The final rule1 makes changes that affect certified operations, certifying agents, and the NOP, including:
- Requiring certification of more businesses, including brokers and traders.
- Requiring NOP Import Certificates for all organic imports.
- Requiring organic identification on nonretail containers.
- Increasing authority for more rigorous on-site inspections of certified operations by certifying agents.
- Requiring additional and more frequent reporting of data on certified operations.
- Requiring certified operations to implement new or more robust recordkeeping, traceability, and fraud prevention procedures, including procedures to verify suppliers in the supply chain and the organic status of agricultural products received.
AMS has not made any changes specific to private labeled products at this time.
Background
The organic regulations, which have been in effect since 2002, set out standards for the production, handling, labeling, and sale of organic agricultural products. According to the agency, the organic market has increased dramatically in the past twenty years, and so has “organic fraud” (when nonorganic products are deceptively represented as organic). The rulemaking is aimed at improving the integrity of the organic label by closing gaps in the current regulations to build consistent certification practices, deter and detect organic fraud, and improve transparency and product traceability. The final rule implements certain provisions mandated by the 2018 farm bill and addresses recommendations made by the National Organic Standards Board.
Key Updates
The final rule includes a number of major updates to the organic regulations. Some of the key changes include:
- Entities Subject to Certification: The organic regulations already provide that any operation that produces or handles organic agricultural products must be certified organic. The final rule amends the definition of “handle” to clarify that this includes trading, facilitating sale or trade on behalf of a seller or oneself, importing to the United States, exporting for sale in the United States, combining, aggregating, culling, conditioning, treating, packing, containerizing, repackaging, labeling, storing, receiving, or loading. The intention of this change is to make clear that most entities that operate “in the middle of organic supply chains” must be certified.
- Exempt Operations: Previously, the regulations included separate criteria for “excluded” entities and “exempt” entities. The final rule removes this distinction and includes criteria for “exempt” entities only. The scope of exempt operations largely remains the same, with some clarifications:
- The rule maintains the exemption for retail establishments that do not process organically produced agricultural products and retail establishments that process, at the point of final sale, agricultural products certified as “100 percent organic,” “organic,” or “made with organic [ingredient or food group].” The rule expands the definition of “retail establishment” to include mail-order and delivery services to consumers, which is consistent with comments submitted by retailers.
- Operations that only buy, sell, receive, store, and/or prepare for shipment, but do not otherwise handle, organic agricultural products that are in sealed, tamper-evident packages labeled for retail sale prior to being received by the operation, and remain in such packaging without alteration while in custody of the operation, remain exempt. The preamble indicates that this exemption may cover, for example, some distributors, brand name owners, and sales brokers that purchase and/or receive products in their final retail packaging, which aligns with industry input. Accordingly, companies, including retailers, whose brand name is identified on the label but that do not manufacture or process the product, remain exempt.
- Calculating Percentage of Organic Ingredients: The rule clarifies the method of calculating the percentage of organic ingredients in multi-ingredient products. Ingredients in multi-ingredient products are to be calculated by dividing the weight or volume of the organic ingredients at formulation by the total weight or volume of the product at formulation, with water and salt added as ingredients at formulation excluded from the calculation. Previously, the weight or volume of the organic ingredients at formulation was to be divided by the total weight or volume of the finished product. According to the agency, this previous method created confusion because it was unclear if “finished product” meant a product before or after processing, which could affect weight.
- Requirements for Certified Operations: With regard to the specific obligations of certified operations, key updates and clarifications include:
- Certified operations must now develop and implement improved recordkeeping and organic fraud prevention processes and procedures, including procedures to verify suppliers in the supply chain and the organic status of agricultural products received. Certified operations must now maintain records that “span the time of purchase or acquisition, through production, to sale or transport and be traceable back to the last certified operation.”
- NOP Import Certificates must now be used for all products entering the United States. These certificates were previously optional.
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- Nonretail containers used to ship or store organic products must now be labeled with organic identity and be traceable to audit trail documentation. This means the container must (a) identify the product as organic and (b) include unique information that links the container to audit trail documentation. This documentation must identify the last certified operation that handled the product.
- Previously, certified operations were required to submit a system plan in its entirety each year. The final rule clarifies that certified operations need only re-submit the plan when it has been revised, and only the sections that have changed need be submitted.
- The final rule specifies the certification requirements for producer group operations, including use of an internal control system to monitor compliance. Producer group operations are groups of producers, typically small farmers, that may find it useful to become certified collectively in order to more easily access organic markets.
- Inspections of Certified Operations and Enforcement: The final rule also makes changes related to inspection of certified operations and enforcement:
- Certifying agents must now conduct unannounced inspections of at least 5% of the operations they certify, complete mass-balance audits during annual on-site inspections, and verify traceability back to the previous certified operation in the supply chain during annual on-site inspections.
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- Certifying agents must now conduct on-site inspections at least once per calendar year.
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- The final rule clarifies that the NOP may initiate enforcement action against any violator of the organic regulations or underlying laws, including uncertified operations and responsibly connected parties, and clarifies NOP's appeal procedures and options for mediation.
- Requirements for Certifying Agents: The final rule also amends a number of the provisions relating to certifying agent activities:
- The rulemaking clarifies AMS's authority to oversee the activities of certifying agents. Certifying agents must now notify AMS when opening any certification office that conducts certification activities. In addition, this rulemaking clarifies that AMS may issue notices of noncompliance to certifying agents based on the certification activities of a party working on behalf of a certifying agent.
- Certifying agents must now issue standardized certificates of organic operation generated from USDA's Organic Integrity Database (OID) and must keep accurate and current certified operation data in the database.
- Certifying agent personnel must now meet minimum education and experience qualifications and participate in continuing education.
- Certifying agents must now conduct supply chain traceability audits and develop and implement information-sharing processes.
- Equivalence Determinations: Finally, the rule clarifies AMS’s procedures for establishing, evaluating, and terminating equivalence determinations with foreign government organic programs, based on an evaluation of their organic foreign conformity systems.
In the proposed rule,2 AMS asked for public comment on the topic of products produced under private label arrangements solely to elicit feedback for possible future consideration. Accordingly, the final rule summarizes the comments received, but does not include any changes to the provisions of the organic regulations relating to packaged product labeling. AMS does confirm in the final rule, however, that private labeling operations that “process” organic agricultural products must be certified.
Next Steps
All entities affected by the rule must comply by March 19, 2024, including by obtaining organic certification if necessary. We will continue to monitor the implementation and enforcement of the updated organic regulations. Please do not hesitate to reach out to us on this or any other matter.
Authored by Brian D. Eyink, Veronica Colas, and Rachel Buff.
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