For the first time in more than thirty years, the United States Department of Agriculture (“USDA”) is increasing regulations of products labeled “organic.” A new final rule announced by the USDA’s National Organic Program seeks to standardize training and operations requirements for organic businesses and personnel, increase on-site inspections, and require certification for key steps in the organic food supply chain.[i] The rule, dubbed “Strengthening Organic Enforcement,” was announced on January 19, 2023, and goes into effect on March 20, 2023. With this rule, the USDA has finally taken definitive action on combatting a major problem that has plagued the organic food industry for decades.
In a press release announcing the rule, the USDA explained its intent to protect organic integrity and bolster farmer and consumer confidence in the “USDA Organic” seal by supporting strong organic control systems, improving farm-to-market traceability, increasing import oversight authority, and providing robust enforcement of the organic regulations.[ii] According to the USDA, “the Strengthening Organic Enforcement rule is the biggest update to the organic regulations since the original [National Organic Program] Act in 1990, providing a significant increase in oversight and enforcement authority to reinforce the trust of consumers, farmers, and those transitioning to organic production. This success is another demonstration that USDA fully stands behind the organic brand.”
The final rule is the product of extensive lobbying by the Organic Trade Association (“OTA”), which represents more than ten thousand organic food businesses across all fifty states.[iii] In a statement, the OTA lauded the rule, calling it the biggest change to organic regulations since the original creation of the National Organic Program. The OTA believes that the rule closes gaps in current organic regulations and builds consistent certification practices to prevent fraud and improve the transparency and traceability of organic products. “Fraud in the organic system—wherever it occurs—harms the entire organic sector and shakes the trust of consumers in organic.”[iv]
In the strictest sense, the word “organic” is a labeling term that indicates that the food or other agricultural product has been produced through approved methods and specifically labeled as such by the USDA according to rigorous accreditation standards.[v] Unlike vague food label terms like “natural” and “humane,” the USDA-certified organic label signals that food was produced according to defined standards that prohibit the use of most synthetic pesticides and include other requirements related to conserving biodiversity and animal welfare. In theory, consumers can trust the organic label due to a thorough global oversight system. At the same time, producers can charge customers higher price premiums to offset the increased cost of labeling and compliance. Consequently, organic food is a big business: the OTA estimates that the sale of organic products in the United States surpassed $63 billion in 2021 alone.[vi]
Unfortunately, because of the premium price tag—and the fact that organic food may be indistinguishable from conventionally raised versions of those same foods—the organic food sector is rife with fraud. For example, in 2018, a farmer in South Dakota made $71 million in fraudulent income by selling thousands of tons of conventionally grown grain falsely labeled as organic, using the proceeds to buy, among other things, an $8 million yacht; a $2.4 million home in Florida; and a Maserati.[vii] In 2021, The New Yorker reported on a massive fraud scheme perpetuated by a Missouri farmer and involving over $142 million in fake organic grain sales between 2010 and 2017.[viii] And in early 2023, the Department of Justice charged two Minnesota farmers with conspiring to defraud grain purchasers out of more than $46 million by selling conventionally farmed crops grown with chemical fertilizers and pesticides in violation of organic farming standards.[ix]
The USDA has been aware of this problem for years. In 2010, the USDA Office of Inspector General (“OIG”) published a report detailing several cases of failure to enforce federal laws governing organics.[x] In some instances, the agency took up to 32 months to resolve significant labeling problems, during which time companies continued illegally selling conventional food under the organic label. At the time, officials did not follow up on and did not know the status of, several formally filed claims. When the OIG audited the National Organic Program’s international trade agreements in 2017, it found that the agency did not conduct sufficient inspections, did not conduct a thorough review of other countries’ certification practices, and did not share with stakeholders its methodology for determining how other countries’ organic standards compared to the USDA’s.[xi] Furthermore, auditors found that millions of pounds of organic products were sometimes fumigated with conventional pesticides to prevent invasive pests from entering the country but still labeled and sold as organic.
The original Organic Foods Production Act of 1990 (“OFPA”) was a product of fraud in the food labeling industry. As early as the 1960s, Congress found that a patchwork of state regulations created inconsistent food labeling standards, which led to concerns about authenticity and reluctance by distributors and retailers to purchase organic foods.[xii] Congress realized that producers were incentivized to mislead consumers with mislabeled products and questionable claims due to the higher prices that organic products began to command. Consequently, Congress passed OFPA to serve three stated goals: (1) to “establish national standards governing the marketing of . . . organically produced products;” (2) to “assure consumers that organically produced products meet a consistent standard;” and (3) to “facilitate interstate commerce in fresh and processed food that is organically produced.”[xiii] But the 1990 law did not come into force until more than a decade later, and disagreements over the definition of “organic” pervaded the industry until a final rule went into effect in 2001.[xiv]
Thirty-three years after the passage of the original OFPA, the USDA has taken a significant step in enforcing labeling standards and protecting consumers. The Strengthening Organic Enforcement final rule is a significant win for producers, consumers, and the organic food industry as a whole. The rule is a strong step in favor of restoring consumer confidence in the USDA organic label while protecting producers and consumers who pay a premium for organic products. And compared to OFPA, which took more than a decade to come into full force, impacted parties will have only one year to comply with the changes before being subject to enforcement.
[i] See Strengthening Organic Enforcement, 88 Fed. Reg. 3548 (Jan. 1, 2023) (revising 7 C.F.R. § 205).
[ii] Press Release, Jenny Lester Moffit, Under Secretary for Marketing and Regulatory Programs, USDA Publishes Strengthening Organic Enforcement Final Rule (Jan. 18, 2023), https://www.usda.gov/media/press-releases/2023/01/18/usda-publishes-strengthening-organic-enforcement-final-rule.
[iii] See About OTA, Organic Trade Ass’n, https://www.ota.com/about-ota/mission (last visited Feb. 8, 2022).
[iv] Maggie McNeil, Organic Trade Association statement on USDA’s Strengthening Organic Enforcement final rule, Organic Trade Association(Jan. 18, 2023), https://ota.com/news/press-releases/22666.
[v] See About the Organic Standards, USDA Agric. Mktg. Serv., https://www.ams.usda.gov/grades-standards/organic-standards (last visited Feb. 8, 2023).
[vi] See Reana Kovalcik, 2022 Organic Industry Survey Shows Steady Growth, Stabilizing Purchasing Patterns, Organic Trade Ass’n (June 2, 2022), https://ota.com/news/press-releases/22284.
[vii] See Danielle Ferguson, Florida man made millions selling mislabeled seeds. Now he’s going to federal prison., Argus Leader (Feb. 22, 2021, 3:26 PM) https://www.argusleader.com/story/news/crime/2021/02/22/florida-man-sentenced-selling-mislabeled-seeds-kent-duane-anderson/4543543001/.
[viii] See Ian Parker, The Great Organic Food Fraud, The New Yorker (Nov. 8, 2021), https://www.newyorker.com/magazine/2021/11/15/the-great-organic-food-fraud.
[ix] See Press Release, Department of Justice, Superseding Indictment Charges Two Cottonwood County Farmers in $46 Million Organic Grain Fraud Scheme (Jan. 13, 2023), https://www.justice.gov/usao-mn/pr/superseding-indictment-charges-two-cottonwood-county-farmers-46-million-organic-grain.
[x] See U.S. Dep’t of Agric., Off. of the Inspector Gen., Audit Report 01601-03-Hy, Oversight of the National Organic Program 2 (2010), https://www.cornucopia.org/USDA/OIG_AuditofNOP.pdf.
[xi] See Scott Thill, Audit Reveals Weaknesses in USDA Organic Program Oversight, Civil Eats (Sept. 25, 2017), https://civileats.com/2017/09/25/audit-reveals-weaknesses-in-usda-organic-program-oversight/.
[xii] See Jessica Ellsworth, The History of Organic Food Regulation 6 (2021) (Third Year Paper, Harvard University) (On file with the Harvard University Library system).
[xiii] Organic Foods Production Act of 1990, 7 U.S.C. § 6501.
[xiv] See National Organic Program, 7 C.F.R. § 205.
