On April 5, 2022 the Agricultural Marketing Service (AMS), an agency within the United States Department of Agriculture (USDA), published a final rule amending the origin of livestock (OOL) requirements for dairy animals under the National Organic Program (NOP). Specifically, the final rule clarifies that an organic dairy cow is a cow that has been under continuous organic management for its entire life and during the three months prior to its birth. The final rule allows nonorganic dairy farms to transition into organic production, but a farm can only transition its herd one time. The final rule prohibits farms from purchasing “transitioned” cows versus life-long organic cows. In some instances, however, the regulation allows farms to apply for a variance to purchase “transitioned” cows. This blog post first defines some important terms used in the final rule, then offers a brief history of the OOL regulations for dairy cows, and then discusses the changes made to the OOL regulations for dairy cows.

Important Terms

There are many important terms used in the OOL section of the organic regulations. Although only some of the following terms are defined in the organic regulations, all are important for understanding the OOL requirements for dairy cows. These terms include:

• “Breeder stock” is defined as “female livestock whose offspring may be incorporated into an organic operation at the time of [the offspring’s] birth.” 7 C.F.R. § 205.2 (2022).
• “Herd” refers to an operation’s entire animal stock, not smaller sub-groups or “distinct herds” of an operation’s animal stock. See 87 Fed. Reg. 19741 (April 5, 2022).
• “Producer” is defined as “a person who engages in the business of growing or producing food, fiber, feed, and other agricultural-based consumer products.” 7 C.F.R. § 205.2 (2022). Many producers may be associated with a single operation.
• “Replacement and expansion dairy animals” and similar terms refer to “the animals brought onto a farm to replace the animals that die or that are removed from the farm for other reasons.” 87 Fed. Reg. 19742 (April 5, 2022).
• “Third-year transitional crops” is defined as “crops and forage from land included in the organic system plan of a producer’s operation that is not certified organic but is in the third year of organic management and is eligible for organic certification in one year or less.” 7 C.F.R. § 205.2 (2022), see also 87 Fed. Reg. 19746 (April 5, 2022).
• “Transitioning” refers to the process of converting a herd or animal from conventional or nonorganic production to organic production. The transitioning period is 12 months, and only after the period is complete can farms label milk from transitioned animals as organic.
• “Transitioned animal” refers to an animal “that has not been under continuous organic management from the last third of gestation [i.e., three months prior to birth]; offspring born to a transitioned animal that, during the last third of gestation consumes third-year transitional crops; and offspring born during the one-time transition exception that themselves consume third-year transitional crops.” 7 C.F.R. § 205.2 (2022), see also 87 Fed. Reg. 19746 (April 5, 2022).

History

Congress passed the Organic Foods Production Act (OFPA) in 1990 to create “national standards governing the marketing of [organically produced] agricultural products,” to assure consumers that “organically produced products meet a consistent standard,” and to facilitate “interstate commerce in fresh and processed [organic] food”. 7 U.S.C. § 6501. The OFPA mandated AMS to finalize regulations governing organic food production.

Although AMS published a few proposed rules in the decade prior, on December 21, 2000, AMS finalized the organic regulations. Among the many provisions of the final rule, one was the original OOL regulation. The original OOL regulation required dairy farms to organically manage their cows for at least a year prior to labeling their milk as organic. However, the final rule included an exception, often referred to as the “80/20 rule”, which allowed “entire, distinct herd[s]” to feed cows 80% organic feed and 20% non-organic feed for the first 9-months. For the remaining three months of the 12-month transitioning period, dairies were required to feed cows 100% organic feed. The final rule also provided that “once an entire, distinct herd has been converted to organic production, all dairy animals shall be under organic management from the last third of gestation.” 7 C.F.R. § 205.236(a)(2)(iii) (2000).

In 2005, the United States District Court for the District of Maine found the 80/20 rule contrary to the OFPA and in excess of AMS’s rulemaking authority. See 87 Fed. Reg. 19744, See also Harvey v. Johanns, Civil No. 02-216-P-H (Consent Final Judgement and Order, June 9, 2005). This court order prompted Congress to amend the OFPA. In an appropriations act passed in 2005, Congress added a section to the OFPA which states “crops and forage from land included in the organic system plan of a dairy farm that is in the third year of organic management may be consumed by the dairy animals of the farm during the 12-month period immediately prior to the sale of organic milk and milk products.” 7 U.S.C. § 6509(e)(2)(B). As a result of the court order and statutory change, AMS published a final rule on June 7, 2006, that eliminated the 80/20 rule and added a provision that allowed transitioning dairies to feed third-year transitional crops. This rule also preserved the language “once an entire, distinct herd has been converted to organic production, all dairy animals shall be under organic management from the last third of gestation.” 7 C.F.R. § 205.236(a)(2)(iii) (2006).

In 2013, the USDA Office of the Inspector General (OIG) conducted an audit of the NOP. The OIG audit found inconsistencies in how certifying agents were interpreting and implementing the OOL requirements for dairy animals, specifically, the use of the term “distinct herd”. According to the audit report, half of the certifying agents that OIG interviewed “allowed organic herds to continue to be transitioned and producers to add cattle to organic herds while [the other half did] not allow additional conversion of conventional cattle to organic status.” In other words, the OIG audit found that some certifying agents interpreted the term “distinct herds” to refer to sub-groups of an operation’s entire herd and allowed operations to continuously add transitioned “distinct herds” into the larger operational herd. Meanwhile, other certifying agents were interpreting the regulations to allow a farm to transition its entire herd only once. The OIG report expressed that this inconsistency could put consumer confidence in the organic milk certification process at risk.

Aware of this inconsistency, AMS published a proposed rule on April 28, 2015. This proposed rule attempted to clarify that a farm could transition its herd only once, and after the one-time transition was complete, producers could seek exceptions from certifying agents. After receiving 1,371 comments in 2015, AMS re-opened the comment period in 2019 and received another 746 comments. Later in 2019, Congress, through the Consolidated Appropriations Act of 2020, mandated AMS to publish a final rule on OOL for dairy no later than 180 days after December 20, 2019. AMS missed this deadline. AMS re-opened the comment period on the proposed rule on May 12, 2021, and received another 486 comments. AMS published the final rule on April 5, 2022.

The Final Rule

The final rule states that its purpose is to clarify the requirements for organic dairy production. The rule’s purpose statement explains that the rule “specifies that a nonorganic dairy may transition to organic production on a one-time basis, and once the transition is complete, the operation must not transition additional nonorganic animals to organic production or source transitioned animals.” Therefore, if an organic dairy farm wishes to purchase replacement or expansion animals, the farm must ensure that the animals were raised under organic management for their entire lives and during the three months prior to their birth. Farms will likely be able to verify this because the rule’s record keeping provision requires producers to keep records of all organically managed and transitioned animals.

When a dairy farm transitions into an organic operation, there are a few key provisions it should keep in mind. First, all animals must complete the transition at the same time. Second, although the milk of transitioned animals can be sold as organic, the farm cannot sell the other products (such as meat, hide, or gelatin) as organic. However, if an animal has been under organic management since three months prior to its birth, then its meat, hide, and other non-dairy products can be labeled as organic. Third, non-organic breeder stock can give birth to organic calves as long as the breeder stock is fed 100% organic feed for the last three months of her pregnancy and while nursing her calves.

The consequence of this rule is that cows that were a part of the herd when the dairy transitioned are considered transitioned animals and cannot be sold to other organic dairies. However, the rule allows a farm wanting to purchase transitioned animals the opportunity to do so if the Administrator of AMS approves the farm’s application for a variance. However, the final rule limits which operations can obtain variances. A dairy farm can only obtain a variance if it falls under the Small Business Administration’s definition of a small business, which is an independent business having fewer than 500 employees. Additionally, the final rule states that the variance provision was “specifically crafted to address concerns about intergenerational transfers, forced sale or bankruptcy proceedings, and liquidity needs of dairy operations ceasing operations that may be hampered by the restrictions on the sourcing of transitioned animals.” Ultimately, the final rule only allows farms to obtain a variance to purchase transitioned cows if the farm selling the cows has filed for bankruptcy, or the transaction is an intergenerational transfer.

Conclusion

AMS stated that its regulatory objective in finalizing the OOL regulation for dairy animals was “to increase the number of livestock that are managed as organic throughout their lives.” To achieve this objective, the final rule allows conventional dairy farms to transition into organic dairy farms only once. Once a farm transitions into organic dairy production, the final rule prevents it from purchasing any transitioned replacement or expansion animals. Instead, all replacement and expansion animals must be organic animals. However, small dairies wishing to purchase transitioned cows may do so if they apply for and obtain a variance from the Administrator of AMS. With this variance, the farm can only purchase transitioned animals from farms facing bankruptcy or through an intergenerational transfer.

To read the Origin of Livestock for Dairy Animals final rule, click here.

To learn more about the NOP, read the NALC’s Legal Guide to the NOP, here.

Fore more NALC resources on the NOP, visit the NOP reading room, here.

**This article was written by former NALC Staff Attorney Jana Caracciolo.