National Organic Program

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 205

[Docket Number: TMD-00-02-PR2]

RIN 0581-AA40

National Organic Program

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule.

SUMMARY:

This proposed rule would establish a National Organic Program (NOP or program) under the direction of the Agricultural Marketing Service (AMS), an arm of the United States Department of Agriculture (USDA). This national program is intended to facilitate interstate commerce and marketing of fresh and processed food that is organically produced and to assure consumers that such products meet consistent, uniform standards. This program will establish national standards for the production and handling of organically produced products, including a National List of substances approved and prohibited for use in organic production and handling. This proposal will establish a national-level accreditation program to be administered by AMS for State officials and private persons who want to be accredited as certifying agents. Under the program, certifying agents will certify production and handling operations in compliance with the requirements of this regulation and initiate compliance actions to enforce program requirements. The proposal includes requirements for labeling products as organic and containing organic ingredients. The rule also provides for importation of organic agricultural products from foreign programs determined to have equivalent organic program requirements. The program is proposed under the Organic Foods Production Act of 1990, as amended.

DATES:

Comments must be submitted on or before June 12, 2000.

ADDRESSES:

Interested persons are invited to submit written comments on this proposal to: Keith Jones, Program Manager, National Organic Program, USDA-AMS-TMP-NOP, Room 2945-So., Ag Stop 0275, PO Box 96456, Washington, DC 20090-6456. Comments also may be sent by fax to (703) 365-0760 or filed via the Internet through the National Organic Program's homepage at: http://www.ams.usda.gov/nop. Written comments to this proposed rule submitted by regular mail and faxed comments should be identified with docket number TMD-00-02-PR. To facilitate the timely scanning and posting of comments to the NOP homepage, multiple page comments submitted by regular mail should not be stapled or clipped. Commenters should identify the topic and section number of this proposal to which the comment refers.

It is our intention to have all comments to this proposal, whether mailed, faxed, or submitted via the Internet, available for viewing on the NOP homepage at http://www.ams.usda.gov/nop in a timely manner. Comments submitted in response to this proposal will be available for viewing at USDA-AMS, Transportation and Marketing, Room 2945-South Building, 14th and Independence Ave., SW, Washington, DC, from 9:00 a.m. to 12:00 p.m. and from 1:00 p.m. to 4:00 p.m., Monday through Friday (except official Federal holidays). Persons wanting to visit the USDA South Building to view comments received in response to this proposal are requested to make an appointment in advance by calling (202) 720-3252.

FOR FURTHER INFORMATION CONTACT:

Richard Mathews, Senior Agricultural Marketing Specialist, USDA-AMS-TM-NOP, Room 2510-So., PO Box 96456, Washington, DC 20090-6456; Telephone: (202) 205-7806; Fax: (202) 205-7808.

SUPPLEMENTARY INFORMATION:

Background of the National Organic Program

To address problems created by inconsistent organic standards, the organic industry attempted to establish a national voluntary organic certification program in the late 1980's. However, that effort failed to develop a consensus on needed organic standards. Congress was then petitioned by an organic industry trade association to establish a mandatory national organic program, resulting in the Organic Foods Production Act of 1990 (the Act). Congress passed the Act to: (1) Establish national standards governing the marketing of certain agricultural products as organically produced products; (2) assure consumers that organically produced products meet a consistent standard; and (3) facilitate commerce in fresh and processed food that is organically produced. This proposal is designed to implement the Act.

To help readers better understand this proposal, we have provided answers to some frequently asked questions about the proposed rule, including some of the issues most commonly raised in public comments.

Is this the final word on National organic standards?

No. This is only a proposed rule. It is important that you take the time to read it carefully and write to USDA to give us your recommendations, being as specific as you can. Your comments are due by June 12, 2000.

Your comments do matter. On December 16, 1997, the first proposed rule was published in the

Federal Register

, and 275,603 people wrote to us to explain why and how the rule should be rewritten, the largest public response to a proposed rule in USDA history. Then, in the October 24, 1998

Federal Register

, we asked for public comment on issues concerning livestock confinement, medications, and the authority of certifying agents, and 10,817 people wrote to us. As you read through this document, you will get a sense of what these comments said because in each section we briefly summarize the relevant comments and provide our response to them.

We expect to publish a final rule later this year, once we know what you think about this proposal. The final rule will have, as proposed here, an implementation phase-in period so farmers and processors won't have to change overnight.

Has there been citizen input on this proposal beyond public comments?

Yes. The National Organic Standards Board (NOSB) is a 15-member citizen board that advises the Secretary on all aspects of the National Organic Program and has special responsibility for development of the National List. Established by law in 1990, the NOSB includes 3 environmental representatives, 3 consumer representatives, 4 organic farmers/ranchers, 2 organic processors, 1 retailer, 1 scientist, and 1 certifying agent. Currently, the NOSB comprises 14 members. The 15th member, an accredited certifying agent, would be appointed after certifying agents are accredited by the Secretary. Since the first NOSB was appointed in 1993, the Board has held 19 public meetings, including one public teleconference, crisscrossing the country to hear from the public before making recommendations to the Secretary on national standards. The vast majority of commenters on the first proposed rule urged the Secretary to rewrite the proposal in line with NOSB recommendations—and this is what we have done. More information on NOSB

members, meeting minutes, and a side-by-side comparison of this proposal with NOSB recommendations can be found at www.ams.nop/gov.

In addition, to be consistent with OMB Circular No, A-119, which directs agencies to use voluntary consensus standards, USDA considered adoption of the

American Organic Standards, Guidelines for the Organic Industry

as a voluntary consensus standard for use in the National Organic Program. In October 1999, the Organic Trade Association published the American Organic Standards (AOS). The AOS standards were developed over several months with two opportunities for comment from interested parties. The introduction states that the standards are written as an up-to-date compilation and codification of organic standards and certification procedures, as they are understood and applies in the United States. Organic Trade Association members are expected to follow the guidelines.

USDA has determined that it would be impractical to use the American Organic Standards in lieu of USDA developed standards for the following reasons: (1) Not all participants in the organic industry elected to participate in developing the AOS; (2) the AOS are new to the industry so there has not been sufficient time for the industry to assess their effectiveness, and (3) some certifying agents disagree with portions of the AOS.

Why do we need national standards for organic food?

National standards for organic food production are designed to bring about greater uniformity in the production, manufacture, and marketing of organic products. In the absence of a national standard, 49 State and private organizations have established individual programs and standards for certifying organic agricultural products. The lack of consistency between these standards has created problems for farmers and handlers of organic products, particularly if they want to sell their products in multiple States with different standards. Lack of a nationwide standard has also created confusion for consumers, who may be uncertain what it really means when a food product is called “organic.”

With a national standard, consumers across the country can go into any store and have full confidence that any food product labeled “organic” meets a strict, consistent standard no matter where it was made. Use of the word, “organic,” on the label of any product that does not meet the standard is strictly prohibited.

Consumers will have that confidence, because this proposal requires for the first time that all organic operations be certified by USDA-approved certifying agents. Up to now, certification has been optional; some farmers choose not to be certified at all, and others are certified by State or private certifiers using different standards. It can be hard for consumers to know if a product has been certified, or, if it has, to what standard. Under this proposal, all organic operations, except for the very smallest, would be certified to the same standard. And all products labeled as “organic” would have to comply with the production and handling standards in this rule.

Consumers can also look for the USDA organic seal, which can only be used on products that have been certified by USDA-approved certifying agents. This seal assures consumers that the maker of the product is part of a rigorous certification program and has been thoroughly reviewed by professional inspectors trained in organic agriculture.

National standards will also bring greater predictability for producers of organic foods. There will be no confusion about whether a product satisfies the particular standard of any State, for example, because all organic foods will meet the same standards.

Finally, a national standard for organic food will help our farmers and manufacturers sell organic products in other countries. The lack of a consistent national organic program has limited access to important markets in other countries because of the confusion created by multiple, independent standards. A strong national standard will help to ensure buyers in other countries that all U.S. organic products meet the same standards.

How can I tell how much organic food is in a product?

This proposal sets strict labeling standards based on the percentage of organic content. If a product is 100 percent organic, it can, of course, be labeled as such. A product that is at least 95 percent organic can be described as, for example, “organic cereal.” If a cereal, for example, contains between 50 and 95 percent organic content, it can be described as “cereal made with organic ingredients,” and up to three organic ingredients can be listed. Finally, if the food contains less than 50 percent organic content, the term, “organic,” may only appear on the ingredient information panel. These four new labeling categories will provide consumers with much greater information than they have today. [Labeling is covered in subpart D.]

What is the National List?

The National List of Allowed and Prohibited Substances (known as the National List) identifies specific substances that may or may not be used in organic production and handling operations. The National List is developed by the NOSB, through consultation with outside experts, and forwarded to the Secretary for approval. The list identifies those synthetic substances, which would otherwise be prohibited, that may be used in organic production based on the recommendations of the NOSB. Only those synthetic substances found on the National List may be used. The National List also identifies those natural substances that may not be used in organic production, as determined by the Secretary based on the NOSB recommendations.

The first proposal included some substances on the National List that were not recommended by the NOSB. This proposal contains no substances on the approved list that were not found in the NOSB recommendations.

This proposal also includes restrictions or other conditions on the use of allowed substances, also known as “annotations,” as recommended by the NOSB. Such annotations have been used by existing State and private certification programs to further ensure that allowed substances are used in a manner that is consistent with organic production. (The National List is covered in subpart G, §§ 205.600 through 205.607.)

Does this proposal prohibit use of genetic engineering in organic production?

Yes. This proposal prohibits the use of genetic engineering (included in the broad definition of “excluded methods” in this proposal, based on the definition recommended by the National Organic Standards Board) in the production of all foods and ingredients that carry the organic label.

275,603 commenters on the first proposal nearly universally opposed the use of this technology in organic production systems. Based on this overwhelming public opposition, this proposal prohibits its use in the production of all organic foods even though there is no current scientific evidence that use of excluded methods presents unacceptable risks to the environment or human health. While these methods have been approved for use in general agricultural production and may offer certain benefits for the

environment and human health, consumers have made clear their strong opposition to their use in organically grown food. Since the use of excluded methods in the production of organic foods runs counter to consumer expectations, foods produced with these methods will not be permitted to carry the organic label. (Excluded methods are defined in subpart A and discussed further under Production and Handling (subpart C), Labeling (subpart D), and the National List (subpart G).)

Will genetic engineering be allowed in the production of foods that contain both organic and nonorganic ingredients?

No. For products with mostly organic content—those products where more than half of the ingredients are organic and that have the word, “organic,” on the main product label— excluded methods must not be used in the production of any ingredients. Only those products, in which fewer than half of the ingredients are organic and in which the organic ingredients are only identified on the ingredient panel, could contain nonorganic ingredients produced through excluded methods.

We believe consumers have expressed a clear expectation that these methods should not be used in the production of any ingredients contained in mostly organic products. Because prominent use of the word, “organic,” on the label of such products reinforces that expectation, we have chosen to prohibit use of excluded methods in production of both the organic and nonorganic ingredients.

We recognize that this policy will place additional burdens on organic food processors and certifying agents because the ability to meet these requirements will depend largely on practices used in conventional agricultural markets. For organic food processors, it may be harder to find sources of nonorganic ingredients that are produced without use of excluded methods. Similarly, certifying agents may face greater difficulty because they will be required to ensure that handlers have complied with this requirement. However, we believe that the need to meet strong consumer expectations outweighs these concerns. Furthermore, we anticipate that as marketplace practices or standards evolve, these practices will be the basis for implementing this provision, providing handlers and certifying agents recognize criteria with which to evaluate sources of nonorganic ingredients in products containing both organic and nonorganic ingredients.

Does this proposal prohibit use of irradiation in organic production?

Yes. This proposal prohibits the use of irradiation in the production of all foods and ingredients that carry the organic label. 275,603 commenters on the first proposal almost universally opposed the use of this technology in organic production systems. Based on this overwhelming public opposition, this proposal prohibits its use in the production of all organic foods even though there is no current scientific evidence that use of irradiation presents unacceptable risks to the environment or human health and may, in fact, offer certain benefits. Because this rule is a marketing standard and consumers have expressed a clear expectation that irradiation should not be used in the production of organic foods, foods produced with this technology will not be permitted to carry the organic label.

The prohibition on irradiation extends to nonorganic ingredients used in mostly organic ingredients—those products where more than half of the ingredients are organic and that have the word, “organic,” on the main product label. Only those products, in which fewer than half of the ingredients are organic and in which the organic ingredients are only identified on the ingredient panel, could contain irradiated nonorganic ingredients. We do not believe that this prohibition on irradiation in nonorganic ingredients will place undue burden on either handlers or certifiers because of current labeling requirements for irradiated products.

Does this proposal prohibit use of sewage sludge in organic production?

Yes. This proposal prohibits the use of sewage sludge in the production of all foods and ingredients that carry the organic label. This prohibition extends to nonorganic ingredients used in the production of mostly organic foods—those products in which more than half of the ingredients are organic and that have the word, “organic,” on the main product label. Only those products, in which fewer than half of the ingredients are organic and which the organic ingredients are only identified on the ingredient panel, could contain nonorganic ingredients produced using sewage sludge.

275,603 commenters on the first proposal almost universally opposed the use of this technology in organic production systems. Based on this overwhelming public opposition, this proposal prohibits its use in the production of all organic foods, even though there is no current scientific evidence that use of sewage sludge in the production of foods presents unacceptable risks to the environment or human health. We believe consumers have expressed a clear expectation that sewage sludge should not be used in the production of any ingredients contained in mostly organic products. Because prominent use of the word, “organic,” on the label of such products reinforces that expectation, we have chosen to prohibit use of sewage sludge in production of both the organic and nonorganic ingredients. We recognize that this policy may place additional burdens on organic food processors and certifying agents. However, we believe that the need to meet strong consumer expectations outweighs these concerns.

Does this proposal set standards for livestock production?

Yes. The proposal sets the first comprehensive standards for production of organic animals and meat products. Under this proposal, use of antibiotics would be prohibited in organic livestock production. The standards also prohibit the routine confinement of animals and require that ruminant animals have access to outdoor land and pasture, although temporary confinement would be allowed under certain, limited circumstances. Animals under organic management must also receive 100-percent organically grown feed. (Organic livestock management issues are discussed in greater detail under subpart C, 205.236 through 205.239.)

Does this proposal prohibit “ecolabeling''?

No. This proposal only regulates use of the term, “organic,” on product labels. Other labels would be allowed as long as they are truthful and not misleading and meet general food labeling requirements. The labeling requirements of this proposal are intended to assure that the term, “organic,” and other similar terms or phrases are not used in a way that misleads consumers. Should we find that terms or phrases are being used to represent “organic” when the products are not produced to the requirements of this regulation, we would proceed to restrict their use. (Labeling is covered in subpart D.)

Are organic foods pesticide-free?

No. Organic farmers can use natural pesticides to control weeds and insects and maintain the high quality of organic products that consumers have come to expect. Use of synthetic chemical pesticides, however, is prohibited unless specifically allowed on the National List as recommended by the

National Organic Standards Board and approved by the Secretary. (The National List is covered in subpart G, sections 205.600 through 205.607.)

Who needs to be certified?

As a general rule, all organic production and handling operations must be certified. The Act and this proposal, however, do provide for some exceptions. For example, organic operations with less than $5,000 in annual sales of organic products do not require certification. Similarly, organic operations that handle only those products with less than 50 percent organic content or that restrict labeling of organic ingredients to the ingredient information panel do not require certification. Finally, we are not requiring certification of most grocery stores and restaurants (referred to in this proposal as “retail food establishments”) at this time.

Even where operations do not require certification, however, all organic food products must meet the national standards as described in this proposal. In that way, consumers can be confident that all products labeled as “organic” meet the national standards, even if they did not require certification under the NOP. (Certification is covered in subpart E; the exceptions from certification are found in subpart B.)

Will organic farmers have to pay fees?

Organic farmers and other organic operations will have to pay fees for organic certification but will not be charged any fees by USDA. Fees for certification services will be set by the private or State certifying agents. The proposal also requires that certifying agents make their schedule of fees publicly available so that organic operations can plan appropriately and so that they can make informed choices where multiple certifying agents are available. USDA will also review fees charged by certifying agents to ensure that they are reasonable and that they are being applied fairly to all organic operations. Under this proposal, USDA would only charge fees for reviewing (“accrediting”) certifying agents. These fees will primarily be based on the actual costs of the accreditation work done by USDA staff so that certifying agents with smaller and less complex programs will pay lower fees. The proposal also provides for a reduction in the accreditation fees during the first 18 months of the program to provide an incentive for certifying agents to become accredited under the new national program as soon as possible. (Fees are covered in subpart G, §§ 205.640 through 205.642.)

How do I become an accredited certifying agent?

All certifying agents must be accredited by USDA. Certifying agents may apply for accreditation effective with publication of the final rule and are encouraged to apply as soon after publication of the final rule as possible. USDA will provide additional information on applying for accreditation on or about the date of publication of the final rule. This information will be available on the NOP website and by mail upon request.

Applications for accreditation will be handled on a first-come-first-served basis. Those that apply within the first 6 months following publication of the final rule and are determined by the Administrator to meet the requirements for accreditation will be notified of their status in writing on or about 12 months after publication of the final rule. This approach is being taken because of the market advantage that could be realized by accredited certifying agents if USDA did not announce the accreditations simultaneously. (Accreditation is covered in subpart F.)

What are the roles and responsibilities of certifying agents in the National Organic Program?

Certifying agents are the “front line” representatives of USDA and play a critical role in the oversight and enforcement of the national organic standards program. Once accredited by USDA, certifying agents are empowered to make key decisions regarding the status of organic operations. Certifying agents review the organic plans of organic operations and are authorized to grant certification to those operations that meet the strict national organic standards. Certifying agents are also responsible for the continuing oversight of organic operations— reviewing annual updates of organic plans, conducting residue analyses, and conducting other monitoring activities.

In cases in which a certifying agent finds that an organic operation does not meet the national standards, the agent is empowered to issue notices of noncompliance and to initiate suspension or revocation of certification. Organic operations can appeal such decisions to USDA but unless the organic operation appeals the certifying agent's decision or can correct the problems identified by the certifying agent, the agent's decision will stand. (Accreditation is covered in subpart F; Compliance is covered in subpart G, §§ 205.660 through 205.668; and Appeals are covered in subpart G, §§ 205.680 through 205.681.]

How will USDA ensure that the National standards are applied fairly and consistently by all certifying agents?

Because this proposal gives certifying agents such an important role in enforcing the national standards, USDA oversight of those certifying agents is particularly important. Under this proposal, all certifying agents, both private and in State organic programs, would have to be accredited by USDA before they could begin to certify organic operations. It is this accreditation process, in which USDA reviews all certifying agents to make sure they understand and can accurately apply the national organic standards, that is USDA's main tool to ensure that the standards are applied fairly and consistently by all certifying agents.

The accreditation process is really one of ongoing oversight by USDA. Accreditation must be renewed every 5 years so that we can be sure certifying agents continue to meet the program standards. USDA will conduct one or more site visits of certifying agents during the period of accreditation as another mechanism of monitoring their compliance. Finally, certified operations may file complaints with USDA if they believe they have been treated unfairly or if a certifying agent is otherwise not following the program requirements. We will investigate these complaints for possible enforcement action.

Can States have organic standards that are more strict than the National standard?

Yes. Some States may have unique environmental or other concerns that they believe require extra conditions above the national standard. In those cases, States would apply to USDA to have their special State program approved by the Secretary.

However, no State would be allowed to set up a program that does not at least meet the national standard. And States would not be allowed to use their programs to keep out or otherwise discriminate against organic products made in another State. (State Programs are covered in subpart G, §§ 205.620 through 205.622.)

What is the timeframe for implementation?

The final rule in this rulemaking process will establish a procedure and a timeframe for implementing the NOP. We expect that the interim period between publication of the final rule in this rulemaking process and the effective date of the program (actual implementation of regulations) will be 18 months. The following is a

preliminary list of several administrative and program issues that must be implemented during that period. Certifying agent applications will be evaluated and accreditation granted. Certifying agents will, in turn, certify production and handling operations to the requirements of these regulations. Equivalency discussions will be held with foreign governments and foreign certifying agents. Guidelines and practice standards on production and handling practices must be finalized and distributed by the NOP. A petition process for recommending amendments to the National List must be developed and distributed. The NOSB will continue to review materials for the National List. State programs may have to make adjustments in their organic certification programs for consistency with the standards of this program. Producers should use the interim period to prepare their production operations to comply with the relevant requirements of this program. Handlers should use the interim period to prepare for necessary changes in the labeling of their products.

Prior Documents in This Proceeding

This proposed rule is issued pursuant to the Organic Food Production Act of 1990 (Act or OFPA), as amended (7 U.S.C. 6501

et seq.

). This proposal replaces the proposed rule published in the

Federal Register

December 16, 1997. Comments to the first proposal were considered in the preparation of this proposed rule.

The following notices related to the NOSB and the development of this proposed regulation have been published in the

Federal Register

. Five notices of nominations for membership on the NOSB were published between April 1991 and June 1999 (56 FR 15323, 59 FR 43807, 60 FR 40153, 61 FR 33897, 64 FR 33240). Two notices of extension of time for submitting nominations were published on September 22, 1995, and September 23, 1996 (60 FR 49246, 61 FR 49725). Seventeen notices of meetings of the NOSB were published between March 1992 and October 1999 (57 FR 7094, 57 FR 27017, 57 FR 36974, 58 FR 85, 58 FR 105, 58 FR 171, 59 FR 58, 59 FR 26186, 59 FR 49385, 60 FR 51980, 60 FR 15532, 61 FR 43520, 63 FR 7389, 63 FR 64451, 64 FR 3675, 64 FR 28154, 64 FR 54858). One notice of public hearings on organic livestock and livestock products was published on December 30, 1993 (58 FR 69315). One notice specifying a procedure for submitting names of substances for inclusion on the National List was published on March 27, 1995 (60 FR 15744). A rule proposing the NOP was published on December 16, 1997 (62 FR 65850). An extension of the time period for submitting comments to the proposed rule was published on February 9, 1998 (63 FR 6498). One request for comments on Issue Papers was published on October 28, 1998 (63 FR 57624). A notice of a program to assess organic certifying agencies was published on June 9, 1999 (64 FR 30861).

This preamble includes a discussion of the proposed rule and supplementary information, including the Regulatory Impact Assessment, Regulatory Flexibility Act Analysis, Federalism Impact Statement, and Paperwork Reduction Act Analysis. The Civil Rights Impact Analysis is not included as an attachment but may be obtained by writing at the address provided above or via the Internet through the National Organic Program's homepage at: http://www.ams.usda.gov/nop.

National Organic Program Overview

Subpart A—Definitions

Proposal Description

This subpart defines various terms used in this part. These definitions are intended to enhance conformance with the regulatory requirements through a clear understanding of the meaning of key terms.

We have amended terms and definitions carried over from the first proposal where necessary to make their wording consistent with the language used in this proposal. We have removed the definition for the following terms because the terms are not used in this proposal or have been determined to be unnecessary: Active ingredient in any input other than pesticide formulations, active ingredient in pesticide formulations, agroecosystem, botanical pesticides, breeding, chapter, cation balancing agent, certification activities, certification applicant, certified facility, chapter, confirmation of accreditation, contaminant, critical control point, cytotoxic mode of action, degradation, detectable residue level, extract, farm, foliar nutrient, formulated product, fungicide, generic name, incidental additive, inert ingredient in any input other than pesticide formulations, intentionally applied, made with certain organic ingredients, mating disrupter, micronutrient, nonactive residues, nonorganic agricultural ingredient or product, petition, preliminary evaluation, processing methods, production aid, production input, proper manuring, putrefaction, site evaluation, soil amendment, split operation, subtherapeutic, suspension of accreditation, synergist, synthetic volatile solvent, treated, untreated seeds, USDA seal, and weed. We received comments on some of the definitions that have been deleted. We have not addressed these comments here because the relevant definitions have been deleted.

Definitions—Changes Based On Comments

This subpart differs from our first proposal in several respects as follows:

(1) We have amended the term, “audit trail,” by replacing the category, “organic” or “made with certain organic ingredients,” with “100 percent organic,” “organic,” or “made with organic (specified ingredients),” or agricultural product containing less than 50 percent organic ingredients identified as organic in an ingredients statement. We have taken this action to clarify the definition as requested by several commenters.

(2) We have amended the term, “buffer area,” to “buffer zone” and amended the term by replacing “a certified farm or portion of a farm” with “a certified production operation or portion of a production operation.” A few commenters suggested including a minimum size for the buffer zone and specifying that buffer zones must be uncropped vegetated areas. The appropriate size and type of a buffer zone is highly site-specific and cannot be rigidly specified for all locations without placing unreasonable burdens on some producers. Several commenters supported determination of the appropriate buffer zone size and type by the producer in consultation with the certifying agent. Additional information on this issue can be found at subpart C, Crop Production, Changes Requested But Not Made, item 1.

(3) We have amended the definition of the term, “certification or certified,” to make the language in the definition consistent with the language of this proposal. We have also removed the language concerning the information to be found on a certificate. Commenters suggested amending the definition by adding the words, “annual” and “based on an on-site inspection and comprehensive review of the operation.” Other commenters recommended deleting the reference to products on a certificate because it is the operation, not the product, that is certified. We have not made the suggested additions because the issues are adequately addressed in the regulations. We have removed the language concerning information found on a certificate because this information

is adequately addressed in the regulations.

(4) We have amended the definition of “certifying agent” to clarify that the term only applies to State-entity and private-entity certifying agents. We have taken this action because there was some confusion among commenters over whether the original definition included a State program's governing State official.

(5) We have amended the definition of “commercially available” by removing the phrase, “to be feasibly and economically used.” We have taken this action because we agree with commenters that use of the phrase provides an opportunity for producers and handlers to avoid use of preferred inputs. We have also clarified that “commercially available” applies to processors by including the words, “or processing ingredient.” Additional information on this issue can be found at subpart C, Production and Handling (General), Changes Requested But Not Made, item 2.

(6) We have amended the definition of “compost” by referring to compost as “the product of a carefully managed process through which microorganisms break down plant and animal materials into more available forms suitable for application to the soil.” We also state that “composting” must use methods to raise the temperature of raw materials to the levels needed to stabilize nutrients and kill pathogens. Specific instructions on the production of compost for use in organic production has been referenced to the National Resources Conservation Service's (NRCS) practice standard for a composting facility (Code 317). The NRCS practice Standard provides a field tested and verifiable procedure for producing compost. We have made these changes because commenters suggested that we clarify the meaning of compost. Several commenters stated that the definition should include rules about what kinds of materials are acceptable for use in compost. Additional information on this issue can be found at subpart C, Production and Handling (General), Changes Based On Comments, item 4.

(7) We have amended the definition of “crop rotation” by adding a statement about the relationship of crop rotation to perennial crops as suggested by an industry association.

Several commenters suggested inserting references to the use of legumes and sod as essential to crop rotation. The benefits achieved through the use of legumes and sod could be fulfilled through many types of rotation plans, which could only be developed according to the site-specific climate, soil type, and type of crops or livestock produced on a given operation. In the interest of flexibility this proposal does not specify what specific crops have to be included in a crop rotation. The issue addressed in this suggestion is addressed in the crop rotation practice standard at § 205.205. Additional information on crop rotation can be found at subpart C, Production, Changes Based On Comments, item 5.

(8) We have amended the definition of “disease vectors” by adding that disease vectors include plants and animals that transmit disease organisms or pathogens which may attack crops or livestock. A few commenters pointed out that the definition as originally proposed was technically inaccurate because it did not address the transmission of disease organisms to crops or livestock.

(9) We have rewritten the definition of “employee” to provide that an employee is any person providing paid or volunteer services for a certifying agent. A few States requested that the definition clearly reference volunteers. A trade association recommended expanding the definition to include any person who works for a certifying agent. We have included volunteers in this proposal because of their substantial use by some certifying agents. Other States suggest changing “certification decisions” to “certification activities” to include any person who is involved in the certification process. We have addressed the commenters' concern by referring to services provided by the employee for the certifying agent. A few States stated that the definition needs to clarify who is the employer of an independent inspector. An independent inspector would not be included in the definition of employee. Such persons are considered to be contractors. Some States expressed concern regarding the use of volunteers from certified production and handling operations. Section 205.501(a)(11) requires that a certifying agent prevent conflicts of interest by not permitting any employee, inspector, contractor, or other personnel to accept payment, gifts, or favors of any kind, other than prescribed fees, from any business inspected, except that a certifying agent that is a not-for-profit organization with an Internal Revenue Code tax exemption may accept voluntary labor from certified operations. Under this exception all volunteers would be excluded 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 prior 12-month period. Additional information on conflicts of interest can be found at subpart F, Changes Based On Comments, items 4 and 5, and subpart F, Changes Requested But Not Made, items 5, 6, 7, and 8; subpart F, Additional Provisions, item 2.

(10) We have rewritten the definition of “fertilizer” to provide for the inclusion of minor nutrients and trace elements with the three primary nutrients (nitrogen, phosphorus, potassium) contained in a substance or a blended substance utilized in a soil fertility program. This is a generic definition of fertilizer. Issues concerning what substances may be present in a fertilizer for organic production are addressed in subpart C of this proposal.

(11) We have amended the definition of “handle” by providing that the term shall not include the sale, transportation, or delivery of crops or livestock by the producer thereof to a handler. This change was made because we found merit in a certifying agent's concern that farmers were turned into handlers by definition. This was not our intent.

(12) We have amended the definition of “inspector” to make terms used in the definition consistent with terms used in this proposal and to remove the phrase, “who is qualified.” A State certifying agent suggested deleting the phrase, “who is qualified,” because the issue of inspector qualification is more appropriately addressed in the regulations. We concur that the definition of “inspector” does not need to address the issue of qualifications, especially in light of the fact that certifying agents are required by these regulations to use qualified inspectors.

(13) We have amended the definition of “livestock” by adding reference to the production of fiber, feed, and other agricultural-based consumer products and by providing that “livestock” shall not include fish or bees for the production of food, fiber, feed, or other agricultural-based consumer products. A trade association and several States recommended adding fibers to the definition. We have added fiber, feed, and other agricultural-based consumer products to the definition to capture all types of consumer products that would be produced from livestock. We have excluded aquatic animals from the definition of livestock pending future development of detailed practice standards for specific aquatic animals. We have also excluded bees from the definition of livestock pending future National Organic Standards Board (NOSB or Board) review and recommendations on apiculture.

Additional information on this issue can be found at subpart C, Livestock Production, Changes Based On Comments, items 3 and 4.

(14) We have amended the definition of “market information.” A commenter suggested that the definitions of the terms, “labeling” and “market information,” were difficult to distinguish from one another and needed clarification. We have added language to make a distinction between the two terms. “Market information” now includes the phrase, “distributed, broadcasted, or made available outside of retail outlets.” This phrase indicates that any information distributed, broadcasted, or made available outside of retail outlets to assist in the sale or promotion of a product falls under the “market information” category. “Labeling” includes any information displayed or made available in retail outlets on or about the product.

(15) We have amended the definition of “organic” to clarify that the term, “organic,” is used as a labeling term. Commenters, including several States, stated that the definition repeated the proposed requirements for allowing the use of “organic” on a product label. They suggested amending the definition to clarify that the term, “organic,” is used as a labeling term. We made the suggested change because we agree that the definition unnecessarily repeated regulatory information and that use of the term, “organic,” is intended as a labeling term.

(16) We have amended the definition of “producer” to clarify that the term includes the production of fiber and other agricultural-based consumer products. Several States suggested that the definition of “producer” be amended to clarify that a producer could also be growing or producing a fiber product. We agree that this clarification is needed and have also added reference to “other agricultural-based consumer products” to further clarify that the term includes all agricultural-based consumer products produced by a producer.

(17) We have changed the definition of “routine use of parasiticide” to the definition recommended by the NOSB. Commenters suggested removing “without cause” from the definition in the first proposal and adding such phrases as “without an indication of illness from parasites,” “administration with need based on the presence of a diagnosed problem with parasites,” and “with or without cause.” The NOSB's definition solves the problems caused by the use of the phrase, “without cause.” Additional information on this issue can be found at subpart C, Livestock Production, Changes Based On Comments, item 9.

(18) We have amended the definition of “slaughter stock” by changing “human consumption” to “consumption by humans and other animals.” A few commenters recommended deleting the word, “human,” to indicate that organic livestock may also be used to produce pet food. We agree that slaughter stock may be used in the production of products for consumption by humans and other animals.

(19) We have amended the term, “soil quality,” and its definition by referencing “water” in the term and the definition. This change was made because of the reference to “soil and water quality” in § 205.200 of this proposal. Several State commenters stated that the definition of “soil quality” was too vague and would pose problems in enforcing a requirement that addressed the effect of various practices on soil quality. Other commenters requested expansion of the definition to include a discussion of why soil quality is important and what functions healthy soil serves in an organic production system. Another State suggested expanding the definition to include water quality, since there were several references in the regulations to effects on soil or water quality. The importance of soil quality has been addressed under subpart C of this proposal. We acknowledge that the phrase, “soil and water quality,” is used in subpart C and have, therefore, expanded the term, “soil quality,” to “soil and water quality” and amended the definition accordingly. We have also added a new phrase to the previous definition to acknowledge that one important criterion of soil and water quality is the control of environmental contaminants. The determination of which observable indicators to monitor and how to interpret the observations will be subject to documentation in the organic system plan and consultation between the producer and the certifying agent. Guidance will be provided to certifying agents through program manuals. Additional information on this issue can be found at subpart C, Production and Handling (General), Changes Based On Comments, item 2.

(20) We have amended the term, “governing State official,” to “State program's governing State official” and retained the definition to clarify the difference between a State certifying agent and a governing State official. We have used the term, “State program's governing State official,” throughout this proposal. A trade association and a State recommended removing the word, “certification,” from the definition. We have not made this change because the term is meant to identify the person responsible for administering the State's organic certification program. By “State organic certification program,” we mean the law, regulations, and any policies and procedures established by the State to govern the organic certification of producers or handlers by State or private certifying agents.

(21) We have amended the definition of “unavoidable residual environmental contamination.” Commenters stated that USDA should set levels rather than make case-by-case decisions regarding residual environmental contamination. They suggested that background levels could be used to determine whether land exceeds the level. Another commenter requested a clear statement of “unavoidable” and “contamination” to facilitate enforcement. Some States stated that there should be a level that is unacceptable for organic agriculture. A commenter suggested that the definition read, “The presence of a material prohibited in organic production, processing, or handling in soil, crop, or food that occurs as a result of factors beyond the control of the producer, processor, or handler.” Another commenter suggested that the definition read, “Background levels of prohibited substances at a site which are clearly beyond the control of a certified organic farm operator through notices to neighbors, careful avoidance of abnormally precontaminated sites, and establishment of buffer zones.” In this proposal, we have defined “unavoidable residual environmental contamination” as “background levels of naturally occurring or synthetic chemicals that are persistent in the soil or present in organically produced agricultural products that are below established tolerances.”

Definitions—Changes Requested But Not Made

This subpart retains from our first proposal terms and their definitions on which we received comments as follows:

(1) A few commenters requested that the definition of “Administrator” be revised to provide that authority to administer the National Organic Program may be delegated to a State official. We have not made the recommended change because the definition of “Administrator” merely addresses the top official of the Agricultural Marketing Service (AMS) and any AMS official to whom the Administrator may delegate authority. The definition is not meant to address working relationships established

between AMS and a State or State entity.

(2) An environmental group requested that we delete the phrase, “other than during the manufacture of a multiingredient product containing both types of ingredients,” from the definition of “commingling.” This proposal requires that a handler prevent the commingling of organic and nonorganic products but permits use of the word, “organic,” in labeling a product made with organic and nonorganic ingredients in accordance with these regulations. Therefore, it is necessary to indicate that the term, “commingling,” does not apply to the manufacture of multiingredient products produced in accordance with these regulations.

(3) A farmers' association recommended that the Secretary delegate authority for determining crop year to certifying agents because crop year will vary from region to region. We have found no compelling reason to make certifying agents responsible for determining crop year and have not made the recommended change.

(4) A few commenters requested that the definition of “handling operation” be amended to exclude retailers of prepackaged agricultural products. This change is unnecessary because such retailers are excluded by the definition of “handling operation” through the phrase, “except final retailers of agricultural products that do not process agricultural products.”

(5) Several commenters, including a State department of agriculture, recommended elimination of the exception for weight labels in the definition of “label.” We have not made the recommended change to the definition of “label” because, as used in this proposal, “label” is intended to represent the organic nature of the product. A weight label that does not refer to the organic nature of the product would not constitute a label for the purposes of this proposal.

(6) A commenter requested that the definitions for “labeling” and “market information” be amended to refer only to products produced by the seller. We have not made this requested change because changing the definitions to only include products produced by the seller would severely restrict the application of the terms, “labeling” and “market information.” As defined, “labeling” and “market information” correctly include any information that may be presented to consumers concerning all products sold whether produced by the seller, most likely a retail outlet, or produced by a production or handling operation from which the seller acquired the products.

(7) A commenter requested that we include definitions for “manure” and “aged or rotted manure.” Under this proposal it is not necessary to define either term.

(8) An environmental organization requested that a phrase be added to the definition of “mulch” to indicate that acceptable mulch materials leave no chemical or toxic residues. This proposal allows the use of composted plant and animal wastes obtained from nonorganic sources, such as commercial compost products. Uncomposted plant or animal waste material which has been treated with a substance can be as utilized as a mulch provided the substance appears on the National List or complies with the OFPA. Off-farm plant and animal wastes from food processing, municipal yard waste facilities, and other sources are used extensively in existing organic operations and generally permitted by organic certification programs. Using such organic wastes is consistent with a system of organic production and handling, which calls for recycling organic wastes to return nutrients to the land. We believe that concerns about potential contaminants in plant and animal waste materials can be addressed by the requirement in this proposal that these materials be managed in a manner that prevents such contamination. Accordingly, this change has not been made. Additional information on this issue can be found at subpart C, Crop Production, Changes Requested But Not Made, items 2 and 3.

(9) Several commenters suggested adding information to the definition of “National Organic Standards Board” to address the role of the NOSB with regard to the National List. This change is unnecessary because the role of the NOSB is adequately covered in section 6517, National List, of the Act.

(10) Numerous comments were received from consumers, environmental groups, and organic producers concerning the definition of the term, “nonagricultural ingredient.” Commenters expressed the view that this term represented an attempt by USDA to circumvent the intent of the Act that synthetic ingredients not be permitted in organic processed products. We disagree with the position that the Act prohibits the use of synthetic ingredients in organic processed products. The use of synthetic ingredients in organic processed products is discussed in the preamble to the National List found in subpart G. We have changed the term, “nonagricultural ingredient,” to “nonagricultural substance” to be consistent with the language used in this proposal. The definition remains the same.

(11) Commenters stated their objection to the use of the term, “nonsynthetic (natural),” and its definition. A commenter mistakenly stated that the term, “natural,” was defined in the Act. Other commenters felt that use of any term that was not included in the Act was a violation of the Act. Because the term, “natural,” is so ambiguous and subject to differing interpretations, the term, “nonsynthetic,” as used throughout this regulation, represents an important clarification of the intent of the Act, and we have, therefore, retained it in this proposal.

(12) A few commenters requested that the definition of “petition” be amended by adding the phrase, “to the National Organic Standards Board,” immediately following the word, “submitted.” We have not made the requested change for two reasons. First, the change is unnecessary. Second, petitions, whether addressed to the NOSB or National Organic Program (NOP) Staff, will be received by the NOP because the administrative functions of the NOSB are performed at the NOP office. Petitions received will be distributed by the NOP to the NOSB and appropriate technical reviewers.

(13) A producers association stated that the definition for “processing” was confusing with regard to the difference between a handler and a processor. A handling operation that performs any of the activities listed in the definition of processing becomes a processor. We have found no compelling reason to revise this comprehensive definition for processing, which comes directly from the Act. A commenter suggested that this definition be changed to include repackaging for weight. In addition to the definition being stipulated by the Act, affixing a weight label to a product is a normal retail activity that does not warrant the expense and effort necessary to certify all retailers who routinely affix weight labels to organic product.

(14) A few commenters requested that the definition of “State organic certification program” be amended by adding a statement indicating that a State program could have additional requirements. This issue is addressed in subpart G, State Organic Certification Programs, Proposal Description.

(15) A technical institute recommended including genetically engineered organisms and their products in the definition of “synthetic,” and an environmental

group wanted the definition to include the combustion of minerals. We have not amended the definition as given in the Act because it already includes the combustion of minerals, which are chemically changed by the process of combustion. We also do not consider it necessary to classify genetically engineered organisms as either synthetic or nonsynthetic for the purposes of this regulation, since these organisms and their products are prohibited for use in organic production or handling regardless of whether or not they are synthetic.

(16) A commenter recommended adding the word, “synthetic,” immediately preceding the word, “substances,” in the second sentence of the definition of “system of organic farming and handling.” We disagree with this suggestion because “substances” as used in this definition could be synthetic or nonsynthetic. A few commenters requested deletion of the word, “extraneous,” as a modifier of “synthetic additives” in the definition of “system of organic farming and handling.” The commenters stated that use of the word, “extraneous,” implied that synthetic additives can be used in organic processed products. Synthetics may be used in processed products if the substance is included on the National List. Additionally, the word, “extraneous,” modifies the word, “processing,” in the definition, and we consider use of extraneous processing to be inconsistent with organic handling. For these reasons, we have not removed the word, “extraneous,” from the definition. We have, however, amended the term, “system of organic farming and handling,” by deleting “farming” and inserting “production.” The definition for the term, “system of organic production and handling,” is unchanged. We have taken this action to make the term consistent with the language of this proposal. Additional information on this issue can be found at subpart C, Production and Handling (General), Changes Requested But Not Made, item 1.

(17) Several commenters, including a State Department of Agriculture and a fishery association, requested that wild game and aquatic animals be included in the definition of “wild crop.” Regarding aquatic animals, we intend to develop detailed practice standards for specific aquatic species, which will be published for comment and finalized prior to the implementation of the NOP. Given the virtual absence of recognized certification programs for aquatic operations, including aquaculture, there are no U.S. models on which to base national standards. Additional information on this issue can be found at subpart B, Changes Requested But Not Made, item 11 and subpart C, Crop Production, Changes Requested But Not Made, item 7. Accordingly, we have not made the requested changes to the definition of “wild crop.”

Definitions—Additional Provisions

Upon further review of the definitions in the first proposal, we have decided to propose the following additions and changes.

Amended Definitions

(1) We have amended the definition of “accreditation” to include foreign entities as now provided for in subpart F, Accreditation. Additional information on including foreign entities in accreditation can be found at subpart B, Additional Provisions, item 1, and subpart F, Changes Based On Comments, item 1.

(2) We have amended the definition of “allowed synthetic” by replacing “for use in organic farming” with “for use in organic production, or handling.” This correction was necessary because the National List includes synthetic substances used in organic production and handling.

(3) We have amended the terms, “certified organic farm,” “certified organic handling operation,” and “certified organic wild-crop harvesting operation,” with the term, “certified operation.” The term, “certified operation,” is used throughout this proposal to refer to a crop or livestock production, wild-crop harvesting, or handling operation or portion of an operation that is certified by an accredited certifying agent as utilizing a system of organic production or handling as described by the Act and regulations in this part. We have taken this action to simplify the regulatory language.

(4) We have amended the term, “cultural,” to “cultural methods” and amended the definition by removing all references to livestock. We have taken this action because this proposal does not refer to cultural methods with reference to livestock health care.

(5) We have amended the definition of “field” by replacing “farm” with “production operation.” This action was taken because “farm” has been replaced by “production operation” throughout this proposal.

(6) We have amended the definition of “handler” by adding the phrase, “including producers who handle crops or livestock of their own production.” We have made this change to clarify that producers who handle their own production become handlers under the regulations. Such producer/handlers must be certified as a handler.

(7) We have amended the term, “inert ingredient in pesticide formulations,” to “inert ingredient.” We have also amended the definition by specifying that the pesticide product is used in organic crop or livestock production and handling. These changes have been made to make the term and its definition consistent with the language used in the National List. This proposal takes a different position on inert ingredients, as explained in subpart G, National List, Changes Based on Comments, item 6, than was taken in the first proposal. Because of the increased importance of inert ingredients in this proposal, we have rejected the position of the few commenters who recommended removal of this definition.

(8) We have amended the term, “organic plan,” to “organic system plan” and made editorial changes to the definition to make the term and language of the definition consistent with the language in this proposal.

(9) We have amended the definition of “peer review panel” by removing “to assist in evaluating the performance of a certifying agent” and inserting “to assist in evaluating applicants for accreditation as certifying agents.” This change clarifies that the role of the peer review panel is to evaluate applicants for accreditation. Additional information on “peer review panel” can be found at subpart C, Proposal Description, Production and Handling (General).

(10) We have amended the definition of “person” by adding “contractor” to clarify that, when the regulations use “person,” the meaning includes “contractors.”

(11) We have amended the definition of “records” by removing the record examples. A trade association and several States recommend adding “process flow charts” to the examples of records. Another commenter, who does not want to give USDA unlimited access to personnel files, suggested the creation of a specific list of records to be maintained. We have rewritten the recordkeeping provisions, removing all references to specific records or types of records which must be maintained. We have taken this action because we believe that it is impracticable to specify in detail every class of records which may be found essential in demonstrating compliance with the Act and regulations. Different types of certified production and handling operations will, by the very nature of their business, be required to maintain different records to establish their

compliance with the Act and regulations. Additional information on the issue of listing every class of records which may be found essential in demonstrating compliance with the Act and regulations can be found at subpart B, Changes Based On Comments, item 6.

(12) We have amended the definition of “State.” Addition of the term, “State entity,” necessitated our amendment of the definition of “State” to clarify that State means the States of the United States of America.

(13) We have amended the term, “system of organic farming and handling,” to “system of organic production and handling” and retained the original definition in this proposal. The original definition was crafted to be consistent with the requirements of the Act. We have changed “farming” to “production” to provide a more encompassing term, which may come to include such diverse activities as hydroponics, green house production, and harvesting of aquatic animals. The purpose of the original definition was to describe practices and substances consistent with systems of organic farming and organic handling as required by the Act and to provide an explicit reference point for determining which practices and substances are most consistent with these systems. Several commenters suggested that the definition include the concepts, “agroecosystem health,” “ecological harmony,” and “biological diversity.” Commenters also suggested including definitions for “organic agriculture,” “organic farming,” and “transition to organic.” This definition is intended to clarify regulatory provisions in this proposal and is not intended as a broad philosophical statement. The terms, “organic agriculture,” “organic farming,” and “transition to organic,” are not used in this proposal and, therefore, are not defined.

(14) We amended the definition of transplant to prevent confusion with a related term, “seedling.” While the terms, “transplant” and “seedling” are often used interchangeably, the Act treats them as distinct and establishes separate regulatory requirements. We have determined that the physical process of moving and replanting a seedling results in that seedling becoming a transplant. We have created this distinction to be able to enforce the full requirements of the Act. Additional information on “transplant” can be found at subpart C, Crop Production, Changes Based On Comments, item 4.

New Definitions

(1) We have defined “accredited laboratory.” Information concerning “accredited laboratory” can be found at subpart G, Inspection and Testing, Reporting, and Exclusion from Sale, Proposal Description.

(2) We have defined “action level.” Information concerning “action level” can be found at subpart G, Inspection and Testing, Reporting, and Exclusion from Sale, Changes Based On Comments, item 2.

(3) We have defined “agricultural inputs.” Information concerning “agricultural inputs” can be found at subpart G, Inspection and Testing, Reporting, and Exclusion from Sale, Changes Based On Comments, item 1.

(4) We have defined “Agricultural Marketing Service (AMS) “ because the term is used throughout this proposal.

(5) We have defined “breeder stock.” We have added this definition because this proposal establishes conditions for the administration of an allowed synthetic parasiticide to livestock producing offspring for incorporation into an organic operation. We have also proposed conditions under which dairy stock, whose milk or milk products are to be sold, labeled, or represented as organically produced, may be treated with allowed synthetic parasiticides. Additional information on this issue can be found at subpart C, Livestock Production, Changes Based On Comments, item 9.

(6) We have defined “bulk.” Information concerning “bulk” can be found at subpart D, Additional Provisions, item 7.

(7) We have defined “claims.” Information concerning “claims” can be found at subpart D, Changes Based On Comments, item 1.

(8) We have defined “detectable residue.” Information concerning “detectable residue” can be found at subpart G, Inspection and Testing, Reporting, and Exclusion from Sale, Proposal Description and at Changes Based On Comments, item 2.

(9) We have defined “drift.” Information concerning “drift” can be found in subpart G, Residue Testing, changes based on comments, item 2.

(10) We have defined “estimated national mean.” Information concerning “estimated national mean” can be found at subpart G, Inspection and Testing, Reporting, and Exclusion from Sale, Proposal Description and at Changes Based On Comments, item 2.

(11) We have defined “excluded methods.” As a result of extensive public comment, we have revised the definition of certain methods to be excluded from organic production systems. Many commenters suggested that we use the definition for certain methods to be excluded from organic production systems proposed by the NOSB. This proposal essentially adopts that definition. “Excluded methods” refers to a variety of methods used to genetically modify organisms or influence their growth and development by means that are not possible under natural conditions or processes and are not considered compatible with organic production. Such methods would include recombinant DNA, cell fusion, and micro-and macroencapsulation. Such methods would not include the use of traditional breeding, conjugation, fermentation, hybridization, in vitro fertilization, or tissue culture.

We recognize that the phrases, “natural conditions or processes” and “not considered compatible with organic production,” may be subject to interpretation. We have proposed to use these phrases for two reasons. First, “natural conditions or processes” is used in the NOSB and American Organic Standards definitions, both of which were the result of consultation with organic industry and consumer stakeholders and, thus, accurately reflect current industry practices as well as consumer preferences. Second, we recognize that industry and consumer expectations regarding the products of these techniques in organic production systems may evolve. We believe that, taken together, these phrases allow for a degree of flexibility to ensure that our regulations continue to accurately reflect industry practices and consumer preferences. In cases where questions may arise regarding a specific technique, we anticipate that such questions would be resolved by the Administrator based on recommendations from the NOSB.

(12) We have defined “feed additive.” Information concerning “feed additive” can be found at subpart C, Livestock Production, Changes Based On Comments, item 7.

(13) We have defined “feed supplement” Information concerning feed supplement” can be found at subpart C, Livestock Production, Changes Based On Comments, item 7.

(14) We have defined “forage.” Information concerning “forage” can be found at subpart C, Livestock Production, Changes Based On Comments, item 4.

(15) We have defined “immediate family.” Information concerning “immediate family” can be found at subpart F, Changes Based On Comments, items 14 and 15; Changes Requested But Not Made, item 18; and Additional Provisions, item 2.

(16) We have defined “ingredient” because the term is used throughout subpart D.

(17) We have defined “inspection” because the term is used throughout subparts E and F.

(18) We have defined “lot.” Information concerning “lot” can be found at subpart D, Proposal Description and at Additional Provisions, item 6.

(19) We have defined “natural resources of the operation.” This definition has been added to provide greater context for evaluating the “maintain or improve” requirement for a system of organic production and handling. Information concerning “natural resources of the operation” can be found at subpart C, Production and Handling (General), Changes Based On Comments, item 2.

(20) We have defined “nonretail container.” Information concerning “nonretail container” can be found at subpart D, Proposal Description and at Additional Provisions, item 6.

(21) We have defined “practice standard.” Practice standards have been added to this proposal in response to commenter requests for more specific guidelines for measuring the performance of an organic system of production and handling. A practice standard is a series of specific guidelines, requirements, and operating procedures through which a production or handling operation implements a required component of its organic system plan. For example, this proposal contains a practice standard for soil fertility and crop nutrient management which describes the tillage practices, sources and handling restrictions for nutrients, and prohibited activities that a production operation must comply with. There are specific practice standards applicable to crop, livestock, and wild-crop production, and handling operations. We are also proposing to incorporate the terms of the NRCS practice standard for a composting facility into the requirements of this proposal. Additional information on “practice standards” can be found at subpart C, Production and Handling (General), Changes Based On Comments, item 4.

(22) We have defined “private entity” because the term is used throughout subpart F to differentiate between governmental (State entity) and nongovernmental (private entity) organizations providing certification services.

(23) We have defined “production lot number.” Information concerning “production lot number” can be found at subpart D, Proposal Description and at Additional Provisions, item 6.

(24) We have defined “residue testing” because the term is used throughout the inspection and Testing, Reporting, and Exclusion from Sale portion of subpart G.

(25) We have defined “retail food establishment.” Information on “retail food establishment” can be found in subpart B, Applicability, Proposal Description and Additional Provisions, item 2.

(26) We have defined “sewage sludge.” This term has been added and defined as synonymous with “biosolids” to incorporate the Environmental Protection Agency's regulatory language for this category of materials. Information concerning “sewage sludge” can be found at subpart C, Crop Production, Changes Based On Comments, item 1.

(27) We have defined “State entity.” This proposal provides for the accreditation of domestic, tribal government, and foreign governmental subdivisions that provide certification services. We refer to such an entity in this proposal as a “State entity.” Additional information on “State entity” can be found at subpart F, Changes Based On Comments, item 1.

(28) We have defined “tolerance.” Information concerning “tolerance” can be found at subpart G, Inspection and Testing, Reporting, and Exclusion from Sale, Proposal Description and at Changes Based On Comments, item 2.

Subpart B—Applicability

This subpart provides an overview of what has to be certified under the National Organic Program (NOP), describes exemptions and exclusions from certification, addresses use of the term, “organic,” and addresses recordkeeping by certified production and handling operations.

Proposal Description

Except for exempt and excluded operations, each production or handling operation or specified portion of a production or handling operation that produces or handles crops, livestock, livestock products, or other agricultural products that are intended to be sold, labeled, or represented as “100 percent organic,” “organic,” or “made with organic (specified ingredients)” must be certified. Certified operations must meet all applicable requirements of these regulations.

Certifying agents will begin the process of certifying organic production and handling operations to the national standards upon receipt of their accreditation from the Administrator. 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. We are providing this phase-in procedure for production and handling operations certified by newly accredited certifying agents because we believe that such certifying agents will, upon publication of the final rule, demonstrate their eligibility for accreditation by applying the national standards to the certification and renewal of certification of their clients. We are also providing this phase-in procedure to provide relief to certified operations which would otherwise have to be certified twice within a 12-month period (prior to their certifying agent's accreditation and again following their certifying agent's accreditation). This relief will only be available to those certified operations certified by a certifying agent that receives its accreditation within 18 months from the date of publication 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. We are providing this substantial phase-in period because accredited certifying agents will have to schedule on-site inspections around varying growing seasons and because certifying agents and production and handling operations will need time to adapt to the new national organic standards.

Exempt and Excluded Operations.

This regulation establishes several categories of exempt or excluded operations. Exempt operations derive their exemption from the Act while excluded operations are excluded as a result of a Departmental policy decision. An exempt or excluded operation does not need to be certified. However, operations that qualify as exempt or excluded operations may elect to apply for certification. A production or handling operation that is exempt or excluded from obtaining certification still must meet other regulatory requirements contained in this rule as explained below.

Exempt Operations.

(1) A production or handling operation that has $5,000 or less in gross agricultural income from organic sales annually is exempt from certification and does not need to submit an the organic system plan to anyone for acceptance or approval. However, an exempt producer or handler must comply with the labeling requirements of § 205.309 and the organic production and handling requirements applicable to its type of operation. For example a producer of organic vegetables, that performs no handling functions, would have to comply with the labeling requirements

of § 205.309 and the applicable production requirements in §§ 205.202 through 205.207. The labeling and production and handling requirements protect the integrity of organically produced products.

(2) A retail food establishment or portion of a retail food establishment that handles organically produced agricultural products but does not process them is exempt from all of the requirements in these regulations.

(3) A handling operation or portion of a handling operation that handles agricultural products containing less than 50 percent organic ingredients by total weight of the finished product (excluding water and salt) is exempt from the requirements in these regulations, except the recordkeeping provisions of § 205.101(c); the provisions for prevention of contact of organic products with prohibited substances in § 205.272; and the labeling regulations in § 205.309. The recordkeeping provisions maintain an audit trail for organic products. The prevention of contact with prohibited substances and the labeling requirements protect the integrity of organically produced products.

(4) If a handling operation or portion of a handling operation that handles agricultural products containing at least 50 percent organic ingredients by weight (excluding water and salt) does not use the word, “organic,” on any package panel other than the information panel, it is exempt from the requirements in these regulations, except the recordkeeping provisions of § 205.101(c); the provisions for prevention of contact of organic products with prohibited substances as provided in § 205.272; and the labeling regulations in § 205.309. The recordkeeping provisions maintain an audit trail for organic products. The prevention of contact with prohibited substances and labeling requirements protect the integrity of organically produced products.

As noted above, exempt handling operations producing multiingredient products must maintain records as required by § 205.101(c). This would include records sufficient to: (1) prove that ingredients identified as organic were organically produced and handled, and (2) verify quantities produced from such ingredients. Such records must be maintained for no less than 3 years and the operation must allow representatives of the Secretary and the applicable State program's governing State official access to the records during normal business hours for inspection and copying to determine compliance with the applicable regulations.

Excluded Operations.

(1) A handling operation or portion of a handling operation that sells organic agricultural products labeled as “100 percent organic,” “organic,” or “made with organic (specified ingredients)” that are packaged or otherwise enclosed in a container prior to being received or acquired by the operation, remain in the same package or container, and are not otherwise processed while in the control of the handling operation is excluded from the requirements in these regulations, except for the provisions for prevention of commingling and contact of organic products with prohibited substances in § 205.272. The requirements for the prevention of commingling and contact with prohibited substances protect the integrity of organically produced products.

This exclusion will avoid creating an unnecessary barrier for handlers who distribute nonorganic products and who want to offer a selection of organic products.

(2) A retail food establishment or portion of a retail food establishment that processes or prepares, on the premises of the retail food establishment, raw and ready-to-eat food from certified agricultural products labeled as “100 percent organic,” “organic,” or “made with organic (specified ingredients)” is excluded from the requirements in these regulations, except for the provisions for prevention of contact of organic products with prohibited substances as provided in § 205.272; and the labeling regulations in § 205.309. The prevention of commingling and contact with prohibited substances and labeling requirements protect the integrity of organically produced products.

Excluded retail food establishments include restaurants; delicatessens; bakeries; grocery stores; or any retail outlet with an in-store restaurant, delicatessen, bakery, salad bar, or other eat-in or carry-out service of processed or prepared raw and ready-to-eat food.

We have excluded such retail food establishments because comments to the first proposal concerning the issue of certification of retail food establishments were completely divergent. Comments ranged from the certification of all retail food establishments to exclusion of all retail food establishments. There is clearly a great deal of public concern regarding the handling of organic products by retail food establishments. Someday retail food establishments may be subject to regulation under this NOP. Any such regulation would be preceded by rulemaking with an opportunity for public comment. Our exclusion of retail food establishments from this proposal does not prevent a State from developing an organic retail food establishment certification program or otherwise regulating retail food establishments that prepare, package, or process organic agricultural products.

No retailer, regardless of this exclusion and the exceptions found in the definitions for “handler” or “handling operation,” may sell, label, or provide market information on a product unless such product has been produced and handled in accordance with the Act and these regulations. Any retailer who knowingly sells or labels a product as organic, except in accordance with the Act and these regulations, will be subject to a civil penalty of not more than $10,000 under this program. Such retailer may also be subject to enforcement actions and penalties under Federal statutes and their implementing regulations administered by other agencies of the Federal government.

Recordkeeping Requirements for Certified Operations.

A certified operation 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)” sufficient to demonstrate compliance with the Act and regulations. Such records must 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 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 regulations. Certified operations must make the records required by this regulation available for inspection and copying by authorized representatives of the Secretary, the applicable State program's governing State official, and the certifying agent. Access to such records must be provided during normal business hours.

Examples of Records.

Each exempt, excluded, and certified operation should maintain the records which demonstrate compliance with the Act and the regulations applicable to it and which it believes establish an audit trail sufficient to prove to the Secretary, the applicable State program's governing State official, and the certifying agent that the exempt, excluded, or certified operation is and has been in compliance with the Act and regulations.

Examples of records include: Application and supporting documents for certification; organic system plan and supporting documents; purchased inputs, including seeds, transplants, livestock, and substances (fertilizers, pesticides, and veterinary biologics consistent with the livestock provisions of subpart C), cash purchase receipts, receiving manifests (bills of lading), receiving tickets, and purchase invoices; field records (planting, inputs, cultivation, and harvest); storage records (bin register, cooler log); livestock records, including feed (cash purchase receipts, receiving manifests (bills of lading), receiving tickets, purchase invoices, copies of grower certificates), breeding records (calendar, chart, notebook, veterinary documents), purchased animals documentation (cash purchase receipts, receiving manifests (bills of lading), receiving tickets, purchase invoices, copies of grower certificates), herd health records (calendar, notebook, card file, veterinary records), and input records (cash purchase receipts, written records, labels); producer invoice; producer contract; receiving manifests (bills of lading); transaction certificate; producer certificate; handler certificate; weigh tickets, receipts, and tags; receiving tickets; cash purchase receipts; raw product inventory reports and records; finished product inventory reports and records; daily inventories by lot; records as to reconditioning, shrinkage, and dumping; production reports and records; shipping reports; shipping manifests (bills of lading); paid freight and other bills; car manifests; broker's contracts; broker's statements; warehouse receipts; inspection certificates; residue testing reports; soil and water testing reports; cash receipt journals; general ledgers and supporting documents; sales journals; accounts payable journals; accounts receivable journals; cash disbursement journals; purchase invoices; purchase journals; receiving tickets; producer and handler contracts; cash sales receipts; cash purchase journals; sales invoices, statements, journals, tickets, and receipts; account sales invoices; ledgers; financial statements; bank statements; records of deposit; canceled checks; check stubs; cash receipts; tax returns; accountant's or other work papers; agreements; contracts; purchase orders; confirmations and memorandums of sales; computer data; computer printouts; and compilations of data from the foregoing.

Request for Comment.

This proposal provides that all ingredients in a multiingredient product identified as organic must have been produced by a production or handling operation certified by an accredited certifying agent. We are seeking comment on the following question. Should handlers be allowed to identify organically produced products produced by exempt production operations as organic ingredients? Such identification would be restricted to the ingredients list on the information panel. This may provide a wholesale outlet for organically produced agricultural products produced by producers exempted from certification because their gross agricultural income from organic sales totals $5,000 or less annually.

Compliance with Federal Statutes and Regulations.

Any agricultural product that is sold, labeled, or represented as “100 percent organic,” “organic,” or “made with organic (specified ingredients)” must be produced and handled in accordance with the requirements in these regulations. Organic agricultural products must be produced and handled in compliance with the Federal Meat Inspection Act, the Poultry Products Inspection Act, and the Egg Products Inspection Act, concerning meat, poultry, and egg products; the Federal Food, Drug, and Cosmetic Act; the Federal Insecticide, Fungicide, and Rodenticide Act; and any other applicable Federal statute and its implementing regulations.

Foreign Applicants.

The regulations in this part, as applicable, apply equally to domestic and foreign applicants for accreditation, accredited certifying agents, domestic and foreign applicants for certification as organic production or handling operations, and certified production and handling operations unless otherwise specified.

Applicability—Changes Based on Comments

This subpart differs from our first proposal in several respects as follows:

(1)

Exception for Handlers Serving Three or Fewer Certified Operations.

We have removed the provision that would have allowed handlers providing services to fewer than three certified organic producers to operate without separate certification under the NOP (§ 205.201). Such handlers will now have to be certified unless otherwise exempted or excluded from certification under § 205.101 of these regulations. We have taken this action because we believe that the first proposal invites problems, such as making certain that the contracted handler maintains compliance with the Act and regulations, taking enforcement actions against persons violating the Act and regulations, and being equitable to all handlers since large-volume handling operations may qualify for inclusion under the provision on the basis of few clients while small-volume handlers would be disqualified because they have three or more clients.

More than 100 comments were received, most from consumers, in opposition to the provision. Many of the commenters erroneously interpreted the provision as an exemption for handlers of product for less than three certified operations. Most of these commenters expressed the belief that it is a violation of the Act to allow handlers to operate through inclusion under another certified operation's certification rather than through separate certification under the Act and regulations. Several commenters stated that it is unacceptable to exempt handling operations providing services to fewer than three certified entities from separate certification. Several commenters stated that operations that process products from a certified producer should always be certified. Several State departments of agriculture and others stated that the exemption for handlers servicing fewer than three certified operations does not make sense. They emphasized that certified operations could produce very large quantities of organic product and a large-scale handler may contract with only a few certified producer operations. Therefore, they called for elimination of the exemption. A few commenters questioned the certified operation's ability to ensure that the contracted handler maintains compliance with the Act and regulations. They expressed their belief that the certified operation would have no authority to maintain compliance with the Act within a facility it neither owns nor manages.

We never intended to exempt handlers of fewer than three certified operations from certification. Rather, we proposed a means by which handlers of fewer than three certified operations could be covered under the certification of a certified operation for which it provides handling services.

Several of the commenters favored the provision that any handling operation that provides handling services to fewer than three certified entities that produce or handle agricultural products that are or that are intended to be sold, labeled, or represented as organic or made with certain organic ingredients would not be required to be separately certified apart from the operations for which it provides such services. However, supporters of the concept differed in their position on the proposal. Most stated that the provision would work

only if it is made clear that a handler can provide services to only one or two separate entities and qualify for the exemption and only if included in the certifications of and inspected along with the entities for which the handler will provide the services. They further emphasized that all applicable standards must be met. A few supporters recommended that there be a contract between the handler and the certified operation and that the certified operation be responsible for any failure of the handler to adhere to these regulations. Another commenter stated that, if handlers are to be exempt from certification, the qualifying parameter for exemption should be based upon economic value similar to that for production operations.

Two commenters supported the proposal but wanted the fewer-than-three-certified-operations limitation removed. One of the commenters, a nonprofit agricultural organization, expressed the belief that the limitation needlessly restricts commercial activity, invites an excessive amount of paperwork related to certification applications, and provides no greater assurances for quality control. This commenter, referring to the definition of handling operation at section 6502(10) of the Act, interpreted “to receive or otherwise acquire” as synonymous with taking legal title to the product. This commenter stated that this interpretation creates a distinct, verifiable threshold which clearly identifies those operations needing to be certified and those that do not need to be certified. Under the commenter's suggested system, handlers who take legal title to organic products assume responsibility for their subsequent handling and are required to have their operations certified. Any handler who works on organic products without taking legal title would have his or her activities approved and monitored by the certifying agent responsible for the product when it arrived at the handler's door. The commenter believes that noncertified handlers who wanted to serve organic customers would quickly learn to provide the quality control and accountability requirements which certifying agents expect to see.

We disagree with the commenters who recommended removal of the fewer-than-three-certified-operations restriction on the grounds that the proposal to limit exemptions to handlers contracting with fewer than three certified operations needlessly restricts commercial activity, invites an excessive amount of paperwork related to certification applications, and provides no greater assurances for quality control. The primary justification given for removal of the fewer-than-three-certified-operations restriction is the belief that any handler who works on organic products without taking legal title would have his or her activities approved and monitored by the certifying agent responsible for the product when it arrived at the handler's door. First, it is unreasonable to expect the certifying agent to be responsible for monitoring noncertified handlers even if they are providing services to an operation certified by the certifying agent. Second, we disagree with the commenter's interpretation that “to receive or otherwise acquire” is synonymous with taking legal title to the product. “To receive or otherwise acquire” involves the possession, control, or custody of a product. Such possession, control, or custody of a product may or may not involve the transfer of title to the product. In other words, a handler may have possession, control, or custody of the product under a right derived from a certified operation but not under a claim of the handler's title to the product.

(2)

Certification for a Portion of a Production or Handling Operation.

We have clarified that a portion of a production or handling operation can be certified. We have taken this action because we agree with the association commenter who suggested that the Department clarify for potential applicants for certification that a portion of their production or handling operation can be certified. The Act at section 6506(b) authorizes the certification of specific fields of a production operation or parts of a handling operation when: (1) In the case of a production operation or field, the area to be certified has distinct, defined boundaries and buffer zones separating the land being operated through the use of organic methods from land that is not being operated through the use of such methods; (2) the operators of such production or handling operation maintain records of all organic operations separate from records relating to other operations and make such records available at all times for inspection by the Secretary, the certifying agent, and the State program's governing State official; and (3) appropriate physical facilities, machinery, and management practices are established to prevent the possibility of a mixing of organic and nonorganic products or a penetration of prohibited chemicals or other substances on the certified area. This clarification is found at § 205.100 of this proposal.

(3)

Exemption for Operations with $5000 or Less in Income.

We have clarified at § 205.101(a)(1) that the producer and handler exemption from certification applies to production and handling operations that sell agricultural products as organic but whose gross agricultural income from organic sales totals $5,000 or less annually. We have taken this action because of commenter confusion over whether the $5,000 level applied to all sales of agricultural products or just sales of organic agricultural products. This action is consistent with the position of a State department of agriculture, which stated that the $5,000 exemption should apply to organic sales, not sales of all agricultural products. The commenter believes that, as originally proposed, the regulation would limit opportunities for organic industry development, especially for small producers and other small agribusinesses.

(4)

Applicability of Regulation to Exempt Operations.

We have revised the producer and handler exemption, provided to producers and handlers with gross agricultural income from organic sales totaling $5,000 or less annually, to provide that such operations are exempt from certification and do not need to submit an organic system plan to anyone for acceptance or approval but must comply with the requirements for organic production and handling and the labeling requirements for agricultural products produced on an exempt or excluded operation. We have taken this action because the first proposal too narrowly addressed the regulatory requirements that exempt producers must meet. Our purpose is to exempt such production and handling operations from the regulatory and financial burdens of certification but not to exempt them from the standards for organic production and handling. A fundamental concept of this regulation is to establish a label for organic. To the extent that these entities will be using the term, “organic,” to describe their product, they must be truthful. If they don't comply with the other requirements of this part, they cannot truthfully describe their product as organic.

Several State commenters expressed the belief that the producer exemption would be too difficult to enforce. Some expressed the belief that exempt production operations would still require monitoring to verify compliance with organic standards. A State department of agriculture commented that some monitoring of uncertified operations would still be needed to verify compliance with standards; otherwise there would be no guarantee that standards would be met for

products being sold as organic. Another State, which expressed strong disagreement with the producer exemption, asked how complaints against such producers would be reconciled if they are exempt from the NOP and do not have to maintain records over a multiple-year period. This commenter stated its intent, under its State program, to require certification of organic production operations producing less than $5,000 in agricultural product yearly. This same commenter acknowledged the Federal program's obligation to provide the exemption as required by section 6505(d) of the Act.

A producer raised the issue of having exempt operations provide affidavits of compliance with the Act and regulations except for certification. A certifying agent made the observation that the rule as first proposed would not permit exempt producers, whether operating under an affidavit or not, to sell any of their products to a certified operation for further processing unless they were fully certified. This certifying agent stated that it did not believe excluding exempt producers from selling any of their products to a certified operation for further processing unless they were fully certified was consistent with the intent of the Act.

We disagree with both commenters. First, we believe that an affidavit program for exempt producers, opting to exercise their right to the exemption, would impose unnecessary regulation upon entities that the Act clearly intended not to impose such regulation upon. Second, an affidavit program would create a regulatory burden on the Department and certifying agents that would not be justified by the size of such operations. We recognize, as pointed out by commenters, that some State programs currently require organic production operations that would be exempt under this national program to register with the State and to comply with requirements such as filing financial records and maintaining records of production methods and substances used.

While we believe that an affidavit program is not appropriate at the national level, we do believe that States would be authorized to regulate organic operations exempted under the NOP's $5,000-or-less organic sales exemption under an approved State program. Under this proposal, producers and handlers exempted under the NOP's $5,000-or-less organic sales exemption will be exempt from the certification regulations and will not have to submit an organic system plan to anyone for acceptance or approval but will be required to comply with the requirements for organic production and handling and for labeling. States may implement a program for monitoring the activities of exempt production and handling operations and enforcing compliance with the NOP. States will be permitted to require certification of federally exempted producers and handlers under an approved State organic certification program. The Department will consider any complaint of noncompliance with these regulations by an exempt production or handling operation and take appropriate action.

(5)

Applicability of Federal Statutes.

We have added at § 205.102(c) reference to a production or handling operation's responsibility for complying with all applicable Federal statutes and their implementing regulations as those statutes may apply to the production and handling of agricultural products. We have made this addition as a means of advising producers, handlers, and the public that these regulations do not supersede or alter a producer's or handler's responsibilities under other Federal statutes and their implementing regulations.

A processors association urged the Department to advise the public in this rule that food products produced and processed under the organic standard must comply with applicable provisions of the Federal Food, Drug, and Cosmetic Act; the Federal Meat Inspection Act; the Poultry Products Inspection Act; and all other relevant statutes and their implementing regulations, in all respects, especially related to adulteration and misbranding.

(6)

Recordkeeping Provisions.

We have rewritten the recordkeeping provisions removing all references to specific records or types of records which must be maintained. In their place, we are requiring that certified operations maintain records adapted to the particular business that the certified operation is conducting. Such records must disclose all activities and transactions of the certified operation in sufficient detail as to be readily understood and audited and must be sufficient to demonstrate compliance with the Act and regulations. We have taken this action because we believe that it is impracticable to specify in detail every class of records which may be found essential in demonstrating compliance with the Act and regulations. Different types of certified production and handling operations will, by the very nature of their business, be required to maintain different records to establish their compliance with the Act and regulations.

A certifying agent and a beekeepers association expressed support for the recordkeeping requirements in the first proposal. The beekeeping association emphasized the value of such recordkeeping in monitoring the use of substances. A marketing association and a State commented that the recordkeeping period for a list of substances applied to a certified operation should be changed from 3 to 5 years to be consistent with the requirements of section 6511(d) of the Act. A research foundation suggested removal of the requirement for identifying the name and address of the person who applies and who has applied any substance to any part of the farm and any livestock or other agricultural product. A trade association recommended the addition of a new paragraph addressing the records required to be maintained by crop production operations to establish an audit trail. Specifically, the commenter recommended that the new paragraph require that an audit trail be maintained by all organic crop production operations, which records: (1) All sources and amounts of all off-farm inputs; (2) the dates, rate, method of application, location, reason for use, and name and address of applicator for all off-farm inputs; (3) the dates, projected and actual yield, and harvest location of all crops produced by the operation, both organic and nonorganic; (4) the dates, quantities, and locations of all crops stored; (5) the transport system(s) used to distribute organic crops; and (6) the product name, date, quantity, and buyer of all products sold, both organic and nonorganic. A State commenter stated that the maintenance of records on a certified operation is important, but there must be restraint in requiring redundant or irrelevant information. Approximately 50 retail commenters, speaking on behalf of a producer handler, stated that the recordkeeping requirements were burdensome and overly complicated.

Comments indicated that there was some concern regarding what records had to be maintained by certified operations. Commenters were concerned about requiring the maintenance of the correct records for establishing an audit trail, avoiding the retention of redundant or irrelevant records, and minimizing the burden and complexity of the recordkeeping.

We agree with the commenters who stated that the recordkeeping period for a list of substances applied should be consistent with the 5-year recordkeeping requirements of the Act.

Accordingly, this proposal at § 205.103(b)(3) requires that certified operations maintain all records applicable to their organic operations for not less than 5 years beyond their creation. We disagree with those commenters who called for more specifics relative to what records need to be maintained and agree with those commenters who expressed concern regarding the magnitude of records required to be maintained. This proposal provides each production and handling operation with the opportunity to decide for itself what records are necessary to demonstrate its compliance with the Act and regulations.

(7)

Exemption from Prevention of Commingling.

We have removed the requirement that a handling operation or portion of a handling operation that handles only agricultural products that contain less than 50 percent organic ingredients by total weight of the finished product (excluding water and salt) that is exempt from the requirements in this part comply with the provision for the prevention of commingling. As noted in item 8 below, exempt handlers of agricultural products that contain at least 50 percent organic ingredients by weight will also be exempt from complying with the provision for the prevention of commingling. We have taken this action because the commingling of agricultural products is often a part of the processing activity. Such operations must, however, comply with all of the applicable labeling provisions of subpart D including the prohibition on the combining of organic and nonorganic forms of the same agricultural product. In other words, the handler must not, for example, combine organic and nonorganic corn if corn is to be shown on the information panel as “organic corn.”

A commenter called for the removal of the requirement that an exempt handler comply with the provisions for the prevention of commingling and contact of organic products with prohibited substances. The commenter claimed that requiring exempt handlers to prevent commingling of organic and nonorganic products and contact of organic products with prohibited substances is inconsistent with the Act. We do not agree. As noted above, we have removed the prevention of commingling requirement because the commingling of agricultural products is often a part of the processing activity. We have not, however, removed the requirement for the prevention of contact of organic products with prohibited substances because the requirement is necessary to safeguard the integrity of organic ingredients used in the products being handled.

(8)

Exemption for Handlers that Handle Product Containing at Least 50 Percent Organic Ingredients.

We have provided at § 205.101(a)(4) that any handling operation or portion of a handling operation that handles agricultural products that contain at least 50 percent organic ingredients by weight (excluding water and salt) that chooses to not use the word, “organic,” on any panel other than the information panel is exempt from the requirements in these regulations, except the provisions for prevention of contact of organic products with prohibited substances as set forth in § 205.272, the labeling provisions of § 205.309, and the recordkeeping provisions of § 205.101(c).

A commenter stated that the Department is required under the Act to exempt any handling operation or portion of a handling operation that processes agricultural products that contain at least 50 percent organically produced ingredients by weight (excluding water and salt). We disagree with the commenter. Section 6505(c)(1) of the Act ties the exemption from certification to use of the word, “organic,” on the principal display panel. The Secretary, in consultation with the National Organic Standards Board (NOSB) and the Secretary of Health and Human Services, may require certification of any operation that chooses to use the word, “organic,” on the principal display panel. This proposal provides that handlers, processing agricultural products that contain at least 50 percent organically produced ingredients by weight (excluding water and salt), who choose to only use the word, “organic,” on the information panel are exempt from certification. Handlers processing agricultural products that contain at least 50 percent organically produced ingredients by weight (excluding water and salt) who choose to use the word, “organic,” on any other panel, including the principal display panel, must be certified. Use of the word, “organic,” on the principal display panel carries with it connotations in the minds of consumers regarding the organic nature of the product which necessitate certification of handlers of such products. Further, requiring certification of handlers of such products is consistent with current industry practice.

Applicability—Changes Requested But Not Made

This subpart retains from our first proposal regulations on which we received comments as follows:

(1)

Exemptions for Handlers.

Commenters stated that under no circumstances should organic handling operations be exempt from certification. A few environmental organizations, a certifying agent, and an industry association commented that the first proposal exceeded statutory authority by broadening the producer exemption in section 6505(d) of the Act to apply to handlers. An agriculture research and education organization stated that, while the Act does not specifically identify handling operations under the producer exemption, including them is a reasonable and workable interpretation of the Act. The commenter stated that the Act provides an exemption to persons who sell no more than $5,000 annually in value of agricultural products and it sees no reason why the exemption should not include handlers. This commenter also recommended that the NOP develop a new category of exemption of up to $10,000 for on-farm processing. The commenter's recommended exemption would apply to value-added, made-on-site products, such as maple syrup, jams, and relishes, and would allow individuals to combine their production and handling exemptions.

We do not agree with those commenters who stated that the first proposal exceeded statutory authority. The title of the exemption in the Act (section 6505(d)) specifically refers to small farmers. However, the text to the exemption provides, in full, that “subpart (a)(1) shall not apply to persons who sell no more than $5,000 annually in value of agricultural products.” “Person” is defined in the Act as “an individual, group of individuals, corporation, association, organization, cooperative, or other entity.” The Act defines “agricultural product” as “any agricultural commodity or product, whether raw or processed, including any commodity or product derived from livestock, that is marketed in the United States for human or livestock consumption. Handlers are covered by the definition of “person” and “agricultural product” and are thereby eligible for exemption.

The financial burden of certification is no less for handlers with sales of no more than $5,000 annually than it is for producers with sales of no more than $5,000 annually. Therefore, since the cost of certification is the primary reason for exempting production

operations with sales of no more than $5,000 annually, it is reasonable to also exempt handling operations with sales of no more than $5,000 annually.

This proposal exempts production and handling operations that sell agricultural products as “organic” but whose gross agricultural income from organic sales totals $5,000 or less annually. Production and handling operations exempted on the basis of organic sales of $5,000 or less annually are exempt from certification under Subpart E and do not need to submit an organic system plan under § 205.201 but must comply with the applicable organic production and handling requirements of subpart C and the labeling requirements of § 205.309.

Exemptions for production operations and handling operations are separate exemptions. Therefore, a production operation that is also a handling operation, due to its production and sale of processed products, must qualify for each exemption separately. The balance of this paragraph lists exemption eligibility examples. A production operation with gross agricultural income from organic sales totaling $5,000 or less annually will be exempt from certification as an organic production operation. A handling operation with gross agricultural income from organic sales totaling $5,000 or less annually will be exempt from certification as an organic handling operation. A production and handling operation with gross agricultural income from organic production sales totaling $5,000 or less annually and organic handling sales totaling $5,000 or less annually will be exempt from certification as an organic production operation and from certification as an organic handling operation. A production and handling operation with gross agricultural income from organic production sales totaling $5,000 or less annually and organic handling sales totaling more than $5,000 annually will be exempt from certification as an organic production operation only. A production and handling operation with gross agricultural income from organic production sales totaling more than $5,000 annually and organic handling sales totaling $5,000 or less annually will be exempt from certification as an organic handling operation only.

Products marketed by exempt production operations and handling operations cannot be represented as certified organic or display the U.S. Department of Agriculture (USDA) organic seal. Products from exempt operations may not be included as organic ingredients in a multiingredient product produced or processed in a certified operation. We anticipate that this exemption will be used primarily by small market gardeners, hobbyists, and other small producers who sell produce and other agricultural products at farmers markets and roadside stands to consumers within their communities.

(2)

Exceeding $5000 Limit for Exemption.

A few commenters, including a State, raised the concern that an organic operation might not anticipate sales over $5,000 but could exceed its exemption due to a bumper crop or market price increases, putting the operation in violation. The Department believes that once an exempted operation reaches the $5,000 maximum exemption level, it is compelled to seek certification, which it would have to obtain and maintain if it is to continue to sell organic products. A certified organic operation, including one which previously lost its exempt status, could switch from certified to exempt if its size or operations were changed such that it no longer sold more than $5,000 annually in value of agricultural products.

(3)

Certification of Exempt Operations.

A producer interpreted “exempt” as meaning that operations exempted from certification could not be certified as an organic operation. This interpretation is not correct. Any production or handling operation, including an exempt operation, which makes application for certification as an organic operation and meets the requirements for organic certification may be certified.

(4)

Increasing the Statutory Limitation of $5000 for Exemption.

In the first proposal, we asked for comments as to whether the $5,000 level for exemption from certification should be raised to $10,000 or to another amount and why an increased amount would be appropriate. Suggested levels ranged from $2,000 to $50,000. The suggested levels and justifications for such levels are not sufficiently consistent for us to recommend that Congress change the $5,000 level.

In addition, we requested data as to the number of operations that may be exempt under the current $5,000 limitation for exemption and the number of operations that may be exempt under any new monetary amount suggested. Comments from the few States responding to the request for data as to the number of operations that may be exempt under the current $5,000 limitation revealed that from one-third to one-half of organic producers in the commenting States would be exempt under the statutorily authorized $5,000 exemption limitation.

(5)

Certification of Retail Operations.

A commenter said the first proposal ignored retail operations which contract with an organic farm to produce organic products with the store's brand on the label. The commenter said the retail operation should be certified because it is responsible if violation occurs in the organic production or handling of the branded product. The commenter is incorrect in suggesting that the retailer would be held responsible for a violation if the violation occurred at the production or handling facility. When a retail operation contracts for the production, packaging, or labeling of organic product, it is the certified production or handling operation that is responsible for meeting the applicable organic production or handling requirements under the Act and these regulations. If a violation occurs in the organic production or handling of the product, the certified production or handling operation retains responsibility for the violation even if the retailer's name is on the label.

(6)

Exemption for Products Containing Less than 50 Percent Organic Ingredients.

Several commenters representing States and organic organizations opposed the exemption of a handling operation or portion of a handling operation that handles only agricultural product containing less than 50 percent organic ingredients. They stated that handling operations creating products with organic ingredients should be certified regardless of the percentage of organic ingredients found in the products they produce. These commenters stated that exemptions from certification undermine audit trails and consumer confidence. Each of these commenters called for removal of the proposed exemption. Another commenter stated that, if a product is less than 50 percent organic, then it is not organic and should not be labeled or sold as such.

We disagree with the comments. Because such products consist of less than 50 percent organic ingredients, handlers may only use the word, “organic,” on the information panel of such products to truthfully represent the organic nature of the ingredients. Such handlers must also comply with the recordkeeping provisions of § 205.101(c), the prevention of contact of organic products with prohibited substances provisions of § 205.272, and the labeling provisions of § 205.309.

(7)

Ensuring Organic Ingredients are Not Contaminated.

A commenter asked how the Department would ensure that organic ingredients are not contaminated without certification of the handling operation creating the final

product. Handling operations that handle agricultural products containing less than 50 percent organic ingredients and at least 50 percent organic ingredients that are exempt from certification must maintain records sufficient to: (1) Prove that ingredients identified as organic were organically produced and handled, and (2) verify quantities produced for such ingredients. Such operations are required at § 205.101(c) of this proposal to allow representatives of the Secretary and the applicable State program's governing State official access to these records for inspection and copying during normal business hours to determine compliance with the applicable regulations.

(8)

Exclusion for Handlers that Receive and Distribute Prepackaged Product.

Commenters raised several issues regarding the exclusion of handlers who receive and distribute prepackaged organic products. At least three certifying agents commented that all retailers should be certified unless they handle only organic product in a “final, sealed retail container,” or “final impermeable containers.” The commenters are apparently seeking further assurance that nothing is added to the organic product while under control of a distributor or retail operation. Because of the wide variety of organic products and the special needs of some of those products, establishing restrictions on the kind of containers used for transportation could unfairly treat some products and commodity industries. For example, some organic products may require containers which “breathe” or allow the exchange of air and outside temperatures. Nonpermeable containers could hasten spoilage of some fresh and processed organic products.

A few certifying agents proposed that distributors and trucking companies which transport agricultural products also should be certified under this part. However, such transportation operations do not carry out the functions specified in the definitions for handler and handling operations. Distributors and trucking companies have traditionally been excluded from requirements of agricultural production regulations. The Act cannot be used to regulate activities or entities beyond its regulatory authorities. In this case, it is the responsibility of producers, handlers, interim handlers, and retailers to meet the requirements of this regulation by ensuring that their contracted shippers and distributors understand, respect, and protect the integrity of the organic products they are transporting.

An organic association requested that proper notification of “good organic handling practices” be made to the transportation, trucking, and public warehousing sectors to inform them of their responsibilities. The commenter stated that the notification should include requirements for audit trail records, measures needed to prevent commingling and contamination by prohibited substances. This commenter expressed the belief that excluded handlers should preregister and provide a signed statement of acknowledgment of the requirements. Regarding enforcement of the suggested requirements, this commenter stated that enforcement of the requirements should be funded and administered by existing State and Federal inspection services.

We acknowledge the need for education regarding the requirements of this rule as well as such issues as the handling of organic products. The NOP, in cooperation with the NOSB, will provide educational material to the public regarding the requirements of this rule. Such educational material will include good organic handling practices made available to the transportation, trucking, and public warehousing sectors. However, we disagree with the suggestions calling for preregistration of exempt and excluded handlers and enforcement of the requirements by existing State and Federal inspection services. We believe the suggestions create a burden, on exempt and excluded handlers, the Department, and certifying agents, not justified by the nature of the handling performed.

(9)

Seafood Products.

A marketing institute recommended that the first proposal be revised to address seafood products in a separate seafood section and to include provisions that apply to seafood harvested in the wild. This commenter stated that wild-caught seafood should be allowed to be labeled as organic. A processors association also called for the labeling of wild-caught seafood as organic.

While the first proposal contained no standards solely for aquatic animals in an organic operation, it did contain provisions applicable to their production. The first proposal allowed fish and crustaceans, among other livestock types, to be sold, labeled, or represented as organic if such livestock had been brought into an organic operation no later than the earliest commercially available stage of life. Several commenters suggested that the management of aquatic animals differs sufficiently from mammals and poultry to require separate regulatory provisions. We concur and intend to develop detailed practice standards for specific aquatic animals as discussed further under the production and handling subpart.

Applicability—Additional Provisions

Upon further review of the applicability provisions in the first proposal, we have decided to propose the following additions and changes.

(1)

Foreign Applicants.

We have added a new provision at § 205.104 addressing applicability of these regulations to foreign applicants. We have made this addition to clarify our intent that the regulations in this part apply equally to domestic and foreign applicants for accreditation, accredited certifying agents, domestic and foreign applicants for certification as organic production or handling operations, and certified organic production and handling operations unless otherwise specified in these regulations.

(2)

New Exclusions.

We have excluded retail food establishments that process or prepare raw and ready-to-eat food from most of the requirements in these regulations. An excluded retail food establishments must comply with the requirements for the prevention of contact with prohibited substances provisions of § 205.272 and the labeling provisions of § 205.309. We have excluded such retail food establishments because comments to the first proposal concerning the issue of certification of retail food establishments (restaurant, delicatessen, bakery, grocery store, or other retail outlet) preparing, packaging, or processing raw and ready-to-eat organic agricultural products that are previously labeled as “100 percent organic,” “organic,” or “made with organic (specified ingredients)” were completely divergent. The first proposal also contained an inconsistency which would have required a supermarket delicatessen to be certified but would have excluded from certification a restaurant with carry-out delicatessen products.

As the comments discussed below show, there is clearly a great deal of public concern regarding the handling of organic products by retail food establishments. Should we decide to regulate retail food establishments under the NOP, we will proceed with rulemaking and provide an opportunity for public comment.

Our exclusion of retail food establishments from this proposal does not prevent a State from developing an organic retail food establishment certification program or otherwise regulating retail food establishments that prepare, package, or process organic

agricultural products. Texas and Maryland currently have retailer certification programs.

No retailer, regardless of this exclusion and the exceptions found in the definitions for “handler” or “handling operation,” may sell or label a product as organically produced and handled or fix a label to or provide other market information concerning an agricultural product if such label or information implies that such product is produced and handled using organic methods unless such product has been produced and handled in accordance with the Act and these regulations. Any retailer who knowingly sells or labels a product as organic, except in accordance with the Act and these regulations, will be subject to a civil penalty of not more than $10,000 under this program. Such retailer may also be subject to enforcement actions and penalties under Federal statutes and their implementing regulations administered by other agencies of the Federal Government.

More than 90 commenters, including an organic association, stated that the retailer exclusion in the first proposal violates the requirement to certify all handling operations. The organic association believes that processing, as defined in the Act, includes all the normal culinary arts, food manufacturing, and packaging. All of these commenters, including some States, recommended removal of the exclusion. Several commenters, including a few States, expressed concern that exclusions from certification eliminate effective audit trails and undermine consumer confidence in organic products. One State commented that it believed retail food establishments should be certified because they are the last handler link from producer to consumer.

Several commenters stated that retailers who receive organic product have a high potential for loss of integrity of the organic product due to accidental misuse of pesticides and sanitizers during shipping or storage and to inadvertent commingling with nonorganic product. The commenters believe that, even though a retailer may only display and sell organic product, such retailer should be certified and monitored for compliance to ensure proper treatment of the product in shipment and storage. A State agency, however, cautioned against establishing another burden on the organic industry. The commenter said that if sorting from bulk and repackaging into smaller packages requires certification, then many small “natural food” retail outlets would find certification more costly than the economic benefits of marketing organic products. The commenter said many small, natural food retail food establishments would likely stop carrying organic items.

A few commenters stated there is a high potential for fraud among retailers who have the opportunity to repackage, mislabel, and sell nonorganic product as organic. Therefore, they believe that all retailers must be subject to certification or some form of oversight to assure that they are not mislabeling product.

A commenter representing a large retail grocery store operation said that good identification procedures enable retail stores to keep organic product separated from nonorganic product during transportation, storage, and in-store displays. The commenter continued that unduly rigid requirements would be burdensome on retailers. The commenter indicated that the costs of certification and compliance may outweigh the benefits of carrying organic product.

Another commenter from a major retail food establishment suggested that retailers that wash and sort fresh organic produce for display should be required to follow “good organic handling practices” that would establish recordkeeping responsibilities and prevent commingling with nonorganic products and contamination by prohibited materials. The commenter suggested that conformance could be maintained by existing State or local health inspectors or Federal inspectors with special training in organic handling systems. However, there is no authority in the Act to require the services of State or local inspectors.

Another retailer stated that retailers will comply with regulations because consumers will hold retailers responsible for deficiencies or illegal actions through the entire production and processing chain for agricultural products.

A commenter stated that, if a restaurant serves organic foods, it should be allowed to so state. The commenter went on to say that restaurants and grocery stores have a right to state that they used organic ingredients in preparing a given dish. This commenter believes that restaurants and grocery stores selling organic products, even if they prepare them, should not have to be certified. A few commenters claimed that processing, as defined in the Act, includes all culinary arts and food manufacturing. They stated that restaurants must be certified or, at the very least, be required to keep records of organic foods prepared. A State commenter who stated that exemptions undermine audit trails and consumer confidence suggested that restaurants serving organic foods be required to maintain records showing the origin and certification status of raw agricultural ingredients used in the restaurant's food products.

The Department routinely monitors compliance of various food producers, handlers, distributors, and retailers which are regulated under a variety of Departmental programs. The Department responds to consumer complaints and often conducts unannounced compliance investigations and audits of agricultural industry businesses. The Department understands the need for and commits Departmental resources to this organic program. In addition, oversight of these operations can be conducted by State agencies.

Subpart C—Organic Crop, Wild Crop, Livestock, and Handling Requirements

Proposal Description

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).” The producer or handler of an organic production or handling operation must comply with all applicable provisions of subpart C. Any 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. 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. 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 measures to be taken to avoid contact between certified production and handling operations and prohibited substances and document how the operation will prevent commingling of organic and nonorganic products. 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, this proposal calls for the 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.

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. In response to several comments received, this proposal provides information, found in subpart B, § 205.103, on the records needed to establish a verifiable audit trail.

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 measures used 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. Requirements in the first proposal for information about the nonorganic portion of the operation have been removed.

We do not propose to list the specific requirements to be included in an organic system plan. We expect to publish a program manual to provide guidance on appropriate documentation for the certification process. In the meantime, 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 §§ 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. Crop nutrients must be budgeted and supplied through proper use of manure or other animal and plant materials, mined mineral substances, and other substances approved for use under these regulations. The producer must manage animal and plant waste 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. 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 waste materials used for soil fertility must be produced in compliance with the Natural Resources Conservation Service's (NRCS) Conservation Practice Standard for a Composting Facility (Code 317). Uncomposted plant and animal waste materials may be used to amend soil fertility. A plant or animal waste 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. Mined substances of low solubility may be used as sources of crop nutrients, as may mined substances of high solubility, when justified by soil or crop tissue analysis. 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. Synthetic crop nutrient supplements that appear on the National List of allowed synthetic substances may be used as a source of crop nutrients when justified by soil or crop tissue analysis. The producer may not use any fertilizer 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, except for trimmings of perennial crops burned to suppress the spread of disease, is prohibited.

The producer must use organically grown seeds, annual seedlings, and planting stock, except that untreated nonorganic seeds and planting stock may be used when equivalent organic varieties are not commercially available. Seed and planting stock treated with substances that appear on the National List of synthetic substances allowed for use in organic production 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. Seeds, annual seedlings, or planting stock produced through an excluded method may not be used for organic production.

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, nontoxic 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 producer evaluates and mitigates the effects of repetitive use of the same or similar materials on resistance and shifts in pest, weed, or disease types. The producer must use a pest, weed, or disease control substance in compliance with the Federal Insecticide, Fungicide, and Rodenticide Act. Pest control substances produced through excluded methods are prohibited.

Any wild crop that is to be sold, labeled, or represented as “100 percent organic,” “organic,” or “made with organic (specified ingredients)” must be harvested from land to which no prohibited substances have been applied for at least 3 years prior to harvest. 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.

We propose that any livestock or edible livestock product to be sold, labeled, or represented as organic must be maintained under continuous organic management from birth or hatching, with four 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. A nonedible livestock product must be derived from an animal that has been under continuous organic management beginning no later than 1 year prior to the harvest of the nonedible product. 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 pregnancy.

We also propose that, 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 birth may not be sold, labeled, or represented as organic slaughter stock. No organism produced with excluded methods may be used for breeding purposes or for the production of livestock products intended to be sold, labeled, or represented as organic. 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.

We are proposing that, except for feed additives and supplements included on the National List of synthetic substances allowed for use in organic livestock production, 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 organic feedstuffs, as well as vitamins, minerals, and other supplements, sufficient to meet the animals' nutritional requirements. 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 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.

We propose that 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 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

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