Federal Register, Volume 62 Issue 241 (Tuesday, December 16, 1997)

[Federal Register Volume 62, Number 241 (Tuesday, December 16, 1997)]
[Proposed Rules]
[Pages 65850-65967]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32322]

[[Page 65849]]

_______________________________________________________________________

Part II

Department of Agriculture

_______________________________________________________________________

Agricultural Marketing Service

_______________________________________________________________________

7 CFR Part 205

National Organic Program; Proposed Rule

Federal Register / Vol. 62, No. 241 / Tuesday, December 16, 1997 /
Proposed Rules

[[Page 65850]]

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 205

[Docket Number: TMD-94-00-2]
RIN: 0581-AA40

National Organic Program

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Agricultural Marketing Service (AMS) is seeking comments
on a proposal to establish a National Organic Program (NOP or program).
The program is proposed under the Organic Foods Production Act of 1990
(OFPA or Act), as amended, which requires the establishment of national
standards governing the marketing of certain agricultural products as
organically produced to facilitate commerce in fresh and processed food
that is organically produced and to assure consumers that such products
meet consistent standards. This program would establish national
standards for the organic production and handling of agricultural
products, which would include a National List of synthetic substances
approved for use in the production and handling of organically produced
products. It also would establish an accreditation program for State
officials and private persons who want to be accredited to certify
farm, wild crop harvesting, and handling operations that comply with
the program's requirements, and a certification program for farm, wild
crop harvesting, and handling operations that want to be certified as
meeting the program's requirements. The program additionally would
include labeling requirements for organic products and products
containing organic ingredients, and enforcement provisions. Further,
the proposed rule provides for the approval of State organic programs
and the importation into the United States of organic agricultural
products from foreign programs determined to have equivalent
requirements.

DATES: Comments must be submitted on or before March 16, 1998.

ADDRESSES: Interested persons are invited to submit written comments on
this proposal to: Eileen S. Stommes, Deputy Administrator, USDA-AMS-TM-
NOP, Room 4007-So., Ag Stop 0275, P.O. Box 96456, Washington, DC 20090-
6456. Comments also may be sent by fax to (202) 690-4632. Additionally,
comments may be sent via the Internet through the National Organic
Program's homepage at: http://www.ams.usda.gov/nop. See the
SUPPLEMENTARY INFORMATION section for further details on submitting
comments.

FOR FURTHER INFORMATION CONTACT: Michael I. Hankin, Senior Agricultural
Marketing Specialist, USDA-AMS-TM-NOP, Room 2510-So., P.O. Box 96456,
Washington, DC 20090-6456; Telephone: (202) 720-3252; Fax: (202) 690-
3924.

SUPPLEMENTARY INFORMATION:

Submission of Comments

Written comments submitted by regular mail and faxed comments
should be identified with the docket number found in brackets in the
heading of this document. Multiple page comments submitted by regular
mail should not be stapled or clipped to facilitate the timely scanning
and posting of these comments to the NOP homepage. Persons submitting
written or faxed comments are requested to identify the topic and
section number, if applicable, to which the comment refers: for
example, for a comment regarding feed for organic livestock, reference
Livestock and section 205.13. Topics should be selected from the
following list: General, Proposed Effective Date, Regulatory Impact
Assessment, Regulatory Flexibility Analysis, Paperwork Reduction Act,
Definitions, Applicability (section 205.3), Crops, Livestock, Handling,
National List, Labeling, Certification, Accreditation, State Programs,
Fees, Compliance, Appeals, and Equivalency.
It is our intention to have all comments, whether mailed, faxed, or
submitted via the Internet, available for viewing on the NOP homepage
at http://www.ams.usda.gov/nop in a timely manner. Comments submitted
in response to this proposal will be available for viewing at the USDA-
AMS, Transportation and Marketing, Room 2945-South Building, 14th and
Independence Ave., S.W., Washington, D.C., from 9:00 a.m. to 1:00 p.m.,
and from 2:00 p.m. to 4:30 p.m., Monday through Friday (except official
Federal holidays). Persons wanting to visit the USDA South Building to
view comments received in response to this proposal are requested to
make an appointment in advance by calling Martha Bearer at (202) 720-
8037.

Purpose and Background of the National Organic Program

Members of organic industries across the U.S. have experienced
numerous problems marketing their organically produced and handled
agricultural products. Inconsistent and conflicting organic production
standards may have been an obstacle to the effective marketing of
organic products. There are currently 33 private and 11 State organic
certification agencies (certifiers), each with their own standards and
identifying marks. Some existing private certifying agencies are
concerned that States might impose registration or licensing fees which
would limit or prevent the private certifiers from conducting
certification activities in those States. Labeling problems have
confronted manufacturers of multi-ingredient organic food products
containing ingredients certified by different certifiers because
reciprocity agreements have to be negotiated between certifiers.
Consumer confusion may exist because of the variety of seals, labels,
and logos used by certifiers and State programs. Also, there is no
industry wide agreement on an accepted list of substances that should
be permitted or prohibited for use in organic production and handling.
Finally, a lack of national organic standards may inhibit organic
farmers and handlers from taking full advantage of international
organic markets and may reduce consumer choices in the variety of
organic products available in the marketplace.
To address these problems, the organic industry trade association
attempted to establish a national voluntary organic certification
program. However, the industry could not develop a consensus on the
standards that should be adopted. Thereafter, Congress was petitioned
by the organic industry trade association to establish a mandatory
national organic program. Congress, in 1990, enacted the Organic Foods
Production Act of 1990, as amended (7 U.S.C. 6501 et seq.). The
purposes of the OFPA, set forth in section 2102 (7 U.S.C. 6501) are to:
(1) establish national standards governing the marketing of certain
agricultural products as organically produced products; (2) assure
consumers that organically produced products meet a consistent
standard; and (3) facilitate commerce in fresh and processed food that
is organically produced.

The National Organic Standards Board

Pursuant to section 2119 of the OFPA (7 U.S.C. 6518), the Secretary
of Agriculture, hereafter referred to as the Secretary, established a
National Organic Standards Board (NOSB or Board). The NOSB has assisted
the Secretary in developing a National List of substances to be used in
organic production and handling and has advised the Secretary on other
aspects

[[Page 65851]]

of implementing the National Organic Program.
The Act establishes what the composition of the Board should be. In
accordance with the Act, the Secretary appointed 14 members in January
1992 that included 4 organic farmers, 2 organic handlers, 1 owner or
operator of a retail establishment with significant trade in organic
products, 3 experts in environmental protection and resource
conservation, 3 representatives of public interest or consumer interest
groups, and 1 expert in the field of either toxicology, ecology, or
biochemistry. The 15th member, an accredited certifier, would be
appointed after certifying agents are accredited by the Secretary. The
Act also provides that members of the NOSB be appointed for 5 year
terms and that the original members be appointed to staggered terms of
3, 4 and 5 years to provide continuity of membership on the Board.
The NOSB has held 12 full Board meetings and 5 joint committee
meetings since the appointment of its members in 1992. To make
recommendations regarding specific issues, the Board formed 6 working
committees: Crops Standards; Livestock (and Livestock products)
Standards; Processing, Packaging and Labeling Standards; Materials;
Accreditation; and International Committees. Each committee reviewed
the provisions of the OFPA and standards previously established by
other organic organizations to determine for which subject areas
position papers would be developed. Based on the position papers
developed, public input given by persons at NOSB meetings, and an
extensive review and comment process used to develop draft
recommendations, the Board provided recommendations to the Secretary
about various matters. The recommendations included ones regarding
production and handling standards, labeling, accreditation, product
residue testing, and emergency spray programs.
The Board has provided recommendations regarding which synthetic
substances should be permitted to be used in organic production and
handling and which non-synthetic substances should be prohibited for
use, in order to recommend to the Secretary whether they should be
placed on the National List as synthetic substances approved for use or
non-synthetic substances not approved for use. The Board has reviewed
approximately 170 substances, including botanical pesticides as
required in section 2119(k)(4) of the OFPA (7 U.S.C. 6518(k)(4)), for
possible placement on the National List, and the Board used technical
advisory panels to provide scientific evaluation of the materials
considered in its review of the substances.
The NOSB's initial recommendations were presented to the Secretary
on August 1, 1994. The NOSB has continued to make recommendations and
has submitted 30 addenda to its initial recommendations. A copy of the
NOSB recommendations may be viewed on the NOP home page at: http://
www.ams.usda.gov/nop, or obtained by writing to: Maria Strother,
Agricultural Marketing Specialist, USDA-AMS-TM-NOP, Room 2510-So., P.O.
Box 96456, Washington, DC 20090-6456.
All of the NOSB recommendations were considered by AMS in
developing the proposed regulation for the National Organic Program.
The discussions and public input involved in generating the
recommendations have been invaluable in assisting AMS to become aware
of the complexity of various issues and to arrive at solutions that
represent the interests of farmers, handlers and consumers. We have
written a proposed regulation that incorporates to the greatest extent
possible the organic principles and specifics contained in the NOSB
recommendations. Many of the recommendations were restructured,
reordered, or combined to be compatible with the format of the proposed
rule. In the few instances where a section of our proposed rule does
not reflect the NOSB recommendation, we explain the variation in the
preamble for the specific section.
The NOSB recommendations and discussions on the following topics
were especially helpful to AMS in developing the proposed rule:
accreditation; labeling; importation; organic farm and handling plans;
split operations; planting stock policies; emergency pest or disease
treatments; livestock feed and health care; commercial availability;
drift of synthetic substances; small farmer exemption; phase-in of NOP
implementation; fiber processing; and the National List substance
review process.

Public Input

In addition to the NOSB recommendations, AMS has received
considerable input from interested persons regarding establishment of
the National Organic Program and this proposed rule.
Section 2110(g) of the OFPA (7 U.S.C. 6509(g)) requires the
Secretary to hold public hearings to obtain information to guide the
implementation of standards for livestock products. Four such hearings
were held during 1994: January 27-28 in Washington, DC; February 10 in
Rosemont, Illinois; February 24 in Denver, Colorado; and March 22 in
Sacramento, California. Oral and written testimony was received from
more than 70 persons, including livestock producers, veterinarians,
certifying agents, processors and members of the NOSB. Comments covered
livestock production and product marketing, antibiotic use, livestock
living conditions, feed availability, provisions for conversion to
organic production, and label requirements. These comments have been
beneficial in developing this proposed rule.
Prior to publication of this proposed rule, public comment also was
received at public events attended by NOP staff members. Public comment
was received at the 12 full Board and 5 joint committee meetings. NOP
staff made presentations and received comments at local and regional
organic conferences and workshops and at national and international
organic and natural food shows. Comments also were received at: a
national organic certifiers meeting held on July 21, 1995, to discuss
accreditation issues; a meeting of State officials held on February 26,
1996, to discuss the role of States in the NOP; training sessions for
organic inspectors; and numerous speaking engagements of the AMS
Administrator, the NOP program manager, and the NOP staff where the
public had an opportunity to participate in question and answer
sessions.

Proposed Effective Date of the Regulation

We have received inquiries about when the various provisions of a
final rule will be effective.
The final rule would establish a procedure and a time frame for
designating private persons and State officials as accredited
certifying agents under the program. One option would be to require
organizations desiring to be included on the initial list of certifying
agents accredited under the National Organic Program to submit their
applications within approximately two months after publication of the
final regulation. Applications submitted later than two months after
publication of the final rule would not be considered for inclusion on
the initial list of certifying agents, but would be reviewed as soon as
possible after publication of the initial list of accredited certifying
agents. Subsequent lists of accredited certifying agents would be
published as they are developed.
If we adopted this option, we would publish an initial list of
accredited certifiers in the Federal Register after

[[Page 65852]]

reviewing the applications received during the first two months after
publication of the final regulation. We will publish subsequent lists
of accredited certifying agents as new applicants become accredited. We
would expect publication of the initial list to occur within six months
after publication of the final rule. Only after publication of that
list would the provisions of the regulation applicable to certification
become effective. Thus, the provisions in the proposal that address the
application process for, and decisions to be made about, the
certification of farms, wild crop harvesting operations, and handling
operations, would become effective only after certifiers have become
accredited. Certifiers would begin certifying individual operations
under the NOP six months after publication of the final rule.
In order for accredited certifying agents to begin certifying
operations under the NOP six months after publication of the final
rule, we believe we would need, as we previously indicated, to have
accreditation applications submitted within two months after
publication of the final regulation. We believe that the initiation of
certification activities by accredited certifying agents six months
after publication of the final rule would permit the implementation of
the national standards for organic products within a reasonable time
frame after publication of the final rule.
We request comments from all interested parties, particularly small
businesses that want to obtain accreditation as certifying agents, as
to whether a two month time frame after publication of the final rule
for submission of applications for accreditation is a sufficient time
period, or whether an extended time period, such as three or four
months after publication of the final rule, should be permitted for
those who want to be listed on the initial list of accredited
certifiers. Any such extension, of course, would lengthen the
implementation schedule.
In this implementation option, we would expect to allow a 12-month
period of time after publication of the initial list of certifying
agents for operations to become certified under the relevant provision
of the final regulation. Thus, all provisions of the NOP would be
implemented 18 months after publication of the final rule. On that
date, which will be stated in the final rule, all organic operations
required to be certified will have to be certified in order to sell or
label their products as organic. Operations that are certified prior to
18 months after publication of the final regulation would be permitted
to use the USDA organic seal upon certification by a USDA accredited
certification organization.
We would like comments, particularly from small farm or handling
operations, as to whether the 12-month period of time we anticipate
allowing for farm, wild crop harvesting, and handling operations to
become certified is a reasonable period of time for such operations to
become certified. We are particularly interested in learning whether
there are any economic or other factors that would create difficulties
in obtaining certification within the 12-month time period we expect to
provide for obtaining certification.
Several people have raised questions about what the impact of the
rule would be when it is effective. Some farmers whose operations are
currently certified as organic under private or State standards have
asked what the status of their certified farming operations would be if
a substance allowed for use under their current private or State
certification is not on the National List, and, therefore, not allowed
under the National Organic Program.
The OFPA requires that a product sold or labeled as an organically
produced agricultural product must, except as otherwise provided in the
Act and excluding livestock, be produced on land to which no prohibited
substances, including synthetic chemicals, have been applied during the
three years immediately preceding harvest of the agricultural product.
We have incorporated this prohibition in our proposal. Thus, a farm
would not be able to become certified under the National Organic
Program until three years after the time any prohibited substance was
last applied. Therefore, at the time the final rule becomes effective,
such farming operations previously certified under private or State
programs would not be able to sell or represent their products as
organically produced if they could not satisfy the three year period
established for nonuse of a prohibited substance.
Petitions, however, to amend the National List may be submitted
immediately after publication of the final rule by using the petition
process proposed in section 205.28 of subpart B. It may be possible,
therefore, for a person who submits a petition immediately after
publication of the final rule to the NOSB for review of a new synthetic
substance to be included on the National List, to have this substance
approved for use by the Secretary prior to the effective date of the
program. If this were to occur, then prior use of the substance would
not prevent the products from being sold or represented as organically
produced.
Processors also have asked what impact the program's requirements
would have on their existing product and label inventories. With regard
to existing product and label inventories, we believe that our intended
18-month delayed effective date for the complete rule would provide
ample time for handlers to use up existing product and label
inventories required under their existing organic certification program
before the rule becomes effective.
States also have asked what effect the rule would have on their
current organic regulations. With regard to current State organic
regulations, we also believe that the anticipated 18-month delayed
effective date should provide State officials with ample time to make
the necessary changes to their State regulations and submit their State
proposed organic program to the Secretary for approval.
Because it is the intent of AMS to provide a final rule which
facilitates trade and which is the least disruptive as possible for the
production, handling and marketing of organic products, we request
comment on our intended schedule of effective dates for the provisions
of the rule. We also request comments on any problems that organic
farmers and handlers, States, and others may encounter when adjusting
their operations to meet the requirements of the National Organic
Program, including the OFPA requirement of a 3-year period prior to the
harvest of organic products from land to which a prohibited substance
is applied. A time-table for implementation of the program would be
published in the final rule.

Prior Documents in This Proceeding

The following notices related to the National Organic Standards
Board and the development of this proposed regulation have been
published in the Federal Register. Four notices of nominations for
membership on the National Organic Standards Board were published
between April 1991 and July 1996 (56 FR 15323, 59 FR 43807, 60 FR
40153, 61 FR 33897). Two notices of extension of time for submitting
nominations were published on September 22, 1995, and September 23,
1996 (60 FR 49246, 61 FR 49725). Twelve notices of meetings of the
National Organic Standard Board were published between March 1992 and
August 1996 (57 FR 7094, 57 FR 27017, 57 FR 36974, 58 FR 85, 58 FR 105,
58 FR 171, 59 FR 58, 59 FR 26186, 59 FR 49385, 60 FR 51980, 60 FR
15532, 61 FR

[[Page 65853]]

43520). One notice of public hearings on organic livestock and
livestock products was published on December 30, 1993 (58 FR 69315).
One notice specifying a procedure to submit names of substances for
inclusion on the National List was published on March 27, 1995 (60 FR
15744).

Executive Order 12988

This proposal has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule is not intended to have retroactive effect.
States and local jurisdictions are preempted under section 2115 of
the OFPA (7 U.S.C. 6514) from creating programs of accreditation for
private persons or State officials who want to become certifying agents
of organic farms or handling operations. A governing State official
would have to apply to the USDA to be accredited as a certifying agent,
as described in section 2115(b) of the OFPA (7 U.S.C. 6514(b)). States
also are preempted under sections 2104 through 2108 of the OFPA (7
U.S.C. 6503 through 6507) from creating certification programs to
certify organic farms or handling operations unless the State programs
have been submitted to, and approved by, the Secretary as meeting the
requirements of the OFPA.
Pursuant to section 2108(b)(2) of the OFPA (7 U.S.C. 6507(b)(2)), a
State organic certification program may contain additional requirements
for the production and handling of organically produced agricultural
products that are produced in the State, and for the certification of
organic farm and handling operations located within the State, under
certain circumstances. Such additional requirements must: (a) further
the purposes of the OFPA; (b) not be inconsistent with the OFPA; (c)
not be discriminatory towards agricultural commodities organically
produced in other States; and (d) not be effective until approved by
the Secretary.
Pursuant to section 2120(f) of the OFPA (7 U.S.C. 6519(f)), this
proposal would not alter the authority of the Secretary under the
Federal Meat Inspection Act (21 U.S.C. 601 et seq.), the Poultry
Products Inspections Act (21 U.S.C. 451 et seq.) or the Egg Products
Inspection Act (21 U.S.C. 1031 et seq.), concerning meat, poultry, and
egg products, nor any of the authorities of the Secretary of Health and
Human Services under the Federal Food, Drug and Cosmetic Act (21 U.S.C.
301 et seq.), nor the authority of the Administrator of the
Environmental Protection Agency (EPA) under the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. 136 et seq.).
Section 2121 of the OFPA (7 U.S.C. 6520) provides for the Secretary
to establish an expedited administrative appeals procedure under which
persons may appeal an action of the Secretary, the applicable governing
State official, or a certifying agent under this title that adversely
affects such person or is inconsistent with the organic certification
program established under this title. The Act also provides that the
U.S. District Court for the district in which a person is located has
jurisdiction to review the Secretary's decision.

Executive Order 12866

This proposed rule has been determined to be economically
significant for the purposes of Executive Order 12866 and, therefore,
has been reviewed by the Office of Management and Budget (OMB). When
proposing a regulation which has been determined to be economically
significant, agencies are required to: assess the costs and benefits of
available regulatory alternatives; base regulatory decisions on the
best reasonably obtainable technical, economic, and other information;
avoid duplicative regulations; and tailor regulations to impose the
least burden on society consistent with obtaining regulatory
objectives. Therefore, to assist in fulfilling the objectives of
Executive Order 12866, and the Unfunded Mandates Reform Act of 1995,
the USDA has prepared a Regulatory Impact Assessment (RIA) which is
attached as an appendix to this proposed rule and from which the
following summaries of the costs and benefits of the proposed National
Organic Program have been taken.
Ideally, the net benefits of the proposed rule would be estimated
by employing a quantitative analysis using information about the cost
structure of the industry, the demand for organic food, and projected
shifts in supply and demand resulting from the various factors
discussed in the assessment. However, although researchers have
conducted numerous small-scale studies to determine consumer
willingness to pay for organic products and to identify reasons why
conventional food buyers do not choose organic food products, the
available data are insufficient to support a quantitative assessment of
this type. At this time, USDA invites public input to provide
additional data that may aid in the development of a quantitative
assessment. This data should be submitted in response to the questions
included in the Conclusion section of the RIA. These questions are
intended to solicit information needed to develop baseline data about
the potential program participants, the costs of organic production,
revenues from organic sales, and the impact of the program on market
growth.

Summary of the Costs of the Proposed Rule

The proposed rule would impose direct costs in the form of fees
charged to certifiers for USDA accreditation and to farmers, wild crop
harvesters and handlers for support of the National Organic Program.
The proposed rule also would impose administrative costs, such as
submission of information, recordkeeping, and access to records that
may constitute an additional burden. The actual amount of the
additional administrative costs that would be imposed by the final rule
is expected to be different for those entities who currently are active
in the organic industry, as compared to those new entities who would
begin their activities only after the national program is implemented.
Certifiers, farmers, wild crop harvesters and handlers who currently
are active in the organic industry already perform most of these
administrative functions; therefore, the additional costs to them would
depend upon the extent to which their current practices are different
from the requirements of the final regulation.
Farmers, wild crop harvesters and handlers would be required to
produce and handle products in accordance with the standards set forth
in the rule and provide certifiers with the required information
necessary to verify certification requirements. Farmers, wild crop
harvesters, and handlers would be charged a fee by the certifying agent
for these certification services. We were not able to estimate the
exact cost of certification fees that would be charged by certifying
agents after implementation of the national program because these fees
currently vary widely among existing certifiers: some existing private
certifying agents are non-profit; some States who currently conduct
certification activities subsidize these activities from other revenue
sources; some existing certifying agents include the cost of inspection
and, in some cases, laboratory testing, in their certification fee; and
some existing larger certifying agents may charge lower fees because
they are able to spread their fixed costs over a larger number of
clients.
Farmers, wild crop harvesters, and handlers may experience certain
costs to comply with the final regulations. For example, there may be
costs associated

[[Page 65854]]

with the proposed requirement that organic products not come in contact
with prohibited substances, or with the proposed requirement that pest
control substances be used only if pest prevention measures are
ineffective. However, since the proposed rule is a synthesis of
existing State and private organic certification programs and the NOSB
recommendations, we believe that farmers, wild crop harvesters and
handlers who currently participate in existing State or private organic
certification programs would experience little or no increased
compliance costs as a result of implementation of the National Organic
Program. Additionally, farmers and handlers who would be exempted or
excluded under the rule, but who choose to become certified in order to
receive the benefits of certification, would be subject to the
additional cost of certification and recordkeeping. USDA requests data
on the costs of organic production and the revenues from organic
farming, and on a comparison of these costs and revenues to
conventional systems.
The following are the upper-bound estimates of the cost of initial
certification under the National Organic Program:

Estimated Cost to Farmers and Wild Crop Harvesters for Initial
Certification

Certification fee *................................. $413
USDA fee............................................ 50
----------
Total fees...................................... 463
----------
Paperwork reporting burden.......................... \1\ 381
Paperwork recordkeeping burden...................... 34
----------
Total reporting and recordkeeping............... 415
=========
ESTIMATED COST TO FARMERS AND WILD CROP HARVESTERS
FOR INITIAL CERTIFICATION.......................... $878

Estimated Cost to Handlers for Initial Certification

Certification fee *................................. $943
USDA fee............................................ 500
----------
Total fees...................................... 1,443
----------
Paperwork reporting burden.......................... \2\ 433
Paperwork recordkeeping burden...................... 34
----------
Total reporting and recordkeeping............... 467
=========
ESTIMATED TOTAL COST TO HANDLERS FOR INITIAL
CERTIFICATION...................................... $1,910

* The estimated certification fee is based on the average of fees
charged by a representative group of certifying agents: private non-
profit, private for-profit and a State agency. Most certifying agents
in our representative group include the cost of inspection and, if
applicable, required laboratory testing in the certification fee.
\1\ For new organic producers.
\2\ For new organic handlers.

USDA requests data on certification fees currently paid by existing
organic farmers, wild crop harvesters, and handlers in order to better
assess the impact of the proposed program.
After implementation, all organic certification agencies, whether
private or State, would be accredited by USDA and would pay fees for
the following services provided by USDA: application review, annual
report review, site evaluation visits, and administrative duties. A
certifier who currently is accredited by a private accreditation
organization might pay USDA lower site evaluation visit fees than a
certifier who is not currently accredited, because of measures that are
implemented by the certifier to receive its private accreditation.
Additionally, as required by the OFPA, a private certifying agent would
have to furnish reasonable security for the purpose of protecting the
rights of farms and handling operations certified by the agent. The
amount and type of security would be established through future
rulemaking.
States that currently perform organic certification activities
under their own regulations, or that have laws pertaining to the
certification of organically produced and handled products, or that
plan to have an organic program in the future, may incur some
additional costs. For example, States with existing organic programs or
regulations may be required to supplement or revise them in order to
meet the criteria of the OFPA, including the provisions set forth in
section 2107 of the OFPA (7 U.S.C. 6506). A State without an existing
organic program that initiates a new State organic program would be
expected to incur greater costs to establish its program.
The following are the upper-bound estimates for the cost of initial
accreditation under the National Organic Program:

Estimated Cost to Certifying Agents for Initial Accreditation

Accreditation application fee....................... $640
Site evaluation fee *............................... 3,500
USDA Administrative fee............................. 2,000
----------
Total fees...................................... 6,140
----------
Paperwork reporting burden.......................... \1\ 23,9
31
Paperwork recordkeeping burden...................... 60
----------
Total reporting and recordkeeping............... 23,991
=========
ESTIMATED TOTAL COST FOR INITIAL ACCREDITATION...... $30,131

The USDA requests data on the fees currently paid by existing
organic certifying agents for accreditation in order to better assess
the impact of the proposed program.
The requirement in the proposed rule for qualified certification
personnel to be used to evaluate certification applications and
contribute to certification decisions may result in an increase in
labor and training costs for some existing certifiers. The amount of
additional costs to these certifiers would depend on the level of
expertise among current certification personnel, the extent to which
certifiers currently rely on volunteers, and the costs of training
these persons. Our proposed inspector training requirements conform to
current established practice in the industry and are not expected to
impose an additional burden on existing certifiers who utilize
inspectors.
We also have identified non-quantifiable costs that may result.
Some certifiers consider the loss of independence in setting
certification standards under a national program as imposing a cost.
Other certifiers consider the establishment of uniform national
standards and an accreditation program as a benefit in that the risk of
potentially costly disputes over acceptance of other certifier's
standards (reciprocity) is eliminated. We anticipate that the net
impact would be positive because the reciprocity dispute problems would
be eliminated.
Another non-quantifiable cost could result from the proposed
requirements that certifiers provide access to all their records to the
Secretary and the applicable governing State official, and provide
access to laboratory analyses and certification documents, other than

[[Page 65855]]

confidential business information, to the general public. Although not
quantifiable, these requirements may represent a change in the way some
existing certifiers currently maintain these records.

Summary of Benefits of the Proposed Rule

In the absence of a nationally recognized definition of organic,
consumers may be mislead by labels on products claiming to be organic,
or claiming to contain organic ingredients, when in fact some of the
products or ingredients may not have been organically produced. Because
many consumers are willing to pay price premiums for organic food,
producers have an economic incentive to label their products organic.
But consumers generally are unable to distinguish organic products from
conventionally produced products by sight inspection; hence, consumers
rely on verification methods such as certification by private entities
or verification by retailers. The USDA requests data to determine the
extent to which mislabeling of non-organically produced products as
organic occurs and the market impacts of mislabeling in terms of
quantities of organic goods sold and the prices for organic goods.
Individual ingredients in multi-ingredient processed products may
be certified under different standards of organic production, thus
making it difficult for a consumer to determine the production
standards under which each of the ingredients was produced. The
proposed standards for organic production, enforced through
accreditation of certifiers, would assure consumers that the organic
ingredients were produced under one national standard. Furthermore,
USDA regulation of labeling claims for organic food would allow the
USDA and other federal agencies whose jurisdiction includes ensuring
the veracity of labeling claims to prosecute those who mislabel
products sold as organic.
Establishing a national definition for organic would be expected to
increase the supply and variety of organic products, especially meat
and poultry, available to consumers. The Food and Drug Administration
(FDA) and the Bureau of Alcohol, Tobacco and Firearms (ATF) currently
allow use of the word organic on most food and alcohol labels, but USDA
has withheld approval for the use of organic labels on meat and poultry
pending the outcome of this rule making. Without the regulation,
however, FDA may decide to disallow use of the term organic on labels
and USDA may continue their current restrictions on the use of organic
on meat and poultry labels. The increased variety of organic products,
especially meat and poultry, that might be marketed after
implementation of the final rule may increase the variety of available
organic products so as to parallel the variety of non-organic products.
The USDA requests data and analyses which would support projections of
the demand for organic meat and poultry.
By providing for the accreditation of certifiers, the proposed rule
would establish the requirements and enforcement mechanism to protect
producers and handlers from inconsistent certification services, lack
of reciprocity between certifiers, and competition from fraudulent
products, which can increase costs or reduce revenue for organic
farmers and handlers. In the absence of the National Organic Program,
the certifier of a final product may not be required to recognize the
certification of an intermediate organic product used in the final
product. Thus, both farmers and primary food processors face a risk of
being unable to sell an organic product identified as certified when
more than one certifier is involved. Monitoring by USDA of
certification inspections and certifier personnel training and
qualifications would help to ensure the quality of the certification,
the use of consistent criteria for certification, and the use of
certification personnel who are knowledgeable and free from conflicts
of interest.
National organic standards and the assurance provided by the USDA
accreditation of certifiers would benefit farmers and handlers by
opening access to international markets. The trade restrictions that
currently exist would be resolved if foreign countries who import
organic products recognize the National Organic Program as equivalent.
Farmers and handlers in the United States may expect larger growth in
exports of organic products to follow implementation of the final rule.
The contributions of national organic standards to increased
domestic demand and to expanded international markets for organic
products may provide opportunities for current organic producers to
expand the scale of their operations. Increased organic production also
may provide incentives for input industries to develop new technologies
which could lower producers' costs of organic production. Input costs
also may decline as a result of economies of scale being achieved in
input industries producing for the organic market. Expanded markets
could encourage additional farmers and handlers to enter the
marketplace, resulting in a potential decline of certifiers' average
costs of operation as fixed costs are spread over a growing number of
clients. The USDA requests information to determine whether the organic
industry and consumers of organic goods have benefitted from industry
growth resulting in economies of scale and production and marketing
efficiencies, and whether industry participants anticipate such
benefits from this rule.
There are three ways in which certifiers' administrative costs
could be reduced as a result of the regulation. First, certifiers'
costs of maintaining access to organic markets for their clients should
be reduced because costs associated with determining equivalency
between certifiers would be reduced or eliminated. Accreditation and
uniform national standards would alleviate the need to negotiate
individual reciprocity agreements with other certifiers. Furthermore,
USDA oversight of certifiers would simplify the process of certifying
multiple ingredient products, thus reducing certification costs. The
responsibility for meeting production and certification requirements of
each ingredient would rest with the certified producers and accredited
certifying agents of the individual ingredients. National standards
also would eliminate costly equivalency disputes between States which
may affect interstate commerce.
Second, certifiers would no longer have to pay private
organizations for the accreditation required to gain access to some
international markets. This would be of particular benefit to the
smaller certifiers who may have been unable to enter these markets
because of the high cost of international accreditation. A portion of
the administrative fees paid by each certifying agent would support
USDA activities to negotiate equivalency of organic standards in world
markets so that producer clients of all USDA accredited certifiers
could have access to these markets.
Third, in the long run, uniform standards of production,
certification and accreditation should reduce the cost of training
certification staff. Industry-wide training costs may increase
initially, but should decline as the pool of trained certifiers and
certification personnel increases and the corresponding cost of
training new certification personnel decreases, especially in those
instances where personnel transfer from one certifier to another.
Standardized materials, such as compliance guides and training manuals,
also should contribute to a reduction in the cost of training

[[Page 65856]]

certification staff. In addition, USDA accreditation of certifiers
would present opportunities for sharing information about standards,
practices and the general requirements of the program through the
National Organic Program staff.

Unfunded Mandates Reform Act

The Unfunded Mandates Reform Act (Pub. L. 104-4) requires (in
Section 202) that agencies prepare a qualitative and quantitative
assessment of the anticipated costs and benefits before proposing any
rule that may result in annual expenditures by State, local, and tribal
governments, in the aggregate, or by the private sector, of
$100,000,000 (adjusted annually for inflation) in any one year. As
discussed in the preceding section entitled ``Executive Order 12866'',
USDA has prepared a Regulatory Impact Assessment (RIA) to assess the
costs and benefits of this proposed rule. As explained in the RIA,
which is attached as an appendix to this proposed rule, USDA was unable
to provide a quantitative assessment of the costs and benefits of the
proposed rule, except for the cost of fees and recordkeeping that would
result from the proposed rule, because of insufficient data available
to support a quantitative assessment. The cost of fees resulting from
this proposed rule is estimated to be $1,000,000 during the first year
of program implementation, and the cost of recordkeeping is estimated
not to exceed $4,700,000 during any one of the first three years of
program implementation. The RIA does, however, provide a qualitative
assessment of the proposed rule's costs and benefits.
The USDA has posed a list of questions in the RIA to assist in the
development of a quantitative assessment for the final RIA that will be
published as part of the final rule for the National Organic Program.
We will utilize public input received in response to these questions
and to other provisions of this proposed rule, as well as other
resources available to USDA before publication of the final rule, to
develop a quantitative assessment of the costs and benefits of the
final rule.
Although USDA has not determined whether this proposed rule would
result in annual expenditures by State, local, and tribal governments,
in the aggregate, or by the private sector, of $100,000,000, USDA has
sought to meet the objectives of the Unfunded Mandates Reform Act. In
addition to its qualitative cost/benefit assessment, USDA has
identified in the RIA three regulatory alternatives to the proposed
rule. We also discuss in the preamble sections entitled ``Paperwork
Reduction Act of 1995'' and ``The Regulatory Flexibility Act and the
Effects on Small Businesses'', the analysis we have employed in
reaching a determination that this proposed rule is the least costly
and least burdensome to the regulated parties, in that we have designed
the proposed rule to be as consistent as possible with existing
industry practices, while satisfying the specific requirements of the
OFPA.
Additionally, we have had numerous occasions to communicate with
State governments during the development of the proposed rule.
Representatives of various State governments participated in several
public meetings of the NOSB and they have provided valuable input to
the NOSB for its recommendations on standards and the National List.
USDA also hosted a meeting on February 26, 1996, to discuss with many
State officials the status of the proposed rule and to listen to
concerns about such topics as fees, enforcement, certifier logo use,
and the range of additional requirements that States may include in
their State programs. On numerous other occasions, AMS staff has had
discussions with a wide array of State officials on subjects related to
this proposed rule or the establishment of, or amendment to, State
organic certification programs. USDA will continue to provide effective
opportunities for the broadest possible input by States and all
interested parties throughout the rulemaking process.

The Regulatory Flexibility Act and the Effects on Small Businesses

Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA) (5 U.S.C. 601 et seq.), the Agricultural
Marketing Service (AMS) has considered the economic impact of the
proposed rule on small entities. The AMS' analysis, as required by the
RFA, considers the impact of this proposed regulation on small entities
and evaluates alternatives that would accomplish the objectives of the
rule without unduly burdening small entities or erecting barriers that
would restrict their ability to compete in the organic market. The
following Initial Regulatory Flexibility Analysis was written with
guidance from the Small Business Administration (SBA).
The size of the organic industry has risen dramatically in recent
years from a low of $78 million in 1980, to $1 billion in 1990, to a
total retail sales level of $3.5 billion in 1996. Certified organic
cropland production has expanded from 473,000 acres to 667,000 acres in
the period 1992 to 1994, and is expected to reach 2 million acres by
the year 2000. Despite this rapid growth, it should be noted that the
organic industry represents a very small percentage of total
agricultural production and sales, and that organic certifiers, farmers
and handlers tend to own smaller operations rather than larger ones.
Currently, organic certification is voluntary and self-imposed.
According to the most complete data available to the AMS, there are 33
private and 11 State certifying agencies certifying approximately 4,000
farmers and 600 handlers in the United States. Over half of the private
and State agencies certify both farm and handling operations, while the
others certify only farms. Over three-fourths of State and private
agencies each certify fewer than 150 farms and 20 handlers. Based on a
review conducted by AMS of 16 certifiers, who provided information on
the organic sales of products produced on certified farms, most of the
farms certified have less than $25,000 in gross sales.
A national organic program would benefit farmers by opening access
to international markets. U.S. exports of organic products totaled $203
million in 1994 or about 9 percent of the organic output. Export
markets may become more substantial and offer price premiums for
organic products with increased world-wide consumption of organically
produced food. For example, the organic market share in the European
Union (EU) has been projected to reach 2.5 percent of total food
consumption expenditures by 1998. Austria expects its organic market
share to equal one third of all food sales by the year 2000. In 1994,
France and Germany combined had total retail sales of organic foods
equal to that of the United States in the same year (approximately $2
billion). Japan's retail sales for that year were estimated to be $688
million. Other EU countries report growth rates equal to or greater
than the current growth rate in the United States of about 20 percent
per year.
The reason for regulatory action is fully explained in the
Regulatory Impact Assessment which is attached as an appendix to this
proposed regulation. In short, the organic market may be precluded from
reaching its full potential until there is a definition of the term
organic, which would be achieved by implementation of this proposed
regulation that provides regulations for production, handling,
labeling, certification and accreditation of U.S. certifiers. Domestic
and international trade in organic products may also be hampered by the
need to negotiate reciprocity agreements because of the differing
standards of

[[Page 65857]]

production and handling that currently exist; meat and poultry,
including processed products containing meat and poultry as
ingredients, cannot be labeled organic; and few enforcement mechanisms
exist to protect consumers against fraudulent organic labeling.
The statutory authority for this proposed rule is the OFPA, which
in section 2104(a) (7 U.S.C. 6503(a)) requires the Secretary of
Agriculture to develop a national organic program. In general, the
Secretary must establish an organic certification program for farmers
and handlers of agricultural products that have been produced using
organic methods as provided for in the OFPA. In addition, section 2115
of the OFPA (7 U.S.C. 6514) requires the Secretary to establish and
implement a program to accredit a governing State official and any
private person who meets the requirements of the OFPA and the
regulations in part 205 as a certifying agent for the purpose of
certifying a farm or handling operation as being in compliance with the
standards set forth in this proposed regulation.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to the actions in order that small businesses would
not be unduly or disproportionately burdened. To accomplish this
purpose, it first is necessary to define a small business. According to
the Standard Industrial Codes (SIC) (13 CFR Part 121) which are
developed by an inter-agency group, published by the Office and
Management and Budget (OMB), and used by the SBA to identify small
businesses, nearly all of the entities affected by this proposed
regulation would be considered small businesses. According to the SIC,
a small business in the agricultural services sector, such as
certifiers, includes firms with revenues of less than $3.5 million (SIC
Division A Major Group 07). In crop production, the SIC definition of a
small business includes all farms with annual gross sales under
$500,000 (SIC 0111-0191). (Most of the farms currently certified have
less than $25,000 in gross sales of organic production. However, many
farms combine organic and conventional production on the same
operation, some with total sales that may exceed $500,000). In handling
operations, according to the SIC, a small business is defined as having
fewer than 500 employees (SIC Division D Major Group 20). (The
workforce data needed to determine whether any organic handling
operations exceed 500 employees is not available, but anecdotal
information leads us to believe that no organic handling operations
employ more than 499 persons).
We consulted with the SBA Office of Advocacy regarding the use of
size standards different from those in 13 CFR 121. For the purpose of
identifying those entities who would be most affected by this proposed
regulation, alternative definitions were established for the purpose of
this analysis. The alternative definition of a small certifier which we
established for this analysis is one with total revenue from
certification of less than $25,000. The alternative definition of a
small farm which we established is one with a maximum of $5,000 in
gross sales of agricultural products, as is set forth in section
2106(d) of the OFPA (7 U.S.C. 6505(d)). Additionally, for this
analysis, we established the alternative definition of a small handling
operations to be one whose sales are $50,000 or less.
Development of regulations for the National Organic Program began
with the premise that the industry should be burdened as little as
possible by the OFPA regulation. To accomplish the goal of regulation
with minimal burden, we initially determined that most of the
information needed for organic farmers and handlers to become
certified, and for certifiers to become accredited, already exists for
those entities currently operating. The challenge was to create a
regulation which complied with the OFPA mandates and which embodied the
customary and usual business practices already being carried out by the
industry. No new forms have been proposed and few additional documents
would be required in this proposed regulation. Certifiers may need to
create some of the documents proposed for the application process;
farmers may have to keep records for longer periods of time; and
handlers may need to refine recordkeeping to ensure a clear audit
trail. However, they would be allowed the flexibility to use the
easiest and least expensive means available to provide information, as
long as the required information is adequate to ensure compliance with
the regulations.
Small and large farmers, handlers, and certifiers would be affected
by additional fees resulting from implementation of the National
Organic Program. Certifiers may be burdened with the accreditation
requirements for business related activities, such as the requirement
for a financial audit. However, because no particular form is required,
current business records may be sufficient to provide the necessary
information. The requirements to keep personnel records, explain
administrative procedures, and evaluate personnel may be burdensome to
small certification businesses. Yet, we have received the comment from
at least one small business that requirements such as these can
increase efficiency and make a small business more cost effective.
Section 2112(d) of the OFPA (7 U.S.C. 6511(d)) requires farmers and
handlers to maintain records for five years, and section 2116 (c)(1) of
the OFPA (7 U.S.C. 6515(c)(1)) requires certifiers to maintain records
for ten years. Our research of the industry indicates that farmers and
handlers already maintain records for five years and certifiers do not
discard historical documents. This regulation, therefore, should not
significantly increase the record retention burden beyond current
industry practice. However, under the requirements of the Paperwork
Reduction Act of 1995 (PRA) (44 U.S.C. 3506 and 3507), a burden is
created when a law or regulation requires the storage of information.
The burden to the industry is calculated on the time required to file a
document. Under the PRA we are required to estimate and account for
this burden.
No other burdens are expected to fall upon the organic industry as
a result of overlapping Federal rules. This proposed regulation would
not duplicate, overlap or conflict with any existing Federal rules. In
preparing this proposed regulation, AMS consulted other Federal
agencies such as the FDA, EPA, ATF, and the USDA's Food Safety and
Inspection Service (FSIS) to ensure that this proposed regulation would
complement existing regulations.
Whether using the SIC definitions for small businesses or the
alternative definitions created for this analysis, our proposed
regulation would have a significant impact on a substantial number of
small businesses. However, we have considered several options with the
intention of mitigating negative economic impacts. The following
options were considered by AMS prior to and during the development of
the proposed regulation.

Regulatory Options

Option 1: The Organic Market in the Absence of Regulation

We have explored the alternative of no government regulation of the
organic industry. However, current problems in the organic industry
would continue to affect small entities as well as large ones. In fact,
it is likely that the effect of no regulation would negatively impact
small businesses to a greater degree than larger ones. For example,
without regulation, smaller certifiers

[[Page 65858]]

entering the industry with growth expectations based on implementation
of the OFPA through Federal regulation would be negatively affected to
a greater degree than larger certifiers who can spread fixed costs over
a larger number of clients. Larger businesses do not depend as heavily
on industry growth to maintain their business operations.
Organic farmers who have integrated livestock into their
agricultural operation are negatively impacted in two ways without
regulation of the organic industry. First, they do not receive the
price premium for organic meat and poultry because at the present time
FSIS does not allow for the use of the term organic on meat and poultry
labels. This would impact small farmers to a greater extent because
they have fewer animals from which to profit from a price premium.
Second, to feed their livestock, farmers either must pay a higher price
for organically produced livestock feed or raise the feed on their own
land which otherwise could be used to produce organic cash crops.
Smaller farmers are disproportionately impacted because the ratio of
the number of livestock per acre of land is limited by the number of
acres they must use for organic crop production in order to be a
profitable business. Larger farmers face the same decision of whether
to purchase organic feed or raise their own, but they have more acres
over which to spread the cost of either choice.
Without Federal regulation, small certifiers and farmers wishing to
export agricultural products are negatively impacted to a greater
degree than larger organizations by a lack of resources and influence
over foreign market systems. Also, completing the paperwork required
for exporting products is disproportionately costly to small entities
because of their limited resources. The burden of completing this
paperwork can be eased if the certifier has attained private, third-
party accreditation. We are aware that certifiers currently may pay in
excess of $15,000 for accreditation by a private organization. Smaller
certifiers cannot afford these fees, and therefore, potential clients
wishing to export organic products choose to be certified by the
larger, privately-accredited organizations.
Finally, we are required by the OFPA to regulate the industry
through the National Organic Program. In fact, we have received
requests from many small businesses, certifiers, farmers, and handlers,
to move forward with implementation of a national program as quickly as
possible. Therefore, we believe that regulating the organic industry
would be the most appropriate action to help small businesses.

Option 2: Exemption of Small Certifiers From Accreditation

We considered the option to exempt small certifiers from
accreditation requirements, just as small farmers and handlers are
exempt from certification. However, the OFPA does not provide for such
an exemption and this, therefore, would require a legislative
amendment. Additionally, we do not believe that exempting small
certifiers would be in the best interest of the industry or the small
certifiers.
The exemption of small farmers carries with it limitations which
may discourage some small farmers from claiming exemption, preferring
instead to become certified. In this proposed regulation, small farmers
who are not certified and who use the term organic to identify their
products must comply with the USDA standards, yet they may not display
the USDA seal or a certifying agent's logo on the labels or the
labeling of their products. Furthermore, organic agricultural products
produced on small farms that claim exemption from certification
requirements cannot be labeled as organic ingredients in products
processed by a certified operation. As a result, consumers and
processors may not wish to pay a price premium for organic products
from a non-certified operation.
The exemption of small certifiers from accreditation would carry
with it limitations resulting from the absence of Federal oversight.
Interstate and international trade would be hampered because it would
likely be limited to products certified by accredited certifiers.
Distinguishing exempt certifiers from accredited ones might require
that product labels of accredited certifiers' clients include the USDA
logo and lead to consumer confusion over labels in the marketplace.
Protecting consumers from fraudulent certification claims on labels
would be difficult at the Federal level since AMS and other enforcement
agencies, such as the FDA, ATF, and FSIS, would have to distinguish
accredited certifiers from those who are exempt. Costly spot checks or
site visits would be required by AMS to verify that products sold or
labeled as organic are produced under systems that are consistent with
the national program. To accomplish this, a mechanism would have to be
established to charge exempt certifiers for spot checks or site visits
and these charges might be more costly than becoming accredited.
One of the purposes of the OFPA is to assure consumers that
organically produced products meet a consistent standard. Without the
assurance provided by Federal oversight of certifiers through USDA
accreditation, there is no way to ensure that one national standard of
production and handling for organic agricultural products would be
employed. The result could be the continuation of costly reciprocity
agreements among small, exempt certifiers and large, USDA accredited
certifiers. This could prove to be more costly to small entities than
accreditation. For all of these reasons, we have determined that option
2 is not a viable alternative.

Option 3: The Proposed Regulation

The regulation we propose is a synthesis of existing organic
standards and certification programs. We have done extensive outreach
which is explained in the SUPPLEMENTARY INFORMATION section entitled
``Public Input''. After gathering the necessary information, we
developed this proposed regulation to ensure industry integrity and
help the organic industry grow. In this section, we will discuss how
this proposed Federal regulation of the organic industry would:
eliminate costly administrative tasks now necessary under current
industry practice and thus mitigate the financial burden of USDA
accreditation; level the playing field, enabling small entities to
better compete in the industry; and benefit all farmers and handlers
through industry growth. Finally, this proposed regulation includes
three factors that would decrease its overall burden by providing
flexibility in compliance and fees.
Certification organizations currently develop and interpret their
own standards of production and handling. The consensus of our outreach
to the industry is that one national standard with interpretation,
decision making, and enforcement authority at the Federal level would
eliminate the need for certifiers to develop and amend standards.
Federal regulation also would provide a consistent process for
certifying operations that produce and handle products bearing an
organic label. Smaller certifiers would benefit to a greater degree
than larger certifiers because the resources saved from creating and
interpreting their own standards could be directed toward improving
their business operations and offsetting any additional burden imposed
by accreditation.
One national standard would eliminate the need to negotiate costly
reciprocity agreements and thus save

[[Page 65859]]

certifiers' resources used to negotiate the agreements, while also
expanding markets for organic farmers and handlers certified by smaller
organizations which currently do not have, or have a limited number of,
such agreements. Eliminating the need for accreditation by private
organizations prior to export would relieve certifiers of current
financial and paperwork burdens while leveling the playing field for
large and small organic entities wishing to export organic agricultural
products.
An expanded market caused by the introduction of organic meat and
poultry, added consumer confidence backed by consistent standards of
production and handling, and additional export volumes of organic
agricultural products would benefit all of the organic industry.
Another benefit of this proposed regulation to smaller certifiers
would be an extended network of information exchange. Presently,
information dissemination occurs on a one-to-one basis and through
participation in industry groups, meetings, workshops and international
trade fairs. Participation in these activities, which often are
dominated by issues of the larger certifiers, is costly and frequently
prohibitive to smaller entities. This proposed regulation would
facilitate providing certifiers with information about the program,
including standards, practices and general requirements. Small
certifiers would have access to the same information at the same time
as large certifiers, which could be passed on to their clients,
typically small farmers and handlers.
In our previously discussed implementation option, we consider
allowing a 6-month period of time after publication of the final rule
for certifying agents to gain initial accreditation, followed by a 12-
month period of time for farm, wild crop harvesting, and handling
operations to become certified under the relevant provision of the
final regulation. Thus, we intend that the provisions of the NOP would
be implemented approximately 18 months after publication of the final
rule. On that date, which will be stated in the final rule, all organic
operations required to be certified in order to sell or label their
products as organic would have to be certified. Operations that are
certified prior to 18-months after publication of the final regulation
would be permitted to use the USDA organic seal upon certification by a
USDA accredited certification organization.
We would like comments, particularly from small farm or handling
operations, as to whether the 12-month period of time we anticipate
allowing for farm and handling operations to become certified is a
reasonable period of time for such operations to become certified. We
are particularly interested in learning whether there are any economic
or other factors that would create difficulties in obtaining
certification within the 12-month time period we expect to provide for
obtaining certification.
Small certifiers have expressed concern that they may not have the
expertise necessary to become accredited by USDA or to carry out the
responsibilities associated with accreditation. However, we believe
that this proposed regulation is consistent with, and builds upon,
current industry practice. It was designed to allow existing
certifiers, farmers and handlers to continue to operate within the
organic industry.
In developing our proposal, we considered requiring that
accreditation be renewed annually by large certifiers and bi-annually
by small certifiers. However, annual or bi-annual preparation of
accreditation application materials and the review of applications
would be burdensome to accredited certifiers and the NOP staff,
respectively. Therefore, in this regulation we have proposed that
rather than extending the length of accreditation for small certifiers,
we would require that all certifiers submit annually only information
about their operation that had changed from the previous year. This
requirement would eliminate the burden of certifiers annually refiling
all of the information submitted in the initial accreditation. Renewal
of accreditation would occur every fifth year.
Finally, this proposed regulation has three elements of flexibility
that are advantageous to small entities: performance based production
and handling standards and certifier requirements; production and
handling standards that contain a range of allowable practices; and
certifier site-evaluation fees that would reflect actual costs incurred
in connection with the site-evaluation.
The standards in this proposed regulation are performance standards
based on the results of a management system, rather than prescriptive
or design standards that prescribe specific technology or a precise
procedure for compliance. Performance standards allow for flexibility
in compliance, which is especially important to organic farmers,
handlers and certifiers with limited resources. Performance standards
promote innovation and the development of new technologies which would
help the industry as a whole be more efficient. Finally, they provide a
less costly means of compliance than design standards. Small entities,
in particular, benefit because compliance with performance standards
allows for the adaptation of existing systems without costly capital
investment.
The proposed rule allows for flexibility by providing a range of
farming and handling practices that can be used when necessary to
maintain the organic integrity of the operation. The use of a practice
or substance that is allowable only when necessary must be described in
the organic plan, as set forth in section 205.205 of subpart D of this
proposed regulation, as a record for consideration by the certifier
during a certification review. The benefit in providing a range of
practices is that a farmer or handler would not lose their investment
in an organic operation because of certain conditions, such as adverse
weather or commercial unavailability. This is especially important to
small farmers and handlers who depend on the organic price premium to a
greater extent than larger firms.
Section 2107(a)(10) of the OFPA (7 U.S.C. 6506(a)(10)) authorizes
the collection of reasonable fees from farmers, handlers, and
certifying agents who participate in the national organic program. When
developing this proposed rule, two alternative fee models were
considered. The fee for direct services model proposed in sections
205.421 through 205.424 of this proposed regulation combines a fixed
fee for all farmers, handlers and certifiers with a variable fee for
certain direct services provided by AMS in the accreditation of
certifiers. The second model considered, but not used in this proposal,
was the fee per certification model which would have based
accreditation fees on the numbers of farmers and handlers certified.
The fee for direct services model proposes to distribute program
costs for services to certified farmers and handlers through fixed fees
of $50 and $500, respectively. The difference between farmer and
handler fees is designed to account for the greater overhead and staff
time devoted to handler and processed product issues as compared to
farmer and raw product issues. A more extensive explanation of farmer
and handler fees is provided in the SUPPLEMENTARY INFORMATION section
entitled ``Fees''. Additionally in this model, certifiers would be
required to pay a fee of $640 when applying for accreditation and
submitting annual reports to cover staff time needed to

[[Page 65860]]

process the application or review the report, and an annual
administrative fee of $2,000 for program costs that cannot be allocated
to a specific certifier. The balance of accreditation costs would be
billed to certifiers on a time rate for direct services. A certifier
would have to collect sufficient funds from the farmers and handlers it
certifies to cover these program fees. Due to the fixed components of
the fees in this model, large farmers and handlers, as well as large
certifiers, would have the ability to spread their costs over a larger
base and, consequently, lower their fixed costs per unit.
Under the fee for direct services model, labor hours, travel, and
per diem costs for the site inspections required for accreditation
would be included in the variable fee for direct services. AMS
estimates the average cost to conduct an accreditation site visit to be
$3,500 per visit. The travel cost component of this figure would vary
based on the certifier's distance from Washington, D.C., because site
visits would be conducted by the National Organic Program staff working
away from program headquarters. An alternative method of distributing
travel costs would be to estimate an average annual cost per trip,
given the expected number of trips and the geographic distribution of
certifiers, and charge that amount for all site visits regardless of
location.
The advantage of the fee for direct services model is that it
incorporates a measure of size in the fee structure, i.e., the time
spent on each accreditation by National Organic Program staff. The
variable portion of the fee would distribute program costs among
certifiers according to the resources actually consumed in providing
the accreditation service. The disadvantage of this model is that it
introduces a source of variation in fees for which the derivation is
not wholly transparent or predictable. With several National Organic
Program staff conducting accreditation evaluations, a complaint about
the efficiency of an individual accreditation would be difficult to
resolve on the basis of objective measures.
Under the fee per certification model that we did not use in this
proposal, in which certifiers would pay a fee to the USDA for each
certification performed, the smallest one half of certifiers, who
certify about 10 percent of organic operations, would pay about 10
percent of the estimated costs associated with accreditation. The
largest 10 percent of certifiers, who certify about 45 percent of
organic operations, would pay about 45 percent of accreditation costs.
The remaining 40 percent of certifiers in the middle would pay 45
percent of the costs. The fee per certification would be fixed,
regardless of the size of the operation being certified. This feature
has the potential to create a barrier to market access for the smaller
operations. Certifiers who charge farmers and handlers for
certification based on size and scope of the operation would maximize
their profits by certifying only the larger farmers and handlers from
whom they would realize a higher return. If certifiers were to
discriminate in this manner in favor of larger operations, smaller
farmers and handlers would find the certification services available to
them to be relatively limited and possibly more expensive than under
the fee for direct services model that includes a variable fee for site
visits. A fixed fee per certification also would not take into account,
in the distribution of costs, the large difference in size between
processors and primary producers. Processors are generally much larger
than primary producers in terms of both total output and total revenue.
Even with the flexibility proposed in the regulation and the
expanded market opportunities brought about by implementation of the
National Organic Program, some small organic certifiers, farmers and
handlers may choose not to continue because of the proposed fees. We
invite comments concerning the expected benefits and costs to small
entities as presented in this analysis.

Paperwork Reduction Act of 1995

This proposed rule contains recordkeeping and submission
requirements that are subject to public comment and to review by the
Office of Management and Budget under the Paperwork Reduction Act of
1995 (44 U.S.C. 3506 and 3507). Therefore, in accordance with 5 CFR
Part 1320, we are providing a description of the reporting and
recordkeeping requirements and an estimate of the annual burden on the
organic industry. The proposed requirements would not become effective
prior to OMB approval.
Title: National Organic Program.
OMB Number: New collection.
Expiration Date of Approval: Three years from date of approval.
Type of Request: New.
Abstract: The information collection requirements in this proposed
regulation are essential to carry out the mandate of the Organic Foods
Production Act of 1990 (OFPA or Act). The OFPA requires the Secretary
of Agriculture to establish and implement a program to accredit a
governing State official, or any private person, who meets the
requirements of the Act and the proposed regulations, as a certifying
agent for the purpose of certifying a farm, wild crop harvesting, or
handling operation as being in compliance with the standards set forth
in the Act and this proposed regulation. After implementation of the
National Organic Program, any agricultural product labeled as organic
or made with certain organic ingredients would have to originate from
an operation that is certified by an accredited USDA certifier.
The OFPA requires certified farms, wild crop harvesting operations
and handling operations to maintain records for 5 years and certifying
agents to maintain records for 10 years. The OFPA exempts from
certification farm operations with gross agricultural sales of less
than $5,000, and the proposed regulation also exempts handling
operations with gross agricultural sales of less than $5,000. We
propose that each exempt operation would be required to maintain
records for one year that verify that such sales are less than $5,000.
We also propose that operations that handle only multi-ingredient
agricultural products that only represent the organic nature of
ingredients in the ingredients statement would not have to be
certified. These operations would be required to maintain records for
one year that verify the source of organic products received and the
operations to whom final organic products are sold. The OFPA also
exempts from certification any retail operation, or portion of a retail
operation, that only handles organically produced agricultural
products, but does not process them. The exemptions and exclusions from
certification requirements proposed in this regulation are discussed in
the supplementary information provided for section 205.202 of subpart
D.
Other information collection requirements proposed in this
regulation include: petitioning the NOSB to review a substance for
inclusion on the National List; developing labels; preparing inspector
and peer review panel reports; documenting methods to prevent
commingling of organic with non-organic products; notifying the proper
authority in the case of non-compliance with the regulations or the
possible violation of food safety laws; and submitting State organic
certification programs to the Secretary for approval.
The USDA conducted extensive research while developing this
proposed regulation so as to minimize disruption to the customary and
usual business practices of certifiers, farms, wild crop harvesting
operations and handling

[[Page 65861]]

operations. The research included consultation with administrators of
existing certification agencies; a review of certifiers' publications,
recordkeeping forms, and business characteristics; discussions at
meetings with State and private certifiers about their concerns
regarding accreditation; communications with the organic industry trade
association; and a review of the National Organic Standards Board
recommendations that were presented to the Secretary after extensive
public input. This research helped us determine that certifiers conduct
their certification of farms, wild crop harvesting operations and
handling operations in a similar manner and have similar recordkeeping
systems and business operating practices. We also determined that most
of the information we would require to conduct accreditation could be
collected from certifiers' existing materials without creating new
forms, and that the information currently used by certifiers to certify
farmers, wild crop harvesters and handlers could be adapted to comply
with this proposed regulation.
We are required under the PRA to report the amount of time
necessary for participants to comply with the proposed regulation as if
there were no previously existing documents. The PRA requires that our
total reporting (creation and submission of documents) burden cover the
greatest amount of reporting burden that might occur for any single
creation or submission of a document during any one of the first three
years following program implementation, i.e: 1999, 2000, and 2001.
Therefore, our total estimated reporting burden reflects the greatest
possible burden for each reporting activity that might occur during
this three year period. We also are required by the PRA to measure the
recordkeeping burden. The recordkeeping burden is the amount of time
needed to store and maintain records. For the purpose of measuring the
recordkeeping burden for our proposed rule, we use the burden for the
year 2001, the reporting year for which we estimated that the largest
number of records might be stored and maintained.
The USDA estimated the number of program participants who would be
required to either create, submit, or store documents as a result of
the proposed rule. To determine the number of organic farmers and
handlers, we conducted an analysis of existing certified organic
farmers and handlers in the United States for 1994, (Dunn, Julie Anton.
1995. ``Organic Food and Fiber: An Analysis of 1994 Certified
Production in the United States.'' U.S. Department of Agriculture,
Agriculture) and examined an analysis of data collected for the
California Department of Food and Agriculture Organic Program
concerning registered organic farms and handling operations in that
state (Klonsky, Karen, and Laura Tourte. September 1995. ``Statistical
Review of California's Organic Agriculture, 1992-93''. Cooperative
Extension, Department of Agricultural Economics, University of
California, Davis). Our analysis indicated that an estimated 4,000
farms and 600 handling operations were certified by 33 private and 11
State certifiers. The data collected in the USDA analysis indicated
that the number of certified organic farmers increased at an average
rate of 12 percent in the period from 1991 to 1994, and the number of
certified organic handlers increased at an average rate of 11 percent
over the same 3 years. Based on this rate of growth, we estimate that
7,049 farmers and 1,011 handlers will seek certification in the year
1999 and that these numbers would increase to 8,843 farmers and 1,245
handlers in the year 2001. We also estimate, based on our inquiries to
existing certifiers, that in the year 1999: 50 percent of certified
organic farms will include livestock, 25 percent of certified organic
farms and 75 percent of certified organic handling operations will be
split operations, and 150 wild crop harvesting operations will seek
certification.
Data from the California Department of Food and Agriculture study
indicated that 50 percent of registered organic farmers in California
had incomes below $10,000 in 1994. For the purposes of this burden
analysis, we estimated for the year 2001 that 25 percent of all organic
farmers and handlers would have an income of less than $5,000 from the
sale of agricultural products and, therefore, would be exempt from
certification. Based on our estimated rate of growth for organic
farmers and handlers, we anticipate that there would be a total of
11,788 non-certified and certified organic farms and a total of 1,660
non-certified and certified organic handling operations in the year
2001. Of these farms and handling operations, we estimated that 25
percent (2,947 farms and 415 handling operations) could be exempt from
certification. As proposed in this regulation, each exempt operation
would be required to maintain records to verify that its gross sales of
agricultural products is below $5,000. We request data and public input
that would assist us to better determine the percentage of certified
organic farms with livestock and the percentage of certified operations
that may be split operations, the percentage of organic farms and
handling operations that may be exempt from certification because they
have sales less than $5,000, and the number of wild crop harvesters.
Our inquires to several existing certifiers indicated that of the
total number of operations seeking certification, approximately 5
percent of farms and handling operations are denied certification; most
of the farms and handling operations denied certification received
certification after they reapply. Additionally, approximately 25
percent of certified operations were identified by certifiers during an
annual review as having some deficiency; most of these operations
retained their certification status.
Other than farmers and handlers, we have made burden estimates for
other entities who will create, submit or maintain records as a result
of the proposed National Organic Program. For instance, we expect to
receive 5 petitions annually for substances to be reviewed by the NOSB
for inclusion on the National List. We estimated a low number of
petitions because prior to proposing the National List the NOSB
researched and determined which substances are currently in use in the
organic industry, and because the NOSB itself will be identifying new
substances for inclusion on the National List.
We also estimated the time spent to develop product labels for
products sold, labeled, or represented as organic or made with certain
organic ingredients, or which use the term organic to modify an
ingredient in the ingredients statement. The time spent deciding about
use of the USDA seal, a State emblem, or the seal of a private
certifier also is included in this burden. Our research indicated that
operations using product labels containing the term organic handle an
average of 19.5 product labels. Additional research indicated that
there are currently about 16,000 products with the term organic used on
the product label and that the number has been increasing by 250
products annually, based on marketing data from 1994, 1995 and 1996. We
estimate, therefore, that by the year 2001, 17,000 products will be
marketed with the label term organic.
Regarding operations that handle products that only represent the
organic nature of ingredients in an ingredients statement, or that
handle prepackaged organic products and do not remove them from the
packaging (such as a warehouse or terminal market), the proposed rule
contains certain recordkeeping requirements in addition to the
requirement to document the procedures to prevent the commingling

[[Page 65862]]

of organic with non-organic products and the exposure of organic
products to prohibited substances. These recordkeeping requirements are
that documentation is to be maintained for 1 year to verify the source
and quantity of organic products received and to verify the destination
and quantity of products shipped from the operation. At this time, we
do not have information as to the number of such operations, nor can we
identify a means of collecting this information. We request public
input to assist us in determining the number of such operations.
We estimated that the number of certifying agents would remain
constant during the years 1999, 2000, and 2001 because our research
indicates that the total number has remained unchanged since 1994.
Although we predicted in the Regulatory Flexibility Analysis that some
of the smallest entities may cease operation as a result of the NOP, we
know of new certifying agents that have begun certifying operations,
and others who intend to begin so after implementation of the NOP. We
also know of existing certifiers who have ceased their operations. We
further estimated that the number of organic inspectors would increase
by the year 2001. We based this estimate on information obtained from a
private organic inspector organization which indicated that each
inspector performed approximately 35 inspections in 1996. Using this
average of 35 inspections per inspector, we estimate that 293
inspectors would be required in the year 2001 to inspect the estimated
10,238 operations to be certified.
The proposed regulation has certain requirements for laboratory
testing of products that are produced on certified organic farms or
wild crop harvesting operations and handled through certified handling
operations. These tests would be required to be conducted of certified
operations not less frequently than every five years; therefore,
approximately 20 percent of the total number of certified operations
would have products tested each year. Based on our estimate that 10,238
operations would be certified in the year 2001, we estimate that 2,048
operations would have products tested in that year. Other residue
testing may be conducted randomly of products at any point of
production or distribution. Pre-harvest tissue testing is proposed to
be conducted of crops grown on soil suspected of harboring a
contaminant. We estimate that certifiers would be required to collect a
combined total of 32 samples as part of this random and pre-harvest
testing, and would report violations of food safety laws to the
appropriate health agencies in 10 instances. We also propose that
producers, handlers, and wild crop harvesters report to their certifier
any instance of an application of a prohibited substance. We estimate
that 25 such instances would be reported to a certifier.
We estimate that approximately 30 foreign programs would submit
their programs to USDA in the year 1999 for review in order to seek
equivalency with the NOP. These programs are important to handlers of
multi-ingredient organic products, especially for the spices and
flavoring agents that cannot be produced in the U.S. We also estimate
that 15 approved foreign programs would be reviewed again by the
Secretary for continued equivalency in the year 2001 and that 5
approved programs would submit substantive program amendments to the
Secretary also in the year 2001.

Estimated Annual Reporting Burden
----------------------------------------------------------------------------------------------------------------
Average
Burden element Respondents Number of hours per Total hours Total cost
responses response
----------------------------------------------------------------------------------------------------------------
Monitor for measurable Farmers/handlers, 2,560 4.00 10,238.00 $102,380
degradation of soil and water. harvesters.
Petition to add to the National Interested parties. 5 10.00 50.00 500
List.
Development of a label........... Farmers/handlers, 17,056 2.00 34,113.00 682,260
harvesters.
Application for certification.... Farmers/handlers, 8,210 1.00 8,210.00 82,100
harvesters.
Farm organic plan (crops) \1\.... Farmers............ 7,049 14.75 103,972.75 1,039,730
Farms with livestock \2\..... Farmers............ 3,525 3.00 10,575.00 105,750
Split farms \2\.............. Farmers............ 1,762 2.50 4,405.00 44,050
Wild crop organic plan........... Harvesters......... 150 9.50 1,425.00 14,250
Handler organic plan............. Handlers........... 1,011 13.00 13,143.00 131,430
Handler split operation \2\.. Handlers........... 759 5.00 3,795.00 37,950
Statement of compliance to USDA Farmers/handlers, 8,210 0.50 4,105.00 41,050
regulations. harvesters.
Inspector report................. Inspectors......... 10,240 4.00 40,960.00 409,640
Determination of certification Certifying agents, 8,254 1.24 10,209.10 102,090
status \3\. farmers/handlers,
harvesters.
Annual continuation of Farmers/handlers, 10,238 3.78 38,648.70 386,490
certification. harvesters.
Notification to certified Certifying agents.. 2,561 2.23 5,711.44 114,220
operation of non-compliance.
Certifying agent notification of Certifying agents.. 12,769 0.85 10,848.20 216,960
Administrator \4\.
Accreditation requirements (other Certifying agents.. 8,272 03.06 25,344.00 506,880
than recordkeeping) \5\.
Accreditation application........ Certifying agents.. 44 1.67 73.50 1,480
Evidence of ability to certify... Certifying agents.. 44 23.28 1,024.50 20,500
Statements of agreement.......... Certifying agents.. 44 0.69 30.25 600
Peer review panel \6\............ Panel members, 72 11.00 792.00 15,840
certifying agents.
Annual continuation of Certifying agents.. 44 10.36 456.00 9,120
accreditation.
Transfer of records to Secretary. Certifying agents.. 2 40.00 80.00 1,600
Suspended certifying agent Certifying agents.. 1 16.00 16.00 320
submits new application.
State program application........ State officials.... 11 42.73 470.00 9,400
Periodic sampling for compliance. Certifying agents.. 2,048 3.00 6,144.00 122,880

[[Page 65863]]

Additional sampling and residue Certifying agents.. 22 3.00 66.00 1,320
testing.
Report residue and pre-harvest Certifying agents.. 20 0.50 10.00 200
test results.
Report application of prohibited Certifying agents, 25 0.15 3.75 80
substances. farmers/handlers,
harvesters.
Equivalency of foreign programs.. Foreign program 30 128.33 3,850.00 77,000
officials.
---------------------------------------------------------
Total........................ ................... ........... ........... 338,771.00 4,278,034
----------------------------------------------------------------------------------------------------------------
\1\ We do not have information to estimate the number of livestock operations that do not produce crops;
therefore, it is not possible to estimate the burden hours for such an operation.
\2\ Estimated hours for farms with livestock and split operations are in addition to the hours needed to
complete a farm plan for crops or a handler plan.
\3\ Respondents in the determination of certification status include 44 certifying agents who determine to grant
or deny certification to 8,210 applicants. The time elements include the exchange of information necessary for
a certifying agent to decide whether to grant or deny certification, issuance of a certificate, and
notification of the Administrator when certification is denied and when applicants do not reapply.
\4\ Notification of certification status includes notification of the Administrator by the certifier of both the
operations that have been certified and those operations not in compliance. We estimate that about 25 percent
of all operations will not be in compliance, and would be granted a continuation of certification with
restrictions.
\5\ The burden elements accounted for in this entry are not mentioned in other sections of the proposed rule.
These include the time necessary to provide information to persons seeking certification and to establish a
State or certifying agent logo, seal or identification.
\6\ We estimate that 72 persons (50 peer review pool members and 22 certifying agents) would participate in the
peer review panel process.

Annual Reporting and Recordkeeping Burden:
Estimated number of respondents: 13,967.
Total annual hours: 377,171.
Total Cost: $ 4,663,349.
It is important to note that the burden being reported is an
estimate of the amount of time that would be required of program
participants. It is not a measurement of the burden that would be
required of existing certifying agents and currently certified farmers,
harvesters and handlers in addition to the reporting and recordkeeping
activities that they currently perform. In writing the proposed
regulation, we carefully reviewed existing industry practice and made
every effort to incorporate the documents and practices currently being
used within the industry as a means of minimizing reporting and
recordkeeping costs when the program begins full operation.
The USDA encourages farmers, handlers and certifiers to use any
electronic means available to them to create, submit and store records,
including: keeping data base records of crops or livestock produced on
operations that are certified; lists of farm and handling operations
and their location; creating certification or training documents;
maintaining business accounting records; and sending documents by fax
or over the Internet. Research of the industry indicates that most
certifiers use electronic data creation and storage, fax machines, and
the Internet. Some farm and handling operations use computers and word
processors for their recordkeeping. Based on this information, we
estimated that 25 percent of the collection of information would be
performed by automated, electronic, mechanical, or other technological
means. We request comments to help assess the number of organizations
using computers, word processors, and other electronic equipment to
create and store documents, as well as the extent to which the Internet
is used to exchange information.
Additionally, comments are invited on: (1) whether the proposed
collection of information is necessary for the proper performance of
the functions of the USDA, including whether the information would have
practical utility; (2) the accuracy of the USDA's estimate of the
burden of the proposed collection of information, including the
validity of the methodology and assumptions used; (3) ways to enhance
the quality, utility, and clarity of the information to be collected;
and (4) ways to minimize the burden of the collection of information on
those who are to respond, including the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology. Comments should be sent to:
Office of Management and Budget, New Executive Office Building, 725
17th Street, N.W., Room 725, Washington, DC 20503, Attention: Lisa
Grove, Desk Officer. Comments also should be sent to: Don Hulcher,
Clearance Officer, USDA-OICO, Room 404W, Jamie Whitten Building, Ag
Stop 7602, P.O. Box 96456, Washington, DC 20090-6456. Additionally,
comments may be sent by fax to (202) 690-4632 or submitted via the
Internet through the National Organic Program's homepage at: http://
www.ams.usda.gov/nop.

[[Page 65864]]

Comments are best assured of having full effect if they are received
within 30 days after publication of the proposed rule in the Federal
Register.

National Organic Program Overview

Pursuant to the OFPA, this rule proposes regulations for the
production, handling and marketing of organically produced agricultural
products and for the management of the National Organic Program. The
major components of the national organic program are summarized below.
A reference to the placement of the regulatory text of the summarized
topic is entered at the end of each program component's summary.
Definitions: Various terms used in the proposal are defined to
ensure that regulatory requirements that must be met are clear. Subpart
A.
Production and handling requirements: The OFPA requires that
national standards be established for the organic production and
handling of agricultural products. Agricultural products are any
agricultural commodity, whether raw or processed, including any
commodity or product derived from livestock that is marketed in the
United States for human or livestock consumption. To establish
consistent national standards for organic production and handling of
agricultural products, this proposed rule provides for the
implementation of a system of organic farming and handling that is
consistent with the provisions of the OFPA. The standards proposed
would apply to the production of crops and livestock and the harvesting
of wild crops, and to fresh or processed agricultural products that
are, or that are intended to be, sold, labeled, or represented as
organically produced or as containing organic ingredients.
The proposed regulation provides for flexibility in the application
of the proposed national organic standards and takes into account
specific conditions that may occur at different production and handling
sites. Under the proposal, each organic farmer and handler would be
required to develop an organic plan for their operations. The plan
would be evaluated and approved by an accredited certifying agent if it
were determined to meet the requirements of the OFPA and the
regulations promulgated under the OFPA. The performance of each farmer
and handler in meeting the approved practices in their organic plans
would be monitored by their certifiers. Subpart B.
National List: This proposal includes a National List of allowed
synthetic substances that can be used, and provides for the development
of a list of non-synthetic substances that cannot be used, in the
production and handling of organically produced agricultural products.
The NOSB provided recommendations to the Secretary with regard to
synthetic substances it believed should be permitted to be used and the
non-synthetic substances it believed should be prohibited for use. The
Act establishes the criteria that must be considered before a synthetic
substance can be placed on the National List of substances approved for
use, and criteria that must be considered before a non-synthetic
substance can be placed on the National List of substances prohibited
for use. A procedure for petitioning the Secretary and the NOSB to have
changes made to the National List of substances approved or prohibited
for use is incorporated in the proposed regulations. Subpart B.
Labeling: This rule proposes regulations for the label, labeling,
and market information for organically produced agricultural products.
The proposal applies to agricultural products that contain various
percentages of organic ingredients. The proposal also provides for the
use of the USDA organic seal, States' organic seals, and a certifying
agent's name, seal or logo, under certain conditions. Subpart C.
Certification: The proposed rule provides the requirements and
procedures for farms, wild crop harvesting operations, and handling
operations applying for organic certification under the NOP. The
proposed rule would permit Indian tribes that as an entity operate a
farm, a wild crop harvesting operation, and/or a handling operation, as
well as individual tribal members who carry out such operations, to
apply for organic certification for these operations. The application
process for certification and the requirements that must be met to
obtain certification, including the submission of an organic plan, are
in the proposed regulations. The proposed regulations provide, in
accordance with the Act, that the determination of whether a farm, wild
crop harvesting, or handling operation should be certified as an
organic farm, wild crop harvesting, or handling operation, would be
made by certifying agents accredited by the Secretary. If a certifying
agent initially determines that certification should not be granted,
the proposed rule allows the applicant for certification to reapply
under certain conditions. Additionally, the proposed rule provides for
the denial of an application for certification and the termination of
certification. It also provides for notice of these actions to the
applicant or certified operation and an opportunity for the applicant
or certified operation to respond to the notice prior to the denial or
termination action. Subpart D.
Accreditation: This proposed rule establishes an accreditation
program for persons who want to be accredited as a certifying agent.
Persons who could become accredited if they meet the OFPA's
requirements for accreditation would include Indian tribes or
individual tribal members. Accredited certifying agents would be
authorized to certify operations that meet the requirements of the OFPA
and the regulations in part 205 as certified farms, certified wild crop
harvesting operations, and certified handling operations. State
governing officials and private persons may apply for and be accredited
by the Secretary as certifying agents. Qualifications needed to obtain
and to maintain accreditation are specified in the proposed rule.
Procedures for denying, terminating, and suspending accreditation also
are proposed. Subpart E.
State organic programs: This proposal permits States to establish
or continue to operate their own organic programs, provided that the
program reflects the requirements of the OFPA and its implementing
regulations, and is approved by the Secretary.
In order for a State program to be approved as meeting the general
requirements set forth in section 2107 of the OFPA (7 U.S.C. 6506), the
program must have regulatory provisions that meet the following
requirements: (1) provide that an agricultural product to be sold or
labeled as organically produced must be produced only on certified
organic farms and handled only through certified organic handling
operations in accordance with the OFPA's requirements and be produced
and handled in accordance with such program; (2) require that producers
and handlers desiring to participate under such program establish an
organic plan as provided for in section 2114 of the OFPA (7 U.S.C.
6513); (3) provide for procedures that allow producers and handlers to
appeal an adverse administrative determination under this Act; (4)
require each certified organic farm, certified organic wild crop
operation, and each certified organic handling operation to certify to
the governing State official, on an annual basis, that such farmer or
handler has not produced or handled any agricultural product sold or
labeled as organically produced except in accordance with this title;
(5) provide for annual on-site inspection by the certifying agent of
each farm, wild crop

[[Page 65865]]

harvesting, and handling operation that has been certified under the
OFPA requirements; (6) require periodic residue testing by certifying
agents of agricultural products that have been produced on certified
organic farms and handled through certified organic handling operations
to determine whether such products contain any pesticide or other
nonorganic residue or natural toxicants and to require certifying
agents, to the extent that such agents are aware of a violation of
applicable laws relating to food safety, to report such violation to
the appropriate health agencies; (7) provide for appropriate and
adequate enforcement procedures; (8) protect against conflicts-of-
interest; (9) provide for public access to certification documents and
laboratory analyses that pertain to certification; (10) provide for the
collection of reasonable fees from producers, certifying agents and
handlers who participate in the program; and (11) require such other
terms and conditions as may be determined by the Secretary to be
necessary.
Once a State program is approved, farm, wild crop harvesting, and
handling operations in that State that wish to sell, label, or
represent their product as organically produced would have to be
approved as a certified operation under the State program. The
determination as to whether or not a farm, wild crop harvesting, or
handling operation meets a State's certification requirements would be
made by an agent accredited by the USDA under the National Organic
Program. The accredited agent who would make this determination either
can be a private person who has been accredited by the USDA or a
governing State official who has been accredited by the USDA.
In order to be certified under the State program, an operation
would have to meet the State certification requirements. These
certification requirements, as discussed previously, must reflect the
requirements in the National Organic Program. Thus, certified
operations in States that have their own program would be producing
products that are represented as organically produced in accordance
with the requirements of the National Organic Program that have been
included in the State program, in accordance with section 2107 or the
OFPA (7 U.S.C. 6506). Therefore, the provisions set forth in our
proposal in part 205 would be applicable to operations that are located
in States that have their own programs since these provisions would be
included in programs that are approved by the Secretary.
States, however, could have requirements that are in addition to
those of the NOP if they are approved by the Secretary and meet the
statutory criteria for approval. This means that if a State has applied
for, and received, approval from the Secretary for requirements in its
program that are in addition to those in the NOP, farm, wild crop
harvesting, and handling operations that operate in that State would
have to comply with these additional requirements that have been
approved. However, a State would not be allowed to require farm, wild
crop harvesting, and handling operations in other States to comply with
any additional requirements that the Secretary has approved for use by
that State.
Fees: The proposed rule establishes a system of fees to be paid by
farmers, wild crop harvesters, handlers, and certifying agents based on
the services provided to them by the USDA. The fees collected from
applicants for accreditation and from accredited certifying agents
would be for reviewing applications and annual reports, performing
administrative services for the benefit of all accredited certifying
agents, and for conducting site evaluations to evaluate the certifying
agent's performance. The fees collected from farmers, wild crop
harvesters, and handlers would be assessed as a fixed fee for each
category. Farmers, wild crop harvesters, and handlers operating under a
State organic program would pay fees directly to USDA. Subpart F.
Compliance review and other testing: This proposal establishes a
system for sampling and testing organically produced and handled
products. It provides for pre-harvest tissue testing and residue
testing to aid in enforcement of the regulations. Subpart F.
Appeals: The OFPA provides for the Secretary to establish an
expedited administrative appeals procedure under which persons may
appeal an action of the Secretary or a certifying agent under this
title that adversely affects such person or is inconsistent with the
organic certification program established under this title. This
proposal provides a procedure for the appeal of these actions. Subpart
F.
Equivalency of imported organic products: This proposal, in
accordance with the OFPA, permits organic products produced and handled
in foreign countries to be imported into the United States, and
represented as organically produced, under certain conditions. These
products would have to be produced and handled under an organic
certification program that provide safeguards and guidelines that are
at least equivalent to the requirements of the OFPA and the National
Organic Program. Under this proposal, the Secretary would review and
approve, if equivalent, the foreign organic programs. Subpart F.

Subpart A--Definitions

A number of the definitions provided in this proposed rule are
terms defined in the Act, and for these definitions we have used the
language provided in the Act. Some definitions are discussed in other
parts of the supplementary information and other definitions provided
are self-explanatory. However, for certain definitions, we have
discussed below our reasons for establishing these definitions to help
ensure that appropriate and consistent procedures are followed in
complying with other requirements proposed here.
Active ingredient is a term found in section 2118(c)(1)(B)(i) of
the OFPA (7 U.S.C. 6517(c)(1)(B)(i)). This section describes categories
of substances that may include active synthetic ingredients that may be
considered to be included on the National List. Although the Act does
not specifically define the term active ingredient, EPA does define
this term in section 2(a) of the Federal Insecticide, Fungicide, and
Rodenticide Act (FIFRA) (7 U.S.C. 136(a)), as amended. The EPA defines
the term active ingredient to be pesticides, herbicides, and other
substances covered by the FIFRA. We have included the EPA definition of
active ingredient as one of our definitions for this term, i.e., the
definition that covers active ingredients in pesticide formulations.
The EPA definition, however, does not cover the full scope of all
active synthetic substances that the Act would authorize for inclusion
on the National List. Therefore, our other proposed definition for
active ingredients, ``active ingredients in any input other than
pesticide formulations'', covers these other substances. One type of
substance that is included in this definition of active ingredient is a
substance used in any aspect of organic production or handling that
becomes chemically functional within an agroecosystem. A chemically
functional substance is one that would be absorbed by plants or that
would affect soil chemistry when used as permitted under this proposal,
such as a micronutrient or a cation balancing agent. Substances or
materials that do not fit this description, such as plastic mulches,
sticky barriers or row covers, thereby would not be considered as

[[Page 65866]]

active ingredients under this definition. Our proposed definition also
covers substances required to be listed as ingredients or additives on
food labels, but it does not include incidental additives and
processing aids that are not required to be listed on food labels.
The agroecosystem is a term that encompasses all the elements of a
system of organic farming and handling, and as such is the primary
focus of the proposed organic crop and livestock production standards.
Section 2119(m)(5) of the OFPA (7 U.S.C. 6518(m)(5)) specifically
indicates that the effects of a substance on the agroecosystem is a
criterion that must be evaluated before a synthetic substance can be
included on the National List of substances allowed for use.
Biodegradable refers to a specific quality of a material or
substance that is used on or applied to the soil that makes the
material or substance susceptible to biological decomposition. Most
biodegradable materials are organic matter obtained from plant or
animal sources. A material such as plastic that is not biodegradable
will resist decomposition and persist in the soil, and may enter into
unknown chemical interactions with soil and water. While chemical
degradation of non-biodegradable materials into simpler compounds
eventually occurs, this process happens very slowly compared to
biological decomposition. The use of non-biodegradable materials as
production inputs is considered to be incompatible with a system of
organic farming or handling because they may leave residues of
synthetic substances in the soil.
Chapter is defined here with reference to our proposal for the
accreditation of certifying agents in subpart E. We are aware of two
existing certifying agents that each operate as a single certification
body through a system of chapters. We believe that this is an
acceptable practice. Such chapters would, however, be expected to
comply with the Act and the regulations in this part.
Commercially available is a term that was the subject of extensive
deliberation by the NOSB, and our proposed definition reflects their
recommendation. We believe that this definition is essential in order
for producers and handlers to make appropriate decisions about whether
it is necessary to use certain materials, such as the use of non-
organically produced planting stock or livestock feed. It also is
necessary to help certifying agents evaluate whether the use of such
materials is justified or should be discontinued.
Contaminant is a term used in section 2112(b) of the OFPA (7 U.S.C.
6511(b)) with reference to substances that persist in the environment,
that may be suspected to be present in soil, and which may necessitate
a preharvest tissue test of crops grown on that soil to determine the
level of the contaminant in an organically produced crop.
Cytotoxic mode of action is used in sections 205.9(f) and 205.21(a)
of subpart B to describe the activity of a type of synthetic substance
that is prohibited for use in organic production. Substances of this
type chemically interact with plant and animal cells and interfere with
normal cell functions. Our definition describes synthetic substances
that are cytotoxic and that, therefore, would be prohibited for use.
Degradation is defined to allow organic producers, handlers and
certifying agents to accurately identify when the use of a practice or
substance that is otherwise permitted under this proposal should be
ended or modified. This would occur when it results in measurable
degradation of soil or water quality. For example, if nitrate levels in
an adjacent well are found to increase over two or more crop years
following application of a highly soluble mined source of nitrogen to
soil, as set forth in proposed section 205.7 (c)(2) of subpart B, then
the practice would have to be terminated or modified to prevent further
adverse effects on water nitrate levels.
Detectable residue level (DRL) is proposed for the purposes of this
part as being a residue of a pesticide or other prohibited substance
that is five percent or greater than the established EPA tolerance
level for the product that was tested, provided that if there is no
tolerance level established but an action level has been established,
the DRL will be the action level established by the FDA for the product
tested. EPA tolerance levels, expressed in terms of parts of a
pesticide residue per million parts of the food (ppm), refer to the
amount of a pesticide residue that may be present in or on a raw
agricultural commodity, processed food or processed feed. These
tolerance levels are listed in 40 CFR Part 180 (raw agricultural
commodities), Part 185 (processed foods) and Part 186 (processed feed).
The FDA action levels are used to regulate the occurrence of very low
levels of pesticide residues that result from the persistence of a
pesticide in the environment and for which there is no tolerance level
established by EPA. The action levels for certain pesticides found as
residues in agricultural commodities, processed foods or processed
feeds are listed in the FDA publication entitled ``Action Levels for
Poisonous or Deleterious Substances in Human Food and Animal Feed.''
Certain pesticide residues may not be detectable by available residue
testing techniques at a level as low as five percent of the EPA
tolerance level; in these cases, we would consider the detectable
residue level to be the lowest level measurable by available
techniques.
The purpose of defining the DRL at the proposed levels is to
establish a practical level for determining when to conduct an
investigation, as required in section 2112(c)(2)(B) of the OFPA (7
U.S.C. 6511(c)(2)(B)), to determine when a residue is the result of an
intentional application or when it is justified by site-specific
unavoidable residual environment contamination due to the persistence
of the detected substance. The proposed DRL should help eliminate
unnecessary investigations and test procedures and is within the range
of tolerance levels developed by existing State and private organic
programs. As discussed with reference to unavoidable residual
environmental contamination, the Secretary would establish on a case by
case basis the residue levels which would indicate that a prohibited
substance had been intentionally applied.
Fertilizers are addressed in section 2109(b)(1) of the OFPA (7
U.S.C. 6508(b)(1)), which prohibits the use in organic production of
fertilizers that contain synthetic ingredients or any commercially
blended fertilizers that contain prohibited substances under the Act or
a State program. Although the Act does not define the term fertilizers,
we have proposed a definition in order to clarify the kinds of
synthetic soil amendment substances that may be considered for
inclusion on the National List. Our proposed definition of fertilizers
is consistent with those used by various State agencies that regulate
the labeling of fertilizers, and refers to materials that supply the
major plant nutrients nitrogen, phosphorus and potassium. Synthetic
mineral substances, such as micronutrients and cation balancing agents,
which do not supply quantities of the three major plant nutrients,
would not be considered fertilizers under this definition and could,
therefore, be considered for inclusion on the National List because
they are not prohibited under section 2109(b)(1) of the OFPA (7 U.S.C.
6508(b)(1)).
Incidental additive is defined so that handlers clearly know that
the substances included in this category may be used in handling
organic

[[Page 65867]]

products, even though the incidental additive itself may not be
included on the National List.
Inert ingredient refers to any substance or group of structurally
similar substances if designated by the EPA, other than an active
ingredient that is intentionally included in a pesticide or formulated
product. Inert ingredients used in pesticides are specifically
regulated by EPA and have been classified by EPA with respect to their
relative toxicity. This EPA classification of inert ingredients is
referred to in Section 2118(c)(1)(B)(ii) of the OFPA (7 U.S.C.
6517(c)(1)(B)(ii)) and has been used in this proposal to indicate the
types of inert ingredients that may be used in any pesticide product
allowed for use on a certified farm or handling operation.
However, the EPA definition does not cover the full scope of inert
ingredients that may be used in formulated products allowed for use in
organic farming. Our proposed definition of this term also includes
inert ingredients intentionally included in any product used in organic
crop production, such as fertilizers or foliar sprays.
Non-agricultural ingredient is a term we use in various sections of
this proposal to delineate the type and category of substances allowed
for use as ingredients in or on organically produced agricultural
products if the substance is included on the National List in section
205.26 of subpart B. As discussed in the supplementary information
section in reference to the National List, we have used this term in
order to accurately describe those substances that would satisfy the
provisions of section 2118(c)(1) of the OFPA (7 U.S.C. 6517(c)(1))
related to handling.
Non-synthetic is a term used throughout our proposal to describe
those substances that are not synthetic. As discussed in the
supplementary information for the National List, we determined that
this term is more appropriate than the word natural, which is not
defined in the Act and which has other regulatory and marketing
meanings.
Packaging is defined here as any material used to wrap, cover, or
contain an agricultural product, and also includes wax applied directly
to an edible surface of an agricultural product. This definition is
proposed in response to the public input that expressed concerns that
waxes that contain synthetic fungicides or preservatives may be used on
organic products, such as fresh produce or cheese. We believe that this
definition is needed to implement the prohibition against the use of
packaging materials containing such prohibited substances, as set forth
in section 2111(a)(5) of the OFPA (7 U.S.C. 6510(a)(5)), to any
material that contacts an edible surface of an organic product.
Production aid is any substance, material, device or structure, but
not an organism, that is used to produce an agricultural product. A
production aid may or may not be synthetic, and may or may not function
as an active ingredient. Examples of production aids are provided in
section 2118(c)(1)(B)(i) of the OFPA (7 U.S.C. 6517(c)(1)(B)(i)) and
include netting, tree wraps and seals, insect traps, sticky barriers,
row covers, and equipment cleansers. Any production aid that is
determined to be active and synthetic must appear on the National List
in either sections 205.22 or 205.24 of subpart B before it may be used
in organic farming.
Putrefaction is defined in order to clarify the reasons why plant
and animal materials that are prone to putrefaction are less preferable
for use in proper manuring practice than those materials that are not
prone to putrefaction, as proposed in section 205.7 of subpart B.
Soil quality is a term that serves as a central performance
standard for the use of any method or substance in an organic farming
system, in that such use may not result in measurable degradation of
soil or water quality, as proposed in section 205.3(b)(1). In order to
determine whether a given operation is in compliance with the
regulations, farmers and certifiers must have a clear understanding of
what soil quality is and how it may be measured. Our proposed
definition of this term encompasses physical, chemical and biological
soil quality indicators that could readily be measured or observed at a
given location. Examples of soil quality indicators commonly measured
in organic farming systems include erosion, aggregation, compaction,
drainage, organic content, nutrient content, pH, cation balances,
presence of contaminants, leaf tissue analysis, presence of indicator
weed species, presence of pathogens, earthworm populations, and legume
nodulation.
Subtherapeutic is a term used in section 2110(d)(1)(A) of the OFPA
(7 U.S.C. 6509(d)(1)(A)) to refer to a dosage level of antibiotics that
is prohibited for administration to organically managed livestock. Our
proposed definition of this term indicates one of the circumstances in
which use of an antibiotic is prohibited.
System of organic farming and handling is a term used throughout
our proposal to refer to the general set of principles and objectives
of the Act. This term also serves as the foundation of the organic
production and handling provisions proposed here, and is discussed more
fully in the supplementary information that introduces Subpart B.
Unavoidable residual environmental contamination (UREC) is a term
used in section 2112(c)(2)(B) of the OFPA (7 U.S.C. 6511(c)(2)(B))
which we define as the residue level of a prohibited substance that
could be expected to exist in the soil at, or in a product originating
from, a specific production site to which the prohibited substance had
not been applied for a minimum of three years. If a residue test of an
organically produced product originating from a specific certified site
reveals a detectable residue level of a prohibited substance, then the
UREC level for the specific certified site would be determined by the
Secretary in consultation with the applicable governing State official,
and the appropriate environmental regulatory agency. A product found to
contain a detectable residue level exceeding the UREC level for the
specific site may not be sold or labeled as organic.

Subpart B--Organic Crop and Livestock Production and Handling
Requirements

Introduction

USDA's proposed requirements for organic farming and handling,
encompassed in subpart B, sections 205.3, 205.5 through 205.9, and
205.11 through 205.28, set forth the requirements for organic crop
production, wild crop harvesting, organic livestock production, organic
handling, and for products and substances allowed and prohibited in
organic farming and handling. These requirements are proposed to
implement the purposes of the Act as set forth in section 2102 of the
OFPA (7 U.S.C. 6501) to establish national standards governing the
marketing of organically produced agricultural products; to assure
consumers that organically produced products meet a consistent
standard; and to facilitate interstate commerce in fresh and processed
food that is organically produced. Section 2106 of the OFPA (7 U.S.C.
6505) requires that any agricultural product that is sold or labeled as
organically produced be produced and handled in accordance with the
standards established under the Act. Section 2118 of the OFPA (7 U.S.C.
6517) requires that a National List of substances approved and
prohibited for use in organic farming

[[Page 65868]]

and handling established by the Secretary be included in the standards.
Active synthetic substances must appear on the National List as
approved substances in order to be used in organic production, and a
non-synthetic (natural) substance may not be used if it appears on the
National List of substances prohibited for use.
We would like to point out that the word substance is used in a
variety of ways in this docket. When the word substance refers to a
material that meets the OFPA's definition of a synthetic substance, it
is described as a ``synthetic substance''. When the word substance
refers to a non-synthetic material (i.e., natural material), which is
one that does not come within the OFPA's definition of a synthetic
substance, it is described as a ``non-synthetic substance.'' When the
word substance refers to a material prohibited for use in the organic
program, whether it be synthetic or non-synthetic (i.e., natural), it
is described as a ``prohibited substance.'' An example of such a
prohibited material is a synthetic substance that does not appear on
the National List of synthetic substances permitted for use in organic
farming and handling. When the word substance is used without any
modifiers, it is used to describe all materials (substances),
regardless of whether such substances are synthetic or non-synthetic,
or prohibited or allowed for use in organic farming and handling.
We have crafted this subpart to be consistent with the requirements
of the Act, including its principles for organic farming and handling
systems. Although the Act does not specifically define what a system of
organic farming and handling is, it does refer in sections 2103(4) and
(5) of the OFPA (7 U.S.C. 6502(4) and (5)) to a system of organic
farming and a system of organic handling, respectively, as described in
the Act. In order to establish consistent national standards for
organic production and handling, we have determined that it is
necessary to define what a system of organic farming and handling is,
and to describe those practices that are consistent with such a system.
Another purpose of this definition will be to provide an explicit point
of reference for the organic industry to make determinations as to
whether various practices and substances are consistent with organic
farming and handling. We further expect the proposed definition of a
system of organic farming and handling to serve as a reference point
for program matters it is determined need further development.
We have defined a system of organic farming and handling to be: a
system that is designed and managed to produce agricultural products by
the use of methods and substances that maintain the integrity of
organic agricultural products until they reach the consumer. This is
accomplished by using, where possible, cultural, biological and
mechanical methods, as opposed to using substances, to fulfill any
specific function within the system so as to: maintain long-term soil
fertility; increase soil biological activity; ensure effective pest
management; recycle wastes to return nutrients to the land; provide
attentive care for farm animals; and handle the agricultural products
without the use of extraneous synthetic additives or processing in
accordance with the Act and the regulations in this part.
Our proposed definition has been derived from the underlying
premises of what constitutes organic farming and handling systems, as
reflected in various provisions of the Act. This definition also is
consistent with the definitions and principles established by the
existing public and private organic programs that we have reviewed and
the definitions and principles of organic agriculture and production
systems adopted by the National Organic Standards Board. The principles
reflected in our definition of a system of organic farming and handling
are incorporated in the regulations we are proposing.
The concept of maintaining the integrity of organic agricultural
products is established by one of the purposes of the Act, stated in
section 2102(2) of the OFPA (7 U.S.C. 6501(2)), to assure consumers
that organically produced products meet a consistent standard. The Act
generally delineates methods and substances that may or may not be used
in organic farming and handling in furtherance of this purpose.
Additionally, in section 2104 of the OFPA (7 U.S.C. 6503) it
specifically provides for an organic certification program for
producers and handlers of organic agricultural products. Such a program
helps to ensure the integrity of organic products.
There is a preference for the use of cultural, biological and
mechanical methods wherever possible, as opposed to using substances,
in organic farming and handling. Examples of methods that do not
involve the use of any substances are the planting of green manure
crops instead of applying fertilizer substances, and the use of crop
rotations and disease resistant plant varieties instead of applying
disease-suppressing substances. Section 2105(1) of the OFPA (7 U.S.C.
6504(1)) provides that an organically produced agricultural product
must be produced and handled without the use of synthetic chemicals,
except as otherwise provided for in the Act. Further, the Act provides
in section 2118 (7 U.S.C. 6517) a detailed scheme and criteria for
determining whether a particular active synthetic substance may be
exempted from the general prohibition on the use of synthetic
chemicals, and further provides in that section for the prohibition of
the use of certain substances that are not synthetic. Also, the Act
specifically directs in section 2119(m)(6) of the OFPA (7 U.S.C.
6518(m)(6)) that the NOSB consider the use of practices or other
available materials as alternatives to a synthetic substance being
included on the National List. Furthermore, the use of certain
substances in organic crop and livestock production and organic
handling is specifically prohibited in several provisions of the Act,
such as portions of sections 2109, 2110, and 2111 of the OFPA (7 U.S.C.
6508, 6509 and 6510). Therefore, we are proposing in our definition of
a system of organic farming and handling that, where possible,
cultural, biological and mechanical methods, as opposed to using
substances, are preferred. These provisions support the concept that
both non-synthetic substances and methods that do not involve the use
of any substances, such as cultural, biological, and mechanical
methods, are preferred alternatives to the use of synthetic chemicals.
The tenets of maintaining long-term soil fertility and increasing
soil biological activity are established in section 2114(b)(1) of the
OFPA (7 U.S.C. 6513(b)(1)), which requires that an organic plan contain
provisions designed to foster soil fertility, primarily through the
management of the organic content of the soil. The Act further
addresses soil biological activity in section 2119(m)(5) of the OFPA (7
U.S.C. 6518(m)(5)) when it requires that the physiological effects of a
synthetic substance on soil organisms be taken into consideration
before the substance is allowed for use in organic production.
The need for effective pest management methods in an organic
farming system is established in section 2109(c) of the OFPA (7 U.S.C.
6508(c)) which prohibits the use of certain substances and materials
for the control of pests, weeds, and diseases. This section, considered
together with the Act's prohibition of the use of most synthetic
chemicals in organic production systems, necessitates that crop pest
management methods be implemented that avoid the need to use

[[Page 65869]]

synthetic substances and materials. In addition, the inclusion of crop
rotation practices in an organic plan, as set forth in section
2114(b)(1) of the OFPA (7 U.S.C. 6513(b)(1)), is critical to
implementing effective pest management strategies and soil fertility
management in an organic farming system.
Recycling wastes to return nutrients to the land is a principle
expressed in the language of section 2114(b)(1) of the OFPA (7 U.S.C.
6513(b)(1)) which requires the fostering of soil fertility and which
provides for proper manuring to be used to manage soil organic content,
and in section 2114(b)(2) of the OFPA (7 U.S.C. 6513(b)(2)) which
delineates more specific requirements for the application of manure to
crops. Although the use of livestock manure is one means of complying
with this requirement, our proposed definition of proper manuring also
includes the use of other plant or animal wastes to improve soil
organic content and provide crop nutrients.
Attentive care for farm animals is implicit in the provisions of
sections 2110(c) and (d) of the OFPA (7 U.S.C. 6509(c) and (d)), which
specify what may or may not be fed to organically managed livestock,
prohibit certain health care practices, and require the NOSB to
recommend additional standards for the care of organic livestock. The
alternative to using the methods and practices prohibited under this
section of the Act is expressed by the concept of attentive care which
is essential when relying on management methods, rather than substances
such as medications, to maintain livestock health.
This proposed rule also incorporates the principle that organic
agricultural products are to be handled without the use of extraneous
synthetic additives and processing. Examples of extraneous additives
are synthetic preservatives, coloring agents and flavors. These are not
allowed because the Act, in section 6510(a)(1), prohibits the addition
of any synthetic ingredient during the processing or postharvest
handling of an agricultural product. Extraneous processing generally
involves the use of additional substances during and after the
processing. Extraneous processing would entail, for example,
unnecessarily subjecting a product to temperatures that degrade its
inherent antioxidant content, thereby requiring supplementation with an
antioxidant to maintain the product's stability.
Our proposed program encompasses all agricultural products, as
defined in section 2103 of the OFPA (7 U.S.C. 6502), and all aspects of
their production and handling, ranging from soil fertility management
to the packaging and labeling of the final product. Our requirements
address the systems used to produce an agricultural product rather than
the physical qualities of the product itself. No distinctions should be
made between organically and non-organically produced products in terms
of quality, appearance, or safety.
We believe that an effective regulatory scheme, which has to be
applicable to diverse types of operations and geographic regions must
be as flexible as possible and take into account site-specific
conditions. We accordingly have developed this proposal to provide,
within the parameters of the Act, provisions that take into account
site specific conditions without impairing the organic integrity of the
product produced. In creating this proposal, we examined various
examples of, and ideas for, such provisions, including standards
developed by existing organic programs, guidelines of international
organic interest groups and standards setting organizations,
recommendations of the NOSB, and suggestions provided in public input
received in the course of NOSB meetings and as response to NOSB draft
documents.
Existing organic certification programs, both State and private,
have grappled with the need to provide flexibility in their allowed
standards and procedures. One method that existing organic programs
have used is to distinguish in their standards between practices that
they consider to be acceptable for use without restrictions, those that
they consider to be acceptable for use only in certain conditions
(i.e., restricted practices), and those that they do not consider to be
acceptable for use under any circumstance. An example of restricted use
is illustrated by the case of botanical pesticides, which most organic
practitioners consider to be a last resort for pest control, and which
are considered acceptable for use only under certain circumstances.
Many existing organic certification programs have thus included such
substances within the area of restricted practices that must be closely
evaluated and justified by site-specific needs.
We have approached this need for flexibility by incorporating two
types of regulatory provisions into our proposed standards. The first
type of regulatory provision establishes, where appropriate, an order
of preference for selecting practices or materials. For example, we
propose in section 205.7(b) of subpart B an order of preferred
selection of five types of materials that would be acceptable for use
in proper manuring. We also propose in section 205.9 of subpart B an
order of preferred selection for the use of practices and substances to
prevent and control crop pests, weeds, and diseases. We would like to
solicit public comment as to whether or not the establishment of orders
of preference would impose an unnecessary burden on organic producers.
The second type of regulatory provision we propose would permit the
use of certain practices or substances only if necessary. The producer
or handler would base their determination of the need to use a
particular method or substance on site specific circumstances. The
basis for a producer or handler determining that a certain practice or
substance is necessary would be described in the organic plan, or
update to the organic plan, and would be reviewed and evaluated by the
certifying agent. An example of a practice that we are proposing be
used only if necessary is the use of non-organically produced
feedstuffs as a portion of an animal's feed ration, as proposed in
section 205.13(a) of subpart B.
A number of the regulations are written as performance standards.
Performance standards are generally written in terms of the results
expected, rather than the specific actions that must be taken to
achieve the desired result. An example of a performance standard is the
requirement proposed in section 205.3(b) of subpart B that the use or
application of any practice or substance must not result in measurable
degradation of soil or water quality. This proposed provision requires
that practices used in an organic operation be implemented in a manner
that maintains soil and water quality, but does not specify the
practices that have to be used.

Subpart B--Regulatory Overview

Subpart B of part 205 consists of USDA's proposed organic
production and handling requirements, and a proposed list of (1)
synthetic substances allowed and non-synthetic (natural) substances
prohibited for use in organic crop and livestock production and (2)
non-agricultural substances and non-organically produced agricultural
products allowed in or on processed organic products. The proposed
requirements for organic production and handling, and the provisions
for the proposed National List and use of substances, have been
integrated as a unified whole consistent with our

[[Page 65870]]

proposed definition of a system of organic farming and handling.
Section 205.3 (applicability) of subpart B delineates proposed
general requirements and conditions for organic production and
handling. Section 205.3 of subpart B includes the general requirement
that the use of any method or substance not result in measurable
degradation of soil or water quality. This section is followed by the
sections that set forth the requirements for organic crop production
(sections 205.5 through 205.9), wild crop harvesting (section 205.11),
organic livestock management (sections 205.12 through 205.15), and
organic handling (sections 205.16 through 205.19). Following the
sections on production and handling, sections 205.20 through 205.28
contain the proposed National List. The proposed National List
regulations consist of sections that describe the active synthetic
substances that are allowed for use in organic crop and livestock
production, the non-synthetic (natural) substances that are prohibited
for use in organic crop or livestock production, and the non-
agricultural and non-organically produced ingredients allowed in or on
processed organic products. (The OFPA does not require non-synthetic
(natural) substances allowed for use in organic crop and livestock
production, or non-organically produced products prohibited for use in
or on processed organic products, to be included in the National List).
Sections 205.20 and 205.21 summarize all of the categories and types of
substances allowed and prohibited for use in organic farming and
handling, as provided under the Act and the proposed regulations in
Subpart B.

Applicability--Section 205.3

In paragraph (a) of this section, we propose to establish the
requirement that any agricultural product that is sold, labeled or
represented as organic be produced in compliance with the relevant
proposed crop, wild crop, livestock and handling requirements,
including those of the National List. Crops and livestock would have to
be produced or harvested on a certified organic farming operation and
handled by a certified organic handling operation under a system of
organic farming and handling.
We propose in paragraph (b) of this section that any use or
application of a method or substance under these proposed requirements
must be used in accordance with all applicable requirements of part 205
and must not result in measurable degradation of soil or water quality.
This provision is proposed to clarify that all methods and substances
used in a certified operation shall be consistent with a system of
organic farming and handling, the purposes of the Act, and any other
requirements in the regulations in part 205. This provision also is
consistent with the recognition in the Act of the relation between
organic practices and soil and water quality.
In most instances we are not proposing to require that any specific
indicators of soil or water quality be monitored for compliance with
this provision. Rather, we expect that appropriate and reliable
indicators of soil or water quality would be chosen according to site-
specific considerations, such as the nature of the crops or livestock
being produced, the location and scale of the operation, and the kinds
of practices being used. By not requiring monitoring of specific
indicators, except in certain cases, we thus intend to leave the
decision as to whether to monitor the effects of a method or substance,
as well as the choice of indicators to be monitored, to the producer or
handler in consultation with the certifying agent. We would expect any
such monitoring activities to be described in the applicable organic
plan, and therefore subject to approval by the certifying agent, who
might require changes.
For example, if a certifying agent had some concerns about the
impact on soil quality of any practice, such as the planting of a
sloping field prone to erosion with corn or sorghum, the certifying
agent might require the producer to monitor erosion in that field to
ensure that soil quality was not being degraded. This could occur
following a review of an organic plan or any required annual inspection
of a certified operation. This provision also would address the
requirement set forth in section 2114(b)(1) of the OFPA (7 U.S.C.
6513(b)(1)) that soil fertility be addressed in an organic farm plan
for crop production. Additionally, a certifier who was concerned about
the compliance of a cattle feeding operation with the manure management
requirements proposed in section 205.15(c) might require that the
producer monitor nitrate levels in a nearby well to show that cattle
holding areas were not discharging manure-laden runoff into
groundwater. A wild crop harvester similarly might be required by a
certifier to estimate the population of the harvested plant species
that remain in a given area after each harvest, to ensure that the
harvesting was being done in compliance with section 2114(f) of the
OFPA (7 U.S.C. 6513(f)), which requires that harvesting does not
deplete the plant species being harvested (as proposed in section
205.11(b)).
Other indicators of soil or water quality that might be appropriate
to monitor, depending on the situation, would include: residues in soil
or water of substances prohibited for use in organic farming; soil
biological activity as indicated by earthworm populations; soil organic
matter and nutrient content; or soil compaction. It should be noted
that much of this monitoring activity is widely practiced in the course
of managing a farm or handling operation, and in many cases would
coincide with measurements, assessments or observations already being
undertaken routinely by a producer.
Although not required by statute, the NOSB recommended that
irrigation and water management be addressed within an organic farm
plan. At this time, however, we are not proposing regulations
specifically for the quality of irrigation water.
Section 205.3(b)(2) further would require that, if the same
function within an organic farming or handling operation may be
fulfilled by either a commercially available non-synthetic substance or
an allowed synthetic substance equally suitable for the intended use,
then the producer or handler must choose the non-synthetic substance in
preference to the synthetic substance if there is no discernable
difference between the two in terms of impacts on soil or water
quality. We recognize that such choices may seldom have to be made in
any operation. However, we are proposing this provision to further
reinforce the preference for the use of non-synthetic substances, as
opposed to synthetic substances, that is implicit in the Act, as
previously discussed. Any allowed synthetic substance will have been
evaluated by the NOSB according to section 2119(m)(6) of the OFPA (7
U.S.C. 6518(m)(6)), regarding alternative practices and available
materials, and our proposed requirement makes clear the choice
producers and handlers must make in a situation where an equally
suitable non-synthetic alternative is available.

Organic Crop Production Requirements

Land Requirements--Section 205.5

This proposed section addresses overall land management practices
that we have determined are needed to ensure that the area on which
organic crops are produced meets the requirements of the Act and the
proposed regulations in subpart B. We have proposed in paragraph (a) of
this

[[Page 65871]]

section, in accordance with section 2105 of the OFPA (7 U.S.C. 6504),
that land not have had any prohibited substances applied to it for at
least three years prior to harvest of an organically produced crop.
We are proposing further that any land on which organic crops are
produced have clearly defined and identifiable boundaries, as provided
under section 2107(b)(1)(A) of the OFPA (7 U.S.C. 6506(b)(1)(A)). We
believe that this requirement should apply to all land on which crops
are grown under organic management for two reasons. First, organically
managed fields must be clearly identifiable so that an inspector may
verify that the observed conditions on a farm operation are consistent
with the information provided by the producer in the application for
certification. Secondly, organically managed fields need to be clearly
identifiable to anyone who may be using prohibited substances on
adjoining lands in order to help prevent unintentional application of
prohibited substances to organically managed areas.
Paragraph (b) of this section would apply to any organically
managed land area that adjoins land that is not organically managed,
and would require that a producer implement, or propose a plan to
implement, some means to prevent the possibility of unintended
application of prohibited substances to land and contact of a
prohibited substance with the land from which organically produced
crops are to be harvested. This could be done through establishment of
physical barriers, diversion of runoff, buffer zones, or other means,
in accordance with section 2107(b)(1)(A) of the OFPA (7 U.S.C.
6506(b)(1)(A)). Existing State and private organic standards have
customarily required producers to establish and maintain adequate
buffer zones between adjoining organic and non-organic field units and
usually specify the minimum size of a buffer area. The information we
have reviewed indicates that such specific minimum size requirements
should not be included in our proposal because they would not be
applicable to every situation and could impose unnecessary burdens on
some organic producers.

Crop Rotation--Section 205.6

Crop rotations, or other means of ensuring soil fertility and
effective pest management, are the cornerstone of successful organic
crop production. They are essential considerations in establishing and
maintaining an organic farm system because they help to prevent pest,
weed and disease problems; disrupt crop pest, weed, and disease cycles;
provide habitat for beneficial organisms; stimulate positive biological
and chemical interactions in the agroecosystem; and maintain soil and
water quality in a manner that diminishes the need for the use of
synthetic substances.
Section 2114(b)(1) of the OFPA (7 U.S.C. 6513 (b)(1)) requires a
crop production farm (organic) plan to foster soil fertility through
practices that include crop rotation. Although the Act includes a
provision for crop rotations as a means of improving soil fertility,
crop rotations also serve additional critical functions in an organic
farming system. Primary among these functions are: the prevention of
weed, pest and disease problems by the planting of species that do not
support the pest organisms or that provide food or habitat for
beneficial insects; the stimulation of populations of beneficial soil
organisms, such as mycorrhizal fungi and predacious nematodes; and the
occurrence of alellopathic effects that suppress weed growth.
Such functions similarly may be accomplished by techniques other
than crop rotation. Additionally, crop rotation practiced in the
production of annual crops, such as corn or soybeans, may not be
feasible in the production of perennial crops, such as tree fruits or
hay. Therefore, we are providing for alternative practices to crop
rotations that also serve the purposes of ensuring soil fertility and
effective pest management.
Examples of alternative practices which a producer might use
include the following: one method would be to establish or preserve
non-agricultural areas such as hedgerows, wetlands, native prairies and
woodland, adjacent to or adjoining a farm or field, to serve, for
example, as habitat for beneficial organisms. A second related method
would be to plant species that serve this same function adjacent to or
between rows of crops. A third related method would be the use on
pasture areas of rotational or intensive grazing methods in which
animals are moved frequently to fresh pasture in order to optimize
nutritional content of the forage and extend the pasture season. Other
methods commonly used in managing perennial plantings, which cannot be
rotated from field to field, include interplanting, alley cropping,
strip cropping and introduction of livestock into perennial systems.
As proposed in section 205.2, a crop rotation is defined as the
practice of alternating the annual crops grown on a specific field in a
planned pattern or sequence in successive crop years, so that crops of
the same species or family are not grown repeatedly without
interruption on the same field during two or more crop years. This
rotation might include the use of sod, legumes or other nitrogen-fixing
plants, or green manures in alternation with cultivated crops. These
crops are universally recognized in the applicable literature as highly
desirable methods of improving soil organic matter content and long-
term fertility, as well as conferring other benefits associated with
crop rotation.
However, a producer could repeatedly plant the same species or
family in a given field over more than two crop years, provided that
practices which ensure soil fertility and effective pest management,
and which do not result in measurable degradation of soil or water
quality, as proposed in section 205.3(b)(1), are used. For example, use
of living mulches, such as clover interplanted between rows of carrots,
could accomplish the same result as a more frequent rotation of carrots
with other crops. Other examples of practices that might be used in
place of the rotation of annual crops are the application of large
amounts of leaf mulch or compost to beds in which the same crop family
is grown several seasons in succession by a small-scale vegetable
producer, and a grain operation in which early annual weeds may serve
as a green manure crop that replenishes soil fertility and provides the
other beneficial effects of crop rotations despite the continual
commercial production of a single species in a field.

Soil Fertility and Crop Nutrient Management--Section 205.7

Section 2114(b) of the OFPA (7 U.S.C. 6513(b)) requires that an
organic plan provide for the management of soil organic content through
proper tillage, crop rotation and manuring, thereby acknowledging the
importance of soil fertility for organic crop production. A fundamental
tenet of organic management systems is that the primary objective of
soil management is to nourish soil organisms which will in turn ensure
soil fertility and properly balanced crop nutrition. We have
incorporated this concept in drafting this proposal.
We consider the term proper manuring as used in section 2114(b) of
the OFPA (7 U.S.C. 6513(b)) to mean any use or application of plant or
animal materials, including green manure crops, to improve soil
fertility, especially its organic content. The use of compost and other
recycled organic wastes, whether or not they contain

[[Page 65872]]

livestock manure, are therefore considered to be part of proper
manuring. Any practice, however, that could contribute significantly to
water contamination by nitrates and bacteria, including human
pathogens, or otherwise result in measurable degradation of soil or
water quality, would accordingly not be considered proper manuring.
Section 2109(b) of the OFPA (7 U.S.C. 6508(b)) specifically
addresses prohibitions on the use of certain materials as fertilizers
and soil amendments; these provisions also are addressed in this
section of the proposal. The practices we propose for fertility and
nutrient management are also relevant to and essential for the
prevention of pest, weed and disease problems that might otherwise have
to be controlled through the use of synthetic substances.
Section 205.7(a) would require that any tillage or cultivation
implements and practices be selected and used by an organic producer in
a manner that does not result in measurable degradation of soil
quality. Soil physical qualities include soil structure, aggregation,
aeration, drainage and erodibility, all of which are indicators of soil
fertility. While we have not proposed to prohibit any specific tillage
or cultivation implement or practice, our proposal would require
producers to select tools and practices that do not harm soil quality.
For example, excessive use of rototillers has been shown to damage soil
structure and lead to accelerated loss of organic content, while
improper moldboard plowing may induce soil compaction. We would expect
an organic producer to manage such tools or practices so that no
measurable degradation of soil quality resulted.

Proper Manuring--Section 205.7(b)

In section 205.7(b) we propose the types of plant and animal wastes
that may be used in an organic system. These materials would represent
the methods, in conjunction with crop rotations and green manure crops,
that can be used to build soil organic matter and provide essential
crop nutrients in accordance with section 2114(b) of the OFPA (7 U.S.C.
6513(b)). The practices proposed are stated in an order of preference
for choosing among available alternatives because we believe that these
preferences most accurately reflect the concept of proper manuring. As
proposed here, the preferred choices in this order of preference are
for the practices that are least likely to result in measurable
degradation of soil or water quality. For example, the application of
compost, as provided in paragraph (b)(1) of this section, is least
likely to contribute to contamination of water by nitrates and
bacteria, including human pathogens, whereas uncomposted materials
having a high soluble nutrient content, as provided in paragraph (b)(3)
of this section, are more likely to adversely affect water quality.
Because section 2114(b)(2)(C) of the OFPA (7 U.S.C. 6513(b)(2)(C))
requires manuring practices to not significantly contribute to water
contamination by nitrates or bacteria, this section also would require
that any application of plant or animal waste materials does not do so.
The first choice of materials, as stated in paragraph (b)(1) of
this section, would be certain composted materials; these include
materials such as livestock manure, food processing wastes, crop
residues, spoiled hay and similar materials. The use of composted plant
and animal matter recycles nutrients and builds soil organic content
with minimal concern for measurable degradation of soil or water
quality, and is fully compatible with our proposed definition of a
system of organic farming and handling. This practice does not include
composts made with certain materials that may pose greater concerns for
soil or water quality, which are addressed in paragraphs (b)(4) and
(b)(5) of this section.
Paragraph (b)(2) of this section includes plant or animal materials
that are neither susceptible to anaerobic decomposition (which presents
potential odor and pathogen problems) nor high in soluble nutrients
(that may pollute water) and which therefore are suitable for
application to soil without first being composted. These materials are
the second best choice because applying them directly to soil permits
them to decompose and contribute to soil organic content and fertility,
thereby functioning in a manner similar to composted materials. This
choice also is consistent with the proposed definition of a system of
organic farming and handling because it furthers the use of methods in
preference to substances. Paragraph (b)(2) of this section would cover
materials such as seaweed, sawdust, peat, earthworm castings, leaves,
rice hulls and similar dry, stable substances. Well-aged and fully
decomposed animal manure that has not been subjected to a composting
process might also be used under proposed paragraph (b)(2) of this
section.
We propose in section 205.7(b)(3) to allow the use of agricultural
waste materials that are known to be susceptible to anaerobic
decomposition or that are high in soluble nutrients. These materials
are the third choice because they require care in use and application
in order to avoid causing measurable degradation of soil or water
quality. However, we believe that their use should still be permitted
because they are a potentially valuable source of soil organic content
and crop nutrients. Examples of such materials include food processing
wastes, such as fruit peelings or culls, slaughterhouse by-products,
fish wastes, whey, and highly nitrogenous plant concentrates like
alfalfa or soybean meal. This category also would include the use of
raw animal manure.
Section 2114(b) of the OFPA (7 U.S.C. 6513(b)) permits the
application of raw manure to any green manure crop, any perennial crop,
and any crop not for human consumption. This section of the OFPA also
restricts the use of raw manure, in that raw manure may only be applied
to a crop intended for human consumption if the crop is harvested after
a reasonable period of time determined by the certifying agent to
ensure the safety of the crop, but in no event may the period be less
than 60 days after the application of raw manure. Furthermore, section
2114 (b)(2)(C) of the OFPA (7 U.S.C. 6513 (b)(2)(C)) prohibits raw
manure from being applied to any crop in a way that significantly
contributes to water contamination by nitrates or bacteria.
Over recent months and years, there has been an increase in the
incidence of food borne illness caused by certain human pathogens found
in animal manure. In consideration of this increased incidence of
illness, this proposed regulation does not address in detail the use of
raw animal manure in crops intended for human consumption because of
the need to develop more and better scientific data regarding the
safety of the crop after application of raw manure. Although we
acknowledge that the use of animal manure, whether applied directly to
the field or composted, is common in organic agriculture, there is
inadequate data to make the determinations necessary regarding the
safety of the crop after application of raw manure. Similarly, data are
needed to make the determinations necessary to ensure that livestock
exposure to pathogens does not occur in cases where raw manure is used.
We are soliciting public comment and scientific and technical data
in regard to the minimum time which must pass before a crop raised for
human consumption on land to which raw manure has been applied may be
harvested. Such technical information might include differentiating the
type of crops to which differently treated manure can be applied with
safety and,

[[Page 65873]]

in addition, suitable time and temperature standards for composting
animal manures. The Act specifies that when raw manure has been applied
to land used to raise a crop intended for human consumption, at least
60 days must pass between application and harvesting to ensure the
safety of the crop. If and when regulations regarding the safety of any
food grown on land to which raw manure has been applied are promulgated
by FDA, EPA and/or USDA, these regulations would be applicable to the
use of raw manure in organic agriculture.
We also would like to obtain public comment and scientific and
technical data as to whether there are any situations where composted
manure would have essentially the same characteristics as raw manure,
thus necessitating special measures to ensure the safety of the food.
We would like to receive data as to whether under any circumstances,
and if so which circumstances, the application of composted material to
crops, or the method of preparation of composted material which is
intended to be applied to crops, would create any human health or food
safety concerns.
On October 2, 1997, President Clinton announced a plan to further
ensure the safety of the nation's food supply. The plan, entitled
``Initiative to Ensure the Safety of Imported and Domestic Fruits and
Vegetables,'' is geared towards increasing assurances that fruits and
vegetables, whether produced domestically or imported, are safe. As
part of this initiative, the President directed the Secretary of Health
and Human Services, in partnership with the Secretary of Agriculture,
and in close cooperation with the agricultural community, to issue
guidance on good agricultural practices (GAP's) and good manufacturing
practices (GMP's) for fruits and vegetables.
In response to this directive, FDA and USDA are developing guidance
to minimize microbial food safety hazards for fresh fruits and
vegetables. The guidance is intended to assist growers and handlers in
continuing to improve the safety of domestic and imported produce. The
agencies have identified several potential vehicles or mechanisms for
pathogenic contamination of fruits and vegetables, including but not
limited to: (1) Water; (2) the application of manure and municipal
wastewater; (3) worker and field sanitation and hygiene; and (4)
transportation and handling. The agencies will be publishing draft
general guidance for public comment shortly.
Proposed paragraph (b)(4) of this section addresses the use of
plant and animal waste materials containing a non-active residue of a
substance. We define a non-active residue in section 205.2 as: any
synthetic substance that does not appear on the National List of
synthetic substances allowed for use, any non-synthetic substance that
does appear on the National List of non-synthetic substances prohibited
for use, or any non-synthetic (natural) poison (such as arsenic or lead
salts) that has long-term effects and persists in the environment, and
which occurs in a very small quantity as a non-active substance in a
production input or water. This provision would apply to plant or
animal waste materials resulting from industrial food or fiber
processing, municipal solid waste streams, and similar sources in which
the materials have been treated or mixed with other substances. These
kinds of materials include non-organically produced cotton gin trash,
cocoa hulls, and confinement livestock manure from animals that are
known to have been treated with synthetic substances. Municipal yard
wastes, including leaves, grass trimmings and prunings, also might fall
into this category.
As discussed in the supplementary information to the National List,
plant or animal materials that only have been treated or mixed with
synthetic substances, but not chemically altered by such treatment, are
not considered synthetic under the definition provided by section
2103(21) of the OFPA (7 U.S.C. 6502(21)), and are therefore not
prohibited under the Act. Additionally, any non-active residues of
substances found on such materials would have minimal or no impact on
the organic agroecosystem and therefore the residues are not consistent
with the definition of an active substance or ingredient when found in
a compost feedstock. Furthermore, the residues themselves are not used
to produce an organic crop since they occur as unintended additives
that are not intentionally applied and do not perform nor interfere
with any function in the agroecosystem.
Such materials would therefore be permitted for use as compost
feedstock in organic crop production, but we are proposing that their
use be restricted by the requirements that they be composted prior to
application to soil, and that levels of any non-active residues
detected in the raw plant or animal waste materials not increase in
soil. Although certain synthetic substances resist decomposition or may
persist if composting is incomplete, most residues present in these
materials will decompose sufficiently when subjected to proper
composting processes so as to be of negligible concern. A producer
using these composted waste materials would be expected to use them in
such a way that any persistent residues did not increase in the soil or
accumulate to a level that caused measurable degradation to soil or
water quality.
In paragraph (b)(5) of this section, we propose to permit the use
of plant and animal waste materials that have been chemically altered
(by the industrial process), and which are therefore considered active
synthetic substances under section 2103(21) of the OFPA (7 U.S.C.
6502(21)), and can only be used if they appear on the National List of
active synthetic substances allowed for use in organic farming. Unlike
non-synthetic materials that may contain synthetic substances as non-
active residues as permitted under paragraph (b)(4) of this section,
this provision refers to materials derived from a process that
chemically changes the material. Such materials might include leather
meal, newspaper and kiln dust. Although this type of material would not
have to be composted prior to application, a farmer using such
substances in a system of organic farming would be expected to use them
in such a way so that measurable degradation of soil or water quality
did not occur.

Providing Mineral Nutrients--Section 205.7(c)

In section 205.7(c), we propose that certain mineral substances
could be used as a means of fostering soil fertility by providing major
nutrients or micronutrients. While use of proper rotations and recycled
plant and animal wastes can often provide all the mineral nutrients
required by crops, supplemental sources of these nutrients sometimes
are needed. We have divided paragraph (c) into two subsections, which
represent two broad types of mineral substances that may be used. The
first two types consist of non-synthetic substances of low solubility
and salinity, including mined substances such as lime, greensand and
rock phosphate, and substances extracted from a plant or animal
substance, such as liquid seaweed extracts, or from a mined mineral.
Such substances historically have been accepted in organic production,
and because they are not synthetic chemicals their use is consistent
with the Act and with a system of organic farming and handling. It
should be noted that, as we discuss in the supplemental information to
the National List, we do not consider the extraction method to be
consequential

[[Page 65874]]

when used to obtain substances from non-synthetic sources that are used
in crop production. The extraction method alone would not cause the
substance to be considered synthetic nor would we expect the resultant
substances to have detrimental effects on biological and chemical
interactions in the agroecosystem or cause any measurable degradation
of soil or water quality. Fish emulsion products which contain
synthetic stabilizers also would not be considered to be synthetic
under this proposal because the stabilizers are not active synthetic
ingredients, as discussed in the supplementary information to the
National List.
The use of ash derived from the burning of a plant or animal
material, such as wood or sunflower hulls, is also included in this
category of non-synthetic mineral nutrient sources, except for certain
instances. The use of ash would be prohibited if the ash is obtained
from a practice prohibited under paragraphs (d)(2) or (3) of this
section or if the ash appears on the National List of prohibited non-
synthetic substances or if the material burned to create the ash had
been treated or combined with a prohibited substance. It should be
noted that a product of the combustion of an inorganic or mineral
substance, such as sulfur or calcium carbonate, would be considered a
synthetic substance under this proposal.
The second category of substances that could be used as sources of
crop nutrients comprises any highly soluble or synthetic substance,
which we propose may be added to soil to correct a known nutrient
deficiency provided that its use does not result in measurable
degradation of soil or water quality. These substances have
historically been permitted by most organic certification programs we
have reviewed, but with restrictions placed on their use. We would like
to receive comment as to whether or not further restrictions on the use
of any of these substances would be appropriate. Such restrictions
might, for example, include designating this type of substance as
representing a lower order of preference than substances included in
paragraph (c)(1) of this section, or might include permitting their use
only if necessary.
The three types of substances that would be covered by this second
category include synthetic micronutrient substances, non-synthetic
minerals that are highly soluble and have a high salt index, and cation
balancing agents. Synthetic micronutrient minerals, such as soluble
boron and chelated trace minerals (e.g. zinc, manganese, iron, and
copper), may often be the most effective and practical choice for
correcting soil deficiencies of these essential nutrients, and when
properly used can be considered a beneficial practice in an organic
soil management system. Their proposed use is restricted because, in
addition to being synthetic substances, misuse or overuse of these
substances can cause measurable degradation of soil or water quality.
Synthetic micronutrients, which are minerals that we propose to
consider as active ingredients in an organic system, are proposed in
section 205.22(f) for inclusion on the National List as allowed
synthetic crop production substances. However, the NOSB has
recommended, and we agree, that it is not acceptable to use any of
these substances in a way that takes advantage of their herbicidal
nature which could result in measurable degradation of soil quality.
Other substances in this category include highly soluble and saline
non-synthetic mined minerals, such as sodium (Chilean) nitrate or
potassium nitrate (niter), which may be applied as a source of
nitrogen, as well as potassium chloride (muriate of potash),
langbeinite (sulfate of potash magnesia), and potassium sulfate, which
are sometimes used to balance the soil cation nutrient content. Such
substances are usually available as non-synthetic mined minerals, but
are proposed to be restricted to cases of known nutrient deficiency
because of their potential to degrade soil quality by contributing to
soil salinization when excessively applied. While the Act makes no
mention of these specific materials, section 2109(b)(2) of the OFPA (7
U.S.C. 6508(b)(2)) indicates that certain mineral nutrients and
nitrogen should not be permitted if they are inconsistent with the
applicable organic certification program. Soil amendment substances,
such as langbeinite and potassium sulfate, used to balance cation
nutrients are more widely considered to be acceptable adjuncts to an
organic fertility management system, but are included in this category
due to their high solubility and salinity, which could cause measurable
degradation of soil quality if overused. As previously stated, a
producer could use these substances only to correct a known nutrient
deficiency.
As proposed and discussed in section 205.22(c) for allowed
synthetic crop substances, certain cation balancing agents, such as
potassium sulfate, may be available on the market either as non-
synthetic mined minerals or as synthetic by-products of an industrial
process. In cases where the origin of such a substance cannot be
determined from readily available information, such as a label or
labeling accompanying the product, the mineral is presumed to be
synthetic and must appear on the National List as an allowed synthetic
crop production substance before it may be used. This presumption would
prevent the inadvertent application of a prohibited substance when the
producer cannot readily determine the origin of a cation balancing
agent.
Finally, we propose in paragraph (d) of this section to prohibit:
the use of any fertilizers or commercially blended fertilizers that
contain an active synthetic ingredient not allowed for use in crop
production as provided for in section 205.22, or that contains an
active prohibited substance; the use of ash obtained from the disposal
of manure by burning; and burning as a means of disposal of manure or
of crop residues produced on the farm. The first prohibition is
proposed in accordance with section 2109(b)(1) of the OFPA (7 U.S.C.
6508(b)(1)) which requires that such a prohibition be established. The
second and third prohibitions are proposed in agreement with the
recommendations received from the NOSB. Burning these materials is not
an appropriate method to use to recycle organic wastes and would not be
considered as a proper method in a manuring program because burning
removes the carbon from these wastes and thereby destroys the value of
the materials for restoring soil organic content. Burning as a disposal
method of these materials would therefore not be consistent with
section 2114(b)(1) of the OFPA (7 U.S.C. 6513(b)(1)).

Selection and Use of Seeds, Seedlings and Planting Stock--Section 205.8

Section 2109(a) of the OFPA (7 U.S.C. 6508(a)) prohibits an organic
producer from applying materials to or engaging in practices on seeds
or seedlings that are inconsistent with the program established under
the Act. Therefore, we are proposing that all seeds and planting stock,
including annual seedlings and transplants, be organically produced.
However, we recognize that at the present time this is impractical for
many farms because organically produced seeds and planting stock are
not widely commercially available; thus, we are proposing to permit
exceptions to this requirement. It is our expectation that our
requiring organic producers to use organic seed and planting stock
except in limited circumstances will stimulate increased organic
production of these essential farm inputs.
This proposal would permit the use of non-organically produced
seeds and planting stock in producing an organic

[[Page 65875]]

crop only when an equivalent organically produced variety is not
commercially available. Planting stock includes, as we define it, any
plant material used for plant reproduction, except seeds, and includes
such materials as seedlings, cuttings, tubers, roots, slips, rhizomes,
crowns, and plantlets derived through tissue culture techniques. Our
proposal also would require that untreated planting stock be selected
in preference to treated planting stock whenever there is a choice.
With the exception of annual seedlings, most organic farm operations
are not equipped to produce planting stock on the farm. In addition,
certain planting stock, such as berry plants and tubers, are required
by some State regulations to be treated with pesticides to prevent the
introduction of plant diseases and other pests.
Although we have received some input in favor of prohibiting all
uses of non-organically produced annual seedlings, we believe that the
inclusion of such annual seedlings under this proposed rule is
justified. The flexibility of allowing the use of non-organically
produced annual seedlings would permit a farmer who lost a crop due to
unanticipated or emergency circumstances shortly after transplanting to
replant with a similar non-organically produced variety that was either
treated or untreated. It should be noted that any annual seedlings that
are produced and replanted on the same certified organic farm are
considered transplants and could not be treated with prohibited
substances, as proposed in section 205.8(c).
We are proposing that treated seeds could only be used if untreated
seeds of the same variety are commercially unavailable or it is
infeasible to obtain untreated seeds due to unanticipated or emergency
circumstances. As discussed in the supplementary information for the
National List, we are not proposing any seed treatment substance to be
included on the National List because we are not proposing to allow a
producer to use any seed treatment on a certified organic farm. Treated
seeds under our proposal are not an active synthetic ingredient in the
organic farming system and therefore are not required to appear on the
National List. A producer could not use the treated seed in order to
take advantage of the functional application of the seed treatment
(this would be using the seed treatment as an active ingredient) or to
use up treated seed remaining from the previous year if the appropriate
untreated seed had since become available.
Because a full range of untreated non-organically produced crop
seeds is widely available, the circumstances under which this exception
would be justified are limited. These circumstances might include
situations in which untreated seeds are not obtainable due, for
example, to the fact that untreated seeds must sometimes be ordered
well in advance of expected delivery or the fact that it may not be
possible to order very small amounts of untreated seed of a new seed
variety that a producer wishes to use on a trial basis. Emergency or
unanticipated circumstances would include loss of a crop to flood or
frost and untreated seeds were no longer available for replanting.
In section 205.8(b) we propose the requirements for how non-
organically produced planting stock used as planting stock to produce a
perennial crop could be sold, labeled or represented as organic. We
propose this provision, as authorized by section 2107(a)(11) of the
OFPA (7 U.S.C. 6506(a)(11)), in order to provide the means by which a
nursery operation that operates in accordance with the Act and our
proposed regulations in part 205 could purchase planting stock from a
non-organic operation and later resell this stock as organically
produced. This proposal would permit perennial planting stock to be
represented as organic after it had been maintained under organic
management on a certified organic farm for a period of at least one
crop year. For example, a certified organic nursery operation could
purchase non-organic dwarf apple rootstock and graft it with locally
adapted varieties, then sell the resultant planting stock as
organically produced after raising it organically for at least one
year. We have proposed the one year period because we do not consider
nursery stock that is held on a certified operation for less than a
year before it is resold to have been organically produced. This
provision is intended to stimulate a wider availability of key organic
production inputs and thus make the ability to comply with the
requirement that organic sources of planting stock be used, as set
forth in proposed section 205.8(a), more feasible for organic
producers.
In section 205.8(c), we propose to prohibit the use of transplants
treated with a prohibited substance, as provided for in section
2109(c)(3) of the OFPA (7 U.S.C. 6508(c)(3)). It should be noted that
we have defined a transplant as an annual seedling produced on an
organic farm and transplanted to a field on the same farm operation to
raise an organically produced crop. This definition also is consistent
with section 2109(a) of the OFPA (7 U.S.C. 6508(a)) which prohibits
farm producers from applying substances to seeds or seedlings that are
contrary to or inconsistent with the proposed program. We do not
propose to prohibit the use of seedlings or other planting stock that
may have been treated with synthetic substances before reaching the
organic farm since the treatment itself is not applied on, or intended
to be used on, the organic farm.
While the OFPA mandates that the Secretary develop organic
standards, it is silent on the issue of genetically engineered
organisms (GEOs) and their products. However, the accompanying Senate
report language states that ``* * * as time goes on, various scientific
breakthroughs, including biotechnology techniques, will require
scrutiny for their application to organic production. The committee is
concerned that production materials keep pace with our evolving
knowledge of production systems.''
In the time since the OFPA was passed, GEOs and their products have
assumed a more significant role in agricultural production. The policy
of the United States Government is that GEOs and their products should
be regulated based on risk, not on how they are produced. The NOSB has
recommended to the Secretary as a policy matter that GEOs should not be
allowed in organic farming and handling.
Public comment is invited with respect to the use of GEOs or their
products in a system of organic farming and handling. The USDA
specifically invites comments on whether the use of GEOs or their
products in organic farming and handling should be permitted,
prohibited, or allowed on a case-by-case basis. Comments should detail
the basis for the commenter's recommendations, including the
agricultural, technical, or scientific factors involved. Comments
should also identify the criteria that should be applied to case-by-
case determinations.

Prevention and Control of Crop Pests, Weeds, and Diseases--Section
205.9

Section 2109(c) of the OFPA (7 U.S.C. 6508(c)) sets forth
practices, such as the use of natural poisons that persist in the
environment, or plastic mulches, that are prohibited or restricted in
the control of pests, weeds and diseases in organic crops. Section
2118(c)(1)(B)(i) of the OFPA (7 U.S.C. 6517(c)(1)(B)(i)) lists the
following categories of active synthetic substances (used for pest,
weed, and disease control) that may be considered for exemption if they
are

[[Page 65876]]

included on the National List: copper and sulfur compounds; toxins
derived from bacteria; pheromones, soaps, horticultural oils, vitamins
and minerals, and production aids including netting, tree wraps and
seals, insect traps, and sticky barriers.
This section is designed to implement these two provisions of the
Act and is consistent with the NOSB recommendations and public comments
received by the NOSB, as well as being consistent with the proposed
definition of a system of organic farming and handling. The structure
of this section reflects an order of preference, in which the first
choice is the use of management methods to prevent the occurrence of
weeds, pests, and diseases, and the second choice is the use of methods
and certain substances to control occurrences that may develop. This
section is consistent with the definition of a system of organic
farming and handling and with the NOSB recommendations because it
requires that methods be chosen in preference to substances and that
toxic substances, whether allowed synthetic substances or non-synthetic
substances, be permitted only as a last resort.
In section 205.9(a), we propose to require that preventive measures
be used by an organic producer for the prevention of pest, weed and
disease problems in crops, including, but not limited to: crop
rotations or other practices provided for by section 205.6;
replenishment and maintenance of soil fertility, as proposed in section
205.7; appropriate sanitation measures, such as composting plant debris
to remove disease vectors, weed seeds and pest habitat; cultural
practices such as irrigation or timing of plantings to enhance crop
health and avoid peak pest hatchings; and selection of species and
varieties for traits such as disease resistance and suitability to
local climate conditions.
When prevention is inadequate, sections 205.9(b) through (d) of our
proposal would provide for a range of practices that could be used to
control pest, weed, and disease problems. These methods are consistent
with the section 2105(1) of the OFPA (7 U.S.C. 6504(1)) requirement
that organic production not include the use of synthetic chemicals
unless otherwise provided for in the Act. Although a preventive
management approach, as exemplified in proposed section 205.9(a), would
be preferable, we recognize that once pests or weeds are present they
must be controlled in order to avoid economic or otherwise significant
damage to crops. Pest control practices, as proposed in section
205.9(b), are: augmentation or introduction of predators or parasites,
such as trichogramma wasps and ladybugs; mechanical or physical
controls, such as pest barriers or traps; and use of non-synthetic and
non-toxic controls, such as repellants or lures. All of these methods
are fully consistent with a system of organic farming, as defined in
section 205.2, and do not entail the use of any active synthetic
substance.
Practices proposed in section 205.9(c) that could be used for weed
control when preventive measures are not effective are: mulching with
fully biodegradable materials, which include plant-derived matter such
as straw, bark, leaves and paper, but do not include plastics that
disintegrate but do not biodegrade; livestock grazing to reduce weed
competition; any mechanical or physical controls, such as weeding and
cultivation techniques; and, in accordance with section 2109(c)(2) of
the OFPA (7 U.S.C. 6508(c)(2)), plastic or other synthetic mulches
provided that they are removed from the field at the end of the growing
or harvest season. It should be noted that the use of cultivation to
control weeds under this proposal also would have to be consistent with
the provisions proposed in section 205.7(a) for protecting soil
quality.
In paragraph (d) of this section, we propose that practices that
are intended to prevent the spread of diseases, such as steam
sterilization to eliminate disease organisms from greenhouse growing
media, could be used if disease preventive measures are not effective.
Plant diseases, once they occur, are difficult to control with existing
organic technologies, although some success has been demonstrated with
the use of compost preparations that actively suppress plant pathogens,
a practice that would be included in this provision.
In paragraph (e) of this section, we are proposing to permit the
use of certain methods and substances to control pests, weeds, and
diseases in an organic farming system if the practices proposed in
paragraphs (a) through (d) are not effective, provided that their use
does not result in measurable degradation of soil or water quality.
Although the use of the proposed substances is often necessary, the use
of these substances may pose concerns for soil or water quality when
overused. Therefore, a producer who used any substance proposed for use
in paragraph (e) of this section would have to describe in the organic
plan how use of the substance was not resulting in measurable
degradation of soil or water quality.
Botanical pesticides are specifically addressed in section
2119(k)(4) of the OFPA (7 U.S.C. 6518(k)(4)) as requiring a special
review to determine whether any of them should be placed on the
National List of prohibited natural substances. This review was
undertaken by the NOSB at its meeting in Rohnert Park, California, in
October, 1994. Considerable public input also has been received
concerning the use of botanical pesticides in organic production. Some
public input expressed concern as to whether organic farmers should be
permitted to use any pesticide sprays, even if they are non-synthetic.
Many organic practitioners who acknowledged the need to use botanical
pesticides stated that they used them only after more ecologically
compatible alternatives proved to be unsuccessful. Our review of
existing organic programs and public input also indicated that non-
synthetic substances used as biological controls may pose concerns for
soil and water quality if used indiscriminately. Concerns also have
been expressed that the use of these substances may impact biological
and chemical interactions in the agroecosystem, including the
possibility of inducing accelerated resistance in pest populations.
While many producers may not need to use botanical pesticides,
prohibiting these materials entirely would severely restrict the
availability of a wide range of organically produced crops. After
concluding its technical review process, the NOSB recommended that
neem, pyrethrums, rotenone, ryania, and sabadilla be allowed for use in
organic agriculture. We agree with the NOSB recommendations on the
basis of the aforementioned public input, and therefore provide in
section 205.9(e) for the use of botanical pesticides under certain
circumstances, provided that the botanical substance is not included as
a prohibited non-synthetic (natural) substance on the National List.
Our proposal also would allow the use of any synthetic weed, pest,
or disease control substance that is included on the National List as a
crop production substance, such as dormant oils, vitamin-D based
rodenticides, pheromones, and copper or sulfur fungicides. In addition,
non-synthetic, biologically based materials, such as bacterial toxins,
that are used to kill pests, weeds or plant diseases also would be
included under this paragraph of our proposal.
This paragraph of section 205.9 also would permit the use of
allowed synthetic substances for the purpose of cotton defoliation. We
have determined that this provision should be proposed

[[Page 65877]]

after reviewing testimony from organic cotton producers and scientific
evidence that the substances in question, which are mineral compounds
having a high salt index and solubility (and usually synthetically
derived) are ordinarily not used in amounts that could cause concern
for adverse impacts on soil fertility.

Prohibited Pest, Weed and Disease Control Practices--Section 205.9(f)

In section 205.9(f), we propose to prohibit the use of a synthetic
carbon-based compound that kills insects, weeds, diseases or other
pests through a cytotoxic mode of action. We have defined the phrase
cytotoxic mode of action to mean having a toxic effect by means of
interference with normal cell functions. We believe this proposal is
appropriate because section 2118 (c)(1)(B)(i) of the OFPA (7 U.S.C.
6517(c)(1)(B)(i)) does not delineate this category of substances as a
category of active synthetic substances that could be considered for
inclusion on the National List of permitted synthetic substances. In
addition, these substances are prohibited under all existing State,
private and international organic programs that we reviewed, and public
input received from organic producers and other members of the public
has raised frequent concerns that such substances potentially might be
allowed for use in organic production. We therefore have determined
that the use of any substance in this category would be inconsistent
with a system of organic farming, as defined under proposed section
205.2, and with the organic certification program established under the
Act.

Wild Crop Harvesting--Section 205.11

Wild crops are generally not produced and managed on a farming
operation, but rather are harvested from public or private lands;
therefore, most of the farming and management practices and materials
described in this proposal, such as soil management practices or weed,
pest and disease control, would not be applicable. However, because
wild crops are addressed in section 2114(f) of the OFPA (7 U.S.C.
6513(f)) and because they are used extensively as ingredients in many
organic products, we are proposing in this section provisions for the
harvesting of organic wild crops. We note here that if management
practices such as cultivation or fertilization are undertaken prior to
the harvest of a wild crop, the wild crop would be considered as a
managed agricultural product and would be subject instead to the
relevant requirements proposed for organic crop production. This idea
is reflected in our proposed definition of a wild crop as being
harvested from an area of land that is not maintained under cultivation
or other agricultural management. It should be noted that this section
would apply only to crops harvested from the wild, and that game
animals harvested from the wild are not addressed in this proposal.
As required under section 2105(2) of the OFPA (7 U.S.C. 6504(2))
and section 2114(f)(2) of the OFPA (7 U.S.C. 6513(f)(2)), we propose in
section 205.11(a) that the land from which wild crops are harvested for
sale as organic must have had no prohibited substances applied to it
for the three years immediately preceding the harvest of the wild crop
and any time thereafter. Our proposal requires that wild crop
harvesting be done in a manner that would not be destructive to the
environment and which would sustain the growth and production of the
wild crop, as required under section 2114(f)(3) of the OFPA (7 U.S.C.
6513(f)(3)).

Organic Livestock Production Requirements

Section 2110 of the OFPA (7 U.S.C. 6509) sets forth certain
requirements and prohibitions for organic animal production. It
requires the Secretary to hold public hearings to guide the
implementation of standards for livestock products. It also states that
the NOSB shall recommend additional standards for livestock health care
to ensure that such livestock is organically produced. Accordingly, the
Secretary held public hearings in Washington, DC, on January 27-28,
1994; Rosemont, IL, on February 10, 1994; Denver, CO, on February 24,
1994; and Sacramento, CA, on March 22, 1994 on this matter.
Additionally, the NOSB provided recommendations to the Secretary on
August 1, 1994 and subsequently, as required in the Act. We have
developed the provisions proposed in sections 205.12 through 205.15 in
accordance with section 2110 of the OFPA (7 U.S.C. 6509), the input
received at the public hearings, and the NOSB recommendations.

Origin of Livestock--Section 205.12

Livestock as defined in section 2103(11) of the OFPA (7 U.S.C.
6502(11)) are cattle, sheep, goats, swine, poultry, equine animals used
for food or in the production of food, fish used for food, wild or
domesticated game, or other nonplant life. Organically raised livestock
should be the offspring of organically raised parents and live under
organic management beginning with their first day of life. We propose
in paragraph (a) of this section that livestock raised on a certified
organic farm for the production of meat, milk, eggs, or other products
to be sold, labeled, or represented as organically produced be under
organic management from birth or hatching, or be the offspring of
parents that have been under organic management, except in certain
cases. These exceptions are based on the provisions of section 2110 of
the OFPA (7 U.S.C. 6509) that provides that breeder stock, poultry from
which meat or eggs are derived, and dairy animals from which milk and
milk products are derived, can be purchased from non-organic sources
and subsequently raised as organic livestock.
Paragraphs (a)(1) through (3) of this section are proposed in
accordance with section 2110 of the OFPA (7 U.S.C. 6509). Paragraph
(a)(1) of this section would permit the purchase of livestock from any
source for use as breeder stock of organic livestock, except that a
gestating mammal would have to be brought onto a certified facility
prior to the last third of pregnancy. Paragraph (a)(2) of this section
would permit dairy animals from which milk or milk products will be
sold, represented, or labeled as organically produced to be brought
onto a certified facility beginning no later than 12-months prior to
the production of milk or milk products that are to be sold,
represented, or labeled as organic. Paragraph (a)(3) of this section
would permit the purchase of poultry from any source for use as organic
slaughter stock (meat) or for organic egg production provided that the
poultry are brought onto a certified facility no later than the second
day of life.
We have proposed other provisions that cover what the practices are
for bringing other types of livestock, such as bees, fish, and
mammalian livestock designated as organic slaughter stock, into an
organic operation to produce such products as fiber, honey, meat and
caviar. These provisions are based on public input received at the USDA
livestock hearings, NOSB meetings and public response to NOSB draft
recommendations.
In section 205.12(a)(4) we propose that livestock may be designated
for the production of non-edible organic products, such as hides,
feathers, fur and fiber, if the animal is raised in compliance with one
of the other provisions proposed in paragraph (a) of this section, as
appropriate to the species. Additionally, we propose that livestock not
raised under organic management from birth or hatching,

[[Page 65878]]

such as male breeder stock purchased from non-organic sources and
subsequently raised as organic livestock for the production of certain
non-edible products, shall have been maintained under organic
management no less than 90 days prior to harvest of the organic
product. For example, wool from a buck sheep designated as organic
breeder stock in accordance with paragraph (a)(1) of this section could
be sold or represented as organically produced only after the buck had
been maintained under organic management for at least 90 days prior to
the time of shearing. This time period is proposed in order to ensure
that non-edible products, such as wool or hides, from breeder animals
brought under organic management could not be represented as
organically produced until the producer had included the livestock in
the overall farm management system.
In section 205.12(a)(5) we are proposing how livestock types such
as fish, crustaceans, mammalian livestock designated as organic
slaughter stock, and other species not addressed in the previous four
provisions, could be introduced onto an organic operation for the
production of edible organic products.
We specifically propose in paragraph (a)(5)(i) that bees may be
brought onto a certified facility at any stage of life. We propose this
because we determined that the production of honey depends on the
nature of the forage available to the bees at the time of honey flow.
Additionally, because of the ephemeral life cycle of individual bees,
previous locations of the hive would be inconsequential to the honey
harvested at the certified organic facility.
We propose in paragraph (a)(5)(ii) of this section that, if
necessary, mammalian livestock from any source could be used as organic
slaughter stock for the production of meat if it is brought onto a
certified facility no later than the 15th day of life. This proposed
provision would allow producers a reasonable length of time to
integrate animals from non-organic sources into their organic
operation, while still ensuring that the animal is brought onto the
certified facility early enough in life to develop primarily and
substantially under organic care. Allowing a mammal up to 15 days to be
introduced onto the certified facility would provide adequate time for
the young stock to receive its mother's first milk, gain strength and
be transported over any distance to the organic farm.
As noted, a producer could use non-organic sources of mammalian
livestock to be designated as organic slaughter stock only if the use
of non-organic livestock is necessary. The determination of necessity
would be based on site-specific conditions that would be described by a
producer in an organic plan, or updates to an organic plan, and
reviewed by the certifying agent. Examples of site specific conditions
that may serve as a basis for supporting the determination to purchase
livestock from non-organic sources are: commercial unavailability of
livestock from organic sources, and unanticipated or emergency
circumstances that prevent the purchase of commercially available
organic livestock.
We are requesting public comment as to the conditions under which
non-organic mammalian livestock may be used as organic slaughter stock.
For example, we would like public comment as to whether specific
conditions, such as commercial unavailability of organic livestock or
an emergency situation, should be a prerequisite for allowing mammalian
livestock of non-organic origin to be designated as organic slaughter
stock and, if so, what these conditions should be. We also request
comment as to whether we should provide for the use of mammalian
livestock of non-organic origin in the production of organic meat.
We propose in paragraph (a)(5)(iii) that all livestock types other
than those described in paragraphs (a)(1) through (5)(ii) may be
brought onto a certified facility no later than the earliest
commercially available stage of life. Other livestock types represent a
wide range of life spans and levels of commercial availability, and
there is no basis for proposing specific time limits for their
introduction into an organic facility. Sufficient time is required to
raise the young of any such species from its earliest commercially
available stage to reach marketable size; this time period will ensure
that the stock is raised primarily under organic management.

Prohibited Practices for Origin of Livestock--Section 205.12(b)

In section 205.12(b)(1), we propose that producers be prohibited
from moving animals in and out of organic care for the purpose of
circumventing the proposed requirements. This provision addresses our
concerns that the leeway provided by proposed paragraph (a)(1) of this
section for the purchase of non-organic breeder stock might be misused
by a producer who might, for example, repeatedly bring a pregnant
mammal onto a certified farm just prior to the last third of pregnancy,
remove the mammal from organic care after the offspring is born, and
then reintroduce her to organic management again just before the last
third of the next pregnancy. Paragraph (b)(2) of this section is
consistent with section 2110(c)(3) of the OFPA (7 U.S.C. 6509 (c)(3)),
which prohibits the use of hormones to stimulate the growth or
production of organically produced livestock. In paragraph (b)(2) of
this section we propose that the use of hormones for any breeding
purposes be prohibited.

Livestock Feed--Section 205.13

Organically produced feed is one of the foundations of organic
livestock management. Section 2110(c)(1) of the OFPA (7 U.S.C.
6509(c)(1)) requires producers of organic livestock to provide
organically produced feed that meets the requirements of the Act to
their livestock. Therefore, we propose in paragraph (a) of this section
that the total feed ration for organically raised livestock be
organically produced. This requirement would include all pasture or
rangeland on which the livestock are grazed. Forage from rangeland
would be considered a wild crop and, thus, would be considered to be
organically produced if it complied with the proposed wild crop
harvesting requirements proposed in section 205.11. Purchased feed
supplements, such as soybean protein concentrates, would have to be
produced in compliance with the Act and the regulations in subpart B to
be considered organically produced.
During the livestock hearings conducted by USDA, producers
expressed concerns that unless an allowance was provided for non-
organic animal feed, the organic status of livestock could be
jeopardized by unavoidable circumstances that would cause or prevent
livestock from consuming non-organic feed. Some of the circumstances
cited by the producers were poor growing conditions, severe weather,
commercial unavailability and fence jumping. We believe that these
concerns are valid and, therefore, propose in paragraph (a)(1)(i)
through (iv) of this section to permit, if necessary, that livestock
under organic management be allowed to receive other than a total feed
ration that is organically produced. We believe that our additional
proposed provisions are consistent with a system of organic farming and
handling and that they will not result in a compromise of the integrity
of organic products.
We propose in paragraph (a)(1)(i) of this section that an animal be
allowed to receive up to twenty percent non-organic feed as part of its
total feed ration in a given year. Paragraph

[[Page 65879]]

(a)(1)(ii) of this section proposes that in emergency situations which
affect the commercial availability of organic feed, such as weather
related disasters, the Administrator could authorize the use of non-
organic feed greater than the twenty percent non-organic feed allowed
in paragraph (a)(1)(i) of this section.
As noted, a producer could use non-organic sources of feed if the
use of non-organic feed is necessary. As previously described in regard
to the use of non-organic sources of mammalian livestock to be
designated as organic slaughter stock, determination of necessity would
be based on site-specific conditions that would be described by a
producer in an organic plan, or updates to an organic plan, and
reviewed by the certifying agent.
We are requesting public comment as to conditions under which non-
organic feed may be used. For example, we would like public comment as
to whether specific conditions, such as commercial unavailability of
organic feed, regional environmental factors, or an unanticipated
situation, should be a prerequisite for allowing non-organic feed and,
if so, what these conditions should be. We also request comment as to
whether we should provide for the use of feed of non-organic origin in
the production of organic livestock on certified organic farms.
In paragraph (a)(1)(iii) of this section, we propose an exemption
that would allow an entire, distinct dairy herd, that is converted to
organic management for the first time, to be fed non-organic feed up to
90 days prior to the production of milk or milk products labeled, sold,
or represented as organic. In testimony received at the USDA public
hearings, milk producers expressed concern that purchasing organic feed
for twelve months prior to selling the milk as organic could hinder or
prevent a producer from deciding to make the transition from non-
organic to organic production. They further explained that the twelve-
month period for feeding organic feed grown on the farm could not be
initiated until after the farm was certified as organic, which might be
three years after the producer first decided to make the transition to
organic production so as to comply with section 2105(2) of the OFPA (7
U.S.C. 6504(2)) regarding prohibited substances applied to the land.
Our proposal would permit use of this exception only one time for
any given discrete dairy herd. This exception applies only to feed;
producers still would have to comply with all other organic livestock
management requirements for the 12-month period prior to selling the
milk or milk products from these animals as organic, as required in
section 2110(e)(2) of the OFPA (7 U.S.C. 6509(e)(2)).
We propose in section 205.13(a)(1)(iv) that bees from which organic
honey and other products are harvested be provided with access to
enough organically managed forage to provide them with a predominant
portion of their needs. The NOSB received many comments about organic
honey production and considered several suggestions without making a
recommendation to the Secretary. One suggestion considered by the NOSB
was that the producers monitor their honey bees to ensure that only
organic forage was accessed by the bees; honey producers maintain that
it is infeasible to monitor and control all bee forage areas. Another
suggestion considered was to require the hive to be surrounded by
organic forage areas for the total radius of the distance for which
bees are known to fly. However, this radius may vary and is impractical
in most regions because the estimated two mile radius that bees are
known to cover would entail more than 12.5 square miles of continuous
organic forage area surrounding each hive.
In creating the proposed provision for bee forage areas, we
considered the applicability of the proposed provision in paragraph
(a)(1)(i) of this section for twenty percent non-organic feed. However,
we decided that it would not be possible for a producer or certifier to
ascertain the exact forage percentages for bees. We expect that
producers of organic honey would meet our proposed requirement that bee
forage areas be predominantly organic by actively managing on-farm
plantings, including crops, buffer zones, biological islands, roadsides
or other available areas during honey flows. A producer also could
satisfy this provision by moving hives to other organically managed
areas to take advantage of organic off-farm acreage.
The NOSB received public comments regarding the addition of vitamin
and mineral supplements to an organic feed ration to prevent deficiency
diseases. In their deliberations, the NOSB recognized that producers
cannot easily determine whether an animal's nutritional requirements
are being satisfied solely by the organically grown feed provided to
them, especially in the case of grazing animals.
The NOSB subsequently recommended that organic feed be allowed to
be supplemented with vitamins and minerals, as needed, to ensure an
animal's health. Deficiency diseases, such as milk fever, may not be
recognized until an animal becomes debilitated; moreover, allowing any
animal to become weakened because of vitamin and mineral deficiencies
may lead to more serious health problems. Accordingly, we propose in
paragraph (a)(2) of this section that the use of non-agricultural
products as vitamin and mineral supplements to satisfy the health
requirements of livestock be permitted, provided that any synthetic
supplement used in organic livestock production is included as an
allowed synthetic on the National list in section 205.24. In accordance
with section 2118(c)(1) of the OFPA (7 U.S.C. 6517(c)(1)), trace
minerals and dietary supplements are included in proposed section
205.24 as synthetic substances permitted for use in organic livestock
production.
We propose in section 205.13(a)(3) that producers be allowed to use
synthetic amino acid additives as necessary for the purpose of
fulfilling the nutritional requirements of the livestock, if the
synthetic amino acid used is included as an allowed synthetic on the
National list in section 205.24. During the USDA public hearings and
NOSB meetings, organic livestock producers stated that it is sometimes
necessary to add amino acid (protein) additives to feed rations to
ensure optimal health and growth. They explained that producers cannot
control, even by diversifying the feed ration, the quantity and type of
protein available in organic feedstuffs. For example, the lysine
content of many feedstuffs is known to be inadequate.
Tests to analyze the essential amino acid content in feed are
inexpensive, and the National Research Council's Committee on Animal
Nutrition publishes nutrient requirements for domestic animals,
including requirements for essential amino acids, where applicable.
These levels could be used as guidelines for producers and certifying
agents to ensure that the amino acids were not used at levels high
enough to artificially stimulate growth or production in the animal,
which is proposed to be prohibited under section 205.13(b)(2). An
analysis of feed showing that it required use of amino acid
supplementation would constitute a site-specific condition that could
be used to demonstrate that its use was necessary to fulfill the
nutritional requirement of the livestock.

Prohibited Livestock Feeding Practices--Section 205.13(b)

Sections 2110(c)(2) and (3) of the OFPA (7 U.S.C. 6509(c)(2) and
(3)) prohibit the use of plastic pellets for roughage; manure
refeeding; feed formulas containing urea; and the use of

[[Page 65880]]

growth promoters and hormones, including antibiotics and synthetic
trace elements to stimulate growth or production. We therefore propose
in paragraphs (b)(1) through (3) of this section that these materials
and practices be prohibited. It should be noted that this proposal
differs from the language given in the Act for the purpose of
clarifying the intent of this prohibition. This clarification is
necessary because synthetic trace elements and other feed supplements,
which are stated in the Act as prohibited when used to stimulate
livestock growth or production, are proposed to be permitted, as
allowed by the Act, in section 205.13(a) when used only to provide
essential nutritional elements to supplement livestock feed. In
accordance with section 2118(c)(1) of the OFPA (7 U.S.C. 6517(c)(1)),
trace minerals and nutritional supplements are proposed to be included
as synthetic substances permitted for use in organic livestock
production in section 205.24 of the proposed National List.

Livestock Health Care--Section 205.14

In developing our proposed organic livestock health care
requirements, we considered information from a number of sources. This
research was necessary because the Act does not provide affirmative
requirements for the health care of livestock in an organic operation.
The primary sources of information we used were the NOSB
recommendations, provided in accordance with section 2110(d)(2) of the
OFPA (7 U.S.C. 6509(d)(2)), and public input received during the USDA
organic livestock hearings held in accordance with section 2110(g) of
the OFPA (7 U.S.C. 6509(g)). We also reviewed comments from the public
provided during input sessions at NOSB meetings and in response to NOSB
draft recommendations. And, finally, we reviewed the livestock
production standards of the existing State and private certification
organizations in an effort to learn as much as possible about the
practices currently being used.
As a result of the research we did, we determined that health care
in organic livestock production should be based on the prevention of
diseases and should include the provisions of adequate feed, living
conditions and attentive care so as to ensure a healthful living
environment and prevent the occurrence of disease and injury.
We propose in paragraph (a) that the practice for maintaining
livestock health would be a preventive management system. Preventive
management includes providing diverse feedstuffs while minimizing
conditions favorable to disease, illness, injury and parasites.
Techniques such as providing isolation facilities for sick animals,
rotating pastures, and introducing species that disrupt parasite
reproduction would be appropriate for a certified operation. Sanitation
practices, such as the use of antiseptics to cleanse wounds, and the
removal of manure, spilled fodder, and soiled bedding material, would
be suitable practices to prevent the occurrence and spread of
infectious organisms.
We further propose to permit the use of veterinary biologics, such
as vaccines and inoculants, as well as vitamins and minerals, to
effectively prevent disease or injury. In fact, Federal and State
regulations may require the use of vaccines and inoculants, and organic
livestock producers would be expected to comply with any applicable
regulations regarding mandatory vaccinations. Additionally, the
practice of breeding animals for adaptability to site-specific
conditions, including resistance to local diseases and parasites, also
would play an important role in a system of organic farming.
The OFPA does not contain affirmative requirements for
administering animal drugs in the event of illness or injury; section
2110(d)(1) of the OFPA (7 U.S.C. 6509(d)(1)) prohibits administering
medications, other than vaccinations, in the absences of illness. This
suggests that the use of medications in organic livestock production
may be permitted. In determining the appropriate use of medications in
organic livestock production, we reviewed the NOSB recommendations,
public input received at NOSB meetings, livestock hearings testimony,
and existing State and private standards. The result of this research
indicated that there is little agreement about the kinds of medications
that are appropriate in organic livestock production and how they
should be used. There was agreement, however, that even with the best
preventive management, animals sometimes become ill, injured or
infested with parasites and that producers should be provided with a
means of administering medications to sick or injured animals. We have
used the term animal drug to include three of the terms used in the
Act: ``medication, antibiotic and parasiticide'', since animal drug is
the term commonly used by the Center for Veterinary Medicine of the FDA
in referring to these substances.
In section 205.14(b) we propose that, in a situation where the
preventive measures provided for in paragraph (a) were not effective in
maintaining livestock health, animal drugs, except as prohibited in
paragraph (d) of this section, may be administered to organic livestock
and that they may be used at any life stage; restrictions are provided
only for mammals and other stock intended for slaughter stock.
Our research indicated that it is appropriate in organic livestock
health care to administer parasiticides either internally or externally
to any animal at any life-stage, provided that the producer complies
with the prohibition against routine use of a synthetic internal
parasiticide, set forth in section 2110(d)(1)(B) of the OFPA (7 U.S.C.
6509(d)(1)(B)). Routine use is defined in section 205.2 as
administering a parasiticide to an animal without cause. While some
public comment favored prohibiting the use of internal parasiticides
and the NOSB recommended a restricted use of parasiticides, many
producers stated that parasites can threaten animal health at any life-
stage and that the use of parasiticides is essential in certain regions
of the country. Even under highly controlled situations, some parasites
endemic to certain regions can be carried by wild birds, water, or
feed. Concerns for the overall health of an animal would indicate that
parasiticides be used as soon as possible after determining the
presence of parasites at a level that would affect the health of the
infected livestock.
Our review of information concerning organic livestock health care
revealed a good deal of difference in the use of antibiotics. We found
that most of the concern about this drug use in animals was with the
subtherapeutic use of antibiotics, which is prohibited by the Act. The
NOSB recommended prohibiting the use of antibiotics in the production
of organic slaughter stock and restricting the use of antibiotics for
other livestock. Public comment suggested that the health of organic
livestock might benefit from receiving antibiotics. We would like to
solicit public comment on the use of animal drugs in the production of
organic livestock, including organic slaughter stock.
Based on the above reasons and after careful consideration of the
information available, we propose to restrict the use of animal drugs
in animals intended as organic slaughter stock. We propose in sections
205.14(b)(1) and (2) that animal drugs, other than those administered
topically and parasiticides, could be administered to mammals intended
as slaughter stock only during the first 21 days of life, and to all
other slaughter stock only during the first 7 days after arrival at the
certified facility. Animal drugs administered topically and

[[Page 65881]]

parasiticides could be administered at any time of life.
We propose to permit this limited allowance for the use of animal
drugs in slaughter stock due to the concerns about the vulnerability of
newly born or hatched livestock brought onto a certified operation from
a non-organic source. Newborn animals are particularly vulnerable to
diseases, such as diarrhea and pneumonia, during the time immediately
following transport, as a result of the stress of adapting to a new
environment. Allowing the use of animal drugs would be an appropriate
safety net for young organic livestock during their first week of
organic management. Since mammals may be as old as 15 days of age when
brought onto an organic operation, as proposed in section
205.12(a)(5)(ii) dealing with the sourcing of animals, mammals could
receive animal drugs up to the 21st day of life, or 7 days after the
last possible date after arrival at the certified facility. This is
consistent with the 7-day time period in which animal drugs may be
administered to non-mammals after their arrivals onto an organic
facility. We believe that restricting the use of animal drugs in
organic slaughter stock production is consistent with a system of
organic farming and handling which uses prevention methods, rather than
substances, to optimize health.
Proposed section 205.14(c) restricts the sale of products from
organic livestock to which an animal drug has been administered. We
propose in this paragraph that the products from treated livestock
could be obtained and thereafter sold, labeled, or represented as
organic only after the producer has determined that the animal had
fully recovered from the conditions being treated, but in no case
sooner than the applicable withdrawal period stated on the label or
labeling of the animal drug or as required by the veterinarian. This
proposal was developed after a lengthy and extensive review of
significant amounts of public input. Also, the NOSB submitted to the
Secretary a subsequent addenda to their recommendations on the use of
antibiotics and parasiticides in livestock used to produce milk and
eggs, which stated:

Just as soil health must be restored after the use of restricted
materials, animals whose health has been threatened by illness or
infection must be allowed adequate time to recuperate after
administration of an antibiotic or parasiticide. The restoration of
health is effected through adequate recovery management. Products
from both restored soil and restored animals may then be labeled as
organically produced.

In determining when animal health has been restored, a producer
might observe the somatic cell counts in milk, the resumption of normal
weight gain in a young animal, or an increase of egg production in a
laying flock. Under this proposal, an organic producer might reasonably
decide to withhold a product from the organic market beyond the
withdrawal period specified on the label based on observations of the
animal's health.
Some of the input received by the NOSB and the USDA requested
extending FDA withdrawal period after internally administering animal
drugs, particularly antibiotics or parasiticides, to organic livestock.
The extended withdrawal periods suggested by the public input ranged
from twice the FDA withdrawal time to a minimum of 90 days. However,
our proposal does not make such a requirement because an extended
withholding time does not further the goals of a system of organic
farming and handling. We wish to point out that under our proposal,
animals used for breeding or as a source of other products could later
be sold as organic slaughter stock only if the animal complied with all
of the other requirements for organic slaughter stock.

Prohibited Livestock Health Care Practices--Section 205.14(d)

Section 2110(d) of the OFPA (7 U.S.C. 6509(d)) prohibits producers
from using subtherapeutic doses of antibiotics, synthetic internal
parasiticides on a routine basis, or medications, other than
vaccinations, in the absence of illness. Accordingly, we propose in
paragraph (d) of this section to prohibit administering any medication,
other than vaccinations, in the absence of illness; the routine use of
synthetic internal parasiticides; and the subtherapeutic use of
antibiotics.

Livestock Living Conditions and Manure Management--Section 205.15

Living conditions play a significant role in livestock health and
production. At the USDA hearings and NOSB meetings, extensive testimony
was received addressing the issue of livestock living conditions. As
provided for under section 2110(d)(2) of the OFPA (7 U.S.C.
6509(d)(2)), the NOSB developed specific recommendations for additional
standards for livestock living conditions, including manure management.
This proposal is consistent with the NOSB recommendations.
In section 205.15(a), we propose to require that the following
living conditions be provided, as appropriate to the species, to
promote livestock health: protection from the elements; space for
movement; clean and dry living conditions; and appropriate access to
the outdoors, food and clean water. These conditions would provide a
healthful environment to raise organically produced livestock and
reduce or eliminate the need to administer animal drugs.
We propose in section 205.15(b) that, if necessary, animals could
be maintained under conditions that restrict the available space for
movement or access to outdoors, provided that other living conditions
are adequate to maintain the animals' health without the use of animal
drugs, except as provided in 205.14(b). In developing this proposal, we
considered public input regarding the effects of climate, geographical
location and physical surroundings on the ability of animals to have
access to the outdoors. The premise that organic management is soil
based and that animals should be allowed, as appropriate, access to the
soil was considered in balance with animal health issues, such as
prevention of exposure to harmful organisms carried by wild animals and
the need to keep animals indoors during extended periods of inclement
weather. The flexibility provided by the provisions of 205.15(b) would
allow operations without facilities for outdoor access to be certified
for organic livestock production and also would permit animals to be
confined during critical periods such as farrowing.
As noted, the producer could maintain animals under conditions that
restrict the available space for movement or access to outside only if
the practice is appropriate and necessary. As previously discussed in
regards to the use of non-organic sources of livestock feed and
mammalian livestock designated as organic slaughter stock, the
determination of necessity would be based on site-specific conditions
that would be described by the producer in an organic plan, or updates
to an organic plan, and reviewed and evaluated by the certifying agent.
We are requesting public comment as to the conditions under which
animals may be maintained so as to restrict the available space for
movement or access to outdoors. Examples of site-specific conditions
which might serve as a basis for maintaining animals under conditions
that restrict the available space for movement or access to outdoors
are: emergency or unanticipated circumstances and site-specific soil,
climate, animal health, or other environmental factors. We also

[[Page 65882]]

request comment as to whether we should allow practices that restrict
the available space for movement or access to outdoors.

Manure Management--Section 205.15(c)

In section 205.15(c), we propose that in any area where livestock
are housed, pastured or penned, manure would have to be managed in a
way that does not cause measurable degradation of soil quality; does
not significantly contribute to contamination of water by nitrates and
bacteria, including human pathogens; optimizes nutrient recycling; and
does not include burning or any practice inconsistent with section
205.14(a) of this subpart which addresses prevention of livestock
health problems. These provisions are consistent with sections
2114(b)(1) and (2) of the OFPA (7 U.S.C. 6513(b)(1) and (2)) that
address proper manuring and methods for applying livestock manure to
soil. The proper management of manure requires that it be used in a way
that optimizes nutrient recycling to be consistent with a system of
organic farming. As discussed in the supplementary information for
proposed section 205.7(d)(3), the disposal of manure by burning cannot
be considered proper manuring.

Organic Handling Requirements

Product Composition--Section 205.16

This section of our proposal addresses the requirements and
prohibitions for ingredients used in products that would be permitted
to use the word organic in some manner on a label or labeling of an
agricultural product. These provisions are in accordance with: section
2106(a)(1)(A) of the OFPA (7 U.S.C. 6505(a)(1)(A)) which requires that
any product that is sold, labeled, or represented as organic must be
produced and handled in accordance with the Act; section 2111(a)(4) of
the OFPA (7 U.S.C. 6510(a)(4)) which provides for an organic product to
contain up to 5 percent by total weight of the finished product,
exclusive of water and salt, of non-organically produced ingredients
that are on the National List; and sections 2106(c)(1) and (2) of the
OFPA (7 U.S.C. 6505(c)(1) and (2)) which permit certain exemptions for
agricultural products that contain more than 5 percent non-organically
produced ingredients.
In paragraph (a)(1) of this section, we propose that an
agricultural product, including a raw agricultural product, sold,
labeled, or represented as organic, contain only organically produced
agricultural ingredients, exclusive of water or salt, except in one
circumstance. This exception is based on section 2111(a)(4) of the OFPA
(7 U.S.C. 6510(a)(4)) which allows an organically produced agricultural
product to contain up to 5 percent non-organically produced ingredients
that are on the National List. Accordingly, we propose in paragraphs
(a)(1)(i) and (ii) of this section that a product sold, labeled, or
represented as organic could contain non-organically produced
agricultural products and non-agricultural ingredients that are
included on the National List, up to 5 percent of the total weight of
the finished product, exclusive of water or salt. As proposed and
discussed in the supplementary information to the National List section
205.27 for non-organic agricultural products, all non-organically
produced agricultural products are proposed to be included on the
National List, and therefore would be permitted for use in an organic
product in accordance with section 2111(a)(4) of the OFPA (7 U.S.C.
6510(a)(4)).
We propose in paragraph (a)(2) of this section the order of
preference by which all ingredients used in an organic product would
have to be selected. We have determined that the provisions of
paragraph (a)(2) of this section are needed to ensure the integrity of
products sold, labeled, or represented as organic and to ensure that
organic products are handled in accordance with a system of organic
farming and handling, as defined in proposed section 205.2 of subpart
A. Accordingly, we propose in paragraph (a)(2)(i) that a handler would
have to select commercially available organically produced agricultural
products as ingredients in preference to non-organic agricultural
products and non-agricultural ingredients. For example, in a bread that
contains 97 percent organically produced flour and also sesame seeds, a
handler would have to use organically produced sesame seeds whenever
they were commercially available.
We propose in paragraph (a)(2)(ii) that a handler would have to
choose a commercially available non-organically produced agricultural
product as an ingredient in preference to a non-agricultural
ingredient. For example, a thickener such as corn starch or arrowroot,
if commercially available, would need to be selected as an ingredient
in a salad dressing in preference to a non-agricultural ingredient,
such as disodium phosphate. Paragraphs (i) and (ii) of this section
together would direct a handler toward the use of an organically
produced agricultural product whenever possible for a given function in
the product. The provisions of these two paragraphs are consistent with
the NOSB recommendation that organic ingredients be used in a multi-
ingredient product to the extent possible.
We propose in paragraph (a)(2)(iii) of this section that a non-
organically produced agricultural product or non-agricultural
ingredient that is extracted without the use of a synthetic volatile
solvent, or which does not contain propylene glycol as a carrier, if
commercially available, must be used as an ingredient in preference to
a non-organically produced agricultural product or non-agricultural
ingredient that is extracted with a synthetic volatile solvent or which
contains propylene glycol as a carrier.
Although the NOSB recommended that substances extracted with a
synthetic volatile solvent (such as hexane) or that contain propylene
glycol as a carrier be prohibited for use in organic products, we
believe our proposal to allow their use only when alternative
substances or products are not commercially available does not affect
the integrity of organically produced products.
Section 2106(c)(1) of the OFPA (7 U.S.C. 6505(c)(1)) authorizes
products that contain at least 50 percent (but less than 95 percent)
organically produced ingredients to use the word organic on the
principal display panel of the product to describe those ingredients
that are organically produced. Accordingly, the Secretary, in
consultation with the NOSB and the Secretary of Health and Human
Services, is proposing in subpart C of this part to allow the statement
made with certain organic ingredients to appear on the principal
display panel of this type of product.
We propose in paragraph (b) the composition requirements for a
product labeled as made with certain organic ingredients. These
proposed requirements are that the total weight of the finished product
that is not comprised of organic agricultural products, excluding water
and salt, shall consist of some combination of non-organically produced
agricultural products and non-agricultural ingredients included on the
National List. This is consistent with the proposed composition
requirement for non-organic ingredients in products labeled as organic
and is consistent with the composition requirements of section
2111(a)(4) of the OFPA (7 U.S.C. 6510(a)(4)).

[[Page 65883]]

Proposed paragraph (b)(3) of this section would require that
products sold, labeled, or represented as made with certain organic
ingredients have been produced in compliance with sections 205.16
through 205.19 of this proposal, with the exception of sections 205.16
(a) and (c) of this subpart. Section 205.16(a) applies to agricultural
products, including raw agricultural products, that are labeled as
organic. Section 205.16(c) applies to multi-ingredient agricultural
products that only represent the organic nature of such ingredients in
the ingredients statement and which themselves are not sold, labeled or
represented as organic or made with certain organic ingredients. The
provisions of proposed paragraph (b)(3) are necessary to assure
consumers that products in which the predominant portion of ingredients
are represented as organically produced have been produced and handled
in accordance with a consistent standard, as provided under section
2102(2) of the OFPA (7 U.S.C. 6501(2)).
We note that processed agricultural products sold, labeled, or
represented as made with certain organic ingredients are exempted by
section 2106(c)(1) of the OFPA (7 U.S.C. 6505(c)(1)) from complying
with the provisions of the Act, except as required by the Secretary in
consultation with the NOSB and the Secretary of HHS. Therefore,
handlers of this type of product can be exempted from complying with
certain provisions of this proposal, provided that the exemptions do
not affect the integrity of the organic ingredients in the product.
Accordingly, as proposed and discussed in the supplementary information
for section 205.201(b) of subpart D regarding an exemption for handlers
of this type of product from the requirement set forth in section
205.3(b)(2) of subpart B that a commercially available non-synthetic
substance be selected in preference to an allowed synthetic substance,
we note that a handling operation that produces products sold, labeled,
or represented as made with certain organic ingredients also would not
be subject to the provisions in section 205.16(a) and (c) with respect
to the handling of this type of product. For example, a manufacturer of
a product sold, labeled, or represented as made with certain organic
ingredients could use a non-organic agricultural ingredient instead of
a commercially available organic agricultural ingredient, as is
required in proposed section 205.16(a)(2) for the manufacturer of a
product to be sold, labeled or represented as organic. However, the
handling operation would be required to be certified and to demonstrate
in the organic plan compliance with the applicable handling
requirements in subpart B. We believe that these provisions will help
assure the integrity of the organic ingredients in this type of product
without imposing undue requirements on the handlers who produce them.
Paragraph (c) of this section is proposed in accordance with
section 2106(c)(2) of the OFPA (7 U.S.C. 6505(c)(2)) and would exempt a
multi-ingredient product that only represents the organic nature of
such ingredients in the ingredients statement, and which itself is not
sold, labeled or represented as organic or made with certain organic
ingredients, from complying with the requirements proposed in this
subpart. It is not critical for either the purposes of the Act or the
integrity of the organic ingredients if a finished product that cannot
be sold, labeled, or represented as organic or as made with certain
organic ingredients on its principal display panel is not subject to
the provisions of this subpart. We note, however, that although a
finished product that contains less than 50 percent organically
produced ingredients, or any other multi-ingredient product that
represents the organic nature of ingredients in the ingredients
statement and which is not labeled as organic or made with certain
organic ingredients, need not be handled by a certified organic
handling operation, the ingredients represented as organic in such a
product must have been produced and handled in accordance with all the
applicable provisions of the Act and the regulations of this part. In
addition, while handling operations which handle only this type of
product would not be required to become certified under the provisions
proposed in section 205.202 of subpart D, this proposal would still
require such operations to maintain records to show that any organic
ingredients listed on product labels were obtained from operations that
were certified in compliance with the Act and the regulations of this
part.
Paragraph (d) of this section would prohibit the use of organic and
non-organic forms of the same agricultural ingredient if the ingredient
is listed as organic in the ingredients statement. We believe that such
a provision is needed in order to avoid any possibility of confusion
concerning the source and percentage of the organic ingredients in the
product.
Paragraph (e) of this section would prohibit, in accordance with
sections 2111(a)(3) and (7) of the OFPA (7 U.S.C. 6510(a)(3) and (7)),
the addition of sulfites, nitrates, or nitrites to an organic food
product, or the addition to the food of water that does not meet the
Safe Drinking Water Act requirements (42 U.S.C. 300f et seq.).

Processing Practices--Section 205.17

In paragraph (a) of this section we propose that biological
methods, such as fermentation, or mechanical methods, such as grinding,
pressing, heating or drying, be used to process an agricultural product
intended to be sold, labeled, or represented as organic or made with
certain organic ingredients for the purpose of retarding spoilage or
otherwise preparing an agricultural product for market. However, an
incidental additive, except for the prohibition on the use of volatile
synthetic solvents proposed in section 205.17(b)(3), may be used, if
necessary, to process an agricultural product intended to be sold,
labeled, or represented as organic or made with certain organic
ingredients. An incidental additive used in the processing of
agricultural products is defined in proposed section 205.2 as an
additive present in an agricultural product at an insignificant level
and that does not have any technical or functional effect in the
product, and is therefore not considered an active ingredient. As
discussed in the supplementary information for section 205.26 of
subpart B, incidental additives may be used in organic handling without
inclusion on the National List. Section 205.17(a) is consistent with
the principles stated in our proposed definition of a system of organic
farming and handling (section 205.2) and as further discussed in the
introduction to the supplementary information for subpart B.
The NOSB recommended that handlers document that a food could not
be processed without the use of a synthetic incidental additive and
that the handler demonstrate progress to replace the synthetic
incidental additive over time. The NOSB language is consistent with our
proposal to permit the use of such substances only if necessary. By
including several synthetic incidental additives in its National List
recommendations, the NOSB also recognized that a wide range of
currently available organic products could not be manufactured feasibly
without the use of incidental additives, such as defoaming agents,
adjuvants, clarifiers, filtering agents and equipment cleansers.
As noted, a producer could use an incidental additive if the use of
the additive is necessary. As previously

[[Page 65884]]

described in the supplementary information for sections 205.12, 205.13,
and 205.15 of subpart B regarding livestock production, determination
of necessity would be based on site-specific conditions that would be
described by a producer in an organic plan, or updates to an organic
plan, and reviewed by the certifying agent.
We are requesting public comment as to the conditions under which
incidental additives may be used. For example, we would like public
comment as to whether specific conditions, such as the inefficacy or
unavailability of mechanical or biological methods, should be a
prerequisite for using an incidental additive and, if so, what these
conditions should be. We also request comment as to whether handlers
who handle only products sold, labeled, or represented as made with
certain organic ingredients should be exempted from the restriction of
using incidental additives only if necessary.
Paragraph (b) of this section proposes several practices that would
be prohibited for the processing and preparation of any raw
agricultural product, and on a finished agricultural product, sold,
labeled, or represented as organic or as made with certain organic
ingredients.
Paragraphs (b)(1) and (b)(2) of this section are proposed in
accordance with sections 2111(a)(5) and (6) of the OFPA (7 U.S.C.
6510(a)(5) and (6)) and would prohibit the use of storage containers or
bins, including packages and packaging materials that contain synthetic
fungicides, preservatives or fumigants, and also would prohibit the use
or reuse of any bag or container that previously had been in contact
with any substance that could compromise the organic integrity of its
contents. Our proposed definition of packaging set forth in section
205.2 encompasses waxes used in contact with an edible surface of an
agricultural product.
Proposed paragraph (b)(3) of this section would prohibit the use of
a volatile synthetic solvent. Volatile synthetic solvents, such as
hexane or isopropyl alcohol, are used in processing and extraction.
This proposed prohibition is made under the authority of section
2107(a)(11) of the OFPA (7 U.S.C. 6506(a)(11)) which authorizes this
program to require such terms and conditions as are determined
necessary. The prohibition of the use of a volatile synthetic solvent
is in agreement with the NOSB recommendation that the use of a volatile
synthetic solvent is not essential, and therefore should not be
permitted in the handling of an organically produced product or a
product sold, labeled, or represented as organic or made with certain
organic ingredients.
As previously discussed in regard to the use of raw manure in
organic crop production (section 205.7 of subpart B), there has been an
increase in the incidence of food borne illness caused by certain
pathogens. The application of ionizing radiation as a sanitation or
preservation treatment currently is permitted by FDA for a wide range
of agricultural products. Additionally, a request to permit the use of
ionizing radiation on red meat products was recently approved by FDA.
The NOSB has recommended to the Secretary that the practice of ionizing
radiation should not be allowed in organic handling, and its use is
prohibited by most existing organic certification programs which we
have reviewed.
Public comment is invited with respect to the compatibility of the
use of ionizing radiation with a system of organic farming and
handling. The USDA also invites comments on whether there are effective
alternatives to ionizing radiation, such as sanitary practices, heat
pasteurization and incidental additives, that are compatible with a
system of organic farming and handling, and, if so, how they are
compatible. Additionally, we are soliciting comment as to whether the
use of ionizing radiation is considered an essential standard industry
practice, or good manufacturing practice, in the processing of any
agricultural product: for example, in the sanitary handling of herbs
and spices.

Prevention and Control of Facility Pests--Section 205.18

We are proposing provisions to safeguard the integrity of organic
products that are handled in facilities in which pest control
substances may be used. The NOSB recommendations and our review of most
existing organic programs indicate that this area needs to be
addressed. We have accordingly determined, as authorized by section
2107(a)(11) of the OFPA (7 U.S.C. 6506(a)(11)), which authorizes this
program to require such terms and conditions as are determined
necessary, that the proposed requirements for facility pest management
in an organic handling operation are necessary and appropriate for an
organic certification program.
As is true with crop production and livestock health care,
prevention of pest occurrences should be the first strategy used by an
organic handler. This is also consistent with the goal of maintaining
the integrity of organic products by avoiding the need to use pest
control substances in handling facilities, as reflected in our
definition of a system of organic farming and handling. We propose in
paragraph (a) of this section that the best practice for control and
prevention of facility pests would be a preventive management system.
This system would include measures to remove pest habitat and to
prevent pests from gaining entrance to the handling facility, as well
as managing environmental factors inside the facility such as
temperature, light, air circulation and humidity to discourage
proliferation of pest populations.
If prevention measures are not effective and pests do appear in
organic handling facilities, we propose in paragraph (b) of this
section for facility pest control to permit the use of pest control
techniques, which include: mechanical controls such as traps or
barriers; augmentation and introduction of predators and parasites for
the pest species; and non-toxic, non-synthetic substances such as lures
and repellants. Pest prevention and control is further discussed in the
supplementary information provided in section 205.9 for crop pests,
weeds and diseases.
However, if pest prevention or control measures provided in
paragraph (a) and (b) of this section are not effective, we propose in
paragraph (c) of this section to permit the use of any substance to
control pests, provided the substance is approved for its intended use
by the appropriate regulatory authority and the substance is applied in
a manner that prevents such substance from contacting any ingredient or
finished product intended to be sold, labeled, or represented as
organic or made with certain organic ingredients. We have proposed
paragraph (c) in recognition of the fact that handling facilities are
subject to federal, state, and local regulations concerning food
safety. The use of the practices in paragraph (c) of this section would
entail maintaining adequate safeguards to protect organic products and
ingredients from being contacted by any pest control substance.
As noted, proposed paragraph (c) would allow the use of any
substance to control pests, provided such substances were used only
when methods to prevent or control pests were not effective.
Additionally, any substance used must be applied in a manner that
prevents such substance from contacting any ingredient or finished
product intended to be sold, labeled, or represented as organic or made
with certain organic ingredients. Because eradication of a pest
infestation may necessitate the use of substances, we are proposing to
allow the use of any

[[Page 65885]]

substance approved for use by the appropriate Federal, State or local
regulatory agency to assure that organic handling operations have
sufficient practices available to deal effectively with severe pest
infestations. Structural pest control is unique in that substances used
for this purpose are not considered to be used in the production and
handling of organic crops, and are not applied to land used in the
production of organic crops.
Many existing certification programs restrict synthetic substances
used to control pests in certified handling facilities to substances
reviewed and allowed for use by the certification agency. We request
comment as to whether only those substances included on the National
List of active synthetic substances allowed for use in organic crop
production, as set forth in section 205.22, should be permitted to be
used to control pests in certified handling facilities. Additionally,
if the use of synthetic substances in structural pest control should
not be restricted solely to those synthetic substances included on the
National List of active synthetic substances, we request comment as to
whether handlers should be required to use synthetic substances
included on the National List of active synthetic substances (or a non-
synthetic biological or botanical substance) before the use of
synthetic substances not included on the National List.

Prevention of Commingling and Contact With Prohibited Substances--
Section 205.19

There are two primary threats to organic integrity: the possibility
of commingling organic products with similar products that were not
organically produced, and the possibility of the organic product coming
into contact with a prohibited substance. Since there is no apparent
physical difference between an organically produced product and a non-
organic product, commingling is a serious concern and an organic
handling operation must make every effort to provide adequate measures
to ensure that commingling does not occur, in addition to adopting
measures to protect organic products from contacting prohibited
substances.
Sections 2107(b)(1)(C) and 2111(b) of the OFPA (7 U.S.C.
6506(b)(1)(C) and 6510(b)) specifically provide for the prevention of
commingling of organic and non-organic products, especially meat, in
any operation that handles both types of products, and the
implementation of practices that protect organic products from contact
with prohibited substances. Therefore, we propose in this section that
a certified handling operation, and a handling operation that is exempt
or excluded from certification in accordance with section 205.202(a)(3)
or section 205.202(b) of subpart D, shall be required to establish
appropriate safeguards during handling, storage and transportation to
both prevent the commingling of organic and non-organic products and to
assure that organic products are protected from contact with prohibited
substances.
These safeguards could take many forms depending on the nature of
the products and the certified handling operation, and should encompass
each step of the manufacturing or handling process, including storage
and transportation. A certified handling operation that receives
certification under our proposal might consist of disparate locations
and facilities, including some that handle both non-organic and organic
products. The public input we have received indicates that many
certified handling operations use subcontractors to perform certain
processing functions, such as dehydrating or freezing, rather than
performing the function within the facilities maintained by the
certified operation. Our primary concern in these instances is that
adequate safeguards are maintained by the certified operation and the
subcontractor to ensure that commingling and contact of organic
products with prohibited substances did not occur. A certified handling
operation that subcontracted with different facilities for cold
storage, for example, would have to make sure that its products were
clearly segregated from non-organic products and that an inspector
examined all such subcontracted facilities as a part of the site visit
to the certified operation. A certified handling operation also would
have to take appropriate measures to ensure that organic products or
ingredients were transported under conditions that protected their
integrity. We note that the best method to prevent commingling or
contact with prohibited substances would be to eliminate the
possibility of such occurrences, such as when a certified operation
handles only organic products and uses no prohibited pest control
substances.

Subpart B--National List

Purpose and Basis of the Proposed National List

The National standards for organic production, provided for in
section 2105 of the OFPA (7 U.S.C. 6504), include the requirement that
an organically produced agricultural product shall have been produced
without the use of synthetic chemicals, except as otherwise provided
for in the Act. The exemptions to which section 2105 refers are
specifically delineated in section 2118 of the OFPA (7 U.S.C. 6517),
which provides for the establishment of a National List of substances
that may be allowed for use in an organic farming or handling operation
that are otherwise prohibited for use under the Act. This section also
provides for the establishment of a National List of non-synthetic
substances, that are otherwise allowed under the Act, that may not be
used in organic farming or handling.
Section 2118(a) of the OFPA (7 U.S.C. 6517(a)) provides that the
Secretary shall establish the National List of approved and prohibited
substances, and section 2118(d)(1) of the OFPA (7 U.S.C. 6517(d)(1))
provides that the National List shall be based upon a proposed national
list developed by the NOSB. In accordance with section 2119 of the OFPA
(7 U.S.C. 6518), the NOSB conducted the prescribed review process, and
solicited public comment at meetings, before recommending an initial
proposed national list to the Secretary. The NOSB recommendations were
based on at least one technical advisory panel review of each substance
in question, as required in section 2119(k)(3) of the OFPA (7 U.S.C.
6518(k)(3)). The NOSB also reviewed available information from the
Environmental Protection Agency, the National Institute of
Environmental Health Studies, and other appropriate sources, as
required in section 2119(l)(1) of the OFPA (7 U.S.C. 6518(l)(1)), to
assist it in evaluating each substance under consideration in
accordance with the criteria delineated in section 2119(m) of the OFPA
(7 U.S.C. 6518(m)). The criteria that were considered for each
substance are: the potential of the substance for detrimental chemical
interactions with other materials used in organic farming systems; the
toxicity and mode of action of the substance and of its breakdown
products or any contaminants, and their persistence in the environment;
the probability of environmental contamination during manufacture, use,
misuse or disposal of the substance; its effects on human health; the
effects of the substance on biological and chemical interactions in the
agroecosystem; the alternatives to using the substance; and the
compatibility of the substance with a system of sustainable
agriculture. The NOSB recommendations, along with the results of the
required evaluation and technical advisory panel review for each

[[Page 65886]]

substance, were considered by the Secretary in accordance with the
requirements of section 2118(d) of the OFPA (7 U.S.C. 6517(d)).

Basis for Inclusion of Substances and Ingredients on the National
List

Basis for Inclusion of Specific Synthetic Substances on the National
List of Synthetic Substances Allowed for Use in Organic Farming and
Handling

Section 2118(c)(1) of the OFPA (7 U.S.C. 6517(c)(1)) provides three
sets of criteria upon which determinations to allow the use of
substances that are otherwise prohibited by the Act must be based. The
first set of criteria, in section 2118(c)(1)(A) of the OFPA (7 U.S.C.
6517(c)(1)(A)), requires that the Secretary, in consultation with the
Secretary of the Department of Health and Human Services and the
Administrator of EPA, determine that: use of the substance would not be
harmful to human health or the environment; the substance is necessary
to the production or handling of an agricultural product because of the
unavailability of wholly natural substitute products; and the use of
the substance is consistent with organic farming and handling.
The second set of criteria in section 2118(c)(1)(B) of the OFPA (7
U.S.C. 6517(c)(1)(B)) describes the types of substances that may be
considered for use if they are included on the National List. The first
type of substance is one that is used in production and contains an
active synthetic ingredient that falls into one of the following
categories: copper and sulfur compounds; toxins derived from bacteria;
pheromones; soaps; horticultural oils; fish emulsions; treated seed;
vitamins and minerals; livestock parasiticides and medicines; and
production aids, including netting, tree wraps and seals, insect traps,
sticky barriers, row covers, and equipment cleansers. The Secretary has
accordingly reviewed each substance proposed in sections 205.22 and
205.24 for inclusion on the National List to determine that it is an
active synthetic ingredient or includes an active synthetic ingredient.
The second type is a substance that is used (in a formulation) in
production and (the formulation) contains synthetic inert ingredients
that the Administrator of the EPA has not classified as inerts of
toxicological concern; and the third type of substance is one that is
used in handling and is non-synthetic but is not organically produced.
The third criterion in section 2118(c)(1)(C) of the OFPA (7 U.S.C.
6517(c)(1)(C)) is that each specific exemption be developed according
to the procedure described in section 2118(d) of the OFPA (7 U.S.C.
6517(d)) for establishing and amending the National List. This
procedure includes basing the proposed National List on the
recommendations received from the NOSB, and publishing such proposed
National List in the Federal Register for public comment before
establishing the National List. The same procedure must be used in
developing any amendments to the National List.
After receiving the NOSB's recommendations, the Secretary
determined, in consultation with the Secretary of HHS and the
Administrator of the EPA that the use of each substance or ingredient
being considered for inclusion on the proposed National List of
synthetic substances allowed for use in organic farming would meet the
first set of criteria. We then examined the second set of criteria to
make determinations concerning substances being considered for
inclusion on the National List of allowed synthetic substances. For
each substance considered, it was first necessary to determine whether
the substance is synthetic according to the definition provided by the
Act. The Act defines a synthetic substance to be ``a substance that is
formulated or manufactured by a chemical process or by a process that
chemically changes a substance extracted from naturally occurring
plant, animal, or mineral sources, except that such term shall not
apply to substances created by naturally occurring biological
processes.''
The language in section 2118(c)(1)(B)(i) of the OFPA (7 U.S.C.
6517)(c)(1)(B)(i)), which provides one set of criteria for placing a
substance on the National List, makes it clear that only synthetic
substances that contain active ingredients need to be on the National
List in order to be permitted for use in organic production. This
provision only encompasses active synthetic ingredients that are used
in production and that come within certain categories. We have
accordingly proposed a definition of an active ingredient or substance
(in any input other than pesticide formulations) to include any
substance that, when used in a system of organic farming or handling,
becomes a chemically functional part of that system, or is otherwise of
significant consequence to the production, handling and integrity of an
organically produced product. This definition excludes substances that
are present in insignificant amounts in the agroecosystem, such as
equipment cleansers; do not chemically interact with the system, such
as plastic mulches or row covers; or are otherwise inconsequential to
the performance of any function within the system.
It should be noted that a formulated product that contains a
substance that is an active synthetic ingredient and which also
contains a synthetic inert ingredient may only be used if the active
synthetic ingredient is included in one of the proposed allowed
synthetic categories. Section 2118(c)(1)(B)(ii) of the OFPA (7 U.S.C.
6517(c)(1)(B)(ii)) does not require that inert ingredients be included
as a separate category of the National List in order to be permitted
for use in organic production. Rather, the Act requires only that the
inert ingredients not be classified by the Administrator of the EPA as
inerts of toxicological concern in order for the substance to be
permitted for use. Our proposal for evaluating formulations that
contain synthetic inert ingredients is included and discussed in
proposed sections 205.20 through 205.21 and the corresponding
supplementary information.
The discussions held by the NOSB as they evaluated substances under
consideration, and their recommendations for their proposed National
List, served as the primary basis for our determinations as to whether
or not a particular substance is active and synthetic, and if so,
whether to include it as an allowed synthetic substance on the proposed
National List. A discussion of those substances that we have determined
to be synthetic, but not active, and which therefore are not required
to be included on the National List in order to be used in organic
farming and handling, is included in the supplementary information to
section 205.20 of this proposal, which sets forth all the categories of
substances and ingredients that can be used in organic production and
handling.

Basis for Including Specific Natural (Non-synthetic) Substances on the
National List of Non-synthetic Substances Prohibited for Use in Organic
Farming and Handling

In this proposal the word non-synthetic is used to address
substances that are described in the Act as either natural or non-
synthetic. No definition is provided in the OFPA for the word natural.
There is also a great deal of ambiguity currently surrounding the use
and meaning of the term in regard to production inputs, nutritional
supplements, cosmetics and other products. The use of the term non-
synthetic in section 2118 of the OFPA (7 U.S.C. 6517) provides us with
the basis for using this term in our proposed rule to describe
substances that are not

[[Page 65887]]

synthetic. By using this one term to describe substances that are not
determined to be synthetic, we hope to avoid the uncertainty that
surrounds the current use of the term natural in the marketplace.
Therefore, in agreement with the recommendations provided by the NOSB,
we will use the word non-synthetic in this and all other provisions of
this proposal to address substances that are described in the Act
either as natural or non-synthetic substances.
Natural (non-synthetic) substances are generally allowed under the
Act for use in organic farming and handling and thus do not have to be
included on the National List in order to be used. However, the Act
does provide for specific natural (non-synthetic) substances to be
prohibited for use in organic farming and handling if certain criteria
are met. The Act also provides that the specified natural (non-
synthetic) substances which are prohibited for use in organic farming
and handling are to be put on the National List of prohibited
substances.
Section 2118(c)(2) of the OFPA (7 U.S.C. 6517(c)(2)) delineates the
criteria upon which the decision to prohibit the use of a specific
natural substance is to be based. These criteria require that the
Secretary determine, in consultation with the Secretary of HHS and the
Administrator of the EPA, that the use of the substance would be
harmful to human health or the environment, and that its use would be
inconsistent with organic farming or handling and the purposes of the
Act.

Basis for Inclusion of Non-agricultural Substances and Non-organically
Produced Agricultural Products on the National List as Substances
Permitted for Use as Ingredients In or On Processed Organic Products.

One criterion provided by section 2118(c)(1)(A)(ii) of the OFPA (7
U.S.C. 6517(c)(1)(A)(ii)) for inclusion of a substance on the National
List of synthetic substances permitted to be used is that it must be
necessary to the production or handling of the agricultural product
because of the unavailability of wholly natural substitute products.
Thus, synthetic substances used in handling an organic product may be
considered for inclusion on the National List of substances permitted
to be used. Such substances, however, must be evaluated according to
the same criteria as synthetic substances permitted to be used in crop
or livestock production, in accordance with section 2118(c)(1)(A) of
the OFPA (7 U.S.C. 6517(c)(1)(A)). Section 2118(c)(1)(B)(iii) of the
OFPA (7 U.S.C. 6517(c)(1)(B)(iii)) permits the consideration of the
inclusion of non-synthetic non-organically produced substances on the
National List for use in handling organic processed products if they
meet the same criteria set forth for synthetic substances in section
2118(c)(1)(A) of the OFPA (7 U.S.C. 6517(c)(1)(A)). Because a substance
that is not an agricultural product is considered to be non-organically
produced, this OFPA provision requires that the NOSB and the Secretary
evaluate non-synthetic non-agricultural substances according to the
same criteria and procedure as an active synthetic substance used in
crop or livestock production or handling. For these reasons, we are
proposing in section 205.26 a National List category of non-
agricultural substances allowed as ingredients in or on organic
processed products, that consists of both synthetic and non-synthetic
substances. A separate category of non-organically produced
agricultural products allowed as ingredients in organic processed
products is proposed in section 205.27, also in accordance with section
2118(c)(1)(B)(iii) of the OFPA (7 U.S.C. 6517(c)(1)(B)(iii)).

Summary of the National List and Petition Process for Adding New
Substances

Sections 205.20 and 205.21 of subpart B provide a summary of all
the categories of substances, ingredients and formulated products that
are either allowed or prohibited for use in organic farming and
handling. These sections are proposed in order to make clear the status
of any substance that may be considered for use in a certified
operation. The following are the categories of substances that we
propose comprise the National List: active synthetic substances allowed
for use in organic crop production (section 205.22); non-synthetic
substances prohibited for use in organic crop production (section
205.23); active synthetic substances allowed for use in organic
livestock production (section 205.24); non-synthetic substances
prohibited for use in organic livestock production (section 205.25);
non-agricultural substances allowed as ingredients in or on processed
products labeled as organic or as made with certain organic ingredients
(section 205.26); and non-organically produced agricultural products
allowed as ingredients in or on processed products labeled as organic
or as made with certain organic ingredients (section 205.27).
The six categories of substances we propose for the National List
delineate the substances that can and cannot be used in organic crop
production, in organic livestock production, and in processed products
labeled as organic or made with certain organic ingredients.
Accordingly, only a substance that appears in more than one category,
such as synthetic mineral nutrients that are proposed for use in both
crop production and as livestock feed supplements, may be used for more
than one purpose.
Proposed section 205.28 delineates the process by which a person
may petition the NOSB to add new substances to the National List in any
of the six aforementioned categories, which entails the submission of
specified information to USDA.

Relationship of the National List to the Organic Production and
Handling Requirements

Section 2118(a) of the OFPA (7 U.S.C. 6517(a)) requires the
Secretary to establish a National List to be included in the standards
for organic production and handling established under the Act. We have
accordingly developed the proposed production and handling requirements
(sections 205.3 through 205.19) and the National List (sections 205.22
through 205.28) as a unified whole. The practices delineated within the
proposed requirements for organic production and handling include
appropriate restrictions and conditions on the use of substances, while
the National List delineates what substances may or may not be used.
These standards also are intended to be consistent with our proposed
definition of a system of organic farming and handling, which, as
discussed previously, was created in order to provide a concise summary
of the underlying principles implicit in the Act. Under this proposal,
any substance that is permitted to be used in organic farming or
handling must be used in compliance with the regulations delineated in
sections 205.5 through 205.19 of subpart B and must also meet the
requirements proposed in section 205.3(b)(1) that its use not result in
any measurable degradation of soil or water quality. We believe that
the provisions proposed here for the appropriate use and application of
substances is consistent with the provisions of the Act that address
the National List and with the definition of a system of organic
farming and handling.

General Rules for Categories of Substances and Ingredients Permitted
for Use in Organic Farming and Handling--Section 205.20

Section 205.20 has been proposed to make it clear that a substance
or

[[Page 65888]]

ingredient on the National List of substances permitted to be used in
organic farming and handling may have its use restricted under other
proposed regulatory provisions.
In section 205.20(a) we propose that all active synthetic
substances or non-organically produced ingredients that are included on
the National List in sections 205.22, 205.24, 205.26, or 205.27, and
therefore permitted to be used in organic farming and handling, would
have to be used in compliance with the Act and all the regulations we
are proposing. In paragraph (b) of this section we propose that any
other substance that may be used in a system of organic farming and
handling also would have to be used in compliance with the Act and the
regulations. Thus, any substance or ingredient that is permitted for
use only could be used if its use complied with any applicable
restrictions on its use that are provided for in other sections of the
proposed regulations. For example, section 205.7(c)(2)(i) permits the
use of synthetic micronutrients to produce organic crops provided that
the micronutrients are not applied in a manner intended to be
herbicidal, and section 205.16(a) permits the use of non-organically
produced ingredients in a product labeled as organic provided that the
ingredients comprise less than 5 percent of the total weight of the
product, excluding water and salt. Of course, all substances used in
organic farming or handling also must be used in accordance with any
other applicable Federal, State, or local regulations.
In section 205.20(b) we propose three categories of substances that
are not required to be included on the National List in order to be
permitted for use in the production or handling of organic products. A
substance that does not appear on the National List would have to be
included in one of these categories in order to be used in organic
farming or handling, as applicable.
The first category of substances permitted for use in organic
farming or handling, as proposed in paragraph (b) of this section,
comprises non-synthetic substances that are not included on the
National List in section 205.23 or section 205.25 as a non-synthetic
substance prohibited for use. Section 2118(c)(2) of the OFPA (7 U.S.C.
6517(c)(2)) provides for a non-synthetic substance to be prohibited in
organic farming and handling only when it is included as a prohibited
substance on the National List. Also, section 2113 of the OFPA (7
U.S.C. 6512) states that a production or handling practice is permitted
under the Act unless it is prohibited or otherwise restricted, or is
determined to be inconsistent with the certification program
established under the Act.
The following list contains various substances that we have
reviewed in consultation with the NOSB and determined to be both non-
synthetic and as not meeting the Act's criteria that would prohibit
their use. Therefore, these substances are permitted for use in organic
crop production. This list is not intended to be inclusive of all non-
synthetic substances allowed for use. It is, however, based on lists of
substances historically permitted for use in organic production by
existing certification programs and is included here as a reference
guide.

A List of Natural (Non-Synthetic) Substances Reviewed for Use in
Organic Crop Production (Non-Inclusive, for Reference Only)

Animal substances or byproducts:
Blood meal
Bone meal and bones
Feather meal
Fish emulsions
Fish hydrolysate
Fish products (fish meal, fish bones, and fish powder)
Fish solubles
Guano, bat or bird
Hoof and horn meal
Insect extracts
Manures, animal
Manure tea
Oyster shells and other sea shells
Oyster shell lime
Sea animal wastes
Tankage
Whey, dairy
Worm castings
Beneficial organisms
Algae
Bacteria [including Bacillus thuringiensis (Bt)]
Fungi
Higher animals
Higher plants
Insects
Microbial soil, compost, plant and seed inoculants
Mites
Nematodes
Protozoa
Viruses
Fermented or bio-processed substances and composts (see animal,
plant and mineral categories for compost feed stocks):
Alcohol-from natural sources only (Ethyl)
Biodynamic preparations
Compost
Compost tea
Gibberellic acid
Leaf mold
Mushroom compost
Vinegar
Mined minerals and other mined substances:
Basalt
Borate and boron products
Calcium sulfate (gypsum)
Chilean nitrate (sodium nitrate, nitrate of soda)
Clays
Colloidal phosphate
Cryolite (sodium fluoaluminate)
Diatomaceous earth
Dolomite
Feldspar
Granite dust
Greensand
Humates, mined sources
Humic acid derivatives
Kieserite
Lignite
Limestone
Marl
Muriate of potash
Niter (potassium nitrate)
Peat moss
Perlite
Phosphate rock, raw
Potassium sulfate
Pumice
Rock dust
Sand
Sulfur
Sulphate of potash magnesia (langbeinite)
Sodium bicarbonate
Vermiculite
Plant substances or byproducts:
Alfalfa pellets, or meal
Aquatic plant extracts
Citrus products
Citrus oil
Cocoa bean hulls
Cotton gin trash
Cottonseed meal
Food processing wastes
Garlic
Grape and other pomaces
Herbal preparations
Hay
Kelp or seaweed, unprocessed, meal, extracts or other
derivatives
Leaves
Molasses
Neem and Neem extracts
Peanut meal
Peanut hulls
Plant extracts
Propolis
Pyrethrums
Rice hulls and other residues
Rotenone
Ryania
Sabadilla
Saw dust, bark, wood chips and other wood wastes
Soybean meal
Straw
Tobacco, and tobacco by-products
Wood ash
Vegetable waste, cannery waste

We consider a non-synthetic substance that is an industrial by-
product to be synthetic only if the substance becomes chemically
altered as a result of a manufacturing process. This is consistent with
section 2103(21) of the OFPA (7 U.S.C. 6502(21)) which defines a
synthetic substance as one that is formulated or manufactured by a
chemical process or by a process that chemically changes the substance.
Examples of industrial by-products that are synthetic substances are:
paper

[[Page 65889]]

manufacturing wastes, kiln dust, and leather meal. Whey solids and
sawdust are examples of industrial by-products that are not chemically
altered and are therefore non-synthetic.
We do not consider non-synthetic substances that have been treated
with a s ynthetic substance, but which have not been chemically altered
by a manufacturing process, to be synthetic under the definition given
in the Act. This is because the residues of synthetic substances that
may be present in these materials do not chemically combine with or
change the chemical composition of the original substance.
Additionally, the presence of these residues has no significant effect
on biological and chemical interactions in the agroecosystem, including
physiological effects on soil organisms, crops and livestock, nor would
the residues cause measurable degradation to soil or water quality. The
synthetic residues therefore are not considered to be active synthetic
ingredients or substances under the definition we have proposed.
Examples of non-synthetic substances that may have been treated with a
synthetic substance, but not chemically altered, include municipal yard
wastes and processing wastes from non-organically produced crops, such
as cotton gin trash or cocoa hulls.
We also do not consider certain categories of substances that are
delineated in section 2118(c)(1)(B)(i) of the OFPA (7 U.S.C.
6517(c)(1)(B)(i)), which provides one set of criteria for substances
which may be included on the National List of synthetic substances
allowed for use in organic farming and handling, as synthetic
substances according to the definition of synthetic given in the Act.
We are therefore proposing to allow the use of the following substances
in organic production and handling without being included in the
National List of active synthetic substances allowed for use in organic
farming.
Toxins derived from bacteria are not synthetic and the use of non-
synthetic toxins as pest control substances in organic crop production
would be regulated under section 205.9(e)(1). We note, however, that
toxins derived from genetically engineered microorganisms are included
in this document as a separate listing on the proposed National List of
active synthetic substances allowed for use in crop production, as set
forth in section 205.22(d) of subpart B. We have included toxins
derived from genetically engineered bacteria on the proposed National
List primarily so that we can receive comment on the proper
classification of these substances, and on whether they should be
allowed, prohibited, or approved on a case-by-case basis.
Fish emulsions are non-synthetic, although they may contain
synthetic preservatives or stabilizers. These preservatives or
stabilizers would be considered as inert ingredients, as defined in
section 205.2, because they are not active ingredients in the
formulated product. Also, these preservatives or stabilizers do not
chemically alter the non-synthetic fish emulsion; therefore, their
presence in a formulated product would not make the fish emulsion
synthetic under the definition in the Act. However, if the level of a
synthetic stabilizer in the fish emulsion is higher than necessary to
stabilize the product, the stabilizer would then be considered as a
synthetic fertilizer and thus prohibited under section 2109(b)(1) of
the OFPA (7 U.S.C. 6508(b)(1)).
Treated seed, i.e., seed treated with pesticides, itself is not a
synthetic substance because seed is an agricultural product and the
treatment does not chemically alter or combine with the seed. When a
treated seed is used as permitted in proposed section 205.8(a), the
seed treatment does not function as an active ingredient for its
intended use, nor do we consider it as causing measurable degradation
of soil or water quality; therefore, the seed treatment is incidental
or inconsequential when treated seed is used in organic production.
The second category, proposed in paragraph (b)(2) of this section,
includes those substances or devices that are not active synthetic
ingredients or substances, as defined in section 205.2, in a system of
organic farming and handling. This category encompasses certain
production aids used in crop and livestock production, such as plastics
or other synthetic materials used as mechanical devices, treatments
used for structures, and substances that otherwise do not enter into
chemical interactions in the agroecosystem under normal conditions of
use. It also includes certain production aids and other substances used
in handling that are considered to be incidental additives, as is
consistent with FDA and FSIS regulations governing ingredients that
must be included on product labels.
The following list of substances or categories of substances have
been determined by us to fall into this category because they are aids,
devices, or incidental additives that do not contain active synthetic
ingredients and do not meet the proposed definition of active
ingredient or substance, and are therefore permitted for use in organic
production or handling without inclusion on the National List. Included
in this listing are some categories of substances delineated in section
2118(c)(1)(B)(i) of the OFPA (7 U.S.C. 6517(c)(1)(B)(i)), which
establishes one set of criteria for substances that may be included on
the National List, as well as additional substances that were
considered by the NOSB for inclusion on the National List. This
discussion is not intended to be an all-inclusive listing of non-active
substances that may be used in organic production or handling.
Production aids such as netting; tree wraps and seals; sticky
barriers; row covers; equipment cleaners; flocculants; pelletizers;
adjuvants; and surfactants and other substances added to water to
change its physical properties do not contain or function as active
ingredients under our proposed definition of active ingredient because
proper use of these substances has no consequential effects on
biological and chemical interactions in the agroecosystem and does not
cause measurable degradation of soil or water quality. Agricultural
plastics, whether used as insect barriers, mulch, irrigation pipe,
season extenders, or similar purposes, cannot be said to enter into
chemical interactions in the agroecosystem. Substances used to adjust
the texture of dry materials (e.g., flocculants or pelletizers) or to
change the physical qualities of water (e.g., adjuvants or surfactants)
are considered to be inconsequential additives rather than active
ingredients in fertilizer, pest control, tank mixes, or other types of
product formulations.
Synthetic substances used in insect or rodent traps are not active
synthetic ingredients because they are not integrated into an organic
production or handling system and do not interact chemically with any
element of the agroecosystem. They are, additionally, prohibited from
directly contacting an organic product or crop and therefore would not
affect the integrity of an organic product.
We do not consider wood that is treated with synthetic
preservatives and used in buildings, trellises and fences to have a
significant potential to cause degradation of soil or water quality
because the wood preservatives do not chemically interact with, or
affect the integrity of, any aspect of the agroecosystem when used for
structures, even structures that are used in contact with the soil.
However, in certain situations, treatments used to preserve wood have
been shown to have effects on biological and chemical interactions in
the agroecosystem that would cause the treated wood to be considered an

[[Page 65890]]

active substance under our proposed definition. These situations are
conditions that bring the wood into prolonged contact with soil that
has a very high organic content, as is commonly found in compost bins
and containers used for greenhouse potting mixes. We therefore would
consider treated wood to be an active synthetic substance in any such
situation, and thus prohibited for use in conditions of prolonged
contact with soil that has a very high organic content. Further, as
discussed in the supplementary information for section 205.21, if
treated wood were to be used as a bin or container for an organic
product, its use would be prohibited under section 2111(a)(5) of the
OFPA (7 U.S.C. 6510(a)(5)), which prohibits the use for the handling of
organic products of any storage containers or bins that contain
synthetic fungicides, preservatives or fumigants.
An incidental additive used in the processing of agricultural
products, which we define as an additive present in an agricultural
product at an insignificant level and that does not have any technical
or functional effect in the product, does not therefore meet our
definition of an active ingredient. As discussed in the supplementary
information for section 205.26, incidental additives may be used in
organic handling without inclusion on the National List, but their use
is regulated in section 205.17(a).
In section 205.20(b)(3), we propose that formulated products
containing inert ingredients may be used in a certified organic farming
operation if the formulated product does not contain an active
synthetic ingredient that is prohibited for use in organic farming, and
any synthetic inert ingredient contained in the formulation is not
classified by EPA as an inert of toxicological concern. In order for a
formulated product to be used in organic crop production, each active
ingredient it contains must be a substance that is permitted under the
Act and subpart B of part 205.
Additionally, the Act in section 2118(c)(1)(B)(ii) of the OFPA (7
U.S.C. 6517(c)(1)(B)(ii)) specifically prohibits products containing
substances classified by EPA as inerts of toxicological concern. We
have determined that this prohibition applies only to EPA List 1 inerts
(Inerts of Toxicological Concern), as explained in the supplementary
information for section 205.21(d). Accordingly, formulations containing
synthetic inert substances included on EPA List 2, Potentially Toxic
Inerts; EPA List 3, Inerts of Unknown Toxicity; and EPA List 4, Inerts
of Minimal Concern would be permitted in organic production under our
proposal.

General Rules for Categories of Substances and Ingredients Prohibited
for Use in Organic Farming and Handling--Section 205.21

Section 205.21 delineates five general categories of substances
that would be prohibited for any use in organic production or handling.
The first of these, proposed in paragraph (a) of this section, would be
an active synthetic substance that is not included as an active
synthetic substance permitted for use in either organic crop or
livestock production in sections 205.22 or 205.24 of the National List.
This category is proposed, as stated previously, in accordance with
sections 2105(1) and 2118(c)(1)(B)(i) of the OFPA (7 U.S.C. 6504(1) and
6517(c)(1)(B)(i)) which prohibit the use of any active synthetic
substance in organic production unless it is on the National List. Our
proposed category specifically includes any synthetic carbon based
substance that has a cytotoxic mode of action, as defined in section
205.2. These synthetic carbon based substances are discussed in the
supplementary information for section 205.9(f). They are not one of the
categories of substances that is identified in section 2118(c)(1)(B)(i)
of the OFPA (7 U.S.C. 6517(c)(1)(B)(i)) as a possible category of
synthetic substances that may be put on the National List, thus
allowing their use. It should be noted that any active synthetic
substance that does not belong to any of the categories of substances
identified in this section of the Act could not be included on the
National List and thus could not be permitted for use in organic
farming or handling.
Paragraph (b) of this section would prohibit the use of a non-
agricultural substance used as an ingredient in or on a processed
product that is labeled as organic or as made with certain organic
ingredients if the substance is not included in section 205.26 as an
allowed non-agricultural substance. This category, as previously
discussed, is proposed in accordance with section 2118(c)(1)(B)(iii) of
the OFPA (7 U.S.C. 6517(c)(1)(B)(iii)), which permits the use of a non-
organically produced ingredient in handling an organic product only if
the substance is included on the National List.
The third category, proposed in paragraph (c) of this section,
would include any prohibited non-synthetic substance included in either
sections 205.23 or 205.25. The absence of any prohibited non-synthetic
substances in this proposal is discussed in the supplementary
information for proposed section 205.23.
The fourth category of substances prohibited under this proposal,
in section 205.21(d), is in accordance with section 2118(c)(1)(B)(ii)
of the OFPA (7 U.S.C. 6517(c)(1)(B)(ii)), which prohibits the use of
formulated products that contain any synthetic inert ingredient that is
classified by the Administrator of the EPA as an inert of toxicological
concern. Inert ingredients of toxicological concern are those inert
ingredients included on the EPA List 1 Inerts of Toxicological Concern
(54 FR 48314, November 22, 1989). Our proposed provision would prohibit
the use of any formulation containing an inert ingredient included on
the EPA List 1, even if that product contained an active ingredient
that was otherwise allowed in this subpart. Formulated pesticidal
products that contain EPA List 1 inerts can be identified by organic
producers and handlers because the EPA requires the phrase ``This
product contains the toxic inert ingredient . . .'' to appear on the
label of such products.
Paragraph (e) of this section would prohibit the use of any
fertilizer or commercially blended fertilizer that contains an active
synthetic ingredient not allowed for use in crop production as provided
for in section 205.22, or that contains an active prohibited substance.
This prohibition is consistent with section 2109(b)(1) of the OFPA (7
U.S.C. 6508(b)(1)) and would apply in this proposal only to substances
or products which meet the definition of fertilizer which we propose in
section 205.2. Under our proposal, the provisions of paragraph (e) of
this section would not apply to substances used as micronutrients,
foliar nutrients, soil cation balancing agents, soil conditioners, or
substances with similar functions which do not meet our proposed
definition of fertilizer as a single or blended substance applied to
the soil to supply any of the three primary plant nutrients, nitrogen
(N), phosphorus (P) and potassium (K), needed for the growth of plants.
Micronutrients and these substances with similar functions are
permitted for use in organic crop production in most of the existing
organic programs we have reviewed, and to include them within the
category of synthetic fertilizers, which are prohibited under the Act,
would unnecessarily restrict the options available to organic farmers
for providing essential plant nutrients and maintaining soil fertility.

[[Page 65891]]

The National List of Active Synthetic Substances Allowed for Use in
Organic Crop Production--Section 205.22

This section of the proposed regulation lists the active synthetic
substances that have been reviewed for use in organic crop production
and which the Secretary proposes be allowed for such use because each
meets the criteria in the Act that permits their use. These substances
have been reviewed by the NOSB as required by the Act, and have been
determined by the Secretary to contain or function as an active
ingredient in one of the categories the Act permits for inclusion on
the National List as a substance permitted for use.
Any synthetic substance included on the National List appears only
according to its generic or most commonly used name. In some cases, we
have indicated other commonly-known terms for certain substances, such
as horticultural oils. A farmer or handler is expected to request
clarification from the applicable certifying agent in the case of
uncertainty about the generic name of a particular brand-name
substance, or about the use of any substance for which there might be
any other questions.
Section 205.22, the list of active synthetic substances allowed for
use in organic crop production, is organized into groups according to
the functions for which the substances may be used. These groups are:
horticultural oils used as insect pest smothering or suffocating
agents; soaps used as insecticides, algicides, de-mossers, large animal
repellants, and herbicides; production aids; toxins derived from
genetically engineered bacteria (that are not released live into the
agroecosystem) for use as pesticides; copper and sulfur compounds used
as pesticides; minerals used as micronutrients; and minerals used as
defoliants in fiber production.
Most of the substances included in this section of the National
List are proposed in accordance with the recommendations provided by
the NOSB. There are, however, a few cases in which we have determined
it necessary to amend the NOSB recommendations concerning a particular
substance in consideration of the Act, public input, and other
information, including evaluations by the technical advisory panels.
The following are substances for which the NOSB recommendations differ
from our proposed list in section 205.22.
The NOSB recommended restricting the use of herbicidal soaps
(proposed in section 205.22(b)) to non-field applications. We
determined, however, that the uses of herbicidal soaps allowed by EPA
would not be harmful to human health or the environment and are
consistent with the other criteria provided by the Act, and thus do not
need to be restricted to non-field applications. The available evidence
suggests that these soaps are not persistent in the agroecosystem and
would not cause measurable degradation of soil or water quality or have
discernable effects on biological and chemical interactions in the
agroecosystem.
The NOSB recommended allowing certain specific antibiotics as
pesticides in crop production, but did not recommend to allow others
for this use, particularly Avermectin. Based on a review of the
technical information for these substances, we determined that all the
antibiotics labeled for use as pesticides by EPA are of equally minimal
consequence in their effects on biological and chemical interactions in
the agroecosystem and would not cause measurable degradation of soil or
water quality when properly used according to label instruction and use
restrictions, and there are no other criteria specified in the Act that
any specific substance in this category fails to meet.
The synergist piperonyl butoxide (PBO) (proposed in section
205.22(c)(9)) was not recommended by the NOSB for inclusion on the
National List; the vote to approve PBO failed by only one vote to
achieve the two-thirds majority required for approval. PBO is extracted
from a non-synthetic substance, but is modified synthetically in the
process of extraction and refining; it does not appear to persist in
the environment or otherwise have significant effects on biological and
chemical interactions in the agroecosystem or cause measurable
degradation of soil or water quality, and is consistent with the other
criteria specified in the Act. It also functions in a manner that
significantly reduces the amounts required of some botanical pesticides
that may be applied. In consideration of the benefits of reducing the
amount of botanical pesticides used in an organic farming operation,
which the scientific evidence clearly indicates is more likely to
effect biological and chemical interactions in the agroecosystem than
the PBO, we have determined that PBO should appear as an allowed
synthetic substance on the proposed National List.
The NOSB did not recommend to include on the proposed National List
killed microbial pesticides (toxins derived from genetically engineered
bacteria that are not released live into the agroecosystem), such as
the Bacillus thuringiensis toxin (proposed in section 205.22(d)).
However, several technical experts to the NOSB reviewed these
substances positively, and did not raise concerns about their effects
on biological and chemical interactions in the agroecosystem when these
substances are properly used. We have included toxins derived from
genetically engineered bacteria that are not released live into the
agroecosystem on the proposed National List.
Our research indicates that the genetically engineered bacteria
from which the toxins proposed for inclusion on the National List in
section 205.22(d) are derived are not released live into the
agroecosystem and therefore do not have the potential to reproduce. Our
research, however, indicates that the toxins themselves if overused may
have the potential to induce accelerated resistance of pest
populations. In this regard, we would like to receive public comment
and technical and scientific data as to the effects of the use of
toxins derived from genetically engineered bacteria that are not
released live into the agroecosystem on the biological and chemical
interactions in the agroecosystem.
The NOSB recommended that minerals used as defoliants in organic
fiber production (proposed in section 205.22(g)) should be restricted
according to their use and source because of their potential to cause
measurable degradation of soil and water quality. However, technical
information we reviewed about the use of these substances indicates
that they are unlikely to result in measurable degradation of soil and
water quality in the amounts applied for the defoliation of fiber
crops. We have, therefore, listed calcium chloride, magnesium chloride,
sodium chlorate, and sodium chloride as allowed synthetic substances
used to defoliate fiber crops. In accordance with proposed section
205.3(b)(2), a non-synthetic substance, such as sodium chloride
extracted from brine, would have to be chosen in preference to any
synthetic defoliant, whenever possible. However, we determined that all
four substances reviewed should appear on the National List because
they are relatively indistinguishable with respect to their potential
for measurable degradation of soil and water quality. In addition, all
these minerals are available in both synthetic and non-synthetic forms
that are not readily distinguishable, and thus would have to appear on
the National List in order to be permitted for use.
The NOSB has reviewed amino acids (proposed in section
205.22(b)(5)) but has not yet made a recommendation as to whether to
include them on the

[[Page 65892]]

National List as allowed synthetic crop production substances. However,
the NOSB did vote to allow the use of certain vitamins, which are
similar to amino acids in their use as a crop production aid and their
effects on soil and water quality. We did not find any scientific
evidence that amino acids, which are synthetically derived but
chemically identical to substances that are normally found in soil
organic matter, pose any concern for measurable degradation of soil and
water quality and they meet all the other criteria established in the
Act. We therefore have included amino acids on the proposed National
List for use as an organic crop production aid.
The NOSB recommended the following substances for inclusion on the
National List of allowed synthetic substances, but we have not included
them on the proposed National List because we determined that they were
non-synthetic. Therefore, they may be used in organic farming without
being included on the National List.
Fish products, aquatic plant extracts, and humic acid and its
derivatives are not included because, as discussed previously, we
determined that they are non-synthetic. Although the NOSB also had
concerns about synthetic extractants used to produce these non-
synthetic substances, we determined that the extraction methods for
substances used in crop production are inconsequential in their effects
on biological and chemical interactions in the agroecosystem or to
measurable degradation of soil and water quality. Additionally, the
addition of small amounts of synthetic stabilizers or preservatives to
these products is of minimal concern and, as discussed in the
supplementary information for section 205.20 of this proposal, the
inclusion in a formulated product of synthetic inert ingredients that
are not of toxicological concern does not cause the product to be
prohibited for use in organic production. However, we are aware that
synthetic stabilizers sometimes may be added to such products at levels
higher than necessary to stabilize the formulation in order to increase
its fertilizer value. In such cases, the stabilizers would be
considered to be synthetic fertilizers, which are prohibited for use in
organic production by section 2109(b)(1) of the OFPA (7 U.S.C.
6508(b)(1)) and proposed section 205.7(d)(1). A certified producer or
handler is expected to request clarification from the certifying agent
in the case of uncertainty about whether a specific product would be
prohibited according to this definition.
Elemental sulfur also was recommended by the NOSB for inclusion in
proposed section 205.21. However, we consider elemental sulfur to be
non-synthetic regardless of its source.
Potassium nitrate (niter) was reviewed by the NOSB as a synthetic
substance and was not recommended for inclusion as an allowed synthetic
substance for organic crop production. However, we reviewed information
that potassium nitrate also exists as a natural mineral deposit that
may be mined for agricultural use. Although we agree with the NOSB and
do not consider synthetic potassium nitrate to meet the criteria for
inclusion as a synthetic substance on the National List, niter in the
form of a non-synthetic mined product would be allowed for use in
organic production under the Act and the proposed regulations in
subpart B of this part.
The following substances were recommended by the NOSB for inclusion
as allowed synthetic substances for organic crop production. We have
not included them on the National List because we consider them not to
be active substances or ingredients in the applications for which they
are used and therefore, as previously discussed, are substances that
may be used in a certified organic operation without inclusion on the
National List:
Plastic mulches and row covers do not interact chemically with the
agroecosystem and are specifically permitted under section 2109(c)(2)
of the OFPA (7 U.S.C. 6508(c)(2)) if they are removed at the end of
each harvest season.
Disinfectants, such as alcohols, hydrogen peroxide and chlorine
bleach that are used to clean equipment; sticky traps and barriers; and
ammonium carbonate used as bait in traps are not used directly on soil
or crops and thus are not active because they have no significant
consequence to the organic production system.
Lignin sulfonate, which is used as a dust suppressant or as a
chelating agent, is not active in either use because, in the former
instance it is not applied to soil used for crop production and, in the
latter instance, it is not an active ingredient in a formulated
(micronutrient) product.
Detergents and other emulsifiers used as surfactants or adjuvants
often are added in very small quantities directly to tank mixes used
for spraying and are considered to be non-active, just as inert
ingredients within a formulated product are. Similar considerations
apply to sodium silicate and other substances used to affect the
surface tension of water, as is sometimes done to improve the buoyancy
of tree fruit during packing.
The NOSB also recommended that lumber treated with arsenates not be
included on the National List as an allowed synthetic substance.
However, as previously discussed, we determined that a substance used
to treat lumber that is used for such purposes as buildings, fences and
trellises cannot be considered to be an active ingredient under our
definition of an active ingredient. However, evidence we have reviewed
indicates that arsenates and other synthetic lumber preservatives may
become active when in contact with soil having a very high organic
content, such as soil used in greenhouse beds or compost bins. Because
arsenates and other synthetic substances used to preserve lumber are
not proposed by us to be included on the National List as active
synthetic substance, and because section 2109(c)(1) of the OFPA (7
U.S.C. 6508(c)(1)) specifically prohibits the use of arsenic or lead
salts in organic crop production, the use of arsenates and other
synthetic lumber preservatives in any manner that might be considered
an active use would be prohibited under the Act and this proposal.
Furthermore, section 2111(a)(5) of the OFPA (7 U.S.C. 6510(a)(5))
prohibits the use of storage containers or bins that contain any
synthetic fungicides or preservatives in handling organic products and
this would include bins constructed of arsenate treated lumber.
Finally, the NOSB recommended that biosolids, or municipal sludge,
should be classified as synthetic and were not appropriate for use in
organic crop production. The EPA defines biosolids as the primarily
organic residuals, produced by current wastewater treatment processes
that treat domestic sewage, that can be beneficially recycled. Under
current EPA regulations, such recycling can include land application of
biosolids to provide primary plant nutrients and micronutrients to
crops and vegetation produced in agriculture and to improve soil
characteristics by providing necessary moisture and/or organic matter
to enhance soil tilth. Over the years, EPA, USDA, and FDA have issued
joint policy statements that have endorsed the beneficial utilization
of biosolids on land for purposes that include the production of fruits
and vegetables. However, to prevent potential problems, the guidance
contains steps that must be taken relative to issues such as the amount
of cadmium and lead that can be applied to the soil, the amount of PCBs
in the biosolids, and the relative accumulation

[[Page 65893]]

of heavy metals into edible plant parts. Under these and other
restrictions contained in 40 CFR Part 503, biosolids can be safely used
in conventional agriculture. However, we are requesting comments to
assess the extent to which biosolids may be used in organic production.
The USDA specifically invites comments on whether the use of biosolids
(municipal sludge) should be permitted or prohibited in organic
production. The USDA also invites comments on the classification of
biosolids as a synthetic rather than a non-synthetic substance.
Comments should detail the basis for the commenter's recommendation,
including the agricultural, policy, technical, or scientific factors.

The National List of Non-Synthetic (Natural) Substances Prohibited for
Use in Organic Crop Production--Section 205.23

The NOSB has recommended that the rodenticide strychnine, the
fertilizer ingredient manure ash, and the pesticide sodium
fluoaluminate, which are non-synthetic (natural) substances, be
prohibited for use in organic farming and handling. As stated
previously, in order for the Secretary to prohibit the use of a non-
synthetic (natural) substance in an organic farming or handling
operation, it must be determined that the use of such substance both
would be harmful to human health and the environment and inconsistent
with organic farming or handling. Further, the Secretary of HHS and the
Administrator of EPA must be consulted.
The Secretary of HHS and the Administrator of EPA, respectively,
have the authority to regulate crop production substances according to
human health and safety and environmental protection. These two
agencies have the responsibility to review and establish appropriate
restrictions on the use of any substance as a pest control, food, feed
or drug, and the applicable agency must determine that allowed use of
the substance poses no threat to human health and the environment
before permitting a substance to be used in agricultural production or
handling. In consulting with these agencies, they concluded that their
review of these substances showed that, when used according to the
requirements established by these agencies, the substances do not meet
the criteria in the Act for inclusion on the National List of
prohibited non-synthetic (natural) substances. In concurrence with this
conclusion, we have determined that there can be no non-synthetic
substance that meets both of the OFPA criteria for being designated as
a prohibited non-synthetic substance, and we did not accept the NOSB's
recommendation for the prohibition of strychnine, manure ash, and
sodium fluoaluminate. We only include sections 205.23 and 205.25 in our
proposal so that appropriate substances may be included on the National
List in the future should this be determined to be necessary.

The National List of Active Synthetic Substances Allowed for Use in
Organic Livestock Production--Section 205.24

The substances proposed for inclusion in this section of the
National List are listed as the following six categories: trace
minerals; nutrients and dietary supplements; feed additives (provided
they are also included in section 205.26); animal drugs and other
animal health care substances; vaccines and biologics; and pest control
substances (provided they also are included in section 205.22).
This section would permit any active synthetic substance permitted
by FDA, EPA and USDA in the specified categories to be allowed for use
in organic livestock production when used in accordance with the
restrictions specified by the approving agency and the restrictions
specified in this section. We have proposed these active synthetic
substances to be permitted for use after reviewing the NOSB
recommendations for livestock substances to be included on the National
List, and their recommendations for the use of vitamins, minerals,
inoculants, vaccines, antibiotics and parasiticides in livestock
production. Our proposed list is consistent with sections 2110 and 2118
of the OFPA (7 U.S.C. 6509 and 6517), which delineate feeding and
health care practices to be used in organic livestock production and
the categories of synthetic substances related to livestock production
that may be included in the National List.
Section 2110(d) of the OFPA (7 U.S.C. 6509(d)) prohibits certain
uses of veterinary medications, specifically subtherapeutic doses of
antibiotics and routine administration of synthetic internal
parasiticides, in organic livestock production. The use of other
veterinary medications, except vaccines, is prohibited only in the
absence of illness. This indicates that therapeutic doses of
antibiotics, non-routine use of synthetic internal parasiticides, any
use of vaccines, and administration of any veterinary medication to
treat an illness are all permitted under the Act, without the need to
include these substances on the National List of synthetic substances
permitted to be used. However, because livestock parasiticides and
medicines are also included among the categories of active synthetic
substances in section 2118(c)(1)(B)(i) of the OFPA (7 U.S.C.
6517(c)(1)(B)(i)) that would need to be included on the National List
in order to be permitted to be used, we have included animal drugs
(veterinary medications) in this section of the proposed National List
in order to clarify that their use is permitted.
All of the categories proposed for inclusion in this section of the
National List, other than animal drugs and other animal health care
substances and vaccines and biologics, have been explicitly reviewed by
the NOSB itself and proposed for inclusion as either crop production
substances in section 205.22 or as ingredients allowed in processed
products in section 205.26. We are including the categories of animal
drugs and animal health care substances and vaccines and biologics in
the National List because these substances have already been evaluated
by the applicable regulatory agency that approves them for general use
by criteria similar to those in section 2119(m) of the OFPA (7 U.S.C.
6518(m)) that are to be used by the NOSB in evaluating a substance.
A representative of the FDA's Center of Veterinary Medicine (CVM)
addressed the NOSB in Rohnert Park, California, in October 1994, to
explain in detail the review process conducted by CVM in reviewing
veterinary drugs and establishing withdrawal times. The NOSB voted at
its meeting in Austin, Texas, on October 31, 1995, to accept the FDA
evaluations of antibiotics, parasiticides, vitamins and minerals and
the USDA evaluations of inoculants and vaccines as equivalent to the
substance review process established for the NOSB in sections 2119(k),
(l) and (m) of the OFPA (7 U.S.C. 6518 (k), (l) and (m)). However, in
doing so, the NOSB did indicate that it would: defer the initial
technical advisory panel review of synthetic vitamins and minerals for
a period of two years unless a specific vitamin or mineral is
identified in the interim as being in conflict with organic principles
and therefore requires an immediate review; defer the initial review of
vaccines and inoculants for a period of two years, except in the case
of a substance that may be in conflict with organic principles and
therefore requires an immediate review; and establish a priority
ranking of antibiotics and parasiticides to be used by producers when
administering animal drugs. To date, the NOSB has not yet established a
priority ranking for preferred use of the antibiotics and parasiticides
approved by FDA.

[[Page 65894]]

The National List of Non-Synthetic Substances Prohibited for Use in
Organic Livestock Production--Section 205.25

As previously discussed with reference to proposed section 205.23,
no substances are proposed in this section because we have determined
that no non-synthetic substances meet the criteria provided in section
2118(c)(2) of the OFPA (7 U.S.C. 6517(c)(2)) for prohibiting their use.

The National List of Non-agricultural Substances Allowed as Ingredients
in or on Processed Products Labeled as Organic or Made With Certain
Organic Ingredients--Section 205.26

We propose in Sec. 205.26 the National List category of non-
agricultural substances allowed as ingredients in or on processed
products labeled as organic or made with certain organic ingredients.
As discussed previously, this section of the National List is proposed
to satisfy the provision in section 2118(c)(1)(B)(iii) of the OFPA (7
U.S.C. 6517(c)(1)(B)(iii)) that a non-organically produced substance
used in handling be evaluated as if it were synthetic, and therefore
the use of such a substance is prohibited unless it appears on the
National List.
The inclusion of both synthetic and non-synthetic non-agricultural
substances in this category is necessary because, as was indicated in
the NOSB's deliberations, it is often very difficult to decisively
classify many non-agricultural ingredients as synthetic or non-
synthetic. For example, citric acid is a naturally occurring substance
that may be obtained from citrus fruits. However, after reviewing and
discussing the process by which virtually all commercially available
citric acid is formulated, the NOSB was almost evenly divided in its
vote as to whether or not this process rendered the substance synthetic
under the definition provided in section 2103 of the OFPA (7 U.S.C.
6502).
We have not, however, proposed to include in this section of the
National List any substance (ingredient) that does not meet our
definition of an active ingredient. Substances that are not active
ingredients are considered to be incidental additives, and such
substances are not consistent with the FDA and FSIS requirements for
substances that must be listed on a product label. As previously
discussed, because incidental additives are not active ingredients,
they are not otherwise prohibited by the Act and may thus be used in
handling organic products without having to be included on the National
List. We are accordingly including only substances that do meet the
definition of an active ingredient, and that therefore are required by
the FDA and FSIS to be listed on a product label, in the National List
of non-agricultural substances allowed as ingredients in or on
processed organic products.
Proposed Sec. 205.26 contains an alphabetical listing of the
generic name of the non-agricultural substances which meet the Act's
criteria for inclusion on the National List as substances permitted to
be used. These substances have been reviewed by the NOSB and included
in recommendations made by them to the Secretary regarding substances
to be included on the proposed National List. In most cases, substances
are listed individually, such as ammonium bicarbonate or lactic acid,
but in many cases categories of substances, such as cultures (dairy,
non-synthetic) or nutrient supplements, are listed. When a category is
listed, the use of any substance that belongs to that category is
allowed.
This section diverges from certain recommendations provided by the
NOSB. As discussed with respect to allowed synthetic substances used in
crop production, proposed in Sec. 205.22, certain substances that the
NOSB recommended be included on the National List of substances allowed
for use as ingredients in or on processed organic products are not
active, and are thus not included in this section. These substances,
which may be used without inclusion on the National List, are
diatomaceous earth, clays including kaolin and bentonite, nitrogen,
oxygen, ozone, chlorine bleach, perlite, sodium hydroxide, ethylene,
hydrogen peroxide, and potassium hydroxide.
Kelp was reviewed and recommended by the NOSB as a permitted non-
agricultural substance in processed products. We have not included kelp
as a non-agricultural substance permitted for use because kelp and
other seaweeds are plants harvested from the wild, and so are
considered agricultural products as opposed to non-agricultural
products when used as ingredients in processed organic products. Kelp
also might be considered a nutrient supplement when used as a source of
iodine in food meant for human consumption and as a source of iodine
and trace minerals in livestock feed.
The NOSB recommended the plant derived waxes carnauba wax and wood
rosin for inclusion on the proposed National List. (Wood rosin also is
referred to as lac-resin, shellac-based wax, or resin). We have
included carnauba wax and wood rosin in this proposed section and
additionally propose to include candelilla wax and beeswax as allowed
non-agricultural substances. Candelilla wax is a plant derived wax that
is commonly used, as is beeswax, in coatings for fresh produce. We
consider both waxes to be necessary to the handling of agricultural
products and as meeting the other requirements of section 2118(a) of
the OFPA (7 U.S.C. 6517(a)) that must be met before such substances may
be permitted to be used. In accordance with section 2111(a)(5) of the
OFPA (7 U.S.C. 6510(a)(5)), which prohibits the use of any packaging
materials that contain synthetic fungicides or preservatives, any wax
used as a coating on fresh produce could not contain synthetic
preservatives or fungicides.
The NOSB recommended the inclusion of unmodified cornstarch as a
permitted substance and postponed a decision on other unmodified
starches. Unmodified starches are agricultural ingredients because they
are manufactured from agricultural products through methods that do not
meet the Act's definition of synthetic. Their use would therefore be
permitted as non-organic agricultural ingredients in proposed
Sec. 205.27.
The NOSB reviewed whey protein and did not recommend it for
inclusion on the National List of allowed non agricultural ingredients.
We consider whey protein to be necessary to the handling of certain
agricultural products because of the unavailability of wholly natural
products, which use is then provided for in section 2118(c)(1)(A)(ii)
of the OFPA (7 U.S.C. 6517(c)(1)(A)(ii)). This substance also meets the
other criteria in the Act for inclusion on the National List, and we
accordingly propose that it be included as an allowed non-agricultural
ingredient as part of our category whey and its fractions.
The NOSB also recommended not to include magnesium carbonate,
potassium phosphate, magnesium stearate, and potassium iodide on their
proposed National List of non-agricultural ingredients allowed in
agricultural products labeled as organic. However, the NOSB recommended
that these four substances be permitted in products labeled as made
with certain organic ingredients. Because our proposed National List is
applicable to both types of labeled products, we propose to include
magnesium carbonate, potassium phosphate, magnesium stearate and
potassium iodide in this section and allow their use in products
labeled organic and made with certain organic ingredients.

[[Page 65895]]

(Potassium iodide is not listed separately because it is included
within the nutrient supplement category).
Chymosin is an enzyme that occurs naturally in animals and
currently is being produced through genetically engineered
microorganism in quantities suitable for cheese production. The NOSB
recommended that chymosin not be included on the proposed National List
of non-agricultural substances because it is derived from a genetically
engineered microorganism. We have included chymosin on the proposed
National List so as to solicit public comment.
The NOSB recommended that enzymes derived from bacteria which were
not genetically engineered are appropriate for use as non agricultural
ingredients in agricultural products labeled as organic or made with
certain organic ingredients. Although the NOSB has not completed its
review of sources of non-synthetic enzymes, such as plant, animal, and
micro-organisms other than bacteria, we have included the category of
enzymes, non-synthetic in this section of the proposed National List
for the purpose of receiving comment during the period that the NOSB
completes its review and develops its recommendation. When they have
completed their review, appropriate notice will be provided. We would
consider animal-derived rennet to be included in the category of non-
synthetic enzymes.
The NOSB classified calcium sulfate as synthetic and did not
recommend it for inclusion on the proposed National List of non-
agricultural substances permitted to be used. However, we are aware of
at least one source of mined gypsum (non-synthetic) that is refined to
food grade calcium sulfate. Also, we received comments from some
manufacturers of tofu who stated their preference for calcium sulfate
over other coagulants. Non-synthetic calcium sulfate could serve in
some cases as a wholly natural alternative to the use of synthetic tofu
coagulants, and otherwise meets the Act's criteria for inclusion on the
National List of non-agricultural substances permitted to be used. We
have therefore included calcium sulfate in this section of the proposed
National List.
Some substances included in this proposed section 205.26 as non-
agricultural substances are manufactured from feed stocks that are
agricultural products, such as corn. Some persons may thus consider
these substances to be agricultural products, and therefore not
appropriate for inclusion in this section of the National List. We have
included these substances because they are not easily recognizable as
agricultural products, or because there is some likelihood that the
processing methods used to purify these substances would render them
synthetic as defined under the Act. The inclusion of these substances
in this section is based on our definition of a non-agricultural
ingredient (proposed in section 205.2) as a substance that is
extracted, isolated from, or is a fraction of an agricultural product,
so that the identity of the agricultural product is unrecognizable in
the extract, isolate or fraction. Examples of these proposed substances
include: ascorbic acid, beeswax, citric acid, candelilla wax, carnauba
wax, carrageenan, non-synthetic colors, lactic acid, lecithin, mono and
diglycerides, pectin, potassium acid tartrate, tartaric acid and whey
and its fractions. Since many of these substances originate from
agricultural products, it is possible that these substances could be
available in the future as organic agricultural products.

Non-organically Produced Agricultural Products Allowed as Ingredients
In or On Processed Products Labeled as Organic or Made With Organic
Ingredients--Section 205.27

Non-organically produced agricultural ingredients are permitted for
use in processed organic products under section 2111(a)(4) of the OFPA
(7 U.S.C. 6510(a)(4)), provided that they comprise less than five
percent by weight of the finished product, exclusive of water and salt,
and are included on the National List. Section 2118(c)(1)(B)(iii) of
the OFPA (7 U.S.C. 6517(c)(1)(B)(iii)) requires non-organically
produced substances to be evaluated according to the same criteria used
for active synthetic ingredients in order to be permitted for use as
ingredients in organic products. In its review of non-organically
produced agricultural products, the NOSB concluded that all
agricultural products, considered as a category, meet the criteria for
including substances on the National List, as set forth in sections
2118(c)(1)(A) and 2119(m) of the OFPA (7 U.S.C. 6517(c)(1)(A) and
6518(m)). In concurrence with the NOSB, we are proposing in this
section that all non-organically produced agricultural products be
allowed as ingredients in organic processed products. Under this
proposal, any agricultural product could be used if such use complied
with the provisions proposed in section 205.16.

Amending the National List--Section 205.28

Section 2119(n) of the OFPA (7 U.S.C. 6518(n)) requires the
establishment of a petition procedure by which interested parties may
request the NOSB to evaluate substances for inclusion on the National
List. We accordingly have proposed in section 205.28 a process by which
an interested party may petition the NOSB to review a substance and
make a recommendation as to whether the substance should be included in
the National List as an allowed active synthetic substance, a
prohibited non-synthetic substance, or a non-agricultural substance
allowed to be used as an ingredient in or on processed organic
products.
This section also proposes the information that, to the extent it
is available to the petitioner, should be included in the petition to
assist the NOSB review of the substance and the Secretary's
determination as to its inclusion on the National List. The information
requested by proposed paragraph (d) of this section would provide
information relevant to the issues that are to be examined when
considering placing a substance on the National List. This would
include information that would enable the Secretary to determine
whether a substance functions as, or contains, an active synthetic
ingredient, and whether it falls into one of the categories of active
synthetic substances that may be included on the National List of
approved substances. This would also include information needed to
evaluate the health, environmental, and agroecosystem effects of the
substance.
This proposed section also would require regulatory information,
such as registration of the substance in question with EPA or FDA.
Other required information would include a description of the
manufacturing process of the substance, product characteristics, safety
information relating to the substance, and bibliographies of scientific
literature relating to the substance that may be available to the
petitioner to be submitted. The petitioner would be requested to submit
information that describes alternative substances or alternative
cultural methods that could be utilized in place of the substance, and
that summarizes the effects on the environment, human health, and farm
ecosystem that might support the use of the substance. This information
is needed to help determine whether a substance is an active synthetic
ingredient in one of the categories that the Act, in section
2118(c)(1)(B)(i) of the

[[Page 65896]]

OFPA (7 U.S.C. 6517(c)(1)(B)(i)), permits to be used if it is on the
National List and whether allowance of a synthetic substance is
justified by the lack of a suitable non-synthetic or cultural
alternative, as required under section 2118(c)(1)(A)(ii) of the OFPA (7
U.S.C. 6517(c)(1)(A)(ii)). Other information required to be submitted
is needed to determine whether a non-synthetic substance will be
prohibited for use under the criteria specified in section 2118(c)(2)
of the OFPA (7 U.S.C. 6517(c)(2)).
Section 2118(d) of the OFPA (7 U.S.C. 6517(d)) includes provision
for the procedure by which amendments may be made to the National List.
Following receipt of a petition, as proposed in this section, the
Secretary would determine whether the substance is within one of the
categories of the National List. If the substance is within one of the
defined categories, it would be reviewed by the NOSB in accordance with
the criteria provided in the Act.
After the NOSB submits its recommendations concerning a petitioned
substance to the Secretary, the Secretary would then determine whether
the substance satisfies the criteria listed in section 2118(c) of the
OFPA (7 U.S.C. 6517(c)) regarding the inclusion of substances on the
National List as an allowed or prohibited substance. If the Secretary
determines that the substance does meet these criteria, the addition of
the substance to the National List would then be proposed as an
amendment to the National List according to the procedure established
in section 2118(d) of the OFPA (7 U.S.C. 6517 (d)), which includes
publication in the Federal Register of a proposed amendment to the
National List and an opportunity for public comment.
As provided for in section 2118(e) of the OFPA (7 U.S.C. 6517(e)),
the NOSB also would review any substance on the National List within
five years of the substance being allowed or prohibited for use, and
would provide the Secretary with recommendations as to whether the
substance should remain on the National List. The Secretary would
decide whether to renew each allowance or prohibition in order for an
allowed or prohibited substance to remain on the National List. The
Secretary's decisions concerning this then would be published in the
Federal Register.

Subpart C--Labels, Labeling, and Market Information

Sections 2106(a)(1)(A) and (B) of the OFPA (7 U.S.C. 6505(a)(1)(A)
and (B)) state that persons may sell or label agricultural products as
organically produced only in accordance with the Act, and that persons
may affix a label to and provide other market information concerning
organically produced agricultural products only when the products are
produced and handled in accordance with the Act.
In accordance with the Act, we are proposing in subpart C of this
part provisions regarding labels, labeling, and marketing information
for agricultural products that are organically produced and for any
agricultural products that contain organically produced ingredients.
Additionally, provisions also are included for the use of the USDA seal
on labels, labeling, and other market information as authorized by
section 2106(a)(2) of the OFPA (7 U.S.C. 6505(a)(2)), and this subpart
also addresses the use of products that originate from operations that
sell no more than $5,000 annually in value of agricultural products.
These operations are exempt from certain provisions of the Act.

Agricultural Products in Packages Sold, Labeled, or Represented as
Organic--Section 205.100

In accordance with section 2106 of the OFPA (7 U.S.C. 6505) which
provides for selling and labeling a product as organically produced, we
propose in section 205.100 of this subpart our labeling provisions for
agricultural products in packages described in section 205.16(a) that
are sold, labeled, or represented as organic. These are finished
products that contain at least 95 percent organically produced
ingredients, by weight, excluding water and salt, hereafter referred to
as ``products that contain at least 95 percent organic ingredients''.
The percentage of the product that is not organic must be made of some
combination of non-agricultural ingredients and/or non-organically
produced agricultural products included on the National List. Packages
are defined in our proposal as a container or wrapping that bears a
label and which encloses an agricultural product, except for
agricultural products in bulk containers, shipping containers, or
shipping cartons.
In paragraph (a) of this section, we propose the terms that may be
used on agricultural products described in section 205.16(a) that are
sold, labeled, or represented as organic, (i.e., products that contain
at least 95 percent organic ingredients). We propose to allow the term
organic to be used on the principal display panel to modify the name of
the product and in the ingredients statement to modify the name of each
ingredient organically produced and handled in accordance with the Act
and the regulations in this part. We have defined the principal display
panel to be that part of a label that is most likely to be displayed,
presented, shown or examined under customary conditions of display for
retail sale. The ingredients statement is defined as the listing of the
ingredients contained in a product listed by their common or usual
names in the descending order of predominance. The ingredients
statement is usually located on the information panel of products other
than meat and poultry products and is often located on the principal
display panel of meat and poultry products, but may be placed on other
package panels because of package restrictions.
We are proposing to allow the term organic to appear on the
principal display panel to ensure a clear, consistent and conspicuous
identification of organically produced agricultural products for
consumers. Examples of the use of this term are organic grapes, organic
beef, organic peppermint tea, organic vegetable soup, organic whole
wheat bread, and organic ice cream. We are proposing to allow the term
organic to be used in the ingredients statement to modify the name of
each organically produced ingredient in order to provide consumers with
a means of knowing which ingredients have been organically produced.
Many consumers would consider information about the specific organic
ingredients contained in a product to be essential information to have
as a part of their purchasing decision.
Section 2106(a)(2) of the OFPA (7 U.S.C. 6505(a)(2)) provides for
products that meet USDA standards for organic production to incorporate
the USDA seal on such agricultural products. Additionally, section 2108
of the OFPA (7 U.S.C. 6507) provides for a State to establish a State
organic program that meets the requirements of the national organic
program. If a State does so, and its program is approved by USDA, we
believe it is appropriate to allow the State to have a seal
representing its program, and to allow agricultural products produced
under such a State program to bear a State seal. Accordingly, we
propose in paragraph (a)(3) of this section that a USDA seal, and a
State seal that represents a State organic program approved by the
Secretary, as provided for in section 205.402 of subpart F, may be used
on the principal display panel of packages of agricultural products
labeled as organic. These seals would reflect that

[[Page 65897]]

the product was produced and handled in accordance with the Act and the
regulations in this part, and if applicable, the requirements of a
State organic program approved by the Secretary.
We think that the terms and marks used on the principal display
panel, which is the most visible panel, should be those terms and marks
which simply and clearly present information about the organic nature
of the agricultural product and its compliance with the national
organic program requirements and, if applicable, the requirements of an
approved State organic program. This is consistent with the purposes
stated in sections 2102(2) and (3) of the OFPA (7 U.S.C. 6501(2) and
(3)) to assure consumers that organically produced products meet a
consistent standard and to facilitate commerce.
We propose in paragraph (a)(4) of this section the terms and marks
which may appear on the information panel of products in packages that
are sold, labeled, or represented as organic (i.e., products that
contain at least 95 percent organic ingredients). We have defined the
information panel to be that part of the label immediately contiguous
and to the right of the principal display panel as observed by an
individual facing the principal display panel, unless an allowance has
to be made for another section of the label to be designated as the
information panel because of size or other limitations. Many meat and
poultry products do not have an information panel.
Most of the terms and marks proposed to be permitted to be used on
the information panel of products that contain at least 95 percent
organic ingredients are the same terms and marks previously proposed to
be allowed to be used on the principal display panel: the term organic,
the USDA seal, and a State seal representing a State organic program
approved by the Secretary. Additionally, we propose to permit on the
information panel the use of a certifying agent's name, seal, logo or
other identification which represents that the farm, wild crop
harvesting, or handling operation that produced or handled the finished
product is a certified operation. We are proposing here to allow only
the identification of the certifying agent that certified the operation
that produced or handled the finished product. We believe that
allowance of the use of multiple identification of certifying agents
who certify any operation involved in the production or handling of the
product would be unwieldy and confusing to the consumer. We invite
comments on this issue.
The NOSB received some public comment which requested that
identification of a certifying agent on product labels be prohibited.
Other public comments, however, indicated that the identification of a
certifying agent should be required on product labels to inform
consumers of the specific organization that performed the certification
of the operation. Additionally, some public comments requested that the
identification of a certifying agent be optional, so that each
individual producer and handler could decide whether to include this
identification on their label.
After evaluating the public comments, we agree that the decision as
to whether to include the certifying agent's identification on a label
should be optional. We believe that inclusion of the identification of
the certifying agent who certified the operation that made the finished
product is not essential. Therefore, we have included this
identification of a certifying agent in our proposal as optional
information that may be included on the information panel of a label of
products that contain at least 95 percent organic ingredients.
We propose to allow the placement of the identification of the
certifying agent on the information panel, but not on the principal
display panel, because we want the principal display panel to include
only those terms or marks that would be important to everyone, i.e.,
those terms or marks that present information about the organic nature
of the agricultural product, its compliance with the national organic
program requirements and, if applicable, the requirements of an
approved State organic program; we do not feel that the identification
of a certifying agent is this type of information. We propose to allow
the placement of the identification of the certifying agent on the
information panel, rather than restricting its use to other less
prominent panels, because we agree with the public input we received
that stated that this information would be important to some consumers
in their purchasing decisions.
In paragraph (a)(5) of this section, we propose that the terms or
marks that may appear on the information panel for products sold,
labeled, or represented as organic (i.e., products that contain at
least 95 percent organic ingredients) also may be used on any package
panels of the product, excluding the principal display panel.
Additionally, we are proposing that these same terms and marks may be
used on the product's labeling and on market information about the
product. We have defined labeling to be written, printed or graphic
material accompanying a product at any time or displayed about the
product at the retail store. Market information has been defined to be
any written, printed, audio-visual or graphic information, including
advertising, pamphlets, flyers, catalogues, posters, and signs, that
are used to assist in the sale or promotion of a product. This
provision is consistent with section 2106(a)(1)(B) of the OFPA (7
U.S.C. 6505(a)(1)(B)), which provides for labels and market information
to be provided for and affixed on agricultural products that are
produced and handled in accordance with the Act and the regulations in
this part.

Agricultural Products in Packages Sold, Labeled, or Represented as Made
With Certain Organic Ingredients--Section 205.101

Section 2106(c)(1) of the OFPA (7 U.S.C. 6505(c)(1)) authorizes the
Secretary, in consultation with the NOSB and the Secretary of Health
and Human Services, to allow the use of the word organic on the
principal display panel of an agricultural product that contains at
least 50 percent organically produced ingredients by weight, excluding
water and salt, only for the purpose of describing the organically
produced ingredients. Our proposed section 205.16(b) makes it clear
that this type of product is one containing at least 50 percent, but
less than 95 percent, organically produced ingredients. The Secretary
has consulted with the Secretary of Health and Human Services and
reviewed the NOSB recommendations for this matter. We are proposing to
allow the word organic to appear on the principal display panel of
products described in section 205.16(b) as discussed below, hereafter
referred to as ``products that contain between 50 and 95 percent
organic ingredients''.
We propose, in paragraph (a) of this section, the terms that must
be used on agricultural products sold in packages, described in section
205.16(b), that are sold, labeled, or represented as made with certain
organic ingredients, (i.e., products that contain between 50 and 95
percent organic ingredients). We propose in paragraph (a)(1) of this
section that the statement made with certain organic ingredients must
be used on the principal display panel of a product described in
section 205.16(b). We believe that allowing the word organic to appear
on the principal display panel of these products only when used within
the statement made with certain organic ingredients would enable
consumers to easily distinguish this type of product from a product
that

[[Page 65898]]

contains at least 95 percent organic ingredients, on which the term
organic must appear on the principal display panel to modify the name
of the product.
We request comments from industry, consumers, consumer interest
groups, and all other interested persons on our proposed use of the
statement made with certain organic ingredients on the principal
display panel of products that contain between 50 and 95 percent
organic ingredients. We are soliciting information as to whether there
are alternative label proposals, and if so, a description of them, that
would accomplish our purpose of clearly distinguishing on the principal
display panel between products that contain at least 95 percent organic
ingredients and those that contain between 50 and 95 percent organic
ingredients.
We also propose in paragraph (a)(2) of this section to require that
the term organic be used in the ingredients statement to modify
organically produced ingredients. We are proposing this in order to
provide consumers with a means of knowing which ingredients have been
organically produced.
We propose in paragraph (b) of this section the terms and marks
that may, but that are not required to, be used on agricultural
products described in section 205.16(b) that are sold, labeled, or
represented as made with certain organic ingredients (i.e., products
that contain between 50 and 95 percent organic ingredients). In
paragraph (b)(1) of this section, we propose to allow the statement
made with certain organic ingredients to appear on the information
panel. We believe this would further assist consumers in readily
identifying products that contain between 50 and 95 percent organic
ingredients, and additionally may be useful in certain retail display
situations where the view of the principal display panel may be
obscured from the consumer. We also propose in paragraph (b)(1) of this
section to allow the identification on the information panel of the
certifying agent who certified the farm, wild crop harvesting, or
handling operation that produced or handled the finished product. Our
reasons for allowing the optional inclusion of the certifying agent's
identification on the information panel and the prohibition of its
placement on the principal display panel for these type of products,
are the same ones we previously discussed with regard to products that
contain at least 95 percent organic ingredients.
In paragraph (b)(2) of this section, we propose that any of the
terms and marks proposed to be allowed to be used on the information
panel may also be used on labeling, market information and any package
panel, excluding the principal display panel, of products labeled as
made with certain organic ingredients. The allowed terms or marks would
be the statement made with certain organic ingredients and the
certifying agent's identification. This provision is consistent with
section 2106(a)(1)(B) of the OFPA (7 U.S.C. 6505(a)(1)(B)), which
provides for labels and market information to be provided for and
affixed on agricultural products that are produced and handled in
accordance with the Act and the regulations in this part.

Multi-ingredient Agricultural Products That Only Represent the Organic
Nature of Such Ingredients in the Ingredients Statement--Section
205.102

Section 2106(c)(2) of the OFPA (7 U.S.C. 6505(c)(2)) authorizes the
Secretary, in consultation with the NOSB and the Secretary of Health
and Human Services, to allow products that contain less than 50 percent
organically produced ingredients by weight of the finished product,
excluding water and salt, to include the word organic on the ingredient
listing panel to describe those ingredients that are organically
produced. The Secretary has consulted with the Secretary of Health of
Human Services and reviewed the NOSB recommendations on this matter. We
propose the following provisions for the use of the word organic in the
ingredients statement of multi-ingredient agricultural products that
only represent the organic nature of such ingredients in the
ingredients statement.
We propose in section 205.102 that the term organic may be used in
the ingredients statement of this type of product to modify the name of
an ingredient organically produced and handled in accordance with the
Act and the regulations in this part. We also propose in section
205.102 that agricultural products that are composed of more than one
ingredient may represent in an ingredients statement that the
ingredients are organic without the finished product having to be
produced and handled in a certified operation, if certain conditions
are met. One of the conditions that must be met is that the producer or
handler of the finished product would have to maintain certain records
that are required for non-certified operations. The second condition
that must be met is that the only representation made about the organic
nature of the product is a statement in the ingredients statement that
identifies organic ingredients.
We also propose in paragraph (b) of this section that the term
organic may be used on labeling, marketing information and package
panels of labels other than the principal display panel and information
panel, to describe the organic ingredients in products discussed above.
We are permitting the identification of organic ingredients under these
conditions for a variety of organic products in order to allow the
organic industry flexibility in the production and marketing of organic
products.

Use of Terms or Statements That Directly or Indirectly Imply That a
Product is Organically Produced and Handled--Section 205.103

Section 2106(a)(1)(B) of the OFPA (7 U.S.C. 505(a)(1)(B)) provides
that a person may affix or provide a label or other market information
about an agricultural product, including an ingredient, that directly
or indirectly implies that the product is organically produced and
handled only when the product has been produced and handled using
organic methods in accordance with the Act. Accordingly, we propose in
this section that labels, labeling or market information that directly
or indirectly imply organic production and handling practices may be
provided for or affixed only on agricultural products produced and
handled in accordance with the Act and the regulations in this part.
Our proposed regulations would authorize the use on a label,
labeling, or market information of the term organic and other terms and
phrases that directly or indirectly imply that the product was
organically produced and handled. Therefore, under our proposal, any
terms or phrases that directly or indirectly imply that a product has
been organically produced or handled would be prohibited from being
used on the label, labeling, or market information of products that are
not produced in accordance with the Act and the regulations in this
part.
We considered putting in our proposed requirement a specific list
of the terms and phrases that we believe would directly or indirectly
imply that a product was organically produced and handled. We have not
done this because we are uncertain as to what terms and phrases should
appropriately be placed on such a list. We request comment from the
public as to what terms or phrases, other than organic or made with
certain organic ingredients, they believe could directly or indirectly
imply that a product was organically produced and handled and the
rationale for the allowance of their use. Examples

[[Page 65899]]

of terms or phrases which we consider may imply directly or indirectly
that a product is organically produced and handled and about which we
specifically request comment include: ``produced without synthetic
pesticides''; ``produced without synthetic fertilizers''; ``raised
without synthetic chemicals''; ``pesticide-free farm''; ``no drugs or
growth hormones used''; ``raised without antibiotics''; ``raised
without hormones''; ``no growth stimulants administered'';
``ecologically produced''; ``sustainably harvested''; and ``humanely
raised''.

Informational Statements Prohibited--Section 205.104

We are proposing in this section to prohibit certain informational
statements from being included on the principal display panel and
ingredients statement of any products containing organically produced
ingredients because we believe such statements might mislead consumers.
Because these are the areas that consumers generally examine to obtain
information about the nature of the product they are purchasing, we
believe that these areas should therefore contain only terms or phrases
that are familiar to consumers and are readily understood by them.
In paragraph (a) of this section, we propose to prohibit the phrase
one hundred percent, stated in letters, numbers or symbols, when used
as part of any phrase or sentence that includes the term organic, on
the principal display panel and in the ingredients statement of a
product that is sold, labeled, or represented as organic. Examples of
phrases that would be prohibited by this paragraph are: our ingredients
are one hundred percent organic; 100% organic whole wheat; and we only
use 100 percent organic methods.
In paragraph (b) of this section, we propose to prohibit the
placement of a statement of the percentage of organic ingredients on
the principal display panel and in the ingredients statement of any
product containing organic ingredients. Our proposal would not prohibit
a statement of the percentage of organic ingredients from being used on
labeling materials, market information and any panel other than the
principal display panel.
The NOSB received comments from manufacturers both in favor and in
opposition to allowing the inclusion of a statement of the percentage
of organic ingredients on product labels. The NOSB recommended to the
Secretary that a percentage statement be allowed on the principal
display panel only for products containing one hundred percent organic
ingredients. For all other products, the NOSB recommended that a
percentage statement be restricted to the information panel.
We agree with the NOSB that a percentage statement should be
permitted, and accordingly propose to allow a statement of the
percentage of organic ingredients on a product label for the benefit of
consumers who believe that this information is important to them as
part of their purchasing decisions. However, we propose to prohibit its
placement on the principal display panel and in the ingredients
statement. We propose this prohibition on the placement of the
percentage statement because we do not consider a percentage statement
to be essential program information. Its use on the principal display
panel and ingredients statement would be inconsistent with our proposed
labeling scheme, as previously explained, which provides for placing
only essential program information on the principal display panel and
ingredients statement. We request comment on our proposal to allow a
statement of the percentage of organic ingredients on a product package
and on our proposal to prohibit its use on the principal display panel
and in the ingredients statement.
In paragraph (c) of this section, we propose to prohibit the use of
the phrase organic when available, or a term of similar meaning or
intent, on the principal display panel and in the ingredients statement
of products containing organic ingredients.

Agricultural Products in a Form Other Than Packages That are Sold,
Labeled, or Represented as Organic or Made With Certain Organic
Ingredients--Section 205.105

We propose in paragraphs (a) and (b) of this section the terms and
marks that may be used on products in a form other than packages that
are sold or represented as organic or made with certain organic
ingredients, in order to prevent the possibility of mixing organic and
nonorganic products. Products in a form other than packages are those
products that either are not enclosed in a container or wrapping or are
products labeled as bulk food items in containers. Products in other
than package form include such products as bulk food items, unpackaged
fruits and vegetables for sale in a retail store, raw agricultural
products such as grains, and products in shipping containers for
further processing.
We propose in paragraph (a)(1) of this section that agricultural
products that contain at least 95 percent organic ingredients that are
sold or represented as organic may use the term organic on a retail
display label (or labeling) or display container to modify the name of
the product. We propose in paragraph (a)(2) of this section that the
term organic may be used in the ingredients statement to modify the
name of an ingredient organically produced and handled in accordance
with the Act and the regulations in this part. The proposals made in
paragraphs (a)(1) and (a)(2) of this section would be applicable to
organic products in other than package form at the time of retail sale
and, thereby, would provide for organic products sold in retail stores
in bulk or other non-package form to be identified by the same terms as
we propose to be used on organic products in package form.
We propose in paragraph (a)(3) of this section that shipping
containers for organic products in other than package form may bear a
clearly recognizable organic identification mark(s) or term(s) in plain
view on the shipping container. The mark(s) or term(s) are proposed to
be chosen from the following: the term organic used to modify the name
of the product; the USDA seal; a seal representing an approved State
organic program; and the certifying agent's name, seal, logo, or other
identification representing certification of the operation that
produced or handled the product. We believe that this provision would
assist those handlers who handle both organically produced and non-
organically produced products to readily identify and separate the
products and prevent their commingling, as required in proposed section
205.19.
We propose in paragraph (b) of this section the labeling
requirements for agricultural products in other than package form that
are sold or represented as made with certain organic ingredients. We
believe that agricultural products in a form other than packages that
are sold or represented as made with certain organic ingredients need
to meet specific labeling requirements that are similar to the
requirements proposed for agricultural products in other than package
form that are sold, labeled, or represented as organic. These labeling
requirements are needed to ensure that these products can be readily
identified and to assist handlers in preventing the possibility of
commingling products sold, labeled, or represented as made with certain
organic ingredients with non-organically produced products.
Accordingly, we propose in paragraph (b)(1) of this section that
agricultural products that are sold or represented as made with certain
organic ingredients

[[Page 65900]]

that are described in section 205.16(b) shall use the statement made
with certain organic ingredients on a retail display label (or
labeling) or display container to modify the name of the product. We
propose in paragraph (b)(2) of this section that the term organic be
used in the ingredients statement to modify the name of an ingredient
organically produced and handled in accordance with the Act and the
regulations in this part. Finally, we propose in paragraph (b)(3) of
this section that agricultural products in a form other than packages
would use the statement made with certain organic ingredients located
in plain view on the shipping container, which may be accompanied by
the certifying agent's name, seal, logo, or other identification. The
rationale for the provisions proposed in paragraph (b) of this section
are discussed in the supplementary information for paragraph (a) of
this section regarding organic products in a form other than packages.

Agricultural Products Produced on an Exempt Farm or Handling
Operation--Section 205.106

Section 2106(d) of the OFPA (7 U.S.C. 6505(d)) provides an
exemption from the compliance requirements of section 2106(a)(1) of the
OFPA (7 U.S.C. 6505(a)(1)), which does not permit a person to sell or
label an agricultural product as organically produced unless it has
been produced and handled in accordance with the Act. This exemption
applies to a person who sells no more that $5,000 annually in value of
agricultural products, unless such person voluntarily chooses to be
certified. In Sec. 205.202(a)(1) of subpart D, we propose that a farm,
handling operation, or wild crop harvesting operation that produces,
handles or harvests agricultural products, but which annually sells no
more than $5,000 in value of agricultural products, would be exempt
from the certification requirements of the Act and the regulations set
forth in subpart D of this part. Consistent with section 2107(a)(11) of
the OFPA (7 U.S.C. 6506(a)(11)), however, which allows the Secretary to
require such other terms and conditions determined to be necessary, we
propose in paragraphs (a) and (b) of this section certain labeling
requirements for agricultural products that are produced on these
exempt operations that have not been certified. We propose these
labeling prohibitions in order to help ensure that consumers are not
misled when they purchase agricultural products from them, and in order
to assure that products and ingredients sold, labeled, or represented
as meeting the requirements of the OFPA in fact have been produced and
handled in accordance with the Act.
In paragraph (a) of this section, we propose to prohibit the
displaying of the USDA seal or any certifying agent's name, seal, logo,
or other identification of certification referring to the requirements
of the Act and the regulations of this part. The purpose of this
provision would be to ensure that only agricultural products that meet
the proposed requirements for organic production and certification in
part 205 could have a label or other market information that
incorporated the USDA seal or certification identification, either of
which would indicate compliance with the Act and the regulations in
this part. Additionally, the provision proposed in paragraph (a) of
this section would assist consumers in distinguishing between an
organic product from an exempt operation and an organic product from an
operation certified to national or State program requirements.
In paragraph (b) of this section, we propose that an agricultural
product that is produced or processed on an exempt farm or handling
operation that annually sells no more than $5,000 in value of
agricultural products and which has not been certified could not be
identified as an organic ingredient in a product produced or processed
on a farm or handling operation that annually sells more than $5,000 in
value of agricultural products. We propose this prohibition for the
purpose of prohibiting organic agricultural products that originate
from exempt uncertified operations from being commingled with organic
agricultural products that originate from operations that are certified
to national or State program requirements. This provision as proposed
would help promote clarity for consumers in identifying when an
agricultural product was produced and handled in accordance with the
Act and the regulations in this part.

The USDA Seal--Section 205.107

Section 2106(a)(2) of the OFPA (7 U.S.C. 6505(a)(2)) allows labels
affixed to, or market information provided for, domestic agricultural
products that meet the USDA standards for organic production to
incorporate the USDA seal. In accordance with this section of the OFPA,
we propose in paragraph (a) of this section that the USDA seal could be
used only on those agricultural products (raw or processed) labeled as
organic (i.e., products that contain at least 95 percent organic
ingredients), as described in Sec. 205.16(a), that are produced in the
U.S. and are produced and handled on a certified operation. This
provision as proposed would permit a product produced in the U.S. which
contained imported organic ingredients obtained from a program
determined by the Secretary to be equivalent to the national program to
display the USDA seal.
In paragraphs (b) and (c) of this section, we propose the form and
design of the USDA seal. We propose to require the reproduction of the
mark in a dark color on a light background, or in a light color on a
dark background, or in a standard four color label. We propose that the
USDA seal consist of an interior globe with continents displayed and a
diagonal line across the globe (continents) with the word organic on
the diagonal. The globe with continents would be surrounded by
concentric circles with arrows containing the words meets USDA
requirements. A triangle would enclose the globe and the concentric
circles.
The use of the globe with continents is intended to represent the
principles of organic production upon which the national organic
program is founded. These principles are oriented toward the nurturing
of a healthy agroecosystem as part of the biosphere, represented by the
globe. The concentric circles with arrows represent the basic practice
of recycling nutrients and materials which is essential to a system of
organic farming. The triangle represents the stability of a healthy
agroecosystem based upon the stewardship of soil, water and air as its
components.
We believe that this seal, which may be used at the option of the
producer or handler in accordance with the provisions of subpart C of
this part, would allow consumers to readily identify that the organic
product met the requirements of the National Organic Program as
proposed in the regulations of this part. We request comment on the
design of the USDA seal and its use as proposed in this subpart as to
whether the proposed design will readily identify an organic product as
one that meets the requirements of the National Organic Program.
In particular, we would like to receive examples of alternative
designs for the USDA seal that would be effective in allowing consumers
to readily identify that an organic product meets the requirements of
the organic program. We would appreciate it if any alternative designs
submitted are accompanied by an explanation about how the alternative
design suggested would more effectively make organic products readily
identifiable as being produced under the National Organic Program than
the proposed design for

[[Page 65901]]

the USDA seal. In addition, we would like comments from all interested
persons as to whether the proposed design for the USDA seal would
create any burdens for its use.
We have provided a chart of what is required to be reflected on the
labels and labeling of various types of organic products, as well as
what is required to be reflected on certain types of market information
provided about organic products. The chart also indicates where
required information is to be placed on labels, on labeling, and on
certain types of market information. Additionally, the chart indicates
what type of information may, but is not required, to be placed on
labels, on labeling, and on certain types of market information for
various types of organic products. Further, the chart indicates what
type of information may not be placed on the labels, labeling, and
market information of various types of organic products, and where it
is prohibited from being placed.

Subpart C--Labels, Labeling, and Market Information
----------------------------------------------------------------------------------------------------------------
Required Discretionary Prohibited
----------------------------------------------------------------------------------------------------------------
Agricultural products in packages sold, labeled or represented as organic
----------------------------------------------------------------------------------------------------------------
Principal display panel:
None...................... The term organic Certifying agent's name, seal, logo,
to modify the name of the or other identification.
product.
USDA seal......... One hundred percent stated in
letters, numbers, or symbols, used with any
phrase or sentence that includes the term
organic.
State seal........ Statement of the percentage of
organically produced ingredients contained in
a product.
Phrase: organic when available (or
term of similar meaning or intent).
Ingredients Statement:
None...................... The term organic One hundred percent stated in
to modify the name of an letters, numbers, or symbols, used with any
ingredient organically phrase or sentence that includes the term
produced and handled. organic.
Statement of the percentage of
organically produced ingredients contained in
a product.
Phrase: organic when available (or
term of similar meaning or intent).
Information panel:
None...................... Organic with None.
product name.
USDA seal.........
State seal........
Certifying agent's
name, seal, logo, or other
identification.
----------------------------------------------------------------------------------------------------------------
Agricultural products in packages sold, labeled, or represented as made with certain organic ingredients
----------------------------------------------------------------------------------------------------------------
Principal display panel:
Statement: made with None.............. One hundred percent stated in
certain organic ingredients. letters, numbers, or symbols, used with any
phrase or sentence that includes the term
organic.
Statement of the percentage of
organically produced ingredients contained in
a product.
Phrase: organic when available (or
term of similar meaning or intent).
USDA seal.
State seal.
Certifying agent's name, seal, logo,
or other identification
ingredients statement:
The term organic to modify None.............. One hundred percent stated in
the name of an ingredient letters, numbers, or symbols, used with any
organically produced and handled.. phrase or sentence that includes the term
organic.
Statement of the percentage of
organically produced ingredients contained in
a product.
Phrase: organic when available (or
term of similar meaning or intent).
Information panel:
None...................... Statement: made USDA seal.
with certain organic
ingredients.
Certifying agent's State seal.
name, seal, logo, or other
identification.
----------------------------------------------------------------------------------------------------------------
Multi-ingredient agricultural products that are not produced by certified operations and that only represent the
organic nature of such ingredients in the ingredient statement and which are not sold, labeled, or represented
as organic or made with certain organic ingredients
----------------------------------------------------------------------------------------------------------------
Principal display panel:
None...................... None.............. The term organic to modify the name
of the product.
Statement: made with certain organic
ingredients.
USDA seal.
State seal.

[[Page 65902]]

Certifying agent's name, seal, logo,
or other identification.
One hundred percent stated in
letters, numbers, or symbols, used with any
phrase or sentence that includes the term
organic.
Statement of the percentage of
organically produced ingredients contained in
a product.
Phrase: organic when available (or
term of similar meaning or intent).
Ingredients statement:
None...................... Organic to modify One hundred percent stated in
the name of an ingredient letters, numbers, or symbols, used with any
that is organically phrase or sentence that includes the term
produced and handled. organic.
Statement of the percentage of
organically produced ingredients contained in
a product.
Phrase: organic when available (or
term of similar meaning or intent).
Information panel:
None...................... None.............. The term organic to modify the name
of the product.
Statement: made with certain organic
ingredients.
USDA seal.
State seal.
Certifying agent's name, seal, logo,
or other identification.
----------------------------------------------------------------------------------------------------------------
Agricultural products in other than package form that are sold, labeled or represented as organic or made with
certain organic ingredients.
----------------------------------------------------------------------------------------------------------------
Retail display label or display
container:
For organic products: For organic
products:
None...................... The term organic None.
to modify the name of the
product.
USDA seal.........
State seal........
Certifying agent's
name, seal, logo, or other
identification..
For made with certain organic For made with certain
ingredients products: organic ingredients
products:
Statement: made with Certifying agent's None
certain organic ingredients. name, seal, logo, or other
identification.
Ingredients statement:
For organic products: For organic products:
None...................... The term organic None.
to modify the name of an
ingredient organically
produced and handled..
For made with certain organic For made with certain
ingredients products: organic ingredients
products:
The term organic to modify None.............. None.
the name of an ingredient
organically produced and handled.
Shipping container:
For organic products: For organic products, one
or more of the following:
None...................... The term organic None.
to modify the name of the
product; or
USDA seal; or.....
State seal; or....
Certifying agent's
name, seal, logo, or other
identification..
For made with certain organic For made with certain
ingredients products: organic ingredients
products:
Statement: made with Certifying agent's None.
certain organic ingredients. name, seal, logo, or other
identification.
----------------------------------------------------------------------------------------------------------------

Subpart D--Certification

Section 2104(a) of the OFPA (7 U.S.C. 6503(a)) requires that the
Secretary establish an organic certification program for producers and
handlers of agricultural products that have been produced using organic
methods, and that this program be implemented through certifying
agents. Section 2107(a) of the OFPA (7 U.S.C. 6506(a)) requires that
all agricultural products sold or labeled as organically produced be
produced on a farm and handled through a handling operation that has
been certified, and delineates a number of other provisions that must
be included in a certification program established under the Act. The
Act,

[[Page 65903]]

however, provides for certain exemptions from certification. In this
subpart we propose the certification provisions of the National Organic
Program, which includes the requirements that must be met by farm, wild
crop harvesting, and handling operations that want to be certified, and
the procedures that must be followed by certifying agents in evaluating
and making determinations concerning operations seeking certification.
Subpart E of this part delineates our proposed accreditation program
for organic certifying agents, as required by section 2115(a) of the
OFPA (7 U.S.C. 6514(a)), including the requirement that a certifying
agent must conduct certification activities in accordance with the
procedures proposed in subpart D of this part to maintain its
accredited status.
The certification process is needed to ensure that products labeled
as organic and made with certain organic ingredients are produced and
handled in accordance with the requirements proposed in subpart B of
this part. Numerous private organizations and States already have
developed experience and expertise in organic certification procedures.
In developing this proposal, we have consulted with and examined the
programs developed by existing private and State certifying agencies,
considered the NOSB's recommendations, and considered comments received
from the public. We also have reviewed the guidelines for the
certification or registration of quality systems and for the assessment
or accreditation of certifying bodies, as promulgated by the
International Organization for Standardization. Other information we
have reviewed includes guidelines for inspection, certification and
accreditation established by other countries, international organic
interest groups, and standards setting organizations, such as the
International Federation of Organic Agricultural Movements.
This proposal is consistent with the provisions of the Act and
incorporates, to the extent possible, the current practices of the
organic certification community. We have designed the proposed
regulations to minimize the burdens placed on organic producers and
handlers, ensure that decisions made by certifying agents are well
founded and fair, and provide sufficient guidance and oversight to
protect the integrity of the organic label. We also have developed this
proposal to utilize the expertise that exists in the organic community,
which encompasses a broad range of producers, handlers and geographic
locales, and to allow for differences in size, scope and organizational
style represented by existing and anticipated private and State
certification programs.

Synopsis of Proposed Certification Program

The provisions of sections 205.201 through 205.206, and sections
205.216 through 205.217(a), address the certification of farm, wild
crop harvesting and handling operations that produce agricultural
products, including livestock, that are, or are intended to be, sold,
labeled or represented as organic or as made with certain organic
ingredients. These proposed sections delineate the types of operations
that must be certified; the types of operations that would be exempt or
excluded from the certification requirement; the general requirements
that must be met to obtain and maintain certification; and the
information that must be submitted when applying for certification,
including the provisions of an organic plan. Certification applicants
would have to submit a statement agreeing to comply with the proposed
production and handling requirements and would have to allow access to
their facilities and records by a certifying agent, representatives of
the Secretary, and the applicable governing State official in the case
of operations located in a State that operates an approved State
program. An operation whose request for certification was approved
would have to operate in compliance with the requirements proposed in
Subpart B, maintain records of its operations to show that it was
complying with those requirements, and submit updated information
annually.
Sections 205.207 through 205.215, and sections 205.217(b) through
205.220, propose the procedures that a certifying agent must follow in
determining the certification status of a certification applicant or a
certified operation, including the procedure for conducting on-site
inspections; the basis for approving an application for certification;
the procedure for notifying an operation of, along with an opportunity
to correct, non-compliance with the Act and the regulations; and the
procedure for recommending that the certification of an operation or a
portion of an operation be denied or terminated by the Administrator,
after providing notice and an opportunity to be heard. The final
section of this subpart proposes the notifications that a certifying
agent would have to provide to the Administrator concerning operations
that it certified.
It should be noted that, in a State that establishes an approved
State program, as provided for and discussed in sections 205.401
through 205.403 of subpart F, the certifying agent also would have to
provide these notifications to the applicable governing State official.
Additionally, the certifying agent would be required to verify that an
applicant for certification in a State that establishes an approved
state program was complying with any additional requirements provided
under the State program. Proceedings to deny or terminate
certification, and an opportunity to appeal such actions, would be
initiated and conducted in accordance with the approved State program
regulations.

What Has to be Certified--Section 205.201

Section 2106(a)(1) of the OFPA (7 U.S.C. 6505(a)(1)) requires that
agricultural products that are sold or labeled as organically produced,
including products for which other market information is provided that
directly or indirectly implies that the products have been produced and
handled using organic methods, must comply with the requirements of the
Act. Therefore, we propose that, except as discussed below in proposed
section 205.202, any farming, wild crop harvesting, or handling
operation, or portion of any of these operations, that intends to sell,
label or represent an agricultural product as organic, or as made with
certain organic ingredients, would have to comply with all the
applicable production and handling requirements set forth in subpart B
of this part and be certified in accordance with the regulations of
this subpart.
We further propose in section 205.201(a) that any operation that
provides handling services to fewer than 3 certified entities that
produce or handle agricultural products that are, or that are intended
to be, sold, labeled or represented as organic or made with certain
organic ingredients, would not be required to be separately certified
apart from the operations for which it provides such services. This
provision is proposed because, as is sometimes the case in existing
certification programs we have examined, a certified operation may
comprise facilities owned by different entities that it contracts with
to provide handling services, such as washing and packing fresh
produce, freezing multi-ingredient products, or warehousing. In such
cases, the facilities that provide these services would be included in
the certification obtained by the contracting operation, and therefore
considered certified with respect to the handling of any products to be
sold, labeled or represented as

[[Page 65904]]

organic or made with certain organic ingredients. Such a facility
would, for the purposes of this proposal, also be considered to be a
distinct portion of the operation for which it provides the handling
services. However, as proposed in this section, if such a facility were
to provide handling services under contract to three or more certified
handling operations, it would then have to obtain a separate
certification. For example, a facility that provided washing and
packing services to one or two organic produce growers could be
included in the growers' certifications as a portion of each of their
operations, but if it were to then provide packing services for a third
organic produce grower it would have to obtain its own separate
certification. Comment is invited concerning the potential impact of
this proposed requirement on handling operations that currently
contract for handling services or that currently provide such services.
Section 2106(c) of the OFPA (7 U.S.C. 6505(c)) exempts products
that contain at least 50 percent (but less than 95 percent) organic
ingredients from complying with the requirements of the Act, but allows
the Secretary, in consultation with the NOSB and the Secretary of HHS,
to permit such products to be labeled on the principal display panel as
containing certain organically produced ingredients. In section 205.101
of subpart C, we propose that such products could be labeled as made
with certain organic ingredients on the principal display panel. In
section 205.201(b) we propose that a handling operation, or portion of
a handling operation, that handles only agricultural products that are,
or that are intended to be, sold, labeled or represented as made with
certain organic ingredients would have to be certified but would be
exempt from complying with the requirement proposed in section
205.3(b)(2) of Subpart B, which requires that a commercially available
non-synthetic substance be selected in preference to an allowed
synthetic substance.
Products labeled as made with certain organic ingredients would
not, in accordance with section 2106(c) of the OFPA (7 U.S.C. 6505(c)),
have to be handled by a certified organic handling operation. However,
the organically produced ingredients contained in such products would
not be exempt from the Act's certification requirement. Therefore,
because the preponderance of the ingredients in such a product would be
organically produced, we believe that the level of oversight provided
by the certification process is needed in order to safeguard the
integrity of the organically produced ingredients and to assure
consumers that these ingredients comply with consistent national
standards. Because this type of product would be able to use the word
organic on its principal display panel within the statement made with
certain organic ingredients, we believe that consumers will generally
expect that such products are in compliance with the Act and the
regulations in this part. However, because the product itself is not
represented as an organic product, we are proposing that such products
need not comply with the requirement to select non-synthetic substances
in preference to allowed synthetic substances. Such products would
still have to comply with all other applicable provisions, including
selecting only non-agricultural ingredients that are included on the
National List.

Exemptions and Exclusions--Section 205.202

In accordance with section 2106(d) of the OFPA (7 U.S.C. 6505(d)),
paragraph (a)(1) of this section would exempt producers and handlers
that produce, handle or harvest agricultural products who sell no more
than $5,000 annually in value of agricultural products from complying
with the certification requirements set forth in this subpart. However,
we propose in subpart C to prohibit the products produced on these
exempt operations from being represented as originating from a
certified operation, displaying the USDA seal, or being identified as
an organic ingredient in a product processed or produced on an
operation that sells more than $5,000 in value of agricultural
products. These prohibitions are necessary to ensure that the
organically produced ingredients contained in products that originate
from certified operations are accurately represented. These
prohibitions would not apply to an otherwise exempt operation that
voluntarily chose to become certified under the Act and the
regulations.
As indicated above, the exemption from certification proposed in
the regulations for producers and handlers who sell no more than $5,000
annually of agricultural products is what is provided for in section
2106(d) of the OFPA (7 U.S.C. 6505(d)). During the course of public
input given at NOSB meetings, various commenters suggested that the
exemption from certification should include producers and handlers who
annually sell no more than $10,000 of agricultural products, as opposed
to $5,000. In order to provide for such an exemption in our
regulations, we would need to have the OFPA amended. We would
appreciate comments as to whether the current statutory limitation of
$5,000 for exemption from certification should be raised to $10,000, or
to another amount, and why such an increased monetary limitation for
exemption from certification is appropriate. In addition, we would like
data as to the number of operations that may be exempt under the
current $5,000 limitation for exemption, and the number of operations
that may be exempt under any new monetary amount suggested.
In paragraph (a)(2) of this section, we propose to exempt retail
operations, or portions of such operations, that handle organically
produced agricultural products but do not process them. This is
consistent with the definition of handling operation as set forth in
section 2103(10) of the OFPA (7 U.S.C. 6502(10)). An exclusion for
certain retail operations that do process organic agricultural products
is proposed in paragraph (b)(3) of this section.
Section 2106(c) of the OFPA (7 U.S.C. 6505(c)) states that the
provisions of section 2106(a) (7 U.S.C. 6505(a)) regarding compliance
with the requirements of the Act do not apply to two types of processed
agricultural products that contain less than 95 percent organic
ingredients. This section of the Act exempts products that contain less
than 50 percent organically produced ingredients from compliance with
the regulations proposed in this part, and we have accordingly
proposed, in paragraph (a)(3) of this section, to exempt any handling
operation, or portion of a handling operation, that handles only
agricultural products that contain less than 50 percent organic
ingredients from all the requirements proposed in this part except the
applicable labeling provisions proposed in subpart C and the provisions
proposed in section 205.19 of subpart B for the prevention of
commingling and contact of organic products by prohibited substances
with regard to any organically produced ingredients used in this type
of product. We believe that these requirements are necessary for a
handler of this type of product in order to safeguard the integrity of
the organic ingredients used in any such product, and to ensure that
any use of the word organic in the ingredient listing is in accordance
with our proposed labeling provisions.
In section 205.202(b), we propose that certain types of operations
or portions of operations be excluded from compliance with the
certification requirements in subpart D. After careful consideration of
the NOSB recommendations, public input, and

[[Page 65905]]

information received from representatives of various types of handling
and retail operations, we believe that it would be burdensome to
require certification of the types of handling operations addressed in
this section and, furthermore, that such a requirement is unnecessary
because it would not contribute to assuring the integrity of an
organically produced product. Accordingly, we propose that three types
of handling operations, or portions of operations, not be required to
be certified.
In section 205.202(b)(1) we propose that a handling operation, or
portion of a handling operation, would be excluded from compliance with
the proposed regulations in this part, except for the requirements for
the prevention of commingling and contact by an organic product with
prohibited substances in section 205.19 of subpart B, if it handles
only products labeled as organic or as made with certain organic
ingredients that meet two criteria. These two criteria are that the
products are packaged or otherwise enclosed in a container prior to
being received by the operation, and that the products remain in the
same package or container and are not processed while in the control of
the operation. This exclusion would avoid creating an unnecessary
barrier for handlers who distribute non-organic products and who want
to include a selection of organic products in their offerings. However,
in order to protect the integrity of the organically produced products,
we do not propose to exempt this type of handling operation from the
requirements set forth in section 205.19 of subpart B regarding the
prevention of commingling and contact with prohibited substances with
respect to any organically produced products.
In section 205.202(b)(2) we propose to exclude restaurants and
other food-service type establishments that process ready-to-eat
organic agricultural products but which do not enclose the food in a
container labeled or represented to the consumer as organic or made
with certain organic ingredients. As further explained below in
paragraph (b)(3) of this section, we are not proposing to require
certification of operations that process food as part of their normal
retail operations if they do not repackage the food in containers that
are labeled or represented by the operation as organic or as made with
certain organic ingredients. We consider the act of preparing ready-to-
eat food by restaurants to be part of their normal retail operations.
We propose in section 205.202(b)(3) to exclude a retail operation,
or portion of a retail operation, that processes products labeled as
organic or as made with certain organic ingredients in the course of
its normal retail operations, but does not repackage products under its
own organic label. A retail operation, or portion of a retail
operation, excluded under this proposal in paragraph (b)(3) of this
section would have to satisfy two requirements. First, the operation
would have to process only products that were previously labeled as
organic or made with certain organic ingredients before being acquired
by the retailer. Second, the products would have to be processed by the
operation in the course of its normal retail business solely for the
purpose of presenting or offering the product to a consumer. These
requirements mean that the product offered to the consumer by the
retail operation could not be one that was created by the retailer by
combining two or more ingredients into a single product that is then
labeled or represented by the retail operation as organic or as made
with certain organic ingredients, and it could not be a product that is
repackaged by the operation and newly labeled or represented as organic
or made with certain organic ingredients. We do not consider either
creating a new product from two or more ingredients, or repackaging and
relabeling a product, to be normal retail business practices for retail
operations solely for the purpose of presenting or offering a product
to a consumer. It should be noted that a weight label is not included
within our proposed definition of label as set forth in section 205.2
of subpart A; therefore, we would not consider a retail operation
applying a weight label to a product repackaged from a bulk container
or sliced from a larger quantity to be a repackaging activity that
would require certification because applying weight labels is an
activity that we consider to be within normal retail business practices
for retail operations.
Examples of retailer processing activities that would be excluded
and which therefore would not require that the retail operation be
certified are washing and sorting fresh produce for display in bulk;
cutting cheese from a bulk wheel and placing weight labels on the
cheese packages; repackaging two pound bags of organic brown rice from
a 50 pound sack and placing weight labels on the two pound bags; and
allowing consumers to package their own bags of organic grain from a
bulk container. Examples of retailer processing activities that would
not be excluded and which therefore would require that the retail
operation be certified are baking organic bread; preparing an organic
pasta salad for sale at the deli counter; repackaging a series of
products such as grains or pastas under the retailer's own label that
identifies the products as organic; and preparing a private label pizza
labeled as made with certain organic ingredients for customers to
purchase from a refrigerated display case for baking at home. We invite
further comment concerning the exclusions proposed in this section.
In section 205.202(c) we propose that farm or handling operations
that are either exempt from certification under section 205.202(a), or
excluded from certification under section 205.202(b), would still be
required to maintain certain records and to make those records
available to authorized representatives of the Secretary and the
applicable governing State official. Small operations that are exempt
pursuant to paragraph (a)(1) of this section would have to keep records
for no less than one calendar year to substantiate that the operation
did not sell more than $5,000 in agricultural products in the previous
calendar year, and therefore met the requirements for exemption of
small operations provided by section 2106(d) of the OFPA (7 U.S.C.
6505(d)).
Handlers of products that contain less than 50 percent organic
ingredients who are exempt under section 205.202(a)(3), or handlers who
are excluded under section 205.202(b)(1), would have to maintain
records for no less than one year from the date of receiving a product
labeled as organic or made with certain organic ingredients, that are
adequate to verify the source and quantity of the product and that the
product or ingredient was handled in accordance with section 205.19 to
prevent commingling and contact with prohibited substances. Records
also would have to be maintained for no less than one year from the
date of shipping a product that contains organic ingredients so as to
verify the destination and quantity of the product shipped. The
recordkeeping requirements proposed in paragraph (c)(2) of this section
are necessary to assist in enforcement of the national organic program
and to verify that the operation is adequately safeguarding the
integrity of organically produced products and organically produced
ingredients.
We would like comments on the various exemptions from certification
we have proposed, as well as on any other exemptions from certification
that should be proposed, keeping in mind that legislative changes may
have to be

[[Page 65906]]

sought to provide additional exemptions from certification.

General Requirements for Certification--Section 205.203

This section of our proposal delineates the six general
requirements with which an organic farm, wild crop harvesting, or
handling operation must comply in order to receive and maintain
certification. These proposed provisions summarize the requirements
provided in the Act and various sections of the regulations proposed in
this part, so that a person seeking organic certification can determine
all the requirements which must be met by the operation to be
certified.
The first requirement, proposed in paragraph (a) of this section,
is to comply with the applicable organic production and handling
requirements of the Act and the regulations in this part. Paragraph (b)
of this section would require that the operation establish and
implement an organic plan that is submitted to an accredited certifying
agent, as required by section 2107(a)(2) of the OFPA (7 U.S.C.
6506(a)(2)), and updated annually. The provisions that must be in the
organic plan are proposed in section 205.205. The third requirement,
proposed in paragraph (c) of this section in accordance with section
2107(a)(5) of the OFPA (7 U.S.C. 6506(a)(5)) is that an annual on-site
inspection by the certifying agent must be permitted. In paragraph (d)
of this section we propose that a certified operation must maintain all
records applicable to the organic operation for a period of not less
than five years from the date of creation of the record, and allow the
Secretary, the applicable governing State official if the operation is
in a State where there is an approved State program, and the certifying
agent, access to such records, as proposed in section 205.216. This
provision is proposed because we believe it is necessary in order to
determine the operation's compliance with the Act and the regulations
in this part for the purpose of providing adequate enforcement
procedures, as required in section 2107(a)(7) of the OFPA (7 U.S.C.
6506(a)(7)). Section 205.203(e) of this proposal requires that a
certified operation submit the required fees to the certifying agent,
as proposed in section 205.422 of subpart F in accordance with section
2107(a)(10) of the OFPA (7 U.S.C. 6506(a)(10)).
In section 205.203(f) we propose that a certified operation must
immediately notify the certifying agent about any application of a
prohibited substance to any field, farm unit, site, facility,
livestock, or product that is part of the certified operation, and
about any other change in a certified operation, or any portion of the
operation, that may affect its compliance with the Act and the
regulations in this part. This provision is necessary in order to
ensure that an operation that is approved for certification would
notify the certifying agent in the event that anything occurs that
would change the operation's compliance with the requirements proposed
in subpart B. This provision therefore would require notification of
the certifying agent if an operation was subject to a Federal or State
emergency pest or disease treatment program as described in proposed
section 205.432 of subpart F and provided for in section 2107(b)(2) of
the OFPA (7 U.S.C. 6506(b)(2)).

Applying for Certification--Section 205.204

As proposed in this section, a certification applicant would have
to submit an organic plan, as proposed in section 205.205, and a
statement agreeing to comply with the Act and the regulations, as
proposed in section 205.206, to an accredited certifying agent. An
applicant also would need to submit basic contact information, such as
phone and fax numbers, for the operation for which certification is
sought. In paragraph (c) of this section, we further propose that the
applicant submit the name or names of any organic certifying agent to
which any application for certification previously has been made,
including the year or years of the application and the outcome of each
application. It should be noted that, if the certification applicant
previously had applied to a different certifying agent who issued a
notification of non-compliance as proposed in section 205.215(a), the
applicant also would have to submit documentation that shows that the
defects in compliance identified in that notice had been corrected, in
accordance with proposed section 205.215(b). Knowledge of previous
certifications or applications for certification is needed in order to
determine if information about implementation of an organic plan or
other updated information, as proposed in section 205.217(a), should be
provided. It also would enable a certifying agent to verify whether any
new applicant for certification was previously issued a notification of
non-compliance by another certifying agent.

Organic Plan--Section 205.205

Section 2114 of the OFPA (7 U.S.C. 6513) requires a producer or
handler who wants certification to submit an organic plan to the
certifying agent, and provides for certain provisions that should be in
the plan to foster the production and handling of agricultural products
in accordance with the Act. Section 2103(13) of the OFPA (7 U.S.C.
6502(13)) defines an organic plan as a plan of management of an organic
farming or handling operation that has been agreed to by the producer
or handler and the certifying agent and that includes written plans
concerning all aspects of agricultural production or handling,
including crop rotation and other practices required under the Act and
the regulations in this part. The specific organic crop production and
wild crop harvesting practices required by sections 2114(b) and (f) of
the OFPA (7 U.S.C. 6513(b) and (f)) are addressed in this proposal in
section 205.6 (crop rotation), section 205.7 (soil fertility and crop
nutrient management), and section 205.11 (wild crop harvesting). The
required provisions of the organic plan proposed here are consistent
with the OFPA definition, and would enable a certifying agent to
determine whether the applicant's management methods meet the
requirements of the Act and the regulations of this part. We also
believe that the establishment of an organic plan, as proposed here,
would be a means by which organic producers and handlers could evaluate
their operations and develop strategies to help them maintain
compliance with the relevant organic production or handling
requirements.
Section 205.205 of this proposal would require a certification
applicant to submit an organic plan to the certifying agent. In a State
with an approved State program, as proposed and discussed in section
205.402 of subpart F, the applicant also would have to submit the
organic plan to the applicable governing State official. The organic
plan would have to identify, as applicable to the operation for which
certification is requested, a description of the practices and
activities previously implemented, and intended to be implemented and
maintained, to establish a system of organic farming and handling that
complies with the applicable crop, livestock, wild crop harvesting, and
handling requirements proposed in Subpart B. Details of any multi-year
planning necessary in order to comply with all applicable requirements
would have to be included in the organic plan. For example, a rotation
plan or a description of other methods for ensuring adequate pest
management, such as introduction of diverse species into areas planted
with perennial crops, would have to be

[[Page 65907]]

provided for each field or farm parcel, as provided for in section
205.6 of subpart B. The organic plan also would have to describe
practices implemented and intended to be implemented to comply with
proposed section 205.3(b) of subpart B, which proposes that any
practices used not result in measurable degradation of soil and water
quality and that non-synthetic substances be chosen in preference to
synthetic substances, to the extent possible. For example, a farmer
might describe practices implemented to ensure that soil quality is not
measurably degraded by tillage practices or that contamination of water
by nitrates does not occur when manure is applied. The organic plan
also would have to describe activities to evaluate the effects of
practices for which more specific restrictions are proposed. For
example, a farmer who is using a composted waste material that contains
a non-active residue of a substance, as proposed in section
205.7(b)(4), would include information in the organic plan to
demonstrate that the level of non-active residues that may be present
in the composted waste material was not increasing in the soil to which
it is applied.
The information delineated in sections 205.205(b) through
205.205(e) would have to be submitted as it was applicable to the
operation for which certification is sought. These proposed paragraphs
would require sufficient information about the farm, wild crop
harvesting or handling operation for which certification is sought to
evaluate whether an applicant is complying with or is able to comply
with the Act and our proposed organic production and handling
requirements in sections 205.3 through 205.28 of subpart B. It also is
needed to aid the certifying agent in determining which areas of the
operation should be observed in the course of the on-site inspection.
Section 205.205(b) proposes the information that would have to be
submitted with respect to a farm operation. This information includes a
description of the farm's crops, livestock, and on-farm processing
activities, total acreage, and a map or maps showing all fields or farm
parcels for which certification is requested. The map(s) are required
to show field and farm parcel boundaries, sizes, locations, and any
significant identifying features. They must also show any adjoining
land, that is not part of the operation to be certified, to which a
prohibited substance may be applied, and the location of any facility
used for livestock housing, storage, or post-harvest handling.
Information also would be required that provides a history of the crops
grown and fertilizers or other production inputs applied to each field
or farm to be certified for the three year period immediately preceding
the date of the request for certification. The information would have
to include the crops intended to be planted or managed on each field in
the coming crop year, and a list of agricultural products to be sold as
organic or as made with certain organic ingredients.
A farm operation also would have to submit information about the
intended use of certain categories of production inputs. First,
information would have to be submitted that listed all substances
intended to be used as production inputs in the crop year. This list
would have to indicate each substance intended to be applied to land or
crops, its source, the anticipated quantity of it to be used, and where
it would be applied. We also propose to request a list of all the seeds
or planting stock intended to be purchased that would indicate for each
of these its source (e.g. nursery or seed company), the approximate
quantity to be used, and whether it was organically produced, treated,
or untreated.
We propose that a livestock producer submit a list of all animals
or livestock management units (such as flocks of poultry or colonies of
bees) to be maintained on the operation and to be purchased in the
following year for use as organic livestock or for the production of
organic livestock products. The list also would have to indicate the
source of the livestock (e.g., born on the farm, or name of the
hatchery), estimated number of each type of livestock to be used and
purchased in the certification year, the intended use of the livestock
(such as slaughter stock, milk, wool, or breeding), and whether the
livestock were purchased from a certified operation. Other information
required to be submitted would indicate the livestock feed and feed
supplements intended to be purchased in the certification year, and
their source (e.g., local feed mill, or neighboring farm) and estimated
quantity. Additionally, information as to what portion, if any, of the
purchased feed was not organically produced would need to be provided.
The livestock operation also would have to submit the name of the
veterinarian from whom the producer obtains animal drugs or
prescriptions for animal drugs, and a list of any animal drug expected
to be used in the certification year, including its source, estimated
amount to be used, and the types of livestock to which it might be
administered. Finally, a farm operation would have to describe the
post-harvest handling or processing methods and facilities to be used.
Examples of post-harvest handling facilities would include fresh
produce washing and packing facilities, grain cleaners, milk bottling,
herb drying, and slaughtering facilities, whether the facilities are
part of the farm operation to be certified or located elsewhere.
It should be noted that, in cases where the regulation provides for
the use of a particular substance or production input only when other
applicable proposed methods or production inputs are not effective or
are not commercially available, such as botanical pesticides (section
205.9), treated seeds (section 205.8), or non-organically produced
livestock feed (section 205.13), a description of the reasons for using
a restricted substance or production input would have to be included in
the organic plan. For example, a farmer might describe why botanical
pesticides, rather than measures that did not involve the use of a
substance, were used to control particular pests on particular crops.
Similarly, a livestock producer would describe the reasons for feeding
non-organic feed, such as an unanticipated expansion of a dairy herd.
Annual updates to the plan also would describe the conditions that
necessitated any allowed emergency or unanticipated use of a particular
production input. For example, if treated seed were used to replant a
corn crop lost to flooding, the farmer would provide this information
as part of the next annual update to the organic plan.
Paragraph (c) of this section would require that an applicant
requesting certification of a split operation (a farm or facility using
both organic and non-organic practices in different field units or
aspects of the operation) submit certain additional information. This
information would include: anticipated quantities and locations of any
crop, livestock or livestock product intended to be grown or raised
both organically and non-organically in the coming crop year; each
prohibited substance that was applied on the farm in the three years
prior to the request for certification; each prohibited substance or
practice that may be used in the certification year on a non-organic
portion of the farm; and a description of the measures that will be
used to prevent commingling of organic and non-organic products, and
contact of organic field units or products with prohibited substances.
This information is needed to determine whether there is any potential
for organically managed portions of the operation to come into

[[Page 65908]]

contact with synthetic pesticides or other substances that are
prohibited for use in organic farming and handling under the Act.
In paragraph (d) of this section we propose that a certification
applicant be required to submit the following information regarding a
wild crop harvesting operation: a map showing each area from which wild
crops will be harvested in the certification year; the ownership of the
area and evidence of permission to harvest in this area; a history of
this area that demonstrates that no prohibited substance has been
applied within three years prior to the initial harvest of a wild crop
to be sold or represented as organic; each species of plant to be
harvested, as well as its botanical name, the part of the plant to be
taken (such as leaves, roots, flowers, fruits, or the whole plant), and
the quantities of the plant expected to be harvested in the coming crop
year; the dates of the harvest season; other information that the
certifying agent might need to assess the impacts of the harvest
operation on the environment and sustained growth and production of the
wild crop; each type of wild product expected to be sold or represented
as organic or made with certain organic ingredients, and the quantity
of each type of product to be sold or represented (such as dried
flowers in bulk, fresh roots and potpourri mixes); and a list of all
post-harvest handling or processing methods and facilities to be used
by the applicant.
As proposed in paragraph (e) of this section for handling
operations, a handling operation applying for certification must
submit: a brief, general description of the type of handling operation
and the processing, manufacturing or other handling procedures it will
use (such as grain cleaning and milling, meat or produce packing, dairy
processing, or frozen food manufacturing); a description of the
structural pest management methods used and intended to be used in each
facility; and a list of each product intended to be handled and sold or
represented in the certification year as organic or made with certain
organic ingredients. A handling operation that produces both organic
and non-organic products also would have to provide a list of each non-
organically produced product or type of product to be sold in the
certification year, and a description of the measures to be used to
prevent the commingling of organic and non-organic products and
ingredients, and the contact of organic products, and packaging and
storage areas used for organic products, with prohibited substances.
Finally, the handling operation would have to submit a list of each
ingredient, incidental additive, and type of packaging material to be
used for organic products in the certification year, and specify for
each, as applicable, whether it is an organic agricultural product, a
non-organic agricultural product, or a non-agricultural ingredient; the
estimated quantity to be used; its source or manufacturer (e.g., name
of the farm(s), flavor company, or packaging manufacturer from which it
is purchased); and the country of origin for each imported organic
agricultural product to be used. The source of any water to be used as
an ingredient in an organic product would have to be identified in
order to determine that the water meets the Safe Drinking Water Act (42
U.S.C. 300(f) et seq.) requirements. This determination needs to be
made because section 2111(a)(7) of the OFPA (7 U.S.C. 6510(a)(7))
prohibits handling operations from using water that does not meet all
the Safe Drinking Water Act requirements.
We would like to point out that we believe that the information we
are requiring be submitted to certifying agents when an application for
certification is made could result in many positive benefits for the
organic program. We believe that the submitted information will
significantly decrease the amount of time it will take to conduct
inspections of operations seeking certification. If this occurs, then
the costs incurred by operations applying for certification will be
reduced.
We also believe that the information submitted at the time an
application for certification is made will also lessen the burdens that
could be incurred by certifying agents in making their own
certification decisions, and in responding to requests for information
from other certifying agents. This could occur because certifying
agents will not have to continually re-contact certification applicants
or certified operations when carrying out their responsibilities.
Additionally, we believe that information that is immediately
available will help ensure that timely decisions are made. For example,
the marketing of multi-ingredient products that may require multiple
certifications should be able to occur in a timely and efficient manner
because accredited certifying agents will be able to readily exchange
the information needed to assure that these multiple certifications
occur. Additionally, the easy accessibility to information that
documents what is to occur in a certified operation will provide both
certifying agents and the Administrator with the ability to help ensure
that violations of the organic program that occur can promptly be
substantiated, thus helping to ensure the integrity of representations
made about the organic nature of a product.
However, an alternative scheme for having the necessary records
available for certification decisions might be a scheme in which
information needed for certification decisions would be required to be
created by an applicant and made available for review and copying at an
applicant's sites of operation, but would not be required to be
submitted to certifying agents at the time an application for
certification is made. In this scheme, these records would be reviewed
by inspectors acting on behalf of certifying agents when an inspection
is carried out as part of the process of determining whether an
applicant should be certified. If records are needed at any other time,
they could either be submitted to the certifying agent or made
available for review at a farm or handling operation.
We would like comments from the public in regard to our proposed
scheme, and the possible alternative to it discussed above. In
particular, we would like information regarding the following:
(1) Whether the suggested alternative scheme which would require
the creation and availability, but not the submission, of needed
records would provide certifying agents with the records they need to
make certification decisions in a timely and efficient manner;
(2) Whether the suggested alternative scheme would be less, or
alternatively, more burdensome economically, or in any other manner,
than the proposed scheme for submission of records for anyone
participating in the organic certification program, including
certifying agents, inspectors, farming operations, and handling
operations, and if so, how and why it would be less or more burdensome;
and
(3) Whether any records we are proposing to be submitted as part of
the certification application, which in our alternative scheme would be
maintained at the sites of operation, are not needed to make
appropriate certification decisions or to ensure the integrity of the
organic program. For example, we would like comments as to whether
certifying agents need to know the anticipated quantities of non-
organic agricultural products intended to be grown or harvested in
order to make certification decisions for split operations. We also
would like comments in this area regarding our requirement that split
operations submit

[[Page 65909]]

information that indicates the expected quantity and location of each
substance prohibited for use under the OFPA that may be used on a non-
certified portion of the split operation.

Statement of Compliance--Section 205.206

We propose in this section, in accordance with section 2107(a)(4)
of the OFPA (7 U.S.C. 6506(a)(4)), that an applicant for certification
also submit a statement agreeing to comply with the Act and the
regulations in this part, including the requirements for receiving and
maintaining certification proposed in section 205.203, to the Secretary
and the certifying agent. This statement of compliance would be
submitted along with the certification application, and annually
thereafter.

Preliminary Evaluation of an Application for Certification--Section
205.207

Section 205.207 would require a certifying agent to make a
preliminary evaluation to determine whether the applicant may be in
compliance with the applicable production and handling requirements
before conducting an inspection. This preliminary evaluation, which
would be based on an examination of the application materials received,
would avoid the necessity of conducting an inspection of an applicant
who clearly could not be in compliance with the applicable organic
requirements, thus preventing unnecessary burdens on both the
certifying agent and the applicant.
This section also would require that the certifying agent verify
that an applicant who had previously applied to another certifying
agent and received a notification of non-compliance, as proposed in
section 205.215(a), had submitted documentation to support the
correction of any deficiencies identified in the notification of non-
compliance. This provision would assist a certifying agent to identify
corrections made in response to deficiencies in compliance that
previously had been noted by another certifier. Once the preliminary
evaluation was completed and the information indicated that the
operation may be in compliance with the Act and the regulations, the
certifying agent would then arrange to conduct an on-site inspection of
the operation.

Arranging for Inspections--Section 205.208

Section 2107(a)(5) of the OFPA (7 U.S.C. 6506(a)(5)) requires that
an annual on-site inspection be performed by the certifying agent of
each farm and handling operation that has applied for certification or
that is certified. In section 205.208(a), we propose that a certifying
agent arrange to conduct an initial on-site inspection of each farm,
facility, and site that is included in an operation for which
certification is requested, for the purpose of determining whether to
approve the request for certification. Another on-site inspection would
be conducted each year thereafter, to determine if the certification
should be continued. Paragraph (b) of this section would require that
such initial inspection be conducted within a reasonable time following
a favorable preliminary evaluation of an application for certification,
as proposed in section 205.207. While the Act does not specify that on-
site inspections be performed prior to granting certification,
performing at least one inspection prior to certification is the
customary and required procedure for all existing certification
programs of which we are aware, and we believe that it should be
required in our proposal in order to verify that the information
provided in an application for certification accurately reflects the
practices used by the operation requesting certification. We have not
specified a time period within which an inspection must be conducted
because this will vary depending on when an application is submitted
and the type of operation to be inspected.
In paragraph (c) of this section, we propose that an inspection be
scheduled at a time when the inspector can observe land, facilities,
and activities that demonstrate the operation's compliance with, or
capacity to comply with, the organic production and handling
requirements proposed in subpart B. Inspections also would have to be
arranged so that the applicant or an authorized representative of the
applicant who is knowledgeable about the operation will be present
during the inspection. This requirement is necessary so that
information pertinent to whether an applicant is complying or can
comply with the Act and the regulations, can be obtained or clarified
through discussion with personnel knowledgeable about the operation
being certified.

Verification of Information--Section 205.210

Section 2105(3) of the OFPA (7 U.S.C. 6504(3)) requires that an
agricultural product to be sold or labeled as an organically produced
agricultural product must be produced and handled in compliance with an
organic plan agreed to by the producer and handler of the product and
the certifying agent. In section 205.210 we propose the means by which
a certifying agent, through the use of an inspector, would verify that
the information provided in the application for certification and in
the organic plan, as proposed in sections 205.204 and 205.205, or in
any annual update to this information, as provided in section 205.217,
accurately represents that the applicant is complying or has the
ability to comply with the Act and the regulations. When an inspection
is conducted to evaluate continuation of certification, its purposes
also would include verification that the provisions of the organic plan
are being implemented.
The inspector should be able to determine from his or her
observations whether the facilities and equipment used by an applicant
for certification would enable the operation to be in full compliance
with all the applicable requirements. For example, the inspector might
verify that a produce operation that was preparing to plant annual
vegetable seedlings had already obtained or produced seedlings that
comply with section 205.8. If non-organically produced seedlings were
being used, the inspector also would examine the operation's records
that demonstrate that comparable organically produced seedlings were
not commercially available.
In order to verify that the information submitted to the certifying
agent is accurate and that practices used by the applicant are in
compliance with the applicable provisions of the Act and the
regulations, an inspection might include an examination of the
applicant's fields, buildings, storage areas, production inputs,
equipment, and other facilities, including any off-site facilities used
by the operation for organic production or handling. In addition, all
supplies and inventories of products that are, or that are intended to
be, sold, labeled or represented as organic or as made with certain
organic ingredients might be examined to observe whether they are
stored and handled in a manner that creates any possibility of their
being commingled with non-organic products. Labels, labeling, and other
market information might also be examined to determine if such material
was in compliance with the requirements of Subpart C. The inspector
also might observe boundaries, buffer zones, and other critical control
points where prohibited substances could contact organic crops,
livestock, or other agricultural products, equipment or production
areas used in organic production or handling, and places where
commingling with nonorganic products might occur, especially in split

[[Page 65910]]

operations. Observations of the overall general health and condition of
the soil, livestock, crops and other biological elements, such as
hedgerows and waterways, as appropriate, also might be made.
Additionally, the inspector might examine the operation's records and
recordkeeping system, as needed to determine the applicant's
compliance, or ability to comply with, the recordkeeping requirements
proposed in section 205.216. Additionally, the inspector might need to
collect samples of materials or substances for laboratory analysis that
may serve as evidence of compliance, as proposed in sections 205.430
and 205.431 of subpart F, when instructed to do so by the certifying
agent, or when the inspector observed a situation, such as herbicide
damage to plants, which could indicate that any crop, field, livestock,
product or facility within the operation has come into contact with a
prohibited substance.

Post-inspection Conference--Section 205.211

In section 205.211 we propose to require that the inspector conduct
a post-inspection conference with the certification applicant or an
authorized representative of the inspected operation. During this
conference, the inspector would discuss specific observations made
concerning the applicant's compliance, or ability to comply, with the
Act and the regulations, such as the adequacy of buffer areas observed
to prevent contact with organically managed fields by prohibited
substances, or the adequacy of the segregation of organic products from
non-organic products in storage areas. We have proposed this
requirement because such discussions are routinely included in
procedures currently used by most existing certification programs, and
we believe that permitting an applicant to clarify any information that
is to be reported by the inspector to the certifying agent would help
ensure the accuracy of the information. For example, if a crop being
grown in a particular field is different from the crop indicated in the
applicant information, the applicant could explain why the alternative
crop had been substituted. This discussion also would assist the
applicant in preparing future revisions to the organic plan and in
making other changes to the operation, such as implementing practices
that reduce the need to use pest control substances or animal drugs.

Reporting to the Certifying Agent--Section 205.212

In section 205.212, we propose that the certifying agent would
require that the inspector prepare and submit to the certifying agent,
within thirty days of completing an inspection, a written report that
describes the inspector's observations and assessments of the inspected
operation's compliance, or ability to comply, with the Act and the
regulations. The inspection report is a key document that will be used
by the certifying agent to verify an applicant's compliance, or ability
to comply, with the regulations of the National Organic Program.
In accordance with section 2105(3) of the OFPA (7 U.S.C. 6504(3))
which requires that organic products be produced and handled in
compliance with an organic plan agreed to by both the producer or
handler and the certifying agent, we believe that sufficiently detailed
information must be contained in an inspection report in order for the
certifying agent to determine whether to approve the organic plan or
require that it be revised, and also to determine whether a certified
operation is complying with the organic plan as previously approved.
Therefore, it is critical that the report include a complete, detailed
description of the observations and assessments made by the inspector
pursuant to section 205.210.

Additional Inspections--Section 205.213

In paragraph (a) of this section, we propose that, in addition to
the annual on-site inspection required in section 205.208(a), a
certifying agent could conduct an inspection of any farm, facility, or
site used by a certified operation or an applicant for certification
when necessary to determine compliance with the Act and the regulations
in this part. In paragraph (b) of this section, we propose that the
Secretary also may require that additional inspections be performed for
the purpose of determining compliance with the Act and the regulations
in this part. In a State in which there was an approved State program,
the governing State official also would be able to require additional
inspections. A certifying agent thus could decide to conduct additional
inspections of certification applicants or certified operations as
necessary to obtain information that was needed by the certifying agent
to determine or verify the certification of the operation.
We believe that the requirements and procedures proposed in
sections 205.208 through 205.213 to be followed by a certifying agent
in conducting an inspection of an applicant for organic certification
or a certified operation represent a key provision of our proposed
certification program. The inspection process is critical for
maintaining the integrity of the national organic certification program
and must be undertaken in a reliable, thorough and consistent manner.
Clear, consistent criteria for performing inspections are essential
because of the diversity of private and State certifying agents who
will be conducting inspections and evaluating inspection reports under
this program.

Approval of Certification--Section 205.214

In this section we propose the basis for a certifying agent to
approve an application for certification, and the procedure to be used
by the certifying agent in notifying the applicant of the approval.
Paragraph (a) of this section would require that the certifying agent
review the information submitted by the applicant, including the
organic plan, and the report submitted by the inspector, and request
that the certification applicant submit any additional information and
documentation that may be needed to determine if the certification
applicant is complying, or is able to comply, with the Act and the
regulations. For example, this might include information about changes
in crops actually planted in certain fields, additional livestock added
to the operation, or new sources for ingredients in a processed
product, that occurred since the inspection took place.
Based on a review of all the information submitted by the
certification applicant and the inspector, including any additional
information the applicant has provided pursuant to paragraph (a) of
this section, paragraph (b) of this section would require the
certifying agent to approve an application for certification after
determining that the applicant's operation satisfies four criteria.
First, the certifying agent would need to determine that the practices
and substances used, or intended to be used, by the operation are
consistent with a system of organic farming and handling, as defined in
section 205.2, and comply with the applicable production and handling
requirements in this proposal. The second criterion that must be met is
that the applicant satisfies the general requirements for
certification, as proposed in section 205.203. Third, the certifying
agent would have to determine that the applicant's organic plan
satisfies the applicable requirements of the Act and the production and
handling regulations in subpart B, including the provisions for the use
of substances proposed in the

[[Page 65911]]

National List. The fourth criterion that must be met is that the
applicant's records and recordkeeping system satisfy the applicable
requirements proposed in section 205.216.
After the certifying agent determines that an application for
certification should be approved, paragraph (c) of this section would
require that the certifying agent send the applicant a written
notification, and to state in the notice any restrictions or
requirements that are being imposed as a condition of certification.
For example, if the inspector noted that information about persons who
had applied substances to certain farm parcels was missing from the
applicant's records, the notice would require that such information be
submitted by a certain time.
Along with the notification of approval, the certifying agent would
provide a certificate which the operation could use as proof of
certification. In paragraph (d) of this section, we propose that the
certificate include the name of the certified operation, the effective
date of the certification, and the category(ies) and type(s) of
products and crop year, if applicable, covered by the certification.

Denial of Certification--Section 205.215

In this section we propose the procedure to be followed if the
certifying agent has reason to believe, based on a review of the
information specified in section 205.214(a), that an applicant for
certification is not able to comply, or is not in compliance, with the
requirements of the Act and the regulations in this part. When this
occurs, the certifying agent would be required to provide a written
notification of non-compliance to the applicant, as proposed in section
205.218(a). This notification would be sent by certified mail to the
certification applicant, and would contain a description of each
deficiency in the applicant's ability to comply with the Act and the
regulations in this part that the certifying agent has reason to
believe has occurred, the evidence on which the notification is based,
and the date by which the operation must correct each deficiency in
compliance identified in the notification.
Following the correction of deficiencies identified in the
notification of non-compliance, section 205.215(b) would permit the
applicant to submit a new application for certification to any
accredited certifying agent. A new application would include
documentation of actions taken by the applicant to correct the
deficiencies in compliance identified in the notification of non-
compliance sent pursuant to paragraph (a) of this section. If a new
application is submitted to a different certifying agent, the
certification applicant would be required to simultaneously inform the
certifying agent who issued the notification of non-compliance that a
new application has been submitted and the name of the certifying agent
to whom it was submitted. It should be noted that an applicant for
certification must provide information to a certifying agent about
previous applications for certification and their outcome, as proposed
in section 205.204(d) (applicant information). A certifying agent thus
would be able to determine whether a new applicant previously had
received a notification of non-compliance from a different accredited
certifying agent and would be required to include with the application
for certification documentation that deficiencies in compliance
identified in the previous notification had been corrected.
Finally, in paragraph (c) of this section, we propose that if a
certification applicant who receives a notification of non-compliance
does not correct the deficiencies or does not notify the certifying
agent that it has submitted a new application within the time specified
in the notice of non-compliance, the certifying agent would submit to
the Administrator a notice of its recommendation to deny certification
to the applicant. The Administrator then could institute proceedings to
deny certification pursuant to the Rules of Practice, 7 CFR 1.130, et
seq. The Rules of Practice provide for the formal filing of a complaint
by the Secretary, an opportunity for the certification applicant to
answer the complaint, a procedure for holding a hearing, and a
procedure for further appealing an adverse decision following any
hearing that is held. A final determination to deny certification would
not be made until the applicant had received notice and an opportunity
to be heard.

Recordkeeping--Section 205.216

Section 2112(d) of the OFPA (7 U.S.C. 6511(d)) requires that
producers who operate a certified organic farm or handling operation
maintain certain records for five years concerning the production or
handling of agricultural products that are sold or labeled as
organically produced. We accordingly propose in section 205.216 that a
certified operation maintain records concerning the production,
harvesting, and handling of agricultural products that are, or that are
intended to be, sold, labeled or represented as organic or made with
certain organic ingredients sufficient to demonstrate compliance with
the Act and the regulations, for a period of five years. These records
would have to be made available to authorized representatives of the
Secretary, the applicable governing State official in a State with an
approved State program, as proposed and discussed in section 205.402 of
subpart F, and the certifying agent, for the purpose of verifying the
operation's compliance with the Act and the regulations in this part
and the provisions of the applicable State program. Records maintained
in accordance with this provision could include written, electronic, or
graphic documentation, such as maps or plant diagrams, that serve to
support and substantiate any information provided to the certifying
agent concerning the operation's production and handling methods.
In paragraph (b) of this section we propose that certain specific
records would have to be maintained by a certified operation. Other
records, in addition to those indicated, also may be maintained as
considered appropriate by the operation to support information provided
to the certifying agent. In paragraphs (b)(1) and (b)(2) of this
section it is proposed, in accordance with sections 2105(2) and 2112(d)
of the OFPA (7 U.S.C. 6504(2) and 6511(d)), that the operation would
have to maintain a list of all substances applied to fields or land
that are part of the certified operation for a period of no less than
three years preceding the intended or actual time of harvest of an
organic crop from such fields or land, along with the name and address
of any person who applies or has applied any substance to any part of
the farm, the name of the substance, and the date(s), location(s),
rate(s) and method(s) of application. Section 2110(f)(2) of the OFPA (7
U.S.C. 6509(f)(2)) requires that certain records be kept with respect
to livestock maintained under organic management. Accordingly, we
propose in section 205.216(b)(3) that, for each animal (or livestock
management unit, such as a poultry flock or bee colony) that is, or
whose products are, intended to be sold or represented as organic in
accordance with the livestock production requirements proposed in
sections 205.12 through 205.15 of subpart B, the producer would have to
keep records of: the source of the animal or livestock management unit
and the date it entered the certified operation; the amounts and
sources of all animal drugs administered to it; all feeds and feed
supplements fed to it; and the location of the field, farm unit, or

[[Page 65912]]

facility where it is maintained, as applicable. These records all are
necessary in order to maintain a detailed, verifiable audit trail so
that each animal (or livestock unit) can be traced back to the farm, as
required by section 2110(f)(1) of the OFPA (7 U.S.C. 6509(f)(1)).
A fourth category of records we propose would have to be maintained
includes any information submitted to a certifying agent as part of an
application for certification or as part of continuation of
certification, as proposed in sections 204.204 and 205.217.
We are also proposing that the records would have to be adequate to
establish an audit trail. An audit trail is defined as the ability to
follow, through documentation, the transfer of ownership and the
transportation of any agricultural product labeled as organic or made
with certain organic ingredients. This information would include, as
applicable, the source, production and handling methods, transfer of
ownership, and transportation of any agricultural product labeled as
organic or made with certain organic ingredients that is received by or
shipped from the certified operation. Although section 2110(f)(1) of
the OFPA (7 U.S.C. 6509(f)(1)) imposes a verifiable audit trail
requirement only on livestock operations, our proposal to establish a
verifiable audit trail for all organically produced products is needed
in order to adequately enforce the provisions of the Act. It also is
consistent with the recordkeeping requirements of most existing
certification programs we have reviewed, and consistent with the
recommendations provided by the NOSB.
Paragraph (c) of this section reiterates that any operation that is
exempt or excluded from certification under section 205.202 (a) or (b)
must maintain records in accordance with proposed section 205.202(c).

Continuation of Certification--Section 205.217

Section 2107(a)(4) of the OFPA (7 U.S.C. 6506(a)(4)) requires that
a certified operation certify on an annual basis that it is producing
agricultural products that are sold, labeled, or represented as organic
in compliance with the Act and the regulations. Additionally, section
2107(a)(5) of the OFPA (7 U.S.C. 6506(a)(5)) requires an annual on-site
inspection of each certified operation. The annual submission of
updated information proposed in paragraph (a) of this section would
provide a certifying agent with information about changes that may have
been made in an operation during the preceding year which is needed by
the certifying agent to properly prepare for the annual inspection.
Although nearly all the existing certification programs we reviewed
require an annual renewal of certification, we are proposing in section
205.217 that a certified operation needs to submit only updated
information to the certifying agent on an annual basis. As proposed
here, an approved certification status would continue in effect until
the operation voluntarily ceased to be certified or was terminated, as
proposed in section 205.219.
As proposed in paragraph (a) of this section, a certified operation
would submit to the certifying agent any additions or changes to each
item of information contained in the previous year's application and
any amendments to the organic plan, including a description of
activities undertaken in the previous year, and intended to be
undertaken in the coming year, to implement the provisions of the
organic plan, as proposed in sections 205.204 and 205.205. For example,
if a farm had expanded its acreage in organic production or the number
of livestock included in its operation had decreased, this information
would have to be included in the update. The certifying agent would
have the previous application information on file, or would be able to
obtain it from the certifying agent who had previously certified the
operation, so that the applicable information specified in section
205.204 and 205.205 would be available when preparing for the on-site
inspection.
The application materials also would have to include a statement
that the certified operation will remain in compliance with the Act and
the regulations in this part, as well as any other information that may
be requested by the certifying agent. In section 205.217 (b) and (c) we
propose that after receiving the updated information as specified in
paragraph (a) of this section, the certifying agent would arrange to
conduct an on-site inspection of the certified operation pursuant to
sections 205.208 through 205.211. After conducting an on-site
inspection of the certified operation pursuant to section 205.212, if a
certifying agent has reason to believe that a certified operation is
not complying with the requirements of the Act and the regulations, the
certifying agent would provide a written notification of non-compliance
to the operation, as proposed in section 205.218(a).

Notification of Non-compliance With Certification Requirements--Section
205.218

Section 2107(a)(7) of the OFPA (7 U.S.C. 6506(a)(7)) requires that
a certification program established under the Act provide for
appropriate and adequate enforcement measures. In section 205.218 we
propose the procedure by which a certifying agent would identify any
problems that may occur in the compliance with, or possible violations
of, the Act or the regulations in this part by a certified operation,
or a certification applicant, and then provide an opportunity for the
operation to correct any defects in its compliance.
In paragraph (a) of this section we propose that a certifying agent
would send a written notification of non-compliance by certified mail
sent to the place of business of the certification applicant or the
certified operation. The notification would have to contain the
following information: a description of each deficiency in compliance
and each possible violation of the Act and the regulations that the
certifying agent has reason to believe has occurred; the evidence on
which the notification is based; and the date by which the operation
must correct each deficiency in compliance and each possible violation
delineated in the notification, and submit documentation to the
certifying agent to support such corrections.
In paragraph (b) of this section we propose the procedure to be
followed after a certifying agent sends a notification of non-
compliance to an operation it has certified. If the documentation to
support corrections received by the certifying agent from an operation
it has certified is not adequate to demonstrate that each deficiency in
compliance and each possible violation has been corrected, we propose
that the certifying agent would conduct an additional inspection, if
one is necessary, to determine whether the operation is complying with,
or has violated, the Act or the regulations. After conducting an
additional inspection, if one is necessary, or without conducting an
additional inspection, if one is not necessary, the certifying agent
would review the status of the certified operation to determine whether
the operation or any portion of the operation has ceased to comply
with, or has violated, the Act and the regulations.
Paragraph (b)(3) of this section proposes the procedure to be
followed after the certifying agent has reviewed the certified
operation's status, pursuant

[[Page 65913]]

to paragraph (b)(2) of this section. Following a review of a certified
operations's status, if a certifying agent determines that the
operation is in compliance with the Act and the regulations, the
certifying agent would be required to notify the certified operation in
writing of its determination of compliance. If the outcome of the
review gives the certifying agent reason to believe that the certified
operation or any portion of the operation is not in compliance with the
Act and the regulations, the certifying agent would submit to the
Administrator a notice of its recommendation to terminate the
certification of the certified operation or any portion of the
certified operation that the certifying agent believes to have ceased
to comply with the Act and the regulations. It should be noted that a
recommendation could be made to terminate the certification of only a
portion of an operation: for example, when a prohibited substance is
applied to only one field that is part of a certified farm operation,
but all other fields remain in compliance with the Act and the
regulations.

Termination of Certification--Section 205.219

In section 205.219 we propose the procedure to be followed to
terminate the certification of an operation or a portion of an
operation that a certifying agent believes has ceased to comply with
the Act and the regulations. In paragraph (a) of this section we
propose that a certifying agent would send the certified operation a
notification of non-compliance and follow the other procedures proposed
in section 205.218 if the certifying agent has reason to believe that a
certified operation or a person responsibly connected with a farm, wild
crop harvesting, or handling operation it has certified has: violated
the purposes of the national organic certification program; made a
false statement; or attempted to have a label indicating that an
agricultural product is organically produced affixed to such product
when such product was not organically produced in accordance with the
Act and the regulations.
In section 205.219(b) we propose that if a certifying agent has
reason to believe that a certified operation or a person responsibly
connected with an operation certified by the certifying agent has
wilfully violated the Act and the regulations, the certifying agent
would not send a notification of non-compliance pursuant to section
205.218. Instead, the certifying agent would submit to the
Administrator a notice of its recommendation to terminate the
certification of the certified operation or any portion of the
certified operation that the certifying agent believes to have ceased
to comply with the Act and the regulations. The names of any persons
the certifying agent believes to have willfully violated the Act and
the regulations would have to be listed in the recommendation to
terminate certification submitted to the Administrator.
In section 205.219(c) we propose that the Administrator could
institute the proceedings to terminate certification (pursuant to the
Rules of Practice 7 CFR 1.130, et seq.) following the Administrator's
receipt from a certifying agent of a notification of a recommendation
to terminate the certification of an operation or any portion of an
operation. The Rules of Practice provide for the formal filing of a
complaint by the Secretary, an opportunity for the person(s) named in
the complaint to answer the complaint, a procedure for holding a
hearing, and a procedure for further appealing an adverse decision
following any hearing that is held. A final determination to terminate
the certification would not be made, therefore, until the person(s)
believed to have violated the Act and the regulations had received
notice and an opportunity to be heard. A notification of a certifying
agent's recommendation to terminate certification could be submitted
either in accordance with paragraph (b) of this section, or in
accordance with section 205.218(b)(3)(ii) following a review of the
status of a certified operation.
Section 2120(c) of the OFPA (7 U.S.C. 6519(c)) requires that, after
notice and an opportunity to be heard, a person who is determined to
have violated the Act and the regulations; made a false statement; or
attempted to have a label indicating that an agricultural product is
organically produced affixed to such product that such person knows, or
should have reason to know, was not organically produced, shall not be
eligible to receive certification for five years from the occurrence of
such violation. Section 205.219(d)(1) is proposed in accordance with
the Act's requirement, with the period of ineligibility to begin when a
determination is made subsequent to the proceedings to terminate
certification as proposed in paragraph (c) of this section. This
section of the Act also permits the Secretary to waive or reduce the
period of ineligibility if it is in the best interests of the
certification program established under the Act, and we accordingly
propose in paragraph (d)(2) of this section that the Secretary may
waive ineligibility for certification if it is in the best interests of
the certification program established under subpart D.

Notification of Certification Status--Section 205.220

In section 205.220 we propose that a certifying agent would be
required to submit to the Administrator a copy of any notification of
non-compliance, sent pursuant to section 205.218, simultaneously with
its issuance to the certification applicant or the certified operation,
and also to submit to the Administrator on a quarterly calendar basis
the name of each operation whose application for certification has been
approved. This information is needed in order for the Administrator to
maintain current information concerning the status of certified farm,
wild crop harvesting and handling operations, and therefore provide
adequate enforcement measures. Information about any operation that has
received a notification of non-compliance, pursuant to section
205.218(a), is needed in order to ensure that information about
possible violations of the Act and the regulations is provided to the
Administrator in a timely manner. This provision also would enable a
certifying agent to determine whether a new certification applicant had
previously received a notification of non-compliance from a different
certifying agent, and was therefore required to document that any
defects in compliance had been corrected.

Subpart D--What Has to be Certified
----------------------------------------------------------------------------------------------------------------
Records required for organic
Entity Needs to be certified ingredients and organic
products
----------------------------------------------------------------------------------------------------------------
ORGANIC OPERATION SELLING or HANDLING NO MORE THAN NO........................... *SALES RECORDS Sec.
$5,000 annually in agricultural products Sec. 205.202(c)(1).
205.202(a)(1). *Sales records for all
agricultural products.

[[Page 65914]]

ORGANIC OPERATION SELLING or HANDLING MORE THAN YES.......................... ALL RECORDS Sec. 205.216.
$5,000 in agricultural products or a HANDLING
OPERATION (i.e., co-packer, etc.) that provides
handling services to THREE (3) OR MORE operations
that produce or handle agricultural products
sold, labeled, or represented as organic or as
made with certain organic ingredients Sec.
205.201(a).
HANDLER of made with certain organic ingredients YES.......................... ALL RECORDS Sec. 205.216.
product Secs. 205.201(a) and (b).
HANDLER of products that contain less than 50% NO........................... SOURCE/QUANTITY RECEIVED--
organic ingredients Sec. 205.202(a)(3). Sec. 205.202(c)(3)(i).
COMMINGLING/CONTACT--Sec.
205.202(c)(3)(i).
DESTINATION/QUANTITY SHIPPED--
Sec. 205.202(c)(3)(ii)).
HANDLER (distributor, warehouser, etc.) of NO........................... SOURCE/QUANTITY RECEIVED--
packaged or otherwise enclosed products that Sec. 205.202(c)(3)(i).
remain in the same packages Sec. 205.202(b)(1). COMMINGLING/CONTACT--Sec.
205.202(c)(3)(i).
DESTINATION/QUANTITY SHIPPED--
Sec. 205.202(c)(3)(ii)).
RETAIL OPERATION that does not process organic NO........................... .............................
products Sec. 205.202(a)(2).
RETAIL OPERATION that processes in the course of NO........................... .............................
normal retail activity solely for the purpose of
offering the product to the consumer Sec.
205.202(b)(3).
RETAIL OPERATION that processes other than in the YES.......................... ALL RECORDS--Sec. 205.216.
course of normal retail activity, i.e., combines
into a single product products previously labeled
organic and represents for sale under a new label
Sec. 205.201(a).
RESTAURANTS and FOOD SERVICE ESTABLISHMENTS that NO........................... .............................
process ready-to-eat food but do not package and
label the food Sec. 205.202(b)(2).
----------------------------------------------------------------------------------------------------------------

Subpart E--Accreditation of Certifying Agents

Section 2115(a) of the OFPA (7 U.S.C. 6514(a)) requires that the
Secretary establish and implement a program to accredit a governing
State official, and any private person, who meets the requirements of
the Act, as a certifying agent for the purpose of certifying a farm or
handling operation as a certified organic farm or certified organic
handling operation. Section 2104 of the OFPA (7 U.S.C. 6503) provides
for the establishment of an organic certification program, which we
have proposed in subpart D of this proposal, and section 2104(d) of the
OFPA (7 U.S.C. 6503(d)) requires that the Secretary implement the
certification program through certifying agents. We accordingly have
proposed the provisions contained in this subpart to establish a
program to accredit certifying agents to implement the certification
program that is proposed in subpart D. We have developed this subpart
following an extensive review of information about, and consultation
with representatives of, existing organic certification programs and
existing accreditation programs. We also have reviewed recommendations
provided by the NOSB and public input submitted to the NOSB and the
USDA.
This subpart delineates the procedure which a governing State
official or a private person must follow in order to apply for and
maintain accreditation as a certifying agent. A governing State
official is defined by the Act as the chief executive official of a
State or, in the case of a State that provides for the Statewide
election of an official to be responsible solely for the administration
of agricultural operations of the State, such official, who administers
an organic certification program under the Act. A person is defined as
an individual, group of individuals, corporation, association,
organization, cooperative, or other entity. Over 33 private
certification organizations currently exist, including some that are
organized for profit and others that are non-profit membership
organizations. Some of these organizations cover a broad geographic
scope and certify a wide range of operations producing diverse
agricultural products. Others are small and cover limited geographical
areas or types of operations. This proposal has been developed to
provide enough flexibility to allow for diversity of organizational
types, while ensuring that the requirements of the Act are met. We
anticipate that new private certifying agents will be organized when
certification becomes mandatory for the marketing of agricultural
products that are represented as organically produced. Eleven States
currently certify organic producers in accordance with State laws, and
additional States have expressed interest in establishing organic
certification programs in their States.
Additionally, a governing State official may establish an approved
State program, as proposed and discussed in section 205.402 of subpart
F, in accordance with section 2108 of the OFPA (7 U.S.C. 6507). A State
could elect to operate the certification component of an approved State
program by utilizing accredited certifying agents who are private
persons; the State would not need to apply for and receive
accreditation as a certifying agent as a condition of its State program
being approved by the Secretary. Conversely, a governing State official
could apply for and receive accreditation as a State certifying agent
without having to establish an approved State program.

Synopsis of Proposed Accreditation Program

This subpart delineates the requirements that must be met for a
private person or a governing State official to receive and maintain
accreditation as a certifying agent. These requirements include those
that are provided under sections 2115 and 2116 of the OFPA (7 U.S.C.
6514 and 6515) which include having sufficient expertise in organic
farming and handling techniques. They also include other requirements
that we believe are necessary in order to perform the certification
functions we have

[[Page 65915]]

proposed in subpart D, such as having an annual internal review
conducted of the accredited certifying agent's operations.
Subpart E also provides a procedure for applying for accreditation,
including the information that an applicant must submit. The
application material includes basic information about the applicant's
operation, information that provides evidence of its expertise in
organic farming and handling techniques, evidence of the applicant's
ability to implement the organic certification program required under
the Act, and an agreement to comply with the Act and the regulations,
as well as certain other terms and conditions. A private person would
have to agree to certain additional terms, including agreeing to hold
the Secretary harmless for any failure on its part, and to furnish
reasonable security to protect the rights of participants in the
certification program in the event the applicant ceases its operations.
This subpart then delineates the procedures by which the
Administrator either would approve or deny an application for
accreditation. The procedure for denial of accreditation would not be
initiated until the applicant had been notified of defects in its
ability to comply with the requirements and given an opportunity to
correct them. This proposal would require an initial on-site evaluation
of an accredited certifying agent's operations within a reasonable time
after approving an application for accreditation, and a subsequent
review by a peer review panel, as provided under section 2117 of the
OFPA (7 U.S.C. 6516). The Administrator then would review the site
evaluation report and the recommendations provided by each peer
reviewer to determine whether to confirm or deny confirmation of the
agent's accredited status. Following confirmation of accreditation,
this proposal would require a certifying agent to submit fees and
reports annually, and to request renewal of accreditation every 5
years. Each USDA review of a certifier's request for renewal of
accreditation would include an on-site evaluation of a certifying
agent's operations and a subsequent review by a peer review panel. This
proposal also would permit the Administrator to conduct site
evaluations whenever needed, including prior to approving
accreditation, in order to verify the accuracy of information submitted
and ensure compliance with the Act and the regulations.
This proposal further provides for certain enforcement actions to
be taken if a certifying agent is not complying with or has violated
the Act or the regulations in this part. A notification would be sent
to a certifying agent if the Administrator has reason to believe that
the certifying agent is not complying with the Act and the regulations.
The basis for initiating the procedure for suspending or terminating an
accreditation, which would be initiated after the certifying agent had
an opportunity to correct deficiencies in compliance, is then proposed.
A private person or a governing State official whose accreditation was
suspended could reapply for accreditation after taking corrective
actions to bring its activities into compliance with the Act and the
regulations. A private person whose accreditation was terminated would
be ineligible to receive accreditation for no less than three years, as
provided by section 2120(e)(2) of the OFPA (7 U.S.C. 6519(e)(2)).

Distinctions Between Certifying Agents

The OFPA provides that a governing State official and any private
person can become an accredited certifying agent if it successfully can
demonstrate that it meets the requirements for accreditation
established by the Secretary. All organic certifying agents, whether
new or existing, or a private person or a governing State official,
generally will have to meet the same qualifications, demonstrate the
same capabilities, and undergo the same accreditation process. There
are, however, certain requirements stated in the OFPA that pertain only
to private certifying agents. Section 2116(e) of the OFPA (7 U.S.C.
6515(e)) requires only private certifying agents to furnish reasonable
security, in an amount determined by the Secretary, to protect the
rights of participants in the organic certification program. This
section of the Act also requires only a private certifying agent to
agree to hold the Secretary harmless for any failure on its part to
carry out the Act's provisions.
Another difference between private and State certifying agents
concerns the termination of accreditation. Section 2120(e) of the OFPA
(7 U.S.C. 6519(e)) provides for the loss of accreditation only for a
private certifying agent who violates the provisions of the Act and the
regulations or who negligently certifies an operation, and also
requires that the private certifying agent be ineligible for
accreditation for a period of at least three years. Section 2116(j)(1)
of the OFPA (7 U.S.C. 6515(j)(1)) provides for the suspension of
accreditation for any certifying agent who is not properly adhering to
the provisions of the OFPA and does not require a minimum period of
ineligibility. These provisions of the Act are reflected in our
proposed section 205.316 (termination of accreditation).

Areas of Accreditation--Section 205.300

As provided by section 2115(a) of the OFPA (7 U.S.C. 6514(a)), this
section proposes that the Secretary shall accredit a qualified
accreditation applicant in the areas of crops, livestock, wild crops,
or handling, or any combination thereof, to certify a farm, wild crop
harvesting operation, or handling operation as a certified organic
farm, a certified organic wild crop harvesting operation, or a
certified organic handling operation. This proposal would allow
certifying agents who may have limited areas of expertise to become
accredited to conduct certifications only of those types of operations
for which they have expertise. Thus, certifying agents would not be
required to have expertise in areas for which they are not requesting
accreditation, in order to obtain accreditation in the areas for which
they request it. For example, a certifying agent that only wanted to be
accredited to certify mushroom farming operations would not have to
have expertise in the raising of organic livestock in order to become
accredited to certify mushroom operations. Additionally, a number of
the existing non-profit certification programs we have reviewed certify
only farms, since their personnel are not knowledgeable enough about
manufacturing and processing procedures to certify those types of
operations. Under this proposal, these organizations would not have to
acquire the capability to certify other types of operations in order to
be accredited to certify only farms.

General Requirements for Accreditation--Section 205.301

Sections 2115 and 2116 of the OFPA (7 U.S.C. 6514 and 6515)
delineate certain requirements that accredited certifying agents must
meet in carrying out the organic certification program mandated by the
Act. This section of our proposal delineates those general requirements
that are provided in these sections of the Act, as well as certain
additional requirements that we have determined to be necessary to
ensure the integrity of the program. These additional requirements are
authorized by section 2107(a)(11) of the OFPA (7 U.S.C. 6506(a)(11))
which permits a program established under the Act to require other
necessary terms and conditions, as determined by the Secretary.

[[Page 65916]]

All of the requirements proposed in paragraph (a) of this section
would apply equally to both State and private certifying agents. The
first two require that an accredited certifying agent have sufficient
expertise in organic farming and handling techniques, and demonstrate
the ability to fully comply with the requirements for accreditation to
implement the certification program under the Act and the regulations,
as provided respectively in sections 2115(b)(2) and 2116(a) of the OFPA
(7 U.S.C. 6514(b)(2) and 6515(a)).
The third requirement we propose in section 205.301(a) is that a
certifying agent carry out the provisions of the Act and the
regulations in this part, which would include sections 205.207 through
205.214 of subpart D that describe certifying agent responsibilities
and section 205.430 of subpart F, concerning compliance testing. The
fourth requirement proposed in paragraph (a) of this section is
consistent with section 2116(b) of the OFPA (7 U.S.C. 6515(b)), which
requires a certifying agent to use a sufficient number of inspectors to
implement the applicable organic certification program. Our proposal
also would include in this requirement personnel other than inspectors,
such as those who review applicants for certification. After reviewing
information from existing certification programs, we have concluded
that sufficient qualified personnel in addition to inspectors are
essential for a certifying agent to have the expertise necessary to
implement the certification program as proposed in subpart D of this
part. Paragraph (a)(4) of this section additionally would require that
the personnel be adequately trained to implement the organic
certification program established under the Act and the regulations.
In section 205.301(a)(5) we propose that a certifying agent be
required to conduct an annual performance review for each inspector
used and to implement measures to correct any possible defects in
compliance with the Act and the regulations identified in each such
review. The quality and consistency of the performance of inspections
is critical to the integrity of the certification program we have
developed and proposed in subpart D. In order to ensure that all
inspections are conducted in a manner that adequately scrutinizes
certified operations, we believe that a certifying agent must annually
evaluate the performance of each inspector it uses during the year.
Paragraph (a)(6) of this section similarly would require that an annual
internal evaluation review be conducted of the certifying agent's own
certification activities, and that measures to correct any possible
defects in compliance with the Act and the regulations be implemented,
as identified in each such review. We propose this requirement in order
to safeguard further the integrity of the certification process, and
also to provide an additional means of evaluating the adequacy of a
certifying agent's performance and compliance with the Act and the
regulations. Such a procedure is consistent with accepted quality
management methods and would assist the certifying agent in helping to
ensure that its operations continue to comply with the requirements of
the Act and the regulations. The requirements proposed in paragraphs
(a)(5) and (a)(6) of this section would help ensure that a certifying
agent possesses the requisite expertise to conduct certification
activities, as required by section 2115(b)(2) of the OFPA (7 U.S.C.
6514(b)(2)), and maintains the administrative capability to fully
implement the proposed program, as required by section 2116(a) of the
OFPA (7 U.S.C. 6515(a)).
In section 205.301(a)(7) we propose the requirement that a
certifying agent provide sufficient information to persons seeking
certification to enable an applicant for certification to comply with
the applicable requirements of the Act and the regulations. This would
require that a certifying agent provide applicable information, such as
information about the National Organic Program's requirements for: the
production and handling of agricultural products; wild crop harvesting;
certification; labeling; inspection; appeals of adverse actions; fees
and expenses; approved State program requirements; and any other
information that is needed for a person to be able to apply for
certification and comply with all the relevant requirements.
Section 2116(c) of the OFPA (7 U.S.C. 6515(c)) requires that a
certifying agent maintain records of its activities under the Act for
not less than 10 years, and that it allow only representatives of the
Secretary and the governing State official access to these records.
Paragraph (a)(8) of this section reflects those requirements. Section
2116(g) of the OFPA (7 U.S.C. 6515(g)) requires that a certifying agent
maintain strict confidentiality with respect to its clients under the
applicable organic certification program and not disclose any business
related information of its clients to third parties, with the exception
of the Secretary or the applicable governing State official. Paragraph
(a)(9) of this section reflects this provision, and also allows for
certain exceptions, as proposed and discussed in section 205.304(b)(5)
of this subpart.
The requirements provided in section 2116(h) of the OFPA (7 U.S.C.
6515(h)) address the prevention of conflicts of interest by certifying
agents, and paragraph (a)(10) of this section is proposed to be
consistent with those provisions. We have found it necessary in some
cases to add certain clarifications to the language contained in the
Act in order to establish requirements that are both feasible for the
diverse range of certifying agents and adequate to prevent conflicts of
interest. The first provision proposed in paragraph (a)(10) of this
section is that a certifying agent could not certify an operation in
which the agent, or a responsibly connected party of the agent, has
held a commercial interest, including the provision of consultancy
services, within 12 months prior to the application for certification.
This provision also would require that a certifying agent not certify
an operation through the use of any employee that has or has held a
commercial interest in the operation, including the provision of
consultancy services, within the 12 month period prior to the
application for certification. This proposal therefore would permit a
certifying agent to certify the operation of an employee provided that
the employee was not used in certifying that operation. This
clarification is consistent with the intent of the Act, and would
permit the use by certifying agents of peer reviewers, as is the
practice in many of the current organic certification programs we have
examined. While the Act does not mention responsibly connected parties,
which we have defined as any person who is a partner, officer,
director, holder, manager, or owner of 10 per centum or more of the
voting stock of an applicant or a recipient of certification or
accreditation, we believe that any such person should be limited in the
same way as the agent itself. Section 2116(h)(1) of the OFPA (7 U.S.C.
6515(h)(1)) also does not specify a time limit for previous commercial
relationships in its conflict of interest provisions; however, we are
proposing here that the prohibition of commercial relationships extend
only to the previous 12 months. We believe that extending this period
indefinitely into the past would prevent certifying agents from hiring
qualified personnel who at some time had a financial interest in an
operation certified by the agent. An indefinite extension would have
the effect of severely curtailing most

[[Page 65917]]

certifying agents' ability to comply with the Act's requirement of
employing people with sufficient expertise to implement the applicable
certification program. We believe that 12 months is a sufficient period
to ensure that any previous commercial interest would not create a
conflict of interest situation, since this time period is consistent
with similar provisions governing conflict of interest for government
employees.
The second provision proposed in paragraph (a)(10) of this section
would similarly prohibit a certifying agent from assigning an inspector
to perform an inspection of an operation in which the inspector has or
has held a commercial relationship within the 12 months prior to
conducting the inspection. We propose this because of the fact that
many existing organic certification programs use inspectors who are
neither employees nor responsibly connected parties, but who instead
are independent contractors who work for multiple certifying agents. As
proposed here, such inspectors would be appropriately prevented from
performing inspections in which they had any conflict of interest.
In accordance with section 2116(h)(2) of the OFPA (7 U.S.C.
6515(h)(2)), the third provision proposed in paragraph (a)(10) of this
section would prohibit a certifying agent and any employee, inspector,
or other personnel involved in certification activities to accept
payment, gifts, or favors of any kind, other than prescribed fees, from
any business inspected. We would not consider a volunteer who performs
services for a not-for-profit certifying agent as providing favors to
any particular individual in that agency and, therefore, would not
consider the certifying agent as being in a conflict of interest
situation by accepting such services from volunteers. The final
provision of paragraph (a)(10) of this section, proposed in accordance
with section 2116(h)(3) of the OFPA (7 U.S.C. 6515(h)(3)), would
prohibit a certifying agent from providing advice concerning organic
practices or techniques to any certification applicant for a fee other
than as part of the fees established for its accredited certification
program.
Section 205.301(a)(11) would require that a certifying agent accept
the certification decisions made by another USDA accredited certifying
agent as equivalent to its own. We believe this provision is necessary
so as to prevent certifying agents from requiring handlers to purchase
only organic products originating from operations certified by the
particular certifying agent, under the premise that products
originating from operations certified by other certifying agents are
not equivalent. Such a situation would conflict with the purposes of
the Act to establish national standards for organically produced
products and to facilitate interstate commerce for organically produced
agricultural products.
Section 205.301(12) would require a certifying agent to refrain
from making false or misleading claims about its accreditation status,
the USDA accreditation program, or the nature or qualities of products
labeled as organically produced. For example, a certifying agent could
describe its procedure for certifying organic production methods, but
it could not claim that its certification procedure offers a guarantee
of product quality. We believe that this provision is needed to prevent
the dissemination of inaccurate or misleading information to consumers
about organically produced products, which is consistent with the
purpose of the Act to assure consumers that organically produced
products meet a consistent standard.
Section 205.301(a)(13) would require that a certifying agent charge
only such fees to applicants for certification and operations it
certifies that the Secretary determines are reasonable. This provision
is consistent with section 2107(a)(10) of the OFPA (7 U.S.C.
6506(a)(10)), which requires the certification program established
under the Act to provide for the collection of reasonable fees from
producers and handlers who participate in such program. AMS will review
the fees charged by the certifying agents when they apply for
accreditation and when they submit annual reports to ensure that the
fees are reasonable and that small businesses are not unduly burdened.
Section 205.301(a)(14) would require a certifying agent to pay and
submit fees to AMS in accordance with sections 205.421 and 205.422(b)
of subpart F, in which we propose that certifying agents would be
required to pay certain fees to become accredited and to maintain
accreditation, and also would be required to collect National Organic
Program fees from farmers and handlers to be submitted to AMS.
In section 205.301(a)(15) we propose that a certifying agent would
have to comply with and implement such other terms and conditions
deemed necessary by the Secretary. This provision is made in accordance
with section 2116(d) of the OFPA (7 U.S.C. 6515(d)).
Paragraph (b) of this section would permit a certifying agent to
establish a seal, logo or other identifying mark that could be used by
farm, wild crop harvesting, and handling operations that it certifies
for the purpose of denoting affiliation with that certifying agent.
This provision, authorized by section 2107(a)(11) of the OFPA (7 U.S.C.
6506(a)(11)), is proposed in consideration of public input provided by
many organic producers and handlers expressing their desire to identify
their operations with a particular certification program. Some existing
certification programs also stated that they have made a considerable
investment in developing consumer recognition for their names or logos.
Although we also received comments stating that the use of certifying
agent seals or logos should be prohibited, we have determined that a
prohibition of seals and logos is not necessary. We believe that the
use of certifying agent identification to indicate affiliation with a
certifying agent would provide information of value to some consumers
and would not be in conflict with the purpose stated in section 2102(2)
of the OFPA (7 U.S.C. 6501(2)) of assuring consumers that organically
produced products meet a consistent national standard.
This proposal would require that the use of any such seal or logo
not be required as a condition for receiving certification, and,
thereby, its use would be optional on the part of the farmer or
handler. In order to ensure that any use of a certifying agent's logo
does not conflict with the purposes of the Act, proposed section
205.301(b)(2) also specifies that the agent could not require, as a
condition for use of its identification mark, compliance with any
farming or handling requirements in addition to those provided for in
the Act and the regulations in this part. Some public input has been
received suggesting that certifying agents be allowed to use their logo
or seal to recognize ``additional achievements'' on the part of farmers
and handlers that exceed the requirements proposed in the national
organic standards. This position was not recommended by the NOSB, which
instead adopted a recommendation as a policy matter that was consistent
with the provisions of this section of our proposal. Our proposal would
not prohibit a certifying agent from verifying that a producer or
handler it certifies is meeting contractual specifications that include
requirements in addition to those of the Act and the regulations. It
would prohibit the use of the certifying agent's logo or seal on a
label, labeling material or other market information to represent
compliance with farming or handling requirements in addition to those

[[Page 65918]]

provided under the Act and the regulations in this part.
In accordance with section 2116(e) of the OFPA (7 U.S.C. 6515(e)),
section 205.301(c) proposes three additional requirements for a
certifying agent who is a private person. These requirements are that a
private certifying agent must: hold the Secretary harmless for any
failure on the part of the certifying agent to carry out the provisions
of the Act and the regulations; furnish reasonable security, in an
amount and according to terms as may be prescribed by regulation by the
Secretary, for the purpose of protecting the rights of farms and
handling operations certified by certifying agents under the Act and
the regulations in this part; and transfer to the Secretary and make
available to the applicable governing State official all records or
copies of records concerning the person's certification activities in
the event that the certifying agent dissolves or loses its
accreditation. The amount and the type of reasonable security that must
be furnished by a private certifying agent for the purpose of
protecting the rights of operations certified by the agent will be the
subject of future rule making by the Department.

Applying for Accreditation--Section 205.302

As provided under section 2115(b)(1) of the OFPA (7 U.S.C.
6514(b)(1)), this section instructs a private person or a governing
State official who wishes to become accredited under this proposal to
submit applicable documents and information, as delineated in proposed
sections 205.303 through 205.305, and the fees required in section
205.421(a) of subpart F to the Program Manager of the National Organic
Program. The Administrator then would determine whether the applicant
demonstrates sufficient expertise and ability to fully implement the
organic certification program proposed in subpart D of this part.

Information to be Submitted by an Accreditation Applicant--Section
205.303

In order to evaluate an applicant for accreditation, it is
necessary to identify who the applicant is, how it may be contacted,
who is responsible for conducting its operations, if it is a private
person, and the extent of the certification activities it intends to
conduct under the Act and the regulations. Accordingly, in this section
we propose that a person seeking accreditation as a certifying agent
provide certain descriptive information about its organization and
intended certification activities. This includes the name of the
applicant, location of its offices, and its contact numbers (telephone,
fax number, and Internet address). A private person also would have to
identify the individual responsible for its day-to-day operations, as
required by section 2116(i) of the OFPA (7 U.S.C. 6515(i)), and its
taxpayer identification number. Paragraph (b) of this section requires
the applicant to submit a list of any organization units, such as
chapters or subsidiary offices, including the names of contact persons,
office addresses and other contact information. This information is
needed in order to determine whether multiple sites are used to conduct
certification activities and, if so, to evaluate whether these
activities are conducted in compliance with the Act and the
regulations.
In paragraph (c) of this section, we propose that the accreditation
applicant specify the intended scope of its certification activities,
and estimate the numbers of producers or handlers in each type of
operation, such as crops, wild crops, livestock, or handling, that it
expects to certify each year. This information is needed so that the
Administrator may determine the types of certifications a certifying
agent is qualified to conduct. This proposed provision would require an
applicant that was limited in scope, such as one that intends to
certify producers of only one commodity, to demonstrate only that it
had sufficient capability and expertise to conduct the types and
numbers of certifications that fell within its requested scope of
accreditation.
Paragraph (d) of this section requests an accreditation applicant
to indicate the type of entity it is (i.e., for profit private, non-
profit private, or State), and to provide documentation pertaining to
its legal status and organizational structure. An applicant who is a
governing State official would have to submit a copy of the official's
statutory or regulatory authority to conduct certification activities
in that State, and a private person would have to submit information
about its status and organizational purpose, such as articles of
incorporation, by-laws, ownership or membership provisions, and the
date of establishment. This type of documentation is generally
maintained on file by an organization, and would be required to assist
the Administrator in verifying that the purposes of the organization
are consistent with its intended activities under the Act and the
regulations in this part.
Paragraph (e) of this section would require an applicant to submit
a list of all the States where it currently conducts and intends to
conduct certification activities. This information would be required so
that the Administrator could determine whether a certifying agent who
conducts or intends to conduct certifications in more than one State is
knowledgeable of any additional requirements of an approved State
program, if applicable, as provided under section 2108(b) of the OFPA
(7 U.S.C. 6507(b)).

Evidence of Expertise and Ability to be Submitted by an Accreditation
Applicant--Section 205.304

Sections 2115(b)(2) and 2116(a) of the OFPA (7 U.S.C. 6514(b)(2)
and 6515(a)) require that a private person or a governing State
official seeking accreditation as a certifying agent have sufficient
expertise in organic farming and handling techniques and be able to
fully implement the applicable organic certification program
established under the Act. This section accordingly requests that an
applicant for accreditation submit information and documents that
demonstrate such expertise and ability. Paragraph (a) of this section
requests information concerning personnel used by the applicant to
conduct certification activities. The first item requested in this
proposed paragraph is a description of the applicant's policies and
procedures for training, supervising, and evaluating personnel. This
information is needed for the Administrator to determine whether the
applicant is providing sufficient oversight over personnel involved in
certification activities to ensure compliance with the Act and the
regulations in this part. The second item requested in this paragraph
is the names and functions of all personnel intended to be used in the
certification operation, including all parties responsibly connected to
the applicant, administrative staff, certification inspectors, and
members of certification review and internal evaluation committees.
This information may include the job title or position of each person
and a description of the organic certification functions they will
perform. This information would enable the Administrator to determine
that the applicant has sufficient personnel to perform the
certification activities for which it seeks accreditation, and whether
it has a sufficient number of inspectors to implement the certification
program, as required under section 2116(b) of the OFPA (7 U.S.C.
6515(b)).
The third item in proposed paragraph (a) of this section requests
the submission of more descriptive

[[Page 65919]]

information about the qualifications, such as past experience,
training, and education in organic farming and handling, of each of the
applicant's inspectors and persons designated to review or evaluate
certification applicants. This proposal would provide the Administrator
with the information needed to evaluate the qualifications of
inspectors and review personnel when determining whether the applicant
possesses the requisite expertise in organic farming and handling
techniques.
Although inspector qualifications would receive careful scrutiny by
the Secretary, we have not proposed the specific types of training and
experience a certification inspector must possess. We have determined
through consultation with experienced organic inspectors that such
provisions would not be feasible because of the variability of
expertise needed for the types of operations to be inspected.
Furthermore, current organic inspectors differ widely in terms of their
background, training and experience, as well as in their relationship
to existing certification programs. For example, current organic
inspectors may be seasonal employees of a private certifying agent,
full-time State employees who conduct inspections for several State
regulatory agencies, or independent contractors used by several
certifying agents, and the expertise required in each case would differ
significantly. We also are aware of at least one existing association
that accredits independent professional organic inspectors according to
criteria consistent with the requirements of our proposed certification
program; we would consider an inspector's receipt of such accreditation
when we evaluate the inspector's qualifications.
The final item in paragraph (a) of this section would request a
description of any training measures the accreditation applicant has
provided or intends to provide to its personnel in organic farming and
handling and in the skills needed to ensure compliance with the Act and
the regulations in this part. This information would enable us to
determine whether the applicant would take measures to ensure that its
personnel maintain adequate levels of expertise and are able to fully
implement the certification program.
Paragraph (b) of proposed section 205.304 delineates the
information that we propose an applicant for accreditation must submit
concerning its administrative policies and procedures. We have
determined that this information is needed to evaluate whether the
applicant is able to fully implement the proposed certification program
and to meet the general responsibilities and requirements proposed in
section 205.301. The first item in this paragraph would request a
description of the procedure to be used by the applicant to evaluate
certification applicants and issue certificates. This information
might, for example, include copies of any forms to be used to record
inspection visit results and other information about certification
applicants. This information would be used by the Administrator to
determine that an accreditation applicant has adequate procedures in
place to properly evaluate the eligibility of a farmer or handler to
receive certification for their operations.
The second item in this paragraph requests information about the
applicant's procedures for reviewing whether operations that it will
certify are in compliance with the Act and the regulations in this part
and for reporting violations to the Secretary and the applicable
governing State official. Sections 2112(a) through (c) of the OFPA (7
U.S.C. 6511(a) through (c)) require certain testing to be done to
assist in enforcement of the Act. We have addressed and discussed these
provisions in sections 205.430 through 205.432 of subpart F. The
information requested in paragraph (b)(2) of this section would help
the Administrator determine whether an applicant would be able to
comply with these requirements. This information also would assist in
determining whether the applicant would be able to comply with the
requirement in section 2120(d) of the OFPA (7 U.S.C. 6519(d)) that a
certifying agent immediately report any violations of the Act to the
Secretary or the governing State official, if applicable.
The third and fourth items proposed in paragraph 205.304(b) request
a description of procedures the applicant would use to comply with the
recordkeeping and confidentiality provisions proposed in sections
205.301(a)(8) and (9), in accordance with sections 2116(c) and (g) of
the OFPA (7 U.S.C. 6515(c) and (g)). This information would be used to
evaluate an applicant's ability to maintain records of its activities
under the Act for 10 years, maintain strict confidentiality of its
records with respect to its clients' business information, and allow
representatives of the Secretary and the governing State official
access to these records, as required under the Act.
Section 2107(a)(9) of the OFPA (7 U.S.C. 6506(a)(9)) requires that
a certification program provide for public access to certification
documents and laboratory analyses that pertain to certification. The
fifth item proposed in section 205.304(b) accordingly requests that an
accreditation applicant submit a description of its procedures for
making certain information available to the public upon request. This
information includes a list of all the operations it has certified,
effective dates of certification, organic products produced by each
certified operation, and the results of laboratory analyses for
residues of pesticides and other prohibited substances. This
information would have to be made available for certifications
conducted up to ten years prior to receipt of the request. As proposed
here, the policies and procedures described also would provide for
public access to other non-confidential business information as
permitted by the producer or handler and approved by the Secretary.
This provision would permit a certifying agent to disclose to the
public other non-confidential information about its clients' production
practices if permitted to do so by the client and approved by the
Secretary.
Paragraph (c) of proposed section 205.304 requests a description of
the applicant's policies and procedures for the collection and
disbursement of funds, and documents that identify anticipated sources
of income, including all fees to be collected from producers and
handlers in accordance with the requirements proposed in section
205.301(a)(15) of this subpart and section 205.422(a) of subpart F.
This information is needed to determine whether the applicant is
charging reasonable fees to its clients, and whether it has sufficient
income to submit the required fees proposed in section 205.421. This
information also would help the Administrator determine that
certification decisions were not influenced by the concern for their
financial impact on the certifying agent and to review an applicant's
anticipated revenue sources for other potential conflicts of interest,
such as fees charged on the basis of the sale of organic products by
certified operations.
Paragraph (d) of section 205.304 requests information about
policies and procedures to be implemented by the applicant to prevent
conflicts of interest. Conflict of interest requirements are proposed
in section 205.301(a)(10) in accordance with section 2116(h) of the
OFPA (7 U.S.C. 6515(h)). This proposal would request information
concerning any food and agriculture-related business interests of the
applicant's personnel, as well as the business interests of immediate
family members, so that the Administrator may

[[Page 65920]]

determine whether conflicts of interest may exist.
Some accreditation applicants currently may be conducting organic
certification activities under State laws or private programs.
Paragraph (e) of this section accordingly provides for the optional
submission of information about certification activities currently
conducted by these applicants. This information could include a list of
all farms and handling operations currently certified by the applicant,
and copies of inspection reports and certification documents for
representative farms or handling operations certified by the applicant
during the previous year. An accreditation applicant who previously has
undergone a process of accreditation or evaluation of its organic
certification activities, such as might be performed by a private
accreditation body, also could submit any information concerning such a
process conducted within the previous year. We believe that
documentation of a previously conducted independent evaluation of the
applicant's expertise and organizational capability would be helpful in
determining whether the certifying agent is qualified and prepared to
comply with the Act and the regulations. Although we would not expect
an applicant for accreditation to have been complying with the
requirements of the Act and the regulations in this part prior to
becoming accredited, these documents would be valuable as an indication
of the applicant's prior experience in evaluating organic farming and
handling operations and of its ability to implement the proposed
certification program. Finally, because we recognize that an applicant
may possess other information that is relevant to the Secretary's
decision whether to approve an accreditation, we propose in paragraph
(f) of this section that an applicant for accreditation could submit
any other information the applicant believes may support the
Secretary's evaluation of its request for accreditation.
As previously discussed, an applicant for accreditation may be a
newly formed organization that intends to begin conducting
certifications after it is accredited, or it may be a certification
organization that currently exists. Based on a review of currently
existing certification programs, we believe that all the information
requested in sections 205.303 and 205.304 should be readily available
to any person or governing State official who is eligible for
accreditation under the Act and the regulations in this part and is
applicable to both existing and newly formed organizations preparing to
perform certification activities under the National Organic Program or
an approved State program. We also believe that all of the information
we are proposing to require in sections 205.303 and 205.304 is
essential to enable the Administrator to make a determination
concerning approval of an application for accreditation.

Statement of Agreement To Be Submitted by an Accreditation Applicant--
Section 205.305

In this section we propose that an applicant for accreditation
would have to submit a statement of agreement along with the
information and documents delineated in sections 205.303 and 205.304.
Paragraph (a) of this section delineates seven provisions to which a
private person or governing State official seeking accreditation must
agree. Two provisions of this agreement would be to carry out the
provisions of the Act and the regulations in this part and to implement
and carry out any other terms and conditions that the Secretary
determines appropriate, both of which are required by section 2116(d)
of the OFPA (7 U.S.C. 6515(d)). It should be noted that this agreement
would encompass all the general requirements proposed under section
205.301, including the provision repeated here that a certifying agent
accept a certification decision made by another USDA accredited
certifying agent as equivalent to its own.
The remaining four provisions to which an accreditation applicant
would have to agree would state the requirements proposed in sections
205.301(a)(5), (a)(6), (a)(12), and (a)(13). These provisions are that
the applicant agrees to: refrain from making false or misleading claims
about its accreditation status, the USDA accreditation program for
certifying agents, or the nature or qualities of products labeled as
organically produced; conduct an annual performance review for each
inspector to be used and implement measures to correct any possible
defects in compliance with the Act and the regulations in this part
identified in each review conducted; have an annual internal evaluation
review conducted of its certification activities and implement measures
to correct any possible defects in compliance with the Act and the
regulations in this part identified in each review conducted; and pay
and submit fees to AMS in accordance with sections 205.421 and
205.422(b) of subpart F of this part.
Paragraph (b) of this section provides for certain agreements that
would apply only to certifying agents who are private persons, as
provided for in section 2116(e) of the OFPA (7 U.S.C. 6515(e)), and as
proposed in section 205.301(c) as general requirements for
accreditation. These provisions are that a private certifying agent
must agree to hold the Secretary harmless for any failure on the part
of the certifying agent to carry out the provisions of the Act, and
also must furnish reasonable security for the purpose of protecting the
rights of participants in the applicable organic certification program.
We also have proposed, in accordance with section 2116(c)(3) of the
OFPA (7 U.S.C. 6515(c)(3)), that a private certifying agent agree to
transfer to the Secretary and make available to the applicable
governing State official all records or copies of records concerning
the person's certification activities in the event that the certifying
agent dissolves or loses its accreditation.

Approval of Accreditation--Section 205.306

In this section we propose that if the Administrator determines
that an applicant has submitted all of the information and the
statement of agreement proposed in sections 205.303 through 205.305,
has paid the required fee as proposed in section 205.421(c) of Subpart
F, and meets or is capable of meeting the general requirements for
accreditation as proposed in section 205.301, the Administrator would
notify the applicant in writing that its request for accreditation has
been approved. We also provide for the Administrator to consider
information obtained from a site evaluation visit, as proposed in
section 205.309, in making this determination. The written notice of
approval of accreditation would state the area(s) for which
accreditation was given and the effective date of the accreditation. A
private person also would be notified of the amount and type of
security determined by the Administrator that would be needed to
protect the rights of farming and handling operations certified by such
certifying agent, in accordance with section 2116(e)(2) of the OFPA (7
U.S.C. 6515(e)(2)).
We have received public input expressing concerns about granting
accreditation to applicants prior to conducting a site evaluation and a
peer review process. However, we believe that the procedure proposed
here is appropriate for several reasons. First, we believe that the
document review process proposed here is sufficiently rigorous to
permit a well-founded assessment of the applicant's capabilities and
qualifications. In cases

[[Page 65921]]

where the application documentation reveals possible concerns about the
applicant's expertise and ability to implement the proposed
certification program, our proposed section 205.309 would authorize us
to conduct a preliminary site evaluation visit. Our proposal would
allow all eligible certifying agents, both existing and newly formed,
to receive accreditation in a timely manner and would avoid conferring
an advantage on those certifying agents for whom we complete the
initial site evaluation and peer review process before those of
competing certifying agents. We further believe that conducting a site
evaluation of a newly established certifying agent before it had begun
any certification activities might not contribute information that
would be useful for our evaluation. Previously existing certifying
agents also would need time to make adjustments in their operations to
comply with the National Organic Program regulations.
Finally, section 2107(a)(1)(A) of the OFPA (7 U.S.C. 6506(a)(1)(A))
requires that any product sold as organic be produced and handled by a
certified operation; this provision of the Act cannot be implemented
until certifying agents have been accredited by AMS. We have received
considerable public input that the OFPA should be implemented as
quickly as possible. A proposal that would require full site
evaluations and peer reviews to be conducted prior to granting
accreditation would further delay implementation of the Act.

Denial of Accreditation--Section 205.307

In section 205.307 we propose the procedure for denying an
application for accreditation. Paragraph (a) provides that, if there
was reason to believe, based on a review of the information specified
in sections 205.303 through 205.305, that an applicant for
accreditation is not able to comply, or is not in compliance, with the
requirements of the Act and the regulations in Part 205, including the
general requirements proposed in section 205.301, the Administrator
would provide a written notification of non-compliance to the
applicant, as proposed in section 205.315(a). The notification would be
sent by certified mail to the accreditation applicant, and would state
any deficiencies in the ability of the applicant to comply with the Act
and the regulations that the Administrator believes exist, the evidence
on which the notification is based, and a date by which the
deficiencies must be corrected.
In section 205.307(b) we propose that, following the correction of
deficiencies identified in the notification issued in accordance with
paragraph (a) of this section, the applicant could submit a new
application for accreditation to the Administrator. The new application
would have to include documentation of actions taken by the applicant
to correct the deficiencies delineated in the notification of non-
compliance.
If an accreditation applicant who receives a notification pursuant
to paragraph (a) of this section does not correct the deficiencies
identified within the time specified in the notice of non-compliance,
paragraph (c) of this section would require that the Administrator
institute proceedings to deny accreditation.

Maintaining Accreditation--Section 205.308

This section proposes that, in order to maintain its accreditation,
a certifying agent must continue to satisfy the general requirements of
section 205.301 of this subpart throughout the duration of its
accredited status, and must pay the required fees in accordance with
the provisions proposed in sections 205.421 and 205.422(b) of subpart
F.

Site Evaluations--Section 205.309

This section of our proposal would require AMS to conduct a site
evaluation of each certifying agent's operation initially, and at least
once every 5 years thereafter, to examine its operations in order to
evaluate the agent's compliance with the Act and the regulations. A
site evaluation to determine compliance may include an examination of
the certifying agent's facilities, records, procedures and activities
conducted under the Act and the regulations set forth in Part 205.
Although the Act does not specifically require that site evaluations be
conducted, we concur with the recommendations made by the NOSB that
such a process is necessary for the Secretary to maintain adequate
oversight of the activities of accredited certifying agents under the
Act and the regulations in this part. This procedure is integral to
other accreditation programs that we reviewed, and is analogous to the
annual on-site inspection that is required of all operations that are
certified under the Act, as provided for in section 2107(a)(5) of the
OFPA (7 U.S.C. 6506(a)(5)).
This proposal provides that the Administrator would arrange and
conduct the site evaluations to verify compliance with the Act and the
regulations in this part. In order to verify the certifying agents's
compliance, the Administrator might conduct visits to selected farm,
wild crop harvesting, and handling operations that have been certified
by the agent. We anticipate that the operations to be visited might be
chosen in consultation with the agent and as might be determined
necessary by the Administrator to verify the agent's compliance with
the regulations. A site evaluation report would be prepared which
described the observations made about the certifying agent's compliance
with the Act and the regulations in this part, including its
performance of certification activities.
We have received some public input suggesting that we use peer
reviewers, as provided for in section 2117 of the OFPA (7 U.S.C. 6516),
in the site evaluation process. We have not provided for peer reviewers
to participate in site evaluations. We believe that the use of peer
reviewers to conduct site evaluations is unnecessary and could pose an
excessive burden on the certifying agents, because the use of persons
other than a single AMS evaluator would increase the costs of
conducting site evaluations, due to additional travel and per diem
expenses, and could delay site evaluations due to the need to
accommodate the peer reviewers' scheduling constraints. Furthermore,
AMS personnel will be sufficiently qualified and prepared to perform
the site evaluations.
Paragraph (a) of this section also provides for a site evaluation
of a newly accredited certifying agent to be conducted within a
reasonable time after the date on which the certifying agent's notice
of approval of accreditation is issued, provided that the agent has
conducted sufficient certification activities under the Act and the
regulations upon which the Administrator may base an evaluation. We
expect to confer closely with newly established certifying agents prior
to scheduling an initial site evaluation to determine that they have
performed enough certifications on which to base the evaluation.
We proposed in paragraph (b) of this section that a site evaluation
of an accreditation applicant or a certifying agent's operation and
performance may be conducted by the Administrator at any time to
determine compliance under the Act and the regulations in this part.
For instance, site evaluations of the operations of a certifying agent
requesting renewal of accreditation would be conducted under this
proposal as part of the renewal process, which we propose in section
205.314(b) to occur

[[Page 65922]]

every five years. However, as proposed in section 205.309(b), site
evaluations could be conducted whenever the Administrator determined
that one was necessary to evaluate whether the certifying agent's
operations and performance are in compliance with the Act and the
regulations. Thus, although accreditation would have to be renewed
every five years, a site evaluation could occur more often than every
five years. We believe that the frequency of site evaluations needed to
properly oversee the activities of certifying agents would likely be
higher than once every five years in the initial few years after
implementation, but that a five year period may be a reasonable
interval of time for conducting site evaluations of established
accredited certifying agents. This proposal would give us the
flexibility to conduct site evaluations based on an assessment of the
previous performance of the certifying agent and the need to oversee
the agent's certification activities. Comments as to the impacts of
this proposed provision on certifying agent operations are invited.
Additionally, this section would give the Administrator the
authority to conduct an additional site evaluation prior to the
approval of accreditation, as needed to verify whether an accreditation
applicant can comply with the general requirements of section 205.301.
We also believe it is essential to be able to conduct a site evaluation
at any time that circumstances warrant a site visit to ensure the
integrity of the organic certification program. For example, a site
visit may be necessary if we receive a significant number of
substantiated complaints from clients or the public about the
performance of a certifying agent.

Peer Review Panel--Section 205.311

Section 2117 of the OFPA (7 U.S.C. 6516) provides for the
establishment of a peer review panel to assist the Secretary in
evaluating applicants for accreditation. This section of our proposal
accordingly delineates the function, composition, duties, and the
meeting and reporting procedures for the peer review panel. In section
205.311(a) we are proposing that a peer review panel be required to
review the accreditation status of a certifying agent after AMS has
conducted a site evaluation for confirmation or renewal of
accreditation, as proposed in sections 205.309(a) and 205.314(b) of
subpart E, respectively. This section would require the Administrator
to consider the reports received from each individual member of a peer
review panel when making a determination whether to confirm the
accreditation of a certifying agent, pursuant to section 205.312, or
when making a determination whether to renew the accreditation of a
certifying agent, pursuant to section 205.314(b). We are also proposing
that the Administrator could choose to convene a peer review panel at
any time for the purpose of evaluating a certifying agent's activities
under the Act and the regulations. This provision would provide
flexibility for the Administrator to seek recommendations from peer
reviewers at other times when it may be necessary to evaluate a
certifying agent's compliance with the Act and the regulations.
In paragraph (b) of this section we propose that the Administrator
establish a pool of peer review panel members to perform a review of
any certifying agent for which an initial or renewal site evaluation
has been conducted, pursuant to proposed section 205.309. We anticipate
that a notice calling for candidates for the peer review panel pool
would be published in the Federal Register shortly after publication of
the final rule. Candidates would be requested to submit a letter to the
Program Manager of the National Organic Program requesting appointment
to the peer review panel pool, stating in the letter their name and
address, qualifications, and a disclosure of any association with any
person who is or who may become an accredited certifying agent, which
may constitute a conflict of interest, such as being a responsibly
connected party of a certified operation. Candidates accepted for this
pool would be notified by the Administrator and could continue to serve
until otherwise notified. As the need arose for additional members of
the pool, the Administrator would publish an announcement to that
effect in the Federal Register.
Section 2117(b) of the OFPA (7 U.S.C. 6516(b)) provides for the
peer review panel to consist of no less than three persons who have
expertise in organic farming and handling methods, and for at least two
of the panelists to be other than USDA or approved State program
personnel. This proposal is consistent with these requirements. Section
205.311(b) of this proposal calls for the Administrator to convene a
three to five member panel from the pool of peer reviewers. Each panel
would include one member from AMS as a permanent member, who would be
responsible for presiding over any proceedings to ensure that they are
conducted in accordance with AMS policy. Under the scheme proposed
here, personnel from an approved State program could be included as an
additional panel member on a panel that consisted of at least four
members. Our proposal would keep the panel to a minimum size so as to
minimize costs, but would permit sufficient numbers of persons with
organic production and certification expertise to participate in the
accreditation process.
In paragraph (b)(2) of this section we propose that each convened
peer review panel include no less than one member who possesses
sufficient expertise, as determined by the Administrator, in the areas
of accreditation delineated in the notice of approval of accreditation,
as proposed in section 205.306(a), for each certifying agent whose
operations and performance are to be reviewed. This approach would
allow for the selection of panelists whose expertise matches the
characteristics of the particular certifying agents under review. For
example, a panelist with a background in organic processing and
manufacturing practices, but who was unfamiliar with organic mushroom
production, would not be used to review a certifying agent whose scope
of certification included only mushroom producers.
We propose in paragraph (b)(3) of this section to prohibit the
selection of a peer reviewer who was associated with a certifying agent
being reviewed in a manner that would constitute a known or perceived
conflict of interest, as determined by the Administrator. We believe
that to ensure the integrity of our proposed program we must take
measures to ensure that any recommendations provided by peer reviewers
are not influenced by the possibility of a financial interest in the
outcome of the Administrator's determination.
Some public input we received suggested that we include
representatives of consumer, environmental and other public interest
groups as members of the peer review panel as a means of having broader
public involvement in the oversight of certifying agents. The Act
requires that persons who possess the necessary technical expertise in
organic production and handling practices evaluate the performance of
certifying agents. Persons representing consumer, environmental, or
other similar groups who possess the necessary expertise could be
eligible to participate in the peer review panel if they file a letter
with the Administrator, and are determined to meet the criteria
established to become a peer review panel member.
We propose in section 205.311(c) that each peer review panel member
would individually review the site evaluation

[[Page 65923]]

report prepared by the Administrator and any other information that may
be provided by the Administrator relevant to confirming or renewing the
accreditation status of a certifying agent. Each peer review panel
member would provide an individual report to the Administrator
regarding the certifying agent's ability to conduct and perform
certification activities under the regulations. We also propose in this
section that each peer reviewer would have to agree to treat the
information received for review as confidential, and could not release,
copy, quote, or otherwise use material from the information received,
other than in the report required to be submitted. This provision is
needed in order to protect the confidentiality of business information
received by USDA concerning the operations of certifying agents, as
well as any information about operations certified by those agents.
In section 205.311(d) we propose that the Administrator could
decide to convene a meeting or conference call of a peer review panel,
if necessary, for evaluating the accreditation status of a certifying
agent, or if it is requested by at least one peer review panel member.
This section also would permit the Administrator to include in this
meeting or conference call the certifying agent being evaluated, or a
representative of the agent, for the purpose of providing additional
information. This provision is proposed so that members of the peer
review panel may have the opportunity to request clarification of any
aspect of the agent's activities described in the site evaluation
report. However, any meeting or conference call would have to be
conducted in a manner that will ensure that the actions of panel
members are carried out on an individual basis with any opinions and
recommendations by a member being individually made.
Section 205.311(d) would additionally permit copies of peer review
panel reports to be provided to the certifying agent, who could then
submit a written response for consideration by the Administrator. This
provision would permit a certifying agent to submit clarifications or
additional information bearing on its activities under the Act and the
regulations, whether or not a meeting or conference call of the peer
review panel was conducted.
In the final paragraph of this section we propose that each peer
review panelist would individually provide a written report to the
Administrator. This report would contain the panelist's recommendations
concerning confirmation or renewal of accreditation for each certifying
agent reviewed, and a description of the basis for each recommendation.
These recommendations might, for example, include conditions that the
reviewer believes should be included in the notice of confirmation of
accreditation, as proposed in section 205.312, or the notice of renewal
of accreditation, as proposed in section 205.314(c).
We are soliciting comments on our proposed accreditation
provisions, including whether alternative provisions should be
promulgated. In particular, we would like comments on whether the peer
review process for accreditation should occur when the initial
application for accreditation is made, as opposed to when accreditation
is confirmed after a site visit.

Confirmation of Accreditation--Section 205.312

In this section we propose that the Administrator would make a
determination whether or not to confirm the accreditation of a
certifying agent. This determination would occur following review of a
site evaluation report and the reports from the peer reviewers. If the
Administrator determined that the certifying agent was in compliance
with the Act and the regulations, including the general requirements
proposed in section 205.301, the Administrator would issue the agent a
written notice of confirmation of accreditation status. Confirmation
notices, therefore, would not be issued to any certifying agent who was
not complying with the Act and the regulations, which would include
payment to AMS of all fees owed by the certifying agent and the
furnishing of reasonable security by a private certifying agent. The
confirmation notice would include any terms or conditions that must be
addressed by the certifying agent before the certifying agent submits a
request for renewal of its accreditation. After confirmation, a
certifying agent's accreditation would be effective until such time
that the certifying agent fails to renew accreditation in accordance
with section 205.314, or the accreditation was suspended or terminated
pursuant to section 205.316, or the certifying agent voluntarily ceased
its certification operations.

Denial of Confirmation--Section 205.313

In section 205.313 we propose the procedure to be followed to deny
confirmation of accreditation to a certifying agent. Paragraph (a) of
this section provides that, if the Administrator has reason to believe,
based on a review of the information specified in sections 205.303
through 205.305, and the results of a site evaluation and reports
submitted by the peer review panel, pursuant to sections 205.309 and
205.311(e), respectively, that the certifying agent is not complying
with the requirements of the Act and the regulations in this part,
including the general requirements for accreditation proposed in
section 205.301, the Administrator would provide a written notification
of non-compliance to the applicant in accordance with section
205.315(a) of this subpart.
In paragraph (b) of this section we propose that if a certifying
agent who receives a notification pursuant to paragraph (a) of this
section corrects the deficiencies identified within the time specified
in the notice of non-compliance, and submits documentation supporting
actions taken by the certifying agent to correct the deficiencies, as
proposed in section 205.315(a)(3), the Administrator would issue a
notice of confirmation of accreditation to the certifying agent,
pursuant to section 205.312(a). Paragraph (c) of this section would
permit the Administrator to institute proceedings to deny confirmation
of accreditation if the certifying agent does not correct the
deficiencies identified in the notice of non-compliance.

Continued Accreditation--Section 205.314

We propose in paragraph (a) that an accredited certifying agent
shall submit certain information annually to the Administrator on or
before the anniversary date of the issuance of the notice of
confirmation of accreditation. This information would be reviewed by
the Administrator to determine whether the certifying agent was
maintaining its accreditation status in accordance with proposed
section 205.308 of subpart E and to assess the need to conduct a site
evaluation visit. We believe that an annual process of reviewing
information submitted by certifying agents is necessary so that the
Administrator can be informed of any changes in the procedures and
personnel used by certifying agents, who also must annually review the
certification of producers and handlers, in accordance with section
2107(a)(4) of the OFPA (7 U.S.C. 6506(a)(4)).
We propose that the accredited certifying agent annually submit
four kinds of information in addition to the proposed fees required in
section 205.421(a) of subpart F. First, the agent would have to update
the general information and evidence of expertise

[[Page 65924]]

and ability submitted in the previous year, pursuant to sections
205.303 and 205.304 of subpart E. Second, if an agent is requesting any
changes in its areas of accreditation, as delineated in section
205.300, the additional information needed to support the request for a
change in the certifying agent's scope of certification activities
would be submitted. Third, we propose that the certifying agent submit
a report that describes the measures the agent has implemented in the
previous year, and any measures it plans to implement in the coming
year, to address the conditions delineated by the Administrator in the
most recent notice of confirmation of accreditation or renewal of
accreditation. The certifying agent also would be required to describe
the corrective actions implemented and intended to be implemented by
the certifying agent in response to the most recent inspector
performance reviews and the required internal evaluation review of the
agent's operations.
Section 2115(c) of the OFPA (7 U.S.C. 6514(c)) provides for
accreditation to be granted for a period not to exceed five years.
Section 205.314(b) would accordingly require that an accredited
certifying agent request renewal of accreditation on or before the
fifth anniversary of the issuance of the notice of confirmation of
accreditation, and of each subsequent renewal of accreditation. The
Administrator would then review the information contained in the annual
reports submitted in accordance with paragraph (a) of this section,
along with the results of the site evaluation(s) performed in
accordance with section 205.309 and peer review panel reports submitted
in accordance with section 205.311(e), in order to determine whether
the certifying agent was still in compliance with the Act and the
regulations.
Because section 2115(c) of the OFPA (7 U.S.C. 6514(c)) stipulates
that accreditation may be granted for a period of time ``not to
exceed'' 5 years, we considered proposing a period of time less than 5
years before a certifying agent would be required to renew its
accreditation. Our intent in considering a lesser period of time for
renewal of accreditation would be to establish an adequate level of
oversight activity to ensure that the certifying agent is in compliance
with the Act and the regulations. However, we believe that an adequate
level of oversight necessary to ensure compliance with the Act and the
regulations would be provided by the requirement proposed in section
205.314(a) that certifying agents submit annual updates to the
Administrator. Additionally, as proposed in sections 205.309(b) and
205.311(a)(2) of this subpart, the Administrator could decide to
conduct an additional site evaluation and peer review of a certifying
agent's activities at any time. We also believe that a requirement that
accreditation be formally renewed more frequently than every five years
might pose an undue burden on certifying agents. Comment concerning the
length of time for which accreditation should be granted is invited.
We propose in section 205.314(c) that the Administrator would issue
a notice of renewal of accreditation after having made the
determination that the certifying agent continues to comply with the
Act and the regulations in this part. The notice of renewal, as in the
case of the notice of confirmation of accreditation, would specify any
terms and conditions that would have to be addressed by the certifying
agent, and the time within which the terms and conditions must be
satisfied. In paragraph (d) of this section, we propose that if the
Administrator determines that there is reason to believe that the
certifying agent is not in compliance with the Act and the regulations,
the Administrator would issue a notification of non-compliance to the
certifying agent, as proposed in section 205.315.

Notification of Non-Compliance With Accreditation Requirements--Section
205.315

In section 205.315 we propose the procedure for the Administrator
to notify an accredited certifying agent, or an applicant for
accreditation, of deficiencies in its compliance, or ability to comply,
with the Act and the regulations, including the general requirements
proposed in section 205.301, and provide an opportunity to correct any
deficiencies identified. In paragraph (a) of this section we propose
that a written notification of non-compliance would be sent by
certified mail to the place of business of the accreditation applicant
or the certifying agent, as applicable. The notification would contain
the following information: a description of each deficiency in
compliance and each violation of the Act and the regulations in this
part that the Administrator has reason to believe has occurred; the
evidence on which the notification is based; and the date by which the
accreditation applicant or the certifying agent, as applicable, must
correct each deficiency and each violation delineated in the
notification, and submit documentation to the Administrator to support
such corrections.
In paragraph (b) of this section we propose the procedure to be
followed if an accredited certifying agent does not provide
documentation to the Administrator, pursuant to paragraph (a)(3) of
this section, that is adequate to demonstrate that each deficiency in
compliance and each violation has been corrected by the date indicated
in the written notification. This paragraph would permit the
Administrator to conduct an additional site evaluation, as provided for
in section 205.309, to determine whether the certifying agent is
complying with, or has violated, the Act or the regulations, including
the general requirements proposed in section 205.301.
In section 205.315(c)(1) we propose that the Administrator would
notify the certifying agent in writing of a determination that the
agent was complying with the Act and the regulations, if, following
receipt of a notification of non-compliance as proposed in paragraph
(a) of this section, the certifying agent submitted the requisite
documentation of corrective actions taken, and if, following any
additional site evaluation conducted pursuant to paragraph (b) of this
section, the Administrator determined that the certifying agent was
fully complying with the Act and the regulations. This paragraph
further provides in paragraph (c)(2) of this section that, if the
Administrator has reason to believe that the certifying agent is not in
compliance with the Act and the regulations in this part, the
Administrator may institute a proceeding to suspend or terminate the
certifying agent's accreditation.

Termination of Accreditation--Section 205.316

Section 2116(j)(1) of the OFPA (7 U.S.C. 6515(j)(1)) provides for
the suspension of a certifying agent's accreditation if the Secretary
determines that the certifying agent is not properly adhering to the
provisions of the Act and the regulations. This provision of the OFPA
would permit the Secretary to suspend the accreditation of either a
governing State official or a private certifying agent. Section 2120(e)
of the OFPA (7 U.S.C. 6519(e)) provides for the loss of accreditation
by a private certifying agent if the certifying agent violates the
provisions of the Act and the regulations, or if the agent falsely or
negligently certifies any farming or handling operation that does not
meet the requirements for a certified operation under the certification
program established by the Act. In section 205.316 we accordingly
propose that the accreditation of any certifying

[[Page 65925]]

agent could be suspended, but that only a private certifying agent
could have its accreditation terminated.
In section 205.316(a) we propose that if the Administrator has
reason to believe that an accredited certifying agent or a person
responsibly connected with an accredited certifying agent has ceased to
comply with or has violated the Act or the regulations, including the
general requirements proposed in section 205.301, then the
Administrator would initiate the process proposed in section 205.315 by
issuing a notification of non-compliance. However, as proposed in
paragraph (b) of this section, if the Administrator has reason to
believe that an accredited certifying agent or a person responsibly
connected with an accredited certifying agent has wilfully violated the
Act and the regulations in this part, including the general
requirements proposed in section 205.301, the Administrator may
institute a proceeding to suspend or terminate the accreditation of the
certifying agent pursuant to the Rules of Practice 7 CFR 1.130, et seq.
The Rules of Practice provide for the formal filing of a complaint by
the Secretary, an opportunity for the certifying agent to answer the
complaint, a procedure for holding a hearing, and a procedure for
further appealing an adverse decision following any hearing that is
held. A final determination to suspend the accreditation would not be
made, therefore, until the certifying agent had received notice and an
opportunity to be heard.
In section 205.316(c) we propose that a private person or a
governing State official whose accreditation as a certifying agent is
suspended or terminated would have to cease any certification activity
in each area of accreditation and in each State for which its
accreditation is suspended, or in the case of a private person whose
accreditation is terminated, cease all certification activities
conducted under the Act and the regulations. The person or governing
State official whose accreditation was either suspended or terminated
would have to transfer to the Secretary, and make available to the
applicable governing State official, all records concerning its
certification activities that were suspended or terminated. This would
enable the Secretary to promptly determine whether farms or handling
operations certified by such certifying agent may retain their organic
certification. This provision is consistent with section 2116(j)(2) of
the OFPA (7 U.S.C. 6515(j)(2)), which requires the Secretary to
promptly determine whether farms or handling operations certified by a
certifying agent who has lost accreditation may retain their organic
certification.
As proposed, a certifying agent who was determined to be in
compliance with all the requirements for certifying certain types of
operations, such as farms, but no longer had the requisite expertise to
certify other types of operations, such as handling operations, could
have its accreditation suspended only in the area of handling
operations. Additionally, if a certifying agent was determined not to
be complying with the additional requirements of an approved State
program, but was otherwise complying with the Act and the regulations,
this proposal would permit its accreditation to be suspended only in
that state.
The Act provides for the Secretary or a governing State official to
suspend the accreditation of a private certifying agent. However, we
have not included a provision for the governing State official to
suspend accreditation in this proposal because the Act only provides
for the Secretary, not the governing State official, to grant (or
reinstate) accreditation. Therefore, we believe that the authority to
remove an accredited status must remain with the Secretary. In the
event that a private certifying agent was to cease complying with, or
to violate, the provisions of an approved State program, we would
expect the applicable governing State official to present this
information to the Secretary for appropriate action.
In section 205.316(d) we propose that a private person or a
governing State official whose accreditation as a certifying agent is
suspended by the Secretary under this section could at any time submit
a new request for accreditation, pursuant to section 205.302. The new
request for accreditation would have to be accompanied by documentation
that demonstrates that appropriate corrective actions to comply with
and remain in compliance with the Act and the regulations, including
the general requirements proposed in section 205.301, have been taken.
This might, for example, entail payment of outstanding accreditation
fees or evidence that sufficient funds have been provided for the
required reasonable security to protect the rights of certified farms
and handling operations.
In accordance with section 2120(e)(2) of the OFPA (7 U.S.C.
6519(e)(2)), we propose in section 205.316(e) that a private person
whose accreditation as a certifying agent is terminated would be
ineligible to be accredited as a certifying agent under the Act and the
regulations for a period of not less than three years following the
date of such determination.

Subpart F--Additional Regulatory Functions

State Programs

Section 2104(a) of the OFPA (7 U.S.C. 6503(a)) requires the
Secretary to establish an organic certification program for producers
and handlers of agricultural products. Section 2104(b) of the OFPA (7
U.S.C. 6503(b)) requires that the Secretary permit each State to
implement a State organic certification program for producers and
handlers of organic products that have been produced using organic
practices as provided for in the OFPA. Section 2108(b) of the OFPA (7
U.S.C. 6507(b)) provides for State programs under certain circumstances
to contain more restrictive requirements, than in the program
established by the Secretary, for the production or handling of
agricultural products sold or labeled as organically produced in such
State and for the certification of farms and handling operations.
Section 2103(20) of the OFPA (7 U.S.C. 6502(20)) defines a State
organic certification program as one that meets the general
requirements for an organic program set forth in section 2107 of the
OFPA (7 U.S.C. 6506), is approved by the Secretary, and is designed to
ensure that a product that is sold or labeled as organically produced
is produced and handled using organic methods. Under a State program,
an accredited State official and/or private certifying agent would
perform certification activities for producers and handlers according
to the procedures and requirements established in subpart D; such
agents are discussed in subpart E (Accreditation) of this proposal. As
discussed in subpart E, it is not necessary for a State to have a State
program to be accredited as a certifying agent, and vice versa.
In order for a State program to be approved as meeting the general
requirements set forth in section 2107 of the OFPA (7 U.S.C. 6506), the
program must have regulatory provisions that meet the following
requirements: (1) provide that an agricultural product to be sold or
labeled as organically produced must be produced only on certified
organic farms and handled only through certified organic handling
operations in accordance with the requirements of the Act; and be
produced and handled in accordance with such program; (2) require that
producers and handlers desiring to participate under such program
establish an organic plan as provided for in section 2114 of the OFPA
(7 U.S.C.

[[Page 65926]]

6513); (3) provide for procedures that allow producers and handlers to
appeal an adverse administrative determination under the Act; (4)
require each certified organic farm, certified organic wild crop
harvesting operation, and each certified organic handling operation to
certify to the governing State official, on an annual basis, that such
farmer or handler has not produced or handled any agricultural product
sold or labeled as organically produced except in accordance with this
title; (5) provide for annual on-site inspection by the certifying
agent of each farm, wild crop harvesting, and handling operation that
has been certified under this title; (6) require periodic residue
testing by certifying agents of agricultural products that have been
produced on certified organic farm and handled through certified
organic handling operations to determine whether such products contain
any pesticide or other nonorganic residue or natural toxicants and to
require certifying agents, to the extent that such agents are aware of
a violation of applicable laws relating to food safety, to report such
violation to the appropriate health agencies; (7) provide for
appropriate and adequate enforcement procedures; (8) protect against
conflict-of-interest as specified under section 2116(h) of the OFPA (7
U.S.C. 6515(h)); (9) provide for public access to certification
documents and laboratory analyses that pertain to certification; (10)
provide for the collection of reasonable fees from producers,
certifying agents and handlers who participate in the program; and (11)
require such other terms and conditions as may be determined by the
Secretary to be necessary.
Once a State program is approved, farm, wild crop harvesting, and
handling operations in that State that wish to sell, label, or
represent their product as organically produced would have to be
approved as a certified operation under the State program. The
determination as to whether or not a farm, wild crop harvesting, or
handling operation meets a State's certification requirements would be
made by a certifying agent accredited by the USDA under the National
Organic Program. The accredited certifying agent who would make this
determination either would be a private person who has been accredited
by the USDA, or a governing State official who has been accredited by
the USDA.
In order to be certified under the State program, an operation
would have to meet all of the State certification requirements.
However, these certification requirements, as discussed previously,
must reflect the requirements of the National Organic Program.
Certified operations in States that have their own program would be
producing products that are represented as organically produced in
accordance with the requirements of the National Organic Program, which
will have been included in the State program in accordance with section
2107 of the OFPA (7 U.S.C. 6506). Therefore, the provisions set forth
in our proposal in part 205 would be applicable to operations that are
located in States that have their own programs since these provisions
would be included in programs that are approved by the Secretary. It is
important that all interested persons provide comments on the
provisions of our proposed rule since these are the provisions that
would be required to be included in a State program in accordance with
section 2108 of the OFPA ( 7 U.S.C. 6507). If an operation is located
in a State that does not have an approved State program, that operation
would carry out its operations only under the requirements of the
National Organic Program.
States may have requirements that are in addition to those of the
National Organic Program if they are approved by the Secretary and meet
the statutory criteria for approval. This means that if a State has
received approval from the Secretary for requirements in its program
that are in addition to those of the National Organic Program, all
certified farm, wild crop harvesting, and handling operations that
operate in that State would have to comply with these additional
requirements that have been approved. However, one State would not be
allowed to require farm, wild crop harvesting, and handling operations
in another State to comply with any additional requirements that have
been approved by the Secretary for the former State.

Requirements of State Programs--Section 205.401

As required in section 2104(b) of the OFPA (7 U.S.C. 6503(b)), we
propose in section 205.401(a) to permit a State to establish a State
program for producers and handlers of agricultural products within the
State that have been produced and handled using organic methods as
provided by the OFPA and its implementing regulations.
The accreditation of a governing State official to conduct
certification activities of farms and handling operations is
specifically authorized in section 2115(a) of the OFPA (7 U.S.C.
6514(a)) and is set forth in subpart E of our proposal. As reflected in
our proposal, the approval by the Secretary of a State organic program
would be a separate decision from the determination of whether a
governing State official who applies to be a certifying agent should be
accredited. Although the Act provides for the accreditation of a
governing State official as a certifying agent, it does not require
that the certification of producers and handlers operating in a State
that has an approved program be performed solely by the State
certifying agent. Rather, the required certification of producers and
handlers operating under an approved State program can be conducted by
either the State certifying agent or a private certifying agent.
Producers and handlers of organic products operating in a State that
chooses to implement a State program, but which does not obtain
accreditation for a governing State official, would be certified by
private certifying agents.
In accordance with section 2108(a) of the OFPA (7 U.S.C. 6507(a)),
we would require in section 205.401(b) that a State program meet the
requirements of the regulations in part 205 and the Act, including the
general requirements for an organic program listed in section 2107(a)
of the OFPA (7 U.S.C. 6506 (a)). These requirements would require: that
an agricultural product that is to be sold or labeled as organically
produced be produced and handled only on certified operations in
accordance with the Act and the regulations in part 205; that
participating producers and handlers establish an organic plan; that an
annual on-site inspection by the certifying agent of each certified
farm and handling operation be done; that reasonable fees be collected
from producers, certifying agents and handlers who participate in such
program; that public access to certification documents and laboratory
analyses that pertain to certification be established; that procedures
that allow producers and handlers to appeal an adverse administrative
determination be established; that appropriate and adequate enforcement
procedures and conflict-of-interest provisions be established; and that
periodic residue testing by certifying agents of agricultural products
that have been produced on certified organic farms and handled through
certified organic handling operations be done.
As provided for in section 2108(b)(1) of the OFPA (7 U.S.C.
6507(b)(1)), we propose in section 205.401(c) that a State program that
meets the requirements of regulations in part 205 and the Act also
could contain more restrictive requirements governing the certification
of organic farming and

[[Page 65927]]

handling operations and the production and handling of organic
agricultural products than those in USDA's National Organic Program.
However, in accordance with section 2108(b)(2) of the OFPA (7 U.S.C.
6507(b)(2)), we propose that any additional requirements must further
the purposes of the Act and the regulations in part 205; not be
inconsistent with the Act and the regulations in part 205; not be
discriminatory towards agricultural commodities organically produced in
other States in accordance with the Act and the regulations in part
205; and not become effective until approved by the Secretary.
One concern expressed by private certification organizations in
response to the NOSB draft recommendations was that a State that had
its own program also might implement its own accreditation program for
certifying agents, and require that a certifying agent be accredited by
the State, as well as by the USDA. In this regard, section 2115(a) of
the OFPA (7 U.S.C. 6514(a)) requires that both a governing State
official and a private person be accredited solely by the Secretary
and, thus, provides for the Secretary alone to establish and implement
an accreditation program for existing and new certifying agents.
Accordingly, a State cannot implement an accreditation program for
certifying agents.
Another concern expressed by private certification organizations
was that a State might attempt to prevent them from certifying farm and
handling operations in that State by charging a high, unreasonable fee
to them for registering with the State as a certifying agent or for
purchasing a business operating license. As part of the approval
process for a State organic certification program, we would review any
fees established by States with respect to the requirements in section
2107(a)(10) of the OFPA (7 U.S.C. 6506(a)(10)) for the collection of
reasonable fees from certifying agents and in section 2108(b)(2)(A) of
the OFPA (7 U.S.C. 6507(b)(2)(A)) that additional State program
requirements further the purposes of the Act. In order for the State
program to be approved, the fees established would have to be
determined to be reasonable.
We know that some current requirements in existing State organic
programs vary from our proposed regulations. We also expect State
program proposals to include requirements we have not considered.
Therefore, in section 205.401(c) of the proposed regulation we do not
include a list of additional requirements which might be determined to
be in compliance with the Act's criteria for approval of additional
requirements. Rather, each State program's proposal would be reviewed
to ensure that it complies with the provisions of section 205.401(c)
(1) through (4) which are the Act's criteria for approval of additional
requirements.

Approval of State Programs and Program Amendments--Section 205.402

In section 205.402(a), we propose that a governing State official
must submit to the Secretary any proposed State program, or proposed
substantive amendments to a State program, and must obtain the
Secretary's approval prior to implementation of the program and any
amendments to it. In section 205.402(b), we propose that the Secretary
would notify the governing State official within six months after
receipt of the program or any proposed change to the program as to
whether the program or substantive amendment is approved or
disapproved. This is consistent with the provisions of section 2108(c)
of the OFPA (7 U.S.C. 6507(c)). After receipt of the notice
disapproving a State program, the governing State official may reapply
at any time.

Review of Approved Programs--Section 205.403

In section 205.403, we propose that the Secretary would review a
State program not less than once every five years from the date of
initial approval of the State program. This is consistent with section
2108(c)(1) of the OFPA (7 U.S.C. 6507(c)(1)), which requires this be
done. The State program would be notified within six months after
initiation of the review, whether the program is approved or
disapproved, and if disapproved, the reasons for the disapproval.

Fees

Section 2107(a)(10) of the OFPA (7 U.S.C. 6506(a)(10)) authorizes
the collection of reasonable fees from farmers, handlers, and
certifying agents who participate in the national organic certification
program. In sections 205.421 through 205.424 we propose the fees we
intend to charge to reflect the cost of the services provided by the
USDA. The statute provides that the fees collected be deposited into
the general fund of the U.S. Treasury. Accordingly, the agency must
obtain appropriated funds to operate this program.
In our efforts to assemble the economic and demographic information
needed to develop the details for assessing and collecting reasonable
fees, we consulted extensively with both State and private certifying
agencies. We received assistance from the USDA Economic Research
Service, as well as from other programs within AMS, in identifying
various options for the assessment of fees in this program.
Additionally, we determined the number of certifying agents and their
chapters that are currently operating in the United States and
conducted an analysis to determine the number of organic farms and
handling operations that were operated in the United States for 1994
(Dunn, Julie Anton. 1995. ``Organic Food and Fiber: An Analysis of 1994
Certified Production in the United States.'' U.S. Department of
Agriculture, Agricultural). We also examined an analysis of data
collected by the California Department of Food and Agriculture
concerning registered organic farms and handling operations in that
state (California Department of Health Services. 1995. ``Report on the
Registration of California Organic Processed Food Firms.'' Sacramento:
State of California Marketing Service). Based on these analyses, we
estimate that 44 certifying agents may apply for accreditation and that
30 chapters or subsidiary offices would be included in their
applications. We further estimate that 4,000 farmers and 600 handlers
would be eligible for certification.
We estimate that it will cost approximately $1,000,000 in the first
full year of operation to operate our program when it is implemented.
These costs include approximately $644,000 for the salaries and
benefits of 12 staff members, which would be comprised of a program
manager, 8 marketing specialists, and 3 support staff personnel, and
approximately $356,000 for general administrative overhead and
operating costs, such as printing, training, travel, NOSB meetings,
equipment, supplies, rent, heat, and communications. A description of
the services that would be provided to program participants by the NOP
staff is presented in the applicable supplementary information sections
on fees that follow.
Based on 1994 workload data, we estimate that $500,000 of this
$1,000,000 will be collected from farms, handling operations, and wild
crop harvesting operations, $389,000 from applicants for accreditation
and accredited certifying agents, and $112,000 from private foreign
certification programs, for a total of $1 million. Note, actual billing
may be somewhat greater due to inflation since 1994. We have included a
chart at the end of the fee discussion that illustrates the fees that
will be charged. The fees in this rule are based upon estimates of the
cost to AMS of providing each of the

[[Page 65928]]

services described, and may be adjusted in future years based upon
program experience and projected or actual changes in the cost of
operations (e.g. inflation).
We again would like to point out that, in addition to the fees that
certified operations would be required to submit to USDA, farm, wild
crop harvesting, and handling operations that want to be certified
under the Act, and those that have been so certified, also would need
to pay certifying agents, whether State or private, for the
certification services provided by them. These certification services
would include review of an initial application for certification,
annual review of updated information, review of an organic plan and
updates to the organic plan, and conducting annual inspections both
before and after certification is granted. As part of the accreditation
process for certifying agents that we propose in subpart E, USDA would
require certifying agents to submit for approval the fees they intend
to charge to operations for which they are going to conduct
certification activities. If the intended fees submitted are deemed
reasonable, as required in section 2107(a)(10) of the OFPA (7 U.S.C.
6506(a)(10), USDA will approve the fees schedule submitted.
The AMS, as set forth in section 205.423 of this proposal, also
would be charging fees to foreign organic certification programs, other
than those operated by a foreign country itself. These fees would cover
the costs AMS will incur in determining whether these programs have
requirements equivalent to those of the AMS program. These fees are
authorized under the Independent Offices Appropriations Act (31 U.S.C.
9701 et seq.).

Fees for Accreditation Applicants and Accredited Certifying Agents--
Section 205.421

Section 2107(a)(10) of the OFPA (7 U.S.C. 6506(a)(10)) provides for
the collection of reasonable fees from certifying agents who
participate in the program. This section discusses the fees proposed to
be paid by applicants who are initially applying for accreditation and
fees to be paid by accredited certifying agents.
In section 205.421(a)(1) we propose that each applicant for
accreditation, and each accredited certifying agent submitting an
annual report, would be required to submit to the Administrator a non-
refundable fee of $640. This fee would cover the AMS cost to review and
evaluate the material required to be submitted to become accredited or
to continue accreditation. We believe it is appropriate to establish a
fee structure to recover the cost of this service.
We estimate that it will take an average of 16 hours to review each
application for accreditation, or each annual report, for certifying
agencies that do not have chapters or subsidiary offices. Our
estimation is based upon knowledge gained from examining current
accreditation programs as well as our general experience and knowledge
gained from other AMS programs that involve the submission and review
of applications. We estimate that the hourly cost for AMS personnel to
handle and review the applications and annual reports will be $40 per
hour. This is the average hourly cost for AMS to conduct a program of
this nature. Based on an hourly fee of $40 per hour and an estimated
time of 16 hours for handling and review, we estimate the cost to
evaluate accreditation applications and annual reports to be $640 per
applicant or accredited certifying agent, as applicable. Therefore, we
are proposing that each applicant of this type (i.e., single, non-
multi-unit organization) seeking accreditation or submitting an annual
report pay a $640 non-refundable fee at the time of submission of
application for accreditation or an annual report.
Assessing a uniform fee for accreditation application and
submission of an annual report is based on our knowledge gained from
other AMS programs and current accreditation programs being operated.
We are not proposing a fee for this activity based on the size and
complexity of the certifying agent because we believe that differences
in the size and complexity of the certifiers would result in an
insignificant difference in the amount of time needed to review
applications and annual reports.
We further propose in section 205.421(a)(2) that an additional
application or annual report review fee of $160 be charged for each
chapter or subsidiary office of an accreditation entity. This
additional fee of $160 is the cost we estimate AMS will incur for the
additional 4 hours we estimate will be necessary to review the
additional information required to be submitted for each part of a
multi-unit organization. We estimate the hourly cost will be $40, the
same average hourly cost we propose for reviewing application
information and annual reports submitted by applicants and accredited
certifying agents. Based on our estimate that 44 certifying agents with
30 chapters or subsidiary offices may apply for accreditation, we
estimate that we may collect $32,960 annually from fees associated with
reviewing accreditation applications and annual reports.
In paragraph (b) of section 205.421, we are proposing the fees that
certifiers would be assessed for a site evaluation visit conducted by
AMS. The fees that would be assessed for a site evaluation visit would
be any travel and per diem expenses incurred as a result of the conduct
of site evaluations, as well as the hourly costs to conduct the site
evaluation. Site evaluations are proposed in section 205.309(a) of
subpart E to be performed by AMS within a reasonable time after
issuance of a notice of approval of accreditation to verify compliance
of the certifying agent with the Act and the regulations. In section
205.309(b), we propose that a site evaluation also may be conducted at
any time to determine an applicant's or certifying agent's compliance
with, or quality of performance under, the Act and the regulations.
Additionally, we propose in section 205.314(b) that a site evaluation
would occur every 5 years as part of the process of renewal of
accreditation for an accredited certifying agent.
We estimate that the hourly cost of performing site evaluations
will be $40, calculated to the nearest fifteen minute period, for each
AMS evaluator conducting the site evaluation visit, including travel
time to and from the evaluator's duty station. This is the average cost
for AMS to conduct evaluations of this nature. We anticipate that the
time necessary for AMS to conduct a site evaluation, and therefore the
total cost to be assessed a certifying agent for a site evaluation,
will vary between certifying agents due to differences in their size,
complexity, and other similar factors. The fee we propose in paragraph
(b) of this section would be a direct assessment on applicants and
accredited certifying agents for the hourly costs and travel and per
diem expenses associated with conducting our site evaluations. As
proposed, an applicant or accredited certifying agent would be required
to pay these fees within 30 days following the date the bill is issued.
As proposed in section 205.424 of this subpart, the fees submitted as
payment for the costs of the site evaluation would be required to be
submitted by certified check or money order made payable to AMS and
sent to the address specified on the bill.
AMS estimates that an average site evaluation would require 5 days
and would cost a certifying agent $3,500. The $3,500 expense would
result from the hourly costs for staff time necessary to prepare for
and conduct the site evaluation, and the related travel and per diem
expenses, such as air fare, car

[[Page 65929]]

rental, lodging, meals, and incidental expenses. We estimate that of
the $3,500 cost, approximately $1,100 would result from related travel
and per diem expenses and approximately $2,400 would result from the
time (hourly costs) necessary to prepare for and conduct the site
evaluation. We anticipate that of this $2,400 hourly cost, $1,600 would
result from the time spent by one AMS evaluator being on site for 5
days (40 hours) at $40 per hour, and $800 would result from the 20
hours we estimate will be needed to prepare for the evaluation, write
an evaluation report, and communicate the results of the evaluation
process to the certifying agent. As previously noted, the actual cost
for each site evaluation will vary based on the length of the
evaluation, due to such factors as the certifying agent's location,
size and complexity.
Based on our estimate that 44 certifying agents with 30 subsidiary
offices or chapters may be accredited, we expect to receive $259,000
annually from fees associated with site evaluations. We note that under
our scheme for site evaluations proposed in section 205.309 of subpart
E, a site evaluation visit may not be performed each year for every
certifying agent and every subsidiary office or chapter. However, also
under our scheme, a site evaluation may be performed more than once
each year for a certifying agent or its subsidiary office or chapter,
when determined necessary by the Administrator to determine the
certifier's compliance or evaluate its performance. For the purpose of
estimating fees to be collected annually from certifying agents, we
assumed that for the intital year that site visits are performed, a
site visit would be performed for each certifying agent and each
subsidiary office or chapter. Thereafter, a site visit of a certifying
agent, subsidiary office, or chapter may be performed more or less
often than annually. The previously discussed number of 12 NOP staff
members estimated to be needed to conduct program activities would be
adjusted accordingly with an increase or decrease in workload.
A different model which we considered for the site evaluation fee,
but which we are not proposing, was based on categorizing certifiers
according to their size and assessing them a fee for a site evaluation
based solely on this factor. In such a scenario, for example, a
certifying agent who certified less than 50 clients might be assessed a
fee equivalent to 3 days of work while a certifying agent that
certified more than 500 clients would be assessed a fee equivalent to
30 days of work. We decided not to propose this model after determining
that site evaluation costs would depend on factors other than the size
of the certifying agent's operation, such as the complexity of the
certification activities conducted by the certifier, the location of
the certifier's facilities, and the certifier's organizational
structure.
In paragraph (c) of this section, we propose that an administrative
fee of $2,000 be paid by a certifying agent upon the initial granting
of accreditation, upon the granting of confirmation of accreditation,
and upon the submission of each subsequent annual report. Under the
regulatory scheme we are proposing, a person who wants to be an
accredited certifying agent first would have to apply for and be
granted accreditation, then would have to have this accreditation
confirmed, and then would have to submit annual reports to provide
current information.
Our $2,000 fee is based upon the yearly cost we estimate we would
incur for providing various administrative services to accredited
agents which would cover the administrative costs discussed below.
Since we expect that confirmation of accreditation would occur
approximately 12 months after the granting of initial accreditation,
and that submission of an annual report would occur subsequently one
year later, we propose to assess a $2,000 fee for each of these yearly
periods so that the fees charged will reflect the cost of the services
provided. We also are proposing that, upon the granting of initial
accreditation, upon the granting of confirmation of accreditation, and
upon the submission of an annual report, a certifying agent would pay
an additional fee of $300 for each chapter or subsidiary of the agent's
organization. Our fees here are based on knowledge gained from the
review of currently existing accreditation programs such as the
International Organization for Standardization program and the
International Federation of Organic Agricultural Movements program.
Our administrative fees would cover costs for the operation of our
accreditation program that are not covered by paragraphs (a) and (b) of
section 205.421. The $2,000 fee would cover day-to-day program
activities and operational and overhead costs for single-site
accreditation entities. Examples of operational and overhead costs are
utilities, rent, supplies, printing, equipment purchases, and
communication. Program activities include: develop and provide guidance
on the NOP production, handling and certification requirements;
compile, copy, and mail site evaluation reports; conduct peer review
panel meetings or conference calls; and enforce the program. The $300
fee for each additional chapter or subsidiary would cover the
additional time for program activities, and additional overhead and
operating expenses, we believe can be attributed to, and which are
necessary for, our providing the previously identified services to
chapters and subsidiary offices. Based on our estimate that 44
certifying agents with 30 subsidiary offices or chapters may be
accredited, we expect to receive $97,000 annually from administrative
fees.
Payment of the non-refundable fees would be required 30 days from
the date of issuance of a notification of approval of accreditation and
notification of confirmation of accreditation, and with the submission
of each annual report.
An alternative model for the administrative fee that we considered
would be to base the administrative fee on the types of certifications
performed by certifiers. For example, certifying agents who certify
farmers and handlers trading in international markets, or who certify
processors producing multi-ingredient products, would pay a higher
administrative fee. The underlying assumption is that certifying agents
who provide more complex services to farmers and handlers utilize more
program resources and derive greater benefit from the National Organic
Program than other certifiers. In evaluating this alternative, we
considered that the AMS costs to administer this model would be
considerably higher than the costs associated with the uniform
administrative fee model we are proposing.

Fees for Certified Operations--Section 205.422

In order for AMS to carry out the OFPA, and in turn fulfill the
mission of AMS, certain program activities must be undertaken. We used
the time required to accomplish these program activities as the basis
for determining the amount of fees charged to each certified farm or
handling operation. Program activities that would have to be carried
out include: financial and staff support for the NOSB; compliance and
enforcement; provision to the public of information about the program;
attendance at meetings, conferences and trade fairs conducted both
inside and outside the United States to convey information about the
program; and other general and administrative functions. To accomplish
these activities, we would need to pay various

[[Page 65930]]

fixed costs, including costs for overhead (utilities, rent and
communications), equipment costs for computers and copying machines,
and staff expenses, which would include salaries, benefits and travel
costs.
In this section, we propose the fees to be collected from certified
farmers, wild crop harvesters, and handlers. The total cost for the
program activities which we estimate that AMS will provide for farm,
wild crop harvesting, and handling operations certified under the
National Organic Program is $500,000, one half of the annual projected
program cost of $1,000,000. We estimate that approximately 40 percent
of the $500,000, or $200,000, would be needed to carry out program
activities concerned with the issues of certified farms and wild crop
harvesting operations, and that approximately 60 percent of the
$500,000, or $300,000, would be needed to carry out activities
concerned with the issues of certified handling operations.
The fee we propose is based upon dividing our estimated cost for
program activities for farmers and harvesters, and handlers,
respectively, among the estimated 4,000 farmers and 600 handlers we
believe will participate in our program. Accordingly, we propose that
each farmer and wild crop harvester would pay $50 annually, or $200,000
divided by 4,000 farmers. We propose that each handler would pay $500
annually, or $300,000 divided by 600 handlers. We used this manner to
determine the fee that will be charged each farmer, each wild crop
harvester, and each handler because almost all of the activities that
would be carried out for each group, i.e., for the certified farmers
and wild crop harvesters, and for the certifier handlers, will be
equally applicable to each farmer and harvester, and each handler. It
would not be practical to apply any of the possible small portion of
activities that remain to individual farmers, wild crop harvesters, and
handlers separate and apart from the overall costs to each group. We
request any additional information that would improve the estimates of
farmer, wild crop harvesting, and handler participation, so that a more
accurate estimate of these fees can be developed.
In our consideration of farmer, harvester, and handler fees, we
determined that the allocation of a higher percentage of costs to
handlers' issues (60 percent), as opposed to farmer/harvester issues
(40 percent), would be appropriate. We anticipate that handling issues,
especially such issues as enforcement; record keeping and auditing;
labeling, including use of the USDA seal and State seals on different
product lines; equivalency of imported organically produced
ingredients; and maintenance of the National List of non-agricultural
ingredients, will require greater program staff time and operating
expenses than farming and harvesting issues.
In developing our proposed fee structure, we considered proposing a
fee structure that did not include a fee collected directly from
producers and handlers, but that instead assessed fees on certifying
agents to cover the total $1,000,000 cost of the National Organic
Program. We considered this alternative because we recognize that any
fee charged to a certifying agent ultimately will be incorporated into
the fee that the certifying agent charges the producer and handler for
certification services. However, we did not propose this alternative
because we consider our proposal that would directly assess producers,
handlers and certifying agents for services we provide to them to
better represent an appropriate and practical method of providing
transparency and distributing overall program costs among the universe
of potential participants and beneficiaries.
We also considered developing a sliding scale of fees to be charged
to producers and handlers, based on the size and complexity of their
operations. For example, a farmer or handler who sells $5,000 annually
of agricultural products would be charged proportionately less than a
farmer or handler whose sales exceed $5,000. However, we are proposing
fees that are related directly to the costs of services provided by
AMS, rather than to such factors as a participant's sales volume or
income from the sale of organically produced products, because we
estimate that a scheme for charging fees based on factors such as sales
volume or income is a more complex scheme and would require additional
recordkeeping burden and administrative costs for producers and
certifiers.
As discussed previously, we have made a distinction between
services provided to farmers/harvesters as a group and handlers as a
group. However, we have not made a distinction within each group for
assessing fees to farms and harvesting operations, and handling
operations, based on their size, complexity, or other similar factor.
Because we are concerned about the impact of our proposed uniform fee
structure on smaller farms and smaller handling operations, we are
requesting public comment on the impact of our proposed structure on
smaller operations. Additionally, we are request public comment on
alternative methods for calculating fees, including, but not limited to
(1) the actual cost of providing services to each individual or
operation, and (2) the size of the operation or value of the product(s)
for which service is being provided.

Fees for Import Programs--Section 205.423

We are proposing in section 205.423(a) that foreign organic
certification programs, other than those operated by a foreign country
itself, pay a fee of $40 per hour plus any travel and per diem costs
that might be incurred to establish the equivalency of the program.
This is the average hourly cost for AMS to conduct a program of this
nature. Before equivalency is final and effective for foreign
certification programs for which payment for determination of
equivalency is required, payment must be made to AMS.
In section 205.423(c) we are proposing that the fees must be
submitted by certified funds made payable to AMS and paid within 30
days following the date of notification of AMS of its intent to approve
the program subject to receipt of the fees. Fees should be submitted
according to the instructions provided by AMS. As indicated in the
proposal, no program would be approved until all required fees are
paid.

Payment of Fees and Other Charges--Section 205.424

In section 205.424(a) we propose that all fees be submitted in the
form of a certified check or money order made payable to AMS and sent
to the address identified in the bill issued for these fees. We also
propose, in accordance with section 3717 of the Debt Collection Act of
1982 as amended (31 U.S.C. 3717), that all fees required to be
submitted would incur interest, penalties, and other costs in the case
of late payment of the fees due. In addition, failure to submit
payment, or a late payment, of a bill owed to AMS may result in the
loss of, or failure to obtain, certification, accreditation, or
equivalency status.
Fees for application for accreditation or for the review of an
annual report must be included with the application or with the annual
report. Without payment of the fee, AMS will not act on the
application. Fees for site evaluations and administrative fees that are
not paid or that are received late may cause AMS to refrain from
issuing, confirming, or continuing accreditation. Certification of
farm, wild crop harvesting and handling operations is dependent upon

[[Page 65931]]

the payment of the fees. Import programs, other than those operated by
a foreign country itself, would not be acknowledged as being equivalent
until payment is made to cover the AMS cost for the establishment of
equivalency.

Estimated National Organic Program Fees
[Based on 1994 data]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Private
foreign
Description Certification agents Subsidiary offices or Handlers (est. 600) Farmers (est. 4,000) certification
(est. 44) chapters (est. 30) programs
(est. 16)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Application or Annual Report $640/Annually............ $160/Annually............ $0....................... $0....................... $0
Fee.
Administrative Fee........... 2,000/Annually........... 300/Annually............. 500/Annually............. 50/Annually.............. 0
Site Evaluations............. 3,500*................... 3,500*................... 0........................ 0........................ 0
Equivalency Review........... 0........................ 0........................ 0........................ 0........................ 7,000
Total Estimated Fees**... 270,160.................. 118,800.................. 300,000.................. 200,000.................. 112,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The $3,500 estimated cost is based on a 5 day site evaluation computed at $40 per hour plus travel and per diem costs. The actual cost will vary based
on the length of the evaluation. Initial site evaluations would be performed approximately 12 months after initial granting of accreditation, after
which site evaluations will be conducted at least once every 5 years and as necessary to determine compliance. The $40 per hour rate, which is used in
many of the National Organic Program fees, is based upon the average hourly cost for AMS to conduct a program of the nature.
** The estimated numbers of farmers, handlers and certifiers are based on data collected in 1994; therefore, the total estimated fees may not represent
the number of farmers, handlers and certifiers who might participate in the National Organic Program after implementation. We also estimated the
number of equivalency reviews conducted for private foreign certification programs to be approximately 16 per year. An equivalency review may cost
more than accreditation of a certification agent because it would include an analysis of the following: production standards, criteria for allowing
certain substances to be used, certification requirements, enforcement measures and accreditation process, and may include a site visit to the foreign
program headquarters. We request information that would improve the estimates of farmer, handler, certifier and private foreign program participation
so a more accurate estimate of these fees can be developed.

Compliance Review and Other Testing

Sections 205.430 through 205.433 contain our proposed provisions
for compliance review, preharvest tissue testing, application of a
prohibited substance due to emergency pest or disease treatment, and
the reporting of the application of a prohibited substance. Section
2107(a)(6) of the OFPA (7 U.S.C. 6506(a)(6)) requires the establishment
of a program under which certifying agents would conduct periodic
residue testing of agricultural products from certified farms and
handling operations and report any violations of food safety laws which
they are aware of to the appropriate health agencies. Section 2112 of
the OFPA (7 U.S.C. 6511)) requirements in regard to preharvest tissue
testing and testing of products sold or labeled as organically produced
also are addressed in the proposal. Additionally, the proposal
addresses the provisions of section 2107(b)(2) of the OFPA (7 U.S.C.
6506(b)(2)) regarding the application of prohibited substances on
certified organic farms that occur as the result of a Federal or State
emergency pest or disease treatment program.

Compliance Review--Section 205.430

This proposed section would implement the residue testing
requirements of sections 2107(a)(6) of the OFPA (7 U.S.C. 6506(a)(6))
and 2112(a) and (b) of the OFPA (7 U.S.C. 6511(a) and (b)). Section
2107(a)(6) of the OFPA (7 U.S.C. 6506(a)(6)) requires a certifying
agent to undertake periodic residue testing of products from certified
farms and handling operations to determine if such products contain a
detectable residue level of a pesticide or other prohibited substance
and to report violations of food safety laws, if found, to the
appropriate health agencies. Section 2112(a) of the OFPA (7 U.S.C.
6511(a)) requires the Secretary, the applicable governing State
official or the certifying agent to utilize a system of residue testing
to test products sold or labeled as organically produced to assist in
enforcement of this title. Section 2112(c) of the OFPA (7 U.S.C.
6511(c)) further requires the Secretary, applicable governing State
official and the certifying agent to conduct an investigation of a
certified farm or handling operation when the residue test of a product
from the certified farm or operation shows a detectable residue level
of a pesticide or other prohibited substance, to determine if the
organic certification program has been violated, and may require the
producer or handler of such product to prove that any prohibited
substance was not applied to such product.
In paragraph (a) of this section we propose that a certifying agent
would arrange with inspectors to conduct periodic sampling for the
purpose of testing organically produced agricultural products from
farm, wild crop harvesting, and handling operations certified by that
agent to enforce the Act and the regulations set forth in this part.
Certifying agents would instruct inspectors when to sample organically
produced products on certified farm, wild crop harvesting, and handling
operations. We do not propose that this sampling would be performed at
each annual inspection. We believe that the frequency of sampling
should be adequate to monitor compliance with the section 2105(2) of
the OFPA (7 U.S.C. 6504(2)) provision that prohibits the sale or
labeling of agricultural products as organic that are produced on land
to which any prohibited substances, including synthetic chemicals, have
been applied during the 3 years immediately preceding the harvest of
the agricultural products, but yet not so frequent as to be unnecessary
or burdensome to the certified operations. We have proposed testing not
less frequently than every 5 years. However, we specifically request
comment on whether this period of time is appropriate. As required by
the Act, we also propose to require certifying agents, to the extent
that such agents are aware of a violation of applicable laws relating
to food safety, to report such violation to the appropriate health
agencies (Federal, State, and local).
In paragraph (b) of this section, which addresses the compliance
provisions of section 2112(a) of the OFPA (7 U.S.C. 6511(a)), we
propose that the Secretary or governing State official would arrange
for sampling and residue testing of organically produced products at
any point of production or distribution, and may require the certifying
agent to conduct sampling and residue testing of organically produced
products originating from operations certified by that agent. These
product samples could be taken from any point in the

[[Page 65932]]

distribution chain, from the farm to the retail store. We believe that
taking samples from any point in the distribution chain would assist in
maintaining the integrity of organically produced agricultural products
after they leave the certified operation and would provide consumers
with added assurance that no pesticide or other prohibited substance
was used in producing or handling the products.
The results from all sampling and testing would be used to
determine if an agricultural product contains any detectable residue
level of a pesticide or other prohibited substance. We define the
detectable residue level in proposed section 205.2 of subpart A as
being the level that is 5 percent or greater of the established EPA
tolerance level for the product that was tested, provided that if there
is no tolerance level established, but an action level has been
established, the detectable residue level will be the action level
established by FDA for the product tested. The EPA tolerance levels,
expressed in terms of parts of a pesticide residue per million parts of
the food (ppm), refer to the amount of a pesticide residue that may
legally be present in or on a raw agricultural commodity, as set forth
in section 408(a) of the Federal Food, Drug and Cosmetic Act (FFDCA)
(21 U.S.C. 346(a)), or present in processed food or feed under the
terms of the food additive regulation as set forth in section 409 of
the FFDCA (21 U.S.C. 348). Tolerance levels for raw agricultural
commodities are published in 40 CFR Part 180; for processed foods, in
40 CFR Part 185; and for processed feed, in 40 CFR Part 186. The FDA
action levels, which are based on recommendations received from the
EPA, also are expressed in terms of parts of a pesticide residue per
million parts of the food and are used to regulate the occurrence of
very low levels of pesticide residues that result from pesticides that
are persistent in the environment and for which EPA does not establish
a tolerance level. The FDA action levels are published in FDA's
Compliance Policy Guide (CPG), Chapter 5 (Foods), subchapter 575,
section 575.100. We have based our compliance testing proposals on the
EPA tolerances and the FDA action levels because they represent the
best data available on what are appropriate and safe residue levels.
In our proposal, we have determined that the detectable residue
level for a prohibited substance would be at 5 percent of the EPA
tolerance for the product tested, or at the actual FDA action level for
the product tested, as applicable, so as to establish a practical
benchmark for determining when to conduct an investigation pursuant to
section 2112(c)(1) of the OFPA (7 U.S.C. 6511(c)(1)). A practical
benchmark must be low enough to provide adequate protection against the
use of pesticides or other prohibited substances and yet high enough
not to burden a producer or handler, and the national or applicable
State program, with an investigation unless a reasonable question of
non-compliance exists. Our proposed levels of 5 percent of the EPA
tolerance, or at the actual FDA action level, as indicators of a
detectable residue level are based upon the historical use of 5 or 10
percent of the EPA tolerance, or the actual FDA action level, by States
and other certifying agents in the organic industry.
The NOSB recommended that the USDA enter into an arrangement with
the Department of Health and Human Services to conduct sampling and
testing of raw organic agricultural products as a part of the FDA's
regulatory monitoring program of all agricultural products for
pesticide residues. The NOSB suggested a similar arrangement with
States that conduct their own pesticide residue monitoring programs.
After implementation, we will consider these possibilities and similar
arrangements with other existing pesticide residue testing programs to
fulfill the proposed sampling provision set forth in paragraph (b) of
this section.
In paragraph (c) in this section, we propose to require each
product sample collected by an inspector representing the Secretary, a
certifying agent, or applicable governing State official, as part of
the compliance review, to be submitted to a laboratory facility
accredited to test the commodity sampled. (Laboratory accreditation is
not a part of the USDA accreditation program and is currently
administered through private and independent third parties.) Each
product sampled would be collected in accordance with instructions
provided in subchapter 400 of the FDA Investigations Operations Manual
(IOM). We have chosen the IOM because it serves as the FDA's primary
guide to field investigators and inspectors on investigational policies
and procedures, and thus provides for consistency in periodic and
random sample collection. The analytical methods used to test each
product sample to determine if an agricultural product contains a
detectable residue level of a pesticide or other prohibited substance
would be selected as appropriate from the FDA's Pesticide Analytical
Manual (PAM) Volumes I and II, the Official Methods of Analysis of the
Association of Official Analytical Chemists, or the Food Safety
Inspection Service (FSIS) Residue Chemical Guidebook. We have adopted
the analytical methods contained or referenced in these publications
because they serve as the standard analytical methods used by the FDA,
FSIS, and other laboratories to examine food and animal feed for
pesticide residues for regulatory purposes. The results of such tests
would be reported to the certifying agent or governing State official,
as applicable, and to the Secretary.
Our proposed paragraph (c)(3) of this section would require that
the Secretary, the governing State official, or the certifying agent,
as applicable, inform the appropriate regulatory agency in the event a
residue test level exceeded either the EPA tolerance level or the FDA
action level, as applicable, for that substance. This proposal is
consistent with section 2107(a)(6) of the OFPA (7 U.S.C. 6506(a)(6)),
which requires reporting of violations related to food safety to the
appropriate health agencies.
Paragraphs (d)(1) and (2) of this section propose the actions that
would be undertaken by the Secretary after the receipt of a residue
test result that indicated a detectable residue level of a prohibited
substance. Our proposed paragraph (d)(1) of this section would require
the Secretary, applicable governing State official, or certifying agent
to conduct an investigation to determine the cause of a detectable
residue level of a prohibited substance in the sample, as provided for
under section 2112(c)(1) of the OFPA (7 U.S.C. 6511(c)(1)). The
investigation may include a visit to the certified operation to
determine whether the detectable residue level exceeds the unavoidable
residual environmental contamination level for the prohibited substance
at the specific certified operation.
Proposed paragraph (d)(2) of this section would implement the
provision of section 2112(c)(2) of the OFPA (7 U.S.C. 6511(c)(2)) which
prohibits organically produced agricultural products from being sold or
labeled as organically produced if the investigation into the cause of
a detectable residue level in a sample determines that the residue was
the result of an intentional application of a prohibited substance or
was at a level greater than the unavoidable residual environmental
contamination level for the prohibited substance. The NOSB recommended
that the unavoidable residual environmental contamination level be at
the actual FDA action level, or not to exceed 5 percent of the EPA
tolerance, as applicable. We propose instead that the unavoidable
residual environmental contamination be established for each

[[Page 65933]]

specific site only after a product produced on that site is found to
contain a detectable residue level of 5 percent of the EPA tolerance,
or at the actual FDA action level, as applicable. We believe that
unavoidable residual levels of contaminants in the environment vary so
greatly by region, State, and site so as to render impractical the use
of a uniform level. The certification eligibility of certified
operations also would be better evaluated by our proposal to establish
a site-specific unavoidable residual level during the investigation,
rather than applying a pre-determined level. Proposed paragraph (d)(2)
of this section would authorize the Administrator to institute
proceedings to terminate the certification of an operation, or portion
of an operation, after an investigation determined that the residue
resulted from an intentional application of a prohibited substance or
that the residue level exceeded the unavoidable residual environmental
contamination level. The termination procedure is more fully described
in section 205.219 of subpart D.

Preharvest Tissue Testing--Section 205.431

Section 2112(b) of the OFPA (7 U.S.C. 6511(b)) authorizes the
Secretary, the governing State official, or the certifying agent to
conduct preharvest tissue testing of any crop grown on soil suspected
of harboring contaminants. We accordingly propose in paragraph (a) of
this section that such a test may be conducted when the soil is
suspected by the Secretary, the governing State official or the
certifying agent of containing contaminants. We have defined
contaminant in section 205.2 of subpart A to be a residue of a
prohibited substance that persists in the environment. This pre-harvest
tissue test would be conducted to determine whether the crop to be
harvested contained levels of any contaminant greater than either the
actual FDA action level, or EPA tolerance, as applicable, for that
contaminant.
We also believe a pre-harvest tissue test could assist producers of
organically grown crops raised on soil to which certain highly
persistent prohibited substances were applied more than three years
prior to the harvest of an organic crop to be knowledgeable of the
residue levels contained in their crops. For example, any soil could
potentially harbor sufficient amounts of prohibited substances, such as
chlorinated hydrocarbons, that are known to causes certain types of
crops, such as squash or cucumbers, to absorb enough of these
contaminants to exceed established FDA action levels or EPA tolerances.
In paragraph (b) of this section, we propose that preharvest tissue
samples be collected by an inspector representing the certifying agent
or applicable governing State official and submitted in accordance with
subchapter 400 of the FDA Investigations Operations Manual (IOM). The
analytical methods used for determining if preharvest tissue samples
contain a detectable residue of a pesticide or prohibited substance are
identified among the methods contained or referenced in the FDA's
Pesticide Analytical Manual Volume I and II or the Official Methods of
Analysis of the Association of Official Analytical Chemists. This
parallels the procedure for compliance testing and sampling as proposed
in section 205.430(c).
Paragraph (c) of this section would require the certifying agent or
the governing State official to report the results of each preharvest
tissue test to the Secretary and to the appropriate health agencies if
a pre-harvest tissue test result indicated that the residue level of a
contaminant exceeds the EPA tolerance or the FDA action level, as
applicable, for that contaminant.
The NOSB submitted recommendations addressing instances of drift of
prohibited substances upon organically produced crops. The NOSB defined
drift as the physical movement of prohibited pesticides or fertilizers
from the intended target site onto a certified organic field or farm,
or portion thereof, caused by a person who is not the certified organic
producer or a person working under the direction of the certified
organic producer. They recommended that agricultural products exposed
to drift should not be sold or labeled as organically produced or fed
to livestock on certified operations and that pre-harvest tissue tests
be required to verify which crops were not drifted upon.
We have not provided in our proposal for instances of drift, or for
the use of pre-harvest testing to verify portions of fields that
receive drift. Although drift may be commonplace, especially in those
agricultural regions where pesticide use on non-organic lands is
routine and heavy, exposure to drift does not constitute use of a
prohibited substance and does not affect the integrity of organically
produced crops because the amount of prohibited substance to which the
crops are exposed is negligible. We believe our provisions proposed in
sections 205.430 and 205.431 for the testing of organically produced
agricultural products, both before and subsequent to harvest, to
determine residue levels and, if necessary, to conduct an investigation
as to the cause of a detectable residue level, are adequate to protect
the integrity of agricultural products sold or labeled as organically
produced.

Emergency Pest or Disease Treatment--Section 205.432

This proposed section would address situations where certified
organic farms are subject to Federal or State emergency pest or disease
programs. It would, pursuant to the discretionary requirements of
2107(b)(2) of the OFPA (7 U.S.C. 6506(b)(2)), provide that a farm
subject to such treatment program would not have its certification
status affected, so long as certain prohibitions in the proposed
regulations are complied with.
The NOSB recommended, and we agree, that land that is subject to an
emergency treatment program with a prohibited substance should not be
required to be withheld from production of organically produced
products for a period of three years. Therefore, we are proposing that
a certified farm that is otherwise in compliance with the regulations
would not have its certification status affected as a result of a
Federal or State emergency pest or disease treatment program, provided
that the conditions stated in paragraphs (a) and (b) of this section,
as applicable, are satisfied.
Paragraph (a) of this section would prohibit the sale or labeling
of any crop harvested from a treated farm as organically produced if
the harvested crop, or plant part to be harvested, had come in contact
with a prohibited substance applied as part of the emergency program.
Field observations by the producer, combined with the reporting
requirements of proposed section 205.433 and the testing and sampling
provisions of sections 205.430 and 205.431 would be used to determine
which crops had come in contact with the prohibited substance and to
monitor that they were not being sold or labeled as organically
produced.
We propose in paragraph (b) of this section that any livestock that
were treated with a prohibited substance as part of a Federal or State
emergency pest or disease treatment program, or product derived from
such livestock, could not be sold as organically produced. However,
exceptions to the prohibition on the sale of treated livestock and
their products as organically produced are proposed in paragraphs
(b)(1) and (b)(2) of this section. In accordance with section
2110(e)(2) of the OFPA (7 U.S.C. 6509(e)(2)), we propose in paragraph

[[Page 65934]]

(b)(1) of this section that milk and milk products from a treated dairy
animal could be sold as organically produced beginning no less than
twelve months following the last treatment with the prohibited
substance. Additionally, in accordance with section 2110(b) of the OFPA
(7 U.S.C. 6509(b), we propose in (b)(2) of this section that offspring
from breeder stock that was not in the last third of its gestation at
the time of the last application of a prohibited substance could be
considered as organic at the time of birth.

Reporting the Application of a Prohibited Substance--Section 205.433

Section 205.433 provides a general requirement that producers or
handlers immediately notify the certifying agent of any instance of an
application of a prohibited substance on their certified operations.
This requirement would ensure that the certifying agent was made aware
of any incident of this type, that occurs on an operation certified by
them, which might affect the integrity and status of an agricultural
product sold as organically produced by the operation or the status of
the operation from which an agricultural product is harvested. Failure
to notify the certifying agent may result in termination of
certification, as provided for in section 205.219 of subpart D.

Appeals

General--Section 205.452

Section 2121(a) of the OFPA (7 U.S.C. 6520(a)) requires the
Secretary to establish an administrative appeals procedure under which
persons may appeal an action of the Secretary or a certifying agent
that adversely affects such person or that is inconsistent with the
applicable organic certification program. We accordingly propose in
this section that any person subject to the OFPA who believes that he
or she is adversely affected by a decision of a member of the National
Organic Program staff or by a certifying official may appeal such
decision to the Administrator of the Agricultural Marketing Service.

Equivalency of Imported Organic Products

Section 2106(b) of the OFPA (7 U.S.C. 6505(b)) provides that
agricultural products imported into the United States may be sold or
labeled as organically produced only if the Secretary determines that
the products have been produced and handled under an organic
certification program that provides safeguards and guidelines that are
at least equivalent to the requirements of the Act. We are proposing
provisions concerning equivalency and the process for establishing
equivalency in accordance with this requirement.

Eligibility of Agricultural Products for Importation Into the United
States--Section 205.480

Section 205.480 requires that imported agricultural products, or
ingredients in products, that are to be sold or labeled as organic must
have been produced and handled under an organic certification program
that the Secretary has determined has safeguards and guidelines
equivalent to those in the Act and our proposed regulations.

Determination of the Equivalency of Foreign Programs--Section 205.481

To provide for the importation of organic agricultural products, we
propose in section 205.481 that an evaluation of a foreign organic
certification program would include a review of its: standards for
production and handling of agricultural products; lists of substances
allowed and prohibited for use and the criteria used to establish the
lists; inspection and certification requirements for farm and handling
operations and oversight of certification provisions; enforcement
provisions; the accreditation process and requirements for an
accredited status; and any additional information deemed necessary by
the Secretary to use to determine equivalency. Examples of other
information that may be required to be submitted are a list of products
certified by the program and copies of inspection reports used in
determining certification status.
It is necessary to evaluate these elements in order to satisfy the
provisions of the OFPA that foreign programs provide safeguards and
guidelines at least equivalent to the requirements of the OFPA and its
implementing regulations. These equivalent safeguards and guidelines
should include: standards for organic farming and handling, including
substances allowed and prohibited for use in the production and
handling of organic products; provisions for certification of farming
and handling operations; and oversight of persons and organizations who
will be responsible for the certification of farm and handling
operations. In addition, there should be equivalent measures provided
for enforcement of any program requirements.
One example of an element that may be examined in determining
equivalency is whether the program's standards for farm and handling
operations incorporate, as does the Act and our proposed regulations,
the principle of prevention, i.e., prevention of disease in animals,
pest infestation in crops, and commingling of non-organic products with
organic products in a food handling operation.
We note that farms and handling operations certified by agents
operating under a foreign organic certification program that is
determined to be equivalent with the USDA National Organic Program
would be able to import products into the United States without the
certified farm or handling operation itself having to apply for
approval for importation from the USDA.
We recognize that not all organic products produced in foreign
countries are produced in countries that would have established their
own equivalent foreign organic certification programs. We intend that
the determination of equivalency of any other type of foreign organic
certification program, such as one conducted by a certifying agent that
operates in a country that has not been determined to have an
equivalent program, also be based on an evaluation and determination of
the components set forth in section 205.481. We also are aware that the
accreditation of some foreign organic certification programs may be
conducted by an agency other than an agency of the government.

Process for Establishing Equivalency of Foreign Programs--Section
205.482.

In this section, we propose the process by which a foreign organic
certification program may apply for a determination of the equivalency
of its program with the National Organic Program, and in turn, the
procedure for notification of a determination of equivalency or
nonequivalency. In paragraph (a) of this section, a foreign organic
certification program that wants to establish the equivalency of its
organic program with the National Organic Program would submit to the
Secretary a complete and accurate description of its program, including
any of the laws and applicable requirements upon which the program is
based and any other information requested by the Secretary.
In paragraph (b) of this section, we propose that the Secretary
would make a determination of equivalency or nonequivalency and notify
the foreign organic certification program of the decision. If the
Secretary determines that a foreign organic certification program is
equivalent to the USDA National Organic Program, we propose that the
Secretary provide the foreign organic certification program written

[[Page 65935]]

notification of the date upon which organically produced agricultural
products produced and handled under the program may be imported into
the United States and labeled or sold as organic. If a foreign organic
certification program has been determined by the Secretary not to be
equivalent, we propose that the Secretary provide the foreign organic
certification program written notification and state the basis for such
determination. After receipt of such notice, the foreign organic
certification program may reapply at any time.
We propose in paragraph (c) of this section that, if at any time
the Secretary determines that a foreign program is not equivalent, the
Secretary may withdraw the equivalency status. Termination of the
equivalency status will be effective upon receipt by the foreign
organic program of the notice.

Maintenance of Eligibility for Importation--Section 205.483

In order to determine if a foreign organic certification program
continues to be eligible to import agricultural products into the
United States that are to be sold or labeled as organic, we propose in
section 205.483 that reviews of the foreign organic certification
program be conducted periodically to reevaluate whether the program
continues to be equivalent. The Secretary will review, as a part of the
reevaluation, documents and other information related to the conduct of
the foreign organic certification program, including any amendments
made to the program requirements since its last evaluation. Continuance
of the eligibility for importation of products produced and handled
under a program would depend on the results of these reviews and the
timely submissions of all documents and other information needed for
the review.

List of Subjects in 7 CFR Part 205

Administrative practice and procedure, Agriculture, Animals,
Archives and records, Foods, Imports, Labeling, Organically produced
products, Plants, Reporting and recordkeeping requirements, Seals and
insignia, Soil conservation.

For the reasons set forth in the preamble, it is proposed that
Title 7, Chapter I of the Code of Federal Regulations be amended as
follows:
1. Parts 205 through 209, which are currently reserved in
subchapter K (Federal Seed Act), are removed.
2. A new subchapter M consisting of parts 205 through 209 is added
to read as follows:

SUBCHAPTER M--ORGANIC FOODS PRODUCTION ACT PROVISIONS

PART 205--NATIONAL ORGANIC PROGRAM

Subpart A--Definitions

Sec.
205.1 Meaning of words.
205.2 Terms defined.

Subpart B--Organic Crop and Livestock Production and Handling
Requirements

205.3 Applicability.
205.4 [Reserved]

Organic Crop Production Requirements

205.5 Land requirements.
205.6 Crop rotation.
205.7 Soil fertility and crop nutrient management.
205.8 Selection and use of seeds, seedlings and planting stock.
205.9 Prevention and control of crop pests, weeds, and diseases.
205.10 [Reserved]
205.11 Wild crop harvesting.

Organic Livestock Production Requirements

205.12 Origin of livestock.
205.13 Livestock feed.
205.14 Livestock health care.
205.15 Livestock living conditions and manure management.

Organic Handling Requirements

205.16 Product composition.
205.17 Processing practices.
205.18 Prevention and control of facility pests.
205.19 Prevention of commingling and contact with prohibited
substances.

The Use of Active Synthetic Substances, Non-synthetic Substances, Non-
Agricultural (Non-organic) Substances and Non-organically Produced
Ingredients in Organic Farming and Handling Operations, Including the
National List of Allowed and Prohibited Substances

205.20 General rules for categories of substances and ingredients
permitted for use in organic farming and handling.
205.21 General rules for categories of substances and ingredients
prohibited for use in organic farming and handling.

The National List of Allowed and Prohibited Substances

205.22 Active synthetic substances allowed for use in organic crop
production.
205.23 Non-synthetic substances prohibited for use in organic crop
production.
205.24 Active synthetic substances allowed for use in organic
livestock production.
205.25 Non-synthetic substances prohibited for use in organic
livestock production.
205.26 Non-agricultural (non-organic) substances allowed as
ingredients in or on processed products labeled as organic or made
with certain organic ingredients.
205.27 Non-organically produced agricultural products allowed as
ingredients in or on processed products labeled as organic or made
with certain organic ingredients.
205.28 Amending the National List.
205.29--205.99 [Reserved]

Subpart C--Labels, Labeling, and Market Information

205.100 Agricultural products in packages sold, labeled or
represented as organic.
205.101 Agricultural products in packages sold, labeled or
represented as made with certain organic ingredients.
205.102 Multi-ingredient agricultural products that only represent
the organic nature of such ingredients in the ingredients statement.
205.103 Use of terms or statements that directly or indirectly
imply that a product is organically produced and handled.
205.104 Informational statements prohibited.
205.105 Agricultural products in a form other than packages that
are sold, labeled or represented as organic or made with certain
organic ingredients.
205.106 Agricultural products produced on an exempt farm or
handling operation.
205.107 The USDA seal.
205.108--205.200 [Reserved]

Subpart D--Certification

205.201 What has to be certified.
205.202 Exemptions and exclusions from certification.
205.203 General requirements for certification.
205.204 Applying for certification.
205.205 Organic plan.
205.206 Statement of compliance.
205.207 Preliminary evaluation of an application for certification.
205.208 Arranging for inspections.
205.209 [Reserved]
205.210 Verification of information.
205.211 Post-inspection conference.
205.212 Reporting to the certifying agent.
205.213 Additional inspections.
205.214 Approval of certification.
205.215 Denial of certification.
205.216 Recordkeeping.
205.217 Continuation of certification.
205.218 Notification of non-compliance with certification
requirements.
205.219 Termination of certification.
205.220 Notification of certification status.
205.221--205.299 [Reserved]

Subpart E--Accreditation of Certifying Agents

205.300 Areas of accreditation.
205.301 General requirements for accreditation.
205.302 Applying for accreditation.
205.303 Information to be submitted by an accreditation applicant.
205.304 Evidence of expertise and ability to be submitted by an
accreditation applicant.
205.305 Statement of agreement to be submitted by an accreditation
applicant.
205.306 Approval of accreditation.
205.307 Denial of accreditation.
205.308 Maintaining accreditation.
205.309 Site evaluations.
205.310 [Reserved]
205.311 Peer review panel.
205.312 Confirmation of accreditation.
205.313 Denial of confirmation.

[[Page 65936]]

205.314 Continued accreditation.
205.315 Notification of non-compliance with accreditation
requirements.
205.316 Termination of accreditation.
205.317--205.400 [Reserved]

Subpart F--Additional Regulatory Functions

State Programs

205.401 Requirements of State programs.
205.402 Approval of State programs and program amendments.
205.403 Review of approved programs.
205.404-205.420 [Reserved]

Fees

205.421 Fees for accreditation applicants and accredited certifying
agents.
205.422 Fees for certified operations.
205.423 Fees for import programs.
205.424 Payment of fees and other charges.
205.425-205.429 [Reserved]

Compliance Review and Other Testing

205.430 Compliance review.
205.431 Preharvest tissue testing.
205.432 Emergency pest or disease treatment.
205.433 Reporting the application of a prohibited substance.
205.434-205.451 [Reserved]

Appeals

205.452 General.
205.453-205.479 [Reserved]

Equivalency of Imported Organic Products

205.480 Equivalency of agricultural products for importation into
the United States.
205.481 Determination of the equivalency of foreign programs.
205.482 Process for establishing equivalency of foreign programs.
205.483 Maintenance of eligibility for importation.
205.484-205.999 [Reserved]

Authority: 7 U.S.C. 6501-6522.

PART 205--NATIONAL ORGANIC PROGRAM

Subpart A--Definitions

Sec. 205.1 Meaning of words.

For the purpose of the regulations in this subpart, words in the
singular form shall be deemed to impart the plural and vice versa, as
the case may demand.

Sec. 205.2 Terms defined.

Accreditation. A determination made by the Secretary that
authorizes a governing State official or private person to conduct
certification activities as a certifying agent under this part.
Act. The Organic Foods Production Act of 1990, as amended (7 U.S.C.
6501 et seq.).
Active ingredient in any input other than pesticide formulations.
Any substance, that when used in a system of organic farming or
handling, becomes a chemically functional part of that system; is a
labeled ingredient or food additive; or is a substance that is
otherwise of significant consequence to the production, handling and
integrity of an organically produced agricultural product.
Active ingredient in pesticide formulations. Any substance (or
group of structurally similar substances) as specified by the EPA in 40
CFR 152.3(b), that will prevent, destroy, repel or mitigate any pest,
or that functions as a plant regulator, desiccant, or defoliant, within
the meaning of section 2(a) of the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended (7 U.S.C. 136(a)).
Administrator. The Administrator for the Agricultural Marketing
Service (AMS), United States Departure of Agriculture, or the
representative to whom authority has been delegated to act in the stead
of the Administrator.
Agricultural product. Any agricultural commodity or product,
whether raw or processed, including any commodity or product derived
from livestock that is marketed in the United States for human or
livestock consumption.
Agroecosystem. A system consisting of the functions, interactions,
and balances of biological, hydrological, geological, and other
environmental elements that are found within a given farm operation.
Allowed synthetic. A substance that is included on the National
List of synthetic substances allowed for use in organic farming.
Animal drug. Any drug as defined in Section 201 of the Federal
Food, Drug and Cosmetic Act, as amended (21 U.S.C. 321) that is
intended for use in livestock, including any drug intended for use in
livestock feed, but not including such livestock feed.
Annual seedling. A plant grown from seed that will complete its
life cycle or produce a harvestable yield within the same crop year or
season in which it was planted.
Area of operations. The types of operations: crops, livestock, wild
crop harvesting, handling, or any combination thereof, that a
certifying agent may be accredited to certify under this part.
Audit trail. Documentation that is sufficient to determine the
source, transfer of ownership and transportation of any agricultural
product labeled as organic or made with certain organic ingredients, or
of any agricultural product identified as organic in an ingredients
statement.
Biodegradable. Subject to biological decomposition into simpler
biochemical or chemical components.
Biologics. All viruses, serums, toxins, and analogous products of
natural or synthetic origin, such as diagnostics, antitoxins, vaccines,
live microorganisms, killed microorganisms and the antigenic or
immunizing components of microorganisms intended for use in the
diagnosis, treatment or prevention of diseases of animals.
Botanical pesticides. Natural (non-synthetic) pesticides derived
from plants.
Breeding. Selection of plants or animals to reproduce desired
characteristics in succeeding generations.
Buffer area. An area located between a certified farm or portion of
a farm, and an adjacent land area that is not maintained under organic
management. A buffer area must be sufficient in size or other features
(e.g., windbreaks or a diversion ditch) to prevent the possibility of
unintended contact by prohibited substances applied to adjacent land
areas with an area that is part of a certified operation.
Cation balancing agent. A mineral substance applied to the soil to
adjust the ratio among positively charged (cation) nutrients on soil
colloids. The major cation nutrients are calcium (Ca), magnesium (Mg),
and potassium (K), and the cation micronutrients include iron (Fe),
zinc (Zn), copper (Cu) and manganese (Mn).
Certification or certified. A determination made by a certifying
agent that a farm, wild crop harvesting, or handling operation is in
compliance with the Act and the regulations in this part, which is
documented by a certificate that identifies the entity certified, the
effective date of certification, and the types of agricultural products
for which certification is granted.
Certification activities. Activities conducted by a certifying
agent in regard to certification applicants or certified farms,
handling operations and wild crop harvesting operations.
Certification applicant. A producer or handler of agricultural
products who applies to a certifying agent for certification.
Certified facility. A processing, manufacturing, livestock housing
or other site or structure maintained or operated to grow, raise or
handle organically produced agricultural products that is part of a
certified organic farm, a certified organic wild crop harvesting
operation, or a certified organic handling operation.
Certified organic farm. A farm, or portion of a farm, or site,
where agricultural products or livestock are

[[Page 65937]]

produced, that is certified by the certifying agent under the Act as
utilizing a system of organic farming as described by the Act and
regulations in this part.
Certified organic handling operation. An operation, or portion of a
handling operation, that is certified by a certifying agent as
utilizing a system of organic handling as described under the Act and
the regulations in this part.
Certified organic wild crop harvesting operation. An operation, or
portion of an operation, that is certified by a certifying agent as
harvesting wild crops in compliance with the Act and the regulations in
this part.
Certifying agent. The chief executive officer of a State or, in the
case of a State that provides for the Statewide election of an official
to be responsible solely for the administration of the agricultural
operations of the State, such official, and any person (including
private entities) who is accredited by the Secretary as a certifying
agent for the purpose of certifying a farm, wild crop harvesting
operation, or handling operation as a certified organic farm, wild crop
harvesting, or handling operation.
Certifying agent's operation. All sites, facilities, personnel and
records used by a certifying agent to conduct certification activities
under the Act and the regulations in this part.
Chapter. A subsidiary organizational unit of a certifying agent
that conducts certification activities in a manner consistent with
relevant policies and procedures developed by the certifying agent in
accordance with the Act and the regulations of this part.
Commercially available. The ability to obtain a production input in
an appropriate form, quality, and quantity to be feasibly and
economically used to fulfill an essential function in a system of
organic farming and handling.
Commingling. Physical contact between unpackaged organically
produced and non-organically produced agricultural products during
production, transportation, storage or handling, other than during the
manufacture of a multi-ingredient product containing both types of
ingredients.
Compost. A process that creates conditions that facilitate the
controlled decomposition of organic matter into a more stable and
easily handled soil amendment or fertilizer, usually by piling,
aerating and moistening; or the product of such a process.
Confirmation of accreditation. A determination made by the
Secretary following the receipt of an AMS site evaluation report and
peer review panel reports that a certifying agent is operating in
compliance with the Act and regulations in this part.
Contaminant. A residue of a prohibited substance that persists in
the environment.
Control. Any method that reduces or limits damage by, or
populations of, pests, weeds or diseases to levels that do not
significantly reduce productivity.
Critical control point. Any point, step or procedure in a certified
production or handling operation where loss of control may result in a
loss of an organic product's integrity, such as the commingling of
organic products with non-organic products or contact of organic
products with prohibited substances.
Crop. A plant or part of a plant intended to be marketed as an
agricultural product or fed to livestock.
Crop residues. The plant parts remaining in a field after the
harvest of a crop, which include stalks, stems, leaves, roots and
weeds.
Crop rotation. The practice of alternating the annual crops grown
on a specific field in a planned pattern or sequence in successive crop
years, so that crops of the same species or family are not grown
repeatedly without interruption on the same field during two or more
crop years.
Crop year. That normal growing season for a crop as determined by
the Secretary.
Cultivation. Digging up or cutting the soil to prepare a seed bed,
control weeds, aerate the soil or work organic matter, crop residues or
fertilizers into the soil.
Cultural. Methods used to enhance crop and livestock health and
prevent weed, pest or disease problems without the use of substances;
examples include the selection of appropriate varieties and planting
sites; selection of appropriate breeds of livestock; providing
livestock facilities designed to meet requirements of species or type
of livestock; proper timing and density of plantings; irrigation; and
extending a growing season by manipulating the microclimate with green
houses, cold frames, or wind breaks.
Cytotoxic mode of action. Having a toxic effect by means of
interference with normal cell functions.
Degradation. Measurable evidence of damage or adverse effects over
the course of two or more crop years, as determined by monitoring one
or more indicators of soil or water quality.
Detectable residue level. The level of a pesticide or other
prohibited substance that is 5 percent or greater of the established
EPA tolerance level, as set forth in 40 CFR Parts 180, 185, and 186,
for the product that was tested, provided that if there is no tolerance
level established, but an action level has been established, the
detectable residue level will be the action level established by FDA
for the product tested.
Disease vectors. Plants or animals that harbor and carry disease
organisms which may attack crops or livestock.
Emergency pest or disease treatment program. A mandatory program
authorized by a State, federal or local agency for the purpose of
controlling or eradicating a pest or disease.
Employee. Any person who will be involved in certification
decisions.
Extract. The action of producing a substance by a process of
dissolving the soluble fractions of a plant, animal or mineral in water
or another solvent; or the product thereof.
Farm. An agricultural operation maintained for the purpose of
producing agricultural products.
Fertilizer. A single or blended substance applied to the soil to
supply any of the three primary plant nutrients, nitrogen (N),
phosphorus (P) and potassium (K), needed for the growth of plants.
Field. An area of land identified as a discrete unit within a farm
operation.
Foliar nutrient. Any liquid substance applied directly to the
foliage of a growing plant for the purpose of delivering essential
nutrient(s) in an immediately available form.
Formulated product. A commercial product composed of more than one
substance.
Fungicide. Any substance that kills fungi or molds.
Generic name. The general or scientific name of a substance that is
not a trade name.
Genetic engineering. Genetic modification of organisms by
recombinant DNA techniques.
Governing State official. The chief executive official of a State
or, in the case of a State that provides for the Statewide election of
an official to be responsible solely for the administration of the
agricultural operations of the State, such official, who administers an
organic certification program under the Act.
Handle. To sell, process, or package agricultural products.
Handler. Any person engaged in the business of handling
agricultural products, except such term shall not include final
retailers of agricultural products that do not process agricultural
products.
Handling operation. Any operation or portion of an operation
(except final retailers of agricultural products that do not process
agricultural products) that receives or otherwise acquires

[[Page 65938]]

agricultural products and processes, packages, or stores such products.
Incidental additive. An additive present in agricultural products
at an insignificant level that does not have any technical or
functional effect in the product and is therefore not an active
ingredient.
Inert ingredient in any input other than pesticide formulations.
Any substance other than an active ingredient intentionally included in
any product used in organic crop production.
Inert ingredient in pesticide formulations. Any substance (or group
of structurally similar substances if designated by the EPA) other than
an active ingredient which is intentionally included in a pesticide
product (40 CFR 152.3(m)).
Information panel. That part of the label of a packaged product
that is immediately contiguous and to the right of the principal
display panel as observed by an individual facing the principal display
panel, unless another section of the label is designated as the
information panel because of package size or other package limitations.
Ingredients statement. The listing of the ingredients contained in
a product listed by their common and usual names in the descending
order of predominance.
Inspector. Any person retained or used by a certifying agent who is
qualified to conduct inspections of certification applicants or
certified farms, handling operations or wild crop harvesting
operations.
Intentionally applied. The deliberate use of a substance on a
certified organic farm or handling operation.
Label. Any display of written, printed, or graphic material on the
immediate container of an agricultural product, or any such material
affixed to any agricultural product or affixed to a bulk container
containing an agricultural product, except for a display of written,
printed, or graphic material which contains only information about the
weight of the product.
Labeling. All written, printed, or graphic material accompanying an
agricultural product at any time, or written, printed, or graphic
material about the agricultural product displayed at retail stores for
the product.
Livestock. Any cattle, sheep, goats, swine, poultry, equine animals
used for food or in the production of food, fish used for food, wild or
domesticated game, or other nonplant life.
Made with certain organic ingredients. An agricultural product
wherein organic agricultural products used as ingredients comprise at
least 50 percent, but less than 95 percent, of the total weight of the
finished product, excluding water and salt; additionally, the
percentage of the total weight of the finished product, excluding water
and salt, that is not comprised of organic agricultural products is
some combination of non-agricultural ingredients and/or non-organically
produced agricultural products included on the National List.
Market information. Any written, printed, audio-visual or graphic
information, including advertising, pamphlets, flyers, catalogues,
posters and signs, that are used to assist in the sale or promotion of
a product.
Mating disrupter. A biochemical substance that serves to prevent
pest insects from reproducing by interfering with their ability to
locate a suitable mate.
Micronutrient. A soil or crop mineral nutrient required in very
small quantities.
Mulch. Any material, such as wood chips, leaves, straw, paper or
plastic that serves to suppress weed growth, moderate soil temperature
or conserve soil moisture.
National list. A list of allowed and prohibited substances as
provided for in section 2118 of the OFPA (7 U.S.C. 6517).
National organic program. The program authorized by the Act for the
purpose of implementing its provisions.
National Organic Standards Board. A Board established by the
Secretary under 7 U.S.C. 6518 to assist in the development of standards
for substances to be used in organic production and to advise the
Secretary on any other aspects of the implementation of the National
Organic Program.
Non-active residues. Any synthetic substance that does not appear
on the National List of synthetic substances allowed for use, any non-
synthetic substance that appears on the National List of non-synthetic
substances prohibited for use, or any non-synthetic (natural) poison
(such as arsenic or lead salts) that has long-term effects and persists
in the environment, and which occurs in a very small quantity as a non-
active substance in a production input or water.
Non-agricultural ingredient. A substance that is not a product of
agriculture, such as a mineral or a bacterial culture, that is used as
an ingredient in an agricultural product. For the purposes of this
part, a non-agricultural ingredient also includes any substance, such
as gums, citric acid or pectin, that is extracted, isolated from, or is
a fraction of an agricultural product, so that the identity of the
agricultural product is unrecognizable in the extract, isolate or
fraction.
Non-organic agricultural ingredient or product. An agricultural
ingredient or product that has not been produced or handled in
accordance with the Act and the regulations in this part.
Non-synthetic (natural). A substance that is derived from mineral,
plant or animal matter and does not undergo a synthetic process as
defined in section 2103(21) of the OFPA (7 U.S.C. 6502(21)). For the
purposes of this part, non-synthetic is used as a synonym for natural
as the term is used in the Act.
Non-toxic. Not known to cause any adverse physiological effects in
animals, plants, humans or the environment.
Organic. A term that refers to a raw agricultural product produced
in accordance with the Act and the regulations in this part; or, to an
agricultural product wherein organic agricultural products used as
ingredients comprise between 95 percent and 100 percent of the total
weight of the finished product, excluding water and salt; additionally,
the percentage of the total weight of the finished product, excluding
water and salt, that is not comprised of organic agricultural products
is some combination of non-agricultural ingredients and/or non-
organically produced agricultural products included on the National
List.
Organic matter. The remains, residues or waste products of any
living organism.
Organic plan. A plan of management of an organic farming or
handling operation that has been agreed to by the producer or handler
and the certifying agent and that includes written plans concerning all
aspects of agricultural production or handling described in the Act and
the regulations in subpart B of this part, including crop rotation and
other practices as required under the Act.
Package. A container or wrapping that bears a label and which
encloses an agricultural product, except for agricultural products in
bulk containers, shipping containers, or shipping cartons.
Packaging. Material used to wrap, cover, or contain an agricultural
product, including wax applied directly to an edible surface of an
agricultural product.
Peer review panel. A panel of individuals who have expertise in
organic farming and handling methods and certification procedures, and
who are appointed by the Administrator to assist in evaluating the
performance of a certifying agent.

[[Page 65939]]

Person. An individual, group of individuals, corporation,
association, organization, cooperative, or other entity.
Pesticide. Any substance which alone, in chemical combination, or
in any formulation with one or more substances, is defined as a
pesticide in section 2(u) of the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. 136(u) et seq.).
Petition. A request to amend the National List that is submitted by
any person in accordance with this part.
Planting stock. Any plant or plant tissue, including rhizomes,
shoots, leaf or stem cuttings, roots or tubers used in plant production
or propagation.
Preliminary evaluation. A determination made by a certifying agent,
prior to an initial inspection of the operation to be certified, as to
whether a person seeking certification of an operation may be in
compliance with the regulations in this part.
Principal display panel. That part of a label that is most likely
to be displayed, presented, shown, or examined under customary
conditions of display for sale.
Processing. Cooking, baking, heating, drying, mixing, grinding,
churning, separating, extracting, cutting, fermenting, eviscerating,
preserving, dehydrating, freezing, or otherwise manufacturing, and
includes the packaging, canning, jarring, or otherwise enclosing food
in a container.
Processing methods. Mechanical, biological and chemical procedures
used in the preparation of an agricultural product for market.
Producer. A person who engages in the business of growing or
producing food or feed.
Production aid. A substance, material, structure, or device, but
not an organism, which may or may not be an active ingredient and may
or may not be a synthetic substance, used to significantly aid a
producer or handler to produce, handle, or maintain the integrity of,
an agricultural product during, production, handling and marketing.
Production input. A substance or agricultural product that is used
to produce or handle an agricultural product.
Prohibited substance. A substance whose use in any aspect of
organic production or handling is prohibited or not provided for in the
Act or the regulations in subpart B of this part.
Proper manuring. Any use or application of plant or animal
materials, including green manure crops, so as to improve soil
fertility, especially its organic content, including the use of compost
and other recycled organic wastes whether or not they contain livestock
manure.
Putrefaction. Partial anaerobic decomposition of organic matter so
that it releases noxious oxidation products and gases, attracts vermin,
or harbors pathogens.
Records. Any information in written, visual, or electronic form
that documents the activities undertaken by a producer, handler, or
certifying agent to comply with the Act and regulations in this part.
Records include questionnaires, affidavits, inspection reports, field
or production logs, maps or facility diagrams, receipts, invoices,
billing statements, bills of lading, inventory control documents,
laboratory analysis reports, minutes of meetings, personnel files,
correspondence, photographs and other materials.
Responsibly connected. Any person who is a partner, officer,
director, holder, manager, or owner of 10 per centum or more of the
voting stock of an applicant or a recipient of certification or
accreditation.
Routine use of parasiticide. Administering a parasiticide to an
animal without cause.
Secretary. The Secretary of Agriculture or a representative to whom
authority has been delegated to act in the Secretary's stead.
Site evaluation. An examination of a certifying agent's operations
and records at its places of business for the purpose of determining,
reviewing or evaluating accreditation status under these regulations.
Slaughter stock. Any animal that is intended to be slaughtered for
human consumption.
Soil amendment. Substance or material applied to the soil as a
production input to improve its physical qualities or biological
activity, complement or increase soil organic matter content, or
complement or adjust a soil nutrient level.
Soil quality. Observable indicators of the physical, chemical or
biological condition of soil.
Split operation. An organic farming operation that also produces
crops or livestock that are not organically produced in accordance with
the Act and the regulations of this part.
State. Any State, Territory, the District of Columbia, or the
Commonwealth of Puerto Rico.
State organic certification program. A program that meets the
requirements of section 2107 of the OFPA (7 U.S.C. 6506), is approved
by the Secretary, and is designed to ensure that an agricultural
product that is sold or labeled as organically produced under the Act
is produced and handled using organic methods.
Subtherapeutic. Administration of an animal drug, at levels that
are below the levels used to treat clinically sick animals, for the
purpose of increasing weight gain or improving feed efficiency.
Suspension of accreditation. An action taken by the Secretary that
results in a certifying agent losing its authority to carry out
certification activities.
Synergist. A substance that is an active ingredient which enhances
the activity or efficiency of another substance, thereby reducing the
amount of other active ingredients needed to achieve the desired
function or result.
Synthetic. A substance that is formulated or manufactured by a
chemical process or by a process that chemically changes a substance
extracted from naturally occurring plant, animal, or mineral sources,
except that such term shall not apply to substances created by
naturally occurring biological processes.
Synthetic volatile solvent. A synthetic substance used as a
solvent, which evaporates readily, such as hexane or isopropyl alcohol.
System of organic farming and handling. A system that is designed
to produce agricultural products by the use of methods and substances
that maintain the integrity of organic agricultural products until they
reach the consumer. This is accomplished by using, where possible,
cultural, biological and mechanical methods, as opposed to using
substances, to fulfill any specific function within the system so as
to: maintain long-term soil fertility; increase soil biological
activity; ensure effective pest management; recycle wastes to return
nutrients to the land; provide attentive care for farm animals; and
handle the agricultural products without the use of extraneous
synthetic additives or processing in accordance with the Act and
regulations in this part.
Transplant. An annual seedling grown on a certified organic farm
and transplanted to a field on the same farm operation to raise an
organically produced crop.
Treated. A seed, plant propagation material or other material
purchased for use as a production input in an organic farming or
handling operation that has been treated or combined with a synthetic
pesticidal substance (that does not appear on the National List) prior
to having been purchased.
Unavoidable residual environmental contamination. The residue level
of a prohibited substance, as determined by the Secretary in
consultation with the

[[Page 65940]]

applicable governing State official and the appropriate environmental
regulatory agencies, that could be expected to exist in the soil at, or
in a product originating from, a specific production site to which the
prohibited substance had not been applied for a minimum of three years.
Untreated seeds. Seeds that have not been treated with a prohibited
substance.
USDA Seal. The logo described in Sec. 205.107 of subpart C of this
part.
Weed. Any plant that directly competes or interferes with the
growth or harvest of a crop.
Wild crop. Any plant or portion of a plant that is collected or
harvested from an area of land that is not maintained under cultivation
or other agricultural management.

Subpart B--Organic Crop and Livestock Production and Handling
Requirements

Sec. 205.3 Applicability.

(a) Any agricultural product that is sold, labeled, or represented
as organic shall be:
(1) Produced in accordance with the requirements specified in
Sec. 205.3 and Secs. 205.5 through 205.9, or Secs. 205.12 through
205.15, and all other applicable requirements of part 205 on a
certified organic farm; or
(2) Harvested, if a wild crop, in accordance with the requirements
specified in Sec. 205.11 and all other applicable requirements of part
205; and
(3) Handled in accordance with the requirements specified in
Sec. 205.3 and Secs. 205.16 through 205.19 and all other applicable
requirements of part 205 in a certified organic handling operation.
(b) A method or substance that is used in accordance with this
subpart shall be used in accordance with all applicable requirements of
part 205 and shall be selected and used such that:
(1) Use or application of the practice or substance does not result
in measurable degradation of soil or water quality; and
(2) A commercially available non-synthetic (natural) substance is
selected in preference to an allowed synthetic substance if the two
substances are equally suitable for the intended purpose and there is
no discernable difference between the two substances in terms of their
effects on soil or water quality.

Sec. 205.4 [Reserved]

Organic Crop Production Requirements

Sec. 205.5 Land requirements.

(a) Any field or farm parcel from which organically produced crops
are intended to be harvested shall:
(1) Have had no prohibited substances, as delineated in the
categories of substances prohibited for use in organic farming and
handling set forth in Sec. 205.21, applied to it for a period of three
years immediately preceding harvest of the crop; and
(2) Have clearly defined and identifiable boundaries.
(b) If organically managed land adjoins any area that is not under
organic management, a producer shall implement, or include in the
organic plan a proposal to implement, physical barriers, diversion of
runoff, buffer areas or other means to prevent the possibility of
unintended application of a prohibited substance to the land or contact
of a prohibited substance with the land on which organically produced
crops are grown.

Sec. 205.6 Crop rotation.

A crop rotation or other means of ensuring soil fertility and
effective pest management in any field or farm parcel shall be
established.

Sec. 205.7 Soil fertility and crop nutrient management.

(a) Tillage and cultivation. Tillage and cultivation implements and
practices shall be selected and used in a manner that does not result
in measurable degradation of soil quality.
(b) Proper manuring. Composted or uncomposted plant or animal
materials used to replenish soil organic matter content and essential
crop nutrients shall be selected according to the following order of
preference, and used in a manner that does not significantly contribute
to water contamination by nitrates and bacteria, including human
pathogens, or result in other measurable degradation of soil or water
quality:
(1) Any composted materials, except those materials provided for in
paragraphs (b)(4) and (5) of this section;
(2) Any uncomposted materials of plant or animal origin, including
aged, fully decomposed animal manure, that are not known to have a high
soluble nutrient content or that are not prone to putrefaction.
(3) Any materials of plant or animal origin that are known to have
a high soluble nutrient content or that are prone to putrefaction.
(4) Plant or animal waste materials that contain non-active
residues of substances may be applied, Provided, That the plant or
animal material is composted prior to application, and Provided,
Further That levels of any non-active residues detected in the raw
plant or animal waste materials do not increase in the soil.
(5) Chemically altered plant and animal waste materials may be
applied, Provided, That such material appears on the National list of
active synthetic substances allowed for use in organic crop production
provided for in Sec. 205.22, and Provided, Further That levels of any
non-active synthetic residues or heavy metals detected in the plant or
animal waste materials do not increase in the soil.
(c) Providing mineral nutrients. A substance used as a source of
major nutrients or micronutrients shall be selected from the following:
(1) A non-synthetic substance of low solubility may be added to
soil, including:
(i) A non-synthetic mineral having a low solubility and salt index;
(ii) A substance extracted from a plant or animal substance or from
a mined mineral; and
(iii) Ash obtained from the burning of a plant or animal material,
except as prohibited in paragraphs (d) (2) or (3) of this section,
Provided, That the material burned has not been treated or combined
with a prohibited substance, or the ash is not included on the National
List of non-synthetic substances prohibited for use in organic crop
production.
(2) A highly soluble or synthetic substance may be added to soil to
correct a known nutrient deficiency, Provided, That its use does not
result in measurable degradation of soil or water quality. Highly
soluble or synthetic substances include:
(i) A synthetic substance included on the National List of active
synthetic substances allowed for use in organic crop production applied
as a source of micronutrients, Provided, That the substance is not
applied in a manner intended to be herbicidal;
(ii) A non-synthetic mineral that is highly soluble and has a high
salt index; or
(iii) A cation balancing agent, Provided, That the specific cation
balancing agent appears on the National List of active synthetic
substances allowed for use in organic crop production if it is
synthetic or of unknown origin.
(d) Prohibited. The following methods or substances are prohibited
for use in soil fertility and crop nutrient management:
(1) The use of any fertilizer or commercially blended fertilizer
that

[[Page 65941]]

contains an active synthetic substance not allowed for use in crop
production as provided for in Sec. 205.22, or that contains an active
prohibited substance;
(2) The use of ash obtained from the disposal of manure by burning;
and
(3) The burning of manure or crop residues produced on the farm as
a means of disposal.

Sec. 205.8 Selection and use of seeds, seedlings and planting stock.

(a) Organically produced seeds and planting stock, including annual
seedlings and transplants, shall be used, except that non-organically
produced seeds and planting stock may be used to produce an organic
crop when an equivalent organically produced variety is not
commercially available, and Provided, That:
(1) Treated seeds are used only when untreated seeds of the same
variety are not commercially available or unanticipated or emergency
circumstances make it infeasible to obtain untreated seeds; and
(2) Untreated planting stock is selected in preference to treated
planting stock whenever there is a choice.
(b) Non-organically produced planting stock to be used as planting
stock to produce a perennial crop may be sold, labeled or represented
as organically produced only after the planting stock has been
maintained under a system of organic management on a certified organic
farm for a period of no less than one crop year.
(c) Prohibited. Transplants that have been treated with a
prohibited substance are prohibited for use as planting stock.

Sec. 205.9 Prevention and control of crop pests, weeds, and diseases.

(a) Pests, weeds, and diseases in crops shall be prevented by
practices including, but not limited to:
(1) Crop rotation or other means provided for in Sec. 205.6;
(2) Replenishment and maintenance of soil fertility in accordance
with Sec. 205.7;
(3) Sanitation measures to remove disease vectors, weed seeds and
habitat for pest organisms; and
(4) Cultural practices that enhance crop health, including
selection of plant species and varieties with regard to suitability to
site-specific conditions and resistance to prevalent pests, weeds and
diseases.
(b) If pest prevention measures provided for in paragraph (a) of
this section are not effective, pest problems shall be controlled
through:
(1) Augmentation or introduction of predators or parasites of the
pest species;
(2) Mechanical or physical controls; or
(3) Non-synthetic, non-toxic controls such as lures and repellents.
(c) If weed prevention measures provided for in paragraph (a) of
this section are not effective, weeds shall be controlled through:
(1) Mulching with fully biodegradable materials;
(2) Livestock grazing;
(3) Mechanical, heat or electrical means; or
(4) Plastic or other synthetic mulches, Provided, That they are
removed from the field at the end of the growing or harvest season.
(d) If disease prevention measures provided for in paragraph (a) of
this section are not effective, plant diseases shall be controlled
through practices that suppress the spread of disease organisms,
including, but not limited to, steam sterilization of growing media.
(e) If the practices provided for in paragraphs (a) through (d) of
this section are not effective to prevent or control crop pests, weeds
and diseases, the following substances may be used Provided, That its
use does not result in measurable degradation of soil or water quality:
(1) Any non-synthetic biological or botanical substance, or
synthetic substance that is included on the National List of active
synthetic substances allowed for use in crop production, may be applied
to prevent, suppress or control pests, weeds or diseases.
(2) A synthetic substance that is included on the National List of
active synthetic substances allowed for use in crop production may be
used to defoliate cotton.
(f) Prohibited. A synthetic carbon-based substance that functions
through a cytotoxic mode of action shall not be applied for any
prevention or control purpose.

Sec. 205.10 [Reserved]

Sec. 205.11 Wild crop harvesting.

(a) Any land from which a wild crop intended to be sold, labeled or
represented as organic is harvested shall have had no prohibited
substance, as delineated in the categories of substances prohibited for
use in organic farming and handling set forth in Sec. 205.21, applied
to it for a period of three years immediately preceding the harvest of
the wild crop and at any time thereafter.
(b) A wild crop shall be harvested in a manner that assures that
such harvesting or gathering will not be destructive to the environment
and will sustain the growth and production of the wild crop.

Organic Livestock Production Requirements

Sec. 205.12 Origin of livestock.

(a) Origin of livestock. Livestock on a certified organic farm that
themselves or their products are to be sold, labeled, or represented as
organically produced shall have been under organic management from
birth or hatching, or shall be the offspring of parents who have been
under organic management, except that:
(1) Breeder stock. Livestock may be designated as breeder stock for
offspring that are to be raised as organic livestock upon entry onto a
certified facility, Provided, That, if such livestock is a gestating
mammal, she must be brought onto the certified facility prior to the
last third of pregnancy;
(2) Dairy livestock. Livestock may be designated as organic dairy
livestock from which milk or milk products obtained therefrom can be
sold, labeled or represented as organically produced, Provided, That
she is brought onto a certified facility beginning no later than 12
months prior to the production of the milk or milk products that are to
be sold, labeled or represented as organic;
(3) Poultry. Poultry may be designated as organic poultry from
which meat or eggs obtained therefrom can be sold, labeled or
represented as organically produced, Provided, That they are brought
onto a certified facility beginning no later than the second day of
life;
(4) Livestock used for the production of non-edible livestock
products. Livestock may be designated as livestock from which skin,
fur, feathers, fibers and all non-edible products obtained therefrom
can be sold, labeled or represented as organically produced, Provided,
That such livestock are brought onto a certified facility in accordance
with one of the subparagraphs of paragraph (a) of this section and,
Provided, Further That any livestock not raised under organic
management from birth or hatching shall have been under organic
management no less than 90 days prior to harvest of the non-edible
product intended to be sold, labeled, or represented as organic; and
(5) Other livestock. Livestock, other than those described in
paragraphs (a)(1) through (4) of this section, may be designated as
organic livestock from which edible products obtained therefrom, can be
sold, labeled, or represented as organically produced, if brought onto
a certified facility:

[[Page 65942]]

(i) At any stage of life for bees;
(ii) If necessary, no later than the 15th day of life for mammalian
livestock of non-organic origin to be designated as organic slaughter
stock for the production of meat; or
(iii) No later than the earliest commercially available stage of
life for livestock types other than bees, or mammalian livestock
designated as slaughter stock.
(b) Prohibited. The following practices are prohibited:
(1) The switching of livestock or facilities between organic and
non-organic management methods for the purpose of circumventing any
provision of this part; and
(2) The use of hormones for breeding purposes.

Sec. 205.13 Livestock feed.

(a) Feeding of livestock. (1) Agricultural products, including
pasture and forage, that are organically produced and, if applicable,
organically handled in accordance with the Act and the regulations in
subpart B of this part shall comprise the total feed ration of
livestock under organic management, Provided, However, That if
necessary:
(i) Livestock, other than as provided for in paragraphs (a)(1)(ii)
through (iv) of this section, may receive a maximum of 20 percent of
the total feed ration in a given year that is not organically produced;
(ii) The Administrator may authorize the use of non-organic feed in
addition to the amount provided for in paragraph (a)(1)(i) of this
section in an emergency situation determined by the Administrator to
affect the commercial availability of organic feed;
(iii) An entire distinct herd of dairy livestock that is converted
to organic management for the first time may be provided with non-
organic feed until 90 days prior to the production of milk or milk
products to be sold, labeled, or represented as organic; and
(iv) Bees from which organic honey and other products are harvested
shall have access to forage organically produced in accordance with the
requirements specified in Secs. 205.3 through 205.11 so as to comprise
the predominant portion of their forage needs.
(2) Non-agricultural products provided as vitamin or mineral
supplements may be used to satisfy the health requirements of livestock
under organic management, Provided, That a synthetic supplement is
included on the list of synthetic substances permitted for use in
livestock production provided for in Sec. 205.24.
(3) Synthetic amino acid additives that appear on the list of
synthetic substances permitted for use in livestock production as set
forth in Sec. 205.24 may be fed to livestock under organic management
only as necessary for the purpose of fulfilling the nutritional
requirements of the livestock.
(b) Prohibited. The following substances or methods for the feeding
of livestock are prohibited:
(1) The use of hormones or growth promoters whether implanted,
injected, or administered orally;
(2) The use of the following for the purpose of stimulating the
growth or production of the livestock:
(i) Antibiotics or other animal drugs;
(ii) Synthetic amino acid additives or synthetic trace elements fed
above levels needed for adequate nutrition; and
(3) The feeding of plastic pellets for roughage, feed formulas
containing urea, or the refeeding of manure.

Sec. 205.14 Livestock health care.

(a) The health of livestock under organic management shall be
maintained by the implementation of preventive measures, including, but
not limited to:
(1) Providing diverse feedstuffs;
(2) Establishing appropriate housing, pasture conditions and
sanitation practices so as to minimize the occurrence and spread of
diseases and parasites;
(3) Administering veterinary biologics, vitamins and minerals; and
(4) Selecting species and types of livestock with regard to
suitability for site-specific conditions and resistance to prevalent
diseases and parasites.
(b) If the preventive measures provided for in paragraph (a) of
this section are not effective in maintaining livestock health, an
animal drug may be administered to any animal at any time of life,
except as prohibited by paragraph (d) of this section, and Provided,
That:
(1) Animal drugs, other than animal drugs administered topically or
parasiticides, may be administered to mammals intended as organic
slaughter stock only within the first 21 days of life; and
(2) Animal drugs, other than animal drugs administered topically or
parasiticides, may be administered to livestock intended as organic
slaughter stock, other than mammals, only within the first 7 days after
arrival onto a certified facility.
(c) A product from organic livestock to which an animal drug has
been administered shall be obtained and thereafter sold, labeled, or
represented as organic only after the producer has determined that the
animal has fully recovered from the condition(s) being treated, but in
no case shall that time be less than the withdrawal period specified on
the label or labeling of the animal drug or as required by the
veterinarian.
(d) Prohibited. The following livestock health care methods are
prohibited:
(1) Administering any animal drug, other than vaccinations, in the
absence of illness;
(2) The routine use of synthetic internal parasiticides; and
(3) The subtherapeutic use of antibiotics.

Sec. 205.15 Livestock living conditions and manure management.

(a) The following living conditions shall be adequately provided,
as appropriate to the species, to promote livestock health:
(1) Protection from the elements;
(2) Space for movement;
(3) Clean and dry living conditions;
(4) Access to outside; and
(5) Access to food and clean water.
(b) If necessary, livestock may be maintained under conditions that
restrict the available space for movement or their access to the
outside, Provided, That the other living conditions specified in
paragraph (a) of this section are adequate to maintain their health
without the use of animal drugs, except as provided in Sec. 205.14(b).
(c) Manure management practices used to maintain any area in which
livestock are housed, pastured or penned shall be implemented in a
manner that:
(1) Does not result in measurable degradation of soil quality;
(2) Does not significantly contribute to contamination of water by
nitrates and bacteria, including human pathogens;
(3) Optimizes recycling of nutrients; and
(4) Does not include burning or any practice inconsistent with the
provisions of Sec. 205.14(a)(2).

Organic Handling Requirements

Sec. 205.16 Product composition.

(a) For an agricultural product, including a raw agricultural
product, sold, labeled, or represented as organic:
(1) Organically produced agricultural products shall comprise 100
percent of the total weight of the finished product, excluding water
and salt, except that not more than five percent of the total weight of
the finished product, excluding water and salt, may consist of one or
more of the following ingredients that are included on the National
List:

[[Page 65943]]

(i) Non-agricultural substances allowed as ingredients in or on
processed products sold, labeled, or represented as organic or made
with certain organic ingredients, provided for in Sec. 205.26; and
(ii) Non-organically produced agricultural products allowed as
ingredients in or on processed products sold, labeled, or represented
as organic or made with certain organic ingredients, provided for in
Sec. 205.27.
(2) An ingredient intended to be used in a processed product sold,
labeled, or represented as organic shall be selected according to the
following order of preference:
(i) An organically produced agricultural product, if commercially
available, shall be selected for use as an ingredient in preference to
a non-organically produced agricultural product or a non-agricultural
ingredient included on the National List;
(ii) A non-organically produced agricultural product, if
commercially available, shall be selected for use as an ingredient in
preference to a non-agricultural ingredient allowed on the National
List; and
(iii) A non-organically produced agricultural product or a non-
agricultural ingredient included on the National List that is extracted
without the use of a synthetic volatile solvent or which does not
contain propylene glycol as a carrier, if commercially available, shall
be selected in preference to a product or ingredient that is extracted
with a synthetic volatile solvent or which contains propylene glycol as
a carrier.
(b) For an agricultural product sold, labeled, or represented as
made with certain organic ingredients on the principal display panel:
(1) Organically produced agricultural products shall comprise at
least 50 percent, but less than 95 percent, of the total weight of the
finished product, excluding water and salt;
(2) The percentage of the total weight of the finished product,
excluding water and salt, that is not comprised of organically produced
agricultural products shall consist of one or more of the following
ingredients:
(i) Non-agricultural substances allowed as ingredients in or on
processed products sold, labeled, or represented as organic or made
with certain organic ingredients, provided for in Sec. 205.26; and
(ii) Non-organically produced agricultural products allowed as
ingredients in or on processed products sold, labeled, or represented
as organic or made with certain organic ingredients, provided for in
Sec. 205.27; and
(3) The finished product shall have been produced in compliance
with Secs. 205.16 through 205.19 of this subpart, except that the
provisions set forth in Secs. 205.16 (a) and (c) shall not apply.
(c) Multi-ingredient agricultural products that only represent the
organic nature of such ingredients in the ingredients statement and
which themselves are not sold, labeled or represented as organic or
made with certain organic ingredients shall not be subject to the
provisions of this subpart, except for the provisions for prevention of
commingling and contact of organic products by prohibited substances,
as set forth in Sec. 205.19, with respect to any organically produced
ingredients.
(d) Organic and non-organic forms of the same agricultural
ingredient shall not be combined in a product sold, labeled, or
represented as organic or made with certain organic ingredients if the
ingredient is represented as organic in the ingredient statement.
(e) The addition of the following substances to any agricultural
product intended to be sold, labeled, or represented as organic or made
with certain organic ingredients is prohibited:
(1) Any sulfites, nitrates, or nitrites; or
(2) Water that does not meet the requirements of the Safe Drinking
Water Act. (42 U.S.C. 300(f) et seq.).

Sec. 205.17 Processing practices.

(a) Mechanical or biological methods, including cooking, baking,
heating, drying, mixing, grinding, churning, separating, extracting,
cutting, fermenting, eviscerating, preserving, dehydrating, freezing or
chilling shall be used to process an agricultural product intended to
be sold, labeled, or represented as organic or made with certain
organic ingredients for the purpose of retarding spoilage or otherwise
preparing the agricultural product for market; Provided, However, That
if necessary an incidental additive, except for volatile synthetic
solvents prohibited in paragraph (b)(3) of this section, may be used to
process such agricultural product.
(b) Prohibited. The following methods and substances are prohibited
for use in the processing and preparation of a raw agricultural
product, and on a finished agricultural product, intended to be sold,
labeled, or represented as organic or made with certain organic
ingredients:
(1) Storing, coating or packaging in a storage container or bin,
including packages or packaging materials, that contain a synthetic
fungicide, preservative, or fumigant;
(2) The use or reuse of any bag or container that had previously
been in contact with any substance in such a manner as to compromise
the organic integrity of any products; and
(3) The use of a volatile synthetic solvent.

Sec. 205.18 Prevention and control of facility pests.

(a) Pest occurrence in a certified organic handling facility shall
be prevented by methods including, but not limited to:
(1) Measures to remove potential habitat of, or access to handling
facilities by, pest organisms; and
(2) Management of environmental factors, such as temperature,
light, humidity, atmosphere and air circulation to prevent pest
reproduction.
(b) If pest prevention measures provided in paragraph (a) of this
section are not effective, facility pest problems shall be controlled
through:
(1) Augmentation or introduction of predators or parasites for the
pest species;
(2) Mechanical or physical controls including, but not limited to,
traps, light or sound; or
(3) Non-toxic, non-synthetic controls, such as lures and
repellants.
(c) If pest prevention or control measures provided for in
paragraphs (a) and (b) of this section are not effective, any substance
may be used to control pests, Provided, That:
(1) The substance is approved for its intended use by the
appropriate regulatory authority; and
(2) The substance is applied in a manner that prevents such
substance from contacting any ingredient or finished product intended
to be sold, labeled, or represented as organic or made with certain
organic ingredients.

Sec. 205.19 Prevention of commingling and contact with prohibited
substances.

A certified handling operation, and a handling operation that is
exempt or excluded from certification in accordance with
Sec. 205.202(a)(3) or Sec. 205.202(b) of subpart D, shall establish, as
appropriate, adequate safeguards during the handling, storage and
transportation of organically produced products in order to:
(a) Prevent the commingling of organic and non-organic products;
and
(b) Assure that organic products and certified facilities are
protected from contact with prohibited substances.

[[Page 65944]]

The Use of Active Synthetic Substances, Non-Synthetic Substances, Non-
Agricultural (Non-Organic) Substances and Non-Organically Produced
Ingredients in Organic Farming and Handling Operations, Including the
National List of Allowed and Prohibited Substances

Sec. 205.20 General rules for categories of substances and ingredients
permitted for use in organic farming and handling.

(a) Any active synthetic substance or ingredient on the National
List, as set forth in Secs. 205.22, 205.24, 205.26 and 205.27, is
permitted for use in a certified organic farming or handling operation
in accordance with the Act and the regulations in part 205.
(b) Any other non-prohibited substance or ingredient may be used in
a certified organic farming or handling operation if used in accordance
with the Act and all other applicable provisions of part 205. These
substances or ingredients are:
(1) A non-synthetic substance that is not included on the National
List as a prohibited non-synthetic substance in either Sec. 205.23 or
Sec. 205.25;
(2) A synthetic substance or device that does not function as an
active ingredient or substance in a system of organic farming and
handling, or as an active ingredient in a processed product; and
(3) A formulated product containing inert ingredients (substances)
that is used in a certified organic farming operation, Provided, That
the formulated product does not contain:
(i) Any active ingredient prohibited under Sec. 205.21; and
(ii) Any synthetic inert ingredient classified by EPA as an inert
of toxicological concern.

Sec. 205.21 General rules for categories of substances and ingredients
prohibited for use in organic farming and handling.

The following synthetic and non-synthetic substances and
ingredients are prohibited for use in a certified organic farming or
handling operation:
(a) An active synthetic substance that is not included on the
National List as an allowed synthetic substance in either Sec. 205.22
or Sec. 205.24, including any synthetic carbon-based substance that
functions through a cytotoxic mode of action;
(b) A non-agricultural substance, used as an ingredient in or on a
processed product labeled as organic or made with certain organic
ingredients, that is not included on the National List as a non-
agricultural substance in Sec. 205.26;
(c) A non-synthetic substance that is included on the National List
as a prohibited non-synthetic substance, in either Sec. 205.23 or
Sec. 205.25;
(d) A formulated product that contains any synthetic inert
ingredient classified by EPA as an inert of toxicological concern; and
(e) A fertilizer or commercially blended fertilizer that contains
an active synthetic substance not allowed for use in crop production as
provided for in Sec. 205.22, or that contains an active prohibited
substance.

The National List of Allowed and Prohibited Substances

Crop Production Substances

Sec. 205.22 Active synthetic substances allowed for use in organic
crop production.

The following may be used in accordance with any restrictions
specified in this section and Secs. 205.3 through 205.10 of subpart B:
(a) Horticultural oils may be used as insect pest smothering or
suffocating agents. Horticultural oils include:
(1) Dormant oils;
(2) Suffocating oils; and
(3) Summer oils.
(b) Soaps may be used as insecticides, algicides, de-mossers, large
animal repellants, and herbicides.
(c) Production aids may be used as follows:
(1) Acetic acid may be used as a pesticide;
(2) Pheromones may be used as insect mating disruptors;
(3) Vitamins may be used as growth promoters and rooting
facilitators;
(4) Vitamin D3 may be used as a rodenticide;
(5) Amino acids may be used as growth promoters;
(6) Antibiotics may be used as pesticides;
(7) Magnesium sulfate may be used as a cation balancing agent;
(8) Newspaper and other recycled paper products may be used as
mulch and compost feedstocks;
(9) Piperonyl butoxide may be used as a synergist;
(10) Potassium sulfate may be used as a cation balancing agent; and
(11) Boric Acid may be used as a pesticide.
(d) Toxins, derived from genetically engineered bacteria (or other
microorganisms) that are not released live into the agroecosystem, may
be used as pesticides.
(e) Copper and sulfur compounds as follows may be used as
pesticides:
(1) Bordeaux mixes;
(2) Copper, including fixed coppers exempt from tolerance by EPA:
hydroxides, basic sulfates, oxychlorides, and oxides;
(3) Lime sulfur, including calcium polysulphide, and
(4) Sulfur dioxide.
(f) Micronutrient minerals as follows may be used:
(1) Chelated micronutrients;
(2) Soluble boron products; and
(3) Sulfates, carbonates, oxides, or silicates of zinc, iron,
manganese, molybdenum, selenium, cobalt or copper.
(g) Minerals as follows may be used as defoliants in organic fiber
production:
(1) Calcium chloride;
(2) Magnesium chloride;
(3) Sodium chlorate; and
(4) Sodium chloride.

Sec. 205.23 Non-synthetic substances prohibited for use in organic
crop production.

None.

Livestock Production Substances

Sec. 205.24 Active synthetic substances allowed for use in organic
livestock production.

Any substance in the following categories may be used in organic
livestock production in accordance with any restrictions specified in
this section and Secs. 205.3, and 205.12 through 205.15 of subpart B:
(a) Trace minerals;
(b) Nutrients and dietary supplements;
(c) Feed additives, Provided, That they are also included in
Sec. 205.26;
(d) Animal drugs and other animal health care substances;
(e) Vaccines and biologics; and
(f) Pest control substances, Provided, That they are also included
in Sec. 205.22.

Sec. 205.25 Non-synthetic substances prohibited for use in organic
livestock production.

None.

Processed Product Substances

Sec. 205.26 Non-agricultural (non-organic) substances allowed as
ingredients in or on processed products labeled as organic or made with
certain organic ingredients.

The following non-agricultural ingredients may be used only in
accordance with any restrictions specified in Secs. 205.3, and 205.16
through 205.19 of subpart B:

Non-agricultural Substances Allowed as Ingredients in or on Processed
Products Labeled as Organic or Made With Certain Organic Ingredients

Agar-agar
Alginates
Alginic Acid
Aluminum-free baking powder
Ammonium bicarbonate

[[Page 65945]]

Ammonium carbonate
Ascorbic acid
Beeswax
Calcium carbonate
Calcium chloride
Calcium citrate
Calcium sulfate
Calcium hydroxide
Calcium phosphates (mono, di and tribasic)
Candelilla wax
Carbon dioxide
Carnauba wax
Carrageenan
Chymosin
Citric acid
Colors, non-synthetic
Cultures, dairy, non-synthetic
Dipotassium phosphate
Enzymes, non-synthetic
Glycerin
Gums
Lactic acid
Lecithin, unbleached or bleached
Magnesium chloride
Magnesium carbonate
Magnesium stearate
Magnesium sulfate
Mono and diglycerides
Natural flavoring agents, non-synthetic
Nutrient supplements
Pectin, low-methoxy and native (high-methoxy)
Potassium acid tartrate
Potassium carbonate
Potassium chloride
Potassium citrate
Potassium phosphate
Silicon dioxide
Sodium bicarbonate
Sodium carbonate
Sodium citrate
Sodium phosphates (mono, di and tribasic)
Sulfur dioxide (not to exceed 100 ppm when used in wine)
Tartaric acid
Tocopherols
Whey and its fractions
Wood rosin
Xanthan gum
Yeast autolysate, non-synthetic
Yeast, bakers, non-synthetic
Yeast, brewers, non-synthetic
Yeast, nutritional, non-synthetic
Yeast, smoked, non-synthetic

Sec. 205.27 Non-organically produced agricultural products allowed as
ingredients in or on processed products labeled as organic or made with
certain organic ingredients.

Any non-organically produced agricultural product may be used in
accordance with any restrictions specified in Sec. 205.16.

Sec. 205.28 Amending the National List.

(a) Purpose of petition process. Any person may petition the NOSB
for the purpose of having a substance evaluated for recommendation to
the Secretary for inclusion on the National List.
(b) A petition may be submitted to: Program Manager, USDA/AMS/TM/
NOP, Room 2945 South Building, P.O. Box 96456, Washington, D.C. 20090-
6456.
(c) Categories of substances. A substance may be added to the
National List only in the following categories:
(1) Active synthetic substances allowed for use in organic crop or
livestock production;
(2) Non-synthetic substances prohibited for use in organic crop or
livestock production; or
(3) Non-agricultural substances allowed for use as ingredients in
or on processed products labeled as organic or made with certain
organic ingredients.
(d) Content of the petition. A person should include in the
petition as much of the following information as is available to the
person for each specific substance:
(1) Background information about the following:
(i) Substance name (generic or common name);
(ii) Manufacturer's name, address, and telephone number, if
different from the petitioner's;
(iii) Area of intended or current use (crops, livestock, or
handling);
(iv) Current or intended use of the substance;
(v) Sources from which the substance is derived;
(vi) Description of the manufacturing or processing procedures for
the substance; and
(vii) Summary of previous reviews of the substance by State or
private organic certification programs or other organizations that
review materials.
(2) Regulatory Information (as applicable) including, but not
limited to:
(i) EPA registration (include the registration number);
(ii) Food and Drug Administration registration;
(iii) State regulatory authority registration (include State
registration number);
(iv) Chemical Abstract Service (CAS) number or other product
number; and
(v) Labels of products that contain the petitioned substance.
(3) Research, characteristics, and safety information:
(i) Detailed findings relevant to the following characteristics of
the substance:
(A) Detrimental chemical interactions with other materials used in
organic production;
(B) Toxicity and persistence in the environment;
(C) Environmental contamination resulting from its use and
manufacture;
(D) Effects on human health; and
(E) Effects on soil organisms, crops and livestock;
(ii) Bibliographies of pertinent research on the substance;
(iii) Material Safety Data Sheet (MSDS);
(iv) Information on the substance obtained from the National
Institute of Environmental Health Studies; and
(v) Information on whether all or part of any submission is
believed to be confidential commercial information, and if so, what
parts, and the basis for the belief that it is confidential commercial
information and should not be released to the public.
(4) Statements of justification for placement on the National List,
as follows:
(i) If petitioning for approval of an active synthetic substance or
non-agricultural ingredient, state the reasons why the substance is
necessary to the production or handling of the organic product;
(ii) If petitioning for prohibition of a non-synthetic substance,
state the reasons why the use of the non-synthetic substance should not
be permitted in organic farming or handling; or
(iii) Describe alternative substances or alternative cultural
methods that could be utilized in place of the substance, summarize
effects on the environment, human health, and the agroecosystem, and
describe its compatibility with a system of sustainable agriculture.
(e) The Secretary or the NOSB may request additional information
from the petitioner following receipt of the initial petition if
necessary to evaluate the substance.

Secs. 205.29 through 205.99 [Reserved]

Subpart C--Labels, Labeling, and Market Information

Sec. 205.100 Agricultural products in packages sold, labeled, or
represented as organic.

(a) Agricultural products in packages described in Sec. 205.16(a)
of subpart B that are sold, labeled, or represented as organic may use
the terms as described below:
(1) The term organic on the principal display panel to modify the
name of the product;
(2) The term organic in the ingredients statement to modify the
name of an ingredient organically produced and handled in accordance
with the Act and the regulations in this part;
(3) On the principal display panel, the following terms or marks:
(i) The USDA seal described in Sec. 205.107; and
(ii) A seal representing a State organic program approved by the
Secretary, as

[[Page 65946]]

provided for in Sec. 205.402 of subpart F; and
(4) On the information panel, the following terms or marks:
(i) The term organic used to modify the name of the product;
(ii) The USDA seal described in Sec. 205.107;
(iii) A seal representing a State organic program approved by the
Secretary, as provided for in Sec. 205.402 of subpart F; and
(iv) A certifying agent's name, seal, logo, or other identification
which represents that the farm, wild crop harvesting, or handling
operation that produced or handled the finished product is a certified
operation.
(5) On other panels of the label, labeling and market information:
Any term or mark identified in paragraph (a)(4) of this section may be
used on package panels of labels not covered by paragraph (a)(3) of
this section as well as on any labeling or market information.
(b) [Reserved]

Sec. 205.101 Agricultural products in packages sold, labeled, or
represented as made with certain organic ingredients.

(a) Agricultural products in packages described in Sec. 205.16(b)
of subpart B that are sold, labeled, or represented as made with
certain organic ingredients shall use the terms and marks as described
below:
(1) The statement made with certain organic ingredients on the
principal display panel; and
(2) The term organic in an ingredients statement to modify the name
of an ingredient organically produced and handled in accordance with
the Act and the regulations in this part.
(b) Agricultural products in packages described in Sec. 205.16(b)
of subpart B that are sold, labeled or represented as made with certain
organic ingredients may use the terms and marks as described below:
(1) On the information panel, the following terms or marks:
(i) The statement made with certain organic ingredients; and
(ii) A certifying agent's name, seal, logo, or other identification
which represents that the farm, wild crop harvesting, or handling
operation that produced or handled the finished product is a certified
operation.
(2) On other panels of the label, labeling and market information:
Any term or mark identified in paragraph (b)(1) of this section may be
used on package panels of labels not covered by paragraphs (a) or
(b)(1) of this section, as well as on labeling or market information.

Sec. 205.102 Multi-ingredient agricultural products that only
represent the organic nature of such ingredients in the ingredients
statement.

Any agricultural product composed of more than one ingredient, no
matter the percentage organic ingredients it contains, that only
represents in an ingredients statement the organic nature of its
ingredients, may use the term organic in the ingredients statement of a
label, labeling, or market information, to modify the name of an
ingredient that is organically produced and handled in accordance with
the Act and the regulations in this part, without the finished product
having to comply with the certification requirements set forth in
subpart D of this part, Provided, That the record keeping requirements
of Sec. 205.202(c) of subpart D are satisfied, and Provided, Further
That the product itself is not sold, labeled, or represented as organic
or made with certain organic ingredients.

Sec. 205.103 Use of terms or statements that directly or indirectly
imply that a product is organically produced and handled.

Any label, labeling or market information that implies directly or
indirectly that a product, including an ingredient, is organically
produced and handled may be used only for an agricultural product,
including an ingredient, that has been produced and handled in
accordance with the Act and the regulations in this part.

Sec. 205.104 Informational statements prohibited.

The use of the following informational statements on the principal
display panel and the ingredients statement of products sold, labeled,
or represented as organic or made with certain organic ingredients, or
products described in Sec. 205.102 that contain organic ingredients, is
prohibited:
(a) The phrase one hundred percent, stated in letters, numbers or
symbols, used as part of any phrase or sentence that includes the term
organic;
(b) A statement of the percentage of organic ingredients contained
in a product; and
(c) The phrase organic when available or a term of similar meaning
or intent.

Sec. 205.105 Agricultural products in a form other than packages that
are sold, labeled or represented as organic or made with certain
organic ingredients.

(a) Agricultural products described in Sec. 205.16(a) of subpart B,
in a form other than packages, that are sold or represented as organic
at the time of retail sale may use the terms and marks as described
below:
(1) The term organic on the retail display label, labeling or
display container to modify the name of the product;
(2) The term organic in the ingredients statement to modify the
name of an ingredient organically produced and handled in accordance
with the Act and the regulations in this part; and
(3) A clearly recognizable organic identification mark(s) or
term(s), selected from the following, located in plain view on the
shipping container:
(i) The term organic used to modify the name of the product;
(ii) The USDA seal as described in Sec. 205.107;
(iii) A seal representing a State organic program approved by the
Secretary as provided for in Sec. 205.402 of subpart F; or
(iv) The certifying agent's name, seal, logo, or other
identification which represents that the farm, wild crop harvesting, or
handling operation that produced or handled the finished product is a
certified operation.
(b) Agricultural products described in Sec. 205.16(b) of subpart B,
in a form other than packages, that are sold, labeled, or represented
as made with certain organic ingredients shall use the terms and marks
as described below:
(1) The statement made with certain organic ingredients on the
retail display label, labeling or display container;
(2) The term organic in the ingredients statement to modify the
name of an ingredient organically produced and handled in accordance
with the Act and the regulations in this part; and
(3) The statement made with certain organic ingredients, which may
be accompanied by the certifying agent's name, seal, logo, or other
identification, located in plain view on the shipping container.

Sec. 205.106 Agricultural products produced on an exempt farm or
handling operation.

An agricultural product produced or processed on a farm, wild crop
harvesting, or handling operation that annually sells no more than
$5,000 in value of agricultural products and which has not been
certified, shall not:
(a) Display the USDA seal, or any certifying agent's name, seal,
logo, or other identification which represents that the farm, wild crop
harvesting, or handling operation that produced or handled the product
is a certified operation; or
(b) Be identified as an organic ingredient in a product produced or
processed on a farm or handling operation that annually sells more than
$5,000 in value of agricultural products.

[[Page 65947]]

Sec. 205.107 USDA seal.

(a) The USDA seal described in paragraphs (b) and (c) of this
section shall be used in accordance with the provisions of this subpart
and shall be used only on agricultural products (raw or processed)
described in Sec. 205.16(a) of subpart B that are sold, labeled, or
represented as organic and which are produced and handled on certified
operations.
(b) The USDA seal used on a label, labeling, or market information
of an agricultural product shall replicate the form and design of the
example in figure 1.
[GRAPHIC] [TIFF OMITTED] TP16DE97.000

(c) Except as otherwise authorized by the Secretary, the USDA seal
shall be:
(1) Printed on a light background with the wording and design in a
dark color or on a dark background with the wording in a light color,
Provided, That such design is legible and conspicuous on the material
upon which it is printed; or
(2) Printed in a standard four color label as follows: concentric
circles with arrows and diagonal on a light background with black
letters; interior globe cyan blue with green continents; interior
triangular sections green; exterior triangle (border) yellow; and both
interior and exterior of triangular border edged with black.

Secs. 205.108 through 205.200 [Reserved]

Subpart D--Certification

Sec. 205.201 What has to be certified.

(a) Each farm, wild crop harvesting operation, or handling
operation that produces or handles crops, livestock, livestock
products, or other agricultural products that are, or that are intended
to be, sold, labeled or represented as organic or made with certain
organic ingredients must be certified according to the provisions of
subpart D of this part, and must meet all other applicable requirements
of this part, Provided, That any handling operation that provides
handling services to fewer than three certified entities that produce
or handle agricultural products that are, or that are intended to be,
sold, labeled or represented as organic or made with certain organic
ingredients, would not be required to be separately certified apart
from the operations for which it provides such services, and Provided,
Further That none of the operations set forth in paragraph (a) of this
section must be certified if exempt or excluded in Sec. 205.202 of this
subpart.
(b) A handling operation, or portion of a handling operation, that
handles only agricultural products that are, or that are intended to
be, sold, labeled or represented as made with certain organic
ingredients is exempt from the requirement to select a commercially
available non-synthetic substance in preference to an allowed synthetic
substance, as set forth in Sec. 205.3(b)(2) of subpart B.

Sec. 205.202 Exemptions and exclusions from certification.

(a) Exemptions. (1) A farm, wild crop harvesting, or handling
operation that sells agricultural products as organic or made with
certain organic ingredients, but which annually sells no more than
$5,000 in value of agricultural products, is exempt from complying with
the requirements in this part, except for the applicable recordkeeping
provisions delineated in paragraph (c)(1) of this section and the
applicable labeling provisions set forth in subpart C of this part.
(2) A retail operation, or portion of a retail operation, that only
handles organically produced agricultural products but does not process
them is exempt from the requirements in this part.
(3) A handling operation, or portion of a handling operation, that
handles only agricultural products that contain less than 50 percent
organic ingredients by total weight of the finished product, excluding
water and salt, is exempt from the requirements in this part, except:
(i) The provisions for prevention of commingling and contact of
organic products by prohibited substances set forth in Sec. 205.19 of
subpart B with respect to any organically produced ingredients used in
an agricultural product; and
(ii) The applicable provisions for labeling set forth in subpart C
of this part.
(b) Exclusions. (1) A handling operation, or portion of a handling
operation, is excluded from the requirements of this part, except for
the requirements for the prevention of commingling and contact with
prohibited substances as set forth in Sec. 205.19 of subpart B with
respect to any organically produced products, if such operation, or
portion of the operation, sells only agricultural products labeled as
organic or made with certain organic ingredients that:
(i) Are packaged or otherwise enclosed in a container prior to
being received or acquired by the operation; and
(ii) Remain in the same package or container and are not otherwise
processed while in the control of the handling operation.
(2) A restaurant or other similar food-service type establishment
that processes ready-to-eat food from organic agricultural products and
which does not enclose the food in a package or container labeled or
represented to the consumer as organic or as made with certain organic
ingredients is excluded from the requirements of this part.
(3) A retail operation, or portion of a retail operation, that
processes only agricultural products that are previously labeled as
organic or made with certain organic ingredients before receipt or
acquisition by the retail operation, is excluded from the requirements
in this part, Provided, That the operation meets both of the following
requirements:
(i) The agricultural product is processed by the retail operation,
or portion of the retail operation, in the course of normal retail
business practice solely for the purpose of offering the product to a
consumer; and
(ii) The agricultural product offered to the consumer:
(A) Has not been created by the retail operation by combining two
or more ingredients into a single product that is then labeled or
represented by the retail operation as organic or as made with certain
organic ingredients; and
(B) Has not been repackaged by the retail operation so as to
provide a new label or labeling for the repackaged product which
represents it as organic or made with certain organic ingredients.
(c) Records to be maintained by exempt or excluded operations. Any
operation that is exempt or excluded from certification, as specified
in paragraphs (a) or (b) of this section, shall maintain records as
follows and shall allow representatives of the Secretary and the
applicable governing State official access to these records to
determine compliance with the applicable regulations set forth in this
part:
(1) Small farm or handling operations. An operation that is exempt
from certification pursuant to paragraph (a)(1) of this section shall
maintain records for no less than one calendar year to substantiate
that the operation did not

[[Page 65948]]

sell agricultural products in excess of $5,000 in value during the
previous calendar year;
(2) Handling operations exempt or excluded from certification. A
handling operation that is exempt from certification pursuant to (a)(3)
of this section, or excluded from certification pursuant to (b)(1) of
this section, shall maintain records as follows:
(i) Documentation as sufficient to verify the source and quantity
of organic products received and that all organic products and
ingredients have been handled in accordance with Sec. 205.19 to prevent
commingling and contact with prohibited substances shall be maintained
for no less than one year from the date of receipt by the operation of
a product, including ingredients, labeled as organic or made with
certain organic ingredients; and
(ii) Documentation as sufficient to verify the destination and
quantity of a product shipped from the operation shall be maintained
for no less than one year from the date of shipping a product labeled
as organic or as made with certain organic ingredients, or which
contains any organic ingredients.

Sec. 205.203 General requirements for certification.

In order to receive and maintain organic certification under the
Act and the regulations in this part, a farm, wild crop harvesting or
handling operation shall:
(a) Comply with the applicable organic production and handling
requirements of the Act and the regulations in this part;
(b) Establish, implement, and update annually an organic plan that
is submitted to an accredited certifying agent as provided for in
Sec. 205.205;
(c) Permit an annual on-site inspection by the certifying agent, as
provided for in Sec. 205.208 through 205.211;
(d) Maintain all records applicable to the organic operation for a
period of not less than five years from the date of creation of the
record, and allow authorized representatives of the Secretary, the
applicable governing State official, and the certifying agent access to
such records to determine compliance with the Act and the regulations
in this part, as provided for in Sec. 205.216;
(e) Submit the applicable fees to the certifying agent, as provided
for in Sec. 205.422 of subpart F; and
(f) Immediately notify the certifying agent concerning:
(1) Any application of a prohibited substance to any field, farm
unit, site, facility, livestock, or product that is part of a certified
operation; and
(2) Any change in a certified operation or any portion of a
certified operation that may affect its compliance with the Act and the
regulations in this part

Sec. 205.204 Applying for certification.

A person seeking certification of a farm, wild crop harvesting, or
handling operation under this subpart shall submit a request for
certification to the certifying agent. The request shall include the
following information:
(a) An organic plan, as required in Sec. 205.205;
(b) A statement of compliance, as required in Sec. 205.206;
(c) The applicant's business name, address, phone and fax numbers,
and, in addition, the names of personnel responsible for maintaining
compliance with the Act and the regulations in this part; and
(d) The name(s) of any organic certifying agent(s) to which
application has previously been made, the year(s) of application, and
the outcome of the application(s) submission.

Sec. 205.205 Organic plan.

A certification applicant shall submit to the certifying agent an
organic plan that identifies, as applicable to its operation:
(a) General. Practices previously implemented, and intended to be
implemented and maintained, to establish a system of organic farming
and handling that complies with the applicable crop, livestock, wild
crop harvesting, and handling requirements, provided in Secs. 205.3,
205.5 through 205.9, and 205.11 through 205.28 of subpart B.
(b) Farm operations. The following information shall be submitted
concerning a farm operation:
(1) The total acreage of the operation, the types of crops grown
and livestock raised, and any on-farm processing activities;
(2) Map(s) of each field and farm parcel for which certification is
requested, showing, for each parcel: A list of crops intended to be
planted and/or managed; identification name or number; size; location;
boundaries; any significant features that may assist the certifying
agent to identify the field or parcel; identification of any adjoining
land to which a prohibited substance may be applied; and the location
of any facility used for livestock housing, storage, or post-harvest
handling;
(3) A history of the crops grown and production inputs used for
each field or farm parcel for which certification is requested, which
covers the three year period immediately preceding the date of the
request for certification;
(4) A list of each type of agricultural product produced on the
farm that is intended to be sold, labeled or represented as organic or
made with certain organic ingredients;
(5) A list of each substance intended to be used as a production
input, indicating: its source, anticipated quantity to be used, and
location(s) where it will be used;
(6) A list of any seeds or planting stock intended to be purchased,
indicating: its source, approximate quantity to be used and whether it
is treated, untreated, or organically produced;
(7) A list of all livestock to be maintained by the operation and
to be purchased in the certification year for the production of
agricultural products to be sold, labeled or represented as organic, or
as made with certain organic ingredients, indicating: their source, the
estimated number to be maintained and purchased, their intended use
(e.g. slaughter stock, egg production), and whether the livestock
originate from a certified organic livestock operation;
(8) A list of all livestock feed and feed supplements intended to
be purchased, indicating: its source, estimated amount to be purchased,
and what, if any, portion of the feed to be purchased will not be
organically produced;
(9) The name of a veterinarian from whom animal drugs or a
prescription for animal drugs are obtained, if applicable, and a list
of any animal drugs that may be used, including their sources,
estimated amount of each animal drug to be used, and the types of
livestock (such as hogs, fish, or chickens) to which such drugs are to
be administered; and
(10) A list of all post-harvest handling or processing methods and
facilities to be used by the applicant.
(c) Split operations. The following information shall be submitted,
as applicable, concerning a farm or wild crop harvesting operation that
produces both organic and non-organic products:
(1) A list and anticipated quantities of livestock and any other
agricultural product intended to be grown, raised or harvested both
organically and non-organically;
(2) A list, indicating expected quantity and location, of each
substance or practice prohibited for organic production under the Act
and the regulations in this part that may be used on a non-certified
portion of the farm; and
(3) A list of the measures used and that will be used to prevent

[[Page 65949]]

commingling of organic and non-organic products, and contact of organic
field units, storage areas and packaging to be used for organic
products, and organic products, including livestock, with prohibited
substances.
(d) Wild crop harvesting operations. The following information
shall be submitted concerning a wild crop harvesting operation:
(1) A map(s) of each area from which wild crops are designated to
be harvested in the certification year;
(2) Information about the ownership of, and evidence of permission
to harvest from, the area from which wild crops are designated to be
harvested;
(3) A history of each designated area so as to demonstrate that no
prohibited substance has been applied within three years prior to the
initial harvest of a wild crop to be sold, labeled or represented as
organically produced;
(4) A list of each species of plant(s) to be harvested, including:
its botanical name(s); the part of the plant to be harvested (e.g.,
roots, flowers, fruits); the quantity expected to be harvested in the
certification year; dates of the harvest season; and any available
information on the impact of the intended harvest on the environment
and on the growth and production of the wild crop;
(5) A list of each type of wild product to be sold or represented
as an organic product, indicating the anticipated quantity of each
type; and
(6) A list of all post-harvest handling or processing methods and
facilities to be used by the applicant.
(e) Handling operations. The following information shall be
submitted concerning a handling operation:
(1) A brief, general description of the type of handling operation
and the processing, manufacturing, or other handling procedures used
and intended to be used;
(2) A list of the structural pest management methods used or
intended to be used;
(3) A list, including the quantity, of each product intended to be
handled and sold or represented as organic, and as made with certain
organic ingredients;
(4) A list of each non-organically produced product or type of
product, if any, intended to be handled or sold;
(5) The measures that will be used to prevent the commingling of
organic and non-organic products and ingredients and the contact of
storage areas and packaging to be used for organic products, and
organic products, with prohibited substances; and
(6) A list of each ingredient, incidental additive, and type of
packaging material intended to be used as a production input in the
handling of organic products specifying for each item listed, as
applicable:
(i) Whether it is an organic agricultural product, a non-organic
agricultural product, or a non-agricultural ingredient;
(ii) The estimated quantity to be used;
(iii) The source or manufacturer;
(iv) The country of origin for each imported organic agricultural
product or ingredient; and
(v) The source of water used as an ingredient in any organic
product, specifying whether it meets the Safe Drinking Water Act
requirements (42 U.S.C. 300(f) et seq.).

Sec. 205.206 Statement of compliance.

A person seeking certification of a farm, wild crop harvesting or
handling operation shall submit to the certifying agent a statement
agreeing to comply with the Act and the regulations of this part,
including the requirements for receiving and maintaining certification
delineated in Sec. 205.203 of this subpart.

Sec. 205.207 Preliminary evaluation of an application for
certification.

A certifying agent shall, with respect to any applicant for
certification:
(a) Make a preliminary evaluation of the operation's compliance and
ability to comply with the applicable requirements of subpart B of this
part;
(b) Verify that an applicant who previously applied to another
certifying agent and received a notification of non-compliance,
pursuant to Sec. 205.215(a) of this subpart, has submitted
documentation to support the correction of any deficiencies identified
in such notification, as required in Sec. 205.215(b) of this subpart;
and
(c) Arrange to conduct an on-site inspection of the operation if
the preliminary evaluation reveals that the farm, wild crop harvesting
or handling operation may be in compliance with the applicable
requirements of subpart B of this part.

Sec. 205.208 Arranging for inspections.

(a) A certifying agent shall arrange to conduct an initial on-site
inspection of each farm, facility, and site that is included in an
operation for which certification is requested, and an on-site
inspection of each certified operation annually thereafter, for the
purpose of determining whether to approve the request for certification
or determining whether the certification of the operation should
continue.
(b) The initial on-site inspection shall be conducted within a
reasonable time following a favorable preliminary evaluation of an
application for certification in accordance with Sec. 205.207.
(c) The on-site inspection shall be scheduled at such time that:
(1) Land, facilities, and activities that demonstrate the
operation's compliance with or capability to comply with the applicable
provisions of subpart B of this part may be observed; and
(2) The applicant or an authorized representative of the applicant
who is knowledgeable about the operation will be present during the
inspection.

Sec. 205.209 [Reserved].

Sec. 205.210 Verification of information.

The inspection of an operation shall be sufficient to verify the
operation's compliance, or ability to comply, with the Act and the
regulations in this part, including verification that the information,
including the organic plan, provided in accordance with Secs. 205.204
or 205.217, and Sec. 205.205, accurately reflects the practices used or
to be used by the applicant for certification or by the certified
operation and, in the case of an on-site inspection to evaluate
continuation of certification, that the provisions of the organic plan
are being implemented.

Sec. 205.211 Post-inspection conference.

The inspector shall conduct a post-inspection conference with an
authorized representative of the inspected operation, and discuss
observations made by the inspector regarding the compliance, or ability
of the operation to comply, with the Act and the regulations in this
part.

Sec. 205.212 Reporting to the certifying agent.

The certifying agent shall require that the inspector prepare and
submit to the certifying agent, within thirty days of completing an
inspection, a written report that describes the inspector's
observations and assessments of the inspected operation's compliance,
or ability to comply, with the Act and the regulations in this part.

Sec. 205.213 Additional inspections.

(a) In addition to the annual on-site inspection, required in
Sec. 205.208(a), a certifying agent may conduct an inspection of any
farm, facility, or site used by a certified operation or an applicant
for certification when necessary to determine compliance with the Act
and the regulations in this part.
(b) The Secretary may require that additional inspections be
performed for the purpose of determining compliance

[[Page 65950]]

with the Act and the regulations in this part.

Sec. 205.214 Approval of certification.

(a) Within a reasonable time after completion of the initial on-
site inspection, a certifying agent shall review the inspection report,
together with the application materials submitted pursuant to
Secs. 205.204 through 205.206 or Sec. 205.217, as applicable, and shall
request the applicant for certification to submit any additional
information and documentation needed to determine if the certification
applicant is complying, or is able to comply, with the Act and the
regulations in this part.
(b) Following the receipt of any additional information and
documentation submitted in accordance with paragraph (a) of this
section, the certifying agent shall approve the application for
certification upon a determination that:
(1) The practices and substances used or intended to be used by the
applicant for certification are consistent with a system of organic
farming and handling, as set forth in Sec. 205.2 of subpart A, and
comply with the applicable organic production and handling
requirements, as set forth in Secs. 205.3, 205.5 through 205.9, and
Secs. 205.11 through 205.28 of subpart B;
(2) The applicant has satisfied the general requirements for
certification set forth in Sec. 205.203;
(3) The organic plan satisfies the applicable requirements of the
Act and the regulations in subpart B of this part; and
(4) The records and recordkeeping system maintained by the
applicant satisfy the applicable requirements of Sec. 205.216.
(c) Upon determining, pursuant to paragraph (b) of this section, to
approve an application for certification, a certifying agent shall
provide a written notification to the certification applicant's place
of business, indicating in such notification restrictions or
requirements, if any, imposed as a condition of certification.
(d) A notice of approval of certification sent to a certification
applicant pursuant to paragraph (c) of this section shall include a
certificate that states:
(1) The name of the certified operation;
(2) The effective date of the certification; and
(3) The category(ies), type(s) of products, and crop years, if
applicable, covered by the certification.

Sec. 205.215 Denial of certification.

(a) If the certifying agent has reason to believe, based on a
review of the information specified in Sec. 205.214(a), that an
applicant for certification is not able to comply, or is not in
compliance, with the requirements of the Act and the regulations in
this part, the certifying agent shall provide a written notification of
non-compliance to the applicant in accordance with Sec. 205.218(a) of
this part.
(b) Following the correction of deficiencies identified in the
notification issued in accordance with paragraph (a) of this section,
the applicant may submit a new application for certification to any
accredited certifying agent. If a new application is submitted to a
certifying agent other than the agent who issued the notification of
non-compliance, the certification applicant shall simultaneously inform
the certifying agent who issued the notification of non-compliance that
a new application has been submitted and shall identify the new
certifying agent to whom it was submitted. The new application shall
include documentation of actions taken by the applicant to correct the
deficiencies delineated in the notification of non-compliance.
(c) If a certification applicant who receives a notification
pursuant to paragraph (a) of this section does not correct the
deficiencies or does not notify the certifying agent that it has
submitted a new application, as provided for in paragraph (b) of this
section, within the time specified in the notice of non-compliance, the
certifying agent shall submit to the Administrator a notice of its
recommendation to deny certification to the applicant. Upon receipt of
a notice of a recommendation to deny certification, the Administrator
may institute proceedings to deny certification.

Sec. 205.216 Recordkeeping.

(a) A certified operation shall maintain records concerning the
production, harvesting, and handling of agricultural products that are
or that are intended to be, sold, labeled or represented as organic or
made with certain organic ingredients for a period of five years
sufficient to demonstrate compliance with the Act and regulations in
the part, and shall make such records available to authorized
representatives of the Secretary, the applicable governing State
official, and the certifying agent.
(b) The records that shall be maintained by the certified operation
in accordance with paragraph (a) of this section shall include, but are
not limited to:
(1) A list of all substances applied to fields and land that are
part of the certified operation for a period of no less than three
years preceding the intended or actual time of harvest of an organic
crop from such fields or land;
(2) The name and address of any person, including the operator of
the certified operation and employees of the certified operation, who
applies and who has applied any substance to any part of the farm and
any livestock or other agricultural product, including the name of the
substance, and the date(s), location(s), rate(s) and method(s) of
application;
(3) For each animal (or livestock management unit, such as a
poultry flock or bee colony) that is, or whose products are, intended
to be sold, labeled or represented as organic livestock or organic
livestock products in accordance with the livestock production
standards set forth in Secs. 205.12 through 205.15 of subpart B:
(i) The source of the animal or livestock management unit and the
date it entered the certified operation;
(ii) The amounts and sources of all animal drugs administered;
(iii) All feeds and feed supplements fed; and
(iv) The location of the field, farm unit, or facility where it is
maintained, as applicable.
(4) Any information submitted to the certifying agent as part of
the application for certification or as part of continuation of
certification in accordance with Sec. 205.204 or Sec. 205.217 of this
subpart, respectively; and
(5) Records sufficient to show the quantities, source of,
production and handling methods used for, transfer of ownership of, and
transportation of, any agricultural product, including livestock, sold,
labeled or represented as organic or as made with certain organic
ingredients, that is received by or shipped from the certified
operation, sufficient to establish an audit trail.
(c) A farm, wild crop harvesting, handling, or other operation that
is exempt or excluded from certification under Secs. 205.202(a) or (b)
shall maintain records as provided for in Sec. 205.202(c).

Sec. 205.217 Continuation of certification.

(a) A certified operation shall annually submit the following
information, as applicable, to the certifying agent:
(1) Any additions and changes to the information about the
operation submitted in the previous year;
(2) Any amendments to the organic plan, including a description of
any

[[Page 65951]]

activities undertaken in the previous year, and intended to be
undertaken in the coming year, to implement the provisions of the
organic plan;
(3) A statement that the certified operation will remain in
compliance with the Act and the regulations in this part; and
(4) Any other information requested by the certifying agent, in
accordance with Sec. 205.214(a) of this subpart.
(b) Following the receipt of the information specified in paragraph
(a), the certifying agent shall arrange and conduct an on-site
inspection of the certified operation, pursuant to Secs. 205.208
through 205.211.
(c) If the certifying agent has reason to believe, based on the on-
site inspection and a review of the information specified in
Sec. 205.214(a), that a certified operation is not complying with the
requirements of the Act and the regulations in this part, the
certifying agent shall provide a written notification of non-compliance
to the operation in accordance with Sec. 205.218(a) of this subpart.

Sec. 205.218 Notification of non-compliance with certification
requirements.

(a) A written notification of non-compliance shall be sent by
certified mail to the place of business of the certification applicant
or the certified operation and shall contain the following information:
(1) A description of each deficiency in compliance and each
possible violation of the Act and the regulations in this part that the
certifying agent has reason to believe has occurred;
(2) The evidence on which the notification is based; and
(3) The date by which the operation must correct each deficiency in
compliance and each possible violation delineated in the notification,
and submit documentation to the certifying agent to support such
corrections.
(b) If the documentation received by the certifying agent from an
operation it has certified, pursuant to paragraph (a)(3) of this
section, is not adequate to demonstrate that each deficiency in
compliance and each possible violation has been corrected, the
certifying agent shall:
(1) Conduct an additional inspection of the certified operation, as
provided for in Sec. 205.213, if the certifying agent determines that
an additional inspection is necessary to determine whether the
operation is complying with, or has violated, the Act or the
regulations in this part;
(2) Review the status of the certified operation to determine
whether the operation or any portion of the operation has ceased to
comply with, or has violated, the Act or the regulations in this part;
and
(3) Notification of determination or recommendation. (i) If,
following the review specified in paragraph (b)(2) of this section, the
certifying agent determines that the operation is in compliance with
the Act and the regulations in this part, the certifying agent shall
notify the certified operation in writing of its determination.
(ii) If, following the review specified in paragraph (b)(2) of this
section, the certifying agent has reason to believe that the certified
operation or any portion of the operation is not in compliance with the
Act and the regulations in this part, the certifying agent shall submit
to the Administrator a notice of its recommendation to terminate the
certification of the certified operation or any portion of the
certified operation that the certifying agent believes to have ceased
to comply with the Act and the regulations in this part.

Sec. 205.219 Termination of certification.

(a) A certifying agent shall follow the procedures in accordance
with Sec. 205.218 of this subpart if the certifying agent has reason to
believe that a certified operation or a person responsibly connected
with a farm, wild crop harvesting, or handling operation it has
certified has:
(1) Made a false statement;
(2) Attempted to have a label indicating that an agricultural
product is organically produced affixed to such product when such
product was produced or handled in a manner that is not in accordance
with the Act and the regulations in this part; or
(3) Otherwise violated the purposes of the certification program
established in Subpart D of this part.
(b) Notwithstanding paragraph (a) of this section, if a certifying
agent has reason to believe that a certified operation or a person
responsibly connected with an operation that has been certified by the
certifying agent has wilfully violated the Act and the regulations in
this part, the certifying agent shall submit to the Administrator a
notice of its recommendation to terminate the certification of the
certified operation or any portion of the certified operation that the
certifying agent believes to have ceased to comply with the Act and the
regulations in this part. A notice of recommendation to terminate
certification shall list the names of any persons the certifying agent
believes to have violated the Act and the regulations in this part.
(c) Upon receipt by the Administrator of a notification of a
recommendation to terminate the certification of an operation or any
portion of an operation, submitted pursuant to paragraph (b) of this
section or Sec. 205.218(b)(3)(ii) of this subpart, as applicable, the
Administrator may institute the proceedings to terminate certification.
(d) Ineligibility and waiver. (1) A certified farm, wild crop
harvesting, or handling operation, or a person responsibly connected
with such an operation, that violates the Act and the regulations in
this part, as determined following the proceedings instituted pursuant
to paragraph (c) of this section, shall not be eligible to receive
certification for any farm, wild crop harvesting, or handling operation
in which such operation or person has an interest for a period of 5
years from the occurrence of such violation.
(2) Notwithstanding paragraph (d)(1) of this section, the Secretary
may waive ineligibility for certification if it is in the best
interests of the certification program established under subpart D of
this part.

Sec. 205.220 Notification of certification status.

A certifying agent shall submit to the Administrator:
(a) A copy of any notification of non-compliance, sent pursuant to
Sec. 205.218, simultaneously with its issuance to the certification
applicant or the certified operation; and
(b) On a quarterly calendar basis, the name of each operation whose
application for certification has been approved.

Secs. 205.221 through 205.299 [Reserved]

Subpart E--Accreditation of Certifying Agents

Sec. 205.300 Areas of accreditation.

The Secretary shall accredit a qualified applicant in the areas of
crops, livestock, wild crops, or handling, or any combination thereof,
to certify a farm, wild crop harvesting operation, or handling
operation as a certified organic farm, certified organic wild crop
harvesting operation, or certified organic handling operation.

Sec. 205.301 General requirements for accreditation.

(a) A private person or governing State official accredited as a
certifying agent under this subpart shall:
(1) Have sufficient expertise in organic farming and handling
techniques to fully comply with and implement the terms and conditions
of

[[Page 65952]]

the organic certification program established under the Act and the
regulations in this part;
(2) Demonstrate the ability to fully comply with the requirements
for accreditation set forth in this subpart;
(3) Carry out the provisions of the Act and the regulations in this
part, including the provisions of Secs. 205.207 through 205.214 of
subpart D, and Sec. 205.430 of subpart F.
(4) Use a sufficient number of adequately trained personnel,
including inspectors and certification review personnel, to comply with
and implement the organic certification program established under the
Act and the regulations in subpart D of this part;
(5) Conduct an annual performance review for each inspector used by
the certifying agent, and implement measures to correct any possible
defects in compliance with the Act and the regulations in this part
identified in each review conducted;
(6) Have an annual internal evaluation review conducted of its
certification activities, and implement measures to correct any
possible defects in compliance with the Act and the regulations in this
part identified in each review conducted;
(7) Provide sufficient information to persons seeking certification
to enable an applicant for certification to comply with the applicable
requirements of the Act and the regulations in this part;
(8) Maintain records and permit access to records as follows:
(i) Maintain all records concerning its activities under the Act
and the regulations in this part for a period of not less than 10 years
from the date of creation of the record; and
(ii) Allow representatives of the Secretary and the applicable
governing State official access to any and all records concerning the
certifying agent's activities under the Act and the regulations in this
part;
(9) Maintain strict confidentiality with respect to its clients
under the applicable organic certification program and not disclose to
third parties (with the exception of the Secretary or the applicable
governing State official) any business related information concerning
any client obtained while implementing the regulations in this part,
except as provided for in Sec. 205.304(b)(5);
(10) Prevent conflict of interest by not:
(i) Certifying an operation if the certifying agent or a
responsibly connected party of such certifying agent has or has held a
commercial interest in the operation, including the provision of
consultancy services, within the 12 month period prior to the
application for certification, and by not certifying an operation
through the use of any employee that has or has held a commercial
interest in the operation, including the provision of consultancy
services, within the 12 month period prior to the application for
certification;
(ii) Assigning an inspector to perform an inspection of an
operation if the inspector has or has held a commercial interest in the
operation, including the provision of consultancy services, within the
12 months prior to conducting the inspection;
(iii) Permitting any employee, inspector, or other personnel to
accept payment, gifts, or favors of any kind, other than prescribed
fees, from any business inspected; and
(iv) Providing advice concerning organic practices or techniques to
any certification applicant or certified organic farm or handling
operation for a fee, other than as part of the fees established under
the applicable certification program established under the Act;
(11) Accept the certification decisions made by another USDA
accredited certifying agent as equivalent to its own;
(12) Refrain from making false or misleading claims about its
accreditation status, the USDA accreditation program for certifying
agents, or the nature or qualities of products labeled as organically
produced;
(13) Charge only such fees to applicants for certification and
operations it certifies that the Secretary determines are reasonable;
(14) Pay and submit fees to AMS in accordance with Secs. 205.421
and 205.422(b) of subpart F of this part; and
(15) Comply with and implement such other terms and conditions
deemed necessary by the Secretary.
(b) A private person or governing State official accredited as a
certifying agent under this subpart may establish a seal, logo or other
identifying mark to be used by farms, wild crop harvesting operations,
and handling operations certified by the certifying agent to denote
affiliation with the certifying agent, Provided, That the certifying
agent:
(1) Does not require as a condition of certification by it the
display of its identifying mark on any product sold, labeled or
represented as organically produced; and
(2) Does not require as a condition of use of its identifying mark
compliance with any farming or handling requirements other than those
provided for in the Act and the regulations in this part.
(c) A private person accredited as a certifying agent shall:
(1) Hold the Secretary harmless for any failure on the part of the
certifying agent to carry out the provisions of the Act and the
regulations in this part;
(2) Furnish reasonable security, in an amount and according to such
terms as the Secretary may by regulation prescribe, for the purpose of
protecting the rights of farms, wild crop harvesting operations, and
handling operations certified by such certifying agent under the Act
and the regulations in this part; and
(3) Transfer to the Secretary, and make available to any applicable
governing State official, all records or copies of records concerning
the person's certification activities in the event that the certifying
agent dissolves or loses its accreditation.

Sec. 205.302 Applying for accreditation.

(a) A private person or governing State official seeking
accreditation as a certifying agent under this subpart shall submit an
application for accreditation which contains the applicable information
and documents set forth in Secs. 205.303 through 205.305 and the fees
required in Sec. 205.421(a) of subpart F to: Program Manager, USDA-AMS-
TM-NOP, Room 2945-S, P.O. Box 96456, Washington, D.C. 20090-6456.
(b) Following the receipt of the information and documents, the
Administrator will determine according to the provisions set forth in
Sec. 205.306 whether the applicant for accreditation should be
accredited as a certifying agent.

Sec. 205.303 Information to be submitted by an accreditation
applicant.

A private person or governing State official seeking accreditation
as a certifying agent shall submit the following information:
(a) The name, primary office location, mailing address, and contact
numbers (telephone, fax, and Internet address) of the applicant;
additionally, for an applicant who is a private person, the name of the
person designated to control its day-to-day operations, and its
taxpayer identification number;
(b) The name, office location, mailing address, and contact numbers
(telephone, fax, and Internet address) for each of its organizational
units, such as chapters or subsidiary offices, and the name of a
contact person for each unit;
(c) Each area of operation (crops, wild crops, livestock or
handling) for which accreditation is requested and the estimated
numbers of each type of operation anticipated to be certified annually
by the applicant;
(d) The type of entity the applicant is (e.g. State government
agricultural

[[Page 65953]]

office, for-profit business, not-for-profit membership association);
and, in addition, for:
(1) A governing State official, a copy of the official's authority
to conduct certification activities under the Act and the regulations
in this part; and
(2) A private person, documentation of its entity's status and
organizational purpose, such as articles of incorporation and by-laws,
ownership or membership provisions, and its date of establishment; and
(e) A list of each State in which the applicant currently certifies
farms and handling operations, and, in addition, a list of each State
in which the applicant intends to certify farms or handling operations.

Sec. 205.304 Evidence of expertise and ability to be submitted by an
accreditation applicant.

A private person or governing State official seeking accreditation
as a certifying agent shall submit the following documents and
information to demonstrate its expertise in organic farming and
handling techniques, its ability to fully comply with and implement the
organic certification program established in Secs. 205.201 through
205.220 of subpart D of this part, and its ability to comply with the
requirements for accreditation set forth in Sec. 205.301 of this
subpart:
(a) Personnel. (1) A description of the applicant's policies and
procedures for training, evaluating and supervising personnel;
(2) The name and functions of all personnel intended to be used in
the certification operation, including administrative staff,
certification inspectors, members of any certification review and
internal evaluation committees, and all parties responsibly connected
to the certification operation;
(3) A description of the qualifications, including past experience,
training, and education in agriculture, including organic farming and
handling, for:
(i) Each inspector intended to be used by the applicant; and
(ii) Each person designated or to be designated by the applicant to
review or evaluate applications for certification; and
(4) A description of any training that the applicant has provided
or intends to provide to personnel to ensure that they can comply with
and implement the requirements of the Act and the regulations in this
part.
(b) Administrative policies and procedures. (1) A description of
the procedure to be used to evaluate certification applicants, make
certification decisions and issue certification certificates;
(2) A description of the procedures to be used for reviewing
compliance of certified farm, wild crop harvesting, and handling
operations with the Act and the regulations in this part and the
reporting of violations of the Act and the regulations in this part to
the Administrator;
(3) A description of the procedures to be used for complying with
the recordkeeping requirements set forth in Sec. 205.301(a)(8);
(4) A description of the procedures to be used for maintaining the
confidentiality of any business related information, as set forth in
Sec. 205.301(a)(9) of this subpart;
(5) A description of the procedures to be used for making the
following information available to any member of the public upon
request:
(i) A list of producers and handlers whose operations it has
certified, and the effective dates of the certifications, during the
ten year period preceding the receipt of the request from the public;
(ii) The organic agricultural products produced by each certified
operation;
(iii) The results of laboratory analyses for residues of pesticides
and other prohibited substances conducted during the ten year period
preceding the request from the public; and
(iv) Other non-confidential business information as permitted by
the producer or handler and approved by the Secretary.
(c) Financial policies and procedures. A description of the
applicant's policies and procedures for the collection and disbursement
of funds, and documents that identify anticipated sources of income,
including all fees to be collected from producers and handlers in
accordance with Sec. 205.301(a)(13) of this subpart and Sec. 205.422(a)
of subpart F.
(d) Conflict of interest. (1) A description of procedures intended
to be implemented to prevent the occurrence of conflicts of interest,
as delineated in Sec. 205.301(a)(10); and
(2) For each person identified in Sec. 205.304(a)(2), the
identification of any food and agriculture-related business interests,
including business interests of immediate family members, that may
cause a conflict of interest.
(e) Current certification activities. An applicant who currently
certifies farms, wild crop harvesting, or handling operations may
additionally submit:
(1) A list of all farms, wild crop harvesting, and handling
operations currently certified by the applicant;
(2) Copies of the inspection reports and certification evaluation
documents for farms, wild crop harvesting, or handling operations
certified by the applicant during the previous year; and
(3) The results of an accreditation process, if any, conducted of
the applicant's operation by an accrediting body during the previous
year for the purpose of evaluating its certification activities; and
(f) Other information. Any other information the applicant believes
may support the Secretary's evaluation of the applicant's expertise and
ability.

Sec. 205.305 Statement of agreement to be submitted by an
accreditation applicant.

(a) A private person or a governing State official seeking
accreditation under this subpart shall submit a statement which affirms
that, if granted accreditation as a certifying agent under this
subpart, the applicant will:
(1) Carry out the provisions of the Act and the regulations in this
part;
(2) Accept the certification decisions made by another USDA
accredited certifying agent as equivalent to its own;
(3) Refrain from making false or misleading claims about its
accreditation status, the USDA accreditation program for certifying
agents, or the nature or qualities of products labeled as organically
produced;
(4) Conduct an annual performance review for each inspector to be
used and implement measures to correct any possible defects in
compliance with the Act and the regulations in this part identified in
each review conducted;
(5) Have an annual internal evaluation review conducted of its
certification activities and implement measures to correct any possible
defects in compliance with the Act and the regulations in this part
identified in each review conducted;
(6) Pay and submit fees to AMS in accordance with Secs. 205.421 and
205.422(b) of subpart F of this part; and
(7) Implement and carry out any other terms and conditions
determined by the Secretary to be necessary.
(b) A private person who seeks accreditation as a certifying agent
under this subpart shall additionally agree to:
(1) Hold the Secretary harmless for any failure on the part of the
certifying agent to carry out the provisions of the Act and the
regulations in this part;
(2) Furnish reasonable security, in an amount and according to such
terms as the Secretary may by regulation prescribe, for the purpose of
protecting the rights of the farming and handling operations certified
by such certifying agent under the Act and the regulations in this
part; and
(3) Transfer to the Secretary and make available to the applicable
governing

[[Page 65954]]

State official all records or copies of records concerning the person's
certification activities in the event that the certifying agent
dissolves or loses its accreditation.

Sec. 205.306 Approval of accreditation.

(a) Accreditation will be approved if:
(1) The accreditation applicant has submitted the information
required by Secs. 205.303 through 205.305 of this subpart;
(2) The accreditation applicant pays the required fee in accordance
with Sec. 205.421(c) of subpart F of this part; and
(3) The Administrator determines that the applicant for
accreditation meets or is capable of meeting the general requirements
for accreditation as stated in Sec. 205.301 of this subpart, as
applicable, as determined by a review of the information submitted in
accordance with Secs. 205.303 through 205.305 and, if necessary, a
review of the information obtained from a site visit as provided for in
Sec. 205.309.
(b) On making a determination to approve an application for
accreditation, the Administrator shall notify the applicant of approval
of accreditation in writing, stating:
(1) The area(s) for which accreditation is given;
(2) The effective date of the accreditation; and
(3) For a certifying agent who is a private person, the amount and
type of security that must be established to protect the rights of
farm, wild crop harvesting, and handling operations certified by such
certifying agent.

Sec. 205.307 Denial of accreditation.

(a) If the Administrator has reason to believe, based on a review
of the information specified in Secs. 205.303 through 205.305 of this
subpart, that an applicant for accreditation is not able to comply or
is not in compliance with the requirements of the Act and the
regulations in this part, including Sec. 205.301 of this subpart, the
Administrator shall provide a written notification of non-compliance to
the applicant in accordance with Sec. 205.315(a) of this subpart.
(b) Following the correction of deficiencies identified in the
notification issued in accordance with paragraph (a) of this section,
the applicant may submit a new application for accreditation to the
Administrator. The new application shall include documentation of
actions taken by the applicant to correct the deficiencies delineated
in the notification of non-compliance.
(c) If an accreditation applicant who receives a notification
pursuant to paragraph (a) of this section does not correct the
deficiencies identified within the time specified in the notice of non-
compliance, the Administrator may institute proceedings to deny
accreditation.

Sec. 205.308 Maintaining accreditation.

To maintain accreditation, an accredited certifying agent must
continue to satisfy the requirements of the Act and the regulations in
this part throughout the duration of its accreditation, and pay and
submit fees in accordance with Secs. 205.421 and 205.422(b) of Subpart
F of this part.

Sec. 205.309 Site evaluations.

(a) An initial site evaluation of the operation of each certifying
agent shall be performed for the purpose of verifying its compliance
with the Act and the regulations in this part within a reasonable
period of time after the date on which the agent's notice of approval
of accreditation is issued, as set forth in Sec. 205.306 of this
subpart, and after the agent has conducted sufficient certification
activities for the Administrator to examine its operations and evaluate
its compliance with Sec. 205.301 of this subpart.
(b) A site evaluation of an accreditation applicant or certifying
agent's operation and performance may be conducted at any time to
determine whether an accreditation applicant can comply with the
general requirements set forth in Sec. 205.301 of this subpart or to
evaluate the certifying agent's operation and performance under the Act
and the regulations in this part.

Sec. 205.310 [Reserved].

Sec. 205.311 Peer review panel.

(a) Peer review panel(s). (1) A peer review panel shall review the
accreditation status of a certifying agent after any site evaluation
performed pursuant to Secs. 205.309(a) and 205.314(b) of this subpart.
(2) The Administrator may convene a peer review panel at any time
for the purpose of evaluating a certifying agent's activities under the
Act and the regulations in this part.
(3) The Administrator shall consider the reports received from each
individual member of a peer review panel when making a determination
whether to confirm the accreditation of a certifying agent, or when
making a determination whether to renew the accreditation of a
certifying agent.
(b) Composition of peer review panels. (1) The Administrator shall
convene a peer review panel, which shall consist of between three and
five persons selected from the established peer review panel pool, with
the following membership requirements:
(i) One member shall be personnel of AMS who shall be responsible
for presiding over the convened panel; and
(ii) At least two members shall not be personnel of AMS or an
approved State program.
(2) Each convened peer review panel shall include no less than one
member who possesses sufficient expertise, as determined by the
Administrator, in the areas of accreditation delineated in the notice
of approval of accreditation, pursuant to Sec. 205.306(a) of this
subpart, for each certifying agent whose operations and performance are
to be reviewed.
(3) No person participating on a convened peer review panel shall
be, or shall have been, associated with a certifying agent being
reviewed by the panel in a manner that would constitute a known or
perceived conflict of interest, as determined by the Administrator.
(c) Duties and responsibilities of panel members. (1) Each person
on a convened peer review panel shall individually review the site
evaluation report prepared by the Administrator and any other
information that may be provided by the Administrator relevant to
confirming or renewing the accreditation status of a certifying agent;
(2) Information about the certifying agent received as part of the
review process is confidential information, and peer reviewers shall
not release, copy, quote, or otherwise use material from the
information received, other than in the report required to be
submitted;
(3) Each peer reviewer must agree, specifically, to treat the
information received for review as confidential; and
(4) Each person on a convened peer review panel shall provide an
individual written report to the Administrator regarding a certifying
agent's ability to conduct and perform certification activities.
(d) Optional meeting or conference call procedure for a convened
peer review panel. (1) The Administrator may convene a peer review
panel meeting or conference call if necessary for evaluating the
accreditation status of a certifying agent or at the request of at
least one peer review panel member. The Administrator may include the
certifying agent being evaluated, or a representative of the agent, for
the purpose of providing additional information. Any meeting or
conference call shall be conducted in a manner that will ensure that
the actions of panel members are carried out on an individual basis
with any opinions and

[[Page 65955]]

recommendations by a member being individually made.
(2) Copies of the peer review panel reports may be provided to the
certifying agent and written responses from the certifying agent may be
submitted for consideration by the Administrator.
(e) Peer review panel reports. Each person who participates in a
peer review panel shall provide a written report to the Administrator
which shall contain the person's recommendations concerning
confirmation or renewal of the accreditation for each agent reviewed
and the basis for each recommendation.

Sec. 205.312 Confirmation of accreditation.

(a) Notice of confirmation. The Administrator shall issue a written
notice of confirmation of accreditation to a certifying agent if the
Administrator determines the agent is in compliance with the
requirements of the Act and the regulations in this part. The notice of
confirmation will set forth any terms and conditions that must be
addressed by the certifying agent before submitting a request for
renewal of accreditation.
(b) Duration of accreditation. The accreditation of a certifying
agent shall continue in effect until such time as the certifying agent
fails to renew accreditation as delineated in Sec. 205.314, voluntarily
ceases its certification activities, or accreditation is suspended or
terminated pursuant to Sec. 205.316.

Sec. 205.313 Denial of confirmation.

(a) If the Administrator has reason to believe, based on a review
of the information specified in Secs. 205.303 through 205.305 and the
results of a site evaluation and the reports submitted by the peer
review panel, pursuant to Secs. 205.309 and 205.311(e) of this subpart,
that the certifying agent is not complying with the requirements of the
Act and the regulations in this part, the Administrator shall provide a
written notification of non-compliance to the certifying agent in
accordance with Sec. 205.315(a) of this subpart.
(b) If a certifying agent who receives a notification pursuant to
paragraph (a) of this section corrects the deficiencies identified
within the time specified in the notice of non-compliance, in
accordance with Sec. 205.315(a)(3) of this subpart, the Administrator
shall issue a notice of confirmation of accreditation to the certifying
agent, pursuant to Sec. 205.312(a).
(c) If a certifying agent who receives a notification pursuant to
paragraph (a) of this section does not correct the deficiencies
identified within the time specified in the notice of non-compliance,
the Administrator may institute proceedings to deny confirmation of
accreditation.

Sec. 205.314 Continued accreditation.

(a) Annual report and fees. An accredited certifying agent shall
submit annually to the Administrator on or before the anniversary date
of the issuance of the notice of confirmation of accreditation,
pursuant to Sec. 205.312(a) of this subpart, the following reports and
fees:
(1) A complete and accurate update of information submitted
pursuant to Secs. 205.303 and 205.304;
(2) Information supporting any changes being requested in the areas
of accreditation delineated in Sec. 205.300;
(3) The measures that were implemented in the previous year, and
any measures to be implemented in the coming year, to satisfy any terms
and conditions determined by the Administrator to be necessary as
specified in the most recent notice of confirmation of accreditation,
in accordance with Sec. 205.312(a) of this subpart, or notice of
renewal of accreditation, in accordance with paragraph (c) of this
section;
(4) The results of the most recent inspector performance reviews
and internal evaluation review, and adjustments to the certifying
agent's operation and procedures implemented, and intended to be
implemented, in response to the reviews; and
(5) The fees required in Sec. 205.421(a) of subpart F.
(b) Renewal of accreditation. An accredited certifying agent shall
request renewal of accreditation on or before the fifth anniversary of
issuance of the notice of confirmation of accreditation and each
subsequent renewal of accreditation. Following receipt of the
information submitted by the certifying agent in accordance with
paragraph (a) of this section and the results of a site evaluation and
the reports submitted by the peer review panel, pursuant to
Secs. 205.309 and 205.311(e) of this subpart, the Administrator shall
determine whether the certifying agent remains in compliance with the
Act and the regulations of this part.
(c) Notice of renewal of accreditation. Upon a determination that
the certifying agent continues to comply with the Act and the
regulations of this part, the Administrator shall issue a notice of
renewal of accreditation. The notice of renewal shall specify any terms
and conditions that must be addressed by the certifying agent and the
time within which those terms and conditions must be satisfied.
(d) Non-compliance. Upon a determination that there is reason to
believe that the certifying agent is not in compliance with the Act and
the regulations of this part, the Administrator shall initiate the
procedure delineated in Sec. 205.315 of this subpart.

Sec. 205.315 Notification of non-compliance with accreditation
requirements.

(a) A written notification of non-compliance shall be sent by
certified mail to the place of business of the accreditation applicant
or the certifying agent, as applicable, and shall contain the following
information:
(1) A description of each deficiency in compliance and each
violation of the Act and the regulations in this part that the
Administrator has reason to believe has occurred;
(2) The evidence on which the notification is based; and
(3) The date by which the accreditation applicant or the certifying
agent, as applicable, must correct each deficiency and each violation
delineated in the notification, and submit documentation to the
Administrator to support such corrections.
(b) If the documentation received by the Administrator, pursuant to
paragraph (a)(3) of this section, is not adequate to demonstrate that
each deficiency in compliance and each violation has been corrected by
the date indicated in the written notification, the Administrator may
conduct a site evaluation, as provided for in Sec. 205.309, to
determine whether the certifying agent is complying with, or has
violated, the Act or the regulations in this part.
(c) Notification of determination or recommendation. (1) If,
following the procedure pursuant to paragraphs (a) and (b) of this
section, the Administrator determines that the certifying agent is in
compliance with the Act and the regulations in this part, the
Administrator shall notify the certifying agent in writing of this
determination.
(2) If, following the procedure pursuant to paragraphs (a) and (b)
of this section, the Administrator has reason to believe that the
certifying agent is not in compliance with the Act and the regulations
in this part, the Administrator may institute a proceeding to suspend
or terminate the accreditation of the certifying agent.

Sec. 205.316 Termination of accreditation.

(a) The Administrator shall follow the procedures prescribed in
Sec. 205.315 of this subpart if the Administrator has reason to believe
that an accredited certifying agent or a person responsibly

[[Page 65956]]

connected with an accredited certifying agent has ceased to comply with
or has violated the Act or the regulations in this part.
(b) Notwithstanding paragraph (a) of this section, if the
Administrator has reason to believe that an accredited certifying agent
or a person responsibly connected with an accredited certifying agent
has wilfully violated the Act and the regulations in this part, the
Administrator may institute a proceeding to suspend or terminate the
accreditation of the certifying agent.
(c) A private person or a governing State official whose
accreditation as a certifying agent is suspended or terminated shall:
(1) Cease any certification activity in each area of accreditation
and in each State for which its accreditation is suspended; or
(2) In the case of a private person whose accreditation is
terminated, cease all certification activities; and
(3) Transfer to the Secretary and make available to any applicable
governing State official all records concerning its certification
activities that were suspended or terminated, so that the Secretary may
promptly determine whether farms or handling operations certified by
such certifying agent may retain their organic certification.
(d) A private person or a governing State official whose
accreditation as a certifying agent is suspended by the Secretary under
this section may at any time submit a new request for accreditation,
pursuant to Sec. 205.302 of this subpart. The request shall be
accompanied by documentation that demonstrates that appropriate
corrective actions have been taken to comply with and remain in
compliance with the Act and the regulations in this part.
(e) A private person whose accreditation as a certifying agent is
terminated shall be ineligible to be accredited as a certifying agent
under the Act and the regulations in this part for a period of not less
than three years following the date of such determination.

Secs. 205.317 through 205.400 [Reserved].

Subpart F--Additional Regulatory Functions

State Programs

Sec. 205.401 Requirements of State programs.

(a) A State may establish a State organic certification program for
producers and handlers of agricultural products that have been produced
within the State using organic methods as provided for in the Act and
the regulations in part 205.
(b) The State program shall meet the requirements of the Act and
the regulations in part 205.
(c) A State program may contain more restrictive requirements
governing the certification of organic farms and handling operations
and the production and handling of agricultural products that are to be
sold or labeled as organically produced than are contained in the
National Organic Program established by the Secretary, Provided, That
such additional requirements:
(1) Further the purposes of the Act and the regulations in part
205;
(2) Are consistent with the provisions of the Act and the
regulations in part 205;
(3) Do not discriminate towards agricultural commodities
organically produced in other States in accordance with the Act and the
regulations in part 205; and
(4) Are approved by the Secretary prior to being implemented.

Sec. 205.402 Approval of State programs and program amendments.

(a) A governing State official shall submit to the Secretary a
proposed State program, and proposed substantive amendment(s) to a
State program, and shall obtain the Secretary's approval prior to
implementation of the proposed program and any proposed substantive
amendments thereto.
(b) The Secretary will notify the governing State official within
six months after the receipt of the proposed State program and proposed
substantive amendment to the State program, as to whether the program
or substantive amendment is approved or disapproved, and if
disapproved, the reasons for the disapproval. After receipt of a notice
of disapproval, the State may reapply at any time.

Sec. 205.403 Review of approved programs.

The Secretary will review a State organic certification program not
less than once during each five-year period following the date of the
initial approval of such program. The Secretary will notify the
governing State official within six months after the initiation of the
review, whether the program is approved or disapproved, and if
disapproved, the reasons for the disapproval.

Secs. 205.404 through 205.420 [Reserved].

Fees

Sec. 205.421 Fees for accreditation applicants and accredited
certifying agents.

(a) Application fees. (1) Each applicant for accreditation and each
accredited certifying agent shall submit a non-refundable fee of $640
simultaneous with the submission of each application for accreditation
or annual report, as applicable. Payment shall be made by certified
check or money order made payable to Agricultural Marketing Service and
sent with the application or annual report to: Program Manager, USDA/
AMS/TM/NOP, Room 2945-S, P.O. Box 96456, Washington, D.C., 20090-6456.
(2) An applicant or an accredited certifying agent whose
organizational structure consists of chapters or subsidiary offices
also shall include a non-refundable fee of $160 for each chapter or
subsidiary office, simultaneous with the submission of each application
for accreditation or annual report, as applicable.
(b) Site evaluation fees and related travel and per diem expenses.
Each applicant or accredited certifying agent for whom a site visit is
conducted shall submit a non-refundable payment for the following fees
and expenses related to a site evaluation visit conducted, pursuant to
Sec. 205.309 of subpart E, within 30 days following issuance of a bill
from AMS for the cost of the site evaluation visit which shall include
payment of:
(1) An hourly fee of $40 per hour, calculated to the nearest
fifteen minute period, for each AMS evaluator to conduct the site
evaluation visit, including travel time to and from the evaluator's
duty station; and
(2) Travel expenses and per diem allowances for each AMS evaluator.
(c) Administrative fee. Each accredited certifying agent shall
submit a non-refundable administrative fee of $2,000, and an additional
non-refundable administrative fee of $300 for each chapter or
subsidiary office belonging to the certifying agent, within 30 days
following issuance of a notification of approval of accreditation
pursuant to Sec. 205.306(b) of subpart E; within 30 days following the
issuance of a subsequent notification of confirmation of accreditation,
pursuant to Sec. 205.312(a) of subpart E; or with the submission of
each annual report, pursuant to Sec. 205.314(a) of subpart E.

Sec. 205.422 Fees for certified operations.

(a) Each farm or wild crop harvesting operation shall submit to the
certifying agent a non-refundable fee of $50 and each handling
operation shall submit to the certifying agent a non-refundable fee of
$500 by money order or certified check made payable to the Agricultural
Marketing Service within 15 days of the date of the issuance by a
certifying agent

[[Page 65957]]

of a notice of approval of certification pursuant to Sec. 205.214(c) of
subpart D.
(b) Each certifying agent shall submit to AMS, according to the
instructions provided by the Administrator, all fees collected pursuant
to paragraph (a) of this section within 15 days following the date of
receipt by the certifying agent.

Sec. 205.423 Fees for import programs.

(a) Each foreign certification program, other than those operated
by a foreign country itself, that wants AMS to determine whether its
program is equivalent to the AMS organic certification program shall
submit, as authorized by the Independent Offices Appropriations Act (31
U.S.C. 9701 et seq.), a non-refundable payment in the amount stated in
the AMS notice of intent to acknowledge equivalency sent to them by
AMS. The payment required will be based on an hourly charge of $40 per
hour for review time plus any travel and per diem expenses incurred.
(b) No determination of equivalency of such a program shall be
final and effective until such payment is made.
(c) The payment required shall be submitted by certified funds to
AMS within 30 days following issuance of a bill from AMS according to
the instructions provided with the notice of intent to acknowledge
equivalency sent by AMS.

Sec. 205.424 Payment of fees and other charges.

(a) All fees shall be submitted in the form of a certified check or
money order made payable to the Agricultural Marketing Service and sent
according to the billing instructions.
(b) All fees submitted later than the time indicated in the
applicable section shall be subject to interest, penalties and
administrative costs, as provided in the Debt Collection Act of 1982
(31 U.S.C 3717), and may result in the loss of or failure to obtain
certification, accreditation, or equivalency status.

Secs. 205.425 through 205.429 [Reserved].

Compliance Review and Other Testing

Sec. 205.430 Compliance review.

(a) A certifying agent shall arrange for periodic sampling and
residue testing, not less frequently than every five years, of
agricultural products produced on certified organic farms or wild crop
harvesting operations and handled through certified handling operations
certified by that agent to determine if an agricultural product
contains a detectable residue level of a pesticide or other prohibited
substance. To the extent that certifying agents are aware of a
violation of applicable laws relating to food safety, they are required
to report such violation to the appropriate health agencies (Federal,
State, and local).
(b) The Secretary or the applicable governing State official shall
arrange for sampling and residue testing of agricultural products sold,
labeled, or represented as organic, at any point of production or
distribution, and may require the certifying agent to conduct sampling
and residue testing of such products originating from operations
certified by that agent in order to determine if such products contain
a detectable residue level of a pesticide or other prohibited
substance.
(c) Sample collection. (1) Each product sample collected pursuant
to paragraphs (a) and (b) of this section shall be collected by an
inspector representing the Secretary, certifying agent, or applicable
governing State official and submitted for analysis to a laboratory
accredited for the product test, in accordance with Subchapter 400 of
the Food and Drug Administration ``Investigations Operations Manual,''
available from the FDA, Division of Emergency and Investigation
Operations, 5600 Fishers Lane, Rockville MD 20857.
(2) The analytical methods used to test each product sample shall
be selected as appropriate from:
(i) The FDA ``Pesticide Analytical Manual,'' Volumes I and II,
available from the FDA, Department of Health, Education and Welfare,
200 C Street S.W., Washington, DC 20204;
(ii) The ``FSIS Residue Chemistry Guidebook'', available by request
from: FSIS Quality Systems Branch, Room 516-A, Annex Building, 300 12th
Street S.W., Washington, DC 20250-3700, or
(iii) The ``Official Methods of Analysis'' of the Association of
Official Analytical Chemists International (AOACI), available by
request from: AOACI, 481 North Frederick Ave., Suite 500, Gaithersburg,
MD 20877.
(3) The results of all sampling and testing performed pursuant to
paragraphs (a) and (b) of this section for each product sample shall be
reported to the certifying agent or applicable governing State
official, and to the Secretary, Provided, That if any test result
indicates that the product sample contains a residue level of a
pesticide or other prohibited substance that exceeds the EPA tolerance
level ¹ or the FDA action level,² as applicable,
for that substance, the certifying agent, governing State official, or
the Secretary also shall inform the appropriate health agencies of the
results of the residue test.
---------------------------------------------------------------------------

\1\ 40 CFR parts 180, 185, and 186.
\2\ The FDA action levels are published in the FDA publication
entitled ``Action Levels for Poisonous or Deleterious Substances in
Human Food and Animal Feed.'' Single copies of this booklet are
available fron: Industry Activities Section (HHF-326), CFSN/FDA, 200
C Street S.W., Washington, DC 20204.
---------------------------------------------------------------------------

(d) Residue test investigations. (1) If the results of the testing
and sampling performed pursuant to paragraphs (a) and (b) of this
section indicate that the product sample contains a detectable residue
level of a pesticide or other prohibited substance, the certifying
agent, the applicable governing State official, or the Secretary shall
conduct an investigation of the certified operation that produced or
harvested the product represented by the sample to determine the cause
of the detectable residue level, and may require the producer or
handler of such product to prove that any prohibited substance was not
applied to such product.
(2) If the certifying agent, applicable governing State official,
or the Secretary, determines as a result of the investigation that the
detectable residue level of the pesticide or other prohibited substance
exceeds the unavoidable residual environmental contamination level for
the detected pesticide or other prohibited substance, or that the
detected pesticide or other prohibited substance was the result of an
intentional application, then the agricultural products represented by
the sample shall not be sold or labeled as organically produced, and
the Administrator may institute proceedings to terminate certification
of the operation, or portion of an operation, from which the
agricultural products represented by the sample originated, as provided
for in Sec. 205.219 of subpart D.

Sec. 205.431 Preharvest tissue testing.

(a) General. The Secretary, the applicable governing State
official, or the certifying agent may require a preharvest tissue test
of any crop to be sold or labeled as organically produced that is grown
on soil suspected by the Secretary, the applicable governing State
official, or the certifying agent of harboring a contaminant.
(b) Preharvest tissue test sample collection. (1) The preharvest
tissue test sample collection conducted pursuant to paragraph (a) of
this section shall be performed by an inspector representing the
Secretary, certifying agent, or applicable governing State official and
shall be collected and submitted for testing in accordance with
Subchapter 400 of the ``FDA Investigations

[[Page 65958]]

Operations Manual'' to a laboratory accredited for the product test.
(2) The analytical methods used to determine whether a preharvest
tissue test sample contains a residue of a contaminant shall be
selected as appropriate from the FDA ``Pesticide Analytical Manual,''
Volumes I and II, or the ``Official Methods of Analysis'' of the
Association of Official Analytical Chemists.
(c) Reporting of preharvest tissue test results. The results of
each preharvest tissue test shall be reported to the Secretary and,
Provided, That if the test result indicates that the residue level of a
contaminant in the organically produced crop exceeds the EPA tolerance
or FDA action level, the certifying agent or applicable official also
shall report the results to the appropriate regulatory agency.

Sec. 205.432 Emergency pest or disease treatment.

If a pesticide or other prohibited substance is applied to a
certified organic farm, wild crop harvesting, or handling operation due
to a Federal or State emergency pest eradication or disease treatment
program, and the certified operation otherwise meets the requirements
of this part, the certification status of the operation shall not be
affected as a result of the application of the pesticide or other
prohibited substance, Provided, That:
(a) Any harvested crop or plant part to be harvested that has
contact with a prohibited substance applied as the result of a Federal
or State emergency pest eradication or disease treatment program is not
sold or labeled as organically produced; and
(b) Any livestock that are treated with a prohibited substance
applied as the result of a Federal or State emergency pest or disease
treatment program, or product derived from such treated livestock,
shall not thereafter be labeled or sold as organically produced, except
that:
(1) Milk or milk products may be labeled or sold as organically
produced beginning 12 months following the last date that the dairy
animal was treated with the prohibited substance; and
(2) The offspring of gestating mammalian breeder stock treated with
a prohibited substance may be considered organic Provided, That the
breeder stock was not in the last third of gestation on the last date
that the breeder stock was treated with the prohibited substance.

Sec. 205.433 Reporting the application of a prohibited substance.

A producer or handler shall immediately report any instance of
application of a prohibited substance on their certified operation to
their certifying agent and shall inform the agent of the reason for, or
the cause of, the application.

Secs. 205.434 through 205.451 [Reserved].

Appeals

Sec. 205.452 General.

Any person subject to the Act who believes that he or she is
adversely affected by a decision of a member of the National Organic
Program staff or by a certifying official may appeal such decision to
the Administrator.

Secs. 205.453 through 205.479 [Reserved].

Equivalency of Imported Organic Products

Sec. 205.480 Eligibility of agricultural products for importation into
the United States.

Any agricultural product imported into the United States that is
labeled or sold as organic or that contains an ingredient represented
as organic shall have been produced and handled under an organic
certification program that the Secretary has determined provides
safeguards and guidelines governing the production and handling of such
products that are at least equivalent to the requirements of the Act
and the regulations set forth in part 205.

Sec. 205.481 Determination of the equivalency of foreign programs.

The determination of the equivalency to the Act and regulations in
part 205 of a foreign organic certification program will be based on an
evaluation of the following components of the program's provisions for
organically produced and handled agricultural products:
(a) The standards of production and handling for agricultural
products;
(b) The list of substances allowed and prohibited for use in the
production and handling of agricultural products and the criteria for
establishing the allowance or prohibition of substances used in organic
production and handling;
(c) The requirements for, and process by which, farms and handling
operations are inspected and certified as operating under a system of
organic farming and handling, including the requirements for
documentation of the practices and substances used;
(d) The measures identified to provide adequate enforcement for,
and protection against, violations of the program requirements;
(e) The requirements for and process by which agents are evaluated
and accredited by an agency of the government as being qualified to
certify organic farm, wild crop harvesting, or handling operations; and
(f) Any other information relevant to the production and
certification of organically produced products including the
administration of the foreign organic certification program.

Sec. 205.482 Process for establishing equivalency of foreign programs.

(a) A foreign organic certification program that wants a
determination of the equivalency of its program, as provided for in
Sec. 205.481, shall submit to the Secretary a complete and accurate
description of its program, including any of the laws and applicable
requirements upon which the program is based and any information
requested by the Secretary.
(b) The foreign organic certification program shall be notified of
the determination as follows:
(1) A foreign organic certification program that the Secretary
determines to have safeguards and guidelines equivalent to the Act and
regulations in part 205, the program's representative shall be notified
in writing of the date upon which agricultural products produced and
handled under that program may begin to be imported into the United
States and sold or labeled as organically produced; and
(2) A foreign organic certification program that the Secretary
determines does not have guidelines and safeguards equivalent to the
Act and the regulations in part 205, the program's representative shall
be notified in writing of the basis for such determination. After
receipt of the notice, the program representative may reapply at any
time.
(c) If at any time the Secretary determines that a foreign program
is not equivalent, the Secretary may withdraw the equivalency status.
Termination of the equivalency status will be effective upon receipt of
the notice.

Sec. 205.483 Maintenance of eligibility for importation.

(a) Maintenance of eligibility for importation of agricultural
products into the United States that are to be sold or labeled as
organic will depend on the results of periodic reviews by the Secretary
of the foreign organic certification program under which the products
are produced and handled, and the timely submission of documents and
other information necessary to reevaluate the equivalency status of the
foreign organic certification program, as requested by the Secretary,
including any amendments made to the foreign

[[Page 65959]]

organic certification program's requirements.
(b) For agricultural products imported into the United States to
continue to be eligible to be sold or labeled as organic, the program
representative of the program under which they were produced and
handled must notify the Secretary of any amendments made to the program
requirements prior to their implementation.

Secs. 205.484--205.999 [Reserved]

PARTS 206--209 [RESERVED]

Dated: December 5, 1997.
Michael V. Dunn,
Assistant Secretary, Marketing and Regulatory Programs.

Note: The following Attachment will not appear in the Code of
Federal Regulations.

Attachment--Regulatory Impact Assessment for Proposed Rules
Implementing the Organic Foods Production Act of 1990

The Need for the Proposed Action

The Organic Foods Production Act (OFPA) of 1990, Title XXI of
the Food, Agriculture, Conservation and Trade Act of 1990 (Farm
Bill), U.S.C. Title 7, mandates that the Secretary of Agriculture
develop a national organic program. The OFPA states that the
Secretary shall establish an organic certification program for
farmers, wild crop harvesters and handlers of agricultural products
that have been produced using organic methods as provided for in the
OFPA. In addition, section 6514 of the OFPA requires the Secretary
to establish and implement a program to accredit a governing State
official or any private person, who meets the requirements of the
Act, as a certifying agent to certify that farm, wild crop
harvesting or handling operations are in compliance with the
standards set out in the regulation. As mandated by the OFPA in
section 6501, the regulations are proposed for the following
purposes: (1) to establish national standards governing the
marketing of certain agricultural products as organically produced
products; (2) to assure consumers that organically produced products
meet a consistent standard; and (3) to facilitate interstate
commerce in fresh and processed food that is organically produced.
The purposes of the OFPA are similar to those of the quality grading
programs currently provided by USDA for many agricultural products.
The following regulatory assessment is provided to fulfill the
requirements of Executive Order 12866. This assessment consists of a
statement of the need for the proposed action, an examination of
alternative approaches, and an analysis of the benefits and costs.
The analysis is necessarily descriptive of the anticipated impacts
of the proposed rule. In the absence of basic market data on the
prices and quantities of organic goods and services and the costs of
organic production, it is not possible to provide quantitative
estimates of the benefits and costs of the proposed rule, except for
the cost of fees and recordkeeping proposed by the USDA.
Consequently, the analysis does not contain an estimate of net
benefits. Rather, it describes the developments leading up to the
passage of the OFPA, outlines current market conditions and recent
trends, and identifies the types of benefits and costs suggested by
the changes in market conditions that the rule is expected to
produce.
The OFPA was introduced at the request of the organic community
after it experienced a number of problems in the marketing of
organic products. Because many consumers are willing to pay price
premiums for organic food, producers (farmers and wild crop
harvesters) and handlers have an economic incentive to label their
products organic. But one problem is that organic products cannot be
distinguished from conventionally produced products by sight
inspection; hence, consumers rely on verification methods, such as
certification by private entities or verification by retailers. To
the extent that consumers cannot verify organic product claims and
are therefore vulnerable to fraud from the mislabeling of organic
products, implementation of uniform organic standards and mandatory
certification can be presumed to be beneficial.
A second problem is the lack of uniformity in various aspects of
standards defining organic production. As organic production became
established in the 1980's, certifying agencies were formed and some
States passed laws establishing standards for organic production.
However, many standards for production, processing and labeling of
organic products were different to some degree, causing
disagreements between certifiers over whose standards would apply to
ingredients used in multi-ingredient organic processed products.
Disagreements about standards also created sourcing problems for
handlers of these multi-ingredient products, which at times resulted
in losses for producers of organic ingredients.
Producers, handlers and certifiers appear to pay the costs
resulting from the lack of uniformity in standards, which interferes
with efficient resource allocation. However, whether these costs are
significant is an empirical question. The data needed to estimate
the effect of disagreements between certifiers on producer and
handler costs would have to be collected. The costs of negotiating
and maintaining reciprocity agreements among certifiers would
provide one cost measure. These reciprocity agreements, which
specify the conditions under which certifiers recognize each others'
standards, would be unnecessary within a uniform national standards
program. The costs of private accreditation or shipment-by-shipment
certification, required to gain access to some foreign markets such
as the European Union (EU), offer another indirect measure of the
burden of the current system of variable standards. Certifiers would
need to be surveyed to estimate these costs.
The lack of uniformity in various aspects of organic standards
potentially reduces consumer welfare by creating confusion over the
meaning of organic. However, the existence of different standards
for organic production may provide consumers with a choice of
products which they may not have under a program with a uniform
standard. Our review of the literature did not find results of
surveys of consumers' perceptions of the characteristics of organic
foods. Consumer surveys focusing specifically on the meaning of
organic and consumer preferences for organic standards would need to
be conducted to determine more precisely the nature and extent of
consumer confusion with, and level of confidence in, the status quo.
A third problem is the constraint on market growth resulting
from the prohibition on labeling meat and poultry products as
organic. The USDA Food Safety and Inspection Service (FSIS) has
withheld approval for the use of organic labels on these products
pending the outcome of this rulemaking. Industry data indicate the
existence of a small market for ``natural'' meat, measured as sales
of meat from natural foods stores, but no data are available on what
proportion of these sales might be represented by organic meat. The
data also are lacking with which to estimate the demand for organic
meat and processed products containing organic meat. Consumer
surveys indicating the degree of interest in these products would
provide a measure of demand.

Alternatives to the Proposed Rule

Status Quo: The Organic Market in the Absence of Regulation

Sales of organic food products produced under a wide variety of
protocols have grown at approximately 20 percent per year since
1990, the year the OFPA was passed (Table 1). Annual sales data are
not available prior to 1990, but sales growth was approximately 10
percent from 1980 to 1989. Although the growth in the organic
industry since 1989 has occurred without direct involvement of the
Federal government, the establishment of national standards and
accreditation could have been anticipated by the industry since
1990, when Congress passed the OFPA. Economic theory suggests the
hypothesis that investments in production, new product development,
and marketing during this period may have incorporated expectations
for OFPA implementation. It has not been possible to test this
hypothesis or to separate out the effect of these expectations from
other forces on industry growth.
The EU is the largest market for organic food outside the United
States. Valued at approximately $1.7 billion in 1990, the European
market has been projected to grow at a rate of 25 percent per year,
reaching approximately $14 billion by the year 2000 (Tate, p. 72).
The EU regulations establishing the basis for equivalency in organic
production among EU members and for imports from outside the EU were
adopted in 1991 (Council Regulation 2092/91) (Byng, p. 21). These
rules are being implemented by EU Member Countries, many of whom
already have been operating under their own nationally recognized
and mandated standards of production and inspection. The EU
regulations allow for imports from non-EU countries whose national
standards have been recognized as equivalent to the EU standards
(Commission Regulation 94/92).

[[Page 65960]]

International access to domestic organic products may be very
influential on development of the organic industry in the United
States. In the absence of national standards, U.S. organic producers
have been able to access European markets only by obtaining specific
product permissions granted to individual importers by organic
regulatory authorities in an EU Member State (Byng, p. 27-28). This
process requires the importer to satisfy the authorities, through
documentation and possible site inspection, that the product in
question has been certified to have been produced under equivalent
standards of production and inspection. It was intended as a
temporary arrangement to accommodate non-EU countries that had not
yet established government systems regulating organic production and
certification. Growth in the trade of organic products, particularly
exports, may be affected if equivalency between the EU and the
United States is not established.
In the absence of a national program, the use of the term
organic may be affected by the policies and regulations of other
regulatory bodies. For example, FSIS currently does not approve the
use of an organic label on meat and poultry, and without national
standards they may continue their current restrictions, thus
limiting growth in the sales of organic meat and poultry. The Food
and Drug Administration (FDA) has allowed organic labeling for all
other food products with the expectation that standards will be
forthcoming. In the absence of a national standard, FDA's future
position on organic labeling is uncertain. Additionally, in the
absence of a national program, certifying agents would not be
required to recognize another certifier's standards as equivalent. A
lack of reciprocity between certifiers also may stifle the growth in
trade of organic products for reasons previously discussed in the
section of this assessment which discusses the need for this
proposed action.

A Pure Food Model

Some consumers expect organic food to be pure food: that is,
food which is completely free of synthetic chemicals (Burros, p. C-
1). A pure food standard could be defined either as one which would
not allow any exceptions to the prohibition on the use of synthetic
substances, including the proposed use of some substances in
emergency situations, or as one which would require that food test
completely free of chemical residues. Such a standard could be posed
as an alternative to the proposed rule; however, it would be more
restrictive than the standard outlined in the OFPA, and would
require an amendment to the OFPA.
Residue free food may be more restrictive than the standards of
production and handling currently adopted by the organic industry
itself. Standards based on residue testing have been rejected by the
industry because: (1) residue testing focuses on the end product
rather than the production process; (2) not all synthetic chemicals
used in production are detectable as residues; and (3) some residues
may appear in a product that has been produced organically because
of unavoidable contamination in the soil, drift, or for other
reasons which are beyond the farmer's control.
Establishing organic standards to meet a pure food definition
could be expected to increase marginal costs, causing the supply
curve to shift in and prices to increase, ceteris paribus. Some
consumers, such as chemically sensitive persons or those who
advocate pure food, likely would be willing to pay for a more
restrictive definition for organic food. Other consumers would find
the higher prices likely to result from a pure food standard beyond
their willingness to pay for organic products and, therefore, may
choose not to purchase organic products.
The niche market for pure food could be supplied by organic
producers and handlers within the context of the regulations and
restrictions contained in the final rule. Individual farmers and
handlers would continue to have the option of putting additional
information about their production methods on labeling materials of
organic products, or otherwise meeting the product specifications of
a pure food model, as long as these were not inconsistent with the
national standards. Such additional information is subject to the
same truth in labeling requirements as applied to all products. A
certifier would be able to supply verification of additional product
claims as a service to its clients, without requiring that all of
its certified clients meet such product specifications.

Exemption of Small Certifiers From Accreditation

As explained below in the section entitled ``Costs of the
Proposed Rule'' and as demonstrated in Table 5, the smallest
certifiers (those with annual revenues of $25,000 or less) may not
have the resources to meet all of the requirements of the rule, such
as accreditation fees, administrative and personnel requirements,
and conflict of interest restrictions, based on their current
structure and revenues. Therefore, exempting the smallest certifiers
from the accreditation requirement, similar to small producers being
exempt from certification requirements, could mitigate the adverse
impact of the rule on this group. This option, however, would
require a legislative amendment to the OFPA.
The exemption of the smaller certifiers from accreditation would
carry with it many of the limitations resulting from the absence of
Federal oversight. International trade would likely be limited to
products certified by accredited certifiers. Protecting domestic
consumers from inappropriate organic claims on the labels of
products certified by exempt certifiers would likely lead to greater
confusion over labels in the marketplace. Federal enforcement
agencies such as FDA, the Bureau of Alcohol, Tobacco and Firearms
(ATF), and FSIS might wish to distinguish accredited certifiers from
those certifiers who are exempt, perhaps by requiring accredited
certifiers' clients to include the USDA seal on their product
labels.
One of the purposes of the OFPA described in the statute is to
assure consumers that organically produced products meet a
consistent standard. Without Federal oversight of certifiers, it
would be difficult to ensure that one national standard of
production and handling for agricultural products would be employed.
The result could be the continuation of reciprocity agreements
between small, exempt certifiers and large accredited ones. This
could result in a cost for small entities, while providing less
benefit to certified producers and handlers than would be provided
them by accreditation of all certifiers.

Benefits of the Proposed Rule

There are three points to note regarding the following
discussion of benefits. First, while the costs of the rule may
initially fall on certifiers, the benefits should be more widely
distributed. The expected growth in the demand for organic products
should create benefits for consumers, producers, handlers and
certifiers. Second, not all benefits that may arise from the rule
are primarily economic or quantifiable. Potential benefits which are
neither quantifiable, such as increased protection for consumers
producers and handlers, nor economic, such as greater communication
among program participants and the NOP staff, are discussed here
along with the economic benefits. Third, where economic data are
available, they are generally not adequate to quantify economic
benefits.

Consumer Benefits

Two potential benefits may accrue to consumers as a result of
the proposed rule: protection from false and misleading organic food
labels and a choice of a wider variety of organic foods.
Without a national standard, consumers can be mislead by labels
on processed products claiming to contain organic ingredients, when
in fact some of the ingredients may not be organically produced or
individual ingredients may be certified under different standards of
organic production. The proposed organic standards and USDA
accreditation of certifiers might benefit consumers by providing
assurance of the authenticity of organic claims. However, without
additional data, it is not possible to quantify this benefit.
Establishing a national standard for the organic label is
expected to increase the supply and variety of organic products,
especially organic meat and poultry, available to consumers in the
market. The organic label on meat and poultry products, including
processed foods such as soups and entrees containing meat and
poultry, would likely account for the bulk of new items that would
enter the market following implementation.

Producer and Handler Benefits

As previously discussed, the proposed rule addresses the problem
of existing certifying agents using different standards and not
granting reciprocity to other certifying agents. By accrediting
certifiers, the rule would establish the requirements and
enforcement mechanism that would protect producers and handlers from
inconsistent certification services, lack of reciprocity between
certifiers, and competition from fraudulent products, all of which
can increase costs or reduce revenues. In the absence of a system of
accreditation, the certifier of a final

[[Page 65961]]

product is not required to recognize the certification of an
intermediate product. Thus, both primary farmers and food handlers
face a risk of being unable to sell certified organic product when
more than one certifier is involved. The monitoring activities of
accreditation should reduce the risk of restricted market access,
and ensure that certifiers are using consistent criteria for
certification and that certification personnel are knowledgeable and
free from conflicts of interest.
The lack of a national standard for the organic label may
present a barrier to marketing organic food products in the United
States and abroad. Current data show organic sales growing at the
rate of about 20 percent per year. It is unclear whether the growth
rate will continue, increase, or decrease as a result of regulating
the organic industry. In the absence of technical barriers to
increasing production, implementation of the rule is expected to
result in an increase in the rate of growth for organic exports and
organic meat and poultry.
It is expected that national standards would create the
conditions necessary for increased access to international markets.
Despite restricted access to the European market, the United States
is the most important non-EU supplier of organic products to EU
countries (Foreign Agriculture Service (FAS), 1995). Import
authorizations have been granted for a number of raw and processed
commodities, including sunflowers, buckwheat, beans, sugar and
apples. Demand is strong throughout the European Union, and the
organic market share has been projected to reach 2.5 percent of
total food consumption expenditures by 1998. Austria expects its
organic market share to equal one third of all food sales by the
year 2000 (FAS, Austria). In 1994, France and Germany combined had
total retail sales of organic foods equal to that of the United
States (approximately $2 billion) (FAS, France and Germany). Japan's
retail sales for that year were estimated to be $688 million (SRI
International, p. 15). Other EU countries report growth rates equal
to or greater than the current growth rate in the United States of
about 20 percent per year. Upon recognition of equivalency by the EU
and the removal of the trade restrictions expected to follow
implementation of the final rule, larger growth in exports of
organic food products might be anticipated.
Increased access to international markets also implies that
imports of organic products to the U.S. may increase. Currently,
there are no restrictions on importing organic products to the U.S.
in addition to those regulations applying to conventional products.
Data are needed on the current trade balance in organic products to
establish a baseline from which to measure changes in trade
following implementation. The U.S. Customs Agency does not collect
trade data that distinguish organic from conventional goods.
The impact of national organic standards on domestic production
depends on increasing demand and on whether producers and handlers
can lower their unit costs through expansion of their economies of
scale of operations. Increasing demand may also create an incentive
for new producers to enter the organic market. Input costs also may
decline if economies of scale are achieved in input industries
producing for the organic market. These conclusions are necessarily
speculative given the lack of information on costs and production
relationships for organic goods. However, such expectations are
consistent with economic theory and experiences in other industries.
Gains to organic producers and handlers may be partially offset by a
decrease in the demand for comparable non-organically produced
agricultural products, causing conventional producers and handlers
to lose market share.
With the introduction of national standards to regulate labeling
of organic products, processed organic products would acquire
commercial item descriptions which are currently used by the food
industry to identify conventional products. Adopting bar codes and
industry accounting practices which identify organic goods would
make sales information more accessible for research and marketing
purposes.

Certifier Benefits

Certifiers might experience benefits from the rule through
reductions in their administrative costs, greater exchange of
information, and an increase in demand for certification resulting
from an increased demand for organic products and from an expansion
of the organic market due to new products entering the market.
There are several ways in which certifiers' administrative costs
may be reduced as a result of the rule. First, increased assurance
through accreditation might reduce certifiers' costs of maintaining
access to organic markets for their clients. Costs associated with
establishing reciprocity between certifiers could be eliminated.
Accreditation and national standards would remove the need to
negotiate individual reciprocity agreements with other certifiers,
and would simplify the process of certifying multiple ingredient
products, thus reducing certification costs. The responsibility for
meeting production and certification requirements of each ingredient
would rest with the certified producers and accredited certifiers of
the individual ingredients.
Second, certifiers would no longer would have to pay private
organizations for the accreditation required to gain access to some
international markets. This would be of particular benefit to the
smaller certifiers who may have been unable to enter these markets
because of the high cost of international accreditation. A portion
of the administrative fees paid by each certifying agent would
support USDA activities to negotiate equivalency of organic
standards in world markets so that producer clients of all USDA
accredited certifiers could have access to these markets.
Third, in the long run, uniform standard of production,
certification and accreditation should reduce the cost of training
certification staff. Industry-wide training costs may increase
initially, but should decline as the pool of trained certifiers and
certification personnel increases and the corresponding cost of
training new certification personnel decreases, especially in those
instances where personnel transfer from one certifier to another.
Standardized materials, such as compliance guides and training
manuals, also should contribute to a reduction in the cost of
training certification staff. In addition, USDA accreditation of
certifiers would present opportunities for sharing information about
standards, practices and the general requirements of the program
through the National Organic Program staff. This information is most
frequently provided in Small Entity Compliance Guides and other
printed material.
The contribution of national standards to increasing domestic
demand and opening international markets to U.S. organic products
provides opportunities for growth in certification services.
Certifiers' average costs of operation may decline as fixed costs
are spread over a growing number of producers.

Costs of the Proposed Rule

Direct Program Costs

The proposed rule would impose direct costs on certifiers in the
form of a fee paid to the Federal government for USDA accreditation,
which the OFPA requires of all certifiers of organic food products
in the United States. Certifiers, in turn, generate revenue by
charging producers and handlers a certification fee. Although the
proposed rule does not regulate the amount of certification fees,
the OFPA does require that food products labeled organic be
certified, and that the fees which certifiers collect from producers
and handlers for this service be reasonable.
The OFPA also provides for the collection of reasonable fees by
USDA from producers and handlers who participate in the national
program. The following analysis of costs thus considers both fees to
be charged to certifiers and fees to be charged to producers and
handlers to recover other program costs.
Certifiers' costs of accreditation are assumed to be passed on
to producers and handlers through an increase in certification fees.
Currently, supply and demand for certification services determine
the fees charged in most areas. Some States charge minimal fees for
certification and instead subsidize operating costs from general
revenues. The majority of certifiers structure their fee schedules
on a sliding scale based on a measure of size, usually represented
by the client's gross sales of organic products.
Direct national program costs would equal the cost of the
accreditation program plus the costs of other functions carried out
by the organic program staff (salaries, overhead, materials review,
compliance costs, etc.). These costs are estimated at approximately
$1 million for the first year that the program is in full operation
(Table 2). In future years, direct national program costs would
depend upon the number of accreditation applicants, annual reports
received from certifiers, and the number of producers, handlers and
certifiers who participate in the program. Data collected by AMS
indicate that the number of organic farmers increased about 12
percent per year and the number of organic handlers increased at
about 11 percent per year during the period 1990 to 1994. There

[[Page 65962]]

is no indication that the rate of growth has continued, or that the
implementation of the organic program would cause an increase in the
number of organic operations; however, growth in retail sales, the
addition of meat and poultry to organic production, and the
possibility of increased exports suggest that the number of
operations may increase.
At the current (1995) level of retail sales, the $1 million
program costs imply an additional consumer cost from the regulation
of approximately .04 cents per dollar. If the known current 44
certifiers were to be accredited and assume the total program cost
of $1 million, annual average costs per certifier would be $22,727.
Assuming these costs are passed on to the estimated number of 4,600
existing certified organic farmers and handlers, and assuming that
these certified farmers and handlers continue in business,
certification costs for these 4,600 farmers and handlers would
increase by an average of $217 per year as a result of the organic
program. This increase may be smaller if more than 4,600 farmers and
handlers are certified. Although the current fees are based on the
anticipated certification of 4,600 farmers and handlers, we
considered for purposes of estimating the reporting and
recordkeeping burdens of the proposed rule that the actual total
number of certified farmers and handlers who may participate in the
national program during the first three years of the program may
approximate 12,000 total farmers and handlers combined. These
distributions of direct program costs are shown in Table 3. The
actual distribution of program costs will be a function of the
elasticity of demand for organic goods. The more inelastic the
demand, the greater the portion of costs paid by consumers. If
demand is elastic, producers and handlers will share a larger
portion of the cost, and supply will be affected.
Producers and handlers would be required to produce and handle
products in accordance with the standards set forth in the rule, and
supply the information necessary to certifiers to verify
certification requirements. These requirements are not expected to
impose additional costs on those currently certified. Certified
farmers and handlers of organic products are currently complying
with certification requirements which are not substantially
different from those in the proposed rule. Organic producers and
handlers who currently are not certified, and new entrants to
organic production and handling, would face higher costs.
The type of government fee structure largely would determine how
program costs are distributed among certifiers and, secondarily,
among producers and handlers. The impact of program costs on
certifiers also would depend on the basis for the fees certifiers
charge their customers, and on their customers' characteristics.
The provisions for assessing fee for direct services presented
in the proposed rule set fixed application and administrative fees
of $640 and $2,000, respectively, to be paid by certifiers, with the
bulk of accreditation costs billed to certifiers on a time rate for
direct services to conduct site visits. The level of these fixed
fees, plus the variable fee for direct services, sets a lower bound
on the size at which a certifier could operate and be economically
viable. A certifier would have to collect enough revenue from the
clients it certifies to cover these fees plus operating costs. Due
to the fixed components of the fees, larger certifiers would have
the ability to spread their costs over a greater number of farmers/
handlers. Additionally, as required by the OFPA, a private
certifying agent would have to furnish reasonable security for the
purpose of protecting the rights of farms and handling operations
certified by the certifying agent. The amount and type of security
would be established through future rulemaking.
Under the fee for direct services provisions, labor hours,
travel and per diem costs for the site inspection required for
accreditation would be included in the variable fee for direct
services. This practice is used by other USDA agencies that conduct
inspection programs. The AMS estimates the average cost to conduct
each accreditation site visit to be $3,500 per visit. The frequency
of site-evaluations for each certifying agent could be expected to
decrease as the operator becomes more familiar with the program
regulations. Pre-accreditation site valuations might be necessary to
enable the certifier to become accredited, and an evaluation would
be required for confirmation of accreditation and thereafter for
renewal of accreditation, which occurs every 5 years.
The travel cost component of this figure would vary based on the
certifier's distance from Washington, D.C., because site visits will
be conducted by the organic program staff headquartered there. An
alternative method of distributing travel costs would be to estimate
an average annual cost per trip, given the expected number of trips
and the geographic distribution of all certifiers, and charge that
amount for all site visits, regardless of location.
A measure of size is incorporated into the fee structure, i.e.,
the time spent conducting each accreditation by organic program
staff. The variable portion of the fee would distribute program
costs among certifiers according to the resources actually consumed
in providing the accreditation service. The more complex and larger
the certifier, the more time required to conduct an evaluation and
the larger their fee for accreditation. However, imposing an hourly
rate for accreditation services introduces a subjective measure in
the determination of fees. With several national program staff
conducting accreditation evaluations, disputes over the time
required to complete a specific accreditation process would be
difficult to resolve on an objective basis.
If program costs were distributed uniformly among existing
certifiers, the smallest certifiers, those with annual revenues of
$25,000 or less, may not have the financial capacity to continue to
operate within the requirements of the regulation, based on their
current revenues. Distributing program costs based on a measure of
size would permit more small certifiers to stay in business,
provided that they met other qualifications for accreditation.
Generally, a fee structure proportionate to size would result in
certifiers contributing to the costs of the program in proportion to
the gains they accrue from it, their revenues being based largely on
the share of total organic output produced by the operations they
certify.
An additional feature of the proposed fees for direct services
is that it attempts to distribute program costs according to a
simplified measure of size through a variable fee charged directly
to farmers and handlers who are certified by an accredited
certifying agent. Under the proposed rule, a farmer would pay USDA
an annual fee of $50 and a handler would pay $500 per year. The
difference between farmer and handler fees is designed to account
for the difference in staff time AMS estimates will be devoted to
handler and processed food issues relative to farmer and raw product
issues. Half of the total program cost of $1 million is assumed to
be covered by these fees.

Administrative Requirements and Associated Costs

The proposed rule also would impose administrative costs, such
as submission of information, recordkeeeping, and access to records
that may constitute an additional burden. The actual amount of the
additional administrative costs that would be imposed by the final
rule is expected to be different for those entities who would begin
their activities only after the national program is implemented.
Certifiers, farmers, wild crop harvesters and handlers who currently
are active in the organic industry already perform most of these
administrative functions; therefore, the additional costs to them
would depend upon the extent to which their current practices are
different from the requirements of the final regulation. The
following list describes several proposed administrative
requirements or optional submissions and the probable resources
required for compliance:
1. A list of farmers, wild crop harvesters and handlers
currently certified. This information could be compiled from
existing records. After implementation, certifiers would be required
to submit on a quarterly basis a list of operations certified during
that quarter.
2. A description of the certification decision process,
compliance review procedures, a plan for allowing public access to
records, and measures taken to prevent conflicts of interest. These
policies may have to be created or modified to conform to the
regulation.
3. Documentation of financial capacity and compliance with other
administrative requirements (e.g., fee structure, recordkeeping
capability, income sources, and business relationships showing
absence of conflicts of interest). Some of this information would be
compiled from existing records (e.g., income sources and fee
schedules), and some may be generated from other sources.
4. Retention of certification documents for 10 years. This
activity requires records and database management capabilities and
resources (storage space, file cabinets, electronic storage, etc.).
In an informal inquiry, AMS found that most existing certifiers
currently retain records for at least 10 years, and use both
electronic and paper storage. We believe that this requirement

[[Page 65963]]

would not pose an additional burden on existing certifiers.
The Act also requires producers and handlers to retain their
records for a minimum of five years. According to the same informal
AMS inquiry, the industry generally requires records to be kept for
three years. Overall, producer and handler operation records
required by the proposed regulation are extensions of, or
modifications to, documents already maintained under normal industry
practice, and therefore this requirement would have minimal impact
on operations currently certified.
5. Public access would have to be provided to certification
records, such as a list of certified farmers and handlers, their
dates of certification, products produced, and the results of
pesticide residue tests. This requirement would have minimal impact
given the requirements for retaining records.
6. Certifiers are required to supply program information to
certification applicants. To comply with this requirement,
certifiers may need to modify existing standards and practice.
The criteria for qualified personnel required in the proposed
rule may likely result in an increase in labor costs for some
existing certifiers and, initially, an increase in training costs.
The amount of additional costs to these certifiers would depend on
the level of expertise among current certification agency staff, the
extent to which certifiers currently rely on volunteers, and the
current costs of training certification staff.
Our proposed inspector training requirements conform closely to
current established practice in the industry and are not expected to
impose an additional burden on most existing certifiers. Training
programs are currently offered by the Independent Organic Inspectors
Association (IOIA), an organization of approximately 165 organic
certification inspectors, and by some of the larger certifiers
(IOIA, p. 1).
Costs to existing certifiers to provide additional training to
other staff are difficult to measure in the absence of information
on current staff skill levels or the existence of formal training
other than inspector training. Some agencies rely on volunteer staff
who may have had no formal training, but the extent of this practice
is unknown. AMS intends to offer assistance to certifiers, producers
and handlers by providing guide books and other printed material
that would enable participants to better understand the regulations.
In addition, AMS intends to continue open and frequent communication
with certifiers and inspectors to provide as much information as
possible to aid them in fulfilling the requirements of the
regulations.
Table 5 estimates the total initial costs for an applicant to
become accredited as a certifying agent under the NOP, and the
estimated total initial costs for a producer or handler to become
certified. The costs presented in Table 5 are the upper-bound
estimates for participation in the National Organic Program for new
organic certifiers, farmers and handlers.

State Program Costs of the Proposed Rule

The proposed rule is based on the OFPA, a review of State and
private certification programs, National Organic Standards Board
(NOSB) recommendations, EU regulations, and foreign organic program
provisions. Table 4 compares many general provisions of the proposed
rule to existing State and private certification programs and the
NOSB recommendations. The proposed rule encompasses most of the
principles of existing State programs, with specific requirements
modified to be performance-based rather than design-based. For
example, the proposed standards for housing poultry require that
farmers provide adequate light and space, rather than requiring a
particular method of housing. With a performance-based rule,
certifiers are free to exercise their judgement regarding how
farmers meet the standards. Thus, the proposed rule provides greater
flexibility than is provided by many existing programs in
determining how a particular standard can be met.
In many cases, the proposed rule provides standards where many
existing State programs are silent. For example, according to AMS
data, only two of the eleven State agencies and 16 of the 33 private
agencies certified livestock in 1994. In the same year, only six of
the eleven States and 15 of the 33 private agencies certified
processors or handlers.
There are 27 States with some standards governing the production
or handling of organic food, and comparing features of State
standards to the provisions of the proposed rule provides a means of
examining the potential impact of the rule on existing State
programs. There are two situations in which implementation of a
national program may impose additional costs on States by requiring
changes in their existing programs. First, where State standards are
below Federal standards or where elements of the Federal standards
are missing from a State program, these States would be required to
make changes in their programs that they might otherwise not make.
Second, where State standards exceed the Federal standards and the
differences are not approved by the USDA, States also would be
required to make changes in their programs. States without organic
standards or whose current standards either would conform to those
of the national program or would be approved by the Secretary would
not incur additional costs resulting from required changes. In
States with existing organic standards but no certification program,
such as California, the national standards would apply to private
certifiers operating within the State and, therefore, they also are
relevant to indicating the degree of impact a national program would
have on existing State programs. An analysis of selected aspects of
specific standards follows:
Transition period. The transition period, which would specify
the time period during which prohibited materials cannot be applied
before a field can be certified as organic, is included in most
State organic standards. The OFPA specifies a required transition
period of three years before certifying a field. Existing certifiers
and farmers will have had several years prior to implementation to
conform with this requirement and its impact is expected to be
minimal. In fact, a required transition period of three years is
currently in effect in 20 out of 23 States.
Animal drug use. Another common feature of organic standards is
the restricted use of animal drugs for livestock. Where livestock
standards have been adopted by existing State programs, most
prohibit the use of animal drugs except for the treatment of a
specific disease condition. Use of animal drugs is generally
prohibited within 90 days prior to slaughter, or the sale of milk or
eggs as organic. The standards in the proposed rule would impose a
more restrictive time period for drug use in animals for slaughter,
but do not differ from most existing State standards in prohibiting
the use of drugs on healthy animals.
Materials list. Lists of approved synthetic materials, including
soil amendments and pesticides, vary from one State program to
another. A detailed analysis of specific differences in the various
existing materials lists shows them to be overlapping in most cases,
but mutually exclusive in others. The impact of the national program
would not be determined by how the national standards differ from
current certification standards, but rather by how the national
standards differ from actual practice. Data on materials currently
used in organic production are not available to make this
comparison.

Non-Quantifiable Costs

Some certifiers have identified the loss of independence in
setting certification standards within a uniform national standard
program as imposing a cost. Certification to a national standard has
been described as ``forced reciprocity,'' that is, compelling
certifiers to recognize as equal in value a product certified by a
competitor. A national accreditation program would preclude a
certifier of an end product from refusing to accept a different
certification of an ingredient used in the end product. A lack of
reciprocity can, in fact, impose costs on manufacturers in the form
of lost product (Natural Foods Merchandiser, April 1995). Other
certifiers welcome the enforcement of uniform national standards and
view mandatory accreditation as a benefit because it would eliminate
the risk of potentially costly reciprocity disputes. What appears to
be at stake is the determination of market shares among certifiers:
losses to one certifier would constitute gains to others.
Another possible cost of the rule may result from the
requirement that certifiers provide access to records. The Secretary
and the applicable governing State official would have access to all
records and certifiers would have to provide public access to
laboratory analyses and certification documents other than
confidential business information. While not quantifiable, this
requirement may represent a substantial change in the way some
certifiers currently operate and interact with producers, other
certifiers, government agencies, and the public.

Conclusion

Ideally, the net benefits of the proposed rule would be
estimated by employing a welfare analysis. In a welfare model, the
quantitative assessment of benefits would be represented by net
changes in consumer and producer surplus, i.e., the difference
between

[[Page 65964]]

the willingness to pay (or firm cost structure in the case of
producers) and the market price of organic food. These net changes
would be estimated using information about the cost structure of the
industry, the demand for organic food, and projected shifts in
supply and demand resulting from the various factors discussed in
the assessment. Although researchers have conducted numerous small-
scale studies to determine consumers' willingness to pay for certain
organic products (primarily fresh produce) and to identify reasons
why conventional food buyers do not choose organic food products
(Hammitt, 1990 and 1993; Jolly; Misra et al.; Park and Lohr; Weaver
et al.), the available data are insufficient to support a
quantitative assessment of this type.
USDA has identified the entities that may be affected by the
proposed rule and has analyzed the anticipated impacts of the rule
on them based on our knowledge of the industry and limited data.
However, USDA lacks data to thoroughly and quantitatively describe
the existing organic industry and quantitatively analyze the effects
of the proposed rule. To assist in the assessment of comments on the
rule and to better report to the public the effects of the rule,
USDA welcomes responses in the following areas. USDA is particularly
interested in data and analyses that are nationally representative.
1. To establish a baseline, USDA requests data on the number of
farmers producing and marketing organic goods, the number of
handlers of organic goods, and the number of organic farmers, wild
crop harvesters and handlers who are operating with third party
certification, and the number who operating without third party
certification..
2. To establish a baseline, USDA requests data on the number of
entities certifying organic farmers and handlers and the number of
organic certifiers who currently are accredited.
3. To establish a baseline, USDA requests data to characterize
the costs of organic production and revenues from organic farming.
4. To assess the impact of the proposed program, USDA requests
data on fees currently paid by organic producers and handlers for
certification services and on fees currently paid by organic
certifiers for accreditation.
5. To assess the impacts of the proposed program and to better
project the costs of operating the National Organic Program (which
will be recovered by fees), USDA requests information to project the
number of organic producers and handlers who would apply for
certification under the National Organic Program. USDA also requests
information to project the number of entities which would seek USDA
accreditation as an organic certifying agent.
6. The regulatory impact assessment for the proposed rule
considers that cost may be incurred by fraudulent labeling of
organic products. To what extent does mislabeling of non-organically
produced products as organic occur and what are the market impacts
in terms of quantities of organic goods sold and the prices for
organic goods?
7. This rule would permit the marketing of meat and poultry
products as organic, which is not currently permitted. USDA requests
data and analyses which would support projections of the demand for
organic meat and poultry.
8. The regulatory impact assessment for this rule reports that
sales of organic goods have been growing at an annual rate of 20
percent. Are there data to support a different rate?
9. We estimate that the organic industry may grow after program
implementation due to the introduction of organic meat and poultry
and increased exports of organic agricultural products. Are there
data to estimate the impact that this rule is likely to have on
overall industry growth?
10. The organic industry and consumers of organic goods may
benefit if industry growth results in economies of scale, and
production and marketing efficiencies. What has been the industry
experience in this area and do industry participants anticipate such
benefits from this rule?

References

______. 1995. Organic Update: Reciprocity Controversies Intensify,
Exacerbating Certifier/Manufacturer Tensions. Natural Foods
Merchandiser (April): (no page numbers).
Burros, Marian. 1996. A New Goal Beyond Organic: ``Clean Food.'' The
New York Times (February 7).
Byng, John. 1994. UK and European Community (EC) Legislation. In,
Handbook of Organic Food Processing and Production. Simon Wright
(ed.). pp. 17-30. Glasgow: Blackie Academic and Professional.
California Department of Health Services. 1995. Report on the
Registration of California Organic Processed Food Firms. Sacramento:
State of California.
Dunn, Julie Anton. 1995. Organic Food and Fiber: An Analysis of 1994
Certified Production in the United States. U.S. Department of
Agriculture, Agricultural Marketing Service.
Emerich, Monica. 1996. Industry Growth: 22.6%. Natural Foods
Merchandiser (June):1-39.
Hammitt, James K. 1990. Risk Perceptions and Food Choice: An
Exploratory Analysis of Organic-Versus Conventional-Produce Buyers.
Risk Analysis, Vol.10, No.3: 367-374.
Hammitt, James K. 1993. Consumer Willingness to Pay to Avoid
Pesticide Residues. Statistica Sinica, 3.
Independent Organic Inspectors Association. 1996. IOIA 1996
Membership Directory. Winona, MN.
Jolly, Desmond A., Howard G. Schutz, Katherine V. Diaz-Knauf and
Jagjeet Johal. 1989. Organic Foods: Consumer Attitudes and Use. Food
Technology (November): 60-66.
Jolly, Desmond A. 1991. Differences Between Buyers and Nonbuyers of
Organic Produce and Willingness to Pay Organic Price Premiums.
Journal of Agribusiness (Spring): 97-111.
Klonsky, Karen, and Laura Tourte. 1995. Statistical Review of
California's Organic Agriculture, 1992-93. Report prepared for the
California Department of Food and Agriculture Organic Program.
Cooperative Extension, Department of Agricultural Economics,
University of California, Davis.
Mergentime, Ken. 1994. The USA Perspective. In, Handbook of Organic
Food Processing and Production. Simon Wright (ed.). pp. 160-183.
Glasgow: Blackie Academic and Professional.
Mergentime, Ken and Monica Emerich. 1995. Organic Sales Jump Over $2
Billion Mark in 1994. Natural Foods Merchandiser (June): 74-76.
Mergentime, Ken and Monica Emerich. 1996. Widening Market Carries
Organic Sales to $2.8 Billion in 1995. Natural Foods Merchandiser
(June): 36-38.
Misra, Sukant, Chung L. Huang and Stephen L. Ott. 1991. Georgia
Consumers' Preference for Organically Grown Fresh Produce. Journal
of Agribusiness (Fall): 53-65.
Park, Timothy A. and Luanne Lohr. 1996. Supply and Demand Factors
for Organic Produce. American Journal of Agricultural Economics,
Vol.78 (August): 647-655.
SRI International. 1992. The Japanese Market for Health Foods and
Beverages. Prepared for the U.S. Agricultural Trade Office, Tokyo,
Japan.
Tate, William. 1991. Organic Produce in Europe. The Economist
Intelligence Unit Special Report No. 2128. London: Business
International Limited.
Underhill, S. E. and E. E. Figueroa. 1993. Consumer Preferences for
Non-Conventionally Grown Produce. Paper presented at the Valuing
Food Safety and Nutrition Conference, organized by the NE-165
Regional Research Project. Alexandria, VA, June 2-4.
USDA Foreign Agricultural Service. 1995. Agricultural Situation:
Agricultural Highlights--Winter 1995. Report from Austria. Code 24,
Sequence No. 007.
USDA Foreign Agricultural Service. 1995. Agricultural Situation:
Organic Food. Report from Germany. Code 24, Sequence No. 011.
USDA Foreign Agricultural Service. 1996. Agricultural Situation:
Organic Food Market Potential and Regulations. Report from France.
Code 24, Sequence No. 002.
Weaver, Robert D., David J. Evans and A. E. Luloff. 1992. Pesticide
Use in Tomato Production: Consumer Concerns and Willingness-to-Pay.
Agribusiness, Vol.8 No.2: 131-142.

Table 1.--Organic Sales, 1980-1995
------------------------------------------------------------------------
Sales (in $
Year millions)
------------------------------------------------------------------------
1980....................................................... 178
1989....................................................... 631
1990....................................................... 1,000
1991....................................................... 1,250
1992....................................................... 1,540

[[Page 65965]]

1993....................................................... 1,890
1994....................................................... 2,310
1995....................................................... 2,800
------------------------------------------------------------------------
Source: Emerich, p. 23.

Table 2.--Breakdown of Projected National Organic Program Costs
[Total Program Costs]
------------------------------------------------------------------------

------------------------------------------------------------------------
Salaries and Benefits...................................... $644,000
Operating Costs *.......................................... 180,617
Agency Overhead **......................................... 100,403
Division Overhead **....................................... 74,980
------------
Total.................................................. 1,000,000
Total Staffing......................................... 12
------------------------------------------------------------------------
* Operating costs include travel, printing, training, equipment,
supplies, rent and other services.
** Agency and Division overhead includes administrative support,
contract and other fees for services, rent, heat, communications, and
major equipment purchases.
Source: AMS.

Table 3.--Distribution of Direct Annual Program Costs for OFPA
[In dollars]
------------------------------------------------------------------------

------------------------------------------------------------------------
Direct program costs....................................... $1,000,000
Costs per dollar sales ($2.8 billion)...................... 0.00036
(.036 cents
)
Costs per certifier (44 certifiers)........................ 22,727
Costs per farmer/handler (4,600 farmers/handlers).......... 217
------------------------------------------------------------------------
Source: AMS data; Emerich, p. 23.

Table 4.--Comparison of the Proposed National Organic Program Regulations With the NOSB Recommendations and
Representative State and Private Programs
----------------------------------------------------------------------------------------------------------------
USDA provision in the proposed rule NOSB recommendation State programs Private programs
----------------------------------------------------------------------------------------------------------------
PRODUCTION AND HANDLING:
Standards based on identified organic Recommended Similar principles.. Similar principles.
principles. principles which
USDA used in the
proposed rule.
Management includes long-range planning, Similar............. Similar............. Similar.
such as an organic plan.
Preventive measures and mechanical or Similar............. Similar; few States Similar; few
biological methods, as opposed to have livestock programs have
substances, used to control pests, weeds, standards. livestock
and disease in crops and livestock. standards.
Organic planting stock, livestock, and Similar............. Similar............. Similar.
ingredients used in preference to non-
organic.
Livestock may be fed non-organic feed Similar............. Similar............. Similar.
under certain circumstances.
Prevention of prohibited substances Similar............. Similar............. Similar.
contacting organic products.
Allowed use of specific synthetic Proposed National Similar; lists vary Similar; lists vary
substances. List reflects among States. among programs.
almost all of the
NOSB
recommendations.
Criteria for list of allowed synthetic Similar............. General criteria are General criteria are
substances. similar. similar.
Mechanical or biological methods, as Similar............. Similar; few States Similar; few
opposed to substances, used in handling have handling programs have
operations. standards. handling standards.
Allowed use of non-organic agricultural Similar............. Similar............. Similar.
ingredients in processed organic food.
Allowed use of specific non-agricultural Proposed National Similar, but few Similar, but few
ingredients in processed organic food. List reflects States have programs have
almost all of the handling standards; handling standards;
NOSB lists differ. lists differ.
recommendations.
CERTIFICATION:
Products labeled organic must originate Similar............. Few States do their Private programs
from certified operations. own certification generally certify.
but generally
producers and
handlers are
certified.
Certification performed by a third-party Similar............. Similar for States Similar.
in a prescribed manner. that require
certification.
Annual certification with verification by Similar............. Similar for States Similar.
inspection of site and records. that require
certification.
All certifications granted by accredited Similar............. Equivalency granted Equivalency granted
certifiers are to be considered on a case-by-case on a case-by-case
equivalent. basis. basis.
ACCREDITATION:

[[Page 65966]]

All certifiers must be accredited by USDA. Similar............. Very few States Very few programs
accredit or are accredited by
register certifiers. private
organizations.
Certifiers evaluate and train inspectors Similar............. Similar; differs Similar; differs
and certification personnel. among States. among programs.
Recordkeeping requirements, public access Similar............. Similar............. Similar.
requirements, and safeguard requirements
for confidential information.
Measures enforced to prevent conflict of Similar............. Similar, as part of Similar, but may not
interest by certifier. State's general be monitored.
requirements.
Certifier performance reviewed by peers... Similar............. Similar in any State Similar for the
accrediting purpose of
certifiers. establishing
reciprocity.
OTHER ELEMENTS:
Site-specific unavoidable residual Predetermined Similar, but some Similar, but some
environmental contamination level used to unavoidable States also use a programs also use a
determine organic status. residual predetermined predetermined
environmental specified residue specified residue
contamination level level to determine level to determine
should be used to organic status. organic status.
determine organic
status.
Enforcement by Federal government......... Similar............. Intra-State Enforcement of
enforcement of individual program
existing State policies.
regulations.
Access to international markets........... Not applicable...... Individually Individually
acquired agreements. acquired
agreements.
Evaluation of foreign programs to Similar............. Not applicable...... Not applicable.
determine equivalency.
----------------------------------------------------------------------------------------------------------------
Source: AMS.

Table 5.--Estimated Upper-Bound Costs of Accreditation and Certification

ESTIMATED COST TO CERTIFIERS FOR INITIAL ACCREDITATION

Accreditation application fee............... $640
Site evaluation fee*........................ 3,500
USDA Administrative fee..................... 2,000
-------------------------------------------------------------------
Total fees.............................. 6,140
Paperwork reporting burden.................. 23,931 (for new organic certifiers)
Paperwork recordkeeping burden.............. 60
-------------------------------------------------------------------
Total reporting and recordkeeping....... 23,991
ESTIMATED TOTAL COST FOR INITIAL 30,131
ACCREDITATION.

ESTIMATED COST TO PRODUCERS FOR INITIAL CERTIFICATION

Certification fee**......................... $413
USDA fee.................................... 50
-------------------------------------------------------------------
Total fees.............................. 463
Paperwork reporting burden.................. 381 (for new organic producers)
Paperwork recordkeeping burden.............. 34
-------------------------------------------------------------------
Total reporting and recordkeeping....... 415
ESTIMATED TOTAL COST TO PRODUCERS FOR 878
INITIAL CERTIFICATION.

ESTIMATED COST TO HANDLERS FOR INITIAL CERTIFICATION

Certification fee **........................ 943
USDA fee.................................... 500
-------------------------------------------------------------------
Total fees.............................. 1,443
Paperwork reporting burden.................. 433 (for new organic handlers)
Paperwork recordkeeping burden.............. 34
-------------------------------------------------------------------
Total reporting and recordkeeping....... 467

[[Page 65967]]

ESTIMATED TOTAL COST TO HANDLERS FOR INITIAL 1,910
CERTIFICATION.

*Each certifying agent would have a site-evaluation to confirm accreditation, and thereafter a subsequent
renewal evaluation at least every 5 years following confirmation of accreditation. In some cases, a pre-
confirmation site visit may be necessary. We anticipate that the frequency of site evaluation would be based
on the performance of the certifying agent and would be higher during the initial years of the program.
**The estimated certification fee is based on the average of fees charged by a representative group of
certifying agents: private non-profit, private for-profit and a State agency. Most certifying agents in our
representative group include the cost of inspection and, if applicable, required laboratory testing in the
certification fee.
Source: AMS.

[FR Doc. 97-32322 Filed 12-15-97; 8:45 am]
BILLING CODE 3410-02-P