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80548 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 205

[Docket Number: TMD–00–02–FR]

RIN 0581–AA40

National Organic Program

AGENCY: Agricultural Marketing Service,USDA.ACTION: Final Rule with request forcomments.

SUMMARY: This final rule establishes theNational Organic Program (NOP orprogram) under the direction of theAgricultural Marketing Service (AMS),an arm of the United States Departmentof Agriculture (USDA). This nationalprogram will facilitate domestic andinternational marketing of fresh andprocessed food that is organicallyproduced and assure consumers thatsuch products meet consistent, uniformstandards. This program establishesnational standards for the productionand handling of organically producedproducts, including a National List ofsubstances approved for and prohibitedfrom use in organic production andhandling. This final rule establishes anational-level accreditation program tobe administered by AMS for Stateofficials and private persons who wantto be accredited as certifying agents.Under the program, certifying agentswill certify production and handlingoperations in compliance with therequirements of this regulation andinitiate compliance actions to enforceprogram requirements. The final ruleincludes requirements for labelingproducts as organic and containingorganic ingredients. This final rule alsoprovides for importation of organicagricultural products from foreignprograms determined to have equivalentorganic program requirements. Thisprogram is authorized under theOrganic Foods Production Act of 1990,as amended.EFFECTIVE DATE: This rule becomeseffective February 20, 2001.

Comments: Comments on specifiedaspects of the final regulations must besubmitted on or before March 21, 2001.ADDRESSES: Interested persons areinvited to submit written comments onspecified aspects of the final regulationto: Keith Jones, Program Manager,National Organic Program, USDA–AMS–TMP–NOP, Room 2945–So., AgStop 0275, P.O. Box 96456, Washington,DC 20090–6456. Comments may also befiled via the Internet through theNational Organic Program’s homepage

at: www.ams.usda.gov/nop. Writtencomments on specified aspects of thefinal regulations should be identifiedwith the docket number TMD–00–02–FR. To facilitate the timely scanning andposting of comments to the NOPhomepage, multiple-page commentssubmitted by regular mail should not bestapled or clipped.

It is our intention to have allcomments to this final rule, whethermailed or submitted via the Internet,available for viewing on the NOPhomepage in a timely manner.Comments submitted in response to thisfinal rule will be available for viewingat USDA–AMS, Transportation andMarketing Programs, Room 2945–SouthBuilding, 14th and IndependenceAvenue, SW., Washington, DC, from 9a.m. to 12 noon and from 1 p.m. to 4p.m., Monday through Friday (exceptfor official Federal holidays). Personswanting to visit the USDA SouthBuilding to view comments received inresponse to this final rule are requestedto make an appointment in advance bycalling (202) 720–3252.FOR FURTHER INFORMATION CONTACT:Richard Mathews, Senior AgriculturalMarketing Specialist, USDA–AMS–TMP–NOP, Room 2510–So., P.O. Box96456, Washington, DC 20090–6456;Telephone: (202) 205–7806; Fax: (202)205–7808.SUPPLEMENTARY INFORMATION:

Prior Documents in This Proceeding

This final rule is issued pursuant tothe Organic Food Production Act of1990 (Act or OFPA), as amended (7U.S.C. 6501 et seq.). This final rulereplaces the proposed rule published inthe Federal Register March 13, 2000.The public submitted 40,774 commentson the proposed rule. Comments to theproposed rule were considered in thepreparation of this final rule.

The following notices related to theNational Organic Standards Board(NOSB) and the development of thisproposed regulation have beenpublished in the Federal Register. Sixnotices of nominations for membershipon the NOSB were published betweenApril 1991 and June 2000 (56 FR 15323,59 FR 43807, 60 FR 40153, 61 FR 33897,64 FR 33240, 65 FR 35317). Two noticesof extension of time for submittingnominations were published onSeptember 22, 1995, and September 23,1996 (60 FR 49246, 61 FR 49725).Twenty notices of meetings of the NOSBwere published between March 1992and November 2000 (57 FR 7094, 57 FR27017, 57 FR 36974, 58 FR 85, 58 FR105, 58 FR 171, 59 FR 58, 59 FR 26186,59 FR 49385, 60 FR 51980, 60 FR 15532,

61 FR 43520, 63 FR 7389, 63 FR 64451,64 FR 3675, 64 FR 28154, 64 FR 54858,65 FR 11758, 65 FR 33802, 65 FR64657). One notice of public hearings onorganic livestock and livestock productswas published on December 30, 1993(58 FR 69315). Two notices specifying aprocedure for submitting names ofsubstances for inclusion on or removalfrom the National List of Approved andProhibited Substances were publishedon March 27, 1995 (60 FR 15744), andJuly 13, 2000 (65 FR 43259). A ruleproposing the NOP was published onDecember 16, 1997 (62 FR 65850). Anextension of the time period forsubmitting comments to the proposedrule was published on February 9, 1998(63 FR 6498). One request for commentson Issue Papers was published onOctober 28, 1998 (63 FR 57624). Anotice of a program to assess organiccertifying agencies was published onJune 9, 1999 (64 FR 30861). A ruleproposing the NOP was published onMarch 13, 2000 (65 FR 13512). A noticeof public meeting and request forcomments on organic production andhandling of aquatic animals to belabeled as organic was published onMarch 23, 2000 (65 FR 15579). Oneadvance notice of proposed rulemakingand request for comments on reasonablesecurity for private certifying agents waspublished on August 9, 2000 (65 FR48642).

This preamble includes a discussionof the final rule and supplementaryinformation, including the RegulatoryImpact Assessment, UnfundedMandates Reform Act Statement,Regulatory Flexibility Act Analysis,Federalism Impact Statement, and CivilJustice Impact Statement. The CivilRights Impact Analysis is not includedas an attachment but may be obtainedby writing to the address providedabove or via the Internet through theNational Organic Program’s homepageat: http://www.ams.usda.gov/nop.

Approval of Paperwork Reduction ActRequirements for This Final Rule

The reporting requirements andrecordkeeping burden imposed by thisrule were published in the March 13,2000, Federal Register for publiccomment. The Agency addressed thesecomments in the final rule to ensurethat the least amount of the burden isplaced on the public. The informationcollection and recordkeepingrequirements have been reviewed andapproved by the Office of Managementand Budget under OMB Number 0581–0191, National Organic Program.

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80549Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

National Organic Program Overview

Subpart A—Definitions

Description of Regulations

This subpart defines various termsused in this part. These definitions areintended to enhance conformance withthe regulatory requirements through aclear understanding of the meaning ofkey terms.

We have amended terms anddefinitions carried over from theproposed rule where necessary to maketheir wording consistent with thelanguage used in this final rule. Wehave revised the definitions of thefollowing words for greater clarity:person, practice standard, inertingredient, processing, tolerance. Wehave removed the definitions for thefollowing terms because the terms arenot used in this final rule or have beendetermined to be unnecessary:accredited laboratory, estimatednational mean, system of organicproduction and handling. We receivedcomments on some of these definitionsthat have been deleted. We have notaddressed those comments here becausethe relevant definitions have beendeleted.

Definitions—Changes Based onComments

This subpart differs from theproposed rule in several respects asfollows:

(1) Many commenters requestedchanges to the definition of ‘‘excludedmethods.’’ Comments included requeststo use the more common term,‘‘genetically modified organisms(GMO)’’; to include the products ofexcluded methods/GMO’s in thedefinition; to more closely follow theNOSB definition by adding genedeletion, doubling, introduction of aforeign gene, and changing geneposition; to include that excludedmethods are prohibited by the Act andby the regulations in this part; to changethe wording of the reference to‘‘recombinant DNA’’; and to add that thedefinition of excluded methods onlycovers ‘‘intentional use.’’

We have accepted some of thecomments and have modified thedefinition accordingly. Specifically, wehave included reference to the‘‘methods’’—gene deletion, genedoubling, changing positions of genes,and introducing foreign genes—thatwere included in the original NOSBdefinition. This will make the definitioneven more closely parallel the NOSBrecommendation. We also refer torecombinant DNA technology, which istechnically more accurate than the

proposed rules reference to recombinantDNA as a ‘‘method.’’

We have not accepted the commentsthat requested adding the products ofexcluded methods to the definition. Theemphasis and basis of these standards ison process, not product. We havespecifically structured the provisionsrelating to excluded methods to refer tothe use of methods. Including theproducts of excluded methods in thedefinition would not be consistent withthis approach to organic standards as aprocess-based system. For the samereason, we have retained the term,‘‘excluded methods,’’ to reinforce thatprocess-based approach.

We have also rejected commentsrequesting that we include theprohibition on excluded methods in thedefinition and, likewise, thoserequesting that we refer to ‘‘intentionaluse’’ of excluded methods. The finalrule maintains and clarifies theprohibition on the use of excludedmethods in organic production systems.The prohibition is most properlyaddressed in the appropriate provisionsof the regulations, particularly inSection 205.105, and not in thedefinition. Similarly, although werecognize that a distinction betweenintentional and unintentional use ofexcluded methods may be meaningful,particularly as it pertains to issues ofdrift, this is an issue that is best handledin the sections of the regulationgoverning use of excluded methods, notin the definition. The definition for‘‘excluded methods’’ now reads:

A variety of methods used togenetically modify organisms orinfluence their growth and developmentby means that are not possible undernatural conditions or processes and arenot considered compatible with organicproduction. Such methods include cellfusion, microencapsulation andmacroencapsulation, and recombinantDNA technology (including genedeletion, gene doubling, introducing aforeign gene, and changing the positionof genes when achieved by recombinantDNA technology). Such methods do notinclude the use of traditional breeding,conjugation, fermentation,hybridization, in vitro fertilization, ortissue culture.’’

(2) Many commenters objected to thedefinition of ‘‘compost’’ in the proposedrule because it required that compostmust be produced in a facility that wasin compliance with the NaturalResource Conservation Service’s (NRCS)practice standard for a compostingfacility. We agree with thesecommenters and removed therequirement to comply with the NRCSpractice standard. However, the final

rule incorporates new requirements forthe production of compost that areincluded in the definition. The finalrule requires that compost must beproduced through a process thatcombines plant and animal materialswith an initial C:N ratio of between 25:1and 40:1. Furthermore, producers usingan in-vessel or static aerated pile systemmust maintain the composting materialsat a temperature of between 131°F and170°F for 3 days. Producers using awindrow system must maintain thecomposting materials at a temperaturebetween 131°F and 170°F for 15 days,during which time, the materials mustbe turned a minimum of five times. Wedeveloped the requirements in the finalrule for producing an allowedcomposted material by integratingstandards used by the EnvironmentalProtection Agency (EPA) and USDA’sNatural Resources Conservation Service(NRCS). The requirements for thecarbon-to-nitrogen (C:N) ratio forcomposting materials is the same as thatfound in the NRCS practice standard fora composting facility. The time andtemperature requirements for in-vessel,static aerated pile, and windowcomposting systems are consistent withthose which EPA regulates under 40CFR 503 for the production of Class Asewage sludge. Additionally, AMSreviewed these compost productionrequirements with USDA’s AgriculturalResearch Service (ARS). This subject isdiscussed further under subpart C, CropProduction, Changes Based onComment.

(3) Some commenters stated thatallowing nonagricultural or syntheticsubstances as feed supplementscontradicted the definition for ‘‘feedsupplement’’ in the proposed rule.These commenters stated that thedefinition stipulated that a feedsupplement must, itself, be a feedmaterial and that the proposeddefinition for ‘‘feed’’ did not includenonagricultural or synthetic substances.These commenters stated that thedefinition of ‘‘feed supplement’’ neededto be amended to accommodatenonagricultural or synthetic substances,or such substances should not beallowed. We agree with thesecommenters and amended the definitionfor ‘‘feed supplement’’ to read ‘‘acombination of feed nutrients added tolivestock feed to improve the nutritionalbalance or performance of the totalration.’’ One commenter recommendedmodifying the definition of ‘‘feedadditive’’ to ‘‘a substance added to feedin micro quantities to fulfill a specificnutritional need; i.e., essential nutrientsin the form of amino acids, vitamins,



and minerals.’’ We agree that thismodification provides a more precisedescription of ‘‘feed additive’’ and haveincluded the change. The changes to thedefinitions for ‘‘feed supplement’’ and‘‘feed additive’’ are further discussedunder item (4) of LivestockProduction—Changes Based onComments.

(4) One commenter stated that thedefinition for ‘‘forage’’ inaccuratelydescribed it as ‘‘vegetable matter,’’ andsuggested that ‘‘vegetative matter’’ was amore suitable description. We agreewith the suggestion and haveincorporated the change.

(5) Some commenters stated that thedefinition for ‘‘mulch’’ implied that allmulch materials must either be organicor included on the National List. Thesecommenters maintained that, if this wasthe intent of the proposed rule, theprovision was too restrictive. Theyrecommended revising the definition toclarify that natural but nonorganic plantand animal materials, if managed toprevent contamination from prohibitedsubstances, could be used as mulchwithout being added to the NationalList. This was the intent in the proposedrule, and we have modified thedefinition to make this provisionclearer.

(6) Many commenters stated that thefinal rule should include a definition of‘‘organic production’’ that required thatcertified operations must preserve orprotect biodiversity. These commentersstated that the preservation ofbiodiversity is a requirement in manyexisting organic certification standards,including the Codex guidelines. Theyalso stated that the NOSB had includedthe requirement to preserve biodiversityin its definition of organic. We agreewith the intent of these comments butprefer the term, ‘‘conserve,’’ to‘‘preserve’’ because it reflects a moredynamic, interactive relationshipbetween the operation and biodiversityover time. We included a definition fororganic production as ‘‘a productionsystem that is managed in accordancewith the Act and regulations in this partto respond to site-specific conditions byintegrating cultural, biological, andmechanical practices that foster cyclingof resources, promote ecologicalbalance, and conserve biodiversity.’’ Wedeleted the definition for ‘‘organicsystem of production and handling’’ inthe final rule.

(7) Several commenters, including theNOSB, were concerned that thedefinition for ‘‘planting stock’’ as ‘‘anyplant or plant tissue, includingrhizomes, shoots, leaf or stem cuttings,roots, or tubers, used in plantproduction or propagation’’ was

sufficiently broad to be applied toannual seedlings. We agree that it isimportant to establish that annualseedlings are not covered by thedefinition of ‘‘planting stock’’ andamended the definition to excludethem. The definition for planting stockin the final rule states ‘‘any plant orplant tissue other than annual seedlingsbut including rhizomes, shoots, leaf orstem cuttings, roots, or tubers, used inplant production or propagation.’’ Thefinal rule retains the definition for‘‘annual seedling’’ from the proposedrule.

(8) Several commenters recommendedthat the definition of ‘‘processing’’should be amended to include‘‘distilling’’ as an allowed practice. Weagree with this comment and addeddistilling as an allowed processingpractice.

(9) Several commenters recommendedthat the final rule include a definitionfor ‘‘processing aid’’ that is consistentwith the definition proposed by theNOSB and used by the Food and DrugAdministration (FDA). We agree withthese commenters and have included adefinition for processing aid that is thesame as the definition used by FDA andfound in 21 CFR Part 101.100(a)(3)(ii).

(10) Many commenters questionedwhether the term, ‘‘State organiccertification program,’’ in the proposedrule included organic programs fromStates that did not offer certificationservices. These commenters stated thatthe final rule should include provisionsfor all State organic programs regardlessof whether they functioned as certifyingagents. We agree with these commentersand have amended the final rule byincorporating the term, ‘‘State organicprogram,’’ as ‘‘a State program thatmeets the requirements of section 6506of the Act, is approved by the Secretary,and is designed to ensure that a productthat is sold or labeled as organicallyproduced under the Act is producedand handled using organic methods.’’The term, ‘‘State organic program,’’encompasses such programs whetherthey offer certification services or not.

(11) One commenter stated that thedefinition for ‘‘wild crop’’ only referredto a plant or part of a plant that washarvested from ‘‘an area of land.’’ Thiscommenter was concerned that thedefinition would preclude thecertification of operations that producewild aquatic crops, such as seaweed,and stated that the OFPA does allow forcertifying such operations. We agreewith this commenter and changed thedefinition to refer to a plant or part ofa plant harvested from a ‘‘site.’’

(12) Many commenters stated that thesoil fertility and crop nutrient

management practice standard lacked adefinition for ‘‘manure.’’ Thesecommenters maintained that thedifferent provisions contained in thepractice standard for ‘‘manure’’ and‘‘compost’’ would be difficult to enforcewithout clear definitions to differentiatebetween the two materials. We agreewith these comments and added adefinition for manure as ‘‘feces, urine,other excrement, and bedding producedby livestock that has not beencomposted.’’

(13) Some commenters stated that theNational List in the final rule shouldinclude an annotation for narrow rangeoils to limit their use to a specific subsetof such materials recommended by theNOSB. We agree with this comment but,rather than add an annotation, we haveincluded the specificationsrecommended by the NOSB in a newdefinition for narrow range oils. Narrowrange oils are defined as ‘‘petroleumderivatives, predominately of paraffinicand napthenic fractions with a 50-percent boiling point (10 mm Hg)between 415°F and 440°F.

(14) Many commenters maintainedthat the final rule needed a definition ofthe term, ‘‘pasture,’’ to describe therelationship between ruminants and theland they graze. These commentersstated that a meaningful definition of‘‘pasture’’ must incorporate thenutritional component that it provideslivestock, as well as the necessity tomanage the land in a manner thatprotects the natural resources of theoperation. We agree with thesecommenters and have added adefinition of ‘‘pasture’’ as ‘‘land used forlivestock grazing that is managed toprovide feed value and maintain orimprove soil, water, and vegetativesources.’’

(15) Many commenters stated that adefinition for ‘‘split operation’’ wasnecessary to prevent comminglingbetween organic and nonorganiccommodities on operations thatproduced or handled both forms of acommodity. We agree with thesecomments and have included adefinition for ‘‘split operation’’ as ‘‘anoperation that produces or handles bothorganic and nonorganic agriculturalproducts.’’

Definitions—Changes Requested ButNot Made

This subpart retains from theproposed rule terms and theirdefinitions on which we receivedcomments as follows:

(1) Many commenters objected to thedefinition of ‘‘sewage sludge’’ because itexcluded ash generated in a sewagesludge incinerator and grit and



screenings generated during preliminarytreatment of domestic sewage intreatment works. We have not changedthe definition for ‘‘sewage sludge’’because it provides the mostcomprehensive and enforceabledescription of the types of materials thatcommenters wanted to prohibit. Thedefinition for ‘‘sewage sludge’’ in theproposed rule arose in response tosignificant public comment on the firstproposed rule for national organicstandards (62 Federal Register, No. 241)that recommended prohibiting biosolidsin organic production. Whenincorporating those comments into theproposed rule, we did not use the term,‘‘biosolids,’’ because it does not have astandardized definition under Federalregulations. The term, ‘‘biosolids,’’ iscommonly used to refer to ‘‘sewagesludge,’’ which is the regulatory termestablished in 40 CFR part 503. Weincorporated the precise definition from40 CFR part 503, even though it doesnot include ash, grit, or screenings,because it provided the clearestdescription of the types of materialsidentified in public comment.

While commenters are correct thatash, grit, or screenings from theproduction of sewage sludge are notprohibited by this definition, thesematerials are prohibited elsewhere inthe regulation. The soil fertility andcrop nutrient management practicestandard in section 205.203 establishesthe universe of allowed materials andpractices. These allowed materials andpractices are crop rotations, cover crops,plant and animal materials (includingtheir ash), nonagricultural, naturalmaterials, and, under appropriateconditions, mined substances of lowand high solubility and syntheticmaterials included on the National List.Ash, grit, or screenings from theproduction of sewage sludge cannot beincluded in any of these categories and,therefore, cannot be used in organicproduction. We retained the definitionof ‘‘sewage sludge’’ because it mostclearly conveys the wide array ofcommercially available soilamendments that might be consideredfor organic production but that the finalrule expressly prohibits. We have notadded specific exclusions for sewagesludge, ash, grit, or screenings becausethese materials are prohibited throughother provisions in the practicestandard.

(2) The proposed rule prohibited thehandler of an organic handlingoperation from using ionizing radiationfor any purpose. The vast majority ofcommenters agreed with thisprohibition and further recommendedthat the term, ‘‘ionizing radiation,’’

should be defined to identify thespecific applications that are prohibited.Most commenters supported adefinition based on the FDArequirements in 21 CFR part 179.26 forthe treatment or processing of foodusing ionizing radiation. While agreeingwith the prohibition on ionizingradiation, these commenters favoredallowing certain forms of irradiationsuch as the use of X-rays to inspect fordebris such as stones that wereinadvertently commingled withorganically handled food. Othercommenters recommended aprohibition on all forms of irradiation,which would include X-rays forinspection purposes, ultraviolet light,and microwaves in addition to ionizingradiation. Finally, a number ofcommenters stated that ionizingradiation is a safe and effective processfor handling food and, therefore, shouldnot be prohibited in organic handling.

We have not added a definition for‘‘ionizing radiation’’ to the final rulebecause we have incorporated specificreferences to the applications that areprohibited in the regulatory text. Thefinal rule prohibits the handler of anorganic handling operation from usingionizing radiation as specified under 21CFR part 179.26. These are the FDA-approved uses of ionizing radiation thatcommenters most frequentlyrecommended that we prohibit inorganic handling operations. Theyinclude the use of cobalt-60, cesium-137, and other sources of radiation forthe purpose of controlling microbialcontaminants, pathogens, and pests infood or to inhibit the growth andmaturation of fresh foods. At its June2000 meeting, the NOSB recommendedprohibiting ionizing radiation for thepurpose of controlling microbialcontaminants, pathogens, parasites, andpests in food, preserving a food, orinhibiting physiological processes suchas sprouting or ripening. The final ruledoes not prohibit the handler of anorganic handling operation from usingthe FDA-approved applications of X-rays for inspecting food. The prohibitionon ionizing radiation in the final rule isbased solely on consumer preference asreflected in the overwhelming publiccomment stating that organicallyhandled foods should not be treated inthat manner.

(3) Some commenters recommendthat the final rule incorporatedefinitions for the terms, ‘‘foodadditives,’’ ‘‘extraction methods,’’‘‘incidental additive,’’ and‘‘substantially transform.’’ However,these terms are not used in the final ruleand do not require a definition.

Definitions—ClarificationsFollowing our review of the

definitions provisions in the proposedrule, we decided to further clarify thefollowing provision in the final rule:

We were concerned that ‘‘Stateentity,’’ the meaning of whichencompasses both domestic and foreignpolitical subdivisions, may be confusedwith ‘‘State,’’ the meaning of which islimited to the States of the UnitedStates, its territories, the District ofColumbia, and Puerto Rico. To avoidany possible confusion as to whichprovisions in this final rule apply toStates and which apply to the broaderpolitical subdivisions, we have replacedthe term, ‘‘State entity,’’ with the term,‘‘governmental entity,’’ while retainingthe same definition language in theproposed rule.

Subpart B—ApplicabilityThis subpart provides an overview of

what has to be certified under theNational Organic Program (NOP);describes exemptions and exclusionsfrom certification; addresses use of theterm, ‘‘organic’; addressesrecordkeeping by certified productionand handling operations; and addressesallowed and prohibited substances,methods, and ingredients in organicproduction and handling.

Description of RegulationsExcept for exempt and excluded

operations, each production or handlingoperation or specified portion of aproduction or handling operation thatproduces or handles crops, livestock,livestock products, or other agriculturalproducts that are intended to be sold,labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients or foodgroup(s))’’ must be certified. Certifiedoperations must meet all applicablerequirements of these regulations.

This final rule becomes effective 60days after its publication in the FederalRegister and will be fully implemented18 months after its effective date.Eighteen months after the effective date,all agricultural products that are sold,labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made with* * *’’ must be produced and handledin compliance with these regulations.Products entering the stream ofcommerce prior to the effective date willnot have to be relabeled. The U.S.Department of Agriculture (USDA) sealmay not be affixed to any ‘‘100 percentorganic’’ or ‘‘organic’’ product until 18months after the final rule’s effectivedate.

We anticipate that certifying agentsand production and handling operations



will move as quickly as possible afterthe effective date of the final rule tobegin operating under the nationalorganic standards. Certifying agentsmust begin certifying organicproduction and handling operations tothe national standards upon receipt oftheir accreditation from theAdministrator. Any production orhandling operation or specified portionof a production or handling operationthat has been already certified by acertifying agent on the date that thecertifying agent receives itsaccreditation under this part shall bedeemed to be certified under the Actuntil the operation’s next anniversarydate of certification. We have taken thisapproach because we believe that suchcertifying agents will, upon the effectivedate of the final rule, demonstrate theireligibility for accreditation by applyingthe national standards to thecertification and renewal of certificationof their clients. We also believe thisapproach will provide relief to certifiedoperations which might otherwise haveto be certified twice within a 12—monthperiod (prior to their certifying agent’saccreditation and again following theircertifying agent’s accreditation). Thisrelief will only be available to thosecertified operations certified by acertifying agent that receives itsaccreditation within 18 months from theeffective date of the final rule.

Certifying agents can apply foraccreditation anytime after the effectivedate of the rule. Applications will beprocessed on a first-come, first-servedbasis. Those certifying agents who applyfor accreditation within the first 6months after the effective date of thefinal rule and are determined by theAdministrator to meet the requirementsfor accreditation will be notified of theirstatus approximately 12 months afterthe final rule’s effective date. Thisapproach is being taken because of themarket advantage that could be realizedby accredited certifying agents if USDAdid not announce the accreditationssimultaneously.

Exempt and Excluded Operations

This regulation establishes severalcategories of exempt or excludedoperations. An exempt or excludedoperation does not need to be certified.However, operations that qualify asexempt or excluded operations canvoluntarily choose to be certified. Aproduction or handling operation that isexempt or excluded from obtainingcertification still must meet otherregulatory requirements contained inthis rule as explained below.

Exempt Operations

(1) A production or handlingoperation that has $5,000 or less in grossannual income from organic sales isexempt from certification. Thisexemption is primarily designed forthose producers who market theirproduct directly to consumers. It willalso permit such producers to markettheir products direct to retail foodestablishments for resale to consumers.The exemption is not restricted to U.S.producers. However, as a practicalmatter, we do not envision anysignificant use of the exemption byforeign producers because: (1) theproducts from such operations cannotbe used as ingredients identified asorganic in processed products producedby another handling operation, and (2)it is unlikely that such operations willbe selling their products directly toconsumers in the United States.

An exempt producer or handler mustcomply with the labeling requirementsof section 205.310 and the organicproduction and handling requirementsapplicable to its type of operation. Forexample, a producer of organicvegetables that performs no handlingfunctions would have to comply withthe labeling requirements of section205.310 and the applicable productionrequirements in sections 205.202through 205.207. The labeling andproduction and handling requirementsprotect the integrity of organicallyproduced products.

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

(3) A handling operation or portion ofa handling operation that handles onlyagricultural products containing lessthan 70 percent organic ingredients bytotal weight of the finished product(excluding water and salt) is exemptfrom the requirements in theseregulations, except the recordkeepingprovisions of section 205.101(c); theprovisions for prevention of contact oforganic products with prohibitedsubstances in section 205.272; and thelabeling regulations in sections 205.305and 205.310. The recordkeepingprovisions maintain an audit trail fororganic products. The prevention ofcontact with prohibited substances andthe labeling requirements protect theintegrity of organically producedproducts.

(4) A handling operation or portion ofa handling operation that uses the word,‘‘organic,’’ only on the informationpanel is exempt from the requirements

in these regulations, except therecordkeeping provisions of section205.101(c); the provisions forprevention of contact of organicproducts with prohibited substances asprovided in section 205.272; and thelabeling regulations in sections 205.305and 205.310. The recordkeepingprovisions maintain an audit trail fororganic products. The prevention ofcontact with prohibited substances andlabeling requirements protect theintegrity of organically producedproducts.

As noted above, exempt handlingoperations producing multiingredientproducts must maintain records asrequired by section 205.101(c). Thiswould include records sufficient to: (1)Prove that ingredients identified asorganic were organically produced andhandled and (2) verify quantitiesproduced from such ingredients. Suchrecords must be maintained for no lessthan 3 years, and the operation mustallow representatives of the Secretaryand the applicable State program’sgoverning State official access to therecords during normal business hoursfor inspection and copying to determinecompliance with the applicableregulations.

Excluded Operations(1) A handling operation or portion of

a handling operation that sells organicagricultural products labeled as ‘‘100percent organic,’’ ‘‘organic,’’ or ‘‘madewith * * *’’ that are packaged orotherwise enclosed in a container priorto being received or acquired by theoperation, remain in the same packageor container, and are not otherwiseprocessed while in the control of thehandling operation is excluded from therequirements in these regulations,except for the provisions for preventionof commingling and contact of organicproducts with prohibited substances insection 205.272. The requirements forthe prevention of commingling andcontact with prohibited substancesprotect the integrity of organicallyproduced products.

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

(2) A retail food establishment orportion of a retail food establishmentthat processes on the premises of theretail food establishment raw and ready-to-eat food from certified agriculturalproducts labeled as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made with* * *’’ is excluded from therequirements in these regulations,except for the provisions for prevention



of contact of organic products withprohibited substances as provided insection 205.272 and the labelingregulations in section 205.310. Theprevention of commingling and contactwith prohibited substances and labelingrequirements protect the integrity oforganically produced products.

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

There is clearly a great deal of publicconcern regarding the handling oforganic products by retail foodestablishments. We have not requiredcertification of retail foodestablishments at this time because of alack of consensus as to whether retailfood establishments should be certified,a lack of consensus on retailercertification standards, and a concernabout the capacity of existing certifyingagents to certify the sheer volume ofsuch businesses. Retail foodestablishments, not exempt under theAct, could at some future date be subjectto regulation under the NOP. Any suchregulation would be preceded byrulemaking with an opportunity forpublic comment.

No retailer, regardless of thisexclusion and the exceptions found inthe definitions for ‘‘handler’’ or‘‘handling operation,’’ may sell, label, orprovide market information on aproduct unless such product has beenproduced and handled in accordancewith the Act and these regulations. Anyretailer who knowingly sells or labels aproduct as organic, except inaccordance with the Act and theseregulations, will be subject to a civilpenalty of not more than $10,000 perviolation under this program.

Recordkeeping Requirements forCertified Operations

A certified operation must maintainrecords concerning the production andhandling of agricultural products thatare sold, labeled, or represented as ‘‘100percent organic,’’ ‘‘organic,’’ or ‘‘madewith * * *’’ sufficient to demonstratecompliance with the Act andregulations. Such records must beadapted to the particular business thatthe certified operation is conducting,fully disclose all activities andtransactions of the certified operation insufficient detail to be readilyunderstood and audited, be maintainedfor not less than 5 years beyond theircreation, and be sufficient todemonstrate compliance with the Actand regulations. Certified operations

must make the records required by thisregulation available for inspection byauthorized representatives of theSecretary, the applicable State organicprogram’s (SOP) governing State official,and the certifying agent. Access to suchrecords must be provided during normalbusiness hours.

Examples of RecordsEach exempt, excluded, and certified

operation should maintain the recordswhich demonstrate compliance with theAct and the regulations applicable to itand which it believes establish an audittrail sufficient to prove to the Secretary,the applicable SOP’s governing Stateofficial, and the certifying agent that theexempt, excluded, or certified operationis and has been in compliance with theAct and regulations.

Examples of records include:application and supporting documentsfor certification; organic system planand supporting documents; purchasedinputs, including seeds, transplants,livestock, and substances (fertilizers,pesticides, and veterinary biologicsconsistent with the livestock provisionsof subpart C), cash purchase receipts,receiving manifests (bills of lading),receiving tickets, and purchase invoices;field records (planting, inputs,cultivation, and harvest); storage records(bin register, cooler log); livestockrecords, including feed (cash purchasereceipts, receiving manifests (bills oflading), receiving tickets, purchaseinvoices, copies of grower certificates),breeding records (calendar, chart,notebook, veterinary documents),purchased animals documentation (cashpurchase receipts, receiving manifests(bills of lading), receiving tickets,purchase invoices, copies of growercertificates), herd health records(calendar, notebook, card file, veterinaryrecords), and input records (cashpurchase receipts, written records,labels); producer invoice; producercontract; receiving manifests (bills oflading); transaction certificate; producercertificate; handler certificate; weightickets, receipts, and tags; receivingtickets; cash purchase receipts; rawproduct inventory reports and records;finished product inventory reports andrecords; daily inventories by lot; recordsas to reconditioning, shrinkage, anddumping; production reports andrecords; shipping reports; shippingmanifests (bills of lading); paid freightand other bills; car manifests; broker’scontracts; broker’s statements;warehouse receipts; inspectioncertificates; residue testing reports; soiland water testing reports; cash receiptjournals; general ledgers and supportingdocuments; sales journals; accounts

payable journals; accounts receivablejournals; cash disbursement journals;purchase invoices; purchase journals;receiving tickets; producer and handlercontracts; cash sales receipts; cashpurchase journals; sales invoices,statements, journals, tickets, andreceipts; account sales invoices; ledgers;financial statements; bank statements;records of deposit; canceled checks;check stubs; cash receipts; tax returns;accountant’s or other work papers;agreements; contracts; purchase orders;confirmations and memorandums ofsales; computer data; computerprintouts; and compilations of data fromthe foregoing.

Allowed and Prohibited SubstancesA certified operation must only use

allowed substances, methods, andingredients for the production andhandling of agricultural products thatare sold, labeled, or represented as ‘‘100percent organic,’’ ‘‘organic,’’ or madewith * * *’’ for these products to be incompliance with the Act and the NOPregulations. Use of ionizing radiation,sewage sludge, and excluded methodsare prohibited in the production andhandling of organic agriculturalproducts.

Applicability—Changes Based onComments

This subpart differs from the proposalin several respects as follows:

(1) Violations of the Act orRegulations. We have amended section205.100 by adding a new paragraph (c),which addresses violations of the Actand these regulations. A number ofcommenters advocated for provisionswithin the final rule describing whatlegal proceedings USDA would conductagainst operations or persons thatviolate the NOP. We agree that this ruleshould include provisions addressingviolations of the Act and theseregulations. Accordingly, we haveadded at section 205.100 the misuse oflabel provisions and false statementprovisions of section 2120 (7 U.S.C.6519) of the Act. Specifically, section205.100(c) provides that persons not incompliance with the labelingrequirements of the Act or theseregulations are subject to a civil penaltyof not more than $10,000 per violationand that persons making falsestatements under the Act to theSecretary, a governing State official, oran accredited certifying agent shall besubject to the provisions of section 1001of Title 18, United States Code. Theprovisions of the Act and theseregulations apply to all operations orpersons that sell, label, or representtheir agricultural product as organic.



(2) Prohibition on Use of ExcludedMethods. We have moved section205.600 from subpart G, Administrative,to subpart B, Applicability, andreplaced paragraph (d), which referredthe reader to section 205.301, with newparagraphs (d) through (g). As amended,this section, redesignated as section205.105, includes all of the provisionscovered under old section 205.600.

The vast majority of commentersstrongly supported the prohibition onthe use of excluded methods in organicproduction and handling but raisedconcerns that they could not point toone provision that prohibited use ofexcluded methods in all aspects oforganic production and handling. Toclose what they perceived to be‘‘loopholes’’ in the prohibition,commenters made several suggestionsfor inclusion of new provisionsprohibiting use of excluded methods inparticular aspects of organic productionand handling that they believed werenot covered in the proposed rule. Othercommenters pointed to inconsistenciesin the way the prohibition on use ofexcluded methods was described indifferent sections, raising concerns thatthese apparent inconsistencies maycreate confusion for organic operations,certifiers, and consumers.

Although we intended that use ofexcluded methods would be prohibitedin all aspects of organic production andhandling, the structure of the proposedrule may not have made that clear. Wealso share the concerns that, inattempting to identify all aspects oforganic production and handling whereexcluded methods might be used, wemay inadvertently have left out someprovisions, creating confusion fororganic operations, certifying agents,and consumers and creating doubt as tothe scope of the prohibition on use ofexcluded methods. Similarly, to theextent that the prohibition on excludedmethods may have been describeddifferently in various sections of theproposed rule, we also share theconcern that these inconsistencies couldcreate confusion.

As a result of these concerns, we havecreated a new provision in section205.105 that prohibits the use ofexcluded methods (and ionizingradiation and sewage sludge) generally.This provision should alleviateperceptions that some areas of organicproduction may not have been coveredby the prohibitions in the proposed rule.It also allows us to eliminate from theregulation most of the individualreferences to the prohibition on use ofthese methods, thereby eliminating anypotential confusion where theseprovisions may have appeared

inconsistent. These changes do not liftthe prohibition on use of these methodsin those sections. In fact, the purpose ofthis new provision is to make clear thatuse of these methods is prohibited inthe production and handling of organicproducts.

(3) Animal Vaccines. The proposedrule specifically asked for publiccomment on the potential impact of theprohibition on use of excluded methodsas it relates to animal vaccines. Anumber of commenters raised concernsthat there may be some critical vaccinesthat are only available in formsproduced using excluded methods.Several commenters requested that weprohibit use of animal vaccinesproduced using excluded methods butthat we provide for a temporaryexemption until such time as vaccinesproduced without using excludedmethods are approved for use on theNational List. Other commentersrequested that we prohibit use ofvaccines produced using excludedmethods without exception.

We have concluded that the potentialimpact of prohibiting vaccines producedusing excluded methods on animalproduction systems is still unknown.We do not know of any critical animalvaccine that is only available in a formproduced using excluded methods, butit is unclear whether producers andcertifying agents are tracking thepossible use of such vaccines. Therealso appears to be no internationalconsensus on the use in organicproduction systems of animal vaccinesproduced using excluded methods,although there is precedent for such anexemption. European Union regulations,for example, allow for use of animalvaccines produced using excludedmethods.

Based on comments received andbecause the potential impact of theprohibition on use of excluded methodsis still uncertain, we have created thepossibility at section 205.105(e) for theNOSB to exercise one very narrowexception to allow use of animalvaccines produced using excludedmethods but only if they are explicitlyapproved on the National List. Webelieve the issue of animal vaccinesrequires further deliberation and that itis most appropriate to consider itthrough the National List process,which mandates review by the NOSBand Technical Advisory Panels.Consideration of animal vaccinesproduced using excluded methods isappropriate for the National List reviewprocess because animal vaccines, webelieve, are most appropriatelyconsidered synthetic materials. That iswhy the provision is structured so that

vaccines produced using excludedmethods could only be used in organicproduction if they are affirmativelyincluded on the National List. We donot believe that a broad-basedexemption of the type suggested in somecomments, even if only temporary, isappropriate.

The Act allows use of animal vaccinesin organic livestock production. Giventhe general prohibition on the use ofexcluded methods, however, we believethat animal vaccines produced usingexcluded methods should not beallowed without an explicitconsideration of such materials by theNOSB and without an affirmativedetermination from the NOSB that theymeet the criteria for inclusion on theNational List. It is for that reason thatwe have not granted this request ofcommenters but, rather, provided anopportunity for review of this narrowrange of materials produced usingexcluded methods through the NationalList process.

It is important to make clear,however, that this provision does notopen all potential applications ofexcluded methods to a case-by-casereview in the context of the NationalList, nor are we proposing that anyparticular vaccines be reviewed forinclusion on the National List at thistime. The prohibition on use ofexcluded methods applies across theboard to all phases of organicproduction and handling. We are simplyresponding to comments suggesting thata narrow exception for animal vaccinesmay be appropriate and providing forthe possibility that such an exceptioncould be invoked upon thorough reviewand recommendation by the NOSB.

Applicability—Changes Requested ButNot Made

This subpart retains from theproposed rule regulations on which wereceived comments as follows:

(1) Exemption of Handling OperationsProducing Multiingredient Products.Some commenters asserted that onlycertified handling operations should beallowed to identify ingredients inmultiingredient products as organic.These commenters believe thatconsumers will be misled if noncertifiedhandling operations are allowed toidentify ingredients as organic even ifthe organic claim is limited to theinformation panel. We do not agree withthese assertions and have retained theproposed rule provisions that do notrequire handler certification when aproduct only identifies ingredients asorganic within the information panel.Although handling operations onlymaking organic claims on the



information panel are exempt fromcertification, these operations arerequired to use organic product fromcertified operations. They are alsorequired to prevent contact of organicproducts with prohibited substances asset forth in section 205.272, adhere tothe labeling provisions of sections205.305 and 205.310, and maintainrecords in accordance with section205.101(c). We believe consumers willunderstand the distinction betweenproducts that have the organic nature ofthe product stated on the principaldisplay panel and those that merelyidentify an ingredient as organic on theinformation panel.

(2) Retailer Exclusion fromCertification. Many commentersobjected to the provisions of section205.101(b)(2) which exclude retail foodestablishments from certification. Thesecommenters assert that only finalretailers that do not process agriculturalproducts should be excluded fromcertification. There is clearly a greatdeal of public concern regarding thehandling of organic products by retailfood establishments. We have notrequired certification of retail foodestablishments at this time because of alack of consensus as to whether retailfood establishments should be certified,a lack of condenses on retailercertification standards, and a concernabout the capacity of existing certifyingagents to certify the sheer volume ofsuch businesses. In addition, mostexisting certification programs do notinclude retail food establishments, andwe do not believe there is sufficientconsensus to institute such a significantexpansion in the scope of certification atthis time. However, since a few Stateshave established procedures forcertifying retail food establishments, wewill assess their experience andcontinue to seek consensus on this issueof establishing retailer provisions underthe NOP. Any such change would bepreceded by rulemaking with anopportunity for public comment. Theexclusion of nonexempt retail foodestablishments from this final rule doesnot prevent a State from developing anorganic retail food establishmentprogram as a component of its SOP.However, as with any component of anSOP, the Secretary will review suchcomponents on a case-by-case basis.

(3) Producer Exemption Level. Severalcommenters advocated for an increasein the producer exemption level abovethe $5,000 limit. Comments supportingthe exemption suggested increasing thestatutory limit for qualifying for theexemption to as high as $75,000. Othercommenters stated that all producersshould be certified and opposed the

exemption even though it is required bythe Act. These commenters wereconcerned about maintaining theintegrity of the organic product andabout the lack of verification of theexempt operations.

We have not increased or removed the$5,000 producer exemption because theexemption is mandated by section2106(d) (7 U.S.C. 6505(d)) of the Act.Our purpose is to limit the financialburdens of certification on suchoperations but not to exempt them fromthe standards for organic productionand handling. Accordingly, exemptproduction and handling operationsmust comply with the applicableorganic production and handlingrequirements of subpart C and thelabeling requirements of section205.310.

Some of the commenters wanting achange in the producer exemption levelsuggested that the NOP add provisionsfor restricting these producers tomarketing at farmers markets orroadside stands. We disagree with thesecomments. While we believe that mostproducers qualifying for the exemptionare indeed likely to be small producerswho market their products directly toconsumers, we do not believe it is in thebest interest of these producers torestrict their market opportunity to aspecific sales method.

A few comments suggested that weestablish a sliding-scale certification feebased upon either the size of theoperation or sales of agriculturalproduct instead of the exemption. TheNOP does not establish fees forcertification. Certifying agents mayestablish a sliding-scale system as longas their fees are reasonable and appliedin a consistent and nondiscriminatorymanner.

Finally, some commenters expressedconcern that exempt operations wereforbidden from certification. Thisinterpretation is not correct. Anyproduction or handling operation,including an exempt operation, whichmakes application for certification as anorganic operation and meets therequirements for organic certificationmay be certified.

(4) Handler exemption. Manycommenters disagreed with theproposed rule provision providing foran exemption of $5,000 to handlers.These commenters asked the NOP toremove the phrase, ‘‘or handlers,’’ fromthe exemption provision. Thecommenters argue that the handlerexemption is not authorized by the Act.We disagree with the commenters, andwe have retained the handler exemptionin the final rule. The Act states that theexemption is available to ‘‘persons’’

selling not more than $5,000 annually invalue of agricultural products. The Act’sdefinition of ‘‘persons’’ includeshandlers. Thus, handlers grossing$5,000 or less qualify for the exemption.

(5) Categories of Income to Qualify foran Exemption. Some commenters wantthe $5,000 producer/handler exemptionto include all sales of agriculturalproducts, not just sales of organicagricultural products. Thesecommenters perceive this provision tobe a loophole for large, split operations.We disagree with these commenters,and we have retained the $5,000producer/handler exemption basedupon total sales of organic agriculturalproducts. We do not believe there is asignificant number of split operationswhich only gross $5,000 in annual salesof organic products and, therefore,qualify for this exemption. In setting theexemption levels, the Departmentsought to maximize the benefits to smallproducers afforded by the Act whilesetting a threshold level that minimizesthe potential of product mislabeling.

(6) Limiting Handler Exclusions.Many commenters argued that brokers,distributors, warehousers, andtransporters should not be excludedfrom certification. We do not agree withthese commenters. Brokers, distributors,warehousers and transporters do notalter the product and, in many cases, donot take title to the product. Certifyingthese handlers would be an unnecessaryburden on the industry. Traditionally,distributors and trucking companieshave been excluded from State andprivate certification requirements.

(7) Recordkeeping Requirements forExcluded Operations. Severalcommenters argued that excludedoperations should be required to complywith the same recordkeepingrequirements as exempt operations.Some commenters expressed concernover the inability to verify compliancefor either exempt or excludedoperations and asked that exempt orexcluded operations be subject toadditional recordkeeping requirements.We disagree with these commenters andhave retained the provisions from theproposed rule on recordkeeping forexcluded operations. Given the natureof these excluded operations, forexample, operations that only sellprepackaged organic products, webelieve that extensive recordkeepingrequirements would be an unwarrantedregulatory burden.

(8) Recordkeeping Burden on SmallCertified Operations. Some commentersquestioned whether small certifiedoperations have the ability to implementa recordkeeping system which complieswith the provisions of section 205.103.



These commenters argue thatrecordkeeping requirements must betailored to the scale of the operation. Wedo not believe that the recordkeepingrequirements as described in section205.103 conflict with the suggestions ofthe commenters. The recordkeepingrequirements provide that the recordsmust be adapted to the particularbusiness that the certified operation isconducting and be sufficient todemonstrate compliance with the Actand regulations. It is USDA’s intent thateach production and handling operationdecide for itself what recordkeepingscheme is appropriate, given thecomplexity and scope of the individualbusiness. These provisions provideconsiderable latitude for eachproduction and handling operation todecide what records are necessary todemonstrate its compliance with the Actand the NOP regulations.

(9) Public Access to Records. Severalcommenters asked that the public havefull access to any certifying agent recordon organic production and/or handlingoperations. Other commentersexpressed concerns about certifyingagents divulging confidential businessinformation and asked that recordscontaining confidential businessinformation not be taken from thebusiness’ physical location.

We have not changed this provision.The recordkeeping requirements aredesigned to seek a balance between thepublic’s right to know and a business’sright to retain confidential businessinformation. Certifying agents musthave access to certain records duringtheir review of the operation todetermine the operation’s compliancewith the NOP. However, certifyingagents are required to protect anoperation’s confidential businessinformation. Requiring full publicaccess could compromise a business’competitive position and place an unfairburden on the organic industry.

(10) Fair Labor Practices on OrganicFarms. Many commenters asked theNOP to develop fair labor practicestandards as a part of the final rule. Wehave not adopted these comments.Other statutes cover labor and workersafety standards. The Act does notprovide the authority to include them inthese regulations. However, theseregulations do not prohibit certifyingagents from developing a voluntarycertification program, separate fromorganic certification, that address fairlabor and worker safety standards.

(11) ‘‘Transitional Organic’’ Label.Several commenters requested that theNOP adopt regulations on theconversion of operations to organicproduction and create a ‘‘transitional

organic’’ label. We have not includedprovisions within the final rule thatprovide for ‘‘transitional organic’’labeling. Although many commentersrequested that we provide for transitionlabeling, there does not appear to besufficient consensus to establish such astandard at this time. Given this lack ofconsensus, it is unclear whatmarketplace value such a label mighthave, and we are concerned thatallowing such a label at this point mightlead to greater consumer confusionrather than providing clarity.

Applicability—ClarificationsClarification is given on the following

issues raised by commenters as follows:(1) ‘‘Genetic’’ drift. Many commenters

raised issues regarding drift of theproducts of excluded methods ontoorganic farms. These commenters wereconcerned that pollen drifting fromnear-by farms would contaminate cropson organic operations and that, as aresult, organic farmers could lose thepremium for their organic productsthrough no fault of their own. Manycommenters argued that we should usethis rule to somehow shift the burden tothe technology providers who marketthe products of excluded methods or thenonorganic farming operations that usetheir products. Some, for example,suggested that this regulation shouldrequire that the nonorganic operationsusing genetically engineered varietiesplant buffer strips or take other steps toavoid drift onto organic farms. Otherssuggested that the regulation couldprovide for citizens’ right to sue in casesof drift.

While we understand the concernsthat commenters have raised, the kindof remedies they suggested are outsidethe scope of the Act and this regulation.The Act only provides for the regulationof organic operations. We cannot usethis regulation to impose restrictions,such as requiring buffer strips or othermeasures, on operations that are notcovered by the Act. Similarly, whilecitizens may have the ability to bringsuit under other laws, the Act itself doesnot provide for the right to bring suit asa Federal cause of action, and we couldnot grant it through this regulation.

Drift has been a difficult issue fororganic producers from the beginning.Organic operations have always had toworry about the potential for drift fromneighboring operations, particularlydrift of synthetic chemical pesticides.As the number of organic farmsincreases, so does the potential forconflict between organic andnonorganic operations.

It has always been the responsibilityof organic operations to manage

potential contact of organic productswith other substances not approved foruse in organic production systems,whether from the nonorganic portion ofa split operation or from neighboringfarms. The organic system plan mustoutline steps that an organic operationwill take to avoid this kind ofunintentional contact.

When we are considering drift issues,it is particularly important to rememberthat organic standards are processbased. Certifying agents attest to theability of organic operations to follow aset of production standards andpractices that meet the requirements ofthe Act and the regulations. Thisregulation prohibits the use of excludedmethods in organic operations. Thepresence of a detectable residue of aproduct of excluded methods alone doesnot necessarily constitute a violation ofthis regulation. As long as an organicoperation has not used excludedmethods and takes reasonable steps toavoid contact with the products ofexcluded methods as detailed in theirapproved organic system plan, theunintentional presence of the productsof excluded methods should not affectthe status of an organic product oroperation.

Issues of pollen drift are also notconfined to the world of organicagriculture. For example, plant breedersand seed companies must ensuregenetic identity of plant varieties byminimizing any cross-pollination thatmight result from pollen drift. Underresearch conditions, small-scale fieldtests of genetically engineered plantsincorporate various degrees of biologicalcontainment to limit the possibility ofgene flow to other sexually compatibleplants. Federal regulatory agenciesmight impose specific plantingrequirements to limit pollen drift incertain situations. Farmers plantingnonbiotechnology-derived varieties mayface similar kinds of questions if cross-pollination by biotechnology-derivedvarieties alters the marketability of theircrop. These discussions within thebroader agricultural community maylead to new approaches to addressingthese issues. They are, however, outsidethe scope of this regulation bydefinition.

(2) Additional NOP Standards forSpecific Production Categories. Manycommenters asked that the NOP includein the final rule certification standardsfor apiculture, greenhouses,mushrooms, aquatic species, culinaryherbs, pet food, and minor animalspecies (e.g., rabbits) food. The NOPintends to provide standards forcategories where the Act provides theauthority to promulgate standards.



During the 18-month implementationperiod, the NOP intends to publish forcomment certification standards forapiculture, mushrooms, greenhousesand aquatic animals. These standardswill build upon the existing final ruleand will address only the uniquerequirements necessary to certify thesespecialized operations.

Some of the other questions raised bycommenters are already addressed inthe final rule. For example, feed forminor species is covered by livestockfeed provisions within subpart C andthe livestock feed labeling provisionswithin subpart D. The production andutilization of culinary herbs, includingherbal teas, is covered by the provisionsof the final rule. We do not envisionneeding to do additional rulemaking onthese two categories.

Other requests by commenters havenot been addressed. We have notaddressed the labeling of pet foodwithin this final rule because of theextensive consultation that will berequired between USDA, the NOSB, andthe pet food industry before anystandards on this category could beconsidered.

(3) Standards for Cosmetics, BodyCare Products, and DietarySupplements. A few commenters askedthat the NOP include in the final rulecertification standards for cosmetics,body care products, and dietarysupplements. Producers and handlers ofagricultural products used asingredients in cosmetics, body careproducts, and dietary supplementscould be certified under theseregulations. Producers and handlers ofthese ingredients might find anincreased market value for theirproducts because of the additionalassurance afforded by certification. Theultimate labeling of cosmetics, bodycare products, and dietary supplements,however, is outside the scope of theseregulations.

(4) Private Label Products. Manycommenters asked about thecertification status of so-called ‘‘privatelabel products.’’ Private label productsare items for which a retailer contractswith a processor to produce the productto the retailer’s specifications and to besold under the retailer’s name.Commenters believe the proposed rulewas unclear on the certificationrequirements for these products. Anyproduct labeled as ‘‘100 organic,’’‘‘organic,’’ or ‘‘made with * * *’’ mustbe certified regardless of the businessarrangements under which the productwas produced. When a retail operationcontracts for the production, packaging,or labeling of organic product, it is thecertified production or handling

operation that is responsible forcomplying with the applicable organicproduction or handling regulations.

(5) State Oversight of Exempt andExcluded Operations. Manycommenters asked for clarification onthe State’s enforcement responsibilityfor exempt and excluded operations.The NOP is ultimately responsible forthe oversight and enforcement of theprogram, including oversight of exemptand excluded operations and cases offraudulent or misleading labeling. Weexpect, however, that States would wantto monitor for false claims or misleadinglabeling under these regulations andwould forward any complaints to theNOP. States that have an approved SOPwhich includes regulation of operationsexcluded under the NOP would berequired to enforce those provisions.

(6) Nonedible Fibers Products in theNOP. Some commenters asked the NOPto clarify the certification status of fiberssuch as cotton and flax. The final ruleallows for certification of organicallyproduced fibers such as cotton and flax.However, the processing of these fibersis not covered by the final rule.Therefore, goods that utilize organicfibers in their manufacture may only belabeled as a ‘‘made with * * *’’product; e.g., a cotton shirt labeled‘‘made with organic cotton.’’

(7) Recordkeeping for Operations ThatProduce Organic and NonorganicProduct. Several commentersrecommended that ‘‘split operations,’’which are operations producing organicand nonorganic agricultural products,be required to maintain separaterecords. These commenters believe thatthe proposed rule did not provideadequate provision for the maintenanceof separate recordkeeping. Theprovisions within section 205.103(b)(1)and (b)(2) do indicate that operationswhich produce both organic andnonorganic agricultural products mustmaintain a recordkeeping system thatdifferentiates the organic portion of theoperations from the records related toother portions of operations.

(8) NOP Program Manual. A fewcommenters, particularly States, notedthat the proposed rule made severalreferences to program manuals as amechanism for further clarifying certainportions of the rule. These commentersasked whether certifying agents shouldconsider information contained in thesemanuals as enforceable regulations.NOP program manuals cannot be andare not intended to be the equivalent ofregulations. Rather, the NOP envisionsdevelopment of a program manual toserve as guidance for certifying agentsregarding implementation- andcertification-related issues. Material

contained within the program manualwill be designed to address the organicagriculture principles of each final rulesection, as appropriate, and to offerinformation that certifying agentsshould consider in making certificationdecisions that will be reliably uniformthroughout the country. The use ofprogram manuals as guidance to assistin developing uniform certificationdecisions is a standard industrypractice, and the NOP has compiledexamples of program manuals from bothlarge and small certifiers. Because theNOP intends to use the examples it hasacquired as the basis for any NOPguidance manual, we believe that mostcertifying agents will find such NOPmanual, when developed, familiar anduseful. Additionally, we will use theNOSB public meeting process to seekguidance from industry and the publicon what information would be useful ina program manual and to provide inputon the program manual as it isdeveloped. Of course, if in developingprogram guidance, it appears thatmodifications or changes in the NOPfinal rule are required, suchmodifications would be made throughnotice and comment rulemaking.

(9) Use of Products from ExemptOperations as Organic Ingredients. Afew commenters responded to thequestion in the proposed rule in whichwe asked whether handlers should beallowed to identify organicallyproduced products produced by exemptproduction operations as organicingredients. The proposed rule providedthat all ingredients identified as organicin a multiingredient product must havebeen produced by a production orhandling operation certified by anaccredited certifying agent.

The commenters supported thisposition. These commenters believe thatthe potential for mislabeling outweighedany financial benefit that might accrueto exempt producers through expandedmarket opportunities. We concur, and,therefore, have retained the prohibitionon using products produced by anexempt production or handlingoperation as organic ingredients.

(10) Exemption of HandlingOperations Producing MultiingredientProducts. We have amended section205.101(a)(3) by changing ‘‘50 percent’’to ‘‘70 percent’’ to make it consistentwith the amendments to the labelingprovisions. We have also edited section205.101(a)(4) for clarification purposes.Additionally, we amended sections205.101(a)(3) and 205.101(a)(4) by citingthe labeling requirements of section205.305. These amendments have beenmade to clarify that handling operationsexempted under these sections are



subject to the labeling requirements ofsection 205.305.

(11) Production and Handling inCompliance with Federal Statutes. Wehave amended section 205.102 byremoving paragraph (c). This paragraphprovided that any agricultural productthat is sold, labeled, or represented as‘‘100 percent organic,’’ ‘‘organic,’’ or‘‘made with organic (specifiedingredients)’’ must be produced andhandled in compliance with applicableFederal statutes and their implementingregulations. We have taken this actionbecause the provision is an identicalrestatement of section 2120(f) (7 U.S.C.6519(f)) of the Act. The Act makes clearthat all production and handlingoperations are to comply with allapplicable Federal statutes and theirimplementing regulations. Therefore, itis unnecessary to repeat the requirementin these regulations.

(12) Foreign Applicants. We haveremoved section 205.104, whichprovided that the regulations in thispart, as applicable, apply equally todomestic and foreign applicants foraccreditation, accredited certifyingagents, domestic and foreign applicantsfor certification as organic production orhandling operations, and certifiedorganic production and handlingoperations unless otherwise specified.These regulations, as written, applyequally to all applicants foraccreditation, accredited certifyingagents, applicants for organiccertification, and certified organicoperations. Accordingly, we havedetermined that section 205.104 is notnecessary.

Subpart C—Organic Crop, Wild Crop,Livestock, and Handling RequirementsDescription of Regulations

General Requirements

This subpart sets forth therequirements with which productionand handling operations must complyin order to sell, label, or representagricultural products as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients or foodgroup(s)).’’ The producer or handler ofan organic production or handlingoperation must comply with allapplicable provisions of subpart C. Anyproduction practice implemented inaccordance with this subpart mustmaintain or improve the naturalresources, including soil and waterquality, of the operation. Productionand handling operations which sell,label, or represent agricultural productsas organic in any manner and which areexempt or excluded from certificationmust comply with the requirements of

this subpart, except for the developmentof an organic system plan.

Production and Handling (General)The Organic Food Production Act of

1990 (OFPA or Act) requires that allcrop, wild crop, livestock, and handlingoperations requiring certification submitan organic system plan to theircertifying agent and, where applicable,the State organic program (SOP). Theorganic system plan is a detaileddescription of how an operation willachieve, document, and sustaincompliance with all applicableprovisions in the OFPA and theseregulations. The certifying agent mustconcur that the proposed organic systemplan fulfills the requirements of subpartC, and any subsequent modification ofthe organic plan by the producer orhandler must receive the approval of thecertifying agent.

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

An organic system plan contains sixcomponents. First, the organic systemplan must describe the practices andprocedures used, including thefrequency with which they will be used,in the certified operation. Second, itmust list and characterize eachsubstance used as a production orhandling input, including thedocumentation of commercialavailability, as applicable. Third, it mustidentify the monitoring techniqueswhich will be used to verify that theorganic plan is being implemented in amanner which complies with allapplicable requirements. Fourth, it mustexplain the recordkeeping system usedto preserve the identity of organicproducts from the point of certificationthrough delivery to the customer whoassumes legal title to the goods. Fifth,the organic system plan must describethe management practices and physicalbarriers established to preventcommingling of organic and nonorganic

products on a split operation and toprevent contact of organic productionand handling operations and productswith prohibited substances. Finally, theorganic system plan must contain theadditional information deemednecessary by the certifying agent toevaluate site-specific conditionsrelevant to compliance with these orapplicable State program regulations.Producers or handlers may submit aplan developed to comply with otherFederal, State, or local regulatoryprograms if it fulfills the requirementsof an organic system plan.

The first element of the organicsystem plan requires a narrative or otherdescriptive format that identifies thepractices and procedures to beperformed and maintained, includingthe frequency with which they will beperformed. Practices are tangibleproduction and handling techniques,such as the method for applyingmanure, the mechanical and biologicalmethods used to prepare and combineingredients and package finishedproducts, and the measures taken toexclude pests from a facility. Proceduresare the protocols established forselecting appropriate practices andmaterials for use in the organic systemplan, such as a procedure for locatingcommercially available, organicallyproduced seed. Procedures reflect thedecision-making process used toimplement the organic system plan.

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

The second element that must beincluded in an organic system plan isinformation on the application ofsubstances to land, facilities, oragricultural products. This requirementencompasses both natural and syntheticmaterials allowed for use in productionand handling operations. For naturalmaterials which may be used in organicoperations under specific restrictions,



the organic plan must detail how theapplication of the materials will complywith those restrictions. For example,farmers who apply manure to theirfields must document in their organicsystem plans how they will prevent thatapplication from contributing to watercontamination. A producer and handlerwho bases the selection of seed andplanting stock material under section205.204 or an agricultural ingredientunder section 205.301 on thecommercial availability of thatsubstance must provide documentationin the organic system plan.

The third element of the organicsystem plan is a description of themethods used to evaluate itseffectiveness. Producers and handlersare responsible for identifyingmeasurable indicators that can be usedto evaluate how well they are achievingthe objectives of the operation. Forexample, production objectives could bemeasured through regular tallies ofbushels or pounds of product sold fromthe farm or in numbers of cases soldfrom a handling operation. Indicatorsthat can identify changes in quality oreffectiveness of management practicescould be relatively simple, such as theinformation contained in a standard soiltest. The specific indicators used toevaluate a given organic system planwill be determined by the producer orhandler in consultation with thecertifying agent. Thus, if the organicsystem plan calls for improvements insoil organic matter content in aparticular field, it would includeprovisions for analyzing soil organicmatter levels at periodic intervals. Ifherd health improvement is anobjective, factors such as somatic cellcount or observations about changes inreproductive patterns might be used asindicators.

The fourth element of the organicsystem plan is a description of therecordkeeping system used to verify anddocument an audit trail, as appropriateto the operation. For each crop or wild-crop harvested, the audit trail must tracethe product from the field, farm parcel,or area where it is harvested through thetransfer of legal title. A livestockoperation must trace each animal fromits entrance into through removal fromthe organic operation. A handlingoperation must trace each product thatis handled and sold, labeled, orrepresented as organic from the receiptof its constituent ingredients to the saleof the processed product.

The fifth element which must beincluded in an organic system planpertains to split production or handlingoperations. This provision requires anoperation that produces both organic

and nonorganic products to describe themanagement practices and physicalbarriers established to preventcommingling of organic and nonorganicproducts. This requirement addressescontact of organic products, includinglivestock, organic field units, storageareas, and packaging to be used fororganic products, with prohibitedsubstances.

The specific requirements to beincluded in an organic system plan arenot listed here. The accreditationprocess provides an assurance thatcertifying agents are competent todetermine the specific documentationthey require to review and evaluate anoperation’s organic system plan. Section205.200(a)(6) allows a certifying agent torequest additional information neededto determine that an organic systemplan meets the requirements of thissubpart. The site-specific nature oforganic production and handlingnecessitates that certifying agents havethe authority to determine whetherspecific information is needed to carryout their function.

Crop ProductionAny field or farm parcel used to

produce an organic crop must have beenmanaged in accordance with therequirements in sections 205.203through 205.206 and have had noprohibited substances applied to it for atleast 3 years prior to harvest of the crop.Such fields and farm parcels must alsohave distinct, defined boundaries andbuffer zones to prevent contact with theland or crop by prohibited substancesapplied to adjoining land.

A producer of an organic crop mustmanage soil fertility, including tillageand cultivation practices, in a mannerthat maintains or improves the physical,chemical, and biological condition ofthe soil and minimizes soil erosion. Theproducer must manage crop nutrientsand soil fertility through rotations, covercrops, and the application of plant andanimal materials. The producer mustmanage plant and animal materials tomaintain or improve soil organic mattercontent in a manner that does notcontribute to contamination of crops,soil, or water by plant nutrients,pathogenic organisms, heavy metals, orresidues of prohibited substances. Plantand animal materials include rawanimal manure, composted plant andanimal materials, and uncompostedplant materials. Raw animal manuremust either be composted, applied toland used for a crop not intended forhuman consumption, or incorporatedinto the soil at least 90 days beforeharvesting an edible product that doesnot come into contact with the soil or

soil particles and at least 120 daysbefore harvesting an edible product thatdoes come into contact with the soil orsoil particles. Composted plant oranimal materials must be producedthrough a process that establishes aninitial carbon-to-nitrogen (C:N) ratio ofbetween 25:1 and 40:1 and achieves atemperature between 131°F and 170°F.Composting operations that utilize anin-vessel or static aerated pile systemmust maintain a temperature within thatrange for a minimum of 3 days.Composting operations that utilize awindrow composting system mustmaintain a temperature within thatrange for a minimum of 15 days, duringwhich time the materials must be turnedfive times.

In addition to these practices andmaterials, a producer may apply a cropnutrient or soil amendment included onthe National List of synthetic substancesallowed in crop production. Theproducer may apply a mined substanceof low solubility. A mined substance ofhigh solubility may only be applied ifthe substance is used in compliancewith the annotation on the National Listof nonsynthetic materials prohibited incrop production. Ashes of untreatedplant or animal materials which havenot been combined with a prohibitedsubstance and which are not includedon the National List of nonsyntheticsubstances prohibited for use in organiccrop production may be used to producean organic crop. A plant or animalmaterial that has been chemicallyaltered by a manufacturing process maybe used only if it is included on theNational List of synthetic substancesallowed for use in organic production.The producer may not use any fertilizeror composted plant and animal materialthat contains a synthetic substance notallowed for crop production on theNational List or use sewage sludge.Burning crop residues as a means ofdisposal is prohibited, except thatburning may be used to suppress thespread of disease or to stimulate seedgermination.

The producer must use organicallygrown seeds, annual seedlings, andplanting stock. The producer may useuntreated nonorganic seeds andplanting stock when equivalent organicvarieties are not commercially available,except that organic seed must be usedfor the production of edible sprouts.Seed and planting stock treated withsubstances that appear on the NationalList may be used when an organicallyproduced or untreated variety is notcommercially available. Nonorganicallyproduced annual seedlings may be usedwhen a temporary variance has beenestablished due to damage caused by



unavoidable business interruption, suchas fire, flood, or frost. Planting stockused to produce a perennial crop maybe sold as organically produced plantingstock after it has been maintained undera system of organic management for atleast 1 year. Seeds, annual seedlings,and planting stock treated withprohibited substances may be used toproduce an organic crop when theapplication of the substance is arequirement of Federal or Statephytosanitary regulations.

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

The producer must use preventivepractices to manage crop pests, weeds,and diseases, including but not limitedto crop rotation, soil and crop nutrientmanagement, sanitation measures, andcultural practices that enhance crophealth. Such cultural practices includethe selection of plant species andvarieties with regard to suitability tosite-specific conditions and resistance toprevalent pests, weeds, and diseases.Mechanical and biological methods thatdo not entail application of syntheticsubstances may be used as needed tocontrol pest, weed, and diseaseproblems that may occur. Pest controlpractices include augmentation orintroduction of pest predators orparasites; development of habitat fornatural enemies; and nonsyntheticcontrols such as lures, traps, andrepellents. Weed management practicesinclude mulching with fullybiodegradable materials; mowing;livestock grazing; hand weeding andmechanical cultivation; flame, heat, orelectrical techniques; and plastic orother synthetic mulches, provided thatthey are removed from the field at theend of the growing or harvest season.Disease problems may be controlledthrough management practices whichsuppress the spread of diseaseorganisms and the application ofnonsynthetic biological, botanical, ormineral inputs. When these practicesare insufficient to prevent or controlcrop pests, weeds, and diseases, abiological or botanical substance or asynthetic substance that is allowed onthe National List may be used providedthat the conditions for using thesubstance are documented in theorganic system plan. The producer must

not use lumber treated with arsenate orother prohibited materials for newinstallations or replacement purposesthat comes into contact with soil orlivestock.

A wild crop that is to be sold, labeled,or represented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients or food group(s))’’must be harvested from a designatedarea that has had no prohibitedsubstances applied to it for a period of3 years immediately preceding theharvest of the wild crop. The wild cropmust also be harvested in a manner thatensures such harvesting or gatheringwill not be destructive to theenvironment and will sustain thegrowth and production of the wild crop.

Livestock ProductionAny livestock product to be sold,

labeled, or represented as organic mustbe maintained under continuous organicmanagement from the last third ofgestation or hatching with threeexceptions. Poultry or edible poultryproducts must be from animals thathave been under continuous organicmanagement beginning no later than thesecond day of life. Milk or milkproducts must be from animals thathave been under continuous organicmanagement beginning no later than 1year prior to the production of suchproducts, except for the conversion ofan entire, distinct herd to organicproduction. For the first 9 months of theyear of conversion, the producer mayprovide the herd with a minimum of 80-percent feed that is either organic orproduced from land included in theorganic system plan and managed incompliance with organic croprequirements. During the final 3 monthsof the year of conversion, the producermust provide the herd feed incompliance with section 205.237. Oncethe herd has been converted to organicproduction, all dairy animals shall beunder organic management from the lastthird of gestation. Livestock used asbreeder stock may be brought from anonorganic operation into an organicoperation at any time, provided that, ifsuch livestock are gestating and theoffspring are to be organically raisedfrom birth, the breeder stock must bebrought into the organic operation priorto the last third of gestation.

Should an animal be brought into anorganic operation pursuant to thissection and subsequently moved to anonorganic operation, neither theanimal nor any products derived from itmay be sold, labeled, or represented asorganic. Breeder or dairy stock that hasnot been under continuous organicmanagement from the last third of

gestation may not be sold, labeled, orrepresented as organic slaughter stock.The producer of an organic livestockoperation must maintain recordssufficient to preserve the identity of allorganically managed livestock and alledible and nonedible organic livestockproducts produced on his or heroperation.

Except for nonsynthetic substancesand synthetic substances included onthe National List that may be used asfeed supplements and additives, thetotal feed ration for livestock managedin an organic operation must becomposed of agricultural products,including pasture and forage, that areorganically produced. Any portion ofthe feed ration that is handled mustcomply with organic handlingrequirements. The producer must notuse animal drugs, including hormones,to promote growth in an animal orprovide feed supplements or additivesin amounts above those needed foradequate growth and healthmaintenance for the species at itsspecific stage of life. The producer mustnot feed animals under organicmanagement plastic pellets for roughageor formulas containing urea or manure.The feeding of mammalian and poultryslaughter by-products to mammals orpoultry is prohibited. The producermust not supply animal feed, feedadditives, or feed supplements inviolation of the Federal Food, Drug, andCosmetic Act.

The producer of an organic livestockoperation must establish and maintainpreventive animal health care practices.The producer must select species andtypes of livestock with regard tosuitability for site-specific conditionsand resistance to prevalent diseases andparasites. The producer must provide afeed ration including vitamins,minerals, protein, and/or amino acids,fatty acids, energy sources, and, forruminants, fiber. The producer mustestablish appropriate housing, pastureconditions, and sanitation practices tominimize the occurrence and spread ofdiseases and parasites. Animals in anorganic livestock operation must bemaintained under conditions whichprovide for exercise, freedom ofmovement, and reduction of stressappropriate to the species. Additionally,all physical alterations performed onanimals in an organic livestockoperation must be conducted to promotethe animals’ welfare and in a mannerthat minimizes stress and pain.

The producer of an organic livestockoperation must administer vaccines andother veterinary biologics as needed toprotect the well-being of animals in hisor her care. When preventive practices



and veterinary biologics are inadequateto prevent sickness, the producer mayadminister medications included on theNational List of synthetic substancesallowed for use in livestock operations.The producer may not administersynthetic parasiticides to breeder stockduring the last third of gestation orduring lactation if the progeny is to besold, labeled, or represented asorganically produced. Afteradministering synthetic parasiticides todairy stock, the producer must observea 90-day withdrawal period beforeselling the milk or milk productsproduced from the treated animal asorganically produced. Every use of asynthetic medication or parasiticidemust be incorporated into the livestockoperation’s organic system plan subjectto approval by the certifying agent.

The producer of an organic livestockoperation must not treat an animal inthat operation with antibiotics, anysynthetic substance not included on theNational List of synthetic substancesallowed for use in livestock production,or any substance that contains anonsynthetic substance included on theNational List of nonsynthetic substancesprohibited for use in organic livestockproduction. The producer must notadminister any animal drug, other thanvaccinations, in the absence of illness.The use of hormones for growthpromotion is prohibited in organiclivestock production, as is the use ofsynthetic parasiticides on a routinebasis. The producer must not administersynthetic parasiticides to slaughter stockor administer any animal drug inviolation of the Federal Food, Drug, andCosmetic Act. The producer must notwithhold medical treatment from a sickanimal to maintain its organic status.All appropriate medications andtreatments must be used to restore ananimal to health when methodsacceptable to organic productionstandards fail. Livestock that are treatedwith prohibited materials must beclearly identified and shall not be sold,labeled, or represented as organic.

A livestock producer must documentin his or her organic system plan thepreventative measures he or she has inplace to deter illness, the allowedpractices he or she will employ if illnessoccurs, and his or her protocol fordetermining when a sick animal mustreceive a prohibited animal drug. Thesestandards will not allow an organicsystem plan that envisions anacceptable level of chronic illness orproposes to deal with disease bysending infected animals to slaughter.The organic system plan must reflect aproactive approach to healthmanagement, drawing upon allowable

practices and materials. Animals withconditions that do not respond to thisapproach must be treated appropriatelyand diverted to nonorganic markets.

The producer of an organic livestockoperation must establish and maintainlivestock living conditions for theanimals under his or her care whichaccommodate the health and naturalbehavior of the livestock. The producermust provide access to the outdoors,shade, shelter, exercise areas, fresh air,and direct sunlight suitable to thespecies, its stage of production, theclimate, and the environment. Thisrequirement includes access to pasturefor ruminant animals. The producermust also provide appropriate clean, drybedding, and, if the bedding is typicallyconsumed by the species, it mustcomply with applicable organic feedrequirements. The producer mustprovide shelter designed to allow for thenatural maintenance, comfort level, andopportunity to exercise appropriate tothe species. The shelter must alsoprovide the temperature level,ventilation, and air circulation suitableto the species and reduce the potentialfor livestock injury. The producer mayprovide temporary confinement of ananimal because of inclement weather;the animal’s stage of production;conditions under which the health,safety, or well-being of the animal couldbe jeopardized; or risk to soil or waterquality. The producer of an organiclivestock operation is required tomanage manure in a manner that doesnot contribute to contamination ofcrops, soil, or water by plant nutrients,heavy metals, or pathogenic organismsand optimizes nutrient recycling.

Handling

Mechanical or biological methods canbe used to process an agriculturalproduct intended to be sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organicingredients’’ for the purpose of retardingspoilage or otherwise preparing theagricultural product for market.Processed multiingredient productslabeled ‘‘100 percent organic,’’ may onlyuse wholly organic ingredients,pursuant to paragraph (a) of section205.301. Nonagricultural substancesthat are allowed for use on the NationalList and nonorganically producedagricultural products may be used in oron ‘‘organic’’ and ‘‘made with * * *’’products pursuant to paragraphs (b) and(c) of section 205.301, respectively.Documentation of commercialavailability of each substance to be usedas a nonorganic ingredient in productslabeled ‘‘organic’’ must be listed in the

organic handling system plan inaccordance with section 205.201.

Handlers are prohibited from using:(1) Ionizing radiation for the treatmentor processing of foods; (2) ingredientsproduced using excluded methods; or(3) volatile synthetic solvents in or ona processed product or any ingredientwhich is sold, labeled, or represented asorganic. The prohibition on ionizingradiation for the treatment or processingof foods is discussed underApplicability, section 205.105. This ruledoes not prohibit an organic handlingoperation from using Food and DrugAdministration (FDA)-approved X-raysfor inspecting packaged foods forforeign objects that may beinadvertently commingled in thepackaged product.

The two paragraphs on excludedmethods and ionizing radiation insection 205.270(c) of the proposed ruleare replaced with new paragraph (c)(1)which cross-references those practicesunder paragraphs (e) and (f) of section205.105. New section 205.105 clearlyspecifies that ionizing radiation andexcluded methods are two practices thathandlers must not use in producingorganic agricultural products andingredients. The prohibition on the useof volatile synthetic solvents, alsoincluded under paragraph (c) of section205.270 does not apply to nonorganicingredients in ‘‘made with * * *’’products.

The practice standard for facility pestmanagement under section 205.271requires the producer or handleroperating a facility to use managementpractices to control and prevent pestinfestations. Prevention practices inparagraph (a) include removing pesthabitats, food sources, and breedingareas; preventing access to handlingfacilities; and controlling environmentalfactors, such as temperature, light,humidity, atmosphere, and aircirculation, to prevent pestreproduction. Permitted pest controlmethods in paragraph (b) includemechanical or physical controls, such astraps, light, or sound. Lures andrepellents using nonsyntheticsubstances may be used as pest controls.Lures and repellents with syntheticsubstances that are allowed on theNational List also may be used.Prevention and control practices inparagraphs (a) and (b) may be usedconcurrently.

If the practices in paragraphs (a) and(b) are not effective, amended paragraph(c) provides that handlers may then usea nonsynthetic or synthetic substanceconsistent with National List. If themeasures and substances providedunder paragraphs (a), (b), and (c) are not



effective, synthetic substances not onthe National List may be used to controlpest infestations. Under new paragraph(d), the handler and the operation’scertifying agent, prior to using such asubstance, must agree on the substanceto be used to control the pest, measuresto be taken to prevent contact withorganically produced product, andingredients that may be in the handlingfacility.

This rule recognizes that certain local,State, and Federal laws or regulationsmay require intervention withprohibited substances before or at thesame time substances allowed inparagraphs (b) and (c) are used. To theextent that this occurs, this rule permitsthe handler to follow such laws andregulations to market a product asorganically handled, provided that theproduct does not come into contact withthe pest control substance used.

The extent of pest infestation cannotbe foreseen when an organic plan issubmitted by the certified operation andapproved by the certifying agent. Ahandler who uses any nonsynthetic orsynthetic substance to control facilitypests must update its organic handlingsystem plan to address all measurestaken or intended to be taken to preventcontact between the substance and anyorganically produced ingredient orfinished product.

Section 205.272 provides additionalpractice standards that must be followedby an organic handling operation toprevent the commingling of organic andnonorganic products and to protectorganic products from contact withprohibited substances. An organichandling operation must not usepackaging materials and storagecontainers or bins that contain asynthetic fungicide, preservative, orfumigant in handling an organicproduct. The operation also must notuse or reuse any storage bin or containerthat was previously in contact with anyprohibited substance unless the reusablebin or container has been thoroughlycleaned and poses no risk of prohibitedmaterials contacting the organicproduct.

Temporary VariancesThis subpart establishes conditions

under which certified organicoperations may receive temporaryvariances from the production andhandling provisions of this subpart. TheAdministrator may establish temporaryvariances due to: (1) Natural disastersdeclared by the Secretary; (2)unavoidable business interruptioncaused by natural catastrophes such asdrought, wind, fire, flood, excessivemoisture, hail, tornado, or earthquake;

or (3) to conduct research on organicproduction and handling techniques orinputs. An SOP’s governing Stateofficial or a certifying agent mayrecommend that the Administratorestablish a temporary variance forvarious reasons including anunavoidable business interruption. TheAdministrator will determine how longa temporary variance will be in effect atthe time it is established, subject to suchextension as the Administrator deemsnecessary. Temporary variances may notbe issued to allow use of any practice,material, or procedure which isprohibited under section 205.105.

The proposed rule inadvertentlyomitted the SOP’s governing Stateofficial as having authority torecommend a temporary variance to theAdministrator. We have added thatauthority in paragraph (b) of section205.290.

Upon notification by theAdministrator that a temporary variancehas been established, the certifyingagent must inform each production andhandling operation it certifies that maybe affected by the temporary variance.For example, if a drought causes asevere shortage of organically producedhay, a dairy operation may be permittedto substitute some nonorganic hay for aportion of the herd’s diet to preventliquidation of the herd. The producermust keep records showing the sourceand amount of the nonorganic hay usedand the timeframe needed to restore thetotal feed ration to organic sources. Thecertifying agent may require that thenext organic plan include contingencymeasures to avoid the need to resort tononorganic feed in case of a futureshortage.

General—Changes Based on CommentsThis subpart differs from the proposal

in several respects as follows:(1) Maintain or Improve Provision for

Production Operations Only. A numberof commenters questioned whether therequirement in the proposed rule that anoperation must ‘‘maintain or improvethe natural resources of the operation,including soil and water quality’’applied to handling as well asproduction operations. They stated thathandling operations are not integratedinto natural systems the way thatproduction systems are. As a result,these commenters were uncertain howhandlers could fulfill the ‘‘maintain orimprove’’ requirement.

The ‘‘maintain or improve’’requirement addresses the impact of aproduction operation on the naturalresource base that sustains it and, assuch, does not apply to handlingoperations. We have modified the final

rule in section 205.200 by limiting the‘‘maintain or improve’’ requirement toproduction practices.

(2) Management Practices andPhysical Barriers to PreventCommingling. Many commenters,including numerous certifying agents,stated that the proposed provisions foran organic system plan were notadequate for the task of certifying anoperation that produces both organicand nonorganic products. Thecommenters requested that the final ruleincorporate the provisions establishedin the OFPA for certifying these splitoperations. These provisions includeseparate recordkeeping for the organicand nonorganic operations and theimplementation of protective practicesto prevent the commingling of productand the unintentional contact of organicproduct with prohibited substances. Wehave amended the provisions for anorganic system plan in section205.201(a)(5) to require greateraccountability regarding the segregationof organic and nonorganic products in asplit operation. The changes we madeincorporate language from the OFPA(‘‘physical facilities, managementpractices’’) to provide clear criteria forproducers, handlers and certifyingagents to agree upon an organic systemplan that protects the integrity oforganic product.

(3) Commercial Availability. Theproposed rule required that a raw orprocessed agricultural product sold,labeled, or represented as organic mustcontain not less than 95 percentorganically produced raw or processedagricultural product. Additionally,section 205.606 of the proposed ruleallowed any nonorganically producedagricultural product to be used in the 5percent nonorganic component of anagricultural product sold, labeled, orrepresented as organic. Manycommenters objected to these provisionsand recommended that nonorganicallyproduced agricultural products shouldonly be allowed in an organic productwhen the organically produced formwas not commercially available.Commenters stated that allowingnonorganically produced agriculturalproducts within the 5 percent wouldsignificantly weaken demand for manyorganically produced commodities,especially herbs and spices. Thesecommenters stated that herbs and spicesoften constitute less than 5 percent ofthe ingredients in a raw or processedagricultural product and that handlersproducing an organic product wouldinstinctively seek out the less expensivenonorganic variety. They also indicatedthat the 5 percent component is animportant market for many products



produced from organically producedlivestock, such as milk derivatives andmeat by-products, that are not typicallymarketed directly to consumers.Commenters stated that thepreponderance of current certificationprograms use the commercialavailability criterion when determiningwhether a nonorganically producedagricultural product may be used withinthe 5 percent component. Commenterscited the National Organic StandardsBoard’s (NOSB) recommendation thatorganic agricultural products be used inthis 5 percent component unless theyare commercially unavailable andrequested that the final rule incorporatethe criteria for determining commercialavailability that accompanied thatNOSB recommendation.

We agree with commenters that apreference for organically producedagricultural commodities, whencommercially available, can benefitorganic producers, handlers, andconsumers in a variety of ways. Webelieve that the commercial availabilityrequirement may allow consumers tohave confidence that processedproducts labeled as ‘‘organic’’ containthe highest feasible percentage oforganic ingredients. Some producersmay benefit from any market incentiveto supply organically produced minoringredients that handlers need for theirprocessed products. We recognize thatthe provision does impose an additionalrequirement on handlers who mustascertain whether the agriculturalingredients they use are commerciallyavailable in organic form. The NOSBrecommended that the final rule containa commercial availability provisionbased upon the guidelines developed bythe American Organic Standards projectof the Organic Trade Association. Forthese reasons, we have amended thefinal rule to require that an agriculturalcommodity used as an ingredient in araw or processed product labeled asorganic must be organic when theingredient is commercially available inan organic form.

While recognizing the potentialbenefits of applying the commercialavailability standard to all agriculturalingredients in a processed product, weare concerned that enforcing thisprovision could impose an excessiveburden on handlers. Although manycommenters stated that some existingcertifying agents apply a commercialavailability standard, we do not havecomplete information on the criteriaused by these certifying agents, and weare unsure whether a consensus existson criteria for commercial availabilitywithin the organic community.Additionally, we are concerned that,

unless the standard is clearly articulatedand consistently interpreted andenforced, it will not be effective.Disagreement among certifying agentsregarding when and under whatcircumstances an ingredient iscommercially available wouldundermine our intent to create anequitable and enforceable standard.

AMS is soliciting additional commentand information on a number of issuesconcerning the development ofstandards for the commercialavailability of organically producedagricultural commodities used inprocessed products labeled as‘‘organic.’’ On the basis of thesecomments and information andadditional recommendations that theNOSB may develop, AMS will developa commercial availability standard foruse in implementing the final rule. AMSintends to develop the commercialavailability standard and incorporate itwithin the final rule prior to thecommencement of certificationactivities by accredited certifyingagents. This approach will provideorganic handlers and certifying agentsthe standard necessary to incorporatethe consideration of commercialavailability of ingredients in an organicsystem plan at the time that the USDAorganic standard comes into use.Specifically, AMS requests commentsand information addressing thefollowing questions:

What factors, such as quantity,quality, consistency of supply, andexpense of different sources of aningredient, should be factored into theconsideration of commercialavailability? What relative importanceshould each of these factors possess,and are there circumstances underwhich the relative importance canchange?

What activities and documentationare sufficient to demonstrate that ahandler has taken appropriate andadequate measures to ascertain whetheran ingredient is commercially available?

How can AMS ensure the greatestpossible degree of consistency in theapplication of the commercialavailability standard among multiplecertifying agents?

Could potentially adverse effects of acommercial availability standard, suchas uncertainty over the cost andavailability of essential ingredients,impact or impede the development ofmarkets for organically processedproducts?

What economic and administrativeburdens are imposed by the commercialavailability standards found in existingorganic certification programs?

How would producers benefit frommarket incentives to increase use oforganic ingredients that result from acommercial availability standard?

Would lack of a commercialavailability standard provide adisincentive for handlers of productslabeled ‘‘organic’’ to seek out additionalorganic minor ingredients? Whatimpacts could this have on producers ofminor ingredients?

AMS welcomes any new orunpublished research results orinformation that exists concerning acommercial availability standard. AMSspecifically invites comment fromestablishments which currently operateusing commercial availability or acomparable provision in the conduct oftheir business. AMS will receivecomment on this issue until 90 daysafter publication of the final rule.

(4) Conservation of Biodiversity. Manycommenters recommended amendingthe definition of organic production toinclude the requirement that an organicproduction system must promote orenhance biological diversity(biodiversity). Commenters stated thatthe definitions for organic productiondeveloped by the NOSB and the CodexCommission include this requirement.We agree with these commenters andhave amended the definition of organicproduction to require that a producermust conserve biodiversity on his or heroperation. The use of ‘‘conserve’’establishes that the producer mustinitiate practices to support biodiversityand avoid, to the extent practicable, anyactivities that would diminish it.Compliance with the requirement toconserve biodiversity requires that aproducer incorporate practices in his orher organic system plan that arebeneficial to biodiversity on his or heroperation.

General—Changes Requested But NotMade


Organic Plan Excessively Restrictive.One organic inspector was concernedthat the requirements of the organicsystem plan were too prescriptive andwould create an excessive paper workburden for producers and handlers. Thecommenter stated that the excessivespecificity of certain requirements(composition and source of everysubstance used), combined with theambiguity of others (soil and tissuetesting required but with no mention ofthe frequency), would confuse theworking relationship between aproducer or handler and his or hercertifying agent. The commenter was



concerned that strict adherence to thespecifications in the organic systemplan would compromise the ability ofproducers and handlers to run theirbusinesses. While agreeing thatflexibility in the development of theorganic system plan was valuable, thecommenter stated that producers andhandlers, not the certifying agent, mustretain the primary managerial role fortheir operation. Other commentersmaintained that the organic system planrequirements were too ambiguous andwould inhibit certifying agents’ effortsto review necessary information. Forexample, a trade association commentedthat the absence of specificrecordkeeping requirements forlivestock feed materials, medications,and health care activities would impaircompliance monitoring.

The provisions for an organic systemplan were one of the most significantlyrevised components of the proposedrule, and, with minor changes related tosplit operations, we have retained themin the final rule. These provisionsprovide ample discretion for producers,handlers, and certifying agents toperform their duties while recognizingthat mutual consent is a prerequisite forthem to meet their responsibilities. Theorganic system plan enables producersand handlers to propose and certifyingagents to approve site and operation-specific practices that fulfill allapplicable program requirements.Producers and handlers retain theauthority to manage their operations asthey deem necessary, but any actionsthey undertake that modify their organicsystem plan must be approved by thecertifying agent. With regard torecordkeeping, certifying agents areauthorized to require the additionalinformation, such as the livestockrecords mentioned in the comment, thatthey deem necessary to evaluatecompliance with the regulations.

One certifying agent stated that therequirement to maintain or improve thenatural resources of the operation wasworthy in principle but unreasonable toachieve. This commenter stated that thelong-term consequences of an organicsystem plan could not be foreseen andrecommended requiring that producers‘‘must endeavor’’ to maintain orimprove the operation’s naturalresources. We have not changed thisrequirement because the vast majority ofcommenters supported an organicsystem plan that mandated the‘‘maintain or improve’’ principle. Agood working relationship between theproducer and his or her certifying agent,including the annual inspection andaccompanying revisions to the organic

system plan, can rectify the unforeseenand unfavorable conditions that arise.

Crop Production—Changes Based onComments


(1) Crop nutrient management. Thefundamental requirement of the soilfertility and crop nutrient managementpractice standard, that tillage,cultivation, and nutrient managementpractices maintain or improve thephysical, chemical, and biologicalcondition of the soil and minimizeerosion, remains unaltered. Theproposed rule required that a producerbudget crop nutrients by properlyutilizing manure or other animal andplant materials, mined substances oflow or high solubility, and allowedsynthetic amendments. Manycommenters disagreed with using theterm, ‘‘budget,’’ which they consideredtoo limiting to characterize nutrientmanagement in organic systems. Thesecommenters recommended that thepractice standard instead emphasize thediverse practices used in organicsystems to cycle nutrients over extendedperiods of time.

We agree with these commenters andhave amended the final rule to requirethat producers manage crop nutrientsand soil fertility through the use of croprotations and cover crops in addition toplant and animal materials.Additionally, we clarified thatproducers may manage crop nutrientsand soil fertility by applying minedsubstances if they are used incompliance with the conditionsestablished in the National List. Finally,we removed the word, ‘‘waste,’’ fromour description of animal and plantmaterials in the proposed rule toemphasize the importance of theseresources in organic soil fertilitymanagement.

(2) Compost Practice Standard. Theproposed rule required that a compostedmaterial used on an organic operationmust be produced at a facility incompliance with the Natural ResourceConservation Service (NRCS) practicestandard. While many commentersagreed with the need for greateroversight of the feedstocks andprocedures used to produce compost,most stated that the NRCS practicestandard would not be suitable for thispurpose. Commenters stated that therequirements in the NRCS practicestandard were not designed for organicoperations and would prohibit manyestablished, effective compostingsystems currently used by organicproducers. For example, adoption of theNRCS practice standard would prevent

producers from using nonfarm wastes ascompost feedstocks. Materials such asfood processing by-products and leavesfrom curbside collection programs havelong been used with beneficial results.

Commenters also stated that theminimum acceptable requirements forthe design, construction, and operationof a composting facility contained in thepractice standard were appropriate for avoluntary cost share program but wereexcessive as a compliance requirementfor organic certification. Commentersquestioned whether producers couldjustify the investment of time andresources needed to comply with themultiple design and operation criteriaspecified in the NRCS practice standard.

We agree with commenters whostated that, given the diversity ofcomposting systems covered by anational organic standard, requiring fullcompliance with the NRCS practicestandard would be overly prescriptive.We maintain, however, thatimplementation of the OFPA requires arigorous, quantitative standard for theproduction of compost. The OFPAcontains significant restrictions onapplying raw manure that are reflectedin the soil fertility and crop nutrientmanagement practice standard. Theserestrictions pertain to raw manure anddo not apply once fresh animalmaterials are transformed into acomposted material. An organicproducer using a composted materialcontaining manure must comply withthe nutrient cycling and soil and waterconservation provisions in his or herorganic system plan but is notconstrained by the restrictions thatapply to raw manure. Therefore,producers intending to apply soilamendments will require clear andverifiable criteria to differentiate rawmanure from composted material. Wedeveloped the requirements in the finalrule for producing an allowedcomposted material by integratingstandards used by the EnvironmentalProtection Agency (EPA) and USDA’sNatural Resources Conservation Service(NRCS). The requirements for thecarbon-to-nitrogen (C:N) ratio forcomposting materials are the same asthat found in the NRCS practicestandard for a composting facility. Thetime and temperature requirements forin-vessel, static aerated pile, andwindrow composting systems areconsistent with that EPA regulatesunder 40 CFR Part 503 for theproduction of Class A sewage sludge.Additionally, AMS reviewed thesecompost production requirements withUSDA’s Agricultural Research Service(ARS).



The conditions in the final rule forproducing an allowed compostedmaterial begin with the selection ofappropriate feedstocks. The producer’sfirst responsibility is to identify thesource of the feedstocks used in thecomposting system. This requirementensures that only allowed plant andanimal materials are included in thecomposting process, that they are notcontaminated with prohibited materials,and that they are incorporated inquantities suitable to the design of thecomposting system. Certifying agentswill exercise considerable discretion forevaluating the appropriateness ofpotential feedstock materials and mayrequire testing for prohibited substancesbefore allowing their use. For example,a certifying agent could require aproducer to monitor off-farm inputssuch as leaves collected through amunicipal curbside program or organicwastes from a food processing facility.Monitoring may be necessary to protectagainst contamination from residues ofprohibited substances, such as motor oilor heavy metals, or gross inert materialssuch as glass shards that can enter theorganic waste stream.

The final rule further requires that theproducer adhere to quantitative criteriawhen combining and managing theplant and animal materials that arebeing composted. When combiningfeedstocks to initiate the process,producers must establish a C:N ratio ofbetween 25:1 and 40:1. This rangeallows for very diverse combinations offeedstock materials while ensuring that,when properly managed, thecomposting process will yield highquality material. While somecommenters maintained that specifyingany C:N ratio in the final rule would betoo restrictive, it would be far moreproblematic not to establish a range. The25:1 to 40:1 range ensures thatproducers will establish appropriateconditions under which the additionalrequirements in this practice standard,most notably the time and temperaturecriteria, can be achieved with minimalproducer oversight. Compostingoperations using a C:N ratio lower than25:1 require increasingly intensivemanagement as the ratio drops due tothe risk of putrefaction. Operations inexcess of the 40:1 range may achieve theminimum temperature but are likely todrop off quickly and result in a finishedmaterial that is inadequately mature anddeficient in nitrogen. The producer isnot required to perform a physicalanalysis of each feedstock component ifhe or she can demonstrate that anestimated value is reliable. For example,estimates of the carbon and nitrogen

content in specific manures and plantmaterials are generally recognized.Other feedstocks of consistent qualitymay be tested once and assumed toapproximate that value.

The producer must develop in his orher organic system plan themanagement strategies and monitoringtechniques to be used in his or hercomposting system. To produce anallowed composted material, theproducer must use an in-vessel, staticaerated pile, or windrow compostingsystem. Producers using an in-vessel orstatic aerated pile system mustdocument that the composting processachieved a temperature between 131°Fand 170°F and maintained that level fora minimum of 3 days. Producers usinga windrow composting system mustdocument that the composting processachieved a temperature between 131°Fand 170°F and maintained that level fora minimum of 15 days. Compostproduced using a windrow system mustbe turned five times during the process.These time and temperaturerequirements are designed to minimizethe risk from human pathogenscontained in the feedstocks, degradeplant pathogens and weed seeds, andensure that the plant nutrients aresufficiently stabilized for landapplication.

The final rule does not containprovisions for the use of materialscommonly referred to as ‘‘compostteas.’’ A compost tea is produced bycombining composted plant and animalmaterials with water and a concentratednutrient source such as molasses. Themoisture and nutrient source contributeto a bloom in the microbial populationin the compost, which is then appliedin liquid form as a crop pest or diseasecontrol agent. The microbialcomposition of compost teas aredifficult to ascertain and control and weare concerned that applying compostteas could impose a risk to humanhealth. Regulation of compost teas wasnot addressed in the proposed rule. TheNational Organic Program (NOP) willrequest additional input from the NOSBand the agricultural researchcommunity before deciding whetherthese materials should be prohibited inorganic production or whetherrestrictions on their use are appropriate.

In addition to managing cropnutrients with raw manure andcomposted plant and animal materials,a producer may use uncomposted plantmaterials. These are materials derivedexclusively from plant sources that aproducer manages in a manner thatmakes them suitable for application ina cropping system. For example, plantmaterials that are degraded and

stabilized through a vermicompostingprocess may be used as a soil fertilityand crop nutrient amendment.

(3) Mined Substances of HighSolubility. The proposed rule treatedmined substances of high solubility as asingle category of soil amendment andallowed their use where warranted bysoil and crop tissue testing. Manycommenters objected to the generalallowance for this category ofsubstances and were particularlydisappointed that the NOSB annotationson two such materials, sodium (Chilean)nitrate and potassium chloride, were notincluded. Commenters cited thepotential detrimental effects of thesehighly soluble and saline substances onsoil quality and stated that severalinternational organic certificationprograms severely prescribe or prohibittheir use. One certifying agentrecommended that natural substances ofhigh solubility and salinity be handledcomparably to similar syntheticmaterials such as liquid fish productsand humic acids that appear on theNational List, complete with theiroriginal NOSB annotations.

At its June 2000 meeting, the NOSBrecommended that the NOP deletegeneral references to mined substancesof high solubility from the final rule,and incorporate the NOSB’s specificannotations for materials of this nature.We have adopted this recommendationby retaining a place for minedsubstances of high solubility in the soilfertility and crop nutrient managementpractice standard but restricting theiruse to the conditions established for thematerial as specified on the NationalList of prohibited natural substances.Under this approach, mined substancesof high solubility are prohibited unlessused in accordance with the annotationrecommended by the NOSB and addedby the Secretary to the National List. Wedeleted the provision from the proposedrule that use of the substance be‘‘justified by soil or crop tissueanalysis.’’ The final rule contains twomaterials—sodium nitrate andpotassium chloride—that may be usedin organic crop production with theannotations developed by the NOSB.

While ‘‘mined substances of highsolubility’’ is not a discrete, recognizedcategory such as crop nutrients, theproposed rule mentioned sodiumnitrate, potassium chloride, potassiumnitrate (niter), langbeinite (sulfate ofpotash magnesia), and potassium sulfatein this context. Based on therecommendation of the NOSB, the finalrule would prohibit use of thesematerials, unless the NOSB developedrecommendations on conditions fortheir use and the Secretary added them



to the National List. The NOP wouldwelcome further guidance from theNOSB on these materials.

(4) Burning crop residues. Theproposed rule prohibited burning as ameans of crop disposal, except forburning prunings from perennial cropsto suppress the spread of disease. Manycommenters supported the principlebehind the prohibition but maintainedthat the proposed language was toorestrictive and would preclude certainbeneficial agronomic practices. Severalproducers stated that the proposed rulewould prevent them from collecting andburning residues from diseased annualcrops, which they felt was an effectiveand beneficial practice. Other producerscited their use of prescriptive burning asa management practice for certain nativeor wild crops. As evidenced by theallowance for burning to suppressdisease with perennial crops, theproposed rule was not designed topreclude the selective use of fire inorganic production. We agree with thecommenters that a more flexibleallowance for the practice is warranted,and we have amended the provision toallow burning of annual and perennialcrop residues for the suppression ofdisease and to stimulate seedgermination. Producers must establishtheir need and procedures for burningin their organic system plan, and thepractice cannot be used solely to removecrop debris from fields.

(5) Requirement for Organic Seed inSprout Production. The proposed ruleallowed nonorganically produced seedsfor all purposes, including sproutproduction, when the certifying agentconcurred with the producer thatorganically produced seeds were notcommercially available. Whilecommenters predominately supportedthis approach with seed used forplanting, they were virtually unanimousin stating that it is never appropriate toallow nonorganically produced andhandled seeds in organic sproutproduction. Commenters cited theNOSB’s June 1994 recommendation thatseed used for the production of ediblesprouts shall be organically producedand stated that existing certificationstandards do not provide an exemptionbased on commercial availability. Weagree with these commenters and havemodified the final rule to require thatorganic seed must be used for theproduction of edible sprouts.

(6) Mitigating the Effects of aBiological, Botanical, or SyntheticSubstance. The proposed rule requiredthat producers who used a biological orbotanical substance or an allowedsynthetic substance to control croppests, weeds, or disease evaluate and

mitigate the effects of repetitive use ofthe same or similar substances. Whileagreeing that pest resistance and shiftsin pest populations were importantconsiderations, commenters stated thatmanaging these issues was beyond theability of individual operations.Commenters recommended that theNOP develop principles and practicesfor managing pest resistance and shiftsin pest types that would apply to allproduction operations. We agree withthese comments and have deleted therequirement to evaluate and mitigate theeffects of using the same or similar croppest, weed, or disease controlsubstances. The final rule requires thatproducers document the use of suchsubstances in their organic systemsplans, subject to the approval of theircertifying agent.

(7) Prohibition on Use of TreatedLumber. The proposed rule did notspecifically address the use of lumberthat had been treated with a prohibitedsubstance, such as arsenic, in organicproduction. Citing the explicitprohibition on these substances inexisting organic standards, manycommenters felt that treated lumbershould be excluded in the final rule.Commenters also cited the NOSB’srecommendation to prohibit the use oflumber treated with a prohibitedsubstance for new construction andreplacement purposes effective uponpublication of the final rule. We haveincluded a modified version of theNOSB’s recommendation within thecrop pest, weed, and diseasemanagement practice standard. Thisprovision prohibits the use of lumbertreated with arsenate or other prohibitedmaterials for new installations orreplacement purposes in contact withan organic production site. We includedthis modification to clarify that theprohibition applies to lumber used indirect contact with organicallyproduced and handled crops andlivestock and does not include uses,such as lumber for fence posts orbuilding materials, that are isolatedfrom production. The prohibitionapplies to lumber used in cropproduction, such as the frames of aplanting bed, and for raising livestock,such as the boards used to build afarrowing house.

(8) Greater Rigor in the Wild HarvestProduction Organic System Plan. Anumber of commenters stated that thewild-crop harvesting practice standardwas insufficiently descriptive and thatthe proposed rule failed to apply thesame oversight to wild harvestoperations as it did to those producingcrops and livestock. Some commentersmaintained that the proposed rule did

not require a wild harvest producer tooperate under an approved organicsystem plan. These commentersproposed specific items, including mapsof the production area that should berequired in a wild harvest operation’sorganic system plan. One commenterrecommended that the definition for‘‘wild crop’’ be modified to allow theharvest of plants from aquaticenvironments.

We amended the practice standard forwild-crop harvesting to express thecompliance requirements more clearly.Wild-crop producers must comply withthe same organic system planrequirements and conditions, asapplicable to their operation, as theircounterparts who produce crops andlivestock. Wild harvest operations areproduction systems, and they mustsatisfy the general requirement that allpractices included in their organicsystem plan must maintain or improvethe natural resources of the operation,including soil and water quality. Wemodified the practice standard toemphasize that wild harvest productionis linked to a designated site and expectthat a certifying agent wouldincorporate mapping and boundaryconditions into the organic system planrequirements. Finally, we changed thedefinition of ‘‘wild crop’’ to specify thatharvest takes place from a ‘‘site’’ insteadof ‘‘from land,’’ thereby allowing foraquatic plant certification.

Crop Production—Changes RequestedBut Not Made


(1) Application of Raw Manure. Thesoil fertility and crop nutrientmanagement practice standard in theproposed rule permitted the applicationof raw manure to crops not intended forhuman consumption and establishedrestrictions for applying it to crops usedfor human food. For human food crops,the proposed rule required a 120-dayinterval between application andharvest of crops whose edible portionhad direct contact with the soil or soilparticles, and a 90-day interval for cropsthat did not. These provisions reflectedthe recommendations developed by theNOSB at its June 1999 meeting. Thepractice standard also required that rawmanure must be applied in a mannerthat did not contribute to thecontamination of crops, soil, or water byplant nutrients, pathogenic organisms,heavy metals, or residues of prohibitedsubstances.

The majority of commenterssupported the provisions for applyingraw manure. Some commenters stated



that the provisions effectively balancedthe benefits of applying raw manure tothe soil with the environmental andhuman health risks associated with itsuse. These commenters stated that thelengthy intervals between applicationand harvest would not impose anunreasonable or unfeasible burden onorganic producers. The NOSB stronglysupported the provisions in theproposed rule, emphasizing that rawmanure contributed significant benefitsto soil nutrient, structure, and biologicalactivity that other soil fertility practicesand materials do not provide. Othercommenters stated that the provisionswere consistent with the requirementsin existing organic standards and addedthat the restrictions were justifiablebecause they reflected responsiblemanagement practices.

For differing reasons, a number ofcommenters disagreed with theproposed provisions. Some commenterscited the human health risks associatedwith pathogenic organisms found in rawmanure and stated that the proposedintervals between application andharvest were not adequately protective.These commenters recommended thatthe NOP conduct more extensive riskassessment procedures beforedetermining what, if any, intervalsbetween application and harvest wouldadequately protect human health. Someof these commenters identified the riskassessment methodology and pathogentreatment procedures governing theproduction and use of sewage sludge asthe most suitable precedent for guidingthe additional work required in thisarea. Conversely, a number ofcommenters stated that the provisionsin the proposed rule were excessivebecause they exceeded the minimum60-day interval between application andharvest established in the OFPA. Manyof these commenters recommendedeliminating the distinction betweencrops that come into contact with soil orsoil particles and those that don’t andapplying a uniform 60-day intervalbetween harvest and application for anycrop to which raw manure had beenapplied. Some commenters stated thatthe 120-day interval severely limited theflexibility of producers who operated inregions such as the Northeast where thegrowing season lasted only slightlylonger. Other commenters maintainedthat the practice standard did notaddress specific practices, such asapplying raw manure to frozen fields,that they maintained should beexpressly prohibited.

The responsibility to use raw manurein a manner that is protective of humanhealth applies to all producers, whetherorganic or not, who apply such

materials. We acknowledge thecommenters who noted that the OFPAcites food safety concerns relative tomanure use and, therefore, that foodsafety considerations should bereflected in the practice standard forapplying raw manure in the final rule.Some of the commenters favored moreextensive risk assessment procedures orlengthening the interval betweenapplication and harvest. We have not,however, changed the provisions forapplying raw manure.

Although public health officials andothers have identified the use of rawmanure as a potential food safetyconcern, at the present time, there is noscience-based, agreed-upon standard forregulating the use of raw manure in cropproduction. The standard in this rule isnot a public health standard. Thedetermination of food safety demands acomplex risk assessment methodology,involving extensive research, peerreview, and field testing for validationof results. The only comparableundertaking in Federal rulemaking hasbeen EPA’s development of treatmentand application standards for sewagesludge, an undertaking that requiredyears of dedicated effort. The NOP doesnot have a comparable capacity withwhich to undertake a comprehensiverisk assessment of the safety of applyingraw manure to human food crops. Todelegate the authority to determine whatconstitutes safe application of rawmanure to certifying agents would beeven more problematic. A certifyingagent cannot be responsible forestablishing a Federal food safetystandard. Therefore, the standard in thisrule is a reflection of AMS’ view and ofthe public comments that this standardis reasonable and consistent withcurrent organic industry practices andNOSB recommendations for organicfood crop production. Should additionalresearch or Federal regulation regardingfood safety requirements for applyingraw manure emerge, AMS will ensurethat organic production practicestandards are revised to reflect the mostup-to-date food safety standard.

Neither the identification of foodsafety as a consideration in the OFPAnor the inclusion of this practicestandard in the final rule should beconstrued to suggest that organicallyproduced agricultural products are anysafer than nonorganically producedones. USDA has consistently stated thatcertification is a process claim, not aproduct claim, and, as such, cannot beused to differentiate organic fromnonorganic commodities with regard tofood safety. National organic standardsfor manure use cannot be used toestablish a food safety standard for

certified commodities in the absence ofas uniform Federal regulation to ensurethe safety of all human food crops towhich raw manure has been applied.The OFPA was designed to certify aprocess for informational marketingpurposes.

Neither have we changed the practicestandard in response to comments thatthe requirement in the final rule shouldnot exceed the 60-day intervalcontained in the OFPA. The OFPAclearly establishes that the interval mustbe no less than 60 days and does notpreclude a longer standard. The NOSBhas strongly supported the proposed 90-and 120-day intervals, and the vastmajority of commenters indicated thatthese provisions would be feasible forvirtually all organic cropping systems.The requirement in the practicestandard that raw manure must beapplied in a manner that does notcontribute to the contamination ofcrops, soil, or water by plant nutrients,pathogenic organisms, heavy metals, orresidues of prohibited substancesprovides certifying agents the discretionto prohibit specific practices that wouldnot be in compliance. With thisdiscretion, a certifying agent couldprohibit practices, such as applyingmanure to frozen ground or too close towater resources, that many commentersstated were not appropriate for organicproduction.

(2) No Prohibition on Manure fromNonorganic Operations. The proposedrule identified animal and plant wastematerials as important components insoil fertility and crop nutrientmanagement without providing criteriafor distinguishing allowed andprohibited sources. A large number ofcommenters objected to this provisionand stated that manure from nonorganicsources may contain residues fromprohibited substances, including animalmedications. These commentersmaintained that some of these residues,such as antibiotics, may remain activefor extended intervals, and others, suchas heavy metals, could accumulate onthe organic operation. Commentersstated that if either or both conditionsprevailed, the integrity of the organicoperation would be jeopardized. Manyproducers and certifying agentsemphasized that the proposed ruleconflicted with the Codex guidelinesthat prohibit the use of manure fromfactory farms. These commenters wereconcerned that failure to restrict the useof manure from nonorganic operationswould put their products at acompetitive disadvantage, particularlyin European markets. When raising thisissue, most commenters requested thatthe final rule either prohibit the use of



manure from factory farms or state thatcertifying agents could regulate thepractice by requiring residue testing andrestrictions on application.

We have not changed the provisionsfor using manure from nonorganicoperations in the final rule. In manydiscussions on the subject throughoutthe years, the NOSB has neverrecommended that manure fromnonorganic farms be prohibited.Existing organic certification standardsroutinely permit the use of manure fromnonorganic operations with appropriateoversight, and the final ruleincorporates a similar approach. Underthe final rule, a certifying agent canrequire residue testing when there isreasonable concern that manure, eitherraw or as a component of compost,contains sufficient quantities ofprohibited materials to violate theorganic integrity of the operation.Providing certifying agents thediscretion to require screening forprohibited materials will minimize therisk of introducing contaminants whilemaintaining the ecologically importantpractice of recycling organic materialfrom nonorganic operations.Additionally, the final rule requires thatproducers apply manure and compost ina manner that maintains or improves thesoil and water quality of their operation.This provision provides an additionalsafeguard that certifying agents may useto ensure that the application of anyform of manure protects the naturalresources of the operation.

(3) Rotating a Field in and out ofOrganic Production. Some commentersstated that a producer should not beallowed to rotate fields on theiroperation in and out of organicproduction. These commenters wereconcerned that producers could applyprohibited substances that persisted formany years, such as soil fumigants, andbegin harvesting organically producedcrops after 3 years. They stated that,without a prohibition on the rotation offields in this manner, organic producerscould effectively use a prohibitedsubstance on their operation.

We have not amended the final ruleto prohibit the rotation of a field on anoperation in and out of organicproduction. The statutory prohibitionon the application of a prohibitedsubstance is 3 years, and thisrequirement is contained in section205.202(b). This prohibition restricts theapplication of a prohibited substance,not its residual activity. If AMS receivesevidence that the rotation of fields inthis manner threatens to compromiseorganic production, the NOP and NOSBwill collaborate on developingstandards to remedy it.

(4) Use of Seed Treatments on theNational List. The seed and plantingstock practice standard in the proposedrule generated a very diverse array ofresponses that, while largely favorable,highlighted a potentially disruptiveimpact on organic producers. Thepractice standard favored organic seedand planting stock over nonorganicallyproduced but untreated varieties andnonorganically produced, untreatedseed and planting stock overnonorganically produced seeds andplanting stock treated with an allowedsynthetic substance. Producers coulduse the less preferable seed or plantingstock variety if they demonstrated totheir certifying agent that an equivalentvariety in the preferred form was notcommercially available. Mostcommenters endorsed the principle ofrequiring organic seed and plantingstock and agreed that the proposedprovisions were a workable approach toenforcement. They stated that theprovisions created an incentive for seedand planting stock providers to developsupplies for organic markets, yetenabled producers who made a goodfaith effort but failed to locate seed orplanting stock in the preferred form theability to continue producingorganically. Most commenters indicatedthat this approach would support theexisting market for organic seed andplanting stock while fostering itscontinued development.

A number of commenters, however,stated that the seed and planting stockpractice standard was unreasonable andunworkable and would adversely affectorganic producers. These effects wouldinclude significantly reduced plantingoptions due to the nonavailability ofseed in any allowed form and higherseed costs, which represent a significantpercentage of the total production costfor some commodities. Thesecommenters maintained that the threecategories of seed and planting stockallowed in the order of preference couldnot reliably provide producers withmany commercial varieties currentlybeing planted. They pointed out thatthere were no synthetic seed treatmentson the National List in the proposedrule, thereby eliminating the use oftreated seed in organic production.Commenters stated that producers oftenrely upon seed and planting stockvarieties that are uniquely well adaptedfor their growing conditions ormarketing requirements and that theseparticular varieties would very often notbe available in untreated form. Thesecommenters concluded that theproposed practice standard wouldcompel many producers to abandon

many tried and true varieties of seedand planting stock and perhaps phaseout organic production entirely. Onecommenter maintained that theproposed rule’s stated intention of usingthe practice standard to stimulateproduction of organic seed and plantingstock was not within the purpose of theOFPA.

We have not changed the seed andplanting stock practice standard inresponse to these commenters becausethe prohibition on using syntheticmaterials not on the National List is arequirement of the OFPA. The final rulecannot allow producers to use syntheticseed treatments that have not beenreviewed, favorably recommended bythe NOSB, and added to the NationalList by the Secretary. The practicestandard creates incentives forproducers to seek out seed and plantingstock inputs that are the mostcompatible with organic production, yetincludes allowances when preferredforms are not commercially available.While no seed treatments are includedon the National List in the final rule,individuals may petition the NOSB forreview of such substances. Additionally,the practice standard creates anincentive for seed and planting stockproducers and suppliers to developnatural treatments suitable for organicsystems that would not need to appearon the National List. The objectives ofspurring production of organicallygrown seed and promoting research innatural seed treatments are compatiblewith the OFPA’s purpose of facilitatingcommerce in organically produced andprocessed food. We designed thepractice standard to pursue theseobjectives while preventing thedisruption that an ironclad requirementfor organically produced seed andplanting stock may have caused.

(5) Practice Standard for MapleSyrup. Many commenters stated that theproposed rule lacked production andhandling standards for operations thatproduce maple syrup. Commentersstated that maple syrup production is asignificant enterprise for many organicproducers and that the absence of apractice standard in the final rule wouldadversely affect existing markets fororganic products. Many commentersrecommended that the final ruleincorporate the maple syrup practicestandard from an existing certificationprogram or the American OrganicStandards.

We have not included a practicestandard for the production andhandling of maple syrup because thefinal rule contains sufficient provisionsfor the certification of these types ofoperations. After reviewing existing



practice standards for maple syrup, wedetermined that the standards in thefinal rule for crop production, handlingoperations, and allowed and prohibitedmaterials on the National List providedcomparable guidance.

Crop Production—ClarificationsClarification is given on the following

issues raised by commenters:(1) Applicability of Crop Rotation

Requirement to all Operations. OneState program commented that the croprotation practice standard in theproposed rule was unreasonable forproducers who operated in regionswhere limited rainfall and irrigationresources or unique soil conditionsmade cover cropping impractical. Thiscommenter stated that certain drylandcropping systems, such as aloe veraproduction, function as ‘‘semi-perennial’’ systems that do not includerotations, yet fulfill the objectives of thecrop rotation practice standard. Acertifying agent expressed a similarconcern by suggesting that the croprotation practice standard be changed byadding ‘‘may include, but is not limitedto’’ prior to the list of allowedmanagement practices. This commenterfelt that the ‘‘may include’’ clauseafforded individual growers greaterdiscretion by acknowledging that notevery allowed management practicewould be applicable to all operations.

We have retained the language fromthe proposed rule because it alreadyprovides the flexibility to develop site-specific crop rotation practicesrequested by these commenters. Theregulation as originally written includesthe ‘‘ but not limited to’’ clause thatallows producers to include alternativemanagement practices in their organicsystem plan. Additionally, theregulation states that the producer mustimplement a crop rotation that providesthe required functions ‘‘that areapplicable to the operation.’’ Thisfurther establishes that the crop rotationcomponent of an organic system planmust be considered within the contextof site-specific environmentalconditions including climate,hydrology, soil conditions, and thecrops being produced. The final rulerequires implementation of a croprotation, but the producer and certifyingagent will determine the specific cropsand the frequency and sequencing oftheir use in that rotation. Crop rotationsmust fulfill the requirements of thispractice standard—to maintain orimprove soil organic matter content,provide for pest management, managedeficient or excess plant nutrients, andcontrol erosion—and are not obligatedto use any specific management

practice. We structured this and otherpractice standards, as well as therequirements of the organic system plan,to enable producers and certifyingagents to develop organic system plansadapted to natural variation inenvironmental conditions andproduction systems.

(2) Excluding Annual Seedlings fromPlanting Stock. The proposed ruleallowed a producer to usenonorganically produced seeds andplanting stock if organically producedequivalent varieties were notcommercially available. Severalcommenters, including the NOSB, wereconcerned that the definition of plantingstock as ‘‘any plant or plant tissue,including rhizomes, shoots, leaf or stemcuttings, roots, or tubers, used in plantproduction or propagation’’ wassufficiently broad to be applied toannual seedlings. While manycommenters, including the NOSB,supported the commercial availabilityexemption in the case of seeds andplanting stock, they objected toextending it to annual seedlings. Theproposed rule did not intend to includeannual seedling within the definition ofplanting stock and included a separatedefinition of ‘‘annual seedling’’ as ‘‘aplant grown from seed that willcomplete its life cycle or produce aharvestable crop yield within the samecrop your or season in which it isplanted.’’ The proposed rule addressedannual seedlings as a distinct categorywithin the seed and planting stockpractice standard. There was noallowance for using nonorganicallyproduced annual seedlings based oncommercial availability, and suchseedlings can only be used when atemporary variance has been issued dueto a catastrophic business interruption.The growth of markets for organicallyproduced annual seedlings, unlike thosefor seeds and planting stock, obviatesthe need for the commercial availabilityprovision. We have retained thisapproach in the final rule.

Livestock Production—Changes Basedon Comments


(1) Whole Herd Conversion. Theproposed rule required that livestockreceive 1 year of continuous organicmanagement prior to the milk or milkproducts they produce being labeled asorganic. Based on the feed provisions inthat proposal, producers would berequired to provide a 100-percentorganic feed ration (exclusive ofNational List substances allowed as feedsupplements and additives) for thatentire year. Many producers,

consumers, State certification programs,and certifying agents commented thatthe full year organic feed requirementcreated an insurmountable barrier forsmall and medium-size dairy operationswishing to convert to organicproduction. They maintained that theadded expense of a full year, 100-percent organic feed requirement waseconomically prohibitive. Thesecommenters stated that ‘‘new entry’’ or‘‘whole herd’’ conversion provisions inexisting certification standards havebeen instrumental in enablingestablished nonorganic dairies to makethe transition to organic production.Commenters stated that these provisionstypically allow producers to providelivestock 80-percent organic or self-raised feed for the first 9 months of aherd’s transition, before requiring 100-percent organic feed for the final 3months. Some commenters stated thatmany current organic dairies hadcapitalized on this whole herdconversion provision and that theconsistent growth in demand for organicmilk and milk products reflectedconsumer acceptance of the principle.

At its June 2000 meeting, the NOSBreiterated its prior endorsement of theconversion principle for operations thatjointly convert dairy herds and the landon which they are raised. The NOSBrecommended allowing a producermanaging an entire, distinct herd toprovide 80-percent organic or self-raisedfeed during the first 9 months of thefinal year of conversion, and 100-percent organic feed for the final 3months. The recommendation furtherrequired that dairy animals brought ontoan organic dairy must be organicallyraised form the last third of gestation,except that feed produced on landmanaged under an organic system plancould be fed to young stock up to 12months prior to milk production.

While the preponderance ofcomments supported the whole herdconversion provision, a significantnumber of individuals, certifying agents,and State certification programsopposed it. Some commenters felt thatrequiring less than 1 full year of 100-percent organic feed would not satisfyconsumer expectations for anorganically managed dairy. Othercommenters stated that the whole herdconversion merely favored one segmentof organic producers over another. Theymaintained that the full year, 100-percent organic feed requirement wouldstimulate markets for organicallyproduced hay and grain, therebyrewarding good row crop rotation. Onecertifying agent was concerned that theconversion provision would create apermanent exemption and that split



operation dairies could use it repeatedlyto bring nonorganic animals into theorganic operation.

The final rule contains a provision forwhole herd conversion that closelyresembles those found in the NOSBrecommendation and the existingcertification standards. The final rulerequires that an entire, distinct dairyherd must be under organicmanagement for 1 year prior to theproduction of organic milk. During thefirst 9 months of that year, the producermust provide a feed ration containing aminimum of 80-percent organic feed orfeed that is raised from land included inthe organic system plan and managed incompliance with organic croprequirements. The balance of the feedration may be nonorganically produced,but it must not include prohibitedsubstances including antibiotics orhormones. The producer must providethe herd 100-percent organic feed forthe final 3 months before the productionof organic milk. The producer mustcomply with the provisions in thelivestock health and living conditionspractice standard during the entire yearof conversion. After the dairy operationhas been certified, animals brought onto the operation must be organicallyraised from the last third of gestation.We did not incorporate the NOSB’srecommendation to provide young stockwith nonorganic feed up to 12 monthsprior to the production of certified milk.By creating an ongoing allowance forusing nonorganic feed on a certifiedoperation, this provision would haveundermined the principle that a wholeherd conversion is a distinct, one-timeevent.

We anticipate that the provisionsadded to the final rule will address theconcerns of commenters who objectedto the conversion principle. Consumershave embraced milk and milk productsfrom dairies certified under privatewhole herd conversion provisionsessentially identical to that in the finalrule. While the conversion provisionmay temporarily reduce demand fororganic feed materials, it encouragesproducers to develop their own suppliesof organic feed. The conversionprovision also rewards producers forraising their own replacement animalswhile still allowing for the introductionof animals from off the farm that wereorganically raised from the last third ofgestation. This should protect existingmarkets for organically raised heiferswhile not discriminating against closedherd operations. Finally, the conversionprovision cannot be used routinely tobring nonorganically raised animals intoan organic operation. It is a one-timeopportunity for producers working with

a certifying agent to implement aconversion strategy for an established,discrete dairy herd in conjunction withthe land resources that sustain it.

(2) Organic Management for Livestockfrom the Last Third of Gestation. Theproposed rule required that organicallymanaged breeder and dairy stock sold,labeled, or represented as organicslaughter stock must be undercontinuous organic management frombirth. Many commenters stated that thisrequirement was an inappropriaterelaxation of most existing organicstandards, which require organicmanagement for all slaughter stock fromthe last third of gestation. Thesecommenters cited the NOSB’s 1994recommendation that all slaughter stockmust be the progeny of breeder stockunder organic management from the lastthird of gestation or longer. Commentersalso recommended extending theorganic management provision to coverthe last third of gestation to make itconsistent with the requirements insection 205.236(a)(4) for the organicallyraised offspring of breeder stock. Weagree with the argument presented bycommenters and have changed the finalrule to require that breeder or dairystock be organically raised from the lastthird of gestation to be sold as organicslaughter stock.

(3) Conversion Period for NonedibleLivestock Products. The proposed rulerequired that livestock must be undercontinuous organic management for aperiod not less than 1 year before thenonedible products produced from themcould be sold as organic. Severalcommenters questioned the basis forcreating different origin of livestockrequirements based on whether theoperation intended to produce edible ornonedible products. These commentersstated that the OFPA does not sanctionsuch a distinction, nor is it contained inexisting certification standards. Theyquestioned why the proposed rulecreated such a provision in the absenceof a favorable NOSB recommendation.We agree that the creation of a separateorigin of livestock requirement foranimals intended to provide nonedibleproducts could be confusing. We havechanged this provision in the final ruleto require that nonedible products beproduced from livestock that have beenorganically managed from the last thirdof gestation.

(4) Provisions for Feed Supplementsand Feed Additives. The proposed ruleprovided that nonagricultural productsand synthetic substances included onthe National List could be used as feedadditives and supplements. Manycommenters stated that allowingnonagricultural products and synthetic

substances as feed supplementscontradicted the definition for ‘‘feedsupplement’’ found in the proposedrule. That definition stipulated that afeed supplement must, itself, be a feedmaterial, and the definition for ‘‘feed’’in the proposed rule precluded usingnonagricultural products and syntheticsubstances. These commentersrequested that either the definition of‘‘feed supplement’’ be changed to makeit consistent with the allowance fornonagricultural products and syntheticsubstances or else that the term bedropped from the final rule. The Foodand Drug Administration (FDA)recommended modifying the definitionsfor ‘‘feed additive’’ and ‘‘feedsupplement’’ and further specifying thecomponents required in a feed rationunder the livestock health care practicestandard.

We amended the definition in thefinal rule to state that a feed supplementis ‘‘a combination of feed nutrientsadded to livestock feed to improve thenutritional balance or performance ofthe total ration.’’ We retained the secondcomponent of the proposed definition,which described how a feed supplementcould be offered to livestock. Weamended the definition of ‘‘feedadditive’’ to ‘‘a substance added to feedin micro quantities to fulfill a specificnutritional need; i.e., essential nutrientsin the form of amino acids, vitamins,and minerals.’’ The definitions for ‘‘feedsupplement’’ and ‘‘feed additive’’ in theproposed rule were originallyrecommended by the NOSB. While ourintent in the proposed rule was tocodify as fully as possible therecommendations of the NOSB, weagree with commenters that theproposed definitions were incompatiblewith the overall provisions for livestockfeed. The definitions in the final rule areconsistent with the NOSB’s objective tocreate clear distinctions between feed,feed supplements, and feed additiveswhile clarifying the role for each withinan organic livestock ration. We alsoincorporated FDA’s recommendation toinclude protein and/or amino acids,fatty acids, energy sources, and fiber forruminants as required elements of a feedration in the livestock health carepractice standard. These additions makethe livestock health care practicestandard more consistent with theNational Research Council’s Committeeon Animal Nutrition’s NutrientRequirement series, which we cited inthe proposed rule as the basis for feedrequirements.

Many commenters addressedprovisions in the proposed rule to allowor prohibit specific materials andcategories of materials used in livestock



feed. Among these, some commentersquestioned whether enzymes weredefined as a feed additive and,therefore, allowed. One certifying agentrequested guidance on the status ofsupplementing livestock feed withamino acids. At its October 1999meeting, the NOSB discussed theTechnical Advisory Panel (TAP)reviews on the use of enzymes andamino acids in livestock feed. TheNOSB determined that natural sourcesof enzymes exist and that their useshould be allowed in organicproduction. Their discussion of naturalsources of enzymes concluded thatenzymes derived from edible, nontoxicplants and nonpathogenic bacteria orfungi that had not been geneticallyengineered should be allowed as anonorganic feed additive. The NOSBdid not take a position on amino acidsduring this meeting but indicated that itwould revisit the subject in the nearfuture. Based on theserecommendations, the final rule allowsthe use of natural enzymes but notamino acids as nonorganic feedadditives. The NOSB’s recommendationthat natural sources of enzymes existedand were compatible with organiclivestock production supports allowingthem without adding them to theNational List. Some commentersdiscussed the animal welfare andenvironmental benefits associated withproviding amino acids in livestock feedand supported allowing them. However,without a recommendation from theNOSB that amino acids are natural orshould be added to the National List asa synthetic, the final rule does not allowtheir use.

Commenters questioned whethernonsynthetic but nonagriculturalsubstances, such as ground oyster shellsand diatomaceous earth, would beallowed in agricultural feed. In 1994,the NOSB recommended that naturalfeed additives can be from any source,provided that the additive is notclassified as a prohibited natural on theNational List. We agree with thisrecommendation and have amended thefinal rule to allow such materials as feedadditives and supplements. The onlyadditional constraint on these materialsis that every feed, feed additive, andfeed supplement be used in compliancewith the Federal Food, Drug, andCosmetic Act, as stated in section205.237(b)(6).

The NOSB recommended thatruminants maintained under temporaryconfinement must have access to dry,unchopped hay. Although this positionwas an NOSB recommendation and notpart of the proposed rule, severalcommenters responded to it. Most of

these commenters stated that thelanguage was too restrictive and couldpreclude the use of many suitable forageproducts. One dairy producer stated thatthe requirement would not be practicalfor operations that mix hay with otherfeed components. We agree that theNOSB’s proposed language is tooprescriptive and have not included it inthe final rule.

(5) Provisions for Confinement. Theproposed rule established the health,nutritional, and behavioral needs of theparticular species and breed of animalas the primary considerations fordetermining livestock living conditions.The proposed rule also identifiedessential components of the practicestandard, including access to shade,shelter, exercise areas, fresh air, anddirect sunlight, while stating thatspecies-specific guidelines would bedeveloped in conjunction with futureNOSB recommendations and publiccomment. Finally, the proposed ruleoutlined the conditions pertaining toanimal welfare and environmentalprotection under which producers couldtemporarily confine livestock.

While supportive of the underlyingprinciples of this practice standard, thevast majority of commenters stated thatthe actual provisions suffered from alack of clarity and specificity. Manycommenters were concerned that theproposed rule did not adequately ensureaccess to the outdoors for all animals.While supportive of the access topasture requirement for ruminantproduction, commenters stated that thefinal rule needed a clear definition ofpasture to make the provisionmeaningful. Conversely, somecommenters supported the lessprescriptive approach adopted in theproposed rule. The NOSB addedconsiderably to its earlierrecommendations on livestock livingconditions during its June 2000 meeting.

Many commenters stated that thecriteria identified as required elementsin the provisions for livestock livingconditions did not specifically includeaccess to the outdoors. One commenterstated that the requirement that animalsreceive direct sunlight could beinterpreted to simply require windowsin livestock confinement facilities.Commenters were virtually unanimousthat, except for the limited exceptionsfor temporary confinement, all animalsof all species must be afforded access tothe outdoors. Commenters alsomaintained that the outdoor area mustaccommodate natural livestockbehavior, such as dust wallows forpoultry and, in the case of ruminants,provide substantial nutrition. Manycommenters specifically opposed dry

lots as an allowable outdoorenvironment. The NOSB recommendedthat the final rule state that all livestockshall have access to the outdoors. As aresult of these comments, we haverevised the final rule to establish thataccess to the outdoors is a requiredelement for all organically raisedlivestock.

We further amended the final rule toinclude a definition of ‘‘pasture.’’ Thedefinition of ‘‘pasture’’ we includedemphasizes that livestock producersmust manage their land to providenutritional benefit to grazing animalswhile maintaining or improving the soil,water, and vegetative resources of theoperation. The producer must establishand maintain forage species-appropriatefor the nutritional requirements of thespecies using the pasture.

Numerous commenters requestedclarification on species-specific livingconditions, such as the use of cages forpoultry and confinement systems forveal production. The use of continuousconfinement systems including cages forpoultry and veal production isincompatible with the requirement thatorganically raised livestock receiveaccess to the outdoors and the ability toengage in physical activity appropriateto their needs. There will be times whenproducers must temporarily confinelivestock under their care, but theseinstances must be supported by theexemptions to the outdoor accessrequirement included in the final rule.Other commenters requested additionalguidance on whether confinement forthe purpose of finishing slaughter stockwould be allowed, and, if so, how longthat confinement could last.Commenters who supported anallowance for finishing most oftenrecommended that, in the case of cattle,confinement should not exceed 90 days.The final rule does not include aspecific length of time that cattle orother species may be confined prior toslaughter. We will seek additional inputfrom the NOSB and public commentbefore developing such standards.

Several commenters questionedwhether a Federal, State, or localregulation that required confinementwould supersede the requirement foroutdoor access. These commenters wereaware of county ordinances thatprohibited free ranging livestockproduction to protect water quality.Organic operations must comply withall Federal, State, and local regulations.At the same time, to sell, label, orrepresent an agricultural commodity as‘‘100 percent organic,’’ ‘‘organic,’’ or‘‘made with * * *’’ the producer orhandler must comply with all theapplicable requirements set forth in this



regulation. Federal, State, or localregulations that prohibit a requiredpractice or require a prohibited one willessentially preclude organiccertification of the affected commoditywithin that jurisdiction.

(6) Prohibition on ParasiticidesDuring Lactation. The proposed ruleprovided that breeder stock couldreceive synthetic parasiticides includedon the National List, provided that thetreatment occurred prior to the last thirdof gestation for progeny that were to beorganically managed. Many commenterssupported this principle but wereconcerned that the wording wouldallow producers to administerparasiticides to lactating breeder stockwhile the offspring were still nursing.These commenters felt that such anallowance violated the intent of theprovision because offspring could beexposed to systemic parasiticides ortheir residues through their mother’smilk. The NOSB recommended aprohibition on using allowed syntheticparasiticides during lactation forprogeny that are organically managed.We agree with these commenters andhave modified the final rule to prohibitthe treatment of organically managedbreeder stock with allowed syntheticparasiticides during the last third ofgestation or lactation.

Livestock Production—ChangesRequested But Not Made


(1) Prohibition on Factory Farms.Many commenters requested that thefinal rule prohibit the certification of‘‘factory farms.’’ These commentersstated that factory farms are dependentupon practices and materials that areinconsistent with or expresslyprohibited in the OFPA. The final ruledoes not contain such a prohibitionbecause commenters did not provide aclear, enforceable definition of ‘‘factoryfarm’’ for use in the final rule. Allorganic operations, regardless of theirsize or other characteristics, mustdevelop and adhere to an approvedorganic system plan that complies withthese regulations in order to be certified.

(2) Nonorganic Feed Protocol. Theproposed rule required that, except fornonagricultural products and syntheticsubstances included on the NationalList, a producer must provide livestockwith a total feed ration composed ofagricultural feed products, includingpasture and forage, that is organicallyproduced and, if applicable, handled. Italso included provisions for temporaryvariances that, under very limitedcircumstances and with the approval of

the certifying agent and theAdministrator, would provide anexemption from specific production andhandling standards. The preamble of theproposed rule described an emergencyresulting in the unavailability of organicagricultural feed products as an exampleof a situation in which a temporaryvariance could be issued. Manycommenters recommended that the finalrule require a producer who received atemporary variance for a feed emergencyto follow the order of preference fornoncertified organic feed developed bythe NOSB. This order of preferencerequires a producer to procureagricultural feed products from sourcesthat are as close to complying with thestandards for organic certification aspossible. Commenters stated thatadherence to the order of preferencewould most closely conform with theexpectation of consumers thatorganically raised livestock receivedorganic feed and would create anincentive for livestock feed producers topursue certification.

We have not included the NOSB’sfeed emergency order of preference inthe final rule because it would be tooprescriptive and difficult to enforceduring an emergency. Receiving atemporary variance categoricallyexempts a producer from the provisionfor which it was issued, although thatproducer may not substitute anypractice, material, or procedure that isotherwise prohibited, although thatproducer may not substitute anypractice, material, or procedure that isotherwise prohibited under section205.105. Additionally, certified organicfeed is far more available in terms ofquantity and affordability than when theNOSB developed its order of preferencein 1994. We anticipate that producerswhose original supply of organicagricultural feed products is interruptedwill be able to fill the shortfall throughthe marketplace.

(3) Prohibition on PhysicalAlterations. The proposed rule requiredthat producers perform physicalalterations as needed to promote animalwelfare and in a manner that minimizespain and stress. This provision was onecomponent of the health care practicestandard that required producers toestablish and maintain preventivelivestock health care practices. Westated in the preamble that there wasinsufficient consensus from previouspublic comment to designate specificphysical alterations as allowed orprohibited and envisioned working withproducers, certifying agents, andconsumers to achieve that goal. Werequested comment on techniques tomeasure animal stress that could be

used to evaluate whether specificphysical alterations were consistentwith the conditions established in theproposed rule.

We received significant numbers ofcomments both opposing andsupporting the provision in theproposed rule for performing physicalalterations. Many commenters opposedany allowance for physical alterationsand argued that such practices are crueland debilitating to animals. Thesecommenters maintained thatmodifications in breed selection,stocking densities, and the configurationof living conditions could achieveresults similar to physical alterationswithout harming the animal. Theystated that by adapting their productionsystems to promote the physical andpsychological welfare of animals,producers could obviate the need forphysical alterations. In particular,commenters cited physical alterations tothe beaks and feet of poultry asunnecessary due to the availability ofalternative production systems. Manycommenters expressed concern that theallowance for physical alterationswould facilitate the certification of largeconfinement operations. Commentersalso stated that performing physicalalterations was inconsistent with Codexguidelines and objected to theallowance before full publicdeliberation on the subject through theNOSB process.

A large number of commenters statedthat, if reasonable guidelines could beestablished, the allowance for physicalalterations would be a beneficial, andeven necessary, condition for organiclivestock production. These commentersmaintained that producers engage inphysical alterations for the overallwelfare of the flock or herd and that thepain and stress of performing them mustbe weighed against the pain and stressof not doing so. For example, thesecommenters cited the traumatic effect ofcannibalism on poultry flocks that hadnot undergone beak trimming or theinjuries caused by animals whose hornshad not been removed. Many of thesecommenters stated that producers couldreduce but not eliminate the need forphysical alterations through alternativeproduction practices such as breedselection and stocking densities. TheNOSB supported the provision aswritten in the proposed rule, stating thatit met the animal welfare requirementswhile allowing practices necessary forgood animal husbandry. We haveretained the proposed provision forphysical alterations without taking anyfurther position on whether specificpractices are allowed or prohibited. Wedid not receive substantial new



guidance on techniques to measurestress in animals due to physicalalterations and have made no revisionsin that regard. The final rule establishesthat, when appropriately performed andwithin the context of an overallmanagement system, specific physicalalterations are allowed. It also mandatesthat, as an element of a preventativehealth care program, physicalalterations must benefit the ultimatephysical and psychological welfare ofthe affected animal.

(4) Withdrawal for SyntheticParasiticides in Lactating Livestock. Theproposed rule required a 90-daywithdrawal period before milk and milkproducts produced from livestocktreated with an allowed syntheticparasiticide could be labeled as organic.Referencing the statement in thepreamble to the proposed rule that the90-day withdrawal period wasattributable to ‘‘consumer expectationsof organically raised animals,’’ a dairyproducer commented that the provisionignored animal welfare and farmeconomic sustainability considerations.The commenter considered the 90-daywithdrawal period capricious andproblematic since, for bovine dairyoperations, it would compel producersto either shorten an animal’s naturaldrying off period, or lose 30 days oforganic milk production. Thecommenter stated that the optimalextended withdrawal period for thissituation would be 60 days since this isthe approximate duration of a dairycow’s natural dry period. Under thisapproach, livestock requiring treatmentcould receive an allowed syntheticparasiticide at the time of drying off,thus allowing the withdrawal period tocoincide with the natural 60-day periodwhen the livestock were not lactating.Livestock could complete thewithdrawal period prior to the birth oftheir offspring in approximately 60days, at which time the mother’s milkcould again be sold as organic. Thecommenter maintained that the 60-dayperiod would satisfy consumerexpectation for an extended withdrawalperiod after treatment with an allowedsynthetic parasiticide without imposingan unnecessary constraint on theproducer.

We have retained the 90-daywithdrawal period in the final rule. Theprovisions in the final rule for treatinglivestock with an allowed syntheticparasiticide reflect the 90-daywithdrawal period recommended by theNOSB at its October 1999 meeting. TheNOSB has the authority to reconsiderthis issue and propose an alternativeannotation for the Secretary’sconsideration.

(5) Delineation of Space Requirementsfor Animal Confinement. The proposedrule did not establish spacerequirements for livestock livingconditions but stated that a producermust accommodate the health andnatural behavior of animals under his orher care. Some commenters stated theirpreference for space requirementsbecause they are more uniform andenforceable. These commenters statedthat some existing certificationstandards include space requirements instandards for livestock living conditionsand that Codex guidelines support thisapproach. While not disagreeing thatspace requirements could be an effectivecertification tool for organic livestockproduction systems, we have notincorporated any such provisions in thefinal rule. We anticipate that additionalNOSB recommendations and publiccomment will be necessary for thedevelopment of space requirements. Atits June 2000 meeting, the NOSB agreedthat it would be premature to includespace requirements in the final rule.

(6) Access to pasture versus pasture-based. Commenters stated that theproposed rule’s requirement thatruminants receive ‘‘access to pasture’’did not sufficiently characterize therelationship that should exist betweenruminants and the land they graze.Many of these commentersrecommended that the final rule requirethat ruminant production be ‘‘pasture-based.’’ Many commenters stated thatthe final rule needed a more explicitdescription of the relationship betweenlivestock and grazing land. The NOSBshared this perspective andrecommended that the final rule requirethat ruminant production systems be‘‘pasture-based.’’ In contrast, an organicdairy producer maintained that auniform, prescriptive definition ofpasture would not be appropriate in afinal rule. This commenter stated thatthe diversity of growing seasons,environmental variables, and forage andgrass species could not be captured ina single definition and that certifyingagents should define pasture on a case-by-case basis. This commenter alsodisagreed with the ‘‘pasture-based’’requirement, stating that pasture shouldbe only one of several components ofbalanced livestock nutrition. Singlingout pasture as the foundation forruminant management would distortthis balance and deprive otherproducers of the revenue and rotationbenefits they generate by growinglivestock feed.

We retained the ‘‘access to pasture’’requirement because the term, ‘‘pasture-based,’’ has not been sufficientlydefined to use for implementing the

final rule. The final rule does include adefinition for pasture, and retention ofthe ‘‘access to pasture’’ provisionprovides producers and certifyingagents with a verifiable and enforceablestandard. The NOP will work with theNOSB to develop additional guidancefor managing ruminant productionoperations.

(7) Stage of Production. The proposedrule contained provisions for temporaryconfinement, during which timelivestock would not receive access tothe outdoors. Many commenters wereconcerned that the stage-of-productionjustification for temporary confinementcould be used to deny animals access tothe outdoors during naturally occurringlife stages, including lactation.Commenters overwhelmingly opposedsuch an allowance and stated that thestage of production exemption shouldbe narrowly applied. One commenterstated that a dairy operation, forexample, might have seven or eightdistinct age groups of animals, witheach group requiring distinct livingconditions. Under these circumstances,the commenter maintained that aproducer should be allowed totemporarily house one of these agegroups indoors to maximize use of thewhole farm and the available pasture. Atits June 2000 meeting, the NOSB statedthat the allowance for temporaryconfinement should be restricted toshort-term events such as birthing ofnewborn or finish feeding for slaughterstock and should specifically excludelactating dairy animals.

We have not changed the provision inthe final rule for the stage-of-productionallowance in response to thesecomments. The NOSB has supported theprinciple of a stage-of-productionallowance but has not providedsufficient guidance for determining, ona species-specific basis, what conditionswould warrant such an allowance.Without a clearer foundation forevaluating practices, we have notidentified any specific examples ofpractices that would or would notwarrant a stage-of-productionallowance. We will continue to explorewith the NOSB specific conditionsunder which certain species could betemporarily confined to enhance theirwell-being.

In the final rule, temporaryconfinement refers to the period duringwhich livestock are denied access to theoutdoors. The length of temporaryconfinement will vary according to theconditions on which it is based, such asthe duration of inclement weather. Theconditions for implementing temporaryconfinement for livestock do notminimize the producer’s ability to



restrain livestock in the performance ofnecessary production practices. Forexample, it is allowable for a producerto restrain livestock during the actualmilking process or under similarcircumstances, such as theadministration of medication, when thesafety and welfare of the livestock andproducer are involved.

Handling—Changes Based onComments

The following changes are madebased on comments received.

(1) Commercial Availability. A largenumber of commenters, includingorganic handlers and certifying agents,stated that ‘‘commercial availability’’must be included as a requirement forthe 5 percent of nonorganic ingredientsthat are used in products labeled‘‘organic.’’

We agree and have added acommercial availability requirement aspart of a handler’s organic system planunder section 205.201 of this subpart.Up to 5 percent (less water and salt) ofa product labeled ‘‘organic,’’ may benonorganic agricultural ingredients.However, handlers must document thatorganic forms of the nonorganicingredients are not commerciallyavailable before using the nonorganicingredients.

(2) Prohibited Practices. Commenterswere unclear about the extent of theprohibition on use of excluded methodsand ionizing radiation. To make thatprohibition clear, we have moved thehandling prohibitions in proposed rulesections 205.270 (c) to 205.105,Applicability, subpart B. Paragraphs(c)(1) and (c)(2) which listed excludedmethods and ionizing radiation in theproposed rule are combined intoparagraph (c)(1) that cross-referencesnew section 205.105.

(3) Use of Predator Pests andParasites. Paragraph (b)(1) of section205.271 proposed that predator pestsand parasites may be used to controlpests in handling facilities. UnderFDA’s Good Manufacturing Practice, 21CFR part section 110.35(c), it states that‘‘No pests shall be allowed in any areaof a food plant.’’ Some commentersbelieved use of predator pests inhandling facilities is prohibited by theFDA regulation. Other commentersstated that predator pests could be usedin certain handling facilities under theFDA regulation. One commenterclaimed that the FDA regulation in 21CFR part 110.19 allows exemptions forcertain establishments that only harvest,store, or distribute raw agriculturalproduct. Another commenter suggestedthat use of predator pests should be

allowed when FDA does not prohibittheir use.

We do not intend to be inconsistentwith the FDA requirement and, thus,have removed proposed paragraph (b)(1)of section 205.271. Use of predator pestsin various organic handling and storageareas is subject to FDA’s GoodManufacturing Practice. Paragraphs(b)(2) and (b)(3) are redesignated.

(4) Use of Synthetic Pheromone Lures.Proposed paragraph (b)(3) provided foruse of nonsynthetic lures and repellant.A few handlers and certifying agentscommented that nearly all pheromonelures use synthetic substances. Becausepheromone lures do not come intocontact with products in a handlingfacility, commenters argued that suchlures should be allowed, provided thatthe synthetic substance used is on theNational List.

We agree and have added ‘‘syntheticsubstances’’ to redesignated paragraph(b)(2) for use in lures and repellents.The synthetic substances used must beconsistent with the National List.

(5) Restrict Initial Use of Synthetics toNational List Substances. Paragraph (c)in the proposed rule provided for use ofany synthetic substance to prevent orcontrol pests. Several handlers andcertifying agents stated that use ofnonsynthetic and synthetic substancesshould initially be limited first tosubstances which are allowed on theNational List. This would mean thatsubstances not allowed for use on theNational List could not be used initiallyto control or prevent pest infestations.

We agree with these comments. Use ofallowed substance before use of othersubstances is a fundamental principle oforganic agriculture. Therefore, ifpreferred practices under paragraphs (a)and (b) are not successful in preventingor controlling pest infestations, handlersmay then use, under amendedparagraph (c), only nonsynthetic orsynthetic substances which are allowedfor use on the National List.

We have removed the proviso thatapplications of a pest control substancemust be consistent with the product’slabel instructions. This requirement isreadily understood and does not need tobe explicitly stated in the regulations.

Because paragraph (c) now providesfor use only of allowed National Listsubstances, a new paragraph (d) isadded to allow for use of other syntheticsubstances, including syntheticsubstances not on the National List, toprevent or control pest infestations.These substances may be used only ifthe practices in paragraphs (a), (b), and(c) are ineffective. Before the substanceis used, the handler and the operation’scertifying agent must agree on the

synthetic substance to be used and themeasures to be taken to prevent contactof the substance with organic productsand ingredients in the facility. Weexpect that this communication can beaccomplished with telephone calls or byelectronic means.

This regulation does not preemptFederal, State, or local health andsanitation requirements. We recognizethat inspectors who monitor compliancewith those regulations may requireimmediate intervention and use ofsynthetic substances, not on theNational List, before or at the same timeas the methods specified in paragraphs(b) and (c). Therefore, to make this clear,we have added a new paragraph (f). Toensure that the use of the substancesdoes not destroy a product’s organicintegrity, we are requiring that thehandler take appropriate measures toprevent contact of the product with thepest control substance used.

(6) Preventing Contact with ProhibitedSubstances. Commenters recommendedthat, if prohibited substances areapplied by fogging or fumigation, theorganic product and packaging materialmust be required to be completelyremoved from the facility and reentry ofthe product or packaging be delayed fora period three times longer than thatspecified on the pesticide label.Commenters believed removal andreentry should be mandatory, regardlessof the organic product or container.

We understand the commenters’concerns. However, theirrecommendations are not appropriatefor all pest infestations. We believe thatmeasures needed to be taken to preventcontact with a synthetic substance mustbe determined on a case-by-case basisby the handler and certifying agent. Asstated earlier, new paragraph (d) ofsection 205.271 requires a handler andcertifying agent to agree on control andprevention measures prior toapplication of a synthetic substance. Webelieve that such an agreement will helpsafeguard a product’s organic integrity.Use of a synthetic substance in foggingor fumigation should be based on,among other things, location of the pestrelative to the organic products in thefacility; the extent of the pestinfestation; the substance andapplication method to be used; the stateof the organically produced product oringredient (raw, unpackaged bulk,canned, or otherwise sealed); and healthand sanitation requirements of local,State, and Federal authorities.

Paragraph (e) is changed to clarify thatan operation’s organic handling planmust be updated to document allmeasures taken to prevent contactbetween synthetic pest control



substances and organically producedproducts and ingredients.

(7) Repetitive Use of Pest ControlMeasures. One commenter suggested achange in the paragraph (e) requirementthat handlers’ organic plans mustinclude ‘‘an evaluation of the effects ofrepetitive use’’ of pest prevention andcontrol materials. The commenterbelieved that the requirement wasexcessive and beyond what should beexpected of handlers. The commenterindicated that handlers’ organic plansshould address the ‘‘techniques that willbe used to minimize’’ the negativeeffects of repetitive use of pest controlmaterials.

We agree that ‘‘an evaluation of theeffects of repetitive use’’ is more thanwhat is reasonable to expect of handlersin their organic plans. We do not agree,however, that an organic plan should berequired to address the ‘‘techniques’’used to minimize the effects ofrepetitive use of pest control materials.However, we believe that handlersshould update their organic handlingplans to account for the use of pestcontrol or prevention substances,particularly if the substances areprohibited substances. The updateshould include a description of theapplication methods used and themeasures taken to prevent contactbetween the substance used and theorganic product. We have added theserequirements in redesignated paragraph(e). Proposed paragraph (e) of section205.271 is removed.

Handling—Changes Requested But NotMade

(1) Exceptions to Handling Processes.A commenter stated that many herbalproducts are extracted from organicallyproduced herbs but that the extractionof those products ‘‘can employsignificantly different methods thanthose used in the manufacture of moretraditional foods.’’ To be labeled as‘‘organic’’ ingredients, substances suchas herbs, spices, flavorings, colorings,and other similar substances, must bederived from a certified organic sourceand be extracted without the use ofprohibited substances.

(2) Allowed Synthetics Used inPackaging Materials and StorageContainers. A State department ofagriculture commented that section205.272(b)(1) prohibits use of syntheticfungicides, preservatives, or fumigantsin packaging materials and storagecontainers or bins. The comment statedthat it is inconsistent to permit use ofallowed substances as ingredients inprocessed products but prohibit theiruse as a preservative or fumigant in thepackaging materials and storage

containers and bins. The commentersuggested that paragraph (b)(1) beamended to permit use of National List-allowed substances in section 205.605,particularly carbon dioxide and ozone,in packaging materials and storagecontainers or bins.

We understand the commenter’sconcern. However, section 6510(a)(5) ofthe Act specifically prohibits use of anypackaging materials, storage containers,or bins that contain syntheticfungicides, preservatives, or fumigants.

(3) Additional Measures to PreventProduct Contamination. A fewcommenters suggested changingparagraph (e) of section 205.271 torequire that handlers’ organic handlingplans specify measures that would betaken to prevent contact between a pestcontrol substance and ‘‘packagingmaterials.’’ This would be in addition tomeasures preventing contamination of‘‘any ingredient or finished product’’ inthe handling facility.

We understand the commenters’objective. However, for the reasonsstated earlier in regard to commenters’request that mandatory removal ofproduct during pest control treatment berequired, we believe that such arequirement should not be mandatoryfor all packaging materials. Measures toprevent contamination of packagingmaterial should be left to the handlerand certifying agent to specify in thehandling plan.

Handling—ClarificationsClarification is given on the following

issues raised by commenters.(1) Use of Nonorganic Ingredients in

Processed Products. We have correctedparagraph (c) of section 205.270 toclarify what must not be used in or onorganically produced ingredients andnonorganically produced ingredientsused in processed organic products. Theprohibition on use of ionizing radiation,excluded methods, and volatilesynthetic solvents applies to allorganically produced ingredients. The 5percent of nonorganic ingredients inproducts labeled ‘‘organic,’’ also aresubject to the three prohibited practices.The nonorganic ingredients in productslabeled ‘‘made with organicingredients’’ must not be producedusing ionizing radiation or excludedmethods but may be produced usingvolatile synthetic solvents. Thenonorganic ingredients in productscontaining less than 70 percentorganically produced ingredients maybe produced and processed usingionizing radiation, excluded methods,and synthetic solvents.

(2) Water Quality Used in Processing.A handler questioned whether public

drinking water containing approvedlevels of chlorine, pursuant to the SafeDrinking Water Act, is acceptable foruse in processing products labeled ‘‘100percent organic.’’ Water meeting theSafe Drinking Water Act may be used inprocessing any organically producedproducts.

Temporary Variances—Changes Basedon Comments

Additional Causes for IssuingTemporary Variance. A few Statedepartment of agriculture commenterssuggested that ‘‘drought’’ should beadded to the regulatory text as a naturaldisaster warranting a temporaryvariance from regulations.

We agree and have added drought tothe regulatory text in paragraph (a)(2) ofsection 205.290. We have also added‘‘hail’’ as a natural disaster warranting atemporary variance. Both drought andhail were mentioned in the preamble ofthe proposed rule but wereunintentionally left out of the regulatorytext.

Temporary Variances—ChangesRequested But Not Made

Allowance of Temporary Variances. Afew commenters suggested that SOP’sgoverning State officials should be ableto authorize temporary variances due tolocal natural disasters which may occurin a State. We do not agree that withthese comments. For consistency ofapplication, we believe that only theAdministrator should have the authorityto grant a temporary variance. Citinglocal conditions, an SOP’s governingState official and certifying agents mayrecommend a temporary variance to theAdministrator. We are committed toproviding quick responses to suchrecommendations.

Subpart D—Labels, Labeling, andMarket Information

The Act provides that a person maysell or label an agricultural product asorganically produced only if the producthas been produced and handled inaccordance with provisions of the Actand these regulations. This subpart setsforth labeling requirements for organicagricultural products and products withorganic ingredients based on theirpercentage of organic composition. Foreach labeling category, this subpartestablishes what organic terms andreferences can and cannot be displayedon a product package’s principal displaypanel (pdp), information panel,ingredient statement, and on otherpackage panels. Labeling requirementsalso are established for organicallyproduced livestock feed, for containersused in shipping and storing organic



product, and for denoting organic bulkproducts in market information which isdisplayed or disseminated at the pointof retail sale. Restrictions on labelingorganic product produced by exemptoperations are established. Finally, thissubpart provides for a USDA seal andregulations for display of the USDA sealand the seals, logos, or other identifyingmarks of certifying agents.

The intent of these sections is toensure that organically producedagricultural products and ingredientsare consistently labeled to aidconsumers in selection of organicproducts and to prevent labeling abuses.These provisions cover the labeling of aproduct as organic and are not intendedto supersede other labelingrequirements specified in other Federallabeling regulations. The Food and DrugAdministration (FDA) regulates theplacement of information on foodproduct packages in 21 CFR parts 1 and101. USDA’s Food Safety and InspectionService’s (FSIS) Federal Meat InspectionAct, Poultry Products Inspection Act,and Egg Products Inspection Act haveimplementing regulations in 9 CFR part317 which must be followed in thelabeling of meat, poultry, and eggproducts. The Federal TradeCommission (FTC) regulations underthe Fair Packaging and Labeling Act(FLPA) in 16 CFR part 500 and theAlcohol Tobacco and Firearms (ATF)regulations under the Federal AlcoholAdministration Act (FAA) in 27 CFRparts 4, 5, and 7, also must be followed,as applicable to the nature of theproduct. The labeling requirementsspecified in this subpart must beimplemented in a manner so that theydo not conflict with the labelingrequirements of these and other Federallabeling requirements.

While this regulation does not requirelabeling of an organic product asorganic, we assume that producers andhandlers choose to label their organicproducts and display the USDA seal tothe extent allowed in these regulations.They do this to improve themarketability of their organic product.

Under the National Organic Program(NOP), the assembly, packaging, andlabeling of multiingredient organicproducts are considered handlingactivities. The certification of handlingoperations is covered in subpart C ofthis regulation. No claims, statements,or marks using the term, ‘‘organic,’’ ordisplay of certification seals, other thanas provided in this regulation, may beused. Based on comments received,several important labeling changes fromthe proposed rule are made in this finalrule. (1) The term, ‘‘organic,’’ cannot beused in an agricultural product name if

it modifies an ingredient that is notorganically produced (e.g., ‘‘organicchocolate ice cream’’ when thechocolate flavoring is not organicallyproduced). (2) The 5 percent or less ofnonorganic ingredients in productslabeled ‘‘organic’’ must be determinednot ‘‘commercially available’’ in organicform. (3) Display of a product’s organicpercentage is changed from required tooptional for ‘‘organic’’ and ‘‘made with* * *’’ products. (4) The minimumorganic content for ‘‘made with * * *’’products is increased from 50 percent to70 percent. (5) In addition to listingindividual ingredients, the ‘‘made with* * *’’ label may identify a food groupon the label (‘‘made with organic fruit’’).(6) A new section is added to providelabeling of livestock feed that isorganically produced. (7) Finally, arevised design for the USDA seal isestablished. In addition to thesechanges, we have made a few changesin the regulatory text for clarity andconsistency purposes. These do notchange the intent of the regulation.

Once a handler makes a decision tomarket a product as organic orcontaining organic ingredients, thehandler is required to follow theprovisions in this subpart regarding use,display, and location of organic claimsand certification seals. Handlers whoproduce and label organic ingredientsand/or assemble multiingredientproducts composed of 70 percent ormore organic ingredients must becertified as an organic handlingoperation. Handlers of products of lessthan 70 percent organic ingredients donot have to be certified unless thehandler actually produces one or moreof the organic ingredients used in theproduct. Repackers who purchasecertified organic product from otherentities for repackaging and labelingmust be certified as an organicoperation. Entities which simply relabelan organic product package are subjectto recordkeeping requirements whichshow proof that the product purchasedprior to relabeling was, indeed,organically produced and handled.Distributors which receive and transportlabeled product to market are notsubject to certification or any labelingrequirements of this regulation.

Many commenters appealed for‘‘transition’’ or ‘‘conversion’’ labeling.This issue is discussed underApplicability in subpart B. Transitionlabeling is not provided for in the Actor the proposed rule and is not providedfor in this regulation.


General RequirementsThe general labeling principle

employed in this regulation is thatlabeling or identification of the organicnature of a product increases as theorganic content of the product increases.In other words, the higher the organiccontent of a product, the moreprominently its organic nature can bedisplayed. This is consistent withprovisions of the Act which establishthe three percentage categories fororganic content and basic labelingrequirements in those categories.

Section 205.300 specifies the generaluse of the term, ‘‘organic,’’ on productlabels and market information.Paragraph (a) establishes that the term,‘‘organic,’’ may be used only on labelsand in market information as a modifierof agricultural products and ingredientsthat have been certified as produced andhandled in accordance with theseregulations. The term, ‘‘organic,’’ cannotbe used on a product label or in marketinformation for any purpose other thanto modify or identify the product oringredient in the product that isorganically produced and handled.Food products and ingredients that arenot organically produced and handledcannot be modified, described, oridentified with the term, ‘‘organic,’’ onany package panel or in marketinformation in any way that implies theproduct is organically produced.

Section 6519(b) of the Act providesthe Secretary with the authority toreview use of the term, ‘‘organic,’’ inagricultural product names and thenames of companies that produceagricultural products. While we believethat the term, ‘‘organic,’’ in a brandname context does not inherently implyan organic production or handling claimand, thus, does not inherently constitutea false or misleading statement, weintend to monitor the use of the term inthe context of the entire label. We willconsult with the FTC and FDAregarding product and company namesthat may misrepresent the nature of theproduct and take action on a case-by-case basis.

Categories of Organic ContentSection 205.301 establishes the

organic content requirements fordifferent labeling provisions specifiedunder this program. The type of labelingand market information that can be usedand its placement on different panels ofconsumer packages and in marketinformation is based on the percentageof organic ingredients in the product.The percentage must reflect the actualweight or fluid volume (excluding water



and salt) of the organic ingredients inthe product. Four categories of organiccontent are established: 100 percentorganic; 95 percent or more organic; 70to 95 percent organic; and less than 70percent organic.

100 Percent OrganicFor labeling and market information

purposes, this regulation allows a ‘‘100percent organic’’ label on: (1)agricultural products that are composedof a single ingredient such as raw,organically produced fruits andvegetables and (2) products composed oftwo or more organically producedingredients, provided that theindividual ingredients are, themselves,wholly organic and produced withoutany nonorganic ingredients or additives.Only processing aids which are,themselves, organically produced, maybe used in the production of productslabeled ‘‘100 percent organic.’’ With theexception of the description phrase‘‘100 percent’’ on the pdp, the labelingrequirements for ‘‘100 percent organic’’products are the same as requirementsfor 95 percent organic productsspecified in section 205.303.

OrganicProducts labeled or represented as

‘‘organic’’ must contain, by weight(excluding water and salt), at least 95percent organically produced raw orprocessed agricultural product. Theorganic ingredients must be producedusing production and handling practicespursuant to subpart C. Up to 5 percentof the ingredients may benonagricultural substances (consistentwith the National List) and, if notcommercially available in organic formpursuant to section 205.201, nonorganicagricultural products and ingredients inminor amounts (hereinafter referred toas minor ingredients) (spices, flavors,colorings, oils, vitamins, minerals,accessory nutrients, incidental foodadditives). The nonorganic ingredientsmust not be produced using excludedmethods, sewage sludge, or ionizingradiation.

Made with Organic IngredientsFor labeling and market information

purposes, the third category ofagricultural products aremultiingredient products containing byweight or fluid volume (excluding waterand salt) between 70 and 95 percentorganic agricultural ingredients. Theorganic ingredients must be produced inaccordance with subpart C and subpartG. Such products may be labeled orrepresented as ‘‘made with organic(specified ingredients or foodgroup(s)).’’ By ‘‘specified,’’ we mean the

name of the agricultural product(s) orfood group(s) forming the organicingredient(s). Up to three organicallyproduced ingredients or food groupsmay be named in the phrase.

If one or more food groups arespecified in the phrase, all ingredientsin the product which belong to the foodgroup(s) identified on the label must beorganically produced. For the purposesof this labeling, the following foodgroups may be identified as organicallyproduced on a food package label:beans, fish, fruits, grains, herbs, meats,nuts, oils, poultry, seeds, spices,sweeteners, and vegetables. In addition,processed milk products (butter, cheese,yogurt, milk, sour creams, etc.) also maybe identified as a ‘‘milk products’’ foodgroup. For instance, a vegetable soupmade with 85 percent organicallyproduced and handled potatoes,tomatoes, peppers, celery, and onionsmay be labeled ‘‘soup made withorganic potatoes, tomatoes, andpeppers’’ or, alternatively, ‘‘soup madewith organic vegetables.’’ In the latterexample, the soup may not containnonorganic vegetables. For the purposesof this labeling provision, tomatoes areclassified, accordingly to food use, as avegetable.

To qualify for this organic labeling,the nonorganic agricultural ingredientsmust be produced and handled withoutuse of the first three prohibited practicesspecified in paragraph (f) of section205.301, but may be produced orhandled using practices prohibited inparagraphs (f)(4) through (f)(7).

Because of the length of the labelingphrase ‘‘made with organic (specifiedingredients or food group(s)),’’ suchproducts are referred to in this preambleas ‘‘made with * * * ’’ products. Thelabeling requirements for ‘‘made with* * *’’ products are specified in section205.304.

Product With Less Than 70 PercentOrganic Ingredients

The final labeling category coversmultiingredient products with less than70 percent organic ingredients (byweight or fluid volume, excluding waterand salt). The organic ingredients mustbe produced in accordance withsubparts C and G. The remainingnonorganic ingredients may beproduced, handled, and assembledwithout regard to these regulations(using prohibited substances andprohibited production and handlingpractices). Organic labeling of theseproducts is limited to the informationpanel only as provided in section205.305.

Products that fail to meet therequirements for one labeling category

may be eligible for a lower labelingcategory. For example, if a productcontains wholly organic ingredients butthe product formulation requires aprocessing aid or less than 5 percent ofa minor ingredient that does not exist inorganic form, the product cannot belabeled ‘‘100 percent organic’’ and mustbe labeled as ‘‘organic.’’ If amultiingredient product is 95 percent ormore organic but contains a prohibitedsubstance in the remaining 5 percent,the product cannot be labeled as‘‘organic,’’ because of the presence ofthe prohibited substance, but may belabeled as a ‘‘made with * * *’’product. Further, a handler whoproduces a ‘‘100 percent organic’’ or‘‘organic’’ product but chooses not to becertified under this program may onlydisplay the organic percentage on theinformation panel and label theingredients as ‘‘organic’’ on theingredient statement. The handler mustcomply with recordkeepingrequirements in subpart E.

Livestock FeedAll agricultural ingredients used in

raw and processed livestock feed that islabeled as ‘‘100 percent organic’’ and‘‘organic’’ must be organically producedand handled in accordance with therequirements of these regulations. Thedifference between the two labels is thatfeed labeled as ‘‘100 percent organic’’must be composed only of organicallyproduced agricultural ingredients andmay not contain nonorganic feedadditives or supplements. Theagricultural portion of livestock feedlabeled as ‘‘organic’’ must contain onlyorganically produced raw and processedagricultural ingredients and maycontain feed additives and supplementsin conformance with the requirementsof section 205.237. Additionally,labeling of livestock feed containersmust follow State livestock feed labelinglaws.

Prohibited PracticesThe labeling of whole products or

ingredients as organic is prohibited ifthose products or ingredients areproduced using any of the followingproduction or handling practices: (1)Ingredients or processing aids producedusing excluded methods; (2) ingredientsthat have been produced usingapplications of sewage sludge; (3)ingredients that have been processedwith ionizing radiation; (4) syntheticsubstances not on the National List; (5)sulfites, nitrates, or nitrites added to orused in processing of an organic productin addition to those substancesoccurring naturally in a commodity(except the use of sulfites in the



production of wine); (6) use of thephrase, ‘‘organic when available,’’ orsimilar statement on labels or in marketinformation when referring to productscomposed of nonorganic ingredientsused in place of specified organicingredients; and (7) labeling as

‘‘organic’’ any product containing bothorganic and nonorganic forms of aningredient specified as ‘‘organic’’ on thelabel.

These seven prohibitions apply to thefour labeling categories of products andare not individually repeated as

prohibited practices in the followingsections. Table 1, Prohibited Productionand Handling Practices for OrganicLabeling, shows how use of the sevenprohibited practices affects the labelingof organically produced products andingredients used in those products.

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

Organic and use label Use excludedmethods

Use sewagesludge

Use ionizingradiation

Use sub-stances noton National

List

Containadded sul-

fites, nitrates,nitrites

Use non-organic ingre-

dients andlabel ‘‘whenavailable’’

Use bothorganic andnonorganic

forms ofsame

ingredient

‘‘100 percent organic’’: Single/multiingredients completelyorganic.

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

‘‘Organic’’:Organic ingredients (95%

or more).NO ................ NO ................ NO ................ NO ................ NO ................ NO ................ NO

Nonorganic ingredients(5% or less).

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

‘‘Made with organic ingredi-ents’’:

Organic ingredients (70–95%).

NO ................ NO ................ NO ................ NO ................ NO—exceptwine.

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

Nonorganic ingredients(30% or less).

NO ................ NO ................ NO ................ OK ................ OK ................ NA* ............... NA*

Less-than 70% organic ingre-dients:

Organic ingredients (30%or less).

NO ................ NO ................ NO ................ NO ................ NO—exceptwine.

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

Nonorganic ingredients(70% or more).

OK ................ OK ................ OK ................ OK ................ OK ................ NA* ............... NA*

* Not applicable, provided that the nonorganic ingredient is not labeled as ‘‘organic’’ on the ingredient statement and is not counted in the cal-culation of the product’s organic percentage.

Calculating the Percentage of OrganicIngredients

Section 205.302 specifies proceduresfor calculating the percentage, by weightor fluid volume, of organically producedingredients in an agricultural productlabeled or represented as ‘‘organic.’’ Thecalculation is made by the handler atthe time the finished product isassembled.

The organic percentage of liquidproducts and liquid ingredients isdetermined based on the fluid volumeof the product and ingredients(excluding water and salt). When aproduct is identified on the pdp or theinformation panel as being reconstitutedwith water from a concentrate, theorganic content is calculated on thebasis of a single-strength concentration.

For products that contain organicallyproduced dry and liquid ingredients,the percentage of total organicingredients is based on the combinedweight of the dry organic ingredient(s)and the weight of the liquid organicingredient(s) (excluding water and salt).For example, a product may be madeusing organically produced vegetableoils or grain oils or contain organic

liquid flavoring extracts in addition toother organic and nonorganicingredients. In such cases, the weight ofthe liquid organic oils or flavoringextracts, less any added water and salt,would be added to other solid organicingredients in the product, and theircombined weight would be the basis forcalculating the percentage of organicingredients.

At the discretion of the handler, thetotal percentage of all organicingredients in a food product may bedisplayed on any package panel of theproduct with the phrase, ‘‘contains Xpercent organic ingredients,’’ or asimilar phrase. If the total percentage isa fraction, it must be rounded down tothe nearest whole number. Thepercentage of each organic ingredient isnot required to be displayed in theingredient statement.

A certified operation that producesorganic product may contract withanother operation to repackage and/orrelabel the product in consumerpackages. In such cases, the repacker orrelabeler may use information providedby the certified operation to determinethe percentage of organic ingredientsand properly label the organic product

package consistent with therequirements of this subpart.

Labeling ‘‘100 Percent Organic’’ and‘‘Organic’’ Products

Section 205.303 includes optional,required, and prohibited practices forlabeling agricultural products that are‘‘100 percent organic’’ or ‘‘organic.’’Products that are composed of whollyorganic ingredients may be identifiedwith the label statement, ‘‘100 percentorganic,’’ on any package panel.Products composed of between 95 and100 percent organic ingredients may beidentified with the label statement‘‘organic’’ on any package panel, and thehandler must identify each organicingredient in the ingredient statement.

The handler may display thefollowing information on the pdp, theinformation panel, and any other part ofthe package and in market informationrepresenting the product: (1) The term,‘‘100 percent organic’’ or ‘‘organic,’’ asapplicable to the content of the product;and (2) for products labeled ‘‘organic,’’the percentage of organic ingredients inthe product. The size of the percentagestatement must not exceed one-half thesize of the largest type size on the panel



on which the statement is displayed. Italso must appear in its entirety in thesame type size, style, and color withouthighlighting; (3) the USDA seal; and (4)the seal, logo, or other identifying markof the certifying agent (hereafter referredto as ‘‘seal or logo’’) which certified thehandler of the finished product. Theseals or logos of other certifying agentswhich certified organic raw materials ororganic ingredients used in the productalso may be displayed, at the discretionof the finished product handler. Ifmultiple organic ingredients areidentified on the ingredient statement,the handler of the finished product thatcombined the various organicingredients must maintaindocumentation, pursuant to subpart B ofthis regulation.

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

If a product is labeled as ‘‘100 percentorganic’’ the ingredients may beidentified with the term, ‘‘organic,’’ butwill not have to be so labeled becauseit is assumed from the 100 percent labelthat all ingredients are organic. For 95percent-plus products, each organicallyproduced ingredient listed in theingredient statement must be identifiedwith the term, ‘‘organic,’’ or an asteriskor other mark to indicate that theingredient is organically produced.Water and salt cannot be identified as‘‘organic’’ in the ingredient statement.

The handler of these products alsomust display on the information panelthe name of the certifying agent whichcertified the handling operation thatproduced the finished product. Thehandler may include the businessaddress, Internet address, or telephonenumber of the certifying agent. Thisinformation must be placed below orotherwise near the manufacturer ordistributor’s name.

Labeling Products ‘‘Made With Organic(specified ingredients or food group(s))’’

With regard to agricultural products‘‘made with * * *’’—those productscontaining between 70 and 95 percentorganic ingredients—this ruleestablishes, in section 205.304, thefollowing optional, required, andprohibited labeling practices.

Under optional practices, the ‘‘madewith * * *’’ statement is used toidentify the organically producedingredients in the product. The

statement may be placed on the pdp andother panels of the package. The samestatement can also be used in marketinformation representing the product.However, the following restrictions areplaced on the statement: (1) Thestatement may list up to threeingredients or food group commoditiesthat are in the product; (2) theindividually specified ingredients andall ingredients in a labeled food groupmust be organically produced and mustbe identified as ‘‘organic’’ in theingredient statement on the package’sinformation panel; (3) the statementcannot appear in print that is larger thanone half (50 percent) of the size of thelargest print or type appearing on thepdp; and (4) the statement and optionaldisplay of the product’s organicpercentage must appear in their entiretyin the same type size, style, and colorwithout highlighting.

The following food groups can bespecified in the ‘‘made with’’ labelingstatement: fish, fruits, grains, herbs,meats, nuts, oils, poultry, seeds, spices,sweeteners, and vegetables. In addition,organically produced and processedbutter, cheeses, yogurt, milk, sourcream, etc., may be identified as a ‘‘milkproducts’’ food group. For the purposesof this labeling, tomatoes are consideredas vegetables, based on their use in aproduct. As noted immediately above,all of a product’s ingredients that are inthe specified food group(s) must beorganically produced.

Display of the ‘‘made with * * *’’statement on other panels must besimilarly consistent with the size ofprint used on those panels. Theserestrictions are in accordance with FDAlabeling requirements and similar to therecommendations of the NationalOrganic Standards Board (NOSB). Thisprovision helps assure that the ‘‘madewith * * *’’ statement is not displayedin such a manner as to misrepresent theactual organic composition of theproduct.

The USDA seal may not be displayedon the pdp of products labeled ‘‘madewith organic ingredients.’’ However, atthe handler’s option and consistent withany contract agreement between theorganic producer or handler and thecertifying agent, the certifying agent’sseal or logo may be displayed on thepdp and other package panels.

Packages of ‘‘made with * * *’’products may display on the pdp,information panel, or any packagepanel, the total percentage of organicingredients in the product. Anyorganically produced ingredient,including any ingredient that is amember of a food group listed on the‘‘made with * * *’’ statement, must be

identified in the ingredient statementwith the term, ‘‘organic.’’ Alternatively,an asterisk or other mark may be placedbeside each organically producedingredient in the ingredients statementwith an explanation that the markindicates the ingredient is organicallyproduced.

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

If the percentage of organicingredients in the product is displayed,the handler who affixes the label to theproduct package is responsible fordetermining the percentage. Thehandler may use information providedby the certified operation indetermining the percentage. As part ofthe certifying agent’s annualcertification of the handler, the certifiermust verify the calculation and labelingof packages.

Labeling Products With Less Than 70Percent Organic Ingredients

Section 205.305 covers the finallabeling category of packagedmultiingredient agricultural productscontaining less than 70 percent organicingredients.

Handlers of ‘‘less than 70 percent’’multiingredient products, who chooseto declare the organic nature of theirproduct, may do so only in theingredient statement by identifying theorganically produced ingredients withthe term, ‘‘organic,’’ or with an asteriskor other mark. If the handler identifiesthe ingredients that are organicallyproduced, the handler also may declarethe percentage of organic content in theproduct. The percentage may only beplaced on the information panel so thatit can be viewed in relation to theingredient statement.

Processed products composed of lessthan 70 percent organic content cannotdisplay the USDA seal or any certifyingagent’s organic certification seal or logoanywhere on the product package or inmarket information.

Handlers of such products are subjectto this regulation in the following ways.Those handlers who only purchaseorganic and nonorganic ingredients and



assemble a finished product of less than70 percent organic content do not haveto be certified as organic handlers.However, they are responsible forappropriate handling and storage of theorganic ingredients (section205.101(a)(3)) and for maintainingrecords verifying the organic

certification of the ingredients used inthe product (section 205.101(c)). To theextent that the packaging processincludes affixing the label to finishedproduct package, those handlers areresponsible for meeting the labelingrequirements of this subpart. Thenonorganic ingredients may be

produced, handled, and assembledwithout regard to the requirements ofthis part.

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

TABLE 2.—LABELING CONSUMER PRODUCT PACKAGES

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

‘‘100 percent Organic’’ (En-tirely organic; whole, rawor processed product).

‘‘100 percent organic’’ (op-tional).

USDA seal and certifyingagent seal(s) (optional).

‘‘100% organic’’ (optional)Certifying agent name (re-

quired); business/Inter-net address, tele. No.(optional).

If multiingredient product,identify each ingredientas ‘‘organic’’ (optional).

‘‘100 percent organic’’ (op-tional).

USDA seal and certifyingagent seal(s) (optional).

‘‘Organic’’ (95% or moreorganic ingredients).

‘‘Organic’’ (plus productname) (optional).

‘‘X% organic’’ (optional)USDA seal and certi-fying agent seal(s) (op-tional).

‘‘X% organic’’ (optional) ....Certifying agent name (re-

quired); business/Inter-net address, tele. No.(optional).

Identify organic ingredientsas ‘‘organic’’ (required ifother organic labeling isshown).

‘‘X% organic’’ (optional).USDA seal and certifying

agent seal(s) (optional).

‘‘Made with Organic Ingre-dients’’ (70 to 95% or-ganic ingredients).

‘‘made with organic (ingre-dients or food group(s))’’(optional).

‘‘X% organic’’ (optional) ....Certifying agent seal of

final product handler(optional).

Prohibited: USDA seal ......

‘‘X% organic ingredients’’(optional).

Certifying agent name (re-quired); business/Inter-net address, tele. No.(optional).

Prohibited: USDA seal ......

Identify organic ingredientsas ‘‘organic’’ (required ifother organic labeling isshown).

‘‘made with organic (ingre-dients or food group(s))’’(optional) ‘‘X% organic’’(optional).

Certifying agent seal offinal product handler(optional).

Prohibited: USDA seal.Less-than 70% organic in-

gredients.Prohibited: Any reference

to organic content ofproduct.

Prohibited: USDA seal &certifying agent seal.

‘‘X% organic’’ (optional) ....Prohibited: USDA seal &

certifying agent seal.

Identify organic ingredientsas ‘‘organic’’ (optional)(required if % organic isdisplayed).

Prohibited: USDA seal &certifying agent seal.

Misrepresentation in Labeling ofOrganic Products. The labelingrequirements of this final rule areintended to assure that the term,‘‘organic,’’ and other similar terms orphrases are not used on a productpackage or in marketing information ina way that misleads consumers as to thecontents of the package. Thus, weintend to monitor the use of the term,‘‘organic,’’ and other similar terms andphrases. If terms or phrases are used onproduct packages to represent ‘‘organic’’when the products are not produced tothe requirements of this regulation, wewill proceed to restrict their use.

Handlers may not qualify or modifythe term, ‘‘organic,’’ using adjectivessuch as, ‘‘pure’’ or ‘‘healthy,’’ e.g., ‘‘pureorganic beef’’ or ‘‘healthy organiccelery.’’ The term, ‘‘organic,’’ is used inlabeling to indicate a certified system ofagricultural production and handling.Terms such as ‘‘pure,’’ ‘‘healthy,’’ andother similar adjectives attributehygienic, compositional, or nutritionalcharacteristics to products. Use of suchadjectives may misrepresent productsproduced under the organic system ofagriculture as having special qualities asa result of being produced under theorganic system. Furthermore, use of

such adjectives would incorrectly implythat products labeled in this manner aredifferent from other organic productsthat are not so labeled.

Moreover, ‘‘pure,’’ ‘‘healthy,’’ andother similar terms are regulated byFDA and FSIS. These terms may be usedonly in accordance with the labelingrequirements of FDA and FSIS. Theprohibition on use of these terms tomodify ‘‘organic’’ does not otherwisepreclude their use in other labelingstatements as long as such statementsare in accordance with other applicableregulations. Representations made inmarket information for organic productsare also subject to the requirements andrestrictions of other Federal statutes andapplicable regulations, including theFederal Trade Commission Act, 15U.S.C. 45 et seq.

Labeling Organically ProducedLivestock Feed Products

New section 205.306 is added toprovide for labeling of the twocategories of livestock feed that areorganically produced under thisregulation. Feed labeled ‘‘100 percentorganic’’ may contain only organicallyproduced agricultural product. Suchfeed must not contain feed additives,

supplements, or synthetic substances.Feed labeled ‘‘organic’’ must containonly organically produced agriculturalproducts and may contain feedadditives and supplements inaccordance with section 205.237,Livestock Feed, and section 205.603 ofthe National List. This rule does notlimit the percentage of such additivesand supplements in organic feedproducts, which may be required undervarious State laws.

Livestock feed labeled ‘‘100 percentorganic’’ and ‘‘organic’’ may, at thehandler’s option, display the USDA sealand the seal or logo of the certifyingagent. The organic ingredients listed onthe ingredient statement may beidentified with the word, ‘‘organic,’’ orother reference mark. The name of thecertifying agent must be displayed onthe information panel. The businessaddress, Internet address, and othercontact information for the certifyingagent may be displayed. These are theonly labeling options to indicate thatlivestock feed that is organicallyproduced.



Labeling of Products Shipped inInternational Markets

Domestically produced organicproducts intended for export may belabeled to meet the requirements of thecountry of destination or any labelingrequirements specified by a particularforeign buyer. For instance, a productlabel may require a statement that theproduct has been certified to, or meets,certain European Union (EU) organicstandards. Such factual statementsregarding the organic nature of theproduct are permitted. However, thosepackages must be exported and cannotbe sold in the United States with sucha statement on the label because thestatement indicates certification tostandards other than are required underthis program. As a safeguard for thisrequirement, we require that shippingcontainers and bills of lading for suchexported products display thestatement, ‘‘for export only,’’ in boldletters. Handlers also are expected tomaintain records, such as bills of ladingand U.S. Customs Servicedocumentation, showing export of theproducts. Only products which havebeen certified and labeled in accordancewith the requirements of the NOP maybe shipped to international marketswithout marking the shippingcontainers ‘‘for export only.’’

Organically produced productsimported into the United States must belabeled in accordance with therequirements of this subpart. Labelingand market representation of theproduct cannot imply that the productis also certified to other organicstandards or requirements that differfrom this national program.

Labeling Nonretail Containers

Section 205.307 provides for labelingnonretail containers used to ship orstore raw or processed organicagricultural products that are labeled‘‘100 percent organic,’’ ‘‘organic,’’ and‘‘made with organic * * *’’ Labelingnonretail containers as containingorganically produced product shouldprovide for easy identification of theproduct to help prevent comminglingwith nonorganic product or handling ofthe product which would destroy theorganic nature of the product(fumigation, etc.). These labelingprovisions are not intended for shippingor storage containers that also are usedin displays at the point of retail sale.Retail containers must meet labelingprovisions specified in section 205.307.

Containers used only for shipping andstorage of any organic product labeledas containing 70 percent or moreorganic content may, at the handler’s

discretion, display the followinginformation: (1) The name and contactinformation of the certifying agentwhich certified the handler of thefinished product; (2) the term,‘‘organic,’’ modifying the product name;(3) any special handling instructionsthat must be followed to maintain theorganic integrity of the product; and (4)the USDA seal and the appropriatecertifying agent seal. This information isavailable to handlers if they believedisplay of the information helps ensurespecial handling or storage practiceswhich are consistent with organicpractices.

Containers used for shipping andstorage of organic product must displaya production lot number if such anumber is used in the processing andhandling of the product. Much of thisinformation may overlap informationthat the handler normally affixes toshipping and storage containers orinformation that is required under otherFederal labeling regulations. There areno restrictions on size or display of theterm, ‘‘organic,’’ or the certifying agentseal unless required by other Federal orState statutes.

Labeling Products at the Point of RetailSale

Section 205.308 applies to organicallyproduced ‘‘100 percent organic’’ and‘‘organic’’ products that are notpackaged prior to sale and are presentedin a manner which allows the consumerto select the quantity of the productpurchased.

The terms, ‘‘100 percent organic’’ and‘‘organic,’’ as applicable, may be used tomodify the name of the product in retaildisplays, labeling, and marketinformation. The ingredient statement ofa product labeled ‘‘organic’’ displayed atretail sale must identify the organicingredients. If the product is prepared ina certified facility, the retail materialsmay also display the USDA seal and theseal or logo of the certifying agent. Ifshown, the certifying agent seal mustnot be larger than the USDA seal.

Section 205.309 addresses ‘‘madewith * * *’’ products that are notpackaged prior to sale and are presentedin a manner which allows the consumerto select the quantity of the productpurchased. These products include, butare not limited to, multiingredientproducts containing between 70 and 95percent organic ingredients. The ‘‘madewith * * *’’ label may be used tomodify the name of the product in retaildisplays, labeling, and marketinformation. Up to three organicingredients or food groups may beidentified in the statement. If suchstatement is declared in market

information at the point of retail sale,the ingredient statement and marketinformation must identify the organicingredients. Retail display and marketinformation of bulk products cannotdisplay the USDA seal but may, if theproduct is prepared in a certifiedfacility, display the seal or logo of thecertifying agent which certified thefinished product. The certifying agent’sseal or logo may be displayed at theoption of the retail food establishment.

Products containing less than 70percent organic ingredients may not beidentified as organic or containingorganic ingredients at retail sale. TheUSDA seal and any certifying agent sealor logo may not be displayed for suchproducts.

Labeling Products Produced in Exemptor Excluded Operations

Section 205.310 provides limitedorganic labeling provisions for organicproduct produced or handled on exemptand excluded operations. Suchoperations would include retail foodestablishments, certain manufacturingfacilities, and production and handlingoperations with annual organic sales ofless the $5,000. These operations arediscussed more thoroughly in subpart B,Applicability.

Any such operation that is exempt orexcluded from certification or whichchooses not to be certified may not labelits organically produced products in away which indicates that the operationhas been certified as organic. Exemptproducers may market whole, raworganic product directly to consumers,for example, at a farmers market orroadside stand as ‘‘organic apples’’ or‘‘organic tomatoes.’’ Exempt producersmay market their products to retail foodestablishments for resale to consumers.However, no terms may be used whichindicate that such products are‘‘certified’’ as organic. Finally, exemptorganic producers cannot sell theirproduct to a handler for use as aningredient or for processing into aningredient that is labeled as organic onthe information panel.

These provisions are truth in labelingprovisions because display of acertification seal indicates that theproduct has been certified. We believethis requirement helps differentiatebetween certified and uncertifiedproducts and helps maintain theintegrity of certified products whileproviding organic labeling opportunitiesfor exempt and excluded operations.

USDA Organic SealThis final rule establishes a USDA

seal that can be placed on consumerpackages, displayed at retail food



establishments, and used in marketinformation to show that certifiedorganic products have been producedand handled in accordance with theseregulations. The USDA seal can only beused to identify raw and processedproducts that are certified as organicallyproduced. It cannot be used for productslabeled as ‘‘made with organicingredients’’ (70 to 95 percent organicingredients) or on products with lessthan 70 percent organic ingredients.

The USDA seal is composed of anouter circle around two interior halfcircles with an overlay of the words‘‘USDA Organic.’’ When used, theUSDA seal must be the same form anddesign as shown in figure 1 of section205.311 of this regulation. The USDAseal must be printed legibly andconspicuously. On consumer packages,retail displays, and labeling and marketinformation, the USDA seal should beprinted on a white background in earthtones with a brown outer circle andseparate interior half circles of white(upper) and green (lower). The term,‘‘USDA,’’ must appear in green on thewhite half circle. The term, ‘‘organic,’’must appear in white on the green halfcircle. The handler may print the USDAseal in black and white, using black inthe place of green and brown. Sizepermitting, the green (or black) lowerhalf circle may have four light linesrunning from left to right anddisappearing at the right horizon, toresemble a cultivated field. The choicebetween these two color schemes is leftto the discretion of the producer,handler, or retail food establishment.

Labeling—Changes Based on CommentsThe following changes are made

based on comments received.(1) Use of ‘‘Organic’’ in Product

Names. The NOSB, State organicprogram (SOP) managers, certifyingagents, and a large number of individualcommenters strongly recommended thatUSDA prohibit use of the term,‘‘organic,’’ to modify an ingredient in aproduct name if the ingredient, itself, isnot produced organically. The examplesoffered were ‘‘organic chocolate icecream’’ and ‘‘organic cherry sweets’’ inwhich the ice cream and candy are atleast 95 percent organic but thechocolate and cherry flavoring is notorganically produced.

We agree with commenters that suchproduct names can be misleading andwould be a violation of section205.300(a). In the examples, the word,‘‘organic,’’ precedes the words,‘‘chocolate’’ and ‘‘cherry,’’ and clearlyimplies that those ingredients areorganically produced. The chocolateand cherry flavorings must be

organically produced to be used in thisway. If the product is at least 95 percentorganically produced but the flavoringis nonorganic, the word sequence mustbe reversed or the word, ‘‘flavored,’’must be added to the name; e.g.,‘‘chocolate organic ice cream’’ or‘‘chocolate flavored organic ice cream.’’A sentence has been added to section205.300(a) to specify that the term,‘‘organic,’’ may not be used in a productname to identify an ingredient that isnot organically produced.

A similar comment was receivedasking how a single product with twoseparately wrapped components can belabeled if one of the components isorganically produced and the other isnot. The commenter’s example was acarrot and dip snack pack in which thecarrots are organically produced and thedip is a conventional product. Anotherexample is ready-to-eat tossed greensalad in which the salad greens areorganically produced but the separatelypouched salad dressing is a nonorganiccomponent of the product.

Such products also must be labeled inaccordance with section 205.300(a). Itwould be misleading to label the snackpack ‘‘organic carrots and dip’’ or‘‘organic green salad and ranchdressing,’’ if the dip and ranch dressingare not produced with organicingredients. The salad may be labeled‘‘organic green salad with ranchdressing.’’

Section 6519(b) of the Act providesthe Secretary with the authority to takeaction against misuse of the term,‘‘organic.’’ USDA will monitor use ofthe term, ‘‘organic,’’ in product namesand will restrict use of the term innames that are determined to bedeliberately misleading to consumers.Such determinations must be made ona case-by-cases basis.

(2) Labeling Livestock Feed. In thedefinition of ‘‘agricultural product,’’ theAct includes product marketed for‘‘livestock consumption.’’ This meansthat NOP regulations have applicabilityto livestock feed production. TheAssociation of American Feed ControlOfficials (AAFCO) and a few Statesdepartments of agriculture commentedthat the proposed provisions conflictwith widely followed standards forlivestock feed labeling. AAFCO’s‘‘Model Bill and Regulation’’ standardsare incorporated in many State feedlaws. The commenters claimed that therequirement to identify organicingredients in the ingredient statementconflicts with feed regulations whichprohibit reference to an ingredient’s‘‘quality or grade.’’ They also claimedthat the percentage of organic contentrequirement is a quantitative claim that

must be verified by independent sources(e.g., sources other than the certifyingagent). The commenters suggested that aprovision be added to address labelingof commercial livestock feed.

We have added new paragraph (e) ofsection 205.301 which provides for twokinds of feed that can be labeled as‘‘organic.’’ The first is feed that containsonly organically produced agriculturalingredients and contains no addednutrients or supplements. The secondorganic feed category also must containonly organically produced agriculturalingredients but may contain feedadditives and supplements that areneeded to meet the nutritional andhealth needs of the livestock for whichthe feed is intended. Feed labeled as‘‘organic’’ must conform with therequirements of section 205.237,Livestock feed. That section providesthat feed additives and supplementsproduced in conformity with section205.603 of the National List may beused. The NOP requires that livestockunder organic management must onlybe fed organically produced agriculturalingredients.

We also have added new section205.306 to address commenters’ labelingconcerns. The new section provides foroptional display of a feed’s organicpercentage and optional identificationof the feed ingredients that areorganically produced. The labelingrequirements are not intended tosupersede the general feed labelingrequirements established in the FFDCAand those found under various Statelaws. Handling processes, feedformulations and recordkeeping must besufficient to meet the requirements ofapplicable State regulations.

We believe the provisions in newparagraph (e) of section 205.301 on feedcontent and new section 205.306 onlabeling will allow livestock feedproducers to produce and label organiclivestock feed that is in accordance withthese regulations and Staterequirements.

(3) Organic Processing Aids. Severalindustry leaders and SOP managersquestioned whether the proposed ruleintended to exclude the use of certifiedorganic processing aids in the creationof ‘‘100 percent organic’’ products.Commenters pointed out that a handlershould be able to use organicallyproduced processing aids to createproducts that are labeled as ‘‘100percent organic.’’ The processing aidcan be a by-product of an organicagricultural product; e.g., a filter madeof rice hulls from organically producedrice. AMS concurs. Accordingly, achange is made in paragraph (f)(4) ofsection 205.301 to provide for use of



organically produced processing aids inproducts labeled ‘‘100 percent organic.’’

To help clarify this and correct anincomplete reference in the proposedrule preamble, we have changed thecolumn heading of the fourth prohibitedpractice in the preamble table 1.

(4) Content of ‘‘100 Percent OrganicProducts.’’ Certifying agents and severalindustry commenters called attention tothe regulatory text of section 205.301(a)describing 100 percent organicproducts. They argued that the proposedrule would allow products with one ormore 95 percent-plus ‘‘organic’’ingredients to be combined ascomponents and have the resultingproduct be labeled as ‘‘100 percentorganic.’’

We did not intend to allow anyingredient that is less than 100 percentorganic to be used in a product labeled‘‘100 percent organic.’’ To leave nodoubt as to the nature of any productlabeled ‘‘100 percent organic,’’ we havechanged the wording of paragraph (a) ofsection 205.301 to clarify that amultiingredient ‘‘100 percent organic’’product must be comprised entirely of100 percent organic ingredients.

(5) Labeling of Organic Percentage.We received many comments requestingclearer display of a product’s percentageof organic content. Most suggested thatany product containing less than 100percent organic ingredients should berequired to display the organicpercentage on the pdp. They argued thatdisplay of the organic percentage on thefront of the package would enableconsumers to more easily determineorganic content, compare competingproducts, and make better purchasedecisions. The NOSB did notrecommend display of organicpercentage on the pdp for all productscontaining organic ingredients.

We also received several commentsfrom handlers concerned that therequired display of a product’s organicpercentage can be a burden on handlers.They stated that, to save packaging andprinting costs, handlers order bulkquantities of printed packages, labels,and other printed marketing materials.When printed in advance of a growingseason and harvest, the handler may notbe able to assemble a product that isexactly consistent with the preprintedlabeling information, particularly thepercentage of organic content. Onecommenter representing a commodityassociation opposed the requiredpercentage labeling because theassociation believes consumers will notunderstand any organic claim if apercentage of less than 100 percent isdisplayed.

We believe that display of thepercentage of organic content isimportant product information that canbe very helpful to consumers in theirpurchase decisions. We also believe thatthe opportunity to display thepercentage content of organicallyproduced ingredients can be a positivefactor in encouraging handlers to usemore organic ingredients in theirmultiingredient products. At the sametime, we understand the financialcommitment involved in preprintingbulk quantities of packages and labelswell in advance of harvests, whichdetermine availability of neededingredients.

This final rule implements changes insections 205.303 and 205.304 forproducts labeled ‘‘organic’’ and ‘‘madewith organic ingredients.’’ Therequirement to display the percentage oforganic content on the informationpanel is removed. That requirement isreplaced with optional labeling of theproduct’s organic percentage on the pdpor any other package panels. This willallow those handlers to display thepercentage of their product’s organicallyproduced contents on the pdp where itwill be most immediately visible toconsumers. Handlers who cannot, withcertainty, display their product’sorganic percentage or who choose not todisplay the percentage, are not requiredto do so.

This revised labeling provision alsoremoves the requirement in section205.305 that products with less than 70percent organic content display theproduct’s organic percentage on theinformation panel. Under this final rule,that percentage labeling is optional butis still restricted to the informationpanel. The percentage of a less than 70percent organic product may not bedisplayed on the pdp and may not bedisplayed if the organic ingredients arenot identified in the ingredientstatement.

(6) Designation of OrganicallyProduced Ingredients. A certifying agentsuggested that identification of organicingredients in ingredient statementsshould be allowed to be made with anasterisk or similar mark, with theasterisk defined on the informationpanel. The commenter stated that therepetitive use of the word, ‘‘organic,’’may cause space problems on somesmall packages and that use of a markis a common industry practice. We agreewith the comment and have changedsections 205.303(b)(1), 205.304(b)(1),and 205.305(a)(i) of the regulatory textaccordingly. Thus, organic ingredientsmay be identified in the ingredientstatement with either the term,‘‘organic,’’ or an asterisk or other mark,

provided that the asterisk or other markis defined on the information paneladjacent to the ingredient statement.

(7) Minimum Organic Percentage forLabeling. In the proposed rule’spreamble, we asked for public commenton whether the 50 percent minimumorganic content for pdp labeling shouldbe increased. The 50 percent minimumcontent was established in section6505(c) of the Act. However, the Actalso provides the Secretary with theauthority to require such other termsand conditions as are necessary toimplement the program. Thus, theminimum organic content level for pdplabeling could be changed if the changewould further the purposes of the Act.

Comments to the first (1997) proposaland to the revised proposed rulesuggested that the minimum organiccontent for labeling purposes should beincreased. All comments received,including comments from certifyingagents, a leading organic association, theEU and other international commentersrecommended that the minimumorganic content to qualify for pdplabeling should be raised to 70 percent,which is the EU’s minimum. Allcomments stated that the increase isnecessary to make the NOP standardsconsistent with international organicstandards. Commenters also pointed toadvances in organic production andprocessing technologies and to increasesin the availability of organicallyproduced products and processedingredients. These factors should makeit easier for handlers to assemble foodproducts with higher organic content.

We concur with the comments. Weview this as a tightening of labelingrequirements in that pdp labeling nowrequires a higher percentage of organicingredients and makes the U.S. standardconsistent with international norms.

In the proposed rule’s preamble, wealso asked for specific public commenton whether a minimum percentage oftotal product content should be requiredfor any single organic ingredient that isincluded in the pdp statement ‘‘madewith organic (specified ingredients).’’No commenters responded to thisquestion. Therefore, no requiredminimum percentage for a singleorganic ingredient in ‘‘made with* * *’’ products is established.

(8) ‘‘Made With Organic (SpecifiedFood Groups).’’ Several industryorganizations suggested that, as analternative to listing up to three organicingredients in the ‘‘made with * * *’’label, the rule should also allow foridentification of food ‘‘groups’’ or‘‘classes’’ of food in the ‘‘made with’’label. Commenters suggested, forinstance, that a soup (with 70 percent or



more organic ingredients, less water andsalt) containing organically producedpotatoes, carrots, and onions may belabeled as ‘‘soup made with organicpotatoes, carrots, and onions’’ or,alternatively, ‘‘soup made with organicvegetables.’’

We agree that this label option offershandlers of such multiingredientproducts with more flexibility in theirlabeling. All ingredients in theidentified food group must beorganically produced and must beidentified in the ingredient statement as‘‘organic.’’ In the above example, if soupalso contains conventionally producedcauliflower, only ‘‘soup made withorganic potatoes, carrots, and onions’’can be displayed.

We also believe that some parametersmust be established as to what areconsidered as food groups or classes offood. For the purposes of thisregulation, products from the followingfood groups may be labeled as ‘‘organic’’in a ‘‘made with * * *’’ label: beans,fruits, grains, herbs, meats, nuts, oils,poultry, seeds, spices, and vegetables. Inaddition, organically produced andprocessed butter, cheeses, yogurt, milk,sour cream, etc. may be combined in aproduct and identified as ‘‘organic milkproducts.’’ Organically produced andprocessed sugar cane, sugar beets, cornsyrup, maple syrup, etc. may be used ina product and identified as ‘‘organicsweeteners.’’

Finally, to be consistent with the‘‘made with * * *’’ labeling forindividual ingredients, up to three foodgroups can be identified in the ‘‘madewith * * *’’ statement. Section 205.304is changed accordingly.

(9) Labeling Products from Exemptand Excluded Operations. A change ismade in redesignated section 205.310which provides for labeling of organicproducts produced by exempt andexcluded operations. SOP managers andan organic handler pointed out that thepreamble suggested restrictions onlabeling that would prevent exempt andexcluded operations from identifyingtheir products as ‘‘organic.’’ Afterreview of the proposed rule, we haverevised redesignated section 205.310 tomore clearly specify labelingopportunities for exempt operations.The regulatory text more clearly statesthat such operations may not label orrepresent their organic products asbeing ‘‘certified’’ as organic and thatsuch exempt and excluded operationsmust comply with applicableproduction and handling provisions ofsubpart C. Labeling must be consistentwith the four labeling categories basedon the product’s organic content.

A State organic advisory boardrecommended that proposed section205.309 be revised to apply to exemptand excluded operations which chooseto be certified under this program. Wedo not believe it is necessary to provideseparate regulatory text for exempt andexcluded operations that are certified.An exempt operation is not precludedfrom organic certification, if qualified.

(10) Redesigned USDA Seal. Leadingindustry members, certifying agents,SOP managers, and many individualcommenters opposed the proposedwording and design of the USDA seal.Comments generally stated thefollowing points: (1) The proposed Sealwording indicates that USDA is thecertifying agent rather than accreditedcertifiers; (2) international Organizationfor Standardization (ISO) Guide 61prohibits government bodies from actingor appearing as certifying agents; and (3)The shield or badge design indicates acertification of product ‘‘quality’’ andassurance of safety which isinconsistent with the NOP’s claim to bea certification of ‘‘process’’ only.Commenters suggested severalalternative seal statements, including:‘‘Certified Organic—USDA Accredited,’’‘‘Certified Organic—USDA Approved,’’‘‘USDA Certified Organic Production,’’‘‘Meets USDA Organic ProductionRequirements.’’

Based on comments received, we areimplementing a revised USDA sealwhich is shown in the regulatory textunder section 301.311. It is a circulardesign with the words, ‘‘USDAOrganic.’’ The color scheme is a whitebackground, brown outer circle, whiteand green inner semicircles, and greenand white words. A black and whitecolor scheme also may be used ifpreferred by the handler.

Some commenters suggested changingthe shape of the USDA seal to a circleor triangle which, they state, is more inkeeping with recognized recycling andsustainability logos. We did not choosea triangle design because processorshave commented that triangle designsmay cause tears in shrink wrapcoverings at the points of the triangle.

Labeling—Changes Requested But NotMade

(1) ‘‘Organic’’ in Company Names.Many commenters stated that the term,‘‘organic,’’ must not be used as part ofa company name if the company doesnot market organically produced foods.They are concerned that the term in acompany name would incorrectly implythat the product, itself, is organicallyproduced.

While we understand commenterconcerns, we do not know the extent of

the problem. We do not believe thoseconcerns require such a prohibition inthe regulations at this time. Theseregulations may not be the bestmechanism to address the issue. Section6519(b) of the Act provides theSecretary with the authority to takeaction against misuse of the term,‘‘organic.’’ USDA will monitor use ofthe term, ‘‘organic,’’ in company namesand will work with the FTC to takeaction against such misuse of the term.These determinations must be made ona case-by-case basis. The proposed ruledid not specifically address this issue.We have added a sentence to paragraph(a) of section 205.300 to this effect.

(2) The ‘‘100 Percent Organic’’ Label.A large number of commenters opposedthe ‘‘100 percent organic’’ label fordifferent reasons. A few claimed that thelabel is not authorized under the Act.Several commenters suggested thatconsumers will not understand thedifference between multiingredientproducts labeled ‘‘100 percent organic’’and ‘‘organic.’’ Others raised theconcern that the ‘‘100 percent organic’’phrase to modify raw, fresh fruits andvegetables in produce sections andfarmers markets may be confusing toconsumers.

Regarding the first comment, the termis not specifically provided for in theAct. However, the Secretary has theauthority under section 6506(a)(11) torequire other terms and conditions asmay be necessary to develop a nationalorganic program. When a product iswholly organic, pursuant to theproduction and handling requirementsof the NOP, we believe the handlershould have the option to differentiateit from products which, by necessity,are less than 100 percent organic. Webelieve the label meets the purposes ofthe Act.

Regarding consumer confusion, webelieve consumers will understand thedifference between the two kinds oforganic products and will make theirorganic purchases accordingly.

Regarding the labeling of raw, freshproduct as ‘‘100 percent organic,’’organically produced products can belabeled to a lower labeling category.Raw, fresh fruits and vegetables whichqualify for a ‘‘100 percent organic’’ labelmay be labeled simply as ‘‘organic,’’ ifthe producer or retail operator believesthat label is best for marketing purposes.

(3) Explain Why Product Is Not 100Percent Organic. A large number ofcommenters also suggested any‘‘product that is less than 100 percentorganic should carry that information onthe main display panel * * *’’ By ‘‘thatinformation,’’ we assume thecommenters are referring to the reasons



why a product cannot be certified as‘‘100 percent organic.’’

AMS believes such a labelingrequirement is impractical. Productsmay fail to qualify for a ‘‘100 percentorganic’’ label for very technical, orlittle understood, reasons.Contemporary food processing oftenuses ingredients, processingtechnologies, and product formulationsthat are complicated, technical, andprobably not of interest to the generalorganic consumer. Such information isnot required on nonorganicallyproduced products for the simple reasonthat it is not considered useful toconsumers. Explanations of the differentprocessing technologies used in foodproducts would be cumbersome andwould interfere with other productlabeling.

We believe the optional display of theorganic percentage and requiredidentification of organic ingredients onthe information panel providessufficient information for consumers tomake purchase decisions. Otherdescriptive information regardingprocessing substances and proceduresmay, of course, be provided at thehandler’s option and placed inaccordance with other Federal labelingrequirements.

(4) Check the Appropriate OrganicCategory. One commenter suggested thatpackages of organically producedproduct display a small box listing thefour organic label categories and a checkmark beside the category which fits theproduct.

We understand the simplicity andcomparative nature of such astandardized organic label that allowseasy comparison of similar products.However, we believe that the optionaldisplay of the product’s organicpercentage and required identificationof organic ingredients will be morehelpful to consumers and makes thegrid box redundant.

(5) Nonorganic Ingredients in OrganicProducts. A large number of commentswere received on the composition anduse of nonorganic ingredients inproducts labeled ‘‘made with * * *’’and on conventional products with lessthan 50 (now 70) percent organicingredients. Several industrycommenters suggested that nonorganicingredients in ‘‘made with * * *’’products must be ‘‘natural’’(nonsynthetic agricultural substances)and not be artificially produced.Commenters argued that all ingredientsin ‘‘made with * * *’’ and less than 70percent products should be produced inaccordance with the prohibitedpractices under sections 205.105 and205.301(f). A significant number of

commenters opposed identification oforganic ingredients in what they called‘‘natural food’’ products.

First, we do not agree that thenonorganic ingredients in ‘‘made with* * *’’ products must be restricted toonly ‘‘natural’’ products. Suchrestrictions on the composition ofnonorganic ingredients wouldsignificantly reduce handlers’ options inproducing those products and, thus,reduce consumers’ options inpurchasing products with organicingredients.

Regarding prohibited practices, thisrule implements the strong industry andconsumer demand that the prohibitedpractices found under section 205.105(excluded methods, irradiation, andsewage sludge) not be used innonorganic ingredients in ‘‘made with* * *’’ products. However, we do notbelieve that restrictions on use of theother prohibited practices, found insection 205.301(f), would further thepurposes of the Act. Application of allprohibited practices on the nonorganicingredients in the ‘‘made with * * *’’and less-than 70 percent organicproducts would essentially require thatthose products be organically produced.The Act allows for products that are notwholly organic. We believe the ‘‘madewith * * *’’ label and the labelingrestrictions on the less-than 70 percentorganic products clearly states toconsumers that only some of theingredients in those products areorganically produced.

If accepted, these comments wouldunnecessarily restrict a handler’s abilityto truthfully represent and market aconventionally produced agriculturalproduct with some organic ingredients.A handler should not be prohibitedfrom making a truthful claim aboutsome ingredients in a less than 70percent organic product.

(6) Alternative ‘‘Made With * * *’’Labels. A few SOP managerscommented that the phrase, ‘‘made with* * *,’’ is confusing. They stated thatmany processed foods contain at least50 percent organic ingredients but donot make an organic claim on the pdp.They believe the label would be lessconfusing if it stated a minimum organicpercentage rather than identifying theorganic ingredients. They suggest thelabeling category be changed to‘‘contains at least 50 percent organicingredients (or, as revised in this rule,‘‘contains at least 70 percent organicingredients’’).

We disagree. Identification of up tothree organically produced ingredientsor food groups on the pdp givesconsumers useful, specific informationabout the product’s organic ingredients.

This label, combined with the optionaldisplay of the percentage content on thepdp and required identification oforganic ingredients, should provideenough information for consumers tomake good decisions.

A few commenters contended that thestatement ‘‘made with organic (specifiedingredients)’’ is unclear and ‘‘openended’’ and that consumers may assumethe entire product is organicallyproduced. The ‘‘made with * * *’’labeling claim refers only to the organicingredients and not to the wholeproduct. We do not believe thatconsumers will be confused by thelabel.

(7) Use of Other Terms asSynonymous for ‘‘Organic’’. A fewcommenters representing internationalorganic standards suggested that use ofthe terms, ‘‘biologic’’ and ‘‘ecologic,’’which are synonymous with ‘‘organic’’in other countries, should be allowedunder the NOP. Commenters claimedthese terms are approved by Codex andtheir inclusion in this regulation wouldfacilitate international trade andequivalency agreements.

These terms were addressed in theproposed rule and are not accepted.Under the NOP, these terms may beused as eco-labels on a product packagebut may not be used in place of theterm, ‘‘organic.’’ Although such termsmay be considered synonymous with‘‘organic’’ in other countries, they arenot widely used or understood in thiscountry. We believe their use assynonymous for ‘‘organic’’ would onlylend to consumer confusion. Regardingthe Codex labeling standard, we pointout that Codex also provides that termscommonly used in a country may beused in place of ‘‘biologic’’ and‘‘ecologic.’’ Thus, the use of ‘‘organic’’in the United States is consistent withCodex standards.

With regard to the commenters’ claimthat the alternate labels would facilitateinternational trade, this regulationallows alternative labeling of productswhich are being shipped tointernational markets. Thus, a certifiedorganic operation in the United Statesmay produce a product to meetcontracted organic requirements of aforeign buyer, label the product as‘‘biologic’’ or ‘‘ecologic’’ on the pdpconsistent with the market preferencesof the receiving country, and ship theproduct to the foreign buyer.

Other terms were suggested bycommenters as alternatives to the term,‘‘organic,’’ including ‘‘grown by age-old,natural methods,’’ ‘‘grown withoutchemical input,’’ and ‘‘residue Free.’’These phrases may be consumerfriendly but clearly do not convey the



extensive and complex nature ofcontemporary organic agriculture. Thesephrases may be used as additional, eco-labels, provided they are truthfullabeling statements. They are notpermitted as replacements for the term,‘‘organic.’’

(8) Reconstituted OrganicConcentrates. A certifying agentobjected to paragraph (a)(2) of section205.302, which allows labeling of anorganically produced concentrateingredient which is reconstituted withwater during assembly of the processedproduct. The commenter claimed thatthis provision gives consumers themessage that reconstituted juice isequivalent to fresh juice when, thecommenter claims, it is not the same.

AMS disagrees. This labeling isconsistent with current industrypractices. The Act does not prohibitsuch labeling of concentrates. Webelieve it is in the interest of theprogram to allow labeling of organicallyproduced concentrates, provided thatthe process to produce the concentrateand the reconstitution process isconsistent with organic principles andthe National List.

(9) Calculating Reconstituted VersusDehydrated Weight. Several commentswere received regarding specificproblems encountered in the calculationof the percentage of organic content asprovided under section 295.302. Ahandler claimed the reconstitutedweight of an organically produced spiceshould be counted in the percentagecalculation rather than the dehydratedweight of the spice used in theformulation. A similar comment wasreceived from a food cooperativesuggesting that, if an organicallyproduced concentrate (in powderedform) is added to the same organicallyproduced ingredient in its organicliquid form (not from concentrate), thenthe product’s organic percentage shouldbe calculated based on the concentrate’ssingle-strength reconstituted weightplus the weight of the natural organicliquid.

AMS disagrees with these comments.This regulation provides for aningredient’s weight to be calculated,excluding added water and salt. If anorganically produced spice is added toa product in its natural form, the weightof the spice is calculated. If the spiceingredient is in dehydrated, powderedform when added in the productformulation, the dehydrated weight ofthe spice must be the basis for itspercentage of content calculation. If anorganically produced dehydrated spiceis reconstituted with water prior toproduct assembly, the spice must stillbe calculated at its dehydrated weight

because percentage calculations arebased on the ingredient weight,excluding water and salt. It would bemisleading to calculate the weight of theconcentrate ingredient in itsreconstituted form.

Likewise, if a powdered ingredient isadded to the same organically producedingredient in its natural, liquid form, theweight of the powdered ingredient mustbe used. Using the reconstituted weightof the powdered ingredient wouldincrease the percentage of the ingredientabove the actual weight of theingredient in the product. We believethat if the comment were accepted, thehandler would be able to use lessnatural organic liquid than the organicpercentage and ingredient statementindicates.

(10) Calculate Organic Percentage inTenths of a Percent. A tradeorganization suggested that the organicpercentage be rounded to tenths of onepercent to accommodate products thatmay contain a minor ingredient oradditive that comprises less than 1percent of the product. The exampleprovided was Vitamin D in milk. Thecomment suggested that it is misleadingto consumers to suggest that 1 percentof a milk product is nonorganic whenthe Vitamin D additive may be compriseonly a few tenths of one percent of theproduct.

AMS disagrees. Rounding down thepercentage to a whole number issufficient for consumer information anddoes not misrepresent the product’sorganic content. A handler may add aqualifying statement regarding theminor ingredient’s weight in relation tothe whole product weight.

(11) Verifying Calculations. A Statedepartment of agriculture commentsuggested that the paragraph (c) ofsection 205.302 be revised slightly toprovide that percentage calculationsmust be verified ‘‘to the satisfaction’’ ofthe certifying agent. The commenterbelieves that the suggested languageallows the handler the flexibility todetermine the number calculations thatneed to be checked in order to verifythat the organic percentage calculationis correct.

We do not believe the suggestedchange is necessary. We assume thatany use of a certifying agent’s seal on aproduct means that the certifying agenthas checked and approves of themethod of calculating the product’sorganic percentage. If the calculationsare not to the certifying agent’ssatisfaction, the agent would not certifythe handling process.

While we appreciate the point madeby the commenter, we do not believe thesuggested change means what the

commenter intends. Paragraph (c) ofsection 205.302 does not specify thenumber and methods of calculationsthat need to be carried out by acertifying agent because that willdepend on the handling process beingcertified and the ingredients in theproduct. We leave that to the discretionof the certifying agent. Also, the basisfor a product’s organic percentagecalculation should be clarified in theorganic plan. It is assumed that thecertifying agent will either be satisfiedthat the methodology for calculatingorganic percentage is correct or themethodology will be changed.

(12) Labeling Nonretail ShippingContainers. A few State departments ofagriculture commented that shippingand storage containers with organicproducts should be required to belabeled as containing organic product.Other commenters recommended thatshipping containers be required todisplay the name of the grower and thecertifying agent. They cite theserequirements as current industrypractice.

This regulation does not requireorganic labeling on shipping and storagecontainers because those containers arenot used in the marketplace. The onlyinformation required by the NOP is theproduction lot number of the product, ifa lot number exists for the particularproduct. Product content and shipperinformation may be displayed, asrequired by other Federal or Stateregulations or at the discretion of thehandler. Proper identification of theorganic nature of a product with specialinstructions for shipment or storagecould prevent exposure to prohibitedsubstances that would lead tosubsequent loss of the shipment as anorganic product.

(13) Disclaimers on Organic Products.Several commenters complained thatconsumers are misled by the organiclabeling and the NOP. They claimedthat when science-based technologies(genetic engineering, irradiation,chlorination, etc.) are not used onproducts, the food is less safe thanconventionally produced foods. Some ofthe commenters suggested that adisclaimer regarding food safety andnutritional value be required onpackages with organic labeling.

AMS disagrees. The USDA sealindicates only that the product has beencertified to a certain production and/orhandling ‘‘process’’ or ‘‘system.’’ Theseal does not convey a message of foodsafety or more nutritional value. TheNOP prohibitions on use of excludedmethods, ionizing radiation, sewagesludge, and some substances andmaterials are not intended to imply that



conventionally produced products madeby those methods or containing thoseprohibited substances are less safe ornutritious than organically producedproducts. We do not believe that organicfood packages or labeling should carrydisclaimers of what the USDA seal or acertifying agent’s seal does notrepresent. Other Federal and State sealsand marketing claims are placed onconsumer products, including foodproducts, without disclaimers regardingthose seals and claims. A disclaimerdisplayed in relation to USDA seal or acertifying agent’s seal would confuseconsumers. Finally, disclaimerstatements also would present spaceproblems on small product packages.

Labeling—ClarificationsClarification is given on the following

issues raised by commenters:(1) Certification Is to an Organic

Process, Not Organic Product. Severalcommenters suggested that the final rulemore clearly state that the NOP providesfor certification of an organic process orsystem of agriculture and notcertification of products, themselves, as‘‘organic.’’ They stated that the phrase‘‘* * * contain or be created using* * *’’ in paragraphs (a), (b), and (c) ofsection 205.301 implies certification ofthe product’s content and not to theprocessed-based, organic system ofagriculture.

We agree and have revised thewording in those paragraphs to clarifythat such products must be organicallyproduced in accordance with organicproduction and handling requirement ofthis regulation.

(2) Phasing Out Use of Old Labels andPackages. Citing FDA regulations, theNOSB, certifying agents, and some Stateagencies suggested a minimum 18-month period for handlers to use uptheir current supplies of packages andlabels before complying with the newlabeling requirements.

This rule provides for an interimperiod of 18 months betweenpublication of the final rule and theimplementation date of the program.Publication of this final rule servesnotice to certified producers andhandlers that they should beginplanning for phasing out use of labelsthat are not in accordance with theserequirements.

The implementation process isdiscussed in Applicability, subpart B.An organic operation will automaticallybe certified under this program when itscertifying agent is accredited by AMS.At that time, the operation may beginfollowing these labeling requirementsbut may not display the new USDA sealuntil the implementation date. AMS

assumes that certifying agents and theirclient certified operations will maintainfrequent contact as to the status of theagent’s application for accreditation sothat the certified operation mayschedule the phasing out of old labelsand purchase of new labels andpackages. AMS expects to accredit allcurrently operating certifying agents bythe implementation date of thisregulation. Stick-on labels to complywith the new requirements areacceptable.

Newly established organic operationscertified for the first time mustimmediately begin using labels inaccordance with this program.

(3) Labeling of Products With MinorIngredients. Several commentersquestioned how the minor ingredients(spices, flavors, colorings, preservatives,oils, vitamins, minerals, accessorynutrients, processing aids, andincidental food additives) needed forformulation or processing of manymultiingredient products will be treatedunder the ‘‘100 percent organic’’ and‘‘organic’’ labeling categories. Becauseminor ingredients may not exist or aredifficult to obtain in organic form, theiruse in a product can affect the labelingof the product, even though thepercentage of the ingredient isextremely small compared to the rest ofthe product’s ingredients.

Minor ingredients and processing aidsmust be treated as any other ingredientor substance which is used as aningredient in or in the processing of anorganically produced product. To beadded as an ingredient or used in theprocessing of a product labeled ‘‘100percent organic,’’ a minor ingredientmust be extracted from a certifiedorganic source without the use ofchemicals or solvents. To be added asan ingredient or used in the processingof a product labeled ‘‘organic,’’ a minoringredient must be from an organicagricultural source, if commerciallyavailable. If not commercially available,the ingredient must be an agriculturalproduct or a substance consistent withthe National List.

(4) Reusing Containers. A commentercomplained that small producers shouldnot be subjected to costly packaging andlabeling requirements when theirproducts are sold directly to the publicat farmers markets and roadside stands.The commenter requested that smallproducers be able to reuse retail boxesand labels. The commenter did notspecify which labeling provisionspresented burdensome costs on smallentities.

We agree that costs for exemptoperations, indeed all organicoperations, should be kept to a

minimum. NOP does not prohibit reuseof containers provided their labelingdoes not misrepresent product and doesnot allow organic product to come intocontact with prohibited substances fromthe container’s previous contents.

(5) Clarifying Prohibited LabelingPractices. Commenters identified a fewinconsistencies between the preambleand regulatory text regarding the sevenprohibited production and processingpractices now specified in section205.301(f). We have made the followingchanges to clarify the intent of theregulation.

A commenter correctly pointed outthat the regulatory text of paragraph (f)incorrectly refers only to ingredientsthat cannot be produced using the sevenprohibited production and handlingpractices listed in the paragraph. Thattext is not consistent with the preamble,which correctly states that wholeproducts, as well as ingredients, labeledas ‘‘organic’’ cannot be produced orprocessed using the seven prohibitedpractices. The term, ‘‘whole products,’’is added to the introductory sentence ofnew section 205.301(f).

A few commenters pointed out thatall seven practices are prohibited in theproduction of nonorganic ingredientsused in products labeled as ‘‘organic.’’The second sentence of proposedparagraph (b) of section 205.301(products labeled ‘‘organic’’) incorrectlylisted only the first three prohibitedpractices. A phrase is added to theintroductory sentence of new paragraph(f) to specify that the 5 percent or lessof nonorganic ingredients in productslabeled as ‘‘organic’’ may not beproduced or handled using any of theseven prohibited practices.

Finally, with the addition of thecommercial availability requirement insection 205.201, a conforming change isneeded in section 205.301(f)(6)regarding use of nonorganic ingredientswhen organically produced ingredientsare available.

(6) Consistency with State LabelingRequirements. One State organicassociation commented that the State’slaw requires identification of thecertifying agent if the term, ‘‘certifiedorganic,’’ appears on the label. Thecomment was not clear about where onthe package the certifier must beidentified; e.g., with the ‘‘certifiedorganic’’ term on the pdp or anywhereon the package. The commenter did notspecifically suggest changing thelabeling provisions to include thecertifying agent on the pdp.

This regulation allows a handler theoption of displaying the certifyingagent’s seal or logo on the pdp forproducts with 70 percent or more



organically produced ingredients. Thisregulation also requires identification ofthe certifying agent on the informationpanel of all products containing 70percent or more organically producedingredients. The identification mustinclude an address or contactinformation and be placed adjacent toidentification of the manufacturer,required by FDA. We believe theseprovisions are sufficient to meet theState’s labeling requirements. The NOPwill be available to consult with Statesregarding alternative labeling requiredto be used in the State.

(7) Clarifying Labeling of Products inOther Than Packaged Form. We havemodified sections 205.308 and 205.309to clarify that products in other thanpackaged form at the point of retail salethat are prepared by an exempt orexcluded operation may be labeled as‘‘100 percent organic,’’ ‘‘organic,’’ or‘‘made with * * *’’ as appropriate.Consistent with the general restrictionson the labeling of products from suchoperations, which are found in section205.310, such products may not displaythe USDA seal or any certifying agent’sseal or other identifying mark orotherwise be represented as a certifiedorganic product.

Subpart E—Certification

This subpart sets forth therequirements for a national program tocertify production and handlingoperations as certified organicproduction or handling operations. Thiscertification process will be carried outby accredited certifying agents.



Production and handling operationsseeking to receive or maintain organiccertification must comply with the Actand applicable organic production andhandling regulations. Such operationsmust establish, implement, andannually update an organic productionor handling system plan that issubmitted to an accredited certifyingagent. They must permit on-siteinspections by the certifying agent withcomplete access to the production orhandling operation, includingnoncertified production and handlingareas, structures, and offices.

As discussed in subpart B, certifiedoperations must maintain recordsconcerning the production and handlingof agricultural products that are sold,labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients or foodgroup(s))’’ sufficient to demonstratecompliance with the Act and

regulations. Records applicable to theorganic operation must be maintainedfor not less than 5 years beyond theircreation. Authorized representatives ofthe Secretary, the applicable Stateorganic program’s (SOP) governing Stateofficial, and the certifying agent must beallowed access to the operation’srecords during normal business hours.Access to the operation’s records will befor the purpose of reviewing andcopying the records to determinecompliance with the Act andregulations.

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

Certification Process

To obtain certification, a producer orhandler must submit an application forcertification to an accredited certifyingagent. The application must containdescriptive information about theapplicant’s business, an organicproduction and handling system plan,information concerning any previousbusiness applications for certification,and any other information necessary todetermine compliance with the Act.

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

The certifying agent will decidewhether to accept the applicant’sapplication for certification. A certifyingagent must accept all production andhandling applications that fall within itsarea(s) of accreditation and certify allqualified applicants to the extent of itsadministrative capacity to do so. Inother words, a certifying agent maydecline to accept an application forcertification when the certifying agent isnot accredited for the area to be certifiedor when the certifying agent lacks theresources to perform the certification.However, the certifying agent may notdecline to accept an application on thebasis of race, color, national origin,gender, religion, age, disability, politicalbeliefs, sexual orientation, or marital orfamily status.

Upon acceptance of an application forcertification, a certifying agent willreview the application to ensurecompleteness and to determine whetherthe applicant appears to comply or maybe able to comply with the applicableproduction or handling regulations. Aspart of its review, the certifying agentwill verify that an applicant hassubmitted documentation to support thecorrection of any noncompliancesidentified in a previously receivednotification of noncompliance or denialof certification. We anticipate that at afuture date the certifying agent will alsoreview any available U.S. Department ofAgriculture (USDA) data on productionand handling operations for informationconcerning the applicant.

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

After a complete review of theapplication, which shall be conductedwithin a reasonable time, the certifyingagent will communicate its findings tothe applicant. If the review of theapplication reveals that the applicantmay be in compliance with theapplicable production or handlingregulations, the certifying agent willschedule an on-site inspection of theapplicant’s operation to determinewhether the applicant qualifies forcertification. The initial on-siteinspection must be conducted within areasonable time following adetermination that the applicantappears to comply or may be able tocomply with the requirements forcertification. The initial inspection maybe delayed for up to 6 months to complywith the requirement that the inspectionbe conducted when the land, facilities,and activities that demonstratecompliance or capacity to comply canbe observed.

The certifying agent will conduct aninitial on-site inspection of eachproduction unit, facility, and site thatproduces or handles organic productsand that is included in the applicant’s



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

operation. As a benchmark, certifyingagents should follow auditingguidelines prescribed by theInternational Organization forStandardization Guide 10011–1,‘‘Guidelines for auditing qualitysystems—Part 1: Auditing’’ (ISO Guide10011–1).1 The certifying agent will usethe on-site inspection in determiningwhether to approve the request forcertification and to verify theoperation’s compliance or capability tocomply with the Act and regulations.Certifying agents will conduct on-siteinspections when an authorizedrepresentative of the operation who isknowledgeable about the operation ispresent. An on-site inspection must alsobe conducted when land, facilities, andactivities that demonstrate theoperation’s compliance with orcapability to comply with the applicableproduction or handling regulations canbe observed.

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

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

the operation during the exit interview.However, the certifying agent will havethe discretion to decide the extent towhich an inspector may discuss anycompliance issue. At the time of theinspection, the inspector shall providethe operation’s authorizedrepresentative with a receipt for anysamples taken by the inspector. Thereshall be no charge to the inspector forthe samples taken.

The certifying agent shall, within areasonable time, provide the inspectedoperation with a copy of the on-siteinspection report, as approved by thecertifying agent, for any on-siteinspection performed and provide theoperation with a copy of the test resultsfor any samples taken by an inspector.

Notification of ApprovalA certifying agent will review the on-

site inspection report, the results of anyanalyses for substances, and anyadditional information provided by theapplicant within a reasonable time aftercompletion of the initial on-siteinspection. The certifying agent willgrant certification upon making twodeterminations: (1) that the applicant’soperation, including its organic systemplan and all procedures and activities,is in compliance with the Act andregulations and (2) that the applicant isable to conduct operations inaccordance with its organic systemsplan.

Upon determining the applicant’scompliance and ability to comply, theagent will grant certification and issuea ‘‘certificate of organic operation.’’ Thecertification may include requirementsfor the correction of minornoncompliances within a specified timeperiod as a condition of continuedcertification. A certificate of organicoperation will specify the name andaddress of the certified operation; theeffective date of certification; thecategories of organic operation,including crops, wild crops, livestock,or processed products produced by thecertified operation; and the name,address, and telephone number of thecertifying agent. Once certified, aproduction or handling operation’sorganic certification continues in effectuntil surrendered by the organicoperation or suspended or revoked bythe certifying agent, the SOP’s governingState official, or the Administrator.

Denial of CertificationShould the certifying agent determine

that the applicant is not able to complyor is not in compliance with the Act, thecertifying agent will issue a writtennotification of noncompliance to theapplicant. The notification of

noncompliance will describe eachnoncompliance, the facts on which thenotification is based, and the date bywhich rebuttal or correction of eachnoncompliance must be made.Applicants who receive a notification ofnoncompliance may correct thenoncompliances and submit, by the datespecified, a description of correctionand supporting documentation to thecertifying agent. As an alternative, theapplicant may submit a new applicationto another certifying agent, along withthe notification of noncompliance and adescription of correction of thenoncompliances and supportingdocumentation. Applicants may alsosubmit, by the date specified, writteninformation to the issuing certifyingagent to rebut the noncompliancedescribed in the notification ofnoncompliance. When a noncompliancecannot be corrected, a notification ofnoncompliance and a ‘‘notification ofdenial of certification’’ may becombined in one notification.

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

An applicant who has received anotification of noncompliance or noticeof denial of certification may apply forcertification again at any time with anycertifying agent. When the applicantsubmits a new application to a differentcertifying agent, the application mustinclude, when available, a copy of thenotification of noncompliance or noticeof denial of certification. Theapplication must also include adescription of the actions taken, withsupporting documentation, to correctthe noncompliances noted in thenotification of noncompliance. When acertifying agent receives such anapplication, the certifying agent willtreat the application as a new



application and begin a new applicationprocess.

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

Continuation of CertificationEach year, the certified operation

must update its organic production orhandling system plan and submit theupdated information to the certifyingagent and pay the certification fees tocontinue certification. The updatedorganic system plan must include asummary statement, supported bydocumentation, detailing deviationsfrom, changes to, modifications to, orother amendments to the previous year’sorganic system plan. The updatedorganic system plan must also includeadditions to or deletions from theprevious year’s organic system plan,intended to be undertaken in thecoming year. The certified operationmust update the descriptive informationabout its business and other informationas deemed necessary by the certifyingagent to determine compliance with theAct and regulations. The certifiedoperation must also provide an updateon the correction of minornoncompliances previously identifiedby the certifying agent as requiringcorrection for continued certification.

Following receipt of the certifiedoperation’s updated information, thecertifying agent will, within areasonable time, arrange and conduct anon-site inspection of the certifiedoperation. When it is impossible for thecertifying agent to conduct the annualon-site inspection following receipt ofthe certified operation’s annual updateof information, the certifying agent mayallow continuation of certification andissue an updated certificate of organicoperation on the basis of theinformation submitted and the mostrecent on-site inspection conductedduring the previous 12 months.However, the annual on-site inspectionmust be conducted within the first 6months following the certifiedoperation’s scheduled date of annualupdate. As a benchmark, certifyingagents should follow auditingguidelines prescribed by ISO Guide10011–1. Upon completion of theinspection and a review of updatedinformation, the certifying agent willdetermine whether the operation

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

In addition to annual inspections, acertifying agent may conduct additionalon-site inspections of certifiedoperations that produce or handleorganic products to determinecompliance with the Act andregulations. The Administrator or SOP’sgoverning State official may also requirethat additional inspections beperformed by the certifying agent todetermine compliance with the Act andregulations. Additional inspections maybe announced or unannounced andwould be conducted, as necessary, toobtain information needed to determinecompliance with identifiedrequirements.

Such on-site inspections would likelybe precipitated by reasons to believethat the certified operation wasoperating in violation of one or morerequirements of the Act or theseregulations. The policies andprocedures regarding additionalinspections, including how the costs ofsuch inspections are handled, would bethe responsibility of each certifyingagent. Misuse of such authority wouldbe subject to review by USDA during itsevaluation of a certifying agent forreaccreditation and at other times inresponse to complaints. Certifiedproduction and handling operations canfile complaints with USDA at any timeshould they believe a certifying agentabuses its authority to performadditional inspections.

Certification After Suspension orRevocation of Certifying Agent’sAccreditation

When the Administrator revokes orsuspends a certifying agent’saccreditation, affected certifiedoperations will need to makeapplication for certification withanother accredited certifying agent. Thecertification of the production orhandling operation remains in effectduring this transfer of the certification.The certified production or handlingoperation may seek certification by anyqualified certifying agent accredited bythe Administrator. To minimize theburden of obtaining the newcertification, the Administrator will

oversee transfer of the original certifyingagent’s file on the certified operation tothe operation’s new certifying agent.

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

A private-entity certifying agent mustfurnish reasonable security for thepurpose of protecting the rights ofoperations certified by such certifyingagent. This security is to ensure theperformance of the certifying agent’scontractual obligations. As notedelsewhere in this rule, the specificamount and type of security that mustbe furnished by a private certifyingagent will be the subject of futurerulemaking by USDA. We anticipatethat the amount of the security will betied to the number of clients served bythe certifying agent and the anticipatedcosts of certification that may beincurred by its clients in the event thatthe certifying agent’s accreditation issuspended or revoked. We anticipatethat the security may be in the form ofcash, surety bonds, or other financialinstrument (such as a letter of credit)administered in a manner comparable tocash or surety bonds held under thePerishable Agricultural CommoditiesAct.

Certification—Changes Based onComments


(1) Access to Production andHandling Operation. We have amendedsection 205.400(c) by changing‘‘noncertified areas and structures’’ to‘‘noncertified production and handling



areas, structures, and offices.’’ Acommenter requested that section205.400(c) be amended to allow foraccess to farm-related structures only.The commenter believes that therequirements of section 205.400(c)could be interpreted as giving inspectorsaccess to residential property. We agreewith the commenter that residentialprivacy should be maintained. However,if a certified operation conductsbusiness from or stores records at aresidential property, the certifiedoperation will be considered to bemaintaining an office at the residentialproperty. The records in such officeshall be made accessible for review andcopying. Accordingly, we haveamended section 205.400(c) to furtherclarify which areas and structures are tobe made accessible during an on-siteinspection.

(2) Application for Certification. Wehave amended the first paragraph ofsection 205.401 by replacing the word,‘‘request,’’ each time it occurred withthe word, ‘‘application.’’ A commenterrecommended that we amend the firstparagraph of section 205.401 byreplacing the word, ‘‘request,’’ with‘‘application.’’ We have accepted thecommenter’s recommendation becausethe amendment makes the language inthe first paragraph consistent with thetitle and the requirements of the section.

(3) Verification of Correction ofNoncompliances. To make section205.402(a)(3) consistent with section205.401(c) we have amended thelanguage in section 205.402(a)(3) torequire that the certifying agent verifythat an applicant who previouslyapplied to another certifying agent andreceived a notification of denial ofcertification has submitteddocumentation to support the correctionof any noncompliances identified in thenotification of denial of certification. Acommenter recommended that section205.402(a)(3) be amended by inserting‘‘or denial of certification’’ after thephrase, ‘‘notification ofnoncompliance.’’ We have accepted thecommenter’s recommended amendmentbecause it is consistent with therequirements of section 205.401(c).Section 205.401(c) requires an applicantfor certification to include the name(s)of any organic certifying agent(s) towhich application has previously beenmade, the year(s) of application, and theoutcome of the application(s)submission. The applicant is alsorequired to include, when available, acopy of any notification ofnoncompliance or denial of certificationissued to the applicant for certification.The words, ‘‘when available,’’ have beenadded to this requirement in this final

rule to satisfy concerns regarding thestatus of applicants who cannot find orno longer have a copy of anynotification of noncompliance or denialof certification previously received. Wesee no down side to relaxing thisrequirement since the applicant muststill comply with each of the otherprovisions in section 205.401(c),including the requirement that theapplicant include a description of theactions taken to correct thenoncompliances noted in anynotification of noncompliance or denialof certification, including evidence ofsuch correction. Further, the certifyingagent will be using USDA’s database ofcertification actions during its review ofan application for certification.

(4) Timely Communication to theApplicant. We have amended section205.402(b), by requiring at paragraph(b)(1) that the certifying agent, within areasonable time, review the applicationmaterials received and communicate itsfindings to the applicant. A commenterrequested that we amend section205.402(b) which required a certifyingagent to communicate to the applicantits findings on the review of applicationmaterials submitted by the applicant.Specifically, the commenter requestedthat section 205.402(b) be amended byadding to the end thereof, ‘‘in a timelymanner so as to prevent the avoidabletillage of native habitat that had beenidentified in the application as lands fororganic production.’’

We concur that certification decisionsshould be timely. There are manyreasons (e.g., financial and contractual)for why certification must be timely. Itwould be impractical, however, toattempt to address all of the reasons fortimely certification in these regulations.We have, therefore, amended section205.402(b) as noted above. Thisamendment is consistent with therequirement in section 205.402(a) thatthe certifying agent, upon acceptance ofan application for certification, reviewthe application for completeness,determine by a review of the applicationmaterials whether the applicant appearsto comply or may be able to complywith the requirements for certification,and schedule an on-site inspection. The‘‘upon acceptance’’ requirementnecessitates that the certifying agentreview the application for certificationand provide feedback to the applicant ina timely manner.

(5) On-site Inspections. We haveamended section 205.403(a)(1) byspecifying that the initial and annualon-site inspections of each productionunit, facility, and site in an operationapplies to those units, facilities, andsites that produce or handle organic

products. A commenter recommendedthat section 205.403(a)(1) be amended tospecify that on-site inspections of eachproduction unit, facility, and site willinclude just those that produce orhandle organic products. Thecommenter stated that this change wasnecessary because some retailcorporations choose to certify all storelocations regardless of whether thelocation sells organic products. Thecommenter went on to say that, if alocation does not stock any organicproducts, the certifying agent shouldhave the discretion to modify theinspection requirement.

We have excluded all retail foodestablishments from certification. Theexclusion is found in section205.101(b)(2). Accordingly, thecommenter’s recommendation is notapplicable to retail food establishments.We have, however, made therecommended amendment to section205.403(a)(1) because of its potentialapplicability to other operations whichmay apply for certification.

(6) Scheduling Initial On-siteInspection. We have amended section205.403(b) to provide that the initialinspection may be delayed for up to 6months to comply with the requirementthat the inspection be conducted whenthe land, facilities, and activities thatdemonstrate compliance or capacity tocomply with the organic production andhandling requirements can be observed.We received a comment stating that ifan application is received in January fora crop that will be planted in May, itwould be necessary to delay theinspection until late May or June toobserve the crop in the field. Thecommenter went on to say that thealternative would be to conduct theinitial inspection before the crop isplanted, in order to meet the ‘‘within areasonable time’’ requirement, and thenconduct a reinspection during thegrowing season. The commenterrecommended amending section205.403(b) to allow the certifying agentto delay the initial on-site inspectionuntil the land, facilities, and activitiesthat demonstrate compliance or capacityto comply can be observed.

We have accepted therecommendation because there may besituations where a later on-siteinspection will prove mutuallybeneficial to the certifying agent and theoperation to be inspected. However,certifying agents are reminded that theoperation may be certified following ademonstration that the operation is ableto comply with the organic productionand handling requirements found insubpart C of these regulations.Accordingly, certifying agents should



not unnecessarily delay the certificationof an organic production or handlingoperation by insisting that theinspection only be performed when theoperation can demonstrate its actualcompliance with the organic productionand handling requirements. Applicantswho believe that the certifying agent isabusing its authority to delay the on-siteinspection may file a complaint with theAdministrator.

We have also amended the secondsentence in section 205.403(b) byinserting the word, ‘‘all,’’ and removingboth references to ‘‘applicant’’ to clarifythat the provision applies to all on-siteinspections.

(7) Exit Interview. We have amendedsection 205.403(d) by requiring that theinspector conduct an exit interviewwith ‘‘an authorized representative ofthe operation who is knowledgeableabout the inspected operation’’ ratherthan ‘‘an authorized representative ofthe inspected operation’’ as required inthe proposed rule. This amendment isconsistent with the requirement insection 205.403(b) that an on-siteinspection be conducted when anauthorized representative of theoperation who is knowledgeable aboutthe operation is present.

A commenter requested that wedefine ‘‘authorized representative.’’Another commenter recommendedchanging the term, ‘‘authorizedrepresentative,’’ to ‘‘responsibleexecutive.’’ Our amendment of section205.403(d) responds to both of thesecomments by clarifying thequalifications of an authorizedrepresentative.

A third commenter stated that an exitinterview is not a practical requirementand that an initial interview is oftenpreferred. The commenter stressed thatverification that the inspector hascorrectly understood what is presentedis ongoing. This commenter alsoexpressed the belief that there may betimes when it may not be appropriatefor the inspector to address issues ofconcern and that such issues may bebest left to the certifying agent. Thecommenter recommended that therequirement for an exit interview bedeleted or presented as an option.Another commenter suggested thatissues of concern are often identifiedand discussed with the operation’srepresentative during the course of theinspection. This commenter believesthat it is unnecessarily confrontationalto require an exit interview duringwhich these issues of concern arerepeated. This commenterrecommended replacing the requiredexit interview with a communicationsprovision that would require the

inspector to discuss the need for anyadditional information as well as anyissues of concern. The recommendedprovision would also authorize thecertifying agent to provide the applicantwith a summary of the inspector’s areasof concern.

While we agree that the language insection 205.403(d) needed clarification,we do not agree that the exit interviewis impractical or unnecessarilyconfrontational. The exit interview isintended to give the inspector anopportunity to confirm the accuracy andcompleteness of inspection observationsand information gathered during the on-site inspection, to request anyadditional information necessary toestablish eligibility for certification, andto raise and discuss any known issuesof concern. Issues of concern that mayinvolve compliance issues will behandled as authorized by the certifyingagent. The exit interview is alsointended to give the inspectedoperation’s authorized representativegeneral information concerning theinspector’s observations. Such exitinterviews are required under ISOGuide 10011–1. Accordingly, requiringexit interviews is consistent with ISOstandards and our expectation, as statedearlier in this preamble, that certifyingagents benchmark their on-siteinspection procedures to ISO Guide10011–1.

(8) On-site Inspection Documentation.We have amended section 205.402(b) byadding the requirements that thecertifying agent: (1) provide theapplicant with a copy of the on-siteinspection report, as approved by thecertifying agent, for any on-siteinspection performed and (2) providethe applicant with a copy of the testresults for any samples taken by aninspector. We have also amendedsection 205.403 by adding a newparagraph (e) that requires the inspector,at the time of the inspection, to providethe operation’s authorizedrepresentative with a receipt for anysamples taken by the inspector. Thisnew paragraph also addresses therequirement that the certifying agentprovide the operation inspected with acopy of the inspection report and anytest results. Having the certifying agentissue the on-site inspection report to theoperation inspected is consistent withISO Guide 65, section 11(b).

Several commenters recommendedthat section 205.403 be amended torequire that the inspector issue a copyof the on-site inspection report to theoperation at the exit interview. Theyalso recommended that the inspector berequired to provide the operation witha receipt for samples collected for

testing. The commenters, further,recommended that the certifying agentbe required to provide the operationwith a written report on the results ofthe testing performed on the samplestaken. A commenter also recommendedthat the operation be paid for anysamples taken. One of the commentersrecommended that section 205.403 beamended by adding protocol for an exitinterview.

We concur that the applicant forcertification and certified operationsshould be provided with a copy of theon-site inspection report, a receipt forsamples taken, and a copy of the testresults for samples taken. Accordingly,we have amended sections 205.402(b)and 205.403 as noted above.

The protocol for an exit interview willbe set forth in the certifying agent’sprocedures to be used to evaluatecertification applicants, makecertification decisions, and issuecertification certificates. The NOP isavailable to respond to questions and toassist certifying agents in thedevelopment of these procedures whichare required under section205.504(b)(1). Accordingly, AMS is notamending the section to include aprotocol for exit interviews. AMS is alsonot including a requirement that thecertifying agent pay the applicant forsamples taken, since such chargeswould just be charged back to theapplicant as a cost for processing theapplicant’s application for certification.

(9) Granting Certification. We haveamended the last sentence of section205.404(a) by removing the word,‘‘restrictions,’’ and replacing it with‘‘requirements for the correction ofminor noncompliances within aspecified time period.’’ A commentersuggested that the last sentence ofsection 205.404(a) be amended to read:‘‘The approval may include restrictionsor requirements as a condition ofcontinued certification, which includesa time line for fulfilling therequirement.’’ Another commenterrequested that we define ‘‘restrictions.’’This commenter also recommendedamending section 205.404(a) to clarifythe meaning of ‘‘restrictions’’ and torequire corrective action by the operatorwithin a specific time period. We agreewith the commenters that the lastsentence of section 205.404(a) was inneed of further clarification. We alsoagree that it is appropriate for theregulations to require that therequirements for correction include aspecified time period within which thecorrections must be made. Accordingly,we amended section 205.404(a) as notedabove. The certifying agent will makethe determination of whether a violation



of the Act and regulations is minor.Minor noncompliances are thoseinfractions that, by themselves, do notpreclude the certification or continuedcertification of an otherwise qualifiedorganic producer or handler. Thecertifying agent would be free to modifythe time period for correction should itbelieve it to be appropriate.

We have also made editorial changesto section 205.404(a) consistent withsuggestions we received on section205.506. In the title to section 205.404we have replaced ‘‘Approval of’’ with‘‘Granting.’’ In section 205.404(a) wehave replaced ‘‘approve’’ with ‘‘grant’’and ‘‘approval’’ with ‘‘certification.’’This change makes the language insection 205.404 consistent with ISOGuide 65, section 4.6, which addressesthe granting of certification.

(10) Payment of Fees. We haveamended the introductory statementwithin section 205.406(a) by adding therequirement that, to continuecertification, a certified operationannually pay the certifying agent’scertification fees. A commenterrecommended amending section205.404(c) by adding a sentenceproviding that a certified operation’sfailure to pay the certifying agent’scertification fees may be a cause forsuspension or revocation ofcertification. We agree that the issue ofpayment of fees should be addressed butnot in section 205.404(c), which dealswith the duration of a certifiedoperation’s certification. We believe theissue of payment of certification fees ismore appropriately addressed in section205.406, which deals with continuationof certification. Accordingly, we haveamended section 205.406(a) to requirepayment of the certifying agent’s fees asa condition of continued certification.This addition would allow a certifyingagent to initiate suspension orrevocation proceedings against anyoperation that fails to pay the requiredfees. The certifying agent is not requiredto initiate suspension or revocationproceedings for failure to pay the fees.In fact, the certifying agent isencouraged to use one or more of thelegal debt collection alternativesavailable to it.

(11) Denial of Certification. We haveamended section 205.405 to includenoncompliance and resolutionprovisions originally included by cross-reference to section 205.662(a). We havemade this amendment in response to acomment that these regulations do notprovide an opportunity for a hearingupon denial of certification. We disagreewith the commenter’s assessment buthave amended section 205.405(a) toeliminate confusion that may result

from the cross-reference to section205.662(a). We have determined thatsection 205.662(a) may cause confusionfor certification applicants because thesection does not specifically addressapplicants.

As amended, section 205.405(a)required a written notification ofnoncompliance that describes eachnoncompliance, the facts on which thenoncompliance is based, and the date bywhich the applicant must rebut orcorrect each noncompliance and submitsupporting documentation of each suchcorrection when correction is possible.Section 205.405(b) lists the optionsavailable to the applicant, including theoptions of correcting the noncomplianceor submitting written information torebut the noncompliance. Successfulcorrection or rebuttal will result in anapproval of certification. When thecorrective action or rebuttal is notsufficient for the applicant to qualify forcertification, the certifying agent willissue a written notice of denial ofcertification. This notice will state thereason(s) for denial and the applicant’sright to request mediation in accordancewith section 205.663 or to file an appealin accordance with section 205.681.

(12) Rebuttal of a Noncompliance. Wehave amended section 205.405(b)(3) toclarify that rebuttal of a noncomplianceshall be submitted to the certifyingagent that issued the notification ofnoncompliance. We made thisamendment in response to acommenter’s question about who hasauthority to evaluate a written rebuttal.

(13) Correction of MinorNoncompliances. We have amendedsection 205.406(a) by adding a newparagraph (3) which requires thecertified operation to include with itsannual reporting an update on thecorrection of minor noncompliancespreviously identified by the certifyingagent as requiring correction forcontinued certification. A commenterrecommended adding at 205.406(a) arequirement that the certified operationaddress any restrictions that have beenapplied to its certification under205.404(a). We agree with thecommenter that the annual reporting bythe certified operation should includean update addressing the certifiedoperation’s compliance with thecertifying agent’s requirements for thecorrection of minor noncompliances.Accordingly, we amended section205.406(a) as noted above andredesignated paragraph (3) as paragraph(4). The certifying agent will make thedetermination of whether a violation ofthe Act and regulations is minor. Minornoncompliances are those infractionsthat, by themselves, do not preclude the

certification or continued certificationof an otherwise qualified organicproducer or handler.

(14) Scheduling Annual On-siteInspections. We have amended section205.406(b) to provide that, when it isimpossible for the certifying agent toconduct the annual on-site inspectionfollowing receipt of the certifiedoperation’s annual update ofinformation, the certifying agent mayallow continuation of certification andissue an updated certificate of organicoperation on the basis of theinformation submitted and the mostrecent on-site inspection conductedduring the previous 12 months. Theannual on-site inspection, required bysection 205.403, must, however, beconducted within the first 6 monthsfollowing the certified operation’sscheduled date of annual update.

A commenter expressed the belief thatthe requirement for an on-siteinspection after receipt of the certifiedoperation’s annual update ofinformation would have required thatall annual on-site inspections beperformed at the same time of the year.The commenter went on to express thebelief that, to avoid inspecting certifiedoperations twice a year, certifyingagents would have to schedule theannual update to occur during thegrowing season in order to comply withthe requirement for timing inspectionswhen normal production activities canbe observed. The commenter stated thatcertifying agents should be given moreflexibility for scheduling inspectionsand conducting their certificationprograms according to managementprocedures best suited to their agency.The commenter recommendedamending section 205.406(b) by addingto the end thereof: ‘‘or base the decisionregarding eligibility for renewal on anon-site inspection conducted during theprevious 12 months.’’

We agree with the commenter thatcertifying agents should be given moreflexibility for scheduling on-siteinspections so as to best meet themanagement needs of the certifyingagent. Accordingly, we have amendedsection 205.406(b) to allow continuationof certification and issuance of anupdated certificate of organic operationon the basis of the informationsubmitted and the most recent on-siteinspection conducted during theprevious 12 months. This option will beavailable to the certifying agent whenrenewal is scheduled for a time when itis impossible to conduct the annual on-site inspection following receipt of theannual update and at a time when land,facilities, and activities that demonstratethe operation’s compliance or capability



to comply can be observed. This changedoes not affect the requirement insection 205.403(a)(1) that the certifyingagent conduct an annual on-siteinspection of each certified operation.Further, the annual on-site inspectionmust be conducted within the first 6months following the certifiedoperation’s scheduled date of annualupdate.

Certification—Changes Requested ButNot Made


(1) Number of On-site Inspections. Acommenter recommended that section205.403(a)(1) be amended by adding arequirement that production operationsbe under active organic management forthe last year of the 3-year landconversion period and that two on-siteinspections be performed prior toorganic certification.

Section 205.403(a)(1) provides thatthe certifying agent must conduct aninitial on-site inspection of eachproduction unit, facility, and site thatproduces or handles organic productsand that is included in an operation forwhich certification is requested. Therequirement does not preclude acertifying agent from conductingadditional on-site inspections, ifnecessary, to establish the applicant’seligibility for certification. The Actrequires a 3-year period immediatelypreceding harvest, during which theproduction operation must be free fromthe application of prohibitedsubstances. The Act does not, however,require that land be under active organicmanagement during this period, and wedo not believe such a requirement inthese regulations is necessary. Such arequirement, for example, wouldnecessitate some process for verifyingthat an operation is under active organicmanagement, which would, in effect,require a certification-type decision ayear before certification is granted andthe operation can begin to labelproducts as certified organic.Accordingly, we disagree with thecommenter’s recommendation that anoperation be under active organicmanagement for the last year of the 3-year land conversion and that two on-site inspections be required.

(2) Unannounced Inspections. Acommenter recommended that section205.403(a)(2)(iii) be amended to requireadditional unannounced inspectionseither by defining the circumstancesunder which the inspections should beundertaken or by setting a minimumpercentage of unannounced inspections.The commenter claimed that 5 percent

is a common percentage adopted bycertifying agents around the world.

Section 205.403 requires an initial on-site inspection, annual on-siteinspection, and additional on-siteinspections to determine compliancewith the Act and regulations, to verifythat information provided reflects actualpractices, and to verify, through testingif necessary, that prohibited substancesare not used by the operation. Becauseof the widely disparate nature ofcertified operations, we believe thecertifying agent is in the best position todetermine the need for additional on-site inspections. Accordingly, we haverejected the commenter’s request thatthe regulations require additionalunannounced visits either by definingthe circumstances under which theseshould be undertaken or by setting aminimum percentage.

(3) Timeliness of Certifying AgentReview Information. A commenterrequested that section 205.404(a) beamended to specify a timeframe of 60days rather than ‘‘Within a reasonabletime’’ as the time by which thecertifying agent must review the on-siteinspection report, the results of anyanalyses for substances, and anyadditional information requested fromor supplied by the applicant.

Section 205.404(a) requires thecertifying agent, within a reasonabletime after completion of the initial on-site inspection, to review the on-siteinspection report, the results of anyanalyses for substances conducted, andany additional information requestedfrom or supplied by the applicant.Section 205.504(b)(1) requires thecertifying agent to submit a copy of theprocedures to be used to evaluatecertification applicants, makecertification decisions, and issuecertification certificates. Suchprocedures and the certifying agent’sperformance in making timelycertification decisions will be subject toreview during accreditation andreaccreditation of the certifying agent.Certifying agents are expected to maketimely decisions regarding whether tocertify an applicant and whether acertified operation is in compliancewith the Act and regulations.Applicants with complaints regardingtimeliness of service could forward theircomplaints to the Administrator.Accordingly, timely service will be inthe best interest of certifying agentssince such complaints could have animpact on their reaccreditation orcontinued accreditation. Further, ouroriginal position is consistent withthose commenters requesting flexibilityin determining what constitutesreasonable time. Accordingly, we have

not amended section 205.404(a) asrequested.

(4) Categories of Organic Operation.We received a variety of commentsregarding the requirement that thecertifying agent issue a certificate oforganic operation which specifies thecategories of organic operation,including crops, wild crops, livestock,or processed products produced by thecertified operation. One commenterrecommended that section 205.404(b)(3)be amended, with regard to processing,to only require a processing category tobe specified on the certificate, such asfood processing or feed processing. Thecommenter stated that it should not benecessary to list every product on thecertificate. Specifically, the commenterrecommended amending section205.404(b)(3) by inserting the words,‘‘general categories of,’’ immediately infront of the word, ‘‘processed.’’ Anothercommenter recommended amendingsection 205.404(b)(3) to require theidentity of specific crops and thespecific processing operations certified.Still another commenter requested thatsection 205.404(b) be amended byadding a new paragraph requiring thatthe certificate include the number oflivestock of each species produced onthe certified operation. This samecommenter also recommended theaddition of a new paragraph requiringthat the certificate identify the specificlocation of each certified organic fieldand handling operation. We alsoreceived support for section205.404(b)(3) as written. Thiscommenter does not support theaddition of information regarding thenumber of livestock or the location offields.

We disagree with the suggestion thatthe certificate list every crop, wild crop,livestock, or processed productproduced by the certified operation. Webelieve that listing categories of organicoperation is sufficient. This does not,however, prevent the certifying agent, incooperation with the certified operation,from listing specific crops, livestock, orprocessed products on the certificate.Such information could always be listedon the certificate when requested by thecertified operation. We also disagreewith the commenter who requested thatcertifying agents display the number oflivestock of each species produced bythe certified operation and the specificlocation of each certified organic fieldand handling operation. We do notbelieve it is necessary to list thequantity of product to be produced orhandled at a certified operation, nor dowe believe it is necessary to list thelocation of a certified operation’s fieldsor facilities. Such information may,



however, be listed on the certificateupon the written request of the certifiedoperation. By requiring the name,address, and telephone number of thecertifying agent, the certificate wouldprovide interested persons with acontact for obtaining releasableinformation concerning the certifiedoperation. Further, the certifying agentis the first line of compliance under thisprogram and, as such, is the person towhom all questions and concernsshould be addressed about certifiedoperations.

(5) Annual Renewal of Certification.Numerous commenters requested thatsection 205.404(b)(2) be amended toprovide for the placement of anexpiration date on the certificate oforganic operation. The commenterswant yearly expiration of certificationand yearly expiration of the certificateof organic operation. Commenters alsorequested that section 205.404(c) beamended to provide that once certified,a production or handling operation’sorganic certification continues in effectuntil the expiration date on thecertificate, until surrendered by theorganic operation, or until suspended orrevoked by the certifying agent, theSOP’s governing State official, or theAdministrator. Some commentersrecommended the addition of a newparagraph 205.406(e) that wouldprovide for automatic suspension of acertification if the certified operationdid not provide the informationrequired in paragraph 205.406(a) by theexpiration date to be placed on thecertificate of organic operation.

We disagree with the commenterswho have requested annual renewal ofcertification and that the certifiedoperation’s certification and itscertificate of organic operation expireannually. We prefer continuouscertification due to the very realpossibility that the renewal processmight not always be completed beforeexpiration of the certification period.Expiration of the certification periodwould result in termination of theoperation’s certification. Even a shortperiod of interruption in an operation’sorganic status could have severeeconomic ramifications. Further, webelieve that a regular schedule ofexpiration of certification isunnecessary inasmuch as all certifiedoperations are required to annuallyupdate their organic system plan andsubmit any changes to their certifyingagent. More importantly, unlikeaccreditation, where the Act providesfor expiration and renewal, the Act doesnot provide for an expiration or renewalof certification. Therefore, it is also ourposition that once granted certification

the production or handling operationretains that certification untilvoluntarily surrendered or removed,following due process, for violation ofthe Act or these regulations.

(6) Denial of Certification. Acommenter recommended that section205.405(e) be amended to place a timerestriction on reapplication forcertification after denial of certification.The commenter suggested a 3-yearperiod. We disagree with thisrecommendation because the reasons fordenial include a wide range ofnoncompliances. The ability to correctnoncompliances will vary as will thetime needed to correct thenoncompliances.

(7) Production and HandlingOperation Certification FollowingSuspension or Revocation of CertifyingAgent Accreditation. A few commentersrequested amendment of section205.406 through the addition of a newparagraph (f). Specifically, thecommenters requested provisions thatwould provide for USDA notification ofcertified operations regarding thesuspension or revocation of theircertifying agent’s accreditation. Some ofthese commenters requested that theprovisions also allow the affectedcertified operation to use current marketlabels for a maximum period of 12months, provided the certified operationmade application for certification withanother USDA-accredited certifyingagent within 3 months of being notifiedof their certifying agent’s suspension orrevocation of accreditation. Anothercommenter requested that the newparagraph provide that the affectedcertified operation will continue tooperate as if certified by the USDA andwill be allowed to use current marketlabels for a maximum period of 12months. The commenter stated that thisamendment would provide the certifiedoperation with the time needed toobtain recertification by an accreditedcertifying agent and to prepare newlabels.

We disagree with therecommendations. USDA does notperform organic certification activitiesunder any circumstance, includingupon surrender, suspension, orrevocation of an accredited certifyingagent’s accreditation. Operationscertified by a certifying agent thatsurrenders or loses its USDAaccreditation will be notified by USDAand given an opportunity toimmediately begin seeking certificationby the USDA-accredited certifying agentof their choice. Certified operationsshall not affix the seal or otherrepresentation of a certifying agent toany product that they produce after the

certifying agent has surrendered or hadits accreditation revoked. The certifiedoperation may use the USDA organicseal. In the case of suspension of thecertifying agent, the reasons for thesuspension and the terms of thesuspension will determine whether thecertifying agent’s certified operationswill have to seek recertification or stopaffixing the certifying agent’s seal orother representation to their products.USDA will announce the suspension orrevocation of a certifying agent’saccreditation, and the announcementwill address the status of operationscertified by the certifying agent.

Certification—ClarificationsClarification is given on the following

issues raised by commenters as follows:(1) Recordkeeping. A commenter

stated that most computerizedrecordkeeping systems used at retail andwholesale are set up to save the data fora maximum of 2 years; adding 3additional years to that requirementwould be extremely costly as systemsmodifications and additional hardwareand support would be required to meetthe mandate. The commenter suggestedthat since food product is generally soldand consumed within a matter ofmonths (if not weeks), shortening thisrequirement to 2 years should meet thegoal for tracking of any product throughthe distribution system. This commenterwas referring to the requirement insection 205.400(d) that records bemaintained for not less than 5 yearsbeyond their creation.

Section 205.103 requires that acertified operation maintain records;that the records be adapted to theparticular business that the certifiedoperation is conducting, fully discloseall activities and transactions of thecertified operation in sufficient detail asto be readily understood and audited, bemaintained for not less than 5 yearsbeyond their creation, and be sufficientto demonstrate compliance with the Actand the regulations in this part; and thatthe certified operation must make suchrecords available for inspection andcopying during normal business hoursby authorized representatives of theSecretary, the applicable SOP’sgoverning State official, and thecertifying agent. The requirements donot state in what form (i.e., paper,electronic, film) that the records must bemaintained. Therefore, in answer to thecommenter’s concern, database recordsmore than 2 years old could be storedin any form, including on an electronicstorage device, which would permitretrieval upon request.

(2) Application Fees. A commenterrecommended that section 205.401 be



amended by adding a new paragraph (e)which would require an applicant forcertification to include, along with theother required application information,the application fees required by thecertifying agent.

The requested language isunnecessary because section 205.400(e)requires submission of the applicablefees charged by the certifying agent asa general requirement for certification.

(3) Applicant Identification. Inreference to section 205.401(c) acommenter stated that an applicant thatis a corporation could easily change thename of the corporation in order toavoid having to report applicationssubmitted and denied under theprevious name. The commenter went onto state that there must be a databaseavailable to certifying agents thatincludes names and location addressesof operations that have received anotification of noncompliance, denial ofcertification, or a suspension orrevocation of certification.

Section 205.401(b) requires theapplicant to include in its applicationthe name of the person completing theapplication; the applicant’s businessname, address, and telephone number;and, when the applicant is acorporation, the name, address, andtelephone number of the personauthorized to act on the applicant’sbehalf.

As we stated in the preamble to theproposed rule, we anticipate using thedata collected under section205.501(a)(15) to establish and maintaintwo Internet databases. The first Internetdatabase would be accessible to thegeneral public and would include thenames and other appropriate data oncertified organic production andhandling operations. The secondInternet database would be passwordprotected and only available toaccredited certifying agents and USDA.This second database would includedata on production and handlingoperations issued a notification ofnoncompliance, noncompliancecorrection, denial of certification,certification, proposed suspension orrevocation of certification, andsuspension or revocation ofcertification. Certifying agents woulduse the second Internet database duringtheir review of an application forcertification.

(4) Withdrawal of Application.Several commenters expressed the beliefthat allowing an applicant to voluntarilywithdraw its application will be used asa tool to avoid denial of certification.They expressed concern that voluntarywithdrawal before denial of certificationwill allow the applicant to make

application with a different certifyingagent with a clean record. Thesecommenters were responding to theprovision in section 205.402(e) whichallows an applicant for certification towithdraw its application at any time.

We continue to believe thatoperations should not be unnecessarilystigmatized because they applied forcertification before the operation wasready to meet all requirements forcertification. While some operationsmay use voluntary withdrawal as ameans to avoid the issuance of anotification of noncompliance or anotice of denial of certification, thisshould not adversely affect the NationalOrganic Program (NOP) because allcertifying agents are responsible forusing qualified personnel in thecertification process and for ensuring anapplicant’s eligibility for certification.Further, all applicants for certificationare required under section 205.401(c) toinclude in their application the name(s)of any organic certifying agent(s) towhich application has previously beenmade, the year(s) of application, and theoutcome of the application(s)submission.

(5) On-site Inspections. Section205.403(a)(2)(ii) provides that theAdministrator or SOP’s governing Stateofficial may require that additionalinspections be performed by thecertifying agent for the purpose ofdetermining compliance with the Actand the regulations in this part. Incommenting on this provision, acommenter asked, ‘‘Who is running thisprogram: State or Federal officials?’’

This is a national organic programadministered by the AgriculturalMarketing Service of the United StatesDepartment of Agriculture. States mayadminister their own organic program.However, all SOP’s are subject to USDAapproval. The National OrganicStandards and a State’s organicstandards under a USDA-approved SOPare the National Organic Standards forthat State. The State, under USDA’sapproval of the SOP, has enforcementresponsibilities for the Federal and Statecomponents of the organic programwithin the State.

(6) Verification of Information. Acommenter stated that section205.403(c) is insufficientlycomprehensive. The commenter statedthat organic inspection is assessment ofa process evaluated againstcomprehensive standards and, as such,it requires specific rules to provideconfidence in the quality of theinspection. The commenterrecommended amending section205.403(c) by including requirements onminimum verification methods.

Section 205.403(c) identifies whatmust be verified during the on-siteinspection. The details on how theverification will be accomplished willbe set forth in the certifying agent’sprocedures to be used to evaluatecertification applicants, makecertification decisions, and issuecertification certificates and thecertifying agent’s procedures forreviewing and investigating certifiedoperation compliance with the Act andregulations. The NOP is available torespond to questions and to assistcertifying agents in complying with theon-site inspection requirements,including those for the verification ofinformation.

(7) Notifying Customers of Change inCertification Status. A commenter statedthat the regulations do not indicatewhen a certified organic producer muststop using the organic seal or whetherthey must notify customers of theirdenial of certification. The commenterrecommended amending section205.405 to include a provision fornotifying customers of a certifiedoperation’s change in certificationstatus.

Any producer or handler who plans tosell, label, or represent its product as‘‘100 percent organic,’’ ‘‘organic,’’ or‘‘made with * * *’’ must be certifiedunless exempted under the smalloperation exemption under section205.101(a)(1) or not regulated under theNOP (i.e., a producer of dog food). Onlycertified operations may representthemselves as certified. Operationsdenied certification may not representtheir products as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with * * *’’Operations that have had theircertification suspended or revoked willbe subject to the terms and conditionsof their suspension or revocationrelative to the labeling of productproduced prior to the suspension orrevocation. No product produced by anoperation after suspension or revocationof certification may be sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with * * *’’

Buyers of organic product can requestto see the producer’s or handler’scertificate of organic operation.Operations that have lost their organicstatus will be unable to obtain anupdated certificate. Buyers withquestions regarding an operation’sorganic status may also contact thecertifying agent identified on acertificate of organic operation. Further,as previously noted, we anticipate usingthe data collected under section205.501(a)(15) to establish and maintainan Internet database accessible to thegeneral public that will include the



2 ISO/IEC Guide 65 is available for viewing atUSDA–AMS, Transportation and MarketingPrograms, Room 2945–South Building, 14th andIndependence Ave., SW., Washington, DC, from9:00 a.m. to 4:00 p.m., Monday through Friday(except official Federal holidays). A copy may beobtained from the American National StandardsInstitute, 11 West 42d Street, New York, NY 10036;Website: www.ansi.org; E-mail:[email protected]; Telephone: 212–642–4900;Facsimile: 212–398–0023.

names and other appropriate data oncertified organic production andhandling operations.

(8) Continuation of Certification. Afew commenters recommendedamending section 205.406 to include asafety net for producers who arecertified by a certifying agent that doesnot become accredited by USDA. Theystated that the rule must clearly statethat a certified organic producer willhave the full 18-month implementationperiod starting from the effective date ofthe final rule to get recertified if theircertifying agent is not accredited. One ofthe commenters stated that because theNOP anticipates that the accreditationprocess will require 12 months,producers will, in effect, have 6 monthsto be certified by a new certifying agentshould the producer’s certifying agentnot be accredited.

Certification under the NOP willbecome mandatory 18 months after theeffective date of the final rule.Applications for accreditation will beprocessed on a first-come, first-servedbasis. Accreditations will be announcedapproximately 12 months after theeffective date of the final rule for thosequalified certifying agents who applywithin the first 6 months following theeffective date and for any otherapplicants that AMS determineseligible. Certifying agents will begin theprocess of certifying organic productionand handling operations to the nationalstandards upon receipt of their USDAaccreditation. All production andhandling operations certified by anaccredited certifying agent will beconsidered certified to the nationalstandards until the certified operation’sanniversary date of certification. Thisphase-in period will only be available tothose certified operations certified by acertifying agent that receives itsaccreditation within 18 months from theeffective date of the final rule. Weanticipate that certifying agents andproduction and handling operationswill move as quickly as possible tobegin operating under the nationalorganic standards. Operations certifiedby a certifying agent, which fails toapply for or fails to meet therequirements for USDA accreditationunder the NOP, must seek and receivecertification by a USDA-accreditedcertifying agent before they can sell,label, or represent their products asorganic, effective 18 months after theeffective date of the final rule.

Subpart F—Accreditation of CertifyingAgents

This subpart sets forth therequirements for a national program toaccredit State and private entities as

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

This National Organic Program (NOP)accreditation process will facilitatenational and international acceptance ofU.S. organically produced agriculturalcommodities. The accreditationrequirements in these regulations will,upon announcement of the first group ofaccredited certifying agents, replace thevoluntary fee-for-service organicassessment program, established byAMS under the Agricultural MarketingAct of 1946. That assessment programverifies that State and private organiccertifying agents comply with therequirements prescribed under theInternational Organization forStandardization/InternationalElectrotechnical Commission Guide 65,‘‘General Requirements for BodiesOperating Product CertificationSystems’’ (ISO Guide 65).2 ISO Guide 65provides the general requirements that acertifying agent would need to meet tobe recognized as competent and reliable.That assessment program was originallyestablished to enable organic certifyingagents in the absence of a U.S. nationalorganic program to comply withEuropean Union (EU) requirementsbeginning on June 30, 1999. Thatassessment program verifies that Stateand private organic certifying agents areoperating third-party certificationsystems in a consistent and reliablemanner, thereby facilitatinguninterrupted exports of U.S. organicagricultural commodities to the EU. ISOGuide 65 was used as a benchmark indeveloping the accreditation programdescribed in this final rule. Certifyingagents accredited under the NOP that

maintain compliance with the Act andthese regulations will meet or exceedthe requirements of ISO Guide 65;therefore, the organic assessmentprogram is no longer needed.

Participation in the NOP does notpreclude the accredited certifying agentfrom conducting other businessoperations, including the certification ofagricultural products, practices, andprocedures to standards that do notmake an organic claim. An accreditedcertifying agent may not, however,engage in any business operations oractivities which would involve theagent in a violation of or in a conflictof interest under the NOP.

Description of RegulationsThe Administrator will accredit

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

Application ProcessCertifying agents will apply to the

Administrator for accreditation tocertify production or handlingoperations operating under the NOP.The certifying agent’s application mustinclude basic business information,must identify each area of operation forwhich accreditation is requested and theestimated number of each type ofoperation to be certified annually, andmust include a list of each State orforeign country where it currentlycertifies production or handlingoperations and where it intends tocertify such operations. Certifyingagents must also submit personnel,administrative, conflict of interest,current certification, and otherdocuments and information todemonstrate their expertise in organicproduction or handling techniques,their ability to comply with andimplement the organic certificationprogram, and their ability to complywith the requirements for accreditation.Certifying agents planning to certifyproduction or handling operationswithin a State with an approved Stateorganic program (SOP) mustdemonstrate their ability to comply withthe requirements of the SOP.

The administrative informationsubmitted by the applicant must includecopies of its procedures for certifyingoperations, for ensuring compliance ofits certified operations with the Act andregulations, for complying withrecordkeeping requirements, and formaking information available to the



public about certified operations. Theprocedures for certifying operationsencompass the processes used by thecertifying agent to evaluate applicants,make certification decisions, issuecertification certificates, and maintainthe confidentiality of any businessinformation submitted by the certifiedoperation. The procedures for ensuringcompliance of the certified operationswill include the methods used to reviewand investigate certified operations, forsampling and residue testing, and toreport violations.

The personnel information submittedwith the application must demonstratethat the applicant uses a sufficientnumber of adequately trained personnelto comply with and implement theorganic certification program. Thecertifying agent will also have toprovide evidence that its responsiblyconnected persons, employees, andcontractors with inspection, analysis,and decision-making responsibilitieshave sufficient expertise in organicproduction or handling techniques tosuccessfully perform the dutiesassigned. They must also show that allpersons who review applications forcertification perform on-siteinspections, review certificationdocuments, evaluate qualifications forcertification, make recommendationsconcerning certification, or makecertification decisions and that allparties responsibly connected to thecertifying agent have revealed existingor potential conflicts of interest.

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

Certifying agents are prohibited fromgiving advice or providing consultancyservices to certification applicants orcertified operations for overcomingidentified barriers to certification. Thisrequirement does not apply to voluntaryeducation programs available to thegeneral public and sponsored by thecertifying agent.

The Administrator will provideoversight of the fees to ensure that theschedule of fees filed with theAdministrator is applied uniformly andin a nondiscriminatory manner. TheAdministrator may inform a certifyingagent that its fees appear to be

unreasonable and require that thecertifying agent justify the fees. TheAdministrator will investigate the levelof fees charged by an accreditedcertifying agent upon receipt of a validcomplaint or under compellingcircumstances warranting such aninvestigation.

Statement of AgreementUpon receipt of the certifying agent’s

application for accreditation, theAdministrator will send a statement ofagreement to the person responsible forthe certifying agent’s day-to-dayoperations for signature. The statementof agreement affirms that, if grantedaccreditation as a certifying agent underthis subpart, the applicant will carry outthe provisions of the Act and theregulations in this part. Accreditationwill not be approved until thisstatement is signed and returned to theAdministrator.

The statement of agreement willinclude the applicant’s agreement toaccept the certification decisions madeby another certifying agent accredited oraccepted by USDA pursuant to section205.500 and the applicant’s agreementto refrain from making false ormisleading claims about itsaccreditation status, the USDAaccreditation program, or the nature orqualities of products labeled asorganically produced. Further, thestatement will include the applicant’sagreement to pay and submit the feescharged by AMS and to comply with,implement, and carry out any otherterms and conditions determined by theAdministrator to be necessary.Applicants are also required to affirmthrough this statement of agreement thatthey will: (1) conduct an annualperformance evaluation of all personswho review applications forcertification, perform on-siteinspections, review certificationdocuments, evaluate qualifications forcertification, make recommendationsconcerning certification, or makecertification decisions and implementmeasures to correct any deficiencies incertification services; and (2) have anannual program review conducted oftheir certification activities by theirstaff, an outside auditor, or a consultantwho has expertise to conduct suchreviews and implement measures tocorrect any noncompliances with theAct and the regulations in this part thatare identified in the evaluation.

A private entity certifying agent mustadditionally agree to hold the Secretaryharmless for any failure on the agent’spart to carry out the provisions of theAct and regulations. A private entitycertifying agent’s statement will also

include an agreement to furnishreasonable security for the purpose ofprotecting the rights of operationscertified by such certifying agent. Suchsecurity will be in an amount andaccording to such terms as theAdministrator may by regulationprescribe. A private entity certifyingagent must agree to transfer all recordsor copies of records concerning itscertification activities to theAdministrator if it dissolves or loses itsaccreditation. This requirement for thetransfer of records does not apply to amerger, sale, or other transfer ofownership of a certifying agent. Aprivate entity certifying agent must alsoagree to make such records available toany applicable SOP’s governing Stateofficial.

Granting AccreditationUpon receiving all the required

information, including the statement ofagreement, and the required fee, theAdministrator will determine if theapplicant meets the requirements foraccreditation. The Administrator’sdetermination will be based on a reviewof the information submitted and, ifnecessary, a review of the informationobtained from a site evaluation. TheAdministrator will notify the applicantof the granting of accreditation inwriting. The notice of accreditation willstate the area(s) for which accreditationis given, the effective date of theaccreditation, any terms or conditionsfor the correction of minornoncompliances, and, for a private-entity certifying agent, the amount andtype of security that must beestablished.

Certifying agents who apply foraccreditation and do not meet therequirements for accreditation will beprovided with a notification ofnoncompliance which will describeeach noncompliance, the facts on whichthe notification is based, and the date bywhich the applicant must rebut orcorrect each noncompliance and submitsupporting documentation of each suchcorrection when correction is possible.If the applicant is successful in itsrebuttal or provides acceptable evidencedemonstrating correction of thenoncompliances, the NOP ProgramManager will send the applicant awritten notification of noncomplianceresolution and proceed with furtherprocessing of the application. If theapplicant fails to correct thenoncompliances, fails to report thecorrections by the date specified in thenotification of noncompliance, fails tofile a rebuttal by the date specified inthe notification of noncompliance, or isunsuccessful in its rebuttal, the Program



3 ISO/IEC Guide 61 is available for viewing atUSDA–AMS, Transportation and MarketingPrograms, Room 2945–South Building, 14th andIndependence Ave., SW., Washington, DC, from9:00 a.m. to 4:00 p.m., Monday through Friday(except official Federal holidays). A copy may beobtained from the American National StandardsInstitute, 11 West 42d Street, New York, NY 10036;Website: www.ansi.org; E-mail:[email protected]; Telephone: 212–642–4900;Facsimile: 212–398–0023.

Manager will issue a written notificationof accreditation denial to the applicant.An applicant who has received writtennotification of accreditation denial mayapply for accreditation again at any timeor file an appeal of the denial ofaccreditation with the Administrator bythe date specified in the notification ofaccreditation denial.

Once accredited, a certifying agentmay establish a seal, logo, or otheridentifying mark to be used by certifiedproduction and handling operations.However, the certifying agent may notrequire use of its seal, logo, or otheridentifying mark on any product sold,labeled, or represented as organicallyproduced as a condition of certification.The certifying agent also may notrequire compliance with any productionor handling practices other than thoseprovided for in the Act and regulationsas a condition for use of its identifyingmark. However, certifying agentscertifying production or handlingoperations within a State with morerestrictive requirements, approved bythe Administrator, shall requirecompliance with such requirements as acondition of use of their identifyingmark by such operations.

Site EvaluationsOne or more representatives of the

Administrator will perform siteevaluations for each certifying agent inorder to examine the certifying agent’soperations and to evaluate compliancewith the Act and regulations. Siteevaluations will include an on-sitereview of the certifying agent’scertification procedures, decisions,facilities, administrative andmanagement systems, and production orhandling operations certified by thecertifying agent. A site evaluation of anaccreditation applicant will beconducted before or within a reasonabletime after issuance of the applicant’snotification of accreditation. Certifyingagents will be billed for each siteevaluation conducted in associationwith an initial accreditation,amendments to an accreditation, andrenewals of accreditation. Certifyingagents will not be billed by USDA forUSDA-initiated site evaluationsconducted to determine compliancewith the Act and regulations.

As noted above, a certifying agentmay be accredited prior to a siteevaluation. If the Program Managerfinds, following the site evaluation, thatan accredited certifying agent is not incompliance with the Act or regulations,the Program Manager will issue thecertifying agent a written notification ofnoncompliance. If the certifying agentfails to correct the noncompliances,

report the corrections by the datespecified in the notification ofnoncompliance, or file a rebuttal by thedate specified in the notification ofnoncompliance, the Administrator willbegin proceedings to suspend or revokethe accreditation. A certifying agent thathas had its accreditation suspended mayat any time, unless otherwise stated inthe notification of suspension, submit arequest to the Secretary forreinstatement of its accreditation. Therequest must be accompanied byevidence demonstrating correction ofeach noncompliance and correctiveactions taken to comply with andremain in compliance with the Act andregulations. A certifying agent whoseaccreditation is revoked will beineligible for accreditation for a periodof not less than 3 years following thedate of such determination.

Peer Review PanelsThe Administrator shall establish a

peer review panel pursuant to theFederal Advisory Committee Act(FACA) (5 U.S.C. App. 2 et seq.). Thepeer review panel shall be composed ofnot fewer than three members who shallannually evaluate the NOP’s adherenceto the accreditation procedures insubpart F of these regulations and ISO/IEC Guide 61,3 General requirements forassessment and accreditation ofcertification/registration bodies, and theNOP’s accreditation decisions. This willbe accomplished through the review of:(1) accreditation procedures, (2)document review and site evaluationreports, and (3) accreditation decisiondocuments or documentation. The peerreview panel shall report its finding, inwriting, to the NOP Program Manager.

Continuing AccreditationAn accredited certifying agent must

submit annually to the Administrator,on or before the anniversary date of theissuance of the notification ofaccreditation, the following reports andfees: (1) A complete and accurate updateof its business information, including itsfees, and information evidencing itsexpertise in organic production orhandling and its ability to comply withthese regulations; (2) informationsupporting any changes requested in theareas of accreditation; (3) a description

of measures implemented in theprevious year and any measures to beimplemented in the coming year tosatisfy any terms and conditionsspecified in the most recent notificationof accreditation or notice of renewal ofaccreditation; (4) the results of the mostrecent performance evaluations andannual program review and adescription of adjustments to thecertifying agent’s operation andprocedures implemented or to beimplemented in response to theperformance evaluations and programreview; and (5) the required AMS fees.

Certifying agents will keep theAdministrator informed of theircertification activities by providing theAdministrator with a copy of: (1) Anynotice of denial of certification,notification of noncompliance,notification of noncompliancecorrection, notification of proposedsuspension or revocation, andnotification of suspension or revocationissued simultaneously with its issuanceand (2) a list, on January 2 of each year,including the name, address, andtelephone number of each operationgranted certification during thepreceding year.

One or more site evaluations willoccur during the 5-year period ofaccreditation to determine whether anaccredited certifying agent is complyingwith the Act and regulations. USDA willestablish an accredited certifying agentcompliance monitoring program, whichwill involve no less than one randomlyselected site evaluation of eachcertifying agent during its 5-year periodof accreditation. Larger and morediverse operations, operations withclients marketing their productsinternationally, and operations with ahistory of problems should expect morefrequent site evaluations by USDA.Operations with clients marketing theirproducts internationally will beannually site evaluated to meet the ISO-Guide 61 requirement for periodicsurveillance of accredited certifyingagents. USDA may also conduct siteevaluations during investigations ofalleged or suspected violations of theAct or regulations and in followup tosuch investigations. Such investigationswill generally be the result ofcomplaints filed with the Administratoralleging violations by the certifyingagent. Compliance site evaluations maybe announced or unannounced at thediscretion of the Administrator.Certifying agents will not be billed byUSDA for USDA-initiated siteevaluations conducted to determinecompliance with the Act andregulations.



An accredited certifying agent mustprovide sufficient information topersons seeking certification to enablethem to comply with the applicablerequirements of the Act and theseregulations. The certifying agent mustmaintain strict confidentiality withrespect to its clients and not disclose tothird parties (with the exception of theSecretary or the applicable SOP’sgoverning State official or theirauthorized representatives) anybusiness-related information concerningany client obtained while implementingthese regulations except as authorizedby regulation. A certifying agent mustmake the following informationavailable to the public: (1) Certificationcertificates issued during the currentand 3 preceding calender years; (2) a listof producers and handlers whoseoperations it has certified, including foreach the name of the operation, type(s)of operation, products produced, andthe effective date of the certification,during the current and 3 precedingcalender years; and (3) the results oflaboratory analyses for residues ofpesticides and other prohibitedsubstances conducted during thecurrent and 3 preceding calender years.A certifying agent may make otherbusiness information available to thepublic if permitted in writing by theproducer or handler. This informationwill be made available to the public atthe public’s expense.

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

noncompliance correction, notificationof proposed suspension or revocation,notification of suspension or revocation,correspondence with applicants andcertified operations, on-site inspectionreports, documents concerning residuetesting, and internal working papers andmemorandums concerning applicantsand certified operations. Examples ofrecords created or received by thecertifying agent pursuant to theaccreditation requirements includeoperations manuals; policies andprocedures documents (personnel,administrative); training records; annualperformance evaluations and supportingdocuments; conflict of interestdisclosure reports and supportingdocuments; annual program reviewworking papers, memorandums, letters,and reports; fee schedules; annualreports of operations grantedcertification; application materialssubmitted to the NOP; correspondencereceived from and sent to USDA; andannual reports to the Administrator.

The certifying agent must make allrecords available for inspection andcopying during normal business hoursby authorized representatives of theSecretary and the applicable SOP’sgoverning State official. In the event thatthe certifying agent dissolves or loses itsaccreditation, it must transfer to theAdministrator and make available toany applicable SOP’s governing Stateofficial all records or copies of recordsconcerning its certification activities.This requirement for the transfer ofrecords does not apply to a merger, sale,or other transfer of ownership of acertifying agent.

Certifying agents are also required toprevent conflicts of interest and torequire the completion of an annualconflict of interest disclosure report byall persons who review applications forcertification, perform on-siteinspections, review certificationdocuments, evaluate qualifications forcertification, make recommendationsconcerning certification, or makecertification decisions and all partiesresponsibly connected to the certifyingagent. Coverage of the conflict ofinterest provisions extends toimmediate family members of personsrequired to complete an annual conflictof interest disclosure report. A certifyingagent may not certify a production orhandling operation if the certifyingagent or a responsibly connected partyof such certifying agent has or has helda commercial interest in the productionor handling operation, including animmediate family interest or theprovision of consulting services, withinthe 12-month period prior to theapplication for certification. A certifying

agent may certify a production orhandling operation if any employee,inspector, contractor, or other personnelof the certifying agent has or has helda commercial interest, including animmediate family interest or theprovision of consulting services, withinthe 12-month period prior to theapplication for certification. However,such persons must be excluded fromwork, discussions, and decisions in allstages of the certification process andthe monitoring of the entity in whichthey have or have held a commercialinterest. The acceptance of payment,gifts, or favors of any kind, other thanprescribed fees, from any businessinspected is prohibited. However, acertifying agent that is a not-for-profitorganization with an Internal RevenueCode tax exemption or, in the case of aforeign certifying agent, a comparablerecognition of not-for-profit status fromits government, may accept voluntarylabor from certified operations.Certifying agents are also prohibitedfrom giving advice or providingconsultancy services to certificationapplicants or certified operations forovercoming identified barriers tocertification. To further ensure againstconflict of interest, the certifying agentmust ensure that the decision to certifyan operation is made by a persondifferent from the person whoconducted the on-site inspection.

The certifying agent must reconsidera certified operation’s application forcertification when the certifying agentdetermines, within 12 months ofcertifying the operation, that a personparticipating in the certification processand covered under section205.501(c)(11)(ii) has or had a conflict ofinterest involving the applicant. Ifnecessary, the certifying agent mustperform a new on-site inspection. Allcosts associated with a reconsiderationof an application, including onsiteinspection costs, shall be borne by thecertifying agent. When it is determinedthat, at the time of certification, aconflict of interest existed between theapplicant and a person covered undersection 205.501(c)(11)(i), the certifyingagent must refer the certified operationto a different accredited certifying agentfor recertification. The certifying agentmust also reimburse the operation forthe cost of the recertification.

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



applications that fall within their areasof accreditation and certify all qualifiedapplicants, to the extent of theiradministrative capacity to do so,without regard to size or membership inany association or group.

Renewal of AccreditationTo avoid a lapse in accreditation,

certifying agents must apply for renewalof accreditation at least 6 months priorto the fifth anniversary of issuance ofthe notification of accreditation andeach subsequent renewal ofaccreditation. The Administrator willsend the certifying agent a notice ofpending expiration of accreditationapproximately 1 year prior to thescheduled date of expiration. Theaccreditation of certifying agents whomake timely application for renewal ofaccreditation will not expire during therenewal process. The accreditation ofcertifying agents who fail to maketimely application for renewal ofaccreditation will expire as scheduledunless renewed prior to the scheduledexpiration date. Certifying agents withan expired accreditation must notperform certification activities under theAct and these regulations.

Following receipt of the certifyingagent’s annual report and fees and theresults of a site evaluation, theAdministrator will determine whetherthe certifying agent remains incompliance with the Act andregulations and should have itsaccreditation renewed. Upon adetermination that the certifying agentis in compliance with the Act andregulations, the Administrator will issuea notice of renewal of accreditation. Thenotice of renewal will specify any termsand conditions that must be addressedby the certifying agent and the timewithin which those terms andconditions must be satisfied. Renewal ofaccreditation will be for 5 years. Upona determination that the certifying agentis not in compliance with the Act andregulations, the Administrator willinitiate proceedings to suspend orrevoke the certifying agent’saccreditation. Any certifying agentsubject to a proceeding to suspend orrevoke its accreditation may continue toperform certification activities pendingresolution of the proceedings to suspendor revoke the accreditation.

Amending AccreditationAn accredited certifying agent may

request amendment to its accreditationat any time. The application foramendment must be sent to theAdministrator and must containinformation applicable to the requestedchange in accreditation, a complete and

accurate update of the certifying agent’sapplication information and evidence ofexpertise and ability, and the applicablefees.

Accreditation—Changes Based onComments


(1) Advice and Consultancy Services.We have amended section205.501(a)(11)(iv) to clarify thatcertifying agents are to prevent conflictsof interest by not giving advice orproviding consultancy services toapplicants for certification and certifiedoperations for overcoming identifiedbarriers to certification. Thisamendment has been made in responseto a commenter who stated that theprovisions of section 205.501(a)(11)(iv),as proposed, seemed to preclude theproviding of advice and educationalworkshops and training programs. Itwas not our intent to prevent certifyingagents from sponsoring in-housepublications, conferences, workshops,informational meetings, and field daysfor which participation is voluntary andopen to the general public. Theprovisions as originally proposed and asamended are intended to prohibitcertifying agents from telling applicantsand certified operations how toovercome barriers to certificationidentified by the certifying agent. Itwould be a conflict of interest for acertifying agent to tell an operation howto comply inasmuch as the certifyingagents impartiality and objectivity willbe lost should the advice or consultancyprove ineffective in resolving thenoncompliance. The provisions ofsection 205.501(a)(11)(iv) are consistentwith ISO Guide 61.

To further clarify this issue, we havealso amended section 205.501(a)(16) byadding ‘‘for certification activities’’ afterthe word, ‘‘charges.’’

(2) Conflicts of Interest—PersonsCovered. We have amended section205.501(a)(11)(v) to limit the completionof annual conflict of interest disclosurereports to all persons who reviewapplications for certification, performon-site inspections, review certificationdocuments, evaluate qualifications forcertification, make recommendationsconcerning certification, or makecertification decisions and all partiesresponsibly connected to the certifyingagent. A commenter recommendedamending section 205.501(a)(11)(v) tohave it apply to all persons with directoversight of or participation in thecertification program rather than allpersons identified in section205.504(a)(2). Section 205.504(a)(2)includes all personnel to be used in the

certification operation, includingadministrative staff, certificationinspectors, members of any certificationreview and evaluation committees,contractors, and all parties responsiblyconnected to the certifying agent. Wehave decided that completion of annualconflict of interest disclosure reports bypersons not involved in the certificationprocess or responsibly connected to thecertifying agent is unnecessary. Asamended, section 205.501(a)(11)(v)includes all persons with theopportunity to influence the outcome ofa decision on whether to certify aspecific production or handlingoperation. Completed conflict of interestdisclosure reports will be used bycertifying agents to identify personswith interests in applicants forcertification and certified operationsthat may affect the impartiality of suchpersons.

(3) Reporting Certifications Granted.We have amended section205.501(a)(15)(ii) (formerly section205.501(a)(14)(ii)) by replacing ‘‘aquarterly calendar basis’’ with ‘‘January2 of each year.’’ A commenter statedthat the requirement that certifyingagents report certifications that theyhave granted on a quarterly basis to theAdministrator is burdensome. Thecommenter requested that section205.501(a)(14)(ii) be amended to requirea midyear or end-year reporting. Section205.501(a)(15)(ii) now requires thecertifying agent to submit a list, onJanuary 2 of each year, including thename, address, and telephone number ofeach operation granted certificationduring the preceding year. Certifyingagents can fulfill this requirement byproviding an up-to-date copy of the listof producers and handlers required tobe made available to the public bysection 205.504(b)(5)(ii).

(4) Notification of Inspector. We haveadded a new section 205.501(a)(18)requiring the certifying agent to providethe inspector, prior to each on-siteinspection, with previous on-siteinspection reports and to notify theinspector of the certifying agent’sdecision relative to granting or denyingcertification to the applicant siteinspected by the inspector. Suchnotification must identify anyrequirements for the correction of minornoncompliances. We have made thisaddition because we agree with thecommenter that such informationshould be provided to the inspector andbecause the requirements are consistentwith ISO Guide 61.

(5) Acceptance of Applications. Wehave added a new section 205.501(a)(19)requiring the certifying agent to acceptall production or handling applications



for certification that fall within thecertifying agent’s areas of accreditationand to certify all qualified applicants, tothe extent of their administrativecapacity to do so, without regard to sizeor membership in any association orgroup. We have made this additionbecause we agree with the manycommenters who requested thatcertifying agents be required to certifyall qualified applicants. We recognize,however, that there may be times whenthe certifying agent’s workload or thesize of its client base might make itnecessary for the certifying agent todecline acceptance of an application forcertification within its area ofaccreditation. This is why we haveincluded the proviso, ‘‘to the extent oftheir administrative capacity to do so.’’We have included ‘‘without regard tosize or membership in any associationor group’’ to address commenterconcerns about discrimination in theproviding of certification services. Thisaddition is consistent with ISO Guide61.

(6) Ability to Comply with SOP. Wehave added a new section 205.501(a)(20)requiring the certifying agent todemonstrate its ability to comply withan SOP, to certify organic production orhandling operations within the State.This change, as pointed out by a Statecommenter, is necessary to clarify thata certifying agent must be able tocomply with an SOP to certifyproduction or handling operationswithin that State.

(7) Performance Evaluation. We haveamended section 205.501(a)(6) byreplacing ‘‘appraisal’’ with ‘‘evaluation’’and expanding the coverage frominspectors to persons who reviewapplications for certification, performon-site inspections, review certificationdocuments, evaluate qualifications forcertification, make recommendationsconcerning certification, or makecertification decisions. Correspondingamendments have also been made tosection 205.510(a)(4). Further, we haveamended section 205.501(a)(6) to clarifythat the deficiencies to be corrected aredeficiencies in certification services. Wechanged ‘‘appraisal’’ to ‘‘evaluation’’ atthe request of a State commenter whopointed out that State inspectorsgenerally perform other duties inaddition to the inspection of organicproduction or handling operations. Weconcur that this change will helpdifferentiate between the State’semployee performance appraisal for allduties as a State employee and theevaluation of certification servicesprovided under the NOP. Expanding thecoverage from inspectors to all personsinvolved in the certification process

makes the regulation consistent withISO Guide 61. Sections 205.505(a)(3)and 205.510(a)(4) have been amended tomake their language consistent with thechanges to section 205.501(a)(6).

(8) Annual Program Evaluation. Wehave amended section 205.501(a)(7) byreplacing ‘‘evaluation’’ with ‘‘review’’and by replacing ‘‘evaluations’’ with‘‘reviews.’’ A commenter suggestedamending section 205.501(a)(7) byreplacing the requirement of an annualprogram evaluation with an annualreview of program activities. We agreethat ‘‘review’’ is a more appropriateterm than ‘‘evaluate’’ since to review isto examine, report, and correct whileevaluate is more in the nature ofassessing value. We have not, however,accepted that portion of thecommenter’s suggestion which wouldhave removed the reference to thereview being conducted by thecertifying agent’s staff, an outsideauditor, or a consultant who has theexpertise to conduct such reviews. Wehave not accepted this suggestionbecause the comment would havelimited the review to being conductedby the certifying agent with norequirement that the certifying agent bequalified to conduct the review.Another commenter wanted to changethe requirement to an annualassessment of the quality of theinspection system. We have notaccepted this suggestion because it canbe interpreted as narrowing the scope ofthe review from the full certificationprogram to just the inspectioncomponent of the certification program.This commenter would also havelimited the review to being conductedby the certifying agent with norequirement that the certifying agent bequalified to conduct the review. Webelieve that narrowing the scope of thereview would be inconsistent with ISOGuide 65. It is also inconsistent with ourintent that the entire certificationprogram be reviewed annually. We alsoreceived a comment stating that it is aviolation of ISO Guide 65 to have staffperform an internal review. We disagreewith this commenter. ISO Guide 65provides that the certification body shallconduct periodic internal auditscovering all procedures in a plannedand systematic manner. Sections205.505(a)(4) and 205.510(a)(4) havebeen amended to make their languageconsistent with the changes to section205.501(a)(7).

(9) Certification Decision. We haveadded a new section 205.501(a)(11)(vi)that requires the certifying agent toensure that the decision to certify anoperation is made by a person differentfrom the person who carried out the on-

site inspection. Commenters requestedthat this provision be added to therequirement that certifying agentsprevent conflicts of interest. We concurwith the request because it clearlyseparates the act of inspecting anorganic operation from the act ofgranting certification. This addition isalso consistent with ISO Guide 65,section 4.2(f), which requires that thecertification body ensure that eachdecision on certification is taken by aperson different from those who carriedout the evaluation.

(10) Determination of Conflict ofInterest. We have added a new section205.501(a)(12) addressing situationswhere a conflict of interest present atthe time of certification is identifiedafter certification. Several commentersrequested the addition of a provisionthat, if a conflict of interest is identifiedwithin 12 months of certification, thecertifying agent must reconsider theapplication and may reinspect theoperation if necessary. We agree withthe commenters that the issue ofconflicts of interest present at the timeof certification but identified aftercertification need to be addressed in theregulations. Accordingly, we haveprovided that an entity accredited as acertifying agent must reconsider acertified operation’s application forcertification and, if necessary, perform anew on-site inspection when it isdetermined, within 12 months ofcertifying the operation, that any personparticipating in the certification processand covered under section205.501(a)(11)(ii) has or had a conflict ofinterest involving the applicant.Because the certifying agent isresponsible for preventing conflicts ofinterest, all costs associated with areconsideration of application,including onsite inspection costs, mustbe borne by the certifying agent.Further, a certifying agent must refer acertified operation to a differentaccredited certifying agent forrecertification when it is determinedthat any person covered under section205.501(a)(11)(i) at the time ofcertification of the applicant had aconflict of interest involving theapplicant. Because the certifying agentis responsible for preventing conflicts ofinterest, the certifying agent mustreimburse the operation for the cost ofthe recertification. Sections205.501(a)(12) through 205.501(a)(17)have been redesignated as sections205.501(a)(13) through 205.501(a)(18),respectively.

(11) Financial Security. We publishedan advanced notice of proposedrulemaking and request for commentsregarding financial security in the



August 9, 2000, issue of the FederalRegister. We issued a news releaseannouncing the Federal Registerpublication on August 9, 2000.Numerous commenters expressedconcern about reasonable securityrelative to its amount and impact onsmall certifying agents. A fewcommenters requested a definition forreasonable security. Others stated thatthe formula for determining the amountof security should be published in theFederal Register. The March 13, 2000,NOP proposed rule stated that theamount and terms of reasonablefinancial security would be the subjectof additional rulemaking. The August 9,2000, advanced notice of proposedrulemaking solicited comments on allaspects of reasonable security andprotection of the rights of programparticipants. We requested commentsfrom any interested parties, includingproducers and handlers of organicagricultural products, certifying agents,importers and exporters, theinternational community, and any otherperson or group. Six questions wereprovided to facilitate public commenton the advanced notice of proposedrulemaking. Comments addressing otherrelevant issues were also invited. Thequestions posed in the advanced noticeof proposed rulemaking were:

(a) From what risks or events might acustomer of a private certifying agentrequire reasonable security?

(b) What are the financialinstrument(s) that could provide thereasonable security to protect customersfrom these events?

(c) What dollar amounts of securitywould give reasonable protection to acustomer of a private certifying agent?

(d) What are the financial costs toprivate certifiers, especially smallcertifiers, of providing reasonablesecurity?

(e) Do the risks or events provided inresponse to question #1 necessarilyrequire financial compensation?

(f) Are there situations in whichreasonable security is not needed?

Following analysis of the commentsreceived, we will publish a proposedrule on reasonable security in theFederal Register. The public will againbe invited to submit comments. Theproposed rule will include the proposedregulation, an explanation of thedecision-making process, an analysis ofthe costs and benefits, the effects onsmall businesses, and an estimate of thepaperwork burden imposed by theregulation.

(12) Use of Identifying Mark. We haveamended section 205.501(b)(2) to clarifythat all certifying agents (private andState) certifying production or handling

operations within a State with morerestrictive requirements, approved bythe Secretary, shall require compliancewith such requirements as a conditionof use of their identifying mark by suchoperations. Numerous commentersstated that they wanted USDA to permithigher production standards by privatecertifying agents. See also item 17 underAccreditation—Changes Requested ButNot Made. This amendment is intendedto further clarify our position that nocertifying agent (State or private) mayestablish or require compliance with itsown organic standards. It is an SOP, nota State certifying agent, that receivesapproval from the Secretary for morerestrictive requirements. See also item 7under Accreditation—Clarifications.

(13) Transfer of Records. To addressthe issues of a merger, sale, or othertransfer of ownership, we have addedthe following to the end of section205.501(c)(3); ‘‘Provided, That, suchtransfer shall not apply to a merger, sale,or other transfer of ownership of acertifying agent.’’ Commenterssuggested amending section205.501(c)(3) to provide for the transferof records accumulated from the time ofaccreditation to the Administrator or hisor her designee, another accreditedcertifying agent, or an SOP’s governingState official in a State where suchofficial exists. It was also stated that thissection needs to take into account acertifying agent’s decision to merge ortransfer accounts to another certifyingagent in the case of loss of accreditation.Under the NOP, should a certifyingagent dissolve or lose its accreditation,its certified operations will be free toseek certification with the accreditedcertifying agent of their choice.Accordingly, it would be inappropriateto automatically transfer an operation’srecords to another certifying agent asrequested by the commenters. However,in analyzing the comments, we realizedthat a provision was needed for amerger, sale, or other transfer ofownership of a certifying agent; thus,the amendment to section 205.501(c)(3).Section 205.505(b)(3) has been amendedto make its language consistent with thechanges to section 205.501(c)(3).

(14) Fees for Information. We haveamended section 205.504(b)(5) byinserting ‘‘including any fees to beassessed’’ after the word, ‘‘used.’’ Thischange is made in response to thequestion of whether fees may be chargedfor making information available to thepublic. It is our intent that certifyingagents may charge reasonable fees fordocument search time, duplication, and,when applicable, review costs. Weanticipate that review costs will mostlikely be incurred when the information

requested is located within documentswhich may contain confidentialbusiness information.

(15) Information Available to thePublic. We have amended section205.504(b)(5)(ii) by adding productsproduced to the information to bereleased to the public. This additionresponds in an alternate way tocommenters who wanted theinformation included on certificates oforganic operation. That request wasdenied; see item 4, Changes RequestedBut Not Made, under subpart E,Certification. This addition is consistentwith ISO Guide 61.

(16) Equivalency of CertificationDecisions and Statement of Agreement.We have amended sections205.501(a)(12) (redesignated as205.501(a)(13)) and 205.505(a)(1) bydeleting the words, ‘‘USDA accredited’’and ‘‘as equivalent to its own,’’ andadding to the end thereof: ‘‘accredited oraccepted by USDA pursuant to section205.500.’’ We have made thisamendment to clarify that the provisionapplies to certification decisions bydomestic certifying agents as well asforeign certifying agents accredited oraccepted by USDA pursuant to section205.500.

There were many comments insupport of section 205.501(a)(12) aswritten. However some did not agreethat certifying agents should have torecognize another agent’s decision asequivalent to their own. Thesecommenters want to maintain the rightand ability not to use their seal on aproduct that does not meet theirstandards. The most strongly voicedcomment stated: ‘‘delete section205.501(a)(12) and section 205.505(a)(1).The requirements constitute a ‘‘taking’’in violation of the Fifth Amendmentand are unnecessary to accomplish thegoal of establishing a consistentstandard and facilitating trade.’’

We do not concur with thecommenters who want to changesections 205.501(a)(12) and205.505(a)(1). We also do not agree withthe comment that sections205.501(a)(12) and 205.505(a)(1)constitute a taking in violation of theFifth Amendment and are unnecessaryto accomplish the goal of establishing aconsistent standard and facilitatingtrade. We believe that, to accomplishthe goal of establishing a consistentstandard and to facilitate trade, it is vitalthat an accredited certifying agentaccept the certification decisions madeby another certifying agent accredited oraccepted by USDA pursuant to section205.500. All domestic organicproduction and handling operations,unless exempted or excluded under



section 205.101, must be certified tothese national standards and, whenapplicable, any State standardsapproved by the Secretary. All domesticcertified operations must be certified bya certifying agent accredited by theAdministrator. No USDA-accreditedcertifying agent, domestic or foreign,may establish or require compliancewith its own organic standards.Certifying agents are not required tohave an identifying mark for use underthe NOP. However, if a certifying agentis going to use an identifying markunder the NOP, the use of such markmust be voluntary and available to all ofthe certifying agent’s clients certifiedunder the NOP. Accordingly, we havenot changed the requirement that acertifying agent accept the certificationdecisions made by another USDA-accredited certifying agent. We have,however, as noted above, amended bothsections to require that USDA-accredited certifying agents accept thecertification decisions made by anothercertifying agent accredited or acceptedby USDA pursuant to section 205.500.

(17) Granting Accreditation. We havemade editorial changes to section205.506 consistent with the suggestionthat we replace ‘‘approval ofaccreditation’’ with ‘‘granting ofaccreditation.’’ In the title to section205.506, we have replaced ‘‘Approvalof’’ with ‘‘Granting.’’ In section205.506(a), we have replaced‘‘approved’’ with ‘‘granted,’’ and insection 205.506(b), we have replaced‘‘approval’’ with ‘‘the granting.’’ Wehave made these change because, underthe NOP, we grant accreditation ratherthan approve accreditation.

(18) Correction of MinorNoncompliances. We have added a newsection 205.506(b)(3) providing that thenotification granting accreditation willstate any terms and conditions for thecorrection of minor noncompliances.Commenters requested the addition oflanguage to section 205.506(b) whichwould clarify that the Administratormay accredit with required correctiveactions for minor noncompliances. Inthe proposed rule, we addressedaccreditation subject to the correction ofminor noncompliances at section205.510(a)(3). We agree withcommenters that, for the purposes ofclarity, this issue should also beaddressed in section 205.506 on thegranting of accreditation. Accordingly,we have added new section205.506(b)(3) as noted above. We havealso retained the provisions of section205.510(a)(3), which requires certifyingagents to annually report on actionstaken to satisfy any terms andconditions addressed in the most recent

notification of accreditation or notice ofrenewal of accreditation. Section205.506(b)(3) has been redesignated assection 205.506(b)(4).

(19) Denial of Accreditation. We haveamended section 205.507 to includenoncompliance and resolutionprovisions originally included by cross-reference to section 205.665(a). Thiscross-reference created confusion forcommenters, regarding section 205.665’sapplicability to applicants foraccreditation because the section doesnot specifically address applicants.Rather than specifically identifyingapplicants within section 205.665, webelieve the issue is best clarified byaddressing noncompliance andresolution within section 205.507. Asamended, section 205.507 now states inparagraph (a) that the writtennotification of noncompliance mustdescribe each noncompliance, the factson which the notification is based, andthe date by which the applicant mustrebut or correct each noncomplianceand submit supporting documentationof each such correction when correctionis possible. This rewrite of paragraph (a)also enabled us to eliminate paragraph(b) since its provisions are addressed inamended paragraph (a). The section alsoprovides, at new paragraph (b), thatwhen each noncompliance has beenresolved, the Program Manager willsend the applicant a written notificationof noncompliance resolution andproceed with further processing of theapplication. We have also clarified theapplicant’s appeal rights by adding ‘‘orappeal the denial of accreditation inaccordance with section 205.681 by thedate specified in the notification ofaccreditation denial’’ to the end ofparagraph (c).

(20) Reinstatement of Accreditation.We have amended section 205.507(d) byremoving the requirement that acertifying agent that has had itsaccreditation suspended reapply foraccreditation in accordance with section205.502. In its place, we provide thatthe certifying agent may requestreinstatement of its accreditation. Suchrequest may be submitted at any timeunless otherwise stated in thenotification of suspension. Amendedsection 205.507(d) also provides that thecertifying agent’s request must beaccompanied by evidencedemonstrating correction of eachnoncompliance and corrective actionstaken to comply with and remain incompliance with the Act and theregulations in this part. We have madethis change because unlike revocation,suspension does not terminate acertifying agent’s accreditation.Accordingly, requiring a new

application for accreditation isunnecessary and burdensome on thecertifying agent. This change isconsistent with changes to sections205.662(f) and 205.665(g)(1), whichwere made based on comments receivedon section 205.662(f).

(21) Ineligible for accreditation. Wehave amended section 205.507(d) bydeleting ‘‘private entity’’ from the thirdsentence. The amended sentenceprovides that ‘‘A certifying agent whoseaccreditation is revoked will beineligible for accreditation for a periodof not less than 3 years following thedate of such determination.’’ Severalcommenters recommended deletion of‘‘private entity’’ so that privatecertifying agents would be regulated onan equivalent basis with State certifyingagents. It is our intent to regulate privateand State certifying agents on anequivalent basis. Accordingly, we madethe recommended change.

(22) Peer Review. We have amendedsection 205.509. As amended, thesection requires that the Administratorestablish a peer review panel pursuantto FACA (5 U.S.C. App. 2 et seq.). Thepeer review panel will be composed ofnot less than 3 members who willannually evaluate the NOP’s adherenceto the accreditation procedures insubpart F of these regulations and ISO/IEC Guide 61, General requirements forassessment and accreditation ofcertification/registration bodies, and theNOP’s accreditation decisions. This willbe accomplished through the review ofaccreditation procedures, documentreview and site evaluation reports, andaccreditation decision documents anddocumentation. The peer review panelwill report its finding, in writing, to theNOP’s Program Manager. We developedthis approach to peer review as a meansof addressing the suggestions of thecommenters and the need foradministration of an effective andtimely accreditation program.

Many commenters wanted theopening language in the first sentence ofsection 205.509 changed from ‘‘TheAdministrator may’’ to the ‘‘TheAdministrator shall’’ establish a peerreview panel to assist in evaluatingapplicants for accreditation, amendmentto an accreditation, and renewal ofaccreditation as certifying agents. One ofthe most frequent comments, includinga comment by the NOSB, was that peerreviewers should be compensated fortheir time and expenses. Manycommenters believe also that the peerreview process should be collaborative.Some commenters who wanted thischange recognized that a collaborativeprocess where confidential informationwas shared could run into problems



because FACA (P.L. 92–463, 5 U.S.C.App.) meetings are open to the public.They advised creating a FACA panel butrestricting public access duringdiscussion of confidential businessinformation based on 5 U.S.C. Section522b(c)(4) of the Government in theSunshine Act.

As requested, amended section205.509 requires the formation of a peerreview panel. Also as requested, peerreviewers, who will serve as a FACAcommittee, will be reimbursed for theirtravel and per diem expenses. Thereviewers will also work collaboratively.We have not, however, provided forcollaborative review of each applicantfor accreditation by the peer reviewpanel because of the administrativeburden that an outside collaborativereview process would place on the NOP.Currently, there are 36 private and 13State certifying agencies. It is, therefore,likely that USDA will receiveapproximately 50 applications foraccreditation the first year of theprogram. Given the need to makeaccreditation decisions in a timely,organized fashion, it would be infeasibleto convene a panel of peers for eachapplicant for accreditation prior torendering a decision on accreditation.However, as noted above, we haveprovided that a peer review panel willannually evaluate the NOP’s adherenceto the accreditation procedures insubpart F of these regulations and ISO/IEC Guide 61, General requirements forassessment and accreditation ofcertification/registration bodies, andvalidate the NOP’s accreditationdecisions.

We have also amended currentsection 205.510(c)(3) by removing thereference to reports submitted by a peerreview panel to make that sectionconsistent with the rewrite of section205.509.

(23) Expiration of accreditation. Wehave added a new section 205.510(c)(1)which provides that the Administratorshall send the accredited certifyingagent a notice of pending expiration ofaccreditation approximately 1 year priorto the scheduled date of expiration. Acommenter suggested USDA notificationof certifying agents at least 1 year priorto the scheduled expiration ofaccreditation. We have made thesuggested change because we believenotification about 1 year prior toexpiration will facilitate the timelyreceipt of applications for renewal. Wehave redesignated sections 205.510(c)(1)and 205.510(c)(2) as 205.510(c)(2) and205.510(c)(3), respectively.

(24) Amendments to Accreditation.We have added a new section 205.510(f)to provide that an amendment to an

accreditation may be requested at anytime. The application for amendmentmust be sent to the Administrator andmust contain information applicable tothe requested change in accreditation.The application for amendment mustalso contain a complete and accurateupdate of the information submitted inaccordance with section 205.503,Applicant information; and section205.504, Evidence of expertise andability. The applicant must also submitthe applicable fees required in section205.640. We have added this newsection because we agree with thecommenter who expressed concern thatthe regulations were not clear regardingamendments to accreditation. Thisaddition is consistent with section205.510(a)(2) which allows certifyingagents to request amendment of theiraccreditation as part of their annualreport to the Administrator.

Accreditation—Changes Requested ButNot Made

This subpart retains from theproposed rule, regulations on which wereceived comments as follows:

(1) Accreditation by USDA. Acommenter stated that ISO/IEC Guide 61specifies, but the proposed rule did notspecify, the requirements for USDA toassess and accredit certifying agents.The commenter questioned USDA’sacceptance internationally as acompetent accreditation body. A fewcommenters requested that USDAprovide certifying agents with assuranceof international trade acceptance of theUSDA’s accreditation program prior toimplementation of the final rule. We donot believe that it is necessary toinclude in these regulations detailedprocedures by which USDA will operateits accreditation program. USDA hasdeveloped its accreditation andcertification programs with the intentthat they meet or exceed internationalguidelines. Every country will make itsown decision regarding acceptance ofthis accreditation program. Accordingly,while we do not anticipate problemswith acceptance of our accreditationprogram, we cannot provide assuranceagainst problems as requested by thecommenters.

(2) Equivalency at the EuropeanCommunity (EC) Level. A commenterrequested confirmation that anequivalency agreement would benegotiated at the EC level since the EClegislation provides for the basic ruleswhile accreditation of certifying agentsis a task for each member state. Anothercommenter pointed out that becauseSwitzerland has the same regulations asthe EC, equivalency would have to bedone in close coordination with the EC.

The commenter went on to say thataccording to Swiss and Europeanpractice, not only the organic product,but also the bodies involved will bemutually accepted. This commenter alsostated that, due to Swiss importprovisions, brokers must be subject to acertain control. Equivalency will benegotiated between the United Statesand the foreign government authorityseeking the equivalency agreement.

(3) Period of Accreditation. It wassuggested that accreditation should befor a 4-year period with fullreevaluation occurring once every 4years and annual surveillance visits inthe intervening years. We do not concurwith changing the period ofaccreditation from 5 years to 4 years assuggested. The 5-year period that wehave provided that accreditation isconsistent with the Act, which providesthat accreditation shall be for a periodof not to exceed 5 years. The commenterclaims that the international norm is forfull reevaluations to take place onceevery 4 years with annual surveillancevisits in the intervening years. ISOGuide 61, section 3.5.1, provides thatthe accreditation body shall have anestablished documented program,consistent with the accreditationgranted, for carrying out periodicsurveillance and reassessment atsufficiently close intervals to verify thatits accredited body continues to complywith the accreditation requirements. Webelieve that accreditation for 5 years isa reasonable period of time. Further, webelieve that a 5-year period ofaccreditation is consistent with ISOGuide 61 inasmuch as we require anannual evaluation of the certificationprogram; annual review of personsassociated with the certification process,including inspectors; annual reportingwith a complete and accurate update ofinformation required for accreditation;and one or more site evaluations duringthe period of accreditation in additionto the initial site evaluation for theperiod of accreditation. Accordingly, wehave not made the recommendedchange.

(4) Accreditation by Private-SectorAccreditation Bodies. Numerouscommenters wanted language added tosection 205.500(c) that would allowprivate sector accreditation bodies toaccredit foreign certifying agents. Forexample, several commenters suggestedadding a provision reading as follows:‘‘The foreign certifying agent isaccredited by a private accreditationbody recognized by the USDA asdefined by an equivalency agreementnegotiated between the USDA and theaccreditation body.’’ Commenters alsowanted us to amend section 205.502(a)



to recognize accreditation by privateaccreditation programs.

USDA is the accrediting body for allaccreditations under the NOP. USDAwill not recognize nongovernmentalaccrediting bodies. USDA will recognizeforeign certifying agents accredited by aforeign government authority whenUSDA determines that the foreigngovernment’s standards meet therequirements of the NOP or when anequivalency agreement has beennegotiated between the United Statesand a foreign government.

(5) Requirements for Accreditation.Some commenters requested morespecificity in the requirements foraccreditation. For example, onerecommended that section 205.501(a)(1)should include the requirement thatinspectors demonstrate completion of aspecified training program or internshipor ongoing education and/or licensing.Another commenter wanted baselinecriteria for denying an application dueto expertise. Still others wanted adefinition for (1) ‘‘experience andtraining pertaining to organic/sustainable agricultural methods andtheir implementation on farm or inprocessing facilities,’’ (2) ‘‘trainedcertifying agent personnel,’’ and (3)‘‘reasonable time.’’ Finally, one wantedrecordkeeping and evaluativeparameters. AMS does not believe thatit is necessary to present therequirements for accreditation to theextent of detail requested by thecommenters. The intent is to provideflexibility to the certifying agents suchthat they can tailor their policies andprocedures to the nature and scope oftheir operation. The NOP is available torespond to questions and to assistcertifying agents in complying with therequirements for accreditation.

(6) Volunteer Board Members. Somecommenters suggested amendingsection 205.501(a)(5) to include areference to committees and to expand‘‘sufficient expertise’’ to ‘‘sufficientbalance of interests and expertise.’’ Thecommenters proposed the amendmentto create a firewall between thosepersons involved in decision makingand the volunteer board members.However, the purpose of section205.501(a)(5) is to ensure that thepersons used by the certifying agent toassume inspection, analysis, anddecision-making responsibilities havesufficient expertise in organicproduction or handling techniques tosuccessfully perform the dutiesassigned. Therefore, we have not madethe suggested changes. Conflict ofinterest guidelines are found at section205.501(a)(11).

(7) Confidentiality. A commenterstated that Texas law prevents the TexasDepartment of Agriculture fromguaranteeing confidentiality to itsclients. Accordingly, the commenterrequested that section 205.501(a)(10) beamended by adding to the end thereof:‘‘or as required by State statutes.’’ Wehave not made the suggested changebecause the Act requires that thecertifying agent maintain strictconfidentiality with respect to its clientsunder the NOP and not disclose anybusiness-related information concerningsuch client obtained whileimplementing the Act. To be accreditedunder the NOP, certifying agents mustfully comply with the requirements ofthe Act and these regulations. Further,no SOP will be approved which doesnot comply with the NOP.

(8) Certifying Agent Fees. Severalcommenters requested that theregulations prohibit royalty formulas(i.e., fees from every certified sale) forcertifying agent fees. It is not our intentto regulate how a certifying agent sets itsfees beyond their being reasonable andnondiscriminatory.

(9) Conflicts of Interest. We receivednumerous comments stating that section205.501(a)(11)(i) was too restrictive andunnecessary due to the provisions ofsection 205.501(a)(11)(ii) to preventconflicts of interest. Some argued thatthese conflict of interest provisions arebeyond ISO requirements and place anundue burden on membership basedcertifying agents and the entities theyserve. They requested a conflict ofinterest policy enabling membership-based certification organizations tocontinue operating. A commentersuggested that section 205.501(a)(11) beamended to require that a certifyingagent’s board members sign an affidavitlisting potential conflicts of interest,identify issues where an organizationdecision might help them personally,and exclude themselves from decision-making that would assist thempersonally. This commenter proposedthe amendment for the purpose ofcreating a firewall between thosepersons involved in certificationdecision-making and the volunteerboard members.

We do not believe that the conflict ofinterest provisions are too restrictive.These provisions are very similar toconflict of interest provisions underother USDA programs involving public-private partnerships (e.g., graininspection). The certifying agent and itsresponsibly connected parties,including volunteer board members,hold positions of influence over thecertifying agent’s employees andpersons with whom the certifying agent

contracts for such services asinspection, sampling, and residuetesting. Therefore, we continue tobelieve that avoiding such conflicts ofinterest is necessary to maintain theintegrity of the organic certificationprocess.

(10) Conflicts of Interest andProhibition on Certification. Acommenter requested that we includean ‘‘or’’ between sections205.501(a)(11)(i) and 205.501(a)(11)(ii).We have not made the recommendedchange because both sections must becomplied with; they are not mutuallyexclusive. Section 205.501(a)(11)(i)prohibits the certification of anapplicant when the certifying agent or aresponsibly connected party of suchcertifying agent has or has held acommercial interest in the applicant forcertification, including an immediatefamily interest or the provision ofconsulting services, within the 12-month period prior to the applicationfor certification. When the certifyingagent and its responsibly connectedpersons are free of any conflict ofinterest involving the applicant forcertification, the applicant may becertified if qualified. However, section205.501(a)(11)(ii) requires the certifyingagent to exclude any person (employeesand contractors who do not meet thedefinition of responsibly connected),including contractors, with conflicts ofinterest from work, discussions, anddecisions in all stages of thecertification process and the monitoringof certified production or handlingoperations for all entities in which suchperson has or has held a commercialinterest, including an immediate familyinterest or the provision of consultingservices, within the 12-month periodprior to the application for certification.

(11) Gifts and Contributions.Commenters recommended that section205.501(a)(11)(iii) be amended to allownot-for-profit organizations to acceptgifts and contributions from certifiedoperations for those programs notdirectly related to the certifying agent’sorganic certification activities. They alsowanted it clarified that not-for-profitorganizations can accept voluntary laborfrom certified operations for thoseprograms not directly related to thecertifying agent’s organic certificationactivities. We have not made therequested changes. First, the acceptanceof gifts and contributions wouldconstitute a conflict of interest andwould be contrary to ISO Guide 61.Certifying agents must have thefinancial stability and resources toperform their certification dutieswithout relying on gifts andcontributions from those they serve.



Second, we have not added therequested provision on voluntary laborbecause section 205.501(a)(11)(iii)already addresses the acceptance ofvoluntary labor by not-for-profitorganizations from certified operations.

(12) Conflicts of Interest—Determination Period. Commenterswanted to increase the conflictdetermination period from 12 months to24 months. Some also wanted theperiod to extend for 2 years after, withthe exception of those who have left theemploy of the certifying agent or are nolonger under contract with the certifyingagent.

We disagree with therecommendations calling for a longerprecertification conflict of interestprohibition period. We continue tobelieve that 12 months is a sufficientperiod to ensure that any previouscommercial interest would not create aconflict of interest situation for tworeasons. First, this time period isconsistent with similar provisionsgoverning conflicts of interest forgovernment employees. Second, section205.501(a)(11)(v) requires thecompletion of an annual conflict ofinterest disclosure report by allpersonnel designated to be used in thecertification operation, includingadministrative staff, certificationinspectors, members of any certificationreview and program evaluationcommittees, contractors, and all partiesresponsibly connected to thecertification operation. Thisrequirement will assist certifying agentsin complying with the requirements toprevent conflicts of interest. We alsocontinue to believe that a longerprohibition period would have the effectof severely curtailing most certifyingagents’ ability to comply with the Act’srequirement that they employ personswith sufficient expertise to implementthe applicable certification program.Accordingly, we have not made therecommended change.

The change recommended by thecommenters who requested that theconflict of interest determination periodextend for 2 years after certification isunnecessary. Certifying agents and theirresponsibly connected parties,employees, inspectors, contractors, andother personnel are prohibited fromengaging in activities or associations atany time during their affiliation with thecertifying agent which would result ina conflict of interest. While associatedwith the certifying agent, all employees,inspectors, contractors, and otherpersonnel are expected to disclose to thecertifying agent any offer of employmentthey have received and not immediatelyrefused. They are also expected to

disclose any employment they areseeking and any arrangement they haveconcerning future employment with anapplicant for certification or a certifiedoperation. The certifying agent wouldthen have to exclude that person fromwork, discussions, and decisions in allstages of the certification or monitoringof the operation making theemployment offer. If a certifying agentor a responsibly connected party of thecertifying agent has received and notimmediately refused an offer ofemployment, is seeking employment, orhas an arrangement concerning futureemployment with an applicant forcertification, the certifying agent maynot accept or process the application.Further, certifying agents andresponsibly connected parties may notseek employment or have anarrangement concerning futureemployment with an operation certifiedby the certifying agent while associatedwith that certifying agent. Certifyingagents and responsibly connectedparties must sever their association withthe certifying agent when such persondoes not immediately refuse an offer ofemployment from a certified operation.Accordingly, we have decided not toinclude a postcertification prohibitionperiod in this final rule.

(13) False and Misleading Claims. Acommenter asked who will determinewhat is a misleading claim about thenature or qualities of products labeledas organically produced. This samecommenter recommended amendingsection 205.501(a)(13) by removing theprohibition against making false ormisleading claims about the nature orqualities of products labeled asorganically produced.

We disagree with thisrecommendation. Claims regardingaccreditation status, the USDAaccreditation program for certifyingagents, and the nature and quality ofproducts labeled as organicallyproduced all fall under the authority ofthe Act. Accordingly, USDA willdetermine what is a misleading claim.We believe that the requirements areneeded to prevent the dissemination ofinaccurate or misleading information toconsumers about organically producedproducts. We further believe that thechange suggested by the commenterwould undermine the goal of a uniformNOP by allowing certifying agents tomake claims that would state or implythat organic products produced byoperations that they certify are superiorto those of operations certified by othercertifying agents. These requirementswould not prohibit certifying agentsfrom sharing factual information withconsumers, farmers, processors, and

other interested parties regardingverifiable attributes of organic food andorganic production systems.Accordingly, we have not made therecommended change to what is nowsection 205.501(a)(14).

(14) Certifying Agent ComplianceWith Terms and Conditions DeemedNecessary. A commenter recommendedthat we remove section 205.501(a)(17).This section requires that certifyingagents comply with and implementother terms and conditions deemednecessary by the Secretary. Thisrequirement is consistent with section6515(d)(2) of the Act, which requires acertifying agent to enter into anagreement with the Secretary underwhich such agent shall agree to suchother terms and conditions as theSecretary determines appropriate.Accordingly, we have not accepted thecommenter’s recommendation. Thisrequirement is located at current section205.501(a)(21).

(15) Limitations on the Use ofCertifying Agent’s Marks. Numerouscommenters stated that they wantedUSDA to permit higher productionstandards by private certifying agents. Acommon argument for allowing higherstandards was that practitioners must beallowed to ‘‘raise the bar’’ throughsuperior ecological on-farm practices orpursuit of other social and ecologicalgoals. Some commenters recommendedthat the language in section205.501(b)(2) be replaced withprovisions that would allow certifyingagents to issue licensing agreementswith contract specifications that clearlyestablish conditions for use of thecertifying agent’s identifying mark.

We believe the positions advocated bythe commenters are inconsistent withsection 6501(2) of the Act, whichprovides that a stated purpose of the Actis to assure consumers that organicallyproduced products meet a consistentnational standard. We believe that, toaccomplish the goal of establishing aconsistent standard and to facilitatetrade, it is vital that an accreditedcertifying agent accept the certificationdecisions made by another certifyingagent accredited or accepted by USDApursuant to section 205.500. All organicproduction and handling operations,unless exempted or excluded undersection 205.101 or not regulated underthe NOP (i.e., a producer of dog food),must be certified to these nationalstandards and, when applicable, anyState standards approved by theSecretary. All certified operations mustbe certified by a certifying agentaccredited by the Administrator. Noaccredited certifying agent mayestablish or require compliance with its



own organic standards. Accreditedcertifying agents may establish otherstandards outside of the NOP. They maynot, however, refer to them as organicstandards nor require that applicants forcertification under the NOP oroperations certified under the NOPcomply with such standards as arequirement for certification under theNOP. Use of the certifying agent’sidentifying mark must be voluntary andavailable to all of its clients certifiedunder the NOP. However, a certifyingagent may withdraw a certifiedoperation’s authority to use itsidentifying mark during a complianceprocess. The certifying agent, however,accepts full liability for any such action.

The national standards implementedby this final rule can be amended asneeded to establish more restrictivenational standards. Anyone may requestthat a provision of these regulations beamended by submitting a request to theNOP Program Manager or theChairperson of the NOSB. Requests foramendments submitted to the NOPProgram Manager will be forwarded tothe NOSB for its consideration. TheNOSB will consider the requestedamendments and make itsrecommendations to the Administrator.When appropriate, the NOP willconduct rulemaking on therecommended amendment. Suchrulemaking will include an opportunityfor public comment.

(16) Evidence of Expertise and Ability.A commenter stated that section205.504, which addresses thedocumentation necessary to establishevidence of expertise and abilities,requires too much paperwork. Webelieve the amount of paperwork isappropriate for the task at hand,verifying a certifying agent’s expertise inand eligibility for accreditation to certifyorganic production and handlingoperations to the NOP. We furtherbelieve that the level of paperwork isnecessary to meet internationalguidelines for determining whether anapplicant is qualified for accreditationas a certifying agent.

(17) Procedures for MakingInformation Available to the Public.Comments on section 205.504(b)(5)were mixed. Some commenters felt thatthe proposal fell short of the OFPArequirement to ‘‘Provide for publicaccess to certification documents andlab analysis.’’ Others thought that toomuch confidential information wouldbe released.

The Act requires public access, atsection 2107(a)(9), to certificationdocuments and laboratory analysespertaining to certification. Accordingly,we disagree with those commenters who

requested that such documents not bereleased to the public. We also disagreewith the commenters who contend thatthe requirement for public disclosurefalls short of what is required by theAct. Section 205.504(b)(5) meets therequirements of the Act by requiring therelease of those documents cited insection 2107(a)(9) of the Act. Thesection also authorizes the release ofother business information asauthorized in writing by the producer orhandler.

(18) Accreditation Prior to SiteEvaluation. Numerous commentersrecommended that we require site visitsprior to accreditation. Somecommenters cited ISO Guide 61, section2.3.1, in their arguments for site visitsprior to accreditation. ISO Guide 61,section 2.3.1., provides that the decisionon whether to accredit a body shall bemade on the basis of the informationgathered during the accreditationprocess and any other relevantinformation. Section 3.3.2 of ISO Guide61 provides that the accreditation bodyshall witness fully the on-site activitiesof one or more assessments or auditsconducted by an applicant body beforean initial accreditation is granted.

We do not concur with thecommenters. These regulations providefor assessment of the applicant’squalifications and capabilities through arigorous review of the application andsupporting documentation. Followingthis review, an initial site evaluationshall be conducted before or within areasonable period of time after issuanceof the applicant’s ‘‘notification ofaccreditation.’’ In cases where thedocument review raises concernsregarding the applicant’s qualificationsand capabilities and the Administratordeems it necessary, a preapproval siteevaluation will be conducted. We havefurther provided that a site evaluationshall be conducted after application forrenewal of accreditation but prior torenewal of accreditation.

Our purpose in allowing for initialaccreditation prior to a site evaluation isto facilitate implementation of the NOPand to provide a means for newlyestablished certifying agents to obtain aclient base to demonstrate that they canmeet the requirements of the NOPregulations. We believe this isconsistent with the intent of ISO Guide61, section 2.3.1. and fits within its‘‘and any other relevant information’’provision. Accordingly, we restate ourposition that accreditation approvalwithout a site evaluation is appropriate,necessary in the case of establishedcertifying agents that may need to makeadjustments in their operations tocomply with the NOP regulations, and

necessary in the case of newlyestablished certifying agents who willhave to obtain a client base todemonstrate beyond the paperwork thatthey can meet the requirements of theNOP regulations.

(19) Ineligibility After Revocation ofAccreditation. Section 205.507(d)provides that a certifying agent whoseaccreditation is revoked will beineligible for accreditation for a periodof not less than 3 years following thedate of such determination. Acommenter stated that the 3-year periodof ineligibility is overly long andeffectively puts the certifying agent outof business. The commenter suggestedthat a 6- to 12-month period might bereasonable. We have not accepted thesuggested 6- to 12-month ineligibilityperiod because the Act requires a periodof ineligibility of not less than 3 yearsfollowing revocation of accreditation.

(20) Qualifications of the SiteEvaluator. A commenter recommendedamending section 205.508(a) to indicatethe required qualifications of the siteevaluator. We have not accepted therecommendation. We do not believe thatit is necessary to specify the requiredqualifications of site evaluators in theseregulations. All USDA employees whowill perform site evaluations under theNOP are quality systems auditorstrained in accordance withinternationally recognized protocols.

(21) Complaint Process. A commenterrecommended that section 205.510include a complaint process forcomplaints by certified operationsregarding the performance of acertifying agent or inspector. Thecommenter also recommended thatsection 205.510 include a complaintprocess for the public should they feelthat a certifying agent is not incompliance.

We do not believe that it is necessaryto include a complaint process in theregulations. All interested parties arefree to file a complaint with anaccredited certifying agent, SOP’sgoverning State official, or theAdministrator at any time. We willprovide guidance to accreditedcertifying agents and SOP’s governingState officials regarding the type ofinformation to gather when receiving acomplaint. SOP’s governing Stateofficials will include in their request forapproval of their SOP information ontheir collection of complaintinformation. Certifying agents willinclude details regarding the collectionof complaint information and theinvestigation of complaints involvingcertified operations in their proceduresfor reviewing and investigating certifiedoperation compliance (section



205.504(b)(2)). This will includemaintaining records of complaints andremedial actions relative to certificationas well as documentation of followupactions. Further, certifying agents willinclude details regarding the collectionof complaint information and theinvestigation of complaints involvinginspectors and other personnelemployed by or contracted by thecertifying agents in their policies andprocedures for training, evaluating, andsupervising personnel (section205.504(a)(1)).

(22) Recordkeeping by CertifyingAgents. A commenter stated that the 10-year recordkeeping requirement ofsection 205.510(b)(2) for records createdby the certifying agent regardingapplicants for certification and certifiedoperations is excessive. The commenterrecommended a 5-year retention period.We have not accepted the recommended5-year records retention period forrecords created by the certifying agentregarding applicants for certificationand certified operations because the Actrequires the retention of such recordsfor 10 years.

(23) Reaccreditation. A commenterrecommended that section 205.510(c)(1)be amended to require reaccreditationevery 3 years. We have provided thataccreditation will be for a period of 5years. This is consistent with the Actwhich provides that accreditation shallbe for a period of not to exceed 5 years.The commenter believes that a 5-yearperiod is not consistent with ISO Guide61, section 3.5.1, which provides thatthe accreditation body shall have anestablished documented program,consistent with the accreditationgranted, for carrying out periodicsurveillance and reassessment atsufficiently close intervals to verify thatits accredited body continues to complywith the accreditation requirements. Webelieve that accreditation for 5 years isa reasonable period of time. Further, webelieve that a 5-year period ofaccreditation is consistent with ISOGuide 61 inasmuch as we require anannual evaluation of the certificationprogram; annual review of personsassociated with the certification process,including inspectors; annual reportingwith a complete and accurate update ofinformation required for accreditation;and one or more site evaluations duringthe period of accreditation in additionto the initial site evaluation for theperiod of accreditation. Accordingly, wehave not made the recommendedchange. This requirement is located atcurrent section 205.510(c)(2).

(24) Notice of Renewal ofAccreditation. A commenterrecommended that section 205.510(d) be

amended to include a timeframe withinwhich the Administrator must notify anapplicant of its renewal of accreditation.We believe that a mandated timeframefor notifying the applicant of renewal ofaccreditation is inappropriate. We planto process all applications for renewal ofaccreditation in the order in which theyare received, to confirm the receipt ofeach application, and to establish adialog with the applicant uponconfirmation of receipt of an applicationfor renewal of accreditation. The lengthof the renewal process will depend inlarge part on the nature of the operationseeking renewal of accreditation. Tominimize the chances that anaccreditation will expire during therenewal process, we have: (1) providedthat the Administrator shall send theaccredited certifying agent a notice ofpending expiration of accreditationapproximately 1 year before the date ofexpiration of the certifying agent’saccreditation, (2) required that anapplication for renewal of accreditationmust be received at least 6 months priorto expiration of the certifying agent’saccreditation, and (3) provided that theaccreditation of a certifying agent whomakes timely application for renewal ofaccreditation will not expire during therenewal process. Accordingly, we havenot made the recommendedamendment.

Accreditation—ClarificationsClarification is given on the following

issues raised by commenters as follows:(1) Accreditation of Foreign Certifying

Agents. A commenter suggested thatsection 205.500 be amended to providethat if there is a government systemoperating in a foreign country then thegovernment is the appropriate pathwayfor that country to apply foraccreditation.

USDA will accept an application foraccreditation to perform certificationactivities under the NOP from anyprivate entity or governmental entitycertifying agent and accredit suchapplicant upon proof of qualification foraccreditation. USDA will provide forUSDA accreditation of certifying agentsand acceptance of a foreigngovernment’s accreditation of certifyingagent within the same country. Thismaximizes opportunity for certifyingagents without the potential forconfusion and overlap indocumentation. Further, we believethese requirements facilitate worldtrade.

(2) State Approval of Product FromForeign Countries. A commenter statedthat any product making claims oforganic agricultural ingredients to besold in California shall fall under the

jurisdiction of the California OrganicProgram for enforcement, inspection,and certification direction. Thecommenter further stated that, shouldany foreign certifying agents beaccepted, they too shall be subject to thesovereign rights of the State ofCalifornia to protect and enforce thelaws of the State of California and toprotect agricultural claims in this State.

Any organic program administered bya State will have to be approved by theSecretary. Approval of an SOP will becontingent upon the State’s agreeing toaccept the certification decisions madeby certifying agents accredited oraccepted by USDA pursuant to section205.500.

(3) Equivalency. A commenter statedthat USDA should declare in section205.500 that there are no alternativemethods of production that meet theCongressional purpose ‘‘to assureconsumers that organically producedproducts meet a consistent standard.’’The commenter went on to state that, ifUSDA proceeds with equivalency thenthe regulations should be amended toprovide for: (1) No importing until finaldetermination, (2) no finaldetermination until Federal Registerpublication and public comment, (3)audit of foreign agency and productionsites, and (4) revocation of accreditationfor violations. The commenter alsorecommended that foreign certifyingagents be reviewed with the samefrequency as State certifying agents.

We disagree that there are noalternative methods of production thatassure consumers that organicallyproduced products meet a consistentstandard. Accordingly, we will negotiateequivalency agreements with foreigngovernments. A final equivalencyagreement will be required beforeaffected product may be imported intothe United States and sold, labeled, orrepresented as organic. Equivalencyagreements will be announced to thepublic through a notice in the FederalRegister and a news release. Siteevaluations are a possibility. Foreigncertifying agents that receive USDAaccreditation, rather than recognitionthrough their government, will have tofully comply with the NOP and will betreated the same as domestic accreditedcertifying agents.

(4) Evaluation of Equivalency.Commenters asked how equivalencywould be evaluated and recommendedbasing equivalency, not on a check offormalities, but on the finding ofsubstantive equivalence and equivalenteffectiveness of certifying systems.

The negotiation of an equivalencyagreement will involve meetingsbetween representatives of the foreign



government seeking equivalency andrepresentatives of USDA’s AgriculturalMarketing Service and ForeignAgricultural Service. Support will beprovided by the Office of the U.S. TradeRepresentative. The process will alsoinclude the review of documents andpossibly one or more site evaluations.Equivalency agreements will beannounced to the public through anotice in the Federal Register and anews release.

(5) Treatment of Certifying AgentsOperating in More Than One Country. Afew commenters requested that weamend section 205.500(c) by adding aprovision to clarify the issue of how theinternational activities of foreign ordomestic certifying agents will betreated when they operate in more thanone country.

We believe that the requestedprovision is unnecessary. Certifyingagents, domestic and foreign, accreditedunder the NOP will be expected tocomply fully with the requirements ofthe NOP regardless of where theyoperate. The only exception would bewhen they operate in a country inwhich the Secretary has negotiated anequivalency agreement.

(6) Accreditation of Foreign CertifyingAgents. A commenter requested that weamend section 205.500(c) to exemptforeign applicants from having to beaccredited certifying agents in USDA’sprogram if the exporting country’snational organic program meetsinternational standards; e.g, Codexguidelines.

We have provided for USDAaccreditation of qualified foreigncertifying agents upon application. Wehave also provided that USDA willaccept a foreign certifying agent’saccreditation to certify organicproduction or handling operations if itdetermines, upon the request of aforeign government, that the standardsunder which the foreign governmentauthority accredited the foreigncertifying agent meet the requirementsof this part. We have further providedthat USDA will accept a foreigncertifying agent’s accreditation to certifyorganic production or handlingoperations if the foreign governmentauthority that accredited the foreigncertifying agent acted under anequivalency agreement negotiatedbetween the United States and theforeign government. These recognitionsof foreign government programs,however, do not extend to internationalstandards such as Codex guidelines. Ineither case, we are recognizing theability of a foreign government’sprogram to meet U.S. standards, notsome other international standard.

(7) States with an Organic Statute. Acommenter stated that a State with anorganic statute or regulations that doesnot certify organic producers or organichandlers should not have to beaccredited.

The NOP requires the Secretary’sapproval of SOP’s whether or not theState has a State certifying agent. AState may have an SOP but not have aState certifying agent. In this case theSOP must be approved by the Secretary.A State may have a State certifyingagent but no SOP. In this case, the Statecertifying agent must apply for andreceive accreditation to certify organicproduction or handling operations.Finally, a State may have an SOP anda State certifying agent. In this case, theSOP must be approved by the Secretary,and the State certifying agent mustapply for and receive accreditation tocertify organic production or handlingoperations.

(8) Nondiscriminatory Services. Acommenter wanted the addition of aprovision in section 205.501(a)requiring certifying agents to providenondiscriminatory services. We havenot included the suggested addition inthis final rule because the provisionalready exists in section 205.501(d).

(9) Release of Information. A fewcommenters requested that we amendsection 205.501(a)(10) to include ageneral exclusion allowing the release ofany information with the client’spermission. We have not included thesuggested addition in this final rulebecause section 205.504(b)(5)(iv)already addresses the allowed release ofother business information as permittedin writing by the producer or handler.

(10) Use of the Term, ‘‘CertifiedOrganic.’’ In commenting on section205.501(b)(1), a commenter stated that ifthe term, ‘‘certified organic,’’ isincluded on a label, it must state bywhom, according to Maine State law.We do not believe that the requirementsof section 205.501(b)(1) would precludea certified operation from complyingwith a State law requiring identificationof the certifying agent on a product sold,labeled, or represented as ‘‘certifiedorganic.’’ Further, these regulations donot require a certified operation to usethe word, ‘‘certified,’’ on its label.

(11) Holding the Secretary Harmless.In commenting on the requirements ofsection 205.501(c)(1), a commenterstated that certifying agents areresponsible for representing USDA butseem to have no recourse. Anothercommenter asked, what happens if acertifying agent is found in violation ofthe Act but the violation was due toinformation or direction that came fromUSDA?

Under the NOP, accredited certifyingagents are required to comply with andcarry out the requirements of the Actand these regulations. If they fail to doso, they are responsible for their actionsor failures to act. This would not be trueif the action or failure to act was at thedirection of the Secretary.

(12) Self-evaluation of Ability toComply. A commenter requested thatsection 205.504 be amended to provideclarity on the baseline requirements thatwould allow a certifying agent toconduct a self-evaluation to determineits ability to comply. The commenterstated that there should be some type ofbaseline acceptance of expertise andability. The commenter wants detailsregarding the ‘‘training’’ or ‘‘experience’’requirements necessary to qualify foraccreditation. This commenter alsostated that criteria for inspector andreviewer training should be added andenlarged.

We do not believe that it is necessaryto present the requirements foraccreditation to the extent of detailrequested by the commenter. The intentis to provide flexibility to the certifyingagents such that they can tailor theirpolicies and procedures to the natureand scope of their operation. The NOPis available to respond to questions andto assist certifying agents in complyingwith the requirements for accreditation.

(13) Evidence of Expertise and Ability.Commenters stated that importantelements of ISO Guide 65 are missingfrom section 205.504. They cite themaintenance of a complaints registerand a register of precedents andprovisions for subcontracting and adocuments control policy or a documentregister.

Certifying agents grant certification,deny certification, and take enforcementaction against a certified operation’scertification. Certifying agents arerequired to maintain records applicableto all such actions and to report suchactions to the Administrator. Certifyingagents may contract with qualifiedindividuals for the performance ofservices such as inspection, sampling,and residue testing. Certifying agents arerequired to submit personnelinformation (employed and contracted)and administrative policies andprocedures to the Administrator. Allsuch documents must be updatedannually. The regulations also requirethe maintenance of records according tospecified retention periods. All of thesefactors will be considered in granting ordenying accreditation. We believe theserequirements meet or exceed the ISOGuide 65 guidelines.

(14) Personnel Evidence of Expertise.A commenter inquired about the



frequency at which the personnelinformation, required by section205.504(a) and used to establishevidence of expertise and ability, is tobe updated. Section 205.510 requiresthat the certifying agent annually submita complete and accurate update of theinformation required in section 205.504.

(15) Responsibly Connected. Acommenter stated that the term,‘‘responsibly connected,’’ as used insection 205.504(a)(2) is a broad sweep.The commenter believes the term wouldinclude everyone they do business with.

Section 205.504(a)(2) requires thecertifying agent to provide the name andposition description of all personnel tobe used in the certification operation.The section assists the certifying agentin meeting the requirement byidentifying categories of personscovered by the requirement includingpersons responsibly connected to thecertifying agent. Responsibly connecteddoes not include everyone that thecertifying agent does business with.Responsibly connected is defined in theDefinitions subpart of this final rule as‘‘any person who is a partner, officer,director, holder, manager, or owner of10 percent or more of the voting stockof an applicant or a recipient ofcertification or accreditation.’’ Thisdefinition has not changed.

(16) Independent Third-PartyInspectors. A commenter recommendedamending section 205.504(a)(3)(I) toprovide for the use of independentthird-party inspectors. We believe thatthis recommended amendment isunnecessary since nothing in theseregulations precludes a certifying agentfrom contracting with independent thirdparties for inspection services.

(17) Response to AccreditationApplicant. A commenter requested thatsection 205.506(a)(3) be amended toprovide a timeframe within which theAdministrator has to respond to theaccreditation application. While section205.506(a)(3) identifies the informationto be reviewed by the Administratorprior to the granting of accreditation, weassume the commenter is seeking aspecific time limit by which theAdministrator will acknowledge receiptof an application for accreditation. Inthe alternative, the commenter mayhave been seeking a specific time limitby which the Administrator must grantor deny accreditation. We believe that aregulation-mandated timeframe fornotifying the applicant of receipt of anapplication or for granting or denyingaccreditation is unnecessary. We plan toprocess all applications in the order inwhich they are received, to confirm thereceipt of each application upon receipt,and to establish a dialog with the

applicant upon confirmation of receiptof an application for accreditation. Wewill work with each applicant tocomplete the accreditation process asexpeditiously as possible. A firmtimeframe, however, cannot be set forgranting or denying accreditation due tothe anticipated uniqueness of eachapplicant and its application foraccreditation.

(18) Duration of Accreditation andCertification. A commenter asked, ‘‘Howcan certification be essentially inperpetuity and accreditation have a timerestraint?’’ The commenter’s questiondoes not indicate a preference forcertification or accreditation longevity.The commenter correctly points out thatcertification and accreditation, both ofwhich must be updated annually, aregranted for different time periods. TheAct limits the period of accreditation to5 years but does not establish a limit tothe period of certification. We believethe requirement that the certifiedoperation submit an annual update of itsorganic plan negates the need for acertification expiration date.

(19) Denial of Accreditation. Incommenting on section 205.507, acommenter stated that the regulationsneed to address what happens to acertifying agent’s clients when thecertifying agent fails to qualify foraccreditation on its first attempt.

Section 205.507(c) provides that anapplicant who has received writtennotification of accreditation denial mayapply for accreditation again at any timein accordance with section 205.502.Upon implementation of thecertification requirements of the NOP,production and handling operationsplanning to sell, label, or represent theirproducts as organic must be certified bya USDA-accredited certifying agentbefore selling, labeling, or representingtheir products as organic. If a producer’sor handler’s choice of certifying agentsdoes not receive USDA accreditation,the producer or handler must seek andreceive certification under the NOPfrom a USDA-accredited certifying agentbefore selling, labeling, or representingtheir products as organic. Producers andhandlers not so certified may not sell,label, or represent their products asorganic. Any producer or handler whoviolates this requirement will be subjectto prosecution under section 2120 of theAct.

(20) Loss of Accreditation After InitialSite Visit. Commenting on section205.508(b), a commenter stated thebelief that accreditation before a sitevisit may cause problems if thecertifying agent does not meet therequirements and, subsequently, losesits accreditation. We believe the

problems will be no greater than willoccur at any other time when it becomesnecessary to revoke a certifying agent’saccreditation, including when itbecomes necessary to initiateproceedings to suspend or revoke thecertification of one or more of thecertifying agent’s certified operations.However, just because revocation of acertifying agent’s accreditation may bejustified, it may not be necessary tosuspend or revoke the certification ofone or more of its clients. An operationcertified by a certifying agent that haslost its accreditation must makeapplication with a new certifying agentif it is going to continue to sell, label,or represent its products as organic.

(21) Prohibition on Certification AfterExpiration of Accreditation. Acommenter stated that, ‘‘USDA shouldallow certifying agents to apply thesame provisions to expiration ofcertification of a certified operation.’’The provision referenced by thecommenter is the section 205.510(c)(1)(current section 205.510(c)(2))requirement that certifying agents withan expired accreditation must notperform certification activities under theAct and these regulations. We have notaccepted the commenter’s request thatthe same prohibition be applied toproduction and handling operationswith an expired certification becausecertification does not expire.

(22) Expiration of Accreditation.Many commenters requested that weamend section 205.510(c)(1) to requireannual reports and ‘‘minivisits.’’ Thecommenters cited ISO Guide 61, section3.5.1. We do not believe that annual‘‘minivisits’’ are necessary to meet therequirements of ISO Guide 61 or toassure compliance with the NOP. Oneor more site evaluations will beconducted during the period ofaccreditation. The certifying agent’sannual report will be used as adetermining factor in whether toconduct a site evaluation. A request foramendment to a certifying agent’s areaof accreditation will also result in a siteevaluation. This requirement is locatedat current section 205.510(c)(2).

(23) Update and Review of InspectorLists. In commenting on section205.510(c)(1) (current section205.510(c)(2)) several commentersstated that updating and review ofinspector lists must occur morefrequently than every 5 years. Theycited ISO Guide 61, section 3.5.1.

Section 205.510(a)(1) requires that thecertifying agent annually update theinformation required in section 205.504.This includes the inspector informationrequired by paragraphs 205.504(a)(2)and 205.504(a)(3)(i).



Subpart G—Administrative

The National List of Allowed andProhibited Substances



This subpart contains criteria fordetermining which substances andingredients are allowed or prohibited inproducts to be sold, labeled, orrepresented as ‘‘organic’’ or ‘‘made withorganic (specified ingredients or foodgroup(s)).’’ It establishes the NationalList of Allowed and ProhibitedSubstances (National List) and identifiesspecific substances which may or maynot be used in organic production andhandling operations. Sections 6504,6510, 6517, and 6518 of the OrganicFoods Production Act (OFPA) of 1990provide the Secretary with the authorityto develop the National List. Thecontents of the National List are basedupon a Proposed National List, withannotations, as recommended to theSecretary by the National OrganicStandards Board (NOSB). The NOSB isestablished by the OFPA to advise theSecretary on all aspects of the NationalOrganic Program (NOP). The OFPAprohibits synthetic substances in theproduction and handling of organicallyproduced agricultural products unlesssuch synthetic substances are placed onthe National List.

Substances appearing on the NationalList are designated using the followingclassifications:

1. Synthetic substances allowed foruse in organic crop production

2. Nonsynthetic substances prohibitedfor use in organic crop production

3. Synthetic substances allowed foruse in organic livestock production

4. Nonsynthetic substances prohibitedfor use in organic livestock production

5. Nonagricultural (nonorganic)substances allowed as ingredients in oron processed products labeled as‘‘organic’’ or ‘‘made with organic(specified ingredients or food group(s))

6. Nonorganically producedagricultural products allowed asingredients in or on processed productslabeled as organic’’ or ‘‘made withorganic (specified ingredients or foodgroup(s))

This subpart also outlines proceduresthrough which an individual maypetition the Secretary to evaluatesubstances for developing proposedNational List amendments anddeletions.

The NOSB is responsible for makingthe recommendation of whether asubstance is suitable for use in organicproduction and handling. The OFPAallows the NOSB to develop substance

recommendations and annotations andforward to the Secretary a ProposedNational List and any subsequentproposed amendments. We have madeevery effort to ensure the National Listin this final rule corresponds to therecommendations on allowed andprohibited substances made by theNOSB. In developing theirrecommendations, the NOSB evaluatessynthetic substances for the NationalList utilizing the criteria stipulated bythe Act. Additionally, criteria forevaluating synthetic processingingredients have been implemented bythe NOSB. These criteria are aninterpretation and application of thegeneral evaluation criteria for syntheticsubstances contained in the OFPA thatthe NOSB will apply to processing aidsand adjuvants. The NOSB adopted thesecriteria as internal guidelines forevaluating processing aids andadjuvants. The adopted criteria do notsupersede the criteria contained in theOFPA or replace the Food and DrugAdministration’s (FDA) regulationsrelated to food additives and generallyrecognized as safe (GRAS) substances.The NOSB has also providedrecommendations for the use ofsynthetic inert ingredients in formulatedpesticide products used as productioninputs in organic crop or livestockoperations. The EnvironmentalProtection Agency (EPA) regulates andmaintains the EPA Lists of Inertingredients used for pesticide. In thisfinal rule, EPA Inerts List 1 and 2 areprohibited, EPA List 3 is also prohibitedunless specifically recommended asallowed by the NOSB, and EPA List 4Inerts are allowed unless specificallyprohibited.

In this final rule, only EPA List 4Inerts are allowed as ingredients informulated pesticide products used inorganic crop and livestock production.The allowance for EPA List 4 Inerts onlyapplies to pesticide formulations.Synthetic ingredients in any formulatedproducts used as organic productioninputs, including pesticides, fertilizers,animal drugs, and feeds, must beincluded on the National List. Assanctioned by OFPA, syntheticsubstances can be used in organicproduction and handling as long as theyappear on the National List. The organicindustry should clearly understand thatNOSB evaluation of the wide variety ofinert ingredients and other nonactivesubstances will require considerablecoordination between the NOP, theNOSB, and industry. Materials reviewcan be anticipated as one of the NOSB’sprimary activities during NOPimplementation. Considering the critical

nature of this task, the organic industryshould make a collaborative effort toprioritize for NOSB review thosesubstances that are essential to organicproduction and handling. Thedevelopment and maintenance of theNational List has been and will bedesigned to allow the use of a minimalnumber of synthetic substances that areacceptable to the organic industry andmeet the OFPA criteria.

We expect the maintenance of theNational List to be a dynamic process.We anticipate that decisions onsubstance petitions for the inclusion onor deletion from the National List willbe made on an annual basis. Any personseeking a change in the National Listshould request a copy of the petitionprocedures that were published in theFederal Register (65 Fed Reg 43259—43261) on July 13, 2000, from the NOP.The National List petition processcontact information is: ProgramManager, National Organic Program,USDA/AMS/TMP/NOP, Room 2945–S,Ag Stop 0268, P.O. Box 96456,Washington, DC 20090–6456 or visit theNOP website: www.ams.usda.gov/nop.Substances petitioned for inclusion onthe National List will be reviewed bythe NOSB, which will forward arecommendation to the Secretary. Anyamendments to the National List willrequire rulemaking and must bepublished for comment in the FederalRegister.

Nothing in this subpart alters theauthority of other Federal agencies toregulate substances appearing on theNational List. FDA issues regulations forthe safe use of substances in foodproduction and processing. USDA’sFood Safety and Inspection Service(FSIS) has the authority to determineefficacy and suitability regarding theproduction and processing of meat,poultry, and egg products. FDA andFSIS restrictions on use or combinationsof food additives or GRAS substancestake precedence over the approved andprohibited uses specified in this finalrule. In other words, any combinationsof substances in food processing notalready addressed in FDA and FSISregulations must be approved by FDAand FSIS prior to use. FDA and FSISregulations can be amended from timeto time under their rulemakingprocedures, and conditions of safe useof food additives and GRAS substancescan be revised by the amendment. It isimportant that certified organicproducers and handlers of both cropand livestock products consult withFDA regulations in 21 CFR parts 170through 199 and FSIS regulations in thisregard. All feeds, feed ingredients, andadditives for feeds used in the



production of livestock in an organicoperation must comply with the FederalFood, Drug, and Cosmetic Act (FFDCA).Animal feed labeling requirements arepublished in 21 CFR Part 501, and newanimal drug requirements and a listingof approved animal drugs are publishedin 21 CFR parts 510–558. Food (feed)additive requirements, a list of approvedfood (feed) additives generallyrecognized as safe substances,substances affirmed as GRAS, andsubstances prohibited from use inanimal food or feed are published in 21CFR parts 570–571, 21 CFR part 573, 21CFR part 582, 21 CFR part 584, and 21CFR part 589, respectively.Furthermore, the Food and DrugAdministration has worked closely withthe Association of American FeedControl Officials (AAFCO) andrecognizes the list of additives andfeedstuffs published in the AAFCOOfficial Publication, which is updatedannually.

Under the Federal Insecticide,Fungicide, and Rodenticide Act(FIFRA), EPA regulates the use of allpesticide products, including those thatmay be approved for use in the NOP. Inregistering a pesticide under FIFRA,EPA approves the uses of each pesticideproduct. It is a violation of FIFRA to usea registered product in a mannerinconsistent with its labeling. The factthat a substance is on the National Listdoes not authorize use or a pesticideproduct for that use if the pesticideproduct label does not include that use.If the National List and the pesticidelabeling conflict, the pesticide labelingtakes precedence and may prohibit apractice allowed on the National List.

National List—Changes Based OnComments


(1) Comprehensive Prohibition onExcluded Methods. Many commenterssupported a comprehensive prohibitionon the use of excluded methods inorganic production and handling. Thesecommenters stated that the proposedlanguage on excluded methods couldhave allowed some uses since thegeneral prohibition described in section205.301 of the proposed rule could beinterpreted as applying only tomultiingredient products. In order toprovide a comprehensive prohibition onthe use of excluded methods, weincorporated a new provision withinsection 205.105. A more comprehensivediscussion of this issue is found insubpart B, Applicability.

(2) Substance Evaluation Criteria forthe National List. Commenters statedthat the final rule should include in the

regulation text the evaluation criteriautilized by the NOSB for thedevelopment of substancerecommendations. We agree, and wehave inserted the substance evaluationcriteria developed by the NOSB forprocessing ingredients and cited thecriteria within the Act (7 U.S.C.6518(m)) for crops and livestockproduction as new provisions forsection 205.600, which is now entitled‘‘Evaluation criteria for allowed andprohibited substances, methods, andingredients.’’

(3) Substances Approved for Inclusionon the National List. Commenters statedthat the National List did not contain allof the substances recommended by theNOSB for inclusion on the National Listof Allowed and Prohibited Substances.We agree and have added the followingsubstances consistent with the mostrecent NOSB recommendations:

Crop ProductionLime sulfur as a plant disease control

substanceElemental sulfur as a plant or soil

amendmentCopper as a plant or soil micronutrientStreptomycin sulfate as plant disease

control substances with theannotation ‘‘ for fire blight control inapples and pears only’’

Terramycin (oxytetracycline calciumcomplex) as a plant disease controlsubstance with the annotation ‘‘forfire blight control only’’

Magnesium sulfate as a plant or soilamendment with the annotation‘‘allowed with a documented soildeficiency’’

Ethylene as a plant growth regulator,with the annotation ‘‘for regulation ofpineapple flowering’’We have added sodium nitrate and

potassium chloride to the National Listas nonsynthetic substances prohibitedfor use in crop production unless usedin accordance with the substanceannotations. Sodium nitrate isprohibited unless use is restricted to nomore than 20 percent of the crop’s totalnitrogen requirement. Potassiumchloride is prohibited unless derivedfrom a mined source and applied in amanner that minimizes chlorideaccumulation in the soil. Theseadditions are discussed further in item3 under Changes Based on Comments,subpart C.

Livestock Production

Oxytocin with the annotation ‘‘for usein postparturition therapeuticapplications’’

EPA List 4 inert ingredients as syntheticinert ingredients for use withnonsynthetic substances or synthetic

substances allowed in organiclivestock production.Several commenters recommended

that the final rule should specify whichnonsynthetic substances are prohibitedfor use in livestock production. Thesecommenters stated that the proposedrule prohibited six such substances foruse in crop production and maintainedthat an analogous list for livestockoperations would be beneficial. Of thesix nonsynthetic substances in theproposed rule prohibited for use in cropproduction, four were based on NOSBrecommendations (strychnine, tobaccodust, sodium fluoaluminate (mined),and ash from burning manure) and twowere based on statutory provisions inthe OFPA (arsenic and lead salts). Afterreviewing these substances and theNOSB recommendations, wedetermined that the prohibition for one,strychnine, also applies to livestockproduction. Individuals may petitionthe NOSB to have additionalnonsynthetic substances prohibited foruse in organic crop and livestockproduction.

Organic Handling (Processing)

Tribasic calcium phosphateNonsynthetic colorsFlavors, with the annotation

‘‘nonsynthetic sources only and mustnot be produced using syntheticsolvents and carrier systems or anyartificial preservatives’’

Nonsynthetic waxes, carnauba wax,wood resin

Cornstarch (native), gums, kelp, lecithinand pectin were moved from section205.605 to section 205.606(4) Substance Removed from the

National List. Commenters stated thatcertain substances on the National Listin the proposed rule had not beenrecommended by the NOSB. We agreewith the comment that the NOSB didnot recommend that magnesium shouldbe allowed as a plant or soilmicronutrient and have removed it fromthe National List.

(5) Changes in Substance Annotationson the National List. Commenters statedthat certain annotations in the proposedrule did not capture the preciserecommendations of the NOSB. Weagree and have amended theannotations within the National List asfollows:

The annotation for hydrated lime as aplant disease control substance nowstates, ‘‘must be used in a manner thatminimizes accumulation of copper inthe soil.’’

The annotation for horticultural oilsas an insecticide substance and as aplant disease control substance now



states, ‘‘Narrow range oils as dormant,suffocating, and summer oils.’’

The annotation for hydrated lime inlivestock production now states, ‘‘notpermitted for soil application or tocauterize physical alterations ordeodorize animal wastes.’’

The annotation for the allowedsynthetic parasiticide Ivermectin hasbeen modified to state that thesubstance may not be used during thelactation period of breeding stock.

The annotation for trace minerals andvitamins allowed as feed additives hasbeen modified and now states, ‘‘used forenrichment or fortification when FDAapproved.’’

The annotation for magnesium sulfatein organic handling now states,‘‘nonsynthetic sources only.’’

The annotation for EPA List 4 Inertsallowed in crop and livestockproduction has been modified to state,‘‘ * * * for use with nonsyntheticsubstances or synthetic substanceslisted in this section * * *’’

(6) Sulfur Dioxide for Organic Wines.Many commenters recommended thatthis final rule should allow for the useof sulfur dioxide in wine labeled ‘‘madewith organic grapes.’’ They argued thatsulfur dioxide is necessary in organicwine production and that prohibiting itsuse would have a negative impact onorganic grape production and wineriesthat produce wine labeled ‘‘made withorganic grapes.’’ The prohibition on theuse of sulfur dioxide in the proposedrule was based upon the requirement inthe Act that prohibited the addition ofsulfites to organically produced foods.However, a change in the Act nowallows the use of sulfites in winelabeled as ‘‘made with organic grapes.’’Therefore, we have added sulfur dioxideto the National List with the annotation,‘‘for use only in wine labeled ‘‘madewith organic grapes,’’ Provided, That,total sulfite concentration does notexceed 100 ppm.’’ The label for thewine must indicate the presence ofsulfites. This addition to the NationalList is also in agreement with the NOSBrecommendation for allowing the use ofsulfur dioxide in producing wine to belabeled as ‘‘made with organic grapes.’’

National List—Changes Requested ButNot Made


(1) Restructuring the National List.Commenters requested a restructuring ofthe National List to improve its clarityand ease of use. Some of thecommenters asked for minor changesinvolving the wording of section titles.Other commenters were opposed to the

categories used in the National Listbecause the categories are not incompliance with the Act. In its June2000 meeting, the NOSB asked the NOPto review a proposal from a researchinstitute proposing that processingmaterials for the National List becategorized according to industrystandards. This proposal recommendedincluding new sections for substancesused in ‘‘made with * * *’’ andsubstances used in the 5-percentnonorganic portion of ‘‘organic’’multiingredient products. We agree thatthe present structure of the National Listmay not have optimum clarity and easeof use. However, extensive restructuringof the National List without additionalNOSB consideration and publicdiscussion would be a significantvariation from the policy thatestablished the National List for thisfinal rule. The NOP will work with theNOSB and the public to refine theNational list consistent with industrynorms and public expectations.

(2) Use of EPA List 4 Inerts. Theproposed rule allowed EPA List 4 Inertsto be used as synthetic inert ingredientswith allowed synthetic activeingredients in crop production. Somecommenters stated that certainsubstances among the EPA List 4 inertsshould not be allowed in organicproduction. Some commenters wentfurther and recommended that theallowance for synthetic inert ingredientsshould be limited to the subset ofmaterials that the EPA designates as List4A. We do not agree with thesecommenters and have retained theallowance for all inerts included on EPAList 4. List 4 inerts are classified by EPAas those of ‘‘minimal concern’and, aftercontinuing consultation with EPA, webelieve there is no justification for afurther restriction to List 4A. Ifcommenters believe that a particularList 4 inert should not be allowed informulated products used in organicproduction, they can petition the NOSBto have that substance prohibited.

(3) Removing Vaccines from theNational List. Some commentersasserted that vaccines should not beincluded on the National List becausethe NOSB had never favorablyrecommended their use in livestockproduction. However, the OFPAauthorizes the use of vaccines, and in1995, the NOSB recommended allowingtheir use. The NOSB stated that use ofvaccines may be necessary to ensure thehealth of the animal and to remain incompliance with Federal, State, orregional regulations. We agree with theNOSB’s recommendation and haveretained vaccines as an allowedsubstance in livestock medication.

(4) Adding Amino Acids to theNational List. Some commentersrecommended that amino acids shouldbe added to the National List as allowedsynthetic substances for livestockproduction. We have not added aminoacids to the National List because theNOSB has not recommended that theyshould be allowed. This subject isdiscussed further in item 4, Livestock—Changes Based on Comments, subpart C.

(5) Creating a Category for ProhibitedNonsynthetic Seed Treatments. Acommenter stated that the National Listof nonsynthetic substances prohibitedfor use in crop production shouldinclude provisions for seed treated witha nonsynthetic substance. Thiscommenter stated that the final ruleshould acknowledge that a nonsyntheticseed treatment could be prohibited onthe National List. We do not believe itis necessary to include a separatecategory for seed treatments under theprohibited nonsynthetic section of theNational List. An individual maypetition the NOSB to have a particularnonsynthetic seed treatments placed onthe prohibited list without creating anew category for seed treatments.

(6) Creating a Category for TreatedSeed and Toxins Derived from Bacteria.Commenters stated that the NationalList of synthetic substances allowed incrop production should includecategories for treated seed and toxinsderived from bacteria. Thesecommenters stated that these categoriesare sanctioned by the OFPA, and failureto consider them would place asignificant burden on organic producers.We believe it is unnecessary to includethese categories on the National List.Specific substances from thesecategories could be incorporated inexisting categories that reflect theirfunction, such as plant disease controlor insecticide. An individual maysubmit petitions to the NOSB to havespecific substances from thesecategories considered for inclusion onthe National List.

(7) Remove Categories for FeedSupplements. A commenter stated thatit was inappropriate for the NationalList of synthetic substances allowed inlivestock production to containcategories for feed supplements andfeed additives because they are notauthorized in the OFPA. We disagreewith this commenter because theidentification of categories on theNational List does not mean that allsubstances within that category areallowed. The categories help to clarifywhich types of materials may beincluded on the National List. Thesubstances included under thecategories of feed supplements and feed



additives were recommended by theNOSB and added to the National Listwith the Secretary’s approval.

(8) Neurotoxic Substances on theNational List. Many commentersrequested that the NOP removeparticular substances from section205.605 of the National List. They statedthese substances were sources ofneurotoxic compounds that negativelyeffect human health. The substancescited were yeast (autolysate andbrewers), carrageenan, and enzymes.Moreover, these commenters arguedagainst including on the National Listsome amino acids or their derivativeswhich the commenters claim haveneurotoxic side effects. Thesecommenters requested that amino acidsshould be prohibited from the NationalList due to the possibility thatneurotoxic substances could be utilizedfor either organic agriculturalproduction or handling.

We do not agree with the requests ofthe commenters and we have not madethe requested changes. There are noamino acids currently on the NationalList; therefore, synthetic sources ofamino acids are prohibited. Unlessrecommended for use by the NOSB,synthetic amino acids will not beincluded on the National List. The NOPhas established a petition process forsubstances to be evaluated for inclusionon or removal from the National List ofAllowed and Prohibited Substances inorganic production and handling.Anyone seeking to have a particularsubstance removed from the NationalList may file a substance petition toamend the National List.

(9) EPA List 4 Inerts for OrganicProcessing. A few commentersrecommended that substances in EPAList 4 inerts that are allowed for use incrop production also be allowed for useas processing materials. We do notagree, and we have not included EPAList 4 Inerts on the National List fororganic handling. Inerts listed on EPAList 4 have been evaluated andapproved for use in pesticideformulations, not for use as processingmaterials. Inerts that are included onEPA List 4 would have to be furtherevaluated to determine whether suchmaterials meet the criteria for inclusionon the National List.

(10) Modifying Annotations ofOrganic Processing Substances. Onecommenter requested that theDepartment modify the annotation forphosphoric acid to include its use as aprocessing aid. We have not made thesuggested change. Any change in theannotation of a substance can onlyoccur through an NOSBrecommendation. Individuals or groups

can use the petition process to submitsubstance petitions to the NOSB for theevaluation to be included on or removedfrom the National List.

(11) Nutritional Supplementation ofOrganic Foods. Some commentersasserted that 21 CFR 104.20 is not anadequate stand-alone reference fornutritional supplementation of organicfoods. As a result, these commentersrecommended that the final rule includeas additional cites 21 CFR 101.9(c)(8) forFDA-regulated foods and 9 CFR317.30(c), 318.409(c)(8) for foodsregulated by FSIS to support 21 CFR104.20. We did not implement thesuggested changes of the commenters.Section 205.605(b)(20) in the proposedrule allowed the use of syntheticnutrient vitamins and minerals to beused in accordance with 21 CFR 104.20,Nutritional Quality Guidelines ForFoods, as ingredients in processedproducts to be sold as ‘‘organic’’ or‘‘made with * * *.’’ The commentersrecommended cites, 21 CFR 101.9(c)(8)for FDA-regulated foods and 9 CFR317.30(c); section 318.409(c)(8) did notprovide provisions for nutritionalsupplementation of foods. Instead, thesesuggested cites were particularly aimedtoward: (1) The declaration of nutritioninformation on the label and in labelingof a food; (2) labeling, marking devices,and containers; (3) entry into officialestablishments; and (4) reinspection andpreparation of products. The NOP, inconsultation with FDA, considers 21CFR 104.20 to be the most appropriatereference regarding nutritionalsupplementation for organic foods.

(12) National List Petition Process asPart of the Final Rule.

Commenters have requested that theNational List Petition Process, approvedby the NOSB at its June 2000 meeting(and published in the Federal Registeron July 13, 2000), be included in thefinal rule. We do not agree with thecommenters, and we have retained theNational List Petition Process regulationlanguage from the proposed rule. Wehave separated the specific petitionprocess from the regulation to providefor maximum flexibility to change andclarify the petition process toaccommodate new considerationsdeveloped during the NOPimplementation. If this process werepart of this final rule, updates to thepetition process would require noticeand comment rulemaking. Any changesin the National List that may be a resultof the petition process, however, wouldrequire notice and commentrulemaking.

(13) Nonapproved SubstanceAmendments to the National List.Commenters also requested to have

many substances that are not on theNational List and that have not beenrecommended by the NOSB for use inorganic production and handling beadded to the National List. We do notagree. Amendments to the National Listmust be petitioned for NOSBconsideration, must have an NOSBrecommendation, and must bepublished for public comment in theFederal Register.

National List—ClarificationsClarification is given on the following

issues raised by commenters as follows:(1) Inerts Use in Botanical or

Microbial Pesticides. Commentersexpressed concern that the prohibitionon the use of EPA List 3 inerts wouldprevent organic producers from usingcertain botanical or microbialformulated products that are currentlyallowed under some certificationprograms. These commenters requestedthat the NOP and the NOSB expeditethe evaluation of List 3 inerts used innonsynthetic formulated products toprevent the loss of certain formulatedproducts. The prohibition of List 3inerts was based on therecommendation of the NOSB to addonly those substances from List 4 to theNational List. The NOSB alsorecommended that individual inertsubstances included on List 3 could bepetitioned for addition to the NationalList. The NOP has requested that theNOSB identify for expedited reviewthose List 3 inerts that are mostimportant in formulated products usedin organic production. Individuals maypetition to have these inerts consideredfor inclusion on the National List.Additionally, the NOP will work withthe EPA and the registrants offormulated products to expedite reviewof List 3 inerts currently included informulated products used in organicproduction. Unless List 3 inerts aremoved to List 4 or individually addedto the National List, they are prohibitedfor use in organic production.

(2) Prohibiting Ash, Grit, andScreenings Derived from Sewage Sludge.Many commenters recommended thatthe ash, grit, and screenings derivedfrom the production of sewage sludgeshould be added to the National List asnonsynthetic materials prohibited foruse in crop production. While the useof sewage sludge, including ash, grit,and screenings, is prohibited in organicproduction, we did not add them to theNational List as prohibited nonsyntheticsubstances. This subject is discussedfurther under subpart A, Definitions—Changes Requested But Not Made.

(3) Allowed Uses for Pheromones.Some commenters were concerned that



the annotation for using pheromones as‘‘insect attractants’’ was too limiting andwould not include uses such as matingdisruption, trapping, and monitoring.The annotation for pheromones does notpreclude any use for a pheromone thatis otherwise allowed by Federal, State,or local regulation.

(4) Nonagricultural Products asLivestock Feed Ingredients. Somecommenters questioned whethernonsynthetic, nonagriculturalsubstances such as fishmeal andcrushed oyster shell needed to be addedto the National List to be used inlivestock feed. Nonsynthetic substancesdo not have to appear on the NationalList and may be used in organiclivestock feed, provided that they areused in compliance with the FFDCA.This subject is discussed further underitem 4, Livestock—Changes Based onComments, subpart C.

(5) Chlorine Disinfectant LimitAnnotation for Organic Production andHandling. Some commenters requestedclarification on the annotation for usingchlorine materials as an allowedsynthetic substance in crop andhandling operations. The annotation inthe proposed rule, which has beenretained in the final rule, stated that‘‘residual chlorine levels in the watershall not exceed the maximum residualdisinfectant limit under the Safe WaterDrinking Act.’’ With this annotation, theresidual chlorine levels at the pointwhere the waste water stream leaves theproduction or handling operation mustmeet limits under the Safe DrinkingWater Act.

(6) Tobacco Use in OrganicProduction. One commenter questionedwhether forms of tobacco other thantobacco dust, such as water extracts orsmoke, were prohibited nonsyntheticsubstances. The technical advisorypanel (TAP) review on which the NOSBbased its recommendation to prohibittobacco dust identified nicotine sulfateas the active ingredient. Therefore, anysubstance containing nicotine sulfate asan active ingredient is prohibited incrop production.

(7) Nonsynthetic AgriculturalProcessing Aids on the National List. Acommenter requested clarification fromthe NOP on whether processing aids (e.g.,defoaming agents), which arenonsynthetic and nonorganicagricultural substances (e.g., soybeanoil), must appear on the National Listwhen used in processing. In theregulation, a nonsynthetic andnonorganic agricultural product, such assoybean oil, used as a processing aiddoes not have to appear on the NationalList. Such products are included in theprovision in section 205.606 that

nonorganically produced agriculturalproducts may be used in accordancewith any applicable restrictions whenthe substance is not commerciallyavailable in organic form.

(8) Transparency of the National ListPetition Process. Some commentersstated the petition process for amendingthe National List appears to havelimited public access and should bemore transparent. These commentersadvocate that any amendments to theNational List should be subject to noticeand comment. They also requestedclarity on how petitions are prioritizedand reviewed and the timeframes forreview. Additionally, these commentersasked the NOP to expedite the review ofmaterials for the National List. On July13, 2000, AMS published in the FederalRegister (Vol. 65, 43259–43261)guidelines for submitting petitions forthe evaluations of substances for theaddition to or removal from the NationalList. In this notice, the NOP stated thatmost petition information is availablefor public inspection with the exceptionof information considered to be‘‘confidential business information.’’The notice also specified that anychanges to the National List must bepublished in the Federal Register forpublic comment. The published petitionnotice has also provided an indicationto the industry about the urgency of theneed for substance review and that theindustry should provide pertinentinformation to the NOSB to expedite thereview of materials not on the NationalList.

State Organic Programs

The Act provides that each State mayimplement an organic program foragricultural products that have beenproduced and handled within the State,using organic methods that meet therequirements of the Act and theseregulations. The Act further providesthat a State organic program (SOP) maycontain more restrictive requirementsfor organic products produced andhandled within the State than arecontained in the National OrganicProgram (NOP). All SOP’s andsubsequent amendments thereto mustbe approved by the Secretary.

A State may have an SOP but not havea State certifying agent. A State mayhave a State certifying agent but no SOP.Finally, a State may have an SOP anda State certifying agent. In all cases, theSOP’s must be approved by theSecretary. In all cases, the Statecertifying agent must apply for andreceive accreditation to certify organicproduction or handling operationspursuant to subpart F.

In States with an approved SOP, theSOP’s governing State official isresponsible for administering acompliance program for enforcement ofthe NOP and any more restrictiverequirements contained in the SOP. TheSOP governing State officials mayreview and investigate complaints ofnoncompliance involving organicproduction or handling operationsoperating within their State and, whenappropriate, initiate suspension orrevocation of certification. The SOPgoverning State officials may alsoreview and investigate complaints ofnoncompliance involving accreditedcertifying agents operating within theirState. They must report the findings ofany review and investigation of acertifying agent to the NOP ProgramManager along with anyrecommendations for appropriateaction. States that do not have an SOPwill not be responsible for complianceunder the NOP, except that anaccredited State certifying agentoperating within such State will havecompliance responsibilities under theNOP as a condition of its accreditation.

The sections covering SOP’s,beginning with section 205.620,establish: (1) The requirements for anSOP and amending such a program and(2) the process for approval of an SOPand amendments to the SOP’s. Reviewand approval of an SOP will occur notless than once during each 5-yearperiod. Review related to compliancematters may occur at any time.


State Organic Program Requirements

A State may establish an SOP forproduction and handling operationswithin the State that produces andhandles organic agricultural products.The SOP and supporting documentationmust demonstrate that the SOP meetsthe requirements for organic programsspecified in the Act.

An SOP may contain more restrictiverequirements governing the productionand handling of organic products withinthe State. Such requirements must bebased on environmental conditions orspecific production or handlingpractices particular to the State orregion of the United States, whichnecessitates the more restrictiverequirement. More restrictiverequirements must be justified andshown to be consistent with and tofurther the purposes of the Act and theregulations in this part. Requirementsnecessitated by an environmentalcondition that is limited to a specificgeographic area of the State should onlybe required of organic production and



handling operations operating withinthe applicable geographic area. Ifapproved by the Secretary, the morerestrictive requirements will become theNOP regulations for organic producersand handlers in the State or applicablegeographical area of the State. AllUSDA-accredited certifying agentsplanning to operate within a State withan SOP will be required to demonstratetheir ability to comply with the SOP’smore restrictive requirements.

No provision of an SOP shalldiscriminate against organic agriculturalproducts produced by production orhandling operations certified bycertifying agents accredited or acceptedby USDA pursuant to section 205.500.Specifically, an SOP may notdiscriminate against agriculturalcommodities organically produced inother States in accordance with the Actand the regulations in this part. Further,an SOP may not discriminate againstagricultural commodities organicallyproduced by production or handlingoperations certified by foreign certifyingagents operating under: (1) Standardsdetermined by USDA to meet therequirements of this part or (2) anequivalency agreement negotiatedbetween the United States and a foreigngovernment.

To receive approval of its SOP, a Statemust assume enforcement obligations inthe State for the requirements of thispart and any more restrictiverequirements included in the SOP andapproved by the Secretary. Specifically,the State must ensure compliance withthe Act, the regulations in this part, andthe provisions of the SOP by certifiedproduction and handling operationsoperating within the State. The SOPmust include compliance and appealsprocedures equivalent to those providedfor under the NOP.

An SOP and any amendments theretomust be approved by the Secretary priorto implementation by the State.

State Organic Program ApprovalProcess

An SOP and subsequent amendmentsthereto must be submitted to theSecretary by the SOP’s governing Stateofficial for approval prior toimplementation. A request for approvalof an SOP must contain supportingmaterials that include statutoryauthorities, program descriptions,documentation of environmental orecological conditions or specificproduction and handling practicesparticular to the State which necessitatemore restrictive requirements than therequirements of this part, and otherinformation as may be required by theSecretary. A request for amendment of

an approved SOP must containsupporting materials that include anexplanation and documentation of theenvironmental or ecological conditionsor specific production practicesparticular to the State or region, whichnecessitate the proposed amendment.Supporting material also must explainhow the proposed amendment furthersand is consistent with the purposes ofthe Act and the regulations in this part.

Each request for approval of an SOPor amendment to an SOP and itssupporting materials anddocumentation will be reviewed forcompliance with the Act and theseregulations. Within 6 months ofreceiving the request for approval, theSecretary will notify the SOP’sgoverning State official of approval ordisapproval. A disapproval will includethe reasons for disapproval. A Statereceiving a notice of disapproval of itsSOP or amendment to its SOP maysubmit a revised SOP or amendment toits SOP at any time.

Review of State Organic ProgramsSOP’s will be reviewed at least once

every 5 years by the Secretary asrequired by section 6507(c)(1) of theAct. The Secretary will notify the SOP’sgoverning State official of approval ordisapproval of the program within 6months after initiation of the review.

State Organic Programs—ChangesBased on Comments

This portion of subpart G differs fromthe proposal in several respects asfollows:

(1) Publication of SOP’s andConsideration of Public Comments.Some commenters assert that the USDAshould not publish SOP provisions forpublic comment in the Federal Register.These commenters argued that it is notappropriate for the NOP to havenonresidents commenting on aparticular State program as nearly allStates have a mechanism to ensure fullpublic participation in their regulationpromulgation. They believe thecomment process set forth in theproposed rule is a redundant andunacceptable intrusion on Statesovereignty.

We will not publish for publiccomment the provisions of SOP’s underreview by the Secretary in the FederalRegister. We have removed theprovision from this final rule, describedin section 205.621(b), requiring theSecretary to publish in the FederalRegister for public comment a summaryof the SOP and a summary of anyamendment to such a program.Alternatively, we will announce whichSOP’s are being reviewed through the

NOP website. The NOP will issue publicinformation notices that will announceeach approved SOP and any approvedamendments to an existing Stateprogram. The notices will identify thecharacteristics of the approved Stateprogram that warranted the morerestrictive organic production orhandling requirements. We also willinclude a summary of the new programon the NOP website.

(2) NOP Oversight of SOP’s. Severalcommenters stated that, in the proposedrule, the provisions did not provide acomprehensive description of organicprograms operated by States that wouldbe under NOP authority. Somecommenters implied that the proposedrule would only include States withorganic certification programs, whileother commenters inquired whether thesections 205.620 to 205.622 includedother SOP activities beyondcertification.

To address the commenters’ concerns,we have modified the section headingby adding the term, ‘‘organic,’’ andremoving the term, ‘‘certification,’’ fromthe description and definition of SOP’s.We have taken this action to clarify that,while certification is one component ofthe requirements, it does not define theextent of evaluation of State programsthat will be conducted by the NOP.SOP’s can choose not to conductcertification activities under theirexisting organic program. Stateprograms whose provisions fall withinthe scope of the eleven generalprovisions described in the Act (7U.S.C. 6506) will require Departmentalreview.

States may conduct other kinds oforganic programs that will not needreview and approval by the NOP.Examples of these other programs mayinclude: organic promotion and researchprojects, marketing; transition assistanceor cost share programs, registration ofState organic production and handlingoperations, registration of certifyingagents operating within the State, or aconsumer referral program. The NOPwill not regulate such State activities.Such programs may not advertise,promote, or otherwise infer that theState’s organic products are moreorganic or better than organic productproduced in other States. Suchprograms and projects would be beyondthe scope of this national program andwill not be subject to the Secretary’sreview.

State Organic Programs—ChangesRequested But Not Made

(1) Limitations on SOP MoreRestrictive Requirements. Commentersexpressed concern that limiting a State’s



ability to craft a regulation designated asa more restrictive requirement toenvironmental conditions or specificproduction and handling practiceswould hinder the ongoing developmentof SOP’s. They were concerned that anyState legislation modifying the SOPwould need to be preapproved by theSecretary.

We have retained the provisionlimiting the scope of more restrictiverequirements States can include in theirorganic program as described in section205.620(c). We believe the languagecontained in the provision is broadenough to facilitate the development ofSOP’s without hindering developmentor State program implementation andenforcement. Section 6507(b)(1) of theAct provides that States may establishmore restrictive organic certificationrequirements; paragraph (b)(2)establishes parameters for thoserequirements. More restrictive SOPrequirements must: further the purposesof the Act, be consistent with the Act,not discriminate against other State’sagricultural commodities, and beapproved by the Secretary beforebecoming effective. We expect that aState’s more restrictive requirements arelikely to cover specific organicproduction or handling practices toaddress a State’s specific environmentalconditions. The Secretary will approveState’s requests for more restrictive Staterequirements that are consistent withthe purposes of the Act. However, webelieve requests from States for morerestrictive requirements will be rare.Although SOP’s can impose additionalrequirements, we believe States will bereluctant to put their programparticipants at a competitivedisadvantage when compared toproducers and handlers in other Statesabsent compelling environmentalconditions or a compelling need forspecial production and handlingpractices. While preapproval of Statelegislation modifying an existing SOP isnot required, the NOP envisions a closeconsultation with States with existingprograms to ensure consistency with thefinal rule.

(2) SOP Enforcement Obligations.Some commenters expressed concernabout States having adequate resourcesavailable to implement enforcementactivities that they are obligated toconduct under the NOP. A few of thesecommenters argue that the enforcementobligation will result in their Stateprograms being discontinued. A fewcommenters cited a lack of federalfunding to support State enforcementobligations and suggested the NOPprovide funding for enforcementactivities.

The proposed rule indicated thatStates with organic programs mustassume enforcement obligations for thisregulation within their State. We haveretained this enforcement obligation insection 205.620(d). Many Statescurrently have organic programs withthe kind of comprehensive enforcementand compliance mechanisms necessaryfor implementing any State regulatoryprogram. Assuming those enforcementactivities are consistent with the NOP,this final rule adds no additionalregulatory burden to the SOP’s. Thecosts associated with the enforcementactivities of an approved SOP should besimilar to the enforcement costsassociated with the existing Stateprogram. Additional clarification of SOPenforcement obligations is in theAccreditation, Appeals, and Compliancepreamble discussions.

(3) SOP Evaluation NotificationPeriod. A few commenters indicatedthat the SOP review and decisionnotification period described in section205.621(b) of the proposed rule couldhinder a State’s ability to develop orimplement an SOP. These commenterscited potential cases in which particularStates have requirements for regulatorypromulgation that must occur within 6months under a State legislative sessionthat is held once every 2 years. Thesecommenters suggested the NOP shouldreduce the notification time to 1 to 3months.

We disagree with the commenters. Inthe proposed rule in section 205.621(b),the Secretary is required to notify theSOP’s governing State official within 6months of receipt of submission ofdocuments and information regardingthe approval of the SOP. We haveretained this time period. We willreview SOP applications as quickly aspossible and will endeavor to makedecisions in less than 6 monthswhenever possible. However, someSOP’s may be very complex and requiremore review time. The NOP envisionsworking closely with the States andState officials to ensure a smoothtransition to the requirements of thisfinal rule.

State Organic Programs—Clarifications(1) Discrimination Against Organic

Products. Several commenters requestedthe addition of a provision prohibitingan SOP from discriminating againstagricultural commodities organicallyproduced in other States.Discrimination by a State againstorganically produced agriculturalproducts produced in another State isprevented in two ways. First, anyorganic program administered by a Statemust meet the requirements for organic

programs specified in the Act and beapproved by the Secretary. Finally, aUSDA-accredited certifying agent mustaccept the certification decisions madeby another USDA-accredited certifyingagent as its own.

(2) Potential Duplication Between theAccreditation and SOP Review Process.Some commenters asked about possibleduplication between the process forreviewing SOP’s and the process ofaccreditation review. These commentershave asked the NOP to eliminate anyduplication that may exist between thetwo review processes. The NOP will beconducting a review process for SOP’sand a separate review process foraccrediting State and private certifyingagents. The two reviews are different.The SOP review is the evaluation ofSOP compliance with the Act and theNOP regulations. If approved, the SOPbecomes the NOP standards for theparticular State with which allcertifying agents operating in that Statemust comply. Approved SOP’s must bein compliance with the Act and theNOP regulations. They cannot haveweaker standards than the NOP. Statescan have more restrictive requirementsthan the NOP if approved by theSecretary.

The accreditation review is anevaluation of the ability of certifyingagents to carry out their responsibilitiesunder the NOP. This review is ameasure of the competency of certifyingagents to evaluate compliance tonational organic standards. Certifyingagents will not be unilaterallyestablishing regulations or standardsrelated to the certification of organicproducts. They will only provide anassessment of compliance.

Thus, SOP reviews and accreditationreviews are separate evaluations ofdifferent procedures. We acknowledgesome of the information for the twoevaluations may be similar; e.g.,compliance procedures. The reviews donot duplicate the same requirements.However, the NOP envisions workingwith States to ensure documentation isnot duplicated.

(3) Scope of Enforcement by States. Anumber of State commenters haverequested clarification on the proposedrule provision specifying that approvedSOP’s must assume enforcementobligations in their State for therequirements of the NOP and anyadditional requirements approved bythe Secretary. These commenters haveindicated that they remain uncertain asto what is expected by the term,‘‘enforcement obligation.’’

Approved SOP’s will have toadminister and provide enforcement ofthe requirements of the Act and the



regulations of the NOP. Theadministrative procedures used by theState in administering the approvedSOP should have the same force andeffect as the procedures use by AMS inadministering this program. This finalrule specifies that the requirements forenvironmental conditions or for specialproduction and handling practices arenecessary for establishing morerestrictive requirements. These factorsestablish our position that a State mustagree to incurring increasedenforcement responsibilities andobligations to be approved as an SOPunder the NOP. For instance, a Statewith an approved organic program willoversee compliance and appealsprocedures for certified organicoperations in the State. Thoseprocedures must provide due processopportunities such as rebuttal,mediation, and correction procedures.Once approved by the Secretary, theState governing official of the SOP mustadminister the SOP in a manner that isconsistent and equitable for the certifiedparties involved in compliance actions.

(4) SOP’s That Do not Certify andNOP Oversight. A few commentersrequested that the NOP develop newprovisions to include State programsthat have organic regulations but do notconduct certification activities. Thesecommenters argue that any SOP that hasa regulatory impact on organicproducers, regardless of whether or notthe program includes certification, beapproved by the Secretary.

This regulation, in section 205.620(b),provides for NOP oversight of SOP’sthat do not conduct certificationactivities.

(5) State’s Use of Private CertifyingAgents. Some commenters haverequested that the NOP provideclarification of the proposed rulesections 205.620 through 205.622 onhow these sections will affect States thatdelegate certification activities toprivate certifying agents. Thesecommenters asked how the NOP intendsto oversee this type of State activity.

The NOP intends to give considerablelatitude to States in choosing the mostappropriate system or procedures tostructure their programs. This mayinclude a State establishing its owncertifying agent or relying on privatecertifying agents. However, States willnot be accrediting certifying agentsoperating in their State. Accreditation ofall certifying agents operating in theUnited States is the responsibility ofUSDA. Establishment of a singlenational accreditation program is anessential part of the NOP. As statedelsewhere in this final rule, anyaccreditation responsibilities of a State’s

current organic program will cease withimplementation of this program.Pursuant to the Compliance provisionsof this subpart, the governing Stateofficial charged with complianceoversight under the SOP may investigateand notify the NOP of possiblecompliance violations on the part ofcertifying agents operating in the State.However, the State may not pursuecompliance actions or removeaccreditation of any certifying agentaccredited by the Secretary. Thatauthority is the sole responsibility of theSecretary. If more restrictive Staterequirements are approved by theSecretary, we will review certifyingagent qualifications in the State, asprovided by section 205.501(a)(20), anddetermine whether they are able tocertify to the approved, more restrictiverequirements. Our accreditationresponsibilities include oversight ofboth State and private certifying agents,including any foreign certifying agentsthat may operate in a State.

Subpart G—Fees

This portion of subpart G sets forththe regulations on fees and othercharges to be assessed for accreditationand certification services under theNational Organic Program (NOP). Theseregulations address the kinds of fees andcharges to be assessed by the U.S.Department of Agriculture (USDA) forthe accreditation of certifying agents,the level of such fees and charges, andthe payment of such fees and charges.These regulations also address generalrequirements to be met by certifyingagents in assessing fees and othercharges for the certification of producersand handlers as certified organicoperations. Finally, these regulationsaddress the Secretary’s oversight of acertifying agent’s fees and charges forcertification services.

Description of Regulation

Fees and Other Charges forAccreditation

Fees and other charges will beassessed and collected from applicantsfor initial accreditation and accreditedcertifying agents submitting annualreports or seeking renewal ofaccreditation. Such fees will be equal asnearly as may be to the cost of theaccreditation services rendered underthese regulations. Fees-for-service willbe based on the time required to renderthe service provided calculated to thenearest 15–minute period. Activities tobe billed on the basis of time usedinclude the review of applications andaccompanying documents andinformation, evaluator travel, the

conduct of on-site evaluations, review ofannual reports and updated documentsand information, and the preparation ofreports and any other documents inconnection with the performance ofservice. The hourly rate will be the sameas that charged by the AgriculturalMarketing Service (AMS), through itsQuality System Certification Program, tocertification bodies requestingconformity assessment to theInternational Organization forStandardization ‘‘General Requirementsfor Bodies Operating ProductCertification Systems’’ (ISO Guide 65).

Applicants for initial accreditationand accredited certifying agentssubmitting annual reports or seekingrenewal of accreditation during the first18 months following the effective dateof subpart F will receive service withoutincurring an hourly charge for suchservice.

Applicants for initial accreditationand renewal of accreditation must payat the time of application, effective 18months following the effective date ofsubpart F, a nonrefundable fee of$500.00. This fee will be applied to theapplicant’s fees-for-service account.

When service is requested at a placeso distant from the evaluator’sheadquarters that a total of one-halfhour or more is required for theevaluator(s) to travel to such a place andback to the headquarters or from a placeof prior assignment on circuitousrouting requiring a total of one-half houror more to travel to the next place ofassignment on the circuitous routing,the charge for such service will includeall applicable travel charges. Travelcharges may include a mileage chargeadministratively determined by USDA,travel tolls, or, when the travel is madeby public transportation (includinghired vehicles), a fee equal to the actualcost thereof. If the service is providedon a circuitous routing, the travelcharges will be prorated among all theapplicants and certifying agentsfurnished the service involved. Travelcharges will become effective for allapplicants for initial accreditation andaccredited certifying agents on theeffective date of subpart F. Theapplicant or certifying agent will not becharged a new mileage rate withoutnotification before the service isrendered.

When service is requested at a placeaway from the evaluator’s headquarters,the fee for such service shall include aper diem charge if the employee(s)performing the service is paid per diemin accordance with existing travelregulations. Per diem charges toapplicants and certifying agents willcover the same period of time for which



the evaluator(s) receives per diemreimbursement. The per diem rate willbe administratively determined byUSDA. Per diem charges shall becomeeffective for all applicants for initialaccreditation and accredited certifyingagents on the effective date of subpart F.The applicant or certifying agent willnot be charged a new per diem ratewithout notification before the service isrendered.

When costs, other than fees-for-service, travel charges, and per diemcharges, are associated with providingthe services, the applicant or certifyingagent will be charged for these costs.Such costs include but are not limitedto equipment rental, photocopying,delivery, facsimile, telephone, ortranslation charges incurred inassociation with accreditation services.The amount of the costs charged will bedetermined administratively by USDA.Such costs will become effective for allapplicants for initial accreditation andaccredited certifying agents on theeffective date of subpart F.

Payment of Fees and Other ChargesApplicants for initial accreditation

and renewal of accreditation must remitthe nonrefundable fee along with theirapplication. Remittance must be madepayable to the Agricultural MarketingService, USDA, and mailed to: ProgramManager, USDA–AMS–TMP–NOP,Room 2945-South Building, P.O. Box96456, Washington, DC 20090–6456 orsuch other address as required by theProgram Manager. All other paymentsfor fees and other charges must bereceived by the due date shown on thebill for collection, made payable to theAgricultural Marketing Service, USDA,and mailed to the address provided onthe bill for collection. TheAdministrator will assess interest,penalties, and administrative costs ondebts not paid by the due date shownon a bill for collection and collectdelinquent debts or refer such debts tothe Department of Justice for litigation.

Fees and Other Charges for CertificationFees charged by a certifying agent

must be reasonable, and a certifyingagent may charge applicants forcertification and certified productionand handling operations only those feesand charges that it has filed with theAdministrator. The certifying agentmust provide each applicant with anestimate of the total cost of certificationand an estimate of the annual cost ofupdating the certification. The certifyingagent may require applicants forcertification to pay at the time ofapplication a nonrefundable fee thatmust be applied to the applicant’s fees-

for-service account. A certifying agentmay set the nonrefundable portion ofcertification fees; however, thenonrefundable portion of certificationfees must be explained in the feeschedule submitted to theAdministrator. The fee schedule mustexplain what fee amounts arenonrefundable and at what stage duringthe certification process the respectivefees become nonrefundable. Thecertifying agent must provide allpersons inquiring about the applicationprocess with a copy of its fee schedule.

Fees—Changes Based on CommentsThis subpart differs from the proposal

in the following respects:Nonrefundable Portion of

Certification Fees. Commenters were notsatisfied with the provision in section205.642 that stated, ‘‘The certifyingagent may require applicants forcertification to pay at the time ofapplication a nonrefundable fee of nomore than $250.00, which shall beapplied to the applicant’s fee for serviceaccount.’’ Some commenters believedwe were requiring the certifying agentsto bill fees for inspection servicesseparately. One State agency expresseda concern that we were placing a limiton the initial fee the certifying agentcould collect. As a result, the Stateagency commented that by not beingallowed to collect the full certificationfee at the time of application, thecertifying agent, in effect, would beextending credit to the applicant.Commenters reported that some Stateagencies are prevented by statute fromextending credit and are required tocollect all fees at the time of application.Several commenters stated that theamount of $250.00 was too low andwould not cover the costs the certifyingagents could incur during thecertification process. One organizationnoted that we should consider proratingthe amount of the fee to be refundedwhen an applicant for certificationwithdraws before the completion of thecertification process. The organizationrecommended that the amount of theprorated fee should be based on how faralong in the certification process theapplicant had progressed beforewithdrawal. Another commenterbelieved it was inappropriate for USDAto set any fees for private certificationprograms and that the fees should bemarket driven.

It was not our intent to limit theinitial amount that certifying agentscould collect from the applicant forcertification. Our intent was to limit theportion of the fee that would benonrefundable in order to reduce thepotential liability for the small

producer/handler who may need towithdraw prematurely from thecertification process. However, weacknowledge that this provision couldbe misinterpreted. We also realize thatcertifying agents may incur initial costsduring the preliminary stage of thecertification process that may be moreor less than the $250.00 application rateproposed. As a result, we have removedthe provision that stated certifyingagents could collect a nonrefundable feeof not more than $250.00 at the time ofapplication from applicants forcertification.

Certifying agents may set thenonrefundable portion of theircertification fees. However, thenonrefundable portion of theircertification fees must be explained inthe fee schedule submitted to theAdministrator. The fee schedule mustexplain what fee amounts arenonrefundable and at what stage duringthe certification process the respectivefees become nonrefundable. Certifyingagents will also provide all personsinquiring about the application processwith a copy of its fee schedule.

Fees—Changes Requested But Not MadeThis subpart retains from the

proposed rule regulations on which wereceived comments as follows:

(1) Farm Subsidy/Transition Program.Many commenters asked that USDAsubsidize or develop a cost-shareprogram for small farmers/producerswho are certified or who are intransition to organic farming. Somecommenters wanted these costs to befully subsidized; a few commenterssuggested that USDA pay for any extrasite visit costs; and many others wantedUSDA to pay premium prices to farmersfor their products during the period oftransition to organic production. Inaddition, many commenters argued thatUSDA should fully fund certificationcosts. Finally, many commenterssuggested that the USDA should provideadditional financial support to theorganic industry because the industry isrelatively young and composed of alarge number of small, low-resourcebusinesses.

We have considered the commentersrequests but have not made thesuggested changes. The NOP underAMS is primarily a user-fee-basedFederal program. Section 2107(a)(10) ofthe Organic Food Production Act of1990 (OFPA) requires that the NOPprovide for the collection of reasonablefees from producers, certifying agents,and handlers who participate inactivities to certify, produce, or handleagricultural products as organicallyproduced. Therefore, under the



statutory authority of OFPA, it isoutside of the scope of the NOP toprovide for the subsidization ofproducers, handlers, and certifyingagents as desired by some commenters.We have, however, establishedprovisions in this part that we believewill minimize the economic impact ofthe NOP on producers, handlers, andcertifying agents.

(2) Small Farmer Exemption VersusLower Certification Fees. Manycommenters suggested that certificationfees be lowered or based on a slidingscale rather than instituting anexemption from certification for smallfarmers and handlers.

We have not accepted thecommenters’ suggestion. We cannotremove the small farmer exemptionbecause section 2106(d) of the Actrequires that small farmers be providedan exemption from organic certificationif they sell no more than $5,000annually in value of agriculturalproducts. Also, certification fees cannotbe lowered by USDA because NOPunder AMS is primarily a user-fee-basedFederal agency. It is not our goal orobjective to make a profit on ouraccreditation activities. However, ourfees associated with the accreditationprocess are targeted toward recoveringcosts incurred during the accreditationprocess. Commenters expressed aconcern that the accreditation feescharged by USDA would have an impacton the certification fees prescribed bycertifying agents to operations seekingorganic certification. We understand thecommenters’ concern that accreditationfees charged to certifying agents willmost likely be calculated into the feesthat certifiers charge their clients.However, we believe that our provisionto waive the hourly service charges foraccreditation during the first 18 monthsof implementation of the NOP shouldhelp reduce accreditation costs of thecertifying agent and should, therefore,result lower certification fee charged bycertifying agents. As provided by theAct and the regulations in this part, feescharged by certifying agents must bereasonable. Also, certifying agents mustsubmit their fee schedule to theAdministrator and may only chargethose fees and charges filed with theAdministrator. In addition, certifiers arerequired to provide their approved feeschedules to applicants for certification.Therefore, applicants for certificationwill be able to base their selection of acertifying agent on price if they choose.Moreover, there are no provisions in theregulations that preclude certifyingagents from pricing their services on asliding scale, as long as their fees areconsistent and nondiscriminatory and

are approved during the accreditationprocess.

(3) Accreditation Fees. Many industrycommenters suggested that wereevaluate our accreditation feestructure. They believe the hourlyaccreditation rate proposed isunacceptable. Commenters wereconcerned that high accreditation costswould lead to high certification costs,which would have a greater impact onsmall operations. Some industrycommenters also noted that we shouldbe required to provide a fee schedulesuch as the certifiers are required to do.They stated that unless USDA provideda fee schedule that included travel costs,they would not be able to accuratelybudget for these costs. A fewcommenters wanted USDA to forgocharging travel costs or not charge traveltime at the full rate. Several commentersalso stated that the hourly rate stated inthe proposal is much higher than whatthe people who actually perform theaccreditations will earn. However, alarge majority of the commentersfavored the 18-month period in whichAMS will not charge the hourlyaccreditation rate to applicants.

As stated in the proposal, the hourlyrate will be the same as that of AMS’Quality Systems Certification Program.Due to the fact that AMS’ QualitySystems Certification Program publishesone rate that is readily available to thepublic, it is our belief that it isunnecessary for the NOP to set up aseparate fee schedule. The NOP willnotify accredited certifying agents andapplicants for accreditation of anyproposed rate changes and final actionson such rates by AMS. We will alsoperiodically report the status of fees tothe National Organic Standards Board.

Those applicants and certifying agentswho need accreditation cost estimates,including travel, for budgetary or otherreasons may notify the NOP. The NOPstaff will provide the applicant with acost estimate, based on informationprovided by the applicant. As stated inan earlier response ((2)—ChangesRequested But Not Made), the objectiveof the fee that is charged to accreditcertifying agents is not to gain a profitfor accreditation activities but to recovercosts incurred during the accreditationprocess. As such, these costs includebut are not limited to salaries, benefits,clerical help, equipment, supplies, etc.

ComplianceThis portion of subpart G sets forth

the enforcement procedures for theNational Organic Program (NOP). Theseprocedures describe the complianceresponsibilities of the NOP ProgramManager, State organic programs’ (SOP)

governing State officials, and State andprivate certifying agents. Theseprovisions also address the rights ofcertified production and handlingoperations and accredited certifyingagents operating under the NOP. Thegranting and denial of certification andaccreditation are addressed undersubparts E and F.

Description of RegulationsThe Secretary is required under the

Act to review the operations of SOP’s,accredited certifying agents, andcertified production or handlingoperations for compliance with the Actand these regulations. The ProgramManager of the NOP may carry outcompliance proceedings and provideoversight of compliance proceedings onbehalf of the Secretary and theAdministrator. The Program Managerwill initiate proceedings to suspend orrevoke a certified operation’scertification if a certifying agent orSOP’s governing State official fails totake appropriate enforcement action.The Program Manager may also initiateproceedings to suspend or revoke acertified operation’s certification if theoperation is found to have beenerroneously certified by a certifyingagent whose accreditation has beensuspended or revoked. We anticipate,however, that most investigations,reviews, and analyses of certificationnoncompliance and initiation ofsuspension or revocation will beconducted by the certified operation’scertifying agent. With regard tocertifying agents, the Program Managerwill, when appropriate, initiateproceedings to suspend or revoke theaccreditation of a certifying agent fornoncompliance with the Act and theseregulations.

In States with an approved SOP, theSOP’s governing State official isresponsible for administering acompliance program for enforcement ofthe NOP/SOP. SOP’s governing Stateofficials may review and investigatecomplaints of noncompliance involvingorganic production or handlingoperations operating within their Stateand, when appropriate, initiatesuspension or revocation ofcertification. SOP’s governing Stateofficials may also review and investigatecomplaints of noncompliance involvingaccredited certifying agents operatingwithin their State. They must report thefindings of any review and investigationof a certifying agent to the ProgramManager along with anyrecommendations for appropriateaction.

The compliance provisions of theNOP are consistent with the



requirements of the AdministrativeProcedure Act (APA) (5 U.S.C. 553–559)in that this program provides for dueprocess including an opportunity forhearing, appeal procedures, writtennotifications of noncompliance, andopportunities to demonstrate or achievecompliance before any suspension orrevocation of organic certification oraccreditation is invoked. A complianceaction regarding certification carried outunder an approved SOP’s complianceprocedures will have the same force andeffect as a certification complianceaction carried out under these NOPcompliance procedures. The notificationprocess for denying certification andaccreditation is laid out in subparts Eand F, respectively.

Each notification of noncompliance,rejection of mediation, noncomplianceresolution, proposed suspension orrevocation, and suspension orrevocation issued under theseregulations must be sent to therecipient’s place of business via adelivery service which provides returnreceipts. Certified operations andcertifying agents must respond to allcompliance notifications via a deliveryservice which provides return receipts.

Noncompliance Procedure for CertifiedOperations

The Act provides for the enforcementof certification requirements. Statutoryoversight of production and handlingoperations by certifying agents includesreview of organic plans, on-siteinspections, residue and tissue testing,authority to conduct investigations andinitiate suspension or revocationactions, and responsibility to reportviolations.

Notification of NoncomplianceA written notification of

noncompliance will be sent to thecertified operation when an inspection,review, or investigation reveals anynoncompliance with the Act or theseregulations. A noncompliancenotification may encompass the entireoperation or a portion of the operation.For instance, a violation at one farmmay not warrant loss of certification atother farms of the certified operation notaffected by the violation. Thenotification of noncompliance willprovide: (1) A description of eachcondition, action, or item ofnoncompliance; (2) the facts uponwhich the notification is based; and (3)the date by which the certifiedoperation must rebut the notification orcorrect the noncompliance and submitsupporting documentation of thecorrection. A certified operation maycontinue to sell its product as organic

upon receiving a notification ofnoncompliance and throughout thecompliance proceeding and any appealprocedure which might follow thecompliance proceeding unlessotherwise notified by a State or Federalgovernment agency.

If a certified operation believes thenotification of noncompliance isincorrect or not well-founded, thecertified operation may submit arebuttal to the certifying agent or SOP’sgoverning State official, as applicable,providing supporting data to refute thefacts stated in the notification. Theopportunity for rebuttal is provided toallow certifying agents and certifiedoperations to informally resolvenoncompliance issues. The rebuttalprocess should be helpful in resolvingdifferences which may be the result ofmisinterpretation of requirements,misunderstandings, or incompleteinformation. Alternatively, the certifiedoperation may correct the identifiednoncompliances and submit proof ofsuch corrections. When the certifiedoperation demonstrates that eachnoncompliance has been corrected orotherwise resolved, the certifying agentor SOP’s governing State official, asapplicable, will send the certifiedoperation a written notification ofnoncompliance resolution.

Proposed Suspension or Revocation ofCertification

If the noncompliance is not resolvedor is not in the process of being resolvedby the date specified in the notificationof noncompliance, the certifying agentor SOP’s governing State official willsend the certified operation a writtennotification of proposed suspension orrevocation of certification for the entireoperation or a portion of the operationaffected by the noncompliance. Thenotification will state: (1) The reasonsfor the proposed suspension orrevocation; (2) the proposed effectivedate of the suspension or revocation; (3)the impact of the suspension orrevocation on the certified operation’sfuture eligibility for certification; and (4)that the certified operation has a right torequest mediation or to file an appeal.The impact of a proposed suspension orrevocation may include the suspensionor revocation period or whether thesuspension or revocation applies to theentire operation or to a portion orportions of the operation.

If a certifying agent or SOP’sgoverning State official determines thatcorrection of a noncompliance is notpossible, the notification ofnoncompliance and the proposedsuspension or revocation of certificationmay be combined in one notification of

proposed suspension or revocation. Thecertified operation will have anopportunity to appeal the proposedsuspension or revocation.

If a certifying agent or SOP’sgoverning State official has reason tobelieve that a certified operation haswillfully violated the Act or regulations,a notification of proposed suspension orrevocation will be sent to the certifiedoperation. The proposed suspension orrevocation will be for the entireoperation or a portion of the operation.This notification, because it involves awillful violation, will be sent withoutfirst issuing a notification ofnoncompliance.

MediationA production or handling operation

may request mediation of any disputeregarding denial of certification orproposed suspension or revocation ofcertification. Mediation is not requiredprior to filing an appeal but is offeredas an option which may resolve thedispute more quickly than the next step,which is filing an appeal. Whenmediation is requested, it must berequested in writing to the applicablecertifying agent. The certifying agentwill have the option of accepting orrejecting the request for mediation. Ifthe certifying agent rejects the requestfor mediation, the certifying agent mustprovide written notification to theapplicant for certification or certifiedoperation. The written notification mustadvise the applicant for certification orcertified operation of the right to requestan appeal in accordance with section205.681. Any such appeal must berequested within 30 days of the date ofthe written notification of rejection ofthe request for mediation. If mediationis accepted by the certifying agent, suchmediation must be conducted by aqualified mediator mutually agreedupon by the parties to the mediation. Ifan SOP is in effect, the mediationprocedures established in the SOP, asapproved by the Secretary, must befollowed. The parties to the mediationwill have no more than 30 days to reachan agreement following a mediationsession. If mediation is unsuccessful,the production or handling operationwill have 30 days from termination ofmediation to appeal the denial ofcertification or proposed suspension orrevocation in accordance with theappeal procedures in section 205.681.

Any agreement reached during or asa result of the mediation process mustbe in compliance with the Act and theseregulations. The Secretary reserves theright to review any mediated agreementfor conformity to the Act and theseregulations and to reject any agreement



or provision not in conformance withthe Act or these regulations

Suspension or Revocation

The certifying agent or SOP’sgoverning State official will suspend orrevoke the certified operation’scertification when the operation fails toresolve the issue through rebuttal ormediation, fails to complete neededcorrections, or does not file an appeal.The operation will be notified of thesuspension or revocation by writtennotification. The certifying agent orSOP’s governing State official must notsend a notification of suspension orrevocation to a certified operation thathas requested mediation or filed anappeal while final resolution of either ispending.

The decision to suspend or revokecertification will be based on theseriousness of the noncompliance. Suchdecisions must be made on a case-by-case basis. Section 6519 of the Actestablishes that willful violationsinclude making a false statement,knowingly affixing a false label, orotherwise violating the purposes of theAct.

In addition to suspension orrevocation, a certified operation thatknowingly sells or labels a product asorganic, except in accordance with theAct, will be subject to a civil penalty ofnot more than $10,000 per violation.Further, a certified operation that makesa false statement under the Act to theSecretary, an SOP’s governing Stateofficial, or a certifying agent will besubject to the provisions of section 1001of title 18, United States Code.

A certified operation whosecertification has been suspended underthis section may at any time, unlessotherwise stated in the notification ofsuspension, submit a request to theSecretary for reinstatement of itscertification. The request must beaccompanied by evidencedemonstrating correction of eachnoncompliance and corrective actionstaken to comply with and remain incompliance with the Act and the NOP.

A certified operation or a personresponsibly connected with anoperation that has had its certificationrevoked will be ineligible to receivecertification for an operation in whichsuch operation or person has an interestfor 5 years following the date ofrevocation. Accordingly, an operationwill be ineligible for organiccertification if one of its responsiblyconnected parties, was a responsiblyconnected party of an operation that hadits certification revoked. The Secretarymay, when in the best interest of the

certification program, reduce oreliminate the period of ineligibility.

Noncompliance Procedure for CertifyingAgents

The Program Manager, on behalf ofthe Secretary, may initiate a complianceaction against an accredited certifyingagent who violates the Act or theseregulations. Compliance proceedingsmay be initiated as a result of annualreviews for continuation ofaccreditation, site evaluations, orinvestigations initiated in response tocomplaints of noncompliant activities.Compliance proceedings also may beinitiated on recommendation of anSOP’s governing State official.

A written notification ofnoncompliance will be sent by theProgram Manager to an accreditedcertifying agent when an inspection,review, or investigation of such personreveals any noncompliance with the Actor these regulations. A notification ofnoncompliance will provide adescription of each noncompliancefound and the facts upon which thenotification is based. Additionally, thenotification will provide the date bywhich the certifying agent must rebut orcorrect each noncompliance describedand submit supporting documentationof each correction.

When documentation received by theProgram Manager demonstrates thateach noncompliance has been resolved,the Program Manager will send thecertifying agent a written notification ofnoncompliance resolution.

If a noncompliance is not resolved byrebuttal or correction, the ProgramManager will issue a notification ofproposed suspension or revocation ofaccreditation. The notification will statewhether the suspension or revocationwill be for the certifying agent’s entireaccreditation, that portion of theaccreditation applicable to a particularfield office, or a specific area ofaccreditation. For instance, if acertifying agent with field offices indifferent geographic areas is cited for acompliance violation at one field office,the Program Manager could determinethat only that portion of theaccreditation applicable to thenoncompliant field office should besuspended or revoked.

If the Program Manager determinesthat the noncompliance cannot beimmediately or easily corrected, theProgram Manager may combine thenotification of noncompliance and theproposed suspension or revocation inone notification.

The notification of proposedsuspension or revocation ofaccreditation will state the reasons and

effective date for the proposedsuspension or revocation. Suchnotification will also state the impact ofa suspension or revocation on futureeligibility for accreditation and thecertifying agent’s right to file an appeal.

If the Program Manager has reason tobelieve that a certifying agent haswillfully violated the Act or regulations,the Program Manager will issue anotification of proposed suspension orrevocation of accreditation. Theproposed suspension or revocation maybe for the certifying agent’s entireaccreditation, that portion of theaccreditation applicable to a particularfield office, or a specified area ofaccreditation. This notification, becauseit involves a willful violation, will besent without first issuing a notificationof noncompliance.

The certifying agent may file anappeal of the Program Manager’sdetermination pursuant to section205.681. If the certifying agent fails tofile an appeal of the proposedsuspension or revocation, the ProgramManager will suspend or revoke thecertifying agent’s accreditation. Thecertifying agent will be notified of thesuspension or revocation by writtennotification.

A certifying agent whose accreditationis suspended or revoked must cease allcertification activities in each area ofaccreditation and in each State forwhich its accreditation is suspended orrevoked. Any certifying agent whoseaccreditation has been suspended orrevoked must transfer to the Secretaryall records concerning its certificationactivities that were suspended orrevoked. The certifying agent must alsomake such records available to anyapplicable SOP’s governing Stateofficial. The records will be used todetermine whether operations certifiedby the certifying agent may retain theirorganic certification.

A certifying agent whose accreditationis suspended by the Secretary may atany time, unless otherwise stated in thenotification of suspension, submit arequest to the Secretary forreinstatement of its accreditation. Suchrequest must be accompanied byevidence demonstrating correction ofeach noncompliance and actions takento comply with and remain incompliance with the Act andregulations. A certifying agent whoseaccreditation is revoked by the Secretarywill be ineligible to be accredited as acertifying agent under the Act andregulations for a period of not less than3 years following the date of revocation.



State Organic Programs’ ComplianceProcedures

An SOP’s governing State official mayinitiate noncompliance proceedingsagainst certified organic operationsoperating in the State. Such proceedingsmay be initiated for failure of a certifiedoperation to meet the production orhandling requirements of this part or theState’s more restrictive requirements, asapproved by the Secretary.

The SOP’s governing State officialmust promptly notify the ProgramManager of commencement ofnoncompliance proceedings initiatedagainst certified operations and forwardto the Program Manager a copy of eachnotice issued. A noncomplianceproceeding, brought by an SOP’sgoverning State official against acertified operation may be appealed inaccordance with the appeal proceduresof the SOP. There will be no subsequentrights of appeal to the Secretary. Finaldecisions of a State may be appealed tothe United States District Court for thedistrict in which such certifiedoperation is located.

An SOP’s governing State official mayreview and investigate complaints ofnoncompliance with the Act orregulations concerning accreditation ofcertifying agents operating in the State.When such review or investigationreveals any noncompliance, the SOP’sgoverning State official must send awritten report of noncompliance to theProgram Manager. The SOP’s governingState official’s report must provide adescription of each noncompliance andthe facts upon which thenoncompliance is based.

Compliance—Changes Based OnComments

This portion of subpart G differs fromthe proposal in several respects asfollows:

(1) Written Notifications. We haveadded a new paragraph (d) to section205.660. The preamble to the proposedrule stated that all written notificationssent by certifying agents and SOP’sgoverning State officials, as well asrebuttals, requests for mediation, andnotices of correction of noncompliancessent by certified operations, will be sentto the addressee’s place of business bya delivery service which provides datedreturn receipts. The assurance ofcompleted communications and timelycompliance procedures was given as thereason for delivery by a service whichprovides dated return receipts. Theaddition of paragraph (d) at section205.660 is one of the actions that wehave taken in response to requests fromcommenters that we further clarify the

compliance process. Paragraph (d)requires that each notification ofnoncompliance, rejection of mediation,noncompliance resolution, proposedsuspension or revocation, andsuspension or revocation issued inaccordance with sections 205.662,205.663, and 205.665 and each responseto such notification must be sent to therecipient’s place of business via adelivery service which provides returnreceipts. This action will facilitate theeffective administration of thecompliance process by assuring averifiable time line on the issuance andreceipt of compliance documents andthe response given to each suchdocument.

(2) Determination of Willful. Thepreamble statement that ‘‘only theProgram Manager or governing Stateofficial may make the finaldetermination that a violation iswillful’’ was incorrect and inconsistentwith the regulatory language in section205.662(d). Section 205.662(d) providesthat, ‘‘if a certifying agent or Stateorganic program’s governing Stateofficial has reason to believe that acertified operation has willfully violatedthe Act or regulations in this part, thecertifying agent or State organicprogram’s governing State official shallsend the certified operation anotification of proposed suspension orrevocation of certification of the entireoperation or a portion of the operation,as applicable to the noncompliance.’’Accordingly, as recommended by acommenter, the incorrect statement hasbeen deleted from the preamble to thisfinal rule.

(3) Proposed Suspension orRevocation. We have amended sections205.662(c) and 205.665(c) by removingthe redundant phrase ‘‘or is notadequate to demonstrate that eachnoncompliance has been corrected’’from the first sentence of each section.

(4) Suspension or Revocation. Wehave amended section 205.662(e)(2) byadding ‘‘while final resolution of eitheris pending’’ to the end thereof. Thelanguage of section 205.662(e)(2) nowreads: ‘‘A certifying agent or Stateorganic program’s governing Stateofficial must not send a notification ofsuspension or revocation to a certifiedoperation that has requested mediationpursuant to section 205.663 or filed anappeal pursuant to section 205.681while final resolution of either ispending.’’ We have made this changebecause we agree with thosecommenters who expressed the beliefthat section 205.662(e)(2) needed to beamended to clarify the duration of thestay on the issuance of a notification ofsuspension or revocation when

mediation is requested or an appeal isfiled. Several commenters stated thatsection 205.662(e)(2) needed to beamended to clarify that requestingmediation or filing an appeal does notindefinitely stop the suspension orrevocation process.

(5) Eligibility After Suspension orRevocation of Certification. We haveamended section 205.662(f) such that itnow parallels section 205.665(g) whichaddresses suspension and revocation ofcertifying agents. We have also changedthe title of section 205.662(f) from‘‘Ineligibility’’ to ‘‘Eligibility’’ to parallelsection 205.665(g). A few commentersreferred to the provisions in section205.665(g), which addresses eligibilityafter suspension or revocation ofaccreditation, and requestedclarification of the difference betweensuspension and revocation ofcertification. Upon reviewing section205.662(f), we decided that amendmentwas needed to clarify the differencebetween suspension and revocation ofcertification relative to eligibility forcertification. Accordingly, we added anew paragraph (1) which provides thata certified operation whose certificationhas been suspended under this sectionmay at any time, unless otherwise statedin the notification of suspension, submita request to the Secretary forreinstatement of its certification. Theparagraph also provides that the requestmust be accompanied by evidencedemonstrating correction of eachnoncompliance and corrective actionstaken to comply with and remain incompliance with the Act and theregulations in this part. We alsoamended what is now paragraph (2) ofsection 205.662(f) to clarify that theperiod of ineligibility followingrevocation of certification is 5 yearsunless reduced or eliminated by theSecretary.

Further, we have amended section205.665(g)(1) to clarify that a certifyingagent that has had its accreditationsuspended may request reinstatement ofits accreditation rather than submit anew request for accreditation. Theamendment also clarifies that thereinstatement may be requested at anytime unless otherwise stated in thenotification of suspension. Thisamendment makes section 205.665(g)(1)similar to new paragraph (1) of section205.662(f). This amendment is alsoconsistent with commenter desires thatthe noncompliance procedures forcertified operations and accreditedcertifying agents be similar.

(6) Penalties for Violations of the Act.We have amended section 205.662 byadding a new paragraph (g) whichincorporates therein the provisions of



paragraphs (a) and (b) of section 2120,7 U.S.C. 6519, Violations of Title, of theAct. Specifically, paragraph (g) providesthat, in addition to suspension orrevocation, any certified operation thatknowingly sells or labels a product asorganic, except in accordance with theAct, shall be subject to a civil penaltyof not more than $10,000 per violation.This paragraph also provides that anycertified operation that makes a falsestatement under the Act to theSecretary, an SOP’s governing Stateofficial, or a certifying agent shall besubject to the provisions of section 1001of title 18, United States Code.Commenters requested regulatorylanguage citing section 2120, 7 USC6519, Violations of Title, of the Act.Commenters also requested a clearerdescription of enforcement. Specifically,they want provisions describing howUSDA will deal with operations thatmake false claims or do not meet theNOP requirements. Further, numerouscommenters expressed concern thatthere are no penalties in the regulationsother than suspension and revocation.The European Community stated that itdid not find, in the proposal,requirements for penalties to be appliedby certifying agents when irregularitiesor infringements are found. TheEuropean Community went on to saythat the European Union requires suchpenalties.

The Act provides for suspension andrevocation of certification and the civiland criminal penalties addressed in 7U.S.C. 6519. Certified operations arealso required through the complianceprogram set forth in these regulations, tocorrect all noncompliances with the Actor regulations as a condition of retainingtheir certification. Furthermore, to get asuspended certification reinstated, anoperation must submit a request to theSecretary. The request must beaccompanied by evidencedemonstrating correction of eachnoncompliance and corrective actionstaken to comply with and remain incompliance with the Act and theregulations in this part. An operation ora person responsibly connected with anoperation whose certification has beenrevoked will be ineligible to receivecertification for a period of not morethan 5 years.

We believe adding paragraph (g) willhelp clarify that there are penaltieswhich may be imposed on certifiedoperations that violate the Act and theseregulations in addition to suspension orrevocation.

The provisions of the Act and theseregulations apply to all persons whosell, label, or represent their agriculturalproduct as organic. Accordingly,

persons who falsely sell, label, orrepresent their product as organic, aresubject to the provisions of paragraphs(a) and (b) of section 2120, 7 USC 6519,of the Act. To clarify this, we haveadded a new paragraph (c) to section205.100 of the Applicability subpart.

Certifying agents, SOP’s governingState officials, and USDA will receivecomplaints alleging violations of the Actor these regulations. Certifying agentswill review all complaints that theyreceive to determine if the complaintinvolves one of their clients. If thecomplaint involves a client of thecertifying agent, the agent will handlethe complaint in accordance with itsprocedures for reviewing andinvestigating certified operationcompliance. If the complaint involves aperson who is not a client of thecertifying agent, the certifying agent willrefer the complaint to the SOP’sgoverning State official, whenapplicable, or, in the absence of anapplicable SOP’s governing Stateofficial, the Administrator. SOP’sgoverning State officials will review allcomplaints that they receive inaccordance with their procedures forreviewing and investigating allegedviolations of the NOP and SOP. TheSOP’s governing State official’s reviewof the complaint could result in referralof the complaint to a certifying agentwhen the complaint involves a client ofthe certifying agent, dismissal, orinvestigation by the SOP’s governingState official. SOP’s governing Stateofficials will, as appropriate, investigateallegations of violations of the Act bynoncertified operations operating withintheir State. USDA will review allcomplaints that it receives inaccordance with its procedures forreviewing and investigating allegedviolations of the NOP. USDA will refercomplaints alleging violations of theNOP/SOP to the applicable SOP’sgoverning State official, who may, inturn, refer the complaint to theapplicable certifying agent. In Stateswithout an approved SOP, USDA willrefer complaints to the applicablecertifying agent. USDA will, asappropriate, investigate allegations ofviolations of the Act by noncertifiedoperations operating in States wherethere is no approved SOP.

(7) Mediation. We have amendedsection 205.663 by providing that adispute with respect to proposedsuspension or revocation of certificationmay, rather than shall, be mediated. Wehave also provided that mediation mustbe requested in writing to the applicablecertifying agent. The certifying agentwill have the option of accepting orrejecting the request for mediation. If

the certifying agent rejects the requestfor mediation, the certifying agent mustprovide written notification to theapplicant for certification or certifiedoperation. The written notification mustadvise the applicant for certification orcertified operation of the right to requestan appeal within 30 days of the date ofthe written notification of rejection ofthe request for mediation. If mediationis accepted by the certifying agent, suchmediation must be conducted by aqualified mediator mutually agreedupon by the parties to the mediation.

Several commenters wanted section205.663 amended to provide thatdisputes ‘‘may,’’ rather than ‘‘shall,’’ bemediated. The commenters advocatedallowing the certifying agent todetermine when mediation is aproductive option. Several Statecommenters wanted to amend thesecond sentence to read as follows: ‘‘Ifa State organic program is in effect, themediation procedures established in theState organic program, as approved bythe Secretary, will be followed for casesinvolving the State organic program andits applicants or certified parties.’’Another commenter wanted to retainthe requirement that disputes ‘‘shall’’ bemediated but wanted disputes mediatedin accordance with 7 CFR part 11 andsection 205.681 of these regulations.

We concur that certifying agentsshould be authorized to reject a requestfor mediation, especially when theybelieve that the noncompliance issue isnot conducive to mediation.Accordingly, we amended section205.663 as noted above. We disagree,however, with the State commenterswho want to amend the secondsentence. We believe that therecommended change would excludethe clients of private-sector certifyingagents operating within the State. USDAapproval of an SOP will require that allcertified operations operating within theState have the same opportunities formediation, regardless of whether theyare certified by a private or Statecertifying agent. If an approved SOPprovides for mediation, such mediationmust be available to all certifiedoperations operating within the State.We also disagree with the commenterwho requested that disputes bemediated in accordance with 7 CFR part11 and section 205.681 of theseregulations. First, we believe that Stateswith an approved SOP must be allowedto establish their own mediationprogram and procedures. Second, theAct and its implementing regulationsare subject to the APA for adjudication.The provisions of the APA generallyapplicable to agency adjudication arenot applicable to proceedings under 7



CFR part 11, National Appeals DivisionRules of Procedure. Even if 7 CFR part11 were applicable, it does not addressmediation procedures. Mediation ismerely addressed in 7 CFR Part 11 as anavailable dispute resolution methodalong with its impact on the filing of anappeal.

(8) Noncompliance Procedure forCertifying Agents. We have amendedsection 205.665(a)(3) to clarify that, likecertified operations, certifying agentsmust submit supporting documentationof each correction of a noncomplianceidentified in a notification ofnoncompliance. This amendment tosection 205.665(a)(3) was made inresponse to commenter concerns thatthe noncompliance procedures forcertified operations and certifyingagents be similar. It had been our intentthat certifying agents would have todocument their correction ofnoncompliances and that thenoncompliance procedures for certifiedoperations and certifying agents wouldbe similar.

Compliance—Changes Requested ButNot Made

This subpart retains from theproposed rule, regulations on which wereceived comments as follows:

(1) Funding for Enforcement. Severalcommenters stated that USDA shouldprovide funding to the States for thecost of performing enforcementactivities. Others asked who shouldfund investigations and enforcementactions if certifying agents (State andprivate) are enforcing compliance witha Federal law. Numerous commentersrequested information on howenforcement will be funded. TheNational Organic Standards Board(NOSB) recommended that the NOPexamine existing models for capturingenforcement fees such as the State ofCalifornia’s registration program for allgrowers, handlers, and processors whouse the word, ‘‘organic,’’ in marketingtheir products.

We disagree with the commenterswho stated that USDA should fundenforcement activities (State andprivate). Costs for compliance under theNOP will be borne by USDA, Stateswith approved SOP’s, and accreditedcertifying agents. Each of the entitieswill bear the cost of their ownenforcement activities under the NOP.AMS anticipates that States willconsider the cost of enforcing theirSOP’s prior to seeking USDA approvalof such programs. We also anticipatethat certifying agents will factor the costof compliance into their certification feeschedules.

We agree that there may bealternatives, such as the State ofCalifornia’s registration program,available to raise funds for enforcing theNOP. We will help identify existingmodels and potential options that maybe available in the future at the Federal,State, or certifying agent level. In theinterim, we believe that SOP’s shouldexplore funding options at their leveland that certifying agents should factorthe cost of enforcement into theircertification fees structure.

(2) Stop Sale. A number ofcommenters requested that theregulations include the ability to stopsales or recall misbranded orfraudulently produced products. TheAct does not authorize the NOP to stopsales or recall misbranded orfraudulently produced product.Accordingly, USDA cannot authorizestop sales or the recall of product. Wealso believe that the certified operation’sright to due process precludes a stopsale or recall prior to full adjudicationof the alleged noncompliance. However,the Food and Drug Administration(FDA) and the USDA’s Food SafetyInspection Service (FSIS) have stop saleauthority that may be used in certainorganic noncompliance cases. Further,States may, at their discretion, be ableto provide for stop sale or recall ofmisbranded or fraudulently producedproducts produced within their State.While the Act does not provide for stopsale or recall, it does provide at 7 U.S.C.6519 that any person who: (1)knowingly sells or labels a product asorganic, except in accordance with theAct, shall be subject to a civil penaltyof not more than $10,000 and (2) makesa false statement under the Act to theSecretary, an SOP’s governing Stateofficial, or a certifying agent shall besubject to the provisions of section 1001of title 18, United States Code.

(3) Notification of ProposedSuspension or Revocation. Acommenter recommended replacing‘‘notification of proposed suspension orrevocation’’ in section 205.662(d) with‘‘notification of suspension orrevocation.’’ Certification cannot besuspended or revoked without dueprocess. Accordingly, the issuance of awritten notification of proposedsuspension or revocation is necessary toprovide the certified operation withinformation regarding the allegednoncompliance(s) and its right toanswer the allegations. For this reasonwe have not accepted the commenter’srecommendation.

(4) Mediation for Certifying Agents.Several commenters recommendedamending section 205.665(c)(4) toprovide for mediation between a

certifying agent and the ProgramManager when a proposed suspensionor revocation is disputed by thecertifying agent. We have not acceptedthe recommendation. USDA uses 7 CFRpart 1, Rules of Practice GoverningFormal Adjudicatory ProceedingsInstituted by the Secretary UnderVarious Statutes, for adjudicatoryproceedings involving the denial,suspension, and revocation ofaccreditation.

(5) Revocation of Accreditation. Acommenter stated that revocation ofaccreditation for 3 years is excessive.The commenter stated that a period of6 to 12 months might be reasonable. Wehave not amended section 205.665(g)(2)because the Act requires that the periodof revocation for certifying agents, whoviolate the Act and these regulations, befor not less than 3 years. Suspension isavailable to the Secretary to address lessegregious noncompliances. A certifyingagent whose accreditation is suspendedmay at any time, unless otherwise statedin the notification of suspension, submita request to the Secretary forreinstatement of its accreditation. Therequest must be accompanied byevidence demonstrating correction ofeach noncompliance and correctiveactions taken to comply with andremain in compliance with the Act andthese regulations.

(6) Appeals Under SOP’s. Severalcommenters recommended amending205.668(b) by adding at the end thereof:‘‘unless the State program’s appealsprocedures include judicial reviewthrough the State District Court.’’Another commenter wanted 205.668(b)amended by removing ‘‘of the Stateorganic certification program. Thereshall be no subsequent rights of appealto the Secretary. Final decisions of aState may be appealed to the UnitedStates District Court for the district inwhich such certified operation islocated,’’ and inserting in its place ‘‘at7 CFR part 11 and 205.681 of thischapter.’’ We have not accepted therecommendations because the Act at 7U.S.C. 6520 provides that a finaldecision of the Secretary may beappealed to the United States DistrictCourt for the district in which theperson is located. We consider anapproved SOP to be the NOP for thatState. As such, we consider the SOP’sgoverning State official of suchapproved SOP to be the equivalent of arepresentative of the Secretary for thepurposes of the appeals proceduresunder the NOP. Accordingly, the finaldecision of the SOP’s governing Stateofficial of an approved SOP isconsidered the final decision of theSecretary and, as such, is appealable to



the United States District Court for thedistrict in which the person is located,not a State’s District Court.

We also disagree with the commenterwho wanted all appeals to be made tothe National Appeals Division under theprovisions at 7 CFR part 11 and section205.681 of these regulations. First, webelieve that States with an approvedSOP must be allowed to establish theirown appeal procedures. Suchprocedures would have to comply withthe Act, be equivalent to the proceduresof USDA, and be approved by theSecretary. Second, as noted elsewherein this preamble, the Act and itsimplementing regulations are subject tothe APA for adjudication. Theprovisions of the APA generallyapplicable to agency adjudication arenot applicable to proceedings under 7CFR part 11.

Compliance—ClarificationsClarification is given on the following

issues raised by commenters:(1) Complaints, Investigations, Stop

Sales, and Penalties. Many commenterswanted USDA to spell out theresponsibilities and authorities ofStates, State and private certifyingagents, Federal agencies, and citizens tomake complaints, investigate violations,halt the sale of products, and imposepenalties. Anyone may file a complaint,with USDA, an SOP’s governing Stateofficial, or certifying agent, allegingviolation of the Act or these regulations.Certifying agents, SOP’s governing Stateofficials, and USDA will receive,review, and investigate complaintsalleging violations of the Act or theseregulations as described in item 6 aboveunder Changes Based on Comments.Citizens have no authority under theNOP to investigate complaints allegingviolation of the Act or these regulations.

As noted elsewhere in this preamble,the Act does not authorize USDA to stopthe sale of product. Accordingly, USDAcannot authorize stop sales byaccredited certifying agents. We alsobelieve that the certified operation’sright to due process precludes a stopsale prior to full adjudication of thealleged noncompliance. However, FDAand FSIS have stop sale authority thatmay be used in the event of food safetyconcerns. Further, States may, at theirdiscretion, be able to provide for stopsale of product produced within theirState. Citizens have no authority underthe NOP to stop the sale of a product.

The Act and these regulations providefor suspension or revocation ofcertification by certifying agents, SOP’sgoverning State officials, and theSecretary. Only USDA may suspend orrevoke a certifying agent’s accreditation.

All proposals to suspend or revoke acertification or accreditation are subjectto appeal as provided in section205.681. The Act provides at 7 U.S.C.6519 that any person who: (1)knowingly sells or labels a product asorganic, except in accordance with theAct, shall be subject to a civil penaltyof not more than $10,000; and (2) makesa false statement under the Act to theSecretary, an SOP’s governing Stateofficial, or a certifying agent shall besubject to the provisions of section 1001of title 18, United States Code. OnlyUSDA may bring an action under 7U.S.C. 6519.

(2) Certifying Agent’s IdentifyingMark. The NOSB reaffirmed itsrecommendation which would allowprivate certifying agents to prevent theuse of their service mark (seal) uponwritten notification that: (1) certificationby the private certifying agent has beenterminated, and (2) the certifying agenthas 30 days to appeal the certifyingagent’s decision to the Secretary ofAgriculture. We will neither prohibitnor approve a certifying agent’s actionsto withdraw a certified operation’sauthority to use the certifying agent’sidentifying mark for alleged violationsof the Act or regulations. We stand fastin our position that all certifiedoperations are to be given due processprior to the suspension or revocation oftheir certification. The reader is alsoreminded that the certifying agentcannot terminate, suspend, or revoke acertification if the certified operationfiles an appeal with an SOP’s governingState official, when applicable, or theAdministrator as provided for in thenotification of proposed suspension orrevocation. The certifying agent acceptsfull liability for any action brought as aresult of the withdrawal of a certifiedoperation’s authority to use thecertifying agent’s identifying mark.

(3) Loss of Certification. A commenterposed several questions regarding theloss of certification. The commenter’squestions and our responses are asfollows.

How will consumers and affectedregulatory agencies know if a grower orhandler loses its certification? We willprovide public notification ofsuspensions and revocations of certifiedoperations through means such as theNOP website.

What will the effect of a lostcertification be? Suspension orrevocation of a producer’s or handler’scertification will require that theproducer or handler immediately ceaseits sale, labeling, and representation ofagricultural products as organicallyproduced or handled as provided in thesuspension or revocation order. A

production or handling operation or aperson responsibly connected with anoperation whose certification has beensuspended may at any time, unlessotherwise stated in the notification ofsuspension, submit a new request forcertification in accordance with section205.401. The request must beaccompanied by evidencedemonstrating correction of eachnoncompliance and corrective actionstaken to comply with and remain incompliance with the Act and theregulations in this part. An operation ora person responsibly connected with anoperation whose certification has beenrevoked will be ineligible to receivecertification for a period of not morethan 5 years following the date of suchrevocation, as determined by theSecretary. Any producer or handler whosells, labels, or represents its product asorganic contrary to the provisions of thesuspension or revocation order wouldbe subject to prosecution under 7 U.S.C.6519 of the Act.

Will the certifying agent give a futureeffective date for loss of certification, orcould the loss of certification beimmediate or even retroactive?Suspension or revocation will becomeeffective as specified in the suspensionor revocation order once it becomesfinal and effective. The operation, uponsuspension or revocation, will beprohibited from selling, labeling, andrepresenting its product as organic perthe provisions of the suspension orrevocation order.

If organic products already on themarket were grown or handled bysomeone whose certification is revokedor suspended, would USDA require thatthe products be recalled and relabeled?USDA will not, unless thenoncompliance involves a food safetyissue under FSIS, require the recall orrelabeling of product in the channels ofcommerce prior to the issuance of asuspension or revocation order. First, atthe time the product was produced, itmay have been produced in compliancewith the Act and these regulations.Second, USDA does not have theauthority, under the Act, to issue a stopsale order for product sold, labeled, orrepresented as organic and placed in thechannels of commerce prior tosuspension or revocation of a certifiedoperation’s certification. The Act,however, provides at 7 U.S.C. 6519(a)for the prosecution of any person whoknowingly sells or labels a product asorganic, except in accordance with theAct. Such persons shall be subject to acivil penalty of not more than $10,000per violation.

(4) Investigations. A commentersuggested that we amend section



205.661(a) to require that all complaintsmust be investigated in accordance withthe certifying agent’s complaints policy.The commenter also stated that theAdministrator should know whichcomplaints were not investigated. Wedisagree that all complaints must beinvestigated since, upon review of thealleged noncompliance, somecomplaints may lack grounds forinvestigation. For example, a concernedcitizen could allege that an organicproducer was seen applying a pesticideto a specific field. Upon review of theallegation, the certifying agent coulddetermine that the producer in questionwas a split operation and that the fieldin question was part of the conventionalside of the production operation.Accordingly, there would be no need foran investigation. However, the certifyingagent will be expected to: (1) take eachallegation seriously, (2) review eachcomplaint received, (3) make adetermination as to whether there maybe a basis for conducting aninvestigation, (4) investigate allallegations when it is believed that theremay be a basis for conducting theinvestigation, and (5) maintain adetailed log of all complaints receivedand their disposition. The actions takenby the certifying agent must be inconformance with the certifying agent’sprocedures for reviewing andinvestigating certified operationcompliance.

(5) Deadline for the Correction of aNoncompliance. Several commentersrequested that 205.662(a)(3) be amendedby adding: ‘‘The deadline for correctionof the noncompliance may be extendedat the discretion of the certifier ifsubstantial progress has been made tocorrect the noncompliance.’’ We believethat the requested amendment isunnecessary. Section 205.662(a)(3)requires that the notification ofnoncompliance include a date by whichthe certified operation must rebut orcorrect each noncompliance and submitsupporting documentation of eachcorrection when correction is possible.There is no prohibition preventing thecertifying agent from extending thedeadline specified when the certifyingagent believes that the certifiedoperation has made a good faith effortat correcting each noncompliance.

(6) Compliance with SOP. SeveralStates requested that section 205.665 beamended to clarify how States mayhandle a private certifying agent foundto be in noncompliance with SOP’sapproved by the Secretary. A majority ofthese commenters also asked if NOPintends to suspend or revoke theaccreditation of certifying agents on aState-by-State basis. Section 205.668(c)

authorizes an SOP’s governing Stateofficial to review and investigatecomplaints of noncompliance with theAct or regulations concerningaccreditation of certifying agentsoperating in the State. When suchreview or investigation reveals anynoncompliance, the SOP’s governingState official shall send a written reportof noncompliance to the NOP ProgramManager. The report shall provide adescription of each noncompliance andthe facts upon which thenoncompliance is based. The NOPProgram Manager will then employ thenoncompliance procedures forcertifying agents as found in section205.665. This may include additionalinvestigative work by AMS. Only USDAmay suspend or revoke a certifyingagent’s accreditation.

SOP’s must meet the generalrequirements for organic programsspecified in the Act and be at leastequivalent to these regulations.Accordingly, noncompliances worthy ofsuspension or revocation would in allprobability be worthy of nationalsuspension or revocation ofaccreditation for one or more areas ofaccreditation. Therefore, USDA does notanticipate suspending or revokingaccreditations, or areas of accreditation,on a State-by-State basis. It is possible,however, that the Secretary may decideto only suspend or revoke a certifyingagent’s accreditation or an area ofaccreditation to certify producers orhandlers within a given State. Such adecision would in all probability be tiedto a State’s more restrictiverequirements.

Inspection and Testing, Reporting, andExclusion from Sale

This portion of subpart G sets forththe inspection and testing requirementsfor agricultural products that have beenproduced on organic productionoperations or handled through organichandling operations.

Residue testing plays an importantrole in organic certification by providinga means for monitoring compliance withthe National Organic Program (NOP)and by discouraging the mislabeling ofagricultural products. This testingprogram provides State organicprograms’ (SOP) governing Stateofficials and certifying agents with atool for ensuring compliance with threeareas for testing: (1) preharvest residuetesting, (2) postharvest residue testing,and (3) testing for unavoidable residualenvironmental contamination levels.


General RequirementsUnder the residue testing

requirements of the NOP, allagricultural products sold, labeled, orrepresented as organically producedmust be available for inspection by theAdministrator, SOP’s governing Stateofficial, or certifying agent. Organicfarms and handling operations must bemade available for inspection undersubpart E, Certification. In addition,products from the aforementionedorganic operations may be required bythe SOP’s governing State official orcertifying agent to undergo preharvest orpostharvest testing when there is reasonto believe that agricultural inputs usedin organic agriculture production oragricultural products to be sold orlabeled as organically produced havecome into contact with prohibitedsubstances or have been produced usingexcluded methods. The cost of suchtesting will be borne by the applicablecertifying agent and is considered a costof doing business. Accordingly,certifying agents should makeprovisions for the cost of preharvest orpostharvest residue testing whenstructuring certification fees.

Preharvest and Postharvest ResidueTesting

The main objectives of the residuetesting program are to: (1) ensure thatcertified organic production andhandling operations are in compliancewith the requirements set forth in thisfinal rule and (2) serve as a means formonitoring drift and unavoidableresidue contamination of agriculturalproducts to be sold or labeled asorganically produced. Any detectableresidues of a prohibited substance or aproduct produced using excludedmethods found in or on samples duringanalysis will serve as a warningindicator to the certifying agent.

The Administrator, SOP’s governingState official, or certifying agent mayrequire preharvest or postharvest testingof any agricultural input used in organicagricultural production or anyagricultural product to be sold orlabeled as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients or foodgroup(s)).’’ It is based on theAdministrator’s, SOP’s governing Stateofficial’s, or certifying agent’s belief thatan agricultural product or agriculturalinput has come into contact with one ormore prohibited substances or has beenproduced using excluded methods.Certifying agents do not have to conductresidue tests if they do not have reasonto believe that there is a need for testing.



Certifying agents must ensure, however,that certified organic operations areoperating in accordance with the Actand the regulations set forth in this part.

The ‘‘reason to believe’’ could betriggered by various situations, forexample: (1) The applicable authorityreceiving a formal, written complaintregarding the practices of a certifiedorganic operation; (2) an open containerof a prohibited substance found on thepremises of a certified organicoperation; (3) the proximity of acertified organic operation to a potentialsource of drift; (4) suspected soilcontamination by historically persistentsubstances; or (5) the product from acertified organic operation beingunaffected when neighboring fields orcrops are infested with pests. Thesesituations do not represent all of thepossible occurrences that would triggeran investigation. Preharvest orpostharvest residue testing will occur ona case-by-case basis.

In each case, an inspectorrepresenting the Administrator, SOP’sgoverning State official, or certifyingagent or will conduct sampling.According to subpart F, Accreditation,private or State entities accredited ascertifying agents under the NOP mustensure that its responsibly connectedpersons, employees, and contractorswith inspection, analysis, and decision-making responsibilities have sufficientexpertise to successfully perform theduties assigned. Therefore, allinspectors employed by certifyingagents to conduct sampling must havesufficient expertise in methods of chain-of-custody sampling. Moreover, testingfor chemical residues must beperformed in an accredited laboratory.When conducting chemical analyses,the laboratory must incorporate theanalytical methods described in themost current edition of the OfficialMethods of Analysis of the AOACInternational or other current applicablevalidated methodology for determiningthe presence of contaminants inagricultural products. Results of allanalyses and tests performed undersection 205.670 must be promptlyprovided to the Administrator, except,that, where an SOP exists, all test resultsand analyses should be provided to theSOP’s governing State official by theapplicable certifying party thatrequested testing. Residue test resultsand analyses must also be, according tosection 205.403(e)(2), provided to theowner of the certified organic operationwhose product was tested. All otherparities desiring to obtain suchinformation must request it from theapplicable certifying agent.

OFPA requires certifying agents, tothe extent of their awareness, to reportviolations of applicable laws relating tofood safety to appropriate healthagencies such as EPA and FDA. Whenresidue testing indicates that anagricultural product contains pesticideresidues or environmental contaminantsthat exceed either the EPA tolerancelevel or FDA action level, as applicable,the certifying agent must promptlyreport data revealing such informationto the Federal agency whose regulatorytolerance or action level has beenexceeded.

Residue Testing and Monitoring ToolsWhen testing indicates that an

agricultural product to be sold orlabeled as organically producedcontains residues of prohibitedsubstances, certifying agents willcompare the level of detected residueswith 5 percent of the EnvironmentalProtection Agency (EPA) tolerance forthe specific residue detected on theagricultural product intended to be soldas organically produced. Thiscompliance measure, 5 percent of EPAtolerance for the detected prohibitedresidue, will serve as a standard for theAdministrator, SOP’s governing Stateofficials, and certifying agents to assistin monitoring for illegal use violations.

In addition, we intend to establishlevels of unavoidable residualenvironmental contamination (UREC)for crop-and site-specific agriculturalcommodities to be sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with . . .’’ Theselevels will represent limits at whichUSDA may take compliance action tosuspend the use of a contaminated areafor organic agricultural production.Currently, USDA is seekingscientifically sound principles andmeasures by which it can establishUREC levels to most effectively addressissues of unavoidable residualenvironmental contamination withrespect to this rule. However, in theinterim, UREC will be defined as theFood and Drug Administration’s (FDA)action levels for poisonous ordeleterious substances in human food oranimal feed. UREC levels will beinitially set for persistent prohibitedsubstances (aldrin, dieldrin, chlordane,DDE, etc.) in the environment. Theymay become more inclusive ofprohibited residues as additionalinformation becomes available.Unavoidable residual environmentalcontamination levels will be based onthe unavoidability of the chemicalsubstances and do not representpermissible levels of contaminationwhere it is avoidable.

Analyses and test results will beavailable for public access unless theresidue testing is part of an ongoingcompliance investigation. Informationrelative to an ongoing complianceinvestigation will be confidential andrestricted to the public.

Detection of Prohibited Substances orProducts Derived from ExcludedMethods

In the case of residue testing and thedetection of prohibited substances in oron agricultural products to be sold,labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made with. . .’’ products with detectable residuesof prohibited substances that exceed 5percent of the EPA tolerance for thespecific residue or UREC cannot be soldor labeled as organically produced.When such an agricultural crop is inviolation of these requirements, thecertification of that crop will besuspended for the period that the cropis in production. Certifying agents mustfollow the requirements specified insections 205.662 and 205.663 of subpartG, Compliance.

The ‘‘5 percent of EPA tolerance’’standard is considered a level abovewhich an agricultural product cannot besold as organic, regardless of how theproduct may have come into contactwith a potential prohibited substance.This standard has been established to:(1) satisfy consumer expectations thatorganic agricultural products willcontain minimal chemical residues and(2) respond to the organic industry’srequest to implement a standardcomparable to current industrypractices. However, the ‘‘5 percent ofEPA tolerance’’ standard cannot be usedto automatically qualify agriculturalproducts as organically produced, evenif the level of chemical residuesdetected on an agricultural product isbelow 5 percent of the EPA tolerance forthe respective prohibited substance.This final rule is a comprehensive set ofstandards and regulations thatdetermines whether a product can orcannot be considered to carry thespecified organic labeling terms insubpart D, Labeling. Therefore, inaddition to this section of subpart G,Administrative, all other requirementsof this part must be met by certifiedorganic operations to have anagricultural product considered‘‘organically produced.’’

When residue testing detects thepresence of any prohibited substance,whether above or below 5 percent of theEPA tolerance for the specific pesticideor UREC, the SOP’s governing Stateofficial or certifying agent may conductan investigation of the certified organic



operation to determine the cause of theprohibited substance or product in or onthe agricultural product to be sold orlabeled as organically produced. Thesame shall occur if testing detects aproduct produced using excludedmethods. If the investigation reveals thatthe presence of the prohibited substanceor product produced using excludedmethods in or on an agriculturalproduct intended to be sold asorganically produced is the result of anintentional application of a prohibitedsubstance or use of excluded methods,the certified organic operation shall besubject to suspension or revocation ofits organic certification. In addition, anyperson who knowingly sells, labels, orrepresents an agricultural product asorganically produced in violation of theAct or these regulations shall be subjectto a civil penalty of not more than$10,000 per violation.

Emergency Pest or Disease TreatmentPrograms

When a prohibited substance isapplied to an organic production orhandling operation due to a Federal orState emergency pest or diseasetreatment program and the organichandling or production operationotherwise meets the requirements of thisfinal rule, the certification status of theoperation shall not be affected as aresult of the application of theprohibited substance, except that: (1)Any harvested crop or plant part to beharvested that has contact with aprohibited substance applied as theresult of a Federal or State emergencypest or disease treatment programcannot be sold, labeled, or representedas ‘‘100 percent organic,’’ ‘‘organic,’’ or‘‘made with . . .’’ and (2) any livestockthat are treated with a prohibitedsubstance applied as the result of aFederal or State emergency pest ordisease treatment program or productderived from such treated livestockcannot be sold, labeled, or representedas ‘‘100 percent organic,’’ ‘‘organic,’’ or‘‘made with . . .’’

However, milk or milk products maybe labeled or sold as organicallyproduced beginning 12 monthsfollowing the last date that the dairyanimal was treated with the prohibitedsubstance. Additionally, the offspring ofgestating mammalian breeder stocktreated with a prohibited substance maybe considered organic if the breederstock was not in the last third ofgestation on the date that the breederstock was treated with the prohibitedsubstance.

Residue Testing—Changes Based onComments

This portion of subpart G differs fromour proposal in several respects asfollows:

(1) Reporting Requirements.Commenters were not satisfied with thelanguage in section 205.670(d)(1) thatrequired results of all analyses and testsperformed under section 205.670 to beprovided to the Administrator promptlyupon receipt. They asked that theparagraph be amended to include that:(1) Results of all analyses and testsperformed under section 205.670 beprovided by the Administrator to theappropriate SOP’s governing Stateofficial; and (2) test results be madeimmediately available to the owner ofthe material sampled. They stated thatsince State organic certificationprograms are responsible forenforcement within their State, resultsof residue tests conducted by certifyingagents must be provided to the SOP’sgoverning State official for routinemonitoring and for investigatingpossible violations of the Act.

We agree with the commenters andhave responded to their concernsaccordingly. To ensure that SOP’sreceive results of all tests and analysesconducted under the inspection andtesting requirements of subpart G,section 205.670(d) has been amended toinclude that the results of all analysesand residue tests must be provided tothe Administrator promptly uponreceipt; Except: That where an SOPexists, all test results and analysesshould be provided to the SOP’sgoverning State official.

In regard to the commenters’ requestthat certified organic operations beprovided with a copy of test results fromsamples taken by an inspector, anadditional paragraph, section205.403(e)(2), has been added to subpartE, Certification, that assures that suchinformation is provided to the owners ofcertified organic operations by thecertifying agents.

(2) Integrity Of Organic Samples. Wehave modified language in section205.670(c) to clarify our intent regardingthe maintenance of sample integrity.The proposed rule stated that ‘‘sampleintegrity must be maintained in transit,and residue testing must be performedin an accredited laboratory.’’ During thefinal rulemaking process, we did notbelieve that our intent was clear on thissubject. Our intent is to ensure thatsample integrity is maintainedthroughout the entire chain of custodyduring the residue testing process.Proposed language only suggests thatsample integrity be maintained in

transit. Therefore, we have changed thesecond sentence in section 205.670(c) tostate that ‘‘sample integrity must bemaintained throughout the chain ofcustody, and residue testing must beperformed in an accredited laboratory.’’

(3) Reporting Residue and Other FoodSafety Violations to Appropriate HealthAgencies. In the proposed rule, section205.671(b) under Exclusion fromOrganic Sale states, ‘‘If test resultsindicate a specific agricultural productcontains pesticide residues orenvironmental contaminants thatexceed the FDA’s or the EPA’sregulatory tolerances, the data must bereported promptly to the appropriatepublic health agencies.’’ During the finalrulemaking process, a group ofcommenters suggested that we movesection 205.671(b) into section 205.670as paragraph (e). They recommendedthat we move section 205.671(b)because it does not specifically addressthe sale of organically producedproducts, as indicated by the sectionheading. They recommended thatsection 205.671(b) be placed undersection 205.670 as paragraph (e) becauseit dealt with the reporting of residuesthat exceed Federal regulatorytolerances. The commenters furtherstated that, while section 205.671(b)creates a duty to report, it is not specificas to who must report.

We have accepted the suggestions ofthe commenters and have respondedaccordingly. We have removed section205.671(b) and relocated it undersection 205.670 as paragraph (e). Wehave also modified the regulatory text ofparagraph (e) to include language thatinstructs certifying agents to report,when residue testing indicates that anagricultural product contains pesticideresidues or environmental contaminantsthat exceed either the EPA tolerancelevel or FDA action level, as applicable,data reveling such information to theFederal agency whose regulatorytolerance or action level has beenexceeded.

(4) Exclusion from Organic Sale. Wehave reviewed section 205.671(a),removed the requirement to implementthe Pesticide Data Program (pdp)estimated national mean as acompliance tool in monitoring for thepresence of unacceptable levels ofprohibited substances in agriculturalproducts intended to be sold as organic,and added the ‘‘5 percent of EPAtolerance’’ standard.

Commenters voiced the opinion thatthe estimated national mean would be adifficult standard in organic agriculturalproduction for several reasons. Somestated that the estimated national meanwas a new concept that would confuse



producers and handlers because theywould not know the exact definition of‘‘estimated national mean’’ and how itwould be determined. Others stated thatthe PDP was too limited in scope toemploy an estimated national mean forall commodity/pesticide combinations.Commenters reasoned that PDP datawere limited in terms of the agriculturalcommodities that are sampled andtested.

Another group of commenters statedthat PDP data would be unfair to use inthe NOP’s residue testing plan. Theyargued PDP data should not be used toset maximum residue levels for organicagricultural products because PDPsamples its products as close to thepoint of consumption as possible. As aresult, commenters believe that PDPdata may not be totally reflective ofresidue levels of agricultural products atthe farmgate level. Since most residuetesting in organic agriculturalproduction takes place at the farmgate,these commenters argued that it wouldbe an inappropriate standard for organicagricultural production.

As a result, a large number ofcommenters suggested that wereconsider using the estimated nationalmean as a standard for the maximumallowable residues on organicallyproduced products. Instead,commenters recommended that the NOPincorporate the National OrganicStandards Board’s (NOSB)recommendation and current industrypractice of using 5 percent of the EPAtolerance as a maximum level ofpesticide residue on organic agriculturalproducts. Commenters argued that using5 percent of the EPA tolerance providesa sense of confidence to the consumersof organic agricultural products.

In many respects, we agree with thecommenters. We have revisited usingPDP data to establish an estimatednational mean for commodity/pesticidecombinations and for setting amaximum level of pesticide residue thatcould exclude agricultural productsfrom being sold, labeled, or representedas organic. As a result, we haveconcluded that such an approach maybe somewhat underdeveloped toincorporate into the NOP. We havereached this conclusion based on manyof the same arguments presented bycommenters (i.e., limited scope ofagricultural products tested under PDP,product sampling based upon marketavailability, testing near the point ofconsumption, etc.). Also, we estimatedthat there would be a considerable timelag between the implementation of theNOP and defining a comprehensive listof estimated national means for allcommodity/pesticide combinations.

Thus, we have decided not to use theestimated national mean as a tool formonitoring organic agriculturalproducts for the presence of prohibitedsubstances and as a standard to excludeagricultural products from being sold,labeled, or represented as organicallyproduced.

Instead, we have decided to followthe recommendation of the commentersby replacing the estimated nationalmean for specific commodity/pesticidepairs with 5 percent of the EPAtolerance for the specific pesticide.Therefore, when residue testing detectsprohibited substances at levels that aregreater than 5 percent of the EPAtolerance for the specific pesticidedetected on the particular productsamples, the agricultural product mustnot be sold or labeled as organicallyproduced.

We fully understand that the EPAtolerance is defined as the maximumlegal level of a pesticide residue in or ona raw or processed agriculturalcommodity. We also acknowledge thatthe EPA tolerance is a health-basedstandard. We are not trying to employthe 5 percent standard in a mannersimilar to that of EPA. As mentioned inour proposal, the national organicstandards, including provisionsgoverning prohibited substances, arebased on the method of production, notthe content of the product. The primarypurpose of the residue testing approachdescribed in this final rule, then, is toprovide an additional tool for SOP’sgoverning State officials and certifyingagents to use in monitoring andensuring compliance with the NOP.

(5) Unavoidable ResidualEnvironmental Contamination. We havedefined, as an interim measure, UREC asthe FDA action levels for poisonous ordeleterious substances in human food oranimal feed.

Section 205.671 proposed the use ofUREC to serve as a residue testing toolfor compliance. Commenters believedUREC levels, as prescribed in section205.671 of the proposed rule, would beproblematic as a standard because theywere undefined. Commenters arguedthat it would be impractical and veryexpensive to establish UREC levels forevery organic crop and region in theUnited States. They suggested thatUREC levels be managed as a practicestandard or program manual issue. Theyalso expressed the concern thatinconsistent application of UREC levelscould create difficulties for certifyingagents and certified operations.

We agree that UREC levels should bedefined. We are seeking scientificallysound principles and measures bywhich we can establish UREC levels to

most effectively address issues ofunavoidable residual contaminationwith respect to this rule. However, inthe interim, the ability to implement anundefined standard would be difficultfor certifying agents. Therefore, we haveincluded language in the preamble thattemporarily defines UREC as the FDAaction levels for poisonous ordeleterious substances in human food oranimal feed. When residue testingdetects the presence of a prohibitedsubstance on an agricultural productgreater than such levels mentioned, theagricultural product cannot be sold asorganic. We have decided to use FDAaction levels for UREC because theyencompass many of the toxic, persistentchemicals and heavy metals that arepresent in the environment and may befound on food and animal feed. Asmentioned earlier, the FDA action levelsare being employed in this part astemporary measures for compliance. Wewill continue to seek scientificallysound principles and measures bywhich to establish UREC levels thatmore appropriately satisfy the purposesof this part.

Residue Testing—Changes RequestedBut Not Made


(1) Residue Testing Responsibility.Commenters petitioned that we removethe requirement in section 205.670(b)that states residue tests must beconducted by the applicable SOP’sgoverning State official or the certifyingagent at the official’s or certifyingagent’s own expense. The commentersexpressed the opinion that we werepracticing ‘‘micromanagement.’’ Theyalso said that there was no need for theproposal to be so detailed with respectto who pays for residue testing. Basedon the commenters’ responses, residueanalyses are reportedly paid byproducers, buyers, brokers, certifiers,and government residue testingprograms.

We have not adopted the suggestionof the commenters. In the proposal, westated that conducting residue tests wasconsidered a cost of doing business forcertifying agents. Our position has notchanged. Certifying agents can factorresidue testing costs into certificationfees. It is not our intention to‘‘micromanage’’ the way that certifyingagents conduct business. Section2107(a)(6) of the Act requires thatcertifying agents conduct residue testingof agricultural products that have beenproduced on certified organic farms andhandled through certified organichandling operations. OFPA also



requires, under section 2112(a) through(c), that certifying agents enforce itsprovisions by implementing a system ofresidue testing to test products sold orlabeled as organically produced. Inaddition, subpart E, Certification,authorizes certifying agents to conducton-site inspections, which may includeresidue testing, of certified organicoperations to verify that the operation iscomplying with the provisions in theAct and the regulations in this part.Certifying agents are responsible formonitoring organic operations for thepresence of prohibited substances; weview residue testing as a cost of doingbusiness. Therefore, we believe thatcertifying agents should factormonitoring costs associated withimplementing the provisions in the Actand Rule into their certification fees.

(2) Reporting to Federal RegulatoryAgencies. Commenters disagree withsection 205.671(b) of the proposed rulewhich states that if test results indicatea specific agricultural product containspesticide residues or environmentalcontaminants that exceed the FDAaction level or EPA tolerance, the datamust be reported promptly toappropriate public health agencies.Commenters believe that since results ofall analyses and tests must be providedto the Administrator, USDA should beresponsible for communicating such testresults to other Federal agencies such asFDA or EPA if regulatory tolerances oraction levels are exceeded. They alsosuggested that section 205.671(b) beremoved from the national regulations.Commenters expressed the view thatsuch a requirement is not related toorganic certification.

We do not agree with the commenters.It is not our intent to create additionalresponsibility for the certifying agent.Section 205.671(b), redesignated assection 205.670(e), is a statutoryrequirement. Section 2107(a)(6) of theOrganic Food Production Act of 1990requires certifying agents, to the extentof their awareness, to report violationsof applicable laws relating to food safetyto appropriate health agencies such asEPA and FDA. Therefore, due to section2107 of the Act, section 205.670(e) hasbeen included in the nationalregulations.

(3) ‘‘Threshold’’ for GeneticContamination. Many commenterssuggested that we establish a‘‘threshold’’ for the unintended oradventitious presence of products ofexcluded methods in organic products.Some commenters argued that athreshold is necessary because, withoutthe mandatory labeling ofbiotechnology-derived products, organicoperations and certifying agents could

not be assured that products of excludedmethods were not being used. Othersargued that, without an establishedthreshold, the regulations wouldconstitute a ‘‘zero tolerance’’ forproducts of excluded methods, whichwould be impossible to achieve.

We do not believe there is sufficientconsensus upon which to establish sucha standard at this time. Much of thebasic, baseline information about theprevalence of genetically engineeredproducts in the conventionalagricultural marketplace that would benecessary to set such a threshold—e.g.,the effects of pollen drift where it maybe a factor, the extent of mixing atvarious points throughout the marketingchain, the adventitious presence ofgenetically engineered seed innonengineered seed lots—is still largelyunknown. Our understanding of howthe use of biotechnology inconventional agricultural productionmight affect organic crop production iseven less well developed.

Also, as was pointed out in somecomments, the testing methodology forthe presence of products of excludedmethods has not yet been fullyvalidated. Testing methods for somebiotechnology traits in somecommodities are becomingcommercially available. Withoutrecognized methods of testing for andquantifying of all traits in a wide rangeof food products, however, it would bevery difficult to establish a reliablenumerical tolerance.

There are publicly and privatelyfunded research projects underway thatmay provide useful baselineinformation. Efforts of Federal agenciesto clarify the marketing and labeling ofbiotechnology- and nonbiotechnology-derived crops may also help addressthese concerns. FDA, for example, isdeveloping guidance for food producerswho voluntarily chose to labelbiotechnology- and nonbiotechnology-derived foods. USDA is also preparinga Federal Register Notice to seek publiccomment on the appropriate role, if any,that it can play in facilitating themarketing of agricultural productsthrough the development of ‘‘qualityassurance’’ type programs that help topreserve the identity of agriculturalcommodities. USDA, in cooperationwith the technology providers, is alsoworking to validate testing proceduresand laboratories for some commodities.

All of these efforts may help toprovide information on this issue.Practices for preserving productidentity, including segregatinggenetically engineered andnongenetically engineered products, areevolving in some conventional markets.

As we discussed in the preamble to theproposed rule, we anticipate that theseevolving industry best practices andstandards will become the standards forimplementing the provisions in thisregulation relating to the use ofexcluded methods. As was alsodiscussed in the proposed rule, theseregulations do not establish a ‘‘zerotolerance’’ standard. As with othersubstances not approve for use inorganic production systems, a positivedetection of a product of excludedmethods would trigger an investigationby the certifying agent to determine if aviolation of organic production orhandling standards occurred. Thepresence of a detectable residue alonedoes not necessarily indicate use of aproduct of excluded methods thatwould constitute a violation of thestandards.

(4) Certification Status AfterEmergency Pest or Disease Treatment.We have not modified language insection 205.672 that would affect thecertification status of a certified organicoperation if the operation had beensubjected to a Federal or Stateemergency pest or disease treatmentprogram.

Section 205.672 states that when aprohibited substance is applied to acertified operation due to a Federal orState emergency pest or diseasetreatment program and the certifiedoperation otherwise meets therequirements of this part, thecertification status of the operation shallnot be affected as a result of theapplication of the prohibited substance:Provided, That, the certified operationadheres to certain requirementsprescribed by the NOP. One group ofcommenters informed us that they didnot support maintaining the organicstatus of an operation that has beendirectly treated with prohibitedsubstances, regardless of the reason fortreatment. They believe that Federal andState emergency pest or diseasetreatment programs should providealternatives for organic operationswhenever feasible. If no alternativemeasure is feasible, the organicoperation should choose betweenvoluntary surrender of their organicstatus on targeted parts of the operationor destruction of the crop to eliminatepest habitat. The commenters alsosuggested that compensation should beprovided to organic producers whosecrops must be destroyed to eliminatehabitat. They feel that allowing theapplication of prohibited materials tocertified organic land without affectingthe certification status violates the trustconsumers place in organic certification.



We disagree with the position of thecommenters. Historically, residues fromemergency pest or disease treatmentprograms have been treated as driftcases by certifiers. In these cases, thespecific crop may not be sold as organic,but the organic status of future cropyears are not affected. We intend tohandle such cases in a similar manner.We understand that commenters wouldlike us to remove the certification of anorganic operation that has been treatedwith a prohibited substance, but organiccertification is a production claim, nota content claim. We, along with thecommenters, are concerned withconsumers trusting organic certification.At the same time, we are concernedwith the welfare of certified organicoperations. We have tried to includelanguage in section 205.672 that wouldaddress both issues. We believe that, ifa certified organic grower has been agood steward of his/her land and hasmanaged the production of his/herproduct(s) in accordance with allregulations in the Act and otherrequirements in this part, thecertification status of the operationshould not be affected. The applicationof a prohibited substance as part of aFederal or State emergency pest ordisease treatment program is outside thecontrol of the certified operation. Wealso believe that maintaining consumertrust is important. Thus, section 205.672states that any harvested crop or plantpart to be harvested that has beentreated with a prohibited substance aspart of a Federal or State emergency pestor disease treatment program cannot besold as organically produced. Therefore,the certified organic operation canretain its certification status, and theconsumer can be assured that a productfrom a certified organic operation thathas been in contact with a prohibitedsubstance as the result of a Federal orState pest or disease treatment programwill not enter the organic marketplace.Accordingly, we have not made thechange to section 205.672 as proposedby the commenters.

(5) Emergency Pest or DiseaseTreatment Programs. Commenterssuggested that the Department add anew paragraph to section 205.672 thatstates ‘‘the certifying agent mustmonitor production operations that havebeen subjected to a Federal or Stateemergency pest or disease treatmentprogram, and may require testing offollowing crops, or an extendedtransition period for affected productionsites, if residue test results indicate thepresence of a prohibited substance.’’Commenters said the language in theproposed rule did not clearly establish

that a transition period could be neededafter contamination of a certifiedorganic operation by a government-mandated spray program. They felt thatthere may be a need for a case-by-casedetermination by the certifying agent asto when it would be best for a certifiedorganic operation to begin selling itsproducts as organically produced after ithas been subject to a governmentmandated spray program.

We understand that commenterswould like USDA to mandate certifyingagents to monitor operations that havebeen subject to Federal or Stateemergency pest or disease treatmentprograms; however, we do not see aneed to prescribe such a provision.Based on the responsibilities of being aUSDA-accredited certifier, it is ourbelief that certifying agents wouldmonitor a certified organic operationthat has been subjected to a Federal orState emergency pest or diseasetreatment program to make sure thatproduct being produced for organic saleis actually being produced inaccordance with the Act and theregulations in this part. Certifyingagents have been granted the authorityto conduct additional on-siteinspections of certified organicoperations to determine compliancewith the Act and national standardsunder subpart E, section 205.403.Commenters requested that we includelanguage that would allow certifyingagents to recommend an extendedtransition period for affected productionsites if residue tests indicate thepresence of a prohibited substance.Again, we understand the commenters’concern, but we are not aware ofcomprehensive soil residue data thatcould guide certifying agents indetermining appropriate withdrawalintervals for operations that have beensubjected to emergency pest or diseasetreatment programs.

Residue Testing—ClarificationsClarification is given on the following

issues raised by commenters as follows:(1) Sampling and Testing.

Commenters stated that the purpose ofresidue testing under the Act is toassure that organically producedagricultural products that are sold asorganic do not contain pesticideresidues or residues of other prohibitedsubstances that exceed levels asspecified by the NOP. Based onlanguage in section 205.670(b) of theproposed rule, commenters expressedthe opinion that the AgriculturalMarketing Service (AMS) was, not onlyrequiring residue testing of organicagricultural products, but also of ‘‘any’’agricultural input used or agricultural

product intended to be sold as ‘‘100percent organic,’’ ‘‘organic,’’ or ‘‘madewith * * *’’ when there is reason tobelieve that the agricultural input orproduct has come into contact with aprohibited substance. Commentersbelieve that organic certifying agentsmay be required to test manynonorganic agricultural inputs (such asseeds, compost, straw, sawdust, andplastic) and nonorganic agriculturalproducts and ingredients used inproducts labeled as ‘‘made with * * *’’.They also argued that such testingwould be unnecessary, burdensome,and expensive because such materialsare more likely to have come intocontact with a prohibited substance.Therefore, commenters suggested thatwe amend section 205.670(b) bydeleting ‘‘agricultural inputs’’ andreplacing ‘‘agricultural product’’ with‘‘organically produced agriculturalproduct.’’ They also recommended thatwe replace the second occurrence of‘‘product’’ with ‘‘organic product.’’ Thussection 205.670(b) would suggest thatonly organic agricultural products couldbe required to be tested by the certifyingagent.

We understand the concerns of thecommenters but believe that thecommenters have misinterpreted theintent of section 205.670(b). It is not ourintent to mandate residue testing of allinputs and ingredients used in theproduction of organic agriculturalproducts. Neither is it our intent forcertifying agents to abuse residue testingresponsibility by conducting residuetests of certified organic operationswithout reason to believe that theagricultural input or product intendedto be sold as organic has come intocontact with prohibited substances. Ourintent is to make it clear that certifyingagents have the authority to test anyagricultural input used or agriculturalproduct intended to be sold asorganically produced when there isreason to believe that the agriculturalinput or product has come into contactwith a prohibited substance. Section205.670(b) allows for testing of inputsand agricultural products, but it doesnot require that all inputs of a productintended to be sold as organicallyproduced must be tested. However,certifying agents must be able to ensurethat certified organic operations areoperating in accordance with the Actand the regulations set forth in this part.To assure that certifying agents haveestablished fair and effective proceduresfor enforcing residue testingrequirements, section 205.504(b)(6)provides that they must submit to USDAa copy of the procedures to be used for



sampling and residue testing pursuantto section 205.670.

(2) Chain Of Custody Training. Acommenter suggested that section205.670(c) address chain of custodytraining for inspectors that will beperforming preharvest or postharvesttissue test sample collection on behalf ofthe Administrator, SOP’s governingState official, or certifying agent. Thecommenter proposed that all inspectorsshould be trained to handle chain ofcustody samples in order to maintainthe integrity of the samples.

We agree that inspectors should beappropriately trained to handle chain-of-custody samples in order to maintainthe integrity of the samples taken froma certified organic operation. However,we do not believe that the language insection 205.670(c) must be modified toaddress such an issue. As a USDA-accredited body, a private or State entityoperating as a certifying agent mustensure that its responsibly connectedpersons, employees, and contractorswith inspection, analysis, and decision-making responsibilities have sufficientexpertise in organic production orhandling techniques to successfullyperform the duties assigned. Thecertifying agent must also submit adescription of the training that has beenprovided or intends to be provided topersonnel to ensure that they complywith and implement the requirements ofthe Act and the regulations in this part.In addition, certifying agents mustsubmit a copy of the procedure to beused for sampling and residue testingfor approval by the Administrator.Through the accreditation process,therefore, we will be able to assess theexpertise of the individuals employedby the certifying agent and provideguidance in areas where additionaltraining is needed to comply with therequirements of the Act and theregulations in this part.

(3) Exclusion from Organic Sale.Commenters expressed that section205.671(a) could be easilymisinterpreted. They said that section205.671(a) did not make clear thatresidue testing may not be used toqualify crops to be sold as organic if adirect application of prohibitedmaterials occurred. Commenterssuggested that section 205.671(a)include: ‘‘Any crop or product to whichprohibited materials have been directlyapplied shall not be sold, labeled, orrepresented as organically produced.’’

We do not believe this additionallanguage is necessary. Residue testingcannot be used to qualify anyagricultural crop or product to which aprohibited material has beenpurposefully/directly applied. The

presence of any prohibited substance onan agricultural product to be sold asorganic warrants an investigation as towhy the detected prohibited substanceis present on the agricultural product. Itdoes not matter if the product has comeinto contact with a prohibited substancethrough means of drift or intentionalapplication. If the outcome of theinvestigation reveals that the presenceof the detected prohibited substance isthe result of an intentional application,the certified operation will be subject tosuspension or revocation of its organiccertification and/or a civil penalty of notmore than $10,000 if he/she knowinglysells the product as organic. The use ofprohibited substances is not allowed inthe Act or this final rule. Residue testingis not a means of qualifying a crop orproduct as organic if a prohibitedsubstance has been intentionally/directly applied. It is a tool formonitoring compliance with theregulations set forth in the Act and inthis part.

(4) Emergency Pest or DiseaseTreatment Programs. Commentersrequested that we make a cleardistinction between crops oragricultural products that have hadprohibited substances directly appliedto them and those that have come intocontact with prohibited substancesthrough chemical drift. They haveproposed that we amend section205.672(a) to address this issue. Section205.672(a) of the proposal states thatany harvested crop or plant part to beharvested that has had contact with aprohibited substance applied as theresult of a Federal or State emergencypest or disease treatment programcannot be sold as organically produced.Commenters did not find this languageacceptable because it did notdistinguish between the two types ofways that products can come intocontact with prohibited substances (driftand direct/intentional application) andhow each situation would be addressedwith respect to the national organicstandards. Commenters believed thatsection 205.672(a) was fairly ambiguousand open for misinterpretation.Commenters requested that we amendlanguage in section 205.672(a) toinclude that ‘‘Any harvested crop orplant part to be harvested that hascontact with a prohibited substancedirectly applied to the crop as the resultof a Federal or State emergency pest ordisease treatment program cannot besold, labeled, or represented asorganically produced.’’

We do not accept the commenters’request and believe that the commentershave misinterpreted section 205.672 ofthe proposed rule. Section 205.672

specifically addresses certified organicoperations that have had prohibitedsubstances applied to them due to aFederal or State pest or diseasetreatment program. Section 205.672does not include those organicoperations that may have been driftedupon by prohibited substances that havebeen applied to a neighboring farm as aresult of a Federal or State emergencypest or disease treatment program. Anypotential drift from a mandatory pestand disease treatment program will betreated in the same manner as drift fromany other source.

Adverse Action Appeal ProcessThis portion of subpart G sets forth

the procedures for appealing adverseactions under the National OrganicProgram (NOP). These procedures willbe used by: (1) Producers and handlersappealing denial of certification andproposed suspension or revocation ofcertification decisions; and (2) certifyingagents appealing denial of accreditationand proposed suspension or revocationof accreditation decisions. The Act andthe Administrative Procedure Act (APA)(5 U.S.C. 553–559) provides affectedpersons with the right to appeal anyadverse actions taken against theirapplication for certification oraccreditation or their certification oraccreditation.

The Administrator will handlecertification appeals from operations inStates that do not have an approvedState organic program (SOP). TheAdministrator will also handle appealsof accreditation decisions of the NOPProgram Manager. The Administratorwill issue decisions to sustain or denyappeals. If an appeal is denied, theAdministrator will initiate a formaladjudicatory proceeding to deny,suspend, or revoke certification oraccreditation. Such proceedings will beconducted pursuant to USDA’s Rules ofPractice Governing Formal AdjudicatoryProceedings Instituted by the SecretaryUnder Various Statutes, 7 CFR 1.130through 1.151. Under these rules ofpractice, if the Administrative LawJudge denies the appeal, the appellantmay appeal the Administrative LawJudge’s decision to the Judicial Officer.If the Judicial Officer denies the appeal,the appellant may appeal the JudicialOfficer’s decision to the United StatesDistrict Court for the district in whichthe appellant is located.

In States with approved SOP’s, theSOP will oversee certificationcompliance proceedings and handleappeals from certified operations in theState. An SOP’s appeal procedures andrules of procedure must be approved bythe Secretary and must be equivalent to



those of the NOP and USDA. The finaldecision on an appeal under the SOPmay be appealed by the appellant toUnited States District Court for thedistrict in which the appellant islocated.

Description of RegulationsThese appeal procedures provide that:

(1) Persons, subject to the Act, whobelieve they are adversely affected by anoncompliance decision of the NOP’sProgram Manager may appeal suchdecision to the Administrator; (2)persons, subject to the Act, who believethey are adversely affected by anoncompliance decision of an SOP mayappeal such decision to the SOP’sgoverning State official who will initiatehandling of the appeal in accordancewith the appeal procedures approved bythe Secretary; and (3) persons, subject tothe Act, who believe they are adverselyaffected by a noncompliance decision ofa certifying agent may appeal suchdecision to the Administrator unless theperson is subject to an approved SOP,in which case the appeal must be madeto the SOP.

All written communications betweenparties involved in appeal proceedingsmust be sent to the recipient’s place ofbusiness by a delivery service whichprovides dated return receipts. Allappeals filed under these procedureswill be reviewed, heard, and decided bypersons not involved with the decisionbeing appealed.

Certification AppealsApplicants for certification may

appeal a certifying agent’s notice ofdenial of certification. Certifiedoperations may appeal a notification ofproposed suspension or revocation oftheir certification issued by theircertifying agent. Such appeals will bemade to the Administrator unless theperson is subject to an approved SOP,in which case the appeal must be madeto the SOP.

If the Administrator or SOP sustainsan appeal, the applicant or certifiedoperation will be granted certification orcontinued certification, as applicable tothe operation’s status. The act ofsustaining the appeal will not beconsidered an adverse action and maynot be appealed by the certifying agentwhich issued the notice of denial ofcertification or notification of proposedsuspension or revocation ofcertification.

If the Administrator or SOP denies anappeal, a formal administrativeproceeding will be initiated to deny,suspend, or revoke the certification.Such proceeding will be conducted inaccordance with USDA’s Uniform Rules

of Practice or the SOP’s rules ofprocedure.

Accreditation AppealsApplicants for accreditation may

appeal the Program Manager’snotification of accreditation denial.Accredited certifying agents may appeala notification of proposed suspension orrevocation of their accreditation issuedby the Program Manager. Such appealswill be made to the Administrator. If theAdministrator sustains an appeal, theapplicant or certifying agent will begranted accreditation or continuedaccreditation, as applicable to theoperation’s status. If the Administratordenies an appeal, a formaladministrative proceeding will beinitiated to deny, suspend, or revoke theaccreditation. Such proceeding will beconducted in accordance with USDA’sUniform Rules of Practice.

Filing PeriodAn appeal of a noncompliance

decision must be filed within the timeperiod provided in the letter ofnotification or within 30 days from thedate of receipt of the notification,whichever occurs later. The appeal willbe considered ‘‘filed’’ on the datereceived by the Administrator or, whenapplicable, the SOP. Unless appealed ina timely manner, a notification to deny,suspend, or revoke a certification oraccreditation will become final. Theapplicant, certified operation, orcertifying agent that does not file anappeal in the time period providedwaives the right to further appeal of thecompliance proceeding.

Where and What to FileAppeals to the Administrator must be

filed in writing and sent to:Administrator, USDA–AMS, Room3071–S, P.O. Box 96456, Washington,DC 20090–6456. Appeals to the SOPmust be filed in writing to the addressand person identified in the letter ofnotification. All appeals must include acopy of the adverse decision to bereviewed and a statement of theappellant’s reasons for believing that thedecision was not proper or made inaccordance with applicable programregulations, policies, or procedures.

Appeals—Changes Based On CommentsThis portion of subpart G differs from

the proposal in several respects asfollows:

(1) To Whom an Appeal Is Made. Wehave amended section 205.680 to clarifyto whom an appeal is made when thenoncompliance decision is made by theNOP’s Program Manager, an SOP, or acertifying agent. Several commenters

requested that we amend section205.680 to make it consistent with theprovision providing that appeals to theAdministrator are not allowed in thecase of an SOP decision, because suchappeals have to be made to the SOP’sgoverning State official.

We agree that section 205.680 did notconvey sufficient explanation of towhom an appeal is made. Accordingly,we have amended the language insection 205.680 to clarify throughparagraphs (a), (b), and (c) that: (1)Persons, subject to the Act, who believethey are adversely affected by anoncompliance decision of the NOP’sProgram Manager may appeal suchdecision to the Administrator; (2)persons, subject to the Act, who believethey are adversely affected by anoncompliance decision of an SOP mayappeal such decision to the SOP’sgoverning State official who will initiatehandling of the appeal pursuant toappeal procedures approved by theSecretary; and (3) persons, subject to theAct, who believe they are adverselyaffected by a noncompliance decision ofa certifying agent may appeal suchdecision to the Administrator unless theperson is subject to an approved SOP,in which case the appeal must be madeto the SOP.

(2) Written Communications. We haveadded a new paragraph (d) to section205.680, which provides that all writtencommunications between partiesinvolved in appeal proceedings must besent to the recipient’s place of businessby a delivery service which providesdated return receipts. We have takenthis action to further clarify the appealsprocess. This addition to section205.680 implements the samerequirements for appeal documents asour addition of new paragraph (d) tosection 205.660 stipulates forcompliance documents.

(3) Who Shall Handle Appeals. Wehave added a new paragraph (e) tosection 205.680, which provides that allappeals must be reviewed, heard, anddecided by persons not involved withthe decision being appealed. Thisprovision was added to section 205.680to allay the fears of commenters that theperson making the decision would bethe person deciding the appeal. Acouple of commenters recommendedthat an appeal be heard by persons otherthan those who made the decision beingappealed. Specifically, they want theappeal conducted by independenthearing officers who are not responsiblefor implementation or administration ofthe NOP. They also want the finaldecision-making authority in theadministrative review process placed inthe hands of the Secretary.



Under the NOP, once the complianceprocedures are completed at thecertifying agent level, the certifiedoperation may appeal the decision ofthe certifying agent to the Administratoror to the SOP when the certifiedoperation is located within a State withan approved SOP. The Administrator orthe SOP will review the case and renderan opinion on the appeal. When theappeal is sustained, the certifiedoperation and certifying agent arenotified and the case ends. However, ifthe appeal is denied the certifiedoperation and certifying agent arenotified and the certified operation isgiven an opportunity to appeal thedecision of the Administrator or SOP.

Appeals of decisions made by theAdministrator will be heard by anAdministrative Law Judge. If theAdministrative Law Judge rules againstthe certified operation, theAdministrative Law Judge’s decisionmay be appealed by the certifiedoperation to the Judicial Officer. TheJudicial Officer is the USDA officialdelegated authority by the Secretary asthe final deciding officer in adjudicationproceedings. If the Judicial Officer rulesagainst the certified operation, theJudicial Officer’s decision may beappealed by the certified operation tothe United States District Court for thedistrict in which the certified operationis located. For additional informationsee USDA’s Uniform Rules of Practicefound at 7 CFR part 1, subpart H.

Appeals of decisions made by an SOPwill follow procedures comparable tothose just described for an appeal of adecision made by the Administrator. Aswith a final decision of USDA, a finaldecision of the State that goes againstthe certified operation may be appealedto the United States District Court forthe district in which the certifiedoperation is located.

(4) Filing Period. We have amendedthe first sentence of section 205.681(c)by replacing ‘‘at least’’ with ‘‘within’’and by adding the words, ‘‘whicheveroccurs later,’’ to the end thereof. Thisamendment has been made to clarifyour intent that persons affected by anoncompliance proceeding decisionreceive not less than 30 days in whichto file their appeal of the decision.

(5) Where To File an Appeal. We haveamended section 205.681(d) to clarifywhere appeals are to be filed. First, wehave amended what is now paragraph(1) by removing the requirement that theappellant send a copy of the appeal tothe certifying agent. This action shiftsthe responsibility of notifying thecertifying agent of the appeal from theappellant to USDA or, when applicable,the SOP. Second, we have added

language at paragraph (2) which clarifiesthat appeals to the SOP must be filed inwriting to the address and personidentified in the letter of notification.Finally, we have amended what is nowparagraph (3) of section 205.681 byreplacing ‘‘position’’ with ‘‘reasons forbelieving’’ to clarify the intended scopeand purpose of the appellant’s appealstatement. Clarification of section205.681(d) was prompted by acommenter who stated that it isdiscriminatory to require clients ofprivate certifying agents to appeal toUSDA in Washington, when Stateprogram clients can appeal locally.

There are various levels of appealwithin the NOP. Clients of certifyingagents (State and private) are providedwith an opportunity to rebut thenoncompliance findings of thecertifying agent. Once the certifiedoperation has exhausted its options atthe certifying agent level, the certifiedoperation may appeal the decision ofthe certifying agent to the Administratoror to the SOP when the certifiedoperation is located within a State withan approved SOP.

The Administrator will review thecase and render an opinion on theappeal. This level of appeal will notrequire the certified operation’srepresentative to travel to theAdministrator. An appeal of a decisionmade by the Administrator will beheard by an Administrative Law Judgeas near as possible to the certifiedoperation’s representative’s place ofbusiness or residence. An appeal of adecision made by the AdministrativeLaw Judge will be heard by the JudicialOfficer. Again the certified operation’srepresentative will not be required totravel outside of the representative’splace of business or residence. If thecertified operation appeals the decisionof the Judicial Officer, the appeal wouldbe heard by the United States DistrictCourt for the district in which thecertified operation is located.

Appeals of decisions made by an SOPwill follow procedures comparable tothose just described for an appeal of adecision made by the Administrator. Aswith a final decision of USDA, a finaldecision of the State that goes againstthe certified operation may be appealedto the United States District Court forthe district in which the certifiedoperation is located.

(6) Appeal Reports. We will submit anannual report on appeals to the NationalOrganic Standards Board (NOSB),which will include nonconfidentialcompliance information. A commenterrequested that we report quarterly to theNOSB on appeals (number, outcome,kinds, and problems). We agree that it

would be appropriate for the NOP tosubmit an appeals report to the NOSB.We will compile appeal data such as thenumber, outcome, kinds, and problemsencountered. We will maintain thisinformation under the complianceprogram to be developed within theNOP. We do not believe that it isnecessary to put this type of detail oractivity into the regulations. Further, wedo not believe, at this time, thatreporting more frequently than annuallywill be needed. The NOP, however, willwork closely with the NOSB to provideit with the information it may need torecommend program amendmentsdesigned to address compliance andappeal issues.

(7) Availability of AppealInformation. We will develop anddistribute appeal information. Acommenter requested that section205.680 be amended to require thedistribution of an appeal informationbrochure to any applicant foraccreditation or certification. We agreethat the development and distribution ofsuch information is a good idea. We donot believe, however, that it is necessaryor appropriate to put this type of detailor activity into the regulations. We planto provide program information,including appeals and related issues, onthe NOP website.

Appeals—Changes Requested But NotMade

This portion of subpart G retains fromthe proposed rule, regulations on whichwe received comments as follows:

(1) National Appeals Division. Severalcommenters recommend amendingsections 205.680 and 205.681 to providefor appeals to the National AppealsDivision under the provisions at 7 CFRpart 11. We disagree with the requestthat the NOP use the National AppealsDivision Rules of Procedure. The Actand its implementing regulations aresubject to the APA for rulemaking andadjudication. The provisions of the APAgenerally applicable to agencyadjudication are not applicable toproceedings under 7 CFR part 11,National Appeals Division Rules ofProcedure. USDA uses 7 CFR part 1,Rules of Practice Governing FormalAdjudicatory Proceedings Instituted bythe Secretary Under Various Statutes,for adjudicatory proceedings involvingthe denial, suspension, and revocationof certification and accreditation.

Appeals—ClarificationsClarification is given on the following

issues raised by commenters:(1) Appeals. A commenter stated that

appeals of certification decisions shouldalways be taken first to the certifying



agent to provide an opportunity torectify any possible error. Anothercommenter requested an appealsprocess that includes private certifyingagents.

Section 205.662(a) requires a writtennotification of noncompliance withopportunity to rebut or correct. Whenthe noncompliance has been resolveddue to rebuttal or correction, a writtennotification of noncomplianceresolution is issued in accordance withsection 205.662(b). When rebuttal isunsuccessful or correction of thenoncompliance is not completed withinthe prescribed time period, a writtennotification of proposed suspension orrevocation will be issued in accordancewith section 205.662(c). Thisnotification will advise the certifiedoperation of its right to requestmediation or file an appeal with theAdministrator or, when applicable, anSOP. We believe this process ofproviding a notification ofnoncompliance with opportunity torebut or correct, followed by anotification of proposed suspension orrevocation, provides ample opportunityfor the certified operation to work withits certifying agent to resolve issues ofnoncompliance.

(2) Timely Notification. A fewcommenters requested that we amendsection 205.680 to include mandatoryprocedures for timely written notice ofan adverse decision, the reasons for thedecision, the person’s appeal rights, andthe procedures for filing an appeal. Werecognize that all compliance activitiesneed to be carried out as quickly andexpeditiously as possible within theconfines of due process. We believe thatthe commenters’ concerns are addressedthrough various sections of theseregulations. Section 205.402(a) requiresreview of an application uponacceptance of the application. Section205.405, on denial of certification,requires a notification ofnoncompliance, followed, as applicable,by a notice of denial of certification. Inaccordance with section 205.405(d), thenotice of denial of certification will statethe reasons for denial and theapplicant’s right to request mediation orappeal the decision. Section 205.507 ondenial of accreditation requires anotification of noncompliance,followed, as applicable, by a denial ofaccreditation. The notification ofaccreditation denial will state thereasons for denial and the applicant’sright to appeal the decision. Compliancesections 205.662 for certified operationsand 205.665 for certifying agents requirea notification of noncompliance with anopportunity to correct or rebut thenoncompliance(s). Sections 205.662 and

205.665, when applicable, require theissuance of a notification of proposedsuspension or revocation. Such noticemust describe the noncompliance andthe entity’s right to an appeal. Section205.681 provides the procedures forfilling an appeal.

MiscellaneousSection 205.690 provisions the Office

of Management and Budget controlnumber assigned to the informationcollection requirements of theseregulations. Sections 205.691 through205.699 are reserved.

List of Subjects in 7 CFR Part 205Administrative practice and

procedure, Agriculture, Animals,Archives and records, Imports, Labeling,Organically produced products, Plants,Reporting and recordkeepingrequirements, Seals and insignia, Soilconservation.

For the reasons set forth in thepreamble, Title 7, Chapter I of the Codeof Federal Regulations is amended asfollows:

PARTS 205–209 [REMOVED]

1. Parts 205 through 209, which arecurrently reserved in subchapter K(Federal Seed Act), are removed.

2. A new subchapter M consisting ofparts 205 through 209 is added to readas follows:

SUBCHAPTER M—ORGANIC FOODSPRODUCTION ACT PROVISIONS

PART 205—NATIONAL ORGANICPROGRAM


Sec.205.1 Meaning of words.205.2 Terms defined.

Subpart B—Applicability

205.100 What has to be certified.205.101 Exemptions and exclusions from

certification.205.102 Use of the term, ‘‘organic.’’205.103 Recordkeeping by certified

operations.205.104 [Reserved]205.105 Allowed and prohibited

substances, methods, and ingredients inorganic production and handling.

205.106–205.199 [Reserved]

Subpart C—Organic Production andHandling Requirements

205.200 General.205.201 Organic production and handling

system plan.205.202 Land requirements.205.203 Soil fertility and crop nutrient

management practice standard.205.204 Seeds and planting stock practice

standard.205.205 Crop rotation practice standard.

205.206 Crop pest, weed, and diseasemanagement practice standard.

205.207 Wild-crop harvesting practicestandard.

205.208–205.235 [Reserved]205.236 Origin of livestock.205.237 Livestock feed.205.238 Livestock health care practice

standard.205.239 Livestock living conditions.205.240–205.269 [Reserved]205.270 Organic handling requirements.205.271 Facility pest management practice

standard.205.272 Commingling and contact with

prohibited substance prevention practicestandard.

205.273–205.289 [Reserved]205.290 Temporary variances.205.291–205.299 [Reserved]

Subpart D—Labels, Labeling, and MarketInformation

205.300 Use of the term, ‘‘organic.’’205.301 Product composition.205.302 Calculating the percentage of

organically produced ingredients.205.303 Packaged products labeled ‘‘100

percent organic’’ or ‘‘organic.’’205.304 Packaged products labeled ‘‘made

with organic (specified ingredients orfood group(s)).’’

205.305 Multiingredient packaged productswith less that 70 percent organicallyproduced ingredients.

205.306 Labeling of livestock feed.205.307 Labeling of nonretail containers

used for only shipping or storage of rawor processed agricultural productslabeled as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients or food group(s)).’’

205.308 Agricultural products in other thanpackaged form at the point of retail salethat are sold, labeled, or represented as‘‘100 percent organic’’ or ‘‘organic.’’

205.309 Agricultural products in other thanpackaged form at the point of retail salethat are sold, labeled, or represented as‘‘made with organic (specifiedingredients or food group(s)).’’

205.310 Agricultural products produced onan exempt or excluded operation.

205.311 USDA Seal.205.312–205.399 [Reserved]

Subpart E—Certification205.400 General requirements for

certification.205.401 Application for certification.205.402 Review of application.205.403 On-site inspections.205.404 Granting certification.205.405 Denial of certification.205.406 Continuation of certification.205.407–205.499 [Reserved]


205.500 Areas and duration ofaccreditation.

205.501 General requirements foraccreditation.

205.502 Applying for accreditation.205.503 Applicant information.205.504 Evidence of expertise and ability.205.505 Statement of agreement.



205.506 Granting accreditation.205.507 Denial of accreditation.205.508 Site evaluations.205.509 Peer review panel.205.510 Annual report, recordkeeping, and

renewal of accreditation.205.511–205.599 [Reserved]


The National List of Allowed and ProhibitedSubstances205.600 Evaluation criteria for allowed and

prohibited substances, methods, andingredients.

205.601 Synthetic substances allowed foruse in organic crop production.

205.602 Nonsynthetic substancesprohibited for use in organic cropproduction.

205.603 Synthetic substances allowed foruse in organic livestock production.

205.604 Nonsynthetic substancesprohibited for use in organic livestockproduction.

205.605 Nonagricultural (nonorganic)substances allowed as ingredients in oron processed products labeled as‘‘organic,’’ or ‘‘made with organic(specified ingredients or food group(s)).’’

205.606 Nonorganically producedagricultural products allowed asingredients in or on processed productslabeled as ‘‘organic’’ or ‘‘made withorganic (specified ingredients or foodgroup(s)).’’

205.607 Amending the National List.205.608–205.619 [ Reserved]

State Organic Programs205.620 Requirements of State organic

programs.205.621 Submission and determination of

proposed State organic programs andamendments to approved State organicprograms.

205.622 Review of approved State organicprograms.

205.623–205.639 [Reserved]

Fees205.640 Fees and other charges for

accreditation.205.641 Payment of fees and other charges.205.642 Fees and other charges for

certification.205.643–205.649 [Reserved]

Compliance205.660 General.205.661 Investigation of certified

operations.205.662 Noncompliance procedure for

certified operations.205.663 Mediation.205.664 [Reserved]205.665 Noncompliance procedure for

certifying agents.205.666–205.667 [Reserved]205.668 Noncompliance procedures under

State Organic Programs.205.699 [Reserved]

Inspection and Testing, Reporting, andExclusion from Sale205.670 Inspection and testing of

agricultural product to be sold or labeled‘‘organic.’’

205.671 Exclusion from organic sale.205.672 Emergency pest or disease

treatment.205.673–205.679 [Reserved]

Adverse Action Appeal Process

205.680 General.205.681 Appeals.205.682–205.689 [Reserved]

Miscellaneous

205.690 OMB control number.205.691–205.699 [Reserved]

Authority: 7 U.S.C. 6501–6522.


§ 205.1 Meaning of words.

For the purpose of the regulations inthis subpart, words in the singular formshall be deemed to impart the pluraland vice versa, as the case may demand.

§ 205.2 Terms defined.

Accreditation. A determination madeby the Secretary that authorizes aprivate, foreign, or State entity toconduct certification activities as acertifying agent under this part.

Act. The Organic Foods ProductionAct of 1990, as amended (7 U.S.C. 6501et seq.).

Action level. The limit at or abovewhich the Food and DrugAdministration will take legal actionagainst a product to remove it from themarket. Action levels are based onunavoidability of the poisonous ordeleterious substances and do notrepresent permissible levels ofcontamination where it is avoidable.

Administrator. The Administrator forthe Agricultural Marketing Service,United States Departure of Agriculture,or the representative to whom authorityhas been delegated to act in the stead ofthe Administrator.

Agricultural inputs. All substances ormaterials used in the production orhandling of organic agriculturalproducts.

Agricultural product. Any agriculturalcommodity or product, whether raw orprocessed, including any commodity orproduct derived from livestock, that ismarketed in the United States forhuman or livestock consumption.

Agricultural Marketing Service (AMS).The Agricultural Marketing Service ofthe United States Department ofAgriculture.

Allowed synthetic. A substance that isincluded on the National List ofsynthetic substances allowed for use inorganic production or handling.

Animal drug. Any drug as defined insection 201 of the Federal Food, Drug,and Cosmetic Act, as amended (21U.S.C. 321), that is intended for use inlivestock, including any drug intended

for use in livestock feed but notincluding such livestock feed.

Annual seedling. A plant grown fromseed that will complete its life cycle orproduce a harvestable yield within thesame crop year or season in which itwas planted.

Area of operation. The types ofoperations: crops, livestock, wild-cropharvesting or handling, or anycombination thereof that a certifyingagent may be accredited to certify underthis part.

Audit trail. Documentation that issufficient to determine the source,transfer of ownership, andtransportation of any agriculturalproduct labeled as ‘‘100 percentorganic,’’ the organic ingredients of anyagricultural product labeled as‘‘organic’’ or ‘‘made with organic(specified ingredients)’’ or the organicingredients of any agricultural productcontaining less than 70 percent organicingredients identified as organic in aningredients statement.

Biodegradable. Subject to biologicaldecomposition into simpler biochemicalor chemical components.

Biologics. All viruses, serums, toxins,and analogous products of natural orsynthetic origin, such as diagnostics,antitoxins, vaccines, livemicroorganisms, killed microorganisms,and the antigenic or immunizingcomponents of microorganismsintended for use in the diagnosis,treatment, or prevention of diseases ofanimals.

Breeder stock. Female livestockwhose offspring may be incorporatedinto an organic operation at the time oftheir birth.

Buffer zone. An area located betweena certified production operation orportion of a production operation andan adjacent land area that is notmaintained under organic management.A buffer zone must be sufficient in sizeor other features (e.g., windbreaks or adiversion ditch) to prevent thepossibility of unintended contact byprohibited substances applied toadjacent land areas with an area that ispart of a certified operation.

Bulk. The presentation to consumersat retail sale of an agricultural productin unpackaged, loose form, enabling theconsumer to determine the individualpieces, amount, or volume of theproduct purchased.

Certification or certified. Adetermination made by a certifyingagent that a production or handlingoperation is in compliance with the Actand the regulations in this part, whichis documented by a certificate of organicoperation.



Certified operation. A crop orlivestock production, wild-cropharvesting or handling operation, orportion of such operation that iscertified by an accredited certifyingagent as utilizing a system of organicproduction or handling as described bythe Act and the regulations in this part.

Certifying agent. Any entityaccredited by the Secretary as acertifying agent for the purpose ofcertifying a production or handlingoperation as a certified production orhandling operation.

Certifying agent’s operation. All sites,facilities, personnel, and records usedby a certifying agent to conductcertification activities under the Act andthe regulations in this part.

Claims. Oral, written, implied, orsymbolic representations, statements, oradvertising or other forms ofcommunication presented to the publicor buyers of agricultural products thatrelate to the organic certification processor the term, ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients or foodgroup(s)),’’ or, in the case of agriculturalproducts containing less than 70 percentorganic ingredients, the term, ‘‘organic,’’on the ingredients panel.

Commercially available. The ability toobtain a production input in anappropriate form, quality, or quantity tofulfill an essential function in a systemof organic production or handling, asdetermined by the certifying agent inthe course of reviewing the organicplan.

Commingling. Physical contactbetween unpackaged organicallyproduced and nonorganically producedagricultural products during production,processing, transportation, storage orhandling, other than during themanufacture of a multiingredientproduct containing both types ofingredients.

Compost. The product of a managedprocess through which microorganismsbreak down plant and animal materialsinto more available forms suitable forapplication to the soil. Compost must beproduced through a process thatcombines plant and animal materialswith an initial C:N ratio of between 25:1and 40:1. Producers using an in-vesselor static aerated pile system mustmaintain the composting materials at atemperature between 131° F and 170° Ffor 3 days. Producers using a windrowsystem must maintain the compostingmaterials at a temperature between 131°F and 170° F for 15 days, during whichtime, the materials must be turned aminimum of five times.

Control. Any method that reduces orlimits damage by populations of pests,

weeds, or diseases to levels that do notsignificantly reduce productivity.

Crop. A plant or part of a plantintended to be marketed as anagricultural product or fed to livestock.

Crop residues. The plant partsremaining in a field after the harvest ofa crop, which include stalks, stems,leaves, roots, and weeds.

Crop rotation. The practice ofalternating the annual crops grown on aspecific field in a planned pattern orsequence in successive crop years sothat crops of the same species or familyare not grown repeatedly withoutinterruption on the same field.Perennial cropping systems employmeans such as alley cropping,intercropping, and hedgerows tointroduce biological diversity in lieu ofcrop rotation.

Crop year. That normal growingseason for a crop as determined by theSecretary.

Cultivation. Digging up or cutting thesoil to prepare a seed bed; controlweeds; aerate the soil; or work organicmatter, crop residues, or fertilizers intothe soil.

Cultural methods. Methods used toenhance crop health and prevent weed,pest, or disease problems without theuse of substances; examples include theselection of appropriate varieties andplanting sites; proper timing anddensity of plantings; irrigation; andextending a growing season bymanipulating the microclimate withgreen houses, cold frames, or windbreaks.

Detectable residue. The amount orpresence of chemical residue or samplecomponent that can be reliably observedor found in the sample matrix bycurrent approved analyticalmethodology.

Disease vectors. Plants or animals thatharbor or transmit disease organisms orpathogens which may attack crops orlivestock.

Drift. The physical movement ofprohibited substances from the intendedtarget site onto an organic operation orportion thereof.

Emergency pest or disease treatmentprogram. A mandatory programauthorized by a Federal, State, or localagency for the purpose of controlling oreradicating a pest or disease.

Employee. Any person providing paidor volunteer services for a certifyingagent.

Excluded methods. A variety ofmethods used to genetically modifyorganisms or influence their growth anddevelopment by means that are notpossible under natural conditions orprocesses and are not consideredcompatible with organic production.

Such methods include cell fusion,microencapsulation andmacroencapsulation, and recombinantDNA technology (including genedeletion, gene doubling, introducing aforeign gene, and changing the positionsof genes when achieved by recombinantDNA technology). Such methods do notinclude the use of traditional breeding,conjugation, fermentation,hybridization, in vitro fertilization, ortissue culture.

Feed. Edible materials which areconsumed by livestock for theirnutritional value. Feed may beconcentrates (grains) or roughages (hay,silage, fodder). The term, ‘‘feed,’’encompasses all agriculturalcommodities, including pastureingested by livestock for nutritionalpurposes.

Feed additive. A substance added tofeed in micro quantities to fulfill aspecific nutritional need; i.e., essentialnutrients in the form of amino acids,vitamins, and minerals.

Feed supplement. A combination offeed nutrients added to livestock feed toimprove the nutrient balance orperformance of the total ration andintended to be:

(1) Diluted with other feeds when fedto livestock;

(2) Offered free choice with otherparts of the ration if separatelyavailable; or

(3) Further diluted and mixed toproduce a complete feed.

Fertilizer. A single or blendedsubstance containing one or morerecognized plant nutrient(s) which isused primarily for its plant nutrientcontent and which is designed for useor claimed to have value in promotingplant growth.

Field. An area of land identified as adiscrete unit within a productionoperation.

Forage. Vegetative material in a fresh,dried, or ensiled state (pasture, hay, orsilage), which is fed to livestock.

Governmental entity. Any domesticgovernment, tribal government, orforeign governmental subdivisionproviding certification services.

Handle. To sell, process, or packageagricultural products, except such termshall not include the sale,transportation, or delivery of crops orlivestock by the producer thereof to ahandler.

Handler. Any person engaged in thebusiness of handling agriculturalproducts, including producers whohandle crops or livestock of their ownproduction, except such term shall notinclude final retailers of agriculturalproducts that do not process agriculturalproducts.



Handling operation. Any operation orportion of an operation (except finalretailers of agricultural products that donot process agricultural products) thatreceives or otherwise acquiresagricultural products and processes,packages, or stores such products.

Immediate family. The spouse, minorchildren, or blood relatives who residein the immediate household of acertifying agent or an employee,inspector, contractor, or other personnelof the certifying agent. For the purposeof this part, the interest of a spouse,minor child, or blood relative who is aresident of the immediate household ofa certifying agent or an employee,inspector, contractor, or other personnelof the certifying agent shall beconsidered to be an interest of thecertifying agent or an employee,inspector, contractor, or other personnelof the certifying agent.

Inert ingredient. Any substance (orgroup of substances with similarchemical structures if designated by theEnvironmental Protection Agency) otherthan an active ingredient which isintentionally included in any pesticideproduct (40 CFR 152.3(m)).

Information panel. That part of thelabel of a packaged product that isimmediately contiguous to and to theright of the principal display panel asobserved by an individual facing theprincipal display panel, unless anothersection of the label is designated as theinformation panel because of packagesize or other package attributes (e.g.,irregular shape with one usable surface).

Ingredient. Any substance used in thepreparation of an agricultural productthat is still present in the finalcommercial product as consumed.

Ingredients statement. The list ofingredients contained in a productshown in their common and usualnames in the descending order ofpredominance.

Inspection. The act of examining andevaluating the production or handlingoperation of an applicant forcertification or certified operation todetermine compliance with the Act andthe regulations in this part.

Inspector. Any person retained orused by a certifying agent to conductinspections of certification applicants orcertified production or handlingoperations.

Label. A display of written, printed,or graphic material on the immediatecontainer of an agricultural product orany such material affixed to anyagricultural product or affixed to a bulkcontainer containing an agriculturalproduct, except for package liners or adisplay of written, printed, or graphicmaterial which contains only

information about the weight of theproduct.

Labeling. All written, printed, orgraphic material accompanying anagricultural product at any time orwritten, printed, or graphic materialabout the agricultural product displayedat retail stores about the product.

Livestock. Any cattle, sheep, goat,swine, poultry, or equine animals usedfor food or in the production of food,fiber, feed, or other agricultural-basedconsumer products; wild ordomesticated game; or other nonplantlife, except such term shall not includeaquatic animals or bees for theproduction of food, fiber, feed, or otheragricultural-based consumer products.

Lot. Any number of containers whichcontain an agricultural product of thesame kind located in the sameconveyance, warehouse, or packinghouse and which are available forinspection at the same time.

Manure. Feces, urine, otherexcrement, and bedding produced bylivestock that has not been composted.

Market information. Any written,printed, audiovisual, or graphicinformation, including advertising,pamphlets, flyers, catalogues, posters,and signs, distributed, broadcast, ormade available outside of retail outletsthat are used to assist in the sale orpromotion of a product.

Mulch. Any nonsynthetic material,such as wood chips, leaves, or straw, orany synthetic material included on theNational List for such use, such asnewspaper or plastic that serves tosuppress weed growth, moderate soiltemperature, or conserve soil moisture.

Narrow range oils. Petroleumderivatives, predominately of paraffinicand napthenic fractions with 50 percentboiling point (10 mm Hg) between 415°F and 440° F.

National List. A list of allowed andprohibited substances as provided for inthe Act.

National Organic Program (NOP). Theprogram authorized by the Act for thepurpose of implementing its provisions.

National Organic Standards Board(NOSB). A board established by theSecretary under 7 U.S.C. 6518 to assistin the development of standards forsubstances to be used in organicproduction and to advise the Secretaryon any other aspects of theimplementation of the National OrganicProgram.

Natural resources of the operation.The physical, hydrological, andbiological features of a productionoperation, including soil, water,wetlands, woodlands, and wildlife.

Nonagricultural substance. Asubstance that is not a product of

agriculture, such as a mineral or abacterial culture, that is used as aningredient in an agricultural product.For the purposes of this part, anonagricultural ingredient also includesany substance, such as gums, citric acid,or pectin, that is extracted from, isolatedfrom, or a fraction of an agriculturalproduct so that the identity of theagricultural product is unrecognizablein the extract, isolate, or fraction.

Nonsynthetic (natural). A substancethat is derived from mineral, plant, oranimal matter and does not undergo asynthetic process as defined in section6502(21) of the Act (7 U.S.C. 6502(21)).For the purposes of this part,nonsynthetic is used as a synonym fornatural as the term is used in the Act.

Nonretail container. Any containerused for shipping or storage of anagricultural product that is not used inthe retail display or sale of the product.

Nontoxic. Not known to cause anyadverse physiological effects in animals,plants, humans, or the environment.

Organic. A labeling term that refers toan agricultural product produced inaccordance with the Act and theregulations in this part.

Organic matter. The remains,residues, or waste products of anyorganism.

Organic production. A productionsystem that is managed in accordancewith the Act and regulations in this partto respond to site-specific conditions byintegrating cultural, biological, andmechanical practices that foster cyclingof resources, promote ecologicalbalance, and conserve biodiversity.

Organic system plan. A plan ofmanagement of an organic production orhandling operation that has been agreedto by the producer or handler and thecertifying agent and that includeswritten plans concerning all aspects ofagricultural production or handlingdescribed in the Act and the regulationsin subpart C of this part.

Pasture. Land used for livestockgrazing that is managed to provide feedvalue and maintain or improve soil,water, and vegetative resources.

Peer review panel. A panel ofindividuals who have expertise inorganic production and handlingmethods and certification proceduresand who are appointed by theAdministrator to assist in evaluatingapplicants for accreditation as certifyingagents.

Person. An individual, partnership,corporation, association, cooperative, orother entity.

Pesticide. Any substance which alone,in chemical combination, or in anyformulation with one or moresubstances is defined as a pesticide in



section 2(u) of the Federal Insecticide,Fungicide, and Rodenticide Act (7U.S.C. 136(u) et seq).

Petition. A request to amend theNational List that is submitted by anyperson in accordance with this part.

Planting stock. Any plant or planttissue other than annual seedlings butincluding rhizomes, shoots, leaf or stemcuttings, roots, or tubers, used in plantproduction or propagation.

Practice standard. The guidelines andrequirements through which aproduction or handling operationimplements a required component of itsproduction or handling organic systemplan. A practice standard includes aseries of allowed and prohibited actions,materials, and conditions to establish aminimum level performance forplanning, conducting, and maintaininga function, such as livestock health careor facility pest management, essential toan organic operation.

Principal display panel. That part ofa label that is most likely to bedisplayed, presented, shown, orexamined under customary conditionsof display for sale.

Private entity. Any domestic orforeign nongovernmental for-profit ornot-for-profit organization providingcertification services.

Processing. Cooking, baking, curing,heating, drying, mixing, grinding,churning, separating, extracting,slaughtering, cutting, fermenting,distilling, eviscerating, preserving,dehydrating, freezing, chilling, orotherwise manufacturing and includesthe packaging, canning, jarring, orotherwise enclosing food in a container.

Processing aid. (1) Substance that isadded to a food during the processing ofsuch food but is removed in somemanner from the food before it ispackaged in its finished form;

(2) a substance that is added to a foodduring processing, is converted intoconstituents normally present in thefood, and does not significantly increasethe amount of the constituents naturallyfound in the food; and

(3) a substance that is added to a foodfor its technical or functional effect inthe processing but is present in thefinished food at insignificant levels anddoes not have any technical orfunctional effect in that food.

Producer. A person who engages inthe business of growing or producingfood, fiber, feed, and other agricultural-based consumer products.

Production lot number/identifier.Identification of a product based on theproduction sequence of the productshowing the date, time, and place ofproduction used for quality controlpurposes.

Prohibited substance. A substance theuse of which in any aspect of organicproduction or handling is prohibited ornot provided for in the Act or theregulations of this part.

Records. Any information in written,visual, or electronic form thatdocuments the activities undertaken bya producer, handler, or certifying agentto comply with the Act and regulationsin this part.

Residue testing. An official orvalidated analytical procedure thatdetects, identifies, and measures thepresence of chemical substances, theirmetabolites, or degradations products inor on raw or processed agriculturalproducts.

Responsibly connected. Any personwho is a partner, officer, director,holder, manager, or owner of 10 percentor more of the voting stock of anapplicant or a recipient of certificationor accreditation.

Retail food establishment. Arestaurant; delicatessen; bakery; grocerystore; or any retail outlet with an in-store restaurant, delicatessen, bakery,salad bar, or other eat-in or carry-outservice of processed or prepared rawand ready-to-eat-food.

Routine use of parasiticide. Theregular, planned, or periodic use ofparasiticides.

Secretary. The Secretary ofAgriculture or a representative to whomauthority has been delegated to act inthe Secretary’s stead.

Sewage sludge. A solid, semisolid, orliquid residue generated during thetreatment of domestic sewage in atreatment works. Sewage sludgeincludes but is not limited to: domesticseptage; scum or solids removed inprimary, secondary, or advancedwastewater treatment processes; and amaterial derived from sewage sludge.Sewage sludge does not include ashgenerated during the firing of sewagesludge in a sewage sludge incinerator orgrit and screenings generated duringpreliminary treatment of domesticsewage in a treatment works.

Slaughter stock. Any animal that isintended to be slaughtered forconsumption by humans or otheranimals.

Soil and water quality. Observableindicators of the physical, chemical, orbiological condition of soil and water,including the presence of environmentalcontaminants.

Split operation. An operation thatproduces or handles both organic andnonorganic agricultural products.

State. Any of the several States of theUnited States of America, its territories,the District of Columbia, and theCommonwealth of Puerto Rico.

State certifying agent. A certifyingagent accredited by the Secretary underthe National Organic Program andoperated by the State for the purposesof certifying organic production andhandling operations in the State.

State organic program (SOP). A Stateprogram that meets the requirements ofsection 6506 of the Act, is approved bythe Secretary, and is designed to ensurethat a product that is sold or labeled asorganically produced under the Act isproduced and handled using organicmethods.

State organic program’s governingState official. The chief executiveofficial of a State or, in the case of aState that provides for the statewideelection of an official to be responsiblesolely for the administration of theagricultural operations of the State, suchofficial who administers a State organiccertification program.

Synthetic. A substance that isformulated or manufactured by achemical process or by a process thatchemically changes a substanceextracted from naturally occurringplant, animal, or mineral sources,except that such term shall not apply tosubstances created by naturallyoccurring biological processes.

Tolerance. The maximum legal levelof a pesticide chemical residue in or ona raw or processed agriculturalcommodity or processed food.

Transplant. A seedling which hasbeen removed from its original place ofproduction, transported, and replanted.

Unavoidable residual environmentalcontamination (UREC). Backgroundlevels of naturally occurring or syntheticchemicals that are present in the soil orpresent in organically producedagricultural products that are belowestablished tolerances.

Wild crop. Any plant or portion of aplant that is collected or harvested froma site that is not maintained undercultivation or other agriculturalmanagement.

Subpart B—Applicability

§ 205.100 What has to be certified.

(a) Except for operations exempt orexcluded in § 205.101, each productionor handling operation or specifiedportion of a production or handlingoperation that produces or handlescrops, livestock, livestock products, orother agricultural products that areintended to be sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients or food group(s))’’must be certified according to theprovisions of subpart E of this part and



must meet all other applicablerequirements of this part.

(b) Any production or handlingoperation or specified portion of aproduction or handling operation thathas been already certified by a certifyingagent on the date that the certifyingagent receives its accreditation underthis part shall be deemed to be certifiedunder the Act until the operation’s nextanniversary date of certification. Suchrecognition shall only be available tothose operations certified by a certifyingagent that receives its accreditationwithin 18 months from February 20,2001.

(c) Any operation that:(1) Knowingly sells or labels a

product as organic, except inaccordance with the Act, shall besubject to a civil penalty of not morethan $10,000 per violation.

(2) Makes a false statement under theAct to the Secretary, a governing Stateofficial, or an accredited certifying agentshall be subject to the provisions ofsection 1001 of title 18, United StatesCode.

§ 205.101 Exemptions and exclusions fromcertification.

(a) Exemptions. (1) A production orhandling operation that sellsagricultural products as ‘‘organic’’ butwhose gross agricultural income fromorganic sales totals $5,000 or lessannually is exempt from certificationunder subpart E of this part and fromsubmitting an organic system plan foracceptance or approval under § 205.201but must comply with the applicableorganic production and handlingrequirements of subpart C of this partand the labeling requirements of§ 205.310. The products from suchoperations shall not be used asingredients identified as organic inprocessed products produced byanother handling operation.

(2) A handling operation that is aretail food establishment or portion of aretail food establishment that handlesorganically produced agriculturalproducts but does not process them isexempt from the requirements in thispart.

(3) A handling operation or portion ofa handling operation that only handlesagricultural products that contain lessthan 70 percent organic ingredients bytotal weight of the finished product(excluding water and salt) is exemptfrom the requirements in this part,except:

(i) The provisions for prevention ofcontact of organic products withprohibited substances set forth in§ 205.272 with respect to any

organically produced ingredients usedin an agricultural product;

(ii) The labeling provisions of§§ 205.305 and 205.310; and

(iii) The recordkeeping provisions inparagraph (c) of this section.

(4) A handling operation or portion ofa handling operation that only identifiesorganic ingredients on the informationpanel is exempt from the requirementsin this part, except:

(i) The provisions for prevention ofcontact of organic products withprohibited substances set forth in§ 205.272 with respect to anyorganically produced ingredients usedin an agricultural product;

(ii) The labeling provisions of§§ 205.305 and 205.310; and

(iii) The recordkeeping provisions inparagraph (c) of this section.

(b) Exclusions. (1) A handlingoperation or portion of a handlingoperation is excluded from therequirements of this part, except for therequirements for the prevention ofcommingling and contact withprohibited substances as set forth in§ 205.272 with respect to anyorganically produced products, if suchoperation or portion of the operationonly sells organic agricultural productslabeled as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients or food group(s))’’that:

(i) Are packaged or otherwiseenclosed in a container prior to beingreceived or acquired by the operation;and

(ii) Remain in the same package orcontainer and are not otherwiseprocessed while in the control of thehandling operation.

(2) A handling operation that is aretail food establishment or portion of aretail food establishment that processes,on the premises of the retail foodestablishment, raw and ready-to-eatfood from agricultural products thatwere previously labeled as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients or foodgroup(s))’’ is excluded from therequirements in this part, except:

(i) The requirements for theprevention of contact with prohibitedsubstances as set forth in § 205.272; and

(ii) The labeling provisions of§ 205.310.

(c) Records to be maintained byexempt operations. (1) Any handlingoperation exempt from certificationpursuant to paragraph (a)(3) or (a)(4) ofthis section must maintain recordssufficient to:

(i) Prove that ingredients identified asorganic were organically produced andhandled; and

(ii) Verify quantities produced fromsuch ingredients.

(2) Records must be maintained for noless than 3 years beyond their creationand the operations must allowrepresentatives of the Secretary and theapplicable State organic programs’governing State official access to theserecords for inspection and copyingduring normal business hours todetermine compliance with theapplicable regulations set forth in thispart.

§ 205.102 Use of the term, ‘‘organic.’’Any agricultural product that is sold,

labeled, or represented as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients or foodgroup(s))’’ must be:

(a) Produced in accordance with therequirements specified in § 205.101 or§§ 205.202 through 205.207 or§§ 205.236 through 205.239 and allother applicable requirements of part205; and

(b) Handled in accordance with therequirements specified in § 205.101 or§§ 205.270 through 205.272 and allother applicable requirements of thispart 205.

§ 205.103 Recordkeeping by certifiedoperations.

(a) A certified operation mustmaintain records concerning theproduction, harvesting, and handling ofagricultural products that are or that areintended to be sold, labeled, orrepresented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients or foodgroup(s)).’’

(b) Such records must:(1) Be adapted to the particular

business that the certified operation isconducting;

(2) Fully disclose all activities andtransactions of the certified operation insufficient detail as to be readilyunderstood and audited;

(3) Be maintained for not less than 5years beyond their creation; and

(4) Be sufficient to demonstratecompliance with the Act and theregulations in this part.

(c) The certified operation must makesuch records available for inspectionand copying during normal businesshours by authorized representatives ofthe Secretary, the applicable Stateprogram’s governing State official, andthe certifying agent.

§ 205.104 [Reserved]

§ 205.105 Allowed and prohibitedsubstances, methods, and ingredients inorganic production and handling.

To be sold or labeled as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made with



organic (specified ingredients or foodgroup(s)),’’ the product must beproduced and handled without the useof:

(a) Synthetic substances andingredients, except as provided in§ 205.601 or § 205.603;

(b) Nonsynthetic substancesprohibited in § 205.602 or § 205.604;

(c) Nonagricultural substances used inor on processed products, except asotherwise provided in § 205.605;

(d) Nonorganic agriculturalsubstances used in or on processedproducts, except as otherwise providedin § 205.606;

(e) Excluded methods, except forvaccines: Provided, That, the vaccinesare approved in accordance with§ 205.600(a);

(f) Ionizing radiation, as described inFood and Drug Administrationregulation, 21 CFR 179.26; and

(g) Sewage sludge.

§§ 205.106–205.199 [Reserved]

Subpart C—Organic Production andHandling Requirements

§ 205.200 General.The producer or handler of a

production or handling operationintending to sell, label, or representagricultural products as ‘‘100 percentorganic,’’ ‘‘organic,’’ or ‘‘made withorganic (specified ingredients or foodgroup(s))’’ must comply with theapplicable provisions of this subpart.Production practices implemented inaccordance with this subpart mustmaintain or improve the naturalresources of the operation, includingsoil and water quality.

§ 205.201 Organic production andhandling system plan.

(a) The producer or handler of aproduction or handling operation,except as exempt or excluded under§ 205.101, intending to sell, label, orrepresent agricultural products as ‘‘100percent organic,’’ ‘‘organic,’’ or ‘‘madewith organic (specified ingredients orfood group(s))’’ must develop an organicproduction or handling system plan thatis agreed to by the producer or handlerand an accredited certifying agent. Anorganic system plan must meet therequirements set forth in this section fororganic production or handling. Anorganic production or handling systemplan must include:

(1) A description of practices andprocedures to be performed andmaintained, including the frequencywith which they will be performed;

(2) A list of each substance to be usedas a production or handling input,indicating its composition, source,

location(s) where it will be used, anddocumentation of commercialavailability, as applicable;

(3) A description of the monitoringpractices and procedures to beperformed and maintained, includingthe frequency with which they will beperformed, to verify that the plan iseffectively implemented;

(4) A description of the recordkeepingsystem implemented to comply with therequirements established in § 205.103;

(5) A description of the managementpractices and physical barriersestablished to prevent commingling oforganic and nonorganic products on asplit operation and to prevent contact oforganic production and handlingoperations and products with prohibitedsubstances; and

(6) Additional information deemednecessary by the certifying agent toevaluate compliance with theregulations.

(b) A producer may substitute a planprepared to meet the requirements ofanother Federal, State, or localgovernment regulatory program for theorganic system plan: Provided, That, thesubmitted plan meets all therequirements of this subpart.

§ 205.202 Land requirements.Any field or farm parcel from which

harvested crops are intended to be sold,labeled, or represented as ‘‘organic,’’must:

(a) Have been managed in accordancewith the provisions of §§ 205.203through 205.206;

(b) Have had no prohibitedsubstances, as listed in § 205.105,applied to it for a period of 3 yearsimmediately preceding harvest of thecrop; and

(c) Have distinct, defined boundariesand buffer zones such as runoffdiversions to prevent the unintendedapplication of a prohibited substance tothe crop or contact with a prohibitedsubstance applied to adjoining land thatis not under organic management.

§ 205.203 Soil fertility and crop nutrientmanagement practice standard.

(a) The producer must select andimplement tillage and cultivationpractices that maintain or improve thephysical, chemical, and biologicalcondition of soil and minimize soilerosion.

(b) The producer must manage cropnutrients and soil fertility throughrotations, cover crops, and theapplication of plant and animalmaterials.

(c) The producer must manage plantand animal materials to maintain orimprove soil organic matter content in

a manner that does not contribute tocontamination of crops, soil, or water byplant nutrients, pathogenic organisms,heavy metals, or residues of prohibitedsubstances. Animal and plant materialsinclude:

(1) Raw animal manure, which mustbe composted unless it is:

(i) Applied to land used for a crop notintended for human consumption;

(ii) Incorporated into the soil not lessthan 120 days prior to the harvest of aproduct whose edible portion has directcontact with the soil surface or soilparticles; or

(iii) Incorporated into the soil not lessthan 90 days prior to the harvest of aproduct whose edible portion does nothave direct contact with the soil surfaceor soil particles;

(2) Composted plant and animalmaterials produced though a processthat:

(i) Established an initial C:N ratio ofbetween 25:1 and 40:1; and

(ii) Maintained a temperature ofbetween 131° F and 170° F for 3 daysusing an in-vessel or static aerated pilesystem; or

(iii) Maintained a temperature ofbetween 131° F and 170° F for 15 daysusing a windrow composting system,during which period, the materials mustbe turned a minimum of five times.

(3) Uncomposted plant materials.(d) A producer may manage crop

nutrients and soil fertility to maintain orimprove soil organic matter content ina manner that does not contribute tocontamination of crops, soil, or water byplant nutrients, pathogenic organisms,heavy metals, or residues of prohibitedsubstances by applying:

(1) A crop nutrient or soil amendmentincluded on the National List ofsynthetic substances allowed for use inorganic crop production;

(2) A mined substance of lowsolubility;

(3) A mined substance of highsolubility: Provided, That, the substanceis used in compliance with theconditions established on the NationalList of nonsynthetic materialsprohibited for crop production;

(4) Ash obtained from the burning ofa plant or animal material, except asprohibited in paragraph (e) of thissection: Provided, That, the materialburned has not been treated orcombined with a prohibited substanceor the ash is not included on theNational List of nonsynthetic substancesprohibited for use in organic cropproduction; and

(5) A plant or animal material that hasbeen chemically altered by amanufacturing process: Provided, That,the material is included on the National



List of synthetic substances allowed foruse in organic crop productionestablished in § 205.601.

(e) The producer must not use:(1) Any fertilizer or composted plant

and animal material that contains asynthetic substance not included on theNational List of synthetic substancesallowed for use in organic cropproduction;

(2) Sewage sludge (biosolids) asdefined in 40 CFR part 503; and (3)Burning as a means of disposal for cropresidues produced on the operation:Except, That, burning may be used tosuppress the spread of disease or tostimulate seed germination.

§ 205.204 Seeds and planting stockpractice standard.

(a) The producer must use organicallygrown seeds, annual seedlings, andplanting stock: Except, That,

(1) Nonorganically produced,untreated seeds and planting stock maybe used to produce an organic cropwhen an equivalent organicallyproduced variety is not commerciallyavailable: Except, That, organicallyproduced seed must be used for theproduction of edible sprouts;

(2) Nonorganically produced seedsand planting stock that have beentreated with a substance included on theNational List of synthetic substancesallowed for use in organic cropproduction may be used to produce anorganic crop when an equivalentorganically produced or untreatedvariety is not commercially available;

(3) Nonorganically produced annualseedlings may be used to produce anorganic crop when a temporary variancehas been granted in accordance with§ 205.290(a)(2);

(4) Nonorganically produced plantingstock to be used to produce a perennialcrop may be sold, labeled, orrepresented as organically producedonly after the planting stock has beenmaintained under a system of organicmanagement for a period of no less than1 year; and

(5) Seeds, annual seedlings, andplanting stock treated with prohibitedsubstances may be used to produce anorganic crop when the application of thematerials is a requirement of Federal orState phytosanitary regulations.

(b) [Reserved]

§ 205.205 Crop rotation practice standard.The producer must implement a crop

rotation including but not limited tosod, cover crops, green manure crops,and catch crops that provide thefollowing functions that are applicableto the operation:

(a) Maintain or improve soil organicmatter content;

(b) Provide for pest management inannual and perennial crops;

(c) Manage deficient or excess plantnutrients; and

(d) Provide erosion control.

§ 205.206 Crop pest, weed, and diseasemanagement practice standard.

(a) The producer must usemanagement practices to prevent croppests, weeds, and diseases including butnot limited to:

(1) Crop rotation and soil and cropnutrient management practices, asprovided for in §§ 205.203 and 205.205;

(2) Sanitation measures to removedisease vectors, weed seeds, and habitatfor pest organisms; and

(3) Cultural practices that enhancecrop health, including selection of plantspecies and varieties with regard tosuitability to site-specific conditionsand resistance to prevalent pests, weeds,and diseases.

(b) Pest problems may be controlledthrough mechanical or physicalmethods including but not limited to:

(1) Augmentation or introduction ofpredators or parasites of the pestspecies;

(2) Development of habitat for naturalenemies of pests;

(3) Nonsynthetic controls such aslures, traps, and repellents.

(c) Weed problems may be controlledthrough:

(1) Mulching with fully biodegradablematerials;

(2) Mowing;(3) Livestock grazing;(4) Hand weeding and mechanical

cultivation;(5) Flame, heat, or electrical means; or(6) Plastic or other synthetic mulches:

Provided, That, they are removed fromthe field at the end of the growing orharvest season.

(d) Disease problems may becontrolled through:

(1) Management practices whichsuppress the spread of diseaseorganisms; or

(2) Application of nonsyntheticbiological, botanical, or mineral inputs.

(e) When the practices provided for inparagraphs (a) through (d) of this sectionare insufficient to prevent or controlcrop pests, weeds, and diseases, abiological or botanical substance or asubstance included on the National Listof synthetic substances allowed for usein organic crop production may beapplied to prevent, suppress, or controlpests, weeds, or diseases: Provided,That, the conditions for using thesubstance are documented in theorganic system plan.

(f) The producer must not use lumbertreated with arsenate or other prohibited

materials for new installations orreplacement purposes in contact withsoil or livestock.

§ 205.207 Wild-crop harvesting practicestandard.

(a) A wild crop that is intended to besold, labeled, or represented as organicmust be harvested from a designatedarea that has had no prohibitedsubstance, as set forth in § 205.105,applied to it for a period of 3 yearsimmediately preceding the harvest ofthe wild crop.

(b) A wild crop must be harvested ina manner that ensures that suchharvesting or gathering will not bedestructive to the environment and willsustain the growth and production ofthe wild crop.

§§ 205.208—205.235 [Reserved]

§ 205.236 Origin of livestock.(a) Livestock products that are to be

sold, labeled, or represented as organicmust be from livestock undercontinuous organic management fromthe last third of gestation or hatching:Except, That:

(1) Poultry. Poultry or edible poultryproducts must be from poultry that hasbeen under continuous organicmanagement beginning no later than thesecond day of life;

(2) Dairy animals. Milk or milkproducts must be from animals thathave been under continuous organicmanagement beginning no later than 1year prior to the production of the milkor milk products that are to be sold,labeled, or represented as organic:Except, That, when an entire, distinctherd is converted to organic production,the producer may:

(i) For the first 9 months of the year,provide a minimum of 80-percent feedthat is either organic or raised from landincluded in the organic system plan andmanaged in compliance with organiccrop requirements; and

(ii) Provide feed in compliance with§ 205.237 for the final 3 months.

(iii) Once an entire, distinct herd hasbeen converted to organic production,all dairy animals shall be under organicmanagement from the last third ofgestation.

(3) Breeder stock. Livestock used asbreeder stock may be brought from anonorganic operation onto an organicoperation at any time: Provided, That, ifsuch livestock are gestating and theoffspring are to be raised as organiclivestock, the breeder stock must bebrought onto the facility no later thanthe last third of gestation.

(b) The following are prohibited:(1) Livestock or edible livestock

products that are removed from an



organic operation and subsequentlymanaged on a nonorganic operation maybe not sold, labeled, or represented asorganically produced.

(2) Breeder or dairy stock that has notbeen under continuous organicmanagement since the last third ofgestation may not be sold, labeled, orrepresented as organic slaughter stock.

(c) The producer of an organiclivestock operation must maintainrecords sufficient to preserve theidentity of all organically managedanimals and edible and nonedibleanimal products produced on theoperation.

§ 205.237 Livestock feed.(a) The producer of an organic

livestock operation must providelivestock with a total feed rationcomposed of agricultural products,including pasture and forage, that areorganically produced and, if applicable,organically handled: Except, That,nonsynthetic substances and syntheticsubstances allowed under § 205.603may be used as feed additives andsupplements.

(b) The producer of an organicoperation must not:

(1) Use animal drugs, includinghormones, to promote growth;

(2) Provide feed supplements oradditives in amounts above thoseneeded for adequate nutrition andhealth maintenance for the species at itsspecific stage of life;

(3) Feed plastic pellets for roughage;(4) Feed formulas containing urea or

manure;(5) Feed mammalian or poultry

slaughter by-products to mammals orpoultry; or

(6) Use feed, feed additives, and feedsupplements in violation of the FederalFood, Drug, and Cosmetic Act.

§ 205.238 Livestock health care practicestandard.

(a) The producer must establish andmaintain preventive livestock healthcare practices, including:

(1) Selection of species and types oflivestock with regard to suitability forsite-specific conditions and resistance toprevalent diseases and parasites;

(2) Provision of a feed ration sufficientto meet nutritional requirements,including vitamins, minerals, proteinand/or amino acids, fatty acids, energysources, and fiber (ruminants);

(3) Establishment of appropriatehousing, pasture conditions, andsanitation practices to minimize theoccurrence and spread of diseases andparasites;

(4) Provision of conditions whichallow for exercise, freedom of

movement, and reduction of stressappropriate to the species;

(5) Performance of physicalalterations as needed to promote theanimal’s welfare and in a manner thatminimizes pain and stress; and

(6) Administration of vaccines andother veterinary biologics.

(b) When preventive practices andveterinary biologics are inadequate toprevent sickness, a producer mayadminister synthetic medications:Provided, That, such medications areallowed under § 205.603. Parasiticidesallowed under § 205.603 may be usedon:

(1) Breeder stock, when used prior tothe last third of gestation but not duringlactation for progeny that are to be sold,labeled, or represented as organicallyproduced; and

(2) Dairy stock, when used aminimum of 90 days prior to theproduction of milk or milk products thatare to be sold, labeled, or represented asorganic.

(c) The producer of an organiclivestock operation must not:

(1) Sell, label, or represent as organicany animal or edible product derivedfrom any animal treated withantibiotics, any substance that containsa synthetic substance not allowed under§ 205.603, or any substance thatcontains a nonsynthetic substanceprohibited in § 205.604.

(2) Administer any animal drug, otherthan vaccinations, in the absence ofillness;

(3) Administer hormones for growthpromotion;

(4) Administer synthetic parasiticideson a routine basis;

(5) Administer synthetic parasiticidesto slaughter stock;

(6) Administer animal drugs inviolation of the Federal Food, Drug, andCosmetic Act; or

(7) Withhold medical treatment froma sick animal in an effort to preserve itsorganic status. All appropriatemedications must be used to restore ananimal to health when methodsacceptable to organic production fail.Livestock treated with a prohibitedsubstance must be clearly identified andshall not be sold, labeled, or representedas organically produced.

§ 205.239 Livestock living conditions.(a) The producer of an organic

livestock operation must establish andmaintain livestock living conditionswhich accommodate the health andnatural behavior of animals, including:

(1) Access to the outdoors, shade,shelter, exercise areas, fresh air, anddirect sunlight suitable to the species,its stage of production, the climate, andthe environment;

(2) Access to pasture for ruminants;(3) Appropriate clean, dry bedding. If

the bedding is typically consumed bythe animal species, it must comply withthe feed requirements of § 205.237;

(4) Shelter designed to allow for:(i) Natural maintenance, comfort

behaviors, and opportunity to exercise;(ii) Temperature level, ventilation,

and air circulation suitable to thespecies; and

(iii) Reduction of potential forlivestock injury;

(b) The producer of an organiclivestock operation may providetemporary confinement for an animalbecause of:

(1) Inclement weather;(2) The animal’s stage of production;(3) Conditions under which the

health, safety, or well being of theanimal could be jeopardized; or

(4) Risk to soil or water quality.(c) The producer of an organic

livestock operation must managemanure in a manner that does notcontribute to contamination of crops,soil, or water by plant nutrients, heavymetals, or pathogenic organisms andoptimizes recycling of nutrients.

§§ 205.240—205.269 [Reserved]

§ 205.270 Organic handling requirements.(a) Mechanical or biological methods,

including but not limited to cooking,baking, curing, heating, drying, mixing,grinding, churning, separating,distilling, extracting, slaughtering,cutting, fermenting, eviscerating,preserving, dehydrating, freezing,chilling, or otherwise manufacturing,and the packaging, canning, jarring, orotherwise enclosing food in a containermay be used to process an organicallyproduced agricultural product for thepurpose of retarding spoilage orotherwise preparing the agriculturalproduct for market.

(b) Nonagricultural substancesallowed under § 205.605 andnonorganically produced agriculturalproducts allowed under § 205.606 maybe used:

(1) In or on a processed agriculturalproduct intended to be sold, labeled, orrepresented as ‘‘organic,’’ pursuant to§ 205.301(b), if not commerciallyavailable in organic form.

(2) In or on a processed agriculturalproduct intended to be sold, labeled, orrepresented as ‘‘made with organic(specified ingredients or foodgroup(s)),’’ pursuant to § 205.301(c).

(c) The handler of an organic handlingoperation must not use in or onagricultural products intended to besold, labeled, or represented as ‘‘100percent organic,’’ ‘‘organic,’’ or ‘‘made



with organic (specified ingredients orfood group(s)),’’ or in or on anyingredients labeled as organic:

(1) Practices prohibited underparagraphs (e) and (f) of § 205.105.

(2) A volatile synthetic solvent orother synthetic processing aid notallowed under § 205.605: Except, That,nonorganic ingredients in productslabeled ‘‘made with organic (specifiedingredients or food group(s))’’ are notsubject to this requirement.

§ 205.271 Facility pest managementpractice standard.

(a) The producer or handler of anorganic facility must use managementpractices to prevent pests, including butnot limited to:

(1) Removal of pest habitat, foodsources, and breeding areas;

(2) Prevention of access to handlingfacilities; and

(3) Management of environmentalfactors, such as temperature, light,humidity, atmosphere, and aircirculation, to prevent pestreproduction.

(b) Pests may be controlled through:(1) Mechanical or physical controls

including but not limited to traps, light,or sound; or

(2) Lures and repellents usingnonsynthetic or synthetic substancesconsistent with the National List.

(c) If the practices provided for inparagraphs (a) and (b) of this section arenot effective to prevent or control pests,a nonsynthetic or synthetic substanceconsistent with the National List may beapplied.

(d) If the practices provided for inparagraphs (a), (b), and (c) of thissection are not effective to prevent orcontrol facility pests, a syntheticsubstance not on the National List maybe applied: Provided, That, the handlerand certifying agent agree on thesubstance, method of application, andmeasures to be taken to prevent contactof the organically produced products oringredients with the substance used.

(e) The handler of an organic handlingoperation who applies a nonsynthetic orsynthetic substance to prevent orcontrol pests must update theoperation’s organic handling plan toreflect the use of such substances andmethods of application. The updatedorganic plan must include a list of allmeasures taken to prevent contact of theorganically produced products oringredients with the substance used.

(f) Notwithstanding the practicesprovided for in paragraphs (a), (b), (c),and (d) of this section, a handler mayotherwise use substances to prevent orcontrol pests as required by Federal,State, or local laws and regulations:

Provided, That, measures are taken toprevent contact of the organicallyproduced products or ingredients withthe substance used.

§ 205.272 Commingling and contact withprohibited substance prevention practicestandard.

(a) The handler of an organic handlingoperation must implement measuresnecessary to prevent the commingling oforganic and nonorganic products andprotect organic products from contactwith prohibited substances.

(b) The following are prohibited foruse in the handling of any organicallyproduced agricultural product oringredient labeled in accordance withsubpart D of this part:

(1) Packaging materials, and storagecontainers, or bins that contain asynthetic fungicide, preservative, orfumigant;

(2) The use or reuse of any bag orcontainer that has been in contact withany substance in such a manner as tocompromise the organic integrity of anyorganically produced product oringredient placed in those containers,unless such reusable bag or containerhas been thoroughly cleaned and posesno risk of contact of the organicallyproduced product or ingredient with thesubstance used.

§§ 205.273—205.289 [Reserved]

§ 205.290 Temporary variances.(a) Temporary variances from the

requirements in §§ 205.203 through205.207, 205.236 through 205.239, and205.270 through 205.272 may beestablished by the Administrator for thefollowing reasons:

(1) Natural disasters declared by theSecretary;

(2) Damage caused by drought, wind,flood, excessive moisture, hail, tornado,earthquake, fire, or other businessinterruption; and

(3) Practices used for the purpose ofconducting research or trials oftechniques, varieties, or ingredientsused in organic production or handling.

(b) A State organic program’sgoverning State official or certifyingagent may recommend in writing to theAdministrator that a temporary variancefrom a standard set forth in subpart C ofthis part for organic production orhandling operations be established:Provided, That, such variance is basedon one or more of the reasons listed inparagraph (a) of this section.

(c) The Administrator will providewritten notification to certifying agentsupon establishment of a temporaryvariance applicable to the certifyingagent’s certified production or handlingoperations and specify the period of

time it shall remain in effect, subject toextension as the Administrator deemsnecessary.

(d) A certifying agent, uponnotification from the Administrator ofthe establishment of a temporaryvariance, must notify each productionor handling operation it certifies towhich the temporary variance applies.

(e) Temporary variances will not begranted for any practice, material, orprocedure prohibited under § 205.105.

§§ 205.291–205.299 [Reserved]

Subpart D—Labels, Labeling, andMarket Information

§ 205.300 Use of the term, ‘‘organic.’’(a) The term, ‘‘organic,’’ may only be

used on labels and in labeling of raw orprocessed agricultural products,including ingredients, that have beenproduced and handled in accordancewith the regulations in this part. Theterm, ‘‘organic,’’ may not be used in aproduct name to modify a nonorganicingredient in the product.

(b) Products for export, produced andcertified to foreign national organicstandards or foreign contract buyerrequirements, may be labeled inaccordance with the organic labelingrequirements of the receiving country orcontract buyer: Provided, That, theshipping containers and shippingdocuments meet the labelingrequirements specified in § 205.307(c).

(c) Products produced in a foreigncountry and exported for sale in theUnited States must be certified pursuantto subpart E of this part and labeledpursuant to this subpart D.

(d) Livestock feeds produced inaccordance with the requirements ofthis part must be labeled in accordancewith the requirements of § 205.306.

§ 205.301 Product composition.(a) Products sold, labeled, or

represented as ‘‘100 percent organic.’’ Araw or processed agricultural productsold, labeled, or represented as ‘‘100percent organic’’ must contain (byweight or fluid volume, excluding waterand salt) 100 percent organicallyproduced ingredients. If labeled asorganically produced, such productmust be labeled pursuant to § 205.303.

(b) Products sold, labeled, orrepresented as ‘‘organic.’’ A raw orprocessed agricultural product sold,labeled, or represented as ‘‘organic’’must contain (by weight or fluidvolume, excluding water and salt) notless than 95 percent organicallyproduced raw or processed agriculturalproducts. Any remaining productingredients must be organicallyproduced, unless not commercially



available in organic form, or must benonagricultural substances ornonorganically produced agriculturalproducts produced consistent with theNational List in subpart G of this part.If labeled as organically produced, suchproduct must be labeled pursuant to§ 205.303.

(c) Products sold, labeled, orrepresented as ‘‘made with organic(specified ingredients or food group(s)).’’Multiingredient agricultural productsold, labeled, or represented as ‘‘madewith organic (specified ingredients orfood group(s))’’ must contain (by weightor fluid volume, excluding water andsalt) at least 70 percent organicallyproduced ingredients which areproduced and handled pursuant torequirements in subpart C of this part.No ingredients may be produced usingprohibited practices specified inparagraphs (f)(1), (2), and (3) of§ 205.301. Nonorganic ingredients maybe produced without regard toparagraphs (f)(4), (5), (6), and (7) of§ 205.301. If labeled as containingorganically produced ingredients orfood groups, such product must belabeled pursuant to § 205.304.

(d) Products with less than 70 percentorganically produced ingredients. Theorganic ingredients in multiingredientagricultural product containing lessthan 70 percent organically producedingredients (by weight or fluid volume,excluding water and salt) must beproduced and handled pursuant torequirements in subpart C of this part.The nonorganic ingredients may beproduced and handled without regard tothe requirements of this part.Multiingredient agricultural productcontaining less than 70 percentorganically produced ingredients mayrepresent the organic nature of theproduct only as provided in § 205.305.

(e) Livestock feed. (1) A raw orprocessed livestock feed product sold,labeled, or represented as ‘‘100 percentorganic’’ must contain (by weight orfluid volume, excluding water and salt)not less than 100 percent organicallyproduced raw or processed agriculturalproduct.

(2) A raw or processed livestock feedproduct sold, labeled, or represented as‘‘organic’’ must be produced inconformance with § 205.237.

(f) All products labeled as ‘‘100percent organic’’ or ‘‘organic’’ and allingredients identified as ‘‘organic’’ inthe ingredient statement of any productmust not:

(1) Be produced using excludedmethods, pursuant to § 201.105(e) ofthis chapter;

(2) Be produced using sewage sludge,pursuant to § 201.105(f) of this chapter;

(3) Be processed using ionizingradiation, pursuant to § 201.105(g) ofthis chapter;

(4) Be processed using processing aidsnot approved on the National List ofAllowed and Prohibited Substances insubpart G of this part: Except, That,products labeled as ‘‘100 percentorganic,’’ if processed, must beprocessed using organically producedprocessing aids;

(5) Contain sulfites, nitrates, ornitrites added during the production orhandling process, Except, that, winecontaining added sulfites may belabeled ‘‘made with organic grapes’’;

(6) Be produced using nonorganicingredients when organic ingredientsare available; or

(7) Include organic and nonorganicforms of the same ingredient.

§ 205.302 Calculating the percentage oforganically produced ingredients.

(a) The percentage of all organicallyproduced ingredients in an agriculturalproduct sold, labeled, or represented as‘‘100 percent organic,’’ ‘‘organic,’’ or‘‘made with organic (specifiedingredients or food group(s)),’’ or thatinclude organic ingredients must becalculated by:

(1) Dividing the total net weight(excluding water and salt) of combinedorganic ingredients at formulation bythe total weight (excluding water andsalt) of the finished product.

(2) Dividing the fluid volume of allorganic ingredients (excluding waterand salt) by the fluid volume of thefinished product (excluding water andsalt) if the product and ingredients areliquid. If the liquid product is identifiedon the principal display panel orinformation panel as being reconstitutedfrom concentrates, the calculationshould be made on the basis of single-strength concentrations of theingredients and finished product.

(3) For products containingorganically produced ingredients inboth solid and liquid form, dividing thecombined weight of the solidingredients and the weight of the liquidingredients (excluding water and salt)by the total weight (excluding water andsalt) of the finished product.

(b) The percentage of all organicallyproduced ingredients in an agriculturalproduct must be rounded down to thenearest whole number.

(c) The percentage must bedetermined by the handler who affixesthe label on the consumer package andverified by the certifying agent of thehandler. The handler may useinformation provided by the certifiedoperation in determining thepercentage.

§ 205.303 Packaged products labeled ‘‘100percent organic’’ or ‘‘organic.’’

(a) Agricultural products in packagesdescribed in § 205.301(a) and (b) maydisplay, on the principal display panel,information panel, and any other panelof the package and on any labeling ormarket information concerning theproduct, the following:

(1) The term, ‘‘100 percent organic’’ or‘‘organic,’’ as applicable, to modify thename of the product;

(2) For products labeled ‘‘organic,’’the percentage of organic ingredients inthe product; (The size of the percentagestatement must not exceed one-half thesize of the largest type size on the panelon which the statement is displayed andmust appear in its entirety in the sametype size, style, and color withouthighlighting.)

(3) The term, ‘‘organic,’’ to identifythe organic ingredients inmultiingredient products labeled ‘‘100percent organic’’;

(4) The USDA seal; and/or(5) The seal, logo, or other identifying

mark of the certifying agent whichcertified the production or handlingoperation producing the finishedproduct and any other certifying agentwhich certified production or handlingoperations producing raw organicproduct or organic ingredients used inthe finished product: Provided, That,the handler producing the finishedproduct maintain records, pursuant tothis part, verifying organic certificationof the operations producing suchingredients, and: Provided further, That,such seals or marks are not individuallydisplayed more prominently than theUSDA seal.

(b) Agricultural products in packagesdescribed in § 205.301(a) and (b) must:

(1) For products labeled ‘‘organic,’’identify each organic ingredient in theingredient statement with the word,‘‘organic,’’ or with an asterisk or otherreference mark which is defined belowthe ingredient statement to indicate theingredient is organically produced.Water or salt included as ingredientscannot be identified as organic.

(2) On the information panel, belowthe information identifying the handleror distributor of the product andpreceded by the statement, ‘‘Certifiedorganic by * * *,’’ or similar phrase,identify the name of the certifying agentthat certified the handler of the finishedproduct and may display the businessaddress, Internet address, or telephonenumber of the certifying agent in suchlabel.



§ 205.304 Packaged products labeled‘‘made with organic (specified ingredientsor food group(s)).’’

(a) Agricultural products in packagesdescribed in § 205.301(c) may displayon the principal display panel,information panel, and any other paneland on any labeling or marketinformation concerning the product:

(1) The statement:(i) ‘‘Made with organic (specified

ingredients)’’: Provided, That, thestatement does not list more than threeorganically produced ingredients; or

(ii) ‘‘Made with organic (specifiedfood groups)’’: Provided, That, thestatement does not list more than threeof the following food groups: beans,fish, fruits, grains, herbs, meats, nuts,oils, poultry, seeds, spices, sweeteners,and vegetables or processed milkproducts; and, Provided further, That,all ingredients of each listed food groupin the product must be organicallyproduced; and

(iii) Which appears in letters that donot exceed one-half the size of thelargest type size on the panel and whichappears in its entirety in the same typesize, style, and color withouthighlighting.

(2) The percentage of organicingredients in the product. The size ofthe percentage statement must notexceed one-half the size of the largesttype size on the panel on which thestatement is displayed and must appearin its entirety in the same type size,style, and color without highlighting.

(3) The seal, logo, or other identifyingmark of the certifying agent thatcertified the handler of the finishedproduct.

(b) Agricultural products in packagesdescribed in § 205.301(c) must:

(1) In the ingredient statement,identify each organic ingredient withthe word, ‘‘organic,’’ or with an asteriskor other reference mark which isdefined below the ingredient statementto indicate the ingredient is organicallyproduced. Water or salt included asingredients cannot be identified asorganic.

(2) On the information panel, belowthe information identifying the handleror distributor of the product andpreceded by the statement, ‘‘Certifiedorganic by * * *,’’ or similar phrase,identify the name of the certifying agentthat certified the handler of the finishedproduct: Except, That, the businessaddress, Internet address, or telephonenumber of the certifying agent may beincluded in such label.

(c) Agricultural products in packagesdescribed in § 205.301(c) must notdisplay the USDA seal.

§ 205.305 Multi-ingredient packagedproducts with less than 70 percentorganically produced ingredients.

(a) An agricultural product with lessthan 70 percent organically producedingredients may only identify theorganic content of the product by:

(1) Identifying each organicallyproduced ingredient in the ingredientstatement with the word, ‘‘organic,’’ orwith an asterisk or other reference markwhich is defined below the ingredientstatement to indicate the ingredient isorganically produced, and

(2) If the organically producedingredients are identified in theingredient statement, displaying theproduct’s percentage of organic contentson the information panel.

(b) Agricultural products with lessthan 70 percent organically producedingredients must not display:

(1) The USDA seal; and(2) Any certifying agent seal, logo, or

other identifying mark which representsorganic certification of a product orproduct ingredients.

§ 205.306 Labeling of livestock feed.

(a) Livestock feed products describedin § 205.301(e)(1) and (e)(2) may displayon any package panel the followingterms:

(1) The statement, ‘‘100 percentorganic’’ or ‘‘organic,’’ as applicable, tomodify the name of the feed product;

(2) The USDA seal;(3) The seal, logo, or other identifying

mark of the certifying agent whichcertified the production or handlingoperation producing the raw orprocessed organic ingredients used inthe finished product, Provided, That,such seals or marks are not displayedmore prominently than the USDA seal;

(4) The word, ‘‘organic,’’ or an asteriskor other reference mark which isdefined on the package to identifyingredients that are organicallyproduced. Water or salt included asingredients cannot be identified asorganic.

(b) Livestock feed products describedin § 205.301(e)(1) and (e)(2) must:

(1) On the information panel, belowthe information identifying the handleror distributor of the product andpreceded by the statement, ‘‘Certifiedorganic by * * *,’’ or similar phrase,display the name of the certifying agentthat certified the handler of the finishedproduct. The business address, Internetaddress, or telephone number of thecertifying agent may be included insuch label.

(2) Comply with other Federal agencyor State feed labeling requirements asapplicable.

§ 205.307 Labeling of nonretail containersused for only shipping or storage of raw orprocessed agricultural products labeled as‘‘100 percent organic,’’ ‘‘organic,’’ or ‘‘madewith organic (specified ingredients or foodgroup(s)).’’

(a) Nonretail containers used only toship or store raw or processedagricultural product labeled ascontaining organic ingredients maydisplay the following terms or marks:

(1) The name and contact informationof the certifying agent which certifiedthe handler which assembled the finalproduct;

(2) Identification of the product asorganic;

(3) Special handling instructionsneeded to maintain the organic integrityof the product;

(4) The USDA seal;(5) The seal, logo, or other identifying

mark of the certifying agent thatcertified the organic production orhandling operation that produced orhandled the finished product.

(b) Nonretail containers used to shipor store raw or processed agriculturalproduct labeled as containing organicingredients must display the productionlot number of the product if applicable.

(c) Shipping containers ofdomestically produced product labeledas organic intended for export tointernational markets may be labeled inaccordance with any shipping containerlabeling requirements of the foreigncountry of destination or the containerlabeling specifications of a foreigncontract buyer: Provided, That, theshipping containers and shippingdocuments accompanying such organicproducts are clearly marked ‘‘For ExportOnly’’ and: Provided further, That, proofof such container marking and exportmust be maintained by the handler inaccordance with recordkeepingrequirements for exempt and excludedoperations under § 205.101.

§ 205.308 Agricultural products in otherthan packaged form at the point of retailsale that are sold, labeled, or representedas ‘‘100 percent organic’’ or ‘‘organic.’’

(a) Agricultural products in other thanpackaged form may use the term, ‘‘100percent organic’’ or ‘‘organic,’’ asapplicable, to modify the name of theproduct in retail display, labeling, anddisplay containers: Provided, That, theterm, ‘‘organic,’’ is used to identify theorganic ingredients listed in theingredient statement.

(b) If the product is prepared in acertified facility, the retail display,labeling, and display containers mayuse:

(1) The USDA seal; and(2) The seal, logo, or other identifying

mark of the certifying agent that



certified the production or handlingoperation producing the finishedproduct and any other certifying agentwhich certified operations producingraw organic product or organicingredients used in the finishedproduct: Provided, That, such seals ormarks are not individually displayedmore prominently than the USDA seal.

§ 205.309 Agricultural products in otherthan packaged form at the point of retailsale that are sold, labeled, or representedas ‘‘made with organic (specifiedingredients or food group(s)).’’

(a) Agricultural products in other thanpackaged form containing between 70and 95 percent organically producedingredients may use the phrase, ‘‘madewith organic (specified ingredients orfood group(s)),’’ to modify the name ofthe product in retail display, labeling,and display containers.

(1) Such statement must not list morethan three organic ingredients or foodgroups, and

(2) In any such display of theproduct’s ingredient statement, theorganic ingredients are identified as‘‘organic.’’

(b) If prepared in a certified facility,such agricultural products labeled as‘‘made with organic (specifiedingredients or food group(s))’’ in retaildisplays, display containers, and marketinformation may display the certifyingagent’s seal, logo, or other identifyingmark.

§ 205.310 Agricultural products producedon an exempt or excluded operation.

(a) An agricultural productorganically produced or handled on anexempt or excluded operation must not:

(1) Display the USDA seal or anycertifying agent’s seal or otheridentifying mark which represents theexempt or excluded operation as acertified organic operation, or

(2) Be represented as a certifiedorganic product or certified organicingredient to any buyer.

(b) An agricultural productorganically produced or handled on anexempt or excluded operation may beidentified as an organic product ororganic ingredient in a multiingredientproduct produced by the exempt orexcluded operation. Such product oringredient must not be identified orrepresented as ‘‘organic’’ in a productprocessed by others.

(c) Such product is subject torequirements specified in paragraph (a)of § 205.300, and paragraphs (f)(1)through (f)(7) of § 205.301.

§ 205.311 USDA Seal.(a) The USDA seal described in

paragraphs (b) and (c) of this section

may be used only for raw or processedagricultural products described inparagraphs (a), (b), (e)(1), and (e)(2) of§ 205.301.

(b) The USDA seal must replicate theform and design of the example in figure1 and must be printed legibly andconspicuously:

(1) On a white background with abrown outer circle and with the term,‘‘USDA,’’ in green overlaying a whiteupper semicircle and with the term,‘‘organic,’’ in white overlaying the greenlower half circle; or

(2) On a white or transparentbackground with black outer circle andblack ‘‘USDA’’ on a white or transparentupper half of the circle with acontrasting white or transparent‘‘organic’’ on the black lower half circle.

(3) The green or black lower halfcircle may have four light lines runningfrom left to right and disappearing at thepoint on the right horizon to resemblea cultivated field.

§§ 205.312–205.399 [Reserved]

Subpart E—Certification

§ 205.400 General requirements forcertification.

A person seeking to receive ormaintain organic certification under theregulations in this part must:

(a) Comply with the Act andapplicable organic production andhandling regulations of this part;

(b) Establish, implement, and updateannually an organic production orhandling system plan that is submittedto an accredited certifying agent asprovided for in § 205.200;

(c) Permit on-site inspections withcomplete access to the production orhandling operation, includingnoncertified production and handlingareas, structures, and offices by thecertifying agent as provided for in§ 205.403;

(d) Maintain all records applicable tothe organic operation for not less than5 years beyond their creation and allowauthorized representatives of theSecretary, the applicable State organic

program’s governing State official, andthe certifying agent access to suchrecords during normal business hoursfor review and copying to determinecompliance with the Act and theregulations in this part, as provided forin § 205.104;

(e) Submit the applicable fees chargedby the certifying agent; and

(f) Immediately notify the certifyingagent concerning any:

(1) Application, including drift, of aprohibited substance to any field,production unit, site, facility, livestock,or product that is part of an operation;and

(2) Change in a certified operation orany portion of a certified operation thatmay affect its compliance with the Actand the regulations in this part.

§ 205.401 Application for certification.A person seeking certification of a

production or handling operation underthis subpart must submit an applicationfor certification to a certifying agent.The application must include thefollowing information:

(a) An organic production or handlingsystem plan, as required in § 205.200;

(b) The name of the personcompleting the application; theapplicant’s business name, address, andtelephone number; and, when theapplicant is a corporation, the name,address, and telephone number of theperson authorized to act on theapplicant’s behalf;

(c) The name(s) of any organiccertifying agent(s) to which applicationhas previously been made; the year(s) ofapplication; the outcome of theapplication(s) submission, including,when available, a copy of anynotification of noncompliance or denialof certification issued to the applicantfor certification; and a description of theactions taken by the applicant to correctthe noncompliances noted in thenotification of noncompliance,including evidence of such correction;and

(d) Other information necessary todetermine compliance with the Act andthe regulations in this part.

§ 205.402 Review of application.(a) Upon acceptance of an application

for certification, a certifying agent must:(1) Review the application to ensure

completeness pursuant to § 205.401;(2) Determine by a review of the

application materials whether theapplicant appears to comply or may beable to comply with the applicablerequirements of subpart C of this part;

(3) Verify that an applicant whopreviously applied to another certifyingagent and received a notification of



noncompliance or denial ofcertification, pursuant to § 205.405, hassubmitted documentation to support thecorrection of any noncompliancesidentified in the notification ofnoncompliance or denial ofcertification, as required in § 205.405(e);and

(4) Schedule an on-site inspection ofthe operation to determine whether theapplicant qualifies for certification if thereview of application materials revealsthat the production or handlingoperation may be in compliance withthe applicable requirements of subpart Cof this part.

(b) The certifying agent shall within areasonable time:

(1) Review the application materialsreceived and communicate its findingsto the applicant;

(2) Provide the applicant with a copyof the on-site inspection report, asapproved by the certifying agent, for anyon-site inspection performed; and

(3) Provide the applicant with a copyof the test results for any samples takenby an inspector.

(c) The applicant may withdraw itsapplication at any time. An applicantwho withdraws its application shall beliable for the costs of services providedup to the time of withdrawal of itsapplication. An applicant thatvoluntarily withdrew its applicationprior to the issuance of a notice ofnoncompliance will not be issued anotice of noncompliance. Similarly, anapplicant that voluntarily withdrew itsapplication prior to the issuance of anotice of certification denial will not beissued a notice of certification denial.

§ 205.403 On-site inspections.(a) On-site inspections. (1) A

certifying agent must conduct an initialon-site inspection of each productionunit, facility, and site that produces orhandles organic products and that isincluded in an operation for whichcertification is requested. An on-siteinspection shall be conducted annuallythereafter for each certified operationthat produces or handles organicproducts for the purpose of determiningwhether to approve the request forcertification or whether the certificationof the operation should continue.

(2) (i) A certifying agent may conductadditional on-site inspections ofapplicants for certification and certifiedoperations to determine compliancewith the Act and the regulations in thispart.

(ii) The Administrator or State organicprogram’s governing State official mayrequire that additional inspections beperformed by the certifying agent for thepurpose of determining compliance

with the Act and the regulations in thispart.

(iii) Additional inspections may beannounced or unannounced at thediscretion of the certifying agent or asrequired by the Administrator or Stateorganic program’s governing Stateofficial.

(b) Scheduling. (1) The initial on-siteinspection must be conducted within areasonable time following adetermination that the applicantappears to comply or may be able tocomply with the requirements ofsubpart C of this part: Except, That, theinitial inspection may be delayed for upto 6 months to comply with therequirement that the inspection beconducted when the land, facilities, andactivities that demonstrate complianceor capacity to comply can be observed.

(2) All on-site inspections must beconducted when an authorizedrepresentative of the operation who isknowledgeable about the operation ispresent and at a time when land,facilities, and activities that demonstratethe operation’s compliance with orcapability to comply with the applicableprovisions of subpart C of this part canbe observed, except that thisrequirement does not apply tounannounced on-site inspections.

(c) Verification of information. Theon-site inspection of an operation mustverify:

(1) The operation’s compliance orcapability to comply with the Act andthe regulations in this part;

(2) That the information, includingthe organic production or handlingsystem plan, provided in accordancewith §§ 205.401, 205.406, and 205.200,accurately reflects the practices used orto be used by the applicant forcertification or by the certifiedoperation;

(3) That prohibited substances havenot been and are not being applied tothe operation through means which, atthe discretion of the certifying agent,may include the collection and testingof soil; water; waste; seeds; plant tissue;and plant, animal, and processedproducts samples.

(d) Exit interview. The inspector mustconduct an exit interview with anauthorized representative of theoperation who is knowledgeable aboutthe inspected operation to confirm theaccuracy and completeness ofinspection observations and informationgathered during the on-site inspection.The inspector must also address theneed for any additional information aswell as any issues of concern.

(e) Documents to the inspectedoperation. (1) At the time of theinspection, the inspector shall provide

the operation’s authorizedrepresentative with a receipt for anysamples taken by the inspector. Thereshall be no charge to the inspector forthe samples taken.

(2) A copy of the on-site inspectionreport and any test results will be sentto the inspected operation by thecertifying agent.

§ 205.404 Granting certification.(a) Within a reasonable time after

completion of the initial on-siteinspection, a certifying agent mustreview the on-site inspection report, theresults of any analyses for substancesconducted, and any additionalinformation requested from or suppliedby the applicant. If the certifying agentdetermines that the organic system planand all procedures and activities of theapplicant’s operation are in compliancewith the requirements of this part andthat the applicant is able to conductoperations in accordance with the plan,the agent shall grant certification. Thecertification may include requirementsfor the correction of minornoncompliances within a specified timeperiod as a condition of continuedcertification.

(b) The certifying agent must issue acertificate of organic operation whichspecifies the:

(1) Name and address of the certifiedoperation;

(2) Effective date of certification;(3) Categories of organic operation,

including crops, wild crops, livestock,or processed products produced by thecertified operation; and

(4) Name, address, and telephonenumber of the certifying agent.

(c) Once certified, a production orhandling operation’s organiccertification continues in effect untilsurrendered by the organic operation orsuspended or revoked by the certifyingagent, the State organic program’sgoverning State official, or theAdministrator.

§ 205.405 Denial of certification.(a) When the certifying agent has

reason to believe, based on a review ofthe information specified in § 205.402 or§ 205.404, that an applicant forcertification is not able to comply or isnot in compliance with therequirements of this part, the certifyingagent must provide a writtennotification of noncompliance to theapplicant. When correction of anoncompliance is not possible, anotification of noncompliance and anotification of denial of certificationmay be combined in one notification.The notification of noncompliance shallprovide:



(1) A description of eachnoncompliance;

(2) The facts upon which thenotification of noncompliance is based;and

(3) The date by which the applicantmust rebut or correct eachnoncompliance and submit supportingdocumentation of each such correctionwhen correction is possible.

(b) Upon receipt of such notificationof noncompliance, the applicant may:

(1) Correct noncompliances andsubmit a description of the correctiveactions taken with supportingdocumentation to the certifying agent;

(2) Correct noncompliances andsubmit a new application to anothercertifying agent: Provided, That, theapplicant must include a completeapplication, the notification ofnoncompliance received from the firstcertifying agent, and a description of thecorrective actions taken with supportingdocumentation; or

(3) Submit written information to theissuing certifying agent to rebut thenoncompliance described in thenotification of noncompliance.

(c) After issuance of a notification ofnoncompliance, the certifying agentmust:

(1) Evaluate the applicant’s correctiveactions taken and supportingdocumentation submitted or the writtenrebuttal, conduct an on-site inspection ifnecessary, and

(i) When the corrective action orrebuttal is sufficient for the applicant toqualify for certification, issue theapplicant an approval of certificationpursuant to § 205.404; or

(ii) When the corrective action orrebuttal is not sufficient for theapplicant to qualify for certification,issue the applicant a written notice ofdenial of certification.

(2) Issue a written notice of denial ofcertification to an applicant who fails torespond to the notification ofnoncompliance.

(3) Provide notice of approval ordenial to the Administrator, pursuant to§ 205.501(a)(14).

(d) A notice of denial of certificationmust state the reason(s) for denial andthe applicant’s right to:

(1) Reapply for certification pursuantto §§ 205.401 and 205.405(e);

(2) Request mediation pursuant to§ 205.663 or, if applicable, pursuant toa State organic program; or

(3) File an appeal of the denial ofcertification pursuant to § 205.681 or, ifapplicable, pursuant to a State organicprogram.

(e) An applicant for certification whohas received a written notification ofnoncompliance or a written notice of

denial of certification may apply forcertification again at any time with anycertifying agent, in accordance with§§ 205.401 and 205.405(e). When suchapplicant submits a new application toa certifying agent other than the agentwho issued the notification ofnoncompliance or notice of denial ofcertification, the applicant forcertification must include a copy of thenotification of noncompliance or noticeof denial of certification and adescription of the actions taken, withsupporting documentation, to correctthe noncompliances noted in thenotification of noncompliance.

(f) A certifying agent who receives anew application for certification, whichincludes a notification ofnoncompliance or a notice of denial ofcertification, must treat the applicationas a new application and begin a newapplication process pursuant to§ 205.402.

(g) Notwithstanding paragraph (a) ofthis section, if a certifying agent hasreason to believe that an applicant forcertification has willfully made a falsestatement or otherwise purposefullymisrepresented the applicant’soperation or its compliance with thecertification requirements pursuant tothis part, the certifying agent may denycertification pursuant to paragraph(c)(1)(ii) of this section without firstissuing a notification of noncompliance.

§ 205.406 Continuation of certification.(a) To continue certification, a

certified operation must annually paythe certification fees and submit thefollowing information, as applicable, tothe certifying agent:

(1) An updated organic production orhandling system plan which includes:

(i) A summary statement, supportedby documentation, detailing anydeviations from, changes to,modifications to, or other amendmentsmade to the previous year’s organicsystem plan during the previous year;and

(ii) Any additions or deletions to theprevious year’s organic system plan,intended to be undertaken in thecoming year, detailed pursuant to§ 205.200;

(2) Any additions to or deletions fromthe information required pursuant to§ 205.401(b);

(3) An update on the correction ofminor noncompliances previouslyidentified by the certifying agent asrequiring correction for continuedcertification; and

(4) Other information as deemednecessary by the certifying agent todetermine compliance with the Act andthe regulations in this part.

(b) Following the receipt of theinformation specified in paragraph (a) ofthis section, the certifying agent shallwithin a reasonable time arrange andconduct an on-site inspection of thecertified operation pursuant to§ 205.403: Except, That, when it isimpossible for the certifying agent toconduct the annual on-site inspectionfollowing receipt of the certifiedoperation’s annual update ofinformation, the certifying agent mayallow continuation of certification andissue an updated certificate of organicoperation on the basis of theinformation submitted and the mostrecent on-site inspection conductedduring the previous 12 months:Provided, That, the annual on-siteinspection, required pursuant to§ 205.403, is conducted within the first6 months following the certifiedoperation’s scheduled date of annualupdate.

(c) If the certifying agent has reason tobelieve, based on the on-site inspectionand a review of the informationspecified in § 205.404, that a certifiedoperation is not complying with therequirements of the Act and theregulations in this part, the certifyingagent shall provide a writtennotification of noncompliance to theoperation in accordance with § 205.662.

(d) If the certifying agent determinesthat the certified operation is complyingwith the Act and the regulations in thispart and that any of the informationspecified on the certificate of organicoperation has changed, the certifyingagent must issue an updated certificateof organic operation pursuant to§ 205.404(b).

§§ 205.407–205.499 [Reserved]


§ 205.500 Areas and duration ofaccreditation.

(a) The Administrator shall accredit aqualified domestic or foreign applicantin the areas of crops, livestock, wildcrops, or handling or any combinationthereof to certify a domestic or foreignproduction or handling operation as acertified operation.

(b) Accreditation shall be for a periodof 5 years from the date of approval ofaccreditation pursuant to § 205.506.

(c) In lieu of accreditation underparagraph (a) of this section, USDA willaccept a foreign certifying agent’saccreditation to certify organicproduction or handling operations if:

(1) USDA determines, upon therequest of a foreign government, that thestandards under which the foreigngovernment authority accredited the



foreign certifying agent meet therequirements of this part; or

(2) The foreign government authoritythat accredited the foreign certifyingagent acted under an equivalencyagreement negotiated between theUnited States and the foreigngovernment.

§ 205.501 General requirements foraccreditation.

(a) A private or governmental entityaccredited as a certifying agent underthis subpart must:

(1) Have sufficient expertise inorganic production or handlingtechniques to fully comply with andimplement the terms and conditions ofthe organic certification programestablished under the Act and theregulations in this part;

(2) Demonstrate the ability to fullycomply with the requirements foraccreditation set forth in this subpart;

(3) Carry out the provisions of the Actand the regulations in this part,including the provisions of §§ 205.402through 205.406 and § 205.670;

(4) Use a sufficient number ofadequately trained personnel, includinginspectors and certification reviewpersonnel, to comply with andimplement the organic certificationprogram established under the Act andthe regulations in subpart E of this part;

(5) Ensure that its responsiblyconnected persons, employees, andcontractors with inspection, analysis,and decision-making responsibilitieshave sufficient expertise in organicproduction or handling techniques tosuccessfully perform the dutiesassigned.

(6) Conduct an annual performanceevaluation of all persons who reviewapplications for certification, performon-site inspections, review certificationdocuments, evaluate qualifications forcertification, make recommendationsconcerning certification, or makecertification decisions and implementmeasures to correct any deficiencies incertification services;

(7) Have an annual program review ofits certification activities conducted bythe certifying agent’s staff, an outsideauditor, or a consultant who hasexpertise to conduct such reviews andimplement measures to correct anynoncompliances with the Act and theregulations in this part that areidentified in the evaluation;

(8) Provide sufficient information topersons seeking certification to enablethem to comply with the applicablerequirements of the Act and theregulations in this part;

(9) Maintain all records pursuant to§ 205.510(b) and make all such records

available for inspection and copyingduring normal business hours byauthorized representatives of theSecretary and the applicable Stateorganic program’s governing Stateofficial;

(10) Maintain strict confidentialitywith respect to its clients under theapplicable organic certification programand not disclose to third parties (withthe exception of the Secretary or theapplicable State organic program’sgoverning State official or theirauthorized representatives) anybusiness-related information concerningany client obtained while implementingthe regulations in this part, except asprovided for in § 205.504(b)(5);

(11) Prevent conflicts of interest by:(i) Not certifying a production or

handling operation if the certifyingagent or a responsibly connected partyof such certifying agent has or has helda commercial interest in the productionor handling operation, including animmediate family interest or theprovision of consulting services, withinthe 12-month period prior to theapplication for certification;

(ii) Excluding any person, includingcontractors, with conflicts of interestfrom work, discussions, and decisionsin all stages of the certification processand the monitoring of certifiedproduction or handling operations forall entities in which such person has orhas held a commercial interest,including an immediate family interestor the provision of consulting services,within the 12-month period prior to theapplication for certification;

(iii) Not permitting any employee,inspector, contractor, or other personnelto accept payment, gifts, or favors of anykind, other than prescribed fees, fromany business inspected: Except, That, acertifying agent that is a not-for-profitorganization with an Internal RevenueCode tax exemption or, in the case of aforeign certifying agent, a comparablerecognition of not-for-profit status fromits government, may accept voluntarylabor from certified operations;

(iv) Not giving advice or providingconsultancy services, to certificationapplicants or certified operations, forovercoming identified barriers tocertification;

(v) Requiring all persons who reviewapplications for certification, performon-site inspections, review certificationdocuments, evaluate qualifications forcertification, make recommendationsconcerning certification, or makecertification decisions and all partiesresponsibly connected to the certifyingagent to complete an annual conflict ofinterest disclosure report; and

(vi) Ensuring that the decision tocertify an operation is made by a persondifferent from those who conducted thereview of documents and on-siteinspection.

(12)(i) Reconsider a certifiedoperation’s application for certificationand, if necessary, perform a new on-siteinspection when it is determined,within 12 months of certifying theoperation, that any person participatingin the certification process and coveredunder § 205.501(a)(11)(ii) has or had aconflict of interest involving theapplicant. All costs associated with areconsideration of application,including onsite inspection costs, shallbe borne by the certifying agent.

(ii) Refer a certified operation to adifferent accredited certifying agent forrecertification and reimburse theoperation for the cost of therecertification when it is determinedthat any person covered under§ 205.501(a)(11)(i) at the time ofcertification of the applicant had aconflict of interest involving theapplicant.

(13) Accept the certification decisionsmade by another certifying agentaccredited or accepted by USDApursuant to § 205.500;

(14) Refrain from making false ormisleading claims about itsaccreditation status, the USDAaccreditation program for certifyingagents, or the nature or qualities ofproducts labeled as organicallyproduced;

(15) Submit to the Administrator acopy of:

(i) Any notice of denial of certificationissued pursuant to § 205.405,notification of noncompliance,notification of noncompliancecorrection, notification of proposedsuspension or revocation, andnotification of suspension or revocationsent pursuant to § 205.662simultaneously with its issuance; and

(ii) A list, on January 2 of each year,including the name, address, andtelephone number of each operationgranted certification during thepreceding year;

(16) Charge applicants for certificationand certified production and handlingoperations only those fees and chargesfor certification activities that it hasfiled with the Administrator;

(17) Pay and submit fees to AMS inaccordance with § 205.640;

(18) Provide the inspector, prior toeach on-site inspection, with previouson-site inspection reports and notify theinspector of its decision regardingcertification of the production orhandling operation site inspected by theinspector and of any requirements for



the correction of minornoncompliances;

(19) Accept all production orhandling applications that fall within itsarea(s) of accreditation and certify allqualified applicants, to the extent of itsadministrative capacity to do so withoutregard to size or membership in anyassociation or group; and

(20) Demonstrate its ability to complywith a State’s organic program to certifyorganic production or handlingoperations within the State.

(21) Comply with, implement, andcarry out any other terms andconditions determined by theAdministrator to be necessary.

(b) A private or governmental entityaccredited as a certifying agent underthis subpart may establish a seal, logo,or other identifying mark to be used byproduction and handling operationscertified by the certifying agent toindicate affiliation with the certifyingagent: Provided, That, the certifyingagent:

(1) Does not require use of its seal,logo, or other identifying mark on anyproduct sold, labeled, or represented asorganically produced as a condition ofcertification and

(2) Does not require compliance withany production or handling practicesother than those provided for in the Actand the regulations in this part as acondition of use of its identifying mark:Provided, That, certifying agentscertifying production or handlingoperations within a State with morerestrictive requirements, approved bythe Secretary, shall require compliancewith such requirements as a conditionof use of their identifying mark by suchoperations.

(c) A private entity accredited as acertifying agent must:

(1) Hold the Secretary harmless forany failure on the part of the certifyingagent to carry out the provisions of theAct and the regulations in this part;

(2) Furnish reasonable security, in anamount and according to such terms asthe Administrator may by regulationprescribe, for the purpose of protectingthe rights of production and handlingoperations certified by such certifyingagent under the Act and the regulationsin this part; and

(3) Transfer to the Administrator andmake available to any applicable Stateorganic program’s governing Stateofficial all records or copies of recordsconcerning the person’s certificationactivities in the event that the certifyingagent dissolves or loses its accreditation;Provided, That, such transfer shall notapply to a merger, sale, or other transferof ownership of a certifying agent.

(d) No private or governmental entityaccredited as a certifying agent underthis subpart shall exclude fromparticipation in or deny the benefits ofthe National Organic Program to anyperson due to discrimination because ofrace, color, national origin, gender,religion, age, disability, political beliefs,sexual orientation, or marital or familystatus.

§ 205.502 Applying for accreditation.

(a) A private or governmental entityseeking accreditation as a certifyingagent under this subpart must submit anapplication for accreditation whichcontains the applicable information anddocuments set forth in §§ 205.503through 205.505 and the fees required in§ 205.640 to: Program Manager, USDA–AMS–TMP–NOP, Room 2945—SouthBuilding, P.O. Box 96456, Washington,DC 20090–6456.

(b) Following the receipt of theinformation and documents, theAdministrator will determine, pursuantto § 205.506, whether the applicant foraccreditation should be accredited as acertifying agent.

§ 205.503 Applicant information.

A private or governmental entityseeking accreditation as a certifyingagent must submit the followinginformation:

(a) The business name, primary officelocation, mailing address, name of theperson(s) responsible for the certifyingagent’s day-to-day operations, contactnumbers (telephone, facsimile, andInternet address) of the applicant, and,for an applicant who is a private person,the entity’s taxpayer identificationnumber;

(b) The name, office location, mailingaddress, and contact numbers(telephone, facsimile, and Internetaddress) for each of its organizationalunits, such as chapters or subsidiaryoffices, and the name of a contactperson for each unit;

(c) Each area of operation (crops, wildcrops, livestock, or handling) for whichaccreditation is requested and theestimated number of each type ofoperation anticipated to be certifiedannually by the applicant along with acopy of the applicant’s schedule of feesfor all services to be provided underthese regulations by the applicant;

(d) The type of entity the applicant is(e.g., government agricultural office, for-profit business, not-for-profitmembership association) and for:

(1) A governmental entity, a copy ofthe official’s authority to conductcertification activities under the Act andthe regulations in this part,

(2) A private entity, documentationshowing the entity’s status andorganizational purpose, such as articlesof incorporation and by-laws orownership or membership provisions,and its date of establishment; and

(e) A list of each State or foreigncountry in which the applicantcurrently certifies production andhandling operations and a list of eachState or foreign country in which theapplicant intends to certify productionor handling operations.

§ 205.504 Evidence of expertise andability.

A private or governmental entityseeking accreditation as a certifyingagent must submit the followingdocuments and information todemonstrate its expertise in organicproduction or handling techniques; itsability to fully comply with andimplement the organic certificationprogram established in §§ 205.100 and205.101, §§ 205.201 through 205.203,§§ 205.300 through 205.303, §§ 205.400through 205.406, and §§ 205.661 and205.662; and its ability to comply withthe requirements for accreditation setforth in § 205.501:

(a) Personnel. (1) A copy of theapplicant’s policies and procedures fortraining, evaluating, and supervisingpersonnel;

(2) The name and position descriptionof all personnel to be used in thecertification operation, includingadministrative staff, certificationinspectors, members of any certificationreview and evaluation committees,contractors, and all parties responsiblyconnected to the certifying agent;

(3) A description of the qualifications,including experience, training, andeducation in agriculture, organicproduction, and organic handling, for:

(i) Each inspector to be used by theapplicant and

(ii) Each person to be designated bythe applicant to review or evaluateapplications for certification; and

(4) A description of any training thatthe applicant has provided or intends toprovide to personnel to ensure that theycomply with and implement therequirements of the Act and theregulations in this part.

(b) Administrative policies andprocedures. (1) A copy of theprocedures to be used to evaluatecertification applicants, makecertification decisions, and issuecertification certificates;

(2) A copy of the procedures to beused for reviewing and investigatingcertified operation compliance with theAct and the regulations in this part andthe reporting of violations of the Act



and the regulations in this part to theAdministrator;

(3) A copy of the procedures to beused for complying with therecordkeeping requirements set forth in§ 205.501(a)(9);

(4) A copy of the procedures to beused for maintaining the confidentialityof any business-related information asset forth in § 205.501(a)(10);

(5) A copy of the procedures to beused, including any fees to be assessed,for making the following informationavailable to any member of the publicupon request:

(i) Certification certificates issuedduring the current and 3 precedingcalender years;

(ii) A list of producers and handlerswhose operations it has certified,including for each the name of theoperation, type(s) of operation, productsproduced, and the effective date of thecertification, during the current and 3preceding calender years;

(iii) The results of laboratory analysesfor residues of pesticides and otherprohibited substances conducted duringthe current and 3 preceding calenderyears; and

(iv) Other business information aspermitted in writing by the producer orhandler; and

(6) A copy of the procedures to beused for sampling and residue testingpursuant to § 205.670.

(c) Conflicts of interest. (1) A copy ofprocedures intended to be implementedto prevent the occurrence of conflicts ofinterest, as described in§ 205.501(a)(11).

(2) For all persons who reviewapplications for certification, performon-site inspections, review certificationdocuments, evaluate qualifications forcertification, make recommendationsconcerning certification, or makecertification decisions and all partiesresponsibly connected to the certifyingagent, a conflict of interest disclosurereport, identifying any food- oragriculture-related business interests,including business interests ofimmediate family members, that cause aconflict of interest.

(d) Current certification activities. Anapplicant who currently certifiesproduction or handling operations mustsubmit: (1) A list of all production andhandling operations currently certifiedby the applicant;

(2) Copies of at least 3 differentinspection reports and certificationevaluation documents for production orhandling operations certified by theapplicant during the previous year foreach area of operation for whichaccreditation is requested; and

(3) The results of any accreditationprocess of the applicant’s operation byan accrediting body during the previousyear for the purpose of evaluating itscertification activities.

(e) Other information. Any otherinformation the applicant believes mayassist in the Administrator’s evaluationof the applicant’s expertise and ability.

§ 205.505 Statement of agreement.(a) A private or governmental entity

seeking accreditation under this subpartmust sign and return a statement ofagreement prepared by theAdministrator which affirms that, ifgranted accreditation as a certifyingagent under this subpart, the applicantwill carry out the provisions of the Actand the regulations in this part,including:

(1) Accept the certification decisionsmade by another certifying agentaccredited or accepted by USDApursuant to § 205.500;

(2) Refrain from making false ormisleading claims about itsaccreditation status, the USDAaccreditation program for certifyingagents, or the nature or qualities ofproducts labeled as organicallyproduced;

(3) Conduct an annual performanceevaluation of all persons who reviewapplications for certification, performon-site inspections, review certificationdocuments, evaluate qualifications forcertification, make recommendationsconcerning certification, or makecertification decisions and implementmeasures to correct any deficiencies incertification services;

(4) Have an annual internal programreview conducted of its certificationactivities by certifying agent staff, anoutside auditor, or a consultant who hasthe expertise to conduct such reviewsand implement measures to correct anynoncompliances with the Act and theregulations in this part;

(5) Pay and submit fees to AMS inaccordance with § 205.640; and

(6) Comply with, implement, andcarry out any other terms andconditions determined by theAdministrator to be necessary.

(b) A private entity seekingaccreditation as a certifying agent underthis subpart must additionally agree to:

(1) Hold the Secretary harmless forany failure on the part of the certifyingagent to carry out the provisions of theAct and the regulations in this part;

(2) Furnish reasonable security, in anamount and according to such terms asthe Administrator may by regulationprescribe, for the purpose of protectingthe rights of production and handlingoperations certified by such certifying

agent under the Act and the regulationsin this part; and

(3) Transfer to the Administrator andmake available to the applicable Stateorganic program’s governing Stateofficial all records or copies of recordsconcerning the certifying agent’scertification activities in the event thatthe certifying agent dissolves or loses itsaccreditation; Provided, That suchtransfer shall not apply to a merger, sale,or other transfer of ownership of acertifying agent.

§ 205.506 Granting accreditation.(a) Accreditation will be granted

when:(1) The accreditation applicant has

submitted the information required by§§ 205.503 through 205.505;

(2) The accreditation applicant paysthe required fee in accordance with§ 205.640(c); and

(3) The Administrator determines thatthe applicant for accreditation meets therequirements for accreditation as statedin § 205.501, as determined by a reviewof the information submitted inaccordance with §§ 205.503 through205.505 and, if necessary, a review ofthe information obtained from a siteevaluation as provided for in § 205.508.

(b) On making a determination toapprove an application foraccreditation, the Administrator willnotify the applicant of the granting ofaccreditation in writing, stating:

(1) The area(s) for which accreditationis given;

(2) The effective date of theaccreditation;

(3) Any terms and conditions for thecorrection of minor noncompliances;and

(4) For a certifying agent who is aprivate entity, the amount and type ofsecurity that must be established toprotect the rights of production andhandling operations certified by suchcertifying agent.

(c) The accreditation of a certifyingagent shall continue in effect until suchtime as the certifying agent fails torenew accreditation as provided in§ 205.510(c), the certifying agentvoluntarily ceases its certificationactivities, or accreditation is suspendedor revoked pursuant to § 205.665.

§ 205.507 Denial of accreditation.(a) If the Program Manager has reason

to believe, based on a review of theinformation specified in §§ 205.503through 205.505 or after a siteevaluation as specified in § 205.508, thatan applicant for accreditation is not ableto comply or is not in compliance withthe requirements of the Act and theregulations in this part, the Program



Manager shall provide a writtennotification of noncompliance to theapplicant. Such notification shallprovide:



(3) The date by which the applicantmust rebut or correct eachnoncompliance and submit supportingdocumentation of each such correctionwhen correction is possible.

(b) When each noncompliance hasbeen resolved, the Program Managerwill send the applicant a writtennotification of noncomplianceresolution and proceed with furtherprocessing of the application.

(c) If an applicant fails to correct thenoncompliances, fails to report thecorrections by the date specified in thenotification of noncompliance, fails tofile a rebuttal of the notification ofnoncompliance by the date specified, oris unsuccessful in its rebuttal, theProgram Manager will provide theapplicant with written notification ofaccreditation denial. An applicant whohas received written notification ofaccreditation denial may apply foraccreditation again at any time inaccordance with § 205.502, or appealthe denial of accreditation inaccordance with § 205.681 by the datespecified in the notification ofaccreditation denial.

(d) If the certifying agent wasaccredited prior to the site evaluationand the certifying agent fails to correctthe noncompliances, fails to report thecorrections by the date specified in thenotification of noncompliance, or failsto file a rebuttal of the notification ofnoncompliance by the date specified,the Administrator will beginproceedings to suspend or revoke thecertifying agent’s accreditation. Acertifying agent who has had itsaccreditation suspended may at anytime, unless otherwise stated in thenotification of suspension, submit arequest to the Secretary forreinstatement of its accreditation. Therequest must be accompanied byevidence demonstrating correction ofeach noncompliance and correctiveactions taken to comply with andremain in compliance with the Act andthe regulations in this part. A certifyingagent whose accreditation is revokedwill be ineligible for accreditation for aperiod of not less than 3 years followingthe date of such determination.

§ 205.508 Site evaluations.(a) Site evaluations of accredited

certifying agents shall be conducted for

the purpose of examining the certifyingagent’s operations and evaluating itscompliance with the Act and theregulations of this part. Site evaluationsshall include an on-site review of thecertifying agent’s certificationprocedures, decisions, facilities,administrative and managementsystems, and production or handlingoperations certified by the certifyingagent. Site evaluations shall beconducted by a representative(s) of theAdministrator.

(b) An initial site evaluation of anaccreditation applicant shall beconducted before or within a reasonableperiod of time after issuance of theapplicant’s ‘‘notification ofaccreditation.’’ A site evaluation shallbe conducted after application forrenewal of accreditation but prior to theissuance of a notice of renewal ofaccreditation. One or more siteevaluations will be conducted duringthe period of accreditation to determinewhether an accredited certifying agent iscomplying with the generalrequirements set forth in § 205.501.

§ 205.509 Peer review panel.

The Administrator shall establish apeer review panel pursuant to theFederal Advisory Committee Act(FACA) (5 U.S.C. App. 2 et seq.). Thepeer review panel shall be composed ofnot less than 3 members who shallannually evaluate the National OrganicProgram’s adherence to theaccreditation procedures in this subpartF and ISO/IEC Guide 61, Generalrequirements for assessment andaccreditation of certification/registrationbodies, and the National OrganicProgram’s accreditation decisions. Thisshall be accomplished through thereview of accreditation procedures,document review and site evaluationreports, and accreditation decisiondocuments or documentation. The peerreview panel shall report its finding, inwriting, to the National OrganicProgram’s Program Manager.

§ 205.510 Annual report, recordkeeping,and renewal of accreditation.

(a) Annual report and fees. Anaccredited certifying agent must submitannually to the Administrator, on orbefore the anniversary date of theissuance of the notification ofaccreditation, the following reports andfees:

(1) A complete and accurate update ofinformation submitted pursuant to§§ 205.503 and 205.504;

(2) Information supporting anychanges being requested in the areas ofaccreditation described in § 205.500;

(3) A description of the measuresimplemented in the previous year andany measures to be implemented in thecoming year to satisfy any terms andconditions determined by theAdministrator to be necessary, asspecified in the most recent notificationof accreditation or notice of renewal ofaccreditation;

(4) The results of the most recentperformance evaluations and annualprogram review and a description ofadjustments to the certifying agent’soperation and procedures implementedor to be implemented in response to theperformance evaluations and programreview; and

(5) The fees required in § 205.640(a).(b) Recordkeeping. Certifying agents

must maintain records according to thefollowing schedule:

(1) Records obtained from applicantsfor certification and certified operationsmust be maintained for not less than 5years beyond their receipt;

(2) Records created by the certifyingagent regarding applicants forcertification and certified operationsmust be maintained for not less than 10years beyond their creation; and

(3) Records created or received by thecertifying agent pursuant to theaccreditation requirements of thissubpart F, excluding any recordscovered by §§ 205.510(b)(2), must bemaintained for not less than 5 yearsbeyond their creation or receipt.

(c) Renewal of accreditation. (1) TheAdministrator shall send the accreditedcertifying agent a notice of pendingexpiration of accreditationapproximately 1 year prior to thescheduled date of expiration.

(2) An accredited certifying agent’sapplication for accreditation renewalmust be received at least 6 months priorto the fifth anniversary of issuance ofthe notification of accreditation andeach subsequent renewal ofaccreditation. The accreditation ofcertifying agents who make timelyapplication for renewal of accreditationwill not expire during the renewalprocess. The accreditation of certifyingagents who fail to make timelyapplication for renewal of accreditationwill expire as scheduled unless renewedprior to the scheduled expiration date.Certifying agents with an expiredaccreditation must not performcertification activities under the Act andthe regulations of this part.

(3) Following receipt of theinformation submitted by the certifyingagent in accordance with paragraph (a)of this section and the results of a siteevaluation, the Administrator willdetermine whether the certifying agentremains in compliance with the Act and



the regulations of this part and shouldhave its accreditation renewed.

(d) Notice of renewal of accreditation.Upon a determination that the certifyingagent is in compliance with the Act andthe regulations of this part, theAdministrator will issue a notice ofrenewal of accreditation. The notice ofrenewal will specify any terms andconditions that must be addressed bythe certifying agent and the time withinwhich those terms and conditions mustbe satisfied.

(e) Noncompliance. Upon adetermination that the certifying agentis not in compliance with the Act andthe regulations of this part, theAdministrator will initiate proceedingsto suspend or revoke the certifyingagent’s accreditation.

(f) Amending accreditation.Amendment to scope of an accreditationmay be requested at any time. Theapplication for amendment shall be sentto the Administrator and shall containinformation applicable to the requestedchange in accreditation, a complete andaccurate update of the informationsubmitted pursuant to §§ 205.503 and205.504, and the applicable feesrequired in § 205.640.

§§ 205.511–205.599 [Reserved]


The National List of Allowed andProhibited Substances

§ 205.600 Evaluation criteria for allowedand prohibited substances, methods, andingredients.

The following criteria will be utilizedin the evaluation of substances oringredients for the organic productionand handling sections of the NationalList:

(a) Synthetic and nonsyntheticsubstances considered for inclusion onor deletion from the National List ofallowed and prohibited substances willbe evaluated using the criteria specifiedin the Act (7 U.S.C. 6517 and 6518).

(b) In addition to the criteria set forthin the Act, any synthetic substance usedas a processing aid or adjuvant will beevaluated against the following criteria:

(1) The substance cannot be producedfrom a natural source and there are noorganic substitutes;

(2) The substance’s manufacture, use,and disposal do not have adverse effectson the environment and are done in amanner compatible with organichandling;

(3) The nutritional quality of the foodis maintained when the substance isused, and the substance, itself, or itsbreakdown products do not have anadverse effect on human health as

defined by applicable Federalregulations;

(4) The substance’s primary use is notas a preservative or to recreate orimprove flavors, colors, textures, ornutritive value lost during processing,except where the replacement ofnutrients is required by law;

(5) The substance is listed as generallyrecognized as safe (GRAS) by Food andDrug Administration (FDA) when usedin accordance with FDA’s goodmanufacturing practices (GMP) andcontains no residues of heavy metals orother contaminants in excess oftolerances set by FDA; and

(6) The substance is essential for thehandling of organically producedagricultural products.

(c) Nonsynthetics used in organicprocessing will be evaluated using thecriteria specified in the Act (7 U.S.C.6517 and 6518).

§ 205.601 Synthetic substances allowedfor use in organic crop production.

In accordance with restrictionsspecified in this section, the followingsynthetic substances may be used inorganic crop production:

(a) As algicide, disinfectants, andsanitizer, including irrigation systemcleaning systems.

(1) Alcohols.(i) Ethanol.(ii) Isopropanol.(2) Chlorine materials—Except, That,

residual chlorine levels in the watershall not exceed the maximum residualdisinfectant limit under the SafeDrinking Water Act.

(i) Calcium hypochlorite.(ii) Chlorine dioxide.(iii) Sodium hypochlorite.(3) Hydrogen peroxide.(4) Soap-based algicide/demisters.(b) As herbicides, weed barriers, as

applicable.(1) Herbicides, soap-based—for use in

farmstead maintenance (roadways,ditches, right of ways, buildingperimeters) and ornamental crops.

(2) Mulches.(i) Newspaper or other recycled paper,

without glossy or colored inks.(ii) Plastic mulch and covers

(petroleum-based other than polyvinylchloride (PVC)).

(c) As compost feedstocks—Newspapers or other recycled paper,without glossy or colored inks.

(d) As animal repellents—Soaps,ammonium—for use as a large animalrepellant only, no contact with soil oredible portion of crop.

(e) As insecticides (includingacaricides or mite control).

(1) Ammonium carbonate—for use asbait in insect traps only, no directcontact with crop or soil.

(2) Boric acid—structural pest control,no direct contact with organic food orcrops.

(3) Elemental sulfur.(4) Lime sulfur—including calcium

polysulfide.(5) Oils, horticultural—narrow range

oils as dormant, suffocating, andsummer oils.

(6) Soaps, insecticidal.(7) Sticky traps/barriers.(f) As insect attractants—Pheromones.(g) As rodenticides.(1) Sulfur dioxide—underground

rodent control only (smoke bombs).(2) Vitamin D3.(h) As slug or snail bait—None.(i) As plant disease control.(1) Coppers, fixed—copper hydroxide,

copper oxide, copper oxychloride,includes products exempted from EPAtolerance, Provided, That, copper-basedmaterials must be used in a manner thatminimizes accumulation in the soil andshall not be used as herbicides.

(2) Copper sulfate—Substance mustbe used in a manner that minimizesaccumulation of copper in the soil.

(3) Hydrated lime—must be used in amanner that minimizes copperaccumulation in the soil.

(4) Hydrogen peroxide.(5) Lime sulfur.(6) Oils, horticultural, narrow range

oils as dormant, suffocating, andsummer oils.

(7) Potassium bicarbonate.(8) Elemental sulfur.(9) Streptomycin, for fire blight

control in apples and pears only.(10) Tetracycline (oxytetracycline

calcium complex), for fire blight controlonly.

(j) As plant or soil amendments.(1) Aquatic plant extracts (other than

hydrolyzed)—Extraction process islimited to the use of potassiumhydroxide or sodium hydroxide; solventamount used is limited to that amountnecessary for extraction.

(2) Elemental sulfur.(3) Humic acids—naturally occurring

deposits, water and alkali extracts only.(4) Lignin sulfonate—chelating agent,

dust suppressant, floatation agent.(5) Magnesium sulfate—allowed with

a documented soil deficiency.(6) Micronutrients—not to be used as

a defoliant, herbicide, or desiccant.Those made from nitrates or chloridesare not allowed. Soil deficiency must bedocumented by testing.

(i) Soluble boron products.(ii) Sulfates, carbonates, oxides, or

silicates of zinc, copper, iron,manganese, molybdenum, selenium,and cobalt.

(7) Liquid fish products—can be pHadjusted with sulfuric, citric or



phosphoric acid. The amount of acidused shall not exceed the minimumneeded to lower the pH to 3.5.

(8) Vitamins, B1, C, and E.(k) As plant growth regulators—

Ethylene—for regulation of pineappleflowering.

(l) As floating agents in postharvesthandling.

(1) Lignin sulfonate.(2) Sodium silicate—for tree fruit and

fiber processing.(m) As synthetic inert ingredients as

classified by the EnvironmentalProtection Agency (EPA), for use withnonsynthetic substances or syntheticsubstances listed in this section andused as an active pesticide ingredient inaccordance with any limitations on theuse of such substances.

(1) EPA List 4—Inerts of MinimalConcern.

(n)–(z) [Reserved]

§ 205.602 Nonsynthetic substancesprohibited for use in organic cropproduction.

The following nonsyntheticsubstances may not be used in organiccrop production:

(a) Ash from manure burning.(b) Arsenic.(c) Lead salts.(d) Sodium fluoaluminate (mined).(e) Strychnine.(f) Tobacco dust (nicotine sulfate).(g) Potassium chloride—unless

derived from a mined source andapplied in a manner that minimizeschloride accumulation in the soil.

(h) Sodium nitrate—unless use isrestricted to no more than 20% of thecrop’s total nitrogen requirement.

(i)–(z) [Reserved]

§ 205.603 Synthetic substances allowedfor use in organic livestock production.

In accordance with restrictionsspecified in this section the followingsynthetic substances may be used inorganic livestock production:

(a) As disinfectants, sanitizer, andmedical treatments as applicable.

(1) Alcohols.(i) Ethanol—disinfectant and sanitizer

only, prohibited as a feed additive.(ii) Isopropanol—disinfectant only.(2) Aspirin—approved for health care

use to reduce inflammation(3) Chlorine materials—disinfecting

and sanitizing facilities and equipment.Residual chlorine levels in the watershall not exceed the maximum residualdisinfectant limit under the SafeDrinking Water Act.

(i) Calcium hypochlorite.(ii) Chlorine dioxide.(iii) Sodium hypochlorite.(4) Chlorohexidine—Allowed for

surgical procedures conducted by a

veterinarian. Allowed for use as a teatdip when alternative germicidal agentsand/or physical barriers have lost theireffectiveness.

(5) Electrolytes—without antibiotics.(6) Glucose.(7) Glycerin—Allowed as a livestock

teat dip, must be produced through thehydrolysis of fats or oils.

(8) Iodine.(9) Hydrogen peroxide.(10) Magnesium sulfate.(11) Oxytocin—use in postparturition

therapeutic applications.(12) Parasiticides—Ivermectin—

prohibited in slaughter stock, allowed inemergency treatment for dairy andbreeder stock when organic systemplan-approved preventive managementdoes not prevent infestation. Milk ormilk products from a treated animalcannot be labeled as provided for insubpart D of this part for 90 daysfollowing treatment. In breeder stock,treatment cannot occur during the lastthird of gestation if the progeny will besold as organic and must not be usedduring the lactation period of breedingstock.

(13) Phosphoric acid—allowed as anequipment cleaner, Provided, That, nodirect contact with organically managedlivestock or land occurs.

(14) Biologics—Vaccines.(b) As topical treatment, external

parasiticide or local anesthetic asapplicable.

(1) Iodine.(2) Lidocaine—as a local anesthetic.

Use requires a withdrawal period of 90days after administering to livestockintended for slaughter and 7 days afteradministering to dairy animals.

(3) Lime, hydrated—(bordeauxmixes), not permitted to cauterizephysical alterations or deodorize animalwastes.

(4) Mineral oil—for topical use and asa lubricant.

(5) Procaine—as a local anesthetic,use requires a withdrawal period of 90days after administering to livestockintended for slaughter and 7 days afteradministering to dairy animals.

(6) Copper sulfate.(c) As feed supplements—Milk

replacers without antibiotics, asemergency use only, no nonmilkproducts or products from BST treatedanimals.

(d) As feed additives.(1) Trace minerals, used for

enrichment or fortification when FDAapproved, including:

(i) Copper sulfate.(ii) Magnesium sulfate.(2) Vitamins, used for enrichment or

fortification when FDA approved.(e) As synthetic inert ingredients as

classified by the Environmental

Protection Agency (EPA), for use withnonsynthetic substances or a syntheticsubstances listed in this section andused as an active pesticide ingredient inaccordance with any limitations on theuse of such substances.

(f) EPA List 4—Inerts of MinimalConcern.

(g)–(z) [Reserved]

§ 205.604 Nonsynthetic substancesprohibited for use in organic livestockproduction.

The following nonsyntheticsubstances may not be used in organiclivestock production:

(a) Strychnine.(b)–(z) [Reserved]

§ 205.605 Nonagricultural (nonorganic)substances allowed as ingredients in or onprocessed products labeled as ‘‘organic’’ or‘‘made with organic (specified ingredientsor food group(s)).’’

The following nonagriculturalsubstances may be used as ingredientsin or on processed products labeled as‘‘organic’’ or ‘‘made with organic(specified ingredients or food group(s))’’only in accordance with any restrictionsspecified in this section.

(a) Nonsynthetics allowed:(1) Acids.(i) Alginic.(ii) Citric—produced by microbial

fermentation of carbohydratesubstances.

(iii) Lactic.(2) Bentonite.(3) Calcium carbonate.(4) Calcium chloride.(5) Colors, nonsynthetic sources only.(6) Dairy cultures.(7) Diatomaceous earth—food filtering

aid only.(8) Enzymes—must be derived from

edible, nontoxic plants, nonpathogenicfungi, or nonpathogenic bacteria.

(9) Flavors, nonsynthetic sources onlyand must not be produced usingsynthetic solvents and carrier systems orany artificial preservative.

(10) Kaolin.(11) Magnesium sulfate, nonsynthetic

sources only.(12) Nitrogen—oil-free grades.(13) Oxygen—oil-free grades.(14) Perlite—for use only as a filter

aid in food processing.(15) Potassium chloride.(16) Potassium iodide.(17) Sodium bicarbonate.(18) Sodium carbonate.(19) Waxes—nonsynthetic.(i) Carnauba wax.(ii) Wood resin.(20) Yeast—nonsynthetic, growth on

petrochemical substrate and sulfitewaste liquor is prohibited.

(i) Autolysate.



(ii) Bakers.(iii) Brewers.(iv) Nutritional.(v) Smoked—nonsynthetic smoke

flavoring process must be documented.(b) Synthetics allowed:(1) Alginates.(2) Ammonium bicarbonate—for use

only as a leavening agent.(3) Ammonium carbonate—for use

only as a leavening agent.(4) Ascorbic acid.(5) Calcium citrate.(6) Calcium hydroxide.(7) Calcium phosphates (monobasic,

dibasic, and tribasic).(8) Carbon dioxide.(9) Chlorine materials—disinfecting

and sanitizing food contact surfaces,Except, That, residual chlorine levels inthe water shall not exceed the maximumresidual disinfectant limit under theSafe Drinking Water Act.

(i) Calcium hypochlorite.(ii) Chlorine dioxide.(iii) Sodium hypochlorite.(10) Ethylene—allowed for

postharvest ripening of tropical fruit.(11) Ferrous sulfate—for iron

enrichment or fortification of foodswhen required by regulation orrecommended (independentorganization).

(12) Glycerides (mono and di)—foruse only in drum drying of food.

(13) Glycerin—produced byhydrolysis of fats and oils.

(14) Hydrogen peroxide.(15) Lecithin—bleached.(16) Magnesium carbonate—for use

only in agricultural products labeled‘‘made with organic (specifiedingredients or food group(s)),’’prohibited in agricultural productslabeled ‘‘organic’’.

(17) Magnesium chloride—derivedfrom sea water.

(18) Magnesium stearate—for use onlyin agricultural products labeled ‘‘madewith organic (specified ingredients orfood group(s)),’’ prohibited inagricultural products labeled ‘‘organic’’.

(19) Nutrient vitamins and minerals,in accordance with 21 CFR 104.20,Nutritional Quality Guidelines ForFoods.

(20) Ozone.(21) Pectin (low-methoxy).(22) Phosphoric acid—cleaning of

food-contact surfaces and equipmentonly.

(23) Potassium acid tartrate.(24) Potassium tartrate made from

tartaric acid.(25) Potassium carbonate.(26) Potassium citrate.(27) Potassium hydroxide—prohibited

for use in lye peeling of fruits andvegetables.

(28) Potassium iodide—for use only inagricultural products labeled ‘‘madewith organic (specified ingredients orfood group(s)),’’ prohibited inagricultural products labeled ‘‘organic’’.

(29) Potassium phosphate—for useonly in agricultural products labeled‘‘made with organic (specificingredients or food group(s)),’’prohibited in agricultural productslabeled ‘‘organic’’.

(30) Silicon dioxide.(31) Sodium citrate.(32) Sodium hydroxide—prohibited

for use in lye peeling of fruits andvegetables.

(33) Sodium phosphates—for use onlyin dairy foods.

(34) Sulfur dioxide—for use only inwine labeled ‘‘made with organicgrapes,’’ Provided, That, total sulfiteconcentration does not exceed 100 ppm.

(35) Tocopherols—derived fromvegetable oil when rosemary extracts arenot a suitable alternative.

(36) Xanthan gum.(c)-(z) [Reserved]

§ 205.606 Nonorganically producedagricultural products allowed as ingredientsin or on processed products labeled as‘‘organic’’ or ‘‘made with organic (specifiedingredients or food group(s)).’’

The following nonorganicallyproduced agricultural products may beused as ingredients in or on processedproducts labeled as ‘‘organic’’ or ‘‘madewith organic (specified ingredients orfood group(s))’’ only in accordance withany restrictions specified in this section.

Any nonorganically producedagricultural product may be used inaccordance with the restrictionsspecified in this section and when theproduct is not commercially available inorganic form.

(a) Cornstarch (native)(b) Gums—water extracted only

(arabic, guar, locust bean, carob bean)(c) Kelp—for use only as a thickener

and dietary supplement(d) Lecithin—unbleached(e) Pectin (high-methoxy)

§ 205.607 Amending the National List.

(a) Any person may petition theNational Organic Standard Board for thepurpose of having a substance evaluatedby the Board for recommendation to theSecretary for inclusion on or deletionfrom the National List in accordancewith the Act.

(b) A person petitioning foramendment of the National List shouldrequest a copy of the petitionprocedures from the USDA at theaddress in § 205.607(c).

(c) A petition to amend the NationalList must be submitted to: Program

Manager, USDA/AMS/TMP/NOP, Room2945, South Building, P.O. Box 96456,Washington, DC 20090–6456.

§§ 205.608–205.619 [Reserved]

State Organic Programs

§ 205.620 Requirements of State organicprograms.

(a) A State may establish a Stateorganic program for production andhandling operations within the Statewhich produce and handle organicagricultural products.

(b) A State organic program must meetthe requirements for organic programsspecified in the Act.

(c) A State organic program maycontain more restrictive requirementsbecause of environmental conditions orthe necessity of specific production orhandling practices particular to theState or region of the United States.

(d) A State organic program mustassume enforcement obligations in theState for the requirements of this partand any more restrictive requirementsapproved by the Secretary.

(e) A State organic program and anyamendments to such program must beapproved by the Secretary prior to beingimplemented by the State.

§ 205.621 Submission and determinationof proposed State organic programs andamendments to approved State organicprograms.

(a) A State organic program’sgoverning State official must submit tothe Secretary a proposed State organicprogram and any proposed amendmentsto such approved program.

(1) Such submission must containsupporting materials that includestatutory authorities, programdescription, documentation of theenvironmental conditions or specificproduction and handling practicesparticular to the State which necessitatemore restrictive requirements than therequirements of this part, and otherinformation as may be required by theSecretary.

(2) Submission of a request foramendment of an approved Stateorganic program must containsupporting materials that include anexplanation and documentation of theenvironmental conditions or specificproduction and handling practicesparticular to the State or region, whichnecessitates the proposed amendment.Supporting material also must explainhow the proposed amendment furthersand is consistent with the purposes ofthe Act and the regulations of this part.

(b) Within 6 months of receipt ofsubmission, the Secretary will: Notifythe State organic program’s governing



State official of approval or disapprovalof the proposed program or amendmentof an approved program and, ifdisapproved, the reasons for thedisapproval.

(c) After receipt of a notice ofdisapproval, the State organic program’sgoverning State official may submit arevised State organic program oramendment of such a program at anytime.

§ 205.622 Review of approved Stateorganic programs.

The Secretary will review a Stateorganic program not less than onceduring each 5-year period following thedate of the initial program approval. TheSecretary will notify the State organicprogram’s governing State official ofapproval or disapproval of the programwithin 6 months after initiation of thereview.

§§ 205.623–205.639 [Reserved]

Fees

§ 205.640 Fees and other charges foraccreditation.

Fees and other charges equal as nearlyas may be to the cost of the accreditationservices rendered under the regulations,including initial accreditation, review ofannual reports, and renewal ofaccreditation, shall be assessed andcollected from applicants for initialaccreditation and accredited certifyingagents submitting annual reports orseeking renewal of accreditation inaccordance with the followingprovisions:

(a) Fees-for-service. (1) Except asotherwise provided in this section, fees-for-service shall be based on the timerequired to render the service providedcalculated to the nearest 15-minuteperiod, including the review ofapplications and accompanyingdocuments and information, evaluatortravel, the conduct of on-siteevaluations, review of annual reportsand updated documents andinformation, and the time required toprepare reports and any otherdocuments in connection with theperformance of service. The hourly rateshall be the same as that charged by theAgricultural Marketing Service, throughits Quality Systems CertificationProgram, to certification bodiesrequesting conformity assessment to theInternational Organization forStandardization ‘‘General Requirementsfor Bodies Operating ProductCertification Systems’’ (ISO Guide 65).

(2) Applicants for initial accreditationand accredited certifying agentssubmitting annual reports or seekingrenewal of accreditation during the first

18 months following the effective dateof subpart F of this part shall receiveservice without incurring an hourlycharge for service.

(3) Applicants for initial accreditationand renewal of accreditation must payat the time of application, effective 18months following February 20, 2001, anonrefundable fee of $500.00 whichshall be applied to the applicant’s fees-for-service account.

(b) Travel charges. When service isrequested at a place so distant from theevaluator’s headquarters that a total ofone-half hour or more is required for theevaluator(s) to travel to such place andback to the headquarters or at a place ofprior assignment on circuitous routingrequiring a total of one-half hour ormore to travel to the next place ofassignment on the circuitous routing,the charge for such service shall includea mileage charge administrativelydetermined by the U.S. Department ofAgriculture and travel tolls, ifapplicable, or such travel proratedamong all the applicants and certifyingagents furnished the service involved onan equitable basis or, when the travel ismade by public transportation(including hired vehicles), a fee equal tothe actual cost thereof. Travel chargesshall become effective for all applicantsfor initial accreditation and accreditedcertifying agents on February 20, 2001.The applicant or certifying agent willnot be charged a new mileage ratewithout notification before the service isrendered.

(c) Per diem charges. When service isrequested at a place away from theevaluator’s headquarters, the fee forsuch service shall include a per diemcharge if the employee(s) performing theservice is paid per diem in accordancewith existing travel regulations. Perdiem charges to applicants andcertifying agents will cover the sameperiod of time for which the evaluator(s)receives per diem reimbursement. Theper diem rate will be administrativelydetermined by the U.S. Department ofAgriculture. Per diem charges shallbecome effective for all applicants forinitial accreditation and accreditedcertifying agents on February 20, 2001.The applicant or certifying agent willnot be charged a new per diem ratewithout notification before the service isrendered.

(d) Other costs. When costs, otherthan costs specified in paragraphs (a),(b), and (c) of this section, are associatedwith providing the services, theapplicant or certifying agent will becharged for these costs. Such costsinclude but are not limited toequipment rental, photocopying,delivery, facsimile, telephone, or

translation charges incurred inassociation with accreditation services.The amount of the costs charged will bedetermined administratively by the U.S.Department of Agriculture. Such costsshall become effective for all applicantsfor initial accreditation and accreditedcertifying agents on February 20, 2001.

§ 205.641 Payment of fees and othercharges.

(a) Applicants for initial accreditationand renewal of accreditation must remitthe nonrefundable fee, pursuant to§ 205.640(a)(3), along with theirapplication. Remittance must be madepayable to the Agricultural MarketingService, USDA, and mailed to: ProgramManager, USDA–AMS–TMP–NOP,Room 2945-South Building, P.O. Box96456, Washington, DC 20090–6456 orsuch other address as required by theProgram Manager.

(b) Payments for fees and othercharges not covered under paragraph (a)of this section must be:

(1) Received by the due date shownon the bill for collection;

(2) Made payable to the AgriculturalMarketing Service, USDA; and

(3) Mailed to the address provided onthe bill for collection.

(c) The Administrator shall assessinterest, penalties, and administrativecosts on debts not paid by the due dateshown on a bill for collection andcollect delinquent debts or refer suchdebts to the Department of Justice forlitigation.

§ 205.642 Fees and other charges forcertification.

Fees charged by a certifying agentmust be reasonable, and a certifyingagent shall charge applicants forcertification and certified productionand handling operations only those feesand charges that it has filed with theAdministrator. The certifying agentshall provide each applicant with anestimate of the total cost of certificationand an estimate of the annual cost ofupdating the certification. The certifyingagent may require applicants forcertification to pay at the time ofapplication a nonrefundable fee whichshall be applied to the applicant’s fees-for-service account. The certifying agentmay set the nonrefundable portion ofcertification fees; however, thenonrefundable portion of certificationfees must be explained in the feeschedule submitted to theAdministrator. The fee schedule mustexplain what fee amounts arenonrefundable and at what stage duringthe certification process fees becomenonrefundable. The certifying agentshall provide all persons inquiring



about the application process with acopy of its fee schedule.

§§ 205.643–205.649 [Reserved]

Compliance

§ 205.660 General.(a) The National Organic Program’s

Program Manager, on behalf of theSecretary, may inspect and reviewcertified production and handlingoperations and accredited certifyingagents for compliance with the Act orregulations in this part.

(b) The Program Manager may initiatesuspension or revocation proceedingsagainst a certified operation:

(1) When the Program Manager hasreason to believe that a certifiedoperation has violated or is not incompliance with the Act or regulationsin this part; or

(2) When a certifying agent or a Stateorganic program’s governing Stateofficial fails to take appropriate action toenforce the Act or regulations in thispart.

(c) The Program Manager may initiatesuspension or revocation of a certifyingagent’s accreditation if the certifyingagent fails to meet, conduct, or maintainaccreditation requirements pursuant tothe Act or this part.

(d) Each notification ofnoncompliance, rejection of mediation,noncompliance resolution, proposedsuspension or revocation, andsuspension or revocation issuedpursuant to § 205.662, § 205.663, and§ 205.665 and each response to suchnotification must be sent to therecipient’s place of business via adelivery service which provides datedreturn receipts.

§ 205.661 Investigation of certifiedoperations.

(a) A certifying agent may investigatecomplaints of noncompliance with theAct or regulations of this partconcerning production and handlingoperations certified as organic by thecertifying agent. A certifying agent mustnotify the Program Manager of allcompliance proceedings and actionstaken pursuant to this part.

(b) A State organic program’sgoverning State official may investigatecomplaints of noncompliance with theAct or regulations in this partconcerning organic production orhandling operations operating in theState.

§ 205.662 Noncompliance procedure forcertified operations.

(a) Notification. When an inspection,review, or investigation of a certifiedoperation by a certifying agent or a State

organic program’s governing Stateofficial reveals any noncompliance withthe Act or regulations in this part, awritten notification of noncomplianceshall be sent to the certified operation.Such notification shall provide:



(3) The date by which the certifiedoperation must rebut or correct eachnoncompliance and submit supportingdocumentation of each such correctionwhen correction is possible.

(b) Resolution. When a certifiedoperation demonstrates that eachnoncompliance has been resolved, thecertifying agent or the State organicprogram’s governing State official, asapplicable, shall send the certifiedoperation a written notification ofnoncompliance resolution.

(c) Proposed suspension orrevocation. When rebuttal isunsuccessful or correction of thenoncompliance is not completed withinthe prescribed time period, thecertifying agent or State organicprogram’s governing State official shallsend the certified operation a writtennotification of proposed suspension orrevocation of certification of the entireoperation or a portion of the operation,as applicable to the noncompliance.When correction of a noncompliance isnot possible, the notification ofnoncompliance and the proposedsuspension or revocation of certificationmay be combined in one notification.The notification of proposed suspensionor revocation of certification shall state:

(1) The reasons for the proposedsuspension or revocation;

(2) The proposed effective date ofsuch suspension or revocation;

(3) The impact of a suspension orrevocation on future eligibility forcertification; and

(4) The right to request mediationpursuant to § 205.663 or to file anappeal pursuant to § 205.681.

(d) Willful violations.Notwithstanding paragraph (a) of thissection, if a certifying agent or Stateorganic program’s governing Stateofficial has reason to believe that acertified operation has willfully violatedthe Act or regulations in this part, thecertifying agent or State organicprogram’s governing State official shallsend the certified operation anotification of proposed suspension orrevocation of certification of the entireoperation or a portion of the operation,as applicable to the noncompliance.

(e) Suspension or revocation. (1) If thecertified operation fails to correct the

noncompliance, to resolve the issuethrough rebuttal or mediation, or to filean appeal of the proposed suspension orrevocation of certification, the certifyingagent or State organic program’sgoverning State official shall send thecertified operation a written notificationof suspension or revocation.

(2) A certifying agent or State organicprogram’s governing State official mustnot send a notification of suspension orrevocation to a certified operation thathas requested mediation pursuant to§ 205.663 or filed an appeal pursuant to§ 205.681, while final resolution ofeither is pending.

(f) Eligibility. (1) A certified operationwhose certification has been suspendedunder this section may at any time,unless otherwise stated in thenotification of suspension, submit arequest to the Secretary forreinstatement of its certification. Therequest must be accompanied byevidence demonstrating correction ofeach noncompliance and correctiveactions taken to comply with andremain in compliance with the Act andthe regulations in this part.

(2) A certified operation or a personresponsibly connected with anoperation whose certification has beenrevoked will be ineligible to receivecertification for a period of 5 yearsfollowing the date of such revocation,Except, That, the Secretary may, whenin the best interest of the certificationprogram, reduce or eliminate the periodof ineligibility.

(g) Violations of Act. In addition tosuspension or revocation, any certifiedoperation that:

(1) Knowingly sells or labels aproduct as organic, except inaccordance with the Act, shall besubject to a civil penalty of not morethan $10,000 per violation.

(2) Makes a false statement under theAct to the Secretary, a State organicprogram’s governing State official, or acertifying agent shall be subject to theprovisions of section 1001 of title 18,United States Code.

§ 205.663 Mediation.Any dispute with respect to denial of

certification or proposed suspension orrevocation of certification under thispart may be mediated at the request ofthe applicant for certification orcertified operation and with acceptanceby the certifying agent. Mediation shallbe requested in writing to the applicablecertifying agent. If the certifying agentrejects the request for mediation, thecertifying agent shall provide writtennotification to the applicant forcertification or certified operation. Thewritten notification shall advise the



applicant for certification or certifiedoperation of the right to request anappeal, pursuant to § 205.681, within 30days of the date of the writtennotification of rejection of the requestfor mediation. If mediation is acceptedby the certifying agent, such mediationshall be conducted by a qualifiedmediator mutually agreed upon by theparties to the mediation. If a Stateorganic program is in effect, themediation procedures established in theState organic program, as approved bythe Secretary, will be followed. Theparties to the mediation shall have nomore than 30 days to reach anagreement following a mediationsession. If mediation is unsuccessful,the applicant for certification orcertified operation shall have 30 daysfrom termination of mediation to appealthe certifying agent’s decision pursuantto § 205.681. Any agreement reachedduring or as a result of the mediationprocess shall be in compliance with theAct and the regulations in this part. TheSecretary may review any mediatedagreement for conformity to the Act andthe regulations in this part and mayreject any agreement or provision not inconformance with the Act or theregulations in this part.


§ 205.665 Noncompliance procedure forcertifying agents.

(a) Notification. When an inspection,review, or investigation of an accreditedcertifying agent by the Program Managerreveals any noncompliance with the Actor regulations in this part, a writtennotification of noncompliance shall besent to the certifying agent. Suchnotification shall provide:



(3) The date by which the certifyingagent must rebut or correct eachnoncompliance and submit supportingdocumentation of each correction whencorrection is possible.

(b) Resolution. When the certifyingagent demonstrates that eachnoncompliance has been resolved, theProgram Manager shall send thecertifying agent a written notification ofnoncompliance resolution.

(c) Proposed suspension orrevocation. When rebuttal isunsuccessful or correction of thenoncompliance is not completed withinthe prescribed time period, the ProgramManager shall send a writtennotification of proposed suspension orrevocation of accreditation to the

certifying agent. The notification ofproposed suspension or revocation shallstate whether the certifying agent’saccreditation or specified areas ofaccreditation are to be suspended orrevoked. When correction of anoncompliance is not possible, thenotification of noncompliance and theproposed suspension or revocation maybe combined in one notification. Thenotification of proposed suspension orrevocation of accreditation shall state:

(1) The reasons for the proposedsuspension or revocation;

(2) The proposed effective date of thesuspension or revocation;

(3) The impact of a suspension orrevocation on future eligibility foraccreditation; and

(4) The right to file an appealpursuant to § 205.681.

(d) Willful violations.Notwithstanding paragraph (a) of thissection, if the Program Manager hasreason to believe that a certifying agenthas willfully violated the Act orregulations in this part, the ProgramManager shall send a writtennotification of proposed suspension orrevocation of accreditation to thecertifying agent.

(e) Suspension or revocation. Whenthe accredited certifying agent fails tofile an appeal of the proposedsuspension or revocation ofaccreditation, the Program Managershall send a written notice ofsuspension or revocation ofaccreditation to the certifying agent.

(f) Cessation of certification activities.A certifying agent whose accreditationis suspended or revoked must:

(1) Cease all certification activities ineach area of accreditation and in eachState for which its accreditation issuspended or revoked.

(2) Transfer to the Secretary and makeavailable to any applicable State organicprogram’s governing State official allrecords concerning its certificationactivities that were suspended orrevoked.

(g) Eligibility. (1) A certifying agentwhose accreditation is suspended by theSecretary under this section may at anytime, unless otherwise stated in thenotification of suspension, submit arequest to the Secretary forreinstatement of its accreditation. Therequest must be accompanied byevidence demonstrating correction ofeach noncompliance and correctiveactions taken to comply with andremain in compliance with the Act andthe regulations in this part.

(2) A certifying agent whoseaccreditation is revoked by the Secretaryshall be ineligible to be accredited as acertifying agent under the Act and the

regulations in this part for a period ofnot less than 3 years following the dateof such revocation.

§§ 205.666–205.667 [Reserved]

§ 205.668 Noncompliance proceduresunder State organic programs.

(a) A State organic program’sgoverning State official must promptlynotify the Secretary of commencementof any noncompliance proceedingagainst a certified operation and forwardto the Secretary a copy of each noticeissued.

(b) A noncompliance proceeding,brought by a State organic program’sgoverning State official against acertified operation, shall be appealablepursuant to the appeal procedures of theState organic program. There shall be nosubsequent rights of appeal to theSecretary. Final decisions of a State maybe appealed to the United States DistrictCourt for the district in which suchcertified operation is located.

(c) A State organic program’sgoverning State official may review andinvestigate complaints ofnoncompliance with the Act orregulations concerning accreditation ofcertifying agents operating in the State.When such review or investigationreveals any noncompliance, the Stateorganic program’s governing Stateofficial shall send a written report ofnoncompliance to the Program Manager.The report shall provide a description ofeach noncompliance and the facts uponwhich the noncompliance is based.


Inspection and Testing, Reporting, andExclusion from Sale

§ 205.670 Inspection and testing ofagricultural product to be sold or labeled‘‘organic.’’

(a) All agricultural products that areto be sold, labeled, or represented as‘‘100 percent organic,’’ ‘‘organic,’’ or‘‘made with organic (specifiedingredients or food group(s))’’ must bemade accessible by certified organicproduction or handling operations forexamination by the Administrator, theapplicable State organic program’sgoverning State official, or the certifyingagent.

(b) The Administrator, applicableState organic program’s governing Stateofficial, or the certifying agent mayrequire preharvest or postharvest testingof any agricultural input used oragricultural product to be sold, labeled,or represented as ‘‘100 percent organic,’’‘‘organic,’’ or ‘‘made with organic(specified ingredients or food group(s))’’when there is reason to believe that theagricultural input or product has come



into contact with a prohibited substanceor has been produced using excludedmethods. Such tests must be conductedby the applicable State organicprogram’s governing State official or thecertifying agent at the official’s orcertifying agent’s own expense.

(c) The preharvest or postharvesttissue test sample collection pursuant toparagraph (b) of this section must beperformed by an inspector representingthe Administrator, applicable Stateorganic program’s governing Stateofficial, or certifying agent. Sampleintegrity must be maintained throughoutthe chain of custody, and residue testingmust be performed in an accreditedlaboratory. Chemical analysis must bemade in accordance with the methodsdescribed in the most current edition ofthe Official Methods of Analysis of theAOAC International or other currentapplicable validated methodologydetermining the presence ofcontaminants in agricultural products.

(d) Results of all analyses and testsperformed under this section:

(1) Must be promptly provided to theAdministrator; Except, That, where aState organic program exists, all testresults and analyses shall be provided tothe State organic program’s governingState official by the applicable certifyingparty that requested testing; and

(2) Will be available for public access,unless the testing is part of an ongoingcompliance investigation.

(e) If test results indicate a specificagricultural product contains pesticideresidues or environmental contaminantsthat exceed the Food and DrugAdministration’s or the EnvironmentalProtection Agency’s regulatorytolerences, the certifying agent mustpromptly report such data to the Federalhealth agency whose regulatorytolerance or action level has beenexceeded.

§ 205.671 Exclusion from organic sale.

When residue testing detectsprohibited substances at levels that aregreater than 5 percent of theEnvironmental Protection Agency’stolerance for the specific residuedetected or unavoidable residualenvironmental contamination, theagricultural product must not be sold,labeled, or represented as organicallyproduced. The Administrator, theapplicable State organic program’sgoverning State official, or the certifyingagent may conduct an investigation ofthe certified operation to determine thecause of the prohibited substance.

§ 205.672 Emergency pest or diseasetreatment.

When a prohibited substance isapplied to a certified operation due toa Federal or State emergency pest ordisease treatment program and thecertified operation otherwise meets therequirements of this part, thecertification status of the operation shallnot be affected as a result of theapplication of the prohibited substance:Provided, That:

(a) Any harvested crop or plant partto be harvested that has contact with aprohibited substance applied as theresult of a Federal or State emergencypest or disease treatment programcannot be sold, labeled, or representedas organically produced; and

(b) Any livestock that are treated witha prohibited substance applied as theresult of a Federal or State emergencypest or disease treatment program orproduct derived from such treatedlivestock cannot be sold, labeled, orrepresented as organically produced:Except, That:

(1) Milk or milk products may be sold,labeled, or represented as organicallyproduced beginning 12 monthsfollowing the last date that the dairyanimal was treated with the prohibitedsubstance; and

(2) The offspring of gestatingmammalian breeder stock treated with aprohibited substance may be consideredorganic: Provided, That, the breederstock was not in the last third ofgestation on the date that the breederstock was treated with the prohibitedsubstance.

§§ 205.673–205.679 [Reserved]

Adverse Action Appeal Process

§ 205.680 General.

(a) Persons subject to the Act whobelieve they are adversely affected by anoncompliance decision of the NationalOrganic Program’s Program Managermay appeal such decision to theAdministrator.

(b) Persons subject to the Act whobelieve that they are adversely affectedby a noncompliance decision of a Stateorganic program may appeal suchdecision to the State organic program’sgoverning State official who will initiatehandling of the appeal pursuant toappeal procedures approved by theSecretary.

(c) Persons subject to the Act whobelieve that they are adversely affectedby a noncompliance decision of acertifying agent may appeal suchdecision to the Administrator, Except,That, when the person is subject to anapproved State organic program, the

appeal must be made to the Stateorganic program.

(d) All written communicationsbetween parties involved in appealproceedings must be sent to therecipient’s place of business by adelivery service which provides datedreturn receipts.

(e) All appeals shall be reviewed,heard, and decided by persons notinvolved with the decision beingappealed.

§ 205.681 Appeals.(a) Certification appeals. An applicant

for certification may appeal a certifyingagent’s notice of denial of certification,and a certified operation may appeal acertifying agent’s notification ofproposed suspension or revocation ofcertification to the Administrator,Except, That, when the applicant orcertified operation is subject to anapproved State organic program theappeal must be made to the Stateorganic program which will carry outthe appeal pursuant to the State organicprogram’s appeal procedures approvedby the Secretary.

(1) If the Administrator or Stateorganic program sustains a certificationapplicant’s or certified operation’sappeal of a certifying agent’s decision,the applicant will be issued organiccertification, or a certified operationwill continue its certification, asapplicable to the operation. The act ofsustaining the appeal shall not be anadverse action subject to appeal by theaffected certifying agent.

(2) If the Administrator or Stateorganic program denies an appeal, aformal administrative proceeding willbe initiated to deny, suspend, or revokethe certification. Such proceeding shallbe conducted pursuant to the U.S.Department of Agriculture’s UniformRules of Practice or the State organicprogram’s rules of procedure.

(b) Accreditation appeals. Anapplicant for accreditation and anaccredited certifying agent may appealthe Program Manager’s denial ofaccreditation or proposed suspension orrevocation of accreditation to theAdministrator.

(1) If the Administrator sustains anappeal, an applicant will be issuedaccreditation, or a certifying agent willcontinue its accreditation, as applicableto the operation.

(2) If the Administrator denies anappeal, a formal administrativeproceeding to deny, suspend, or revokethe accreditation will be initiated. Suchproceeding shall be conducted pursuantto the U.S. Department of Agriculture’sUniform Rules of Practice, 7 CFR part 1,Subpart H.



(c) Filing period. An appeal of anoncompliance decision must be filedwithin the time period provided in theletter of notification or within 30 daysfrom receipt of the notification,whichever occurs later. The appeal willbe considered ‘‘filed’’ on the datereceived by the Administrator or by theState organic program. A decision todeny, suspend, or revoke certification oraccreditation will become final andnonappealable unless the decision isappealed in a timely manner.

(d) Where and what to file. (1)Appeals to the Administrator must befiled in writing and addressed toAdministrator, USDA–AMS, Room3071–S, P.O. Box 96456, Washington,DC 20090–6456.

(2) Appeals to the State organicprogram must be filed in writing to theaddress and person identified in theletter of notification.

(3) All appeals must include a copy ofthe adverse decision and a statement ofthe appellant’s reasons for believing thatthe decision was not proper or made inaccordance with applicable programregulations, policies, or procedures.

§§ 205.682–205.689 [Reserved]

Miscellaneous

§ 205.690 OMB control number.The control number assigned to the

information collection requirements inthis part by the Office of Managementand Budget pursuant to the PaperworkReduction Act of 1995, 44 U.S C.Chapter 35, is OMB number 0581–0181.

§§ 205.691–205.699 [Reserved]

PARTS 206–209 [Reserved]

Dated: December 13, 2000.Kathleen A. Merrigan,Administrator, Agricultural MarketingService.

Appendixes to Preamble

Appendix A—Regulatory ImpactAssessment for Final RuleImplementing the Organic FoodsProduction Act of 1990

The following regulatory assessment isprovided to fulfill the requirements ofExecutive Order 12866. This assessmentconsists of a statement of the need fornational organic standards, a description ofthe baseline for the analysis, a summary ofthe provisions of the final U.S. Departmentof Agriculture (USDA) rule and thealternative approaches that were examined,and an analysis of the benefits and costs.Much of the analysis is necessarilydescriptive of the anticipated effects of thefinal rule. Because basic market data on theprices and quantities of organic goods andthe costs of organic production are limited,

it is not possible to provide quantitativeestimates of all benefits and costs of the finalrule. The cost of fees and recordkeeping inthe final USDA rule are quantified, but theanticipated benefits and other costs are not.Consequently, the analysis does not estimatethe magnitude or the direction (positive ornegative) of net benefits.

Under the final rule, USDA will implementa program of uniform standards ofproduction and certification, as mandated bythe Organic Foods Production Act of 1990(OFPA). The primary benefits fromimplementation of USDA’s National OrganicProgram (NOP) are standardizing thedefinitions and the manner in which organicproduct information is presented toconsumers, which may reduce the costassociated with enforcement actions inconsumer fraud cases, and improved accessto domestic and international markets fromharmonizing the various State and privateorganic standards and elevating reciprocitynegotiations to the national level.

The costs of this rule are the direct costsfor accreditation and the costs of complyingwith the specific standards in the proposal,including the reporting and recordkeepingrequirements. Certifiers will be charged feesbased on the actual costs of the accreditationwork done by USDA staff. Smaller certifierswith less complex programs are expected topay somewhat lower fees. Organic farmers,ranchers, wild-crop harvesters, and handlerswill have to pay fees for organic certificationfrom a State or private certifier but will notbe charged any additional fees by USDA. Thedirect accreditation costs to an estimated 59certifying agents (including all 49 currentU.S. certifiers and an estimated 10 foreignagents) during the first 18 months followingthe final rule are estimated to beapproximately $92,000 to $124,000 and arebeing subsidized with appropriated fundsderived from the taxpayers. In addition,USDA will use appropriated funds to coverapproximately $270,000–$448,000 in hourlycharges for site evaluation during this periodand for other costs associated with startingup the NOP. The magnitude of othercompliance costs for adhering to thisregulation—including the costs of becomingfamiliar with and adopting the nationalstandards—have not been measured. Fororganic farmers who adhere to Stateregulations or undergo third-party inspectionand certification, the compliance cost maynot be large. For those who don’t, the costsmay be more substantial. The impact of thisregulation on small certifying agents andother small businesses has also not beenmeasured but may be significant.

To account for significant rule changesfrom the proposal and to reflect more up-to-date information, we revised some estimatesof benefits and costs. We have raised ourestimates of current certification fees andUSDA accreditation fees. Also, we nowproject higher USDA accreditation fees afterthe 18-month implementation period. Werevised our estimates of the certification feescharged by a representative set of public andprivate certifiers in the U.S. based on newdata, and our new estimates are about 25percent higher for small and midsizedfarmers. Small and midsized farmers are now

estimated to pay $579 and $1,414 for theirfirst-year certification, respectively.Accreditation costs after the 18-monthimplementation period are substantiallyabove those estimated in the proposed rule,reflecting a slight increase in the governmentper diem travel allowance since the proposedrule was published and a change in theprojected number of reviewers needed forsite evaluations and renewals after the 18-month implementation period. In theproposed rule, USDA had projected that onlyone reviewer would be needed for siteevaluations and renewals that took placeafter the 18-month implementation periodbut has changed that projection to tworeviewers based on additional experiencewith the International Organization forStandardization (ISO Guide 65) program. Weestimate that initial accreditation costs afterthe 18-month implementation period willrange from $6,120 to $9,700, approximatelydouble our estimate in the March 2000proposed rule.

Marginal changes have been made in thefinal rule, in response to comments on theMarch 2000 proposal, which generally clarifyor add flexibility to producer and handlerprovisions or make them better reflectcurrent industry standards. One key changewas to raise the threshold for labelingproducts as ‘‘made with organic ingredients’’from 50 percent organic content to 70 percentto be consistent with international industrystandards. Although not quantified, webelieve that this will increase the cost of therule. Another key change was to reduce thetransition period for a dairy operation tomake a whole-herd conversion to organicproduction in order to make conversionaffordable for a wider range of dairy farms,including smaller operations. Although notquantified, we believe that this will decreasethe cost of the rule.

The Need for National Standards

Over the last several decades, as marketdemand has grown from a handful ofconsumers bargaining directly with farmersto millions of consumers acquiring goodsfrom supermarket shelves as well as marketstalls, a patchwork of State and privateinstitutions has evolved to set standards andverify label claims. Organically producedfood cannot be distinguished visually fromconventional food and cannot necessarily bedistinguished by taste; therefore, consumersmust rely on labels and other advertisingtools for product information. Farmers, foodhandlers, and other businesses that produceand handle organically grown food have afinancial incentive to advertise thatinformation because consumers have beenwilling to pay a price premium for thesegoods. However, consumers face difficultiesin discerning the organic attributes of aproduct, and many producers and handlershave sought third-party certification oforganic claims.

State and private initiatives have resultedin a fairly robust system of standards andcertification, and the difficulties in consumerverification have been partially overcome bythese initiatives. Private organizations,mostly nonprofits, began developingcertification standards in the early 1970’s as



a way to support organic farming, as well asto strengthen legitimate product claims. Thefirst organization to offer third-partycertification, California Certified OrganicFarmers, was formed in the early 1970’s, andthe first State regulations and laws on organiclabeling were also passed in the 1970’s.Currently, 13 State and 36 privatecertification programs are operating in theUnited States, and about half the Statescurrently have some form of regulation.While most States still do not mandate third-party certification and many organicproducers still market goods withoutcertification, large food processors, graintraders, and retailers are increasinglyrequiring certification, and many growershave turned to certification as a marketingtool.

However, even with increasing pressure forgrowers to use third-party certificationservices and increasing availability of theseservices from State and private certifiers, thediscrepancies between the certifiers onorganic standards and between the States oncertification requirements have resulted inseveral impediments to market development.The patchwork of variable standards hasmade producer access to organic markets,international and domestic, uneven. Therecent emergence of the industry-developedstandards may have mitigated some domesticaccess problems, but two importantimpediments remain. They are:multiingredient certification disputes andbarriers to foreign markets.

Difficulty Certifying Multiingredient Products

Although the State and private organicstandards that have developed over the lastseveral decades have many areas of overlap,particularly for crop production, thedifferences have caused disagreementsamong certifying agents over whosestandards apply to multiingredient organicprocessed products. These disagreementshave created sourcing problems for food.Disagreements about standards also createsourcing problems for handlers of thesemultiingredient products. Certifying agentsare able to negotiate and maintain reciprocityagreements at some cost. These reciprocityagreements specify the conditions underwhich certifying agents recognize eachother’s standards. Although new organicproduct offerings have emerged at a fast paceduring the 1990’s, this pace could eventuallyslow, assuming that the need for costlyreciprocity agreements will continue topersist in the absence of national standards.

Barriers to Foreign Organic Markets

In the absence of a national standard, U.S.producers have taken on costs of privateaccreditation or shipment-by-shipmentcertification required to gain access to someforeign markets such as the European Union(EU). However, even with these actions, U.S.organic products may have had somedifficulties entering other foreign marketsdue to high information and search costs onthe part of foreign buyers. Some foreignbuyers of U.S. organic products may incurcosts to determine the compatibility ofstandards. Such costs may have discouragedpurchases of U.S. organic products.

Congress passed the OFPA—Title XXI ofthe Food, Agriculture, Conservation andTrade Act of 1990, U.S.C. Title 7—largely toaddress these marketing problems. The OFPAmandates that the Secretary of Agriculturedevelop a national organic program, andUSDA’s statutory responsibility is theprimary reason why USDA has carried outthis rulemaking process. The OFPA requiresthe Secretary to establish an organiccertification program for farmers, wild-cropharvesters, and handlers of agriculturalproducts that have been produced usingorganic methods as provided for in theOFPA. This legislation requires the Secretaryto establish and implement a program toaccredit a State program official or anyprivate person who meets the requirementsof the Act as a certifying agent to certify thatfarm, wild-crop harvesting, or handlingoperations are in compliance with thestandards set out in the regulation. As statedby the OFPA in section 6501, the regulationsare for the following purposes: (1) Toestablish national standards governing themarketing of certain agricultural products asorganically produced products, (2) to assureconsumers that organically producedproducts meet a consistent standard, and (3)to facilitate interstate commerce in fresh andprocessed food that is organically produced.

Baseline

After struggling to build market recognitionand supply capacity for many decades, theorganic farming industry became one thefastest growing segments of U.S. agricultureduring the last decade. Certified organiccropland more than doubled in the UnitedStates between 1992 and 1997, and twoorganic livestock sectors-eggs and dairy-greweven faster (Greene, 2000a). USDA’sEconomic Research Service estimates thatover 1.3 million acres of U.S. farmland werecertified in 1997, and more recent data fromsome of the certifiers indicate that thismomentum is continuing (Greene, 2000b).Although national estimates of the amount ofuncertified organic acreage are not available,data from California, the largest U.S.producer of organic specialty crops, indicatesthat most of the State’s organic acreage andabout half of the growers were certifiedduring the 1997/98 crop year (Klonsky et al.,2000).

Growth in U.S. sales of organic productsduring the 1990’s mirrors the growth inacreage devoted to producing these goods.According to industry data, total organicproduct sales more than doubled between1992 and 1996 to $3.5 billion in sales (table1). More recent industry data on organic salesthrough natural product stores, the largestoutlet for organic products, show annualsales growth continuing in the general rangeof 20–25 percent annually.

The recent growth in organic productionand sales has taken place in the absence ofnational organic standards but with industryexpectation that these standards wereforthcoming. While the U.S. organic industryis characterized by an array of certification,production, processing, and marketingpractices, there are commonalitiesthroughout the industry.

Certification

The number of U.S. certification groupshas fluctuated between 40 and 50 during thelast decade. Currently, 49 organizations—36private and 13 State—are advertising thatthey provide certification services to farmers,handlers (a category that USDA defines toinclude processors), retailers, or othersegments of the food industry. Somecertifiers provide services to multiplesegments of the food industry. Privatecertifying agents range from small nonprofitassociations that certify only a few growersto large for-profit businesses operating innumerous States and certifying hundreds ofproducers. Typically, certifying agentsreview organic production plans, inspect thefarm fields and facilities to be certified,periodically reinspect, and may conduct soiltests and tests for residues of prohibitedsubstances. In some cases, certifying agentsnegotiate reciprocity agreements with otheragents.

State laws vary widely on organiccertification and registration. Some States,such as California, require only that anorganic producer register and makecertification voluntary. Other States,including Texas, require certification by theState’s own agents, while Minnesota andothers accept certification by a privatecertifying agent. Approximately half of theStates have laws that regulate organicproduction and processing. In many Statesproducers may claim their product is organicbut operate without certification or well-defined standards. Many organic producersin States with no State programs voluntarilysecure third-party certification to well-defined standards. Certification costs varywith farm size and across certifying agents.Illustrative certification costs are presentedin tables 2A and 2B.

Very few certifying agents operate with anexternal accreditation for the followingreasons. There is no law which requires themto be accredited: the price may beunacceptably high in relation to expectedbenefits; the certifying agent may be unableto find an accrediting party willing toaccredit the particular organic program thecertifying agent is marketing; and Stateprograms may believe that their status as agovernment entity obviates the need forexternal accreditation.

In 1999, USDA began accrediting certifyingagents as meeting ISO Guide 65. It is avaluable recognition that the certifying entitysatisfies the business capacity standards ofISO Guide 65. EU authorities have acceptedverification of certifying agents to ISO Guide65 as an interim measure to facilitate exportspending the establishment of a nationalorganic program.

Organic Crop and Livestock Production

In 1997, farmers in 49 States used organicproduction systems and third-party organiccertification services on over a million acresof farmland and were raising certified organiclivestock production in nearly half the States,according to USDA data (Greene, 2000a).Two-thirds of the farmland was used forgrowing crops, with Idaho, California, NorthDakota, Montana, Minnesota, Wisconsin,Iowa, and Florida as the top producers.



Colorado and Alaska had the most organicpasture and rangeland. Californiaoverwhelmingly had the most certifiedorganic fruit and vegetable acreage in 1997,but farmers were growing small plots ofcertified organic vegetables for directmarketing to consumers in over half theStates. About 2 percent of the U.S. apple,grape, lettuce, and carrot crops were certifiedorganic in 1997, while only one-tenth of 1percent of the U.S. corn and soybean cropswere grown under certified organic farmingsystems. USDA has not estimated the amountof acreage devoted to organic productionsystems that has not been certified, althoughdata from California suggest that a largenumber of farmers, mostly those with smalloperations, produce and market organicgoods without third-party certification.

Key production practices followed bycertified organic producers include:abstaining from use of certain crop chemicalsand animal drugs; ecologically based pestand nutrient management; segregation oforganic fields and animals from nonorganicfields and animals; following an organicsystem plan with multiple goals, includingsustainability; and recordkeeping todocument practices and progress toward theplan’s goals. Specific elements of organicproduction vary, but organic systemsgenerally share a core set of practices. Forexample, the certification standards ofvirtually all State and private U.S. certifyingagents prohibit the use of synthetic chemicalpesticides or animal growth hormones. Andmost certification standards include a 3-yearban on the use of prohibited substances oncropland before production can be certifiedas organic.

On the other hand, certification standardsfor organic livestock production have beenmore variable for pasture, feed, and otherpractices. Until 1999, the USDA Food Safetyand Inspection Service (FSIS) withheldapproval for the use of organic labels on meatand poultry products pending the outcome ofthis rulemaking. However, the Secretaryannounced a change in policy in January1999. Meat and poultry products may belabeled ‘‘certified organic by (name of thecertifying agent)’’ if handlers obtain priorlabel approval from FSIS and the claim meetscertain basic criteria. Organic labels havebeen permitted on eggs and dairy products—which are regulated by the Food and DrugAdministration (FDA)—throughout the1990’s, but most certifiers have not yetoffered certification services for theseproducts.

We provide a summary of the NewHampshire organic program to highlight thesimilarities in the core set of practices. It isimportant to note that this discussion isintended to highlight the conceptualsimilarities between State and privateprograms and is not intended to suggest thatthese programs are identical to each other orto the NOP. Production standards include: awritten rotation plan; tillage systems thatincorporate organic matter wastes into thetopsoil; compliance with limits on thesources of manure and the timing of itsapplication; prohibitions on the use ofcertain substances (e.g., sewage sludge,synthetic sources of nitrates, synthetic

growth regulators, and anhydrous ammonia);a list of accepted and prohibited weed andpest control practices; segregation of organicand nonorganic production; recordkeepingregarding fertilization, cropping, and pestmanagement histories; separate sales recordsfor organic and nonorganic production; andrecords of all laboratory analyses. Residuetesting may be required if USDA believes thatthe products or soil used for producingcertified products may have becomecontaminated with prohibited substances.

The New Hampshire program requiresgrowers to pay a $100 annual inspection feeand to provide a written description of theirfarm operation, including the size of thefarm; a field map; a 3-year history of cropproduction, pest control, and fertilizer use; acrop rotation and a soil management plan;and a description of postharvest storage andhandling methods. Applicants forcertification must also agree to comply withregulations controlling the use of the NewHampshire certified organic logo.

Organic Food Handling

In addition to growers, who actuallyproduce and harvest products to be marketedas organic, there are handlers who transformand resell the organic products. Not allcertifiers have standards for handling organicproducts. And some certifiers have standardsfor parts of the food marketing system, suchas restaurants, which are not explicitlycovered by the OFPA nor encompassed bythis final regulation.

Definitions of processing and handlingdiffer across certifying agents and State laws.Some States, such as Washington, distinguishbetween a processor and a handler,specifying 21 actions which constituteprocessing and defining a handler as anyonewho sells, distributes, or packs organicproducts. Other States do not distinguishbetween food processors and handlers. Underthe final rule, the term, ‘‘handler,’’ includesprocessors but not final retailers ofagricultural products that do not processagricultural products.

Organic Product Marketing

The two largest marketing outlets fororganically produced goods are natural foodsstores and direct markets—which includefarmers markets, roadside stands, and‘community supported agriculture’arrangements—according to industry data.USDA does not have official national levelstatistics on organic retail sales, but anindustry trade publication, the Natural FoodsMerchandiser (NFM), reported estimates oftotal retail sales of organic foods for years1990–96 and continues to report estimates ofnatural product stores sales (table 1). The lastNFM estimate of total organic sales throughall marketing outlets was $3.5 billion in 1996($3.7 billion in 1999 dollars), less than onepercent of total food expenditures by familiesand individuals that year.

Natural foods stores increased in size andpresence in the United States during the1990’s—many are now the size ofconventional supermarkets—and about two-thirds of estimated total organic sales duringthe 1990’s were through this outlet (table 1).Natural foods supermarkets, which are

similar to conventional in the breadth ofsupermarket offerings and amount of totalsales, accounted for close to 1 percent of totalsupermarket sales by 1997 (Kaufman 1998).Organic product sales through the naturalfoods stores outlet, alone, in 1999 wereestimated at $4 billion, and sales through thisoutlet increased about 20–25 percentannually through the 1990’s.

Direct-to-consumer market sales rangedfrom $270 to $390 million during the early1990’s, accounting for between 17 and 22percent of total organic sales during thisperiod, according to NFM estimates (table 1).Conventional food stores (mass markets)accounted for 6–7 percent of total salesduring this period, and export salesaccounted for 3–8 percent of the total. A draftreport on the U.S. organic export market,partly funded by USDA, indicates thatcurrent U.S. export sales are under 5 percentof total organic product sales (Fuchshofenand Fuchshofen 2000).

The United States is both an importer andan exporter of organic foods. The UnitedStates does not restrict imports of organicfoods. In fact, U.S. Customs accounts do notdistinguish between organic andconventional products. The largest marketsfor organic foods outside the United Statesare in Europe, Japan, and Canada. There isincreasing pressure, particularly in Europeand Japan, for U.S. exports to demonstratethat they meet a national standard rather thana variety of private and State standards.France, for example, has indicated to USDAthat it prefers to negotiate with a singlenational organic program, rather than thedozens of different State and privatecertifying programs currently operating in theU.S.

The EU is the largest market for organicfood outside the United States. The organicfood market in the EU was estimated to beworth $5.2 billion in 1997 (InternationalTrade Centre UNCTAD/WTO 1999). Thelargest organic retail sales markets in the EUin 1997 were Germany ($1.8 billion), France($720 million), and Italy ($750 million).Large organic markets outside the EU includeCanada and Australia, with approximately$60 million and $68 million, respectively, inorganic retail sales in 1997 (Lohr 1998).Import share of the organic food market inEurope ranged from 10 percent in France to70 percent in the United Kingdom, was 80percent in Canada, and varied from 0 to 13percent in various Australian States.

Japan is another important market for U.S.organic products. Currently, Japan hasvoluntary labeling guidelines for 6 categoriesof nonconventional agricultural products:organic, transitional organic, no pesticide,reduced pesticide, no chemical fertilizer, andreduced chemical fertilizer. Total sales,including foods marketed as ‘‘no chemical’’and ‘‘reduced chemical,’’ are forecast to jump15 percent in 1999 to almost $3 billion.Imports of organic agricultural products werevalued at $90 million in 1998. Given Japan’slimited agricultural acreage, imports willlikely provide an increasingly significantshare of Japan’s organic food supply (USDAFAS 1999a).

Recently, these markets have adopted orare considering adoption of procedures that



may impede the importing of organic food.The EU regulations establishing the basis forequivalency in organic production among EUmembers and for imports from outside theEU were adopted in 1991 (CouncilRegulation 2092/91). The EU regulations onlyallow imports from non-EU countries whosenational standards have been recognized asequivalent to the EU standards (CommissionRegulation 94/92).

The Ministry of Agriculture, Forestry, andFisheries (MAFF) in Japan recentlyannounced proposed standards and third-party certification requirements. UnderJapan’s proposed standards, certifying agentsfrom countries without national organicstandards administered by a federalgovernment will face additional financial andadministrative costs.

Requirements of the Final Rule

The final rule follows the structureestablished in the OFPA. By adopting thisalternative, the Department is following thelegislative direction in the OFPA. Allproducts marketed as organic will have to beproduced and handled as provided in theOFPA and these regulations. Compared tocurrent organic practices, the final rule setsa somewhat more stringent system ofrequirements.

Among many alternatives, two alternativesto the final rule are discussed in this section:continuation of the status quo and use ofindustry-developed standards. Given thestatutory responsibility, USDA isimplementing the requirements of the OFPA.However, under the status quo alternative,there would be no national standard ornational program of accreditation andcertification. No Federal funds would beused, there would be no transfer from Federaltaxpayers at large to organic marketparticipants, and there would be no Federalregulatory barriers to entry into organicproduction and handling. However, growersand handlers would still not have levelaccess, under uniform standards, to thedomestic market, and there may besignificant enforcement gaps at the Statelevel. International pressure for additionalverification would continue to build andwould be likely to lead to an increased useof public and private verification andaccreditation services, which are provided ona user-fee basis with full cost recovery.Establishing reciprocity between certifyingagents in the domestic organic market wouldcontinue to be costly and may stifle growthin trade of organic products, although themagnitude of these costs and their effects ongrowth are unknown. Without furtheranalysis that includes quantification andmonetization of benefits and costs, it is notclear whether the net benefits associated withthis alternative are greater or less than thoseassociated with the final rule.

Under the other industry-developedstandards alternative, USDA could eliminatethe costs associated with establishingreciprocity in the domestic market andestablish equivalency for access tointernational markets, but it would bedifficult for industry to develop consensusstandards. For example, the industry-developed standards recently proposed by

the Organic Trade Association weredeveloped with significant industry input butwith little public comment. In contrast,several hundred thousand comments havebeen submitted in the course of the USDArulemaking process. In addition, the OFPAmandated an advisory role for a 15-memberNational Organic Standards Board (NOSB),which has wide representation from theorganic community and includes memberswho are farmers, handlers, retailers,environmentalists, consumers, scientists, andcertifiers. The NOSB has assisted indeveloping the standards promulgated in thisfinal rule and will play an advisory role forthe NOP even after the final rule is in place.Without further analysis that includesquantification and monetization of benefitsand costs, it is not clear whether the netbenefits associated with this alternative aregreater or less than those associated with thefinal rule.

USDA’s final rule will be implemented bythe NOP staff in the Agricultural MarketingService (AMS). Major features of the NOPinclude:

Accreditation and Certification

The rule specifies the accreditation andcertification process. Persons providingcertification services for organic productionand handling must be accredited by USDAthrough the NOP. Applicants foraccreditation must document their abilities tocertify according to the national standardsand to oversee their client’s compliance withthe requirements of the OFPA and NOPregulations. Producers and handlers oforganic products must be certified by anaccredited certifying agent. Producers andhandlers are required to document theirorganic plans and procedures to ensurecompliance with the OFPA.

All certifying agents would have to beaccredited, and certification by producersand handlers would be mandatory. Theexceptions are: (1) growers and handlers withgross organic sales of $5,000 or less would beexempt from certification, and (2) a handlingoperation may be exempt or excluded fromcertification according to provisionsdescribed in the rule’s subpart B,Applicability.

USDA will charge applicants foraccreditation and accreditation renewal(required every 5 years) a $500 fee at the timeof application. USDA will also chargeapplicants for costs over $500 for siteevaluation of the applicant’s business. Theapplicant would be charged for travel costs,per diem expenses, and any miscellaneouscosts incurred with a site evaluation. USDAwill also charge accredited certifiers at anhourly rate to review their annual reports.

Producers and handlers will not paycertification fees to USDA. Certification feeswill be established by the accreditedcertifying agents. USDA will not set fees. Therule requires certifying agents to submit acopy of their fee schedules to USDA, posttheir fees, and provide applicants estimatesof the costs for initial certification and forrenewal of certification.

Production and Handling

The rule establishes standards for organicproduction of crops and livestock and

handling of organic products. Thesestandards were developed from specificrequirements in the OFPA, recommendationsfrom the NOSB, review of existing organicindustry practices and standards, publiccomments received on the 1997 proposal andsubsequent issue papers, public meetings,and comments received on the 2000proposal.

The final rule establishes a number ofrequirements for producers and handlers oforganic food. These requirements will affectfarming operations, packaging operations,processing operations and retailers. Some ofthe major provisions are: (1) landrequirements, (2) crop nutrient requirements,(3) crop rotation requirements, (4) pestmanagement requirements, (5) livestockmanagement requirements, (6) processingand handling requirements, and (7)commingling requirements.

National List

The National List lists allowed syntheticsubstances and prohibited nonsyntheticsubstances that may or may not be used inorganic production and handling operations.The list identifies those synthetic substances,which would otherwise be prohibited, thatmay be used in organic production based onthe recommendations of the NOSB. Onlythose synthetic substances on the NationalList may be used. The National List alsoidentifies those natural substances that maynot be used in organic production, asdetermined by the Secretary based on theNOSB recommendations.

Testing

When certifying agents have reason tobelieve organic products contain a prohibitedsubstance, they may conduct residue tests.

Labeling

The rule also states how organic productsmay be labeled and permitted uses of theUSDA organic seal. In addition to the USDAseal and the certifying agent’s seal,information on organic food content may bedisplayed. Small businesses that are certifiedmay use the USDA seal.

Recordkeeping

The rule requires certifying agents,producers, and handlers to keep certainrecords. Certifying agents are required to fileperiodic reports with USDA. Producers andhandlers are required to notify and submitreports to their certifying agent. Whilerecordkeeping is a standard practice inconventional and organic farming, the finalrule adds recordkeeping and reportingrequirements that do not exist for growersand handlers operating without certification.Similarly, certifying agents would faceadditional recordkeeping and reportingrequirements, particularly those certifyingagents operating without externalaccreditation. The rule permits certifyingagent logos and requires the name of thecertifying agent on processed organic foods.

Enforcement

Organic operations that falsely sell or labela product as organic will be subject to civilpenalties of up to $10,000 per violation. Theprovisions of the final regulation apply to all



persons who sell, label, or represent theiragricultural product as organic, includingoperations that aren’t certified, and the civilpenalties of up to $10,000 apply to theseoperations as well. Certifying agents, Stateorganic programs’ governing State officials,and USDA will receive complaints allegingviolations of the Act or these regulations. InStates where there is no State organicprogram, USDA will investigate allegations ofviolations of the Act.

Number of Affected Parties and Projections

In assessing the impacts of the rule, wehave attempted to determine the number ofcertifying agents, private and State, that arecurrently operating and considered thefactors likely to affect the number ofcertifying agents after the rule isimplemented. We have attempted todetermine the number of currently operatingproducers and handlers that would beaffected. And, we have considered the factorsthat might affect the number of producersand handlers after the program has beenimplemented.

For the analysis, USDA assumes thefollowing:

1. Forty-nine domestic certifying agentsand ten foreign certifying agents will beaffected by the regulation.

2. Approximately 13,650 certified andnoncertified organic producers will beaffected by the regulation. With the assumedgrowth rate of 14 percent for certified organicproducers and approximately 8 percent fornoncertified organic producers, the numberof organic producers will grow to 17,150 in2002.

3. Approximately 1,600 handlers of organicfood will be affected by the regulation. Thisnumber will grow to 2,250 by 2002.

Certifying Entities

We place the number of certifying agentscurrently operating at 49, including 13 Stateprograms. The number of certifying agentshas remained fairly stable, between 40 and50, for some years, with entries and exitstending to offset each other. For purposes ofestimating the paperwork burden describedelsewhere, we assume no growth in thenumber of domestic certifying agents butproject 10 foreign certifying agents will seekand receive USDA accreditation in the first3 years of the program.

Organic Producers

While some USDA data on the number ofcertified organic producers in the UnitedStates exist, no national data have beencollected on the number of producers thatproduce and market organic goods withoutthird-party certification. Organic farming wasnot distinguished from conventionalagriculture in the last Census of Agriculturein 1997. USDA and Organic FarmingResearch Foundation (OFRF) data were usedin the Regulatory Impact Analysis (RIA) ofthe March 2000 proposed rule to helpestimate the number of certified U.S. growersaffected by the regulation. CaliforniaDepartment of Food and Agriculture (CDFA)data were used to help estimate the numberof uncertified U.S. growers affected by theregulation. All three of these data sourceshave updated their estimates of the number

of certified and uncertified organic producerssince the RIA of the proposed rule waspublished earlier this year. However, theupdated numbers do not indicate trends thatwould fundamentally alter the assumptionsused in the RIA of the proposed rule tocalculate the number of affected growers, andthe estimates made for the March 2000 RIAare retained in this assessment of the finalrule.

USDA datum indicates the average annualgrowth rate in the number of U.S. certifiedorganic growers between 1991 and 1994 wasabout 14 percent (Dunn 1995b). In April2000, USDA’s Economic Research Serviceestimated that 5,021 certified organic growersoperated 1.347 million acres of U.S. farmlandin 1997, indicating that the increase inacreage had outpaced the increase ingrowers, and showing only an 8 percentannual growth rate in growers between 1994and 1997 (Greene, 2000b). However, USDA’sstudy indicated that the pace of growth incertified acreage had quickened considerablysince 1997, with the amount of certifiedacreage increasing 38 to 150 percent between1997 and 1999 by several large certifyingorganizations across the U.S. And a nonprofitorganic research foundation, OFRF, estimatesthat the number of certified organicproducers in the certification organizationsthat they track—the ones that will releasedata to them—grew over 20 percent annuallybetween 1997 and 1999, from 4,638 to 6,600(OFRF 2000). Also, one certifier, WashingtonState, responded to our request for data onthe growth rate, indicating that the numberof certified organic producers has increasedan average of 17 percent per year between1994 and 1999 in that State and noting thatcertification became mandatory by State lawin 1993.

In the March 2000 RIA, USDA estimatedthat the number of certified U.S. organicproducers potentially affected by thislegislation is approximately 9,350 in 2000and will be approximately 12,150 in 2002,based on a straight line projection of the 14-percent annual growth rate trend shown byUSDA data for 1991–1994. The period, 2000–2002, was chosen for analysis because itencompasses both the period of finalrulemaking and the 18-monthimplementation period. Congress passed theOFPA in 1990, and the 14-percent growthrate in certified growers during the 1991–1994 period reflects their expectation thatnational organic regulations wereforthcoming. Since the recent estimates ofindustry growth during the 1990’s are unevenand the actual growth rate in the number ofgrowers who will become certified after thislegislation is implemented is uncertain, theMarch 2000 estimates are retained in thisassessment of the final rule.

The March 2000 RIA also estimated thenumber of producers who are practicingorganic agriculture but who are currentlyuncertified that would be affected by therule. In California, where organic growers arerequired to register with the State but not tobe certified, a large proportion of growers areuncertified. The most recent State data, forthe 1997/98 crop year, indicate that 1,526growers registered as organic, but only 41percent of them obtained third-party

certification (Klonsky et al., 2000). Whileonly a small percentage of growers in thelowest organic sales category (0–$10,000),where the largest number of growers wereclustered, obtained certification, three-quarters or more of the growers earning atleast $50,000 obtained certification, and all ofthe growers in the highest sales class werecertified. USDA did not use the Californiaratios of certified to uncertified growers inthe March 2000 RIA to estimate the numberof uncertified growers because the farmingstructure of California may not berepresentative of the Nation. For example,California sells at least three times morespecialty crops than any other State in theUnited States and has an unusual registrationprogram that many growers use instead ofcertification.

USDA made two assumptions aboutuncertified production for the March 2000estimate. The first assumption was that therate of growth in uncertified production isless than the rate for certified farms becausecertification has value and organic producerswould be expected to take advantage of themarketing advantages of certification. Thisassumption is consistent with California datathat showed an increase in the percent oforganic farmers obtaining certificationbetween 1996/97 and 1997/98 in virtuallyevery sales class (Klonsky et al. 2000).Second, the emergence of State certificationprograms with lower certification fees thanprivate certification entities may haveencouraged more organic producers to becertified. Based on these assumptions, USDAassumed that the number of uncertifiedorganic producers is about 4,300 in 2000 andwill be about 5,000 in 2002, making the totalnumber of farms potentially affected by therule about 13,650 in 2000 and 17,150 in2002.

Organic Handlers

Little information exists on the number oforganic product handlers, such as organicsoup manufacturers, organic food packagingoperations, organic food wholesalers, andfeed millers. USDA has estimated that therewere 600 entities in this category in 1994(Dunn 1995b). AMS estimated that thegrowth rate was 11 percent from 1990through 1994 (Dunn 1995b). More recent datafrom CDFA registration records suggest agrowth rate of about 28 percent (CaliforniaDepartment of Health Services 1999). Forprojection purposes, we use a growth rate of20 percent and estimate there are about 1,600in 2000 and there will be about 2,250handlers in 2002. Reasons for growth includethe general increase in organic productionand growth in the market for processedorganic foods, including multiingredientproducts. Again, these projections are basedon limited data from the early 1990’s, andgrowth may have slowed or increased. Theseestimates of organic product handlers areslightly higher that the estimates made in theMarch 2000 RIA because they include about100 feed millers that were not included inthe earlier calculation.

Retail Food Establishments

Retailers of organic food are grocery stores,bakeries and other establishments that



process or prepare raw and ready-to-eat food.Most are not currently subject to eithervoluntary practices or mandatory standardsof the organic industry. Although they areexcluded from the certification requirementsunder the final rule, they are subject to otherprocessing, handling, and other productionrelated requirements of the final rule. Someof the grocery stores in the United States,particularly the natural foods stores, sellprocessed or prepared organic foods and willbe affected by the these requirements. USDAdoes not have an estimate of the number ofentities affected.

Foreign Entities

In addition to domestic certifying agents,foreign certifying agents may also apply foraccreditation under the NOP. At this time,we have no information regarding thenumber of foreign certifying agents that mayseek USDA accreditation. Foreign applicantswill face the same base costs for accreditationas domestic applicants but the overall levelsof cost are expected to be higher due to thegenerally higher costs of foreign travel andper diem expenses for site evaluation andmiscellaneous costs such as for translation ofdocuments. For purposes of estimating thepaperwork burden described elsewhere, weassume 10 foreign certifying agents will seekand obtain accreditation during the first 3years of the program.

Benefits of the Final RuleThe benefits of implementing national

uniform standards of production andcertification include: (1) Providing a commonset of definitions on organic attributes andstandardizing the manner in which theproduct information is presented, which mayreduce the cost associated with enforcementactions in consumer fraud cases; (2) reducedadministrative costs; and (3) improved accessto organic markets. Not all benefits that mayarise from the rule are quantifiable. Whereeconomic data are available, they may relateto costs and are generally not adequate toquantify economic benefits. The regulatorychanges in the final rule are not expected toreduce the benefits from those describedunder the March 2000 proposed rule.

Information

Potential benefits to consumers as a resultof the final rule include providing a commonset of definitions on organic attributes andstandardizing the manner in which theproduct information is presented. Thisstandardization may reduce the costassociated with enforcement actions inconsumer fraud cases.

Organic products cannot be distinguishedfrom conventionally produced products bysight inspection, and consumers rely onverification methods such as certification toensure that organic claims are true. Self-policing by certifiers of growers and handlersthat are certified has been difficult becausesome certifiers have been under pressure touse weak standards and lax enforcementprocedures in order to keep their producerand processor clients from taking theirbusiness to other certifiers (Scowcroft 1998).

Anecdotal evidence suggests that consumerfraud involving organic food does occur, andseveral States successfully pursued civil and

criminal prosecution of these cases duringthe 1990’s. The Attorney General ofMinnesota successfully prosecuted felonycharges in 1997 against the president ofGlacial Ridge Foods, a wholesale supplier ofbeans and grains, for repackagingconventionally produced product and sellingapproximately $700,000 worth labeled ascertified organic (Mergentime 1997). The SanDiego City Attorney’s office successfullyprosecuted felony charges against PetrouFoods, Inc., an organic oil and vinegardistributor, for misbranding conventionalproduct, based on an investigation by theCalifornia Department of Health Services(Scott 1997). Also the California Departmentof Food and Agriculture conducted spotchecks of 51 uncertified organic growersduring the mid-1990’s, based on complaints,and found 32 violations of California’sorganic standards (Farmers Market Outlook).However, only about half of the States haveany organic legislation, and few of thoseStates have laws with enough teeth to permitprosecution of organic fraud. In Stateswithout similar laws, the costs associatedwith remedies via the tort system may behigh. The NOP established in this final ruleis expected to fill in important State andregional gaps in enforcement in organic fraudcases.

The USDA organic seal will also provideconsumers a quick tool to verify that goodsoffered for sale as organic are in fact organic.

Reduced Administrative Costs

The rule addresses the problem of existingcertifying agents using different standardsand not granting reciprocity to othercertifying agents. By accrediting certifyingagents, the rule establishes the requirementsand enforcement mechanisms that wouldreduce inconsistent certification services andlack of reciprocity between certifying agents.In the current system, the certifying agent ofa final product is not required to recognizethe certification of an intermediate product.Both primary farmers and food handlers mayface a risk of being unable to sell a certifiedorganic product when more than onecertifying agent is involved. By imposing auniform standard of certification andproduction, the costs associated withestablishing reciprocity between certifyingagents will be eliminated, and the marketdampening effects that these costs imposewill be eliminated. Industry-wide trainingcosts may also decrease. USDA’s uniformstandards of production and certificationshould enable organic inspectors to movemore easily from one certifying agent toanother than under the current system.

Domestic and International Markets

The final rule is expected to improveaccess to domestic and foreign markets fororganically produced goods. The currentpatchwork of differing State certificationrequirements and variable State and privatestandards has given producers and handlersuneven access to the domestic organic marketand to the price premiums associated withthis market. Livestock producers, inparticular, may have limited their organicproduction because they lacked access to aState or private organic livestock certification

program or were uncertain about thestandards that would be implemented underthe NOP.

The final rule could also improve access toEU and other foreign markets for U.S. organicproducts. For example, the EU maydetermine that the NOP is acceptable vis-a-vis EU regulation 2092/91. Article 11 of EUReg. 2092/91 establishes the conditionsunder which organic products may beimported from third countries and addressesthe framework for equivalency. The NOP isa national program that should be acceptableto the EU and other governments. Foreignacceptance of the U.S. national standardwould reduce costs of negotiating anddocumenting shipment by shipment.Reducing these transaction costs may reduceentry costs for U.S. producers to foreignorganic markets. These benefits would notaccrue until after negotiations for anequivalency agreement have been held andcompleted successfully, which could be alengthy process.

An estimated 5 percent of total U.S. salesare from exports. Currently, despite restrictedaccess to the European market, the UnitedStates is the most important non-EU supplierof organic products to EU countries (ForeignAgriculture Service (FAS), 1995). Importauthorizations have been granted for anumber of raw and processed commodities,including sunflowers, buckwheat, beans,sugar, and apples. Demand is strongthroughout the European market, and theorganic market share was 1–2 percent of totalfood sales in 1997 (Collins 1999). Medium-term growth rate forecasts range from 5–10percent for Germany to 30–40 percent forDenmark, and is 20–30 percent in most of theEU countries, according to the InternationalTrade Centre UNCTAD/WTO. However, mostanalysts are basing their projected futuregrowth rates on straight-line extrapolations ofcurrent sales and growth rates withoutunderstanding the underlying marketmechanisms and price elasticities (Lohr1998).

Costs of the Final Rule

The costs of the regulation are the directcosts of complying with the specificstandards. It is important to note that whilesome costs associated with accreditation andcertification are quantified, costs stemmingfrom other provisions of the final regulationsare not. In addition, this is a short-runanalysis. The analysis examines the costs thatmay be incurred through 2002. It is notpossible at this time to conduct a longer runanalysis because we do not know enoughabout the fundamental supply and demandrelationships to make economically soundlong-run projections.

Accreditation Costs

USDA has identified 36 private certifyingagents and 13 State programs providingcertification in the United States. These 49entities are considered likely applicantsduring the first 18 months during whichUSDA will not charge application fees orhourly fees for accreditation. An unknownnumber of new entrants to the certifyingbusiness may also apply. However, over thelast 10 years, the number of certifying agents



does not appear to have grown significantly,with the net effect of entries and exitsmaintaining a population of certifying agentsat about 40–50.

The final rule allows USDA to collect feesfrom certifying agents for USDAaccreditation. The first proposal would havepermitted USDA to collect fees fromproducers and handlers as well, but USDAdecided that it would be administrativelysimpler to collect fees only from certifiersand would enable State programs that wantto keep client costs low to be able to do so.

Applicants for accreditation will berequired to submit a nonrefundable fee of$500 at the time of application, which willbe applied to the applicant’s fees for serviceaccount. This means that the $500 fee paidat the time of application is credited againstany subsequent costs of accreditation arisingfrom the initial review and the siteevaluation. The $500 fee is the direct cost toapplicants who are denied accreditationbased on the initial review of the informationsubmitted with their application. Charges forthe site evaluation visit will cover travelcosts from the duty station of USDAemployees, per diem expenses for USDAemployees performing the site evaluation, anhourly charge (per each employee) forservices during normal working hours(higher hourly rates will be charged forovertime and for work on holidays), andother costs associated with providing serviceto the applicant or certifying agent.

At present, the base per diem for places inthe United States is $85 ($55 for lodging and$30 for meals and incidental expenses). Perdiem rates are higher than $85 in most largecities and urbanized places, but over half ofthe current U.S. certifiers are located inplaces that have an $85 per diem rate, andthat is the rate used to calculate averagecertifier expenses in table 3. A review ofdomestic travel by USDA staff during fiscalyear 1999 indicates transportation costsranging from $500 to $600 per person.Miscellaneous costs are estimated to addanother $50 to each site visit.

The hourly rate that USDA anticipatescharging for accreditation is the rate thatUSDA currently charges for services underthe Quality Systems Certification Program(QSCP). Our preliminary estimate that thisrate will be no more than $95 per hour ispresented to give the public some indicationof the rate that will be charged following the18-month transition period. QSCP is anaudit-based program administered by AMS,which provides meat producers, handlers(packers and processors), and otherbusinesses in the livestock and meat tradewith the opportunity to have specialprocesses or documented qualitymanagement systems verified. Theprocedures for accreditation evaluation aresimilar to those used to certify other types ofproduct or system certification programsunder QSCP.

Accreditation will include verification ofadherence to ISO Guide 65 and theregulations. Although much of the siteevaluation for accreditation will involvecomparisons against ISO Guide 65,additional hours will be required becauseUSDA will be evaluating additional aspects

of the applicant’s operation to determine ifthe applicant is qualified to perform as anaccredited agent for the NOP. Based onexperience with the QSCP and more limitedexperience performing audits verifying thatcertifying agents meet ISO Guide 65, weproject that a site evaluation visit for smallapplicants with a simple business structurewill require 3 days of review, and for thoselarge applicants with more complex businessstructure will require 5 days of review.

USDA will use two reviewers for each siteevaluation visit during the 18-monthimplementation period, as well as for newapplicants after that period. One reviewerwill come from the QSCP audit staff and willbe familiar with the ISO Guide 65verification; the other reviewer will comefrom the NOP staff and will be familiar withrequirements of the organic program. Thetwo will conduct the site evaluation jointly.Two reviewers will also be needed for thesite evaluation visits for the accreditationrenewals, which will take place every 5years. In the proposed rule, USDA hadprojected that only one reviewer would beneeded for site evaluations and renewals thattook place after the 18-monthimplementation period but has changed thatprojection based on additional experiencewith the ISO Guide 65 program.

During the 18–month implementationperiod, applicants will be charged for traveland per diem costs for two persons and formiscellaneous expenses but will not becharged application fees or hourly fees. Theestimated expenditures for these initialaccreditations is $1,560–$2,100, with $510–$850 for per diem expenses, $1,000–$1,200for travel expenses, and $50 formiscellaneous expenses (table 3). The cost ofinitial site evaluation visits will vary with thecost of travel from the USDA reviewer’s dutystation to the applicant’s place of business.In general, more distant and remote locationswill involve higher travel costs.

USDA estimates the costs of a siteevaluation visit after the transition periodmay average $6,120–$9,700, depending onthe characteristics of the applicant, including$4,500–$7,600 for the hourly site evaluationcharges that are not billed to the certifierduring the first 18 months (table 3). USDAhas received appropriated funds to pay forthe hourly site evaluation charges onlyduring the first 18 months of the program.

Currently, few private certifying agents areoperating with third-party accreditation.Fetter (1999) reports that in a sample of 18certification programs, four programs wereaccredited, and one had accreditationpending. All of these were large, privatecertifying agents. Those certifying agentscurrently accredited by third parties willlikely pay less for USDA accreditation. In itsfirst proposal, USDA stated at FR 62:65860,‘‘We are aware that certifiers currently maypay in excess of $15,000 for accreditation bya private organization.’’ Commenters thoughtthis figure was too high. One commenter,which operates the International Federationof Organic Agriculture Movements (IFOAM)Accreditation Programme under license toIFOAM, stated, ‘‘It is possible that the largestprogramme operating a chapter system withactivities in many countries (which is

included in their IFOAM evaluation) paidthis amount in their first year. On the otherhand the average cost to a medium sizedcertifier works out at around $3000 to $4000per year.’’ Another commenter stated, ‘‘At thepresent time IFOAM accreditation costs lessthan $10,000/year for the largest certifier and$3–5,000 for smaller certifiers.’’

The 18-month NOP implementation periodaffects the distribution of program costsbetween the organic industry and thetaxpayer. Some of the costs of accreditationwould be absorbed by the NOP operationbudget appropriated by Congress. In effect,the taxpayers are subsidizing the organicindustry. Without this subsidy, the total costof accreditation would approach $1 million.

The direct accreditation costs to anestimated 59 certifying agents (including all49 current U.S. certifiers and an estimated 10foreign certifiers) during the first 18 monthsfollowing the final rule, are approximately$92,000 to $124,000. This figure is derivedfrom the per-firm costs in table 3. In addition,USDA will use appropriated funds to coverapproximately $270,000–$448,000 in hourlycharges for site evaluation. USDA will alsouse appropriated funds to cover the costs ofproducing and publishing an accreditationhandbook in several languages, translatingUSDA reports to foreign clients, anddeveloping and funding a peer review panelto evaluate NOP’s adherence to itsaccreditation procedures. And if more thanthe estimated 59 certifiers apply foraccreditation during the first 18 months ofthe program, USDA will use appropriatedfunds to cover additional hourly charges forsite evaluation.

Private certifying agents and Stateprograms that do not mirror the regulationmay incur additional costs to change theirprograms to adopt the national standards.The discussion on the effect of the regulationon existing State programs is in ‘‘StateProgram Costs.’’ The cost associated withchanging existing private certifying programsis not quantified.

Also, certifying agents who have beenoperating without third party accreditationwill face new costs. For certifying agents whocurrently obtain third-party accreditation, thedirect costs of USDA accreditation, which areonly incurred every 5 years, may be lower onan annual basis compared to the direct costsfor third-party certification of $3,000–$5,000per year indicated by the commenters. Thedirect costs for certifying agents obtainingaccreditation during the first 18 months,when USDA will not impose an applicationfee or hourly charges, will be limited totravel, per diem, and miscellaneousexpenses.

A national accreditation program mayshrink the market for a third-partyaccreditation. Certifying agents will havelittle incentive to maintain or seek a secondaccreditation by a private organization unlessthat accreditation sufficiently enhances themarket value of the certifying agent’sservices. Thus, the market will determinewhether other accrediting entities continue tohave a U.S. market for their services.

Training programs are currently offered bythe Independent Organic InspectorsAssociation (IOIA), an organization of



approximately 165 organic certificationinspectors, and by some of the largercertifying agents (IOIA). Costs to existingcertifying agents to provide additionaltraining to other staff are difficult to measurein the absence of information on current staffskill levels or the existence of formal trainingother than inspector training. Some agenciesrely on volunteer staff who may have had noformal training, but the extent of this practiceis unknown. AMS intends to offer assistanceto certifying agents, producers, and handlersby providing accreditation training forcertification agents and other printedmaterial that would enable participants tobetter understand the regulations. Inaddition, AMS intends to continue open andfrequent communication with certifyingagents and inspectors to provide as muchinformation as possible to aid them infulfilling the requirements of the regulations.

The OFPA requires that private certifyingagents furnish reasonable security for thepurpose of protecting the rights ofparticipants in the organic certificationprogram. It is expected that there will becosts to certifying agents from theserequirements.

Implementation of the final rule will alsoimpose a less tangible cost on some certifiers.Some private certifiers have advertised theirprogram and logo as representing higherstandards than other programs. The brandvalue associated with the logos of thesecertifiers will be lost when uniform standardsare implemented as part of the nationalprogram. However, certifiers will still be ableto distinguish themselves to clients based onthe quality of their services and othercharacteristics.

A key change was made in the final rule,based on comments to the March 2000proposal, to make the standard used bycertifiers to determine maximum allowablepesticide residues (the level above which aproduct could not be called organic)consistent with the current industry standardand with NOSB recommendations. In thefinal rule, the standard will be set at 5percent of the pesticide residue tolerancescalculated by the Environmental ProtectionAgency (EPA). This change couldconceptually reduce costs, but the magnitudeof this reduction is uncertain.

Certification Costs

Under the final rule, USDA will notimpose any direct fees on producers andhandlers. Certifying agents will establish afee schedule for their certification servicesthat will be filed with the Secretary.Certifying agents will provide all personsinquiring about the application process witha copy of their fees. The certifying agent willprovide each applicant with an estimate ofthe total cost of certification and an estimateof the annual costs of updating thecertification. Under the proposed rule,certifiers could charge a maximum of $250 atthe time of application, but under the finalrule, certifiers are not limited in the amountof certification fees that they may charge atthe time of application.

Some States charge minimal fees forcertification by subsidizing operating costsfrom general revenues. The majority of

certifying agents structure their fee scheduleson a sliding scale based on a measure of size,usually represented by the client’s gross salesof organic products but sometimes based onthe acres operated (Fetter 1999 and Graf andLohr 1999). Some certifying agents charge anhourly rate for inspection and audit services.

Graf and Lohr have applied fee schedulesprovided by ten certifying agents to fourhypothetical farms, small, medium, large,and a super farm. Tables 2A and 2Bsummarizes the fees that Graf and Lohr foundby applying schedules of each certifyingagent to hypothetical farms. Total first-yearcosts and subsequent-year (renewal) costs forcertification are shown. The average cost foreach size class should be interpreted withcare because it is not weighted by the numberof clients certified. In their study, the TexasDepartment of Agriculture program is thelow-cost certifying agent for all-sizeoperations. The high-cost certifying agentdiffers across farm sizes. None of thesecertification programs mentions costs forresidue testing, which the NOP will requirein the form of preharvest testing when thereis reason to believe that agricultural productshave come into contact with prohibitedsubstances. Preharvest testing is expected tobe infrequent. Some certifying agentscurrently require soil nutrient testing andwater quality testing. The estimated totalinitial costs for a producer or handler tobecome certified are presented in table 3.

We have not extended the average costsreported in Tables 2A and 2B to aggregatecertification costs for all organic farmsbecause the number of organic farms is notknown with precision, nor is their geographiclocation, and there are no data to distributethe population of organic farms across sizeclasses. The data from California suggest thata large number of small farmers produce andmarket organic goods without third-partycertification, but those data may not berepresentative of the national trend.Although many of the smallest farms wouldqualify for the small farm exemption fromcertification, if consumers accept the labelingpractices required by this final rule, smallfarmers may obtain certification to stay in theorganic market, which may involve somecost.

In response to comments, the March 2000proposal was changed to provide that if aconflict of interest is identified within 12months of certification, the certifying agentmust reconsider the application and mayreinspect the operation if necessary.Additionally, if a conflict of interest isidentified, the certifying agent must refer theoperation to a different accredited certifyingagent. These provisions would likely increasecosts to certifiers; however, the magnitude ofthis increase is unknown.

Production and Handling Costs

Producers and handlers currently active inthe organic industry may bear costs under thenational standards. We believe that whilemost provisions of the program mirrorcurrent industry practices, there are somedifferences. In addition to the cost associatedwith becoming familiar with the nationalprogram, any adjustments stemming fromthese differences will result in costs. These

costs were qualitatively discussed in theMarch 2000 RIA for major provisions of therule and are described below. The March2000 proposal adhered closely torecommendations from the NOSB and largelyreflected current industry standards.Marginal changes have been made in thefinal rule in response to comments on theMarch 2000 proposal. These changes havebeen made in concert with NOSBrecommendations and, in general, have beenmade to clarify or add flexibility to producerand handler provisions or to make thembetter reflect current industry standards.

Producers

Producers of organic food will facenumerous provisions that will regulate theirproduction methods. As indicated in theBaseline section, many of the requirementsare currently followed by certified organicfarmers. Farming operations that are notcertified but are registered with a Stategovernment, such as California, receivecopies of the State laws to which they mustcomply. The costs associated with adjustingto provisions in the final rule may beminimal for certified and State-registeredgrowers but may be more substantial fornoncertified organic producers that do notfollow a specific set of guidelines orregulations. Some organic producers areneither certified nor registered and, therefore,may not practice the requirements in thefinal rule. Major provisions of the final rule—the withdrawal period required for land to befree of prohibited substances, National List,animal drug use, and residue tests—arediscussed to illustrate costs; other provisionsmay also impose additional costs.

A 3-year withdrawal period, during whichprohibited materials cannot be applied to afield to be certified as organic, is currentlyrequired by most private and State organicstandards, and the final rule also specifies a3-year period. The effect of this provision onthe currently certified organic farmingoperations may be minimal, but the effect onfarming operations that are neither certifiednor registered may be significant. Farmingoperations that have completed a 3-yearwithdrawal period will not be affected bythis requirement. To stay in the organicindustry, those who have not completed the3-year period must comply with thisrequirement. They may incur the cost oforganic production for a significant length oftime, yet not be allowed to sell their productsas organic. Hence, some small organicoperations may exit the industry.

The impact of the National List, which listsallowed synthetic substances and prohibitednonsynthetic substances that may or may notbe used in organic production and handlingoperations, will be determined by how thenational standards differ from currentcertification standards and from actualpractice. Lists of approved syntheticmaterials, including soil amendments andpesticides, vary from one certificationprogram to another, but a detailed analysis ofspecific differences in the various existingmaterials lists shows them to be overlappingin most cases with each other and with theNational List. The degree of overlap shouldmitigate the costs for certified operations, but



farming operations, particularly those thataren’t certified, may need to make someadjustments to comply with the list. Theseadjustments will impose costs on theseoperations. The magnitude of the costsresulting from these adjustments is notquantified.

Where livestock standards have beenadopted by existing State programs and byprivate certifying agents, most prohibit theuse of animal drugs except for the treatmentof a specific disease condition, and use ofanimal drugs is generally prohibited within90 days prior to the sale of milk or eggs asorganic. Some State and private certifiersallow the use of animal drugs in animals forslaughter under certain conditions, whileothers prohibit the use of animal drugs. Thestandards in the final rule would prohibit thesale as organic of edible products derivedfrom an animal treated with antibiotics orother unapproved substances. The standardsmay not differ from existing State or privatestandards in prohibiting the use of drugs onhealthy animals. However, the effect of thisprovision may differ among certified andregistered organic farms. The effect on thecertified farming operations is unknown. Weassume that this provision may have costs,but the magnitude of these costs is notquantified.

Additional costs may be imposed byseveral further changes to the March 2000proposal. These changes involve the use oftreated lumber, confinement requirements,and the commercial availability ofingredients in products labeled ‘‘organic.’’

The replacement of lumber treated withprohibited substances that comes into contactwith soil, crops, or livestock under organicmanagement with treated lumber is nowspecifically prohibited in organic systems.Since the use of lumber treated withprohibited substances for the purpose ofpreventing degradation is not a commonpractice in livestock production, thisprohibition is not expected to increaseproducer costs substantially. The exactmagnitude of any increase is uncertain andmainly dependent upon the number ofproducers seeking organic certification thatcurrently use treated lumber in theiroperations and are planning to replace thatlumber.

The confinement provisions in the March2000 proposal have been slightly modified.Access to the outdoors is now an explicitlyrequired element for all organically raisedlivestock. We expect this change to have aminor impact on overall producer costs,since we assume most producers raisingorganic livestock already provide access tothe outdoors. Additionally, the term,‘‘pasture,’’ has been defined to emphasizethat livestock producers must manage theirland to provide nutritional benefit to grazinganimals while maintaining or improving soil,water, and vegetative resources of theoperation. To the extent producers desiringto raise organic livestock do not currentlymanage pasture in this manner, we expectlivestock production costs to increase.

The organic plan now requires usingorganically produced minor agriculturalingredients unless not commerciallyavailable. This applies to the previously

allowed 5-percent nonorganic agriculturaland other ingredients in products labeled‘‘organic.’’ Handlers of organically producedminor ingredients, especially herbs andspices, are likely to benefit from this marketincentive, while producers of nonorganicminor ingredients will likely be adverselyaffected. Producers will also realize a burdenassociated with providing the documentationof commercial availability for ingredients inthe 5-percent component. Since the criteriato determine commercial availability will bedeveloped after additional comments andinformation are considered, the magnitude ofthe cost and benefit implications from thisstandard are currently unquantifiable butwill likely be largely dependent upon thestringency of the developed criteria.

Producers will also have administrativecosts for reporting and recordkeeping,although producers who currently are activein the organic industry already perform mostof these administrative functions, andadditional costs to them would depend uponthe extent to which their current practices aredifferent from the requirements of the finalrule. The annual reporting and recordkeepingburden on producers is estimated at 24 hoursfor certified producers and 1 hour ofrecordkeeping for small producers whochoose to operate as exempt entities and isvalued at $23 per hour.

Other provisions of the final rule, such asthose on residue testing, livestock housingand feed, and health care practices, may varyenough from those followed by some growersthat they may impose costs due to thevariability in current housing, feed, andhealth care practices, but lackinginformation, we have not quantified thesecosts.

There were also several key changes madein the final rule, based on comments to theMarch 2000 proposal, that will add flexibilityto producer standards. A specific type ofproduction facility was required forcomposting manure in the proposal, and thisprovision has been modified to ensure thatmanure is adequately composted whileallowing variation in the type of facility thatis used. Also, the transition period of a dairyoperation to make a whole-herd conversionto organic production has been reduced inorder to make conversion affordable for awider range of dairy farms, including smalleroperations. Finally, the requirement thatslaughter stock sold, labeled, or representedas organic be under continuous organicmanagement from birth was changed torequire continuous organic management fromthe last third of gestation. This change is alsoexpected to provide possible cost savings andadded flexibility for producers.

Handlers

Handlers of organic food are defined andregulated differently across differentcertifying agents and States. Due to thisvariability, handlers may incur some costassociated with complying with therequirements of the regulation. Several keychanges were made in the final rule, basedon comments to the March 2000 proposal, tomake handler standards more consistent withcurrent industry standards. The proposalprohibited the addition of sulfites to wine as

required by OFPA. The statute has beenchanged since March, and the final rule willpermit added sulfites in wine labeled ‘‘madewith organic grapes,’’ consistent withindustry standards and NOSBrecommendations.

Also, the March proposal requiredproducts labeled ‘‘made with organicingredients’’ to have ingredients that were atleast 50 percent organic, and this thresholdhas been raised to 70 percent in the finalrule. Some certifiers set their thresholds at 50percent, others at 70 percent, while othersrestrict labeling to individual ingredientsonly. The international industry standardoutside the United States is set at 70 percent.The threshold is set at 70 percent in the finalrule inresponese to comments received onthe proposal and to be consistent withinternational standards, which will help easeexport of U.S. organic product into thosemarkets. Alternatively, to the extent handlersdo not currently meet the 70-percentthreshold to label products ‘‘made withorganic ingredients,’’ handlers may incuradditional costs to reach the threshold or exitthe industry. The magnitude of those effectsis unknown.

In addition to the labeling requirement, ahandler’s current use of nonsynthetic andsynthetic substances may change in responseto the final rule. The March 2000 proposalprovided for the use of any prohibitedsubstance to prevent or control pests. Thisprovision has been changed to first limit theuse of nonsynthetic and synthetic substancesto substances which are on the National Listbefore allowing the use of any syntheticsubstance. To the extent to which handlersare now required to consider substances onthe National List before using a prohibitedsubstance and these substances on theNational List are priced differently from thesubstance otherwise used, handlers mayincur a change in production costs. Thisrequirement may increase costs on handlers,but the magnitude of this increase isunknown.

In addition, the commercial availabilityrequirement in the final rule, described in theproducer costs section, may also create aburden on handlers to consistently apply thestandard. To the extent to which sourcingorganically produced ingredients in excess of95 percent of the finished product is moreexpensive than sourcing nonorganicallyproduced ingredients, handlers seeking the‘‘organic’’ label for their products will incuradditional costs. As previously described, themagnitude of the cost implications from thisstandard is currently unquantifiable but willlikely be largely dependent upon thestringency of the standard that is developed.

Handlers will also have administrativecosts for reporting and recordkeeping,although handlers who currently are active inthe organic industry already perform most ofthese administrative functions, andadditional costs to them would depend uponthe extent to which their current practices aredifferent from the requirements of the finalrule. The annual reporting and recordkeepingburden on handlers is estimated at 63 hoursfor certified handlers and 1 hour ofrecordkeeping for small handlers who chooseto operate as exempt entities and is valuedat $23 per hour.



Retail Food Establishments

Most retailers are not currently subject toeither voluntary practices or mandatorystandards of the organic industry. Retailersthat have organic processing operations, suchas organic food delis and bakeries, are notrequired to be certified in the final rule.However, retailers will be subject torequirements such as prevention ofcontamination of organic products withprohibited substances, and comminglingorganic with nonorganic products. Obtainingcertification and complying with theseprovisions will incur some cost.

Labeling Costs

Certified handlers will have to complywith requirements regarding the approveduse of labels. In addition, any producers,handlers, and retailers who are not currentlycertified but who package organic productsare also subject to the labeling requirements.The estimated annual cost for handlers todetermine the composition of 20 products tobe reported on labels is $1,647,000. Thisfigure is based on an average of 1 hour perproduct per handler and an hourly cost of$27. Similarly, certified handlers will have todesign their labels to comply with theregulation. This is expected to take 1 hourper label at $27 per hour for a compliancecost of $1,647,000. Total label costs forhandlers are $3.3 million. Any changes toexisting labels and new labels that need toconform to the regulation will incur a cost.The costs associated with these activities arenot quantified. Hence, the lower bound onthe labeling cost is approximately $4 million.

State Program Costs

The national program may imposeadditional costs on States by requiringchanges in their existing programs. The ruleencompasses most of the principles ofexisting State programs. However, there arealso departures.

Where State standards are below Federalstandards or where elements of the Federalstandards are missing from a State program,these States would be required to makechanges in their programs that they mightotherwise not make. Where State programshave standards in addition to the Federalstandards and they are not approved by theSecretary, States also would be required tomake changes in their programs. Stateswithout organic standards or whose currentstandards either would conform to those ofthe national program or would be approvedby the Secretary would not incur additionalcosts resulting from required changes.Currently, USDA cannot predict which Statesmay be required to adjust their existingprograms.

States that conduct certification activitieswill be charged for accreditation, somethingnone of them pay for now. The costassociated with this provision is discussed inthe Accreditation section.

Enforcement costs

Enforcement costs will fall upon USDA’sNOP, States operating State organicprograms, and on State and private certifyingagents. Certifying agents will review clients’operations and will notify clients of

deficiencies. Certifying agents can initiatesuspension or revocation of certification.Certifying agents will be aware of theseoverhead costs, and we assume that they willestablish fee schedules that will cover thesecosts. Actual costs to certifying agents forenforcement activities will depend on thenumber of clients, how well informed clientsare of their obligations, and client conduct.State certifying agents will face the sameobligations and types of costs as privatecertifying agents.

In States operating State organic programs(SOP), State enforcement costs are costsassociated with ensuring that certifiedoperations fulfill their obligations. TheseStates will bear the costs of investigatingcomplaints, monitoring use of the Stateorganic seal and organic labeling, and takingcorrective action when needed. These Stateswill bear costs related to reviewing anapplicant’s or certified operation’s appealand for administrative proceedings. Many ofthese activities are already a routine part ofthe certification program in States that haveprograms, and USDA will fill in gaps inenforcement in States that choose not to haveprograms.

USDA’s enforcement costs are costsassociated with ensuring that certifyingagents fulfill their obligations. In Stateswithout an organic program, USDA will bearthe costs of investigating complaints,monitoring use of the USDA organic seal andorganic labeling, and taking corrective actionwhen needed. USDA will bear costs relatedto reviewing an applicant’s or certified oraccredited operation’s appeal and foradministrative proceedings. USDA expects toeffectively carry out its enforcementresponsibilities using funds that are alreadyallocated for operating the NOP. To theextent to which we did not estimate thelikely noncompliance rate, the costassociated with enforcement remainsunknown.

Reporting and Recordkeeping Costs

The Paperwork Reduction Act of 1995requires an estimate of the annual reportingand recordkeeping burden of the NOP. Theestimated annual reporting andrecordkeeping burden reported isapproximately $13 million. This figureshould be understood within the context ofthe requirements of the Paperwork ReductionAct. The Paperwork Reduction Act requiresthe estimation of the amount of timenecessary for participants to comply with theregulation in addition to the burden theycurrently have. Information gathered by AMSin auditing activities in conjunction with ISOGuide 65 verifications leads us to believe thatthe paperwork burden on current certifyingagents and certified operators will be 10 to15 percent greater than their current businesspractices as a result of this final rule.

Certifying Agents. The regulation willimpose administrative costs on certifyingagents for reporting and recordkeeping. Theactual amount of the additionaladministrative costs that would be imposedby the rule is expected to be different forthose entities that would begin theiractivities only after the national program isimplemented. Certifying agents that currently

are active in the organic industry alreadyperform most of these administrativefunctions; therefore, the additional costs tothem would depend upon the extent towhich their current practices are differentfrom the requirements of the regulation. Anestimate of the cost of compliance is theannual reporting and recordkeeping burdendocumented in the Paperwork Reduction Actof 1995 analysis. Table 4 shows the estimatedannual costs for certifying agents. Certifyingagencies each have an estimated burden of1,068 hours valued at roughly $27,729.

The following list describes several of themost significant administrative requirementsor optional submissions and the probableresources required for compliance. Details onthe reporting and recordkeeping burdensestimated for each item are in the paperworkanalysis.

1. A list of farmers, wild-crop harvesters,and handlers currently certified. Thisinformation can be compiled from existingrecords. After implementation, certifyingagents will be required to submit on aquarterly basis a list of operations certifiedduring that quarter.

2. A copy of procedures used forcertification decisions, complying withrecordkeeping requirements, maintainingconfidentiality of client’s business-relatedinformation, preventing conflicts of interest,sampling and residue testing, training andsupervising personnel, and public disclosureof prescribed information concerningoperations they have certified and laboratoryanalyses. These policies may have to becreated or modified to conform to theregulation.

3. Documentation on the qualifications ofall personnel used in the certificationoperation, annual performance appraisals foreach inspector and personnel involved in thecertification, and an annual internal programevaluation. Existing certifying agents mayalready perform these operations. Newcertifying agents will have to establishprocedures to achieve these things.

4. Documentation on the financial capacityand compliance with other administrativerequirements (e.g., fee structure, reasonablesecurity to protect the rights of the certifyingagent’s clients as provided in the NOP, andbusiness relationships showing absence ofconflicts of interest). Some of thisinformation can be compiled from existingrecords, e.g., fee schedules, and some may begenerated from other sources.

5. Copies must be submitted to USDA ofall notices that are issued on certificationdenial, noncompliance, and suspension orrevocation of certification. This requirementwill be fulfilled simultaneously with sendingnotices to applicants or clients.

6. An annual report to the Administratorincluding an update of previously submittedbusiness information, information supportingany requested changes in the areas ofaccreditation, and steps taken to respond topreviously identified concerns of theAdministrator regarding the certifying agent’ssuitability for continued accreditation. Theannual report requirement will draw onrecords created in the normal course ofbusiness.

7. Retention of records created by thecertifying agent regarding applicants and



certified operations for not less than 10 years,retention of records obtained from applicantsand certified operations for not less than 5years, and retention of other records createdor received for USDA accreditation for notless than 5 years. This activity requiresrecords, database management capabilities,and resources (storage space, file cabinets,electronic storage, etc.). In an informalinquiry, AMS found that most existingcertifying agents currently retain records forat least 10 years and use both electronic andpaper storage. We believe that thisrequirement will not pose an additionalburden on existing certifying agents.

8. Public access to certification records,such as a list of certified farmers andhandlers, their dates of certification, productsproduced, and the results of pesticide residuetests. This requirement will have minimalimpact given the requirements for retainingrecords.

9. Providing program information tocertification applicants. To comply with thisrequirement, certifying agents may need tomodify existing standards and practices. Thecriteria for qualified personnel in the rulemay likely result in an increase in labor costsfor some existing certifying agents and,initially, an increase in training costs. Theamount of additional costs to these certifyingagents would depend on the level ofexpertise among current certification agencystaff, the extent to which certifying agentscurrently rely on volunteers, and the currentcosts of training certification staff.

Producers and Handlers. The regulationwill impose administrative costs onproducers and handlers for reporting andrecordkeeping. The actual amount of theadditional administrative costs that would beimposed by the final rule is expected to bedifferent for those entities that would begintheir activities only after the nationalprogram is implemented. Producers andhandlers who currently are active in theorganic industry already perform most ofthese administrative functions; therefore, theadditional costs to them would depend uponthe extent to which their current practices aredifferent from the requirements of the finalregulation. An estimate of the cost ofcompliance is the annual reporting andrecordkeeping burden documented in thePaperwork Reduction Act of 1995 analysis.

The following list describes severaladministrative requirements or optionalsubmissions and the probable resourcesrequired for compliance.

1. Establish, implement, and updateannually an organic production or handlingplan. Organic plans are a standard feature inthe organic industry and are required bycertifying agents. Thus, producers andhandlers who are already involved inorganics can rely on their current plan withrevisions as needed to meet elements of thenational program which are new to them ordiffer from their current practice. Althoughproducers and handlers are generally awareof the goals of organic plans, current practicemay fall short of the rigor that will berequired by the national program. Newproducers and handlers will have highercosts because they will have to prepare aplan from scratch.

2. Maintain records pertaining to theirorganic operation for at least 5 years andallow authorized representatives of theSecretary, the applicable State organicprogram’s governing State official, and thecertifying agent access to records. Existingorganic producers and handlers maintainrecords. New producers and handlers willhave to develop records systems. Access isexpected to be infrequent, will require littletime of the certified entity, and will notrequire buildings or equipment other thanwhat is required for storing records.

3. Notify the certifying agent as required(e.g., when drift of a prohibited substancemay have occurred) and complete astatement of compliance with the provisionsof the NOP. Notifications are expected to beinfrequent.

The total reporting burden includescreation and submission of documents. Itcovers the greatest amount of reportingburden that might occur for any singlecreation or submission of a document duringany one of the first 3 years following programimplementation; i.e., 2000, 2001, and 2002.The total estimated reporting burden reflectsthe average burden for each reporting activitythat might occur in 1 year of this 3-yearperiod.

The total recordkeeping burden is theamount of time needed to store and maintainrecords. For the purpose of measuring therecordkeeping burden, the year 2002 is usedas the reporting year for which the largestnumber of records might be stored andmaintained.

The annual reporting and recordkeepingburden on producers, handlers, andcertifying agents is summarized in table 4.The annual burden on certified producers isestimated at 24 hours and $552. Certifiedhandlers have an estimated burden of 63hours valued at $1,449. The burden on smallproducers and handlers who choose tooperate as exempt entities is minimal, 1 hourof recordkeeping valued at $23. If this costis applied to the total estimated number ofaffected producers, the reporting andrecordkeeping cost would be $5,260,100 in2000 and $6,835,554 in 2002. By applyingthis cost figure to the estimated total numberof affected handlers, the reporting andrecordkeeping cost would be $2,143,002 in2000 and $3,013,552 in 2002.

Barriers to Entry—Importers of OrganicProducts

Currently, there are no Federal restrictionson importing organic products to the UnitedStates in addition to those regulationsapplying to conventional products. If theimposition of the NOP decreases theimportation of organic food into the UnitedStates, then this regulatory action may resultin some cost.

Small Business Ramifications

USDA’s final rule has an 18-month periodduring which applicants for accreditationwould not be billed for hourly services. Therationale for this transition period is toreduce the costs to certifying agents and,thus, increase the prospect that certifyingagents, producers, and handlers will be ableto afford to participate in the national

program. The choice of 18 months isintended to provide sufficient time for partiesdesiring accreditation to submit theirapplication and prepare for a site evaluation.

USDA will operate the program partiallywith appropriated funds, in effect sharing thecost of the program between taxpayers andthe organic industry, to respond to publicconcerns regarding the effects of theregulation on small businesses. Thousands ofcomments were received opposing the firstproposal’s fee provisions with most focusingon the substantial impact on small certifyingagents.

Congress has expressed public policyconcern with the impacts of regulations onsmall entities generally and with the impactson the NOP regulations on small entitiesparticularly. The Small Business RegulatoryEnforcement Fairness Act of 1996 and theRegulatory Flexibility Act expressCongressional concern regarding regulatoryburden on small businesses. The Report fromthe Committee on Appropriations regardingthe Agriculture, Rural Development, Foodand Drug Administration, and RelatedAgencies Appropriations Bill, 2000, includesthe following language (U.S. Senate 1999):

‘‘The Committee continues to recognize theimportance of organic markets for smallfarmers and fishermen. The Committeeexpects the Secretary to construct a nationalorganic program that takes into considerationthe needs of small farmers and fishermen.* * * Furthermore, the Committee expectsthat of the funding available for the NationalOrganic Program, necessary funds should beused to offset the initial costs of accreditationservices, a subsidy necessary due to the lackof expertise in the Department of Agriculturein the areas of organic accreditation andinsufficient data on the industry.’’

Certifying agents applying for accreditationduring the first 18 months following the finalregulation will face lower direct costs thansubsequent applicants. The cost for laterapplicants for accreditation will be higherbecause they will have to pay a $500application fee and hourly charges forcompleting their site evaluation. Therequirement for accreditation was establishedin the OFPA in 1990 and the accreditationprogram was part of the 1997 proposal.Because in this final rule, USDA is usingappropriated funds to cover some of the costsof initial accreditation during the first 18months of the program, certifying agents mayset lower fees initially benefiting theproducers and handlers who are certifiedduring this period.

It is important to note that many smallorganic operations may not be certifiedcurrently. In California, for example, manysmall farms are registered but not certified.Even if certifying agents pass on the costsavings of the 18-month period provision toapplicants for certification, the cost ofcertification may be higher than the cost ofregistration. Hence, becoming a certifiedoperation for small organic producers andhandlers may be more costly than the currentpractices.

The costs imposed on small operationsmay be mitigated by a $5000 certificationexemption to aid the smallest organicoperations. However, these operations are



still subject to other requirements of theregulation. To the extent that theserequirements differ from their currentpractices, complying with the nationalstandards may be costly for exemptoperations.

In addition, the certification exemptionallowed under the regulation includes limitson what an exempt operation may do.Without the certification, small organicoperations may not display the USDA sealand may not use a certifying agent’s seal. Ifthe consumers of organic food view the sealsas important information tools on organicfood; that is, if consumers of organicproducts insist on only certified organicproducts, the inability of small operations todisplay these seals may prevent them fromrealizing the price premiums associated withcertified organic products.

Industry Composition

The imposition of the national standardsmay change the composition of the organicindustry. Even with the small businessexemptions, some small organic operationsmay choose to exit the industry, and smallorganic operations may also be discouragedfrom entering the industry, resulting in ahigher concentration of larger firms. On theother hand, it may be easier for smalloperations to comply with certain NOPstandards, such as the livestock standardsthat prohibit confinement productionsystems and require 100 percent organic feed.And State and Federal certification andconservation cost-share programs and othergovernment programs may help lower theimpact on small producers.

References

Byng, John. 1994. UK and EuropeanCommunity (EC) Legislation. InHandbook of Organic Food Processingand Production. Simon Wright (ed.). pp.17–30. Glasgow: Blackie Academic andProfessional.

California Department of Health Services(DHS). 1999. Report on the Registrationof California Organic Processed FoodFirms. Sacramento: State of California.September 1999. Figures obtained viapersonal communication with DHS.

California Department of Health Services.1995. Report on the Registration ofCalifornia Organic Processed FoodFirms. Sacramento: State of California.

Collins, Shane. 1999. ‘‘Rosy future forecastfor Europe’s organic market,’’ EurofruitMagazine, September.

Dunn, Julie Anton. 1995a. Organic Food andFiber: An Analysis of 1994 CertifiedProduction in the United States. U.S.Department of Agriculture, AgriculturalMarketing Service. Dunn, Julie Anton.1995b. ‘‘Organic Foods Find Opportunityin Natural Foods Industry,’’ FoodReview, Vol. 18, Issue 3, Sep.-Dec.

Dunn, Julie Anton. 1997. AgriSystemsInternational Reports Certified Organicproduction in the United States: Half aDecade of Growth. AgriSystemsInternational: Wind Gap, PA. Emerich,Monica. 1996. Industry Growth: 22.6%.Natural Foods Merchandiser (June): 1–39. Farmers Market Outlook. 1996.

‘‘Waiting for Organic Inspections,’’September-October issue.

Farmers Market Outlook. Various issues.www.seasonalchef.com/orgnews1.htm.

Fetter, Robert T. 1999. Economic Impacts ofAlternative Scenarios of OrganicProducts Regulation. Senior HonorsThesis. University of Massachusetts,Amherst, MA.

Fuchshofen, Winfried and Silke Fuchshofen.2000. ‘‘Export Study for U.S. OrganicProducts into Asia and Europe,’’ DraftReport, Organic Insights, Inc.

Graf, Anita and Luanne Lohr. 1999.‘‘Analysis of certification programcosts,’’ Working Paper, Fund for RuralAmerica project, Market Developmentfor Organic Agriculture Products, GrantNo. 97–36200–5.

Greene, Catherine. 2000a. ‘‘U.S. OrganicFarming,’’ USDA, Economic ResearchService Issues Center, www.ers.usda.gov.

Greene, Catherine. 2000b. ‘‘U.S. OrganicAgriculture Gaining Ground,’’ EconomicResearch Service, U.S. Department ofAgriculture, Agricultural Outlook, AGO–270, April.

Hammitt, James K. 1990. Risk Perceptionsand Food Choice: An ExploratoryAnalysis of Organic—VersusConventional-Produce Buyers. RiskAnalysis, Vol. 10, No. 3: 367–374.

Hammitt, James K. 1993. ConsumerWillingness to Pay to Avoid PesticideResidues. Statistica Sinica, 3.

Independent Organic Inspectors Association.1996. IOIA 1996 Membership Directory.Winona, MN.

International Trade Centre UNCTAD/WTO.1999. Organic Food and beverages:World Supply and Major EuropeanMarkets. Geneva: ITC, xiv, 271 p.

Jolly, Desmond A., Howard G. Schutz,Katherine V. Diaz-Knauf, and JagjeetJohal. 1989. Organic Foods: ConsumerAttitudes and Use. Food Technology(November): 60–66.

Jolly, Desmond A. 1991. Differences BetweenBuyers and Nonbuyers of OrganicProduce and Willingness to Pay OrganicPrice Premiums. Journal of Agribusiness(Spring): 97–111. Kaufman, Phil. 1998.‘‘Natural Foods Supermarkets Gaining inPopularity,’’ Economic Research Service,U.S. Department of Agriculture,FoodReview, Volume 21, Issue 3,September-December.

Klonsky, Karen and Laura Tourte. 1995.Statistical Review of California’s OrganicAgriculture, 1992–93. Report preparedfor the California Department of Foodand Agriculture Organic Program.Cooperative Extension, Department ofAgricultural Economics, University ofCalifornia, Davis.

Klonsky, Karen and Laura Tourte. 1998a.Statistical Review of California’s OrganicAgriculture, 1992–95. Report preparedfor the California Department of Foodand Agriculture Organic Program.Cooperative Extension, Department ofAgricultural Economics, University ofCalifornia, Davis.

Klonsky, Karen and Laura Tourte. 1998b.Organic Agricultural Production in theUnited States: Debates and Directions.

Amer. J. Agr. Econ. Vol. 80, No. 5: 1119–1124.

Klonsky, Karen, Laura Tourte, Robin Kozloff,and Benjamin Shouse. 2000. StatisticalReview of California OrganicAgriculture, 1995–98, forthcoming.

Lohr, Luanne. 1998. Implications of OrganicCertification for Market Structure andTrade. Amer. J. Agr. Econ. Vol. 80, No.5: 1125–1129.

Mergentime, Ken. 1997. ‘‘Organic Fraud CaseDeepens; Possible Link Causes OCIATurmoil,’’ the Natural FoodsMerchandiser, March.

Mergentime, Ken and Monica Emerich. 1995.Organic Sales Jump Over $2 Billion Markin 1994.

Natural Foods Merchandiser (June): 74–76.Mergentime, Ken and Monica Emerich. 1996.

Widening Market Carries Organic Salesto $2.8 Billion in 1995. Natural FoodsMerchandiser (June): 36–38.

Misra, Sukant, Chung L. Huang, and StephenL. Ott. 1991. Georgia Consumers’Preference for Organically Grown FreshProduce. Journal of Agribusiness (Fall):53–65.

National Commission on Small Farms. 1998,A Time to Act: A Report of the USDANational Commission on Small Farms,Miscellaneous Publication 1545, January.

Natural Foods Merchandiser. 1995. OrganicUpdate: Reciprocity ControversiesIntensify, Exacerbating Certifier/Manufacturer Tensions. April.

Organic Farming Research Foundation. 1999.Final Results of the Third BiennialNational Organic Farmers’ Survey. E.Walz, Program Coordinator. Santa Cruz,CA.

Organic Farming Research Foundation. 2000.‘‘Organic Certifiers Directory,’’ on-linepublication, www.ofrf.org.

Park, Timothy A. and Luanne Lohr. 1996.Supply and Demand Factors for OrganicProduce. American Journal ofAgricultural Economics, Vol. 78(August): 647–655.

Scott, Mary. 1997. ‘‘Olive Oil CompanyAccused of Fraud,’’ Natural FoodsMerchandiser, December.

Scott, Mary. 1997. ‘‘OFMA Activists UrgeStates to Enact Organic Laws,’’ NaturalFoods Merchandiser, May.

Scowcroft, Bob. 1998. ‘‘Organic Standardsand Enforcement: The Public’s Right toKnow,’’ Organic Farming ResearchFoundation, Information BulletinNewsletter, Number 5, Summer Issue.

Thompson, Gary D. 1998. Consumer Demandfor Organic Foods: What We Know andWhat We Need to Know. Amer. J. Agr.Econ. Vol. 80, No. 5: 1113–1118.

Underhill, S. E. and E. E. Figueroa. 1993.Consumer Preferences for Non-Conventionally Grown Produce. Paperpresented at the Valuing Food Safety andNutrition Conference, organized by theNE–165 Regional Research Project.Alexandria, VA, June 2–4.

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Report from Germany. Code 24,Sequence No. 011.

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and Drug Administration, and RelatedAgencies Appropriation Bill 2000.Committee on Appropriations. Page 56.

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TABLE 1.—U.S. ORGANIC PRODUCT SALES, 1990–99($ billions)

Year Export DirectExport/direct

subtotal

Massmarket

Naturalfoodsstores

Naturalfoodsstores

(1999 $)

Total sales Total sales(1999 $)

1990 ............................................... .................. .................. .................. .................. .................. .................. 1 1.271991 ............................................... 0.04 0.27 0.31 0.09 0.85 1.04 1.25 1.531992 ............................................... 0.07 0.32 0.39 0.12 1.03 1.22 1.54 1.831993 ............................................... 0.11 0.36 0.47 0.14 1.29 1.49 1.90 2.191994 ............................................... 0.20 0.39 0.60 0.17 1.54 1.73 2.31 2.601995 ............................................... 1 1 0.71 0.21 1.87 2.04 2.79 3.051996 ............................................... .................. .................. 1 1 1 1 3.5 3.721997 ............................................... .................. .................. .................. .................. 2 .................. .................... ..................1998 ............................................... .................. .................. .................. .................. 3.28 3.35 .................... ..................1999 ............................................... .................. .................. .................. .................. 4.00 4.00 .................... ..................

Source: Natural Foods Merchandiser, New Hope Communications.—= Not reported.1 New Hope Communications reported a combined estimate for export and direct sales in 1995 and reported a different set of subcategories in

1996 and has reported only on sales in natural foods stores since 1996.2 New Hope Communications did not estimate natural product store sales in 1997, but the Hartman Group estimated these sales at $4.9

billion.

TABLE 2A.—FIRST-YEAR CERTIFICATION COSTS, FROM GRAF AND LOHR ANALYSIS

(dollars)

Certifying agent Small farm Mediumfarm Large farm Super farm

CCOF ............................................................................................................................... 850 1,750 4,850 51,250FVO .................................................................................................................................. 698 1,737 5,214 51,550FOG ................................................................................................................................. 810 1,860 4,860 51,210NOFA–VT ........................................................................................................................ 335 535 585 585NC/SCS ........................................................................................................................... 700 900 1,000 2,000OGBA ............................................................................................................................... 1,290 3,300 12,300 33,296OTCO-In .......................................................................................................................... 608 1,603 2,517 150,300OTCO-Out ........................................................................................................................ 768 1,698 2,852 12,052OCIA–WI .......................................................................................................................... 315 1,590 6,090 75,090OCIA–VA ......................................................................................................................... 258 320 495 1,745TDA .................................................................................................................................. 90 155 200 575WSDA .............................................................................................................................. 480 1,555 3,040 12,480

Average cost ............................................................................................................. 579 1,414 3,623 33,276

Notes:CCOF—California Certified Organic FarmersFVO—Farm Verified OrganicFOG—Florida Certified Organic Growers & ConsumersNOFA–VT—Northeast Organic Farming Association—VermontNC/SCS—NutriClean/Scientific Certification SystemsOBBA—Organic Growers and Buyers AssociationOTCO–In—Oregon Tilth Certified Organic, inside OregonOTCO–Out—Oregon Tilth Certified Organic, outside OregonOCIA–WI—Organic Crop Improvement Association, Wisconsin chapterOCIA–VA—Organic Crop Improvement Association, Virginia chapterTDA—Texas Department of AgricultureWSDA—Washington State Department of AgricultureSmall farm—25 acres with annual sales of $30,000.Medium farm—150 acres with annual sales of $200,000.Large farm—500 acres with annual sales of $800,000.Super farm—3,000 acres with annual sales of $10,000,000.



TABLE 2B.—SUBSEQUENT-YEAR CERTIFICATION COSTS, FROM GRAF AND LOHR ANALYSIS

(dollars)

Certifying agent Small farm Mediumfarm Large farm Super farm

CCOF ............................................................................................................................... 425 1,300 4,350 50,550FVO .................................................................................................................................. 510 1,499 4,851 51,187FOG ................................................................................................................................. 325 845 2,525 25,525NOFA–VT ........................................................................................................................ 300 500 550 550OTCO–In .......................................................................................................................... 454 1,611 2,362 11,363OTCO–Out ....................................................................................................................... 424 1,353 2,207 11,208OCIA–WI .......................................................................................................................... 290 1,565 6,065 75,065OCIA–VA ......................................................................................................................... 233 295 470 1,720TDA .................................................................................................................................. 90 155 200 515WSDA .............................................................................................................................. 330 1,375 2,800 12,000NC/SCS ........................................................................................................................... 700 900 1,000 2,000

Average cost ............................................................................................................. 371 1,036 2,489 21,971

Notes:CCOF—California Certified Organic FarmersFVO—Farm Verified OrganicFOG—Florida Certified Organic Growers & ConsumersNOFA–VT—Northeast Organic Farming Association—VermontNC/SCS—NutriClean/Scientific Certification SystemsOBBA—Organic Growers and Buyers AssociationOTCO–In—Oregon Tilth Certified Organic, inside OregonOTCO–Out—Oregon Tilth Certified Organic, outside OregonOCIA–WI—Organic Crop Improvement Association, Wisconsin chapterOCIA–VA—Organic Crop Improvement Association, Virginia chapterTDA—Texas Department of AgricultureWSDA—Washington State Department of AgricultureSmall farm—25 acres with annual sales of $30,000.Medium farm—150 acres with annual sales of $200,000.Large farm—500 acres with annual sales of $800,000.Super farm—3,000 acres with annual sales of $10,000,000.

TABLE 3.—COSTS OF ACCREDITATION AND CERTIFICATION

Estimated costs to certifying agents during first 18 months

Application fee 1 ............................................................................................................................... $0.Site evaluation costs (two person team):

Per diem (3 to 5 days at $85/day) ........................................................................................... $510 to $850.Travel (domestic) ...................................................................................................................... $1,000 to $1,200.Hourly charges (not billed during the first 18 months) ............................................................ $0.Miscellaneous charges (copying, phone, and similar costs) ................................................... $50.

Total .................................................................................................................................. $1,560 to $2,100.

Estimated costs to certifying agents for initial accreditation after first 18 months

Site evaluation costs (two person team):Per diem (3 to 5 days) ............................................................................................................. $510 to $850.Travel (domestic) ...................................................................................................................... $1,000 to $1,200.Hourly charges (24 to 40 hours at $95/hour) .......................................................................... $4,560 to $7,600.Miscellaneous charges (copying, phone, and similar costs) ................................................... $50.

Total .................................................................................................................................. $6,120 to $9,700.Annual review fees for certifying agents (2 to 8 hours at $95/hour) 2 .............................. $190 to $760.

Estimated costs to producers for certification 3

Certification fee (renewals) .............................................................................................................. $730.

Estimated costs to handlers for certification 4

Certification fee (initial certification) ................................................................................................ $2,337.Certification fee (renewals) .............................................................................................................. $1,665.

1 Nonrefundable fee that will be applied to the applicant’s fee-for-service account.2 Certifying agents are required to submit annual reports to USDA. Review of these reports is expected to range from 2 to 8 hours at an ap-

proximate rate of $95 per hour.3 Estimated certification fees are calculated from Graf and Lohr 1999 which, for a selection of certification agents, provides certification costs

for four hypothetical farm sizes: (1) small farm (family farm): 25 acres, $30,000 annual sales, 5 hours to certify; (2) medium farm (cottage indus-try): 150 acres, $200,000 annual sales, 6 hours to certify; (3) large farm (commercial farm): 500 acres, $800,000 annual sales, 8 hours to certify;and (4) super farm: 3,000 acres, $10,000,000 annual sales, 16 hours to certify. Our estimated certification fees only include those charged forsmall and medium farms because most organic producers fall into these categories as defined by Graf and Lohr. In the 1997 OFRF survey, 90percent of respondents had gross organic farming income of less than $250,000, with 82 percent less than $100,000.



The average current certification cost for most organic producers is about $1,025 for the first year of certification ($579 for small and $1,414 formedium farms) and about $705 for subsequent years ($371 for small and $1,036 for medium farms). Approximately $25 is added to cover thecosts associated with the National Organic Program for an estimated first-year certification fee of $1,000 and subsequent-year certification fee of$730 for producers. Larger producers could expect higher fees.

4 Because Graf and Lohr do not estimate certification fees for handlers, we estimate these fees by applying a ratio of handler-to-producer cer-tification fees from the regulatory impact assessment from 1997. The ratio is 2:28 and results in estimated fees of $2,337 and $2,665,respectively.

TABLE 4.—ESTIMATED ANNUAL REPORTING AND RECORDKEEPING BURDEN

Type of respondentAnnual hourly

perrespondent

Hourly rate Annual cost

Certified producer .............................................................................................................................. 24 $23 $552Certified handler ................................................................................................................................ 63 23 1,449Exempt producers and handlers ....................................................................................................... 1 23 23Certifying agency ............................................................................................................................... 1,068 27 27,729

Note: Estimates derived from Paperwork Reduction Act of 1995 analysis.

Appendix B—Unfunded MandatesReform Act

This rule has been reviewed under theUnfunded Mandates Reform Act (Pub. L.104–4). The Act requires that agenciesprepare a qualitative and quantitativeassessment of the anticipated costs andbenefits before issuing any rule that mayresult in annual expenditures by State, local,and tribal governments, in the aggregate, orby the private sector of $100 million(adjusted annually for inflation) in any 1year. According to the Act, the term, ‘‘Federalmandate,’’ means any provision inlegislation, statute, or regulation that wouldimpose an enforceable duty upon State, local,or tribal governments or the private sector,except a duty arising from participation in avoluntary Federal program.

The National Organic Foods ProductionAct (OFPA) of 1990 mandates that theSecretary develop a national organic programto accredit eligible governing State officialsor private persons as certifying agents whowould certify producers or handlers ofagricultural products that have beenproduced using organic methods as providedfor in the OFPA. The OFPA also permits agoverning State official to voluntarilyestablish a State organic program (SOP) if theprogram is approved by the Secretary andmeets the requirements of the OFPA. TheOFPA does not require that States establishtheir own SOP’s or that State, local, or tribalgovernments or the private sector becomeaccredited; therefore, the OFPA is not subjectto the Unfunded Mandates Reform Actbecause it is a voluntary program.

Although the U.S. Department ofAgriculture has determined that this rule isnot subject to the Unfunded MandatesReform Act, USDA has sought to consider therule’s impact on various entities. USDAprepared a Regulatory Impact Assessment(RIA) that is discussed in the section entitled‘‘Executive Order 12866’’ (also attached as anappendix to this regulation). The RIAconsists of a statement of the need for theaction, an examination of alternativeapproaches, and an analysis of the benefitsand costs. Much of the analysis is necessarilydescriptive of the anticipated impacts of therule. Because basic market data on the pricesand quantities of organic goods and servicesand the costs of organic production are

limited, it is not possible to providequantitative estimates of all benefits andcosts of the rule. The cost of fees andrecordkeeping required by USDA arequantified, but the anticipated benefits arenot. Consequently, the analysis does notcontain an estimate of net benefits.

The analysis employed in reaching adetermination that this rule is the least costlyand least burdensome to the regulated partiesis discussed in the sections entitled ‘‘TheRegulatory Flexibility Act and the Effects onSmall Businesses’’ and ‘‘PaperworkReduction Act of 1995.’’ The rule has beendesigned to be as consistent as possible withexisting industry practices, while satisfyingthe specific requirements of the OFPA.

We have had numerous occasions duringwhich to communicate with various entitiesduring the development of the rule; States,for example. Currently, there are 32 Stateswith some standards governing theproduction or handling of organic food and13 States with organic certifying programs.Representatives of State governments haveparticipated in public meetings with theNational Organic Standards Board, while theNOP staff has made presentations, receivedcomments, and consulted with States andlocal and regional organic conferences,workshops, and trade shows. States havebeen actively involved in training sessionsfor organic inspectors; public hearingsconcerning standards for livestock productsduring 1994; a national Organic Certifiersmeeting on July 21, 1995; a USDA-hostedmeeting on February 26, 1996; a Statecertifiers meeting in February 1999; and anInternational Organization forStandardization (ISO) 65 assessment trainingsession for certifiers in April-May 1999. Moredetail about contact with States regardingthis rule is in the Federalism section. It isunknown at this time how many States, ifany, might voluntarily establish their ownSOP’s pursuant to the OFPA and theregulations.

Appendix C—Final RegulatoryFlexibility Analysis

The Regulatory Flexibility Act (5 U.S.C.601 et seq.) requires agencies to consider theeconomic impact of each rule on smallentities and evaluate alternatives that wouldaccomplish the objectives of the rule without

unduly burdening small entities or erectingbarriers that would restrict their ability tocompete in the market. The purpose is to fitregulatory actions to the scale of businessessubject to the action.

1. Need for and objectives of the NationalOrganic Rule.

Currently, organic certification is voluntaryand self-imposed. Members of organicindustries across the United States haveexperienced numerous problems marketingtheir organically produced and handledagricultural products. Inconsistent andconflicting organic production standards mayhave been an obstacle to the effectivemarketing of organic products. There arecurrently 36 private and 13 State organiccertification agencies (certifying agents) inthe United States, each with its ownstandards and identifying marks.

Some existing private certifying agents areconcerned that States might imposeregistration or licensing fees which wouldlimit or prevent private certification activitiesin those States. Labeling problems haveconfronted manufacturers of multiingredientorganic food products containing ingredientscertified by different certifying agentsbecause reciprocity agreements have to benegotiated between certifying agents.Consumer confusion may exist because of thevariety of seals, labels, and logos used bycertifying agents and State programs. Also,there is no industrywide agreement on anaccepted list of substances that should bepermitted or prohibited for use in organicproduction and handling. Finally, a lack ofnational organic standards may inhibitorganic producers and handlers in taking fulladvantage of international organic marketsand may reduce consumer choices in thevariety of organic products available in themarketplace.

To address these problems in the late1980’s, the organic industry attempted toestablish a national voluntary organiccertification program. At that time, theindustry could not develop consensus on thestandards that should be adopted, soCongress was petitioned by the OrganicTrade Association to establish nationalstandards for organic food and fiber products.

In 1990, Congress enacted the OrganicFoods Production Act of 1990, as amended(7 U.S.C. 6501 et seq.) (OFPA). The OFPA



requires all agricultural products labeled as‘‘organically produced’’ to originate fromfarms or handling operations certified by aState or private agency that has beenaccredited by USDA.

The purposes of the OFPA, set forth insection 2102 (7 U.S.C. 6501), are to: (1)Establish national standards governing themarketing of certain agricultural products asorganically produced products; (2) assureconsumers that organically producedproducts meet a consistent standard; and (3)facilitate commerce in fresh and processedfood that is organically produced. TheNational Organic Program (NOP) is the resultof the OFPA.

Recently, the Organic Trade Associationpublished American Organic Standards,Guidelines for the Organic Industry (AOS).However, not all participants in the organicindustry elected to participate in developingthe AOS. Many certifying agents preferred towait for implementation of the nationalstandards, and some certifying agentsdisagree with portions of the AOS. For thesereasons, USDA will implement a regulationfor the NOP.

2. Summary of the significant issues raisedby public comments in response to the InitialRegulatory Flexibility Analysis (IRFA), asummary of agency assessment of suchissues, and a statement of any changes madein the final rule as a result of such comments.

Although we received many individualcomments in reference to the proposed rule’sIRFA, they were, for the most part, variationsof several form letters. Most of the concernon the part of commenters regarded the feesthat small certifying agents would be subjectto under the rule.

Comments Accepted

(1) We received numerous comments to theeffect that the fees, recordkeeping, andpaperwork requirements for producer andhandler certification must be kept as low aspossible while still offering a qualitycertification program. We believe that wehave made every effort in this rule tominimize the cost and paperwork burden tocertifiers and certified operations as much aspossible. We have permitted certifiers andcertified operations to develop their ownrecordkeeping and reporting systems—solong as they conform to the needs of theprogram. For the most part, the paperworkand recordkeeping requirements for certifiedoperations conform to the requirements thatthey presently face under existingcertification programs. In order to minimizethe cost to the industry of transitioning to asystem where certifying agents are accredited(assuming that there will be a learning curveas agents familiarize themselves with therequirements of accreditation), we havewaived the per-hour cost that USDA willcharge to conduct an accreditation review forthe first 18 months of the program.

(2) In the proposed rule, we requestedcomment on the benefits of an exemption forsmall certifiers similar to that for smallproducers. We received comments inopposition to such an exemption becausecommenters wanted to maintain documentedverification of standards that is afforded bycertification and accreditation. They felt that

exemptions weakened the organic system inits ability to assure consumers of productsthat meet a consistent standard. Weconcurred with this comment and have notdeveloped an exemption for certifiers in thefinal rule.

Comments Rejected

(3) We received comments suggesting that,in order to lower the direct cost ofaccreditation to smaller certifier applicants,we should eliminate on-site visits duringaccreditation or extend the time beyond theinitial on-site visit for a subsequent visit.Although eliminating the on-site visits wouldcertainly lower the applicant’s costs, we havenot made the change to reduce or eliminateon-site visits. We did not see how USDAcould make an informed decision aboutwhether or not to continue to accredit acertifying agent without complete access tothe relevant records documenting the agent’sbusiness practices. This can only beefficiently done through a site visit.

(4) We received numerous comments thatthe fees proposed by USDA will result incertification fees that are excessive for smallfarming operations. The commenterssuggested that USDA impose fees on a slidingscale based on a farmer’s income so as notto drive these farmers out of business anddeprive consumers of the benefits of theseoperations. We received a similar commentto the Fees section of the proposed rule, andour response is the same. Although one ofour top priorities is assisting the smallfarmer, AMS is primarily a user-fee-basedFederal agency. We are aware that ouraccreditation fees will figure into the feesthat certifiers charge their clients. However,the fee we will charge to accredit anapplicant is based not on earning profits, buton recovery of costs. In addition, our waiverof the hourly service charges for accreditationduring the first 18 months of the programshould help to keep the cost of accreditationto certifying agents down. We believe therequirements that fees charged by a certifyingagent must be reasonable and that certifiersmust file a fee schedule for approval by theAdministrator will help to keep costs undercontrol. Since certifiers are required toprovide their approved fee schedules toapplicants for certification, the applicantswill be able to base their selection ofcertifying agent on price if the applicants sochoose. In addition, nothing in theregulations precludes certifying agents frompricing their services on a sliding scale solong as their fees are consistent andnondiscriminatory and are approved duringthe accreditation process.

(5) Other commenters were concerned thatin the rule USDA neglects to establish‘‘reasonable fees’’ annually for farm/site/wildcrop production and handling operationcertification. Commenters did not believethat a valid Regulatory Flexibility Actanalysis could be made without the annualfarm and handling operation fee projection.We have not established guidelines for whatconstitutes a ‘‘reasonable fee’’ in the finalrule. Accredited certifying agents will berequired to submit a proposed fee scheduleas a part of their application. At that time,we will work with applicants for

accreditation to ensure that their fees areappropriate. In addition, certifying agentswill be required to send a copy of their feeschedule to anyone who requests one. Thiswill allow operations that wish to be certifiedto shop around and will provide adisincentive for accredited agents to pricethemselves out of the market.

3. Description of and an estimate of thenumber of small entities to which the rulewill apply.

Small business size standards, StandardIndustrial Code (SIC) (13 CFR part 121), aredeveloped by an interagency group,published by the Office of Management andBudget, and used by the Small BusinessAdministration (SBA) to identify smallbusinesses. These standards represent thenumber of employees or annual receiptsconstituting the largest size that a for-profitenterprise (together with its affiliates) may beand remain eligible as a small business forvarious SBA and other Federal Governmentprograms.

There are three categories of operationsthat contain small business entities thatwould be affected by this rule: Certifyingagents, organic producers, and/or organichandlers. The term, ‘‘certifying agent,’’ meansthe chief executive officer of a State or, in thecase of a State that provides for the statewideelection of an official to be responsible solelyfor the administration of the agriculturaloperations of a State, such official and anyperson (including private entities) who isaccredited by the Secretary as a certifyingagent for the purpose of certifying a farm orhandling operation as a certified organic farmor handling operation.

According to the most complete dataavailable to USDA’s Agricultural MarketingService (AMS), there are 49 certifying agents(36 private and 13 State) in the United States.More than half of the private and Statecertifying agents certify both producers andhandlers, while the others certify onlyproducers. Over three-fourths of private andState certifying agents each certify fewer than150 producers and 20 handlers. The numberof certifying agents has remained fairlystable, between 40 and 50, for some years,with entries and exits tending to offset eachother. The NOP staff anticipates that, inaddition to the 49 domestic certifying agents,10 foreign certifying agents may seekaccreditation during the initial phase of theprogram.

Small businesses in the agriculturalservices sector, such as certifying agents,include firms with average annual revenuesof less than $5 million (SIC Division A MajorGroup 7). Based on SBA’s small business sizestandards for the agricultural services sector,it is not likely that many, if any, of the 49domestic certifying agents have annualrevenue greater than $5 million. All private,nonprofit certifying agents would beconsidered small by SBA’s standards. Basedon anecdotal information, only a few private,for-profit, certifying agents might becategorized as large businesses. In addition,the 13 State certifying agents, although notexceeding the revenue threshold, would notbe considered to be small entities under theAct as only government jurisdictions withpopulations under 50,000 are considered to



be small entities under section 601(5).Therefore, at least 30 certifying agents wouldqualify as a small business.

The term, ‘‘producer,’’ means a person whoengages in the business of growing orproducing food or feed. It is more difficult toestablish the number of organic producers.Organic farming was not distinguished fromconventional agriculture in the 1997 Censusof Agriculture. There are sources which giveinsight into the number of producers. TheOrganic Farming Research Foundation(OFRF), a California-based nonprofitorganization, has conducted threenationwide surveys of certified organicproducers from lists provided by cooperatingcertifying agents. The most recent surveyapplies to the 1997 production year (1).’’b b b OFRF sent its 1997 survey to 4,638names and received 1,192 responses. BecauseOFRF did not obtain lists from all certifyingorganizations or their chapters (55 out of atotal of 64 identified entities provided lists),its list count is likely an understatement ofthe number of certified organic producers.Note that the estimated number of organicproducers includes only certified organicfarms. Comments filed in response to the firstproposal and studies indicate that the totalnumber of organic farms is higher.

Dunn has estimated the number of certifiedorganic producers in the United States (2, 3)Dunn’s 1995 work, a USDA study, estimatedthe number of certified producers at 4,060 in1994; this estimate was used in the firstproposal. Dunn’s 1997 work reported 4,060certified organic farms in 1994 and 4,856 in1995.

Data collected by AMS indicate that thenumber of organic farmers increased about 12percent per year during the period 1990 to1994. OFRF survey efforts indicate thatgrowth has continued, although it is not clearwhether the growth rate has changed.Similarly, growth in retail sales, the additionof meat and poultry to organic production,and the possibility of increased exportssuggest that the number of operations hascontinued to increase. Lacking an alternativeestimate of the growth rate for the number ofcertified organic producers, we use theaverage growth rate of about 14 percent fromDunn’s 1997 study. The true rate of growthcould be higher or lower. Applying the 14-percent growth rate to Dunn’s estimate ofcertified producers in 1995 gives an estimateof 8,200 organic producers for 1999.

An adjustment is needed to account for thenumber of producers who are practicingorganic agriculture but who are not certifiedand who would be affected by thisregulation. We assume that the number oforganic but not certified producers in 1999 isabout 4,000. This assumption is based onvery limited information about the number ofregistered but not certified organic producersin California in 1995. Thus, the total numberof certified organic producers used inassessing the impact of the rule is 12,176.

Producers with crop production (SICDivision A Major Group 1) and annualaverage revenues under $500,000 are smallbusinesses. Producers with livestock oranimal specialities are also considered smallif annual average revenues are under$500,000 (SIC Division A Major Group 2),

with the exception of custom beef cattlefeedlots and chicken eggs, which areconsidered small if annual average revenuesare under $1,500,000.

Based on SBA’s small business sizestandards for producers, it is likely thatalmost all organic producers would beconsidered small. The OFRF survey asked forthe producer’s total gross organic farmingincome during 1997. Only 35 (less than 3percent) of the survey respondents reportedgross income greater than $500,000, theSBA’s cutoff between small and largebusinesses. Over 70 percent reported grossincome of less than $50,000. The OFRFsurvey does caution readers about potentialsurvey ‘‘errors.’’ It is particularly importantto emphasize potential ‘‘non-response error’’;that is, it is unknown if those who respondedto the survey accurately represent the entirepopulation of certified organic growers. Also,some producers combine organic andconventional production on the sameoperation, some with total sales that mayexceed $500,000. However, it is likely that amajority of organic producers would beconsidered small. We have estimated thatthere would be 12,176 producers certified inthe first year and of those 97 percent, or11,811, based on OFRF’s survey results,would qualify as a small business.

The term, ‘‘handler,’’ means any personengaged in the business of handlingagricultural products, excluding finalretailers of agricultural products that do notprocess agricultural products. Littleinformation exists on the numbers ofhandlers and processors. USDA hasestimated that there were 600 entities in thiscategory in 1994. In California, there were208 registered organic processed food firmsin 1995 and 376 in 1999, a growth rate of 20percent (4). We assume that this growth rateis applicable to the U.S. and project 2,077certified handlers in 2001. This figureincludes 100 livestock feed handlers whowould become certified organic. Again, therate of growth could be higher or lower.

In handling operations, a small businesshas fewer than 500 employees (SIC DivisionD Major Group 20). It is also likely that thevast majority of handlers would beconsidered small, based on SBA’s smallbusiness size standards for handlers. Basedon informal conversations with organiccertifying agents, currently, about 25 (about2 percent) of the estimated 1,250 organichandlers in 1999 had more than 500employees. This includes firms that handleor process both organic and conventionalfoods. We have estimated that 2,077 handlerswould be certified organic in the first year.Based on this information, 98 percent or2,035 would qualify as a small business.

4. An estimate of the projected reporting,recordkeeping, and other compliancerequirements of the rule, including anestimate of the classes of small entities whichwill be subject to the requirement and thetype of professional skills necessary forpreparation of the report or record.

The reporting, recordkeeping, andcompliance requirements of the rule willdirectly affect three sectors of the organicindustry that contain small business entities:accredited certifying agents, organic

producers, and organic handlers. We haveexamined the requirements of the rule as itpertains to each of these entities, howeverseveral requirements to complete thisRegulatory Flexibility Analysis (RFA) overlapwith the Regulatory Impact Assessment (RIA)and the Paperwork Reduction Act (PRA)section. In order to avoid duplication, wecombine some analyses as allowed in section605(b) of the Act. This RFA providesinformation specific to small entities, whilethe RIA or PRA should be referred to formore detail. For example, the RFA requiresan analysis of the rule’s costs to smallentities. The RIA provides an analysis of thebenefits and costs of this regulation. ThisRFA uses the RIA information to estimate theimpact on small entities. Likewise, the RFArequires a description of the projectedreporting, recordkeeping, and othercompliance requirements of the final rule.The PRA section estimates the reporting andrecordkeeping (information collection)requirements that would be required by thisrule from individuals, businesses, otherprivate institutions, and State and localgovernments. The burden of theserequirements is measured in terms of theamount of time required of programparticipants and its cost. This RFA uses thePRA information to estimate the burden onsmall entities.

Certifying Agents

We have identified 36 private certifyingagents and 13 State programs providingcertification. These 49 domestic entities areconsidered likely applicants during the first12 months, as are an estimated 10 foreigncertifying agents. An unknown number ofnew entrants to the certifying business mayalso apply. However, over the last 10 years,the number of certifying agents does notappear to have grown significantly, with thenet effect of entries and exits maintaining apopulation of U.S.-based certifying agents atabout 40 to 50. Of the 49 domestic certifyingagents, based on information discussedpreviously, we estimate that 30 of the 36private certifying agents are small businesses.

The recordkeeping and paperworkrequirements are outlined in the PaperworkReduction Act section. The requirements forsmall and large certifying agents areidentical. The recordkeeping and paperworkrequirements for accreditation will be a newburden to most agents as the majority of themhave not been accredited in the past.However, the actual amount of the additionaladministrative costs that would be imposedby the final rule is expected to be differentfor those entities that would begin theiractivities only after the national program isimplemented. Certifying agents that currentlyare active in the organic industry alreadyperform most of these requiredadministrative functions; therefore, theadditional costs to them would depend uponthe extent to which their current practices aredifferent from the requirements of the finalregulation. Because the rule does not requireany particular system or technology, it doesnot discriminate against small businesses.The ability of an agent to carry out thepaperwork and recordkeeping sections of therule will be more dependant on the



administrative skill and capacity of theirparticular organization than their size. Wedid not receive significant comments aboutthe paperwork requirements of the proposedrule that would indicate that they will beonerous for small certifying agents.

Certifying agents will be the front line inmonitoring and ensuring that certifiedoperations stay in compliance with the Actand the regulations. However, most of thecompliance requirements, with the exceptionof some reporting requirements, areconsistent with what certifiers are currentlyexpected to do. Like the paperwork andreporting requirements, the additional coststo an agent will depend on how differenttheir current practices are from the finalregulation.

The final, and probably most significant,area in which certifying agents are affectedby the rule is in the fees that they must payfor accreditation. Certifying agents will beassessed for the actual time and travelexpenses necessary for the NOP to performaccreditation services, including initialaccreditations, 5-year renewals ofaccreditation, review of annual reports, andchanges to accreditation. Although the feeshave not been set yet, we are using as astarting point the hourly fees that are chargedfor the voluntary, fee-for-service programprovided by AMS to certification bodiesrequesting conformity assessment to the ISOGuide 65, ‘‘General Requirements for BodiesOperating Product Certification Systems.’’We expect that at the time the NOP’s finalrule is implemented, the fees will beapproximately $95 per hour with higherovertime and holiday rates. Certifying agentswill also be charged for travel, per diem, andother related costs associated withaccreditation. To ease the financial burden ofaccreditation during the 18 month transitionperiod after the NOP has been implemented,USDA will not impose hourly charges oncertifying agents. The direct costs forcertifying agents to obtain accreditation willbe limited to per diem and transportationcosts to the site evaluation. Review of thecertifying agent’s annual report is anticipatedto range from 2 to 8 hours at the ISO Guide65 hourly rate. Also, if certifying agents wishto become accredited in additional areas forwhich they were not accredited previously,a site evaluation (with associated fees) willbe necessary. Detail about the expected costsof accreditation can be found in the RIA.

Several factors will influence the amountof time needed to complete an accreditationaudit. An operation in which documents arewell organized and that has fewnonconformities within the quality systemwill require less time for an audit than anorganization in which documents arescattered and there are manynonconformities (7). Similarly, in a followupaudit, operations that lack organization intheir documents and that had a large numberof nonconformities during previous auditswill require a greater amount of time. Thescope of a followup audit is to verify thecorrection of nonconformities and to evaluatethe effectiveness of the corrections. Certifyingagents are able to control these cost factorsby making certain that documents are wellorganized and by educating themselves aboutquality systems.

The complexity of a certification agency’sorganization also will affect the time neededto complete an audit. An agency with acentral office in which all certificationactivities take place will require less time fordocument review and site evaluation than achapter organization or a business structuredso that responsibility for making certificationdecisions is delegated outside of the centraloffice. In the latter cases, the auditors’document review would require additionaltime and site evaluation that would extendfrom the central office to one or more of thechapters or to the site to which thecertification decision making is delegated.

Other factors determine the amount of timeneeded to complete an accreditation audit.For an agency with numerous clients,auditors may need to spend more timereviewing client files or examining businessoperations than they would have to spend fora smaller agency. Audit of an agency with alarge number of processor clients may requirean extended amount of time to follow audittrails, confirm that organic ingredientsremain segregated from nonorganicingredients, and establish that foreign-produced ingredients originate fromapproved entities. Finally, the complexity ofthe agricultural practices certified couldinfluence the amount of time necessary tocomplete an accreditation audit. An agencywhose certification covers only producerswho grow and harvest one crop per field peryear, such as wheat or sugar beets, couldquickly be audited. An agency whoseproducers grow several different crops perfield per year or an agency that certifiesproducers of crops and livestock as well ashandlers would require a greater amount oftime.

All of these factors will affect both smalland large certifying agents. A small certifyingagent could be assumed to have a lesscomplex organization or have fewer clients,and, thus, potentially less time would benecessary for review. However, other factors,such as the degree of paperwork organizationor the complexity of the agricultural practicescertified, may influence the time needed forreview for any size of business.

Currently, relatively few certifying agentshave third-party accreditation becauseaccreditation of certifying agents isvoluntary. Fetter reports that in a sample of18 certification programs, selected to includesix large, private programs, six smallerprivate programs, and six State programs,four programs were accredited and one hadaccreditation pending (8). All of these werelarge private certifying agents. Three of thecertifying agents identified by Fetter asaccredited requested ISO Guide 65assessments by USDA and have beenapproved for selling organic products intothe international market. Those certifyingagents currently accredited by third partieswill likely pay less for USDA accreditationbecause their documents are organized andthey have fewer nonconformities.

It is expected that all certifying agents willset their fee schedule to recover costs fortheir certification services, including thecosts of accreditation. The larger the numberof clients per certifying agent, the more fixedcosts can be spread out. It is possible,

however, that small certifying agents couldbe significantly affected by this final rule andmay not be able to continue in business froma financial standpoint.

Costs to Producers and Handlers

The OFPA established a small farmerexemption from certification and submissionof organic plans for small producers with amaximum of $5,000 in gross sales of organicproducts. For purposes of the exemption, theOFPA defines a ‘‘small farmer’’ as those whosell no more than $5,000 annually in valueof agricultural products. In this rule, we haveclarified that the exemption applies toproducers and handlers who sell no morethan $5,000 annually in value of organicproducts (9). In addition, handling operationsare exempt if they: Are a retail foodestablishment that handles organicallyproduced agricultural products but does notprocess them; handles agricultural productsthat contain less than 70 percent organicingredients by weight of finished product; ordoes not use the word, ‘‘organic,’’ on anypackage panel other than the informationpanel if the agricultural product contains atleast 70 percent organic ingredients byweight of finished product.

A handling operation or specific portion ofa handling operation is excluded fromcertification if it handles packaged certifiedorganic products that were enclosed in theirpackages or containers prior to beingacquired and remain in the same package andare not otherwise processed by the handler,or it is a retail food establishment thatprocesses or prepares on its own premisesraw and ready-to-eat food from certifiedorganic products.

According to the OFRF survey, 27 percentof currently certified farms that responded tothe survey would fall under the producerexemption. This percentage does not takeinto account those organic farms that are notcurrently certified by a private or Statecertifying agent. A study of California organicfarms found that, of all organic farms (10) in1994–95, about 66 percent have revenues lessthan $10,000 (11). If California isrepresentative and the distribution within thesub-$10,000 category is uniform, then a thirdof the farms would be classified as small forpurposes of the statutory exemption withannual sales less than $5,000. Based on theCalifornia study and the OFRF survey results,we estimate that between 25 and 33 percentof organic producers are small and wouldqualify for exemption from the certificationrequirements.

We have estimated that there are 4,801small organic producers and 173 handlersthat will be exempt from certification (thisfigure does not include excluded operations).These operations would be required tocomply with the production and handlingstandards and labeling requirements set forthunder the NOP. They do not have to meet thepaperwork requirements of certification andthey must only keep records that documentcompliance with the law for 3 years (ratherthan 5 for certified operations. We anticipatethat this exemption will be used primarily bysmall market gardeners and hobbyists whogrow and process produce and otheragricultural products for sale at farmers



markets and roadside stands to consumerswithin their communities.

Exempt producers will be allowed tomarket their products as organicallyproduced without being certified by acertifying agent. Products marketed byexempt producers cannot be represented ascertified organic or display the USDA organicseal. Products produced or handled on anexempt operation may be identified asorganic ingredients in a multiingredientproduct produced by the exempt operation,but they may not be identified as organic ina product processed by others. Theselimitations may discourage some smallproducers from seeking exemption, whoinstead may choose to become certified. Inthis case, the costs of certification wouldapply. The value associated with havingorganic certification may outweigh the costsof certification.

As with accredited certifying agents, theregulation will impose administrative costson certified producers and handlers forreporting, recordkeeping, residue testing, andother compliance requirements. The actualamount of the additional administrative coststhat would be imposed by the final rule isexpected to be different for those entities thatbecome certified only after the nationalprogram is implemented. Producers andhandlers who currently are active in theorganic industry already perform most ofthese administrative functions; therefore, theadditional costs to them would depend uponthe extent to which their current practicesdiffer from the requirements of the finalregulation. Projected reporting,recordkeeping, and other compliancerequirements of certifying agents arediscussed in greater detail in the PRA and theRIA. The only distinction made in the finalrule between large and small entities forreporting, recordkeeping, and compliance isfor operators who produce less than $5000per year in organic products as stated above.

As with the certifying agents, most of theconcern this rule generated for small certifiedoperations revolves around fees. Under thisrule, USDA will not impose any direct feeson producers and handlers. Certifying agentswill establish a fee schedule for theircertification services that will be filed withthe Secretary and posted in a place accessibleto the public. Certifying agents will provideall persons inquiring about the applicationprocess with a copy of their fees. Thecertifying agent may only charge those feesthat it has filed with the Secretary.Furthermore, the certifying agent willprovide each applicant with an estimate ofthe total cost of certification and an estimateof the annual costs of updating thecertification.

Currently, supply and demand forcertification services determine the feescharged in most areas. Some States chargeminimal fees for certification and insteadsubsidize operating costs from generalrevenues. According to separate studies byFetter, and Graf and Lohr, the majority ofcertifying agents structure their fee scheduleson a sliding scale based on a measure of size,usually represented by the client’s gross salesof organic products but sometimes based onthe acres operated. Some certifying agents

charge an hourly rate for inspection andaudit services.

Graf and Lohr’s study indicates that evensmall farms require significant time for thecertification process, and this time does notincrease proportionately as farm sizeincreases. None of the existing certificationprograms mention costs for residue testing,which the NOP will require in the form ofpreharvest testing when there is reason tobelieve that agricultural products have comeinto contact with prohibited substances.Preharvest testing is expected to beinfrequent. Certifiers will recover the costs ofpreharvest testing through explicit charges tothe producer whose crop is tested or througha generally higher fee structure that spreadsthe expected costs of tests over all clients.

This rule imposes no requirements thatwould cause certifying agents that arepresently using a sliding-scale type feeschedule to abandon their current fee system.Certifying agents could recover their netadditional costs by increasing their flat-feecomponent, their incremental charges, orboth. Because accreditations are renewedonly every 5 years, certifying agents will have5 years to recover their net new costs.Certifying agents who become accreditedduring the first year of the program wouldhave fewer direct costs to recover becausethey will not be charged the application feeand hourly charges for accreditation services.

Those currently receiving voluntarycertification will likely see a modest increaseas the certifying agent passes on its costincurred under the NOP. Those not currentlyreceiving certification and producing over$5,000 annually in organic products will berequired to become certified, and they willincur the actual costs of certification.

Some States, such as Texas andWashington, charge producers and handlersnominal fees for certification, and it ispossible that more States might providecertification services as the NOP isimplemented. Other States, such asMinnesota, have cost-share programs to helpoffset costs for organic producers.

Conclusion

This rule will primarily affect smallbusinesses. We have, therefore, attempted tomake the paperwork, recordkeeping, andcompliance provisions as flexible as possiblewithout sacrificing the integrity of theprogram. We are not requiring specifictechnologies or practices and with the 18-month phase-in of the program we areattempting to give both certifying agents andcertified operators an opportunity to adapttheir current practices to conform with therule. Because we have attempted to make therule conform with existing industrystandards, including ISO guide 65 forcertification and ISO guide 61 foraccreditation, the changes for mostorganizations and operations should berelatively straightforward.

The fees required for accreditation will bethe most significant change faced by mostoperations—and this was apparent in thecomments received. While we understandthe concerns of the affected organizations, inorder to administer an accreditation program,it is necessary that we recover our costs. We

are hoping that the elimination of the hourlycharges in the first round of accreditationwill help to alleviate some of this burden.

1. Organic Farming Research Foundation.1999. Final Results of the Third BiennialNational Organic Farmers’ Survey. SantaCruz, CA.

2. Dunn, Julie Anton. 1995. Organic Foodand Fiber: An Analysis of 1994 CertifiedProduction in the United States. U.S.Department of Agriculture, AgriculturalMarketing Service.

3. Dunn, Julie Anton. 1997. AgriSystemsInternational Reports Certified OrganicProduction in the United States: Half aDecade of Growth. AgriSystemsInternational: Wind Gap, PA.

4. California Department of Health Services(DHS). 1995. Report on the Registration ofCalifornia Organic Processed Food Firms.Sacramento: State of California. September1999 figures obtained via personalcommunication with California DHS.

5. Graf, Anita and Luanne Lohr. 1999.Analysis of certification program costs.Working Paper, Fund for Rural Americaproject, Market Development for OrganicAgriculture Products, Grant No. 97–36200–5.

6. During the first 18 months, siteevaluation for initial accreditation will beconducted jointly by two reviewers. Tworeviewers offers: (1) Anticipated faster turn-around; (2) different areas of expertise—onereviewer would come from the QualitySystems Certification Program audit staff andwould be familiar with ISO Guide 65verification, while the other reviewer wouldcome from the NOP staff and would befamiliar with the requirements of theprogram; and (3) consistency with theorganic industry’s desire to have reviewersfrom both areas of expertise during ISOGuide 65 assessments. AMS would considersending one reviewer, rather than two, for thesite evaluation of small certification agents ifan individual possessing both reviewing skilland knowledged of the NOP is available. Weanticipate only one reviewer would berequired after the 18-month transition period.

7. Adequate advance notice will be givento certifying agents to allow them theopportunity to organize their records prior tothe audit and minimize the costs ofaccreditation.

8. Fetter, Robert T. 1999. EconomicImpacts of Alternative Scenarios of OrganicProducts Regulation. Senior Honors Thesis.University of Massachusetts, Amherst, MA.

9. We asked for comments on the firstproposal as to whether the current statutorylimitation of $5,000 for exemption fromcertification should be raised to $10,000 or toanother amount and why such an increasedmonetary limitation for exemption fromcertification would be appropriate. Fewcommenters offered recommendations as to amaximum sales volume to exempt producers.Amounts ranged from $2,000 to $50,000,with a few suggesting $10,000 and $20,000exemptions. These proposed exemptionlevels and justifications in commentsreceived are not sufficiently consistentenough for us to recommend changing thestatute requirement of the $5,000 maximumsales volume exemption.



10. California State law requires organicfarmers to register with the State.Certification is voluntary at the current time.

11. Klonsky, Karen, and Laura Tourte.1998. Statistical Review of California’sOrganic Agriculture, 1992–95. Reportprepared for the California Department ofFood and Agriculture Organic Program.Cooperative Extension, Department ofAgricultural Economics, University ofCalifornia, Davis.

Appendix D—Executive Order 12988,Civil Justice Reform

Executive Order 12988, Civil JusticeReform, instructs each executive agency toadhere to certain requirements in thedevelopment of new and revised regulationsin order to avoid unduly burdening the courtsystem. The revised proposal was reviewedunder this Executive Order. No commentswere received on that review, and noadditional related information has beenobtained since then. This rule is not intendedto have retroactive effect.

States and local jurisdictions arepreempted under section 2115 of the OrganicFoods Production Act (OFPA) (7 U.S.C. 6514)from creating programs of accreditation forprivate persons or State officials who want tobecome certifying agents of organic farms orhandling operations. A governing Stateofficial would have to apply to USDA to beaccredited as a certifying agent, as describedin section 2115(b) of the OFPA (7 U.S.C.6514(b)). States also are preempted undersections 2104 through 2108 of the OFPA (7U.S.C. 6503 through 6507) from creatingcertification programs to certify organic farmsor handling operations unless the Stateprograms have been submitted to, andapproved by, the Secretary as meeting therequirements of the OFPA.

Pursuant to section 2108(b)(2) of the OFPA(7 U.S.C. 6507(b)(2)), a State organiccertification program may contain additionalrequirements for the production andhandling of organically produced agriculturalproducts that are produced in the State andfor the certification of organic farm andhandling operations located within the Stateunder certain circumstances. Such additionalrequirements must: (a) further the purposesof the OFPA, (b) not be inconsistent with theOFPA, (c) not be discriminatory towardagricultural commodities organicallyproduced in other States, and (d) not beeffective until approved by the Secretary.

Pursuant to section 2120(f) of the OFPA (7U.S.C. 6519(f)), this regulation would notalter the authority of the Secretary under theFederal Meat Inspection Act (21 U.S.C. 601et seq.), the Poultry Products Inspections Act(21 U.S.C. 451 et seq.), or the Egg ProductsInspection Act (21 U.S.C. 1031 et seq.),concerning meat, poultry, and egg products,nor any of the authorities of the Secretary ofHealth and Human Services under theFederal Food, Drug and Cosmetic Act (21U.S.C. 301 et seq.), nor the authority of theAdministrator of the EnvironmentalProtection Agency (EPA) under the FederalInsecticide, Fungicide and Rodenticide Act(7 U.S.C. 136 et seq.).

Section 2121 of the OFPA (7 U.S.C. 6520)provides for the Secretary to establish an

expedited administrative appeals procedureunder which persons may appeal an actionof the Secretary, the applicable governingState official, or a certifying agent under thistitle that adversely affects such person or isinconsistent with the organic certificationprogram established under this title. The Actalso provides that the U.S. District Court forthe district in which a person is located hasjurisdiction to review the Secretary’sdecision.

Appendix E—Executive Order 13132,Federalism

This final rule has been reviewed underExecutive Order 13132, Federalism. ThisOrder requires that regulations that havefederalism implications provide a federalismimpact statement that: (1) Demonstrates theAgency consulted with the State and localofficials before developing the final rule, (2)summarizes State concerns, (3) provides theAgency’s position supporting the need for theregulation, and (4) describes how theconcerns of State officials have been met. TheOrder indicates that, where Nationalstandards are required by Federal statutes,Agencies shall consult with appropriate Stateand local officials in developing thosestandards.

The Organic Foods Production Act (OFPA)of 1990 (7 U.S.C. 6501 et seq.) establishesnational standards regarding the marketing ofagricultural products as organicallyproduced, assures consumers that organicallyproduced products meet a consistentstandard, and facilitates interstate commercein fresh and processed food that isorganically produced. There has been a greatdeal of support for this law and theseregulations from the organic community.

OFPA and these regulations do preemptState statutes and regulations related toorganic agriculture. OFPA establishesnational standards regarding the marketing ofagricultural products as organicallyproduced, assures consumers that organicallyproduced products meet a consistentstandard, and facilitates interstate commercein fresh and processed food that isorganically produced. Currently, 32 Stateshave organic statutes on their books and haveimplemented them to various degrees.However, the Act contemplates a significantrole for the States and, in fact, envisions apartnership between the States and theFederal Government in meeting therequirements of the Statute. The Act allowsthe States to determine the degree to whichthey are involved in the organic program.States may choose to: (1) Carry out therequirements of the Act by establishing aState organic program (SOP) and becomingaccredited to certify operations, (2) establishan SOP but utilize private accreditedcertifying agents, (3) become accredited tocertify and operate under the NationalOrganic Program (NOP) as implemented bythe Secretary, or (4) not play an active rolein the NOP. 7 U.S.C. 6507 provides thatStates may establish an SOP consistent withthe national program. SOP’s may containmore restrictive requirements than the NOPestablished by the Secretary of Agriculture.To be more restrictive, SOP’s must: furtherthe purposes of the Act, be consistent with

the Act, not discriminate against organicproducts of another State, and be approvedby the Secretary.

Because implementation of OFPA willhave a significant effect on many States’existing State statutes and programs, the U.S.Department of Agriculture (USDA) hasreached out to States and actively soughttheir input throughout the entire process ofdeveloping the organic rule. On publicationof the first proposal on December 16, 1997,an announcement and information packetsummarizing the proposal was sent to morethan 1,000 interested parties, including Stategovernors and State department ofagriculture secretaries, commissioners, ordirectors. Over a period of 6 years, numerousmeetings were held to provide States anopportunity to provide information andfeedback to the rule. In 1994, States wereinvited to participate in four public hearingsheld in Washington, DC; Rosemont, IL;Denver, CO; and Sacramento, CA, to gatherinformation to guide development ofstandards for livestock products. States werealso provided the opportunity to commentspecifically on State issues at a NationalOrganic Certifiers meeting held on July 21,1995. They were invited to discussaccreditation issues at a meeting held onFebruary 26, 1996. Following the publicationof the first proposal, State and localjurisdictions had the opportunity to provideinput at four listening sessions held inFebruary and March 1998 in Austin, TX;Ames, IA; Seattle, WA; and New Brunswick,NJ. A meeting to discuss the role of States inthe NOP was held in February 1999. A Stateorganic certifiers meeting to discuss Stateissues was held at a March 2000 meetingwith the National Association of StateOrganic Programs.

USDA also drew extensively on theexpertise of States and the organic industryby working closely with the National OrganicStandards Board. The Board met 12 timesbefore publication of the proposed rule onDecember 16, 1997, and met five timesduring 1998 and 1999 and two times in 2000.States were invited to attend each of thesemeetings, and official State certifierrepresentatives participated in Boarddeliberations in meetings held in July 1998,July 1999, and March 2000.

Public input sessions were held at eachmeeting to gather information from allinterested persons, including State and localjurisdictions. NOP staff also receivedcomments and consulted with States atpublic events. They made presentations,received comments, and consulted withStates at local and regional organicconferences and workshops and at nationaland international organic and natural foodshows. States were consulted in trainingsessions held for organic inspectors, as wellas numerous question and answer sessions atspeaking engagements of the AgriculturalMarketing Service (AMS) Administrator, theNOP Program Manager, and NOP staff.

In addition, during August and September2000, the Administrator and NOP staffengaged in extensive efforts to discuss theproposed rule. While many organizationsdeclined opportunities for these briefings,AMS staff did meet with the National



Conference of State Legislatures (NCSL) and,at their request, in lieu of a meeting,provided information to the NationalGovernor’s Association (NGA). NGA andNCSL representatives stated they were awareof the development of the final rule butoffered no comments during theseconsultations beyond those submitted by theindividual States during the proposed rule’scomment period. In addition, betweenAugust and October 2000, NOP staff hadtelephone or e-mail contact with the Stateorganic program directors or other Statedepartment of agriculture representatives in25 States to determine the scope and statusof each State’s organic program in the contextof the issuance of the final rule. These Staterepresentatives stated that they were eagerlyawaiting the publication of the final rule andhad already begun adjusting their programsto conform with the March 2000 proposedrule in anticipation of the publication of thefinal rule. Finally, States have had theopportunity to comment on two proposedrules. More than 275,000 comments werereceived on the first proposal, and 40,000 onthe second proposed rule-including extensivecomments from twelve State departments ofagriculture, one State legislator, two membersof Congress, and the National Association ofState Organic Programs.

Through this outreach and consultationprocess, States have both provided generalfeedback to the rule and expressed severalspecific concerns about how this rule willaffect State programs. Overwhelmingly,States were extremely supportive of theMarch 2000 proposed rule. With a fewexceptions, most notably who should bearthe cost of enforcement of an SOP, States aresupportive of the Federal legislation. We didnot receive a single comment from a Statethat indicated that there should not be anational organic program.

The most prevalent issues they raisedregarding the March 2000 proposed rule as tohow this rule will affect organic programs intheir States, along with USDA’s response, aredescribed below. We received no directcomments from States on the Federalismsection in the proposed rule. Many of theseconcerns and others are addressed in moredetail in the relevant sections of the rule.

Applicability

Regarding section 205.100(b), five Statescurrently offer a ‘‘transition to organic’’ labelfor producers who are in the process of

becoming certified. Many of these Stateswould like to continue to offer this label.However, OFPA does not authorize a‘‘transition to organic’’ label. Although theStates (or private certifiers) are free to comeup with a different label for these farmers,they cannot utilize the term, organic, in anyseal or labeling associated with theconversion period. There is no change in thisprovision from the proposed rule.

Accreditation

Regarding section 205.501(a), many Stateswanted the NOP to add an additionalsubsection to the Accreditation sectionrequiring certifiers to prove that they cancarry out a State’s more restrictive standardsin order to be accredited to certify in thatState. AMS concurs with this suggestion andhas added a new paragraph 205.502(a)(20)requiring the certifying agent to demonstrateits ability to comply with a State’s additionalrequirements.

Regarding section 205.501(b), there wasstrong support by all of the States for theprovision that States with SOP’s are able tohave higher standards than the NOP foroperations within their State. However, therewas not consensus among the States on theprohibition on private certifiers requiringmore stringent standards.

Although most supported the prohibitionon private certifiers imposing additionalrequirements as a condition of certificationbecause they perceived that it loweredbarriers to farmers and processors in theirStates, three States were strongly opposed tothis provision. Because having a consistentnational standard is one of the primarypurposes of the legislation, there is no changein this provision from the proposed rule.

State Programs

There was general confusion about what isthe difference between a State organiccertification program and an SOP. Inaddition, some States wanted the scope of theNOP’s oversight for State organic activities tobe limited to certification. A State organiccertification program is equivalent to aprivate or foreign certification program.States wishing to certify operations in theirState must apply to the NOP foraccreditation.

An SOP, on the other hand, requires theState to submit a plan to the NOP forapproval to, in effect, administer the NOPwithin their State. Included in this is the

opportunity to include requirements thatdiffer from the NOP. In creating an SOP, aState is also agreeing to take on enforcementactivities that would otherwise be theresponsibility of the NOP. One exception toa State’s enforcement authority is that Stateswith SOP’s do not have jurisdiction over theaccreditation of certifying agents and cannotrevoke accreditation. They can investigateand report accreditation violations to theNOP. States with only an accreditedcertification program are only responsible forthe level of enforcement that all accreditedcertifying agents, State, private, or foreign,are required to take on.

Regarding section 205.620(c), several Stateswant broader language than ‘‘uniqueenvironmental conditions’’ to be the basis fora State to have the right to establish morerestrictive requirements under an SOP. AMSdoes not concur. There is no change to thislanguage in the final rule. It is the opinionof AMS that the current language is broadenough to cover the scope of more restrictiverequirements as authorized by OFPA.

Regarding section 205.620(d), many Stateswant it to be optional for States with SOP’sto take on enforcement obligations; severalwant funding from USDA for enforcementactivities. AMS does not concur with thischange. AMS does not envision thatparticipation under the NOP will imposeadditional fiscal costs on States with existingorganic programs, other than the costs ofaccreditation.

Regarding section 205.621(b), severalStates commented that States with SOP’sshould not be required to publish proposedchanges to their programs in the FederalRegister for public comment. AMS concurswith this comment. This language was anoversight from the first proposed rule.

Fees

A few States commented that the proposedfees for accreditation could cost more thansome States could afford to pay. They madesome suggestions for reducing accreditationfees, ranging from no fees (a completelyfederally funded program) to chargingreduced rates for travel or eliminating hourlycharges. AMS has no plans to change the feestructure. As in the proposed rule, hourlycharges for accreditation will be waived forall applicants in the first 18 months of theprogram to facilitate the conversion to anational accreditation system.



ComplianceRegarding section 205.665, several States

wanted to know what their authority was torevoke the accreditation of private certifiersin their State who do not meet additionalState standards under an SOP. An SOP’sgoverning State official is authorized toreview and investigate complaints ofnoncompliance with the Act or regulationsconcerning accreditation of certifying agentsoperating in their State. If they discover anoncompliance, they shall send a writtenreport to the NOP program manager. Becauseaccreditation is a Federal license, States donot have the authority to revoke a certifyingagent’s accreditation. There is no change inthis section from the proposed rule

Appeals

Regarding section 205.668(b), several Statecommenters want appeals from SOP’s to go

to State district court rather than Federaldistrict court. AMS disagrees. The Actprovides that a final decision of the Secretarymay be appealed to the U.S. District Court forthe district in which the person is located.AMS considers an approved SOP to be theNOP for that State. As such, AMS considersthe governing State official of such Stateprogram to be the equivalent of arepresentative of the Secretary for thepurpose of the appeals procedures under theNOP. Because the final decision of thegoverning State official is considered thefinal decision of the Secretary, under the Actit is then appealable to the U.S. DistrictCourt, not the State district court.

Regarding section 205.680, Statecommenters want a process by which peoplewho feel they were adversely affected by theorganic program in a State with an SOP mayappeal to the SOP’s governing State official,

rather than the Administrator. AMS hasamended the language in section 205.680 toclarify to whom an appeal is made undervarious situations. If persons believe thatthey were adversely affected by a decisionmade by the NOP Program Manager, theyappeal to the Administrator. If they wereadversely affected by a decision made by acertifying agent (State, private, or foreign),they appeal to the Administrator unless theyare in a State with an SOP, in which case,they appeal to the SOP’s governing Stateofficial. If persons believe that they wereadversely affected by a decision made by arepresentative of an SOP, they appeal suchdecision to the SOP’s governing State officialor such official’s designee.

[FR Doc. 00–32257 Filed 12–20–00; 8:45 am]BILLING CODE 3410–02–P
