Regulatory Issues: Federal Court Decides On Synthetic Organic Restriction

When new requirements for labeling organics become effective, either the formulations or the organic claims for affected products must be changed, unless the Organic Foods Production Act of 1990 (OFPA) is amended in the interim.The OFPA governs the marketing of raw and processed organic agricultural products in the U.S. for human and livestock consumption. The U.S. Department of Agriculture (USDA) administers organic requirements through the National Organic Program (NOP), which includes a National List of Allowed and Prohibited Substances (National List). The NOP was implemented 12 years after the passage of the OFPA, during which time there was a significant increase in the number of processed organic products on the market.Four categories of products are covered by the NOP labeling regulations, based on organic content (excluding water and salt):

Products labeled "100% Organic"

must be composed entirely of organically produced ingredients, including any processing aids.

Products labeled "organic"

must contain at least 95 percent organically produced ingredients, and any additional ingredients must be organically produced unless not "commercially available" in organic form, or must be nonagricultural substances or nonorganically produced agricultural ingredients consistent with the National List.

Products labeled as "made with organic (specified ingredients or food groups)"

must contain at least 70 percent organically produced ingredients.

Products containing less than 70 percent organic ingredients

may use the term "organic" (on the information panel only) to identify specific organic ingredients.Challenge to NOP RegulationsIn 2003, a lawsuit filed by Arthur Harvey (a producer/handler of organic crops and a certified organic inspector) against the USDA in the U.S. District Court for the District of Maine alleged that a number of provisions of the NOP are inconsistent with the OFPA, including two regulations permitting synthetic substances to be used in processed organic products.The NOP, at 7 CFR section 205.600(b), states synthetic substances may be used as processing aids or adjuvants if they meet six evaluation criteria, and section 205.605(b) lists thirty-eight substances, including pectin, baking soda, ascorbic acid, xanthan gum, and nutrient vitamins and minerals (in accordance with FDA's fortification policy), that are specifically allowed in or on processed organic products in their synthetically derived forms.

Harvey challenged the regulations permitting synthetics as inconsistent with the OFPA provision stating certified handling operations "shall not, with respect to any agricultural product covered by this chapter, add any synthetic ingredient during the processing or any post harvest handling of the product." 7 U.S.C. section 6510(a)(1).The USDA conceded section 6510(a)(1) constitutes a "general prohibition" against adding synthetic ingredients in handling operations, but relied on OFPA section 6517(c)(1), which states that the National List "may provide for the use of substances in an organic farming or handling operation that are otherwise prohibited under this chapter" if certain conditions are met.Amendment to the RulingThe lawsuit was unsuccessful, but Harvey appealed, and in January this year the U.S. Court of Appeals concluded the provisions concerning use of synthetic substances are inconsistent with the OFPA and therefore exceed USDA authority. The USDA did not seek review of the Court of Appeals decision.The USDA interpreted the Court of Appeals ruling to mean the use of synthetic substances was prohibited in processed products labeled "organic" or "made with organic (specified ingredients or food groups)."But Harvey's intent in bringing the action was only to prohibit the use of synthetic substances in products making "organic" claims, not in "made with organic" product claim. Because it appeared the Court of Appeal's decision was ambiguous, Harvey filed a Motion for Clarification, taking the position that the ban on synthetics should apply only to the handling of products marketed as "organically produced," meaning products that are at least 95-percent organic.In response to Harvey's motion, the Court of Appeals amended its opinion to make clear synthetic substances are only banned from use in products labeled "organic." The Court declined to vacate the current rules, and remanded the case to the Court for further action.Proposed Time Frames for ComplianceHarvey and the USDA each filed a proposed Final Judgment and Order with the Court, with different recommendations regarding implementation of the Court of Appeals' mandate. In addition, the Organic Trade Association (OTA) filed a motion to appear as amicus curiae ("friend of the court").The USDA's proposed final judgment asked the Court to let them create a new rule within 270 days from the Court entering a final judgment. The agency also requested discretion to exempt any nonconforming product labeled "organic" from enforcement during that time, plus an additional 24 months after the new rule is set. OTA's motion is consistent with USDA's proposed final judgment.Harvey also requested the Court remand the matter to the USDA for a 270-day rule making. But Harvey's proposed final judgment would bar the USDA from taking enforcement action against nonconforming product labeled "organic" during the 270-day rulemaking period; rather than authorizing agency discretion with respect to enforcement action. The mandatory period of non-enforcement would extend beyond the 270-day rulemaking period, but only until the second anniversary of the Court's entry of final judgment. On the second anniversary, the mandatory grace period would terminate, and all producers, handler, and processors would be subject to enforcement.Given that both parties — and the OTA — are asking the Court to remand to matter to the USDA for a 270-day rulemaking period, with either a bar on enforcement or enforcement discretion during that period and well beyond, it's very likely industry will have at least two years to institute changes in accordance with a new rule.