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Proposed Rule

National Organic Program, Provision of Reasonable Security

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Information about this document as published in the Federal Register.

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Agricultural Marketing Service, USDA.


Advance notice of proposed rulemaking and request for comments.


The Agricultural Marketing Service (AMS) is publishing this advance notice of proposed rulemaking to request comments on the Organic Foods Production Act of 1990 (OFPA) requirement that private certifying agents furnish reasonable security, in an amount determined by the Secretary, to protect the rights of participants in the National Organic Program (NOP). On March 13, 2000, the Department of Agriculture (USDA) published in the Federal Register, a revised National Organic Program proposed rule. The proposed rule stated the amount and terms of reasonable security would be the subject of additional rulemaking.


Comments must be submitted on or before September 8, 2000.


Comments should be sent to Beth Hayden, Agricultural Marketing Specialist, National Organic Program, Start Printed Page 48643USDA/AMS/TM/NOP, Room 2510-So., Ag Stop 0268, P.O. Box 96456, Washington, D.C. 20090-6456. Phone: 202/720-3252. Fax: 202/205-7808. E-mail:

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Keith Jones, Program Manager, National Organic Program, USDA/AMS/TM/NOP, Room 2945-So., Ag Stop 0268, P.O. Box 96456, Washington, D.C. 20090-6456. Phone: 202/720-3252. Fax: 202/690-3924. E-mail:

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AMS is responsible for implementing 7 U.S.C. 6515 (e)(2). This section of the OFPA requires private certifying agents to furnish reasonable security, in an amount determined by the Secretary, for the purpose of protecting the rights of participants (customers) in an organic certification program established under the NOP. Historically, the National Organic Standards Board (NOSB) recommends regulations that will benefit the organic industry. When the NOSB considered the issue of reasonable security as proposed in the March 13, 2000, proposed rule, 65 FR 13512-13658, (2000), they recommended that the criteria used to determine the amount and type of security required should be affordable and explicitly defined with particular regard for the diverse size and economics of various regional certifiers and operations being certified. Additionally, the Senate Committee Report on the OFPA (Senate Committee Report, Food, Agriculture, Conservation and Trade Act of 1990, Title XVI, pg. 294-295) states, “It is not the Committee's intention that the Department establish security deposits that are so high as to cause the elimination of private certifying agents.”

AMS reviewed many financial instruments to determine the type and value of security a certifying agent might need based on its business structure and customer base. For example, an agent operating a small, not-for-profit operation for clients who primarily sell directly to consumers may have fewer and smaller liability requirements than an agent with numerous clients who sell to large food processors or who export product.

AMS also interviewed current certifying agents and concluded that many of the 36 known private certifying agents carry liability insurance to protect themselves against claims from the public or their employees in the course of their business activities. For example, some certifying agents must provide evidence of liability coverage in order to sell their products to food processors. However, under certain state laws, not-for-profit certifying agents may be exempt from legal actions that would normally require a prudent businessperson to carry liability insurance. In some cases, certifying agents request that their clients sign a liability waiver and therefore do not carry liability insurance.

After reviewing the options for assessing reasonable security and the current industry information on this issue, however, the NOP decided to seek additional public input on what amount and type of reasonable security is best for protecting the rights of NOP participants.

This action has been determined not significant and not subject to review by the Office of Management and Budget under Executive Order 12866.

Issues for Public Comment

AMS is soliciting comments on all aspects of reasonable security and protection of the rights of program participants. We request 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. The following questions are provided to facilitate public comment on this advanced notice of proposed rulemaking. Comments addressing other relevant issues also may be submitted.

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

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

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

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

5. Do the risk or events provided in response to Question #1 necessarily require financial compensation?

6. Are there situations where reasonable security is not needed?

A thirty day comment period is provided for interested persons to comment on this advance notice of proposed rulemaking. This time period is deemed appropriate given the need to publish a final NOP rule by the end of the calendar year.

After comments to this notice are received and analyzed, AMS intends to publish a proposed rule in the Federal Register. The public will once again be invited to submit comments. The proposed rule will include the proposed regulation, an explanation of our 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 rule.

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Authority: 7 U.S.C. 6501-6522.

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Dated: August 3, 2000.

Sharon Bomer Lauritsen,

Acting Deputy Administrator, Transportation and Marketing.

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[FR Doc. 00-20062 Filed 8-8-00; 8:45 am]