(1) The department may initiate a compliance action against an applicant for certification or a producer or handler certified by the department that is not in compliance with these rules:

(a) the department and applicants for certification will follow procedures established in 7 CFR 205, subpart (e) in addressing noncompliance issues under National Organic Program standards;

(b) the department and certified operations will follow procedures established in 7 CFR 205, subpart (g) in addressing noncompliance issues under National Organic Program standards;

(c) the department's procedure for denying certification under National Organic Program standards will adhere to that established in 7 CFR 205, subpart (e); and

(d) any notice of denial of certification or proposed suspension or revocation of certification will state the person's right to mediation. The department's mediation procedures will be consistent with that established in 7 CFR 205.663 and the department may incorporate procedures for mediation established by state statutes.

(2) Where there is reason to believe that an operation certified by the department is selling, representing, or labeling as organic any products that have been exposed to or contain prohibited substances or have been produced using prohibited substances or excluded methods, the department may place a stop sale tag on such products prohibiting further sale or movement. Any person who removes or disposes of such detained product by sale or otherwise, without prior permission, or removes or alters the tag, is in violation and may be subject to civil penalties. The department may authorize removal of the tag when this chapter has been complied with. If compliance is not achieved within 30 days, or upon the request of the person holding the product, the department may begin proceedings for condemnation.

(3) When the department finds that a producer or handler has committed a violation of these rules, the department may assess a civil penalty sufficient to recover all costs of the investigation leading to the finding of violation. Such costs shall include those associated with sampling of soil, production inputs, or products for residues of prohibited materials or products of excluded methods. Penalties issued to recover costs of investigation shall be in addition to civil penalties issued in response to violations, as described in this rule.

(4) The director may assess a civil penalty not exceeding $10,000 per violation when the department concludes that a producer or handler committed a violation. The department in selecting an appropriate penalty amount shall consider the severity of the violation and other gravity factors such as negligence and willfulness.

(5) A civil penalty may not be assessed until the person charged is given notice of opportunity for a hearing and an appeal pursuant to the Montana Administrative Procedure Act.

(6) This rule does not require the department to revoke or suspend certification, issue stop sale orders, or assess civil penalties when other remedies such as a written notice or warning are sufficient to cure a violation.