Program to Assess Organic Certifying Agencies

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 37

[Docket Number LS-99-04]

RIN 0581-AB58

Program to Assess Organic Certifying Agencies

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule establishes a voluntary, fee-for-service program,

under the Agricultural Marketing Agreement Act of 1946, to verify that

State and private organic certifying agencies comply with the

requirements prescribed under the International Organization for

Standardization/

[[Page 30862]]

International Electrotechnical Commission Guide 65 ``General

Requirements for Agencies Operating Product Certification Systems''

(ISO Guide 65). Assessments are to be conducted by the Livestock and

Seed Program of the Agricultural Marketing Service (AMS).

This assessment program is established to enable organic certifying

agencies to comply with European Union (EU) requirements beginning on

June 30, 1999. This assessment program will verify that State and

private organic certifying agencies are operating third-party

certification systems in a consistent and reliable manner thereby,

facilitating uninterrupted exports of U.S. organic agricultural

commodities to the EU. This action also establishes fees for the

services provided and announces that AMS has obtained, on an emergency

basis, approval from the Office of Management and Budget (OMB) of the

information collection requirements contained in this rule.

DATES: This rule is effective June 10, 1999. Comments must be received

by August 9, 1999. The incorporation by reference of the International

Organization for Standardization/International Electrotechnical

Commission Guide 65, ``General Requirements for Agencies Operating

Product Certification Systems'', Ref. No. ISO/IEC Guide 65:1996, listed

in this rule is approved by the Director of the Federal Register as of

June 10, 1999.

ADDRESSES: Interested persons are invited to submit written comments

concerning this interim final rule. Comments must be sent to Larry R.

Meadows, Chief, Meat Grading and Certification Branch, Livestock and

Seed Program, AMS, USDA, STOP 0248, 1400 Independence Avenue, SW.;

Washington, D.C. 20250-0248. Comments also may be sent by fax to (202)

690-4119. Additionally, comments may be sent via E-mail to

[email protected]. Comments should make reference to the date and

page number of this issue of the Federal Register and they will be made

available for public inspection in the above office during regular

business hours.

Pursuant to the Paperwork Reduction Act of 1995 (PRA), also send

comments regarding the merits of the burden estimate, ways to minimize

the burden, including through the use of automated collection

techniques or other forms of information technology, or any other

aspect of this collection of information, to the above address.

Comments concerning the information collection and recordkeeping under

the PRA should also be sent to the Desk Officer for Agriculture, Office

of Information and Regulatory Affairs, Office of Management and Budget,

Washington, D.C. 20503.

FOR FURTHER INFORMATION CONTACT: Larry R. Meadows, Chief, Meat Grading

and Certification (MGC) Branch, (202) 720-1246.

SUPPLEMENTARY INFORMATION:

Background and Discussion

This action establishes a voluntary, user-fee funded program under

which AMS would assess State and private agencies in the United States

that meet the requirements of ISO Guide 65, which has been incorporated

in this rule by reference. This assessment will facilitate

uninterrupted imports of U.S. organic products to countries in the EU

by enabling organic certifying agencies to comply with EU requirements

beginning on June 30, 1999.

This program does not provide for national standards governing the

marketing of agricultural commodities or products as organically

produced and therefore differs substantially from the proposed National

Organic Program (NOP) under the Organic Foods Production Act of 1990.

The 1990 Act requires the establishment of national standards governing

the marketing of certain agricultural products as organically produced.

A proposed rule concerning the NOP was published in the Federal

Register at 63 FR 65850 on December 16, 1997. The Department is

currently drafting a revised proposed rule for publication in the

Federal Register.

This program is established under the Agricultural Marketing Act of

1946 and provides only for the voluntary assessment of State and

private certifying agencies to verify compliance with the requirements

of ISO Guide 65. To be assessed under this program, an organic

certifying agency would submit an application requesting such

assessment from AMS and also submit to AMS for review and evaluation, a

manual documenting the organic certifying agency's quality system and

associated quality certification procedures used to certify organic

producers and handlers of organically produced agricultural commodities

(including those involved with wild crop harvesting) in accordance with

applicable industry standards.

According to the most complete data available to AMS, there are 11

State and 33 private organic certifying agencies currently providing

organic certification for agricultural commodities in the United

States. These certifying agencies provide service to approximately

4,000 organic producers and 600 handlers of agricultural commodities in

the United States. ISO Guide 65 assessment will ensure that State and

private organic certifying agencies operating third-party certification

systems are doing so in a consistent and reliable manner; thereby,

facilitating their acceptance on an international basis. Assessing

organic certifying agencies under ISO Guide 65 would enable U.S.

organic producers and handlers of U.S. organically produced agriculture

commodities to continue to export to the EU.

In crafting the provisions of a service program to assess State and

private organic certifying agencies, we have turned to the

comprehensive scheme that appears in ISO Guide 65 and incorporated by

reference its provisions in this rule. The ISO, itself, is based in

Geneva, Switzerland, and coordinates development and maintenance of

numerous international consensus standards and guidelines frequently

referenced in trade and international agreements.

As noted in ISO Guide 65, the guide provides for the general

requirements that a certifying agency would be required to meet so that

the certifying agency is recognized as competent and reliable. ISO

Guide 65 includes provisions that address a certification agency's

organization and structure; operations; subcontracting; quality system

and documentation of that system; conditions and requirements regarding

certification; internal audits and management reviews; documentation

and records; and confidentiality. Provisions of ISO Guide 65 also

include requirements for personnel and their qualifications; the

procedures to be followed by a certification agency in providing

certifications, including evaluations; and decisions on certification

and surveillance.

Because this action establishes a voluntary, user-fee service based

upon and similar to the Quality Systems Certification Program (QSCP)

established pursuant to 7 CFR Part 54, this program would be

administered by the AMS, Livestock and Seed (LS) Program, Meat Grading

and Certification (MGC) Branch. The QSCP is an audit-based program

administered by AMS which provides meatpackers, processors, producers,

and other businesses in the livestock and meat trade with the

opportunity to have special processes or documented quality management

systems verified. The services provided for in this rule would utilize

experienced QSCP auditors to assess organic certifying agencies to ISO

Guide 65. AMS has developed, tested,

[[Page 30863]]

and implemented QSCP procedures to verify quality systems and this

knowledge and experience is readily adaptable to reviewing and

assessing quality systems of organic certifying agencies pursuant to

the requirements of ISO Guide 65.

Interested State or private organic certifying agencies can apply

to be assessed under ISO Guide 65 by completing Form LS-314,

Application for Service and submitting the completed and signed Form

LS-314 to the address listed on the form. Upon approval of a request

for service, an applicant would be required to submit a copy of its

quality manual used for conducting certification.

AMS auditors would review the quality manual for conformance with

requirements set forth in ISO Guide 65. Upon AMS approval of the

quality manual, AMS auditors would schedule and conduct an onsite audit

of the certifying agency's operation which would include confirmation

that the provisions of the quality manual have been implemented and

that the applicant complies with the requirements of ISO Guide 65. Upon

verification by AMS of the organic certifying agency's compliance with

ISO Guide 65 requirements, AMS would issue a certificate of compliance.

Those organic certifying agencies determined to not meet applicable

assessment program requirements would be provided with a written

summary of observed program deficiencies. These organic certifying

agencies would have the opportunity to implement the required

corrective actions needed to receive a certificate of compliance or

appeal the determination to the LS Program Deputy Administrator. Once

corrective action has been taken, the organic certifying agency may

contact the MGC Branch to schedule another audit for assessment.

Each assessed organic certifying agency would be provided official

documentation of their compliance with ISO Guide 65 in the form of a

certificate of compliance. The names of assessed certifying agencies

would be posted for public reference on the LS Program's website at:

http://www.ams.usda.gov/lsg/. AMS would conduct periodic reassessment

audits to ensure continued compliance with all applicable program

requirements.

This section establishes and adds a new Part 37 to Title 7 of the

Code of Federal Regulations. In addition to fees, those provisions and

procedures that would be the same or similar to the provisions of Part

54 are included in this rule in order to provide a complete voluntary

service program under the Agricultural Marketing Act of 1946.

Accordingly, the regulations include provisions for appropriate

definitions; description of services; the incorporation by reference of

the requirements of ISO Guide 65; how to apply for service; when an

application may be withdrawn; access to establishments and records;

reassessment of approved certification programs; suspension or denial

of program assessment; appeals and termination.

Under the Agricultural Marketing Act of 1946, AMS is required to

collect hourly fees for providing official services under 7 CFR Part

54, including services provided under the QSCP, to cover as nearly as

practicable AMS costs for performing the service including related

administrative and supervisory costs. Since the procedures used for

assessing State and private organic certifying agencies are similar as

those used to certify other types of product or system certification

programs under the QSCP, AMS has decided to charge the same hourly fees

for assessing organic certifying agencies as are charged for services

currently provided under QSCP. QSCP services are based on the hourly

rate for applicants who request services on an hourly or daily basis

and appear at 7 CFR Part 54 as published in the Federal Register at 63

FR 32965 on July 17, 1998. The current base hourly rate for such

service is $42.20 per hour for 8 hours or less of work performed

between the hours of 6 a.m. and 6 p.m., Monday through Friday, except

on legal holidays. The premium hourly rate for all applicants is $47.80

per hour charged to users of the service for the hours worked in excess

of 8 hours per day between the hours of 6 a.m. and 6 p.m.; for the

hours worked between 6 p.m. and 6 a.m., Monday through Friday; and for

any time worked on Saturday and Sunday, except on legal holidays. The

holiday rate for all applicants is $79.60 per hour charged to users of

the service for all hours worked on legal holidays. Travel costs, per

diem costs, and other administrative costs are in addition to the

hourly charges. The estimated average total cost for assessment would

be approximately $2,000 plus associated travel expenses. These fees are

currently under review and any changes deemed necessary will be subject

to a separate rulemaking action.

Executive Order 12866

This rule has been determined to be significant for purposes of

Executive Order 12866 and, therefore, has been reviewed by the Office

of Management and Budget. The EU regulatory framework permits

assessment to ISO Guide 65 by competent government authorities or by

internationally recognized private accreditation agencies such as

European Accreditation or the American National Standards Institute.

National governments are recognized as competent authorities and in

matters pertaining to agriculture USDA is the competent authority for

the United States. At this time, USDA believes there are no domestic

private official accreditation agencies which perform ISO Guide 65

assessments for agriculture-related third party certification programs.

Thus, pending implementation of this rule there is no domestic supply

of ISO Guide 65 assessments for organic certifiers.

A U.S. certification agency may obtain assessment to ISO Guide 65

from a private entity sanctioned by a government agency within a

individual EU member state. This approach allows products to be

imported only into the EU Member State that provides oversight to the

private entity. This approach would potentially require each certifier

to negotiate 15 separate agreements, one for each member state.

Therefore, country-by-country recognition is inefficient. ISO Guide 65

assessments conferred by the competent authority of a third country,

USDA for the United States, would be more efficient because under the

EU regulatory framework such assessments would be recognized by all EU

Member States, enabling direct trade with all 15 Member States.

Alternatively, USDA could establish through rulemaking a process to

approve private parties who could then perform ISO Guide 65 assessments

acceptable to the EU at large. However, given the small universe of

potential clients--11 State programs and 33 private certifying

agencies--it is unlikely that economic returns would be sufficient for

a competitive system to develop. Also, establishing a program to

approve a private party to perform conformity assessments to ISO Guide

65, would take more time than is available before the announced EU

deadline for such assessments, and does not ensure these services are

available.

This regulatory action directly affects organic certifying agencies

and indirectly affects producers and handlers of organic goods. The

rule provides a mechanism for certifying agencies to be assessed for

conformance to ISO Guide 65 guidelines. The benefit of the assessment

to the certifiers is their clients will satisfy the EU requirement that

producers and handlers of organic goods exported to

[[Page 30864]]

the EU must be operating under a certifying agency that conforms to ISO

Guide 65. Certifying agencies will choose to be assessed against ISO

Guide 65 if they perceive that it will benefit their clients and if the

certifying agency expects to be able to recover the costs of an ISO

Guide 65 assessment. This is the case where their clients are or may

anticipate exporting to the EU, or the certifier hopes to attract new

clients that wish to export to the EU.

Organic producers and handlers in the United States will demand

that their certifying agency undertake an ISO Guide 65 assessment if it

benefits them. The benefit to organic producers and handlers derives

from access to the EU market for organic goods. It is difficult to

quantify the value of access to the European market because suitable

statistics on organic goods exported to Europe are not available. U.S.

exports of organic goods are estimated at a retail value of $300

million. It is not known what share of these exports go to the EU.

The immediate benefit of this rule is that it maintains the access

that the U.S. organic industry has to the European market. Without the

rule, U.S. producers and handlers would incur economic loses resulting

from the sale of their organic goods in less remunerative markets.

If EU markets were no longer available, organic goods would be

marketed in the domestic organic market or in other foreign organic

markets. This would preserve part of the price premium for organic

goods. Returns would fall as product is shifted into other markets,

first because producers were presumably selling into their most

profitable markets and secondly because increased supplies to other

markets will depress prices. Another marketing alternative is to sell

organic goods in the conventional market. Unlike organic markets which

are relatively thin, little price impact would be expected from shifts

to conventional markets. In the longer run, U.S. organic production

could decline if producers perceived that the European market were

lost.

The difference in net returns between sales to the EU organic

market and sales to the conventional market is the maximum loss to the

organic industry. There is insufficient data to estimate this

difference. Data on the volumes of particular organic goods exported,

their value as organic goods in Europe, and their value if sold into

conventional markets would be needed. However, it is possible to

illustrate the difference in net returns.

Retail price premiums for organic products vary by commodity,

region, and season. Case studies suggest a range of premiums from 5

percent to over 200 percent.1 In the following illustration,

a 100 percent premium is assumed. The impact on organic products from

shifting sales to the conventional market cannot be directly computed

by applying the lost premium to the retail value. The aggregate loss to

producers is much smaller because the farm share of value of retail

sales is only a fraction of the retail value. In aggregate, the farm

share of retail value is about 22 percent, but this could be different

for organic goods.2 The farm share is slightly smaller--18

to 20 percent--for fresh fruits and vegetables which are important

organic commodities and much smaller, around 5 percent for highly

processed goods like breads and cereals. The highest farm shares are

for eggs and meats which can run from 30 to almost 60 percent. Thus,

shifting the sales of organic goods from markets where they are valued

at $1 million retail to conventional markets would involve a decrease

in revenues to organic producers of about $110,000 (a decrease from

$220,000 to $110,000). This assumes the average 22 percent farm share

of value and an organic price premium of 100 percent that carries

through from retail to farm.

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\1\ Harris J. Michael, ``Consumers Pay a Premium for Organic

Baby Foods,'' Food Review, USDA, Economic Research Service, May-

August 1997.

Glazer, Lewrene, et al, ``Demand for Frozen Vegetables: A

Comparison of Organic and Conventional Products,'' Vegetables and

Specialities, VGS-276, USDA, Economic Research Service, Nov. 1998.

Dobbs, Thomas L. ``Price Premiums for Organic Crops,'' Choices,

American Agricultural Economics Association, Second Quarter, 1998.

\2\ U.S. Department of Agriculture. Agricultural Outlook,

Economic Research Service. Table 8, page 37, May 1998.

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Handlers and processors between the producer and retailer would

also see lower revenues from shifting sales to conventional markets.

However, it is difficult to describe quantitative relationships for

intermediary handlers because they engage in a wide range of activities

including substantial processing of some commodities.

Certifying agencies that choose to be assessed with regard to ISO

Guide 65 will face the direct cost of fees for the assessment service

and any ancillary costs to bring their business practices into

conformity. Ancillary costs might include costs to create or modify

business records and policy documents so that they meet ISO Guide 65

standards. AMS has already provided training regarding ISO Guide 65 to

interested organic certifiers and believes industry participants are

already in or very nearly in conformity with ISO Guide 65. Thus,

ancillary costs are expected to be minor. The cost of providing and

obtaining information for AMS review is $590 per certifying agency and

discussed in detail under the Paperwork Reduction Act.

Some State organic certifying agencies which subsidize activities

associated with providing organic certification services may not pass

assessment costs on to users of their organic certification. Likewise,

some of the larger organic certifying agencies may absorb the

assessment costs because they are able to spread their fixed costs over

a larger number of clients. However, given that there are approximately

4,000 organic farmers and 600 handlers in the United States, the Agency

anticipates that any increase in fee rates based solely on recovering

assessment costs would be minimal.

This rule is not intended to have any effect on consumers. The

costs to certifying agencies for ISO Guide 65 assessment would be

passed on to their clients. Organic producers and handlers could pass

some of these costs on to consumers depending on the elasticity of

demand and supply.

Regulatory Flexibility Act

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA) (5 U.S.C. 601 et seq.), AMS has considered the economic

impact of this rule on small entities. The purpose of the RFA is to fit

regulatory actions to the scale of businesses subject to such action so

that small businesses will not be disproportionally burdened.

Accordingly, we also have prepared an initial regulatory flexibility

analysis.

This action establishes, under the authority of the Agricultural

Marketing Act of 1946, a voluntary, user-fee funded program under which

the AMS would accredit State and private organic certifying agencies in

the United States that meet the requirements of ISO Guide 65, which has

been incorporated in this rule by reference. This assessment will

facilitate uninterrupted imports of U.S. organic products to countries

in the EU by enabling organic certifying agencies to comply with EU

requirements beginning on June 30, 1999.

To be assessed, an organic certifying agency would submit an

application requesting such assessment from AMS and also submit to AMS

for review and evaluation, a manual documenting the organic certifying

agency's quality system and associated quality certification procedures

used to certify organic farms and handlers of organically produced

agricultural commodities (including those involved in wild crop

harvesting).

[[Page 30865]]

According to the Standard Industrial Classifications (SIC) (13 CRF

Part 121) which are used by the Small Business Administration (SBA) to

identify small businesses, nearly all of the entities affected by this

proposed regulation would be considered small businesses. According to

the SIC, a small business in the agricultural services sector, such as

organic certifying agencies, includes firms with revenues of less than

$3.5 million (SIC Division A Major Group 07).

According to the most complete data available to AMS, there are 11

State and 33 private organic certifying agencies currently providing

organic certification services in the United States. While they vary in

size, they all have fewer than 499 employees and earn annual revenues

of less than $3.5 million. These agencies certify approximately 4,000

farmers and 600 handlers in the United States. In crop production, the

SIC definition of a small business includes all farms with annual crop

sales of under $500,000 (SIC 0111-0191). Most of the farms currently

certified have less than $25,000 in gross sales of organic production.

However, many farms combine organic and conventional production on the

same operation, some with total sales that may exceed $500,000. In

handling operations, the SIC defines a small business as having fewer

than 500 employees (SIC Division D. Mayor Group 20). In the absence of

definitive data on organic handling operations, AMS believes that no

handling operation employs more than 499 employees.

Except for an application form, no new forms will be required in

connection with requests for assessment service or the assessment

audit, review and approval process. Although, ISO Guide 65 requires

that certifiers maintain a variety of records and documents, AMS

believes many of these records and documents are already being prepared

and maintained as a standard operating practice necessary for organic

certifying agencies to support certification of organic farms and

handling operations. However, it is possible that organic certifiers

may need to refine their recordkeeping process and improve their

documentation. We estimate that the cost of providing and obtaining the

information required in this rule to assess State and private organic

certifying agencies is $590 per certifying agency. The paperwork burden

that may be imposed on organic certifying agencies is further discussed

in the section entitled Paperwork Reduction Act that follows.

In addition, we have not identified any relevant Federal rules that

are currently in effect that duplicate, overlap, or conflict with this

rule.

Interested State or private organic certifying agencies would be

able to apply for assessment under ISO Guide 65 in accordance with the

provisions of this rule. Accordingly, this rulemaking action

establishes and adds a new Part 37 to Title 7 of the Code of Federal

Regulations. In addition to fees, those provisions and procedures that

are the same or similar to the provisions of Part 54 are included in

this rule in order to provide a complete voluntary service program

under the Agricultural Marketing Act of 1946. The regulations include

provisions for appropriate definitions; description of services; the

incorporation by reference of the requirements of ISO Guide 65; how to

apply for service; when an application may be withdrawn; access to

establishments and records; reassessment of approved certification

programs; suspension or denial of program assessment; appeals and

termination.

Under the Agricultural Marketing Act of 1946, AMS is required to

collect hourly fees for providing official services under 7 CFR Part

54, including services provided under the QSCP, to cover as nearly as

practicable AMS costs for performing the service including related

administrative and supervisory costs. Since the procedures used for

assessing State and private organic certifying agencies are similar as

those used to certify other types of product or system certification

programs under the QSCP, AMS has decided to charge the same hourly fees

for assessing organic certifying agencies as are charged for services

currently provided under QSCP. QSCP services are based on the hourly

rate for applicants who request services on an hourly or daily basis

and appear at 7 CFR Part 54 as published in the Federal Register at 63

FR 32965 on July 17, 1998. The current base hourly rate for such

service is $42.20 per hour for 8 hours or less of work performed

between the hours of 6 a.m. and 6 p.m., Monday through Friday, except

on legal holidays. The premium hourly rate for all applicants is $47.80

per hour charged to users of the service for the hours worked in excess

of 8 hours per day between the hours of 6 a.m. and 6 p.m.; for the

hours worked between 6 p.m. and 6 a.m., Monday through Friday; and for

any time worked on Saturday and Sunday, except on legal holidays. The

holiday rate for all applicants is $79.60 per hour charged to users of

the service for all hours worked on legal holidays. Travel costs, per

diem costs, and other administrative costs are in addition to the

hourly charges.

AMS estimates that the average assessment service would cost $2,000

plus travel costs for the required documentation review and onsite

audit required for verifying compliance with ISO Guide 65. These fees

are currently under review and any charges deemed necessary will be

subject to a separate rulemaking action.

Further, in assessing alternatives to the scheme provided for in

Part 37, we believe that the provisions contained in the rule would

best accomplish its purpose of this rule and at the same time minimize

any burden that might be placed upon affected parties. Nonetheless, we

invite comments concerning the potential effects of this rule on

affected parties, including more information on the benefits or burdens

that small entities may incur as a result of implementation of this

rule.

Executive Order 12988 and 12898

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform and is not intended to have retroactive effect. This

rule would not preempt any State or local laws, regulations, or

policies, unless they present an irreconcilable conflict with this

rule. There are no administrative procedures that must be exhausted

prior to any judicial challenge to the provisions of this rule.

Pursuant to Executive Order 12898, ``Federal Actions to Address

Environmental Justice in Minority Populations and Low Income

Populations,'' AMS has considered the potential civil rights

implications of this rule on minorities, women, or persons with

disabilities to ensure that no person or group shall be discriminated

against on the basis of race, color, sex, national origin, religion,

age, disability, or marital or familia status. This included those

persons who are employees, program beneficiaries, or applicants for

employment or program benefits in this voluntary program to assess

organic certifying agencies. This rule does not require certifying

agencies to relocate or alter their operations in ways that could

adversely affect such persons or groups. Nor would it exclude any

persons or groups from participation in the voluntary assessment

program, deny any persons or groups the benefits of the assessment

program, or subject any persons or groups to discrimination.

Paperwork Reduction Act

This interim final rule contains recordkeeping and submission

[[Page 30866]]

requirements that are subject to public comment and to review by the

Office of Management and Budget under the Paperwork Reduction Act of

1995 (PRA) (44 U.S.C. Chapter 35). In accordance with 5 CFR Part 1320,

we included the description of the reporting and recordkeeping

requirements and an estimate of the annual burden on organic certifying

agencies. Because there is insufficient time for a normal clearance

procedure, AMS has received temporary approval from OMB for the use of

the information collection and recordkeeping requirements that we used

to implement the assessment program for organic certifying agencies on

an expedited basis.

Title: Program to Assess Organic Certifying Agencies.

OMB Number: New collection.

Expiration Date of Assessment: Three years from date of assessment.

Type of Request: New.

Abstract: The information collection and recordkeeping requirements

in this regulation are essential to establishing and implementing a

voluntary program which verifies State and private organic certifying

agencies compliance with the requirements of the International

Organization for Standardization (ISO) Guide 65.

Based on information available, the Agency has determined that

there are currently 11 State and 33 private organic certifying

agencies. These certifying agencies conduct their certification of

organic farms and handling operations in a similar manner and have

similar recordkeeping systems and business operation practices. The

agency also determined that most of the information required under this

rule to conduct the assessment process could be collected from

certifying agencies' existing materials without creating new forms, and

that the information currently used by certifying agencies to certify

organic producers and handlers could be adapted to comply with this

rule. The PRA also requires the agency to measure the recordkeeping

burden. These organic certifying agencies have documented review and

auditing procedures and maintain appropriate records and documents for

up to 5 years on each certified organic farm or handler of organic

products. The recordkeeping burden is the amount of time needed to

store and maintain records. The agency estimated the number of program

participants who would be required to either create, submit, or store

documents as a result of this rule. The estimated annual cost of

providing and obtaining the information needed is estimated to be

$25,980 or $590 per each certifying agency. Records are required to be

retained for 5 years.

The information collection requirements in this interim final rule

include: (1) Submission of an application requesting to be assessed to

ISO Guide 65, (2) the preparation and submission of a quality manual

documenting the procedures that certifying agencies use to provide

certification services, and (3) an on-site audit of certifying agencies

certification operation programs to determine whether the certifying

agencies have implemented the provisions of the quality manual and are

in compliance with the requirements of ISO Guide 65. These information

collection requirements have been designed to minimize disruption to

the normal business practices of organic certifying agencies.

The application form requires the minimal amount of information

necessary including: (1) Firm name, address, telephone number, and

other information necessary to identify the certifying agency and its

location, and (2) other pertinent information to determine that a firm

is eligible to apply and receive services available through the program

to assess organic certifying agencies. Such information can be supplied

without data processing equipment or outside technical expertise.

Based on available information, AMS has determined that all State

and private certifying agencies develop and maintain as a normal

business practice the records and documents necessary to prepare the

quality manual required by ISO Guide 65.

The onsite audit would consist of a review and evaluation of a

certifying agency's process for certifying organic farms and handlers.

Verifying implementation of the provisions of a certifying agency's

quality manual and compliance with the requirements of ISO Guide 65

would include a review and evaluation of existing records and documents

described in the quality manual, interviews of certifiers' employees

and customers, and observation of certification activities.

1. Application for Service--Form LS-314.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average .25 hours per response.

Respondents: State and private organic certifying agencies.

Estimated Number of Respondents: 44.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 11 hours.

Total Cost: $220.

2. Quality Manual.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average 23.28 hours per response.

Respondents: State and private organic certifying agencies.

Estimated Number of Respondents: 44.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 1024 hours.

Total Cost: $20,480.

3. Maintenance of records for on-site audit.

Estimate of Burden: Public recordkeeping burden for keeping this

information is estimated to average 6.0 hours per recordkeeper.

Recordkeepers: State and private organic certifying agencies.

Estimated Number of Recordkeepers: 44.

Estimated Total Recordkeeping Hours: 264 hours.

Total Cost: $5,280.

The total average cost of the estimated annual reporting burden per

certifying agency would be approximately $590.

We are soliciting comments from the public (as well as affected

certifying agencies) concerning the information collection and

recordkeeping requirements contained in this interim final rule.

Comments are specifically invited on the following: (1) Whether the

proposed collection of information is necessary for the proper

performance of the functions of the agency, including whether the

information will have practical utility; (2) the accuracy of the

agency's burden estimate of the proposed collection of information

including the validity of the methodology and assumptions used; (3)

ways to enhance the quality, utility, and clarity of the information

collected; and (4) ways to minimize the burden of the collection of

information on those who are to respond, including through the use of

appropriate automated, electronic, mechanical, or other technological

collection techniques or other forms of information technology.

Comments concerning the information collection and recordkeeping

requirements contained in this action should reference OMB number 0581-

0183 and the Program to Assess Organic Certifying Agencies, Docket

Number LS-99-04, together with the date and page number of this issue

of the Federal Register. Comments should be sent to Larry Meadows,

Chief, Meat Grading and Certification Branch,

[[Page 30867]]

Livestock and Seed Program, AMS, USDA, STOP 0248, 1400 Independence

Avenue, SW., Washington, D.C. 20250-0248; telephone: (202) 720-1246 or

Fax: (202) 690-4119. Comments should be sent to the Desk Officer for

Agriculture, Office of Information and Regulatory Affairs, Office of

Management and Budget, Washington, D.C. 20503.

All comments received will be available for public inspection

during regular business hours at the same address.

All responses to this rule will be summarized and included in the

request for OMB approval. All comments will become a matter of public

record. Comments are best assured of having full effect if they are

received within 30 days after publication of the rule in the Federal

Register.

Pursuant to 5 U.S.C. 553, it is found and determined upon good

cause that it is impracticable, unnecessary, and contrary to the public

interest to give preliminary notice prior to putting this rule into

effect and that good cause exists for not postponing the effective date

of this rule until 30 days after publication in the Federal Register.

This action establishes a voluntary, fee for service program, under the

Agricultural Marketing Act of 1946, to assess State and private organic

certifying agencies as meeting the requirements prescribed under ISO

Guide 65. Providing this assessment, which must be conducted by a

competent authority, is necessary to comply with EU requirements that

organic certifiers must be compliant with the ISO Guide 65 which EU

plans to enforce after June 30, 1999. This assessment will ensure

uninterrupted imports of U.S. organic products to countries in the EU.

Accordingly, this rule would benefit certifying agencies as well as

producers and handlers of organically produced agricultural commodities

(including those involved with wild crop harvesting). This program is

similar to other audit-based programs in the Department. Given the

current need for an ISO Guide 65 based program at the USDA governmental

level and the expectations of EU countries, it is necessary to

implement these regulations as soon as possible. A 60-day period is

provided for interested persons to comment on this rule.

List of Subjects in 7 CFR Part 37

Administrative practice and procedure, Agriculture, Assessment of

organic certifying agencies, Incorporation by reference, Organically

produced agricultural commodities, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, Title 7 of Chapter I of

the Code of Federal Regulations is amended as follows:

1. Part 37 is added to read as follows:

PART 37--PROGRAM TO ASSESS ORGANIC CERTIFYING AGENCIES

Sec.

37.1 Definitions.

37.2 Services.

37.3 Availability of service.

37.4 How to apply for service.

37.5 Order of furnishing service.

37.6 When application may be withdrawn.

37.7 Authority to request service.

37.8 Financial interest of official.

37.9 Access to establishments or records; record retention.

37.10 Official assessment.

37.11 Publication of program assessment status.

37.12 Reassessment.

37.13 Suspension or denial of program assessment; appeals and

termination.

37.14 Fees and other charges.

37.15 Payment of fees.

37.16 OMB assigned numbers.

Authority: 7 U.S.C. 1621-1627.

Sec. 37.1 Definitions.

Words used in this part in the singular form shall be deemed to

impart the plural, and vice versa, as the case may demand. For the

purposes of such regulations, unless the context otherwise requires,

the following terms shall be construed, respectively, to mean:

Assessment services. The services provided by the Meat Grading and

Certification Branch in accordance with the regulations that may result

in assessment of an organic certification program that certifies

agricultural commodities to established specifications or standards.

Act. The Agricultural Marketing Act of 1946 (Title II of the act of

Congress approved August 14, 1946, 60 Stat. 1087, as amended by Pub. L.

272, 84th Cong., 69 Stat. 553, 7 U.S.C. 1621-1627).

Agricultural commodity. Any agricultural commodity or product, raw

or processed, that is used for human or animal consumption or use.

Agricultural Marketing Service. The Agricultural Marketing Service

of the Department.

Applicant. Any person who applies for service under the

regulations.

Audit. A systematic review of the adequacy of program or system

documentation, or the review of the completeness of implementation of a

documented program or system.

Auditor. Person authorized by the Branch to conduct official

assessments of agricultural commodity product certification programs.

Branch. The Meat Grading and Certification Branch.

Branch Chief. The Chief of the Branch, or any officer or employee

of the Meat Grading and Certification Branch, Livestock and Seed

Program, Agricultural Marketing Service, to whom authority has

heretofore been delegated, or to whom authority may hereafter be

delegated, to act in his or her stead.

Department. The United States Department of Agriculture.

Deputy Administrator. The Deputy Administrator of the Livestock and

Seed Program of the Agricultural Marketing Service or any officer or

employee of the Livestock and Seed Program to whom authority has

heretofore been delegated, or to whom authority may hereafter be

delegated to act in his or her stead.

Legal holiday. Those days designated as legal public holidays in

Title 5, United States Code, Section 6103(a).

Livestock and Seed Program. The Livestock and Seed Program of the

Agricultural Marketing Service.

Part. The program to assess organic certifying agencies in the

regulations.

Person. Any individual, partnership, corporation, or other legal

entity, or Government agency.

Quality Manual. A manual documenting an organic certifying agency's

quality system and associated quality certification procedures used to

certify organic producers and handlers of organically produced

agricultural commodities in accordance with established specifications

or standards.

Regulations. The regulations in this part.

Sec. 37.2 Services.

Organic certifying agencies requesting assessment services under

this Part shall conform to the provisions of the regulations and the

requirements of International Organization for Standardization/

International Electrotechnical Commission (ISO/IEC) Guide 65--General

Requirements for Bodies Operating Product Certification Systems, Ref.

No. ISO/IEC Guide 65:1996, or other internationally recognized

guidelines or requirements. The Director of the Federal Register

approves the incorporation by reference of ISO/IEC Guide 65 in

accordance with 5 U.S.C. 552(a) and 1 CFR part 51. You may obtain a

copy from the American National Standards Institute, 11 West 42nd

Street, New York, NY 10036. You may inspect a copy at USDA, AMS, LSP,

MGCB; STOP 0248, Room 2628-S; 1400 Independence Ave., SW., Washington,

DC 20250-0248 or at the Office of the

[[Page 30868]]

Federal Register, 800 North Capitol Street, NW, Suite 700, Washington,

DC 20488.

(a) Assessment services provided under the regulations shall

consist of:

(1) Review of the adequacy of an applicant's quality manual against

the requirements of ISO Guide 65; and

(2) Onsite auditing of an applicant's organic certification program

to ensure implementation of the provisions of the quality manual and

the applicant's compliance with the requirements of ISO Guide 65.

(b) Organic certifying agencies also may request assessment

services under other international recognized guidelines or

requirements. Developmental assistance in the form of training to

explain requirements for quality system assessment is available upon

request.

Sec. 37.3 Availability of service.

Service under these regulations is available to State and private

organic certifying agencies.

Sec. 37.4 How to apply for service.

(a) Application. Any organic certifying agency may apply to the

Branch Chief, Meat Grading and Certification (MGC) Branch, Livestock

and Seed (LS) Program, AMS, P.O. Box 96456, Room 2628-South,

Washington, D.C., 20090-6456 for assessment service. The application

shall be made on Form LS-314, Application for Service. The applicant

shall provide the following:

(1) The name and address of the establishment at which service is

desired;

(2) The name and post office address of the applicant;

(3) The financial interest of the applicant in the program, except

where application is made by an official of a State Government agency

in their official capacity;

(4) The type of business and services provided;

(5) The type of commodity certified; and

(6) the signature of the applicant (or the signature and title of

his representative). The application shall indicate the status of the

applicant as an individual, partnership, corporation, or other form of

entity. Any change in such status, at any time while service is being

received, shall be promptly reported to the Department by the person

receiving the service.

(b) Notice of eligibility for service. The applicant will be

notified whether its application is approved, and the request for

service deemed made under the regulations. Upon approval of a request

for service, the applicant shall provide a copy of its quality manual.

(c) Applicants requiring additional assessment audits who have

already submitted Form LS-314 are not required to submit an additional

Form LS-314: Provided that, the required information on the original

Form LS-314 remains unchanged.

Sec. 37.5 Order of furnishing service.

Service under the regulations shall be furnished to applicants in

the order in which requests for service therefore are received, insofar

as consistent with good management, efficiency, and economy.

Sec. 37.6 When application may be withdrawn.

An application or a request for service may be withdrawn by the

applicant at any time before the application is approved or prior to

performance of service: provided that, the applicant shall pay any

expenses which have been incurred by the Department in connection with

such application.

Sec. 37.7 Authority to request service.

Proof of the interest of an applicant involved in the request for

service, or of the authority of any person applying for the service on

behalf of another may be required, at the discretion of the reviewing

official.

Sec. 37.8 Financial interest of official.

No auditor or other Department official shall review any programs

or documents concerning a certification program in which the official

is directly or indirectly financially interested.

Sec. 37.9 Access to establishments or records; record retention.

The applicant shall cause records and documents, with respect to

which service is requested, to be made easily accessible for

examination. Supervisors and other employees of the Department

responsible for maintaining uniformity and accuracy of service shall

have access to all parts of establishments covered by approved

applications for service under the regulations, during normal business

hours or during periods of production, for the purpose of evaluating

systems or processes associated with an approved certification program.

Records and documents shall be retained for at least 5 years beyond the

date of the applicant's request for service.

Sec. 37.10 Official assessment.

Official assessment of an applicant's certification program shall

be granted upon successful completion of a two-step review process, as

provided for in Sec. 37.2.

(a) Documentation approval. Documentation approval will be provided

by the Branch Chief regarding the adequacy of an applicant's quality

manual with respect to ISO Guide 65 requirements upon completion of an

adequacy audit by the auditors.

(b) Program assessment. Assessment of a certification program will

be issued by the Branch Chief by written memorandum or other approved

method of assessment upon successful completion of an onsite audit

conducted by the auditors of an applicant's organic certification

program ensuring that the provisions of the applicant's quality manual

have been implemented and that the applicant's certification program

complies with the requirements of ISO Guide 65.

(c) Disapproval and corrections. An applicant determined not to

meet applicable assessment requirements shall be provided by the Branch

Chief with a written summary of observed program deficiencies. The

applicant may appeal such a determination in accordance with the

provisions of Sec. 37.13 or implement required corrective action. After

completion of the corrective action, the applicant may contact the

Branch Chief to schedule another audit for assessment.

Sec. 37.11 Publication of program assessment status.

(a) The names of assessed certifying agencies shall be posted for

public reference on the Livestock and Seed Program's website at: http:/

/www.ams.usda.gov/lsg/. Such postings shall include: certifier's name

and contact information; referenced specification or standard(s)

covered under the scope of assessment; effective date of assessment;

and control number(s) of official certificate(s), as applicable.

(b) The names of assessed certifying agencies posted on the

Livestock and Seed Program's website may be removed from the website

upon suspension or termination of assessment for noncompliance with the

regulations pursuant to Sec. 37.13.

Sec. 37.12 Reassessment.

Approved certification programs shall be subject to periodic

reassessment to ensure ongoing compliance with the regulations,

including the requirements of ISO Guide 65. The frequency of such

reassessment shall be based on the relative risk associated with the

certification program's integrity, as determined by the Branch Chief.

[[Page 30869]]

Sec. 37.13 Suspension or denial of program assessment; appeals and

termination.

(a) Suspension or denial of assessment. When a review of a

certification program by auditors finds noncompliance with the

regulations, including the requirements of ISO Guide 65, the Branch

Chief may suspend or deny assessment until subsequent audits show the

noncompliance has been corrected.

(b) Appeals. Appeals of adverse decisions by an auditor or the

Branch Chief may be made in writing to the Livestock and Seed Program

Deputy Administrator at Room 2092-South, 1400 Independence Avenue, SW.,

Washington, D.C. 20250-0249.

(c) Termination. If noncompliance with the regulations remains

uncorrected beyond a reasonable amount of time, as determined by the

Livestock and Seed Program Deputy Administrator, an application may be

rejected or program assessment terminated.

(1) Procedure. Actions under this subparagraph concerning rejection

of an application or termination of assessment shall be conducted in

accordance with the Rules of Practice Governing Formal Adjudicatory

Proceedings Instituted by the Secretary Under Various Statutes set

forth in Secs. 1.130 through 1.151 of this title.

(2) [Reserved]

Sec. 37.14 Fees and other charges.

Fees and other charges equal as nearly as may be to the cost of the

assessment services rendered under the regulations, including

reassessments, shall be assessed and collected from applicants in

accordance with the following provisions.

(a) Fees for Service. Except as otherwise provided in this section,

fees-for-service shall be based on the time required to render the

service provided calculated to the nearest 15-minute period, including

auditor's travel, review and approval of quality manual, the conduct of

the onsite audit, and time required to prepare reports and any other

documents in connection with the performance of service. The base

hourly rate for such service is $42.20 per hour for 8 hours or less of

work performed between the hours of 6 a.m. and 6 p.m., Monday through

Friday, except on legal holidays. The premium hourly rate for all

applicants is $47.80 per hour charged to users of the service for the

hours worked in excess of 8 hours per day between the hours of 6 a.m.

and 6 p.m.; for the hours worked between 6 p.m. and 6 a.m., Monday

through Friday; and for any time worked on Saturday and Sunday, except

on legal holidays. The holiday rate for all applicants is $79.60

charged to users of the service for all hours worked on legal holidays.

(b) Travel charges. When service is requested at a place so distant

from an auditor's headquarters, or place of prior assignment on

circuitous routing, that a total of one-half hour or more is required

for the auditor to travel to such place and back to the headquarters,

or to the next place of assignment on a circuitous routing, the charge

for such service shall include mileage charge administratively

determined by the Department, and travel tolls, if applicable, or such

travel prorated against all the applicants furnished the service

involved on an equitable basis, or where the travel is made by public

transportation (including hired vehicles), a fee equal to the actual

cost thereof. However, the applicant will not be charged a new mileage

rate without notification before the service is rendered.

(c) Per diem charges. When service is requested at a place away

from the auditor's headquarters, the fee for such service shall include

a per diem charge if the employee performing the service is paid per

diem in accordance with existing travel regulations. Per diem charges

to applicants will cover the same period of time for which the auditor

receives per diem reimbursement. The per diem rate will be

administratively determined by the Department. However, the applicant

will not be charged a new per diem rate without notification before the

service is rendered.

(d) Other costs. When costs, other than costs specified in

paragraphs (a), (b), and (c) of this section are associated with

providing the services, the applicant will be charged for these costs.

The amount of the costs charged will be determined administratively by

the Department. However, the applicant will not be charged for such

cost without notification before the service is rendered of the charge

for such item of expense.

Sec. 37.15 Payment of fees.

Fees and other charges for service shall be paid by the applicant

to the Livestock and Seed Program, AMS, P.O. Box 96456, Room 2628-

South, Washington, D.C. 20090-6456, with a check made payable to the

Agricultural Marketing Service.

Sec. 37.16 OMB assigned numbers.

The information collection and recordkeeping requirements contained

in this part have been approved by the Office of Management and Budget

(OMB) under the provisions of the Paperwork Reduction Act, 44 U.S.C.

Chapter 35 and have been assigned OMB Control Number 0581-0183.

Dated: June 4, 1999.

Enrique E. Figueroa,

Administrator, Agricultural Marketing Service.

[FR Doc. 99-14688 Filed 6-7-99; 10:53 am]

BILLING CODE 3410-02-P