[Federal Register Volume 68, Number 212 (Monday, November 3, 2003)]
[Rules and Regulations]
[Pages 62215-62218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-27416]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 205

[Docket Number TM-03-02]
RIN 0581-AC27


National Organic Program; Amendments to the National List of 
Allowed and Prohibited Substances

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends the U.S. Department of Agriculture's 
(USDA) National List of Allowed and Prohibited Substances (National 
List) to reflect recommendations submitted to the Secretary by the 
National Organic Standards Board (NOSB). Consistent with 
recommendations from the NOSB, this final rule adds four substances, 
along with any restrictive annotations, to the National List, and 
revises the annotation of one substance.

EFFECTIVE DATE: This rule becomes effective November 4, 2003.

FOR FURTHER INFORMATION CONTACT: Richard H. Mathews, Program Manager, 
National Organic Program, Telephone: (202) 720-3252; Fax: (202) 205-
7808.

SUPPLEMENTARY INFORMATION: 

I. Background

    On December 21, 2000, the Secretary established, within the 
National Organic Standards (NOS) [7 CFR part 205], the National List 
(Sec. Sec.  205.600 through 205.607). The National List is the Federal 
list that identifies synthetic substances and ingredients that are 
allowed and nonsynthetic (natural) substances and ingredients that are 
prohibited for use in organic production and handling. Since 
established, the National List has not been amended. However, under the 
authority of the Organic Foods Production Act of 1990 (OFPA), as 
amended (7 U.S.C. 6501 et seq.), the National List can be amended by 
the Secretary based on proposed amendments developed by the NOSB.
    This final rule amends the National List to reflect recommendations 
submitted to the Secretary by the NOSB from November 15, 2000, through 
September 17, 2002. Between the specified time period, the NOSB has 
recommended that the Secretary add five substances to Sec.  205.605 of 
the National List based on petitions received from industry 
participants. These substances were evaluated by the NOSB using the 
criteria specified in OFPA (7 U.S.C. 6517 and 6518) and the NOS. The 
NOSB also recommended that the Secretary revise the annotation of one 
substance included within Sec.  205.605.
    The NOSB has recommended that the Secretary add additional 
substances to Sec. Sec.  205.605 and 205.606 that have not been 
included in this final rule but are under review and, as appropriate, 
will be included in future rulemaking.

II. Overview of Amendments

    The following provides an overview of the amendments made to 
designated sections of the National List:


Sec.  205.605  Nonagricultural (nonorganic) substances allowed as 
ingredients in or on processed products labeled as ``organic'' or 
``made with organic (specified ingredients or food group(s)).''

    This final rule amends paragraph (a) of Sec.  205.605 by adding 
animal enzymes--without Lysosyme, calcium sulfate--mined, and glucono 
delta-lactone. This final rule also amends paragraph (b) of Sec.  
205.605 by adding cellulose.
    This final rule revises current paragraph (b) of Sec.  205.605 by 
amending an annotation to read as follows:
    Potassium hydroxide--prohibited for use in lye peeling of fruits 
and vegetables except when used for peeling peaches during the 
Individually Quick Frozen (IQF) production process.

III. Related Documents

    Eight notices were published regarding the meetings of the NOSB and 
its deliberations on recommendations and substances petitioned for 
amending the National List. Substances and recommendations included in 
this final rule were announced for NOSB deliberation in the following 
Federal Register Notices: (1) 65 FR 64657, October 30, 2000, (Animal 
enzymes); (2) 66 FR 10873, February 20, 2001, (Calcium sulfate); (3) 66 
FR 48654, September 21, 2001, (Cellulose, and Potassium hydroxide); and 
(4) 67 FR 54784, August 26, 2002, (Glucono delta-lactone, and 
Tetrasodium pyrophosphate).

IV. Statutory and Regulatory Authority

    The OFPA, as amended (7 U.S.C. 6501 et seq.), authorizes the 
Secretary, at Sec.  6517(d)(1), to make amendments to the National List 
based on proposed amendments developed by the NOSB. Sections 6518(k)(2) 
and 6518(n) of OFPA authorize the NOSB to develop proposed amendments 
to the National List for submission to the Secretary and establish a 
petition process by which persons may petition the NOSB for the purpose 
of having substances evaluated for inclusion onto or deletion from the

[[Page 62216]]

National List. The National List petition process is implemented under 
Sec.  205.607 of the NOS. The current petition process (65 FR 43259) 
can be accessed through the NOP Web site at http://www.ams.usda.gov/nop.

A. Executive Order 12866

    This action has been determined to be non-significant for purposes 
of Executive Order 12866, and therefore, does not have to be reviewed 
by the Office of Management and Budget.

B. Executive Order 12988

    Executive Order 12988 instructs each executive agency to adhere to 
certain requirements in the development of new and revised regulations 
in order to avoid unduly burdening the court system. The final rule was 
reviewed under this Executive Order and no additional related 
information has been obtained since then. This final rule is not 
intended to have a 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 USDA to be accredited as a certifying agent, as 
described in Sec.  2115(b) of the OFPA (7 U.S.C. 6514(b)). States are 
also preempted under Sec. Sec.  2104 through 2108 of the OFPA (7 U.S.C. 
6503 through 7 U.S.C. 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 Sec.  2108(b)(2) of the OFPA (7 U.S.C. 6507(b)(2)), a 
State organic certification program may contain additional requirements 
for the production and handling of organically produced agricultural 
products that are produced in the State and for the certification of 
organic farm and handling operations located within the State under 
certain circumstances. Such additional requirements must: (a) Further 
the purposes of the OFPA, (b) not be inconsistent with the OFPA, (c) 
not be discriminatory toward agricultural commodities organically 
produced in other States, and (d) not be effective until approved by 
the Secretary.
    Pursuant to section 2120(f) of the OFPA (7 U.S.C. 6519(f)), this 
regulation would not alter the authority of the Secretary under the 
Federal Meat Inspection Act (21 U.S.C. 601 et seq.), the Poultry 
Products Inspections Act (21 U.S.C. 451 et seq.), or the Egg Products 
Inspection Act (21 U.S.C. 1031 et seq.), concerning meat, poultry, and 
egg products, nor any of the authorities of the Secretary of Health and 
Human Services under the Federal Food, Drug and Cosmetic Act (21 U.S.C. 
301 et seq.), nor the authority of the Administrator of the 
Environmental Protection Agency (EPA) under the Federal Insecticide, 
Fungicide and Rodenticide Act (7 U.S.C. 136 et seq.).
    Section 2121 of the OFPA (7 U.S.C. 6520) provides for the Secretary 
to establish an expedited administrative appeals procedure under which 
persons may appeal an action of the Secretary, the applicable governing 
State official, or a certifying agent under this title that adversely 
affects such person or is inconsistent with the organic certification 
program established under this title. The OFPA 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.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
requires agencies to consider the economic impact of each rule on small 
entities and evaluate alternatives that would accomplish the objectives 
of the rule without unduly burdening small entities or erecting 
barriers that would restrict their ability to compete in the market. 
The purpose is to fit regulatory actions to the scale of businesses 
subject to the action. Section 605 of the RFA allows an agency to 
certify a rule, in lieu of preparing an analysis, if the rulemaking is 
not expected to have a significant economic impact on a substantial 
number of small entities.
    Pursuant to the requirements set forth in the RFA, the Agricultural 
Marketing Service (AMS) performed an economic impact analysis on small 
entities in the final rule published in the Federal Register on 
December 21, 2000. AMS has also considered the economic impact of this 
action on small entities and has determined that this final rule will 
have an impact on a substantial number of small entities. However, AMS 
has determined that the impact on entities affected by this rule will 
not be significant. The effect of this rule will be to allow the use of 
additional substances in agricultural production and handling. This 
action relaxes the regulations published in the final rule and provides 
small entities with more tools to use in day-to-day operations. The AMS 
concludes that the economic impact of this addition of allowed 
substances, if any, will be minimal and entirely beneficial to small 
agricultural service firms. Accordingly, the Administrator of the AMS 
hereby certifies that this rule will not have a significant economic 
impact on a substantial number of small entities.
    Small agricultural service firms, which include producers, 
handlers, and accredited certifying agents, have been defined by the 
Small Business Administration (SBA) (13 CFR 121.201) as those having 
annual receipts of less than $750,000 and small agricultural producers 
are defined as those having annual receipts of less than $5,000,000.
    The U.S. organic industry at the end of 2001 included nearly 6,600 
certified crop and livestock operations, including organic production 
and handling operations, producers, and handlers. These operations 
reported certified acreage totaling more than 2.34 million acres, 
72,209 certified livestock, and 5.01 million certified poultry. Data on 
the numbers of certified handling operations are not yet available, but 
likely number in the thousands, as they would include any operation 
that transforms raw product into processed products using organic 
ingredients. Growth in the U.S. organic industry has been significant 
at all levels. From 1997 to 2001, the total organic acreage grew by 74 
percent; livestock numbers certified organic grew by almost 300 percent 
over the same period, and poultry certified organic increased by 2,118 
percent over this time. Sales growth of organic products has been 
equally significant, growing on average around 20 percent per year. 
Sales of organic products were approximately $1 billion in 1993, but 
are estimated to reach $13 billion this year, according to the Organic 
Trade Association (the association that represents the U.S. organic 
industry). In addition, USDA has accredited 85 certifying agents who 
have applied to USDA to be accredited in order to provide certification 
services to producers and handlers. A complete list of names and 
addresses of accredited certifying agents may be found on the AMS NOP 
Web site, at http://www.ams.usda.gov/nop. AMS believe that most of 
these entities would be considered small entities under the criteria 
established by the SBA.

D. Paperwork Reduction Act

    Pursuant to the Paperwork Reduction Act of 1995, the existing 
information collection requirements for the NOP are approved under OMB 
number 0581-0181. No additional collection or recordkeeping 
requirements are imposed on the public by this final rule. Accordingly, 
OMB clearance is not required by section 350(h) of the

[[Page 62217]]

Paperwork Reduction Act, 44 U.S.C. 3501, et seq., or OMB's implementing 
regulation at 5 CFR part 1320.

E. Discussion of Comments

    The proposed rule was published in the Federal Register on May 22, 
2003, with a ten-day comment period ending on June 2, 2003. Eighteen 
comments were received on TM-03-02. All comments on the proposed rule 
were posted on the NOP website.
    Commenters on proposed rule TM-03-02 were consumers, producers, 
processors, the NOSB, certifying agents, food industry organizations, 
and trade organizations. The comments received were for amending the 
National List of Allowed and Prohibited Substances by adding to: Sec.  
205.605(a): Calcium sulfate-mined, and glucono delta-lactone; and to 
Sec.  205.605(b): animal enzymes-without Lysosyme, cellulose, and 
terasodium pyrophosphate. The commenters were also for amending the 
annotation for potassium hydroxide as follows: Potassium hydroxide-
prohibited for use in lye peeling of fruits and vegetables except when 
used for peeling peaches during the Individually Quick Frozen (IQF) 
production process.
    We received five comments on Calcium sulfate-mined, all of which 
were in support of adding it to the National List. Two of the 
commenters requested that the annotation be changed to the NOSB 
recommendation ``allowed from non-synthetic sources only.'' They felt 
this annotation would cover the mined calcium sulfate as well as any 
other naturally derived forms, should they become commercially 
available. This substance will be added to the National List as 
published in the proposed rule because it would be redundant to state 
``from non-synthetic sources only'' because the sub-section heading is 
``Nonsysthetics allowed.''
    Five comments were received in favor of adding Glucono delta-
lactone to the National List. Four of the commenters requested it be 
added with the following annotation: ``produced through microbial 
fermentation of carbohydrates only.'' This annotation would disallow 
the use of oxidation of D-glucose with enzymes, but enzymes are allowed 
in Sec.  205.605(a). Accordingly, this annotation is not adopted. 
However, the listing is amended to add the annotation ``production by 
the oxidation of D-glucose with bromine water is prohibited.'' This 
will allow only the microbial and enzymes oxidation production methods.
    Six comments were received in favor of adding Animal enzymes-
(Rennet-animal derived; Catalase-bovine liver; Animal lipase; 
Pancreatin; Pepsin; and Trypsin) to the National List. All agreed, 
however, that it should be listed in Sec.  205.605 (a) as an allowed 
nonsynthetic rather than Sec.  205.605 (b) as an allowed synthetic. 
Because the NOSB recommended it as an allowed nonsynthetic, and it was 
inadvertently listed as an allowed synthetic, the substance will be 
moved to Sec.  205.605 (a), allowed nonsynthetics.
    Six comments were received in favor of adding Cellulose to the 
National List. One commenter was opposed to adding this substance to 
the National List because the substance is synthetic and the commenter 
believes that the substance is not essential to any product 
formulation. The commenter also stated that there are a number of 
analogous substances already on the National List as allowed substances 
that can fulfill the role. One commenter requested that the annotation 
be separated to avoid confusion with other cellulose derivates that are 
used as food additives and have been rejected by the NOSB. The NOSB 
considered the issues raised by both commenters in formulating its 
recommendation and we believe that no further change is needed based on 
these comments. In light of this, this substance will be added to the 
National List as proposed.
    Tertrasodium Pyrophospate received six comments, three in favor of 
and three opposed to inclusion on the National List. Several commenters 
expressed concern over the recommended annotation. They indicated that 
the annotation is vague, confusing, undefined and needs clarification. 
They stated that the primary use of this substance appears to be to 
create a texture that is similar to a meat product, and that this 
directly conflicts with the criterion established in Sec.  
205.600(b)(4):

the substance's primary use is not as a preservative or to recreate 
or improve flavors, colors, textures, or nutritive value lost during 
processing, except where the replacement of nutrients is required by 
law.

    We believe these comments have merit, and accordingly, we have not 
added this substance to the National List. We will return the NOSB's 
recommendation on this substance to the NOSB for reconsideration.
    Potassium hydroxide received six comments, five in favor of and one 
opposed to amending the annotation. The commenter opposed to the 
annotation amendment did not agree that the substance was essential to 
the peeling of peaches. The commenter stated that peach peeling 
production trials, without using the substance, were not exhaustive of 
the possibilities they could have employed to gain a successful outcome 
and therefore the substance should not be allowed. The petitioner of 
this substance provided substantial supporting data that the NOSB 
considered in its review of the substance. The NOSB's recommended 
annotation change is based on all of the evidence provided. One 
commenter suggested this not be restricted to just peaches, but allowed 
for ``peeling of Stone Fruit.'' However, the petitioner and the NOSB 
considered only peaches and not stone fruit generally. Accordingly, the 
annotation is amended as proposed.
    Pursuant to 5 U.S.C. 553, it is found and determined that good 
cause exists for not postponing the effective date of this action until 
30 days after publication in the Federal Register. This rule reflects 
recommendations submitted to the Secretary by the NOSB. The substances 
to be added to the National List were based on petitions from the 
industry and evaluated by the NOSB using criteria in the Act and 
regulations. Because these substances are critical to organic 
production and handling, the National List should be amended as soon as 
possible.

List of Subjects in 7 CFR Part 205

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

0
For the reasons set forth in the preamble, 7 CFR part 205, subpart G is 
amended as follows:

PART 205--NATIONAL ORGANIC PROGRAM

0
1. The authority citation for 7 CFR part 205 continues to read as 
follows:

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


0
2. Section 205.605 is amended by:
0
a. Adding three substances to paragraph (a).
0
b. Adding one substance to paragraph (b).
0
c. Revising Potassium hydroxide in paragraph (b).
    The additions and revisions read as follows:


Sec.  205.605  Nonagricultural (nonorganic) substances allowed as 
ingredients in or on processed products labeled as ``organic'' or 
``made with organic (specified ingredients or food group(s)).''

* * * * *
    (a) * * *

[[Page 62218]]

    Animal enzymes--(Rennet--animals derived; Catalase--bovine liver; 
Animal lipase; Pancreatin; Pepsin; and Trypsin).
* * * * *
    Calcium sulfate--mined.
* * * * *
    Glucono delta-lactone--production by the oxidation of D-glucose 
with bromine water is prohibited.
* * * * *
    (b) * * *
* * * * *
    Cellulose--for use in regenerative casings, as an anti-caking agent 
(non-chlorine bleached) and filtering aid.
* * * * *
    Potassium hydroxide--prohibited for use in lye peeling of fruits 
and vegetables except when used for peeling peaches during the 
Individually Quick Frozen (IQF) production process.
* * * * *

    Dated: October 27, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-27416 Filed 10-31-03; 8:45 am]
BILLING CODE 3410-02-P