Lisa Grove, Desk Officer
Office of Management and Budget
New Executive Office Building
725 17th St N.W., Room 725
Washington, DC 20503

and

Don Hulcher
Clearance Officer
USDA-OICO
Room 404W
Jamie Whitten Building, Ag Stop 7602
P.O. Box 96456
Washington, DC 20090-6456

Dear Ms. Grove and Mr. Hulcher:

In accordance with the request for comment pertinent to the Paperwork Reduction Act section of the proposed organic rule published in the Federal Register (Vol. 62, No 241) we are offering the following observations. These comments are submitted on behalf of Farm Verified Organic Inc., a private certification company, located in Medina, N.D., that has provided certification services both domestically and internationally for almost twenty years. Our client base includes over 2,000 growers and handlers of organic product.

First, it is our firm opinion that the proposed organic rule needs to be drastically reworked to bring it into compliance with the needs of the organic industry and the intent of Congress as it was articulated in the Senate Report which accompanied the Organic Foods Production Act of 1990. Based on conversations we have had with colleagues around the country, ours appears to be an industry wide opinion. In our humble opinion, it would therefore be a waste of OMB's time to put a lot of effort into judging the adequacy of the paperwork Reduction Act section of this rule as it currently stands.

Nevertheless, we would like to offer the following general observations about the paperwork Reduction Act portion of the Rule.

First, we believe that USDA severely underestimated the work that private certifiers do to achieve credible and reliable certification of producers and handlers of organic food. There is, for example, no recognition in the rule of the separation of functions (standard setting, inspection, decision-making, and oversight) which is so critical to reliable certification results. The recognition that such separation of functions is critical was learned in the industry through many years of experience. While there is still some certification taking place, internationally, that ignores such separation of functions, it will, in the opinion of most industry analysts, be short lived, because it does not provide adequate guarantees against conflicts of interest and errors and omissions. In our judgment the separation of functions is absolutely critical if USDA is to have a reliable certification system.

Second, the Rule does not recognize the ongoing communication with growers and handlers that accompanies any competent certification work. The rule seems to imply a simple annual inspection and decision, that being the end of the matter. In our twenty years of experience this is far from reality. First there are the pre-application conversations, walking a client through the steps they will need to take to prepare for inspection. Then there is the administrative work connected with setting up the inspection, making sure inspections in a geographic region are adequately coordinated so that inspections are efficiently organized. Failure to do this important task results in duplication of travel and time spent by inspectors. Then there is the follow up communication, making sure farm plans are complete and clear, obtaining additional information so that all files are complete before the Certification Committee reviews the files to arrive at a certification decision, etc. etc.. Again, based on our experience, without such coordination and administrative support, certification can be time-consuming and inefficient and produce less than satisfactory results.

Such communications tasks continue throughout the certification process, including audits and post inspection education. None of these communications tasks, together with the files that need to be kept concerning them, seem to be recognized in the rule.

We believe that these, and many other services that certifiers must perform to achieve reliable certification have been overlooked by USDA, and that accounts for their drastic underestimation of the costs of certification in their "summary of the costs of the proposed rule". (p. 65854). Again those cost estimates seem to be based on the simple tasks of inspection, and decision on the inspection, rather than the full services necessary to obtain credible certification. Nor do the costs reflect all of the overhead costs of maintaining a certification program. Such costs include personnel, equipment, rent, errors and omissions insurance (which in itself costs certifiers anywhere from $5,000 to $15,000 annually), etc. Again, these costs are unavoidable if certifiers are to uphold the public trust in the certification label and protect themselves in case of law suits, let alone "hold the Secretary harmless," as the rule requires.

We also suspect that USDA when it developed its summary of costs it did not take into account the enormous amount of volunteer work that most private certifiers use. Furthermore we expect that these volunteers will no longer be willing to perform such volunteer work if private certifies are transformed into extensions of USDA in the manner that the rule proposes.

We also do not believe that USDA has adequately researched the new costs that will be added to certification as a result of the more extensive residue testing that the rule requires. How much more will this cost the industry and who will pay? Surely growers, who historically have received the smallest share off financial return, should not be burdened with the whole cost. These issues remain very unclear in the rule, and so costs cannot be adequately determined.

We also believe that the rule's requirement to transfer a ton of paperwork from the certifier to USDA for their files, which not only would give USDA a de facto decision responsibility, which the Senate Report reserves for certifiers, but is unnecessary. There is no public gain from such a paper blizzard transfer. If accreditation evaluations are thorough, there is no reason to burden certifiers or USDA personnel with such duplication. Such transfer of documentation should only be necessary in cases of appeal or when certifiers go out of business.

We further believe that the rule's intent to involve USDA in defining and enforcing "acceptable insurance coverage" for certifiers is an unnecessary intrusion and may unnecessarily raise costs. This is an area where we should let competition and the free market work. A simple requirement that certifiers carry adequate insurance and annual confirmation that their insurance is continued in force would be adequate.

We do believe that there are ways to simplify and streamline much of the record keeping work of certification without sacrificing quality. The most obvious improvement will come with computerization of the inspection/record-keeping process. Several private certifiers are in the process of making this transition, and hope to have their whole systems on electronic mode within the next year or so. Since most private certifiers are undercapitalized they have not been able to move on this front as quickly as many would have liked. Furthermore, the shift to electronic records will, of course, require additional training of staff and inspectors.

We also believe that the estimated costs for accrediting certifiers is inflated and not well thought out. The rule implies that costs will be shared equitably, but that would require an information base which is not there. In fact there are few details in the rule that would indicate just how accreditation will work so there is no way to project information needs or costs.

It is important to point out that certifiers, like Farm Verified Organic Inc., who have been accredited by private accreditation entities have been accredited for less cost than the cost estimate proposed in the rule, despite the fact that private accreditation evaluations include spot visits to farms and handlers of the certifier (in our view a critical part of reliable accreditation). The proposed rule seems to suggest a very lean evaluation process that does not include such spot visits.

The cost discrepancies between private accreditation and those proposed by USDA would seem to indicate, once again, that the private sector could perform this task more efficiently than government bureaucrats. If that is the case, perhaps USDA should consider privatizing the accreditation function, or contracting the function to a private accrediting entity. In our view such privatization could reduce costs, streamline and simplify the government's role, and reduce the risk of having the accreditation process politicized.

We hope that these comments are helpful to OMB and USDA, as they continue their work on refining the rule.

As always we stand ready to share our experience and expertise in this field with government officials.

1/13/98