year period of accreditation. Larger and more diverse operations, operations with clients marketing their products internationally, and operations with a history of problems should expect more frequent site evaluations by USDA. Operations with clients marketing their products internationally will be annually site evaluated to meet the ISO Guide 61 requirement for periodic surveillance of accredited certifying agents. USDA may also conduct site evaluations during investigations of alleged or suspected violations of the Act or regulations and in followup to such investigations. Such investigations will generally be the result of complaints filed with the Administrator alleging violations by the certifying agent. Compliance site evaluations may be announced or unannounced at the discretion of the Administrator. Certifying agents will not be billed by USDA for USDA initiated site evaluations conducted to determine compliance with the Act and regulations. 200 An accredited certifying agent must provide sufficient information to persons seeking certification to enable them to comply with the applicable requirements of the Act and these regulations. The certifying agent must maintain strict confidentiality with respect to its clients and not disclose to third parties ( with the exception of the Secretary or the applicable SOP's governing State official or their authorized representatives) any business related information concerning any client obtained while implementing these regulations except as authorized by regulation. A certifying agent must make the following information available to the public: ( 1)

certification certificates issued during the current and 3 preceding calender years; ( 2) a list of producers and handlers whose operations it has certified, including for each the name of the operation, type( s) of operation, products produced, and the effective date of the certification,

during the current and 3 preceding calender years; and ( 3) the results of laboratory analyses for residues of pesticides and other prohibited substances conducted during the current and 3 preceding calender years. A certifying agent may make other business information available to the public if permitted in writing by the producer or handler. This information will be made available to the public at the public's expense.

An accredited certifying agent must maintain records according to the following schedule:

( 1) records obtained from applicants for certification and certified operations must be maintained for not less than 5 years beyond their receipt; ( 2) records created by the certifying agent regarding applicants for certification and certified operations must be maintained for not less than 10 years beyond their creation; and ( 3) records created or received by the certifying agent pursuant to the accreditation requirements, excluding any records covered by the 10 year requirement, must be maintained for not less than 5 years beyond their creation or receipt. Examples of records 201 obtained from applicants for certification and certified operations include organic production system plans, organic handling system plans, application documents, and any documents submitted to the certifying agent by the applicant/ certified operation. Examples of records created by the certifying agent regarding applicants for certification and certified operations include certification certificates, notices of denial of certification, notification of noncompliance,

notification of noncompliance correction, notification of proposed suspension or revocation,

notification of suspension or revocation, correspondence with applicants and certified operations,

on site inspection reports, documents concerning residue testing, and internal working papers and memorandums concerning applicants and certified operations. Examples of records created or received by the certifying agent pursuant to the accreditation requirements include operations manuals; policies and procedures documents ( personnel, administrative); training records; annual performance evaluations and supporting documents; conflict of interest disclosure reports and supporting documents; annual program review working papers, memorandums, letters, and reports; fee schedules; annual reports of operations granted certification; application materials submitted to the NOP; correspondence received from and sent to USDA; and annual reports to the Administrator.

The certifying agent must make all records available for inspection and copying during normal business hours by authorized representatives of the Secretary and the applicable SOP's governing State official. In the event that the certifying agent dissolves or loses its accreditation,

it must transfer to the Administrator and make available to any applicable SOP's governing State official all records or copies of records concerning its certification activities. This requirement for the transfer of records does not apply to a merger, sale, or other transfer of ownership of a 202 certifying agent.

Certifying agents are also required to prevent conflicts of interest and to require the completion of an annual conflict of interest disclosure report by all persons who review applications for certification, perform on site inspections, review certification documents, evaluate qualifications for certification, make recommendations concerning certification, or make certification decisions and all parties responsibly connected to the certifying agent. Coverage of the conflict of interest provisions extends to immediate family members of persons required to complete an annual conflict of interest disclosure report. A certifying agent may not certify a production or handling operation if the certifying agent or a responsibly connected party of such certifying agent has or has held a commercial interest in the production or handling operation,

including an immediate family interest or the provision of consulting services, within the 12 month period prior to the application for certification. A certifying agent may certify a production or handling operation if any employee, inspector, contractor, or other personnel of the certifying agent has or has held a commercial interest, including an immediate family interest or the provision of consulting services, within the 12 month period prior to the application for certification. However, such persons must be excluded from work, discussions, and decisions in all stages of the certification process and the monitoring of the entity in which they have or have held a commercial interest. The acceptance of payment, gifts, or favors of any kind, other than prescribed fees, from any business inspected is prohibited. However, a certifying agent that is a not for profit organization with an Internal Revenue Code tax exemption or, in the case of a foreign certifying agent, a comparable recognition of not for profit status from its government,

may accept voluntary labor from certified operations. Certifying agents are also prohibited from 203 giving advice or providing consultancy services to certification applicants or certified operations for overcoming identified barriers to certification. To further ensure against conflict of interest,

the certifying agent must ensure that the decision to certify an operation is made by a person different from the person who conducted the on site inspection.

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

No accredited certifying agent may exclude from participation in or deny the benefits of the NOP to any person due to discrimination because of race, color, national origin, gender,

religion, age, disability, political beliefs, sexual orientation, or marital or family status. Accredited certifying agents must accept all production and handling applications that fall within their areas of accreditation and certify all qualified applicants, to the extent of their administrative capacity to do so, without regard to size or membership in any association or group.

Renewal of Accreditation.

To avoid a lapse in accreditation, certifying agents must apply for renewal of accreditation 204 at least 6 months prior to the fifth anniversary of issuance of the notification of accreditation and each subsequent renewal of accreditation. The Administrator will send the certifying agent a notice of pending expiration of accreditation approximately 1 year prior to the scheduled date of expiration. The accreditation of certifying agents who make timely application for renewal of accreditation will not expire during the renewal process. The accreditation of certifying agents who fail to make timely application for renewal of accreditation will expire as scheduled unless renewed prior to the scheduled expiration date. Certifying agents with an expired accreditation must not perform certification activities under the Act and these regulations.

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

Amending accreditation.

An accredited certifying agent may request amendment to its accreditation at any time. 205 The application for amendment must be sent to the Administrator and must contain information applicable to the requested change in accreditation, a complete and accurate update of the certifying agent's application information and evidence of expertise and ability, and the applicable fees.

Accreditation  Changes Based on Comments This subpart differs from the proposal in several respects as follows:

( 1) Advice and Consultancy Services. We have amended section 205.501( a)( 11)( iv) to clarify that certifying agents are to prevent conflicts of interest by not giving advice or providing consultancy services to applicants for certification and certified operations for overcoming identified barriers to certification. This amendment has been made in response to a commenter who stated that the provisions of section 205.501( a)( 11)( iv), as proposed, seemed to preclude the providing of advice and educational workshops and training programs. It was not our intent to prevent certifying agents from sponsoring in house publications, conferences, workshops,

informational meetings, and field days for which participation is voluntary and open to the general public. The provisions as originally proposed and as amended are intended to prohibit certifying agents from telling applicants and certified operations how to overcome barriers to certification identified by the certifying agent. It would be a conflict of interest for a certifying agent to tell an operation how to comply inasmuch as the certifying agents impartiality and objectivity will be lost should the advice or consultancy prove ineffective in resolving the noncompliance. The provisions of section 205.501( a)( 11)( iv) are consistent with ISO Guide 61.

To further clarify this issue, we have also amended section 205.501( a)( 16) by adding " for certification activities" after the word, " charges." 206 ( 2) Conflicts of Interest  Persons Covered. We have amended section 205.501( a)( 11)( v)

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

( 3) Reporting Certifications Granted. We have amended section 205.501( a)( 15)( ii)

( formerly section 205.501( a)( 14)( ii)) by replacing " a quarterly calendar basis" with " January 2 of each year." A commenter stated that the requirement that certifying agents report certifications that they have granted on a quarterly basis to the Administrator is burdensome. The commenter requested that section 205.501( a)( 14)( ii) be amended to require a midyear or end year reporting. 207 Section 205.501( a)( 15)( ii) now requires the certifying agent to submit a list, on January 2 of each year, including the name, address, and telephone number of each operation granted certification during the preceding year. Certifying agents can fulfill this requirement by providing an up

todate copy of the list of producers and handlers required to be made available to the public by section 205.504( b)( 5)( ii).

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

( 5) Acceptance of Applications. We have added a new section 205.501( a)( 19) requiring the certifying agent to accept all production or handling applications for certification that fall within the certifying agent's areas of accreditation and to certify all qualified applicants, to the extent of their administrative capacity to do so, without regard to size or membership in any association or group. We have made this addition because we agree with the many commenters who requested that certifying agents be required to certify all qualified applicants. We recognize,

however, that there may be times when the certifying agent's workload or the size of its client base might make it necessary for the certifying agent to decline acceptance of an application for certification within its area of accreditation. This is why we have included the proviso, " to the extent of their administrative capacity to do so." We have included " without regard to size or 208 membership in any association or group" to address commenter concerns about discrimination in the providing of certification services. This addition is consistent with ISO Guide 61.

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

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

Expanding the coverage from inspectors to all persons involved in the certification process makes the regulation consistent with ISO Guide 61. Sections 205.505( a)( 3) and 205.510( a)( 4) have been amended to make their language consistent with the changes to section 205.501( a)( 6).

( 8) Annual Program Evaluation. We have amended section 205.501( a)( 7) by replacing 209 " evaluation" with " review" and by replacing " evaluations" with " reviews." A commenter suggested amending section 205.501( a)( 7) by replacing the requirement of an annual program evaluation with an annual review of program activities. We agree that " review" is a more appropriate term than " evaluate" since to review is to examine, report, and correct while evaluate is more in the nature of assessing value. We have not, however, accepted that portion of the commenter's suggestion which would have removed the reference to the review being conducted by the certifying agent's staff, an outside auditor, or a consultant who has the expertise to conduct such reviews. We have not accepted this suggestion because the comment would have limited the review to being conducted by the certifying agent with no requirement that the certifying agent be qualified to conduct the review. Another commenter wanted to change the requirement to an annual assessment of the quality of the inspection system. We have not accepted this suggestion because it can be interpreted as narrowing the scope of the review from the full certification program to just the inspection component of the certification program. This commenter would also have limited the review to being conducted by the certifying agent with no requirement that the certifying agent be qualified to conduct the review. We believe that narrowing the scope of the review would be inconsistent with ISO Guide 65. It is also inconsistent with our intent that the entire certification program be reviewed annually. We also received a comment stating that it is a violation of ISO Guide 65 to have staff perform an internal review. We disagree with this commenter. ISO Guide 65 provides that the certification body shall conduct periodic internal audits covering all procedures in a planned and systematic manner. Sections 205.505( a)( 4) and 205.510( a)( 4) have been amended to make their language consistent with the changes to section 205.501( a)( 7). 210 ( 9) Certification Decision. We have added a new section 205.501( a)( 11)( vi) that requires the certifying agent to ensure that the decision to certify an operation is made by a person different from the person who carried out the on site inspection. Commenters requested that this provision be added to the requirement that certifying agents prevent conflicts of interest. We concur with the request because it clearly separates the act of inspecting an organic operation from the act of granting certification. This addition is also consistent with ISO Guide 65, section 4.2( f), which requires that the certification body ensure that each decision on certification is taken by a person different from those who carried out the evaluation.

( 10) Determination of Conflict of Interest. We have added a new section 205.501( a)( 12)

addressing situations where a conflict of interest present at the time of certification is identified after certification. Several commenters requested the addition of a provision that, if a conflict of interest is identified within 12 months of certification, the certifying agent must reconsider the application and may reinspect the operation if necessary. We agree with the commenters that the issue of conflicts of interest present at the time of certification but identified after certification need to be addressed in the regulations. Accordingly, we have provided that an entity accredited as a certifying agent must reconsider a certified operation's application for certification and, if necessary, perform a new on site inspection when it is determined, within 12 months of certifying the operation, that any person participating in the certification process and covered under section 205.501( a)( 11)( ii) has or had a conflict of interest involving the applicant. Because the certifying agent is responsible for preventing conflicts of interest, all costs associated with a reconsideration of application, including onsite inspection costs, must be borne by the certifying agent. Further, a certifying agent must refer a certified operation to a different accredited certifying agent for 211 recertification when it is determined that any person covered under section 205.501( a)( 11)( i) at the time of certification of the applicant had a conflict of interest involving the applicant. Because the certifying agent is responsible for preventing conflicts of interest, the certifying agent must reimburse the operation for the cost of the recertification. Sections 205.501( a)( 12) through 205.501( a)( 17) have been redesignated as sections 205.501( a)( 13) through 205.501( a)( 18),

respectively.

( 11) Financial Security. We published an advanced notice of proposed rulemaking and request for comments regarding financial security in the August 9, 2000, issue of the Federal Register. We issued a news release announcing the Federal Register publication on August 9,

2000. Numerous commenters expressed concern about reasonable security relative to its amount and impact on small certifying agents. A few commenters requested a definition for reasonable security. Others stated that the formula for determining the amount of security should be published in the Federal Register. The March 13, 2000, NOP proposed rule stated that the amount and terms of reasonable financial security would be the subject of additional rulemaking.

The August 9, 2000, advanced notice of proposed rulemaking solicited comments on all aspects of reasonable security and protection of the rights of program participants. We requested comments from any interested parties, including producers and handlers of organic agricultural products, certifying agents, importers and exporters, the international community, and any other person or group. Six questions were provided to facilitate public comment on the advanced notice of proposed rulemaking. Comments addressing other relevant issues were also invited.

The questions posed in the advanced notice of proposed rulemaking were:

( 1) From what risks or events might a customer of a private certifying agent require 212 reasonable security?

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

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

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

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

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

Following analysis of the comments received, we will publish a proposed rule on reasonable security in the Federal Register. The public will again be invited to submit comments.

The proposed rule will include the proposed regulation, an explanation of the decision making process, an analysis of the costs and benefits, the effects on small businesses, and an estimate of the paperwork burden imposed by the regulation.

( 12) Use of Identifying Mark. We have amended section 205.501( b)( 2) to clarify that all certifying agents ( private and State) certifying production or handling operations within a State with more restrictive requirements, approved by the Secretary, shall require compliance with such requirements as a condition of use of their identifying mark by such operations. Numerous commenters stated that they wanted USDA to permit higher production standards by private certifying agents. See also item 17 under Accreditation  Changes Requested But Not Made.

This amendment is intended to further clarify our position that no certifying agent ( State or 213 private) may establish or require compliance with its own organic standards. It is an SOP, not a State certifying agent, that receives approval from the Secretary for more restrictive requirements.

See also item 7 under Accreditation  Clarifications.

( 13) Transfer of Records. To address the issues of a merger, sale, or other transfer of ownership, we have added the following to the end of section 205.501( c)( 3); " Provided, That,

such transfer shall not apply to a merger, sale, or other transfer of ownership of a certifying agent." Commenters suggested amending section 205.501( c)( 3) to provide for the transfer of records accumulated from the time of accreditation to the Administrator or his or her designee,

another accredited certifying agent, or an SOP's governing State official in a State where such official exists. It was also stated that this section needs to take into account a certifying agent's decision to merge or transfer accounts to another certifying agent in the case of loss of accreditation. Under the NOP, should a certifying agent dissolve or lose its accreditation, its certified operations will be free to seek certification with the accredited certifying agent of their choice. Accordingly, it would be inappropriate to automatically transfer an operation's records to another certifying agent as requested by the commenters. However, in analyzing the comments,

we realized that a provision was needed for a merger, sale, or other transfer of ownership of a certifying agent; thus, the amendment to section 205.501( c)( 3). Section 205.505( b)( 3) has been amended to make its language consistent with the changes to section 205.501( c)( 3).

( 14) Fees for Information. We have amended section 205.504( b)( 5) by inserting " including any fees to be assessed" after the word, " used." This change is made in response to the question of whether fees may be charged for making information available to the public. It is our intent that certifying agents may charge reasonable fees for document search time, duplication, 214 and, when applicable, review costs. We anticipate that review costs will most likely be incurred when the information requested is located within documents which may contain confidential business information.

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

( 16) Equivalency of Certification Decisions and Statement of Agreement. We have amended sections 205.501( a)( 12) ( redesignated as 205.501( a)( 13)) and 205.505( a)( 1) by deleting the words, " USDA accredited" and " as equivalent to its own," and adding to the end thereof:

" accredited or accepted by USDA pursuant to section 205.500." We have made this amendment to clarify that the provision applies to certification decisions by domestic certifying agents as well as foreign certifying agents accredited or accepted by USDA pursuant to section 205.500.

There were many comments in support of section 205.501( a)( 12) as written. However some did not agree that certifying agents should have to recognize another agent's decision as equivalent to their own. These commenters want to maintain the right and ability not to use their seal on a product that does not meet their standards. The most strongly voiced comment stated:

" delete section 205.501( a)( 12) and section 205.505( a)( 1). The requirements constitute a " taking"

in violation of the Fifth Amendment and are unnecessary to accomplish the goal of establishing a consistent standard and facilitating trade."

We do not concur with the commenters who want to change sections 205.501( a)( 12) and 215 205.505( a)( 1). We also do not agree with the comment that sections 205.501( a)( 12) and 205.505( a)( 1) constitute a taking in violation of the Fifth Amendment and are unnecessary to accomplish the goal of establishing a consistent standard and facilitating trade. We believe that,

to accomplish the goal of establishing a consistent standard and to facilitate trade, it is vital that an accredited certifying agent accept the certification decisions made by another certifying agent accredited or accepted by USDA pursuant to section 205.500. All domestic organic production and handling operations, unless exempted or excluded under section 205.101, must be certified to these national standards and, when applicable, any State standards approved by the Secretary. All domestic certified operations must be certified by a certifying agent accredited by the Administrator. No USDA accredited certifying agent, domestic or foreign, may establish or require compliance with its own organic standards. Certifying agents are not required to have an identifying mark for use under the NOP. However, if a certifying agent is going to use an identifying mark under the NOP, the use of such mark must be voluntary and available to all of the certifying agent's clients certified under the NOP. Accordingly, we have not changed the requirement that a certifying agent accept the certification decisions made by another USDAaccredited certifying agent. We have, however, as noted above, amended both sections to require that USDA accredited certifying agents accept the certification decisions made by another certifying agent accredited or accepted by USDA pursuant to section 205.500.

( 17) Granting Accreditation. We have made editorial changes to section 205.506 consistent with the suggestion that we replace " approval of accreditation" with " granting of accreditation." In the title to section 205.506, we have replaced " Approval of" with " Granting."

In section 205.506( a), we have replaced " approved" with " granted," and in section 205.506( b), 216 we have replaced " approval" with " the granting." We have made these change because, under the NOP, we grant accreditation rather than approve accreditation.

( 18) Correction of Minor Noncompliances. We have added a new section 205.506( b)( 3)

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

( 19) Denial of Accreditation. We have amended section 205.507 to include noncompliance and resolution provisions originally included by cross reference to section 205.665( a). This cross reference created confusion for commenters, regarding section 205.665' s applicability to applicants for accreditation because the section does not specifically address applicants. Rather than specifically identifying applicants within section 205.665, we believe the issue is best clarified by addressing noncompliance and resolution within section 205.507. As amended, section 205.507 now states in paragraph ( a) that the written notification of noncompliance must describe each noncompliance, the facts on which the notification is based, 217 and the date by which the applicant must rebut or correct each noncompliance and submit supporting documentation of each such correction when correction is possible. This rewrite of paragraph ( a) also enabled us to eliminate paragraph ( b) since its provisions are addressed in amended paragraph ( a). The section also provides, at new paragraph ( b), that when each noncompliance has been resolved, the Program Manager will send the applicant a written notification of noncompliance resolution and proceed with further processing of the application.

We have also clarified the applicant's appeal rights by adding " or appeal the denial of accreditation in accordance with section 205.681 by the date specified in the notification of accreditation denial" to the end of paragraph ( c).

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

requiring a new application for accreditation is unnecessary and burdensome on the certifying agent. This change is consistent with changes to sections 205.662( f) and 205.665( g)( 1), which were made based on comments received on section 205.662( f).

( 21) Ineligible for accreditation. We have amended section 205.507( d) by deleting 218 " private entity" from the third sentence. The amended sentence provides that " A certifying agent whose accreditation is revoked will be ineligible for accreditation for a period of not less than 3 years following the date of such determination." Several commenters recommended deletion of " private entity" so that private certifying agents would be regulated on an equivalent basis with State certifying agents. It is our intent to regulate private and State certifying agents on an equivalent basis. Accordingly, we made the recommended change.

( 22) Peer Review. We have amended section 205.509. As amended, the section requires that the Administrator establish a peer review panel pursuant to FACA ( 5 U. S. C. App. 2 et seq.).

The peer review panel will be composed of not less than 3 members who will annually evaluate the NOP's adherence to the accreditation procedures in subpart F of these regulations and ISO/ IEC Guide 61, General requirements for assessment and accreditation of certification/ registration bodies, and the NOP's accreditation decisions. This will be accomplished through the review of accreditation procedures, document review and site evaluation reports, and accreditation decision documents and documentation. The peer review panel will report its finding, in writing, to the NOP's Program Manager. We developed this approach to peer review as a means of addressing the suggestions of the commenters and the need for administration of an effective and timely accreditation program.

Many commenters wanted the opening language in the first sentence of section 205.509 changed from " The Administrator may" to the " The Administrator shall" establish a peer review panel to assist in evaluating applicants for accreditation, amendment to an accreditation, and renewal of accreditation as certifying agents. One of the most frequent comments, including a comment by the NOSB, was that peer reviewers should be compensated for their time and 219 expenses. Many commenters believe also that the peer review process should be collaborative.

Some commenters who wanted this change recognized that a collaborative process where confidential information was shared could run into problems because FACA ( P. L. 92 463, 5 U. S. C. App.) meetings are open to the public. They advised creating a FACA panel but restricting public access during discussion of confidential business information based on 5 U. S. C.

Section 522b( c)( 4) of the Government in the Sunshine Act.

As requested, amended section 205.509 requires the formation of a peer review panel.

Also as requested, peer reviewers, who will serve as a FACA committee, will be reimbursed for their travel and per diem expenses. The reviewers will also work collaboratively. We have not,

however, provided for collaborative review of each applicant for accreditation by the peer review panel because of the administrative burden that an outside collaborative review process would place on the NOP. Currently, there are 36 private and 13 State certifying agencies. It is,

therefore, likely that USDA will receive approximately 50 applications for accreditation the first year of the program. Given the need to make accreditation decisions in a timely, organized fashion, it would be infeasible to convene a panel of peers for each applicant for accreditation prior to rendering a decision on accreditation. However, as noted above, we have provided that a peer review panel will annually evaluate the NOP's adherence to the accreditation procedures in subpart F of these regulations and ISO/ IEC Guide 61, General requirements for assessment and accreditation of certification/ registration bodies, and validate the NOP's accreditation decisions.

We have also amended current section 205.510( c)( 3) by removing the reference to reports submitted by a peer review panel to make that section consistent with the rewrite of section 205.509. 220 ( 23) Expiration of accreditation. We have added a new section 205.510( c)( 1) which provides that the Administrator shall send the accredited certifying agent a notice of pending expiration of accreditation approximately 1 year prior to the scheduled date of expiration. A commenter suggested USDA notification of certifying agents at least 1 year prior to the scheduled expiration of accreditation. We have made the suggested change because we believe notification about 1 year prior to expiration will facilitate the timely receipt of applications for renewal. We have redesignated sections 205.510( c)( 1) and 205.510( c)( 2) as 205.510( c)( 2) and 205.510( c)( 3),

respectively.

( 24) Amendments to Accreditation. We have added a new section 205.510( f) to provide that an amendment to an accreditation may be requested at any time. The application for amendment must be sent to the Administrator and must contain information applicable to the requested change in accreditation. The application for amendment must also contain a complete and accurate update of the information submitted in accordance with section 205.503, Applicant information; and section 205.504, Evidence of expertise and ability. The applicant must also submit the applicable fees required in section 205.640. We have added this new section because we agree with the commenter who expressed concern that the regulations were not clear regarding amendments to accreditation. This addition is consistent with section 205.510( a)( 2)

which allows certifying agents to request amendment of their accreditation as part of their annual report to the Administrator.

Accreditation  Changes Requested But Not Made This subpart retains from the proposed rule, regulations on which we received comments as follows: 221 ( 1) Accreditation by USDA. A commenter stated that ISO/ IEC Guide 61 specifies, but the proposed rule did not specify, the requirements for USDA to assess and accredit certifying agents. The commenter questioned USDA's acceptance internationally as a competent accreditation body. A few commenters requested that USDA provide certifying agents with assurance of international trade acceptance of the USDA's accreditation program prior to implementation of the final rule. We do not believe that it is necessary to include in these regulations detailed procedures by which USDA will operate its accreditation program. USDA has developed its accreditation and certification programs with the intent that they meet or exceed international guidelines. Every country will make its own decision regarding acceptance of this accreditation program. Accordingly, while we do not anticipate problems with acceptance of our accreditation program, we cannot provide assurance against problems as requested by the commenters.

( 2) Equivalency at the European Community ( EC) Level. A commenter requested confirmation that an equivalency agreement would be negotiated at the EC level since the EC legislation provides for the basic rules while accreditation of certifying agents is a task for each member state. Another commenter pointed out that because Switzerland has the same regulations as the EC, equivalency would have to be done in close coordination with the EC. The commenter went on to say that according to Swiss and European practice, not only the organic product, but also the bodies involved will be mutually accepted. This commenter also stated that, due to Swiss import provisions, brokers must be subject to a certain control. Equivalency will be negotiated between the United States and the foreign government authority seeking the equivalency agreement. 222 ( 3) Period of Accreditation. It was suggested that accreditation should be for a 4 year period with full reevaluation occurring once every 4 years and annual surveillance visits in the intervening years. We do not concur with changing the period of accreditation from 5 years to 4 years as suggested. The 5 year period that we have provided that accreditation is consistent with the Act, which provides that accreditation shall be for a period of not to exceed 5 years. The commenter claims that the international norm is for full reevaluations to take place once every 4 years with annual surveillance visits in the intervening years. ISO Guide 61, section 3.5.1,

provides that the accreditation body shall have an established documented program, consistent with the accreditation granted, for carrying out periodic surveillance and reassessment at sufficiently close intervals to verify that its accredited body continues to comply with the accreditation requirements. We believe that accreditation for 5 years is a reasonable period of time. Further, we believe that a 5 year period of accreditation is consistent with ISO Guide 61 inasmuch as we require an annual evaluation of the certification program; annual review of persons associated with the certification process, including inspectors; annual reporting with a complete and accurate update of information required for accreditation; and one or more site evaluations during the period of accreditation in addition to the initial site evaluation for the period of accreditation. Accordingly, we have not made the recommended change.

( 4) Accreditation by Private Sector Accreditation Bodies. Numerous commenters wanted language added to section 205.500( c) that would allow private sector accreditation bodies to accredit foreign certifying agents. For example, several commenters suggested adding a provision reading as follows: " The foreign certifying agent is accredited by a private accreditation body recognized by the USDA as defined by an equivalency agreement negotiated between the 223 USDA and the accreditation body." Commenters also wanted us to amend section 205.502( a) to recognize accreditation by private accreditation programs.

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

( 5) Requirements for Accreditation. Some commenters requested more specificity in the requirements for accreditation. For example, one recommended that section 205.501( a)( 1) should include the requirement that inspectors demonstrate completion of a specified training program or internship or ongoing education and/ or licensing. Another commenter wanted baseline criteria for denying an application due to expertise. Still others wanted a definition for ( 1) " experience and training pertaining to organic/ sustainable agricultural methods and their implementation on farm or in processing facilities," ( 2) " trained certifying agent personnel," and ( 3) " reasonable time."

Finally, one wanted recordkeeping and evaluative parameters. AMS does not believe that it is necessary to present the requirements for accreditation to the extent of detail requested by the commenters. The intent is to provide flexibility to the certifying agents such that they can tailor their policies and procedures to the nature and scope of their operation. The NOP is available to respond to questions and to assist certifying agents in complying with the requirements for accreditation.

( 6) Volunteer Board Members. Some commenters suggested amending section 205.501( a)( 5) to include a reference to committees and to expand " sufficient expertise" to 224 " sufficient balance of interests and expertise." The commenters proposed the amendment to create a firewall between those persons involved in decision making and the volunteer board members. However, the purpose of section 205.501( a)( 5) is to ensure that the persons used by the certifying agent to assume inspection, analysis, and decision making responsibilities have sufficient expertise in organic production or handling techniques to successfully perform the duties assigned. Therefore, we have not made the suggested changes. Conflict of interest guidelines are found at section 205.501( a)( 11).

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

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

( 9) Conflicts of Interest. We received numerous comments stating that section 205.501( a)( 11)( i) was too restrictive and unnecessary due to the provisions of section 225 205.501( a)( 11)( ii) to prevent conflicts of interest. Some argued that these conflict of interest provisions are beyond ISO requirements and place an undue burden on membership based certifying agents and the entities they serve. They requested a conflict of interest policy enabling membership based certification organizations to continue operating. A commenter suggested that section 205.501( a)( 11) be amended to require that a certifying agent's board members sign an affidavit listing potential conflicts of interest, identify issues where an organization decision might help them personally, and exclude themselves from decision making that would assist them personally. This commenter proposed the amendment for the purpose of creating a firewall between those persons involved in certification decision making and the volunteer board members.

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

( 10) Conflicts of Interest and Prohibition on Certification. A commenter requested that we include an " or" between sections 205.501( a)( 11)( i) and 205.501( a)( 11)( ii). We have not made the recommended change because both sections must be complied with; they are not mutually exclusive. Section 205.501( a)( 11)( i) prohibits the certification of an applicant when the certifying 226 agent or a responsibly connected party of such certifying agent has or has held a commercial interest in the applicant for certification, including an immediate family interest or the provision of consulting services, within the 12 month period prior to the application for certification. When the certifying agent and its responsibly connected persons are free of any conflict of interest involving the applicant for certification, the applicant may be certified if qualified. However,

section 205.501( a)( 11)( ii) requires the certifying agent to exclude any person ( employees and contractors who do not meet the definition of responsibly connected), including contractors, with conflicts of interest from work, discussions, and decisions in all stages of the certification process and the monitoring of certified production or handling operations for all entities in which such person has or has held a commercial interest, including an immediate family interest or the provision of consulting services, within the 12 month period prior to the application for certification.

( 11) Gifts and Contributions. Commenters recommended that section 205.501( a)( 11)( iii)

be amended to allow not for profit organizations to accept gifts and contributions from certified operations for those programs not directly related to the certifying agent's organic certification activities. They also wanted it clarified that not for profit organizations can accept voluntary labor from certified operations for those programs not directly related to the certifying agent's organic certification activities. We have not made the requested changes. First, the acceptance of gifts and contributions would constitute a conflict of interest and would be contrary to ISO Guide 61. Certifying agents must have the financial stability and resources to perform their certification duties without relying on gifts and contributions from those they serve. Second, we have not added the requested provision on voluntary labor because section 205.501( a)( 11)( iii) already 227 addresses the acceptance of voluntary labor by not for profit organizations from certified operations.

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

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

ability to comply with the Act's requirement that they employ persons with sufficient expertise to implement the applicable certification program. Accordingly, we have not made the recommended change.

The change recommended by the commenters who requested that the conflict of interest determination period extend for 2 years after certification is unnecessary. Certifying agents and 228 their responsibly connected parties, employees, inspectors, contractors, and other personnel are prohibited from engaging in activities or associations at any time during their affiliation with the certifying agent which would result in a conflict of interest. While associated with the certifying agent, all employees, inspectors, contractors, and other personnel are expected to disclose to the certifying agent any offer of employment they have received and not immediately refused. They are also expected to disclose any employment they are seeking and any arrangement they have concerning future employment with an applicant for certification or a certified operation. The certifying agent would then have to exclude that person from work, discussions, and decisions in all stages of the certification or monitoring of the operation making the employment offer. If a certifying agent or a responsibly connected party of the certifying agent has received and not immediately refused an offer of employment, is seeking employment, or has an arrangement concerning future employment with an applicant for certification, the certifying agent may not accept or process the application. Further, certifying agents and responsibly connected parties may not seek employment or have an arrangement concerning future employment with an operation certified by the certifying agent while associated with that certifying agent. Certifying agents and responsibly connected parties must sever their association with the certifying agent when such person does not immediately refuse an offer of employment from a certified operation.

Accordingly, we have decided not to include a postcertification prohibition period in this final rule.

( 13) False and Misleading Claims. A commenter asked who will determine what is a misleading claim about the nature or qualities of products labeled as organically produced. This same commenter recommended amending section 205.501( a)( 13) by removing the prohibition 229 against making false or misleading claims about the nature or qualities of products labeled as organically produced.

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

( 14) Certifying Agent Compliance With Terms and Conditions Deemed Necessary. A commenter recommended that we remove section 205.501( a)( 17). This section requires that certifying agents comply with and implement other terms and conditions deemed necessary by the Secretary. This requirement is consistent with section 6515( d)( 2) of the Act, which requires a certifying agent to enter into an agreement with the Secretary under which such agent shall agree to such other terms and conditions as the Secretary determines appropriate. Accordingly, we have not accepted the commenter's recommendation. This requirement is located at current section 205.501( a)( 21). 230 ( 15) Limitations on the Use of Certifying Agent's Marks. Numerous commenters stated that they wanted USDA to permit higher production standards by private certifying agents. A common argument for allowing higher standards was that practitioners must be allowed to " raise the bar" through superior ecological on farm practices or pursuit of other social and ecological goals. Some commenters recommended that the language in section 205.501( b)( 2) be replaced with provisions that would allow certifying agents to issue licensing agreements with contract specifications that clearly establish conditions for use of the certifying agent's identifying mark.

We believe the positions advocated by the commenters are inconsistent with section 6501( 2) of the Act, which provides that a stated purpose of the Act is to assure consumers that organically produced products meet a consistent national standard. We believe that, to accomplish the goal of establishing a consistent standard and to facilitate trade, it is vital that an accredited certifying agent accept the certification decisions made by another certifying agent accredited or accepted by USDA pursuant to section 205.500. All organic production and handling operations, unless exempted or excluded under section 205.101 or not regulated under the NOP ( i. e., a producer of dog food), must be certified to these national standards and, when applicable, any State standards approved by the Secretary. All certified operations must be certified by a certifying agent accredited by the Administrator. No accredited certifying agent may establish or require compliance with its own organic standards. Accredited certifying agents may establish other standards outside of the NOP. They may not, however, refer to them as organic standards nor require that applicants for certification under the NOP or operations certified under the NOP comply with such standards as a requirement for certification under the NOP. Use of the certifying agent's identifying mark must be voluntary and available to all of its 231 clients certified under the NOP. However, a certifying agent may withdraw a certified operation's authority to use its identifying mark during a compliance process. The certifying agent, however,

accepts full liability for any such action.

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

( 16) Evidence of Expertise and Ability. A commenter stated that section 205.504, which addresses the documentation necessary to establish evidence of expertise and abilities, requires too much paperwork. We believe the amount of paperwork is appropriate for the task at hand,

verifying a certifying agent's expertise in and eligibility for accreditation to certify organic production and handling operations to the NOP. We further believe that the level of paperwork is necessary to meet international guidelines for determining whether an applicant is qualified for accreditation as a certifying agent.

( 17) Procedures for Making Information Available to the Public. Comments on section 205.504( b)( 5) were mixed. Some commenters felt that the proposal fell short of the OFPA requirement to " Provide for public access to certification documents and lab analysis." Others thought that too much confidential information would be released. 232 The Act requires public access, at section 2107( a)( 9), to certification documents and laboratory analyses pertaining to certification. Accordingly, we disagree with those commenters who requested that such documents not be released to the public. We also disagree with the commenters who contend that the requirement for public disclosure falls short of what is required by the Act. Section 205.504( b)( 5) meets the requirements of the Act by requiring the release of those documents cited in section 2107( a)( 9) of the Act. The section also authorizes the release of other business information as authorized in writing by the producer or handler.

( 18) Accreditation Prior to Site Evaluation. Numerous commenters recommended that we require site visits prior to accreditation. Some commenters cited ISO Guide 61, section 2.3.1,

in their arguments for site visits prior to accreditation. ISO Guide 61, section 2.3.1., provides that the decision on whether to accredit a body shall be made on the basis of the information gathered during the accreditation process and any other relevant information. Section 3.3.2 of ISO Guide 61 provides that the accreditation body shall witness fully the on site activities of one or more assessments or audits conducted by an applicant body before an initial accreditation is granted.

We do not concur with the commenters. These regulations provide for assessment of the applicant's qualifications and capabilities through a rigorous review of the application and supporting documentation. Following this review, an initial site evaluation shall be conducted before or within a reasonable period of time after issuance of the applicant's " notification of accreditation." In cases where the document review raises concerns regarding the applicant's qualifications and capabilities and the Administrator deems it necessary, a preapproval site evaluation will be conducted. We have further provided that a site evaluation shall be conducted 233 after application for renewal of accreditation but prior to renewal of accreditation.

Our purpose in allowing for initial accreditation prior to a site evaluation is to facilitate implementation of the NOP and to provide a means for newly established certifying agents to obtain a client base to demonstrate that they can meet the requirements of the NOP regulations.

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

( 19) Ineligibility After Revocation of Accreditation. Section 205.507( d) provides that a certifying agent whose accreditation is revoked will be ineligible for accreditation for a period of not less than 3 years following the date of such determination. A commenter stated that the 3

year period of ineligibility is overly long and effectively puts the certifying agent out of business.

The commenter suggested that a 6 to 12 month period might be reasonable. We have not accepted the suggested 6 to 12 month ineligibility period because the Act requires a period of ineligibility of not less than 3 years following revocation of accreditation.

( 20) Qualifications of the Site Evaluator. A commenter recommended amending section 205.508( a) to indicate the required qualifications of the site evaluator. We have not accepted the recommendation. We do not believe that it is necessary to specify the required qualifications of site evaluators in these regulations. All USDA employees who will perform site evaluations under 234 the NOP are quality systems auditors trained in accordance with internationally recognized protocols.

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

We do not believe that it is necessary to include a complaint process in the regulations.

All interested parties are free to file a complaint with an accredited certifying agent, SOP's governing State official, or the Administrator at any time. We will provide guidance to accredited certifying agents and SOP's governing State officials regarding the type of information to gather when receiving a complaint. SOP's governing State officials will include in their request for approval of their SOP information on their collection of complaint information. Certifying agents will include details regarding the collection of complaint information and the investigation of complaints involving certified operations in their procedures for reviewing and investigating certified operation compliance ( section 205.504( b)( 2)). This will include maintaining records of complaints and remedial actions relative to certification as well as documentation of followup actions. Further, certifying agents will include details regarding the collection of complaint information and the investigation of complaints involving inspectors and other personnel employed by or contracted by the certifying agents in their policies and procedures for training,

evaluating, and supervising personnel ( section 205.504( a)( 1)).

( 22) Recordkeeping by Certifying Agents. A commenter stated that the 10 year recordkeeping requirement of section 205.510( b)( 2) for records created by the certifying agent 235 regarding applicants for certification and certified operations is excessive. The commenter recommended a 5 year retention period. We have not accepted the recommended 5 year records retention period for records created by the certifying agent regarding applicants for certification and certified operations because the Act requires the retention of such records for 10 years.

( 23) Reaccreditation. A commenter recommended that section 205.510( c)( 1) be amended to require reaccreditation every 3 years. We have provided that accreditation will be for a period of 5 years. This is consistent with the Act which provides that accreditation shall be for a period of not to exceed 5 years. The commenter believes that a 5 year period is not consistent with ISO Guide 61, section 3.5.1, which provides that the accreditation body shall have an established documented program, consistent with the accreditation granted, for carrying out periodic surveillance and reassessment at sufficiently close intervals to verify that its accredited body continues to comply with the accreditation requirements. We believe that accreditation for 5 years is a reasonable period of time. Further, we believe that a 5 year period of accreditation is consistent with ISO Guide 61 inasmuch as we require an annual evaluation of the certification program; annual review of persons associated with the certification process, including inspectors;

annual reporting with a complete and accurate update of information required for accreditation;

and one or more site evaluations during the period of accreditation in addition to the initial site evaluation for the period of accreditation. Accordingly, we have not made the recommended change. This requirement is located at current section 205.510( c)( 2).

( 24) Notice of Renewal of Accreditation. A commenter recommended that section 205.510( d) be amended to include a timeframe within which the Administrator must notify an applicant of its renewal of accreditation. We believe that a mandated timeframe for notifying the 236 applicant of renewal of accreditation is inappropriate. We plan to process all applications for renewal of accreditation in the order in which they are received, to confirm the receipt of each application, and to establish a dialog with the applicant upon confirmation of receipt of an application for renewal of accreditation. The length of the renewal process will depend in large part on the nature of the operation seeking renewal of accreditation. To minimize the chances that an accreditation will expire during the renewal process, we have: ( 1) provided that the Administrator shall send the accredited certifying agent a notice of pending expiration of accreditation approximately 1 year before the date of expiration of the certifying agent's accreditation, ( 2) required that an application for renewal of accreditation must be received at least 6 months prior to expiration of the certifying agent's accreditation, and ( 3) provided that the accreditation of a certifying agent who makes timely application for renewal of accreditation will not expire during the renewal process. Accordingly, we have not made the recommended amendment.

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

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

USDA will accept an application for accreditation to perform certification activities under the NOP from any private entity or governmental entity certifying agent and accredit such applicant upon proof of qualification for accreditation. USDA will provide for USDA 237 accreditation of certifying agents and acceptance of a foreign government's accreditation of certifying agent within the same country. This maximizes opportunity for certifying agents without the potential for confusion and overlap in documentation. Further, we believe these requirements facilitate world trade.

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

they too shall be subject to the sovereign rights of the State of California to protect and enforce the laws of the State of California and to protect agricultural claims in this State.

Any organic program administered by a State will have to be approved by the Secretary.

Approval of an SOP will be contingent upon the State's agreeing to accept the certification decisions made by certifying agents accredited or accepted by USDA pursuant to section 205.500.

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

revocation of accreditation for violations. The commenter also recommended that foreign certifying agents be reviewed with the same frequency as State certifying agents.

We disagree that there are no alternative methods of production that assure consumers 238 that organically produced products meet a consistent standard. Accordingly, we will negotiate equivalency agreements with foreign governments. A final equivalency agreement will be required before affected product may be imported into the United States and sold, labeled, or represented as organic. Equivalency agreements will be announced to the public through a notice in the Federal Register and a news release. Site evaluations are a possibility. Foreign certifying agents that receive USDA accreditation, rather than recognition through their government, will have to fully comply with the NOP and will be treated the same as domestic accredited certifying agents.

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

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

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

We believe that the requested provision is unnecessary. Certifying agents, domestic and 239 foreign, accredited under the NOP will be expected to comply fully with the requirements of the NOP regardless of where they operate. The only exception would be when they operate in a country in which the Secretary has negotiated an equivalency agreement.

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

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

( 7) States with an Organic Statute. A commenter stated that a State with an organic statute or regulations that does not certify organic producers or organic handlers should not have to be accredited. 240 The NOP requires the Secretary's approval of SOP's whether or not the State has a State certifying agent. A State may have an SOP but not have a State certifying agent. In this case the SOP must be approved by the Secretary. A State may have a State certifying agent but no SOP.

In this case, the State certifying agent must apply for and receive accreditation to certify organic production or handling operations. Finally, a State may have an SOP and a State certifying agent.

In this case, the SOP must be approved by the Secretary, and the State certifying agent must apply for and receive accreditation to certify organic production or handling operations.

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

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

( 10) Use of the Term, " Certified Organic." In commenting on section 205.501( b)( 1), a commenter stated that if the term, " certified organic," is included on a label, it must state by whom, according to Maine State law. We do not believe that the requirements of section 205.501( b)( 1) would preclude a certified operation from complying with a State law requiring identification of the certifying agent on a product sold, labeled, or represented as " certified organic." Further, these regulations do not require a certified operation to use the word, 241 " certified," on its label.

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

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

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

We do not believe that it is necessary to present the requirements for accreditation to the extent of detail requested by the commenter. The intent is to provide flexibility to the certifying agents such that they can tailor their policies and procedures to the nature and scope of their operation. The NOP is available to respond to questions and to assist certifying agents in complying with the requirements for accreditation. 242 ( 13) Evidence of Expertise and Ability. Commenters stated that important elements of ISO Guide 65 are missing from section 205.504. They cite the maintenance of a complaints register and a register of precedents and provisions for subcontracting and a documents control policy or a document register.

Certifying agents grant certification, deny certification, and take enforcement action against a certified operation's certification. Certifying agents are required to maintain records applicable to all such actions and to report such actions to the Administrator. Certifying agents may contract with qualified individuals for the performance of services such as inspection,

sampling, and residue testing. Certifying agents are required to submit personnel information ( employed and contracted) and administrative policies and procedures to the Administrator. All such documents must be updated annually. The regulations also require the maintenance of records according to specified retention periods. All of these factors will be considered in granting or denying accreditation. We believe these requirements meet or exceed the ISO Guide 65 guidelines.

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

( 15) Responsibly Connected. A commenter stated that the term, " responsibly connected,"

as used in section 205.504( a)( 2) is a broad sweep. The commenter believes the term would include everyone they do business with.

Section 205.504( a)( 2) requires the certifying agent to provide the name and position 243 description of all personnel to be used in the certification operation. The section assists the certifying agent in meeting the requirement by identifying categories of persons covered by the requirement including persons responsibly connected to the certifying agent. Responsibly connected does not include everyone that the certifying agent does business with. Responsibly connected is defined in the Definitions subpart of this final rule as " any person who is a partner,

officer, director, holder, manager, or owner of 10 percent or more of the voting stock of an applicant or a recipient of certification or accreditation." This definition has not changed.

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

( 17) Response to Accreditation Applicant. A commenter requested that section 205.506( a)( 3) be amended to provide a timeframe within which the Administrator has to respond to the accreditation application. While section 205.506( a)( 3) identifies the information to be reviewed by the Administrator prior to the granting of accreditation, we assume the commenter is seeking a specific time limit by which the Administrator will acknowledge receipt of an application for accreditation. In the alternative, the commenter may have been seeking a specific time limit by which the Administrator must grant or deny accreditation. We believe that a regulation mandated timeframe for notifying the applicant of receipt of an application or for granting or denying accreditation is unnecessary. We plan to process all applications in the order in which they are received, to confirm the receipt of each application upon receipt, and to establish a dialog with the applicant upon confirmation of receipt of an application for accreditation. We will work with 244 each applicant to complete the accreditation process as expeditiously as possible. A firm timeframe, however, cannot be set for granting or denying accreditation due to the anticipated uniqueness of each applicant and its application for accreditation.

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

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

Section 205.507( c) provides that an applicant who has received written notification of accreditation denial may apply for accreditation again at any time in accordance with section 205.502. Upon implementation of the certification requirements of the NOP, production and handling operations planning to sell, label, or represent their products as organic must be certified by a USDA accredited certifying agent before selling, labeling, or representing their products as organic. If a producer's or handler's choice of certifying agents does not receive USDA accreditation, the producer or handler must seek and receive certification under the NOP from a USDA accredited certifying agent before selling, labeling, or representing their products as 245 organic. Producers and handlers not so certified may not sell, label, or represent their products as organic. Any producer or handler who violates this requirement will be subject to prosecution under section 2120 of the Act.

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

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

( 22) Expiration of Accreditation. Many commenters requested that we amend section 246 205.510( c)( 1) to require annual reports and " minivisits." The commenters cited ISO Guide 61,

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

( 23) Update and Review of Inspector Lists. In commenting on section 205.510( c)( 1)

( current section 205.510( c)( 2)) several commenters stated that updating and review of inspector lists must occur more frequently than every 5 years. They cited ISO Guide 61, section 3.5.1.

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

Subpart G Administrative The National List of Allowed and Prohibited Substances Description of Regulations General Requirements This subpart contains criteria for determining which substances and ingredients are allowed or prohibited in products to be sold, labeled, or represented as " organic" or " made with organic ( specified ingredients or food group( s))." It establishes the National List of Allowed and Prohibited Substances ( National List) and identifies specific substances which may or may not be used in organic production and handling operations. Sections 6504, 6510, 6517, and 6518 of the 247 Organic Foods Production Act ( OFPA) of 1990 provide the Secretary with the authority to develop the National List. The contents of the National List are based upon a Proposed National List, with annotations, as recommended to the Secretary by the National Organic Standards Board ( NOSB). The NOSB is established by the OFPA to advise the Secretary on all aspects of the National Organic Program ( NOP). The OFPA prohibits synthetic substances in the production and handling of organically produced agricultural products unless such synthetic substances are placed on the National List.

Substances appearing on the National List are designated using the following classifications:

1. Synthetic substances allowed for use in organic crop production 2. Nonsynthetic substances prohibited for use in organic crop production 3. Synthetic substances allowed for use in organic livestock production 4. Nonsynthetic substances prohibited for use in organic livestock production 5. Nonagricultural ( nonorganic) substances allowed as ingredients in or on processed products labeled as " organic" or " made with organic ( specified ingredients or food group( s))

6. Nonorganically produced agricultural products allowed as ingredients in or on processed products labeled as organic" or " made with organic ( specified ingredients or food group( s))

This subpart also outlines procedures through which an individual may petition the Secretary to evaluate substances for developing proposed National List amendments and deletions.

The NOSB is responsible for making the recommendation of whether a substance is 248 suitable for use in organic production and handling. The OFPA allows the NOSB to develop substance recommendations and annotations and forward to the Secretary a Proposed National List and any subsequent proposed amendments. We have made every effort to ensure the National List in this final rule corresponds to the recommendations on allowed and prohibited substances made by the NOSB. In developing their recommendations, the NOSB evaluates synthetic substances for the National List utilizing the criteria stipulated by the Act. Additionally,

criteria for evaluating synthetic processing ingredients have been implemented by the NOSB.

These criteria are an interpretation and application of the general evaluation criteria for synthetic substances contained in the OFPA that the NOSB will apply to processing aids and adjuvants.

The NOSB adopted these criteria as internal guidelines for evaluating processing aids and adjuvants. The adopted criteria do not supersede the criteria contained in the OFPA or replace the Food and Drug Administration's ( FDA) regulations related to food additives and generally recognized as safe ( GRAS) substances. The NOSB has also provided recommendations for the use of synthetic inert ingredients in formulated pesticide products used as production inputs in organic crop or livestock operations. The Environmental Protection Agency ( EPA) regulates and maintains the EPA Lists of Inert ingredients used for pesticide. In this final rule, EPA Inerts List 1 and 2 are prohibited, EPA List 3 is also prohibited unless specifically recommended as allowed by the NOSB, and EPA List 4 Inerts are allowed unless specifically prohibited.

In this final rule, only EPA List 4 Inerts are allowed as ingredients in formulated pesticide products used in organic crop and livestock production. The allowance for EPA List 4 Inerts only applies to pesticide formulations. Synthetic ingredients in any formulated products used as organic production inputs, including pesticides, fertilizers, animal drugs, and feeds, must be 249 included on the National List. As sanctioned by OFPA, synthetic substances can be used in organic production and handling as long as they appear on the National List. The organic industry should clearly understand that NOSB evaluation of the wide variety of inert ingredients and other nonactive substances will require considerable coordination between the NOP, the NOSB, and industry. Materials review can be anticipated as one of the NOSB's primary activities during NOP implementation. Considering the critical nature of this task, the organic industry should make a collaborative effort to prioritize for NOSB review those substances that are essential to organic production and handling. The development and maintenance of the National List has been and will be designed to allow the use of a minimal number of synthetic substances that are acceptable to the organic industry and meet the OFPA criteria.

We expect the maintenance of the National List to be a dynamic process. We anticipate that decisions on substance petitions for the inclusion on or deletion from the National List will be made on an annual basis. Any person seeking a change in the National List should request a copy of the petition procedures that were published in the Federal Register ( 65 Fed Reg 43259

43261) on July 13, 2000, from the NOP. The National List petition process contact information is: Program Manager, National Organic Program, USDA/ AMS/ TMP/ NOP, Room 2945 S, Ag Stop 0268, P. O. Box 96456, Washington, DC 20090 6456 or visit the NOP website:

www. ams. usda. gov/ nop. Substances petitioned for inclusion on the National List will be reviewed by the NOSB, which will forward a recommendation to the Secretary. Any amendments to the National List will require rulemaking and must be published for comment in the Federal Register.

Nothing in this subpart alters the authority of other Federal agencies to regulate 250 substances appearing on the National List. FDA issues regulations for the safe use of substances in food production and processing. USDA's Food Safety and Inspection Service ( FSIS) has the authority to determine efficacy and suitability regarding the production and processing of meat,

poultry, and egg products. FDA and FSIS restrictions on use or combinations of food additives or GRAS substances take precedence over the approved and prohibited uses specified in this final rule. In other words, any combinations of substances in food processing not already addressed in FDA and FSIS regulations must be approved by FDA and FSIS prior to use. FDA and FSIS regulations can be amended from time to time under their rulemaking procedures, and conditions of safe use of food additives and GRAS substances can be revised by the amendment. It is important that certified organic producers and handlers of both crop and livestock products consult with FDA regulations in 21 CFR parts 170 through 199 and FSIS regulations in this regard. All feeds, feed ingredients, and additives for feeds used in the production of livestock in an organic operation must comply with the Federal Food, Drug, and Cosmetic Act ( FFDCA).

Animal feed labeling requirements are published in 21 CFR Part 501, and new animal drug requirements and a listing of approved animal drugs are published in 21 CFR Parts 510 558.

Food ( feed) additive requirements, a list of approved food ( feed) additives generally recognized as safe substances, substances affirmed as GRAS, and substances prohibited from use in animal food or feed are published in 21 CFR 570 571, 21 CFR 573, 21 CFR 582, 21 CFR 584, and 21 CFR 589, respectively. Furthermore, the Food and Drug Administration has worked closely with the Association of American Feed Control Officials ( AAFCO) and recognizes the list of additives and feedstuffs published in the AAFCO Official Publication, which is updated annually.

Under the Federal Insecticide, Fungicide, and Rodenticide Act ( FIFRA), EPA regulates 251 the use of all pesticide products, including those that may be approved for use in the NOP. In registering a pesticide under FIFRA, EPA approves the uses of each pesticide product. It is a violation of FIFRA to use a registered product in a manner inconsistent with its labeling. The fact that a substance is on the National List does not authorize use or a pesticide product for that use if the pesticide product label does not include that use. If the National List and the pesticide labeling conflict, the pesticide labeling takes precedence and may prohibit a practice allowed on the National List.

National List  Changes Based On Comments This subpart differs from the proposal in several respects as follows:

( 1) Comprehensive Prohibition on Excluded Methods. Many commenters supported a comprehensive prohibition on the use of excluded methods in organic production and handling.

These commenters stated that the proposed language on excluded methods could have allowed some uses since the general prohibition described in section 205.301 of the proposed rule could be interpreted as applying only to multiingredient products. In order to provide a comprehensive prohibition on the use of excluded methods, we incorporated a new provision within section 205.105. A more comprehensive discussion of this issue is found in subpart B, Applicability.

( 2) Substance Evaluation Criteria for the National List. Commenters stated that the final rule should include in the regulation text the evaluation criteria utilized by the NOSB for the development of substance recommendations. We agree, and we have inserted the substance evaluation criteria developed by the NOSB for processing ingredients and cited the criteria within the Act ( 7 U. S. C. 6518( m)) for crops and livestock production as new provisions for section 205.600, which is now entitled " Evaluation criteria for allowed and prohibited substances, 252 methods, and ingredients."

( 3) Substances Approved for Inclusion on the National List. Commenters stated that the National List did not contain all of the substances recommended by the NOSB for inclusion on the National List of Allowed and Prohibited Substances. We agree and have added the following substances consistent with the most recent NOSB recommendations:

Crop Production:

Lime sulfur as a plant disease control substance Elemental sulfur as a plant or soil amendment Copper as a plant or soil micronutrient Streptomycin sulfate as plant disease control substances with the annotation " for fire blight control in apples and pears only"

Terramycin ( oxytetracycline calcium complex) as a plant disease control substance with the annotation " for fire blight control only"

Magnesium sulfate as a plant or soil amendment with the annotation " allowed with a documented soil deficiency"

Ethylene as a plant growth regulator, with the annotation " for regulation of pineapple flowering"

We have added sodium nitrate and potassium chloride to the National List as nonsynthetic substances prohibited for use in crop production unless used in accordance with the substance annotations. Sodium nitrate is prohibited unless use is restricted to no more than 20 percent of the crop's total nitrogen requirement. Potassium chloride is prohibited unless derived from a mined source and applied in a manner that minimizes chloride accumulation in the soil. These 253 additions are discussed further in item 3 under Changes Based on Comments, subpart C.

Livestock Production:

Oxytocin with the annotation " for use in postparturition therapeutic applications"

EPA List 4 inert ingredients as synthetic inert ingredients for use with nonsynthetic substances or synthetic substances allowed in organic livestock production.

Several commenters recommended that the final rule should specify which nonsynthetic substances are prohibited for use in livestock production. These commenters stated that the proposed rule prohibited six such substances for use in crop production and maintained that an analogous list for livestock operations would be beneficial. Of the six nonsynthetic substances in the proposed rule prohibited for use in crop production, four were based on NOSB recommendations ( strychnine, tobacco dust, sodium fluoaluminate ( mined), and ash from burning manure) and two were based on statutory provisions in the OFPA ( arsenic and lead salts). After reviewing these substances and the NOSB recommendations, we determined that the prohibition for one, strychnine, also applies to livestock production. Individuals may petition the NOSB to have additional nonsynthetic substances prohibited for use in organic crop and livestock production.

Organic Handling ( Processing):

Tribasic calcium phosphate Nonsynthetic colors Flavors, with the annotation " nonsynthetic sources only and must not be produced using synthetic solvents and carrier systems or any artificial preservatives"

Nonsynthetic waxes, carnauba wax, wood resin 254 Cornstarch ( native), gums, kelp, lecithin and pectin were moved from section 205.605 to section 205.606 ( 4) Substance Removed from the National List. Commenters stated that certain substances on the National List in the proposed rule had not been recommended by the NOSB.

We agree with the comment that the NOSB did not recommend that magnesium should be allowed as a plant or soil micronutrient and have removed it from the National List.

( 5) Changes in Substance Annotations on the National List. Commenters stated that certain annotations in the proposed rule did not capture the precise recommendations of the NOSB. We agree and have amended the annotations within the National List as follows:

The annotation for hydrated lime as a plant disease control substance now states, " must be used in a manner that minimizes accumulation of copper in the soil."

The annotation for horticultural oils as an insecticide substance and as a plant disease control substance now states, " Narrow range oils as dormant, suffocating, and summer oils."

The annotation for hydrated lime in livestock production now states, " not permitted for soil application or to cauterize physical alterations or deodorize animal wastes."

The annotation for the allowed synthetic parasiticide Ivermectin has been modified to state that the substance may not be used during the lactation period of breeding stock.

The annotation for trace minerals and vitamins allowed as feed additives has been modified and now states, " used for enrichment or fortification when FDA approved."

The annotation for magnesium sulfate in organic handling now states, " nonsynthetic sources only."

The annotation for EPA List 4 Inerts allowed in crop and livestock production has been 255 modified to state, "... for use with nonsynthetic substances or synthetic substances listed in this section..."

( 6) Sulfur Dioxide for Organic Wines. Many commenters recommended that this final rule should allow for the use of sulfur dioxide in wine labeled " made with organic grapes." They argued that sulfur dioxide is necessary in organic wine production and that prohibiting its use would have a negative impact on organic grape production and wineries that produce wine labeled " made with organic grapes." The prohibition on the use of sulfur dioxide in the proposed rule was based upon the requirement in the Act that prohibited the addition of sulfites to organically produced foods. However, a change in the Act now allows the use of sulfites in wine labeled as " made with organic grapes." Therefore, we have added sulfur dioxide to the National List with the annotation, " for use only in wine labeled ` made with organic grapes,' Provided,

That, total sulfite concentration does not exceed 100 ppm." The label for the wine must indicate the presence of sulfites. This addition to the National List is also in agreement with the NOSB recommendation for allowing the use of sulfur dioxide in producing wine to be labeled as " made with organic grapes."

National List  Changes Requested But Not Made This subpart retains from the proposed rule regulations on which we received comments as follows:

( 1) Restructuring the National List. Commenters requested a restructuring of the National List to improve its clarity and ease of use. Some of the commenters asked for minor changes involving the wording of section titles. Other commenters were opposed to the categories used in the National List because the categories are not in compliance with the Act. In 256 its June 2000 meeting, the NOSB asked the NOP to review a proposal from a research institute proposing that processing materials for the National List be categorized according to industry standards. This proposal recommended including new sections for substances used in " made with..." and substances used in the 5 percent nonorganic portion of " organic" multiingredient products. We agree that the present structure of the National List may not have optimum clarity and ease of use. However, extensive restructuring of the National List without additional NOSB consideration and public discussion would be a significant variation from the policy that established the National List for this final rule. The NOP will work with the NOSB and the public to refine the National list consistent with industry norms and public expectations.

( 2) Use of EPA List 4 Inerts. The proposed rule allowed EPA List 4 Inerts to be used as synthetic inert ingredients with allowed synthetic active ingredients in crop production. Some commenters stated that certain substances among the EPA List 4 inerts should not be allowed in organic production. Some commenters went further and recommended that the allowance for synthetic inert ingredients should be limited to the subset of materials that the EPA designates as List 4A. We do not agree with these commenters and have retained the allowance for all inerts included on EPA List 4. List 4 inerts are classified by EPA as those of " minimal concern" and,

after continuing consultation with EPA, we believe there is no justification for a further restriction to List 4A. If commenters believe that a particular List 4 inert should not be allowed in formulated products used in organic production, they can petition the NOSB to have that substance prohibited.

( 3) Removing Vaccines from the National List. Some commenters asserted that vaccines should not be included on the National List because the NOSB had never favorably recommended 257 their use in livestock production. However, the OFPA authorizes the use of vaccines, and in 1995, the NOSB recommended allowing their use. The NOSB stated that use of vaccines may be necessary to ensure the health of the animal and to remain in compliance with Federal, State, or regional regulations. We agree with the NOSB's recommendation and have retained vaccines as an allowed substance in livestock medication.

( 4) Adding Amino Acids to the National List. Some commenters recommended that amino acids should be added to the National List as allowed synthetic substances for livestock production. We have not added amino acids to the National List because the NOSB has not recommended that they should be allowed. This subject is discussed further in item 4, Livestock

Changes Based on Comments, subpart C.

( 5) Creating a Category for Prohibited Nonsynthetic Seed Treatments. A commenter stated that the National List of nonsynthetic substances prohibited for use in crop production should include provisions for seed treated with a nonsynthetic substance. This commenter stated that the final rule should acknowledge that a nonsynthetic seed treatment could be prohibited on the National List. We do not believe it is necessary to include a separate category for seed treatments under the prohibited nonsynthetic section of the National List. An individual may petition the NOSB to have a particular nonsynthetic seed treatments placed on the prohibited list without creating a new category for seed treatments.

( 6) Creating a Category for Treated Seed and Toxins Derived from Bacteria.

Commenters stated that the National List of synthetic substances allowed in crop production should include categories for treated seed and toxins derived from bacteria. These commenters stated that these categories are sanctioned by the OFPA, and failure to consider them would place 258 a significant burden on organic producers. We believe it is unnecessary to include these categories on the National List. Specific substances from these categories could be incorporated in existing categories that reflect their function, such as plant disease control or insecticide. An individual may submit petitions to the NOSB to have specific substances from these categories considered for inclusion on the National List.

( 7) Remove Categories for Feed Supplements. A commenter stated that it was inappropriate for the National List of synthetic substances allowed in livestock production to contain categories for feed supplements and feed additives because they are not authorized in the OFPA. We disagree with this commenter because the identification of categories on the National List does not mean that all substances within that category are allowed. The categories help to clarify which types of materials may be included on the National List. The substances included under the categories of feed supplements and feed additives were recommended by the NOSB and added to the National List with the Secretary's approval.

( 8) Neurotoxic Substances on the National List. Many commenters requested that the NOP remove particular substances from section 205.605 of the National List. They stated these substances were sources of neurotoxic compounds that negatively effect human health. The substances cited were yeast ( autolysate and brewers), carrageenan, and enzymes. Moreover,

these commenters argued against including on the National List some amino acids or their derivatives which the commenters claim have neurotoxic side effects. These commenters requested that amino acids should be prohibited from the National List due to the possibility that neurotoxic substances could be utilized for either organic agricultural production or handling.

We do not agree with the requests of the commenters and we have not made the requested 259 changes. There are no amino acids currently on the National List; therefore, synthetic sources of amino acids are prohibited. Unless recommended for use by the NOSB, synthetic amino acids will not be included on the National List. The NOP has established a petition process for substances to be evaluated for inclusion on or removal from the National List of Allowed and Prohibited Substances in organic production and handling. Anyone seeking to have a particular substance removed from the National List may file a substance petition to amend the National List.

( 9) EPA List 4 Inerts for Organic Processing. A few commenters recommended that substances in EPA List 4 inerts that are allowed for use in crop production also be allowed for use as processing materials. We do not agree, and we have not included EPA List 4 Inerts on the National List for organic handling. Inerts listed on EPA List 4 have been evaluated and approved for use in pesticide formulations, not for use as processing materials. Inerts that are included on EPA List 4 would have to be further evaluated to determine whether such materials meet the criteria for inclusion on the National List.

( 10) Modifying Annotations of Organic Processing Substances. One commenter requested that the Department modify the annotation for phosphoric acid to include its use as a processing aid. We have not made the suggested change. Any change in the annotation of a substance can only occur through an NOSB recommendation. Individuals or groups can use the petition process to submit substance petitions to the NOSB for the evaluation to be included on or removed from the National List.

( 11) Nutritional Supplementation of Organic Foods. Some commenters asserted that 21 CFR 104.20 is not an adequate stand alone reference for nutritional supplementation of organic foods. As a result, these commenters recommended that the final rule include as additional cites 260 21 CFR 101.9( c)( 8) for FDA regulated foods and 9 CFR 317.30( c), 318.409( c)( 8) for foods regulated by FSIS to support 21 CFR 104.20. We did not implement the suggested changes of the commenters. Section 205.605( b)( 20) in the proposed rule allowed the use of synthetic nutrient vitamins and minerals to be used in accordance with 21 CFR 104.20, Nutritional Quality Guidelines For Foods, as ingredients in processed products to be sold as " organic" or " made with..." The commenters recommended cites, 21 CFR 101.9( c)( 8) for FDA regulated foods and 9 CFR 317.30( c); section 318.409( c)( 8) did not provide provisions for nutritional supplementation of foods. Instead, these suggested cites were particularly aimed toward: ( 1) the declaration of nutrition information on the label and in labeling of a food; ( 2) labeling, marking devices, and containers; ( 3) entry into official establishments; and ( 4) reinspection and preparation of products. The NOP, in consultation with FDA, considers 21 CFR 104.20 to be the most appropriate reference regarding nutritional supplementation for organic foods.

( 12) National List Petition Process as Part of the Final Rule.

Commenters have requested that the National List Petition Process, approved by the NOSB at its June 2000 meeting ( and published in the Federal Register on July 13, 2000), be included in the final rule. We do not agree with the commenters, and we have retained the National List Petition Process regulation language from the proposed rule. We have separated the specific petition process from the regulation to provide for maximum flexibility to change and clarify the petition process to accommodate new considerations developed during the NOP implementation. If this process were part of this final rule, updates to the petition process would require notice and comment rulemaking. Any changes in the National List that may be a result of the petition process, however, would require notice and comment rulemaking. 261 ( 13) Nonapproved Substance Amendments to the National List. Commenters also requested to have many substances that are not on the National List and that have not be recommended by the NOSB for use in organic production and handling be added to the National List. We do not agree. Amendments to the National List must be petitioned for NOSB consideration, must have an NOSB recommendation, and must be published for public comment in the Federal Register.

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

( 1) Inerts Use in Botanical or Microbial Pesticides. Commenters expressed concern that the prohibition on the use of EPA List 3 inerts would prevent organic producers from using certain botanical or microbial formulated products that are currently allowed under some certification programs. These commenters requested that the NOP and the NOSB expedite the evaluation of List 3 inerts used in nonsynthetic formulated products to prevent the loss of certain formulated products. The prohibition of List 3 inerts was based on the recommendation of the NOSB to add only those substances from List 4 to the National List. The NOSB also recommended that individual inert substances included on List 3 could be petitioned for addition to the National List. The NOP has requested that the NOSB identify for expedited review those List 3 inerts that are most important in formulated products used in organic production.

Individuals may petition to have these inerts considered for inclusion on the National List.

Additionally, the NOP will work with the EPA and the registrants of formulated products to expedite review of List 3 inerts currently included in formulated products used in organic production. Unless List 3 inerts are moved to List 4 or individually added to the National List, 262 they are prohibited for use in organic production.

( 2) Prohibiting Ash, Grit, and Screenings Derived from Sewage Sludge. Many commenters recommended that the ash, grit, and screenings derived from the production of sewage sludge should be added to the National List as nonsynthetic materials prohibited for use in crop production. While the use of sewage sludge, including ash, grit, and screenings, is prohibited in organic production, we did not add them to the National List as prohibited nonsynthetic substances. This subject is discussed further under subpart A, Definitions  Changes Requested But Not Made.

( 3) Allowed Uses for Pheromones. Some commenters were concerned that the annotation for using pheromones as " insect attractants" was too limiting and would not include uses such as mating disruption, trapping, and monitoring. The annotation for pheromones does not preclude any use for a pheromone that is otherwise allowed by Federal, State, or local regulation.

( 4) Nonagricultural Products as Livestock Feed Ingredients. Some commenters questioned whether nonsynthetic, nonagricultural substances such as fishmeal and crushed oyster shell needed to be added to the National List to be used in livestock feed. Nonsynthetic substances do not have to appear on the National List and may be used in organic livestock feed,

provided that they are used in compliance with the FFDCA. This subject is discussed further under item 4, Livestock  Changes Based on Comments, subpart C.

( 5) Chlorine Disinfectant Limit Annotation for Organic Production and Handling. Some commenters requested clarification on the annotation for using chlorine materials as an allowed synthetic substance in crop and handling operations. The annotation in the proposed rule, which 263 has been retained in the final rule, stated that " residual chlorine levels in the water shall not exceed the maximum residual disinfectant limit under the Safe Water Drinking Act." With this annotation, the residual chlorine levels at the point where the waste water stream leaves the production or handling operation must meet limits under the Safe Drinking Water Act.

( 6) Tobacco Use in Organic Production. One commenter questioned whether forms of tobacco other than tobacco dust, such as water extracts or smoke, were prohibited nonsynthetic substances. The technical advisory panel ( TAP) review on which the NOSB based its recommendation to prohibit tobacco dust identified nicotine sulfate as the active ingredient.

Therefore, any substance containing nicotine sulfate as an active ingredient is prohibited in crop production.

( 7) Nonsynthetic Agricultural Processing Aids on the National List. A commenter requested clarification from the NOP on whether processing aids ( e. g., defoaming agents), which are nonsynthetic and nonorganic agricultural substances ( e. g., soybean oil), must appear on the National List when used in processing. In the this regulation, a nonsynthetic and nonorganic agricultural product, such as soybean oil, used as a processing aid does not have to appear on the National List. Such products are included in the provision in section 205.606 that nonorganically produced agricultural products may be used in accordance with any applicable restrictions when the substance is not commercially available in organic form.

( 8) Transparency of the National List Petition Process. Some commenters stated the petition process for amending the National List appears to have limited public access and should be more transparent. These commenters advocate that any amendments to the National List should be subject to notice and comment. They also requested clarity on how petitions are 264 prioritized and reviewed and the timeframes for review. Additionally, these commenters asked the NOP to expedite the review of materials for the National List. On July 13, 2000, AMS published in the Federal Register ( Vol. 65, 43259 43261) guidelines for submitting petitions for the evaluations of substances for the addition to or removal from the National List. In this notice,

the NOP stated that most petition information is available for public inspection with the exception of information considered to be " confidential business information." The notice also specified that any changes to the National List must be published in the Federal Register for public comment.

The published petition notice has also provided an indication to the industry about the urgency of the need for substance review and that the industry should provide pertinent information to the NOSB to expedite the review of materials not on the National List.

State Organic Programs The Act provides that each State may implement an organic program for agricultural products that have been produced and handled within the State, using organic methods that meet the requirements of the Act and these regulations. The Act further provides that a State organic program ( SOP) may contain more restrictive requirements for organic products produced and handled within the State than are contained in the National Organic Program ( NOP). All SOP's and subsequent amendments thereto must be approved by the Secretary.

A State may have an SOP but not have a State certifying agent. A State may have a State certifying agent but no SOP. Finally, a State may have an SOP and a State certifying agent. In all cases, the SOP's must be approved by the Secretary. In all cases, the State certifying agent must apply for and receive accreditation to certify organic production or handling operations pursuant to subpart F. 265 In States with an approved SOP, the SOP's governing State official is responsible for administering a compliance program for enforcement of the NOP and any more restrictive requirements contained in the SOP. The SOP governing State officials may review and investigate complaints of noncompliance involving organic production or handling operations operating within their State and, when appropriate, initiate suspension or revocation of certification. The SOP governing State officials may also review and investigate complaints of noncompliance involving accredited certifying agents operating within their State. They must report the findings of any review and investigation of a certifying agent to the NOP Program Manager along with any recommendations for appropriate action. States that do not have an SOP will not be responsible for compliance under the NOP, except that an accredited State certifying agent operating within such State will have compliance responsibilities under the NOP as a condition of its accreditation.

The sections covering SOP's, beginning with section 205.620, establish: ( 1) the requirements for an SOP and amending such a program and ( 2) the process for approval of an SOP and amendments to the SOP's. Review and approval of an SOP will occur not less than once during each 5 year period. Review related to compliance matters may occur at any time.

Description of Regulations State Organic Program Requirements A State may establish an SOP for production and handling operations within the State that produces and handles organic agricultural products. The SOP and supporting documentation must demonstrate that the SOP meets the requirements for organic programs specified in the Act.