September 20, 2020

Volume X, Number 264

September 18, 2020

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USDA Proposes Overhaul of Organic Program Certification and Enforcement Rules

Key Takeaways:

  • What Happened: On August 5, 2020, USDA proposed a significant expansion of certification and recordkeeping requirements and enforcement activities under the National Organic Program.

  • Who’s Impacted: All participants in the global organic agricultural product supply chain may be impacted, including many handlers, brokers, and other operations not currently required to be certified under USDA’s existing program.

  • What Should They Consider Doing in Response: Review the proposed rule and submit comments on or before October 5, 2020.

Seeking to protect integrity in the organic supply chain and build consumer and industry trust in the USDA Organic label, the U.S. Department of Agriculture (USDA) proposed on August 5 to substantially expand certification requirements and enforcement under the National Organic Program (NOP). The proposed changes include requiring certification for all “handlers,” foreign “exporters,” and domestic “importers” of organic agricultural products; additional requirements for certification of foreign “grower group operations”; increased unannounced on-site inspections by organic certifiers; training, evaluation, and staffing requirements for accredited certifiers; and explicit civil and criminal enforcement authority for USDA’s Agricultural Marketing Service (AMS). USDA is also proposing additional labeling and recordkeeping requirements to improve the traceability of organic products and prevent fraud, and encouraging the adoption of digital ledger technologies like blockchain throughout the organic supply chain. USDA seeks comments from stakeholders and the public by October 5, 2020.

Responding to Increased Complexity and Rising Fraud

AMS established the NOP in 2000 and through this program oversees national standards for production, handling, labeling, and sale of organically produced agricultural products. Since then, the organic industry has expanded dramatically, with total U.S. sales of organic products exceeding $55 billion in 2019. 

This rapid expansion has led to increased complexity in the global organic supply chain, and premium prices for organic products have also led to a rise in organic fraud in the supply chain. For instance, the U.S. Department of Justice successfully prosecuted a $120 million organic grain fraud in Iowa, Nebraska, and Missouri in 2019, and in February 2020 a federal grand jury indicted an individual in South Dakota for allegedly selling $71 million of nonorganic grains and oilseeds falsely labeled organic for over five years. Building on various recommendations by the National Organic Standards Board since 2002, USDA intends the new proposed rule to fill oversight gaps and prevent similar fraud in the organic supply chain.

The Details

The proposed rule would be the first major overhaul of NOP regulations since 2000, and would expand certification, inspection, training, labeling, and recordkeeping requirements across the organic program and supply chain. The rule would also reinforce AMS’s power to enforce program rules with civil or criminal penalties.

If finalized, significant changes to the organic program would include:

  • Any operation that “handles” (i.e., sells, processes, or packages, including but not limited to trading, brokering, repackaging, labeling, combining, containerizing, or storing) organic agricultural products (including packaged products) must be certified, with exceptions for certain small-scale handlers, retail operations, operations that handle only partially organic products, and operations that only store, receive, or load and do not process or alter organic products.

  • All final exporters to, and importers of record into, the United States of organic products from any country must be certified either under the USDA program or under a trade agreement. Furthermore, each imported shipment of organic products must be certified and declared as organic and associated with a valid NOP Import Certificate or equivalent data source detailing the quantity and origin of the organic products. 

  • Multi-member certified “grower group operations” must use centralized processing, distribution, and marketing facilities and systems and comply with enhanced documentation and inspection requirements. (These operations reduce barriers for small-scale farms in developing countries entering the global organic market, and enable the production of organic coffee, cacao, bananas, tea, and spices.)

  • Certifying agents and their inspectors must annually conduct unannounced inspections of at least five percent of the operations they certify, and must not accept applications or continue certification with operations located in areas where they are unable to do so. During inspections, certifying agents must also verify operations produce or purchase sufficient quantities of organic products to account for their sales.

  • To enhance supply chain traceability from source to consumer, organic operations would be required to maintain audit trail documentation and describe in their organic system plans the monitoring practices and procedures used to prevent organic fraud and verify suppliers. Certifying agents would be required to share information to verify supply chains, have procedures for identifying high-risk operations and products, conduct risk-based supply chain audits, and report credible evidence of fraud to USDA.

  • Certifying agents must demonstrate that their staff, volunteers, and contractors have the required knowledge, skills, and experience to inspect the operations assigned to them and must evaluate performance annually. Additionally, inspectors must have at least one year of relevant field-based experience and complete at least 20 hours of relevant training each year.

  • Certifying agents must notify AMS after certification activities begin in a new certification office, including information regarding the countries covered by that office, the nature of their activities, and the qualifications of their personnel.

  • Upon a foreign country’s request, AMS may determine that that country’s organic certification program is at least equivalent to its own program. If AMS makes such a determination, products produced and handled under that country’s organic certification program may be sold or labeled as organic in the United States.

  • The AMS Program Manager may initiate civil or criminal enforcement actions in response to any violation of the organic program rules. The proposed rule clarifies that noncertified status does not protect an operation that commits organic fraud from enforcement actions.

In addition to the above, the proposed rule includes various paperwork and recordkeeping requirements. These would include centralizing and standardizing certification and associated records in AMS’s INTEGRITY database; requiring that certified operations annually submit only revisions to their organic system plan, rather than their organic system plan in its entirety; and annual expiration of organic certificates, though not of the underlying certification.

Finally, AMS states that it will continue to work toward its goal of full supply chain traceability and fully verifiable organic products through the use of electronic tracking systems including digital ledger technology, or blockchain. AMS recognizes cost barriers to widespread adoption of this technology, as well as inadequate access to technology and connectivity in rural areas, but expects interest to grow within the organic community over time.

AMS requests that industry stakeholders and interested members of the public submit comments on the proposed rule by October 5, 2020.

© 2020 Beveridge & Diamond PC National Law Review, Volume X, Number 223


About this Author

Alan J. Sachs Regulatory Attorney Beveridge & Diamond Washington, DC

Alan’s practice focuses on the wide range of regulatory issues faced by the global agriculture, food, biotechnology, and bioenergy industries.

Practicing environmental law provides him with daily opportunities to use his legal skills and training to help clients overcome often extremely technical business and regulatory challenges in order to ensure compliance with applicable environmental requirements.

He advises numerous Forbes Global 2000 companies on the legal and regulatory requirements associated with both domestic and foreign production, and the import, export, and...

Kathryn E. Szmuszkovicz Litigation Attorney Beveridge & Diamond Washington, DC
Managing Principal

Kathryn E. Szmuszkovicz litigates and provides strategic regulatory counsel.

Kathy litigates on behalf of individual companies, groups of companies and trade associations in federal and state courts across the country. She also provides alternative dispute resolution (ADR), compliance, strategic planning, and commercial services focused on the regulatory aspects of her clients’ businesses. Kathy’s practice focuses on clients who manufacture, sell, and use products regulated by EPA, USDA, FDA, DOI, DOC, and analogous state agencies under the environmental, health, and safety laws that these agencies implement.

In particular, Kathy works with clients in the agricultural sector (including pesticides and seeds businesses), and food, chemicals, and consumer products industries. This includes traditional products and products produced through biotechnology or nanotechnology. Examples of her work include:

  • Bringing or defending litigation where necessary to protect clients’ products, projects, or practices.
  • Advising clients on strategies for obtaining federal approvals for new products or substances, defending products once they are on the market, and phasing out products for regulatory or commercial reasons.
  • Advising clients who manufacture, sell, license, or use these regulated products on government requirements and commercial transactions.
  • Defending companies against enforcement actions.
  • Proposing and commenting on regulatory and legislative initiatives.
  • Supporting acquisition or sale of particular products or businesses.
  • Advising on stewardship and sustainability practices.

Kathy has litigated in federal courts across the country, including the United States Supreme Court, and has represented clients in every EPA region and many states. She has advocated for clients in ADR proceedings, including ADR mandated by statute, mini-trials and other ADR designed by parties to resolve disputes privately without court intervention, and mediation.

Kathy is Beveridge & Diamond’s firmwide Managing Principal. Before assuming this role, she served for many years on B&D's Management Committee and as the chair or co-chair of the firm’s pesticides and biotechnology practices. Kathy served for six years on the Board of Directors of a privately held company that discovers, manufactures, and sells proprietary chemicals. Before her legal career, Kathy served in federal and Michigan state government.

Jack B. Zietman Regulatory Environmental Attorney Beveridge & Diamond Washington, DC

Jack litigates and practices regulatory environmental law with a focus on groundwater issues and the agriculture, food, and chemical manufacturing industries.

His representative experience includes work on products liability and environmental tort litigation, as well as regulatory counsel for products regulated under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and the Toxic Substances Control Act (TSCA). He is also familiar with fishery management issues, particularly pertaining to the conservation of endangered species, and the evolving U.S. regulations of...