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Organic Trade Association v. United States Department of Agriculture

United States District Court, District of Columbia

February 27, 2019

ORGANIC TRADE ASSOCIATION, Plaintiff,
v.
UNITED STATES DEPARTMENT, OF AGRICULTURE, et al., Defendants.

          MEMORANDUM OPINION

          Rosemary M. Collyer, United States District Judge.

         On January 19, 2017, the last day of the administration of former President Barack Obama, the United States Department of Agriculture (USDA) issued the final Organic Livestock and Poultry Practices Rule (Final OLPP Rule), which made more stringent the regulations that govern the certification of livestock as “organic” by USDA. On January 20, 2017, the first day of the administration of President Donald Trump, the White House directed executive agencies to delay implementation of all pending regulations that had not yet become effective, which included the Final OLPP Rule. USDA thereafter issued “Delay Rules” in February, May, and November 2017, each further delaying the effective date of the Final OLPP Rule. Eventually, on March 13, 2018, USDA formally withdrew the Final OLPP Rule.

         The Organic Trade Association (OTA) challenged the delays to the effective date of the Final OLPP Rule in September 2017, while the November Delay Rule was open for public comment and not yet finalized. Between then and now, the Complaint has twice been amended and now also includes a challenge to the withdrawal of the rule. The government moves to dismiss the Second Amended Complaint. OTA opposes. Having studied the parties' briefs, the Court finds OTA has standing to sue but will dismiss its challenge to the Delay Rules.

         I. BACKGROUND

         A. The Organic Food Products Act

         Congress enacted the Organic Food Products Act (OFPA) in 1990 “to establish national standards governing the marketing of certain agricultural products as organically produced products”; “to assure consumers that organically produced products meet a consistent standard”; and “to facilitate interstate commerce in fresh and processed food that is organically produced.” 7 U.S.C. § 6501. Consistent with this purpose, the OFPA requires the Secretary of Agriculture to “establish an organic certification program” for producers and handlers of organic agricultural products to ensure that those products are “produced and handled in compliance with an organic plan” and, as a general matter, “without the use of synthetic chemicals.”[1] 7 U.S.C. §§ 6503(a), 6504(1) and (3). Each organic operator must develop and follow an “organic plan, ” which is defined as:

a plan of management of an organic farming or handling operation that has been agreed to by the producer or handler and the certifying agent and that includes written plans concerning all aspects of agricultural production or handling described in this chapter including crop rotation and other practices as required under this chapter.

7 U.S.C. § 6502(13). One touchstone of the organic program is the “National List of approved and prohibited substances that shall be included in the standards for organic production and handling.” Id. § 6517(a); see also S. Rep. No. 101-357, at 298 (1990) (hereinafter “Senate Report”) (“Most consumers believe that absolutely no synthetic substances are used in organic production. For the most part, they are correct and this is the basic tenet of this legislation.”). The National List touches virtually all aspects of the organic foods market, including organic crop production, 7 U.S.C. § 6508, organic animal production, id. § 6509, and organic handling practices, id. § 6510. Producers that do not satisfy the standards established under the OFPA may not market their products as organic, on pain of civil and criminal enforcement. Id. § 6519(c).

         To aid the Secretary in this undertaking, the OFPA required the establishment of “a National Organic Standards Board . . . to assist in the development of standards for substances to be used in organic production and to advise the Secretary on any other aspects of the implementation of [the OFPA].” Id. § 6518(a). The National Organic Standards Board (occasionally, “Board”) has 15 members appointed for staggered terms and drawn from a cross section of consumers, conservationists, scientists, and the organic agricultural industry. Id. § 6518(b) and (d). The Board “shall provide recommendations to the Secretary regarding the implementation” of the OFPA. Id. § 6518(k). Indeed, Congress regarded the National Organic Standards Board “as an essential advisor to the Secretary on all issues concerning [the OFPA] and anticipate[d] that many of the key decisions concerning standards [would] result from recommendations by this Board.” Senate Report at 296.

         Although “generally responsible for advising the Secretary on all aspects” of the OFPA, the National Organic Standards Board is “[s]pecifically . . . responsible for evaluating substances for inclusion on the Proposed National List.” Id. at 297. Thus, the National List must be “based upon a proposed national list or proposed amendments . . . developed by” the Board, and the Secretary may not add exemptions to the National List that are not included on the proposed national list developed by the Board. 7 U.S.C. § 6517(d)(1) and (2). Nothing requires the Secretary to adopt recommendations made by the National Organic Standards Board in other areas related to the OFPA. However, the Secretary has historically consulted the Board on all rulemaking affecting organic standards. Resp. in Opp'n to the Gov't's Mot. to Dismiss, Ex. 3, Decl. of Tom Chapman (Chapman Decl.) [Dkt. 16-3] ¶ 28.

         With the assistance of the National Organic Standards Board, USDA has promulgated a series of rules regulating the care of organic livestock.[2] For example, in 2000 USDA promulgated the National Organic Program Rule (Organic Program Rule), 65 Fed. Reg. 80, 548 (Dec. 21, 2000), an extensive set of regulations covering a wide variety of organic production practices, which required organic producers to “establish and maintain livestock living conditions which accommodate the health and natural behavior of animals, including . . . [a]ccess to the outdoors, shade, shelter, exercise areas, fresh air, and direct sunlight suitable to the species, its stage of production, the climate, and the environment.” Id. at 80, 645. In 2010, USDA followed up the Organic Program Rule with the 2010 Access to Pasture Rule, 75 Fed. Reg. 7154 (Feb. 17, 2010), which reaffirmed and clarified the requirements for outdoor access.

         In April 2016, USDA proposed the OLPP Rule, after it determined that its organic regulations concerning livestock care needed “additional specificity and clarity to better ensure consistent compliance by certified organic operations” and to “better satisfy consumer expectations that organic livestock meet a uniform and verifiable animal welfare standard.” 81 Fed. Reg. 21, 956 (Apr. 13, 2016). USDA also noted that lack of uniform implementation requirements for the Organic Program and Access to Pasture Rules resulted in “variation in the manner in which the regulations are applied.” Id. at 21, 958. USDA elaborated:

For example, in organic poultry production, outdoor access ranges from extensive pasture to roofed enclosures, i.e., porches with no access to soil or vegetation. This disparity in amounts of outdoor access has economic implications for producers and lessens consumer confidence in the organic label.

Id.

         On January 19, 2017, after a decade of internal work and administrative review, including public notice and comment, USDA published the Final OLPP Rule, which addressed “care and production practices, transport, slaughter, and living conditions for organic livestock and poultry.” 82 Fed. Reg. 7042, 7043 (Jan. 19, 2017). The Final OLPP Rule was to become effective on March 20, 2017, and was to be fully implemented by March 2018, except that outdoor access requirements for organic broiler operations were to be implemented by March 2020, and outdoor access requirements for organic egg operations were to be implemented by March 2022. Id.

         Although the Final OLPP Rule regulated multiple practices, outdoor access for mammals and especially for birds was “a prominent issue.” Id. Indeed, as part of its Regulatory Impact Analysis and Final Regulatory Flexibility Analysis (RIA), USDA predicted that the costs and benefits of the Final OLPP Rule would depend largely on the outdoor access and living space requirements for poultry. Mot. to Dismiss, Ex. F, RIA [Dkt. 43-7] at 12-13. Such requirements were the subject of several negative comments to the proposed OLPP Rule. See, e.g., Mot. to Dismiss, Ex. B, Nat'l Ass'n of State Dep'ts of Agric. Comment to OLPP Rule [Dkt. 43-4] at 4 (arguing that the proposed OLPP Rule would “impose significant costs and production challenges on organic producers”). USDA ultimately determined that the benefits associated with the proposed OLPP Rule outweighed the costs of compliance.

         B. Delay and Withdrawal

         On January 20, 2017, Reince Priebus, then-Chief of White House Staff in the newly-inaugurated Trump Administration, issued a moratorium directing departments and agencies in the Executive Branch to, inter alia, postpone for 60 days the effective date of any regulations that had been published in final form in the Federal Register but not yet taken effect, so that the new administration would have an opportunity to “review questions of fact, law, or policy they raise.” Mem. for the Heads of Exec. Dep'ts and Agencies (Trump Moratorium), 2017 WL 280678, at *1 (Jan. 20, 2017). The Trump Moratorium further encouraged agencies to consider, where appropriate, additional rules, subject to public notice and comment, which could delay previously-final regulations beyond 60 days. Id.

         On February 9, 2017, consistent with the Trump Moratorium and stating that there were “significant policy and legal issues . . . that warrant further review, ” USDA published, without notice or opportunity for public comment, and without input from the National Organic Standards Board, the February Delay Rule delaying the effective date of the Final OLPP Rule from March 20, 2017, until May 19, 2017. 82 Fed. Reg. 9967 (Feb. 9, 2017) (February Delay Rule); Chapman Decl. ¶¶ 14-15. In response, the National Organic Standards Board unanimously adopted a resolution urging USDA to allow the Final OLPP Rule to go into effect on May 19, 2017. See Defs.' Mot. to Dismiss, Ex. H, NOSB Formal Recommendation (Apr. 21, 2017) [Dkt. 14-10]. The February Delay Rule did not affect the implementation deadlines under the Final OLPP Rule.

         On May 10, 2017, USDA published a May Delay Rule further delaying the effective date of the Final OLPP Rule, this time until November 14, 2017. See 82 Fed. Reg. 21, 677 (May 10, 2017) (May Delay Rule). The May Delay Rule was also published without public notice and comment and without input from the National Organic Standards Board. See Chapman Decl. ¶¶ 19-20. In a separate notice, also published on May 10, 2017, USDA repeated, without more elaboration, that there were “significant policy and legal issues . . . that warrant further review” of the Final OLPP Rule and issued a proposed rule seeking public comment on whether USDA should: (1) allow the Final OLPP Rule to become effective on November 14, 2017; (2) suspend the Final OLPP Rule indefinitely; (3) delay the Final OLPP Rule further; or (4) withdraw the Final OLPP Rule entirely. 82 Fed. Reg. 21, 742 (May 10, 2017) (Proposed November Delay Rule).

         USDA received approximately 47, 000 comments on the Proposed November Delay Rule, most in favor of implementation of the Final OLPP Rule. On November 14, 2017, USDA finalized the Proposed November Delay Rule and postponed the effective date of the Final OLPP Rule until May 14, 2018. 82 Fed. Reg. 52, 643. USDA explained that it was concerned that it may have exceeded its statutory authority in promulgating the Final OLPP Rule. Id. It also stated that it had identified a significant mathematical error which could impact the necessary cost/benefit analysis to the Final OLPP Rule. Id. at 52, 644. Accordingly, USDA opted to delay so that it could engage in rulemaking with the purpose of withdrawing the Final OLPP Rule. Id.

         On December 18, 2017, USDA noticed a 30-day public comment period on a proposed rule to withdraw the Final OLPP Rule. 82 Fed. Reg. 59, 988 (Dec. 18, 2017) (Proposed OLPP Withdrawal Rule). Several organizations, including Plaintiff OTA, requested an extension of the comment period, due to the holiday season and the complicated nature of the Final OLPP Rule. Second Am. Compl. (SAC) [Dkt. 34-3], Ex. 4, OTA Comment to Proposed Withdrawal Rule [34-8] at 2. USDA refused to extend the comment period, stating that interested persons had already had an opportunity to comment on the Final OLPP Rule, that the Proposed OLPP Withdrawal Rule concerned discrete issues that could be addressed within the 30-day comment period, and that extending the comment period would prevent USDA from issuing a final rule before the expiration of the November Delay Rule. SAC, Ex. 6, USDA Letter Denying Extension of Comment Period [34-10] at 1. OTA timely filed its comment.

         On March 13, 2018, USDA published a final rule withdrawing the Final OLPP Rule. 83 Fed. Reg. 10, 775 (Mar. 13, 2018) (OLPP Withdrawal Rule). Although acknowledging that the organic industry strongly supported the Final OLPP Rule, id. (“The majority of comments . . . opposed the withdrawal.”), USDA provided two reasons for the OLPP Withdrawal Rule. First, USDA questioned its statutory authority to promulgate regulations centered around “stand-alone concerns about animal welfare.” Id. at 10, 776. That is, USDA decided that its authority to promulgate standards “for the care” of organically produced livestock was limited only to those health care practices “similar to those specified by Congress in the statute.” Id. Second, after revisiting the regulatory impact analysis behind the Final OLPP Rule, USDA determined that the costs of the Final OLPP Rule outweighed its potential benefits and that no “significant market failure” had been identified to justify the Final OLPP Rule, so that even if USDA had the authority to regulate stand-alone concerns about animal welfare, it would choose not to do so as a matter of policy. Id. at 10, 779-82.

         C. OTA's ...


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