83 FR 10775 - National Organic Program (NOP); Organic Livestock and Poultry Practices

DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service

Federal Register Volume 83, Issue 49 (March 13, 2018)

Page Range		10775-10783
FR Document		2018-05029

This final rule withdraws the Organic Livestock and Poultry Practices final rule published in the Federal Register on January 19, 2017, by the U.S. Department of Agriculture's Agricultural Marketing Service. The existing organic livestock and poultry regulations remain effective.

Federal Register, Volume 83 Issue 49 (Tuesday, March 13, 2018)

[Federal Register Volume 83, Number 49 (Tuesday, March 13, 2018)]
[Rules and Regulations]
[Pages 10775-10783]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2018-05029]

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Rules and Regulations
Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents.

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Federal Register / Vol. 83, No. 49 / Tuesday, March 13, 2018 / Rules
and Regulations

[[Page 10775]]

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 205

[Document Number AMS-NOP-15-0012; NOP-15-06]
RIN 0581-AD75

National Organic Program (NOP); Organic Livestock and Poultry
Practices

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule; withdrawal.

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SUMMARY: This final rule withdraws the Organic Livestock and Poultry
Practices final rule published in the Federal Register on January 19,
2017, by the U.S. Department of Agriculture's Agricultural Marketing
Service. The existing organic livestock and poultry regulations remain
effective.

DATES: Effective May 13, 2018, the final rule published January 19,
2017, at 82 FR 7042, delayed February 9, 2017, at 82 FR 9967, further
delayed May 10, 2017, at 82 FR 21677, and further delayed November 14,
2017, at 82 FR 52643, is withdrawn.

FOR FURTHER INFORMATION CONTACT: Paul Lewis, Ph.D., Director, Standards
Division, Telephone: (202) 720-3252; Fax: (202) 720-7808.

SUPPLEMENTARY INFORMATION:

I. Background

The Organic Foods Production Act of 1990 (OFPA), as amended (7
U.S.C. 6501-6522), authorizes the United States Department of
Agriculture (USDA or Department) to establish national standards
governing the marketing of certain agricultural products as organically
produced 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. USDA's Agricultural
Marketing Service (AMS) administers the National Organic Program (NOP)
under 7 CFR part 205.

II. Overview of Agency Action

USDA is withdrawing the OLPP rule based on its current
interpretation of 7 U.S.C. 6905, under which the OLPP final rule would
exceed USDA's statutory authority. Withdrawal of the OLPP rule also is
independently justified based upon USDA's revised assessments of its
benefits and burdens and USDA's view of sound regulatory policy. This
is considered a deregulatory action under Executive Order 13771. The
organic livestock and poultry regulations now published at 7 CFR part
205 remain effective.

III. Related Documents

Documents related to this final rule include: OFPA (7 U.S.C. 6501-
6524) and its implementing regulations (7 CFR part 205); the OLPP
proposed rule published in the Federal Register on April 13, 2016 (81
FR 21956); the OLPP final rule published in the Federal Register on
January 19, 2017 (82 FR 7042); the final rule delaying the OLPP final
rule's effective date until May 19, 2017, published in the Federal
Register on February 9, 2017 (82 FR 9967); the final rule delaying the
OLPP final rule's effective date until November 14, 2017, published in
the Federal Register on May 10, 2017 (82 FR 21677); a second proposed
rule presenting the four options for agency action listed in Section I,
supra, published in the Federal Register on May 10, 2017 (82 FR 21742);
a final rule further delaying the OLPP final rule's effective date
until May 14, 2018, published in the Federal Register on November 14,
2017 (82 FR 52643); and a proposed rule explaining AMS' intent to
withdraw the OLPP final rule, published in the Federal Register on
December 18, 2017 (82 FR 59988).

IV. Public Comments

AMS received approximately 72,000 comments on the proposal to
withdraw the OLPP final rule. The majority of comments, over 63,000,
opposed the withdrawal of that final rule. This included over 56,000
comments submitted as form letters. Approximately fifty comments
supported withdrawal of the OLPP final rule. This included five
comments submitted as form letters. The remaining comments, about
7,800, did not state a clear opinion about the proposed withdrawal of
the rule.
Commenters opposing withdrawal included consumers, organic farmers,
organic handlers, organizations representing animal welfare,
environmental, or farming interests, trade associations, certifying
agents and inspectors, and retailers. These commenters expressed the
view that the OFPA provides AMS the legal authority to implement the
OLPP final rule and that withdrawal violates the Administrative
Procedure Act and/or the OFPA, because AMS did not consult with the
National Organic Standards Board. These commenters asserted that the
organic sector requested the OLPP regulation and the rulemaking
reflects consensus within the organic sector and a working public-
private partnership with years of input from stakeholders. A number of
commenters also opposed withdrawal because of potential negative
impacts for the welfare of farm animals.
Some commenters opposing the withdrawal also challenged the
Preliminary Regulatory Impact Analysis (PRIA, published December 18,
2017 at https://www.regulations.gov/document?D=AMS-NOP-15-0012-6687)
for the withdrawal of the OLPP final rule. These commenters claimed
that (1) organic certification is voluntary and, therefore, there are
no costs associated with the OLPP final rule, (2) economic
considerations are not a legally permissible basis for withdrawing the
OLPP final rule and are irrelevant because OFPA is not a cost-benefit
statute, and (3) the PRIA failed to consider qualitative benefits.
Some comments objected to AMS' conclusion that there is no
significant market failure to justify this rulemaking and stated that
consumer deception caused by inconsistent application of outdoor access
requirements for poultry is the market failure that OFPA prevents by
compelling AMS to develop consistent standards. These commenters argued
that withdrawal of the OLPP final rule would erode consumer confidence
and trust in the organic label. Commenters also requested an extension
of the public comment period, from 30 to 90 days, specifically noting
they needed more time to study the revisions discussed in the
Preliminary Regulatory Impact Analysis (PRIA) and develop meaningful
comments.

[[Page 10776]]

Commenters supporting withdrawal of the OLPP final rule included
organic farmers, state departments of agriculture, and trade
associations. These commenters agreed that the OLPP final rule exceeded
the scope of authority granted to AMS through OFPA to regulate specific
animal health care practices. These commenters stated that withdrawing
the OLPP final rule would prevent increased costs to producers and
consumers from costly structural changes and higher prices for organic
eggs, respectively. Some commenters also supported the withdrawal
because of concerns that the outdoor access requirements for organic
poultry would heighten disease risk and interfere with biosecurity
practices and Food and Drug Administration (FDA) requirements.

V. Rationale for Withdrawing Organic Livestock and Poultry Practices
Final Rule

A. Statutory Authority

In the notice of proposed rulemaking (NPRM), AMS proposed to
withdraw the OLPP Rule due to a lack of statutory authority and to
maintain consistency with USDA regulatory policy principles. The
proposal stated that ``the relevant language and context suggests
OFPA's reference to additional regulatory standards `for the care' of
organically produced livestock should be limited to health care
practices similar to those specified by Congress in the statute, rather
than expanded to encompass stand-alone animal welfare concerns. 7
U.S.C. 6509(d)(2).'' The NPRM included a detailed analysis of the
relevant legal authorities leading to the proposed action. (82 FR
59989-90).
AMS received approximately fifteen comments directly addressing
AMS' proposed interpretation, of which three agreed with AMS'
interpretation that OFPA does not provide statutory authority for the
OLPP final rule. After reviewing these comments, AMS maintains its
interpretation that OFPA does not provide authority for the OLPP final
rule and has decided to withdraw it. Consequently, the existing organic
livestock and poultry regulations now published at 7 CFR part 205
remain effective.
1. Analysis of Its Authority Under the OFPA To Issue Stand-Alone Animal
Welfare Regulations
The OLPP final rule consisted, in large part, of rules clarifying
how producers and handlers participating in the National Organic
Program must treat livestock and poultry to ensure their wellbeing (82
FR 7042). AMS is withdrawing the OLPP final rule because it now
believes OFPA does not authorize the animal welfare provisions of the
OLPP final rule. Rather, the agency's current reading of the statute,
given the relevant language and context, is that OFPA's reference in 7
U.S.C. 6509(d)(2) to additional regulatory standards ``for the care''
of organically produced livestock does not encompass stand-alone
concerns about animal welfare, but rather is limited to practices that
are similar to those specified by Congress in the statute and necessary
to meet congressional objectives outlined in 7 U.S.C. 6501.
USDA believes that the Department's power to act and how it may act
are authoritatively prescribed by statutory language and context; USDA
believes that it may not lawfully regulate outside the boundaries of
legislative text.\1\ Therefore, in considering the scope of its lawful
authority, USDA believes the threshold question should be whether
Congress has authorized the proposed action. If a statute is silent or
ambiguous with respect to a specific issue, then USDA believes that its
interpretation is entitled to deference and the question becomes simply
whether USDA's action is based on a permissible statutory
construction.\2\
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\1\ City of Arlington v. FCC, 133 S. Ct. 1863, 1868 (2013).
\2\ See Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc.,
467 U.S. 837, 843 (1984); City of Arlington, 133 S. Ct. at 1871.
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The OLPP final rule is a broadly prescriptive animal welfare
regulation (82 FR 7042, 7074, 7082). USDA's general OFPA implementing
authority was used as justification for the OLPP final rule, which
cited 7 U.S.C. 6509(g) as ``convey(ing) the intent for the USDA to
develop more specific standards. . . .'' (82 FR 7043), and 7 U.S.C.
6509(d)(2) as authorizing regulations for animal ``wellbeing'' and the
``care of livestock.'' (82 FR 7042, 7074, 7082).
But nothing in section 6509 authorizes the broadly prescriptive,
stand-alone animal welfare regulations contained in the OLPP final
rule. Rather, section 6509 outlines discrete aspects of animal
production practices and materials relevant to organic certification:
sources of breeder stock, livestock feed, use of hormones and growth
promoters, animal health care, and record-keeping. While subsection
6509(d)(2) authorizes promulgation of additional standards for the
``care'' of livestock, that provision is not free-standing authority
for AMS to adopt any regulation conceivably related to animal ``care'';
rather, standards promulgated under that authority must be relevant to
``ensur[ing] that [organic] livestock is organically produced.'' 7
U.S.C. 6509(d)(2). Similarly, section 6509(g) is not open-ended
authority to regulate any and all aspects of livestock production;
rather, it authorizes AMS to promulgate regulations to ``guide the
implementation of the standards for livestock products provided under
this section'' (emphasis added); in other words, standards relevant to
and necessitated by the expressed purposes of Congress in enacting the
OFPA. Thus, standards promulgated pursuant to section 6509(d)(2) and
section 6509(g) must be relevant to ensuring that livestock is
``organically produced.''
Although Congress did not define the term ``organically produced''
in the OFPA, the Cambridge Dictionary defines ``organic'' as ``not
using artificial chemicals in the growing of plans and animals for food
and other products.'' Merriam-Webster defines ``organic'' as ``of,
relating to, yielding, or involving the use of food produced with the
use of feed or fertilizer of plant or animal origin without employment
of chemically formulated fertilizers, growth stimulants, antibiotics,
or pesticides'' (emphasis added). https://www.merriam-webster.com/dictionary/organic. The surrounding provisions in section 6509
demonstrate that Congress had a similar understanding of the term
``organic.'' For example, subsection 6509(d)(2)'s authority for
promulgation of additional standards governing animal ``care'' is
contained within a subsection entitled ``Health care'' and follows a
list of three specifically prohibited health care practices that each
relate to ingestion or administration of chemical, synthetic, or non-
naturally-occurring substances: Use of subtherapeutic doses of
antibiotics; routine use of synthetic internal parasiticides; and
administration of medication, other than vaccines, absent illness. AMS
believes these prohibited practices--all of which relate to ingestion
of chemical, artificial, or non-organic substances--are representative
of the types of practices and standards that Congress intended to limit
exposure of animals to non-organic substances and thus ``ensure that
[organic] livestock is organically produced.'' Thus, the authority
provided by section 6509(d)(2) does not extend to any and all aspects
of animal ``care''; it is limited to those aspects of animal care that
are similar to the examples provided in the statue and relate to
ingestion or administration of non-organic substances, thus tracking
the purposes of the OFPA.
Reading this language in context, AMS now believes that the
authority granted in section 6509(d)(2) and

[[Page 10777]]

section 6509(g) for the Secretary to issue additional regulations
fairly extends only to those aspects of animal care that are similar to
those described in section 6509(d)(1)--i.e., relate to the ingestion or
administration of non-organic substances, thus tracking the purposes of
the OFPA--and that are shown to be necessary to meet the congressional
objectives specified in 7 U.S.C. 6501.
AMS finds that its rulemaking authority in section 6509(d)(2)
should not be construed in isolation, but rather should be interpreted
in light of section 6509(d)(1) and section 6509(g). Furthermore, AMS
believes that a decision to withdraw the OLPP final rule based on Sec.
6509's language, titles, and position within Chapter 94 of Title 7 of
the United States Code; \3\ controlling Supreme Court authorities; and
general USDA regulatory policy, would be a permissible statutory
construction.
2. Public Comments on AMS' Analysis
a. One commenter said that ``Agency reconsideration of a rule . . .
[previously] approved by the agency and the Office of Management and
Budget under a previous administration is arbitrary, capricious, and an
abuse of discretion.'' Others suggested that the agency's prior
consideration of ``animal welfare'' was binding and dispositive.
However, AMS has broad discretion to reconsider a regulation at any
time. Clean Air Council v. Pruitt, 862 F.3d 1, 8-9 (D.C. Cir. 2017).
Furthermore, AMS' interpretation of OFPA ``is not instantly carved in
stone,'' but may be evaluated ``on a continuing basis.'' Chevron U.S.A.
Inc. v. NRDC, Inc., 467 U.S. 837, 863-64 (1984). This is true when, as
is the case here, the agency's review is undertaken in response to a
change in administrations. National Cable & Telecommunications Ass'n v.
Brand X Internet Services, 545 U.S. 967, 981 (2005).
b. AMS sought comment on the proposed construction of its
rulemaking authority, suggesting that the relevant OFPA text did not
authorize the broadly prescriptive, stand-alone animal welfare
regulations in the OLPP final rule, and noting that, even if OFPA were
deemed to be silent or ambiguous with respect to the authority issue, a
decision to withdraw the OLPP final rule based on section 6509's
language, titles, and position within Chapter 94 of Title 7 of the
United States Code; relevant legal authorities; and general USDA
regulatory policy, would be a permissible statutory construction. AMS
was led to this position by the Supreme Court's admonition that it may
properly exercise discretion only in the interstices created by
statutory silence or ambiguity and that it must always give effect to
the unambiguously expressed intent of Congress.\4\
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\4\ See generally Utility Air Regulatory Group v. Environmental
Protection Agency, 134 S. Ct. 2427, 2441, 2445-46 (2014) (citations
omitted).
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The U.S. Supreme Court established the legal standard for review
for an agency's interpretation of a statute that it administers in
Chevron, 467 U.S. at 842-43:

First, always, is the question whether Congress has directly
spoken to the precise question at issue. If the intent of Congress
is clear, that is the end of the matter; for the court, as well as
the agency, must give effect to the unambiguously expressed intent
of Congress. If, however, the court determines Congress has not
directly addressed the precise question at issue, the court does not
simply impose its own construction on the statute, as would be
necessary in the absence of an administrative interpretation.
Rather, if the statute is silent or ambiguous with respect to the
specific issue, the question for the court is whether the agency's
answer is based on a permissible construction of the statute.

Several commenters challenged the proposed action based on an
expansive construction of the statutory term ``care'' largely divorced
from the surrounding context of the OFPA. This interpretation would
suggest that Congress delegated the Secretary virtually un-cabined
regulatory authority over organic livestock producers.
Under City of Arlington v. FCC, 569 U.S. 290 (2013), the Supreme
Court held that the Chevron framework applies to an agency's
interpretation of ambiguous statutory language concerning the scope of
its authority. Id. at 302 (``[W]e have consistently held `that Chevron
applies to cases in which an agency adopts a construction of a
jurisdictional provision of a statute it administers.' 1 R. Pierce,
Administrative Law Treatise Sec. 3.5, p. 187 (2010).''). While the
regulations in City of Arlington were based on an expansive
construction of statutory authority, AMS is aware of no reason, and
commenters cited none, suggesting deference is limited to
interpretations of expansive authority. Rather, the City of Arlington
decision is not a one-way ratchet; and an agency would also be entitled
to deference when it interprets the scope of its authority narrowly.
Some commenters also stated that certain parts of the OLPP Rule do
relate to animal health care, such as provisions concerning physical
alterations. OFPA does not define the terms ``care,'' ``health care,''
``welfare,'' or ``wellbeing.'' Accordingly, some commenters rejected
the contextual construction adopted by AMS to argue that the reference
in section 6509(d)(2) to additional standards ``for the care of
livestock to ensure that such livestock is organically produced''
necessarily encompasses the statutory authority to issue stand-alone
animal welfare regulations because animal health and welfare are
``inextricably linked.'' This requires an expansive interpretation of
the direction to the National Organic Standards Board (NOSB) to
``recommend to the Secretary standards in addition to those in
paragraph (1) for the care of livestock'' in 7 U.S.C. 6509(d)(2) to
encompass stand-alone animal welfare standards. However, the regulatory
authority conferred by subparagraph (d)(2) does not extend to all
aspects of animal care, but rather is limited to those necessary to
``ensure that such livestock is organically produced.''
Moreover, subparagraph (d)(2) specifically refers back to
subparagraph (d)(1) when calling for standards of livestock care in
addition to the prohibitions set forth in subparagraph (d)(1). This
demonstrates that any additional standards promulgated pursuant to
section (d)(2) are to be similar to those set forth in section (d)(1),
all of which are related to ensuring that organic livestock is raised
with minimal administration of chemical and synthetic substances. That
subparagraph's reference to ``care for livestock'' cannot be read more
expansively than the previous references to animal health care found in
section 6509 generally. Thus, even if some aspects of the OLPP Rule--
such as certain provisions pertaining to physical alterations--can be
characterized as relating to ``health care,'' AMS finds that they are
not related to the OFPA's overarching purpose of regulating the use of
chemical and synthetic substances in organic farming. Therefore,
section 6509 does not provide authority for those provisions. AMS notes
that some commenters agree with this interpretation of section 6509(d).
c. Several commenters also cited certain passages from OFPA's
legislative history that they claim demonstrate Congress' intention to
give the Secretary authority to regulate the stand-alone welfare of
organic livestock, but they either misinterpret or selectively quote
the legislative history. Specifically, the commenters noted that Senate
Report 101-357, which accompanied S. 2830, the Food, Agriculture,
Conservation, and Trade Act of 1990, states, ``[t]he Committee expects
that, after due consideration and the reception of public comment, the
[National Organic

[[Page 10778]]

Standards Board or NOSB] will best determine the necessary balance
between the goal of restricting livestock medications and the need to
provide humane conditions for livestock rearing.'' The commenters
suggest that this reference to ``the need to provide humane conditions
for livestock rearing'' is proof that OFPA authorizes USDA to
promulgate wide-ranging animal welfare regulations for organic
livestock to ensure ``humane conditions for livestock rearing.''
However, this statement actually states that the NOSB is to weigh
the fact that administering certain livestock medications to livestock
may disqualify said livestock from claiming organic status against the
fact that withholding these medications in order to claim organic
status may in fact be inhumane; it does not direct or authorize the
Secretary to issue regulations to promote animal welfare by ensuring
that organic livestock are reared humanely. In other words, the Senate
Report does not equate organic production with humane treatment; to the
contrary, it conveys an understanding that organic production may be in
tension with humane rearing. To the extent that is so, the Senate
Report suggests that AMS may relax organic objectives in order to
accommodate countervailing principles of humane treatment. But the
Senate Report in no way suggests that AMS is permitted to regulate
animal welfare as a stand-alone objective. Furthermore, the commenters
were selectively quoting from the Senate Report; the full statement
reads as follows:

The Committee felt strongly that organically produced feed
should be required for livestock. However, on the issue of livestock
medication, the Committee felt that this required further
consideration by the National Organic Standards Board. Livestock
parasiticides and medications must be on the National List in order
to be used but in no case shall livestock be given subtherapeutic
doses of antibiotics, synthetic internal parasiticides on a routine
basis, or be administered medication other than vaccinations in the
absence of illness. The Committee expects that, after due
consideration and the reception of public comment, the Board will
best determine the necessary balance between the goal of restricting
livestock medications and the need to provide humane conditions for
livestock rearing.

1990 U.S.C.C.A.N. 4656, 4956.
The language preceding that cited by the commenters strengthens,
rather than refutes, USDA's belief that section 6509(d)(2) authorizes
AMS only to establish additional medical standards for the care of
livestock to ensure that these livestock are organically produced. This
legislative history supports an interpretation that the Secretary does
not have the authority to promulgate stand-alone animal welfare organic
requirements.
Several commenters also noted that the Senate Report and the House
Conference Report 101-916 on the Food, Agriculture, Conservation, and
Trade Act of 1990 make references to the expectation that USDA would
promulgate regulations regarding livestock standards. However, this
legislative history does not specify that the referenced livestock
standards go beyond the specific types of practices referenced in the
statute to include animal welfare. Rather, they are general statements
that do not change the statutory plain meaning or AMS's permissible
interpretation of the scope of its statutory authority.
d. Several commenters argued that AMS may not withdraw the OLPP
final rule because it did not consult with the NOSB prior to proposing
the withdrawal. Additionally, they stated that withdrawal would be
improper because it is contrary to the NOSB's recommendations.\5\
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\5\ These commenters offer a constitutionally troubling
construction of the OFPA. To comply with the Appointments Clause of
the U.S. Constitution, National Organic Standards Board members must
serve at the pleasure of the Secretary and be subordinate to him or
her. The Secretary must be free to accept, reject, or revise the
recommendations of an advisory committee such as the NOSB.
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OFPA requires USDA to consult with the NOSB on certain matters and
to receive recommendations from it, but nothing in OFPA requires AMS to
consult the NOSB at every phase of the rule making process or makes the
NOSB's recommendations binding on the Secretary, nor could it.\6\
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\6\ OFPA requires AMS to consult with the NOSB only under
limited circumstances: In developing the organic certification
program (section 6503(c)), exemption for certain processed food
(section 6505(c)), and certification and labeling of wild seafood
(section 6506(c)). Thus, OFPA does not require AMS to consult with
the NOSB prior to undertaking a rulemaking to withdraw the OLPP
final rule. Additionally, requiring USDA to consult NOSB on every
action that it takes with respect to organic standards and practices
would be impractical. The NOSB meets only twice a year and is not
available for consultation on the many steps involved in a
significant rulemaking. Regardless, AMS did present to the NOSB an
update concerning the status of the proposed withdrawal of the OLPP
final rule. AMS participated in the NOSB's meeting in the April
2017, during which NOSB discussed the delayed effective date of the
OLPP final rule and unanimously voted to ``urge[ ] the Secretary to
allow the [OLPP] Rule to become effective on May 19, 2017 without
further delay.''
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e. Several commenters argued that 7 U.S.C. 6506(a)(11) \7\ and 6512
\8\ provided additional statutory authority for the OLPP final rule.
Sections 6506(a)(11) and 6512 do not convey to the Secretary limitless
and unfettered discretion to require whatever terms and conditions he
or she may want. Rather, the exercise of discretion under those
sections must be grounded in the statutory authority for the organic
production. As discussed above for Sec. 6509, the authority for care
of organic livestock is to ensure that organic livestock is raised with
minimal administration of chemical and synthetic substances.
Additionally, to the extent that section 6506(a)(11) may provide
authority for livestock care regulations, it does so only if the
Secretary determines that they are necessary, which the OLPP final rule
is not.
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\7\ ``[R]equire such other terms and conditions as may be
determined by the Secretary to be necessary.''
\8\ ``If a production or handling practice is not prohibited or
otherwise restricted under this chapter, such practice shall be
permitted unless it is determined that such practice would be
inconsistent with the applicable organic certification program.''
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f. Certain commenters noted that NOSB made recommendations
concerning animal welfare standards and living conditions over a period
of nearly two decades, a situation that has caused a majority of small-
and medium-sized operations to have significant reliance interests in
animal welfare standards under NOP rules in general, including the OLPP
final rule. They further asserted that, under Encino Motorcars v.
Navarro, 136 S. Ct. 2117 (2016), AMS is required to address any
disruption of long standing policies upon which the industry may have
relied but has failed to do so. As proof of such reliance, some
commenters asserted that they have made capital expenditures based on
the 2002 NOP policy statement on outdoor access and 7 CFR 205.239.
The subject matter of Encino Motorcars is distinguishable from this
rule. The Court in Encino Motorcars was concerned with the Department
of Labor's decision to reverse an established rule that had governed
the regulated industry for over 30 years, thereby upsetting a
longstanding, and therefore, settled reliance interest (``[I]n
explaining its changed position, an agency must be cognizant that
longstanding policies may have engendered serious reliance interests
that must be taken into account (emphasis added)'').\9\ The commenters
who claimed that USDA should consider their ``reliance interests''
acknowledged that they relied on a history of NOSB recommendations
(which do not constitute official USDA policy) and the NOP policies and
regulations that are already in effect,

[[Page 10779]]

rather than the OLPP final rule. Indeed, they could not have relied
(and did not assert specific reliance upon) the OLPP final rule because
AMS published that rule in the Federal Register in January 2017 and it
never went into effect. Accordingly, any capital investments or other
activities that the regulated industry made in order to comply with the
OLPP rule prior to its effective date were not made pursuant to that
rule, but in accordance with existing NOP policies and regulations
governing animal welfare standards. USDA is not proposing to withdraw
existing organic animal welfare standards or the 2002 NOP policy
statement on outdoor access, and they remain in effect. Therefore,
withdrawal of the OLPP final rule is not a reversal of a longstanding
agency policy.
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\9\ Encino Motorcars, 136 S. Ct. at 2020.
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g. Finally, several commenters disagreed with USDA's current
interpretation of OFPA by noting that USDA previously promulgated 7 CFR
205.238, 205.239, and 205.240, which they interpret to address the
wellbeing of organic livestock. They cited those regulations as proof
that USDA has authority to promulgate stand-alone animal welfare
standards. In the alternative, they noted that some of these standards
address animal health and they question why the OLPP final rule cannot
be promulgated on the same ground.
AMS notes that the validity of Sec. Sec. 205.238, 205.239, and
205.240 is not before it in the present rulemaking. As such, a detailed
consideration of whether those regulations accord with AMS' statutory
interpretation is not within the scope of this rulemaking. Thus, even
if AMS were to decide that it does not have authority to promulgate
those regulations under OFPA, it could not withdraw them through this
final rule because the NPRM did not provide notice that this action was
under consideration. As part of the regulatory reform review, however,
AMS may seek comment in the future regarding whether the cited
regulations are in accordance with AMS' statutory authority.

B. Impact of OLPP Final Rule on Producers and Lack of Market Failure

Executive Orders 12866 and 13563 require agencies to assess the
costs and benefits of economically significant regulatory actions.
Executive Order 12866 also generally requires that the agency ``propose
or adopt a regulation only upon a reasoned determination that the
benefits of the intended regulation justify its costs,'' and further,
that the agency ``shall tailor its regulations to impose the least
burden on society . . .'' Executive Order 12866 also states that
``Federal agencies should promulgate only such regulations as are
required by law, are necessary to interpret the law, or are made
necessary by compelling need, such as material failures of private
markets . . .'' While participation in the NOP is technically
voluntary, this fact does not neutralize the impacts of changes to the
USDA organic regulations because Executive Order 12866 does not exempt
regulations of voluntary programs from this evaluation. Changes to the
regulations could affect voluntary participation and would have real
costs.
The Office of Management and Budget (OMB) has designated OLPP as an
economically significant rule. Under Executive Order 12866, AMS is
obligated to consider whether the potential impacts of the OLPP rule
meet the principles of Executive Order 12866 and demonstrate a need for
regulation. AMS did not identify a market failure in the OLPP final
rule RIA and therefore AMS has now concluded that regulation is
unwarranted. In fact, several organic producers and organizations that
oppose withdrawal of the OLPP rule, including a few that argued that
there was market failure necessitating the OLPP final rule, purchased a
full-page advertisement in a newpaper about this rulemaking. In it they
recognized that ``[o]rganic farmers have pioneered new practices to
enhance animal welfare because consumers demand it and because it makes
farms resilient and profitable.'' \10\ If this is true, it is
additional evidence from those involved in organic production that
supports AMS' conclusion that the market is working and that additional
regulation is unwarranted.
---------------------------------------------------------------------------

\10\ The Washington Post, January 16, 2018, Page A7.
---------------------------------------------------------------------------

Further, AMS maintains that the costs of the OLPP final rule
outweigh potential benefits. After publication of the OLPP final rule,
AMS discovered a mathematical error in the calculation of benefits. The
error was related to the formula used to calculate the 7 percent and 3
percent discount rates. In addition, AMS determined that there was a
more suitable willingness-to-pay estimate for outdoor access than the
range used to estimated benefits in the OLPP final rule. Although there
was another error correction that moved the results in the opposite
direction, the estimated benefits declined overall when AMS
recalculated those values based on the above findings. In summary,
given the high degree of uncertainty and subjectivity in evaluating the
benefits of the OLPP final rule, and the lack of any market failure to
justify intervention, and the clear potential for additional regulation
to distort the market or drive away consumers, even if the comparison
of costs and benefits was a close call, AMS would choose not to
regulate as a policy matter.
Several commenters opined that AMS did not properly account for
qualitative benefits to farm animals and producers in determining that
there are net costs for the OLPP final rule. AMS finds that the
qualitative benefits are speculative because it is uncertain that
organic farmers and consumers would see positive impacts from
implementation of the OLPP rule. The assertion that the OLPP final rule
would result in economic benefits from healthier animals is not
supported by information or research linking outdoor access on pasture
or vegetation to improved economic outcomes for producers. AMS did not
use the potential outcome of healthier animals as justification for the
OLPP final rule. The withdrawal of the OLPP final rule does not prevent
organic producers from providing outdoor access on pasture or
vegetation, communicating that to consumers, and receiving any
potential benefits from those practices.
AMS concludes that the costs to consumers of implementing the OLPP
final rule would outweigh any potential benefits to consumers because
it anticipates that a significant portion (50 percent) of current
organic egg producers would exit the organic market following
implementation, resulting in supply shortages and price increases for
organic eggs. The OLPP final rule RIA estimated that organic egg prices
could increase by a mean of $1.25 per dozen (assuming a demand
elasticity of 1.0) as a result of that rule, which exceeded the RIA's
estimate of consumers' willingness to pay for the costs of implementing
the OLPP final rule. Furthermore, as AMS explained in the PRIA issued
in connection with this final rule on withdrawal, the initial consumer
willingness-to-pay estimates for eggs from hens with outdoor access
were likely overstated in the RIA for the OLPP final rule and should be
lower (initial range: $0.21 to $0.49 per dozen versus revised range:
$0.16 to $0.25 per dozen). Therefore, the estimated benefits in the RIA
for the OLPP final rule were inflated, and there are no clear net
benefits for producers or consumers from implementation of the OLPP
final rule.
Ultimately, the reduction of potential qualitative benefits, as a
result of recalculations due to mathematical errors, the absence of a
market failure,

[[Page 10780]]

and tenuous qualitative benefits leaves net costs that would be overly
burdensome to organic producers and consumers.
Some commenters have stated that withdrawal of the rule would
undermine public trust and consumer confidence in the organic label.
AMS believes, based on data and experience, that this outcome will not
be realized. First, the withdrawal of the OLPP final rule maintains the
current organic regulations for livestock that cover health care
practices and living conditions, including the requirement for year-
round outdoor access. This rule does not withdraw any requirements that
are currently codified in the USDA organic regulations for livestock.
AMS anticipates that consumer confidence in the organic label will be
preserved and that certified organic livestock producers will continue
to use that label to differentiate their products in the marketplace.
Further, market data suggests that consumer perception of the USDA
organic regulations, which will remain in effect upon withdrawal of the
OLPP final rule, is positive. Under the current regulations, sales of
organic products have increased annually. From 2007 to 2016, the number
of organic layers has increased by 12.7% annually. The Organic Trade
Association (OTA) 2017 Organic Industry Survey reports, ``2016 was a
tremendous year for organic meat and poultry, with sales growing
17.2%.'' That survey further states, ``Consumers have moved from
conventional to natural to hormone-free or grass-fed, and now finally
to organic or organic grass-fed as they understand all that organic
encompasses.'' Regarding organic eggs, the OTA 2017 Organic Industry
Survey predicted that the organic egg market will ``stabilize'' by the
latter half of 2017, after the supply of organic eggs spiked in
response to the 2015 outbreak of Avian Influenza and the drop in demand
for organic eggs in 2016 due to the wide price gap between organic and
conventional.
These market data do not support commenters' assertions that the
withdrawal of the OLPP final rule and maintenance of current
regulations will damage consumer confidence and trust in organic
products. The industry has continued to expand under the current
regulations and the outlook for continued growth in the organic sector
has not been predicated upon the implementation of the OLPP final rule.
Further, the OTA survey indicates that consumers are choosing organic
meat and poultry, demonstrating consumer validation of the sufficiency
of the existing regulations; plainly, the organic label is an effective
means for product differentiation in the marketplace.
A number of commenters mentioned that withrawal of the rule
contradicts the ``consensus'' favoring new, broadly prescriptive
regulations and that considerations for animal welfare should override
potential costs. Commenters urged implementation of the OLPP final rule
because the organic industry requested that regulation.
AMS will not regulate when statutory authority is insufficient and
potential costs do not justify potential benefits, whether there is a
pro-regulatory ``consensus'' or not. As a matter of USDA regulatory
policy, AMS should not regulate simply because some industry players
believe that more regulations will help their competitive position.
Furthermore, AMS believes the very notion of a ``consensus'' is at odds
with prior public comments and some data on consumer behavior around
organic purchases. In response to the April 2016 OLPP proposed rule,
AMS received a number of comments representing consumer and organic
farmer interests that stated that the current USDA organic regulations
are adequate and enforceable and new regulations are not necessary or
preferable. In the 2017 OTA U.S. Families' Organic Attitudes and
Behavior survey, respondents were asked to rank the importance of
several ``true'' statements about organic products. The statement,
``Animals used in the production of organic food are treated humanely,
fed an organic diet and are not rasied in confinement,'' was ranked
fourth out of fourteen.\11\ This data, plus the reports of increased
sales in organic livestock products, shows consumer trust in the
current practices and requirements for organic livestock products.
---------------------------------------------------------------------------

\11\ The question provided a list and asked, ``All of the
following statements are true with regards to products certified as
organic by the USDA. From this list, what is or would be most
important to you, if any, when deciding whether or not to purchase
organic foods specifically? The statement, ``Animals used in the
production of organic foods are treated humanely, fed an organic
diet and not raised in confinement,'' ranked 4 out of 14.
---------------------------------------------------------------------------

Moreover, the mere fact that some organic consumers care about
animal welfare does not mean that the term ``organic'' should be
equated with animal welfare assurances.
The current USDA organic regulations, which will remain in effect,
have standards for livestock healthcare, feed, and living conditions. A
central premise of these regulations, which producers must uphold and
certifying agents must enforce, is for year-round living conditions
that accommodate the health and natural behavior of the animals.
Moreover, AMS has estimated that a sizeable portion of organic
livestock producers already meet the requirements in the OLPP final
rule. In the RIA for the OLPP final rule, AMS stated that the mammalian
livestock provisions of the OLPP final rule largely codify existing
industry practices. In addition, AMS estimated that the majority of
organic egg producers and about half of organic egg production meet the
outdoor access requirements in the OLPP final rule. The withdrawal of
the OLPP final rule would not compel changes in organic livestock
production for these producers, who can continue to cater to consumers
willing to pay a premium for animal welfare guarantees if they choose.
Finally, the withdrawal of the OLPP final rule does not restrict
organic producers from using private certification labels to
communicate additional information to consumers about production
practices or product attributes.
Some commenters asserted that the voluntary nature of the organic
program mitigates the potential costs of implementing the OLPP final
rule. The bases for evaluating the potential costs of compliance are
the requirements of Executive Order 12866 and the final rule
establishing the NOP in 2002 (65 FR 80548). The 2002 final rule
quantified costs of complying with that rule, e.g., voluntarily
obtaining or maintaining organic certification. AMS cannot negate the
costs of the OLPP final rule on the basis that obtaining organic
certification is voluntary because some producers that are in
compliance with current regulations would incur costs to either change
practices or to exit organic production. AMS notes that participation
in many regulated markets is technically voluntary, but participants
nevertheless invest substantial resources in and frequently stake their
livelihoods on such participation. Moreover, the voluntary nature of
the market is not an answer for consumers that would like to purchase
organic products but cannot afford the premium that will result from
the cost of implementing the OLPP rule. These consumers could be
excluded from the organic market despite their preference to
participate.
A number of commenters also addressed biosecurity and disease risk,
stating that some of the outdoor access requirements, such as the
presence of vegetation and no roofs, conflict with FDA requirements and
biosecurity practices. These comments were also submitted in response
to the April 2016 OLPP proposed rule and were addressed in the OLPP
final rule (p. 7068-7070;

[[Page 10781]]

7072). Existing USDA organic regulations allow for the temporary
confinement of animals for conditions under which the health, safety,
or well-being of the animal could be jeopardized. AMS acknowledges that
the existing requirements for outdoor access and the provisions for
temporary confinement provide organic producers with the flexibility to
mitigate biosecurity and disease risks.
A comment noted that AMS must assess the impact of withdrawing the
OLPP final rule on the equivalency arrangements with the European Union
and Canada and the economic impacts of the potential dissolution of
those agreements as a result of this action. In the OLPP final rule,
AMS responded to comments concerning potential impacts on trade
agreements (p. 7080). AMS' responses to these comments remains the
same.
AMS provided a 30-day public comment period in order to consider
the public comments received on the proposed withdrawal and make a
final decision on the OLPP final rule by the current effective date of
May 14, 2018. AMS did not grant requests for extension of the public
comment period because interested parties had the opportunity to
comment on the underlying OLPP final rule in 2016 as well as the
rulemaking in 2017 that culminated in the delay of the effective of the
OLPP final rule until May 14, 2018. Moreover, commenters were on notice
of the proposal since November 14, 2017, when it was discussed in a
final rule published on that date. Furthermore, and in light of this
backdrop, the December 18, 2017 proposed rule presented discrete issues
that interested parties should have been able to address within the 30-
day comment period. Additionally, extending the comment period would
have prevented AMS from resolving the status of the OLPP rulemaking by
May 14, 2018.
For the reasons described above, AMS maintains that the OLPP final
rule exceeds AMS' scope of authority under OFPA and would be overly
burdensome for organic poultry producers. Therefore, AMS is withdrawing
the OLPP final rule.

VI. Executive Orders 12866/13563 Review

This section provides an Executive Summary of the Regulatory Impact
Analysis (RIA) for this final rule on withdrawal. A full analysis is
posted on the Regulations.gov website. This rulemaking has been
designated as an ``economically significant regulatory action'' under
Executive Order 12866, and, therefore, has been reviewed by OMB. This
RIA on withdrawal remains unchanged from the PRIA because AMS did not
receive new information via public comments on the December 18, 2017
proposed rule that would have altered the RIA.
Executive Orders 12866, 13563, and 13771 control regulatory review.
Executive Orders 12866 and 13563 direct agencies to assess all costs
and benefits of available regulatory alternatives, and, if regulation
is necessary, to select regulatory approaches that maximize net
benefits (including potential economic, environmental, public health
and safety effects, distributive impacts, and equity). Executive Order
13563 emphasizes the importance of quantifying both costs and benefits,
reducing costs, harmonizing rules, and promoting flexibility. Executive
Order 13771 directs Agencies to identify at least two existing
regulations to be repealed for every new regulation unless prohibited
by law. The total incremental cost of all regulations issued in a given
fiscal year must have costs within the amount of incremental costs
allowed by the Director of OMB, unless otherwise required by law or
approved in writing by the Director of OMB. This rule is an Executive
Order 13771 deregulatory action. AMS estimates that withdrawal of the
OLPP final rule will result in cost savings of $10.2 million to $32.6
million per year, discounted at 7 percent over 15 years. When factored
over perpetuity and extended to account for future years, the estimated
cost savings become, on an annualized basis, $8.5 million to $34.9
million. Details on the estimated cost savings of this rule over 15
years can be found in the RIA, posted separately and summarized below.
The estimated costs of implementing the OLPP final rule were based
on three potential scenarios of how organic egg producers would
respond. First, AMS estimated that if all organic livestock and poultry
producers came into compliance, the costs would be $28.7 to $31 million
each year. Second, if 50 percent of the organic egg producers moved to
the cage-free egg market and the organic industry continues to grow at
historical rates, the estimated costs are $11.7-$12.0 million. Plus,
AMS estimated transfers in the amount of $79.5 million to $86.3 million
per year for producers that move from the organic to the cage-free
market and lose the organic price premium. Third, if 50 percent of the
organic egg producers moved to the cage-free egg market and there were
no new entrants that could not already comply, the estimated costs are
$8.2 million. For this scenario, AMS estimated transfers to be $43.7
million to $47.4 million per year. These costs do not include an
additional $1.95-$3.9 million associated with the estimated paperwork
burden. Withdrawing the OLPP final rule prevents these potential costs
from taking effect, resulting in substantial organic poultry producer
cost savings.
The estimated benefits of implementing the OLPP final rule were
calculated for the three scenarios above and were based on consumer
willingness-to-pay for outdoor access for laying hens. If all organic
livestock and poultry producers came into compliance, AMS estimated the
benefits would be $13.0-$31.6 million. Second, if 50 percent of the
organic egg producers moved to the cage-free egg market and the organic
industry continues to grow at historical rates, the estimated benefits
are $3.6-$8.7 million. Third, if 50 percent of the organic egg
producers moved to the cage-free egg market and there were no new
entrants that could not already comply, the estimated benefits are
$3.3-$8.0 million.
For all scenarios described above, the midpoint of the cost
estimates, including the estimated paperwork burden, exceeds the
midpoint of the estimated benefits.
The OLPP final rule estimated the benefits from the rule's
implementation as $4.1 to $49.5 million annually. The estimated
benefits spanned a wider range than the estimated costs and were based
on research that measured consumers' willingness-to-pay for outdoor
access for laying hens. The OLPP final rule acknowledged that the
benefits were difficult to quantify.
In reviewing the OLPP final rule, AMS found that the calculation of
benefits contained mathematical errors in calculating the discount
rates of 7% and 3%. The error resulted in overstating the value of the
benefits. Using the correct discounting formula, the estimated costs
and paperwork burden for the OLPP final rule exceed the estimated
benefits for all producer response scenarios. AMS also found the
estimated benefits over time were handled differently than were the
estimated costs over time. Specifically, costs were constant over time
while benefits declined by an equal amount each year corresponding to
the depreciation of poultry housing. In addition, AMS determined that
the range used for estimating the benefit interval should be replaced
with more suitable estimates. The estimate used in the benefits
calculations for the OLPP final rule were based on consumers'
willingness-to-pay for eggs produced by chickens raised in a cage-free

[[Page 10782]]

environment without induced moulting and with outdoor access. Because
the first two practices are already required in organic production, AMS
determined that a narrower range for the willingness-to-pay for outdoor
access estimate was more precise and appropriate. The revised
calculations of benefits are presented in the accompanying RIA.
As a result of reviewing the calculation of estimated benefits, AMS
reassessed the economic basis for the rulemaking as well as the
validity of the estimated benefits. On the basis of that reassessment,
AMS finds little, if any, economic justification for the OLPP final
rule.
The RIA for the OLPP final rule did not identify a significant
market failure to justify the need for rule. The RIA for the OLPP final
rule noted that there is wide variance in production practices within
the organic egg sector and asserted that ``as more consumers become
aware of this disparity, they will either seek specific brands of
organic eggs or seek animal welfare labels in addition to the USDA
organic seal.'' OLPP final rule RIA at 14. AMS also found the
``majority of organic producers also participate in private, third-
party verified animal welfare certification programs.'' Id. Variance in
production practices and participation in private, third-party
certification programs, however, do not constitute evidence of
significant market failure or weigh against withdrawal of the OLPP
rule.
First, while AMS recognizes that the purpose of the OFPA is to
assure consumers that organically produced products meet a consistent
standard, that purpose does not imply that there can be no variation in
organic production practices. Rather, a variety of production methods
may be employed to meet the same standard. Some may be more labor
intensive and others more capital intensive, and some may be
appropriate for small operations while others are appropriate for large
operations. Importantly, producers will adopt different production
methods over time as technology evolves and enables operations to meet
the same standard more efficiently. Moreover, producers may follow
different standards with respect to aspects of production that are not
relevant to organic certification or otherwise subject to regulation.
Thus, variation in production practices is expected and does not stand
as an indicator of a significant market failure.
Second, private, third-party certification programs are common in
the dynamic food sector. That organic suppliers participate in such
programs does not indicate a market failure with respect to the
standards promulgated under the USDA NOP. Rather, the use of third-
party certifications in addition to the USDA organic seal merely
indicates that participants in the food sector seek ways to
differentiate their products from those of their competitors. That some
aspects of a private certification may overlap with the requirements
underlying the USDA organic seal demonstrates that food producers,
manufacturers, and retailers use multiple methods to communicate with
consumers about the attributes of the foods that they produce and sell.
Private, third-party certifications reflect attributes that food
sellers wish to emphasize, and the existence of such certifications on
organic products provides no evidence of a significant market failure
relating to USDA organic standards. Nor is it clear that implementation
of the OLPP final rule would reduce participation in third-party
certification programs; instead, third-party certification programs may
simply evolve as producers find new ways to distinguish their products.
Finally, the accompanying RIA explains several calculation errors
associated with the OLPP final rule RIA. The RIA also provides
additional information regarding the estimated benefits and explains
why they likely were overstated in the original OLPP final rule RIA. In
any case, withdrawing the OLPP final rule would prevent the negative
cost impacts from taking effect, resulting in substantial organic
poultry producer cost savings of $8.2 to $31 million annually, plus
additional cost savings of $1.95-$3.9 million from paperwork reduction.

Consideration of Alternatives

AMS considered three alternatives in developing this rule to
withdraw the OLPP final rule. The first alternative was to implement
the OLPP final rule on May 14, 2018, which is the current effective
date. The second alternative was to further delay the final rule. The
third alternative, which is the selected alternative, was to withdraw
the final rule.
For the first alternative, if the OLPP final rule were to become
effective on May 14, 2018, the costs and transfers described in the RIA
would be expected to occur, resulting in requirements with substantial
costs not supported by evidence of significant market failure.
The second alternative was to further delay the OLPP final rule.
This alternative, however, would defer the decision on whether to
implement or withdraw to a future date, despite the agency having
performed its review and received comments from the public. This
alternative fails to achieve USDA's goal of reducing regulatory
uncertainty.
AMS has selected the third alternative, to withdraw the OLPP final
rule, as the preferred alternative. This alternative estimates cost
savings for poultry producers of $8.2 to $31 million per year (based on
15-year costs). In addition, $1.95-$3.9 million in annual paperwork
burden would not be incurred. As described in the RIA, the range of
benefits could be expected to be lower than projected in the OLPP final
rule RIA. Moreover, a priori, the benefits associated with any
government intervention in the absence of an identifiable market
failure will be lower than the required costs of imposing such an
intervention. Given the unclear nature of the market failure being
addressed by the OLPP final rule, AMS would give clear preference to
the lower end of the benefit range, which consistently falls below the
costs associated with the OLPP final rule.

VII. Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601-612) requires agencies
to consider the economic impact of each rule on small entities and
evaluate alternatives that would accomplish the objectives of the rule
without unduly burdening small entities or erecting barriers that would
restrict their ability to compete in the market.
Data suggest nearly all organic egg producers qualify as small
businesses. OLPP final rule RIA at 140-141. Small egg producers are
listed under North American Industry Classification System (NAICS) code
112310 (Chicken Egg Production) as grossing less than $15,000,000 per
year, and AMS estimates that out of 722 operations reporting sales of
organic eggs, only four are not small businesses. Thus, the OLPP final
rule RIA found that some small egg producers and small chicken
(broiler) producers would be affected by the poultry outdoor access and
space provisions. See OLPP final rule RIA at 136-138, 142, 145-146.
Furthermore, the RIA of the OLPP final rule noted that some small
producers were particularly concerned about limited land availability
for outdoor access requirements and the potential for increased
mortality attendant to the new regulatory demands. These concerns were
identified as sources of burdensome costs and/or major obstacles to
compliance for some small businesses. See id. at 26-28. Based on
surveys of organic egg producers, AMS believes approximately fifty
percent of layer production will not be able to

[[Page 10783]]

acquire additional land needed to comply with the OLPP final rule and
some of this burden will be borne by small entities. Id. at 142. Also,
certain existing certified organic slaughter facilities could surrender
their organic certification as a result of the OLPP final rule and
certain businesses currently providing livestock transport services for
certified organic producers or slaughter facilities may be unwilling to
meet and/or document compliance with the livestock transit
requirements. Id. at 149.
Withdrawing the OLPP final rule avoids these economic impacts
without introducing any incremental burdens or erecting barriers that
would restrict the ability of small entities to compete in the market.
This conclusion is supported by the historic growth of the organic
industry without the regulatory amendments.
This rule relieves producers of the costs of complying with the
OLPP final rule. The effects of withdrawal will be beneficial and not
defined as significant for the specific purposes of the Regulatory
Flexibility Act. Some small entities may experience time and money
savings as a result of not having to change practices to comply with
the OLPP final rule. Affected small entities would include organic egg
and organic broiler producers. This rule will provide measurable,
savings for small entities. However, for the definitional purposes of
the RFA, these savings are not considered a ``significant'' economic
impact on a substantial number of small entities.
Under these circumstances, the Administrator of AMS has determined
that this action will not have a significant economic impact on a
substantial number of small entities and certifies as such.

VIII. Executive Order 12988

Executive Order 12988 instructs each executive agency to adhere to
certain requirements in the development of new and revised regulations
in order to avoid unduly burdening the court system.
Pursuant to section 6519(f) of OFPA, this final rule would not
alter the authority of the Secretary under the Federal Meat Inspection
Act (21 U.S.C. 601-624), the Poultry Products Inspection Act (21 U.S.C.
451-471), or the Egg Products Inspection Act (21 U.S.C. 1031-1056),
concerning meat, poultry, and egg products, respectively, nor any of
the authorities of the Secretary of Health and Human Services under the
Federal Food, Drug and Cosmetic Act (21 U.S.C. 301-399), nor the
authority of the Administrator of the U.S. Environmental Protection
Agency under the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. 136-136(y)).

IX. Paperwork Reduction Act

No additional collection or recordkeeping requirements are imposed
on the public by withdrawing the OLPP final rule. Accordingly, OMB
clearance is not required by the Paperwork Reduction Act of 1995 (44
U.S.C. 3501), Chapter 35. Withdrawing the OLPP final rule will avoid an
estimated $1.95-$3.9 million in costs for increased paperwork burden
associated with that final rule.

X. Executive Order 13175

This rule has been reviewed in accordance with the requirements of
Executive Order 13175, ``Consultation and Coordination with Indian
Tribal Governments.'' Executive Order 13175 requires Federal agencies
to consult and coordinate with tribes on a government-to-government
basis on policies that have tribal implications, including regulations,
legislative comments or proposed legislation, and other policy
statements or actions that have substantial direct effects on one or
more Indian tribes, on the relationship between the Federal Government
and Indian tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian tribes.
AMS has assessed the impact of this rule on Indian tribes and
determined that this rule would not, to our knowledge, have tribal
implications that require tribal consultation under Executive Order
13175. If a Tribe requests consultation, AMS will work with the Office
of Tribal Relations to ensure meaningful consultation is provided where
changes, additions and modifications identified herein are not
expressly mandated by Congress.

XI. Civil Rights Impact Analysis

AMS has reviewed this final rule in accordance with the Department
Regulation 4300-4, Civil Rights Impact Analysis, to address any major
civil rights impacts the rule might have on minorities, women, and
persons with disabilities. AMS has determined that withdrawing the OLPP
final rule has no potential for affecting producers in protected groups
differently than the general population of producers.

XII. Conclusion

In compliance with OFPA and consistent with the regulatory policies
of Executive Orders 12866 and 13563, AMS is withdrawing the OLPP final
rule.

Dated: March 8, 2018.
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2018-05029 Filed 3-12-18; 8:45 am]
BILLING CODE 3410-02-P

10775

Rules and Regulations Federal Register
Vol. 83, No. 49

Tuesday, March 13, 2018

This section of the FEDERAL REGISTER Marketing Service (AMS) administers clear opinion about the proposed
contains regulatory documents having general the National Organic Program (NOP) withdrawal of the rule.
applicability and legal effect, most of which under 7 CFR part 205. Commenters opposing withdrawal
are keyed to and codified in the Code of included consumers, organic farmers,
Federal Regulations, which is published under II. Overview of Agency Action
organic handlers, organizations
50 titles pursuant to 44 U.S.C. 1510. USDA is withdrawing the OLPP rule representing animal welfare,
The Code of Federal Regulations is sold by
based on its current interpretation of 7 environmental, or farming interests,
the Superintendent of Documents. U.S.C. 6905, under which the OLPP trade associations, certifying agents and
final rule would exceed USDA’s inspectors, and retailers. These
statutory authority. Withdrawal of the commenters expressed the view that the
DEPARTMENT OF AGRICULTURE OLPP rule also is independently OFPA provides AMS the legal authority
justified based upon USDA’s revised to implement the OLPP final rule and
Agricultural Marketing Service assessments of its benefits and burdens that withdrawal violates the
and USDA’s view of sound regulatory Administrative Procedure Act and/or
7 CFR Part 205 policy. This is considered a the OFPA, because AMS did not consult
[Document Number AMS–NOP–15–0012; deregulatory action under Executive with the National Organic Standards
NOP–15–06] Order 13771. The organic livestock and Board. These commenters asserted that
poultry regulations now published at 7 the organic sector requested the OLPP
RIN 0581–AD75 CFR part 205 remain effective. regulation and the rulemaking reflects
National Organic Program (NOP); III. Related Documents consensus within the organic sector and
Organic Livestock and Poultry a working public-private partnership
Documents related to this final rule
Practices include: OFPA (7 U.S.C. 6501–6524) with years of input from stakeholders. A
and its implementing regulations (7 CFR number of commenters also opposed
AGENCY: Agricultural Marketing Service, withdrawal because of potential
USDA. part 205); the OLPP proposed rule
published in the Federal Register on negative impacts for the welfare of farm
ACTION: Final rule; withdrawal. animals.
April 13, 2016 (81 FR 21956); the OLPP
final rule published in the Federal Some commenters opposing the
SUMMARY: This final rule withdraws the withdrawal also challenged the
Organic Livestock and Poultry Practices Register on January 19, 2017 (82 FR
7042); the final rule delaying the OLPP Preliminary Regulatory Impact Analysis
final rule published in the Federal (PRIA, published December 18, 2017 at
Register on January 19, 2017, by the final rule’s effective date until May 19,
2017, published in the Federal Register https://www.regulations.gov/
U.S. Department of Agriculture’s document?D=AMS-NOP-15-0012-6687)
Agricultural Marketing Service. The on February 9, 2017 (82 FR 9967); the
final rule delaying the OLPP final rule’s for the withdrawal of the OLPP final
existing organic livestock and poultry rule. These commenters claimed that (1)
regulations remain effective. effective date until November 14, 2017,
published in the Federal Register on organic certification is voluntary and,
DATES: Effective May 13, 2018, the final therefore, there are no costs associated
May 10, 2017 (82 FR 21677); a second
rule published January 19, 2017, at 82 with the OLPP final rule, (2) economic
proposed rule presenting the four
FR 7042, delayed February 9, 2017, at considerations are not a legally
options for agency action listed in
82 FR 9967, further delayed May 10, permissible basis for withdrawing the
Section I, supra, published in the
2017, at 82 FR 21677, and further OLPP final rule and are irrelevant
Federal Register on May 10, 2017 (82
delayed November 14, 2017, at 82 FR because OFPA is not a cost-benefit
FR 21742); a final rule further delaying
52643, is withdrawn. the OLPP final rule’s effective date until statute, and (3) the PRIA failed to
FOR FURTHER INFORMATION CONTACT: Paul May 14, 2018, published in the Federal consider qualitative benefits.
Lewis, Ph.D., Director, Standards Register on November 14, 2017 (82 FR Some comments objected to AMS’
Division, Telephone: (202) 720–3252; 52643); and a proposed rule explaining conclusion that there is no significant
Fax: (202) 720–7808. AMS’ intent to withdraw the OLPP final market failure to justify this rulemaking
SUPPLEMENTARY INFORMATION: rule, published in the Federal Register and stated that consumer deception
on December 18, 2017 (82 FR 59988). caused by inconsistent application of
I. Background outdoor access requirements for poultry
The Organic Foods Production Act of IV. Public Comments is the market failure that OFPA prevents
1990 (OFPA), as amended (7 U.S.C. AMS received approximately 72,000 by compelling AMS to develop
6501–6522), authorizes the United comments on the proposal to withdraw consistent standards. These commenters
States Department of Agriculture (USDA the OLPP final rule. The majority of argued that withdrawal of the OLPP
or Department) to establish national comments, over 63,000, opposed the final rule would erode consumer
standards governing the marketing of withdrawal of that final rule. This confidence and trust in the organic
certain agricultural products as included over 56,000 comments label. Commenters also requested an
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organically produced to assure submitted as form letters. extension of the public comment period,
consumers that organically produced Approximately fifty comments from 30 to 90 days, specifically noting
products meet a consistent standard and supported withdrawal of the OLPP final they needed more time to study the
to facilitate interstate commerce in fresh rule. This included five comments revisions discussed in the Preliminary
and processed food that is organically submitted as form letters. The remaining Regulatory Impact Analysis (PRIA) and
produced. USDA’s Agricultural comments, about 7,800, did not state a develop meaningful comments.

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Federal Register / Vol. 83, No. 49 / Tuesday, March 13, 2018 / Rules and Regulations 10781

7072). Existing USDA organic and, therefore, has been reviewed by estimated transfers to be $43.7 million
regulations allow for the temporary OMB. This RIA on withdrawal remains to $47.4 million per year. These costs do
confinement of animals for conditions unchanged from the PRIA because AMS not include an additional $1.95–$3.9
under which the health, safety, or well- did not receive new information via million associated with the estimated
being of the animal could be public comments on the December 18, paperwork burden. Withdrawing the
jeopardized. AMS acknowledges that 2017 proposed rule that would have OLPP final rule prevents these potential
the existing requirements for outdoor altered the RIA. costs from taking effect, resulting in
access and the provisions for temporary Executive Orders 12866, 13563, and substantial organic poultry producer
confinement provide organic producers 13771 control regulatory review. cost savings.
with the flexibility to mitigate Executive Orders 12866 and 13563 The estimated benefits of
biosecurity and disease risks. direct agencies to assess all costs and implementing the OLPP final rule were
A comment noted that AMS must benefits of available regulatory calculated for the three scenarios above
assess the impact of withdrawing the alternatives, and, if regulation is and were based on consumer
OLPP final rule on the equivalency necessary, to select regulatory willingness-to-pay for outdoor access for
arrangements with the European Union approaches that maximize net benefits laying hens. If all organic livestock and
and Canada and the economic impacts (including potential economic, poultry producers came into
of the potential dissolution of those environmental, public health and safety compliance, AMS estimated the benefits
agreements as a result of this action. In effects, distributive impacts, and would be $13.0–$31.6 million. Second,
the OLPP final rule, AMS responded to equity). Executive Order 13563 if 50 percent of the organic egg
comments concerning potential impacts emphasizes the importance of producers moved to the cage-free egg
on trade agreements (p. 7080). AMS’ quantifying both costs and benefits, market and the organic industry
responses to these comments remains reducing costs, harmonizing rules, and continues to grow at historical rates, the
the same. promoting flexibility. Executive Order estimated benefits are $3.6–$8.7 million.
AMS provided a 30-day public 13771 directs Agencies to identify at Third, if 50 percent of the organic egg
comment period in order to consider the least two existing regulations to be producers moved to the cage-free egg
public comments received on the repealed for every new regulation unless market and there were no new entrants
proposed withdrawal and make a final prohibited by law. The total incremental that could not already comply, the
decision on the OLPP final rule by the cost of all regulations issued in a given estimated benefits are $3.3–$8.0 million.
current effective date of May 14, 2018. fiscal year must have costs within the For all scenarios described above, the
AMS did not grant requests for amount of incremental costs allowed by midpoint of the cost estimates,
extension of the public comment period the Director of OMB, unless otherwise including the estimated paperwork
because interested parties had the required by law or approved in writing burden, exceeds the midpoint of the
opportunity to comment on the by the Director of OMB. This rule is an estimated benefits.
underlying OLPP final rule in 2016 as Executive Order 13771 deregulatory The OLPP final rule estimated the
well as the rulemaking in 2017 that action. AMS estimates that withdrawal benefits from the rule’s implementation
culminated in the delay of the effective of the OLPP final rule will result in cost as $4.1 to $49.5 million annually. The
of the OLPP final rule until May 14, savings of $10.2 million to $32.6 million estimated benefits spanned a wider
2018. Moreover, commenters were on per year, discounted at 7 percent over range than the estimated costs and were
notice of the proposal since November 15 years. When factored over perpetuity based on research that measured
14, 2017, when it was discussed in a and extended to account for future consumers’ willingness-to-pay for
final rule published on that date. years, the estimated cost savings outdoor access for laying hens. The
Furthermore, and in light of this become, on an annualized basis, $8.5 OLPP final rule acknowledged that the
backdrop, the December 18, 2017 million to $34.9 million. Details on the benefits were difficult to quantify.
proposed rule presented discrete issues estimated cost savings of this rule over In reviewing the OLPP final rule,
that interested parties should have been 15 years can be found in the RIA, posted AMS found that the calculation of
able to address within the 30-day separately and summarized below. benefits contained mathematical errors
comment period. Additionally, The estimated costs of implementing in calculating the discount rates of 7%
extending the comment period would the OLPP final rule were based on three and 3%. The error resulted in
have prevented AMS from resolving the potential scenarios of how organic egg overstating the value of the benefits.
status of the OLPP rulemaking by May producers would respond. First, AMS Using the correct discounting formula,
14, 2018. estimated that if all organic livestock the estimated costs and paperwork
For the reasons described above, AMS and poultry producers came into burden for the OLPP final rule exceed
maintains that the OLPP final rule compliance, the costs would be $28.7 to the estimated benefits for all producer
exceeds AMS’ scope of authority under $31 million each year. Second, if 50 response scenarios. AMS also found the
OFPA and would be overly burdensome percent of the organic egg producers estimated benefits over time were
for organic poultry producers. moved to the cage-free egg market and handled differently than were the
Therefore, AMS is withdrawing the the organic industry continues to grow estimated costs over time. Specifically,
OLPP final rule. at historical rates, the estimated costs costs were constant over time while
are $11.7–$12.0 million. Plus, AMS benefits declined by an equal amount
VI. Executive Orders 12866/13563 estimated transfers in the amount of each year corresponding to the
Review $79.5 million to $86.3 million per year depreciation of poultry housing. In
This section provides an Executive for producers that move from the addition, AMS determined that the
Summary of the Regulatory Impact organic to the cage-free market and lose range used for estimating the benefit
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Analysis (RIA) for this final rule on the organic price premium. Third, if 50 interval should be replaced with more
withdrawal. A full analysis is posted on percent of the organic egg producers suitable estimates. The estimate used in
the Regulations.gov website. This moved to the cage-free egg market and the benefits calculations for the OLPP
rulemaking has been designated as an there were no new entrants that could final rule were based on consumers’
‘‘economically significant regulatory not already comply, the estimated costs willingness-to-pay for eggs produced by
action’’ under Executive Order 12866, are $8.2 million. For this scenario, AMS chickens raised in a cage-free

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10782 Federal Register / Vol. 83, No. 49 / Tuesday, March 13, 2018 / Rules and Regulations

environment without induced moulting suppliers participate in such programs agency having performed its review and
and with outdoor access. Because the does not indicate a market failure with received comments from the public.
first two practices are already required respect to the standards promulgated This alternative fails to achieve USDA’s
in organic production, AMS determined under the USDA NOP. Rather, the use goal of reducing regulatory uncertainty.
that a narrower range for the of third-party certifications in addition AMS has selected the third
willingness-to-pay for outdoor access to the USDA organic seal merely alternative, to withdraw the OLPP final
estimate was more precise and indicates that participants in the food rule, as the preferred alternative. This
appropriate. The revised calculations of sector seek ways to differentiate their alternative estimates cost savings for
benefits are presented in the products from those of their poultry producers of $8.2 to $31 million
accompanying RIA. competitors. That some aspects of a per year (based on 15-year costs). In
As a result of reviewing the private certification may overlap with addition, $1.95–$3.9 million in annual
calculation of estimated benefits, AMS the requirements underlying the USDA paperwork burden would not be
reassessed the economic basis for the organic seal demonstrates that food incurred. As described in the RIA, the
rulemaking as well as the validity of the producers, manufacturers, and retailers range of benefits could be expected to be
estimated benefits. On the basis of that use multiple methods to communicate lower than projected in the OLPP final
reassessment, AMS finds little, if any, with consumers about the attributes of rule RIA. Moreover, a priori, the benefits
economic justification for the OLPP the foods that they produce and sell. associated with any government
final rule. Private, third-party certifications reflect intervention in the absence of an
The RIA for the OLPP final rule did attributes that food sellers wish to identifiable market failure will be lower
not identify a significant market failure emphasize, and the existence of such than the required costs of imposing such
to justify the need for rule. The RIA for certifications on organic products an intervention. Given the unclear
the OLPP final rule noted that there is provides no evidence of a significant nature of the market failure being
wide variance in production practices market failure relating to USDA organic addressed by the OLPP final rule, AMS
within the organic egg sector and standards. Nor is it clear that would give clear preference to the lower
asserted that ‘‘as more consumers implementation of the OLPP final rule end of the benefit range, which
become aware of this disparity, they would reduce participation in third- consistently falls below the costs
will either seek specific brands of party certification programs; instead, associated with the OLPP final rule.
organic eggs or seek animal welfare third-party certification programs may
labels in addition to the USDA organic VII. Regulatory Flexibility Act
simply evolve as producers find new
seal.’’ OLPP final rule RIA at 14. AMS ways to distinguish their products. The Regulatory Flexibility Act (5
also found the ‘‘majority of organic Finally, the accompanying RIA U.S.C. 601–612) requires agencies to
producers also participate in private, explains several calculation errors consider the economic impact of each
third-party verified animal welfare associated with the OLPP final rule RIA. rule on small entities and evaluate
certification programs.’’ Id. Variance in The RIA also provides additional alternatives that would accomplish the
production practices and participation information regarding the estimated objectives of the rule without unduly
in private, third-party certification benefits and explains why they likely burdening small entities or erecting
programs, however, do not constitute were overstated in the original OLPP barriers that would restrict their ability
evidence of significant market failure or final rule RIA. In any case, withdrawing to compete in the market.
weigh against withdrawal of the OLPP the OLPP final rule would prevent the Data suggest nearly all organic egg
rule. negative cost impacts from taking effect, producers qualify as small businesses.
First, while AMS recognizes that the resulting in substantial organic poultry OLPP final rule RIA at 140–141. Small
purpose of the OFPA is to assure producer cost savings of $8.2 to $31 egg producers are listed under North
consumers that organically produced million annually, plus additional cost American Industry Classification
products meet a consistent standard, savings of $1.95–$3.9 million from System (NAICS) code 112310 (Chicken
that purpose does not imply that there paperwork reduction. Egg Production) as grossing less than
can be no variation in organic $15,000,000 per year, and AMS
production practices. Rather, a variety Consideration of Alternatives estimates that out of 722 operations
of production methods may be AMS considered three alternatives in reporting sales of organic eggs, only four
employed to meet the same standard. developing this rule to withdraw the are not small businesses. Thus, the
Some may be more labor intensive and OLPP final rule. The first alternative OLPP final rule RIA found that some
others more capital intensive, and some was to implement the OLPP final rule small egg producers and small chicken
may be appropriate for small operations on May 14, 2018, which is the current (broiler) producers would be affected by
while others are appropriate for large effective date. The second alternative the poultry outdoor access and space
operations. Importantly, producers will was to further delay the final rule. The provisions. See OLPP final rule RIA at
adopt different production methods third alternative, which is the selected 136–138, 142, 145–146. Furthermore,
over time as technology evolves and alternative, was to withdraw the final the RIA of the OLPP final rule noted
enables operations to meet the same rule. that some small producers were
standard more efficiently. Moreover, For the first alternative, if the OLPP particularly concerned about limited
producers may follow different final rule were to become effective on land availability for outdoor access
standards with respect to aspects of May 14, 2018, the costs and transfers requirements and the potential for
production that are not relevant to described in the RIA would be expected increased mortality attendant to the new
organic certification or otherwise to occur, resulting in requirements with regulatory demands. These concerns
subject to regulation. Thus, variation in substantial costs not supported by were identified as sources of
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production practices is expected and evidence of significant market failure. burdensome costs and/or major
does not stand as an indicator of a The second alternative was to further obstacles to compliance for some small
significant market failure. delay the OLPP final rule. This businesses. See id. at 26–28. Based on
Second, private, third-party alternative, however, would defer the surveys of organic egg producers, AMS
certification programs are common in decision on whether to implement or believes approximately fifty percent of
the dynamic food sector. That organic withdraw to a future date, despite the layer production will not be able to

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Document Created: 2018-03-13 01:57:06
Document Modified: 2018-03-13 01:57:06

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Rules and Regulations
Action		Final rule; withdrawal.
Dates		Effective May 13, 2018, the final rule published January 19, 2017, at 82 FR 7042, delayed February 9, 2017, at 82 FR 9967, further delayed May 10, 2017, at 82 FR 21677, and further delayed November 14, 2017, at 82 FR 52643, is withdrawn.
Contact		Paul Lewis, Ph.D., Director, Standards Division, Telephone: (202) 720-3252; Fax: (202) 720-7808.
FR Citation		83 FR 10775
RIN Number		0581-AD75

83 FR 10775 - National Organic Program (NOP); Organic Livestock and Poultry Practices

DEPARTMENT OF AGRICULTUREAgricultural Marketing Service

Federal Register Volume 83, Issue 49 (March 13, 2018)

DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service