Organic Broadcaster

Proposed rule to strengthen organic enforcement contains hits, misses; comments needed

By Alice Runde & Abby Youngblood

The USDA National Organic Program (NOP) released the long-awaited “Strengthening Organic Enforcement (SOE) Proposed Rule” last month. This rule is meant to implement provisions from the 2018 Farm Bill, along with multiple recommendations from the National Organic Standards Board (NOSB), with the goal to update and modernize the organic regulations to strengthen oversight and enforcement to reduce fraud in the organic marketplace. This is by far the most extensive regulatory change in organic standards since the publication of the USDA organic regulations 20 years ago.

Regulations are much needed as organic sales have risen to more than $55 billion annually in the U.S., according to the latest survey from the Organic Trade Association. With this rise in demand, supply chains have become more complex, with many uncertified entities handling organic products without direct oversight from the NOP, thus increasing the potential for fraud.

The 13 provisions in this rule and their intention are listed below, along with NOC’s analysis of the significant improvements the rule achieves and an outline of some of the shortfalls and opportunities for this rule. The NOP has encouraged the organic community to submit comments by Oct. 5, 2020, to help design a rule that meets its purpose.

Provisions

1. Reduce the types of uncertified entities in the organic supply chain that operate without USDA oversight—including importers, brokers, and traders of organic products. This will safeguard organic product integrity and improve traceability.

2. Require the use of NOP Import Certificates, or equivalent data, for all organic products entering the United States. This proposed change will expand the use of NOP Import Certificates to all organic products imported into the U.S., improving the oversight and traceability of imported organic products.

3. Clarify the NOP’s authority to oversee certification activities, including the authority to act against an agent or office of a certifying agent. Additionally, certifying agents must notify the NOP upon opening a new office, which will allow the NOP to provide more effective and consistent oversight of certifying agents and their activities.

4. Clarify the labeling of nonretail containers used to ship or store organic products. Requiring additional information on nonretail containers will clearly identify organic products, reduce the mishandling of organic products, and support traceability. This is needed to maximize the linkage between operation certificates and import certificates and the organic product.

5. Specify the minimum number of unannounced inspections of certified operations that must be conducted annually by accredited certifying agents and require that mass balance and trace-back audits be completed during on-site inspections.

6. Require certifying agents to issue standardized certificates of organic operation generated from the USDA’s Organic Integrity Database (INTEGRITY) and to keep accurate and current certified operation data in INTEGRITY. Standardization will simplify the verification of valid organic certificates and import certificates. It will also reduce reporting by eliminating the need to provide notices of approval or denial of certification and annual lists of certified operations to USDA.

7. Clarify that certified operations only need to submit changes to their organic system plan during annual updates and clarify that certifying agents must conduct annual inspections of certified operations. This will reduce paperwork burden for organic operations and ensure that all organic operations are inspected at least once a year.

8. Establish specific qualification and training requirements for certifying agent personnel, including inspectors and certification reviewers. Requiring that personnel meet minimum education and experience qualifications and requiring continuing education will ensure quality and consistency of certification activities performed by certifying agents.

9. Clarify conditions for establishing, evaluating, and terminating equivalence determinations with foreign government organic programs, based on an evaluation of their organic foreign conformity systems. This will ensure the compliance of organic products imported from countries that have organic equivalence determinations with the United States.

10. Clarify requirements to strengthen and streamline enforcement processes, specifically noting that the NOP may initiate enforcement action against any violator of the OFPA, including responsible parties; defining the term “adverse action” to clarify what actions may be appealed and by whom; and clarifying NOP’s appeal procedures and options for alternative dispute resolution.

11. Specify certification requirements for grower group operations, to provide consistent, enforceable standards and ensure compliance with the USDA organic regulations. Grower group certification would be restricted to crop production and handling only, and would require the use of an internal control system to monitor compliance.

12. Clarify the method of calculating the percentage of organic ingredients in a multi-ingredient product to promote consistent interpretation and application of the regulation.

13. Require certified operations and certifying agents to develop improved recordkeeping, organic fraud prevention, and trace-back audit processes. Information sharing between certifying agents and documented organic fraud prevention procedures are also required.

Implementation period

For this SOE rule, the USDA Agricultural Marketing Service (AMS) is proposing that all requirements of the rule be implemented within 10 months of the effective date of the final rule (meaning one year after publication of the final rule). Some believe one year is too long given the urgency of cracking down on organic fraud and the delays we’ve already experienced, and others have said that that the implementation timeframe is too short given the complexity of the rule. A tiered or phased approach for implementation could help address both issues.

Successes of Proposed Rule

From NOC’s perspective, the provisions intended to increase supply chain traceability (such as requiring more operations to get certified, requiring mass balance and trace-back audits, and requiring certifiers to share information with each other for enforcement purposes), are significant improvements that will help certifiers and the NOP more effectively identify and crack down on fraud. NOC has pushed hard to get these improvements codified and we are glad to finally see regulatory language that includes these new requirements.

Another big success of the proposed rule is that it codifies many existing best practices and instructions to certifiers. Without formal regulatory language, it is challenging to fully enforce these requirements. Some areas where the new regulation would codify existing best practices are the requirement that certifiers conduct unannounced inspections for at least 5% of the operations they certify annually, and codification of requirements for grower groups.

The 2018 Farm Bill specifically required USDA to do a rulemaking to:

1. Reduce the types of uncertified entities in the organic supply chain that operate without USDA oversight—including importers, brokers, and traders of organic products, to safeguard organic product integrity and improve traceability.

2. Require the use of NOP Import Certificates, or equivalent data, for all organic products entering the U.S.

3. Clarify NOP’s authority to oversee certification activities, including the authority to act against an agent or office of a certifying agent, such as foreign satellite office of certifying agents.

The proposed SOE rule addresses those issues, but it also goes far beyond and includes a whole host of regulatory changes with the goal of improving organic integrity across the supply chain and building consistent certification practices to deter and detect organic fraud.

Shortfalls of Proposed Rule

NOC has also identified some significant and glaring gaps in the proposed rule that must be addressed in the rule itself or in other ways.

1. Import certificates: It is not clear that the requirements for import certificates will have the intended impact for two reasons: 1) NOP Import Certificates must be uploaded into the ACE system within 10 calendar days of the shipment entering the U.S., meaning organic products can come into ports of entry and enter the marketplace without this accompanying documentation; and 2) If the information in the import certificate is insufficiently verified or up to date, the certificate gives a false confidence.

2. Gaps in regulatory language: In some parts of the proposed rule, there is no specific regulatory language that clearly accomplishes the intent expressed by NOP in explanatory text. Without adding specific regulatory language, certain provisions cannot be consistently enforced by certifiers.

For example:

a. NOC believes AMS should implement a new requirement that certifiers report acreage data into the Organic Integrity Database, but the regulatory language in the proposed rule does not fully address this issue;

b. NOC suggests clear regulatory explanation of what the term “risk-based” means in the regulatory text. Certifiers are required by the new rule to use a “risk-based” approach when determining when to conduct supply chain audits and unannounced inspections. Without indicating what this means, there may be wide variations across certifiers in how they implement these requirements.

c. The regulatory language and explanatory text needs to more clearly express the intent for the exemption from certification at § 205.101 (e): An operation that only stores, receives, and/or loads agricultural products, but does not process or alter such agricultural products. Without more clearly indicating the intent, there could be confusion regarding which entities must be certified. For example, will milk haulers combining loads of milk need to be certified? Will vehicles transporting non-organic and organic animals need to be certified? Will storage facilities that receive bulk grains need to be certified? Will ships that transport bulk grains need to be certified?

3. Role and responsibility for USDA NOP: The new regulations impose numerous new requirements for operations and certifiers, but the NOP must also play a role and change its own practices to catch up to the new challenges we face in organic supply chains. The proposed rule is silent in this area.

For example:

a. The rule requires that inspectors and certification review staff have the necessary qualifications, but does not say how the NOP will ensure that accreditation auditors and enforcement staff are qualified and have the relevant knowledge.

b. The rule requires certifiers to share information with other certifiers in efforts to enforce the organic regulations and crack down on fraud. In a similar vein, NOC believes it is imperative that the NOP shares information with other accreditors, such as the European Union, to flag risky certifiers and operations in the organic supply chain.

4. Unintended consequences for small and lower resourced operations: NOC strongly supports provisions that increase supply chain traceability, but we have important questions about how these provisions could negatively impact some operations in the organic supply chain. Specifically, we are concerned that new requirements for more operations to get certified could have the unintended consequence of creating disincentives for on-farm organic seed production (by requiring these operations to obtain handling certificates). We are also analyzing the rule to ensure that new grower group requirements do not unduly harm or cause loss of organic market access for legitimate grower groups and their members. These farmers represent the largest percentage of organic farmers worldwide.

Submit Comments to NOP

Organic stakeholders have until Oct. 5, 2020 to submit comments on the proposed rule. See www.ams.usda.gov/rules-regulations/strengthening-organic-enforcement-proposed-rule. NOC will be providing talking points and sample language.

NOC hosts a virtual meeting Oct. 26 from 1 to 4 p.m. ET, prior to the fall meeting of the NOSB. NOC’s meeting provides an opportunity for the organic community to share updates, discuss challenges, and think about issues that the NOSB will discuss on subsequent days. Register for the NOC meeting online at www.nationalorganiccoalition.org/events.

Alice Runde is Coalition Manager and Abby Youngblood is Executive Director of the National Organic Coalition.

 

From the September | October 2020 Issue

 

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