The organic food industry is the fastest-growing sector in American retail grocery sales, reaching $47 billion, or 6.4%, of total grocery sales of $822 billion in 2017.1 It is unlikely that any major law firm in America does not have clients that produce, transport, distribute, or sell (retail grocery and food service) organic foods.
Advising food industry clients who inquire about the costs and benefits of the complex, critical, and often costly transitioning to organic certification requires an understanding of the current basic regulatory issues. The U.S. Department of Agriculture (USDA) National Organic Program (NOP) and its National List of Allowed and Prohibited Substances2 are the core of organic regulation.
There are multiple national and private standards concerning “organic” products. A product certified to the USDA NOP is an agricultural commodity produced using methods compliant with 7 C.F.R. part 205. NOP organic farming methods support ecological balance and biodiversity, while prohibiting sewage sludge, ionizing radiation, and genetically modified organisms and restricting the use of synthetic inputs. The NOP is a standard to which organic products from operations around the world are certified. There are also trade agreements in place with other nations’ standards to facilitate trade. Understanding of the regulation and trade agreements is necessary for assuring organic integrity and regulatory compliance.
1. Organic Production and Certification
What qualifies as “organic” may appear to be a simple question, but the answer varies depending on what is being discussed and where it is discussed. In chemistry, “organic” refers to carbon-containing compounds. In biology, it relates to living organisms. For agricultural products, “organic” is a product produced using methods in compliance with a regulation or standard. There are national and private standards regarding “organic” products in different locations (nations) and for various scopes (food, feed, textile).
In the United States, only agricultural products certified within the scope of the NOP3 may be labeled and marketed as “organic.” In Canada, the national standard is the Canadian Organic Regime (COR),4 while in the European Union it is compliance with EC 889/2008 & 834/2007.5 Products outside of the scope of a national standard can potentially be certified to a different national standard or a private standard. So, what is “organic”? For the purpose of this article, “organic” will be restricted to the NOP, with some reference to other national standards for which the NOP has trade agreements in place.
Law, Regulation, Accreditation, and Certification
The Organic Foods Production Act (OFPA) of 19906 required national standards for organic agricultural products and resulted in the establishment of the NOP. The NOP regulations are published in the Code of Federal Regulations (CFR). The USDA Agricultural Marketing Service (AMS) oversees the NOP and is responsible for the organic regulations in 7 C.F.R. part 205. The USDA NOP is responsible for development of the regulation (or standards) for organic production. Changes to the regulation may be made by the USDA NOP based on the recommendations of the National Organic Standards Board (NOSB). The USDA NOP is also responsible for enforcement of the regulation, for certified operations domestically or abroad.
The USDA NOP accredits third-party organic certifiers to certify farms and handlers of organic products for five-year periods. These certifiers may be private entities, state agencies of the individual U.S. states, or foreign governments. Currently, the USDA Organic Integrity Database lists some 80 certifiers. It is the certifiers’ responsibility to ensure the certified entities’ compliance with the regulation, including review of the organic system plans and on-site inspections of entities seeking or maintaining organic certification. An interesting point is that entities seeking certification can choose the certifier they would like to work with. Currently, the USDA Organic Integrity Database lists more than 41,000 certified entities.
The scope of the NOP regulation covers food, feed (animal food), and fiber. Aquaculture and aquaculture feed are not within the scope of the NOP. An entity that produces or handles crops, livestock, livestock products, or other agricultural products and that sells, labels, or represents these products as organic is required to be certified, unless exempted or excluded by the regulation. There are four categories of organic certification: crops, wild crops, livestock, and handling. Handling is defined in the regulation to include “[t]o sell, process, or package agricultural products.”7 A wide variety of operations can be considered handlers. A sampling of handlers includes, but is not limited to, operations that broker, repackage, and relabel; those that sell fresh produce; coffee roasters; and operations that produce flavors, baby food, or supplements. It additionally includes alcohol (breweries, wineries, and distilleries) and tobacco products. The NOP also has an “inclusive scope policy,”8 which allows for products such as textiles and cosmetics to be certified organic if the product is compliant with the regulation.
The NOP regulation includes exemptions and exclusions from certification for some operations.9 For an operation to be considered under the exemptions, the organic sales annually must be less than $5,000, it operates as a retail food establishment, or it produces products with less than 70 percent organic ingredients. For an operation to be considered under the exclusions, products must be packaged before being acquired by the operation, remain in the same packaging, and not be otherwise processed. A retail food establishment may additionally meet the requirements for the exclusion. Regardless, operations exempt from certification are required to maintain documentation on the organically produced product for not less than three years.
In addition to the National Organic Program regulations in 7 C.F.R. part 205 and the NOP preamble, the USDA NOP provides guidance documents regarding organic certification. The USDA NOP guidance documents include policy memos in the National Organic Program Handbook: Guidance and Instructions for Accredited Certifying Agent and Certified Operations (the Handbook).10 The NOP regulation additionally references the U.S. Food and Drug Administration (FDA) food labeling regulations, labeling regulations for alcoholic beverages, and relevant EPA regulations.
Under the NOP, residue testing is conducted to verify that prohibited substances (chemicals) are not applied to organic crops. Certifiers are required by the NOP regulation to conduct residue testing on samples from five percent of their certified entities. Sampling procedures for residue testing, laboratory selection, prohibited pesticides, and responding to the testing results are in the Handbook. Products with residue results detected at less than 0.01 ppm (for all residues) may be sold as organic but require follow-up to determine why the residue was present. If at least one residue was detected above 0.01 ppm, the situation becomes more complicated.
The residue findings must be referenced against the EPA tolerance (found in 40 C.F.R. part 180), or if there is no EPA tolerance, the FDA action level is referenced, and follow-up is needed to determine why the residue was present. The residue test result may need to be reported to the appropriate agency. In cases where the product cannot be sold as organic, a notice of noncompliance may be issued.
When a certified entity is determined by the certifier to be not in compliance with the regulation, a notice of noncompliance may be issued pursuant to the USDA organic regulation 7 C.F.R. § 205.662(a). For each noncompliance, the certifier must receive a description of corrective actions taken or a written rebuttal, with supporting documentation. If the noncompliance is not resolved by the date indicated in the notice, a proposed suspension of certification may be issued to the certified entity as outlined in § 205.662(c). For new entities seeking certification found to have unresolvable noncompliances, a notice of denial would be issued as described in § 205.405(c).
Certified entities that receive a proposed suspension of certification have the right to request mediation pursuant to § 205.663, and/or the right to file an appeal as described in § 205.681. The appeal must be submitted in writing to the Administrator, USDA, AMS. If an operation is suspended, the operation may apply for reinstatement with a certifier, though the NOP makes the final decision on whether to reinstate the suspended operation. Reinstatement of certification only can occur after the time stated in the suspension: typically three years after the last application of a prohibited substance for crops. Only the Secretary of Agriculture may reduce or eliminate the period of ineligibility. While an operation is suspended, a suspended operation cannot sell or label product as organic. As stated in § 205.101(c), “Any operation that: (1) Knowingly sells or labels a product as organic, except in accordance with the Act, shall be subject to a civil penalty of not more than the amount specified in § 3.91(b)(1) of this title per violation.” Proposed revocation and revocation are for willful violations of the regulation. An operation that has organic certification revoked is ineligible to receive certification for five years following the revocation.
In the event that serious compliance issues arise, many certified producers will turn to the specialized group of attorneys who deal in USDA administrative law matters. These adjudications often turn on complex technical and scientific issues, and organic producers may wish to retain counsel with advanced degrees in food and agricultural science.
2. Transitioning to Organic Production
A crop or livestock operation that decides to seek organic certification must transition to organic production. To apply for certification, the land used to produce the agricultural commodities must not have had prohibited substances applied for 36 months (three years). If an application of a prohibited substance occurred during this period, it will be three years before the operation can potentially obtain certification. Agricultural commodities produced during the transition period may not be sold, labeled, or represented as organic. During the transition, the operation does not benefit from the higher prices paid for organic commodities. The operation also may see a decrease in yield during the transition period. The USDA has a program to assist transitioning producers with technical and financial issues—the Environmental Quality Incentives Program (EQIP).11 An additional program to assist with certification costs is the USDA Organic Certification Cost-Share Program,12 which can reimburse certified operations for up to 75 percent of their certification costs. For handlers there is no transition period, as organic products are sourced from already-certified organic entities.
3. National Organic Standards Board (NOSB)
The National Organic Standards Board (NOSB) is a federal advisory board. The 15 Board members are appointed by the Secretary of Agriculture for a period of five years and represent different stakeholders of the organic industry and community. “Established by the Organic Foods Production Act (OFPA) and governed by the Federal Advisory Committee Act (FACA), the NOSB considers and makes recommendations on a wide range of issues involving the production, handling, and processing of organic products.”13 The NOSB is responsible for reviewing petitions for the addition of substances to the National List of Allowed and Prohibited Substances (the National List), making formal recommendations to add or remove substances on the National List, and reviewing every substance on the National List every five years during the “sunset review” to confirm that the substance continues to meet required criteria.
“The full NOSB generally meets publicly twice per year to discuss items on the work agenda, hear public commentary, vote on proposals, and make recommendations to the Secretary of Agriculture.”14 If a proposal receives a decisive vote (2/3 majority) in its favor, the NOSB will make a recommendation to the USDA. The proposal is then provided to the Secretary of Agriculture through the AMS NOP. The Secretary can choose to act on or ignore the recommendation of the NOSB. However, the USDA cannot add to or remove substances from the National List without the NOSB’s recommendation.
New materials may only be added to the National List when an interested party makes a formal petition to the NOSB, the NOSB recommends addition of the substance, and the USDA adds the substance to the National List through the rule-making process. Petitions must be for generic substances, not formulated (brand-name) products. The petitioning process consists of these eight steps.
- An individual or organization submits the petition to the USDA NOP.
- NOP determines if the substance is eligible for petition, and, if eligible, the NOP sends the petition to the NOSB subcommittee.
- NOSB subcommittee determines if additional information is needed or if sufficient information has been provided.
- NOSB subcommittee publishes a proposal and requests public comments.
- NOP publishes the public meeting agenda and solicits public comments on NOSB’s behalf.
- NOSB analyzes comments and votes on petition.
- NOSB submits final recommendation to NOP.
- NOP reviews recommendation and may initiate rulemaking.
The process can take six months to one year for completion, depending on the need for clarification or additional supporting documentation. There is no fee for petitioning a material. A petitioner cannot appeal a decision by the NOSB to reject the material. For reconsideration, the petitioner must restart the process with new information supporting the petition.
4. Maintaining Organic Integrity
There have been challenges in the organic industry concerning ensuring organic integrity. Certified organic commodities are produced without the use of prohibited synthetic pesticides and fertilizers and without using genetically modified organisms. Both synthetic pesticides and fertilizers are commonly used on conventional crops. Use of genetically modified organisms in agriculture is common for some crops. Documentation for traceability combined with testing helps ensure that what is labeled as an organic product complies with the regulation.
Fraud is a concern as prices for organic commodities are typically higher than for the conventional form of the same commodity. The USDA Market News Organic Reports provides price information for selected commodities, including a weekly report on the prices of retail products. Retail prices vary, but organic products can retail from a few percent to two times or more than the price of conventional products.
Several articles were published in the Washington Post in 2017 on potential fraud in the organic industry. The articles included milk, eggs, corn, and soybeans. As it turned out, there was an issue with corn and soybeans exported from Turkey. Exported grains from Turkey came under increased scrutiny. In June 2017 the USDA AMS provided the training titled “Organic Integrity in the Supply Chain.”15 The training, which is available on the NOP website, included the information that the Turkish organic corn imported to the USA exceeded the Turkish organic corn production. The results of the investigation were reported in the “Organic Oversight and Enforcement: Summary of Activities and Overview Action Plan” in May 2018:16 96 organic operations in Ukraine, Kazakhstan, Russia, and Turkey surrendered their certification, and 30 operations had their organic certification suspended or revoked.
In the August 5, 2018, issue of the Wall Street Journal, an article titled “The Organic Industry Is Lying to You” was published.17 The topic of the article was false and deceptive labeling claims. It was claimed by the author that “absence claims,” which are used by the organic industry and others, are in violation of FDA regulations. The article received a quick response from FDA Commissioner Scott Gottlieb, M.D., on Twitter, including “#FDA and USDA have distinct roles when it comes to the oversight of organic foods. USDA is charged with regulating use of the term ‘organic’ on food labels whereas FDA oversees general food labeling compliance and safety issues: go.usa.gov/xU7FN.”
Another concern was brought up in the August 29, 2018, issue of Food Safety News in an article on organic milk brands.18 The article cites the Cornucopia Institute, which suggests that consumers cannot rely on the USDA seal on the label as a sign of companies adhering to organic principles. The claim is made that companies focused on profit do the minimum to be certified, while at the same time remarking these same companies appear compliant with the regulation. This seems more to speak to the issue of what organic may be perceived to be than what the regulation actually requires. These articles have brought attention to the organic sector. In some cases the publicity has brought to light areas that now have additional scrutiny and/or proposed regulatory changes. The USDA NOP, NOSB, certifiers, and industry groups have focused efforts toward ways to ensure organic integrity.
Imported Organic Products
Organic products are imported into the USA. Products may have been produced by an entity certified to the NOP, by an entity certified to another nation’s national standard for which there is a trade agreement, or by an entity certified to another nation’s national standard for which there is no trade agreement. In the first and second cases, the product, with proper documentation, can be considered organic under the NOP. In the third case, the product would not be considered NOP organic. Under the NOP there are several international trade arrangements for organic products. The international trade arrangements provide access to other markets and products. There are three types of international trade arrangements: equivalency arrangements, recognition agreements, and export arrangements. Equivalency arrangements are for the import and export of organic products between the nations. Countries with which the USA has equivalency arrangements in place are Canada, the European Union, Japan, Korea, and Switzerland. Recognition agreements, which are only for the import of organic products, exist with India, Israel, and New Zealand. An export arrangement is maintained with Taiwan. All of the international trade agreements define the scope of products covered, as well as labeling and documentation requirements. The equivalency arrangements have differing requirements for final processing and packaging and must be reviewed in detail before contracting for shipments and are required to be done in the named nations, except for the U.S.-Canada equivalency agreement. All of the international trade agreements require some form of transaction certificate (TC) be completed by the certifier, except for the U.S.-Canada equivalency. The TC for import is a NOP Import Certificate, while the TC for export may be a TM-11, NAQS, or COI depending on the destination. Detailed information is available at the USDA AMS International Trade Partners webpages.19
Another factor is concerning the treatment of imports at port. A product certified to the NOP that is fumigated with a prohibited substance can no longer be considered as organic, and, therefore, phytosanitary documents are important for documenting organic integrity. In the NOP Handbook, Policy Memos 18-1 and 18-2 address this topic. Other resources from the NOP Handbook are NOP 5031, Certification Requirements for Handling Unpackaged Organic Products, and NOP 4013, Maintaining the Integrity of Organic Imports. NOP 4013 was effective in October 2017, and it increased the documentation requirements to verify the organic integrity of imports. The USDA Animal and Plant Health Inspection Service (APHIS) also has resources available concerning imports. The Fruits and Vegetables Import Requirements (FAVIR) Database20 and the Treatment Manual21 have information on commodities and potential treatment depending on the origin and port of entry.
In the September 2018 presentation titled “Verifying Production Yields of Farming Operations,” the USDA NOP indicated three tools to help evaluate the organic capacity for foreign crops. The USDA FAS GAIN22 compiles agricultural reports on imports. FiBL23 has data on the total farmland involved in certified organic agriculture. The UN’s Food and Agriculture Organization Statistics (FAOSTAT)24 has data for crop production around the world, though it is not specific to organic.
Uncertified wholesalers and brokers marketing organic produce are considered an increased risk to the integrity of the organic products. This is due to several issues, including a lack of oversight of their operations (as they are not certified) and incomplete audit trail documentation. The use of uncertified handlers may remain undisclosed, leaving gaps in the supply chain discovered at inspection. Of note, all handlers of organic products are required to be certified in the European Union in compliance with EC 889/2008 and 834/2007.
The topic of uncertified handlers has been discussed by the NOSB and the NOP. In February 2018, uncertified handlers were a topic for the meeting of the NOSB. In May 2018 the NOP Organic Oversight and Enforcement: Summary of Activities and Overview Action Plan included the possibility of modifying the exclusion for uncertified handlers, which would result in importers and brokers needing to be certified. Another topic related to traceability is the possibility of requiring import certificates for all imports. In July 2018 the NOP held what was referred to as a “Town Hall Chat” titled “Strengthening Organic Enforcement.” Question number 5 at the chat was “Which types of excluded operations should be required to be certified and why?”25
Nongovernment groups have discussed the issues of uncertified handlers and imported products. The Accredited Certifiers Association (ACA) has conducted working groups on multiple topics associated with certification, including traceability. The Organic Trade Association (OTA), as a prominent member of the organic community, is focused on ensuring organic integrity. The OTA Global Organic Supply Chain Integrity Task Force has been developing a Best Practices Guide, of which a draft is available: “Draft GOSCI Best Practices Guide.”26
There are a number of resources that can be used to help verify suppliers’ organic certificates in an effort to ensure organic integrity. These resources include national standard program sites and the certifying agent of the supplier. For the NOP, the USDA Organic Integrity Database (OID)27 lists the certified entity, its certifier, and the types of certified products. It also can be used to view operations that have surrendered their organic certificate or had their organic certificate suspended or revoked. For the Canadian Organic Regime (COR), the Canadian Food Inspection Agency maintains a listing of Cancelled Organic Certifications.28 The National Programme for Organic Production (NPOP) in India has a listing of certified entities.29
The USDA NOP has organic enforcement abilities. Complaints can be filed online with AMS Compliance and Enforcement. The organic enforcement page30 also lists USDA Agreements and Decisions (such as settlements) and fraudulent certificates. The number of fraudulent organic certificates listed in 2017 was 41. From January through September of 2018, USDA AMS has listed 17 fraudulent organic certificates.
The USDA National Organic Program is not, and never will be, “perfect,” as critics often point out. Nevertheless, it has created a rapidly growing, nearly $50 billion business that most responsible food and agricultural scientists support as a major contribution to human nutrition and sound environmental stewardship. Attorneys advising food industry clients on the regulatory costs and business benefits of participation in the organic foods market would be well-advised to stay abreast of the latest organic food science and regulatory matters in both the United States and its trading partners.
2. 7 C.F.R. §§ 205.600–205.607.
3. 7 C.F.R. pt. 205, National Organic Program.
4. Organic Production Standards, CAN/CGSB-32.310. To be codified as Part 13, Safe Food for Canadians Act.
5. Reg (EC) No 889/2008 of 5 September 2008 Laying Down Detailed Rules for the Implementation of Council Regulation (EC) No 834/2007 on Organic Production and Labelling of Organic Products with Regard to Organic Production, Labelling and Control, 2008 O.J. (L 250) 1 (Sept. 18, 2008).
6. 7 U.S.C. ch. 94, §§ 6501–6524.
7. 7 C.F.R. § 205.2.
8. Agric. Mktg. Serv., U.S. Dep’t of Agric., Policy Memorandum 11-14, Labeling of Textiles That Contain Organic Ingredients (May 20, 2011).
9. 7 C.F.R. § 205.101, Exemptions and exclusions from certification.
10. National Organic Program Handbook: Guidance & Instructions for Accredited Certifying Agents & Certified Operations, U.S. Dep’t of Agric. (2018), https://www.ams.usda.gov/rules-regulations/organic/handbook.
11. Environmental Quality Incentives Program, Natural Res. Conservation Serv., U.S. Dep’t of Agric., https://www.nrcs.usda.gov/wps/portal/nrcs/detailfull/national/programs/?&cid=nrcs143_008224.
12. Farm Serv. Agency, U.S. Dep’t of Agric., Organics Fact Sheet (Oct. 2017), https://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/FactSheets/2017/organics_fact_sheet_oct2017.pdf.
13. National Organic Standards Board (NOSB), Agric. Mktg. Serv., U.S. Dep’t of Agric., https://www.ams.usda.gov/rules-regulations/organic/nosb.
15. Agric. Mktg. Serv., U.S. Dep’t of Agric., Organic Integrity in the Supply Chain: Training for Certified Handlers (June 4, 2017), https://www.ams.usda.gov/sites/default/files/media/NOPTrainingHandlersWebinar06142017.pdf.
16. Agric. Mktg. Serv., U.S. Dep’t of Agric., Organic Oversight and Enforcement: Summary of Activities and Overview Action Plan (May 2018), https://www.ams.usda.gov/sites/default/files/media/ActionUpdatePlanEnforcement.pdf.
17. Henry I. Miller, The Organic Industry Is Lying to You, Wall St. J. (Aug. 5, 2018), https://www.wsj.com/articles/the-organic-industry-is-lying-to-you-1533496699.
18. Dan Flynn, Group Ranks 160 Organic Milk Brands; Says USDA Has Failed Consumers, Food Safety News (Aug. 29, 2018), https://www.foodsafetynews.com/2018/08/group-ranks-160-organic-milk-brands-says-usda-has-failed-consumers/.
19. International Trade Partners, Agric. Mktg. Serv., U.S. Dep’t of Agric., https://www.ams.usda.gov/services/organic-certification/international-trade.
20. Fruits and Vegetables Import Requirements (FAVIR) Database, APHIS, U.S. Dep’t of Agric. (June 26, 2015), https://www.aphis.usda.gov/aphis/ourfocus/planthealth/sa_import/sa_permits/sa_plant_plant_products/sa_fruits_vegetables/ct_favir/.
21. U.S. Dep’t of Agric., Treatment Manual (2016), https://www.aphis.usda.gov/import_export/plants/manuals/ports/downloads/treatment.pdf.
25. Agric. Mktg. Serv., U.S. Dep’t of Agric., Town Hall: Strengthening Organic Enforcement (July 17, 2018), https://www.ams.usda.gov/sites/default/files/media/TownHallSlidesChatParticipants.pdf.
26. Global Organic Supply Chain Integrity Task Force, Organic Trade Ass’n, Ensuring Global Organic Supply Chain Integrity (GOSCI): A Guide to Developing an Organic Fraud Prevention Plan (Draft June 5, 2018), https://ota.com/draft-gosci-best-practices-guide.
28. Cancelled Organic Certifications, Canadian Food Inspection Agency, http://www.inspection.gc.ca/about-the-cfia/accountability/compliance-and-enforcement/organic-certification/eng/1323651699386/1323651855189.
29. National Programme for Organic Production (NPOP), Agric. & Processed Food Prod. Export Dev. Au thor., http://www.apeda.gov.in/apedawebsite/organic/index.htm.
30. Organic Enforcement, Agric. Mktg. Serv., U.S. Dep’t of Agric., https://www.ams.usda.gov/services/enforcement/organic.