Fwd: USDA Regulatory Flexibility Analysis
Sun, 26 Apr 1998 09:59:44 -0700
>Date: Sun, 26 Apr 1998 08:18:00 -0700
>From: "S. Moore" <firstname.lastname@example.org>
>To: "BIODYNAMIC MAIL LIST (E-mail)" <email@example.com>,
> "Lawrence London (E-mail)" <firstname.lastname@example.org>,
>Subject: USDA Regulatory Flexibility Analysis
>X-Mailer: Microsoft Outlook 8.5, Build 4.71.2173.0
>In the uproar over the absurdity of USDA's proposed rules I have heard or
>seen very little about the Regulatory Flexibility Act analysis contained
>therein. I believe this could provide a legal pathway for virtually all
>organic growers to seek relief from the insanity that USDA seeks to visit
>upon us. The RFA, as amended in 1996, provides that a small business which
>is adversely affected by agency action is entitled to judicial review of
>agency compliance with certain aspects of RFA. The agency is required to
>prepare an analysis of the economic impact on small entities of its
>regulatory action. All of this appears to me to be a possible legal path to
>overcome one of the worst features of OFPA, mandatory certification.
>However, as with all other aspects of the rule making process, these issues
>probably need to be raised during the public comment period. The comments
>on RFA, which I am submitting personally and on behalf of the BD
>Association, are presented below. I urge other concerned parties to also
>submit comments to USDA on this issue.
>Comments on USDA's Regulatory Flexibility Act Analysis contained in its
>USDA's analysis of the proposed rule (PR) under the RFA is primarily based
>on unsubstantiated assertions and totally fails to account for thousands of
>small organic growers who are not currently certified. Furthermore, the
>alternatives to USDA's PR do not account for the harmonization that has
>taken place among private certifiers during the past eight years since the
>passage of OFPA. In short the analysis is superficial, incomplete and
>totally inadequate for its intended purpose of evaluating the economic
>impact of the PR on small entities.
>According to the PR "Based on review conducted by AMS of 16 certifiers, who
>provided information on the organic sales of products produced on certified
>farms, most of the farms currently certified have less than $25,000 in gross
>sales." No data from the AMS review is presented, so it is impossible for
>us to assess the validity of this assertion. Furthermore, there are
>thousands of small organic growers throughout the country who are not
>certified at this time. For example, in California many growers are
>registered as organic, but are not certified by either the state or a
>private certifier. These growers typically serve local, direct to consumer
>markets like farmer's markets and CSA's. These uncertified organic growers
>are totally unaccounted for in the RFA analysis presented in the PR. It
>does not appear that any effort was made by USDA to include this class of
>growers in their RFA analysis.
>The Standard Industrial Codes (SIC) establish definitions of small entities
>for the purposes of analysis under RFA. Although no justification or
>rationale is provided, USDA specifies alternative definitions for small
>entities subject to its PR. The definition of a small certifier is changed
>from $3.5 million to $25,000 gross revenues. A small farm is redefined from
>$500,000 to $5,000 annual gross sales. Under SIC virtually every organic
>certifier and organic farm in the U.S. would be included in the class of
>small entities affected by the PR. Under USDA's alternative definitions the
>number of entities affected is dramatically reduced, effectively removing
>the burden of RFA analysis from USDA. It is our contention that USDA has
>proposed these alternative definitions for exactly this reason. That is, to
>avoid the burden of conducting an effective analysis. In any case, assuming
>it has a legal basis, USDA needs to provide a foundation for its alternative
>Because USDA fails to account for the large number of uncertified organic
>growers, its assertion that "most of the information needed for organic
>farmers and handlers to become certified, and for certifiers to become
>accredited, already exists for those entities currently operating" is
>unfounded. The proposed NOP makes certification mandatory. The large, but
>unknown, number of uncertified growers, who for the most part are highly
>independent and loathe intervention from either private or government
>agencies, will be faced with substantial new requirements for fees,
>documentation, and record keeping. The fact that USDA has not proposed any
>new forms or paperwork is immaterial to its analysis. All of the
>documentation currently required for private certification will be a
>substantial burden for currently uncertified growers who will be required to
>become certified in order to continue to do business as organic growers.
>Failure to include this class of growers and assess the impact of the PR on
>them under the RFA is a major omission.
>In the RFA analysis USDA asserts that the NOP would benefit farmers by
>opening access to international markets. As proposed, USDA's rules would
>CLOSE access to international markets because the proposed rules do not meet
>international standards for organic. As a result, U.S. growers who seek
>export markets would be severely impacted economically by the PR.
>Alternatively, the vast majority of organic growers serve local and regional
>markets. They are not concerned with international markets and have no need
>for a PR, which meets the needs of exporters. One of the major shortcomings
>of USDA's overall approach to developing a NOP is that it attempts to apply
>a single solution to all types of organic growers and markets. No effort
>has been made to recognize and account for the different needs of small
>local/regional growers, as opposed to larger operations, which are concerned
>with interstate and international trade. As a result, the proposed NOP
>utterly fails to provide any flexibility for small entities.
>USDA claims that specification of a uniform nationally recognized definition
>of organic will be a significant benefit to organic businesses, especially
>small entities. This is the case only if organic producers and consumers
>embrace the definition. As proposed, USDA's definition totally fails to
>garner support of the organic community and has the potential to throw the
>organic marketplace into total chaos. In such a case it can hardly claim
>to be providing a benefit to small entities.
>The RFA analysis considers only two alternatives to the proposed USDA NOP.
>They are 1) no federal regulation (status quo) and 2) exemption of small
>certifiers from accreditation. The discussion under the "no regulation"
>alternative is simply a regurgitation of the assertions made elsewhere in
>support of USDA regulation. In fact, the past eight years since passage of
>OFPA, has been a de facto period of "no regulation". During this time the
>organic trade has experienced phenomenal growth at great benefit to small
>and large entities. Many of the problems, which originally motivated the
>passage of OFPA, are being resolved within the organic community without the
>USDA NOP. The "no regulation" scenario needs to be thoroughly examined as a
>viable alternative in light of the experience of the past eight years.
>The analysis of the small certifier exemption analysis is of little
>consequence under USDA's definition of small entities because the number of
>entities qualifying under USDA's definition is near zero.
>We believe there other viable alternatives that deserve serious
>consideration. These include: 1) the "local-market" grower certification
>proposal, which is outlined elsewhere in this document; 2) limiting USDA's
>role to facilitating through NOSB the process of developing a national
>definition of organic and fostering a private program of certifier
>accreditation; 3) eliminating mandatory certification from the NOP; and 4)
>establishing more realistic limits for small entity exemptions.
>The RFA analysis fails to meet its purpose of evaluating the economic impact
>of the proposed regulation on small entities. First, the statutory meaning
>of small entity is arbitrarily redefined so that virtually no entities fit
>the redefined category of "small entity" affected by the regulations. In
>addition, a major class of subject entities, currently uncertified organic
>farms, is simply not accounted for in the analysis. Second, the benefits of
>the proposed regulation will clearly not be realized because the regulations
>fail to meet either the spirit or the letter of the law they are
>implementing (OFPA). Third, there is no substantive evaluation of costs in
>the RFA analysis. How can an economic analysis omit discussion of costs?
>The proposed regulations impose significant direct and indirect costs on
>growers and certifiers. Where is the analysis of the impact of these costs
>on small entities? Finally, the evaluation of alternatives is nothing more
>than a self-serving rehash of unsubstantiated claims that USDA regulations
>will benefit small entities. No effort has been made to substantively
>consider a variety of clearly appropriate alternatives to the proposed
>regulations. If USDA's proposed rules are, in fact, valid and beneficial,
>then they will stand up to such scrutiny. The cursory and superficial
>analysis presented suggests to us that USDA recognizes the adverse impacts
>its proposed rules will have on small entities and is attempting to sweep
>the whole issue under the rug.
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