CEI Comments to USDA on Proposed Organic Rules

CEI Comments to USDA on Proposed Organic Rules

June 12, 2000

COMMENTS OF THE COMPETITIVE ENTERPRISE INSTITUTE

TO THE UNITED STATES DEPARTMENT OF AGRICULTURE,

AGRICULTURAL MARKETING SERVICE,

CONCERNING ITS PROPOSED NATIONAL ORGANIC PROGRAM

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Docket No. TMD-00-02-PR2

65 FR 13,512 (March 13, 2000)

 

The Competitive Enterprise Institute (CEI) hereby submits these comments on USDA’s proposed National Organic Program. As explained below, USDA’s proposal attempts to impose a uniform, highly technical standard on an issue and an industry which are incapable of precise definition. Moreover, USDA’s proposal would prohibit private parties from engaging in practices that encompass any variation in applying this standard. It would prevent certifiers from requiring practices that are greater, lesser, or in any way different from USDA’s uniform standards. There is considerable evidence that consumers of organic products hold a wide range of opinions regarding what constitutes organic production. Consequently, by prohibiting variability or flexibility, USDA’s proposed rule would prevent producers from responding to consumer preferences and would directly harm consumer choice. Furthermore, by drastically restricting the information which food producers can provide to consumers, USDA’s proposal raises serious First Amendment problems. For these reasons, USDA should alter its approach to allow far more flexibility. As explained below, this would be fully compatible with the Organic Foods Production Act (7 USC 6501 et seq.). More importantly, it would avoid the constitutional infirmities contained in the current proposal.

BACKGROUND OF CEI

The Competitive Enterprise Institute is a non-profit research and advocacy organization, and has been extensively involved in issues dealing with food labeling and safety, and other issues of public health. CEI is particularly interested in expanding consumer choice in the marketplace and promoting private solutions to consumer information issues. Such advocacy includes CEI’s comments regarding the U.S. Department of Agriculture’s first proposed rule for the National Organic Program (Docket No. TMD-94-00-2, 62 FR 65,850, December 16, 1997). Other examples include CEI’s testimony opposing mandatory labeling of recombinant Bovine Somatotropin-derived (rbST) dairy products at the May 6, 1993 Joint Meeting of the Food and Veterinary Medicine Advisory Committees (see 58 FR 21,314, April 20, 1993); CEI’s comments endorsing the freedom of food producers to voluntarily label rbST dairy products (FDA Docket No. 94D-0025, 59 FR 6,279, Feb.10, 1994); and CEI’s pending lawsuit challenging the federal ban on advertising and label references to the health benefits of moderate alcohol consumption (CEI and Consumer Alert v. Rubin, D.D.C., Civil Action No. 96-2476 TPJ).

I

USDA’S PROPOSAL IS AN UNWARRANTED ATTEMPT TO IMPOSE

A SINGLE ARBITRARY STANDARD ON A DIVERSE FIELD

WHICH NEITHER REQUIRES, NOR IS CAPABLE OF, PRECISE DEFINITION

The proposed National Organic Program raises a vast number of technical issues. Underlying it, however, are several basic assumptions regarding what USDA can achieve. While USDA and the Agricultural Marketing Service (AMS) have interpreted the Organic Foods Production Act as requiring a single national standard for organic production, we believe that such a task is inherently unachievable. The very attempt by USDA to promulgate a rule for the National Organic Program has spawned numerous, passionate disputes over the very nature of “organic production.”

In our view, there is simply no way for USDA to resolve these disputes in any rational manner because there is no right answer. Many of these disputes are purely ideological, such as objections to irradiation and genetic engineering. Others involve attempts to expand an already vague concept to encompass issues of political correctness, global ecology, and the good life. None are suitable for across-the-board determinations by a federal agency. Furthermore, by prohibiting private parties from operating outside USDA’s strictly defined standards (Note 1), this proposal would restrict variability and flexibility, jeopardize competitive forces that foster improvement and innovation, and directly harm consumer choice.

In its first attempt to develop a rule for the National Organic Program, USDA carefully evaluated the available information before proposing a rule that pleased almost no one. USDA received more than 275,000 comments on that proposed rule – most of them critical. According to the Organic Trade Association, the first set of proposed regulations “lack[ed] the holistic approach central to organic practices” (Note 2). The huge number of public comments that USDA received in its first rulemaking made it the largest proceeding in the department’s history (Note 3).  Even now, USDA’s second proposed rule continues to attract criticism. This is perhaps the best evidence that the issue before the agency is one that is fundamentally unsuited to strict regulation by any government agency. It is as if a government body were attempting to define religious doctrine.

Indeed, USDA’s description of what is and is not to be considered permissible in organic production often resembles the proverbial debate over how many angels can dance on the head of a pin. In its most recent proposed rule, USDA specifically categorizes certain “non-organic” production practices as “excluded methods.” Such excluded methods include use of recombinant DNA technology, cell fusion, and micro- and macro-encapsulation (Note 4). These items are excluded because, according to the agency, they “are not possible under natural conditions or processes and are not considered compatible with organic processes” (Note 5). However, among USDA’s enumerated permissible practices are in vitro fertilization and tissue culture (Note 6) – techniques that clearly are also “not possible under natural conditions or processes.”

Furthermore, most consumers would undoubtedly be shocked to know that many completely “natural” substances long used as pesticides in organic farming, such as Pyrethrin (Pyrethrum), Rotenone (now being cancelled for agricultural uses), Ryania, and Sabadilla, are toxic and may be carcinogenic (Note 7). Each of these chemicals is derived from the roots, stems, flowers, or seeds of naturally occurring plants; therefore, under USDA’s proposed rule, they are not excluded from organic production. But surely the use of toxic chemicals is not what most laymen have in mind when they think of organic food. In each of these cases, the lesson to be learned is that the meaning of the term “organic” defies simple definition. Consequently, it is impossible to create a single national standard to describe a concept that inherently defies unanimity.

Such variable views on the concept of “organicness” are reflected in market activity. Some 33 private organic certifying organizations have sprung up in the United States, to complement numerous government and international standard-setting bodies – most of which enforce a slightly different standard of organic purity (Note 8). USDA’s Federal Register notice describes the failed attempt by the US organic food industry to develop a uniform, voluntary national certification program, and lists this as one justification for federal action (Note 9). Consequently, both Congress (Note 10) and USDA (Note 11) have argued that this rulemaking is necessary to promote national uniformity for the production and marketing of organic products, and argue further, that “[l]ack of a nationwide standard has also created confusion for consumers who may be uncertain what it really means when a food product is called ‘organic’” (Note 12).

But neither Congress nor USDA has provided substantial evidence that consumer confusion is, in fact, a problem. Nor does there appear to be any real evidence that deceptive labeling has been a problem. Gene Kahn, a charter member of the National Organic Standards Board, has said, “It’s fair to say that the industry has been self-governing and has, by and large, done a good job” (Note 13).

Still, USDA’s insistence upon a single standard is allegedly aimed at giving consumers the information that cannot be provided by private markets and voluntary association. But this basic assumption is wrong. If consumers are truly interested in knowing certain facts about their food, then labeling mandates or restrictions are not necessary to produce that information. Market forces themselves are fully capable of meeting consumer information demands. The competitive forces that produced the existing organic food industry are but one example. Rather than simply viewing the variety of organic certification schemes as evidence that a uniform, federal government standard is the only solution, we urge USDA to recognize that the difficulty in establishing a single, uniform standard for organic food production suggests that consumers actually want varying levels of  “organicness.”

Consider, for example, one real world analogue: kosher foods. For religious purposes, many Jewish people purchase foods that have been processed according to Kashrut, or kosher, dietary rules. And, increasingly, many non-Jewish consumers have begun purchasing kosher foods because of a perceived sanitary or nutritional improvement over other foods. To ensure that these foods are, in fact, processed according to Kashrut rules, a large number of private kosher certification organizations have been formed. Furthermore, because these certifying organizations keep to varying degrees of Kashrut strictness, some purchasers of kosher products seek out only foods approved by specific certifying organizations (Note 14).

Kosher certification provides a range of information useful to consumers precisely because, not despite, the fact that different certifying agents adhere to varying standards. The existence of competing certification organizations in that industry provides a level of consumer choice that would be impossible under a government-imposed, one-size-fits-all labeling scheme. Information provision within this well-established segment of the food industry clearly shows that the market can support voluntary labeling of process attributes pertaining to food products. And though several states have attempted to establish basic standards for kosher certification (Note 15), imagine how unnecessary and inappropriate it would be for consumers or producers of kosher foods (even large groups of consumers or producers) to demand a single national standard for kosher certification that provides for no variability. Any conceivable gains that might be derived from uniformity would undoubtedly be swamped by the loss of an important aspect of consumer choice.

Similarly, CEI urges the USDA to recognize that what constitutes “organic” food is so inherently imprecise, so hotly contested, and subject to a variety of consumer attitudes and demands that the agency should not attempt to narrowly define the term or to stringently restrict its use by private parties. In short, USDA can fulfill its obligations under the OFPA while simultaneously permitting private parties to define the term “organic” more flexibly.

II

USDA’S FINAL RULE SHOULD MAXIMIZE FLEXIBILITY

BY PERMITTING A RANGE OF LABELLING SYSTEMS,

UTILIZING DISCLAIMERS AND OTHER DEVICES TO PERMIT VARIATIONS

FROM ITS OWN ORGANIC PRODUCTION STANDARD

While the above disputes cannot be resolved administratively, they can be resolved privately. Private organic certification is a growing enterprise, and for many wholesale purchasers as well as consumers certain organic certifications have taken on exceptional importance (Note 16). Though the USDA is bound by the OFPA to establish a set of national standard production techniques describing the term “organically produced” (Note 17), the Act does not appear to forbid USDA from permitting private variability.

If, in USDA’s view, competing certification schemes might hold some potential for consumer confusion, then there are far less stringent ways to deal with them. For example, rather than an outright prohibition, USDA could simply establish its own set of standards and ensure that the truthfulness of labels that affirmatively claim compliance those standards. Alternatively, USDA could require that labels for foods that do not meet its standards carry a disclaimer, such as “This package does not comply with USDA standards for organic labeling.” Similarly, organic certifying agencies that wish to enforce a more stringent standard – which, for example, meets all USDA standards as well as additional standards – might be permitted to carry a label such as “Meets or exceeds all USDA standards for organic labeling.”

Another approach would be for USDA to establish several easily recognizable levels of organic “quality” or “strictness,” such as “organic plus” and “organic double-plus.” Such a tiered labeling system could permit various levels of strictness in farming practices, and would provide flexibility beyond USDA’s four proposed thresholds for organic content of multi-ingredient foods (Note 18) and USDA’s proposed prohibited production and handling practices for labeling categories (Note 19).

Unlike the proposed prohibitions, such approaches would give consumers access to more products and more information. Some organic food purchasers might avoid “lower-ranked” items, or items carrying disclaimers, altogether. Others might simply discount the disclaimed information, and still others would not care at all. But both consumer choice and producer flexibility would be maximized. Even with respect to producing detailed information about different types of organic food, consumer pressures and market forces are demonstrably better than an across-the-board federal rule. The key to the success of such a private system is flexibility.

The Organic Foods Production Act itself permits such an approach. It is true that the Act, in Section 6501, discusses the need for organically produced products to “meet a consistent standard.” Nowhere, however, does the Act require that all organic products meet the same standard. Moreover, the Act itself contemplates at least one area in which there may be differing standards – Section 6506(c) expressly permits state programs “additional guidelines.” Similarly, USDA has itself interpreted the Act as allowing it to establish four different categories of organic food, depending on the percentage of organic ingredients that they contain (Note 20). This demonstrates several basic facts:  1) that the Act should not be interpreted to mandate a single, unvarying across-the-board standard for what is and is not organic; 2) that consumers can readily comprehend a variety of organic standards; and 3) that the public interest is better served by such a variety of standards, as compared to one single, rigid standard.

III

UNDER RECENT FIRST AMENDMENT CASELAW,

USDA’S CURRENT APPROACH IS HIGHLY QUESTIONABLE

The increasing First Amendment protection accorded to commercial speech in recent decades indicates that USDA’s proposed labeling rules raise serious constitutional problems. In fact, from a First Amendment standpoint, less restrictive approaches are clearly mandated under decisions of both the Supreme Court and the U.S. Court of Appeals for the D.C. Circuit. In Central Hudson Gas and Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980), the Supreme Court established a multi-part test for assessing the validity of a government restriction on commercial speech. Included in that test is the requirement that the asserted government interest be substantial, that it be directly advanced by the restriction at issue, and that there be a reasonable fit between the government’s objective and the means chosen to achieve it.

In Pearson v. Shalala, 164 F.3d 650 (D.C. Cir. 1999), the D.C. Circuit applied this test to overturn FDA’s treatment of certain dietary supplement health claims. FDA had rejected the claims on the ground that they did not meet its standard of scientific agreement and were therefore misleading. The court invalidated this approach, characterizing FDA’s view of consumer gullibility as “almost frivolous” (Id. at 655). It pointed out that, in choosing to ban the statements, FDA had “disregard[ed] far less restrictive and more precise means” of preventing consumer deception such as by requiring disclaimers (Id. at 658). The court noted that the Supreme Court had “repeatedly point[ed] to disclaimers as constitutionally preferable to outright suppression” (Id. at 657).

In its proposal, however, USDA has essentially adopted suppression as its approach; it has imposed an outright ban on the marketing use of organic food standards other than its own, with no consideration of less drastic means such as those described above. As other comments in the administrative record make clear, however, there are a number of organizations that have a strong interest in utilizing other sets of standards, and in making that fact known to consumers. The Demeter Association, for example, has long been involved in certifying the use of its own “biodynamic standards” and transitional standards for organic foods. Yet its ability to continue doing so under Section 6505(a)(1) is highly questionable, unless USDA expressly permits label variations from its own standards.

As the Pearson decision notes, “conclusory assertion[s]” of consumer confusion will not suffice; there must be actual empirical evidence of such confusion. 164 F.3d at 659, citing Edenfield v. Fane, 507 U.S. 761, 771 (1993). See also 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 507 (1996). There is absolutely no evidence that consumers would be confused if USDA were to allow organic food labels based on standards different than those proposed by the agency. If there were any possibility of such confusion, it could be eliminated by requiring that such variations be accompanied by explanatory disclaimers.

In its current restrictive form, USDA’s proposal simply does not meet the constitutional criteria for government prohibitions on speech.

CONCLUSION

For the foregoing reasons, USDA should seriously consider simply abandoning its attempt to establish a strict definition of organic food, and should instead inform Congress that the task set out in the National Organic Foods Production Act is both inappropriate and impossible. If USDA does proceed to implement the Act, it should do in the most flexible manner possible. The agency’s current approach, which effectively prohibits organic food producers from varying USDA’s across-the-board standard, is counter to both the public interest and the First Amendment.                                                             

Respectfully submitted,                                           

Gregory Conko

Director, Food Safety Policy

Sam Kazman

General Counsel

 

Competitive Enterprise Institute

1001 Connecticut Ave. NW

Suite 1250

Washington DC 20036

Tel: (202) 331-1010

 

June 12, 2000

NOTES

 

1. 65 FR 13,555, 13,623.

2. Organic Trade Association, “Organic Standards at Risk,” Organic Trade Association press release (January 27, 1998).

3. 65 FR 13,512.

4. 65 FR 13,611.

5. Id.

6. Id.

7. Dave Kain, “Botanical Insecticides,” Scaffolds Fruit Journal: Update on Pest Management and Crop Development, Vol. 5 (July 29, 1996) available at www.nysaes.cornell.edu scaffolds 1996 scaffolds_0729.html>.

8. Anon. “Organic farming: Let’s keep it clean,” The Economist (April 17, 1999) pp. 34-35.

9. 65 FR 13,512. However, USDA fails to note, at least in this section, the recent development of uniform production guidelines by numerous organic industry stakeholders under the auspices of the Organic Trade Association. Organic Trade Association, American Organic Standards: Guidelines for the Organic Industry, compiled by James A. Riddle, Emily Brown Rosen, and Lynn S. Coody (Greenfield, Mass.: Organic Trade Association, October 20, 1999).

10. 7 USC 6,501.

11. 65 FR 13,513.

12. Id.

13. Carole Sugarman, “Organic? Industry is Way ahead of Government,” The Washington Post (December 31, 1997), p. E1.

14. See, for example, Michael I. Krauss, “Loosening the FDA’s Drug Certification Monopoly: Implications for Tort Law and Consumer Welfare,” George Mason Law Review, Vol. 4 (Spring 1996), pp. 457-83.

15. Karen Ruth Lavy Lindsay, “Can Kosher Fraud Statutes Pass The Lemon Test?: The Constitutionality Of Current And Proposed Statutes,” University of Dayton Law Review, Vol. 23 (Winter 1998) 337-69.

16. Sugarman, op. cit.

17. 7 USC 6,502.

18. 65 FR 13,554 (Table 2).

19. 65 FR 13,552 (Table 1).

20. 65 FR 13,554.