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Federal Register / Vol. 86, No. 90 / Wednesday, May 12, 2021 / Proposed Rules
operations would align the proposal with the rest of the USDA organic regulations and the existing framework for certification and oversight.
If these provisions are implemented, existing certified dairy operations that purchase animals, individually or as an entire herd, would not be allowed to purchase any transitioned animals for organic milk production beginning on the compliance date. They would be able to purchase and sell only livestock that had been under continuous organic management from the last third of gestation. New operations would have only one opportunity to transition in non-organic animals into the operations.
Those transitioned animals could then be sold to other operations, but only as non-organic. Once sold, those animals would not be eligible to produce organic milk.
In addition to comments on the provisions above, AMS is interested in comments on the following topics and options:
1. Implementation timeframe. AMS
had proposed that all requirements be implemented upon the effective date of a final rule, with an exception for any transition that was already approved by a certifying agent. AMS requests comments about whether an implementation timeframe is necessary for organic dairies to comply. If one is needed, AMS requests comments on how long this implementation period should be and why.
2. Accuracy of the estimates in the Regulatory Impact Analysis RIA/
Regulatory Flexibility Analysis. The cost estimates presented in this notice are based on USDA and industry data.
AMS requests feedback on the assumptions related to costs and benefits, with supporting information data and sources where available.
3. Exceptions to the one-time allowance requirement. AMS has not proposed exceptions to the one-time transition requirement, but the current regulations permit temporary variances in some scenarios 205.290 and allow for re-transition following Federal or State emergency treatments 205.672.
AMS seeks comments on whether the rule should include any additional exceptions to the one-time transition requirement for scenarios where the current regulations would not apply, and if so, what scenarios would warrant an exception.
II. Regulatory Impact Analysis/
Regulatory Flexibility Analysis Because the Regulatory Impact Analysis and the Regulatory Flexibility Analysis for the proposed rule were completed in 2015, we decided to
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update those analyses with more current information. We have updated the analyses to reflect more current information about the dairy market, including the number of certified organic operations and the number of organic dairy animals. This updated information revises the estimated costs of the proposed rule $488,000
$1,462,500 compared to the estimated costs $288,000$935,000 in our analysis published in 2015. The analysis below also includes updated information on the distribution of dairy farms, dairy farm practices, and the market for dairy products. We also discuss public comments on those prior regulatory analyses.
Need for the Rule AMS determined that the USDA
organic regulations for sourcing dairy animals and managing breeder stock require additional specificity to ensure organic dairy operations meet a consistent standard. Interpretations of these regulations have differed between certifying agents, and the different interpretations have led to widely divergent practices by organic dairy operations for sourcing replacement dairy animals. AMS proposes revising the regulations to ensure the USDA
organic regulations are administered and enforced in a clear, uniform, and equitable manner, and to address inconsistencies determined in the 2013
USDA Office of Inspector General OIG
Audit.1 Furthermore, AMS expects that increased clarity will support trust in the USDA organic seal by assuring consumers that organic dairy products meet a consistent standard, a stated purpose of the Organic Foods Production Act OFPA of 1990 7
U.S.C. 6501.
In a 2006 final rule related to this issue June 7, 2006; 71 FR 32803, AMS
recognized that the regulations allowed different methods for replacing organic dairy animals depending on how the producer transitioned to organic production. AMS further stated that, given the almost 13,000 comments on the 2006 proposed rule 71 FR 32804, the issue was a significant concern of the organic community, including organic dairy producers, certifying agents, trade organizations, and consumers.
The July 2013 OIG audit also identified a need for this rulemaking, and AMS concurred with this finding.
The OIG audit of organic milk 1 The July 2013 OIG audit report on organic milk operations may be accessed at the following website: http www.usda.gov/oig/webdocs/016010002-32.pdf.

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operations found that the interpretation and implementation of the origin of livestock requirements differed across producers and certifying agents. As a result, organic milk producers may have faced materially different organic production requirements based on their particular certifiers interpretation of the National Organic Programs NOP
origin of livestock requirements. AMS
agrees with OIGs recommendation that the regulations should be revised to clarify the origin of livestock requirements and ensure consistent application of the requirements by certifying agents.
As described at the beginning of this SUPPLEMENTARY INFORMATION section, AMS published in 2015 a proposed rule to revise the origin of livestock regulations. The public comments received on the proposed rule in 2015
and during the reopened comment period in 2019 indicate there remains a need for rulemaking in this area.
Of the comments received by AMS on the 2015 proposed rule, a large number were submitted by producers and consumers of organic dairy products and groups representing producers and consumers. These commenters generally expressed a desire for AMS to establish and enforce clearer rules for organic dairy production. They expressed that organic dairies should raise animals organically from birth and not be allowed to cycle animals in and out of organic production i.e., by continually transitioning animals.
NOPs experience is that because organic products cannot be readily distinguished from nonorganic products based on sight inspection, buyers rely on process verification methods to ensure that organic claims are true.
Within the economics literature, organic food products are credence goods, or goods with characteristics that are valuable but are difficult to verify, both before and after purchase.2 3 4 Foods certified under USDAs NOP, including milk, have a common standard that specifies production practices, such as dairy herd pasture requirements, permitted feeds, and permitted use of antibiotics and hormones, that cannot 2 Caswell, Julie A. and Eliza M. Mojduszka. 1996.
Using Informational Labeling to Influence the Market for Quality in Food Products. American Journal of Agricultural Economics. Vol. 78, No. 5:
12481253.
3 Zorn, Alexander, Christian Lippert, and Stephan Dabbert. 2009. Economic Concepts of Organic Certification. Deliverable 5 of the EU FP7
CERTCOST Project: Economic Analysis of Certification Systems in Organic Food and Farming.
4 Michael Darby and Edi Karni, Free Competition and the Optimal Amount of Fraud Journal of Law and Economics 1619731:6788.

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