[Federal Register Volume 65, Number 154 (Wednesday, August 9, 2000)]
[Proposed Rules]
[Pages 48642-48643]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-20062]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 205

[TM-00-07]
RIN 0581-AA40


National Organic Program, Provision of Reasonable Security

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Advance notice of proposed rulemaking and request for comments.

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SUMMARY: The Agricultural Marketing Service (AMS) is publishing this 
advance notice of proposed rulemaking to request comments on the 
Organic Foods Production Act of 1990 (OFPA) requirement that private 
certifying agents furnish reasonable security, in an amount determined 
by the Secretary, to protect the rights of participants in the National 
Organic Program (NOP). On March 13, 2000, the Department of Agriculture 
(USDA) published in the Federal Register, a revised National Organic 
Program proposed rule. The proposed rule stated the amount and terms of 
reasonable security would be the subject of additional rulemaking.

DATES: Comments must be submitted on or before September 8, 2000.

ADDRESSES: Comments should be sent to Beth Hayden, Agricultural 
Marketing Specialist, National Organic Program,

[[Page 48643]]

USDA/AMS/TM/NOP, Room 2510-So., Ag Stop 0268, P.O. Box 96456, 
Washington, D.C. 20090-6456. Phone: 202/720-3252. Fax: 202/205-7808. E-
mail: [email protected].

FOR FURTHER INFORMATION CONTACT: Keith Jones, Program Manager, National 
Organic Program, USDA/AMS/TM/NOP, Room 2945-So., Ag Stop 0268, P.O. Box 
96456, Washington, D.C. 20090-6456. Phone: 202/720-3252. Fax: 202/690-
3924. E-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Background

    AMS is responsible for implementing 7 U.S.C. 6515 (e)(2). This 
section of the OFPA requires private certifying agents to furnish 
reasonable security, in an amount determined by the Secretary, for the 
purpose of protecting the rights of participants (customers) in an 
organic certification program established under the NOP. Historically, 
the National Organic Standards Board (NOSB) recommends regulations that 
will benefit the organic industry. When the NOSB considered the issue 
of reasonable security as proposed in the March 13, 2000, proposed 
rule, 65 FR 13512-13658, (2000), they recommended that the criteria 
used to determine the amount and type of security required should be 
affordable and explicitly defined with particular regard for the 
diverse size and economics of various regional certifiers and 
operations being certified. Additionally, the Senate Committee Report 
on the OFPA (Senate Committee Report, Food, Agriculture, Conservation 
and Trade Act of 1990, Title XVI, pg. 294-295) states, ``It is not the 
Committee's intention that the Department establish security deposits 
that are so high as to cause the elimination of private certifying 
agents.''
    AMS reviewed many financial instruments to determine the type and 
value of security a certifying agent might need based on its business 
structure and customer base. For example, an agent operating a small, 
not-for-profit operation for clients who primarily sell directly to 
consumers may have fewer and smaller liability requirements than an 
agent with numerous clients who sell to large food processors or who 
export product.
    AMS also interviewed current certifying agents and concluded that 
many of the 36 known private certifying agents carry liability 
insurance to protect themselves against claims from the public or their 
employees in the course of their business activities. For example, some 
certifying agents must provide evidence of liability coverage in order 
to sell their products to food processors. However, under certain state 
laws, not-for-profit certifying agents may be exempt from legal actions 
that would normally require a prudent businessperson to carry liability 
insurance. In some cases, certifying agents request that their clients 
sign a liability waiver and therefore do not carry liability insurance.
    After reviewing the options for assessing reasonable security and 
the current industry information on this issue, however, the NOP 
decided to seek additional public input on what amount and type of 
reasonable security is best for protecting the rights of NOP 
participants.
    This action has been determined not significant and not subject to 
review by the Office of Management and Budget under Executive Order 
12866.

Issues for Public Comment

    AMS is soliciting comments on all aspects of reasonable security 
and protection of the rights of program participants. We request 
comments from any interested parties, including producers and handlers 
of organic agricultural products, certifying agents, importers and 
exporters, the international community and any other person or group. 
The following questions are provided to facilitate public comment on 
this advanced notice of proposed rulemaking. Comments addressing other 
relevant issues also may be submitted.
    1. From what risks or events might a customer of a private 
certifying agent require reasonable security?
    2. What are the financial instrument(s) that could provide the 
reasonable security to protect customers from these events?
    3. What dollar amounts of security would give reasonable protection 
to a customer of a private certifying agent?
    4. What are the financial costs to private certifiers, especially 
small certifiers, of providing reasonable security?
    5. Do the risk or events provided in response to Question #1 
necessarily require financial compensation?
    6. Are there situations where reasonable security is not needed?
    A thirty day comment period is provided for interested persons to 
comment on this advance notice of proposed rulemaking. This time period 
is deemed appropriate given the need to publish a final NOP rule by the 
end of the calendar year.
    After comments to this notice are received and analyzed, AMS 
intends to publish a proposed rule in the Federal Register. The public 
will once again be invited to submit comments. The proposed rule will 
include the proposed regulation, an explanation of our decision making 
process, an analysis of the costs and benefits, the effects on small 
businesses, and an estimate of the paperwork burden imposed by the 
rule.

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

    Dated: August 3, 2000.
Sharon Bomer Lauritsen,
Acting Deputy Administrator, Transportation and Marketing.
[FR Doc. 00-20062 Filed 8-8-00; 8:45 am]
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