Department of Agriculture Withdraws Revisions to Organic Standards

Consumers increasingly look to organic labels on their food as a way to ensure that any meat, eggs, or dairy they buy came from animals that had enjoyed nice lives in open fields. But whose responsibility should it be to decide whether the regulated organic label accurately represents the practices that consumers associate with that designation? Earlier this year, the U.S. Department of Agriculture (USDA) decided to withdraw an Obama Administration rule that would have added requirements to the qualifying criteria for organic labels on animal products. Those new requirements, including provisions to regulate the care and living conditions of livestock, aimed to make the term “organic” better aligned with consumer expectations. For example, the Obama organics rule established requirements for the size and type of outdoor space for holding chickens, standards for transporting animals to slaughter, and prohibitions on some physical alterations of the animals such as de-beaking—where producers remove more than one-third of a chicken’s beak to prevent them from hurting other birds in their vicinity. Adopted at the very end of the Obama Administration, the rule had not yet taken effect, giving the Trump Administration an opportunity to review and ultimately withdraw it. USDA justifies its withdrawal of the Obama era rule by claiming that the rule had exceeded the agency’s statutory authority under the federal Organic Foods Production Act of 1990 (OFPA). This law expressly authorizes the agency to impose standards for the feed and health care of livestock, but does not mention other conditions. The current USDA believes that it lacks authority to impose standards for the general welfare of animals. The Obama Administration had claimed otherwise, focusing on a part of the law that allows the Secretary of Agriculture to create detailed regulations to implement organic standards. In addition to viewing the agency’s legal authority differently, the current USDA said that it conducted a new benefit-cost analysis of the rule and determined that moving forward with the regulation was not “sound regulatory policy.” USDA argued that, because the market for organic foods continues to grow, consumers do not have a problem with existing standards. Reactions to the withdrawal of the Obama Administration’s organics rule break down according to industry interests. The Organic Trade Association has argued that the qualitative benefits of the organics rule did justify the rule’s costs. The association claims that an information asymmetry exists in the market for organic food because terms such as “outdoor access” remain ambiguous under the existing regulations. The new organics rule would have corrected this market failure by clarifying existing language and putting in place new language to reduce variation in practices deemed “organic” and align regulations better with consumer expectations. Other industry groups, such as the National Chicken Council and the United Egg Producers, expressed concern that the benefits justifying the organics rule overestimated potential gains for consumers. They also argued that USDA had underestimated the costs of the regulation and failed to consider adequately how requirements for outdoor access would increase biosecurity risks. The current USDA acknowledged the possibility of qualitative benefits to consumers, but concluded that, when it balanced those “speculative benefits” against the expected costs to organic producers, the organics rule became “overly burdensome.” In contrast to the Obama Administration’s USDA—which focused on the need to provide a consistent standard that would increase consumer confidence in the agency’s “organic” label—the Trump Administration’s USDA began its analysis with the conclusion that no market failure existed, shifting the balance of costs and benefits heavily toward costs. USDA’s conclusion that the organics rule imposed costs greater than its benefits has proven important in light of President Trump’s executive order that specifies that, for every new regulation, two existing ones must be removed, and that the total cost of new regulatory actions must be zero—which can be achieved by offsetting the costs of new regulation with the elimination of existing regulations. Because the decision to withdraw the organics rule avoided imposing the cost of new regulations on organic producers, it can be classified as a deregulatory action. Eliminating the costs that would have been imposed by the organics rule allows the Trump Administration to issue a new rule with equivalent costs. The Organics Trade Association has announced plans to challenge USDA’s withdrawal in court