National Organic Program; Strengthening Organic Enforcement

Federal RegisterAug 5, 2020

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 205

[Document Number AMS-NOP-17-0065; NOP-17-02]

RIN 0581-AD09

National Organic Program; Strengthening Organic Enforcement

AGENCY:

Agricultural Marketing Service, USDA

ACTION:

Proposed rule.

SUMMARY:

The United States Department of Agriculture (USDA) Agricultural Marketing Service (AMS) proposes amending the USDA organic regulations to strengthen oversight and enforcement of the production, handling, and sale of organic agricultural products. The proposed amendments are intended to protect integrity in the organic supply chain and build consumer and industry trust in the USDA organic label by strengthening organic control systems, improving farm to market traceability, and providing robust enforcement of the USDA organic regulations. Topics addressed in this proposed rule include: Applicability of the regulations and exemptions from organic certification; National Organic Program Import Certificates; recordkeeping and product traceability; certifying agent personnel qualifications and training; standardized certificates of organic operation; unannounced on-site inspections of certified operations; oversight of certification activities; foreign conformity assessment systems; certification of grower group operations; labeling of nonretail containers; annual update requirements for certified operations; compliance and appeals processes; and calculating organic content of multi-ingredient products.

DATES:

Send comments on or before October 5, 2020.

ADDRESSES:

You may send comments on this proposed rule to the Federal eRulemaking Portal at

https://www.regulations.gov/.

You can access this proposed rule and instructions for submitting public comments by searching for document number, AMS-NOP-17-0065. Comments may also be sent to Jennifer Tucker, Deputy Administrator, National Organic Program, USDA-AMS-NOP, 1400 Independence Ave. SW, Room 2642-So., Ag Stop 0268, Washington, DC 20250-0268; (202) 260-9151 (Fax).

Instructions:

All comments received must include the docket number AMS-NOP-17-0065; NOP-17-02, and/or Regulatory Information Number (RIN) 0581-AD09 for this rulemaking. You should clearly indicate the topic and section number of this proposed rule to which your comment refers, state your position(s), offer any recommended language change(s), and include relevant information and data to support your position(s) (

e.g.,

scientific, environmental, manufacturing, industry, or industry impact information, etc.). All comments and relevant background documents posted to

https://www.regulations.gov

will include any personal information provided.

In addition to the questions following each topic in the

Overview of Proposed Amendments

section of this proposed rule, AMS is requesting comments on the following general topics:

1. The clarity of the proposed requirements. Can certified operations, handlers, and certifying agents readily determine how to comply with the proposed regulations?

2. The implementation timeframe. AMS is proposing that all requirements in this proposed rule be implemented within ten months of the effective date of the final rule (this is also one year after publication of the final rule).

3. The accuracy of the estimates in the Regulatory Impact Analysis and Regulatory Flexibility Analysis, which describe the expected costs of this proposed rule on all affected entities and on small businesses, respectively.

4. Are there alternatives to regulations, or less stringent requirements, that could achieve the same objectives as this proposed rule?

5. How will certifying agents cover the costs of additional actions required under this rule, such as the required unannounced inspections and the issuing of NOP Import Certificates? Will certifying agents charge fees that are consistent for expanded handlers, brokers, importers and exporters?

FOR FURTHER INFORMATION CONTACT:

Jennifer Tucker, Ph.D., Deputy Administrator, National Organic Program. Telephone: 202-720-3252. Email:

Jennifer.Tucker@usda.gov.

SUPPLEMENTARY INFORMATION:

Executive Summary

A. Purpose of the Proposed Rule

This proposed rule would amend several sections of the USDA organic regulations, 7 CFR part 205, to strengthen oversight of the production, handling, certification, marketing, and sale of organic agricultural products as established by the Organic Foods Production Act of 1990 (OFPA, or “the Act”).

If implemented, this proposed rule will improve organic integrity across the organic supply chain, and benefit stakeholders throughout the organic industry. The proposed amendments will close gaps in the current regulations to build consistent certification practices to deter and detect organic fraud, and improve transparency and product traceability. In addition, the proposed amendments will assure consumers that organic products meet a robust, consistent standard and reinforce the value of the organic label.

The Organic Foods Production Act of 1990, 7 U.S.C. 6501-6524, is the statute from which the Agricultural Marketing Service derives authority to administer the NOP, and authority to amend the regulations as described in this proposed rule. This document is available at:

https://uscode.house.gov/view.xhtml?path=/prelim@title7/chapter94&edition=prelim

The need for more consistent oversight to protect organic integrity is a product of the rapidly expanding organic market, increasingly complex organic supply chains, and price premiums for organic products. Total sales of organic agricultural products in the United States grew from $3.4 billion in 1997 to $55.1 billion in 2019.

This substantial market growth has allowed many additional types of business to participate in the organic supply chain, and organic agricultural products are now traded on a global scale. Today's global organic marketplace is marked by a multifaceted supply chain with organic products increasingly sold and handled by entities not regulated by the USDA. The absence of direct enforcement authority over some entities in the organic supply chain, in combination with price premiums for organic products, presents the opportunity and incentive for organic fraud, which has been discovered in the organic sector by both the National Organic Program (NOP) and organic stakeholders. The amendments in this proposed rule are designed to mitigate the occurrence of organic fraud.

Organic Trade Association, Organic Industry Survey, 2018-2020.

In response to their experiences in the organic system, stakeholders have repeatedly called for the NOP to take steps to improve oversight of organic systems and enforcement of the USDA organic regulations. Commonly cited areas for improvement include certification of excluded handlers, organic import oversight, fraud prevention, organic trade arrangements, and organic inspector qualifications. In addition, public discussions on many proposals included in this action occurred during multiple National

Organic Standards Board (NOSB) meetings.

The April 2019 NOSB meeting is the most recent example of a public discussion to address fraud concerns in the organic supply chain. A discussion document, meeting transcripts, and public comments are available at:

https://www.ams.usda.gov/event/national-organic-standards-board-nosb-meeting-seattle-wa.

The NOP identified the need for many of the proposed amendments as part of its direct experience in administering this program, particularly during complaint investigations and audits of certifying agents. Other proposed amendments are based on recent amendments to the OFPA included in the Agriculture Improvement Act of 2018;

the recommendations of a 2017 Office of Inspector General audit; the recommendations of a federal advisory committee, the NOSB; and industry stakeholder feedback. The amendments in this proposed rule are intended to: (1) Strengthen organic control systems; (2) improve organic import oversight; (3) clarify organic certification standards; and (4) enhance supply chain traceability.

The Agriculture Improvement Act of 2018 (Pub. L. 115-334), commonly known as the “2018 farm bill,” is available at

https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.

Organic certification is discussed in Title X, Section 10104.

B. Summary of Provisions

This proposed rule will strengthen enforcement of the USDA organic regulations through several actions mandated by the Agriculture Improvement Act of 2018:

1. Reduce the types of uncertified entities in the organic supply chain that operate without USDA oversight—including importers, brokers, and traders of organic products. This will safeguard organic product integrity and improve traceability.

2. Require the use of NOP Import Certificates, or equivalent data, for all organic products entering the United States. This proposed change will expand the use of NOP Import Certificates to all organic products imported into the United States, improving the oversight and traceability of imported organic products.

3. Clarify the NOP's authority to oversee certification activities, including the authority to act against an agent or office of a certifying agent. Additionally, certifying agents must notify the NOP upon opening a new office, which will allow the NOP to provide more effective and consistent oversight of certifying agents and their activities.

Additionally, this proposed rule includes several discretionary actions that work in alignment with the provisions above to further strengthen enforcement of the USDA organic regulations:

4. Clarify the labeling of nonretail containers used to ship or store organic products. Requiring additional information on nonretail containers will clearly identify organic products, reduce the mishandling of organic products, and support traceability. This is needed to maximize the linkage between operation certificates and import certificates and the organic product.

5. Specify the minimum number of unannounced inspections of certified operations that must be conducted annually by accredited certifying agents, and require that supply chain audits be completed during on-site inspections.

6. Require certifying agents to issue standardized certificates of organic operation generated from the USDA's Organic Integrity Database (INTEGRITY) and to keep accurate and current certified operation data in INTEGRITY. Standardization will simplify the verification of valid organic certificates and import certificates. It will also reduce reporting, by eliminating the need to provide notices of approval or denial of certification and annual lists of certified operations to USDA.

7. Clarify that certified operations only need to submit changes to their organic system plan during annual updates, and clarify that certifying agents must conduct annual inspections of certified operations. This will reduce paperwork burden for organic operations and ensure that all organic operations are inspected at least once a year.

8. Establish specific qualification and training requirements for certifying agent personnel, including inspectors and certification reviewers. Requiring that personnel meet minimum education and experience qualifications and requiring continuing education will ensure quality and consistency of certification activities performed by certifying agents.

9. Clarify conditions for establishing, evaluating, and terminating equivalence determinations with foreign government organic programs, based on an evaluation of their organic foreign conformity systems. This will ensure the compliance of organic products imported from countries that have organic equivalence determinations with the United States.

10. Clarify requirements to strengthen and streamline enforcement processes, specifically noting that the NOP may initiate enforcement action against any violator of the OFPA, including responsible parties; defining the term adverse action to clarify what actions may be appealed and by whom; and clarifying NOP's appeal procedures and options for alternative dispute resolution.

11. Specify certification requirements for grower group operations, to provide consistent, enforceable standards and ensure compliance with the USDA organic regulations. Grower group certification would be restricted to crop production and handling only, and would require the use of an internal control system to monitor compliance.

12. Clarify the method of calculating the percentage of organic ingredients in a multi-ingredient product to promote consistent interpretation and application of the regulation.

13. Require certified operations and certifying agents to develop improved recordkeeping, organic fraud prevention, and trace-back audit processes. Information sharing between certifying agents and documented organic fraud prevention procedures are also required.

C. Costs and Benefits

AMS estimates the following costs and benefits of this proposed rule:

Economic impact of SOE proposed rule

Annualized

Total

Costs

$7,205,815-$7,351,910

$65,629,941-$87,766,628

Benefits

$83,992,975-$86,874,833

$765,000,793-$1,037,106,112

Estimated 15-year annualized domestic costs for affected industry discounted at 3 and 7 percent.

Estimated total domestic costs for affected industry in Net Present Value discounted at 3 and 7 percent, 15 year.

Table of Contents

I. General Information

A. Does this proposed action apply to me?

II. Background

III. Overview of Proposed Amendments

1. Applicability and Exemptions From Certification

2. Imports to the United States

3. Labeling of Nonretail Containers

4. On-Site Inspections

5. Certificates of Organic Operation

6. Continuation of Certification

7. Paperwork Submissions to the Administrator

8. Personnel Training and Qualifications

9. Oversight of Certification Activities

10. Accepting Foreign Conformity Assessment Systems

11. Compliance—General

12. Noncompliance Procedure for Certified Operations

13. Mediation

14. Adverse Action Appeal Process—General

15. Adverse Action Appeal Process—Appeals

16. Grower Group Operations

17. Calculating the Percentage of Organically Produced Ingredients

18. Supply Chain Traceability and Organic Fraud Prevention

19. Technical Corrections

20. Additional Amendments Considered But Not Included in This Proposed Rule

IV. Statutory and Regulatory Authority

A. Summary of Economic Analyses

B. Executive Order 12988

C. Paperwork Reduction Act

D. Executive Order 13175

E. Civil Rights Impact Analysis

I. General Information

A. Does this proposed action apply to me?

You may be affected by this proposed action if you are engaged in the organic industry. Potentially affected entities may include, but are not limited to, the following:

• Individuals or business entities that are considering organic certification;

• Existing production and handling operations that are currently certified organic under the USDA organic regulations;

• Brokers, traders, and importers of organic products that are not currently certified under the USDA organic regulations;

• Operations that use non-retail containers for shipping or storing organic products;

• Retailers that sell organic products;

• Operations that receive or review organic certificates to verify compliance with USDA organic regulations;

• USDA-accredited certifying agents, inspectors, and reviewers;

• Operations that import organic products into the United States; and/or

• Operations that export organic products to the United States.

This listing is not intended to be exhaustive but identifies key entities likely to be affected by this proposed action. Other types of entities may also be affected. To determine whether you or your business may be affected by this proposed action, you should carefully examine the proposed regulatory text.

II. Background

The Organic Foods Production Act of 1990 (OFPA) (7 U.S.C. 6501-6524), authorizes the Agricultural Marketing Service (AMS) to establish and maintain national standards governing the marketing of organically produced agricultural products. AMS administers these standards through the National Organic Program (NOP). Final regulations implementing the NOP, also referred to as the USDA organic regulations, were published on December 21, 2000 (65 FR 80548) and became effective on October 21, 2002.

Through these regulations, AMS oversees national standards for the production, handling, labeling, and sale of organically produced agricultural products.

7 CFR part 205 National Organic Program; Final Rule. December 21, 2000. Available on the AMS website:

https://www.federalregister.gov/documents/2000/12/21/00-32257/national-organic-program.

Since full implementation of the USDA organic regulations, the organic industry has experienced significant change. Both demand for and sales of organic products have risen steadily; total U.S. sales of organic products reached more than $55 billion in 2019.

The number of businesses producing, handling, marketing, and selling organic products has also grown to meet consumer demand. Rapid growth has attracted many businesses to the USDA organic label and increased the complexity of the global organic supply chain.

Organic Trade Association, Organic Industry Survey, 2020.

AMS is confident in the integrity and value of the USDA organic seal. Consumers can trust the organic label due to a rigorous oversight system that operates globally. However, the growth and complexity of the modern organic industry has exposed the limitations of the current organic regulations, revealing gaps in oversight and enforcement that the original regulations do not address. A lack of clear and specific standards in portions of the regulations has sometimes led to different interpretations of the regulations, inconsistent practices, and unequal enforcement across the industry. Increasingly complex organic supply chains reduce transparency and complicate traceability, yet these elements are essential to trust in the organic label. In addition, businesses that operate in the organic supply chain without oversight from the NOP pose risks to organic integrity. This can lead to mishandling of organic product, loss of organic integrity, and fraud. The provisions in this proposed rule are designed to address these risks.

Complex Organic Supply Chains

The need for this proposed rule is driven partially by the increasing complexity of organic supply chains. When the organic regulations were published in 2000, organic products were marketed mostly locally or regionally, and supply chains tended to be short and transparent; for example, farm to wholesale to retail to consumer. Demand and sales have grown considerably since then. This significant market growth has attracted more producers, handlers, product suppliers, importers, brokers, distributors, and others to the organic market.

Consider the example of an organic egg supply chain in the United States, beginning with the production of certified organic corn and ending with the sale of eggs to the consumer. This demonstrates the typical entities and transactions in an organic supply chain under the existing regulations:

• A certified organic farm produces organic corn.

• The corn is transported via an uncertified truck to a local grain elevator, where it is aggregated with other organic corn from nearby producers.

• An uncertified commodity trader buys the corn.

• The corn is transported via uncertified truck to an uncertified storage facility; both transport and storage are subcontracted and are not owned by the commodity trader.

• The commodity trader sells the corn to a certified organic grain supplier; the two parties remain anonymous because they use an uncertified broker to facilitate the transaction.

• The corn is transported via uncertified rail and river barge to the grain supplier; it is transloaded and stored temporarily several times before being delivered to the certified grain supplier.

• The certified organic grain supplier stores the corn and combines it with imported organic corn purchased from an importer via an uncertified broker.

• The certified grain supplier sells the corn to a certified organic feed processer; the corn is transported via an uncertified truck.

• The certified processer combines the corn with several other ingredients to create organic chicken feed.

• The certified processer sells the feed to a certified organic egg producer and transports it via an uncertified truck.

• The certified organic egg producer sells organic eggs to an uncertified distributor.

• The uncertified distributor sells the organic eggs to a retailer prior to final sale to the consumer.

This is just one example of a complex organic supply chain. It becomes even more complex if one considers that the processer combines several ingredients into the final chicken feed, sourced both domestically and imported. Each ingredient has its own unique supply chain—and together they weave a complex and dense web converging on a single organic product.

Organic Fraud

The risk of organic fraud has grown due to high demand for organic products, the absence of direct enforcement authority over some entities in the organic supply chain, and price premiums for organic products. Both the NOP and organic stakeholders have uncovered organic fraud in the organic supply chain. The following examples highlight the extent and complexity of organic fraud in organic grain and oilseed supply chains.

Organic Grain and Oilseed Fraud in the United States

In recent years, the NOP has identified fraud in both domestic and foreign organic grain and oilseed supply chains. These supply chains are generally complex and involve multiple changes in product ownership, creating additional risk and opportunity for fraud. Demand for organic grain and oilseed (especially for organic livestock feed) currently exceeds domestic production. In 2019, a private organic outlook firm predicted a double-digit decline in domestic organic corn and soybean production. The shortage of domestic organic commodities, combined with a projected shrinking supply, increases the incentive for organic fraud. Federal investigations show that organic grain and oilseed fraud can lead to tens of millions of dollars in fraudulent sales within just a few months. Below are several examples which outline the different actors, market complexities, and indicators of an increase in fraud.

In 2019, the U.S. Attorney's office of Northern Iowa sentenced five individuals to prison for their role in an organic grain fraud ring. The lead defendant pled guilty to defrauding customers in a scheme involving at least $142 million in nonorganic grains sold as organic. The lead defendant sold fraudulent grain to customers over a period of seven years, claiming the product was organically grown in Nebraska and Missouri.

In February 2020, a federal grand jury indicted an individual in South Dakota for allegedly selling $71 million of nonorganic grains and oilseeds falsely labeled organic over five years. The fraud ring spanned multiple states. After the NOP revoked the organic business' organic certificates, the responsible parties established new brokerage firms to continue their fraud. Under the current organic regulations, these brokerages did not require organic certification; the NOP had no oversight of their activities. This proposed rule would require the certification and oversight of brokers like those involved in this case. This would allow the NOP to identify and prevent the fraud, minimizing damage to the U.S. market.

In addition to the examples above, the NOP continues to investigate multiple cases of organic grain and oilseed fraud at the production and handling levels. Continuing complaints of organic grain fraud received by the NOP demonstrate an ongoing need for stronger enforcement provisions to ensure integrity in organic supply chains.

Fraud Within Complex Supply Chains

Cases of organic fraud are often compounded by a complex supply chain. Uncertified entities acting within a complex supply chain can create significant oversight and enforcement challenges for both the NOP and accredited certifying agents. Recent fraud investigations have shown that the use of uncertified handlers can decrease the NOP's ability to prevent fraudulent grain sales in the organic market.

Fraudulent actors may obtain organic handler certification solely to take advantage of the regulatory exclusions at 7 CFR 205.101. Investigations have found fraudulent actors using these exclusions to funnel nonorganic feedstuffs through uncertified grain elevators. Because organic certifying agents sometimes consider elevators to be transportation, they are not required to obtain organic certification. In addition, because some grain elevators are not certified, the NOP cannot compel organic certifying agents to investigate the onsite activities at these elevators.

The above examples of actual fraud investigations demonstrate the complexity of organic supply chains, the certification status of the entities involved, and the transactions where fraud occurred. It is also useful to consider the types of entities involved:

• Certified organic farms thought to supply little or none of the feedstuffs later sold as organic.

• Uncertified farms supplying non-GMO feedstuffs to uncertified grain elevators.

• Uncertified grain elevators currently excluded from certification requirements.

• Certified handlers that brokered the sale of nonorganic feedstuffs through an uncertified elevator to certified buyers, falsifying paperwork to represent the products for sale as organic.

• Certified organic handlers that consolidated fraudulent products from previous handlers, thinking the product was organic.

• Certified feed mills that purchased the nonorganic feedstuffs believing the products were organic.

• Livestock and poultry operations that purchased feed rations from the mills and thus unknowingly fed nonorganic feed to their animals, which are required to eat a diet of 100% certified organic feed.

The proposed rule would require the certification of some types of currently uncertified entities, such as the grain elevators in this example. Organic certification would subject these entities to regular, systematic oversight from accredited certifying agents and allow the NOP to monitor these entities' activities through on-site investigations, ensuring faster detection and prevention of millions of dollars in organic fraud.

Terminology and Objectives

Throughout this proposed rule, AMS refers to four concepts—organic integrity, organic fraud, audit trails, and supply chain traceability—which are integral to the purpose of this proposed rule. AMS is explaining these concepts upfront to assist reader understanding:

These terms are explained only for use in this proposed rule and are not intended to represent any addition to 7 CFR part 205 or revision to the term

audit trail.

Organic integrity:

The unique attributes that make a product organic, and define its status as organic. A product that fully complies with the USDA organic regulations has integrity, and its organic qualities have not been compromised.

Organic fraud:

Intentional deception for illicit economic gain, where nonorganic products are labeled, sold, or represented as organic. This may include substitutions or deliberate mislabeling; falsified records; and/or false statements given in applications or

organic system plans, or during inspections, investigations, and audits.

Audit trail:

Documentation that is sufficient to determine the source, transfer of ownership, and transportation of any agricultural product labeled as “100 percent organic,” the organic ingredients of any agricultural product labeled as “organic” or “made with organic (specified ingredients)” or the organic ingredients of any agricultural product containing less than 70 percent organic ingredients identified as organic in an ingredients statement (7 CFR 205.2).

Supply chain traceability:

The ability to identify and track a product (including its location, history, and organic nature) along its entire supply chain, from source to consumption, and/or “backwards” from consumption to source. A supply chain audit assesses supply chain traceability for specific products, verifying whether records show all movement, transactions, custody, and activities involving the products.

The objective of this proposed rule is to strengthen enforcement of the USDA organic regulations and protect the integrity of the organic label by (1) strengthening organic control systems; (2) improving organic import oversight; (3) clarifying organic certification standards; and (4) enhancing supply chain traceability. AMS identified the need for these proposed changes from the following sources:

• Direct experience in administering the NOP, particularly complaint investigations and audits of accredited certifying agents;

• The Agriculture Improvement Act of 2018,

which amended the OFPA.

The Agriculture Improvement Act of 2018, Public Law 115-334, is available at:

https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.

• Recommendations of a 2017 Office of Inspector General report;

USDA Office of Inspector General Audit Report 01601-0001-21: National Organic Program International Trade Arrangements and Agreements. September 2017:

https://www.usda.gov/oig/webdocs/01601-0001-21.pdf.

• Recommendations of the NOP's federal advisory committee, the National Organic Standards Board (NOSB); and

• Industry stakeholder and consumer feedback.

If implemented, AMS expects the amendments proposed in this rule will bring more effective oversight and enforcement, improve organic integrity and product traceability, clarify existing standards to ensure fair competition, bolster consumer trust in the organic label, reduce organic fraud, and support continued industry growth. Information about each amendment is described in more detail below.

III. Overview of Proposed Amendments

1—Applicability and Exemptions From Certification

Section

Action

Proposed text

205.2

Revise

Handle.

To sell, process, or package agricultural products, including but not limited to trading, facilitating sale or trade, brokering, repackaging, labeling, combining, containerizing, storing, receiving, or loading.

205.2

Revise

Handler.

Any person engaged in the business of handling agricultural products.

205.2

Revise

Handling operation.

Any operation or portion of an operation that handles agricultural products, except for operations that are exempt from certification.

205.2

Revise

Retail operation.

An operation that sells agricultural products directly to final consumers through in-person and/or virtual transactions.

205.100(a)

Revise

Except for the exempt operations described in § 205.101, each operation, or portion of an operation, that produces or handles agricultural products that are intended to be sold, labeled, or represented as “100 percent organic,” “organic,” or “made with organic (specified ingredients or food group(s))” must be certified according to the provisions of subpart E of this part and must meet all other applicable requirements of this part.

205.101

Revise

Exemptions from certification.

205.101

Revise

The following operations in subparagraphs (a) through (e) of this section are exempt from certification under subpart E of this part and from submitting an organic system plan for acceptance or approval under § 205.201 but must comply with the applicable organic production and handling requirements of subpart C of this part, including the provisions for prevention of contact of organic products with prohibited substances set forth in § 205.272, and the specific additional requirements stipulated in § 205.101(a) through (f).

205.101(a)

Revise

A production or handling operation that sells agricultural products as “organic” but whose gross agricultural income from organic sales totals $5,000 or less annually. The products from such operations must not be used as ingredients identified as organic in processed products produced by another handling operation. Such operations must comply with the labeling provisions of § 205.310.

205.101(b)

Revise

A retail operation or a portion of a retail operation that sells, but does not process, organically produced agricultural products.

205.101(c)

Revise

A retail operation or portion of a retail operation that processes agricultural products that were previously labeled for retail sale as “100 percent organic,” “organic,” or “made with organic (specified ingredients or food group(s)),” provided that the products are processed onsite at the point of sale to the final consumer. Such operations must comply with the labeling provisions of § 205.310, and must maintain records sufficient to:

(1) Prove that agricultural products identified as organic were organically produced and handled; and

(2) Verify quantities produced or sold from such agricultural products.

205.101(d)

Add

A handling operation or portion of a handling operation that only handles agricultural products that contain less than 70 percent organic ingredients (as described in § 205.301(d)), or that only identifies organic ingredients on the information panel. Such operations must comply with the labeling provisions of §§ 205.305 and 205.310 and must maintain records sufficient to:

(1) Prove that agricultural products identified as organic were organically produced and handled; and

(2) Verify quantities produced or sold from such agricultural products.

205.101(e)

Add

An operation that only stores, receives, and/or loads agricultural products, but does not process or alter such agricultural products.

205.101(f)

Add

Records described in subparagraphs (a)-(d) of this section must be maintained for no less than 3 years beyond their creation, and the operations must allow representatives of the Secretary and the applicable State organic programs' governing State official access to these records for inspection and copying during normal business hours to determine compliance with the applicable regulations set forth in this part.

AMS proposes amending §§ 205.2 and 205.100-101 of the USDA organic regulations to clarify the applicability of the regulations and limit the types of operations excluded from organic certification in the global supply chain. This includes revising the definitions of

handle, handler,

handling operation,

and

retail food establishment.

The proposed amendments would require certification of operations that facilitate the sale or trade of organic products, including but not limited to brokers, importers, and traders.

In general, this proposed rule requires the certification of any handling operation whose activities may affect the organic status of agricultural products they handle or represent after production, as the products move from production source through a supply chain. The amendments also clearly specify which entities and activities are exempt from certification. Most notably, this includes exemptions for retail operations and entities that only store organic products; the current exclusions at § 205.101(b)(1) would be removed.

Authority

AMS' authority to modify §§ 205.2, 205.100, and 205.101 of 7 CFR is established in the OFPA. The statute allows AMS to “establish an organic certification program for producers and handlers of agricultural products” (7 U.S.C. 6503(a)) and “require such other terms and conditions as may be determined . . . necessary” (7 U.S.C. 6506(a)(11)). The OFPA and the USDA organic regulations state that any operation that produces or handles certified organic agricultural products is required to be certified (7 U.S.C. 6503 and 7 CFR 205.100). Additionally, the Agriculture Improvement Act of 2018 (the “2018 farm bill”) requires that the USDA “issue regulations to limit the type of organic operations that are excluded from certification under section 205.101” of the organic regulations.

See section 10104(a) of the Agriculture Improvement Act of 2018, Public Law 115-334, available at:

https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf

This proposed amendment clarifies the terms

handle, handler,

and

handling operation

to better align with the OFPA definition of

handle,

“to sell, process, or package agricultural products” (7 U.S.C. 6502(8)). Limiting handler exemptions is necessary to meet the basic purposes delineated in 7 U.S.C. 6501(2)-(3), “to assure consumers that organically produced products meet a consistent standard, and to facilitate interstate commerce in fresh and processed food that is organically produced.” As the current exclusions at § 205.101(b)(1) are no longer appropriate, AMS is exercising its authority, as mandated in the 2018 farm bill, to limit those exclusions in order to fully implement the national standards authorized by 7 U.S.C. 6504 and to ensure compliance with the OFPA and the USDA organic regulations.

History and Justification for Amendments

In addition to the 2018 farm bill, several factors compel regulatory changes to require the certification of many currently excluded operations. The present need for expanded oversight to protect organic integrity is primarily due to the emergence of complex global supply chains and business relationships, and price premiums for organic products. These factors present the opportunity and incentive for organic fraud, which has materialized in the organic sector, and which would be mitigated by reducing the types of entities excluded from certification.

Following full implementation of the NOP in 2002, AMS believed that organic product integrity would not be compromised or altered when handled by entities such as brokers, distributors, traders, storage professionals, receivers, and loaders. As such, these handlers were not required to be certified. At that time, marketing was mostly local or regional, and organic market sales totaled a fraction of today's figures. Additionally, the percentage of organic product handled by excluded entities was relatively low.

The organic market has grown considerably since the USDA organic regulations took effect in 2002. The Organic Trade Association reports that total U.S. organic sales grew from $3.4 billion in 1997 to $55.1 billion in 2019.

This significant market growth has created the opportunity for additional domestic and international producers, handlers, product suppliers, importers, brokers, distributors, and others to participate in the organic market. Interpretation of the current regulations has allowed many of these operations to remain uncertified. This has resulted in increased complexity of organic supply chains. Today's organic marketplace is marked by multifaceted supply chains with organic products increasingly coordinated by entities not regulated by the USDA, creating risks that could impact the integrity of organic products.

Organic Trade Association, Organic Industry Survey, 2018-2020.

Other contributors to risk include entities in the middle of supply chains that facilitate the sale or trade of organic products. These include domestic importers of products, brokers/traders, distributors, and other handlers who represent a link between certified parties. Although some of these handlers voluntarily seek certification, the current organic regulations do not require their certification. Handlers are responsible for the integrity of the organic products they handle, even if they never take ownership or possession of a product, because they frequently make decisions impacting the integrity of organic products. For example, they may file import and export permits; arrange sales to both certified and uncertified entities; and comply with

mandatory import conditions such as fumigation or irradiation. The current lack of certification requirements for excluded handlers can negatively affect the organic status of products, and reduce the availability of auditable records needed to assess organic status.

The evolution of the organic industry has made clear that the current terms

handle, handler,

and

handling operation,

as defined at § 205.2 of the organic regulations, no longer adequately represent the full scope of organic supply chains. The allowance of uncertified handlers creates gaps in the organic supply chain, breaking chains of custody and complicating the verification of product origin. Expanding organic certification to cover a wider range of handling operations is critical to supply chain traceability. It would make more parties visible and accountable, require the generation and maintenance of auditable records, and improve the usefulness of audit trails and product verification. The NOP believes improved supply chain traceability is critical to the continuing success of the program and its ability to ensure the integrity of organic products. Supply chain traceability is discussed in more detail later in this proposed rule.

Previous Actions by AMS, the NOSB, and Stakeholders

In 2010, the NOSB provided AMS recommendations to address the risks to organic integrity created by handler exclusions.

The NOSB determined that handlers of unpackaged bulk agricultural products should not be excluded from certification and requested that the NOP define the scope of handling activities addressed by § 205.101(b) of the organic regulations. In 2014, the NOP issued guidance on the certification requirements for handling unpackaged organic products (NOP 5031)

and provided clarification about the circumstances under which a handling operation is excluded from certification requirements. This guidance was based upon both the 2010 NOSB recommendations and the findings of two Office of Inspector General audits of the NOP's oversight of organic milk.

Because the guidance in NOP 5031 only addresses handlers of unpackaged organic products, it has not eliminated the audit trail gaps that prevent full product traceability from farm gate to consumer. Furthermore, NOP 5031 has not been consistently implemented by certifying agents, particularly with respect to less-typical handling activities (

e.g.,

auguring commodities from vessels to rail cars at ports).

NOSB Formal Recommendation: Clarifying the Limits of 205.101(b), October 28, 2010:

https://www.ams.usda.gov/sites/default/files/media/NOP%20CACC%20Final%20Rec%20Clarifying%20the%20Limitations.pdf.

NOP 5031—Guidance, Certification Requirements for Handling Unpackaged Organic Products, January 22, 2014:

https://www.ams.usda.gov/sites/default/files/media/5031.pdf.

USDA Office of Inspector General Audit Report 01601-0001-Te: National Organic Program—Organic Milk, February 2012:

https://www.usda.gov/oig/webdocs/01601-0001-Te.pdf.

Clarification of Applicability

The proposed rule clarifies the applicability of the regulations by revising § 205.100 and the definitions of

handle, handler,

and

handling operation.

These proposed revisions clearly state which entities, operations, and activities require certification under the USDA organic regulations. Specifically, the proposed rule revises the definition of

handle

by including additional activities, most notably trading, brokering, and facilitating sale or trade. The revised definition of

handle

reflects the broad range of handling activities that take place in the modern organic industry, and can be generally described to include activities that affect the organic status or ownership of an agricultural product after production as it moves from production source through a supply chain.

Unless specifically exempted from certification, as discussed in a later section, any person or operation that conducts activities described in the revised definition of

handle

would need to be certified and comply with all applicable requirements for handlers. This would require the certification of certain types of excluded handlers that currently operate without regular systematic oversight from the USDA, most notably intermediate market actors such as brokers, traders, and importers. Certified organic products that are handled by an uncertified, non-exempt operation at any point in the supply chain will lose their certified organic status and may no longer be sold, labeled, or represented as organic. In turn, certified organic operations that receive products from uncertified, non-exempt handlers and subsequently label the products as organic, use as feed for organic livestock, or use as ingredients for organic products are in violation of USDA organic regulations, and may be subject to proposed suspension or revocation of certification and possible civil penalties.

The proposed rule also modifies the definitions of

handler

and

handling operation

to include any person or operation that handles agricultural products. This includes handling operations such as importers, brokers, and traders. Accountability from these operations is required to maintain the integrity of organic products. Even if these operations do not take physical possession or ownership of the product they represent, their decisions affect the status of organic products; the operation's records are essential to demonstrate a product's compliance at that point in the supply chain. For example, uncertified brokers may receive notices of organic products being treated with substances prohibited for use on organic products, but might not provide those notices to certified importers or accredited certifying agents. Such critical breaks in the audit trail could allow products to be sold as organic, after being treated with substances prohibited for use on organic products.

Similarly, uncertified storage facilities may store and split or combine lots and loads. Certifying agents and certified importers may not be informed of the full range of activities conducted at such facilities; however, handlers at these locations have a critical role in maintaining the integrity and traceability of organic products. For this reason, the proposed rule would require the certification of these types of handlers.

Finally, because uncertified handlers are not required to maintain auditable records for five years, sales or transit records might not be available for inspection by the USDA or certifying agents. The U.S. Government has limited ability to obtain records from foreign businesses who are not certified to the USDA regulations. The current exclusion of these brokers from organic certification creates risks for organic integrity when they facilitate the sale of USDA-organic products produced overseas, prior to export to the United States.

Clarification of Exemptions From Certification

In addition to clearly stating who requires organic certification, the proposed rule also describes the activities that would not require certification to produce, handle, or sell organic agricultural products. The proposed rule modifies § 205.101 by renaming the section “Exemptions from certification,” eliminating the exclusions currently listed at § 205.101(b), and listing in revised § 205.101 all operations that are exempt from organic certification. Eliminating reference to exclusion and excluded

operations, and categorizing as exempt those operations that do not require organic certification, will reduce confusion and misinterpretation about who needs to be certified.

Although they do not require certification, exempt operations must comply with portions of the organic regulations. Exempt operations that are producing or handling organic products are responsible for maintaining organic integrity and must follow the production and handling requirements of the organic regulations that relate to their activities. Stakeholders have expressed concern about the clarity and consistent implementation of these requirements. The proposed rule addresses this concern by clearly stating what requirements each exempt operation must follow. In general, all exempt operations must follow the applicable organic production and handling requirements of subpart C of the regulations, including the provisions for prevention of contact of organic products with prohibited substances (§ 205.272). In addition, specific additional requirements are included for some exemptions, and recordkeeping requirements are explained in revised § 205.101.

Exemptions Retained by the Proposed Rule

The current exemption for operations with $5,000 or less in annual income from organic sales is retained at revised § 205.101(a). To ensure the integrity of organic products, these operations are required to comply with the provisions for the prevention of contact of organic products with prohibited substances (§ 205.272) and the labeling provisions of § 205.310. The current exemptions for operations that handle products with less than 70 percent organic ingredients and operations that only identify organic ingredients on product labels are also retained at new § 205.101(d). These exempt handlers are required to comply with the labeling requirements of §§ 205.305 and 205.310, the comingling requirements of § 205.272, and must maintain records that (1) prove that agricultural products identified as organic were organically produced and handled, and (2) verify quantities produced or sold from such agricultural products.

Exclusions Removed From the Proposed Rule

The current exclusion at § 205.101(b)(1), for operations that only handle packaged organic products, is omitted from the proposed rule. This amendment will improve traceability of organic products through the supply chain and reduce the potential mishandling of packaged organic products by uncertified operations. This modification also addresses many stakeholders' request that everyone in the supply chain producing or handling organic products must be certified, with very limited exceptions. Requiring certification of additional types of handling operations, including those previously excluded by the “packaged product” condition, would substantially enhance the integrity of organic products by eliminating record gaps in the supply chain and enabling more complete audit trails. Expanded certification also would reduce the risk of exposure of packaged organic products to prohibited methods such as ionizing radiation and fumigation with prohibited materials, processes that may compromise the product's organic status.

Clarification of the Retail Operation Exemption

The proposed rule renames the term

retail food establishment

retail operation

and expands the definition to include current modes of direct-to-consumer sales that commonly occur in the modern marketplace. The term

retail operation

is defined as an operation that sells agricultural products directly to final consumers through in-person and/or virtual transactions. This amended term is required to capture the full range of direct-to-consumer sales that may occur in the current era of electronic and internet commerce. “Virtual transaction” is used to describe any form of transaction that does not occur in person (

e.g.,

telephone, mail-order, and/or online sales). Additionally, expanding the term to include food and other agricultural products is necessary to reflect the full range of certified organic products that may be sold directly to consumers in today's retail marketplace. Examples of retail operations include but are not limited to restaurants, delicatessens, bakeries, grocery stores, or any retail business with a restaurant, delicatessen, bakery, salad bar, bulk food self-service stations (

e.g.,

grains, nuts), or other eat-in, carry-out, mail-order, or delivery service of raw or processed agricultural products.

The OFPA excludes final retailers that do not process agricultural products from the definition of “handler” and “handling operation.” (7 U.S.C. 6502). Therefore, these types of retailers are not required to be certified in order to sell organic products. In the proposed rule, AMS is modifying and expanding the current provision in the USDA organic regulations which permits retailers that process raw and ready-to-eat agricultural products to sell, label, or represent these products as organic. In the future, under its existing authority, AMS could consider requirements for the certification of retailers that process agricultural products intended to be sold, labeled, or represented as organic. We are retaining the exemption from certification for retailers that process unless and until we have more input from stakeholders on the need for and impact of removing this exemption and recommended standards for retailers.

The proposed rule would exempt retail operations from certification, including retail operations that sell, but do not process, organic agricultural products (proposed § 205.101(b)), and retail operations that process agricultural products previously labeled for retail sale as organic (proposed § 205.101(c)). These exemptions are very similar to the current exemption and exclusion for retail food establishments at current §§ 205.101(a)(2) and (b)(2). To qualify for the exemption at proposed § 205.101(c), any processing of organic products performed by a retail operation must occur in connection with the direct sale to the final consumer. This means that the products must be processed and sold in the same physical location. An operation processing a product for sale at another site would require certification. This would include retailers that sell virtually; the organic products which they sell, label or represent as organic must have been produced and processed by certified operations.

Retail operations may present risks to organic integrity. For example, a grocery store may accidentally mix or combine organic and nonorganic produce of the same type, or they may unintentionally place an organic label on a shelf that holds nonorganic products. Further, storing organic produce in a container that was previously used for nonorganic produce without first cleaning the container may expose the organic produce to a prohibited pesticide. Therefore, all exempt retail operations must comply with the requirements of § 205.272, which describe handling requirements to prevent comingling and contact with prohibited substances. Additionally, exempt retail operations that process organic products must follow the labeling provisions of § 205.310, and maintain records to (1) demonstrate that agricultural products identified as organic were organically produced and handled; and (2) verify quantities received, sold, or produced from such agricultural products. Following these requirements will help maintain organic integrity, even in the absence of certification.

Exemption for Storage of Organic Agricultural Products

There are many operations that store organic products; however, these operations are generally considered low-risk because of the type of activities they perform and because they may be identified in the organic system plan of a certified operation. Given that these operations are lower-risk and are subject to oversight by certified handlers in adjacent segments of the supply chain, AMS proposes exempting from organic certification operations that only store agricultural products, but do not process or alter such agricultural products (proposed § 205.101(e)).

This approach is consistent with risk-based oversight models.

Processing,

as defined by 7 CFR 205.2, includes “packaging. . .or otherwise enclosing food in a container.”

This exemption would apply to warehouses, storage facilities, and other operations whose only function is the temporary holding or storage of organic products, and the associated receiving and loading of organic products. An operation that processes or alters the organic products they store would not qualify for the exemption and must be certified. Storage operations claiming this exemption must not label/relabel, combine, split, containerize, pack/repack, treat, sort, open, enclose, or otherwise alter the organic products they handle. Like other exempt operations, the proposed rule would require storage operations exempted at proposed § 205.101(e) to comply with the requirements of § 205.272 for the prevention of commingling and contact with prohibited substances.

Transport of Organic Agricultural Products

Like storage, transport also qualifies as a low-risk activity and may be identified in the organic system plan of a certified handler. Because transport alone is not a handling activity (see 7 U.S.C. 6502(8) and 7 CFR 205.2), operations that only transport organic products are not required to be certified. Certifying agents have expressed confusion about which activities constitute transport versus which activities qualify as handling and, thus, require certification. Transport commonly refers to the movement of products in commerce; any activity that alters an agricultural product during transport would qualify as handling, and would require certification. Other activities that could occur adjacent to transport include, for example, combining, splitting, containerizing, packing/repacking, treating, sorting, opening, enclosing, or labeling/relabeling. These activities are handling and would require certification. Permitted activity that does not require certification would be restricted to movement of agricultural products only.

Certified Operations' Verification and Recordkeeping Responsibilities

The exempt activities described in this proposed rule present relatively low risk to organic integrity; however, exempted operations are not without risk. To address this risk, AMS proposes that certified operations include in their organic system plans monitoring practices and procedures to verify their supply chains and the organic status of products they receive (see proposed amendments to § 205.201 and discussion on Supply Chain Traceability and Fraud Prevention later in this proposed rule). This includes verifying the organic status of products that are handled by exempt operations in a supply chain. Certified operations should carefully review the practices and records of operations in their supply chain, including transportation and storage operations. Certified operations that load/sell/export organic products and certified operations that receive/purchase/import organic products are ultimately responsible for verifying that organic status has not been compromised during transport or storage.

In addition to procedures in an organic system plan, certified operations must also maintain records to support the verification of organic integrity and facilitate supply chain audits. The current organic regulations at § 205.103 state that certified operations “must maintain records concerning the production, harvesting, and handling” of their products. Certified operations must keep records of these activities to “Fully disclose all activities and transactions of the certified operation in sufficient detail” to “demonstrate compliance with the Act and the regulations.” Therefore, to demonstrate compliance, certified operations must maintain records of products that were handled by operations in their supply chain, including transportation and storage operations.

7 U.S.C. 6519(a)(1) “. . .each person who sells, labels, or represents any agricultural product as having been produced or handled using organic methods shall make available. . .all records associated with the agricultural product.”

As a best practice, records covering these types of handling activities should (1) demonstrate that the organic integrity of the product is maintained during transport and/or storage, and (2) verify both the quantities and the organic status of the product being transported and/or stored. Records could include clean truck affidavits; records of cleaning and sanitizing materials, and procedures used to clean trucks; bills of lading, manifests, transaction certificates, shipping records, delivery records, invoices, lot numbers, and other audit trail documents; and records documenting the audit trail, chain of custody, tanker seals, wash tags, truck and trailer numbers. Records such as these can be used by a certified operation to verify that organic products are properly handled by exempt transport or storage operations. Records can also be used for traceability, both by certified operations to verify the source of a product they receive, and by certifying agents to verify the origin of a product during a trace-back audit.

These recordkeeping requirements will ensure that certified operations maintain documents to demonstrate that the organic integrity of products is not compromised during transport and/or storage. Additionally, records will show the quantities of organic products transported and/or stored, and facilitate certifying agents in performing trace-back and mass-balance audits through a supply chain. Clarifying what activities that are exempt from certification—and clarifying recordkeeping responsibility—will enhance accountability for the integrity of both domestic and imported organic products by bolstering the NOP's oversight of handlers that affect the status of organic products.

Request for Comment

AMS seeks comment regarding the proposed amendments to §§ 205.2 and 205.100-101 discussed above, including answers to the following questions:

1. Are there additional activities that should be included in the proposed definition of

handle

(

i.e.,

are there additional activities that require certification)? Are there any activities in the proposed definition of

handle

that should be exempt from certification?

2. Are there specific activities not included in the proposed rule that you believe should be exempt from organic certification?

3. Are there additional requirements that exempt handlers described in this proposed rule should follow?

4. Activities at ports may present a threat to the integrity of organic products due to the multiple types of handling activities performed in these locations. It is common for independent operations to perform specific physical handling activities within a port (

e.g.,

loading, unloading, or transfer of

packaged, unpackaged, or bulk organic product). The proposed rule would require certification of these operations, who are often contractors. What other activities performed at ports should require certification and why?

2—Imports to the United States

Section

Action

Proposed text

205.2

Add new term

Organic exporter.

The owner or final exporter of the organic product who facilitates the trade of, consigns, or arranges for the transport/shipping of the organic product from a foreign country.

205.2

Add new term

Organic importer of record.

The operation responsible for accepting imported organic products within the United States.

205.273

Add new section

Imports to the United States.

205.273

Add

Each shipment of organic products imported into the United States through U.S. Ports of Entry must be certified pursuant to subpart E of this part, labeled pursuant to subpart D of this part, be declared as organic to U.S. Customs and Border Protection, and be associated with a valid NOP Import Certificate (Form NOP 2110-1) or equivalent data source.

205.273(a)

Add

Persons exporting organic products to the United States must request an NOP Import Certificate, or provide data through an equivalent data source, from a certifying agent, for each physical shipment of certified organic products prior to their export. Only certifying agents accredited by the USDA or foreign certifying agents authorized under an organic trade arrangement may issue an NOP Import Certificate or approve a listing in an equivalent data source (e.g., a third-party export system).

205.273(b)

Add

The certifying agent must review an NOP Import Certificate request, determine whether the shipment complies with the USDA organic regulations, and issue the NOP Import Certificate or equivalent within 30 calendar days of receipt if the shipment complies with the USDA organic regulations.

205.273(c)

Add

Each compliant organic shipment must be declared as organic to U.S. Customs and Border Protection through a U.S. Port of Entry by uploading the unique NOP Import Certificate, or equivalent electronic data entry, into the U.S. Customs and Border Protection's Automated Commercial Environment system.

205.273(d)

Add

Upon receiving a shipment with organic products, the organic importer of record must ensure the shipment is accompanied by a verified NOP Import Certificate or equivalent; must verify that the shipment contains only the quantity and type of certified organic product specified on the NOP Import Certificate or equivalent; and must verify that the shipment has had no contact with prohibited substances pursuant to § 205.272 or exposure to ionizing radiation pursuant to § 205.105, since export.

205.273(e)

Add

The use of the term equivalent in this section refers to electronic data, documents, identification numbers, databases, or other systems verified as an equivalent data source to the NOP Import Certificate.

205.300(c)

Revise

Products produced in a foreign country and exported for sale in the United States must be certified pursuant to subpart E of this part, labeled pursuant to this subpart D, and must comply with the requirements in § 205.273, Imports to the United States.

AMS proposes amending the USDA organic regulations by adding a new section (205.273) discussing the use of the National Organic Program Import Certificate (“NOP Import Certificate”). Currently, NOP Import Certificates are only required for organic products imported from a country that the NOP has determined uses an equivalent system of organic certification,

e.g.,

NOP Import Certificates are currently used for imports from the European Union, Switzerland, Japan, and South Korea. This proposed rule would require that any organic agricultural product imported to the United States be associated with a valid NOP Import Certificate or equivalent data source. The use of the term “equivalent” in this section refers to data and systems that are created, issued, or used by the United States or foreign governments to share trade-related information. Allowing for equivalent data and systems that harmonize with U.S. Government trade systems allows for the future development of interoperable import and export systems that facilitate information exchange between governments or authorized entities.

What is an NOP import certificate?

The NOP Import Certificate, or equivalent, is a type of transaction certificate, or equivalent data source, that contains detailed information about the quantity and origin of organic product being imported into the United States. The purpose of the NOP Import Certificate is to document the organic status and quantity of a specific physical shipment of imported organic products. The NOP Import Certificate is associated with a specific shipment of imported organic products as it travels from a certified organic exporter in a foreign country to a certified organic importer in the United States. The NOP Import Certificate is used to ensure a smooth, auditable business transaction by documenting that the products in the shipment are organic and may be sold, represented, and distributed as organic within the United States.

NOP Import Certificates are currently used for organic products imported from countries that the NOP has determined to be equivalent (OMB Approval No. 1651-0022). The USDA has established equivalency with Canada, the European Union, Switzerland, Japan, South Korea, Taiwan, and the United Kingdom.

Organic imports from Canada are accompanied by an attestation statement that the products comply with the terms of the United States-Canada Organic Equivalency Arrangement. Organic imports from the European Union, Switzerland, Japan, South Korea, Taiwan, and the United Kingdom are accompanied by an NOP Import Certificate. The certifying agent evaluates the request for an NOP Import Certificate, and upon verification of the organic shipment, completes and issues an NOP Import Certificate. Form NOP 2110-1 (OMB Control Number 0581-0191) is currently used for this purpose.

The United States-United Kingdom equivalency will be effective in January 2021.

AMS does not currently require NOP Import Certificates for organic imports from countries that the United States does not have organic equivalency with. This proposed rule would expand and make compulsory the use of NOP Import Certificates, regardless of an imported product's country of origin. Specifically, this proposed rule would require that all imported products intended to be sold, represented, or labeled as organic in the United States must be declared as organic to U.S. Customs and Border Protection (CBP), and that each physical shipment passing through a U.S. Port of Entry must be associated with an NOP Import Certificate, or equivalent data source. Requiring an NOP Import Certificate provides trackable and auditable verification that a specific shipment of imported organic products complies with the USDA organic regulations. It will also support investigations if noncompliant products are exported and misrepresented as organic for sale in the United States.

Authority and Justification for the Mandatory Use of NOP Import Certificates

The mandatory use of NOP Import Certificates is authorized by the OFPA, as amended by the Agriculture Improvement Act of 2018.

The OFPA specifies what information an NOP Import Certificate must include (7 U.S.C. 6502(13)), and also stipulates that the NOP Import Certificate must “be available as an electronic record” and captured in a tracking system maintained by the U.S. Government (7 U.S.C. 6514(d)). The OFPA also provides the Secretary with broad authority to establish appropriate and adequate enforcement procedures and any other requirements that the Secretary may determine to be necessary (7 U.S.C. 6506).

See sections 10104(b)(3) and 10104(c) of the Agriculture Improvement Act of 2018, Public Law No: 115-334. Available at:

https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.

Both the OFPA and the USDA organic regulations require certified operations to maintain and make available to the Secretary records concerning the production, harvesting, and handling of agricultural products that are or that are intended to be sold, labeled, or represented as organic (7 U.S.C. 6519, 7 CFR 205.103, and 7 CFR 205.400(d)). This includes sufficient records to provide an audit trail to determine the source, type and quantity, transfer of ownership, and transportation of any agricultural product labeled as organic (7 CFR 205.2). Likewise, both the OFPA and the USDA organic regulations require certifying agents to maintain and make available to the Secretary records concerning its activities (7 U.S.C. 6519, 7 CFR 205.501(a)(9), 7 CFR 205.510(b)).

NOP Import Certificate Format and Tracking System

AMS proposes that NOP Import Certificates must be provided in a standardized electronic format to ensure consistency. AMS anticipates that Form NOP 2110-1, or an electronic equivalent that provides the same data, will serve this purpose, because it includes fields for the information needed to meet the requirements of an NOP Import Certificate as defined in the OFPA: Origin; destination; the certifying agent issuing the NOP Import Certificate; harmonized tariff code, when applicable; total weight; and the organic standard the product was certified to (7 U.S.C. 6502(13)). For the purposes of uploading and tracking NOP Import Certificates, Form 2110-1 must be available as an electronic format to meet the requirements of the OFPA (7 U.S.C. 6514(d)(1)).

The OFPA, as amended by the 2018 farm bill, also states that AMS must establish a system of tracking NOP Import Certificates, and that AMS “may integrate the system into any existing information tracking systems for imports of agricultural products” (7 U.S.C. 6514(d) and 6522(c)).

Because the OFPA enables AMS to access information available in CBP's Automated Commercial Environment system (ACE) (7 U.S.C. 6521(c)), AMS expects that ACE will be used to track and store NOP Import Certificates, or equivalent electronic data.

ACE is an automated and electronic system for processing commercial trade data. ACE is the primary system through which the global trade community files information about imports and exports so that admissibility into the United States may be determined by government agencies (including AMS) to ensure compliance.

See section 10104(c) of the Agriculture Improvement Act of 2018, Public Law No: 115-334. Available at:

https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.

See sections 10104(h) and (j) of the Agriculture Improvement Act of 2018, Public Law No: 115-334. Available at:

https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.

Use of the NOP Import Certificate

The proposed rule includes two new terms,

organic exporter

and

organic importer of record,

that describe businesses that facilitate the international trade of organic products. An

organic exporter

is responsible for facilitating the trading, selling, consigning, shipping or exporting of organic product from a foreign country to the United States. An organic exporter must be certified organic by certifying agents accredited by the USDA or certifying agents authorized by a trade arrangement, and must maintain records required under § 205.103. Organic exporters may be the final physical handler of organic products within a foreign country or they may be the entities that facilitate, sell, or arrange the sale of organic products shipped to the United States.

organic importer of record

is the entity responsible for receiving organic products within the United States. An organic importer of record must be certified and must maintain records required under 7 CFR 205.103. The proposed rule would specify that there is a consistent party, the organic importer of record, that is responsible for ensuring the compliance of organic agricultural products imported into the United States.

This proposed rule would require that a certified organic exporter sending organic products to the United States request an NOP Import Certificate, or equivalent, from their certifying agent for the organic products intended for export. As discussed in the proposed amendments to the USDA organic regulation at § 205.2, Terms defined, and § 205.101, Exemptions from certification, entities that facilitate the sale of organic products and arrange for the transport of organic products into the United States (

e.g.,

organic exporters) would need to be certified. The request for an NOP Import Certificate must include information required for the organic exporter's certifying agent to complete the NOP Import Certificate or equivalent.

The organic exporter's certifying agent would issue the NOP Import Certificate, or equivalent, provided it has verified that the shipment complies with the USDA organic regulations or an equivalent standard. This means that: (1) The information submitted on the NOP Import Certificate, or equivalent, is accurate, including confirmation of the organic status of each product listed on the NOP Import Certificate; and (2) the final handler has the capacity to produce or handle the quantity of organic product to be exported. The final handler would typically be the exporter or the last handler that processed the product. Verifying that the product complies with the organic standards includes, but is not limited to, verifying that the import has not been exposed to a prohibited substance, treated with a prohibited substance as a

result of fumigation or treated with ionizing radiation at any point in the products' movements across country borders.

Upon receiving a shipment, an organic importer of record must verify that the organic product(s) comply with the USDA organic regulations. This includes, but is not limited to, verifying that the import has not been treated with a prohibited substance as a result of fumigation or treated with ionizing radiation at any point in the products' movements across country borders.

Both the organic exporter and organic importer of record must maintain records of NOP Import Certificates, and these records must be available for inspection by the NOP and certifying agents in accordance with § 205.103.

Only certifying agents accredited by the USDA, or foreign certifying agents authorized by a trade arrangement, may prepare and issue an NOP Import Certificate or equivalent. Once completed by the certifying agent, an NOP Import Certificate or equivalent is provided to the organic exporter, and the organic exporter must provide the data associated with the NOP Import Certificate to CBP by uploading the data into the ACE system as an electronic record.

An NOP Import Certificate, or equivalent, would also require use of the 10-digit NOP operation ID, or equivalent ID, name, and address of the organic importer of record in the United States, and the 10-digit NOP operation ID, or equivalent ID issued by a foreign certifying agent authorized under a trade arrangement, for the organic exporter of the product to be exported to the United States. The NOP Operation ID, or an equivalent ID, is a critical piece of data because it is a unique number generated in the Organic INTEGRITY Database for certifying agents accredited by the USDA, or in an equivalent system for foreign certifying agents authorized under a trade arrangement. This unique ID for each certified operation will link the exported organic product to the organic importer of record in the United States. This will strengthen the audit trail by ensuring that handlers on both sides of the transaction are known to Federal agents and can be linked when an organic product is imported into the United States.

AMS acknowledges the concern that using NOP Import Certificates may slow the importation of organic product. Therefore, AMS is requiring that organic imports that pass through U.S. Ports of Entry be associated with, but not accompanied by, an NOP Import Certificate. This means that a shipment containing organic products may enter the United States without an NOP Import Certificate at the time of entry. However, the NOP Import Certificate, or equivalent data, must be uploaded into the ACE system within 10 calendar days of the shipment entering the United States. This is consistent with existing trade filing timeframes in ACE using the Entry Summary process.

AMS expects that this 10-day timeframe will result in little to no impact to the timely importation of organic products. Regardless of when an NOP Import Certificate is completed, the organic exporter and organic importer of record are fully accountable for the compliance of the imported product(s).

CBP Form 7501: Entry Summary. Available on the U.S. Customs and Border Protection website:

https://www.cbp.gov/trade/programs-administration/entry-summary/cbp-form-7501.

Cooperation With U.S. Customs and Border Protection

The OFPA, as amended by the Agriculture Improvement Act of 2018, requires the establishment of an Organic Agricultural Product Imports Interagency Working Group, consisting of members of both the USDA and CBP (see 7 U.S.C. 6521a).

The mandatory use of NOP Import Certificates supports the working group's goal to ensure the compliance of organic agricultural products imported to the United States, and builds upon ongoing cooperation between the USDA and CBP.

See section 10104(i) of the Agriculture Improvement Act of 2018, Public Law No: 115-334. Available at:

https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.

AMS is working with CBP to verify that shipments of imported organic products are associated with unique NOP Import Certificates. In April 2020, the electronic version of the NOP Import Certificate (or “message set”) was deployed in ACE as an optional filing step for organic imports. The use of the electronic NOP Import Certificate will be mandatory when the SOE final rule is implemented.

AMS expects some of the information collected via the NOP Import Certificate may be modified. In addition to the NOP Operation ID mentioned above, AMS is considering adding fields for the U.S. Customs Entry Number and the Purchase Order (PO) number to assist with tracking organic imports.

Other fields may be eliminated to avoid collecting duplicate information already collected through the ACE database.

Once established, the availability of the electronic NOP Import Certificate in ACE would notify CBP officials of organic shipments and provide AMS with more data to identify specific shipments of organic imports.

Alignment With Other Supply Chain Traceability Norms

One of the goals of this action is to harmonize USDA regulatory requirements for importing organic products with international guidelines and norms. NOP considered international standards established by the Codex Alimentarius Commission (Codex)

and norms published by the International Federation of Organic Agriculture Movements (IFOAM).

Both provide for and support the use of transaction shipment certificates such as the NOP Import Certificate.

Section 7 of the Codex

Guidelines for the Production, Processing, Labelling and Marketing of Organically Produced Foods

recommends imported organic products to be marketed only where the competent authority or designated body in the exporting country has issued a certificate of inspection stating that the lot designated in the certificate was obtained within an organic system of production, preparation, marketing and inspection.

IFOAM Norms define a transaction certificate as a “document issued by a certification body or by the operator, declaring that a specified lot or consignment of goods is certified.”

Future Harmonization With Sanitary and Phytosanitary Data Systems

Further, the use of health certificates, sanitary certificates, phytosanitary certificates, and other regulatory requirements in place to contain certain plant and animal pests or diseases may offer a possible resource for the NOP and other government agencies to document the movement of organic products across national borders. Over time, it is expected that the United States and foreign countries will automate and harmonize systems to support the more seamless exchange of electronic import and export data in organic trade. AMS will continue to work to improve, adapt to, and support seamless electronic paperless supply chain traceability and transparency using the International Trade Data System (ITDS) and other technologies as they evolve.

Request for Comment

AMS seeks comment regarding the use of NOP Import Certificates discussed in this proposed rule, including answers to the following questions:

1. Is the 30-day timeframe for certifying agents to review and issue an NOP Import Certificate appropriate? Why or why not?

2. How could the mode of transportation and frequency of shipments affect the use of the NOP Import Certificate?

3—Labeling of Nonretail Containers

Section

Action

Proposed text

205.307

Revise title

Labeling of nonretail containers.

205.307 (a)

Revise

Nonretail containers used to ship or store certified organic product must display the following:

(1) The term, “100 percent organic,” “organic,” or “made with organic (specified ingredients or food group(s)),” as applicable, to identify the product;

(2) The statement, “Certified organic by (name of certifying agent),” or similar phrase, to identify the name of the certifying agent that certified the producer of the product, or, if processed, the certifying agent that certified the last handler that processed the product; and

(3) The production lot number of the product, shipping identification, or other information needed to ensure traceability.

205.307 (b)

Revise

Nonretail containers used to ship or store certified organic product may display the following:

(1) Special handling instructions needed to maintain the organic integrity of the product;

(2) The USDA seal. Use of the USDA seal must comply with § 205.311;

(3) The name and contact information of the certified producer of the product, or if processed, the last certified handler that processed the product;

(4) The seal, logo, or other identifying mark of the certifying agent that certified the producer of the product, or if processed, the last handler that processed the product; and/or

(5) The business address, website, and/or contact information of the certifying agent.

Accurate labeling of non-retail containers used to ship or store organic products is critical to organic integrity. Detailed labeling reduces misidentification and mishandling, facilitates traceability through the supply chain, reduces the potential for organic fraud, and allows accurate identification of organic product by customs officials and transportation agents. Therefore, AMS proposes amending § 205.307 to add new requirements for the labeling of nonretail containers.

If implemented, this proposed action will require that nonretail containers used to ship or store organic products are labeled with two additional pieces of information: (1) A statement identifying the product as organic; and (2) the name of the certifying agent that certified either the producer of the product, or, if the product is processed, the last handler that processed the product. In addition, the current requirement to show the production lot number on nonretail containers will be expanded, the option to include the name of the certified operation that produced or handled the product will be added, and the use of the USDA seal on nonretail containers will be clarified.

Nonretail containers are defined under § 205.2 of the USDA organic regulations as “any container used for shipping or storage of an agricultural product that is not used in the retail display or sale of the product.” Nonretail containers are used to ship or store either packaged or unpackaged organic products, and may include the following:

1. Produce boxes, totes, bulk containers, bulk bags, flexible bulk containers, harvest crates and bins; and

2. Boxes, crates, cartons, and master cases of wholesale packaged products.

Section 205.307 does not apply to large nonretail containers that are associated with a mode of transportation or storage, such as trailers, tanks, railcars, shipping containers, grain elevators/silos, vessels, cargo holds, freighters, barges, or other method of bulk transport or storage. As labeling of these types of large containers may be impractical, they do not need to be labeled with the information described in § 205.307. However, this information must be evident in documentation associated with and traceable to the container, to ensure that organic integrity is maintained during transport, storage, and handling.

The current regulations require only one piece of information on nonretail container labeling: A production lot number. Other information elements—such as identification of the product as organic, certifying agent information, and special handling instructions—are optional, but not required on nonretail container labels. Lack of this information creates gaps in the organic chain of custody, complicates the verification of organic integrity, and increases the vulnerability to organic fraud.

Nonretail containers labeled with only a production lot number provide no identifying information about the entity that provided that number. This can create problems when nonretail containers are used to store or ship unlabeled unpackaged product (

e.g.,

produce or bulk commodities), because a production lot number alone is not sufficient to immediately identify the product as organic or conventional. An organic product stored or shipped in a nonretail container labeled with only a production lot number is at risk of having its organic integrity compromised, including treatment with a prohibited substance during border crossings, or comingling with conventional product during transport and aggregation.

This proposed amendment will provide an additional safeguard for organic integrity by alerting certifying agents, handlers, and border agents to the contents of nonretail containers, and by helping prevent unintentional mishandling of organic product. This proposed action also aligns with the OFPA requirement that an agricultural product which is sold or labeled as organic must have been produced and handled without prohibited synthetic chemicals (7 U.S.C. 6504(1)).

Some stakeholders have asked AMS to limit the applicability of § 205.307 to packaged organic products described in §§ 205.303-304,

i.e.,

products labeled “100% organic,” “organic,” or “made with organic (specified ingredients or food group(s)).” AMS believes that amending the regulations to require a statement of organic status on all nonretail containers, including those which contain unpackaged and/or unlabeled product, is a more comprehensive and enforceable solution. Further, this will support the requirement for certified operations to maintain auditable records (§ 205.103(b)(2)). An

audit trail,

as defined by the regulations, includes documents that show the source, transfer of ownership, and transportation of any agricultural product with an organic label (§ 205.2). Obscuring the “organic” status of any product during a segment of the supply

chain disrupts the audit trail. By clearly stating that nonretail containers must be labeled with the product's organic status and the name of the certifying agent (both currently optional), this proposed amendment will ensure that all organic product in nonretail containers is identifiable.

Organic products often pass through multiple handlers in the supply chain as they move from production source to consumer. However, the proposed rule does not require nonretail container labels to list the certifying agent of every operation that handled the product. The proposed amendments to § 205.307 require that nonretail container labels list either (1) the certifying agent that certified the producer, or, if the product is processed, (2) the certifying agent that certified the operation that last processed the product.

This means that:

See definition of

processing

in § 205.2 of the USDA organic regulations.

1. If a product is not processed between production and sale, then the certifying agent of the producer must be listed on the nonretail container label;

2. If a product is processed after production, then the certifying agent of the processer must be listed on the nonretail container label;

3. If a product is processed sequentially by different operations (A, B, and C) after production, then only the certifying agent of the last processer (operation C) must be listed on the nonretail container label; and

4. The certifying agents of operations that handle, but do not process, organic products after production do not need to be listed on the nonretail container label.

Listing the certifying agent of the producer or last processer on nonretail container labels will provide a point of contact to verify the organic status of a product, without adding surplus information to the label. However, to maintain a complete audit trail, all operations that produced, processed, handled, or transported the organic product must be visible in the product's audit trail documentation.

Clearly labeling a nonretail container with organic identification, certifying agent, and production lot number will ease product traceability during audits, help to prevent unintentional contact with prohibited substances (

e.g.,

fumigation) and comingling with conventional product, and help to ensure accurate representation of the product at the point of sale. In addition, this proposed amendment is also expected to reduce the vulnerability to organic fraud by ensuring that organic product status is visible throughout the supply chain.

Request for Comment

AMS seeks comment regarding the proposed amendments to the labeling of nonretail containers, specifically whether or not the certified operation that produced or last processed the product must be listed (

i.e.,

not optional) on all nonretail container labels.

4—On-Site Inspections

Section

Action

Proposed text

205.403(b)-(e)

Redesignate

Redesignate paragraphs (b)-(e) as paragraphs (c)-(f).

205.403(b)

Add

Unannounced inspections.

205.403(b)(1)

Add

A certifying agent must, on an annual basis, conduct unannounced inspections of a minimum of five percent of the operations it certifies, rounded up to the nearest whole number.

205.403(b)(2)

Add

Certifying agents must be able to conduct unannounced inspections of any operation it certifies and must not accept applications or continue certification with operations located in areas where they are unable to conduct unannounced inspections.

205.403(c)

Redesignate as 205.403(d)

Verification of information.

The on-site inspection of an operation must verify:

205.403(d)(4)

Add

That sufficient quantities of organic product and ingredients are produced or purchased to account for organic product sold or transported; and

205.403(d)(5)

Add

That organic products and ingredients are traceable by the operation from the time of production or purchase to sale or transport; and that certifying agents can verify traceability back to the source per § 205.501(a)(21).

Unannounced Inspections

Unannounced inspections are a critical enforcement tool for ensuring ongoing compliance by organic operations. AMS proposes amending § 205.403 of the organic regulations to require a minimum number of unannounced inspections that certifying agents must perform annually. The current regulations allow for, but do not require, unannounced inspections, leaving this to the discretion of the certifying agent. NOP has issued an instruction to certifying agents (NOP Instruction 2609) on unannounced inspections, which recommends that certifying agents conduct unannounced inspections of 5 percent of their total certified operations per year as a tool in ensuring compliance with the regulations.

This NOP instruction was supported by a recommendation made by the NOSB in December 2011.

The majority of USDA-accredited certifying agents currently complete unannounced inspections at this frequency.

This provision would make these inspections a regulatory requirement.

NOP 2609, Instruction, Unannounced Inspections. September 12, 2012. Available in the NOP Program Handbook:

https://www.ams.usda.gov/sites/default/files/media/2609.pdf.

NOSB Recommendation, Unannounced Inspections. December 2, 2011. Available on the AMS website:

https://www.ams.usda.gov/sites/default/files/media/NOP%20CACC%20Final%20Rec%20on%20Unannounced%20Inspections.pdf.

42 of the 49 USDA-accredited certifying agents the NOP audited in calendar years 2018 and 2019 completed unannounced inspections of 5% of the operations they certify.

Unannounced inspections are an effective and useful tool in the USDA organic regulations to ensure compliance across certified operations and bolster consumer trust in the organic label. Therefore, AMS is proposing to codify a requirement for certifying agents to conduct a minimum number of unannounced inspections annually of certified operations. This proposed amendment, consistent with NOP Instruction 2609, would require certifying agents to conduct unannounced inspections annually on a minimum of 5 percent of operations they certify. The operations may be selected randomly, risk-based, and/or in

response to a complaint or investigation. The proposed requirement specifies that the number of unannounced inspections should be calculated by rounding up to the nearest whole number, so that certifying agents with very few certified operations (

e.g.,

under 20 operations) would still be required to conduct at least one unannounced inspection per year.

The OFPA requires that organic operations make their records available at all times for inspection by the Secretary, the certifying agent, and State officials (7 U.S.C. 6506(b)(1)(B)). Additionally, the OFPA requires that certifying agents employ a sufficient number of inspectors to implement the organic regulations (7 U.S.C. 6515(b)). By establishing a baseline requirement for unannounced inspection activities, AMS can verify that certifying agents employ a sufficient number of inspectors (

i.e.,

enough inspectors to perform annual inspections and unannounced inspections) and will ensure, through unannounced inspections, that organic operations keep records related to their organic activities and comply with other requirements of the OFPA and the USDA organic regulations.

AMS also proposes a requirement that certifying agents only accept applications for certification from operations located where the certifying agent is able to conduct unannounced inspections. Further, certifying agents must be able to conduct unannounced inspections of any operation it continues to certify. To ensure consistency, transparency, and accountability, certifying agents would be expected to describe the areas where they operate in the written materials they provide to both applicants and certified operations, and review the locations of all operations during their application review or annual review. This proposed requirement is also based on recommended practice in the NOP Instruction 2609 and was recommended by the NOSB in December 2011.

AMS proposes this requirement to ensure that all certified operations are subject to unannounced inspections, regardless of location. A certifying agent that cannot conduct unannounced inspections in an applicant's or certified operation's location due to logistical challenges, staffing, security, or other reasons, is considered to not have or no longer have the administrative capacity for certification activities in that area, consistent with § 205.501(a)(19). In this case, the certifying agent would need to document the specific reasons it does not have, or no longer has, the administrative capacity to certify in that area, and would need to inform the applicant or certified operation to seek certification from another certifying agent. If new certification is not obtained, the operation's certification would be suspended. This process would be similar to the current procedures used when a certifying agent surrenders its accreditation or is suspended; however, it would be limited to a specific well-defined location, with justifications specific to that area.

Supply Chain Audits During On-Site Inspections

Additionally, AMS proposes two new requirements in § 205.403 to clarify the responsibilities of inspectors and certifying agents related to on-site inspections. AMS has consistently provided training to certifying agents which specifies that supply chain audits must be conducted at on-site inspections, but the types of audits required are not explicit in the current regulations. Audits can help detect organic fraud and should be routine practice during inspections. These proposed audit requirements are needed to ensure that AMS can take appropriate action against certifying agents that are not conducting adequate audits during inspections.

First, AMS proposes a requirement that certifying agents must verify that the quantity of organic product sold does not exceed the quantity of organic product that is produced or purchased. Second, AMS proposes a requirement that certifying agents verify that organic products and organic ingredients are traceable from the time of production or purchase to the time of sale or movement of product from the operation and vice versa. These new verification requirements are also referred to as “mass-balance” and “trace-back” audits. Certifying agents should determine the minimum number of products to review to assess whether the operation is compliant with the regulations. This should involve a risk-based sampling of products that span different time ranges and products.

For example, the inspection of a grain milling operation is to include an examination of the transaction and processing records for various commodities and time ranges. An inspection of a manufacturer of organic frozen meals, or other multi-ingredient products, is to examine records for various types of products to cover a range of ingredients and production dates.

During an on-site inspection, a certifying agent may also choose to conduct a broader review of an entire supply chain for an operation's product(s), to fulfill the proposed requirement at § 205.501(a)(21) to conduct risk-based supply chain audits according to the certifying agent's written procedures to meet that audit requirement (see proposed § 205.504(b)(7)). Full supply chain audits are discussed in more detail later in this proposed rule.

The OFPA requires that organic operations maintain all records associated with the production and handling of organic products and make these records available to certifying agents at all times (7 U.S.C. 6519(a) and 6506(b)(1)(B)). The proposed inspection requirements support the review and verification of these required records.

5—Certificates of Organic Operation

Section

Action

Proposed text

205.2

Add new term

INTEGRITY.

The National Organic Program's electronic, web-based reporting tool for the submission of data, completion of certificates of organic operation, and other information, or its successors.

205.404(b)

Revise

The certifying agent must issue a certificate of organic operation. The certificate of organic operation must be generated from INTEGRITY and may be provided to certified operations electronically.

205.404(c)

Redesignate

Redesignate as paragraph (d).

205.404(c)

Add

In addition to the certificate of organic operation provided for in § 205.404(b), a certifying agent may issue its own addenda to the certificate of organic operation. If issued, any addenda must include:

(1) Name, address, and contact information for the certified operation;

(2) The certified operation's unique ID number/code that corresponds to the certified operation's ID number/code in USDA Organic INTEGRITY;

(3) A link to USDA Organic INTEGRITY or a link to the certified operation's profile in USDA Organic INTEGRITY, along with a statement, “You may verify the certification of this operation at USDA Organic INTEGRITY,” or a similar statement;

(4) Name, address, and contact information of the certifying agent;

(5) “Addendum issue date;” and

(6) “Addendum expiration date,” which must not exceed the expiration date of the certificate of organic operation.

The certificate of organic operation (“organic certificate”) communicates information about the organic certification of an operation and the raw and processed products it is permitted to represent as organic. The proposed rule would require certifying agents to provide organic certificates that are uniform in appearance. To achieve this uniformity, the proposed rule would require that certifying agents create and provide organic certificates that are generated from a USDA-hosted electronic web-based system known as the Organic INTEGRITY Database (“INTEGRITY”). In this way, AMS would be responsible for the functionality of INTEGRITY and ensure consistent content and style of all organic certificates. Buyers of organic products would be able to recognize and validate legitimate organic certificates. This is currently difficult due to wide variability in the content and style of certifying agent-generated organic certificates.

The appearance and format of current organic certificates vary depending upon which certifying agent issued the organic certificate. Currently, AMS accredits almost 80 certifying agents; only a few create organic certificates through INTEGRITY. As a result, more than 70 distinct formats of organic certificates exist in the market. This variation increases the chance of alteration and organic fraud. In addition, AMS consistently cites noncompliances to certifying agents who do not currently include all the required information on their own organic certificates. Of the 49 USDA-accredited certifying agents audited by the NOP in calendar years 2018 and 2019, 16 were cited for issuing organic certificates not consistent with USDA organic regulation and instruction. The use of a uniform organic certificate generated through INTEGRITY would eliminate these inconsistencies.

The changes are proposed under AMS' authority provided in the OFPA to establish a program for organic certification (7 U.S.C. 6503(a)) and to facilitate interstate commerce of organic foods (7 U.S.C. 6501(3)). The proposed changes are also consistent with recommendations made by the NOSB between 2005 and 2007, including a recommendation that all certifying agents use a common database to issue and maintain organic certificates and that organic certificates include expiration dates.

NOSB Formal Recommendation: Information on Certificates of Organic Operation, March 2005:

https://www.ams.usda.gov/sites/default/files/media/NOSB%20Rec%20Standardize%20Organic%20Certifications%20Certificates.pdf.

NOSB Formal Recommendation: Expiration Dates on Certificates of Organic Operation, November 2006:

https://www.ams.usda.gov/sites/default/files/media/NOP%20Final%20Rec%20Use%20of%20Expiration%20Dates%20on%20Certificates%20of%20Organic%20Op.pdf.

NOSB Formal Recommendation: Standardized Certificates, November 2007:

https://www.ams.usda.gov/sites/default/files/media/NOP%20Final%20Rec%20Standardization%20of%20Certificates.pdf.

The Organic INTEGRITY Database

The OFPA was amended in 2014 to, among other things, require the USDA to modernize database and technology systems. To that end, the NOP created the Organic Integrity Database. INTEGRITY contains information about certified operations as well as information about operations that have surrendered their organic certification or had their organic certification suspended or revoked. The data or information is provided directly from certifying agents. The information can be viewed and searched by the general public online at

https://organic.ams.usda.gov/Integrity/Default.aspx.

INTEGRITY and Organic Certificates

In 2016, NOP enhanced the functionality of INTEGRITY to allow for the generation of organic certificates. When the currently optional function is activated, INTEGRITY generates a one-page organic certificate and an accompanying detailed product list (together referred to as the “organic certificate”). Few certifying agents currently use INTEGRITY to generate organic certificates. This proposed rule would require all certifying agents to generate organic certificates through INTEGRITY. Foreign-based certifying agents that are accredited to and certify operations to the USDA organic regulations would be required to enter data in INTEGRITY to generate the organic certificates for USDA-certified operations. The proposed changes would adopt a March 2005 NOSB recommendation that the NOP establish a common database for all certifying agents to issue and maintain organic certificates and that the database allow certifying agents to upload data from their existing systems.

INTEGRITY is the system that certifying agents would use to perform these functions.

NOSB Formal Recommendation: Information on Certificates of Organic Operation; March 2005:

https://www.ams.usda.gov/sites/default/files/media/NOSB%20Rec%20Standardize%20Organic%20Certifications%20Certificates.pdf.

Once created in INTEGRITY, an organic certificate is available online via a unique link where it can be electronically downloaded or printed as a hard copy. A permalink to the online certificate is included on every organic certificate, including downloaded and printed organic certificates. If an operation's certification has been suspended, revoked, or surrendered, information from the linked web page will indicate that a valid organic certificate is no longer available.

AMS expects the proposed changes would promote access to robust information about individual operations and support timely verification of the organic status of operations and products. Additionally, we expect the changes would encourage a move toward sharing of real-time electronic documents and away from paper-based documents, which can quickly become outdated and can be more easily falsified. AMS also expects that the proposed change would reduce the administrative burden on operations in the supply chain that must verify the validity of organic certificates,

especially for companies that purchase from many different organic operations.

Certifying agents that are not currently using INTEGRITY to generate organic certificates would need to modify their practices to routinely enter information in INTEGRITY before issuing organic certificates. Specifically, these certifying agents may need to provide additional information in INTEGRITY to populate all fields that appear on the organic certificate, including: Effective date of certification status, scope of organic certification (

e.g.,

crops, handling), details about certified products (

e.g.,

organic labeling category, brands), acreage, and livestock details. AMS would be responsible for the functionality of INTEGRITY, including the style and content of organic certificates.

Expiration Dates on Organic Certificates

The USDA organic regulations do not currently require expiration dates on organic certificates, and an operation's organic certification does not expire—once granted, it may only be suspended, revoked, or surrendered. Through this proposed rule, AMS intends to include certificate expiration dates on the organic certificates generated via INTEGRITY. AMS sees this as an important measure to establish a clear and consistent method for assessing whether an organic certificate is current and valid. This change was recommended by the NOSB in a November 11, 2006 recommendation titled “Expiration Dates on Certificates of Organic Operation.”

Expiration dates would ensure the data on an organic certificate is up to date and current. Using current (

i.e.,

unexpired) certificates would support verification of an operation's organic status. Expiration dates are intended to prompt the generation of an updated organic certificate, rather than to void or have any effect on the operation's certification status; an operation could remain certified even if their organic certificate has expired.

NOSB Formal Recommendation: Expiration Dates on Certificates of Organic Operation, November 2006:

https://www.ams.usda.gov/sites/default/files/media/NOP%20Final%20Rec%20Use%20of%20Expiration%20Dates%20on%20Certificates%20of%20Organic%20Op.pdf.

AMS intends to allow organic certificates to remain valid for 12 months from the date they are issued. The expiration date would be calculated automatically by INTEGRITY and appear on all organic certificates. Certifying agents could validate information and create a new organic certificate in INTEGRITY at any time to generate a new organic certificate with a new expiration dated 12 months from the creation of the certificate. AMS believes this flexibility would allow certified operations to obtain valid organic certificates from their certifying agent in a timely fashion. Operations that are certified (

i.e.,

that have not surrendered their certification or had their certification suspended or revoked) would continue to have a right to obtain a valid organic certificate from their certifying agent to demonstrate their certification.

Allowance for Additional Addenda to Certificates of Organic Operation

AMS recognizes that certifying agents have invested in systems to create their own unique addenda to organic certificates; AMS is not seeking to eliminate these unique sources of value offered by certifying agents. Under the proposed rule, certifying agents could continue to provide their own certification addenda that would communicate additional information about an operation's certification in a different format than generated by INTEGRITY.

For example, an addendum may include information about the compliance of the operation's crops or products with various international organic standards that may not be included on the INTEGRITY organic certificate. AMS is proposing six required elements (proposed § 205.404(c)) on any organic certificate addenda issued by certifying agents to deter organic fraud and provide consistency across certifying agents. Primarily, the proposed requirements are intended to ensure that someone viewing the document is aware that the certification may be verified in INTEGRITY.

As with organic certificates from INTEGRITY, this proposed rule requires that any organic certificate addenda include an expiration date. Certifying agents would need to ensure that the expiration date of the addendum does not extend beyond the expiration date of the most recent organic certificate generated by INTEGRITY, to ensure an operation does not simultaneously possess a valid addendum and an expired organic certificate, which could cause confusion.

Request for Comment

AMS seeks comment on the proposed amendments regarding certificates of organic operation discussed above, including answers to the following questions:

1. How frequently should accredited certifying agents update the information in an operation's organic certificate?

2. Should a minimum reporting frequency (

e.g.,

monthly, quarterly, etc.) be added to the regulations?

3. Should an expiration date be included on all certificates of organic operation? Would this make them more useful?

6—Continuation of Certification

Section

Action

Proposed text

205.406(a)

Revise

To continue certification, a certified operation must annually pay the certification fees and submit the following information to the certifying agent:

(1) A summary statement, supported by documentation, detailing any deviations from, changes to, modifications to, or other amendments made to the organic system plan submitted during the previous year; and

(2) Any additions or deletions to the previous year's organic system plan, intended to be undertaken in the coming year, detailed pursuant to § 205.201;

(3) Any additions to or deletions from the information required pursuant to § 205.401(b); and

(4) Other information as deemed necessary by the certifying agent to determine compliance with the Act and the regulations in this part.

205.406(b)

Revise

The certifying agent must arrange and conduct an on-site inspection, pursuant to § 205.403, of the certified operation at least once per calendar year.

AMS proposes amending § 205.406 to clarify the annual update requirements for certified operations and to clarify that certifying agents must conduct annual inspections of certified operations.

The current regulations require that certified operations annually submit an updated organic production or handling system plan (§ 205.400(b)). Some certifying agents require that certified operations submit an organic system plan (OSP) in its entirety every year, while other certifying agents only require that operations annually submit revisions to the OSP. Clarifying in the regulations that operations are only required to submit sections of the OSP that have changed will eliminate unnecessary paperwork without compromising oversight of organic operations. The NOP previously described this approach in published certifying agent Instructions (NOP 2615 and NOP 2601).

These proposed changes are necessary to ensure legal enforceability, consistent practices between certifying agents, and reduce the paperwork burden of organic certification. The proposed changes in this section will not impact the requirements for certified operations to maintain an updated OSP or the requirement for an operation to notify their certifying agent of changes in their operation that may affect its compliance with the organic regulations (§ 205.400(f)). Further, the on-site inspection must verify that the entire OSP is implemented as described.

NOP 2601 The Organic Certification Process, December 16, 2013:

https://www.ams.usda.gov/sites/default/files/media/2601.pdf.

NOP 2615 Organic System Plans, Organic System Plan Updates, and Notification of Changes, December 16, 2013:

https://www.ams.usda.gov/sites/default/files/media/2615.pdf.

AMS also proposes removing current paragraph § 205.406(a)(3) to reduce paperwork and simplify the certification process. Section 205.406(a)(3) requires that certified operations provide, along with their annual update, an update on the correction of minor noncompliances previously identified by the certifying agent as requiring correction for continued certification. This requirement is duplicative and unnecessary, as certifying agents (when issuing a notice of noncompliance) must specify a date by which a certified operation must rebut or correct noncompliances (§§ 205.662(a)(3) and 205.404(a)). Certifying agents should establish this due date in accordance with the severity of the noncompliance. If a certified operation does not resolve noncompliances by the due date, their certifying agent should take further action (

i.e.,

issue a notice of proposed suspension); therefore, AMS sees no benefit to requiring a partial response (

i.e.,

an update) as part of the annual renewal. While removing this requirement, AMS proposes to maintain the allowance in this section for certifying agents to require other information from certified operations during the annual renewal process that they determine is necessary to assess compliance. AMS believes this will provide certifying agents with the flexibility they require to verify compliance.

Additionally, AMS proposes revising paragraph § 205.406(b) to simplify the regulatory text and to clarify that inspections are to be conducted on an annual basis. Current requirements at paragraph (b) could be interpreted to mean that an operation may be inspected once every 18 months on an ongoing basis (

i.e.,

two inspections over a 36-month period compared to three inspections if conducted annually). Revision of paragraph (b) would clarify that all certified operations must be inspected at least annually, regardless of (1) when the certified operation was last inspected and (2) when, or if, the certified operation provided its annual updates. Additional inspections may be needed to ensure full compliance of complex operations (

e.g.,

during and outside the grazing season for livestock operations). This requirement does not replace the need for additional unannounced inspections.

This revision would allow certifying agents flexibility to conduct on-site inspections at any time during the year (essential for verifying activities throughout the growing season, for example) while ensuring that an inspection is conducted every single calendar year. Annual inspection cycles are essential to vigilant oversight and AMS seeks to eliminate confusion around and deviations from alternative timing of on-site inspections.

7—Paperwork Submissions to the Administrator

Section

Current text

Action

Proposed text

205.405(c)(3)

Provide notice of approval or denial to the Administrator, pursuant to § 205.501(a)(14).

Remove

205.501(a)(15)

Submit to the Administrator a copy of:

Revise

Maintain current and accurate data in INTEGRITY for each operation which it certifies;

(i) Any notice of denial of certification issued pursuant to § 205.405, notification of noncompliance, notification of noncompliance correction, notification of proposed suspension or revocation, and notification of suspension or revocation sent pursuant to § 205.662 simultaneously with its issuance; and

(ii) A list, on January 2 of each year, including the name, address, and telephone number of each operation granted certification during the preceding year;

AMS proposes amending § 205.405 and § 205.501 to reduce the paperwork burden of accredited certifying agents. In addition, AMS is proposing that certifying agents must maintain current data in INTEGRITY on all operations which they certify. The availability of accurate and current information about certified operations is an essential tool for certifying agents and operations in the organic supply chain to support the verification of specific organic products.

The proposed removal of paragraph (c)(3) of § 205.405 will eliminate the need to provide notices of approval or denial of certification to the Administrator following the issuance of a notice of noncompliance to an applicant for certification. The proposed rule would also amend provisions at § 205.501(a)(15) regarding information

that accredited certifying agents must submit to the Administrator. The proposal removes the requirement for submission of any notices of denial of certification, notifications of noncompliance, notification of noncompliance correction, notification of proposed suspension or revocation, or notification of suspension or revocation. Also, the proposed rule removes the annual requirement for certifying agents to submit by January 2 an annual list of operations certified during the preceding year.

These two requirements will be replaced by a requirement for certifying agents to maintain updated data in INTEGRITY for each operation they certify; these mandatory data requirements will include listings of items and certified acreage, among other data fields. This proposed rule would require certifying agents to generate organic certificates in INTEGRITY, as discussed above in the proposed amendments to § 205.404. The organic industry, including certifying agents, certified operations, consumers, AMS, and other regulatory agencies, use INTEGRITY to confirm the certification status of an operation, organic status of a product, find product information about specific operations, and obtain data for investigation and enforcement. Timely updates to maintain data reflecting an operation's current status, including certified products and acreage, is critical to commerce and enforcement. As discussed later in this proposed rule, amendments to § 205.662 would require certifying agents to update INTEGRITY within three business days of accepting an operation's surrender, or suspending or revoking an operation's certification.

AMS believes the availability of complete data on certified operations, including complete information on certified items and acreage, will reduce the time certifying agents and AMS spend responding to inquiries about specific operations and will enable interested parties to obtain information with less time and effort. Therefore, we propose including INTEGRITY reporting as a general requirement for accreditation to reinforce that data reporting is a mandatory practice.

8—Personnel Training and Qualifications

Section

Action

Proposed text

205.2

Add new term

Certification review.

The act of reviewing and evaluating a certified operation or applicant for certification and determining compliance with the USDA organic regulations. This does not include performing an inspection.

205.501(a)(4)

Revise

Continuously use a sufficient number of qualified and adequately trained personnel, including inspectors and persons who conduct certification review, to comply with and implement the USDA organic standards;

(i) Certifying agents must demonstrate that all inspectors, including staff, volunteers, and contractors, have the required knowledge, skills, and experience to inspect operations of the scope and scale as assigned and to evaluate compliance with the applicable regulations of this part; and

(A) Certifying agents must demonstrate that inspectors continuously maintain adequate knowledge and skills about the current USDA organic standards, production and handling practices, certification and inspection, import and/or export requirements, auditing practices and skills in written and oral communications, sample collection, investigation techniques, and preparation of technically accurate inspection documents; and

(B) Initially and every year thereafter, inspectors must demonstrate successful completion of a minimum of 20 hours of training in topics that are relevant to inspection. Training may include material delivered via the NOP learning management system, certifying agents, or other relevant training provider; and

(C) Certifying agents must demonstrate that inspectors have a minimum of 1 year of field-based experience related to both the scope and scale of operations they will inspect before assigning inspection responsibilities;

(ii) Certifying agents must demonstrate that all persons who conduct certification review, including staff, volunteers, or contractors, have the knowledge, skills, and experience required to perform certification review of operations of the scope and scale assigned and to evaluate compliance with the applicable regulations of this part; and

(A) Certifying agents must demonstrate that all certification review personnel continuously maintain adequate knowledge and skills in the current USDA organic standards, certification and compliance processes, and practices applicable to the type, volume, and range of review activities assigned; and

(B) Initially and every year thereafter, all persons who conduct certification review activities must demonstrate successful completion of a minimum of 20 hours of training in topics that are relevant to certification review. Training may include material delivered via the NOP learning management system, certifying agents, or other relevant training provider; and

(iii) Certifying agents must maintain current training requirements, training procedures, and training records for all inspectors and persons who conduct certification review activities.

205.501(a)(5)

Revise

Demonstrate that all persons with inspection or certification review responsibilities have sufficient expertise in organic production or handling techniques to successfully perform the duties assigned;

(i) Sufficient expertise must include knowledge of certification to USDA organic standards and evidence of formal education, training, or professional experience in the fields of agriculture, science, or organic production and handling that directly relates to assigned duties.

205.501(a)(6)

Revise

Conduct an annual performance evaluation of all persons who conduct inspections, certification review, or implement measures to correct any deficiencies in certification services;

(i) On-site evaluation of inspectors—Certifying agents must observe each inspector performing on-site inspections at least once every three years, or more frequently if warranted; and

(A) On-site inspector evaluations must be performed by certifying agent personnel who are qualified to evaluate inspectors;

(ii) Certifying agents must maintain documented policies, procedures, and records for annual performance evaluations and on-site inspector evaluations.

The USDA organic regulations at 7 CFR 205.501, General Requirements for Accreditation, require certifying agents and their inspection and certification personnel to have sufficient expertise in organic production and handling techniques to fully comply with and implement the USDA organic regulations. The OFPA establishes AMS' authority to modify the USDA organic regulations at 7 CFR 205.501. The proposed rule amends § 205.501 to specify minimum qualifications and training requirements for inspectors and persons who perform certification review activities. The OFPA states that to be accredited as a certifying agent, the certifying agent will have sufficient expertise in organic farming and handling techniques as determined by the Secretary (7 U.S.C. 6514(b)(2)).

Organic inspectors and review staff are the most direct form of enforcement and verification in the organic system. Inspectors protect organic integrity by inspecting certified organic operations onsite and reporting their findings to certifying agents. Persons performing certification review activities also ensure organic integrity by reviewing organic system plans, inputs, inspection reports, and other certification documents. It is essential that these personnel have knowledge, skills, and experience related to the scope and scale of the organic operations they inspect and review. The role of inspectors and reviewers has grown more critical as organic operations and supply chains become more complex and diverse.

The USDA organic regulations currently require that certifying agents “have sufficient expertise in organic production or handling techniques,” and maintain “a sufficient number of adequately trained personnel.” However, the regulations lack specific detail about qualifications, experience, and continual training for inspectors and reviewers. Certifying agents set their own policies and minimum qualifications to hire inspectors and reviewers. This can result in variability of inspection and certification review between certifying agents. Further, many inspectors are independent contractors who are responsible for establishing and maintaining their own knowledge base. This diversity of background and training creates an inconsistent baseline of knowledge and skill, exposing a potential weakness at one of the most critical points in the organic certification system.

This proposed rule would clearly define expertise requirements to ensure that all inspectors are capable of verifying an organic operation's compliance with the USDA organic regulations. The requirements would ensure that all inspectors can identify non-compliant or fraudulent practices when observed during inspection and produce a technically accurate inspection report that is sent to the certifying agent. The requirements would also ensure that persons performing certification review are competent in identifying any non-compliant or fraudulent practices of operations when reviewing inspection reports prepared by an inspector, organic system plans, or other certification documents. Examples of certification review includes reviewing applications for certification, reviewing certification documents, evaluating qualifications for certification, making recommendations concerning certification, or making certification decisions and implementing measures to correct any deficiencies in certification services. Establishing baseline criteria for qualifications and training of inspectors and certification review personnel would create a uniform level of scrutiny in inspections and certification compliance reviews for all USDA certified organic operations, leading to greater consistency and integrity in organic certification.

In a 2012 memo, the NOP notified certifying agents that all inspectors and reviewers, whether staff or independent contractors, must possess the expertise and qualifications needed to evaluate compliance with the USDA organic standards.

During audits performed twice every five years, AMS has observed that inspectors and certification review staff currently receive at least 10 hours of training per year from certifying agents on topics related to the USDA organic regulations.

In 2018, the NOSB provided recommendations for the specific qualification and training requirements for inspectors and persons performing certification review.

AMS has considered these recommendations and determined that the proposed changes align with the OFPA and would bolster the integrity of organic products.

NOP Memo: Criteria and Qualifications for Organic Inspectors; April 2012:

https://www.ams.usda.gov/sites/default/files/media/NOP-Notice-OrganicInspectorCriteria.pdf.

Paperwork burden attributed to current training is accounted for in the NOP's 2020 Information Collections Renewal (ICR) (AMS-NOP-19-0090; OMB Control #: 0581-0191). Also, please see Paperwork Reduction Act chapter and Information Collection Request (ICR) package associated with this proposed rule for additional details regarding this proposed burden.

NOSB Formal Recommendation, Inspector Qualifications and Training, May 29, 2018:

https://www.ams.usda.gov/sites/default/files/media/CACSInspectorQualificationsRec.pdf.

The USDA organic regulations stipulate that accredited certifying agents must have sufficient expertise in organic production and handling techniques to fully comply with and implement the terms and conditions of the organic certification program. The regulations at § 205.501(a)(4) require that certifying agents use a sufficient number of adequately trained personnel, including inspectors and certification review personnel, to comply with and fully implement the organic certification program. It is essential that certifying agents maintain adequate staffing levels and the range of expertise needed to perform the full range of certification activities, including inspections and reviews. This includes maintaining an inspection staff to timely complete initial on-site inspections, annual inspections for all operations it certifies, unannounced inspections on a minimum of 5 percent of the operations it certifies annually, and any other inspections that may be warranted for investigations or reinstatements. If certifying agents reduce staffing levels, if the number of certified operations increases, or if certifying agents add new certification scopes to the certification services they provide, then the number and qualifications of personnel used by certifying agents may become insufficient to fully comply with the organic regulations.

Therefore, this proposed rule amends § 205.501(a)(4) to clarify that certifying agents must continuously use a sufficient number of qualified and adequately trained personnel. This proposed rule also specifies and strengthens requirements for organic inspectors and certification review personnel. These additional qualification and training requirements will help certifying agents meet their obligation to provide sufficient expertise in organic production and handling techniques. The new proposed requirements would specify the areas of knowledge, skills, and expertise required for certifying agents in using adequately trained inspection and certification review personnel for organic inspection and review activities.

Inspector Qualifications and Training

The regulations at § 205.501(a)(4) currently do not contain requirements for specific qualifications or training of inspectors. Certifying agents depend on qualified inspectors who are experienced with the complexity of the organic market to verify the integrity of organic products. Organic inspections, a critical component for ensuring organic integrity, are an assessment of an entire production system, not just the final product. Therefore, when conducting organic inspections, inspectors must continuously maintain adequate knowledge and skills about the current USDA organic standards, production and handling practices, certification and inspection, import and/or export requirements, auditing practices and skills in written and oral communications, sample collection, investigation techniques, and preparation of technically accurate inspection documents. In addition, the knowledge, skills, and experience in these areas must be relevant to the scope and scale of the operation seeking or continuing organic certification.

Given that certifying agents may use a variety of inspectors, including staff, volunteers, and contract inspectors, there is variability in the level of experience and qualifications of inspectors performing the key function of ensuring organic integrity at the source of production and through the supply chain. This proposed rule adds subparagraph (i) requiring certifying agents to ensure all inspectors have the level of knowledge, skills, and experience needed to conduct the specific inspections assigned, based on the scope and scale of the operations to be inspected. The proposed rule clarifies that the requirement applies not only to staff inspectors, but to all inspectors (

i.e.,

including volunteers and contractors) and further requires certifying agents to provide evidence of inspectors' qualifications, matching the scope and scale of inspection assignments.

This proposed rule at § 205.501(a)(4)(i)(A) describes the general scope of the knowledge and skills required for inspectors to be deemed adequately qualified. Inspections of organic operations provide information to certifying agents to verify whether the practices and inputs used in an operation's implemented organic system plan are compliant with the USDA organic regulations. To ensure an adequate organic inspection, each inspector must be knowledgeable and competent both in inspection and auditing procedures, as well as in the processes of organic certification and inspection. Organic inspectors must know the USDA organic regulations and have expertise in the scope of the agricultural or processing system (

i.e.,

crops, wild crops, livestock, or handling) being inspected.

In addition, inspectors must have sufficient knowledge of organic and general agricultural practices, as well as a general awareness of other rules and regulations that may be applicable to the operation being inspected. Qualified organic inspectors must also have skills in written and oral communications, auditing, investigation and observation techniques which support fraud detection, and sample collection. Inspectors must be proficient in orally communicating inspection findings both during the inspection closing meeting with the inspected operation, and in writing to provide detailed and technically accurate descriptions of the inspection findings in the report to the certifying agent. The inspection report is a critical tool used by certifying agents to verify if on-site practices are in compliance with the USDA organic regulations. As such, the quality and depth of the inspection report directly affects the integrity of organic products. An adequately qualified inspector would know how to independently apply knowledge in the above areas to assess whether an operation is complying with all applicable parts of the regulations and clearly communicate those findings to the certifying agent.

AMS proposes strengthening and specifying training requirements to § 205.501(a)(4)(i)(B) for all inspectors currently inspecting organic operations or seeking to become qualified to conduct organic inspections. For inspectors to remain qualified or to become qualified in any scope of organic inspection, they must obtain and continuously update knowledge, skills, and experience relevant to the types of operations they inspect. Organic training hours should include: Organic and general agricultural practices; USDA organic regulations and guidance; inputs allowed for organic production and handling (

i.e.,

changes to the National List); new technology that may be used in organic production and handling; investigation and auditing techniques; and new developments in marketing organic products. To ensure consistency in inspector training and qualifications across the organic industry, this proposed rule requires that inspectors initially, and every year thereafter, complete at least 20 hours of training that may include material delivered via the NOP learning management system, certifying agents, or other relevant training providers.

In their 2018 recommendation, NOSB did not specify the number of hours of training that inspectors must complete annually. However, they requested that the NOP set the minimum training guidelines. A minimum of 20 hours of annual training for inspectors is consistent with standards established by other agencies or organizations (

e.g.,

Preventive Controls Qualified Individuals per 2011 Food Safety Modernization Act; ISO 9001 Global Certified Lead Auditor). The proposed training requirements will ensure that inspectors meet the training requirements recommended by the NOSB, which state that continuing education is essential to “professional competence.”

Establishing baseline training criteria for inspectors across the organic industry is essential for ensuring that compliance with USDA organic standards would be assessed in all sectors of this rapidly growing and diversifying global industry. Additionally, requiring inspectors to continuously supplement their knowledge with a minimum annual training requirement is vital to ensuring the integrity of organic products amidst rapidly changing technologies and product supply chain practices.

NOSB Formal Recommendation, Inspector Qualifications and Training, May 29, 2018:

https://www.ams.usda.gov/sites/default/files/media/CACSInspectorQualificationsRec.pdf.

Each scope of organic certification, as well as the scale and type of operation being inspected, provides different challenges to ensuring a comprehensive and sufficient organic inspection. Inspectors who are inexperienced with an agricultural production or handling system may underestimate the scale of an operation or may miss components of

that system during the inspection. Varied quality of inspections can result in an inconsistent organic certification process. In addition, to enhance inspection consistency and organic certification integrity, this rule proposes to add the requirement, in § 205.501(a)(4)(i)(C), that certifying agents must ensure and demonstrate an inspector has a minimum of one year of on-site experience related to the scope and size of the operation being inspected. The proposed requirement aligns with recommendations developed by the NOSB.

Certification Review Personnel Qualifications and Training

The regulations in § 205.501(a)(4) currently do not contain requirements for specific qualifications or training of persons who conduct certification review. Certification review personnel are critical to ensuring organic integrity. Certification review activities include, but are not limited to, review of organic system plans, inputs (

e.g.,

production aids, fertilizers, pesticides), seeds, planting stock, inspection reports, and residue tests for compliance with the USDA organic standards. Certification review personnel are responsible for verifying whether the procedures being implemented at the point of production or handling are compliant with the USDA organic standards. Certification review personnel must continuously maintain adequate knowledge about the current USDA organic standards, certification and compliance processes, and practices applicable to the type, volume, and range of review activities assigned. The level of knowledge, skills, and experience of certification review personnel must be relevant to the scope and scale of the operations seeking or continuing organic certification.

In addition, certification review personnel play a crucial role in determining if an operation is granted organic certification initially, if continued certification is warranted, and/or if issuing a non-compliance, proposed suspension, or revocation. In cases where an operation has been issued a non-compliance or has been suspended, the certification review personnel determine if sufficient corrective actions have been taken to bring the operation into compliance. As such, the certification review personnel are integral to maintaining organic integrity. Therefore, this proposed rule adds a requirement at § 205.501(a)(4)(ii) that certifying agents are responsible for demonstrating that all certification review personnel, whether staff, volunteers, or contractors, have the knowledge, skills, and experience needed to conduct the specific reviews assigned.

This proposed rule at § 205.501(a)(4)(ii)(A) specifies the types of knowledge and essential skills in which certification review personnel must be proficient to be deemed qualified. To verify the integrity of organic products, reviewers must be knowledgeable and competent in current USDA organic regulations, guidance, and instructions; certification procedures; and practices specific to the type, volume, and range of review activities assigned by the certifying agent. To remain current with changes in technology, new developments in marketing or importing organic products, changes in organic standards, novel input materials, or changes to the National List, reviewers must continuously update knowledge, skills, and experience directly related to their specific review responsibilities.

To ensure consistency in reviewer training and qualifications across the organic industry, this proposed rule in § 205.501(a)(4)(ii)(B) requires that all persons conducting certification review activities initially, and every year thereafter, complete at least 20 hours of training that can include material delivered via the NOP learning management system, certifying agents, or other relevant training providers. A minimum of 20 hours of annual training for certification review personnel is consistent with training required by other agencies or organizations (

e.g.,

Preventive Controls Qualified Individuals per 2011 Food Safety Modernization Act; ISO 9001 Global Certified Lead Auditor). Establishing baseline training criteria for certification review personnel across the organic industry is essential for ensuring that compliance with USDA organic standards would be assessed in all sectors of this rapidly growing and diversifying global industry. Additionally, requiring certification review personnel to continuously supplement their knowledge with a minimum annual training requirement is vital to ensuring the integrity of organic products amidst rapidly changing technologies and product supply chain practices.

Documented Training Requirements and Procedures

The current regulations at § 205.504(a) require certifying agents to provide descriptions of personnel qualifications and training but do not contain requirements for documenting training procedures. This proposed rule adds § 205.501(a)(4)(iii) to require certifying agents to maintain current documented training requirements, procedures, and records for all inspectors and certification review personnel. This requirement would enable the NOP to verify if accredited certifying agents are meeting the requirement in § 205.501(a)(4) to maintain a sufficient number of qualified and adequately trained personnel to comply with and implement the organic certification program established under the Act.

Expertise

The regulations in § 205.501(a)(5) require that certifying agents ensure that all persons with inspection, analysis, and decision-making responsibilities have sufficient expertise in organic production and handling techniques. However, the regulations currently do not contain requirements for specific expertise areas needed to ensure the integrity of organic products. This proposed rule adds § 205.501(a)(5)(i) to clarify the areas of expertise required. The change specifies that expertise must include knowledge of certification to USDA organic standards, as well as evidence of formal education, training, or professional experience in the fields of agriculture, science, or organic production and handling that directly relates to assigned duties. This clarification will assist certifying agents in evaluating potential hires for adequate expertise needed to perform certification duties. The added specificity regarding areas of expertise and the need for formal education or training aligns with recommendations proposed by the NOSB.

AMS evaluated the proposed recommendations and found them to be consistent with the OFPA and therefore has included similar requirements in this proposed rule.

“Training and Oversight of Inspector and Certification Review Personnel” proposal, August 17, 2018:

https://www.ams.usda.gov/sites/default/files/media/CACSTrainingOversightInspectorsProposalOct2018Web.pdf.

Performance Evaluations

The proposed rule also revises the requirements for annual performance evaluations, described in § 205.501(a)(6), to include requirements for regular field evaluation of inspectors and documentation of annual performance and field evaluation procedures and results. The proposed rule amends § 205.501(a)(6) to clarify the requirements for annual performance evaluations conducted by accredited certifying agents. Subparagraph (i) is added to address the evaluation of inspectors while performing on-site inspections. The proposed rule ensures that inspectors

are evaluated regularly in the field (

i.e.,

while performing an inspection on a farm, in a processing facility, etc.). The proposed change specifies a minimum frequency of every three years for on-site inspection evaluation, unless higher frequency is warranted based on experience level or past performance of the individual inspector. For inspectors that work for or contract with multiple certifying agents, the on-site evaluation conducted by one certifying agent may fulfill the on-site evaluation requirements for all certifying agents, provided that the report of the evaluation is shared. Another certifying agent may choose to independently conduct an on-site evaluation in addition to one performed by another certifying agent within the 3-year period. All certifying agents are required to ensure that all inspectors they employ or contract with have been evaluated during an on-site inspection at least once every three years. The proposed frequency of on-site inspection evaluation is based upon the frequency recommended in the NOSB proposal “Personnel Performance Evaluations of Inspectors”

and aligns with the “Guidance on Organic Inspector Qualifications” published by the Accredited Certifiers Association, Inc.

(February 2018). AMS considered requiring more frequent on-site evaluations. However, the NOSB has indicated that requiring inspector on-site evaluations on a more frequent basis worldwide may pose undue financial burden on certifying agents. AMS also determined that inspector evaluations every year would create a significant resource constraint on certifying agents.

“Personnel Performance Evaluations of Inspectors” proposal, December 13, 2016:

https://www.ams.usda.gov/sites/default/files/media/CACSInspectorsProposal.pdf.

The Accredited Certifiers Association, Inc. is a 501(c)(3) non-profit educational organization created to benefit the accredited organic certifying agent community and the organic industry:

https://www.accreditedcertifiers.org/.

On-site evaluations of inspectors are necessary to verify that inspectors possess the knowledge and skills to evaluate the compliance of certified organic operations and to produce technically accurate inspection reports. Requiring recurring, on-site evaluations of inspectors would enhance the integrity of organic products by verifying competence of organic inspectors and ensuring consistency in organic certification inspections. Subparagraph (i)(A) is added to ensure that inspector on-site evaluations are performed by certifying agent personnel who are qualified to evaluate inspectors. This could include for example, a person who has prior experience as an inspector, conducts training for inspectors, and/or evaluates inspection reports to determine compliance.

Subparagraph (ii) is added to address the need for certifying agents to maintain detailed procedures regarding how performance evaluations are conducted. The text also requires certifying agents to document results of on-site inspector performance evaluations and results of annual performance evaluations for all persons who review applications for certification, perform on-site inspections, review certification documents, evaluate qualifications for certification, make recommendations concerning certification, or make certification decisions and implement measures to correct any deficiencies in certification services. This change would ensure uniformity in scope and frequency of performance evaluations implemented across certifying agents, thereby enhancing organic integrity.

Request for Comment

AMS seeks comment regarding certifying agent personnel qualifications and training, including answers to the following questions:

1. Is 20 training hours a year an appropriate amount of continuing education for organic inspectors and certification review personnel?

2. Should organic inspectors be evaluated on-site more frequently than once every three years?

3. Should any other types of knowledge, skills, and experience be specified?

9—Oversight of Certification Activities

Section

Action

Proposed text

205.2

Add new term

Certification activity.

Any business conducted by a certifying agent, or by a person acting on behalf of a certifying agent, including but not limited to: Certification management; administration; application review; inspection planning; inspections; sampling; inspection report review; material review; label review; records retention; compliance review; investigating complaints and taking adverse actions; certification decisions; and issuing transaction certificates.

205.2

Add new term

Certification office.

Any site or facility where certification activities are conducted, except for certification activities that occur at certified operations or applicants for certification, such as inspections and sampling.

205.501(a)(22)

Add

Notify AMS not later than 90 calendar days after certification activities begin in a new certification office. The notification must include the countries where the certification activities are being provided, the nature of the certification activities, and the qualifications of the personnel providing the certification activities.

205.640

Revise

Fees and other charges equal as nearly as may be to the cost of the services rendered under the regulations, including initial accreditation, review of annual reports, and renewal of accreditation, shall be reviewed, assessed, and collected from applicants in accordance with the following provisions:

205.665(a)

Revise

Notification.

(1) A written notification of noncompliance will be sent to the certifying agent when:

(i) An inspection, review, or investigation of an accredited certifying agent by the Program Manager reveals any noncompliance with the Act or regulations in this part; or

(ii) The Program Manager determines that the certification activities of the certifying agent, or any person performing certification activities on behalf of the certifying agent, are not compliant with the Act or the regulations in this part; or

(iii) The Program Manager determines that the certification activities at a certification office, and/in specific countries, are not compliant with the Act or the regulations in this part.

(2) Such notification must provide:

(i) A description of each noncompliance;

(ii) The facts upon which the notification of noncompliance is based; and

(iii) The date by which the certifying agent must rebut or correct each noncompliance and submit supporting documentation of each correction when correction is possible.

AMS proposes amending §§ 205.2, 205.501, and 205.665 of the USDA organic regulations to strengthen oversight and enforcement of certifying agents and their activities. These proposed changes are primarily intended to address recent changes to the OFPA, as amended by the Agriculture Improvement Act of 2018 (see 7 U.S.C. 6515(i)-(j)).

Clarifying the oversight of certifying agents is a critical component of this proposed rule, because it will allow the NOP to provide robust enforcement of the USDA organic regulations, and ensure a level playing field for all accredited certifying agents and certified operations.

See section 10104(d) of the Agriculture Improvement Act of 2018, Public Law No: 115-334, available at:

https://www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.

General Clarification of Oversight

To clarify the USDA's oversight of the certifying agents it accredits, AMS proposes adding the new term

certification activities

to the organic regulations. This new term defines the general activities which are considered essential to the function of a certifying agent, and therefore subject to oversight by the NOP. Any business operation conducted by a certifying agent as they implement the USDA organic regulations is considered a certification activity, including review, inspection, and certification of organic operations. The new term also clarifies that NOP oversight extends to the activities of any person performing work on behalf of the certifying agent (

e.g.,

a specific office operating in specific countries, or a subcontractor or subcontractor organization). Because the use of subcontractors is very common in the organic industry, effective enforcement depends upon oversight that reaches all persons involved in the certification of organic operations. This is reinforced by the proposed revision of § 205.665, at paragraph (a)(1)(ii), which clarifies the Program's authority to send notifications of noncompliance to a certifying agent based upon review of certification activities, including those of a person acting on behalf of the certifying agent.

Certifying Agents With Multiple Offices of Operation

Certifying agents commonly operate multiple offices to ensure adequate service (

e.g.,

sufficient capacity or proximity) to the operations they certify. This can result in a single certifyin

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