Subpart E - Certification

This subpart sets forth the requirements for a national program to certify production and handling operations as certified organic production or handling operations. This certification process will be carried out by accredited certifying agents.

Description of Regulations

General Requirements

Production and handling operations seeking to receive or maintain organic certification must comply with the Act and applicable organic production and handling regulations. Such operations must establish, implement, and annually update an organic production or handling system plan that is submitted to an accredited certifying agent. They must permit on-site inspections by the certifying agent with complete access to the production or handling operation, including noncertified production and handling areas, structures, and offices.

As discussed in subpart B, certified operations must maintain records concerning the production and handling of agricultural products that are sold, labeled, or represented as "100 percent organic," "organic," or "made with organic (specified ingredients or food group(s))" sufficient to demonstrate compliance with the Act and regulations. Records applicable to the organic operation must be maintained for not less than 5 years beyond their creation. Authorized representatives of the Secretary, the applicable State organic program's (SOP) governing State official, and the certifying agent must be allowed access to the operation's records during normal business hours. Access to the operation's records will be for the purpose of reviewing and copying the records to determine compliance with the Act and regulations.

Certified operations are required to immediately notify the certifying agent concerning any application, including drift, of a prohibited substance to any field, production unit, site, facility, livestock, or product that is part of the organic operation. They must also immediately notify the certifying agent concerning any change in a certified operation or any portion of a certified operation that may affect its compliance with the Act and regulations.

Certification Process

To obtain certification, a producer or handler must submit an application for certification to an accredited certifying agent. The application must contain descriptive information about the applicant's business, an organic production and handling system plan, information concerning any previous business applications for certification, and any other information necessary to determine compliance with the Act.

Applicants for certification and certified operations must submit the applicable fees charged by the certifying agent. An applicant may withdraw its application at anytime. An applicant who withdraws its application will be liable for the costs of services provided up to the time of withdrawal of the application.

The certifying agent will decide whether to accept the applicant's application for certification. A certifying agent must accept all production and handling applications that fall within its area(s) of accreditation and certify all qualified applicants to the extent of its administrative capacity to do so. In other words, a certifying agent may decline to accept an application for certification when the certifying agent is not accredited for the area to be certified or when the certifying agent lacks the resources to perform the certification. However, the certifying agent may not decline to accept an application on the basis of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, or marital or family status.

Upon acceptance of an application for certification, a certifying agent will review the application to ensure completeness and to determine whether the applicant appears to comply or may be able to comply with the applicable production or handling regulations. As part of its review, the certifying agent will verify that an applicant has submitted documentation to support the correction of any noncompliances identified in a previously received notification of noncompliance or denial of certification. We anticipate that at a future date the certifying agent will also review any available U.S. Department of Agriculture (USDA) data on production and handling operations for information concerning the applicant.

We anticipate using data collected from certifying agents to establish and maintain a password-protected Internet database only available to accredited certifying agents and USDA. This database would include data on production and handling operations issued a notification of noncompliance, noncompliance correction, denial of certification, certification, proposed suspension or revocation of certification, and suspension or revocation of certification. Certifying agents would use this Internet database during their review of an application for certification. This data will not be available to the general public because much of the data would involve ongoing compliance issues inappropriate for release prior to a final determination.

After a complete review of the application, which shall be conducted within a reasonable time, the certifying agent will communicate its findings to the applicant. If the review of the application reveals that the applicant may be in compliance with the applicable production or handling regulations, the certifying agent will schedule an on-site inspection of the applicant's operation to determine whether the applicant qualifies for certification. The initial on-site inspection must be conducted within a reasonable time following a determination that the applicant appears to comply or may be able to comply with the requirements for certification. The initial inspection may be delayed for up to 6 months to comply with the requirement that the inspection be conducted when the land, facilities, and activities that demonstrate compliance or capacity to comply can be observed.

The certifying agent will conduct an initial on-site inspection of each production unit, facility, and site that produces or handles organic products and that is included in the applicant's operation. As a benchmark, certifying agents should follow auditing guidelines prescribed by the International Organization for Standardization Guide 10011-1, "Guidelines for auditing quality systems - Part 1: Auditing" (ISO Guide 10011-1).⁽¹⁾ The certifying agent will use the on-site inspection in determining whether to approve the request for certification and to verify the operation's compliance or capability to comply with the Act and regulations. Certifying agents will conduct on-site inspections when an authorized representative of the operation who is knowledgeable about the operation is present. An on-site inspection must also be conducted when land, facilities, and activities that demonstrate the operation's compliance with or capability to comply with the applicable production or handling regulations can be observed.

The on-site inspection must verify that the information provided to the certifying agent accurately reflects the practices used or to be used by the applicant or certified operation and that prohibited substances have not been and are not being applied to the operation. Certifying agents may use the collection and testing of soil; water; waste; plant tissue; and plant, animal, and processed products samples as tools in accomplishing this verification.

The inspector will conduct an exit interview with an authorized representative of the operation who is knowledgeable about the inspected operation to confirm the accuracy and completeness of inspection observations and information gathered during the on-site inspection. The main purpose of this exit interview is to present the inspection observations to those in charge of the firm in such a manner so as to ensure they clearly understand the results of the inspection. The firm is not required to volunteer any information during the exit interview but would be required to respond to questions or requests for additional information. The inspector will raise and discuss during the exit interview any known issues of concern, taking into account their perceived significance. As a general rule, the inspector will not make recommendations for improvements to the operation during the exit interview. However, the certifying agent will have the discretion to decide the extent to which an inspector may discuss any compliance issue. At the time of the inspection, the inspector shall provide the operation's authorized representative with a receipt for any samples taken by the inspector. There shall be no charge to the inspector for the samples taken.

The certifying agent shall, within a reasonable time, provide the inspected operation with a copy of the on-site inspection report, as approved by the certifying agent, for any on-site inspection performed and provide the operation with a copy of the test results for any samples taken by an inspector.

Notification of Approval

A certifying agent will review the on-site inspection report, the results of any analyses for substances, and any additional information provided by the applicant within a reasonable time after completion of the initial on-site inspection. The certifying agent will grant certification upon making two determinations: (1) that the applicant's operation, including its organic system plan and all procedures and activities, is in compliance with the Act and regulations and (2) that the applicant is able to conduct operations in accordance with its organic systems plan.

Upon determining the applicant's compliance and ability to comply, the agent will grant certification and issue a "certificate of organic operation." The certification may include requirements for the correction of minor noncompliances within a specified time period as a condition of continued certification. A certificate of organic operation will specify the name and address of the certified operation; the effective date of certification; the categories of organic operation, including crops, wild crops, livestock, or processed products produced by the certified operation; and the name, address, and telephone number of the certifying agent. Once certified, a production or handling operation's organic certification continues in effect until surrendered by the organic operation or suspended or revoked by the certifying agent, the SOP's governing State official, or the Administrator.

Denial of Certification

Should the certifying agent determine that the applicant is not able to comply or is not in compliance with the Act, the certifying agent will issue a written notification of noncompliance to the applicant. The notification of noncompliance will describe each noncompliance, the facts on which the notification is based, and the date by which rebuttal or correction of each noncompliance must be made. Applicants who receive a notification of noncompliance may correct the noncompliances and submit, by the date specified, a description of correction and supporting documentation to the certifying agent. As an alternative, the applicant may submit a new application to another certifying agent, along with the notification of noncompliance and a description of correction of the noncompliances and supporting documentation. Applicants may also submit, by the date specified, written information to the issuing certifying agent to rebut the noncompliance described in the notification of noncompliance. When a noncompliance cannot be corrected, a notification of noncompliance and a "notification of denial of certification" may be combined in one notification.

The certifying agent will evaluate the applicant's corrective actions taken and supporting documentation submitted or the written rebuttal. If necessary, the certifying agent will conduct a followup on-site inspection of the applicant's operation. When the corrective action or rebuttal is sufficient for the applicant to qualify for certification, the certifying agent will approve certification. When the corrective action or rebuttal is not sufficient for the applicant to qualify for certification, the certifying agent will issue the applicant a written notice of denial of certification. The certifying agent will also issue a written notice of denial of certification when an applicant fails to respond to the notification of noncompliance. The notice of denial of certification will state the reasons for denial and the applicant's right to reapply for certification, request mediation, or file an appeal.

An applicant who has received a notification of noncompliance or notice of denial of certification may apply for certification again at any time with any certifying agent. When the applicant submits a new application to a different certifying agent, the application must include, when available, a copy of the notification of noncompliance or notice of denial of certification. The application must also include a description of the actions taken, with supporting documentation, to correct the noncompliances noted in the notification of noncompliance. When a certifying agent receives such an application, the certifying agent will treat the application as a new application and begin a new application process.

A certifying agent has limited authority to deny certification without first issuing a notification of noncompliance. This authority may be exercised when the certifying agent has reason to believe that an applicant for certification has willfully made a false statement or otherwise purposefully misrepresented its operation or its compliance with the requirements for certification.

Continuation of Certification

Each year, the certified operation must update its organic production or handling system plan and submit the updated information to the certifying agent and pay the certification fees to continue certification. The updated organic system plan must include a summary statement, supported by documentation, detailing deviations from, changes to, modifications to, or other amendments to the previous year's organic system plan. The updated organic system plan must also include additions to or deletions from the previous year's organic system plan, intended to be undertaken in the coming year. The certified operation must update the descriptive information about its business and other information as deemed necessary by the certifying agent to determine compliance with the Act and regulations. The certified operation must also provide an update on the correction of minor noncompliances previously identified by the certifying agent as requiring correction for continued certification.

Following receipt of the certified operation's updated information, the certifying agent will, within a reasonable time, arrange and conduct an on-site inspection of the certified operation. When it is impossible for the certifying agent to conduct the annual on-site inspection following receipt of the certified operation's annual update of information, the certifying agent may allow continuation of certification and issue an updated certificate of organic operation on the basis of the information submitted and the most recent on-site inspection conducted during the previous 12 months. However, the annual on-site inspection must be conducted within the first 6 months following the certified operation's scheduled date of annual update. As a benchmark, certifying agents should follow auditing guidelines prescribed by ISO Guide 10011-1. Upon completion of the inspection and a review of updated information, the certifying agent will determine whether the operation continues to comply with the Act and regulations. If the certifying agent determines that the operation is in compliance, certification will continue. If any of the information specified on the certificate of organic operation has changed, the certifying agent will issue an updated certificate of organic operation. If the certifying agent finds that the operation is not complying with the Act and regulations, a written notification of noncompliance will be issued as described in section 205.662.

In addition to annual inspections, a certifying agent may conduct additional on-site inspections of certified operations that produce or handle organic products to determine compliance with the Act and regulations. The Administrator or SOP's governing State official may also require that additional inspections be performed by the certifying agent to determine compliance with the Act and regulations. Additional inspections may be announced or unannounced and would be conducted, as necessary, to obtain information needed to determine compliance with identified requirements.

Such on-site inspections would likely be precipitated by reasons to believe that the certified operation was operating in violation of one or more requirements of the Act or these regulations. The policies and procedures regarding additional inspections, including how the costs of such inspections are handled, would be the responsibility of each certifying agent. Misuse of such authority would be subject to review by USDA during its evaluation of a certifying agent for reaccreditation and at other times in response to complaints. Certified production and handling operations can file complaints with USDA at any time should they believe a certifying agent abuses its authority to perform additional inspections.

Certification After Suspension or Revocation of Certifying Agent's Accreditation

When the Administrator revokes or suspends a certifying agent's accreditation, affected certified operations will need to make application for certification with another accredited certifying agent. The certification of the production or handling operation remains in effect during this transfer of the certification. The certified production or handling operation may seek certification by any qualified certifying agent accredited by the Administrator. To minimize the burden of obtaining the new certification, the Administrator will oversee transfer of the original certifying agent's file on the certified operation to the operation's new certifying agent.

Upon initiation of suspension or revocation of a certifying agent's accreditation or upon suspension or revocation of a certifying agent's accreditation, the Administrator may initiate proceedings to suspend or revoke the certification of operations certified by the certifying agent. The Administrator's decision to suspend or revoke a producer's or handler's certification in light of the loss of its certifying agent's accreditation would be made on a case-by-case basis. Actions such as fraud, bribery, or collusion by the certifying agent, which cause the Administrator to believe that the certifying agent's clients do not meet the standards of the Act or these regulations, might require the immediate initiation of procedures to suspend or revoke certification from some or all of its client base. Removal of accreditation, regardless of the reason, in no way affects the appeals rights of the certifying agent's clients. Further, a certified operation's certification will remain in effect pending the final resolution of any proceeding to suspend or revoke its certification.

A private-entity certifying agent must furnish reasonable security for the purpose of protecting the rights of operations certified by such certifying agent. This security is to ensure the performance of the certifying agent's contractual obligations. As noted elsewhere in this rule, the specific amount and type of security that must be furnished by a private certifying agent will be the subject of future rulemaking by USDA. We anticipate that the amount of the security will be tied to the number of clients served by the certifying agent and the anticipated costs of certification that may be incurred by its clients in the event that the certifying agent's accreditation is suspended or revoked. We anticipate that the security may be in the form of cash, surety bonds, or other financial instrument (such as a letter of credit) administered in a manner comparable to cash or surety bonds held under the Perishable Agricultural Commodities Act.

Certification - Changes Based on Comments

This subpart differs from the proposal in several respects as follows:

(1) Access to Production and Handling Operation. We have amended section 205.400(c) by changing "noncertified areas and structures" to "noncertified production and handling areas, structures, and offices." A commenter requested that section 205.400(c) be amended to allow for access to farm-related structures only. The commenter believes that the requirements of section 205.400(c) could be interpreted as giving inspectors access to residential property. We agree with the commenter that residential privacy should be maintained. However, if a certified operation conducts business from or stores records at a residential property, the certified operation will be considered to be maintaining an office at the residential property. The records in such office shall be made accessible for review and copying. Accordingly, we have amended section 205.400(c) to further clarify which areas and structures are to be made accessible during an on-site inspection.

(2) Application for Certification. We have amended the first paragraph of section 205.401 by replacing the word, "request," each time it occurred with the word, "application." A commenter recommended that we amend the first paragraph of section 205.401 by replacing the word, "request," with "application." We have accepted the commenter's recommendation because the amendment makes the language in the first paragraph consistent with the title and the requirements of the section.

(3) Verification of Correction of Noncompliances. To make section 205.402(a)(3) consistent with section 205.401(c) we have amended the language in section 205.402(a)(3) to require that the certifying agent verify that an applicant who previously applied to another certifying agent and received a notification of denial of certification has submitted documentation to support the correction of any noncompliances identified in the notification of denial of certification. A commenter recommended that section 205.402(a)(3) be amended by inserting "or denial of certification" after the phrase, "notification of noncompliance." We have accepted the commenter's recommended amendment because it is consistent with the requirements of section 205.401(c). Section 205.401(c) requires an applicant for certification to include the name(s) of any organic certifying agent(s) to which application has previously been made, the year(s) of application, and the outcome of the application(s) submission. The applicant is also required to include, when available, a copy of any notification of noncompliance or denial of certification issued to the applicant for certification. The words, "when available," have been added to this requirement in this final rule to satisfy concerns regarding the status of applicants who cannot find or no longer have a copy of any notification of noncompliance or denial of certification previously received. We see no down side to relaxing this requirement since the applicant must still comply with each of the other provisions in section 205.401(c), including the requirement that the applicant include a description of the actions taken to correct the noncompliances noted in any notification of noncompliance or denial of certification, including evidence of such correction. Further, the certifying agent will be using USDA's database of certification actions during its review of an application for certification.

(4) Timely Communication to the Applicant. We have amended section 205.402(b), by requiring at paragraph (b)(1) that the certifying agent, within a reasonable time, review the application materials received and communicate its findings to the applicant. A commenter requested that we amend section 205.402(b) which required a certifying agent to communicate to the applicant its findings on the review of application materials submitted by the applicant. Specifically, the commenter requested that section 205.402(b) be amended by adding to the end thereof, "in a timely manner so as to prevent the avoidable tillage of native habitat that had been identified in the application as lands for organic production."

We concur that certification decisions should be timely. There are many reasons (e.g., financial and contractual) for why certification must be timely. It would be impractical, however, to attempt to address all of the reasons for timely certification in these regulations. We have, therefore, amended section 205.402(b) as noted above. This amendment is consistent with the requirement in section 205.402(a) that the certifying agent, upon acceptance of an application for certification, review the application for completeness, determine by a review of the application materials whether the applicant appears to comply or may be able to comply with the requirements for certification, and schedule an on-site inspection. The "upon acceptance" requirement necessitates that the certifying agent review the application for certification and provide feedback to the applicant in a timely manner.

(5) On-site Inspections. We have amended section 205.403(a)(1) by specifying that the initial and annual on-site inspections of each production unit, facility, and site in an operation applies to those units, facilities, and sites that produce or handle organic products. A commenter recommended that section 205.403(a)(1) be amended to specify that on-site inspections of each production unit, facility, and site will include just those that produce or handle organic products. The commenter stated that this change was necessary because some retail corporations choose to certify all store locations regardless of whether the location sells organic products. The commenter went on to say that, if a location does not stock any organic products, the certifying agent should have the discretion to modify the inspection requirement.

We have excluded all retail food establishments from certification. The exclusion is found in section 205.101(b)(2). Accordingly, the commenter's recommendation is not applicable to retail food establishments. We have, however, made the recommended amendment to section 205.403(a)(1) because of its potential applicability to other operations which may apply for certification.

(6) Scheduling Initial On-site Inspection. We have amended section 205.403(b) to provide that the initial inspection may be delayed for up to 6 months to comply with the requirement that the inspection be conducted when the land, facilities, and activities that demonstrate compliance or capacity to comply with the organic production and handling requirements can be observed. We received a comment stating that if an application is received in January for a crop that will be planted in May, it would be necessary to delay the inspection until late May or June to observe the crop in the field. The commenter went on to say that the alternative would be to conduct the initial inspection before the crop is planted, in order to meet the "within a reasonable time" requirement, and then conduct a reinspection during the growing season. The commenter recommended amending section 205.403(b) to allow the certifying agent to delay the initial on-site inspection until the land, facilities, and activities that demonstrate compliance or capacity to comply can be observed.

We have accepted the recommendation because there may be situations where a later on-site inspection will prove mutually beneficial to the certifying agent and the operation to be inspected. However, certifying agents are reminded that the operation may be certified following a demonstration that the operation is able to comply with the organic production and handling requirements found in subpart C of these regulations. Accordingly, certifying agents should not unnecessarily delay the certification of an organic production or handling operation by insisting that the inspection only be performed when the operation can demonstrate its actual compliance with the organic production and handling requirements. Applicants who believe that the certifying agent is abusing its authority to delay the on-site inspection may file a complaint with the Administrator.

We have also amended the second sentence in section 205.403(b) by inserting the word, "all," and removing both references to "applicant" to clarify that the provision applies to all on-site inspections.

(7) Exit Interview. We have amended section 205.403(d) by requiring that the inspector conduct an exit interview with "an authorized representative of the operation who is knowledgeable about the inspected operation" rather than "an authorized representative of the inspected operation" as required in the proposed rule. This amendment is consistent with the requirement in section 205.403(b) that an on-site inspection be conducted when an authorized representative of the operation who is knowledgeable about the operation is present.

A commenter requested that we define "authorized representative." Another commenter recommended changing the term, "authorized representative," to "responsible executive." Our amendment of section 205.403(d) responds to both of these comments by clarifying the qualifications of an authorized representative.

A third commenter stated that an exit interview is not a practical requirement and that an initial interview is often preferred. The commenter stressed that verification that the inspector has correctly understood what is presented is ongoing. This commenter also expressed the belief that there may be times when it may not be appropriate for the inspector to address issues of concern and that such issues may be best left to the certifying agent. The commenter recommended that the requirement for an exit interview be deleted or presented as an option. Another commenter suggested that issues of concern are often identified and discussed with the operation's representative during the course of the inspection. This commenter believes that it is unnecessarily confrontational to require an exit interview during which these issues of concern are repeated. This commenter recommended replacing the required exit interview with a communications provision that would require the inspector to discuss the need for any additional information as well as any issues of concern. The recommended provision would also authorize the certifying agent to provide the applicant with a summary of the inspector's areas of concern.

While we agree that the language in section 205.403(d) needed clarification, we do not agree that the exit interview is impractical or unnecessarily confrontational. The exit interview is intended to give the inspector an opportunity to confirm the accuracy and completeness of inspection observations and information gathered during the on-site inspection, to request any additional information necessary to establish eligibility for certification, and to raise and discuss any known issues of concern. Issues of concern that may involve compliance issues will be handled as authorized by the certifying agent. The exit interview is also intended to give the inspected operation's authorized representative general information concerning the inspector's observations. Such exit interviews are required under ISO Guide 10011-1. Accordingly, requiring exit interviews is consistent with ISO standards and our expectation, as stated earlier in this preamble, that certifying agents benchmark their on-site inspection procedures to ISO Guide 10011-1.

(8) On-site Inspection Documentation. We have amended section 205.402(b) by adding the requirements that the certifying agent: (1) provide the applicant with a copy of the on-site inspection report, as approved by the certifying agent, for any on-site inspection performed and (2) provide the applicant with a copy of the test results for any samples taken by an inspector. We have also amended section 205.403 by adding a new paragraph (e) that requires the inspector, at the time of the inspection, to provide the operation's authorized representative with a receipt for any samples taken by the inspector. This new paragraph also addresses the requirement that the certifying agent provide the operation inspected with a copy of the inspection report and any test results. Having the certifying agent issue the on-site inspection report to the operation inspected is consistent with ISO Guide 65, section 11(b).

Several commenters recommended that section 205.403 be amended to require that the inspector issue a copy of the on-site inspection report to the operation at the exit interview. They also recommended that the inspector be required to provide the operation with a receipt for samples collected for testing. The commenters, further, recommended that the certifying agent be required to provide the operation with a written report on the results of the testing performed on the samples taken. A commenter also recommended that the operation be paid for any samples taken. One of the commenters recommended that section 205.403 be amended by adding protocol for an exit interview.

We concur that the applicant for certification and certified operations should be provided with a copy of the on-site inspection report, a receipt for samples taken, and a copy of the test results for samples taken. Accordingly, we have amended sections 205.402(b) and 205.403 as noted above.

The protocol for an exit interview will be set forth in the certifying agent's procedures to be used to evaluate certification applicants, make certification decisions, and issue certification certificates. The NOP is available to respond to questions and to assist certifying agents in the development of these procedures which are required under section 205.504(b)(1). Accordingly, AMS is not amending the section to include a protocol for exit interviews. AMS is also not including a requirement that the certifying agent pay the applicant for samples taken, since such charges would just be charged back to the applicant as a cost for processing the applicant's application for certification.

(9) Granting Certification. We have amended the last sentence of section 205.404(a) by removing the word, "restrictions," and replacing it with "requirements for the correction of minor noncompliances within a specified time period." A commenter suggested that the last sentence of section 205.404(a) be amended to read: "The approval may include restrictions or requirements as a condition of continued certification, which includes a time line for fulfilling the requirement." Another commenter requested that we define "restrictions." This commenter also recommended amending section 205.404(a) to clarify the meaning of "restrictions" and to require corrective action by the operator within a specific time period. We agree with the commenters that the last sentence of section 205.404(a) was in need of further clarification. We also agree that it is appropriate for the regulations to require that the requirements for correction include a specified time period within which the corrections must be made. Accordingly, we amended section 205.404(a) as noted above. The certifying agent will make the determination of whether a violation of the Act and regulations is minor. Minor noncompliances are those infractions that, by themselves, do not preclude the certification or continued certification of an otherwise qualified organic producer or handler. The certifying agent would be free to modify the time period for correction should it believe it to be appropriate.

We have also made editorial changes to section 205.404(a) consistent with suggestions we received on section 205.506. In the title to section 205.404 we have replaced "Approval of" with "Granting." In section 205.404(a) we have replaced "approve" with "grant" and "approval" with "certification." This change makes the language in section 205.404 consistent with ISO Guide 65, section 4.6, which addresses the granting of certification.

(10) Payment of Fees. We have amended the introductory statement within section 205.406(a) by adding the requirement that, to continue certification, a certified operation annually pay the certifying agent's certification fees. A commenter recommended amending section 205.404(c) by adding a sentence providing that a certified operation's failure to pay the certifying agent's certification fees may be a cause for suspension or revocation of certification. We agree that the issue of payment of fees should be addressed but not in section 205.404(c), which deals with the duration of a certified operation's certification. We believe the issue of payment of certification fees is more appropriately addressed in section 205.406, which deals with continuation of certification. Accordingly, we have amended section 205.406(a) to require payment of the certifying agent's fees as a condition of continued certification. This addition would allow a certifying agent to initiate suspension or revocation proceedings against any operation that fails to pay the required fees. The certifying agent is not required to initiate suspension or revocation proceedings for failure to pay the fees. In fact, the certifying agent is encouraged to use one or more of the legal debt collection alternatives available to it.

(11) Denial of Certification. We have amended section 205.405 to include noncompliance and resolution provisions originally included by cross-reference to section 205.662(a). We have made this amendment in response to a comment that these regulations do not provide an opportunity for a hearing upon denial of certification. We disagree with the commenter's assessment but have amended section 205.405(a) to eliminate confusion that may result from the cross-reference to section 205.662(a). We have determined that section 205.662(a) may cause confusion for certification applicants because the section does not specifically address applicants.

As amended, section 205.405(a) required a written notification of noncompliance that describes each noncompliance, the facts on which the noncompliance is based, and the date by which the applicant must rebut or correct each noncompliance and submit supporting documentation of each such correction when correction is possible. Section 205.405(b) lists the options available to the applicant, including the options of correcting the noncompliance or submitting written information to rebut the noncompliance. Successful correction or rebuttal will result in an approval of certification. When the corrective action or rebuttal is not sufficient for the applicant to qualify for certification, the certifying agent will issue a written notice of denial of certification. This notice will state the reason(s) for denial and the applicant's right to request mediation in accordance with section 205.663 or to file an appeal in accordance with section 205.681.

(12) Rebuttal of a Noncompliance. We have amended section 205.405(b)(3) to clarify that rebuttal of a noncompliance shall be submitted to the certifying agent that issued the notification of noncompliance. We made this amendment in response to a commenter's question about who has authority to evaluate a written rebuttal.

(13) Correction of Minor Noncompliances. We have amended section 205.406(a) by adding a new paragraph (3) which requires the certified operation to include with its annual reporting an update on the correction of minor noncompliances previously identified by the certifying agent as requiring correction for continued certification. A commenter recommended adding at 205.406(a) a requirement that the certified operation address any restrictions that have been applied to its certification under 205.404(a). We agree with the commenter that the annual reporting by the certified operation should include an update addressing the certified operation's compliance with the certifying agent's requirements for the correction of minor noncompliances. Accordingly, we amended section 205.406(a) as noted above and redesignated paragraph (3) as paragraph (4). The certifying agent will make the determination of whether a violation of the Act and regulations is minor. Minor noncompliances are those infractions that, by themselves, do not preclude the certification or continued certification of an otherwise qualified organic producer or handler.

(14) Scheduling Annual On-site Inspections. We have amended section 205.406(b) to provide that, when it is impossible for the certifying agent to conduct the annual on-site inspection following receipt of the certified operation's annual update of information, the certifying agent may allow continuation of certification and issue an updated certificate of organic operation on the basis of the information submitted and the most recent on-site inspection conducted during the previous 12 months. The annual on-site inspection, required by section 205.403, must, however, be conducted within the first 6 months following the certified operation's scheduled date of annual update.

A commenter expressed the belief that the requirement for an on-site inspection after receipt of the certified operation's annual update of information would have required that all annual on-site inspections be performed at the same time of the year. The commenter went on to express the belief that, to avoid inspecting certified operations twice a year, certifying agents would have to schedule the annual update to occur during the growing season in order to comply with the requirement for timing inspections when normal production activities can be observed. The commenter stated that certifying agents should be given more flexibility for scheduling inspections and conducting their certification programs according to management procedures best suited to their agency. The commenter recommended amending section 205.406(b) by adding to the end thereof: "or base the decision regarding eligibility for renewal on an on-site inspection conducted during the previous 12 months."

We agree with the commenter that certifying agents should be given more flexibility for scheduling on-site inspections so as to best meet the management needs of the certifying agent. Accordingly, we have amended section 205.406(b) to allow continuation of certification and issuance of an updated certificate of organic operation on the basis of the information submitted and the most recent on-site inspection conducted during the previous 12 months. This option will be available to the certifying agent when renewal is scheduled for a time when it is impossible to conduct the annual on-site inspection following receipt of the annual update and at a time when land, facilities, and activities that demonstrate the operation's compliance or capability to comply can be observed. This change does not affect the requirement in section 205.403(a)(1) that the certifying agent conduct an annual on-site inspection of each certified operation. Further, the annual on-site inspection must be conducted within the first 6 months following the certified operation's scheduled date of annual update.

Certification - Changes Requested But Not Made

This subpart retains from the proposed rule regulations on which we received comments as follows:

(1) Number of On-site Inspections. A commenter recommended that section 205.403(a)(1) be amended by adding a requirement that production operations be under active organic management for the last year of the 3-year land conversion period and that two on-site inspections be performed prior to organic certification.

Section 205.403(a)(1) provides that the certifying agent must conduct an initial on-site inspection of each production unit, facility, and site that produces or handles organic products and that is included in an operation for which certification is requested. The requirement does not preclude a certifying agent from conducting additional on-site inspections, if necessary, to establish the applicant's eligibility for certification. The Act requires a 3-year period immediately preceding harvest, during which the production operation must be free from the application of prohibited substances. The Act does not, however, require that land be under active organic management during this period, and we do not believe such a requirement in these regulations is necessary. Such a requirement, for example, would necessitate some process for verifying that an operation is under active organic management, which would, in effect, require a certification-type decision a year before certification is granted and the operation can begin to label products as certified organic. Accordingly, we disagree with the commenter's recommendation that an operation be under active organic management for the last year of the 3-year land conversion and that two on-site inspections be required.

(2) Unannounced Inspections. A commenter recommended that section 205.403(a)(2)(iii) be amended to require additional unannounced inspections either by defining the circumstances under which the inspections should be undertaken or by setting a minimum percentage of unannounced inspections. The commenter claimed that 5 percent is a common percentage adopted by certifying agents around the world.

Section 205.403 requires an initial on-site inspection, annual on-site inspection, and additional on-site inspections to determine compliance with the Act and regulations, to verify that information provided reflects actual practices, and to verify, through testing if necessary, that prohibited substances are not used by the operation. Because of the widely disparate nature of certified operations, we believe the certifying agent is in the best position to determine the need for additional on-site inspections. Accordingly, we have rejected the commenter's request that the regulations require additional unannounced visits either by defining the circumstances under which these should be undertaken or by setting a minimum percentage.

(3) Timeliness of Certifying Agent Review Information. A commenter requested that section 205.404(a) be amended to specify a timeframe of 60 days rather than "Within a reasonable time" as the time by which the certifying agent must review the on-site inspection report, the results of any analyses for substances, and any additional information requested from or supplied by the applicant.

Section 205.404(a) requires the certifying agent, within a reasonable time after completion of the initial on-site inspection, to review the on-site inspection report, the results of any analyses for substances conducted, and any additional information requested from or supplied by the applicant. Section 205.504(b)(1) requires the certifying agent to submit a copy of the procedures to be used to evaluate certification applicants, make certification decisions, and issue certification certificates. Such procedures and the certifying agent's performance in making timely certification decisions will be subject to review during accreditation and reaccreditation of the certifying agent. Certifying agents are expected to make timely decisions regarding whether to certify an applicant and whether a certified operation is in compliance with the Act and regulations. Applicants with complaints regarding timeliness of service could forward their complaints to the Administrator. Accordingly, timely service will be in the best interest of certifying agents since such complaints could have an impact on their reaccreditation or continued accreditation. Further, our original position is consistent with those commenters requesting flexibility in determining what constitutes reasonable time. Accordingly, we have not amended section 205.404(a) as requested.

(4) Categories of Organic Operation. We received a variety of comments regarding the requirement that the certifying agent issue a certificate of organic operation which specifies the categories of organic operation, including crops, wild crops, livestock, or processed products produced by the certified operation. One commenter recommended that section 205.404(b)(3) be amended, with regard to processing, to only require a processing category to be specified on the certificate, such as food processing or feed processing. The commenter stated that it should not be necessary to list every product on the certificate. Specifically, the commenter recommended amending section 205.404(b)(3) by inserting the words, "general categories of," immediately in front of the word, "processed." Another commenter recommended amending section 205.404(b)(3) to require the identity of specific crops and the specific processing operations certified. Still another commenter requested that section 205.404(b) be amended by adding a new paragraph requiring that the certificate include the number of livestock of each species produced on the certified operation. This same commenter also recommended the addition of a new paragraph requiring that the certificate identify the specific location of each certified organic field and handling operation. We also received support for section 205.404(b)(3) as written. This commenter does not support the addition of information regarding the number of livestock or the location of fields.

We disagree with the suggestion that the certificate list every crop, wild crop, livestock, or processed product produced by the certified operation. We believe that listing categories of organic operation is sufficient. This does not, however, prevent the certifying agent, in cooperation with the certified operation, from listing specific crops, livestock, or processed products on the certificate. Such information could always be listed on the certificate when requested by the certified operation. We also disagree with the commenter who requested that certifying agents display the number of livestock of each species produced by the certified operation and the specific location of each certified organic field and handling operation. We do not believe it is necessary to list the quantity of product to be produced or handled at a certified operation, nor do we believe it is necessary to list the location of a certified operation's fields or facilities. Such information may, however, be listed on the certificate upon the written request of the certified operation. By requiring the name, address, and telephone number of the certifying agent, the certificate would provide interested persons with a contact for obtaining releasable information concerning the certified operation. Further, the certifying agent is the first line of compliance under this program and, as such, is the person to whom all questions and concerns should be addressed about certified operations.

(5) Annual Renewal of Certification. Numerous commenters requested that section 205.404(b)(2) be amended to provide for the placement of an expiration date on the certificate of organic operation. The commenters want yearly expiration of certification and yearly expiration of the certificate of organic operation. Commenters also requested that section 205.404(c) be amended to provide that once certified, a production or handling operation's organic certification continues in effect until the expiration date on the certificate, until surrendered by the organic operation, or until suspended or revoked by the certifying agent, the SOP's governing State official, or the Administrator. Some commenters recommended the addition of a new paragraph 205.406(e) that would provide for automatic suspension of a certification if the certified operation did not provide the information required in paragraph 205.406(a) by the expiration date to be placed on the certificate of organic operation.

We disagree with the commenters who have requested annual renewal of certification and that the certified operation's certification and its certificate of organic operation expire annually. We prefer continuous certification due to the very real possibility that the renewal process might not always be completed before expiration of the certification period. Expiration of the certification period would result in termination of the operation's certification. Even a short period of interruption in an operation's organic status could have severe economic ramifications. Further, we believe that a regular schedule of expiration of certification is unnecessary inasmuch as all certified operations are required to annually update their organic system plan and submit any changes to their certifying agent. More importantly, unlike accreditation, where the Act provides for expiration and renewal, the Act does not provide for an expiration or renewal of certification. Therefore, it is also our position that once granted certification the production or handling operation retains that certification until voluntarily surrendered or removed, following due process, for violation of the Act or these regulations.

(6) Denial of Certification. A commenter recommended that section 205.405(e) be amended to place a time restriction on reapplication for certification after denial of certification. The commenter suggested a 3-year period. We disagree with this recommendation because the reasons for denial include a wide range of noncompliances. The ability to correct noncompliances will vary as will the time needed to correct the noncompliances.

(7) Production and Handling Operation Certification Following Suspension or Revocation of Certifying Agent Accreditation. A few commenters requested amendment of section 205.406 through the addition of a new paragraph (f). Specifically, the commenters requested provisions that would provide for USDA notification of certified operations regarding the suspension or revocation of their certifying agent's accreditation. Some of these commenters requested that the provisions also allow the affected certified operation to use current market labels for a maximum period of 12 months, provided the certified operation made application for certification with another USDA-accredited certifying agent within 3 months of being notified of their certifying agent's suspension or revocation of accreditation. Another commenter requested that the new paragraph provide that the affected certified operation will continue to operate as if certified by the USDA and will be allowed to use current market labels for a maximum period of 12 months. The commenter stated that this amendment would provide the certified operation with the time needed to obtain recertification by an accredited certifying agent and to prepare new labels.

We disagree with the recommendations. USDA does not perform organic certification activities under any circumstance, including upon surrender, suspension, or revocation of an accredited certifying agent's accreditation. Operations certified by a certifying agent that surrenders or loses its USDA accreditation will be notified by USDA and given an opportunity to immediately begin seeking certification by the USDA-accredited certifying agent of their choice. Certified operations shall not affix the seal or other representation of a certifying agent to any product that they produce after the certifying agent has surrendered or had its accreditation revoked. The certified operation may use the USDA organic seal. In the case of suspension of the certifying agent, the reasons for the suspension and the terms of the suspension will determine whether the certifying agent's certified operations will have to seek recertification or stop affixing the certifying agent's seal or other representation to their products. USDA will announce the suspension or revocation of a certifying agent's accreditation, and the announcement will address the status of operations certified by the certifying agent.

Certification - Clarifications

Clarification is given on the following issues raised by commenters as follows:

(1) Recordkeeping. A commenter stated that most computerized recordkeeping systems used at retail and wholesale are set up to save the data for a maximum of 2 years; adding 3 additional years to that requirement would be extremely costly as systems modifications and additional hardware and support would be required to meet the mandate. The commenter suggested that since food product is generally sold and consumed within a matter of months (if not weeks), shortening this requirement to 2 years should meet the goal for tracking of any product through the distribution system. This commenter was referring to the requirement in section 205.400(d) that records be maintained for not less than 5 years beyond their creation.

Section 205.103 requires that a certified operation maintain records; that the records be adapted to the particular business that the certified operation is conducting, fully disclose all activities and transactions of the certified operation in sufficient detail as to be readily understood and audited, be maintained for not less than 5 years beyond their creation, and be sufficient to demonstrate compliance with the Act and the regulations in this part; and that the certified operation must make such records available for inspection and copying during normal business hours by authorized representatives of the Secretary, the applicable SOP's governing State official, and the certifying agent. The requirements do not state in what form (i.e., paper, electronic, film) that the records must be maintained. Therefore, in answer to the commenter's concern, database records more than 2 years old could be stored in any form, including on an electronic storage device, which would permit retrieval upon request.

(2) Application Fees. A commenter recommended that section 205.401 be amended by adding a new paragraph (e) which would require an applicant for certification to include, along with the other required application information, the application fees required by the certifying agent.

The requested language is unnecessary because section 205.400(e) requires submission of the applicable fees charged by the certifying agent as a general requirement for certification.

(3) Applicant Identification. In reference to section 205.401(c) a commenter stated that an applicant that is a corporation could easily change the name of the corporation in order to avoid having to report applications submitted and denied under the previous name. The commenter went on to state that there must be a database available to certifying agents that includes names and location addresses of operations that have received a notification of noncompliance, denial of certification, or a suspension or revocation of certification.

Section 205.401(b) requires the applicant to include in its application the name of the person completing the application; the applicant's business name, address, and telephone number; and, when the applicant is a corporation, the name, address, and telephone number of the person authorized to act on the applicant's behalf.

As we stated in the preamble to the proposed rule, we anticipate using the data collected under section 205.501(a)(15) to establish and maintain two Internet databases. The first Internet database would be accessible to the general public and would include the names and other appropriate data on certified organic production and handling operations. The second Internet database would be password protected and only available to accredited certifying agents and USDA. This second database would include data on production and handling operations issued a notification of noncompliance, noncompliance correction, denial of certification, certification, proposed suspension or revocation of certification, and suspension or revocation of certification. Certifying agents would use the second Internet database during their review of an application for certification.

(4) Withdrawal of Application. Several commenters expressed the belief that allowing an applicant to voluntarily withdraw its application will be used as a tool to avoid denial of certification. They expressed concern that voluntary withdrawal before denial of certification will allow the applicant to make application with a different certifying agent with a clean record. These commenters were responding to the provision in section 205.402(e) which allows an applicant for certification to withdraw its application at any time.

We continue to believe that operations should not be unnecessarily stigmatized because they applied for certification before the operation was ready to meet all requirements for certification. While some operations may use voluntary withdrawal as a means to avoid the issuance of a notification of noncompliance or a notice of denial of certification, this should not adversely affect the National Organic Program (NOP) because all certifying agents are responsible for using qualified personnel in the certification process and for ensuring an applicant's eligibility for certification. Further, all applicants for certification are required under section 205.401(c) to include in their application the name(s) of any organic certifying agent(s) to which application has previously been made, the year(s) of application, and the outcome of the application(s) submission.

(5) On-site Inspections. Section 205.403(a)(2)(ii) provides that the Administrator or SOP's governing State official may require that additional inspections be performed by the certifying agent for the purpose of determining compliance with the Act and the regulations in this part. In commenting on this provision, a commenter asked, "Who is running this program: State or Federal officials?"

This is a national organic program administered by the Agricultural Marketing Service of the United States Department of Agriculture. States may administer their own organic program. However, all SOP's are subject to USDA approval. The National Organic Standards and a State's organic standards under a USDA-approved SOP are the National Organic Standards for that State. The State, under USDA's approval of the SOP, has enforcement responsibilities for the Federal and State components of the organic program within the State.

(6) Verification of Information. A commenter stated that section 205.403(c) is insufficiently comprehensive. The commenter stated that organic inspection is assessment of a process evaluated against comprehensive standards and, as such, it requires specific rules to provide confidence in the quality of the inspection. The commenter recommended amending section 205.403(c) by including requirements on minimum verification methods.

Section 205.403(c) identifies what must be verified during the on-site inspection. The details on how the verification will be accomplished will be set forth in the certifying agent's procedures to be used to evaluate certification applicants, make certification decisions, and issue certification certificates and the certifying agent's procedures for reviewing and investigating certified operation compliance with the Act and regulations. The NOP is available to respond to questions and to assist certifying agents in complying with the on-site inspection requirements, including those for the verification of information.

(7) Notifying Customers of Change in Certification Status. A commenter stated that the regulations do not indicate when a certified organic producer must stop using the organic seal or whether they must notify customers of their denial of certification. The commenter recommended amending section 205.405 to include a provision for notifying customers of a certified operation's change in certification status.

Any producer or handler who plans to sell, label, or represent its product as "100 percent organic," "organic," or "made with..." must be certified unless exempted under the small operation exemption under section 205.101(a)(1) or not regulated under the NOP (i.e., a producer of dog food). Only certified operations may represent themselves as certified. Operations denied certification may not represent their products as "100 percent organic," "organic," or "made with..." Operations that have had their certification suspended or revoked will be subject to the terms and conditions of their suspension or revocation relative to the labeling of product produced prior to the suspension or revocation. No product produced by an operation after suspension or revocation of certification may be sold, labeled, or represented as "100 percent organic," "organic," or "made with..."

Buyers of organic product can request to see the producer's or handler's certificate of organic operation. Operations that have lost their organic status will be unable to obtain an updated certificate. Buyers with questions regarding an operation's organic status may also contact the certifying agent identified on a certificate of organic operation. Further, as previously noted, we anticipate using the data collected under section 205.501(a)(15) to establish and maintain an Internet database accessible to the general public that will include the names and other appropriate data on certified organic production and handling operations.

(8) Continuation of Certification. A few commenters recommended amending section 205.406 to include a safety net for producers who are certified by a certifying agent that does not become accredited by USDA. They stated that the rule must clearly state that a certified organic producer will have the full 18-month implementation period starting from the effective date of the final rule to get recertified if their certifying agent is not accredited. One of the commenters stated that because the NOP anticipates that the accreditation process will require 12 months, producers will, in effect, have 6 months to be certified by a new certifying agent should the producer's certifying agent not be accredited.

Certification under the NOP will become mandatory 18 months after the effective date of the final rule. Applications for accreditation will be processed on a first-come, first-served basis. Accreditations will be announced approximately 12 months after the effective date of the final rule for those qualified certifying agents who apply within the first 6 months following the effective date and for any other applicants that AMS determines eligible. Certifying agents will begin the process of certifying organic production and handling operations to the national standards upon receipt of their USDA accreditation. All production and handling operations certified by an accredited certifying agent will be considered certified to the national standards until the certified operation's anniversary date of certification. This phase-in period will only be available to those certified operations certified by a certifying agent that receives its accreditation within 18 months from the effective date of the final rule. We anticipate that certifying agents and production and handling operations will move as quickly as possible to begin operating under the national organic standards. Operations certified by a certifying agent, which fails to apply for or fails to meet the requirements for USDA accreditation under the NOP, must seek and receive certification by a USDA-accredited certifying agent before they can sell, label, or represent their products as organic, effective 18 months after the effective date of the final rule.

1. ISO Guide 10011-1 is available for viewing at USDA-AMS, Transportation and Marketing Programs, Room 2945-South Building, 14th and Independence Ave., SW, Washington, DC, from 9:00 a.m. to 4:00 p.m., Monday through Friday (except official Federal holidays). A copy may be obtained from the American National Standards Institute

Subpart F - Accreditation of Certifying Agents

This subpart sets forth the requirements for a national program to accredit State and private entities as certifying agents to certify domestic or foreign organic production or handling operations. This subpart also provides that USDA will accept a foreign certifying agent's accreditation to certify organic production or handling operations if: (1) USDA determines, upon the request of a foreign government, that the standards under which the foreign government authority accredited the foreign certifying agent meet the requirements of this part; or (2) the foreign governmental authority that accredited the certifying agent acted under an equivalency agreement negotiated between the United States Government and the foreign government.

This National Organic Program (NOP) accreditation process will facilitate national and international acceptance of U.S. organically produced agricultural commodities. The accreditation requirements in these regulations will, upon announcement of the first group of accredited certifying agents, replace the voluntary fee-for-service organic assessment program, established by AMS under the Agricultural Marketing Act of 1946. That assessment program verifies that State and private organic certifying agents comply with the requirements prescribed under the International Organization for Standardization/International Electrotechnical Commission Guide 65, "General Requirements for Bodies Operating Product Certification Systems" (ISO Guide 65).⁽¹⁾ ISO Guide 65 provides the general requirements that a certifying agent would need to meet to be recognized as competent and reliable. That assessment program was originally established to enable organic certifying agents in the absence of a U.S. national organic program to comply with European Union (EU) requirements beginning on June 30, 1999. That assessment program verifies that State and private organic certifying agents are operating third-party certification systems in a consistent and reliable manner, thereby facilitating uninterrupted exports of U.S. organic agricultural commodities to the EU. ISO Guide 65 was used as a benchmark in developing the accreditation program described in this final rule. Certifying agents accredited under the NOP that maintain compliance with the Act and these regulations will meet or exceed the requirements of ISO Guide 65; therefore, the organic assessment program is no longer needed.

Participation in the NOP does not preclude the accredited certifying agent from conducting other business operations, including the certification of agricultural products, practices, and procedures to standards that do not make an organic claim. An accredited certifying agent may not, however, engage in any business operations or activities which would involve the agent in a violation of or in a conflict of interest under the NOP.

Description of Regulations

The Administrator will accredit qualified domestic and foreign applicants in the areas of crops, livestock, wild crops, or handling or any combination thereof to certify domestic or foreign production or handling operations as certified organic operations. Qualified applicants will be accredited for 5 years.

Application Process

Certifying agents will apply to the Administrator for accreditation to certify production or handling operations operating under the NOP. The certifying agent's application must include basic business information, must identify each area of operation for which accreditation is requested and the estimated number of each type of operation to be certified annually, and must include a list of each State or foreign country where it currently certifies production or handling operations and where it intends to certify such operations. Certifying agents must also submit personnel, administrative, conflict of interest, current certification, and other documents and information to demonstrate their expertise in organic production or handling techniques, their ability to comply with and implement the organic certification program, and their ability to comply with the requirements for accreditation. Certifying agents planning to certify production or handling operations within a State with an approved State organic program (SOP) must demonstrate their ability to comply with the requirements of the SOP.

The administrative information submitted by the applicant must include copies of its procedures for certifying operations, for ensuring compliance of its certified operations with the Act and regulations, for complying with recordkeeping requirements, and for making information available to the public about certified operations. The procedures for certifying operations encompass the processes used by the certifying agent to evaluate applicants, make certification decisions, issue certification certificates, and maintain the confidentiality of any business information submitted by the certified operation. The procedures for ensuring compliance of the certified operations will include the methods used to review and investigate certified operations, for sampling and residue testing, and to report violations.

The personnel information submitted with the application must demonstrate that the applicant uses a sufficient number of adequately trained personnel to comply with and implement the organic certification program. The certifying agent will also have to provide evidence that its responsibly connected persons, employees, and contractors with inspection, analysis, and decision-making responsibilities have sufficient expertise in organic production or handling techniques to successfully perform the duties assigned. They must also show that all persons who review applications for certification perform on-site inspections, review certification documents, evaluate qualifications for certification, make recommendations concerning certification, or make certification decisions and that all parties responsibly connected to the certifying agent have revealed existing or potential conflicts of interest.

Applicants who currently certify production or handling operations must also submit a list of the production and handling operations currently certified by them. For each area in which the applicant requests accreditation, the applicant should furnish copies of inspection reports and certification evaluation documents for at least three operations. If the applicant underwent any other accrediting process in the year previous to the application, the applicant should also submit the results of the process.

Certifying agents are prohibited from giving advice or providing consultancy services to certification applicants or certified operations for overcoming identified barriers to certification. This requirement does not apply to voluntary education programs available to the general public and sponsored by the certifying agent.

The Administrator will provide oversight of the fees to ensure that the schedule of fees filed with the Administrator is applied uniformly and in a nondiscriminatory manner. The Administrator may inform a certifying agent that its fees appear to be unreasonable and require that the certifying agent justify the fees. The Administrator will investigate the level of fees charged by an accredited certifying agent upon receipt of a valid complaint or under compelling circumstances warranting such an investigation.

Statement of Agreement.

Upon receipt of the certifying agent's application for accreditation, the Administrator will send a statement of agreement to the person responsible for the certifying agent's day-to-day operations for signature. The statement of agreement affirms that, if granted accreditation as a certifying agent under this subpart, the applicant will carry out the provisions of the Act and the regulations in this part. Accreditation will not be approved until this statement is signed and returned to the Administrator.

The statement of agreement will include the applicant's agreement to accept the certification decisions made by another certifying agent accredited or accepted by USDA pursuant to section 205.500 and the applicant's agreement to refrain from making false or misleading claims about its accreditation status, the USDA accreditation program, or the nature or qualities of products labeled as organically produced. Further, the statement will include the applicant's agreement to pay and submit the fees charged by AMS and to comply with, implement, and carry out any other terms and conditions determined by the Administrator to be necessary. Applicants are also required to affirm through this statement of agreement that they will: (1) conduct an annual performance evaluation of all persons who review applications for certification, perform on-site inspections, review certification documents, evaluate qualifications for certification, make recommendations concerning certification, or make certification decisions and implement measures to correct any deficiencies in certification services; and (2) have an annual program review conducted of their certification activities by their staff, an outside auditor, or a consultant who has expertise to conduct such reviews and implement measures to correct any noncompliances with the Act and the regulations in this part that are identified in the evaluation.

A private entity certifying agent must additionally agree to hold the Secretary harmless for any failure on the agent's part to carry out the provisions of the Act and regulations. A private entity certifying agent's statement will also include an agreement to furnish reasonable security for the purpose of protecting the rights of operations certified by such certifying agent. Such security will be in an amount and according to such terms as the Administrator may by regulation prescribe. A private entity certifying agent must agree to transfer all records or copies of records concerning its certification activities to the Administrator if it dissolves or loses its accreditation. This requirement for the transfer of records does not apply to a merger, sale, or other transfer of ownership of a certifying agent. A private entity certifying agent must also agree to make such records available to any applicable SOP's governing State official.

Granting Accreditation.

Upon receiving all the required information, including the statement of agreement, and the required fee, the Administrator will determine if the applicant meets the requirements for accreditation. The Administrator's determination will be based on a review of the information submitted and, if necessary, a review of the information obtained from a site evaluation. The Administrator will notify the applicant of the granting of accreditation in writing. The notice of accreditation will state the area(s) for which accreditation is given, the effective date of the accreditation, any terms or conditions for the correction of minor noncompliances, and, for a private-entity certifying agent, the amount and type of security that must be established.

Certifying agents who apply for accreditation and do not meet the requirements for accreditation will be provided with a notification of noncompliance which will describe each noncompliance, the facts on which the notification is based, and the date by which the applicant must rebut or correct each noncompliance and submit supporting documentation of each such correction when correction is possible. If the applicant is successful in its rebuttal or provides acceptable evidence demonstrating correction of the noncompliances, the NOP Program Manager will send the applicant a written notification of noncompliance resolution and proceed with further processing of the application. If the applicant fails to correct the noncompliances, fails to report the corrections by the date specified in the notification of noncompliance, fails to file a rebuttal by the date specified in the notification of noncompliance, or is unsuccessful in its rebuttal, the Program Manager will issue a written notification of accreditation denial to the applicant. An applicant who has received written notification of accreditation denial may apply for accreditation again at any time or file an appeal of the denial of accreditation with the Administrator by the date specified in the notification of accreditation denial.

Once accredited, a certifying agent may establish a seal, logo, or other identifying mark to be used by certified production and handling operations. However, the certifying agent may not require use of its seal, logo, or other identifying mark on any product sold, labeled, or represented as organically produced as a condition of certification. The certifying agent also may not require compliance with any production or handling practices other than those provided for in the Act and regulations as a condition for use of its identifying mark. However, certifying agents certifying production or handling operations within a State with more restrictive requirements, approved by the Administrator, shall require compliance with such requirements as a condition of use of their identifying mark by such operations.

Site Evaluations.

One or more representatives of the Administrator will perform site evaluations for each certifying agent in order to examine the certifying agent's operations and to evaluate compliance with the Act and regulations. Site evaluations will include an on-site review of the certifying agent's certification procedures, decisions, facilities, administrative and management systems, and production or handling operations certified by the certifying agent. A site evaluation of an accreditation applicant will be conducted before or within a reasonable time after issuance of the applicant's notification of accreditation. Certifying agents will be billed for each site evaluation conducted in association with an initial accreditation, amendments to an accreditation, and renewals of accreditation. Certifying agents will not be billed by USDA for USDA-initiated site evaluations conducted to determine compliance with the Act and regulations.

As noted above, a certifying agent may be accredited prior to a site evaluation. If the Program Manager finds, following the site evaluation, that an accredited certifying agent is not in compliance with the Act or regulations, the Program Manager will issue the certifying agent a written notification of noncompliance. If the certifying agent fails to correct the noncompliances, report the corrections by the date specified in the notification of noncompliance, or file a rebuttal by the date specified in the notification of noncompliance, the Administrator will begin proceedings to suspend or revoke the accreditation. A certifying agent that has had its accreditation suspended may at any time, unless otherwise stated in the notification of suspension, submit a request to the Secretary for reinstatement of its accreditation. The request must be accompanied by evidence demonstrating correction of each noncompliance and corrective actions taken to comply with and remain in compliance with the Act and regulations. A certifying agent whose accreditation is revoked will be ineligible for accreditation for a period of not less than 3 years following the date of such determination.

Peer Review Panels.

The Administrator shall establish a peer review panel pursuant to the Federal Advisory Committee Act (FACA) (5 U.S.C. App. 2 et seq.). The peer review panel shall be composed of not fewer than three members who shall annually evaluate the NOP's adherence to the accreditation procedures in subpart F of these regulations and ISO/IEC Guide 61⁽²⁾, General requirements for assessment and accreditation of certification/registration bodies, and the NOP's accreditation decisions. This will be accomplished through the review of: (1) accreditation procedures, (2) document review and site evaluation reports, and (3) accreditation decision documents or documentation. The peer review panel shall report its finding, in writing, to the NOP Program Manager.

Continuing Accreditation.

An accredited certifying agent must submit annually to the Administrator, on or before the anniversary date of the issuance of the notification of accreditation, the following reports and fees: (1) a complete and accurate update of its business information, including its fees, and information evidencing its expertise in organic production or handling and its ability to comply with these regulations; (2) information supporting any changes requested in the areas of accreditation; (3) a description of measures implemented in the previous year and any measures to be implemented in the coming year to satisfy any terms and conditions specified in the most recent notification of accreditation or notice of renewal of accreditation; (4) the results of the most recent performance evaluations and annual program review and a description of adjustments to the certifying agent's operation and procedures implemented or to be implemented in response to the performance evaluations and program review; and (5) the required AMS fees.

Certifying agents will keep the Administrator informed of their certification activities by providing the Administrator with a copy of: (1) any notice of denial of certification, notification of noncompliance, notification of noncompliance correction, notification of proposed suspension or revocation, and notification of suspension or revocation issued simultaneously with its issuance and (2) a list, on January 2 of each year, including the name, address, and telephone number of each operation granted certification during the preceding year.

One or more site evaluations will occur during the 5-year period of accreditation to determine whether an accredited certifying agent is complying with the Act and regulations. USDA will establish an accredited certifying agent compliance monitoring program, which will involve no less than one randomly selected site evaluation of each certifying agent during its 5-year period of accreditation. Larger and more diverse operations, operations with clients marketing their products internationally, and operations with a history of problems should expect more frequent site evaluations by USDA. Operations with clients marketing their products internationally will be annually site evaluated to meet the ISO-Guide 61 requirement for periodic surveillance of accredited certifying agents. USDA may also conduct site evaluations during investigations of alleged or suspected violations of the Act or regulations and in followup to such investigations. Such investigations will generally be the result of complaints filed with the Administrator alleging violations by the certifying agent. Compliance site evaluations may be announced or unannounced at the discretion of the Administrator. Certifying agents will not be billed by USDA for USDA-initiated site evaluations conducted to determine compliance with the Act and regulations.

An accredited certifying agent must provide sufficient information to persons seeking certification to enable them to comply with the applicable requirements of the Act and these regulations. The certifying agent must maintain strict confidentiality with respect to its clients and not disclose to third parties (with the exception of the Secretary or the applicable SOP's governing State official or their authorized representatives) any business-related information concerning any client obtained while implementing these regulations except as authorized by regulation. A certifying agent must make the following information available to the public: (1) certification certificates issued during the current and 3 preceding calender years; (2) a list of producers and handlers whose operations it has certified, including for each the name of the operation, type(s) of operation, products produced, and the effective date of the certification, during the current and 3 preceding calender years; and (3) the results of laboratory analyses for residues of pesticides and other prohibited substances conducted during the current and 3 preceding calender years. A certifying agent may make other business information available to the public if permitted in writing by the producer or handler. This information will be made available to the public at the public's expense.

An accredited certifying agent must maintain records according to the following schedule: (1) records obtained from applicants for certification and certified operations must be maintained for not less than 5 years beyond their receipt; (2) records created by the certifying agent regarding applicants for certification and certified operations must be maintained for not less than 10 years beyond their creation; and (3) records created or received by the certifying agent pursuant to the accreditation requirements, excluding any records covered by the 10-year requirement, must be maintained for not less than 5 years beyond their creation or receipt. Examples of records obtained from applicants for certification and certified operations include organic production system plans, organic handling system plans, application documents, and any documents submitted to the certifying agent by the applicant/certified operation. Examples of records created by the certifying agent regarding applicants for certification and certified operations include certification certificates, notices of denial of certification, notification of noncompliance, notification of noncompliance correction, notification of proposed suspension or revocation, notification of suspension or revocation, correspondence with applicants and certified operations, on-site inspection reports, documents concerning residue testing, and internal working papers and memorandums concerning applicants and certified operations. Examples of records created or received by the certifying agent pursuant to the accreditation requirements include operations manuals; policies and procedures documents (personnel, administrative); training records; annual performance evaluations and supporting documents; conflict of interest disclosure reports and supporting documents; annual program review working papers, memorandums, letters, and reports; fee schedules; annual reports of operations granted certification; application materials submitted to the NOP; correspondence received from and sent to USDA; and annual reports to the Administrator.

The certifying agent must make all records available for inspection and copying during normal business hours by authorized representatives of the Secretary and the applicable SOP's governing State official. In the event that the certifying agent dissolves or loses its accreditation, it must transfer to the Administrator and make available to any applicable SOP's governing State official all records or copies of records concerning its certification activities. This requirement for the transfer of records does not apply to a merger, sale, or other transfer of ownership of a certifying agent.

Certifying agents are also required to prevent conflicts of interest and to require the completion of an annual conflict of interest disclosure report by all persons who review applications for certification, perform on-site inspections, review certification documents, evaluate qualifications for certification, make recommendations concerning certification, or make certification decisions and all parties responsibly connected to the certifying agent. Coverage of the conflict of interest provisions extends to immediate family members of persons required to complete an annual conflict of interest disclosure report. A certifying agent may not certify a production or handling operation if the certifying agent or a responsibly connected party of such certifying agent has or has held a commercial interest in the production or handling operation, including an immediate family interest or the provision of consulting services, within the 12-month period prior to the application for certification. A certifying agent may certify a production or handling operation if any employee, inspector, contractor, or other personnel of the certifying agent has or has held a commercial interest, including an immediate family interest or the provision of consulting services, within the 12-month period prior to the application for certification. However, such persons must be excluded from work, discussions, and decisions in all stages of the certification process and the monitoring of the entity in which they have or have held a commercial interest. The acceptance of payment, gifts, or favors of any kind, other than prescribed fees, from any business inspected is prohibited. However, a certifying agent that is a not-for-profit organization with an Internal Revenue Code tax exemption or, in the case of a foreign certifying agent, a comparable recognition of not-for-profit status from its government, may accept voluntary labor from certified operations. Certifying agents are also prohibited from giving advice or providing consultancy services to certification applicants or certified operations for overcoming identified barriers to certification. To further ensure against conflict of interest, the certifying agent must ensure that the decision to certify an operation is made by a person different from the person who conducted the on-site inspection.

The certifying agent must reconsider a certified operation's application for certification when the certifying agent determines, within 12 months of certifying the operation, that a person participating in the certification process and covered under section 205.501(c)(11)(ii) has or had a conflict of interest involving the applicant. If necessary, the certifying agent must perform a new on-site inspection. All costs associated with a reconsideration of an application, including onsite inspection costs, shall be borne by the certifying agent. When it is determined that, at the time of certification, a conflict of interest existed between the applicant and a person covered under section 205.501(c)(11)(i), the certifying agent must refer the certified operation to a different accredited certifying agent for recertification. The certifying agent must also reimburse the operation for the cost of the recertification.

No accredited certifying agent may exclude from participation in or deny the benefits of the NOP to any person due to discrimination because of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, or marital or family status. Accredited certifying agents must accept all production and handling applications that fall within their areas of accreditation and certify all qualified applicants, to the extent of their administrative capacity to do so, without regard to size or membership in any association or group.

Renewal of Accreditation.

To avoid a lapse in accreditation, certifying agents must apply for renewal of accreditation at least 6 months prior to the fifth anniversary of issuance of the notification of accreditation and each subsequent renewal of accreditation. The Administrator will send the certifying agent a notice of pending expiration of accreditation approximately 1 year prior to the scheduled date of expiration. The accreditation of certifying agents who make timely application for renewal of accreditation will not expire during the renewal process. The accreditation of certifying agents who fail to make timely application for renewal of accreditation will expire as scheduled unless renewed prior to the scheduled expiration date. Certifying agents with an expired accreditation must not perform certification activities under the Act and these regulations.

Following receipt of the certifying agent's annual report and fees and the results of a site evaluation, the Administrator will determine whether the certifying agent remains in compliance with the Act and regulations and should have its accreditation renewed. Upon a determination that the certifying agent is in compliance with the Act and regulations, the Administrator will issue a notice of renewal of accreditation. The notice of renewal will specify any terms and conditions that must be addressed by the certifying agent and the time within which those terms and conditions must be satisfied. Renewal of accreditation will be for 5 years. Upon a determination that the certifying agent is not in compliance with the Act and regulations, the Administrator will initiate proceedings to suspend or revoke the certifying agent's accreditation. Any certifying agent subject to a proceeding to suspend or revoke its accreditation may continue to perform certification activities pending resolution of the proceedings to suspend or revoke the accreditation.

Amending accreditation.

An accredited certifying agent may request amendment to its accreditation at any time. The application for amendment must be sent to the Administrator and must contain information applicable to the requested change in accreditation, a complete and accurate update of the certifying agent's application information and evidence of expertise and ability, and the applicable fees.

Accreditation - Changes Based on Comments

This subpart differs from the proposal in several respects as follows:

(1) Advice and Consultancy Services. We have amended section 205.501(a)(11)(iv) to clarify that certifying agents are to prevent conflicts of interest by not giving advice or providing consultancy services to applicants for certification and certified operations for overcoming identified barriers to certification. This amendment has been made in response to a commenter who stated that the provisions of section 205.501(a)(11)(iv), as proposed, seemed to preclude the providing of advice and educational workshops and training programs. It was not our intent to prevent certifying agents from sponsoring in-house publications, conferences, workshops, informational meetings, and field days for which participation is voluntary and open to the general public. The provisions as originally proposed and as amended are intended to prohibit certifying agents from telling applicants and certified operations how to overcome barriers to certification identified by the certifying agent. It would be a conflict of interest for a certifying agent to tell an operation how to comply inasmuch as the certifying agents impartiality and objectivity will be lost should the advice or consultancy prove ineffective in resolving the noncompliance. The provisions of section 205.501(a)(11)(iv) are consistent with ISO Guide 61.

To further clarify this issue, we have also amended section 205.501(a)(16) by adding "for certification activities" after the word, "charges."

(2) Conflicts of Interest - Persons Covered. We have amended section 205.501(a)(11)(v) to limit the completion of annual conflict of interest disclosure reports to all persons who review applications for certification, perform on-site inspections, review certification documents, evaluate qualifications for certification, make recommendations concerning certification, or make certification decisions and all parties responsibly connected to the certifying agent. A commenter recommended amending section 205.501(a)(11)(v) to have it apply to all persons with direct oversight of or participation in the certification program rather than all persons identified in section 205.504(a)(2). Section 205.504(a)(2) includes all personnel to be used in the certification operation, including administrative staff, certification inspectors, members of any certification review and evaluation committees, contractors, and all parties responsibly connected to the certifying agent. We have decided that completion of annual conflict of interest disclosure reports by persons not involved in the certification process or responsibly connected to the certifying agent is unnecessary. As amended, section 205.501(a)(11)(v) includes all persons with the opportunity to influence the outcome of a decision on whether to certify a specific production or handling operation. Completed conflict of interest disclosure reports will be used by certifying agents to identify persons with interests in applicants for certification and certified operations that may affect the impartiality of such persons.

(3) Reporting Certifications Granted. We have amended section 205.501(a)(15)(ii) (formerly section 205.501(a)(14)(ii)) by replacing "a quarterly calendar basis" with "January 2 of each year." A commenter stated that the requirement that certifying agents report certifications that they have granted on a quarterly basis to the Administrator is burdensome. The commenter requested that section 205.501(a)(14)(ii) be amended to require a midyear or end-year reporting. Section 205.501(a)(15)(ii) now requires the certifying agent to submit a list, on January 2 of each year, including the name, address, and telephone number of each operation granted certification during the preceding year. Certifying agents can fulfill this requirement by providing an up-to-date copy of the list of producers and handlers required to be made available to the public by section 205.504(b)(5)(ii).

(4) Notification of Inspector. We have added a new section 205.501(a)(18) requiring the certifying agent to provide the inspector, prior to each on-site inspection, with previous on-site inspection reports and to notify the inspector of the certifying agent's decision relative to granting or denying certification to the applicant site inspected by the inspector. Such notification must identify any requirements for the correction of minor noncompliances. We have made this addition because we agree with the commenter that such information should be provided to the inspector and because the requirements are consistent with ISO Guide 61.

(5) Acceptance of Applications. We have added a new section 205.501(a)(19) requiring the certifying agent to accept all production or handling applications for certification that fall within the certifying agent's areas of accreditation and to certify all qualified applicants, to the extent of their administrative capacity to do so, without regard to size or membership in any association or group. We have made this addition because we agree with the many commenters who requested that certifying agents be required to certify all qualified applicants. We recognize, however, that there may be times when the certifying agent's workload or the size of its client base might make it necessary for the certifying agent to decline acceptance of an application for certification within its area of accreditation. This is why we have included the proviso, "to the extent of their administrative capacity to do so." We have included "without regard to size or membership in any association or group" to address commenter concerns about discrimination in the providing of certification services. This addition is consistent with ISO Guide 61.

(6) Ability to Comply with SOP. We have added a new section 205.501(a)(20) requiring the certifying agent to demonstrate its ability to comply with an SOP, to certify organic production or handling operations within the State. This change, as pointed out by a State commenter, is necessary to clarify that a certifying agent must be able to comply with an SOP to certify production or handling operations within that State.

(7) Performance Evaluation. We have amended section 205.501(a)(6) by replacing "appraisal" with "evaluation" and expanding the coverage from inspectors to persons who review applications for certification, perform on-site inspections, review certification documents, evaluate qualifications for certification, make recommendations concerning certification, or make certification decisions. Corresponding amendments have also been made to section 205.510(a)(4). Further, we have amended section 205.501(a)(6) to clarify that the deficiencies to be corrected are deficiencies in certification services. We changed "appraisal" to "evaluation" at the request of a State commenter who pointed out that State inspectors generally perform other duties in addition to the inspection of organic production or handling operations. We concur that this change will help differentiate between the State's employee performance appraisal for all duties as a State employee and the evaluation of certification services provided under the NOP. Expanding the coverage from inspectors to all persons involved in the certification process makes the regulation consistent with ISO Guide 61. Sections 205.505(a)(3) and 205.510(a)(4) have been amended to make their language consistent with the changes to section 205.501(a)(6).

(8) Annual Program Evaluation. We have amended section 205.501(a)(7) by replacing "evaluation" with "review" and by replacing "evaluations" with "reviews." A commenter suggested amending section 205.501(a)(7) by replacing the requirement of an annual program evaluation with an annual review of program activities. We agree that "review" is a more appropriate term than "evaluate" since to review is to examine, report, and correct while evaluate is more in the nature of assessing value. We have not, however, accepted that portion of the commenter's suggestion which would have removed the reference to the review being conducted by the certifying agent's staff, an outside auditor, or a consultant who has the expertise to conduct such reviews. We have not accepted this suggestion because the comment would have limited the review to being conducted by the certifying agent with no requirement that the certifying agent be qualified to conduct the review. Another commenter wanted to change the requirement to an annual assessment of the quality of the inspection system. We have not accepted this suggestion because it can be interpreted as narrowing the scope of the review from the full certification program to just the inspection component of the certification program. This commenter would also have limited the review to being conducted by the certifying agent with no requirement that the certifying agent be qualified to conduct the review. We believe that narrowing the scope of the review would be inconsistent with ISO Guide 65. It is also inconsistent with our intent that the entire certification program be reviewed annually. We also received a comment stating that it is a violation of ISO Guide 65 to have staff perform an internal review. We disagree with this commenter. ISO Guide 65 provides that the certification body shall conduct periodic internal audits covering all procedures in a planned and systematic manner. Sections 205.505(a)(4) and 205.510(a)(4) have been amended to make their language consistent with the changes to section 205.501(a)(7).

(9) Certification Decision. We have added a new section 205.501(a)(11)(vi) that requires the certifying agent to ensure that the decision to certify an operation is made by a person different from the person who carried out the on-site inspection. Commenters requested that this provision be added to the requirement that certifying agents prevent conflicts of interest. We concur with the request because it clearly separates the act of inspecting an organic operation from the act of granting certification. This addition is also consistent with ISO Guide 65, section 4.2(f), which requires that the certification body ensure that each decision on certification is taken by a person different from those who carried out the evaluation.

(10) Determination of Conflict of Interest. We have added a new section 205.501(a)(12) addressing situations where a conflict of interest present at the time of certification is identified after certification. Several commenters requested the addition of a provision that, if a conflict of interest is identified within 12 months of certification, the certifying agent must reconsider the application and may reinspect the operation if necessary. We agree with the commenters that the issue of conflicts of interest present at the time of certification but identified after certification need to be addressed in the regulations. Accordingly, we have provided that an entity accredited as a certifying agent must reconsider a certified operation's application for certification and, if necessary, perform a new on-site inspection when it is determined, within 12 months of certifying the operation, that any person participating in the certification process and covered under section 205.501(a)(11)(ii) has or had a conflict of interest involving the applicant. Because the certifying agent is responsible for preventing conflicts of interest, all costs associated with a reconsideration of application, including onsite inspection costs, must be borne by the certifying agent. Further, a certifying agent must refer a certified operation to a different accredited certifying agent for recertification when it is determined that any person covered under section 205.501(a)(11)(i) at the time of certification of the applicant had a conflict of interest involving the applicant. Because the certifying agent is responsible for preventing conflicts of interest, the certifying agent must reimburse the operation for the cost of the recertification. Sections 205.501(a)(12) through 205.501(a)(17) have been redesignated as sections 205.501(a)(13) through 205.501(a)(18), respectively.

(11) Financial Security. We published an advanced notice of proposed rulemaking and request for comments regarding financial security in the August 9, 2000, issue of the Federal Register. We issued a news release announcing the Federal Register publication on August 9, 2000. Numerous commenters expressed concern about reasonable security relative to its amount and impact on small certifying agents. A few commenters requested a definition for reasonable security. Others stated that the formula for determining the amount of security should be published in the Federal Register. The March 13, 2000, NOP proposed rule stated that the amount and terms of reasonable financial security would be the subject of additional rulemaking. The August 9, 2000, advanced notice of proposed rulemaking solicited comments on all aspects of reasonable security and protection of the rights of program participants. We requested comments from any interested parties, including producers and handlers of organic agricultural products, certifying agents, importers and exporters, the international community, and any other person or group. Six questions were provided to facilitate public comment on the advanced notice of proposed rulemaking. Comments addressing other relevant issues were also invited. The questions posed in the advanced notice of proposed rulemaking were:

(1) From what risks or events might a customer of a private certifying agent require reasonable security?

(2) What are the financial instrument(s) that could provide the reasonable security to protect customers from these events?

(3) What dollar amounts of security would give reasonable protection to a customer of a private certifying agent?

(4) What are the financial costs to private certifiers, especially small certifiers, of providing reasonable security?

(5) Do the risks or events provided in response to question #1 necessarily require financial compensation?

(6) Are there situations in which reasonable security is not needed?

Following analysis of the comments received, we will publish a proposed rule on reasonable security in the Federal Register. The public will again be invited to submit comments. The proposed rule will include the proposed regulation, an explanation of the decision-making process, an analysis of the costs and benefits, the effects on small businesses, and an estimate of the paperwork burden imposed by the regulation.

(12) Use of Identifying Mark. We have amended section 205.501(b)(2) to clarify that all certifying agents (private and State) certifying production or handling operations within a State with more restrictive requirements, approved by the Secretary, shall require compliance with such requirements as a condition of use of their identifying mark by such operations. Numerous commenters stated that they wanted USDA to permit higher production standards by private certifying agents. See also item 17 under Accreditation - Changes Requested But Not Made. This amendment is intended to further clarify our position that no certifying agent (State or private) may establish or require compliance with its own organic standards. It is an SOP, not a State certifying agent, that receives approval from the Secretary for more restrictive requirements. See also item 7 under Accreditation - Clarifications.

(13) Transfer of Records. To address the issues of a merger, sale, or other transfer of ownership, we have added the following to the end of section 205.501(c)(3); "Provided, That, such transfer shall not apply to a merger, sale, or other transfer of ownership of a certifying agent." Commenters suggested amending section 205.501(c)(3) to provide for the transfer of records accumulated from the time of accreditation to the Administrator or his or her designee, another accredited certifying agent, or an SOP's governing State official in a State where such official exists. It was also stated that this section needs to take into account a certifying agent's decision to merge or transfer accounts to another certifying agent in the case of loss of accreditation. Under the NOP, should a certifying agent dissolve or lose its accreditation, its certified operations will be free to seek certification with the accredited certifying agent of their choice. Accordingly, it would be inappropriate to automatically transfer an operation's records to another certifying agent as requested by the commenters. However, in analyzing the comments, we realized that a provision was needed for a merger, sale, or other transfer of ownership of a certifying agent; thus, the amendment to section 205.501(c)(3). Section 205.505(b)(3) has been amended to make its language consistent with the changes to section 205.501(c)(3).

(14) Fees for Information. We have amended section 205.504(b)(5) by inserting "including any fees to be assessed" after the word, "used." This change is made in response to the question of whether fees may be charged for making information available to the public. It is our intent that certifying agents may charge reasonable fees for document search time, duplication, and, when applicable, review costs. We anticipate that review costs will most likely be incurred when the information requested is located within documents which may contain confidential business information.

(15) Information Available to the Public. We have amended section 205.504(b)(5)(ii) by adding products produced to the information to be released to the public. This addition responds in an alternate way to commenters who wanted the information included on certificates of organic operation. That request was denied; see item 4, Changes Requested But Not Made, under subpart E, Certification. This addition is consistent with ISO Guide 61.

(16) Equivalency of Certification Decisions and Statement of Agreement. We have amended sections 205.501(a)(12) (redesignated as 205.501(a)(13)) and 205.505(a)(1) by deleting the words, "USDA accredited" and "as equivalent to its own," and adding to the end thereof: "accredited or accepted by USDA pursuant to section 205.500." We have made this amendment to clarify that the provision applies to certification decisions by domestic certifying agents as well as foreign certifying agents accredited or accepted by USDA pursuant to section 205.500.

There were many comments in support of section 205.501(a)(12) as written. However some did not agree that certifying agents should have to recognize another agent's decision as equivalent to their own. These commenters want to maintain the right and ability not to use their seal on a product that does not meet their standards. The most strongly voiced comment stated: "delete section 205.501(a)(12) and section 205.505(a)(1). The requirements constitute a "taking" in violation of the Fifth Amendment and are unnecessary to accomplish the goal of establishing a consistent standard and facilitating trade."

We do not concur with the commenters who want to change sections 205.501(a)(12) and 205.505(a)(1). We also do not agree with the comment that sections 205.501(a)(12) and 205.505(a)(1) constitute a taking in violation of the Fifth Amendment and are unnecessary to accomplish the goal of establishing a consistent standard and facilitating trade. We believe that, to accomplish the goal of establishing a consistent standard and to facilitate trade, it is vital that an accredited certifying agent accept the certification decisions made by another certifying agent accredited or accepted by USDA pursuant to section 205.500. All domestic organic production and handling operations, unless exempted or excluded under section 205.101, must be certified to these national standards and, when applicable, any State standards approved by the Secretary. All domestic certified operations must be certified by a certifying agent accredited by the Administrator. No USDA-accredited certifying agent, domestic or foreign, may establish or require compliance with its own organic standards. Certifying agents are not required to have an identifying mark for use under the NOP. However, if a certifying agent is going to use an identifying mark under the NOP, the use of such mark must be voluntary and available to all of the certifying agent's clients certified under the NOP. Accordingly, we have not changed the requirement that a certifying agent accept the certification decisions made by another USDA-accredited certifying agent. We have, however, as noted above, amended both sections to require that USDA-accredited certifying agents accept the certification decisions made by another certifying agent accredited or accepted by USDA pursuant to section 205.500.

(17) Granting Accreditation. We have made editorial changes to section 205.506 consistent with the suggestion that we replace "approval of accreditation" with "granting of accreditation." In the title to section 205.506, we have replaced "Approval of" with "Granting." In section 205.506(a), we have replaced "approved" with "granted," and in section 205.506(b), we have replaced "approval" with "the granting." We have made these change because, under the NOP, we grant accreditation rather than approve accreditation.

(18) Correction of Minor Noncompliances. We have added a new section 205.506(b)(3) providing that the notification granting accreditation will state any terms and conditions for the correction of minor noncompliances. Commenters requested the addition of language to section 205.506(b) which would clarify that the Administrator may accredit with required corrective actions for minor noncompliances. In the proposed rule, we addressed accreditation subject to the correction of minor noncompliances at section 205.510(a)(3). We agree with commenters that, for the purposes of clarity, this issue should also be addressed in section 205.506 on the granting of accreditation. Accordingly, we have added new section 205.506(b)(3) as noted above. We have also retained the provisions of section 205.510(a)(3), which requires certifying agents to annually report on actions taken to satisfy any terms and conditions addressed in the most recent notification of accreditation or notice of renewal of accreditation. Section 205.506(b)(3) has been redesignated as section 205.506(b)(4).

(19) Denial of Accreditation. We have amended section 205.507 to include noncompliance and resolution provisions originally included by cross-reference to section 205.665(a). This cross-reference created confusion for commenters, regarding section 205.665's applicability to applicants for accreditation because the section does not specifically address applicants. Rather than specifically identifying applicants within section 205.665, we believe the issue is best clarified by addressing noncompliance and resolution within section 205.507. As amended, section 205.507 now states in paragraph (a) that the written notification of noncompliance must describe each noncompliance, the facts on which the notification is based, and the date by which the applicant must rebut or correct each noncompliance and submit supporting documentation of each such correction when correction is possible. This rewrite of paragraph (a) also enabled us to eliminate paragraph (b) since its provisions are addressed in amended paragraph (a). The section also provides, at new paragraph (b), that when each noncompliance has been resolved, the Program Manager will send the applicant a written notification of noncompliance resolution and proceed with further processing of the application. We have also clarified the applicant's appeal rights by adding "or appeal the denial of accreditation in accordance with section 205.681 by the date specified in the notification of accreditation denial" to the end of paragraph (c).

(20) Reinstatement of Accreditation. We have amended section 205.507(d) by removing the requirement that a certifying agent that has had its accreditation suspended reapply for accreditation in accordance with section 205.502. In its place, we provide that the certifying agent may request reinstatement of its accreditation. Such request may be submitted at any time unless otherwise stated in the notification of suspension. Amended section 205.507(d) also provides that the certifying agent's request must be accompanied by evidence demonstrating correction of each noncompliance and corrective actions taken to comply with and remain in compliance with the Act and the regulations in this part. We have made this change because unlike revocation, suspension does not terminate a certifying agent's accreditation. Accordingly, requiring a new application for accreditation is unnecessary and burdensome on the certifying agent. This change is consistent with changes to sections 205.662(f) and 205.665(g)(1), which were made based on comments received on section 205.662(f).

(21) Ineligible for accreditation. We have amended section 205.507(d) by deleting "private entity" from the third sentence. The amended sentence provides that "A certifying agent whose accreditation is revoked will be ineligible for accreditation for a period of not less than 3 years following the date of such determination." Several commenters recommended deletion of "private entity" so that private certifying agents would be regulated on an equivalent basis with State certifying agents. It is our intent to regulate private and State certifying agents on an equivalent basis. Accordingly, we made the recommended change.

(22) Peer Review. We have amended section 205.509. As amended, the section requires that the Administrator establish a peer review panel pursuant to FACA (5 U.S.C. App. 2 et seq.). The peer review panel will be composed of not less than 3 members who will annually evaluate the NOP's adherence to the accreditation procedures in subpart F of these regulations and ISO/IEC Guide 61, General requirements for assessment and accreditation of certification/registration bodies, and the NOP's accreditation decisions. This will be accomplished through the review of accreditation procedures, document review and site evaluation reports, and accreditation decision documents and documentation. The peer review panel will report its finding, in writing, to the NOP's Program Manager. We developed this approach to peer review as a means of addressing the suggestions of the commenters and the need for administration of an effective and timely accreditation program.

Many commenters wanted the opening language in the first sentence of section 205.509 changed from "The Administrator may" to the "The Administrator shall" establish a peer review panel to assist in evaluating applicants for accreditation, amendment to an accreditation, and renewal of accreditation as certifying agents. One of the most frequent comments, including a comment by the NOSB, was that peer reviewers should be compensated for their time and expenses. Many commenters believe also that the peer review process should be collaborative. Some commenters who wanted this change recognized that a collaborative process where confidential information was 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 but restricting public access during discussion of confidential business information based on 5 U.S.C. Section 522b(c)(4) of the Government in the Sunshine Act.

As requested, amended section 205.509 requires the formation of a peer review panel. Also as requested, peer reviewers, who will serve as a FACA committee, will be reimbursed for their travel and per diem expenses. The reviewers will also work collaboratively. We have not, however, provided for collaborative review of each applicant for accreditation by the peer review panel because of the administrative burden that an outside collaborative review process would place on the NOP. Currently, there are 36 private and 13 State certifying agencies. It is, therefore, likely that USDA will receive approximately 50 applications for accreditation the first year of the program. Given the need to make accreditation decisions in a timely, organized fashion, it would be infeasible to convene a panel of peers for each applicant for accreditation prior to rendering a decision on accreditation. However, as noted above, we have provided that a peer review panel will annually evaluate the NOP's adherence to the accreditation procedures in subpart F of these regulations and ISO/IEC Guide 61, General requirements for assessment and accreditation of certification/registration bodies, and validate the NOP's accreditation decisions.

We have also amended current section 205.510(c)(3) by removing the reference to reports submitted by a peer review panel to make that section consistent with the rewrite of section 205.509.

(23) Expiration of accreditation. We have added a new section 205.510(c)(1) which provides that the Administrator shall send the accredited certifying agent a notice of pending expiration of accreditation approximately 1 year prior to the scheduled date of expiration. A commenter suggested USDA notification of certifying agents at least 1 year prior to the scheduled expiration of accreditation. We have made the suggested change because we believe notification about 1 year prior to expiration will facilitate the timely receipt of applications for renewal. We have redesignated sections 205.510(c)(1) and 205.510(c)(2) as 205.510(c)(2) and 205.510(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 any time. The application for amendment must be sent to the Administrator and must contain information applicable to the requested change in accreditation. The application for amendment must also contain a complete and accurate update of the information submitted in accordance with section 205.503, Applicant information; and section 205.504, Evidence of expertise and ability. The applicant must also submit the applicable fees required in section 205.640. We have added this new section because we agree with the commenter who expressed concern that the regulations were not clear regarding amendments to accreditation. This addition is consistent with section 205.510(a)(2) which allows certifying agents to request amendment of their accreditation as part of their annual report to the Administrator.

Accreditation - Changes Requested But Not Made

This subpart retains from the proposed rule, regulations on which we received comments as follows:

(1) Accreditation by USDA. A commenter stated that ISO/IEC Guide 61 specifies, but the proposed rule did not specify, the requirements for USDA to assess and accredit certifying agents. The commenter questioned USDA's acceptance internationally as a competent accreditation body. A few commenters requested that USDA provide certifying agents with assurance of international trade acceptance of the USDA's accreditation program prior to implementation of the final rule. We do not believe that it is necessary to include in these regulations detailed procedures by which USDA will operate its accreditation program. USDA has developed its accreditation and certification programs with the intent that they meet or exceed international guidelines. Every country will make its own decision regarding acceptance of this accreditation program. Accordingly, while we do not anticipate problems with acceptance of our accreditation program, we cannot provide assurance against problems as requested by the commenters.

(2) Equivalency at the European Community (EC) Level. A commenter requested confirmation that an equivalency agreement would be negotiated at the EC level since the EC legislation provides for the basic rules while accreditation of certifying agents is a task for each member state. Another commenter pointed out that because Switzerland has the same regulations as the EC, equivalency would have to be done in close coordination with the EC. The commenter went on to say that according to Swiss and European practice, not only the organic product, but also the bodies involved will be mutually accepted. This commenter also stated that, due to Swiss import provisions, brokers must be subject to a certain control. Equivalency will be negotiated between the United States and the foreign government authority seeking the equivalency agreement.

(3) Period of Accreditation. It was suggested that accreditation should be for a 4-year period with full reevaluation occurring once every 4 years and annual surveillance visits in the intervening years. We do not concur with changing the period of accreditation from 5 years to 4 years as suggested. The 5-year period that we have provided that accreditation is consistent with the Act, which provides that accreditation shall be for a period of not to exceed 5 years. The commenter claims that the international norm is for full reevaluations to take place once every 4 years with annual surveillance visits in the intervening years. ISO Guide 61, section 3.5.1, provides that the accreditation body shall have an established documented program, consistent with the accreditation granted, for carrying out periodic surveillance and reassessment at sufficiently close intervals to verify that its accredited body continues to comply with the accreditation requirements. We believe that accreditation for 5 years is a reasonable period of time. Further, we believe that a 5-year period of accreditation is consistent with ISO Guide 61 inasmuch as we require an annual evaluation of the certification program; annual review of persons associated with the certification process, including inspectors; annual reporting with a complete and accurate update of information required for accreditation; and one or more site evaluations during the period of accreditation in addition to the initial site evaluation for the period of accreditation. Accordingly, we have not made the recommended change.

(4) Accreditation by Private-Sector Accreditation Bodies. Numerous commenters wanted language added to section 205.500(c) that would allow private sector accreditation bodies to accredit foreign certifying agents. For example, several commenters suggested adding a provision reading as follows: "The foreign certifying agent is accredited by a private accreditation body recognized by the USDA as defined by an equivalency agreement negotiated between the USDA and the accreditation body." Commenters also wanted us to amend section 205.502(a) to recognize accreditation by private accreditation programs.

USDA is the accrediting body for all accreditations under the NOP. USDA will not recognize nongovernmental accrediting bodies. USDA will recognize foreign certifying agents accredited by a foreign government authority when USDA determines that the foreign government's standards meet the requirements of the NOP or when an equivalency agreement has been negotiated between the United States and a foreign government.

(5) Requirements for Accreditation. Some commenters requested more specificity in the requirements for accreditation. For example, one recommended that section 205.501(a)(1) should include the requirement that inspectors demonstrate completion of a specified training program or internship or ongoing education and/or licensing. Another commenter wanted baseline criteria for denying an application due to expertise. Still others wanted a definition for (1) "experience and training pertaining to organic/sustainable agricultural methods and their implementation on farm or in processing facilities," (2) "trained certifying agent personnel," and (3) "reasonable time." Finally, one wanted recordkeeping and evaluative parameters. AMS does not believe that it is necessary to present the requirements for accreditation to the extent of detail requested by the commenters. The intent is to provide flexibility to the certifying agents such that they can tailor their policies and procedures to the nature and scope of their operation. The NOP is available to respond to questions and to assist certifying agents in complying with the requirements for accreditation.

(6) Volunteer Board Members. Some commenters suggested amending section 205.501(a)(5) to include a reference to committees and to expand "sufficient expertise" to "sufficient balance of interests and expertise." The commenters proposed the amendment to create a firewall between those persons involved in decision making and the volunteer board members. However, the purpose of section 205.501(a)(5) is to ensure that the persons used by the certifying agent to assume inspection, analysis, and decision-making responsibilities have sufficient expertise in organic production or handling techniques to successfully perform the duties assigned. Therefore, we have not made the suggested changes. Conflict of interest guidelines are found at section 205.501(a)(11).

(7) Confidentiality. A commenter stated that Texas law prevents the Texas Department of Agriculture from guaranteeing confidentiality to its clients. Accordingly, the commenter requested that section 205.501(a)(10) be amended by adding to the end thereof: "or as required by State statutes." We have not made the suggested change because the Act requires that the certifying agent maintain strict confidentiality with respect to its clients under the NOP and not disclose any business-related information concerning such client obtained while implementing the Act. To be accredited under the NOP, certifying agents must fully comply with the requirements of the Act and these regulations. Further, no SOP will be approved which does not comply with the NOP.

(8) Certifying Agent Fees. Several commenters requested that the regulations prohibit royalty formulas (i.e., fees from every certified sale) for certifying agent fees. It is not our intent to regulate how a certifying agent sets its fees beyond their being reasonable and nondiscriminatory.

(9) Conflicts of Interest. We received numerous comments stating that section 205.501(a)(11)(i) was too restrictive and unnecessary due to the provisions of section 205.501(a)(11)(ii) to prevent conflicts of interest. Some argued that these conflict of interest provisions are beyond ISO requirements and place an undue burden on membership based certifying agents and the entities they serve. They requested a conflict of interest policy enabling membership-based certification organizations to continue operating. A commenter suggested that section 205.501(a)(11) be amended to require that a certifying agent's board members sign an affidavit listing potential conflicts of interest, identify issues where an organization decision might help them personally, and exclude themselves from decision-making that would assist them personally. This commenter proposed the amendment for the purpose of creating a firewall between those persons involved in certification decision-making and the volunteer board members.

We do not believe that the conflict of interest provisions are too restrictive. These provisions are very similar to conflict of interest provisions under other USDA programs involving public-private partnerships (e.g., grain inspection). The certifying agent and its responsibly connected parties, including volunteer board members, hold positions of influence over the certifying agent's employees and persons with whom the certifying agent contracts for such services as inspection, sampling, and residue testing. Therefore, we continue to believe that avoiding such conflicts of interest is necessary to maintain the integrity of the organic certification process.

(10) Conflicts of Interest and Prohibition on Certification. A commenter requested that we include an "or" between sections 205.501(a)(11)(i) and 205.501(a)(11)(ii). We have not made the recommended change because both sections must be complied with; they are not mutually exclusive. Section 205.501(a)(11)(i) prohibits the certification of an applicant when the certifying agent or a responsibly connected party of such certifying agent has or has held a commercial interest in the applicant for certification, including an immediate family interest or the provision of consulting services, within the 12-month period prior to the application for certification. When the certifying agent and its responsibly connected persons are free of any conflict of interest involving the applicant for certification, the applicant may be certified if qualified. However, section 205.501(a)(11)(ii) requires the certifying agent to exclude any person (employees and contractors who do not meet the definition of responsibly connected), including contractors, with conflicts of interest from work, discussions, and decisions in all stages of the certification process and the monitoring of certified production or handling operations for all entities in which such person has or has held a commercial interest, including an immediate family interest or the provision of consulting services, within the 12-month period prior to the application for certification.

(11) Gifts and Contributions. Commenters recommended that section 205.501(a)(11)(iii) be amended to allow not-for-profit organizations to accept gifts and contributions from certified operations for those programs not directly related to the certifying agent's organic certification activities. They also wanted it clarified that not-for-profit organizations can accept voluntary labor from certified operations for those programs not directly related to the certifying agent's organic certification activities. We have not made the requested changes. First, the acceptance of gifts and contributions would constitute a conflict of interest and would be contrary to ISO Guide 61. Certifying agents must have the financial stability and resources to perform their certification duties without relying on gifts and contributions from those they serve. Second, we have not added the requested provision on voluntary labor because section 205.501(a)(11)(iii) already addresses the acceptance of voluntary labor by not-for-profit organizations from certified operations.

(12) Conflicts of Interest - Determination Period. Commenters wanted to increase the conflict determination period from 12 months to 24 months. Some also wanted the period to extend for 2 years after, with the exception of those who have left the employ of the certifying agent or are no longer under contract with the certifying agent.

We disagree with the recommendations calling for a longer precertification conflict of interest prohibition period. We continue to believe that 12 months is a sufficient period to ensure that any previous commercial interest would not create a conflict of interest situation for two reasons. First, this time period is consistent with similar provisions governing conflicts of interest for government employees. Second, section 205.501(a)(11)(v) requires the completion of an annual conflict of interest disclosure report by all personnel designated to be used in the certification operation, including administrative staff, certification inspectors, members of any certification review and program evaluation committees, contractors, and all parties responsibly connected to the certification operation. This requirement will assist certifying agents in complying with the requirements to prevent conflicts of interest. We also continue to believe that a longer prohibition period would have the effect of severely curtailing most certifying agents' ability to comply with the Act's requirement that they employ persons with sufficient expertise to implement the applicable certification program. Accordingly, we have not made the recommended change.

The change recommended by the commenters who requested that the conflict of interest determination period extend for 2 years after certification is unnecessary. Certifying agents and their responsibly connected parties, employees, inspectors, contractors, and other personnel are prohibited from engaging in activities or associations at any time during their affiliation with the certifying agent which would result in a conflict of interest. While associated with the certifying agent, all employees, inspectors, contractors, and other personnel are expected to disclose to the certifying agent any offer of employment they have received and not immediately refused. They are also expected to disclose any employment they are seeking and any arrangement they have concerning future employment with an applicant for certification or a certified operation. The certifying agent would then have to exclude that person from work, discussions, and decisions in all stages of the certification or monitoring of the operation making the employment offer. If a certifying agent or a responsibly connected party of the certifying agent has received and not immediately refused an offer of employment, is seeking employment, or has an arrangement concerning future employment with an applicant for certification, the certifying agent may not accept or process the application. Further, certifying agents and responsibly connected parties may not seek employment or have an arrangement concerning future employment with an operation certified by the certifying agent while associated with that certifying agent. Certifying agents and responsibly connected parties must sever their association with the certifying agent when such person does not immediately refuse an offer of employment from a certified operation. Accordingly, we have decided not to include a postcertification prohibition period in this final rule.

(13) False and Misleading Claims. A commenter asked who will determine what is a misleading claim about the nature or qualities of products labeled as organically produced. This same commenter recommended amending section 205.501(a)(13) by removing the prohibition against making false or misleading claims about the nature or qualities of products labeled as organically produced.

We disagree with this recommendation. Claims regarding accreditation status, the USDA accreditation program for certifying agents, and the nature and quality of products labeled as organically produced all fall under the authority of the Act. Accordingly, USDA will determine what is a misleading claim. We believe that the requirements are needed to prevent the dissemination of inaccurate or misleading information to consumers about organically produced products. We further believe that the change suggested by the commenter would undermine the goal of a uniform NOP by allowing certifying agents to make claims that would state or imply that organic products produced by operations that they certify are superior to those of operations certified by other certifying agents. These requirements would not prohibit certifying agents from sharing factual information with consumers, farmers, processors, and other interested parties regarding verifiable attributes of organic food and organic production systems. Accordingly, we have not made the recommended change to what is now section 205.501(a)(14).

(14) Certifying Agent Compliance With Terms and Conditions Deemed Necessary. A commenter recommended that we remove section 205.501(a)(17). This section requires that certifying agents comply with and implement other terms and conditions deemed necessary by the Secretary. This requirement is consistent with section 6515(d)(2) of the Act, which requires a certifying agent to enter into an agreement with the Secretary under which such agent shall agree to such other terms and conditions as the Secretary determines appropriate. Accordingly, we have not accepted the commenter's recommendation. This requirement is located at current section 205.501(a)(21).

(15) Limitations on the Use of Certifying Agent's Marks. Numerous commenters stated that they wanted USDA to permit higher production standards by private certifying agents. A common argument for allowing higher standards was that practitioners must be allowed to "raise the bar" through superior ecological on-farm practices or pursuit of other social and ecological goals. Some commenters recommended that the language in section 205.501(b)(2) be replaced with provisions that would allow certifying agents to issue licensing agreements with contract specifications that clearly establish conditions for use of the certifying agent's identifying mark.

We believe the positions advocated by the commenters are inconsistent with section 6501(2) of the Act, which provides that a stated purpose of the Act is to assure consumers that organically produced products meet a consistent national standard. We believe that, to accomplish the goal of establishing a consistent standard and to facilitate trade, it is vital that an accredited certifying agent accept the certification decisions made by another certifying agent accredited or accepted by USDA pursuant to section 205.500. All organic production and handling operations, unless exempted or excluded under section 205.101 or not regulated under the NOP (i.e., a producer of dog food), must be certified to these national standards and, when applicable, any State standards approved by the Secretary. All certified operations must be certified by a certifying agent accredited by the Administrator. No accredited certifying agent may establish or require compliance with its own organic standards. Accredited certifying agents may establish other standards outside of the NOP. They may not, however, refer to them as organic standards nor require that applicants for certification under the NOP or operations certified under the NOP comply with such standards as a requirement for certification under the NOP. Use of the certifying agent's identifying mark must be voluntary and available to all of its clients certified under the NOP. However, a certifying agent may withdraw a certified operation's authority to use its identifying mark during a compliance process. The certifying agent, however, accepts full liability for any such action.

The national standards implemented by this final rule can be amended as needed to establish more restrictive national standards. Anyone may request that a provision of these regulations be amended by submitting a request to the NOP Program Manager or the Chairperson of the NOSB. Requests for amendments submitted to the NOP Program Manager will be forwarded to the NOSB for its consideration. The NOSB will consider the requested amendments and make its recommendations to the Administrator. When appropriate, the NOP will conduct rulemaking on the recommended amendment. Such rulemaking will include an opportunity for public comment.

(16) Evidence of Expertise and Ability. A commenter stated that section 205.504, which addresses the documentation necessary to establish evidence of expertise and abilities, requires too much paperwork. We believe the amount of paperwork is appropriate for the task at hand, verifying a certifying agent's expertise in and eligibility for accreditation to certify organic production and handling operations to the NOP. We further believe that the level of paperwork is necessary to meet international guidelines for determining whether an applicant is qualified for accreditation as a certifying agent.

(17) Procedures for Making Information Available to the Public. Comments on section 205.504(b)(5) were mixed. Some commenters felt that the proposal fell short of the OFPA requirement to "Provide for public access to certification documents and lab analysis." Others thought that too much confidential information would be released.

The Act requires public access, at section 2107(a)(9), to certification documents and laboratory analyses pertaining to certification. Accordingly, we disagree with those commenters who requested that such documents not be released to the public. We also disagree with the commenters who contend that the requirement for public disclosure falls short of what is required by the Act. Section 205.504(b)(5) meets the requirements of the Act by requiring the release of those documents cited in section 2107(a)(9) of the Act. The section also authorizes the release of other business information as authorized in writing by the producer or handler.

(18) Accreditation Prior to Site Evaluation. Numerous commenters recommended that we require site visits prior to accreditation. Some commenters cited ISO Guide 61, section 2.3.1, in their arguments for site visits prior to accreditation. ISO Guide 61, section 2.3.1., provides that the decision on whether to accredit a body shall be made on the basis of the information gathered during the accreditation process and any other relevant information. Section 3.3.2 of ISO Guide 61 provides that the accreditation body shall witness fully the on-site activities of one or more assessments or audits conducted by an applicant body before an initial accreditation is granted.

We do not concur with the commenters. These regulations provide for assessment of the applicant's qualifications and capabilities through a rigorous review of the application and supporting documentation. Following this review, an initial site evaluation shall be conducted before or within a reasonable period of time after issuance of the applicant's "notification of accreditation." In cases where the document review raises concerns regarding the applicant's qualifications and capabilities and the Administrator deems it necessary, a preapproval site evaluation will be conducted. We have further provided that a site evaluation shall be conducted after application for renewal of accreditation but prior to renewal of accreditation.

Our purpose in allowing for initial accreditation prior to a site evaluation is to facilitate implementation of the NOP and to provide a means for newly established certifying agents to obtain a client base to demonstrate that they can meet the requirements of the NOP regulations. We believe this is consistent with the intent of ISO Guide 61, section 2.3.1. and fits within its "and any other relevant information" provision. Accordingly, we restate our position that accreditation approval without a site evaluation is appropriate, necessary in the case of established certifying agents that may need to make adjustments in their operations to comply with the NOP regulations, and necessary in the case of newly established certifying agents who will have to obtain a client base to demonstrate beyond the paperwork that they can meet the requirements of the NOP regulations.

(19) Ineligibility After Revocation of Accreditation. Section 205.507(d) provides that a certifying agent whose accreditation is revoked will be ineligible for accreditation for a period of not less than 3 years following the date of such determination. A commenter stated that the 3-year period of ineligibility is overly long and effectively puts the certifying agent out of business. The commenter suggested that a 6- to 12-month period might be reasonable. We have not accepted the suggested 6- to 12-month ineligibility period because the Act requires a period of ineligibility of not less than 3 years following revocation of accreditation.

(20) Qualifications of the Site Evaluator. A commenter recommended amending section 205.508(a) to indicate the required qualifications of the site evaluator. We have not accepted the recommendation. We do not believe that it is necessary to specify the required qualifications of site evaluators in these regulations. All USDA employees who will perform site evaluations under the NOP are quality systems auditors trained in accordance with internationally recognized protocols.

(21) Complaint Process. A commenter recommended that section 205.510 include a complaint process for complaints by certified operations regarding the performance of a certifying agent or inspector. The commenter also recommended that section 205.510 include a complaint process for the public should they feel that a certifying agent is not in compliance.

We do not believe that it is necessary to include a complaint process in the regulations. All interested parties are free to file a complaint with an accredited certifying agent, SOP's governing State official, or the Administrator at any time. We will provide guidance to accredited certifying agents and SOP's governing State officials regarding the type of information to gather when receiving a complaint. SOP's governing State officials will include in their request for approval of their SOP information on their collection of complaint information. Certifying agents will include details regarding the collection of complaint information and the investigation of complaints involving certified operations in their procedures for reviewing and investigating certified operation compliance (section 205.504(b)(2)). This will include maintaining records of complaints and remedial actions relative to certification as well as documentation of followup actions. Further, certifying agents will include details regarding the collection of complaint information and the investigation of complaints involving inspectors and other personnel employed by or contracted by the certifying agents in their policies and procedures for training, evaluating, and supervising personnel (section 205.504(a)(1)).

(22) Recordkeeping by Certifying Agents. A commenter stated that the 10-year recordkeeping requirement of section 205.510(b)(2) for records created by the certifying agent regarding applicants for certification and certified operations is excessive. The commenter recommended a 5-year retention period. We have not accepted the recommended 5-year records retention period for records created by the certifying agent regarding applicants for certification and certified operations because the Act requires the retention of such records for 10 years.

(23) Reaccreditation. A commenter recommended that section 205.510(c)(1) be amended to require reaccreditation every 3 years. We have provided that accreditation will be for a period of 5 years. This is consistent with the Act which provides that accreditation shall be for a period of not to exceed 5 years. The commenter believes that a 5-year period is not consistent with ISO Guide 61, section 3.5.1, which provides that the accreditation body shall have an established documented program, consistent with the accreditation granted, for carrying out periodic surveillance and reassessment at sufficiently close intervals to verify that its accredited body continues to comply with the accreditation requirements. We believe that accreditation for 5 years is a reasonable period of time. Further, we believe that a 5-year period of accreditation is consistent with ISO Guide 61 inasmuch as we require an annual evaluation of the certification program; annual review of persons associated with the certification process, including inspectors; annual reporting with a complete and accurate update of information required for accreditation; and one or more site evaluations during the period of accreditation in addition to the initial site evaluation for the period of accreditation. Accordingly, we have not made the recommended change. This requirement is located at current section 205.510(c)(2).

(24) Notice of Renewal of Accreditation. A commenter recommended that section 205.510(d) be amended to include a timeframe within which the Administrator must notify an applicant of its renewal of accreditation. We believe that a mandated timeframe for notifying the applicant of renewal of accreditation is inappropriate. We plan to process all applications for renewal of accreditation in the order in which they are received, to confirm the receipt of each application, and to establish a dialog with the applicant upon confirmation of receipt of an application for renewal of accreditation. The length of the renewal process will depend in large part on the nature of the operation seeking renewal of accreditation. To minimize the chances that an accreditation will expire during the renewal process, we have: (1) provided that the Administrator shall send the accredited certifying agent a notice of pending expiration of accreditation approximately 1 year before the date of expiration of the certifying agent's accreditation, (2) required that an application for renewal of accreditation must be received at least 6 months prior to expiration of the certifying agent's accreditation, and (3) provided that the accreditation of a certifying agent who makes timely application for renewal of accreditation will not expire during the renewal process. Accordingly, we have not made the recommended amendment.

Accreditation - Clarifications

Clarification is given on the following issues raised by commenters as follows:

(1) Accreditation of Foreign Certifying Agents. A commenter suggested that section 205.500 be amended to provide that if there is a government system operating in a foreign country then the government is the appropriate pathway for that country to apply for accreditation.

USDA will accept an application for accreditation to perform certification activities under the NOP from any private entity or governmental entity certifying agent and accredit such applicant upon proof of qualification for accreditation. USDA will provide for USDA accreditation of certifying agents and acceptance of a foreign government's accreditation of certifying agent within the same country. This maximizes opportunity for certifying agents without the potential for confusion and overlap in documentation. Further, we believe these requirements facilitate world trade.

(2) State Approval of Product From Foreign Countries. A commenter stated that any product making claims of organic agricultural ingredients to be sold in California shall fall under the jurisdiction of the California Organic Program for enforcement, inspection, and certification direction. The commenter further stated that, should any foreign certifying agents be accepted, they too shall be subject to the sovereign rights of the State of California to protect and enforce the laws of the State of California and to protect agricultural claims in this State.

Any organic program administered by a State will have to be approved by the Secretary. Approval of an SOP will be contingent upon the State's agreeing to accept the certification decisions made by certifying agents accredited or accepted by USDA pursuant to section 205.500.

(3) Equivalency. A commenter stated that USDA should declare in section 205.500 that there are no alternative methods of production that meet the Congressional purpose "to assure consumers that organically produced products meet a consistent standard." The commenter went on to state that, if USDA proceeds with equivalency then the regulations should be amended to provide for: (1) no importing until final determination, (2) no final determination until Federal Register publication and public comment, (3) audit of foreign agency and production sites, and (4) revocation of accreditation for violations. The commenter also recommended that foreign certifying agents be reviewed with the same frequency as State certifying agents.

We disagree that there are no alternative methods of production that assure consumers that organically produced products meet a consistent standard. Accordingly, we will negotiate equivalency agreements with foreign governments. A final equivalency agreement will be required before affected product may be imported into the United States and sold, labeled, or represented as organic. Equivalency agreements will be announced to the public through a notice in the Federal Register and a news release. Site evaluations are a possibility. Foreign certifying agents that receive USDA accreditation, rather than recognition through their government, will have to fully comply with the NOP and will be treated the same as domestic accredited certifying agents.

(4) Evaluation of Equivalency. Commenters asked how equivalency would be evaluated and recommended basing equivalency, not on a check of formalities, but on the finding of substantive equivalence and equivalent effectiveness of certifying systems.

The negotiation of an equivalency agreement will involve meetings between representatives of the foreign government seeking equivalency and representatives of USDA's Agricultural Marketing Service and Foreign Agricultural Service. Support will be provided by the Office of the U.S. Trade Representative. The process will also include the review of documents and possibly one or more site evaluations. Equivalency agreements will be announced to the public through a notice in the Federal Register and a news release.

(5) Treatment of Certifying Agents Operating in More Than One Country. A few commenters requested that we amend section 205.500(c) by adding a provision to clarify the issue of how the international activities of foreign or domestic certifying agents will be treated when they operate in more than one country.

We believe that the requested provision is unnecessary. Certifying agents, domestic and foreign, accredited under the NOP will be expected to comply fully with the requirements of the NOP regardless of where they operate. The only exception would be when they operate in a country in which the Secretary has negotiated an equivalency agreement.

(6) Accreditation of Foreign Certifying Agents. A commenter requested that we amend section 205.500(c) to exempt foreign applicants from having to be accredited certifying agents in USDA's program if the exporting country's national organic program meets international standards; e.g, Codex guidelines.

We have provided for USDA accreditation of qualified foreign certifying agents upon application. We have also provided that USDA will accept a foreign certifying agent's accreditation to certify organic production or handling operations if it determines, upon the request of a foreign government, that the standards under which the foreign government authority accredited the foreign certifying agent meet the requirements of this part. We have further provided that USDA will accept a foreign certifying agent's accreditation to certify organic production or handling operations if the foreign government authority that accredited the foreign certifying agent acted under an equivalency agreement negotiated between the United States and the foreign government. These recognitions of foreign government programs, however, do not extend to international standards such as Codex guidelines. In either case, we are recognizing the ability of a foreign government's program to meet U.S. standards, not some other international standard.

(7) States with an Organic Statute. A commenter stated that a State with an organic statute or regulations that does not certify organic producers or organic handlers should not have to be accredited.

The NOP requires the Secretary's approval of SOP's whether or not the State has a State certifying agent. A State may have an SOP but not have a State certifying agent. In this case the SOP must be approved by the Secretary. A State may have a State certifying agent but no SOP. In this case, the State certifying agent must apply for and receive accreditation to certify organic production or handling operations. Finally, a State may have an SOP and a State certifying agent. In this case, the SOP must be approved by the Secretary, and the State certifying agent must apply for and receive accreditation to certify organic production or handling operations.

(8) Nondiscriminatory Services. A commenter wanted the addition of a provision in section 205.501(a) requiring certifying agents to provide nondiscriminatory services. We have not included the suggested addition in this final rule because the provision already exists in section 205.501(d).

(9) Release of Information. A few commenters requested that we amend section 205.501(a)(10) to include a general exclusion allowing the release of any information with the client's permission. We have not included the suggested addition in this final rule because section 205.504(b)(5)(iv) already addresses the allowed release of other business information as permitted in writing by the producer or handler.

(10) Use of the Term, "Certified Organic." In commenting on section 205.501(b)(1), a commenter stated that if the term, "certified organic," is included on a label, it must state by whom, according to Maine State law. We do not believe that the requirements of section 205.501(b)(1) would preclude a certified operation from complying with a State law requiring identification of the certifying agent on a product sold, labeled, or represented as "certified organic." Further, these regulations do not require a certified operation to use the word, "certified," on its label.

(11) Holding the Secretary Harmless. In commenting on the requirements of section 205.501(c)(1), a commenter stated that certifying agents are responsible for representing USDA but seem to have no recourse. Another commenter asked, what happens if a certifying agent is found in violation of the Act but the violation was due to information or direction that came from USDA?

Under the NOP, accredited certifying agents are required to comply with and carry out the requirements of the Act and these regulations. If they fail to do so, they are responsible for their actions or failures to act. This would not be true if the action or failure to act was at the direction of the Secretary.

(12) Self-evaluation of Ability to Comply. A commenter requested that section 205.504 be amended to provide clarity on the baseline requirements that would allow a certifying agent to conduct a self-evaluation to determine its ability to comply. The commenter stated that there should be some type of baseline acceptance of expertise and ability. The commenter wants details regarding the "training" or "experience" requirements necessary to qualify for accreditation. This commenter also stated that criteria for inspector and reviewer training should be added and enlarged.

We do not believe that it is necessary to present the requirements for accreditation to the extent of detail requested by the commenter. The intent is to provide flexibility to the certifying agents such that they can tailor their policies and procedures to the nature and scope of their operation. The NOP is available to respond to questions and to assist certifying agents in complying with the requirements for accreditation.

(13) Evidence of Expertise and Ability. Commenters stated that important elements of ISO Guide 65 are missing from section 205.504. They cite the maintenance of a complaints register and a register of precedents and provisions for subcontracting and a documents control policy or a document register.

Certifying agents grant certification, deny certification, and take enforcement action against a certified operation's certification. Certifying agents are required to maintain records applicable to all such actions and to report such actions to the Administrator. Certifying agents may contract with qualified individuals for the performance of services such as inspection, sampling, and residue testing. Certifying agents are required to submit personnel information (employed and contracted) and administrative policies and procedures to the Administrator. All such documents must be updated annually. The regulations also require the maintenance of records according to specified retention periods. All of these factors will be considered in granting or denying accreditation. We believe these requirements meet or exceed the ISO Guide 65 guidelines.

(14) Personnel Evidence of Expertise. A commenter inquired about the frequency at which the personnel information, required by section 205.504(a) and used to establish evidence of expertise and ability, is to be updated. Section 205.510 requires that the certifying agent annually submit a complete and accurate update of the information required in section 205.504.

(15) Responsibly Connected. A commenter stated that the term, "responsibly connected," as used in section 205.504(a)(2) is a broad sweep. The commenter believes the term would include everyone they do business with.

Section 205.504(a)(2) requires the certifying agent to provide the name and position description of all personnel to be used in the certification operation. The section assists the certifying agent in meeting the requirement by identifying categories of persons covered by the requirement including persons responsibly connected to the certifying agent. Responsibly connected does not include everyone that the certifying agent does business with. Responsibly connected is defined in the Definitions subpart of this final rule as "any person who is a partner, officer, director, holder, manager, or owner of 10 percent or more of the voting stock of an applicant or a recipient of certification or accreditation." This definition has not changed.

(16) Independent Third-Party Inspectors. A commenter recommended amending section 205.504(a)(3)(I) to provide for the use of independent third-party inspectors. We believe that this recommended amendment is unnecessary since nothing in these regulations precludes a certifying agent from contracting with independent third parties for inspection services.

(17) Response to Accreditation Applicant. A commenter requested that section 205.506(a)(3) be amended to provide a timeframe within which the Administrator has to respond to the accreditation application. While section 205.506(a)(3) identifies the information to be reviewed by the Administrator prior to the granting of accreditation, we assume the commenter is seeking a specific time limit by which the Administrator will acknowledge receipt of an application for accreditation. In the alternative, the commenter may have been seeking a specific time limit by which the Administrator must grant or deny accreditation. We believe that a regulation-mandated timeframe for notifying the applicant of receipt of an application or for granting or denying accreditation is unnecessary. We plan to process all applications in the order in which they are received, to confirm the receipt of each application upon receipt, and to establish a dialog with the applicant upon confirmation of receipt of an application for accreditation. We will work with each applicant to complete the accreditation process as expeditiously as possible. A firm timeframe, however, cannot be set for granting or denying accreditation due to the anticipated uniqueness of each applicant and its application for accreditation.

(18) Duration of Accreditation and Certification. A commenter asked, "How can certification be essentially in perpetuity and accreditation have a time restraint?" The commenter's question does not indicate a preference for certification or accreditation longevity. The commenter correctly points out that certification and accreditation, both of which must be updated annually, are granted for different time periods. The Act limits the period of accreditation to 5 years but does not establish a limit to the period of certification. We believe the requirement that the certified operation submit an annual update of its organic plan negates the need for a certification expiration date.

(19) Denial of Accreditation. In commenting on section 205.507, a commenter stated that the regulations need to address what happens to a certifying agent's clients when the certifying agent fails to qualify for accreditation on its first attempt.

Section 205.507(c) provides that an applicant who has received written notification of accreditation denial may apply for accreditation again at any time in accordance with section 205.502. Upon implementation of the certification requirements of the NOP, production and handling operations planning to sell, label, or represent their products as organic must be certified by a USDA-accredited certifying agent before selling, labeling, or representing their products as organic. If a producer's or handler's choice of certifying agents does not receive USDA accreditation, the producer or handler must seek and receive certification under the NOP from a USDA-accredited certifying agent before selling, labeling, or representing their products as organic. Producers and handlers not so certified may not sell, label, or represent their products as organic. Any producer or handler who violates this requirement will be subject to prosecution under section 2120 of the Act.

(20) Loss of Accreditation After Initial Site Visit. Commenting on section 205.508(b), a commenter stated the belief that accreditation before a site visit may cause problems if the certifying agent does not meet the requirements and, subsequently, loses its accreditation. We believe the problems will be no greater than will occur at any other time when it becomes necessary to revoke a certifying agent's accreditation, including when it becomes necessary to initiate proceedings to suspend or revoke the certification of one or more of the certifying agent's certified operations. However, just because revocation of a certifying agent's accreditation may be justified, it may not be necessary to suspend or revoke the certification of one or more of its clients. An operation certified by a certifying agent that has lost its accreditation must make application with a new certifying agent if it is going to continue to sell, label, or represent its products as organic.

(21) Prohibition on Certification After Expiration of Accreditation. A commenter stated that, "USDA should allow certifying agents to apply the same provisions to expiration of certification of a certified operation." The provision referenced by the commenter is the section 205.510(c)(1) (current section 205.510(c)(2)) requirement that certifying agents with an expired accreditation must not perform certification activities under the Act and these regulations. We have not accepted the commenter's request that the same prohibition be applied to production and handling operations with an expired certification because certification does not expire.

(22) Expiration of Accreditation. Many commenters requested that we amend section 205.510(c)(1) to require annual reports and "minivisits." The commenters cited ISO Guide 61, section 3.5.1. We do not believe that annual "minivisits" are necessary to meet the requirements of ISO Guide 61 or to assure compliance with the NOP. One or more site evaluations will be conducted during the period of accreditation. The certifying agent's annual report will be used as a determining factor in whether to conduct a site evaluation. A request for amendment to a certifying agent's area of accreditation will also result in a site evaluation. This requirement is located at current section 205.510(c)(2).

(23) Update and Review of Inspector Lists. In commenting on section 205.510(c)(1) (current section 205.510(c)(2)) several commenters stated that updating and review of inspector lists must occur more frequently than every 5 years. They cited ISO Guide 61, section 3.5.1.

Section 205.510(a)(1) requires that the certifying agent annually update the information required in section 205.504. This includes the inspector information required by paragraphs 205.504(a)(2) and 205.504(a)(3)(i).

1. ISO/IEC Guide 65 is available for viewing at USDA-AMS, Transportation and Marketing Programs, Room 2945-South Building, 14th and Independence Ave., SW, Washington, DC, from 9:00 a.m. to 4:00 p.m., Monday through Friday (except official Federal holidays). A copy may be obtained from the American National Standards Institute, 11 West 42d Street, New York, NY 10036; Website: www.ansi.org; E-mail: ansionline@ansi.org; Telephone: 212-642-4900; Facsimile: 212-398-0023.

2. ISO/IEC Guide 61 is available for viewing at USDA-AMS, Transportation and Marketing Programs, Room 2945-South Building, 14th and Independence Ave., SW, Washington, DC, from 9:00 a.m. to 4:00 p.m., Monday through Friday (except official Federal holidays). A copy may be obtained from the American National Standards Institute

This subpart sets forth the requirements with which production and handling operations must comply in order to sell, label, or represent agricultural products as "100 percent organic," "organic," or "made with organic (specified ingredients or food group(s))." The producer or handler of an organic production or handling operation must comply with all applicable provisions of subpart C. Any production practice implemented in accordance with this subpart must maintain or improve the natural resources, including soil and water quality, of the operation. Production and handling operations which sell, label, or represent agricultural products as organic in any manner and which are exempt or excluded from certification must comply with the requirements of this subpart, except for the development of an organic system plan.

Production and Handling (General)

The Organic Food Production Act of 1990 (OFPA or Act) requires that all crop, wild crop, livestock, and handling operations requiring certification submit an organic system plan to their certifying agent and, where applicable, the State organic program (SOP). The organic system plan is a detailed description of how an operation will achieve, document, and sustain compliance with all applicable provisions in the OFPA and these regulations. The certifying agent must concur that the proposed organic system plan fulfills the requirements of subpart C, and any subsequent modification of the organic plan by the producer or handler must receive the approval of the certifying agent.

The organic system plan is the forum through which the producer or handler and certifying agent collaborate to define, on a site-specific basis, how to achieve and document compliance with the requirements of certification. The organic system plan commits the producer or handler to a sequence of practices and procedures resulting in an operation that complies with every applicable provision in the regulations. Accreditation qualifies the certifying agent to attest to whether an organic system plan comports with the organic standard. The organic system plan must be negotiated, enacted, and amended through an informed dialogue between certifying agent and producer or handler, and it must be responsive to the unique characteristics of each operation.

An organic system plan contains six components. First, the organic system plan must describe the practices and procedures used, including the frequency with which they will be used, in the certified operation. Second, it must list and characterize each substance used as a production or handling input, including the documentation of commercial availability, as applicable. Third, it must identify the monitoring techniques which will be used to verify that the organic plan is being implemented in a manner which complies with all applicable requirements. Fourth, it must explain the recordkeeping system used to preserve the identity of organic products from the point of certification through delivery to the customer who assumes legal title to the goods. Fifth, the organic system plan must describe the management practices and physical barriers established to prevent commingling of organic and nonorganic products on a split operation and to prevent contact of organic production and handling operations and products with prohibited substances. Finally, the organic system plan must contain the additional information deemed necessary by the certifying agent to evaluate site-specific conditions relevant to compliance with these or applicable State program regulations. Producers or handlers may submit a plan developed to comply with other Federal, State, or local regulatory programs if it fulfills the requirements of an organic system plan.

The first element of the organic system plan requires a narrative or other descriptive format that identifies the practices and procedures to be performed and maintained, including the frequency with which they will be performed. Practices are tangible production and handling techniques, such as the method for applying manure, the mechanical and biological methods used to prepare and combine ingredients and package finished products, and the measures taken to exclude pests from a facility. Procedures are the protocols established for selecting appropriate practices and materials for use in the organic system plan, such as a procedure for locating commercially available, organically produced seed. Procedures reflect the decision-making process used to implement the organic system plan.

By requiring information on the frequency with which production and handling practices and procedures will be performed, the final rule requires an organic system plan, to include an implementation schedule, including information on the timing and sequence of all relevant production and handling activities. The plan will include, for example, information about planned crop rotation sequences, the timing of any applications of organic materials, and the timing and location of soil tests. Livestock management practices might describe development of a rotational grazing plan or addition of mineral supplements to the feed supply. A handling operation might identify steps involved in locating and contracting with farmers who could produce organic ingredients that were in short supply.

The second element that must be included in an organic system plan is information on the application of substances to land, facilities, or agricultural products. This requirement encompasses both natural and synthetic materials allowed for use in production and handling operations. For natural materials which may be used in organic operations under specific restrictions, the organic plan must detail how the application of the materials will comply with those restrictions. For example, farmers who apply manure to their fields must document in their organic system plans how they will prevent that application from contributing to water contamination. A producer and handler who bases the selection of seed and planting stock material under section 205.204 or an agricultural ingredient under section 205.301 on the commercial availability of that substance must provide documentation in the organic system plan.

The third element of the organic system plan is a description of the methods used to evaluate its effectiveness. Producers and handlers are responsible for identifying measurable indicators that can be used to evaluate how well they are achieving the objectives of the operation. For example, production objectives could be measured through regular tallies of bushels or pounds of product sold from the farm or in numbers of cases sold from a handling operation. Indicators that can identify changes in quality or effectiveness of management practices could be relatively simple, such as the information contained in a standard soil test. The specific indicators used to evaluate a given organic system plan will be determined by the producer or handler in consultation with the certifying agent. Thus, if the organic system plan calls for improvements in soil organic matter content in a particular field, it would include provisions for analyzing soil organic matter levels at periodic intervals. If herd health improvement is an objective, factors such as somatic cell count or observations about changes in reproductive patterns might be used as indicators.

The fourth element of the organic system plan is a description of the recordkeeping system used to verify and document an audit trail, as appropriate to the operation. For each crop or wild-crop harvested, the audit trail must trace the product from the field, farm parcel, or area where it is harvested through the transfer of legal title. A livestock operation must trace each animal from its entrance into through removal from the organic operation. A handling operation must trace each product that is handled and sold, labeled, or represented as organic from the receipt of its constituent ingredients to the sale of the processed product.

The fifth element which must be included in an organic system plan pertains to split production or handling operations. This provision requires an operation that produces both organic and nonorganic products to describe the management practices and physical barriers established to prevent commingling of organic and nonorganic products. This requirement addresses contact of organic products, including livestock, organic field units, storage areas, and packaging to be used for organic products, with prohibited substances.

The specific requirements to be included in an organic system plan are not listed here. The accreditation process provides an assurance that certifying agents are competent to determine the specific documentation they require to review and evaluate an operation's organic system plan. Section 205.200(a)(6) allows a certifying agent to request additional information needed to determine that an organic system plan meets the requirements of this subpart. The site-specific nature of organic production and handling necessitates that certifying agents have the authority to determine whether specific information is needed to carry out their function.

Crop Production

Any field or farm parcel used to produce an organic crop must have been managed in accordance with the requirements in sections 205.203 through 205.206 and have had no prohibited substances applied to it for at least 3 years prior to harvest of the crop. Such fields and farm parcels must also have distinct, defined boundaries and buffer zones to prevent contact with the land or crop by prohibited substances applied to adjoining land.

A producer of an organic crop must manage soil fertility, including tillage and cultivation practices, in a manner that maintains or improves the physical, chemical, and biological condition of the soil and minimizes soil erosion. The producer must manage crop nutrients and soil fertility through rotations, cover crops, and the application of plant and animal materials. The producer must manage plant and animal materials to maintain or improve soil organic matter content in a manner that does not contribute to contamination of crops, soil, or water by plant nutrients, pathogenic organisms, heavy metals, or residues of prohibited substances. Plant and animal materials include raw animal manure, composted plant and animal materials, and uncomposted plant materials. Raw animal manure must either be composted, applied to land used for a crop not intended for human consumption, or incorporated into the soil at least 90 days before harvesting an edible product that does not come into contact with the soil or soil particles and at least 120 days before harvesting an edible product that does come into contact with the soil or soil particles. Composted plant or animal materials must be produced through a process that establishes an initial carbon-to-nitrogen (C:N) ratio of between 25:1 and 40:1 and achieves a temperature between 131F and 170F. Composting operations that utilize an in-vessel or static aerated pile system must maintain a temperature within that range for a minimum of 3 days. Composting operations that utilize a windrow composting system must maintain a temperature within that range for a minimum of 15 days, during which time the materials must be turned five times.

In addition to these practices and materials, a producer may apply a crop nutrient or soil amendment included on the National List of synthetic substances allowed in crop production. The producer may apply a mined substance of low solubility. A mined substance of high solubility may only be applied if the substance is used in compliance with the annotation on the National List of nonsynthetic materials prohibited in crop production. Ashes of untreated plant or animal materials which have not been combined with a prohibited substance and which are not included on the National List of nonsynthetic substances prohibited for use in organic crop production may be used to produce an organic crop. A plant or animal material that has been chemically altered by a manufacturing process may be used only if it is included on the National List of synthetic substances allowed for use in organic production. The producer may not use any fertilizer or composted plant and animal material that contains a synthetic substance not allowed for crop production on the National List or use sewage sludge. Burning crop residues as a means of disposal is prohibited, except that burning may be used to suppress the spread of disease or to stimulate seed germination.

The producer must use organically grown seeds, annual seedlings, and planting stock. The producer may use untreated nonorganic seeds and planting stock when equivalent organic varieties are not commercially available, except that organic seed must be used for the production of edible sprouts. Seed and planting stock treated with substances that appear on the National List may be used when an organically produced or untreated variety is not commercially available. Nonorganically produced annual seedlings may be used when a temporary variance has been established due to damage caused by unavoidable business interruption, such as fire, flood, or frost. Planting stock used to produce a perennial crop may be sold as organically produced planting stock after it has been maintained under a system of organic management for at least 1 year. Seeds, annual seedlings, and planting stock treated with prohibited substances may be used to produce an organic crop when the application of the substance is a requirement of Federal or State phytosanitary regulations.

The producer is required to implement a crop rotation, including but not limited to sod, cover crops, green manure crops, and catch crops. The crop rotation must maintain or improve soil organic matter content, provide for effective pest management in perennial crops, manage deficient or excess plant nutrients, and control erosion to the extent that these functions are applicable to the operation.

The producer must use preventive practices to manage crop pests, weeds, and diseases, including but not limited to crop rotation, soil and crop nutrient management, sanitation measures, and cultural practices that enhance crop health. Such cultural practices include the selection of plant species and varieties with regard to suitability to site-specific conditions and resistance to prevalent pests, weeds, and diseases. Mechanical and biological methods that do not entail application of synthetic substances may be used as needed to control pest, weed, and disease problems that may occur. Pest control practices include augmentation or introduction of pest predators or parasites; development of habitat for natural enemies; and nonsynthetic controls such as lures, traps, and repellents. Weed management practices include mulching with fully biodegradable materials; mowing; livestock grazing; hand weeding and mechanical cultivation; flame, heat, or electrical techniques; and plastic or other synthetic mulches, provided that they are removed from the field at the end of the growing or harvest season. Disease problems may be controlled through management practices which suppress the spread of disease organisms and the application of nonsynthetic biological, botanical, or mineral inputs. When these practices are insufficient to prevent or control crop pests, weeds, and diseases, a biological or botanical substance or a synthetic substance that is allowed on the National List may be used provided that the conditions for using the substance are documented in the organic system plan. The producer must not use lumber treated with arsenate or other prohibited materials for new installations or replacement purposes that comes into contact with soil or livestock.

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 designated area that has had no prohibited substances applied to it for a period of 3 years immediately preceding the harvest of the wild crop. The wild crop must also be harvested in a manner that ensures such harvesting or gathering will not be destructive to the environment and will sustain the growth and production of the wild crop.

Livestock Production

Any livestock product to be sold, labeled, or represented as organic must be maintained under continuous organic management from the last third of gestation or hatching with three exceptions. Poultry or edible poultry products must be from animals that have been under continuous organic management beginning no later than the second day of life. Milk or milk products must be from animals that have been under continuous organic management beginning no later than 1 year prior to the production of such products, except for the conversion of an entire, distinct herd to organic production. For the first 9 months of the year of conversion, the producer may provide the herd with a minimum of 80-percent feed that is either organic or produced from land included in the organic system plan and managed in compliance with organic crop requirements. During the final 3 months of the year of conversion, the producer must provide the herd feed in compliance with section 205.237. Once the herd has been converted to organic production, all dairy animals shall be under organic management from the last third of gestation. Livestock used as breeder stock may be brought from a nonorganic operation into an organic operation at any time, provided that, if such livestock are gestating and the offspring are to be organically raised from birth, the breeder stock must be brought into the organic operation prior to the last third of gestation.

Should an animal be brought into an organic operation pursuant to this section and subsequently moved to a nonorganic operation, neither the animal nor any products derived from it may be sold, labeled, or represented as organic. Breeder or dairy stock that has not been under continuous organic management from the last third of gestation may not be sold, labeled, or represented as organic slaughter stock. The producer of an organic livestock operation must maintain records sufficient to preserve the identity of all organically managed livestock and all edible and nonedible organic livestock products produced on his or her operation.

Except for nonsynthetic substances and synthetic substances included on the National List that may be used as feed supplements and additives, the total feed ration for livestock managed in an organic operation must be composed of agricultural products, including pasture and forage, that are organically produced. Any portion of the feed ration that is handled must comply with organic handling requirements. The producer must not use animal drugs, including hormones, to promote growth in an animal or provide feed supplements or additives in amounts above those needed for adequate growth and health maintenance for the species at its specific stage of life. The producer must not feed animals under organic management plastic pellets for roughage or formulas containing urea or manure. The feeding of mammalian and poultry slaughter by-products to mammals or poultry is prohibited. The producer must not supply animal feed, feed additives, or feed supplements in violation of the Federal Food, Drug, and Cosmetic Act.

The producer of an organic livestock operation must establish and maintain preventive animal health care practices. The producer must select species and types of livestock with regard to suitability for site-specific conditions and resistance to prevalent diseases and parasites. The producer must provide a feed ration including vitamins, minerals, protein, and/or amino acids, fatty acids, energy sources, and, for ruminants, fiber. The producer must establish appropriate housing, pasture conditions, and sanitation practices to minimize the occurrence and spread of diseases and parasites. Animals in an organic livestock operation must be maintained under conditions which provide for exercise, freedom of movement, and reduction of stress appropriate to the species. Additionally, all physical alterations performed on animals in an organic livestock operation must be conducted to promote the animals' welfare and in a manner that minimizes stress and pain.

The producer of an organic livestock operation must administer vaccines and other veterinary biologics as needed to protect the well-being of animals in his or her care. When preventive practices and veterinary biologics are inadequate to prevent sickness, the producer may administer medications included on the National List of synthetic substances allowed for use in livestock operations. The producer may not administer synthetic parasiticides to breeder stock during the last third of gestation or during lactation if the progeny is to be sold, labeled, or represented as organically produced. After administering synthetic parasiticides to dairy stock, the producer must observe a 90-day withdrawal period before selling the milk or milk products produced from the treated animal as organically produced. Every use of a synthetic medication or parasiticide must be incorporated into the livestock operation's organic system plan subject to approval by the certifying agent.

The producer of an organic livestock operation must not treat an animal in that operation with antibiotics, any synthetic substance not included on the National List of synthetic substances allowed for use in livestock production, or any substance that contains a nonsynthetic substance included on the National List of nonsynthetic substances prohibited for use in organic livestock production. The producer must not administer any animal drug, other than vaccinations, in the absence of illness. The use of hormones for growth promotion is prohibited in organic livestock production, as is the use of synthetic parasiticides on a routine basis. The producer must not administer synthetic parasiticides to slaughter stock or administer any animal drug in violation of the Federal Food, Drug, and Cosmetic Act. The producer must not withhold medical treatment from a sick animal to maintain its organic status. All appropriate medications and treatments must be used to restore an animal to health when methods acceptable to organic production standards fail. Livestock that are treated with prohibited materials must be clearly identified and shall not be sold, labeled, or represented as organic.

A livestock producer must document in his or her organic system plan the preventative measures he or she has in place to deter illness, the allowed practices he or she will employ if illness occurs, and his or her protocol for determining when a sick animal must receive a prohibited animal drug. These standards will not allow an organic system plan that envisions an acceptable level of chronic illness or proposes to deal with disease by sending infected animals to slaughter. The organic system plan must reflect a proactive approach to health management, drawing upon allowable practices and materials. Animals with conditions that do not respond to this approach must be treated appropriately and diverted to nonorganic markets.

The producer of an organic livestock operation must establish and maintain livestock living conditions for the animals under his or her care which accommodate the health and natural behavior of the livestock. The producer must provide access to the outdoors, shade, shelter, exercise areas, fresh air, and direct sunlight suitable to the species, its stage of production, the climate, and the environment. This requirement includes access to pasture for ruminant animals. The producer must also provide appropriate clean, dry bedding, and, if the bedding is typically consumed by the species, it must comply with applicable organic feed requirements. The producer must provide shelter designed to allow for the natural maintenance, comfort level, and opportunity to exercise appropriate to the species. The shelter must also provide the temperature level, ventilation, and air circulation suitable to the species and reduce the potential for livestock injury. The producer may provide temporary confinement of an animal because of inclement weather; the animal's stage of production; conditions under which the health, safety, or well-being of the animal could be jeopardized; or risk to soil or water quality. The producer of an organic livestock operation is required to manage manure in a manner that does not contribute to contamination of crops, soil, or water by plant nutrients, heavy metals, or pathogenic organisms and optimizes nutrient recycling.

Handling

Mechanical or biological methods can be used to process an agricultural product intended to be sold, labeled, or represented as "100 percent organic," "organic," or "made with organic ingredients" for the purpose of retarding spoilage or otherwise preparing the agricultural product for market. Processed multiingredient products labeled "100 percent organic," may only use wholly organic ingredients, pursuant to paragraph (a) of section 205.301. Nonagricultural substances that are allowed for use on the National List and nonorganically produced agricultural products may be used in or on "organic" and "made with..." products pursuant to paragraphs (b) and (c) of section 205.301, respectively. Documentation of commercial availability of each substance to be used as a nonorganic ingredient in products labeled "organic" must be listed in the organic handling system plan in accordance with section 205.201.

Handlers are prohibited from using: (1) ionizing radiation for the treatment or processing of foods; (2) ingredients produced using excluded methods; or (3) volatile synthetic solvents in or on a processed product or any ingredient which is sold, labeled, or represented as organic. The prohibition on ionizing radiation for the treatment or processing of foods is discussed under Applicability, section 205.105. This rule does not prohibit an organic handling operation from using Food and Drug Administration (FDA)-approved X-rays for inspecting packaged foods for foreign objects that may be inadvertently commingled in the packaged product.

The two paragraphs on excluded methods and ionizing radiation in section 205.270(c) of the proposed rule are replaced with new paragraph (c)(1) which cross-references those practices under paragraphs (e) and (f) of section 205.105. New section 205.105 clearly specifies that ionizing radiation and excluded methods are two practices that handlers must not use in producing organic agricultural products and ingredients. The prohibition on the use of volatile synthetic solvents, also included under paragraph (c) of section 205.270 does not apply to nonorganic ingredients in "made with..." products.

The practice standard for facility pest management under section 205.271 requires the producer or handler operating a facility to use management practices to control and prevent pest infestations. Prevention practices in paragraph (a) include removing pest habitats, food sources, and breeding areas; preventing access to handling facilities; and controlling environmental factors, such as temperature, light, humidity, atmosphere, and air circulation, to prevent pest reproduction. Permitted pest control methods in paragraph (b) include mechanical or physical controls, such as traps, light, or sound. Lures and repellents using nonsynthetic substances may be used as pest controls. Lures and repellents with synthetic substances that are allowed on the National List also may be used. Prevention and control practices in paragraphs (a) and (b) may be used concurrently.

If the practices in paragraphs (a) and (b) are not effective, amended paragraph (c) provides that handlers may then use a nonsynthetic or synthetic substance consistent with National List. If the measures and substances provided under paragraphs (a), (b), and (c) are not effective, synthetic substances not on the National List may be used to control pest infestations. Under new paragraph (d), the handler and the operation's certifying agent, prior to using such a substance, must agree on the substance to be used to control the pest, measures to be taken to prevent contact with organically produced product, and ingredients that may be in the handling facility.

This rule recognizes that certain local, State, and Federal laws or regulations may require intervention with prohibited substances before or at the same time substances allowed in paragraphs (b) and (c) are used. To the extent that this occurs, this rule permits the handler to follow such laws and regulations to market a product as organically handled, provided that the product does not come into contact with the pest control substance used.

The extent of pest infestation cannot be foreseen when an organic plan is submitted by the certified operation and approved by the certifying agent. A handler who uses any nonsynthetic or synthetic substance to control facility pests must update its organic handling system plan to address all measures taken or intended to be taken to prevent contact between the substance and any organically produced ingredient or finished product.

Section 205.272 provides additional practice standards that must be followed by an organic handling operation to prevent the commingling of organic and nonorganic products and to protect organic products from contact with prohibited substances. An organic handling operation must not use packaging materials and storage containers or bins that contain a synthetic fungicide, preservative, or fumigant in handling an organic product. The operation also must not use or reuse any storage bin or container that was previously in contact with any prohibited substance unless the reusable bin or container has been thoroughly cleaned and poses no risk of prohibited materials contacting the organic product.

Temporary Variances

This subpart establishes conditions under which certified organic operations may receive temporary variances from the production and handling provisions of this subpart. The Administrator may establish temporary variances due to: (1) Natural disasters declared by the Secretary; (2) unavoidable business interruption caused by natural catastrophes such as drought, wind, fire, flood, excessive moisture, hail, tornado, or earthquake; or (3) to conduct research on organic production and handling techniques or inputs. An SOP's governing State official or a certifying agent may recommend that the Administrator establish a temporary variance for various reasons including an unavoidable business interruption. The Administrator will determine how long a temporary variance will be in effect at the time it is established, subject to such extension as the Administrator deems necessary. Temporary variances may not be issued to allow use of any practice, material, or procedure which is prohibited under section 205.105.

The proposed rule inadvertently omitted the SOP's governing State official as having authority to recommend a temporary variance to the Administrator. We have added that authority in paragraph (b) of section 205.290.

Upon notification by the Administrator that a temporary variance has been established, the certifying agent must inform each production and handling operation it certifies that may be affected by the temporary variance. For example, if a drought causes a severe shortage of organically produced hay, a dairy operation may be permitted to substitute some nonorganic hay for a portion of the herd's diet to prevent liquidation of the herd. The producer must keep records showing the source and amount of the nonorganic hay used and the timeframe needed to restore the total feed ration to organic sources. The certifying agent may require that the next organic plan include contingency measures to avoid the need to resort to nonorganic feed in case of a future shortage.

General - Changes Based on Comments

This subpart differs from the proposal in several respects as follows: (1) Maintain or Improve Provision for Production Operations Only. A number of commenters questioned whether the requirement in the proposed rule that an operation must "maintain or improve the natural resources of the operation, including soil and water quality" applied to handling as well as production operations. They stated that handling operations are not integrated into natural systems the way that production systems are. As a result, these commenters were uncertain how handlers could fulfill the "maintain or improve" requirement.

The "maintain or improve" requirement addresses the impact of a production operation on the natural resource base that sustains it and, as such, does not apply to handling operations. We have modified the final rule in section 205.200 by limiting the "maintain or improve" requirement to production practices.

(2) Management Practices and Physical Barriers to Prevent Commingling. Many commenters, including numerous certifying agents, stated that the proposed provisions for an organic system plan were not adequate for the task of certifying an operation that produces both organic and nonorganic products. The commenters requested that the final rule incorporate the provisions established in the OFPA for certifying these split operations. These provisions include separate recordkeeping for the organic and nonorganic operations and the implementation of protective practices to prevent the commingling of product and the unintentional contact of organic product with prohibited substances. We have amended the provisions for an organic system plan in section 205.201(a)(5) to require greater accountability regarding the segregation of organic and nonorganic products in a split operation. The changes we made incorporate language from the OFPA ("physical facilities, management practices") to provide clear criteria for producers, handlers and certifying agents to agree upon an organic system plan that protects the integrity of organic product.

(3) Commercial Availability. The proposed rule required that a raw or processed agricultural product sold, labeled, or represented as organic must contain not less than 95 percent organically produced raw or processed agricultural product. Additionally, section 205.606 of the proposed rule allowed any nonorganically produced agricultural product to be used in the 5 percent nonorganic component of an agricultural product sold, labeled, or represented as organic. Many commenters objected to these provisions and recommended that nonorganically produced agricultural products should only be allowed in an organic product when the organically produced form was not commercially available. Commenters stated that allowing nonorganically produced agricultural products within the 5 percent would significantly weaken demand for many organically produced commodities, especially herbs and spices. These commenters stated that herbs and spices often constitute less than 5 percent of the ingredients in a raw or processed agricultural product and that handlers producing an organic product would instinctively seek out the less expensive nonorganic variety. They also indicated that the 5 percent component is an important market for many products produced from organically produced livestock, such as milk derivatives and meat by-products, that are not typically marketed directly to consumers. Commenters stated that the preponderance of current certification programs use the commercial availability criterion when determining whether a nonorganically produced agricultural product may be used within the 5 percent component. Commenters cited the National Organic Standards Board's (NOSB) recommendation that organic agricultural products be used in this 5 percent component unless they are commercially unavailable and requested that the final rule incorporate the criteria for determining commercial availability that accompanied that NOSB recommendation.

We agree with commenters that a preference for organically produced agricultural commodities, when commercially available, can benefit organic producers, handlers, and consumers in a variety of ways. We believe that the commercial availability requirement may allow consumers to have confidence that processed products labeled as "organic" contain the highest feasible percentage of organic ingredients. Some producers may benefit from any market incentive to supply organically produced minor ingredients that handlers need for their processed products. We recognize that the provision does impose an additional requirement on handlers who must ascertain whether the agricultural ingredients they use are commercially available in organic form. The NOSB recommended that the final rule contain a commercial availability provision based upon the guidelines developed by the American Organic Standards project of the Organic Trade Association. For these reasons, we have amended the final rule to require that an agricultural commodity used as an ingredient in a raw or processed product labeled as organic must be organic when the ingredient is commercially available in an organic form.

While recognizing the potential benefits of applying the commercial availability standard to all agricultural ingredients in a processed product, we are concerned that enforcing this provision could impose an excessive burden on handlers. Although many commenters stated that some existing certifying agents apply a commercial availability standard, we do not have complete information on the criteria used by these certifying agents, and we are unsure whether a consensus exists on criteria for commercial availability within the organic community. Additionally, we are concerned that, unless the standard is clearly articulated and consistently interpreted and enforced, it will not be effective. Disagreement among certifying agents regarding when and under what circumstances an ingredient is commercially available would undermine our intent to create an equitable and enforceable standard.

AMS is soliciting additional comment and information on a number of issues concerning the development of standards for the commercial availability of organically produced agricultural commodities used in processed products labeled as "organic." On the basis of these comments and information and additional recommendations that the NOSB may develop, AMS will develop a commercial availability standard for use in implementing the final rule. AMS intends to develop the commercial availability standard and incorporate it within the final rule prior to the commencement of certification activities by accredited certifying agents. This approach will provide organic handlers and certifying agents the standard necessary to incorporate the consideration of commercial availability of ingredients in an organic system plan at the time that the USDA organic standard comes into use. Specifically, AMS requests comments and information addressing the following questions:

What factors, such as quantity, quality, consistency of supply, and expense of different sources of an ingredient, should be factored into the consideration of commercial availability? What relative importance should each of these factors possess, and are there circumstances under which the relative importance can change?

What activities and documentation are sufficient to demonstrate that a handler has taken appropriate and adequate measures to ascertain whether an ingredient is commercially available?

How can AMS ensure the greatest possible degree of consistency in the application of the commercial availability standard among multiple certifying agents?

Could potentially adverse effects of a commercial availability standard, such as uncertainty over the cost and availability of essential ingredients, impact or impede the development of markets for organically processed products?

What economic and administrative burdens are imposed by the commercial availability standards found in existing organic certification programs?

How would producers benefit from market incentives to increase use of organic ingredients that result from a commercial availability standard?

Would lack of a commercial availability standard provide a disincentive for handlers of products labeled "organic" to seek out additional organic minor ingredients? What impacts could this have on producers of minor ingredients?

AMS welcomes any new or unpublished research results or information that exists concerning a commercial availability standard. AMS specifically invites comment from establishments which currently operate using commercial availability or a comparable provision in the conduct of their business. AMS will receive comment on this issue until 90 days after publication of the final rule.

(4) Conservation of Biodiversity. Many commenters recommended amending the definition of organic production to include the requirement that an organic production system must promote or enhance biological diversity (biodiversity). Commenters stated that the definitions for organic production developed by the NOSB and the Codex Commission include this requirement. We agree with these commenters and have amended the definition of organic production to require that a producer must conserve biodiversity on his or her operation. The use of "conserve" establishes that the producer must initiate practices to support biodiversity and avoid, to the extent practicable, any activities that would diminish it. Compliance with the requirement to conserve biodiversity requires that a producer incorporate practices in his or her organic system plan that are beneficial to biodiversity on his or her operation.

General - Changes Requested But Not Made

This subpart retains from the proposed rule regulations on which we received comments as follows:

Organic Plan Excessively Restrictive. One organic inspector was concerned that the requirements of the organic system plan were too prescriptive and would create an excessive paper work burden for producers and handlers. The commenter stated that the excessive specificity of certain requirements (composition and source of every substance used), combined with the ambiguity of others (soil and tissue testing required but with no mention of the frequency), would confuse the working relationship between a producer or handler and his or her certifying agent. The commenter was concerned that strict adherence to the specifications in the organic system plan would compromise the ability of producers and handlers to run their businesses. While agreeing that flexibility in the development of the organic system plan was valuable, the commenter stated that producers and handlers, not the certifying agent, must retain the primary managerial role for their operation. Other commenters maintained that the organic system plan requirements were too ambiguous and would inhibit certifying agents' efforts to review necessary information. For example, a trade association commented that the absence of specific recordkeeping requirements for livestock feed materials, medications, and health care activities would impair compliance monitoring.

The provisions for an organic system plan were one of the most significantly revised components of the proposed rule, and, with minor changes related to split operations, we have retained them in the final rule. These provisions provide ample discretion for producers, handlers, and certifying agents to perform their duties while recognizing that mutual consent is a prerequisite for them to meet their responsibilities. The organic system plan enables producers and handlers to propose and certifying agents to approve site and operation-specific practices that fulfill all applicable program requirements. Producers and handlers retain the authority to manage their operations as they deem necessary, but any actions they undertake that modify their organic system plan must be approved by the certifying agent. With regard to recordkeeping, certifying agents are authorized to require the additional information, such as the livestock records mentioned in the comment, that they deem necessary to evaluate compliance with the regulations.

One certifying agent stated that the requirement to maintain or improve the natural resources of the operation was worthy in principle but unreasonable to achieve. This commenter stated that the long-term consequences of an organic system plan could not be foreseen and recommended requiring that producers "must endeavor" to maintain or improve the operation's natural resources. We have not changed this requirement because the vast majority of commenters supported an organic system plan that mandated the "maintain or improve" principle. A good working relationship between the producer and his or her certifying agent, including the annual inspection and accompanying revisions to the organic system plan, can rectify the unforeseen and unfavorable conditions that arise.

Crop Production - Changes Based on Comments

This subpart differs from the proposal in several respects as follows:

(1) Crop nutrient management. The fundamental requirement of the soil fertility and crop nutrient management practice standard, that tillage, cultivation, and nutrient management practices maintain or improve the physical, chemical, and biological condition of the soil and minimize erosion, remains unaltered. The proposed rule required that a producer budget crop nutrients by properly utilizing manure or other animal and plant materials, mined substances of low or high solubility, and allowed synthetic amendments. Many commenters disagreed with using the term, "budget," which they considered too limiting to characterize nutrient management in organic systems. These commenters recommended that the practice standard instead emphasize the diverse practices used in organic systems to cycle nutrients over extended periods of time.

We agree with these commenters and have amended the final rule to require that producers manage crop nutrients and soil fertility through the use of crop rotations and cover crops in addition to plant and animal materials. Additionally, we clarified that producers may manage crop nutrients and soil fertility by applying mined substances if they are used in compliance with the conditions established in the National List. Finally, we removed the word, "waste," from our description of animal and plant materials in the proposed rule to emphasize the importance of these resources in organic soil fertility management.

(2) Compost Practice Standard. The proposed rule required that a composted material used on an organic operation must be produced at a facility in compliance with the Natural Resource Conservation Service (NRCS) practice standard. While many commenters agreed with the need for greater oversight of the feedstocks and procedures used to produce compost, most stated that the NRCS practice standard would not be suitable for this purpose. Commenters stated that the requirements in the NRCS practice standard were not designed for organic operations and would prohibit many established, effective composting systems currently used by organic producers. For example, adoption of the NRCS practice standard would prevent producers from using nonfarm wastes as compost feedstocks. Materials such as food processing by-products and leaves from curbside collection programs have long been used with beneficial results.

Commenters also stated that the minimum acceptable requirements for the design, construction, and operation of a composting facility contained in the practice standard were appropriate for a voluntary cost share program but were excessive as a compliance requirement for organic certification. Commenters questioned whether producers could justify the investment of time and resources needed to comply with the multiple design and operation criteria specified in the NRCS practice standard.

We agree with commenters who stated that, given the diversity of composting systems covered by a national organic standard, requiring full compliance with the NRCS practice standard would be overly prescriptive. We maintain, however, that implementation of the OFPA requires a rigorous, quantitative standard for the production of compost. The OFPA contains significant restrictions on applying raw manure that are reflected in the soil fertility and crop nutrient management practice standard. These restrictions pertain to raw manure and do not apply once fresh animal materials are transformed into a composted material. An organic producer using a composted material containing manure must comply with the nutrient cycling and soil and water conservation provisions in his or her organic system plan but is not constrained by the restrictions that apply to raw manure. Therefore, producers intending to apply soil amendments will require clear and verifiable criteria to differentiate raw manure from composted material. We developed the requirements in the final rule for producing an allowed composted material by integrating standards used by the Environmental Protection Agency (EPA) and USDA's Natural Resources Conservation Service (NRCS). The requirements for the carbon-to-nitrogen (C:N) ratio for composting materials are the same as that found in the NRCS practice standard for a composting facility. The time and temperature requirements for in-vessel, static aerated pile, and windrow composting systems are consistent with that EPA regulates under 40 CFR Part 503 for the production of Class A sewage sludge. Additionally, AMS reviewed these compost production requirements with USDA's Agricultural Research Service (ARS).

The conditions in the final rule for producing an allowed composted material begin with the selection of appropriate feedstocks. The producer's first responsibility is to identify the source of the feedstocks used in the composting system. This requirement ensures that only allowed plant and animal materials are included in the composting process, that they are not contaminated with prohibited materials, and that they are incorporated in quantities suitable to the design of the composting system. Certifying agents will exercise considerable discretion for evaluating the appropriateness of potential feedstock materials and may require testing for prohibited substances before allowing their use. For example, a certifying agent could require a producer to monitor off-farm inputs such as leaves collected through a municipal curbside program or organic wastes from a food processing facility. Monitoring may be necessary to protect against contamination from residues of prohibited substances, such as motor oil or heavy metals, or gross inert materials such as glass shards that can enter the organic waste stream.

The final rule further requires that the producer adhere to quantitative criteria when combining and managing the plant and animal materials that are being composted. When combining feedstocks to initiate the process, producers must establish a C:N ratio of between 25:1 and 40:1. This range allows for very diverse combinations of feedstock materials while ensuring that, when properly managed, the composting process will yield high quality material. While some commenters maintained that specifying any C:N ratio in the final rule would be too restrictive, it would be far more problematic not to establish a range. The 25:1 to 40:1 range ensures that producers will establish appropriate conditions under which the additional requirements in this practice standard, most notably the time and temperature criteria, can be achieved with minimal producer oversight. Composting operations using a C:N ratio lower than 25:1 require increasingly intensive management as the ratio drops due to the risk of putrefaction. Operations in excess of the 40:1 range may achieve the minimum temperature but are likely to drop off quickly and result in a finished material that is inadequately mature and deficient in nitrogen. The producer is not required to perform a physical analysis of each feedstock component if he or she can demonstrate that an estimated value is reliable. For example, estimates of the carbon and nitrogen content in specific manures and plant materials are generally recognized. Other feedstocks of consistent quality may be tested once and assumed to approximate that value.

The producer must develop in his or her organic system plan the management strategies and monitoring techniques to be used in his or her composting system. To produce an allowed composted material, the producer must use an in-vessel, static aerated pile, or windrow composting system. Producers using an in-vessel or static aerated pile system must document that the composting process achieved a temperature between 131F and 170F and maintained that level for a minimum of 3 days. Producers using a windrow composting system must document that the composting process achieved a temperature between 131F and 170F and maintained that level for a minimum of 15 days. Compost produced using a windrow system must be turned five times during the process. These time and temperature requirements are designed to minimize the risk from human pathogens contained in the feedstocks, degrade plant pathogens and weed seeds, and ensure that the plant nutrients are sufficiently stabilized for land application.

The final rule does not contain provisions for the use of materials commonly referred to as "compost teas." A compost tea is produced by combining composted plant and animal materials with water and a concentrated nutrient source such as molasses. The moisture and nutrient source contribute to a bloom in the microbial population in the compost, which is then applied in liquid form as a crop pest or disease control agent. The microbial composition of compost teas are difficult to ascertain and control and we are concerned that applying compost teas could impose a risk to human health. Regulation of compost teas was not addressed in the proposed rule. The National Organic Program (NOP) will request additional input from the NOSB and the agricultural research community before deciding whether these materials should be prohibited in organic production or whether restrictions on their use are appropriate.

In addition to managing crop nutrients with raw manure and composted plant and animal materials, a producer may use uncomposted plant materials. These are materials derived exclusively from plant sources that a producer manages in a manner that makes them suitable for application in a cropping system. For example, plant materials that are degraded and stabilized through a vermicomposting process may be used as a soil fertility and crop nutrient amendment.

(3) Mined Substances of High Solubility. The proposed rule treated mined substances of high solubility as a single category of soil amendment and allowed their use where warranted by soil and crop tissue testing. Many commenters objected to the general allowance for this category of substances and were particularly disappointed that the NOSB annotations on two such materials, sodium (Chilean) nitrate and potassium chloride, were not included. Commenters cited the potential detrimental effects of these highly soluble and saline substances on soil quality and stated that several international organic certification programs severely prescribe or prohibit their use. One certifying agent recommended that natural substances of high solubility and salinity be handled comparably to similar synthetic materials such as liquid fish products and humic acids that appear on the National List, complete with their original NOSB annotations.

At its June 2000 meeting, the NOSB recommended that the NOP delete general references to mined substances of high solubility from the final rule, and incorporate the NOSB's specific annotations for materials of this nature. We have adopted this recommendation by retaining a place for mined substances of high solubility in the soil fertility and crop nutrient management practice standard but restricting their use to the conditions established for the material as specified on the National List of prohibited natural substances. Under this approach, mined substances of high solubility are prohibited unless used in accordance with the annotation recommended by the NOSB and added by the Secretary to the National List. We deleted the provision from the proposed rule that use of the substance be "justified by soil or crop tissue analysis." The final rule contains two materials--sodium nitrate and potassium chloride--that may be used in organic crop production with the annotations developed the NOSB.

While "mined substances of high solubility" is not a discrete, recognized category such as crop nutrients, the proposed rule mentioned sodium nitrate, potassium chloride, potassium nitrate (niter), langbeinite (sulfate of potash magnesia), and potassium sulfate in this context. Based on the recommendation of the NOSB, the final rule would prohibit use of these materials, unless the NOSB developed recommendations on conditions for their use and the Secretary added them to the National List. The NOP would welcome further guidance from the NOSB on these materials.

(4) Burning crop residues. The proposed rule prohibited burning as a means of crop disposal, except for burning prunings from perennial crops to suppress the spread of disease. Many commenters supported the principle behind the prohibition but maintained that the proposed language was too restrictive and would preclude certain beneficial agronomic practices. Several producers stated that the proposed rule would prevent them from collecting and burning residues from diseased annual crops, which they felt was an effective and beneficial practice. Other producers cited their use of prescriptive burning as a management practice for certain native or wild crops. As evidenced by the allowance for burning to suppress disease with perennial crops, the proposed rule was not designed to preclude the selective use of fire in organic production. We agree with the commenters that a more flexible allowance for the practice is warranted, and we have amended the provision to allow burning of annual and perennial crop residues for the suppression of disease and to stimulate seed germination. Producers must establish their need and procedures for burning in their organic system plan, and the practice cannot be used solely to remove crop debris from fields. (5) Requirement for Organic Seed in Sprout Production. The proposed rule allowed nonorganically produced seeds for all purposes, including sprout production, when the certifying agent concurred with the producer that organically produced seeds were not commercially available. While commenters predominately supported this approach with seed used for planting, they were virtually unanimous in stating that it is never appropriate to allow nonorganically produced and handled seeds in organic sprout production. Commenters cited the NOSB's June 1994 recommendation that seed used for the production of edible sprouts shall be organically produced and stated that existing certification standards do not provide an exemption based on commercial availability. We agree with these commenters and have modified the final rule to require that organic seed must be used for the production of edible sprouts.

(6) Mitigating the Effects of a Biological, Botanical, or Synthetic Substance. The proposed rule required that producers who used a biological or botanical substance or an allowed synthetic substance to control crop pests, weeds, or disease evaluate and mitigate the effects of repetitive use of the same or similar substances. While agreeing that pest resistance and shifts in pest populations were important considerations, commenters stated that managing these issues was beyond the ability of individual operations. Commenters recommended that the NOP develop principles and practices for managing pest resistance and shifts in pest types that would apply to all production operations. We agree with these comments and have deleted the requirement to evaluate and mitigate the effects of using the same or similar crop pest, weed, or disease control substances. The final rule requires that producers document the use of such substances in their organic systems plans, subject to the approval of their certifying agent.

(7) Prohibition on Use of Treated Lumber. The proposed rule did not specifically address the use of lumber that had been treated with a prohibited substance, such as arsenic, in organic production. Citing the explicit prohibition on these substances in existing organic standards, many commenters felt that treated lumber should be excluded in the final rule. Commenters also cited the NOSB's recommendation to prohibit the use of lumber treated with a prohibited substance for new construction and replacement purposes effective upon publication of the final rule. We have included a modified version of the NOSB's recommendation within the crop pest, weed, and disease management practice standard. This provision prohibits the use of lumber treated with arsenate or other prohibited materials for new installations or replacement purposes in contact with an organic production site. We included this modification to clarify that the prohibition applies to lumber used in direct contact with organically produced and handled crops and livestock and does not include uses, such as lumber for fence posts or building materials, that are isolated from production. The prohibition applies to lumber used in crop production, such as the frames of a planting bed, and for raising livestock, such as the boards used to build a farrowing house. (8) Greater Rigor in the Wild Harvest Production Organic System Plan. A number of commenters stated that the wild-crop harvesting practice standard was insufficiently descriptive and that the proposed rule failed to apply the same oversight to wild harvest operations as it did to those producing crops and livestock. Some commenters maintained that the proposed rule did not require a wild harvest producer to operate under an approved organic system plan. These commenters proposed specific items, including maps of the production area that should be required in a wild harvest operation's organic system plan. One commenter recommended that the definition for "wild crop" be modified to allow the harvest of plants from aquatic environments.

We amended the practice standard for wild-crop harvesting to express the compliance requirements more clearly. Wild-crop producers must comply with the same organic system plan requirements and conditions, as applicable to their operation, as their counterparts who produce crops and livestock. Wild harvest operations are production systems, and they must satisfy the general requirement that all practices included in their organic system plan must maintain or improve the natural resources of the operation, including soil and water quality. We modified the practice standard to emphasize that wild harvest production is linked to a designated site and expect that a certifying agent would incorporate mapping and boundary conditions into the organic system plan requirements. Finally, we changed the definition of "wild crop" to specify that harvest takes place from a "site" instead of "from land," thereby allowing for aquatic plant certification.

Crop Production - Changes Requested But Not Made

This subpart retains from the proposed rule regulations on which we received comments as follows:

(1) Application of Raw Manure. The soil fertility and crop nutrient management practice standard in the proposed rule permitted the application of raw manure to crops not intended for human consumption and established restrictions for applying it to crops used for human food. For human food crops, the proposed rule required a 120-day interval between application and harvest of crops whose edible portion had direct contact with the soil or soil particles, and a 90-day interval for crops that did not. These provisions reflected the recommendations developed by the NOSB at its June 1999 meeting. The practice standard also required that raw manure must be applied in a manner that did not contribute to the contamination of crops, soil, or water by plant nutrients, pathogenic organisms, heavy metals, or residues of prohibited substances.

The majority of commenters supported the provisions for applying raw manure. Some commenters stated that the provisions effectively balanced the benefits of applying raw manure to the soil with the environmental and human health risks associated with its use. These commenters stated that the lengthy intervals between application and harvest would not impose an unreasonable or unfeasible burden on organic producers. The NOSB strongly supported the provisions in the proposed rule, emphasizing that raw manure contributed significant benefits to soil nutrient, structure, and biological activity that other soil fertility practices and materials do not provide. Other commenters stated that the provisions were consistent with the requirements in existing organic standards and added that the restrictions were justifiable because they reflected responsible management practices.

For differing reasons, a number of commenters disagreed with the proposed provisions. Some commenters cited the human health risks associated with pathogenic organisms found in raw manure and stated that the proposed intervals between application and harvest were not adequately protective. These commenters recommended that the NOP conduct more extensive risk assessment procedures before determining what, if any, intervals between application and harvest would adequately protect human health. Some of these commenters identified the risk assessment methodology and pathogen treatment procedures governing the production and use of sewage sludge as the most suitable precedent for guiding the additional work required in this area. Conversely, a number of commenters stated that the provisions in the proposed rule were excessive because they exceeded the minimum 60-day interval between application and harvest established in the OFPA. Many of these commenters recommended eliminating the distinction between crops that come into contact with soil or soil particles and those that don't and applying a uniform 60-day interval between harvest and application for any crop to which raw manure had been applied. Some commenters stated that the 120-day interval severely limited the flexibility of producers who operated in regions such as the Northeast where the growing season lasted only slightly longer. Other commenters maintained that the practice standard did not address specific practices, such as applying raw manure to frozen fields, that they maintained should be expressly prohibited.

The responsibility to use raw manure in a manner that is protective of human health applies to all producers, whether organic or not, who apply such materials. We acknowledge the commenters who noted that the OFPA cites food safety concerns relative to manure use and, therefore, that food safety considerations should be reflected in the practice standard for applying raw manure in the final rule. Some of the commenters favored more extensive risk assessment procedures or lengthening the interval between application and harvest. We have not, however, changed the provisions for applying raw manure.

Although public health officials and others have identified the use of raw manure as a potential food safety concern, at the present time, there is no science-based, agreed-upon standard for regulating the use of raw manure in crop production. The standard in this rule is not a public health standard. The determination of food safety demands a complex risk assessment methodology, involving extensive research, peer review, and field testing for validation of results. The only comparable undertaking in Federal rulemaking has been EPA's development of treatment and application standards for sewage sludge, an undertaking that required years of dedicated effort. The NOP does not have a comparable capacity with which to undertake a comprehensive risk assessment of the safety of applying raw manure to human food crops. To delegate the authority to determine what constitutes safe application of raw manure to certifying agents would be even more problematic. A certifying agent cannot be responsible for establishing a Federal food safety standard. Therefore, the standard in this rule is a reflection of AMS' view and of the public comments that this standard is reasonable and consistent with current organic industry practices and NOSB recommendations for organic food crop production. Should additional research or Federal regulation regarding food safety requirements for applying raw manure emerge, AMS will ensure that organic production practice standards are revised to reflect the most up-to-date food safety standard.

Neither the identification of food safety as a consideration in the OFPA nor the inclusion of this practice standard in the final rule should be construed to suggest that organically produced agricultural products are any safer than nonorganically produced ones. USDA has consistently stated that certification is a process claim, not a product claim, and, as such, cannot be used to differentiate organic from nonorganic commodities with regard to food safety. National organic standards for manure use cannot be used to establish a food safety standard for certified commodities in the absence of as uniform Federal regulation to ensure the safety of all human food crops to which raw manure has been applied. The OFPA was designed to certify a process for informational marketing purposes.

Neither have we changed the practice standard in response to comments that the requirement in the final rule should not exceed the 60-day interval contained in the OFPA. The OFPA clearly establishes that the interval must be no less than 60 days and does not preclude a longer standard. The NOSB has strongly supported the proposed 90- and 120-day intervals, and the vast majority of commenters indicated that these provisions would be feasible for virtually all organic cropping systems. The requirement in the practice standard that raw manure must be applied in a manner that does not contribute to the contamination of crops, soil, or water by plant nutrients, pathogenic organisms, heavy metals, or residues of prohibited substances provides certifying agents the discretion to prohibit specific practices that would not be in compliance. With this discretion, a certifying agent could prohibit practices, such as applying manure to frozen ground or too close to water resources, that many commenters stated were not appropriate for organic production.

(2) No Prohibition on Manure from Nonorganic Operations. The proposed rule identified animal and plant waste materials as important components in soil fertility and crop nutrient management without providing criteria for distinguishing allowed and prohibited sources. A large number of commenters objected to this provision and stated that manure from nonorganic sources may contain residues from prohibited substances, including animal medications. These commenters maintained that some of these residues, such as antibiotics, may remain active for extended intervals, and others, such as heavy metals, could accumulate on the organic operation. Commenters stated that if either or both conditions prevailed, the integrity of the organic operation would be jeopardized. Many producers and certifying agents emphasized that the proposed rule conflicted with the Codex guidelines that prohibit the use of manure from factory farms. These commenters were concerned that failure to restrict the use of manure from nonorganic operations would put their products at a competitive disadvantage, particularly in European markets. When raising this issue, most commenters requested that the final rule either prohibit the use of manure from factory farms or state that certifying agents could regulate the practice by requiring residue testing and restrictions on application.

We have not changed the provisions for using manure from nonorganic operations in the final rule. In many discussions on the subject throughout the years, the NOSB has never recommended that manure from nonorganic farms be prohibited. Existing organic certification standards routinely permit the use of manure from nonorganic operations with appropriate oversight, and the final rule incorporates a similar approach. Under the final rule, a certifying agent can require residue testing when there is reasonable concern that manure, either raw or as a component of compost, contains sufficient quantities of prohibited materials to violate the organic integrity of the operation. Providing certifying agents the discretion to require screening for prohibited materials will minimize the risk of introducing contaminants while maintaining the ecologically important practice of recycling organic material from nonorganic operations. Additionally, the final rule requires that producers apply manure and compost in a manner that maintains or improves the soil and water quality of their operation. This provision provides an additional safeguard that certifying agents may use to ensure that the application of any form of manure protects the natural resources of the operation.

(3) Rotating a Field in and out of Organic Production. Some commenters stated that a producer should not be allowed to rotate fields on their operation in and out of organic production. These commenters were concerned that producers could apply prohibited substances that persisted for many years, such as soil fumigants, and begin harvesting organically produced crops after 3 years. They stated that, without a prohibition on the rotation of fields in this manner, organic producers could effectively use a prohibited substance on their operation.

We have not amended the final rule to prohibit the rotation of a field on an operation in and out of organic production. The statutory prohibition on the application of a prohibited substance is 3 years, and this requirement is contained in section 205.202(b). This prohibition restricts the application of a prohibited substance, not its residual activity. If AMS receives evidence that the rotation of fields in this manner threatens to compromise organic production, the NOP and NOSB will collaborate on developing standards to remedy it. (4) Use of Seed Treatments on the National List. The seed and planting stock practice standard in the proposed rule generated a very diverse array of responses that, while largely favorable, highlighted a potentially disruptive impact on organic producers. The practice standard favored organic seed and planting stock over nonorganically produced but untreated varieties and nonorganically produced, untreated seed and planting stock over nonorganically produced seeds and planting stock treated with an allowed synthetic substance. Producers could use the less preferable seed or planting stock variety if they demonstrated to their certifying agent that an equivalent variety in the preferred form was not commercially available. Most commenters endorsed the principle of requiring organic seed and planting stock and agreed that the proposed provisions were a workable approach to enforcement. They stated that the provisions created an incentive for seed and planting stock providers to develop supplies for organic markets, yet enabled producers who made a good faith effort but failed to locate seed or planting stock in the preferred form the ability to continue producing organically. Most commenters indicated that this approach would support the existing market for organic seed and planting stock while fostering its continued development.

A number of commenters, however, stated that the seed and planting stock practice standard was unreasonable and unworkable and would adversely affect organic producers. These effects would include significantly reduced planting options due to the nonavailability of seed in any allowed form and higher seed costs, which represent a significant percentage of the total production cost for some commodities. These commenters maintained that the three categories of seed and planting stock allowed in the order of preference could not reliably provide producers with many commercial varieties currently being planted. They pointed out that there were no synthetic seed treatments on the National List in the proposed rule, thereby eliminating the use of treated seed in organic production. Commenters stated that producers often rely upon seed and planting stock varieties that are uniquely well adapted for their growing conditions or marketing requirements and that these particular varieties would very often not be available in untreated form. These commenters concluded that the proposed practice standard would compel many producers to abandon many tried and true varieties of seed and planting stock and perhaps phase out organic production entirely. One commenter maintained that the proposed rule's stated intention of using the practice standard to stimulate production of organic seed and planting stock was not within the purpose of the OFPA.

We have not changed the seed and planting stock practice standard in response to these commenters because the prohibition on using synthetic materials not on the National List is a requirement of the OFPA. The final rule cannot allow producers to use synthetic seed treatments that have not been reviewed, favorably recommended by the NOSB, and added to the National List by the Secretary. The practice standard creates incentives for producers to seek out seed and planting stock inputs that are the most compatible with organic production, yet includes allowances when preferred forms are not commercially available. While no seed treatments are included on the National List in the final rule, individuals may petition the NOSB for review of such substances. Additionally, the practice standard creates an incentive for seed and planting stock producers and suppliers to develop natural treatments suitable for organic systems that would not need to appear on the National List. The objectives of spurring production of organically grown seed and promoting research in natural seed treatments are compatible with the OFPA's purpose of facilitating commerce in organically produced and processed food. We designed the practice standard to pursue these objectives while preventing the disruption that an ironclad requirement for organically produced seed and planting stock may have caused. (5) Practice Standard for Maple Syrup. Many commenters stated that the proposed rule lacked production and handling standards for operations that produce maple syrup. Commenters stated that maple syrup production is a significant enterprise for many organic producers and that the absence of a practice standard in the final rule would adversely affect existing markets for organic products. Many commenters recommended that the final rule incorporate the maple syrup practice standard from an existing certification program or the American Organic Standards.

We have not included a practice standard for the production and handling of maple syrup because the final rule contains sufficient provisions for the certification of these types of operations. After reviewing existing practice standards for maple syrup, we determined that the standards in the final rule for crop production, handling operations, and allowed and prohibited materials on the National List provided comparable guidance.

Crop Production - Clarifications

Clarification is given on the following issues raised by commenters:

(1) Applicability of Crop Rotation Requirement to all Operations. One State program commented that the crop rotation practice standard in the proposed rule was unreasonable for producers who operated in regions where limited rainfall and irrigation resources or unique soil conditions made cover cropping impractical. This commenter stated that certain dryland cropping systems, such as aloe vera production, function as "semi-perennial" systems that do not include rotations, yet fulfill the objectives of the crop rotation practice standard. A certifying agent expressed a similar concern by suggesting that the crop rotation practice standard be changed by adding "may include, but is not limited to" prior to the list of allowed management practices. This commenter felt that the "may include" clause afforded individual growers greater discretion by acknowledging that not every allowed management practice would be applicable to all operations.

We have retained the language from the proposed rule because it already provides the flexibility to develop site-specific crop rotation practices requested by these commenters. The regulation as originally written includes the " but not limited to" clause that allows producers to include alternative management practices in their organic system plan. Additionally, the regulation states that the producer must implement a crop rotation that provides the required functions "that are applicable to the operation." This further establishes that the crop rotation component of an organic system plan must be considered within the context of site-specific environmental conditions including climate, hydrology, soil conditions, and the crops being produced. The final rule requires implementation of a crop rotation, but the producer and certifying agent will determine the specific crops and the frequency and sequencing of their use in that rotation. Crop rotations must fulfill the requirements of this practice standard--to maintain or improve soil organic matter content, provide for pest management, manage deficient or excess plant nutrients, and control erosion--and are not obligated to use any specific management practice. We structured this and other practice standards, as well as the requirements of the organic system plan, to enable producers and certifying agents to develop organic system plans adapted to natural variation in environmental conditions and production systems.

(2) Excluding Annual Seedlings from Planting Stock. The proposed rule allowed a producer to use nonorganically produced seeds and planting stock if organically produced equivalent varieties were not commercially available. Several commenters, including the NOSB, were concerned that the definition of planting stock as "any plant or plant tissue, including rhizomes, shoots, leaf or stem cuttings, roots, or tubers, used in plant production or propagation" was sufficiently broad to be applied to annual seedlings. While many commenters, including the NOSB, supported the commercial availability exemption in the case of seeds and planting stock, they objected to extending it to annual seedlings. The proposed rule did not intend to include annual seedling within the definition of planting stock and included a separate definition of "annual seedling" as "a plant grown from seed that will complete its life cycle or produce a harvestable crop yield within the same crop your or season in which it is planted." The proposed rule addressed annual seedlings as a distinct category within the seed and planting stock practice standard. There was no allowance for using nonorganically produced annual seedlings based on commercial availability, and such seedlings can only be used when a temporary variance has been issued due to a catastrophic business interruption. The growth of markets for organically produced annual seedlings, unlike those for seeds and planting stock, obviates the need for the commercial availability provision. We have retained this approach in the final rule.

Livestock Production - Changes Based on Comments

This subpart differs from the proposal in several respects as follows:

(1) Whole Herd Conversion. The proposed rule required that livestock receive 1 year of continuous organic management prior to the milk or milk products they produce being labeled as organic. Based on the feed provisions in that proposal, producers would be required to provide a 100-percent organic feed ration (exclusive of National List substances allowed as feed supplements and additives) for that entire year. Many producers, consumers, State certification programs, and certifying agents commented that the full year organic feed requirement created an insurmountable barrier for small and medium-size dairy operations wishing to convert to organic production. They maintained that the added expense of a full year, 100-percent organic feed requirement was economically prohibitive. These commenters stated that "new entry" or "whole herd" conversion provisions in existing certification standards have been instrumental in enabling established nonorganic dairies to make the transition to organic production. Commenters stated that these provisions typically allow producers to provide livestock 80-percent organic or self-raised feed for the first 9 months of a herd's transition, before requiring 100-percent organic feed for the final 3 months. Some commenters stated that many current organic dairies had capitalized on this whole herd conversion provision and that the consistent growth in demand for organic milk and milk products reflected consumer acceptance of the principle.

At its June 2000 meeting, the NOSB reiterated its prior endorsement of the conversion principle for operations that jointly convert dairy herds and the land on which they are raised. The NOSB recommended allowing a producer managing an entire, distinct herd to provide 80-percent organic or self-raised feed during the first 9 months of the final year of conversion, and 100-percent organic feed for the final 3 months. The recommendation further required that dairy animals brought onto an organic dairy must be organically raised form the last third of gestation, except that feed produced on land managed under an organic system plan could be fed to young stock up to 12 months prior to milk production.

While the preponderance of comments supported the whole herd conversion provision, a significant number of individuals, certifying agents, and State certification programs opposed it. Some commenters felt that requiring less than 1 full year of 100-percent organic feed would not satisfy consumer expectations for an organically managed dairy. Other commenters stated that the whole herd conversion merely favored one segment of organic producers over another. They maintained that the full year, 100-percent organic feed requirement would stimulate markets for organically produced hay and grain, thereby rewarding good row crop rotation. One certifying agent was concerned that the conversion provision would create a permanent exemption and that split operation dairies could use it repeatedly to bring nonorganic animals into the organic operation.

The final rule contains a provision for whole herd conversion that closely resembles those found in the NOSB recommendation and the existing certification standards. The final rule requires that an entire, distinct dairy herd must be under organic management for 1 year prior to the production of organic milk. During the first 9 months of that year, the producer must provide a feed ration containing a minimum of 80-percent organic feed or feed that is raised from land included in the organic system plan and managed in compliance with organic crop requirements. The balance of the feed ration may be nonorganically produced, but it must not include prohibited substances including antibiotics or hormones. The producer must provide the herd 100-percent organic feed for the final 3 months before the production of organic milk. The producer must comply with the provisions in the livestock health and living conditions practice standard during the entire year of conversion. After the dairy operation has been certified, animals brought on to the operation must be organically raised from the last third of gestation. We did not incorporate the NOSB's recommendation to provide young stock with nonorganic feed up to 12 months prior to the production of certified milk. By creating an ongoing allowance for using nonorganic feed on a certified operation, this provision would have undermined the principle that a whole herd conversion is a distinct, one-time event.

We anticipate that the provisions added to the final rule will address the concerns of commenters who objected to the conversion principle. Consumers have embraced milk and milk products from dairies certified under private whole herd conversion provisions essentially identical to that in the final rule. While the conversion provision may temporarily reduce demand for organic feed materials, it encourages producers to develop their own supplies of organic feed. The conversion provision also rewards producers for raising their own replacement animals while still allowing for the introduction of animals from off the farm that were organically raised from the last third of gestation. This should protect existing markets for organically raised heifers while not discriminating against closed herd operations. Finally, the conversion provision cannot be used routinely to bring nonorganically raised animals into an organic operation. It is a one-time opportunity for producers working with a certifying agent to implement a conversion strategy for an established, discrete dairy herd in conjunction with the land resources that sustain it.

(2) Organic Management for Livestock from the Last Third of Gestation. The proposed rule required that organically managed breeder and dairy stock sold, labeled, or represented as organic slaughter stock must be under continuous organic management from birth. Many commenters stated that this requirement was an inappropriate relaxation of most existing organic standards, which require organic management for all slaughter stock from the last third of gestation. These commenters cited the NOSB's 1994 recommendation that all slaughter stock must be the progeny of breeder stock under organic management from the last third of gestation or longer. Commenters also recommended extending the organic management provision to cover the last third of gestation to make it consistent with the requirements in section 205.236(a)(4) for the organically raised offspring of breeder stock. We agree with the argument presented by commenters and have changed the final rule to require that breeder or dairy stock be organically raised from the last third of gestation to be sold as organic slaughter stock.

(3) Conversion Period for Nonedible Livestock Products. The proposed rule required that livestock must be under continuous organic management for a period not less than 1 year before the nonedible products produced from them could be sold as organic. Several commenters questioned the basis for creating different origin of livestock requirements based on whether the operation intended to produce edible or nonedible products. These commenters stated that the OFPA does not sanction such a distinction, nor is it contained in existing certification standards. They questioned why the proposed rule created such a provision in the absence of a favorable NOSB recommendation. We agree that the creation of a separate origin of livestock requirement for animals intended to provide nonedible products could be confusing. We have changed this provision in the final rule to require that nonedible products be produced from livestock that have been organically managed from the last third of gestation.

(4) Provisions for Feed Supplements and Feed Additives. The proposed rule provided that nonagricultural products and synthetic substances included on the National List could be used as feed additives and supplements. Many commenters stated that allowing nonagricultural products and synthetic substances as feed supplements contradicted the definition for "feed supplement" found in the proposed rule. That definition stipulated that a feed supplement must, itself, be a feed material, and the definition for "feed" in the proposed rule precluded using nonagricultural products and synthetic substances. These commenters requested that either the definition of "feed supplement" be changed to make it consistent with the allowance for nonagricultural products and synthetic substances or else that the term be dropped from the final rule. The Food and Drug Administration (FDA) recommended modifying the definitions for "feed additive" and "feed supplement" and further specifying the components required in a feed ration under the livestock health care practice standard.

We amended the definition in the final rule to state that a feed supplement is "a combination of feed nutrients added to livestock feed to improve the nutritional balance or performance of the total ration." We retained the second component of the proposed definition, which described how a feed supplement could be offered to livestock. We amended the definition of "feed additive" to "a substance added to feed in micro quantities to fulfill a specific nutritional need; i.e., essential nutrients in the form of amino acids, vitamins, and minerals." The definitions for "feed supplement" and "feed additive" in the proposed rule were originally recommended by the NOSB. While our intent in the proposed rule was to codify as fully as possible the recommendations of the NOSB, we agree with commenters that the proposed definitions were was incompatible with the overall provisions for livestock feed. The definitions in the final rule are consistent with the NOSB's objective to create clear distinctions between feed, feed supplements, and feed additives while clarifying the role for each within an organic livestock ration. We also incorporated FDA's recommendation to include protein and/or amino acids, fatty acids, energy sources, and fiber for ruminants as required elements of a feed ration in the livestock health care practice standard. These additions make the livestock health care practice standard more consistent with the National Research Council's Committee on Animal Nutrition's Nutrient Requirement series, which we cited in the proposed rule as the basis for feed requirements.

Many commenters addressed provisions in the proposed rule to allow or prohibit specific materials and categories of materials used in livestock feed. Among these, some commenters questioned whether enzymes were defined as a feed additive and, therefore, allowed. One certifying agent requested guidance on the status of supplementing livestock feed with amino acids. At its October 1999 meeting, the NOSB discussed the Technical Advisory Panel (TAP) reviews on the use of enzymes and amino acids in livestock feed. The NOSB determined that natural sources of enzymes exist and that their use should be allowed in organic production. Their discussion of natural sources of enzymes concluded that enzymes derived from edible, nontoxic plants and nonpathogenic bacteria or fungi that had not been genetically engineered should be allowed as a nonorganic feed additive. The NOSB did not take a position on amino acids during this meeting but indicated that it would revisit the subject in the near future. Based on these recommendations, the final rule allows the use of natural enzymes but not amino acids as nonorganic feed additives. The NOSB's recommendation that natural sources of enzymes existed and were compatible with organic livestock production supports allowing them without adding them to the National List. Some commenters discussed the animal welfare and environmental benefits associated with providing amino acids in livestock feed and supported allowing them. However, without a recommendation from the NOSB that amino acids are natural or should be added to the National List as a synthetic, the final rule does not allow their use.

Commenters questioned whether nonsynthetic but nonagricultural substances, such as ground oyster shells and diatomaceous earth, would be allowed in agricultural feed. In 1994, the NOSB recommended that natural feed additives can be from any source, provided that the additive is not classified as a prohibited natural on the National List. We agree with this recommendation and have amended the final rule to allow such materials as feed additives and supplements. The only additional constraint on these materials is that every feed, feed additive, and feed supplement be used in compliance with the Federal Food, Drug, and Cosmetic Act, as stated in section 205.237(b)(6).

The NOSB recommended that ruminants maintained under temporary confinement must have access to dry, unchopped hay. Although this position was an NOSB recommendation and not part of the proposed rule, several commenters responded to it. Most of these commenters stated that the language was too restrictive and could preclude the use of many suitable forage products. One dairy producer stated that the requirement would not be practical for operations that mix hay with other feed components. We agree that the NOSB's proposed language is too prescriptive and have not included it in the final rule.

(5) Provisions for Confinement. The proposed rule established the health, nutritional, and behavioral needs of the particular species and breed of animal as the primary considerations for determining livestock living conditions. The proposed rule also identified essential components of the practice standard, including access to shade, shelter, exercise areas, fresh air, and direct sunlight, while stating that species-specific guidelines would be developed in conjunction with future NOSB recommendations and public comment. Finally, the proposed rule outlined the conditions pertaining to animal welfare and environmental protection under which producers could temporarily confine livestock.

While supportive of the underlying principles of this practice standard, the vast majority of commenters stated that the actual provisions suffered from a lack of clarity and specificity. Many commenters were concerned that the proposed rule did not adequately ensure access to the outdoors for all animals. While supportive of the access to pasture requirement for ruminant production, commenters stated that the final rule needed a clear definition of pasture to make the provision meaningful. Conversely, some commenters supported the less prescriptive approach adopted in the proposed rule. The NOSB added considerably to its earlier recommendations on livestock living conditions during its June 2000 meeting.

Many commenters stated that the criteria identified as required elements in the provisions for livestock living conditions did not specifically include access to the outdoors. One commenter stated that the requirement that animals receive direct sunlight could be interpreted to simply require windows in livestock confinement facilities. Commenters were virtually unanimous that, except for the limited exceptions for temporary confinement, all animals of all species must be afforded access to the outdoors. Commenters also maintained that the outdoor area must accommodate natural livestock behavior, such as dust wallows for poultry and, in the case of ruminants, provide substantial nutrition. Many commenters specifically opposed dry lots as an allowable outdoor environment. The NOSB recommended that the final rule state that all livestock shall have access to the outdoors. As a result of these comments, we have revised the final rule to establish that access to the outdoors is a required element for all organically raised livestock.

We further amended the final rule to include a definition of "pasture." The definition of "pasture" we included emphasizes that livestock producers must manage their land to provide nutritional benefit to grazing animals while maintaining or improving the soil, water, and vegetative resources of the operation. The producer must establish and maintain forage species-appropriate for the nutritional requirements of the species using the pasture.

Numerous commenters requested clarification on species-specific living conditions, such as the use of cages for poultry and confinement systems for veal production. The use of continuous confinement systems including cages for poultry and veal production is incompatible with the requirement that organically raised livestock receive access to the outdoors and the ability to engage in physical activity appropriate to their needs. There will be times when producers must temporarily confine livestock under their care, but these instances must be supported by the exemptions to the outdoor access requirement included in the final rule. Other commenters requested additional guidance on whether confinement for the purpose of finishing slaughter stock would be allowed, and, if so, how long that confinement could last. Commenters who supported an allowance for finishing most often recommended that, in the case of cattle, confinement should not exceed 90 days. The final rule does not include a specific length of time that cattle or other species may be confined prior to slaughter. We will seek additional input from the NOSB and public comment before developing such standards.

Several commenters questioned whether a Federal, State, or local regulation that required confinement would supersede the requirement for outdoor access. These commenters were aware of county ordinances that prohibited free ranging livestock production to protect water quality. Organic operations must comply with all Federal, State, and local regulations. At the same time, to sell, label, or represent an agricultural commodity as "100 percent organic," "organic," or "made with...," the producer or handler must comply with the all applicable requirements set forth in this regulation. Federal, State, or local regulations that prohibit a required practice or require a prohibited one will essentially preclude organic certification of the affected commodity within that jurisdiction.

(6) Prohibition on Parasiticides During Lactation. The proposed rule provided that breeder stock could receive synthetic parasiticides included on the National List, provided that the treatment occurred prior to the last third of gestation for progeny that were to be organically managed. Many commenters supported this principle but were concerned that the wording would allow producers to administer parasiticides to lactating breeder stock while the offspring were still nursing. These commenters felt that such an allowance violated the intent of the provision because offspring could be exposed to systemic parasiticides or their residues through their mother's milk. The NOSB recommended a prohibition on using allowed synthetic parasiticides during lactation for progeny that are organically managed. We agree with these commenters and have modified the final rule to prohibit the treatment of organically managed breeder stock with allowed synthetic parasiticides during the last third of gestation or lactation.

Livestock Production - Changes Requested But Not Made

This subpart retains from the proposed rule regulations on which we received comments as follows:

(1) Prohibition on Factory Farms. Many commenters requested that the final rule prohibit the certification of "factory farms." These commenters stated that factory farms are dependent upon practices and materials that are inconsistent with or expressly prohibited in the OFPA. The final rule does not contain such a prohibition because commenters did not provide a clear, enforceable definition of "factory farm" for use in the final rule. All organic operations, regardless of their size or other characteristics, must develop and adhere to an approved organic system plan that complies with these regulations in order to be certified. (2) Nonorganic Feed Protocol. The proposed rule required that, except for nonagricultural products and synthetic substances included on the National List, a producer must provide livestock with a total feed ration composed of agricultural feed products, including pasture and forage, that is organically produced and, if applicable, handled. It also included provisions for temporary variances that, under very limited circumstances and with the approval of the certifying agent and the Administrator, would provide an exemption from specific production and handling standards. The preamble of the proposed rule described an emergency resulting in the unavailability of organic agricultural feed products as an example of a situation in which a temporary variance could be issued. Many commenters recommended that the final rule require a producer who received a temporary variance for a feed emergency to follow the order of preference for noncertified organic feed developed by the NOSB. This order of preference requires a producer to procure agricultural feed products from sources that are as close to complying with the standards for organic certification as possible. Commenters stated that adherence to the order of preference would most closely conform with the expectation of consumers that organically raised livestock received organic feed and would create an incentive for livestock feed producers to pursue certification.

We have not included the NOSB's feed emergency order of preference in the final rule because it would be too prescriptive and difficult to enforce during an emergency. Receiving a temporary variance categorically exempts a producer from the provision for which it was issued, although that producer may not substitute any practice, material, or procedure that is otherwise prohibited, although that producer may not substitute any practice, material, or procedure that is otherwise prohibited under section 205.105 . Additionally, certified organic feed is far more available in terms of quantity and affordability than when the NOSB developed its order of preference in 1994. We anticipate that producers whose original supply of organic agricultural feed products is interrupted will be able to fill the shortfall through the marketplace.

(3) Prohibition on Physical Alterations. The proposed rule required that producers perform physical alterations as needed to promote animal welfare and in a manner that minimizes pain and stress. This provision was one component of the health care practice standard that required producers to establish and maintain preventive livestock health care practices. We stated in the preamble that there was insufficient consensus from previous public comment to designate specific physical alterations as allowed or prohibited and envisioned working with producers, certifying agents, and consumers to achieve that goal. We requested comment on techniques to measure animal stress that could be used to evaluate whether specific physical alterations were consistent with the conditions established in the proposed rule.

We received significant numbers of comments both opposing and supporting the provision in the proposed rule for performing physical alterations. Many commenters opposed any allowance for physical alterations and argued that such practices are cruel and debilitating to animals. These commenters maintained that modifications in breed selection, stocking densities, and the configuration of living conditions could achieve results similar to physical alterations without harming the animal. They stated that by adapting their production systems to promote the physical and psychological welfare of animals, producers could obviate the need for physical alterations. In particular, commenters cited physical alterations to the beaks and feet of poultry as unnecessary due to the availability of alternative production systems. Many commenters expressed concern that the allowance for physical alterations would facilitate the certification of large confinement operations. Commenters also stated that performing physical alterations was inconsistent with Codex guidelines and objected to the allowance before full public deliberation on the subject through the NOSB process.

A large number of commenters stated that, if reasonable guidelines could be established, the allowance for physical alterations would be a beneficial, and even necessary, condition for organic livestock production. These commenters maintained that producers engage in physical alterations for the overall welfare of the flock or herd and that the pain and stress of performing them must be weighed against the pain and stress of not doing so. For example, these commenters cited the traumatic effect of cannibalism on poultry flocks that had not undergone beak trimming or the injuries caused by animals whose horns had not been removed. Many of these commenters stated that producers could reduce but not eliminate the need for physical alterations through alternative production practices such as breed selection and stocking densities. The NOSB supported the provision as written in the proposed rule, stating that it met the animal welfare requirements while allowing practices necessary for good animal husbandry.

We have retained the proposed provision for physical alterations without taking any further position on whether specific practices are allowed or prohibited. We did not receive substantial new guidance on techniques to measure stress in animals due to physical alterations and have made no revisions in that regard. The final rule establishes that, when appropriately performed and within the context of an overall management system, specific physical alterations are allowed. It also mandates that, as an element of a preventative health care program, physical alterations must benefit the ultimate physical and psychological welfare of the affected animal.

(4) Withdrawal for Synthetic Parasiticides in Lactating Livestock. The proposed rule required a 90-day withdrawal period before milk and milk products produced from livestock treated with an allowed synthetic parasiticide could be labeled as organic. Referencing the statement in the preamble to the proposed rule that the 90-day withdrawal period was attributable to "consumer expectations of organically raised animals," a dairy producer commented that the provision ignored animal welfare and farm economic sustainability considerations. The commenter considered the 90-day withdrawal period capricious and problematic since, for bovine dairy operations, it would compel producers to either shorten an animal's natural drying off period, or lose 30 days of organic milk production. The commenter stated that the optimal extended withdrawal period for this situation would be 60 days since this is the approximate duration of a dairy cow's natural dry period. Under this approach, livestock requiring treatment could receive an allowed synthetic parasiticide at the time of drying off, thus allowing the withdrawal period to coincide with the natural 60-day period when the livestock were not lactating. Livestock could complete the withdrawal period prior to the birth of their offspring in approximately 60 days, at which time the mother's milk could again be sold as organic. The commenter maintained that the 60-day period would satisfy consumer expectation for an extended withdrawal period after treatment with an allowed synthetic parasiticide without imposing an unnecessary constraint on the producer.

We have retained the 90-day withdrawal period in the final rule. The provisions in the final rule for treating livestock with an allowed synthetic parasiticide reflect the 90-day withdrawal period recommended by the NOSB at its October 1999 meeting. The NOSB has the authority to reconsider this issue and propose an alternative annotation for the Secretary's consideration.

(5) Delineation of Space Requirements for Animal Confinement. The proposed rule did not establish space requirements for livestock living conditions but stated that a producer must accommodate the health and natural behavior of animals under his or her care. Some commenters stated their preference for space requirements because they are more uniform and enforceable. These commenters stated that some existing certification standards include space requirements in standards for livestock living conditions and that Codex guidelines support this approach. While not disagreeing that space requirements could be an effective certification tool for organic livestock production systems, we have not incorporated any such provisions in the final rule. We anticipate that additional NOSB recommendations and public comment will be necessary for the development of space requirements. At its June 2000 meeting, the NOSB agreed that it would be premature to include space requirements in the final rule.

(6) Access to pasture versus pasture-based. Commenters stated that the proposed rule's requirement that ruminants receive "access to pasture" did not sufficiently characterize the relationship that should exist between ruminants and the land they graze. Many of these commenters recommended that the final rule require that ruminant production be "pasture-based." Many commenters stated that the final rule needed a more explicit description of the relationship between livestock and grazing land. The NOSB shared this perspective and recommended that the final rule require that ruminant production systems be "pasture-based." In contrast, an organic dairy producer maintained that a uniform, prescriptive definition of pasture would not be appropriate in a final rule. This commenter stated that the diversity of growing seasons, environmental variables, and forage and grass species could not be captured in a single definition and that certifying agents should define pasture on a case-by-case basis. This commenter also disagreed with the "pasture-based" requirement, stating that pasture should be only one of several components of balanced livestock nutrition. Singling out pasture as the foundation for ruminant management would distort this balance and deprive other producers of the revenue and rotation benefits they generate by growing livestock feed.

We retained the "access to pasture" requirement because the term, "pasture-based," has not been sufficiently defined to use for implementing the final rule. The final rule does include a definition for pasture, and retention of the "access to pasture" provision provides producers and certifying agents with a verifiable and enforceable standard. The NOP will work with the NOSB to develop additional guidance for managing ruminant production operations.

(7) Stage of Production. The proposed rule contained provisions for temporary confinement, during which time livestock would not receive access to the outdoors. Many commenters were concerned that the stage-of-production justification for temporary confinement could be used to deny animals access to the outdoors during naturally occurring life stages, including lactation. Commenters overwhelmingly opposed such an allowance and stated that the stage of production exemption should be narrowly applied. One commenter stated that a dairy operation, for example, might have seven or eight distinct age groups of animals, with each group requiring distinct living conditions. Under these circumstances, the commenter maintained that a producer should be allowed to temporarily house one of these age groups indoors to maximize use of the whole farm and the available pasture. At its June 2000 meeting, the NOSB stated that the allowance for temporary confinement should be restricted to short-term events such as birthing of newborn or finish feeding for slaughter stock and should specifically exclude lactating dairy animals.

We have not changed the provision in the final rule for the stage-of-production allowance in response to these comments. The NOSB has supported the principle of a stage-of-production allowance but has not provided sufficient guidance for determining, on a species-specific basis, what conditions would warrant such an allowance. Without a clearer foundation for evaluating practices, we have not identified any specific examples of practices that would or would not warrant a stage-of-production allowance. We will continue to explore with the NOSB specific conditions under which certain species could be temporarily confined to enhance their well-being.

In the final rule, temporary confinement refers to the period during which livestock are denied access to the outdoors. The length of temporary confinement will vary according to the conditions on which it is based, such as the duration of inclement weather. The conditions for implementing temporary confinement for livestock do not minimize the producer's ability to restrain livestock in the performance of necessary production practices. For example, it is allowable for a producer to restrain livestock during the actual milking process or under similar circumstances, such as the administration of medication, when the safety and welfare of the livestock and producer are involved.

Handling - Changes Based on Comments

The following changes are made based on comments received.

(1) Commercial Availability. A large number of commenters, including organic handlers and certifying agents, stated that "commercial availability" must be included as a requirement for the 5 percent of nonorganic ingredients that are used in products labeled "organic."

We agree and have added a commercial availability requirement as part of a handler's organic system plan under section 205.201 of this subpart. Up to 5 percent (less water and salt) of a product labeled "organic," may be nonorganic agricultural ingredients. However, handlers must document that organic forms of the nonorganic ingredients are not commercially available before using the nonorganic ingredients.

(2) Prohibited Practices. Commenters were unclear about the extent of the prohibition on use of excluded methods and ionizing radiation. To make that prohibition clear, we have moved the handling prohibitions in proposed rule sections 205.270 (c) to 205.105, Applicability, subpart B. Paragraphs (c)(1) and (c)(2) which listed excluded methods and ionizing radiation in the proposed rule are combined into paragraph (c)(1) that cross-references new section 205.105.

(3) Use of Predator Pests and Parasites. Paragraph (b)(1) of section 205.271 proposed that predator pests and parasites may be used to control pests in handling facilities. Under FDA's Good Manufacturing Practice, 21 CFR part section 110.35(c), it states that "No pests shall be allowed in any area of a food plant." Some commenters believed use of predator pests in handling facilities is prohibited by the FDA regulation. Other commenters stated that predator pests could be used in certain handling facilities under the FDA regulation. One commenter claimed that the FDA regulation in 21 CFR part 110.19 allows exemptions for certain establishments that only harvest, store, or distribute raw agricultural product. Another commenter suggested that use of predator pests should be allowed when FDA does not prohibit their use.

We do not intend to be inconsistent with the FDA requirement and, thus, have removed proposed paragraph (b)(1) of section 205.271. Use of predator pests in various organic handling and storage areas is subject to FDA's Good Manufacturing Practice. Paragraphs (b)(2) and (b)(3) are redesignated.

(4) Use of Synthetic Pheromone Lures. Proposed paragraph (b)(3) provided for use of nonsynthetic lures and repellant. A few handlers and certifying agents commented that nearly all pheromone lures use synthetic substances. Because pheromone lures do not come into contact with products in a handling facility, commenters argued that such lures should be allowed, provided that the synthetic substance used is on the National List.

We agree and have added "synthetic substances" to redesignated paragraph (b)(2) for use in lures and repellents. The synthetic substances used must be consistent with the National List. (5) Restrict Initial Use of Synthetics to National List Substances. Paragraph (c) in the proposed rule provided for use of any synthetic substance to prevent or control pests. Several handlers and certifying agents stated that use of nonsynthetic and synthetic substances should initially be limited first to substances which are allowed on the National List. This would mean that substances not allowed for use on the National List could not be used initially to control or prevent pest infestations.

We agree with these comments. Use of allowed substance before use of other substances is a fundamental principle of organic agriculture. Therefore, if preferred practices under paragraphs (a) and (b) are not successful in preventing or controlling pest infestations, handlers may then use, under amended paragraph (c), only nonsynthetic or synthetic substances which are allowed for use on the National List.

We have removed the proviso that applications of a pest control substance must be consistent with the product's label instructions. This requirement is readily understood and does not need to be explicitly stated in the regulations.

Because paragraph (c) now provides for use only of allowed National List substances, a new paragraph (d) is added to allow for use of other synthetic substances, including synthetic substances not on the National List, to prevent or control pest infestations. These substances may be used only if the practices in paragraphs (a), (b), and (c) are ineffective. Before the substance is used, the handler and the operation's certifying agent must agree on the synthetic substance to be used and the measures to be taken to prevent contact of the substance with organic products and ingredients in the facility. We expect that this communication can be accomplished with telephone calls or by electronic means.

This regulation does not preempt Federal, State, or local health and sanitation requirements. We recognize that inspectors who monitor compliance with those regulations may require immediate intervention and use of synthetic substances, not on the National List, before or at the same time as the methods specified in paragraphs (b) and (c). Therefore, to make this clear, we have added a new paragraph (f). To ensure that the use of the substances does not destroy a product's organic integrity, we are requiring that the handler take appropriate measures to prevent contact of the product with the pest control substance used.

(6) Preventing Contact with Prohibited Substances. Commenters recommended that, if prohibited substances are applied by fogging or fumigation, the organic product and packaging material must be required to be completely removed from the facility and reentry of the product or packaging be delayed for a period three times longer than that specified on the pesticide label. Commenters believed removal and reentry should be mandatory, regardless of the organic product or container.

We understand the commenters' concerns. However, their recommendations are not appropriate for all pest infestations. We believe that measures needed to be taken to prevent contact with a synthetic substance must be determined on a case-by-case basis by the handler and certifying agent. As stated earlier, new paragraph (d) of section 205.271 requires a handler and certifying agent to agree on control and prevention measures prior to application of a synthetic substance. We believe that such an agreement will help safeguard a product's organic integrity. Use of a synthetic substance in fogging or fumigation should be based on, among other things, location of the pest relative to the organic products in the facility; the extent of the pest infestation; the substance and application method to be used; the state of the organically produced product or ingredient (raw, unpackaged bulk, canned, or otherwise sealed); and health and sanitation requirements of local, State, and Federal authorities.

Paragraph (e) is changed to clarify that an operation's organic handling plan must be updated to document all measures taken to prevent contact between synthetic pest control substances and organically produced products and ingredients.

(7) Repetitive Use of Pest Control Measures. One commenter suggested a change in the paragraph (e) requirement that handlers' organic plans must include "an evaluation of the effects of repetitive use" of pest prevention and control materials. The commenter believed that the requirement was excessive and beyond what should be expected of handlers. The commenter indicated that handlers' organic plans should address the "techniques that will be used to minimize" the negative effects of repetitive use of pest control materials.

We agree that "an evaluation of the effects of repetitive use" is more than what is reasonable to expect of handlers in their organic plans. We do not agree, however, that an organic plan should be required to address the "techniques" used to minimize the effects of repetitive use of pest control materials. However, we believe that handlers should update their organic handling plans to account for the use of pest control or prevention substances, particularly if the substances are prohibited substances. The update should include a description of the application methods used and the measures taken to prevent contact between the substance used and the organic product. We have added these requirements in redesignated paragraph (e). Proposed paragraph (e) of section 205.271 is removed.

Handling - Changes Requested But Not Made

(1) Exceptions to Handling Processes. A commenter stated that many herbal products are extracted from organically produced herbs but that the extraction of those products "can employ significantly different methods than those used in the manufacture of more traditional foods." To be labeled as "organic" ingredients, substances such as herbs, spices, flavorings, colorings, and other similar substances, must be derived from a certified organic source and be extracted without the use of prohibited substances.

(2) Allowed Synthetics Used in Packaging Materials and Storage Containers. A State department of agriculture commented that section 205.272(b)(1) prohibits use of synthetic fungicides, preservatives, or fumigants in packaging materials and storage containers or bins. The comment stated that it is inconsistent to permit use of allowed substances as ingredients in processed products but prohibit their use as a preservative or fumigant in the packaging materials and storage containers and bins. The commenter suggested that paragraph (b)(1) be amended to permit use of National List-allowed substances in section 205.605, particularly carbon dioxide and ozone, in packaging materials and storage containers or bins.

We understand the commenter's concern. However, section 6510(a)(5) of the Act specifically prohibits use of any packaging materials, storage containers, or bins that contain synthetic fungicides, preservatives, or fumigants.

(3) Additional Measures to Prevent Product Contamination. A few commenters suggested changing paragraph (e) of section 205.271 to require that handlers' organic handling plans specify measures that would be taken to prevent contact between a pest control substance and "packaging materials." This would be in addition to measures preventing contamination of "any ingredient or finished product" in the handling facility.

We understand the commenters' objective. However, for the reasons stated earlier in regard to commenters' request that mandatory removal of product during pest control treatment be required, we believe that such a requirement should not be mandatory for all packaging materials. Measures to prevent contamination of packaging material should be left to the handler and certifying agent to specify in the handling plan.

Handling - Clarifications

Clarification is given on the following issues raised by commenters.

(1) Use of Nonorganic Ingredients in Processed Products. We have corrected paragraph (c) of section 205.270 to clarify what must not be used in or on organically produced ingredients and nonorganically produced ingredients used in processed organic products. The prohibition on use of ionizing radiation, excluded methods, and volatile synthetic solvents applies to all organically produced ingredients. The 5 percent of nonorganic ingredients in products labeled "organic," also are subject to the three prohibited practices. The nonorganic ingredients in products labeled "made with organic ingredients" must not be produced using ionizing radiation or excluded methods but may be produced using volatile synthetic solvents. The nonorganic ingredients in products containing less than 70 percent organically produced ingredients may be produced and processed using ionizing radiation, excluded methods, and synthetic solvents.

(2) Water Quality Used in Processing. A handler questioned whether public drinking water containing approved levels of chlorine, pursuant to the Safe Drinking Water Act, is acceptable for use in processing products labeled "100 percent organic." Water meeting the Safe Drinking Water Act may be used in processing any organically produced products.

Temporary Variances - Changes Based on Comments

Additional Causes for Issuing Temporary Variance. A few State department of agriculture commenters suggested that "drought" should be added to the regulatory text as a natural disaster warranting a temporary variance from regulations.

We agree and have added drought to the regulatory text in paragraph (a)(2) of section 205.290. We have also added "hail" as a natural disaster warranting a temporary variance. Both drought and hail were mentioned in the preamble of the proposed rule but were unintentionally left out of the regulatory text.

Temporary Variances - Changes Requested But Not Made

Allowance of Temporary Variances. A few commenters suggested that SOP's governing State officials should be able to authorize temporary variances due to local natural disasters which may occur in a State. We do not agree that with these comments. For consistency of application, we believe that only the Administrator should have the authority to grant a temporary variance. Citing local conditions, an SOP's governing State official and certifying agents may recommend a temporary variance to the Administrator. We are committed to providing quick responses to such recommendations.