Department of Agriculture - U.S. Government … of Agriculture (USDA). This national program is...

Monday,

March 13, 2000

Part III

Department ofAgricultureAgricultural Marketing Service7 CFR Part 205National Organic Program; Proposed Rule

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

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 205

[Docket Number: TMD–00–02–PR2]

RIN 0581–AA40

National Organic Program

AGENCY: Agricultural Marketing Service,USDA.ACTION: Proposed rule.

SUMMARY: This proposed rule wouldestablish a National Organic Program(NOP or program) under the direction ofthe Agricultural Marketing Service(AMS), an arm of the United StatesDepartment of Agriculture (USDA). Thisnational program is intended tofacilitate interstate commerce andmarketing of fresh and processed foodthat is organically produced and toassure consumers that such productsmeet consistent, uniform standards.This program will establish nationalstandards for the production andhandling of organically producedproducts, including a National List ofsubstances approved and prohibited foruse in organic production and handling.This proposal will establish a national-level accreditation program to beadministered by AMS for State officialsand private persons who want to beaccredited as certifying agents. Underthe program, certifying agents willcertify production and handlingoperations in compliance with therequirements of this regulation andinitiate compliance actions to enforceprogram requirements. The proposalincludes requirements for labelingproducts as organic and containingorganic ingredients. The rule alsoprovides for importation of organicagricultural products from foreignprograms determined to have equivalentorganic program requirements. Theprogram is proposed under the OrganicFoods Production Act of 1990, asamended.DATES: Comments must be submitted onor before June 12, 2000.ADDRESSES: Interested persons areinvited to submit written comments onthis proposal to: Keith Jones, ProgramManager, National Organic Program,USDA–AMS–TMP–NOP, Room 2945–So., Ag Stop 0275, PO Box 96456,Washington, DC 20090–6456.Comments also may be sent by fax to(703) 365–0760 or filed via the Internetthrough the National Organic Program’shomepage at: http://www.ams.usda.gov/nop. Written comments to this proposedrule submitted by regular mail and

faxed comments should be identifiedwith docket number TMD–00–02-PR. Tofacilitate the timely scanning andposting of comments to the NOPhomepage, multiple page commentssubmitted by regular mail should not bestapled or clipped. Commenters shouldidentify the topic and section number ofthis proposal to which the commentrefers.

It is our intention to have allcomments to this proposal, whethermailed, faxed, or submitted via theInternet, available for viewing on theNOP homepage at http://www.ams.usda.gov/nop in a timelymanner. Comments submitted inresponse to this proposal will beavailable for viewing at USDA–AMS,Transportation and Marketing, Room2945–South Building, 14th andIndependence Ave., SW, Washington,DC, from 9:00 a.m. to 12:00 p.m. andfrom 1:00 p.m. to 4:00 p.m., Mondaythrough Friday (except official Federalholidays). Persons wanting to visit theUSDA South Building to viewcomments received in response to thisproposal are requested to make anappointment in advance by calling (202)720–3252.FOR FURTHER INFORMATION CONTACT:Richard Mathews, Senior AgriculturalMarketing Specialist, USDA–AMS–TM–NOP, Room 2510–So., PO Box 96456,Washington, DC 20090–6456;Telephone: (202) 205–7806; Fax: (202)205–7808.SUPPLEMENTARY INFORMATION:

Background of the National OrganicProgram

To address problems created byinconsistent organic standards, theorganic industry attempted to establisha national voluntary organiccertification program in the late 1980’s.However, that effort failed to develop aconsensus on needed organic standards.Congress was then petitioned by anorganic industry trade association toestablish a mandatory national organicprogram, resulting in the Organic FoodsProduction Act of 1990 (the Act).Congress passed the Act to: (1) Establishnational standards governing themarketing of certain agriculturalproducts as organically producedproducts; (2) assure consumers thatorganically produced products meet aconsistent standard; and (3) facilitatecommerce in fresh and processed foodthat is organically produced. Thisproposal is designed to implement theAct.

To help readers better understand thisproposal, we have provided answers tosome frequently asked questions about

the proposed rule, including some of theissues most commonly raised in publiccomments.

Is this the final word on Nationalorganic standards?

No. This is only a proposed rule. It isimportant that you take the time to readit carefully and write to USDA to giveus your recommendations, being asspecific as you can. Your comments aredue by June 12, 2000.

Your comments do matter. OnDecember 16, 1997, the first proposedrule was published in the FederalRegister, and 275,603 people wrote tous to explain why and how the ruleshould be rewritten, the largest publicresponse to a proposed rule in USDAhistory. Then, in the October 24, 1998Federal Register, we asked for publiccomment on issues concerning livestockconfinement, medications, and theauthority of certifying agents, and10,817 people wrote to us. As you readthrough this document, you will get asense of what these comments saidbecause in each section we brieflysummarize the relevant comments andprovide our response to them.

We expect to publish a final rule laterthis year, once we know what you thinkabout this proposal. The final rule willhave, as proposed here, animplementation phase-in period sofarmers and processors won’t have tochange overnight.

Has there been citizen input on thisproposal beyond public comments?

Yes. The National Organic StandardsBoard (NOSB) is a 15-member citizenboard that advises the Secretary on allaspects of the National Organic Programand has special responsibility fordevelopment of the National List.Established by law in 1990, the NOSBincludes 3 environmentalrepresentatives, 3 consumerrepresentatives, 4 organic farmers/ranchers, 2 organic processors, 1retailer, 1 scientist, and 1 certifyingagent. Currently, the NOSB comprises14 members. The 15th member, anaccredited certifying agent, would beappointed after certifying agents areaccredited by the Secretary. Since thefirst NOSB was appointed in 1993, theBoard has held 19 public meetings,including one public teleconference,crisscrossing the country to hear fromthe public before makingrecommendations to the Secretary onnational standards. The vast majority ofcommenters on the first proposed ruleurged the Secretary to rewrite theproposal in line with NOSBrecommendations—and this is what wehave done. More information on NOSB


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

members, meeting minutes, and a side-by-side comparison of this proposalwith NOSB recommendations can befound at www.ams.nop/gov.

In addition, to be consistent withOMB Circular No, A–119, which directsagencies to use voluntary consensusstandards, USDA considered adoptionof the American Organic Standards,Guidelines for the Organic Industry as avoluntary consensus standard for use inthe National Organic Program. InOctober 1999, the Organic TradeAssociation published the AmericanOrganic Standards (AOS). The AOSstandards were developed over severalmonths with two opportunities forcomment from interested parties. Theintroduction states that the standardsare written as an up-to-date compilationand codification of organic standardsand certification procedures, as they areunderstood and applies in the UnitedStates. Organic Trade Associationmembers are expected to follow theguidelines.

USDA has determined that it wouldbe impractical to use the AmericanOrganic Standards in lieu of USDAdeveloped standards for the followingreasons: (1) Not all participants in theorganic industry elected to participatein developing the AOS; (2) the AOS arenew to the industry so there has notbeen sufficient time for the industry toassess their effectiveness, and (3) somecertifying agents disagree with portionsof the AOS.

Why do we need national standards fororganic food?

National standards for organic foodproduction are designed to bring aboutgreater uniformity in the production,manufacture, and marketing of organicproducts. In the absence of a nationalstandard, 49 State and privateorganizations have establishedindividual programs and standards forcertifying organic agricultural products.The lack of consistency between thesestandards has created problems forfarmers and handlers of organicproducts, particularly if they want tosell their products in multiple Stateswith different standards. Lack of anationwide standard has also createdconfusion for consumers, who may beuncertain what it really means when afood product is called ‘‘organic.’’

With a national standard, consumersacross the country can go into any storeand have full confidence that any foodproduct labeled ‘‘organic’’ meets a strict,consistent standard no matter where itwas made. Use of the word, ‘‘organic,’’on the label of any product that does notmeet the standard is strictly prohibited.

Consumers will have that confidence,because this proposal requires for thefirst time that all organic operations becertified by USDA-approved certifyingagents. Up to now, certification has beenoptional; some farmers choose not to becertified at all, and others are certifiedby State or private certifiers usingdifferent standards. It can be hard forconsumers to know if a product hasbeen certified, or, if it has, to whatstandard. Under this proposal, allorganic operations, except for the verysmallest, would be certified to the samestandard. And all products labeled as‘‘organic’’ would have to comply withthe production and handling standardsin this rule.

Consumers can also look for theUSDA organic seal, which can only beused on products that have beencertified by USDA-approved certifyingagents. This seal assures consumers thatthe maker of the product is part of arigorous certification program and hasbeen thoroughly reviewed byprofessional inspectors trained inorganic agriculture.

National standards will also bringgreater predictability for producers oforganic foods. There will be noconfusion about whether a productsatisfies the particular standard of anyState, for example, because all organicfoods will meet the same standards.

Finally, a national standard fororganic food will help our farmers andmanufacturers sell organic products inother countries. The lack of a consistentnational organic program has limitedaccess to important markets in othercountries because of the confusioncreated by multiple, independentstandards. A strong national standardwill help to ensure buyers in othercountries that all U.S. organic productsmeet the same standards.

How can I tell how much organic foodis in a product?

This proposal sets strict labelingstandards based on the percentage oforganic content. If a product is 100percent organic, it can, of course, belabeled as such. A product that is atleast 95 percent organic can bedescribed as, for example, ‘‘organiccereal.’’ If a cereal, for example,contains between 50 and 95 percentorganic content, it can be described as‘‘cereal made with organic ingredients,’’and up to three organic ingredients canbe listed. Finally, if the food containsless than 50 percent organic content, theterm, ‘‘organic,’’ may only appear on theingredient information panel. Thesefour new labeling categories willprovide consumers with much greater

information than they have today.[Labeling is covered in subpart D.]

What is the National List?The National List of Allowed and

Prohibited Substances (known as theNational List) identifies specificsubstances that may or may not be usedin organic production and handlingoperations. The National List isdeveloped by the NOSB, throughconsultation with outside experts, andforwarded to the Secretary for approval.The list identifies those syntheticsubstances, which would otherwise beprohibited, that may be used in organicproduction based on therecommendations of the NOSB. Onlythose synthetic substances found on theNational List may be used. The NationalList also identifies those naturalsubstances that may not be used inorganic production, as determined bythe Secretary based on the NOSBrecommendations.

The first proposal included somesubstances on the National List thatwere not recommended by the NOSB.This proposal contains no substances onthe approved list that were not found inthe NOSB recommendations.

This proposal also includesrestrictions or other conditions on theuse of allowed substances, also knownas ‘‘annotations,’’ as recommended bythe NOSB. Such annotations have beenused by existing State and privatecertification programs to further ensurethat allowed substances are used in amanner that is consistent with organicproduction. (The National List iscovered in subpart G, §§ 205.600through 205.607.)

Does this proposal prohibit use ofgenetic engineering in organicproduction?

Yes. This proposal prohibits the useof genetic engineering (included in thebroad definition of ‘‘excluded methods’’in this proposal, based on the definitionrecommended by the National OrganicStandards Board) in the production ofall foods and ingredients that carry theorganic label.

275,603 commenters on the firstproposal nearly universally opposed theuse of this technology in organicproduction systems. Based on thisoverwhelming public opposition, thisproposal prohibits its use in theproduction of all organic foods eventhough there is no current scientificevidence that use of excluded methodspresents unacceptable risks to theenvironment or human health. Whilethese methods have been approved foruse in general agricultural productionand may offer certain benefits for the



environment and human health,consumers have made clear their strongopposition to their use in organicallygrown food. Since the use of excludedmethods in the production of organicfoods runs counter to consumerexpectations, foods produced with thesemethods will not be permitted to carrythe organic label. (Excluded methodsare defined in subpart A and discussedfurther under Production and Handling(subpart C), Labeling (subpart D), andthe National List (subpart G).)

Will genetic engineering be allowed inthe production of foods that containboth organic and nonorganicingredients?

No. For products with mostly organiccontent—those products where morethan half of the ingredients are organicand that have the word, ‘‘organic,’’ onthe main product label— excludedmethods must not be used in theproduction of any ingredients. Onlythose products, in which fewer than halfof the ingredients are organic and inwhich the organic ingredients are onlyidentified on the ingredient panel, couldcontain nonorganic ingredientsproduced through excluded methods.

We believe consumers have expresseda clear expectation that these methodsshould not be used in the production ofany ingredients contained in mostlyorganic products. Because prominentuse of the word, ‘‘organic,’’ on the labelof such products reinforces thatexpectation, we have chosen to prohibituse of excluded methods in productionof both the organic and nonorganicingredients.

We recognize that this policy willplace additional burdens on organicfood processors and certifying agentsbecause the ability to meet theserequirements will depend largely onpractices used in conventionalagricultural markets. For organic foodprocessors, it may be harder to findsources of nonorganic ingredients thatare produced without use of excludedmethods. Similarly, certifying agentsmay face greater difficulty because theywill be required to ensure that handlershave complied with this requirement.However, we believe that the need tomeet strong consumer expectationsoutweighs these concerns. Furthermore,we anticipate that as marketplacepractices or standards evolve, thesepractices will be the basis forimplementing this provision, providinghandlers and certifying agents recognizecriteria with which to evaluate sourcesof nonorganic ingredients in productscontaining both organic and nonorganicingredients.

Does this proposal prohibit use ofirradiation in organic production?

Yes. This proposal prohibits the useof irradiation in the production of allfoods and ingredients that carry theorganic label. 275,603 commenters onthe first proposal almost universallyopposed the use of this technology inorganic production systems. Based onthis overwhelming public opposition,this proposal prohibits its use in theproduction of all organic foods eventhough there is no current scientificevidence that use of irradiation presentsunacceptable risks to the environmentor human health and may, in fact, offercertain benefits. Because this rule is amarketing standard and consumers haveexpressed a clear expectation thatirradiation should not be used in theproduction of organic foods, foodsproduced with this technology will notbe permitted to carry the organic label.

The prohibition on irradiationextends to nonorganic ingredients usedin mostly organic ingredients—thoseproducts where more than half of theingredients are organic and that havethe word, ‘‘organic,’’ on the mainproduct label. Only those products, inwhich fewer than half of the ingredientsare organic and in which the organicingredients are only identified on theingredient panel, could containirradiated nonorganic ingredients. Wedo not believe that this prohibition onirradiation in nonorganic ingredientswill place undue burden on eitherhandlers or certifiers because of currentlabeling requirements for irradiatedproducts.

Does this proposal prohibit use ofsewage sludge in organic production?

Yes. This proposal prohibits the useof sewage sludge in the production of allfoods and ingredients that carry theorganic label. This prohibition extendsto nonorganic ingredients used in theproduction of mostly organic foods—those products in which more than halfof the ingredients are organic and thathave the word, ‘‘organic,’’ on the mainproduct label. Only those products, inwhich fewer than half of the ingredientsare organic and which the organicingredients are only identified on theingredient panel, could containnonorganic ingredients produced usingsewage sludge.

275,603 commenters on the firstproposal almost universally opposed theuse of this technology in organicproduction systems. Based on thisoverwhelming public opposition, thisproposal prohibits its use in theproduction of all organic foods, eventhough there is no current scientific

evidence that use of sewage sludge inthe production of foods presentsunacceptable risks to the environmentor human health. We believe consumershave expressed a clear expectation thatsewage sludge should not be used in theproduction of any ingredients containedin mostly organic products. Becauseprominent use of the word, ‘‘organic,’’on the label of such products reinforcesthat expectation, we have chosen toprohibit use of sewage sludge inproduction of both the organic andnonorganic ingredients. We recognizethat this policy may place additionalburdens on organic food processors andcertifying agents. However, we believethat the need to meet strong consumerexpectations outweighs these concerns.

Does this proposal set standards forlivestock production?

Yes. The proposal sets the firstcomprehensive standards for productionof organic animals and meat products.Under this proposal, use of antibioticswould be prohibited in organic livestockproduction. The standards also prohibitthe routine confinement of animals andrequire that ruminant animals haveaccess to outdoor land and pasture,although temporary confinement wouldbe allowed under certain, limitedcircumstances. Animals under organicmanagement must also receive 100-percent organically grown feed.(Organic livestock management issuesare discussed in greater detail undersubpart C, 205.236 through 205.239.)

Does this proposal prohibit‘‘ecolabeling’’?

No. This proposal only regulates useof the term, ‘‘organic,’’ on productlabels. Other labels would be allowed aslong as they are truthful and notmisleading and meet general foodlabeling requirements. The labelingrequirements of this proposal areintended to assure that the term,‘‘organic,’’ and other similar terms orphrases are not used in a way thatmisleads consumers. Should we findthat terms or phrases are being used torepresent ‘‘organic’’ when the productsare not produced to the requirements ofthis regulation, we would proceed torestrict their use. (Labeling is covered insubpart D.)

Are organic foods pesticide-free?No. Organic farmers can use natural

pesticides to control weeds and insectsand maintain the high quality of organicproducts that consumers have come toexpect. Use of synthetic chemicalpesticides, however, is prohibitedunless specifically allowed on theNational List as recommended by the



National Organic Standards Board andapproved by the Secretary. (TheNational List is covered in subpart G,sections 205.600 through 205.607.)

Who needs to be certified?As a general rule, all organic

production and handling operationsmust be certified. The Act and thisproposal, however, do provide for someexceptions. For example, organicoperations with less than $5,000 inannual sales of organic products do notrequire certification. Similarly, organicoperations that handle only thoseproducts with less than 50 percentorganic content or that restrict labelingof organic ingredients to the ingredientinformation panel do not requirecertification. Finally, we are notrequiring certification of most grocerystores and restaurants (referred to in thisproposal as ‘‘retail foodestablishments’’) at this time.

Even where operations do not requirecertification, however, all organic foodproducts must meet the nationalstandards as described in this proposal.In that way, consumers can be confidentthat all products labeled as ‘‘organic’’meet the national standards, even if theydid not require certification under theNOP. (Certification is covered in subpartE; the exceptions from certification arefound in subpart B.)

Will organic farmers have to pay fees?Organic farmers and other organic

operations will have to pay fees fororganic certification but will not becharged any fees by USDA. Fees forcertification services will be set by theprivate or State certifying agents. Theproposal also requires that certifyingagents make their schedule of feespublicly available so that organicoperations can plan appropriately andso that they can make informed choiceswhere multiple certifying agents areavailable. USDA will also review feescharged by certifying agents to ensurethat they are reasonable and that theyare being applied fairly to all organicoperations. Under this proposal, USDAwould only charge fees for reviewing(‘‘accrediting’’) certifying agents. Thesefees will primarily be based on theactual costs of the accreditation workdone by USDA staff so that certifyingagents with smaller and less complexprograms will pay lower fees. Theproposal also provides for a reduction inthe accreditation fees during the first 18months of the program to provide anincentive for certifying agents to becomeaccredited under the new nationalprogram as soon as possible. (Fees arecovered in subpart G, §§ 205.640through 205.642.)

How do I become an accreditedcertifying agent?

All certifying agents must beaccredited by USDA. Certifying agentsmay apply for accreditation effectivewith publication of the final rule andare encouraged to apply as soon afterpublication of the final rule as possible.USDA will provide additionalinformation on applying foraccreditation on or about the date ofpublication of the final rule. Thisinformation will be available on theNOP website and by mail upon request.

Applications for accreditation will behandled on a first-come-first-servedbasis. Those that apply within the first6 months following publication of thefinal rule and are determined by theAdministrator to meet the requirementsfor accreditation will be notified of theirstatus in writing on or about 12 monthsafter publication of the final rule. Thisapproach is being taken because of themarket advantage that could be realizedby accredited certifying agents if USDAdid not announce the accreditationssimultaneously. (Accreditation iscovered in subpart F.)

What are the roles and responsibilitiesof certifying agents in the NationalOrganic Program?

Certifying agents are the ‘‘front line’’representatives of USDA and play acritical role in the oversight andenforcement of the national organicstandards program. Once accredited byUSDA, certifying agents are empoweredto make key decisions regarding thestatus of organic operations. Certifyingagents review the organic plans oforganic operations and are authorized togrant certification to those operationsthat meet the strict national organicstandards. Certifying agents are alsoresponsible for the continuing oversightof organic operations— reviewingannual updates of organic plans,conducting residue analyses, andconducting other monitoring activities.

In cases in which a certifying agentfinds that an organic operation does notmeet the national standards, the agent isempowered to issue notices ofnoncompliance and to initiatesuspension or revocation ofcertification. Organic operations canappeal such decisions to USDA butunless the organic operation appeals thecertifying agent’s decision or can correctthe problems identified by the certifyingagent, the agent’s decision will stand.(Accreditation is covered in subpart F;Compliance is covered in subpart G,§§ 205.660 through 205.668; andAppeals are covered in subpart G,§§ 205.680 through 205.681.]

How will USDA ensure that the Nationalstandards are applied fairly andconsistently by all certifying agents?

Because this proposal gives certifyingagents such an important role inenforcing the national standards, USDAoversight of those certifying agents isparticularly important. Under thisproposal, all certifying agents, bothprivate and in State organic programs,would have to be accredited by USDAbefore they could begin to certifyorganic operations. It is thisaccreditation process, in which USDAreviews all certifying agents to makesure they understand and can accuratelyapply the national organic standards,that is USDA’s main tool to ensure thatthe standards are applied fairly andconsistently by all certifying agents.

The accreditation process is really oneof ongoing oversight by USDA.Accreditation must be renewed every 5years so that we can be sure certifyingagents continue to meet the programstandards. USDA will conduct one ormore site visits of certifying agentsduring the period of accreditation asanother mechanism of monitoring theircompliance. Finally, certified operationsmay file complaints with USDA if theybelieve they have been treated unfairlyor if a certifying agent is otherwise notfollowing the program requirements. Wewill investigate these complaints forpossible enforcement action.

Can States have organic standards thatare more strict than the Nationalstandard?

Yes. Some States may have uniqueenvironmental or other concerns thatthey believe require extra conditionsabove the national standard. In thosecases, States would apply to USDA tohave their special State programapproved by the Secretary.

However, no State would be allowedto set up a program that does not at leastmeet the national standard. And Stateswould not be allowed to use theirprograms to keep out or otherwisediscriminate against organic productsmade in another State. (State Programsare covered in subpart G, §§ 205.620through 205.622.)

What is the timeframe forimplementation?

The final rule in this rulemakingprocess will establish a procedure anda timeframe for implementing the NOP.We expect that the interim periodbetween publication of the final rule inthis rulemaking process and theeffective date of the program (actualimplementation of regulations) will be18 months. The following is a



preliminary list of severaladministrative and program issues thatmust be implemented during thatperiod. Certifying agent applicationswill be evaluated and accreditationgranted. Certifying agents will, in turn,certify production and handlingoperations to the requirements of theseregulations. Equivalency discussionswill be held with foreign governmentsand foreign certifying agents. Guidelinesand practice standards on productionand handling practices must befinalized and distributed by the NOP. Apetition process for recommendingamendments to the National List mustbe developed and distributed. TheNOSB will continue to review materialsfor the National List. State programsmay have to make adjustments in theirorganic certification programs forconsistency with the standards of thisprogram. Producers should use theinterim period to prepare theirproduction operations to comply withthe relevant requirements of thisprogram. Handlers should use theinterim period to prepare for necessarychanges in the labeling of theirproducts.

Prior Documents in This ProceedingThis proposed rule is issued pursuant

to the Organic Food Production Act of1990 (Act or OFPA), as amended (7U.S.C. 6501 et seq.). This proposalreplaces the proposed rule published inthe Federal Register December 16, 1997.Comments to the first proposal wereconsidered in the preparation of thisproposed rule.

The following notices related to theNOSB and the development of thisproposed regulation have beenpublished in the Federal Register. Fivenotices of nominations for membershipon the NOSB were published betweenApril 1991 and June 1999 (56 FR 15323,59 FR 43807, 60 FR 40153, 61 FR 33897,64 FR 33240). Two notices of extensionof time for submitting nominations werepublished on September 22, 1995, andSeptember 23, 1996 (60 FR 49246, 61 FR49725). Seventeen notices of meetings ofthe NOSB were published betweenMarch 1992 and October 1999 (57 FR7094, 57 FR 27017, 57 FR 36974, 58 FR85, 58 FR 105, 58 FR 171, 59 FR 58, 59FR 26186, 59 FR 49385, 60 FR 51980,60 FR 15532, 61 FR 43520, 63 FR 7389,63 FR 64451, 64 FR 3675, 64 FR 28154,64 FR 54858). One notice of publichearings on organic livestock andlivestock products was published onDecember 30, 1993 (58 FR 69315). Onenotice specifying a procedure forsubmitting names of substances forinclusion on the National List waspublished on March 27, 1995 (60 FR

15744). A rule proposing the NOP waspublished on December 16, 1997 (62 FR65850). An extension of the time periodfor submitting comments to theproposed rule was published onFebruary 9, 1998 (63 FR 6498). Onerequest for comments on Issue Paperswas published on October 28, 1998 (63FR 57624). A notice of a program toassess organic certifying agencies waspublished on June 9, 1999 (64 FR30861).

This preamble includes a discussionof the proposed rule and supplementaryinformation, including the RegulatoryImpact Assessment, RegulatoryFlexibility Act Analysis, FederalismImpact Statement, and PaperworkReduction Act Analysis. The CivilRights Impact Analysis is not includedas an attachment but may be obtainedby writing at the address providedabove or via the Internet through theNational Organic Program’s homepageat: http://www.ams.usda.gov/nop.

National Organic Program Overview

Subpart A—Definitions

Proposal DescriptionThis subpart defines various terms

used in this part. These definitions areintended to enhance conformance withthe regulatory requirements through aclear understanding of the meaning ofkey terms.

We have amended terms anddefinitions carried over from the firstproposal where necessary to make theirwording consistent with the languageused in this proposal. We have removedthe definition for the following termsbecause the terms are not used in thisproposal or have been determined to beunnecessary: Active ingredient in anyinput other than pesticide formulations,active ingredient in pesticideformulations, agroecosystem, botanicalpesticides, breeding, chapter, cationbalancing agent, certification activities,certification applicant, certified facility,chapter, confirmation of accreditation,contaminant, critical control point,cytotoxic mode of action, degradation,detectable residue level, extract, farm,foliar nutrient, formulated product,fungicide, generic name, incidentaladditive, inert ingredient in any inputother than pesticide formulations,intentionally applied, made with certainorganic ingredients, mating disrupter,micronutrient, nonactive residues,nonorganic agricultural ingredient orproduct, petition, preliminaryevaluation, processing methods,production aid, production input,proper manuring, putrefaction, siteevaluation, soil amendment, splitoperation, subtherapeutic, suspension of

accreditation, synergist, syntheticvolatile solvent, treated, untreatedseeds, USDA seal, and weed. Wereceived comments on some of thedefinitions that have been deleted. Wehave not addressed these commentshere because the relevant definitionshave been deleted.

Definitions—Changes Based OnComments

This subpart differs from our firstproposal in several respects as follows:

(1) We have amended the term, ‘‘audittrail,’’ by replacing the category,‘‘organic’’ or ‘‘made with certain organicingredients,’’ with ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients),’’ oragricultural product containing lessthan 50 percent organic ingredientsidentified as organic in an ingredientsstatement. We have taken this action toclarify the definition as requested byseveral commenters.

(2) We have amended the term,‘‘buffer area,’’ to ‘‘buffer zone’’ andamended the term by replacing ‘‘acertified farm or portion of a farm’’ with‘‘a certified production operation orportion of a production operation.’’ Afew commenters suggested including aminimum size for the buffer zone andspecifying that buffer zones must beuncropped vegetated areas. Theappropriate size and type of a bufferzone is highly site-specific and cannotbe rigidly specified for all locationswithout placing unreasonable burdenson some producers. Several commenterssupported determination of theappropriate buffer zone size and type bythe producer in consultation with thecertifying agent. Additional informationon this issue can be found at subpart C,Crop Production, Changes RequestedBut Not Made, item 1.

(3) We have amended the definition ofthe term, ‘‘certification or certified,’’ tomake the language in the definitionconsistent with the language of thisproposal. We have also removed thelanguage concerning the information tobe found on a certificate. Commenterssuggested amending the definition byadding the words, ‘‘annual’’ and ‘‘basedon an on-site inspection andcomprehensive review of theoperation.’’ Other commentersrecommended deleting the reference toproducts on a certificate because it isthe operation, not the product, that iscertified. We have not made thesuggested additions because the issuesare adequately addressed in theregulations. We have removed thelanguage concerning information foundon a certificate because this information



is adequately addressed in theregulations.

(4) We have amended the definition of‘‘certifying agent’’ to clarify that theterm only applies to State-entity andprivate-entity certifying agents. We havetaken this action because there wassome confusion among commentersover whether the original definitionincluded a State program’s governingState official.

(5) We have amended the definition of‘‘commercially available’’ by removingthe phrase, ‘‘to be feasibly andeconomically used.’’ We have taken thisaction because we agree withcommenters that use of the phraseprovides an opportunity for producersand handlers to avoid use of preferredinputs. We have also clarified that‘‘commercially available’’ applies toprocessors by including the words, ‘‘orprocessing ingredient.’’ Additionalinformation on this issue can be foundat subpart C, Production and Handling(General), Changes Requested But NotMade, item 2.

(6) We have amended the definition of‘‘compost’’ by referring to compost as‘‘the product of a carefully managedprocess through which microorganismsbreak down plant and animal materialsinto more available forms suitable forapplication to the soil.’’ We also statethat ‘‘composting’’ must use methods toraise the temperature of raw materials tothe levels needed to stabilize nutrientsand kill pathogens. Specific instructionson the production of compost for use inorganic production has been referencedto the National Resources ConservationService’s (NRCS) practice standard for acomposting facility (Code 317). TheNRCS practice Standard provides a fieldtested and verifiable procedure forproducing compost. We have madethese changes because commenterssuggested that we clarify the meaning ofcompost. Several commenters statedthat the definition should include rulesabout what kinds of materials areacceptable for use in compost.Additional information on this issue canbe found at subpart C, Production andHandling (General), Changes Based OnComments, item 4.

(7) We have amended the definition of‘‘crop rotation’’ by adding a statementabout the relationship of crop rotation toperennial crops as suggested by anindustry association.

Several commenters suggestedinserting references to the use oflegumes and sod as essential to croprotation. The benefits achieved throughthe use of legumes and sod could befulfilled through many types of rotationplans, which could only be developedaccording to the site-specific climate,

soil type, and type of crops or livestockproduced on a given operation. In theinterest of flexibility this proposal doesnot specify what specific crops have tobe included in a crop rotation. The issueaddressed in this suggestion isaddressed in the crop rotation practicestandard at § 205.205. Additionalinformation on crop rotation can befound at subpart C, Production, ChangesBased On Comments, item 5.

(8) We have amended the definition of‘‘disease vectors’’ by adding that diseasevectors include plants and animals thattransmit disease organisms or pathogenswhich may attack crops or livestock. Afew commenters pointed out that thedefinition as originally proposed wastechnically inaccurate because it did notaddress the transmission of diseaseorganisms to crops or livestock.

(9) We have rewritten the definition of‘‘employee’’ to provide that anemployee is any person providing paidor volunteer services for a certifyingagent. A few States requested that thedefinition clearly reference volunteers.A trade association recommendedexpanding the definition to include anyperson who works for a certifying agent.We have included volunteers in thisproposal because of their substantial useby some certifying agents. Other Statessuggest changing ‘‘certificationdecisions’’ to ‘‘certification activities’’ toinclude any person who is involved inthe certification process. We haveaddressed the commenters’ concern byreferring to services provided by theemployee for the certifying agent. A fewStates stated that the definition needs toclarify who is the employer of anindependent inspector. An independentinspector would not be included in thedefinition of employee. Such personsare considered to be contractors. SomeStates expressed concern regarding theuse of volunteers from certifiedproduction and handling operations.Section 205.501(a)(11) requires that acertifying agent prevent conflicts ofinterest by not permitting any employee,inspector, contractor, or other personnelto accept payment, gifts, or favors of anykind, other than prescribed fees, fromany business inspected, except that acertifying agent that is a not-for-profitorganization with an Internal RevenueCode tax exemption may acceptvoluntary labor from certifiedoperations. Under this exception allvolunteers would be excluded fromwork, discussions, and decisions in allstages of the certification process andthe monitoring of certified productionor handling operations for all entities inwhich such person has or has held acommercial interest, including animmediate family interest or the

provision of consulting services, withinthe prior 12-month period. Additionalinformation on conflicts of interest canbe found at subpart F, Changes BasedOn Comments, items 4 and 5, andsubpart F, Changes Requested But NotMade, items 5, 6, 7, and 8; subpart F,Additional Provisions, item 2.

(10) We have rewritten the definitionof ‘‘fertilizer’’ to provide for theinclusion of minor nutrients and traceelements with the three primarynutrients (nitrogen, phosphorus,potassium) contained in a substance ora blended substance utilized in a soilfertility program. This is a genericdefinition of fertilizer. Issues concerningwhat substances may be present in afertilizer for organic production areaddressed in subpart C of this proposal.

(11) We have amended the definitionof ‘‘handle’’ by providing that the termshall not include the sale,transportation, or delivery of crops orlivestock by the producer thereof to ahandler. This change was made becausewe found merit in a certifying agent’sconcern that farmers were turned intohandlers by definition. This was not ourintent.

(12) We have amended the definitionof ‘‘inspector’’ to make terms used in thedefinition consistent with terms used inthis proposal and to remove the phrase,‘‘who is qualified.’’ A State certifyingagent suggested deleting the phrase,‘‘who is qualified,’’ because the issue ofinspector qualification is moreappropriately addressed in theregulations. We concur that thedefinition of ‘‘inspector’’ does not needto address the issue of qualifications,especially in light of the fact thatcertifying agents are required by theseregulations to use qualified inspectors.

(13) We have amended the definitionof ‘‘livestock’’ by adding reference to theproduction of fiber, feed, and otheragricultural-based consumer productsand by providing that ‘‘livestock’’ shallnot include fish or bees for theproduction of food, fiber, feed, or otheragricultural-based consumer products.A trade association and several Statesrecommended adding fibers to thedefinition. We have added fiber, feed,and other agricultural-based consumerproducts to the definition to capture alltypes of consumer products that wouldbe produced from livestock. We haveexcluded aquatic animals from thedefinition of livestock pending futuredevelopment of detailed practicestandards for specific aquatic animals.We have also excluded bees from thedefinition of livestock pending futureNational Organic Standards Board(NOSB or Board) review andrecommendations on apiculture.



Additional information on this issue canbe found at subpart C, LivestockProduction, Changes Based OnComments, items 3 and 4.

(14) We have amended the definitionof ‘‘market information.’’ A commentersuggested that the definitions of theterms, ‘‘labeling’’ and ‘‘marketinformation,’’ were difficult todistinguish from one another andneeded clarification. We have addedlanguage to make a distinction betweenthe two terms. ‘‘Market information’’now includes the phrase, ‘‘distributed,broadcasted, or made available outsideof retail outlets.’’ This phrase indicatesthat any information distributed,broadcasted, or made available outsideof retail outlets to assist in the sale orpromotion of a product falls under the‘‘market information’’ category.‘‘Labeling’’ includes any informationdisplayed or made available in retailoutlets on or about the product.

(15) We have amended the definitionof ‘‘organic’’ to clarify that the term,‘‘organic,’’ is used as a labeling term.Commenters, including several States,stated that the definition repeated theproposed requirements for allowing theuse of ‘‘organic’’ on a product label.They suggested amending the definitionto clarify that the term, ‘‘organic,’’ isused as a labeling term. We made thesuggested change because we agree thatthe definition unnecessarily repeatedregulatory information and that use ofthe term, ‘‘organic,’’ is intended as alabeling term.

(16) We have amended the definitionof ‘‘producer’’ to clarify that the termincludes the production of fiber andother agricultural-based consumerproducts. Several States suggested thatthe definition of ‘‘producer’’ beamended to clarify that a producercould also be growing or producing afiber product. We agree that thisclarification is needed and have alsoadded reference to ‘‘other agricultural-based consumer products’’ to furtherclarify that the term includes allagricultural-based consumer productsproduced by a producer.

(17) We have changed the definitionof ‘‘routine use of parasiticide’’ to thedefinition recommended by the NOSB.Commenters suggested removing‘‘without cause’’ from the definition inthe first proposal and adding suchphrases as ‘‘without an indication ofillness from parasites,’’ ‘‘administrationwith need based on the presence of adiagnosed problem with parasites,’’ and‘‘with or without cause.’’ The NOSB’sdefinition solves the problems causedby the use of the phrase, ‘‘withoutcause.’’ Additional information on thisissue can be found at subpart C,

Livestock Production, Changes BasedOn Comments, item 9.

(18) We have amended the definitionof ‘‘slaughter stock’’ by changing‘‘human consumption’’ to‘‘consumption by humans and otheranimals.’’ A few commentersrecommended deleting the word,‘‘human,’’ to indicate that organiclivestock may also be used to producepet food. We agree that slaughter stockmay be used in the production ofproducts for consumption by humansand other animals.

(19) We have amended the term, ‘‘soilquality,’’ and its definition byreferencing ‘‘water’’ in the term and thedefinition. This change was madebecause of the reference to ‘‘soil andwater quality’’ in § 205.200 of thisproposal. Several State commentersstated that the definition of ‘‘soilquality’’ was too vague and would poseproblems in enforcing a requirementthat addressed the effect of variouspractices on soil quality. Othercommenters requested expansion of thedefinition to include a discussion ofwhy soil quality is important and whatfunctions healthy soil serves in anorganic production system. AnotherState suggested expanding the definitionto include water quality, since therewere several references in theregulations to effects on soil or waterquality. The importance of soil qualityhas been addressed under subpart C ofthis proposal. We acknowledge that thephrase, ‘‘soil and water quality,’’ is usedin subpart C and have, therefore,expanded the term, ‘‘soil quality,’’ to‘‘soil and water quality’’ and amendedthe definition accordingly. We have alsoadded a new phrase to the previousdefinition to acknowledge that oneimportant criterion of soil and waterquality is the control of environmentalcontaminants. The determination ofwhich observable indicators to monitorand how to interpret the observationswill be subject to documentation in theorganic system plan and consultationbetween the producer and the certifyingagent. Guidance will be provided tocertifying agents through programmanuals. Additional information on thisissue can be found at subpart C,Production and Handling (General),Changes Based On Comments, item 2.

(20) We have amended the term,‘‘governing State official,’’ to ‘‘Stateprogram’s governing State official’’ andretained the definition to clarify thedifference between a State certifyingagent and a governing State official. Wehave used the term, ‘‘State program’sgoverning State official,’’ throughoutthis proposal. A trade association and aState recommended removing the word,

‘‘certification,’’ from the definition. Wehave not made this change because theterm is meant to identify the personresponsible for administering the State’sorganic certification program. By ‘‘Stateorganic certification program,’’ we meanthe law, regulations, and any policiesand procedures established by the Stateto govern the organic certification ofproducers or handlers by State orprivate certifying agents.

(21) We have amended the definitionof ‘‘unavoidable residual environmentalcontamination.’’ Commenters stated thatUSDA should set levels rather thanmake case-by-case decisions regardingresidual environmental contamination.They suggested that background levelscould be used to determine whetherland exceeds the level. Anothercommenter requested a clear statementof ‘‘unavoidable’’ and ‘‘contamination’’to facilitate enforcement. Some Statesstated that there should be a level thatis unacceptable for organic agriculture.A commenter suggested that thedefinition read, ‘‘The presence of amaterial prohibited in organicproduction, processing, or handling insoil, crop, or food that occurs as a resultof factors beyond the control of theproducer, processor, or handler.’’Another commenter suggested that thedefinition read, ‘‘Background levels ofprohibited substances at a site which areclearly beyond the control of a certifiedorganic farm operator through notices toneighbors, careful avoidance ofabnormally precontaminated sites, andestablishment of buffer zones.’’ In thisproposal, we have defined ‘‘unavoidableresidual environmental contamination’’as ‘‘background levels of naturallyoccurring or synthetic chemicals thatare persistent in the soil or present inorganically produced agriculturalproducts that are below establishedtolerances.’’

Definitions—Changes Requested ButNot Made

This subpart retains from our firstproposal terms and their definitions onwhich we received comments asfollows:

(1) A few commenters requested thatthe definition of ‘‘Administrator’’ berevised to provide that authority toadminister the National OrganicProgram may be delegated to a Stateofficial. We have not made therecommended change because thedefinition of ‘‘Administrator’’ merelyaddresses the top official of theAgricultural Marketing Service (AMS)and any AMS official to whom theAdministrator may delegate authority.The definition is not meant to addressworking relationships established



between AMS and a State or Stateentity.

(2) An environmental group requestedthat we delete the phrase, ‘‘other thanduring the manufacture of amultiingredient product containing bothtypes of ingredients,’’ from thedefinition of ‘‘commingling.’’ Thisproposal requires that a handler preventthe commingling of organic andnonorganic products but permits use ofthe word, ‘‘organic,’’ in labeling aproduct made with organic andnonorganic ingredients in accordancewith these regulations. Therefore, it isnecessary to indicate that the term,‘‘commingling,’’ does not apply to themanufacture of multiingredientproducts produced in accordance withthese regulations.

(3) A farmers’ associationrecommended that the Secretarydelegate authority for determining cropyear to certifying agents because cropyear will vary from region to region. Wehave found no compelling reason tomake certifying agents responsible fordetermining crop year and have notmade the recommended change.

(4) A few commenters requested thatthe definition of ‘‘handling operation’’be amended to exclude retailers ofprepackaged agricultural products. Thischange is unnecessary because suchretailers are excluded by the definitionof ‘‘handling operation’’ through thephrase, ‘‘except final retailers ofagricultural products that do not processagricultural products.’’

(5) Several commenters, including aState department of agriculture,recommended elimination of theexception for weight labels in thedefinition of ‘‘label.’’ We have not madethe recommended change to thedefinition of ‘‘label’’ because, as used inthis proposal, ‘‘label’’ is intended torepresent the organic nature of theproduct. A weight label that does notrefer to the organic nature of the productwould not constitute a label for thepurposes of this proposal.

(6) A commenter requested that thedefinitions for ‘‘labeling’’ and ‘‘marketinformation’’ be amended to refer onlyto products produced by the seller. Wehave not made this requested changebecause changing the definitions to onlyinclude products produced by the sellerwould severely restrict the applicationof the terms, ‘‘labeling’’ and ‘‘marketinformation.’’ As defined, ‘‘labeling’’and ‘‘market information’’ correctlyinclude any information that may bepresented to consumers concerning allproducts sold whether produced by theseller, most likely a retail outlet, orproduced by a production or handling

operation from which the selleracquired the products.

(7) A commenter requested that weinclude definitions for ‘‘manure’’ and‘‘aged or rotted manure.’’ Under thisproposal it is not necessary to defineeither term.

(8) An environmental organizationrequested that a phrase be added to thedefinition of ‘‘mulch’’ to indicate thatacceptable mulch materials leave nochemical or toxic residues. Thisproposal allows the use of compostedplant and animal wastes obtained fromnonorganic sources, such as commercialcompost products. Uncomposted plantor animal waste material which hasbeen treated with a substance can be asutilized as a mulch provided thesubstance appears on the National Listor complies with the OFPA. Off-farmplant and animal wastes from foodprocessing, municipal yard wastefacilities, and other sources are usedextensively in existing organicoperations and generally permitted byorganic certification programs. Usingsuch organic wastes is consistent with asystem of organic production andhandling, which calls for recyclingorganic wastes to return nutrients to theland. We believe that concerns aboutpotential contaminants in plant andanimal waste materials can be addressedby the requirement in this proposal thatthese materials be managed in a mannerthat prevents such contamination.Accordingly, this change has not beenmade. Additional information on thisissue can be found at subpart C, CropProduction, Changes Requested But NotMade, items 2 and 3.

(9) Several commenters suggestedadding information to the definition of‘‘National Organic Standards Board’’ toaddress the role of the NOSB withregard to the National List. This changeis unnecessary because the role of theNOSB is adequately covered in section6517, National List, of the Act.

(10) Numerous comments werereceived from consumers,environmental groups, and organicproducers concerning the definition ofthe term, ‘‘nonagricultural ingredient.’’Commenters expressed the view thatthis term represented an attempt byUSDA to circumvent the intent of theAct that synthetic ingredients not bepermitted in organic processedproducts. We disagree with the positionthat the Act prohibits the use ofsynthetic ingredients in organicprocessed products. The use ofsynthetic ingredients in organicprocessed products is discussed in thepreamble to the National List found insubpart G. We have changed the term,‘‘nonagricultural ingredient,’’ to

‘‘nonagricultural substance’’ to beconsistent with the language used inthis proposal. The definition remainsthe same.

(11) Commenters stated theirobjection to the use of the term,‘‘nonsynthetic (natural),’’ and itsdefinition. A commenter mistakenlystated that the term, ‘‘natural,’’ wasdefined in the Act. Other commentersfelt that use of any term that was notincluded in the Act was a violation ofthe Act. Because the term, ‘‘natural,’’ isso ambiguous and subject to differinginterpretations, the term,‘‘nonsynthetic,’’ as used throughout thisregulation, represents an importantclarification of the intent of the Act, andwe have, therefore, retained it in thisproposal.

(12) A few commenters requested thatthe definition of ‘‘petition’’ be amendedby adding the phrase, ‘‘to the NationalOrganic Standards Board,’’ immediatelyfollowing the word, ‘‘submitted.’’ Wehave not made the requested change fortwo reasons. First, the change isunnecessary. Second, petitions, whetheraddressed to the NOSB or NationalOrganic Program (NOP) Staff, will bereceived by the NOP because theadministrative functions of the NOSBare performed at the NOP office.Petitions received will be distributed bythe NOP to the NOSB and appropriatetechnical reviewers.

(13) A producers association statedthat the definition for ‘‘processing’’ wasconfusing with regard to the differencebetween a handler and a processor. Ahandling operation that performs any ofthe activities listed in the definition ofprocessing becomes a processor. Wehave found no compelling reason torevise this comprehensive definition forprocessing, which comes directly fromthe Act. A commenter suggested thatthis definition be changed to includerepackaging for weight. In addition tothe definition being stipulated by theAct, affixing a weight label to a productis a normal retail activity that does notwarrant the expense and effortnecessary to certify all retailers whoroutinely affix weight labels to organicproduct.

(14) A few commenters requested thatthe definition of ‘‘State organiccertification program’’ be amended byadding a statement indicating that aState program could have additionalrequirements. This issue is addressed insubpart G, State Organic CertificationPrograms, Proposal Description.

(15) A technical instituterecommended including geneticallyengineered organisms and theirproducts in the definition of‘‘synthetic,’’ and an environmental



group wanted the definition to includethe combustion of minerals. We havenot amended the definition as given inthe Act because it already includes thecombustion of minerals, which arechemically changed by the process ofcombustion. We also do not consider itnecessary to classify geneticallyengineered organisms as either syntheticor nonsynthetic for the purposes of thisregulation, since these organisms andtheir products are prohibited for use inorganic production or handlingregardless of whether or not they aresynthetic.

(16) A commenter recommendedadding the word, ‘‘synthetic,’’immediately preceding the word,‘‘substances,’’ in the second sentence ofthe definition of ‘‘system of organicfarming and handling.’’ We disagreewith this suggestion because‘‘substances’’ as used in this definitioncould be synthetic or nonsynthetic. Afew commenters requested deletion ofthe word, ‘‘extraneous,’’ as a modifier of‘‘synthetic additives’’ in the definitionof ‘‘system of organic farming andhandling.’’ The commenters stated thatuse of the word, ‘‘extraneous,’’ impliedthat synthetic additives can be used inorganic processed products. Syntheticsmay be used in processed products ifthe substance is included on theNational List. Additionally, the word,‘‘extraneous,’’ modifies the word,‘‘processing,’’ in the definition, and weconsider use of extraneous processing tobe inconsistent with organic handling.For these reasons, we have not removedthe word, ‘‘extraneous,’’ from thedefinition. We have, however, amendedthe term, ‘‘system of organic farmingand handling,’’ by deleting ‘‘farming’’and inserting ‘‘production.’’ Thedefinition for the term, ‘‘system oforganic production and handling,’’ isunchanged. We have taken this action tomake the term consistent with thelanguage of this proposal. Additionalinformation on this issue can be foundat subpart C, Production and Handling(General), Changes Requested But NotMade, item 1.

(17) Several commenters, including aState Department of Agriculture and afishery association, requested that wildgame and aquatic animals be includedin the definition of ‘‘wild crop.’’Regarding aquatic animals, we intend todevelop detailed practice standards forspecific aquatic species, which will bepublished for comment and finalizedprior to the implementation of the NOP.Given the virtual absence of recognizedcertification programs for aquaticoperations, including aquaculture, thereare no U.S. models on which to basenational standards. Additional

information on this issue can be foundat subpart B, Changes Requested ButNot Made, item 11 and subpart C, CropProduction, Changes Requested But NotMade, item 7. Accordingly, we have notmade the requested changes to thedefinition of ‘‘wild crop.’’

Definitions—Additional ProvisionsUpon further review of the definitions

in the first proposal, we have decided topropose the following additions andchanges.

Amended Definitions(1) We have amended the definition of

‘‘accreditation’’ to include foreignentities as now provided for in subpartF, Accreditation. Additionalinformation on including foreignentities in accreditation can be found atsubpart B, Additional Provisions, item1, and subpart F, Changes Based OnComments, item 1.

(2) We have amended the definition of‘‘allowed synthetic’’ by replacing ‘‘foruse in organic farming’’ with ‘‘for use inorganic production, or handling.’’ Thiscorrection was necessary because theNational List includes syntheticsubstances used in organic productionand handling.

(3) We have amended the terms,‘‘certified organic farm,’’ ‘‘certifiedorganic handling operation,’’ and‘‘certified organic wild-crop harvestingoperation,’’ with the term, ‘‘certifiedoperation.’’ The term, ‘‘certifiedoperation,’’ is used throughout thisproposal to refer to a crop or livestockproduction, wild-crop harvesting, orhandling operation or portion of anoperation that is certified by anaccredited certifying agent as utilizing asystem of organic production orhandling as described by the Act andregulations in this part. We have takenthis action to simplify the regulatorylanguage.

(4) We have amended the term,‘‘cultural,’’ to ‘‘cultural methods’’ andamended the definition by removing allreferences to livestock. We have takenthis action because this proposal doesnot refer to cultural methods withreference to livestock health care.

(5) We have amended the definition of‘‘field’’ by replacing ‘‘farm’’ with‘‘production operation.’’ This action wastaken because ‘‘farm’’ has been replacedby ‘‘production operation’’ throughoutthis proposal.

(6) We have amended the definition of‘‘handler’’ by adding the phrase,‘‘including producers who handle cropsor livestock of their own production.’’We have made this change to clarify thatproducers who handle their ownproduction become handlers under the

regulations. Such producer/handlersmust be certified as a handler.

(7) We have amended the term, ‘‘inertingredient in pesticide formulations,’’ to‘‘inert ingredient.’’ We have alsoamended the definition by specifyingthat the pesticide product is used inorganic crop or livestock productionand handling. These changes have beenmade to make the term and itsdefinition consistent with the languageused in the National List. This proposaltakes a different position on inertingredients, as explained in subpart G,National List, Changes Based onComments, item 6, than was taken inthe first proposal. Because of theincreased importance of inertingredients in this proposal, we haverejected the position of the fewcommenters who recommendedremoval of this definition.

(8) We have amended the term,‘‘organic plan,’’ to ‘‘organic systemplan’’ and made editorial changes to thedefinition to make the term andlanguage of the definition consistentwith the language in this proposal.

(9) We have amended the definition of‘‘peer review panel’’ by removing ‘‘toassist in evaluating the performance ofa certifying agent’’ and inserting ‘‘toassist in evaluating applicants foraccreditation as certifying agents.’’ Thischange clarifies that the role of the peerreview panel is to evaluate applicantsfor accreditation. Additionalinformation on ‘‘peer review panel’’ canbe found at subpart C, ProposalDescription, Production and Handling(General).

(10) We have amended the definitionof ‘‘person’’ by adding ‘‘contractor’’ toclarify that, when the regulations use‘‘person,’’ the meaning includes‘‘contractors.’’

(11) We have amended the definitionof ‘‘records’’ by removing the recordexamples. A trade association andseveral States recommend adding‘‘process flow charts’’ to the examples ofrecords. Another commenter, who doesnot want to give USDA unlimited accessto personnel files, suggested the creationof a specific list of records to bemaintained. We have rewritten therecordkeeping provisions, removing allreferences to specific records or types ofrecords which must be maintained. Wehave taken this action because webelieve that it is impracticable to specifyin detail every class of records whichmay be found essential in demonstratingcompliance with the Act andregulations. Different types of certifiedproduction and handling operationswill, by the very nature of theirbusiness, be required to maintaindifferent records to establish their



compliance with the Act andregulations. Additional information onthe issue of listing every class of recordswhich may be found essential indemonstrating compliance with the Actand regulations can be found at subpartB, Changes Based On Comments, item 6.

(12) We have amended the definitionof ‘‘State.’’ Addition of the term, ‘‘Stateentity,’’ necessitated our amendment ofthe definition of ‘‘State’’ to clarify thatState means the States of the UnitedStates of America.

(13) We have amended the term,‘‘system of organic farming andhandling,’’ to ‘‘system of organicproduction and handling’’ and retainedthe original definition in this proposal.The original definition was crafted to beconsistent with the requirements of theAct. We have changed ‘‘farming’’ to‘‘production’’ to provide a moreencompassing term, which may come toinclude such diverse activities ashydroponics, green house production,and harvesting of aquatic animals. Thepurpose of the original definition was todescribe practices and substancesconsistent with systems of organicfarming and organic handling asrequired by the Act and to provide anexplicit reference point for determiningwhich practices and substances are mostconsistent with these systems. Severalcommenters suggested that thedefinition include the concepts,‘‘agroecosystem health,’’ ‘‘ecologicalharmony,’’ and ‘‘biological diversity.’’Commenters also suggested includingdefinitions for ‘‘organic agriculture,’’‘‘organic farming,’’ and ‘‘transition toorganic.’’ This definition is intended toclarify regulatory provisions in thisproposal and is not intended as a broadphilosophical statement. The terms,‘‘organic agriculture,’’ ‘‘organicfarming,’’ and ‘‘transition to organic,’’are not used in this proposal and,therefore, are not defined.

(14) We amended the definition oftransplant to prevent confusion with arelated term, ‘‘seedling.’’ While theterms, ‘‘transplant’’ and ‘‘seedling’’ areoften used interchangeably, the Acttreats them as distinct and establishesseparate regulatory requirements. Wehave determined that the physicalprocess of moving and replanting aseedling results in that seedlingbecoming a transplant. We have createdthis distinction to be able to enforce thefull requirements of the Act. Additionalinformation on ‘‘transplant’’ can befound at subpart C, Crop Production,Changes Based On Comments, item 4.

New Definitions(1) We have defined ‘‘accredited

laboratory.’’ Information concerning

‘‘accredited laboratory’’ can be found atsubpart G, Inspection and Testing,Reporting, and Exclusion from Sale,Proposal Description.

(2) We have defined ‘‘action level.’’Information concerning ‘‘action level’’can be found at subpart G, Inspectionand Testing, Reporting, and Exclusionfrom Sale, Changes Based OnComments, item 2.

(3) We have defined ‘‘agriculturalinputs.’’ Information concerning‘‘agricultural inputs’’ can be found atsubpart G, Inspection and Testing,Reporting, and Exclusion from Sale,Changes Based On Comments, item 1.

(4) We have defined ‘‘AgriculturalMarketing Service (AMS) ‘‘ because theterm is used throughout this proposal.

(5) We have defined ‘‘breeder stock.’’We have added this definition becausethis proposal establishes conditions forthe administration of an allowedsynthetic parasiticide to livestockproducing offspring for incorporationinto an organic operation. We have alsoproposed conditions under which dairystock, whose milk or milk products areto be sold, labeled, or represented asorganically produced, may be treatedwith allowed synthetic parasiticides.Additional information on this issue canbe found at subpart C, LivestockProduction, Changes Based OnComments, item 9.

(6) We have defined ‘‘bulk.’’Information concerning ‘‘bulk’’ can befound at subpart D, AdditionalProvisions, item 7.

(7) We have defined ‘‘claims.’’Information concerning ‘‘claims’’ can befound at subpart D, Changes Based OnComments, item 1.

(8) We have defined ‘‘detectableresidue.’’ Information concerning‘‘detectable residue’’ can be found atsubpart G, Inspection and Testing,Reporting, and Exclusion from Sale,Proposal Description and at ChangesBased On Comments, item 2.

(9) We have defined ‘‘drift.’’Information concerning ‘‘drift’’ can befound in subpart G, Residue Testing,changes based on comments, item 2.

(10) We have defined ‘‘estimatednational mean.’’ Information concerning‘‘estimated national mean’’ can be foundat subpart G, Inspection and Testing,Reporting, and Exclusion from Sale,Proposal Description and at ChangesBased On Comments, item 2.

(11) We have defined ‘‘excludedmethods.’’ As a result of extensivepublic comment, we have revised thedefinition of certain methods to beexcluded from organic productionsystems. Many commenters suggestedthat we use the definition for certainmethods to be excluded from organic

production systems proposed by theNOSB. This proposal essentially adoptsthat definition. ‘‘Excluded methods’’refers to a variety of methods used togenetically modify organisms orinfluence their growth and developmentby means that are not possible undernatural conditions or processes and arenot considered compatible with organicproduction. Such methods wouldinclude recombinant DNA, cell fusion,and micro-and macroencapsulation.Such methods would not include theuse of traditional breeding, conjugation,fermentation, hybridization, in vitrofertilization, or tissue culture.

We recognize that the phrases,‘‘natural conditions or processes’’ and‘‘not considered compatible withorganic production,’’ may be subject tointerpretation. We have proposed to usethese phrases for two reasons. First,‘‘natural conditions or processes’’ isused in the NOSB and AmericanOrganic Standards definitions, both ofwhich were the result of consultationwith organic industry and consumerstakeholders and, thus, accuratelyreflect current industry practices as wellas consumer preferences. Second, werecognize that industry and consumerexpectations regarding the products ofthese techniques in organic productionsystems may evolve. We believe that,taken together, these phrases allow fora degree of flexibility to ensure that ourregulations continue to accuratelyreflect industry practices and consumerpreferences. In cases where questionsmay arise regarding a specifictechnique, we anticipate that suchquestions would be resolved by theAdministrator based onrecommendations from the NOSB.

(12) We have defined ‘‘feed additive.’’Information concerning ‘‘feed additive’’can be found at subpart C, LivestockProduction, Changes Based OnComments, item 7.

(13) We have defined ‘‘feedsupplement’’ Information concerningfeed supplement’’ can be found atsubpart C, Livestock Production,Changes Based On Comments, item 7.

(14) We have defined ‘‘forage.’’Information concerning ‘‘forage’’ can befound at subpart C, LivestockProduction, Changes Based OnComments, item 4.

(15) We have defined ‘‘immediatefamily.’’ Information concerning‘‘immediate family’’ can be found atsubpart F, Changes Based OnComments, items 14 and 15; ChangesRequested But Not Made, item 18; andAdditional Provisions, item 2.

(16) We have defined ‘‘ingredient’’because the term is used throughoutsubpart D.



(17) We have defined ‘‘inspection’’because the term is used throughoutsubparts E and F.

(18) We have defined ‘‘lot.’’Information concerning ‘‘lot’’ can befound at subpart D, ProposalDescription and at AdditionalProvisions, item 6.

(19) We have defined ‘‘naturalresources of the operation.’’ Thisdefinition has been added to providegreater context for evaluating the‘‘maintain or improve’’ requirement fora system of organic production andhandling. Information concerning‘‘natural resources of the operation’’ canbe found at subpart C, Production andHandling (General), Changes Based OnComments, item 2.

(20) We have defined ‘‘nonretailcontainer.’’ Information concerning‘‘nonretail container’’ can be found atsubpart D, Proposal Description and atAdditional Provisions, item 6.

(21) We have defined ‘‘practicestandard.’’ Practice standards have beenadded to this proposal in response tocommenter requests for more specificguidelines for measuring theperformance of an organic system ofproduction and handling. A practicestandard is a series of specificguidelines, requirements, and operatingprocedures through which a productionor handling operation implements arequired component of its organicsystem plan. For example, this proposalcontains a practice standard for soilfertility and crop nutrient managementwhich describes the tillage practices,sources and handling restrictions fornutrients, and prohibited activities thata production operation must complywith. There are specific practicestandards applicable to crop, livestock,and wild-crop production, and handlingoperations. We are also proposing toincorporate the terms of the NRCSpractice standard for a compostingfacility into the requirements of thisproposal. Additional information on‘‘practice standards’’ can be found atsubpart C, Production and Handling(General), Changes Based OnComments, item 4.

(22) We have defined ‘‘private entity’’because the term is used throughoutsubpart F to differentiate betweengovernmental (State entity) andnongovernmental (private entity)organizations providing certificationservices.

(23) We have defined ‘‘production lotnumber.’’ Information concerning‘‘production lot number’’ can be foundat subpart D, Proposal Description andat Additional Provisions, item 6.

(24) We have defined ‘‘residuetesting’’ because the term is used

throughout the inspection and Testing,Reporting, and Exclusion from Saleportion of subpart G.

(25) We have defined ‘‘retail foodestablishment.’’ Information on ‘‘retailfood establishment’’ can be found insubpart B, Applicability, ProposalDescription and Additional Provisions,item 2.

(26) We have defined ‘‘sewagesludge.’’ This term has been added anddefined as synonymous with‘‘biosolids’’ to incorporate theEnvironmental Protection Agency’sregulatory language for this category ofmaterials. Information concerning‘‘sewage sludge’’ can be found atsubpart C, Crop Production, ChangesBased On Comments, item 1.

(27) We have defined ‘‘State entity.’’This proposal provides for theaccreditation of domestic, tribalgovernment, and foreign governmentalsubdivisions that provide certificationservices. We refer to such an entity inthis proposal as a ‘‘State entity.’’Additional information on ‘‘Stateentity’’ can be found at subpart F,Changes Based On Comments, item 1.

(28) We have defined ‘‘tolerance.’’Information concerning ‘‘tolerance’’ canbe found at subpart G, Inspection andTesting, Reporting, and Exclusion fromSale, Proposal Description and atChanges Based On Comments, item 2.

Subpart B—ApplicabilityThis subpart provides an overview of

what has to be certified under theNational Organic Program (NOP),describes exemptions and exclusionsfrom certification, addresses use of theterm, ‘‘organic,’’ and addressesrecordkeeping by certified productionand handling operations.

Proposal DescriptionExcept for exempt and excluded

operations, each production or handlingoperation or specified portion of aproduction or handling operation thatproduces or handles crops, livestock,livestock products, or other agriculturalproducts that are intended to be sold,labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients)’’ must becertified. Certified operations must meetall applicable requirements of theseregulations.

Certifying agents will begin theprocess of certifying organic productionand handling operations to the nationalstandards upon receipt of theiraccreditation from the Administrator.All production and handling operationscertified by an accredited certifyingagent will be considered certified to thenational standards until the certified

operation’s anniversary date ofcertification. We are providing thisphase-in procedure for production andhandling operations certified by newlyaccredited certifying agents because webelieve that such certifying agents will,upon publication of the final rule,demonstrate their eligibility foraccreditation by applying the nationalstandards to the certification andrenewal of certification of their clients.We are also providing this phase-inprocedure to provide relief to certifiedoperations which would otherwise haveto be certified twice within a 12-monthperiod (prior to their certifying agent’saccreditation and again following theircertifying agent’s accreditation). Thisrelief will only be available to thosecertified operations certified by acertifying agent that receives itsaccreditation within 18 months from thedate of publication of the final rule. Weanticipate that certifying agents andproduction and handling operationswill move as quickly as possible tobegin operating under the nationalorganic standards. We are providing thissubstantial phase-in period becauseaccredited certifying agents will have toschedule on-site inspections aroundvarying growing seasons and becausecertifying agents and production andhandling operations will need time toadapt to the new national organicstandards.

Exempt and Excluded Operations.This regulation establishes severalcategories of exempt or excludedoperations. Exempt operations derivetheir exemption from the Act whileexcluded operations are excluded as aresult of a Departmental policy decision.An exempt or excluded operation doesnot need to be certified. However,operations that qualify as exempt orexcluded operations may elect to applyfor certification. A production orhandling operation that is exempt orexcluded from obtaining certificationstill must meet other regulatoryrequirements contained in this rule asexplained below.

Exempt Operations. (1) A productionor handling operation that has $5,000 orless in gross agricultural income fromorganic sales annually is exempt fromcertification and does not need tosubmit an the organic system plan toanyone for acceptance or approval.However, an exempt producer orhandler must comply with the labelingrequirements of § 205.309 and theorganic production and handlingrequirements applicable to its type ofoperation. For example a producer oforganic vegetables, that performs nohandling functions, would have tocomply with the labeling requirements



of § 205.309 and the applicableproduction requirements in §§ 205.202through 205.207. The labeling andproduction and handling requirementsprotect the integrity of organicallyproduced products.

(2) A retail food establishment orportion of a retail food establishmentthat handles organically producedagricultural products but does notprocess them is exempt from all of therequirements in these regulations.

(3) A handling operation or portion ofa handling operation that handlesagricultural products containing lessthan 50 percent organic ingredients bytotal weight of the finished product(excluding water and salt) is exemptfrom the requirements in theseregulations, except the recordkeepingprovisions of § 205.101(c); theprovisions for prevention of contact oforganic products with prohibitedsubstances in § 205.272; and thelabeling regulations in § 205.309. Therecordkeeping provisions maintain anaudit trail for organic products. Theprevention of contact with prohibitedsubstances and the labelingrequirements protect the integrity oforganically produced products.

(4) If a handling operation or portionof a handling operation that handlesagricultural products containing at least50 percent organic ingredients byweight (excluding water and salt) doesnot use the word, ‘‘organic,’’ on anypackage panel other than theinformation panel, it is exempt from therequirements in these regulations,except the recordkeeping provisions of§ 205.101(c); the provisions forprevention of contact of organicproducts with prohibited substances asprovided in § 205.272; and the labelingregulations in § 205.309. Therecordkeeping provisions maintain anaudit trail for organic products. Theprevention of contact with prohibitedsubstances and labeling requirementsprotect the integrity of organicallyproduced products.

As noted above, exempt handlingoperations producing multiingredientproducts must maintain records asrequired by § 205.101(c). This wouldinclude records sufficient to: (1) provethat ingredients identified as organicwere organically produced and handled,and (2) verify quantities produced fromsuch ingredients. Such records must bemaintained for no less than 3 years andthe operation must allowrepresentatives of the Secretary and theapplicable State program’s governingState official access to the recordsduring normal business hours forinspection and copying to determine

compliance with the applicableregulations.

Excluded Operations. (1) A handlingoperation or portion of a handlingoperation that sells organic agriculturalproducts labeled as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients)’’ that arepackaged or otherwise enclosed in acontainer prior to being received oracquired by the operation, remain in thesame package or container, and are nototherwise processed while in thecontrol of the handling operation isexcluded from the requirements in theseregulations, except for the provisions forprevention of commingling and contactof organic products with prohibitedsubstances in § 205.272. Therequirements for the prevention ofcommingling and contact withprohibited substances protect theintegrity of organically producedproducts.

This exclusion will avoid creating anunnecessary barrier for handlers whodistribute nonorganic products and whowant to offer a selection of organicproducts.

(2) A retail food establishment orportion of a retail food establishmentthat processes or prepares, on thepremises of the retail foodestablishment, raw and ready-to-eatfood from certified agricultural productslabeled as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients)’’ is excludedfrom the requirements in theseregulations, except for the provisions forprevention of contact of organicproducts with prohibited substances asprovided in § 205.272; and the labelingregulations in § 205.309. The preventionof commingling and contact withprohibited substances and labelingrequirements protect the integrity oforganically produced products.

Excluded retail food establishmentsinclude restaurants; delicatessens;bakeries; grocery stores; or any retailoutlet with an in-store restaurant,delicatessen, bakery, salad bar, or othereat-in or carry-out service of processedor prepared raw and ready-to-eat food.

We have excluded such retail foodestablishments because comments to thefirst proposal concerning the issue ofcertification of retail foodestablishments were completelydivergent. Comments ranged from thecertification of all retail foodestablishments to exclusion of all retailfood establishments. There is clearly agreat deal of public concern regardingthe handling of organic products byretail food establishments. Somedayretail food establishments may besubject to regulation under this NOP.

Any such regulation would be precededby rulemaking with an opportunity forpublic comment. Our exclusion of retailfood establishments from this proposaldoes not prevent a State fromdeveloping an organic retail foodestablishment certification program orotherwise regulating retail foodestablishments that prepare, package, orprocess organic agricultural products.

No retailer, regardless of thisexclusion and the exceptions found inthe definitions for ‘‘handler’’ or‘‘handling operation,’’ may sell, label, orprovide market information on aproduct unless such product has beenproduced and handled in accordancewith the Act and these regulations. Anyretailer who knowingly sells or labels aproduct as organic, except inaccordance with the Act and theseregulations, will be subject to a civilpenalty of not more than $10,000 underthis program. Such retailer may also besubject to enforcement actions andpenalties under Federal statutes andtheir implementing regulationsadministered by other agencies of theFederal government.

Recordkeeping Requirements forCertified Operations. A certifiedoperation must maintain recordsconcerning the production and handlingof agricultural products that are sold,labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients)’’sufficient to demonstrate compliancewith the Act and regulations. Suchrecords must be adapted to theparticular business that the certifiedoperation is conducting, fully discloseall activities and transactions of thecertified operation in sufficient detail tobe readily understood and audited, bemaintained for not less than 5 yearsbeyond their creation, and be sufficientto demonstrate compliance with the Actand regulations. Certified operationsmust make the records required by thisregulation available for inspection andcopying by authorized representatives ofthe Secretary, the applicable Stateprogram’s governing State official, andthe certifying agent. Access to suchrecords must be provided during normalbusiness hours.

Examples of Records. Each exempt,excluded, and certified operationshould maintain the records whichdemonstrate compliance with the Actand the regulations applicable to it andwhich it believes establish an audit trailsufficient to prove to the Secretary, theapplicable State program’s governingState official, and the certifying agentthat the exempt, excluded, or certifiedoperation is and has been in compliancewith the Act and regulations.



Examples of records include:Application and supporting documentsfor certification; organic system planand supporting documents; purchasedinputs, including seeds, transplants,livestock, and substances (fertilizers,pesticides, and veterinary biologicsconsistent with the livestock provisionsof subpart C), cash purchase receipts,receiving manifests (bills of lading),receiving tickets, and purchase invoices;field records (planting, inputs,cultivation, and harvest); storage records(bin register, cooler log); livestockrecords, including feed (cash purchasereceipts, receiving manifests (bills oflading), receiving tickets, purchaseinvoices, copies of grower certificates),breeding records (calendar, chart,notebook, veterinary documents),purchased animals documentation (cashpurchase receipts, receiving manifests(bills of lading), receiving tickets,purchase invoices, copies of growercertificates), herd health records(calendar, notebook, card file, veterinaryrecords), and input records (cashpurchase receipts, written records,labels); producer invoice; producercontract; receiving manifests (bills oflading); transaction certificate; producercertificate; handler certificate; weightickets, receipts, and tags; receivingtickets; cash purchase receipts; rawproduct inventory reports and records;finished product inventory reports andrecords; daily inventories by lot; recordsas to reconditioning, shrinkage, anddumping; production reports andrecords; shipping reports; shippingmanifests (bills of lading); paid freightand other bills; car manifests; broker’scontracts; broker’s statements;warehouse receipts; inspectioncertificates; residue testing reports; soiland water testing reports; cash receiptjournals; general ledgers and supportingdocuments; sales journals; accountspayable journals; accounts receivablejournals; cash disbursement journals;purchase invoices; purchase journals;receiving tickets; producer and handlercontracts; cash sales receipts; cashpurchase journals; sales invoices,statements, journals, tickets, andreceipts; account sales invoices; ledgers;financial statements; bank statements;records of deposit; canceled checks;check stubs; cash receipts; tax returns;accountant’s or other work papers;agreements; contracts; purchase orders;confirmations and memorandums ofsales; computer data; computerprintouts; and compilations of data fromthe foregoing.

Request for Comment. This proposalprovides that all ingredients in amultiingredient product identified as

organic must have been produced by aproduction or handling operationcertified by an accredited certifyingagent. We are seeking comment on thefollowing question. Should handlers beallowed to identify organicallyproduced products produced by exemptproduction operations as organicingredients? Such identification wouldbe restricted to the ingredients list onthe information panel. This may providea wholesale outlet for organicallyproduced agricultural productsproduced by producers exempted fromcertification because their grossagricultural income from organic salestotals $5,000 or less annually.

Compliance with Federal Statutes andRegulations. Any agricultural productthat is sold, labeled, or represented as‘‘100 percent organic,’’ ‘‘organic,’’ or‘‘made with organic (specifiedingredients)’’ must be produced andhandled in accordance with therequirements in these regulations.Organic agricultural products must beproduced and handled in compliancewith the Federal Meat Inspection Act,the Poultry Products Inspection Act,and the Egg Products Inspection Act,concerning meat, poultry, and eggproducts; the Federal Food, Drug, andCosmetic Act; the Federal Insecticide,Fungicide, and Rodenticide Act; andany other applicable Federal statute andits implementing regulations.

Foreign Applicants. The regulationsin this part, as applicable, apply equallyto domestic and foreign applicants foraccreditation, accredited certifyingagents, domestic and foreign applicantsfor certification as organic production orhandling operations, and certifiedproduction and handling operationsunless otherwise specified.

Applicability—Changes Based onComments


(1) Exception for Handlers ServingThree or Fewer Certified Operations. Wehave removed the provision that wouldhave allowed handlers providingservices to fewer than three certifiedorganic producers to operate withoutseparate certification under the NOP(§ 205.201). Such handlers will nowhave to be certified unless otherwiseexempted or excluded from certificationunder § 205.101 of these regulations. Wehave taken this action because webelieve that the first proposal invitesproblems, such as making certain thatthe contracted handler maintainscompliance with the Act andregulations, taking enforcement actionsagainst persons violating the Act andregulations, and being equitable to all

handlers since large-volume handlingoperations may qualify for inclusionunder the provision on the basis of fewclients while small-volume handlerswould be disqualified because they havethree or more clients.

More than 100 comments werereceived, most from consumers, inopposition to the provision. Many of thecommenters erroneously interpreted theprovision as an exemption for handlersof product for less than three certifiedoperations. Most of these commentersexpressed the belief that it is a violationof the Act to allow handlers to operatethrough inclusion under anothercertified operation’s certification ratherthan through separate certificationunder the Act and regulations. Severalcommenters stated that it isunacceptable to exempt handlingoperations providing services to fewerthan three certified entities fromseparate certification. Severalcommenters stated that operations thatprocess products from a certifiedproducer should always be certified.Several State departments of agricultureand others stated that the exemption forhandlers servicing fewer than threecertified operations does not makesense. They emphasized that certifiedoperations could produce very largequantities of organic product and alarge-scale handler may contract withonly a few certified produceroperations. Therefore, they called forelimination of the exemption. A fewcommenters questioned the certifiedoperation’s ability to ensure that thecontracted handler maintainscompliance with the Act andregulations. They expressed their beliefthat the certified operation would haveno authority to maintain compliancewith the Act within a facility it neitherowns nor manages.

We never intended to exempthandlers of fewer than three certifiedoperations from certification. Rather, weproposed a means by which handlers offewer than three certified operationscould be covered under the certificationof a certified operation for which itprovides handling services.

Several of the commenters favored theprovision that any handling operationthat provides handling services to fewerthan three certified entities that produceor handle agricultural products that areor that are intended to be sold, labeled,or represented as organic or made withcertain organic ingredients would not berequired to be separately certified apartfrom the operations for which itprovides such services. However,supporters of the concept differed intheir position on the proposal. Moststated that the provision would work



only if it is made clear that a handlercan provide services to only one or twoseparate entities and qualify for theexemption and only if included in thecertifications of and inspected alongwith the entities for which the handlerwill provide the services. They furtheremphasized that all applicablestandards must be met. A fewsupporters recommended that there be acontract between the handler and thecertified operation and that the certifiedoperation be responsible for any failureof the handler to adhere to theseregulations. Another commenter statedthat, if handlers are to be exempt fromcertification, the qualifying parameterfor exemption should be based uponeconomic value similar to that forproduction operations.

Two commenters supported theproposal but wanted the fewer-than-three-certified-operations limitationremoved. One of the commenters, anonprofit agricultural organization,expressed the belief that the limitationneedlessly restricts commercial activity,invites an excessive amount ofpaperwork related to certificationapplications, and provides no greaterassurances for quality control. Thiscommenter, referring to the definition ofhandling operation at section 6502(10)of the Act, interpreted ‘‘to receive orotherwise acquire’’ as synonymous withtaking legal title to the product. Thiscommenter stated that thisinterpretation creates a distinct,verifiable threshold which clearlyidentifies those operations needing to becertified and those that do not need tobe certified. Under the commenter’ssuggested system, handlers who takelegal title to organic products assumeresponsibility for their subsequenthandling and are required to have theiroperations certified. Any handler whoworks on organic products withouttaking legal title would have his or heractivities approved and monitored bythe certifying agent responsible for theproduct when it arrived at the handler’sdoor. The commenter believes thatnoncertified handlers who wanted toserve organic customers would quicklylearn to provide the quality control andaccountability requirements whichcertifying agents expect to see.

We disagree with the commenterswho recommended removal of thefewer-than-three-certified-operationsrestriction on the grounds that theproposal to limit exemptions tohandlers contracting with fewer thanthree certified operations needlesslyrestricts commercial activity, invites anexcessive amount of paperwork relatedto certification applications, andprovides no greater assurances for

quality control. The primaryjustification given for removal of thefewer-than-three-certified-operationsrestriction is the belief that any handlerwho works on organic products withouttaking legal title would have his or heractivities approved and monitored bythe certifying agent responsible for theproduct when it arrived at the handler’sdoor. First, it is unreasonable to expectthe certifying agent to be responsible formonitoring noncertified handlers even ifthey are providing services to anoperation certified by the certifyingagent. Second, we disagree with thecommenter’s interpretation that ‘‘toreceive or otherwise acquire’’ issynonymous with taking legal title tothe product. ‘‘To receive or otherwiseacquire’’ involves the possession,control, or custody of a product. Suchpossession, control, or custody of aproduct may or may not involve thetransfer of title to the product. In otherwords, a handler may have possession,control, or custody of the product undera right derived from a certifiedoperation but not under a claim of thehandler’s title to the product.

(2) Certification for a Portion of aProduction or Handling Operation. Wehave clarified that a portion of aproduction or handling operation can becertified. We have taken this actionbecause we agree with the associationcommenter who suggested that theDepartment clarify for potentialapplicants for certification that a portionof their production or handlingoperation can be certified. The Act atsection 6506(b) authorizes thecertification of specific fields of aproduction operation or parts of ahandling operation when: (1) In the caseof a production operation or field, thearea to be certified has distinct, definedboundaries and buffer zones separatingthe land being operated through the useof organic methods from land that is notbeing operated through the use of suchmethods; (2) the operators of suchproduction or handling operationmaintain records of all organicoperations separate from recordsrelating to other operations and makesuch records available at all times forinspection by the Secretary, thecertifying agent, and the State program’sgoverning State official; and (3)appropriate physical facilities,machinery, and management practicesare established to prevent the possibilityof a mixing of organic and nonorganicproducts or a penetration of prohibitedchemicals or other substances on thecertified area. This clarification is foundat § 205.100 of this proposal.

(3) Exemption for Operations with$5000 or Less in Income. We have

clarified at § 205.101(a)(1) that theproducer and handler exemption fromcertification applies to production andhandling operations that sellagricultural products as organic butwhose gross agricultural income fromorganic sales totals $5,000 or lessannually. We have taken this actionbecause of commenter confusion overwhether the $5,000 level applied to allsales of agricultural products or justsales of organic agricultural products.This action is consistent with theposition of a State department ofagriculture, which stated that the $5,000exemption should apply to organicsales, not sales of all agriculturalproducts. The commenter believes that,as originally proposed, the regulationwould limit opportunities for organicindustry development, especially forsmall producers and other smallagribusinesses.

(4) Applicability of Regulation toExempt Operations. We have revisedthe producer and handler exemption,provided to producers and handlerswith gross agricultural income fromorganic sales totaling $5,000 or lessannually, to provide that suchoperations are exempt from certificationand do not need to submit an organicsystem plan to anyone for acceptance orapproval but must comply with therequirements for organic production andhandling and the labeling requirementsfor agricultural products produced onan exempt or excluded operation. Wehave taken this action because the firstproposal too narrowly addressed theregulatory requirements that exemptproducers must meet. Our purpose is toexempt such production and handlingoperations from the regulatory andfinancial burdens of certification but notto exempt them from the standards fororganic production and handling. Afundamental concept of this regulationis to establish a label for organic. To theextent that these entities will be usingthe term, ‘‘organic,’’ to describe theirproduct, they must be truthful. If theydon’t comply with the otherrequirements of this part, they cannottruthfully describe their product asorganic.

Several State commenters expressedthe belief that the producer exemptionwould be too difficult to enforce. Someexpressed the belief that exemptproduction operations would stillrequire monitoring to verify compliancewith organic standards. A Statedepartment of agriculture commentedthat some monitoring of uncertifiedoperations would still be needed toverify compliance with standards;otherwise there would be no guaranteethat standards would be met for



products being sold as organic. AnotherState, which expressed strongdisagreement with the producerexemption, asked how complaintsagainst such producers would bereconciled if they are exempt from theNOP and do not have to maintainrecords over a multiple-year period.This commenter stated its intent, underits State program, to require certificationof organic production operationsproducing less than $5,000 inagricultural product yearly. This samecommenter acknowledged the Federalprogram’s obligation to provide theexemption as required by section6505(d) of the Act.

A producer raised the issue of havingexempt operations provide affidavits ofcompliance with the Act andregulations except for certification. Acertifying agent made the observationthat the rule as first proposed would notpermit exempt producers, whetheroperating under an affidavit or not, tosell any of their products to a certifiedoperation for further processing unlessthey were fully certified. This certifyingagent stated that it did not believeexcluding exempt producers fromselling any of their products to acertified operation for further processingunless they were fully certified wasconsistent with the intent of the Act.

We disagree with both commenters.First, we believe that an affidavitprogram for exempt producers, opting toexercise their right to the exemption,would impose unnecessary regulationupon entities that the Act clearlyintended not to impose such regulationupon. Second, an affidavit programwould create a regulatory burden on theDepartment and certifying agents thatwould not be justified by the size ofsuch operations. We recognize, aspointed out by commenters, that someState programs currently require organicproduction operations that would beexempt under this national program toregister with the State and to complywith requirements such as filingfinancial records and maintainingrecords of production methods andsubstances used.

While we believe that an affidavitprogram is not appropriate at thenational level, we do believe that Stateswould be authorized to regulate organicoperations exempted under the NOP’s$5,000-or-less organic sales exemptionunder an approved State program.Under this proposal, producers andhandlers exempted under the NOP’s$5,000-or-less organic sales exemptionwill be exempt from the certificationregulations and will not have to submitan organic system plan to anyone foracceptance or approval but will be

required to comply with therequirements for organic production andhandling and for labeling. States mayimplement a program for monitoring theactivities of exempt production andhandling operations and enforcingcompliance with the NOP. States will bepermitted to require certification offederally exempted producers andhandlers under an approved Stateorganic certification program. TheDepartment will consider any complaintof noncompliance with theseregulations by an exempt production orhandling operation and take appropriateaction.

(5) Applicability of Federal Statutes.We have added at § 205.102(c) referenceto a production or handling operation’sresponsibility for complying with allapplicable Federal statutes and theirimplementing regulations as thosestatutes may apply to the productionand handling of agricultural products.We have made this addition as a meansof advising producers, handlers, and thepublic that these regulations do notsupersede or alter a producer’s orhandler’s responsibilities under otherFederal statutes and their implementingregulations.

A processors association urged theDepartment to advise the public in thisrule that food products produced andprocessed under the organic standardmust comply with applicable provisionsof the Federal Food, Drug, and CosmeticAct; the Federal Meat Inspection Act;the Poultry Products Inspection Act;and all other relevant statutes and theirimplementing regulations, in allrespects, especially related toadulteration and misbranding.

(6) Recordkeeping Provisions. Wehave rewritten the recordkeepingprovisions removing all references tospecific records or types of recordswhich must be maintained. In theirplace, we are requiring that certifiedoperations maintain records adapted tothe particular business that the certifiedoperation is conducting. Such recordsmust disclose all activities andtransactions of the certified operation insufficient detail as to be readilyunderstood and audited and must besufficient to demonstrate compliancewith the Act and regulations. We havetaken this action because we believethat it is impracticable to specify indetail every class of records which maybe found essential in demonstratingcompliance with the Act andregulations. Different types of certifiedproduction and handling operationswill, by the very nature of theirbusiness, be required to maintaindifferent records to establish their

compliance with the Act andregulations.

A certifying agent and a beekeepersassociation expressed support for therecordkeeping requirements in the firstproposal. The beekeeping associationemphasized the value of suchrecordkeeping in monitoring the use ofsubstances. A marketing association anda State commented that therecordkeeping period for a list ofsubstances applied to a certifiedoperation should be changed from 3 to5 years to be consistent with therequirements of section 6511(d) of theAct. A research foundation suggestedremoval of the requirement foridentifying the name and address of theperson who applies and who hasapplied any substance to any part of thefarm and any livestock or otheragricultural product. A trade associationrecommended the addition of a newparagraph addressing the recordsrequired to be maintained by cropproduction operations to establish anaudit trail. Specifically, the commenterrecommended that the new paragraphrequire that an audit trail be maintainedby all organic crop productionoperations, which records: (1) Allsources and amounts of all off-farminputs; (2) the dates, rate, method ofapplication, location, reason for use,and name and address of applicator forall off-farm inputs; (3) the dates,projected and actual yield, and harvestlocation of all crops produced by theoperation, both organic and nonorganic;(4) the dates, quantities, and locations ofall crops stored; (5) the transportsystem(s) used to distribute organiccrops; and (6) the product name, date,quantity, and buyer of all products sold,both organic and nonorganic. A Statecommenter stated that the maintenanceof records on a certified operation isimportant, but there must be restraint inrequiring redundant or irrelevantinformation. Approximately 50 retailcommenters, speaking on behalf of aproducer handler, stated that therecordkeeping requirements wereburdensome and overly complicated.

Comments indicated that there wassome concern regarding what recordshad to be maintained by certifiedoperations. Commenters wereconcerned about requiring themaintenance of the correct records forestablishing an audit trail, avoiding theretention of redundant or irrelevantrecords, and minimizing the burden andcomplexity of the recordkeeping.

We agree with the commenters whostated that the recordkeeping period fora list of substances applied should beconsistent with the 5-yearrecordkeeping requirements of the Act.



Accordingly, this proposal at§ 205.103(b)(3) requires that certifiedoperations maintain all recordsapplicable to their organic operationsfor not less than 5 years beyond theircreation. We disagree with thosecommenters who called for morespecifics relative to what records needto be maintained and agree with thosecommenters who expressed concernregarding the magnitude of recordsrequired to be maintained. Thisproposal provides each production andhandling operation with the opportunityto decide for itself what records arenecessary to demonstrate its compliancewith the Act and regulations.

(7) Exemption from Prevention ofCommingling. We have removed therequirement that a handling operationor portion of a handling operation thathandles only agricultural products thatcontain less than 50 percent organicingredients by total weight of thefinished product (excluding water andsalt) that is exempt from therequirements in this part comply withthe provision for the prevention ofcommingling. As noted in item 8 below,exempt handlers of agriculturalproducts that contain at least 50 percentorganic ingredients by weight will alsobe exempt from complying with theprovision for the prevention ofcommingling. We have taken this actionbecause the commingling of agriculturalproducts is often a part of the processingactivity. Such operations must,however, comply with all of theapplicable labeling provisions ofsubpart D including the prohibition onthe combining of organic andnonorganic forms of the sameagricultural product. In other words, thehandler must not, for example, combineorganic and nonorganic corn if corn isto be shown on the information panel as‘‘organic corn.’’

A commenter called for the removalof the requirement that an exempthandler comply with the provisions forthe prevention of commingling andcontact of organic products withprohibited substances. The commenterclaimed that requiring exempt handlersto prevent commingling of organic andnonorganic products and contact oforganic products with prohibitedsubstances is inconsistent with the Act.We do not agree. As noted above, wehave removed the prevention ofcommingling requirement because thecommingling of agricultural products isoften a part of the processing activity.We have not, however, removed therequirement for the prevention ofcontact of organic products withprohibited substances because therequirement is necessary to safeguard

the integrity of organic ingredients usedin the products being handled.

(8) Exemption for Handlers thatHandle Product Containing at Least 50Percent Organic Ingredients. We haveprovided at § 205.101(a)(4) that anyhandling operation or portion of ahandling operation that handlesagricultural products that contain atleast 50 percent organic ingredients byweight (excluding water and salt) thatchooses to not use the word, ‘‘organic,’’on any panel other than the informationpanel is exempt from the requirementsin these regulations, except theprovisions for prevention of contact oforganic products with prohibitedsubstances as set forth in § 205.272, thelabeling provisions of § 205.309, and therecordkeeping provisions of§ 205.101(c).

A commenter stated that theDepartment is required under the Act toexempt any handling operation orportion of a handling operation thatprocesses agricultural products thatcontain at least 50 percent organicallyproduced ingredients by weight(excluding water and salt). We disagreewith the commenter. Section 6505(c)(1)of the Act ties the exemption fromcertification to use of the word,‘‘organic,’’ on the principal displaypanel. The Secretary, in consultationwith the National Organic StandardsBoard (NOSB) and the Secretary ofHealth and Human Services, mayrequire certification of any operationthat chooses to use the word, ‘‘organic,’’on the principal display panel. Thisproposal provides that handlers,processing agricultural products thatcontain at least 50 percent organicallyproduced ingredients by weight(excluding water and salt), who chooseto only use the word, ‘‘organic,’’ on theinformation panel are exempt fromcertification. Handlers processingagricultural products that contain atleast 50 percent organically producedingredients by weight (excluding waterand salt) who choose to use the word,‘‘organic,’’ on any other panel, includingthe principal display panel, must becertified. Use of the word, ‘‘organic,’’ onthe principal display panel carries withit connotations in the minds ofconsumers regarding the organic natureof the product which necessitatecertification of handlers of suchproducts. Further, requiring certificationof handlers of such products isconsistent with current industrypractice.

Applicability—Changes Requested ButNot Made

This subpart retains from our firstproposal regulations on which wereceived comments as follows:

(1) Exemptions for Handlers.Commenters stated that under nocircumstances should organic handlingoperations be exempt from certification.A few environmental organizations, acertifying agent, and an industryassociation commented that the firstproposal exceeded statutory authorityby broadening the producer exemptionin section 6505(d) of the Act to apply tohandlers. An agriculture research andeducation organization stated that,while the Act does not specificallyidentify handling operations under theproducer exemption, including them isa reasonable and workableinterpretation of the Act. Thecommenter stated that the Act providesan exemption to persons who sell nomore than $5,000 annually in value ofagricultural products and it sees noreason why the exemption should notinclude handlers. This commenter alsorecommended that the NOP develop anew category of exemption of up to$10,000 for on-farm processing. Thecommenter’s recommended exemptionwould apply to value-added, made-on-site products, such as maple syrup,jams, and relishes, and would allowindividuals to combine their productionand handling exemptions.

We do not agree with thosecommenters who stated that the firstproposal exceeded statutory authority.The title of the exemption in the Act(section 6505(d)) specifically refers tosmall farmers. However, the text to theexemption provides, in full, that‘‘subpart (a)(1) shall not apply topersons who sell no more than $5,000annually in value of agriculturalproducts.’’ ‘‘Person’’ is defined in theAct as ‘‘an individual, group ofindividuals, corporation, association,organization, cooperative, or otherentity.’’ The Act defines ‘‘agriculturalproduct’’ as ‘‘any agriculturalcommodity or product, whether raw orprocessed, including any commodity orproduct derived from livestock, that ismarketed in the United States forhuman or livestock consumption.Handlers are covered by the definitionof ‘‘person’’ and ‘‘agricultural product’’and are thereby eligible for exemption.

The financial burden of certificationis no less for handlers with sales of nomore than $5,000 annually than it is forproducers with sales of no more than$5,000 annually. Therefore, since thecost of certification is the primaryreason for exempting production



operations with sales of no more than$5,000 annually, it is reasonable to alsoexempt handling operations with salesof no more than $5,000 annually.

This proposal exempts productionand handling operations that sellagricultural products as ‘‘organic’’ butwhose gross agricultural income fromorganic sales totals $5,000 or lessannually. Production and handlingoperations exempted on the basis oforganic sales of $5,000 or less annuallyare exempt from certification underSubpart E and do not need to submit anorganic system plan under § 205.201 butmust comply with the applicableorganic production and handlingrequirements of subpart C and thelabeling requirements of § 205.309.

Exemptions for production operationsand handling operations are separateexemptions. Therefore, a productionoperation that is also a handlingoperation, due to its production and saleof processed products, must qualify foreach exemption separately. The balanceof this paragraph lists exemptioneligibility examples. A productionoperation with gross agricultural incomefrom organic sales totaling $5,000 or lessannually will be exempt fromcertification as an organic productionoperation. A handling operation withgross agricultural income from organicsales totaling $5,000 or less annuallywill be exempt from certification as anorganic handling operation. Aproduction and handling operation withgross agricultural income from organicproduction sales totaling $5,000 or lessannually and organic handling salestotaling $5,000 or less annually will beexempt from certification as an organicproduction operation and fromcertification as an organic handlingoperation. A production and handlingoperation with gross agricultural incomefrom organic production sales totaling$5,000 or less annually and organichandling sales totaling more than $5,000annually will be exempt fromcertification as an organic productionoperation only. A production andhandling operation with grossagricultural income from organicproduction sales totaling more than$5,000 annually and organic handlingsales totaling $5,000 or less annuallywill be exempt from certification as anorganic handling operation only.

Products marketed by exemptproduction operations and handlingoperations cannot be represented ascertified organic or display the U.S.Department of Agriculture (USDA)organic seal. Products from exemptoperations may not be included asorganic ingredients in a multiingredientproduct produced or processed in a

certified operation. We anticipate thatthis exemption will be used primarilyby small market gardeners, hobbyists,and other small producers who sellproduce and other agricultural productsat farmers markets and roadside standsto consumers within their communities.

(2) Exceeding $5000 Limit forExemption. A few commenters,including a State, raised the concernthat an organic operation might notanticipate sales over $5,000 but couldexceed its exemption due to a bumpercrop or market price increases, puttingthe operation in violation. TheDepartment believes that once anexempted operation reaches the $5,000maximum exemption level, it iscompelled to seek certification, which itwould have to obtain and maintain if itis to continue to sell organic products.A certified organic operation, includingone which previously lost its exemptstatus, could switch from certified toexempt if its size or operations werechanged such that it no longer soldmore than $5,000 annually in value ofagricultural products.

(3) Certification of ExemptOperations. A producer interpreted‘‘exempt’’ as meaning that operationsexempted from certification could notbe certified as an organic operation.This interpretation is not correct. Anyproduction or handling operation,including an exempt operation, whichmakes application for certification as anorganic operation and meets therequirements for organic certificationmay be certified.

(4) Increasing the Statutory Limitationof $5000 for Exemption. In the firstproposal, we asked for comments as towhether the $5,000 level for exemptionfrom certification should be raised to$10,000 or to another amount and whyan increased amount would beappropriate. Suggested levels rangedfrom $2,000 to $50,000. The suggestedlevels and justifications for such levelsare not sufficiently consistent for us torecommend that Congress change the$5,000 level.

In addition, we requested data as tothe number of operations that may beexempt under the current $5,000limitation for exemption and thenumber of operations that may beexempt under any new monetaryamount suggested. Comments from thefew States responding to the request fordata as to the number of operations thatmay be exempt under the current $5,000limitation revealed that from one-thirdto one-half of organic producers in thecommenting States would be exemptunder the statutorily authorized $5,000exemption limitation.

(5) Certification of Retail Operations.A commenter said the first proposalignored retail operations which contractwith an organic farm to produce organicproducts with the store’s brand on thelabel. The commenter said the retailoperation should be certified because itis responsible if violation occurs in theorganic production or handling of thebranded product. The commenter isincorrect in suggesting that the retailerwould be held responsible for aviolation if the violation occurred at theproduction or handling facility. When aretail operation contracts for theproduction, packaging, or labeling oforganic product, it is the certifiedproduction or handling operation that isresponsible for meeting the applicableorganic production or handlingrequirements under the Act and theseregulations. If a violation occurs in theorganic production or handling of theproduct, the certified production orhandling operation retainsresponsibility for the violation even ifthe retailer’s name is on the label.

(6) Exemption for ProductsContaining Less than 50 PercentOrganic Ingredients. Severalcommenters representing States andorganic organizations opposed theexemption of a handling operation orportion of a handling operation thathandles only agricultural productcontaining less than 50 percent organicingredients. They stated that handlingoperations creating products withorganic ingredients should be certifiedregardless of the percentage of organicingredients found in the products theyproduce. These commenters stated thatexemptions from certificationundermine audit trails and consumerconfidence. Each of these commenterscalled for removal of the proposedexemption. Another commenter statedthat, if a product is less than 50 percentorganic, then it is not organic andshould not be labeled or sold as such.

We disagree with the comments.Because such products consist of lessthan 50 percent organic ingredients,handlers may only use the word,‘‘organic,’’ on the information panel ofsuch products to truthfully represent theorganic nature of the ingredients. Suchhandlers must also comply with therecordkeeping provisions of§ 205.101(c), the prevention of contactof organic products with prohibitedsubstances provisions of § 205.272, andthe labeling provisions of § 205.309.

(7) Ensuring Organic Ingredients areNot Contaminated. A commenter askedhow the Department would ensure thatorganic ingredients are notcontaminated without certification ofthe handling operation creating the final



product. Handling operations thathandle agricultural products containingless than 50 percent organic ingredientsand at least 50 percent organicingredients that are exempt fromcertification must maintain recordssufficient to: (1) Prove that ingredientsidentified as organic were organicallyproduced and handled, and (2) verifyquantities produced for suchingredients. Such operations arerequired at § 205.101(c) of this proposalto allow representatives of the Secretaryand the applicable State program’sgoverning State official access to theserecords for inspection and copyingduring normal business hours todetermine compliance with theapplicable regulations.

(8) Exclusion for Handlers thatReceive and Distribute PrepackagedProduct. Commenters raised severalissues regarding the exclusion ofhandlers who receive and distributeprepackaged organic products. At leastthree certifying agents commented thatall retailers should be certified unlessthey handle only organic product in a‘‘final, sealed retail container,’’ or ‘‘finalimpermeable containers.’’ Thecommenters are apparently seekingfurther assurance that nothing is addedto the organic product while undercontrol of a distributor or retailoperation. Because of the wide varietyof organic products and the specialneeds of some of those products,establishing restrictions on the kind ofcontainers used for transportation couldunfairly treat some products andcommodity industries. For example,some organic products may requirecontainers which ‘‘breathe’’ or allow theexchange of air and outsidetemperatures. Nonpermeable containerscould hasten spoilage of some fresh andprocessed organic products.

A few certifying agents proposed thatdistributors and trucking companieswhich transport agricultural productsalso should be certified under this part.However, such transportationoperations do not carry out thefunctions specified in the definitions forhandler and handling operations.Distributors and trucking companieshave traditionally been excluded fromrequirements of agricultural productionregulations. The Act cannot be used toregulate activities or entities beyond itsregulatory authorities. In this case, it isthe responsibility of producers,handlers, interim handlers, and retailersto meet the requirements of thisregulation by ensuring that theircontracted shippers and distributorsunderstand, respect, and protect theintegrity of the organic products theyare transporting.

An organic association requested thatproper notification of ‘‘good organichandling practices’’ be made to thetransportation, trucking, and publicwarehousing sectors to inform them oftheir responsibilities. The commenterstated that the notification shouldinclude requirements for audit trailrecords, measures needed to preventcommingling and contamination byprohibited substances. This commenterexpressed the belief that excludedhandlers should preregister and providea signed statement of acknowledgmentof the requirements. Regardingenforcement of the suggestedrequirements, this commenter statedthat enforcement of the requirementsshould be funded and administered byexisting State and Federal inspectionservices.

We acknowledge the need foreducation regarding the requirements ofthis rule as well as such issues as thehandling of organic products. The NOP,in cooperation with the NOSB, willprovide educational material to thepublic regarding the requirements ofthis rule. Such educational material willinclude good organic handling practicesmade available to the transportation,trucking, and public warehousingsectors. However, we disagree with thesuggestions calling for preregistration ofexempt and excluded handlers andenforcement of the requirements byexisting State and Federal inspectionservices. We believe the suggestionscreate a burden, on exempt andexcluded handlers, the Department, andcertifying agents, not justified by thenature of the handling performed.

(9) Seafood Products. A marketinginstitute recommended that the firstproposal be revised to address seafoodproducts in a separate seafood sectionand to include provisions that apply toseafood harvested in the wild. Thiscommenter stated that wild-caughtseafood should be allowed to be labeledas organic. A processors association alsocalled for the labeling of wild-caughtseafood as organic.

While the first proposal contained nostandards solely for aquatic animals inan organic operation, it did containprovisions applicable to theirproduction. The first proposal allowedfish and crustaceans, among otherlivestock types, to be sold, labeled, orrepresented as organic if such livestockhad been brought into an organicoperation no later than the earliestcommercially available stage of life.Several commenters suggested that themanagement of aquatic animals differssufficiently from mammals and poultryto require separate regulatoryprovisions. We concur and intend to

develop detailed practice standards forspecific aquatic animals as discussedfurther under the production andhandling subpart.

Applicability—Additional ProvisionsUpon further review of the

applicability provisions in the firstproposal, we have decided to proposethe following additions and changes.

(1) Foreign Applicants. We haveadded a new provision at § 205.104addressing applicability of theseregulations to foreign applicants. Wehave made this addition to clarify ourintent that the regulations in this partapply equally to domestic and foreignapplicants for accreditation, accreditedcertifying agents, domestic and foreignapplicants for certification as organicproduction or handling operations, andcertified organic production andhandling operations unless otherwisespecified in these regulations.

(2) New Exclusions. We haveexcluded retail food establishments thatprocess or prepare raw and ready-to-eatfood from most of the requirements inthese regulations. An excluded retailfood establishments must comply withthe requirements for the prevention ofcontact with prohibited substancesprovisions of § 205.272 and the labelingprovisions of § 205.309. We haveexcluded such retail foodestablishments because comments to thefirst proposal concerning the issue ofcertification of retail foodestablishments (restaurant, delicatessen,bakery, grocery store, or other retailoutlet) preparing, packaging, orprocessing raw and ready-to-eat organicagricultural products that are previouslylabeled as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients)’’ werecompletely divergent. The first proposalalso contained an inconsistency whichwould have required a supermarketdelicatessen to be certified but wouldhave excluded from certification arestaurant with carry-out delicatessenproducts.

As the comments discussed belowshow, there is clearly a great deal ofpublic concern regarding the handlingof organic products by retail foodestablishments. Should we decide toregulate retail food establishmentsunder the NOP, we will proceed withrulemaking and provide an opportunityfor public comment.

Our exclusion of retail foodestablishments from this proposal doesnot prevent a State from developing anorganic retail food establishmentcertification program or otherwiseregulating retail food establishmentsthat prepare, package, or process organic



agricultural products. Texas andMaryland currently have retailercertification programs.

No retailer, regardless of thisexclusion and the exceptions found inthe definitions for ‘‘handler’’ or‘‘handling operation,’’ may sell or labela product as organically produced andhandled or fix a label to or provide othermarket information concerning anagricultural product if such label orinformation implies that such product isproduced and handled using organicmethods unless such product has beenproduced and handled in accordancewith the Act and these regulations. Anyretailer who knowingly sells or labels aproduct as organic, except inaccordance with the Act and theseregulations, will be subject to a civilpenalty of not more than $10,000 underthis program. Such retailer may also besubject to enforcement actions andpenalties under Federal statutes andtheir implementing regulationsadministered by other agencies of theFederal Government.

More than 90 commenters, includingan organic association, stated that theretailer exclusion in the first proposalviolates the requirement to certify allhandling operations. The organicassociation believes that processing, asdefined in the Act, includes all thenormal culinary arts, foodmanufacturing, and packaging. All ofthese commenters, including someStates, recommended removal of theexclusion. Several commenters,including a few States, expressedconcern that exclusions fromcertification eliminate effective audittrails and undermine consumerconfidence in organic products. OneState commented that it believed retailfood establishments should be certifiedbecause they are the last handler linkfrom producer to consumer.

Several commenters stated thatretailers who receive organic producthave a high potential for loss of integrityof the organic product due to accidentalmisuse of pesticides and sanitizersduring shipping or storage and toinadvertent commingling withnonorganic product. The commentersbelieve that, even though a retailer mayonly display and sell organic product,such retailer should be certified andmonitored for compliance to ensureproper treatment of the product inshipment and storage. A State agency,however, cautioned against establishinganother burden on the organic industry.The commenter said that if sorting frombulk and repackaging into smallerpackages requires certification, thenmany small ‘‘natural food’’ retail outletswould find certification more costly

than the economic benefits of marketingorganic products. The commenter saidmany small, natural food retail foodestablishments would likely stopcarrying organic items.

A few commenters stated there is ahigh potential for fraud among retailerswho have the opportunity to repackage,mislabel, and sell nonorganic product asorganic. Therefore, they believe that allretailers must be subject to certificationor some form of oversight to assure thatthey are not mislabeling product.

A commenter representing a largeretail grocery store operation said thatgood identification procedures enableretail stores to keep organic productseparated from nonorganic productduring transportation, storage, and in-store displays. The commentercontinued that unduly rigidrequirements would be burdensome onretailers. The commenter indicated thatthe costs of certification and compliancemay outweigh the benefits of carryingorganic product.

Another commenter from a majorretail food establishment suggested thatretailers that wash and sort fresh organicproduce for display should be requiredto follow ‘‘good organic handlingpractices’’ that would establishrecordkeeping responsibilities andprevent commingling with nonorganicproducts and contamination byprohibited materials. The commentersuggested that conformance could bemaintained by existing State or localhealth inspectors or Federal inspectorswith special training in organichandling systems. However, there is noauthority in the Act to require theservices of State or local inspectors.

Another retailer stated that retailerswill comply with regulations becauseconsumers will hold retailersresponsible for deficiencies or illegalactions through the entire productionand processing chain for agriculturalproducts.

A commenter stated that, if arestaurant serves organic foods, itshould be allowed to so state. Thecommenter went on to say thatrestaurants and grocery stores have aright to state that they used organicingredients in preparing a given dish.This commenter believes thatrestaurants and grocery stores sellingorganic products, even if they preparethem, should not have to be certified. Afew commenters claimed thatprocessing, as defined in the Act,includes all culinary arts and foodmanufacturing. They stated thatrestaurants must be certified or, at thevery least, be required to keep recordsof organic foods prepared. A Statecommenter who stated that exemptions

undermine audit trails and consumerconfidence suggested that restaurantsserving organic foods be required tomaintain records showing the origin andcertification status of raw agriculturalingredients used in the restaurant’s foodproducts.

The Department routinely monitorscompliance of various food producers,handlers, distributors, and retailerswhich are regulated under a variety ofDepartmental programs. TheDepartment responds to consumercomplaints and often conductsunannounced compliance investigationsand audits of agricultural industrybusinesses. The Departmentunderstands the need for and commitsDepartmental resources to this organicprogram. In addition, oversight of theseoperations can be conducted by Stateagencies.

Subpart C—Organic Crop, Wild Crop,Livestock, and Handling Requirements

Proposal Description

This subpart sets forth therequirements with which productionand handling operations must complyin order to sell, label, or representagricultural products as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients).’’ Theproducer or handler of an organicproduction or handling operation mustcomply with all applicable provisions ofsubpart C. Any practice implemented inaccordance with this subpart mustmaintain or improve the naturalresources, including soil and waterquality, of the operation. Productionand handling operations which sell,label, or represent agricultural productsas organic in any manner and which areexempt or excluded from certificationmust comply with the requirements ofthis subpart, except for the developmentof an organic system plan.

Production and Handling (General).The Organic Food Production Act of1990 (OFPA or Act) requires that allcrop, wild crop, livestock, and handlingoperations requiring certification submitan organic system plan to theircertifying agent and, where applicable,the State organic program. The organicsystem plan is a detailed description ofhow an operation will achieve,document, and sustain compliance withall applicable provisions in the OFPAand these regulations. The certifyingagent must concur that the proposedorganic system plan fulfills therequirements of Subpart C, and anysubsequent modification of the organicplan by the producer or handler mustreceive the approval of the certifyingagent.



The organic system plan is the forumthrough which the producer or handlerand certifying agent collaborate todefine, on a site-specific basis, how toachieve and document compliance withthe requirements of certification. Theorganic system plan commits theproducer or handler to a sequence ofpractices and procedures resulting in anoperation that complies with everyapplicable provision in the regulations.Accreditation qualifies the certifyingagent to attest to whether an organicsystem plan comports with the organicstandard. The organic system plan mustbe negotiated, enacted, and amendedthrough an informed dialogue betweencertifying agent and producer orhandler, and it must be responsive tothe unique characteristics of eachoperation.

An organic system plan contains sixcomponents. First, the organic systemplan must describe the practices andprocedures used, including thefrequency with which they will be used,in the certified operation. Second, itmust list and characterize eachsubstance used as a production orhandling input. Third, it must identifythe monitoring techniques which willbe used to verify that the organic planis being implemented in a mannerwhich complies with all applicablerequirements. Fourth, it must explainthe recordkeeping system used topreserve the identity of organic productsfrom the point of certification throughdelivery to the customer who assumeslegal title to the goods. Fifth, the organicsystem plan must describe the measuresto be taken to avoid contact betweencertified production and handlingoperations and prohibited substancesand document how the operation willprevent commingling of organic andnonorganic products. Finally, theorganic system plan must contain theadditional information deemednecessary by the certifying agent toevaluate site-specific conditionsrelevant to compliance with these orapplicable State program regulations.Producers or handlers may submit aplan developed to comply with otherFederal, State, or local regulatoryprograms if it fulfills the requirementsof an organic system plan.

The first element of the organicsystem plan requires a narrative or otherdescriptive format that identifies thepractices and procedures to beperformed and maintained, includingthe frequency with which they will beperformed. Practices are tangibleproduction and handling techniquessuch as the method for applyingmanure, the mechanical and biologicalmethods used to prepare and combine

ingredients and package finishedproducts, and the measures taken toexclude pests from a facility. Proceduresare the protocols established forselecting appropriate practices andmaterials for use in the organic systemplan, such as a procedure for locatingcommercially available organicallyproduced seed. Procedures reflect thedecision-making process used toimplement the organic system plan.

By requiring information on thefrequency with which production andhandling practices and procedures willbe performed, this proposal calls for theorganic system plan to include animplementation schedule, includinginformation on the timing and sequenceof all relevant production and handlingactivities. The plan will include, forexample, information about plannedcrop rotation sequences, the timing ofany applications of organic materials,and the timing and location of soil tests.Livestock management practices mightdescribe development of a rotationalgrazing plan or addition of mineralsupplements to the feed supply. Ahandling operation might identify stepsinvolved in locating and contractingwith farmers who could produceorganic ingredients that were in shortsupply.

The second element that must beincluded in an organic system plan isinformation on the application ofsubstances to land, facilities, oragricultural products. This requirementencompasses both natural and syntheticmaterials allowed for use in productionand handling operations. For naturalmaterials which may be used in organicoperations under specific restrictions,the organic plan must detail how theapplication of the materials will complywith those restrictions. For example,farmers who apply manure to theirfields must document in their organicsystem plans how they will prevent thatapplication from contributing to watercontamination.

The third element of the organicsystem plan is a description of themethods used to evaluate itseffectiveness. Producers and handlersare responsible for identifyingmeasurable indicators that can be usedto evaluate how well they are achievingthe objectives of the operation. Forexample, production objectives could bemeasured through regular tallies ofbushels or pounds of product sold fromthe farm or in numbers of cases soldfrom a handling operation. Indicatorsthat can identify changes in quality oreffectiveness of management practicescould be relatively simple, such as theinformation contained in a standard soiltest. The specific indicators used to

evaluate a given organic system planwill be determined by the producer orhandler in consultation with thecertifying agent. Thus, if the organicsystem plan calls for improvements insoil organic matter content in aparticular field, it would includeprovisions for analyzing soil organicmatter levels at periodic intervals. Ifherd health improvement is anobjective, factors such as somatic cellcount or observations about changes inreproductive patterns might be used asindicators.

The fourth element of the organicsystem plan is a description of therecordkeeping system used to verify anddocument an audit trail, as appropriateto the operation. For each crop or wild-crop harvested, the audit trail must tracethe product from the field, farm parcel,or area where it is harvested through thetransfer of legal title. A livestockoperation must trace each animal fromits entrance into through removal fromthe organic operation. A handlingoperation must trace each product thatis handled and sold, labeled, orrepresented as organic from the receiptof its constituent ingredients to the saleof the processed product. In response toseveral comments received, thisproposal provides information, found insubpart B, § 205.103, on the recordsneeded to establish a verifiable audittrail.

The fifth element which must beincluded in an organic system planpertains to split production or handlingoperations. This provision requires anoperation that produces both organicand nonorganic products to describe themeasures used to prevent comminglingof organic and nonorganic products.This requirement addresses contact oforganic products, including livestock,organic field units, storage areas, andpackaging to be used for organicproducts, with prohibited substances.Requirements in the first proposal forinformation about the nonorganicportion of the operation have beenremoved.

We do not propose to list the specificrequirements to be included in anorganic system plan. We expect topublish a program manual to provideguidance on appropriate documentationfor the certification process. In themeantime, the accreditation processprovides an assurance that certifyingagents are competent to determine thespecific documentation they require toreview and evaluate an operation’sorganic system plan. Section205.200(a)(6) allows a certifying agent torequest additional information neededto determine that an organic systemplan meets the requirements of this



subpart. The site-specific nature oforganic production and handlingnecessitates that certifying agents havethe authority to determine whetherspecific information is needed to carryout their function.

Crop Production. Any field or farmparcel used to produce an organic cropmust have been managed in accordancewith the requirements in §§ 205.203through 205.206 and have had noprohibited substances applied to it for atleast 3 years prior to harvest of the crop.Such fields and farm parcels must alsohave distinct, defined boundaries andbuffer zones to prevent contact with theland or crop by prohibited substancesapplied to adjoining land.

A producer of an organic crop mustmanage soil fertility, including tillageand cultivation practices, in a mannerthat maintains or improves the physical,chemical, and biological condition ofthe soil and minimizes soil erosion.Crop nutrients must be budgeted andsupplied through proper use of manureor other animal and plant materials,mined mineral substances, and othersubstances approved for use under theseregulations. The producer must manageanimal and plant waste materials tomaintain or improve soil organic mattercontent in a manner that does notcontribute to contamination of crops,soil, or water by plant nutrients,pathogenic organisms, heavy metals, orresidues of prohibited substances. Rawanimal manure must either becomposted, applied to land used for acrop not intended for humanconsumption, or incorporated into thesoil at least 90 days before harvesting anedible product that does not come intocontact with the soil or soil particlesand at least 120 days before harvestingan edible product that does come intocontact with the soil or soil particles.Composted plant or animal wastematerials used for soil fertility must beproduced in compliance with theNatural Resources ConservationService’s (NRCS) Conservation PracticeStandard for a Composting Facility(Code 317). Uncomposted plant andanimal waste materials may be used toamend soil fertility. A plant or animalwaste material that has been chemicallyaltered by a manufacturing process maybe used only if it is included on theNational List of synthetic substancesallowed for use in organic production.Mined substances of low solubility maybe used as sources of crop nutrients, asmay mined substances of highsolubility, when justified by soil or croptissue analysis. Ashes of untreated plantor animal materials which have notbeen combined with a prohibitedsubstance and which are not included

on the National List of nonsyntheticsubstances prohibited for use in organiccrop production may be used to producean organic crop. Synthetic crop nutrientsupplements that appear on theNational List of allowed syntheticsubstances may be used as a source ofcrop nutrients when justified by soil orcrop tissue analysis. The producer maynot use any fertilizer that contains asynthetic substance not allowed for cropproduction on the National List or usesewage sludge. Burning crop residues asa means of disposal, except fortrimmings of perennial crops burned tosuppress the spread of disease, isprohibited.

The producer must use organicallygrown seeds, annual seedlings, andplanting stock, except that untreatednonorganic seeds and planting stockmay be used when equivalent organicvarieties are not commercially available.Seed and planting stock treated withsubstances that appear on the NationalList of synthetic substances allowed foruse in organic production may be usedwhen an organically produced oruntreated variety is not commerciallyavailable. Nonorganically producedannual seedlings may be used when atemporary variance has been establisheddue to damage caused by unavoidablebusiness interruption, such as fire,flood, or frost. Planting stock used toproduce a perennial crop may be sold asorganically produced planting stockafter it has been maintained under asystem of organic management for atleast 1 year. Seeds, annual seedlings,and planting stock treated withprohibited substances may be used toproduce an organic crop when theapplication of the substance is arequirement of Federal or Statephytosanitary regulations. Seeds, annualseedlings, or planting stock producedthrough an excluded method may not beused for organic production.

The producer is required toimplement a crop rotation, includingbut not limited to sod, cover crops,green manure crops, and catch crops.The crop rotation must maintain orimprove soil organic matter content,provide for effective pest managementin perennial crops, manage deficient orexcess plant nutrients, and controlerosion to the extent that thesefunctions are applicable to theoperation.

The producer must use preventivepractices to manage crop pests, weeds,and diseases, including but not limitedto crop rotation, soil and crop nutrientmanagement, sanitation measures, andcultural practices that enhance crophealth. Such cultural practices includethe selection of plant species and

varieties with regard to suitability tosite-specific conditions and resistance toprevalent pests, weeds, and diseases.Mechanical and biological methods thatdo not entail application of syntheticsubstances may be used as needed tocontrol pest, weed, and diseaseproblems that may occur. Pest controlpractices include augmentation orintroduction of pest predators orparasites; development of habitat fornatural enemies; and nonsynthetic,nontoxic controls such as lures, traps,and repellents. Weed managementpractices include mulching with fullybiodegradable materials; mowing;livestock grazing; hand weeding andmechanical cultivation; flame, heat, orelectrical techniques; and plastic orother synthetic mulches, provided thatthey are removed from the field at theend of the growing or harvest season.Disease problems may be controlledthrough management practices whichsuppress the spread of diseaseorganisms and the application ofnonsynthetic biological, botanical, ormineral inputs. When these practicesare insufficient to prevent or controlcrop pests, weeds, and diseases, abiological or botanical substance, or asynthetic substance that is allowed onthe National List may be used providedthat the producer evaluates andmitigates the effects of repetitive use ofthe same or similar materials onresistance and shifts in pest, weed, ordisease types. The producer must use apest, weed, or disease control substancein compliance with the FederalInsecticide, Fungicide, and RodenticideAct. Pest control substances producedthrough excluded methods areprohibited.

Any wild crop that is to be sold,labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients)’’ must beharvested from land to which noprohibited substances have beenapplied for at least 3 years prior toharvest. The wild crop must also beharvested in a manner that ensures suchharvesting or gathering will not bedestructive to the environment and willsustain the growth and production ofthe wild crop.

Livestock Production. We proposethat any livestock or edible livestockproduct to be sold, labeled, orrepresented as organic must bemaintained under continuous organicmanagement from birth or hatching,with four exceptions. Poultry or ediblepoultry products must be from animalsthat have been under continuousorganic management beginning no laterthan the second day of life. Milk or milkproducts must be from animals that



have been under continuous organicmanagement beginning no later than 1year prior to the production of suchproducts. A nonedible livestock productmust be derived from an animal that hasbeen under continuous organicmanagement beginning no later than 1year prior to the harvest of thenonedible product. Livestock used asbreeder stock may be brought from anonorganic operation into an organicoperation at any time, provided that, ifsuch livestock are gestating and theoffspring are to be organically raisedfrom birth, the breeder stock must bebrought into the organic operation priorto the last third of pregnancy.

We also propose that, should ananimal be brought into an organicoperation pursuant to this section andsubsequently moved to a nonorganicoperation, neither the animal nor anyproducts derived from it may be sold,labeled, or represented as organic.Breeder or dairy stock that has not beenunder continuous organic managementfrom birth may not be sold, labeled, orrepresented as organic slaughter stock.No organism produced with excludedmethods may be used for breedingpurposes or for the production oflivestock products intended to be sold,labeled, or represented as organic. Theproducer of an organic livestockoperation must maintain recordssufficient to preserve the identity of allorganically managed livestock and alledible and nonedible organic livestockproducts produced on his or heroperation.

We are proposing that, except for feedadditives and supplements included onthe National List of synthetic substancesallowed for use in organic livestockproduction, the total feed ration forlivestock managed in an organicoperation must be composed ofagricultural products, including pastureand forage, that are organicallyproduced. Any portion of the feed rationthat is handled must comply withorganic handling requirements. Theproducer must not use animal drugs,including hormones, to promote growthin an animal or provide feedsupplements or additives in amountsabove those needed for adequate growthand health maintenance for the speciesat its specific stage of life. The producermust not feed animals under organicmanagement plastic pellets for roughageor formulas containing urea or manure.The feeding of mammalian and poultryslaughter by-products to mammals orpoultry is prohibited. The producermust not supply animal feed, feedadditives, or feed supplements inviolation of the Federal Food, Drug, andCosmetic Act.

The producer of an organic livestockoperation must establish and maintainpreventive animal health care practices.The producer must select species andtypes of livestock with regard tosuitability for site-specific conditionsand resistance to prevalent diseases andparasites. The producer must provideorganic feedstuffs, as well as vitamins,minerals, and other supplements,sufficient to meet the animals’nutritional requirements. The producermust establish appropriate housing,pasture conditions, and sanitationpractices to minimize the occurrenceand spread of diseases and parasites.Animals in an organic livestockoperation must be maintained underconditions which provide for exercise,freedom of movement, and reduction ofstress appropriate to the species.Additionally, all physical alterationsperformed on animals in an organiclivestock operation must be conductedto promote the animals’ welfare and ina manner that minimizes stress andpain.

The producer of an organic livestockoperation must administer vaccines andother veterinary biologics as needed toprotect the well-being of animals in hisor her care. When preventive practicesand veterinary biologics are inadequateto prevent sickness, the producer mayadminister medications included on theNational List of synthetic substancesallowed for use in livestock operations.The producer may not administersynthetic parasiticides to breeder stockduring the last third of gestation if theprogeny is to be sold, labeled, orrepresented as organically produced.After administering syntheticparasiticides to dairy stock, theproducer must observe a 90-daywithdrawal period before selling themilk or milk products produced fromthe treated animal as organicallyproduced. Every use of a syntheticmedication or parasiticide must beincorporated into the livestockoperation’s organic system plan subjectto approval by the certifying agent.

We propose that the producer of anorganic livestock operation must nottreat an animal in that operation withantibiotics, any synthetic substance notincluded on the National List ofsynthetic substances allowed for use inlivestock production, or any substancethat contains a nonsynthetic substanceincluded on the National List ofnonsynthetic substances prohibited foruse in organic livestock production. Theproducer must not administer anyanimal drug, other than vaccinations, inthe absence of illness. The use ofhormones is prohibited in organiclivestock production, as is the use of

synthetic parasiticides on a routinebasis. The producer must not administersynthetic parasiticides to slaughter stockor administer any animal drug inviolation of the Federal Food, Drug, andCosmetic Act. The producer must notwithhold medical treatment from a sickanimal to maintain its organic status.All appropriate medications andtreatments must be used to restore ananimal to health when methodsacceptable to organic productionstandards fail. Livestock that are treatedwith prohibited materials must beclearly identified and shall not be sold,labeled, or represented as organic.

Under this proposal, a livestockproducer must document in his or herorganic system plan the preventativemeasures he or she has in place to deterillness, the allowed practices he or shewill employ if illness occurs, and his orher protocol for determining when asick animal must receive a prohibitedanimal drug. The standards we areproposing will not allow an organicsystem plan that envisions anacceptable level of chronic illness orproposes to deal with disease bysending infected animals to slaughter.Neither situation can be consideredconsistent with the principles of organicmanagement. The organic system planmust reflect a proactive approach tohealth management, drawing uponallowable practices and materials.Animals with conditions that do notrespond to this approach must betreated appropriately and diverted tononorganic markets.

The producer of an organic livestockoperation must establish and maintainlivestock living conditions for theanimals under his or her care whichaccommodate the health and naturalbehavior of the livestock. The producermust provide access to shade, shelter,exercise areas, fresh air, and directsunlight suitable to the species, its stageof production, the climate, and theenvironment. This requirement includesaccess to pasture for ruminant animals.The producer must also provideappropriate clean, dry bedding, and, ifthe bedding is typically consumed bythe species, it must comply withapplicable organic feed requirements.The producer must provide shelterdesigned to allow for the naturalmaintenance, comfort level, andopportunity to exercise appropriate tothe species. The shelter must alsoprovide the temperature level,ventilation, and air circulation suitableto the species and reduce the potentialfor livestock injury. The producer mayprovide temporary confinement of ananimal because of inclement weather;the animal’s stage of production;



conditions under which the health,safety, or well-being of the animal couldbe jeopardized; or risk to soil or waterquality. The producer of an organiclivestock operation is required tomanage manure in a manner that doesnot contribute to contamination ofcrops, soil, or water by plant nutrients,heavy metals, or pathogenic organismsand optimizes nutrient recycling.

Handling. This proposal permitsmechanical or biological methods to beused to process an agricultural productintended to be sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients)’’ for the purposeof retarding spoilage or otherwisepreparing the agricultural product formarket. It permits the use ofnonagricultural substances andnonorganically produced agriculturalproducts that are included on theNational List in or on a processedagricultural product intended to be sold,labeled, or represented as ‘‘organic’’ or‘‘made with organic (specifiedingredients).’’ This proposal prohibits ahandler from using ionizing radiationfor any purpose, an ingredient producedwith excluded methods, or a volatilesynthetic solvent in or on a processedagricultural product intended to be sold,labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients).’’

The practice standard for facility pestmanagement requires the producer orhandler operating a facility to usemanagement practices to prevent pests,including removing pest habitat, foodsources, and breeding areas; preventingaccess to handling facilities; andcontrolling environmental factors, suchas temperature, light, humidity,atmosphere, and air circulation toprevent pest reproduction. Permittedpest control methods includeaugmentation or introduction ofpredators or parasites for the pestspecies; mechanical or physicalcontrols, including traps, light, orsound; and nontoxic, nonsyntheticcontrols, such as lures and repellents.

This proposal permits the use of anonsynthetic biological or botanicalsubstance or any synthetic substance tocontrol facility pests if the permittedprevention and control practices are noteffective. Any substance applied mustbe used in accordance with the labelprovisions as approved by theappropriate authority, such as theEnvironmental Protection Agency (EPA)or the Food and Drug Administration(FDA). We propose that the handler ofan organic handling operation who usesany biological, botanical, or syntheticsubstance to control facility pests must

specify in the organic system plan allmeasures taken or intended to be takento prevent contact between thesubstance and any ingredient orfinished product intended to be sold,labeled, or represented as organic ormade with organic ingredients. Inaddition to these restrictions, thehandler must include in the organichandling plan an evaluation of theeffects of repetitive use of the same orsimilar materials on pest resistance andshifts in pest types.

This proposal delineates practicestandards that must be followed by anorganic handling operation to preventthe commingling of organic andnonorganic products and protect organicproducts from contact with prohibitedsubstances. An organic handlingoperation must not use packagingmaterials and storage containers or binsthat contain a synthetic fungicide,preservative, or fumigant in handling anorganic product. The operation alsomust not use or reuse any storage bin orcontainer that was previously in contactwith any prohibited substance unlessthe reusable bin or container has beenthoroughly cleaned and poses no risk ofprohibited materials contacting theorganic product.

Temporary Variances. This subpartestablishes conditions under whichoperations may receive temporaryvariances from the provisions containedin §§ 205.203 through 205.207, 205.336through 205.239, and 205.270 through205.272. The Administrator mayestablish temporary variances due tonatural disasters declared by theSecretary; unavoidable businessinterruption caused by catastrophe suchas wind, fire, hail, flooding, excessivemoisture, earthquake, or drought; or toconduct research on organic productionand handling techniques or inputs. Acertifying agent may recommend thatthe Administrator establish a temporaryvariance for unavoidable businessinterruption. The Administrator willdetermine how long a temporaryvariance will be in effect at the time itis established, subject to extension asthe Administrator deems necessary.Upon notification by the Administratorthat a temporary variance has beenestablished due to a natural disaster, acertifying agent must inform eachproduction and handling operation itcertifies within the affectedgeographical region or each individualproduction and handling operationaffected by the temporary variance.Temporary variances may not be issuedfor any practice, material, or procedurewhich is otherwise prohibited by theseregulations.

A request for issuance of a temporaryvariance, the justification for it, andmeasures to evaluate the impact of thepractice on the operation’s naturalresources must be documented in theorganic plan and approved by thecertifying agent. For example, if adrought resulted in a severe shortage oforganically produced hay, a dairyoperation might be permitted tosubstitute some nonorganic hay for aportion of the herd’s diet to preventliquidation of the herd. The producermust keep records showing the sourceand amount of the hay and update theorganic plan to describe the justificationfor the practice and a timeframe forrestoring the total feed ration to organicsources. The certifying agent might alsorequest that the plan includecontingency measures to avoid the needto resort to nonorganic feed in case ofa future shortage. A variance forexperimental purposes might be issuedto permit a crop producer to undertakeon-farm trials of small quantities of anew (but not produced with excludedmethods) crop variety that was notavailable as organic seed.

Production and Handling (General)—Changes Based on Comments

The subpart differs from our firstproposal in several respects as follows:

(1) Genetically Engineered Organisms.In the first proposal, we invited publiccomment on the use of geneticallyengineered organisms (GEO’s) or theirproducts in a system of organicproduction and handling. Specifically,we asked whether the use of GEO’s ortheir products should be permitted,prohibited, or allowed on a case-by-casebasis in organic production or handlingoperations. Hundreds of thousands ofpublic comments opposed the use ofGEO’s or their products in organicproduction or processing. In response tothese comments, this proposal prohibitsuse of genetic engineering (included inthe broad definition of ‘‘excludedmethods’’ in this proposal, based on thedefinition recommended by theNational Organic Standards Board(NOSB)) in all stages of organicproduction and handling. This proposalcontains a specific prohibition on theuse of seeds, annual seedlings andplanting stock (§ 205.204(b)), pestcontrol substances (§ 205.206(f)),organisms (§ 205.236 (b)(3)), andingredients (§ 205.270(c)(2)) producedwith excluded methods.

Products created with modernbiotechnology techniques have beentested, approved by the appropriateregulatory agencies, and can be usedsafely in general agriculturalproduction. At the same time,



consumers have made clear theiropposition to use of these techniques inorganic food production. This rule is amarketing standard, not a safetystandard. Since use of geneticengineering in the production of organicfoods runs counter to consumerexpectations, foods produced throughexcluded methods will not be permittedto carry the organic label.

We acknowledge that the broadprohibition on use of excluded methodsin organic production and handlingsystems may create complianceobstacles for organic operations andcertifying agents. For example, manycurrent certification programs allowvaccination of animals with syntheticcompounds when such treatment ismandatory. However, while many FDA-approved vaccines are now producedusing excluded methods, we areunaware of any certification programwhich has an enforcement mechanismto ensure that such substances are notused in organic production. We do notknow to what extent, if any, organiclivestock producers are currently usingvaccines produced with excludedmethods or how a prohibition on theuse of such substances would affectdevelopment of the industry.

Similarly, the prohibition on the useof excluded methods in the productionof organic foods may also presentchallenges to organic handlers andcertifying agents. This may pose aparticular problem with respect to thenonorganic ingredients ofmultiingredient products with 50-95percent organic content, to which theprohibition on use of excluded methodsalso applies. For example, it may beharder for organic food processors, whomay struggle to find sources ofnonorganic ingredients that areproduced without use of excludedmethods and for certifying agents, whomust ensure that handlers havecomplied with this requirement.

As with most elements of thisprogram, compliance monitoring andenforcement will rely on the ongoingoversight of organic operations byUSDA-accredited certifying agents,rather than on product testing.Certifying agents must approve organicplans that detail procedures andpractices to be followed by organicoperations and will review extensiverecords maintained by organicoperations to ensure that they arecomplying with the approved organicplans and the regulations.

This system of compliance assurancewill be particularly important withrespect to the prohibition on use ofexcluded methods. Producers andhandlers must be vigilant in the

acquisition of materials and products.Certifying agents should be aware ofagricultural products produced throughexcluded methods and must carefullyreview material and product origindocumentation. It will be theresponsibility of certifying agents toreview the sourcing specifications andother provisions of producer andhandler organic plans to ensure theintegrity of organic and multiingredientproducts. We anticipate that this systemof carefully reviewed and documentedorganic plans, which establishesdocumented procedures demonstratinggood faith efforts to diligently pursueand maintain the integrity of ingredientsproduced without use of excludedmethods, could satisfy the requirementsin this regulation.

With respect to the prohibition on theuse of excluded methods in productionof the nonorganic ingredients inmultiingredient products, we recognizethat the ability to meet theserequirements depends primarily onpractices used in conventionalagricultural markets. We also recognizethat practices for preserving productidentity, including segregatinggenetically engineered andnongenetically engineered products, areevolving in some conventional markets.Currently there are no consensusindustry standards for productsegregation, rather contractualagreements are used to the extentpossible. As the marketplace evolvestoward recognized best practices orstandards for product testing andsegregation, we anticipate that thesemethods and systems will become thestandards for implementing theprohibition on use of excluded methodsin production of nonorganic ingredientsin multiingredient products. Linking therequirements pertaining to nonorganicingredients in this proposal to theevolving practices within themarketplace will provide certifyingagents with a verifiable criterion againstwhich to evaluate production andhandling processes, as well as providinggreater certainty to handlers andprocessors as they seek to identifyacceptable sources of nonorganicingredients.

As with other prohibited substances,a positive detection of a product ofexcluded methods would trigger aninvestigation by the certifying agent todetermine if a violation of organicproduction or handling standardsoccurred and would not necessarilyrepresent a violation on its own. Thepresence of a detectable residue alonedoes not necessarily indicate use of aproduct of excluded methods that

would constitute a violation of thestandards.

We anticipate that these issues will beof particular interest to commenters onthe proposal, and that comments mayhelp to shed light on industrycapabilities and expectations. Werecognize that this policy will placeadditional burdens on certifiedoperations and certifying agents, but webelieve that the necessity to meet strongconsumer expectations outweighs theseconcerns.

(2) Measurable Degradation Standard.We are proposing that any practiceimplemented in accordance with therequirements for organic production andhandling must maintain or improve thesoil and water quality of the operation.This provision is a modification of therequirement in the first proposal thatthe use or application of a practice notresult in measurable degradation of soilor water quality. Some commentersstated that the concept of measurabledegradation was too limiting andreduced the holistic principles behindorganic production to an exercise in riskassessment. In introducing the conceptof measurable degradation, we statedthat its purpose was to ‘‘clarify that allmethods and substances used in anorganic operation shall be consistentwith a system of organic farming andhandling and the purposes of theOFPA.’’ As such, measurabledegradation and the specific indicatorsof soil and water quality used tomonitor it were designed as tools toevaluate compliance with the OFPA andnot as ends in themselves.

The new provision requiring that anorganic operation maintain or improveits soil and water quality retains thelinkage between production andhandling practices and the naturalresources of the operation, which is afundamental tenet of both organicproduction and the OFPA. We haveintroduced the ‘‘maintain or improve’’provision to allow for consideration ofa variety of environmental indicatorsthat contribute to the overallperformance of the operation. Both theobjective of certification—establishingan organic system of production andhandling—and the standard by which itis achieved—the requirements in thisproposal—remain constant for alloperations. The environmentalindicators used to establish and monitorcompliance with an approved organicsystem plan will depend upon the site-specific conditions of the individualoperation. For example, a producer andcertifying agent would consider the soiltypes, hydrology, other environmentalconditions and the specific nature of thecrops and livestock being produced to



determine which indicators would bestreflect the performance of the organicsystem plan. Site-specific conditions—high water table, soils that are prone toerosion—combined with the operation’sproduction practices—the use ofpersistent inputs such as copper orsulfur compounds, the type of tillagepractices used—will dictate theselection of environmental indicators.While individual indicators, especiallywhen signaling that significant changehas occurred, remain important, the‘‘maintain or improve’’ provision allowsa producer or handler and his or hercertifying agent to assume a broaderperspective in monitoring compliancewith the OFPA.

Many commenters objected to therequirement in the first proposal thatcertain production practices ‘‘not resultin a measurable degradation of the soil.’’The purpose of the ‘‘measurabledegradation’’ requirement was solely toprovide producers and their certifyingagents with quantifiable, verifiable toolswith which to evaluate compliance withthe applicable regulations. While thecurrent proposal does not refer to‘‘measurable degradation’’ in thepractice standards, producers andhandlers must identify and incorporateinto their organic system plans specifictesting and evaluation techniques tomeasure the environmental impact oftheir production practices. In manycases, this requirement could be filledwith a standard soil analysis, whichwould indicate trends in soil organiccontent, nutrient composition, andphysical properties. In other cases,chemical or biological analysis of streamwater entering and leaving a crop orlivestock operation could suffice tomonitor compliance with the practicestandards. There is no way tosubstantiate the effectiveness of thepractices and materials used in anorganic production system withoutsome form of measurable verification.Analytical procedures to monitor thecondition, over time, of an operation’sresource base are a standard feature ofefficient resource management, whetheror not the operation is organicallymanaged.

(3) Function and ContentRequirements of the Organic SystemPlan. We propose significant changes inthe function and content requirementsof the organic system plan to solidify itsrole in the relationship betweenproducer or handler and certifyingagent. Public comment on the firstproposal identified numerous perceiveddeficiencies in the provisions for anorganic system plan. Some commenters,including organic certifying agents andindustry associations, stated that the

proposed content requirements were a‘‘shadow’’ of the plan intended by theOFPA because the regulatory text didnot include the words, ‘‘management,’’‘‘rotation,’’ or ‘‘manure.’’ Somecommenters characterized the organicsystem plan in the first proposal as asimple list of materials to be used andpractices to be followed and thoughtthat it would not adequately addresswhy the producer or handler madespecific production choices. Echoing therecommendation adopted by the NOSBat its June 1994 meeting in Santa Fe,NM, other commenters suggested thateach organic system plan should berequired to include key elements oforganic production, such as soil andcrop management, resourceconservation, crop protection, andmaintenance of organic integritythrough growing, harvesting, andpostharvest operations. We fully agreewith the principle that a comprehensiveorganic system plan is an integralcomponent of a certified operation andthat it provides the foundation for theworking relationship between thecertifying agent and the producer orhandler. This proposal contains astandard that defines and characterizesan organic system of production andhandling and establishes the organicsystem plan as the centerpiece of therelationship between producer orhandler and certifying agent.

Some commenters expressed concernthat the first proposal did not link theorganic system plan to specificregulatory requirements such as propertillage, crop rotation, and manuring. Thefirst proposal did, however, requireoperations to document compliancewith all applicable standards. Theobligation to document compliance withall applicable standards was implicit inthe requirement that an organic systemplan contain a description of thepractices to be performed andmaintained to establish a system oforganic farming and handling. Aproducer or handler intending to engagein a practice must comply with thecorresponding standards and includehis or her intentions for doing so in theorganic system plan. This proposalcontains a similar provision, found in§ 205.200(a)(1), which requires adescription of the practices andprocedures used in the certifiedoperation, again, without stating thespecific standards with which theoperation must comply.

We acknowledge that, by providingthe regulatory guidance necessary toimplement the OFPA, the Secretary isfurther empowering accreditedcertifying agents to determine whetheran operation’s organic system plan

meets the requirements of the statute.The provisions for an organic systemplan in § 205.200(a)(1)–(6) outline theprerequisites for certification. Combinedwith the production and handlingstandards in §§ 205.201 through205.207, 205.236 through 205.239, and205.270 through 205.272, theserequirements provide the criterianecessary for certifying agents todetermine whether to grant certification.

For similar reasons, we propose not toinclude in this proposal a list of thespecific requirements to be included ina particular type of organic system plan.For example, while the first proposalrequired that a farm operation submitthe total acreage under organicmanagement as part of its organicsystem plan, there is no similarrequirement in this proposal. Webelieve that accredited certifying agentsare capable of determining the specificdocumentation they require to reviewan application for certification.Certifying agents are granted authorityto request the information they deemessential to the performance of theirduties. Many resources are available tocertifying agents for determining theinformation needed to makecertification decisions. The Federal-State Marketing Improvement Programof the Agricultural Marketing Service(AMS) helped fund a project (#12–25–G–0202) which created an organicinspection manual and developed awhole set of organic certification formtemplates. Among these templates aredetailed forms for organic farm,livestock, and handling system plans.AMS worked with the IndependentOrganic Inspectors Association and theOrganic Certifiers Council on thisproject and supports continuedmovement toward standardizedcertification documentation. The NOSBprovided recommendations, includingsample questionnaires, for theinformation it deems necessary forinclusion in an organic system plan.Additionally, the Organic TradeAssociation recently released theAmerican Organic Standards that drewupon broad industry involvement tocreate a detailed description of organicsystem plan requirements.

The organic system plan in the firstproposal included requirements for splitfarming operations—meaning farms thatengage in both organic and nonorganicproduction—that some commentersstated were excessive. Thesecommenters pointed out that the OFPAdoes not provide for the organic systemplan to include any production orhandling practice not consistent withthe OFPA, and that the practices on thenonorganic portion of the split-farm



would not be consistent with the Act.Based on these comments, this proposedorganic production system plan will notrequire information about a split-farm’snonorganic operations. However, thisproposal requires that a split operation,whether a production or a handlingoperation, describe the measures it istaking or will take to preventcommingling of organic and nonorganicproduct and to prevent contact oforganic products, fields, or facilitieswith prohibited substances.

(4) Regulatory Enforcement. TheNational Organic Program (NOP) willrequire consistent and effectiveenforcement of the regulations acrossdiverse crop, wild crop, livestock, andhandling operations which aredifferentiated by site-specific conditionswithin dissimilar geographic regions.The resources and objectives of eachcertified operation are unique, and theOFPA, accordingly, provides certifyingagents with criteria, not formulas, todetermine whether the practices,procedures, and inputs described in anorganic system plan constitutecompliance with the OFPA. Theflexibility implicit in this approachallows producers and handlers tochoose from a variety of production andhandling options. In addition to beingflexible, a regulatory mechanism mustbe clear, consistent, and enforceable.For this reason, producers and handlersmust document the choices they makein an organic system plan anddemonstrate a good-faith effort toimplement the plan. For example, thedecision to use an allowed syntheticpest control substance must be based onevidence that prevention andnonsynthetic pest control measures arenot adequate.

Public comment indicated that theregulatory mechanisms that wereintroduced in the first proposal,including orders of preference,performance standards, and provisionfor allowance of certain practices ‘‘ifnecessary,’’ provided producers andhandlers too much discretion inselecting materials and practices. Thesecomments indicated that insufficientoversight by certifying agents coulddilute the meaning of organiccertification. Therefore, we areproposing significant changes in theregulatory mechanisms which governproducers, handlers, and their certifyingagents in determining the materials,practices, and procedures used in anorganic operation.

One regulatory mechanism used inthe first proposal was an ‘‘order ofpreference’’ scheme for selecting organicpractices or materials employed inproduction and handling. This scheme

was proposed for a number of areas:Crop rotation; manuring practices; soilfertility and nutrient management; seedsand planting stock selection; crop pest,weed, and disease prevention andmanagement; livestock health care;selection of handling ingredients; andprevention and facility pestmanagement. There was also a generalorder of preference requirement thatmandated the use of nonsyntheticsubstances in preference to syntheticsubstances.

Comments from at least one industryassociation supported using orders ofpreference to assure that choices madeby producers and handlers will be asconsistent as possible with organicfarming and handling principles.Others, including several organiccertifying agents, felt that the conditionsfor choosing a lower order of preferencewere not specified clearly enough andcould result in inconsistent enforcementof the standards. Some commentersthought that certifying agents would beoverly burdened by having to reviewand approve the justification in theorganic plan for choosing less preferablepractices, although some stated that ifthe criteria for choosing a lower order ofpreference were clarified anddocumentation of the reasoning behindthe choice was explicitly required, thenthis scheme would be workable. Somenoted that ranking practices and inputsaccording to their suitability isanalogous to the ‘‘approved, restricted,prohibited’’ scheme which many Stateand private certification programsemploy. A few commenters expressedthe belief that establishing provisions toissue variances would address theirconcerns and provide for adequateoversight and enforcement concerningpractices, procedures, and inputs thatare considered to be acceptable but lessdesirable for organic production andhandling.

However, several commenters,including consumers and organiccertifying agents, asserted that‘‘preference’’ could be interpreted aspurely based on the personal choice orconvenience of the producer or handler.Some certifying agents indicated thatthe soil fertility order of preference wastoo complex and difficult to enforce. Anumber of consumers disliked thisconcept because it permitted somedeviation from the most desirablestandards, such as use of organicallyproduced seeds. Another commenterspeculated that this scheme could beinterpreted as establishing differentlevels of ‘‘organicness.’’ Although theseinterpretations do not reflect the intentof the first proposal, in the interest ofclarity, we have removed references to

orders of preference in the currentregulatory text. We also removed thegeneral requirement for orders ofpreference and to simplify the schemeso that it will be less burdensome forcertifying agents to enforce. Severalprovisions in this proposal, includingthe seeds and planting stock practicestandard (§ 205.204) and the crop pest,weed, and disease management practicestandard (§ 205.206) will allow lessdesirable practices or substances to beused only if the preferred alternative iseither ineffective or not commerciallyavailable. As was true of the firstproposal, justification for choosing aless desirable alternative, such asnonorganic seeds or planting stock,must be documented in the relevantorganic system plan and approved bythe certifying agent.

Several commenters, includingindustry and environmentalassociations, also took issue with theuse in the first proposal of performancestandards, which specify the requiredoutcome but not the practices that mustbe used to achieve it. The generalprovision that any practice or substanceused in an organic operation notcontribute to measurable degradation ofsoil or water quality is an example ofsuch a performance standard.Objections to the use of performancestandards referred to the nature oforganic production standards, whichfocus on the production process and notquantifiable outcomes such as pesticideresidue levels. Some of thesecommenters asserted that such amechanism would relegate organicstandards to a risk assessment model,which is not appropriate for evaluatinga system of organic management.

We agree that standards for an organicmanagement system cannot be reducedto measurable outcomes, and this wasnot the intent of the proposedperformance standards in the firstproposal. The evaluation of measurableindicators as benchmarks of the properfunctioning of a management system iscompatible with the overall requirementthat practices be implemented that areconsistent with a system of organicfarming and handling. Such indicatorshelp to determine whether a givenoperation is in compliance with theregulations. For example, the croprotation provisions in this proposal lista series of functions, including weedmanagement, that should be providedby an appropriate rotation. While thepossible types of rotation that couldachieve this objective are virtuallylimitless and could not be specificallyprescribed, recording changes in weedpopulations could document the



effectiveness of the rotation beingimplemented.

Another type of regulatory provisionemployed in the first proposal permittedthe use of certain practices orsubstances only ‘‘if necessary.’’ Thiswas proposed for the introduction ofnonorganic animals into an organicoperation, for using up to 20 percentnonorganic livestock feed, forpermitting restrictions on access bylivestock to space for movement andaccess to outdoors, and for use ofsynthetic processing aids in producingan organic processed product. Aproducer or handler was required toestablish his or her need to use aparticular practice or substance basedon site-specific circumstances. The basisfor each such decision was to be statedin the organic system plan andevaluated by the certifying agent. Manycommenters indicated that thisprovision was not appropriate because,for example, the allowance for the useof 20 percent nonorganic livestock feed,‘‘if necessary,’’ left a loophole that couldpermit an unscrupulous producer to usenonorganic feed without a valid reasonthat was consistent with the regulations.We concur that this allowance forpractices ‘‘if necessary’’ is overly vagueand have removed the provision fromthis proposal. It has been replaced bymore specific regulatory restrictions,referred to as practice standards, whichbetter reflect the recommendations ofthe NOSB.

We have addressed comments thatrequested more specific guidelines foracceptable organic practices byintroducing the concept of practicestandards. Practice standards are aseries of specific guidelines,requirements, and operating proceduresfor common agricultural practices suchas crop rotation, pest management, andcrop nutrient management. The NOSBreviewed portions of the current NRCSpractice standards for crop rotation,nutrient management, pest management,composting facilities, and cover or greenmanure crops at its Washington, DC,meeting in June 1999. NRCS practicestandards, while not public healthstandards, contain rigorous, field-testedprovisions which provide specificbenchmarks for monitoring theperformance of many required organicproduction techniques. A practicestandard can also serve as thefoundation for an even more detailedprogram manual.

For example, we are proposing thatcomposted animal and plant wastematerials which are used for soilfertility and crop nutrient managementmust be produced at a facility incompliance with the NRCS practice

standard for a Composting Facility(Code 317). This document establishesminimum acceptable requirements forthe design, construction, and operationof a composting facility. A copy of thispractice standard may be obtained fromany NRCS field office. A copy of thispractice standard may be viewed atUSDA–AMS–TMD–NOP, Room 2510—South Building; 1400 IndependenceAve., SW, Washington, DC 20250–0248.The NOP intends to publish additionalpractice standards for public commentin the Federal Register. We are alsoholding discussions with NRCS todetermine whether farming operationswhich comply with the certificationrequirements of the NOP will have theadded benefit of being able toparticipate simultaneously with NRCScost-share programs.

Incorporating NRCS practicestandards into the requirements fororganic certification introduces asignificantly greater degree of specificitythan most organic standards havepreviously contained. For example, theComposting Facility practice standardincludes specifications for facility size,moisture content of the compost pile,carbon-nitrogen ratio, and the intervalwhich certain temperatures must besustained to achieve a finished product.The practice standard also containsrestrictions on source materials whichmay make it difficult to utilize certaincategories of materials which havetraditionally been allowed in organiccompost production. Enforcing theseadditional requirements will require fargreater oversight from the certifyingagent, and expertise in this area willbecome another factor in accreditation.NRCS uses its practice standards forvoluntary cost-share programs, andorganic producers may find therequirements burdensome as an added,mandatory expense. Despite the manycomments we received criticizing theprovisions for performance standards inthe first proposal, organic certificationschemes have traditionally prescribedoutcomes and allowed producers andhandlers flexibility in selectingpractices used to achieve them.However, we received many othercomments stating that more rigorous,clearly defined regulatory mechanismswere needed to protect the integrity oforganic certification. We haveconsidered the use of NRCS practicestandards to provide clear, consistent,and verifiable guidelines for conductingessential organic production practices.We are particularly interested inreceiving specific comment on thefeasibility of using NRCS practicestandards for compost production and

how such practice standards maygenerally be used to establish organicstandards.

(5) Temporary Variances. Section205.201(b) of this proposal providesprocedures for establishing a temporaryvariance from certain requirements ofsubpart C. The temporary variance is amechanism for providing regulatoryflexibility that did not appear in the firstproposal. This mechanism is proposedin response to comments from anindustry association and severalcertifying agents who expressed theneed, in certain circumstances, to usepractices that would otherwise notcomply with the applicable practicestandard. Similar mechanisms are usedby most existing certifying agents tomake exceptions in cases of compellingneed, when there is minimal concern forcompromising the integrity of anorganic system. Temporary variancesare established from specificrequirements and not, unless specified,from all production standards. They areestablished for a determined period oftime, subject to extension as deemednecessary by the Administrator. Forexample, the Administrator could,under appropriate circumstances, waivethe requirement that a producer mustprovide livestock with a rationcomposed of 100 percent organicallyproduced feed.

Temporary variances are createdunder very specific circumstances andare subject to strong oversight by theDepartment to prevent potential abuse.This proposal contains three situationsin which the Administrator couldestablish a temporary variance. Thesesituations are: natural disasters asdeclared by the Secretary in a specificgeographical area; business interruptioncaused by wind, flood, fire, or othercatastrophic event; or for the purpose ofconducting research or trials oftechniques, varieties, or ingredientsused in organic production or handling.In the case of natural disaster declaredby the Secretary, the Administrator willestablish a temporary variance availableto all organic operations within the areadesignated as affected. For localcatastrophic events in which theSecretary does not declare a disaster, thecertifying agent is responsible formaking recommendations to theAdministrator for establishingtemporary variances. Catastrophicevents must be of a sufficient magnitudeand have a direct, immediate impactsuch that the operation could notcontinue to function without thetemporary variance. Certifying agentsare responsible for making arecommendation for a temporaryvariance in situations prompted by



research needs. Producers and handlerscannot appeal directly to theAdministrator for a temporary variancebut must make such a request throughtheir certifying agent.

Temporary variances, as proposedhere, will not extend to any practice orsubstance that is expressly prohibitedby any provision of the OFPA, theapplicable standards, these regulations,or any other Federal, State, or local lawsor regulations. For example, a variancecannot be granted for use of an organismproduced through excluded methods,for use of sewage sludge as a fertilizer,or for use of irradiation to process anorganic product or ingredient. Weexpect to provide additional guidelinesin a program manual to assist certifyingagents in evaluating how much of anallowance is appropriate, such as howmuch of the ration for which animalscould come from nonorganic sourcesunder a variance.

Production and Handling (General)—Changes Requested But Not Made


(1) Definition of ‘‘System of OrganicFarming and Handling’’. The firstproposal contained a definition of a‘‘system of organic farming andhandling’’ to provide an explicitreference point for determining whichpractices and substances wereconsistent with such a system. Severalindustry associations and certifyingagents commented that the definitionwas helpful but lacking in key concepts,such as ‘‘ecological balance,’’‘‘agroecosystem health,’’ and ‘‘biologicaldiversity.’’ Several thought thedefinition should receive greateremphasis in the regulations as areference point for the underlyingprinciples of organic production andhandling and that the NOSB’s definitionshould be used. Although weconsidered many of the conceptsdiscussed by commenters, only thescope and not the meaning of theoriginal definition has been changed.The definition in this proposal is basedon the one we developed inconsultation with the NOSB but islimited to concepts that areincorporated into the OFPA. Measuringcompliance with the component-basedmandates of the OFPA, such as fosteringsoil fertility and preventing watercontamination by manure, does notrequire criteria as far-reaching as‘‘agroecosystem health’’ or ‘‘biologicaldiversity.’’ We also took intoconsideration the costs to comply withsuch open-ended requirements anddetermined that this could be

excessively burdensome. Synergisticbenefits may be associated with organicproduction and handling systems, butthe OFPA requires only that individualcomponents of the system—soil, water,wild crop environment—be protected.Adherence to the conservation practicesfound in the individual practicestandards will result in cumulativebenefits to the agroecosystem, butproducers and handlers would havedifficulty measuring compliance at thisscale. Establishing standards thataddress individual components of anorganic farming system, such as tillagepractices and manure management, willdirectly and beneficially impact theentire ecosystem. For the purpose ofenforcement, however, we proposeretaining the component-based criteriafor evaluating a system of organicfarming and handling.

(2) Commercial Availability Standard.The first proposal allowed certainmaterials and practices, such asnonorganic seeds and nonorganic minoringredients in a product labeled organic,to be chosen if preferable alternativeswere not ‘‘commercially available.’’ Wehave retained the commercialavailability principle in this proposalbut have limited its use to theprovisions addressing the selection oforganic or untreated seeds and plantingstock. A number of producers,consumers, and certifying agentsexpressed concern that producers orhandlers not be permitted to base claimsof commercial unavailability on anyprice difference between organic andnonorganic inputs. They argued that theterm, ‘‘feasibly and economically,’’ inthe proposed definition of‘‘commercially available’’ were toovague to be enforceable. Comments froman industry association supported theuse of this concept but requested a morespecific definition that could be used toassess the economic dimension ofcommercial availability. The NOSB hasalso cited commercial availability as avalid criterion for allowing someflexibility in the choice of inputs andstated that the term is applicable to thequantity and quality of availableproduct as well as its cost.

Although commercial availability isnot defined in the OFPA, the concept iswell established within currentcertification programs and thecommercial world in general. To beconsidered commercially available, apreferred input must be known andreadily available in the sense that aproducer or handler can locate andacquire the quantity and quality ofproduct needed to sustain his or heroperation. The producer or handlermust make a good faith effort to procure

the preferred input but should not beexpected to rely on an inconsistentsupply of a necessary commodity. Wedo not provide a formula fordetermining when price differencealone is enough to justify purchase ofthe less desirable input because of themultiple factors which could affect sucha decision.

By limiting the application of thecommercial availability standard to theselection of organic or untreated seedsand planting stock, we are limiting itsuse to relatively narrow and welldefined markets. A producer mustjustify a choice based on commercialavailability when submitting an organicplan to the certifying agent, and it mustbe supported by evidence of a good-faitheffort to obtain the preferred input. Theattempt to source an input from knownsuppliers and an investigation todiscover potential new suppliersconstitute the producer’s good-faitheffort. Certifying agent approval of theorganic plan provides sufficientprotection against abuse of thisprovision. Although comments reflectedconcern that too many allowances fornonorganic inputs could dilute theintegrity of certification, the organicindustry has built its reputation whileusing the commercial availabilityexemption for sourcing certainmaterials. Certifying agent oversight canensure that it works in the NOP as well.

Production and Handling (General)—Additional Provisions

Upon further review of the provisionsin the first proposal, we have decided topropose the following additions andchanges.

(1) Dual Use of an Organic SystemPlan. Section 205.201(b) allows aproducer or handler to submit anorganic production system plandeveloped to meet the requirements ofanother Federal, State, or localregulatory program if the plan fulfillsthe applicable requirements of thissection. Government agencies may haveprograms in place that requireparticipating agricultural producers orhandlers to develop and follow amanagement plan. For example, theNRCS Environmental Quality IncentivesProgram (EQIP) requires a conservationplan. An organic production systemplan could be incorporated into such aconservation plan and fully complywith the requirements proposed in§ 205.201 of this proposal. This newprovision could reduce the paperworkburden for an operation that participatesin more than one program requiring afarm conservation plan.



Crop Production—Changes Based onComments


(1) Biosolids. The first proposalrequested public comment on thepossible use of biosolids as a means ofenhancing soil fertility on an organicagricultural operation. Ourinterpretation of the term, ‘‘biosolids,’’is synonymous with the definition ofsewage sludge contained in 40 CFR part503. In response to the comments wereceived, this proposal adds biosolids tothe list in § 205.203(e)(2) of substancesthat are specifically prohibited for usein organic production.

The first proposal reviewed somehistorical information about the Federalenforcement of biosolids use and thesteps taken by EPA, FDA, and the U.S.Department of Agriculture (USDA) toensure that biosolids are safe to use oncrops for human consumption.Comments were solicited as to whetherbiosolids should be permitted orprohibited in organic production. Thefirst proposal noted that the NOSBrecommended that biosolids should beclassified as synthetic and were notappropriate for use in organic cropproduction. The NOSB took thisposition at its 1996 meeting inIndianapolis, IN, and reaffirmed it at its1998 meeting in Ontario, CA.

We received hundreds of thousands ofcomments, virtually all of whichstrongly opposed the use of biosolids inorganic agriculture. The vast majority ofthe commenters stated that biosolidscan contain synthetic substancesprohibited in organic agriculture, suchas industrial waste, street runoffcontaining petroleum products, andhousehold waste contaminated withcleaning products, polychlorinatedbiphenyls (PCB’s) and dioxins.Commenters indicated that sewagesludge should not be allowable becauseit may contain synthetic materialsprohibited in organic production whichare not restricted under EPAregulations. Many commenters statedthat biosolids are not currently allowedin organic production and thatpermitting their use would run contraryto consumer expectations. Such anallowance would place producers at acompetitive disadvantage in domesticand international markets. Whilesewage sludge may be safely used inconventional agriculture, allowing itsuse under these standards would beinconsistent with the historicalunderstanding of organic fertilitymanagement shared by producers andconsumers. Therefore, this proposal

prohibits the use of sewage sludge inorganic production.

(2) Tillage and ConservationPractices. While no comments objectedto the inclusion of tillage andcultivation practices in the firstproposal, a few took issue with therequirement that these practices resultin ‘‘no measurable degradation’’ of soilquality. In this proposal, the concept of‘‘ no measurable degradation’’ has beenreplaced with the requirement to‘‘maintain or improve’’ soil quality. Weagree with commenters who suggest thatprevention of soil erosion is animportant consideration for theselection of tillage and cultivationmethods and have included arequirement that tillage and cultivationpractices maintain or improve thephysical, chemical, and biologicalcondition of soil and minimize soilerosion. We have removed otherreferences to preventing measurabledegradation when using plant or animalwastes in the first proposal and replacedthem with a requirement, in§ 205.203(c), that the producer managethese materials to maintain or improvesoil organic matter content in a mannerthat does not contribute tocontamination of crops, soil, or water byplant nutrients, pathogenic organisms,heavy metals, or residues of prohibitedsubstances. In accordance with severalcomments received, this provisionframes the requirement in terms ofachieving a positive outcome ratherthan avoiding a negative one. Thisproposal specifies the types ofmeasurable degradation that couldresult from improper or excessiveapplication of plant or animal wastematerials, and producers, inconsultation with the certifying agent,will identify potential problems andaddress them in the organic systemplan. The organic system plan must alsoidentify appropriate monitoringactivities to ensure that the ‘‘maintain orimprove’’ requirement is being met. Forexample, a producer who manages anon-farm composting facility might makeregular observations of the pile to checkfor leaking and periodically sample anearby stream for nitrate content.

(3) Application of Raw Manure. Thefirst proposal requested public commenton appropriate guidelines to ensure thatuse of raw animal manure would notcause contamination of food productsby pathogens that cause foodborneillness. The OFPA restricts the use ofraw manure by requiring that areasonable period of time elapsebetween its application to a cropintended for human consumption andthe harvest of that crop. This period oftime must be approved by the certifying

agent, but in no event may it be lessthan 60 days. The OFPA stipulates thatthe certifying agent determine theinterval between the last application ofraw manure and harvest of the crop toensure the safety of the crop.Furthermore, the OFPA prohibits rawmanure from being applied to any cropin a way that significantly contributes towater contamination by nitrates orbacteria. The first proposal contained anorder of preference which favored theuse of composted materials, includingmanure, as inputs for soil fertility butallowed raw manure applicationssubject to the 60-day minimumpreharvest interval contained in theOFPA.

Many public comments addressed theissue of raw manure use, and someindustry, producer, consumer, andenvironmental groups submittedsubstantial technical information. Manyof these commenters addressed thehuman health risk associated with theuse of manure in organic cropproduction. Most of these commentssuggested that a determination ofsufficient time to ensure the safety of acrop depends on soil and climateconditions, but that the 60-day periodspecified in the OFPA was notsufficient. Some commenters citedvarious amounts of time that might beconsidered safe. Other commentersstated that no interval betweenapplication and harvest could beconsidered safe and recommendedprohibiting the application of rawmanure to any crop. The NOSB hadextensive deliberations on the use ofraw manure in organic crop productionat its June 1999 meeting in Washington,DC.

The OFPA’s requirement that rawmanure be applied in a manner thatensures the safety of the crop presentsa unique regulatory challenge. We haveconsistently maintained that the NOP isfor marketing, not food safety, purposes.Organic production and handlingstandards, which are not based on riskassessment of public healthconsequences, may differ from therequirements established by agenciesthat are responsible for food safetyregulations. The OFPA’s requirementthat the application of raw manureensures the safety of the food to whichit has been applied requires the NOP tomove toward establishing a publichealth standard. This requirement isespecially challenging given that thereis no Federal oversight of theapplication of raw manure to any kindof crop nor any public health standardsto establish what constitutes safe use ofraw manure. Applications of rawmanure are a hazardous, threatening



pathogenic contamination of foodproducts, notwithstanding the use ofcomposted manure, which can carrysimilar hazards.

We have responded to the concernsregarding the application of raw manureto organically produced crops byproposing the standards contained in§ 205.203(c)(1). We propose that rawanimal manure must be composted,unless it is applied to land used for acrop not intended for humanconsumption, incorporated into the soilnot less than 120 days prior to theharvest of a product in direct contactwith the soil surface or particles, orincorporated into the soil not less than90 days prior to the harvest of a productthe edible portion of which does nothave contact with the soil surface orparticles. However, many site-specificvariables affect the viability ofpathogens in raw manure, and wecannot determine whether this standardwill be sufficient under all conditions tofulfill the safe food requirementcontained in the OFPA. We arerequesting comment on thedevelopment of more comprehensivestandards that certifying agents arecapable of enforcing. We are alsorequesting comment on how to regulatethe authority to determine the‘‘reasonable period of time’’ between thelast application of raw manure andharvest of a crop which the OFPAdelegates to the certifying agent. Giventhe need for far greater scientificunderstanding of the spread ofpathogens in raw manure, we do notconsider that certifying agents should beexpected to make the determination ofsafety.

Several comments were receivedwhich suggest that any use of rawanimal manure could jeopardize humanhealth and that the use of raw animalmanure by organic farmers therebyincreases the risk that organic foods maynot be as safe as conventionallyproduced foods. We recognize that ourknowledge of the risks from foodbornepathogens has advanced since the OFPAwas passed a decade ago, and that safetyprecautions have been strengthenedaccordingly. Therefore, we are seekingfurther guidance for developingregulations that minimize the potentialfor contamination of crops grown forhuman consumption by pathogens fromraw animal manure. This approach isconsistent with the traditional organiccertification procedures which haverestricted the use of raw manure forenvironmental as well as healthconcerns. Other Federal and Stateregulatory programs may imposeadditional requirements on the use ofraw manure in crop production which

could be applicable to organicoperations.

The first proposal required thatmanagement practices for theapplication and storage of raw manurebe implemented in a manner that doesnot significantly contribute tocontamination of water by nitrates andbacteria, including human pathogens.The use of the word, ‘‘significantly,’’ inthis provision is a direct reference to theauthorizing language in the OFPA(Section 2114(b)(2) (C)). However,commenters suggested that thislanguage implies that ‘‘insignificant’’contamination would be acceptable.This proposal requires that soilmanagement practices aim atpreventing, to the extent possible, anycontamination of water by nitrates andpathogenic bacteria.

(4) Use of Treated Seed. The firstproposal permitted the use of treatedseeds if the same variety was notcommercially available in untreatedform or if unanticipated or emergencycircumstances made it infeasible toobtain untreated seeds. In this context,‘‘treated seed’’ refers to the applicationof a pesticide to a seed prior to plantingand does not include the use of adisinfection treatment for a seed that isintended for sprouting and food use. Anumber of comments from producer andindustry groups suggested that this wasappropriate but that a producer shouldhave to choose an ‘‘equivalent’’untreated seed variety that wascommercially available. The term,‘‘equivalent,’’ indicates that two seedvarieties have similar performanceattributes, such as resistance to droughtand insects, and production traits,including yield, size, and shape of thecommodity. We agree with thisprovision because it favors anonsynthetic input over a synthetic oneand have, therefore, included it in thisproposal. We are also requiring that,when selecting a nonorganicallyproduced seed, a producer select anuntreated equivalent variety inpreference to one which has beentreated with an allowed synthetictreatment.

Some comments objected to anyallowance for the use of treated seeds orplanting stock, citing the prohibition in2109(c)(3) of the OFPA (7 U.S.C.6508(c)(3)) on the use of transplants thatare treated with any synthetic orprohibited material. We recognize thatthe use of synthetic seed treatments,some of which are acutely toxic, mayseem inconsistent with a system oforganic production and handling, but itis an established practice in State andprivate certification programs and issupported by provisions of the OFPA.

We believe that retention of thecommercial availability requirement, apreference for untreated, nonorganicallyproduced seed over treated,nonorganically produced seed, and theuse of temporary variances in thisproposal provide an appropriate contextfor regulating the use of synthetic seedtreatments.

The requirement from the firstproposal that all seeds, annualseedlings, and planting stock beorganically produced is retained in thisproposal. Similarly, this proposalcontains a comparable exception to therequirement so that nonorganicallyproduced seeds and planting stockcould be used to produce an organiccrop when an equivalent organicallyproduced variety is not commerciallyavailable. A producer’s decision to usenonorganically produced seeds andplanting stock for reasons of commercialnonavailability of equivalent organicvarieties must be included in his or herorganic plan and agreed to by thecertifying agent. We decided to retainthese provisions from the first proposalafter receiving comments from producerand industry groups that acknowledgedthat the supplies of organic farm inputswill not be sufficient to provide for theseed and planting stock needs of allorganic operations in the near future.We have added the requirement thatproducers select equivalent untreatedseed over treated seed when commercialavailability allows them to use anonorganically produced variety. Werecognize that these provisions couldlead to certifying agents facingnumerous decisions regardingcommercial availability and equivalencyin the organic system plans they review.This degree of oversight is warranted,however, to ensure that the use ofsynthetic materials in organicproduction is kept to a minimum. Weare not extending the commercialavailability exception to therequirement for organically producedannual seedlings because the commentsindicated that the organic inputsuppliers are effectively meeting thisdemand.

In contrast to the first proposal, wepropose that any synthetic seedtreatment used in organic productionmust be included on the National Listof synthetic substances allowed for usein organic production. We base thisrequirement on the OFPA, whichidentifies ‘‘treated seed’’ as a category ofsynthetic substances eligible forinclusion on the National List. Webelieve that including specific seedtreatments on the National List willsatisfy the requirement in the OFPA thata farmer shall not apply a material to or



engage in a practice on seeds orseedlings that is contrary to orinconsistent with the applicablecertification program. The approach weare proposing is also consistent withcurrent practice in the organic industry.The NOSB endorsed this approach at its1994 meeting in Santa Fe, NM, byrecommending that seed treated withsynthetic fungicides appearing on theNational List be allowed whennontreated varieties are commerciallyunavailable.

We propose that producers orhandlers may request a temporaryvariance due to unavoidable naturaldisaster in order to use nonorganicallyproduced annual seedlings. Thetemporary variance will be appropriatein instances in which an unexpectedevent such as a frost, flooding, fire, orother catastrophic event destroyed theproducer’s nontreated plantingmaterials and no organically producedreplacements are commerciallyavailable. This provision cannot be usedto compensate for mismanagement bythe producer. For example, a producerwho planted seedlings prior to therecognized frost date and lost his or hercrop to a freeze could not claim that thisdisaster was unavoidable. Thisprovision requires that the producermake all reasonable efforts to protect hisor her seeds, annual seedlings, andplanting stock before being allowed tosubstitute with treated replacements.

Some commenters cited theprohibition in section 2109(c)(3) of theOFPA against using transplants that aretreated with any synthetic or prohibitedmaterial as justification for prohibitingthe use of synthetic seed treatments.However, the statute permits the use ofseeds and seedlings treated withsubstances included on the NationalList of allowed synthetic substances.The seemingly inconsistentrequirements for seedlings andtransplants, functionally equivalentterms, have made this a difficult issueto resolve. The first proposal attemptedto reconcile these differences bydefining transplant as an annualseedling produced on an organic farmand transplanted to a field on the samefarm operation to raise an organicallyproduced crop. Many commenters feltthat distinguishing between annualseedlings which originated on and offthe operation was not a valid approach.We concur, and have removed thisdefinition, and interpret the term,’’transplant,’’ as applying to any seedlingwhich is transported and replanted,regardless of whether it originated onthe operation or not. We interpret theprohibition on using a transplant treatedwith any synthetic or prohibited

material as taking effect after theseedling has been physicallytransplanted. Therefore, the prohibitiononly applies to materials applied aftertransplanting and not to the synthetictreatment included on the National List,which may have been applied to theseed that produced the seedling.

The application of disinfectants toseeds used for sprouting represents aunique dimension of the seed treatmentissue. Raw sprouts pose a potential foodsafety risk because the conditions underwhich they are produced—growingtime, temperature, water activity, pHand nutrient content—can foster therapid growth of bacteria. In 1999, FDAissued guidance advising sproutproducers and seed suppliers ofmeasures to reduce microbial hazardscommon to sprout production. Thesemeasures include treating seeds withone or more approved methods such aspresprout soaking with 20,000 ppmcalcium hypochlorite. Based on therecommendation of the NOSB, theSecretary has included on the NationalList in this proposal three chlorinematerials to disinfect and sanitize foodcontact surfaces. However, thesematerials carry the annotation thatresidual chlorine levels in water shallnot exceed the maximum residualdisinfectant limit under the SafeDrinking Water Act, which is wellbelow the 20,000 ppm level that FDAcurrently advises sprout producers tofollow.

Existing State and private certificationprograms have diverged in theirresponse to the FDA guidance onchlorine treatments. While treating foodproducts with high concentrations ofchlorine has traditionally beenprohibited, some certifying agentscurrently allow sprout treatment at the20,000 ppm level. Producers of organicsprouts are finding it increasinglydifficult to balance the FDA guidance,the expectations of consumers, and therequirements of their certifying agents.This proposal contains no specificguidance on the use of chlorinetreatments on seeds used in sproutproduction. As synthetic compounds,chlorine materials would have to beadded to the National List at specifiedconcentrations to be used fordisinfecting sprouts. Without a specificNational List exemption, operations thattreat sprouts at the level established inthe FDA guidance could not beorganically managed.

(5) Crop Rotation. The OFPA requiresan organic crop production plan tofoster soil fertility through practices thatinclude a crop rotation. The firstproposal required the establishment of acrop rotation or other ‘‘means’’ of

ensuring soil fertility and effective pestmanagement but did not provideexplicit restrictions concerningsituations in which those means couldbe substituted. Producers and producergroups sent many comments stressingthe importance of a proper crop rotationfor successful organic crop productionand objecting to the vague allowance forother methods to be used in its place.Although we have not changed thedefinition of crop rotation from the firstproposal, the new practice standardeliminates the possibility that anorganic producer will substitute someother practice for a crop rotation. Thisproposal does, however, allow forvariances from an approved croprotation plan due to natural disasters,including weather.

A few commenters made the pointthat, although the OFPA includes aprovision for a crop rotation as a meansof improving soil fertility, a croprotation serves other critical functionsas well. We reviewed the NRCS practicestandard for crop rotation (Code 328)which addresses many of the concernsraised in public comment. Accordingly,§ 205.205 of this proposal requires theproducer to implement a crop rotation,including, but not limited to, covercrops, sod, green manure crops, alleycrops, and catch crops. Thesetechniques serve the following functionsas applicable to the operation: maintainor improve soil organic matter content;provide for effective pest managementin annual and perennial crops; managedeficient or excess plant nutrients;provide erosion control to minimize soilloss; and manage subsurface water toprevent transport of dissolved materials.

A few comments suggested requiringthat rotation plans include sod orlegumes, which serve to improve soilorganic matter content and increase soilnitrogen supplies to meet the demandsof a following crop. However, all ofthese functions could be fulfilledthrough many different types of rotationplans, which could only be developedaccording to the site-specific climate,soil type, and type of crops or livestockproduced on a given operation. In theinterest of flexibility, therefore, thisproposal does not specify what cropshave to be included in a crop rotation.An organic plan that meets the criteriaspecified in this proposal must bedeveloped by a producer and approvedby the certifying agent.

Proposed § 205.205(b) specificallyapplies to perennial crops. Under thisprovision, an orchard plan mightinclude establishment of hedgerowareas that provide habitat for beneficialinsects to assist in effective pestmanagement. This provision was added



in response to comments stating that anorganic farm plan should address thefunctions provided by crop rotationseven in the case of perennial crops suchas orchards and sod. We expect todevelop program manuals containingmore detailed information on differenttypes of rotations, including methods tofulfill the prescribed functions forperennial crops, that are suitable to awide range of types of operations andgeographic conditions.

(6) Prohibition on Cytotoxic PestControl Substances. In response toseveral comments, we have deleted theprovision in the first proposal toprohibit use of a synthetic carbon-basedsubstance having a cytotoxic mode ofaction for any use as a pest controlsubstance. Some commentersinterpreted this provision to mean thatthis single criterion would substitute forthose specified in the OFPA forevaluating substances proposed forinclusion on the National List. Othercommenters, including industry groups,objected to this provision because it hasnot previously been part of certificationstandards and its meaning was tooambiguous. Some substances that havehistorically been accepted for organicproduction could have cytotoxic effectswhen used in inappropriateconcentrations. Although this provisionadded to and did not replace theevaluation criteria contained in theOFPA and eliminated the need for theNOSB to review clearly inappropriatesubstances, it has been removed fromthis proposal in the interest of clarity.

Crop Production—Changes RequestedBut Not Made


(1) Buffer Zones. Section 205.202(a)(3)of this proposal requires that any landon which organic crops are producedhave distinct, defined boundaries andbuffer zones, such as runoff diversions,to prevent the unintended exposure ofthe crop to prohibited substances fromadjoining land. Several commenterssuggested that the regulations shouldspecify a minimum size for buffer zones,as is currently required by some organiccertifying agents. Although specifying asize for these zones would establish amore definable requirement, it couldalso impose unnecessary burdens onsome organic producers without offeringgreater protection of organic fields andcrops from unintended contact withprohibited substances. Anothercommenter argued that buffer zonesshould not be required for unmanagedlands such as wilderness areas orabandoned farms. There might be no

need for a buffer zone if an organic farmwere completely surrounded bywilderness or abandoned farms, whichis one reason why a the size of a bufferzone should not be specified. Thisproposal leaves the determination of anadequate buffer zone to the organicproducer and the certifying agent on acase-by-case basis. Buffer zoneprovisions are an important part of eachorganic production system plan, and wewill provide guidelines for buffer zonesin program manuals.

(2) Nonorganic Plant and AnimalWaste Materials. The first proposalpermitted the use of any uncompostedplant or animal wastes. It also alloweduse of composted plant or animal wastesobtained from nonorganic sources, suchas commercial compost products.Several consumer and environmentalgroups objected to permitting the use ofplant or animal wastes from nonorganicsources. Such materials, they argued,could potentially contain residues ofprohibited substances that couldcompromise the integrity of the organicfarm system. However, off-farm plantand animal wastes from foodprocessing, municipal yard wastefacilities, and other sources are usedextensively in existing organicoperations and are generally permittedby organic certification programs. Bonemeal, fish meal, and seaweed meal arealso commonly used as organic farminputs. Commercial fertilizer productsthat contain mixtures of such plant andanimal by-products are commonlypermitted for use in existing organiccertification programs, subject tocertifying agent review. Using suchorganic wastes is consistent with asystem of organic production andhandling, which calls for recyclingorganic wastes to return nutrients to theland. We believe that concerns aboutpotential contaminants in plant andanimal waste materials can be addressedby the requirement in this proposal thatthese materials be managed in a mannerthat prevents such contamination. Forexample, cotton gin trash that had beentreated with a prohibited substancecould only be used if the organic systemplan specified composting the materialbefore adding it to the soil. Compostinghas been shown to effectivelybiodegrade synthetic organiccompounds, and the organic systemplan could also call for the compost orsoil to be monitored regularly forspecific residues.

Finally, the first proposal and thisproposal prohibit the use of anycommercially blended fertilizer productthat contains a prohibited substance, asrequired by the OFPA. Although anumber of commenters worried that a

product containing toxic syntheticsubstances as inert ingredients could beused for organic production, thisprohibition prevents such products frombeing used. For this reason, the use ofany composted or uncomposted plant oranimal wastes to supply soil or cropnutrient is permitted without furtherlimitation other than preventingcontamination of soil or water bypathogenic organisms, heavy metals, orresidues of prohibited substances. Thecertifying agent will be expected to havethe expertise to recognize materials thatmight be of concern and ensure thatthey are properly addressed in theorganic system plan. We expect toprovide additional guidelines inprogram manuals to help evaluatewhether animal manure is fullydecomposed, as well as guidelines forother types of materials to addresspotential soil or water quality concerns.We acknowledge the need to examinecarefully commercial blended fertilizersand soil amendments to ensure thatsuch products do not contain prohibitedsubstances.

(3) Chemically Altered Plant orAnimal Waste Materials. The firstproposal allowed the use of acomposted or uncomposted plant oranimal waste material that had beenchemically altered by a manufacturingprocess—such as leather meal,newspaper, and biosolids—if thematerial was included on the NationalList of allowed synthetics. Onlynewspaper was proposed for inclusionon the National List. A few commentersobjected to this allowance, althoughnewspaper is commonly permitted as amulch material or as an ingredient incompost in existing organic certificationprograms and was recommended forthis use by the NOSB. The National Listreview process offers an adequatesafeguard to ensure that other wastematerials that may be permitted in thefuture will be consistent with a systemof organic production and handling, andwe propose to retain this provision in§ 205.203(c)(5) of this proposal.

(4) Soil and Crop Mineral Nutrients.This proposal includes provisions forsupplying soil and crop mineralnutrients that are similar to those in thefirst proposal. While use of a propercrop rotation and recycled plant andanimal wastes can often provide all themineral nutrients required by crops,supplemental sources of these nutrientsare sometimes needed. Section205.203(d) of this proposal permits aproducer to supply soil and cropnutrients through use of mined mineralsand other nonsynthetic sources.Synthetic micronutrients are alsoallowed if they are included on the



National List. Ash from plant or animalmaterials can be used, as long as theburned material was not treated orcombined with a prohibited substanceand was not included on the NationalList of prohibited nonsyntheticsubstances. For example, ashes fromtreated wood or incinerator ash are notpermitted, nor is ash from manure,which is on the National List ofprohibited nonsynthetics. Theprohibition of burning crop residues onthe farm in the first proposal has beenretained, but an exception for burningtrimmings of perennial crops to controldiseases has been added in response toan NOSB recommendation.

Commenters raised no objection to theproposed allowance for mineralsubstances of low solubility, includinglime, greensand (glauconite), and rockphosphate, which have traditionallybeen permitted in organic certificationprograms. However, numerousproducers and certifying agentsexpressed concern about the allowancefor use of mined mineral substances ofhigh solubility or salinity. Theseinclude substances such as sodium(Chilean) nitrate or potassium nitrate(niter), potassium chloride (muriate ofpotash), langbeinite (sulfate of potashmagnesia), and potassium sulfate.Because of their potential to degradesoil quality by contributing to soilsalinization, these substances, alongwith the synthetic micronutrients thatare on the National List of allowedsynthetics, were allowed only whenused in cases of known nutrientdeficiency. Many commenters objectedto the use of sodium nitrate andpotassium nitrate in organic production,and some contested the determinationthat nonsynthetic, mined sources ofpotassium nitrate are available. Somealso objected to allowing potassiumchloride, which has traditionally beenprohibited in most organic certificationprograms. Several commenters arguedthat no highly soluble source ofnitrogen, synthetic or not, should bepermitted for application to soil in anorganic management system. Theyindicated that these materials are notpermitted in international organicstandards, and approval couldpotentially harm exports of organicproducts. The NOSB reviewed Chileannitrate in 1995 and recommendedcertain restrictions on the use of thismaterial, which is allowed withrestrictions in some existing organiccertification programs and prohibited inothers. In accordance with the NOSB’srecommendation, this proposal permitsthese materials to be used according tojustifications in the organic system plan.

More detailed guidance will beprovided in program manuals on theappropriate justifications for the use ofhighly soluble nutrient sources,including plans for discontinuing theiruse. Soil or tissue testing will be animportant aspect of justifying the needfor any such supplementation.Producers concerned aboutrequirements for export markets canrequest certification to the standardsrequired by individual contracts.

(5) Nonorganically Produced PlantingStock. The first proposal allowednonorganically produced planting stockused to produce a perennial crop to besold, labeled, or represented asorganically produced after the plantingstock had been managed on an organicoperation for a period of no less than 1crop year. This provision is authorizedby section 2107(a)(11) of the OFPA (7U.S.C. 6506(a)(11)). Some commentersthought this provision provided aloophole for indiscriminate use oftreated planting stock on an organicoperation. They argued that a producercould purchase treated nursery stockand list it as organic planting stock inthe organic plan after only 1 year.However, producer and industry groupssupported this provision as animportant stimulus to the organic inputsuppliers, since it allows a nurseryoperation to purchase planting stockfrom a nonorganic operation and laterresell this stock as organicallyproduced. The first proposal describedan organic nursery operation whichcould purchase nonorganic dwarf applerootstock and graft it with locallyadapted varieties and then sell theresulting planting stock as organicallyproduced after raising it organically forat least 1 year. We agree that thepotential benefits of this provisionoutweigh its possible abuses, and§ 205.204(d) of this proposal permitsnonorganically produced planting stockto be used as planting stock to producea perennial crop to be sold, labeled, orrepresented as organically producedafter the planting stock has been undera system of organic management for noless than 1 crop year.

(6) Pest, Weed, and Disease ControlPractice Standard. The OFPA sets forthpractices such as the use of naturalpoisons that persist in the environmentor plastic mulches that are prohibited orrestricted in the control of pests, weeds,and diseases in organic crops. It alsolists the following categories of activesynthetic pest, weed, and diseasecontrol substances that may beconsidered for exemption if they areincluded on the National List: Copperand sulfur compounds; toxins derivedfrom bacteria; pheromones; soaps;

horticultural oils; fish emulsions;treated seed; vitamins and minerals;livestock parasiticides and medications,and production aids, including netting,tree wraps and seals, insect traps, stickybarriers, row covers, and equipmentcleansers. Section 205.206 of thisproposal contains the practice standardto implement the provisions of theOFPA for synthetic pest controlsubstances.

We have made a minor modificationby eliminating one element of the orderof preference which commentersconsidered too difficult to enforce.There is no distinction made in thisproposal between pest prevention andcontrol practices in terms ofpreferability. However, a provision inthe first proposal that permittedapplication of a botanical or allowedsynthetic pest control substance only ifpreviously delineated methods wereineffective has been retained. Thisprovision is supported by publiccomments from producers, certifyingagents, and many consumers whoemphasized that such substances, whilesometimes necessary, should only bepermitted as a last resort. This provisionrequires a producer to document theneed for copper and sulfur fungicides,dormant oils, or similar materials intheir organic system plan.

(7) Wild-crop Harvesting. We receivedfew comments on the provision in thefirst proposal concerning wild-cropharvesting, and, therefore, this proposalretains similar requirements. Changingthe term for the location from whichwild crops may be harvested from‘‘land’’ to ‘‘area’’ is the only substantivedifference between the first proposaland this one. We made this change tobe consistent with the language in theOFPA. One commenter stated that mapsshould be required as part of thecertification process. A certifying agentcould reasonably require such maps toassist in evaluating the organic systemplan, but we have not made theirinclusion a requirement.

The provisions of this section applyonly to the management of wild crops.The OFPA includes ‘‘fish used for food,wild or domesticated game, or othernonplant life’’ in the definition oflivestock, and we are consideringadditional standards for animals andanimal products harvested from thewild. We received substantial publiccomment on the opportunities fordeveloping standards for marine andfreshwater aquatic animals(encompassing finfish and shellfish) andapiculture operations. Additionalcomments addressed the feasibility ofdeveloping production standards forharvesting wild terrestrial animals.



The certification of aquatic animalshas very limited precedent amongexisting certifying agents and willrequire additional dialogue beforecredible standards can be developed.The FY 2000 Agriculture, RuralDevelopment, Food and DrugAdministration, and Related AgenciesAppropriations Act provides funds forthe NOP to convene national meetingsto consider the development of organicstandards for aquatic animals. Meetingswill be held in Alaska, Alabama, andRhode Island. Simultaneously, the NOPwill be working with stakeholders fromthe aquaculture community to considerstandards for the production of farm-raised aquatic animals.

The certification of apicultureoperations has some precedent amongcertifying agents. However, due to manyunique production considerations,organic certification for apicultureoperations has been very limited. Publiccomment on the first proposal indicatedthat consensus on critical apicultureissues including forage area and pestmanagement will require considerableadditional dialogue. The NOSB hasexpressed interest in leading thediscussion of the key issues pertinent tocertification of apiculture operations.We will incorporate public participationand the NOSB’s recommendations intofuture production standards forapiculture as well as for other wildharvested livestock operations asneeded.

(8) Practice Standards for SpecialtyCrop Operations. Several organiccertifying agents and producerassociations commented that theproposed rule did not sufficiently detailprescribed practices for manyspecialized aspects of organicproduction and handling, such asmushrooms, greenhouses, andaquaculture. We concur that suchdetails are lacking, and to a certainextent, this proposal addresses that gapthrough the introduction of moredetailed practice standards. In somecases, more specific regulationsappropriate for such specializedoperations, including aquaculture,mushroom production, and greenhouseoperations, will be filled in asrecommendations are developed by theNOSB. Beyond this, the Departmentexpects to address the need for greaterspecificity through program manuals,which will provide more detailedguidance about site-specific decisions.For example, program manuals couldinclude examples of crop rotation planssuited to different geographic regions,soil conditions, and types of enterprises.Program manuals could also be used toprovide guidance about how indicators

of the condition of the natural resourcebase can be qualitatively assessed usingsimple field observations so that theimpact of site-specific practices on soiland water quality can be documented inthe organic plan.

Crop Production—AdditionalProvisions

Upon further review of the provisionsin the first proposal, we have decided topropose the following additions andchanges.

(1) Mandatory PhytosanitaryTreatment of Seeds, Seedlings, andPlanting Stock. Section 205.204(e) ofthis proposal contains a new provisionthat permits the use of treated seeds,seedlings, or planting stock in cases inwhich Federal or State phytosanitaryregulations require treatment. Forexample, some States require seedpotatoes or strawberry crowns to betreated to prevent the spread of plantdiseases. The OFPA authorizesreasonable exemptions from specificrequirements for compliance withFederal or State emergency pest ordisease treatment programs. Thisprovision is also consistent with theNOSB’s recommendation on the use oftreated planting stock.

(2) Restriction on the Use of aSynthetic Pest Control Substance. Thefirst proposal included a provision thatany use of biological or botanical pestcontrol substances or synthetic pestcontrol substances approved for use onthe National List had to be used in amanner that did not result inmeasurable degradation of soil or waterquality. This provision has beenremoved, and § 205.207(e) of thisproposal includes a new provision thatfurther restricts use of these substancesby requiring the producer to implementmeasures to evaluate and mitigate theeffects of repetitive use of the same orsimilar materials on pest resistance andshifts in pest types. This requirementcan be met by reviewing availableresearch on pest resistance to thesubstance being used and observingchanges in pest populations followingrepeated application of the substance.Public comments pointed out evidencethat nonsynthetic biological andbotanical pest control substances, ifoverused, pose concerns for inducingaccelerated resistance in pestpopulations.

Livestock Production—Changes Basedon Comments


(1) Minimum Period of OrganicManagement—Nonedible Products. Thefirst proposal established a 90-day

minimum period of organicmanagement for animals from whichnonedible products, such as wool, wereto be harvested. Many consumers andproducers said that a 90-day period wastoo short and that an animal should beunder organic management for at least 1year before a nonedible organic productcould be obtained from it. Thisrequirement is consistent with theprovision that dairy animals receive aminimum of 1 year of continuousorganic management prior to theproduction of the milk or milk productsto be sold, labeled, or represented asorganic. Therefore, this proposal hasbeen revised to state that an animalbrought into an organic operation mustbe under continuous organicmanagement for 1 year prior to theharvest of nonedible products that aresold, labeled, or represented as organic.

(2) Origin of Mammalian SlaughterStock. The first proposal allowedmammalian livestock from a nonorganicsource for the production of organicmeat if the livestock was brought into anorganic operation no later than the 15thday of life, if necessary. Public commentwas sought as to the specific conditions,such as commercial unavailability oforganic livestock or an emergencysituation, that should be a prerequisitefor allowing mammalian livestock ofnonorganic origin to be designated asorganic slaughter stock. Thousands ofcommenters, along with the NOSB,strongly opposed allowing the use ofcows, sheep, or other mammals asorganic slaughter stock if they were notorganic from birth. Most of them alsorejected allowing such practices on an‘‘if necessary’’ basis. Accordingly,§ 205.236 requires that mammalianslaughter stock be organically raisedfrom birth.

(3) Standard for Aquatic AnimalProduction. While the first proposalcontained no standards solely foraquatic animals in an organic operation,it did contain provisions applicable totheir production. The first proposalallowed fish and crustaceans, amongother livestock types, to be sold, labeled,or represented as organic if suchlivestock had been brought into anorganic operation no later than theearliest commercially available stage oflife. Several commenters suggested thatthe management of aquatic speciesdiffers significantly from mammals andpoultry and would require separateregulatory provisions. We concur andintend to develop detailed practicestandards for specific aquatic speciesthat will be published for comment andfinalized prior to the implementation ofthe NOP. Given the virtual absence ofrecognized certification programs for



aquatic operations, includingaquaculture, there are limited models onwhich to base national standards.Therefore, we must create opportunitiesfor producers, consumers, certifyingagents, and other interested parties toparticipate in the development ofpractice standards. We will hold publicmeetings in Alaska, Alabama, andRhode Island to receive comment andanticipate that the NOSB will alsoprovide recommendations.

(4) Apiculture Standard. The firstproposal allowed bees to be brought intoan organic operation at any stage of lifeand required that the predominantportion of their forage be organicallyproduced. Several commenters,including producer and industrygroups, pointed out that bees differsignificantly from other livestock typesand that the first proposal lackedsufficient details to guide honeyproducers. Many consumers stated thatthe provisions proposed for bee forage,which required only that a predominantportion of the bees’ forage be organic,were too vague and lenient. Recognizingthat the provisions in the first proposalfor certifying beekeeping operationswere inadequate, we removed thementirely from this proposal. We willreview the detailed production andhandling standards for beekeepingoperations that several certifying agentshave developed and assess thefeasibility of developing a practicestandard. The NOSB has agreed toreview and recommend an apiculturepractice standard for organic honeyproduction and hive care, including theorigin of organic bees.

(5) Organic Feed Requirement. Thefirst proposal allowed a producer to feedlivestock up to 20 percent of the totalfeed ration in a given year that was notorganically produced. Furthermore, inan emergency situation, the firstproposal allowed the Administrator toincrease the amount of nonorganic feedthat could be provided. Thousands ofcomments were received opposing anyallowance for nonorganic livestock feed,and many thought that no conditionsjustified providing any nonorganic feedto organic animals. Most producergroups, organic certifying agents, andindustry groups, however, recognizedthat eliminating all flexibility in thisregard could seriously inhibit growth ofthe organic livestock industry andreduce the availability organic livestockproducts. Several existing certificationprograms allow some use of nonorganicfeed in emergencies, in one casespecifying that up to 10 percent of thelivestock ration may be nonorganic.Commenters made it clear that thecommercial availability of certified

organic livestock feed has increasedenough to eliminate exemptions basedon availability, even in regions such asthe Northeast where supplies werepreviously difficult to obtain. The NOSBalso recommended providing anallowance for livestock to receivenonorganic feed in emergencysituations, with strict requirements fordocumentation in the organic systemplan.

Based on the public commentreceived and the recommendations ofthe NOSB, we agree that allowances forproviding nonorganic feed toorganically managed livestock should belimited to emergencies, such as fire,drought, flood, and other naturaldisasters. Accordingly, we haveremoved the provision from the firstproposal that a producer may provideup to 20 percent nonorganically raisedfeed ‘‘as necessary.’’ Exemptions foremergency use of nonorganic feed mustbe authorized by the Administratorthrough the procedures for establishinga temporary variance. Producers willwork with their certifying agents todetermine the minimum percentage ofnonorganic feed needed to supply thenutritional requirements of the livestockuntil the 100 percent organic ration canbe restored.

(6) New Dairy Herd exemption. Thefirst proposal included an exemption toallow an entire, distinct dairy herd—converted to organic management forthe first time—to be fed nonorganic feedup to 90 days prior to the production ofmilk or milk products labeled asorganic. A few producer groupssupported this allowance for a one-time,whole-herd exemption to make itfeasible for existing conventional dairyfarmers to convert to organicmanagement without incurring the costsof 100 percent organic feed for 12months prior to certification. However,in light of the strong opposition to anynonorganic feed allowance byconsumers and its inconsistency withNOSB recommendations, we haveeliminated this provision.

(7) Synthetic Feed Additives. The firstproposal prohibited the feeding ofsubstances containing synthetic aminoacid additives and synthetic traceelements to stimulate the growth orproduction of livestock. In§ 205.237(c)(2), the term, ‘‘syntheticamino acids,’’ is replaced with the term,‘‘additives,’’ which includes nutritionalsubstances other than amino acids.Some commenters stated that the term,‘‘additives,’’ more precisely reflects theintent of the OFPA, which prohibits theuse of growth stimulants. The provisionin the first proposal to permit use ofsynthetic amino acid additives to fulfill

the normal nutritional needs oflivestock is retained in § 205.237(a).

(8) Prohibition on Antibiotics. TheOFPA prohibits producers from usingsubtherapeutic doses of antibiotics.While this suggests that treatment withantibiotics at therapeutic levels isallowed, the OFPA does not containaffirmative conditions for their use. Indeveloping provisions in the firstproposal for treating livestock withantibiotics, we reviewed the NOSBrecommendations, public input receivedat NOSB meetings, testimony presentedat livestock hearings, and existing Stateand private standards. We found thatinnovative production practices andconsumer expectations had increasinglydiminished the use of antibiotics inorganic livestock since passage of theOFPA. At its 1994 meeting in Santa Fe,NM, the NOSB recommendedprohibiting the use of antibiotics in theproduction of organic slaughter stockbut allowing their use with extendedwithdrawal intervals for dairy andbreeder stock. By its Ontario, CA,meeting in 1998, the NOSBrecommended prohibiting all antibioticuse after animals were brought into anorganic operation. Other comments wereviewed favored allowing the use ofantibiotics because organic livestockmight benefit from receiving suchtreatments. Other commenters requestedthat organic producers be prohibitedfrom withholding treatment from sickanimals for economic reasons.

The first proposal permitted mammalsraised as organic slaughter stock toreceive antibiotics in the first 21 days oflife and other species to be givenantibiotics in the first 7 days of life. Therationale for allowing antibiotic use wasbased on concerns about thevulnerability of newly born or hatchedlivestock brought into an organicoperation from a nonorganic source. Thefirst proposal permitted organicslaughter stock to originate fromnonorganic sources if it was broughtunder organic management at an earlystage of life. Allowing the use of animaldrugs could be an appropriate safety netfor young organic livestock during theirfirst week of organic management. Werequested public comment on the use ofanimal drugs in the production oforganic livestock, including organicslaughter stock. We also published anissue paper in October 1998 entitled‘‘The Use of Antibiotics andParasiticides in Organic LivestockProduction,’’ requesting additionalpublic comment on this subject.

We received thousands of commentsfrom consumers, producers, andindustry groups objecting to anyallowance for antibiotic use in



organically produced livestock. Many ofthese comments supported acomprehensive prohibition on the use ofantibiotics, regardless of the animal’sage or the type of products producedfrom it. Based on these publiccomments and the availability ofalternative production practices, thisproposal prohibits selling, labeling, orrepresenting as organic any animal thathas been treated with an antibiotic atany dosage.

(9) Parasiticide Use. The first proposalpermitted livestock in an organicoperation to receive parasiticidestopically at any time of life, providedthat the producer complied with theprohibition against routine use of asynthetic internal parasiticide. Weconcluded that, while some earlierpublic comment favored prohibiting theuse of internal parasiticides and theNOSB recommended restricting theiruse, many producers had indicated thatparasiticides were essential to theiroperations. These producers stated thatparasites can threaten animal health atany stage of life and that the use ofparasiticides is unavoidable in certainregions of the country. Even underhighly controlled situations, someparasites endemic to certain regions canbe carried by wild birds, water, or feed.Concerns for the overall health of ananimal warranted that parasiticides beused as soon as possible afterdetermining the presence of parasites ata level affecting the health of theinfected livestock.

In responding to the first proposal, alarge number of commenters stated thatsynthetic parasiticides should beprohibited in organic production,especially for slaughter stock. TheNOSB also recommended prohibitingthe use of parasiticides in slaughteranimals. For other livestock, the Boardrecommended that, in certain climates,in certain stages of production, and forcertain animals, the use of syntheticparasiticides might be necessary. TheBoard stated that breeding stock, forexample, could receive parasiticides upto certain stages of gestation specific tothe type of livestock. Such use ofsynthetic parasiticides would be highlyrestricted and include a lengthy periodof elapsed time before the animal’soffspring would be eligible for use in acertified operation. The Board proposeddeveloping practice standards toaddress specific instances in whichparasiticides could be allowed.

This proposal allows the use ofsynthetic parasiticides included on theNational List for use in organicproduction on breeder and dairy stockprovided that preventative practices andveterinary biologics are inadequate to

prevent infestation. This proposalprohibits administering syntheticparasiticides to livestock sold forslaughter. These provisions reflect anattempt to balance the conflictingpositions taken by consumers andproducers in response to the firstproposal and the subsequent issue paperon livestock medications. We recognizethat the goal of organic production is touse management practices and naturalsubstances to eliminate, when possible,reliance on synthetic materials.However, we do not believe that acomprehensive prohibition on syntheticparasiticides is feasible for all speciesand for all regions of the country at thistime. Additionally, the newrequirements for access to the outdoorsfor organically managed livestockcontained in this proposal mayexacerbate exposure to parasites foranimals in systems which previouslyused greater degrees of confinement.These provisions are also consistentwith the position of the NOSB, whichrecommended at its October 1999meeting to allow a synthetic parasiticidefor use on organically raised breederand dairy stock with the samerestrictions incorporated in thisproposal.

The OFPA prohibits the use ofsynthetic internal parasiticides on aroutine basis. In the first proposal, theword, ‘‘routine,’’ was defined asadministering an animal drug ‘‘withoutcause.’’ Many commenters objected tothat definition, pointing out thatproducers would not administer aparasiticide unless they perceived ajustifiable cause. Commenters fear thatthis might lead to dependence onparasiticides rather than a managementsystem to reduce the number ofparasites. Therefore, this proposaladopts the NOSB-recommendeddefinition for ‘‘routine’’ as use of asynthetic parasiticide on a regular,planned, or periodic basis. Theprohibition on using synthetictreatments on a routine basis is retainedin § 205.238(c)(4).

(10) Temporary Confinement. Thefirst proposal provided that, ifnecessary, animals could be maintainedunder conditions that restrict theavailable space for movement or accessto outdoors if other living conditionswere adequate to maintain the animals’health without the use of permittedanimal drugs. This provision consideredthe effects of climate, geographicallocation, and physical surroundings onthe ability of animals to have access tothe outdoors. We explained that asystem of organic production is soilbased and that animals should beallowed, as appropriate, access to the

soil. This understanding was consideredin balance with animal health issues,such as the need to keep animalsindoors during extended periods ofinclement weather. The determinationof necessity was to be based on site-specific conditions described by theproducer in an organic system plan orupdates to an organic plan, whichrequired approval from the certifyingagent. We requested public comment asto the conditions under which animalsmay be maintained to restrict theavailable space for movement or accessto the outdoors. We also released anissue paper in October 1998 entitled‘‘Livestock Confinement in OrganicProduction Systems’’ to solicit furtherpublic participation in preparing thisproposal.

Many commenters stated that, whileconfinement is appropriate undercertain conditions, access to theoutdoors is a fundamental tenet oforganic livestock production.Commenters cited the widespreadprohibition on confinement systems,such as raising poultry in battery cages,contained in domestic and internationalstandards. Producers of organiclivestock have incorporated access tothe outdoors into viable productionsystems for all major commercialspecies, and consumers clearly identifythese practices as a distinguishingcharacteristic of organic products. Somecommenters stated that productionstandards containing broad allowancesfor confinement would weaken theirincentive for purchasing organicproducts. Some producers pointed outthat providing animals access to theoutdoors can reduce stress and diminishthe risk of transmitting disease. The vastmajority of commenters stronglyindicated that protection of an animal’swelfare or the soil and water resourcesof the operation were the onlyappropriate conditions for restrictingaccess to the outdoors. Furthermore,many commenters stated that thecondition and properties of the outdoorarea to which an animal receives access,such as the nutritional content ofpasture, must be importantconsiderations in developing livestockproduction standards.

Section 205.239(b) of this proposalspecifies the circumstances underwhich animals may be temporarilyconfined. This new requirementproposes temporary confinement duringperiods of inclement weather; certainstages of production such as when dairyanimals are very young; when theanimal’s health, safety, or well-being arejeopardized; or when there is risk to soiland water quality. The NOSB specifiedthat the stage of an animal’s production



is not intended to include the lactationcycle of dairy animals in which only drycows would be allowed access to theoutside and pasture. The NOSBrecommended and we propose thatwhen there is a risk to soil or waterquality, livestock should be temporarilyconfined. Practice standards addressingwhen and how individual species maybe temporarily confined will bedeveloped and published in programmanuals. We are also incorporating theNOSB recommendation that ruminantsreceive access to pasture during theperiods they are not temporarilyconfined.

(11) Physical Alterations. Thisproposal contains a requirement in§ 205.238(a)(5) that the producer of anorganic livestock operation mustperform, as needed, physical alterationson livestock to promote the animal’swelfare and in a manner that minimizespain and stress. Physical alterationsinclude castration and other practices,such as wing clipping, intended tomodify or affect the animal’s behavior inconfinement. We received comments onthe first proposal which stated that theperformance of physical alterations isintegral to a system of organic livestockproduction which must be addressed inthe standards. Subsequently, somecommenters on the confinement issuepaper drew a connection betweencertain physical alterations, such asdebeaking in poultry, and theconditions for space and mobility underwhich livestock are raised We anticipatethat this subject will be a significantconsideration when the NOP engages inequivalency discussions under theCodex Alimentarius guidelines.

While many certification programshave production standards forconducting physical alterations onanimals, we cannot identify generalconsensus on which practices should beapproved or prohibited. Manyproduction variables, including breed,the number and concentration ofanimals raised, and the available naturalresource base, influence the selection ofproduction practices. Operations whichraise the same species of livestockcould, due to differences in productionpractices, require different approachesto whether and how to conduct physicalalterations. We do not have sufficientinformation at this time to proposespecies-specific guidelines butanticipate working with producers,consumers, and certifying agents todevelop a better understanding onwhich to act. By including therequirement for conducting physicalalterations in a manner which promotesan animal’s welfare and minimizes painand stress in this proposal, we are

acknowledging two points. One,physical alterations have an appropriateand at times necessary role in livestockproduction, and, two, consideration foranimal welfare and comfort is anintegral component of organic livestockproduction.

In order to use an animal’s welfareand comfort as a condition forestablishing standards, we arerequesting comment on techniques tomeasure animal stress. Certifying agentswill need objective, verifiable methodsto determine whether a producer isfulfilling the livestock managementconditions established in the organicsystem plan. Such methods may includephysiological or behavioral approachesto measuring stress and may be directedat individual animals or larger groupssuch as herds or flocks. The manycomments addressing the well-being ofanimals under organic managementindicate that this issue is central to thedifferentiation of organic productionstandards from nonorganic practices.We need consistent, verifiableenforcement techniques to ensure thatorganic producers are capable ofattaining and documenting suchstandards.

(12) Treatment of Sick or InjuredAnimals. In this proposal, any animalthat is to be sold, labeled, or representedas organic may not be treated with aprohibited animal drug, includingantibiotics, synthetic substances that arenot allowed, or nonsynthetic substancesthat are prohibited. Any substance usedas an animal drug in organic livestockproduction must be approved by FDA orregistered by EPA and must beadministered in compliance with theFederal Food, Drug, and Cosmetic Act.This proposal simultaneously requiresthat sick or injured animals must betreated with the appropriate animalmedicine regardless of whether organicstatus is lost as a result of doing so. Thisrequirement has been added in responseto an NOSB recommendation.Thousands of comments expressedconcern that organic livestock wouldsuffer unduly if producers were notrequired to provide treatment,especially to save the life of a criticallyill animal, rather than risk the sufferingor death of the animal simply tomaintain its organic status. If thetreatment required under this proposalincludes the use of a prohibitedsubstance, the animal and any productderived from it must be diverted to thenonorganic market.

(13) Feeding of Animal By-Products.Although we received thousands ofcomments supporting a ban on thefeeding of any animal by-products tolivestock under organic management, a

broad prohibition would prevent certainessential practices, such as feeding milkto young mammals. This prohibition isalso inappropriate in the case ofcarnivorous livestock, such as manyaquatic species. We believe that thecomments we received were notintended to prohibit such practices butwere, rather, motivated by concerns forfood safety and the humane treatment ofanimals. This proposal prohibits thefeeding of poultry and mammalianslaughter by-products to organicallyraised poultry or mammals. This changeis based on the thousands of commentsthat expressed strong consumerpreference against adding animal by-products into feed for the same species.There was concern that this practicecould expose ruminant animals toBovine Spongiform Encephalopathy(BSE). FDA regulates animal feedadditives and uses its authority toaddress the human healthconsiderations of animal refeeding. FDAcontinually revises its regulations toensure the highest level of protectionagainst known and emerging humanhealth risks. The prohibition on feedingpoultry and mammalian slaughter by-products to organically raised poultry ormammals contained in this proposal isbased solely on the consumer preferenceexpressed in public comment and is nota food safety standard. Future changesthat are made to FDA regulations will bereflected in NOP standards.

(14) Withdrawal Intervals. The firstproposal required that a producerdetermine that an animal was fullyrecovered from the condition for whichan animal drug was administered beforea product obtained from that animalcould be sold, labeled, or represented asorganic. In compliance with FDAregulations, this could not have beenless than the withdrawal time specifiedon the label of the animal drugadministered. We received commentsfrom producer groups that favoredextending the withdrawal timesspecified on animal drug labels. Manyprivate certification programs appliedthe principle of extended withdrawalperiods to the use of antibiotics in dairyand breeder stock before innovations inproduction led to such substances beingprohibited. The NOSB has continued toinclude extended withdrawal periodannotations with its recommendationsfor the use of parasiticides.

Based on consumer preference andthe recommendations of the NOSB, weare proposing an extended withdrawalinterval for three animal drugs(Ivermectin, Lidocaine, and Procaine)included on the National List in thisproposal. FDA exercises fullresponsibility for determining and



enforcing the withdrawal intervals foranimal drugs. No food safety argumentsare used or implied to support the useof extended withdrawal periods. Rather,we determined that extendedwithdrawal periods are more compatiblewith consumer expectations oforganically raised animals. Inemergency situations where the need fora synthetic parasiticide or medicine isunavoidable, an extended withdrawalperiod would indicate that such use wasneither routine nor normal. Thisapproach is consistent with the mannerin which organic certification agenciesaddressed antibiotic use in livestockproduction. Before the currentprohibition on antibiotics became theindustry norm, certifying agents allowedtheir use under restricted conditions,including extended withdrawalintervals, to demonstrate to consumersthat such use was genuinely essential.

Livestock Production—ChangesRequested But Not Made


(1) Feed Requirements. The firstproposal required the use of preventivehealth care practices, including diversefeedstuffs, appropriate housing, wellmaintained pasture, and good sanitationpractices, and this proposal containssimilar provisions. It also includedprovisions for administering appropriateveterinary biologics, vitamins, andminerals, and on selecting species andtypes of livestock with regard tosuitability for site-specific conditionsand resistance to prevalent diseases andparasites. Preventive health carepractices were generally supported bycomments as being consistent with asystem of organic livestock production.

Many commenters requested anexplanation of the term, ‘‘diversefeedstuffs,’’ and some expressedconcern that this provision could permituse of feed supplements which might beprohibited by other Federal, State, orlocal laws. All provisions proposed inthis subpart must be in compliance withapplicable laws and regulations,including the Federal Food, Drug, andCosmetic Act; the OFPA; and ourdefinition of a system of organicproduction and handling. Vitamins,minerals, and other synthetic ornonagricultural supplements, whichappear on the National List of allowedsynthetic livestock products in the firstproposal are similarly permitted here,and provide a means to diversify ananimal’s diet. Soybean meal and otherorganically produced feed concentratesalso serve this purpose. We encouragethe NOSB to develop and recommend

practice standards to provide additionalguidance regarding the appropriatevariety of feed for specific livestockspecies. Both the first proposal and thisone defer to publications of the NationalResearch Council’s Committee onAnimal Nutrition to establish nutrientrequirements for livestock. Producersand certifying agents will use thesepublications to ensure that animalnutrient requirements are met.

Handling—Changes Based onComments


(1) Irradiation. In the first proposal,we requested public comment on thecompatibility of ionizing radiation(irradiation) with a system of organicproduction and handling. We also askedif there are effective alternatives toionizing radiation, such as sanitarypractices, heat pasteurization, andincidental additives, that are compatiblewith a system of organic production andhandling, and, if so, how they arecompatible. We further asked whetherthe use of ionizing radiation wasconsidered an essential standardindustry practice or good manufacturingpractice. Although the NOSBrecommended prohibiting the use ofionizing radiation for organic products,we requested this information becauseof increasing concern about foodborneillness and growing interest in FDA-approved ionizing radiation as asanitation or preservation treatment fora wide range of agricultural products.

We received hundreds of thousands ofcomments from every segment of theorganic community—producers,processors, certifying agents,consumers, environmental groups, andretailers—opposing the use of ionizingradiation. These comments indicatedthat ionizing radiation has beenexpressly prohibited in all existingorganic certification standards,international as well as domestic.Allowing this practice could putdomestic producers and handlers at atrade disadvantage, disruptinternational markets, and undermineconsumer faith in the integrity of thedomestic organic label.

Comments suggested alternatives toionizing radiation for preventingcontamination by human pathogens.Alternatives include heat disinfection,refrigeration, moisture and oxygenreduction, packaging, hygienichandling, and appropriate use ofdisinfectant substances. Although noone suggested that any products mightbe unavailable if irradiation wereprohibited, many commenters expressedthe willingness to do without any

product that required irradiation. Inresponse to the overwhelmingconsensus of public comment, thisproposal prohibits any use of ionizingradiation for the handling of any organicproduct in § 205.270(c).

(2) Incidental Additives. The firstproposal included a provision thatpermitted the use of incidental additivesin processing, except those extractedwith a volatile synthetic solvent, if itwas necessary for the production of theproduct. As with previous provisionsfor practices that could be used only ‘‘ifnecessary,’’ the preamble to the firstproposal explained that a determinationof necessity was based on site-specificconditions that were described by aproducer or handler in an organicsystem plan or updates to an organicsystem plan and reviewed by thecertifying agent. We requestedcomments as to the conditions underwhich an incidental additive might beconsidered necessary and requestedcomment as to whether handlers whohandle only products sold, labeled, orrepresented as ‘‘made with certainorganic ingredients’’ should beexempted from the restriction of usingincidental additives only if necessary.An incidental additive was defined asan additive that is present in anagricultural product at an insignificantlevel, does not have any technical orfunctional effect in the product, and isnot considered an active ingredient.This definition is consistent with 21CFR 101.100(a)(3)(ii) and is the basis forthe definition of an incidental additivein this proposal.

Although thousands of consumersobjected to the use of syntheticsubstances in processed organicproducts, many others specified that anincidental additive that had beenreviewed and approved by the NOSBwould be acceptable. Few respondentssupported exempting products labeledas ‘‘made with organic ingredients’’from restrictions on the use ofincidental additives. The NOSBrecommended that documentation berequired for use of synthetic incidentaladditives and that handlers demonstrateprogress over time in findingreplacements. Organic industry groupsalso commented that hundreds ofincidental additives are currently beingused to process organic products andthat prohibiting the use of suchsubstances would severely restrict thechoices available to consumers andlimit the growth of the organic sector.The NOSB recommended severalsynthetic incidental additives for theNational List, recognizing that a widerange of organic products could not befeasiblely manufactured without the use



of incidental additives such asdefoaming agents, adjuvants, clarifiers,filtering agents, and equipmentcleansers. Therefore, this proposalrequires that any incidental additiveused to process agricultural productsthat are intended to be sold, labeled, orrepresented as ‘‘organic’’ or ‘‘made withorganic (specified ingredients)’’ must beincluded on the National List of allowednonagricultural (nonorganic) substancesin § 205.605. A product labeled as ‘‘100percent organic’’ could not be producedthrough the use of any syntheticprocessing aid.

(3) Prevention and Control of FacilityPests. The first proposal addressed theprevention and control of facility pestsand authorized the NOP to require suchterms and conditions as are determinednecessary. These provisions were basedon existing organic certificationprograms and NOSB recommendations.The first proposal included a three-steporder of preference, which commentersfound to be overly complex and difficultto enforce. This proposal retains similarprovisions but simplifies the scheme sothat there are only two levels ofdistinction between preferable and lesspreferable practices. In this proposal,pest prevention and control methodsthat do not entail use of biological,botanical, or synthetic substances areequally acceptable, and the producer orhandler may only use biological,botanical, or synthetic substances ifother approved methods are noteffective. Paragraph (c) of § 205.271parallels the provision proposed in§ 205.206(d) addressing crop pest, weed,and disease management. Accordingly,it requires an operator of an organichandling operation who applies anybiological, botanical, or syntheticsubstance for the prevention or controlof pests to implement measures toevaluate the effects of repetitive use ofthe same or similar materials on pestresistance and shifts in pest types.

(4) Storage Containers. Sections205.272 (b)(1) and (b)(2) of this proposalcontain provisions similar to the firstproposal which prohibit the use ofstorage containers or bins, includingpackages and packaging materials, thatcontain synthetic fungicides,preservatives, or fumigants. Theserequirements also prohibit the use orreuse of any bag or container that waspreviously in contact with anysubstance that could compromise theorganic integrity of its contents. Thisproposal adds a provision to permit thereuse of a bag or container originallyused for conventional products if thereusable bin or container has beenthoroughly cleaned and poses no risk ofprohibited materials contacting organic

products. Producers and handlerscommented that it is possible anddesirable to reuse some kinds ofcontainers if precautions are taken. Thismodification is consistent with theOFPA, which requires that the organicquality of a product not becompromised.

(5) Agricultural Fibers. Somecommenters stated that the labelingprovisions in the first proposal forprocessed commodities containingorganically produced cotton fibers wereexcessively restrictive. The OFPAprovides the Secretary with theauthority to implement standards fororganically produced agricultural fibers,including cotton, used for nonfoodpurposes. This authority includesstandards for the production of theagricultural fiber as well as handlingstandards to regulate the practices andmaterials that are used in themanufacture of the nonfood commodity.State and private certification agentshave made substantial progress indeveloping and implementing handlingstandards for organically producedagricultural fibers that are gainingacceptance in the marketplace. We arereviewing the existing certificationguidelines and industry practices andanticipate developing standards forprocessing organically producedagricultural fibers.

Handling—Changes Requested But NotMade


(1) Facility Pest Control Substances.The first proposal permitted the use ofany substance to control facility pests,as long as the intended use wasapproved by the appropriate regulatoryauthority and the substance was appliedin a manner that prevents it fromcoming into contact with any organicproduct. Many consumers objected tothis provision and suggested thatprohibited substances should never beallowed to be used in any organicoperation. However, comments from anumber of organic handlers and oneindustry association stated that, becausehandling operations must comply withhealth regulations that requireelimination of any pests that mayinvade food handling facilities,prohibited substances must sometimesbe used. The NOSB also acknowledgedthis possibility in its recommendations,and most organic certification programssimilarly allow for such an occurrence,with strict provisions for safeguardingthe integrity of organic products. Inagreement with these comments, wehave proposed a similar allowance in

§ 205.271(c). The handler must fullydocument in his or her organic plan theevidence that such a measure wasnecessary and the measures taken toprotect organic products or ingredientsfrom coming into contact with any pestcontrol substance.

(2) Waxes. We propose to retain thedefinition of packaging included in thefirst proposal, which encompasseswaxes used in contact with an ediblesurface of an agricultural product. Anumber of commenters disagreed withthe inclusion of waxes in the definitionof packaging, arguing that waxes shouldbe considered nonagriculturalingredients and, therefore, should berequired to appear on the National Listof nonagricultural (nonorganic)substances allowed as ingredients in oron processed products labeled as‘‘organic’’ or ‘‘made with organic(specified ingredients).’’ However, thefirst proposal did require carnauba andother waxes to be on the National Listof nonagricultural ingredients allowedfor use in organic processed products,and this proposal contains a similarprovision. These provisions adequatelyaddress the concerns expressed by thecommenters that only waxes meetingthe criteria for ingredients in organicprocessed products be permitted. It isappropriate to include waxes in thedefinition of packaging to ensure thatprohibited substances are not added toapproved waxes that may be applied tothe edible surface of organic products,in accordance with the OFPA, whichprohibits use of any packaging materialsthat contain synthetic fungicides,preservatives, or fumigants.

Subpart D—Labels, Labeling, andMarket Information

The Act provides that a person maysell or label an agricultural product asorganically produced only if the producthas been produced and handled inaccordance with provisions of the Actand these regulations. This subpart setsforth labeling requirements for organicagricultural products and products withorganic ingredients based on theirpercentage of organic composition. Foreach labeling category, this subpartestablishes what ‘‘organic’’ terms andreferences can and cannot be displayedon a product package’s principal displaypanel, information panel, ingredientstatement, and on other package panels.Labeling is proposed for containers usedin shipping and storing organic productand for denoting organic bulk productsin market information which isdisplayed or disseminated at the pointof retail sale. Restrictions on labelingorganic product produced by exemptoperations are described. Finally, this



subpart proposes a new USDA organicseal or shield (hereafter referred to asthe USDA Seal) and regulations fordisplay of the USDA seal and display ofthe seals, logos, or other identifyingmarks of certifying agents.

The intent of these sections is toensure that organically producedagricultural products are consistentlylabeled to aid consumers in selection oforganic products and to prevent labelingabuses. These provisions cover thelabeling of a product as ‘‘organic’’ andare not intended to supersede otherlabeling requirements specified invarious Federal labeling regulations. Forinstance, we propose that the percent oforganic ingredients and the name of thecertifying agent be displayed on theinformation panel of packaged productsand that the organic ingredients beidentified as ‘‘organic’’ in the ingredientstatement. The Food and DrugAdministration (FDA) has authority toregulate the placement of informationon package information panels and,thus, FDA labeling requirements in 21CFR parts 100 through 169 must becomplied with by handler when affixingorganic labels to product packages.Display of the USDA Seal and certifyingagent seals, logos, or other identifyingmarks also must be in accordance withthose regulations. The requirements ofFDA’s Fair Packaging and Labeling Act(FLPA) and the Federal Food, Drug, andCosmetic Act (FFDCA) must befollowed. Likewise, the Federal TradeCommission has authority over productadvertising and the extent to which ahandler or retail food establishmentengages in advertising as part of itsmarket information activities. TheFederal Trade Commission (FTC)regulations in 16 CFR must be followed.USDA’s Food Safety and InspectionService’s (FSIS) Federal Meat InspectionAct, Poultry Products Inspection Act,and Egg Products Inspection Act alsohave implementing regulations in 9 CFRwhich must be followed. The labelingrequirements specified in this subpartmust not be applied in a manner so thatthey would conflict with the labelingrequirements of these and other Federaland State programs.

While this regulation does not requirelabeling of an organic product asorganic, we assume that producers andhandlers will choose to label theirorganic products and display the USDASeal to the extent allowed in theseregulations. They will do this toimprove the marketability of theirorganic product.

In this proposal, assembly, packaging,and labeling of a multiingredientorganic product are considered handlingactivities. The certification of handling

operations is covered in subpart C ofthis regulation. No claims, statements,or marks using the term, ‘‘organic,’’ ordisplay of certification seals, other thanas provided in this regulation, may beused. A handler which chooses not touse these required and prohibitedlabeling provisions may not otherwiselabel or represent a product as organic.

Once a handler makes a decision tomarket a product as organic orcontaining organic ingredients, thehandler is required to follow theprovisions in this subpart regarding use,display, and location of organic claimsand certification seals. Handlers whomay produce organic ingredients and/orassemble multiingredient productscomposed of more than 50 percentorganic ingredients must be certified asan organic handling operation. Handlersof products of less-than-50-percentorganic ingredients do not have to becertified unless the handler actuallyproduces one or more of the ingredientsused in the less-than-50-percentproduct. Repackers who purchasecertified organic product from otherentities for repackaging and labelingmust be certified as an organicoperation. Entities which simply relabela product package would be subject torecordkeeping requirements to showproof that the product purchased priorto relabeling was, indeed, organicallyproduced. Distributors which receiveand transport labeled product to marketare not subject to certification or anyhandling requirements of thisregulation.

Proposal DescriptionThe general labeling principle

employed in this proposal, and to whichwe think most commenters wouldsubscribe, is that labeling oridentification of the organic nature of aproduct should increase as the organiccontent of the product increases. Inother words, the higher the organiccontent of a product, the moreprominently its organic nature can bedisplayed. This is consistent withprovisions of the Act which establishesthe three percentage categories fororganic content and basic labelingrequirements in two of those categories.

Section 205.300 specifies the generaluse of the term, ‘‘organic,’’ on productlabels. Paragraph (a) establishes that theterm, ‘‘organic,’’ may be used only onlabels and in market information ofagricultural products and ingredientsthat have been certified as produced andhandled in accordance with theseregulations. The term, ‘‘organic,’’ cannotbe used on a product label for anypurpose other than to modify or identifythe product or ingredient in the product

that is organically produced andhandled. Products not organicallyproduced and handled will not be ableto use the term, ‘‘organic,’’ on anypackage panel or in market informationin any way that implies the product isorganically produced.

Categories of Organic Content. Thetype of labeling and market informationthat can be used and its placement ondifferent panels of consumer packageswill be based on the percentage oforganic ingredients in the product. Thepercentage will reflect the actual weightor fluid volume (excluding water andsalt) of the organic ingredients in theproduct. Four categories of organiccontent are proposed: 100 percentorganic; 95 percent or more organiccontent; 50 to 95 percent organiccontent; and less than 50 percentorganic content.

100 Percent OrganicFor labeling and market information

purposes, this proposal allows a ‘‘100percent organic’’ label for anagricultural product that is composed ofa single ingredient such as raw,organically produced fruits andvegetables. The product also may becomposed of two or more organicallyproduced ingredients, provided that theindividual ingredients are organicallyproduced and handled consistent withprovisions in subpart C of thisregulation. No processing aids may beused in the production of 100 percentorganic products. This proposalprovides that labeling provisions for‘‘100 percent organic’’ products be thesame as provisions for the 95 percent‘‘organic’’ products specified below.

OrganicProducts labeled or represented as

‘‘organic’’ will contain, by weight(excluding water and salt), at least 95percent organically produced raw orprocessed agricultural product. Theorganic ingredients must be producedusing production and handling practicespursuant to subpart C of this regulation.The nonorganic (5 percent or less)ingredients may be composed ofnonorganic or nonagriculturalsubstances. The difference between 100percent organic products and 95percent-plus products is that the lattermay contain up to 5 percent nonorganicor nonagricultural products.

Multiingredient Product: 50–95 PercentOrganic Ingredients

For labeling and market informationpurposes, the third category ofagricultural products aremultiingredient products containing byweight or fluid volume (excluding water



and salt) between 50 and 95 percentorganic agricultural ingredientsproduced pursuant to these regulations.Such products may be labeled orrepresented as ‘‘made with organic(specified ingredients).’’ By ‘‘specified,’’we mean the name of the agriculturalproduct forming the organic ingredient.The organic ingredients must beproduced using substances on theapproved National List in subpart G andemploying organic production andhandling practices consistent withsubpart C of this regulation. Forinstance, breakfast cereal made with 75percent organically produced andprocessed wheat and 25 percent other,nonorganically produced grains, raisins,and nuts can be labeled as ‘‘made withorganic wheat’’ on the principal displaypanel. To qualify for this organiclabeling, the nonorganic ingredients(grains, raisins, and nuts) must beproduced and handled without use ofthe first three prohibited practicesspecified in paragraph (e) (excludedmethods, sewage sludge, or ionizingradiation). However, those nonorganicingredients may be produced or handledusing practices prohibited in paragraphs(e)(4) through (e)(7) (using substancesnot on the National List; containingadded sulfites, nitrates, or nitrites; usingnonorganic ingredients when organicingredients are available; and using

organic and nonorganic forms of thesame ingredient).

Multiingredient Product: Less Than 50Percent Organic Ingredients

The final labeling category coversmultiingredient products with less than50 percent organic ingredients (byweight or fluid volume, excluding waterand salt). The organic ingredients mustbe produced using substances on theapproved National List in subpart G andemploying organic production andhandling practices consistent withsubpart C of this part. The remainingnonorganic ingredients (50 percent ormore of the product) may be produced,handled, and assembled without regardto these regulations (using prohibitedsubstances and prohibited productionand handling practices). Organiclabeling of these products is limited tothe information panel only as providedin § 205.305.

Prohibited Practices. This proposalprohibits labeling of whole products oringredients as ‘‘organic’’ if thoseproducts or ingredients are producedusing any of the following production orhandling practices: (1) Ingredients orprocessing aids containing or createdusing excluded methods (geneticallymodified organisms (GMO)) or theproducts of excluded methods; (2)ingredients that have been producedusing applications of sewage sludge

(biosolids) as fertilizer; (3) ingredientsthat have been processed with ionizingradiation; (4) processing aids notapproved on the National List; (5)sulfites, nitrates, or nitrites added to orused in processing of an organic productin addition to those substancesoccurring naturally in a commodity; (6)use of the phrase, ‘‘organic whenavailable,’’ or similar statement onlabels or in market information whenreferring to products composed ofnonorganic ingredients used in place ofspecified organic ingredients; and (7)labeling as ‘‘organic’’ any productcontaining both organic and nonorganicforms of an ingredient specified as‘‘organic’’ on the label. The prohibitionson the use of excluded methods, sewagesludge, irradiated products, andprohibited processing aids are includedhere to be consistent with the revisedNational List of Approved andProhibited Substances in subpart G.

These seven prohibitions apply to thefour labeling categories of products andare not individually repeated asprohibited practices in the followingsections. Table 1, Prohibited Productionand Handling Practices for OrganicLabeling, is a summary reference of howthe seven prohibited practices must beapplied in the production and handlingof organic and nonorganic ingredients ofproducts in the four labeling categories.

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

Labeling categoryUse

excludedmethods

Use sew-age sludge

Useirradiation

Use proc-essing aidsnot on na-tional list

Containadded sul-

fites, ni-trates,nitrites

Use or-ganic in-gredients

when avail-able

Use bothorganic &

nonorganicforms ofsame in-gredient

‘‘100 percent Organic’’Single/multiingredients completely organic NO ............ NO ............ NO ............ Use NO

Proc-essingAids.

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

‘‘Organic’’Organic Ingredients (95% or more) ........... NO ............ NO ............ NO ............ NO ............ NO ............ NO ............ NO.Nonorganic Ingredients (5% or less) ......... NO ............ NO ............ NO ............ NO ............ NO ............ NO ............ NO.

‘‘Made with Organic (specified ingredients)’’Organic Ingredients (50–95%) ................... NO ............ NO ............ NO ............ NO ............ NO ............ NO ............ NO.Nonorganic Ingredients (49% or less) ....... NO ............ NO ............ NO ............ OK ............ OK ............ NA* ........... NA*.

Less-than 50% Organic IngredientsOrganic 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 OrganicIngredients. This proposal specifiesprocedures for calculating thepercentage, by weight or fluid volume,of organically produced ingredients inan agricultural product labeled orrepresented as ‘‘organic.’’

The organic percentage of liquidproducts and liquid ingredients will bedetermined based on the fluid volumeof the product and ingredients(excluding water and salt). When aproduct is identified on the principaldisplay panel or the information panelas being reconstituted with water from

a concentrate, the organic content willbe calculated on the basis of a single-strength concentration.

Some products may contain both dryand liquid ingredients that are producedorganically. In such cases, this proposalprovides that the percentage of totalorganic ingredients will be based on the



combined weight of the dry organicingredient(s) and the weight of theliquid organic ingredient(s), excludingwater and salt. For example, a productmay be made using organicallyproduced vegetable oils or grain oils orcontain organic liquid flavoring extractsin addition to other organic andnonorganic ingredients. In these cases,the weight of the liquid organic oils orflavoring extracts, less any added waterand salt, would be added to other solidorganic ingredients in the product, andtheir combined weight would be thebasis for calculating the percentage oforganic ingredients. We believe thisprocess provides the most appropriateand least burdensome method forcalculating the organic percentage ofsuch multiingredient products.

Only one figure providing the totalpercentage of all organic ingredientswill be shown on the information panel.The total percentage will be displayedon the information panel of theconsumer package above or below theingredient statement with the words,‘‘contains X percent organicingredients,’’ or a similar phrase. If thetotal percentage is a fraction, it will berounded down to the nearest wholenumber. The percentage of each organicingredient will not be required to bedisplayed.

Labeling ‘‘100 Percent Organic’’ and‘‘Organic’’ Products. This proposalincludes optional, required, andprohibited practices for labelingpackages of agricultural products thatare ‘‘100 percent organic’’ or ‘‘organic’’(at least 95 percent organic). Onlyproducts that are composed of a whollyorganic single ingredient or entirely ofcertified organic ingredients may beidentified with a percentage number(100 percent) on the principal displaypanel. Products between 95 and 100percent organic composition, whenidentified as ‘‘organic’’ on the principaldisplay panel, will be required to stateon the information panel the percentageof organic ingredients in the finishedproduct and identify each organicingredient in the ingredient statement.

The handler may display thefollowing information on the principaldisplay panel, the information panel,and any other part of the package andin market information representing theproduct: (1) The term, ‘‘100 percentorganic’’ or ‘‘organic,’’ as applicable, tothe content of the product; (2) the USDASeal; and (3) the seal, logo, or otheridentifying mark of the certifying agent(hereafter referred to as ‘‘seal or logo’’)which certified the handler of thefinished product. The seals or logos ofother certifying agents which certifiedorganic raw materials or organic

ingredients used in the product alsomay be displayed, at the discretion ofthe handler. If multiple organicingredients are identified on theingredient statement, the handler of thefinished product that combined thevarious organic ingredients mustmaintain documentation, pursuant tosubpart B of this regulation, certifyingthe organic content of the addedingredients.

While certifying agent identificationscan appear on the package with theUSDA Seal, they may not appear largerthan the USDA Seal on the package.There is no restriction on the size of theUSDA Seal as it may appear on anypanel of a packaged product, providedthat display of the Seal conforms withthe labeling requirements of FDA andFSIS.

This proposal specifies three labelingpractices that will be required if ahandler labels a product ‘‘100 percentorganic’’ or ‘‘organic’’ on the principaldisplay panel. If a product is labeled as‘‘100 percent organic’’ the ingredientsmay also be modified with the term,‘‘organic,’’ but would not have to be solabeled because it is assumed from the100 percent label that all ingredients areorganic. For 95 percent-plus productsthat contain more than one ingredient,each organic ingredient listed in theingredient statement must be modifiedwith the term, ‘‘organic.’’ Water and saltin the ingredient will not be identifiedas ‘‘organic.’’ Secondly, the totalpercentage of organic ingredients in theproduct must be shown on theinformation panel. The percentagestatement should be placed in a mannerthat it can be viewed in relation to theingredient statement.

The handler also must display on theinformation panel the name of thecertifying agent which certified thehandler producing the finished product.The handler has the option to includethe business address or telephonenumber of the certifying agent. Thisinformation must be placed below orotherwise near the manufacturer ordistributor’s name.

Labeling Products ‘‘Made withOrganic (Specified Ingredients)’’. Withregard to agricultural products ‘‘madewith organic (specified ingredients)’’—those products containing between 50and 95 percent organic ingredients—thisproposal establishes the followingoptional, required, and prohibitedlabeling practices.

Under optional practices, thestatement, ‘‘made with organic(specified ingredients),’’ may be placedon the principal display panel and otherpanels of the package. The samestatement can also be used in market

information representing the product.However, the following restrictions willbe placed on the statement, ‘‘made withorganic (specified ingredients),’’ when itappears on the principal display panel:(1) The statement cannot list more thanthree organic ingredients in the product;(2) the statement cannot appear in printthat is larger than one half (50 percent)of the size of the largest print or typeappearing on the principal displaypanel; and (3) the statement mustappear in its entirety in the same typesize, style, and color withouthighlighting. Display of the statement,‘‘made with organic (specifiedingredients),’’ on other panels must besimilarly consistent with the size ofprint used on those panels. Theserestrictions are consistent with FDAregulations and similar to therecommendations of the NationalOrganic Standards Board (NOSB). Thisprovision will help assure that thestatement, ‘‘made with organic(specified ingredients),’’ is notdisplayed in such a manner as tomisrepresent the actual organiccomposition of the product.

We also propose that, at the handler’soption, the certifying agent’s seal or logomay be displayed on the principaldisplay panel or other package panel.

Packages of products labeled as‘‘made with organic (specifiedingredients)’’ will be required to displayon the information panel the totalpercentage of organic ingredients in theproduct and modify each organicingredient listed in the ingredientstatement with the term, ‘‘organic.’’ Thepercentage of organic ingredients mustbe displayed so that it can be viewed inrelation to the ingredient statement.

The name of the certifying agentwhich certified the handler of thefinished product must be displayedbelow or otherwise near themanufacturer or distributor’s name. Thestatement may include the phrase,‘‘Certified organic by * * *’’ or‘‘Ingredients certified as organicallyproduced by * * *’’ to help distinguishthe certifying agent from themanufacturer or distributor. At thehandler’s option, this label may includethe business address or telephonenumber of the certifying agent whichcertified the handler of the finishedproduct.

Labeling Products with Less Than 50Percent Organic Ingredients. The finallabeling category covers packagedmultiingredient agricultural productcontaining less than 50 percent organicingredients.

Handlers of ‘‘less than 50 percent’’multiingredient products, who chooseto declare the organic nature of the



product, may do so only on theinformation panel by declaring the totalpercentage of organic ingredients in theproduct and, in the ingredientstatement, modifying the organicingredients with the term, ‘‘organic.’’The percentage statement must bedisplayed so that it can be viewed inrelation to the ingredient statement.

Products composed of less than 50percent organic content cannot displaythe USDA Seal or any certifying agent’sseal or logo anywhere on the productpackage or in market information.

Handlers of such products will besubject to this regulation in thefollowing ways. Those handlers whoonly purchase organic and nonorganic

ingredients and assemble a finishedproduct of less than 50 percent organiccontent do not have to be certified asorganic handlers. They will beresponsible for appropriate handlingand storage of the organic ingredientsprior to product assembly and formaintaining records verifying theorganic certification of the ingredientsused in the product. To the extent thatthe packaging process includes affixingthe label to finished product package,those handlers will be responsible formeeting the labeling requirements ofthis subpart. Handlers who produce anorganic ingredient prior to assemblyinto a finished product, even though thefinished product contains less than 50

percent organic content, and must becertified as to the source of the organicingredient(s). The nonorganicingredients may be produced, handled,and assembled without regard to therequirements of this part.

The handler who affixes the label tothe product package will be responsiblefor calculating the percentage of organicingredients in an organic product. Aspart of the certifying agent’’ annualcertification of the handler, the certifierwill verify the calculation and labelingof packages.

Table 2, Labeling Consumer ProductPackages, provides a summary of therequired and prohibited labelingpractices for the four labeling categories.

TABLE 2.—LABELING CONSUMER PRODUCT PACKAGES

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

‘‘100 percent Organic’’ (Entirely or-ganic; whole, raw or processedproduct).

‘‘100 percent organic’’ .... ‘‘100% Organic’’ ............. If multiingredient prod-uct, identify each in-gredient as ‘‘organic’’.

‘‘100 percent Organic’’.

USDA Seal and Certi-fying agent sets(s).

Certifying agent name(required); businessaddress, tele. # (op-tional).

........................................ USDA Seal and Certi-fying agent seal(s).

‘‘Organic‘‘ (95% or more organicingredients).

‘‘Organic’’ ....................... ‘‘X% Organic Ingredi-ents’’.

Identify organic ingredi-ents as ‘‘organic’’.

‘‘Organic’’.

USDA Seal and Certi-fying agent seals(s).

Certifying agent name(required); businessaddress, tele. # (op-tional).

........................................ USDA Seal and Certi-fying agent seal(s).

‘‘Made with Organic (specified in-gredients)’’ (50 to 95% organicingredients).

‘‘Made with organic(specified ingredients)’’.

‘‘X% Organic Ingredi-ents’’.


‘‘Made with organic(specified ingredi-ents)’’.

Certifying agent seal offinal product handler.

Certifying agent name(required; businessaddress, tele. # (op-tional).


‘‘Made with organic(specified ingredi-ents)’’.

Prohibited: USDA Seal .. Prohibited: USDA Seal .. ........................................ Prohibited: USDA Seal.Less-than 50% Organic Ingredi-

ents (49% or less organic ingre-dients).

Prohibited: Any ref-erence to organic con-tent of product.

‘‘X% Organic Ingredi-ents’’.


Prohibited: Any ref-erence to organic con-tent of product.

Prohibited: USDA Seal &Certifying agent seal.

Prohibited: USDA Seal &Certifying agent seal.

........................................ Prohibited: USDA Seal &Certifying agent seal.

Misrepresentation in Labeling ofOrganic Products. The labelingrequirements of this proposal areintended to assure that the term,‘‘organic,’’ and other similar terms orphrases are not used on a productpackage or in marketing information ina way that misleads consumers as to thecontents of the package. Thus, weintend to monitor the use of the term,‘‘organic,’’ and other similar terms andphrases. Should we find that terms orphrases are being used on productpackages to represent ‘‘organic’’ whenthe products are not produced to therequirements of this regulation, we willproceed to restrict their use.

After consideration of alternativelabeling terms that handlers might wishto use to qualify or modify the term,

‘‘organic,’’ we have determined thathandlers may not qualify or modify theterm, ‘‘organic,’’ using adjectives suchas, ‘‘pure’’ or ‘‘healthy,’’ e.g., ‘‘pureorganic beef’’ or ‘‘healthy organiccelery.’’ The term, ‘‘organic,’’ is used inlabeling to indicate a certified system ofagricultural production and handling.Terms such as ‘‘pure,’’ ‘‘healthy,’’ andother similar adjectives attributehygienic, compositional, or nutritionalcharacteristics to products. Use of suchadjectives misrepresents productsproduced under the organic system ofagriculture as having special qualities asa result of being produced under theorganic system. Furthermore, use ofsuch adjectives would incorrectly implythat products labeled in this manner are

different from other ‘‘organic’’ productsthat are not so

Moreover, ‘‘pure,’’ ‘‘healthy,’’ andother similar terms are regulated byFSIS and FDA. These terms may be usedonly in accordance with the labelingrequirements of FDA and FSIS. Forexample, the regulations implementedby FSIS, 9 CFR 317.363, define theterms, ‘‘healthy,’’ ‘‘health,’’ and similarderivations and the conditions of use asa nutritional claim. Also, according toFSIS regulations, 9 CFR 317.8(b)(34), theterm, ‘‘pure,’’ as well as the terms, ‘‘all,’’‘‘100 percent,’’ and similar terms, mayonly be used to indicate that a singleingredient product is composed of 100percent of the product ingredient andcontains no other ingredients. The term,‘‘healthy,’’ is regulated by FDA (21 CFR



101.14) and can be used, withdocumentation, only to indicate orcharacterize a relationship of theproduct to a disease or health-relatedcondition. The prohibition on use ofthese terms to modify ‘‘organic’’ doesnot otherwise preclude their use inother labeling claims.

We also intend to monitor the use ofthe term, ‘‘organic,’’ in corporate orcompany names and seek additionalguidance from the FTC. We do notbelieve that the term, ‘‘organic,’’ in abrand name context inherently impliesan organic production or handling claimor inherently constitutes a false ormisleading statement.

The determination as to whether theuse of the term, ‘‘organic,’’ in a brandname conveys a message about theproduct’s attributes must be made bythe Secretary. We will monitor use ofthe term, ‘‘organic,’’ in product andcompany names at this time. However,if we find that the term is being used ina false or misleading way tomisrepresent the organic nature of theproduct, we have the authority undersection 6519(b) of the Act to take actionagainst such use. Such determinationsand actions will be taken on a case-by-case basis.

Labeling of Products Shipped inInternational Markets. Domesticallyproduced organic products intended forexport may be labeled to meet therequirements of the country ofdestination or any labeling requirementsspecified by a particular foreign buyer.For instance, a product label mayrequire a statement that the product hasbeen certified to, or meets, certainEuropean Union organic standards.Such factual statements regarding theorganic nature of the product will bepermitted. However, those packagesmust be exported and cannot be sold inthe United States with such a statementon the label because the statementindicates certification to standards otherthan are required under this program.As a safeguard for this requirement, werequire that shipping containers andbills of lading for such exportedproducts display the statement, ‘‘forexport only,’’ in bold letters. Handlersalso will be expected to maintainrecords, such as bills of lading and U.S.Customs Service documentation,showing export of the products. Onlyproducts which have been certified andlabeled consistent with therequirements of the National OrganicProgram (NOP) may be shipped tointernational markets without markingthe shipping containers ‘‘for exportonly.’’

Organic product produced under aforeign country’s or international

association’s organic standards deemedequivalent to these standards andcertified by a certifying agent accreditedby the Secretary may be imported intothe United States provided that theproduct labels are consistent with therequirements of this subpart. Anylabeling on the product package or inmarket representation cannot imply thatthe product is also certified to otherorganic standards or requirements thatare more restrictive than this nationalprogram. These provisions areconsistent with international standardsand will facilitate international trade oforganically produced products and,thus, benefit the global organic industry.

Labeling Nonretail Containers.Section 205.306 provides for labelingnonretail containers used to ship orstore raw or processed organicagricultural products that are labeled‘‘100 percent organic,’’ ‘‘organic,’’ and‘‘made with organic (specifiedingredients).’’ These labeling provisionsare not intended for shipping or storagecontainers that also will be used indisplays at the point of retail sale. Theywould be used for easy identification ofthe product to help preventcommingling with nonorganic productor handling of the product which woulddestroy the organic nature of theproduct (fumigation, etc.). Retailcontainers will have to meet labelingprovisions specified in § 205.307.

Containers used only for shipping andstorage of any product labeled ascontaining 50 percent or more organiccontent may, at the handler’s discretion,display the following information: (1)The name and contact information ofthe certifying agent which certified thehandler of the finished product; (2) theterm, ‘‘organic,’’ modifying the productname; (3) any special handlinginstructions that must be followed tomaintain the organic integrity of theproduct; and (4) the USDA Seal and theappropriate certifying agent seal. Thisinformation is optional if handlersbelieve display of the information helpsensure special handling or storagepractices which are consistent withorganic practices.

Containers used for shipping andstorage of organic product must displaya production lot number if such anumber is used in the processing andhandling of the organic product beingshipped or stored. The lot number mustbe included for inventory control andquality assurance purposes. To helpassure export of organic productproduced and labeled to foreignspecifications, the shipping containersand shipping documents (bills of lading)must be marked with the phrase, ‘‘forexport only,’’ in bold letters. The

handler also must maintain recordsshowing export of the product to aforeign country.

Much of the required information mayoverlap information that the handlernormally affixes to shipping and storagecontainers or information that isrequired under other Federal labelingregulations. Provisions in this proposaldo not take precedence over food safetyor quality control provisions which maybe required for specified products ortypes of products covered by suchFederal regulations. There are norestrictions on size or display of theterm, ‘‘organic product,’’ or thecertifying agent seal unless otherwiserequired by other Federal or Statestatutes.

Labeling Products at the Point ofRetail Sale Section 205.101(b)(2) ofsubpart B on Applicability providesregulations regarding the certification ofretail food establishments under thisprogram. Those operations are subject tolabeling and market informationrequirements concerning productsoffered to consumers at the point ofretail sale. Such labeling and marketinformation must truthfully representthe organic nature and handling of theproduct.

Section 205.307 applies to organicallyproduced products that are notprepackaged prior to sale and arepresented in a manner which allows theconsumer to select the quantity of theproduct purchased.

To be labeled as ‘‘100 percentorganic’’ or ‘‘organic’’ at the point ofretail sale, the processing and assemblyof such products must be carried out bya certified manufacturing facility fordistribution to a retail foodestablishment. For instance, a tossedsalad may be labeled as ‘‘100 percentorganic tossed salad’’ or ‘‘organic tossedsalad’’ (consistent with the percentageof organic ingredients in the salad)provided the salad and ingredients havebeen produced and assembled underorganic certification. If themultiingredient product is identified as‘‘organic’’ at the point of retail sale, anyingredient statement displayed at retailsale must identify the organicingredients as ‘‘organic.’’ The retailmaterials may also display the USDASeal and the seal or logo of thecertifying agent. If shown, the certifyingagent seal must not be larger than theUSDA Seal.

Using the same example, a productmade with 95 percent or more certifiedorganic salad components but which isassembled at an uncertified operationmay be labeled ‘‘tossed salad made withorganic (specified ingredients).’’ Theretail food establishment may not



display the USDA Seal or the seal orseals of cerftifying agents involved iningredient certifications because thefinal assembly of the product was notcertified pursuant to the handlingrequirements of this regulation.

Our position on the applicability ofthese regulations to different businessentities is more completely explained insubpart B, Applicability, of thisregulation.

‘‘Section 205.308 addresses processedproducts ‘‘made with organic (specifiedingredients)’’ that are not prepackagedprior to sale and are presented in amanner which allows the consumer toselect the quantity of the productpurchased. These products will include,but will not be limited to,multiingredient products containingbetween 50 and 95 percent organicingredients. Retail displays, displaycontainers, and market information forsuch products may display the phrase,‘‘made with organic (specifiedingredients)’’ provided that the producthas been assembled by a manufacturingfacility certified pursuant to thisregulation. Up to three organicingredients may be identified in thestatement. If such statement is declaredin market information at the point ofretail sale, the ingredient statementmust identify the organic ingredients as‘‘organic.’’ Retail display and marketinformation of such bulk productscannot use the USDA Seal but maydisplay the seal or logo of the certifyingagent which certified the finishedproduct, provided that assembly of theproduct was carried out at a certifiedmanufacturing facility. The certifyingagent’s seal or logo may be displayed atthe option of the retail foodestablishment. If such a product has notbeen assembled at a certifiedmanufacturing facility, the retail displayand market information may notidentify the product as ‘‘made withorganic (specified ingredients).’’

Prepared food products containingless than 50 percent organic ingredientsat retail sale may not be identified asorganic or containing organicingredients. The USDA Seal and anycertifying agent seal or logo may not bedisplayed.

Labeling Products Produced onExempt or Excluded Operations. Thisproposal provides limited organiclabeling provisions for organic productproduced or handled on exempt andexcluded operations. Such operationswould include retail foodestablishments, certain manufacturingfacilities, and production and handlingoperations with annual organic sales ofless the $5,000. They are discussed

more thoroughly in subpart B,Applicability.

Under this proposal, any suchoperation that is exempt or excludedfrom certification, or which chooses notto be certified, may not label itsproducts in a way which indicates thatthe operation has been certified asorganic. Primarily, this means that theexempt or excluded operation may notdisplay the USDA Seal or any seal orlogo of a certifying agent. Any packagedorganic product from an exempt orexcluded operation may not use thelabeling terms ‘‘100 percent organic,’’ or‘‘organic,’’ or ‘‘made with organic(specified ingredients),’’ on theprincipal display panel. Those labelingterms are reserved for productsproduced by certified operations. Theorganic representation of exempt orexcluded operation products may onlybe made on the information panel wherethe organic percentage can be displayedand the organic ingredients identified as‘‘organic.’’

Retail displays and marketrepresentation of such products may notindicate that the product has beencertified as organic. For instance, awhole, raw, organic product marketeddirectly to consumers at a farmersmarket or roadside stand as ‘‘organicapples’’ or ‘‘organic tomatoes.’’However, no terms may be used whichindicate ‘‘certified’’ organic apples, etc.No organic seal or logo may bedisplayed with the product at the pointof retail sale.

We propose these restrictions simplyas truth in labeling provisions becauseuse of terms or phrases reserved forcertified operations and products anddisplay a certification seal will indicatethat the product has been certified. Webelieve this requirement will helpdifferentiate between certified and notcertified products and help maintain theintegrity of certified products whileproviding limited organic labelingopportunities for exempt and excludedoperations.

Finally, this rule proposes thatexempt organic producers cannot selltheir product to a handler for use as aningredient or for processing into aningredient that will be labeled as‘‘organic’’ on the information panel.However, this restriction is raised forpublic comment in subpart B,Applicability, of this part.

Small producers or handlers whoqualify for exemption but who choose tobe certified pursuant to theseregulations can label their product ascertified organic and can sell thatproduct to certified handlers for furtherprocessing as an organic ingredient.

USDA Seal. This proposal introducesa new, redesigned, USDA Seal, that canbe placed on consumer packages,displayed at retail food establishments,and used in market information to showthat products have been produced andhandled in accordance with theseregulations. The Seal can only be usedto identify raw and processed productsthat are labeled as ‘‘100 percentorganic’’ or ‘‘organic.’’ It cannot be usedfor products labeled as ‘‘made withorganic (specified ingredients)’’ (50 to95 percent organic ingredients) or onmultiingredient products with less than50 percent organic ingredients.

The USDA Seal presented in thisproposal will consist of the phrase,‘‘USDA Certified Organic,’’ on a shieldor badge design. When used, the sealmust be the same form and design asshown in figure 1 of § 205.310 of thisproposal. The seal must be printedlegibly and conspicuously. Onconsumer packages, retail displays, andlabeling and market information, theSeal may be printed on a white, lightcolored, or transparent background withcontrasting dark colored words andshield outline or on a dark coloredbackground with contrasting words andshield outline in one or two light colors.The Seal also may be printed in thecolors red, white, and blue as follows:a white background, with dark blueshield outline, and red words. Thechoice of color scheme is left to thediscretion of the producer, handler, orretail food establishment based on othercolors on the product package and otherconsiderations.

Labeling—Changes Based On CommentsThis subpart differs from our first

proposal in several respects as follows:(1) Use of terms other than ‘‘organic.’’

The first proposal stated thatinformational statements which imply‘‘organic’’ production and handlingshould be used only on products thatare produced and handled inaccordance with these regulations. Theproposal identified severalinformational statements commonlyreferred to as ‘‘eco-label’’ or ‘‘green’’terms and phrases such as: ‘‘producedwithout synthetic fertilizers,’’ ‘‘pesticidefree farm,’’ ‘‘no drugs or growthhormones used,’’ ‘‘raised withoutantibiotics,’’ ‘‘ecologically produced,’’‘‘sustainably harvested,’’ etc. We askedfor comments on these and other termsor phrases which directly or indirectlyimply that a product was organicallyproduced and handled.

Commenters favored use of ‘‘eco-label’’ and ‘‘green’’ terms and phraseson any product labels. The generalconsensus expressed in the comments is



that producers and handlers should beable to make claims about their productprovided the claims are truthful.

While commenters did not oppose theuse of eco-label terms or phrases onnonorganic products, they made it clearthat the term, ‘‘organic,’’ should only beused on products produced and handledin accordance with these regulations.Several commented that consumersrespond favorably to the term,‘‘organic,’’ when used on a productlabel, and, therefore, proper use of theterm must be closely protected.

We also received several commentsregarding use of the terms, ‘‘biological’’and ‘‘ecological,’’ on product labels. Afew comments indicated that the termsshould be allowed on nonorganicproducts to truthfully describe analternative agricultural system underwhich the product was produced orprocessed. However, most commentersopposed use of the terms as substitutesfor the term ‘‘organic’’ on productlabels.

We agree with the majority ofcomments received on this subject, andwe, therefore, propose to regulate theterm, ‘‘organic,’’ and no other terms. Wepropose that the term, ‘‘organic,’’ mayonly be used on labeling and marketinformation of products that areproduced and handled in accordancewith these regulations. We understandthat the terms, ‘‘ecological’’ and‘‘biological,’’ are a special case in thatthey are used synonymously with theterm, ‘‘organic,’’ in other countries.However, they cannot be usedinterchangeably with the term,‘‘organic,’’ in this country. These termsmay be used as eco-labels at this time.However, we will proceed to restrict useof these or any other terms if we findthat they are used on product packagesin the United States to represent‘‘organic’’ when the products are notproduced to the requirements of thisregulation.

(2) 100 percent organic category. Ourfirst proposal did not provide for a ‘‘100percent organic’’ category because thatlevel of organic composition is notspecifically provided for in the Act.While the Act and the first proposalprovide for a labeling category of 95percent or higher organic content,commenters appealed for a labelingcategory for product that is 100 percentorganic. Many suggested that being ableto use the term, ‘‘100 percent,’’ will givehandlers added incentive to use onlycertified ingredients in multiingredientproducts. Some commenters suggestedthat if a product is composed only oforganic ingredients, with no additives orother substances, it should be allowed

to be labeled and represented in marketinformation as 100 percent.

We agree that a ‘‘100 percent organic’’labeling category may increase theeffectiveness of marketing efforts andmay provide incentives for handlers touse more certified organic ingredients intheir multiingredient products.Therefore, this proposal will allow theterm, ‘‘100 percent organic,’’ to be usedon labels affixed to or marketinformation representing raw orprocessed organic products that arecomposed entirely of organicallyproduced agricultural product.

(3) Identification of private certifyingagents. Under the first proposal,identification of private certifyingagents was not permitted on theprincipal display panel with the USDASeal and the State organic seal. While afew commenters suggested that only theUSDA Seal should be displayed on theprincipal display panel, the majority ofthose commenting on this topicrequested that private certifying agentseals be displayed on an equal basiswith a seal of the appropriate State’sorganic program. Although the numberof State certifying agents is relativelysmall, private certifying agents believethat State organic programs and Statecertifying agents may implementmeasures in States that work against theinterests of private certifying agents.The Department believes those concernsto be unfounded. Under the NOP, theSecretary will approve all State organicprograms and accredit all Statecertifying agents. However, any of thoseprograms or agents that mightdiscriminate or work against theinterests of private certifying agents inthe State would not be approved by theSecretary.

Some commenters suggested thatmany private certifying agent seals arewidely recognized and respected andtheir seals influence consumer choicesin product purchases. It is appropriatethat private certifying agents be affordedthe same treatment with regard tolabeling as the State certifying agent. Weagree with commenters’ requests forequal treatment of certifying agents andthat certifier seals may have marketingpotential in some areas. Therefore, wespecify in this proposal that a privatecertifying agent’s seal or logo can bedisplayed to the same extent as the sealof a State certifying agent. This changeis reflected throughout this subpart.

(4) Use of a certifying agent’s seal orlogo. Many commenters believe that thecertifying agent’s seal, logo, oridentifying mark shown on ‘‘100 percentorganic’’ and ‘‘organic’’ products shouldbe the seal or mark of the certifyingagent that certifies the handler of

finished product. Commenters alsostated that labels should not be used tomisrepresent one product as being moreorganic than another product, whichmight happen if multiple seals aredisplayed on one product package andonly two are displayed on a competingproduct package. While we understandthe commenters’ points, we believe thatdisplay of certifying agent seals onproducts labeled ‘‘100 percent organic,’’‘‘organic,’’ and ‘‘made with organic(specified ingredients)’’ should remainoptional for handlers. If two or morecertifying agents are involved incertifying raw organic agriculturalproduct and organic ingredients used ina finished product, the seals or marks ofthose certifying agents may bedisplayed, at the discretion of thehandler. There should be only tworestrictions to using multiple certifyingagent seals: (1) The seal of the certifierof the handling operation producing thefinished product should be displayed;and (2) only the seals of those certifyingagents actually involved withcertification of the product oringredients may be displayed. Forinstance, a private certifying agent maycertify a product assembled usingorganic ingredients produced in Texasand certified by the Texas Statecertifying agent. The product packagemay, at the handler’s option, display theTexas State agent’s seal in addition tothe seal of the private certifying agentwhich certified the operation creatingother organic ingredients and creatingthe finished product. Likewise, displayof a seal of a foreign country’s organicprogram or foreign certifying agent willbe permitted only if the foreign agentcertified the finished product or aproduct ingredient.

Some commenters say that display oftwo State agent seals may confuseconsumers. However, we do not believeit is likely that handlers will choose todisplay multiple certifying agent seals tomisrepresent a product. We also do notbelieve that possible consumerconfusion from display of multiple sealsshould take precedence over thehandler’s right to provide productinformation. If multiple certifying agentseals or marks are displayed on aproduct package or in marketinformation, the handler or retail foodestablishment must maintainappropriate records showing proof of allorganic certifications.

(5) Display of certifying agent nameand business address. Commenters alsosuggested that the certifying agent’sname and business address be displayedadjacent to identification of the handleror distributor of products labeled‘‘organic’’ and ‘‘made with organic



(specified ingredients).’’ Thecommenters stated that suchinformation should be available forconsumers who may have questionsabout the organic nature of a product orproduct ingredients. We agree that thename of the certifying agent should beincluded on a product package butbelieve that display of the businessaddress or telephone number should beoptional to the handler who assemblesthe finished product and affixes thelabel on the package. If a consumerwants to inquire about the organicnature of a purchased product, theconsumer can obtain contactinformation through the certifying agentdatabase listed on the NOP homepage.Finally, to clearly identify theinformation provided, the statement,‘‘Certified organic by * * *’’ or‘‘Ingredients certified as organicallyproduced by * * *,’’ may be used todistinguish the certifying agent from themanufacturer or distributor of theproduct.

The statement and agentidentification is intended forinformation purposes only and is not topromote the organic nature of theproduct. The certifying agentidentification may be placed below themanufacturer or distributor informationand must not interfere with display ofthat information.

(6) Size of certifying agent seal. Therewas a general consensus amongcommenters that the seals of State andprivate certification agents should notbe larger than the USDA Seal. Toemphasize the market value of such anational organic seal and maintain someconsistency of treatment with regard tothe different organic content categories,we propose that State and privatecertifying agent seals can be the samesize as but must not exceed the size ofthe USDA Seal on any package label orin market information. The size of theUSDA Seal on a package is left to thediscretion of the handler.

(7) Displaying the percentage oforganic ingredients. The first proposalpermitted use of the word, ‘‘organic,’’ inthe ingredient statements to modifythose ingredients that were producedand handled pursuant to theseregulations, but did not require thepercentage of organic ingredients to bedisplayed on the label. Most allcommenters responding to this labelingissue stated that identification oforganic ingredients as ‘‘organic’’ willencourage handlers to increase theorganic composition of multiingredientproducts. However, some commentersdid not favor any use of the word,‘‘organic,’’ on packages ofmultiingredient products containing

less than 50 percent organic ingredients.Some commenters also suggested thatincluding the total percentage of organiccontent adjacent to the ingredientstatement (in which the organicingredients are identified) would giverelevance to the ingredient statement.We concur with commenters’recommendations about the display ofthe total percentage of organic contentand propose that the percentage oforganic ingredients be placed on theinformation panel. The percentagestatement and the ingredient statementshould be shown in a way that indicatesthe relationship of the information. If aproduct is labeled ‘‘100 percentorganic,’’ all ingredients (except waterand salt), by definition, would have tobe certified organic ingredients, andeach ingredient may be but would nothave to be identified as ‘‘organic.’’Identification of organic ingredientswould be required for products labeled‘‘organic’’ and ‘‘made with organic(specified ingredients),’’ and forproducts containing less than 50 percentorganic ingredients. We did not changethe identification of organic ingredientsfor products containing less than 50percent organic ingredients because webelieve the uses of the term on theinformation panel and ingredientstatement of such product packages donot imply that the product is organic.

(8) Labeling of products containing50–95 percent organic ingredients. Thefirst proposal specified that productswith 50–95 percent organic contentcould use ‘‘made with certain organicingredients’’ on the label. Manycommenters suggested that the word,‘‘certain,’’ may appear confusing toconsumers and that a stronger statementis needed to identify the organic natureof the product. One commenter soughtclarification of whether the term,‘‘certain,’’ is a substitute for the name ofthe ingredient in a single-ingredientproduct. Many requested that thestatement be changed to allow specificidentification of the organic ingredientson the principal display panel. Becausethat is the panel first and most oftenobserved by consumers, the commentersindicated that the information presentedon the principal display panel should beclear and accurate to assist consumersin making their purchasing decisions.

After review of the comments, webelieve that, if the statement is going tobe displayed on the principal displaypanel, it should state the specifiedorganic ingredient in the product; e.g.,‘‘made with organic (specifiedingredients).’’ Replacing the word,‘‘certain,’’ with the actual organiccommodity name or organic ingredientwill add the specificity sought by

commenters and assist consumers inmaking more informed choices. Underthis proposal, the statement, ‘‘madewith organic (specified ingredients),’’must be used on the principal displaypanel and on other package panels of aproduct containing between 50 and 95percent organic ingredients.

Several commenters suggested thatthe size of the letters in the phrase belimited to a fraction of the size of theproduct name as it appears on theprincipal display panel. They stated thatlimiting the size of the letters will keepthe statement from making the productappear more organic than products with95 percent organic ingredients. Forinstance, if a product contains 55percent organic ingredients and thestatement, ‘‘made with organic(specified ingredients),’’ is displayed onthe principal display panel in large,bold letters, the product may appearmore organic than a 97-percent productsimply labeled ‘‘organic.’’ Commentersrecommended letter sizes from one-halfto three-fourths the size of the productname as it appears on the principaldisplay panel.

We also believe that the labeling forthese products should not use typefaceor letter sizes which would misleadconsumers. FDA labeling requirementsin 21 CFR 101.3(d) specify that requiredstatement of identity of the productshall be in a size most reasonablyrelated to the largest printed matter ona panel. FDA enforces ‘‘reasonablyrelated’’ as being one half the size of thelargest printed matter, which is usuallythe product name. Therefore, to beconsistent with FDA labelingrequirements, we have established theprint size of the statement, ‘‘made withorganic (specified ingredients),’’ to benot more than 50 percent, or one half,of the largest print size appearing on theprincipal display panel. This print sizeis consistent with the recommendationof many commenters but is smaller thanthe 75 percent recommended by theNOSB. We propose that the statement,‘‘made with organic (specifiedingredients),’’ appear in only one printstyle and color, without highlighting.

We believe that these additionalrestrictions on display of the statementwill enable the message to be deliveredand yet provide some structure andconsistency to display of the statement.It is our intention that the statement notbe used to disproportionately dominatethe principal display panel or otherpanels and not be used to misrepresentthe organic nature of the product.

(9) Limiting the number of organicingredients listed. Some commenterssuggested limiting the number oforganic ingredients that could be



included in the statement ‘‘made withorganic ingredients.’’ This topic was thesubject of much NOSB deliberation andpublic discussion. Commentersreasoned that if the list of organicingredients became too long, theproduct could appear to be more organicthan ‘‘95 percent’’ products. Forinstance, a product could have 10organic ingredients, but those 10ingredients may comprise only 51percent of the product. The consensusof comments suggested that thestatement should be limited to threeorganic ingredients, which is theindustry standard. We believe theirrecommendation has merit and,therefore, propose that up to threeorganic ingredients can be shown in thestatement. We encourage additionalcomments on the maximum number ofingredients that should be allowed toappear in the statement on the principaldisplay panel. Commenters shouldprovide reasons for the number theyrecommend.

(10) Qualifications for display of theUSDA Seal. In the first proposal, wepermitted the display of the USDA sealon products with 50 percent or moreorganic ingredients. Commentersobjected. They overwhelminglyendorsed a high organic contentstandard for a product to be labeled as‘‘organic.’’ They believe productscontaining less than 95 percent organicingredients do not have sufficientorganic content to justify an ‘‘organic’’label on the principal display panel, andshould not be so labeled under the NOPregulations. Commenters also stated thatdisplay of the USDA Seal will be verydesirable. Many stated that a prohibitionon display of the USDA Seal on 50-to-95-percent products would encouragehandlers who assemble multiingredientproducts to use more organicallyproduced ingredients and fewernonorganic ingredients. They suggestedthat the USDA Seal and the certifyingagent’s seal or logo not be displayed onany package panel of products ‘‘madewith organic (specified ingredients)’’ oron products with less than 50 percentorganic ingredients.

We agree that some distinction shouldbe made between 95 percent-plusorganic products and the 50–95 percentorganic products. Handlers of 95percent-plus organic products maydisplay both the USDA Seal and thecertifying agent seal or logo on theprincipal display panel of the product.The commenters propose that handlersof 50–95 percent organic products notbe allowed to display either seal on theprincipal display panel. However, webelieve that, because handlers of 50–95percent organic product are required to

be certified under this program, it isappropriate that they should be allowedto display some evidence of thatcertification. We propose, therefore, thathandlers of 50–95 percent organicproduct may display the seal or logo ofthe certifying agent which certified thefinished product. Display of the USDASeal will still be restricted to only 100percent organic products and to 95percent-plus products. We believe thisprovision will provide more equitabletreatment for handlers of 50–95 percentproducts who are required under thisregulation to obtain and maintainorganic certification in order to labeltheir organic product. It will alsomaintain a distinction between the twoproduct levels by continuing therestriction on display of the USDA Seal.We believe that, while display of theUSDA Seal is less likely to be anincentive for handlers of products at thelower end of the 50 to 95 percent rangeof organic content, handlers of productsat the higher end of the 50 to 95 percentorganic content range may beencouraged to increase the organiccontent in order to display the USDASeal.

An organic product produced orhandled by an exempt or excludedoperation, including those with lessthan $5,000 annual organic sales, maynot display the USDA Seal or the sealof a certified agent because theoperation has not been certified. Even ifthe organic content of the product is 95percent or higher, the product stillcannot be labeled as ‘‘certified’’ organicor marketed using an organic seal orlogo.

(11) Design of the USDA Seal. Thefinal change prompted by comments isredesign of the USDA Seal. The Seal inthe first proposal was a triangular shapebehind a circle of recycling arrowsaround a globe figure with the word,‘‘organic,’’ printed diagonally across theglobe. That proposed seal was opposedby hundreds of commenters. Commentsincluded: The triangle resembles aradioactive warning symbol or falloutshelter sign; the diagonal line across thecircle appears to be the universal ‘‘no’’sign (such as ‘‘no walking,’’ ‘‘nosmoking’’); the globe design doesn’tshow up; the globe design implies aninternational program; the design is toobusy; simplify the design; use thewords, ‘‘certified organic’’; use a textlogo; the seal will be too costly toproduce; and the triangle points willpuncture or tear plastic when printed.

Given the overwhelming negativeresponse to the first seal, we propose asimplified design composed of thewords, ‘‘USDA CERTIFIED ORGANIC,’’inside a shield or badge design. This

design is consistent with commentsrequesting simplicity and use of thewords, ‘‘certified organic.’’ At therequest of commenters, this proposalprovides for labeling on transparentmaterial. We believe the proposed basicdark on light or light on darkrequirement is broad enough to allowhandlers the flexibility needed to matchcolor schemes compatible with theirproduct packages. The alternative red,white, and blue color scheme offershandlers what consumers may identifyas a more official or patriotic display ofthe Seal. We believe it is important thatthe Seal be displayed in a consistentmanner, within general light/darkguidelines so that the Seal becomeseasily recognizable to consumers.

Labeling—Changes Requested But NotMade

Comments reflecting differentopinions on the same topic are coveredabove (e.g., the number of organicingredients listed on the principaldisplay panel, the size of ‘‘organic’’letters on the principal display panel, arecommended redesign of the USDASeal, etc.). Obviously, not all suchconflicting recommendations can beaccepted. Two comments were receivedwhich are not accepted but which webelieve warrant further consideration bythe public and the organic community.We request additional commentsregarding the following tworecommendations. Commenters shouldspecify their recommendation regardingeach topic and provide reasons for theirrecommendation.

(1) Changing the ‘‘organic’’ thresholdfor multiingredient products. At leastone commenter suggested that the 50–95percent labeling category sets too low athreshold for organic labeling ofmultiingredient products. Thecommenter suggested that, for increasedinternational acceptance of USDAstandards, the lowest acceptablepercentage for receiving an organic labelshould be 70 percent organicingredients, based on the EuropeanUnion (EU) standard which nowrequires a minimum of 70 percentorganic ingredients for the product to belabeled as ‘‘organic’’ (or, ‘‘biological’’ or‘‘ecological’’).

The EU standard allows productswith a 70 percent organic content to belabeled as ‘‘organic,’’ where ourproposal will require at least 95 percentorganic content before a product couldbe labled as ‘‘organic.’’ This 95 percentstandard is in the Act. Where the twostandards differ is that the EU standarddoe not have a ‘‘made with organic(specified ingredients)’’ categoryproposed in this rule.



While the Act establishes a 50-percentminimum ingredient content, thatpercentage can be adjusted upward ifdoing so would further the purposes ofthe Act. To do so, however, theSecretary must have good cause andjustification for establishing a higherminimum organic ingredient content. Inother words, we could raise theminimum organic ingredient contentthreshold to 70 percent, redefining twoof our four categories. The fourcategories would be: less than 70percent, 70–95 percent, greater than 95percent, and 100 percent. Under thisscenario, the prohibitions on excludedmethods, irradiation, and sewage sludgewould not apply to the nonorganicingredients of products with less than70 percent organic content. At the sametime, these products would only be ableto list the organic ingredients on theinformation panel. The ‘‘made withorganic ingredients’’ category, to whichthe prohibition would apply, would be70–95 percent organic content. The onlyproducts that would get the ‘‘organic’’designation would still be those with atleast 95 percent organic content.

Because we find no compelling reasonto raise the 50-percent minimumingredient content threshold establishedin the Act, we have not accepted thecommentor’s recommendation in thisproposal. However, if comments on thisproposal suggest an appropriatejustification, the minimum ingredientcontent threshold could be raised in thefinal rule.

(2) Minimum content requirements fororganic ingredients. One commentersuggested that a minimum percentage ofthe entire product weight be establishedto qualify for a single ingredient to beincluded in the statement, ‘‘made withorganic (specified ingredients).’’ Thecommenter suggested that this wouldhelp prevent misrepresentation of theorganic nature of a product. Thecommenter suggested that the minimumcontent for any ingredient should be 15percent. The commenter did not justifythe 15-percent minimum (as opposed toanother minimum percentage). Becausesuch a recommendation could preventimportant ingredients from beingspecified on a product label, we havenot incorporated the comment in thisproposal. However, we believe thecomment may have merit. One factor inestablishing a minimum percentage forany individual ingredient listed on theprincipal display panel would be theestablished minimum percentage for allorganic ingredients in a product, thequestion raised in the paragraph above.For instance, if the minimum percentageof all ingredients is established at 70percent to conform to EU standards,

should there be a minimum percentagefor any individual organic ingredientthat could be listed on the principaldisplay panel as one of three organicingredients in the product? Would sucha labeling restriction preventidentification of an important organicingredient from being displayed on theprincipal display panel?

Commenters on questions (1) and (2)should state whether they think therecommendations would further themarketing of organic products and, if so,clearly state the recommendedpercentage for each question and thereasons for their opinions regardingeach issue.

(3) Labeling requirements for smalloperations. A majority of those whocommented on the exemption for smalloperations (less than $5,000 organicsales) in the first proposal stated thatsuch operations are not exempt fromlabeling requirements under the Act. Inthis proposal, we provide limitedlabeling provisions which prohibitexempt and excluded operations,including those with less than $5,000 inannual organic sales, from labeling theirproducts in a way that indicates theoperations or the products have beencertified as organic. These provisionswill not allow such operations to uselabeling terms and organic seals andlogos specified for certified operations.We believe those terms, logos and sealsshould be reserved for operations andproducts that are certified under theseregulations.

Labeling—Additional ProvisionsUpon further review of the label and

market information provisions in thefirst proposal, we propose the followingadditions and changes.

(1) Display of a State organic seal.Under the first proposal, each Stateorganic certification program wouldhave been allowed to display a seal orlogo of its State organic program. Thefirst preamble stated that it wasappropriate for a State to have a sealrepresenting its organic program, thusallowing product produced under thatprogram to bear the State’s seal.

Currently, 13 State departments ofagriculture (or other State agency) andapproximately 40 private agents certifyto a variety of private and State organicrequirements. After establishing a policywhich more clearly defines the criteriafor approval of a State organic program,we believe that, in the interest ofconsistent and uniform nationalstandards, product packages should notdisplay the seal of a State organicprogram if the seal is different from theseal or mark used by the State’s organiccertifying agent.

This determination is based on aproposed change in State programs. AState organic program will be approvedby the Secretary for specific, need-basedreasons particular to that State (see StatePrograms under subpart G). To establishand maintain uniform nationalstandards, States will not be authorizedto implement more restrictive organicstandards simply to promote Stateproducts that are ‘‘more organic’’ thanproducts produced and handled in otherStates or under NOP requirements.Rather, the Secretary will approve onlythose State programs that need morerestrictive requirements to protect orpreserve unique environmentalconditions or to accommodate productand handling practices unique to a Stateor portion of a State. In the absence ofsuch environmental conditions orproduction practice needs, a State’sorganic program must have the samerequirements as this NOP. If this is thecase and if a relatively few Stateprograms are approved to have morerestrictive requirements, then no realpurpose is served by permitting Stateorganic programs to display a separateand distinct seal on a product label.Such a seal would not represent a ‘‘moreorganic’’ product.

In the place of a State organic programseal, this proposal provides for the sealor logo of a State certifying agent to bedisplayed on packages, if that certifyingagent certifies the organic operationproducing the product. Selection of aState or private certifying agent is thechoice of the organic producer orhandler being certified. A State’sdepartment of agriculture (or otherequivalent State agency) may establishone or more State certifying agentoffices as part of its governmentaloperations, or the State may license aprivate certifying agent to certify organicoperations on behalf of the State. Ineither case, the certifying agent wouldcertify these national requirements andnot the particular requirements of aState organic program unless thoserequirements were approved by theSecretary. Therefore, the only organicseal or mark representing a State will bethe seal or mark of a State’s certifyingagent or licensed certifying agent. Anycertifying agent licensed by the Statemust be accredited by the Secretarypursuant to subpart F of this proposal.

(2) Labeling for international markets.We have added two paragraphs undersection 205.300 to provide for labelingof products intended for internationalmarkets. Domestically produced organicproducts intended for export may belabeled to meet the requirements of thecountry of destination or any labeling



requirements specified by a particularforeign buyer.

If labeled to meet foreign labelingrequirements, such packaged productscannot be sold in the United States.Pursuant to § 205.306, shippingcontainers and bills of lading for theseproducts would have to be marked ‘‘forexport only’’ to assure that the productwas not distributed domestically. Weare providing this exception to labelingrequirements for the convenience ofexporters only. If the foreign country orbuyer does not require different productlabeling, domestic product which hasbeen produced, certified, and labeledpursuant to these regulations may beshipped without the statement, ‘‘forexport only,’’ on the containers and billsof lading.

Organic product produced in anothercountry for export to the United Statesmay be certified to the requirements ofthis regulation or to an approved foreignorganic certification program that hasbeen recognized as equivalent to therequirements of the NOP. Such productsmust be labeled pursuant to therequirements of this subpart.

(3) Product composition. Under new§ 205.301, Product Composition, wehave clarified the composition oforganic and nonorganic ingredients inproducts covered in the four labelingcategories. All ingredients labeled as‘‘organic’’ in the ingredient statement ofthe product package must be producedand handled pursuant to theserequirements. No substances prohibitedon the National List in subpart G and noproduction or handling practicesprohibited in § 205.301(e) may be usedin the production or handling of anyingredient labeled as ‘‘organic.’’Regulations covering the productionand handling of nonorganic ingredientsvaries with the labeling category. Thehigher the percentage of a product’sorganic composition, the morerestrictive the production and handlingrequirements of the nonorganicingredients in the product. Theserequirements are found under § 205.301and explained above under ProposalDescription.

(4) Prohibited practices. Section205.301(e) lists seven production andhandling practices that are prohibitedfrom being used to produce wholeproducts or product ingredients thatwould be labeled as ‘‘organic’’ under theNOP. Some of these prohibited practicesappear for the first time in this proposal,and others were specified in the firstproposal and were supported by allthose who addressed them in theircomments.

The first proposal prohibited organiclabeling of a product or ingredient

produced using water that does notmeet requirements of the Safe DrinkingWater Act (42 U.S.C. 300(f) et seq.). Wehave not included that provision in thisproposal because potable water isrequired in other FDA and FSISprocessing regulations and does notneed to be repeated as a requirement inthis regulation.

The first three practices (use ofexcluded methods, sewage sludge, andirradiation) are discussed elsewhere inthis proposal and are added asprohibited practices in this labelingsection for consistency purposes.

Only processing aids and substanceson the National List in subpart G of thisregulation may be used in theproduction and handling of 95 percent-plus organic products and 50–95percent organic products and in anyingredient labeled as organic on aproduct package.

The first proposal prohibited use ofsulfites, nitrates, and nitrites inproduction or processing of organicproducts or ingredients. We haveamended the wording of this provisionto clarify that a handler cannot add anysulfites, nitrates, and nitrites to aproduct and still label the finishedproduct or ingredient as ‘‘organic.’’ Wemake this clarification because thesesubstances are found naturally in manysubstances and may appear naturally inpotable water used in processing.

The last two processing practices thatwould prohibit an ‘‘organic’’ labelappeared in separate sections of the firstproposal and are included in thisproposal in § 205.301(e)(6) and (e)(7).The first is that products and organicingredients assembled using organic ornonorganic forms of the same ingredientor component ingredients—dependingon availability of the organicingredients—cannot be labeled as‘‘organic when available’’ or a similarphrase. Similarly, products and organicingredients assembled using bothorganic and nonorganic forms of thesame ingredient or componentingredients cannot be labeled as organicif that ingredient is identified as organicon the ingredient statement andincluded in the percentage of organiccontent on the information panel.

(5) Calculating organic content.Because labeling requirements are basedon the amount of organic ingredients ina product, we have added new section205.302, which addresses thecalculation of organic percentages.Provisions in this new section were notincluded in the first proposal. Whilethis should be a simple mathematicalprocedure, the section proposes certainguidelines for calculating and labelingorganic percentages.

Only one percentage figure for totalorganic ingredients will be shown on apackage. The percentage of individualorganic ingredients will not bedisplayed.

An organic product may beconstituted completely of organic liquidproducts. Therefore, this proposal addsthe phrase, ‘‘or fluid volume,’’ in severalplaces in the proposal when referring toliquid products and ingredients. Foringredients in liquid form that arereconstituted with water from aconcentrate, the calculation would bebased on a single-strength solution ofthe liquid concentrate. For products thatmay contain both dry and liquid organicingredients, the percentage calculationwould be based on the combined weightof the organic ingredients, including theweight of the liquid ingredients, minuswater and salt.

(6) Labeling of nonretail containers.We have added new § 205.306, coveringlabeling of nonretail containers—thoseused only for shipping and storage ofagricultural products labeled as organicor containing organic ingredients. Whilethe same containers are commonly usedfor both shipping and storage, the firstproposal did not reference storagecontainers or specify labelingrequirements for those containers. Theseprovisions are proposed only forproducts labeled as ‘‘100 percentorganic,’’ ‘‘organic,’’ and ‘‘made withorganic (specified ingredients).’’ Somemay believe that use of the USDA Sealon a shipping container of products‘‘made with organic (specifiedingredients)’’ may be inconsistent withother labeling provisions prohibitingdisplay of the Seal on consumerpackages of those products. However, inthe case of shipping and storagecontainers, the display of seals is notintended for marketing purposes butwould be used for easy identification ofthe product to help preventcommingling with nonorganic productor handling of the product which woulddestroy the organic nature of theproduct (fumigation, etc.). Theseprovisions will not apply to shippingand storage containers of productscontaining less than 50 percent organicingredients.

(7) Retail Food Establishments. Theextent of the regulatory authority of thisregulation has been the subject ofintense discussions in commentsreceived, NOSB deliberations, and AMSdiscussions. Commenters claimed that itmakes no sense to regulate and certifythe production and handling of organicproduct but not require certification andregulate retail food establishmentswhere some fresh foods containingorganic ingredients are processed and



assembled and where they can becomeadulterated or misrepresented to theconsuming public.

Retail food establishments that marketorganic product, whether produced in-store, in a corporate commissary, or byothers, will be subject to the labelingprovisions of this subpart as thatlabeling applies to: (1) Point-of-purchase, in-store displays describingthe organic nature of the product; and(2) other market information and mediaadvertising regarding the product beingmarketed at the retail foodestablishment. Food retailestablishments must describe theproduct in in-store retail displays,market information, and mediaadvertising that is consistent with theorganic content of the finished product.Any labeling of a product that isinconsistent with the percentage oforganic content of the product will beconsidered a violation of truth inlabeling and/or truth in advertisingregulations of FDA and the FTC.Multiingredient products which aredescribed as organic product in retaildisplays and market information mustbe assembled by a certifiedmanufacturing facility, pursuant to theApplicability subpart of this regulation.

Packaged organic products, organicfresh produce, and organic bulk binfood items must be described in point-of-purchase displays, pricinginformation, and consumer informationin terms consistent with the organiccontent of the product. For instance, anin-store retail display would describe an87 percent organic product byspecifying the percentage of organiccontent of the product and identifyingthe organic ingredients in the ingredientstatement, as may be required by FDA.The market information for such aproduct must not, for instance, label theproduct as ‘‘organic’’ or ‘‘100 percentorganic.’’ This would be a violation oftruth in labeling and advertisingregulations of FDA and FTC. The USDASeal and the seal of the certifying agentmay be displayed at retail sales and inmarket information on productscertified as containing 95 percent ormore organic content. Multiingredientproducts containing 50–95 percentorganic ingredients may display the sealor logo of the certifying agent of theorganic handling operation.

We believe these labeling practiceswill help assure appropriaterepresentation of bulk organic productsat retail sale and will encouragehandlers to use more organicingredients.

Products containing less than 50percent organic ingredients at the pointof retail sale may not be identified in

any way as ‘‘organic’’ or containingorganic ingredients. In addition, theUSDA Seal and seal, logo, or otheridentifying mark of the certifying agentis prohibited from being used in retaildisplays and market information.

(8) Change in calculating the $5,000exemption. We are proposing a changein calculating the $5,000 exemption forproducers and handlers. The $5,000annual exemption will be calculated onsales of organically produced productand not on all agricultural productsmarketed by the exempt producer orhandler, as provided in the firstproposal. This exemption means thatqualifying exempt organic producersand handlers may annually sell up to$5,000 of organically produced productsand not be certified as an organicoperation under this regulation. Theexemption could apply to a large,conventional agricultural operation thatalso has a small amount of acreagedesignated for organic production—theproducts of which, for example, is soldat a roadside stand. Any sale of other,nonorganic products will not countagainst the $5,000 sales total. Thelabeling and market informationrequirements for organic productsproduced by such exempt operations arespecified in § 205.309 of this regulation.

Subpart E—CertificationThis subpart sets forth the

requirements for a national program tocertify production and handlingoperations as certified organicproduction or handling operations. Thecertification process proposed in thissubpart will be carried out by accreditedcertifying agents.

Proposal DescriptionGeneral Requirements. Production

and handling operations seeking toreceive or maintain organic certificationmust comply with the Act andapplicable organic production andhandling regulations. Such operationsmust establish, implement, andannually update an organic productionor handling system plan that issubmitted to an accredited certifyingagent. They must permit on-siteinspections by the certifying agent withcomplete access to the production orhandling operation, includingnoncertified areas and structures.

As discussed in Subpart B, certifiedoperations must maintain recordsconcerning the production and handlingof agricultural products that are sold,labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients)’’sufficient to demonstrate compliancewith the Act and regulations. Records

applicable to the organic operation mustbe maintained for not less than 5 yearsbeyond their creation. Authorizedrepresentatives of the Secretary, theapplicable State program’s governingState official, and the certifying agentmust be allowed access to theoperation’s records during normalbusiness hours. Access to theoperation’s records will be for thepurpose of reviewing and copying therecords to determine compliance withthe Act and regulations.

Certified operations are required toimmediately notify the certifying agentconcerning any application, includingdrift, of a prohibited substance to anyfield, production unit, site, facility,livestock, or product that is part of theorganic operation. They must alsoimmediately notify the certifying agentconcerning any change in a certifiedoperation or any portion of a certifiedoperation that may affect its compliancewith the Act and regulations.

Certification Process. To obtaincertification, a producer or handler mustsubmit a request for certification to anaccredited certifying agent. The requestmust contain descriptive informationabout the applicant’s business, anorganic production and handling systemplan, information concerning anyprevious business applications forcertification, and any other informationnecessary to determine compliance withthe Act.

Applicants for certification andcertified operations must submit theapplicable fees charged by the certifyingagent. An applicant may withdraw itsapplication at anytime. An applicantwho withdraws its application will beliable for the costs of services providedup to the time of withdrawal of theapplication.

The certifying agent will decidewhether to accept the applicant’sapplication for certification. Certifyingagents may decline to accept anapplication for certification but may notdecline to accept an application on thebasis of race, color, national origin,gender, religion, age, disability, politicalbeliefs, sexual orientation, or marital orfamily status.

Upon acceptance of an application forcertification, a certifying agent willreview the application to ensurecompleteness and to determine whetherthe applicant appears to comply or maybe able to comply with the applicableproduction or handling regulations. Aspart of its review, the certifying agentwill verify that an applicant hassubmitted documentation to support thecorrection of any deficiencies identifiedin a previously received notification ofnoncompliance. The certifying agent



1 ISO Guide 10011–1 is available for viewing atUSDA–AMS, Transportation and MarketingPrograms, Room 2945—South Building, 14th andIndependence Ave., SW, Washington, DC, from 9:00a.m. to 4:00 p.m., Monday through Friday (exceptofficial Federal holidays). A copy may be obtainedfrom the American National Standards Institute, 11West 42nd Street, New York, NY 10036; Website:www.ansi.org; E-mail: [email protected];Telephone: 212–642–4900; Facsimile: 212–398–0023.

will also review any available U.S.Department of Agriculture (USDA) dataon production and handling operationsfor information concerning theapplicant.

We anticipate using data collectedfrom certifying agents to establish andmaintain a password-protected Internetdatabase only available to accreditedcertifying agents and USDA. Thisdatabase would include data onproduction and handling operationsissued a notification of noncompliance,noncompliance correction, denial ofcertification, certification, proposedsuspension or revocation ofcertification, and suspension orrevocation of certification. Certifyingagents would use this Internet databaseduring their review of an application forcertification. This data will not beavailable to the general public becausemuch of the data would involve ongoingcompliance issues inappropriate forrelease prior to a final determination.

After a complete review of theapplication, the certifying agent willcommunicate its findings to theapplicant. If the review of theapplication reveals that the applicantmay be in compliance with theapplicable production or handlingregulations, the certifying agent willschedule an on-site inspection of theapplicant’s operation to determinewhether the applicant qualifies forcertification. The initial on-siteinspection must be conducted within areasonable time following adetermination that the applicantappears to comply or may be able tocomply with the requirements forcertification.

The certifying agent will conduct aninitial on-site inspection of eachproduction unit, facility, and siteincluded in the applicant’s operation.As a benchmark, certifying agentsshould follow auditing guidelinesprescribed by the InternationalOrganization for Standardization Guide10011–1, ‘‘Guidelines for auditingquality systems—Part 1: Auditing’’ (ISOGuide 10011–1).1 The certifying agentwill use the on-site inspection indetermining whether to approve therequest for certification and to verify theoperation’s compliance or capability tocomply with the Act and regulations.

Certifying agents will conduct on-siteinspections when the applicant or anauthorized representative of theapplicant who is knowledgeable aboutthe operation is present. An on-siteinspection must also be conductedwhen land, facilities, and activities thatdemonstrate the operation’s compliancewith or capability to comply with theapplicable production or handlingregulations can be observed.

The on-site inspection must verifythat the information provided to thecertifying agent accurately reflects thepractices used or to be used by theapplicant or certified operation and thatprohibited substances have not beenand are not being applied to theoperation. Certifying agents may use thecollection and testing of soil; water;waste; plant tissue; and plant, animal,and processed products samples as toolsin accomplishing this verification.

The inspector will conduct an exitinterview with an authorizedrepresentative of the inspectedoperation to confirm the accuracy andcompleteness of inspection observationsand information gathered during the on-site inspection. The main purpose ofthis exit interview is to present theinspection observations to those incharge of the firm in such a manner soas to ensure they clearly understand theresults of the inspection. The firm is notrequired to volunteer any informationduring the exit interview but would berequired to respond to questions orrequests for additional information. Theinspector will raise and discuss duringthe exit interview any known issues ofconcern, taking into account theirperceived significance. As a generalrule, the inspector will not makerecommendations for improvements tothe operation during the exit interview.However, the certifying agent will havethe discretion to decide the extent towhich an inspector may discuss anycompliance issue.

Notification of Approval. A certifyingagent will review the on-site inspectionreport, the results of any analyses forsubstances, and any additionalinformation provided by the applicantwithin a reasonable time aftercompletion of the initial on-siteinspection. The certifying agent willapprove certification upon making twodeterminations: (1) That the applicant’soperation, including its organic systemplan and all procedures and activities,is in compliance with the Act andregulations; and (2) that the applicant isable to conduct operations inaccordance with its organic systemsplan.

Upon determining the applicant’scompliance and ability to comply, the

agent will approve certification andissue a ‘‘certificate of organicoperation.’’ The approval may includerestrictions regarding minor deficienciesthat would not prevent certification asa condition of continued certification. Acertificate of organic operation willspecify the name and address of thecertified operation; the effective date ofcertification; the categories of organicoperation, including crops, wild crops,livestock, or processed productsproduced by the certified operation; andthe name, address, and telephonenumber of the certifying agent. Oncecertified, a production or handlingoperation’s organic certificationcontinues in effect until surrendered bythe organic operation or suspended orrevoked by the certifying agent, theState program’s governing State official,or the Administrator.

Denial of Certification. Should thecertifying agent determine that theapplicant is not able to comply or is notin compliance with the act, thecertifying agent will issue a writtennotification of noncompliance to theapplicant. Applicants who receive anotification of noncompliance maycorrect the deficiencies and submit, bythe date specified, a description ofcorrection and supportingdocumentation to the certifying agent.As an alternative, the applicant maysubmit a new application to anothercertifying agent, along with thenotification of noncompliance and adescription of correction of thedeficiencies and supportingdocumentation. Applicants may alsosubmit, by the date specified, writteninformation to the certifying agent torebut the noncompliance described inthe notification of noncompliance.When a noncompliance cannot becorrected, a notification ofnoncompliance and a ‘‘notification ofdenial of certification’’ may becombined in one notification.

The certifying agent will evaluate theapplicant’s corrective actions taken andsupporting documentation submitted orthe written rebuttal. If necessary, thecertifying agent will conduct a followupon-site inspection of the applicant’soperation. When the corrective action orrebuttal is sufficient for the applicant toqualify for certification, the certifyingagent will approve certification. Whenthe corrective action or rebuttal is notsufficient for the applicant to qualify forcertification, the certifying agent willissue the applicant a written notice ofdenial of certification. The certifyingagent will also issue a written notice ofdenial of certification when anapplicant fails to respond to thenotification of noncompliance. The



notice of denial of certification will statethe reasons for denial and theapplicant’s right to reapply forcertification, request mediation, or filean appeal.

An applicant who has received anotification of noncompliance or noticeof denial of certification may apply forcertification again at any time with anycertifying agent. When the applicantsubmits a new application to a differentcertifying agent, the application mustinclude a copy of the notification ofnoncompliance or notice of denial ofcertification. The application must alsoinclude a description of the actionstaken, with supporting documentation,to correct the deficiencies noted in thenotification of noncompliance. When acertifying agent receives such anapplication, the certifying agent willtreat the application as a newapplication and begin a new applicationprocess.

A certifying agent has limitedauthority to deny certification withoutfirst issuing a notification ofnoncompliance. This authority may beexercised when the certifying agent hasreason to believe that an applicant forcertification has willfully made a falsestatement or otherwise purposefullymisrepresented its operation or itscompliance with the requirements forcertification.

Continuation of Certification. Eachyear, the certified operation mustupdate its organic production orhandling system plan and submit theupdated information to the certifyingagent to continue certification. Theupdated organic system plan mustinclude a summary statement,supported by documentation, detailingdeviations from, changes to,modifications to, or other amendmentsto the previous year’s organic systemplan. The updated organic system planmust also include additions to ordeletions from the previous year’sorganic system plan, intended to beundertaken in the coming year. Thecertified operation must update thedescriptive information about itsbusiness and other information asdeemed necessary by the certifyingagent to determine compliance with theAct and regulations.

Following receipt of the certifiedoperation’s updated information, thecertifying agent will arrange andconduct an on-site inspection of thecertified operation. As a benchmark,certifying agents should follow auditingguidelines prescribed by ISO Guide10011–1. Upon completion of theinspection and a review of updatedinformation, the certifying agent willdetermine whether the operation

continues to comply with the Act andregulations. If the certifying agentdetermines that the operation is incompliance, certification will continue.If any of the information specified onthe certificate of organic operation haschanged, the certifying agent will issuean updated certificate of organicoperation. If the certifying agent findsthat the operation is not complying withthe Act and regulations, a writtennotification of noncompliance will beissued as described in § 205.662.

In addition to annual inspections, acertifying agent may conduct additionalon-site inspections of certifiedoperations to determine compliancewith the Act and regulations. TheAdministrator or State program’sgoverning State official may also requirethat additional inspections beperformed by the certifying agent todetermine compliance with the Act andregulations. Additional inspections maybe announced or unannounced andwould be conducted, as necessary, toobtain information needed to determinecompliance with identifiedrequirements.

Such on-site inspections would likelybe precipitated by reasons to believethat the certified operation wasoperating in violation of one or morerequirements of the Act or theseregulations. The policies andprocedures regarding additionalinspections, including how the costs ofsuch inspections are handled, would bethe responsibility of each certifyingagent. Misuse of such authority wouldbe subject to review by the Departmentduring its evaluation of a certifyingagent for reaccreditation and at othertimes in response to complaints.Certified production and handlingoperations could file complaints withthe Department at any time should theybelieve a certifying agent abuses itsauthority to perform additionalinspections.

Certification After Suspension orRevocation of Certifying Agent’sAccreditation. When the Administratorrevokes or suspends a certifying agent’saccreditation, affected certifiedoperations will need to makeapplication for certification withanother accredited certifying agent. Thecertification of the production orhandling operation remains in effectduring this transfer of the certification.The certified production or handlingoperation may seek certification by anyqualified certifying agent accredited bythe Administrator. To minimize theburden of obtaining the newcertification, the Administrator willoversee transfer of the original certifying

agent’s file on the certified operation tothe operation’s new certifying agent.

Upon initiation of suspension orrevocation of a certifying agent’saccreditation, or upon suspension orrevocation of a certifying agent’saccreditation, the Administrator mayinitiate proceedings to suspend orrevoke the certification of operationscertified by the certifying agent. TheAdministrator’s decision to suspend orrevoke a producer’s or handler’scertification in light of the loss of itscertifying agent’s accreditation would bemade on a case-by-case basis. Actionssuch as fraud, bribery, or collusion bythe certifying agent, which cause theAdministrator to believe that thecertifying agent’s clients do not meet thestandards of the Act or theseregulations, might require theimmediate initiation of procedures tosuspend or revoke certification fromsome or all of its client base. Removalof accreditation, regardless of thereason, in no way affects the appealsrights of the certifying agent’s clients.Further, a certified operation’scertification will remain in effectpending the final resolution of anyproceeding to suspend or revoke itscertification.

A private-entity certifying agent mustfurnish reasonable security for thepurpose of protecting the rights ofoperations certified by such certifyingagent. This security is to ensure theperformance of the certifying agent’scontractual obligations. As notedelsewhere in this proposed rule, thespecific amount and type of securitythat must be furnished by a privatecertifying agent will be the subject offuture rulemaking by the Department.We anticipate that the amount of thesecurity will be tied to the number ofclients served by the certifying agentand the anticipated costs of certificationthat may be incurred by its clients in theevent that the certifying agent’saccreditation is suspended or revoked.We anticipate that the security may bein the form of cash, surety bonds, orother financial instrument (such as aletter of credit) administered in amanner comparable to cash or suretybonds held under the PerishableAgricultural Commodities Act.

Certification—Changes Based onComments


(1) On-site Inspection Requirements.We have amended the generalrequirements provision concerning on-site inspections. The first proposalrequired production and handlingoperations to permit an annual on-site



inspection by the certifying agent. A fewcommenters suggested that the term,‘‘inspection,’’ be made plural and thatthe section citations be amended toinclude the section on additionalinspections. The section on additionalinspections addressed the certifyingagent’s authority to perform on-siteinspections in addition to the annualon-site inspection.

The commenters believe that‘‘inspection’’ should apply to allsituations when on-site inspectionsmust be or could be performed,including the initial site inspection fora new certification as well as, forinstance, compliance inspections.Commenters believe that these changesare needed to assure access to thecertified operation and that anapplicant’s agreement to permit any andall necessary on-site inspections shouldbe clearly stated as a generalrequirement for certification.

We had intended for the generalrequirements provision concerning on-site inspections to include all instancesin which an on-site inspection might beappropriate. Accordingly, we haveamended the requirement by replacingthe phrase, ‘‘an annual on-siteinspection,’’ with the phrase, ‘‘on-siteinspections.’’ This terminology wouldcover initial, annual, and additionalinspections needed for certification,continuation of certification, and todetermine whether the operation is incompliance with program requirements.To ensure complete access to theproduction or handling operation for thepurpose of conducting on-siteinspections and determiningcompliance with the requirements of theNational Organic Program (NOP), wehave added a requirement that theoperation permit complete access to theproduction or handling operation,including noncertified areas andstructures. The general requirementsprovision on on-site inspections isfound at § 205.400(c).

(2) Providing Access to Records. Wehave clarified the meaning of providingaccess to the records that the certifiedoperation must maintain by adding‘‘during normal business hours forreview and copying’’ to the regulation.The first proposal required that certifiedorganic operations maintain records fornot less than 5 years from the date oftheir creation. It also required thecertified operation to allow authorizedrepresentatives of the Secretary, theapplicable governing State official, andthe certifying agent access to suchrecords to determine compliance withthe Act and regulations.

Several comments were receivedregarding these recordkeeping

requirements. Most of these commentswere received from organic producerorganizations and certifying agents. Afew commenters questioned thenecessity of maintaining records for 5years, requested a different period fordifferent records, and requestedclarification on the meaning ofproviding access. Section 6511(d) of theAct requires organic production orhandling operations to maintain recordsfor 5 years. Accordingly, we have madeno change to the retention period in thisproposal. The clarification on themeaning of providing access to recordsis found at § 205.400(d).

(3) Notification of Drift. We haveamended the requirement thatproduction and handling operationsimmediately notify the certifying agentconcerning any application of aprohibited substance by adding thephrase, ‘‘including drift.’’ A fewcommenters suggested adding arequirement that the certified operationnotify the certifying agent when anorganically certified field iscontaminated by drift. They stated thatdrift is the most common reason forprohibiting the organic label onotherwise organically producedproduct.

We agree that the certified operationshould immediately report any drift ofa prohibited substance onto an organicfield to its certifying agent. Accordingly,§ 205.400(f)(1) provides that anapplicant seeking to receive or maintainorganic certification must immediatelynotify the certifying agent concerningany application, including drift, of aprohibited substance. This provisionapplies to new applicants as well as toongoing certified operations.Contamination by drift could occurduring the time period betweenapplication for and approval ofcertification. Accordingly, an applicantfor certification would be required tonotify the certifying agent of any contactwith a prohibited substance.

(4) Applicant Requirements. We haveadded the requirement that applicantsfor certification include otherinformation necessary to determinecompliance with the Act andregulations. Commenters suggested thatthe we add a provision to theapplication regulations requiringapplicants for certification to submitother information deemed necessary bythe certifying agent. They stated thatthis authority is needed to assure thatapplicants are fully cooperative andresponsive throughout the certificationprocess.

We believe the requested authoritywould be helpful to certifying agents.However, we believe the authority for

certifying agents to request otherinformation they deem necessary mustbe qualified by the requirement that theinformation be necessary to determinecompliance with the Act andregulations. Accordingly, we haveprovided certifying agents with theauthority to request other informationnecessary to determine compliance withthe Act and regulations. This addition isfound at § 205.401(d).

(5) Requirement for Notification ofNoncompliance. We have replaced thefirst proposal’s section on ‘‘preliminaryevaluation of an applicant forcertification’’ with a new section on‘‘review of application.’’ We haverevised the section to clarify thatcertifying agents will issue notices ofnoncompliance only after the initial on-site inspection of an applicant’soperations. We also allow applicants tovoluntarily withdraw their applicationfor certification at any time.

This change was in response tocomments on the first proposal’srequirement that applicants forcertification report, to the certifyingagent with whom they have applied, thereceipt of a notice of noncompliancereceived from another certifying agent.A State organic growers associationstated that this requirement places astigma on applicants who, for example,applied for certification before theoperation was ready to meet allrequirements for certification. Thiscommenter suggested that notificationof previous denial only be required afteran applicant has been deniedcertification. The commenter went on tosay that, if the language in the originalproposal is maintained, there should bea time limit of within the past 3 or 5years of denial. Another commentersuggested that certifying agents have theoption of recommending thatnoncompliant applicants withdraw theirapplications rather than be deniedcertification. As an alternative, one ofthe commenters suggested that denial ofcertification to an unprepared applicantshould not have to be reported on asubsequent application to anothercertifying agent unless the firstnoncompliance notice led to a denial ofcertification.

We continue to believe that it is in thebest interest of the program andconsumers to require applicants toreport the receipt of notices ofnoncompliance and denial ofcertification to any certifying agent towhom they make application. However,we also believe that operations shouldnot be unnecessarily stigmatizedbecause they applied for certificationbefore the operation was ready to meetall requirements for certification.



Accordingly, this proposal requires thatan applicant report the receipt of anotice of noncompliance or denial ofcertification to any certifying agent towhom application is made but allowsapplicants to voluntarily withdraw theirapplication at any time.

An applicant that voluntarilywithdrew its application prior to theissuance of a notice of noncompliancewould not be issued a notice ofnoncompliance. Similarly, an applicantthat voluntarily withdrew itsapplication prior to the issuance of anotice of certification denial would notbe issued a notice of certification denial.

(6) Residue Testing. We have revisedthe verification of informationprovisions to provide that the on-siteinspection of an operation must verifythat prohibited substances have notbeen and are not being applied to theoperation. Verification would bethrough means which, at the discretionof the certifying agent, may include thecollection and testing of soil; water;waste; seeds; plant tissue; and plant,animal, and processed productssamples.

Comments from certifying agentssuggested adding a provision that wouldallow a certifying agent to collectsamples of substances from theoperation for residue testing. Theystated that such testing is necessary todetect unreported use or accumulationof prohibited substances. Section6506(a)(6) of the Act requires periodicresidue testing by certifying agents ofproducts produced by certified organicoperations. It is our intent thatcollection of samples for residue testingmay be conducted as part of initial on-site inspections, as well as during on-site inspections of certified organicoperations. The inspector could collectsamples of soil; water; waste; seeds;plant tissues; and plant, animal, andprocessed products. Collection of suchsamples would be at the discretion ofthe certifying agent. To maintain theintegrity of the inspection process, it isnecessary that the certifying agent orinspector collect such samples firsthand, rather than receive the samplesfrom the applicant. We have made therequested addition at § 205.403(c)(3).

(7) Postinspection ConferenceRequirements. We have amended thepostinspection conference requirements.We have changed all references to‘‘postinspection conference’’ to ‘‘exitinterview.’’ We have removed therequirement that the inspector discusshis or her observations regarding theoperation’s compliance or ability tocomply with the Act and regulations.This requirement has been replacedwith the requirement that the inspector

confirm the accuracy and completenessof inspection observations andinformation gathered during the on-siteinspection. The inspector can use theexit interview to request any additionalinformation necessary to establisheligibility for certification. Finally, thisamendment requires the inspector toraise and discuss during the exitinterview any known issues of concern.

Certifying agents commented that itwould be inappropriate for an inspectorto discuss observations and possibleviolations of compliance at an exitinterview. They stated that requiringexit interviews places the inspector inthe position of providing observationsand feedback to the applicant before theinspector is able to confer with thecertifying agent. Some certifying agentsexpressed concern that exit interviewscould result in inspectors providingfalse or misleading information to theapplicant. Some commenters requestedthat exit interviews be held only for thepurpose of checking the accuracy andcompleteness of inspector observationsmade and the information obtainedduring the inspection. Othercommenters requested that the exitinterviews requirement be removedfrom these regulations.

We believe that qualified inspectorsshould be capable of competentlydiscussing an applicant’s compliance orability to comply with these regulations.However, we also believe that acertifying agent should have theopportunity to decide whether to allowits inspectors to discuss issues ofcompliance at an exit interview.Accordingly, we have amended the exitinterview requirements as noted above.These amended requirements are foundat § 205.403(d).

(8) Additional Inspections. We haveadded a new provision that additionalinspections may be announced orunannounced at the discretion of thecertifying agent or as required by theAdministrator or State program’sgoverning State official. This changewas made in response to commenterswho requested the addition of arequirement that certifying agentsconduct unannounced site visits inaddition to the initial and annualinspections. We believe thatunannounced on-site inspections areappropriate and valuable in bothmonitoring and investigatingcompliance with the Act andregulations. The requested addition isfound at § 205.403(a)(2)(iii).

(9) Requirements for WrittenInspection Reports. We have removedthe requirement that the certifying agentrequire an inspector to prepare andsubmit to the certifying agent, within 30

days of completing an inspection, awritten report that describes theinspector’s observations andassessments of the inspected operation’scompliance or ability to comply withthe Act and regulations. A variety ofcomments, pro and con, were receivedon this requirement. Certifying agentsquestioned whether the 30-daytimeframe was reasonable. Othercommenters suggested that, rather thanspecifying a time period, the sectionshould stress the need for timelyreporting. A commenter suggested thatan inspector’s observations andassessments on the inspected operationinclude the inspector’srecommendations on approval ofcertification. Other commenters statedthat the requirement amounted to micromanagement of a certifying agent’sbusiness. This latter group ofcommenters believe that the setting of atime period for inspector reportinginvolves a policy matter that should bedetermined by the certifying agent. Weagree with the commenters who statedthat setting deadlines for the filing ofinspection reports is an internal policymatter better left to certifying agents.

We believe that policies andprocedures regarding inspectorreporting are the purview of thecertifying agent. Certifying agents wouldbe expected to develop and implementinspector reporting requirements for on-site inspections internal to their ownoperations. Such policies andprocedures and a certifying agent’sperformance in making timelycertification decisions would be subjectto review during accreditation andreaccreditation of the certifying agent.Accordingly, we have removed theprovision.

Removal of this requirement does noteliminate the need for a written on-siteinspection report or the importance oftimely inspection reporting by aninspector to the certifying agent.Certifying agents are expected to maketimely decisions regarding whether tocertify an applicant and whether acertified operation is in compliancewith the Act and regulations.Applicants with complaints regardingtimeliness of service could forward theircomplaints to the Administrator.

(10) Responsibilities of Certifier in theApplication Process. We have replacedthe list of requirements to be reviewedby a certifying agent in determining anapplicant’s eligibility for certificationwith a general statement ondetermination of eligibility.Commenters requested the addition of aprovision requiring certifying agents toverify implementation of the organicsystem plan. We agree that an on-site



inspection of an ongoing operation mustinclude assessment of the operation’sapplication of its organic system plan.Because an on-site inspection of a newapplicant’s operation would beconducted at a time when the operationcan demonstrate its organic capabilities,the operation must be able to show thatit is satisfactorily carrying out itsorganic system plan.

It was our intent that certifying agentswould verify implementation of theapplicant’s organic system plan duringthe certifying agent’s review of the on-site inspection report and application.However, our list of requirements to bereviewed by a certifying agent indetermining an applicant’s eligibility forcertification did not specificallyreference verification of implementationof the organic system plan. We havedecided to replace the list ofrequirements to be reviewed with ageneral statement on determination ofeligibility. This statement provides: ‘‘Ifthe certifying agent determines that theorganic system plan and all proceduresand activities of the applicant’soperation are in compliance with therequirements of this part and that theapplicant is able to conduct operationsin accordance with the plan, the agentshall approve certification.’’ We believethis general statement, in combinationwith the requirement that the certifyingagent review the application, the on-siteinspection report, the results of anyanalyses for substances conducted, andany additional information requestedfrom or supplied by the applicant,adequately addresses the commenters’concerns. This revision to the approvalof certification requirements is found at§ 205.404(a).

(11) Information Included on theCertificate of Organic Operation. Wehave amended the regulationsspecifying what information must beincluded on a certificate of organicoperation. Comments received fromorganic operations, certifying agents,and consumers recommended thatcertifying agents provide additionalinformation on certificates of organicoperation. Specifically, theyrecommended that all certificatesinclude: (1) The certifying agent’s nameand address; (2) an expiration date; (3)the physical location of certifiedoperations, including separate fieldsand facilities; (4) the name of thecertified operation’s contact personresponsible for compliance withprogram requirements; (5) the name andaddress of the certified operation; and(6) the crops and products certified. Thecommenters believe such information,especially a date on which thecertificate expires, to be vital to assuring

accountability and compliance with theprogram.

We believe it would be beneficial topersons with concerns regarding acertified production or handlingoperation to have ready access toinformation concerning the name,address, and telephone number of thecertifying agent. Further, because thecertificate of organic operation would bean official document of the certifyingagent, it would be appropriate for thisinformation to appear on everycertificate. Accordingly, we have addedthe name, address, and telephonenumber of the certifying agent to theinformation which must be included onevery certificate. This addition is foundat § 205.404(b)(4).

We disagree with the commenterswho requested that certificates oforganic operation display an expirationdate. We believe annual expiration of acertificate would place an unnecessaryburden on certifying agents and certifiedoperations. Annual expiration ofcertificates is also inconsistent with thefact that an operation’s certificationdoes not expire. In fact, once anoperation is certified as an organicoperation, its certification remains ineffect until surrendered by the certifiedoperation or suspended or revoked bythe certifying agent, the State program’sgoverning State official, or theAdministrator. All certified operationsare required to annually update theirorganic system plan. If the updated plancauses information on the certificate tobe incorrect, the certifying agent willissue a new certificate with the correctinformation. This provides a mechanismfor ensuring that certificates are updatedas necessary on an annual bases. Wehave not included the recommendedaddition in this proposal.

For clarification, we have added§ 205.404(c). This section provides thatonce certified a production or handlingoperation’s organic certificationcontinues in effect until surrendered bythe organic operation or suspended orrevoked by the certifying agent, theState program’s governing State official,or the Administrator.

We disagree with the commenterswho requested that certificates displaythe physical location of certifiedoperations, including separate fieldsand facilities, and the name of thecertified operation’s contact personresponsible for compliance withprogram requirements. We believe thatthe location of a certified operation’sfields and facilities has no relationshipto the operation’s status as a certifiedorganic operation. Therefore, suchinformation should only be madeavailable with the written consent of the

certified operation. The name of thecertified operation’s contact personwould be releasable information. Webelieve, however, that such detail isunnecessarily burdensome to thecertifying agent and will only serve toclutter the certificate. By requiring thename, address, and telephone number ofthe certifying agent, as noted above, thecertificate would provide interestedpersons with a contact for obtainingreleasable information concerning thecertified operation. Further, thecertifying agent is the first line ofcompliance under this program and, assuch, is the person to whom allquestions and concerns should beaddressed about certified operations.

We agree with the commenters whorequested that certificates display thename and address of the certifiedoperation because such information ispotentially beneficial to consumers.Accordingly, we have added the nameand address of the certified operation tothe information which must be includedon every certificate. This addition isfound at § 205.404(b)(1).

The first proposal required that thecertificate list the category(ies) andtype(s) of products produced by thecertified operation. Commenters wereapparently confused about the meaningof category(ies) and type(s) of products.We have, therefore, revised therequirement to provide that a certificateof organic operation would specify thecategories of organic operation,including, crops, wild crops, livestock,or processed products produced by thecertified operation. This revision isfound at § 205.404(b)(3).

(12) Certifiers Authority to DenyCertification. We have added authorityfor certifying agents to deny certificationto applicants who do not meet therequirements for certification. The firstproposal required certifying agents toforward their recommendations fordenial of certification to theAdministrator. Commenters stated thatauthority for denial of certificationshould rest with the certifying agents.They also contended that referral to theAdministrator for denial of certificationestablishes a bureaucratic process,which would create unnecessary delaysto the denial process and increased costto applicants. Many commenterssuggested the appeals process issufficient to protect the interests of theSecretary.

We have determined that it isreasonable to authorize certifying agentsto deny certification. Denial by thecertifying agent would provide theapplicant with a more timely decisionon its eligibility for certification. A moretimely decision would provide an



earlier opportunity for applicants toappeal a denial of certification.Authority for certifying agents to denycertification to applicants who do notmeet the requirements for certificationis found at section 205.405.

This proposal requires certifyingagents to evaluate the applicant’scorrective actions taken and supportingdocumentation or written rebuttalsubmitted in response to a notificationof noncompliance. Certifying agents areauthorized to perform on-siteinspections to verify corrections todeficiencies or statements contained ina rebuttal, if necessary, to assure fullcompliance with the certificationrequirements. The certifying agent willissue the applicant a written notice ofdenial of certification if the correctiveaction or rebuttal is not sufficient for theapplicant to qualify for certification.

We believe the denial of certificationprovisions should clearly state anapplicant’s options and rights uponreceiving a notice of denial ofcertification. Accordingly,§ 205.405(c)(1)(ii) provides that a noticeof denial of certification must state thereasons for denial and the applicant’sright to reapply for certification, requestmediation, or file an appeal. Anapplicant who has received a writtennotice of denial of certification mayapply for certification again at any timewith any certifying agent, may requestmediation to resolve a dispute with thecertifying agent, or may file an appealwith the Administrator as outlined in§ 205.663 for mediation and § 205.681for appeals. Applicants subject to anapproved State program would seekmediation or appeal in accordance withthe rules of the approved State program.

(13) Willful Misrepresentations orFalse Statements by Applicants. Wehave included authority for certifyingagents to deny certification if the agenthas reason to believe that the applicanthas willfully made a false statement orotherwise purposefully misrepresentedits operation or compliance with thecertification requirements. Such falsestatements would, in most cases, beverified during an on-site inspection.This authority was provided tocertifying agents in the first proposalrelative to certified operations. The firstproposal, however, did not reference anapplicant’s willful making of a falsestatement or otherwise purposefullymisrepresenting its operation orcompliance with the certificationrequirements. Certifying agentscommented that applicants forcertification also may make falsestatements or misrepresent facts. Theysuggested that the regulations reflect acertifying agent’s authority in such

cases. We agree with the commentersand have added § 205.405(f). Thissection authorizes denial of certificationwithout first issuing a notification ofnoncompliance when the certifyingagent has reason to believe that theapplicant has willfully made a falsestatement or otherwise purposefullymisrepresented its operation orcompliance with the certificationrequirements.

Certification—Changes Requested ButNot Made


(1) Timeliness of Applicant’sNotification to Certifiers. A commentersuggested that ‘‘immediately’’ in therequirement that production andhandling operations immediately notifythe certifying agent concerning anyapplication of a prohibited substance bereplaced with ‘‘within 2 days.’’ Nojustification was given for therecommended change, and the changehas not been made. ‘‘Immediatelynotify’’ means that the applicant orcertified operation must at once notifyits certifying agent upon learning that aprohibited substance has come incontact with any portion of its operationor production. The certifying agent willevaluate the circumstances surroundingthe event and decide whether thecertified operation acted within theintent of this requirement. Thisrequirement is found at § 205.400(f)(1).

(2) Notification of Changes toCertifying Agent. Commentersquestioned how the certified operationwould know what changes in itscertified operation or any portion of itsoperation would require reporting to itscertifier. Certified operations areresponsible for being familiar with therequirements of the Act and theseregulations. Further, they have anobligation to contact their certifyingagent when they have questionsregarding compliance with thisprogram. As a rule, certified operationsshould contact their certifying agentwhenever the change is not coveredunder their approved organic systemplan. The requirement that a certifiedoperation notify its certifying agentconcerning any change in its certifiedoperation that may affect its compliancewith the Act and regulations is found at§ 205.400(f)(2).

(3) Tests for Soil Fertility andIrrigation Water. Certifying agentssuggested that applicants forcertification be required to submit testresults for soil fertility and irrigationwater quality to prove compliance withthe NOP. We recognize that increasing

soil fertility through organic productionpractices is a goal of the organicindustry. However, soil fertility will notqualify or disqualify an applicant fororganic certification. An applicant whohas independently had such testsconducted may, but is not required to,include them with the application.While the Act requires that handlersonly use in their products water thatmeets all Safe Drinking Water Actrequirements, no similar requirementsare placed on producers and the waterthey use to irrigate their crops. For thesereasons, we are not requiring applicantsfor certification to submit soil fertility orirrigation water quality test results.

(4) Timeliness of On-site Inspection.The first proposal required a certifyingagent to conduct an initial on-siteinspection within a reasonable timefollowing a favorable preliminaryevaluation of an application forcertification. Several commenters askedwhat constitutes reasonable timebetween submission of an applicationand an on-site inspection. Others statedthat, when determining what constitutesreasonable time, consideration shouldbe given to factors such as when theapplication was submitted relative towhen activities demonstratingcompliance can be observed and whenthe inspection can be scheduled toassure the presence of the applicant.

We stated in the first proposal that wedid not specify a time within which aninspection must be conducted becausethe time would vary according to whenthe application was submitted and thetype of operation to be inspected.Timely service will be in the bestinterest of certifying agents sinceapplicants may forward complaintsregarding service to the Administrator.Such complaints could have an impacton a certifying agent’s reaccreditation orcontinued accreditation. Further, ouroriginal position is consistent withthose commenters requesting flexibilityin determining what constitutesreasonable time. Accordingly, we havemade no changes in this proposalregarding what constitutes reasonabletime. This requirement is found at§ 205.403(b).

(5) Additional On-site Inspections.Some organic associations asked whatwould trigger a decision to conduct anadditional on-site inspection.Commenters expressed the concern thatcertifying agents could conductadditional, unneeded inspections at theexpense of operators who would have topay the costs of the inspections. Othercommenters asked who would pay forthe additional on-site inspections. Somecertifying agents suggested thatguidelines need to be established under



which additional inspections must beconducted. A certifying agent suggestedthat additional inspections could beconducted based on the inspector’sobservations, the certifier’srecommendation, and, possibly, third-party complaints.

The authority for on-site inspectionsis necessary for monitoring andcompliance purposes at the discretion ofthe certifying agent, the Administrator,or a State program’s governing Stateofficial. Such on-site inspections wouldlikely be precipitated by reasons tobelieve that the certified operation wasoperating in violation of one or morerequirements of the Act or theseregulations. The on-site inspectionwould be conducted, as necessary, toobtain information needed to determinecompliance with identifiedrequirements.

We believe policies and proceduresregarding additional inspections,including how the costs of suchinspections are handled, are theresponsibility of each certifying agent.Misuse of such authority would besubject to review by the Departmentduring its evaluation of a certifyingagent for reaccreditation and at othertimes in response to complaints.Certified production and handlingoperations could file complaints withthe Department at any time should theybelieve a certifying agent abuses itsauthority to perform additionalinspections. Accordingly, we have madeno changes in this proposal based onthese comments.

(6) Annual Renewal of Certification.Commenters requested annual renewalof certification rather than updates to acontinuing certification program. Othercommenters requested that the notice ofcertification have an ending date or beissued for an established period of time.An industry association commented thatthe proposed continuation ofcertification regulations requires acertified operation to annually certifythat it is complying with the Act andthese regulations. This commenterstated that the proposed continuation ofcertification procedures changes theprocess of recertification to one moreclosely resembling self-certification.Another industry association stated thatcertification until surrendered by thecertified operation or suspended orrevoked would make the assurance ofcompliance extremely difficult, if notimpossible. This commenter furtherstated that certifying agents will beunable to effectively monitor applicantsor gain needed information. Thiscommenter recommended that renewalpaperwork include the items specifiedin the continuation of certification

regulations but that certifying agents usetheir own discretion as to the forms andinformation needed. Similarly, acertifying agent commented thatcertification must be renewed with anapplication on an annual basis and thatno operation can be certified for life.This commenter recommendedrequiring a yearly application and otherdocumentation deemed necessary by thecertifying agent.

We disagree with the commenters. Weprefer continuous certification due tothe very real possibility that the renewalprocess might not always be completedbefore expiration of the certificationperiod. Expiration of the certificationperiod would result in termination ofthe operation’s certification. Even ashort period of interruption in anoperation’s organic status could havesevere economic ramifications. Further,we believe that a regular schedule ofexpiration of certification isunnecessary inasmuch as all certifiedoperations are required to annuallyupdate their organic system plan andsubmit any changes to their certifyingagent. Accordingly, this proposal retainsthe provision for continuouscertification.

(7) Timing of On-site Inspections. AState certifying agent and an industryorganization stated that requiring an on-site inspection after receipt of therenewal application is not consistentwith current practice. The Statecertifying agent stated that it moved therenewal date to January 1 of each yearto make the renewal process lessburdensome to its certified producers.This commenter went on to say that theannual inspection conducted during theappropriate growing or processingseason is used to evaluate the organicoperation in the renewal process. TheState certifying agent further stated thatan additional inspection at renewal timewould not be useful if it was not anappropriate time to observe productionpractices at the organic operation. Bothcommenters requested elimination ofthe requirement that the certifying agentarrange and conduct an on-siteinspection following receipt of theoperation’s annual submission ofinformation. These commenters alsorequested that a determination ofnoncompliance be based on on-siteinspections conducted during theprevious certification year and a reviewof the information annually submittedby the certified operation.

We disagree with the commenters.Certifying agents are required toschedule on-site inspections for a timewhen land, facilities, and activities thatdemonstrate the operation’s complianceor capability to comply with the

applicable production or handlingprovisions of the NOP may be observed.Accordingly, the initial certificationmust have followed an on-siteinspection performed when theoperation was able to demonstrate itscompliance or capability to comply. Thecertified operation, therefore, should befulfilling its annual continuation ofcertification obligations at a time whenit can demonstrate its compliance withthe Act and regulations. Thecommenters’ recommendations are notaccepted.

Certification—Additional ProvisionsUpon further review of the

certification provisions in the firstproposal, we have decided to proposethe following additions and changes.

(1) Requirements for BusinessInformation. We have revised thebusiness information required of allapplicants for certification as an organicoperation. First, the application mustinclude the name of the person whocompleted the application. Certifyingagents will use this information whenfollowing up on information within theapplication. Second, we have removedthe requirement that the applicationinclude the names of personnelresponsible for maintaining compliancewith the Act and regulations. Webelieve this information is unnecessarysince the person responsible foroverseeing compliance is the certifyingagent. Third, we have added therequirement that when the applicant isa corporation, the application mustinclude the name, address, andtelephone number of the personauthorized to act on the applicant’sbehalf. Fourth, we have removed therequirement that the applicant forcertification submit a statement ofcompliance. We have also removed the‘‘Statement of Compliance’’ sectionwhich required the submission of astatement of compliance with theapplication for certification. We haveremoved this requirement because wehave determined that it creates anunnecessary burden upon applicants forcertification. Section 205.400(a) requiresthat a person seeking to receive ormaintain organic certification mustcomply with the Act and applicableproduction and handling regulations.Accordingly, it is unnecessary to requirea separate document through which theapplicant for certification agrees tocomply with the Act and regulations.The requirements for the submission ofbusiness information with the requestfor certification are found at§ 205.401(b).

(2) Disclosure of PreviousApplications. The first proposal



2 ISO/IEC Guide 65 is available for viewing atUSDA–AMS, Transportation and MarketingPrograms, Room 2945-South Building, 14th andIndependence Ave., SW, Washington, DC, from 9:00

a.m. to 4:00 p.m., Monday through Friday (exceptofficial Federal holidays). A copy may be obtainedfrom the American National Standards Institute, 11West 42nd Street, New York, NY 10036; Website:www.ansi.org; E-mail: [email protected];Telephone: 212–642–4900; Facsimile: 212–398–0023.

required that the request for certificationinclude the name(s) of any organiccertifying agent(s) to which applicationhad previously been made, the year(s) ofapplication, and the outcome of theapplication(s) submission. We haveamended this requirement by adding‘‘including a copy of any notification ofnoncompliance or denial of certificationissued to the applicant for certificationand a description of the actions taken bythe applicant to correct the deficienciesnoted in the notification ofnoncompliance, including evidence ofsuch correction.’’ We have added thisprovision to clarify what we mean by‘‘the outcome of the application(s)submitted.’’ This provision is found at§ 205.401(c).

(3) On-site Inspections. We havecombined the arranging for inspection,verification of information,postinspection conference, andadditional inspection regulations of thefirst proposal into a new on-siteinspections section, § 205.403. We madethis change for the purposes ofclarification and the removal ofredundancies.

(4) Additional Inspections. We haverevised the on-site inspectionsrequirements to provide that a Stateprogram’s governing State official mayrequire a certifying agent to conduct anadditional inspection of a production orhandling operation to determine theoperation’s compliance with the Actand these regulations. We haveprovided State program governing Stateofficials with authority to requireadditional inspections because suchofficials will have complianceresponsibilities under their Stateprograms and will need such authorityto carry out their responsibilities. Theserequirements are found at § 205.403(a).

(5) Notifications of Noncompliance.We have added at § 205.405(b) aprovision which identifies forapplicants for certification what theiroptions are when they receive anotification of noncompliance. Suchapplicants may correct the deficienciesand submit a description andsupporting documentation of correctionto the certifying agent, correct thedeficiencies and submit a newapplication to another certifying agentalong with the notification ofnoncompliance and a description andsupporting documentation of correction,or submit written information to thecertifying agent to rebut thenoncompliance described in thenotification of noncompliance.

(6) Reapplying After a Notice ofNoncompliance or Denial ofCertification. We have added a newprovision which requires a certifying

agent to treat an application forcertification as a new application whensuch application includes a notificationof noncompliance or a notice of denialof certification. While the newapplication may contain the sameorganic system plan and otherinformation provided in theunsuccessful application forcertification, it must also provide anynew information or changes inoperations which may have occurredsince the filing of the unsuccessfulapplication. The updated informationconcerning the applicant’s operationmust include a description of actionstaken, with supporting documentation,to correct the deficiencies identified inthe notification of noncompliance. Thisnew provision is found at § 205.405(e).

Subpart F—Accreditation of CertifyingAgents

This subpart sets forth therequirements for a national program toaccredit State and private entities ascertifying agents to certify domestic orforeign organic production or handlingoperations. This subpart also providesthat USDA will accept a foreigncertifying agent’s accreditation to certifyorganic production or handlingoperations if: (1) USDA determines,upon the request of a foreigngovernment, that the standards underwhich the foreign government authorityaccredited the foreign certifying agentmeet the requirements of this part; or (2)the foreign governmental authority thataccredited the certifying agent actedunder an equivalency agreementnegotiated between the United StatesGovernment and the foreigngovernment.

This National Organic Program (NOP)accreditation process will facilitatenational and international acceptance ofUnited States organically producedagricultural commodities. Theaccreditation requirements in theseregulations will replace the organicassessment voluntary, fee-for-serviceprogram, established by AMS under theAgricultural Marketing Act of 1946.That assessment program verifies thatState and private organic certifyingagents comply with the requirementsprescribed under the InternationalOrganization for Standardization/International ElectrotechnicalCommission Guide 65, ‘‘GeneralRequirements for Bodies OperatingProduct Certification Systems’’ (ISOGuide 65).2 ISO Guide 65 provides the

general requirements that a certifyingagent would need to meet to berecognized as competent and reliable.That assessment program was originallyestablished to enable organic certifyingagents in the absence of a U.S. nationalorganic program to comply withEuropean Union (EU) requirementsbeginning on June 30, 1999. Thatassessment program verifies that Stateand private organic certifying agents areoperating third-party certificationsystems in a consistent and reliablemanner, thereby facilitatinguninterrupted exports of U.S. organicagricultural commodities to the EU. ISOGuide 65 is used as a benchmark indeveloping the accreditation programdescribed in this proposed rule.Certifying agents accredited under theNOP that maintain compliance with theAct and these regulations will meet orexceed the requirements of ISO Guide65; therefore, the organic assessmentprogram is no longer needed.

Participation in the NOP does notpreclude the accredited certifying agentfrom conducting other businessoperations, including the certification ofagricultural products, practices, andprocedures. An accredited certifyingagent may not, however, engage in anybusiness operations or activities whichwould involve the agent in a violationof or a conflict of interest under theNOP.

Proposal DescriptionThe Administrator will accredit

qualified domestic and foreignapplicants in the areas of crops,livestock, wild crops, or handling or anycombination thereof to certify domesticor foreign production or handlingoperations as certified organicoperations. Qualified applicants will beaccredited for 5 years.

Application Process. Certifying agentswill apply to the Administrator foraccreditation to certify production orhandling operations operating under theNOP. The certifying agent’s applicationmust include basic businessinformation, must identify each area ofoperation for which accreditation isrequested and the estimated number ofeach type of operation to be certifiedannually, and must include a list ofeach State or foreign country where itcurrently certifies production orhandling operations and where itintends to certify such operations.



Certifying agents must also submitpersonnel, administrative, conflict ofinterest, current certification, and otherdocuments and information todemonstrate their expertise in organicproduction or handling techniques,their ability to comply with andimplement the organic certificationprogram, and their ability to complywith the requirements for accreditation.

The administrative informationsubmitted by the applicant shouldinclude copies of their procedures forcertifying operations, for ensuringcompliance of their certified operationswith the Act and regulation, forcomplying with recordkeepingrequirements, and for makinginformation available to the publicabout certified operations. Theprocedures for certifying operationsencompass the processes used by thecertifying agent to evaluate applicants,make certification decisions, issuecertification certificates, and maintainthe confidentiality of any businessinformation submitted by the certifiedoperation. The procedures for ensuringcompliance of the certified operationswould include the methods used toreview and investigate certifiedoperations, for sampling and residuetesting, and to report violations.

The personnel information submittedwith the application shoulddemonstrate that the applicant uses asufficient number of adequately trainedpersonnel to comply with andimplement the organic certificationprogram. The certifying agent will alsohave to provide evidence that itsresponsibly connected persons,employees, and contractors withinspection, analysis, and decision-making responsibilities have sufficientexpertise in organic production orhandling techniques to successfullyperform the duties assigned. They mustalso show that these employees haverevealed existing or potential conflictsof interest.

Applicants who currently certifyproduction or handling operations mustalso submit a list of the production andhandling operations currently certifiedby them. For each area in which theapplicant requests accreditation, theapplicant should furnish copies ofinspection reports and certificationevaluation documents for at least threeoperations. If the applicant underwentany other accrediting process in the yearprevious to the application, theapplicant should also submit the resultsof the process.

Certifying agents are prohibited fromproviding advice concerning organicpractices or techniques to anycertification applicant or certified

operation for a fee, other than as part ofthe fees under the certification program.The Administrator will provideoversight of the fees to ensure that theschedule of fees filed with theAdministrator is applied uniformly andin a nondiscriminatory manner. TheAdministrator may inform a certifyingagent that its fees appear to beunreasonable and require that thecertifying agent justify the fees. TheAdministrator will investigate the levelof fees charged by an accreditedcertifying agent upon receipt of a validcomplaint or under compellingcircumstances warranting such aninvestigation. Certifying agents areprohibited from providing adviceconcerning organic practices ortechniques to any certification applicantor certified operation for a fee, otherthan as part of the fees under thecertification program.

Statement of Agreement. Upon receiptof the certifying agent’s application foraccreditation, the Administrator willsend a statement of agreement to theperson responsible for the certifyingagent’s day-to-day operations forsignature. The statement of agreementaffirms that, if granted accreditation asa certifying agent under this subpart, theapplicant will carry out the provisionsof the Act and the regulations in thispart. Accreditation will not be approveduntil this statement is signed andreturned to the Administrator.

The statement of agreement willinclude the applicant’s agreement toaccept the certification decisions madeby another U.S. Department ofAgriculture (USDA)-accreditedcertifying agent as equivalent to its ownand the applicant’s agreement to refrainfrom making false or misleading claimsabout its accreditation status, the USDAaccreditation program, or the nature orqualities of products labeled asorganically produced. Further, thestatement will include the applicant’sagreement to pay and submit the feescharged by AMS and to comply with,implement, and carry out any otherterms and conditions determined by theAdministrator to be necessary.Applicants are also required to affirmthrough this statement of agreement thatthey will: (1) Conduct an annualperformance appraisal for eachinspector used; (2) have an annualprogram evaluation conducted of theircertification activities by their staff, anoutside auditor, or a consultant who hasexpertise to conduct such evaluations;and (3) implement measures to correctany deficiencies in compliance with theAct and regulations identified in aninspector performance appraisal orprogram evaluation.

A private entity certifying agent mustadditionally agree to hold the Secretaryharmless for any failure on the agent’spart to carry out the provisions of theAct and regulations. A private entitycertifying agent’s statement will alsoinclude an agreement to furnishreasonable security for the purpose ofprotecting the rights of operationscertified by such certifying agent. Suchsecurity will be in an amount andaccording to such terms as theAdministrator may by regulationprescribe. A private entity certifyingagent must agree to transfer all recordsor copies of records concerning itscertification activities to theAdministrator if it dissolves or loses itsaccreditation. A private entity certifyingagent must also agree to make suchrecords available to any applicable Stateprogram’s governing State official.

Approval of Accreditation. Uponreceiving all the required information,including the statement of agreement,and the required fee, the Administratorwill determine if the applicant meetsthe requirements for accreditation. TheAdministrator’s determination will bebased on a review of the informationsubmitted and, if necessary, a review ofthe information obtained from a siteevaluation. The Administrator willnotify the applicant of approval ofaccreditation in writing. The notice ofaccreditation will state the area(s) forwhich accreditation is given, theeffective date of the accreditation, and,for a private-entity certifying agent, theamount and type of security that mustbe established.

Certifying agents who apply foraccreditation and do not meet therequirements for accreditation will beprovided, in accordance with § 205.665,with a notification of noncomplianceand given an opportunity to come intocompliance. After receipt of anotification of noncompliance, theapplicant may submit a description ofthe actions taken to correct the noteddeficiencies and evidencedemonstrating such corrections or filean appeal with the Administrator. If theapplicant is successful in its appeal orprovides acceptable evidencedemonstrating correction of thedeficiencies, the Administrator willnotify the applicant of accreditation. Ifthe applicant fails to correct thedeficiencies, fails to report thecorrections by the date specified in thenotification of noncompliance, fails tofile an appeal by the date specified inthe notification of noncompliance, or isunsuccessful in its appeal, theAdministrator will issue a writtennotification of accreditation denial tothe applicant. An applicant who has



received written notification ofaccreditation denial may apply foraccreditation again at any time.

Once accredited, a certifying agentmay establish a seal, logo, or otheridentifying mark to be used by certifiedproduction and handling operations.However, the certifying agent may notrequire use of its seal, logo, or otheridentifying mark on any product sold,labeled, or represented as organicallyproduced as a condition of certification.The certifying agent also may notrequire compliance with any productionor handling practices other than thoseprovided for in the Act and regulationsas a condition for use of its identifyingmark. This provision does not apply toStates with more restrictiverequirements approved by theAdministrator or private-entitycertifying agents certifying operationswithin such States.

Site Evaluations. One or morerepresentatives of the Administratorwill perform site evaluations for eachcertifying agent in order to examine thecertifying agent’s operations and toevaluate compliance with the Act andregulations. Site evaluations willinclude an on-site review of thecertifying agent’s certificationprocedures, decisions, facilities,administrative and managementsystems, and production or handlingoperations certified by the certifyingagent. A site evaluation of anaccreditation applicant will beconducted before or within a reasonabletime after issuance of the applicant’snotification of accreditation. Certifyingagents will be billed for each siteevaluation conducted in associationwith an initial accreditation,amendments to an accreditation, andrenewals of accreditation. Certifyingagents will not be billed by USDA forUSDA-initiated site evaluationsconducted to determine compliancewith the Act and regulations.

As noted above, a certifying agentmay be accredited prior to a siteevaluation. If the Administrator finds,following the site evaluation, that anaccredited certifying agent is not incompliance with the Act or regulations,the Administrator will issue thecertifying agent a written notification ofnoncompliance. If the certifying agentfails to correct the deficiencies, reportthe corrections by the date specified inthe notification of noncompliance, orfile an appeal by the date specified inthe notification of noncompliance, theAdministrator will begin proceedings tosuspend or revoke the accreditation. Acertifying agent that has had itsaccreditation suspended may apply foraccreditation again at any time. A

private-entity certifying agent whoseaccreditation is revoked will beineligible for accreditation for a periodof not less than 3 years following thedate of such determination.

Peer Review Panels. TheAdministrator may establish a peerreview panel to assist in evaluatingapplicants for accreditation. Peer reviewpanels will be used at the discretion ofthe Administrator following the siteevaluation of a certifying agent, butunder no circumstances will theAdministrator convene a peer reviewpanel when the peer review pool doesnot contain sufficient persons qualifiedto peer review the certifying agent.

To be eligible to serve on a peerreview panel, the applicant formembership in the peer review poolmust provide the Administrator with awritten description and, upon request,supporting documentation of itsqualifications to conduct peer reviews.The applicant for membership in thepeer review pool must address possiblelimitations on availability to serve andinclude information concerningcommercial interests with any personwho may seek to become or who is anaccredited certifying agent. No personwho has or has had a commercialinterest, including an immediate familyinterest or the provision of consultingservices, in an applicant foraccreditation or renewal of accreditationwill be appointed to a panel evaluatingsuch applicant for accreditation orrenewal of accreditation. Personsaccepted to the pool may serve untilnotified that their appointment has beenrescinded by the Administrator or untilthey are no longer qualified, whicheveroccurs first. Peer reviewers will servewithout compensation.

Peer review panels will consist of atleast three but no more than fivemembers. A Department representativewill preside over the panel. A peerreview panel will include no fewer thantwo members who possess sufficientexpertise in the certifying agent’s areasof accreditation. Peer review panels mayinclude up to two members withexpertise in other disciplines, includingorganizational management and finance;member(s) from the approved Stateorganic certification program when theapplicant is a private entity that willoperate within the State; and member(s)from a foreign government’s organicprogram when the applicant is a privateentity that will operate within thecountry.

Each person on a peer review panelmust individually review the siteevaluation report prepared by theDepartment’s evaluator(s) and any otherinformation that may be provided by the

Administrator relevant to continuing orrenewing the accreditation status of acertifying agent. Information about thecertifying agent received as part of thereview process is confidentialinformation, and peer reviewers mustnot release, copy, quote, or otherwiseuse material from the informationreceived other than in the reportrequired to be submitted. Each peerreviewer must agree to treat theinformation received for review asconfidential.

A peer review panel meeting will beheld solely for the purposes ofexchanging information. Any meeting orconference call will be conducted in amanner that will ensure the actions ofpanel members are carried out on anindividual basis with any opinions andrecommendations by a member beingmade individually. We do not believethat it is usual to have consensus in peerreview or that it is the best use of USDAresources or the time of peer reviewersto seek consensus under a single report.Further, requiring a consensus reportmay make peer review panels subject tothe Federal Advisory Committee Act,which might stifle meaningful dialogbetween reviewers, increase the costand time required of peer reviewers forpeer review service, and result inproblems obtaining volunteers forservice on peer review panels.

Peer review panel members willprepare and submit individual reports,including recommendations, to theAdministrator regarding a certifyingagent’s ability to conduct and performcertification activities. TheAdministrator will consider the reportswhen determining whether to continueor renew the certifying agent’saccreditation. Copies of the peer reviewpanel reports will be provided, uponrequest, to the certifying agent, andwritten responses from the certifyingagent may be submitted forconsideration by the Administrator.Copies of peer review panel reports maybe provided to any person requestingsuch reports under the Freedom ofInformation Act.

Continuing Accreditation. Anaccredited certifying agent must submitannually to the Administrator, on orbefore the anniversary date of theissuance of the notification ofaccreditation, the following reports andfees: (1) A complete and accurate updateof its business information, including itsfees, and information evidencing itsexpertise in organic production orhandling and its ability to comply withthese regulations; (2) informationsupporting any changes requested in theareas of accreditation; (3) a descriptionof measures implemented in the



3 ISO/IEC Guide 61 is available for viewing atUSDA–AMS, Transportation and MarketingPrograms, Room 2945—South Building, 14th andIndependence Ave., SW, Washington, DC, from 9:00a.m. to 4:00 p.m., Monday through Friday (exceptofficial Federal holidays). A copy may be obtainedfrom the American National Standards Institute, 11West 42nd Street, New York, NY 10036; Website:www.ansi.org; E-mail: [email protected];Telephone: 212–642–4900; Facsimile: 212–398–0023.

previous year and any measures to beimplemented in the coming year tosatisfy any terms and conditionsspecified in the most recent notificationof accreditation or notice of renewal ofaccreditation; (4) the results of the mostrecent inspector performance appraisalsand annual program evaluation and adescription of adjustments to thecertifying agent’s operation andprocedures implemented or to beimplemented in response to theappraisals and evaluation; and (5) therequired AMS fees.

Certifying agents will keep theAdministrator informed of theircertification activities by: (1) Providingthe Administrator with a copy of anynotice of denial of certification,notification of noncompliance,notification of noncompliancecorrection, notification of proposedsuspension or revocation, andnotification of suspension or revocationissued simultaneously with its issuance;and (2) on a quarterly calendar basis, thename, address, and telephone number ofeach operation granted certification.

One or more site evaluations willoccur during the 5-year period ofaccreditation to determine whether anaccredited certifying agent is complyingwith the Act and regulations. USDA willestablish an accredited certifying agentcompliance monitoring program, whichwill involve no less than one randomlyselected site evaluation of eachcertifying agent during its 5-year periodof accreditation. Larger and morediverse operations, operations withclients marketing their productsinternationally, and operations with ahistory of problems should expect morefrequent site evaluations by USDA.Operations with clients marketing theirproducts internationally will beannually site evaluated to meet the ISO-Guide 61 3 requirement for periodicsurveillance of accredited certifyingagents. USDA may also conduct siteevaluations during investigations ofalleged or suspected violations of theAct or regulations and in followup tosuch investigations. Such investigationswill generally be the result ofcomplaints filed with the Administratoralleging violations by the certifyingagent. Compliance site evaluations maybe announced or unannounced at the

discretion of the Administrator.Certifying agents will not be billed byUSDA for USDA-initiated siteevaluations conducted to determinecompliance with the Act andregulations.

An accredited certifying agent mustprovide sufficient information topersons seeking certification to enablethem to comply with the applicablerequirements of the Act and theseregulations. The certifying agent mustmaintain strict confidentiality withrespect to its clients and not disclose tothird parties (with the exception of theSecretary or the applicable Stateprogram’s governing State official ortheir authorized representatives) anybusiness-related information concerningany client obtained while implementingthese regulations except as authorizedby regulation. A certifying agent mustmake the following informationavailable to the public: (1) Certificationcertificates issued during the currentand 3 preceding calender years; (2) a listof producers and handlers whoseoperations it has certified, including foreach the name of the operation, type(s)of operation, and the effective date ofthe certification, during the current and3 preceding calender years; and (3) theresults of laboratory analyses forresidues of pesticides and otherprohibited substances conducted duringthe current and 3 preceding calenderyears. A certifying agent may makeother business information available tothe public if permitted in writing by theproducer or handler. This informationwill be made available to the public atthe public’s expense.

An accredited certifying agent mustmaintain records according to thefollowing schedule: (1) Recordsobtained from applicants forcertification and certified operationsmust be maintained for not less than 5years beyond their receipt; (2) recordscreated by the certifying agent regardingapplicants for certification and certifiedoperations must be maintained for notless than 10 years beyond their creation;and (3) records created or received bythe certifying agent pursuant to theaccreditation requirements, excludingany records covered by the 10-yearrequirement must be maintained for notless than 5 years beyond their creationor receipt. Examples of records obtainedfrom applicants for certification andcertified operations include organicproduction system plans, organichandling system plans, applicationdocuments, and any documentssubmitted to the certifying agent by theapplicant/certified operation. Examplesof records created by the certifying agentregarding applicants for certification

and certified operations includecertification certificates, notice of denialof certification, notification ofnoncompliance, notification ofnoncompliance correction, notificationof proposed suspension or revocation,notification of suspension or revocation,correspondence with applicants andcertified operations, on-site inspectionreports, documents concerning residuetesting, and internal working papers andmemoranda concerning applicants andcertified operations. Examples ofrecords created or received by thecertifying agent pursuant to theaccreditation requirements includeoperations manuals; policies andprocedures documents (personnel,administrative); training records; annualperformance appraisals and supportingdocuments; conflict of interestdisclosure reports and supportingdocuments; annual program evaluationworking papers, memoranda, letters,and reports; fee schedules; quarterlyreports of operations grantedcertification; application materialssubmitted to the NOP; correspondencereceived from and sent to USDA; andannual reports to the Administrator.

The certifying agent must make allrecords available for inspection andcopying during normal business hoursby authorized representatives of theSecretary and the applicable Stateprogram’s governing State official. In theevent that the certifying agent dissolvesor loses its accreditation, it musttransfer to the Administrator and makeavailable to any applicable Stateprogram’s governing State official allrecords or copies of records concerningits certification activities.

Certifying agents are also required toprevent conflicts of interest and torequire the completion of an annualconflict of interest disclosure report byall personnel designated to be used inthe certification operation. Coverage ofthe conflict of interest provisionsextends to immediate family membersof the certifying agent; responsiblyconnected persons of the certifyingagent; and any employee, inspector,contractor, or other personnel of thecertifying agent. A certifying agent maynot certify a production or handlingoperation if the certifying agent or aresponsibly connected party of suchcertifying agent has or has held acommercial interest in the production orhandling operation, including animmediate family interest or theprovision of consulting services, withinthe 12-month period prior to theapplication for certification. A certifyingagent may certify a production orhandling operation if any employee,inspector, contractor, or other personnel



of the certifying agent has or has helda commercial interest, including animmediate family interest or theprovision of consulting services, withinthe 12-month period prior to theapplication for certification. However,any such person must be excluded fromwork, discussions, and decisions in allstages of the certification process andthe monitoring of the entity in whichthey have or have held a commercialinterest. The acceptance of payment,gifts, or favors of any kind, other thanprescribed fees, from any businessinspected is prohibited. However, acertifying agent that is a not-for-profitorganization with an Internal RevenueCode tax exemption or, in the case of aforeign certifying agent, a comparablerecognition of not-for-profit status fromits government, may accept voluntarylabor from certified operations.Certifying agents are also prohibitedfrom providing advice concerningorganic practices or techniques to anycertification applicant or certifiedoperation for a fee, other than as part ofthe fees under the certification program.

No accredited certifying agent mayexclude from participation in or denythe benefits of the NOP to any persondue to discrimination because of race,color, national origin, gender, religion,age, disability, political beliefs, sexualorientation, or marital or family status.

Renewal of Accreditation. To avoid alapse in accreditation, certifying agentsmust apply for renewal of accreditation6 months prior to the fifth anniversaryof issuance of the notification ofaccreditation and each subsequentrenewal of accreditation. Theaccreditation of certifying agents whomake timely application for renewal ofaccreditation will not expire during therenewal process. The accreditation ofcertifying agents who fail to maketimely application for renewal ofaccreditation will expire as scheduledunless renewed prior to the scheduledexpiration date. Certifying agents withan expired accreditation must notperform certification activities under theAct and these regulations.

Following receipt of the certifyingagent’s annual report and fees, theresults of a site evaluation, and, whenapplicable, the reports submitted by apeer review panel, the Administratorwill determine whether the certifyingagent remains in compliance with theAct and regulations and should have itsaccreditation renewed. Upon adetermination that the certifying agentis in compliance with the Act andregulations, the Administrator will issuea notice of renewal of accreditation. Thenotice of renewal will specify any termsand conditions that must be addressed

by the certifying agent and the timewithin which those terms andconditions must be satisfied. Renewal ofaccreditation will be for 5 years. Upona determination that the certifying agentis not in compliance with the Act andregulations, the Administrator willinitiate proceedings to suspend orrevoke the certifying agent’saccreditation. Any certifying agentsubject to a proceeding to suspend orrevoke its accreditation may continue toperform certification activities pendingresolution of the proceedings to suspendor revoke the accreditation.

Accreditation—Changes Based onComments


(1) Equivalency of Imported OrganicProducts. We have removed theregulations on equivalency of importedorganic products included in the firstproposal. In this proposal, we haveadded foreign certifying agents asentities eligible for accreditation ascertifying agents qualified to certifydomestic and foreign organicproduction and handling operations. Wehave also added to subpart A definitionsfor private entity and State entity. Wehave defined ‘‘private entity’’ as anydomestic or foreign nongovernmentalfor-profit or not-for-profit organizationproviding certification services. Wehave defined ‘‘State entity’’ as anydomestic or foreign governmentalsubdivision providing certificationservices.

In commenting on the first proposal,several commenters expressedconfusion as to how the Secretarywould determine equivalency ofimported organic products. They alsoexpressed confusion as to how theSecretary would ensure that importedproducts met the same requirements asthose produced domestically. We haveaddressed these concerns by addingforeign certifying agents as private orstate entities that may be accreditedunder the NOP. We have also providedthat USDA will accept a foreigncertifying agent’s accreditation to certifyorganic production or handlingoperations if: (1) USDA determines,upon the request of a foreigngovernment, that the standards underwhich the foreign government authorityaccredited the foreign certifying agentmeet the requirements of this part; or (2)the foreign governmental authority thataccredited the certifying agent actedunder an equivalency agreementnegotiated between the United StatesGovernment and the foreigngovernment. These changes ensure thatall certifying agents, including foreign

private and state certifying agents, willbe required to meet the samerequirements to be recognized asqualified to certify organic productionor handling operations. This changeprovides foreign private and statecertifying agents with transparentstandards for accreditation.

A commenter raised concerns that weacted in violation of internationalagreements and domestic policy byproposing rules that were contrary tointernationally accepted organicstandards and, thus, created anunacceptable barrier to trade. The Actdirects the Secretary to establishnational standards governing themarketing of certain agriculturalproducts as organically producedproducts. In accordance with ourinternational agreements, this proposalensures that, with respect toaccreditation under this subpart,products imported from the territory ofany country are being accordedtreatment no less favorable than thataccorded to products of U.S. origin.However, in accordance with ourinternational trade agreements and uponimplementation of this program, theAdministrator will give positiveconsideration to accepting as equivalenttechnical regulations of other countries,even if these regulations differ from ourown, provided such regulations fulfilthe objectives of this proposed program.Any such equivalency agreements willbe negotiated on a case-by-case basis,and ample opportunity for publiccomment will be provided before andduring the negotiation process.

Two commenters requested that theSecretary recognize internationalaccreditation systems for foreign organiccertification programs and establish therequirements for approval of suchsystems in this proposal. We haveinstead proposed for the purposes ofthis rule that all certifying agents,regardless of their country of origin,meet the same requirements foraccreditation through the provisions ofthis subpart.

One commenter requested that allimported organic products be labeled bytheir respective country of origin. Thepurpose of this proposal is to providethe requirements for the marketing ofagricultural products in the UnitedStates that are labeled or sold as organic.The issue of country-of-origin labelingof imported products is not related tothis proposal or the Act. Further,regulations pertaining to the labeling oforganic agricultural products should notbe used to enforce country-of-originlabeling requirements.

Several commenters stated that thefirst proposal did not take into account



the use of equivalency to ensure themarketing of U.S. organic products inforeign markets. The Department willwork to oppose other countries’ organicregulations that would prohibit entry ofU.S. organic product produced underthe Act or these regulations. Asappropriate, the U.S. Government mayrepresent U.S. organic interests ininternational government-to-governmentbodies. However, neither of theseobjectives is intended to be achieved bythis rule.

(2) Accreditation RequirementsRegarding Expertise of Employees. Wehave added a new regulation to thegeneral requirements for accreditation.This regulation requires that thecertifying agent ensure that itsresponsibly connected persons,employees, and contractors withinspection, analysis, and decision-making responsibilities have sufficientexpertise in organic production orhandling techniques to sufficientlyperform the duties assigned. Certifyingagents were required under the firstproposal to use a sufficient number ofadequately trained personnel, includinginspectors. They were also required toconduct an annual performanceappraisal of each inspector.

Commenters felt that the proposedrule did not sufficiently ensure thatcertifying agents would employqualified individuals. One of thesecommenters requested that we requireorganic certification inspectors toparticipate in an inspector accreditationprogram, such as that offered by theIndependent Organic InspectorsAssociation. We believe that inspectorparticipation in an inspectoraccreditation program should be left tothe discretion of the inspector andcertifying agent. However, we believethat the new requirement combinedwith the requirements from the firstproposal should ensure that responsiblyconnected persons, employees, andcontractors of an accredited certifyingagent are qualified to perform theirinspection, analysis, and decision-making duties. This new regulation isfound at § 205.501(a)(5) of this proposal.

(3) Recordkeeping Requirements. Wehave proposed a new § 205.510(b),which identifies three categories ofrecords and their retention periods. Thisnew paragraph was added to addresscommenter concern that therequirement that an accreditedcertifying agent maintain records aboutall of its activities for 10 years wasexcessive and unnecessary. Commenterssuggested a 5- to-7-year retentionperiod. We agree that for some records,a retention period of 10 years may beexcessive. Accordingly, in this proposal,

we are proposing three retentionperiods. First, records created by thecertifying agent regarding applicants forcertification and certified operationswould have to be maintained for notless than 10 years beyond their creation.We believe this retention period to beconsistent with the Act’s requirementthat the certifying agent maintain allrecords concerning its activities for aperiod of not less than 10 years. Second,records obtained from applicants forcertification and certified operationswould have to be maintained for notless than 5 years beyond their receipt.This retention period is the same as thatrequired by the Act for the retention ofrecords by the certified operation. Sincethe certified operation can dispose of itsrecords 5 years after their creation, thecertifying agent should also be able todispose of those records it receives fromthe certified operation 5 years after theirreceipt. Third, records created orreceived by the certifying agent forUSDA accreditation would have to bemaintained for not less than 5 yearsbeyond their creation or receipt.

(4) Conflict of Interest Provisions. Wehave made three changes which webelieve will strengthen the conflict ofinterest provisions. We have made thesechanges because we concur with thecomment from a research foundationstating that the provisions forpreventing conflicts of interest neededto be significantly strengthened. First,we have added a new§ 205.501(a)(11)(v), which requires thecompletion of an annual conflict ofinterest disclosure report by allpersonnel designated to be used in thecertification of an operation, includingadministrative staff, certificationinspectors, members of any certificationreview and program evaluationcommittees, contractors, and all partiesresponsibly connected to the certifyingagent. Second, coverage of the conflictof interest provisions has been extendedto immediate family members of thecertifying agent; responsibly connectedpersons of the certifying agent; and anyemployee, inspector, contractor (to beused in the certification of anoperation), or other personnel of thecertifying agent. Immediate familymembers would include the spouse;minor children, including legallyadopted children; or blood relativeswho reside in the immediate householdof a certifying agent; responsiblyconnected person of the certifying agent;or any employee, inspector, contractor,or other personnel of the certifyingagent. Third, this proposal listscontractors among those persons whoare prohibited from accepting payment,

gifts, or favors of any kind, other thanregular fees from any business inspectedby the certifying agent. This addition,which is found at § 205.501(a)(11), wasmade to clarify that contractors,including contract inspectors, areprohibited from accepting payment,gifts, or favors of any kind, other thanregular fees.

(5) Use of Voluntary Labor. We haveadded an exception to the prohibition ofthe acceptance of payment, gifts, orfavors of any kind. The exceptionprovides that any certifying agent that isa not-for-profit organization with anInternal Revenue Code tax exemptionor, in the case of a foreign certifyingagent, a comparable recognition of not-for-profit status from its governmentmay accept voluntary labor fromcertified operations. Internal RevenueCode tax exemption or, in the case of aforeign certifying agent, a comparablerecognition from its government isrequired as verification of the certifyingagent’s status as a not-for-profitorganization. This change was made toclarify our original intent that not-for-profit certifying agents would beallowed to accept volunteer labor frompersons certified by the certifying agent.

In the preamble to the first proposal,we stated that we would not consider avolunteer who performs services for anot-for-profit certifying agent asproviding favors to any particularindividual in that agency and, therefore,would not consider the certifying agentas being in a conflict of interestsituation by accepting such servicesfrom volunteers. We have made thisclarification because a commenterexpressed the belief that the certifyingagent should be allowed to receivedonations of time, food, and moneybeyond any mandatory fees frompersons they certify. The Act prohibitscertifying agents from acceptingpayments, gifts, or favors of any kindfrom a business inspected, other thanprescribed fees. Accordingly, thisexception is limited to acceptance ofvoluntary labor by not-for-profitcertifying agents. While§ 205.501(a)(11)(iii) prohibits theacceptance of payments, gifts, or favorsof any kind, other than prescribed fees,from any business inspected forcertification as a producer or handler oforganic agricultural products, theparagraph does not prohibit theaccredited certifying agent fromaccepting payments, gifts, or favors ofany kind, including time, food, ormoney, from persons for whom they donot provide inspections for certificationas a producer or handler of organicagricultural products.



(6) Certification Fees. We haveremoved the requirement that acertifying agent charge only such fees toapplicants for certification andoperations it certifies that the Secretarydetermines are reasonable. We havemade this change because we concurwith those commenters who expressedthe belief that certifying agents shouldbe permitted to set their own feeswithout the approval of the Secretary.However, we continue to believe thatthe Administrator should retainoversight of the fees, not for the purposeof setting the fees or of dictating thelevel of the fees, but for the purpose ofdetermining if any certifying agent’s feesare so high as to be unreasonable and toensure that the schedule of fees filedwith the Administrator are applieduniformly and in a nondiscriminatorymanner. The Administrator should alsoretain the ability to inform a certifyingagent that its fees appear to beunreasonable and to require ajustification for the level of fees set bythe certifying agent. We further believethat the Administrator should retain theability to investigate the level of feescharged by an accredited certifyingagent if a complaint is made or ifcompelling circumstances warrant suchan investigation. Accordingly, we haveproposed at § 205.501(a)(15) that acertifying agent must charge applicantsfor certification and certified productionand handling operations only those feesand charges that it has filed with theAdministrator. We have also included at§ 205.642 regulations with respect tofees charged by certifying agents toproducers and handlers. Section205.642 is discussed under fees insubpart G of this preamble.

(7) State Standards That Vary Fromthe National Organic Program. We haveadded an exception to the regulationwhich prohibited certifying agents fromrequiring, as a condition for use of thecertifying agent’s identifying mark,compliance with any farming orhandling requirements other than thoseprovided for in the Act and regulations.The exception provides that therequirement does not apply to Stateswith more restrictive requirementsapproved by the Secretary or privateentity certifying agents certifyingproduction or handling operationswithin States with more restrictiverequirements approved by the Secretary.This change was made because we agreewith the State commenters who statedthat the prohibition on requiringcompliance with any farming orhandling requirements other than thoseprovided for in the Act and regulationswould prohibit States from requiring

that their more restrictive standards,approved by the USDA, be met as arequirement for use of the State’s logoon organically produced products. Wedid not intend to prohibit States fromrequiring that their more restrictivestandards be met as a requirement foruse of the State’s logo on organicallyproduced products. Including thisexception in § 205.501(b)(2) will permitStates with more restrictiverequirements approved by the Secretaryand private entity certifying agentscertifying production or handlingoperations within the borders of suchStates to require that the State’s morerestrictive standards be met as arequirement for use of their logo orother identifying mark on organicallyproduced products.

Certifying agents may not require acertified operation to meet productionor handling standards greater than thoseestablished by the Department or, whenapplicable, an approved State organiccertification program as a condition forusing its logo or other identifying mark.However, a certifying agent may verify,upon the request of a producer orhandler certified by the certifying agent,that the producer or handler is meetingcontractual specifications whichinclude requirements in addition tothose of the Act and regulations.

(8) Time Period for Public Access toInformation. For the requirement thatcertifying agents describe theprocedures they will use for makinginformation available to the public, wehave changed the time period from‘‘during the 10-year period precedingthe receipt of the request from thepublic’’ to ‘‘during the current and 3preceding calendar years.’’ Commentersstated that the required 10-year periodwas excessive and unnecessary. The Actrequires public access to certificationdocuments and laboratory analyses thatpertain to certification. However, theAct does not specify that a certifyingagent must provide access to its recordsthroughout their 10-year retentionperiod. We agree with the commentersthat public access to the records thecertifying agent is required to keepshould be limited to a reasonable periodshort of the full retention period. Sucha reasonable period, we believe, wouldbe the current calendar year and the 3calendar years preceding the calendaryear of the request. Accordingly,§ 205.504(b)(5) requires certifying agentsto describe the procedures they will usefor making information available to thepublic during the current and 3preceding calendar years. This timeperiod will lessen the burden oncertifying agents while assuring

reasonable public access to suchrecords.

(9) Scope of Information for PublicRelease. We have expanded the scope ofinformation for public release whichmust be included in the list ofproducers and handlers whoseoperations the certifying agent hascertified. Specifically, certifying agentswill have to include the name of theoperation and type(s) of operation in itslist of producers and handlers it hascertified. This change is included insection § 205.504(b)(5)(ii). Commentersrequested that the list be expanded toinclude the name of the operation, itsphysical location(s), certificationhistory, type(s) of operation, acreage(when applicable), and personresponsible for organic regulationcompliance. While we agree that thename of the operation and type(s) ofoperation should be available to thepublic, we believe that the certifiedoperation’s physical location(s),certification history, and acreage areconfidential information which has norelationship to the operation’s status asa certified organic operation. Therefore,such information should only be madeavailable with the written consent of thecertified operation. We also believe thatit is unnecessary to list a personresponsible for organic regulationcompliance since the applicantultimately has that responsibility.Therefore, these requested additionshave not been made. We have alsoremoved the separate requirement thatcertifying agents identify for the publicthe organic agricultural productsproduced by each certified operation.We have taken this action because theinformation is available on thecertificates and the list of producers andhandlers required to be released by thecertifying agent to the public. Theserequirements are found at§ 205.504(b)(5)(i) and (ii).

(10) Release of NonconfidentialBusiness Information. We have removedthe requirement that certifying agentsprovide a description of the proceduresto be used to make nonconfidentialbusiness information, as permitted bythe producer or handler and approvedby the Secretary, available to the public.This requirement has been replacedwith the requirement that the certifyingagent provide a description of theprocedures to be used to make otherbusiness information, as permitted inwriting by the producer or handler,available to the public. Commentersobjected to the requirement that theSecretary approve the release ofnonconfidential business informationthat the producer or handler hadauthorized the certifying agent to



release. They believed that thisrequirement lacked justification andcreated unnecessary costs. We concurthat this requirement is unnecessary.However, we believe that the producer’sor handler’s approval must be obtainedin writing, which is reflected in thisproposal at § 205.504(b)(5)(v).

(11) Submission of Applicant’sFinancial Policies and Procedures. Wehave removed the requirement that acertifying agent include with itsapplication for accreditation adescription of its policies andprocedures for collection anddisbursement of funds and documentsthat identify anticipated sources ofincome, including all fees to becollected from producers and handlers.Commenters stated that they did notbelieve the submission of applicantfinancial policies and procedures wasnecessary. We have decided that theinformation requested probably wouldnot fully meet our needs in determiningthat certification decisions were notinfluenced by the certifying agent’sconcern for the certification decision’sfinancial impact on the certifying agentor in determining compliance with theconflict of interest provisions of the Actand these regulations. Accordingly, thisrequirement is not included in thisproposal.

(12) Submission of InformationConcerning Current CertificationActivities. We have changed thevoluntary submission of informationand documents concerning currentcertification activities to a requiredsubmission. Commenters stated that thesubmission of a list of all farms, wild-crop harvesting operations, andhandling operations currently certifiedby the applicant should be required.They went on to say that the submissionof copies of the inspection reports andcertification evaluation documents forproduction or handling operationscertified by the applicant during theprevious year should remain optional.They also said the submission of resultsfrom any accreditation process of theapplicant’s operation by an accreditingbody during the previous year for thepurpose of evaluating its certificationactivities should remain optional.

We agree with the commenters that alist of all operations currently certifiedby the applicant should be a requiredsubmission. We also believe that copiesof inspection reports, certificationevaluation documents, andaccreditation results should be arequired submission from all applicantscurrently certifying production orhandling operations. Accordingly, at§ 205.504(d) we have made thesubmission of information and

documents concerning currentcertification activities mandatory forcertifying agents currently certifyingproduction or handling operations.

This change has been made because ofthe value such information anddocuments would have in assisting theDepartment in evaluating an applicantfor accreditation. However, we havelimited the submission of inspectionreports and certification evaluationdocuments for production and handlingoperations certified by the applicant.The applicant is required to submitcopies of at least 3 different inspectionreports and certification evaluationdocuments for production or handlingoperations certified by the applicantduring the previous year for each areaof operation for which accreditation isrequested. We have limited thesubmission to reduce the reportingburden on certifying agents. TheAdministrator may, however, requirethat the certifying agent submitadditional inspection reports andcertification evaluation documents.

We recognize that a newly organizedcertifying agent with no experiencewould be unable to supply theinformation. An applicant’s inability toprovide the information anddocumentation required by the revisedparagraph due to lack of experiencewould not be prejudicial to theDepartment’s evaluation of theapplication.

(13) Site Evaluations. We have revisedthe site evaluation provisions to clarifythe scope of an evaluation, to specifythat the evaluation will be arranged andconducted by a representative of theAdministrator, and to specify whenevaluations shall or may be conducted.These changes are made in response tocommenters who suggested addingdetails to the regulatory text regardingthe nature of site evaluations. Therevised section provides that siteevaluations of accredited certifyingagents shall: (1) Be conducted for thepurpose of examining the certifyingagent’s operations and evaluating itscompliance with the Act andregulations; (2) include an on-sitereview of the certifying agent’scertification procedures, decisions,facilities, administrative andmanagement systems, and production orhandling operations certified by thecertifying agent; (3) be conducted by arepresentative(s) of the Administrator;and (4) be conducted after applicationfor renewal of accreditation but prior tothe issuance of a notice of renewal ofaccreditation. This revised sectionprovides that an initial site evaluation ofan accreditation applicant would beconducted before or within a reasonable

period of time after issuance of theapplicant’s notification of accreditation.Section 205.508 also provides that oneor more site evaluations will beconducted during the period ofaccreditation to determine whether anaccredited certifying agent is complyingwith the general requirements foraccreditation.

(14) Eligibility for Peer Review Panels.We have added a new regulationaddressing eligibility for peer reviewpanels. Commenters expressed concernthat peer review pool applicants be freeof conflicts of interest and possess thenecessary expertise in organicproduction or handling. The firstproposal provided that candidates formembership in the peer review panelpool would be required to submit aletter to the Program Manager of theNOP requesting appointment,describing their qualifications, andidentifying conflicts of interest. Webelieve that there is value to theapplicants for membership in the peerreview panel pool and the generalpublic in addressing eligibility for peerreview panels in the regulatory text.Accordingly, we have added a newregulation at § 205.509(b) whichprovides that applicants for membershipin the peer review panel pool mustprovide the Administrator with awritten description and, upon request,supporting documentation of theirqualifications to conduct peer reviews.Such description must includeinformation concerning the applicant’straining and expertise in organicproduction or handling methods and inevaluating whether production orhandling operations are using a systemof organic production or handling.Applicants must also address theirpossible limitations on availability toserve. Further, applicants would berequired to include informationconcerning their commercial interestsand those of their immediate familymembers, within the 12-month periodprior to application, with any personwho may seek to become or who is anaccredited certifying agent. No personwho has or has had a commercialinterest, including an immediate familyinterest or the provision of consultingservices, in an applicant foraccreditation or renewal of accreditationwill be appointed to or acceptappointment to a panel evaluating theapplicant. This provision was added forthe purpose of avoiding conflicts ofinterest by peer reviewers. This newregulation also provides that personsaccepted to the pool may serve untilnotified that their appointment has beenrescinded by the Administrator or until



they are no longer qualified, whicheveroccurs first.

(15) Composition of Peer ReviewPanels. We have revised the regulationsconcerning the composition of peerreview panels. Commenters requestedthat the peer review panel consist of atleast two members who are not USDAemployees, rather than not AMSemployees. We agree with thissuggested change, which clarifies whathad been our intent. This change isincluded in § 205.509(c). Section205.509(c) provides that peer reviewpanels shall consist of at least three butno more than five members. Thissection provides that peer review panelsmust include a Departmentrepresentative who will preside over thepanel and no fewer than two membersfrom the peer review pool who possesssufficient expertise in the relevant areasof accreditation. Additionally, section205.509(c) provides that peer reviewpanels may include up to two memberswith expertise in other disciplines,including organizational managementand finance; member(s) from theapproved State organic certificationprogram when the applicant is a privateentity seeking accreditation within theState; and member(s) from a foreigngovernment’s organic program when theapplicant is a private entity that willoperate within the country. We haveadded authorization for these additionalmembers to broaden the scope anddepth of expertise available to peerreview panels.

Commenters also expressed concernthat the peer review panels consist of atleast one member from a State organiccertification program. We do not believethat the composition of peer reviewpanels regulations needs to be amendedto accommodate this concern. To theextent possible, accredited privatecertifying agents will peer reviewprivate certifying agents, and accreditedState certifying agents will peer reviewState certifying agents.

(16) Renewal of Accreditation. Wehave revised the renewal ofaccreditation provisions to, among otherthings, require that an accreditedcertifying agent’s application foraccreditation renewal be received 6months prior to the fifth anniversary ofissuance of the notification ofaccreditation and each subsequentrenewal of accreditation. The firstproposal provided that an accreditedcertifying agent would request renewalof accreditation on or before the fifthanniversary of issuance of the notice ofconfirmation of accreditation and eachsubsequent renewal of accreditation.Commenters expressed concern aboutwhether the accredited certifying agent’s

accreditation would lapse during therenewal process. They suggested thatcertifying agents should submit theirapplication for renewal of accreditation6 months prior to the fifth anniversaryof issuance of the notice ofconfirmation.

We believe that clarification regardingthe status of the certifying agent’saccreditation during the renewalprocess is appropriate. We also concurwith the commenters’ suggestion thatcertifying agents should submit theirapplications for renewal of accreditation6 months prior to the fifth anniversaryof issuance of the notice ofconfirmation. We have replaced ‘‘noticeof confirmation of accreditation,’’however, with ‘‘notification ofaccreditation’’ because this proposaleliminates the section on confirmationof accreditation. Accordingly, we haveprovided in this proposal at § 205.510(c)that: (1) An accredited certifying agent’sapplication for accreditation renewalmust be received 6 months prior to thefifth anniversary of issuance of thenotification of accreditation and eachsubsequent renewal of accreditation; (2)the accreditation of certifying agentswho make timely application forrenewal of accreditation will not expireduring the renewal process; (3) theaccreditation of certifying agents whofail to make timely application forrenewal of accreditation will expire asscheduled unless renewed prior to thescheduled expiration date; (4) certifyingagents with an expired accreditationmust not perform certification activitiesunder the Act and regulations; and (5)following receipt of the informationsubmitted by the certifying agent, theresults of any site evaluation, and, whenapplicable, the reports submitted by apeer review panel, the Administratorwill determine whether the certifyingagent remains in compliance with theAct and regulations and should have itsaccreditation renewed.

These changes would provide theDepartment with sufficient time to fullyprocess the certifying agent’sapplication for accreditation renewalprior to the accreditation’s scheduleddate of expiration. This revisedregulation also clarifies that a certifyingagent’s accreditation will not expireduring the accreditation renewalprocess if the certifying agent has madetimely application for renewal. It alsomakes clear that the accreditation ofcertifying agents who fail to maketimely application for renewal ofaccreditation will expire as scheduledunless renewed prior to the scheduledexpiration date. This regulation alsoprovides that certifying agents with anexpired accreditation must not perform

certification activities under the Act andthese regulations.

(17) Denial of Accreditation. We haverevised the denial of accreditationregulations to clarify that after receipt ofa notification of noncompliance, theapplicant may submit a description ofthe actions taken to correct the noteddeficiencies and evidencedemonstrating such corrections, ratherthan submitting a new application. Wehave taken this action becausecommenters were confused by ourreference to a new application in thedenial of accreditation regulations. Thedenial of accreditation regulations arefound at § 205.507 in this proposal.

Accreditation—Changes Requested ButNot Made


(1) Durations of Accreditation andReporting Requirements. Commentersexpressed concern regarding theduration of accreditation and whetherthe interval of required reporting isadequate. An association expressedconcern regarding the economic impactof accreditation on small certifyingagents. This commenter stated thatsmall certifying agents should not beaccredited more often than every 5years. An international organicfederation expressed the belief thataccreditation for 5 years is too long. Thecommenter went on to say thatcertification bodies are expandingrapidly and that annual reports cannotbe relied upon to fully convey theconsequent changes. This commenterbelieves that many of the conditions ofaccreditation may relate to operationalaspects that cannot be addressed in anannual report.

Annual reporting by the certifyingagent, under this proposal, wouldprovide: (1) A complete and accurateupdate of applicant information andexpertise and ability informationpreviously submitted; (2) informationsupporting any changes being requestedin the areas of accreditation; (3) themeasures that were implemented in theprevious year and any measures to beimplemented in the coming year tosatisfy any terms and conditionsdetermined by the Administrator to benecessary as specified in the most recentnotification of accreditation; and (4) theresults of the most recent inspectorperformance appraisal and programevaluation and adjustments to thecertifying agent’s operation andprocedures implemented and intendedto be implemented in response to theappraisals and evaluations. Thisproposal includes a requirement at



§ 205.501(a)(14) that the certifying agentsubmit to the Administrator a copy ofeach notification of: (1) Denial ofcertification; (2) noncompliance; (3)noncompliance correction; (4) proposedsuspension or revocation; and (5)suspension or revocation,simultaneously with its issuance.

We believe that these reportingrequirements, coupled with feedbackfrom applicants for certification,certified operations, and otherinterested parties, will provide theDepartment with sufficient informationregarding the certifying agent and itsoperation to determine whether a sitevisit is necessary to evaluate thecertifying agent’s suitability to remainaccredited. Under this proposal, theDepartment will conduct one or moresite evaluations during the period ofaccreditation to determine whether theaccredited certifying agent is complyingwith the requirements for accreditation.Accordingly, we believe the duration ofaccreditation period first proposed wascorrect, and we are, therefore,reproposing this time period at§ 205.500(b).

(2) Performance Appraisals andProgram Evaluation. Comments fromState departments of agriculture andsome certifiers indicated that the annualinspector performance appraisal andannual program evaluationrequirements duplicated Staterequirements. The commenters askedwhat the required scope and depth ofevaluations was expected to be, whetherthird party evaluators would be requiredto be used to assess the performance ofthe operation, and whether existingperformance appraisal and programevaluation practices of a certifying agentwould be used to meet the annualinspector performance appraisal andprogram evaluation requirements.

We do not intend for States to developdual performance appraisal andprogram evaluation programs. Webelieve that performance appraisals andprogram evaluations conducted to meetState requirements will also meet therequirements of this proposal. State andprivate agency personnel performanceappraisals and program evaluationswould be expected to be consistent withgood management practices andappropriate to the organization’s sizeand structure. This could be differentfor different organizations. Therefore,we are not prescribing the specificperformance appraisal system orinstrument to be used to assessinspector performance, the specificprogram evaluation methods that mustbe used, or that third parties mustconduct the required programevaluation. Accordingly, we have not

changed the questioned provisions,which appear at § §205.501(a)(6) and(7). We have, however, revised§ 205.501(a)(7) to clarify that the annualprogram evaluation can be conducted bythe certifying agency staff, an auditingentity, or a consultant who has expertiseto conduct program evaluations.

(3) ‘‘Open Records’’ Requirements.Commenters expressed the belief thatconfidentiality requirements forcertifying agents might conflict withState requirements for ‘‘open records.’’We recognize this potential forconflicting requirements. Recordscollected and maintained under theNOP are subject to the confidentialityprovisions of the Act and theseregulations. However, a State-entitycertifying agent will be subject to itsState ‘‘open records’’ laws when suchlaws conflict with the confidentialityprovisions of the Act and theseregulations. Records collected andmaintained under the NOP by a privateentity certifying agent will always besubject to the confidentialityrequirements of the Act and theseregulations. Accordingly, pursuant tothe Act, we are reproposing theconfidentiality provisions at§ 205.501(a)(10).

To clarify that authorizedrepresentatives of the Secretary or theapplicable State program’s governingState official may act on behalf of theSecretary or the State program’sgoverning State official and must begiven access to the records, we haveadded the phrase, ‘‘or their authorizedrepresentatives,’’ to § 205.501(a)(10).Such representative could be a memberof the NOP staff, a Departmentcompliance officer, or other official.This provision is standard practice andis necessary for Government oversight ofa regulatory program.

(4) List of Confidential Records. Onecommenter requested a definitive list ofthe records that had to be keptconfidential. We cannot create such alist because it is not possible to describeevery record that would becharacterized as a business-relatedrecord. Such records would include,however, organic production andhandling plans, records that are relatedto trade secrets and commercial orfinancial information obtained fromapplicants for certification, and recordsor information compiled for aninvestigation into allegednoncompliance with the Act andregulations.

(5) Time Period for Prohibition ofCommercial Interest. We received manycomments regarding the prohibition ofcommercial interest in an organicproduction or handling operation

during the 12 months prior tocertification. Several States and industryassociations stated that the prohibitionof commercial interest should apply tothe 12 months after as well as the 12months prior to certification. Thesecommenters offered no reasoning fortheir position. A research foundationrecommended that the prohibition ofcommercial interest should be for 3years before and after the application forcertification. This commenter stated thatthe conflict of interest provisionsneeded significant strengthening. Aproducer commenter stated that theprohibition of commercial interestshould be for an indefinite period, notfor 12 months. Some commentersrecommended that certifying agents andresponsible parties and employees ofcertifying agents be barred fromaccepting employment for 1 to 3 yearsfrom any certified production orhandling operation in which theyparticipated in any manner in theoperation’s certification. Anaccreditation service stated it believedthere would be a conflict of interestshould a consulting or businessconnection arise between an inspectorand a production or handling operationfollowing the site evaluation. Thiscommenter presented the example of aninspector being offered employmentduring the site evaluation but not takingthe position until 6 months after the siteevaluation. Many commenters, however,supported our proposed prohibition ofcommercial interest in an organicoperation during the 12 months prior tocertification.

We disagree with therecommendations calling for a longerprecertification conflict of interestprohibition period and with therecommendations for a postcertificationprohibition period for those persons nolonger associated with the certifyingagent. Regarding the recommendationsfor a longer precertification prohibitionperiod, we continue to believe that 12months is a sufficient period to ensurethat any previous commercial interestwould not create a conflict of interestsituation for two reasons. First, this timeperiod is consistent with similarprovisions governing conflicts ofinterest for government employees.Second, we have added a new section,205.501(a)(11)(v), which requires thecompletion of an annual conflict ofinterest disclosure report by allpersonnel designated to be used in thecertification operation, includingadministrative staff, certificationinspectors, members of any certificationreview and program evaluationcommittees, contractors, and all parties



responsibly connected to thecertification operation. Thisrequirement will assist certifying agentsin complying with the requirements toprevent conflicts of interest. We alsocontinue to believe that a longerprohibition period would have the effectof severely curtailing most certifyingagents’ ability to comply with the Act’srequirement that they employ personswith sufficient expertise to implementthe applicable certification program.Accordingly, we have decided torepropose the prohibition oncommercial interest in an applicant forcertification for a 12-month period priorto the application for certification atsection § 205.501(a)(11).

Regarding the recommendations for apostcertification prohibition period forthose persons no longer associated withthe certifying agent, we believe such aperiod is unnecessary. We take thisposition because certifying agents andtheir responsibly connected parties,employees, inspectors, contractors, andother personnel are prohibited fromengaging in activities or associations atany time during their affiliation with thecertifying agent which would result ina conflict of interest. While associatedwith the certifying agent, all employees,inspectors, contractors, and otherpersonnel are expected to disclose to thecertifying agent any offer of employmentthey have received and not immediatelyrefused. They are also expected todisclose any employment they areseeking and any arrangement they haveconcerning future employment with anapplicant for certification or a certifiedoperation. The certifying agent wouldthen have to exclude that person fromwork, discussions, and decisions in allstages of the certification or monitoringof the operation making theemployment offer. If a certifying agentor a responsibly connected party of thecertifying agent has received and notimmediately refused an offer ofemployment, is seeking employment, orhas an arrangement concerning futureemployment with an applicant forcertification, the certifying agent maynot accept or process the application.Further, certifying agents andresponsibly connected parties may notseek employment or have anarrangement concerning futureemployment with an operation certifiedby the certifying agent while associatedwith that certifying agent. Certifyingagents and responsibly connectedparties must sever their association withthe certifying agent when such persondoes not immediately refuse an offer ofemployment from a certified operation.Accordingly, we have decided not to

include a postcertification prohibitionperiod in this proposal.

(6) Conflicts of Interest. Somecommenters stated that they understoodthe proposed conflict of interestprovisions to prohibit certifying agentsfrom certifying any organic operationowned or operated by a member of thecertifying agent’s board of directors orfrom certifying any organic operationowned or operated by an employee ofthe certifying agent. One commenterstated that because certification arosefrom the ranks of organic farmers, thereare many certification personnel,including inspectors, who also farm orhave family who farm. This commenterstated that it should be permissible fora certifying agent to review and certifyan organic operation owned or operatedby a responsibly connected person oremployee, provided that the responsiblyconnected person or employee isexcluded from the decision-makingprocess with respect to the organicoperation to be certified.

The commenters are correct in theirinterpretation that the first proposalprohibited certifying agents fromcertifying an operation when thecertifying agent or a responsiblyconnected party of such certifying agenthas or has held a commercial interest inthe operation. This prohibition islimited, however, to the 12-monthperiod prior to the application forcertification. The first proposal did notprohibit certifying agents from certifyingan operation when an employee of thecertifying agent has or has held acommercial interest in the operation.The first proposal prohibited acertifying agent from using an employeein any phase of the certification processwhen such employee has or has held acommercial interest in an operationmaking application for certificationwithin the 12-month period prior to theapplication for certification. Aresponsibly connected party is anyperson who is a partner, officer,director, holder, manager, or owner of10 percent or more of the voting stockof an applicant for or a recipient ofcertification or accreditation.

We believe that a certifying agent anda responsibly connected party of suchcertifying agent hold positions of powerand authority which preclude thecertification of an operation in whichthey have or have held a commercialinterest during the 12-month periodprior to an application for certification.The certifying agent’s control over theemployment of an agent’s employeemakes it unreasonable to expect anemployee of a certifying agent toimpartially carry out the employee’sduties when the certifying agent or a

responsibly connected party of suchagent has an interest in the applicant.Such is not true of an employee who issubordinate to the certifying agent or aresponsibly connected party of thecertifying agent. Accordingly, we havereproposed the requirement that acertifying agent prevent conflicts ofinterest by: (1) Not certifying aproduction or handling operation if thecertifying agent or a responsiblyconnected party of such certifying agenthas or has held a commercial interestwithin the 12-month period prior to theapplication for certification and (2)excluding any person with a conflict ofinterest from work, discussions, anddecisions in all stages of thecertification process and the monitoringof certified production or handlingoperations for all entities in which theperson has or has held a commercialinterest within the 12-month periodprior to the application for certification.Both of these provisions are found in§ 205.501(a)(11).

(7) Defining Commercial Interest. Aresearch foundation recommended thatthe provisions for preventing conflicts,found in this proposal at§ 205.501(a)(11), be strengthened bychanging ‘‘a commercial interest in theoperation’’ to ‘‘a commercial interest inthe operation or the marketing ordistribution of its products.’’ We believethat the recommended addition isunnecessary because ‘‘commercialinterest’’ covers all businesstransactions between the certifyingagent or responsibly connected parties,employees, inspectors, contractors, orother personnel of the certifying agentand the applicant for certification orcertified operation. This interpretationwould not apply to voluntary laborprovided, in accordance with§ 205.501(a)(11)(iii), by a certifiedoperation to a certifying agent that is anot-for-profit organization with anInternal Revenue Code tax exemption.Further, this interpretation would notapply to the providing of advice, inaccordance with § 205.501(a)(11)(iv),concerning organic practices ortechniques to any certification applicantor certified operation when such adviceis covered by fees under the applicablecertification program established underthe Act.

(8) Provision of Information toProducers and Conflicts of Interest.Commenters were concerned about theeffect that some of the conflict ofinterest provisions would have oncertifying agents that provide producerswith information on organic practicesthrough forums such as in-housepublications, conferences, workshops,informational meetings, and field days



for a fee. Specifically, they wereconcerned about the impact of theconflict of interest provision requiringthat certifying agents prevent conflictsof interest by not providing adviceconcerning organic practices ortechniques to any certification applicantor certified organic production orhandling operation for a fee, other thanas part of the fees established under theapplicable certification programestablished under the Act. Thesecommenters requested that theparagraph be rewritten to clarify thatsuch activities would not be prohibited.We also received a comment stating thatadvice relating to improving productionyields, market access, etc., is not thefunction of an inspector and can lead toa nonmonetary conflict of interest. Thiscommenter stated that advice, wheregiven, should be restricted to issuesrelated to the understanding andimplementation of the standards.

Certifying agents have historicallyprovided advice concerning organicpractices or techniques to anycertification applicant or certifiedorganic production or handlingoperation for a fee through forums suchas in-house publications, conferences,workshops, informational meetings, andfield days. Such activities and their feeswould not be prohibited under the Actor these regulations, provided that suchactivities were not required as acondition for production or handlingcertification. Section 205.503(c) wouldrequire that the applicant foraccreditation provide a copy of theapplicant’s schedule of fees for allservices to be provided under theseregulations by the applicant. We wouldconsider such activities to be voluntaryparticipation activities provided by thecertifying agent to producers, handlers,and other interested persons under theNOP. We also believe that it isappropriate, as well as industrypractice, during an on-site inspectionfor inspectors to provide advice on awide range of issues related to an on-siteinspection of a production or handlingoperation. Accordingly, the conflict ofinterest provisions found at§ 205.501(a)(11) have not been rewrittenas requested by the commenters.

(9) Equivalency of CertificationDecisions. We received a variety ofcomments suggesting changes to therequirement that accredited certifyingagents accept the certification decisionsmade by another USDA-accreditedcertifying agent as equivalent to its own.Several of these commenters askedwhether States with more restrictivestandards could challenge certificationdecisions made by any accreditedcertifying agents. A few commenters

representing State programs stated thatStates should be able to maintaincontrol over which certifying agentsoperate within their State. Othercommenters suggested that therequirement be amended to: (1) Requirethat a certifying agent accept thecertification decisions made by anotherUSDA-accredited certifying agent asequivalent to its own only after thecertifying agent’s accreditation has beenconfirmed by the Department; (2)provide that if a certifying agent doubtsthe accuracy of another certifyingagent’s determination, the certifyingagent questioning the accuracy can filea complaint with the Secretary; and (3)authorize an accredited certifying agentto request additional documentationfrom another certifying agent ifquestions arise regarding the othercertifying agent’s certification activitiesor the activities or product of aproduction or handling operationcertified by the other certifying agent.

No organic product may be producedor handled to organic standards lowerthan the standards of the NOP. Tocertify organic production or handlingoperations to the national standards orto more restrictive State standardsapproved by the Secretary, the certifyingagent must be accredited by theAdministrator. While States may setmore restrictive standards than thenational organic standards for productproduced or handled within their State,those requirements do not apply toorganic product produced or handledoutside of such State. Further, a Stategovernment may not prevent themarketing or sale in the State of organicproduct produced in another State tothis program’s national organicstandards. State organic certificationprograms approved by the Secretarywould be required to treat all accreditedcertifying agents equally. Likewiseunder this program, accreditedcertifying agents in one State cannotrefuse to recognize another State’sproduct which is certified to thesenational organic standards.

We disagree with the suggestion toallow certifying agents to challenge thedecisions of certifying agents that havenot yet had their accreditationconfirmed by the Department. Webelieve that allowing a certifying agentto challenge the certification decisionsmade by a certifying agent that has nothad its site evaluation would create aninsurmountable barrier for personswanting to become accredited under theNOP, especially persons establishingnew operations. The proposedaccreditation procedures are sufficientlyrigorous to permit a well-foundedassessment of the applicant’s

capabilities and qualifications and willallow all eligible certifying agents toreceive timely accreditation. We willonly accredit certifying agents that webelieve possess the expertise and abilityto implement the proposed certificationprogram. This includes newlyestablished certifying agents who mightrequire a longer period of time betweenaccreditation and a site evaluation toallow the certifying agent to performsufficient certification activities for theDepartment to perform a meaningful siteevaluation.

Should questions arise regarding acertifying agent’s certification activities,a certified production or handlingoperation’s activities, or the organicstatus of a certified production orhandling operation’s product, thequestioning certifying agent couldreport a complaint or allegation ofnoncompliance, with the certificationprovisions of this part, to the Stateprogram’s governing State official or theAdministrator. As appropriate, the Stateprogram’s governing State official or theAdministrator will investigate suchcomplaints or allegations. Certifyingagents are not authorized to investigateallegations or suspicions ofnoncompliance by other certifyingagents, nor are certifying agents allowedto take unilateral action against anaccredited certifying agent, such asrefusal to recognize the certificationdecisions made by another certifyingagent.

For the above reasons, we have notchanged the requirement that acertifying agent accept the certificationdecisions made by another USDA-accredited certifying agent as equivalentto its own. This requirement is locatedat § 205.501(a)(12).

(10) False or Misleading Claims.Commenters objected to therequirements that an accreditedcertifying agent must refrain frommaking false or misleading claims aboutits accreditation status, the USDAaccreditation program for certifyingagents, or the nature or qualities ofproducts labeled as organicallyproduced. A few of these commentersstated that the requirements exceed theauthority given by the Act byintroducing claims other than thoseconcerning representations ofnonorganic product as organic.Additionally, a few commentersbelieved that the term, ‘‘misleading,’’ istoo broad and could be interpreted tomean that the certifying agent couldmake no negative claims about theUSDA accreditation program. Theysuggested that the requirements beamended by removing the reference tomisleading claims. Another commenter



believed that the phrase, ‘‘or the natureor qualities of products labeled asorganically produced,’’ should bedeleted because it is vague and wouldunduly limit the freedom of certifyingagents to share information withconsumers, farmers, processors, andother interested parties regarding theattributes of organic food and organicproduction systems, includingnutritional properties, freshness, taste,and less reliance on syntheticsubstances.

We disagree with the commenterswho stated that the requirements exceedthe authority given by the Act byintroducing claims other than thoseconcerning representations ofnonorganic product as organic. Claimsregarding accreditation status, theUSDA accreditation program forcertifying agents, and the nature andquality of products labeled asorganically produced all fall under theauthority of the Act. We believe that therequirements are needed to prevent thedissemination of inaccurate ormisleading information to consumersabout organically produced products.We further believe that the changessuggested by the commenters wouldundermine the goal of a uniform NOPby allowing certifying agents to makeclaims that would state or imply thatorganic products produced byoperations that they certify are superiorto those of operations certified by othercertifying agents. These requirementswould not prohibit certifying agentsfrom sharing factual information withconsumers, farmers, processors, andother interested parties regardingverifiable attributes of organic food andorganic production systems.Accordingly, the requirements arereproposed in this proposal withoutchange at § 205.501(a)(13).

(11) Notification of Status of CertifiedOperations. Comments received on therequirements addressing documentationto be submitted by certifying agents tothe Department regarding the status ofcertified operations suggested that: (1)The public should have access to thenotification of certification statusdocumentation; (2) annual reporting bycertifying agents of the name of eachoperation whose application forcertification has been approved issufficient; and (3) the required reportingshould only include the name of thoseoperations certified during the quarterbeing reported rather than a listing of alloperations certified by the certifyingagent. First, we believe that the Freedomof Information Act adequately providesfor public access to information.Second, we need the requiredinformation to facilitate oversight and to

ensure that we have relatively currentdata for responding to inquiriesinvolving the granting of certificationsby certifying agents. It was not ourintent to have certifying agents updatetheir list of certified entities quarterly.Our intent was to receive on a quarterlybasis a listing of all certificationsgranted by the certifying agent duringthe quarter being reported. Accordingly,no changes have been made on the basisof these comments to the requirementsfound in this proposal at§ 205.501(a)(14).

(12) Certifier Compliance With Termsand Conditions Deemed Necessary.Commenters objected to the requirementthat certifying agents must comply withand implement other terms andconditions deemed necessary by theSecretary. This requirement isconsistent with § 6515(d)(2) of the Act,which requires a certifying agent toenter into an agreement with theSecretary under which such agent shallagree to such other terms and conditionsas the Secretary determines appropriate.Accordingly, this requirement, found at§ 205.501(a)(17), is unchanged in thisproposal except to change ‘‘Secretary’’to ‘‘Administrator’’ since theAdministrator will be responsible foradministration of the NOP.

(13) Limitations on the Use ofCertifying Agent’s Marks. Privatecertifying agents disagreed with theprovision that prohibited certifyingagents from requiring, as a condition ofuse of the certifying agent’s identifyingmark, compliance with any productionor handling requirements other thanthose provided for in the Act andregulations. Private certifying agentscommented that they should be allowedto use their identifying mark torecognize additional achievements byproducers and handlers that exceed therequirements proposed in the nationalorganic standards. The commenters’position is the same as that suggested bypublic input prior to publication of thefirst proposal.

We believe that the private certifyingagents’ position advocating the use oftheir identifying mark to recognizeadditional achievements is inconsistentwith § 6501(2) of the Act, whichprovides that a stated purpose of the Actis to assure consumers that organicallyproduced products meet a consistentnational standard. Accordingly, we arereproposing the provision prohibitingcertifying agents from requiring, as acondition of use of the certifying agent’sidentifying mark, compliance with anyproduction or handling requirementsother than those provided for in the Actand regulations or under an approvedState organic certification program. This

reproposed provision is found at§ 205.501(b).

(14) Additional Requirements forPrivate Certifying Agents. Commentersexpressed concern regarding the threeadditional requirements for a certifyingagent who is a private person. First,private certifying agents expressedconcern regarding the requirement thatprivate certifying agents hold theSecretary harmless for any failure ontheir part to carry out the provisions ofthe Act and regulations. Their concernfocused on the fact that applicants forcertification can appeal a certifyingagent’s refusal to certify to the Secretaryand that a certifying agent’srecommendation to suspend or revoke acertification can be appealed to theSecretary. They believe that, without theauthority to independently deny,suspend, or revoke certification, thecertifying agent becomes liable for theactions of the Secretary.

We disagree with the assertion thatthe certifying agent becomes liable forthe actions of the Secretary. Theprovision clearly states that privatecertifying agents hold the Secretaryharmless for any failure on their part.This in no way would make thecertifying agent responsible for anyfailure on the part of the Department.Further, the wording of this provision isconsistent with § 6515(e)(1) of the Act,which provides that private certifyingagents shall agree to hold the Secretaryharmless for any failure on the part ofthe certifying agent to carry out theprovisions of the Act. Accordingly, weare reproposing this regulation at§ 205.501(c)(1).

Second, commenters expressedconcern regarding the requirement thatcertifying agents furnish reasonablesecurity, in an amount and according toterms as the Secretary may by regulationprescribe, for the purpose of protectingthe rights of production and handlingoperations certified by such certifyingagent. The commenters expressedconcern regarding what would be thedollar amount of the security, how thedollar amount of the security would bedetermined, and in what form thesecurity might be furnished. Severalcommenters expressed concern over theavailability of errors and omissionsinsurance. The commenters alsoexpressed a belief that guidance on whatreasonable security might entail will beneeded by accreditation applicants toevaluate their costs for accreditation.

A private-entity certifying agent mustfurnish reasonable security for thepurpose of protecting the rights ofoperations certified by such certifyingagent. This security is to ensure theperformance of the certifying agent’s



contractual obligations. As notedelsewhere in this proposed rule, thespecific amount and type of securitythat must be furnished by a privatecertifying agent will be the subject offuture rulemaking by the Department.Such rulemaking will provide for publicinput and will occur prior to the call forapplications for accreditation. Weanticipate that the amount of thesecurity will be tied to the number ofclients served by the certifying agentand the anticipated costs of certificationthat may be incurred by its clients in theevent that the certifying agent’saccreditation is suspended or revoked.We anticipate that the security may bein the form of cash, surety bonds, orother financial instrument (such as aletter of credit) administered in amanner comparable to cash or suretybonds held under the PerishableAgricultural Commodities Act.Accordingly, we are reproposing thisregulation at § 205.501(c)(2).

Third, commenters expressed concernregarding the requirement that a privateperson accredited as a certifying agentmust transfer to the Secretary and makeavailable to any applicable Stateprogram’s governing State official allrecords or copies of records concerningthe private certifying agent’scertification activities in the event thatthe certifying agent dissolves or loses itsaccreditation. This requirement isconsistent with § 6515(c)(3) of the Act,which provides that if any privateperson that was certified under the Actis dissolved or loses its accreditation, allrecords or copies of records concerningsuch person’s activities under the Actshall be transferred to the Secretary andmade available to the applicable Stateprogram’s governing State official. Inaddition to being consistent with theAct, we believe that this regulation isnecessary to ensure the continuity andintegrity of the NOP. Accordingly, weare reproposing this regulation at§ 205.501(c)(3).

(15) Public Access to ApplicantInformation. The first proposal includedprovisions regarding what informationhad to be submitted by an accreditationapplicant. Commenters requested theaddition of a paragraph addressingpublic access to this information aboutthe applicant’s organization andintended certification activities. Wehave not made this requested changebecause the proposed recordkeepingand availability requirements under thisprogram, coupled with the Freedom ofInformation Act, adequately provide forpublic access to information. Theregulations on applicant information arefound at § 205.503 and include twoadditions to the provisions of the first

proposal. This proposal requires theapplicant to provide the name of theperson responsible for the certifyingagency’s day-to-day operations and tosubmit a copy of its schedule of fees forall services to be provided under theseregulations.

(16) Application Requirements forStates. Commenters stated that Statecertifying agents should not be requiredto submit documents and informationregarding personnel, administrativepolicies and procedures, and financialpolicies and procedures to demonstrateevidence of expertise and ability. Theybelieve that the requirements should notapply to States that have establishedhiring procedures, standardqualifications for job descriptions, andstatewide policies for training,evaluating, and supervising personnel.They also stated that administrativepolicy and procedure review should belimited to organic programadministration, not to agencywidepolicies or procedures such as financialpolicies.

We acknowledge that States haveestablished hiring procedures, standardqualifications for job descriptions,administrative procedures, andstatewide policies for training,evaluating, and supervising personneland that such policies and procedureswould be applicable to State certifyingagents. This fact, however, does notmake States uniquely different fromprivate accreditation applicants whowould have similar policies andprocedures in exercising good businesspractices. State certifying agents cannotbe exempt from these requirementssimply because they are a governmentagency.

We anticipate that a State will submitits established policies and proceduresto meet the requirements fordemonstrating its expertise in organicproduction and handling techniquesand its ability to fully comply with andimplement the national organiccertification program. A stated purposeof the Act is the establishment ofnational standards. We believe suchnational standards extend to uniformrequirements for State and privatecertifying agents unless otherwiseprovided by the Act. We further believethe required information is essential toenable the Administrator to make adetermination concerning approval ofan application for accreditation.Accordingly, the requirements fordemonstrating expertise in organicproduction and handling techniquesand an ability to fully comply with andimplement the national organiccertification program remain the samefor private and State certifying agents.

These requirements are found at§ 205.504.

(17) Public Access to Information onCertified Operations. Commentersrequested that the public be providedinformation about a certified operation’sfarming practices, use of pesticides, andlivestock production practices. Allproduction and handling operationsmust meet the requirements of thenational organic certification program tobe certified. An accredited certifyingagent will determine whether anoperation meets those requirements.Certified operations can be held to noother standards except, if applicable, therequirements of an approved Stateorganic certification program.Accordingly, we believe access to therequested information is unnecessary.We also believe the information to beconfidential business information thatshould not be released to the public.Therefore, we have made no changes tothe proposed rule to accommodate thecommenters’ request.

(18) Conflicts of Interest. The firstproposal required a description ofprocedures intended to be implementedto prevent the occurrence of conflicts ofinterest. It also required theidentification of any food or agriculture-related business interests of allpersonnel intended to be used in thecertification operation, includingadministrative staff, certificationinspectors, members of any certificationreview and evaluation committees, allparties responsibly connected to thecertification operation, and immediatefamily members, that may result in aconflict of interest. Commenters statedthat existing State policies should besufficient to prevent conflicts of interest.They also stated that lists of thebusiness interests of all inspectors,program staff, and their families areunnecessary.

We agree with the commenters thatexisting State policies should besufficient to prevent conflicts of interest.However, we disagree with thecommenters’ assertion that lists of thebusiness interests of all inspectors,program staff, and their families areunnecessary. At § 6515(h), the Actplaces responsibility for the preventionof conflicts of interest with thecertifying agent. We, however, haveresponsibility for ensuring that thecertifying agent complies with thatresponsibility. We believe theserequirements will provide theAdministrator with informationessential to the identification ofconflicts of interest. A stated purpose ofthe Act is the establishment of nationalstandards. We believe such nationalstandards extend to uniform conflict of



interest requirements for State andprivate certifying agents. Further, forconflict of interest standards to achievetheir intended effectiveness, they mustbe uniformly applied to both State andprivate certifying agents. The requiredinformation is also essential to theAdministrator’s determination of theapplicant’s suitability for accreditation.As the commenters point out, Stateshave established conflict of interestpolicies and procedures. Thus, therequired information should be readilyavailable for submission to theAdministrator with minimalinconvenience to the certifying agent.Accordingly, we have made no changesin this proposal based on thesecomments. Regulations concerningconflicts of interest are found at§§ 205.501(a)(11) and 205.504(c) in thisproposal.

(19) Accreditation Prior to SiteEvaluation. Commenters expressedconcern that applicants could beaccredited prior to a site evaluation ofthe applicant’s facilities and operations.Most, however, recognized the need foraccreditation decisions on writtenmaterials as opposed to further delay toprogram implementation. A few of thecommenters urged USDA to completethe site evaluations during theimplementation phase. The firstproposal provided that an initial siteevaluation of the operation of eachcertifying agent must be performed forthe purpose of verifying its compliancewith the Act and regulations. Tworestrictions concerning timing wereplaced on the performance of an initialsite evaluation. First, the site evaluationhad to be performed within a reasonableperiod of time after the date on whichthe agent’s notice of approval ofaccreditation was issued. Second, thesite evaluation had to be performed afterthe agent had conducted sufficientcertification activities for theAdministrator to examine its operationsand evaluate its compliance with thegeneral requirements for accreditation.

We never intended that a siteevaluation be required prior toaccreditation. While site evaluationscould be conducted before approval, webelieve accreditation approval without asite evaluation is appropriate. Webelieve that the commenters’ concernsare adequately addressed by the firstproposal, which provided for a well-founded assessment of the applicant’squalifications and capabilities through asufficiently rigorous review of theapplication and supportingdocumentation. In cases where thedocument review raises concernsregarding the applicant’s qualificationsand capabilities and the Administrator

deems it necessary, a preapproval siteevaluation would be conducted.

As noted above, a site evaluation toverify compliance with the Act andregulations would be conducted withina reasonable time period after the dateon which the agent’s notice of approvalof accreditation was issued. Followingthe site evaluation, the certifying agent’saccreditation would be continuedprovided the certifying agent is incompliance with the Act andregulations. Should it be found that theaccredited certifying agent is not incompliance with the Act andregulations, the Administrator will issuethe certifying agent a notification ofnoncompliance and afford the certifyingagent an opportunity to correct thedeficiencies. If the deficiencies are notcorrected, the Administrator will beginproceedings to suspend or revoke thecertifying agent’s accreditation.

We also believe that: (1) Conductinga site evaluation of a newly establishedcertifying agent before it had begun anycertification activities might notcontribute information that would beuseful for the Department’s evaluation;(2) previously existing certifying agentsalso would need time to makeadjustments in their operations tocomply with the NOP regulations; and(3) requiring full site evaluations andpeer reviews to be conducted prior togranting accreditation would furtherdelay implementation of the Act.Accordingly, we have made no changesto the application requirements found at§ 205.502 or the site evaluationrequirements found at § 205.508 on thebasis of these comments.

(20) Conditional Accreditation.Commenters suggested that the ruleprovide for conditional accreditation ofcertifying agents. We disagree with theconcept of conditional accreditation. Webelieve accreditation before a siteevaluation to be the most effectivemeans of providing new certifyingagents with the opportunity toparticipate in the NOP. New certifyingagents need to be unconditionallyaccredited to sell their services topotential organic clients. Such certifyingagents need organic clients todemonstrate to the Administrator theircompliance with the Act andregulations relative to the certificationof organic producers or handlers.Furthermore, the Act does not providefor conditional accreditation.Accordingly, the proposed accreditationprogram for initial accreditationprovides for: (1) Review and analysis ofthe applicant’s application and evidenceof expertise and ability, (2) approval ofaccreditation upon determination thatthe applicant meets the requirements for

accreditation, and (3) site evaluation todetermine compliance with the Act andregulations.

(21) Application Fees Incurred FromNotifications of Noncompliance.Commenters questioned whether a newapplication for accreditation, followingthe correction of deficiencies identifiedin the notification of noncompliance,would require a second application fee.The commenters stated that fees paid forthe initial application should covertimely resubmission of the applicationafter correction of deficiencies. In thisproposal, we have replaced the flat feefor accreditation with an hourly user feesystem, which will involve billing foractual time used in the accreditationprocess. Accordingly, there will beadditional costs to applicants whosubmit a description of the actions takento correct the deficiencies noted in thenotification of noncompliance.

(22) Peer Review Panels. Commentswere received expressing variousopinions regarding the peer reviewpanel provisions of the first proposal.First, commenters stated that peerreview panels should participate in siteevaluations. Prior to publishing the firstproposal, the Department received somepublic input which also suggested theuse of peer reviewers in the siteevaluation process. As noted in the firstproposal, we did not provide for suchparticipation because we believed thatthe use of peer reviewers could pose anexcessive burden on the certifyingagents, would increase the costs ofconducting site evaluations, and coulddelay site evaluations and because AMSstaff are well qualified to perform thesite evaluations. We have made nochange to our proposal as a result of thiscomment.

Second, commenters stated that peerreview panels should participate in theinitial review of an application foraccreditation. We believe this would notbe an effective use of panel members’talents and expertise and would not becost effective. We have made no changeto our proposal as a result of thiscomment.

Third, an industry association statedthat section 6516(a) of the Act clearlystates that the Secretary shall considera report, not three to five individualreports, in determining whether toapprove an applicant for accreditation.We do not agree that the Act requires asingle report, nor do we believe that itis usual to have consensus in peerreview. We also believe that it isimpractical to bring peer reviewerstogether for the purpose of reviewingthe information provided and drafting asingle report. The Administrator couldconvene a peer review panel meeting or



conference call if necessary. Suchmeeting or conference call would beconducted in a manner that wouldensure the actions of panel members arecarried out on an individual basis withany opinions and recommendations bya member being made individually. Apeer review panel meeting or conferencecall will be held solely to give andreceive information. Such meeting orconference call will not be held for thepurpose of achieving consensus by thepeer review panel. The written report ofeach panel member would reflect theparticular knowledge, expertise, andopinion that its author-member brings tothe panel. The Administrator willconsider all points in the individualreports in making a determination as tothe continued operation of theaccredited certifying agent. We havemade no change to our proposal as aresult of this comment.

Fourth, commenters stated that thepeer review panel regulations should berevised to specify what situations, otherthan continuation or renewal ofaccreditation, would trigger a peerreview; that a peer review panel shouldbe used in determining noncompliancewith accreditation requirements; andthat a peer review panel should beconvened to review any decision ofnoncompliance prior to initiation ofproceedings to suspend or revoke acertifying agent’s accreditation. The firstproposal provided that theAdministrator may convene a peerreview panel at any time for the purposeof evaluating a certifying agent’sactivities under the Act and regulations.This provision would provide flexibilityfor the Administrator to seekrecommendations from peer reviewersat other times when it may be necessaryto evaluate a certifying agent’scompliance with the Act andregulations. We do not believe that it ispractical or necessary to require the useof peer review panels in determiningnoncompliance and decisions tosuspend or revoke an accreditation. Wehave made no change to our proposal asa result of these comments.

(23) Purpose of Annual ReportingRequirements. At least one commenterwas confused regarding the purpose forhaving certifying agents submit annualreports to the Administrator. Thereports would update information andevidence of expertise and abilitypreviously submitted by the certifyingagent; support any changes beingrequested in the areas of accreditation;describe the measures that wereimplemented in the previous year andany measures to be implemented in thecoming year to satisfy any terms andconditions determined by the

Administrator to be necessary, asspecified in the most recent notificationof accreditation or notice of renewal ofaccreditation; and describe the results ofthe most recent inspector performanceappraisals and program evaluation andadjustments to the certifying agent’soperation and procedures implementedand intended to be implemented inresponse to the appraisals and programevaluation. The first proposal stated thatthis information would be reviewed bythe Administrator to determine whetherthe certifying agent was maintaining itsaccreditation by satisfying therequirements of the Act and regulationsand to assess the need for a siteevaluation. We believe that an annualprocess of reviewing informationsubmitted by certifying agents isnecessary so that the Administrator canbe informed of any changes in theprocedures and personnel used by thecertifying agents. We have made nochange to our proposal as a result of thiscomment.

Accreditation—Additional ProvisionsUpon further review of the

accreditation provisions in the firstproposal, we have decided to proposethe following additions and changes.

(1) Access to Records. We have addedthe requirement that the recordsmaintained by the certifying agentunder the Act and regulations be madeavailable for copying by authorizedrepresentatives of the Secretary and theapplicable State program’s governingState official. This addition is necessaryto ensure that authorizedrepresentatives are able to obtain copiesof records applicable to a review or aninvestigation regarding compliance withthe Act and regulations. This addition,found at § 205.501(a)(9), is authorizedunder section 6506 of the Act.

(2) Conflicts of Interest. A conflict ofinterest regulation in the first proposalrequired that certifying agents preventconflicts of interest by not certifying anoperation through the use of anyemployee that has or has held acommercial interest in the operation,including the provision of consultingservices, within the 12-month periodprior to the application for certification.This regulation was closely related to asecond regulation which requiredcertifying agents to prevent conflicts ofinterest by not assigning an inspector toperform an inspection of an operation ifthe inspector has or has held acommercial interest in the operation,including the provision of consultingservices, within the 12 months prior toconducting the inspection. Forclarification, this proposal combines theregulations at § 205.501(a)(11)(ii). This

new regulation provides for excludingany person, including contractors, withconflicts of interest from work,discussions, and decisions in all stagesof the certification process and themonitoring of certified production andhandling operations for all entities inwhich such person has or has held acommercial interest, including animmediate family interest or theprovision of consulting services, withinthe 12-month period prior to theapplication for certification. Thisregulation would permit a certifyingagent to certify the operation of anemployee or contractor or an employee’sor contractor’s immediate familymember provided the employee orcontractor was not used in certifying theproduction or handling operation.

(3) Reporting Requirements forCertifying Agents. The first proposalrequired a certifying agent to submit tothe Administrator a copy of eachnotification of noncompliance issuedsimultaneously with its issuance to thecertification applicant or the certifiedoperation. It also required a certifyingagent to submit to the Administrator ona quarterly calendar basis the name ofeach operation certified. In thisproposal, we have expanded theprovision to provide that certifyingagents must submit to theAdministrator: (1) A copy of any noticeof denial of certification, notification ofnoncompliance, notification ofnoncompliance correction, notificationof proposed suspension or revocation,and notification of suspension orrevocation issued simultaneously withits issuance; and (2) on a quarterlycalendar basis, the name, address, andtelephone number of each operationgranted certification. This information isneeded to facilitate oversight and toensure that we have relatively currentdata for responding to inquiriesinvolving the granting of certificationsby certifying agents. These changes areincluded in § 205.501(a)(14).

We anticipate using the data collectedunder § 205.501(a)(14) to establish andmaintain 2 Internet databases. The firstInternet database would be accessible tothe general public and would includethe names and other appropriate data oncertified organic production andhandling operations. The secondInternet database would be passwordprotected and only available toaccredited certifying agents and USDA.This second database would includedata on production and handlingoperations issued a notification ofnoncompliance, noncompliancecorrection, denial of certification,certification, proposed suspension orrevocation of certification, and



suspension or revocation ofcertification. Certifying agents woulduse the second Internet database duringtheir review of an application forcertification.

(4) Requirements forNondiscrimination. We have includedat § 205.501(d) the provision that noprivate or State entity accredited as acertifying agent under subpart F shallexclude from participation in or denythe benefits of the NOP to any persondue to discrimination because of race,color, national origin, gender, religion,age, disability, political beliefs, sexualorientation, or marital or family status.This regulation is consistent with USDAregulations which prohibitdiscrimination in its programs andactivities.

(5) Submission of Policies andProcedures. The first proposal requiredan applicant for accreditation as acertifying agent to submit documentsand information to demonstrate theapplicant’s expertise in organic farmingor handling techniques, its ability tofully comply with and implement theorganic certification program, and itsability to comply with the requirementsfor accreditation. Much of thedocumentation and informationrequired involved submission of adescription of a policy or procedure tobe used by the certifying agent. In thisproposal we have changed therequirement from submission of adescription of the policy or procedure tosubmission of a copy of the actualpolicy or procedure. This will facilitatethe Department’s determination of anapplicant’s eligibility for accreditationby providing more completeinformation. By requiring a copy of eachpolicy and procedure, which shouldalready be in the possession of theapplicant, rather than a description ofeach, we have lessened the burden onapplicants for accreditation. Thischange is found in § 205.504 of thisproposal.

(6) Public Access to CertificationCertificates. In this proposal, we haveadded the requirement that certifyingagents make copies of certificationcertificates issued during the currentand 3 preceding calendar years availableto the public. Such documents may beuseful to consumers wishing to verifythat an operation is certified to produceand label agricultural products asorganic. Copies of certificationcertificates will be especially valuablein assisting handlers in assuring that theproducts they receive labeled as organicwere produced and handled by certifiedorganic operations. This requirement isfound at § 205.504(b)(5)(i).

(7) Submission of Residue TestingProcedures. We believe that applicantsfor accreditation should provideevidence of expertise and ability inmeeting the sampling and residuetesting requirements of theseregulations. Therefore, we have addedthe requirement that applicants foraccreditation submit a copy of theprocedures to be used for residuetesting. This requirement is found at§ 205.504(b)(6). Residue testingrequirements are found at § 205.670.

(8) Elimination of Section onConfirmation of Accreditation. We haveamended the section on approval ofaccreditation by adding the duration ofaccreditation provision formerlyincluded in the first proposal’s sectionon confirmation of accreditation. Wehave also eliminated the section onconfirmation of accreditation. We havetaken this action to eliminate theconfusion created by having a sectionon approval of accreditation and asection on confirmation of accreditation.

(9) Denial of Accreditation. We haveamended the denial of accreditationregulations and eliminated the sectionon denial of confirmation ofaccreditation. We have taken this actionto eliminate the confusion created byhaving a section on denial ofaccreditation and a section on denial ofconfirmation of accreditation. We haveadded to the denial of accreditationregulations that a notification ofnoncompliance can be issued based onthe findings of a site evaluation.

Under the first proposal’s denial ofaccreditation regulations, theAdministrator could instituteproceedings to deny accreditation to anapplicant who did not correct thedeficiencies noted in a notification ofnoncompliance within the timespecified. In this proposal, we haveamended these regulations to providethat the Administrator will provide theapplicant with a written notification ofaccreditation denial or beginproceedings to suspend or revoke thecertifying agent’s accreditation ifaccredited prior to a site evaluation.Such action will be taken when theapplicant fails to correct thedeficiencies, report the corrections bythe date specified, or file an appeal bythe date specified in the notification ofnoncompliance.

We have also clarified that anapplicant who has received writtennotification of accreditation denial orhad its accreditation suspended mayapply for accreditation again at anytime. Additionally, we have providedthat a private certifying agent whoseinitial accreditation is revokedfollowing an initial site evaluation will

be ineligible for accreditation for aperiod of not less than 3 years followingthe date of such determination. Thisperiod of ineligibility is consistent withsection 6519(e) of the Act. Thesechanges are included in § 205.507.

A certifying agent accredited prior toan initial site evaluation whose siteevaluation reveals that the certifyingagent is not properly adhering to theprovisions of the Act or theseregulations will be subject to suspensionof its accreditation. A private certifyingagent accredited prior to an initial siteevaluation who’s site evaluation revealsthat the certifying agent has violated theprovisions of the Act and theseregulations or that falsely or negligentlycertifies any production or handlingoperation that does not meet the termsand conditions of this national organiccertification program as an organicoperation will be subject to revocationof its accreditation. Section 205.660(b)of subpart G provides that the Secretarymay initiate suspension or revocationproceedings against a certified operationupon initiation of suspension orrevocation proceedings against or uponsuspension or revocation of the certifiedoperation’s certifying agent’saccreditation.

(10) Peer Review Panels. We haveremoved the provision which providedthat the Administrator may convene apeer review panel at any time for thepurpose of evaluating an applicant foraccreditation or a certifying agent’sactivities under the Act and regulations.This change has been made becausepeer review panels will only be used toassist in the evaluation of applicants foraccreditation, amendment to anaccreditation, and renewal ofaccreditation.

Subpart G—Administrative

The National List of Allowed andProhibited Substances

Proposal DescriptionThis subpart contains criteria for

determining which substances andingredients are allowed or prohibited inproducts to be sold, labeled, orrepresented as ‘‘organic’’ or ‘‘made withorganic (specified ingredients).’’ Itestablishes the National List of Allowedand Prohibited Substances (NationalList) and identifies specific substanceswhich may or may not be used inorganic production and handlingoperations. Sections 6504, 6510, 6517,and 6518 of the Organic FoodsProduction Act (OFPA) of 1990 providethe Secretary with the authority todevelop the National List. The contentsof the National List are based upon aProposed National List, with



annotations, as recommended to theSecretary by the National OrganicStandards Board (NOSB). The NOSB isestablished by the OFPA to advise theSecretary on all aspects of the NationalOrganic Program (NOP). The OFPAprohibits synthetic substances in theproduction and handling of organicallyproduced agricultural products unlesssuch synthetic substances are placed onthe National List.

The first category of the National Listincludes synthetic substances allowedfor use in organic crop production. Thesecond category includes nonsyntheticsubstances prohibited for use in organiccrop production. The third category ofthe National List includes syntheticsubstances allowed for use in organiclivestock production. The fourthcategory includes nonsyntheticsubstances prohibited for use in organiclivestock production. The fifth categoryof the National List includesnonagricultural (nonorganic) substancesallowed as ingredients in or onprocessed products labeled as ‘‘organic’’or ‘‘made with organic (specifiedingredients).’’ The final category of theNational List includes nonorganicallyproduced agricultural products allowedas ingredients in or on processedproducts labeled as ‘‘organic’’ or ‘‘madewith organic (specified ingredients).’’This subpart also outlines proceduresthrough which an individual maypetition the Secretary to evaluatesubstances for developing proposedNational List amendments anddeletions.

National List (General)The NOSB is responsible for making

the recommendation of whether asubstance is suitable for use in organicproduction and handling. The OFPAauthorizes the NOSB to develop andforward to the Secretary a ProposedNational List and any subsequentproposed amendments. In March 1995,the NOSB initiated a petition process tosolicit public participation inidentifying specific materials to beadded to the National List. The NOSBconvened a Technical Advisory Panel(TAP) to review substances identified inthe petition process and made extensiverecommendations on a ProposedNational List during its meetings in1995 and 1996. In 1999, the NOSBselected materials left from the originalpetition process to authorize a secondround of TAP reviews. The NOSB usedthese updated TAP reviews to makeadditional recommendations on theProposed National List at its October1999 meeting. With the exception offour substances on which the Secretarydid not concur with the NOSB

recommendations and minor formattingchanges, the National List in thisproposal corresponds to therecommendations on allowed andprohibited substances made by theNOSB. The National List in thisproposal has also been developed inconsultation with the Food and DrugAdministration (FDA), theEnvironmental Protection Agency(EPA), and the Food Safety InspectionService (FSIS) of USDA. Additionally,we have made changes in response topublic comment received on the firstproposal.

Nothing in this subpart alters theauthority of other Federal agencies toregulate substances appearing on theNational List. FDA establishes safetyregulations on approved and prohibiteduses of substances in food productionand processing. FSIS has the authorityto determine efficacy and suitabilityregarding the production and processingof meat, poultry, and egg products. FDAand FSIS restrictions on use orcombinations of food additives oringredients take precedence over theapproved and prohibited uses specifiedin this proposal. Any combinations ofsubstances in food processing notalready addressed in FDA and FSISregulations must be approved by FDAand FSIS prior to use. Use-of-substancerequirements are proposed by FDA andFSIS in rulemaking actions and arefrequently updated with revised userequirements. It is important thatcertified organic producers and handlersof both crop and livestock productsconsult with FDA regulations in 21 CFRparts 170 through 199 and FSISregulations in this regard. All feeds, feedingredients, and additives for feeds usedin the production of livestock in anorganic operation must comply with theFederal Food, Drug, and Cosmetic Act(FFD&CA). Animal feed labelingrequirements are published in 21 CFRpart 501, and new animal drugrequirements and a listing of approvedanimal drugs are published in 21 CFRparts 510–558. Food (feed) additiverequirements, a list of approved food(feed) additives generally recognized assafe substances (GRAS), substancesaffirmed as GRAS, and substancesprohibited from use in animal food orfeed are published in 21 CFR parts 570–571, 21 CFR part 573, 21 CFR part 582,21 CFR part 584, and 21 CFR part 589,respectively. Furthermore, the Food andDrug Administration has worked closelywith the Association of American FeedControl Officials (AAFCO) andrecognizes the list of additives andfeedstuffs published in the AAFCO

Official Publication, which is updatedannually.

National List—Changes Based OnComments


(1) Genetically Engineered Organisms(GEO’s). To solicit public comment onthe use of genetically engineeredorganisms in organic production andhandling, we included two suchmaterials on the National List in the firstproposal. As discussed in Productionand Handling—Subpart C, we receivedmany thousands of comments opposingthe use of substances or organismsproduced through genetic engineeringin organic production and handling.Many commenters expressed strongconcerns that GEO’s do not meet currentconsumer expectations of organicagriculture or an organically producedproduct. They stated that existingnational and international organiccertification standards clearly andconsistently prohibit GEO’s.Accordingly, this proposal prohibitsGEO’s and their derivatives and theproducts of GEO’s and their derivativesin any product or ingredient that is sold,labeled, or represented as organic. As aresult of the prohibition, the NationalList does not contain any materialsderived from GEO’s.

(2) Inclusion of Substances notRecommended by the NOSB. The firstproposal allowed some syntheticsubstances in organic crop productionand handling that the NOSB had notincluded on the proposed National List.Citing the statutory requirements of theOFPA, commenters wereoverwhelmingly opposed to addingsubstances to the National List that hadnot been recommended by the NOSB.Every substance on the National List inthis proposal was favorablyrecommended by the NOSB.

With four exceptions, the NationalList included in this proposal containsevery substance that the NOSBrecommended to allow in organicproduction and handling. The Secretaryhas not accepted the NOSBrecommendations to allow sulfurdioxide in the production of winelabeled as ‘‘made with organic grapes.’’Additionally, the Secretary has notconcurred with the NOSBrecommendation to allow theantibiotics, Streptomycin andTerramycin, in organic crop productionor to allow livestock producers toadminister synthetic Oxytocin forapproved organic veterinary practices.The Secretary decided not to add sulfurdioxide to the National List because itsuse produces sulfites, which are



prohibited in the OFPA. Streptomycinand Terramycin were not added to theNational List for use in crop productionin order to be consistent with thisproposal’s prohibition on the use of allantibiotics in animal production. TheSecretary’s decision not to allowlivestock producers to administersynthetic Oxytocin is based onextensive public comment that opposedthe use of animal drugs includinghormones in organic livestockoperations. Many certifying agencieshave allowed producers to administerOxytocin to animals that experiencesevere complications resulting fromlabor. While most of the publiccomment strongly opposed the use ofsynthetic hormones in organic dairyproduction, Oxytocin has some usesthat do not involve lactation but areinstead related to an animal’spostpartum survival. Not allowingOxytocin in organic operations isresponsive to the public commentopposing the use of synthetic hormonesbut does preclude the use of an animalmedication that some producers havepreviously been able to use inemergency situations.

(3) Prohibited NonsyntheticSubstances. The National List in thefirst proposal contained no prohibitednonsynthetic (natural) substances. Manycommenters requested that the fournonsynthetic substances which theNOSB proposed to prohibit be added tothe National List. We agree with thisposition, and this proposal lists ashfrom manure burning, mined sodiumfluoaluminate, strychnine, and tobaccodust as natural substances that areprohibited in organic crop productionand handling. In addition, we haveincluded arsenic and lead salts on theNational List of prohibited naturalsubstances in accordance withprovisions of the OFPA.

(4) Annotations on National ListSubstances. The National List in thefirst proposal did not include all of theannotations originally developed by theNOSB for the materials it recommendedto include on the National List. TheOFPA stipulates that when basing theNational List upon the NOSB’srecommendations, the Secretary shallinclude ‘‘an itemization, by specific useor application,’’ of each syntheticsubstance permitted or naturalsubstance prohibited. This itemization,commonly known within the organicindustry as an annotation, has beenused by existing State and privatecertification agents to regulate the use ofallowed materials. Annotations canestablish allowable sources orprocedures for obtaining a substance,specify the crops or conditions for

which it may be applied, establish userestrictions based on environmentalmonitoring, or create other conditions togovern the use of a substance.

Many commenters stated thatremoving annotations diminished theNOSB’s role in advising the Secretaryon the content of the National List.Commenters also stated that annotationsare essential for ensuring thatsubstances are used in a manner whichis consistent and compatible with asystem of organic production andhandling. Considering how annotationshave been applied in regulating the useof allowed substances by State andprivate certifying agents, we haveincorporated every feasible NOSB-proposed annotation in this proposal.

(5) Incidental Additives. The firstproposal stated that a nonagriculturalsynthetic substance occurring as anincidental additive, including aprocessing aid, could be used in organicproduction and handling withouthaving to be added to the National List.This position was based on FDA andFSIS regulations which require thatactive ingredients, but not incidentaladditives, appear on a product label.Because incidental additives were notactive ingredients in organicallyprocessed food under these regulations,the first proposal maintained that theywere not prohibited by the OFPA andwould not need to be added to theNational List.

Thousands of commenters respondedwith varying opinions on this subject.Many commenters approved of theproposed approach, generally statingthat processing aids are essential andneeded for most agricultural products.These commenters felt that eliminatingtheir use entirely would greatly limithandlers’ ability to produce a widevariety of organic products. However,other commenters strongly opposedallowing the use of any nonagriculturalsynthetic substance that had not beenpetitioned, reviewed, and recommendedby the NOSB; published for comment inthe Federal Register; and then added bythe Secretary to the National List. Somecommenters protested the use of anysynthetic incidental additives in organichandling operations. They stated thattheir use is not consistent with theprinciples of organic agriculture andthat consumers currently do not believethat such aids and additives are used inorganically processed products.

Prior to the first proposal, the NOSBreviewed this issue and recommendedallowing both synthetic andnonsynthetic incidental additives inprocessed organic products. TheNOSB’s 1995 recommendation statedthat nonsynthetic, nonagricultural

products used as ingredients, processingaids, or incidental food additives shouldbe categorically allowed in organicallyprocessed products unless specificallyprohibited and that synthetic,nonagricultural products should not beused as ingredients, processing aids, orincidental food additives unlessspecifically included on the NationalList. The NOSB applied theserecommendations to processed foodslabeled ‘‘organic’’ and ‘‘made withorganic (specified ingredients).’’However, the OFPA does not allow thecategorical allowance for nonsynthetic,nonagricultural products. Section6510(a)(4) of the OFPA requires that anynonorganically produced ingredientadded to an organic product must beincluded on the National List.

The NOSB revisited this issue at itsFebruary 1999 meeting when it adoptedcriteria for accepting (adding to theNational List) a synthetic processing aidor adjuvant. These criteria are aninterpretation and application of thegeneral evaluation criteria for syntheticsubstances contained in the OFPA thatthe NOSB will apply to processing aidsand adjuvants. To review the adoptedcriteria, the public can visit the USDANOP website: www.ams.usda.gov/nop/nosbfeb99.html or write ProgramManager, Room 2945 South Building,U.S. Department of Agriculture, AMS,Transportation and Marketing Programs,NOP, PO Box 96456, Washington, DC20090–6456. The NOSB adopted thesecriteria as internal guidelines forevaluating processing aids andadjuvants. The adopted criteria do notsupercede the criteria contained in theOFPA, or replace FDA’s authority toregulate food additives.

We are proposing that to be used inor on a processed product labeled as‘‘organic’’ or ‘‘made with organic(specified ingredients),’’ anonagricultural substance, whethersynthetic or nonsynthetic, must beincluded on the National List. Thisposition supports the NOSBrecommendation that syntheticsubstances be allowed in organicprocessed foods but incorporates theNational List requirement reflected inpublic comment. We have divided thematerials on this list (§ 205.605) in thecurrent proposal to reflect therecommended distinction made by theNOSB between synthetic andnonsynthetic substances. Thisdistinction does not affect how thesubstances may be used. We recognizethat many commenters, basing theirargument on the OFPA, objected toallowing any synthetic substances inprocessed organic products. However,we believe that the OFPA does allow



synthetic substances, when added to theNational List, to be used in this manner.The criteria utilized by the NOSB forevaluating processing aids andadjuvants are very restrictive and, ifapplied to all incidental additives,should minimize the number ofsubstances added to the National List.

(6) Inert Ingredients in FormulatedProducts. The first proposal addressedthe presence of synthetic inertingredients in formulated products usedas production inputs in organic crop orlivestock operations. Formulatedproducts are multiingredientcompounds including pesticides,fertilizers, and animal drugs and feeds.In accordance with the OFPA, weproposed that a formulated productcontaining an inert ingredient could beused, provided that the substance didnot appear on EPA’s List 1 as an Inertof Toxicological Concern. We alsoprohibited the use of synthetic inertsnot on EPA List 1 if the substance wasalso used as an active ingredient thathad not been added to the National List.To review or to receive the most currentlisting of the EPA Inerts, the public canvisit EPA’s Internet home page at http://www.epa.gov/opprd001/inerts/lists.html, or write to RegistrationSupport Branch (Inerts), RegistrationDivision (Mail Code 7505C), Office ofPesticide Programs, EnvironmentalProtection Agency, 401 M St., SW.,Washington, DC 20460.

The first proposal interpreted thestatutory prohibition on EPA List 1inerts as allowing the use of syntheticinert ingredients that were notspecifically prohibited. This allowed theuse of products containing syntheticinert substances (provided that theywere not also used as active substances)included on the other EPA inert lists:List 2, Potentially Toxic Inerts; List 3,Inerts of Unknown Toxicity; and List 4,Inerts of Minimal Concern. We alsoapplied the term, ‘‘inert,’’ to allnonactive ingredients contained in anyformulated product used in organicproduction. This meant that thenonactive ingredients in animal feeds(fillers or additives), animal drugs(excipients), and fertilizers (carriers oradjuvants) would only be prohibited ifthey were classified by the EPA as List1 inerts.

We received many comments statingthat our restrictions on inert ingredientswere too permissive and would result inmany traditionally prohibited materialsbeing used in organic production.Commenters stated that the statutoryprohibition on EPA List 1 inerts did notimply that all other inerts should beallowed and argued that the NOSB hadthe authority to prohibit additional

substances. Citing the uncertaintyassociated with EPA List 2 (potentiallytoxic) and EPA List 3 (unknowntoxicity) inert ingredients, theyquestioned how such substances couldsatisfy the criteria in OFPA for addingsynthetic substances to the NationalList. Commenters also opposedexpanding the definition of inert toinclude nonactive ingredients in allformulated products. They stated thatthe EPA classifies only those inerts usedin pesticides, and that many of thesubstances routinely used in other typesof formulated products were not subjectto review. Therefore, substances notused in pesticides would not appear onany EPA list and would be allowed.Finally, commenters cited the disparitybetween the allowance for syntheticinert ingredients in the first proposaland the more restrictive substancereview procedures used by existingorganic certifying agents.

The NOSB responded to theprovisions for inert ingredientscontained in the first proposal. At itsmeeting in March 1998, the NOSBstated that synthetic compounds shouldnot be allowed in production inputsunless they appear on the National List.In February 1999, the NOSB voted toprohibit EPA List 1 and 2 inerts,prohibit EPA List 3 inerts unlessspecifically allowed by the NOSB, andallow EPA List 4 inerts unlessspecifically prohibited. The NOSB alsorecommended full disclosure of allingredients in formulated products,called for an expedited review of EPAList 3 inerts currently in common use inorganic production, and endorsed an 18-month phase-out period for EPA List 3inerts not ultimately allowed.

In this proposal, only EPA List 4inerts are allowed as ingredients informulated products used in organicproduction. This would not includevarieties of EPA List 4 substances suchas corn starch, lecithin, or citric acidthat are the product of excludedmethods. Additionally, the term inert isrestricted to nonactive ingredients inpesticides. Synthetic nonactiveingredients in formulated products usedas production inputs, includingfertilizers, animal drugs, and feeds,must be included the National List.While the OFPA prohibits using afertilizer containing syntheticingredients or a commercially blendedfertilizer containing prohibitedmaterials, the requirement does notapply to synthetic substances includedon the National List. The NOSBrecommended and the Secretaryconcurs that certain syntheticsubstances used in fertilizer-formulatedproducts should be included on the

National List. We have retained theprovision from the first proposalprohibiting the use of any formulatedproduct containing a EPA List 1 Inert.Using the criteria established in theOFPA for evaluating syntheticsubstances, the NOSB may review inertingredients on EPA List 2 or 3 as wellas other synthetic, nonactive substancesused in formulated products forinclusion on the Proposed National Listit forwards to the Secretary.

We recognize that inert ingredients inpesticides and similar substances inother formulated products pose one ofthe most problematic examples of theuse of synthetic materials in organicproduction. For example, verifying theuse of inerts and similar substancessuch as fillers, carriers, additives, andexcipients has been difficult becausethey are not required to appear oningredient labels, and formulatorstypically treat product formulas asconfidential information. At times,certifying agents have been unable todetermine the exact composition offormulated products proposed for use inorganic production. In other instances,organic producers have appliedformulated products containing inertingredients and similar substances thatare not specifically allowed. We arechallenged with balancing standardpractice with the strict statutoryrequirement that producers andhandlers apply only those syntheticsubstances added to the National List.As sanctioned by OFPA, syntheticsubstances can be used in organicproduction as long as they appear on theNational List. The development andmaintenance of the National List hasbeen and will be designed to allow theuse of a minimal number of syntheticsubstances that are acceptable to theorganic industry and meet the OFPAcriteria.

Two principles will be essential forresponding to this challenge: greaterdisclosure of the contents of formulatedproducts and an expedited review ofinert ingredients and other nonactivesubstances. The OFPA recognized theneed for disclosure by requiring theNOSB to work with formulators toobtain a complete list of ingredients intheir products. The NOSB has initiatedthis work, and its effort is ongoing as ofthe date of this publication. It is ourunderstanding from the comments,hearings, and information considered bythe NOSB that the organic industry hasmade considerable progress ondisclosure of inert ingredients since thepassage of OFPA. Formulators haveresponded to the incentive to provideproducts using EPA List 4 inertingredients, and certifying agents have



gained greater access to information onproduct composition. EPA hasexpressed its willingness to expedite thereview of its List 2 and 3 inerts, whichthe NOSB identifies as particularlyimportant in formulated productswidely used in organic operations. Theorganic industry should clearlyunderstand that NOSB evaluation of thewide variety of inert ingredients andother nonactive substances will requireconsiderable coordination between theNOP, the NOSB, and industry. Materialsreview can be anticipated as the NOSB’sprimary activity during NOPimplementation. Considering the criticalnature of this task, the organic industryshould make a collaborative effort toprioritize for NOSB review thosesubstances which are essential toorganic production and handling.

We recognize that more work isneeded for this policy to satisfy theneeds of organic producers andhandlers, product formulators, andconsumers. We are requesting commenton the proposed requirements for inertingredients in formulated products. Weare sensitive that an abrupt prohibitionon synthetic substances which mayhave knowingly or unknowingly beenused in the past but which are notadded to the National List may disruptmany well-established and acceptedproduction systems. However, ourassessment is that the benefits of a clearpolicy consistent with the OFPA, NOSBrecommendations, and public commentoutweigh the costs. The net effect willbe greater consumer confidence inUSDA’s organic label and moreproducts that are tailored to the needsof organic producers.

(7) Use of Veterinary Medicines. TheOFPA prohibits certain routine uses ofveterinary medications (specificallysubtherapeutic doses of antibiotics) butallows their administration in thepresence of illness. The first proposaladded antibiotics to the National Listbecause their use had been evaluatedand approved by applicable regulatoryagencies, pursuant to FDArequirements, and because they had tobe included on the National List to beused in organic livestock production.

We received many commentsopposing the use of antibiotics inorganic livestock production.Commenters expressed general concernover microbial resistance to antibioticsand expressed a desire to source foodproducts without antibiotics. Thisproposal removes antibiotics from theNational List of approved syntheticsubstances for livestock use.

(8) Removal of Substances from theNational List. The first proposaloutlined a petition process for amending

the National List and included anextensive list of information to beprovided for reviewing a substance.Some commenters recommended thatthis section be amended to includeprocedures for deleting substances fromthe National List. The OFPA and thefirst proposal indicated that the NOSBwould review substances added to theNational List at least on a 5-year basisand recommend to the Secretary anysubstances that should be removed. Weconcur with commenters that removal ofa substance should not have to wait forsuch a review cycle. Thus, a petition toremove a substance from the NationalList may be filed at any time. Theinformation contained in the petition forremoval of a substance will be providedby AMS upon request. The NOSB willevaluate substance removal petitionsand forward a recommendation to theSecretary. Commenters suggested thatany changes to the National List bepublished in the Federal Register forpublic comment. All proposed changesto the National List will be published inthe Federal Register.

(9) Use of Sulfur Dioxide. The firstproposal allowed the use of sulfurdioxide in crop production and as aningredient in or on organic processedproducts. The NOSB had recommendedthat sulfur dioxide be permitted in theprocessing of organic wine and forsmoke bombs used underground tocontrol rodents. Numerous commentersopposed the use of sulfur dioxide inorganic wine because its use producessulfites, which are prohibited in theOFPA, as a by-product. We concur withthe commenters and further believe thatthe trend in the organic industry, asevidenced by the California Departmentof Food and Agriculture’s PreliminaryOrganic Materials List of September1998, is to prohibit all uses of sulfurdioxide except in underground rodentcontrol. Therefore, we are proposing toallow sulfur dioxide for undergroundcontrol of rodents and to prohibit its useas an ingredient in or processed foodincluding the production of organicwine.

National List—Additional ProvisionsUpon further review of the provisions

in the first proposal, we have decided topropose the following additions andchanges.

(1) New Additions to the NationalList. During the October 1999 meeting,the NOSB reviewed substances andmade new recommendations to theProposed National List. The Secretaryconcurs with the recommendations fromthat meeting and this proposal addsthose substances with the applicableannotations to the National List. These

substances are: Potassium Bicarbonate(205.601(d)), Glycerin (2005.603(a)),Phosphoric Acid (205.603(a) and205.605(b)), Ivermectin (205.603(a)),Chlorhexidine (205.603(a)), andEthylene (205.605(b)). This proposalestablishes conditions that allowproducers to administer the parasiticideIvermectin to breeder stock and dairystock in organic livestock operations.Treating organically managed slaughterstock with Ivermectin is prohibited.These provisions are based on therecommendations developed by theNOSB at its October 1999 meeting. TheNOSB’s recommendations from thatmeeting were derivative of many yearsof work addressing how to establish andenforce the conditions allowing use ofsynthetic parasiticides. The OFPAidentifies livestock parasiticides as acategory of substances which may beincluded on the National List and alsoprohibits the use of synthetic internalparasiticides on a routine basis. Thedetermination of what constitutes aroutine basis for parasiticide use hasbeen challenging given the diversity ofanimals, production systems, andenvironmental factors which arecovered by a national organic standard.

In this proposal, the conditions underwhich Ivermectin may be used apply tothe health care history of the animalprior to treatment and the certificationof products derived from the animalafter treatment. The pretreatmentconditions are designed to ensure thatthe producer is using a comprehensivemanagement system to prevent theintroduction and transmission ofparasites among the animals in his orher care. Producers must document intheir organic system plan preventativepractices such as quarantine and fecalexams for all incoming stock,appropriate pasture rotation andmanagement, culling of infestedlivestock, and vector and intermediatehost control. A producer mayadminister an allowed syntheticparasiticide only after all applicablemanagement practices and nonsynthetictreatments have been employed. Aproducer must receive the approval oftheir certifying agent before using asynthetic parasiticide. In collaborationwith the NOSB, we will be developingprogram manuals detailing preventivemanagement practices for specificlivestock species to assist producers andcertifying agents in determining whenthe use of synthetic parasiticides isallowable.

This proposal also containsprovisions addressing the posttreatmentcondition of livestock which areadministered Ivermectin. Theseconditions are included as an



annotation to Ivermectin on theNational List and are consistent with therequirements contained in§ 205.238(b)(1)(2) of the regulatory textfor administering any allowed syntheticparasiticide. In compliance with therecommendations of the NOSB, we areproposing that a producer may notadminister Ivermectin to breeder stockduring the last third of gestation if theprogeny is to be sold, labeled, orrepresented as organically produced.Additionally, a producer must observe a90-day withdrawal period before sellingmilk or milk products produced from ananimal treated with Ivermectin asorganically produced. The Food andDrug Administration exercisesresponsibility for determining andenforcing the withdrawal intervals foranimal drugs. No food safety argumentsare used or implied to support the useof extended withdrawal periods. Rather,we determined that extendedwithdrawal periods are more compatiblewith consumer expectations oforganically raised animals.

Ivermectin is the first syntheticparasiticide that the Secretary hasproposed adding to the National List,and allowing its use could significantlyaffect organic management practices.The FDA has approved 18 animal drugscontaining Ivermectin that are labeledfor use on one or more animalsincluding beef and dairy cattle, sheep,swine, and several minor species. Atotal of 11 of these drugs are not coveredby this proposed rule: three haveadditional synthetic active ingredientsnot on the National List and eight othersare labeled for nonfood uses. (They areused on horses not for food use, dogs,and cats.) While there are no approveduses of Ivermectin on lactating dairyanimals, the remaining seven food-useproducts could be administered tobreeder stock and dairy stock eitherprior to lactation or during a dry period.

Future NOSB meetings will considernew proposals of substances to be addedto the National List.

(2) Petition Process to Amend theNational List. We are modifying thecontents of the petition for amendingthe National List that was contained inthe first proposal. We are proposing thatany person requesting a change in theNational List should request a copy ofthe petition procedures from the NOPProgram Manager. The procedures willinclude a list of information that has tobe provided for consideration of achange in the National List. Under theprovisions in the first proposal, the NOPwould be required to go throughrulemaking every time it sought toupdate contents of the petition. Underthis proposal, the NOP will amend the

requirements of the petition process andpublish the changes in the FederalRegister. This revised process will helpto expedite amending the National Listand keep the National List more current.We anticipate that amendments to theNational List will be made on an annualbasis, depending upon the number ofsubstance petitions filed. Substancespetitioned for inclusion onto theNational List will be reviewed by theNOSB, which will forward arecommendation to the Secretary. Allamendments to the National List will bepublished for comment in the FederalRegister.

State Organic Certification Programs

The Act provides that each State mayimplement a certification program forproducers and handlers of agriculturalproducts that have been produced andhandled within the State, using organicmethods that meet the requirements ofthis regulation. Each State organiccertification program must be approvedby the Secretary. A State organiccertification program’s organicstandards and requirements cannotexceed these National Organic Program(NOP) regulations unless the Statepetitions for, and the Secretaryapproves, more restrictive requirements.The sections covering State programs,beginning with § 205.620, establish: (1)The requirements for a State organiccertification program and amendingsuch a program; and (2) the process forinitial approvals of programs andprogram amendments. A process forreview and approval of a State’s organiccertification program every 5 years willbe addressed in subsequent rulemaking.

Proposal Description

There are a wide variety of organiccertification programs now operating indifferent States. Approximately 31States currently have, or are developing,their own State organic certificationprograms. At least 13 of those use Stategovernment agencies or contractedprivate certifying agents to certifyorganic operations in the State. Thus, atleast 19 States do not have State organicprograms and approximately 37 Statesdo not have State Government or State-designated private certifying agents.Under this proposal, States may utilizethese NOP standards and requirementsand not have State oversight orresponsibility for administration of theNOP in the State. On the other hand, aState may petition the Secretary forapproval to add its unique Staterequirements to the NOP and agree toadminister the national program in theState.

Requirements of a State OrganicCertification Program. Under the Actand the NOP, a State, through the Stateprogram’s governing State official, mustsubmit to the Secretary a copy of theproposed State organic certificationprogram. The governing State officialmust submit an affidavit ormemorandum of understanding agreeingto meet the 11 general requirements ofan organic program, as specified insection 6506(a) of the Act. Specifically,the governing State official must agreeto: (1) Require that product sold orrepresented as organic must beproduced and handled only by certifiedorganic operations; (2) require thatparticipating organic producers andhandlers establish organic plans fortheir operations; (3) allow certifiedproducers and handlers to appealadverse decisions under appealprovisions of these regulations; (4)require that certified operations certifyannually that they have complied withthe NOP; (5) provide for annual on-siteinspections of certified operations bycertifying agents; (6) require periodicresidue testing by certifying agents; (7)provide for appropriate and adequateenforcement procedures which areconsistent with the NOP; (8) protectagainst conflict of interests as specifiedin these regulations; (9) provide forpublic access to certificationdocuments; (10) provide for collectionof reasonable fees; and (11) require otherterms and conditions as may beestablished by the Secretary. The NOPwill assume these responsibilities inStates that do not have an approvedState organic certification program.

Supporting materials must besubmitted addressing these generalrequirements, including suchdocumentation as: authorizing Statestatutes, program goals and objectives, adescription of the State’s organicprogram office, codified compliance andappeals processes, and otherinformation as may be requested by theSecretary. Written material must assessthe State organic certification program’sability and willingness to administer the11 general requirements for organicprograms. Administration of thesegeneral requirements may requiredevelopment of a unique workingrelationship between the State organicprogram and the NOP.

With the approval of its State organiccertification program, the State mustassume responsibility for administrationof these 11 general requirements andany approved, more restrictiverequirements in the State. For instance,a State’s responsibilities will includeoversight of certified organic productionand handling operations to ensure that



products sold or represented as organicare produced and handled pursuant tothese regulations. A State’s organiccertification program must includenoncompliance and appeals proceduressimilar in force and effect to thoseoutlined in the Compliance and Appealsprovisions of this subpart. We expectthat every State has in place officialcompliance procedures and formalappeal procedures which are used toenforce the State’s regulatory programs.Those procedures should provideopportunity, as do the procedures inthis subpart, for entities that may not bein compliance with State regulations, tocome into compliance with thoseregulations. Such procedures should beclearly addressed in the State’s organiccertification application.

A proposed State organic certificationprogram and any proposed amendmentto such a program must be approved bythe Secretary prior to beingimplemented by the State. A State mayhave other organic State sponsoredprojects, such as research andpromotion programs, tax incentives, ortransition assistance for organicproducers within the State. Suchprograms would not be subject to theSecretary’s approval, provided they donot conflict with the purposes of theAct.

Under certain circumstances, a Stateorganic program may have morerestrictive requirements in the Statethan corresponding NOP requirementsfor production and handling of organicproduct and certification of organicproduction and handling operations.These more restrictive requirementsmust be based on unique environmentalconditions or specific production orhandling practices particular to theState or portion of the State. Anyenvironmental condition cited in theproposed amendment must be of anature that implementation of theseNOP regulations will be insufficient tocorrect the condition. Theenvironmental condition mustnecessitate use of more restrictivepractices or requirements rather thanthe corresponding practices andrequirements provided in theseregulations. Any such condition that islimited to a specific geographic area ofthe State will be required of organicproduction and handling operationsactive only in that geographic area. Ifapproved by the Secretary, the morerestrictive requirements will become theNOP regulations for appropriate organicproducers and handlers in the State orarea of the State.

We do not expect that a State’srequest for more restrictiverequirements will cover a wide range of

organic production and handlingstandards. Rather, the increasedrequirements are likely to be limited toa specific production or handlingpractice or a more restricted use ofapproved National List substances toaddress needs or critical conditions in aspecified geographic area(s). Forinstance, to protect an endangered lakeor estuary, a State may have morerestrictive buffer zone requirementsthan are provided in this regulation.Such a State may request that its morerestrictive buffer zone requirements beestablished as the minimum buffer zonerequirements of this regulation.

A State’s more restrictive standardswill not be applied to production andhandling activities outside the State ora specified geographic area in the State.Further, the more restrictive standardsdo not apply to marketing of organicproduct and, thus, will not be used torestrict access of organic productproduced in other States.

Section 205.621 provides that a Stateprogram’s governing State official willsubmit to the Secretary a copy of aproposed State organic program orrequest for approval of any substantiveamendment to a State’s approvedprogram.

State Program Approval Process. Weenvision the request and approvalprocess will occur during the periodbetween publication of the final ruleand the projected effective date of thethis national program (which will beannounced in the final rule). Becauserequirements of a State organic programcannot exceed the requirements of thisprogram unless warranted by uniqueconditions in the State, some Stateorganic programs currently in effect mayelect to discontinue their programswhen the NOP becomes effective. Thoseprograms simply will not requestapproval of their programs and theirState organic requirements, in effectunder the State program, will besuperseded on the effective date of theNOP. State organic certificationprograms which seek approval of theirprograms will submit the requiredmaterial and continue operations untilthe effective date of the NOP. Weenvision that all approved State organiccertification programs will becomeeffective under the NOP on the day theprogram becomes effective. A Statewishing to establish a new State organiccertification program under the NOPmay submit the State program requestand supporting material at any time.New programs submitted after thisprogram becomes effective will besubject to the same review and approvalprocess.

The submitted copy of the Stateorganic certification program must be inits final form and ready forimplementation. It cannot be altered bythe State during the review processunless the change is cleared with theSecretary.

Amendments to State Programs. Foramendment of a State organic program,the State program’s governing Stateofficial must submit a copy of theproposed amendments and justificationfor them. The supporting material mustdocument the unique environmental orecological conditions or productionpractices in the State that necessitateuse of more restrictive organicrequirements. The supporting materialmust also explain how the morerestrictive requirements will address theenvironmental condition. Likewise, thesupporting material must explain howthe increased requirements are bettersuited to agricultural conditions in theState.

Because State organic certificationprogram requirements cannot be lessrestrictive than NOP requirements, anyamendment to lower such requirementscould only entail a relaxation of a morerestrictive requirement previouslyapproved by the Secretary. Thus, anamendment to relax a State program’srequirement also must be reviewed bythe Secretary. A decrease in a Stateorganic certification program’s morerestrictive requirements must bejustified, based on documented changesin the unique conditions or practiceswhich warranted the increase inrequirements.

Written materials supporting anamendment must assess how the morerestrictive requirements further thepurposes of and are consistent with theAct and these regulations. The writtenmaterial should acknowledge that themore restrictive State requirements willnot be used to limit or restrict access oforganic products produced in otherStates or foreign countries to markets inthe State. Also, supporting materialsmust explain how the amendedrequirements would affect the Stateprogram’s governing State official’sability to administer the 11 generalrequirements. A request to relax arequirement also must address theseissues.

The Secretary will review each State’sapplication based on how closely itcomplies with the purposes and intentof the Act and the provisions of the NOPand how well its administrativecapabilities and processes match upwith the needs of the State’s program.

The Act provides that the Secretary’sreview and determination of a new Stateorganic certification program or a



program amendment will take no morethan 6 months. AMS will notify thepublic upon approval of each Stateprogram. The public information will bemade available to national agriculturalnews media and to all news media inthe State. AMS will identify, amongother things, any more restrictivecertification requirements that areincluded in the approved State program.

A denial of a new program or programamendment will include a writtenexplanation of why the proposal isdenied and what changes will beneeded for the program to be approved.The State may implement neededchanges and submit a new program orprogram amendment.

Section 205.622 establishes that Stateorganic certification programs will bereviewed at least once every 5 years bythe Secretary and that a determinationwill be made within 6 months of theanniversary date as to continuation ofthe State organic certification program.We will issue appropriate proceduresregarding this requirement at a laterdate, after AMS and the States have hadan opportunity to administer the NOPand State programs.

State Programs—Changes Based OnComments

There are no changes based oncomments.

State Programs—Changes Requested ButNot Made

(1) Allowing more restrictive Statestandards. About a third of thosecommenting on State organiccertification program provisionscomplained that the first proposal gaveUSDA complete control over Stateorganic standards. A few suggested thata State with higher organic requirementsshould be able to prohibit the in-Statesale of products certified only to theNOP or other State organic programrequirements. Another commented thatthe NOP should ‘‘defer’’ to other Stateorganic certification programs withhigher standards.

While paragraph (b)(1) of section 6507of the Act provides that States mayestablish more restrictive organiccertification requirements, paragraph(b)(2) establishes parameters for thoserequirements. More restrictive Stateorganic program requirements must:Further the purposes of the Act; beconsistent with the Act; notdiscriminate against other States’agricultural commodities; and beapproved by the Secretary beforebecoming effective. As noted above, weexpect that a State’s more restrictiverequirements are likely to cover specificproduction or handling practices such

as more restricted use of approvedNational List substances or farmingpractices to address a State or area’sparticular environmental conditions.

The Secretary must employ someconsistent and common criteria forapproving States requests for morerestrictive State organic programs. Thecriteria for establishing suchrequirements must be consistent withthe purposes of the Act. We believe theneed to preserve, protect, and enhanceunique environmental or farmingconditions is a common criterion for allStates. We believe such criteria areconsistent with the stated goals of most,if not all, State organic programs andorganic trade and farming organizations.

The more restrictive standards willnot be applied to production andhandling activities outside thegeographic area of the State. Further, themore restrictive standards do not applyto marketing of organic product and,thus, will not be used to restrict accessof organic product produced in otherStates. Clearly, prohibiting the sale ofother States’ products is prohibited bythe Act as well as other national lawscovering interstate commerce in theUnited States. If some States were torestrict access to State markets, thepurposes and the benefits of thenational program would be lost.

Discriminatory marketing practicesare prohibited under section6507(b)(2)(c) of the Act. Thus, thepurpose of more restrictive State organicrequirements cannot be, as thecommenters suggest, to allow claims ofmore organic or purer product. Stateswill not be able to promote theirproducts as being more organic becausetheir products were produced undermore restrictive State requirements.More restrictive State organicrequirements will be authorized only asneeded to respond to specialenvironmental or production conditionsin the State which necessitate morerestrictive requirements. Any State’srequest for less restrictive or lowerorganic standards than are requiredunder this program will not be approvedby the Secretary.

(2) Treatment of private and Statecertifying agents. Some privatecertifying agents commented that thefirst proposal would permit accreditedState certifying agents to establish morerestrictive standards than theseregulations but prohibit privatecertifying agents from establishing theirown more restrictive requirements.Under this program, State certifyingagents will not unilaterally establishorganic standards or requirements in aState. A State program’s governing Stateofficial may, upon approval of the

Secretary, establish a State organiccertification program as an entity of theState’s department of agriculture orother similar State government agency.The Act provides this authority to theState government and does not providesimilar authority to private certifyingagents. Private certifying agents are notgovernment entities and have no officialregulatory or administrative authoritiesover agricultural activities in the State.State certifying agents as well as privatecertifying agents will act as serviceproviders, certifying to national and,where applicable, to particular Stateorganic requirements.

Again, commenters appear to miss anessential point of this national program.The only mandatory organic standardsand requirements are those of the NOPand the unique requirements approvedfor a State organic certification programby the Secretary. A private certifyingagent may believe its more restrictiverequirements result in a more organic orpurer product and may want to certifyproducers and handlers only to thoserequirements. However, neither Statecertifying agents nor private certifyingagents will be able to require that clientoperations or organic product becertified to more restrictive standardsthan the standards of this program orapproved State standards. The onlyother more restrictive requirements thatmay be certified to may be requirementsmade at the request of handlers ormanufacturers who are purchasing theorganic product or ingredient. Forexample, a producer could request acertifying agent to certify certainproduction practices required for exportto a foreign manufacturer. Suchcertification can be made only at therequest of the producer or handler beingcertified. Both State and privatecertifying agents may certify to therequested more restrictive contractrequirements, provided those morerestrictive requirements are consistentwith these regulations and provided thecertifying agents have the necessarytechnical qualifications to carry out thecertification.

Similarly, one commenter stated thatthe NOP should not prevent a privatecertifying agent from having andadvertising its own higher organicstandards. While a private certifyingagent may have the capability to certifyto certain higher organic requirements,a handler certified by the certifyingagent may not claim on product labelsor in market information that itsproducts are more organic, purer, orbetter than product certified by othercertifying agents or State organicprograms.



In this regard, certifying agents,whether they are State or privatecertifying agents, may not use differentseals, logos, or other identifying marksto distinguish between organicoperations certified to NOPrequirements and a State’s approvedmore restrictive requirements, thecertifying agent’s preferredrequirements, or the client’s requestedhigher requirements. We believe that ifcertifying agents were allowed to usemore than one seal or identifying mark,based on various standards certified to,the marketplace would be inundatedwith a variety of different certifyingagent seals, logos, and identifyingmarks. This would add to consumerconfusion, complicate the marketplace,and jeopardize benefits of this program.

(3) Private certifying agent concerns.Several commenters expressed concernthat private certifying agents are at adisadvantage vis-a-vis State certifyingagents. They stated that a State organicprogram or a State certifying agent couldinitiate policies that would limit theactivities or effectiveness of privatecertifying agents. However, thisproposed program does not alter thecurrent situation in that State andprivate certifying agents operate in thesame States. If a requested State organiccertification program proposes arequirement or procedure that will havea negative affect or discriminate againstprivate certifying agents operating in theState, the Secretary will not approve therequirement or procedure.

Some commenters asked whetherthese national regulations will affect aState’s accreditation of private certifyingagents operating in the State. A fewbelieve that States should be allowed tocontinue or establish separateaccreditation programs for privatecertifying agents.

We believe accreditation of certifyingagents is a core responsibility for USDA.Establishment of a single nationalaccreditation program is an essentialpart of the NOP. States will not accreditprivate certifying agents. As statedelsewhere in this proposal, anyaccreditation responsibilities of a State’scurrent organic certification programwill cease with implementation of thisprogram. Pursuant to the Complianceprovisions of this subpart, the governingState official or designee charged withcompliance oversight under the Stateprogram may investigate and notify theNOP of possible compliance violationson the part of certifying agents operatingin the State. However, the State may notpursue compliance actions or removeaccreditation of any certifying agentaccredited by the Secretary. That

authority is the sole responsibility of theSecretary.

If more restrictive State requirementsare approved by the Secretary, we willreview certifying agent qualifications inthe State and determine whether theyare able to certify to the approved, morerestrictive requirements. Ouraccreditation responsibilities mustinclude oversight of both State andprivate certifying agents, including anyforeign certifying agents that mayoperate in a State, and to monitoringtheir compliance with accreditationrequirements.

(4) Public comment on Stateapplications. One commenter suggestedthat USDA publish for comment in theFederal Register, a summary of eachState’s proposed organic program andany requested program amendments.The commenter claimed that anapproved State organic certificationprogram will effectively substitute theState’s program for the NOP in the State.Thus, the commenter contends, thoseproposed State programs and programamendments should be made availablefor public comment. After considerationof the implications of the comment, wedo not believe that the Federal Registernotification process is the proper venuefor receiving comments on a proposedState program which is applicable onlyto residents and business entities in theState. We assume that the governingState official is submitting the requeston behalf of the organic producers andhandlers in the State. Further, theappropriateness of the State’s requestedmore restrictive requirements shouldstand on the merits of each proposal andnot on whether commenters in otherStates believe the proposedrequirements are warranted. Certifiedorganic producers and handlers outsidethe State will not be subject to the morerestrictive standards or requirements ofthe State program. The more restrictivestandards will not be used to restrictmarket access of organic productproduced in other States or countries.Thus, there is no reason to receivepublic comment on requested Staterequirements from individuals notdirectly affected by the proposedrequirements.

The commenter suggested that AMSalso publish a summary of eachproposed program and any amendmentsto a program in a newspaper of generalcirculation in the State. AMS will issuea public information notices which willannounce each approved State organiccertification program and any approvedamendments of a State program. Thenotices will identify the uniquecharacteristics of the approved Stateprogram that warranted the more

restrictive organic production orhandling requirements. We also willinclude a summary of the new programon the NOP homepage.

(5) State program consistencies.Several commenters asked forclarification of the first proposal’s terms,‘‘consistent’’ and ‘‘substantiveamendments,’’ used in regard to Stateprograms operating under the NOP.Being ‘‘consistent’’ with the NOP meansthat a State program’s written standardsor requirements must be at least equalto the standards and requirements of theNOP. This is provided for in the Act.Further, in allowing State organicprograms to have more restrictive orhigher standards, the Act requires thatthose more restrictive standards andrequirements be consistent with thepurposes of the Act. To be ‘‘consistent’’with the purposes of the Act means thatthe requested, more restrictive standardsor requirements are of such a nature thatthey do not undermine the applicationof uniform national organic standards.Thus, if a request for more restrictiveState organic standards is determined tonot be consistent with uniform nationalorganic standards, the State programwill not be approved by the Secretary.The administrative procedures used bythe State in administering the 11 generalrequirements of the State’s organicprogram should have the same force andeffect of the procedures use by AMS inadministering this program.

The same commenters asked forclarification of the term, ‘‘substantiveamendments,’’ in obtaining USDAapproval of more strict amendments forone State’s organic certificationprogram. ‘‘Substantive amendments’’means changes that would increase thequantitative or qualitative standards orspecific requirements for an operation’sor a product’s certification under theState organic program. Once thisnational program is operating, if aquestion arises as to whether a desiredchange in a State organic certificationprogram is considered substantive ornot, the State program’s governing Stateofficial should raise the issue with theSecretary.

State Programs—Additional Provisions(1) State program responsibilities.

This subpart establishes that a Stateorganic certification program whichpetitions for approval by the Secretarywill have increased responsibilitiesunder the NOP. Our first proposal didnot suggest qualifying factors or otherinformation that had to be submitted bythe State program’s governing Stateofficial. This proposal specifies the 11general requirements, addressed above,and the needs-based environmental



conditions or special productionpractices for establishing morerestrictive requirements. Those factorsestablish our revised position that aState must agree to incurring increasedresponsibilities and obligations to beapproved as a State organic certificationprogram under the NOP. For instance,as discussed above, a State with anapproved organic certification programwill oversee compliance and appealsprocedures for certified organicoperations in the State. Thoseprocedures must provide due processopportunities such as rebuttal,mediation, and correction procedures inthis proposal. Once approved by theSecretary, the State governing official ordesignee must effectively administer theState’s organic certification program ina manner that is consistent andequitable for the certified partiesinvolved in compliance actions.

A State’s organic certification programmay include other programs andprojects which the State governmentmay conduct to promote or increaseorganic production and handling in theState. Such programs may includeorganic promotion and researchprojects, transition assistance, adirectory of organic production andhandling operations in the State, aconsumer referral program, orcertifications given to retail operationswhich market organic foods. Thisproposal will not prohibit such Stateactivities, provided those activities donot establish production or handlingstandards that work against thepurposes of the NOP. Such programsmay not advertise, promote, orotherwise infer that the State’s organicproducts are more organic or better thanorganic product produced in otherStates. Such programs and projectsshould be beyond the scope of thisnational program and, if so, will not besubject to the Secretary’s review.

(2) Renewal of State program. Thefinal section provides that reviews ofState organic certification programs willbe conducted at least once every 5 years,as required in paragraph (c) of section6507. The intent of the provision is notchanged in this proposal. We willprovide further information regardingreviews of State programs before thefirst 5-year period is completed. Weexpect that, with experiences gainedfrom a few years of program operation,we will be able to propose moreappropriate procedures, guidelines, andrequirements to assure proper reviewsof operating State organic programs.

Fees. This portion of subpart G setsforth the regulations on fees and othercharges to be assessed for accreditationand certification services under the

National Organic Program (NOP). Theseregulations address the kinds of fees andcharges to be assessed by theDepartment for the accreditation ofcertifying agents, the level of such feesand charges, and the payment of suchfees and charges. These regulations alsoaddress general requirements to be metby certifying agents in assessing feesand other charges for the certification ofproducers and handlers as certifiedorganic operations. Finally, theseregulations address the Secretary’soversight of a certifying agent’s fees andcharges for certification services.

Proposal DescriptionFees and Other Charges for

Accreditation. Fees and other chargeswill be assessed and collected fromapplicants for initial accreditation andaccredited certifying agents submittingannual reports or seeking renewal ofaccreditation. Such fees will be equal asnearly as may be to the cost of theaccreditation services rendered underthese regulations. Fees-for-service willbe based on the time required to renderthe service provided calculated to thenearest 15-minute period. Activities tobe billed on the basis of time usedinclude the review of applications andaccompanying documents andinformation, evaluator travel, theconduct of on-site evaluations, review ofannual reports and updated documentsand information, and the preparation ofreports and any other documents inconnection with the performance ofservice. The hourly rate will be the sameas that charged by the AgriculturalMarketing Service (AMS), through itsQuality System Certification Program, tocertification bodies requestingconformity assessment to theInternational Organization forStandardization ‘‘General Requirementsfor Bodies Operating ProductCertification Systems’’ (ISO Guide 65).

Applicants for initial accreditationand accredited certifying agentssubmitting annual reports or seekingrenewal of accreditation during the first18 months following the effective dateof subpart F will receive service withoutincurring an hourly charge for suchservice.

Applicants for initial accreditationand renewal of accreditation must payat the time of application, effective 18months following the effective date ofSubpart F, a nonrefundable fee of$500.00. This fee will be applied to theapplicant’s fees-for-service account.

When service is requested at a placeso distant from the evaluator’sheadquarters that a total of one-halfhour or more is required for theevaluator(s) to travel to such place and

back to the headquarters, or at a placeof prior assignment on circuitousrouting requiring a total of one-half houror more to travel to the next place ofassignment on the circuitous routing,the charge for such service will includeall applicable travel charges. Travelcharges may include a mileage chargeadministratively determined by theDepartment, travel tolls, or, where thetravel is made by public transportation(including hired vehicles), a fee equal tothe actual cost thereof. If the service isprovided on a circuitous routing thetravel charges will be prorated amongall the applicants and certifying agentsfurnished the service involved on anequitable basis. Travel charges willbecome effective for all applicants forinitial accreditation and accreditedcertifying agents on the effective date ofsubpart F. The applicant or certifyingagent will not be charged a new mileagerate without notification before theservice is rendered.

When service is requested at a placeaway from the evaluator’s headquarters,the fee for such service shall include aper diem charge if the employee(s)performing the service is paid per diemin accordance with existing travelregulations. Per diem charges toapplicants and certifying agents willcover the same period of time for whichthe evaluator(s) receives per diemreimbursement. The per diem rate willbe administratively determined by theDepartment. Per diem charges shallbecome effective for all applicants forinitial accreditation and accreditedcertifying agents on the effective date ofsubpart F. The applicant or certifyingagent will not be charged a new perdiem rate without notification before theservice is rendered.

When costs, other than fees-for-service, travel charges, and per diemcharges are associated with providingthe services, the applicant or certifyingagent will be charged for these costs.Such costs include, but are not limitedto, equipment rental, photocopying,delivery, facsimile, telephone, ortranslation charges incurred inassociation with accreditation services.The amount of the costs charged will bedetermined administratively by theDepartment. Such costs will becomeeffective for all applicants for initialaccreditation and accredited certifyingagents on the effective date of subpart F.

Payment of Fees and Other Charges.Applicants for initial accreditation andrenewal of accreditation must remit thenonrefundable fee along with theirapplication. Remittance must be madepayable to the Agricultural MarketingService, USDA, and mailed to: ProgramManager, USDA–AMS–TMP–NOP,



Room 2945-South Building, PO Box96456, Washington, DC 20090–6456 orsuch other address as required by theProgram Manager. All other paymentsfor fees and other charges must bereceived by the due date shown on thebill for collection, made payable to theAgricultural Marketing Service, USDA,and mailed to the address provided onthe bill for collection. TheAdministrator will assess interest,penalties, and administrative costs ondebts not paid by the due date shownon a bill for collection and collectdelinquent debts or refer such debts tothe Department of Justice for litigation.

Fees and Other Charges forCertification. Fees charged by acertifying agent must be reasonable, anda certifying agent may charge applicantsfor certification and certified productionand handling operations only those feesand charges that it has filed with theAdministrator. The certifying agentmust provide each applicant with anestimate of the total cost of certificationand an estimate of the annual cost ofupdating the certification. The certifyingagent may require applicants forcertification to pay at the time ofapplication a nonrefundable fee of nomore than $250.00 which must beapplied to the applicant’s fees-for-service account. The certifying agentmust provide all persons inquiringabout the application process with acopy of its fee schedule.

Fees—Changes Based on Comments.This portion of subpart G differs fromour first proposal in several respects asfollows:

(1) Application and AdministrativeFees. We have removed the provisionswhich required certifying agents to payapplication and administrative fees.These fee provisions have been replacedwith provisions for the assessment offees for service equal as nearly as maybe to the cost of the accreditationservices rendered under theseregulations. In other words, we will beassessing fees and charges only foractivities related to accreditation. Thesefees and charges will be assessed andcollected from applicants for initialaccreditation and accredited certifyingagents submitting annual reports orseeking renewal of accreditation. Thebalance of costs incurred by the NOPwill be funded through appropriations.We have retained the requirement, withmodification, that certifying agentsreimburse the Department for travel, perdiem, and related other costs associatedwith providing accreditation services.We have taken these actions in anattempt to minimize the cost of thisprogram on certifying agents. Certifyingagents will be charged for the actual

time and travel expenses necessary forthe NOP to perform accreditationservices.

This proposed program is similar tothe Quality Systems CertificationProgram (QSCP) established pursuant to7 CFR part 54. The QSCP is an audit-based program administered by AMSthrough its Livestock and Seed Program,which provides meatpackers,processors, producers, and otherbusinesses in the livestock and meattrade with the opportunity to havespecial processes or documented qualitymanagement systems verified. Since theprocedures used for accrediting Stateand private entities as accreditedorganic certifying agents are similar tothose used to certify other types ofproduct or system certification programsunder the QSCP, we have decided to usethis existing program and its staff inexamining certifying agents’ operationsand evaluating their compliance withthe Act and these regulations. Using theQSCP and its staff will enable the NOPto provide the necessary serviceswithout creating a separate bureaucracy.Hourly fees to be charged for servicesunder this program will be the same asthose under the QSCP, currentlyestimated at $95.00 per hour.

This fee of approximately $95.00 isgreater than the $42.20 base rate chargedunder the voluntary user-fee-fundedprogram established by AMS to verifythat State and private organic certifyingagents in the United States comply withthe requirements prescribed under ISOGuide 65. This program, administeredby the AMS Livestock and SeedProgram, applied the aggregate meatgrading rate for services to this ISOGuide 65 verification program for Stateand private organic certificating agents.The grading rate of $42.20 was the onlyrate for which AMS was authorized tocharge at the time that the program toassess ISO Guide 65 conformity byorganic certifying agents wasimplemented. This was not the actualaudit rate of approximately $95.00 forsuch services. The AMS Livestock andSeed Program will engage in rulemakingto establish audit fees for its QSCP. Asnoted above, those fees are expected tobe approximately $95.00 per hour. TheNOP will notify accredited certifyingagents of proposed rate changes andfinal actions on such rates by AMS.

To minimize the economic impact ofimplementing the NOP on certifyingagents, we have decided to provideservices for accreditation during the first18 months following the effective dateof new subpart F without an hourlycharge for all applicants for initialaccreditation and accredited certifyingagents. This represents full

subsidization of the hourly costs foraccreditation by the Department duringthe first 18 months of operation. This18-month subsidization of the hourlycosts will prove especially beneficial toany applicant for accreditation thatsubmits a substandard application orhas difficulty establishing eligibility foraccreditation. Certifying agents will becharged for accreditation service at thepublished hourly rate on the first day ofthe nineteenth month following theeffective date of subpart F.

Over 15,000 comments were receivedon fees, with all opposing the firstproposal’s fee provisions. In addition tocomments from consumers, commentswere received from State agencies,organic growers, grower associations,and certifying agents. Most of thesecommenters expressed the belief thatthe proposed fees would price smallcertifying agents out of the organicindustry. Almost half of the over 15,000comments suggested a sliding-scale feesystem, rather than the flat fee system inthe first proposal, to accommodate theeconomic needs of small certifyingagents. We have not accepted theconcept of a sliding-scale fee system.Rather, as noted above, we areproposing that certifying agents becharged for the actual time and travelexpenses necessary for the NOP toperform accreditation services. Underthis fee system, smaller certifying agentsshould pay less in hourly charges toobtain and maintain certification thanlarger certifying agents. Thisassumption, however, is contingent onthe quality of all documentationsubmitted to the Department, certifyingagent recordkeeping, and the efficiencyof the certifying agent in meeting therequirements of this part. The fees andother charges for accreditationregulations are found in § 205.640.

(2) Payment by Certified Check. Wehave removed the requirement that thepayment of fees and charges to theDepartment be by certified check ormoney order. We have made this changebecause we agree with commenters thatthis requirement is unnecessary andpotentially burdensome.

Nearly all industry commentersopposed the form and method ofpayments stated throughout the originalfee sections. Commenters stated thatpayment by certified check or moneyorder was unnecessary and would createan additional burden on individualproducers, handlers, and privatecertifiers. A few State commentersstated that it was insulting for the U.S.Department of Agriculture (USDA) torequire a State government agency topay for its accreditation with a certifiedcheck.



(3) Producer and Handler Fees to theDepartment. We have removed theprovisions which required the paymentof certification fees by producers andhandlers to the Department. We havetaken this action because we believethat the goal of recovering program coststhrough fees and other costs charged toproducers and handlers for certificationas certified organic operations should bebalanced against the Act’s purpose tofacilitate interstate commerce in freshand processed food.

We received over 15,000 commentsall opposing the first proposal’s feeprovisions for producers and handlers.Comments were received fromconsumers, State agencies, organicgrowers, grower associations, andcertifying agents. Most of thesecommenters stated that the proposedfees would price small producers andhandlers out of the organic industry.Hundreds of these commenters statedthat the proposed fees favor largeproduction operations. Almost half ofthe over 15,000 comments suggested asliding-scale fee system, rather than theflat fee system proposed in the firstproposal, to accommodate the economicneeds of small producers and handlers.Hundreds more suggested that smallproducers and processors be exemptfrom the payment of fees.

Most of the State agency, organicgrower, grower association, andcertifying agent (industry) commentersspoke to the very small size and family-farm nature of the average organicproduction operation and how thoseoperations would be affected by theproposed fees. Commenters from thisgroup who offered estimates suggestedthat one-third to over one-half of organicproducers in their area or State are verysmall organic producers operating at ornear the exemption level of $5,000 inannual sales. They said those operatingjust above the exemption level could beforced out of organic production by theextra fee and the increased certificationcharges passed down by certifyingagents who would have to pay theproposed accreditation charges.

Commenters, industry and consumer,stated that, rather than encouraginggrowth and new participation in organicagriculture, the costs of certificationwould stifle growth and discouragesmall producer participation in organicagriculture. An industry commenterstated that exempt producers who mightwant to be certified so they couldmarket their product as organic wouldbe dissuaded from doing so because ofthe cost of certification. Industrycommenters also stated that theadditional USDA fee on small handlerswould make small organic handling

operations marginal. A few Stateagencies commented that many smallorganic producers also conduct theirown on-farm handling and that theseoperations would be forced out of theorganic industry by the excessivehandler fee and reporting burdens.

The comment, that exempt producerswho might want to be certified so theycould market their product as organicwould be dissuaded from doing sobecause of the cost of certification,requires clarification. It may be true thatsuch producers would be dissuadedfrom seeking certification because of thecost of certification. It is not true,however, that exempt producers mustbe certified to sell or label theirproduction as organic. The Act exemptssmall producers, those who produce nomore than $5,000 in agriculturalproducts, from the requirement that aperson may sell or label an agriculturalproduct as organically produced only ifsuch product is produced and handledin accordance with the Act.

Industry commenters recommendedcomplete changes to the proposed feestructure. Most, like the consumercommenters, suggested a sliding scalefor fees based on either size or salesvolume. Several industry commentersstated that the Act does not require thatUSDA recover all program costs fromassessments on producers, handlers,and certifying agents. They cited section6522 of the Act as authorizing the useof appropriated funds to carry out theprogram. Some industry commenterssuggested that appropriated fundsshould be used to cover alladministrative and overhead costs andthat fees collected from the industryshould only be used for specificprogram activities such as accreditation.A few industry commenters suggestedthat organic farmers not be charged anAMS fee but that each be required tosign an affidavit of compliance withprogram requirements.

After further discussions within theDepartment and review of thecomments, we have determined that thefee structure for the NOP should bemodified to reduce costs to all organicsectors. We acknowledge that the feesproposed in the first proposal mighthave discouraged industry growth andmight not have facilitated interstatecommerce of organic products. Becausewe believe that fees and other costscharged to producers and handlers forcertification as certified organicoperations should be kept to a minimumto encourage industry participation andgrowth, we have removed theregulations which provided for thepayment of fees to the Department by

certified production and handlingoperations.

(4) Estimated Cost of Certification. Wehave added, at § 205.642, therequirement that the certifying agentmust provide each applicant with anestimate of the total cost of certificationand an estimate of the annual cost ofupdating the certification. Additionally,the certifying agent must provide allpersons inquiring about the applicationprocess with a copy of its fee schedule.We have added these provisions toensure that producers and handlershave early and ready access to theinformation they need to consider costin selecting an agent to certify theirproduction or handling operation. Weconsider this to be especially importantbecause, as noted in the preamble tosubpart F, we have removed therequirement that the certifying agentcharge only such fees to applicants forcertification and operations it certifiesthat the Secretary determines arereasonable. We have removed thisrequirement because we concur withthose commenters who expressed thebelief that certifying agents should bepermitted to set their own fees withoutthe approval of the Secretary. We havealso removed this requirement becausewe concur with the commenters’ beliefthat production and handling operationsare free to consider cost in selecting anagent to certify their production orhandling operation.

Fees—Changes Requested But NotMade. This subpart retains from our firstproposal regulations on which wereceived comments as follows:

(1) Accreditation Charges Billed toState Certifying Agents. Several Statecertifying agents stated that Statecertifying agents should not be assessedaccreditation charges. Commentersstated that most State certifying agentscould face large accreditation costsbecause they have many county orregional offices which would beconsidered subsidiaries of theheadquarters office. They stated thatthese charges would have to be passedon to producers and handlers or paidwith supplemental State funds. A fewState certifying agents stated that USDAshould pay the States, rather than viceversa, because of the State organicprograms’ contributions to the nationalprogram. At least one Staterepresentative commented thataccreditation fees for State certifyingagents should be less than for privatecertifying agents because State certifyingagents should require less review andoversight by AMS.

We disagree with those commenterswho recommended that State certifyingagents not be assessed accreditation



charges, be charged less foraccreditation, or be paid to certifyproduction or handling operations. Weview such actions as constitutingunacceptable preferential treatment ofState certifying agents to the detrimentof private-entity certifying agents.Accordingly, under this proposal, State-entity certifying agents will be assessedfees for accreditation under the same feestructure as private-entity certifyingagents.

(2) Subsidization. Some industrycommenters stated that nationalgovernments in Europe provide directsubsidies and other economic incentivesfor their farmers to grow organic. A fewquestioned why the organic industrywould be charged for services whilesome USDA programs are providedwithout cost to other agriculturalsectors, and USDA actually pays somefarmers not to grow some commodities.Industry commenters and manyconsumer commenters stated that it wasunfair for this proposed program tocharge all costs to a fledglingagricultural industry composed mostlyof small, family farmers and marginaloperations. Finally, a few industrycommenters proposed the philosophicalargument that program fees penalizethose who protect the earth and thatUSDA should charge traditionalproducers who damage the earth withchemical applications andnonsustainable cultural practices.

AMS is primarily a user-fee-basedFederal agency. The Act at section6506(a)(10) requires the collection offees from producers, handlers, andcertifying agents. We are, therefore,unable to provide for the fullsubsidization of producers, handlers,and certifying agents as espoused bysome commenters. Accordingly, thisproposal provides for the payment offees by producers, handlers, andcertifying agents. We have, however,proposed regulations in this proposalwhich we believe will minimize theeconomic impact of the NOP onproducers, handlers, and certifyingagents.

Fees—Additional Provisions. Uponfurther review of the fee provisions inthe first proposal, we have decided topropose the following additions.

(1) Certification Fees Charged byCertifying Agents. We have added, at§ 205.642, regulations addressinggeneral requirements to be met bycertifying agents in assessing fees andother charges for the certification ofproducers and handlers as certifiedorganic operations. First, fees chargedby a certifying agent must be reasonable,and a certifying agent may chargeapplicants for certification and certified

production and handling operationsonly those fees and charges that it hasfiled with the Administrator. This is ageneral requirement for accreditationand is also found at § 205.501(a)(15) insubpart F on accreditation. Thisregulation does not prohibit certifyingagents from providing and charging forservices outside the NOP. Services thatcertifying agents might provide outsidethe NOP include in-house publications,conferences, workshops, informationalmeetings, and field days. Certifyingagents cannot require participation insuch activities by certified operations orapplicants for certification as acondition of certification.

Second, the certifying agent mayrequire applicants for certification topay at the time of application anonrefundable fee of no more than$250.00 which must be applied to theapplicant’s fees-for-service account. Webelieve that this fee will help ensurethat certifying agents are compensatedfor certification services provided to anapplicant that is found to be notqualified to receive certification as anorganic production or handlingoperation.

(2) Fees Charged to Foreign CertifyingAgents. We have removed theprovisions which required the paymentof fees for import programs. We havetaken this action because this proposalincludes foreign State entities andforeign private entities which providecertification services under theaccreditation requirements of this part.Accordingly, such entities are coveredunder the fees for accreditationprovisions of § 205.640.

ComplianceThis portion of subpart G sets forth

the enforcement procedures for theNational Organic Program (NOP). Theseprocedures describe the complianceresponsibilities of the Secretary, USDA,and Agricultural Marketing Service(AMS) officials acting on behalf of theSecretary. These procedures alsodescribe responsibilities of Stateprograms’ governing State officials(governing State officials) and State andprivate certifying agents for complianceunder the NOP. The NOP is the AMSoffice that reviews applications andinitiates approvals of accreditation ofnew certifying agents, conductsoversight of accredited certifying agents,and reviews and recommendscontinuation of accreditation ofcertifying agents. These provisions alsoaddress the rights of certifiedproduction and handling operations andaccredited certifying agents operatingunder the NOP. Approval or denial ofapplications for certification and

accreditation are addressed undersubparts E and F, respectively.

Proposal DescriptionThe Secretary is required under the

Act to review the operations of Stateorganic certification programs,accredited certifying agents, andcertified production or handlingoperations for compliance with the Actand these regulations. The ProgramManager of the NOP may carry outoversight of compliance proceedings onbehalf of the Secretary and theAdministrator. However, most reviewsand analyses of certificationnoncompliance will be conducted bythe certifying agent which certified theoperation. With regard to certifyingagents, the Program Manager mayinitiate proceedings to suspend orrevoke the accreditation of a certifyingagent for failure to conductaccreditation activities or maintainaccreditation requirements pursuant tosubpart F of this regulation.

In States with an approved Stateorganic certification program, the Stateprogram’s governing State official isresponsible for administration of theState’s compliance program for certifiedoperations. Governing State officialsalso may review and investigatecomplaints of certifying agentsoperating in the State who may not bein compliance with the accreditationrequirements of the Act and theseregulations. They must notify theProgram Manager of suchnoncompliance activities and makeinformation regarding the violationavailable to the NOP for appropriateaction.

The Program Manager may initiateproceedings to suspend or revoke acertified operation’s certification if acertifying agent or State program’sgoverning State official fails to takeappropriate enforcement action or if anoperation is found to be erroneouslycertified by a certifying agent whoseaccreditation has been suspended orrevoked.

The compliance provisions of theNOP are consistent with therequirements of the AdministrativeProcedure Act (APA) (5 U.S.C. 553–559)in that this program provides for dueprocess including an opportunity forhearing, appeal procedures, writtennotifications of noncompliance, andopportunities to demonstrate or achievecompliance before any suspension orrevocation of organic certification oraccreditation is invoked. An exceptionto the initial due process steps underthe APA is provided in instances ofwillful violations. However, willfulviolations may be appealed pursuant to



the Appeals procedure in this subpart.A compliance action regardingcertification carried out under anapproved State program’s complianceprocedures will have the same force andeffect as a certification complianceaction carried out under these NOPcompliance procedures. The notificationprocess for denying applications forcertification and applications foraccreditation is laid out in subparts Eand F respectively.

Noncompliance Procedure forCertified Operations. The Act providesfor the enforcement of certifiedoperations. Statutory oversight ofproduction and handling operations bycertifying agents includes review oforganic plans, residue and tissue testing,authority to conduct investigations, andresponsibility to report violations.Applicants for certification must meetcertification requirements of the NOP,as determined by certifying agents.

Notification of Noncompliance. Asnoted above, the Program Manager orthe governing State official may reviewand investigate a certified operationbased on complaints and may initiatenoncompliance proceedings establishedin this subpart. However, we expect thatmost compliance procedures will beginwith a certifying agent’s inspection,review, or investigation of such certifiedoperation. Thus, this noncomplianceprocedure is proposed based on thatprocess.

A written notification ofnoncompliance will be sent to thecertified operation if a certifying agent’sinspection, review, or investigationreveals any noncompliance with the Actor these regulations. Noncompliancemay include, among other things,production or handling practices orconditions, use of substances, orlabeling which are not in compliancewith subparts C, Production andHandling, or E, Certification, of thisregulation. The results of a residue testmay trigger a noncompliancenotification. A noncompliancenotification may encompass the entireoperation or a portion of the operation.For instance, a violation at one farmmay not warrant loss of certification atother farms of the certified operation notaffected by the violation.

A notification of noncompliance willprovide: (1) A description of eachcondition, action, or item ofnoncompliance; (2) the facts uponwhich the notification is based; and (3)the date by which the certifiedoperation must rebut the notification orcorrect the noncompliance. A certifiedoperation may continue to sell itsproduct as organic upon receiving anotification of noncompliance and

throughout the noncomplianceproceeding and any appeal procedurewhich might follow the complianceproceeding.

All written notifications sent bycertifying agents and governing Stateofficials, as well as rebuttals, requestsfor mediation, and notices of correctionof deficiencies sent by certifiedoperations will be sent to theaddressee’s place of business by adelivery service which provides datedreturn receipts. This will help assurecompleted communications and timelycompliance procedures.

If a certified operation believes thenotification of noncompliance isincorrect or not well-founded, theoperation may submit a rebuttal to thecertifying agent, providing supportingdata to refute the facts stated in thenotification. Rebuttals are provided toallow certifying agents and certifiedoperations to informally resolvenoncompliance notices. Rebuttalsshould be helpful in resolvingdifferences which may be the result ofmisinterpretation of requirements,misunderstandings, or incompleteinformation. Alternatively, the certifiedoperation may correct the identifieddeficiencies and submit proof of suchcorrections. When the operationdemonstrates that each noncompliancehas been corrected or otherwiseresolved, the certifying agent will sendthe certified operation a writtennotification of noncomplianceresolution.

Proposed Suspension or Revocation ofCertification. If the noncompliance isnot resolved and is not in the process ofbeing resolved by the date specified inthe notification, the certifying agent willsend the certified operation a writtennotification of proposed suspension orrevocation of certification for the entireoperation or a portion of the operationaffected by the noncompliance. Thenotification will state: (1) The reasonsfor the proposed suspension orrevocation; (2) the proposed effectivedate of the suspension or revocation; (3)the impact of the suspension orrevocation on the certified operation’sfuture eligibility for certification; and (4)that the certified operation has a right torequest mediation or to file an appeal.The impact of a proposed suspension orrevocation may include the suspensionperiod or whether the suspension orrevocation applies to the entireoperation or to a portion or portions ofthe operation. A governing State officialmay not suspend or revoke certificationof an entity’s certified operations inother States. Likewise, a certifying agentmay not suspend or revoke certification

of an entity’s operations which thecertifying agent does not certify.

If a certifying agent determines thatcorrection of a noncompliance is notpossible, the notification ofnoncompliance and the proposedsuspension or revocation of certificationmay be combined in one notification ofproposed suspension or revocation. Thecertified operation will have anopportunity to appeal that suspensionor revocation decision.

Mediation. A certified operation mayrequest mediation of any disputeregarding denial of certification orproposed suspension or revocation ofcertification. Mediation is not requiredprior to filing an appeal but is offeredas an option which may resolve thenoncompliance more quickly than thenext step, which is filing an appeal. Ifa State program is in effect, themediation procedures established in theState program, as approved by theSecretary, must be followed. Mediationwill be requested in writing to theapplicable certifying agent. The disputewill be mediated by a qualified mediatormutually agreed upon by the parties tothe mediation. The parties to themediation will have no more than 30days to reach an agreement following amediation session. If mediation isunsuccessful, the certified operationwill have 30 days from termination ofmediation to appeal the proposedsuspension or revocation to theAdministrator.

Any agreement reached during or asa result of the mediation process mustbe in compliance with the Act and theseregulations. Also, the Secretary reservesthe right to review any mediatedsettlement to assure that the terms of thesettlement conform with therequirements of the Act and the NOP.

Suspension or Revocation. Thecertifying agent will suspend or revokethe certified operation’s certificationwhen the operation fails to resolve theissue through rebuttal or mediation,fails to complete needed corrections, ordoes not file an appeal. The operationwill be notified of the suspension orrevocation by written notification. Thecertifying agent must not send anotification of suspension or revocationto a certified operation that hasrequested mediation or filed an appeal.

The decision to suspend or revokecertification will be based on theseriousness of the noncompliance andon whether the noncompliance is awillful action by the certified operation.Such decisions must be made on a case-by-case basis. Section 6519 of the Actestablishes that willful violationsinclude making a false statement,knowingly affixing a false label, or



otherwise violating the purposes of theAct. Certifying agents are responsible forinvestigating whether a violation is awillful act and advising the ProgramManager or governing State official ofthe results of such investigation.However, only the Program Manager orgoverning State official may make thefinal determination that a violation iswillful.

If a suspected willful noncomplianceis not a serious violation, a proposedsuspension rather than revocation maybe issued. Revocation is reserved forserious instances of willfulnoncompliance and other seriousviolations.

The certifying agent may determinethat a lesser penalty of suspension iswarranted by the noncompliance. Aproposal to suspend certification may beissued for violations that are inadvertentor cannot be proven to be willful. Asuspension may be applicable only toone area of operation or one field orfarm unit where the noncomplianceoccurred.

A certified operation that has had itscertification revoked will not be eligibleto receive certification for an operationin which such operation or person hasan interest for 5 years following the dateof revocation. If an individual is theowner of a certified operation or is theprincipal officer or director ofoperations who is fully responsible forcomplying with certificationrequirements of this part, a suspensionor revocation could be issued in theindividual’s name. The effect would bethat another operation would beineligible for organic certification if thatindividual is listed as a principal in theoperation. The Secretary may waive anineligibility period when it is in the bestinterests of the certification program.

Noncompliance Procedure forCertifying Agents. The ProgramManager, on behalf of the Secretary,may initiate a compliance action againstan accredited certifying agent who failsto carry out responsibilities entrusted tothe certifying agent or maintainresources sufficient to meetaccreditation requirements in subpart F.Compliance proceedings may beinitiated as a result of annual reviewsfor continuation of accreditation, as aresult of site visits, or as a result ofinvestigations initiated in response tocomplaints of noncompliant activities.Compliance proceedings also may beinitiated on recommendation of agoverning State official.

A written notification ofnoncompliance will be sent by theProgram Manager to an accreditedcertifying agent when an inspection,review, or investigation of such person

reveals any noncompliance with the Actor these regulations. A notification ofnoncompliance will provide adescription of each noncompliancefound and the facts upon which thenotification is based. Additionally, thenotification will provide the date bywhich the certifying agent must rebutthe noncompliance notice or correcteach noncompliance described.

When documentation received by theProgram Manager demonstrates thateach noncompliance has been resolved,the Program Manager will send thecertifying agent a written notification ofnoncompliance resolution.

If a noncompliance is not resolved byrebuttal or correction of violations, theProgram Manager will issue a proposedsuspension or revocation ofaccreditation. The notification will statewhether the certifying agent’s entirebusiness, field office, or offices in ageographic area or in a specifiedtechnical field of accreditation are to besuspended or revoked. For instance, if aprivate certifying agent with field officesin different geographic areas is cited fora compliance violation in one area, theProgram Manager could determine thatonly the accreditation of thenoncompliant operation should besuspended or revoked.

If the Program Manager determinesthat the noncompliance cannot beimmediately or easily corrected, theProgram Manager may combine thenotification of noncompliance and theproposed suspension or revocation inone notification. The notification ofproposed suspension or revocation ofaccreditation will state the reasons andeffective date for the proposedsuspension or revocation. Suchnotification will also state the impact ofa suspension or revocation on futureeligibility for accreditation and thecertifying agent’s right to file an appeal.

If the Program Manager has reason tobelieve that a certifying agent haswillfully violated the Act or regulations,the Program Manager may issue anotification of proposed revocation ofaccreditation. The proposed revocationmay be for the certifying agent’s entireaccreditation business, a particular fieldoffice, or a specified technical area ofaccreditation. This notification, becauseit involves a willful violation, will besent without first issuing a notificationof noncompliance.

The certifying agent may file anappeal of the Program Manager’sdetermination, pursuant to § 205.681. Ifthe certifying agent fails to file anappeal of the proposed suspension orrevocation, the Program Manager willsuspend or revoke the certifying agent’saccreditation. The certifying agent will

be notified of the suspension orrevocation by written notification.

A certifying agent whose accreditationis suspended or revoked must cease allcertification activities in each area ofaccreditation and in each State forwhich its accreditation is suspended orrevoked. Any certifying agent whoseaccreditation has been suspended orrevoked must transfer to the Secretaryall records concerning its certificationactivities that were suspended orrevoked. The certifying agent must alsomake such records available to anyapplicable governing State official. Therecords will be used to determinewhether operations certified by thecertifying agent may retain their organiccertification.

A certifying agent whose accreditationis suspended by the Secretary may atany time submit a new request foraccreditation. Such request must beaccompanied by evidencedemonstrating correction of eachnoncompliance and actions taken tocomply with and remain in compliancewith the Act and regulations. Acertifying agent whose accreditation isrevoked by the Secretary will beineligible to be accredited as a certifyingagent under the Act and regulations fora period of not less than 3 yearsfollowing the date of revocation.

State Programs’ ComplianceProcedures. A State program’s governingState official may initiatenoncompliance proceedings of certifiedorganic operations operating in theState. Such proceedings may beinitiated for failure of a certifiedoperation to meet the production orhandling requirements of this part or theState’s more restrictive requirements, asapproved by the Secretary. Thegoverning State official must attempt toresolve the compliance violationsthrough State mediation and reviews ofcorrections to operations.

The governing State official mustpromptly notify the Program Manager ofcommencement of enforcementproceedings initiated against certifiedoperations. An enforcement proceeding,brought by a governing State officialagainst a certified operation may beappealed in accordance with the appealprocedures of the State organiccertification program. There will be nosubsequent rights of appeal to theSecretary.

Compliance—Changes Based OnComments

This portion of subpart G differs fromour first proposal in several respects asfollows:

(1) Authority of certifying agents. Wehave provided accredited certifying



agents with authority to initiatenoncompliance proceedings which mayresult in suspension or revocation ofproducer and handler certifications. Acertifying agent’s notification ofproposed suspension or revocation ofcertification provides an opportunity forthe certified operation to file an appealin accordance with the appealprovisions of § 205.681. If anoncompliance procedure initiated by acertifying agent is not corrected,remains unresolved, and is notappealed, the certified operation’scertification will be suspended orrevoked. If the certified operation filesan appeal, the action is turned over tothe Program Manager or applicablegoverning State official for furtherresolution. The suspension orrevocation will not become effectiveunless upheld by a ruling on the appeal.

Commenters expressed opposition tothe notification of noncompliance withcertification requirements andtermination of certification provisions ofthe first proposal. Those provisionsrequired a certifying agent to submit tothe Administrator a notice of itsrecommendation to terminate thecertification of a certified operation orany portion of a certified operation ifthe certifying agent had reason tobelieve the operation had ceased tocomply with the Act and regulations.The commenters were opposed to theSecretary assuming authority forsuspension or revocation ofcertification. The commenters statedthat such decisions are the duty andresponsibility of certifying agents, withthe Secretary providing for appeals.Some commenters expressed the beliefthat the certifying agent’s position isundermined by not having authority tosuspend or revoke a certification forcause. Many commenters stated thatcertifying agents must have suchauthority in order to: (1) Achieveproducer and handler compliance withthe regulations; and (2) expedite theenforcement process. They believe thatproviding certifying agents with theauthority to suspend or revoke acertification will preserve the NOP’sintegrity and increase consumerconfidence in the quality of the organicproducts they purchase. Commentersstressed that, in addition to providingprocedures for producer and handlerappeals, the Department provides asystem of checks and balances throughthe accreditation program.

We agree that certifying agents shouldhave an important role to play in thesuspension or revocation of thecertification of production or handlingoperation that they certify. Thisproposal will enhance the certifying

agent’s authority to ensure that anyproduction or handling operation itcertifies is in compliance with the Actand regulations. We also agree thatproviding certifying agents with a moredirect role in suspension or revocationproceedings will shorten thecompliance process.

Accordingly, as noted above, we haveprovided accredited certifying agentswith increased authorities inenforcement proceedings. They willmake determinations to accept or rejectrebuttals submitted in response tonotifications of noncompliance. Theywill be responsible for defending theirdeterminations, which must beconsistent with the position of the NOP,in mediation processes. Finally, theirdecisions to propose suspension orrevocation of producer and handlercertifications will become effectiveunless appealed by the certifiedoperation. Authority for certifyingagents to take enforcement actionsagainst certified operations is found in§ 205.662.

(2) Mediation. We have added a newsection authorizing certified operationsto request mediation of any disputeregarding denial of certification orproposed suspension or revocation ofcertification. This section addresses therequest for mediation, selection of themediator, the time period for reachingan agreement, requirements of anagreement, and appealing anoncompliance decision if mediation isunsuccessful. The parties in theprocedure must make administrativearrangements for the mediation andarrange for payment of any costsinvolved in the mediation. TheDepartment will not finance orparticipate in such mediation. Thisadditional provision is found at§ 205.663.

Commenters requested that theDepartment authorize the use ofalternative dispute resolutionprocedures and mediation. We supportthe idea of using mediation to resolvedisputes with respect to denial ofcertification or proposed suspension orrevocation of certification. Some Statesuse mediation as a component of theirappeal process. We believe mediationcould prove effective in resolving manyof the possible disputes betweenapplicants for certification or certifiedoperations and certifying agents.Without mediation, such disputeswould probably be referred to theAdministrator in the form of appeals.Mediation in some cases, however, maybe of limited value because allagreements reached during mediation oras a result of the mediation processmust be in compliance with the Act,

these regulations, and any policies orprocedures governing the NOP. Whilewe presume a mediated settlement willbe in accordance with the Act, theSecretary has authority to review andoverrule a mediated settlement if theSecretary determines the settlement isnot in accordance with Act and theseregulations.

(3) State certification program.Commenters generally requested thatStates administer and enforce their ownorganic certification programs. We haveadded regulations in these provisionsaddressing States’ enforcement of theirprograms regarding certified producersand handlers operating in the State.These regulations clarify a State’sresponsibility to provide forenforcement and appeal proceedingswhich are consistent with theseregulations and for keeping theSecretary informed of such proceedings.We have added these regulationsbecause we believe that a State musthave the authority to initiatecompliance actions to enforce itsorganic certification program. Theregulations are found at § 205.668.

Regarding accreditation authorities,commenters stated that a Stateprogram’s governing State officialshould have authority to suspend orrevoke the accreditation of privatecertifying agents operating within theState. Sections 6515(j) and 6519(e) ofthe Act address suspension andrevocation of accreditation by theSecretary or governing State official.While the Act may provide for thepossibility of such authority being usedby governing State officials, it alsorequires the Secretary to establish aworkable accreditation program and itgrants sole authority to the Secretary toaccredit certifying agents. Therefore, theSecretary must have sole authority tosuspend or revoke that accreditation.

This does not mean that governingState officials are denied a role inoversight of certifying agents operatingin their States. If a governing Stateofficial believes a certifying agentoperating in the State is not incompliance with the accreditationrequirements of the Act or is notproperly certifying producers orhandlers to NOP and the State’sapproved unique organic certificationrequirements, the governing Stateofficial must investigate the possiblenoncompliance. If evidence ofnoncompliance is found, the governingState official must notify the ProgramManager of such noncomplianceactivities and document those activities.The Program Manager will investigatesuch complaints of noncompliance.



(4) Right of appeal. We have addedthe requirement that any notification ofproposed suspension or revocation mustinclude a notice to the certifiedoperation’s or certifying agent’s of itsright to file an appeal. Commentersrequested that the notification ofproposed suspension or revocationprovisions for certifying agentsreference the appeals section. We agreewith the commenters’ request and addthat all recipients of a notification ofproposed suspension or revocationshould be made aware of their appealrights. Notification of appeal rights isfound in § 205.662 for certifiedoperations and § 205.665 for certifyingagents.

Compliance—Changes Requested ButNot Made


(1) Revocation period. Commentersstated that a 5-year period ofineligibility for certification afterrevocation of certification is too harsh apunishment to apply in all cases. Somecommenters suggested that ‘‘shall not beeligible’’ should be replaced with ‘‘maybe deemed ineligible’’ so that thepenalty provision would be available forflagrant violations of the Act but wouldnot have to be applied to all violations.A commenter suggested a maximumperiod of ineligibility of 3 years beestablished for certified operations. Thecommenter’s justification was thatorganically produced agriculturalproducts must be produced on land towhich no prohibited substances havebeen applied for 3 years prior to harvest.This commenter also stated that theineligibility waiver should be a localdecision with notice to theAdministrator.

Section 6519(c) of the Act requirescertification ineligibility for 5 yearsunless reduced or eliminated by theSecretary. Revocation of a certificationis a serious action subject to due processfor the accused certified producer orhandler. We believe that anynoncompliance action, combination ofnoncompliance actions, or history ofnoncompliance activities deemed towarrant the revocation of certificationalso warrants ineligibility fromcertification for 5 years unless reducedor eliminated by the Secretary. If thenoncompliance is not significantenough to warrant revocation of theoperation’s certification, the certifyingagent, State program’s governing Stateofficial, or Secretary may choose tosuspend the operation’s certification fora period of time less than the 5-yearrevocation period. We disagree with the

suggestion that ineligibility waiversshould be decided at the local level.Actions which are finalized by thegoverning State official, Administrator,or Secretary cannot be subject toreversal or waivers by certifying agents.Additionally, a national program suchas this must have uniformity inapplication, which would be less likelyif individual certifying agents werepermitted to establish their own criteriafor ineligibility waivers. Accordingly,the ineligibility and waiver provisionsare unchanged in this proposal.

(2) Accreditation sanctions.Commenters stated that suspension andrevocation of accreditation should beapplied fairly to both private and Statecertifying agents. Governing Stateofficials do not have any accreditationauthorities under this proposal—whichmay reduce private certifying agents’concerns of unfair or unequal treatment.Accreditation compliance actions by theProgram Manager and the Administratorwill be conducted impartially and inaccordance with the AdministrativeProcedure Act and Department policies.

Revocation would be based on adetermination that a private certifyingagent willfully violated the Act or theseregulations or falsely or negligentlycertified a production or handlingoperation as an organic operation. TheAct does not authorize the revocation ofa State certifying agent’s accreditation.However, because suspension of suchentity can be established for any periodof time, a suspension can be effectivelyequivalent to a revocation ofaccreditation. Accordingly, thisproposal retains the provisions for thesuspension of accreditation for privateand State certifying agents and therevocation of accreditation for privatecertifying agents.

Compliance—Additional Provisions

Upon further review of theaccreditation provisions in the firstproposal, we have decided to proposethe following additions and changes.

(1) Enforcement rights of theSecretary. We have added a generalsection addressing specific enforcementrights of the Secretary. First, this sectionclarifies that the Program Manager onbehalf of the Secretary and theAdministrator may inspect and reviewState organic certification programs,accredited certifying agents, andcertified production or handlingoperations for compliance with the Actor regulations. The Program Managerhas this oversight authority in Stateswith State organic certificationprograms as well as in States withoutsuch programs.

Second, this section provides that theProgram Manager may initiateproceedings to suspend or revoke acertified operation’s certification when acertifying agent or governing Stateofficial fails to take appropriateenforcement action against a certifiedoperation that is not in compliance withthe Act or these regulations. We haveadded this provision because thisproposal provides certifying agents andgoverning State officials withenforcement authorities, including thesuspension and revocation ofcertifications. However, we believe theSecretary, through the ProgramManager, must have authority to takesuch actions if a certifying agent orgoverning State official fails to carry outits responsibilities.

Third, this section provides that theProgram Manager may initiateproceedings to suspend or revoke acertified operation’s certification uponsuspension or revocation of theoperation’s certifying agent’saccreditation. We have added thisprovision to enable the ProgramManager to suspend or revokecertification of any operation that acertifying agent certified followingprocedures or practices that are not incompliance with the Act or theseregulations. This addition is found at§ 205.660.

(2) Certifying agent investigations. Wehave added a section to clarify thatcertifying agents may investigatecomplaints of noncompliance with theAct or regulations concerningoperations that they have certified. Thissection does not authorize a certifyingagent to investigate certified operationsthat the certifying agent has notcertified. Such complaints should bereported to the certifying agent thatcertifies the operation in question. Thisaddition is found at § 205.661.

(3) Certified operation rebuttals. Wehave added a certified operation’s rightto rebut any noncompliance describedin a notice of noncompliance. Webelieve this provision is necessary toclarify that certified operations shouldbe able to present facts or argumentsrefuting the certifying agent’s findings.We see this as an informal processbetween the certified operation and thecertifying agent to clarify possiblemisunderstandings or misinterpretationof requirements, data, or information.The APA requires such opportunitiesprior to suspension or revocation.Certified operations that successfullyrefute a finding of noncompliance willreceive a notification of noncomplianceresolution. Any certified operationunable to successfully refute a finding ofnoncompliance must correct the



noncompliance or face possiblesuspension or revocation of itscertification. This addition is found at§ 205.662(a)(3).

(4) Certifying agent rebuttals. We alsohave added a certifying agent’s right torebut any accreditation noncompliancedescribed in a notice of noncomplianceissued by the Program Manager. Thisalso will be an informal process and isconsistent with the intent of the APA.We believe this provision is necessary toclarify that certifying agents should beable to present facts or argumentsrefuting the Program Manager’sfindings. Certifying agents thatsuccessfully refute a finding ofnoncompliance will receive anotification of noncomplianceresolution. Any certifying agent unableto successfully refute a finding ofnoncompliance must correct thenoncompliance or face possiblesuspension or revocation of itsaccreditation. This addition is found at§ 205.665(a)(3).

(5) Willful noncompliance. We havealso added authority for certifyingagents and governing State officials tomove directly to a notice of proposedrevocation if a certificationnoncompliance is a willful, seriousviolation of these regulations. This willallow expedited action in dealing withserious violations of certification. Thedue process provisions of the APAprovide an exception in cases of willfulviolations. Even though anoncompliance may be a willful act, thecertified operation maintains the right tofile an appeal of a proposed suspensionor revocation of certification.Revocation of certification is reservedfor serious instances of willfulnoncompliance and other seriousviolations. If a suspected willfulviolation is deemed not serious, aproposed suspension of certificationrather than revocation may be issued.

Inspection and Testing, Reporting, andExclusion From Sale

This portion of subpart G sets forththe inspection and testing requirementsfor agricultural products that have beenproduced on organic productionoperations or handled through organichandling operations.

Based on comments receivedregarding the first proposal, we havemodified and restructured our residuetesting requirements. Commenters wereconcerned about the cost of residuetesting to certified operations andcertifying agents, the determination ofdetectable levels of prohibitedsubstances, and the exclusion ofcontaminated products from sale asorganically produced.

Residue testing plays an importantrole in organic certification by providinga means for monitoring compliance withthe National Organic Program (NOP)and by discouraging the mislabeling ofagricultural products. This testingprogram provides State programs’governing State officials and certifyingagents with a tool for ensuringcompliance with three areas for testing:(1) Preharvest residue testing, (2)postharvest residue testing, and (3)testing for unavoidable residualenvironmental contamination levels.

Proposal DescriptionUnder the residue testing

requirements of the NOP, we proposethat all agricultural products sold,labeled, or represented as organicallyproduced be available for inspection bythe Administrator, State program’sgoverning State official, or certifyingagent. Organic farms and handlingoperations must be made available forinspection under proposed Subpart E,Certification. In addition, products fromthe aforementioned organic operationsmay be required by the State program’sgoverning State official or certifyingagent to undergo preharvest orpostharvest testing when there is reasonto believe that agricultural products tobe sold or labeled as organicallyproduced have come into contact withprohibited substances. The cost of suchtesting will be borne by the applicablecertifying party and is considered a costof doing business. Accordingly,certifying agents should makeprovisions for the cost of preharvest orpostharvest residue testing whenstructuring certification fees.

Preharvest and Postharvest ResidueTesting. The main objectives of theresidue testing program are to: (1)Ensure that certified organic productionand handling operations are incompliance with the requirements setforth in this proposal; and (2) serve asa means for monitoring drift andunavoidable residue contamination ofagricultural products to be sold orlabeled as organically produced. Anydetectable residues of a prohibitedsubstance found in or on samplesduring chemical analysis will serve as awarning indicator to the State program’sgoverning State official or certifyingagent.

The request for preharvest orpostharvest residue testing is based onthe Administrator’s, State program’sgoverning State official’s, or certifyingagent’s belief that an agriculturalproduct has come into contact with oneor more prohibited substances. The‘‘reason to believe’’ could be triggeredby various situations, for example: (1)

The applicable authority receivingformal written complaint regarding thepractices of a certified organicoperation; (2) an open container of aprohibited substance found on thepremises of a certified organicoperation; (3) the proximity of acertified organic operation to a potentialsource of drift; (4) suspected soilcontamination by historically persistentsubstances; or (5) when the productfrom a certified organic operation isunaffected when neighboring fields orcrops are infested with pests. Thesesituations do not represent all of thepossible occurrences that would triggeran investigation. Preharvest orpostharvest residue testing will occur ona case-by-case basis.

In each case, an inspectorrepresenting the Administrator,certifying agent, or State program’sgoverning State official will conductsampling. Testing for chemical residuesmust be performed in an accreditedlaboratory, defined as a laboratory thathas met and continues to meet therequirements specified in the Food,Agriculture, Conservation, and TradeAct of 1990 (7 U.S.C. 138) (FACT Act)for pesticide residue analyses of freshfruit and vegetables and/or pesticideanalysis of products derived fromlivestock and fowl. AMS is currentlydeveloping a regulation for the NationalLaboratory Accreditation Program(NLAP), which will accredit laboratoriesunder the FACT Act. We expect that theNLAP will be implemented before or atthe same time as the NOP. Whenconducting chemical analyses, thelaboratory must incorporate theanalytical methods described in the16th edition of the Official Methods ofAnalysis of the AOAC International orother applicable validated methodologyfor determining the presence ofcontaminants in agricultural products.

When testing indicates that anagricultural product to be sold orlabeled as organically producedcontains residues of prohibitedsubstances, certifying agents willcompare the level of detected residueswith a national mean of detection forthe specific commodity/pesticidecombination generated by the U.S.Department of Agriculture’s (USDA)Pesticide Data Program (PDP). Thisnational mean is defined as the meanlevel of detected pesticide residues asdescribed in certain pesticide/commodity pairs or combinationsestablished by USDA’s Pesticide DataProgram. The national mean for specificcommodity/pesticide combinations willserve as a standard for theAdministrator, State programs’governing State officials, and certifying



agents to assist in monitoring for illegaluse violations. This information will bemade available by USDA to aid Stateprograms’ governing State officials andcertifying agents in making soundevaluations and decisions regardingdetected levels of prohibited substances.

In addition, levels of unavoidableresidual environmental contaminationwill be determined for crop-and site-specific agricultural commodities to besold, labeled, or represented as ‘‘100percent organic,’’ ‘‘organic,’’ or ‘‘madewith organic (specified ingredients).’’These levels will represent limits atwhich the Department may takecompliance action to suspend the use ofthe contaminated area for organicagricultural production. Initially,unavoidable residual environmentalcontamination levels will be set forpersistent prohibited substances (aldrin,dieldrin, chlordane, DDE, etc.) in theenvironment. In time, they may becomemore inclusive of prohibited residues asadditional information becomesavailable. Unavoidable residualenvironmental contamination levelswill be based on the unavoidability ofthe chemical substances and do notrepresent permissible levels ofcontamination where it is avoidable.Historical residue data gathered fromFederal and State monitoring andtesting programs will be used todetermine these levels. They will be setby the Administrator, in consultationwith the Food and Drug Administration(FDA) and Environmental ProtectionAgency (EPA).

After all tests and analyses have beenconcluded, the results must be providedto the Administrator. The results ofanalyses and tests will be available, kepton record, and reviewed by theDepartment to evaluate concentrationlevels of prohibited substances forspecific regions and agricultural crops.Analyses and test results will also beavailable for public access, unless theresidue testing is part of an ongoingcompliance investigation. Informationrelative to an ongoing complianceinvestigation will be confidential andrestricted to the public.

Detection of Prohibited Substances. Inthe case of residue testing and thedetection of prohibited substances in oron agricultural products to be sold,labeled, or represented ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients),’’detectable residues of prohibitedsubstances that exceed the nationalmean of detection for the respectivecommodity/pesticide combination orunavoidable residual contaminationlevels cannot be sold or labeled asorganically produced. When such an

agricultural crop is in violation of theserequirements, the certification of thatcrop will be suspended for the periodthat the crop is in production. Certifyingagents must follow the requirementsspecified in §§ 205.662 and 205.663 ofSubpart G, Compliance. In addition,when a State program’s governing Stateofficial or a certifying agent detects aprohibited substance in or onagricultural products to be sold orlabeled as organically produced, theState program’s governing State officialor certifying agent may conduct aninvestigation to determine the cause ofthe prohibited substance.

If the investigation into the cause ofa detectable residue level in a productindicates that the residue was the resultof an intentional application of aprohibited substance, the Administratoris authorized to initiate proceedings torevoke or suspend the certificationstatus of an operation or portion of thatoperation. When testing indicates thatan agricultural product containsprohibited substances that exceed eitherthe EPA tolerance level or FDA actionlevel, as applicable, for the prohibitedsubstance, the data revealing suchinformation will be promptly reportedto the appropriate regulatory healthagencies.

Emergency Pest Eradication orDisease Treatment Programs. When aprohibited substance is applied to anorganic production or handlingoperation due to a Federal or Stateemergency pest eradication or diseasetreatment program and the organichandling or production operationotherwise meets the requirements of thisproposal, the certification status of theoperation shall not be affected as aresult of the application of theprohibited substance, provided that: (1)Any harvested crop or plant part to beharvested that has contact with aprohibited substance applied as theresult of a Federal or State emergencypest eradication or disease treatmentprogram cannot be sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients)’; and (2) anylivestock that are treated with aprohibited substance applied as theresult of a Federal or State emergencypest or disease treatment program orproduct derived from such treatedlivestock cannot be sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients).’’

However, milk or milk products maybe labeled or sold as organicallyproduced beginning 12 monthsfollowing the last date that the dairyanimal was treated with the prohibited

substance. Additionally, the offspring ofgestating mammalian breeder stocktreated with a prohibited substance maybe considered organic if the breederstock was not in the last third ofgestation on the date that the breederstock was treated with the prohibitedsubstance.

Residue Testing—Changes Based onComments

This portion of subpart G differs fromour first proposal in several respects asfollows:

Residue Testing. (1) We have revisedthe first proposal’s section on residuetesting and repositioned it under§ 205.670(b).

Commenters disagreed with theprovisions in the first proposal whichrequired certifying agents to conductresidue testing of products producedand handled on operations that they hadcertified not less frequently than every5 years. They stated that the firstproposal’s requirements for residuetesting: (1) Were in excess of what theAct actually requires; (2) were morestringent than that of the industry norm;(3) would create an unnecessary burdenon certifying agents and organicproduction and handling operations;and (4) would increase costs forcertified production and handlingoperations. The commenters stated thatthe NOP’s residue testing requirementsshould utilize existing Federal and Statetesting programs for the detection ofpesticide residues. They also stated thatresidue testing should only be requiredwhen it is known or suspected thatprohibited substances have beenapplied to organic products.

We disagree with the commenters’assertions regarding the first proposal’srequirements for residue testing.However, in an attempt to minimize theburdens of residue testing, we haveproposed that State programs’ governingState officials and certifying agents maytest agricultural inputs used for organicproduction and require preharvest orpostharvest testing of any agriculturalproduct to be sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients)’’ when there isreason to believe that the agriculturalproduct has come into contact withprohibited substances. This changeallows State programs’ governing Stateofficials and certifying agents to performpreharvest and postharvest residuetesting on a case-by-case basis.

Commenters requested that the rulespecify which laboratories areauthorized to perform residue testingand what tests each laboratory would beaccredited to perform. We have defined



an accredited laboratory as a laboratorythat has met and continues to meet therequirements specified in the Food,Agriculture, Conservation, and TradeAct of 1990 (7 U.S.C. 138) for pesticideresidue analyses of fresh fruit andvegetables and/or pesticide residueanalysis of products derived fromlivestock and fowl. Any laboratory thatmeets the specified requirementstherein may be used in conductingresidue tests. We have required thataccredited laboratories be used toensure consistency among data, testingmethodology, reporting procedures, andother testing criteria needed to maintainanalytical uniformity in the residuetesting program. Validated analyticalmethodologies for determining thepresence of contaminants in agriculturalproducts, such as those described in the16th edition of the Official Methods ofAnalysis of the AOAC International,may be used.

Tolerance Levels for PesticideResidues. (2) We have prohibited thesale and labeling of agriculturalproducts as organic when such productshave been tested for prohibitedsubstances and found to containresidues of prohibited substances atlevels greater than the national mean ofdetection for the specific commodity/pesticide combination or levels greaterthan the unavoidable residualenvironmental contamination. Suchagricultural products cannot be sold,labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients).’’ TheAdministrator, State program’sgoverning State official, or certifyingagent may conduct an investigation ofthe applicable production or handlingoperation to determine the cause of thepresence of any prohibited substance. Ifthe investigation reveals that thepresence of a prohibited substance wasthe result of intentional application ofthe prohibited substance, theAdministrator may initiate proceedingsto suspend or revoke the production orhandling operation’s certification.

(3) Commenters suggested that USDAadopt a uniform standard for themaximum allowable residue levels.Some commenters expressed the beliefthat it is impractical or too expensive toestablish site-specific, unavoidableresidual environmental contaminationlevels for every commodity/pesticidecombination in every growing area.Others argued that the cause ofcontamination is irrelevant and thatcrops that exceed the maximum residuelevels should not be allowed to be soldas organic. Finally, others argued that asingle standard was needed becausecontaminated products would not be

removed from the market immediately,pending determination of cause.

Organic standards, includingprovisions governing prohibitedsubstances, are based on the method ofproduction, not the content. Theprimary purpose of the residue testingapproaches described in this proposal,then, is to provide an additional tool forState programs’ governing State officialsand certifying agents to use inmonitoring and ensuring compliancewith the NOP. We acknowledge thatconsumers have a reasonableexpectation that organic products willcontain minimal residues of prohibitedsubstances. We are not allowing the useof prohibited substances. We are makingprovisions for the unavoidableoccurrences of prohibited substanceswhile ensuring that residue levels areconsistent with consumer expectations.

This proposal adopts PDP’s nationalmeans of detected residue for specificcommodity/pesticide combinations andthe unavoidable residual environmentalcontamination levels. Both standardshave been adopted for the purpose ofdetermining excessive prohibitedsubstances on agricultural products tobe sold, labeled, or represented as ‘‘100percent organic,’’ ‘‘organic,’’ or ‘‘madewith organic (specified ingredients).’’

The national mean of detected residuefor a specific commodity/pesticidecombination is derived from detectionsin the PDP monitoring program. As aresult of mean values being based onconventional substances, we believethat residue values that fall above thismean, then, would be beyondreasonable consumer expectations forminimal residues. The situation is verysimilar with respect to unavoidableresidual environmental contaminationlevels. Even though the presence ofresidues of certain persistent substancesmay not be the result of intentionalapplication, we believe that excessiveresidue levels would not be consistentwith the intentions of the Act.Accordingly, when levels of a persistentsubstance are detected above theunavoidable residual environmentalcontamination level, the product cannotbe sold or labeled as organicallyproduced.

Some commenters suggested that weuse a percentage of the EPA tolerance ofFDA action level, such as 5 or 10percent, as a uniform standard for themaximum allowable residue level. Weconsidered the comments but decidednot to adopt them for the followingreasons. The EPA tolerances forpesticides are defined as the maximumlegal level of a pesticide residue in or ona raw or processed agriculturalcommodity, as set by the Environmental

Protection Agency under the FederalFood Drug and Cosmetic Act, section408. FDA action levels represent limits,at or above which FDA will take legalaction against a food product to preventpoisonous or deleterious substancesfrom entering the food supply. BothEPA tolerances and FDA action levelsare public health-based standards. Ourrationale for residue testing, as a tool forState programs’ governing State officialsand certifying agents to monitorcompliance with the NOP, is differentfrom these public health programs.

Accepting a percentage of EPAtolerance or FDA action levels couldalso pose a significant problem foranalytical laboratories trying to analyzefor prohibited substances. In somecases, pesticides have tolerances that areset near their analytical method’s Limitof Quantification (LOQ). The LOQ isdefined as the lowest level whereanalytical measurement becomesquantitatively meaningful. If the EPAtolerances are near the analyticalmethod LOQ’s, accurate determinationof the levels at 5 to 10 percent of thetolerance may not be attainable foranalytical instrumentation currentlyemployed. Therefore, the Departmentcould be setting a level of concernbelow the LOQ for some substances if itadopted this recommendation. As afundamental principle, we have chosennot to set an enforcement level thatcould be below detection limits forsome substances. As an alternative, weare proposing to use the PDP nationalmean of detected residues for specificcommodity/pesticide combinations.

Other commenters suggested thatUSDA adopt a ‘‘zero tolerance’’ forresidues of prohibited substances.Under this suggestion, productscontaining any detectable residues of aprohibited substance would not beallowed to be labeled as organicallyproduced. This proposal does not adoptthis suggestion. While standards strictlyprohibit use of any substance not foundon the approved National List, werecognize that some minimal residuesmay still be found in organic foods. Webelieve our proposed residue testingsystem and compliance provisionsshould be adequate to protect theintegrity of agricultural products sold,labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients).’’

Several commenters expressedopposition to the first proposal notrequiring residue testing in the event ofdrift. These commenters stated thatorganic producers should report allincidences of drift to their certifyingagent. The commenters further statedthat a crop should be tested for the



presence of prohibited substances whendrift has or is suspected to haveoccurred. They also stated that when thetest indicates levels of residues ofprohibited substances that exceed 5percent of the EPA tolerance level, thecrop should be prohibited from beingsold or labeled as organically produced.

In response to commenters’ concernabout contamination from drift, we haveused some of their reasoning in thedevelopment of our residue testingprogram. Drift is defined as the physicalmovement of prohibited substancesfrom the intended target site onto anorganic production operation or anyportion thereof. The National OrganicStandards Board (NOSB or Board)recommended that agricultural productsexposed to drift not be sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients)’’ or fed tolivestock on organic operations. TheNOSB also recommended thatpreharvest tissue testing of cropssuspected of receiving drift be requiredto verify the presence or absence ofprohibited substances. This proposaladdresses the problem of drift throughthe use of preharvest testing of cropssuspected of receiving drift of aprohibited substance. Although driftmay occur, especially in thoseagricultural regions where pesticide useon nonorganic lands is routine andheavy, exposure to drift does notconstitute use of a prohibited substance.Therefore, preharvest testing provisionshave been established for Stateprograms’ governing State officials andcertifying agents to test when there is areason to believe that agriculturalproducts intended to be sold or labeledas organically produced have come intocontact with prohibited substances. Thiswill allow a State program’s governingState official or certifying agent todetermine whether the integrity of theproduct has been affected. We believeour proposed residue testing programand compliance provisions should beadequate to protect the integrity ofagricultural products.

Residue Testing—Changes Requestedbut Not Made

(1) The original proposal providedthat land subject to a Federal or Stateemergency disease or pest treatmentprogram should not lose its organiccertification and should not be requiredto be withheld from organic productionfor a period of 3 years. A fewcommenters stated that a field treatedunder such emergency situations shouldlose its certification and should berestricted for organic use for 3 yearsfollowing the emergency treatment. The

commenters stated this is necessary tomaintain consumer confidence inorganically produced products. Webelieve the first proposal is consistentwith the requirements of the Act. Theproposal provided that crops andlivestock that had contact or beentreated with a prohibited substanceunder such an official emergencytreatment program could not be sold orlabeled as organic. This proposal retainsthat prohibition.

Commenters suggested that producerswork with the Federal or State agencywhich requires an emergency treatmentprogram and arrange for use of materialsthat are compatible with organicproduction. While this may be possibleunder certain emergency treatmentsituations, it cannot be relied on as asolution to every emergency treatmentsituation. Appropriate alternativetreatments may not be available, or thejurisdiction requiring the emergencyprogram may not grant alternativetreatments. Commenters also suggestedthat producers avoid planting crops thatmight be subject to pests or diseasestargeted by emergency treatmentprograms to avoid emergencytreatments. We do not believe that is areasonable solution for producers.Emergency treatment programs are usedin response to unforeseen infestationsand diseases. Only hindsight wouldhelp organic producers determinewhich crops to produce. Further, thepossibilities of damaging insectinfestations or plant or animal diseaseswarranting an emergency treatmentprogram are so numerous that anorganic producer could be left with fewor no alternative crops or livestock toproduce. Cultural conditions andmarket factors also would limitselection of alternative organicproduction. Accordingly, thecommenters’ recommendation that lossof organic certification and an automatic3-year prohibition on organicproduction from land or livestocktreated under an official emergencytreatment program is not accepted.

Residue Testing. (2) Commenterssuggested that some of the responsibilityof residue testing be removed fromcertifying agent responsibilities. Theyalso suggested that residue testingrequirements take into account currentFederal and State testing requirementsalready in place for the detection ofpesticide residues.

We have not adopted language thatthe Department would use currentFederal and State testing requirementsfor the detection of pesticide residues inthe residue testing program. AlthoughState and Federal testing provide goodsources of data on pesticide residues,

the data may reflect criteria developedfor different sampling purposes,showing wide variations in sampleselection and indicating differentlaboratory capabilities and differentlevels of quantification between andwithin laboratories.

Residue Testing—Additional ProvisionsSection 205.670(a) has been added. It

provides that the Administrator, theState program’s governing State official,and the applicable certifying agent haveaccess, for inspection purposes, to allagricultural products being sold,labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients).’’ Inaddition, the organic products must bemade available for examination by saidauthorities in the manner that theyprescribe.

Public comments did not suggest thisaction. However, we believe it isnecessary to officially grant theAdministrator, the State program’sgoverning State official, and theapplicable certifying agent the authorityto access all agricultural productssubject to inspection under this section.This authority will help resolveconflicts that may arise regardingproduct accessibility during inspectionand testing.

Adverse Action Appeal Process. Thisportion of subpart G sets forth thegeneral framework for an appeal processfor persons subject to compliancedeterminations under the NationalOrganic Program (NOP). In thisproposal, we are empowering certifyingagents with the authority to makedecisions concerning denial ofcertification and the suspension orrevocation of certified operations. Thisempowerment of certifying agentsmakes the appeal process veryimportant.

We envision two kinds of appeals willbe filed under these procedures: (1)Producers and handlers appealingdenial of certification and proposedsuspension and revocation ofcertification decisions by certifyingagents; and (2) certifying agentsappealing denial of accreditation andproposed suspension and revocationdecisions by the NOP Program Manager.The Administrative Procedure Act(APA) (5 U.S.C. 553–559) provides thatentities such as certified operations andaccredited certifying agents have theright to appeal any adverse actionstaken against their certification oraccreditation, respectively. Applicantsfor certification and applicants foraccreditation who receive a denial ofcertification or accreditation may appealthat denial following this appeal



procedure. The appeal process is thesame for applicants as for certifiedoperations and accredited certifyingagents.

The informal appeal processdescribed in this section is an extensionof the noncompliance proceedingoutlined in the Compliance section ofthis subpart.

For certification proceedings, the NOPand the Administrator will overseecompliance proceedings and handlecertification appeals from operations inStates that do not have an approvedState organic certification program. TheAdministrator will issue decisions tosustain or deny appeals. If an appeal isdenied, the Secretary will initiate aformal administrative review process,which includes a hearing before anadministrative law judge and review bythe Department’s Judicial Officer. Theformal administrative review processwill be conducted pursuant to theDepartment’s Uniform Rules of Practice,7 CFR 1.130 through 1.151. The formaladministrative review will be theDepartment’s final determination on thenoncompliance proceeding. Thatdecision may be appealed to the DistrictCourts. This section addresses theinformal appeal process which is usedto arrive at the Administrator’s decisionto sustain or deny an appeal.

In States with approved State organiccertification programs, the governingState official or designee will overseecertification compliance proceedingsand handle appeals from certifiedoperations in the State. The governingState official or designated appealsofficial will rule on appeals filed undera State organic certification program.Further appeal of that decision may bemade to the district court system.

Proposal DescriptionThese appeal procedures provide that

persons subject to the Act who believethat they are adversely affected by anoncompliance decision of a certifyingagent, Program Manager, or governingState official may appeal such decisionto the Administrator or to the applicableState’s appeal process. UnderCompliance provision in this subpart,accredited certifying agents initiatenoncompliance proceedings. If anappeal of a certification decision isfiled, the process is referred to theAdministrator or governing State officialor designee, as applicable, to the Statewhere the applicant or certifiedoperation resides.

Certification AppealsApplicants for certification may

appeal a certifying agent’s denial ofcertification. Certified operations may

appeal a certifying agent’s notificationof proposed suspension or revocation ofthe operation’s certification. Theseappeals will be made to theAdministrator or to the applicablegoverning State official or designatedofficial in the approved State organiccertification program.

Certification appeals may be filedonly after an applicant or a certifiedoperation has been given opportunity tocome into compliance with theseregulations or otherwise resolve thespecified noncompliance. Prior to filingan appeal, the applicant or certifiedoperation must have failed in rebuttal,refused to make specified corrections, ormade corrections which the certifyingagent subsequently determined to notmeet certification requirements of theNOP.

If the Administrator or governingState official sustains an appeal, theapplicant or certified operation will begranted certification or continuedcertification, as applicable to theoperation’s status. The applicant orcertified operation will not be requiredto correct the actions or conditions citedin the noncompliance notification. Theact of sustaining the appeal will not beconsidered an adverse action and maynot be appealed by the certifying agentwhich issued the notification.

If the Administrator or governingState official denies an appeal, a formaladministrative proceeding will beinitiated to deny, suspend, or revoke thecertification. Such proceeding will beconducted pursuant to the Department’sUniform Rules of Practice or pursuant tothe State’s formal appeal procedures.Certified operations may continue tooperate throughout this informalappeals process and the formaladministrative proceedings.

Accreditation AppealsPursuant to § 205.665 of this subpart,

all accredited certifying agents aresubject to the Program Manager’s reviewof their operations and anynoncompliance actions resulting fromsuch reviews. As provided in § 205.668,a State program’s governing Stateofficial must advise the ProgramManager if an investigation of acertifying agent reveals that thecertifying agent is not in compliancewith the Act or these regulations. Theappeal process for applicants is thesame as for accredited certifying agents.

An appeal may be filed with theAdministrator only after the certifyingagent fails to rebut the noncompliancenotice and fails to correct thenoncompliance specified. If theAdministrator sustains an appeal, theapplicant or certified operation will be

granted certification or continuedcertification, as applicable to theoperation’s status. The applicant orcertified operation will not be requiredto correct the actions or conditions citedin the compliance notification. If theappeal is denied, a formaladministrative proceeding will beinitiated to deny, suspend, or revoke theaccreditation.

The certifying agent may continue tooperate as a certifying agent throughoutthe informal appeals process and theformal administrative proceeding.

All appeals to the Administrator mustbe filed in writing and sent to:Administrator, USDA–AMS, Room3071–S, PO Box 96456, Washington, DC20090–6456. An appeal must include acopy of the adverse decision to bereviewed and a statement of theappellant’s reasons for believing that thedecision was not proper and not madein accordance with applicable programregulations, policies, or procedures. Acertified operation must send a copy ofits appeal, to its certifying agent. Allwritten communications betweenparties involved in appeal proceedingsmust be sent to the recipient’s place ofbusiness by a delivery service whichprovides dated return receipts. Appealsunder a State’s procedure will be filedpursuant to the State’s appeal process,which should include addresses andfiling periods, etc.

An appeal must be filed within thetime provided in the letter ofnotification or at least 30 days from thedate of receipt of the notice to deny,suspend, or revoke certification oraccreditation. The appeal will beconsidered ‘‘filed’’ on the date receivedby the Administrator or, whenapplicable, the State program’sgoverning State official or such official’sdesignee. The Administrator will notifythe appellant and the appellant’scertifying agent that the appeal wasreceived. Unless appealed in a timelymanner, a notification to deny, suspend,or revoke a certification or anaccreditation will become final. Theapplicant, certified operation, orcertifying agent that does not file anappeal in the time period providedwaives the right to further appeal of thecompliance proceeding.

Appeals—Changes Based On CommentsThese appeal regulations differ from

our first proposal as follows:(1) Decision-making. We have

clarified who will be making decisionsthat may be appealed to theAdministrator. This proposal providesthat persons subject to the Act who,during noncompliance proceedingsdescribed in this subpart, believe that



they are adversely affected by anoncompliance decision of a certifyingagent, Program Manager, or governingState official may appeal such decisionto the Administrator or the State’sdesignated appeals official. Thisclarification is found in § 205.680.

Commenters stated that the proposedappeals procedures limited appeals todecisions of the NOP staff. Commentersrequested that the appeals proceduresbe available for decisions by theSecretary, any representative of theSecretary, and decisions by anycertifying agent. What we meant in thefirst proposal was that appeals would befiled on decisions made by the ProgramManager and certifying agents.

As noted above, we are empoweringcertifying agents to make decisionsconcerning denials of certification andsuspension or revocation of certifiedoperations’ certifications. Certifyingagents accredited under this program acton behalf of the Secretary and theAdministrator to carry out certificationservices, including noncomplianceactions. The Administrator ordesignated governing State official willmake decisions to either sustain or denyappeals by certification applicants andcertified operations, as applicable to theState.

The Program Manager will makedecisions to deny applications foraccreditation and to suspend or revokecertifying agents’ accreditations. TheAdministrator will make all decisions toeither sustain or deny appeals byaccreditation applicants and certifyingagents.

(2) Appeal procedures. Commentersrequested detailed appeal procedures orthe use of citations to identify existingDepartmental appeal procedures whichwould be used for appeals filed underthis program. We acknowledge that thefirst proposal lacked detailed appealsprovisions. However, we believe thisexplanation is more informative andhelpful for the commenters. The formaladministrative procedure following theDepartment’s Uniform Rules of Practiceis required under the APA. The rules ofpractice are not included in individualrulemaking actions but may be foundunder 7 CFR 1.130 through 1.151. Thecombination of this informal appealprocedure followed by the formaladministrative proceeding assuresapplicants, certified operations, andaccredited certifying agents that theywill be given full opportunity torespond to any noncomplianceproceeding brought against theirapplication or operation. IndividualState programs will have their own,approved appeal procedures.

Commenters also recommended thatthe Department should use anindependent USDA appeals division toavoid conflict of interest by the ProgramManager or the Administrator in thehandling of appeals. We believe thisproposed appeal procedure ensures thatappeals will be administered by personsnot involved in the decision beingappealed. This appeals procedure isconsistent with the requirements of theAPA.

Paragraph (a)(1) of § 205.681 providesthat if the Administrator sustains anapplicant’s or certified operation’sappeal of a certifying agent’snoncompliance decision, the act ofsustaining the appeal shall not be anadverse action subject to appeal by theaffected certifying agent. We haveincluded this provision because, asnoted above, certifying agents areaccredited by the Secretary to providecertification services as agents of theSecretary and the Administrator.Therefore, if the Administratoroverrules a decision of an accreditedcertifying agent, that certifying agentcannot request an appeal of theAdministrator’s decision.

Appeals—Changes Requested But NotMade

None.

Appeals—Additional Provisions(1) State appeals procedures. We are

proposing that appeal proceedings inStates with organic certificationprograms approved by the Secretary willbe carried out in accordance with theofficial administrative appealproceedings in each State. A State’sappeal process will be included as partof the State’s organic certificationprogram. Because a State’s appealprocedure is approved by the Secretary,the final determination for acertification appeal arrived at under thatprocedure is considered to have theeffect of a decision by the Secretary.Approved State appeal processes areunique to each State and are notincluded in this regulation.

Certification appeals are made to theState program’s governing State officialor such official’s designee. Thegoverning State official or designee willadminister the appeal pursuant toappeal procedures which have beenapproved by the Secretary. Rulings onsuch appeals, as noted in § 205.668, maynot be appealed to the Secretary. Thecertification applicant or certifiedoperation may make subsequent appealto the Court of Appeals of the UnitedStates for the circuit in which suchapplicant or certified operation carrieson business or in the United States

Court of Appeals for the District ofColumbia Circuit.

(2) Accreditation appeals. Thisproposal provides that the ProgramManager carries out all complianceproceedings on accredited certifyingagents. The Secretary has sole authorityfor accrediting certifying agents and,therefore, must retain sole authority forsuspending or revoking thataccreditation. A State program’sgoverning State official must investigateany complaints of noncompliance onthe part of a certifying agent operatingin the State. If noncompliance activitiesor conditions are found, the governingState official must notify the ProgramManager of those compliance violationsor suspected compliance violations.

MiscellaneousSection 205.690 provisions the Office

of Management and Budget controlnumber assigned to the informationcollection requirements of theseregulations. Sections 205.691 through205.699 are reserved.

List of Subjects in 7 CFR Part 205Administrative practice and

procedure, Agriculture, Animals,Archives and records, Foods, Imports,Labeling, Organically producedproducts, Plants, Reporting andrecordkeeping requirements, Seals andinsignia, Soil conservation.

For the reasons set forth in thepreamble, it is proposed that Title 7,Chapter I of the Code of FederalRegulations be amended as follows:

1. Parts 205 through 209 which arecurrently reserved in subchapter K(Federal Seed Act), are removed.

2. A new subchapter M consisting ofpart 205 through 209 is added to readas follows:

SUBCHAPTER M—ORGANIC FOODSPRODUCTION ACT PROVISIONS

PART 205—NATIONAL ORGANICPROGRAM


Sec.205.1 Meaning of words.205.2 Terms defined.

Subpart B—Applicability205.100 What has to be certified.205.101 Exemptions and exclusions from

certification.205.102 Use of the term, ‘‘organic.’’205.103 Recordkeeping by certified

operations.205.104 Foreign applicants.205.105–205.199 [Reserved]

Subpart C—Organic Crop, Wild Crop,Livestock, and Handling Requirements

205.200 General.



205.201 Organic production and handlingsystem plan.

205.202 Land requirements.205.203 Soil fertility and crop nutrient

management practice standard.205.204 Seeds and planting stock practice

standard.205.205 Crop rotation practice standard.205.206 Crop pest, weed, and disease

management practice standard.205.207 Wild-crop harvesting practice

standard.205.208–205.235 [Reserved]205.236 Origin of livestock.205.237 Livestock feed.205.238 Livestock health care practice

standard.205.239 Livestock living conditions.205.240–205.269 [Reserved]205.270 Organic handling requirements.205.271 Facility pest management practice

standard.205.272 Commingling and contact with

prohibited substance prevention practicestandard.

205.290 Temporary variances.

Subpart D—Labels, Labeling, and MarketInformation205.300 Use of the term, ‘‘organic.’’205.301 Product composition.205.302 Calculating the percentage of

organically produced ingredients.205.303 Packaged products labeled ‘‘100

percent organic’’ or ‘‘organic.’’205.304 Packaged products labeled ‘‘made

with organic (specified ingredients).’’205.305 Multiingredient packaged products

with less that 50 percent organicingredients.

205.306 Labeling of nonretail containersused for only shipping or storage of rawor processed agricultural productslabeled as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients).’’

205.307 Agricultural products in a formother than packages at the time of retailsale that are labeled or represented as‘‘100 percent organic’’ or ‘‘organic.’’

205.308 Agricultural products in a formother than packages at the time of retailsale that are sold, labeled, or representedas ‘‘made with organic (specifiedingredients).’’

205.309 Agricultural products produced onan exempt production operation.

205.310 USDA Seal.

Subpart E—Certification205.400 General requirements for

certification.205.401 Application for certification.205.402 Review of application.205.403 On-site inspections.205.404 Approval of certification.205.405 Denial of certification.205.406 Continuation of certification.205.407–205.499 [Reserved]


205.500 Areas and duration ofaccreditation.

205.501 General requirements foraccreditation.

205.502 Applying for accreditation.

205.503 Applicant information.205.504 Evidence of expertise and ability.205.505 Statement of agreement.205.506 Approval of accreditation.205.507 Denial of accreditation.205.508 Site evaluations.205.509 Peer review panel.205.510 Annual report, recordkeeping, and

renewal of accredition.205.511–205.599 [Reserved]


The National List of Allowed and ProhibitedSubstances

205.600 Allowed and prohibitedsubstances and ingredients in organicproduction and handling.

≤205.601 Synthetic substances allowed foruse in organic crop production.

205.602 Nonsynthetic substancesprohibited for use in organic cropproduction.

205.603 Synthetic substances allowed foruse in organic livestock production.

205.604 Nonsynthetic substancesprohibited for use in organic livestockproduction. [Reserved]

205.605 Nonagricultural (nonorganic)substances allowed as ingredients in oron processed products labeled as‘‘organic,’’ or ‘‘made with organic(specified ingredients).’’

205.606 Nonorganically producedagricultural products allowed asingredients in or on processed productslabeled as ‘‘organic’’ or ‘‘made withorganic ingredients.’’

205.607 Amending the National List.State Programs205.620 Requirements of State organic

certification programs.205.621 Submission and determination of

proposed State organic certificationprograms and amendments to approvedState organic certification programs.

205.622 Review of approved State organiccertification programs.

Fees205.640 Fees and other charges for

accreditation.205.641 Payment of fees and other charges.205.642 Fees and other charges for

certification.205.643–205.649 [Reserved]Compliance205.660 General.205.661 Investigations of certified

operations.205.662 Noncompliance procedure for

certified operations.205.663 Mediation.205.664 [Reserved]205.665 Noncompliance prodcedures for

certifying agents.205.666–205.667 [Reserved]205.668 Noncompliance procudures under

State organic certification programs.205.699 [Reserved]Inspection and Testing, Reporting, and

Exclusion from Sale205.670 Inspection and testing of

agricultural product to be sold or labeled‘‘organic’’.

205.671 Exclusion from organic sale.205.672 Emergency pest or disease

treatment.

205.673—205.679 [Reserved]Adverse Action Appeal Process205.680 General.205.681 Appeals.205.682—205.689 [Reserved]Miscellaneous205.690 OMB control number.205.691—205.699 [Reserved]

Authority: 7 U.S.C. 6501–6522.


205.1 Meaning of words.

For the purpose of the regulations inthis subpart, words in the singular formshall be deemed to impart the pluraland vice versa, as the case may demand.

205.2 Terms defined.

Accredited laboratory. A laboratorythat has met and continues to meet therequirements specified in the Food,Agriculture, Conservation, and TradeAct of 1990 (7 U.S.C. 138) for pesticideresidue analyses of fresh fruit andvegetables and/or pesticide residueanalysis of products derived fromlivestock and fowl.

Accreditation. A determination madeby the Secretary that authorizes aprivate, foreign, or State entity toconduct certification activities as acertifying agent under this part.

Act. The Organic Foods ProductionAct of 1990, as amended (7 U.S.C. 6501et seq.).

Action level. The limit at or abovewhich the Food and DrugAdministration will take legal actionagainst a product to remove it from themarket. Action levels are based onunavoidability of the poisonous ordeleterious substances and do notrepresent permissible levels ofcontamination where it is avoidable.

Administrator. The Administrator forthe Agricultural Marketing Service(AMS), United States Departure ofAgriculture, or the representative towhom authority has been delegated toact in the stead of the Administrator.

Agricultural inputs. All substances ormaterials used in the production orhandling of organic agriculturalproducts.

Agricultural product. Any agriculturalcommodity or product, whether raw orprocessed, including any commodity orproduct derived from livestock that ismarketed in the United States forhuman or livestock consumption.

Allowed synthetic. A substance that isincluded on the National List ofsynthetic substances allowed for use inorganic production, or handling.

Agricultural Marketing Service (AMS).The Agricultural Marketing Service ofthe United States Department ofAgriculture.



Animal drug. Any drug as defined insection 201 of the Federal Food, Drug,and Cosmetic Act, as amended (21U.S.C. 321), that is intended for use inlivestock, including any drug intendedfor use in livestock feed but notincluding such livestock feed.

Annual seedling. A plant grown fromseed that will complete its life cycle orproduce a harvestable yield within thesame crop year or season in which itwas planted.

Area of operation. The types ofoperations: Crops, livestock, wild-cropharvesting, handling, or anycombination thereof that a certifyingagent may be accredited to certify underthis part.

Audit trail. Documentation that issufficient to determine the source,transfer of ownership, andtransportation of any agriculturalproduct labeled as ‘‘100 percentorganic,’’ the organic ingredients of anyagricultural product labeled as‘‘organic’’ or ‘‘made with organic(specified ingredients)’’ or the organicingredients of any agricultural productcontaining less than 50 percent organicingredients identified as organic in aningredients statement.

Biodegradable. Subject to biologicaldecomposition into simpler biochemicalor chemical components.

Biologics. All viruses, serums, toxins,and analogous products of natural orsynthetic origin, such as diagnostics,antitoxins, vaccines, livemicroorganisms, killed microorganisms,and the antigenic or immunizingcomponents of microorganismsintended for use in the diagnosis,treatment, or prevention of diseases ofanimals.

Breeder stock. Female livestockwhose offspring may be incorporatedinto an organic operation at the time oftheir birth.

Buffer zone. An area located betweena certified production operation orportion of a production operation andan adjacent land area that is notmaintained under organic management.A buffer zone must be sufficient in sizeor other features (e.g., windbreaks or adiversion ditch) to prevent thepossibility of unintended contact byprohibited substances applied toadjacent land areas with an area that ispart of a certified operation.

Bulk. The presentation to consumersat retail sale of an agricultural productin unpackaged, loose form, enabling theconsumer to determine the individualpieces, amount, or volume of theproduct purchased.

Certification or certified. Adetermination made by a certifyingagent that a production or handling

operation is in compliance with the Actand the regulations in this part, whichis documented by a certificate of organicoperation.

Certified operation. A crop orlivestock production, wild-cropharvesting, or handling operation orportion of such operation that iscertified by an accredited certifyingagent as utilizing a system of organicproduction or handling as described bythe Act and the regulations in this part.

Certifying agent. Any entityaccredited by the Secretary as acertifying agent for the purpose ofcertifying a production or handlingoperation as a certified production orhandling operation.

Certifying agent’s operation. All sites,facilities, personnel, and records usedby a certifying agent to conductcertification activities under the Act andthe regulations in this part.

Claims. Oral, written, implied, orsymbolic representations, statements, oradvertising or other forms ofcommunication presented to the publicor buyers of agricultural products thatrelate to the organic certification processor the term, ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients),’’ or, in the caseof agricultural products containing lessthan 50 percent organic ingredients, theterm, ‘‘organic,’’ on the ingredientspanel.

Commercially available. The ability toobtain a production input in anappropriate form, quality, or quantity tofulfill an essential function in a systemof organic production or handling, asdetermined by the certifying agent inthe course of reviewing the organicplan.

Commingling. Physical contactbetween unpackaged organicallyproduced and nonorganically producedagricultural products during production,transportation, storage or handling,other than during the manufacture of amultiingredient product containing bothtypes of ingredients.

Compost. The product of a carefullymanaged process through whichmicroorganisms break down plant andanimal materials into more availableforms suitable for application to the soil.Compost used in an organic operationmust be produced in a facility incompliance with the Natural ResourceConservation Service’s practice standardfor a composting facility (Code 317) andmust use methods to raise thetemperature of the raw materials to thelevels needed to stabilize nutrients andkill pathogens.

Control. Any method that reduces orlimits damage by populations of pests,

weeds, or diseases to levels that do notsignificantly reduce productivity.

Crop. A plant or part of a plantintended to be marketed as anagricultural product or fed to livestock.

Crop residues. The plant partsremaining in a field after the harvest ofa crop, which include stalks, stems,leaves, roots, and weeds.

Crop rotation. The practice ofalternating the annual crops grown on aspecific field in a planned pattern orsequence in successive crop years, sothat crops of the same species or familyare not grown repeatedly withoutinterruption on the same field.Perennial cropping systems employmeans such as alley cropping,intercropping, and hedgerows tointroduce biological diversity in lieu ofcrop sequencing.

Crop year. That normal growingseason for a crop as determined by theSecretary.

Cultivation. Digging up or cutting thesoil to prepare a seed bed; controlweeds; aerate the soil; or work organicmatter, crop residues, or fertilizers intothe soil.

Cultural methods. Methods used toenhance crop health and prevent weed,pest, or disease problems without theuse of substances; examples include theselection of appropriate varieties andplanting sites; proper timing anddensity of plantings; irrigation; andextending a growing season bymanipulating the microclimate withgreen houses, cold frames, or windbreaks.

Detectable residue. The amount orpresence of chemical residue or samplecomponent that can be reliably observedor found in the sample matrix by thecurrent approved analyticalmethodology.

Disease vectors. Plants or animals thatharbor or transmit disease organisms orpathogens which may attack crops orlivestock.

Drift. The physical movement ofprohibited substances from the intendedtarget site onto an organic operation orportion thereof.

Emergency pest or disease treatmentprogram. A mandatory programauthorized by a Federal, State, or localagency for the purpose of controlling oreradicating a pest or disease.

Employee. Any person providing paidor volunteer services for a certifyingagent.

Estimated National Mean. The meanlevel of detected pesticide residues asdescribed in certain pesticide/commodity pairs or combinationsestablished by USDA’s Pesticide DataProgram.



Excluded methods. Refers to a varietyof methods used to genetically modifyorganisms or influence their growth anddevelopment by means that are notpossible under natural conditions orprocesses and are not consideredcompatible with organic production.Such methods would includerecombinant DNA, cell fusion, andmicro- and macroencapsulation. Suchmethods would not include the use oftraditional breeding, conjugation,fermentation, hybridization, in vitrofertilization, or tissue culture.

Feed. Edible materials which areconsumed by livestock for theirnutritional value. Feed may beconcentrates (grains) or roughages (hay,silage, fodder). The term, ‘‘feed,’’encompasses all agriculturalcommodities, including pastureingested by livestock for nutritionalpurposes.

Feed Additive. A substance orcombination of substances added to feedin micro quantities to fulfill a specificnutritional need, i.e., nutrients in theform of amino acids, vitamins, andminerals.

Feed Supplement. A feed used withanother feed to improve the nutrientbalance or performance of the totalration and intended to be:

(1) Diluted with other feeds when fedto livestock;

(2) Offered free choice with otherparts of the ration if separatelyavailable; or

(3) Further diluted and mixed toproduce a complete feed.

Fertilizer. A single or blendedsubstance containing one or morerecognized plant nutrient(s) which isused primarily for its plant nutrientcontent and which is designed for useor claimed to have value in promotingplant growth.

Field. An area of land identified as adiscrete unit within a productionoperation.

Forage. Vegetable material in a fresh,dried, or ensiled state (pasture, hay, orsilage) which is fed to livestock.

Handle. To sell, process, or packageagricultural products, except such termshall not include the sale,transportation, or delivery of crops orlivestock by the producer thereof to ahandler.

Handler. Any person engaged in thebusiness of handling agriculturalproducts, including producers whohandle crops or livestock of their ownproduction, except such term shall notinclude final retailers of agriculturalproducts that do not process agriculturalproducts.

Handling operation. Any operation orportion of an operation (except final

retailers of agricultural products that donot process agricultural products) thatreceives or otherwise acquiresagricultural products and processes,packages, or stores such products.

Immediate family. The spouse, minorchildren, or blood relatives who residein the immediate household of acertifying agent or an employee,inspector, contractor, or other personnelof the certifying agent. For the purposeof this part, the interest of a spouse,minor child, or blood relative who is aresident of the immediate household ofa certifying agent or an employee,inspector, contractor, or other personnelof the certifying agent shall beconsidered to be an interest of thecertifying agent or an employee,inspector, contractor, or other personnelof the certifying agent.

Inert ingredient. Any substance (orgroup of substances with similarchemical structures if designated by theEnvironmental Protection Agency) otherthan an active ingredient which isintentionally included in any pesticideproduct used in organic crop orlivestock production and handling (40CFR 152.3(m)).

Information panel. That part of thelabel of a packaged product that isimmediately contiguous to and to theright of the principal display panel asobserved by an individual facing theprincipal display panel, unless anothersection of the label is designated as theinformation panel because of packagesize or other package attributes (e.g.,irregular shape with one usable surface).

Ingredient. Any substance used in thepreparation of an agricultural productthat is still present in the finalcommercial product as consumed.

Ingredients statement. The list ofingredients contained in a productshown in their common and usualnames in the descending order ofpredominance.

Inspector. Any person retained orused by a certifying agent to conductinspections of certification applicants orcertified production or handlingoperations.

Inspection. The act of examining andevaluating the production or handlingoperation of an applicant forcertification or certified operation todetermine compliance with the Act andthe regulations in this part.

Label. A display of written, printed,or graphic material on the immediatecontainer of an agricultural product orany such material affixed to anyagricultural product or affixed to a bulkcontainer containing an agriculturalproduct, except for package liners or adisplay of written, printed, or graphicmaterial which contains only

information about the weight of theproduct.

Labeling. All written, printed, orgraphic material accompanying anagricultural product at any time orwritten, printed, or graphic materialabout the agricultural product displayedat retail stores about the product.

Livestock. Any cattle, sheep, goat,swine, poultry, or equine animals usedfor food or in the production of food,fiber, feed, or other agricultural-basedconsumer products; wild ordomesticated game; or other nonplantlife, except such term shall not includeaquatic animals or bees for theproduction of food, fiber, feed, or otheragricultural-based consumer products.

Lot. Any number of containers whichcontain an agricultural product of thesame kind located in the sameconveyance, warehouse, or packinghouse and which are available forinspection at the same time.

Market information. Any written,printed, audiovisual, or graphicinformation, including advertising,pamphlets, flyers, catalogues, posters,and signs, distributed, broadcasted, ormade available outside of retail outletsthat are used to assist in the sale orpromotion of a product.

Mulch. Any material, such as woodchips, leaves, straw, paper, or plastic(on the National List), that serves tosuppress weed growth, moderate soiltemperature, or conserve soil moisture.

National List. A list of allowed andprohibited substances as provided for insection 6517 of the Act (7 U.S.C. 6517).

National Organic Program (NOP). Theprogram authorized by the Act for thepurpose of implementing its provisions.

National Organic Standards Board(NOSB). A Board established by theSecretary under 7 U.S.C. 6518 to assistin the development of standards forsubstances to be used in organicproduction and to advise the Secretaryon any other aspects of theimplementation of the National OrganicProgram.

Natural resources of the operation.The physical, hydrological, andbiological features of a productionoperation, including soil, water,wetlands, woodlands, and wildlife.

Nonagricultural substance. Asubstance that is not a product ofagriculture, such as a mineral or abacterial culture, that is used as aningredient in an agricultural product.For the purposes of this part, anonagricultural ingredient also includesany substance, such as gums, citric acid,or pectin, that is extracted from, isolatedfrom, or a fraction of an agriculturalproduct, so that the identity of the



agricultural product is unrecognizablein the extract, isolate, or fraction.

Nonsynthetic (natural). A substancethat is derived from mineral, plant, oranimal matter and does not undergo asynthetic process as defined in section6502(21) of the Act (7 U.S.C. 6502(21)).For the purposes of this part,nonsynthetic is used as a synonym fornatural as the term is used in the Act.

Nontoxic. Not known to cause anyadverse physiological effects in animals,plants, humans, or the environment.

Nonretail container. Any containerused for shipping or storage of anagricultural product that is not used inthe retail display or sale of the product.

Organic. A labeling term that refers toan agricultural product produced inaccordance with the Act and theregulations in this part.

Organic matter. The remains,residues, or waste products of anyorganism.

Organic system plan. A plan ofmanagement of an organic production orhandling operation that has been agreedto by the producer or handler and thecertifying agent and that includeswritten plans concerning all aspects ofagricultural production or handlingdescribed in the Act and the regulationsin subpart C of this part.

Peer review panel. A panel ofindividuals who have expertise inorganic production and handlingmethods and certification proceduresand who are appointed by theAdministrator to assist in evaluatingapplicants for accreditation as certifyingagents.

Person. An individual, group ofindividuals, contractor, corporation,association, organization, cooperative,or other entity.

Pesticide. Any substance which alone,in chemical combination, or in anyformulation with one or moresubstances is defined as a pesticide insection 2(u) of the Federal Insecticide,Fungicide, and Rodenticide Act (7U.S.C. 136(u) et seq).

Petition. A request to amend theNational List that is submitted by anyperson in accordance with this part.

Planting stock. Any plant or planttissue, including rhizomes, shoots, leafor stem cuttings, roots, or tubers, usedin plant production or propagation.

Practice standard. The guidelines andrequirements through which aproduction or handling operationimplements a required component of itsproduction or handling organic systemplan. A practice standard integrates aseries of allowed and prohibited actions,materials, and conditions to establish aminimum level performance forplanning, conducting, and maintaining

a function, such as livestock health careor facility pest management, essential toan organic operation.

Principal display panel. That part ofa label that is most likely to bedisplayed, presented, shown, orexamined under customary conditionsof display for sale.

Private entity. Any domestic orforeign nongovernmental for-profit ornot-for-profit organization providingcertification services.

Processing. Cooking, baking, curing,heating, drying, mixing, grinding,churning, separating, extracting, cutting,fermenting, eviscerating, preserving,dehydrating, freezing, or otherwisemanufacturing and includes thepackaging, canning, jarring, or otherwiseenclosing food in a container.

Producer. A person who engages inthe business of growing or producingfood, fiber, feed, and other agricultural-based consumer products.

Production lot number/identifier.Identification of a product based on theproduction sequence of the productshowing the date, time, and place ofproduction used for quality controlpurposes.

Prohibited substance. A substancewhose use in any aspect of organicproduction or handling is prohibited ornot provided for in the Act or theregulations of this part.

Records. Any information in written,visual, or electronic form thatdocuments the activities undertaken bya producer, handler, or certifying agentto comply with the Act and regulationsin this part.

Residue testing. An official orvalidated analytical procedure thatdetects, identifies, and measures thepresence of chemical substances, theirmetabolites, or degradations products inor on raw or processed agriculturalproducts.

Responsibly connected. Any personwho is a partner, officer, director,holder, manager, or owner of 10 percentor more of the voting stock of anapplicant or a recipient of certificationor accreditation.

Retail food establishment. Arestaurant; delicatessen; bakery; grocerystore; or any retail outlet with an in-store restaurant, delicatessen, bakery,salad bar, or other eat-in or carry-outservice of processed or prepared rawand ready-to-eat-food.

Routine use of parasiticide. Theregular, planned, or periodic use ofparasiticides.

Secretary. The Secretary ofAgriculture or a representative to whomauthority has been delegated to act inthe Secretary’s stead.

Sewage sludge. A solid, semisolid, orliquid residue generated during thetreatment of domestic sewage in atreatment works. Sewage sludgeincludes, but is not limited to: domesticseptage; scum or solids removed inprimary, secondary, or advancedwastewater treatment processes; and amaterial derived from sewage sludge.Sewage sludge does not include ashgenerated during the firing of sewagesludge in a sewage sludge incinerator orgrit and screenings generated duringpreliminary treatment of domesticsewage in a treatment works.

Slaughter stock. Any animal that isintended to be slaughtered forconsumption by humans or otheranimals.

Soil and water quality. Observableindicators of the physical, chemical, orbiological condition of soil and water,including the presence of environmentalcontaminants.

State. Any of the several States of theUnited States of America, its territories,the District of Columbia, and theCommonwealth of Puerto Rico.

State certifying agent. A certifyingagent accredited by the Secretary underthe National Organic Program andoperated by the State for the purposesof certifying organic production andhandling operations in the State.

State entity. Any domestic, tribalgovernment, or foreign governmentalsubdivision providing certificationservices.

State organic certification program. AState program that meets therequirements of section 6506 of the Act,is approved by the Secretary, and isdesigned to ensure that a product thatis sold or labeled as organicallyproduced under the Act is producedand handled using organic methods.

State program’s governing Stateofficial. The chief executive official of aState or, in the case of a State thatprovides for the statewide election of anofficial to be responsible solely for theadministration of the agriculturaloperations of the State, such official,who administers a State organiccertification program.

Synthetic. A substance that isformulated or manufactured by achemical process or by a process thatchemically changes a substanceextracted from naturally occurringplant, animal, or mineral sources,except that such term shall not apply tosubstances created by naturallyoccurring biological processes.

System of organic production andhandling. A system that is designed toproduce agricultural products by the useof methods and substances thatmaintain the integrity of organic



agricultural products until they reachthe consumer. This is accomplished byusing, where possible, cultural,biological, and mechanical methods, asopposed to using substances, to fulfillany specific function within the systemso as to: Maintain long-term soilfertility; increase soil biological activity;ensure effective pest management;recycle wastes to return nutrients to theland; provide attentive care for farmanimals; and handle the agriculturalproducts without the use of extraneoussynthetic additives or processing inaccordance with the Act and regulationsin this part.

Transplant. A seedling which hasbeen removed from its original place ofproduction, transported, and replanted.

Tolerance. The maximum legal levelof a pesticide residue in or on a raw orprocessed agricultural commodity as setby the Environmental Protection Agencyunder FFDCA, Section 408.

Unavoidable residual environmentalcontamination (UREC). Backgroundlevels of naturally occurring or syntheticchemicals that are present in the soil orpresent in organically producedagricultural products that are belowestablished tolerances.

Wild crop. Any plant or portion of aplant that is collected or harvested froman area of land that is not maintainedunder cultivation or other agriculturalmanagement.

Subpart B—Applicability

§ 205.100 What has to be certified.(a) Except for operations exempt or

excluded in § 205.101, each productionor handling operation or specifiedportion of a production or handlingoperation that produces or handlescrops, livestock, livestock products, orother agricultural products that areintended to be sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients)’’ must becertified according to the provisions ofsubpart E of this part and must meet allother applicable requirements of thispart.

(b) Any production or handlingoperation that has been certified by acertifying agent on the date that thecertifying agent first receives itsaccreditation under this part shall beconsidered certified to the nationalstandards until the operation’sanniversary date of certification. Suchrecognition shall only be available tothose operations certified by a certifyingagent that receives its accreditationwithin 18 months from the date ofpublication of the final ruleimplementing this part.

§ 205.101 Exemptions and exclusions fromcertification.

(a) Exemptions.(1) A production or handling

operation that sells agriculturalproducts as ‘‘organic’’ but whose grossagricultural income from organic salestotals $5,000 or less annually is exemptfrom certification under subpart E ofthis part and from submitting an organicsystem plan for acceptance or approvalunder § 205.201 but must comply withthe applicable organic production andhandling requirements of subpart C ofthis part and the labeling requirementsof § 205.309.

(2) A handling operation that is aretail food establishment or portion of aretail food establishment that handlesorganically produced agriculturalproducts but does not process them isexempt from the requirements in thispart.

(3) A handling operation or portion ofa handling operation that handlesagricultural products that contain lessthan 50 percent organic ingredients bytotal weight of the finished product(excluding water and salt) is exemptfrom the requirements in this part,except:

(i) The provisions for prevention ofcontact of organic products withprohibited substances set forth in§ 205.272 with respect to anyorganically produced ingredients usedin an agricultural product;

(ii) The labeling provisions of§ 205.309; and

(iii) The recordkeeping provisions inparagraph (c) of this section.

(4) A handling operation or portion ofa handling operation that handlesagricultural products that contain atleast 50 percent organic ingredients bytotal weight of the finished product(excluding water and salt) that choosesto not use the word, ‘‘organic,’’ on anypanel other than the information panelis exempt from the requirements in thispart, except:

(i) The provisions for prevention ofcontact of organic products withprohibited substances set forth in§ 205.272 with respect to anyorganically produced ingredients usedin an agricultural product;

(ii) The labeling provisions of§ 205.309; and

(iii) The recordkeeping provisions inparagraph (c) of this section.

(b) Exclusions.(1) A handling operation or portion of

a handling operation is excluded fromthe requirements of this part, except forthe requirements for the prevention ofcommingling and contact withprohibited substances as set forth in§ 205.272 with respect to any

organically produced products if suchoperation or portion of the operationonly sells organic agricultural productslabeled as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients)’’ that:

(i) Are packaged or otherwiseenclosed in a container prior to beingreceived or acquired by the operation;and

(ii) Remain in the same package orcontainer and are not otherwiseprocessed while in the control of thehandling operation.

(2) A handling operation that is aretail food establishment or portion of aretail food establishment that processesor prepares, on the premises of the retailfood establishment, raw and ready-to-eat food from agricultural products thatare previously labeled as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients)’’ isexcluded from the requirements in thispart, except:

(i) The requirements for theprevention of contact with prohibitedsubstances as set forth in § 205.272; and

(ii) The labeling provisions of§ 205.309.

(c) Records to be maintained byexempt operations.

(1) Any handling operation exemptfrom certification pursuant to paragraph(a)(3) or (a)(4) of this section mustmaintain records sufficient to:

(i) Prove that ingredients identified asorganic were organically produced andhandled; and

(ii) Verify quanities produced fromsuch ingredients.

(2) Records must be maintained for noless than 3 years beyond their creationand the operations must allowrepresentatives of the Secretary and theapplicable State program’s governingState official access to these records forinspection and copying during normalbusiness hours to determine compliancewith the applicable regulations set forthin this part.

§ 205.102 Use of the term, ‘‘organic.’’Any agricultural product that is sold,

labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients)’’ must be:

(a) Produced in accordance with therequirements specified in § 205.101 or§§ 205.202 through 205.207 or§§ 205.236 through 205.239 and allother applicable requirements of part205;

(b) Handled in accordance with therequirements specified in § 205.101 or§§ 205.270 through 205.272 and allother applicable requirements of thispart 205; and

(c) Produced and handled incompliance with the Federal Meat



Inspection Act (21 U.S.C. 601 et seq.),the Poultry Products Inspection Act (21)U.S.C. 451 et seq.), and the Egg ProductsInspection Act (21 U.S.C. 1031 et seq.),concerning meat, poultry, and eggproducts; the Federal Food, Drug, andCosmetic Act (21 U.S.C. 301 et seq.); theFederal Insecticide, Fungicide, andRodenticide Act (7 U.S.C. 136 et seq.);and any other applicable Federal statuteand its implementing regulations.

§ 205.103 Recordkeeping by certifiedoperations.

(a) A certified operation mustmaintain records concerning theproduction, harvesting, and handling ofagricultural products that are or that areintended to be sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients).’’

(b) Such records must:(1) Be adapted to the particular

business that the certified operation isconducting;

(2) Fully disclose all activities andtransactions of the certified operation insufficient detail as to be readilyunderstood and audited;

(3) Be maintained for not less than 5years beyond their creation; and

(4) Be sufficient to demonstratecompliance with the Act and theregulations in this part.

(c) The certified operation must makesuch records available for inspectionand copying during normal businesshours by authorized representatives ofthe Secretary, the applicable Stateprogram’s governing State official, andthe certifying agent.

§ 205.104 Foreign applicants.The regulations in this part, as

applicable, apply equally to domesticand foreign applicants for accreditation,accredited certifying agents, domesticand foreign applicants for certificationas organic production or handlingoperations, and certified organicproduction and handling operationsunless otherwise specified.

§§ 205.105—205.199 [Reserved]

Subpart C—Organic Production andHandling Requirements

§ 205.200 General.The producer or handler of a

production or handling operationwishing to sell, label, or representagricultural products as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients)’’ mustcomply with the applicable provisionsof this subpart. Practices implementedin accordance with this subpart mustmaintain or improve the natural

resources of the operation, includingsoil and water quality.

§ 205.201 Organic production andhandling system plan.

(a) The producer or handler of aproduction or handling operation,except as exempt or excluded under§ 205.101, wishing to sell, label, orrepresent agricultural products as ‘‘100percent organic,’’ ‘‘organic,’’ or ‘‘madewith organic (specified ingredients)’’must develop an organic production orhandling system plan that is agreed toby the producer or handler and anaccredited certifying agent. An organicsystem plan must meet the requirementsset forth in this section to establish asystem of organic production orhandling. An organic production orhandling system plan must include:

(1) A description of practices andprocedures to be performed andmaintained, including the frequencywith which they will be performed;

(2) A list of each substance to be usedas a production or handling input,indicating its composition, source, andlocation(s) where it will be used;

(3) A description of the monitoringpractices and procedures to beperformed and maintained, includingthe frequency with which they will beperformed, to verify that the plan iseffectively implemented;

(4) A description of the recordkeepingsystem implemented to comply with therequirements established in § 205.103;

(5) A description of practices andprocedures to prevent commingling oforganic and nonorganic products and toprevent contact of organic productionand handling operations and productswith prohibited substances; and

(6) Additional information deemednecessary by the certifying agent toevaluate compliance with theregulations.

(b) A producer may substitute a planprepared to meet the requirements ofanother Federal, State, or localgovernment regulatory program for theorganic system plan: Provided, That, thesubmitted plan meets all therequirements of this subpart.

§ 205.202 Land requirements.Any field or farm parcel from which

harvested crops are intended to be sold,labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients)’’ must:

(a) Have been managed in accordancewith the provisions of §§ 205.203through 205.206;

(b) Have had no prohibitedsubstances, as listed in § 205.600,applied to it for a period of 3 yearsimmediately preceding harvest of thecrop; and

(c) Have distinct, defined boundariesand buffer zones such as runoffdiversions to prevent the unintendedapplication of a prohibited substance tothe crop or contact with a prohibitedsubstance applied to adjoining land thatis not under organic management.

§ 205.203 Soil fertility and crop nutrientmanagement practice standard.

(a) The producer must select andimplement tillage and cultivationpractices that maintain or improve thephysical, chemical, and biologicalcondition of soil and minimize soilerosion.

(b) The producer must budget andsupply crop nutrients by properlyutilizing manure or other animal andplant materials, mined mineralsubstances, and substances approved in§ 205.601.

(c) The producer must manage animaland plant waste materials to maintain orimprove soil organic matter content ina manner that does not contribute tocontamination of crops, soil, or water byplant nutrients, pathogenic organisms,heavy metals, or residues of prohibitedsubstances. Animal and plant wastematerials include:

(1) Raw animal manure, which mustbe composted unless it is:

(i) Applied to land used for a crop notintended for human consumption;

(ii) Incorporated into the soil not lessthan 120 days prior to the harvest of aproduct whose edible portion has directcontact with the soil surface or soilparticles; or

(iii) Incorporated into the soil not lessthan 90 days prior to the harvest of aproduct whose edible portion does nothave direct contact with the soil surfaceor soil particles;

(2) Other uncomposted plant oranimal wastes, such as aged, fullydecomposed animal manure;

(3) A composted product produced ina facility in compliance with the NaturalResources Conservation Service’spractice standard for a compostingfacility (Code 317); and

(4) A composted or uncompostedplant or animal waste material that hasbeen chemically altered by amanufacturing process: Provided, That,the material is included on the NationalList of synthetic substances allowed foruse in organic crop productionestablished in § 205.601.

(d) In addition to crop rotations andplant and animal waste materials, aproducer may supply soil and cropnutrients by applying:

(1) A mined substance of lowsolubility;

(2) A mined substance of highsolubility, when justified by soil or croptissue analysis;



(3) Ash obtained from the burning ofa plant or animal material, except asprohibited in paragraph (e) of thissection: Provided, That, the materialburned has not been treated orcombined with a prohibited substanceor the ash is not included on theNational List of nonsynthetic substancesprohibited for use in organic cropproduction; and

(4) A crop nutrient supplementincluded on the National List ofsynthetic substances allowed for use inorganic production, when justified bysoil or crop tissue analysis.

(e) The producer must not use:(1) Any fertilizer or commercially

blended fertilizer or composted productthat contains a synthetic substance notincluded on the National List ofsynthetic substances allowed for use inorganic production;

(2) Sewage sludge (biosolids) asdefined in 40 CFR part 503; and

(3) Burning as a means of disposal forcrop residues produced on theoperation: Except, That, prunings fromperennial crops may be burned tosuppress the spread of disease.

§ 205.204 Seeds and planting stockpractice standard.

(a) The producer must use organicallygrown seeds, annual seedlings, andplanting stock: Except, That,

(1) Nonorganically produceduntreated seeds and planting stock maybe used to produce an organic cropwhen an equivalent organicallyproduced variety is not commerciallyavailable;

(2) Nonorganically produced seedsand planting stock that have beentreated with a substance included on theNational List of synthetic substancesallowed for use in organic cropproduction may be used to produce anorganic crop when an equivalentorganically produced or untreatedvariety is not commercially available;

(3) Nonorganically produced annualseedlings may be used to produce anorganic crop when a temporary variancehas been granted in accordance with§ 205.290(a)(2);

(4) Nonorganically produced plantingstock to be used to produce a perennialcrop may be sold, labeled, orrepresented as organically producedonly after the planting stock has beenmaintained under a system of organicmanagement for a period of no less than1 year; and

(5) Seeds, annual seedlings, andplanting stock treated with prohibitedsubstances may be used to produce anorganic crop when the application of thematerials is a requirement of Federal orState phytosanitary regulations.

(b) The producer of an organicoperation must not use seeds or plantingstock produced with excluded methods.

§ 205.205 Crop rotation practice standard.The producer must implement a crop

rotation including, but not limited to,sod, cover crops, green manure crops,and catch crops that provide thefollowing functions that are applicableto the operation:

(a) Maintain or improve soil organicmatter content;

(b) Provide for pest management inannual and perennial crops;

(c) Manage deficient or excess plantnutrients; and

(d) Provide erosion control.

§ 205.206 Crop pest, weed, and diseasemanagement practice standard.

(a) The producer must usemanagement practices to prevent croppests, weeds, and diseases including,but not limited to:

(1) Crop rotation and soil and cropnutrient management practices, asprovided for in §§ 205.203 and 205.205;

(2) Sanitation measures to removedisease vectors, weed seeds, and habitatfor pest organisms; and

(3) Cultural practices that enhancecrop health, including selection of plantspecies and varieties with regard tosuitability to site-specific conditionsand resistance to prevalent pests, weeds,and diseases.

(b) Pest problems may be controlledthrough mechanical or physicalmethods including, but not limited to:

(1) Augmentation or introduction ofpredators or parasites of the pestspecies;

(2) Development of habitat for naturalenemies of pests;

(3) Nonsynthetic, nontoxic controlssuch as lures, traps, and repellents.

(c) Weed problems may be controlledthrough:

(1) Mulching with fully biodegradablematerials;

(2) Mowing;(3) Livestock grazing;(4) Hand weeding and mechanical

cultivation;(5) Flame, heat, or electrical means; or(6) Plastic or other synthetic mulches:

Provided, That, they are removed fromthe field at the end of the growing orharvest season.

(d) Disease problems may becontrolled through:

(1) Management practices whichsuppress the spread of diseaseorganisms; or

(2) Application of nonsyntheticbiological, botanical, or mineral inputs.

(e) When the practices provided for inparagraphs (a) through (d) of this section

are insufficient to prevent or controlcrop pests, weeds, and diseases, abiological or botanical substance or asubstance included on the National Listof synthetic substances allowed for usein organic production may be applied toprevent, suppress, or control pests,weeds, or diseases: Provided, That, theproducer implements measures toevaluate and mitigate the effects ofrepetitive use of the same or similarmaterials on pest resistance and shifts inpest, weed, or disease types, and thesubstance is used in compliance withthe Federal Insecticide, Fungicide, andRodenticide Act.

(f) The producer or handler of anorganic operation must not use a pest,weed, or disease control substanceproduced through excluded methods.

§ 205.207 Wild-crop harvesting practicestandard.

(a) Any area from which a wild cropthat is intended to be sold, labeled, orrepresented as organic is harvested musthave had no prohibited substance, as setforth in § 205.600, applied to it for aperiod of 3 years immediately precedingthe harvest of the wild crop.

(b) A wild-crop must be harvested ina manner that ensures that suchharvesting or gathering will not bedestructive to the environment and willsustain the growth and production ofthe wild crop.

§§ 205.208—205.235 [Reserved]

§ 205.236 Origin of livestock.(a) Livestock or edible livestock

products that are to be sold, labeled, orrepresented as organic must be fromlivestock under continuous organicmanagement from birth or hatching:Except, That,

(1) Poultry. Poultry or edible poultryproducts must be from poultry that hasbeen under continuous organicmanagement beginning no later than thesecond day of life;

(2) Dairy Animals. Milk or milkproducts must be from animals thathave been under continuous organicmanagement beginning no later than 1year prior to the production of the milkor milk products that are to be sold,labeled, or represented as organic.

(3) Nonedible products. Nonediblelivestock products must be from animalsthat have been under continuousorganic management not less than 1 yearprior to harvest of the nonedibleproduct.

(4) Breeder stock. Livestock used asbreeder stock may be brought from anonorganic operation onto an organicoperation at any time: Provided, That, ifsuch livestock are gestating and theoffspring are to be raised as organic



livestock, the breeder stock must bebrought onto the facility prior to the lastthird of pregnancy.

(b) The following are prohibited:(1) Livestock or edible livestock

products that are removed from anorganic operation and subsequentlymanaged on a nonorganic operation maybe not sold, labeled, or represented asorganically produced.

(2) Breeder or dairy stock that has notbeen under continuous organicmanagement since birth may not besold, labeled, or represented as organicslaughter stock; and

(3) No organism produced byexcluded methods may be used forbreeding purposes or for the productionof livestock products intended to besold, labeled, or represented as organic.

(c) The producer of an organiclivestock operation must maintainrecords sufficient to preserve theidentity of all organically managedanimals and edible and nonedibleanimal products produced on theoperation.

§ 205.237 Livestock feed.(a) The producer of an organic

livestock operation must providelivestock with a total feed rationcomposed of agricultural products,including pasture and forage, that isorganically produced and, if applicable,organically handled: Except, That,nonagricultural products and syntheticsubstances allowed under § 205.603may be used as feed additives andsupplements.

(b) The producer of an organicoperation must not:

(1) Use animal drugs, includinghormones, to promote growth;

(2) Provide feed supplements oradditives in amounts above thoseneeded for adequate nutrition andhealth maintenance for the species at itsspecific stage of life;

(3) Feed plastic pellets for roughage;(4) Feed formulas containing urea or

manure;(5) Feed mammalian or poultry

slaughter by-products to mammals orpoultry; or

(6) Use feed, feed additives, and feedsupplements in violation of the FederalFood, Drug, and Cosmetic Act.

§ 205.238 Livestock health care practicestandard.

(a) The producer must establish andmaintain preventive livestock healthcare practices, including:

(1) Selection of species and types oflivestock with regard to suitability forsite-specific conditions and resistance toprevalent diseases and parasites;

(2) Provision of feedstuffs sufficient tomeet nutritional requirements,

including vitamins, minerals, and otheradditives or supplements;

(3) Establishment of appropriatehousing, pasture conditions, andsanitation practices to minimize theoccurrence and spread of diseases andparasites;

(4) Provision of conditions whichallow for exercise, freedom ofmovement, and reduction of stressappropriate to the species;

(5) Performance of physicalalterations as needed to promote theanimal’s welfare and in a manner thatminimizes pain and stress; and

(6) Administration of vaccines andother veterinary biologics.

(b) When preventive practices andveterinary biologics are inadequate toprevent sickness, a producer mayadminister synthetic medications:Provided, That, such medications areallowed under § 205.603. Parasiticidesallowed under § 205.603 may be usedon

(1) Breeder stock, when used prior tothe last third of gestation for progenythat are to be sold, labeled, orrepresented as organically produced;and

(2) Dairy stock, when used aminimum of 90 days prior to theproduction of milk or milk products thatare to be sold, labeled, or represented asorganic.

(c) The producer of an organiclivestock operation must not:

(1) Sell, label, or represent as organicany animal or edible product derivedfrom any animal treated withantibiotics, any substance that containsa synthetic substance not allowed under§ 205.603, or any substance thatcontains a nonsynthetic substanceprohibited in § 205.604.

(2) Administer any animal drug, otherthan vaccinations, in the absence ofillness;

(3) Administer hormones;(4) Administer synthetic parasiticides

on a routine basis;(5) Administer synthetic parasiticides

to slaughter stock;(6) Administer animal drugs in

violation of the Federal Food, Drug, andCosmetic Act; or

(7) Withhold medical treatment froma sick animal in an effort to preserve itsorganic status. All appropriatemedications must be used to restore ananimal to health when methodsacceptable to organic production fail.Livestock treated with a prohibitedsubstance must be clearly identified andshall not be sold, labeled, or representedas organically produced.

§ 205.239 Livestock living conditions.(a) The producer of an organic

livestock operation must establish and

maintain livestock living conditionswhich accommodate the health andnatural behavior of animals, including:

(1) Access to shade, shelter, exerciseareas, fresh air, and direct sunlightsuitable to the species, its stage ofproduction, the climate, and theenvironment;

(2) Access to pasture for ruminants;(3) Appropriate clean, dry bedding. If

the bedding is typically consumed bythe animal species, it must comply withthe feed requirements of § 205.237;

(4) Shelter designed to allow for:(i) Natural maintenance, comfort

behaviors, and opportunity to exercise;(ii) Temperature level, ventilation,

and air circulation suitable to thespecies; and

(iii) Reduction of potential forlivestock injury;

(b) The producer of an organiclivestock operation may providetemporary confinement for an animalbecause of:

(1) Inclement weather;(2) The animal’s stage of production;(3) Conditions under which the

health, safety, or well being of theanimal could be jeopardized; or

(4) Risk to soil or water quality.(c) The producer of an organic

livestock operation must managemanure in a manner that does notcontribute to contamination of crops,soil, or water by plant nutrients, heavymetals, or pathogenic organisms andoptimizes recycling of nutrients.

§§ 205.240—205.269 [Reserved]

§ 205.270 Organic handling requirements.(a) Mechanical or biological methods,

including, but not limited to, cooking,baking, heating, drying, mixing,grinding, churning, separating,extracting, slaughtering, cutting,fermenting, eviscerating, preserving,dehydrating, freezing, chilling, orotherwise manufacturing, and thepackaging, canning, jarring, or otherwiseenclosing food in a container may beused to process an agricultural productintended to be sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients)’’ for the purposeof retarding spoilage or otherwisepreparing the agricultural product formarket.

(b) Nonagricultural substancesallowed under § 205.605 andnonorganically produced agriculturalproducts allowed under § 205.606 maybe used in or on a processed agriculturalproduct intended to be sold, labeled, orrepresented as ‘‘organic’’ or ‘‘made withorganic (specified ingredients).’’

(c) The handler of an organic handlingoperation must not use in or on an



agricultural product intended to be sold,labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients)’’:

(1) Ionizing radiation for any purpose;(2) An ingredient produced with

excluded methods; or(3) A volatile synthetic solvent or any

other synthetic processing aid notallowed under § 205.605 as ingredientsin or on processed products labeled asorganic or made with organicingredients.

§ 205.271 Facility pest managementpractice standard.

(a) The producer or handler of anorganic facility must use managementpractices to prevent pests, including,but not limited to:

(1) Removal of pest habitat, foodsources, and breeding areas;

(2) Prevention of access to handlingfacilities; or

(3) Management of environmentalfactors, such as temperature, light,humidity, atmosphere, and aircirculation to prevent pest reproduction.

(b) Pests may be controlled through:(1) Augmentation or introduction of

predators or parasites for the pestspecies;

(2) Mechanical or physical controlsincluding, but not limited to, traps,light, or sound; or

(3) Nontoxic, nonsynthetic controls,such as lures and repellents.

(c) If the practices provided for inparagraphs (a) and (b) of this section arenot effective to prevent or controlfacility pests, a nonsynthetic biologicalor botanical substance or a syntheticsubstance may be applied to prevent,suppress, or control pests: Provided,That, the substance is applied in themanner consistent with its label asapproved by the Federal, State, andlocal regulatory authorities.

(d) The handler of an organichandling operation who applies anonsynthetic biological or botanicalsubstance or a synthetic substance forthe prevention or control of a pest mustinclude in the organic handling plan alist of all measures taken or intended tobe taken to prevent contact between thesubstance and any ingredient orfinished product intended to be sold,labeled, or represented as ‘‘organic’’ or‘‘made with organic (specifiedingredients).’’

(e) The handler of an organic handlingoperation who applies a nonsyntheticbiological or botanical substance or asynthetic substance for the preventionor control of a pest must include in theorganic handling plan an evaluation ofthe effects of repetitive use of the sameor similar materials on pest resistanceand shifts in pest types.

§ 205.272 Commingling and contact withprohibited substance prevention practicestandard.

(a) The handler of an organic handlingoperation must implement measuresnecessary to prevent the commingling oforganic and nonorganic products andprotect organic products from contactwith prohibited substances.

(b) The following methods andsubstances are prohibited for use in thehandling of any agricultural productintended to be sold, labeled, orrepresented as ‘‘100 per cent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients)’’:

(1) Packaging materials and storagecontainers or bins that contain asynthetic fungicide, preservative, orfumigant;

(2) The use or reuse of any bag orcontainer that had previously been incontact with any substance in such amanner as to compromise the organicintegrity of any products unless, afteruse for conventional products, thereusable bin or container has beenthoroughly cleaned and poses no risk ofprohibited materials contacting theorganic product.

§§ 205.273—205.289 [Reserved]

§ 205.290 Temporary variances.(a) Temporary variances from the

requirements in §§ 205.203 through205.207, 205.236 through 205.239, and205.270 through 205.272 may beestablished by the Administrator for thefollowing reasons:

(1) Natural disasters declared by theSecretary;

(2) Damage caused by wind, flood,excessive moisture, tornado, earthquake,fire, or other business interruption; and

(3) Practices used for the purpose ofconducting research or trials oftechniques, varieties, or ingredientsused in organic production or handling.

(b) A certifying agent may recommendin writing to the Administrator atemporary variance from a standard setforth in subpart C of this part for organicproduction or handling operations:Provided, That, such variance may onlybe recommended for the reasons listedin paragraph (a) of this section.

(c) The Administrator will providewritten notification to certifying agentsupon establishment of a temporaryvariance applicable to the certifyingagent’s certified production or handlingoperations. When establishing atemporary variance, the Administratorshall specify the period of time it shallremain in effect, subject to extension asthe Administrator deems necessary.

(d) A certifying agent, uponnotification from the Administrator of

the establishment of a temporaryvariance, must notify each productionor handling operation it certifies withinthe affected geographical area or theindividual organic production orhandling operation(s) to which thetemporary variance applies.

(e) Temporary variances may not berequested for any practice, material, orprocedure otherwise prohibited in theseregulations.

Subpart D—Labels, Labeling, andMarket Information

§ 205.300 Use of the term, ‘‘organic.’’(a) The term, ‘‘organic,’’ may only be

used on labels and in labeling of raw orprocessed agricultural products,including ingredients, that have beenproduced and handled in accordancewith the regulations in this part.

(b) Products for export, produced andcertified to foreign national organicstandards or foreign contract buyerrequirements, may be labeled inaccordance with the organic labelingrequirements of the receiving country orcontract buyer: Provided, That, theshipping containers and shippingdocuments meet the labelingrequirements specified in § 205.306(c).

(c) Products produced in a foreigncountry and exported for sale in theUnited States must be certified pursuantto subpart E of this part and labeledpursuant to this subpart D.

§ 205.301 Product composition.(a) Products sold, labeled, or

represented as ‘‘100 percent organic.’’ Araw or processed agricultural productsold, labeled, or represented as ‘‘100percent organic’’ must contain (byweight or fluid volume, excluding waterand salt) not less than 100 percentorganically produced raw or processedagricultural product. No such product orproduct ingredient may contain or becreated using excluded methods or beproduced using sewage sludge orionizing radiation. If labeled as anorganic food product, such productmust be labeled pursuant to § 205.303.

(b) Products sold, labeled, orrepresented as ‘‘organic.’’ A raw orprocessed agricultural product sold,labeled, or represented as ‘‘organic’’must contain (by weight or fluidvolume, excluding water and salt) notless than 95 percent organicallyproduced raw or processed agriculturalproduct. Any remaining productingredients must consist ofnonagricultural substances ornonorganically produced agriculturalproducts approved in the National Listof Allowed and Prohibited Substancesin subpart G of this part and must not



contain or be created using excludedmethods or be produced using sewagesludge or ionizing radiation. If labeledas an organic food product, suchproducts must be labeled pursuant to§ 205.303.

(c) Products sold, labeled, orrepresented as ‘‘made with organic(specified ingredients).’’ Multiingredientagricultural product sold, labeled, orrepresented as ‘‘made with organic(specified ingredients)’’ must contain(by weight or fluid volume, excludingwater and salt) at least 50 percentorganically produced agriculturalproducts which are produced andhandled pursuant to requirements insubpart C of this part. The nonorganicingredients must not contain or becreated using excluded methods or beproduced using sewage sludge orionizing radiation. If labeled as anorganic food product, such productsmust be labeled pursuant to § 205.304.

(d) Products with less than 50 percentorganic ingredients. The organicingredients in multiingredientagricultural product containing lessthan 50 percent organic ingredients (byweight or fluid volume, excluding waterand salt) must be produced and handledpursuant to requirements in subpart C ofthis part. The nonorganic ingredientsmay be produced and handled withoutregard to the requirements of this part.Multiingredient agricultural productcontaining less than 50 percentorganically produced ingredients mayrepresent the organic nature of theproduct only as provided in § 205.305.

(e) All ingredients identified as‘‘organic’’ in the ingredient statement ofany product must not:

(1) Be produced using excludedmethods or products of excludedmethods as ingredients or processingaids;

(2) Be produced using sewage sludge;(3) Be processed using ionizing

radiation;(4) Be processed using processing aids

not approved on the National List ofAllowed and Prohibited Substances insubpart G of this part: Except, That,products labeled as ‘‘100 percentorganic,’’ if processed, must beprocessed using no processing aids;

(5) Contain sulfites, nitrates, ornitrites added during the production orhandling process;

(6) Be produced using nonorganicingredients when organic ingredientsare not available; or

(7) Include organic and nonorganicforms of the same ingredient.

§ 205.302 Calculating the percentage oforganically produced ingredients.

(a) The percentage of all organicallyproduced ingredients in an agriculturalproduct sold, labeled, or represented as‘‘100 percent organic,’’ ‘‘organic,’’ or‘‘made with organic (specifiedingredients),’’ or that include organicingredients must be calculated by:

(1) Dividing the total net weight(excluding water and salt) of combinedorganic ingredients by the total weight(excluding water and salt) of thefinished product.

(2) Dividing the fluid volume of allorganic ingredients (excluding waterand salt) by the fluid volume of thefinished product (excluding water andsalt) if the product and ingredients areliquid. If the liquid product is identifiedon the principal display panel orinformation panel as being reconstitutedfrom concentrates, the calculationshould be made on the basis of single-strength concentrations of theingredients and finished product.

(3) For products containing organicingredients in both solid and liquidform, dividing the combined weight ofthe solid ingredients and the weight ofthe liquid ingredients (excluding waterand salt) by the total weight (excludingwater and salt) of the finished product.

(b) The percentage of all organicallyproduced ingredients in an agriculturalproduct must be rounded down to thenearest whole number and indicated onthe information panel above theingredient statement with the words,‘‘contains X percent organicingredients.’’

(c) The percentage must be calculatedby the handler who affixes the label onthe consumer package and verified bythe certifying agent of the handler.

§ 205.303 Packaged products labeled ‘‘100percent organic’’ or ‘‘organic.’’

(a) Agricultural products in packagesdescribed in § 205.301(a) and (b) maydisplay, on the principal display panel,information panel, and any other panelof the package and on any labeling ormarket information concerning theproduct, the following terms:

(1) The term, ‘‘100 percent organic’’ or‘‘organic,’’ as applicable, to modify thename of the product;

(2) The USDA Seal;(3) The seal, logo, or other identifying

mark of the certifying agent whichcertified the production or handlingoperation producing the finishedproduct and any other certifying agentwhich certified production or handlingoperations producing raw organicproduct or organic ingredients used inthe finished product: Provided, That,the handler producing the finished

product maintain records, pursuant tothis part, verifying organic certificationof the operations producing suchingredients, and: Provided further, That,such seals or marks are not,individually, displayed moreprominently than the USDA Seal.

(b) Agricultural products in packagesdescribed in § 205.301(a) and (b) must:

(1) On the information panel ofmultiingredient products and consistentwith the labeling requirements of theFood and Drug Administration, declarethe total percentage of organicingredients in the product.

(2) In the ingredient statement,modify each organic ingredient ofmultiingredient products with the word,‘‘organic’’: Except, That, ingredients inmultiingredient products labeled ‘‘100percent organic’’ are not required tomodified with the term ‘‘organic.’’ Anywater or salt included as an ingredientwill not be identified as organic.

(3) On the information panel, belowthe information identifying the handleror distributor of the product andpreceded by the statement, ‘‘Certifiedorganic by * * *,’’ or similar phrase,identify the name of the certifying agentthat certified the handler of the finishedproduct: Except, That, the businessaddress or telephone number of thecertifying agent may be included insuch label.

§ 205.304 Packaged products labeled‘‘made with organic (specifiedingredients).’’

(a) Agricultural products in packagesdescribed in § 205.301(c) may displayon the principal display panel,information panel, and any other paneland on any labeling or marketinformation concerning the product:

(1) The statement, ‘‘made with organic(specified ingredients)’’: Provided, That,display of the statement is consistentwith labeling requirements of the Foodand Drug Administration and:

(i) Does not list more than threeorganic ingredients;

(ii) Does not exceed one-half the sizeof the largest type size on the panel; and

(iii) Appears in its entirety in thesame type size, style, and color withouthighlighting; and

(2) The seal, logo, or other identifyingmark of the certifying agent thatcertified the handler of the finishedproduct.

(b) Agricultural products in packagesdescribed in § 205.301(c) must:

(1) On the information panel andconsistent with the labelingrequirements of the Food and DrugAdministration, declare the totalpercentage of organic ingredients in theproduct.



(2) In the ingredient statement,modify each organic ingredient with theword, ‘‘organic.’’ Any water or saltincluded as an ingredient will not beidentified as organic.

(3) On the information panel, belowthe information identifying the handleror distributor of the product andpreceded by the statement, ‘‘Certifiedorganic by * * *,’’ or similar phrase,identify the name of the certifying agentthat certified the handler of the finishedproduct: Except, That, the businessaddress or telephone number of thecertifying agent may be included insuch label.

(c) Agricultural products in packagesdescribed in § 205.301(c) must notdisplay the USDA Seal.

§ 205.305 Multiingredient packagedproducts with less than 50 percent organicingredients.

(a) Agricultural products with lessthan 50 percent organic ingredientsmust:

(1) On the information panel andconsistent with the labelingrequirements of the Food and DrugAdministration, declare the totalpercentage of organic ingredients in theproduct.

(2) In the ingredient statement,modify each organic ingredient with theword, ‘‘organic.’’

(b) Agricultural products with lessthan 50 percent organic ingredientsmust not display:

(1) The USDA Seal and(2) Any certifying agent’s seal, logo, or

other identifying mark.

§ 205.306 Labeling of nonretail containersused for only shipping or storage of raw orprocessed agricultural products labeled as‘‘100 percent organic,’’ ‘‘organic,’’ or ‘‘madewith organic (specified ingredients).’’

(a) Nonretail containers used only toship or store raw or processedagricultural product labeled ascontaining organic ingredients maydisplay the following terms or marks:

(1) The name and contact informationof the certifying agent which certifiedthe handler which assembled the finalproduct;

(2) Identification of the product as‘‘organic product’’;

(3) Special handling instructionsneeded to maintain the organic integrityof the product;


mark of the certifying agent thatcertified the organic production orhandling operation that produced orhandled the finished product.

(b) If not required under other Federallabeling regulations, nonretailcontainers used to ship or store raw or

processed agricultural product labeledas containing organic ingredients mustdisplay the production lot number ofthe product, if applicable.

(c) Shipping containers ofdomestically produced product labeledas organic intended for export tointernational markets may be labeledconsistent with any shipping containerlabeling requirements of the foreigncountry of destination or the containerlabeling specifications of a foreigncontract buyer: Provided, That, theshipping containers and shippingdocuments accompanying such organicproduct be clearly marked ‘‘For exportonly’’ and: Provided further, That, proofof such container marking and exportmust be maintained by the handler,consistent with recordkeepingrequirements for exempt and excludedoperations under § 205.101.

§ 205.307 Agricultural products in otherthan packaged form at the point of retailsale that are sold, labeled, or representedas ‘‘100 percent organic’’ or ‘‘organic.’’

(a) Agricultural products labeled orrepresented as ‘‘100 percent organic’’ or‘‘organic’’ in retail display, labeling, anddisplay containers may use the term,‘‘100 percent organic’’ or ‘‘organic,’’ asapplicable, to modify the name of theproduct: Provided, That, such productsare assembled in a manufacturingfacility certified in accordance with therequirements of this part; and, Providedfurther, Than, the word, ‘‘organic,’’ isused to modify the organic ingredientslisted in the ingredient statement of theproducts.

(b) The retail display, labeling, anddisplay containers may use:


mark of the certifying agent thatcertified the production or handlingoperation producing the finishedproduct and any other certifying agentwhich certified operations producingraw organic product or organicingredients used in the finishedproduct: Provided, That, such seals ormarks are not, individually, displayedmore prominently than the USDA Seal.

§ 205.308 Agricultural products in otherthan packaged form at the point of retailsale that are sold, labeled, or representedas ‘‘made with organic (specifiedingredients).’’

(a) Retail displays, display containers,and market information of agriculturalproducts containing between 50 and 95percent organic ingredients may use thephrase, ‘‘made with organic (specifiedingredients)’’ Provided, That, suchproducts have been assembled at amanufacturing facility certified in

accordance with the requirements ofthis part, and:

(1) Such statement does not list morethan three organic ingredients, and

(2) In any such display of theproduct’s ingredient statement, theorganic ingredients must be modified as‘‘organic.’’

(b) Such agricultural products labeledas ‘‘made with organic (specifiedingredients)’’ in retail displays, displaycontainers, and market information maydisplay the certifying agent’s seal, logo,or other identifying mark.

§ 205.309 Agricultural products producedon an exempt or excluded operation.

(a) An agricultural productorganically produced or handled on anexempt or excluded operation must not:

(1) Display the USDA Seal or anycertifying agent’s seal or otheridentifying mark which represents thatthe production or handling operation asa certified organic operation, or

(2) Be represented as a certifiedorganic product to any buyer.

(b) An agricultural productorganically produced or handled on anexempt or excluded operation may beidentified as an organic product ororganic ingredient in a multiingredientproduct produced by the exempt orexcluded operation. Such product oringredient must not be identified as‘‘organic’’ in a product processed byothers.

(c) Such product is subject to labelingrequirements specified in paragraph (a)of § 205.300, and paragraphs (e)(1)through (e)(7) of § 205.301.

§ 205.310 USDA Seal.

(a) The USDA Seal described inparagraphs (b) and (c) of this sectionmay be used only for agriculturalproducts (raw or processed) describedin § 205.301(a) and (b).

(b) The USDA Seal must replicate theform and design of the example in figure1 and must be printed legibly andconspicuously:

(1) On a white, light colored, ortransparent background with contrastingdark color words and shield outline oron a dark colored background withcontrasting white or light colored wordsand shield outline; or

(2) On a white background with darkblue colored words and red shieldoutline.BILLING CODE 3410–02–P



BILLING CODE 3410–02–C

Subpart E—Certification

§ 205.400 General requirements forcertification.

A person seeking to receive ormaintain organic certification under theregulations in this part must:

(a) Comply with the Act andapplicable organic production andhandling regulations of this part;

(b) Establish, implement, and updateannually an organic production orhandling system plan that is submittedto an accredited certifying agent asprovided for in § 205.200;

(c) Permit on-site inspections withcomplete access to the production orhandling operation, includingnoncertified areas and structures, by thecertifying agent as provided for in§ 205.403;

(d) Maintain all records applicable tothe organic operation for not less than5 years beyond their creation and allowauthorized representatives of theSecretary, the applicable Stateprogram’s governing State official, andthe certifying agent access to suchrecords during normal business hoursfor review and copying to determinecompliance with the Act and theregulations in this part, as provided forin § 205.104;

(e) Submit the applicable fees chargedby the certifying agent; and

(f) Immediately notify the certifyingagent concerning any:

(1) Application, including drift, of aprohibited substance to any field,production unit, site, facility, livestock,or product that is part of an operation;and

(2) Change in a certified operation orany portion of a certified operation thatmay affect its compliance with the Actand the regulations in this part.

§ 205.401 Application for Certification.A person seeking certification of a

production or handling operation underthis subpart must submit a request forcertification to a certifying agent. The

request must include the followinginformation:

(a) An organic production or handlingsystem plan, as required in § 205.200;

(b) The name of the personcompleting the application; theapplicant’s business name, address, andtelephone number; and, when theapplicant is a corporation, the name,address, and telephone number of theperson authorized to act on theapplicant’s behalf.

(c) The name(s) of any organiccertifying agent(s) to which applicationhas previously been made, the year(s) ofapplication, and the outcome of theapplication(s) submission, including acopy of any notification ofnoncompliance or denial of certificationissued to the applicant for certificationand a description of the actions taken bythe applicant to correct the deficienciesnoted in the notification ofnoncompliance, including evidence ofsuch correction and;

(d) Other information necessary todetermine compliance with the Act andthe regulations in this part.

§ 205.402 Review of application.(a) Upon acceptance of an application

for certification a certifying agent must:(1) Review the application to ensure

completeness pursuant to § 205.401;(2) Determine by a review of the

application materials whether theapplicant appears to comply or may beable to comply with the applicablerequirements of subpart C of this part;

(3) Verify that an applicant whopreviously applied to another certifyingagent and received a notification ofnoncompliance, pursuant to§ 205.405(a), has submitteddocumentation to support the correctionof any deficiencies identified in suchnotification, as required in § 205.405(b);and

(4) Schedule an on-site inspection ofthe operation to determine whether theapplicant qualifies for certification if thereview of application materials revealsthat the production or handlingoperation may be in compliance withthe applicable requirements of subpart Cof this part.

(b) The certifying agent shallcommunicate to the applicant itsfindings on the review of applicationmaterials specified in § 205.402(a).

(c) The applicant may withdraw itsapplication at any time. An applicantwho withdraws its application shall beliable for the costs of services providedup to the time of withdrawal of itsapplication. An applicant thatvoluntarily withdrew its applicationprior to the issuance of a notice ofnoncompliance will not be issued a

notice of noncompliance. Similarly, anapplicant that voluntarily withdrew itsapplication prior to the issuance of anotice of certification denial will not beissued a notice of certification denial.

§ 205.403 On-site inspections.

(a) On-site inspections.(1) A certifying agent must conduct an

initial on-site inspection of eachproduction unit, facility, and site that isincluded in an operation for whichcertification is requested and an on-siteinspection of each certified operationannually thereafter, for the purpose ofdetermining whether to approve therequest for certification or whether thecertification of the operation shouldcontinue.

(2)(i) A certifying agent may conductadditional on-site inspections ofapplicants for certification and certifiedoperations to determine compliancewith the Act and the regulations in thispart.

(ii) The Administrator or Stateprogram’s governing State official mayrequire that additional inspections beperformed by the certifying agent for thepurpose of determining compliancewith the Act and the regulations in thispart.

(iii) Additional inspections may beannounced or unannounced at thediscretion of the certifying agent or asrequired by the Administrator or Stateprogram’s governing State official.

(b) Scheduling. The initial on-siteinspection must be conducted within areasonable time following adetermination that the applicantappears to comply or may be able tocomply with the requirements ofsubpart C of this part. On-siteinspections must be conducted whenthe applicant or an authorizedrepresentative of the applicant who isknowledgeable about the operation ispresent and at a time when land,facilities, and activities that demonstratethe operation’s compliance with orcapability to comply with the applicableprovisions of subpart C of this part canbe observed, except that thisrequirement does not apply tounannounced on-site inspections.

(c) Verification of information. Theon-site inspection of an operation mustverify:

(1) The operation’s compliance orcapability to comply with the Act andthe regulations in this part;

(2) That the information, includingthe organic production or handlingsystem plan, provided in accordancewith §§ 205.401, 205.406, and 205.200,accurately reflects the practices used orto be used by the applicant for



certification or by the certifiedoperation;

(3) That prohibited substances havenot been and are not being applied tothe operation through means which, atthe discretion of the certifying agent,may include the collection and testingof soil; water; waste; seeds; plant tissue;and plant, animal, and processedproducts samples.

(d) Exit interview. The inspector mustconduct an exit interview with anauthorized representative of theinspected operation to confirm theaccuracy and completeness ofinspection observations and informationgathered during the on-site inspection.The inspector must also address theneed for any additional information aswell as any issues of concern.

§ 205.404 Approval of certification.(a) Within a reasonable time after

completion of the initial on-siteinspection, a certifying agent mustreview the on-site inspection report, theresults of any analyses for substancesconducted, and any additionalinformation requested from or suppliedby the applicant. If the certifying agentdetermines that the organic system planand all procedures and activities of theapplicant’s operation are in compliancewith the requirements of this part andthat the applicant is able to conductoperations in accordance with the plan,the agent shall approve certification.The approval may include restrictionsas a condition of continued certification.

(b) The certifying agent must issue acertificate of organic operation whichspecifies the:

(1) Name and address of the certifiedoperation;

(2) Effective date of certification;(3) Categories of organic operation,

including crops, wild crops, livestock,or processed products produced by thecertified operation; and

(4) Name, address, and telephonenumber of the certifying agent.

(c) Once certified, a production orhandling operation’s organiccertification continues in effect untilsurrendered by the organic operation orsuspended or revoked by the certifyingagent, the State program’s governingState official, or the Administrator.

§ 205.405 Denial of certification.(a) When the certifying agent has

reason to believe, based on a review ofthe information specified in § 205.402 or§ 205.404, that an applicant forcertification is not able to comply or isnot in compliance with therequirements of this part, the certifyingagent must provide a writtennotification of noncompliance to the

applicant pursuant to § 205.662(a).When correction of a noncompliance isnot possible, a notification ofnoncompliance and a notification ofdenial of certification may be combinedin one notification.

(b) Upon receipt of such notificationof noncompliance, the applicant may:

(1) Correct deficiencies and submit adescription of the corrective actionstaken with supporting documentation tothe certifying agent;

(2) Correct deficiencies and submit anew application to another certifyingagent: Provided, That, the applicantmust include a complete application,the notification of noncompliancereceived from the first certifying agent,and a description of the correctiveactions taken with supportingdocumentation; or

(3) Submit written information torebut the noncompliance described inthe notification of noncompliance.

(c) After issuance of a notification ofnoncompliance, the certifying agentmust:

(1) Evaluate the applicant’s correctiveactions taken and supportingdocumentation submitted or the writtenrebuttal, conduct an on-site inspection ifnecessary, and;

(i) When the corrective action orrebuttal is sufficient for the applicant toqualify for certification, issue theapplicant an approval of certificationpursuant to § 205.404; or

(ii) When the corrective action orrebuttal is not sufficient for theapplicant to qualify for certification,issue the applicant a written notice ofdenial of certification.

(2) Issue a written notice of denial ofcertification to an applicant who fails torespond to the notification ofnoncompliance.

(3) Provide notice of approval ordenial to the Administrator, pursuant to§ 205.501(a)(14).

(d) A notice of denial of certificationmust state the reason(s) for denial andthe applicant’s right to:

(1) Reapply for certification pursuantto §§ 205.401 and 205.405(e);

(2) Request mediation pursuant to§ 205.663 or, if applicable, pursuant toa State program; or

(3) File an appeal pursuant to§ 205.681 or, if applicable, pursuant toa State program of the denial ofcertification.

(e) An applicant for certification whohas received a written notification ofnoncompliance or a written notice ofdenial of certification may apply forcertification again at any time with anycertifying agent, in accordance with§§ 205.401 and 205.405(e). When suchapplicant submits a new application to

a certifying agent other than the agentwho issued the notification ofnoncompliance or notice of denial ofcertification, the applicant forcertification must include a copy of thenotification of noncompliance or noticeof denial of certification and adescription of the actions taken, withsupporting documentation, to correctthe deficiencies noted in the notificationof noncompliance.

(f) A certifying agent who receives anew application for certification, whichincludes a notification ofnoncompliance or a notice of denial ofcertification, must treat the applicationas a new application and begin a newapplication process pursuant to§ 205.402.

(g) Notwithstanding paragraph (a) ofthis section, if a certifying agent hasreason to believe that an applicant forcertification has willfully made a falsestatement or otherwise purposefullymisrepresented the applicant’soperation or its compliance with thecertification requirements pursuant tothis part, the certifying agent may denycertification pursuant to paragraph(c)(1)(ii) of this section without firstissuing a notification of noncompliance.

§ 205.406 Continuation of certification.(a) To continue certification, a

certified operation must annuallysubmit the following information, asapplicable, to the certifying agent:

(1) An updated organic production orhandling system plan which includes:

(i) A summary statement, supportedby documentation, detailing anydeviations from, changes to,modifications to, or other amendmentsmade to the previous year’s organicsystem plan during the previous year;and

(ii) Any additions or deletions to theprevious year’s organic system plan,intended to be undertaken in thecoming year, detailed pursuant to§ 205.200;

(2) Any additions to or deletions fromthe information required pursuant to§ 205.401(b); and (3) Other informationas deemed necessary by the certifyingagent to determine compliance with theAct and the regulations in this part.

(b) Following the receipt of theinformation specified in paragraph (a) ofthis section, the certifying agent shallarrange and conduct an on-siteinspection of the certified operation,pursuant to § 205.403.

(c) If the certifying agent has reason tobelieve, based on the on-site inspectionand a review of the informationspecified in § 205.404, that a certifiedoperation is not complying with therequirements of the Act and the



regulations in this part, the certifyingagent shall provide a writtennotification of noncompliance to theoperation in accordance with § 205.662.

(d) If the certifying agent determinesthat the certified operation is complyingwith the Act and the regulations in thispart and that any of the informationspecified on the certificate of organicoperation has changed, the certifyingagent must issue an updated certificateof organic operation pursuant to§ 205.404(b).

§§ 205.407–205.499 [Reserved]


§ 205.500 Areas and duration ofaccreditation.

(a) The Administrator shall accredit aqualified domestic or foreign applicantin the areas of crops, livestock, wildcrops, or handling or any combinationthereof to certify a domestic or foreignproduction or handling operation as acertified operation.

(b) Accreditation shall be for a periodof 5 years from the date of approval ofaccreditation pursuant to § 205.506.

(c) In lieu of accreditation underparagraph (a) of this section, USDA willaccept a foreign certifying agent’saccreditation to certify organicproduction or handling operations if:

(1) USDA determines, upon therequest of a foreign government, that thestandards under which the foreigngovernment authority accredited theforeign certifying agent meet therequirements of this part; or

(2) The foreign government authoritythat accredited the foreign certifyingagent acted under an equivalencyagreement negotiated between theUnited States and the foreigngovernment.

§ 205.501 General requirements foraccreditation.

(a) A private or State entity accreditedas a certifying agent under this subpartmust:

(1) Have sufficient expertise inorganic production or handlingtechniques to fully comply with andimplement the terms and conditions ofthe organic certification programestablished under the Act and theregulations in this part;

(2) Demonstrate the ability to fullycomply with the requirements foraccreditation set forth in this subpart;

(3) Carry out the provisions of the Actand the regulations in this part,including the provisions of §§ 205.402through 205.406 and § 205.670;

(4) Use a sufficient number ofadequately trained personnel, including

inspectors and certification reviewpersonnel, to comply with andimplement the organic certificationprogram established under the Act andthe regulations in subpart E of this part;

(5) Ensure that its responsiblyconnected persons, employees, andcontractors with inspection, analysis,and decision-making responsibilitieshave sufficient expertise in organicproduction or handling techniques tosuccessfully perform the dutiesassigned.

(6) Conduct an annual performanceappraisal for each inspector used by thecertifying agent and implementmeasures to correct any deficiencies incompliance with the Act and theregulations in this part that areidentified in the appraisal;

(7) Have an annual programevaluation of its certification activitiesconducted by the certifying agent’s staff,an outside auditor, or a consultant whohas expertise to conduct suchevaluations and implement measures tocorrect any deficiencies in compliancewith the Act and the regulations in thispart that are identified in the evaluation;

(8) Provide sufficient information topersons seeking certification to enablethem to comply with the applicablerequirements of the Act and theregulations in this part;

(9) Maintain all records pursuant to§ 205.510(b) and make all such recordsavailable for inspection and copyingduring normal business hours byauthorized representatives of theSecretary and the applicable Stateprogram’s governing State official;

(10) Maintain strict confidentialitywith respect to its clients under theapplicable organic certification programand not disclose to third parties (withthe exception of the Secretary or theapplicable State program’s governingState official or their authorizedrepresentatives) any business-relatedinformation concerning any clientobtained while implementing theregulations in this part, except asprovided for in § 205.504(b)(5);

(11) Prevent conflicts of interest by:(i) Not certifying a production or

handling operation if the certifyingagent or a responsibly connected partyof such certifying agent has or has helda commercial interest in the productionor handling operation, including animmediate family interest or theprovision of consulting services, withinthe 12-month period prior to theapplication for certification;

(ii) Excluding any person, includingcontractors, with conflicts of interestfrom work, discussions, and decisionsin all stages of the certification processand the monitoring of certified

production or handling operations forall entities in which such person has orhas held a commercial interest,including an immediate family interestor the provision of consulting services,within the 12-month period prior to theapplication for certification;

(iii) Not permitting any employee,inspector, contractor, or other personnelto accept payment, gifts, or favors of anykind, other than prescribed fees, fromany business inspected, except that acertifying agent that is a not-for-profitorganization with an Internal RevenueCode tax exemption, or in the case of aforeign certifying agent a comparablerecognition of not-for-profit status fromits government, may accept voluntarylabor from certified operations;

(iv) Not providing advice concerningorganic practices or techniques to anycertification applicant or certifiedoperation for a fee, other than as part ofthe fees under the applicablecertification program established underthe Act; and

(v) Requiring all persons identified in§ 205.504(a)(2) to complete an annualconflict of interest disclosure report.

(12) Accept the certification decisionsmade by another USDA-accreditedcertifying agent as equivalent to its own;

(13) Refrain from making false ormisleading claims about itsaccreditation status, the USDAaccreditation program for certifyingagents, or the nature or qualities ofproducts labeled as organicallyproduced;

(14) Submit to the Administrator:(i) A copy of any notice of denial of

certification issued pursuant to§ 205.405, notification ofnoncompliance, notification ofnoncompliance correction, notificationof proposed suspension or revocation,and notification of suspension orrevocation sent pursuant to § 205.662,simultaneously with its issuance and

(ii) On a quarterly calender basis, thename, address, and telephone number ofeach operation granted certification;

(15) Charge applicants for certificationand certified production and handlingoperations only those fees and chargesthat it has filed with the Administrator;

(16) Pay and submit fees to AMS inaccordance with § 205.640; and

(17) Comply with, implement, andcarry out any other terms andconditions determined by theAdministrator to be necessary.

(b) A private or State entity accreditedas a certifying agent under this subpartmay establish a seal, logo, or otheridentifying mark to be used byproduction and handling operationscertified by the certifying agent toindicate affiliation with the certifying



agent: Provided, That, the certifyingagent:

(1) Does not require use of its seal,logo, or other identifying mark on anyproduct sold, labeled, or represented asorganically produced as a condition ofcertification and

(2) Does not require compliance withany production or handling practicesother than those provided for in the Actand the regulations in this part as acondition of use of its identifying mark:Provided, That, this provision does notapply to States with more restrictiverequirements approved by the Secretaryor private entity certifying agentscertifying production and handlingoperations within States with morerestrictive requirements approved by theSecretary.

(c) A private entity accredited as acertifying agent must:

(1) Hold the Secretary harmless forany failure on the part of the certifyingagent to carry out the provisions of theAct and the regulations in this part;

(2) Furnish reasonable security, in anamount and according to such terms asthe Administrator may by regulationprescribe, for the purpose of protectingthe rights of production and handlingoperations certified by such certifyingagent under the Act and the regulationsin this part; and

(3) Transfer to the Administrator andmake available to any applicable Stateprogram’s governing State official allrecords or copies of records concerningthe person’s certification activities inthe event that the certifying agentdissolves or loses its accreditation.

(d) No private or State entityaccredited as a certifying agent underthis subpart shall exclude fromparticipation in or deny the benefits ofthe National Organic Program to anyperson due to discrimination because ofrace, color, national origin, gender,religion, age, disability, political beliefs,sexual orientation, or marital or familystatus.

§ 205.502 Applying for accreditation.

(a) A private or State entity seekingaccreditation as a certifying agent underthis subpart must submit an applicationfor accreditation which contains theapplicable information and documentsset forth in §§ 205.503 through 205.505and the fees required in § 205.640 to:Program Manager, USDA–AMS–TMP–NOP, Room 2945–South Building, POBox 96456, Washington, DC 20090–6456.

(b) Following the receipt of theinformation and documents, theAdministrator will determine, pursuantto § 205.506, whether the applicant for

accreditation should be accredited as acertifying agent.

§ 205.503 Applicant information.A private or State entity seeking

accreditation as a certifying agent mustsubmit the following information:

(a) The business name, primary officelocation, mailing address, name of theperson(s) responsible for the certifyingagent’s day-to-day operations, contactnumbers (telephone, facsimile, andInternet address) of the applicant, and,for an applicant who is a private person,the entity’s taxpayer identificationnumber;

(b) The name, office location, mailingaddress, and contact numbers(telephone, facsimile, and Internetaddress) for each of its organizationalunits, such as chapters or subsidiaryoffices, and the name of a contactperson for each unit;

(c) Each area of operation (crops, wildcrops, livestock, or handling) for whichaccreditation is requested and theestimated number of each type ofoperation anticipated to be certifiedannually by the applicant along with acopy of the applicant’s schedule of feesfor all services to be provided underthese regulations by the applicant;

(d) The type of entity the applicant is(e.g., government agricultural office, for-profit business, not-for-profitmembership association) and for:

(1) A State entity, a copy of theofficial’s authority to conductcertification activities under the Act andthe regulations in this part,

(2) A private entity, documentationshowing the entity’s status andorganizational purpose, such as articlesof incorporation and by-laws orownership or membership provisions,and its date of establishment; and

(e) A list of each State or foreigncountry in which the applicantcurrently certifies production andhandling operations and a list of eachState or foreign country in which theapplicant intends to certify productionor handling operations.

§ 205.504 Evidence of expertise andability.

A private or State entity seekingaccreditation as a certifying agent mustsubmit the following documents andinformation to demonstrate its expertisein organic production or handlingtechniques; its ability to fully complywith and implement the organiccertification program established in§§ 205.100 and 205.101, §§ 205.201through 205.203, §§ 205.300 through205.303, §§ 205.400 through 205.406,and §§ 205.661 and 205.662; and itsability to comply with the requirementsfor accreditation set forth in § 205.501:

(a) Personnel.(1) A copy of the applicant’s policies

and procedures for training, evaluating,and supervising personnel;

(2) The name and position descriptionof all personnel to be used in thecertification operation, includingadministrative staff, certificationinspectors, members of any certificationreview and evaluation committees,contractors, and all parties responsiblyconnected to the certifying agent;

(3) A description of the qualifications,including experience, training, andeducation in agriculture, organicproduction, and organic handling, for:

(i) Each inspector to be used by theapplicant and

(ii) Each person to be designated bythe applicant to review or evaluateapplications for certification; and

(4) A description of any training thatthe applicant has provided or intends toprovide to personnel to ensure that theycomply with and implement therequirements of the Act and theregulations in this part.

(b) Administrative policies andprocedures.

(1) A copy of the procedures to beused to evaluate certification applicants,make certification decisions, and issuecertification certificates;

(2) A copy of the procedures to beused for reviewing and investigatingcertified operation compliance with theAct and the regulations in this part andthe reporting of violations of the Actand the regulations in this part to theAdministrator;

(3) A copy of the procedures to beused for complying with therecordkeeping requirements set forth in§ 205.501(a)(9);

(4) A copy of the procedures to beused for maintaining the confidentialityof any business-related information asset forth in § 205.501(a)(10);

(5) A copy of the procedures to beused for making the followinginformation available to any member ofthe public upon request:

(i) Certification certificates issuedduring the current and 3 precedingcalender years;

(ii) A list of producers and handlerswhose operations it has certified,including for each the name of theoperation, type(s) of operation, and theeffective date of the certification, duringthe current and 3 preceding calenderyears;

(iii) The results of laboratory analysesfor residues of pesticides and otherprohibited substances conducted duringthe current and 3 preceding calenderyears; and

(iv) Other business information aspermitted in writing by the producer orhandler; and



(6) A copy of the procedures to beused for sampling and residue testingpursuant to § 205.670.

(c) Conflicts of interest.(1) A copy of procedures intended to

be implemented to prevent theoccurrence of conflicts of interest, asdescribed in § 205.501(a)(11).

(2) For each person identified in§ 205.504(a)(2), a conflict of interestdisclosure report, identifying any food-or agriculture-related business interests,including business interests ofimmediate family members, that cause aconflict of interest.

(d) Current certification activities. Anapplicant who currently certifiesproduction or handling operations mustsubmit:

(1) A list of all production andhandling operations currently certifiedby the applicant;

(2) Copies of at least 3, theAdministrator may require additional,different inspection reports andcertification evaluation documents forproduction or handling operationscertified by the applicant during theprevious year for each area of operationfor which accreditation is requested;and

(3) The results of any accreditationprocess of the applicant’s operation byan accrediting body during the previousyear for the purpose of evaluating itscertification activities.

(e) Other information. Any otherinformation the applicant believes mayassist in the Administrator’s evaluationof the applicant’s expertise and ability.

§ 205.505 Statement of agreement.(a) A private or State entity seeking

accreditation under this subpart mustsign and return a statement of agreementprepared by the Administrator whichaffirms that, if granted accreditation asa certifying agent under this subpart, theapplicant will carry out the provisionsof the Act and the regulations in thispart, including:

(1) Accept the certification decisionsmade by another USDA accreditedcertifying agent as equivalent to its own;

(2) Refrain from making false ormisleading claims about itsaccreditation status, the USDAaccreditation program for certifyingagents, or the nature or qualities ofproducts labeled as organicallyproduced;

(3) Conduct an annual performanceappraisal for each inspector to be usedby the certifying agent and implementmeasures to correct any possibledeficiencies identified in compliancewith the Act and the regulations in thispart;

(4) Have an annual internal programevaluation conducted of its certification

activities by certifying agent staff, anoutside auditor, or a consultant who hasthe expertise to conduct suchevaluations and implement measures tocorrect any deficiencies identified incompliance with the Act and theregulations in this part;

(5) Pay and submit fees to AMS inaccordance with § 205.640; and

(6) Comply with, implement, andcarry out any other terms andconditions determined by theAdministrator to be necessary.

(b) A private entity seekingaccreditation as a certifying agent underthis subpart must additionally agree to:

(1) Hold the Secretary harmless forany failure on the part of the certifyingagent to carry out the provisions of theAct and the regulations in this part;

(2) Furnish reasonable security, in anamount and according to such terms asthe Administrator may by regulationprescribe, for the purpose of protectingthe rights of production and handlingoperations certified by such certifyingagent under the Act and the regulationsin this part; and

(3) Transfer to the Administrator andmake available to the applicable Stateprogram’s governing State official allrecords or copies of records concerningthe certifying agent’s certificationactivities in the event that the certifyingagent dissolves or loses its accreditation.

§ 205.506 Approval of accreditation.(a) Accreditation will be approved

when:(1) The accreditation applicant has

submitted the information required by§§ 205.503 through 205.505;

(2) The accreditation applicant paysthe required fee in accordance with§ 205.640(c); and

(3) The Administrator determines thatthe applicant for accreditation meets therequirements for accreditation as statedin § 205.501, as determined by a reviewof the information submitted inaccordance with §§ 205.503 through205.505 and, if necessary, a review ofthe information obtained from a siteevaluation as provided for in § 205.508.

(b) On making a determination toapprove an application foraccreditation, the Administrator willnotify the applicant of approval ofaccreditation in writing, stating:

(1) The area(s) for which accreditationis given;

(2) The effective date of theaccreditation; and

(3) For a certifying agent who is aprivate entity, the amount and type ofsecurity that must be established toprotect the rights of production andhandling operations certified by suchcertifying agent.

(c) The accreditation of a certifyingagent shall continue in effect until suchtime as the certifying agent fails torenew accreditation as provided in§ 205.510(b), the certifying agentvoluntarily ceases its certificationactivities, or accreditation is suspendedor revoked pursuant to § 205.665.

§ 205.507 Denial of accreditation.

(a) If the Administrator has reason tobelieve, based on a review of theinformation specified in §§ 205.503through 205.505 or after a siteevaluation as specified in § 205.508, thatan applicant for accreditation is not ableto comply or is not in compliance withthe requirements of the Act and theregulations in this part, theAdministrator shall provide a writtennotification of noncompliance to theapplicant in accordance with§ 205.665(a).

(b) The applicant may:(1) File, with the Administrator, an

appeal of the deficiencies identified inthe notification of noncompliance; or

(2) Submit to the Administrator adescription of the actions taken tocorrect the deficiencies identified in thenotification of noncompliance andevidence demonstrating suchcorrections.

(c) If an applicant fails to correct thedeficiencies, fails to report thecorrections by the date specified in thenotification of noncompliance, fails tofile an appeal of the notification ofnoncompliance by the date specified, oris unsuccessful in its appeal, theAdministrator will provide theapplicant with written notification ofaccreditation denial. An applicant whohas received written notification ofaccreditation denial may apply foraccreditation again at any time inaccordance with § 205.502.

(d) If the certifying agent wasaccredited prior to the site evaluationand the certifying agent fails to correctthe deficiencies, fails to report thecorrections by the date specified in thenotification of noncompliance, or failsto file an appeal of the notification ofnoncompliance by the date specified,the Administrator will beginproceedings to suspend or revoke thecertifying agent’s accreditation. Anapplicant who has had its accreditationsuspended may apply for accreditationagain at any time in accordance with§ 205.502. A private entity certifyingagent whose accreditation is revokedwill be ineligible for accreditation for aperiod of not less than 3 years followingthe date of such determination.



§ 205.508 Site evaluations.(a) Site evaluations of accredited

certifying agents shall be conducted forthe purpose of examining the certifyingagent’s operations and evaluating itscompliance with the Act and theregulations of this part. Site evaluationsshall include an on-site review of thecertifying agent’s certificationprocedures, decisions, facilities,administrative and managementsystems, and production or handlingoperations certified by the certifyingagent. Site evaluations shall beconducted by a representative(s) of theAdministrator.

(b) An initial site evaluation of anaccreditation applicant shall beconducted before or within a reasonableperiod of time after issuance of theapplicant’s ‘‘notification ofaccreditation.’’ A site evaluation shallbe conducted after application forrenewal of accreditation but prior to theissuance of a notice of renewal ofaccreditation. One or more siteevaluations will be conducted duringthe period of accreditation to determinewhether an accredited certifying agent iscomplying with the generalrequirements set forth in § 205.501.

§ 205.509 Peer review panel.The Administrator may establish a

peer review panel to assist in evaluatingapplicants for accreditation, amendmentto an accreditation, and renewal ofaccreditation as certifying agents. Peerreviewers will serve withoutcompensation.

(a) Peer review panel(s).(1) A peer review panel shall review

the documentation provided by theAdministrator after any site evaluationperformed pursuant to §§ 205.508 and205.510.

(2) The Administrator shall considerthe reports received from eachindividual member of a peer reviewpanel when determining whether tocontinue or renew the accreditation of acertifying agent.

(3) A peer review panel meeting shallbe held solely for the purposes of givingand receiving information. Any meetingor conference call shall be conducted ina manner that will ensure the actions ofpanel members are carried out on anindividual basis with any opinions andrecommendations by a member beingmade individually.

(b) Eligibility for peer review panels.(1) Applicants for membership in the

peer review panel pool must:(i) Provide the Administrator with a

written description and, upon request,supporting documentation of theirqualifications to conduct peer reviews.Such description must include

information concerning the applicant’straining and expertise in organicproduction or handling methods and inevaluating whether production orhandling operations are using a systemof organic production or handling.

(ii) Address possible limitations onavailability to serve.

(iii) Include information concerningtheir commercial interests and those oftheir immediate family members, withinthe 12-month period prior toapplication, with any person who mayseek to become or who is an accreditedcertifying agent. No person who has orhas had a commercial interest,including an immediate family interestor the provision of consulting services,in an applicant for accreditation orrenewal of accreditation within thepreceding 12-month period shall beappointed to or accept appointment toa panel evaluating such applicant foraccreditation or renewal ofaccreditation.

(2) Persons accepted to the pool mayserve until notified that theirappointment has been rescinded by theAdministrator or until they are nolonger qualified, whichever occurs first.

(c) Composition of peer review panels.(1) Peer review panels convened by

the Administrator shall consist of atleast three but no more than fivemembers.

(2) Peer review panels must include:(i) A Department representative who

shall preside over the panel and(ii) No fewer than two members,

drawn from the peer review pool, whopossess sufficient expertise, asdetermined by the Administrator, in theareas of accreditation described in theapplication for accreditation or thenotice of approval of accreditation foreach certifying agent whose operationsand performance are to be reviewed.

(3) Peer review panels may include:(i) Up to two members with expertise

in other disciplines, includingorganizational management and finance;

(ii) Member(s) from the approvedState organic certification programwhen the applicant is a private entitythat will operate within the State; and

(iii) Member(s) from a foreigngovernment’s organic program when theapplicant is a private entity that willoperate within the country.

(d) Duties and responsibilities ofpanel members.

(1) Each person on a peer reviewpanel must individually review the siteevaluation report prepared by theDepartment’s evaluator(s) and any otherinformation that may be provided by theAdministrator relevant to continuing orrenewing the accreditation status of acertifying agent;

(2) Information about the certifyingagent received as part of the reviewprocess is confidential information, andpeer reviewers must not release, copy,quote, or otherwise use material fromthe information received, other than inthe report required to be submitted;

(3) Each peer reviewer must agree totreat the information received for reviewas confidential; and

(4) Each person on a peer reviewpanel must provide an individualwritten report, includingrecommendations, to the Administratorregarding a certifying agent’s ability toconduct and perform certificationactivities.

(e) Peer review panel reports. Copiesof the peer review panel reports will beprovided upon request to the certifyingagent, and written responses from thecertifying agent may be submitted forconsideration by the Administrator.

§ 205.510 Annual report, recordkeeping,and renewal of accreditation.

(a) Annual report and fees. Anaccredited certifying agent must submitannually to the Administrator, on orbefore the anniversary date of theissuance of the notification ofaccreditation, the following reports andfees:

(1) A complete and accurate update ofinformation submitted pursuant to§§ 205.503 and 205.504;

(2) Information supporting anychanges being requested in the areas ofaccreditation described in § 205.500;

(3) A description of the measuresimplemented in the previous year andany measures to be implemented in thecoming year to satisfy any terms andconditions determined by theAdministrator to be necessary, asspecified in the most recent notificationof accreditation or notice of renewal ofaccreditation;

(4) The results of the most recentinspector performance appraisals andannual program evaluation and adescription of adjustments to thecertifying agent’s operation andprocedures implemented or to beimplemented in response to theappraisals and evaluation; and

(5) The fees required in § 205.640(a).(b) Recordkeeping. Certifying agents

must maintain records according to thefollowing schedule:

(1) Records obtained from applicantsfor certification and certified operationsmust be maintained for not less than 5years beyond their receipt;

(2) Records created by the certifyingagent regarding applicants forcertification and certified operationsmust be maintained for not less than 10years beyond their creation; and



(3) Records created or received by thecertifying agent pursuant to theaccreditation requirements of thissubpart F, excluding any recordscovered by §§ 205.510(b)(2), must bemaintained for not less than 5 yearsbeyond their creation or receipt.

(c) Renewal of accreditation.(1) An accredited certifying agent’s

application for accreditation renewalmust be received 6 months prior to thefifth anniversary of issuance of thenotification of accreditation and eachsubsequent renewal of accreditation.The accreditation of certifying agentswho make timely application forrenewal of accreditation will not expireduring the renewal process. Theaccreditation of certifying agents whofail to make timely application forrenewal of accreditation will expire asscheduled unless renewed prior to thescheduled expiration date. Certifyingagents with an expired accreditationmust not perform certification activitiesunder the Act and these regulations.

(2) Following receipt of theinformation submitted by the certifyingagent in accordance with paragraph (a)of this section, the results of a siteevaluation, and, if applicable, thereports submitted by a peer reviewpanel, the Administrator will determinewhether the certifying agent remains incompliance with the Act and theregulations of this part and should haveits accreditation renewed.

(d) Notice of renewal of accreditation.Upon a determination that the certifyingagent is in compliance with the Act andthe regulations of this part, theAdministrator will issue a notice ofrenewal of accreditation. The notice ofrenewal will specify any terms andconditions that must be addressed bythe certifying agent and the time withinwhich those terms and conditions mustbe satisfied.

(e) Noncompliance. Upon adetermination that the certifying agentis not in compliance with the Act andthe regulations of this part, theAdministrator will initiate proceedingsto suspend or revoke the certifyingagent’s accreditation.

§§ 205.511—205.599 [Reserved]


The National List of Allowed andProhibited Substances

§ 205.600 Allowed and prohibitedsubstances and ingredients in organicproduction and handling.

To be sold or labeled as ‘‘organic,’’ or‘‘made with organic (specifiedingredients),’’ the product must be

produced and handled without the useof:

(a) Synthetic substances andingredients, except as provided in§ 205.601 and § 205.603.

(b) Nonagricultural substances used inor on processed products, except asotherwise provided in § 205.605;

(c) Nonsynthetic substancesprohibited in § 205.602 or § 205.604;and

(d) Materials, processes, or techniquesprohibited in § 205.301.

§ 205.601 Synthetic substances allowedfor use in organic crop production.

In accordance with restrictionsspecified in this section and § 205.102and § 205.200 through § 205.207, thefollowing synthetic substances may beused:

(a) As algicides, disinfectants andsanitizers, including irrigation systemcleaning systems

(1) Alcohols(i) Ethanol(ii) Isopropanol(2) Chlorine Materials—Except, That,

residual chlorine levels in the watershall not exceed the maximum residualdisinfectant limit under the SafeDrinking Water Act.

(i) Calcium Hypochlorite(ii) Chlorine Dioxide(iii) Sodium Hypochlorite(3) Hydrogen Peroxide(4) Soap-Based Algicides/Demossers(b) As herbicides, weed barriers, as

applicable.(1) Herbicides, Soap-Based—for use in

farmstead maintenance (roadways,ditches, right of ways, buildingperimeters) and ornamental crops

(2) Mulches(i) Newspaper or other recycled paper,

without glossy or colored inks.(ii) Plastic mulch and covers

(petroleum-based other than polyvinylchloride (PVC))

(c) As compost feedstocks—Newspapers or other recycled paper,without glossy or colored inks

(d) As animal repellents—Soaps,Ammonium—for use as a large animalrepellant only, no contact with soil oredible portion of crop

(e) As insecticides (includingacracides or mite control)

(1) Ammonium Carbonate—for use asbait in insect traps only, no directcontact with crop or soil

(2) Boric Acid—structural pestcontrol, no direct contact with organicfood or crops

(3) Elemental Sulfur(4) Lime Sulfur—including calcium

polysulfide, fungicides, or insecticidesif no alternatives

(5) Oils, Horticultural—as dormant,suffocating, and summer oils

(6) Petroleum-Based Oils—on woodyplants for dormant and summer pestcontrol, Except, That, a petroleum-basedmaterial allowed as a pesticide isprohibited for use as a herbicide.Aromatic petroleum solvents as asubclass of petroleum-based oils areprohibited.

(7) Soaps, Insecticidal(8) Sticky Traps/Barriers(f) As insect attractants—Pheromones(g) As rodenticides(1) Sulfur Dioxide—underground

rodent control only (smoke bombs)(2) Vitamin D3(h) As slug or snail bait—[Reserved](i) As plant disease control(1) Coppers, Fixed—Copper

Hydroxide, Copper Oxide, CopperOxychloride, Includes productsexempted from EPA tolerance, Except,That, copper-based materials shall bemanaged in a way that preventsexcessive accumulation in the soil andshall not be used as herbicides.

(2) Copper Sulfate—Substance mustbe used in a manner that minimizesaccumulation of copper in the soil.

(3) Hydrated Lime—not permitted forsoil application or to cauterizemutilations or deodorize animal wastes

(4) Hydrogen Peroxide(5) Oils, Horticultural, as dormant,

suffocating, and summer oils,insecticides only

(6) Petroleum-Based Oils—Except,That, aromatic petroleum solvents as asubclass of petroleum-based oils areprohibited.

(7) Potassium Bicarbonate(8) Elemental Sulfur(j) As plant or soil amendments.(1) Aquatic Plant Extracts (other than

hydrolyzed)—Extraction process islimited to the use of PotassiumHydroxide or Sodium Hydroxide;solvent amount used is limited to thatamount necessary for extraction.

(2) Humic Acids—naturally occurringdeposits, water and alkali extracts only

(3) Lignin Sulfonate—chelating agent,dust suppressant, floatation agent

(4) Micronutrients—not to be used asa defoliant, herbicide, or desiccant.Those made from nitrates or chloridesare not allowed. Soil deficiency must bedocumented by soil or tissue test.

(i) Soluble Boron Products(ii) Sulfates, carbonates, oxides, or

silicates of zinc, iron, magnesium,manganese, molybdenum, selenium,and cobalt

(5) Liquid Fish Products—can be pHadjusted with sulfuric, citric orphosphoric acid. The amount of acidused shall not exceed the minimumneeded to lower the pH to 3.5

(6) Vitamins, B1, C, and E(k) As plant growth regulators—

[Reserved]



(l) As floating agents in postharvesthandling

(1) Lignin Sulfonate(2) Sodium Silicate—for tree fruit and

fiber processing(m) As synthetic inert ingredients as

classified by the EnvironmentalProtection Agency (EPA), for use with asynthetic substance listed in this sectionand used as an active ingredient inaccordance with any limitations on theuse of such synthetic substances—EPAList 4—Inerts of Minimal Concern

(n)–(z) [Reserved]

§ 205.602 Nonsynthetic substancesprohibited for use in organic cropproduction.

(a) Ash from manure burning(b) Arsenic(c) Lead salts(d) Sodium Fluoaluminate (Mined)(e) Strychnine(f) Tobacco Dust(g)-(z) [Reserved]

§ 205.603 Synthetic substances allowedfor use in organic livestock production.

Any substance in the followingcategories may be used in organiclivestock production in accordance withany restrictions specified in this sectionand § 205.102 and § 205.236 through§ 205.239.

(a) As disinfectants, sanitizers, andmedical treatments as applicable

(1) Alcohols(i) Ethanol—disinfectant and sanitizer

only, prohibited as a feed additive(ii) Isopropanol—disinfectant only(2) Aspirin—approved for health care

use to reduce inflammation(3) Chlorine Materials—disinfecting

and sanitizing facilities and equipment.Residual chlorine levels in the watershall not exceed the maximum residualdisinfectant limit under the SafeDrinking Water Act

(i) Calcium Hypochlorite(ii) Chlorine Dioxide(iii) Sodium Hypochlorite(4) Chlorohexidine—Allowed for

surgical procedures conducted by aveterinarian. Allowed for use as a teatdip when alternative germicidal agentsand/or physical barriers have lost theireffectiveness

(5) Electrolytes—without antibiotics(6) Glucose(7) Glycerin—Allowed as a livestock

teat dip, must be produced through thehydrolysis of fats or oils

(8) Iodine(9) Hydrogen Peroxide(10) Magnesium Sulfate(11) Parasiticides—Ivermectin—

Prohibited in slaughter stock, allowed inemergency treatment for dairy andbreeder stock when organic system

plan-approved preventive managementdoes not prevent infestation. Milk ormilk products from a treated animalcannot be labeled as provided for insubpart D of this part for 90 daysfollowing treatment. In breeder stock,treatment cannot occur during the lastthird of gestation if the progeny will besold as organic

(12) Phosphoric Acid—allowed as anequipment cleaner

(13) Vaccines and Biologics(b) As topical treatment, external

parasiticide or local anesthetic asapplicable.

(1) Iodine(2) Lidocaine—as a local anesthetic.

Use requires a withdrawal period of 90days after administering to livestockintended for slaughter and 7 days afteradministering to dairy animals

(3) Lime, Hydrated—(Bordeauxmixes)

(4) Mineral Oil—for topical use and asa lubricant

(5) Procaine—as a local anesthetic,use requires a withdrawal period of 90days after administering to livestockintended for slaughter and 7 days afteradministering to dairy animals

(6) Copper Sulfate(c) As feed supplements—Milk

Replacers—without antibiotics, asemergency use only, no nonmilkproducts or products from BST treatedanimals

(d) As feed additives(1) Trace Minerals, including:(i) Copper Sulfate(ii) Magnesium Sulfate(2) Vitamins—accepted for

enrichment or fortification, limited tothose approved by the FDA for livestockuse

(e) As fillers and excipients(f)–(z) [Reserved]

§ 205.604 Nonsynthetic substancesprohibited for use in organic livestockproduction. [Reserved]

§ 205.605 Nonagricultural (nonorganic)substances allowed as ingredients in or onprocessed products labeled as ‘‘organic’’ or‘‘made with organic (specifiedingredients).’’

The following nonagriculturalsubstances may be used only inaccordance with any restrictionsspecified in this section and § 205.102,§ 205.270, and § 205.300 through§ 205.310.

(a) Nonsynthetics allowed:(1) Agar-agar(2) Acids(i) Alginic(ii) Citric—produced by microbial

fermentation of carbohydrate substances(iii) Lactic(3) Baking Powder—aluminum-free

(4) Bentonite(5) Calcium Carbonate(6) Calcium Chloride(7) Carrageenan(8) Cornstarch (Native)(9) Dairy Cultures—non-EM(10) Diatomaceous Earth—food

filtering aid only(11) Enzymes—must be derived from

edible, nontoxic plants, nonpathogenicfungi, or nonpathogenic bacteria

(12) Gums—Water extracted only(arabic, guar, locust bean, carob bean)

(13) Kaolin(14) Kelp—for use only as a thickener

and dietary supplement(15) Lecithin—unbleached(16) Nitrogen—Oil-free grades(17) Oxygen—Oil-free grades(18) Pectin (high-methoxy)(19) Perlite—for use only as a filter

aid in food processing(20) Potassium Chloride(21) Potassium Iodide(22) Sodium Bicarbonate(23) Sodium Carbonate(24) Yeast—Nonsynthetic, non-EM(i) Autolysate(ii) Bakers(iii) Brewers(iv) Nutritional(v) Smoked—growth on

petrochemical substrate and sulfitewaste liquor prohibited. Nonsyntheticsmoke flavoring process must bedocumented

(b) Synthetics allowed:(1) Alginates(2) Ammonium Bicarbonate—for use

only as a leavening agent(3) Ammonium Carbonate—for use

only as a leavening agent(4) Ascorbic Acid(5) Calcium Citrate(6) Calcium Hydroxide(7) Calcium Phosphates (monobasic

and dibasic)(8) Carbon Dioxide(9) Chlorine Materials—disinfecting

and sanitizing food contact surfaces,Except, That, residual chlorine levels inthe water shall not exceed the maximumresidual disinfectant limit under theSafe Drinking Water Act.

(i) Calcium Hypochlorite(ii) Chlorine Dioxide(iii) Sodium Hypochlorite(10) Ethylene—allowed for post

harvest ripening of tropical fruit(11) Ferrous Sulfate—for iron

enrichment or fortification of foodswhen required by regulation orrecommended (independentorganization)

(12) Glycerides (mono and di)—foruse only in drum drying of food

(13) Glycerin—produced byhydrolysis of fats and oils

(14) Hydrogen peroxide



(15) Lecithin—bleached(16) Magnesium Carbonate—for use

only in agricultural products labeled‘‘made with organic (specifiedingredients),’’ prohibited in agriculturalproducts labeled ‘‘organic’’

(17) Magnesium Chloride—derivedfrom sea water

(18) Magnesium Stearate—for useonly in agricultural products labeled‘‘made with organic (specifiedingredients),’’ prohibited in agriculturalproducts labeled ‘‘organic’’

(19) Magnesium Sulfate(20) Nutrient vitamins and minerals,

in accordance with 21 CFR 104.20,Nutritional Quality Guidelines ForFoods

(21) Ozone(22) Pectin (low-methoxy)(23) Phosphoric Acid—cleaning of

food-contact surfaces and equipmentonly

(24) Potassium Acid Tartrate(25) Potassium Tartrate made from

Tartaric acid(26) Potassium Carbonate(27) Potassium Citrate(28) Potassium Hydroxide—

prohibited for use in lye peeling of fruitsand vegetables

(29) Potassium Iodide—for use only inagricultural products labeled ‘‘madewith organic (specified ingredients),’’prohibited in agricultural productslabeled ‘‘organic’’

(30) Potassium Phosphate—for useonly in agricultural products labeled‘‘made with organic (specificingredients),’’ prohibited in agriculturalproducts labeled ‘‘organic’’

(31) Silicon Dioxide(32) Sodium Citrate(33) Sodium Hydroxide—prohibited

for use in lye peeling of fruits andvegetables

(34) Sodium Phosphates—for use onlyin dairy foods

(35) Tocopherols—derived fromvegetable oil when rosemary extracts arenot a suitable alternative

(36) Xanthan gum(c)–(z) [Reserved]

§ 205.606 Nonorganically producedagricultural products allowed as ingredientsin or on processed products labeled asorganic or made with organic ingredients.

Any nonorganically producedagricultural product may be used inaccordance with any restrictionsspecified in this section and § 205.102,§ 205.270, and § 205.300 through§ 205.310.

§ 205.607 Amending the National List.

(a) Any person may petition theNational Organic Standard Board for thepurpose of having a substance evaluated

for recommendation to the Secretary forinclusion on or deletion from theNational List in accordance with section6517 of the Act.

(b) A person petitioning foramendment of the National List shouldrequest a copy of the petitionprocedures from the USDA at theaddress in § 205.607(c).

(c) A petition to amend the NationalList must be submitted to: ProgramManager, USDA/AMS/TM/NOP, Room2945 South Building, PO Box 96456,Washington, DC 20090–6456.

(d) A substance may be added to theNational List only in the followingcategories:

(1) Synthetic substances allowed foruse in organic crop or livestockproduction;

(2) Nonsynthetic substancesprohibited for use in organic crop orlivestock production; or

(3) Nonagricultural substancesallowed for use as ingredients in or onprocessed products labeled as ‘‘organic’’or ‘‘made with organic (specifiedingredients).’’

State Programs

§ 205.620 Requirements of State organiccertification programs.

(a) A State may establish a Stateorganic certification program forproduction and handling operationswithin the State which produces andhandles organic agricultural products.

(b) A State organic certificationprogram must meet the generalrequirements for organic programsspecified in the Act and be at leastequivalent to the regulations in thispart.

(c) A State organic certificationprogram may contain more restrictiverequirements based on uniqueenvironmental conditions or specificproduction or handling practicesparticular to the State or region of theUnited States, which necessitates themore restrictive requirement. Suchadditional requirements must furtherthe purposes and be consistent with theAct and regulations in this part.

(d) A State organic certificationprogram must assume enforcementobligations in the State for therequirements of this part and any morerestrictive requirements approved by theSecretary.

(e) A State organic certificationprogram and any amendments to suchprogram must be approved by theSecretary prior to being implemented bythe State.

§ 205.621 Submission and determinationof proposed State organic certificationprograms and amendments to approvedState organic certification programs.

(a) A State program’s governing Stateofficial must submit to the Secretary aproposed State organic certificationprogram and any proposed amendmentsto such approved program.

(1) Such submission must containsupporting materials that includestatutory authorities, programdescription, a statement of acceptance ofthe general requirements for organicprograms specified in the Act,documentation of unique environmentalor ecological conditions or specificproduction practices particular to theState which necessitate more restrictiverequirements than the requirements ofthis part, and other information as maybe required by the Secretary.

(2) Submission of a request foramendment of an approved Stateorganic certification program mustcontain supporting material thatincludes an explanation anddocumentation of the uniqueenvironmental or ecological conditionsor specific production practicesparticular to the State or region, whichnecessitates the proposed amendment.Supporting material also must explainhow the proposed amendment furthersand is consistent with the purposes ofthe Act and the regulations of this part.

(b) Within 6 months of receipt ofsubmission, the Secretary will:

(1) Publish in the Federal Register forpublic comment, a summary of aproposed State organic certificationprogram, and a summary of anyproposed amendment to such program.

(2) After review of materials anddocumentation accompanying theproposal and consideration ofcomments received, notify the Stateprogram’s governing State official ofapproval or disapproval of the proposedprogram or amendment of an approvedprogram and, if disapproved, thereasons for the disapproval.

(c) After receipt of a notice ofdisapproval, the State program’sgoverning State official may resubmitt arevised State organic certificationprogram or amendment of such aprogram at any time.

§ 205.622 Review of approved Stateorganic certification programs.

The Secretary will review a Stateorganic certification program not lessthan once during each 5-year periodfollowing the date of the initial programapproval. The Secretary will notify theState program’s governing State officialof approval or disapproval of the



program within 6 months after initiationof the review.

Fees

§ 205.640 Fees and other charges foraccreditation.

Fees and other charges equal as nearlyas may be to the cost of the accreditationservices rendered under the regulations,including initial accreditation, review ofannual reports, and renewal ofaccreditation, shall be assessed andcollected from applicants for initialaccreditation and accredited certifyingagents submitting annual reports orseeking renewal of accreditation inaccordance with the followingprovisions.

(a) Fees-for-Service.(1) Except as otherwise provided in

this section, fees-for-service shall bebased on the time required to render theservice provided calculated to thenearest 15-minute period, including thereview of applications andaccompanying documents andinformation, evaluator travel, theconduct of on-site evaluations, review ofannual reports and updated documentsand information, and the time requiredto prepare reports and any otherdocuments in connection with theperformance of service. The hourly rateshall be the same as that charged by theAgricultural Marketing Service (AMS),through its Quality SystemsCertification Program, to certificationbodies requesting conformityassessment to the InternationalOrganization for Standardization‘‘General Requirements for BodiesOperating Product CertificationSystems’’ (ISO Guide 65).

(2) Applicants for initial accreditationand accredited certifying agentssubmitting annual reports or seekingrenewal of accreditation during the first18 months following the effective dateof subpart F of this part shall receiveservice without incurring an hourlycharge for service.

(3) Applicants for initial accreditationand renewal of accreditation must payat the time of application, effective 18months following the effective date ofsubpart F of this part, a nonrefundablefee of $500.00 which shall be applied tothe applicant’s fees-for-service account.

(b) Travel charges. When service isrequested at a place so distant from theevaluator’s headquarters that a total ofone-half hour or more is required for theevaluator(s) to travel to such place andback to the headquarters or at a place ofprior assignment on circuitous routingrequiring a total of one-half hour ormore to travel to the next place ofassignment on the circuitous routing,

the charge for such service shall includea mileage charge administrativelydetermined by the Department andtravel tolls, if applicable, or such travelprorated among all the applicants andcertifying agents furnished the serviceinvolved on an equitable basis or, wherethe travel is made by publictransportation (including hiredvehicles), a fee equal to the actual costthereof. Travel charges shall becomeeffective for all applicants for initialaccreditation and accredited certifyingagents on the effective date of subpart Fof this part. The applicant or certifyingagent will not be charged a new mileagerate without notification before theservice is rendered.

(c) Per diem charges. When service isrequested at a place away from theevaluator’s headquarters, the fee forsuch service shall include a per diemcharge if the employee(s) performing theservice is paid per diem in accordancewith existing travel regulations. Perdiem charges to applicants andcertifying agents will cover the sameperiod of time for which the evaluator(s)receives per diem reimbursement. Theper diem rate will be administrativelydetermined by the Department. Perdiem charges shall become effective, forall applicants for initial accreditationand accredited certifying agents on theeffective date of subpart F of this part.The applicant or certifying agent willnot be charged a new per diem ratewithout notification before the service isrendered.

(d) Other costs. When costs, otherthan costs specified in paragraphs (a),(b), and (c) of this section are associatedwith providing the services, theapplicant or certifying agent will becharged for these costs. Such costsinclude, but are not limited to,equipment rental, photocopying,delivery, facsimile, telephone, ortranslation charges incurred inassociation with accreditation services.The amount of the costs charged will bedetermined administratively by theDepartment. Such costs shall becomeeffective for all applicants for initialaccreditation and accredited certifyingagents on the effective date of subpart Fof this part.

§ 205.641 Payment of fees and othercharges.

(a) Applicants for initial accreditationand renewal of accreditation must remitthe nonrefundable fee, pursuant to§ 205.640(a)(3), along with theirapplication. Remittance must be madepayable to the Agricultural MarketingService, USDA, and mailed to: ProgramManager, USDA–AMS–TMP–NOP,Room 2945–South Building, PO Box

96456, Washington, DC 20090–6456 orsuch other address as required by theProgram Manager.

(b) Payments for fees and othercharges not covered under paragraph (a)of this section must be:

(1) Received by the due date shownon the bill for collection;

(2) Made payable to the AgriculturalMarketing Service, USDA; and

(3) Mailed to the address provided onthe bill for collection.

(c) The Administrator shall assessinterest, penalties, and administrativecosts on debts not paid by the due dateshown on a bill for collection andcollect delinquent debts or refer suchdebts to the Department of Justice forlitigation.

§ 205.642 Fees and other charges forcertification.

Fees charged by a certifying agentmust be reasonable, and a certifyingagent shall charge applicants forcertification and certified productionand handling operations only those feesand charges that it has filed with theAdministrator. The certifying agentshall provide each applicant with anestimate of the total cost of certificationand an estimate of the annual cost ofupdating the certification. The certifyingagent may require applicants forcertification to pay at the time ofapplication a nonrefundable fee of nomore than $250.00, which shall beapplied to the applicant’s fees-for-service account. The certifying agentshall provide all persons inquiringabout the application process with acopy of its fee schedule.

§§ 205.643—205.649 [Reserved]

Compliance

§ 205.660 General.(a) The National Organic Program’s

Program Manager, on behalf of theSecretary, may inspect and reviewcertified production and handlingoperations and accredited certifyingagents for compliance with the Act orregulations in this part.

(b) The Program Manager may initiatesuspension or revocation proceedingsagainst a certified operation:

(1) When the Secretary has reason tobelieve that a certified operation hasviolated or is not in compliance withthe Act or regulations in this part.

(2) When a certifying agent or a Stateprogram’s governing State official failsto take appropriate action to enforce theAct or regulations in this part; or

(c) The Program Manager may initiatesuspension or revocation of a certifyingagent’s accreditation if the certifyingagent fails to meet, conduct, or maintain



accreditation requirements pursuant tothe Act or this part.

§ 205.661 Investigation of certifiedoperations.

(a) A certifying agent may investigatecomplaints of noncompliance with theAct or regulations of this partconcerning production and handlingoperations certified as organic by thecertifying agent. A certifying agent mustnotify the Program Manager of allcompliance proceedings and actionstaken pursuant to this part.

(b) A State program’s governing Stateofficial may investigate complaints ofnoncompliance with the Act orregulations in this part concerningorganic production or handlingoperations operating in the State.

§ 205.662 Noncompliance procedure forcertified operations.

(a) Notification. When an inspection,review, or investigation of a certifiedoperation by a certifying agent or a Stateprogram’s governing State officialreveals any noncompliance with the Actor regulations in this part, a writtennotification of noncompliance shall besent to the certified operation. Suchnotification shall provide:

(1) A description of eachnoncompliance;

(2) The facts upon which thenotification of noncompliance is based;and

(3) The date by which the certifiedoperation must rebut or correct eachnoncompliance and submit supportingdocumentation of each such correctionwhen correction is possible.

(b) Resolution. When a certifiedoperation demonstrates that eachnoncompliance has been resolved, thecertifying agent or the State program’sgoverning State official, as applicable,will send the certified operation awritten notification of noncomplianceresolution.

(c) Proposed suspension orrevocation. When rebuttal isunsuccessful or correction of thenoncompliance is not completed withinthe prescribed time period or is notadequate to demonstrate that eachnoncompliance has been corrected, thecertifying agent or State program’sgoverning State official shall send thecertified operation a written notificationof proposed suspension or revocation ofcertification of the entire operation or aportion of the operation, as applicable tothe noncompliance. When correction ofa noncompliance is not possible, thenotification of noncompliance and theproposed suspension or revocation ofcertification may be combined in onenotification. The notification of

proposed suspension or revocation ofcertification shall state:

(1) The reasons for the proposedsuspension or revocation;

(2) The proposed effective date ofsuch suspension or revocation;

(3) The impact of a suspension orrevocation on future eligibility forcertification; and

(4) The right to request mediationpursuant to § 205.663 or to file anappeal pursuant to § 205.681.

(d) Willfull violations.Notwithstanding paragraph (a) of thissection, if a certifying agent or Stateprogram’s governing State official hasreason to believe that a certifiedoperation has willfully violated the Actor regulations in this part, the certifyingagent or State program’s governing Stateofficial shall send the certified operationa notification of proposed suspension orrevocation of certification of the entireoperation, or a portion of the operation,as applicable to the noncompliance.

(e) Suspension or revocation.(1) If the certified operation fails to

correct the noncompliance, to resolvethe issue through rebuttal or mediation,or to file an appeal of the proposedsuspension or revocation ofcertification, the certifying agent orState program’s governing State officialshall send the certified operation awritten notification of suspension orrevocation.

(2) A certifying agent or Stateprogram’s governing State official mustnot send a notification of suspension orrevocation to a certified operation thathas requested mediation pursuant to§ 205.663 or filed an appeal pursuant to§ 205.681.

(f) Ineligibility. A certified operationor a person responsibly connected withan operation whose certification hasbeen revoked will not be eligible toreceive certification for a period of notmore than 5 years following the date ofsuch revocation, as determined by theSecretary.

§ 205.663 Mediation.Any dispute with respect to proposed

suspension or revocation of certificationunder this part shall, at the request ofthe applicant for certification orcertified operation, be mediated by aqualified mediator mutually agreedupon by the parties to the mediation. Ifa State Program is in effect, themediation procedures established in theState Program, as approved by theSecretary, will be followed. Mediationshall be requested in writing to theapplicable certifying agent. The partiesto the mediation shall have no morethan 30 days to reach an agreementfollowing a mediation session. If

mediation is unsuccessful, the applicantfor certification or certified operationshall have 30 days from termination ofmediation to appeal the certifyingagent’s decision to the Administrator,pursuant to § 205.681. Any agreementreached during or as a result of themediation process shall be incompliance with the Act and theseregulations. The Secretary may reviewany mediated agreement for conformityto the Act and these regulations.

§ 205.664 [Reserved]

§ 205.665 Noncompliance procedure forcertifying agents.

(a) Noncompliance. When aninspection, review, or investigation ofan accredited certifying agent by theProgram Manager reveals anynoncompliance with the Act orregulations in this part, a writtennotification of noncompliance shall besent to the certifying agent, asapplicable. Such notification shallprovide:

(1) A description of eachnoncompliance found;

(2) The facts upon which thenotification of noncompliance is based;and

(3) The date by which the certifyingagent must rebut or correct eachnoncompliance when correction ispossible.

(b) Resolution. When eachnoncompliance has been resolved, theProgram Manager shall send thecertifying agent a written notification ofnoncompliance resolution.

(c) Proposed suspension orrevocation. If rebuttal is unsuccessful orif correction of the noncompliance isnot made within the prescribed timeperiod or is not adequate to demonstratethat each noncompliance has beencorrected, the Program Manager shallsend a written notification of proposedsuspension or revocation ofaccreditation to the certifying agent. Thenotification of proposed suspension orrevocation shall state whether thecertifying agent’s accreditation orspecified areas of accreditation are to besuspended or revoked. When correctionof a noncompliance is not possible, thenotification of noncompliance and theproposed suspension or revocation maybe combined in one notification. Thenotification of proposed suspension orrevocation of accreditation shall state:

(1) The reasons for the proposedsuspension or revocation;

(2) The proposed effective date of thesuspension or revocation;

(3) The impact of a suspension orrevocation on future eligibility foraccreditation; and



(4) The right to file an appealpursuant to § 205.681.

(d) Willfull violations.Notwithstanding paragraph (a) of thissection, if the Program Manager hasreason to believe that a certifying agenthas willfully violated the Act orregulations in this part, the ProgramManager shall send a writtennotification of proposed suspension orrevocation of accreditation to thecertifying agent.

(e) Suspension or revocation. Whenthe accredited certifying agent fails tofile an appeal of the proposedsuspension or revocation ofaccreditation, the Program Managershall send a written notice ofsuspension or revocation ofaccreditation to the certifying agent.

(f) Cessation of certification activities.A certifying agent whose accreditationis suspended or revoked must:

(1) Cease all certification activities ineach area of accreditation which itsaccreditation is suspended or revoked.

(2) Transfer to the Secretary and makeavailable to any applicable governingState official all records concerning itscertification activities that weresuspended or revoked.

(g) Eligibility.(1) A certifying agent whose

accreditation is suspended by theSecretary under this section may at anytime submit a new request foraccreditation, pursuant to § 205.502.The request must be accompanied byevidence demonstrating correction ofeach noncompliance and correctiveactions taken to comply with andremain in compliance with the Act andthe regulations in this part.

(2) A certifying agent whoseaccreditation is revoked by the Secretaryshall be ineligible to be accredited as acertifying agent under the Act and theregulations in this part for a period ofnot less than 3 years following the dateof such revocation.

§§ 205.666 and 205.667 [Reserved]

§ 205.668 Noncompliance proceduresunder State organic certification programs.

(a) A State program’s governing Stateofficial must promptly notify theSecretary of commencement of anyenforcement proceeding against acertified operation and forward to theSecretary a copy of each notice issued.

(b) A noncompliance proceeding,brought by a State program’s governingState official against a certifiedoperation, shall be appealable pursuantto the appeal procedures of the Stateorganic certification program. Thereshall be no subsequent rights of appealto the Secretary. Final decisions of a

State may be appealed to the UnitedStates District Court for the district inwhich such certified operation islocated.

(c) A State program’s governing Stateofficial may review and investigatecomplaints of noncompliance with theAct or regulations concerningaccreditation of certifying agentsoperating in the State. When suchreview or investigation reveals anynoncompliance, the State program’sgoverning State official shall send awritten report of noncompliance to theProgram Manager. The report shallprovide a description of eachnoncompliance and the facts uponwhich the notification ofnoncompliance is based.

§ 205.669 [Reserved]

Inspection and Testing, Reporting, andExclusion from Sale

§ 205.670 Inspection and testing ofagricultural product to be sold or labeledorganic.

(a) All agricultural products that areto be sold, labeled, or represented as‘‘100 percent organic,’’ ‘‘organic,’’ or‘‘made with organic (specifiedingredients)’’ must be made accessibleby certified organic production orhandling operations for examination bythe Administrator, the applicable Stateprogram’s governing State official, or thecertifying agent.

(b) The Administrator, applicableState program’s governing State official,or the certifying agent may requirepreharvest or postharvest testing of anyagricultural input used or agriculturalproduct to be sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients)’’ when there isreasonable cause to believe that theagricultural input or product has comeinto contact with a prohibitedsubstance. Such tests must beconducted by the applicable Stateprogram’s governing State official or thecertifying agent at the official’s orcertifying agent’s own expense.

(c) The preharvest or postharvesttissue test sample collection pursuant toparagraph (b) of this section must beperformed by an inspector representingthe Administrator, certifying agent, orapplicable State program’s governingState official. Sample integrity must bemaintained in transit, and residuetesting must be performed in anaccredited laboratory. Chemical analysismust be made in accordance with themethods described in the 16th edition ofthe Official Methods of Analysis of theAOAC International or other applicablevalidated methodology determining the

presence of contaminants in agriculturalproducts.

(d) Results of all analyses and testsperformed under this section:

(1) Must be provided to theAdministrator promptly upon receipt;and

(2) Will be available for public access,unless the testing is part of an ongoingcompliance investigation.

§ 205.671 Exclusion from organic sale.(a) When residue testing detects

prohibited substances at levels that aregreater than the estimated nationalmean of detected residues for specificcommodity/pesticide pairs, asdemonstrated by USDA’s Pesticide DataProgram, or unavoidable residualenvironmental contamination, asdetermined by the Administrator, theagricultural product must not be sold,labeled, or represented as organicallyproduced. The Administrator, theapplicable State program’s governingState official, or the certifying agent mayconduct an investigation of the certifiedoperation to determine the cause of theprohibited substance residue.

(b) If test results indicate a specificagricultural product contains pesticideresidues or environmental contaminantsthat exceed the Food and DrugAdministration’s or the EnvironmentalProtection Agency’s regulatorytolerances, the data must be reportedpromptly to the appropriate publichealth agencies.

§ 205.672 Emergency pest or diseasetreatment.

When a prohibited substance isapplied to a certified operation due toFederal or State emergency pesteradication or disease treatmentprogram and the certified operationotherwise meets the requirements of thispart, the certification status of theoperation shall not be affected as aresult of the application of theprohibited synthetic substance:Provided, That:

(a) Any harvested crop or plant partto be harvested that has contact with aprohibited substance applied as theresult of a Federal or State emergencypest eradication or disease treatmentprogram cannot not be sold, labeled, orrepresented as organically produced;and

(b) Any livestock that are treated witha prohibited substance applied as theresult of a Federal or State emergencypest or disease treatment program orproduct derived from such treatedlivestock cannot be sold, labeled, orrepresented as organically produced:Except, That:

(1) Milk or milk products may be sold,labeled, or represented as organically



produced beginning 12 monthsfollowing the last date that the dairyanimal was treated with the prohibitedsubstance; and

(2) The offspring of gestatingmammalian breeder stock treated with aprohibited substance may be consideredorganic: Provided, That, the breederstock was not in the last third ofgestation on the date that the breederstock was treated with the prohibitedsubstance.

§§ 205.673—205.679 [Reserved]

Adverse Action Appeal Process

§ 205.680 General.

Persons subject to the Act who believethey are adversely affected by anoncompliance proceeding decision ofthe National Organic Program’s ProgramManager or a certifying agent mayappeal such decision to theAdministrator.

§ 205.681 Appeals.

(a) Certification appeals. An applicantfor certification may appeal a certifyingagent’s notice of denial of certification,and a certified operation may appeal acertifying agent’s notification ofproposed suspension or revocation ofcertification to the Administrator:Except, That, when the applicant orcertified operation is subject to anapproved State organic certificationprogram and the decision to deny,suspend, or revoke a certification ismade by a certifying agent or a Stateprogram’s governing State official, theappeal must be made to the Stateprogram’s governing State official orsuch official’s designee who will carryout the appeal pursuant to the Stateprogram’s appeal procedures approvedby the Secretary.

(1) If the Administrator sustains acertification applicant’s or certifiedoperation’s appeal of a certifying agent’sdecision, the applicant will be issuedorganic certification, or a certifiedoperation will continue its certification,as applicable to the operation. The actof sustaining the appeal shall not be anadverse action subject to appeal by theaffected certifying agent.

(2) If the Administrator denies anappeal, a formal administrativeproceeding will be initiated to deny,suspend, or revoke the certification.Such proceeding shall be conductedpursuant to the Department’s UniformRules of Practice.

(b) Accreditation appeals. Anapplicant for accreditation and anaccredited certifying agent may appeal aProgram Manager’s denial ofaccreditation or proposed suspension or

revocation of accreditation to theAdministrator.

(1) If the Administrator sustains anappeal, an applicant will be issuedaccreditation, or a certifying agent willcontinue its accreditation, as applicableto the operation.

(2) If the Administrator denies anappeal, a formal administrativeproceeding to deny, suspend, or revokethe accreditation will be initiated. Suchproceeding shall be conducted pursuantto the Department’s Uniform Rules ofPractice.

(c) An appeal of a noncompliancedecision must be filed within the timeperiod provided in the letter ofnotification or at least 30 days from thereceipt of the notification. The appealwill be considered ‘‘filed’’ on the datereceived by the Administrator or by theState program’s governing State officialor such official’s designee as providedin the State’s approved appealprocedures. A decision to deny,suspend, or revoke certification oraccreditation will become final andnonappealable unless the decision isappealed in a timely manner.

(d) All appeals to the Administratormust be filed in writing and addressedto Administrator, USDA–AMS, Room3071–S, PO Box 96456, Washington, DC20090–6456, and be copied to thecertifying agent completely andsimultaneously with submission to theAdministrator. Appeals must include acopy of the adverse decision and astatement of the appellant’s positionthat the decision was not made inaccordance with applicable programregulations, policies, or procedures.

§§ 205.682—205.689 [Reserved].

Miscellaneous

§ 205.690 OMB control number.

The control number assigned to theinformation collection requirements bythe Office of Management and Budgetpursuant to the Paperwork ReductionAct of 1980, Public Law 96–511, is OMBnumber 0581–0181.

§§ 205.691—205.699 [Reserved]

PARTS 206–209—[RESERVED]

Dated: March 3, 2000.Kathleen A. Merrigan,Administrator, Agricultural MarketingService.

Appendices to the Preamble

Appendix A.—Regulatory ImpactAssessment for Proposed RulesImplementing the Organic Foods ProductionAct of 1990 (Executive Order 12866)

The following regulatory assessment isprovided to fulfill the requirements ofExecutive Order 12866. This assessmentconsists of a statement of the need for theproposed action, a description of the baselinefor the analysis, an examination of alternativeapproaches, and an analysis of the benefitsand costs. Much of the analysis is necessarilydescriptive of the anticipated effects of theproposed rule. Because basic market data onthe prices and quantities of organic goodsand services and the costs of organicproduction are limited, it is not possible toprovide quantitative estimates of all benefitsand costs of the proposed rule. The cost offees and recordkeeping proposed by U.S.Department of Agriculture (USDA) arequantified, but the anticipated benefits arenot. Consequently, the analysis does notestimate the magnitude or the direction(positive or negative) of net benefits.

The Need for the Proposed ActionThe Organic Foods Production Act of 1990,

Title XXI of the Food, Agriculture,Conservation and Trade Act of 1990, U.S.C.Title 7, mandates that the Secretary ofAgriculture develop a national organicprogram. The OFPA states that the Secretaryshall establish an organic certificationprogram for farmers, wild-crop harvesters,and handlers of agricultural products thathave been produced using organic methodsas provided for in the OFPA. In addition,section 6514 of the OFPA requires theSecretary to establish and implement aprogram to accredit a State program’sgoverning State official or any private person,who meets the requirements of the Act, as acertifying agent to certify that farm, wild-cropharvesting, or handling operations are incompliance with the standards set out in theregulation. As stated by the OFPA in section6501, the regulations are proposed for thefollowing purposes: (1) to establish nationalstandards governing the marketing of certainagricultural products as organically producedproducts; (2) to assure consumers thatorganically produced products meet aconsistent standard; and (3) to facilitateinterstate commerce in fresh and processedfood that is organically produced.

The OFPA was introduced at the request ofthe organic community after it experienced anumber of problems in the marketing oforganic products. Many consumers arewilling to pay price premiums for organicfood; hence, producers (farmers, ranchers,and wild-crop harvesters) and handlers havean economic incentive to label their products



organic. Because organic products cannot bedistinguished from conventionally producedproducts by sight inspection, consumers relyon verification methods, such as certificationby private entities or verification by retailersto ensure that organic claims are true. Wherethere has been no mandatory certification,consumers have been unable to verify organicproduct claims on their own, and may havebeen vulnerable to fraud from the mislabelingof organic products.

As organic production became betterestablished in the 1980’s, new certifyingagencies were formed, and some Statespassed laws establishing standards fororganic production. However, the standardsfor organic production, processing, handling,and labeling were different to some degree,causing disagreements between certifyingagents over whose standards would apply toingredients used in multi-ingredient organicprocessed products. Disagreements aboutstandards also created sourcing problems forhandlers of these multiingredient products.

Certifying agents are able to negotiate andmaintain reciprocity agreements at some cost.These reciprocity agreements specify theconditions under which certifying agentsrecognize each others’ standards. The currentsystem of variable standards has led theorganic industry to take on costs of privateaccreditation or shipment-by-shipmentcertification, required to gain access to someforeign markets such as the European Union(EU). These costs would be avoided if anational program were in place.

Baseline

The organic industry is characterized by anarray of production and handling practices,self regulation and state regulation, andconsumer perceptions. However, there arecommonalities throughout the industry.

Certification

The United States currently has 49certifying agents. There are 36 privatecertifying agencies and 13 States which havecertification programs. Private certifyingagents range from small nonprofitassociations that certify only a few growersto large for-profit businesses operating innumerous States and certifying hundreds ofproducers. Typically, certifying agentsreview producers’ organic production plans,inspect the farm fields and facilities to becertified, periodically reinspect, and mayconduct soil tests and tests for residues ofprohibited substances. In some cases,certifying agents negotiate reciprocityagreements with other agents.

State laws vary widely on organiccertification and registration. Some Statesrequire only that an organic producer registerand make certification voluntary. Californiais an example. Other States requirecertification by the State’s own agents, whileothers accept certification by a privatecertifying agent. The least stringentrequirement among States with organiclegislation is that products marketed asorganic comply with their definition oforganic but both registration and certificationare voluntary. Approximately half of theStates have laws which regulate organicproduction and processing. Thirteen States

operate programs to certify organicproduction. In many States producers mayclaim their product is organic but operatewithout certification or well-definedstandards. On the other hand, many organicproducers operate in States with no programand voluntarily secure third partycertification to well-defined standards.Certification costs vary with farm size andacross certifying agents. Illustrativecertification costs are presented in Tables 2Aand 2B.

Very few certifying agents operate with anexternal accreditation. There is no law whichrequires them to be accredited: The pricemay be unacceptably high in relation toexpected benefits; the certifying agent may beunable to find an accrediting party willing toaccredit the particular organic program thecertifying agent is marketing; and Stateprograms may believe that their status as agovernment entity obviates the need forexternal accreditation.

In 1999 USDA began verifying certifyingagents to International Organization forStandardization (ISO) Guide 65. It is avaluable recognition that the certifying entitysatisfies the business capacity standards ofISO Guide 65. European Union authoritieshave accepted verification of certifyingagents to ISO Guide 65 as an interim measureto facilitate exports pending theestablishment of a national organic program.

Organic Food Production

Organic production occurs in all States. Anestimated 12,000 organic producers areoperating in the United States. Most organicproducers are small both in terms of value ofsales and acreage. Small producers do notnecessarily farm full-time, and may notdepend solely on farm income for alivelihood. Some organic production occursas a distinct part of a larger operation thatincludes conventional production practices.

Key production practices followed bycertified organic producers include:abstaining from use of certain crop chemicalsand animal drugs; ecologically based pestand nutrient management; segregation oforganic fields and animals from nonorganicfields and animals; following an organicproduction plan with multiple goals,including sustainability; and record keepingto document practices and progress towardthe plan’s goals. Specific elements of organicproduction will vary, but organic systemsgenerally share a core set of practices. Forexample, the certification standards ofvirtually all State and private U.S. certifyingagents prohibit the use synthetic chemicalherbicides and insecticides or animal growthhormones. And most certification standardsinclude a three year ban on the use ofprohibited substances on cropland beforeproduction can be certified as organic.

On the other hand, certification standardsfor organic livestock production have beenmore variable, for pasture, feed, and otherpractices. Until 1999, the USDA Food Safetyand Inspection Service (FSIS) withheldapproval for the use of organic labels on meatand poultry products pending the outcome ofthis rulemaking. However, the Secretaryannounced a change in policy in January1999. Meat and poultry products may be

labeled ‘‘certified organic by (name of thecertifying agent)’’ if processors obtain priorlabel approval from FSIS and the claim meetscertain basic criteria. However, many privateand State certifying programs have notdeveloped standards for livestockproduction.

The provisions of the New Hampshireorganic program are summarized below toillustrate key elements of current organicstandards. The New Hampshire programprovisions are not substantially differentfrom provisions in some State programs,private programs, and mirror provisions ofUSDA’s proposed national program. Soiltests are required for initial certification andevery three years afterward. Soil testingmeasures the quality of the soil foragricultural production and is different fromresidue testing. New Hampshire requiresresidue testing ‘‘if the department believesthat the produce or soil which certifiedproduce was grown may have becomecontaminated with prohibited substances.’’(New Hampshire Rule AGR 906 Certificationof Organically Grown Food, Agr 906.05Laboratory Analysis) Other productionstandards include a written rotation plan,tillage systems that incorporate organicmatter wastes into the topsoil, compliancewith limits on the sources of manure and thetiming of its application, prohibitions on theuse of certain substances (e.g., sewage sludge,synthetic sources of nitrates, syntheticgrowth regulators, and anhydrous ammonia),a list of accepted and prohibited weed andpest control practices, segregation of organicand nonorganic production, record keepingregarding fertilization, cropping, and pestmanagement histories, separate sales recordsfor organic and nonorganic production, andrecords of all laboratory analyses.

The New Hampshire program requiresgrowers to pay a $100 annual inspection fee,and to provide a written description of theirfarm operation including the size of the farm,a field map, a three-year history of cropproduction, pest control, and fertilizer use, acrop rotation and a soil management plan,and a description of post-harvest storage andhandling methods. Applicants forcertification must also agree to comply withregulations controlling the use of the NewHampshire certified organic logo.

Organic Food Handling

In addition to growers, who actuallyproduce and harvest products to be marketedas organic, there are handlers who transformand resell the organic products. Not allcertifying agents have standards for handlingorganic products. Some have standards forparts of the food marketing system, such asretail food establishments, that are notexplicitly covered by the OFPA or by theproposed regulation.

Definitions of processing and handlingdiffer across certifying agents and State laws.Some States, such as Washington, distinguishbetween a processor and a handler,specifying 21 actions which constituteprocessing and defining a handler as anyonewho sells, distributes, or packs organicproducts. Washington does not considerretail grocery stores and restaurants to beorganic handlers or processors.



Marketing of Organic Food—Domestic andInternational

The marketing practices of organicproducers range from roadside standsmarketing directly to consumers, tomarketing through wholesale markets, todirect marketing to restaurants andsupermarkets. USDA does not have officialnational level statistics on organic retailsales. An industry trade publication reportedestimates of retail sales of organic foods fora number of years in the 1990’s (Table 1). Thelast published estimate was $3.5 billion in1996 ($3.6 billion in 1998 dollars). To putthis figure in context, total food expendituresby families and individuals were $606 billionin 1996 ($629 billion in 1998 dollars).

The United States is both an importer andan exporter of organic foods. The UnitedStates does not restrict imports of organicfoods. In fact, U.S. Customs accounts do notdistinguish between organic andconventional products. The largest marketsfor organic foods outside the United Statesare in Europe, Japan, and Canada. There isincreasing pressure, particularly in Europeand Japan, for U.S. exports to demonstratethat they meet a national standard rather thana variety of private and State standards.

The EU is the largest market for organicfood outside the United States. The organicfood market in the EU was estimated to beworth $5.2 billion in 1997 (InternationalTrade Centre UNCTAD/WTO 1999). Thelargest organic retail sales markets in the EUin 1997 were Germany ($1.8 billion), France($720 million), and Italy ($750 million).Large organic markets outside the EU includeCanada and Australia, with approximately$60 million and $68 million, respectively, inorganic retail sales in 1997 (Lohr 1998).Import share of the organic food market inEurope ranged from 10 percent in France to70 percent in the United Kingdom, was 80percent in Canada, and varied from 0 to 13percent in various Australian states.

Japan is another important market for U.S.organic products. Currently, Japan hasvoluntary labeling guidelines for 6 categoriesof non-conventional agricultural products:organic, transitional organic, no pesticide,reduced pesticide, no chemical fertilizer, andreduced chemical fertilizer. Total sales,including foods marketed as ‘‘no chemical,’’and ‘‘reduced chemical’’ are forecast to jump15 percent in 1999 to almost $3 billion.Imports of organic agricultural products werevalued at $90 million in 1998. Given Japan’slimited agricultural acreage, imports willlikely provide an increasingly significantshare of Japan’s organic food supply (USDAFAS 1999a).

Recently, these markets have adopted orare considering to adopt procedures that mayimpede the importing of organic food. TheEU regulations establishing the basis forequivalency in organic production among EUmembers and for imports from outside theEU were adopted in 1991 (CouncilRegulation 2092/91). The EU regulations onlyallow imports from non-EU countries whosenational standards have been recognized asequivalent to the EU standards (CommissionRegulation 94/92).

The Ministry of Agriculture, Forestry, andFisheries (MAFF) in Japan recently

announced proposed standards and third-party certification requirements. UnderJapan’s proposed standards, certifying agentsfrom countries without national organicstandards administered by a federalgovernment will have to be accredited(registered) with MAFF to obtain approval tocertify products destined for the Japanesemarket. The Japanese proposal includesprovisions for country-to-countryequivalency recognition of other nationalprograms.

The Proposed RuleThe proposed rule follows the structure

established in the OFPA. By adopting thisalternative, the Department would followlegislative direction in the OFPA. Allproducts marketed as organic will have to beproduced and handled as provided in theOFPA and the regulations. Compared tocurrent organic practices, the proposed rulesets a more stringent system of requirements.

Accreditation and Certification

The rule specifies the accreditation andcertification process. Persons providingcertification of organic production andhandling must be accredited by USDAthrough the NOP. Applicants foraccreditation must document their abilities tocertify according to the national standardsand to oversee their clients’ compliance withthe requirements of the OFPA and NOPregulations. Producers and handlers oforganic products must be certified by anaccredited certifying agent. Producers andhandlers are required to document theirorganic plans and procedures to ensurecompliance with the OFPA.

All certifying agents would have to beaccredited, and certification by producersand handlers would not be voluntary. Theexceptions are: (1) Growers and handlerswith gross organic sales of $5,000 or lesswould be exempt from certification; and (2)a handling operation may be exempt orexcluded from certification according toprovisions described in the rule’s subpart B,Applicability. For example, a handlingoperation that is a retail food establishmentor portion of a retail food establishmentwould be exempt if it handles organicallyproduced agricultural products but does notprocess them, and would be excluded fromthe requirement to be certified if it processesor prepares, on the premises of the retail foodestablishment, raw and ready-to-eat-foodfrom agricultural products that are previouslylabeled as ‘‘100 percent organic,’’ ‘‘organic,’’or ‘‘made with organic (specifiedingredients).’’ However, this exemption doesnot extend to other provisions of theproposed rule such as prevention of contactwith prohibited substances.

USDA will charge applicants foraccreditation a $500 fee at the time ofapplication. USDA will also chargeapplicants for costs over $500 for siteevaluation of the applicant’s business. Theapplicant would be charged for travel costs,per diem expenses, and any miscellaneouscosts incurred with a site evaluation. Reviewof documents for renewal of accreditationwill be charged at an hourly rate.

Producers and handlers will not paycertification fees to USDA. Certification fees

will be established by the accreditedcertifying agents. USDA will not set fees. Therule requires certifying agents to submit acopy of their fee schedules to USDA, posttheir fees, and provide applicants estimatesof the costs for initial certification and forrenewal of certification.

Production and Handling

The rule establishes standards for organicproduction of crops and livestock andhandling of organic products. Thesestandards were developed from specificrequirements in the OFPA, recommendationsfrom the National Organic Standards Board(NOSB), review of existing organic industrypractices and standards, public commentsreceived on the 1997 proposal andsubsequent issue papers, and publicmeetings.

The proposed rule establishes a number ofrequirements for producers and handlers oforganic food. These requirements will affectfarming operations, packaging operations,processing operations and retailers. Some ofthe major provisions are: (1) Landrequirements; (2) crop nutrient requirements;(3) crop rotation requirements; (4) pestmanagement requirements; (5) livestockmanagement requirements; (6) processingand handling requirements; and (7)commingling requirements.

National List

The National List lists allowed syntheticsubstances and prohibited non-syntheticsubstances that may or may not be used inorganic production and handling operations.The list identifies those synthetic substances,which would otherwise be prohibited, thatmay be used in organic production based onthe recommendations of the NOSB. Onlythose substances on the National List may beused. The National List also identifies thosenatural substances that may not be used inorganic production, as determined by theSecretary based on the NOSBrecommendations.

Testing

When certifying agents have reason tobelieve organic products contain a prohibitedsubstance, they may conduct residue tests.The rule incorporates the national mean ofdetected residues for specific commodity/pesticide pairs and clarifies how unavoidableresidual environmental contamination wouldbe used in residue testing.

Labeling

The rule also states how organic productsmay be labeled and permitted uses of theUSDA organic seal. In addition to the USDAseal and the certifying agent’s seal,information on organic food content may bedisplayed. It is important to note that smallbusinesses who are certified may use theUSDA seal.

Recordkeeping

The rule will require certifying agents,producers, and handlers to keep certainrecords. Certifying agents will be required tofile periodic reports with USDA. Producersand handlers will be required to notify andsubmit reports to their certifying agent. Whilerecordkeeping is a standard practice in



conventional and organic farming, theproposal adds recordkeeping and reportingrequirements which do not exist for growersand handlers operating without certification.Similarly, certifying agents would faceadditional recordkeeping and reportingrequirements, particularly those certifyingagents operating without externalaccreditation. State and private certifyingagents regulate the use of organic seals andlogos. The proposed rule permits certifyingagent logos and requires the name of thecertifying agent on processed organic foods.

Alternatives to the Proposed Rule

As required by E.O. 12866, alternatives tothe proposed rule were considered. Theidentified alternatives were the Status Quoand Industry-Developed Standards. The costsand benefits of each alternative were assessedto the extent possible.

Status Quo: The Organic Market in theAbsence of Federal Regulation

This is the no program alternative. Therewould be no national standard or nationalprogram of accreditation and certification.Certification would be voluntary andcertifying agents would not have third partyaccreditation. Some producers and handlerswould operate with certification provided byprivate organizations or State programs.Other producers and handlers wouldcharacterize their foods as organic but wouldnot be certified.

A mix of State and private programs maycontinue to operate according to varyingstandards. In States without organic laws orStates where certification is voluntary, goodswould be marketed as organic without thirdparty certification. Even under this scenario,organic food produced in States withproduction standards and certification maybe produced using similar practices becausemost State standards follow similarrequirements: A 3 year transition, prohibiteduse of certain substances (lists of substancestend to overlap), practices which preventcommingling with conventional products,and where livestock standards exist, organicfeed.

In addition, at the time the OFPA wasenacted, the industry had been unable toagree on organic standards. Recently, therehas been movement toward shared standardspartly in response to efforts to developnational organic standards including the1997 proposal and the public NOSB process.The Organic Trade Association (OTA) hasdeveloped ‘‘American Organic Standards’’which the OTA Board recently ratified. TheOTA describes itself as ‘‘ * * * a nationalassociation representing the organic industryin Canada, the United States and Mexico.Members include growers, shippers,processors, certifying agents, farmerassociations, brokers, consultants,distributors and retailers. Established in 1985as the Organic Foods Production Associationof North America, the Organic TradeAssociation works to promote organicproducts in the marketplace and to protectthe integrity of organic standards.’’ (OTAwebsite). Although there is substantialconsensus on the draft standards, acceptanceis not unanimous.

The draft standards developed throughOTA correspond closely to many elements inthe proposed national organic program. OTAenvisions a system of accreditation andcertification of producers and handlers butnot restaurants and grocery stores. The list ofallowed and prohibited substances mirrorsthe list developed by the NOSB. Productionpractices for crops and livestock include thecommon features in most State and privateprograms—a 3 year transition, nocommingling, use of organic feed, limits onthe use of antibiotics, requirements for anorganic plan and recordkeeping. Hence, evenin the absence of a national program, theorganic industry may be moving toward acommon standard.

Under the status quo-no national programalternative, producers and handlers whochose to be certified, or who are required byState laws to be certified, would pay fees thatwould vary depending on the market for theparticular private certifying agent’s serviceand whether a State certification programwas operating with subsidized fees.

No federal funds would be used, therewould be no transfer from federal taxpayersat large to organic market participants, andthere would be no federal regulatory barriersto entry into organic production andhandling.

International access for domestic organicproducts may be very influential ondevelopment of the organic industry in theUnited States. A food trade publication (TheNatural Foods Merchandiser) tracked organicsales for a while in the 1990s showing annualgrowth in retail sales of 20–25 percentbetween 1990 and 1996 (Table 1). Thisgrowth took place in the absence of anational program.

In the absence of national standards, U.S.organic producers have been able to accessEuropean markets only by obtaining specificproduct permissions granted to individualimporters by organic regulatory authorities inan EU member state (Byng, p. 27–28 1994).This process has required the importer tosatisfy the authorities, throughdocumentation and possible site inspection,that the product in question has beencertified to and produced under equivalentstandards of production and inspection. Thiscase-by-case process of approving importswas intended as a temporary arrangement toaccommodate non-EU countries that had notyet established government systemsregulating organic production andcertification. Another step State and privateorganic certifying agencies have taken toaccess international markets in the absence ofa national program has been a voluntary, fee-for-service program to verify that theycomply with the requirements prescribedunder ISO Guide 65.

Governments in foreign markets andforeign private processors and retailers areexpected to insist on additional verificationthat goods have been produced to acceptableorganic standards. This would likely lead toan increased use of private accreditationservices and of USDA’s ISO Guide 65verification service. USDA’s ISO Guide 65verification services are provided on a userfee basis with full cost recovery. Theseprivate accreditations and USDA’s

verifications would increase costs forcertifying agents and producers and handlers.In addition, establishing reciprocity betweencertifying agents in the domestic organicmarket involves some cost and may stiflegrowth in trade of organic products, althoughthe magnitude of these costs and their effectson growth is unknown.

Under the proposed national program, allapplicants for accreditation will be assessedagainst ISO Guide 65, eliminating the needfor a separate ISO Guide 65 assessment thatexists for those exporting to the EU in theabsence of a national program. Growth in thetrade of organic products, particularlyexports, may be jeopardized by a status quo-no program alternative because there wouldbe no national program upon which toestablish equivalency.

Industry-Developed Standards

As an alternative to the proposed nationalprogram, another national program couldadopt industry-developed standards. Forexample, USDA could adopt the standardsrecently developed by the Organic TradeAssociation or other consensus standards andenforce those standards. Certification to thesestandards could be performed as it iscurrently, by private certifiers or by stateprograms. There could be variation amongcertifiers’ standards, but producers andcertifiers would not be able to prohibit useof a product meeting the national standardfrom the production of other ‘‘organic’’products.

There are various enforcement mechanismsthat are available under this alternative. TheUSDA could choose to enforce the adoptedstandards. Enforcement could be left to otherfederal agencies or State governments. Forexample, the Federal Trade Commissioncould regulate truth in advertising withrespect to organic food; the USDA FoodSafety Inspection Service could regulatelabeling of organic meat and poultryproducts.

Adopting the industry standard as theUSDA standard, the USDA could provide anacceptable national standard that would benecessary in establishing equivalency toaccess international organic markets, andeliminate the problems associated withestablishing reciprocity in the domesticorganic market.

It is important to note that it may bedifficult to develop consensus industrystandards. For example, while standardsrecently proposed by OTA were developedwith significant industry input they may notrepresent the kind of consensus that is theresult of this proposed rule.

Number of Affected Parties and ProjectionsIn assessing the impacts of the rule, we

have attempted to determine the number ofcertifying agents, private and State, that arecurrently operating, and considered thefactors likely to affect the number ofcertifying agents after the rule isimplemented. We have attempted todetermine the number of currently operatingproducers and handlers that would beaffected. And, we have considered the factorswhich might affect the number of producersand handlers after the program has beenimplemented.



For the analysis, the USDA assumes thefollowing:

1. Forty-nine domestic certifying agentsand ten foreign certifying agents will beaffected by the proposed regulation.

2. Approximately 12,200 certified and non-certified organic producers will be affectedby the proposed regulation. With theassumed growth rate of 14% for certifiedorganic producers and approximately 8% fornon-certified organic producers, the numberof organic producers will grow to 17,150 in2002.

3. Approximately 1,250 processors andhandlers of organic food will be affected bythe proposed action. This number will growto 2,150 by 2002.

4. The number of retailers affected by theproposed action is not quantified.

Certifying Entities

We place the number of certifying agentscurrently operating at 49, including 13 Stateprograms. The number of certifying agentshas remained fairly stable, between 40 and50, for some years, with entries and exitstending to offset each other. For purposes ofestimating the paperwork burden describedelsewhere, we assume no growth in thenumber of domestic certifying agents butproject 10 foreign certifying agents in the first3 years of the program.

Organic Producers

It is more difficult to establish the numberof organic producers. Organic farming wasnot distinguished from conventionalagriculture in the 1997 Census of Agriculture.Among the sources which give insight intothe number of producers, the OrganicFarming Research Foundation (OFRF) hasconducted nationwide surveys of certifiedorganic producers from lists provided bycooperating certifying agents (OFRF 1999).OFRF sent its 1997 survey to 4,638 organicproducers.

Because OFRF did not obtain lists from allcertifying organizations or their chapters (55out of a total of 64 identified entitiesprovided lists), its list count of 4,638producers is likely an underestimate of thenumber of certified organic farms. If theaverage producer-to-certifying agent ratio (55certifying agents to 4,638 producers) holdsfor the 9 certifying organizations that did notprovide the list (9 certifying agents out of a64 certifying agents), then the number ofproducer grows to 5,397 producers.

The different estimates of the number ofcertifying agents should be noted. The USDAestimates 49 certifying agents; the OFRFestimates 64 certifying agents. The differencestems from the USDA’s not counting differentchapters of certifying organizationsseparately.

The California Department of Food andAgriculture’s organic registration programsuggests that, at least for California, mostorganic producers are not certified. For the1994–95 reporting period, CDFA reportedthat 1,372 farms registered as organicproducers but only 517 of these farms werecertified (Klonsky and Tourte, 1998a). Thus,one approach to projecting national totalsfrom OFRF survey lists of certified producerswould be to apply the 1994–95 ratio between

producers registered and certified inCalifornia to the OFRF 1997 list count. Thiswould suggest the number of non-certifiedproducers to be 8,918, resulting in the totalnumber of organic producers to be 14,315.However, it is important to note thatCalifornia’s structure of organic productionmay not be representative of the nationalprofile. The number of non-certifiedproducers may be higher or lower.

CDFA also reports the number of registeredand certified producers by sales class. Manyproducers would likely be eligible for thesmall farm (sales less than $5,000) exemptionprovided for in the OFPA. Of 1,372 registeredorganic farms in California, 907 had sales ofless than $10,000. Of the 517 certified farms,188 had sales of under $10,000. If these ratiosare applied to the number of producerscalculated, then the number of certifiedproducers with sales under $10,000 would be1,962, and the number of organic producersin general with sales under $10,000 would be9,463. Thus, there are potentially a largenumber of farms which could be exemptfrom certification requirements.

Dunn (1995a, 1995b, and 1997) hasestimated the number of certified organicproducers in the United States. Dunn (1995a,1995b) estimated the number of certifiedproducers at 4,060 in 1994. Dunn (1997)reported 4,856 certified organic farms in1995. USDA’s 1997 proposal relied onDunn’s 1995 estimate of 4,060 total certifiedproducers. Dunn’s numbers have been usedbecause Dunn’s 1995 work was an officialUSDA study. The methods used werereviewed by USDA and the resultingestimates are official USDA statistics.Although Dunn’s 1997 estimates were not aUSDA study, the 1997 study used the sameapproach as the 1995 study.

An adjustment is needed to account for thenumber of producers who are practicingorganic agriculture but who are uncertifiedand would be affected by this proposed rule.We reject the idea of expanding by thecertified-to-registered ratio reported inCalifornia for reasons previously stated. Weassume that the number of organic-but-not-certified producers in 1999 is about 4,000.We adopt this figure recognizing that theremay be 1,000 such farms in California, giventhat there were 855 in CDFA’s report on 1995registrations. The total number of organicfarms for assessing the impact of the rule is12,200 in 1999.

Data collected by AMS indicate that thenumber of certified organic farmers increasedabout 12 percent per year during the period1990 to 1994. OFRF survey efforts indicatethat growth has continued, though it is notclear whether the growth rate has changed.We use the average growth rate from Dunn’stime series from 1991–1994, which was about14 percent. The true rate of growth could behigher or lower. By applying the 14-percentgrowth rate to Dunn’s (1995) estimate, thenumber of certified organic producerpotentially affected in 1999 is 8,200 and12,150 in 2002.

We have no national-level growth rates fornot-certified organic farms. The limited timesseries from CDFA is of limited value inestimating a growth rate. We suspect it is lessthan the rate for certified farms because

certification has value and organic producerswould be expected to take advantage of themarketing advantages of certification.Furthermore, the emergence of Statecertification programs that appear to havelower certification fees than privatecertification entities may have encouragedmore organic producers to be certified.Therefore, for purposes of analyzing theimpacts of the rule for the PaperworkReduction Act, we assume growth of non-certified organic producers from 4,000 in1999 to 5,000 non-certified farms by 2002,making the total number of farms potentiallyaffected by the rule, 17,150 farms. However,we request comment and/or data on thenumber and the growth of certified and non-certified organic farms.

Organic Handlers

Little information exists on the number ofhandlers. They include processors such asorganic soup manufacturers, organic foodpackaging operations, and organic foodwholesalers. USDA has estimated that therewere 600 entities in this category in 1994(Dunn 1995b). AMS estimated that thegrowth rate was 11 percent from 1990through 1994 (Dunn 1995b). More recent datafrom CDFA registration records suggest agrowth rate of about 28 percent (CaliforniaDepartment of Health Services 1999). Forprojection purposes, we use a growth rate of20 percent, which makes the number ofhandlers for 1999 1,250 and for 2002 2,150.Reasons for growth include the generalincrease in organic production and growth inthe market for processed organic foods,including multiingredient products. Again,these projections are based on limited datafrom the early 1990’s, and growth may haveslowed or increased. We request commentand/or data on the number and the growthrate of processors and handlers in the organicindustry.

Retail Food Establishments

Retailers of organic food are grocery stores,bakeries, restaurants and otherestablishments that process or prepare rawand ready-to-eat food. Most are not currentlysubject to either voluntary practices ormandatory standards of the organic industry.Although they are excluded from thecertification requirements, they are subject toother processing, handling, and otherproduction related requirements of theproposed rule. Hence, a new stratum of theorganic industry will be regulated by theproposed rule.

Dunn’s (1995a) estimates the number ofcertified retailers to be 31 in 1995. It is notclear whether Dunn’s (1995a) definition ofretailers and the proposed definition statedabove are consistent. Hence, the total numberof retailers that may be regulated remainsunknown. USDA’s Economic ResearchService (ERS) reports there were 161,707grocery stores in 1997 (ERS website). Manyof these stores sell organic products and maybe affected by the proposed rule. The effectof the proposed regulation on the growth ofretailers remains unknown. We requestcomment and/or data on the number and thegrowth rate on the retailers of organic food.



Foreign Entities

The discussion of the number of affectedparties has focused on domestic certifyingagents, producers, and handlers. Werecognize that foreign entities may apply foraccreditation and foreign producers andhandlers may be certified under the NOP.Furthermore, upon request of a foreigngovernment, a foreign certifying agent maymeet the requirements for accreditation whenthe Administrator determines that thecertifying agent meets the requirements of theNOP.

At this time, we have no informationregarding the number of foreign entitieswhich may enter the NOP. We do not knowhow many foreign producers and handlersare marketing goods as organic, nor do weknow how many will seek to be certifiedunder the NOP. Accredited certifying agentswill be able to certify operations outside theUnited States and foreign certifying agentsmay become accredited by USDA. It is likelythat the costs for accreditation will be higherfor foreign applicants for accreditation.Foreign applicants will face the same costs asdomestic applicants but the levels of costwould reflect generally higher costs offoreign travel and per diem expenses for siteevaluation and miscellaneous costs such asfor translation of documents. For purposes ofestimating the paperwork burden describedelsewhere, we assume 10 foreign certifyingagents in the first 3 years of the program. Werequest comment and/or data on the numberand the growth rate of foreign entities thatmay export to the U.S. organic market.

Benefits of the Proposed Rule

The benefits from implementation of theproposed rule are: (1) Improved protection ofbuyers from misleading claims and moreinformation on organic food; (2) reducedadministrative costs; and (3) improved accessto international organic markets. Not allbenefits that may arise from the rule arequantifiable. Where economic data areavailable, they may relate to costs and aregenerally not adequate to quantify economicbenefits.

Information

Potential benefits to consumers as a resultof the proposed rule include moreinformation on organic food, and protectionfrom false and misleading organic foodclaims. Consumers may be misled by labelson processed and raw products claiming tobe organic. In particular, with processedfood, some of the ingredients may not beorganically produced, or the product maycontain less organic content than theconsumer assumes. The USDA organic sealwill provide consumers a quick tool to verifythat goods offered for sale as organic are infact organic. To the extent that consumersview the seal as an important informationtoo, that is, product with the seal is perceivedas more desirable, they may enhance theability of producers to realize the pricepremiums associated with certified products.

There is anecdotal evidence to suggest thatconsumer fraud involving organic food doesoccur (Mergentime 1997). Criminalprosecutions involving felony pleas and fineshave taken place (Mergentime 1997).

However, we have no evidence to suggestthat this problem is wide-spread (Mergentime1995). Also, it is important to recognize thatthe organic industry’s effort to police itselfand the remedies provided by the judicialsystem may be adequate to address consumerfraud. Mergentime (1997) documents theeffect of litigating fraud cases on theindustry. However, we request comment and/or data on the extent and the severity ofconsumer fraud that may exist.

Some producers may have limited theirorganic livestock production because ofuncertainty regarding the standards thatwould be used in the NOP. By removing theuncertainty, producers may increaseproduction, thereby increasing the quantityof livestock products.

Reduced Administrative Costs

The proposed rule addresses the problemof existing certifying agents using differentstandards and not granting reciprocity toother certifying agents. By accreditingcertifying agents, the rule would establish therequirements and enforcement mechanismsthat would reduce inconsistent certificationservices and lack of reciprocity betweencertifying agents. In the current system, thecertifying agent of a final product is notrequired to recognize the certification of anintermediate product. Both primary farmersand food handlers may face a risk of beingunable to sell a certified organic productwhen more than one certifying agent isinvolved. By imposing a uniform standard ofcertification and production, costs associatedwith establishing reciprocity betweencertifying agents will be eliminated.However, the magnitude of this benefitcannot be gauged without quantification. Inparticular, with the increasing consensuswithin the organic industry, the benefit maynot be large.

It is important to distinguish betweenconsensus with respect to standards ofproduction and consensus with respect tocertifying agents practices. There is growingconsensus regarding crop standards,livestock standards are more problematic.And, consensus is least evolved regardingstandards of conduct and practice forcertifying agents. There is no consensusregarding whether certifying agents should beaccredited or who the accrediting bodyshould be.

Industry-wide training costs may decrease.The proposed uniform standards ofproduction, certification should enableorganic inspectors to move more easily fromone certifying agent to another than thecurrent system.

In addition, USDA accreditation ofcertifying agents would present opportunitiesfor sharing information about standards,practices, and the general requirements of theprogram through the NOP staff. USDA willundertake a number of outreach andeducation efforts in connection with thelaunch of the NOP. Compliance guides andother printed material will be preparedwhich will be more readily understood thanthe Federal Register document. NOP staffwill participate at industry meetings and willlikely host public information exchangemeetings.

International Markets

The final national program rule is expectedto lead to EU acceptance of NOP certifiedorganic products. That is, it is anticipatedthat the EU would determine that the NOPis acceptable vis-a-vis EU regulation 2092/91.Article 11 of EU Reg. 2092/91 establishes theconditions under which organic productsmay be imported from third countries andaddresses the framework for equivalency.The NOP is a national program that shouldbe acceptable to the EU and othergovernments. The result would be theremoval of trade restrictions, therebypossibly increasing the growth in exports oforganic food products.

Currently, despite restricted access to theEuropean market, the United States is themost important non-EU supplier of organicproducts to EU countries (ForeignAgriculture Service (FAS), 1995). Importauthorizations have been granted for anumber of raw and processed commodities,including sunflowers, buckwheat, beans,sugar, and apples. Demand is strongthroughout the European market, and theorganic market share was 1–2 percent of totalfood sales in 1997 (Collins).

Lohr (1998) cites several growthprojections:

Annual growth rates of 25% to 30% havebeen experienced in the EU, the UnitedStates, and Japan for over five years, butgrowth is already slowing in some productcategories (PSC, Scott) * * * Segger projectsthat the EU market will reach $58 billion andthe U.S. market $47 billion by 2006. Ahmedsuggests that the Australian market couldgrow to $571 million by 2000, whereasLaFond projects that the value of Canadianorganics will reach $145 million by 2006.Mergentime forecasts the Japanese marketwill reach $2.6 billion by 2000 (Lohr, 1126).

Lohr further states that these projectedfuture growth rates are based on straight-lineextrapolations of current sales and growthrates without understanding the underlyingmarket mechanisms and price elasticities(Lohr 1998).

Foreign acceptance of the U.S. nationalstandard can be expected to expand theuniverse of consumers for U.S. producers andreduce costs of negotiating and documentingshipment by shipment.

Costs of the Proposed Rule

The costs of the proposed regulation arethe direct costs of complying with thespecific standards. It is important to note thatwhile some costs associated withaccreditation and certification are quantified,costs stemming from other provisions of theproposed regulations are not. In addition,this is a short-run analysis. The analysisexamines the costs that may be incurred from1999 to 2002. It is not possible at this timeto conduct a longer-run analysis because wedo not know enough about the fundamentalsupply and demand relationships to makeeconomically sound long run projections.

Accreditation Costs

USDA has identified 36 private certifyingagents and 13 State programs providingcertification. These 49 entities are consideredlikely applicants during the first 18 months



during which USDA will not chargeapplication fees or hourly fees foraccreditation. An unknown number of newentrants to the certifying business may alsoapply. However, over the last 10 years, thenumber of certifying agents does not appearto have grown significantly, with the neteffect of entries and exits maintaining apopulation of certifying agents at about 40–50.

The proposed rule would allow USDA tocollect fees from certifying agents for USDAaccreditation. Collecting fees from certifyingagents only is administratively simpler andwill enable State programs that want to keepclient costs low to do so.

Applicants for accreditation will berequired to submit a nonrefundable fee of$500 at the time of application, which isapplied to the applicant’s fees for serviceaccount. This means that the $500 fee paidat the time of application is credited againstany subsequent costs of accreditation arisingfrom the site evaluation. The $500 fee is thedirect cost to applicants who are deniedaccreditation based on the initial review ofthe information submitted with theirapplication. Charges for the site evaluationvisit will cover travel costs from the USDAemployees’ duty station, per diem expensesfor USDA employees performing the siteevaluation, an hourly charge that weanticipate will not exceed $95 per hour (pereach employee) for services during normalworking hours (higher hourly rates will becharged for overtime and for work onholidays), and other costs associated withproviding service to the applicant orcertifying agent.

The anticipated hourly rate is the rate thatUSDA will charge for services under theQuality Systems Certification Program(QSCP). A separate rulemaking will establishthe precise hourly rate that will be charged.Our preliminary estimate that the fee will beno more than $95 per hour is presented togive the public some indication of the ratethat will be charged following the 18-monthtransition period. QSCP is an audit-basedprogram administered by AMS, whichprovides meat packers, processors,producers, and other businesses in thelivestock and meat trade with theopportunity to have special processes ordocumented quality management systemsverified. The procedures for accreditationevaluation are similar to those used to certifyother types of product or system certificationprograms under QSCP.

At present, the base per diem for places inthe United States is $80 ($50 for lodging and$30 for meals and incidental expenses). Perdiem rates are higher than $80 in most largecities and urbanized places. Travel costs willdepend on where the certifying agent islocated.

USDA estimates the costs of a siteevaluation visit after the transition periodwill average $3,070–$4,850 depending on thecharacteristics of the applicant. This estimateis based on experience with the QSCP andmore limited experience performing auditsverifying that certifying agents meet ISOGuide 65. The cost of a site evaluation visitwill vary with the cost of travel from theUSDA reviewer’s duty station to the

applicant’s place of business. In general,more distant and more remote locations willinvolve higher travel costs.

Accreditation will include verification ofadherence to ISO Guide 65. Recentexperience with USDA’s program to verifyorganic certifying agents to ISO Guide 65indicates that roughly 32 staff hours arerequired. Although much of the accreditationsite evaluation will involve comparisonsagainst ISO Guide 65, additional hours willbe required because USDA will be evaluatingadditional aspects of the applicant’soperation to determine if the applicant isqualified to perform as an accredited agentfor the NOP. Based on experience with ISOGuide 65 verifications, we project that smallapplicants with a simple business structurewill require 3 days and large applicants withmore complex business structure will require5 days. Thus, the total number of hours to becharged would range from 24 to 40 hours. Atthe base rate of $95.00, the charge for hoursof service would be $2,280–$3,800.

Per diem costs would cover 3 to 5 days,totaling $240–$400. A review of domestictravel by USDA staff during fiscal year 1999,indicates that transportation costs rangingfrom $500–$600. Miscellaneous costs areestimated to add another $50 to each sitevisit. Thus, the total site visit cost wouldrange from $3,070 to $4,850.

During the 18-month transition period,USDA intends to use 2 reviewers for siteevaluation visits. One reviewer will comefrom the QSCP audit staff and will befamiliar with the ISO Guide 65 verification;the other reviewer will come from the NOPstaff and will be familiar with requirementsof the organic program. The two will conductthe site evaluation jointly. We anticipate onlyone reviewer will be required after thetransition period. During the 18 monthtransition period, applicants will be chargedfor travel and per diem costs for two persons,but not application fees or hourly fees. Thus,the estimated expenditures (travel and perdiem) for these initial accreditations will be$1,530–$2,050. Table 3 estimates the totalinitial costs for an applicant to becomeaccredited.

Currently few private certifying agents areoperating with third party accreditation.Fetter (1999) reports that in a sample of 18certification programs four programs wereaccredited and one had accreditationpending. All of these were large, privatecertifying agents. Those certifying agentscurrently accredited by third parties willlikely pay less for USDA accreditation. In itsfirst proposal, USDA stated at FR 62:65860,‘‘We are aware that certifiers currently maypay in excess of $15,000 for accreditation bya private organization.’’ Commenters thoughtthis figure was too high. One commenter,which operates the International Federationof Organic Agriculture Movements (IFOAM)Accreditation Programme under license toIFOAM, stated ‘‘It is possible that the largestprogramme operating a chapter system withactivities in many countries (which isincluded in their IFOAM evaluation) paidthis amount in their first year. On the otherhand the average cost to a medium sizedcertifier works out at around $3000 to $4000per year.’’ Another commenter stated ‘‘At the

present time IFOAM accreditation costs lessthan $10,000/year for the largest certifier and$3–5,000 for smaller certifiers.’’

The direct costs of accreditation, if allcurrently operating certifying agents becomeaccredited during the first 18 monthsfollowing the final rule, is approximately$75,000 to $100,000. This figure is derivedfrom the per firm costs in Table 3. After thefirst 18 months, the direct cost for accrediting49 certifying agents would be approximately$150,000 to $238,000.

The 18 month period affects thedistribution of program costs between theorganic industry and the taxpayer. Some ofthe costs of accreditation would be absorbedby the NOP operation budget appropriated byCongress. In effect, the taxpayers aresubsidizing the organic industry. Withoutthis subsidy, the total cost of accreditationmay approach $1 million.

Private certifying agents and state programsthat do not mirror the proposed regulationmay incur additional costs to change theirprograms to adopt the proposed nationalstandards. The discussion on the effect of theproposed regulation on existing stateprograms is in ‘‘State Program Costs.’’ Thecost associated with changing existingprivate certifying programs is not quantified.

Also, certifying agents who have beenoperating without third party accreditationwill face new costs. Compared to the directcosts of $3,000–$5,000 per year indicated bythe commenters, the direct costs of USDAaccreditation will be smaller. The direct costsfor certifying agents obtaining accreditationduring the first 18 months, when USDA willnot impose an application fee or hourlycharges, will be limited to travel and perdiem costs. Furthermore, USDA’s charges areimposed every 5 years, not annually.

A national accreditation program mayshrink the market for a third-partyaccreditation. Certifying agents will havelittle incentive to maintain or seek a secondaccreditation by a private organization unlessthat accreditation sufficiently enhances themarket value of the certifying agent’sservices. Thus, the market will determinewhether other accrediting entities continue tohave a U.S. market for their services.

Training programs are currently offered bythe Independent Organic InspectorsAssociation (IOIA), an organization ofapproximately 165 organic certificationinspectors, and by some of the largercertifying agents (IOIA, p. 1). Costs toexisting certifying agents to provideadditional training to other staff are difficultto measure in the absence of information oncurrent staff skill levels or the existence offormal training other than inspector training.Some agencies rely on volunteer staff whomay have had no formal training, but theextent of this practice is unknown. AMSintends to offer assistance to certifyingagents, producers, and handlers by providingguide books and other printed material thatwould enable participants to betterunderstand the regulations. In addition, AMSintends to continue open and frequentcommunication with certifying agents andinspectors to provide as much information aspossible to aid them in fulfilling therequirements of the regulations.



The OFPA requires that private certifyingagents furnish reasonable security, such as abond, for the purpose of protecting the rightsof participants in the organic certificationprogram. Specifics requirements regardingreasonable security have not yet beenestablished. It is expected that there will becosts to certifying agents from theserequirements.

Certification Costs

State laws vary widely on organiccertification and registration. Some Statesrequire only that an organic producer registerand make certification voluntary. OtherStates require certification by the State’s ownagents, while others accept certification by aprivate certifying agent. The least stringentrequirement among States with organiclegislation is that products marketed asorganic comply with their definition oforganic but both registration and certificationare voluntary. Thirteen States operateprograms to certify organic production. Inmany States producers may claim theirproduct is organic but operate withoutcertification or well-defined standards. Onthe other hand, many organic producersoperate in States with no program andvoluntarily secure third party certification towell-defined standards.

Under the proposed rule, USDA will notimpose any direct fees on producers andhandlers. Certifying agents will establish afee schedule for their certification servicesthat will be filed with the Secretary.Certifying agents will provide all personsinquiring about the application process witha copy of their fees. The certifying agent willprovide each applicant with an estimate ofthe total cost of certification and an estimateof the annual costs of updating thecertification. However, the certifying agentmay require applicants to pay at the time ofapplication a nonrefundable fee of no morethan $250 which must be applied to theapplicants’ fee-for-services account. The $250limit is proposed as a reasonable figureconsidering the interests of certifying agentsand applicants.

The proposed maximum nonrefundable feeprotects certifying agents by ensuring thatthey receive some payment for their work forapplicants should the applicant lose interestor be found unqualified for certification. Forthe purposes of estimating the cost of thepaperwork burden on certifying agents,USDA has valued their time at $27 per hour.Thus, the $250 limit, if the certifying agentchooses to require it, would coverapproximately 9 hours of work. The $250limit protects applicants from paying largefees up front when their ultimate eligibilityfor certification is unknown. The $250 limitis believed to be low enough to ensureproducers and handlers can afford to take thefirst steps for certification but high enough toensure certifying agents will have anincentive to initiate certification when theprospects that the applicant will qualify areunknown.

Some States charge minimal fees forcertification by subsidizing operating costsfrom general revenues. The majority ofcertifying agents structure their fee scheduleson a sliding scale based on a measure of size,

usually represented by the client’s gross salesof organic products but sometimes based onthe acres operated (Fetter 1999 and Graf andLohr 1999). Some certifying agents charge anhourly rate for inspection and audit services.

Graf and Lohr have applied fee schedulesprovided by nine certifying agents to fourhypothetical farms—small, medium, large,and a super farm. Tables 2A and 2Bsummarizes the fees that Graf and Lohr foundby applying schedules of each certifyingagent to hypothetical farms. Total first-yearcosts and subsequent (renewal) year costs forcertification are shown. The average cost foreach size class should be interpreted withcare because the reported average is notweighted by the number of clients certified.In their study, the Texas Department ofAgriculture program is the low-cost certifyingagent for all-size operations. The high-costcertifying agent differs across farm sizes.None of these certification programsmentions costs for residue testing, which theNOP will require in the form of preharvesttesting when there is reason to believe thatagricultural products have come in contactwith prohibited substances. Preharvesttesting is expected to be infrequent. Somecertifying agents currently require soilnutrient testing and water quality testing.The estimated total initial costs for aproducer or handler to become certified arepresented in Table 3.

We have not extended the average costsreported in Tables 2A and 2B to aggregatecertification costs for all organic farmsbecause the number of organic farms is notknown with precision, nor is their geographiclocation and there are no data to distributethe population of organic farms across sizeclasses. Like conventional agriculture, thelargest percentage of farms would beexpected to fall in the smallest sales class.Many of the smallest farms would qualify forthe small farm exemption from certification.

In addition, organic producers andhandlers would incur the costs associatedwith becoming familiar with the nationalprogram. We request comment and/or dataon the certification costs that may beimposed on the organic producers, handlers,processors, and retailers.

Production and Handling Costs

Producers and handlers currently active inthe organic industry may bear costs under theproposed national standards. We believe thatwhile some provisions of the proposedprogram mirror current industry practices,others differ. In addition to the costassociated with becoming familiar with thenational program, any adjustments stemmingfrom these differences will result in costs.These costs are only qualitatively discussed.This assessment does not include aprovision-by-provision analysis of possiblealternatives.

Producers

Producers of organic food will facenumerous provisions that will regulate theirproduction methods. As indicated in theBaseline section, many of the requirementsare currently practiced by certified organicfarmers. Farming operations that are notcertified, but are registered with a State

government such as California, receive copiesof the State laws to which they must comply.Some organic producers are neither certifiednor registered and therefore may not practicethe requirements proposed. Major provisionsare discussed to illustrate costs; otherprovisions may also impose additional costs.We request comment and/or data on the coststhat may be imposed on the producers oforganic products. In addition, we requestcomment and/or data on the similarities anddifferences between the current practices ofprivate and State programs and the proposedrequirements.

Land Requirement. The transition period,which would specify the time during whichprohibited materials cannot be applied beforea field can be certified as organic, is includedin many private and State organic standards.The OFPA specifies a required transitionperiod of 3 years before certifying a field. Theeffect of this provision on the currentlycertified organic farming operations may beminimal. Certifying agents currently enforcethe 3 year transition period required by theOFPA. Producers who are registered in Statesrequiring registration, receive copies of theState laws governing organic productionwhich generally require a 3 year transitionperiod.

The effect on small farming operations thatare neither certified or registered may besignificant. Small farming operations thathave completed a 3 year transition periodand can document the transition will not beaffected by this requirement. To stay in theorganic industry, those who have notcompleted the 3 year transition period mustcomply with the transition periodrequirement. They may incur the cost oforganic production for a significant length oftime, yet not be allowed to sell their productsas organic. Hence, some small organicoperations may exit the industry. We requestcomment and/or data on the magnitude ofthe cost associated with the provision. Inaddition, we request comment and/or data onthe similarities and differences between thecurrent practices of private and stateprograms and the proposed requirements.

Soil fertility and crop nutrients. Lackinginformation, we have not quantified the costassociated with this provision, but weassume that it may have costs Organicproduction historically rests on soil fertilitymanagement. Private and State certifyingagents have well developed standardsaddressing care and treatment of the soil. Theproposed rule includes requirements for theuse of manure and a practice standard forcomposting which may impose additionalcosts to producers. However, not all organicfarmers use manure for soil fertility andmany farmers use composting practices thatare consistent with the proposed rule. Webelieve that this requirement will haveminimal impact on certified or registeredorganic producers. We request comment and/or data on the magnitude of the costassociated with the provision. In addition,we request comment and/or data on thesimilarities and differences between thecurrent practices of private and Stateprograms and the proposed requirements.

Materials list. Lists of approved syntheticmaterials, including soil amendments and



pesticides, vary from one State program toanother. A detailed analysis of specificdifferences in the various existing materialslists shows them to be overlapping in mostcases. The impact of the national programwill be determined by how the nationalstandards differ from current certificationstandards and from actual practice.

Farming operations, both certified andregistered, may need to adjust theirproduction methods to comply with the list.These adjustments will impose costs on theseoperations. However, most currently certifiedoperations and those operating under a Stateprogram already adhere to a materials list.These lists overlap in most cases with eachother and the National List in this proposalwhich should mitigate the costs for theseoperations. The magnitude of the costsresulting from these adjustments is notquantified. We request comment and/or dataon the magnitude of the costs associated withthe provision. In addition, we requestcomment and/or data on the similarities anddifferences between the current practices ofprivate and state programs and the proposedrequirements.

Animal drug use. Another common featureof organic standards is the restricted use ofanimal drugs for livestock. Where livestockstandards have been adopted by existingState programs and by private certifyingagents, most prohibit the use of animal drugsexcept for the treatment of a specific diseasecondition, and use of animal drugs isgenerally prohibited within 90 days prior tothe sale of milk or eggs as organic. SomeState and private certifiers allow the use ofanimal drugs in animals for slaughter if theproducer extends the withholding period.Others prohibit the use of animal drugs. Thestandards in the proposed rule wouldprohibit the sale as organic of an edibleproducts derived from an animal treated withantibiotics or other unapproved substances.

The proposed standards may not differfrom existing State or private standards inprohibiting the use of drugs on healthyanimals. However, the effect of this provisionmay differ among certified and registeredorganic farms. The effect on the certifiedfarming operations is unknown. We assumethat this provision may have costs, but themagnitude of these costs is not quantified.We request comment and/or data on themagnitude of the costs associated with theprovision. In addition, we request commentand/or data on the similarities anddifferences between the current practices ofprivate and state programs and the proposedrequirements.

Other livestock requirements. Lackinginformation, we have not quantified the costassociated with this provision, but weassume that this provision may have costsdue to the variability in current housing, feedand health care practices. We requestcomment and/or data on the magnitude ofthe costs associated with the provision. Inaddition, we request comment and/or data onthe similarities and differences between thecurrent practices of private and stateprograms and the proposed requirements.

Residue Testing. Lacking information, wehave not quantified the cost associated withthis provision, but we assume that this

provision may have costs. We requestcomment and/or data on the magnitude ofthe costs associated with the provision. Inaddition, we request comment and/or data onthe similarities and differences between thecurrent practices of private and stateprograms and the proposed requirements.

Handling requirements. Theserequirements prohibit a handler from usingionizing radiation for any purpose, aningredient produced with excluded methods,or a volatile synthetic solvent in or on aprocessed agricultural product intended to besold, labeled, or represented as ‘‘100 percentorganic’’, ‘‘organic’’ or ‘‘made with organic(specified ingredients).’’ We believe,however, that the additional costs associatedwith compliance may be small. We base thisassumption on the thousands of commentson the first proposal, including commentsfrom the organic industry, indicating thatthese practices are widely considered to beinconsistent with organic production andhandling. Lacking information, we have notquantified the cost associated with thisprovision. We request comment and/or dataon the magnitude of the costs associated withthe provision In addition, we requestcomment and/or data on the similarities anddifferences between the current practices ofprivate and state programs and the proposedrequirements.

Handlers

Handlers of organic food may be definedand regulated differently across differentcertifying agents and States. Handlers mayincur some cost associated with complyingwith the requirements of the proposedregulation. We request comment and/or dataon the costs that may be imposed on theretailers of organic products. In particular,we request comment and/or data on costsassociated with excluded methods, residuetesting, and labeling. In addition, we requestcomment and/or data on the similarities anddifferences between the current practices ofprivate and state programs and the proposedrequirements.

Retail Food Establishments

Largely, retailers of organic food are notregulated. However, they are still subject toother requirements such as prevention ofcontamination of organic products withprohibited substances, and comminglingorganic with non organic products.Complying with these provisions may incursome cost. We request comment and/or dataon the costs that may be imposed on theretailers of organic products.

Labeling Costs

Certified handlers will have to complywith requirements regarding the approveduse of labels. The estimated annual cost for1,977 certified handlers to determine thecomposition of 20 products to be reported onlabels is $948,960. This figure is based on anaverage of 1 hour per product and an hourlycost of $27. Similarly, certified handlers willhave to design their labels to comply with theregulation. This is expected to take 1 hourper label at $27 per hour for a compliancecost of $948,960. Total label costs forcertified handlers are $1.9 million.

Any producers, processors, and retailerswho are not currently certified but whopackage organic products are also subject tothe labeling requirements. Any changes toexisting labels and new labels that need toconform to the proposed regulation willincur a cost. The costs associated with theseactivities are not quantified. Hence, the lowerbound on the labeling cost is approximately$2 million. We request comment and/or dataon the extent the current labels will need tochange to conform to the proposedregulation. In addition, we request commentand/or data on the similarities anddifferences between the current practices ofprivate and state programs and the proposedrequirements.

State Program Costs

A national program may impose additionalcosts on States by requiring changes in theirexisting programs. The proposed ruleencompasses most of the principles ofexisting State programs. However, there arealso departures.

Where State standards are below Federalstandards or where elements of the Federalstandards are missing from a State program,these States would be required to makechanges in their programs that they mightotherwise not make. Where State programshave standards in addition to the Federalstandards and they are not approved by theSecretary, States also would be required tomake changes in their programs. Stateswithout organic standards or whose currentstandards either would conform to those ofthe national program or would be approvedby the Secretary would not incur additionalcosts resulting from required changes.Currently, USDA cannot predict which Statesmay be required to adjust their existingprograms.

States will be charged for accreditation,something none of them pay for now. Thecost associated with this provision isdiscussed in the Accreditation Section.

Enforcement Costs

Enforcement costs will fall upon USDA’sNOP, States operating State programs, and oncertifying agents. Certifying agents willreview clients’ operations and will notifyclients of deficiencies. Certifying agents caninitiate suspension or revocation ofcertification. Certifying agents will be awareof these overhead costs and we assume thatthey will establish fee schedules that willcover these costs. Actual costs to certifyingagents for enforcement activities will dependon the number of clients, how well informedclients are of their obligations, and clientconduct. State programs will face the sameobligations and types of costs as privatecertifying agents.

USDA’s enforcement costs are costsassociated with ensuring private certifyingagents and State programs fulfill theirobligations. USDA will bear costs ofinvestigating complaints, monitoring use ofthe USDA organic seal and organic labeling,and taking corrective action when needed.USDA will bear costs related to reviewing anapplicant’s or certified operation’s appealand for administrative proceedings. Werequest comment on the costs of the



enforcement provisions of the proposedregulation.

Reporting and Recordkeeping Costs

The Paperwork Reduction Act of 1995requires an estimate of the annual reportingand recordkeeping burden of the proposedNOP. Detailed descriptions of individualelements of that burden are presented in theproposal under the heading PaperworkReduction Act of 1995. The estimated annualreporting and recordkeeping burden reportedis approximately $6.8 million. This figureshould be understood within the context ofthe requirements of the Paperwork ReductionAct. The Paperwork Reduction Act requiresthe estimation of the amount of timenecessary for participants to comply with theproposed regulation in addition to theburden they currently have. Informationgathered by AMS in auditing activities inconjunction with ISO Guide 65 verifications,leads us to believe that the paperwork burdenon current certifying agents and certifiedoperators will be 10 to 15 percent greaterthan their current business practices as aresult of this proposal.

Certifying Agents. The regulation willimpose administrative costs on certifyingagents for reporting and recordkeeping. Theactual amount of the additionaladministrative costs that would be imposedby the proposed rule is expected to bedifferent for those entities which wouldbegin their activities only after the nationalprogram is implemented. Certifying agentsthat currently are active in the organicindustry already perform most of theseadministrative functions; therefore, theadditional costs to them would depend uponthe extent to which their current practices aredifferent from the requirements of theproposed regulation. An estimate of the costof compliance is the annual reporting andrecordkeeping burden documented in thePaperwork Reduction Act of 1995 analysis.Table 4 shows the estimated annual costs forState certifying agents and for private orforeign certifying agents. Based on theprojected number of States agents (13) andprivate or foreign agents (46) the totalreporting and recordkeeping cost, whichcaptures much of the compliance costs of therule, is $1,113,192.

The following list describes several of themost significant proposed administrativerequirements or optional submissions andthe probable resources required forcompliance. Details on the reporting andrecordkeeping burdens estimated for eachitem are in the paperwork analysis.

1. A list of farmers, wild crop harvestersand handlers currently certified. Thisinformation can be compiled from existingrecords. After implementation, certifyingagents will be required to submit on aquarterly basis a list of operations certifiedduring that quarter.

2. A copy of procedures used forcertification decisions, complying withrecordkeeping requirements, maintainingconfidentiality of clients’ business-relatedinformation, preventing conflicts of interest,sampling and residue testing, training andsupervising personnel, and public disclosureof prescribed information concerning

operations they have certified and laboratoryanalyses. These policies may have to becreated or modified to conform to theregulation.

3. Documentation on the qualifications ofall personnel used in the certificationoperation, annual performance appraisals foreach inspector and personnel involved in thecertification, and an annual internal programevaluation. Existing certifying agents mayalready perform these operations. Newcertifying agents will have to establishprocedures to achieve these things.

4. Documentation on the financial capacityand compliance with other administrativerequirements (e.g., fee structure, reasonablesecurity to protect the rights of the certifyingagents’ clients as provided in the NOP, andbusiness relationships showing absence ofconflicts of interest). Some of thisinformation can be compiled from existingrecords, e.g., fee schedules, and some may begenerated from other sources.

5. Copies, submitted to USDA, of noticesissued involving denials of certification,noncompliance, and suspension orrevocation of certification. This requirementwill be fulfilled simultaneously with sendingnotices to applicants or clients.

6. An annual report to the Administratorincluding an update of previously submittedbusiness information, information supportingany requested changes in the areas ofaccreditation, and steps taken to respond topreviously identified concerns of theAdministrator regarding the certifying agent’ssuitability for continued accreditation. Theannual report requirement will draw onrecords created in the normal course ofbusiness.

7. Retention of records created by thecertifying agent regarding applicants andcertified operations for not less than 10 years,retention of records obtained from applicantsand certified operations for not less than 5years, and retention of other records createdor received for USDA accreditation for notless than 5 years. This activity requiresrecords and database managementcapabilities and resources (storage space, filecabinets, electronic storage, etc.). In aninformal inquiry, AMS found that mostexisting certifying agents currently retainrecords for at least 10 years and use bothelectronic and paper storage. We believe thatthis requirement will not pose an additionalburden on existing certifying agents.

8. Public access to certification records,such as a list of certified farmers andhandlers, their dates of certification, productsproduced, and the results of pesticide residuetests. This requirement will have minimalimpact given the requirements for retainingrecords.

9. Providing program information tocertification applicants. To comply with thisrequirement, certifying agents may need tomodify existing standards and practices. Thecriteria for qualified personnel in theproposed rule may likely result in anincrease in labor costs for some existingcertifying agents and, initially, an increase intraining costs. The amount of additional coststo these certifying agents would depend onthe level of expertise among currentcertification agency staff, the extent to which

certifying agents currently rely on volunteers,and the current costs of training certificationstaff.

Producers and Handlers. The regulationwill impose administrative costs onproducers and handlers for reporting andrecordkeeping. The actual amount of theadditional administrative costs that would beimposed by the final rule is expected to bedifferent for those entities that would begintheir activities only after the nationalprogram is implemented. Producers andhandlers who currently are active in theorganic industry already perform most ofthese administrative functions; therefore, theadditional costs to them would depend uponthe extent to which their current practices aredifferent from the requirements of the finalregulation. An estimate of the cost ofcompliance is the annual reporting andrecordkeeping burden documented in thePaperwork Reduction Act of 1995 analysis.

The following list describes severalproposed administrative requirements oroptional submissions and the probableresources required for compliance.

1. Establish, implement, and updateannually an organic production or handlingplan. Organic plans are a standard feature inthe organic industry and are required bycertifying agents. Thus, producers andhandlers who are already involved inorganics, can rely on their current plan withrevisions as needed to meet elements of thenational program which are new to them ordiffer from their current practice. Althoughproducers and handlers are generally awareof the goals of organic plans, current practicemay fall short of the rigor that will berequired by the national program. Newproducers and handlers will have highercosts because they will have to prepare aplan from scratch.

2. Maintain records pertaining to theirorganic operation for at least 5 years andallow authorized representatives of theSecretary, the applicable State program’sgoverning State official, and the certifyingagent access to records. Existing organicproducers and handlers maintain records.New producers and handlers will have todevelop records systems. Access is expectedto be infrequent, will require little time of thecertified entity, and will not requirebuildings or equipment other than what isrequired for storing records.

3. Notify the certifying agent as required,e.g., when drift of a prohibited substance mayhave occurred, and complete a statement ofcompliance with the provisions of the NOP.Notifications are expected to be infrequent.

The total reporting burden includescreation and submission of documents. Itcovers the greatest amount of reportingburden that might occur for any singlecreation or submission of a document duringany one of the first 3 years following programimplementation, i.e., 2000, 2001, and 2002.The total estimated reporting burden reflectsthe average burden for each reporting activitythat might occur in 1 year of this 3-yearperiod.

The total recordkeeping burden is theamount of time needed to store and maintainrecords. For the purpose of measuring therecordkeeping burden, the year 2002 is used



as the reporting year for which the largestnumber of records might be stored andmaintained. The annual reporting andrecordkeeping burdens on producers,handlers, and certifying agents issummarized in Table 4.

Certified operations. The annual burden oncertified producers is estimated at 10 hoursand $229. Certified handlers have anestimated burden of 50 hours valued at$1,189. Certifying agencies have an estimatedburden of 700 hours valued at roughly$18,900.

Exempt operations. The burden on smallproducers and handlers, who choose tooperate as exempt entities, is minimal, 0.5hour of recordkeeping valued at $12. Exemptoperations are exempt from reporting andrecordkeeping burdens. However, smallproducers and handlers will have to investsome time and review documents todetermine whether they qualify forexemption or exclusion. Exempt operationsthat produce multiingredient productscontaining less than 50 percent organicingredient will be required to maintainrecords documenting the organic ingredientspurchased. Since records of purchases wouldbe part of the normal recordkeeping forhandlers, we do not consider this arecordkeeping burden.

Based on the projected number ofproducers (17,150) and handlers (2,150), thetotal reporting and recordkeeping cost, whichcaptures much of the compliance costs of therule for this group, is $5,200,721. We requestcomment and/or data on the costs that maybe imposed by the recordkeepingrequirements of the proposed regulation. Inaddition, we request comment and/or data onthe similarities and differences between thecurrent practices of private and stateprograms and the proposed requirements.

Barriers to Entry—Importers of OrganicProducts

Currently, there are no federal restrictionson importing organic products to the UnitedStates in addition to those regulationsapplying to conventional products. However,some States require organic products soldwithin the State to be produced according theState’s standards. Thus, some State programsare barriers to importers. The proposedregulation imposes a national standard thatthese importers must meet, and may incursome cost. We request comment and/or dataon the extent of the organic food imports andthe costs that may be imposed on theseimporters to meet the proposed standards.

Small Business Ramifications

USDA has proposed an 18-month periodduring which applicants for accreditationwould not be billed for hourly services. Therationale for this transition period is toreduce the costs to certifying agents and,thus, increase the prospect that certifyingagents, producers, and handlers will be ableto afford to participate in the nationalprogram. The choice of 18 months isintended to provide sufficient time for partiesdesiring accreditation to submit theirapplication and prepare for a site evaluation.

USDA has proposed to operate the programpartially with appropriated funds, in effect

sharing the cost of the program betweentaxpayers and the organic industry, torespond to public concerns regarding theeffects of the proposed regulation on smallbusinesses. Thousands of comments werereceived opposing the first proposal’s feeprovisions with most focusing on thesubstantial impact on small certifying agents.

Congress has expressed public policyconcern with the impacts of regulations onsmall entities generally and with the impactson the NOP regulations on small entitiesparticularly. The Small Business RegulatoryEnforcement Fairness Act of 1996 and theRegulatory Flexibility Act expressCongressional concern regarding regulatoryburden on small businesses. The Report fromthe Committee on Appropriations regardingthe Agriculture, Rural Development, Foodand Drug Administration, and RelatedAgencies Appropriations Bill, 2000, includesthe following language (U.S. Senate 1999):

‘‘The Committee continues to recognize theimportance of organic markets for smallfarmers and fishermen. The Committeeexpects the Secretary to construct a nationalorganic program that takes into considerationthe needs of small farmers and fishermen.* * * Furthermore, the Committee expectsthat of the funding available for the NationalOrganic Program, necessary funds should beused to offset the initial costs of accreditationservices, a subsidy necessary due to the lackof expertise in the Department of Agriculturein the areas of organic accreditation andinsufficient data on the industry.’’

Certifying agents applying for accreditationduring the first 18 months following the finalregulation will face lower direct costs thansubsequent applicants. The cost for laterapplicants for accreditation will be higherbecause they will have to pay a $500application fee and hourly charges forcompleting their site evaluation. Therequirement for accreditation was establishedin the OFPA in 1990 and the proposedaccreditation program was part of the 1997proposal. Because in this proposal USDA isusing appropriated funds to cover some ofthe costs of initial accreditation during thefirst 18 months of the program, certifyingagents may set lower fees initially benefittingthe producers and handlers who are certifiedduring this period.

It is important to note that many smallorganic operations may not be certifiedcurrently. In California, for example, manysmall farms are registered, but not certified.Even if certifying agents pass on the costsavings of the 18 month period provision toapplicants for certification, the cost ofcertification may be higher than the cost ofregistration. Hence, becoming a certifiedoperation for small organic producers andhandlers may be more costly than the currentpractices.

The costs imposed on small operationsmay be mitigated by a $5000 certificationexemption to aid the smallest organicoperations. However, these operations arestill subject to other requirements of theproposed regulation. To the extent that theserequirements differ from their currentpractices, complying with the nationalstandards may be costly for exemptoperations.

In addition, the certification exemptionallowed under the proposed regulationincludes limits on what an exempt operationmay do. Without the certification, smallorganic operations may not display theUSDA seal and may not use a certifyingagent’s seal. However, we are asking forpublic comment on whether exemptoperations should have the marketing optionof selling their products to handlers who canclaim the products as organic in multi-ingredient products. If the consumers oforganic food view the seals as importantinformation tools on organic food, that is, ifconsumers of organic products insist on onlycertified organic products, the inability ofsmall operations to display these seals mayprevent them from realizing the pricepremiums associated with certified organicproducts.

Industry Composition

The imposition of the national standardsmay change the composition of the organicindustry. Even with the small businessexemptions, some small organic operationsmay choose to exit the industry and smallorganic operations may also be discouragedfrom entering the industry, resulting in ahigher concentration of larger firms. On theother hand, it may be easier for smalloperations to comply with certain NOPstandards, such as the livestock standardswhich prohibit confinement productionsystems and require 100 percent organic feed.

Conclusion

Ideally, the net benefits of the proposedrule would be estimated by employing awelfare analysis. In a welfare model, thequantitative assessment of benefits would berepresented by net changes in consumer andproducer surplus, i.e., the difference betweenthe willingness to pay (or firm cost structurein the case of producers) and the marketprice of organic food. These net changeswould be estimated using information aboutthe cost structure of the industry, the demandfor organic food, and projected shifts insupply and demand resulting from thevarious factors discussed in the assessment.Although researchers have conductednumerous small-scale studies to determineconsumers’ willingness to pay for certainorganic products (primarily fresh produce)and to identify reasons why conventionalfood buyers do not choose organic foodproducts (Hammitt, 1990 and 1993; Jolly;Misra et al.; Park and Lohr; Weaver et al.),the available data are insufficient to supporta quantitative assessment of this type. A 1998review of studies of consumer demand fororganic foods concluded, ‘‘Attitudes,motives, and willingness to pay for organicproducts have been measured, but apparentlyno retail data have been available to estimateown-price, cross-price, and incomeelasticities.’’ (Thompson 1998).

USDA has identified the entities that maybe affected by the proposed rule and hasanalyzed the anticipated business-associatedimpacts on them of the rule based on ourknowledge of the industry and limited data.We have drawn on industry studies,including studies completed since the 1997proposed rule was published, and



information provided in comments on the1997 proposed rule.

The primary benefits from implementationof the proposed rule are improved protectionof buyers from a reduction in marketconfusion including protection from falseand misleading claims, and improved accessto markets from the reciprocity inherent innational standards. These benefits have notbeen quantified.

The costs of the proposed regulation arethe direct costs for accreditation and thecosts of complying with the specificstandards in the proposal including thereporting and recordkeeping requirements.Other than accreditation fees, recordkeepingand reporting costs, we did not quantify themagnitude of the compliance costs or thecosts of adhering to other provisions of thisregulation. We have also not quantified theimpact of all these provisions on smallbusiness but we believe there impact to besignificant.

The direct costs of accreditation if allcurrently operating certifying agents becomecertified during the first 18 months followingthe final rule is approximately $75,000 to$100,000. After the first 18 months, the directcost for accrediting would be approximately$150,000 to $238,000. During the 18-monthperiod during which the NOP is notrecovering the full costs of accreditationservices, the organic industry is beingsubsidized with appropriated funded derivedfrom the taxpayers. For existing certifyingagents compliance costs include costs tobecome familiar with and adopt NOPstandards. The aggregate cost of complyingwith reporting and recordkeepingrequirements of the rule are approximately$6.8 million. Appropriated NOP funds usedto operate the National Organic Program aretransfers from the taxpayers to theparticipants in the organic sector.

ReferencesByng, John. 1994. UK and European

Community (EC) Legislation. In, Handbookof Organic Food Processing andProduction. Simon Wright (ed.). pp. 17–30.Glasgow: Blackie Academic andProfessional.

California Department of Health Services(DHS). 1999. Report on the Registration ofCalifornia Organic Processed Food Firms.Sacramento: State of California. September1999. Figures obtained via personalcommunication with DHS.

California Department of Health Services.1995. Report on the Registration ofCalifornia Organic Processed Food Firms.Sacramento: State of California.

Collins, Shane. 1999. ‘‘Rosy future forecastfor Europe’s organic market,’’ EurofruitMagazine, September.

Dunn, Julie Anton. 1995a. Organic Food andFiber: An Analysis of 1994 CertifiedProduction in the United States. U.S.Department of Agriculture, AgriculturalMarketing Service.

Dunn, Julie Anton. 1995b. ‘‘Organic FoodsFind Opportunity in Natural FoodsIndustry,’’ Food Review, Vol. 18, Issue 3,Sep.–Dec.

Dunn, Julie Anton. 1997. AgriSystemsInternational Reports Certified Organic

production in the United States: Half aDecade of Growth. AgriSystemsInternational: Wind Gap, PA.

Emerich, Monica. 1996. Industry Growth:22.6%. Natural Foods Merchandiser(June):1–39.

Fetter, Robert T. 1999. Economic Impacts ofAlternative Scenarios of Organic ProductsRegulation. Senior Honors Thesis.University of Massachusetts, Amherst, MA.

Graf, Anita and Luanne Lohr. 1999.‘‘Analysis of certification program costs,’’Working Paper, Fund for Rural Americaproject, Market Development for OrganicAgriculture Products, Grant No. 97–36200–5.

Hammitt, James K. 1990. Risk Perceptionsand Food Choice: An Exploratory Analysisof Organic—Versus Conventional-ProduceBuyers. Risk Analysis, Vol. 10, No. 3: 367–374.

Hammitt, James K. 1993. ConsumerWillingness to Pay to Avoid PesticideResidues. Statistica Sinica, 3.

Independent Organic Inspectors Association.1996. IOIA 1996 Membership Directory.Winona, MN.

International Trade Centre UNCTAD/WTO.1999. Organic Food and beverages: WorldSupply and major European Markets.Geneva: ITC, xiv, 271 p.

Jolly, Desmond A., Howard G. Schutz,Katherine V. Diaz-Knauf, and Jagjeet Johal.1989. Organic Foods: Consumer Attitudesand Use. Food Technology (November):60–66.

Jolly, Desmond A. 1991. Differences BetweenBuyers and Nonbuyers of Organic Produceand Willingness to Pay Organic PricePremiums. Journal of Agribusiness(Spring): 97–111.

Klonsky, Karen and Laura Tourte. 1995.Statistical Review of California’s OrganicAgriculture, 1992–93. Report prepared forthe California Department of Food andAgriculture Organic Program. CooperativeExtension, Department of AgriculturalEconomics, University of California, Davis.

Klonsky, Karen and Laura Tourte. 1998a.Statistical Review of California’s OrganicAgriculture, 1992–95. Report prepared forthe California Department of Food andAgriculture Organic Program. CooperativeExtension, Department of AgriculturalEconomics, University of California, Davis.

Klonsky, Karen and Laura Tourte. 1998b.Organic Agricultural Production in theUnited States: Debates and Directions.Amer. J. Agr. Econ. Vol. 80, No. 5: 1119–1124.

Lohr, Luanne. 1998. Implications of OrganicCertification for Market Structure andTrade. Amer. J. Agr. Econ. Vol. 80, No. 5:1125–1129.

Mergentime, Ken. 1997. ‘‘Organic Fraud CaseDeepens; Possible Link Causes OCIATurmoil’’, the Natural Foods Merchandiser,March.

Mergentime, Ken and Monica Emerich. 1995.Organic Sales Jump Over $2 Billion Markin 1994. Natural Foods Merchandiser(June): 74–76.

Mergentime, Ken and Monica Emerich. 1996.Widening Market Carries Organic Sales to$2.8 Billion in 1995. Natural FoodsMerchandiser (June): 36–38.

Misra, Sukant, Chung L. Huang, and StephenL. Ott. 1991. Georgia Consumers’Preference for Organically Grown FreshProduce. Journal of Agribusiness (Fall): 53–65.

Natural Foods Merchandiser. 1995. OrganicUpdate: Reciprocity ControversiesIntensify, Exacerbating Certifier/Manufacturer Tensions. April.

Organic Farming Research Foundation. 1999.Final Results of the Third BiennialNational Organic Farmers’ Survey. E. Walz,Program Coordinator. Santa Cruz, CA.

Park, Timothy A. and Luanne Lohr. 1996.Supply and Demand Factors for OrganicProduce. American Journal of AgriculturalEconomics, Vol. 78 (August): 647–655.

Thompson, Gary D. 1998. Consumer Demandfor Organic Foods: What We Know andWhat We Need to Know. Amer. J. Agr.Econ. Vol. 80, No. 5: 1113–1118.

Underhill, S. E. and E. E. Figueroa. 1993.Consumer Preferences for Non-Conventionally Grown Produce. Paperpresented at the Valuing Food Safety andNutrition Conference, organized by theNE–165 Regional Research Project.Alexandria, VA, June 2–4.

USDA Foreign Agricultural Service. 1995.Agricultural Situation: AgriculturalHighlights, Winter 1995. Report fromAustria. Code 24, Sequence No. 007.

USDA Foreign Agricultural Service. 1995.Agricultural Situation: Organic Food.Report from Germany. Code 24, SequenceNo. 011.

USDA Foreign Agricultural Service. 1996.Agricultural Situation: Organic FoodMarket Potential and Regulations. Reportfrom France. Code 24, Sequence No. 002.

USDA Foreign Agricultural Service. 1999a.Report on organic agriculture in Japan.Attache report JA91234. October 5.

USDA Foreign Agricultural Service. 1999b.Report on organic agriculture in France.Attache report FR9070. October 18.

U.S. Senate. 1999. Report 106–80.Agriculture, Rural Development, Food andDrug Administration, and Related AgenciesAppropriation Bill 2000. Committee onAppropriations. Page 56.

Weaver, Robert D., David J. Evans, and A. E.Luloff. 1992. Pesticide Use in TomatoProduction: Consumer Concerns andWillingness-to-Pay. Agribusiness, Vol. 8No. 2: 131–142. Table 1.

TABLE 1.—ORGANIC FOOD SALES

[$ billions]

Year SalesSales(1998

dollars)

1990 .......................... 1.000 1.251991 .......................... 1.250 1.501992 .......................... 1.540 1.791993 .......................... 1.890 2.131994 .......................... 2.310 2.541995 .......................... 2.800 2.991996 .......................... 3.500 3.64

Source: Mergentime and Emerich in NaturalFoods Merchandiser.



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

[In dollars]

Certifying agent Smallfarm

Mediumfarm

Largefarm

Superfarm

CCOF ............................................................................................................................................... 750 1,650 4,750 51,150FVO .................................................................................................................................................. 585 1,624 5,101 51,437FOG ................................................................................................................................................. 325 845 2,525 25,525NOFA-VT ......................................................................................................................................... 335 535 585 585OTCO-In .......................................................................................................................................... 608 1,766 2,517 11,518OTCO-Out ........................................................................................................................................ 568 1,498 2.352 11,353OCIA-WI ........................................................................................................................................... 315 1,590 6,090 75,090OCIA-VA .......................................................................................................................................... 258 320 495 1,745TDA .................................................................................................................................................. 90 155 200 515WSDA .............................................................................................................................................. 330 1,375 2,800 12,000NC/SCS ........................................................................................................................................... n/a n/a n/a n/aAverage cost .................................................................................................................................... 416 1,136 2,742 24,092

Notes:CCOF—California Certified Organic FarmersFVO—Farm Verified OrganicFOG—Florida Certified Organic Growers & ConsumersNOFA–VT—Northeast Organic Farming Association-VermontOTCO–In—Oregon Tilth Certified Organic, inside OregonOTCO–Out—Oregon Tilth Certified Organic, outside OregonOCIA–WI—Organic Crop Improvement Association, Wisconsin chapterOCIA–VA—Organic Crop Improvement Association, Virginia chapterTDA—Texas Department of AgricultureWSDA—Washington State Department of AgricultureNC/SCS—NutriClean/Scientific Certification SystemsSmall farm—25 acres with annual sales of $30,000.Medium farm—150 acres with annual sales of $200,000.Large farm—500 acres with annual sales of $800,000.Super farm—3,000 acres with annual sales of $10,000,000.

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

[In dollars]

Certifying agent Smallfarm

Mediumfarm

Largefarm

Superfarm

CCOF ............................................................................................................................................... 425 1,300 4,350 50,550FVO .................................................................................................................................................. 510 1,499 4,851 51,187FOG ................................................................................................................................................. 325 845 2,525 25,525NOFA-VT ......................................................................................................................................... 300 500 550 550OTCO-In .......................................................................................................................................... 454 1,611 2,362 11,363OTCO-Out ........................................................................................................................................ 424 1,353 2,207 11,208OCIA-WI ........................................................................................................................................... 290 1,565 6,065 75,065OCIA-VA .......................................................................................................................................... 233 295 470 1,720TDA .................................................................................................................................................. 90 155 200 515WSDA .............................................................................................................................................. 330 1,375 2,800 12,000NC/SCS ........................................................................................................................................... 700 900 1,000 2,000Average cost .................................................................................................................................... 371 1,036 2,489 21,971

Notes:CCOF—California Certified Organic FarmersFVO—Farm Verified OrganicFOG—Florida Certified Organic Growers & ConsumersNOFA–VT—Northeast Organic Farming Association—VermontOTCO-In—Oregon Tilth Certified Organic, inside OregonOTCO-Out—Oregon Tilth Certified Organic, outside OregonOCIA–WI—Organic Crop Improvement Association, Wisconsin chapterOCIA–VA—Organic Crop Improvement Association, Virginia chapterTDA—Texas Department of AgricultureWSDA—Washington State Department of AgricultureNC/SCS—NutriClean/Scientific Certification SystemsSmall farm—25 acres with annual sales of $30,000.Medium farm—150 acres with annual sales of $200,000.Large farm—500 acres with annual sales of $800,000.Super farm—3,000 acres with annual sales of $10,000,000.



TABLE 3.—COSTS OF ACCREDITATIONAND CERTIFICATION

Estimated costs to certifying agents duringfirst 18 months

Application fee 1 $0Site evaluation costs

(two person team):.Per diem (3 to 5

days).$480 to $800

Travel (domestic) .... $1,000 to $1,200Hourly charges (not

billed).$0

Miscellaneouscharges (copying,phone, and similarcosts).

$50

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

Estimated costs to certifying agents forinitial accreditation after first 18 months

Application fee 1 .......... $500Site evaluation costs

(one person):Per diem (3 to 5

days).$240 to $400

Travel (domestic) .... $500 to $600Hourly charges (24

to 40 hours at$95/hour)).

$2,280 to $3,800

TABLE 3.—COSTS OF ACCREDITATIONAND CERTIFICATION—Continued

Miscellaneouscharges (copying,phone, and similarcosts).

$50

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

Annual review fees forcertifying agents (2to 8 hours at $95/hour) 2.

$190 to $760

Estimated costs to producers forcertification 3

Certification fee (ini-tial certification).

$800

Certification fee (re-newals).

$730

Estimated costs to handlers forcertification 4

Certification fee (initialcertification).

$1,825

Certification fee (re-newals).

$1,665

1 Nonrefundable fee that will be applied tothe applicant’s fee for service account.

2 Certifying agents are required to submitannual reports to USDA. Review of these re-ports is expected to range from 2 to 8 hours atan approximate rate of $95 per hour.

3 Estimated certification fees are calculatedfrom Graf and Lohr 1999 which, for a selectionof certification agents, provides certificationcosts 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 an-nual sales, 16 hours to certify. Our estimatedcertification fees only include those chargedfor small and medium farms, because most or-ganic producers fall into these categories asdefined by Graf and Lohr. In the 1997 OFRFsurvey, 90 percent of respondents had grossorganic farming income less than $250,000,with 82 percent less than $100,000.

The average current certification cost formost organic producers is about $775 for thefirst year of certification ($416 for small and$1,136 for medium farms) and about $705 forsubsequent years ($371 for small and $1,036for medium farms). Approximately $25 isadded to cover the costs associated with theNational Organic Program for an estimatedfirst year certification fee of $800 and subse-quent year certification fee of $730 for pro-ducers. Larger producers could expect higherfees.

4 Because Graf and Lohr do not estimatecertification fees for handlers, we estimatethese fees by applying a ratio of handler-to-producer certification fees from the regulatoryimpact assessment from 1997. The ratio is2.28 results in estimated fees of $1,825 and$1,665, respectively.

TABLE 4.—ESTIMATED ANNUAL REPORTING AND RECORDKEEPING BURDEN

Type of respondentAnnual

hours perrespondent

Hourly rate Annual cost

Certified producer .................................................................................................................................... 10 $24 $229Exempt producer ..................................................................................................................................... 0.5 24 12Certified handler ...................................................................................................................................... 50 24 1,189Exempt handler ........................................................................................................................................ 0.5 24 12State certifying agency ............................................................................................................................ 696 27 18,778Private or foreign certifying agency ......................................................................................................... 700 27 18,893

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

Appendix B.—Unfunded Mandates ReformAct

This proposed rule has been reviewedunder the Unfunded Mandates Reform Act(P.L.104–4). The Act requires that agenciesprepare a qualitative and quantitativeassessment of the anticipated costs andbenefits before proposing any rule that mayresult in annual expenditures by State, local,and tribal governments, in the aggregate, orby the private sector, of $100 million(adjusted annually for inflation) in any oneyear. According to the Act, the term Federalmandate means any provision in legislation,statute, or regulation that would impose anenforceable duty upon State, local, or tribalgovernments, or the private sector, except aduty arising from participation in a voluntaryFederal program.

The National Organic Foods ProductionAct (OFPA) of 1990 mandates that theSecretary develop a National OrganicProgram (NOP) to accredit eligible governing

State officials or private persons as certifyingagents who would certify producers orhandlers of agricultural products that havebeen produced using organic methods asprovided for in the OFPA. The OFPA alsopermits a governing State official tovoluntarily establish a State organiccertification program if the program isapproved by the Secretary and meets therequirements of the OFPA. The OFPA doesnot require that States establish their ownorganic certification programs or that State,local or tribal governments, or the privatesector, become accredited; therefore, theOFPA is not subject to the UnfundedMandates Reform Act because it is avoluntary program.

Although USDA has determined that thisproposed rule is not subject to the UnfundedMandates Reform Act, USDA has sought toconsider the rule’s impact on various entities.USDA prepared a Regulatory ImpactAssessment (RIA) that is discussed in thesection titled ‘‘Executive Order 12866’’ (also

attached as an appendix to this proposedregulation). The RIA consists of a statementof the need for the proposed action, anexamination of alternative approaches, andan analysis of the benefits and costs. Muchof the analysis is necessarily descriptive ofthe anticipated impacts of the proposed rule.Because basic market data on the prices andquantities of organic goods and services andthe costs of organic production is limited, itis not possible to provide quantitativeestimates of all benefits and costs of theproposed rule. The cost of fees andrecordkeeping proposed by the USDA arequantified, but the anticipated benefits arenot. Consequently, the analysis does notcontain an estimate of net benefits.

The analysis employed in reaching adetermination that this proposed rule is theleast costly and least burdensome to theregulated parties is discussed in the sectionstitled ‘‘The Regulatory Flexibility Act and theEffects on Small Businesses’’ and‘‘Paperwork Reduction Act of 1995.’’ The



1 Organic Farming Research Foundation. 1999.Final Results of the Third Biennial NationalOrganic Farmers’ Survey. Santa Cruz, CA.

proposed rule has been designed to be asconsistent as possible with existing industrypractices, while satisfying the specificrequirements of the OFPA.

We have had numerous occasions tocommunicate with various entities during thedevelopment of the proposed rule; States, forexample. Currently there are 27 States withsome standards governing the production orhandling of organic food and 13 States withorganic certifying programs. Representativesof State governments have participated inpublic meetings with the NOSB, while theNOP staff has made presentations, receivedcomments, and consulted with States andlocal and regional organic conferences,workshops, and trade shows. States havebeen actively involved in training sessionsfor organic inspectors; public hearingsconcerning standards for livestock productsduring 1994; a national Organic Certifiersmeeting on July 21, 1995; a USDA-hostedmeeting on February 26, 1996; a Statecertifiers meeting in February 1999; and anISO 65 assessment training session forcertifiers in April-May 1999. It is unknownat this time how many States, if any, mightvoluntarily establish their own organiccertification programs pursuant to the OFPAand the regulations.

Appendix C.—The Regulatory Flexibility Actand the Effects on Small Businesses

The Regulatory Flexibility Act (5 U.S.C.601 et seq.) (Act) requires agencies toconsider the economic impact of eachproposed rule on small entities and evaluatealternatives that would accomplish theobjectives of the rule without undulyburdening small entities or erecting barriersthat would restrict their ability to compete inthe market. The purpose is to fit regulatoryactions to the scale of businesses subject tothe action.

In the first proposal published in December1997, the initial Regulatory FlexibilityAnalysis (RFA), describing the impact of theNational Organic Program and evaluating thealternatives, was written with guidance fromthe U.S. Small Business Administration(SBA). The RFA of this proposal was writtenfollowing consideration of commentsreceived in response to the first proposal,other information that has become availablesince the first proposal, the RegulatoryImpact Assessment (RIA) that is discussed inthe section entitled ‘‘Executive Order 12866’’(also attached as an appendix to thisproposal), and the information collectionburden discussed in the section entitled‘‘Paperwork Reduction Act of 1995’’ (PRA).

Reasons for Proposal

Currently, organic certification is voluntaryand self-imposed. Members of organicindustries across the U.S. have experiencednumerous problems marketing theirorganically produced and handledagricultural products. Inconsistent andconflicting organic production standards mayhave been an obstacle to the effectivemarketing of organic products. There arecurrently 36 private and 13 State organiccertification agencies (certifying agents) inthe United States, each with its ownstandards and identifying marks.

Some existing private certifying agents areconcerned that States might imposeregistration or licensing fees which wouldlimit or prevent private certification activitiesin those States. Labeling problems haveconfronted manufacturers of multi ingredientorganic food products containing ingredientscertified by different certifying agentsbecause reciprocity agreements have to benegotiated between certifying agents.Consumer confusion may exist because of thevariety of seals, labels, and logos used bycertifying agents and State programs. Also,there is no industry wide agreement on anaccepted list of substances that should bepermitted or prohibited for use in organicproduction and handling. Finally, a lack ofnational organic standards may inhibitorganic producers and handlers in taking fulladvantage of international organic marketsand may reduce consumer choices in thevariety of organic products available in themarketplace.

To address these problems in the late1980’s, the organic industry attempted toestablish a national voluntary organiccertification program. At that time, theindustry could not develop consensus on thestandards that should be adopted, soCongress was petitioned by the OrganicTrade Association to establish nationalstandards for organic food and fiber products.

Recently, the Organic Trade Associationpublished American Organic Standards,Guidelines for the Organic Industry (AOS).However, not all participants in the organicindustry elected to participate in developingthe AOS. Many certifying agents preferred towait for implementation of the Nationalstandards, and some certifying agentsdisagree with portions of the AOS. For thesereasons, the USDA is proposing a regulationfor the National Organic Program.

Legal Basis for and Objectives of Proposal

In 1990, Congress enacted the OrganicFoods Production Act of 1990, as amended(7 U.S.C. 6501 et seq.) (OFPA). The OFPArequires all agricultural products labeled as‘‘organically produced’’ to originate fromfarms or handling operations certified by aState or private agency that has beenaccredited by USDA.

The purposes of the OFPA, set forth insection 2102 (7 U.S.C. 6501), are to: (1)Establish national standards governing themarketing of certain agricultural products asorganically produced products; (2) assureconsumers that organically producedproducts meet a consistent standard; and (3)facilitate commerce in fresh and processedfood that is organically produced. TheNational Organic Program, which this ruleproposes, is the result of the OFPA.

Applicability of Proposal

This proposal will directly affect threesectors of the organic industry: certifyingagents, producers, and handlers. The OFPAprovides for the collection of reasonable feesby USDA from producers, handlers, andcertifying agents who participate in thenational program. This proposal will imposedirect costs on certifying agents in the formof a fee paid to the Federal Government forUSDA accreditation. This proposal does not

impose direct costs in the form of fees onproducers and handlers. Certifying agentswill establish a fee schedule for theircertification services for producers andhandlers. All three sectors are subject toindirect costs of compliance.

The term, ‘‘certifying agent,’’ means thechief executive officer of a State or, in thecase of a State that provides for the statewideelection of an official to be responsible solelyfor the administration of the agriculturaloperations of a State, such official and anyperson (including private entities) who isaccredited by the Secretary as a certifyingagent for the purpose of certifying a farm orhandling operation as a certified organic farmor handling operation. The term, ‘‘producer,’’means a person who engages in the businessof growing or producing food or feed. Theterm, ‘‘handler,’’ means any person engagedin the business of handling agriculturalproducts, excluding final retailers ofagricultural products that do not processagricultural products. Subpart B, section205.101 in the proposed regulation providesinformation about exemptions andexclusions from certification.

According to the most complete dataavailable to USDA’s Agricultural MarketingService (AMS), there are 49 certifying agents(36 private and 13 State) in the U.S. Over halfof the private and State certifying agentscertify both producers and handlers, whilethe others certify only producers. Over three-fourths of private and State certifying agentseach certify fewer than 150 producers and 20handlers. The number of certifying agents hasremained fairly stable between 40 and 50 forsome years, with entries and exits tending tooffset each other. The National OrganicProgram staff anticipates that, in addition tothe 49 domestic certifying agents, 10 foreigncertifying agents may seek accreditationduring the initial phase of the program.

It is more difficult to establish the numberof organic producers. Organic farming wasnot distinguished from conventionalagriculture in the 1997 Census of Agriculture.There are sources which give insight into thenumber of producers. The Organic FarmingResearch Foundation (OFRF), a California-based nonprofit organization, has conductedthree nationwide surveys of certified organicproducers from lists provided by cooperatingcertifying agents. The most recent surveyapplies to the 1997 production year.1 OFRFsent its 1997 survey to 4,638 names andreceived 1,192 responses. Because OFRF didnot obtain lists from all certifyingorganizations or their chapters (55 out of atotal of 64 identified entities provided lists),their list count is likely an understatement ofthe number of certified organic producers.Note that the estimated number of organicproducers includes only certified organicfarms. Comments filed in response to the firstproposal and studies indicate that the totalnumber of organic farms is higher.



2 Dunn, Julie Anton. 1995. Organic Food andFiber: An Analysis of 1994 Certified Production inthe United States. U.S. Department of Agriculture,Agricultural Marketing Service.

3 Dunn, Julie Anton. 1997. AgriSystemsInternational Reports Certified Organic Productionin the United States: Half a Decade of Growth.AgriSystems International: Wind Gap, PA.

4 California Department of Health Services (DHS).1995. Report on the Registration of CaliforniaOrganic Processed Food Firms. Sacramento: State ofCalifornia. September 1999 figures obtained viapersonal communication with California DHS.

Dunn has estimated the number of certifiedorganic producers in the U.S.2 3 Dunn’s 1995work, a USDA study, estimated the numberof certified producers at 4,060 in 1994; thisestimate was used in the first proposal.Dunn’s 1997 work reported 4,060 certifiedorganic farms in 1994 and 4,856 in 1995.

Data collected by AMS indicate that thenumber of organic farmers increased about 12percent per year and the number of organichandlers increased at about 11 percent peryear during the period 1990 to 1994. OFRFsurvey efforts indicate that growth hascontinued, although it is not clear whetherthe growth rate has changed. Similarly,growth in retail sales, the addition of meatand poultry to organic production, and thepossibility of increased exports suggest thatthe number of operations has continued toincrease. Lacking an alternative estimate ofthe growth rate for the number of certifiedorganic producers, we use the average growthrate of about 14 percent from Dunn’s 1997study. The true rate of growth could behigher or lower. Applying the 14-percentgrowth rate to Dunn’s estimate of certifiedproducers in 1995 gives an estimate of 8,200organic producers for 1999.

An adjustment is needed to account for thenumber of producers who are practicingorganic agriculture but who are not certifiedand who would be affected by this proposal.We assume that the number of organic butnot certified producers in 1999 is about4,000. This assumption is based on verylimited information about the number ofregistered but not certified organic producersin California in 1995. Thus, the total numberof organic producers used in assessing theimpact of the rule is 12,176 in 1999.

Little information exists on the numbers ofhandlers and processors. USDA hasestimated that there were 600 entities in thiscategory in 1994. In California, there were208 registered organic processed food firmsin 1995 and 376 in 1999, a growth rate of 20percent.4 We assume that this growth rate isapplicable to the U.S. and project 1,250handlers in 1999. Again, the rate of growthcould be higher or lower.

SBA Definitions of Small Entities

Small business size standards, StandardIndustrial Code (SIC) (13 CFR part 121), aredeveloped by an inter-agency group,published by the Office of Management andBudget, and used by SBA to identify small

businesses. These standards represent thenumber of employees or annual receiptsconstituting the largest size that a for-profitenterprise (together with its affiliates) may beand remain eligible as a small business forvarious SBA and other Federal Governmentprograms.

Small businesses in the agriculturalservices sector, such as certifying agents,include firms with average annual revenuesof less than $5 million (SIC Division A MajorGroup 7). Producers with crop production(SIC Division A Major Group 1) and annualaverage revenues under $500,000 are smallbusinesses. Producers with livestock oranimal specialities are also considered smallif annual average revenues are under$500,000 (SIC Division A Major Group 2),with the exception of custom beef cattlefeedlots and chicken eggs, which areconsidered small if annual average revenuesare under $1,500,000. In handling operations,a small business has fewer than 500employees (SIC Division D Major Group 20).

Based on SBA’s small business sizestandards for the agricultural services sector,it is not likely that many, if any, of the 49domestic certifying agents have annualrevenue greater than $5 million. Based onanecdotal information, only a few private,for-profit, certifying agents might becategorized as a large business. All private,non profit, and State certifying agents wouldbe considered small by SBA’s standards.Even if State certifying agents do not exceedthe revenue threshold, they would not beconsidered to be small entities under the Actif the agents are an arm of state government.Only government jurisdictions withpopulations under 50,000 are considered tobe small entities under section 601(5) of theAct.

Based on SBA’s small business sizestandards for producers, it is likely thatalmost all organic producers would beconsidered small. The OFRF survey asked forthe producer’s total gross organic farmingincome during 1997. Only 35 (less than 3percent) of the survey respondents reportedgross income greater than $500,000, theSBA’s cutoff between small and largebusinesses. Over 70 percent reported grossincome of less than $50,000. The OFRFsurvey does caution readers about potentialsurvey ‘‘errors.’’ It is particularly importantto emphasize potential ‘‘non-response error,’’that is, it is unknown if those who responded

to the survey accurately represent the entirepopulation of certified organic growers. Also,some producers combine organic andconventional production on the sameoperation, some with total sales that mayexceed $500,000. However, it is likely that amajority of organic producers would beconsidered small.

It is also likely that the vast majority ofhandlers would be considered small, basedon SBA’s small business size standards forhandlers. Based on informal conversationswith organic certifying agents, about 25(about 2 percent) of the estimated 1,250organic handlers have more than 500employees. This includes firms that handleor process both organic and conventionalfoods.

Costs of This Proposal

Several requirements to complete this RFAoverlap with the RIA and the PRA. In orderto avoid duplication, we combine someanalyses as allowed in section 605(b) of theAct. This RFA provides information specificto small entities, while the RIA or PRAshould be referred to for more detail. Forexample, the RFA requires an analysis of theproposed rule’s costs to small entities. TheRIA provides an analysis of the benefits andcosts of this proposal. This RFA uses the RIAinformation to estimate the impact on smallentities. Likewise, the RFA requires adescription of the projected reporting,recordkeeping, and other compliancerequirements of the proposed rule. The PRAsection estimates the reporting andrecordkeeping (information collection)requirements that would be required by thisproposal from individuals, businesses, otherprivate institutions, and State and localgovernments. The burden of theserequirements is measured in terms of theamount of time required of programparticipants and its cost. This RFA uses thePRA information to estimate the burden onsmall entities.

The estimated direct costs of accreditationfor certifying agents and certification forproducers and handlers under the firstproposal issued in December 1997 and thisproposal are shown in table 1 and discussedin the following sections. More specificdetails regarding these costs are found in theRIA.

TABLE 1.—ESTIMATED DIRECT COSTS OF ACCREDITATION AND CERTIFICATION

First proposal This proposal

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

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

3 2,0501

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



5 Graf, Anita and Luanne Lohr. 1999. Analysis ofcertification program costs. Working Paper, Fundfor Rural America project, Market Development forOrganic Agriculture Projects, Grant No. 97–36200–5.

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

First proposal This proposal

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

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

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

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

Handlers:Estimated certification fee 4 ...................................................................... 943 943 1,825 1,665USDA 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 evaluationfees will be charged.

2 First proposal: Included in application and administrative fees. This proposal: Certifying agents are required to submit annual reports toUSDA. 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 diemand 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 estimatedfee 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 certifyingagents (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 byGraf and Lohr. In the 1997 OFRF survey, 90 percent of respondents had gross organic farming income less than $250,000, with 82 percent lessthan $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 formedium farms) and about $705 for subsequent years ($371 for small and $1,036 for medium farms). An estimated $25 is added to cover thecosts 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 AgentsWe have identified 36 private certifying

agents and 13 State programs providingcertification. These 49 domestic entities areconsidered likely applicants during the first12 months, as are an estimated 10 foreigncertifying agents. An unknown number ofnew entrants to the certifying business mayalso apply. However, over the last 10 years,the number of certifying agents does notappear to have grown significantly, with thenet effect of entries and exits maintaining apopulation of U.S.-based certifying agents atabout 40 to 50. Of the 49 domestic certifyingagents, based on information discussedpreviously, we estimate that the 36 privatecertifying agents are small.

In order to identify the certifying agentsthat might be expected to face moresignificant impacts as a result of thisproposal, we analyzed the amount ofrevenues from certification fees received by

certifying agents. Total certification feescollected by the certifying agents in 1994ranged from about $2,500 to about $400,000,with most certifying agents clustered aroundthe low or high end of this range. Thisamount is based on information collected byAMS from a sample of 16 private and Statecertifying agents for certification feescollected in 1994. To determine a cutoffpoint for small certifying agents, the Statecertifying agents were eliminated from thesample because these agents are an arm ofState government and are not consideredsmall entities. Of the remaining 11 privatecertifying agents, 6 (or 55 percent) collectedless than $25,000 each in total certificationfees, and the other 5 (45 percent) eachcollected more than $200,000. Based on thisinformation and knowledge of the organicindustry, for purposes of analyzing the costof accreditation, we estimate that about 55percent of private certifying agents are smallwith total annual revenue from certificationof less than $25,000.

Certification fees probably do notconstitute total income for most privatecertifying agents and, thus, are not acomplete measure of economic size. Some

certifying agents also earn revenue from anumber of other sources, such as sale ofpublications, membership dues, trainingworkshop and conference fees, farmersmarkets, grants, or donations.

Certifying agents will be assessed for theactual time and travel expenses necessary forthe National Organic Program to performaccreditation services. The National OrganicProgram will charge the same hourly fees asare charged for the voluntary, fee-for-serviceprogram provided by AMS to certificationbodies requesting conformity assessment tothe International Organization forStandardization (ISO) Guide 65, ‘‘GeneralRequirements for Bodies Operating ProductCertification Systems.’’ We expect that at thetime the National Organic Program’s finalrule is implemented, the fees will beapproximately $95 per hour, with higherovertime and holiday rates. Certifying agentswill be charged for travel, per diem, andother related costs associated withaccreditation. Applicants for accreditationwill be required to pay at the time ofapplication a nonrefundable fee of $500,which is applied to the applicant’s fee forservices account. This fee is credited against



6 During the first 18 months, site evaluation forinitial accreditation will be conducted jointly bytwo reviewers. Two reviewers offers: (1) anticipatedfaster turn-around; (2) different areas of expertise—one reviewer would come from the Quality SystemsCertification Program audit staff and would befamiliar with ISO Guide 65 verification, while theother reviewer would come from the NationalOrganic Program staff and would be familiar withthe requirements of the program; and (3)consistency with the organic industry’s desire tohave reviewers from both areas of expertise duringISO Guide 65 assessments. AMS would considersending one reviewer, rather than two, for the siteevaluation of small certification agents if anindividual possessing both reviewing skill andknowledged of the NOP is available. We anticipateonly one reviewer would be required after the 18-month transition period.

7 Adequate advance notice will be given tocertifying agents to allow them the opportunity toorganize their records prior to the audit andminimize the costs of accreditation.

8 Fetter, Robert T. 1999. Economic Impacts ofAlternative Scenarios of Organic ProductsRegulation. Senior Honors Thesis. University ofMassachusetts, Amhearst, MA.

any subsequent costs of accreditation arisingfrom the site evaluation.

During the first 18 months after theNational Organic Program has beenimplemented, USDA will not impose hourlycharges on certifying agents. The direct costsfor certifying agents to obtain accreditationwill be limited to per diem andtransportation costs for the site evaluation,which is required every 5 years. We estimatethese costs to be $1,530 for a small certifyingagent and $2,050 for a larger certifying agent.These estimates are based on, for small andlarger certifying agents, two reviewers with 3and 5 days of per diem, $500 to $600 intransportation costs, and $50 inmiscellaneous charges related toaccreditation. 6 In subsequent years,certifying agents will be required to submitan annual report. Review of this report isanticipated to range from 2 to 8 hours at theISO Guide 65 hourly rate. If certifying agentswish to become accredited in additionalareas for which they were not accreditedpreviously, site evaluation fees will becharged.

After the first 18 months of the NationalOrganic Program, USDA estimates that thecosts of a site evaluation visit, required every5 years, could be $3,070 for small certifyingagents and $4,850 for larger certifying agents.These estimates are based on, for small andlarger certifying agents, one reviewer with 3and 5 days of per diem, $500 to $600 intransportation costs, $50 in miscellaneouscharges related to accreditation, and 24 to 40hours (3 to 5 work days) at an anticipatedmaximum hourly rate under ISO Guide 65 of$95. Higher hourly rates will be charged forovertime and for work on holidays.

The cost of a site evaluation will vary withthe cost of travel from the auditor’s workstation to the applicant’s place of business.Auditors live in different parts of thecountry, and travel costs might be reducedwhen the distance traveled is reduced. Thelowest cost airfare would be used wheneverpossible. In some cases, site evaluationsmight be grouped geographically in order toreduce travel expenses. The per diem ratewill also vary depending on the rate set forthe certifying agent’s location as establishedby the General Services Administration.

Several factors will influence the amountof time needed to complete an accreditationaudit. An operation in which documents arewell organized and that has fewnonconformities within the quality system

will require less time for an audit than anorganization in which documents arescattered and there are manynonconformities.7 Similarly, in a follow upaudit, operations that lack organization intheir documents and that had a large numberof nonconformities during previous auditswill require a greater amount of time. Thescope of a follow up audit is to verify thecorrection of nonconformities and to evaluatethe effectiveness of the corrections. Certifyingagents are able to control these cost factorsby making certain that documents are wellorganized and by educating themselves aboutquality systems.

The complexity of an certification agency’sorganization also will affect the time neededto complete an audit. An agency with acentral office in which all certificationactivities take place will require less time fordocument review and site evaluation than achapter organization or a business structuredso that responsibility for making certificationdecisions is delegated outside of the centraloffice. In the latter cases, the auditors’document review would require additionaltime and site evaluation that would extendfrom the central office to one or more of thechapters or to the site to which thecertification decision making is delegated.

Other factors determine the amount of timeneeded to complete an accreditation audit.For an agency with numerous clients,auditors may need to spend more timereviewing client files or examining businessoperations than they would have to spend fora smaller agency. Audit of an agency with alarge number of processor clients may requirean extended amount of time to follow audittrails, confirm that organic ingredientsremain segregated from nonorganicingredients, and establish that foreign-produced ingredients originate fromapproved entities. Finally, the complexity ofthe agricultural practices certified couldinfluence the amount of time necessary tocomplete an accreditation audit. An agencywhose certification covers only producerswho grow and harvest one crop per field peryear, such as wheat or sugar beets, couldquickly be audited. An agency whoseproducers grow several different crops perfield per year or an agency that certifiesproducers of crops and livestock as well ashandlers would require a greater amount oftime.

All of these factors will impact both smalland large certifying agents. A small certifyingagent could be assumed to have a lesscomplex organization or have fewer clients,and, thus, potentially less time would benecessary for review. However, other factors,such as the degree of paperwork organizationor the complexity of the agricultural practicescertified, may influence the time needed forreview for any size of business.

Comments from the first proposal indicatethat the average accreditation cost for acertifying agent may range from $3,000 to$5,000 per year for small to medium-sizecertifying agents to less than $10,000 per yearfor the largest certifying agents.

Currently, relatively few certifying agentshave third party accreditation becauseaccreditation of certifying agents isvoluntary. Fetter reports that in a sample of18 certification programs, selected to includesix large, private programs, six smallerprivate programs, and six State programs,four programs were accredited and one hadaccreditation pending.8 All of these werelarge private certifying agents. Three of thecertifying agents identified by Fetter asaccredited requested ISO Guide 65assessments by USDA and have beenapproved for selling organic products intothe international market. Those certifyingagents currently accredited by third partieswill likely pay less for USDA accreditationbecause their documents are organized andthey have fewer nonconformities.

Those certifying agents who have beenoperating without third party accreditationwill face new costs—the costs ofaccreditation—under this proposal.Compared to the direct costs of $3,000 to$5,000 per year indicated by the commenters,the direct costs of USDA accreditation will besmaller, with estimated site evaluation fees(covering 5 years) ranging from $3,070 to$4,850 for the first year and an annual reviewfee ranging from $190 to $760 for subsequentyears. Furthermore, the direct costs would besubstantially less for those certifying agentsobtaining accreditation during the first 18months while USDA does not impose anapplication fee or hourly charges and limitsdirect costs to travel and per diem costs.

It is expected that all certifying agents willset their fee schedule to recover costs fortheir certification services, including thecosts of accreditation. The larger the numberof clients per certifying agent, the more fixedcosts can be spread out. It is possible,however, that small certifying agents couldbe significantly impacted by this proposaland may not be able to continue in businessfrom a financial standpoint.

Projected Reporting, Recordkeeping, andOther Compliance Requirements of CertifyingAgents

In addition to the direct costs, theregulation will impose administrative costson certifying agents for reporting,recordkeeping, residue testing, and othercompliance requirements. The actual amountof the additional administrative costs thatwould be imposed by the final rule isexpected to be different for those entities thatwould begin their activities only after thenational program is implemented. Certifyingagents that currently are active in the organicindustry already perform most of theseadministrative functions; therefore, theadditional costs to them would depend uponthe extent to which their current practices aredifferent from the requirements of the finalregulation. Projected reporting,recordkeeping, and other compliancerequirements of certifying agents arediscussed in greater detail in the PRA and theRIA.



9 We asked for comments on the first proposal asto whether the current statutory limitation of $5,000for exemption from certification should be raised to$10,000 or to another amount and why such anincreased monetary limitation for exemption fromcertification would be appropriate. Fewcommenters offered recommendations as to amaximum sales volume to exempt producers.Amounts ranged from $2,000 to $50,000, with a fewsuggesting $10,000 and $20,000 exemptions. Theseproposed exemption levels and justifications incomments received are not sufficiently consistentenough for us to recommend changing the statute

requirement of the $5,000 maximum sales volumeexemption.

10 California State law requires organic farmers toregister with the State. Certification is voluntary atthe current time.

11 Klonsky, Karen, and Laura Tourte. 1998.Statistical Review of California’s OrganicAgriculture, 1992–95. Report prepared for theCalifornia Department of Food and AgricultureOrganic Program. Cooperative Extension,Department of Agricultural Economics, Universityof California, Davis.

Costs to Producers and Handlers

Under this proposal, USDA will notimpose any direct fees on producers andhandlers. Certifying agents will establish afee schedule for their certification servicesthat will be filed with the Secretary andposted in a place accessible to the public.Certifying agents will provide all personsinquiring about the application process witha copy of their fees. The certifying agent mayonly charge those fees that it has filed withthe Secretary. Furthermore, the certifyingagent will provide each applicant with anestimate of the total cost of certification andan estimate of the annual costs of updating

the certification. However, the certifyingagent may require applicants to pay at thetime of application a nonrefundable fee of nomore than $250 which must be applied to theapplicant’s fee for services account.

Currently, supply and demand forcertification services determine the feescharged in most areas. Some States chargeminimal fees for certification and insteadsubsidize operating costs from generalrevenues. According to separate studies byFetter, and Graf and Lohr, the majority ofcertifying agents structure their fee scheduleson a sliding scale based on a measure of size,usually represented by the client’s gross sales

of organic products but sometimes based onthe acres operated. Some certifying agentscharge an hourly rate for inspection andaudit services.

Graf and Lohr have applied fee schedulesprovided by nine certifying agents to fourhypothetical farms—small, medium, large,and a super farm. They define ‘‘small’’ as a25-acre farm with annual sales of $30,000that would take 5 hours to certify. Note thatour alternative definition of small (under$5,000) is different. Table 2 shows the totalfirst-year cost and subsequent-year cost forcertification for small farms; the RIA showsdetail on other size farms.

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

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

Certifying agentTotal cost tocertify in first

year

Total cost tocertify in sub-sequent years

California Certified Organic Farmers ....................................................................................................................... $750 $425Farm Verified Organic ............................................................................................................................................. 585 510Florida Certified Organic Growers and Consumers ................................................................................................ 325 325Northeast Organic Farming Association—Vermont ................................................................................................ 335 300Oregon Tilth Certified Organic:

—Inside Oregon ............................................................................................................................................... 608 454—Outside Oregon ............................................................................................................................................. 568 424

Organic Crop Improvement Association:—Wisconsin chapter ......................................................................................................................................... 315 290—Virginia chapter ............................................................................................................................................. 258 233

Texas Department of Agriculture ............................................................................................................................. 90 90Washington State Department of Agriculture .......................................................................................................... 330 330NutriClean/Scientific Certification Systems ............................................................................................................. n/a 700Average cost ............................................................................................................................................................ 416 371

The Texas Department of Agricultureprogram is the low-cost certifying agent. Thehigh-cost certifying agent differs from first-year to subsequent-year certification. Grafand Lohr’s study indicates that even smallfarms require significant time for thecertification process and this time does notincrease proportionately as farm sizeincreases. None of these certificationprograms mentions costs for residue testingwhich the National Organic Program willrequire in the form of preharvest testingwhen there is reason to believe thatagricultural products have come in contactwith prohibited substances. Preharvesttesting is expected to be infrequent. Certifierswill recover the costs of preharvest testingthrough explicit charges to the producerwhose crop is tested, or through a generallyhigher fee structure that spreads the expectedcosts of tests over all clients.

Certifying agents will continue to set theirown fee schedules under the organicprogram. Certifying agents will have to setfees to cover any net additional costs of doingbusiness under the National OrganicProgram. Accreditation and administrativecosts are incremental costs to existingcertifying agents’ businesses. Some certifyingagents might drop their third partyaccreditation saving perhaps $3,000 to $5,000per year, but most certifying agents are notcurrently paying for accreditation.

This proposal imposes no requirementsthat would cause certifying agents that arepresently using a sliding scale type fee

schedule to abandon their current fee system.Certifying agents could recover their netadditional costs by increasing their flat feecomponent, their incremental charges, orboth. Because accreditations are renewedonly every 5 years, certifying agents will have5 years to recover their net new costs.Certifying agents who become accreditedduring the first year of the program wouldhave fewer direct costs to recover, becausethey will not be charged the application feeand hourly charges for accreditation services.

The OFPA established a small farmerexemption from certification and submissionof organic plans for small producers with amaximum of $5,000 in gross sales of organicproducts. For purposes of the exemption, theOFPA defines a ‘‘small farmer’’ as those whosell no more than $5,000 annually in valueof agricultural products. In this proposal, wehave clarified that the exemption applies tothose who sell no more than $5,000 annuallyin value of organic products.9 According to

the OFRF survey, 27 percent of currentlycertified farms that responded to the surveywould fall under this exemption. Thispercentage does not take into account thoseorganic farms that are not currently certifiedby a private or State certifying agent. A studyof California organic farms found that, of allorganic farms 10 in 1994–95, about 66 percenthave revenues less than $10,000.11 IfCalifornia is representative and thedistribution within the sub-$10,000 categoryis uniform, then a third of the farms wouldbe classified as small for purposes of thestatutory exemption with annual sales lessthan $5,000. Based on the California studyand the OFRF survey results, we estimatethat between 25 and 33 percent of organicproducers are small and would qualify forexemption from the certificationrequirements.

We have estimated that there are between3,000 and 4,000 small organic producers thatwill be exempt from certification. Theseproducers would be required to comply with



the production and handling standards andlabeling requirements set forth under theNational Organic Program. We anticipate thatthis exemption will be used primarily bysmall market gardeners and hobbyists whosell produce and other agricultural productsat farmers markets and roadside stands toconsumers within their communities. Bybeing exempt from certification, the currentcertification costs (table 2) estimated at anaverage $416 for the first year and an average$370 for subsequent years have beeneliminated.

Exempt producers will be allowed tomarket their products as organicallyproduced without being certified by acertifying agent. Products marketed byexempt producers cannot be represented ascertified organic or display the USDA organicseal. Products produced or handled on anexempt operation may be identified asorganic ingredients in a multiingredientproduct produced by the exempt operation,but they may not be identified as organic ina product processed by others. Theselimitations may discourage some smallproducers from seeking exemption, whoinstead may choose to become certified. Inthis case, the costs of certification wouldapply. The value associated with havingorganic certification may outweigh the costsof certification.

Those currently receiving voluntarycertification will likely see a modest increaseas the certifying agent passes on its costincurred under the National OrganicProgram. Those not currently receivingcertification and producing over $5,000annually in organic products will be requiredto become certified, and they will incur theactual costs of certification.

We have estimated that there about 98percent of the 1,250 organic handlers aresmall. A handling operation or a portion ofa handling operation is exempt fromcertification requirements if it has annualgross sales of less than $5,000; is a retail foodestablishment that handles organicallyproduced agricultural products but does notprocess them; handles agricultural productsthat contain less than 50 percent organicingredients by weight of finished product; ordoes not use the word, ‘‘organic,’’ on anypackage panel other than the informationpanel if the agricultural product contains atleast 50 percent organic ingredients byweight of finished product. A handlingoperation or specific portion of a handlingoperation is excluded from certification if ithandles packaged certified organic productsthat were enclosed in their packages orcontainers prior to being acquired andremain in the same package and are nototherwise processed by the handler, or it isa retail food establishment that processes orprepares on its own premises raw and ready-to-eat food from certified organic products.Otherwise, to be certified organic, handlersmust pay for certification fees estimated at$1,800 per year and fulfill recordkeepingrequirements.

In order to identify handlers that might beexpected to face more significant impacts asa result of this proposal, we attempted toanalyze handlers’ revenue from organic sales.Sales data indicate that gross sales of organic

production total less than $500,000 per firmfor most certified handlers. Information fromthe California DHS, where State law requiresorganic processors to register, gives someindication of the size distribution. Of the 208processors registered with the State in 1995,80 firms (38 percent) reported gross sales of$50,000 or less, and 50 firms (24 percent) hadgross sales exceeding $500,000. In mid-September 1999, 376 processors wereregistered with the State, with 107 firms (28percent) reporting gross sales of $50,000 orless and 112 firms (30 percent) reportinggross sales exceeding $500,000. We use thisCalifornia information to estimate that 25 to30 percent of handlers have gross sales of$50,000 or less and could be significantlyimpacted by this proposal. Informationneeded to estimate the number of exempt orexcluded handlers is not available.

Some States, such as Texas andWashington, charge producers and handlersnominal fees for certification, and it ispossible that more States might providecertification services as the National OrganicProgram is implemented. Other States, suchas Minnesota, have cost-share programs tohelp offset costs for organic producers.

Projected Reporting, Recordkeeping, andOther Compliance Requirements forProducers and Handlers

In addition to the fees for certification, theregulation will impose administrative costson producers and handlers for reporting,recordkeeping, residue testing, and othercompliance requirements. The actual amountof the additional administrative costs thatwould be imposed by the final rule isexpected to be different for those entities thatwould begin their activities only after thenational program is implemented. Producersand handlers who currently are active in theorganic industry already perform most ofthese administrative functions; therefore, theadditional costs to them would depend uponthe extent to which their current practices aredifferent from the requirements of the finalregulation. Projected reporting,recordkeeping, and other compliancerequirements of certifying agents arediscussed in greater detail in the PRA and theRIA.

Federal RulesNo other burdens are expected to fall upon

the organic industry as a result ofoverlapping Federal rules. This proposedregulation would not duplicate, overlap orconflict with any existing Federal rules. Inpreparing this proposed regulation, AMSconsulted other Federal agencies such as theFood and Drug Administration (FDA), theEnvironmental Protection Agency (EPA), theBureau of Alcohol, Tobacco and Firearms(ATF), and the USDA’s Food Safety andInspection Service (FSIS) to ensure that thisproposed regulation would complementexisting regulations.

Alternatives to This ProposalWe believe that our proposed regulation

could have a significant impact on asubstantial number of small businesses.However, we have considered several optionswith the intention of mitigating negativeeconomic impacts of the fees. We did not

consider alternatives, beyond the previouslydiscussed exemptions, that would mitigatethe indirect costs of this rule on smallentities. The following options wereconsidered by AMS prior to and during thedevelopment of this proposal:

Option 1: First Proposal Issued December1997

The first proposal suggested a fee for directservices model which combined a fixed feefor all farmers, handlers, and certifyingagents, with a variable fee for certain directservices provided by AMS in theaccreditation of certifying agents.

Table 1 includes estimated direct costs ofaccreditation and certification for the firstproposal and this proposal; the fees in thisproposal are discussed in prior sections ofthis RFA. The fee provisions in this proposalhave been changed significantly, due in largepart to comments received regarding the firstproposal.

In overall design, the first proposal issimilar to this proposal. USDA wouldaccredit certifying agents who would in turncertify producers and handlers. USDAproposed to charge certifying agents a $640application fee, costs for a site evaluation feethat were estimated at $3,500, and a $2,000administrative fee. Producers would becharged a $50 USDA fee in addition to thefees imposed by the certifying agent.Handlers would be charged a $500 USDA feeon top of the certifying agent’s fees. The feestructure was intended to recover the fullcosts of operating the National OrganicProgram, which was estimated at $1 millionannually. Producers with $5,000 or less inannual gross sales of agricultural productsand handlers with annual gross sales of lessthan $5,000 were exempt from certificationas provided for in the OFPA.

The OFPA permitted but did not obligateUSDA to charge fees. The first proposalsought to set fees to recover the full costs ofthe National Organic Program. Publiccomment generally stressed that the feeswere too high. Most certifying agents haveoperated without third party accreditation.Thus, USDA fees were a substantial increasein the costs of doing business for mostcertifiers. For producers the direct fee of $50was a 12 percent increase over the estimatedaverage fee paid for certification. Forcertifying agents the $500 fee would havebeen a 53 percent increase over estimatedaverage certification fees. To the extent theprogram raised certifying agent costs, thesecosts would have been passed through toproducers and handlers. Commenters statedthat many certifying agents had few clientsand to pass through the estimated direct costsof accreditation ($6,140) would make thecosts of certification higher than producerscould afford.

Comments were received opposing feeprovisions in the first proposal. Most of thesecommenters expressed the belief that theproposed fees would price small farmers,handlers, and certifying agents out of theorganic industry. Many commenters statedthat the proposed fees favored large farmingoperations and suggested a sliding scale feesystem, rather than the flat fee systemdiscussed in the first proposal, to



accommodate the economic needs of smallfarmers, handlers, and certifying agents. Mostsuggested that small farmers and processorsbe exempt from the payment of fees. A morecomprehensive review of the commentsappears in subpart G entitled‘‘Administrative’’ of this proposal.

Additional comments were received thatspecifically referred to the section entitled‘‘Regulatory Flexibility Act and Effects onSmall Businesses’’ in the first proposal. Mostof these commenters expressed the belief thatcosts were understated and benefits wereoverstated. Commenters thought theproposed fees were excessive, unacceptable,and burdensome and would price manysmall farmers, handlers, and certifying agentsout of the organic industry. Some thoughtthat this appeared to be the actual intent ofthe first proposal. They also supported asliding scale fee system, rather than the flatfee system originally proposed. Some statedthat the $5,000 exemption level was muchtoo low. Producers objected to having to paythe certification and inspection fees prior toknowing whether they would actually set acrop, if the crop would grow, or whatpercentage of the crop might be harvested.

Compared to this proposal, the firstproposal would have been more costly to theorganic industry in terms of direct costs foraccreditation, and to producers and handlersin terms direct fees and the costs whichcertifying agents would have attempted topass through. However, the current proposalhas not set fees at levels to recover allprogram costs and during an 18 monthtransition period will not require applicationfees or charge for hourly services. Costs thatare not recovered through fees will becovered by appropriated funds, meaning thattaxpayers at large will bear some of the costsof the proposed organic program. Thus, interms of fees and other direct costs, the firstproposal was more burdensome on theorganic industry.

The first proposal also contained newinformation collection requirements, adescription of those requirements, and anestimate of the annual economic burden onthe organic industry. We received responsesspecifically referring to the informationcollection requirements of the first proposal.Among the comments made were that therequirements would be unaffordable by smallbusinesses and that paperwork requirementsshould be kept small, simple, and to a bareminimum, especially for small producers.

Recordkeeping requirements for certifyingagents in the first proposal that requiredcertifying agents to maintain all recordsconcerning their activities for 10 years havebeen changed to reduce the burden.Commenters expressed concern that thisrequirement was excessive and unnecessary.We agree and are instead proposing that therebe three categories of records with retentionperiods: (1) Records created by certifyingagents regarding applicants for certificationand certified operations to be maintained 10years, consistent with OFPA requirement formaintaining all records concerning activitiesof certifying agents; (2) records obtained fromapplicants for certification and certifiedoperations to be maintained 5 years, the sameas OFPA requirement for the retention of

records by certified operations; and (3) otherrecords created or received by certifyingagents to be maintained for five years.

Option 2: Fee per Certification Model

A fee per certification model wasconsidered but not used. This model wouldhave based accreditation fees on the numbersof farmers and handlers certified.Specifically, certifying agents would pay afee to USDA for each certification performed.The smallest one-half of certifying agents,who certify about 10 percent of organicoperations, would pay about 10 percent ofthe estimated costs associated withaccreditation. The largest 10 percent ofcertifying agents, who certify about 45percent of organic operations, would payabout 45 percent of accreditation costs. Theremaining 40 percent of certifying agents inthe middle would pay 45 percent of the costs.The fee per certification would be fixed,regardless of the size of the operation beingcertified. This feature has the potential tocreate a barrier to market access for thesmaller operations. Certifying agents whocharge farmers and handlers for certificationbased on size and scope of the operationwould maximize their profits by certifyingonly the larger farmers and handlers fromwhom they would realize a higher return. Ifcertifying agents were to discriminate in thismanner in favor of larger operations, smallerfarmers and handlers would find thecertification services available to them to berelatively limited and possibly moreexpensive than under the fee for directservices model that includes a variable fee forsite visits. A fixed fee per certification alsowould not take into account, in thedistribution of costs, the large difference insize between processors and primaryproducers. Processors are generally muchlarger than primary producers in terms ofboth total output and total revenue.

Option 3: Exemption of Small CertifyingAgents From Accreditation

Small certifying agents (those with annualrevenues of $25,000 or less) may not have theresources to meet all of the requirements ofthe rule, such as accreditation fees,administrative and personnel requirements,and conflict of interest restrictions, based ontheir current structure and revenues.Therefore, exempting the smallest certifyingagents from the accreditation requirement,similar to small producers being exempt fromcertification requirements, could mitigate anypotential adverse impact of the rule on thisgroup. This option, however, would requirea legislative amendment to the OFPA.

The exemption of the smaller certifyingagents from accreditation would carry with itmany of the limitations resulting from theabsence of Federal oversight. Internationaltrade would likely be limited to productscertified by accredited certifying agents.Protecting domestic consumers frominappropriate organic claims on the labels ofproducts certified by exempt certifyingagents would likely lead to greater confusionover labels in the marketplace. Federalenforcement agencies such as the FDA, theATF, and FSIS might wish to distinguishaccredited certifying agents from those

certifying agents who are exempt, perhaps byrequiring accredited certifying agents’ clientsto include the USDA seal on their productlabels.

One of the purposes of the OFPA describedin the statute is to assure consumers thatorganically produced products meet aconsistent standard. Without Federaloversight of certifying agents, it would bedifficult to ensure that one national standardof production and handling for agriculturalproducts would be employed. The resultcould be the continuation of reciprocityagreements between small, exempt certifyingagents and large accredited ones. This couldresult in a cost for small entities, whileproviding less benefit to certified producersand handlers than would be provided themby accreditation of all certifying agents.

We request comments from all interestedparties, particularly small businesses, as towhether a small certifier exemption would bebeneficial or practical given the constraintsexplained in this option.

Option 4: This Proposal

The new proposal includes provisions thatwill mitigate the impact of the NationalOrganic Program, especially for smallbusinesses. Fixed administration fees forproducers, handlers and certification agentshave been eliminated. The fixed applicationfee for accreditation also has beeneliminated. This will positively affect smallproducers and handlers because fixed feesexpend a larger percentage of a smalleroperation’s total revenue.

As indicated earlier in this discussion,certifying agent evaluation fees would reflectactual costs for the time and travel requiredto do the evaluation. It is anticipated thatsmaller certification agents would benefitbecause they are small and less complex thanlarger certification agents. The proposedaccreditation costs would be proportional tothe actual time required to perform theservice. Several small operations could begrouped by area to reduce travel expenses ofthe evaluators.

The new labeling requirements that allowthe use of a certification agent’s seal on theprincipal display panel and on theinformation panel of processed productlabels also may benefit small operations.Certification agents that have an establishedconsumer base may benefit by displayingtheir identifying seal. Small certificationagents, whose clients more likely produceingredients for processed products, couldalso be identified and thus share in thisbenefit. Certification agents also may wish toexpand their operation by offeringverification of truthful labeling claims whichwill be allowed under this proposal.

This proposal has three elements offlexibility that are advantageous to smallentities: performance-based production andhandling standards and certifying agentrequirements; production and handlingstandards that contain a range of allowablepractices; and temporary variances.

The standards in this proposal areperformance standards based on the resultsof a management system, rather thanprescriptive or design standards thatprescribe specific technology or a precise



procedure for compliance. Performancestandards allow for flexibility in compliance,which is especially important to organicfarmers, handlers and certifying agents withlimited resources. Performance standardspromote innovation and the development ofnew technologies which would help theindustry as a whole be more efficient.Finally, they provide a less costly means ofcompliance than design standards. Smallentities, in particular, benefit becausecompliance with performance standardsallows for the adaptation of existing systemswithout costly capital investment.

This proposal allows for flexibility byproviding a range of production and handlingpractices that can be used to maintain theorganic integrity of the operation. The use ofan allowed practice or substance must bedescribed in the organic plan as a record forconsideration by the certifying agent duringa certification review. The proposal providestemporary variances in the case of naturaldisasters, damage from wind, floods and thelike, and for research trials. The benefit ofvariances is that a producer or handler wouldnot lose its investment in an organicoperation because of certain conditions thatare beyond the producer or handler’s control.Variances also enhance performancestandards by allowing additional innovationand experimentation. This is especiallyimportant to producers and handlers whodepend on the organic price premium.

Conclusion

USDA has identified the entities that maybe affected by this proposal and has analyzedthe anticipated impacts of the proposal onthem based on our knowledge of the industryand limited data. We have drawn on industrystudies, including studies completed sincethe first proposal was published in 1997, aswell as information provided in commentson the first proposal. However, we lack datato thoroughly and quantitatively describe theexisting organic industry and quantitativelyanalyze the effects of this proposal.

Whether using SBA’s small business sizestandards by SIC or the alternativedefinitions created for this analysis, webelieve that this proposal could have asignificant impact on a substantial number ofsmall businesses. Even with the flexibilityproposed in the regulation and the expandedmarket opportunities brought about byimplementation of the National OrganicProgram, some small certifying agents maychoose not to become accredited to providecertifying services, and some small producersand handlers may choose not to continuebeing certified organic because the proposedfees would be passed down to them ascertification fees. We invite comments aboutthe expected benefits and costs to smallentities as presented in this analysis.Specifically, we invite comments regardingthe impact of the proposed National OrganicProgram on small certifying agents,producers, and handlers so that we mightuncover potential unintended negativeimpacts on small entities.

The proposed structure of user feesoutlined in this proposal attempts tominimize the burden of administrative costswhich will be assumed by small-scale

organic certifying agents and the producersand handlers who use these certificationservices. Certifying agents already performingorganic certification services in a State orprivate capacity on the date that theproposed national accreditation program fororganic certification is implemented will notbe required to pay the administrative costs ofapplying for initial national accreditationstatus; the administrative costs involved inevaluating the accreditation status of theseagents will be absorbed by a portion of theNational Organic Program operating budgetappropriated by Congress. They will berequired to pay travel expenses for thereviewers. New applicants seeking nationalaccreditation for organic certification serviceswill be charged a fee to cover theadministrative costs of evaluating theirsuitability for accreditation, their applicationfees will be structured to reflect the actualhourly costs of having an AMS evaluatorconduct a site visit (including travel time toand from the evaluator’s duty station and perdiem travel expenses). The departures fromthe first proposal—which would haveimposed a uniform flat fee on all applicantsfor national accreditation—along with theadoption of an application fee structurewhich attempts to relate the imposition offees to the actual costs involved inadministering the national accreditationprogram, should contribute to a lessburdensome and more equitable distributionof administrative costs across all segments ofthe organic industry.

Appendix D—Paperwork Reduction Act of1995

The Paperwork Reduction Act of 1995(PRA) (44 U.S.C. 3506 and 3507) is designedto minimize the burden of reporting andrecordkeeping (information collectionrequirements) required by Federalregulations on individuals, businesses, otherprivate institutions, and State and localgovernments. The burden is an estimate ofthe amount of time and the cost required ofprogram participants to fulfill theinformation collection requirements.

Information collection requirements musthave Office of Management and Budget(OMB) review and approval before they canbecome effective. They must also be madeavailable for public comment, and thecomments become part of the public record.This notice requests comments on theproposed information collectionrequirements of this proposal.

Title: National Organic Program.OMB Number: New collection.Expiration Date of Approval: Three years

from date of approval.Type of Request: New.Abstract: The Organic Foods Production

Act (OFPA) of 1990 mandates that theSecretary develop a National OrganicProgram (NOP) to accredit eligible Stateprogram’s governing State officials or privatepersons as certifying agents who wouldcertify producers or handlers of agriculturalproducts that have been produced usingorganic methods as provided for in theOFPA. This regulation is proposed: (1) Toestablish national standards governing themarketing of certain agricultural products as

organically produced products; (2) to assureconsumers that organically producedproducts meet a consistent standard; and (3)to facilitate interstate commerce in fresh andprocessed food that is organically produced.

The OFPA was requested by the organiccommunity because of problems encounteredin the marketing of organic products. First,there was fraudulent use of the term,‘‘organic,’’ resulting in the mislabeling ofproducts, caused in part because manyconsumers are willing to pay premium pricesfor organic foods. Second, there was a lackof uniformity in standards defining organicproduction, causing trade disruption andconfusion among buyers, sellers, and users oforganic products. Third, there was constrainton market growth due to the prohibition onlabeling meat and poultry products asorganic. After implementation of the NOP,any agricultural product labeled ‘‘organic’’will have to be from a production or handlingoperation that is certified by a certifyingagent who is accredited by the U.S.Department of Agriculture (USDA).

A proposed rule to implement the OFPAwas published in December 1997. Itcontained information collectionrequirements, an estimate of the annualeconomic burden on the organic industry,and a request for comments about theburden. A few general comments werereceived about the burden and they wereconsidered when this proposal was prepared.Also taken into account was otherinformation about existing industry practicesand documents, the Initial RegulatoryFlexibility Analysis that is discussed in thesection entitled ‘‘Regulatory Flexibility Actand the Effects on Small Businesses,’’ and theRegulatory Impact Assessment (RIA) that isdiscussed in the section entitled ‘‘ExecutiveOrder 12866.’’ The numbers of entitiesaffected by this proposal are estimated in theRIA. The RIA is attached as an appendix tothis proposal.

Reporting and recordkeeping are essentialto the integrity of the organic certificationsystem. They create a paper trail that is acritical element in carrying out the mandateof the OFPA. They serve the Agency mission,program objectives, and management needsby providing information on the efficiencyand effectiveness of the program. Theinformation affects decisions because it is thebasis for evaluating compliance with theOFPA and the regulations, for administeringthe program, for management decisions andplanning, and for establishing the cost of theprogram. It supports administrative andregulatory actions in response tononcompliance with the OFPA and theregulations.

In general, the information collected willbe used by USDA, State program’s governingState officials, and certifying agents. It will becreated and submitted by State and foreignprogram officials, peer review panelmembers, accredited certifying agents,organic inspectors, certified organicproducers and handlers, those seekingaccreditation or certification, and partiesinterested in changing the National List.Additionally, it will necessitate that all ofthese entities have procedures and space forrecordkeeping.



The burden on each entity is discussedbelow. One major estimate made about eachentity is the number of entities likely toparticipate in the NOP. The informationcollection burden attempts to incorporate theburden that will be in addition to the burdenthat current organic marketers have with theburden required of new entrants into thefield.

USDA. USDA will be the accreditingauthority. USDA will accredit domestic andforeign certifying agents who will certifydomestic and foreign organic producers andhandlers, using information from the agentsdocumenting their business operations andprogram expertise. USDA will also permitState program’s governing State officials toestablish their own organic certificationprograms after the programs are approved bythe Secretary, using information from theStates documenting their ability to operatesuch programs and showing that suchprograms meet the requirements of the OFPAand the regulations.

States. State program’s governing Stateofficials may operate their own organiccertification programs. State officials willobtain the Secretary’s approval of theirprograms by submitting information to USDAdocumenting their ability to operate suchprograms and showing that such programsmeet the requirements of the OFPA and theregulations. More than half of the Statescurrently have some standards governing theproduction, handling, or labeling of organicfood and 13 States have organic certifyingprograms. These programs require reportingand recordkeeping burdens similar to thoserequired by the NOP. It is unknown at thistime how many States, if any, will establishtheir own organic certification programspursuant to the OFPA and the regulations.Estimates: 13 States will operate their owncertification programs. The annual burden foreach State will be an average of 52.308 hoursor if calculated at a rate of $27 per hour,(rounded up to the next dollar), it would be$1,413.

Peer review panels. Panels will assist theAgricultural Marketing Service (AMS)Administrator in evaluating applicants foraccreditation as certifying agents. Individualswill apply to USDA for membership in a poolfrom which the panels are selected,submitting to USDA informationdocumenting their qualifications to conductsuch reviews. This will be a new burden forthose serving on the panels. Estimates: 40people will participate in peer review panels.The annual burden for each panel memberwill be an average of 10 hours or if calculatedat and $27 per hour, it would be $270.

Certifying agents. Certifying agents may beState program’s governing State officials,private entities, or foreign entities who areaccredited by USDA to certify domestic andforeign producers and handlers as organic inaccordance with the OFPA and theregulations. Each entity wanting to be anagent will seek accreditation from USDA,submitting information documenting itsbusiness operations and program expertise.Accredited agents will determine if aproducer or handler meets organicrequirements, using detailed informationfrom the operation documenting its specific

practices and on-site inspection reports fromorganic inspectors. Estimates: 59 entities areexpected to apply for certification (13 Stateprograms, 36 private entities, 10 foreignentities). The annual burden for each Stateprogram will be an average of 695.428 hoursor if calculated at $18,778. The annualburden for each private or foreign entity willbe 699.678 hours or $27 per hour (roundedup to the next dollar) it would be $18,893.

Administrative costs for reporting,disclosure of information, and recordkeepingare expected to vary among certifying agents.Entities which begin their activities only afterthe national program is implemented wouldbe expected to incur the greatest cost as theyset up an operation that conforms to theOFPA and the regulations. For agents whoare currently active in the organic industry,follow ISO guidelines, and already performmany of these administrative functions, costswill vary depending upon the extent towhich their current practices are differentfrom requirements in the OFPA and theregulations. Agents will be expected toprovide the public with informationconcerning their clients. Efforts were made toincorporate existing industry practices anddocuments into this proposal. A list ofseveral proposed administrativerequirements and the probable resourcesrequired for compliance is included in theRegulatory Impact Assessment.

When an entity applies for accreditation asa certifying agent, it must provide a copy ofits procedures for complying withrecordkeeping requirements (§ 205.504(b)(3)).Once certified, agents will have to make theirrecords available for inspection and copyingby authorized representatives of the Secretary(§ 205.501(a)(9)). USDA will charge certifyingagents for the time required to do thesedocument reviews. Audits will require lesstime if the documents are well organized andcentrally located, than if they are in disarrayand in several locations. Certifying agentswill have control over these conditions, butmaking documents accessible to the publicmay bring about a substantial change in theway some agents currently operate.

Recordkeeping requirements for certifyingagents in the first proposal were changed toreduce the burden. They required certifyingagents to maintain all records concerningtheir activities for 10 years. Commentersexpressed concern that this requirement wasexcessive and unnecessary. We agree and areinstead proposing three categories of recordswith varying retention periods: (1) recordscreated by certifying agents regardingapplicants for certification and certifiedoperations, maintain 10 years, consistentwith OFPA’s requirement for maintaining allrecords concerning activities of certifyingagents; (2) records obtained from applicantsfor certification and certified operations,maintain 5 years, the same as OFPA’srequirement for the retention of records bycertified operations; and (3) records createdor received by certifying agents regardingaccreditation, maintain 5 years, consistentwith OFPA’s requirement for renewal ofagent’s accreditation (§ 205.510(b)).

Residue testing requirements in the firstproposal were changed to reduce the burden.They required certifying agents to undertake

residue testing every 5 years to determine ifproducts from certified operations containeda detectable residue level of a prohibitedsubstance and to report such findings toappropriate authorities. Commentersexpressed concern that the requirement wastoo costly. We agree and are insteadproposing that the State program’s governingState officials or certifying agents mayconduct testing at their own expense only ifthey suspect a crop has come into contactwith a prohibited substance. Test resultsmust be submitted to the Administrator(§ 205.672(b)).

Organic inspectors. Inspectors will conducton-site inspections for the certifying agents ofeach applicant for certification and annuallyof each certified operation. They willdetermine whether or not certification shouldcontinue and will report this finding to thecertifying agent. Inspectors will be the agentsthemselves, employees of the agents, orindividual contractors. We estimate thatabout half will be certifying agents and theiremployees and half will be individualcontractors. Individuals who apply forpositions as inspectors will submit to theagents information documenting theirqualifications to conduct such inspections.Estimates: 293 inspectors (147 certifyingagents and their employees, 146 individualcontractors) will be used. The annual burdenfor each inspector will be an average of48.304 hours or if calculated at $27 per hour(rounded up to the next dollar), it would be$1,305.

Producers and handlers. Producers andhandlers, domestic and foreign, will apply tocertifying agents for organic certification, torenew their certification, or to report changesin their practices, submitting to the agentsdetailed information documenting theirspecific practices. Producers include farmers,livestock and poultry producers, and wildcrop harvesters. Handlers include those whotransport or transform food and may includemillers, bulk distributors, foodmanufacturers, processors, repackagers, orpackers. Some handlers may be part of aretail operation that processes organicproducts in a location other than thepremises of the retail outlet.

The OFPA requires certified operators tomaintain their records for 5 years. Estimates:19,300 total operators (14,153 certified and5,147 exempt), including 17,150 producers(12,176 certified and 4,974 exempt) and2,150 handlers (1,977 certified and 173exempt). We do not have an estimate of thenumber of foreign producers and handlersthat will apply for organic certification. Theannual burden for each domestic operatorwill be: certified producer—average of 9.521hours or if calculated at $24 per hour, itwould be $229; certified handler—average of49.521 hours or if calculated at $24 per hour,it would be $1,189; exempt/excludedoperator—average of 0.5 hour or if calculatedat $24. per hour, it would be $12.

The proposed regulation exempts certainoperations from certification: (1) Producersand handlers whose gross agriculturalincome from organic sales totals $5,000 orless annually; (2) handlers selling onlyagricultural products that contain less than50 percent organic ingredients by total



weight of the finished product; (3) handlersthat handle agricultural products that containat least 50 percent organic ingredients andchoose to use the word ‘‘organic’’ only on theinformation panel of a packaged product; and(4) handlers that are retail foodestablishments that handler organic food butdo not process it. The proposed regulationalso excludes certain operations fromcertification: (1) Handlers selling onlyagricultural products labeled as organic ormade with organic ingredients that areenclosed in a container prior to beingreceived, remain in the same container, andare not otherwise processed while in thecontrol of the operation; and (2) handlers thatare retail food establishments that process orprepare, on the premises, raw and ready-to-eat food from organic agricultural products.

Administrative costs for reporting andrecordkeeping are expected to vary amongcertified operators. Entities which begin theiractivities only after the national program isimplemented would be expected to incur thegreatest cost as they set up an operation thatconforms to the OFPA and the regulations.For operators who are currently active in theorganic industry and already perform many

of these administrative functions, costswould vary depending upon the extent towhich their current practices are differentfrom requirements in the OFPA and theregulations. Efforts were made to incorporateexisting industry practices and documentsinto this proposal. A list of several proposedadministrative requirements and the probableresources required for compliance isincluded in the Regulatory ImpactAssessment.

Research studies have indicated thatoperations using product labels containingthe term ‘‘organic’’ handle an average of 19.5labels annually, that there are about 16,000products with the term organic on the label,and that the number of such productsincreased by 250 annually from 1994 through1996. We estimate that by the year 2001,17,000 products will be marketed with theterm ‘‘organic’’ on the label. This proposalincludes an estimate of the time needed todevelop labels for products sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ ‘‘made with organic (specifiedingredients),’’ or which use the term organicto modify an ingredient in the ingredientsstatement. Also included is the time spent

deciding about use of the USDA seal, a Stateemblem, or the seal, logo, or other identifyingmarks of a private certifying agent(§ 205.300–§ 205.310). Because the labelingrequirements in this proposal are in additionto FDA and FSIS requirements, the burdenmeasurement does not include the hoursnecessary to develop the entire label. Forpurposes of calculating the burden, it wasestimated that each handler will develop 20labels annually.

Interested parties. Any interested partymay petition the NOSB for the purpose ofhaving a substance evaluated forrecommendation to the Secretary forinclusion on or deletion from the NationalList. Estimates: 25 interested parties maypetition the NOSB. The annual burden foreach interested party will be an average of104 hours and $2,496 ($24 per hour).

Cost. The following table shows the salaryrates used to calculate the cost of the burden.We believe the increased rates for thisproposal over the first proposal are morerealistic in terms of the responsibilities andrequirements of each entity.

Estimated hourly rates Firstproposal

Thisproposal

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

Annual Reporting and RecordkeepingBurden:

Estimated Number of Respondents: 19,730.Total Annual Hours: 269,622.Total Cost: $6,780,348.Comments. Comments are requested on

these proposed information collectionrequirements. Comments are specificallyinvited on: (1) Whether the proposedcollection of information is necessary for theproper performance of the functions ofUSDA, including whether the informationwould have practical utility; (2) the accuracyof USDA’s estimate of the burden of theproposed collection of information, includingthe validity of the methodology andassumptions used; (3) ways to enhance thequality, utility, and clarity of the informationto be collected; and (4) ways to minimize theburden of the collection of information onthose who are to respond, including the useof appropriate automated, electronic,mechanical, or other technological collectiontechniques or other forms of informationtechnology.

Comments should be submitted by the datestated in the section entitled DATES at thebeginning of this proposal. However, theyshould be sent to (1) Office of Managementand Budget, New Executive Office Building,725 17th Street, NW, Room 725, Washington,D. C. 20503, Attention: Desk Officer, and to(2) Clearance Officer, USDA–OCIO, Room404W, Jamie Whitten Building, STOP 7602,1400 Independence Avenue, SW,Washington, D.C. 20250–7602. Additionally,comments may be sent by fax to (202) 690–4632 or submitted via the Internet throughthe National Organic Program’s homepage athttp://www.ams.usda.gov/nop.

Appendix E.—Executive Order 12988, CivilJustice Reform

Executive Order 12988, Civil JusticeReform, instructs each executive agency toadhere to certain requirements in thedevelopment of new and revised regulationsin order to avoid unduly burdening the courtsystem. The first proposal was reviewedunder this Executive Order. No commentswere received on that review and noadditional related information has beenobtained since then. This rule is not intendedto have retroactive effect.

States and local jurisdictions arepreempted under section 2115 of the OFPA(7 U.S.C. 6514) from creating programs ofaccreditation for private persons or Stateofficials who want to become certifyingagents of organic farms or handlingoperations. A governing State official wouldhave to apply to the USDA to be accreditedas a certifying agent, as described in section2115(b) of the OFPA (7 U.S.C. 6514(b)).States also are preempted under sections2104 through 2108 of the OFPA (7 U.S.C.6503 through 6507) from creatingcertification programs to certify organic farmsor handling operations unless the Stateprograms have been submitted to, andapproved by, the Secretary as meeting therequirements of the OFPA.

Pursuant to section 2108(b)(2) of the OFPA(7 U.S.C. 6507(b)(2)), a State organiccertification program may contain additionalrequirements for the production andhandling of organically produced agriculturalproducts that are produced in the State, andfor the certification of organic farm andhandling operations located within the State,under certain circumstances. Such additional

requirements must: (a) Further the purposesof the OFPA; (b) not be inconsistent with theOFPA; (c) not be discriminatory towardsagricultural commodities organicallyproduced in other States; and (d) not beeffective until approved by the Secretary.

Pursuant to section 2120(f) of the OFPA (7U.S.C. 6519(f)), this proposal would not alterthe authority of the Secretary under theFederal Meat Inspection Act (21 U.S.C. 601et seq.), the Poultry Products Inspections Act(21 U.S.C. 451 et seq.) or the Egg ProductsInspection Act (21 U.S.C. 1031 et seq.),concerning meat, poultry, and egg products,nor any of the authorities of the Secretary ofHealth and Human Services under theFederal Food, Drug and Cosmetic Act (21U.S.C. 301 et seq.), nor the authority of theAdministrator of the EnvironmentalProtection Agency (EPA) under the FederalInsecticide, Fungicide and Rodenticide Act(7 U.S.C. 136 et seq.).

Section 2121 of the OFPA (7 U.S.C. 6520)provides for the Secretary to establish anexpedited administrative appeals procedureunder which persons may appeal an actionof the Secretary, the applicable governingState official, or a certifying agent under thistitle that adversely affects such person or isinconsistent with the organic certificationprogram established under this title. The Actalso provides that the U.S. District Court forthe district in which a person is located hasjurisdiction to review the Secretary’sdecision.

Appendix—Executive Order 13132,Federalism

This proposal has been reviewed underExecutive Order 13132, Federalism. This



Order requires that regulations that havefederalism implications provide a federalismimpact statement that: (1) Demonstrates theAgency consulted with the State and localofficials before developing the proposedregulation, (2) summarizes State concerns, (3)provides the Agency’s position supportingthe need for the regulation, and, (4) describeshow the concerns of State officials have beenmet. The Order indicates that where Nationalstandards are required by Federal statutes,Agencies shall consult with appropriate Stateand local officials in developing thosestandards. Further, Agencies are required tointerpret Federal statutes to preempt Statelaw only where the statute contains anexpress preemption provision. In such a case,any regulatory preemption of State law shallbe restricted to the minimum necessary tomeet the objectives of the statute.

The Organic Foods Production Act (OFPA)of 1990 (7 U.S.C. 6514) establishes nationalstandards regarding the marketing ofagricultural products as organicallyproduced, assures consumers that organicallyproduced products meet a consistentstandard, and facilitates interstate commercein fresh and processed food that isorganically produced. In carrying out thesepurposes, the Act contemplates a significantrole for the States and, in fact, envisions apartnership between the States and theFederal Government in meeting therequirements of the Statute. The Act specifiesthe State role and gives States recognition fortheir activities in organic agriculture inseveral ways. First, 7 CFR 6507 provides thatStates may establish a State organiccertification program consistent with thenational program. Second, these programsmay contain more restrictive requirementsthan the National Organic Programestablished by the Secretary of Agriculture.To be more restrictive, State Organicprograms are required to: further thepurposes of the Act, be consistent with theAct, not discriminate against organicproducts of another State, and be approvedby the Secretary. Third, States can choose tobe accredited as certifying agents under theAct and carry out a State organic program.Fourth, the Act allows the States todetermine the manner in which they chooseto be involved in the organic program. Statesmay choose to carry out the requirements ofthe Act by establishing a State program andbecoming accredited as certifying agents,they may establish a State program andutilize private certifying agents to implementthe program, or they may choose to utilizethe national organic program as implementedby the Secretary.

In recognition of their role in carrying outthe provisions of OFPA, the Department hasreached out to States and actively soughttheir input throughout the entire process ofdeveloping the proposed organic rule. TheDepartment drew extensively on the organicexpertise of States and the organic industryby working closely with the National OrganicStandards Board. The National OrganicStandards Board, established under Section2119 of the OFPA (7 CFR 6518), has provideda broad and inclusive forum for publicparticipation in developing therecommendations and concepts that

underpin the proposed organic rule. Section2104(c) of the OFPA (7 CFR 6503(c)) requiresthe Secretary to consult with the NationalOrganic Standards Board in developing theorganic program and the National List setforth in Section 2118 of the OFPA (7 CFR6517).

The Secretary has received extensive inputfrom the Board, interested persons, and theStates regarding the establishment of theNational Organic Program and thisreproposal. The Board met 12 times beforepublication of the proposed rule onDecember 16, 1997, and has met five timesduring 1998 and 1999. States were invited toattend each of these meetings, and officialState certifier representatives participated inBoard deliberations in meetings held in July1998 and July 1999. Public input sessionswere held at each meeting to gatherinformation from all interested persons,including State and local jurisdictions.

Section 2110(g) of the OFPA (7 U.S.C.6509(g)) requires the Secretary to hold publichearings to gather information to guidedevelopment of standards for livestockproducts. Four hearings were held during1994 in Washington, D.C.; Rosemont, IL;Denver, CO; and, Sacramento, CA. Stateswere invited to participate in each of thesehearings.

National Organic Program staff alsoreceived comments and consulted withStates at public events. They madepresentations, received comments, andconsulted with States at local and regionalorganic conferences and workshops and atnational and international organic andnatural food shows.

Further, States were provided theopportunity to comment specifically on Stateissues at a National Organic Certifiersmeeting held on July 21, 1995, to discussaccreditation issues; a meeting held onFebruary 26, 1996, to discuss the role ofStates in the National Organic Program; anda February 1999 State Certifiers meeting todiscuss State issues. Further, States wereconsulted in training sessions held fororganic inspectors, as well as numerousquestion and answer sessions at speakingengagements of the Agricultural MarketingService Administrator, the National OrganicProgram Program Manager, and the staff.

On publication of the first proposal onDecember 16, 1997, an announcement andinformation packet summarizing the firstproposal were sent to over 1,000 interestedparties, including State governors and Statedepartment of agriculture secretaries,commissioners, or directors. Subsequent topublication of the first proposal, State andlocal jurisdictions had the opportunity toprovide input at four listening sessions heldin February–March 1998 on the first proposalin Austin, TX; Ames, IA; Seattle, WA; andNew Brunswick, NJ.

Finally, States had the opportunity tocomment on the first proposal. More than275,000 comments were received on the firstproposal, including State commenters.

Through this extensive outreach andconsultation process, States identified anumber of issues with the first proposal.States expressed several specific concernsregarding accreditation requirements as they

affect State programs. These issues aredescribed below, along with theDepartment’s response in the reproposal.

(1) Under OPFA 2108 (7 CFR 6507), Statesmay establish additional standards, approvedby the Secretary. First, State commentersobjected to the provision in the first proposalthat would have prohibited States fromrequiring compliance with these additionalstandards as a condition for use of theorganically produced State logo on productswithin the borders of such State. We agreewith the commenters, as we did not intendto prohibit States from requiring that thesemore restrictive standards be met as arequirement to the State’s logo on organicallyproduced products. Accordingly, thisproposal will permit States with morerestrictive requirements approved by theSecretary and private certifiers certifyingproduction and handling operations withinthese States to require that the State’s morerestrictive standards be met in order to usethe State logo.

(2) The first proposal required annualorganic inspector performance appraisal andannual program evaluations for certifyingagents. State commenters objected that theserequirements would duplicate Staterequirements. We do not intend for States todevelop dual performance appraisal andprogram evaluation systems because webelieve that programs already conducted bythe States will meet the requirements of thisproposal. These programs would be expectedto conform with good management practicesappropriate to an organization’s size andstructure. The questioned provisions havenot been changed, but this proposal has beenrevised to clarify that the annual programevaluation can be conducted by the certifyingagency staff, an auditing entity, or aconsultant with appropriate expertise.

(3) The first proposal set forthconfidentiality requirements for certifyingagents. Commenters stated that theseconfidentiality requirements might conflictwith State requirements for ‘‘open records.’’While we recognize this potential forconflicting requirements, records collectedunder the National Organic Program wouldbe subject to the requirements of the Act.Where the Act and State requirementsconflict, the Act would take precedence.There is no change to the confidentialityprovision.

To clarify that authorized representativesof the Secretary or the applicable Staeprogram’s governing State official may act ontheir behalf and must be given access to therecords, this proposal adds the phrase ‘‘andtheir authorized representatives.’’

(4) This proposal will require thataccredited certifying agents acceptcertification decisions made by anotherUSDA-accredited certifying agent asequivalent. State commenters said that Statesshould be able to control which certifyingagents operate within their State.

The first proposal provided that accreditedcertifying agents accept the certificationdecisions made by another USDA-accreditedcertifying agent as equivalent to their own.Commenters representing State programssaid that States should be able to controlwhich certifying agents operate within their



State. Several commenters asked whetherStates with more restrictive standards couldchallenge certification decisions made byother accredited certifying agents. Under theAct, no organic product may be produced orhandled to organic standards lower than thestandards of the National Organic Program. AState Government may not prevent themarketing or sale within a given State oforganic product produced in another Stateaccording to this proposal. While States may,with the approval of the Secretary, set morerestrictive standards than the nationalorganic standards for product produced orhandled within their State, theserequirements do not apply to productsproduced or handled in another State.

State programs approved by the Secretarywill be required to treat all accreditedcertifying agents equally, and accreditedcertifying agents in one State cannot refuseto recognize another State’s product certifiedto national standards. Accordingly, therequirement remains unchanged that acertifying agent accept certification decisionsby another USDA-accredited certifying agentas equivalent.

(5) The first proposal required all certifyingagents to submit documents and informationon personnel, administrative, and financialpolicies and procedures to demonstrateorganic expertise and ability to implementthe National Organic Program. Statescommented that State certifying agentsshould not be required to submit suchinformation, stating that these requirementsshould not apply to States with establishedpersonnel, administrative, and financialprocedures. They also indicated that thereview should be limited to organic programadministration only, not to agencywidepolicies and procedures. We recognize thatStates have established personnel,administrative, and financial procedures andthat these procedures would apply to Statecertifying agents. However, a stated purposeof the Act is establishment of nationalstandards. Such standards should extend touniform requirements for State and privatecertifying agents unless otherwise providedin the Act. Further, such information isnecessary for the Administrator to make adetermination on approval of an applicationfor accreditation. Accordingly, therequirements for demonstrating organicexpertise and ability to implement theNational Organic Program remain the samefor private and State certifying agents.

(6) The first proposal required a certifyingagents to provide a description of proceduresto prevent conflicts of interest and theidentification of any food or agriculture-related business interests of all personnelintended to be used in the certifyingoperation. Commenters stated that existingState policies should be sufficient to preventconflicts of interest for a State certifyingagent and that lists of the business interestsof all inspectors, program staff, and theirfamilies are not necessary.

We agree that existing State policies shouldbe sufficient to prevent conflicts of interestbut disagree that lists of the businessinterests of all inspectors, program staff, andtheir families are unnecessary. The Act (CFR6515(h)) places responsibility for the

prevention of conflicts of interest with thecertifying agent. However, the Department isresponsible for ensuring that the certifyingagent complies with that responsibility. Therequirement to provide such a listingprovides the Administrator informationessential to identifying conflicts of interest.In addition, a stated purpose of the Act is toestablish uniform national standards. Theseuniform standards should extend to uniformconflict of interest requirements for State andprivate certifying agents. The commentershave said that most States already haveestablished conflict of interest policies andprocedures so that the required informationshould be easily available for submission tothe Administrator. Accordingly, no changehas been made in this proposal.

Certification, the process of qualifying aproducer or handler to sell agriculturalproducts labeled as organic, raised severalissues for States.

(1) The first proposal required an applicantfor certification to supply requireddocumentation to provide informationnecessary to allow a certifying agent toevaluate the application. State commenterssuggested a provision be added to allow acertifying agent to require documentationfrom applicants in addition to that requiredby the first proposal.

A certifying agent can, if necessary, followup on an initial application with requests foradditional information, provided thatinformation is needed to evaluate theapplication and determine compliance withthe Act and regulations. We did not make thesuggested change, as the existing languagealready allows the certifying agent to requestadditional information necessary todetermine compliance with the Act andregulations.

(2) The first proposal laid out acertification program that provided forupdates to a continuous organic certification.To meet continuation of certificationrequirements, the first proposal required anon-site inspection after receipt of the updateto the application. A State certifying agentobjected, saying that an on-site inspectionafter receipt of a renewal application is notconsistent with current practice. Currently,on-site inspections conducted during theprior year are used to determine compliancewith certification requirements at the time ofrenewal, along with a review of informationsubmitted by the certified operation. TheState certifying agent stated that anadditional inspection at renewal time wouldnot be useful if it was not an appropriate timeto observe the certified unit in operation.

We disagree with the commenters, sincecertifiers are required to schedule on-siteinspections when the certified operation canbe observed for its compliance or ability tocomply with the provisions of the NationalOrganic Program. The initial certification,therefore, should have been granted when theon-site inspection verified compliance withcertification requirements. The certifiedoperation should be fulfilling its annualcontinuation of certification at a time whenit can demonstrate its compliance with theAct.

States commented on several complianceissues included in the first proposal.

(1) The Administrator had sole authority tosuspend or revoke the accreditation ofcertifying agents in the first proposal.Commenters indicated that State program’sgoverning State officials should have theauthority to suspend or revoke theaccreditation of private certifying agents.

We agree that in a State with a programapproved by the Secretary, the Stateprogram’s governing State official should beauthorized to suspend or revoke anaccreditation granted by the Secretary tocertifying agents operating within the State.We concur because of the Department’s rolein providing oversight to the State program,including its enforcement procedures, andhave made that change in this proposal.

(2) Many commenters stated that the firstproposal lacked adequate enforcementprovisions, including enforcement by Stateswith an approved State program.

We agree with the commenters thatadditional enforcement provisions arenecessary for the National Organic Program.The following changes have been made inthis proposal.

(a) As noted above, the State program’sgoverning State official will now beauthorized to suspend or revokeaccreditation granted by the Secretary tocertifying agents operating in the State.

(b) An enforcement proceeding brought bya State program’s governing State officialagainst a certified operation or certifyingagent shall be appealable pursuant to theappeal procedures of the State program withno subsequent appeal rights to the Secretary.

States commented on several feesprovisions in the first proposal.

(1) The first proposal required thatpayment of fees and charges to theDepartment be by certified check or moneyorder. State commenters objected, saying itwas insulting for USDA to require a Stategovernment agency to pay for itsaccreditation with a certified check.

Accordingly, we have removed thisrequirement, simply requiring that paymentsfor fees and other charges for accreditationmust be made payable to the AgriculturalMarketing Service.

(2) Several State agencies objected to thefee provisions in the first proposal,expressing the belief that the proposed feeswould price small producers and handlersout of the organic industry. Some Stateagencies commented that those small organicproducers conducting their own on-farmhandling would be forced out of the organicindustry by the excessive handler fee andreporting burdens.

After review of the comments, weacknowledge that the fees charged in the firstproposal may have discouraged industrygrowth and may not have facilitatedinterstate commerce of organic product. Wehave thus, modified the fee structure toreduce costs to all organic sectors and haveremoved the requirement that provided forpayment of fees to the Department bycertified production and handling operations.Instead, the Department will chargecertifying agents only for fees and chargesrelated to accreditation, with the balance ofthe costs of the program to be funded throughappropriations.



(3) Some State certifying agentscommented that State certifying agentsshould not be assessed accreditation fees.They stated that most State certifying agentscould face large accreditation costs becausethey have many county or regional officeswhich would be considered subsidiaries,adding that these costs would be passed onto producers and handlers or paid withsupplemental State funds. A few Statecertifying agents asserted that USDA shouldpay the States because of the State’scontribution to the national program. One

State representative said that accreditationfees for State certifying agents should be lessthan for private certifying agents, as Statecertifying agents should involve less AMSreview and oversight.

We disagree with those commenters whosay that State certifying agents should not beassessed accreditation charges, be chargedless, or be paid to certify production andhandling operations. These actions wouldconstitute unacceptable preferentialtreatment of State certifying agents to thedetriment of private certifying agents. This

proposal will assess State certifying agentsthe same fees for accreditation under thesame fee structure as private certifyingagents.

We invite States and local jurisdictions tocomment on the issues raised in thisFederalism impact statement. We alsoencourage States and local jurisdictions toreview and comment on this proposal as itrelates to the operation of State organicprograms.[FR Doc. 00–5723 Filed 3–7–00; 10:42 am]BILLING CODE 3410–02–P


Date post:	17-Apr-2018
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