Court Dismisses Pratum Farm's Challenge to USDA's SOE Provisions

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Court Dismisses Challenge to Strengthening Organic Enforcement Rule

by: Food and Drug Law at Keller and Heckman of Keller and Heckman LLP - The Daily Intake

Wednesday, October 16, 2024

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On September 30, 2024, the U.S. District Court for the District of Oregon dismissed a complaint filed by Pratum Farm, LLC which challenged the Strengthening Organic Enforcement (SOE) provisions regarding certification of “grower groups” allowing for inspection of a sample of growers from the grower group, as opposed to inspection of every grower.
Grower groups are certified at a group level, and under the SOE rule, inspection by a USDA-accredited certifier is required for “at least 1.4 times the square root or 2% of the total number of producer group members, whichever is higher.” This equates to at least 10 members in a 50-member group (20% inspection rate), 14 members in a 100-member group (14% inspection rate), or 31 members in a 500-member group (6.2% inspection rate). The larger the group, the lower the minimum inspection rate. Other farms within the group that are not inspected by a USDA-inspected certifier are required to be inspected for compliance by a designated employee of the grower group.
Plaintiff alleged that the grower group certification regulation (7 CFR 205.403(a)(2)) is contrary to the Organic Foods Product Act’s provision for “annual on-site inspection” of organic farms. (7 USC 6506(a)(5)). Plaintiff further alleged that it had suffered harm because (1) the USDA organic seal acted as a kind of license that had been degraded through lack of enforcement, and (2) it was placed in a competitive disadvantage, as the rule had allowed other growers to sell fraudulent organic product on the U.S. market. Plaintiff is a small farm growing hazelnuts and had prompted a Federal Trade Commission (FTC) investigation of Turkish hazelnut growers.
However, the Court dismissed the complaint for lack of injury (i.e., standing) because the argument that Plaintiff was injured as a licensee (of the organic seal) was speculative and because Plaintiff had not shown that it had been injured by the regulation. On the contrary, the Court held that the injury it alleged could be attributed to the “unlawful action of third parties.”