[Federal Register Volume 88, Number 12 (Thursday, January 19, 2023)]
[Rules and Regulations]
[Pages 3548-3627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-00702]
[[Page 3547]]
Vol. 88
Thursday,
No. 12
January 19, 2023
Part III
Department of Agriculture
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7 CFR Part 205
National Organic Program (NOP); Strengthening Organic Enforcement;
Final Rule
Federal Register / Vol. 88 , No. 12 / Thursday, January 19, 2023 /
Rules and Regulations
[[Page 3548]]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 205
[Doc. No. AMS-NOP-17-0065; NOP-17-02]
RIN 0581-AD09
National Organic Program (NOP); Strengthening Organic Enforcement
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This rulemaking amends the United States Department of
Agriculture (USDA) organic regulations to strengthen oversight and
enforcement of the production, handling, and sale of organic
agricultural products. The amendments protect integrity in the organic
supply chain and build consumer and industry trust in the USDA organic
label by strengthening organic control systems, improving farm to
market traceability, and providing robust enforcement of the USDA
organic regulations. Topics addressed in this rulemaking include:
applicability of the regulations and exemptions from organic
certification; National Organic Program Import Certificates;
recordkeeping and product traceability; certifying agent personnel
qualifications and training; standardized certificates of organic
operation; unannounced on-site inspections of certified operations;
oversight of certification activities; foreign conformity assessment
systems; certification of producer group operations; labeling of
nonretail containers; annual update requirements for certified
operations; compliance and appeals processes; and calculating organic
content of multi-ingredient products.
DATES:
Effective date: March 20, 2023
Implementation date: March 19, 2024.
FOR FURTHER INFORMATION CONTACT: Jennifer Tucker, Ph.D., Deputy
Administrator, National Organic Program. Telephone: 202-720-3252.
Email: [email protected].
SUPPLEMENTARY INFORMATION:
I. Executive Summary
This rulemaking amends several sections of the USDA organic
regulations, 7CFR part 205, to strengthen oversight of the production,
handling, certification, marketing, and sale of organic agricultural
products as established by the Organic Foods Production Act of 1990
(OFPA, or ``the Act'').\1\ When implemented, this rulemaking will
improve organic integrity across the organic supply chain, and benefit
stakeholders throughout the organic industry. These amendments close
gaps in the current regulations to build consistent certification
practices to deter and detect organic fraud, and improve transparency
and product traceability. In addition, the amendments will assure
consumers that organic products meet a robust, consistent standard and
reinforce the value of the organic label.
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\1\ The Organic Foods Production Act of 1990, 7 U.S.C. 6501-
6524, is the statute from which the Agricultural Marketing Service
derives authority to administer the NOP and authority to amend the
regulations as describedin thisrulemaking. This document is
available at: https://uscode.house.gov/view.xhtml?path=/prelim@title7/chapter94&edition=prelim
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The need for this rulemaking is driven by organic market growth and
increasingly complex organic supply chains. Today's organic market is
characterized by long--and often global--supply chains where organic
products are handled by many businesses before reaching the consumer.
Often, these businesses are not certified organic--and therefore have
no oversight from the USDA or USDA-accredited certifying agents. The
absence of direct enforcement over some entities in the organic supply
chain, in combination with price premiums for organic products, has
created the opportunity for organic fraud. The amendments in this
rulemaking are designed to mitigate the occurrence of organic fraud.
The Agricultural Marketing Service (AMS) is confident in the
integrity and value of the USDA organic seal. Consumers can trust the
organic label due to a rigorous oversight system that operates
globally. However, the challenges of modern organic supply chains
demand action to strengthen enforcement and uphold the integrity of the
USDA organic label.
This rulemaking strengthens enforcement of the USDA organic
regulations through several actions mandated by the Agriculture
Improvement Act of 2018:
1. Reduce the types of uncertified entities in the organic supply
chain that operate without USDA oversight--including importers, certain
brokers, and traders of organic products. This will safeguard organic
product integrity and improve traceability.
2. Require the use of NOP Import Certificates for all organic
products entering the United States. This change expands the use of NOP
Import Certificates to all organic products imported into the United
States, improving the oversight and traceability of imported organic
products.
3. Clarify the NOP's authority to oversee certification activities,
including the authority to act against an agent or office of a
certifying agent. Additionally, certifying agents must notify the NOP
upon opening a new office, which will allow the NOP to provide more
effective and consistent oversight of certifying agents and their
activities.
Additionally, this rule includes several essential actions that
work in alignment with the provisions above to further strengthen
enforcement of the USDA organic regulations:
1. Require that nonretail containers used to ship or store organic
products are labeled with organic identity and are traceable to audit
trail documentation. This information will clearly identify organic
products, reduce the mishandling of organic products, and support
traceability.
2. Require certifying agents to conduct unannounced inspections of
at least 5% of the operations they certify, complete mass-balance
audits during annual on-site inspections, and verify traceability back
to the previous certified operation in the supply chain during annual
on-site inspections.
3. Require certifying agents to issue standardized certificates of
organic operation generated from the USDA's Organic Integrity Database
(OID); this will simplify the verification of valid certificates of
organic operation. Certifying agents must also keep accurate and
current certified operation data in OID, which will further support
verification of operations' certified status.
4. Clarify how certified operations may submit changes to their
organic system plan, with the goal of reducing paperwork burden for
organic operations and certifying agents. This rule also builds
consistency in certification practices by clarifying that certifying
agents must conduct on-site inspections at least once per calendar
year.
5. Establish specific qualification and training requirements for
certifying agent personnel, including inspectors and certification
reviewers. Requiring that personnel meet minimum education and
experience qualifications and requiring continuing education will
ensure high-quality and consistent certification activities across all
certifying agents.
6. Clarify conditions for establishing, evaluating, and terminating
equivalence determinations with foreign government organic programs,
based on an
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evaluation of their organic foreign conformity systems. This will
ensure the compliance of organic products imported from countries that
have organic trade arrangements or agreements with the United States.
7. Clarify that the NOP may initiate enforcement action against any
violator of the OFPA, including uncertified operations and responsibly
connected parties; clarify what actions may be appealed and by whom;
and clarify NOP's appeal procedures and options for mediation
(alternative dispute resolution).
8. Specify certification requirements for producer group
operations, to provide consistent, enforceable standards and ensure
compliance with the USDA organic regulations. Producer groups must meet
certain criteria to qualify for certification, and must use an internal
control system to monitor compliance.
9. Clarify the method of calculating the percentage of organic
ingredients in a multi-ingredient product to promote consistent
interpretation and application of the regulation.
10. Require certified operations to develop and implement improved
recordkeeping and organic fraud prevention processes and procedures;
require certifying agents to conduct supply chain traceability audits
and to develop and implement information-sharing processes.
Costs and Benefits
AMS estimates the following costs and benefits of this rule:
Costs and Benefits of SOE Rulemaking
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Average annual cost \a\ Total cost \b\
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3% Discount 7% Discount 3% Discount 7% Discount
rate rate rate rate
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Domestic Costs.................................. $10,548,510 $7,884,601 $158,227,651 $118,269,011
Foreign Costs................................... 8,769,681 6,550,892 131,545,210 98,263,398
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Total Costs................................. 19,318,191 14,435,494 289,772,861 216,532,409
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Benefits.................................... 32,944,812 24,272,099 494,172,179 364,081,491
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\a\ Estimated annual averages of the 15-year Net Present Value domestic costs discounted at 3 and 7 percent.
\b\ Estimated total domestic costs for affected industry in Net Present Value discounted at 3 and 7 percent.
Table of Contents
I. Executive Summary
II. Background
A. Authority
B. Purpose and Need for the Rule
C. History
D. Public Comment
E. Terminology
F. Does this action apply to me?
G. Compliance Date
III. Overview of Amendments
A. Applicability and Exemptions From Certification
B. Imports to the United States
C. Labeling of Nonretail Containers
D. On-Site Inspections
E. Certificates of Organic Operation
F. Continuation of Certification
G. Paperwork Submissions to the Administrator
H. Personnel Training and Qualifications
I. Oversight of Certification Activities
J. Accepting Foreign Conformity Assessment Systems
K. Compliance and Noncompliance Procedures
L. Mediation
M. Adverse Action Appeal Process
N. Producer Group Operations
O. Calculating the Percentage of Organically Produced
Ingredients
P. Supply Chain Traceability and Organic Fraud Prevention
Q. Technical Corrections
R. Additional Amendments Considered but Not Included in This
Rule
IV. Regulatory Analyses
A. Summary of Economic Analyses
B. Regulatory Impact Analysis
C. Executive Order 12988
D. Paperwork Reduction Act
E. Executive Order 13175
F. Executive Order 13132
G. Civil Rights Impact Analysis
H. Related Documents
II. Background
A. Authority
The Organic Foods Production Act of 1990 (OFPA) (7 U.S.C. 6501-
6524), authorizes the Agricultural Marketing Service (AMS) to establish
and maintain national standards governing the marketing of organically
produced agricultural products. AMS administers these standards through
the National Organic Program (NOP). Final regulations implementing the
NOP, also referred to as the USDA organic regulations, were published
on December 21, 2000 (65 FR 80548) and became effective on October 21,
2002.\2\ Through these regulations, AMS oversees national standards for
the production, handling, labeling, and sale of organically produced
agricultural products.
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\2\ 7 CFR part 205 National Organic Program; Final Rule.
December 21, 2000. Available on the AMS website: https://www.federalregister.gov/documents/2000/12/21/00-32257/national-organic-program
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B. Purpose and Need for the Rule
Since full implementation of the USDA organic regulations, the
organic industry has experienced significant change. Both demand for
and sales of organic products have risen steadily; total U.S. sales of
organic products reached more than $63 billion in 2021.\3\ The number
of businesses producing, handling, marketing, and selling organic
products has also grown to meet consumer demand. Rapid growth has
attracted many businesses to the USDA organic label and increased the
complexity of global organic supply chains.
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\3\ Organic Trade Association, Organic Industry Survey, 2022.
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Complexity makes oversight and enforcement of the organic supply
chains difficult because organic products are credence goods, which
means that their organic attributes, or ``integrity,'' cannot be easily
verified by consumers or businesses who buy organic products for use or
resale. The elements needed to guarantee organic integrity--transparent
supply chains, trusted interactions between businesses, and mechanisms
to verify product legitimacy--are more difficult to achieve in the
increasingly complex modern organic industry. This is further
compounded by inconsistent interpretation and implementation of the
USDA organic regulations, caused by a lack of clarity in some portions
of the regulation.
AMS is confident in the integrity and value of the USDA organic
seal. Consumers can trust the organic label due to a rigorous oversight
system that operates globally. However, the above challenges sometimes
cause
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mishandling of organic products, where integrity is compromised due to
improper handling. Additionally, high demand for organic products, the
absence of direct enforcement over some entities in the organic supply
chain, and organic price premiums increase the opportunity and
incentive for organic fraud (when nonorganic products are deceptively
represented as organic).
This rule addresses these risks and challenges by expanding
oversight to higher-risk portions of organic supply chains, requiring
organic operations to implement traceability and verification best
practices, and clarifying oversight and enforcement practices to ensure
more consistent implementation by certifying agents. This rule will
help prevent loss of organic integrity--which can occur both through
unintentional mishandling of organic products, and intentional fraud
meant to deceive--and strengthen the trust consumers, farmers, and
businesses have in the USDA organic label.
Mishandling of Organic Products and Complex Supply Chains
One of the most common risks to the integrity of an organic product
is mishandling--when an entity unintentionally compromises the unique
attributes that make a product organic. Once organic integrity is
compromised, that product can no longer be sold as organic, and both
its unique attributes and price premium are forfeit. Mishandling can
occur at any point in a supply chain, including production, handling,
transport, storage, sale, and processing. Examples of mishandling that
can cause a loss of integrity include exposure to pesticides,
fertilizers, fumigants, or cleaning agents that are not permitted in
organic production; mixing (``commingling'') of organic and nonorganic
products; relabeling or repackaging with incorrect identification; and
inability to demonstrate organic status due to poor or incomplete
information in records or transaction paperwork. The likelihood of such
mishandling is greater in long, complex supply chains where many
businesses, including businesses not certified organic, handle and sell
organic products.
When the organic regulations were published in 2000, organic
products were marketed mostly locally or regionally, and supply chains
tended to be short and transparent; for example, farm to wholesale to
retail to consumer. Demand and sales have grown considerably since
then. This significant market growth has attracted more producers,
handlers, product suppliers, importers, brokers, distributors, and
others to the organic market. Consider the example of an organic egg
supply chain in the United States, beginning with the production of
certified organic corn and ending with the sale of eggs to the
consumer. This demonstrates the typical entities and transactions in an
organic supply chain under the existing regulations:
A certified organic farm produces organic corn.
The corn is transported via an uncertified truck to a
local grain elevator, where it is aggregated with other organic corn
from nearby producers.
An uncertified commodity trader buys the corn.
The corn is transported via uncertified truck to an
uncertified storage facility; both transport and storage are
subcontracted and are not owned by the commodity trader.
The commodity trader sells the corn to a certified organic
grain supplier; the two parties remain anonymous because they use an
uncertified broker to facilitate the transaction.
The corn is transported via uncertified rail and river
barge to the grain supplier; it is transloaded and stored temporarily
several times before being delivered to the certified grain supplier.
The certified organic grain supplier stores the corn and
combines it with imported organic corn purchased from an importer via
an uncertified broker.
The certified grain supplier sells the corn to a certified
organic feed processer; the corn is transported via an uncertified
truck.
The certified processer combines the corn with several
other ingredients to create organic chicken feed.
The certified processer sells the feed to a certified
organic egg producer and transports it via an uncertified truck.
The certified organic egg producer sells organic eggs to
an uncertified distributor.
The uncertified distributor sells the organic eggs to a
retailer prior to final sale to the consumer.
This example illustrates the supply chain for a single ingredient--
organic feed corn. The supply chain for the organic eggs at the end of
this example is even more complex because it includes other ingredients
that go into the chicken feed (e.g., soybean meal, oats, wheat, seed
oils). Many of these ingredients are sourced both domestically and
internationally. Each ingredient has its own unique supply chain;
together they create a complex web converging on a single organic
product. It is largely because of this complexity that this rule
introduces more specific traceability, verification, oversight, and
enforcement practices for high-risk portions of organic supply chains.
Organic Fraud
In addition to mishandling, a growing risk to organic integrity is
fraud--the deceptive representation, sale, or labeling of nonorganic
agricultural products as organic. High demand for organic products, the
absence of direct enforcement over some entities in the organic supply
chain, and organic price premiums have increased the opportunity and
incentive for organic fraud. Both NOP and organic stakeholders have
uncovered organic fraud in organic supply chains, particularly in
organic grain and oilseed supply chains. Because such supply chains are
complex and involve multiple changes in ownership of high demand
products, the incentive for fraud is high. Federal investigations show
that organic grain and oilseed fraud can lead to tens of millions of
dollars in fraudulent sales within just a few months. The following
examples highlight some of the types of organic fraud that this rule
seeks to prevent. The examples also demonstrate the magnitude of total
organic fraud and how this rule's additional oversight and enforcement
mechanisms will reduce fraud.
In 2019, four individuals were sentenced to prison terms
for their roles in an organic grain fraud ring. The charges were
brought by the U.S. Attorney's Office for the Northern District of
Iowa. All four were sentenced to prison terms. The lead defendant, who
was sentenced to more than ten years, pled guilty to defrauding
customers in a scheme involving at least $142 million in nonorganic
grains sold as organic. The lead defendant sold fraudulent grain to
customers over a period of seven years, claiming the product was
organically grown in Nebraska and Missouri.\4\ This rule includes more
robust traceability and verification practices that would have helped
identify and stop this type of fraud earlier, preventing further sale
of the fraudulent products and reducing the impact of the fraud.
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\4\ https://www.justice.gov/usao-ndia/pr/field-schemes-fraud-results-over-decade-federal-prison-leader-largest-organic-fraud.
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In February 2020, a federal grand jury indicted an
individual in South Dakota for allegedly selling $71 million of
nonorganic grains and oilseeds falsely labeled organic between 2012 and
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2018.\5\ The defendant pled guilty and was sentenced in 2021 to 51
months in federal prison. He was also ordered to pay more than $15
million in restitution. The fraud ring spanned multiple states. After
NOP revoked the business' organic certifications, the responsible
parties established new brokerage firms to continue their fraud. Under
the current organic regulations, these brokerages did not require
organic certification and NOP had no oversight of their activities.
This rule will require the certification and oversight of brokers like
those involved in this case. This would allow the NOP to identify and
prevent the fraud, minimizing damage to the U.S. market.
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\5\ https://www.wisfarmer.com/story/news/2020/02/18/south-dakota-man-indicted-71-million-organics-fraud/4801207002/. https://www.justice.gov/usao-sd/pr/florida-man-sentenced-conspiracy-commit-wire-fraud-and-money-laundering.
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In 2017, an investigation revealed three shipments of
imported ``organic'' corn and soybeans--each weighing between 36 and 46
million pounds--were fraudulently labeled as organic. The associated
transaction records indicated that all three shipments originated from
producers in the Black Sea region that were not certified organic, and
that the shipments were originally sold at lower conventional prices.
In one case, a shipment of soybeans had been fumigated with aluminum
phosphide, which is prohibited for use in organic production and
handling. By the time this fraud was discovered, about 21 million
pounds of this same shipment of soybeans had already been distributed--
primary to organic producers as livestock feed.\6\ This rule will
require the use of NOP Import Certificates to verify the source and
integrity of organic imports, which will help detect and prevent
fraudulently labeled imports, such as those in this example, from
entering domestic supply chains.
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\6\ https://www.washingtonpost.com/business/economy/the-labels-said-organic-but-these-massive-imports-of-corn-and-soybeans-werent/2017/05/12/6d165984-2b76-11e7-a616-d7c8a68c1a66_story.html.
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In July 2022, a Minnesota farmer was indicted for growing
and selling fraudulent organic grains worth more than $46 million. The
farmer was certified organic but was growing grains with synthetic
fertilizers and pesticides in violation of the USDA organic
regulations. He sold this conventional grain (both what he produced
conventionally as well as conventional grain he purchased) as organic,
fraudulently presenting his certificate of organic operation to claim
the grain was organic and withholding the grain's true status from
buyers.\7\ This rule includes more robust traceability and verification
practices that would have helped identify and stop this type of fraud
earlier, preventing further sale of the fraudulent products and
reducing the impact of the fraud.
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\7\ https://www.justice.gov/usao-mn/pr/cottonwood-county-farmer-charged-46-million-organic-grain-fraud-scheme.
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In several of the above examples, fraudulent livestock feed was
sold to certified organic livestock producers, magnifying the effects
of the fraud. NOP continues to investigate complaints and multiple
cases of organic fraud at the production and handling levels. These
examples demonstrate the magnitude of fraud that NOP intercepts with
current oversight and enforcement techniques. SOE will significantly
bolster the oversight and enforcement mechanisms that NOP, certifying
agents, and operations have at their disposal. In the fraud cases
discussed above, these mechanisms would have allowed earlier fraud
detection and more effective enforcement action and would have greatly
reduced or even prevented the fraud.
Patterns in USDA Organic Certification and Organic Imports
The scope and distribution of potential organic fraud can also be
seen in changes in the number of operations certified to the USDA
organic standards and changes in the amount of organic imports from
certain regions. Two recent NOP efforts show both the potential type
and magnitude of fraud in the marketplace; more importantly, they also
demonstrate the potential of improved oversight and enforcement
mechanisms.
In 2018 and 2019, NOP began making changes to improve oversight of
organic imports, especially grain and oilseed imports from the Black
Sea region. NOP conducted farm-level yield analysis to compare expected
and actual yield, supply chain research to better understand the roles
and relationships of high-risk entities, and targeted import
surveillance to investigate credible reports of suspected fraud. As a
result of this heightened oversight and enforcement action, at least
180 operations (60 percent) in the Black Sea region have lost their
organic certification. In 2016, imports from the Black Sea region
represented 49 percent of the total dollar value of imported organic
grain and oilseeds (including corn, soybeans, wheat, barley,
sunflowers, flaxseed, and peas). In 2018, imports of these grains and
oilseeds from the region had dropped to 21 percent of the total dollar
value. The steep drop in organic certification and downward supply
trend in the Black Sea region give an indication of the magnitude and
type of fraud, as well as the success of stronger oversight and
enforcement strategy. Despite this enforcement success, key gaps in
oversight remain, such as uncertified entities in import supply chains
and non-mandatory use of NOP Import Certificates. This rule will help
close these gaps and bolster NOP's ability to detect and prevent
fraudulent organic imports.
In January 2021, AMS announced it would end its U.S.-India organic
recognition, which had allowed India's Agricultural and Processed Food
Products Export Development Authority (APEDA) to accredit certifying
agents to provide USDA organic certification in India. AMS ended this
recognition because NOP audits consistently found India's organic
control system to be insufficient to protect the integrity of the USDA
organic seal. In late 2020, prior to the end of U.S.-India recognition,
there were 4,023 operations certified to the USDA organic standard in
India. Operations formerly certified by AEDPA-accredited certifying
agents were given an 18-month transition period to become certified by
a USDA-accredited certifying agent. Since the end of the transition
period in July 2022, only 1,471 operations in India remain certified to
the USDA organic standard. Because failure to become recertified may
indicate an inability to comply with the USDA organic regulations, this
significant (63 percent) drop in the number of certified operations may
indicate the general volume of noncompliant activity (including
mishandling and fraud) that may have been taking place under the former
recognition. Additionally, following the end of the U.S. -India
recognition, imports of certified organic products from India has
dropped from an average per quarter value of $15.6 million to $9.4
million, a 39 percent decrease. This drop in import value suggests that
a significant number of organic imports from India may not have been
fully compliant with the USDA organic standard. The end of the U.S.-
India recognition demonstrates both the magnitude of potential fraud in
the market, and how more effective oversight (in this case,
certification only by USDA-accredited certifying agents) can
successfully safeguard the integrity of the USDA organic label. Despite
this success, there are still gaps in the oversight of foreign-
accredited certifying agents and imports from these countries.
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This rule will allow NOP to more fully implement its oversight
authority by codifying specific procedures for evaluating, accepting,
and continuing equivalency or recognition with foreign organic
programs.
These examples demonstrate how applying oversight and enforcement
best practices can reduce organic fraud. SOE will reduce fraud by
codifying best practices in critical areas--exemptions from
certification, import oversight, traceability, recordkeeping,
inspections and audits, oversight of certifying agents, and assessment
of organic trade partners. Additionally, the examples above only show
the positive results of improved oversight and enforcement at the
federal level; SOE will build upon this success by requiring certifying
agents and organic operations to use similar techniques. This means
proven oversight and enforcement techniques will be deployed closer to
where fraud occurs, which will facilitate earlier detection, stop more
fraud before it cascades further into supply chains, and more directly
deter fraudulent actors. Because this rule codifies best practices and
requires key parties in organic supply chains use these practices, AMS
expects that SOE's benefits will exceed those demonstrated in the
examples above.
C. History
In response to their experiences in the organic system,
stakeholders have called for the NOP to take steps to improve oversight
of organic systems and enforcement of the USDA organic regulations.
Commonly cited areas for improvement include certification of excluded
handlers, organic import oversight, fraud prevention, organic trade
arrangements, and organic inspector qualifications. Public discussions
on many topics included in this rule occurred during multiple National
Organic Standards Board (NOSB) meetings.\8\
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\8\ The April 2021 NOSB meeting is the most recent example of a
public discussion to address fraud concerns in the organic supply
chain. A discussion document, meeting transcripts, and public
comments are available at https://www.ams.usda.gov/event/national-organic-standards-board-nosb-meeting-crystal-city-va-0.
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This rule seeks to strengthen enforcement of the USDA organic
regulations and protect the integrity of the organic label by (1)
strengthening organic control systems; (2) improving organic import
oversight; (3) clarifying organic certification standards; and (4)
enhancing supply chain traceability. AMS identified the need for these
changes through:
Direct experience in administering the NOP, particularly
complaint investigations and audits of accredited certifying agents;
The Agriculture Improvement Act of 2018,\9\ which amended
the OFPA.
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\9\ The Agriculture Improvement Act of 2018, Public Law No: 115-
334, is available at: https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.
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Recommendations of a 2017 Office of Inspector General
report; \10\
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\10\ USDA Office of Inspector General Audit Report 01601-0001-
21: National Organic Program International Trade Arrangements and
Agreements. September 2017: https://www.usda.gov/sites/default/files/01601-0001-21.pdf.
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Recommendations of the NOP's federal advisory committee,
the National Organic Standards Board (NOSB); and
Industry stakeholder and consumer feedback.
AMS expects the amendments will bring more effective oversight and
enforcement, improve organic integrity and product traceability,
clarify existing standards to ensure fair competition, bolster consumer
trust in the organic label, reduce organic fraud, and support continued
industry growth. Information about each amendment is described in more
detail below.
D. Public Comment
AMS published the Strengthening Organic Enforcement proposed rule
on August 5, 2020, opening a 60-day public comment period. AMS received
more than 1,500 public comments from a variety of stakeholders,
including certifying agents, certified organic producers and handlers,
uncertified handlers, retailers, organic inspectors, trade
associations, organic advocates, scientific organizations, government
organizations, and consumers. The majority of public comments supported
the proposed amendments and agreed that the rule is needed to improve
oversight and enforcement, drive consistent implementation of the
organic regulations, and reduce organic fraud.
Many stakeholders provided meaningful feedback about the proposed
policy revisions, including recommendations to improve the rule through
greater specificity and clarity. Others discussed how the proposed
amendments would affect them or suggested alternatives to the proposed
policies. Popular topics of discussion included the need for
certification; excluded handlers; exemptions from certification;
implementation of the mandatory NOP Import Certificate requirements;
supply chain traceability audits; recordkeeping and verification
requirements; fraud prevention plans for certified operations;
oversight of producer groups; qualifications and training requirements
for certifying agent personnel; labeling of nonretail containers; and
unannounced inspections.
Some comments also discussed the proposed implementation timeframe
of one year after publication of the final rule. Some comments asked
AMS to implement the rule immediately, while others agreed that a one-
year timeframe is reasonable and gives stakeholders time to comply with
the new requirements. A few comments noted that some parts of the rule
may require more than one year to implement and asked AMS to consider
this in the final rule. Few comments addressed the costs and benefits
of the rule in detail, but many comments noted in general that the
costs of the rule are acceptable and outweighed by the benefits.
AMS took these public comments into consideration when revising the
policy, implementation timeframe, and cost-benefit analysis of this
rulemaking. For more information on the comments received and AMS's
response to specific comments, refer to ``III. Overview of
Amendments.''
E. Terminology
Throughout this rule, AMS refers to four concepts--organic
integrity, organic fraud, audit trails, and supply chain traceability--
which are integral to the purpose of this rule. AMS is explaining these
concepts upfront to assist reader understanding:
Organic integrity: The unique attributes that make a
product organic and define its status as organic. A product that fully
complies with the USDA organic regulations has integrity, and its
organic qualities have not been compromised.
Organic fraud: Deceptive representation, sale, or labeling
of nonorganic agricultural products or ingredients as ``100 percent
organic,'' ``organic,'' or ``made with organic (specified ingredients
or food group(s))'' (7 CFR 205.2).
Audit trail: Documentation that is sufficient to determine
the source, transfer of ownership, and transportation of any
agricultural product labeled as ``100 percent organic,'' the organic
ingredients of any agricultural product labeled as ``organic'' or
``made with organic (specified ingredients)'' or the organic
ingredients of any agricultural product containing less than 70 percent
organic ingredients identified as organic in an ingredients statement
(7 CFR 205.2).
[[Page 3553]]
Supply chain traceability: The ability to identify and
track the movement, sale, custody, handling, and organic status of an
agricultural product along a supply chain. Supply chain traceability
audits are used to verify an agricultural product's compliance with the
USDA organic regulations.
F. Does this action apply to me?
You may be affected by this action if you are engaged in the
organic industry. Potentially affected entities may include, but are
not limited to, the following:
Individuals or business entities that are considering
organic certification;
Existing production and handling operations that are
currently certified organic under the USDA organic regulations;
Brokers, traders, and importers of organic products that
are not currently certified under the USDA organic regulations;
Operations that use non-retail containers for shipping or
storing organic products;
Retailers that sell organic products;
Operations that receive or review certificates of organic
operation to verify compliance with USDA organic regulations;
USDA-accredited certifying agents, inspectors, and
certification review personnel;
Operations that import organic products into the United
States; and/or
Operations that export organic products to the United
States and the corresponding certifying agents.
This list is not exhaustive but identifies key entities likely to
be affected by this action. Other types of entities may also be
affected. To determine whether you or your business may be affected by
this action, you should carefully examine the regulatory text and
discussion below.
G. Compliance Date
AMS is establishing a compliance date for this final rule of March
19, 2024, or 12 months after the effective date of this final rule.
This means that all entities affected by this rule, including certified
operations and certifying agents, must comply with the provisions of
this final rule by this date. This also means that operations requiring
organic certification because of this final rule must be certified by
the compliance date. AMS is setting this compliance date to allow
affected entities time to read and understand this final rule, obtain
organic certification if needed, and prepare for and implement other
changes in this final rule.
III. Overview of Amendments
A. Applicability and Exemptions From Certification
The table below includes the regulatory provisions related to this
section of the rule. A discussion of the policy follows.
------------------------------------------------------------------------
Section Final regulatory text
------------------------------------------------------------------------
205.2..................................... Terms Defined.
Definitions for Handle,
Handler, Handling
operation, and Retail
establishment.
205.100................................... What has to be certified.
Paragraph (a).
205.101................................... Exemptions from
certification.
Entire section.
205.310................................... Agricultural products
produced or processed by an
exempt operation.
Paragraphs (a) and (b).
------------------------------------------------------------------------
The USDA organic regulations require organic certification of
businesses that sell, process, or package organic agricultural products
as handling operations. This rulemaking clarifies that most operations
that operate in the middle of organic supply chains must be certified
organic. This may include entities that sell, trade, distribute, or
import organic products. The activities of these operations may affect
organic integrity; therefore, certification is necessary to assure
consumers that organically produced products meet a consistent
standard. In addition to clarifying who needs certification, this
rulemaking also provides limited exemptions to organic certification
for certain entities and activities that present a low risk to organic
integrity.
This action may affect noncertified operations that handle organic
products, sell organic products, or facilitate the sale or trade of
organic products on behalf of a seller or oneself; certified organic
operations; organic inspectors; and certifying agents. Readers should
carefully examine the regulatory text and policy discussion to
determine if they are affected.
Background
The organic market has grown considerably since the USDA organic
regulations took effect in 2002. The Organic Trade Association reports
that total U.S. organic sales grew from $3.4 billion in 1997 to $61.9
billion in 2020.\11\ This growth has created increasingly complex
organic supply chains as additional domestic and international
businesses choose to produce and sell organic products for the U.S.
market. Some segments of organic supply chains remain uncertified under
current regulation, creating gaps in oversight, increasing the
opportunity for fraud, and complicating enforcement by the USDA and its
enforcement partners.
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\11\ Organic Trade Association, Organic Industry Survey, 2018-
2021
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Oversight and enforcement of organic supply chains are challenging
because organic products are credence goods, which means that their
organic attributes, or ``integrity,'' cannot be easily verified by an
individual. Guaranteeing organic integrity requires transparent supply
chains, trusted interactions between businesses, and mechanisms to
verify product legitimacy. This is best accomplished via certification,
which requires operations to follow traceability and verification
practices, and provides regular oversight in the form of audits and
annual inspection. This rulemaking broadens the scope of who must be
certified, opening more of the organic supply chain to oversight and
mitigating the risks of noncertified businesses handling organic
product.
OFPA authorizes the USDA to regulate and enforce the production,
handling, and sale of organic products (7 U.S.C. 6503). This includes
activity within organic supply chains, from production through final
sale to the
[[Page 3554]]
consumer.\12\ AMS is exercising its authority to regulate entities in
organic supply chains by requiring certification of some types of
currently noncertified operations. This action is mandated by the 2018
Farm Bill, which states that the USDA must ``issue regulations to limit
the type of organic operations that are excluded from certification
under section 205.101'' of the organic regulations.\13\ This rulemaking
supports the OFPA's purpose ``to assure consumers that organically
produced products meet a consistent standard (7 U.S.C. 6506(a)(11)).''
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\12\ OFPA and the USDA organic regulations do not provide
authority to regulate the transport of organic agricultural
products.
\13\ See section 10104(a) of the Agriculture Improvement Act of
2018, Public Law No: 115-334, available at: https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf,
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Who needs to be certified?
Section 205.100(a) of the organic regulations states that any
operation that produces or handles organic agricultural products must
be certified organic. This means that operations conducting activities
described in the definition of handle must be certified organic and
must follow all applicable portions of the OFPA and the USDA organic
regulations. In general, handle means to ``sell, process, or package''
organic agricultural products. Limited exemptions for operations that
handle organic agricultural products are described in Sec. 205.101(a)-
(h).
The definition of handle includes the term processing, which is
defined in Sec. 205.2.\14\ Operations that process organic
agricultural products must be certified. Handle further explains what
to ``sell'' and ``package'' mean by including additional examples of
handling activities. The examples represent typical supply chain
activities that may affect organic integrity. This includes activities
where there is physical contact with agricultural products, such as
combining, aggregating, culling, conditioning, treating, packing,
containerizing, repackaging, labeling, storing, receiving, or
loading.\15\ Examples of operations that often conduct these activities
may include grain elevators; bulk grain handlers; warehouses that cull,
label, or repackage; central bakeries or kitchens that serve grocery
chains; or ports of entry.
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\14\ 7 CFR 205.2 Processing. Cooking, baking, curing, heating,
drying, mixing, grinding, churning, separating, extracting,
slaughtering, cutting, fermenting, distilling, eviscerating,
preserving, dehydrating, freezing, chilling, or otherwise
manufacturing and includes the packaging, canning, jarring, or
otherwise enclosing food in a container.
\15\ The regulations at Sec. 205.2 define ``label'' and
``labeling'' to explain the type and location of information
covered. Labeling as a handling activity refers to the act of
applying a label to a product with an organic claim; applying other
types of labels, such as for inventory or information accompanying a
product, may not need certification.
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Handle also includes activities where there may not be physical
contact with agricultural products, such as selling, trading,
facilitating sale or trade on behalf of a seller or oneself, importing
to the United States, or exporting from a foreign country for sale in
the United States. These activities are included in the definition of
handle because they have the potential to affect organic integrity.
Operations that conduct these activities must be certified (unless
exempt per Sec. 205.101). Examples of operations that often conduct
these activities may include sales brokers, commodity traders,
ingredient sourcers, importers, or exporters.
The definition of handle is not an exhaustive list of activities
that must be certified. There may be additional activities not listed
in the definition that are similar to the listed activities and require
certification, or different words or synonyms for the same or similar
activities. The absence of a specific term in the definition of handle
does not mean the activity is not handling or that an operation
conducting this activity does not need certification.
What are the certification requirements for handlers?
All certified organic operations must follow the portions of the
USDA organic regulations that apply to activities they conduct.
Conversely, some portions of the regulation will not apply to every
operation (e.g., a certified operation that only produces crops does
not have to follow the livestock requirements of subpart C). Similarly,
the scope of a handling operation's certification only covers the
activities it conducts. For example, the OSP of a certified importer
would likely describe the operation's system to maintain transaction
records and audit trails, verify suppliers and NOP Import Certificates,
and verify traceability. On-site inspection of such an operation would
likely focus on a records review and evaluation, rather than evaluation
of physical facilities.
Contractors are sometimes used in the organic industry to provide
services to certified operations. Contractors that qualify for an
exemption per Sec. 205.101(a)-(f) do not need to be certified. Any
contractor performing handling activities on behalf of an operation
must be certified or described in the OSP of a certified operation.
It is common for some operations to handle both organic and
nonorganic agricultural products (i.e., a split operation). For a split
operation, only the portion(s) of the operation that produces or
handles organic agricultural products must be certified. If a portion
of an operation qualifies for an exemption from certification described
in Sec. 205.101(a)-(h), only that portion may be exempt, and the
remainder of the operation must be certified if it produces or handles
organic agricultural products. For example, a grocery store chain's
retail locations may be exempt under Sec. 205.101(b) or (c), but its
importing and some distribution activities would likely need to be
certified.
Organic Agricultural Products Received From an Exempt Operation
Agricultural products produced or processed on an exempt operation
must follow all requirements of Sec. 205.310. This means that an
operation receiving products produced or processed by an exempt
operation cannot represent the products as certified organic, cannot
display the USDA organic seal on the products, and cannot use the
products as organic ingredients in a product produced by the receiving
operation. In effect, product received and then processed by an exempt
operation loses its certified organic status and cannot be represented
as organic.
However, exempt operations may perform limited handling of
certified organic products, as described in each exemption at Sec.
205.101; i.e., if an exempt operation handles certified organic
products in a manner consistent with its applicable exemption, the
products maintain their organic status. This means, for example, that
an exempt warehouse may receive, store, and prepare for shipment
packaged certified organic products. Conversely, if this warehouse
opens or relabels such packaged products, then the certified organic
status of the products is lost, and an operation receiving these
products must not represent them as certified organic.
The USDA organic regulations require certified operations to
implement recordkeeping and verification practices that ensure the
integrity of organic agricultural products they receive, including
products received from exempt or uncertified operations. Records must
trace organic products back through any exempt operations to the last
certified operation in the supply chain, and operations must verify
their suppliers, including exempt operations. See Sec. Sec.
205.103(b)(2) and 205.201(a)(3) in the section on Supply Chain
Traceability and Fraud Prevention later in this rule.
[[Page 3555]]
Exemptions From Certification
The USDA organic regulations require certification of any operation
that produces or handles organic agricultural products (Sec.
205.100(a)). However, the regulations provide limited exemptions to
certain types of operations that conduct low-risk activities, and are
therefore less likely to compromise organic integrity of the
agricultural products they handle. These exemptions, and the conditions
that must be met to qualify for each, are described in Sec. 205.101.
The USDA organic regulations formerly used the terms ``exemption''
and ``exclusion'' to describe activities that do not require organic
certification. This final rule removes use of the term ``exclusion''
from Sec. 205.101 and throughout the organic regulation to reduce
confusion and misinterpretation about who needs to be certified. The
term ``exemption'' is now used exclusively to describe activities that
do not require organic certification. Previous ``exclusions'' listed
under former Sec. 205.101(b) have been modified and are now listed
under current Sec. 205.101.
Responsibilities of Exempt Operations
Operations described in Sec. 205.101 are exempt from the
requirement to be certified organic under subpart E. However, these
exempt operations must still follow all other applicable portions of
the organic regulations, including the production and handling
requirements of subpart C. For example, a very small vegetable farm may
be exempt from certification per Sec. 205.101(a); this means the farm
does not have to be certified and inspected annually, and does not have
to develop and submit an organic system plan. However, the farm must
follow the other organic production and handling requirements of
subpart C, including soil and fertility practices, crop rotation, weed
management, and seed use practices. Exempt operations must also comply
with Sec. 205.272 and practices to prevent commingling and contact
with prohibited substances.
Exempt operations must also follow the applicable labeling
requirements of subpart D. Critically, this means exempt operations
must not represent the agricultural products they produce or process as
certified organic and must not use the USDA organic seal. Additionally,
agricultural products produced or processed by an exempt operation must
not be identified or represented as organic in a product processed by
another operation (See Sec. 205.310, Agricultural products produced or
processed on an exempt operation). Additionally, exempt operations are
only permitted to perform the limited handling activities described in
the applicable exemption; any handling outside of that described in the
exemption may result in loss of organic status of products.
Operations that qualify for an exemption may voluntarily choose to
become certified. By becoming certified, the operation may market the
products it produces and processes as certified organic, display the
USDA organic seal on its products, and represent these products as
ingredients for use in other organic products.
Like certified operations, exempt operations are subject to
penalties for violating the OFPA and the organic regulations. Section
205.100(c) of the organic regulations states that any person or
responsibly connected person--including exempt operations--that
knowingly sells or labels a product as organic, except in accordance
with the Act, shall be subject to a civil penalty as specified in 7 CFR
3.91(b)(1)(xxxvi).\16\
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\16\ 7 CFR 3.91(b)(xxxvi): Civil penalty for knowingly labeling
or selling a product as organic except in accordance with the
Organic Foods Production Act of 1990, codified at 7 U.S.C. 6519(c).
As of the publication of this rule the civil penalty amount is a
maximum of $20,130 per violation.
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Recordkeeping by Exempt Operations
Like certified operations, exempt operations play a critical role
in maintaining the integrity of organic products as they travel from
production to consumer. Therefore, exempt operations must maintain
records of the organic products they produce and handle, including
records that: demonstrate that agricultural products identified as
organic were organically produced and handled; and verify quantities of
organic agricultural products received and shipped or sold. Such
records are necessary to maintain an audit trail for organic products;
this will facilitate many other provisions of this rule, including
supply chain traceability audits (Sec. 205.501(a)(21)), recordkeeping
by certified operations (Sec. 205.103), on-site inspections (Sec.
205.403(d)), and fraud prevention plans (Sec. 205.201(a)(3)). Retail
establishments that do not process agricultural products (see
definition for Handle at Sec. 205.2 and exemption from certification
at Sec. 205.101(b)) do not need to maintain such records. Exempt
handlers must have required records available and must show those
records to a representative of the Secretary upon request. Failure to
produce compliant records may lead to enforcement action.
Small Producers and Handlers
Small organic producers and handlers are exempt from certification
at Sec. 205.101(a). This exemption is limited to producers and
handlers with gross agricultural income from organic sales of no more
than $5,000 annually. These operations are exempt from certification
under subpart E and from submitting an organic system plan, but must
follow all applicable organic production and handling requirements of
subpart C and labeling requirements of subpart D. This includes the
requirements to prevent commingling and prevention of contact with
prohibited substances (Sec. 205.272).
Such operations must not represent the agricultural products they
produce or process as certified organic and must not use the USDA
organic seal. Agricultural products produced or processed by these
exempt operations must not be identified or represented as organic in a
product processed by another operation (see Sec. 205.310).
Retail Establishments
Retail businesses that handle organic agricultural products and
sell directly to consumers may be exempt from certification. To qualify
for an exemption, the operation must be a retail establishment and meet
the conditions for the exemptions in Sec. 205.101(b) and (c).
The regulations define retail establishment to include a range of
transaction modes for selling to consumers that commonly occur in the
modern marketplace. Retail establishment includes restaurants,
delicatessens, bakeries, grocery stores, or any retail business with a
restaurant, delicatessen, bakery, salad bar, bulk food self-service
station, or other eat-in, carry-out, mail-order, or delivery service of
raw or processed agricultural products. Retail is commonly described as
selling directly to consumers, end-users, or the public. The definition
for retail establishment aligns with that concept. Businesses which
sell to other businesses (wholesale) do not qualify as retail
establishments. Retail establishments may use virtual transactions for
sales, but they must also have a physical location for consumers to
purchase products.
Only operations that are retail establishments are eligible for the
retailer exemptions. The definitions for handler and handling operation
do not include final retailers of agricultural products that do not
process agricultural products. This exemption from certification is
also reinforced at section 205.101(b), which exempts retail
establishments that sell, but do not
[[Page 3556]]
process, organic agricultural products to consumers.
Section 205.101(c) exempts retail establishments that process
certified organic agricultural products at the point of sale to the
consumer. Distributors or brand name owners that do not qualify as
retail establishments should review the exemptions from certification
at Sec. 205.101(e) and (f), as those may apply to their activities.
Retail Operations That Don't Process
Retail establishments that do not process agricultural products are
not handlers or handling operations and may be exempt from
certification under Sec. 205.101(b). The OFPA and Sec. 205.2 define
processing as cooking, baking, heating, drying, mixing, grinding
churning, separating, extracting, cutting, fermenting, eviscerating,
pre-serving, dehydrating, freezing, or otherwise manufacturing, and
includes the packaging, canning jarring, or otherwise enclosing food in
a container. A retail establishment that is not processing may do other
handling activities without certification. This could include, for
example, removing produce from shipping boxes and washing and
transferring product to display cases or opening bags of oats and
transferring contents to bulk food dispensers. Although a retailer
performing such handling activities may be exempt from certification,
all retail establishments must comply with Sec. 205.272, which
requires measures to prevent commingling of organic products and
contact with prohibited substances.
Retail establishments that do not process ``100% organic'' and
``organic'' unpackaged products may use the USDA organic seal and/or
seal of the certifying agent in retail labeling and display of these
unpackaged products (Sec. 205.308). Retail establishments that do not
process ``made with organic. . .'' unpackaged products may use that
claim in retail labeling and displays (Sec. 205.309).
Retail Establishments That Process
Retail establishments that process organic agricultural products
may be exempt from certification under Sec. 205.101(c). To qualify for
this exemption, a retail establishment must process organic products at
the point of final sale to the consumer. This means that the products
must be processed and sold in the same physical location. This could
include repackaging bulk containers of organic product into individual
units for retail sale within an individual grocery store or a retail
establishment that prepares ready-to-eat meals and sells them online to
consumers from the processing location.
Per Sec. 205.310, organic agricultural products that are processed
by exempt retail establishments (such as in the examples above) must
not be sold, labeled or represented as ``certified'' organic, must not
display the USDA seal or identify the certifying agent, and must not be
used by another operation as ingredients in a certified organic
product. Only retail establishments that are certified organic may use
the USDA organic seal (or make certified organic claims) on products
they process.
This exemption does not cover retail establishments that sell
organic products to consumers which are processed at a location
separate from the point of sale. This could include, for example, an
online retailer that sells products processed at an uncertified
facility or a central processing facility that prepares food sold in
bakery and deli sections of grocery stores. In these scenarios, the
processing facility is not co-located in the same physical location as
the point of sale and the retail establishment exemption does not cover
separate processing facilities. The processors would need to be
separately certified in order for a retail establishment to sell their
products as organic.
In addition, this exemption does not cover retailers that process
and sell to consumers only via virtual transactions. ``Virtual
transaction'' describes any form of transaction that does not occur in-
person (e.g., telephone, mail-order, and/or online sales). Retailers
that process and sell to consumers virtually without having a physical
location for retail sales must be certified. These businesses do not
meet the definition for retail establishment, and, by extension, the
conditions for exemption from certification.
All exempt retail establishments must comply with the requirements
of Sec. 205.272, which describes handling requirements to prevent
commingling and contact with prohibited substances. In addition, exempt
retail establishments that process organic products must follow the
labeling provisions specified in Sec. 205.310 and maintain records to
(1) demonstrate that agricultural products identified as organic were
organically produced and handled; and (2) verify quantities received,
sold, or produced from such agricultural products. Exempt handlers must
have these records available and must show them to a representative of
the Secretary upon request (7 U.S.C. 6519(a)(1)). Failure to produce
compliant records may lead to enforcement action.
Operations That Handle Only Products With Less Than 70 Percent Organic
Ingredients
Section 205.101(d) exempts from certification operations that only
handle agricultural products with less than 70 percent organically
produced ingredients, and operations that only identify organic
ingredients on the product informational panel. This exemption is not
new policy. It combines two existing exemptions: operations that handle
products with less than 70 percent organic ingredients (former Sec.
205.101(a)(3)) and operations that handle products that only identify
organic ingredients on the information panel (former Sec.
205.101(a)(4)). AMS combined these exemptions because they cover
operations that handle products in the same labeling category (per
Sec. 205.305), and because these operations must follow identical use
and labeling requirements. Operations that qualify for this exemption
are exempt from certification under subpart E and from submitting an
organic system plan, but must follow all applicable organic production
and handling requirements of subpart C and labeling requirements of
subpart D. This includes the labeling requirements for products with
less than 70 percent organic content (Sec. 205.305) and the
requirements to prevent commingling and prevention of contact with
prohibited substances (Sec. 205.272).
Handlers covered under this exemption must have the records
required by Sec. 205.101(i) available and show them to a
representative of the Secretary upon request (7 U.S.C. 6519(a)(1)).
Failure to produce compliant records may lead to enforcement action.
Such operations must not represent the agricultural products they
produce or process as certified organic and must not use the USDA
organic seal. Agricultural products produced or processed by these
exempt operations must not be identified or represented as organic in a
product processed by another operation (see Sec. 205.310).
Storing or Selling Packaged Organic Products
The movement of packaged and sealed organic products through the
supply chain is a lower-risk activity. Packaged products are less
likely to be commingled, exposed to contaminants, or tampered with, and
alterations are easier to detect. Handling operations that sell,
distribute, or store packaged organic agricultural products may be
exempt from organic certification. Two exemptions, at Sec. 205.101(e)
and (f),
[[Page 3557]]
apply to limited handling activities involving only organic
agricultural products that are in sealed, tamper-evident packaging or
containers. The key distinctions between these exemptions are that
205.101(f) covers operations that buy and sell, in addition to
receiving, storing and/or preparing for shipment, and that 205.101(f)
covers only retail-packaged products versus packaged products that are
not in final retail packaging. Tamper-evident packaging or container
means that the contents are sealed in a manner where an attempt to
break the seal, access the contents, or reclose the package would be
obvious. These exemptions cover only the specified handling activities.
These exemptions do not, for example, cover buying, selling, receiving,
storing, or loading of unpackaged products; those activities require
certification.
The exemption at Sec. 205.101(e) is intended primarily for storage
and warehouse facilities. Section 205.101(e) applies to handlers that
are only receiving, storing and/or preparing for shipment products that
are received in and remain in sealed, tamper-evident packaging until
the products leave their custody. This allowance may cover, for
example, warehouses and storage facilities, including some cold storage
facilities that only receive and store packaged products and prepare
them for shipment to another entity. Examples of tamper-evident
packaging include produce boxes with ``DO NOT TAMPER WITH'' tape placed
across the box flaps, sealed bulk bags of flour, or sealed drums and
totes of olive oil. Storage facilities or warehouses that receive
products that are not in sealed, tamper-evident packaging must be
certified.
The exemption at Sec. 205.101(f) is intended primarily for
distributors. Section 205.101(f) applies to handlers that only buy,
sell, receive, store and/or prepare for shipment retail-packaged
organic agricultural products. This allowance may cover, for example,
some distributors, brand name owners, and sales brokers that purchase
and/or receive products in their finished retail packaging. Products
must be received in and remain in the final retail packaging without
alteration throughout their custody. This exemption does not apply to
sales brokers, traders, or other handlers that buy and sell products
that are not in their final retail packaging.
Preparing for shipment is an activity that is covered under both
exemptions at Sec. 205.101(e) and (f). This may include various tasks
that must be performed with the sealed, tamper-evident packaging
remaining intact and without altering product contents or any retail
labeling. Examples of preparing for shipment include putting packaged
products into shipping containers, applying internal tracking numbers,
shrink-wrapping shipping cartons to a pallet, breaking down pallets of
fully packaged products, adding protective packaging to nonretail
containers or retail displays of organic products, packing individual
packaged products onto a shipping pallet, loading/unloading packaged
products onto or from transport vehicles, and placing individual retail
packages into a retail display which the certifying agent of the last
certified handling operation has verified as compliant.
Handlers that qualify for an exemption at Sec. 205.101(e) or (f)
must use practices for preventing commingling and contamination of
organic products, in compliance with Sec. 205.272. In addition, exempt
handlers must have records available and must show those records to a
representative of the Secretary upon request, to show that organic
products are organically produced and handled and to verify quantities
of organic product received and shipped or sold. Failure to produce
compliant records may lead to enforcement action.
Customs Brokers
Section 205.101(g) exempts Customs brokers from organic
certification. Customs brokers facilitate the entry of products into
the United States by helping meet import documentation and filing
requirements and by acting as intermediaries between importers and the
U.S. government. Customs brokers do not take ownership or physical
possession of organic products and their actions present minimal risk
to organic integrity. They are often distinct from sales or commodity
brokers, who sell or facilitate the sale of organic products--those
operations must be certified if they handle organic products. Customs
brokers also play a critical role by filing NOP Import Certificate data
in the U.S. Custom and Border Protection's (CBP) Automated Commercial
Environment (ACE) import entry system.
This exemption is limited to Customs brokers as defined by 19 CFR
111.1: ``a person who is licensed under this part to transact customs
business on behalf of others.'' Customs business is further defined in
19 CFR 111.1 and includes ``activities involving transactions with CBP
[U.S. Customs and Border Protection] concerning the entry and
admissibility of merchandise . . . payment of duties, taxes, or other
charges . . . the preparation . . . of documents in any format and the
electronic transmission of documents . . . intended to be filed with
CBP in furtherance of any other customs business activity . . . '' \17\
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\17\ See 19 CFR 111.1 for complete definitions of Customs broker
and Customs business: https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=ab6e30d35ef538ce07bc8021d6e1d4c3&mc=true&n=sp19.1.111.a&r=SUBPART&ty=HTML#se19.1.111_11.
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To qualify for this exemption, Customs brokers must only conduct
customs business. If a Customs broker conducts any additional activity
within the definition of handle--such as selling, importing, or
trading--the Customs broker must be certified.
Logistics Brokers
Section 205.101(h) exempts from certification operations that only
arrange for the shipping, storing, transport, or movement of organic
agricultural products. Sometimes known as ``logistics brokers,'' these
operations facilitate the movement and storage of agricultural products
by connecting a consigner (or consignee) with a carrier who can
transport/store the products. Logistics brokers do not take ownership
or physical possession of organic products. The activities they conduct
present minimal risk to organic integrity because they only secure
transport/storage to meet the needs of a third party who owns or is
responsible for the agricultural product.
This exemption is limited to operations that only arrange for the
shipping, storing, transport, or movement of agricultural products and
do not conduct any other activity in the definition of handle. If such
an operation conducts other handling activities--such as selling,
importing, or trading--the operation must be certified.
Transport
Transport of agricultural products alone is not a handling activity
and does not require certification (see definitions of handle in 7 CFR
205.2 and 7 U.S.C. 2502(8)). Transport generally refers to the movement
of products in commerce. Examples of activities which are
transportation and do not require certification include: moving organic
hay or milk from a certified producer to a certified organic buyer or
certified processing facility, moving organic grain or organic
livestock from certified organic farms to a certified handling or
slaughter facility, and food delivery services transporting prepared
foods from a retail establishment to a consumer.
Any activities other than the movement of product on a
transportation vehicle or moving products between transportation
[[Page 3558]]
vehicles (transloading) are handling and require certification.
Handling activities which are adjacent to transport require
certification unless they are covered by exemptions 205.101(e) or (f)
for packaged products. Examples of adjacent activities which do not
qualify as transport include combining, splitting, containerizing,
packing/repacking, treating, sorting, opening, enclosing, or labeling/
relabeling. In addition, loading or unloading of unpackaged products
into or from a storage facility is not a form of transportation; this
activity must be certified.
Certified operations are responsible for verifying that products
handled by uncertified entities in their supply chain remain in
compliance with the organic regulations. This includes verifying
organic products transported by an uncertified transporter. A certified
operation needs to describe procedures for verifying suppliers in the
supply chain and the organic status of products received (Sec.
205.201(a)(3)). In addition, certified operations must maintain records
back to last certified operation, which may encompass uncertified
operations that fall between certified entities (Sec. 205.103(b)(2)).
The certified organic operation responsible for the organic products
that are transported must: maintain records, for the audit trail and
traceability, in sufficient detail as to be readily understood and
audited; demonstrate prevention of commingling and contamination during
transportation (Sec. 205.272); fully describe the transportation
practices in the organic system plan; and ensure that the
transportation records for organic products are available for
inspection. Certified operations that load or receive products from
uncertified transporters can verify prevention of contamination/contact
with prohibited substances through, for example, affidavits or other
documentation of vehicle clean out.
Summary of Changes to the Final Rule
AMS made several revisions to the proposed regulatory text when
writing this rulemaking. Changes to the rulemaking are discussed below.
This is then followed by responses to specific themes from public
comment.
AMS revised the definition of handle to include additional
examples of activities that require organic certification. AMS added
these activities in response to public comments, which asked for
additional clarity about who must be certified. The additional
activities in the definition more clearly indicate activities that
require certification and will help businesses determine whether they
need organic certification.
AMS simplified the term handler and removed ``except for
operations that are exempt from certification'' and ``or a portion of
[an operation]'' from handling operation. These phrases are redundant
because they are explained in Sec. 205.100--What has to be certified.
AMS also added ``except final retailers of agricultural products that
do not process agricultural products'' to both definitions. This
clarifies that certain final retailers are not handlers or handling
operations and aligns the definitions with OFPA. The two definitions
are now mostly synonymous, differing only in their reference to either
a person or an operation.
The proposed rule would have replaced the defined term
retail food establishment with the updated term retail operation, which
focused on the key activities of retailers, notably those selling
``directly to final consumers.'' Many public comments noted that the
proposed phrase ``direct to final consumers'' was imprecise and would
not be interpreted consistently by stakeholders. These comments also
indicated that stakeholders are familiar with the meaning of the
original defined term retail food establishment and how to apply it.
Therefore, this final rule uses the defined term retail establishment,
which has language very similar to the original retail food
establishment, to ensure consistent stakeholder understanding. This
final defined term removes the word ``food'' because retailers
sometimes sell non-food items; it also avoids the potentially confusing
phrase ``directly to final consumers.'' Finally, this definition for
retail establishment adds more examples of types of retail
establishments to help stakeholders determine whether they are a retail
establishment.
AMS removed ``or a portion of an operation'' from the
descriptions of each exemption; this language was redundant because it
is included in Sec. 205.100--What has to be certified.
AMS removed references to Sec. 205.272 because they are
redundant to the reference to subpart C in the introductory paragraph
of Sec. 205.101.
In the introductory paragraph of Sec. 205.101, AMS
replaced references to Sec. 205.310 with a reference to subpart D.
This more broadly references the labeling requirements exempt
operations must follow, including use of the USDA seal and labeling in
retail environments.
In Sec. 205.101(b), AMS removed ``sells'' to clarify that
retail establishments may also perform some handling (not just selling)
in the regular course of business.
In Sec. 205.101(c), AMS removed the reference to
agricultural products ``previously labeled for retail sale'' and
replaced it with the statement ``certified under this part'' to clarify
that retailers may process certified organic products regardless of
whether the products are labeled for retail sale or for other use
(e.g., organic products labeled for food service).
AMS revised Sec. 205.101(e) to exempt only storage of
products sealed in tamper-evident packaging. Storage of unpackaged
organic products is a high-risk activity that requires certification to
maintain integrity. Sealed, tamper-evident packaging makes organic
products less susceptible to fraud and mishandling and helps maintain
organic integrity during storage and handling by uncertified
operations.
AMS added new paragraph (f) in Sec. 205.101 to exempt the
sale of retail products sealed in tamper-evident packaging. Sale of
this type of packaged retail products presents little risk to organic
integrity, and operations storing and selling these products do not
require organic certification.
AMS added new paragraphs (g) and (h) to Sec. 205.101 to
exempt Customs brokers and logistics brokers because these operations
only facilitate entry of imports into the United States, and their
activities do not present a risk to organic integrity.
AMS removed recordkeeping requirements from specific
exemptions and replaced them with a general ``Recordkeeping by exempt
operations'' paragraph at Sec. 205.101(i).
AMS revised Sec. 205.310 to remove ``or excluded'' and
replaced ``handled'' with ``processed'' to more clearly indicate that
products processed by an exempt operation must not be used as an
ingredient in an organic product processed by others.
Summary of Public Comment
AMS received many public comments from stakeholders across the
organic industry discussing this section of the proposed rule. The
majority of comments generally supported AMS's proposed revisions and
agreed that the organic regulations must clearly indicate who needs to
be certified and reduce the types of uncertified operations in organic
supply chain. Many commenters requested further clarification of the
proposed changes, particularly about the need for organic certification
and exemptions from certification.
[[Page 3559]]
Revised Definitions
The revised definition of handle was discussed in many comments.
Some commenters requested expanding the definition to include terms
such as ``port,'' ``transload,'' and ``brand owner'' to the regulatory
text. Commenters also requested specific distinctions be made between
``transport'' and ``transload,'' noting current inconsistency in how
these are interpreted by the industry.
Some comments discussed further clarification needed, including how
``cold storage'' fits into the rule. Other comments requested to
further clarify handle by better defining ``split.'' Another commenter
requested clarification for operations that repackage or repurpose
certified organic products for on-site sale (e.g., delis). A few
commenters also requested AMS discuss virtual transactions more
clearly.
In response to AMS's request for additional activities that may
need to be certified, commenters suggested the following be added to
the definition of handle: split, open, close, sort, combine,
consolidate, aggregate, enclose, condition, treat, size, grade,
transload, brand ownership, private label, import, export, commingle,
transport, and deliver.
Exemptions
Certification of and exemption for brokers was frequently discussed
in comments. Many commenters requested that brokering activities be
exempt, with some requesting broad exemptions for all brokers and
others favoring exemptions for certain brokering activities. These
comments explained that exemptions are warranted because brokers
typically do not take physical possession of the products. Many
commenters also stated that all brokering activity should be certified,
regardless of physical or financial possession.
Several comments requested changes or clarifications to the
exemption for operations with organic sales of less than $5,000,
although the proposed rule did not revise existing policy. Most of
these comments wrote in support of this exemption, though some proposed
changes such as raising the maximum receipts to $10,000 while still
maintaining exempt status.
In general, some comments requested fewer exemptions, and asked AMS
to implement a transition period for operations that would require
certification under the rulemaking. Further comments wrote that
operations that sell direct to consumers should be eligible for
exemption. Several comments requested that storage facilities which
only receive product packaged by a certified operation be exempt. One
comment requested that products, not operations, be eligible for
exemption because operations can interact with organic and non-organic
products.
Some comments also requested clarification about private label
brands. There was no clear consensus among comments about the need to
certify such operations. Many comments stated that these operations
must be certified, and that doing so would improve traceability and
integrity. Others requested that private labels be exempt to avoid
additional costs and labeling inconsistencies. Further comments
requested that ``private label'' be added to the definition of ``retail
establishment'' because retail brands often sell private-labeled
product.
Comments disagreed about the specific requirements exempt
operations must follow. Some comments argued for more specific
regulatory requirements for exempt operations (i.e., clarify what
exempt operations can and cannot do). Many comments discussed the use
of the USDA organic label by exempt operations, stating that exempt
operations should not be permitted to use the certified organic label.
They requested that whenever the organic label is used, the business
must be certified.
Transport
Many comments requested specific exemptions for most transportation
of organic products. Specifically, several comments requested that milk
hauling and transportation between two certified operations should be
exempt from certification. While the majority of comments requested
these types of transportation be exempt, some comments disagreed,
requesting limits on transportation exemptions. Other comments
requested clarification for whether third-party delivery services that
restaurants use are exempt. Finally, some comments also asked AMS to
clarify whether transloading activities need to be certified.
Recordkeeping and Compliance
Some comments were concerned with verifying exempt operations
compliance. Several commenters suggested requiring universal use of
affidavits when doing business with exempt operations. Another
suggested utilizing invoices to track compliance using mass-balance
audits.
Many comments addressed recordkeeping. Several comments requested
modifying recordkeeping requirements to require exempt operations to
maintain records for five years to align requirements for certified and
exempt operations. Other comments wrote that the recordkeeping
requirements are burdensome for exempt businesses and asked AMS to not
require certain recordkeeping practices.
Responses to Public Comment
Definition of Handle
(Comment) AMS received many comments about the definition of handle
and activities that should or should not require certification.
Comments discussed a wide range of activities spanning all segments of
the supply chain and suggested many additional activities to include in
the definition of handle, including to split, open, close, sort,
combine, consolidate, aggregate, enclose, condition, treat, size,
grade, transload, brand ownership, private label, import, export,
commingle, transport, and deliver. Conversely, comments also provided
examples of activities that should not require certification, including
storing packaged products, transporting, delivering, repackaging or
splitting cases of retail-packaged products, loading, receiving,
brokering, selling or trading packaged products, selling retail
products, or labeling for inventory purposes.
(Response) AMS agrees that some of the activities presented by
commenters require certification and has added more examples to the
definition of handle to help clarify who and what activities must be
certified. The definition of handle is not an exhaustive list of
activities that must be certified. There may be additional activities
not listed in the definition that require certification, or different
words or synonyms for the same or similar activities. The absence of a
specific term in the definition of handle does not mean the activity is
not handling or that an operation conducting this activity does not
need certification. More specific responses to certain activities are
discussed below.
(Comment) Several comments noted the difference between the
definitions of handler and handling operation and asked AMS to either
clarify this difference, or harmonize the two definitions.
(Response) AMS simplified handler and removed ``except for
operations that are exempt from certification'' and ``or a portion of
[an operation]'' from handling operation. These phrases are redundant
because they are explained in Sec. 205.100--What has to be certified.
AMS also added ``except final retailers
[[Page 3560]]
of agricultural products that do not process agricultural products'' to
both definitions. This clarifies that certain final retailers are not
handlers or handling operations, and aligns the definitions with OFPA.
The two definitions are now mostly synonymous, differing only in their
reference to either a person or an operation.
(Comment) Several comments asked AMS to include importing and
exporting to the definition of handle, noting that the mandatory use of
NOP Import Certificates requires certification of importers and
exporters.
(Response) AMS agrees with these comments and has added importing
to the United States and exporting for sale in the United States to the
definition to help clarify that these activities require certification,
and to support the mandatory use of NOP Import Certificates described
in Section 2 of this rule, Imports to the United States.
(Comment) Commenters questioned the inclusion of ``facilitating
sale or trade'' in the definition for handle. The comments explained
that the meaning is vague and too broad and would result in customs
brokers, freight forwarders, sales brokers, and administrative
activities requiring certification.
(Response) The original definition for handle covered many
activities in the supply chain, from post-production to retail sale.
The updated definition is specific about which activities are included
in ``sell, process or package.'' However, the list of activities is not
exhaustive and does not capture all activities that may be considered
as selling, processing, or packaging an agricultural product. AMS
included ``facilitating sale or trade on behalf of a seller or
oneself'' as a general category to capture activities which are
integral to selling a product and may be known by various names. The
definition for handle includes handling activities that fall under
AMS's authority, although sometimes certain activities listed in handle
may not require certification. For example, entities that perform lower
risk activities--such as Customs brokers, logistics providers (e.g.,
freight forwarders), and limited handling of packaged products--may be
exempt from certification (see Sec. 205.101(e)--(h)).
Retail
(Comment) AMS received comments requesting clarification regarding
whether distribution centers and transport vehicles associated with a
retail establishment are exempt from certification. Some commenters
requested that off-site warehouses and distribution centers not be
exempt unless they meet proposed Sec. 205.101(e). According to
commenters, this clarification is needed to ensure that distribution
centers do not avoid certification by claiming to be an exempt retail
establishment.
(Response) A warehouse or distribution center associated with a
retail establishment is only exempt if it meets the criteria described
in Sec. 205.101(e) or (f). Transport vehicles associated with a retail
establishment do not require certification if they only transport and
do not handle organic agricultural products per Sec. 205.2.
(Comment) AMS received comments asking whether virtual transactions
with a final consumer are exempt from certification. Although a few
comments asked NOP to either exempt or require certification of this
activity, most comments did not give an opinion and only asked NOP for
clarification.
(Response) AMS has provided additional clarification by noting that
only businesses that meet the definition for retail establishment are
exempt under Sec. 205.101(b) and (c). Virtual businesses that only
sell retail packaged products to consumers, but do not qualify as
retail establishments, may be exempt from certification if they meet
the criteria of Sec. 205.101(f). AMS provides further detail in the
``Retail establishments'' section of the preamble.
(Comment) Comments noted that the proposed definition of retail
operation did not include the list of examples that was provided in the
preamble, and asked AMS to add them to the definition.
(Response) AMS agrees that the examples help clarify the definition
and has added them to the final definition of retail establishment.
(Comment) Comments requested revising the exemption for retailers
that process by not limiting this to processing only products that were
previously labeled for retail sale. Comments indicated that retailers
commonly source products labeled for food service.
(Response) AMS has removed that qualification from Sec. 205.101(c)
to clarify that exempt retail establishments may process certified
organic products regardless of whether the products are labeled for
retail sale.
(Comment) AMS received comments asking about the status of food
delivery services, specifically those affiliated with or serving retail
operations. Although a few comments asked NOP to either exempt or
require certification of this activity, most comments did not give an
opinion and only asked NOP for clarification.
(Response) Services which deliver products from a retail
establishment to a consumer may not require certification. A service
which delivers product from the retailer to the consumer after final
sale and does not engage in handling is transport and does not require
certification.
(Comment) Comments requested clearer guidance on what handling
activities retail operations could engage in and remain exempt.
Comments explained that the exemption for retailers that only sell and
retailers that process creates uncertainty for the many retail
operations that sell and handle. A few comments gave specific examples
of activities that exempt retail establishments should be allowed to
conduct, including removing/unpacking products, washing and
transferring products to retail displays, and breaking down master
cases of individual packaged products. However, most comments did not
give an opinion and only asked NOP for clarification.
(Response) AMS has revised the definitions of handler and handling
operation to exclude retailers that do not process organic agricultural
products; these operations may not require certification. This is
reinforced by the exemption for retailers that handle but do not
process at Sec. 205.101(b), which acknowledges that exempt retail
establishments may perform some handling activities. AMS has also
revised the definition for handle to be more specific about the types
of activities included. The additional description will help to clarify
the differences and overlap in handling and processing activities.
(Comment) Comments asked to clarify the meaning of ``point of
sale'' in reference to virtual transactions for retailers. There was a
suggestion to allow virtual transactions only when the sale occurs from
a brick-and-mortar retail location, to prohibit retailers that sell
only via an online platform.
(Response) The definition for retail establishment allows for
virtual retail transactions. For a retail establishment to be exempt,
the sales must occur at the same location as the processing, and there
must also be a physical location for consumers to purchase products.
Storage
(Comment) AMS received comments stating that storage of unpackaged
or bulk organic products is high-risk and should require certification.
They also noted that the proposed rule eliminated the distinction
between packaged and unpackaged product relating to receiving, storing,
and loading activities; this could allow high-risk operations
[[Page 3561]]
such as grain elevators and ports of entry to be exempt from
certification. Some comments requested AMS only exempt the storage of
sealed, tamper-evident packaged products.
(Response) AMS has revised the exemption at Sec. 205.101(e) to
exempt only operations that store, receive, and prepare for shipment
organic products in sealed, tamper-evident packages. Products must
remain in their packages and the exempt operation must not handle the
product beyond storing, loading, and preparing for shipment. Operations
that store bulk products or products not packaged in sealed, tamper-
evident packaging must be certified.
AMS made this change because the proposed rule would have exempted
operations that store unpackaged or bulk organic products. Many public
comments noted that storage of unpackaged organic products is a high-
risk activity that requires certification to maintain integrity. AMS
agrees that storage of unpackaged products is a high-risk activity.
Lack of sealed or protective packaging increases the likelihood of
contamination with prohibited materials (e.g., pesticides and
fumigants), commingling with nonorganic products, and
misidentification. These risks are especially great in high-activity
areas, and storage of unpackaged products requires additional care and
oversight to ensure organic integrity is maintained. Therefore, AMS is
requiring certification of operations that store unpackaged products.
Conversely, because packaging reduces the risk of contamination,
commingling, and misidentification, AMS is granting an exemption from
certification for operations that only store packaged products that are
sealed upon arrival and remain in their packaging.
AMS has narrowed the exemption to include only operations that
store, receive, and/or prepare for shipment organic products in sealed,
tamper-evident packaging. Sealed, tamper-evident packaging makes
organic products less susceptible to fraud and mishandling and helps
maintain organic integrity during storage and handling by uncertified
operations.
(Comment) Commenters requested AMS exempt from certification
activities where packaged product remains in its container, such as
breaking up pallets of packaged organic products that remain in its
original inner packaging, or placing such products into a retail
display.
(Response) Section 205.101(e) and (f) exempt operations that
receive, store, and prepare for shipment organic products enclosed in
sealed, tamper-evident packages or containers. Preparing for shipment
may include various tasks that must be performed with the sealed,
tamper-evident packaging remaining intact and without altering product
contents or any retail labeling. Examples of preparing for shipment
include putting packaged products into shipping containers, applying
internal tracking numbers, shrink-wrapping shipping cartons to a
pallet, breaking down pallets of fully packaged products, adding
protective packaging to nonretail containers or retail displays of
organic products, packing individual packaged products onto a shipping
pallet, placing individual retail packages into a retail display, and
loading/unloading packaged products onto or from transport vehicles.
(Comment) Several comments asked if cold storage of organic
agricultural products is exempt from certification, pointing to the
inclusion of ``chilling'' in the definition of processing.
(Response) Cold storage of organic agricultural products may be
exempt from organic certification if the activity meets the criteria of
Sec. 205.101(e), i.e., only sealed, tamper-proof packaged organic
products are stored. The act of cooling packaged organic products is a
common low-risk storage activity that is different from ``chilling''
performed as part of organic product processing.
(Comment) Several commenters requested that AMS remove the verb
``loads'' from proposed Sec. 205.101(e) for operations that storage
organic products, arguing that ``load'' could be conflated with
handling activities such as placing or packaging bulk products into
containers.
(Response) AMS uses ``prepare for shipment'' in exemptions at Sec.
205.101(e)-(f) to clarify that these exempt operations may not perform
activities such as packaging or loading bulk products into containers.
Prepare for shipment means that these operations may move products into
or onto a mode of transport, provided that the products are packaged
per Sec. 205.101(e)-(f).
(Comment) One commenter asked AMS to require certification of
storage facilities that store both organic and nonorganic agricultural
products. They argue that such ``split'' storage operations are a known
source of contamination and commingling, and that certification is
necessary to prevent this.
(Response) This rulemaking addresses the risks of contamination and
commingling by split storage operations by (1) requiring the
certification of operations that handle unpackaged organic products and
(2) limiting the exemption for storage operations to only those that
handle sealed, tamper-proof packaged organic products. AMS believes
these changes will mitigate the risks of split operations.
Additionally, Sec. 205.100(a) states that ``each operation or
portion of an operation'' that handles organic agricultural products
must be certified. Similarly, the exemption at Sec. 205.101(e), which
allows storage of packaged organic products without certification,
would be limited to only the portions of an operation that meet the
narrow criteria of this exemption. This means that a portion of a split
operation that stores unpackaged organic products needs to be
certified.
Transport
(Comment) Commenters requested that AMS explicitly state what
transportation activities are exempt from certification. They also
noted that the regulatory text and preamble lack a specific exemption
for transport of agricultural products.
(Response) The OFPA provides AMS authority to regulate the handling
(i.e., selling, processing, or packaging) of organic agricultural
products; however, transportation activities are not included in this
authority. Transport is generally described as the movement of products
in commerce. Based on the OFPA, transport of organic agricultural
products does not need to be certified; however, any handling
activities that occur during transport must be. See the definition of
handle for examples of activities that may require certification.
(Comment) AMS received several comments asking if milk haulers will
require organic certification. Most comments requested only
clarification on this topic, but several specifically requested that
milk haulers be exempted from certification.
(Response) AMS is defining the need for certification based on
activities performed, not type of business, because this will ensure
that businesses conducting high-risk activities require certification
(and conversely that businesses that conduct low-risk activities remain
exempt). A milk hauler would be exempt from certification if they only
transport organic milk (e.g., move milk from a dairy to a processor)
but do not otherwise handle the milk (e.g., process or package loads of
milk). Transport alone does not require certification.
(Comment) AMS received comments requesting that the transport
exemption be limited to transport from one certified operator to
another, or to a
[[Page 3562]]
final retailer, to ensure traceability of product throughout supply
chains.
(Response) AMS is not restricting transport of organic agricultural
products from one certified operation to another. This rule ensures
traceability via other means: certified operations must maintain audit
trail documentation for products they produce or handle (Sec.
205.103(b)(3)) and keep records to trace organic products received back
to the last certified operation in the supply chain (Sec.
205.103(b)(2)). This means that certified operations must ensure
traceability of products transported by uncertified operations,
including if several uncertified transporters are used in sequence.
(Comment) Many comments discussed transloading organic agricultural
products and asked AMS to clarify if this activity requires
certification.
(Response) Transloading is commonly defined as the movement of
agricultural products between modes of transport. AMS does not have the
authority to regulate transport. Therefore, transloading strictly
between modes of transportation does not need to be certified.
However, transloading is sometimes used to describe the movement of
agricultural products from storage to transport or transport to
storage. AMS considers these activities to be loading and receiving
(see Sec. 205.2 and the definition of handle). Moving unpackaged
organic agricultural products from storage to transport, or from
transport to storage, requires certification. If the organic
agricultural products are enclosed in sealed, tamper-proof containers
or packages, then loading and receiving is exempt from certification.
Small Operations
(Comment) Several comments discussed the exemption for small
operations at Sec. 205.101(a). A few commenters asked AMS to clarify
if the exemption applies to both production and handling operations.
Others requested that AMS allow ingredients produced or processed by
such exempt operations to be used as certified organic ingredients
produced by other operations. One commenter requested AMS increase the
gross sales limit of $5,000.
(Response) This rulemaking does not modify current policy regarding
the exemption for small operations. Section 205.101(a) exempts
operations that produce or handle agricultural products as ``organic''
but whose gross agricultural income from organic sales totals $5,000 or
less annually. However, these operations must not sell, label, or
represent agricultural products they produce or process as certified
organic, and such products must not be used as certified organic
ingredients in products processed by another operation (see Sec.
205.310). Additionally, the $5,000 gross sales threshold is set by the
OFPA, and AMS does not have authority to increase this limit.
Selling and Representing
(Comment) Many comments requested that AMS provide exemptions for
operations that do not physically handle or contact organic
agricultural products, arguing that such operations do not threaten
organic integrity.
(Response) AMS disagrees with commenters' claim that lack of
physical contact equals low risk. Organic integrity depends on
oversight and transparency across the entire organic supply chain--
including some operations that may never physically contact organic
products. The need for certification is based on risk and this rule
requires certification of high-risk operations such as importers,
traders, and others that facilitate the sale of organic products.
Although these operations may not physically contact organic products,
they control critical events along organic supply chains where organic
integrity can be compromised, including purchase, sale, transport,
storage, and combining or splitting products. For example, an importer,
broker, or trader could unintentionally compromise the integrity of
organic products they buy or sell by not seeking or keeping records to
demonstrate traceability and verify organic integrity. Without these
records, there is no way to verify that a product was properly handled
by the multiple physical handlers in a supply chain. A breach of
integrity could go unreported, and the importer or trader would
unintentionally sell a product that has lost its organic status and
integrity. Similarly, brokers and traders could mistakenly direct
contracted storage facilities and transporters to perform activities
that compromise organic integrity, such as directing a storage facility
to fumigate a container of organic wheat or directing a transporter to
combine loads of organic and nonorganic corn.
Additionally, because importers, brokers, traders and others that
facilitate sales have direct financial interest in the transaction of
organic products, they have the incentive and opportunity to commit
fraud. For example, an operation could falsify records to claim that a
nonorganic product is certified organic, or direct a contracted storage
facility or transporter to mix organic and nonorganic products, and
then claim the entire load is organic. NOP has investigated many
notable cases of fraud committed by uncertified operations that did not
physically contact the products in question (see the discussion on
fraud under ``Purpose and Need for the Rule'').
The risk of both unintentional breach of integrity and fraud has
grown with the organic market as supply chains increase in complexity
and more uncertified parties affect control of organic products and
their transaction. Requiring certification based on risk ensures
traceability, verification, accountability, and oversight at the most
critical points of the supply chain, including the activities of
brokers, traders, importers, and others who facilitate sale but may not
physically contact organic products. The rule also provides reasonable
exemptions for low-risk operations to reduce cost and administrative
burden to the industry.
(Comment) Many comments discussed private labeling and brand
ownership of organic products. Opinions differed about the need to
certify these operations. Some commenters argued that requiring
certification of these operations would improve transparency and
traceability of products, while others claimed that doing so would be
unnecessary and create potential problems with labeling and
traceability.
(Response) ``Brand owners'' or operations that sell or distribute
organic products produced by another operation on their behalf may be
exempt from certification if they meet the criteria of Sec.
205.101(f). This exemption allows the buying, selling, receiving,
storing, and preparing for shipment of organic products that are
packaged for retail sale. The products must be sealed in tamper-evident
packaging ready for retail sale, and the operation must not open or
otherwise handle the retail packages. Private labeling operations that
process organic agricultural products must be certified.
(Comment) Commenters asked AMS to clarify if sales brokers need to
be certified, including businesses that buy or sell only packaged
organic products.
(Response) Operations that sell, trade, or facilitate sale or trade
of organic agricultural products on behalf of a seller or oneself must
be certified. However, AMS is providing an exemption for operations
that only buy, sell, receive, store, or prepare for shipment organic
products packaged for retail sale (Sec. 205.101(f)). The products must
be sealed in tamper-evident
[[Page 3563]]
packaging labeled for retail sale, and the operation must not open or
otherwise handle the retail packages. Sale of organic products not
packaged for retail sale (e.g., bulk; unpackaged; packaged for
nonretail sale; unsealed, non-tamper-evident packaging) must be
certified.
Supply Chain Logistics
(Comment) Many comments asked AMS to provide a specific exemption
for Customs brokers licensed by U.S. Customs and Border Protection,
arguing that these operations only facilitate entry of imports into the
United States, and that their activities do not present a risk to
organic integrity.
(Response) AMS agrees that the activities of Customs brokers do not
threaten organic integrity. Therefore, Sec. 205.101(g) exempts from
certification licensed Customs brokers that only conduct Customs
business per 19 CFR 111.1. This exemption is limited to Customs
business; other activities conducted by a Customs broker that fall
within the definition of handle--including selling, importing, or
trading organic agricultural products--may require certification.
(Comment) Several comments asked AMS to clarify if businesses that
facilitate the storage and transport of organic agricultural products,
such as logistics brokers and freight forwarders, require
certification.
(Response) Logistics brokers, freight forwarders, and other
businesses that facilitate storage and transport of agricultural
products may be exempt if they meet the criteria of Sec. Sec.
205.101(e) or (h). These exemptions only apply to operations that
conduct or facilitate specific shipping, storing, or transport
activities. This may include logistics brokers or freight forwarders
who do not take ownership or physical possession of organic products
and only provide a service by connecting a consigner (or consignee)
with a carrier who transports/stores the products. Additionally,
transport of organic agricultural products does not require
certification if the transport operation does not handle the products
(see definition of handle in Sec. 205.2). Other handling activities--
such as selling, importing, or trading--must be certified.
(Comment) Many commenters responded to AMS's request for comment
about ports of entry. Most commenters agreed that the activities of
ports--such as loading, storing, receiving, combining, and splitting--
must be certified if unpackaged products are being handled. Comments
stated that handling of unpackaged goods at ports should be certified
because ports conduct physical activities that can compromise organic
integrity. Ports unload, move, split, combine, and store both organic
and nonorganic products, increasing the risk of commingling organic and
nonorganic products, and the risk of contamination with substances not
allowed in organic handling. In contrast, several comments from trade
associations state that requiring certification of port activities may
cause delays, increase costs, and may have limited positive impacts on
organic integrity. Several comments asked AMS for more clarification
about the need for ports of entry to be certified.
(Response) Ports of entry must be certified if the activities they
conduct meet the definition of handle and do not clearly fit an
exemption at Sec. 205.101(a)-(h).
Recordkeeping and Verification
(Comment) Several comments noted that proposed Sec. 205.101 did
not clearly explain the requirements and recordkeeping practices each
exempt operation must follow. A few comments also asked AMS to increase
the recordkeeping requirement for exempt operations to five years to be
consistent with requirements for certified operations.
(Response) AMS has revised Sec. 205.101 to clarify the
requirements and recordkeeping practices that exempt operations must
follow. Specific references to individual requirements are removed from
each exemption, and the introductory paragraph explains universally
that all exempt operations must follow the applicable production,
handling, and labeling requirements of subparts C and D. The preamble
further explains with specific examples of requirements exempt
operations may have to follow.
AMS has also removed recordkeeping requirements from individual
exemptions and replaced them with a single, consistent recordkeeping
requirement that applies universally to most exempt operations. AMS
retained the requirements for exempt operations to maintain records for
at least three years because there was not a compelling reason for
increasing that timeframe without prior notice.
(Comment) AMS received several comments asking who is responsible
for verifying exempt operations' compliance with the organic
regulations.
(Response) Certified operations are responsible for verifying the
compliance of the certified organic products they receive, including
those received from exempt operations. Section 205.201(a)(3) requires a
certified operation's OSP to include monitoring practices and
procedures to verify suppliers (including exempt suppliers) and the
organic status of products they receive. AMS is not prescribing how
certified operations should verify suppliers and products; this
provides flexibility for operations to develop and implement practices
that best suit their business and the products they handle.
B. Imports to the United States
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
------------------------------------------------------------------------
Section Final regulatory text
------------------------------------------------------------------------
205.2..................................... Terms Defined.
Definitions for Organic
exporter and Organic
importer.
205.273................................... Imports to the United
States.
Entire section.
205.300................................... Use of the term,
``organic.''
Paragraph (c).
------------------------------------------------------------------------
Purpose, Scope, and Authority
AMS is amending the USDA organic regulations by adding a new
section (205.273) requiring the use of the National Organic Program
Import Certificate (``NOP Import Certificate''). The NOP Import
Certificate is a transaction certificate, or data set, that contains
detailed information about the quantity and origin of organic product
being imported into the United States. Any organic agricultural product
imported to the United States must be associated with a valid NOP
Import Certificate, generated by the certifying agent of the final
certified exporter sending the product to the United States.
[[Page 3564]]
The purpose of the NOP Import Certificate is to document the
organic status and quantity of imported organic products as they travel
from a certified organic exporter in a foreign country to a certified
organic importer in the United States. The NOP Import Certificate
ensures an auditable business transaction by documenting that the
products in the shipment are organic and may be sold, represented, and
distributed as organic within the United States.
The mandatory use of NOP Import Certificates is authorized by the
Organic Foods Production Act (OFPA), as amended by the ``2018 Farm
Bill''.\18\ The OFPA specifies what information an NOP Import
Certificate must include (7 U.S.C. 6502(13)) and also stipulates that
the NOP Import Certificate must ``be available as an electronic
record'' and captured in a tracking system maintained by the U.S.
Government (7 U.S.C. 6514(d)). The OFPA also provides the Secretary
with broad authority to establish appropriate and adequate enforcement
procedures and any other requirements that the Secretary may determine
to be necessary (7 U.S.C. 6506).
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\18\ See sections 10104(b)(3) and 10104(c) of the Agriculture
Improvement Act of 2018, Public Law 115-334. Available at: https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.
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The NOP Import Certificate must be presented to U.S. Customs and
Border Protection (CBP) through the CBP Automated Commercial
Environment (ACE). The use of this standardized electronic format will
ensure consistency in data for auditing, surveillance, and enforcement
purposes. The OFPA, as amended by the 2018 Farm Bill, states that AMS
must establish a system of tracking NOP Import Certificates, and that
AMS ``may integrate the system into any existing information tracking
systems for imports of agricultural products'' (7 U.S.C. 6514(d) and
6522(c)).\19\
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\19\ See section 10104(c) of the Agriculture Improvement Act of
2018, Public Law 115-334. Available at: https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.
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Because the OFPA enables AMS to access information available in ACE
(7 U.S.C. 6521(c)), AMS is using ACE to accept NOP Import Certificate
data.\20\ ACE is an automated and electronic system for processing
commercial trade data. It is the primary system through which the
global trade community files information about imports and exports so
that admissibility into the United States may be determined by
government agencies (including AMS) to ensure compliance.
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\20\ See sections 10104(h) and (j) of the Agriculture
Improvement Act of 2018, Public Law115-334. Available at: https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.
---------------------------------------------------------------------------
The data to be entered into ACE include fields for the information
needed to meet the requirements of an NOP Import Certificate as defined
in the OFPA: origin; destination; the certifying agent issuing the NOP
Import Certificate; harmonized tariff code, when applicable; total
weight; and the organic standard the product was certified to (7 U.S.C.
6502(13)). For the purposes of uploading and tracking NOP Import
Certificates, the data must be available as an electronic format to
meet the requirements of the OFPA (7 U.S.C. 6514(d)(1)).
Both the OFPA and the USDA organic regulations require certified
operations to maintain and make available to the Secretary records that
concern the production, harvesting, and handling of agricultural
products that are or that are intended to be sold, labeled, or
represented as organic. This includes sufficient records to provide an
audit trail to determine the source, type and quantity, transfer of
ownership, and transportation of any agricultural product labeled as
organic. Likewise, both the OFPA and the USDA organic regulations
require certifying agents to maintain and make available to the
Secretary records concerning its activities.
This policy also aligns with international guidelines and norms
related to organic oversight. NOP considered international standards
established by the Codex Alimentarius Commission (Codex) \21\ and norms
published by the International Federation of Organic Agriculture
Movements (IFOAM).\22\ Both provide for and support the use of
transaction shipment certificates such as the NOP Import Certificate.
---------------------------------------------------------------------------
\21\ Section 7 of the Codex Guidelines for the Production,
Processing, Labelling and Marketing of Organically Produced Foods
recommends imported organic products to be marketed only where the
competent authority or designated body in the exporting country has
issued a certificate of inspection stating that the lot designated
in the certificate was obtained within an organic system of
production, preparation, marketing, and inspection.
\22\ IFOAM Norms define a transaction certificate as a
``document issued by a certification body or by the operator,
declaring that a specified lot or consignment of goods is
certified.''
---------------------------------------------------------------------------
Change From Current Policy
NOP Import Certificates are currently only used for organic
products imported from countries with which AMS has an equivalence
determination. The USDA has established equivalence determinations with
Canada, the European Union, Switzerland, Japan, South Korea, Taiwan,
and the United Kingdom. Organic imports from Canada are accompanied by
an organic certificate that includes an attestation statement that the
products comply with the terms of the United States-Canada Organic
Equivalency Arrangement. Organic imports from the European Union,
Switzerland, Japan, South Korea, Taiwan, and the United Kingdom are
accompanied by an NOP Import Certificate. The certifying agent of the
exporter evaluates the request for an NOP Import Certificate, and upon
verification of the organic shipment, completes and issues an NOP
Import Certificate. Form NOP 2110-1 is currently used for this purpose.
In the past, AMS has not required NOP Import Certificates for
organic exports from countries with which the United States does not
have an organic equivalence determination. The rulemaking changes this
to make the use of NOP Import Certificates mandatory, regardless of an
imported product's country of origin or if that country has an
equivalency determination with USDA. Specifically, this rulemaking
requires that all imported products intended to be sold, represented,
labeled, or marketed as organic in the United States must be declared
as organic to U.S. Customs and Border Protection (CBP), using an NOP
Import Certificate.
Alignment of Policy With U.S. Customs and Border Protection Policies
and Systems
The OFPA, as amended by the 2018 Farm Bill, requires the
establishment of an Organic Agricultural Product Imports Interagency
Working Group, consisting of members of both the USDA and CBP (see 7
U.S.C. 6521a).\23\ The mandatory use of NOP Import Certificates
supports the working group's goal to ensure the compliance of organic
agricultural products imported into the United States.
---------------------------------------------------------------------------
\23\ See section 10104(i) of the Agriculture Improvement Act of
2018, Public Law No: 115-334. Available at: https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.
---------------------------------------------------------------------------
Under this policy, AMS and CBP will collaborate to verify that
imported organic products are associated with NOP Import Certificates.
In April 2020, the electronic version of the NOP Import Certificate was
deployed in ACE as an optional filing step for organic imports. The use
of the electronic NOP Import Certificate will be mandatory once this
rule is fully implemented.
NOP Import Certificates will be required for any commodity imported
into the United States that is being
[[Page 3565]]
manifested, sold, marketed, or labeled organic. NOP Import Certificates
are required for organic commodities regardless of value or size and is
not applicable for any di Minimis exemptions under current CBP
regulations.
Generating the NOP Import Certificate
This section describes how the NOP Import Certificate data are
generated. NOP Import Certificates must be generated using the USDA's
Organic Integrity Database. By the time the rule is fully implemented,
both USDA-accredited certifying agents and organic certifying agents
accredited by countries with which USDA holds an organic trade
arrangement or agreement (equivalence determination or recognition
arrangement) will have access to the Organic Integrity Database to
generate NOP Import Certificates. Only the Organic Integrity Database
can be used to generate valid NOP Import Certificates, and only
accredited organic certifying agents (USDA or under an organic trade
arrangement or agreement) are authorized to use the Organic Integrity
Database.
Where does the data for the NOP Import Certificate come from?
The data for the NOP Import Certificate is generated in the Organic
Integrity Database by the certifying agent of the exporter. The
exporter is responsible for facilitating the trading, selling,
consigning, shipping, or exporting of organic product from a foreign
country to the United States. An organic exporter must be certified
organic by certifying agents accredited by the USDA or certifying
agents authorized by a trade arrangement or agreement. Organic
exporters may be the final physical handler of organic products within
a foreign country, or they may be the entities that facilitate, sell,
or arrange the sale of organic products shipped to the United States.
This exporter is responsible for verifying that the organic product
complies with organic standards. This includes, but is not limited to,
verifying that the import has not been exposed to a prohibited
substance, treated with a prohibited substance as a result of
fumigation or treated with ionizing radiation at any point in the
products' movements across country borders.
How does the certifying agent evaluate the request for an NOP Import
Certificate?
The certifying agent determines the format of the NOP Import
Certificate request from the certified operation, based on the data
required for the Organic Integrity Database to generate the NOP Import
Certificate. The request for an NOP Import Certificate must include all
information required by the organic exporter's certifying agent to
complete the NOP Import Certificate. The certifying agent is required
to confirm the authenticity of the organic products covered by the NOP
Import Certificate using control systems it designs for this purpose.
The certifying agent must have and implement a documented organic
control system for intaking and approving or rejecting the validity of
an NOP Import Certificate request.
The certifying agent is responsible for ensuring that the issued
NOP Import Certificate is only associated with an amount of product
that has been verified to be certified organic. The certifying agent
has the authority to determine whether it will issue an NOP Import
Certificate for a specific shipment, or for a specific timeframe (e.g.,
weekly, monthly, season) and amount or volume ceiling. This
determination is to be based on the capacity and control systems of
both the certifying agent and the certified operation. There is no
limit on the length of timeframe a certifying agent chooses. However,
the certifying agent must choose a timeframe that is appropriate to
their administrative capacity and documented control system and allows
them to verify the integrity of the specific type and volume of import.
Once the certifying agent verifies the authenticity of the organic
export, the certifying agent enters or uploads the information needed
into the Organic Integrity Database. Each NOP Import Certificate must
be associated with a certified organic operation listed in the
database, identified by a 10-digit code. The Organic Integrity Database
will generate a unique NOP Import Certificate that includes both the
10-digit identifier for the operation and a unique numerical identifier
for the NOP Import Certificate. The certifying agent will provide the
NOP Import Certificate, or data set with the NOP Import Certificate
number, back to the certified organic exporter requesting the NOP
Import Certificate. The certifying agent can cancel or void a NOP
Import Certificate in the Organic Integrity Database at any time.
Transmitting the NOP Import Certificate From Exporter to Importer
The certified organic exporter provides the NOP Import Certificate
to the U.S. importer, who provides it to the specific entity
responsible for entering import information into the ACE system. This
is typically an importer or designated Customs broker. The NOP Import
Certificate data can be sent either electronically or via paper. The
U.S. importer or Customs broker enters the NOP Import Certificate data
into ACE as part of its standard import filing process; this process is
governed by timelines determined by CBP. Organic certifying agents will
not have access to ACE; this activity is done by the importer or its
Customs broker, using the NOP Import Certificate data provided by the
certifying agent to the exporter.
As the certified organic product itself moves from the exporting
country into the United States, all entry documentation including, but
not limited to bills of lading, bills of sale, commercial invoices, and
packing lists must clearly state that the product is organic. Exporting
and importing operations must maintain records required under Sec.
205.103. CBP may hold shipments at the border to address health and
safety issues or violations of U.S. trade laws with a specific
commodity or shipment.
Importer Responsibilities
Upon receiving a shipment, an organic importer must verify that the
organic product(s) comply with the USDA organic regulations. This
includes ensuring that an NOP Import Certificate is associated with the
product received. It also includes verifying that the import has not
been treated with a prohibited substance as a result of fumigation or
treated with ionizing radiation at any point in the products' movements
across borders. Verification may take many forms, depending on the
documentation provided, and country and commodity. The importer must
have an organic control system that documents how this verification is
conducted to protect the organic integrity of imported product. This
control system is reviewed by the importer's certifying agent.
Both the organic exporter and U.S. organic importer must maintain
records of NOP Import Certificates, and these records must be available
for inspection by the NOP and certifying agents in accordance with
Sec. 205.103. Certifying agents that are overseeing imports of organic
products into the United States must have a system for ensuring that
operations receiving organic product are receiving and maintaining NOP
Import Certificates, and that they are not accepting more product from
any providers than is authorized by NOP Import Certificates.
[[Page 3566]]
Connecting NOP Import Certificate With ACE Import Data
Once NOP Import Certificate Data is entered into ACE, the data are
transmitted to AMS for analysis, surveillance, and enforcement. AMS
will align and validate the data generated in ACE with the original NOP
Import Certificate entered into the Organic Integrity Database. This
will connect the data about the actual imported product back to the
data about the corresponding authorized export, aligning both sides of
the transaction. This alignment will allow for the identification of
any anomalies or indicators of fraud, such as: NOP Import Certificates
in ACE that were not authorized (do not have a valid certificate
number) by a certifying agent in the Organic Integrity Database (e.g.,
fraudulent certificates); volumes of product entered in ACE that exceed
those authorized in the Organic Integrity Database; and/or entries into
ACE that are associated with an operation that is no longer certified.
This type of automated data-driven surveillance is a common approach in
trade oversight.
Timing of the NOP Import Certificate
The timing of the NOP Import Certificate data entry into ACE must
comply with current CBP import filing requirements for Partner
Government Agencies. The certified organic exporter must time the NOP
Import Certificate request in such a way that the certifying agent has
time to consider the request and generate the NOP Import Certificate,
and the exporter has time to deliver it to the importer or Customs
broker before the CBP filing requirements for the product.
Requiring an NOP Import Certificate provides trackable and
auditable verification that organic products comply with the USDA
organic regulations. This requirement will also support investigations
if noncompliant products are exported and misrepresented as organic for
sale in the United States. Given that the Organic Integrity Database
will be the definitive tool for generating NOP Import Certificates,
additional guidelines on data entry to generate NOP Import Certificates
will be provided through that system.
Summary of Changes to the Final Rule
AMS made several changes to the regulatory text of the SOE proposed
rule when writing this final rule. Changes to the final rule are
discussed below and are followed by responses to specific themes from
public comment.
AMS removed ``owner'' from the definition of organic
exporter, added ``certified'' before ``exporter,'' and ``to the United
States'' after ``from a foreign country.'' This clarifies that the
organic exporter must be certified, and that the organic exporter may
be the final physical handler of organic products within a foreign
country, or they may be the entities that facilitate, sell, or arrange
the sale of organic products shipped to the United States. This was
done to clarify questions about ``who needs to be certified'' received
during public comment.
AMS removed ``of record'' from the definition of organic
importer and added a statement that the organic importer is responsible
for entering NOP Import Certificate data into ACE. This addresses
public commenters' request to clarify the role of the organic importer
and the person responsible for entering data into ACE.
AMS removed ``through a U.S. Port of Entry,'' as all
imports must enter through such a Port, so the phrase is not needed.
AMS removed references to ``or equivalent data source''
and ``NOP Form 2110-1'' throughout Sec. 205.273 and clarified that the
Organic Integrity Database must be used to issue NOP Import
Certificates. AMS has determined that the Organic Integrity Database
will be the only data source for NOP Import Certificates because it is
a preexisting, proven tool that meets U.S. government security
requirements, and already accepts data in multiple different forms to
accommodate data inputs from other systems. The Organic Integrity
Database is already used and understood by certifying agents, including
many accredited by both the USDA and trade partner countries. It is a
system that accepts data in multiple forms, that any government can
engage with, and that minimizes onboarding time and learning curve.
Using the Organic Integrity Database as a single source of
certification and import data, while allowing multiple data upload
methods, will provide secure access to import data that facilitates the
use of NOP Import Certificates.
AMS clarified that certifying agents may issue NOP Import
Certificates for a specific timeframe, if appropriate, not limited to a
single transaction. This addresses public commenters' concerns about
generating NOP Import Certificates for multiple shipments in short
timeframes (e.g., multiple shipments of fresh produce across the
border). This change allows certifying agents to determine whether they
will issue an NOP Import Certificate for a specific shipment or for a
specific timeframe (e.g., weekly, monthly, seasonally) and amount or
volume ceiling. Because certifiers conduct certification activities on
a one-year cycle, it is expected that import certificates are unlikely
to exceed one year in duration. The certifying agent must choose a
timeframe that is appropriate to their administrative capacity and
documented control system, and allows them to verify the integrity of
the specific type and volume of import.
AMS clarified the requirement that certifying agents must
have and implement a documented organic control system for intaking and
approving or rejecting NOP Import Certificates. This ensures that
certifying agents have auditable processes and procedures that NOP can
audit to assess certifying agents' ability to generate and approve NOP
Import Certificates.
AMS removed the requirement that certifying agents must
issue NOP Import Certificates within 30 days. This avoids any timing
discrepancy between NOP Import Certificate data entry and CBP import
filing requirements. AMS does not have authority to change CBP entry
requirements. The timing of the NOP Import Certificate data entry into
ACE must comply with current CBP import filing requirements for Partner
Government Agencies.
AMS clarified that organic importers must have a
documented organic control system to verify NOP Import Certificates and
verify no contact with prohibited substances or exposure to ionizing
radiation. This is necessary to ensure that organic importers have
auditable processes and procedures that certifying agents can review to
assess importers' ability to verify NOP Import Certificates and verify
the integrity of imported organic products.
AMS clarified that organic importers must verify that the
NOP Import Certificate data accurately reflects the shipment, which may
include verification of quantities and types of product specified on
the NOP Import Certificate. This requirement more clearly states the
organic importer's responsibility in assessing and ensuring the
integrity of imported products, providing an additional layer of
oversight at a critical juncture in organic supply chains.
Summary of Public Comment
The majority of public comments were strongly in support of AMS's
proposed mandatory use of NOP Import Certificates. Many comments
discussed or recommended changes to the NOP Import Certificate process,
including the timing of NOP Import Certificates, ACE data entry, how
the certificate should travel with the import, certifying agent
[[Page 3567]]
role and capacity, and how the NOP Import Certificate would function
within organic trade arrangements and agreements.
Comments frequently asked AMS to clarify if NOP Import Certificates
can be issued before or after shipment. They also noted that the
proposed 30-day requirement to issue NOP Import Certificates does not
align with the 10-day ACE entry deadline noted in the preamble. Some
comments requested that AMS allow up to 30 days to enter NOP Import
Certificate data into ACE, while others recommended 10 days or less to
help reduce fraud.
Many comments asked AMS to clarify if an NOP Import Certificate
must ``accompany'' an import or be ``associated with'' an import.
Several comments requested that AMS require imports be ``accompanied''
by an NOP Import Certificate and that the certificate travel with the
import and be presented at entry into the United States, claiming that
this would help prevent fraudulent organic products from entering the
U.S. market. Others stated a preference to allow NOP Import
Certificates to ``be associated'' with shipments, noting that this
flexibility is needed to match the frequency and pace of land imports
via truck and rail.
Several comments noted that issuing NOP Import Certificates for
individual shipments would be difficult for high-volume, high-frequency
imports, especially those from Canada and Mexico. These comments asked
AMS to consider allowing certifying agents to issue NOP Import
Certificates that cover a specific time period (e.g., quarterly),
product type, and volume. Comments argued this would reduce
administrative burden and cost to both certified operations and
certifying agents. A few comments also claimed that some certifying
agents may not have the administrative capacity or technical expertise
to issue and verify NOP Import Certificates as proposed.
A few comments asked AMS to clarify the definitions and roles of
exporters and importers, noting that it is not clear who is responsible
for requesting NOP Import Certificates, verifying them upon import, and
entering data into ACE. Some comments also asked AMS to further define
``equivalent data.''
Finally, some comments requested clarification about the general
applicability and use of NOP Import Certificates, including their use
for very small or infrequent shipments, use by exporters in a country
AMS has a trade arrangement or agreement with, use of electronic vs.
paper certificates, and use in trade between two foreign countries.
Responses to Public Comment
Timing of NOP Import Certificates
(Comment) AMS received many comments concerning the 30-day time
frame for certifying agents to review and issue NOP Import
Certificates. Commenters stated that the 30-day timeframe will
negatively impact imports of perishable organic product from Canada and
Mexico that require a rapid import process.
Other commenters stated that the 30-calendar-day timeframe for
certifying agents to review and issue NOP Import Certificates does not
align with the existing 10-day requirement to upload the NOP Import
Certificate data into the ACE system. Others requested that the 10-day
requirement for organic exporters to enter data from an NOP Import
Certificates or equivalent into ACE align with the proposed 30-day
requirement for certifying agents to issue an NOP Import Certificate or
equivalent. Commenters also requested that the 10-day timeframe to
enter NOP Import Certificate data be reduced to prevent organic fraud.
More broadly, AMS received comments asking if NOP Import
Certificates can be issued both before and after shipment.
Additionally, commenters asked If NOP Import Certificates could be
issued after the shipment of organic product has already entered the
United States.
(Response) The timing of the NOP Import Certificate data entry into
ACE must comply with current CBP import filing requirements for Partner
Government Agencies. AMS does not have authority to change CBP entry
requirements.
The certified organic exporter must time the NOP Import Certificate
request in such a way that the certifying agent has time to consider
the request and generate the NOP Import Certificate, and the exporter
has time to deliver it to the importer or Customs broker before the CBP
filing requirements for the product.
To address the problem of generating NOP Import Certificates for
multiple shipments in short timeframes (e.g., multiple shipments of
fresh produce across the border), AMS is granting the certifying agent
the authority to determine whether it will issue an NOP Import
Certificate for a specific shipment, or for a specific timeframe (e.g.,
weekly, monthly, season) and amount or volume ceiling. The certifying
agent is responsible for ensuring that the issued NOP Import
Certificate is only associated with an amount of product that has been
verified to be certified organic.
Associated vs. Accompanying
(Comment) Several commenters noted that proposed Sec. 205.273(d)
states that the organic importer of record must ensure that the
shipment is accompanied by a verified NOP Import Certificate. This
conflicts with the preamble which states that shipments of organic
product must be associated with a valid NOP Import Certificate.
(Response) To clarify the requirement, AMS has removed the term
accompanied from the rule. The NOP Import Certificate must be
associated with a shipment. This revision accurately describes AMS's
intent that organic shipments are associated with, and not accompanied
by, a valid NOP Import Certificate at the time of entry into the United
States.
(Comment) Commenters requested that the term associated, located in
the preamble text, be changed to accompany and that AMS require NOP
Import Certificates to be available upon entry to the United States, to
prevent fraud in the organic market.
(Response) USDA is requiring that all organic exports to the United
States be associated with a valid NOP Import Certificate. By requiring
organic imports to be associated with, and not accompanied by, an NOP
Import Certificate, USDA will have access to the import data without
restricting or slowing import and trade of organic products.
Certifying Agent Capacity
(Comment) AMS received several comments highlighting that organic
certifying agents lack the capacity to issue the number of NOP Import
Certificates that would be required under the proposed rule at one per
shipment. Comments specifically referenced the high-volume of organic
products coming by truck and rail from Mexico and Canada.
(Response) It is the certifying agent's responsibility to ensure
that the exporting operation has the capacity to produce or handle the
product covered by the NOP Import Certificate. When a certifying agent
issues a NOP Import Certificate, it is validating that the product is
truly organic; therefore, it must have adequate control systems to
verify these claims.
To address the problem of generating NOP Import Certificates for
multiple shipments in short timeframes (e.g., multiple shipments of
fresh produce across the border), AMS is granting the certifying agent
the authority to determine whether it will issue an NOP Import
Certificate for a specific shipment, or for a specific timeframe
[[Page 3568]]
(e.g., weekly, monthly, season) and amount or volume ceiling. The
certifying agent is responsible for ensuring that the issued NOP Import
Certificate is only associated with an amount of product that has been
verified to be certified organic.
(Comment) AMS received several comments that recommended a
staggered implementation timeline for the NOP Import Certificate
requirement to ensure certifying agents have the administrative
capacity to process additional NOP Import Certificates. Several
comments also expressed concern about the increased cost associated
with issuing NOP Import Certificates. Comments noted that certifying
agents would need to hire and train additional technical staff to
comply with the proposed requirements for NOP Import Certificates.
(Response) Under the current USDA organic regulations, certifying
agents are not allowed to provide certification services that are
outside its administrative capacity. While a reasonable implementation
period is being provided to fully update the Organic Integrity Database
to generate NOP Import Certificates, certifying agents are not to issue
any NOP Import Certificates without having adequate expertise and
staffing to verify the organic status of products it oversees under the
organic program.
(Comment) Commenters asked how certifying agents will verify
whether a shipment is compliant with the USDA organic regulations based
on an NOP Import Certificate.
(Response) Certifying agents that are overseeing exports of organic
products to the United States must have and implement a documented
organic control system for intaking and then approving or rejecting an
NOP Import Certificate request. The certifying agent is responsible for
ensuring that the issued NOP Import Certificate is only associated with
an amount of product that has been verified to be certified organic.
Certifying agents that are overseeing importers of organic products
into the United States must have a system for ensuring that operations
receiving organic product are receiving and maintaining NOP Import
Certificates, ensuring that importers have met the requirements of this
section, and that they are not accepting more product from any
providers than is authorized by NOP Import Certificates.
General Applicability
(Comment) AMS received comments asking if NOP Import Certificates
would be required for small, retail, and mixed shipments of organic
product imported into the United States.
(Response) NOP import Certificates will be required for any
commodity imported into the United States that is being manifested,
sold, marketed, or labeled organic. NOP Import Certificates are
required for organic commodities regardless of value or size and is not
applicable for any de minimis exemptions under current CBP regulations.
A very limited number of exemptions will be allowed for items such as,
but not limited to, food donations, non-retail samples, and
humanitarian efforts.
(Comment) Commenters asked if NOP Form 2110-1, NOP Import
Certificate, is mandatory and whether a paper copy would be permitted.
Commenters also asked if certifying agents would issue physical or
digital copies of NOP-2110-1 to operations.
(Response) Only the NOP Import Certificate and its associated data,
generated from the Organic Integrity Database, is a valid NOP Import
Certificate. Either a paper-based or electronic NOP Import Certificate
may be used. Certifying agents will determine the format it will use to
provide the exporter with the NOP Import Certificate data.
ACE Data Entry
(Comment) We received comments requesting AMS clarify the
definition of ``equivalent data source'' by providing additional text
in Sec. 205.273(e). Commenters requested the requirement explicitly
state that USDA is the sole authority that determines equivalent data
sources.
(Response) In the final rule, we have removed the term ``equivalent
data source.'' All NOP Import Certificates will be generated using the
Organic Integrity Database. AMS provides multiple ways to upload or
enter data into the Organic Integrity Database. We have determined it
will be the only data source for NOP Import Certificates because it is
a preexisting, proven tool that meets U.S. government security
requirements, and a centralized system is needed to facilitate supply
chain traceability and to assess authorized import certificate data
against actual import data generated by CBP and reported back to AMS.
The Organic Integrity Database allows data submittals in multiple
formats, such as direct data entry, data spreadsheet uploads, and
automated programming interfaces. A data dictionary is also public,
allowing external parties to easily map their own systems and data
exports to the tool. The Organic Integrity Database is already used and
understood by certifying agents, including many accredited by both the
USDA and trade partner countries. It is a system that any government
can engage with that minimizes onboarding time and learning curve.
Using the Organic Integrity Database as a single source of
certification and import data, while allowing multiple data upload
methods, will provide secure access to import data that facilitates the
use of NOP Import Certificates.
(Comment) We received a number of comments about the respective
roles of the exporter and importer with respect to the NOP Import
Certificate. Several comments stated that the organic exporter does not
have access to the CBP ACE system and is not the party that would enter
the required data into ACE. Commenters recommended that the importer of
record be the entity responsible for entering data into ACE. Comments
stated that the proposed definition of organic importer of record is
unclear and does not reliably identify the party capable of ensuring
each shipment is associated with an NOP Import Certificate.
(Response) NOP Import Certificates must be generated by the
certified organic exporter's certifying agent, using the USDA's Organic
Integrity Database. Only the Organic Integrity Database can be used to
generate valid NOP Import Certificates, and only accredited organic
certifying agents (USDA or under an organic trade arrangement or
agreement) are authorized to use the Organic Integrity Database.
Once the NOP Import Certificate is generated in the Organic
Integrity Database, the exporter's certifying agent provides the NOP
Import Certificate, or data set with the NOP Import Certificate number,
back to the certified organic exporter who requested the NOP Import
Certificate. The certified organic exporter then provides the NOP
Import Certificate to the U.S. importer or buyer, who provides it to
the specific entity responsible for entering import information into
the ACE system. This is typically an importer or designated Customs
broker. That importer or Customs broker enters the NOP Import
Certificate data into the ACE system as part of its standard import
filing processes, including the Entry Summary Process. Organic
certifying agents will not have access to ACE; this activity is done by
the importer or its Customs broker, using the NOP Import Certificate
data provided by the certifying agent to the exporter.
(Comment) Commenters asked how imported organic product would be
identified in ACE without an organic
[[Page 3569]]
Harmonized Tariff Schedule (HTS) code.
(Response) The NOP Import Certificate in ACE has been programmed to
enable NOP Import Certificate entry for a wide range of products,
including agricultural products and textiles, not just those with an
organic HTS code. An organic HTS code is not required to upload NOP
Import Certificate data into ACE.
Trade Arrangements and Agreements
(Comment) AMS received comments requesting that foreign-based
certifying agents operating under recognition arrangements be required
to list organic operations in the Organic Integrity Database. As noted
by commenters, the absence of that data makes it difficult for
organizations to verify the certification status of foreign-certified
operations.
(Response) AMS is changing access to the Organic Integrity Database
to include organic certifying agents and operations operating under
organic trade arrangements or agreements, such as equivalency and
recognition arrangements. Certified organic operations covered under
trade arrangements or agreements will need to be listed in the Organic
Integrity Database by their certifying agents for the certifying agents
to be able to generate NOP Import Certificate for valid products
entering the United States as organic.
(Comment) We received comments asking how NOP Import Certificates
would apply to trade of organic products under, and outside of, an
equivalency arrangement. Additionally, commenters requested more
information about how NOP Import Certificates would apply to NOP-
certified products traded between foreign countries.
(Response) The NOP Organic Import Certificate is required for any
product imported into the United States that is being manifested, sold,
marketed, or labeled organic, regardless of the product's country of
origin or if that country has an equivalency determination with USDA.
Organic products imported from any country with which AMS has an
equivalency determination must follow the same NOP Import Certificate
requirements outlined in this rule. Other countries may also have their
own unique filing requirements for organic products coming into their
countries; organic businesses need to consult with their supply chains
to determine those requirements.
C. Labeling of Nonretail Containers
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
----------------------------------------------------------------------------------------------------------------
Section Final regulatory text
----------------------------------------------------------------------------------------------------------------
205.307............................................. Labeling of nonretail containers.
Paragraphs (a) through (c).
----------------------------------------------------------------------------------------------------------------
Accurate labeling of non-retail containers used to ship or store
organic products is critical to organic integrity. Proper labeling
reduces misidentification and mishandling, facilitates traceability and
product verification, reduces the potential for organic fraud, and
allows accurate identification of organic product by customs officials
and transportation agents.
Therefore, this rulemaking requires that all nonretail container
labels must identify contents as organic and include information
linking the container to audit trail documentation. Additionally, audit
trail documentation associated with a nonretail container must identify
the last certified operation that handled the product. Affected
entities may include but are not limited to: certified and noncertified
operations that store and transport organic product in nonretail
containers; certifying agents; and inspectors.
Background
The organic regulations previously only required a production lot
number on nonretail containers labels used to ship or store organic
product. Other information--such as identification of the product as
organic, and special handling instructions--were optional, but not
required on nonretail container labels. Based on the NOP's experience
enforcing the organic regulations, this lack of information created
gaps in the organic chain of custody, complicated the verification of
organic integrity, and increased the likelihood of organic fraud.
To reduce the prevalence of organic fraud and increase oversight of
organic supply chains, nonretail containers are now required to be
marked with a statement identifying the product as organic and must
include unique information that will link the nonretail containers to
audit trail documentation. Unique identifying information could include
lot numbers, shipping information, or a unique identifier for that
shipment. Accurate labeling will identify contents as organic as a
container moves through the supply chain; this will reduce mishandling
and help maintain an audit trail and improve traceability.
Nonretail Containers: Description and Use
Nonretail containers are defined under Sec. 205.2 of the USDA
organic regulations as ``any container used for shipping or storage of
an agricultural product that is not used in the retail display or sale
of the product.'' Nonretail containers are used to ship or store either
packaged or unpackaged organic products, and may include the following:
Produce boxes, totes, bulk containers, bulk bags, flexible
bulk containers, harvest crates and bins;
Boxes, crates, cartons, and master cases of wholesale
packaged products; and
Trailers, tanks, railcars, shipping containers, vessels,
cargo holds, freighters, barges, grain elevators, silos, grain bins, or
other methods of bulk transport or storage.
Nonretail containers are not used to display organic products for
sale to the consumer at retail establishments. Packages that display
organic products for retail sale to the consumer must be labeled
according to Sec. Sec. 205.303 and 205.306.
What must be included on nonretail container labels?
Nonretail containers used to ship or store organic products must be
clearly labeled with a statement that identifies the product as
organic. Clearly visible organic identification alerts handlers that
the contents of the nonretail container may require special care, thus
reducing accidental mishandling of the product, such as treatment with
a prohibited substance or commingling with conventional product during
transport and storage. Operations may use abbreviations or acronyms to
identify products as organic, provided that they are clear and easily
understood. This provides flexibility for
[[Page 3570]]
operations to meet the requirements of Sec. 205.307(a)(1) and makes it
easier to label containers with limited space or containers that are
difficult to label due to their size, shape, material, or use.
Nonretail containers must also be clearly labeled with information
that links the container to audit trail documentation (see Sec. 205.2
for definition of audit trail). This could be a production lot number,
shipping identification, or other unique information that handlers can
use to trace the container to its associated audit trail documentation.
This creates a clear link between container and audit trail and
minimizes the size of labels by allowing some information to be listed
in associated documentation, instead of directly on the nonretail
container label.
Operations may use temporary labels or signage to meet the
requirements of Sec. 205.307(a). This provides additional flexibility
for containers that may be difficult to label due to size, shape,
material, or use.
Revisions to Sec. 205.307 do not limit the information that can be
on a nonretail label. This gives operations the flexibility to include
details they deem critical to the integrity of specific products. For
example, an operation may opt to include special handling instructions,
the USDA organic seal for qualifying products, the operation or
certifying agent name, or contact information on the nonretail label.
Nonretail Containers and Audit Trail Documentation
Nonretail containers used to ship or store organic products must be
labeled with information that links the container to audit trail
documentation (Sec. 205.307(a)(2)). Such documentation must be
sufficient to determine the source, transfer of ownership, and
transportation of the product (see definition of audit trail in Sec.
205.2) and must identify the last certified operation that handled the
product (Sec. 205.307(b)).
Listing the last certified organic operation provides a point of
contact to verify the organic status of a product and supports
operations' traceability, recordkeeping, and fraud prevention
requirements (Sec. Sec. 205.103(b)(2)-(3) and 205.201(a)(3)). It also
supports on-site inspections and supply chain traceability audits
conducted by certifying agents (Sec. Sec. 205.403(d)(5) and
205.501(a)(21)) by ensuring good recordkeeping of the critical
transfers between certified operations.
Exception to Organic Identification on Nonretail Containers
Nonretail containers used to ship or store agricultural products
packaged for retail sale with organic identification visible on the
retail label are not required to identify product as organic per Sec.
205.307(a)(1). Examples include master cases and pallets where the
organic identification (e.g., the USDA organic seal) of individual
retail units is visible. These are exempt from Sec. 205.307(a)(1)
because the organic identification is visible on the retail label.
These types of nonretail containers are only excepted from the
requirements of Sec. 205.307(a)(1). All nonretail containers must be
linked or traceable to audit trail documentation per Sec.
205.307(a)(2); this ensures traceability of the product in the
containers and supports organic integrity during transport, storage,
and handling.
Summary of Changes to the Final Rule
AMS made several changes to the regulatory text of the SOE proposed
rule when writing this final rule. Changes to the proposed rule are
discussed below and are followed by specific themes from public
comment.
AMS simplified the requirement to list full organic
identification (e.g., ``100 percent organic,'' or ``made with organic .
. .'') to ``identification of product as organic,'' which provides more
flexibility to operations and shortens the organic identification
statement without changing the statement's intent or its utility as
immediate and clear identification of nonretail containers. This change
was made in response to public comment.
AMS revised the requirement to list production lot numbers
or shipping identification. This information is now used to link a
container to audit trail documentation. To reduce administrative burden
and cost to operations, AMS is only requiring the most critical
information on nonretail container labels: organic identification and
information that links the container to audit trail documentation. This
maintains traceability and integrity by requiring nonretail containers
to be linked to audit trail documentation, which must identify the last
certified operation that handled the product and must be sufficient to
determine the source, transfer of ownership, and transportation of the
product.
AMS removed the requirement to identify the product's
certifying agent on nonretail labels because this information may be
included in audit trail documentation linked to nonretail containers.
Removing this requirement limits information on nonretail labels to the
most critical information, thereby reducing cost and burden without
sacrificing integrity.
AMS added a requirement that audit trail documentation
associated with a nonretail container must identify the last certified
operation that handled the product. This allows operations to verify
the source of organic products they receive and provides a record trail
that certifying agents can use to conduct full supply chain
traceability audits and verify organic status.
The final rule no longer requires organic identification
on nonretail containers of retail-labeled products. This avoids undue
administrative burden, cost, and redundant information when organic
identification is already visible on the products' retail labels.
AMS removed the list of optional information that may be
listed on nonretail container labels. This list is not necessary
because operations may optionally include any additional information on
nonretail labels if they wish.
Summary of Public Comment
Public comments strongly supported mandatory organic identification
on nonretail container labels. However, many comments requested the
flexibility to use alternatives like abbreviations and common names.
Commenters stated that the proposed rule's requirement to use specific
(and sometimes lengthy) statements would add cost and be difficult to
apply to containers with limited space. Commenters also requested that
AMS require generic product names--e.g., ``organic tomatoes''--on
labels, claiming that this information is needed to quickly identify
the contents of nonretail containers.
Other commenters requested AMS mandate additional information on
large nonretail container labels to include country of origin, special
handling instructions, and the USDA organic seal. Additionally,
comments pointed out that nonretail labels should not be limited to the
information explicitly listed in Sec. 205.307, and requested that NOP
allow operations to include other types of information on labels.
Responses to Public Comment
(Comment) We received comments requesting AMS require all nonretail
containers display the information described in Sec. 205.307,
regardless of size or type (i.e., not allow exceptions for large
nonretail containers used for transport or storage). Additionally,
commenters noted that there was no definition or description outlining
what type of containers would be exempt from the labeling requirements.
[[Page 3571]]
(Response) All nonretail containers of organic products must be
labeled with information that links the container to audit trail
documentation, regardless of size, shape, or use. This ensures
information needed to verify and trace the product is available to
those handling the product. Only nonretail containers used to ship or
store agricultural products packaged for retail sale with organic
identification visible on the retail label are excepted from the
requirements of Sec. 205.307(a)(1).
(Comment) Commenters requested the name and contact information of
the certified operation be a mandatory field on all nonretail container
labels because a certifying agent name alone is not sufficient to match
a physical product to an organic certificate. Other commenters also
requested that the operation's address or the NOP operation ID also be
included.
(Response) AMS is only requiring the most critical information on
nonretail container labels: organic identification and information that
links the container to audit trail documentation. This reduces
administrative burden and cost to operations. Traceability and
integrity are maintained by requiring nonretail containers be linked to
audit trail documentation, which must identify the last certified
operation that handled the product. Audit trail documentation must be
sufficient to determine the source, transfer of ownership, and
transportation of the product (see audit trail in Sec. 205.2).
(Comment) We received comments requesting that listing the
certifying agent be optional because it was redundant for master cases
of retail-packaged product and added to the cost of the label.
(Response) AMS does not require listing the certifying agent on
nonretail container labels. Such information may be listed in audit
trail documentation; operations may choose to do this to verify organic
status of the product or determine the source, transfer of ownership,
and transportation of the product. Section 205.307(c) excepts nonretail
containers of retail-packaged products from listing organic
identification if the retail packages clearly identify the product as
organic.
(Comment) AMS received comments noting both disagreement and
confusion regarding which operation/certifying agent pair is required
to be on the nonretail label. Commenters stated that the proposed
revision (``producer of the product, or . . . the last handler that
processed the product'') may not indicate the appropriate operation for
verification purposes or in private labeling scenarios.
(Response) Section 205.307(b) requires that a nonretail container's
audit trail documentation identify the last certified operation that
handled the product. The certifying agent that certified this handler
may be listed in audit trail documentation; operations may choose to do
this to verify organic status of the product or determine the source,
transfer of ownership, and transportation of the product.
(Comment) We received comments stating that special handling
instructions are critical to the integrity of organic products in the
supply chain and requested that AMS make this information mandatory on
all labels. Commenters also inquired about what special handling
instructions should include.
(Response) We are not requiring special handling instructions on
nonretail container labels; this reduces administrative burden and cost
to operations without risking integrity. Operations may include special
handling instructions (or other information) on nonretail containers if
they deem it necessary.
(Comment) AMS received comments requesting the mandatory use of
tamper-evident seals on nonretail containers. Commenters argue that
tamper-evident seals may help prevent fraud and mishandling of organic
product.
(Response) AMS is not requiring tamper-evident seals on nonretail
containers; this avoids potential undue administrative burden and costs
to operations. Operations may use tamper-evident seals on nonretail
containers if they deem it necessary.
D. On-Site Inspections
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
----------------------------------------------------------------------------------------------------------------
Section Final regulatory text
----------------------------------------------------------------------------------------------------------------
205.2............................................... Terms defined.
Definition for Unannounced inspection.
205.403............................................. On-site inspections.
Paragraphs (b)(1) and (2) and (d)(4) and (5).
----------------------------------------------------------------------------------------------------------------
On-site inspections of certified organic operations are a
critically important tool used to verify an operation's compliance with
the Act and the organic regulations. This rulemaking strengthens the
utility of on-site inspections by requiring that certifying agents:
Conduct a minimum number of unannounced inspections each
year.
Conduct mass-balance audits during on-site inspections.
Verify traceability of product and ingredients within an
operation during on-site inspections.
Verify traceability of product in an operation's supply
chain back to the last certified operation during on-site inspections.
These requirements will strengthen organic integrity and supply
chain traceability by requiring the use of proven best practices during
inspection of organic production and handling. Entities affected by
this policy may include certifying agents, certified operations, and
operations applying for certification. Organic stakeholders should
carefully examine the regulatory text and policy discussion below.
Unannounced Inspections--Background
Unannounced inspections are an effective and useful tool to ensure
compliance across certified operations and bolster consumer trust in
the organic label. NOP previously issued an instruction (NOP
Instruction 2609) on unannounced inspections, which recommends that
certifying agents conduct unannounced inspections of five percent of
their total certified operations per year as a tool for ensuring
compliance with the regulations.\24\ This NOP instruction was supported
by a recommendation made by the NOSB in December 2011.\25\ The organic
regulations previously allowed for, but did not require, unannounced
inspections, leaving this to the discretion of the certifying agent.
[[Page 3572]]
Therefore, AMS has codified the requirement for certifying agents to
conduct a minimum number of unannounced inspections annually of
certified operations.
---------------------------------------------------------------------------
\24\ NOP 2609, Instruction, Unannounced Inspections. September
12, 2012. Available in the NOP Program Handbook: https://www.ams.usda.gov/sites/default/files/media/2609.pdf.
\25\ NOSB Recommendation, Unannounced Inspections. December 2,
2011. Available on the AMS website: https://www.ams.usda.gov/sites/default/files/media/NOP%20CACC%20Final%20Rec%20on%20Unannounced%20Inspections.pdf.
---------------------------------------------------------------------------
Use of Unannounced Inspections
To clarify the difference between unannounced inspections and full
annual inspections, AMS is defining the term unannounced inspection as
``The act of examining and evaluating all or a portion of the
production or handling activities of a certified operation without
advance notice to determine compliance with the Act and the regulations
in this part.'' \26\ Note that unannounced inspections are different
from a full annual inspection because the scope of the inspection may
be limited to a portion of the operation or the operation's activities,
and certifying agents must conduct the inspection without advance
notice.
---------------------------------------------------------------------------
\26\ Compare to the definition of inspection at 7 CFR 205.2: The
act of examining and evaluating the production or handling operation
of an applicant for certification or certified operation to
determine compliance with the Act and the regulations in this part.
---------------------------------------------------------------------------
Scope of Unannounced Inspections
Relative to a full annual on-site inspection, an unannounced
inspection may be limited in scope, depth, and breadth and may cover
only a portion of the operation or the operation's activities, such as
parcels, facilities, products, or a review of records. This allows
unannounced inspections to be used as a risk-based tool to address
specific needs, such as investigation of a complaint or high-risk area.
Inspectors may conduct sampling during an unannounced inspection.
Samples collected may count towards the number of samples a certifying
agent must collect annually per Sec. 205.670(d) of the organic
regulations. Sample collection alone, however, does not qualify as an
unannounced inspection.
When unannounced inspections are limited in scope, they are not
required to follow the requirements of Sec. 205.403(c)(2), (d), or
(e). This means unannounced inspections:
May be conducted when an authorized representative of the
operation is not present and the inspector is not trespassing.
May be conducted at any time of year.
Do not have to verify all areas or activities of the
operation like a full, annual inspection.
Do not have to include an exit interview with an
authorized representative of the operation.
An unannounced inspection may fulfill the requirement for a full
annual on-site inspection, provided that the inspector meets all
requirements for an annual on-site inspection per Sec. 205.403. This
includes meeting the timing, scope, exit interview and documentation
requirements for annual inspections. The exception is that the
inspection would not be scheduled in advance with the operation's
awareness. If an unannounced inspection will serve as the annual
inspection, an authorized representative must be present.
Selecting Operations for Unannounced Inspections
To maximize the effectiveness of unannounced inspections,
certifying agents are encouraged to select operations from a range of
different production and handling types, products, and locations.
Operations may be selected randomly, by risk, in response to a
complaint or investigation, or other criteria. The number of
unannounced inspections to be conducted annually should be calculated
by rounding up to the nearest whole number, so that certifying agents
with very few certified operations (e.g., under 20 operations) are
still required to conduct at least one unannounced inspection per year.
Planning and Scheduling Unannounced Inspections
Unannounced inspections should be conducted without advance notice
to the operation. However, some unannounced inspections may require
advance notice (e.g., to ensure that portions of an operation are
accessible or safe to access). Therefore, a certifying agent may notify
an operation up to four hours prior to the inspector arriving onsite.
As a best practice, certifying agents are encouraged to disclose their
process for unannounced inspections, including a policy on inspector
access to certified operations, and to train inspectors to prevent
trespassing or breaking laws when accessing an operation. An
operation's refusal to allow an inspector access to any portion of the
operation is a violation of Sec. 205.403 and warrants a notification
of noncompliance.
Following an unannounced inspection, an inspection report must be
written by the inspector and reviewed by the certifying agent. The
results of the inspection must be communicated to the inspected
operation per Sec. 205.403(f) and the certifying agent's internal
protocols.
Certifying Agent Ability To Conduct Unannounced Inspections
Certifying agents must be able to conduct unannounced inspections
of any operation they certify. Therefore, AMS requires that certifying
agents only accept applications for certification or continue
certification from operations for which the certifying agent is able to
conduct unannounced inspections. To ensure consistency, transparency,
and accountability, certifying agents are expected to describe the
areas where they operate in the written materials they provide to both
applicants and certified operations, and review the locations of all
operations during their application review or annual review.
A certifying agent that cannot conduct unannounced inspections in
an applicant's or certified operation's location due to logistical
challenges, staffing, security, or other reasons, is considered to not
have the administrative capacity for certification activities in that
area, consistent with Sec. 205.501(a)(19). In this case, the
certifying agent must document the specific reasons it does not have
the administrative capacity to certify in that area, and must inform
the applicant or certified operation to seek certification from another
certifying agent. If new certification is not obtained, the operation's
certification would be suspended/revoked. This process is similar to
the current procedures used when a certifying agent surrenders its
accreditation or is suspended/revoked.
For additional information about unannounced inspections,
certifying agents may refer to NOP Instruction 2609.
Mass-Balance and Traceability Audits During On-Site Inspections
Traceability of organic products is critical to verification of
organic integrity. Therefore, AMS requires that certifying agents
verify quantities and traceability of organic products produced or
handled by an operation through mass-balance and traceability audits.
Audit tools are the premier methods to verify organic integrity. The
importance of audits has increased because transaction certificates,
which certifying agents relied upon in the past to verify the organic
status of specific loads or sales or organic products, are neither
required by the USDA organic regulations nor universally issued by
certifying agents.
Mass-Balance Audits
During on-site inspections, certifying agents must verify that the
quantities of organic product and ingredients
[[Page 3573]]
produced or purchased by an operation accounts for organic products and
ingredients used, stored, sold, or transported by the operation (Sec.
205.403(d)(4)). Commonly known as a ``mass-balance'' or ``in-out''
audit, this verification is an effective method of detecting and
discouraging organic fraud.
Mass-balances may be performed on products that are produced on an
operation, but then used or stored on-site and not sold (e.g., silage
produced on-site as feed for dairy animals). Mass-balance covers
quantities of agricultural products; other quantitative assessments
such as dry matter intake and stocking rate verification are not mass-
balances. To conduct these mass-balance audits, certifying agents may
choose a sub-set of products based on risk or other factors. With
respect to multi-ingredient products, certifying agents may choose a
single ingredient or multiple ingredients to mass-balance. When a
single ingredient is selected, a best practice is to choose an
ingredient that is high-risk or used in several products.
Mass-balances do not replace the recommended best practice of also
conducting yield analyses at producer operations. Yield analysis looks
at whether harvested quantities are consistent with expected yields.
This is an important tool to assess the potential for commingling of
noncertified/nonorganic products with organic products.
Traceability Audits
Successful traceability within organic supply chains requires three
basic elements: (1) traceability within a single operation; (2)
traceability one step back from an operation in a supply chain; and (3)
traceability by a third party along an entire supply chain, source to
consumer.
Therefore, during all annual inspections certifying agents must
verify the traceability of organic product both within an operation and
verify traceability back to an operation's suppliers (Sec.
205.403(d)(5)).\27\ This means that a certifying agent must verify that
an operation can trace the products it produces or handles during the
full time the operation possesses those products, from time of purchase
or acquisition, through production, to sale or transport. This includes
ingredients or products that the operation handles but may not own.
---------------------------------------------------------------------------
\27\ The third traceability element, traceability along an
entire supply chain, is addressed in 7 CFR 205.501(a)(21), and
discussed in this rulemaking in Section P, Supply Chain Traceability
and Organic Fraud Prevention.
---------------------------------------------------------------------------
Additionally, certifying agents must verify the traceability of
products from an operation's suppliers (Sec. 205.403(d)(5)). Because
supply chains sometimes include operations that are not certified,
certifying agents must verify compliance of organic products back to
the last USDA-certified organic operation. Certifying agents may verify
compliance back to the last certified operation by inspecting and
verifying audit trail documentation and other records kept by the
certified operation being inspected. This will ensure oversight of the
critical linkages between certified operations and support full
traceability and verification of organic products across supply chains.
Certifying agents must also conduct supply traceability chain
audits when circumstances meet criteria defined by the certifying agent
(Sec. Sec. 205.501(a)(21) and 205.504(b)(7)). These audits would not
be performed at every annual inspection.
Responses to Public Comment
Virtual/Remote Inspections
(Comment) Several public comments noted that during the COVID-19
pandemic, virtual inspections, or sometimes a hybrid of virtual an on-
site inspection, were temporarily used by certifying agents. Several
comments asked if AMS intends to allow the use of virtual inspections
for operations that have a demonstrated history of compliance or are at
low risk of organic fraud.
(Response) Virtual and/or remote inspections were not included in
the SOE proposed rule and AMS is therefore not setting specific policy
related to virtual or remote inspections. The final regulations provide
flexibility so that AMS may consider virtual inspection policy options
in the future.
Unannounced Inspections
(Comment) Several comments asked AMS to increase the minimum number
of operations that must receive unannounced inspections beyond the five
percent AMS proposed.
(Response) AMS is finalizing the proposed requirement that
certifying agents must conduct unannounced inspections of at least five
percent of the operations they certify. This is consistent with a 2011
NOSB recommendation and a current NOP Instruction document. AMS chose
this percentage because the majority of USDA-accredited certifying
agents currently complete unannounced inspections at this
frequency.\28\ Because most certifying agents are already completing
unannounced inspections at this level, this percent should be tenable
for certifying agents, regardless of size. To justify a higher
percentage, AMS would require additional information, industry
feedback, and data to assess the potential impact. Comments did not
provide justification or data to support a higher inspection
percentage. However, certifying agents may choose to conduct a higher
percentage of unannounced inspections to supplement their oversight and
enforcement of certified operations.
---------------------------------------------------------------------------
\28\ 42 of the 49 USDA-accredited certifying agents the NOP
audited in calendar years 2018 and 2019 completed unannounced
inspections for 5% of the operations they certify.
---------------------------------------------------------------------------
(Comment) Some public comments asked if AMS intends to publish
criteria for initiating or using unannounced inspections.
(Response) AMS is not adding criteria for using or initiating
unannounced inspections to the regulations. Unannounced inspections may
be triggered and selected by a variety of factors, including at random
and in response to complaints or investigations. The regulations
provide certifying agents flexibility to use unannounced inspections
when and where they are most effective.
Mass-Balances
(Comment) Several public comments asked if AMS is requiring one
mass-balance per certification scope (i.e., crops, livestock, handling,
wild crops) of an operation.
(Response) The regulatory text provides certifying agents the
flexibility to determine where such audits are most needed within a
single inspection.
(Comment) Some comments asked AMS if mass-balances should be
performed for single-ingredient or multi-ingredient products, and if
mass-balances for multi-ingredient products must balance all
ingredients in the product.
(Response) The final regulatory text provides certifying agents
flexibility to perform mass-balance audits of both single- and multi-
ingredient products. For multi-ingredient products, the certifying
agent may choose to mass-balance one or more of the ingredients.
E. Certificates of Organic Operation
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
[[Page 3574]]
------------------------------------------------------------------------
Section Final regulatory text
------------------------------------------------------------------------
205.2..................................... Terms defined.
Definition for Organic
Integrity Database.
205.404................................... Granting certification.
Paragraphs (b) and (c).
------------------------------------------------------------------------
Certificates of organic operation are an important tool used by
organic stakeholders to communicate information about certified
operations. Certifying agents must generate certificates of organic
operation electronically using the Organic Integrity Database.
Standardized, electronic certificates maintained in a publicly
accessible database will help to deter and prevent the use of
fraudulent certificates of organic operation. This requirement also
ensures that certificates of organic operation have consistent
information and format, allowing certifying agents and buyers of
organic products to readily validate certificates of organic operation.
Certifying agents may add their unique addenda to certificates of
organic operation to provide additional details about the certified
operation.
Affected entities may include certifying agents, applicants for
USDA accreditation, certified operations and entities seeking to
validate the certification status of an organic operation. Readers
should carefully examine the regulatory text and discussion below to
determine if they are affected by this action.
Background
AMS accredits nearly 80 certifying agents; only a few currently
create certificates of organic operation using the Organic Integrity
Database. As a result, more than 70 distinct formats of certificates of
organic operation exist in the market. This variation increases the
likelihood of alteration and organic fraud. In addition, AMS
consistently cites noncompliances for certifying agents who do not
include all of the required information on their certificates of
organic operation. Of the 49 USDA-accredited certifying agents audited
by the NOP in calendar years 2018 and 2019, 16 were cited for issuing
certificates of organic operation not consistent with USDA organic
regulations and instruction. The use of a uniform certificate of
organic operation generated through the Organic Integrity Database
eliminates these inconsistencies and helps avoid noncompliances.
The requirement for uniform certificates of organic operation
supports OFPA's purpose to facilitate interstate commerce of organic
foods (7 U.S.C. 6501(3)). This rulemaking also addresses a 2005 NOSB
recommendation to standardize information on certificates of organic
operation and require certifying agents to issue and maintain
certificates of organic operation from a common database.\29\
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\29\ NOSB Recommendation: Information on Certificates of Organic
Operation: https://www.ams.usda.gov/sites/default/files/media/NOSB%20Rec%20Standardize%20Organic%20Certifications%20Certificates.pdf.
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Organic Integrity Database and Certificates of Organic Operation
The certificate of organic operation communicates information about
the organic certification of an operation. This rulemaking requires
certifying agents to provide uniform certificates of organic operation
that are electronically generated from the Organic Integrity Database.
AMS defines the term Organic Integrity Database in Sec. 205.2 as
the National Organic Program's electronic, web-based reporting tool for
the submission of data, completion of certificates of organic
operation, and other information, or its successors. The Organic
Integrity Database may also be referred to as the OID or INTEGRITY. AMS
is responsible for the functionality of the Organic Integrity Database
and ensuring consistent content and styles of all certificates of
organic operation. The general public can view information in the
Organic Integrity Database online at: https://organic.ams.usda.gov/integrity/
Generating Certificates of Organic Operation in the Organic Integrity
Database
Section 205.404(b) requires certifying agents to generate
certificates of organic operation in the Organic Integrity Database,
making it easier for the certificates to be accessed online by relevant
stakeholders in the organic supply chain (e.g., other certifying
agents, inspectors). Section 205.501(a)(15) requires certifying agents
to maintain current and accurate data on operations they certify in the
Organic Integrity Database. Together, sections 205.404(b) and
205.501(a)(15) require certifying agents to input and maintain accurate
data on the operations they certify, and to generate certificates of
organic operation using the Organic Integrity Database. This applies to
all USDA-accredited certifying agents whether foreign- or domestic-
based.
Certificates of organic operation generated in the Organic
Integrity Database include the required information that stakeholders
need to verify organic status of an operation. Users can also access
the database to see if an operation's organic certification has been
suspended, revoked, or surrendered. In addition to strengthening
organic integrity, standardized certificate format and data fields
facilitate and simplify verification of products, ingredients, and
suppliers. The Operation Profile feature in the Organic Integrity
Database also lists the generic products and services offered by an
operation. The accessibility and security of this data will reduce
administrative burden on certified operations that purchase organic
products and ingredients, as well as certifying agents and inspectors
who monitor compliance.
Certifying agents can continue using the data submission template
and the web-based form to upload the required data fields into the
Organic Integrity Database. Additionally, certifying agents can
transfer data from in-house databases to the Organic Integrity Database
using an Application Programing Interface (API) to reduce duplicative
data entry. AMS provides a data submission API guide for certifying
agents on the Organic Integrity Database's User Resources page.
Addenda to Certificates of Organic Operation
Some certifying agents use certificate addenda to supplement the
information on certificates of organic operation with more details
about an operation and the products it is certified to produce and/or
handle. Certificate addenda may be generated and maintained in the
Organic Integrity Database or by certifying agents' databases. The
rulemaking allows certifying agents to continue providing their own
certification addenda to communicate additional information about an
operation's certification in a different format than certificates
generated by the Organic Integrity Database. For example, an addendum
may include information about an operation's certification to
[[Page 3575]]
various international organic standards or the brand names of products
that the operation produces and/or handles that are not included on the
certificate of organic operation. Certificate addenda may be issued
only for a certified operation at an approved location(s).
Section 205.404(c) requires five elements to be on any organic
certificate addenda issued by certifying agents to deter organic fraud
and provide consistency across certifying agents. Primarily, the
addendum requirements are intended to ensure that someone viewing the
document is aware that certification may be verified in the Organic
Integrity Database. The accuracy of information on addenda, such as
products and labeling categories, may also be verified in the Organic
Integrity Database (see Operation Profiles). In summary, an addendum
must identify the name, location, and contact information of the
operation and certifying agent; an operation's unique operation ID from
the Organic Integrity Database; addendum issue date; a link to the
operation's certificate or profile in the Organic Integrity Database;
and a statement citing the Organic Integrity Database for certificate
verification. Certifying agents may include other data in addition to
the mandatory elements on certificate addenda.
Summary of Changes to the Final Rule
AMS revised Sec. 205.2 to replace the name of the proposed term
``INTEGRITY'' with ``the Organic Integrity Database.'' Additionally,
AMS did not include proposed Sec. 205.404(c)(6) which would have
required expiration dates on certificate addenda. Many public comments
noted that an addenda expiration date could cause confusion, as it
could be mistakenly interpreted as expiration of an operation's
certification. Organic certification does not expire; it continues
until surrendered, suspended, or revoked--see Sec. 205.404(d).
Further, several public comments noted that addenda expiration dates
would increase workload for certifying agents, as they would need to
update addenda expiration dates even if there are no other changes to a
certificate of organic operation. AMS agrees with public comments and
is not finalizing the requirement for addenda expiration dates. This
will also encourage stakeholders to adopt the best practice of
verifying certification status in the Organic Integrity Database, as
this tool will include the most up-to-date operation and certification
information (see Sec. 205.201(a)(15)).
Summary of Public Comments
Comments generally supported requirements to including uniform
information on certificates of organic operation, noting that this
would reduce inconsistencies across the industry on what information is
collected and maintained. Comments expressed concern about using the
Organic Integrity Database to generate the certificate files and some
argued that the proposed changes would instead hinder the process for
certificate generation, rather than streamlining it. Some certifying
agents noted that they would be more comfortable and efficient using
their proprietary databases to generate certificate information and
that using the Organic Integrity Database would be additional work to
enter duplicative data. Comments requested a method for certifying
agents to easily upload or transfer their existing data into the
Organic Integrity Database, and to generate a certificate of organic
operation. In addition, comments generally opposed including an
expiration date on certificates of organic operation because a
certificate expiration date could be conflated with an operation's
certification status.
Responses to Public Comment
(Comment) Comments requested that NOP change the name of the
proposed term INTEGRITY to Organic Integrity Database. Commenters
stated that referring to the database's nickname is not descriptive
enough and could lead to confusion between the concept of organic
integrity and the database.
(Response) AMS has revised Sec. 205.2 to use the term Organic
Integrity Database to reduce the possibility of stakeholder confusion
by using the full name of the database.
(Comment) Certifying agents stated that entering operation data
into their own databases and the Organic Integrity Database is
duplicative work and would be a financial and administrative burden
because it will require administrative staff to update both databases.
Commenters also expressed concern about whether the Organic Integrity
Database would have the functionality and capacity to withstand the
number of people who would need to access it regularly, if the Organic
Integrity Database is also used to generate certificates of organic
operation.
(Response) AMS provides tools for uploading data (data submission
template) and transferring data (via an API) into the Organic Integrity
Database to reduce duplication. Please see the data submission API
guide for certifying agents on the Organic Integrity Database's User
Resources page. In addition, generating certificates pulls from the
mandatory data that certifying agents must enter into the Organic
Integrity Database to comply with Sec. 205.501(a)(15). Section
205.501(a)(15) requires certifiers to enter data into the Organic
Integrity Database and states certifying agents must ``Maintain current
and accurate data in the Organic Integrity Database for each operation
which it certifies.'' Certificate generation does not require
additional data. AMS is prepared for the increased usage of the Organic
Integrity Database as a result of the rulemaking and will offer
outreach to certifying agents to support technology integration.
(Comment) AMS received comments requesting clarification on whether
the rule requires operations to receive certificates of organic
operation electronically--noting that many operations prefer (or can
only receive) paper certificates.
(Response) Section 205.404(b) states that an organic certificate
may be provided to operations electronically--however, this step occurs
after a certificate has been generated electronically and does not
affect how a certifying agent transmits certificates to an operation.
Anyone may print a certificate from the Organic Integrity Database as
needed.
F. Continuation of Certification
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
----------------------------------------------------------------------------------------------------------------
Section Final regulatory text
----------------------------------------------------------------------------------------------------------------
205.406............................................. Continuation of certification.
Paragraphs (a) and (b).
----------------------------------------------------------------------------------------------------------------
AMS has amended Sec. 205.406 to clarify the annual update
requirements for organic system plans (OSP) and to specify that
certifying agents are required to conduct inspections of operations
they certify at least once per
[[Page 3576]]
calendar year. These changes maintain requirements for certified
operations to provide certifying agents with updated and accurate
information about their organic activities while eliminating
duplicative work, and will strengthen oversight of organic operations
through regular and timely inspection. Affected entities may include,
but are not limited to certifying agents, certified organic operations,
and operations seeking organic certification. You should carefully
examine the regulatory text to determine if you or your organization
may be affected by this action.
Annual Updates of Organic System Plans
Previously, the organic regulations required certified operations
to submit an updated OSP in its entirety as part of annual
certification renewal. Certifying agents implemented this
inconsistently: some required certified operations submit an entire OSP
every year, while others required operations only to submit revisions
to their OSP. To clarify OSP requirements, this rulemaking revises
Sec. 205.406(a) to allow certified organic operations to only submit
sections of its OSP that have changed to its certifying agent.
Additionally, the rulemaking removes previous paragraph Sec.
205.406(a)(3), which required that certified operations provide, along
with its annual update, an update on the correction of minor
noncompliances previously identified by the certifying agent as
requiring correction for continued certification. This requirement was
duplicative and unnecessary, as certifying agents (when issuing a
notice of noncompliance) must specify a date by which a certified
operation must rebut or correct noncompliances (Sec. Sec.
205.662(a)(3) and 205.404(a)). Removal of this requirement reduces
paperwork, simplifies the certification process, and ensures that
noncompliances are resolved according to the deadline in the notice,
rather than waiting until the next certification cycle.
The NOP previously described this approach in published certifying
agent Instructions (NOP 2615 and NOP 2601).\30\ This change is
necessary to ensure legal enforceability, consistent practices between
certifying agents, and reduce the paperwork burden of organic
certification. This will not impact the requirements for certified
operations to maintain an updated OSP or the requirement for an
operation to notify its certifying agent of operational changes that
may affect its compliance with organic regulations (Sec. 205.400(f)).
Further, the on-site inspection of an organic operation must verify
that the entire OSP is implemented as described.
---------------------------------------------------------------------------
\30\ NOP 2601 The Organic Certification Process, December 16,
2013: https://www.ams.usda.gov/sites/default/files/media/2601.pdf;
NOP 2615 Organic System Plans, Organic System Plan Updates, and
Notification of Changes, December 16, 2013: https://www.ams.usda.gov/sites/default/files/media/2615.pdf.
---------------------------------------------------------------------------
Frequency and Scheduling for Annual Inspections
Annual inspection cycles are essential to vigilant oversight of
organic operations. Inconsistent interpretation of previous Sec.
205.406 regarding inspection timing sometimes resulted in inspection
frequencies longer than the annual timeframe specified in OFPA (7
U.S.C. 6506(a)(5)). For example, former Sec. 205.406(b) was sometimes
interpreted to mean that an operation may be inspected once every 18
months on an ongoing basis (i.e., two inspections over a 36-month
period compared to three inspections if conducted annually). To clarify
frequency of on-site inspection, this rulemaking revises Sec.
205.406(b) to simplify the regulatory text and clearly state that
inspections are to be conducted at least once per calendar year.
Revised paragraph (b) clarifies that all certified operations must
be inspected at least once in a calendar year, regardless of (1) when
the certified operation was last inspected and (2) when, or if, the
certified operation provided its annual updates. This revision allows
certifying agents flexibility to conduct on-site inspections at any
time during the year (essential for verifying activities throughout the
growing season, for example) to ensure that an inspection is conducted
every single calendar year. Additional inspections may be needed to
inspect all portions of an operation to assess full compliance of an
operation (e.g., during and outside the grazing season for livestock
operations). This requirement does not replace the need for additional
unannounced inspections.
Summary of Changes to the Final Rule
AMS did not make any revisions to the proposed regulatory text. The
policy continues unchanged in this final rule.
Summary of Public Comment
Public comments largely supported changes made in the proposed
rule, citing support for reduced paperwork, increased flexibility, and
clear enforceability to uphold organic integrity. Some comments
questioned the need for the proposed changes, citing that the work of
updating an entire OSP is not significantly greater than updating
portions of it.
Several comments supported revisions to section 205.406(b), which
now requires certifying agents to conduct on-site inspection once per
calendar year. However, commenters requested additional flexibility
regarding annual inspections requirements in the face of extreme
circumstances that may render an in-person inspection unsafe or
unfeasible for the inspector or operation. These comments cite the
COVID-19 pandemic as an example.
Other comments were generally in support of the flexibility that
the revisions provide, particularly allowing inspections to occur when
seasonally appropriate (and potentially reducing certifying agents'
need to request additional inspections). However, a few commenters
noted that the calendar year restriction may cause inspections to occur
one closely after another, depending on the type of operation and
harvest timeline.
Responses to Public Comment
(Comment) AMS received comments stating that the revisions to OSP
submission requirements could lead to inconsistent information across
certifying agent databases and the Organic Integrity Database.
(Response) All certifying agents are now required to maintain
updated information on operations they certify in the Organic Integrity
Database. This requirement will eliminate inconsistencies.
(Comment) Comments asked if certifying agents can still request
full updated OSPs from operations they certify, should the certifying
agent deem the proposed changes significant.
(Response) The rulemaking does not change or limit the ability of
certifying agents to request information, including a full OSP, that is
needed to determine an operation's compliance with the organic
regulations. Paragraph 205.406(a)(4) of the regulations requires
operations to provide certifying agents information that they deem
necessary to determine compliance with organic regulations.
(Comment) We received comments requesting more flexibility
regarding annual inspections (e.g., allowing the issuance of temporary
variances, or allowing for virtual inspections) in the face of extreme
circumstances that may render an in-person inspection unsafe or
unfeasible for the inspector or operation.
(Response) AMS acknowledges that extreme circumstances may prevent
a certifying agent from completing an on-site inspection once per
calendar year. In such cases, the certifying agent may
[[Page 3577]]
delay inspection, but the delay should be minimized and explained in
the certifying agent's inspection report and records. A certifying
agent's inability to consistently inspect operations annually due to
access, safety, extreme weather, or other issues is a failure to carry
out inspection requirements and does not fulfill the general
requirements for accreditation (Sec. 205.501(a)(3)). When the
certifying agent is unable to provide adequate oversight and
enforcement, the certifying agent should not continue to certify the
operation.
(Comment) AMS received comments proposing an inspection window
anywhere between 7 and 17 months apart rather than 18 months, thus
allowing inspectors to conduct inspections when seasonally appropriate.
(Response) The rulemaking establishes a minimum frequency for on-
site inspections--at least once per calendar year--to ensure all
certified operations meet OFPA's requirement for annual inspection. If
the certifying agent is unable to complete a full inspection during a
time when land, facilities, and activities that demonstrate compliance
can be observed (see Sec. 205.403(c)(2)), then the certifying agent
may conduct additional on-site inspections, as allowed in Sec.
205.403(a)(3)(i), to cover unobserved portions and ensure compliance
with Sec. 205.403.
G. Paperwork Submissions to the Administrator
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
----------------------------------------------------------------------------------------------------------------
Section Final regulatory text
----------------------------------------------------------------------------------------------------------------
205.501............................................. General requirements for accreditation.
Paragraph (a)(15).
----------------------------------------------------------------------------------------------------------------
Accurate and current information about certified operations is
critical for commerce and oversight in the organic sector. This
rulemaking supports accessible and updated data on organic operations
by requiring certifying agents to maintain current data on all
operations they certify in the Organic Integrity Database. Certifying
agents and certified operations may be affected by these requirements.
Readers should carefully review the regulations and policy discussion
to determine whether they must comply.
Background
The organic industry, including certifying agents, certified
operations, consumers, AMS, and other regulatory agencies use the
Organic Integrity Database to confirm the certification status of
operations, organic status of products, find contact or product
information for specific operations, and obtain data points for
investigation and enforcement actions. Timely updates to maintain data
on an operation's current status, including certified products and
acreage, is necessary for efficient business transactions and informed
oversight. The availability of operation data also reduces the time
spent by certifying agents and by AMS responding to inquiries about
specific operations because interested parties can independently access
the information they need.
Mandatory Reporting in Organic Integrity Database
Certifying agents are required to provide and maintain current
mandatory data on operations in the Organic Integrity Database. The
required data fields are listed in the INTEGRITY Data Dictionary and
defined in the Glossary of Terms which can be accessed at https://organic.ams.usda.gov/Integrity/About.aspx. Some of the data in the
Organic Integrity Database is publicly accessible. Examples of
mandatory, public data fields include: certification status, scope(s)
of certification (e.g., crops, livestock, handling, wild-crop), and the
organic commodities produced or handled by the operation. This
information is essential for certifying agents and operations to verify
the organic status of operations and products and supports efficient
business transactions. Organic acreage is an example of mandatory data
that will not be publicly available in the Organic Integrity Database.
Update Frequency
Certifying agents are to establish processes for updating data in
the Organic Integrity Database in a manner that keeps information
current about their certified operations. This is needed to support the
industry's reliance on the Organic Integrity Database for current and
accurate information about individual operations. Certifying agents are
required in Sec. 205.662(e)(3) to update the Organic Integrity
Database within 72 hours of an operation's suspension, revocation or
surrender of certification.
This rule removes the requirement for certifying agents to provide
notices of denial of certification to the Administrator following the
issuance of a notice of noncompliance to an applicant for certification
(formerly Sec. 205.405(c)). In addition, the rule removes the
requirement for submission of any notices of denial of certification,
notifications of noncompliance, notification of noncompliance
correction, notification of proposed suspension or revocation, or
notification of suspension or revocation (formerly Sec.
205.501(a)(15)(i)). Also, the rule removes the annual requirement for
certifying agents to submit, by January 2, an annual list of operations
certified during the preceding year (formerly Sec.
205.501(a)(15)(ii)). Certifying agents' adherence to noncompliance
procedures in the regulations are evaluated during NOP audits, review
of appeal cases and relevant complaints. The requirement for certifying
agents to list operations in the Organic Integrity Database and their
corresponding certification status makes the paperwork submission
requirements unnecessary.
Summary of Changes to the Final Rule
AMS renamed the term INTEGRITY in Sec. 205.501(a)(15) to the
Organic Integrity Database.
Summary of Public Comment
Comments were largely in support of the proposed revisions, citing
that the changes remove an unnecessary and redundant step from
certifying agents' day-to-day operations. Commenters also noted that
codifying global use of the Organic Integrity Database and maintaining
``accurate and current'' data are both critical to ensuring organic
integrity. Commenters noted that the regulatory text does not explain
how often certifying agents should update operation data.
Responses to Public Comment
(Comment) Comments requested that AMS require certifying agents to
upload and maintain data in the Organic Integrity Database on
operations that are no longer certified, were denied certification, or
withdrew certification with adverse actions on record.
(Response) The Organic Integrity Database can identify applicants
for certification that were denied or
[[Page 3578]]
withdrew from certification. AMS encourages certifying agents to enter
those operations into the Organic Integrity Database, however, this is
not a required reporting element. The Organic Integrity Database
includes all operations which are no longer certified because they are
suspended, revoked, or surrendered.
(Comment) Comments noted that the rule does not describe the data
fields that certifying agents are required to complete in the Organic
Integrity Database.
(Response) The Data Dictionary provides a list of all data fields
for the Organic Integrity Database (https://organic.ams.usda.gov/Integrity/About.aspx). The Data Dictionary will be updated upon
implementation of this rulemaking to make all current fields mandatory.
AMS may add more mandatory fields in the future based on industry and
NOP needs.
(Comment) Comments requested that certifying agents be required to
update the Organic Integrity Database within 72 hours of any changes to
crops, products, acreage, or certification status.
(Response) The rule does not require certifying agents to update
all required data fields within a certain timeframe, as certifiers need
flexibility to create their own systems for updating and maintaining
current data in the Organic Integrity Database. However, AMS does
require certifying agents to update certain data fields within a
specified timeframe. For example, Sec. 205.662(e)(3) requires
certifying agents to update the Organic Integrity Database with changes
to an operations certification status within 3 business days. The Data
Quality Minimum Standards and Best Practices provides recommendations
for the minimum frequency to update specific data fields in the Organic
Integrity Database.\31\
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\31\ Available in the Organic Integrity Database: https://organic.ams.usda.gov/integrity/About.aspx.
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H. Personnel Training and Qualifications
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
----------------------------------------------------------------------------------------------------------------
Section Final regulatory text
----------------------------------------------------------------------------------------------------------------
205.2............................................... Terms defined.
Definition for Certification review.
205.501............................................. General requirements for accreditation.
Paragraphs (a)(4), (5), and (6).
----------------------------------------------------------------------------------------------------------------
The USDA organic regulations require that certifying agents use a
sufficient number of trained and qualified inspectors and certification
review personnel with expertise in organic production and handling.
This rulemaking enhances existing requirements with detail about the
qualifications that organic inspectors and certification reviewers must
have in order to work for certifying agents. By clarifying the
necessary technical skills, qualifications, and knowledge needed to
conduct organic inspections and certification review, AMS ensures that
inspectors and certification reviewers are better prepared to verify
organic compliance, which further strengthens organic integrity across
all levels of the supply chain and upholds confidence in the organic
label among consumers.
The rule adds new requirements for certifying agents, inspectors,
and certification personnel:
Certifying agents must verify that all inspectors and
certification personnel they contract with or hire have the minimum
required training, skills, and knowledge.
Inspectors and certification personnel must meet a minimum
baseline of knowledge, skills, and experience before beginning
inspection or certification review activities.
Inspectors and certification personnel must meet annual
training requirements to continue inspection or certification review
activities.
Certifying agents must conduct periodic observations of
inspectors during inspections (``witness inspections'') as a part of
their annual evaluation activities.
Certifying agents must maintain policies, procedures, and
records regarding inspector and certification review personnel training
and evaluation.
The provisions in this chapter affect current and potential organic
inspectors, certification review personnel, and certifying agents who
employ or contract with inspectors or certification review personnel.
Some provisions apply directly to certifying agents' hiring and
evaluation processes. Others clarify the amount of training inspectors
are required to do to maintain compliance to the organic regulations.
The following discussion provides further detail on the provisions and
AMS's responses to comments received on the proposed rule.
Background
To continue certification, a certified organic operation must
undergo an on-site inspection at least once a year. Organic inspectors
visit certified organic operations to thoroughly investigate the
operation's processes, facilities, and records. Inspections vary by
type and complexity of operation, but generally an inspector will
review fields to investigate pest management, soil fertility
management, buffer zones, and other production techniques; inspect
storage and preparation areas for evidence of commingling or
contamination with substances prohibited in organic; review records and
invoices; conduct mass-balance, traceability, and yield analyses; and
interview a representative of the operation. The inspector may also
collect samples to test for pesticide residues. The inspector then
prepares an inspection report that the certifying agent uses to
evaluate the operation's compliance with the organic regulations. In
addition to regular, once-a-year scheduled inspections, organic
inspectors also conduct unannounced inspections, which are conducted
without advance notice and are often used to target a more limited, but
higher-risk, portion of an operation to ensure compliance (see the
``On-Site Inspections'' portion of this rule for more detail).
Organic inspectors and review staff are therefore the most direct
form of enforcement and verification because they inspect certified
organic operations onsite and report their findings to certifying
agents. Persons performing certification review activities also ensure
organic integrity by reviewing these inspection reports along with
organic system plans, inputs, and other certification documents that
are used to determine compliance with the organic regulations and grant
continued certification. The role as inspectors and
[[Page 3579]]
reviewers has only grown more critical as organic operations and supply
chains become more complex and diverse.
Inspection and certification review are complex professions that
require detailed and highly specialized knowledge of organic regulation
and agricultural practices and strong observation, communication, and
investigation skills. Without highly qualified inspectors and
certification review personnel, loss of organic integrity--either
unintentional or fraudulent--would go unnoticed and the organic
certification system would fail. Therefore, these personnel must adhere
to consistent standards of knowledge, skill, and experience, relevant
to the scope and complexity of the organic operations they inspect and
review. Consistent standards will ensure effective oversight and review
of organic operations, catching and preventing mishandling and fraud at
critical points in the organic supply chain.
The rapidly increased complexity and scale of the organic market
has multiplied opportunities for mishandling of organic products and
fraud, especially as supply chains for organic products increasingly
depend on imported goods. In its February 2018 recommendation, the NOSB
referenced ``well-publicized incidents of proven fraudulent imports in
the last year'' as a compelling reason to ensure the industry has
``qualified inspectors experienced in a broad range of operations
diverse in scope and scale.'' \32\ For example, a May 2017 Washington
Post investigation found that millions of pounds of imported corn,
soybeans, and ginger had been fraudulently labeled organic, and
inconsistent inspection practices were partly to blame.\33\
Additionally, public comments from accredited certifying agents and
organic inspector associations agreed that minimum training and
qualification requirements for inspectors are necessary to detect
breach of organic integrity and fraud. AMS recognizes that in a diverse
market where operations can choose their own certifiers, one critical
element of protecting organic integrity and preventing fraud is
ensuring that all organic inspectors and reviewers are held to the same
high standards of training and experience.
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\32\ NOSB Formal Recommendation, Inspector Qualifications and
Training, May 29, 2018: https://www.ams.usda.gov/sites/default/files/media/CACSInspectorQualificationsRec.pdf.
\33\ Peter Whoriskey, ``The labels said `organic.' But these
massive imports of corn and soybeans weren't.'' Washington Post. May
12, 2017. https://www.washingtonpost.com/business/economy/the-labels-said-organic-but-these-massive-imports-of-corn-and-soybeans-werent/2017/05/12/6d165984-2b76-11e7-a616-d7c8a68c1a66_story.html?utm_term=.97e7f3942427&itid=lk_inline_manual_
7.
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The regulations previously lacked specific detail about
qualifications, experience, and continual training for inspectors and
certification reviewers. Certifying agents currently set their own
policies and minimum qualifications to hire inspectors and reviewers,
creating inconsistency in on-site inspection and certification review.
Further, many inspectors are independent contractors who are
responsible for establishing and maintaining their own knowledge base.
This diversity of background and training creates an inconsistent
baseline of knowledge and skill.
In 2012, NOP issued a memo to clarify that all inspectors and
reviewers, whether staff or independent contractors, must possess the
expertise and qualifications needed to evaluate compliance with the
USDA organic standards.\34\ Additionally, the NOSB provided
recommendations in 2018 to address the need for specific qualification
and training requirements for inspectors and persons performing
certification review.\35\ This rulemaking codifies the general policy
in the 2012 memo and addresses the NOSB recommendations by describing
baseline qualifications for certifying agent personnel.
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\34\ NOP Memo: Criteria and Qualifications for Organic
Inspectors; April 2012: https://www.ams.usda.gov/sites/default/files/media/NOP-Notice-OrganicInspectorCriteria.pdf.
\35\ NOSB Formal Recommendation, Inspector Qualifications and
Training, May 29, 2018: https://www.ams.usda.gov/sites/default/files/media/CACSInspectorQualificationsRec.pdf.
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To clarify the portions of this policy that apply to certification
review personnel, AMS defines the term certification review as ``the
act of reviewing and evaluating a certified operation or applicant for
certification and determining compliance or ability to comply with the
USDA organic regulations.'' The term does not encompass performing an
inspection, which is separately defined in Sec. 205.2.\36\ Examples of
certification review includes reviewing applications for certification,
reviewing certification documents, evaluating qualifications for
certification, making recommendations concerning certification, or
making certification decisions and implementing measures to correct any
deficiencies in certification services. Establishing baseline
qualifications for the personnel conducting these activities will lead
to greater consistency in certification review and decision.
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\36\ Sec. 205.2 Inspection. The act of examining and evaluating
the production or handling operation of an applicant for
certification or certified operation to determine compliance with
the Act and the regulations in this part.
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General Requirements
Section 205.501(a)(4) requires that certifying agents
``continuously use a sufficient number of qualified and adequately
trained personnel'' to implement and comply with the organic
regulations. Certifying agents must maintain adequate staffing levels
and the range of expertise needed to perform the full range of
certification activities, including inspection and certification
review. This includes maintaining an inspection staff to timely
complete initial on-site inspections, annual inspections for all
operations it certifies, unannounced inspections on a minimum of 5
percent of the operations it certifies annually (see Sec. 205.403(b)),
and any other inspections needed to ensure compliance with the
regulations.
Certifying agents sometimes use contracted or volunteer personnel
(i.e., persons not directly employed by the certifying agent) to
inspect operations or complete certification review. Therefore,
certifying agents must ensure that all inspectors and certification
review personnel--including staff, contractors, and volunteers--meet
the requirements of Sec. 205.501(a)(4)-(6). This means that any person
performing inspection or certification review activities must meet
these requirements, regardless of their work or contractual
relationship with the certifying agent. This ensures consistent
inspection and certification review by all certifying agents.
Knowledge, Skill, and Expertise
Certifying agents must demonstrate that all personnel they use to
conduct inspection and certification review continuously maintain
knowledge and skills that qualify them to perform duties as assigned
(Sec. 205.501(a)(4)(i)(A) and (a)(4)(ii)(A)). These paragraphs detail
the minimum knowledge and skills that inspectors and certification
reviewers must have. Because inspectors and certification reviewers
perform different functions, each must meet different baseline
criteria, although there is some overlap, such as knowledge and skill
of the organic regulations, traceability audits, and mass-balance
audits. Certifying agents must demonstrate, as part of their
accreditation process, that any inspectors or certification reviewers
they use have sufficient knowledge in organic standards and practices
to successfully understand, verify, and document an operation's
compliance or noncompliance with the organic regulations.
[[Page 3580]]
The requirements in the rulemaking are based on NOSB
recommendations, public comments, and the NOP's own experience auditing
certifying agents. AMS chose these specific skills because they are
essential to inspection and certification review. These requirements
will ensure that inspectors and certification review personnel can
accurately interpret the regulations and standards, and consistently
apply critical skills when inspecting and assessing compliance. This
will address the current regulation's lack of specific qualifications,
experience, and continual training for inspectors and reviewers.
Certifying agents must also demonstrate the expertise of all
personnel they use to conduct inspection and certification review
(Sec. 205.501(a)(5)). Critically, this means all inspection and review
personnel must have expertise in knowledge of certification to the USDA
organic standards. Certifying agents must also demonstrate their
personnel must have education, training, or professional experience in
the fields of agriculture, science, or organic production and handling
that relates to assigned duties. This requirement to demonstrate
expertise will facilitate more robust accreditation audits of
certifying agents and ensure more consistent oversight of certifying
agents. Together with the above knowledge and skills, this requirement
to maintain adequate expertise will also promote development of a
uniform, high-quality base of organic inspectors and certification
reviewers.
Training
Organic inspectors and certification reviewers must complete
regular training relevant to their duties. Training may include
courses, webinars, training sessions, field days, seminars,
conferences, shadowing other inspectors on their inspections, and
directed readings on relevant topics. Certifying agents may determine
if specific trainings fulfill the requirements. Relevant training
courses available on the Organic Integrity Learning Center (OILC) may
also meet the annual training requirements. When the minimum training
hours are completed, certifying agents must still ensure that each
inspector and certification reviewer has the training that is
sufficient to competently perform assigned inspections or duties.
Sections 205.501(a)(4)(i)(B) and 205.501(a)(4)(ii)(B) require
inspectors and certification review personnel with less than one year
of experience to complete at least 50 hours of training on USDA organic
standards, inspection protocols, and organic production and handling
practices. This requirement will help ensure new inspectors and
certification review personnel are adequately prepared for their
duties. The proposed rule had included a lower number of hours across
all staff, new and experienced. Commenters suggested that less-
experienced staff require more hours of training than existing staff.
AMS agrees with public comments and has raised the initial training
requirement for less-experienced staff to 50 hours, which is a
reasonable balance that aligns with industry best practice and will
ensure staff are adequately prepared to perform inspection and
certification duties.
Onboarding for new inspectors or certification reviewers hired by
certifying agents may count towards the 50-hour requirement, as can
other qualifying training they complete in their first year performing
inspection or certification review duties. Any onboarding that counts
towards the training would need to be technical rather than
administrative to qualify as relevant training. New inspectors must
complete the 50 hours of training, at minimum, before they conduct
inspections independently. This allows new inspectors to gain practical
training through shadow inspections. Training requirements apply
equally to inspectors who are hired as employees and contractors of
certifying agents; initial training received must sufficiently address
the scope and complexity of work these personnel encounter when
performing their duties.
Sections 205.501(a)(4)(i)(B) and 205.501(a)(4)(ii)(B) detail
training requirements for inspectors and certification reviewers with
more than one year of experience. Inspectors and certification
reviewers must complete relevant ongoing training appropriate to their
existing skills, expertise, and scope of work. The annual minimum is 10
hours per year for personnel inspecting or reviewing one area of
operation (i.e., crops, wild crops, livestock, and handling). Five
additional hours of annual training are required for each additional
scope or area of operation. For example, an inspector who only inspects
crop operations (i.e., a single area of operation) must complete at
least 10 hours of annual training; an inspector who inspects crop,
livestock, and wild crop operations (i.e., three areas of operation)
must complete at least 20 hours of training annually. Because there are
four scopes of certification in the USDA organic regulation (crops,
livestock, handling, and wild crops), the maximum number of training
hours an inspector would be required to complete annually would be 25
hours (10 hours of training for the first scope of certification, plus
5 hours for each of the additional 3 scopes of certification).
AMS chose these training requirements based on review of public
comment and review of established industry norms. AMS agrees with
public comments that new inspectors will require more robust initial
training and certifying agent personnel may require more or less annual
training depending on how many areas of operation they inspect or
review. Therefore, relative to the proposed rule, AMS is requiring 50
hours of training for new personnel, and 10 hours plus 5 hours per
additional area of operation for more experienced inspectors.
AMS chose the 50-hour requirement for new inspectors because it
aligns with industry best practice. Some certifying agents commented
that the proposed 20-hour requirement for new inspectors was adequate,
while others maintained that 75-100 hours was necessary; 50 hours is a
median within that range. The 50-hour requirement also aligns closely
with the Accredited Certifier's Association's ``Guidance on Organic
Inspector Qualifications,'' which recommends initial inspector training
that totals 43-46 hours plus several mentored inspections and monitored
reports.\37\ Finally, many certifying agents currently require new
inspectors to complete the International Organic Inspector
Association's (IOIA) basic training, a 5-day course requiring
approximately 40 hours to complete,\38\ plus additional field
observation and training that together total to 50 hours of training.
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\37\ ``Guidance on Organic Inspector Qualifications,''
Accredited Certifiers Association, Inc., February, 2018, https://www.accreditedcertifiers.org/wp-content/uploads/2018/02/ACA-Guidance-on-Inspector-Qualifications-with-IOIA-Evaluation-Checklist.pdf.
\38\ IOIA Basic Training: https://www.ioia.net/training-program-overview/.
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AMS chose an annual training requirement of 10 hours plus 5 hours
per additional scope for more experienced inspectors because it is
consistent with standards established by other agencies or
organizations (e.g., Preventive Controls Qualified Individuals per 2011
Food Safety Modernization Act, ISO 9001 Global Certified Lead Auditor),
and because it increases flexibility by allowing more or less total
annual training hours based on the areas of operations inspected or
reviewed. These requirements will ensure that inspectors and reviewers
receive annual training that is
[[Page 3581]]
appropriate for the level and scope of their duties.
In certain cases, certifying agents may not be able to prescribe
specific training to contracted inspectors or certification review
personnel. However, certifying agents must use a sufficient number of
qualified and trained personnel (Sec. 205.501(a)(4)) and demonstrate
that all persons with inspection and certification review
responsibilities have expertise in organic production and handling
(Sec. 205.501(a)(5). This means that certifying agents must ensure any
contractor used to conduct inspection or certification review
activities meets the training requirements described in the regulation.
Experience
In addition to training, Sec. 205.501(a)(4)(i)(C) requires that
certifying agents demonstrate that the inspectors they use have
experience that prepares them to conduct their assigned duties.
Certifying agents must demonstrate that inspectors have at least 2,000
hours of relevant experience that prepares them for the areas of
operation they will be assigned (i.e., crops, livestock, handling, or
wild crops). Both this baseline experience requirement and the 50-hour
training requirement must be met before inspectors can independently
inspect organic operations. An experienced inspector may advance to
inspect more complex operations based on performance.
The proposed rule specified one year of experience. This was
consistent with the 2018 NOSB recommendation and generally supported by
public comments. However, because public comments noted that ``one
year'' is unclear and can be interpreted differently, AMS has chosen a
more specific 2,000-hour requirement. This is equivalent to one year of
full-time work (accounting for vacation and time off) and expands the
pool of qualifying experiences because the hours can be obtained across
multiple years, from one or more jobs, internships, or other qualifying
activities.
Eligible types of experience include but are not limited to: work
on a farm or ranch; agricultural extension work; agricultural
education; internships; apprenticeships; experiential education; 4-H;
Future Farmers of America; other inspection or auditing work;
management of an organic food handling operation; food processing
research; or natural resource management work. Qualifying experience is
not restricted to paid work, and may include volunteer work or
education.
This minimum experience requirement is supported by Sec.
205.501(a)(5), which requires that certifying agents demonstrate that
all persons with inspection or certification review responsibilities
have education, training, or professional experience that relates to
the duties they will perform.
Field Evaluation of Inspectors
Section 205.501(a)(6) requires certifying agents to ensure that
every inspector they use is evaluated while performing an inspection at
least every three years. Inspectors with less than three years of
organic inspection experience must be evaluated every year. The
regulatory text refers to observing an inspector while they are
inspecting an operation as a ``witness inspection.'' This term is used
by the International Standards Organization to refer to observations of
inspections to ensure proper adherence to inspection procedures and the
standards to which the inspection is being made.
The rulemaking's field evaluation requirements are consistent with
a 2016 NOSB proposal and accepted industry guidance from the Accredited
Certifiers Association.\39\ In addition, public comments supported this
evaluation frequency, including annual evaluations for inspectors with
less than three years of inspection experience. The rulemaking is
therefore aligned with industry best practice, and will ensure that the
performance of all inspectors is consistently monitored and evaluated
by certifying agents.
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\39\ ``Personnel Performance Evaluations of Inspectors''
proposal, December 13, 2016: https://www.ams.usda.gov/sites/default/files/media/CACSInspectorsProposal.pdf.
The Accredited Certifiers Association, Inc. is a 501(c)(3) non-
profit educational organization created to benefit the accredited
organic certifying agent community and the organic industry: https://www.accreditedcertifiers.org/.
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The above requirement is a minimum and certifying agents have the
option of conducting witness inspections more frequently than the above
guidelines to verify an inspector's ability to successfully conduct
inspection duties. For example, certifying agents may decide to conduct
additional witness inspections if there is a sudden change in the
complexity of an operation being inspected, or if inspection reports
show deficiencies in an inspector's skill or knowledge.
To ease the burden on certifying agents and inspectors, certifying
agents may share witness inspection reports with each other, but each
certifying agent must demonstrate that they have evaluated each
inspector's performance in accordance with their own internal personnel
policies and procedures. Certifying agents may use employees or
contractors to perform the witness inspections, provided they are
qualified to perform such duties (e.g., a witness inspection for a
diversified crop operation should be overseen by an evaluator with
adequate experience in inspecting diversified crop operations). A key
indicator of an individual's qualifications to conduct witness
inspections is whether that person can perform the type of inspections
they are evaluating.
To ensure that witness inspections are effective and consistent,
certifying agents must maintain procedures for conducting and
documenting them, and maintain records of all witness inspections of
inspectors they have conducted (Sec. 205.501(a)(6)(ii)). These records
may include a quantitative or qualitative evaluation of the inspector,
along with details on where, when, by whom, and on what area of
operation the inspection was conducted. This requirement will
facilitate more robust accreditation audits and ensure more consistent
oversight of certifying agents.
Witness inspections are intended as one tool to help certifying
agents maintain, evaluate and improve inspector quality, but certifying
agents are also expected to take corrective action appropriate to
remedying gaps and deficiencies in knowledge and skills. For example,
if a witness inspection identifies problems with an inspector's report
writing, then a desk audit of additional inspection reports may be
appropriate to address any shortcomings. Conversely, if an inspector
misses a significant noncompliance while inspecting an operation, the
certifying agent may decide to conduct a follow-up witness inspection
of the inspector.
Summary of Changes to the Final Rule
AMS made several changes to the proposed regulatory text when
writing this final rule. Changes to the final rule are discussed below
and are followed by responses to specific themes from public comment.
In Sec. 205.501(a)(4)(i) and (a)(4)(ii), AMS changed
``scale'' to ``complexity'' because public comments noted that scale
does not always equate to greater complexity. AMS agrees with public
comments and included ``complexity'' in the rulemaking to highlight its
importance in determining appropriate qualifications for inspectors and
reviewers.
In Sec. 205.501(a)(4)(i)(A) and (a)(4)(ii)(A), AMS
replaced ``auditing'' with ``traceability audits'' and ``mass-balance
audits.'' This addresses public
[[Page 3582]]
comments that requested additional specificity about the meaning of
``audit.'' The new language more closely aligns with accepted and well-
understood industry terminology and more clearly describes the
knowledge and skills that certifying agents must ensure their
inspectors and reviewers possess.
AMS revised the proposed annual training requirement of 20
hours in Sec. 205.501(4)(i)(B) and (4)(ii)(B). Inspectors and
reviewers must complete a baseline of 10 hours of training, plus an
additional 5 hours for each additional area of operation they inspect
or review. Inspectors and reviewers with less than one year of
inspection experience must complete 50 hours of training within their
first year. This revised requirement is consistent with established
industry training standards but is also more flexible because it allows
for more or less total annual training hours based on the experience of
the inspector or reviewer and the areas of operations they inspect or
review. This requirement will ensure that inspectors and reviewers
receive annual training that is appropriate for the level and scope of
their duties.
AMS updated proposed Sec. 205.501(a)(4)(i)(C) from
``field-based experience related to both the scope and scale of
operations they will inspect'' to ``experience relevant to the scope
and complexity of operations they will inspect.'' We removed ``field-
based'' because that term was unclear and could be interpreted too
narrowly. Using ``scope and complexity'' focuses the requirement on
experience relevant to the type of inspections to be performed.
AMS changed the one-year experience requirement in Sec.
205.501(a)(4)(i)(C) to 2,000 hours in response to comments that
requested more specificity and a clear metric for verifying compliance.
A 2,000-hour requirement is clearer, will promote consistent
implementation among certifying agents, will allow inspectors to
combine qualifying experience from more than one activity, and was
supported by public comments.
In Sec. 205.501(a)(6), AMS added ``witness inspection''
to refer to certifying agents observing inspectors as they inspect an
operation. This change aligns with industry and international
convention and more clearly describes the requirement.
AMS revised Sec. 205.501(a)(6) to clarify that certifying
agents must conduct annual witness inspections of inspectors with fewer
than three years of experience. This change is consistent with industry
best practice and will ensure that the performance of new inspectors is
consistently monitored and evaluated by certifying agents.
Summary of Public Comment
Many public comments focused on the proposed number of required
hours of continuing education, with a mix of comments that believed
that 20 hours annually is sufficient, and others arguing that 20 hours
would not be sufficient. A few comments requested flexibility in how
inspectors meet the education requirements, suggesting that added
flexibility would help them complete the education more easily and
reduce costs for certifying agents.
Some comments expressed concern that the proposed requirement of
one-year of field-based experience was restrictive, and that the
proposed rule was not specific enough about what types of experience
would qualify. AMS also received several comments noting that using
years as a metric is not an adequate measure for experience; several
comments suggested a minimum number of hours per year as an
alternative.
Several comments discussed inspector evaluations, with most of
these comments supporting in-person evaluations once every three years,
and others recommending more frequent evaluations for new or
inexperienced inspectors.
Responses to Public Comment
Specified Additional Knowledge, Skills, and Experience
(Comment) One comment stated that labor laws prevent certifying
agents from requiring contract inspectors to undertake specific
training.
(Response) The regulations do not require contract inspectors to
complete training specified by certifying agents; however, certifying
agents must demonstrate that all inspectors, including contract
inspectors, complete training that is relevant to inspection.
Certifying agents can recommend or offer courses to contract
inspectors, but may not be able to require completion of specific
training courses. Certifying agents should review inspector training
logs or other records to ensure that the inspector has completed the
required number of hours and that the training is appropriate to
inspectors' skill and role.
(Comment) Comments expressed concern that a list of skills,
knowledge, and experience detailed in Sec. 205.501(a)(4)(i)(A) may
limit the pool of organic inspectors, and thus limit the capacity of
certifying agents to inspect operations. Comments stated that specific
qualifications should be based on the scope of inspections performed by
individual inspectors.
(Response) The list of qualifications specified in this section are
not unique to any specific type of organic operation, but are important
for all inspection and certification review activities, regardless of
area of operation. All inspectors must meet the general qualifications
listed in Sec. 205.501(a)(4)(i)(A). Specific qualifications should be
based on the scope of inspections performed--Sec. 205.501(a)(4)
requires certifying agents to demonstrate that inspectors have
qualifications to inspect the scope and complexity of the operations
assigned.
(Comment) Comments recommended including recordkeeping, mass-
balance audits, traceability/trace-back audits, DMI calculations,
biosecurity, cultural training, and internal control systems for
producer groups as areas where inspectors must demonstrate adequate
knowledge and skills.
(Response) AMS expanded the list of qualifications in the
rulemaking to include mass-balance audits and traceability audits.
These additions support changes to the USDA organic regulations for
supply chain traceability and on-site inspections as a result of this
rulemaking. DMI calculations, biosecurity, and internal control systems
for producer groups are specific to particular types of operations, and
AMS is not mandating these topics for general organic inspector
qualifications. Although knowledge of recordkeeping is not explicitly
included, some certifying agent personnel may need this knowledge if it
pertains to their duties (e.g., personnel who conduct supply chain
traceability audits).
(Comment) Comments recommended requiring special qualifications or
experience for inspectors who inspect high-risk operations, including
special training requirements for producer group operations.
(Response) AMS is not including special training requirements for
inspectors of high-risk operations or producer group operations.
Section 205.501(a)(4)(i) requires certifying agents to demonstrate that
their inspectors are qualified to inspect the operations of the scope
and complexity assigned. If an inspector is to inspect high-risk
operations or producer groups, then they must be qualified to inspect
those types of operations.
(Comment) Comments recommended clarifying that import/export skills
are needed only if relevant, as not all certifying agents deal with
import or export of organic products.
(Response) AMS is keeping import/export requirements in the
knowledge
[[Page 3583]]
areas required for all inspectors. Because this rule requires an NOP
Import Certificate for each organic shipment imported to the United
States, all inspectors must have knowledge of import and/or export
requirements and how they are implemented. Inspectors who regularly
inspect importing or exporting operations, or operations adjacent in
the supply chain, may require more advanced import/export expertise.
Training Requirements
(Comment) Some comments stated that an annual training requirement
violates labor laws regarding contractors. Commenters claimed
certifying agents cannot provide the training to contract inspectors,
so these inspectors will need to pay for the training, which could lead
to higher inspection fees.
(Response) All inspectors must meet the hourly annual requirements
for training that is relevant to their inspection work. While
certifying agents cannot require inspectors to complete trainings,
certifying agents must ensure all contract inspectors they use meet the
training requirement. The rulemaking adds clarifying detail to existing
training requirements to ensure consistent implementation by certifying
agents. In addition, there are various trainings available for free,
such as the online Organic Integrity Learning Center, which offers 33
courses averaging 3-4 hours per course. Additional no-cost resources
that could qualify for training include resources published by
universities, the USDA, or other organic experts (e.g., plant
identification databases, university extension courses, recorded
lectures, informational web pages) and organic farming conferences.
Furthermore, certifying agents commonly offer no-cost activities that
can count as training, such as updates to inspection procedure,
overviews of changes in organic regulation, supervised inspections, or
field visits. Because of the wide availability of no-cost training, and
because the rule's hourly training requirement is consistent with what
the industry already practices, AMS does not believe this requirement
will result in additional costs for inspectors beyond what is accounted
for the in the rule's economic analysis, or affect the cost of
inspection.
(Comment) Comments stated that the number of required training
hours should depend on how many different types of operations are
inspected by a particular inspector.
(Response) AMS revised the training hour requirements in the
rulemaking based on the types of operations inspected--see Sec.
205.501(a)(4)(i)(B) and (a)(4)(ii)(B).
(Comment) Comments showed concern that a specific numerical
training requirement is not appropriate. They stated that the required
content in the training is critical, not the number of training hours.
(Response) The annual training minimum is required to ensure the
regulation's specified knowledge, skills, and experience requirements
are effectively implemented. Establishing a minimum number of training
hours sets a clear baseline for inspector and certification reviewer
knowledge that promotes consistent implementation of the regulation by
certifying agents.
Experience Requirements
(Comment) Comments opposed the requirement that inspectors have one
year of field-based experience, asserting it was difficult to interpret
and may limit the pool of potential inspectors.
(Response) AMS agrees that the proposed use of ``field-based''
experience may be interpreted narrowly (e.g., only farming and organic
inspection experience) and that this may limit the pool of potential
new organic inspectors. The final rule is updated to reference
``relevant'' rather than ``field-based'' experience. This change
supports the use of a broader pool of qualified candidates, such as
persons with auditing or food handling experience.
(Comment) Comments recommended changing the proposed requirement
for one year of experience to a specific number of hours of related
experience.
(Response) AMS incorporated this recommendation into the final
rule. Inspectors are required to have at least 2,000 hours of relevant
experience prior to conducting their first inspection. This is
equivalent to one year of full-time work, and can be obtained across
multiple years, from one or more jobs, internships, or other qualifying
activities. This clarifies the requirement and expands the pool of
qualifying experiences across an individual's career and education.
(Comment) Comments recommended AMS adopt a ``mentoring and
evaluation system'' for inspectors in lieu of a one-year field-based
experience requirement because the proposed requirement was vague.
Comments stated requiring experience based on scope and scale was seen
as overly prescriptive and would limit the pool of qualified
inspectors.
(Response) The rulemaking does not codify an inspector mentoring
program. However, a mentorship program may be used by a certifying
agent to improve the quality and proficiency of their inspectors.
Mentorships may also count towards the 2,000-hour minimum experience
requirement, provided that the certifying agent can demonstrate that
the mentorship provided experience relevant to inspection.
Field Evaluation of Inspectors/Witness Inspections
(Comment) Several comments recommended that witness inspections
occur more frequently than once every three years, or that NOP issue
guidance for how to determine when witness inspections should be more
frequent.
(Response) Certifying agents may conduct witness audits more
frequently than once every three years ``if warranted.'' However,
certifying agents must also maintain documented policies, procedures,
and records for annual performance evaluations and witness inspections
(Sec. 205.501(a)(6)). This means that a certifying agent may choose to
conduct witness inspections more frequently than required by the
regulation (e.g., to monitor inspectors with performance issues), but
that the reason for more frequent witness audits should be justified
and documented in the certifying agent's policies and procedures.
Additionally, AMS increased the frequency of witness inspections
for inspectors with less than three years of experience from once per
three years to annually. This change was made to ensure that the
performance of new inspectors is consistently monitored and evaluated
by certifying agents.
(Comment) Comments recommended allowing virtual or remote witness
inspections.
(Response) Virtual and/or remote witness inspections were not
included in the SOE proposed rule and AMS is therefore not setting
specific policy related to virtual or remote witness inspections. The
final regulations provide flexibility so that AMS may consider virtual
witness inspection policy options in the future.
(Comment) Comments recommend allowing certifying agents to share
inspector evaluation reports with other certifying agents following
witness inspections.
(Response) AMS has addressed this recommendation in the rulemaking.
Certifying agents may share witness inspections reports with each
other. However, certifying agents using an inspector performance
evaluation or witness inspection report from another certifying must
demonstrate that they have evaluated the inspector's performance in
accordance with their
[[Page 3584]]
own internal personnel policies and procedures.
(Comment) Several comments expressed concern that the proposed
language would not allow contractors of a certifying agent to perform
witness inspections.
(Response) Certifying agents may use contractors to perform witness
inspections. However, the contracted personnel performing the witness
inspection must be qualified to evaluate the inspector (Sec.
205.501(a)(6)(i)).
(Comment) One comment stated that new inspectors should be shadowed
on 10 inspections during their first year, in addition to the proposed
20-hour training requirement.
(Response) AMS has not included this recommendation in the
rulemaking. Witness inspections will assess inspectors as they perform
their duties, with more frequent witness inspections of less
experienced inspectors. Comments did not demonstrate the benefit of
shadowing, although certifying agents may use this method if it is
documented in their policies and procedures for witness inspections.
I. Oversight of Certification Activities
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
----------------------------------------------------------------------------------------------------------------
Section Final regulatory text
----------------------------------------------------------------------------------------------------------------
205.2............................................... Terms defined.
Definition for Certification activity and Certification
office.
205.501............................................. General requirements for accreditation.
Paragraph (a)(22).
205.665............................................. Noncompliance procedure for certifying agents.
Paragraph (a).
----------------------------------------------------------------------------------------------------------------
This rulemaking revises the USDA organic regulations at Sec. Sec.
205.2, 205.501(a)(22) and 205.665(a) to clarify AMS's authority to
oversee the activities of certifying agents. Certifying agents must
notify AMS when opening any certification office that conducts
certification activities. In addition, this rulemaking clarifies that
AMS may issue notices of noncompliance to certifying agents based on
the certification activities of a party working on behalf of a
certifying agent.
Certifying agents, applicants for accreditation, and certified
operations may be affected by these requirements. Readers should
carefully review the regulations and policy discussion to determine if
they may be affected by this action.
Background
Certifying agents commonly have multiple offices to ensure they
provide adequate services to their clients. However, certifying agents
sometimes open new certification offices without reporting this to AMS.
Some certification offices operate independently and in different
countries or regions than a certifying agent's main office. AMS cannot
provide oversight (regular audits and reviews) or enforcement of
offices of which it is not aware. This can lead to inconsistent
application and enforcement of the regulations across certifying
agents. To address these gaps in oversight, the 2018 Farm Bill amended
OFPA to require certifying agents to report new certification offices
to AMS within 90 days of opening.\40\
---------------------------------------------------------------------------
\40\ See section 10104(d) of the Agriculture Improvement Act of
2018, Public Law No: 115-334, available at: https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf (7 U.S.C.
6515(j)).
---------------------------------------------------------------------------
AMS also needs clear authority to initiate enforcement against
parties acting on behalf of a certifying agent (e.g., a subcontractor)
or individual certification offices. The use of subcontractors is
common in the organic industry and effective enforcement depends on
oversight of all persons involved in the certification of organic
operations. Uncertainty about whether AMS can target a certification
office or contractor for enforcement action interferes with precise and
expedited enforcement. Therefore, AMS revised the organic regulations
to clarify that entities acting on behalf of a certifying agent are
subject to oversight and enforcement.
90-Day Notification of New Certification Offices
To support the consistent application of the organic regulations
across all certifying agents, Sec. 205.501(a)(22) requires certifying
agents to notify AMS within 90 calendar days of the opening of any
office performing certification activities. A certification office is
defined as any site or facility where certification activities take
place, except for activities that take place at certified operations or
other specialized facilities, such as inspection, sampling, and
testing. This notification requirement applies to any facility or
location that meets the definition of certification office, regardless
of how the office is classified by a certifying agent (e.g.,
``central'' vs. ``satellite'' offices).
Notification of a new office opening must include basic information
to support effective oversight of the certification office, including
the countries serviced, location and nature of the certification
activities, and the qualifications of the personnel that will provide
the certification activities. Information on the location of new
offices allows AMS to efficiently use personnel and travel resources to
schedule on-site audits, and to be precise in any adverse action that
may affect only a portion of certifying agent's accreditation, e.g., a
certification office or activities in a specific country or region.
Information on the types of certification activities being conducted
allows AMS to better evaluate the need for additional oversight; for
instance, a new office located in a high-risk area with a history of
organic fraud may require additional oversight.
Authority To Issue Notices of Noncompliance
AMS is clarifying its authority to issue notices of noncompliance
to certifying agents based on the activities of persons acting on
behalf of a certifying agent, the activities of a certification office,
or the activities in a specific country. AMS added the term
certification activity to Sec. 205.2 of the organic regulations to
define activities that are essential to the function of a certifying
agent and therefore subject to NOP oversight. Certification activity is
any business conducted by a certifying agent, or by a person acting on
behalf of a certifying agent (e.g., a specific office operating in
specific countries, or a subcontractor or subcontractor organization).
Any business activity conducted by a certifying agent as it implements
the USDA organic regulations is considered a certification activity,
including review, inspection, and certification of organic operations.
The definition includes a non-exhaustive list of certification
activities that fall under AMS oversight authority.
[[Page 3585]]
AMS's authority to initiate enforcement action for a portion of a
certifying agent's operation is reinforced in Sec. 205.665(a)(1). This
states that AMS may send notifications of noncompliance to a certifying
agent based upon review of the certification activities of:
A person acting on behalf of the certifying agent or
A certification office.
This means that AMS may issue notices of noncompliance to a
certifying agent based on the activity of certifying agent
subcontractors, or an individual certification office(s) that may be in
a different location from the certifying agent's main office. Further,
AMS may suspend or revoke a portion of accreditation for activities in
a specific certification office, country, or region.
Summary of Changes to the Final Rule
AMS made no changes to the proposed regulatory text in Sec. Sec.
205.2, 205.501(a)(22), and 205.665(a) with respect to oversight of
certification activities and has finalized the proposed requirements.
Summary of Public Comment
The majority of public comments supported AMS's proposed
clarification. Commenters were primarily concerned that the proposed
definition of certification office would subject remote staff and home
offices to NOP audits. Commenters stated that NOP audits of home
offices and remote workers does not align with NOP's intent for adding
the term certification office. Comments suggested excluding home
offices and telework locations from the definition for certification
office, and some explained that certifying offices which solely operate
virtually should qualify as a certification office and individual
workers working remotely on a temporary basis should not be subject to
NOP audits.
Commenters were also concerned that the 90-day timeframe for
certifying agents to notify AMS of new offices conducting certification
activities is too long.
Responses to Public Comment
Definition of Certification Office
(Comment) AMS received comments requesting that the definition of
certification office exclude home offices and remote workers.
Commenters asserted that if home offices for remote staff are included
in the definition of certification offices, they will be subject to
audits, which would be unreasonable.
(Response) Home offices are not excluded in the definition of
certification office because some certifying agents may maintain home
offices as their primary location or certification office from which
they conduct certification activities.
90-Day Notification of New Offices
(Comment) We received comments stating that the 90-day timeframe
for certifying agents to notify AMS of new offices conducting
certification activities is too long. Some suggested that timeframes of
30 or 45 days would be more appropriate.
(Response) The 2018 Farm Bill established the 90-day timeframe.
Section 10104 (j) of the 2018 Farm Bill and 7 U.S.C. 6515(j) state
``Not later than 90 days after the date on which a new certifying
office performing certification activities opens, an accredited
certifying agent shall notify the Secretary of the opening.'' While
certifying agents may choose to notify AMS earlier, AMS is retaining
the 90-day notification requirement in the organic regulations.
(Comment) Commenters asked what office types (e.g., satellite
offices or main offices) would require a certifying agent to notify
AMS.
(Response) Certifying agents must notify AMS of the opening of any
type of office where certification activities take place. This
requirement for notification is based on the activities of an office
not the type.
J. Accepting Foreign Conformity Assessment Systems
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
----------------------------------------------------------------------------------------------------------------
Section Final regulatory text
----------------------------------------------------------------------------------------------------------------
205.2............................................... Terms defined.
Definitions for Conformity assessment system and Technical
requirements.
205.511............................................. Accepting foreign conformity assessment systems.
Entire section.
----------------------------------------------------------------------------------------------------------------
AMS has added a new section to the USDA organic regulations, Sec.
205.511, on accepting foreign conformity assessment systems that
oversee organic certification in foreign countries. Section 205.511
replaces former Sec. 205.500(c).
Affected entities may include, but are not limited to:
Trade partners who have established an organic equivalence
determination or are interested in establishing an equivalence
determination with the United States.
Foreign certifying agents and certified operations not
accredited or certified by the USDA.
Foreign organic producers who export products to the
United States.
The above list is a general description of entities likely to be
affected by this action. Other types of entities could also be
affected. You should carefully examine the regulatory text to determine
if you or your organization may be affected by this action.
Background
The OFPA, under 7 U.S.C. 6505(b), allows imported organic products
to be sold or labeled in the United States as organically produced if
the Secretary determines that the products have been produced and
handled under an organic certification program with requirements and
oversight determined to be at least equivalent to those described in
the OFPA. Under this authority, the U.S. government, including the USDA
and the U.S. Trade Representative, work closely together to implement
processes that determine the equivalence of foreign organic
certification programs and then negotiate an arrangement or agreement
as appropriate.
USDA organic regulations formerly addressed USDA's authority to
make equivalence determinations in general terms under Sec.
205.500(c), but did not describe the criteria, scope, and other
parameters to establish, oversee, or terminate such equivalence
determinations, which are critical to the enforcement of organic
imports. This new Sec. 205.511 does not change current policy or add
any new requirements. It codifies existing practices and clarifies the
procedures followed when determining organic equivalence, which
strengthens oversight and enforcement capacity of organic imports by
supporting the government's authority to reassess, continue, and
terminate equivalence determinations, as
[[Page 3586]]
necessary. Without this clear implementation of Federal authority in
the USDA organic regulations, the government could face challenges
establishing and enforcing terms under current and future equivalence
determinations that are critical to ensuring the integrity of imported
organic products.
Definitions
The rulemaking adds two new terms in Sec. 205.2: conformity
assessment system and technical requirements. These terms are defined
to ensure that the process and requirements described in Sec. 205.511
are clear. The rulemaking defines conformity assessment system as all
activities, including oversight, accreditation, compliance review, and
enforcement, undertaken by a government to ensure that the applicable
technical requirements for the production and handling of organic
agricultural products are fully and consistently applied. The
rulemaking defines technical requirements as a system of relevant laws,
regulations, regulatory practices, standards, policies, and procedures
that address the certification, production, and handling of organic
agricultural products.
Foreign Product Certification
Section 205.511(a) describes the U.S. government's authority under
OFPA to make equivalence determinations and explains the conditions in
which foreign-produced product can be labeled and sold as organic in
the United States.
Equivalency Determination Request
Section 205.511(b) describes the process used by the U.S.
government and other foreign governments for initiating a request for
an equivalence determination. Since there are several factors that may
impact whether the U.S. government moves forward to review an
equivalence determination request (e.g., agency resources, capacity to
oversee the potential trade arrangement or agreement, relative benefits
for the U.S. organic sector), this section clarifies that the U.S.
government will determine if it can proceed with the evaluation process
on a case-by-case basis.
Equivalency Reviews and Reassessments
Section 205.511(d) lays out the current process that AMS and other
foreign governments use to monitor equivalence determinations that have
been made. The section provides some flexibility in the timing of
reviews to accommodate unavoidable factors in both countries that can
impact timing (e.g., federal budgets, election cycles, growing
seasons).
Equivalence Termination Procedures
Section 205.511(e) describes the conditions under which the U.S.
government may terminate equivalence determinations. These conditions
for termination are commonly accepted among countries that maintain
equivalence determinations and are based upon the core concepts
underlying equivalence. The U.S. government must be able to terminate
equivalence determinations under these conditions in order to fulfill
its statutory obligation to assure that organic products sold in the
United States are compliant with OFPA and the USDA organic regulations
and maintain a level playing field for U.S. farms and businesses.
In addition to the conditions described in Sec. 205.511(e), the
U.S. government may also terminate an equivalence determination ``for
other good cause.'' This includes risks that may negatively affect the
integrity of organic products imported from a country with which the
U.S. government has an equivalence determination, policy changes, or
resource constraints that impact either government. Examples include:
Repeated cases of organic fraud that are not corrected by
a foreign government;
Increasing levels of organic fraud that a foreign
government is unable or unwilling to address;
Political instability, safety concerns, or limitations on
access that make it impossible for USDA to travel to and assess a
foreign government's equivalence determination;
Reduction in funding or other resources that compromises a
foreign government's or USDA's ability to operate its organic program
and oversee the equivalence determination; or
Changes in a foreign government's unilateral equivalence
determination with the USDA that may restrict domestic producers'
access to foreign markets.
In all cases, the U.S. government would provide notice and
justification to the foreign government prior to termination, and give
notice to affected organic stakeholders along with a reasonable
timeline to transition.
Summary of Changes to the Final Rule
AMS made several revisions to the proposed regulatory text when
writing this final rule. Changes to the proposed rule are discussed
below and are followed by responses to specific themes from public
comment.
AMS added ``oversight, accreditation, compliance review,
and enforcement'' to the definition of conformity assessment system to
clarify the scope of the assessment of a foreign organic certification
system's eligibility for an equivalence determination.
AMS added ``standards, policies'' and ``certification'' to
the definition of technical requirements to clarify the scope of this
term and to ensure that the definition covers all parts of a country's
framework for regulating organic products.
AMS corrected the syntax of Sec. 205.511(a) and (b) to
state that foreign product ``may be sold, labeled, or represented in
the United States as organically produced.'' This accurately reflects
the intent to allow foreign organic product to be exported to the
United States and sold as organic, but does not allow foreign organic
product to be labeled as domestically produced in the United States.
AMS removed the reference to a two-year review cycle in
Sec. 205.511(d) and replaced with a statement explaining how AMS will
determine the timing and scope of reviews of equivalence
determinations. This gives AMS the flexibility to determine timelines
for audits and reassessments of equivalence determinations, and allows
AMS to accommodate unavoidable factors when scheduling audits and
reassessments of equivalence determinations.
Summary of Public Comment
Public comments showed overall support for codifying AMS's existing
practices for determining organic equivalence, agreeing that the
proposed updates would strengthen the integrity of imported organic
products.
Several of these comments largely focused on how the specifics of
the proposed Sec. 205.511 would improve the transparency and oversight
of equivalence determinations and recognition agreements. Some of these
comments recommended requiring certified foreign operations to be
listed in the Organic Integrity Database and for NOP to investigate any
countries with equivalence determinations found to be noncompliant.
Some comments expressed opinions in opposition to some existing trade
arrangements, and/or suggested that USDA not allow equivalence
determinations and require direct certification via USDA-accredited
certifying agents instead. Some comments were also uncertain the
proposed requirements of Sec. 205.511 apply to recognition agreements.
Several comments expressed concern that the proposed Sec.
205.511(a) and (b)
[[Page 3587]]
would allow organic products produced under foreign equivalence
determinations to be sold as ``produced in the United States.'' Some
comments pointed out that the two and five-year inspection timelines
may conflict with other regulations.
Responses to Public Comment
Definition of Conformity Assessment Systems
(Comment) AMS received comments requesting that several activities
be included in the definition of conformity assessment systems.
Commenters stated that it is critical to ensure that foreign
governments have sufficient oversight, accreditation, compliance, and
enforcement mechanisms in place to ensure that organic technical
requirements are being enforced.
(Response) The definition of conformity assessment systems has been
modified from the proposed rule to include the following activities:
oversight, accreditation, compliance review, and enforcement. The
additional activities were added to the definition of conformity
assessment systems to clarify the scope of the assessment of a foreign
organic certification system's eligibility for an equivalence
determination.
Definition of Technical Requirements
(Comment) We received comments requesting that the definition of
technical requirements include the terms standards, policies, and
certification. Commenters stated that it was important that these terms
be added to ensure that the definition covers all parts of a country's
framework for regulating organic products.
(Response) The terms standards, policies, and certification have
been added to the definition of technical requirements. The new terms
were added to ensure that the definition covers all parts of a
country's framework for regulating organic products.
Labeling of Foreign Product Origin
(Comment) Comments noted that Sec. 205.511(a) could be interpreted
to allow labeling of foreign-produced organic product as ``produced in
the United States.''
(Response) The final rule corrects the syntax of Sec. 205.511(a)
to state foreign organic product ``. . . may be sold, labeled, or
represented in the United States as organically produced.'' This
accurately reflects the intent to allow foreign organic product to be
exported to the United States and sold as organic, but does not allow
foreign organic product to be labeled as domestically produced in the
United States.
Equivalence Reviews and Reassessments
(Comment) We received comments requesting AMS clarify its timeline
for audits and reassessments of equivalence determinations.
Additionally, commenters noted the difference between proposed Sec.
205.511(d), which requires a two-year midcycle review, and the proposed
rule preamble, which states, ``The review cycles mirror ISO standards,
which include a five-year reassessment cycle and mid-cycle reviews.''
(Response) The final rule has been revised to allow AMS additional
flexibility to determine timelines for audits and reassessments of
equivalence determinations. The final rule replaces ``two-year cycle''
and ``five years'' with the phrase ``regular reviews and
reassessments.'' The new regulatory language allows AMS to accommodate
unavoidable factors when scheduling audits and reassessments of
equivalence determinations.
(Comment) AMS received comments asking if recognition agreements
would be subject to AMS audits and reassessments per new Sec. 205.511.
(Response) Recognition agreements will be subject to AMS audits and
reassessments of equivalence per Sec. 205.511.
Equivalence Determination Procedures
(Comment) We received comments requesting AMS describe in Sec.
205.511(e) the criteria used to determine termination of an equivalence
determination.
(Response) Each equivalence determination is unique and is assessed
using the general criteria described in Sec. 205.511. To ensure fair
assessment of each unique equivalence determination, AMS has not
codified specific criteria used to determine termination of
equivalence.
K. Compliance and Noncompliance Procedures
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
----------------------------------------------------------------------------------------------------------------
Section Final regulatory text
----------------------------------------------------------------------------------------------------------------
205.660............................................. General.
Paragraph (c).
205.661............................................. Investigation.
Change section heading only.
205.100............................................. What has to be certified.
Paragraph (c).
205.662............................................. Noncompliance procedure for certified operations.
Paragraphs (e)(3), (f)(1), and (g)(1).
----------------------------------------------------------------------------------------------------------------
Authority To Pursue Enforcement Action Against Any OFPA Violator
The NOP currently pursues enforcement actions against uncertified
parties when AMS has evidence of OFPA violations. In 2021, more than
half of the complaints received by the NOP alleging violations of OFPA
involved uncertified operations representing products as organic.
Continued AMS enforcement against uncertified operations is central to
the effective administration of the OFPA.
The rulemaking updates the USDA organic regulations by adding new
paragraph (c) to Sec. 205.660, to clarify that the NOP Program Manager
may initiate an enforcement action against any violator of OFPA,
regardless of certification status. Consistent with the new paragraph
(c) to Sec. 205.660, to clarify that the NOP Program Manager may
initiate an enforcement action against any violator of the OFPA, AMS
changed the title of Sec. 205.661 from ``Investigation of Certified
Operations'' to ``Investigation.''
Enforcement Action Against Responsibly Connected Persons
Person(s) responsibly connected to a violator of the OFPA may be
complicit in the OFPA violation(s) because of their association to the
violator. Because of this, the rulemaking clarifies at Sec. Sec.
205.100 and 205.662 that any person who is responsibly connected to an
operation that violates OFPA or the USDA organic regulations may be
subject to a suspension of certification, civil penalties, or criminal
charges and/
[[Page 3588]]
or may be ineligible to receive certification. This clarification
strengthens AMS's enforcement capacity by ensuring that enforcement
actions and penalties for violations of the OFPA extend to all
accountable parties.
Responsibly connected persons who are suspended or revoked may
request to have their certification reinstated, if suspended, or their
eligibility to become certified reinstated, if revoked. AMS has
published guidance for Reinstating Suspended Operations (NOP 2605),
which applies to both suspended and revoked operations that want to
become certified again.\41\
---------------------------------------------------------------------------
\41\ Instruction NOP 2605, Reinstating Suspended Operations:
https://www.ams.usda.gov/sites/default/files/media/2605.pdf.
---------------------------------------------------------------------------
Timely Updates to the Organic Integrity Database
Timely updates to the Organic Integrity Database (OID) are critical
to inform other certifying agents, operations in the supply chain, and
consumers when an operation is no longer certified and can help prevent
noncompliant products from entering or continuing in the stream of
commerce. At Sec. 205.662(e)(3) of the regulations, AMS requires
certifying agents to provide timely updates on the status of an
operation that has been suspended or revoked (or that has surrendered
its organic certification). These updates should be viewable in the
Organic Integrity Database within three business days of issuing a
notification of suspension or revocation, or from the effective date of
a surrender. This publicly available information helps businesses in
the supply chain confirm that an operation from which they purchase or
receive organic products has a valid organic certification.
In most cases, the effective date of an operation's surrender means
that the certifying agent has received notification from the operation
and confirmed the surrender status. AMS recognizes that in some cases
the effective date of the surrender may date prior to certifying agent
confirmation of surrender and the Organic Integrity database updates
will extend past the three-day window.
Federal Civil Penalty Inflation Adjustment
Finally, AMS amended Sec. 205.662(g)(1) of the regulations to
update the citation which specifies the maximum civil penalty amount
for violations of the OFPA. Title 7 CFR 3.91(b)(1)(xxxvi) provides the
civil penalty amount for each violation of OFPA. This amendment aligns
with the Federal Civil Penalties Inflation Adjustment Act Improvements
Act of 2015, Public Law 114-74, sec. 701.\42\
---------------------------------------------------------------------------
\42\ https://www.govinfo.gov/content/pkg/PLAW-114publ74/html/PLAW-114publ74.htm. As of the publication of this rule the civil
penalty amount is $20,130 per violation of OFPA occurring on or
after February 15, 2022. The civil penalty amount will be adjusted
in the future so readers should refer to 7 CFR 3.91(b)(1)(xxxvi) for
the current amount.
---------------------------------------------------------------------------
Changes From Proposed to Final Rule
AMS made one change to the proposed regulatory text when writing
this final rule:
Removed the phrase ``directly or indirectly'' from
205.660(c) because its meaning was confusing. The intent of 205.660(c)
is to clarify the scope of potential enforcement actions which may
include blatant and subtle false labeling and representation of
nonorganic products as organic.
No other changes were made to the proposed regulatory text in
Sec. Sec. 205.100(c), 205.660(c), 205.662(e)(3)), and 205.662(f)(1)
and AMS has finalized the proposed requirements with respect to AMS's
authority to enforce against any OFPA violator and all responsibly
connected persons connected to a violator. AMS also made no changes to
proposed requirement to timely update the Organic Integrity Database.
Summary of Public Comments
In general, most public comments supported the proposed revisions
to clarify AMS's authority to enforce against any violator of the OFPA
and the organic regulations. Many comments also discussed the revisions
in detail and offered recommendations or changes to the proposed
policy.
Many comments discussed the proposed three-day timeframe to submit
updates to the Organic Integrity Database (Sec. 205.662(e)(3)). Some
comments describe the requirement as too burdensome, while some support
the three-day timeframe. Comments opposing the proposed requirement
recommended alternatives ranging from 7 to 30 days. Other comments
state that updates should be immediate, or made within 48 hours, so
that noncompliant products do not continue in the stream of commerce.
Several comments also claim that identifying and tracking all
responsibly connected persons would be difficult, and requested more
guidance on how this should be done. A few comments asked AMS if
revocation of an operation's certification should also result in the
revocation of all responsibly connected persons' certification.
Some comments also asked AMS to clarify the phrase ``or submit a
request for eligibility to be certified'' in Sec. 205.662(f)(1). A few
comments also asked if this applies to persons responsibly connected to
a suspended operation. One comment also asked if this section applies
to revocation of certification.
Responses to Public Comment
Timely Updates to the Organic Integrity Database
(Comment) AMS received comments that the three-day requirement to
update the Organic Integrity Database is too burdensome. Commenters did
not quantify negative impacts to certifying agents, nor did they
clearly explain why this would be burdensome for certifying agents.
Others supported the three-day timeframe or recommended that updates
should be immediate or within 48 hours, so that noncompliant products
do not continue in the stream of commerce. Other commenters recommended
alternatives ranging from 7 to 30 days.
(Response) Certifying agents will have a one-year implementation
period before this requirement takes effect. During the implementation
period, there is no fixed time frame for updating data in the Organic
Integrity Database. This requirement is limited in scope and applies
when an operation is suspended, revoked, or has surrendered organic
certification. Public accessibility of an operation's correct
certification status is essential for movement of products in organic
supply chains. AMS believes that three days for certification status
updates is adequate and supports organic verification across supply
chains of different speeds. Extending the deadline beyond three days
may interfere with the timely verification of an operation's accurate
certification status. This is critical data and inaccurate information
can delay legitimate transactions and fail to prevent sales of products
from suspended or revoked operations. Further, AMS provides certifying
agents with an API to upload data to the Organic Integrity Database,
which reduces redundant or duplicative work for certifying agents.
Enforcing Against Responsibly Connected Persons
(Comment) AMS received comments stating that identifying and
tracking all responsibly connected persons would be difficult because
these entities are not listed in the Organic Integrity
[[Page 3589]]
Database. Commenters requested guidance on how this should be
accomplished.
(Response) AMS is not specifying how certifying agents must
identify responsibly connected persons, nor are we requiring
responsibly connected persons to be listed and searchable as such in
the Organic Integrity Database. Obtaining responsibly connected persons
from organic system plans and/or identifying all known responsibly
connected persons in adverse action letters are best practices that
certifying agents should pursue.
Use of Term ``Indirectly'' in 205.660(c)
(Comment) Commenters requested clarification of what is meant by a
label or information which ``indirectly'' implies that product was
produced with organic methods if product was produced in violation of
the OFPA or the organic regulations.
(Response) AMS removed the phrase ``directly or indirectly'' from
205.660(c) because its meaning was confusing. The intent of 205.660(c)
is to clarify the scope of potential enforcement actions which may
include blatant and subtle false labeling and representation of
nonorganic products as organic.
Civil Penalty Citation
(Comment) For civil penalty fines, commenters requested AMS cite
the regulation, not the amount, since the latter changes and becomes
outdated.
(Response) The proposed and final rules cite the regulation that
sets the civil penalty amount.
Documented Delivery Confirmation
(Comment) Commenters requested AMS allow ``documented delivery
confirmation'' to accommodate electronic communication rather than only
certified paper mail.
(Response) AMS accepts that ``dated return receipts,'' which are
required when certifying agents or NOP sends an adverse action notice
to an operation, may include electronic communications. This means that
the adverse action notices may be sent electronically to the recipient
and delivery confirmation may include, for example, confirmation that
an email has been delivered.
L. Mediation
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
----------------------------------------------------------------------------------------------------------------
Section Final regulatory text
----------------------------------------------------------------------------------------------------------------
205.504............................................. Evidence of expertise and ability.
Introductory text and paragraph (b)(8).
205.663............................................. Mediation.
Entire section.
----------------------------------------------------------------------------------------------------------------
Background
AMS revised Sec. 205.663 to improve the general readability of
this section and to more clearly explain how mediation may be used in
noncompliance procedures. When successful, mediation is an efficient
way to bring operations into compliance and resolve conflicts among
certifying agents and operations. The USDA organic regulations require
that certifying agents and State organic programs provide applicants
for certification and certified operations the right to request
mediation when they issue a denial of certification, notice of proposed
suspension, or proposed revocation of certification (Sec. Sec.
205.405(d) and 205.662(c)). Section 205.663 provides requirements for
requesting mediation, responding to a mediation request, the time frame
for reaching an agreement, and what happens when mediation is
unsuccessful.
The USDA organic regulations require certifying agents and State
organic programs to notify operations of the option to request
mediation as an alternative dispute resolution to resolve noncompliance
findings that have led to a proposed suspension, revocation, or denial
of certification. This will facilitate resolution of these issues
before they escalate to an appeal to AMS or a State organic program.
Mediation Is a Collaborative Process
The requirements for mediation support a process that is efficient
and accessible to producers and handlers who want to resolve a denial
of certification, proposed suspension, or revocation of certification.
Mediation is a collaborative process between a certifying agent and an
operation or applicant for certification. A successful mediation
addresses the noncompliance(s) and leads to full compliance with the
USDA organic regulations. To ensure that mediation is readily
accessible, certifying agents and certified operations or applicants
may engage in mediation without a third-party mediator, provided that
all parties agree upon the person who will serve as the mediator.
Mediation Must Be Requested in Writing
After a certifying agent issues a denial of certification, proposed
suspension, or revocation of certification, a certified operation and
certifying agent may discuss the option of mediation prior to receiving
a request for mediation. However, for mediation to proceed as a form of
alternative dispute resolution, an operation must request mediation in
writing to the certifying agent. The request for mediation must be
submitted to the certifying agent within 30 calendar days from the date
of the proposed adverse action or denial of certification (Sec.
205.663(b)(1)). This aligns with the length of time provided to submit
an appeal of a proposed adverse action.
Mediation Acceptance Criteria
A certifying agent determines whether to accept or reject a written
request for mediation. Certifying agents must include mediation
acceptance decision criteria as part of the administrative policies and
procedures which certifying agents are required to submit to
demonstrate their ability to comply with the certification program
(Sec. 205.504(b)(8)). The mediation acceptance criteria must be fair
and reasonable and not arbitrary. The criteria must be based on factors
that will likely determine potential success or failure of the
mediation process. The certifying agent must document how it applied
the criteria to accept or reject requests for mediation. Parties to the
mediation may develop conditions, such as cost, timeframes to reach a
settlement agreement within the allowed maximum of 30 days, and any
incremental steps, only after a certifying agent accepts a mediation
request. A certifying agent must not impose any preconditions for the
acceptance of mediation (i.e., the certifying agent cannot require that
the operation take a specific action--other than submitting a written
request for mediation--before it will consider mediation).
[[Page 3590]]
If a certifying agent decides to reject a request for mediation,
based on its criteria for acceptance of mediation, it must inform the
operation in writing, with the justification for the rejection. That
notification must explain that the operation has the right to appeal
the rejection of mediation (Sec. 205.663(b)(3)). While an operation
appeals a rejection of mediation, the proposed suspension or revocation
which led to the request for mediation must not be finalized (Sec.
205.663(b)(4)). The date that the notification is received by the
operation is important because it starts the 30-day window for filing
an appeal and may be used to determine whether an appeal has been
timely filed. Likewise, when mediation is unsuccessful, the certifying
agent must inform the operation in writing to document the start of the
30-day window for filing an appeal. This means that certifying agents
must send rejection and termination of mediation notices using a method
with delivery confirmation.
Use of Settlement Agreements
In accepting mediation, a certifying agent may also, at its
discretion, offer a settlement agreement for an operation to consider
(Sec. 205.663(e)). The outcome of successful mediation is a settlement
agreement that brings an operation into compliance with the USDA
organic regulations. A settlement agreement must clearly describe the
corrective actions and timeframes for implementing corrective actions,
and may impose additional actions (e.g., unannounced inspections,
sampling for residue testing) to ensure the operation maintains
compliance. A settlement agreement may also include a suspension of
organic certification.
A settlement offer may be useful when the corrective action(s) is
clear and the noncompliance(s) is not recurrent. As part of the
mediation, an operation may accept or reject the settlement agreement,
negotiate the terms with the certifying agent, or request a mediator to
try and reach a settlement agreement.
Use of a Third-Party Mediator
This rule clarifies that mediation does not require a third-party
mediator to reach a settlement agreement (Sec. 205.663(c)). The
certifying agent and operation may agree that mediation will be between
only those two parties. For example, mediation may consist of a phone
call or series of phone calls between the operation and the certifying
agent to discuss the terms of a settlement offer prior to signing the
agreement.
In some cases, the use of a third-party mediator may be
appropriate, either because the operation initially requested this, or
the operation rejected a settlement offer and then requested a
mediator. To demonstrate their ability to comply with the certification
program, each certifying agent must submit a process to identify a
qualified mediator and set the time and location of mediation
session(s), mediation format (in-person, video, phone), and mediation
fees and payment (Sec. 205.504(b)(8)).
Role of the Program Manager
The Program Manager does not require, manage, or otherwise
participate in mediation between operations and certifying agents or
State organic programs. The Program Manager may review an agreement
that results from the mediation for conformity to the OFPA and the USDA
organic regulations and reject any nonconforming provision or agreement
(Sec. 205.663(f)). The Program Manager may direct the certifying agent
or State organic program to revise any nonconforming provisions, and
the operation would have a new opportunity to accept or reject the
revised settlement agreement.
Mediation under the USDA organic regulations is an alternative
dispute resolution mechanism, conducted between a certified operation
or applicant for certification and a certifying agent or State organic
program. The Program Manager is not involved in determining the outcome
of a mediation, notwithstanding his or her authority to review dispute
resolution terms for conformity with the OFPA and the USDA organic
regulations.
This does not affect AMS's ability to carry out oversight,
compliance, and enforcement activities on behalf of the Program
Manager. For example, AMS may conduct informal mediation, at its
discretion, and enter into mutually agreeable settlement agreements
with parties that receive a proposed adverse action (Sec. 205.663(g)).
Changes From Proposed to Final Rule
AMS made minor revisions to the proposed regulatory text when
writing this final rule. Changes to the final rule are discussed below
and are followed by specific themes from public comment.
AMS added the words ``of receipt'' to Sec. 205.663(b)(3)
and (e) so that the 30-day time frame for requesting an appeal when
mediation is rejected or terminated provides adequate due process and
aligns with the appeal filing time frame for other adverse action
notices.
AMS added a requirement for termination of mediation to be
documented in a written notice so it is clear when an operation may
exercise its right to file an appeal.
AMS revised the introductory paragraph at Sec. 205.504 to
include the cross-reference to Sec. 205.663 because certifying agents
must submit mediation procedures as part of the evidence of their
ability to comply with and implement mediation requirements.
AMS relocated the requirement to submit mediation policies
and procedures from Sec. 205.663(a) to Sec. 205.504(b), where
requirements for certifying agents' policies and procedures are
identified.
AMS added a requirement that certifiers document the
reason for denying mediation. If the rejection is appealed, this will
allow the Administrator to determine whether the rejection was
reasonable and consistent with the certifier's criteria for rejection.
AMS added the word ``reasonable'' to Sec. 205.504(b)(8)
to describe parameters for the criteria that certifiers must set for
accepting mediation. This supports fair and consistent decisions on
requests for mediation across certifying agents.
AMS revised Sec. 205.663(e) to require that a settlement
agreement be reached within 30 days from the start of mediation. This
clarifies when the 30-day timeframe begins and supports timely
resolution of compliance issues.
AMS added a new provision at Sec. 205.663(b)(4) to
clarify that an adverse action (e.g., proposed suspension or
revocation) must not be finalized during the appeal proceeding. This
clarification supports the right to adequate due process before an
adverse action takes effect.
Responses to Public Comment
Settlement Agreements
(Comment) Several commenters asked questions about the management
of settlement agreements.
(Response) AMS is not addressing questions about management of
settlement agreements in this rule because they are beyond the scope of
this rule. More information on settlement agreements is available
through the Organic Integrity Learning Center and annual training for
certifying agents.
Mediation
(Comment) AMS received a comment stating certifying agents should
be allowed to propose mediation and offer settlement agreements.
(Response) The regulations do not prohibit a certifying agent from
[[Page 3591]]
informing an operation of its willingness to engage in mediation prior
to an operation requesting mediation. In addition, the regulations do
not prohibit a certifying agent from offering a settlement agreement as
part of mediation to resolve an adverse action.
(Comment) AMS received a comment to replace the terms ``mediation
session'' with ``mediation'' to allow informal mediation at Sec.
205.663(e).
(Response) AMS replaced ``mediation session'' with ``mediation'' to
account for informal mediation which may not use the same format as
formal mediation.
(Comment) AMS received a comment to change the deadline to submit a
request for mediation from ``30 days from receipt'' to ``30 days from
date of issue.''
(Response) AMS is declining to make this change, in order to align
with USDA's Office of Administrative Hearings and Appeals, which uses
date of receipt and not date of issue. This practice preserves due
process rights of operations being notified of adverse actions. AMS
believes that the use of electronic communications and the availability
of electronic delivery confirmation will make this requirement less
burdensome.
(Comment) Comments requested that AMS align language for timeframes
for requesting mediation and requesting an appeal.
(Response) AMS agrees that the timeframes for requesting mediation
and requesting an appeal when mediation fails should be consistent. We
changed Sec. 205.663(b)(3) to state that an operation has 30 days from
receipt of the rejection of request for mediation to file an appeal. We
also changed Sec. 205.663(e) to state that an operation has 30 days
from receipt of a written notice of termination of mediation to file an
appeal. These changes make the timeframes to file an appeal consistent
whether mediation is rejected or terminated.
(Comment) AMS received a comment that both parties agreeing on the
person conducting mediation should only apply to formal mediation.
(Response) AMS disagrees that consensus on the person conducting
mediation should only apply for formal mediation. Informal mediation
also requires that parties agree on who will facilitate the mediation,
even when the parties to the mediation facilitate the process
themselves.
M. Adverse Action Appeal Process
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
----------------------------------------------------------------------------------------------------------------
Section Final regulatory text
----------------------------------------------------------------------------------------------------------------
205.2............................................... Terms defined.
Definition for Adverse action.
205.680............................................. Adverse Action Appeal Process--General.
Entire section.
205.68.............................................. Adverse Action Appeal Process--Appeals.
Paragraphs (a), (a)(2), (b), (c), and (d)(1) and (2).
----------------------------------------------------------------------------------------------------------------
General Appeals
AMS revised parts of the adverse action appeals process in
Sec. Sec. 205.680 and 205.681. These changes clarify which actions can
be appealed, recognize the use of alternative dispute resolution in
lieu of a formal administrative proceeding to resolve an appeal, and
reinforce that appeal submissions need to comply with the basic
requirements in the regulations.
The OFPA calls for an expedited appeals procedure that gives
persons affected by a proposed adverse action the opportunity to appeal
that action (7 U.S.C. 6520). All appealed adverse actions are
expeditiously reviewed and decided in an unbiased manner by persons
that are not involved in the initial decision to issue an adverse
action. In December 2014, AMS issued guidance to explain how it
administers the adverse action appeal process, the status of an
appellant during an appeal, and the possible outcomes of an appeal in
NOP 4011, Adverse Action Appeal Process.\43\
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\43\ NOP 4011, Adverse Action Appeal Process. December 23, 2011:
https://www.ams.usda.gov/sites/default/files/media/4011.pdf.
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The original USDA organic regulations described how certified
operations, accredited certifying agents, and applicants for
certification or accreditation may appeal a noncompliance decision that
would affect their certification or accreditation status or eligibility
to become certified or accredited (Sec. 205.680(a)). The regulations
explained when an appeal may be submitted, how it must be submitted,
and what the appeal submission must contain. Specifically, appeals of
noncompliance decisions of a certifying agent or NOP are appealable to
the AMS Administrator, or to the State organic program if the appellant
is in a State with an approved State organic program. A decision to
sustain an appeal will result in a favorable action with respect to the
appellant's certification or accreditation. Following a decision to
deny an appeal, AMS will initiate a formal administrative proceeding
(i.e., a hearing), unless the parties resolve the issue through
settlement, or the appellant waives the hearing. If an appeal is not
timely filed, the adverse action which led to the appeal will be final
and cannot be appealed further.
Adverse Action Defined
The new term adverse action clarifies which actions may be appealed
under the USDA organic regulations. Adverse action replaces the use of
``noncompliance decision'' throughout this section. Adverse action is
defined as a noncompliance decision that adversely affects
certification, accreditation, or a person subject to the Act, including
a proposed suspension or revocation; a denial of certification,
accreditation, or reinstatement; a cease-and-desist notice; or a civil
penalty.
Option To Request Mediation or Appeal of an Adverse Action Issued by a
Certifying Agent or State Organic Program
When a certifying agent or State organic program issues a proposed
suspension or revocation, operations have the option to request
mediation or appeal the proposed adverse action. Mediation is covered
in more detail in Sec. 205.663. The mediation process can be a viable
path to resolve noncompliances that are correctable and are not willful
or recurrent. If mediation is rejected or is not successful, the
operation maintains the right to appeal. The time frame for filing an
appeal is calculated from receipt of the notice of rejection or
termination of mediation (Sec. 205.663(b)(3) and (e)).
Administrative Requirements
Appeals must be properly filed as described in paragraphs (c) and
(d) of Sec. 205.681. This means that an appeal must be:
[[Page 3592]]
Filed in writing within the time period provided in the
letter of notification or within 30 days from receipt of the
notification, whichever occurs later.
Sent to the correct physical or email address:
[cir] 1400 Independence Ave. SW, Room 2642, Stop 0268, Washington,
DC 20250.
[cir] [email protected].
Include a copy of the adverse action and explain why the
adverse action is incorrect.
An adverse action will become final and nonappealable unless an
appeal is timely filed. Appeals will be considered ``filed'' on the
date received by the Administrator or by the State organic program.
Denied Appeals
AMS supports the use of alternative means, such as mediation and
settlement agreements to expedite resolution of an adverse action
dispute while preserving due process and avoiding prolonged formal
proceedings. When an appeal is denied, AMS offers the appellant the
option to waive further hearing. When an appellant waives a hearing,
the appeal decision is final and takes effect. Failing to timely submit
a request for hearing is regarded as a waiver of hearing. In some
cases, when an appeal is denied, AMS may pursue a settlement agreement
in lieu of initiating a formal administrative proceeding. AMS assesses
the potential for a settlement agreement on a case-by-case basis and
will exercise this option when a settlement may offer a viable route
for the operation to come back into compliance or to exit the organic
sector. Even when an appellant requests a hearing, AMS and the
appellant may enter into a settlement agreement prior to the hearing.
This provides flexibility to resolve appeals outside of a lengthy
formal administrative process. The appellant reserves the right to an
administrative hearing. Entering into a settlement agreement is an
optional, not compulsory, alternative to a hearing.
Changes From Proposed to Final Rule
AMS made several revisions to the proposed regulatory text when
writing this final rule, including revising Sec. 205.681(a)(2) and
(b)(2) to state that the Administrator will initiate a formal
proceeding and identify the conditions when that would not occur, i.e.,
the parties settle beforehand, or the appellant waives its right to a
hearing. These sections explain that failing to timely request a
hearing constitutes a waiver of hearing. AMS also deleted ``policies
and procedures'' from 205.681(d)(3) to clarify that the USDA organic
regulations are the basis for enforcement.
Summary of Public Comments
Comments were generally supportive of the clarifications to the
appeals sections of the USDA organic regulations. The main concern in
comments was the revision to state that AMS ``may'' rather than
``will'' initiate a formal administrative proceeding if the
Administrator denies an appeal. The comments stated that this change
removes due process rights of an appellant and should not be at the
discretion of AMS. Other comments requested changes to appeal filing
timeframes and delivery confirmation.
Responses to Public Comment
(Comment) Comments opposed the change to not require AMS to
initiate the hearing process following an appeal denial.
(Response) AMS made changes to Sec. 205.681(a)(2) and (b)(2) to
state that AMS will begin formal administrative proceedings once an
appeal is denied. Those sections also explain that an administrative
proceeding would not begin if the appellant waives or fails to timely
request a hearing or AMS and the appellant reach a settlement
agreement. This revision does not change AMS's intent that appellants
always have the right to request a hearing following a denial of an
appeal; it only provides options for a more expedient resolution in
lieu of a hearing if the appellant consents to that outcome.
(Comment) AMS received comments stating that the proposed revisions
to Sec. 205.681(b) do not clearly provide appeal rights for certifying
agents.
(Response) Person, as defined in the regulations at Sec. 205.2,
includes certifying agents and Sec. 205.681(b) allows persons to
appeal an adverse action by the NOP Program Manager. Further, Sec.
205.681(b)(1) explains what happens to accreditation when an appeal is
sustained.
(Comment) AMS received comments suggesting that dated return
receipts should be replaced with documented delivery confirmation.
(Response) AMS interprets dated return receipts to include
electronic confirmation of electronic delivery, such as registered
email which shows that a message has been delivered to recipient's
email and the date of delivery.
(Comment) AMS received comments that appeals should be filed within
30 days of date of notice rather than date of receipt of notice.
(Response) AMS is not making this change because it could interfere
with due process rights of an appellant. We believe that appellant
should have the full 30 days to appeal from the time that they receive
the notice and not lose time due to possible delays in the mail or
delivery service. Therefore, we are keeping this timeframe to 30 days
from the date of receipt of notice to ensure that appellants have 30
days to review the notice and to decide how to respond.
(Comment) Comments requested that NOP timely respond to appeals
because operations are allowed to remain certified during the appeal
process and any subsequent hearing proceeding.
(Response) AMS has procedures to thoroughly and efficiently
evaluate NOP appeals. AMS generally resolves appeals within 6 months of
receipt. AMS also frequently uses settlement agreements to resolve
appeals which decreases the number of appeals that may potentially
proceed to a hearing.
N. Producer Group Operations
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
----------------------------------------------------------------------------------------------------------------
Section Final regulatory text
----------------------------------------------------------------------------------------------------------------
205.2............................................... Terms defined.
Definitions for Producer group member, Producer group
operation, Producer group production unit, and Internal
control system.
205.201............................................. Organic production and handling system plan.
Paragraph (c).
205.400............................................. General requirements for certification.
Paragraph (g).
205.403............................................. On-site inspections.
Paragraph (a)(2).
----------------------------------------------------------------------------------------------------------------
[[Page 3593]]
The organic industry has a longstanding practice of certifying
groups of producers. This practice helps small farmers access the
organic market and enables handlers to source products that are not
produced in the United States. Compared with traditional producers and
handlers, these groups of producers have unique needs in quality
control and compliance. AMS is establishing requirements for producer
group operations that promote consistent certification practices and
ensure their continued viability and integrity. This rule codifies key
provisions of the 2002 and 2008 NOSB recommendations on producer group
certification, including:
Establishing eligibility criteria for operations to
qualify as producer group operations.
Clarifying the function and responsibilities of Internal
Control Systems (ICS).
Clarifying inspection requirements for producer group
operations.
Additionally, this rule builds upon the NOSB recommendations with
additional detail based on public comment and NOP's programmatic
experience auditing certifying agents and witnessing producer group
inspections. These additions include requirements for more specific ICS
requirements, more specific member and group information in OSPs, and
an improved inspection sampling rate.
This rule strengthens the oversight of organic supply chains by
enabling certifying agents to more readily assess a producer group
operation's compliance with the USDA organic regulations. Certifying
agents and operations that are certified as part of a producer group
may be affected by these requirements. Readers should carefully review
the regulatory text and policy discussion to determine if the
requirements apply to them.
Background
Producer group operations export important organic agricultural
products to the United States, such as coffee, cocoa, bananas, tea, and
spices.\44\ Globally, there are about 2.6 million organic producers
organized across 5,900 producer group operations in 58 countries
(mainly in Africa, Asia, and Latin America), managing a total area of
about 4.5 million hectares (11 million acres) of certified organic
land.\45\
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\44\ Producer groups may also be called ``grower groups.'' The
latter term is commonly used when certification of group operations
is limited to the production or harvest of crops or wild crops.
\45\ Florentine Meinshausen, Toralf Richter, Johan Blockeel and
Beate Huber Project: Consolidation of the Local Organic
Certification Bodies--ConsCert (2014-2018)//March 2019 https://orgprints.org/id/eprint/35159/7/fibl-2019-ics.pdf.
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Producer group operations present unique certification challenges.
Producer groups may have thousands of members spread across a large
area. The collection, handling, and processing of crops may be
centralized, and these groups may also rely on centralized input
procurement, training, and marketing to sell their product. These
centralized practices can introduce risks to traceability and organic
integrity due to producer group operations' unique structure, size, and
reliance upon internal quality control systems (the ICS) as the first
layer of oversight. Through certification audits and field visits, USDA
has witnessed many of the common problems created by the lack of a
codified producer group standard.
The most common, and difficult to address, challenge is lack of a
well-functioning ICS. The ICS is the first line of oversight and
enforcement and is responsible for critical functions such as education
and inspection of members, and ensuring adherence to the organic
regulations. A poorly functioning ICS often leads to poorly trained
members who do not understand basic organic principles, and the ICS's
lack of effective oversight means members' mistakes go unreported,
resulting in a breakdown of the basic oversight necessary to ensure
that products meet the USDA organic standard. As a result, NOP audits
have uncovered issues such as application of prohibited synthetic
fertilizers and pesticides, mixing of conventional and organic
products, decentralized storage that causes mixing and contamination,
and poor or nonexistent recordkeeping that makes traceability and
verification of integrity difficult. These issues sometimes persist
because the current regulations lack ICS responsibilities and NOP
therefore has no mechanism or basis for citing noncompliance.
Conflict of interest can also become a challenge if not
specifically addressed by the ICS. Often, ICS personnel are relatives
or friends of the members and may withhold or obscure evidence of
noncompliance or fraud. In other cases, the influence of a buyer or
exporter will lead members to compromise organic integrity in order to
meet specific quality or volume targets.
In addition to the ICS, the lack of general criteria that producer
groups must meet creates challenges for certifying agents. This is most
often seen as an absence of critical information about the producer
group and its members. Producer groups often do not provide certifying
agents with basic information, such as accurate maps, location of
plots, acreage, and production practices and inputs. During inspection,
certifying agents commonly cannot locate members, plots, boundaries, or
central distribution points, making it difficult to complete basic
audit techniques such as yield analysis or mass balance.
The unique conditions of producer group production mentioned above,
when combined with poor oversight and enforcement mechanisms at the ICS
level, create an environment where loss of organic integrity and
organic fraud are more likely to occur. The organic regulation
currently does not have the specificity to address these unique
challenges, making it challenging to both discover and correct issues
that are prevalent in producer groups. The provisions in this rule
codify specific eligibility criteria, ICS requirements, and inspection
techniques to address these challenges, and the rule will give
certifying agents the ability to successfully certify and oversee
producer group operations and the products they produce.
The International Federation of Organic Agriculture Movements
(IFOAM) \46\ started developing criteria for producer group
certification in 1994, and in 2003 published its position on ``Small
Holder Group Certification for organic production and processing'' to
support the concept.\47\ The criteria formed the basis for acceptance
of producer group certification in the European Union (EU) and the
United States. Producer group operation certification is also used by
other standards organizations, such as the International Accreditation
Forum and Global G.A.P., to provide small-holder farming operations
access to markets, expand consumer choices, and ensure the integrity of
the supply chain.\48\
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\46\ https://www.ifoam.bio/.
\47\ https://www.ifoam-eu.org/sites/default/files/page/files/small_holder_group_certification_0.pdf.
\48\ https://www.iaf.nu/; https://www.globalgap.org/uk_en/.
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[[Page 3594]]
Organic certification standards for producer group operations
support strong and consistent oversight and enforcement of producer
group operations. This final rule addresses 2002 and 2008 NOSB
recommendations on producer group certification and adds detail about
documentation requirements and inspection methods in response to public
comments to the proposed rule.\49\ While there are only a few known
producer groups in the U.S. at this time, setting requirements for
producer groups may help U.S. producer group members access the organic
cost-share program and crop insurance. These regulations support the
legitimate status of U.S. producer group members as part of an organic
operation.
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\49\ NOSB Recommendation: Criteria for Certification of Grower
Groups. October 20, 2002: https://www.ams.usda.gov/sites/default/files/media/Rec%20Criteria%20for%20Certification%20of%20Grower%20Groups.pdf.
NOSB Recomendation: Certifiying Operations with Multiple
Production Units, Sites, and Facilities under the National Organic
Program. November 19, 2008: https://www.ams.usda.gov/sites/default/files/media/NOP%20Final%20Rec%20Certifying%20Operations%20with%20Multiple%20Sites.pdf.
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Qualifying as a Producer Group Operation
Certifying agents must assess whether operations that apply for or
maintain producer group certification meet the characteristics in the
definitions for producer group member, producer group operation, and
producer group production unit and the qualifications for certification
as producer group operations in 205.400(g). Operations that do not meet
all criteria must not be certified as a producer group operation.
The smallest unit of a producer group operation is a producer group
member. A producer group member is an individual engaged in the
activity of producing or harvesting agricultural products as a member
of a producer group operation. The practices of each producer group
member must align with the organic system plan (OSP) of the producer
group. Each member must use practices that comply with the requirements
for producers and handlers in the USDA organic regulations. Some
requirements may be met collectively by the producer group operation,
such as submitting an organic system plan.
Producer group members are organized into production units. A
producer group production unit is a defined subgroup of producer group
members in geographic proximity within a single producer group
operation that use shared practices and resources to produce similar
agricultural products. Each producer group operation determines the
producer group production units in its operation and must identify
these in the organic system plan per Sec. 205.201(c)(4).
A producer group operation is a producer, organized as a person,
consisting of producer group members and production units in geographic
proximity governed by an internal control system under one organic
system plan and certification. A producer group operation must define
its geographic proximity criteria for its producer members and
production units Sec. 205.201(c)(4). The site-specific conditions of
an operation, such as infrastructure, topography, common soil, water
source, and products produced will affect ``geographic proximity.''
Therefore, AMS is requiring that certifying agents document and adopt
their own criteria or guidelines for internal consistency when
establishing acceptable distances or evaluating the geographic reach of
a producer group operation.
Producer group operations may be certified for crops, wild crops,
livestock, and handling. The requirements for production and handling
operations in the USDA organic regulations also apply to producer group
operations.
Structure and Organization of Producer Group Operations
A producer group operation must be organized as a person (Sec.
205.400(g)(1)). Organization as a person provides a path to
certification because OFPA and the USDA organic regulations apply to a
person as the basic regulatory unit. The definition for person at 7
U.S.C. 6502(16) and Sec. 205.2 includes groups (e.g., ``. . .
association, cooperative, or other entity''). Therefore, certification
may be granted to the producer group operation, rather than individual
producer group members.
A producer group operation must use centralized processing,
distribution, and marketing facilities and systems (Sec.
205.400(g)(2)). A group may have several facilities for aggregating the
products of producer group members and production units and moving into
commerce.
An internal control system (ICS) is a defining component of
producer group operations and is critical for management of the
operation. The ICS is an additional tier of oversight and enforcement
between the producer group members and the certifying agent. All
producer group operations must have an ICS that implements the
practices and procedures described in the organic system plan (Sec.
205.400(g)(4)). Further ICS requirements are discussed in the following
section.
All products sold, labeled, or represented as organic by a producer
group operation must be produced or harvested only by producer group
members on land and using facilities that are included in the producer
group operation's certification (Sec. 205.400(g)(5)). This means that,
for example, a producer group member from one operation (A) must not
use a handling facility owned by another producer group operation (B)
unless the facility is included in the organic system plan and the
producer group operation's (A) certification. A producer group
operation must not buy products from non-member producers and sell,
label, or represent them as organic using the producer group
certification. Likewise, producer group members must not sell, label,
or represent their products as organic outside of the producer group
operation unless they are individually certified (Sec. 205.400(g)(6)).
This accommodates producer group operations with members of varying
production levels where some members have the capacity and need for
marketing channels in addition to the producer group operation. When
this occurs, clear and careful recordkeeping is essential for
successful mass-balance audits.
Producer group operations must provide a comprehensive inventory of
the producer group operation and its capacity to the certifying agent.
Specifically, the operation must provide the name and location of each
producer group member and producer group production unit(s), and
identify all products produced, estimated yield(s), and the sizes of
the production and harvesting areas (Sec. 205.400(g)(7)). Producer
group operations must provide this information to the certifying agent
at least annually and should inform the certifying agent more
frequently of changes that may affect its compliance with OFPA or the
USDA organic regulations, e.g., additional crops produced, inclusion of
new land area and producer group members.
Producer group operations must also show evidence of compliance
with the USDA organic regulations through internal inspections and
reporting sanctions imposed on producer group members. It is not
feasible for certifying agents to inspect each producer member
annually, due to the number of members in any one producer group
operation. However, the producer member must attend the internal
inspection to provide complete information about their
[[Page 3595]]
production activities (Sec. 205.400(g)(8)). Internal inspections must
include mass-balance audits and reconciliation of each producer group
member's and each producer group production unit's yield and group
sales. Records are critical to demonstrate compliance and producer
group operations must maintain a recordkeeping system so that products
are traceable from producer group members' individual production parcel
to aggregation and handling at the production unit and through sale or
transport when the products leave the custody and ownership of the
producer group operation (Sec. 205.400(g)(9)).
Internal Control Systems
Pursuant to the 2002 NOSB recommendation ``Criteria for
Certification of Grower Groups'' \50\ and an August 2020 IFOAM position
paper,\51\ all producer group operations must have an internal control
system (ICS). The internal control system is an internal quality
management system that establishes and governs the review, monitoring,
training, and inspection of the producer group operation, and the
procurement and distribution of shared production and handling inputs
and resources, to maintain compliance with the USDA organic
regulations. The ICS consists of both the personnel and the procedures
that form a producer group's internal governance, verification, and
enforcement system. The ICS is responsible for the overall governance
and compliance of the producer group operation and verifies each
member's adherence to the organic system plan and USDA organic
regulations.
---------------------------------------------------------------------------
\50\ NOSB Formal Recommendation, Criteria for Certification of
Grower Groups, October 20, 2002: https://www.ams.usda.gov/sites/default/files/media/Rec%20Criteria%20for%20Certification%20of%20Grower%20Groups.pdf.
\51\ ``Internal Control Systems (ICS) for Group Certification,''
IFOAM Organics International, August 2020, https://www.ifoam.bio/our-work/how/standards-certification/internal-control.
---------------------------------------------------------------------------
ICS Functions
A producer group operation must have an OSP that meets the
requirements for all operations in Sec. 205.201(a) and additionally
must describe its ICS procedures and practices. Section 205.201(c)
describes the OSP requirements that are specific to producer group
operations. The OSP for a producer group operation needs to include a
description of the ICS and how it verifies the operation's compliance
with the USDA organic regulations. This includes defining the
organizational structure, roles, qualifications, and responsibilities
of all ICS personnel (Sec. 205.201(c)(1)). Personnel qualifications
could include, for example, knowledge of local production practices,
organic production and handling practices, ICS procedures, USDA organic
regulations, and fluency in the language(s) of the producer group
operation.
The ICS must also describe and prevent conflicts of interest
between ICS personnel and the producer group operation that it oversees
(Sec. 205.201(c)(3)). The USDA organic regulations identify conflict
of interest scenarios for certifying agent and operations (Sec.
205.501(a)(11)). The ICS personnel-producer member relationship is
different than the certifying agent-certified operation relationship so
these criteria are not wholly applicable to producer group operations.
For example, certifying agents are not permitted to consult with
operations to overcome obstacles to certification. However, ICS
personnel are required to provide training, education, and resources to
assist producer members with awareness of, and compliance with, organic
requirements. A generally accepted criteria for conflict of interest is
whether an oversight entity, e.g., the ICS, has a financial interest in
the regulated party or likely bias based on familial relations. For
example, internal inspectors should not inspect family members or
production units where the inspector is a member.
The oversight function of the ICS places its personnel at a higher
risk for retribution from producer group operations. To support the
integrity of ICS oversight, the ICS must also describe how it will
protect ICS personnel from retaliation for carrying out their
responsibilities, and, in particular, finding and reporting
noncompliances (Sec. 205.201(c)(3)). This could include obtaining a
written guarantee from the producer group operation that ICS personnel
will not be subject to retribution and requiring ICS personnel to
disclose any conflicts of interest prior to internal inspections or
review.
The ICS must document and apply procedures for adding new members
to a producer group operation (Sec. 205.201(c)(5)). These procedures
must cover how each new member will be inspected by the ICS and
evaluated to determine whether they can fully comply with the organic
production and handling requirements before they are added as a
producer member.
Producer group members use common practices to produce, harvest,
and handle their collective products and common inputs. Shared farming
or harvesting practices could include fertility and pest management,
procurement of inputs (including seeds or soil amendments), and shared
resources could include post-harvest handling facilities. The ICS must
describe how shared resources, including production practices and
inputs, are procured and provided to all producer group members and
personnel (Sec. 205.201(c)(7)). Shared practices and inputs are
critical to fostering compliance among many individual farmers and
documenting these practices is an important indicator of compliance for
the entire operation. Training, education, and technical assistance are
critical practices to support consistent and compliant practices among
producer members and the description of the ICS must explain how these
resources are provided (Sec. 205.201(c)(8)).
Internal Oversight
The ICS is the first line of oversight of a producer group
operation and is responsible for assessing the compliance of producer
group members. The USDA organic regulations include several
requirements to ensure that the ICS provides competent and thorough
oversight. More generally, the ICS must have documented clear policies
and procedures to verify the producer group operation's and producer
group members' compliance with the USDA organic regulations (Sec.
205.201(c)).
The ICS must identify criteria for high-risk producer group members
and production units (Sec. 205.201(c)(6)). Certifying agents must also
determine which producer members are high risk. Examples of risk
factors that may be used by both the ICS and the certifying agent are
listed below in the discussion of on-site inspection by the certifying
agent.
Clear and comprehensive records are a critical component of an ICS.
They help certifying agents understand how the operation is
implementing its organic system plan and complying with the USDA
organic regulations. The organic system plan must describe the system
of records maintained by the ICS (Sec. 205.201(c)(9)). The system of
records must show how records will support and be used for mass-balance
calculations and traceability throughout the operation. For full
traceability, records would need to cover the purchase, acquisition, or
production of products for each producer member through sale or
transport.
The description of the ICS must explain internal monitoring,
surveillance, sanctions, inspection, and auditing methods used to
assess compliance of all producer group
[[Page 3596]]
members (Sec. 205.201(c)(10)). As a best practice, internal monitoring
and surveillance should cover critical organic control points may
include, for example, buffer areas, condition of crops and/or wild
crops and animals, soil quality indicators, handling practices, input
and equipment use and storage areas. A description of sanctions may
cover the review of internal inspection results to determine member
compliance; and the processes to address noncompliances, impose
sanctions, remove noncompliant producer group members and reporting
noncompliances to the certifying agent. A description of the auditing
methods could cover mass-balance audits to reconcile the expected and
actual yields and sales of producer members, producer group production
units, and producer group operations.
On-Site Inspections by the Certifying Agent
Certifying agents are the second tier of oversight for producer
group operations. Certifying agents, in addition to verifying that
producer group operations are fully compliant with the eligibility,
certification and ICS requirements, must follow specific requirements
for on-site inspections of producer group operations. Initial and
annual on-site inspections of producer group operations must comply
with the general requirements for inspections in Sec. 205.403. During
annual on-site inspections of producer group operations, certifying
agents are required to evaluate the ICS, review internal inspections
conducted by the ICS of individual members, and observe ICS personnel
conducting internal inspections (Sec. 205.403(a)(2)(i)-(ii)). At least
one producer group member from each producer group production unit must
be inspected, and each handling facility, including all collection
sites, must be inspected (Sec. 205.403(a)(2)(iii)-(iv)). Collection
sites, where the harvest from multiple producer group members is stored
before transport, are handling facilities, and are inspected by
certifying agents. USDA organic regulations do not set a minimum number
or percentage of witness inspections that a certifying agent must
conduct at each producer group operation inspection. Witness
inspections are a key component of assessing the ICS and certifying
agents will need to ensure that the number of witness inspections at a
given operation is sufficient to evaluate ICS rigor.
During on-site inspections, certifying agents must inspect at least
1.4 times the square root or 2% of the total number of producer group
members, whichever is higher (Sec. 205.403(a)(2)(iii)).\52\ The square
root sampling rate aligns with industry practice. Two sampling rates
are provided because the power of the square root sampling power begins
to decline when operations exceed 5,000 members so that a smaller
proportion of members are inspected relative to the total number of
members. The addition of the 2% rate more evenly distributes the number
of external inspections across producer groups regardless of the number
of members as shown in Table 1. For each producer group operation,
certifying agents need to calculate the number of members to inspect
using the square root method and the 2% rate and use the higher number.
---------------------------------------------------------------------------
\52\ The square root sampling scheme was developed in the 1920s
as a sampling scheme for agricultural regulatory inspectors. The
formula used was the square root (Sqrt) of the lot size (N) + 1.
Blanck, F.C. (1927). ``Report of the Committee on Sampling,'' J.
Assoc. Official Agricultural Chemists, 10, 92-98.
Table 1--Certifying Agent ICS Inspection Sampling Rates
----------------------------------------------------------------------------------------------------------------
Producer group members (N) Square root Flat 2% Final rule
--------------------------------------------------------------- method ---------------------------------
---------------- Greater of 1.4 *
N 1.4 * [radic]N 2% [radic]N or 2%
----------------------------------------------------------------------------------------------------------------
50............................................................ 10 1 10
100........................................................... 14 2 14
250........................................................... 23 5 23
500........................................................... 32 10 32
1000.......................................................... 45 20 45
5000.......................................................... 99 100 100
7500.......................................................... 122 150 150
10000......................................................... 140 200 200
----------------------------------------------------------------------------------------------------------------
The number of producer group members inspected by the certifying
agent must include all high-risk members (Sec. 205.403(a)(2)(iii)).
Certifying agents must inspect at least one producer group member in
each production unit (as defined in Sec. 205.2) to ensure all producer
group production units are inspected, as well as each handling
facility. As a best practice, AMS recommends that certifying agents
also select members from across the risk spectrum--including lower-risk
members--so that the same producer members are not inspected year after
year. This may require a sample size larger than the minimum required
(i.e., more than 1.4 times the square root or more than 2% of the
number of producer group members). All numbers must be rounded up to
the next whole number (e.g., using square root method, 50 members = 10
inspections, 100 members = 14 inspections, 500 members = 31
inspections, and 1,000 members = 44 inspections). The certifying agent
has the discretion to inspect more producer group members than the
minimum indicated by the calculation.
Risk-based inspections rely upon certifying agents having policies
and procedures to determine the risk factors associated with producer
group operations. While the ICS determines which producer members and
production units are high-risk according to their criteria, the
certifying agent needs to independently determine which members are
high-risk (Sec. 205.403(a)(2)(iii)). The certifying agent should apply
the risk assessment procedures to determine and instruct the inspector
on which producer group members to inspect during the annual
inspection. After all risk-based and other inspection selection
criteria are satisfied, certifying agents should randomly select the
remaining member inspections so that different lower-risk producer
group members are inspected each year.
Risk factors may include, but are not limited to, producer group
administrative capacity, organization complexity, and variations in
members and production units (such as product quantity and value,
member size,
[[Page 3597]]
number of products), rate of growth, and compliance and enforcement
history. For example, a producer group member selling products outside
of the producer group or a producer group member that is considerably
larger than the other producer group members in a production unit
represent compliance risks to the overall producer group operation.
When assessing the risks of the producer group operation to determine
which producer group members to inspect, examples of risk factors that
the certifying agent may consider include, but are not limited to:
Noncompliance history of overall producer group and of
individual members;
The criteria used to designate a collection of producer
group members as a single producer group production unit;
High-risk members identified in the ICS and producer
groups member with noncompliances;
Application of prohibited materials adjacent to member
fields;
Split or parallel operations (i.e., operations that are
also producing nonorganic agricultural products);
Producer group members with incomes greater than $5,000
USD per year;
The procurement, availability, and distribution of inputs
and resources to members;
The prevalence of nonorganic production of similar
products and crops in the region;
Post-harvest handling practices designed to prevent
commingling and contact with prohibited substances;
New producer group members;
Size of producer group member's production or gathering
areas; and
Significant expansion of a producer group member's
production area.
As a best practice, the inspection of the ICS should also include:
document review; auditing of production and sales/distribution records;
reconciliation of product inventory; review of procurement and
distribution of inputs; review of the inspections conducted by the ICS;
review of ICS personnel qualifications and training; witness audits to
observe ICS inspectors; review of noncompliance actions for producer
group members; examination of organic control points and high-risk
areas; interviews with managers responsible for the OSP, governance of
the ICS, and producer group members and individuals overseen by the
ICS; and review of training provided to ICS staff and producer group
members.
Summary of Changes to Final Rule
AMS made several changes to the proposed regulatory text when
writing this final rule. Changes to the final rule are discussed below
and are followed by responses to specific themes from public comment.
AMS revised the definitions of producer group member,
producer group operation, producer group production unit and internal
control system to allow livestock production and to clarify that the
operation is regulated as a person. Use of the term ``individual'' in
producer group member and ``person'' in producer group operation more
clearly indicates that the operation is the legal regulated entity,
which is consistent with current regulation and ties to the existing
defined term person (see Sec. 205.2).
AMS replaced ``crop/wild-crop'' with ``agricultural
product'' throughout so that livestock and livestock products are not
excluded from producer group operation production. Public commenters
argued that a prohibition on livestock in producer group certification
may disproportionately affect poor and small-scale farmers that depend
on producer groups to access the organic market. Livestock production
in producer group certification is consistent with EU organic
standards, IFOAM, the 2008 NOSB recommendation, and current practice in
the organic industry. Allowing livestock production avoids market
disruption and negative impact to operations that depend on producer
group certification for market access.
AMS added more specificity to the description of the ICS
in the organic system plan, including: describing qualifications of ICS
personnel; procedures for approving new members; policies to protect
ICS personnel from retribution; description of technical assistance to
members; and a system of records that covers each member and support
mass-balance audits and traceability. Public comments stressed the
importance of the ICS and suggested modifications to strengthen the
ICS's ability to enforce the organic regulations and maintain organic
integrity. AMS agrees with public comments and has revised ICS
requirements to be more specific because this is necessary to bolster
the oversight and enforcement of producer groups.
AMS clarified that producer group operations must only
sell products from the land and facilities included in the
certification. The proposed text only specified ``from grower group
members.'' Additionally, requiring that producer groups only sell
products produced using land and facilities within the certified
operation improves oversight because these facilities and land are
routinely inspected by the ICS and the certifying agent.
AMS added a requirement that producer group operations
must maintain an ICS as described in the organic system plan. Although
it was implied, proposed Sec. 205.400(g) did not include an explicit
requirement to maintain an ICS and did not reference the ICS
requirements (Sec. 205.201(c)). Adding this explicit requirement makes
an ICS a clear condition of certification that must be included as part
of an organic system plan.
AMS clarified that producer group members must be present
during internal inspections. Having producer group members present
during onsite internal inspections is necessary so that ICS personnel
can interact with and ask questions of the members to ensure a full
understanding of the activities on the members' production sites.
AMS removed a redundant requirement from Sec. 205.400(g)
that the producer group operation must document and report the use of
sanctions; the description and implementation of a system of sanctions
is covered in Sec. Sec. 205.201(c)(10) and 205.400(g)(4) and (10).
AMS adjusted the sampling rates certifying agents must use
when inspecting producer groups to 1.4 times the square root or 2% of
the total number of producer group members, whichever is higher. The
proposed inspection rate of 1.4 times the number of members is a
digressive rate, which samples a smaller percentage of members as a
group grows larger. Combining this with a linear 2% sampling rate
ensures that larger producer groups (those with more than 5,000
members) are inspected at a similar rate as smaller groups.
AMS revised Sec. 205.403(a)(2)(iii) to clarify that a
certifying agent must inspect all producer group members determined to
be high-risk by the certifying agent. The proposed rule had stated that
high-risk members should be chosen based on the ICS's risk criteria.
This change improves oversight by ensuring that a certifying agent
conducts independent risk assessments based on their own risk criteria,
rather than relying only on the ICS's assessment.
Summary of Public Comments
The majority of public comments received supported AMS's
codification of producer group standards in the USDA organic
regulations. Many comments provided suggestions and
[[Page 3598]]
recommendations to the proposed policy.
Many comments strongly opposed the proposed prohibition of
livestock production within producer groups, requesting that AMS revise
the standard to allow ``scope neutrality'' and the production of
livestock and livestock products. Several commenters stated that many
certified producer groups already produce livestock and livestock
products, and that prohibiting livestock would negatively impact these
operations.
Several comments suggested AMS add more specificity to the proposed
ICS requirements to ensure the ICS can manage the unique challenges of
producer groups. Commenters requested more detail about conflict of
interest, training, risk assessment, inspections, recordkeeping,
personnel qualifications, protections for farmers, and evaluation of
the ICS by the certifying agent. Commenters pointed to specific details
found in the preamble describing organic system plans and the internal
control system and requested these be added to the final rule to
support clarity and consistency.
The proposed rule asked if producer group risk should be managed by
placing limits on scale (e.g., number of members, size of individual
members, geographic distribution of members). Most commenters agreed
that the risks of uncontrolled size or scale should be addressed but
felt prescriptive limits may arbitrarily exclude members, disrupt well-
functioning groups, restrict economic opportunity, or force producers
to revert to conventional methods. The majority of commenters advocated
for ``scale neutrality'' and requested NOP develop alternate strategies
to manage the risks of large producer group operations.
Several comments requested that AMS require the use of risk
criteria and assessment to control issues of scale. Others recommended
that AMS develop a separate scope of accreditation specifically for
producer groups, arguing that certification of these operations
requires specialized skill and oversight. A few comments noted the
difficultly of identifying producer groups in the Organic Integrity
Database, and asked for identification to be mandatory. Some comments
noted differences between the proposed policy and other international
standards, and asked AMS to align its producer group standards with EU
and IFOAM. Finally, a few comments expressed concern that the producer
group standard may be used by large livestock or poultry cooperatives
in the United States, which they argue is against the intent of the
standard to support opportunity and growth for very small organic
farmers.
Responses to Public Comments
(Comment) Some commenters recommended specific limits on parcel
size and number of members in a producer group operation because a lack
of controls on scale could lead to inadequate and inconsistent
enforcement. Commenters mentioned that an ICS could be reluctant to
enforce against a large producer member without which the producer
group could fail.
(Response) AMS is not setting size limitations, in terms of land
area or number of members, on producer group operations. The ICS
requirements support effective oversight of producer group operations
regardless of their size.
(Comment) Comments opposed the proposed prohibition of livestock
producer group operations. Commenters argued that this may
disproportionately affect poor and small-scale farmers that depend on
producer groups to access the organic market. Some comments mentioned
that livestock producer group operations are already certified for beef
and honey production.
(Response) AMS revised the proposed rule to allow the certification
of livestock production as producer group operations. This allowance
aligns with the EU organic standards for producer group operations and
the 2008 NOSB recommendation, which did not restrict producer group
certification to crop and wild crop operations. Livestock producer
group operations may be more complex and higher risk than crop and wild
crop producer group operations. In practice, this will require careful
oversight of the ICS and qualifications of ICS inspectors and
personnel. Further, some types of livestock production may be
unsuitable for group certification (e.g., intensive livestock farming,
variability between producer members) because it is more difficult for
them to meet the requirements for certification as a producer group
operation.
(Comment) Comments requested a separate scope of accreditation for
producer group certification to ensure that certifying agents are
sufficiently qualified to certify producer groups.
(Response) Establishing a separate scope of accreditation would
require more input and assessment of impacts, as this was not included
in the proposed rule. This type of certification is complex and
presents higher risks for organic integrity. AMS will assess certifying
agents' oversight of and qualifications for producer group
certification through rigorous audits.
(Comment) Comments suggested that the ICS should describe the
qualifications of all ICS personnel and the procedure to ensure the
availability of a sufficient number of qualified personnel. Comments
specified that the ICS should describe how ICS personnel are familiar
with the local production practices, general organic production and
handling practices, the USDA organic regulations, ICS procedures and
regulations, and be fluent in the language(s) of the producer group
members and the ICS.
(Response) The description of the ICS must describe the
qualifications and responsibilities of ICS personnel. AMS has
identified examples of the knowledge qualifications for ICS personnel,
but is not adding these as required to give flexibility to certifying
agents to determine the suitable qualifications on specific operations.
(Comment) Comments asserted that producer group operations must
ensure that all group members understand and can comply with the USDA
organic regulations. Commenters urged that the ICS should describe how
the training, education, and technical assistance that is provided to
producer group members and ICS personnel ensures their understanding of
and compliance with internal control system's policies, the organic
system plan, and the USDA organic regulations.
(Response) Producer group operation compliance requires that each
member understand the required and prohibited practices for organic
production and handling. AMS has added a requirement for the ICS to
include training, education, and technical assistance to producer
members (205.201(c)(8)). Given that producer group operations are
located in areas with varying language and literacy proficiency, it is
the responsibility of the operation to effectively communicate this
information to all members on an ongoing basis.
(Comment) Comments stated that the ICS should explain how it
manages conflicts of interest by addressing or prohibiting internal
inspectors from inspecting or acting as buying officers for their own
relatives. Comments also requested guidance around conflict-of-interest
scenarios and that internal inspectors are not restricted from
providing training, education, or technical assistance to producer
group members.
(Response) The description of the ICS must explain how it will
prevent potential conflicts of interest. The development of guidance on
specific examples of conflict of interest needs further public input
and discussion and
[[Page 3599]]
that level of detail was not included in the scope of this rule.
Certifying agents will review the ICS to determine if known potential
conflicts of interest are identified and prevented. AMS agrees that
internal inspectors inspecting or procuring products from their
relatives would be potential conflicts of interest because the
relationship may compromise the inspector's objectivity in assessing
compliance.
(Comment) Comments stressed that group members need to be present
during their internal inspection and that more guidance is needed to
ensure the ICS is addressing noncompliances and reporting major
noncompliances to the certifying agent.
(Response) AMS has added the requirement for producer members to be
present at the inspection of their production site(s). Maintaining an
organized, transparent, and equitable system of sanctions is critical
for producer group certification. The ICS must have procedures for
implementing a system of sanctions, and the producer group operation
must report sanctions for noncompliant members to the certifying agent.
The requirements for recordkeeping that covers internal inspection
reports, sanctions, and corrective actions plus the external inspection
requirements will help certifying agents to assess whether the ICS is
reporting noncompliances and sanctions to the certifying agent.
(Comment) Comments supported that the ICS describe the
recordkeeping system that must cover signed member agreements, internal
inspection reports, documents related to internal sanctions and
corrections, and formal agreements for each producer group member that
commits them to complying with ICS, OSP, and USDA organic regulations,
along with all training records for members and personnel. The ICS
procedures should state how lists of individual members, locations,
products, acreage, copies of inspection reports, sanctions, and
corrections are stored and made available during inspection by the
certifying agent.
(Response) The USDA organic regulations require a description and
implementation of the recordkeeping system. The critical objective of
recordkeeping is to support traceability of production, inputs, and
transactions throughout the producer group operation. Information about
sanctions and internal inspection reports are required by separate
provisions.
(Comment) Comments requested clarification about what types of
noncompliances (i.e., major vs minor) must be reported to the
certifying agent.
(Response) The requirement to report noncompliances to the
certifying agent enables the certifying agent to assess ICS oversight.
It also leaves flexibility for the ICS to describe different timing and
reporting methods for noncompliances of varying scope and severity.
Noncompliances that may result in removal of the member(s) from the
producer group, for example, application of prohibited substances,
warrant timely notification to the certifying agent. In contrast,
maintaining records of correctable noncompliances for the certifying
agent to review during external inspections would be acceptable.
(Comment) Comments stated that the use of 1.4 times the square root
of the number of members is not adequate for external inspections. They
explained that this inspection rate is either too low for a producer
group with more than 5,000 members, resulting in potentially inadequate
oversight of very large groups, or the inspection rate is too high and
burdensome for small producers, resulting in pressure to grow larger to
reduce certification costs. Comments suggested other rates including a
flat percentage rate of 2-3%, a combination of square root and flat
rate methods, or a minimum of 10% of producer group members.
(Response) The external inspection sampling rate should be equally
stringent for producer member operations regardless of size. The USDA
organic regulations specify that certifying agents must use the higher
result of 2 sampling rates to set the minimum number of producer
members that need to be inspected. Setting 2 rates is necessary because
the square root sampling power begins to decline when producer groups
are larger than 5,000 members. The use of 1.4 times the square root or
2% of the total number of producer members is a minimum and does not
prevent certifying agents from using sampling sizes that exceed the
results of those rates. Higher levels of inspection rates may be
warranted when necessary if a producer group operation has a history of
inadequate internal controls and poorly trained personnel with
ineffective policies, procedures, or sanctions, and is failing to
enforce against noncompliant members, failing to inspect all members,
or is not completing mass-balance audits.
O. Calculating the Percentage of Organically Produced Ingredients
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
----------------------------------------------------------------------------------------------------------------
Section Final regulatory text
----------------------------------------------------------------------------------------------------------------
205.302............................................. Calculating the percentage of organically produced
ingredients.
Paragraphs (a)(1), (2), and (3).
----------------------------------------------------------------------------------------------------------------
This rulemaking revises Sec. 205.302(a) to clarify that the
percentage of organic ingredients in multi-ingredient products should
be calculated by dividing the weight or volume of the organic
ingredients at formulation by the total weight or volume of the product
at formulation, with water and salt added as ingredients at formulation
excluded from the calculation.
This policy may affect certified operations, noncertified
operations that process products containing organic ingredients,
applicants for organic certification, and certifying agents. The reader
should carefully examine the regulatory text and discussion below.
Background
Section 205.301 of the organic regulations classify products
containing organic ingredients into several categories based on percent
composition--e.g., ``100 percent organic,'' ``organic,'' ``made with
organic (specified ingredients or food group(s)).'' Clear and easily
understood instructions for calculating product composition are needed
to ensure consistent classification by the organic industry.
Previous policy had sometimes caused inconsistent implementation
because it required calculation based on ``total weight of the finished
product.'' It was unclear if this meant products before or after
processing. Because processing (e.g., cooking, baking, dehydrating,
freeze drying) often causes water loss from ingredients, using the
total weight of the product after processing sometimes resulted in
inflated percent organic content calculations. This rulemaking
clarifies that organic content must be calculated from the weight of
ingredients at formulation (i.e., before processing such
[[Page 3600]]
as baking or cooking). This will ensure correct calculation of organic
content so that labels on multi-ingredient organic products are
accurately listed. This requirement also addresses an existing point of
confusion and will increase the consistency of organic labeling claims
in processed organic products. This policy is consistent with both an
April 2013 NOSB recommendation \53\ and NOP 5037 Draft Guidance
published by AMS in December 2016.\54\
---------------------------------------------------------------------------
\53\ NOSB Recommendation, Calculating Percentage Organic in
Multi-Ingredient Products, April 11, 2013: https://www.ams.usda.gov/sites/default/files/media/NOP%20CACC%20Final%20Rec%20Calculating%20Percentage.pdf.
\54\ The draft guidance and comments can be viewed at https://www.regulations.gov/document?D=AMS-NOP-16-0085-0001 and in the NOP
Program Handbook: https://www.ams.usda.gov/sites/default/files/media/NOP5037DraftGuidancePercentCalculations.pdf.
---------------------------------------------------------------------------
Calculating Percentage of Organic Ingredients
To calculate the percentage of organic ingredients in a multi-
ingredient product, divide the weight or volume of the organic
ingredients at formulation by the total weight or volume of the product
at formulation. If water and salt are added as ingredients, these must
be excluded from the calculation. If a multi-ingredient product
contains only liquids, volume must be used for calculation. If a
product contains both solid and liquid ingredients, weight must be used
for calculation. Please see Table 2, below, for an example of how to
calculate the percentage organic content of a multi-ingredient product.
Liquid ingredients being reconstituted from concentrates should be
calculated based on single-strength concentrations. The term ``single-
strength'' is defined by the Food and Drug Administration (21 CFR 101)
as equivalent to the Brix value of 100 percent juice. Brix is a
measurement referring to the percent, by mass, of soluble solids
(generally sugar) in a solution. Brix is a useful reference in
identifying single-strength identities of juices (see 21 CFR
101.30(h)(1)) as the mass of sugar and other soluble solids is not
affected by the concentration process (i.e., the same mass of sugar
will be present in 1 liter of apple juice measured at 11.5 Brix, as is
present in 0.5 liters of concentrated apple juice measured at 23 Brix).
Reconstitution is taking a concentrated juice product and adding water
to dilute the concentrated juice back to single-strength values. Using
the previous example, if a producer starts with 0.5 liters of
concentrated apple juice, they could add water to increase the total
volume to 1 liter, bringing the juice back to the original Brix value
of 11.5. Allowing for reconstituting concentrated juice gives producers
flexibility in shipping, storage, and use of juice products in organic
production.
For products that have ingredients composed of multiple ingredients
(also referred to as ``multi-ingredient ingredients''), the exact
organic content should be obtained of that multi-ingredient ingredient
when calculating the total organic content of the final organic
product. In this case, the calculation should identify the organic and
nonorganic parts of the multi-ingredient ingredient and supporting
documentation should be available for the certifying agent to review.
Alternatively, these ingredients should be calculated as contributing
either 95% organic content or 70% organic content depending on how the
product is classified (i.e., either ``organic'' or ``made with organic
(specified ingredients or food groups)'' respectively).
Table 2--Calculating Percent Organic of a Soy Beverage
----------------------------------------------------------------------------------------------------------------
Weight of
ingredient at % Organic % In Actual
Ingredient formulation content of formulation organic %
(lbs.) ingredient
----------------------------------------------------------------------------------------------------------------
Organic Soy Base..................................... 1,100 100 16.42 16.4200
Organic Cane Sugar................................... 5,288 100 78.94 78.9400
Organic Vanilla Extract.............................. 60 95 0.89 0.8455
Vitamins............................................. 50 0 0.74 0.0000
Calcium Phosphate.................................... 100 0 1.49 0.0000
Carrageenan.......................................... 100 0 1.49 0.0000
Added Water.......................................... 10,000
Added Salt........................................... 5
----------------------------------------------------------
Total weight (excluding added salt and water).... 6,698
----------------------------------------------------------
Total % Organic.................................. ............... ........... .............. 96.2055
----------------------------------------------------------------------------------------------------------------
Summary of Changes to the Final Rule
AMS replaced the parenthetical statements ``(excluding water and
salt)'' with the single statement ``Water and salt added as ingredients
at formulation are excluded from the calculation.'' This more clearly
states NOP's intent and will result in more consistent calculation of
organic content across the industry.
Summary of Public Comment
In general, almost all public comments supported AMS's
clarification that percent organic content must be calculated based on
weights/volumes at formulation. However, many comments noted that the
proposed text could be interpreted to mean that salt and water must be
excluded from each ingredient during calculation. Commenters explained
this would be difficult and unnecessary to calculate the amount of
water and salt in some ingredients and asked that AMS revise Sec.
205.302(a) to state that only water and salt added as ingredients
should be excluded from calculation. However, several comments also
asked AMS to clarify that water and salt added to individual
ingredients (e.g., broth or tea) should be excluded from calculation.
Responses to Public Comment
(Comment) Many comments noted that the proposed text could be
interpreted to mean that salt and water must be excluded from
individual ingredients during calculation. Commenters explained this
would be difficult and unnecessary to calculate the amount of water and
salt in some ingredients, and asked that AMS revise Sec. 205.302(a) to
state that only water and salt added as ingredients should be excluded
from calculation.
[[Page 3601]]
(Response) AMS has replaced the parenthetical statements
``(excluding water and salt)'' with the single statement ``Water and
salt added as ingredients at formulation are excluded from the
calculation.'' This clearly states that only water and salt added as
ingredients are excluded from calculation.
(Comment) Several comments asked NOP to clarify how to calculate
percentage organic content when ingredients are composed of more than
one ingredient (a ``multi-ingredient ingredient'').
(Response) The exact organic content of a multi-ingredient
ingredient should be used when calculating the total organic content of
the final organic product.
P. Supply Chain Traceability and Organic Fraud Prevention
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
----------------------------------------------------------------------------------------------------------------
Section Final regulatory text
----------------------------------------------------------------------------------------------------------------
205.2............................................... Terms defined.
Definitions for Organic fraud and Supply chain
traceability.
205.103............................................. Recordkeeping by certified operations.
Paragraphs (b)(2), and (3).
205.201............................................. Organic production and handling system plan.
Paragraph (a)(3).
205.501............................................. General requirements for accreditation.
Paragraphs (a)(10), (13), and (21).
205.504............................................. Evidence of expertise and ability.
Paragraphs (b)(4) and (7).
----------------------------------------------------------------------------------------------------------------
Traceability and fraud prevention are essential in complex organic
supply chains. Because protecting and verifying organic integrity is a
responsibility shared by many participants in the organic industry,
this rulemaking requires certified operations and certifying agents to
incorporate supply chain traceability and organic fraud prevention into
their practices. These actions will strengthen organic integrity and
reinforce trust in the USDA organic label.
Certified organic operations must:
Maintain records of their activities that span the time of
purchase or acquisition, through production, to sale or transport;
Maintain records that trace back to the last certified
operations in their supply chain;
Maintain audit trail documentation to facilitate supply
chain traceability, including identification of agricultural products
as organic on audit trail documents; and
Describe in their organic system plan the monitoring
practices and procedures used to prevent organic fraud and verify
suppliers and organic product status.
Certifying agents must:
Conduct risk-based supply chain traceability audits of
products they certify to verify compliance;
Maintain procedures for identifying high-risk operations
and agricultural products, conducting risk-based supply chain audits,
and reporting credible evidence of organic fraud to the USDA; and
Share information with other certifying agents to conduct
investigations, conduct supply chain traceability audits, and verify
compliance of organic products.
These requirements may affect certified organic operations,
certifying agents, and operations applying for organic certification.
Organic stakeholders should carefully examine the regulatory text and
policy discussion below.
Background
Because organic products are credence goods, the organic system
relies upon on trust between entities in organic supply chains.\55\
Therefore, traceability and verification of organic products are
essential to the function of a healthy organic market. This is
especially true of modern organic supply chains, which have grown
longer and more complex. Organic products and ingredients are often
handled by dozens of operations, including uncertified entities, on
their way to the consumer. A robust system of traceability and fraud
prevention can help reduce the risks of complex supply chains and
minimize fraud.
---------------------------------------------------------------------------
\55\ A credence good is something with value or qualities that
cannot be easily determined by the consumer before, or even after,
purchase.
---------------------------------------------------------------------------
The length and complexity of modern supply chains present many
risks to organic integrity. Activities that can compromise organic
integrity and void the use of the USDA organic label include physical
risks such as contact with substances prohibited in organic production
(e.g., pesticides, fumigants, or cleaning agents) and mixing or
commingling of organic and nonorganic products. Integrity can also be
compromised if a nonorganic product is mistakenly labeled or identified
as organic, or if poor recordkeeping cannot demonstrate that a product
was produced on a certified farm and handled according to the organic
regulations. Additionally, fraud can occur through falsification of
records and labeling to claim that a nonorganic product is certified
organic. Breach of integrity can occur at any point in a supply chain,
from production to final sale. In addition, the prevalence in organic
supply chains of uncertified operations, who do not have direct USDA or
certifying agent oversight, increases the chance that loss of integrity
may occur and/or go unreported.
Organic products therefore require additional care to verify
organic status and ensure that products bought and sold are genuinely
organic and have not been compromised. Because full visibility across
an entire supply chain is difficult, this rule focuses on using
critical information at control points where risk is highest to verify
chain of custody and confirm organic integrity. This is primarily done
by building a record of product transaction and movement that
demonstrates proper handling and maintenance of integrity. Without a
verified transaction record, operations (and by extension, consumers)
don't have a full picture of a product's history, and breaches of
integrity can go unnoticed, allowing compromised product to continue
along a supply chain to the consumer.
The current USDA organic regulations require general recordkeeping
and verification of organic integrity, but the requirements are not
specific and lack key types of information and practices that are
necessary to prove the integrity of products from long, complex supply
chains. This lack of recordkeeping information often leads to
incomplete audit trails, and operations and
[[Page 3602]]
certifying agents are often unable to verify product origin or organic
integrity. The specific recordkeeping, auditing, and fraud prevention
procedures in this rule will augment existing practice to ensure more
complete visibility into organic supply chains. This visibility will
allow operations and certifying agents to complete more rigorous
verification of organic products and identify and stop loss of organic
integrity before it moves further into organic supply chains.
All successful systems of traceability include three common
elements: (1) traceability within a single operation; (2) traceability
one step forward and one step back from an operation in a supply chain;
and (3) bidirectional traceability along a supply chain by a third
party. This rulemaking supports traceability by clarifying who is
responsible for each element: certified organic operations are
responsible for traceability within their operation, back to their
suppliers, and forward to their customers; certifying agents are
responsible for verifying and tracing products along a supply chain and
assessing a certified operation's system of traceability.
Fraud is also a significant risk to organic integrity; this
rulemaking therefore focuses effort on its prevention. To clarify what
this means, Sec. 205.2 of the organic regulations includes a
definition of organic fraud: deceptive representation, sale, or
labeling of nonorganic products as ``100 percent organic,''
``organic,'' or ``made with organic (specified ingredients or food
group(s)).'' This broad definition helps clarify portions of this
rulemaking's policy (e.g., Sec. Sec. 205.201(a)(3) and 205.504(b)(7)),
but is not intended to be used as a mechanism or criterion for
enforcement.
Certified Operations
Recordkeeping
Section 205.103 of the organic regulations describes the
recordkeeping responsibilities of certified operations. Records are
used by operations, certifying agents, the USDA, and others to verify
the compliance of organic operations and products. Clear and auditable
records also support traceability. This rulemaking clarifies
recordkeeping requirements to support the traceability of organic
products both within and between operations.
General Recordkeeping Requirements
Section 205.103(b)(2) specifies that a certified operation's
records must describe all activities and transactions of the operation.
This includes physical and financial possession, production, handling,
title, and contractual oversight responsibilities of the organic
products and ingredients the operation produces or handles. Such
records must span the time of purchase or acquisition, through
production, to sale or transport. This requirement supports
``internal'' traceability, or the ability to track the movement,
handling, and organic status of products within a single operation.
These records are needed to verify the compliance of an organic
operation and its products, and supports on-site inspections by
providing information for mass-balance audits and traceability
verification by certifying agents (see Sec. 205.403(d)(4)-(5)).
Section 205.103(b)(2) also requires that an operation's records
must be sufficient to trace products back through a supply chain to the
last certified operation. Keeping ``external'' records back to the last
certified operation is needed to verify the source of organic products.
Note that records must reach back to the last certified operation.
Operations receiving organic products from uncertified suppliers (e.g.,
an exempt wholesaler) must keep records demonstrating how the
uncertified operation maintained organic product integrity. This may
require keeping records from several uncertified operations in
sequence; in all cases the records must show an audit trail back to the
last certified operation. Operations can demonstrate an audit trail by
using various types of documentation that are typically used during
sale, purchase, and transfer, such as receipts, invoices, shipping or
receiving manifests, shipping logs, bills of lading, or transaction
certificates. The organic industry creates and transfers this
documentation (almost always electronically) in the usual course of
business, and sales contracts often list this documentation as a
condition of the sale. Typically, handling entities along a supply
chain (such as a transporter, broker, or storage facility) will send
electronic documentation directly to the buyer either before or at
receipt of a product. A buyer may also obtain additional documents or
records directly from the certified operation that sold the product.
Maintaining records back to the last certified operation will
support supplier verification and fraud prevention plans (Sec.
205.201(a)(3)). Such records will also ensure certifying agents have
the information they need to verify the compliance of products during
on-site inspections (Sec. 205.403(d)(5)) and during supply chain
traceability audits (Sec. 205.501(a)(21)).
Section 205.103(b)(2) describes a certified operation's minimum
recordkeeping requirements. Certified operations may need to keep
additional records beyond the scope of Sec. 205.103(b)(2) to comply
with other portions of the organic regulations and the Act. For
example, to comply with Sec. 205.236, Origin of livestock, livestock
operations must maintain records demonstrating that animals were
organically managed from the last third of gestation, which may include
place and date of birth. This may require records that trace purchased
animals back to the operation where the animal was born to prove origin
and organic management (i.e., the records must trace beyond the last
certified operation to prove compliance).
Audit Trail Documentation
Certified operations must keep audit trail documentation for all
organic products they produce or handle. Audit trail documents are
records used to determine the source, transfer of ownership, and
transportation of organic products (see definition of audit trail in
Sec. 205.2). For the purpose of audit trail documentation, the
``source'' of organic products is the certified operation that supplied
the product to the operation. Examples of audit trail documentation may
include but are not limited to receipts, invoices, shipping or
receiving manifests, shipping logs, bills of lading, and transaction
certificates. Audit trails must document the history of organic
products back to the last certified operation (per Sec.
205.103(b)(2)).
Audit trail documentation must identify organic products as ``100%
organic,'' ``organic,'' or ``made with organic (specified ingredients
or food group(s)),'' as appropriate. Operations may use abbreviations
or acronyms to identify products, provided that the abbreviations or
acronyms are easily understood. Certified operations should consider
describing use of any abbreviations or acronyms in their OSP; this will
facilitate on-site inspections and record audits by certifying agents,
and help ensure that records are ``readily understood and audited''
(Sec. 205.103(b)(2)).
Explicit identification of products as organic is required for
audit trail records (i.e., ``transaction'' or ``external'' records).
``Internal'' records do not need to provide explicit organic
identification (e.g., ``100 percent organic''). However, all systems of
records must be ``in sufficient detail as to be readily understood and
audited'' to meet the requirements of Sec. 205.103(b)(2). This means
that operations must be able to identify products they produce or
[[Page 3603]]
handle as organic, even if records do not explicitly state ``organic.''
For example, an operation may use an inventory management system that
uses lot codes, batch numbers, or other designation system that
indicates organic status. Such designation systems must be clear and
auditable to facilitate on-site inspection and verification of
compliance.
Audit trail documentation that clearly identifies organic products
will support an operation's verification of suppliers and
implementation of fraud prevention plans. They will also allow
certifying agents to verify compliance of suppliers and products during
on-site inspections (Sec. 205.403(d)(5)) and supply chain traceability
audits (Sec. 205.501(a)(21)).
Fraud Prevention Plans
Section 205.201(a)(3) requires all certified operations to maintain
and implement practices to verify the organic status of suppliers and
products in their supply chain and to prevent organic fraud. Often
called ``fraud prevention plans,'' these procedures and practices
support early detection, prevention, and mitigation of fraud, and
strengthen integrity across organic supply chains.
A fraud prevention plan must be included in an operation's OSP.
This allows certifying agents to assess the effectiveness of certified
operations' anti-fraud practices and compliance with the organic
regulations. A fraud prevention plan must be appropriate to the
activities, scope, and complexity of the operation, and should be
sufficient to address the verification and anti-fraud needs of the
particular operation. This means not all fraud prevention plans will be
alike. For example, a producer who does not handle another operation's
organic products may develop a simple fraud prevention that verifies
purchased inputs comply with organic regulation. In contrast, a
processor that receives many organic ingredients from numerous
suppliers should develop a fraud prevention plan that describes
practices to detect, prevent, minimize, and mitigate organic fraud
risks in lengthy supply chains.
Because fraud prevention plans must verify the organic status of
suppliers and organic products, they should include a description of
how an operation verifies organic status back to the last certified
operation in the supply chain. This supports recordkeeping and audit
trail requirements at Sec. 205.103(b)(2) and (3) and allows certifying
agents to verify compliance during on-site inspections and supply chain
traceability audits.
As a best practice, a robust plan for supply chain oversight and
organic fraud prevention may include:
A map or inventory of the operation's supply chain that
identifies suppliers;
Identification of critical control points in the supply
chain where organic fraud or loss of organic status are most likely to
occur;
A vulnerability assessment to identify weaknesses in the
operation's practices and supply chain;
Practices for verifying the organic status of any product
they acquire and/or use;
A process to verify suppliers and minimize supplier risk
to organic integrity;
Mitigation measures to correct vulnerabilities and
minimize risks;
Monitoring practices and verification tools to assess the
effectiveness of mitigation measures; and
A process for reporting suspected organic fraud to
certifying agents and the NOP.
Certifying Agents
Supply Chain Traceability Audits
Traceability of organic products across multiple operations in a
supply chain is an effective strategy to detect fraud, conduct
investigations, and verify compliance of products and operations.
Therefore, Sec. 205.501(a)(21) of the organic regulations requires
certifying agents to conduct risk-based supply chain traceability
audits of products and operations they certify.
What is a supply chain traceability audit?
A supply chain traceability audit (SCT audit) is the process of
identifying and tracking the movement, sale, custody, handling, and
organic status of a product along a supply chain. The objective of a
supply chain audit is to verify a product's compliance with the organic
regulations. SCT audits can be used to investigate evidence or
suspicion of fraud, verify compliance of high-risk products,
investigate patterns of activity, trace the source of products
contaminated with prohibited substances, surveil high-risk supply
chains, or for other compliance-related reasons.
Criteria and Procedures for Supply Chain Traceability Audits
Certifying agents must maintain criteria and procedures that
describe the use of risk-based SCT audits. This must include (1)
criteria used to identify high-risk operations and products for SCT
audits, and (2) procedures used to conduct SCT audits. SCT audits
conducted by the certifying agent must be based on these criteria and
procedures. To ensure that AMS is made aware of organic fraud when it
is discovered, certifying agents must also maintain procedures to
report credible evidence of fraud to the USDA. Copies of these
procedures and criteria should be kept by the certifying agent to
demonstrate its expertise and ability (Sec. 205.504(b)(7)); this
allows AMS to review and evaluate use of SCT audits during regular
accreditation audits.
SCT audits should be initiated by events or criteria chosen and
described by the certifying agent. For example, SCT audits may be
initiated to investigate evidence or suspicion of fraud, verify
compliance of an organic product, investigate patterns of activity,
trace the source of positive residue testing, surveil high-risk supply
chains or products, or to address any other compliance-related risk,
activity, or need identified by the certifying agent.
Use of Supply Chain Traceability Audits
The length, extent, and frequency of an SCT audit may vary and
should be determined by the objective of the audit (i.e., an SCT audit
ends when its objective is achieved). SCT audits may trace back to the
origin (production site) of a product, or until a noncompliance is
verified or cleared. For example, if a certifying agent's objective is
to verify the production origin of an ingredient, the SCT audit should
trace the ingredient through the entire supply chain to the farm or
ranch where the ingredient was produced. In contrast, if an SCT audit
is initiated to determine the source of a positive residue test, the
SCT audit may conclude when the source of the contamination is
identified (which may only be several ``steps'' back in the supply
chain).
The number, frequency, type, and extent of SCT audits should be
appropriate to the number, scope, and complexity of operations the
certifying agent certifies.
Information Sharing
To facilitate supply chain traceability audits, investigations, and
verification of organic status, AMS requires certifying agents share
compliance- and enforcement-related information with each other. Per
Sec. 205.501(a)(10), certifying agents must maintain strict
confidentiality with respect to its clients and not disclose business-
related information to third parties that are not involved in the
regulation or certification of operations, as required by the OFPA (7
U.S.C. 6515(f)).
[[Page 3604]]
Certifying agents must exchange information that is credibly needed
to determine an operation's compliance with the USDA organic
regulations, including assessment of applications for certification,
noncompliance investigations, suspension/revocation of certification,
supply chain traceability audits, verification of audit trail
documentation, and verification of the organic status of products
represented as organic (see Sec. 205.501(a)(10)(ii) and (a)(13)).
Section 205.501(a)(10)(iii) requires that compliance-related
proprietary business information exchanged between certifying agents
must remain proprietary, and that all certifying agents involved in the
exchange must preserve the confidentiality of the information during
and after the exchange. Certifying agents must maintain copies of the
procedures used to exchange information and maintain confidentiality of
information (Sec. 205.504(b)(4)). These requirements will ensure
confidentiality of information during compliance activities that span
multiple certified operations and certifying agents, such as supply
chain traceability audits and investigations.
Conclusion
The traceability and fraud prevention requirements discussed above
are part of a holistic organic control system that enhances the
oversight, enforcement, and integrity of organic products. Many other
sections of this rule support and facilitate traceability and fraud
prevention; stakeholders should read the following sections to better
understand how to implement this rule's traceability and fraud
prevention requirements:
Section III. A: Applicability and Exemptions from
Certification;
Section III. B: Imports to the United States;
Section III. C: Labeling of Nonretail Containers;
Section III. D: On-Site Inspections;
Section III. G: Paperwork Submissions to the
Administrator; and
Section III. H: Personnel Training and Qualifications.
Summary of Changes to the Final Rule
AMS made several changes to the proposed regulatory text when
writing this final rule. Changes to the proposed rule are discussed
below and are followed by responses to specific themes from public
comment:
AMS revised the definition of organic fraud to remove
``intentional'' and ``for illicit economic gain.'' ``Intentional'' is
not needed because this defined term is not used for enforcement; it is
used to help explain the objective of this rulemaking and many of its
provisions. AMS removed the phrase ``for illicit economic gain''
because not all fraud results in or is motivated by economic gain. The
final defined term is more flexible than proposed and encompasses a
broader range of potential fraud types.
AMS added the new term supply chain traceability audit. A
similar definition was used in the preamble of the proposed rule to
help stakeholders understand the rule and its objectives. AMS added
this new term to more formally clarify its purpose and objective, and
to more clearly define the expectations of traceability audits by
certifying agents (see Sec. 205.501(a)(21)).
AMS removed the requirement in Sec. 205.103(b)(2) to
identify specific labeling categories (e.g., ``100% organic'') in
records. Removing this requirement avoids the potential for additional
recordkeeping burden that some comments noted the proposed rule could
unintentionally create, and gives operations more flexibility in how
they keep records.
AMS specified the scope of recordkeeping in Sec.
205.103(b)(2) to more clearly indicate the types of records that
operations should keep, and what timeframe they should span. This
presents clear expectations that support traceability and verification
of organic products, but also puts clear boundaries on the scope of
records to control burden and cost to operations.
AMS added a requirement to identify organic status (e.g.,
``100 organic'') in audit trail documentation at Sec. 205.103(b)(3)
and added ``or similar terms, as applicable.'' The proposed rule had
included this at (b)(2) as a general requirement for all records; the
rulemaking only requires such identification on audit trail
documentation (see audit trail at Sec. 205.2). This change will avoid
the potential for additional recordkeeping burden that some comments
noted the proposed rule could unintentionally create, but still ensures
that this critical information is available to trace organic products
between operations and to verify integrity.
AMS revised Sec. 205.201(a)(3) to clarify that fraud
prevention plans must be appropriate to an operation's activities,
scope, and complexity. This change responds to public comments that
were concerned about disproportionate burden (i.e., greater cost) on
small operations, especially small producers. This change may allow
operations with less complex activities and/or a more limited scope to
write and implement simpler fraud prevention plans.
AMS removed ``back to the source'' in Sec. 205.501(a)(21)
because public comments indicated this phrase was unclear and that the
length of supply chain traceability audits varies. The new term supply
chain traceability audit states the objective of such an audit--to
verify an organic product's compliance--and therefore serves to clarify
that the length and extent of supply chain traceability audits will
vary depending on the objective and findings of the process.
In Sec. 205.501(a)(15), AMS added references to Sec.
205.504(b)(7) and Sec. 205.501(a)(13). This more clearly specifies
that certifying agents are to use their own criteria for identifying
high-risk operations and conducting supply chain traceability audits,
and that they are to share information with other certifying agents to
conduct audits and verify compliance.
AMS added the term supply chain traceability audit to
Sec. 205.504(b)(7) to more clearly state the need for and objectives
of the risk criteria and procedures in this paragraph.
AMS did not change Sec. 205.501(a)(10), Sec.
205.501(a)(13), or Sec. 205.504(b)(4).
Summary of Public Comment
The majority of public comments supported AMS's proposed revisions
to recordkeeping requirements for certified operations. Many comments
noted that including a description of full organic status (e.g., ``100
percent organic . . .'') on all records may be burdensome and suggested
that AMS allow the use of abbreviations, acronyms, or shorthand when
identifying organic ingredients. Other comments asked for additional
clarity about the definition of audit trail and what types of
documentation are needed to meet the requirements of Sec.
205.103(b)(3). Finally, a few comments claimed that keeping full
organic identification on all records may be burdensome and asked that
AMS not finalize this requirement in cases where inventory management
systems can indicate organic status via lot codes or batch numbers.
Comments largely supported AMS's proposed use of fraud prevention
plans by certified operations. However, many comments requested
additional specificity about what should be included in fraud
prevention plans. Other comments noted that fraud prevention plans may
be difficult for very small businesses to write and implement and
recommended AMS develop templates, examples, and
[[Page 3605]]
generic forms for small operations to use.
AMS received many comments about the proposed definition of organic
fraud. Some comments requested that AMS remove ``illicit'' and from the
definition, arguing that fraud may not always constitute illegal
activity. Others suggested removing ``intentional,'' citing the
difficulty of proving intent. Several comments also suggested AMS
harmonize the proposed definition with existing definitions from other
organizations such as GFSI, the EU, ISO, and FDA.
Public comment generally supported the proposed use of supply chain
traceability audits. Many comments asked AMS to clarify the
requirements of and extent of supply chain traceability audits,
particularly how far back an audit should trace a product. Others
suggested adding a definition of supply chain audit or traceability.
Opinions varied widely on the number of supply chain traceability
audits to be conducted, with many comments suggesting a minimum
percentage of operations or a risk-based selection. Many comments also
discussed the administrative impacts of supply chain traceability
audits: a few comments claimed some certifying agents may not have the
capacity of expertise to conduct audits; others highlighted challenges
with information sharing and coordination among certifying agents. A
few comments expressed a desire for AMS to coordinate supply chain
traceability audits.
Finally, some comments suggested alternatives to AMS's proposed
traceability and fraud prevention strategy, including trusted trader
programs, increased surveillance by AMS, and exemptions for businesses
that already participate in other traceability programs.
Responses to Public Comment
Definition of Organic Fraud
(Comment) Comments asked AMS to use ``willful'' instead of
``intentional'' in the definition of organic fraud.
(Response) The rulemaking does not use ``willful'' or
``intentional'' in the final definition. This allows for a more
flexible definition that encompasses a broader range of potential fraud
types. ``Willful'' and ``intentional'' are not needed because organic
fraud is not used for enforcement; it is used to help explain the
objective of this final rule and many of its provisions.
(Comment) Comments asked AMS to remove ``for illicit economic
gain,'' claiming that not all fraud is illicit or economic in nature.
Comments also asked AMS to harmonize the definition of organic fraud
with terms used by other standards organizations such as ISO, GFSI,
FDA, and the EU.
(Response) Many of the organizations mentioned in public comment
focus on ``economic gain'' as a key factor in defining fraud. The final
rule does not include the phrase ``for illicit economic gain'' because
not all fraud results in or is motivated by economic gain. This
definition is more flexible and encompasses a broader range of
potential fraud types than terms used by other standards organizations.
Recordkeeping
(Comment) Comments requested that the regulatory text explicitly
allow use of abbreviations for indicating organic status on records.
(Response) AMS amended Sec. 205.103(b)(3) to allow use of similar
terms such as acronyms or abbreviations for identifying organic status
on audit trail documentation. Abbreviations or acronyms should be
easily understood to meet the requirement that all records ``be readily
understood and audited'' (Sec. 205.103(b)(2).
(Comment) Comments are concerned that the requirement to identify
organic products as such on all records will add an unnecessary
recordkeeping burden that duplicates existing recordkeeping or
inventory management systems.
(Response) The requirement to identify products as ``100%
organic,'' ``organic,'' or ``made with organic (specified ingredients
or food group(s)),'' has been revised to apply only to audit trail
documentation. Other records should also indicate organic status to
meet the requirement that all records ``be readily understood and
audited'' (Sec. 205.103(b)(2)). However, operations may use a system
of recordkeeping or inventory management system that uses lot codes,
batch numbers, or other designation system that indicates organic
status, as long as such designations are clear and auditable.
(Comment) Commenters requested clarity on the use of ``internal''
vs. ``external'' records for purposes of supply chain traceability.
(Response) The requirements of Sec. 205.103(b)(2) applies to
broadly all records maintained by an operation, including both
``external'' and ``internal'' records. Section 205.103(b)(3) applies
only to audit trail documentation, i.e., ``external'' or
``transaction'' records.
Fraud Prevention Plans
(Comment) Comments asked AMS for more detail about the scope of
fraud prevention plans and what elements should be included in them.
(Response) The preamble of this rulemaking describes best practices
that operations may use to develop and implement fraud prevention
plans. The final regulatory text does not include specific practices or
requirements; this provides maximum flexibility for operations and
certifying agents to determine what is appropriate for individual
operations. A fraud prevention plan must describe the operation's
monitoring practices and procedures they use to verify suppliers,
verify products received, and prevent organic fraud. The plan must be
appropriately tailored to the activities, scope, and complexity of the
operation.
(Comment) Comments stated that the fraud prevention plan
requirement would cause a disproportionate burden (i.e., greater cost)
on small operations, especially small producers.
(Response) The final rule regulatory text and the preamble explain
that an operation's fraud prevention plan must be appropriate to the
operation's complexity, scope, and activities. This may allow
operations with less complex activities and/or a more limited scope to
write and implement simpler fraud prevention plans.
Supply Chain Traceability Audits
(Comment) Comments requested greater clarity about the proposed
rule's use of the terms traceback, mass-balance, and supply chain
audits.
(Response) Verification of traceability back to the last certified
operation and mass-balance audits are routine practice during on-site
inspection of certified operations. Section 205.403(d)(4)-(5) describe
the use of these mechanisms. In contrast, supply chain traceability
audits are triggered by criteria defined by the certifying agent. A
supply chain traceability audit generally encompasses at least a
portion of a supply chain and is conducted to verify the compliance of
a product with the organic regulations and the Act.
``Traceback'' is a term commonly used in the organic industry.
However, this term was used inconsistently in public comment and there
was no clear preference for how to define it. Therefore, AMS has
avoided using this term in the final rule. AMS defines and uses the
term supply chain traceability audit to describe certain activities,
and the regulatory text clarifies the extent of other traceability
requirements (e.g., Sec. 205.103(b)(2)) requires that an operation's
records must be traceable back to the last certified operation).
(Comment) Comments asked AMS for clarification about the phrase
``back to
[[Page 3606]]
the source'' in the proposed rule's revision to Sec. 205.501(a)(21).
(Response) This phrase is not used in the SOE final rule. The
length and extent of supply chain traceability audits will vary
depending on the objective and findings of the process. Some supply
chain traceability audits may extend back to the site of production,
while others may only go a few steps back in a supply chain; the audit
ends when its objective (e.g., verification of compliance) is achieved.
(Comment) Many comments discussed the administrative impacts of
supply chain traceability audits: a few comments claimed some
certifying agents may not have the capacity or expertise to conduct
audits; others highlighted challenges with information sharing and
coordination among certifying agents.
(Response) Supply chain audits are an important tool for oversight
in the organic market. AMS has added flexibility for certifying agents
to define the conditions for when supply chain audits are necessary.
Further, there are other requirements in this rule that will support
supply chain audits: certification of additional handlers in supply
chains, mandatory NOP Import Certificates, identifying organic products
on audit trail documentation, and information sharing among certifying
agents.
Q. Technical Corrections
The table below includes the regulatory text related to this
section of the rule. A discussion of the policy follows.
----------------------------------------------------------------------------------------------------------------
Section Final regulatory text
----------------------------------------------------------------------------------------------------------------
205.301............................................. Product composition.
Paragraphs (f)(2) and (3).
205.400............................................. General requirements for certification.
Paragraph (b).
205.401............................................. Application for certification.
Paragraph (a).
----------------------------------------------------------------------------------------------------------------
AMS has revised Sec. 205.301 to correct a technical error in the
description of the prohibition of ionizing radiation and sewage sludge.
A previous technical correction (80 FR 6429) contained an error in the
language used to describe the prohibition on ionizing radiation and
sewage sludge. The terms ``produced'' and ``processed'' were
erroneously used to describe the use of ionizing radiation and sewage
sludge, respectively, in the current regulatory text. This action
corrects the language at paragraphs (f)(2) and (f)(3) to clarify that
all products labeled as ``100% organic'' or ``organic'' and all
ingredients identified as organic in the ingredient statement of any
product must not be processed using ionizing radiation or produced
using sewage sludge.
AMS also revised Sec. Sec. 205.400(b) and 205.401(a) to correct
the references to organic system plans (Sec. 205.201), which was
incorrectly cited in the previous organic regulation.
R. Additional Amendments Considered But Not Included in This Rule
The Strengthening Organic Enforcement proposed rule asked the
public for feedback on two additional subjects: packaged product
labeling and expiration of certification. AMS did not propose amending
the portions of the USDA organic regulations that relate to these
subjects. The specific questions asked in the proposed rule were meant
to elicit feedback from stakeholders about the two topics for possible
future consideration. AMS has summarized the public comment received
below.
Summary of Public Comments: Packaged Product Labeling
Processed and/or packaged food products are often manufactured or
packaged by one business and labeled for sale/distribution by another
business. This type of relationship, sometimes called contract
manufacturing and private labeling, is common in both the organic and
nonorganic markets. This rulemaking does not change how such products
are labeled for retail sale. However, in the proposed rule AMS asked
for public comment on private-labeled product labeling, prompting
feedback about preferred terminology and which businesses should be
listed on labels.
Overall, there was no consensus among comments about issues of
organic private-labeled products, including who should be certified,
what terminology to use, and which operations and certifying agents
should be listed on labels. Because private label and brand/contract
relationships are on a contract-by-contract basis to protect
proprietary information, some comments argued that creating a single
set of rules to govern these relationships may change how private
labels operate in the future. The comments received reflect this, and
include a variety of opinions based on a commenter's position in the
organic supply chain. Responses from public comments are summarized
below along with background information to provide context and help
explain comments.
Preferred Terminology To Describe Private Label Products and Parties
Throughout the supply chain there are many steps where brand
companies can leverage contracted companies to produce items for sale
under the brand. After raw material sourcing, there are opportunities
for a company to contract out steps such as manufacturing, packaging,
and distribution.
Because of the variable use and function of contracted
organizations in organic production, it is important to use common
terminology to refer to organic operations and their certifying agents.
Many comments requested consistent regulatory terminology to categorize
these operations in relation to the organic supply chain, but there was
no clear preference for certain terminology. Terms and relationships
between contract food producers and brand owners are highly variable in
the organic industry, but comments highlighted opportunities to align
with commonly used and understood terminology. Comments suggested terms
that could be consistently used to prevent confusion about which
companies should appear on product labels, including contract
manufacturer or ``co-man,'' contract packer or ``co-packer,'' external
distributors, Private label entities/owners, and brand owners.''
Listing Contract Manufacturers on Labels
The SOE proposed rule asked the public if private label products or
brands that use contract manufacturers should list those manufacturers
on the product label. The majority of
[[Page 3607]]
comments supported optionally listing contract manufacturers. Those who
did not agree with this opinion requested that products should list the
brand name and the contract manufacturer. Currently, it is mandatory
for some product categories such as meat, poultry, and dairy to have an
Establishment Number that can trace back to the facility where it was
processed. For other products that are not currently mandated to
provide this information, identity of the contract manufacturer is
often considered proprietary information, and in some instances, there
could be multiple contract manufacturers operating at the direction of
one brand owner.
Commenters were concerned that listing contract manufacturers would
result in a loss of competitiveness; mandatory listings would expose
proprietary information and undercut the success of these
relationships. For brand owners that use several contracted companies,
their products would need multiple versions of labels and traceability
would become more complex. Comments also questioned the purpose of
listing contract manufacturers on labels, some arguing that it would
not improve organic integrity or traceability, especially because
certifying agents are already listed on products. Some comments
discussed that certifying agent information is enough to trace the
product back to the manufacturer, making the listing of contract
manufacturers unnecessary.
Listing Certified Operations on Private-Label Packaged Products
The organic regulations currently require listing a certified
operation on branded products. The proposed rule asked commenters which
certified operations should be added to the packaging of private label
products, in the interest of furthering traceability. Many comments
recommend the brand owner/distributor and their certifying agent be
listed on retail labels, with some comments stating no preference. Some
commenters stated listing the brand owner would require companies to
impose traceability standards on the contract companies they use.
Some individuals recommend listing the last certified operation in
the supply chain, to improve clarity and traceability, while others
contradict this point by discussing the confidentiality concerns of
listing the contract manufacturer. Commenters noted that distributors
may be the best certified operation to list because they are often the
last step in the organic handling process and can trace a product back
through manufacturing and sourcing. Conversely, others noted that not
all companies handle distribution internally (choosing instead to use a
contracted company).
Other comments claim that listing co-packers on labels is not
necessary if brand owners are certified; however, some comments
indicated it is unclear if brand owners need to be certified. Finally,
a few comments recommended AMS assess the labeling requirements'
alignment with the FDA.
Listing Certifying Agents on Private-Label Packaged Products
Multiple certifying agents are typically involved in the production
and processing of organic products (from raw materials to material
refining, manufacturing, and distribution); each assures that an
individual process or step meets the organic standard. In the case of
brand companies with contract manufacturers, comments did not clearly
agree on which certifying agent (that of the brand company or that of
the contract manufacturer) to list on the product label. Many
individuals supported listing the certifying agent of the brand owner/
distributor, but the brand owner may not be certified. For example,
some comments pointed out that retailers are often the brand owners/
distributors of organic products, but they are often exempt from
organic certification. In this case, some commenters recommended
listing the contract manufacturer's certifying agent.
Others recommended listing the certifying agent that certified that
last handling operation in the supply chain, arguing that this would
aid traceability. However, due to the variety of different
manufacturing/branding relationships, this could be either the
certifying agent of the brand owner or the manufacturer.
Matching the Certifying Agent to the Listed Operation
Organic product labels currently must include both a certifying
agent and an operation. Commenters generally agreed that if a specific
operation is listed (i.e., contract manufacturer), that the certifying
agent on the label should match. Comments explained that matching the
two organizations would make it easier to contact a responsible party
or file a complaint. Commenters on the proposed rule also agree that a
label that lists the brand name next to the contract manufacturer's
certifying agent would be confusing. However, given that some brand
owners may not be certified, commenters noted this mismatch may already
be happening in the marketplace.
Summary of Public Comments: Expiration of Certification
Under current USDA regulation, organic certification continues
until surrendered, revoked, or suspended (Sec. 205.404(c)). Certified
operations must undergo an annual recertification process (Sec.
205.406), but certification does not expire after one year. While
developing the SOE proposed rule, AMS considered, but did not propose,
adding a mechanism where certification would expire if an operation did
not complete the annual recertification process timely.
The proposed rule included specific questions about expiration of
certification and asked the public to comment on the subject. At this
time, AMS has chosen not to pursue a policy of expiration of
certification. The following is a summary of public comments received
in response to the questions AMS asked the public in the SOE proposed
rule.
Potential Improvements to Organic Integrity
The SOE proposed rule asked the public how annual expiration of
certification could improve organic integrity. Some comments suggested
that expiration could be an incentive for operations to punctually
renew. Some comments adverted that it may help address the common
incident of adverse action circumstances by encouraging operations to
update their (organic system plan) OSP and pay fees on time. Commenters
expressed if operations understood the annual expiration date,
operations with unresolved noncompliances would risk losing
certification via expiration. Those who did not agree indicated that
current regulation specifies that operations are certified unless
suspended or revoked. The annual expiration would disrupt this current
system of recertification.
Limitations of Expiration of Certification
The proposed rule requested the public to comment on what the
limitations of requiring expiration of certification may be. Commenters
forecast potential negative effects such as marketplace disruption,
communication burdens and administrative burdens. Commentators
mentioned that expiration may negatively impact the status of inventory
of operations who allowed their certification to expire. One remark
stated that the requirement could place additional administrative
burden on the certifying agent: expiration of certification would
result in the
[[Page 3608]]
certifying agent having to update systems, train staff, educate
operations on the policy change, and frequently remind operations of
the upcoming expiration date.
Minimum Requirement for Renewing Certification
The SOE proposed rule asked for comments on what the minimum
requirement for renewing certification should be. Many commenters
recommended the following process: submit required paperwork, pay
annual fee, and confirm interest in renewing. It was also recommended
that on-site inspection should not be a requirement for
recertification.
Operations With Adverse Actions
The proposed rule asked the public if an operation with adverse
actions that are in the appeals process could renew certification.
Comments expressed contrasting views on this matter, some finding that
operations should be able to renew, and some communicating that those
operations should not have the flexibility to renew their
certification. Some comments pointed out that the appeal process for a
proposed suspension is lengthy, and that not allowing an operation with
pending adverse actions to renew certification would promptly remove
them from the system and prevent potentially noncompliant product from
entering the market. Some individuals stated that depending on the
severity of the pending adverse action, AMS should administer a system
that would not block an operation from renewing its certification due
to minor non-compliances. Others asked that if an operation has a
record of failing to address certain adverse actions, then the system
should prevent them from renewing their certification.
Grace Period for Renewing Certification
The SOE proposed rule asked commenters if a grace period would be
appropriate for operations that failed to renew by the expiration date.
Commenters were also asked what the length of the grace period should
be. Overall, comments proffered a 30- or 90-day grace period or
mentioned that the current system already has a grace period built into
the timeline. Some individuals suggested that a grace period would
improve assurance among farmers.
Process of Regaining Certification
The SOE proposed rule asked the public to express their opinion on
what process should exist for an operation to regain organic
certification should they allow it to expire. Many individuals
communicated that the process of regaining an expired certification
should be different than regaining a suspended/revoked certification.
They stated the process should also be dependent on the presence and
severity of adverse actions and there should be leniency within the
duration. Some commentators proposed that operations with expired
certification should apply as a new applicant, unless applying within
the grace period. However, a commenter identified a potential loophole
in tracking pending adverse actions of operations with expired
certification; they recommended a system that would keep a record of
operations with any pending adverse actions.
Notification of Upcoming Expiration of Certification
The SOE proposed rule asked the public if certified agents should
notify certified operations of their upcoming expiration of
certification. Commenters clarified that notifying certified operations
is currently a widespread practice. Moreover, a commenter suggested
that notification should be sent from the Organic Integrity Database,
which may normalize the process.
IV. Regulatory Analyses
A. Summary of Economic Analyses
Executive Orders 12866 and 13563 control regulatory review.\56\
Executive Orders 12866 and 13563 direct agencies to assess all costs
and benefits of available regulatory alternatives, and, if regulation
is necessary, to select regulatory approaches that maximize net
benefits (including potential economic, environmental, public health
and safety effects, distributive impacts, and equity). Executive Order
13563 emphasizes the importance of quantifying both costs and benefits,
reducing costs, harmonizing rules, and promoting flexibility.
---------------------------------------------------------------------------
\56\ Executive Order 12866, Regulatory Planning and Review,
September 30, 1993: https://www.archives.gov/files/federal-register/executive-orders/pdf/12866.pdf.
Executive Order 13563, Improving Regulation and Regulatory
Review: https://www.federalregister.gov/documents/2011/01/21/2011-1385/improving-regulation-and-regulatory-review.
---------------------------------------------------------------------------
The Regulatory Flexibility Act (5 U.S.C. 601-612) 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.
This rulemaking amends amending several portions of the USDA
organic regulations (7 CFR part 205) to strengthen oversight and
enforcement of the production, handling, sale, and marketing of organic
agricultural products in the United States. The amendments address gaps
in the organic standards to deter organic fraud and create a level
playing field for farms and businesses. This reinforces the value of
the organic label by assuring consumers and stakeholders that organic
products meet a robust and consistent standard.
The revised organic standards in this rule affect: certifying
agents; certified operations (farms, processers, and handlers); and
certain operations that are currently excluded or exempt from organic
certification (e.g., certain brokers, traders, importers, exporters).
The following discussion summarizes the economic analysis AMS
performed to estimate the impacts of this rule. A complete economic
analysis of this rulemaking is available at https://www.regulations.gov/. You can access the economic analysis by searching
for document number AMS-NOP-17-0065.
B. Regulatory Impact Analysis
The costs of this rule are primarily due to new or additional
reporting and recordkeeping (paperwork) activities. In addition, there
is cost for some currently excluded and exempt operations to become
certified to handle organic products. AMS estimated the benefits of
this rule by quantifying the organic fraud that will be prevented by
implementation of the rule. The estimated benefits are expected to
outweigh the estimated costs. Total estimated costs and benefits of the
rule are summarized below.
[[Page 3609]]
Costs and Benefits of Rulemaking Discounted at 3% and 7%
----------------------------------------------------------------------------------------------------------------
Average annual cost \a\ Total cost \b\
---------------------------------------------------------------
Amendments 3% Discount 7% Discount 3% Discount 7% Discount
rate rate rate rate
----------------------------------------------------------------------------------------------------------------
Domestic Certifying Agents
----------------------------------------------------------------------------------------------------------------
Imports to the United States.................... $50,247 $37,534 $753,710 $563,016
Certificates of Org. Operation & Cont. of 22,742 21,892 341,130 328,377
Certification..................................
Personnel Training & Qualifications............. 144,661 108,061 2,169,922 1,620,918
On-Site Inspections............................. 96,402 72,012 1,446,031 1,080,176
Supply Chain Traceability & Organic Fraud 4,089 3,054 61,333 45,815
Prevention.....................................
Mediation....................................... 139 134 2,091 2,013
----------------------------------------------------------------------------------------------------------------
Domestic Excluded Handlers
----------------------------------------------------------------------------------------------------------------
Applicability and Exemptions.................... 8,349,390 6,236,939 125,240,844 93,554,079
Imports to the United States.................... 369,807 276,243 5,547,100 4,143,647
----------------------------------------------------------------------------------------------------------------
Domestic Certified Operations
----------------------------------------------------------------------------------------------------------------
Labeling of Nonretail Containers................ 901,966 673,763 13,529,496 10,106,444
Supply Chain Traceability & Organic Fraud 609,066 454,968 9,135,993 6,824,526
Prevention.....................................
----------------------------------------------------------------------------------------------------------------
Total Costs and Benefits, Discounted Over 15 Years
----------------------------------------------------------------------------------------------------------------
Total Expected Domestic Costs............... 10,548,510 7,884,601 158,227,651 118,269,011
Total Expected Foreign \c\ Costs............ 8,769,681 6,550,892 131,545,210 98,263,398
Total Expected Domestic & Foreign Costs..... 19,318,191 14,435,494 289,772,861 216,532,409
Total Expected Benefit of Rulemaking........ 32,944,811 24,272,099 494,172,179 364,081,491
----------------------------------------------------------------------------------------------------------------
\a\ These are the estimated annual averages of the 15-year Net Present Value domestic costs discounted at 3 and
7 percent.
\b\ These are the estimated total domestic costs for affected industry in Net Present Value of the stream of
future costs, discounted at 3 and 7 percent.
\c\ AMS assumes all foreign costs will pass through to U.S. consumers and therefore includes these costs in the
final rule. See the full Regulatory Impact Analysis for more detail.
Estimation of Benefits
AMS expects that this rule will reduce organic fraud in the U.S.
market. Therefore, AMS quantified the estimated benefits of the
rulemaking as the value of the projected reduction in organic fraud in
the U.S. organic marketplace following implementation. AMS reviewed
economic studies that identify and quantify fraudulent activity in
retail food markets. AMS then used these estimates of fraud as a
benchmark to quantify the benefits of the rulemaking.
Based on analysis of these food fraud studies, AMS estimated that 2
percent of organic products sold in the United States are currently
subject to some form of fraud. This estimate aligns with rates of food
fraud reported in multiple studies. Therefore, AMS estimated the total
value of organic fraud in the United States as 2 percent of the total
annual organic premiums for domestic organic production and organic
imports, or approximately $109 million annually. AMS chose to use
organic premiums (the cost difference between organic and nonorganic
products) to estimate fraud because this more accurately measures the
value lost to fraud than total sales value (i.e., a fraudulent organic
product only loses the value of its organic attributes, not its entire
value as a food product).
AMS expects the changes from this rule will reduce the amount of
organic fraud (estimated at $109 million annually) by half (an
estimated $54 million). However, it is unclear what proportion of this
$54-million fraud reduction translates directly into social welfare
loss. For example, some certified operations and other compliant
entities in organic supply chains may unknowingly experience some
economic gain from fraud elsewhere in the supply chain. Additionally,
AMS cannot accurately predict how fraud reduction efforts would impact
organic prices, and hence premiums. Given this uncertainty about the
true value of social welfare loss, AMS reduced the estimated $54
million fraud reduction by half for an estimated social welfare gain
(benefit) of $27 million in the first year following implementation of
the rule. Estimated over a 15-year period, and accounting for projected
future annual growth rates of the U.S. organic market, annual benefits
from fraud reduction are estimated to reach $57 million in year 2036.
When discounted over the 15-year period, total economic benefits of the
rulemaking range from $364 to $494 million. When averaged, the economic
benefits range from $24.3 to $32.9 million annually.
Estimation of Costs
The costs of this rule are driven primarily by new or additional
reporting and recordkeeping (paperwork) activities. AMS estimated
additional paperwork cost for each provision of the rule by identifying
the affected population (e.g., number of producers affected by a
change), estimating the time for each affected entity to comply with a
new change, and assigning an appropriate labor category and wage rate.
This accounting of new reporting and recordkeeping costs is discussed
in more detail in the Paperwork Reduction Act section of this
rulemaking.
This rule would also require some currently excluded and exempt
operations to become certified to handle organic products. AMS predicts
that these businesses fall within NAICS categories 425 (Wholesale
Electronic Markets and Agents and Brokers) and 4244 (Grocery and
Related Product Merchant Wholesalers). These categories are very broad
and include mostly businesses that do not handle organic products.
Therefore, AMS used participation rates in the organic sector to
estimate that 1,985 domestic businesses would need to become
[[Page 3610]]
certified organic. Using historic knowledge of certification costs, AMS
estimated that each of the affected 1,985 domestic businesses would
spend $2,000 to become certified organic.
AMS also estimated the cost of this rule to foreign entities,
including both paperwork and recordkeeping burden and costs for certain
businesses to obtain certification. AMS assumes that all foreign costs
will be passed along to U.S. consumers. This may create some tendency
to overstate U.S.-borne costs, as competitive pressures will lead some
compliance costs to be absorbed by businesses and other entities as the
cost of doing business.
Alternatives
AMS also considered three alternatives when developing this
rulemaking.
1. Make no change to the organic regulations. This option would not
implement this rulemaking and leave the organic regulation as-is. AMS
did not select this option because it does not address organic fraud or
other issues affecting organic integrity. AMS considers this a costly
alternative because it forgoes the fraud reduction benefits of the
rulemaking. Regulatory inaction would create social costs that increase
over time. AMS believes the rulemaking will mitigate social welfare
losses by approximately half through the use of practical, risk-based
oversight and enforcement.
2. Require NOP Import Certificates for individual imported
shipments of organic product. The rulemaking will allow NOP Import
Certificates to be issued for multiple shipments over a time span to be
determined at the discretion of each certifying agent. In contrast,
this alternative would require the use of NOP Import Certificates for
each physical shipment of organic products imported into the United
States. AMS found this alternative to be inferior to the rulemaking
because it would create greater cost with limited additional benefit.
AMS believes that the rulemaking's option to issue NOP Import
Certificates on a periodic basis is the most practical, effective, and
cost-sensitive means to address fraudulent imported organic products.
3. Require less-stringent data reporting and training requirements
for certifying agents. AMS also considered a less-stringent alternative
to the rulemaking to assesses if this could lower costs while
maintaining the effectiveness of the rulemaking. Relative to the
rulemaking, this alternative would (1) omit the requirement for
certifying agents to issue standardized certificates of organic
operation generated in the USDA Organic Integrity Database; and (2)
reduce the annual training hours that must be completed by organic
inspectors and certification review personnel. AMS chose not to pursue
this alternative because it would weaken other critical, interdependent
amendments in the rulemaking. AMS predicts any cost reduction of this
alternative would be accompanied by a significant reduction in
effectiveness of the rulemaking.
Regulatory Flexibility Act
AMS also performed additional analysis to determine the rule's
impact to domestic small businesses. This analysis revealed that small
businesses producing, selling, handling, and marketing organic products
would not be adversely affected by the amendments in this rule. AMS
expects that most of the entities affected by this rule are small
businesses as defined by Small Business Administration criteria. For
each category of affected entity (certifying agents, certified
operations, and exempt or excluded operations that need to become
certified), AMS estimates that the costs of the rule for each business
type will be less than one percent of the annual revenue.
A full economic analysis of this rulemaking is available at https://www.regulations.gov/. You can access this rule and the economic
analysis by searching for document number AMS-NOP-17-0065.
C. 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. This rule cannot
be applied retroactively. States and local jurisdictions are preempted
under the OFPA 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 section 6514(b) of the OFPA. States are also preempted
under sections 6503 through 6507 of the OFPA 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 6507(b)(2) of the OFPA, a state organic
certification program that has been approved by the Secretary may
contain additional requirements for the production and handling of
agricultural products organically 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.
In addition, pursuant to section 6519(c)(6) of the OFPA, this
rulemaking does not supersede or alter the authority of the Secretary
under the Federal Meat Inspection Act (21 U.S.C. 601-624), the Poultry
Products Inspection Act (21 U.S.C. 451-471), or the Egg Products
Inspection Act (21 U.S.C. 1031-1056), concerning meat, poultry, and egg
products, respectively, 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. 301-399), nor the authority of the Administrator of the
Environmental Protection Agency under the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. 136-136(y)).
OFPA at 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.
D. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3501-3520) (PRA), AMS is requesting OMB approval for a new information
collection totaling 368,321 hours for the reporting and recordkeeping
requirements contained in this rulemaking. OMB previously approved
information collection requirements associated with NOP and assigned
OMB control number 0581-0191. AMS intends to merge this new information
collection (0581-0321), upon OMB approval, into the approved 0581-0191
collection. Below, AMS has described and estimated the annual burden
(i.e., the amount of time and cost of labor), for entities to prepare
and maintain information to participate in this voluntary labeling
program. The Organic Foods Production Act of 1990
[[Page 3611]]
(OFPA) provides authority for this action.\57\
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\57\ The Organic Foods Production Act of 1990, 7 U.S.C. 6501-
6524, is the statute from which the Agricultural Marketing Service
derives authority to administer the NOP, and authority to amend the
regulations as described in this rulemaking. This document is
available at: https://uscode.house.gov/view.xhtml?path=/prelim@title7/chapter94&edition=prelim.
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Title: National Organic Program.
OMB Control Number: 0581-0321.
Expiration Date of Approval: 3 years from OMB date of approval.
Type of Request: New collection.
Abstract: Information collection and recordkeeping are necessary to
implement reporting and recordkeeping necessitated by amendments to
Sec. Sec. 205.2, 205.100, 205.101, 205.103, 205.201, 205.273, 205.300-
205.302, 205.310, 205.307, 205.310, 205.400, 205.403-205.404, 205.406,
205.500-501, 205.504, 205.511, 205.660-205.663, 205.665, 205.680, and
205.681 of the USDA organic regulations. The rulemaking will protect
organic product integrity and build consumer and industry trust in the
USDA organic label by strengthening organic control systems, improving
organic import oversight, clarifying organic certification standards,
and enhancing farm to market traceability.
This rulemaking amends several sections of the USDA organic
regulations, 7 CFR part 205, to strengthen the NOP's ability to oversee
and enforce the production, handling, marketing, and sale of organic
agricultural products as established by the OFPA. The rule will improve
organic integrity throughout the organic supply chain and benefit
stakeholders at all levels of the organic industry. The amendments will
close gaps in the current regulations to build consistent certification
practices, deter organic fraud, and improve transparency and product
traceability. NOP identified the need for many of the amendments as
part of its direct experience in administering this program,
particularly via complaint investigation and audits of certifying
agents. Other amendments are based on changes to the OFPA included in
the Agriculture Improvement Act of 2018; \58\ the recommendations of a
2017 Office of Inspector General audit; \59\ the recommendations of the
National Organic Standards Board (a federal advisory committee to NOP);
and industry stakeholder feedback.
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\58\ The Agriculture Improvement Act of 2018 (Public Law No:
115-334), commonly known as the ``2018 Farm Bill,'' is available at
https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.
Organic certification is discussed in Title X, Section 10104.
\59\ The National Organic Program International Trade
Arrangements and Agreements Audit Report 01601-0001-21, September
2017: https://www.usda.gov/sites/default/files/01601-0001-21.pdf.
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This rulemaking strengthens enforcement with amendments to the USDA
organic regulations and modifies the reporting and recordkeeping
burdens as summarized below.
1. Reduces the types of uncertified handling operations in the
organic supply chain that operate without USDA oversight.\60\ The
amendments require certification of operations that facilitate the sale
or trade of organic products, including but not limited to certain
brokers, importers, and traders. These handlers must obtain organic
certification and develop an organic system plan (OSP) to describe the
practices and procedures used in their operations. Certifying agents
customize the format of the OSP to cover standards applicable to
operations seeking certification. Because traders and brokers do not
farm or manufacture organic products, the OSPs for traders and brokers
will address fewer sections of the organic regulations than OSPs for
operations that farm or manufacture organic products. Therefore,
uncertified traders and brokers will take 40 hours in the first year
after the rule going into effect to prepare an initial OSP. In
subsequent years, AMS estimates each of these entities will incur a
recordkeeping burden of 10 hours annually, and a reporting burden of 20
hours annually, to update their OSP (Sec. Sec. 205.2, 205.100,
205.101, and 205.103).
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\60\ Mandated by the Agriculture Improvement Act of 2018. See
section 10104(a).
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Burden is increased in the rulemaking due to refinements in NAICS
code 425 and the addition of operations from NAICS code 4244 in
response to public comment. The 2018 Farm Bill mandates that NOP reduce
the number of operations excluded from certification at Sec. 205.101.
AMS's revised estimate indicates 1,985 formerly excluded domestic
operations now require organic certification. This includes 855
operations in NAICS code 425 (Wholesale Electronic Markets and Agents
and Brokers) and 1,130 operations in NAICS code 4244 (Grocery and
Related Product Merchant Wholesalers). See the accompanying Regulatory
Impact Analysis (RIA) for more information. AMS assumes the 1,985
domestic excluded operations represent 59 percent of the global total
of excluded handlers (using a benchmark 59 percent to 41 percent ratio
of domestic to foreign operations). Therefore, AMS estimates there are
an additional 1,379 foreign formerly excluded operations, for a total
of 3,364 new handlers that will need organic certification.
2. Requires all currently certified organic operations and new
applicants to describe their procedures for monitoring, verifying, and
demonstrating the organic status of their suppliers and products
received to prevent organic fraud. Operations will include this
information as a supplemental part of the OSP; therefore, AMS allocates
the time to develop these procedures separately from the initial 40
hours to develop an OSP. AMS estimates that each currently certified
operation and applicant seeking certification will need 30 minutes to
describe the supply chain verification procedures and monitoring
practices required by this regulation (Sec. Sec. 205.103 and 205.201).
Burden is increased in the rulemaking due to industry growth.
3. Mandates the use of NOP Import Certificates. Each shipment of
organic products imported into the United States must be declared as
organic to U.S. Customs and Border Protection (CBP) and associated with
a valid NOP Import Certificate (currently form NOP 2110-1).\61\ The NOP
Import Certificate contains specific information about the quantity and
source of a shipment of imported organic products. NOP Import
Certificates are currently used for organic products imported from
countries with which NOP has trade arrangements. This rulemaking will
expand and make compulsory the use of NOP Import Certificates,
regardless of an imported product's country of origin.
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\61\ Office of Management and Budget (OMB) approved form NOP
2110-1 NOP Import Certificate. https://www.ams.usda.gov/resources/nop-2110-1.
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In response to public comments, the final rule allows NOP Import
Certificates to be issued for a given time period (e.g., quarterly)
rather than with every shipment as proposed. AMS estimates that NOP
Import Certificates will be issued quarterly, as this will reduce costs
and limit disruption to the speed of imports. Additionally, the
estimated number of annual shipments has increased from 67,023 in 2017
to 80,109 in 2020 due to industry growth.\62\ Therefore, AMS estimates
3,856 exporters will request from their certifying agents an annual
total of 15,424 NOP Import Certificates,
[[Page 3612]]
covering 80,109 annual shipments.\63\ AMS estimates each exporter and
certifying agent will spend an average of 30 minutes to request and
approve each NOP Import Certificate. This estimate accounts for some
learning within the first year, as well as the option to issue a single
NOP Import Certificate for multiple shipments over a specific timeframe
and amount or volume. Additionally, AMS estimates that importers and
their certifying agents will need an average of one tenth (0.1) of an
hour, or 6 minutes, to compare the shipping manifest of each shipment
with its respective NOP Import Certificate to verify the accuracy and
organic compliance of each shipment.
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\62\ Data source: USDA Foreign Agricultural Service (FAS) Global
Agricultural Trade System (GATS). Select: Partners, World Total,
Product Type, Imports--General, Products: All Aggregates; Product
Groups: Organic--Selected: https://apps.fas.usda.gov/gats/default.aspx.
\63\ NOP International Division reports that 3,303 organic
exporters are certified by foreign (non-USDA) certifiers. Plus, the
Organic Integrity Database shows that 553 foreign-based handlers are
certified by USDA-accredited certifying agents. The total number of
NOP Import Certificates assumes each exporter is issued NOP Import
Certificates quarterly (four annually).
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Further, certifying agents must have and implement a documented
organic control system for intaking and approving or rejecting the
validity of an NOP Import Certificate request, and importers must have
and implement a documented organic control system to verify that
shipments of organic products are accompanied by accurate NOP Import
Certificate data and have not had contact with prohibited substances or
ionizing radiation (Sec. Sec. 205.273 and 205.300).
4. Clarifies nonretail containers used to ship or store organic
products must display organic identification and information that links
the container to audit trail documentation. This will help maintain the
integrity of organic products by reducing misidentification and
mishandling, facilitating traceability through the supply chain,
reducing organic fraud, and allowing accurate identification of organic
product by customs officials and transportation agents.
The rulemaking reduces burden because the revised regulation
requires less information on nonretail container labels and provides
exceptions for certain types of containers in response to public
comment. AMS estimates that 35,698 producers and/or processers will
need one tenth (0.1) of an hour, or 6 minutes, to add the required
information to the labels that are displayed on the nonretail
containers of an estimated 275,596 annual shipments (Sec.
205.307).\64\
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\64\ 29,929 (existing and new domestic operations and traders)
certified operations will be modifying how they label 195,387
nonretail shipments and 5,769 (existing, new, and domestic
operations and traders) certified operations will be modifying how
they label 80,109 nonretail shipments exported to the US.
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5. Codifies current practices for the certification of producer
group operations (groups of producers organized and certified as a
single operation).\65\ The rulemaking describes the criteria to qualify
as a producer group, how producer group operations must comply with the
USDA organic regulations, and how certifying agents should inspect
these operations. It also sets a risk-based benchmark to determine how
many producer group members in an operation need to be inspected by
certifying agents annually.
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\65\ NOP Policy Memo 11-10. Grower Group Certification, October
31, 2011: https://www.ams.usda.gov/sites/default/files/media/NOP-11-10-GroupGrowerCert.pdf.
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In response to public comment, AMS expects that these requirements
will add 11,800 hours of one-time paperwork burden for 5,900 producer
group operations \66\ to prepare a detailed Internal Control System for
their OSP, including procedures to address conflicts of interest and
manage the unique challenges of producer group oversight. In addition,
AMS estimates 5 hours to prepare and deliver training, outreach and
technical assistance to ICS personnel and producer group members,
leading to a total annual burden of 29,500 hours of burden annually
(Sec. Sec. 205.201, 205.400(g) and 205.403).
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\66\ Meinshausen F., Richter, T., Blockeel, J., and Huber, B.,
Group Certification: Internal Control Systems in Organic
Agriculture: Significance, Opportunities and Challenges, Research
Institute of Organic Agriculture FiBL, March 2019.
---------------------------------------------------------------------------
6. Clarifies how certified operations may submit annual updates to
their OSP. This includes the option to only submit practices or
procedures that have changed since their last approved OSP, rather than
submitting an OSP in its entirety. This will reduce unnecessary
paperwork without compromising oversight because operations will
continue to maintain an OSP that accurately reflects current practices
and procedures of the operation. This codifies current policy and does
not modify the paperwork burden (Sec. 205.406).
7. Requires certifying agents to issue standardized certificates of
organic operation generated from the USDA's publicly available Organic
Integrity Database (OID).\67\ This will require an initial upload of
mandatory data for each operation and maintenance to ensure that data
in OID are current and accurate. Currently, all certifying agents have
voluntarily uploaded data and maintain an estimated 50% or more data on
all certified operations per the recommendations found in the NOP's
Data Quality Best Practices.\68\
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\67\ Organic Integrity Database: https://organic.ams.usda.gov/integrity. Accessed September 2021.
\68\ Data Quality Best Practices: https://www.ams.usda.gov/sites/default/files/media/INTEGRITY%20Data%20Quality.pdf.
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These amendments will require a new, one-time burden of reporting
hours for certifying agents to upload existing data pertaining to
currently certified operations into OID for the first time. It is
estimated that uploading these data into OID will require 30 minutes
for each operation and will be performed by administrative support
personnel who have a lower wage rate than review and compliance staff.
The rulemaking's burden increases slightly due to industry growth.
These amendments will simultaneously eliminate the requirement to
physically mail the Administrator or State organic program paper copies
of: (1) the list of operations certified annually; (2) notifications of
proposed adverse actions, approvals, or denials of corrective actions;
and (3) notifications of executions of adverse actions regarding
certified operations or operations applying for certification
(Sec. Sec. 205.405 and 205.501). AMS is not modifying the estimate of
paperwork burden associated with these changes in requirements because
any change will be very small, and these activities and tasks are still
occurring electronically as a part of maintaining the data on all
operations over time.
8. Requires certifying agents to develop procedures to: (1)
identify high-risk operations and agricultural products; (2) conduct
supply chain traceability audits, (3) share information with other
certifying agents to verify supply chains and conduct investigations,
and (4) report credible evidence of organic fraud to the USDA. Due to
the complexity of these procedures, AMS estimates each certifying agent
will spend two hours documenting these procedures (Sec. Sec. 205.501
and 205.504) rather than one hour as proposed. The rulemaking's burden
increases due to an increase in time for preparing procedures despite a
net loss of certifying agents since 2017 (the net value reflects that
while some certifiers have been suspended or have surrendered, others
have been newly accredited).
9. Requires certifying agents to submit their decision criteria for
acceptance of mediation, and a process for identifying personnel to
conduct mediation and set up mediation sessions with its administrative
policies and procedures required by Sec. 205.504(b). AMS estimates
each certifying agent will spend one
[[Page 3613]]
hour documenting these procedures, which they are already implementing.
The rulemaking's burden changes due to the net loss of 3 certifying
agents since 2017.
10. Requires certifying agents to establish procedures to conduct
inspector field evaluations (``witness inspections''), demonstrate that
they are sufficiently staffed with qualified personnel, and demonstrate
that all inspectors, certification reviewers, and in-field evaluators
meet knowledge, skills, and experience qualifications. AMS estimates
that each certifying agent will spend 60 minutes to draft policies and
procedures for conducting inspector field evaluations. Further,
certifying agents must observe an inspector performing an on-site
inspection at least once every three years (or annually for inspectors
with fewer than three years of experience).
The rulemaking's burden is reduced due to narrowed training
requirements and the net loss of 3 certifying agents since 2017. AMS
estimates each certifying agent will conduct an average of two field
evaluations of an inspector and certification review personnel per
year, rather than four as proposed, and that this activity will require
7.5 hours per evaluation (Sec. Sec. 205.2 and 205.501).
11. Requires some additional training of new inspectors and
certification review personnel. Inspectors and certification review
personnel play a crucial role in determining whether an operation is
granted organic certification initially and whether certified
operations comply with the USDA organic regulations. Certification
review personnel may also serve as inspectors. Through insight gained
during regular audits of certifying agents, AMS estimates that
inspectors and certification review staff currently receive at least 10
hours of training per year from certifying agents on topics related to
the USDA organic regulations.
In response to public comment, 40 hours of additional training is
required for inspectors and certification review personnel with less
than one year of experience.\69\ Based on an estimated separation rate
of 14 percent,\70\ AMS estimates that certifying agents will annually
hire 35 new certification review staff and hire or contract with 35
inspectors with less than one year of experience to replace the
certification review staff and inspectors that exit the labor pool.
Training offered by NOP through its online Organic Integrity Learning
Center (OILC) and training provided by the certifying agents or other
providers may qualify towards the minimum annual training requirements
(Sec. Sec. 205.2 and 205.501).
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\69\ Ten hours of training are accounted for in the 2020
Information Collections Renewal for NOP (AMS-NOP-19-0090; OMB
Control Number: 0581-0191). Our internal on-site accreditation audit
checklist used by our accreditation audit team includes a question
on training. With the implementation of this rule, the specific
hours of training offered by the 75 certifying agents will be
documented.
\70\ The US Bureau of Labor and Statistics reports that the
average separation rate (which captures both labor force exits and
transfers in occupation) for agricultural inspectors is 14 percent.
https://www.bls.gov/news.release/jolts.t16.htm.
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12. Requires that certifying agents conduct unannounced inspections
of at least 5 percent of the operations they certify, which is the
current recommended practice in NOP Instruction 2609.\71\ For the
purposes of estimating paperwork impacts, AMS expects that half of the
unannounced inspections (2.5% of total inspections) will meet the
requirement for a full annual inspection and will not impact current
paperwork burden. The remaining half of the unannounced inspections
(2.5% of total inspections) will be limited in scope and target high-
risk operations and will not count as a full annual inspection.
Examples of targeted, limited-scope unannounced inspections include but
are not limited to verifying livestock on pasture or performing
targeted mass-balance or traceability audits. AMS estimates that the
paperwork impacts associated with these unannounced inspections will
average inspectors 5 hours per inspection; half of the estimated 10
hours for a full annual inspection (Sec. 205.403).
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\71\ NOP 2609, Instruction, Unannounced Inspections. September
12, 2012. Available in the NOP Program Handbook: https://www.ams.usda.gov/sites/default/files/media/2609.pdf.
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13. Clarifies the process for accepting foreign conformity
assessment systems that oversee organic certification in foreign
countries.\72\ The OFPA (7 U.S.C. 6505(b)) and the USDA organic
regulations provide the authority to establish organic equivalency. The
revised regulations describe the criteria, scope, and other parameters
for ongoing peer review audits of foreign organic conformity systems to
determine whether the United States should continue, revise, or
terminate such equivalence determinations. These peer review audits of
equivalence determinations occur as needed and will result in new
periodic paperwork impacts for foreign governments. The rulemaking's
burden is reduced because AMS estimates it will review one foreign
government conformity assessment system per year. AMS estimates the
reporting impacts for foreign governments when USDA reviews the
applicable trade arrangement or agreement to be 60 hours. Since
recordkeeping is ongoing requirement, recordkeeping is calculated as 10
hours per year per foreign government. These impacts are comparable to
the estimated paperwork impacts for AMS audits of certifying agents
(Sec. 205.511).
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\72\ Currently, the United States has established organic trade
arrangements with Canada, the European Union, the United Kingdom,
Israel, Japan, New Zealand, South Korea, Taiwan, and Switzerland.
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Respondents
AMS has identified four primary types of entities (respondents)
that will need to submit and maintain information as a result of this
rulemaking: certified organic operations; accredited certifying agents;
organic inspectors; and foreign governments. Three respondent types--
certified operations (producers and handlers), certifying agents, and
inspectors--have been identified in a currently approved information
collection (0581-0191). To implement a 2018 Farm Bill mandate, AMS is
requiring certification of additional types of operations in the
organic supply chain and regular audits of trade arrangements or
agreements with foreign governments.\73\ This adds new types of
handlers as a subcategory of certified operations and foreign
governments as a new type of respondent.
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\73\ See Section 10104(a) of the Agriculture Improvement Act of
2018, Public Law No: 115-334, available at: https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.
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To more precisely understand the paperwork impacts of this
rulemaking, AMS has divided the categories of respondents into domestic
and foreign, as appropriate, to show the potential impacts on domestic-
based versus foreign-based USDA-accredited certifying agents,
inspectors, and certified operations, along with foreign-accredited
certifying agents, and foreign governments serving as accrediting
bodies. For each type of respondent, we describe the general paperwork
submission and recordkeeping activities and estimate: (1) the number of
respondents; (2) the hours they spend, annually, creating and storing
records to meet the paperwork requirements of the organic labeling
program; and (3) the costs of those activities based on prevailing
domestic and foreign wages and benefits.
Certifying Agents
Certifying agents are State, private, or foreign entities
accredited by the USDA,
[[Page 3614]]
or by accreditation bodies of foreign governments with which USDA has a
trade arrangement or agreement. Certifying agents certify domestic and
foreign producers and handlers as organic in accordance with the OFPA
and the USDA organic regulations. Certifying agents determine whether a
producer or handler meets the organic requirements, using detailed
information from the operation about its specific practices and on-site
inspection reports from organic inspectors.
Currently, there are 75 USDA-accredited certifying agents (down
from 78 in 2017) 45 are based in the United States and 30 are
headquartered in foreign countries. Both domestic- and foreign-based
USDA-accredited certifying agents certify operations based in the
United States and abroad. AMS assumes all currently accredited
certifying agents evaluate all types of production and handling
operations for compliance with the USDA organic regulations and will be
subject to the reporting and recordkeeping burdens of this rulemaking.
In addition, AMS assumes there are 30 foreign government-accredited
foreign-based certifying agents that certify handlers in accordance
with the USDA organic regulations and that will issue NOP Import
Certificates for organic product shipments to the United States.\74\
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\74\ An estimate based on the number of foreign-based USDA-
accredited certifying agents.
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Certifying agents of operations that export to the United States
must issue NOP Import Certificates for all shipments of organic
products being exported. The USDA Foreign Agricultural Service (FAS)
Global Agricultural Trade System (GATS) showed 80,109 shipments of
organic product coming into the United States in 2020 (up from 67,023
in 2017 due to industry growth).\75\ In response to public comments,
AMS estimates that NOP Import certificates will be issued seasonally
(e.g., quarterly) rather than with every shipment as proposed. AMS
estimates that 3,856 foreign exporters will request from their
certifying agents an annual total of 15,424 NOP Import Certificates,
covering 80,109 annual shipments.\76\ AMS estimates each exporter and
certifying agent will spend 30 minutes to request and approve each NOP
Import Certificate.
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\75\ Data source: USDA Foreign Agricultural Service (FAS) Global
Agricultural Trade System (GATS). Select: Partners, World Total,
Product Type, Imports--General, Products: All Aggregates; Product
Groups: Organic--Selected: https://apps.fas.usda.gov/gats/default.aspx.
\76\ NOP International Division reports that 3,303 organic
exporters are certified by foreign (non-USDA) certifiers. Plus, the
Organic Integrity Database shows that 553 foreign-based handlers are
certified by USDA-accredited certifying agents. The total number of
NOP Import Certificates assumes each exporter is issued NOP Import
Certificates quarterly (four annually).
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Thirty (30) USDA-accredited certifying agents based in foreign
countries certify 92% of the foreign operations certified under USDA
organic standards. Of the 45 domestic-based USDA accredited certifying
agents, 15 certifying agents certify 8% of the foreign operations
certified under USDA.\77\ This means that 30 domestic-based USDA-
accredited certify agents only certify domestic-based operations that
do not import foreign organic products or ingredients. AMS estimates
there are 30 foreign-accredited certifying agents that certify foreign
operations under trade arrangements.\78\
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\77\ Organic Integrity Database: https://organic.ams.usda.gov/integrity/.
\78\ An estimate based on the number of foreign-based USDA-
accredited certifying agents.
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AMS will review documents regarding imports during the
accreditation audits of USDA-accredited certifying agents. AMS
estimates 30 minutes for the 3,856 exporters and their certifying
agents to prepare and approve each of the 15,424 NOP Import
Certificates and one tenth of an hour, or 6 minutes, for importers to
verify and reconcile all 80,109 subsequent associated shipments
exported to the United States.\76\ USDA-accredited domestic-based
certifying agents must work with their foreign-based operations to
verify their associated shipments for 8%, or 6,409, of 80,109 annual
shipments. USDA-accredited foreign-based certifying agents must work
with their foreign-based operations to verify their associated
shipments for 46%, or 36,850, of 80,109 annual shipments. Foreign-
accredited certifying agents must work with their foreign-based
operations to verify 46% of 80,109 annual shipments.
In addition, this rulemaking reduces the current paperwork burden
of accredited certifying agents by eliminating the need to provide
notices of approval or denial of certification to the Administrator
following the issuance of a notice of noncompliance or adverse action
to an applicant for certification. Also, the rulemaking removes the
annual requirement for certifying agents to submit by January 2 an
annual list of operations certified. Certifying agents will instead be
required to update data in OID for each operation they certify. AMS is
not modifying the estimate of paperwork burden with these changes in
requirements because any change will be very small. These activities
and tasks are still occurring electronically as a part of maintaining
the data on all operations over time. Certifying agents must issue
organic certificates generated in OID.
[[Page 3615]]
In addition, all USDA-accredited certifying agents must write
detailed procedures to identify high-risk operations and products they
certify and procedures to conduct supply-chain traceability audits.
Certifying agents must write fraud prevention and reporting procedures,
and mediation procedures per Sec. 205.504(b). Certifying agents must
write procedures to demonstrate how they are sufficiently staffed and
that all persons who perform certification review activities and on-
site inspections (inspectors) are qualified and complying with training
requirements for their new certification review personnel. AMS
estimates that 14 percent, or 35, new certification review staff with
less than one year of experience must complete 40 hours of training in
their first year in addition to the baseline training requirement of 10
hours annually already accounted for in the overall program ICR
(0191).79 80
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\79\ Ten hours of training are accounted for in the 2020
Information Collections Renewal for the NOP (AMS-NOP-19-0090; OMB
Control Number: 0581-0191). Our internal onsite accreditation audit
checklist used by our accreditation audit team includes a question
on training. With the implementation of this rule, the specific
hours of training offered by our 75 certifying agents will be
documented.
\80\ The US Bureau of Labor and Statistics reports that the
average separation rate (which captures both labor force exits and
transfers in occupation) for agricultural inspectors is 14 percent.
https://www.bls.gov/news.release/jolts.t16.htm.
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This rulemaking increases the overall reporting and recordkeeping
burden for certifying agents (See Summary Table 1: Certifying Agents).
AMS estimates the annual collection cost per domestic-based USDA-
accredited certifying agents will be $13,511.\81\ This cost is based on
an estimated 109.23 labor hours per certifying agent per year for staff
with certification review responsibilities at $47.97 per labor hour,
including 31.7% benefits, for a total salary component of $5,229 per
year.\82\ The estimated cost for domestic certifying agents also
includes 332.55 labor hours per certifying agent per year for
administrative support staff to upload data about certified operations
to OID at $24.90 per labor hour, including 31.7% benefits, for a total
salary component of $8,282 per year.\83\
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\81\ In this assessment, all domestic labor rates are sourced
from the U.S. Bureau of Labor Statistics National Compensation
Survey, Occupational Employment and Wages, May 2020: https://www.bls.gov/oes/current/oes_nat.htm. Domestic benefits are based on
a Bureau of Labor Statistics News Release on Employer Costs for
Employee Compensation, which states that benefits account for 31.7%
of total average employer compensation costs, December 17, 2020.
\82\ The labor rate for certification review staff is based on
Occupational Employment Statistics group 13-1041, Compliance
Officers. Compliance officers examine, evaluate, and investigate
eligibility for or conformity with laws and regulations governing
contract compliance of licenses and permits, and perform other
compliance and enforcement inspection and analysis activities not
classified elsewhere. Compliance Officers (bls.gov).
\83\ The labor rate for administrative support staff is based on
Occupational Employment Statistics group 43-9199, Office and
Administrative Support Workers, who support general office work and
data entry functions. Office and Administrative Support Workers, All
Other (bls.gov).
---------------------------------------------------------------------------
In addition, AMS estimates the annual collection cost for all
domestic-based USDA-accredited certifying agents will be $608,001. This
cost is based on a total of 4,915 hours for all staff with
certification review responsibilities at $47.87 per labor hour,
including 31.7% benefits, for a total salary component of $235,313 for
all staff with certification review and procedure writing
responsibilities of all domestic-based USDA-accredited certifying
agents. The estimated cost for all domestic-based certifying agents
also includes 14,965 hours total hours for administrative support staff
uploading data about certified operations to OID at $24.90 per labor
hour, including 31.7% benefits for a total salary component of
$372,688.
Summary Table 1--Certifying Agents
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per
Respondent categories Number of Wages + Hours per respondent Total all Total all costs
respondents benefits respondent type hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
US Based USDA Certifying Agents.............................. 45 $47.87 109.23 $5,229.17 4,915.36 $235,312.78
US Based USDA Certifying Agents--data entry.................. 45 24.90 332.55 8,281.95 14,964.69 372,687.76
------------------------------------------------------------------------------------------
Subtotal U.S.-Based USDA Certifying Agents............... 45 ........... 441.78 13,511.12 19,880.05 608,000.54
------------------------------------------------------------------------------------------
Foreign-Based USDA Certifying Agents......................... 30 34.40 653.80 22,493.03 19,614.07 674,791.04
Foreign-Based USDA Certifying Agents--data entry............. 30 17.90 346.64 6,203.93 10,399.19 186,118.00
------------------------------------------------------------------------------------------
Subtotal Foreign-Based USDA Certifying Agents............ 30 ........... 1,000.44 28,696.97 30,013.26 860,909.04
------------------------------------------------------------------------------------------
Total USDA Accredited Certifying Agents...................... 75 ........... .............. 42,208.09 49,893.31 1,468,909.58
------------------------------------------------------------------------------------------
Foreign (Non-USDA) Accredited Certifying Agents.............. 30 34.40 614.17 21,129.51 18,425.07 633,885.38
All Certifying Agents........................................ 105 ........... .............. .............. 68,318.38 2,102,794.96
--------------------------------------------------------------------------------------------------------------------------------------------------------
For foreign-based USDA-accredited certifying agents, AMS estimates
the annual cost per certifying agent will be $28,697 per year. This
cost is based on an estimated 653.80 labor hours for staff with
certification review and procedure writing responsibilities at $34.40
per labor hour, including 34.63% benefits, for a total salary component
of $22,493 per foreign-based USDA-accredited certifying agent per year.
These estimated costs primarily pertain to the issuance and review of
NOP Import Certificates. The estimated cost for foreign-based USDA-
accredited certifying agents also includes 346.64 labor hours per
certifying agent per year for administrative support staff to upload
data about certified operations to OID at $17.90 per labor hour,
including 34.63% benefits, for a total salary component of $6,204 per
year.84 85
---------------------------------------------------------------------------
\84\ The source of the data is based on average World Bank wage
rates for countries with USDA-accredited certifying agents, which
were 70.3% of U.S. labor rates in 2020. https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD. Agents: https://stats.oecd.org/Index.aspx?DataSetCode=AWCOMP.
\85\ Benefits are based on a review of data from the
Organisation for Economic Co-Operation and Development (OECD), which
indicates that benefits account for 34.63% of total compensation in
foreign countries with USDA-accredited certifying agents.
---------------------------------------------------------------------------
AMS estimates the annual collection cost for all foreign-based USDA
accredited certifying agents will total $860,909. This cost is based on
a total of 19,614.07 hours for all staff with certification review
responsibilities at $24.90 per labor hour, including 34.63% benefits,
for a total salary component of $674,791 for staff with certification
review and procedure writing responsibilities of all foreign-based
USDA-accredited certifying agents. The estimated cost for all foreign-
based USDA-accredited certifying agents also includes 10,399.19 hours
total hours for administrative support staff uploading data about
certified operations to OID at $17.90 per labor hour, including 34.63%
[[Page 3616]]
benefits, for a total salary component of $186,118.86 87
---------------------------------------------------------------------------
\86\ The source of the data is based on average World Bank wage
rates for countries with USDA-accredited certifying agents which
were 70.3% of U.S. labor rates in 2020. https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD. Agents: https://stats.oecd.org/Index.aspx?DataSetCode=AWCOMP.
\87\ Benefits are based on a review of data from the
Organisation for Economic Co-Operation and Development (OECD), which
indicates that benefits account for 34.63% of total compensation in
foreign countries with USDA-accredited certifying agents.
---------------------------------------------------------------------------
For foreign-accredited certifying agents (non-USDA accredited), AMS
estimates the annual cost will be $21,130 per certifying agent. This
cost is based on an estimated 614.17 labor hours per year for staff to
issue and review NOP Import Certificates, at $34.40 per labor hour plus
34.63% benefits. The total for all foreign-accredited certifying agents
is estimated to be $633,885. The cost is based on an estimated 18,425
total hours for all staff involved in the issuance and review of NOP
Import Certificates, at $34.40 per labor hour plus 34.63% benefits.
88 89
---------------------------------------------------------------------------
\88\ The source of the data is based on average World Bank wage
rates for countries with USDA-accredited certifying agents which
were 70.3% of U.S. labor rates in 2020. https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD.agents: https://stats.oecd.org/Index.aspx?DataSetCode=AWCOMP.
\89\ Benefits are based on a review of data from the
Organisation for Economic Co-Operation and Development (OECD), which
indicates that benefits account for 34.63% of total compensation in
foreign countries with USDA-accredited certifying agents.
---------------------------------------------------------------------------
The total cost for all certifying agents--including the 75 USDA-
accredited certifying agents, domestic- and foreign-based, and the
estimated 30 foreign-accredited (non-USDA) certifying agents who
certify operations that export products to the U.S.--is $2,102,795.
This cost is based on 68,318.38 total hours at their respective wage
rates and benefits to comply with the rulemaking's requirements.
Organic Inspectors
Inspectors conduct on-site inspections of certified operations and
operations applying for certification and report the findings to the
certifying agent. Inspectors may be independent contractors or
employees of certifying agents. Certified operations must be inspected
annually, and a certifying agent may call for additional inspections or
unannounced inspections on an as-needed basis (Sec. 205.403(a)). Any
individuals who apply to conduct inspections of operations will need to
submit information documenting their qualifications to the certifying
agent (Sec. 205.504(a)(3)).
Inspectors provide an inspection report to the certifying agent for
each operation inspected (Sec. 205.403(e)) but are not expected to
store the record. Currently, AMS estimates that inspectors spend 10
hours on average to complete an inspection report for a full annual
inspection of an organic operation. The additional unannounced
inspections required by this rulemaking are likely to be more limited
in scope (such as pasture or dairy surveillance, or mass-balance and
supply chain traceability audits). AMS projects, on average, that
inspectors will spend 5 hours to complete an inspection report for an
unannounced targeted-scope inspection. Organic inspectors do not have
recordkeeping obligations; certifying agents maintain the records of
inspection reports (see Summary Table 2: Inspectors).
Summary Table 2--Inspectors
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per
Respondent categories Number of Wages + Hours per respondent Total all Total all costs
respondents benefits respondent type hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
USDA US based Inspectors..................................... 148 $30.79 30.86 $950.20 4,567.17 $140,629.94
USDA Foreign based inspectors................................ 102 22.13 31.12 688.53 3,173.80 70,229.73
------------------------------------------------------------------------------------------
All USDA Inspectors...................................... 250 ........... .............. .............. 7,740.97 210,859.67
--------------------------------------------------------------------------------------------------------------------------------------------------------
According to the International Organic Inspectors Association
(IOIA), there are approximately 250 inspectors currently inspecting
crop, livestock, handling, and/or wild crop operations that are
certified or have applied for certification. To comply with this
rulemaking, AMS estimates that 14 percent, or 35, new inspectors with
less than one year of experience must complete 40 hours of training in
their first year in addition to the baseline training requirement of 10
hours annually already accounted for in the overall program ICR
(0191).90 91
---------------------------------------------------------------------------
\90\ Ten hours of training are accounted for in the 2020
Information Collections Renewal for the NOP (AMS-NOP-19-0090; OMB
Control Number: 0581-0191). Our internal onsite accreditation audit
checklist used by our accreditation audit team includes a question
on training. With the implementation of this rule, the specific
hours of training offered by our 75 certifying agents will be
documented.
\91\ The US Bureau of Labor and Statistics reports that the
average separation rate (which captures both labor force exits and
transfers in occupation) for agricultural inspectors is 14 percent.
https://www.bls.gov/news.release/jolts.t16.htm.
---------------------------------------------------------------------------
AMS estimates that 148 inspectors are working for USDA-accredited
certifying agents in the United States. For the additional training of
new inspectors, and for conducting unannounced targeted-scope
inspections, AMS estimates the annual paperwork impact cost per
domestic-based inspector is $950.20. This is based on an estimated
30.86 labor hours per year at $30.79 per labor hour, including 31.7%
benefits. The total annual cost for all domestic-based inspectors is
$140,630. This cost is based on 4,567 total hours for all domestic
based inspectors at $30.79 per labor hour, including 31.7%
benefits.\92\
---------------------------------------------------------------------------
\92\ The labor rate for inspectors is based on Occupational
Employment Statistics group 45-2011, Agricultural Inspectors.
Agricultural inspectors inspect agricultural commodities, processing
equipment, facilities, and fish and logging operations to ensure
compliance with regulations and laws governing health, quality, and
safety.
---------------------------------------------------------------------------
AMS estimates that 102 inspectors are working for USDA-accredited
certifying agents in foreign countries. AMS estimates the annual
paperwork impact cost per foreign-based inspector is $688.53. This
estimate is based on an estimated 31.12 labor hours per year at $22.13
per labor hour, including 34.63% benefits for the additional training
of new inspectors and for conducting unannounced targeted-scope
inspections. This rule does not impose additional recordkeeping costs
for inspectors. The total annual cost for all foreign-based inspectors
is $70,230 at $31.12 per labor hour, including 34.63% benefits. The
total annual cost for all inspectors working for USDA-accredited
certifying agents is $210,860, at their respective wage rates and
benefits.93 94
---------------------------------------------------------------------------
\93\ The source of the data is based on average World Bank wage
rates for countries with USDA-accredited certifying agents which
were 70.3% of U.S. labor rates in 2020. https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD. Agents: https://stats.oecd.org/Index.aspx?DataSetCode=AWCOMP.
\94\ Benefits are based on a review of data from the
Organisation for Economic Co-Operation and Development (OECD), which
indicates that benefits account for 34.63% of total compensation in
foreign countries with USDA-accredited certifying agents.
---------------------------------------------------------------------------
[[Page 3617]]
Producers and Handlers
Domestic and foreign producers and handlers seeking organic
certification must submit an OSP that details the practices and
activities specific to their operation. Once certified, operations are
required to update any changes in their operation or practices to their
certifying agent at least annually.
Uncertified Handlers. This rulemaking requires that operations that
facilitate the sale or trade of organic products--including, but not
limited to, certain brokers, importers, and traders--obtain organic
certification and submit and maintain an OSP. AMS estimates that 1,985
domestic \95\ and 1,379 foreign-based \96\ operations will need to
become certified as a result of the rule. Traders and brokers do not
farm or manufacture organic products, so the OSPs for traders and
brokers will address fewer sections of USDA organic regulations than
OSPs for operations that produce or manufacture organic products.
Certifying agents customize the format of the OSP to cover standards
applicable to the operations seeking certification. Therefore, AMS
estimates that preparation of an initial OSP will require 40 reporting
hours, plus 10 hours of annual recordkeeping. The estimated annual
reporting burden for each entity to update its OSP in future years is
20 hours (See Summary Table 3a: Uncertified Handlers).
---------------------------------------------------------------------------
\95\ Please refer to the ``Applicability and Exemptions from
Certification (Sec. Sec. 205.100-101)'' chapter in the Regulatory
Impact Analysis (RIA) for an explanation of how previously excluded
domestic handlers were estimated.
\96\ AMS assumes the 1,985 domestic excluded operations
represent 59% of the global total benchmarked 59%/41% ratio of
domestic to foreign operations and certifying agents. Therefore, AMS
estimate there are an additional 1,379 foreign formerly excluded
operations, for a total of 3,364 new handlers that will need organic
certification.
---------------------------------------------------------------------------
All operations that export organic products to the United States
must request an NOP Import Certificate from their certifying agent.
Further, operations that import organic products must verify and
reconcile each shipment with its associated NOP Import Certificate and
verify that organic integrity was maintained throughout the import
process. In addition, domestic and foreign handlers that must obtain
organic certification as a result of this rulemaking will also need to
comply with the labeling requirements for nonretail containers.
Summary Table 3a--Uncertified Handlers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total cost per
Respondent categories Number of Wages + Total hours respondent Total all Total all costs
respondents benefits per respondent type hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
Formerly Excluded Handlers--Domestic......................... 1,985 $48.64 50.97 $2,478.80 101,166.47 $4,920,414.48
Formerly Excluded Handlers--Foreign.......................... 1,379 34.95 53.42 1,867.02 73,660.94 2,574,623.40
------------------------------------------------------------------------------------------
All Uncertified Handlers................................. 3,364 ........... .............. .............. 174,827.41 7,495,037.88
--------------------------------------------------------------------------------------------------------------------------------------------------------
AMS estimates the annual paperwork impact for each domestic handler
to prepare their initial organic system plan, verify and reconcile
imported shipments with their respective NOP Import Certificates, and
verify that the organic integrity of the product was maintained through
shipping is 2,478.80. This is based on an estimated 50.97 labor hours
at $48.64 per labor hour, including 31.7% benefits. The total cost to
all previously uncertified domestic handlers is $4,920,415. This cost
is based on 101,166.47 total labor hours at $48.64 per labor hour,
including 31.7% benefits.\97\
---------------------------------------------------------------------------
\97\ For uncertified handlers, AMS chose to use the same labor
rate as certified producers and handlers: Occupational Employment
Statistics group 11-9013, Farmers, Ranchers, and Other Agricultural
Managers.
---------------------------------------------------------------------------
AMS estimates the annual paperwork impact for each foreign-based
handler to prepare their initial organic system plan and to work with
their certifying agent to prepare NOP Import Certificates for the
products they export is $1,867.02. This is based on an estimated 53.42
labor hours per year at $34.95 per labor hour, which includes 34.63%
for benefits. The total cost to all previously uncertified foreign
handlers is $2,574,623.40. This cost is based on 73,660.94 total labor
hours at $34.95 per labor hour, which includes 34.63% for benefits.
Total costs to the 3,364 previously uncertified handlers, domestic and
foreign, is $7,495,038, based on 174,827 total labor hours at their
respective domestic and foreign wage rates and benefits. This cost is
to prepare and keep initial OSPs and related records, and to prepare,
verify, and reconcile NOP Import Certificates for
compliance.98 99
---------------------------------------------------------------------------
\98\ The source of the data is based on average World Bank wage
rates for countries with USDA-accredited certifying agents which
were 70.3% of U.S. labor rates in 2020. https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD.agents: https://stats.oecd.org/Index.aspx?DataSetCode=AWCOMP.
\99\ Benefits are based on a review of data from the
Organisation for Economic Co-Operation and Development (OECD), which
indicates that benefits account for 34.63% of total compensation in
foreign countries with USDA-accredited certifying agents.
---------------------------------------------------------------------------
Certified Operations and New Applicants under Current Rules. There
currently are 44,725 organic operations worldwide that are certified to
the USDA organic standards. Over the next 12 months, AMS expects 2,639
operations will seek organic certification, based on the 5.9% rate of
growth in number of operations observed in the last 12 months under
current rules. Therefore, AMS estimates that 27,945 operations based in
the United States, and 19,419 operations based in foreign countries,
including the respective applicants for certification, will be impacted
by this rulemaking.\100\
---------------------------------------------------------------------------
\100\ Organic Integrity Database: https://organic.ams.usda.gov/integrity/.
---------------------------------------------------------------------------
All currently certified organic operations and projected new
applicants must describe in their OSP their procedures for monitoring,
verifying, and demonstrating the organic status of their suppliers and
products received to prevent organic fraud. All certified organic
operations must also comply with revised nonretail container labeling
requirements and must maintain all records about their organic
production and/or handling for five years (Sec. 205.103(b)(3)).
[[Page 3618]]
In addition, AMS estimates a one-time paperwork burden of 11,800
hours for 5,900 producer group operations to prepare a detailed
Internal Control System (ICS) for their OSP, including procedures to
address conflicts of interest and manage the unique challenges of
producer group oversight. In addition, training requirements for ICS
personnel and producer group members are expanded to 29,500 hours
annually (Sec. Sec. 205.201, 205.400(g) and 205.403).\101\
---------------------------------------------------------------------------
\101\ Meinshausen F., Richter, T., Blockeel, J., and Huber, B.,
Group Certification: Internal Control Systems in Organic
Agriculture: Significance, Opportunities and Challenges, Research
Institute of Organic Agriculture FiBL, March 2019.
Summary Table 3b--Certified Organic Operations and New Applicants
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total cost/
Respondent categories Number of Wages + Total hours/ respondent Total all Total all costs
respondents benefits respondent type hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
Certified Producers & Handlers--New and Existing Domestic.... 27,945 $48.64 1.67 $81.07 46,579.60 $2,265,483.08
Certified Producers & Handlers--New and Existing Foreign..... 19,419 34.95 3.44 120.39 66,888.32 2,337,904.67
------------------------------------------------------------------------------------------
All New and Existing Producers & Handlers.................... 47,364 ........... .............. .............. 113,467.92 4,603,388.08
--------------------------------------------------------------------------------------------------------------------------------------------------------
AMS estimates that the average annual paperwork impact for domestic
USDA-certified organic producers and handlers to develop fraud
prevention procedures and to comply with nonretail container labeling
requirements is $81.07. This is based on an estimated 1.67 labor hours
at $48.64 per labor hour, including 31.7% benefits. The total cost for
all domestic certified organic producers and handlers to comply with
these new requirements is $2,265,483.08. This cost is based on
46,579.60 labor hours at $48.64 per labor hour, including 31.7%
benefits.\102\
---------------------------------------------------------------------------
\102\ The labor rate for producers and handlers is based on
Occupational Employment Statistics group 11-9013, Farmers, Ranchers,
and Other Agricultural Managers, who plan, direct, or coordinate the
management or operation of farms, ranches, or other agricultural
establishments.
---------------------------------------------------------------------------
AMS estimates the average annual paperwork impact for foreign-based
USDA-certified organic producers and handers to create fraud prevention
procedures and to comply with nonretail container labeling requirements
is $120.39. This is based on an estimated 3.44 labor hours per year at
$34.95 per labor hour, including 34.63% benefits. The total cost for
all foreign producers and handlers certified to the USDA organic
standards is $2,337,904.67. This cost is based on 66,888.32 labor hours
year at $34.95 per labor hour, including 34.63% benefits. The total
cost for the 47,364 current and projected certified organic producers
and handlers, domestic and foreign, is $4,603,388. This cost is based
on 113,4677.92 labor hours at their respective domestic and foreign
wages and benefits.103 104
---------------------------------------------------------------------------
\103\ The source of the data is based on average World Bank wage
rates for countries with USDA-accredited certifying agents which
were 70.3% of U.S. labor rates in 2020. https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD. Agents: https://stats.oecd.org/Index.aspx?DataSetCode=AWCOMP.
\104\ Benefits are based on a review of data from the
Organisation for Economic Co-Operation and Development (OECD), which
indicates that benefits account for 34.63% of total compensation in
foreign countries with USDA-accredited certifying agents.
---------------------------------------------------------------------------
Foreign Governments
The U.S. government, including the USDA and the U.S. Trade
Representative, work closely together to implement processes that
determine the equivalence of foreign organic certification programs and
then negotiate an arrangement or agreement as appropriate.\105\
Formerly, the organic regulations only addressed this authority in
general terms under Sec. 205.500(c) but did not describe the criteria,
scope, and other parameters to establish, oversee, or terminate such
arrangements or agreements. The rulemaking describes equivalence
determinations in more detail; this creates a new type of PRA
respondent category. The rulemaking allows an equivalence determination
if the U.S. government determines that the technical requirements and
conformity assessment system under which foreign products labeled as
organic are produced and handled are at least equivalent to the
requirements of the OFPA and the USDA organic regulations. The
rulemaking requires periodic assessment.
---------------------------------------------------------------------------
\105\ The United States currently has organic trade arrangements
with Canada, the European Union, the United Kingdom, Israel, Japan,
New Zealand, South Korea, Taiwan, and Switzerland.
---------------------------------------------------------------------------
AMS expects these periodic peer review assessments will be similar
in depth and frequency to the audits of USDA-accredited certifying
agents and estimates a comparable level of reporting and recordkeeping
burden by foreign governments with which USDA has negotiated trade
arrangements or agreements. AMS estimates the collection cost for the
periodic review of a single foreign government is $602. This cost is
based on 7.5 reporting labor hours averaged as needed and an estimated
10 hours of annual recordkeeping per foreign government per year at
$24.59 per labor hour, including 34.63% benefits, for a total salary
component of $602.06 per year reviewed. The total cost for foreign
governments to be assessed for a trade arrangement or agreement is
$4,816. This cost is averaged as 140 total labor hours for all foreign
governments at $24.59 per labor hour, including 34.63% benefits.
106 107
---------------------------------------------------------------------------
\106\ The source of the data is based on average World Bank wage
rates for countries with USDA-accredited certifying agents which
were 70.3% of U.S. labor rates in 2020. https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD. Agents: https://stats.oecd.org/Index.aspx?DataSetCode=AWCOMP.
\107\ Benefits are based on a review of data from the
Organisation for Economic Co-Operation and Development (OECD), which
indicates that benefits account for 34.63% of total compensation in
foreign countries with USDA-accredited certifying agents.
---------------------------------------------------------------------------
Total (Domestic and Foreign) Information Collection Cost (Reporting
and Recordkeeping) of Rulemaking: $14,416,897 (Also, see Summary Table
4: All Reporting and Recordkeeping Hours and Costs, and All Domestic
Reporting and Recordkeeping Hours and Costs).
Total All Reporting Burden Cost: $12,454,097.
Estimate of Burden: Public reporting burden for the collection of
information is estimated to average 0.56 hours per year per response.
Respondents: Certifying agents, certified operations, inspectors,
and foreign governments.
Estimated Number of Reporting Respondents: 51,091.
Estimated Number of Reporting Responses: 566,387.
Estimated Total Annual Burden on Reporting Respondents: 318,859
hours.
Estimated Total Annual Reporting Responses per Reporting
Respondents: 11.09 reporting responses per reporting respondents.
Total All Recordkeeping Burden Cost: $1,962,800.
Estimate of Burden: Public recordkeeping burden is estimated to be
[[Page 3619]]
an annual total of 0.90 hours per year per respondent.
Respondents: Certifying agents, certified operations, and foreign
governments.
Estimated Number of Recordkeeping Respondents: 50,811.
Estimated Total Recordkeeping Burden on Respondents: 45,636 hours.
Estimated Total Recordkeeping Responses per Recordkeeping
Respondents: 1 recordkeeping response per recordkeeping respondents.
Total Domestic Only Information Collection Cost (Reporting and
Recordkeeping) of Rulemaking: $7,934,528.
Total Domestic Only Reporting Burden Cost: $6,627,301.
Estimate of Burden: Public domestic only reporting burden is
estimated to be an annual total 0.43 hours per year per domestic
respondent.
Respondents: Certifying agents, certified operations, and
inspectors.
Estimated Number of Domestic Reporting Respondents: 30,123.
Estimated Number of Domestic Reporting Responses: 334,168.
Estimated Total Annual Reporting Burden on Domestic Respondents:
145,315 hours.
Estimated Total Domestic Reporting Responses per Reporting
Respondents: 11.09 reporting response per reporting respondents.
Total Domestic Only Recordkeeping Burden Cost: $1,307,227.
Estimate of Burden: Public domestic only recordkeeping burden is
estimated to be an annual total of 1 hours per year per respondent.
Respondents: Certifying agents and certified operations.
Estimated Number of Domestic Recordkeeping Respondents: 29,975.
Estimated Total Annual Recordkeeping Burden on Domestic
Respondents: 26,878 hours.
Estimated Number of Domestic Recordkeeping Responses: 29,929.
Estimated Total Domestic Recordkeeping Responses per Recordkeeping
Respondents: 1 recordkeeping response per recordkeeping respondents.
Summary Table 4--All Hours and Costs, All Domestic Hours and Costs, and All Foreign Hours and Costs
----------------------------------------------------------------------------------------------------------------
Number of
Hours Costs respondents Respondent types
----------------------------------------------------------------------------------------------------------------
Total for All (Reporting & 364,495 $14,416,897 51,091 Certifying agents,
Recordkeeping). certified operations,
inspectors, and foreign
governments.
All Reporting..................... 318,859 12,454,097 51,091 Certifying agents,
certified operations,
inspectors, and foreign
governments.
All Recordkeeping................. 45,636 1,962,800 50,811 Certifying agents,
certified operations,
and foreign
governments.
----------------------------------------------------------------------------------------------------------------
Just Domestic--All (Reporting & 172,193 7,934,528 30,123 Certifying agents,
Recordkeeping). certified operations,
and inspectors.
Just Domestic Reporting........... 145,315 6,627,301 30,123 Certifying agents,
certified operations,
and inspectors.
Just Domestic Recordkeeping....... 26,878 1,307,227 29,975 Certifying agents and
certified operations.
----------------------------------------------------------------------------------------------------------------
Just Foreign--All (Reporting & 192,301 6,482,369 20,968 Certifying agents,
Recordkeeping). certified operations,
inspectors, and foreign
governments.
Just Foreign Reporting............ 173,543 5,826,795 20,968 Certifying agents,
certified operations,
inspectors, and foreign
governments.
Just Foreign Recordkeeping........ 18,758 655,573 20,836 Certifying agents,
certified operations,
and foreign
governments.
----------------------------------------------------------------------------------------------------------------
E. Executive Order 13175
Executive Order 13175 requires Federal agencies to consult and
coordinate with Tribes on a government-to-government basis on policies
that have Tribal implications, including regulations, legislative
comments, or proposed legislation. Additionally, other policy
statements or actions that have substantial direct effects on one or
more Indian Tribes, the relationship between the Federal Government and
Indian Tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian Tribes also require
consultation.
AMS hosted a virtual tribal listening session on April 9, 2020, to
discuss the Strengthening Organic Enforcement proposed rule and
upcoming public comment opportunity. AMS has not received comments from
Tribes during the rulemaking process. AMS conducted an analysis of
possible Tribal impacts and determined that any impact is most likely
to be positive. AMS finds oversight protections and fraud deterrence
actions that will have positive benefits for organic producers extend
to any Tribal organic producers. Further, the specific provisions
related to grower groups may benefit small producers in a Tribe who
wish to join together under a shared certification for market
development purposes.
If a tribe requests consultation in the future, AMS will work with
the Office of Tribal Relations to ensure meaningful consultation is
provided. AMS also stands ready to provide technical assistance to
Tribes and operators wishing to participate in the organic
certification process.
F. Executive Order 13132
Executive Order 13132 mandates that federal agencies consider how
their policymaking and regulatory activities impact the policymaking
discretion of States and local officials and how well such efforts
conform to the principles of federalism defined in said order. This
executive order only pertains to regulations with clear federalism
implications.
AMS has determined that this rulemaking conforms with the
principles of federalism described in E.O. 13132. The rule does not
impose substantial direct costs or effects on States, does not alter
the relationship between States and the federal government, and does
not alter the distribution of powers and responsibilities among the
various levels of government. States had the opportunity to comment on
the proposed rule. No States provided public comment on the federalism
implications of this rule. Therefore, AMS has concluded that this
rulemaking does not have federalism implications.
G. Civil Rights Impact Analysis
AMS has reviewed this rulemaking in accordance with the Department
Regulation 4300-4, Civil Rights Impact Analysis, to address any major
civil rights impacts the rule might have on minorities, women, and
persons with disabilities. After a careful review of the rule's intent
and provisions, AMS determined that this rule will affect certifying
agents and organic inspectors, handlers of organic products, and
organic producers. AMS also determined that this rule has no
[[Page 3620]]
potential for affecting producers, handlers, certifying agents, or
inspectors in protected groups differently than the general population
of producers, handlers, certifying agents, or inspectors.
Protected individuals have the same opportunity to participate in
NOP as non-protected individuals. The USDA organic regulations prohibit
discrimination by certifying agents. Specifically, Sec. 205.501(d) of
the current regulations for accreditation of certifying agents provides
that ``No private or governmental entity accredited as a certifying
agent under this subpart shall exclude from participation in or deny
the benefits of NOP to any person due to discrimination because of
race, color, national origin, gender, religion, age, disability,
political beliefs, sexual orientation, or marital or family status.''
Section 205.501(a)(2) requires ``certifying agents to demonstrate the
ability to fully comply with the requirements for accreditation set
forth in this subpart'' including the prohibition on discrimination.
The granting of accreditation to certifying agents under Sec. 205.506
requires the review of information submitted by the certifying agent
and an on-site review of the certifying agent's client operation.
Further, if certification is denied, Sec. 205.405(d) requires that the
certifying agent notify the applicant of their right to file an appeal
to the AMS Administrator in accordance with Sec. 205.681.
These regulations provide protections against discrimination,
thereby permitting all producers, regardless of race, color, national
origin, gender, religion, age, disability, political beliefs, sexual
orientation, or marital or family status, who voluntarily choose to
adhere to the rule and qualify, to be certified as meeting NOP
requirements by an accredited certifying agent. This action in no way
changes any of these protections against discrimination.
H. Related Documents
Documents related to this rule include the Organic Foods Production
Act of 1990, as amended, (7 U.S.C. 6501-6524) and its implementing
regulations (7 CFR part 205). On August 5, 2020, AMS published the
proposed rule (85 FR 47536) to notify the public of and request
comments on the potential changes to the organic regulations discussed
in this rulemaking.
List of Subjects in 7 CFR Part 205
Administrative practice and procedure, Agricultrual Commodities,
Agriculture, Animals, Archives and records, Fees, Imports, Labeling,
Livestock, Organically produced products, Plants, Reporting and
recordkeeping requirements, Seals and insignia, Soil conservation.
For the reasons set forth in the preamble, the Agricultural
Marketing Service amends 7 CFR part 205 as follows:
PART 205--NATIONAL ORGANIC PROGRAM
0
1. The authority citation for part 205 continues to read as follows:
Authority: 7 U.S.C. 6501-6524.
0
2. Section 205.2 is amended by:
0
a. Adding in alphabetical order the terms ``Adverse action'',
``Certification activity'', ``Certification office'', ``Certification
review'', and ``Conformity assessment system'';
0
b. Revising the terms ``Handle'', ``Handler'', and ``Handling
operation'';
0
c. Adding in alphabetical order the terms ``Internal control system'',
``Organic exporter'', ``Organic fraud'', ``Organic importer'',
``Organic Integrity Database'', ``Producer group member'', ``Producer
group operation'', ``Producer group production unit'', and ``Retail
establishment'';
0
d. Removing the terms ``Retail food establishment''; and
0
e. Adding in alphabetical order the terms ``Supply chain traceability
audit'', ``Technical requirements'', and ``Unannounced inspection''.
The revisions and additions read as follows:
Sec. 205.2 Terms defined.
* * * * *
Adverse action. A noncompliance decision that adversely affects
certification, accreditation, or a person subject to the Act, including
a proposed suspension or revocation; a denial of certification,
accreditation, or reinstatement; a cease and desist notice; or a civil
penalty.
* * * * *
Certification activity. Any business conducted by a certifying
agent, or by a person acting on behalf of a certifying agent, including
but not limited to: certification management; administration;
application review; inspection planning; inspections; sampling;
inspection report review; material review; label review; records
retention; compliance review; investigating complaints and taking
adverse actions; certification decisions; and issuing transaction
certificates.
Certification office. Any site or facility where certification
activities are conducted, except for certification activities that
occur at certified operations or applicants for certification, such as
inspections and sampling.
* * * * *
Certification review. The act of reviewing and evaluating a
certified operation or applicant for certification and determining
compliance or ability to comply with the USDA organic regulations. This
does not include performing an inspection.
* * * * *
Conformity assessment system. All activities, including oversight,
accreditation, compliance review, and enforcement, undertaken by a
government to ensure that the applicable technical requirements for the
production and handling of organic agricultural products are fully and
consistently applied.
* * * * *
Handle. To sell, process, or package agricultural products,
including but not limited to trading, facilitating sale or trade on
behalf of a seller or oneself, importing to the United States,
exporting for sale in the United States, combining, aggregating,
culling, conditioning, treating, packing, containerizing, repackaging,
labeling, storing, receiving, or loading.
Handler. Any person that handles agricultural products, except
final retailers of agricultural products that do not process
agricultural products.
Handling operation. Any operation that handles agricultural
products, except final retailers of agricultural products that do not
process agricultural products.
* * * * *
Internal control system. An internal quality management system that
establishes and governs the review, monitoring, training, and
inspection of the producer group operation, and the procurement and
distribution of shared production and handling inputs and resources, to
maintain compliance with the USDA organic regulations.
* * * * *
Organic exporter. The final certified exporter of the organic
agricultural product, who facilitates the trade of, consigns, or
arranges for the transport/shipping of the organic agricultural product
from a foreign country to the United States.
Organic fraud. Deceptive representation, sale, or labeling of
nonorganic agricultural products or ingredients as ``100 percent
organic,'' ``organic,'' or ``made with organic (specified ingredients
or food group(s)).''
[[Page 3621]]
Organic importer. The operation responsible for accepting imported
organic agricultural products within the United States and ensuring NOP
Import Certificate data are entered into the U.S. Customs and Border
Protection import system of record.
Organic Integrity Database. The National Organic Program's
electronic, web-based reporting tool for the submission of data,
completion of certificates of organic operation, and other information,
or the tool's successors.
* * * * *
Producer group member. An individual engaged in the activity of
producing or harvesting agricultural products as a member of a producer
group operation.
Producer group operation. A producer, organized as a person,
consisting of producer group members and production units in geographic
proximity governed by an internal control system under one organic
system plan and certification.
Producer group production unit. A defined subgroup of producer
group members in geographic proximity within a single producer group
operation that use shared practices and resources to produce similar
agricultural products.
* * * * *
Retail establishment. Restaurants, delicatessens, bakeries, grocery
stores, or any retail business with a restaurant, delicatessen, bakery,
salad bar, bulk food self-service station, or other eat-in, carry-out,
mail-order, or delivery service of raw or processed agricultural
products.
* * * * *
Supply chain traceability audit. The process of identifying and
tracking the movement, sale, custody, handling, and organic status of
an agricultural product along a supply chain to verify the agricultural
product's compliance with this part.
* * * * *
Technical requirements. A system of relevant laws, regulations,
regulatory practices, standards, policies, and procedures that address
the certification, production, and handling of organic agricultural
products.
* * * * *
Unannounced inspection. The act of examining and evaluating all or
a portion of the production or handling activities of a certified
operation without advance notice to determine compliance with the Act
and the regulations in this part.
* * * * *
0
3. Section 205.100 is amended by revising paragraph (a) and paragraph
(c) introductory text to read as follows:
Sec. 205.100 What has to be certified.
(a) Except for the exempt operations described in Sec. 205.101,
each operation or portion of an operation that produces or handles
agricultural products intended to be sold, labeled, or represented as
``100 percent organic,'' ``organic,'' or ``made with organic (specified
ingredients or food group(s))'' must be certified according to the
provisions of subpart E of this part and must meet all other applicable
requirements of this part.
* * * * *
(c) Any person or responsibly connected person that:
* * * * *
0
4. Revise Sec. 205.101 to read as follows:
Sec. 205.101 Exemptions from certification.
The following operations in paragraphs (a) through (h) of this
section are exempt from certification under subpart E of this part and
from submitting an organic system plan for acceptance or approval under
Sec. 205.201 but must comply with the applicable organic production
and handling requirements of subpart C of this part, the applicable
labeling requirements of subpart D of this part, and any requirements
described in paragraphs (a) through (i) of this section.
(a) A production or handling operation that sells agricultural
products as ``organic'' but whose gross agricultural income from
organic sales totals $5,000 or less annually.
(b) A retail establishment that does not process organically
produced agricultural products.
(c) A retail establishment that processes, at the point of final
sale, agricultural products certified under this part as ``100 percent
organic,'' ``organic,'' or ``made with organic (specified ingredients
or food group(s)).''
(d) A handling operation that only handles agricultural products
that contain less than 70 percent organic ingredients (as described in
Sec. 205.301(d)) or that only identifies organic ingredients on the
information panel.
(e) An operation that only receives, stores, and/or prepares for
shipment, but does not otherwise handle, organic agricultural products
that:
(1) Are enclosed in sealed, tamper-evident packages or containers
prior to being received or acquired by the operation; and
(2) Remain in the same sealed, tamper-evident packages or
containers and are not otherwise handled while in the control of the
operation.
(f) An operation that only buys, sells, receives, stores, and/or
prepares for shipment, but does not otherwise handle, organic
agricultural products already labeled for retail sale that:
(1) Are enclosed in sealed, tamper-evident packages or containers
that are labeled for retail sale prior to being received or acquired by
the operation; and
(2) Remain in the same sealed, tamper-evident packages or
containers that are labeled for retail sale and are not otherwise
handled while in the control of the operation.
(g) A Customs broker (per 19 CFR 111.1) that only conducts customs
business but does not otherwise handle organic agricultural products.
(h) An operation that only arranges for the shipping, storing,
transport, or movement of organic agricultural products but does not
otherwise handle organic products.
(i) Recordkeeping by exempt operations.
(1) Exempt operations described in paragraphs (a) and (c) through
(f) of this section must make available to representatives of the
Secretary, upon request, records that:
(i) Demonstrate that agricultural products identified as organic
were organically produced and handled; and
(ii) Verify quantities of organic agricultural products received
and shipped or sold
(2) All records described in this section must be maintained for no
less than 3 years beyond their creation, and the operations must allow
representatives of the Secretary and the applicable State organic
programs' governing State official access to these records for
inspection and copying during normal business hours to determine
compliance with the applicable regulations set forth in this part.
0
5. Section 205.103 is amended by:
0
a. Revising paragraph (b)(2);
0
b. Redesignating paragraphs (b)(3) and (4) as paragraphs (b)(4) and
(5); and
0
c. Adding new paragraph (b)(3).
The revision and addition read as follows:
Sec. 205.103 Recordkeeping by certified operations.
* * * * *
(b) * * *
(2) Fully disclose all activities and transactions of the certified
operation, in sufficient detail as to be readily understood and
audited; records must span the time of purchase or acquisition, through
production, to sale
[[Page 3622]]
or transport and be traceable back to the last certified operation;
(3) Include audit trail documentation for agricultural products
handled or produced by the certified operation and identify
agricultural products on these records as ``100% organic,''
``organic,'' or ``made with organic (specified ingredients or food
group(s)),'' or similar terms, as applicable;
* * * * *
0
6. Section 205.201 is amended by:
0
a. Removing the words ``or excluded'' in paragraph (a) introductory
text;
0
b. Revising paragraph (a)(3); and
0
c. Adding paragraph (c).
The revision and addition to read as follows:
Sec. 205.201 Organic production and handling system plan.
(a) * * *
(3) A description of the monitoring practices and procedures to be
performed and maintained, including the frequency with which they will
be performed, to verify that the plan is effectively implemented. This
must include a description of the monitoring practices and procedures
to verify suppliers in the supply chain and organic status of
agricultural products received, and to prevent organic fraud, as
appropriate to the certified operation's activities, scope, and
complexity;
* * * * *
(c) In addition to paragraph (a) of this section, a producer group
operation's organic system plan must describe its internal control
system. The description of the internal control system must:
(1) Define the organizational structure, roles, and
responsibilities of all personnel;
(2) Identify producer group production units and locations;
(3) Describe measures to protect against potential conflicts of
interest and protect internal control system personnel from
retribution;
(4) Define geographic proximity criteria for producer group members
and producer group production units;
(5) Describe procedures for accepting new members into the producer
group operation, including initial inspection and compliance
determination;
(6) Describe characteristics of high-risk producer group members
and producer group production units;
(7) Describe how shared resources, including production practices
and inputs, are procured and provided to all producer group members and
personnel;
(8) Describe how training, education, and technical assistance is
provided to producer group members and internal control system
personnel;
(9) Describe the system of records used to demonstrate compliance
with this part, including traceability and mass-balance audits; and
(10) Describe how internal monitoring, surveillance, inspection,
sanctions, and auditing are used to assess the compliance of all
producer group members.
0
7. Add Sec. 205.273 to subpart C to read as follows:
Sec. 205.273 Imports to the United States.
Each shipment of organic agricultural products imported into the
United States must be certified pursuant to subpart E of this part,
labeled pursuant to subpart D of this part, be declared as organic to
U.S. Customs and Border Protection, and be associated with valid NOP
Import Certificate data.
(a) Persons exporting organic agricultural products to the United
States must request an NOP Import Certificate from a certifying agent
prior to their export. Only certifying agents accredited by the USDA or
foreign certifying agents authorized under an organic trade arrangement
or agreement may issue an NOP Import Certificate.
(b) The certifying agent must review an NOP Import Certificate
request and determine whether the export complies with the USDA organic
regulations. The certifying agent must have and implement a documented
organic control system for intaking and approving or rejecting the
validity of an NOP Import Certificate request. The certifying agent
shall issue the NOP Import Certificate through the Organic Integrity
Database only if the export complies with the USDA organic regulations.
(c) Each compliant organic import must be declared as organic to
U.S. Customs and Border Protection by entering NOP Import Certificate
data into the U.S. Customs and Border Protection's Automated Commercial
Environment system. Organic imports must be clearly identified and
marked as organic on all import documents including but not limited to
invoices, packing lists, bills of lading, and U.S. Customs and Border
Protection entry data. Only NOP Import Certificate data generated by
the Organic Integrity Database are valid.
(d) Upon receiving a shipment with organic agricultural products,
the organic importer must ensure the import is accompanied by accurate
NOP Import Certificate data and must verify that the shipment has had
no contact with prohibited substances pursuant to Sec. 205.272 or
exposure to ionizing radiation pursuant to Sec. 205.105, since export.
The organic importer must have a documented organic control system to
conduct this verification.
0
8. Amend Sec. 205.300 by revising paragraph (c) to read as follows:
Sec. 205.300 Use of the term, ``organic.''
* * * * *
(c) Products produced in a foreign country and exported for sale in
the United States must be certified pursuant to subpart E of this part,
labeled pursuant to this subpart D, and must comply with the
requirements in Sec. 205.273.
* * * * *
0
9. Amend Sec. 205.301 by revising paragraphs (f)(2) and (3) to read as
follows:
Sec. 205.301 Product composition.
* * * * *
(f) * * *
(2) Be processed using ionizing radiation, pursuant to Sec.
205.105(f);
(3) Be produced using sewage sludge, pursuant to Sec. 205.105(g);
* * * * *
0
10. Amend Sec. 205.302 by revising paragraphs (a)(1) through (3) to
read as follows:
Sec. 205.302 Calculating the percentage of organically produced
ingredients.
(a) * * *
(1) Dividing the total net weight of the combined organic
ingredients at formulation by the total weight of all ingredients of
the product at formulation. Water and salt added as ingredients at
formulation are excluded from the calculation.
(2) Dividing the total fluid volume of the combined organic
ingredients at formulation by the total fluid volume of all ingredients
of the product at formulation if the product and ingredients are
liquid. Water and salt added as ingredients at formulation are excluded
from the calculation. If the liquid product is identified on the
principal display panel or information panel as being reconstituted
from concentrates, the calculation should be made based on single-
strength concentrations of all ingredients.
(3) For products containing organically produced ingredients in
both solid and liquid form, dividing the combined net weight of the
solid organic ingredients and the net weight of the liquid organic
ingredients at formulation by the total weight of all ingredients of
the product at formulation. Water and salt added as ingredients at
formulation are excluded from the calculation.
* * * * *
0
11. Revise Sec. 205.307 to read as follows:
[[Page 3623]]
Sec. 205.307 Labeling of nonretail containers.
(a) Nonretail containers used to ship or store certified organic
agricultural products must display:
(1) Identification of the product as organic; and
(2) The production lot number, shipping identification, or other
unique information that links the container to audit trail
documentation.
(b) Audit trail documentation for nonretail containers must
identify the last certified operation that handled the agricultural
product.
(c) Paragraph (a)(1) of this section does not apply to nonretail
containers used to ship or store agricultural products packaged for
retail sale with organic identification visible on the retail label.
(d) Shipping containers of domestically produced product labeled as
organic intended for export to international markets may be labeled in
accordance with any shipping container labeling requirements of the
foreign country of destination or the container labeling specifications
of a foreign contract buyer: Provided, that, the shipping containers
and shipping documents accompanying such organic products are clearly
marked ``For Export Only'' and: Provided further, that proof of such
container marking and export must be maintained by the handler in
accordance with recordkeeping requirements for exempt operations under
Sec. 205.101.
0
12. Section 205.310 is amended by revising the section heading and
paragraphs (a) and (b) to read as follows:
Sec. 205.310 Agricultural products produced or processed by an exempt
operation.
(a) An agricultural product organically produced or processed by an
exempt operation must not:
(1) Display the USDA seal or any certifying agent's seal or other
identifying mark which represents the exempt operation as a certified
organic operation; or
(2) Be represented as a certified organic product or certified
organic ingredient to any buyer.
(b) An agricultural product organically produced or processed by an
exempt operation may be identified as an organic product or organic
ingredient in a multi-ingredient product produced by the exempt
operation. Such product or ingredient must not be identified or
represented as ``organic'' in a product processed by others.
* * * * *
0
13. Section 205.400 is amended by:
0
a. Removing ``Sec. 205.200'' and adding in its place ``Sec. 205.201''
in paragraph (b); and
0
b. Adding paragraph (g).
The addition reads as follows:
Sec. 205.400 General requirements for certification.
* * * * *
(g) In addition to paragraphs (a) through (f) of this section, a
producer group operation must:
(1) Be organized as a person;
(2) Use centralized processing, distribution, and marketing
facilities and systems;
(3) Be organized into producer group production units;
(4) Maintain an internal control system to implement the practices
described in Sec. 205.201(c) and ensure compliance with this part;
(5) Ensure that all agricultural products sold, labeled, or
represented as organic are produced only by producer group members
using land and facilities within the certified operation;
(6) Ensure that producer group members do not sell, label, or
represent their agricultural products as organic outside of the
producer group operation unless they are individually certified;
(7) Report to the certifying agent, at least annually, the name and
location of all producer group members and producer group production
units, the agricultural products produced, estimated yields, and size
of production areas;
(8) Conduct internal inspections of each producer group member, at
least annually, by internal inspectors with the member present, which
must include mass-balance audits and reconciliation of each producer
group member's and each producer group production unit's yield and
group sales;
(9) Implement recordkeeping requirements to ensure traceability
from production at each producer group member and production unit
through handling to sale and transport;
(10) Implement procedures to ensure all production and handling by
the producer group operation is compliant with the USDA organic
regulations and the Act; and
(11) Address any other terms or conditions determined by the
Administrator to be necessary to enforce compliance with the USDA
organic regulations and the Act.
Sec. 205.401 [Amended]
0
14. Amend Sec. 205.401 in paragraph (a) by removing ``Sec. 205.200''
and adding in its place ``Sec. 205.201''.
0
15. Section 205.403 is amended by:
0
a. Redesignating paragraph (a)(2) as paragraph (a)(3);
0
b. Adding new paragraph (a)(2);
0
c. Redesignating paragraphs (b) through (e) as paragraphs (c) through
(f);
0
d. Adding new paragraph (b);
0
e. In newly redesignated paragraph (d)(2), removing ``Sec. 205.200''
and adding in its place ``Sec. 205.201''; and
0
f. Adding paragraphs (d)(4) and (5).
The additions read as follows:
Sec. 205.403 On-site inspections.
(a) * * *
(2) Inspections of a producer group operation must:
(i) Assess the internal control system's compliance, or ability to
comply, with the requirements of Sec. 205.400(g)(8). This must include
review of the internal inspections conducted by the internal control
system.
(ii) Conduct witness audits of internal control system inspectors
performing inspections of the producer group operation.
(iii) Individually inspect at least 1.4 times the square root or 2%
of the total number of producer group members, whichever is higher. All
producer group members determined to be high risk by the certifying
agent must be inspected. At least one producer group member in each
producer group production unit must be inspected.
(iv) Inspect each handling facility.
* * * * *
(b) Unannounced inspections. (1) A certifying agent must, on an
annual basis, conduct unannounced inspections of a minimum of five
percent of the operations it certifies, rounded up to the nearest whole
number.
(2) Certifying agents must be able to conduct unannounced
inspections of any operation they certify and must not accept
applications or continue certification with operations located in areas
where they are unable to conduct unannounced inspections.
* * * * *
(d) * * *
(4) Mass-balances, in that quantities of organic product and
ingredients produced or purchased account for organic product and
ingredients used, stored, sold, or transported (that is, inputs account
for outputs); and
(5) That organic products and ingredients are traceable by the
operation from the time of purchase or acquisition through production
to sale or transport; and that the certifying agent can verify
compliance back to the last certified operation.
* * * * *
0
16. Section Sec. 205.404 is amended by revising paragraph (b),
redesignating paragraph (c) as paragraph (d), and adding a new
paragraph (c).
The revision and addition read as follows:
[[Page 3624]]
Sec. 205.404 Certificates of organic operation.
* * * * *
(b) The certifying agent must issue a certificate of organic
operation. The certificate of organic operation must be generated from
the Organic Integrity Database and may be provided to certified
operations electronically.
(c) In addition to the certificate of organic operation provided
for in paragraph (b) of this section, a certifying agent may issue its
own addenda to the certificate of organic operation. If issued, any
addenda must include:
(1) Name, address, and contact information for the certified
operation;
(2) The certified operation's unique ID number/code that
corresponds to the certified operation's ID number/code in the Organic
Integrity Database;
(3) A link to the Organic Integrity Database or a link to the
certified operation's profile in the Organic Integrity Database, along
with a statement, ``You may verify the certification of this operation
at the Organic Integrity Database,'' or a similar statement;
(4) Name, address, and contact information of the certifying agent;
and
(5) ``Addendum issue date.''
* * * * *
Sec. 205.405 [Amended]
0
17. Amend Sec. 205.405 by removing paragraph (c)(3).
0
18. Amend 205.406 by revising paragraphs (a) and (b) to read as
follows:
Sec. 205.406 Continuation of certification.
(a) To continue certification, a certified operation must annually
pay the certification fees and submit the following information to the
certifying agent:
(1) A summary statement, supported by documentation, detailing any
deviations from, changes to, modifications to, or other amendments made
to the organic system plan submitted during the previous year;
(2) Any additions or deletions to the previous year's organic
system plan, intended to be undertaken in the coming year, detailed
pursuant to Sec. 205.201;
(3) Any additions to or deletions from the information required
pursuant to Sec. 205.401(b); and
(4) Other information as deemed necessary by the certifying agent
to determine compliance with the Act and the regulations in this part.
(b) The certifying agent must arrange and conduct an on-site
inspection, pursuant to Sec. 205.403, of the certified operation at
least once per calendar year.
* * * * *
Sec. 205.500 [Amended]
0
19. Amend Sec. 205.500 by removing paragraph (c).
0
20. Section 205.501 is amended by:
0
a. Revising paragraphs (a)(4), (5), (6), (10), (13), and (15);
0
b. Redesignating paragraph (a)(21) as paragraph (a)(23); and
0
c. Adding new paragraph (a)(21) and paragraph (a)(22).
The revisions and additions read as follows:
Sec. 205.501 General requirements for accreditation.
(a) * * *
(4) Continuously use a sufficient number of qualified and
adequately trained personnel, including inspectors and certification
review personnel, to comply with and implement the USDA organic
standards.
(i) Certifying agents must demonstrate that all inspectors,
including staff, volunteers, and contractors, have the relevant
knowledge, skills, and experience required to inspect operations of the
scope and complexity assigned and to evaluate compliance with the
applicable regulations of this part.
(A) Certifying agents must demonstrate that inspectors continuously
maintain adequate knowledge and skills about the current USDA organic
standards, production and handling practices, certification and
inspection, import and/or export requirements, traceability audits,
mass-balance audits, written and oral communication skills, sample
collection, investigation techniques, and preparation of technically
accurate inspection documents.
(B) All inspectors must demonstrate successful completion of
training that is relevant to inspection. Inspectors with less than one
year of inspection experience must complete at least 50 hours of
training within their first year and prior to performing inspections
independently. Inspectors with one or more years of inspection
experience must annually complete at least 10 hours of training if
inspecting one area of operation (as defined at Sec. 205.2) and an
additional 5 hours of training for each additional area of operation
inspected.
(C) Certifying agents must demonstrate that inspectors have a
minimum of 2,000 hours of experience relevant to the scope and
complexity of operations they will inspect before assigning initial
inspection responsibilities.
(ii) Certifying agents must demonstrate that all certification
review personnel, including staff, volunteers, or contractors, have the
knowledge, skills, and experience required to perform certification
review of operations of the scope and complexity assigned and to
evaluate compliance with the applicable regulations of this part.
(A) Certifying agents must demonstrate that all certification
review personnel continuously maintain adequate knowledge and skills in
the current USDA organic standards, certification and compliance
processes, traceability audits, mass-balance audits, and practices
applicable to the type, volume, and range of review activities
assigned.
(B) All certification review personnel must demonstrate successful
completion of training that is relevant to certification review.
Certification review personnel with less than one year of certification
review experience must complete at least 50 hours of training within
their first year performing certification review. Certification review
personnel with one or more years of certification review experience
must annually complete at least 10 hours of training if conducting
certification review related to one area of operation and an additional
5 hours of training for each additional area of operation.
(iii) Certifying agents must maintain current training
requirements, training procedures, and training records for all
inspectors and certification review personnel.
(5) Demonstrate that all persons with inspection or certification
review responsibilities have sufficient expertise in organic production
or handling techniques to successfully perform the duties assigned.
Sufficient expertise must include knowledge of certification to USDA
organic standards and evidence of education, training, or professional
experience in the fields of agriculture, science, or organic production
and handling that relates to assigned duties.
(6) Conduct an annual performance evaluation of all persons who
conduct inspections, certification review, or implement measures to
correct any deficiencies in certification services.
(i) Witness inspections--certifying agents must ensure that each
inspector is evaluated while performing an inspection at least once
every three years, or more frequently if warranted. Inspectors with
less than three years of inspection experience must undergo a witness
inspection annually. Witness inspections must be performed by
certifying agent personnel who are qualified to evaluate inspectors.
(ii) Certifying agents must maintain documented policies,
procedures, and
[[Page 3625]]
records for annual performance evaluations and witness inspections.
* * * * *
(10) Maintain strict confidentiality with respect to its clients
under the applicable organic certification program and not disclose to
third parties (except for the Secretary or the applicable State organic
program's governing State official or their authorized representatives)
any business-related information concerning any client obtained while
implementing the regulations in this part, except:
(i) For information that must be made available to any member of
the public, as provided for in Sec. 205.504(b)(5);
(ii) For enforcement purposes, certifying agents must exchange any
compliance-related information that is credibly needed to certify,
decertify, or investigate an operation, including for the purpose of
verifying supply chain traceability and audit trail documentation; and
(iii) If a certified operation's proprietary business information
is compliance-related and thus credibly needed to certify, decertify,
or investigate that operation, certifying agents may exchange that
information for the purposes of enforcing the Act, but the information
in question still retains its proprietary character even after it is
exchanged and all of the certifying agents that are involved in the
exchange still have a duty to preserve the confidentiality of that
information after the exchange.
* * * * *
(13) Accept the certification decisions made by another certifying
agent accredited or accepted by USDA pursuant to Sec. 205.500.
Certifying agents must provide information to other certifying agents
to ensure organic integrity or to enforce organic regulations,
including to verify supply chain integrity, authenticate the organic
status of certified products, and conduct investigations;
* * * * *
(15) Maintain current and accurate data in the Organic Integrity
Database for each operation which it certifies;
* * * * *
(21) Conduct risk-based supply chain traceability audits as
described in the criteria and procedures for supply chain audits, per
Sec. 205.504(b)(7), and share audit findings with other certifying
agents as needed to determine compliance, per paragraph (a)(13) of this
section.
(22) Notify AMS not later than 90 calendar days after certification
activities begin in a new certification office. The notification must
include the countries where the certification activities are being
provided, the nature of the certification activities, and the
qualifications of the personnel providing the certification activities.
* * * * *
0
21. Section 205.504 is amended by revising the introductory text and
paragraph (b)(4) and adding paragraphs (b)(7) and (8) to read as
follows:
Sec. 205.504 Evidence of expertise and ability.
A private or governmental entity seeking accreditation as a
certifying agent must submit the following documents and information to
demonstrate its expertise in organic production or handling techniques;
its ability to fully comply with and implement the organic
certification program established in Sec. Sec. 205.100 and 205.101,
205.201 through 205.203, 205.300 through 205.303, 205.400 through
205.406, and 205.661 through 205.663; and its ability to comply with
the requirements for accreditation set forth in Sec. 205.501:
* * * * *
(b) * * *
(4) A copy of the procedures to be used for sharing information
with other certifying agents and for maintaining the confidentiality of
any business-related information as set forth in Sec. 205.501(a)(10);
* * * * *
(7) A copy of the criteria to identify high-risk operations and
agricultural products for supply chain traceability audits; and
procedures to conduct risk-based supply chain traceability audits, as
required in Sec. 205.501(a)(21); and procedures to report credible
evidence of organic fraud to the Administrator.
(8) A copy of reasonable decision criteria for acceptance of
mediation, and a process for identifying personnel conducting mediation
and setting up mediation.
* * * * *
0
22. Add Sec. 205.511 to subpart F to read as follows:
Sec. 205.511 Accepting foreign conformity assessment systems.
(a) Foreign product may be certified under the USDA organic
regulations by a USDA-accredited certifying agent and imported for sale
in the United States. Foreign product that is produced and handled
under another country's organic certification program may be sold,
labeled, or represented in the United States as organically produced if
the U.S. Government determines that such country's organic
certification program provides technical requirements and a conformity
assessment system governing the production and handling of such
products that are at least equivalent to the requirements of the Act
and the regulations in this part.
(b) Countries desiring to establish eligibility of product
certified under that country's organic certification program to be
sold, labeled, or represented in the United States as organically
produced may request equivalence determinations from AMS. A foreign
government must maintain compliance and enforcement mechanisms to
ensure that its organic certification program is fully meeting the
terms and conditions of any equivalence determination provided by the
U.S. Government pursuant to this section. To request an equivalence
determination, the requesting country must submit documentation that
fully describes its technical requirements and conformity assessment
system. If the U.S. Government determines it can proceed, AMS will
assess the country's organic certification program to evaluate if it is
equivalent.
(c) USDA, working with other Federal agencies, will describe the
scope of an equivalence determination.
(d) AMS will conduct regular reviews and reassessments of countries
deemed equivalent to verify that the foreign government's technical
requirements and conformity assessment system continue to be at least
equivalent to the requirements of the Act and the regulations of this
part, and will determine if the equivalence determination should be
continued, amended, or terminated. AMS will determine the timing and
scope of reviews and re-assessments based on, but not limited to,
factors such as: the terms of the equivalence determination, changes to
the foreign country's technical requirements or conformity assessment
system, the results of previous reviews and re-assessments, instances
of suspected or verified noncompliance issues, the volume of trade, and
other factors contributing to the risk level of the equivalence
determination.
(e) The U.S. Government may terminate an equivalence determination
if the terms or conditions established under the equivalence
determination are not met; if AMS determines that the country's
technical requirements and/or conformity assessment program are no
longer equivalent; if AMS determines that the foreign government's
organic control system is inadequate to ensure that the country's
organic certification program is fully meeting the terms and conditions
under the equivalence determination; or for other good cause.
[[Page 3626]]
0
23. Amend Sec. 205.660 by redesignating paragraphs (c) and (d) as
paragraphs (d) and (e) and adding new paragraph (c).
The addition reads as follows:
Sec. 205.660 General.
* * * * *
(c) The Program Manager may initiate enforcement action against any
person who sells, labels, or provides other market information
concerning an agricultural product if such label or information implies
that such product is produced or handled using organic methods, if the
product was produced or handled in violation of the Organic Foods
Production Act or the regulations in this part.
* * * * *
0
24. Amend Sec. 205.661 by revising the section heading to read as
follows:
Sec. 205.661 Investigation.
* * * * *
0
25. Section 205.662 is amended by:
0
a. Adding paragraph (e)(3);
0
b. Revising the first sentence of paragraph (f)(1); and
0
c. Revising paragraph (g)(1).
The addition and revisions read as follows:
Sec. 205.662 Noncompliance procedure for certified operations.
* * * * *
(e) * * *
(3) Within 3 business days of issuing a notification of suspension
or revocation, or the effective date of an operation's surrender, the
certifying agent must update the operation's status in the Organic
Integrity Database.
(f) * * *
(1) A certified operation or a person responsibly connected with an
operation whose certification has been suspended may at any time,
unless otherwise stated in the notification of suspension, submit a
request to the Secretary for reinstatement of its certification, or
submit a request for eligibility to be certified. * * *
* * * * *
(g) * * *
(1) Knowingly sells or labels a product as organic, except in
accordance with the Act, shall be subject to a civil penalty of not
more than the amount specified in 7 CFR 3.91(b)(1)(xxxvi) per
violation.
* * * * *
0
26. Revise Sec. 205.663 to read as follows:
Sec. 205.663 Mediation.
(a) A certifying agent must submit with its administrative policies
and procedures: decision criteria for acceptance of mediation, and a
process for identifying personnel conducting mediation and setting up
mediation sessions per Sec. 205.504(b)(8).
(b) A certified operation or applicant for certification may
request mediation to resolve a denial of certification or proposed
suspension or proposed revocation of certification issued by a
certifying agent or State organic program.
(1) A certified operation or applicant for certification must
submit any request for mediation in writing to the applicable
certifying agent or State organic program within 30 calendar days of
receipt of the notice of proposed suspension or proposed revocation of
certification or denial of certification.
(2) A certifying agent or State organic program may accept or
reject a request for mediation based on the decision criteria required
in paragraph (a) of this section. Certifying agents must document these
criteria and how the certifying agent applied the criteria to the
request.
(3) If a certifying agent rejects a mediation request, it must
provide this rejection, and the justification for the rejection, in
writing to the applicant for certification or certified operation. The
rejection must include the right to request an appeal, pursuant to
Sec. 205.681, within 30 calendar days of the date of receipt of the
written notification of rejection of the request for mediation.
(4) When an operation appeals a rejection of mediation, the adverse
action which is contested must not be finalized during the appeal
proceeding.
(c) Both parties must agree on the person conducting the mediation.
(d) If a State organic program is in effect, the parties must
follow the mediation procedures established in the State organic
program and approved by the Secretary.
(e) The parties to the mediation have a maximum of 30 calendar days
from the start of mediation to reach an agreement. Successful mediation
results in a settlement agreement agreed to in writing by both the
certifying agent and the certified operation. If mediation is
unsuccessful, the applicant for certification or certified operation
has 30 calendar days from receipt of a written notice of termination of
mediation to appeal the denial of certification or proposed suspension
or revocation pursuant to Sec. 205.681.
(f) Any settlement agreement reached through mediation must comply
with the Act and the regulations in this part. The Program Manager may
review any mediated settlement agreement for conformity to the Act and
the regulations in this part and may reject any agreement or provision
not in conformance with the Act or the regulations in this part.
(g) The Program Manager may propose mediation and enter into a
settlement agreement at any time to resolve any adverse action notice.
0
27. Amend Sec. 205.665 by revising paragraph (a) to read as follows:
Sec. 205.665 Noncompliance procedure for certifying agents.
(a) Notification. (1) A written notification of noncompliance will
be sent to the certifying agent when:
(i) An inspection, review, or investigation of an accredited
certifying agent by the Program Manager reveals any noncompliance with
the Act or regulations in this part; or
(ii) The Program Manager determines that the certification
activities of the certifying agent, or any person performing
certification activities on behalf of the certifying agent, are not
compliant with the Act or the regulations in this part; or
(iii) The Program Manager determines that the certification
activities at a certification office, and/in specific countries, are
not compliant with the Act or the regulations in this part.
(2) Such notification must provide:
(i) A description of each noncompliance;
(ii) The facts upon which the notification of noncompliance is
based; and
(iii) The date by which the certifying agent must rebut or correct
each noncompliance and submit supporting documentation of each
correction when correction is possible.
* * * * *
0
28. Revise Sec. 205.680 to read as follows:
Sec. 205.680 General.
(a) Persons subject to the Act who believe they are adversely
affected by an adverse action of the National Organic Program's Program
Manager may appeal such decision to the Administrator.
(b) Persons subject to the Act who believe they are adversely
affected by an adverse action of a State organic program may appeal
such decision to the State organic program's governing State official,
who will initiate handling of the appeal pursuant to appeal procedures
approved by the Secretary.
(c) Persons subject to the Act who believe they are adversely
affected by an adverse action of a certifying agent may appeal such
decision to the Administrator, Except, that, when the person is subject
to an approved State
[[Page 3627]]
organic program, the appeal must be made to the State organic program.
(d) Persons subject to the Act who believe they are adversely
affected by an adverse action of a certifying agent or a State organic
program may request mediation as provided in Sec. 205.663.
(e) All appeals must comply with the procedural requirements in
Sec. 205.681(c) and (d).
(f) All written communications between parties involved in appeal
proceedings must be sent to the recipient's place of business by a
delivery service which provides dated return receipts.
(g) All appeals must be reviewed, heard, and decided by persons not
involved with the adverse action being appealed.
0
29. Amend Sec. 205.681 by revising paragraph (a) introductory text and
paragraphs (a)(2), (b), (c), and (d)(1) and (3) to read as follows:
Sec. 205.681 Appeals.
(a) Adverse actions by certifying agents. An applicant for
certification may appeal a certifying agent's notice of denial of
certification, and a certified operation may appeal a certifying
agent's notification of proposed suspension or proposed revocation of
certification to the Administrator, Except, that, when the applicant or
certified operation is subject to an approved State organic program,
the appeal must be made to the State organic program which will carry
out the appeal pursuant to the State organic program's appeal
procedures approved by the Secretary.
* * * * *
(2) If the Administrator or State organic program denies an appeal,
a formal administrative proceeding will be initiated to deny, suspend,
or revoke the certification unless the parties resolve the issues
through settlement, or the appellant waives or does not timely request
a hearing. Such proceeding must be conducted pursuant to the U.S.
Department of Agriculture's Uniform Rules of Practice, 7 CFR part 1,
subpart H, or the State organic program's rules of procedure.
(b) Adverse actions by the NOP Program Manager. A person affected
by an adverse action, as defined by Sec. 205.2, issued by the NOP
Program Manager, may appeal to the Administrator.
(1) If the Administrator sustains an appeal, an applicant will be
issued accreditation, a certifying agent will continue its
accreditation, or an operation will continue its certification, a civil
penalty will be withdrawn, and a cease and desist notice will be
withdrawn, as applicable to the operation.
(2) If the Administrator denies an appeal, a formal administrative
proceeding will be initiated to deny, suspend, or revoke the
accreditation or certification and/or levy civil penalties unless the
parties resolve the issues through settlement, the appellant waives a
hearing, or the appellant does not timely request a hearing. Such
proceeding must be conducted pursuant to the U.S. Department of
Agriculture's Uniform Rules of Practice, 7 CFR part 1, subpart H.
(c) Filing period. An appeal must be filed in writing within the
time period provided in the letter of notification or within 30 days
from receipt of the notification, whichever occurs later. The appeal
will be considered ``filed'' on the date received by the Administrator
or by the State organic program. An adverse action will become final
and nonappealable unless an appeal is timely filed.
(d) * * *
(1) Appeals to the Administrator and Requests for Hearing must be
filed in writing and addressed to: 1400 Independence Ave. SW, Room
2642, Stop 0268, Washington, DC 20250, or electronic transmission,
[email protected].
* * * * *
(3) All appeals must include a copy of the adverse action and a
statement of the appellant's reasons for believing that the action was
not proper or made in accordance with applicable program regulations.
Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-00702 Filed 1-18-23; 8:45 am]
BILLING CODE 3410-02-P