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More on Federal Court Ruling Tightening up Organic Standards

>From the Natural Food Merchandiser (Feb. 2, 2005)

http://www.naturalfoodsmerchandiser.com/asp/articleDisplay.asp?strArticleId=
1310&strSite=NFMSite

NOP Violates Organic Rule, Court Says
Laurie Budgar

Natural Foods Merchandiser 2/2/04

Three provisions of the National Organic Program are not valid, according to
a decision issued by the U.S. Court of Appeals for the First Circuit last
week.

The decision came after a lawsuit filed in October 2003 by Arthur Harvey, an
organic blueberry farmer in Canton, Maine and an organic inspector for the
U.S. Department of Agriculture. Harvey claimed that seven NOP provisions
were not consistent with the Organic Food Production Act of 1990, which
became effective in October 2002. Harvey filed the suit against Ann Veneman,
then U.S. secretary of agriculture. Initially, Harvey made nine claims
against Veneman, but failed to convince the court of the merits of any of
them.

According to last week's ruling on his appeal, Harvey alleged that he has
suffered because "the challenged regulations weaken the integrity of the
organic program and the standards it sets forth."
The court agreed with Harvey that two NOP provisions were outside the
program's authority and contradicted OFPA:

* The NOP regulations have allowed 38 synthetic ingredients, from
alginates to xanthan gum, to be used in processing and post-harvest
handling, even though OFPA prohibits synthetic ingredients in processed
foods. The court ruled that most of these ingredients would no longer be
allowed.
* The NOP regulations have, until now, permitted dairy herds that were
undergoing conversion to organic status to be given feed that is only 80
percent organic for the first nine months, and then switch to full organic
feed after that. Harvey argued that this violated OFPA's mandate that
organic dairy animals receive organic feed for 12 months prior to the sale
of organic dairy products. "Nothing in the Act's plain language permits
creation of an 'exception' permitting a more lenient phased conversion
process for entire dairy herds," the court wrote.
* The NOP has allowed non-organic agricultural ingredients, such as
cornstarch and pectin, to be used when organic versions were not
commercially available. Harvey argued that the rule gives certifiers a
"blanket" exemption, without requiring them to review each ingredient on a
case-by-case basis. The circuit court agreed and ruled that non-organic
agricultural products should have individual reviews in order to be used in
processed foods.

On the "blanket exemption" point above, Harvey's "win" wasn't as clear-cut.
"They sent it back to the trial court to clarify the point," said William J.
Friedman, an attorney with DLA Piper Rudnick Gray Cary in Washington, D.C.
"Look, they are allowed to have a 'commercially available' provision but it
can't be anytime they want; there has to be a little more contour to it,"
Friedman said.

In a news release, the Organic Trade Association noted that the USDA would
have 45 days to challenge the ruling. If challenged, the case would go to
the U.S. Supreme Court. Otherwise, the Circuit Court will order the USDA to
issue new regulations to replace the provisions that were found to be
unlawful.

For his part, Harvey finds the ruling "slightly encouraging," but is wary
about celebrating. "I don't really know what the end result will be-it
depends on how the USDA responds. Sometimes the agency ignores court
decisions. I'm not saying this will happen here. We'll just have to wait and
see."

"It's important to keep in mind that we do have time," said Jim Riddle,
chairman of the National Organic Standards Board, which reports to the USDA.
"This is a deliberative process; it will involve new rule writing and
possibly new legislation." He emphasized the need for collaborative
discussion in the process. "There's a possibility it could cause confusion
in the marketplace and I think we need to be thoughtful about how we handle
it in the short term and in the long term ... to be inclusive in the
discussions and to really consider a wide range of options that really have
the support of farmers, consumers and processors."

Friedman noted the USDA had three ways it could delay the return of the case
to district court. "USDA could petition the U.S. Supreme Court for review;
they could ask for reconsideration; or they could ask for en banc rehearing,
which is a procedural device for asking the entire circuit to review this."
Normally, appellate decisions are made by three-judge panels rather than all
10 judges on the circuit.

Friedman said the USDA may also ask the district court to allow a grace
period for manufacturers and retailers to convert to the new standards, but
that it probably would not be a protracted amount of time. "As that time
gets longer it becomes more necessary that Mr. Harvey would have to agree
with it. USDA can ask for whatever it wants but the court's going to say
'Hey, we've got an appellate decision here and we need to implement it."

Friedman emphasized that more details must be ironed out before any new
regulations take effect. "This ruling will not and can not be enforced until
it is back in the trial court and the trial court has entered a final
judgment consistent with this opinion." Riddle also observed that there's no
need for manufacturers or retailers to panic. "All of the products on the
shelves are currently certified to the regulation. USDA does not have power
for recall or stop sale, and I think the judge will certainly take that into
account and not create a huge upheaval in the stream of business."

Dave DeCou, executive director of the Organic Materials Review Institute,
said the court's ruling didn't surprise him. "There were always some
traditionalists, and obviously Arthur Harvey is one of them, who didn't
think anything synthetic should be allowed into organic food." He noted that
the OFPA was written "at a different point in time," when "there weren't
that many [organic] processed products." He said the new ruling could have
lasting impacts on manufacturers. "It's going to probably cause some
manufacturers to move out of the organic labeling category into the made
with organic ingredients category. ... My guess is that many of them are not
going to be able to change their ingredients; I don't think they've been
using these on a casual basis."

As for dairy farmers, the ruling's impact could be minimal, according to
Harvey. "Dairy farmers who wanted to convert to organic found it
prohibitively expensive. ... I acknowledge that that is quite a strong
barrier," he said. "On the other hand, they're getting $21 a hundred
[weight] versus the maybe $12 for conventional milk. It's an investment."
Besides, he said, the two biggest organic milk producers in the country are
not accepting new farmers. "They're oversubscribed right now. It's not as
though they're really hurting for more organic dairy producers. I think the
effect of this ruling will be to slightly increase the cost of organic milk,
but it will also increase the purity. That's a reasonable bargain for the
consumer."

Katherine DiMatteo, executive director of the Organic Trade Association,
said, "The court decision may hamper [the] growth rate [of organic product
sales] in the short term, but the OTA is optimistic that its members and
others in the organic community can pull together to maintain the momentum
for organic agriculture."