By Lisa M. Campbell, Lisa R. Burchi, and Timothy D. Backstrom

On September 19, 2016, the U.S. Environmental Protection Agency’s (EPA) Office of Inspector General (OIG) issued a report, EPA Needs a Risk-Based Strategy to Assure Continued Effectiveness of Hospital-Level Disinfectants, the result of OIG’s review of EPA’s Antimicrobial Testing Program (ATP) to “determine whether the program ensures the efficacy of EPA-registered hospital sterilants, disinfectants, and tuberculocides (“hospital-level disinfectants”); and to evaluate options for improving the ATP.”  OIG found that the ATP “does not assure that hospital-level disinfectant products continue to be effective after they are registered,”  specifically that:

• Once the EPA tests a product and it passes, it is listed as Agency Confirmed Efficacy on the agency’s website and is typically not tested again; the long-term efficacy of the product cannot be assured.
• EPA relies on manufacturers to voluntarily submit product samples for testing. In the last three years, out of the approximately 300 registered hospital disinfectant products that have not been tested, manufacturers submitted only 12 samples to EPA for ATP efficacy testing.

Importantly, however, OIG concludes: “Although the program as currently designed and conducted does not assure that most hospital disinfectant products continue to be effective, at this point it is redundant and unnecessary to make adjustments, since the EPA is concurrently having the products re-registered.”

OIG makes two major recommendations:

1. EPA should suspend administering the current Antimicrobial Testing Program until completion of the one-time re-registration process.
2. EPA should develop a risk-based antimicrobial testing strategy to assure the effectiveness of public health pesticides used in hospital settings once products are in the marketplace. At a minimum, OIG states, the strategy should:

• Include a framework for periodic testing to assure products continue to be effective after registration.
• Define a program scope that is flexible and responsive to current and relevant public health risks.
• Identify risk factors for selecting products to test.
• Identify the method to be used for obtaining samples for testing.
• Designate a date to commence risk-based post-registration testing.

In its response, EPA agreed with OIG’s recommendations, and stated it will develop a plan to coordinate and implement the discontinuation of the present-day program, with the closure of the ATP program to take place by November 2017.  EPA also stated that by December 2018 it plans to develop a risk-based strategy to assure the effectiveness of public health pesticides used in hospital settings once products are in the marketplace.  

Registrants of the affected products should monitor closely the development of EPA’s plans both to discontinue the program and to establish this new risk-based strategy for assuring product efficacy.

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By Lisa M. Campbell, Lisa R. Burchi, and Margaret R. Graham

On September 16, 2016, the U.S. Environmental Protection Agency (EPA) announced it settled an enforcement matter with Syngenta Crop Protection, LLC (Syngenta or Respondent) via a Consent Agreement and Final Order (CAFO) concerning EPA’s allegations that Syngenta violated the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and EPA’s Pesticide Container and Containment Rule (PCCR).  The investigation took place over three years, starting in August 2012 and concluding in January 2015.  The multi-regional investigation which took place over three years, from August 2012 to January 2015, was conducted by EPA Regions 4, 5, 7, and 8, and found violations in six states:  Ohio, Colorado, Iowa, Kansas, Michigan and Missouri.

The CAFO listed the alleged violations in three parts:

1. Failure to have repackaging agreements and failure to maintain records concerning the repackaging agreements:  In the CAFO, EPA states that it identified numerous and separate occasions when Respondent distributed or sold approximately 19 registered pesticides to approximately 222 refillers “prior to having written repackaging agreements in place with such refillers,” “and/or failed to maintain records of the repackaging agreements with the refillers.”  The requirements for such agreements and record keeping are set forth at 40 C.F.R. §§ 165.67(b)(3), 165.67(d), and 165.67(h).
2. Distribution and sale of misbranded pesticides:  In the CAFO, EPA states that at least seven inspections conducted at different facilities that were refillers of Respondent’s pesticides found pesticides affixed with outdated labels, as well as sales of such products with outdated labels.  EPA states that Syngenta was the registrant of all the products at issue and had provided the refillers with the outdated labels for repackaging the pesticide products in refillable containers or bulk tanks on at least 19 separate occasions.
3. Failure to maintain data submitted for pesticide registration:  In the CAFO, EPA states it conducted an inspection at two laboratories to review compliance with Good Laboratory Practice requirements, and to audit the data for studies submitted by Respondent to EPA to support one of its pesticide registrations.  In both cases, Respondent informed EPA that it did not maintain records or raw data associated with the studies and the laboratories confirmed they did not maintain the records at their facilities.

Syngenta neither admits nor denies these allegations, but has agreed to pay a civil penalty of $766,508, as well as to complete an environmental compliance promotion Supplemental Environmental Project (SEP) within four years at a cost of not less than $436,990.  Specifically, the SEP will involve a four-year educational awareness training and campaign to educate the regulated community on FIFRA regulatory compliance requirements pertaining to the PCCR.  The training will focus on the requirements relevant to bulk pesticide containers, containment, labels, storage, transportation, delivery, clean-out, repackaging agreements, and recordkeeping.  The training is intended to increase awareness across a broad array of businesses that handle pesticides, including registrants, refillers, retailers, commercial applicators, and custom blenders of pesticides.

Discussion

EPA states that the settlement sends “a strong message to pesticide companies to maintain compliance with all federal environmental laws.”  Indeed, the breadth of EPA’s investigation and the ultimate size of the penalty signify EPA’s focus on pesticide violations and, particularly, misbranded pesticides.  EPA in recent years has focused on labeling violations between registrant and supplemental distributor labels and the issues in this case have some similarities, particularly the need for written contacts between registrants and refillers or supplemental distributors, and also the need to ensure that current pesticide labels are provided before repackaging and relabeling take place. 

More information concerning supplemental distributors and repackaging is available in our blog item Registrants Penalized for Actions of Third-Party Pesticide Distributor, our memorandum EPA’s Enforcement Efforts Regarding FIFRA Supplemental Distribution and How to Avoid Noncompliance and in the materials from our webinar EPA's Supplemental Distribution:  Enforcement Actions Are Buzzing:  How to Avoid Getting Stung.

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By Lisa R. Burchi and Margaret R. Graham

On September 2, 2016, the U.S. Environmental Protection Agency (EPA) issued guidance to registrants on the process for making claims against emerging viral pathogens not on EPA-registered disinfectant labels (Guidance).  A draft of this guidance was issued in April 2016 and comments were sought at that time.  More information concerning the draft guidance is available in our blog item EPA Combats Emerging Pathogens Through Updating Guidance for Antimicrobial Pesticide Products.

The current Guidance document, which EPA states “provides general guidance to registrants that can be used to identify effective disinfectant products for use against emerging viral pathogens and to permit registrants to make limited claims of their product’s efficacy against such pathogens,” includes changes incorporated following EPA’s review of the three public comments received in response to that draft.  

The Guidance retains the voluntary two-stage process, but amends the first stage as indicated:

• In the first stage, which may be performed prior to any outbreak, registrants with an eligible disinfectant product may submit a request, via label amendment or during the registration of a new product, to control a specific emerging viral pathogen to add a designated statement to the master label and additional terms to the product registration.  If the product meets the eligibility criteria suggested in this Guidance, [EPA] generally will approve the amendment.  Approval of the amendment would include additional terms and conditions of registration regarding how the designated statement may be published and communicated.

In its response to comments document, EPA responded to several comments, including:

• Changes were made to EPA’s mandated non-label statements to remove certain language that could be considered redundant.
• EPA is developing a coordinated process with the Centers for Disease Control and Prevention for the purpose of providing a more standardized and consistent approach to emerging viral pathogen outbreaks.  Once this process is established, the agency expects to consult with the U.S. Department of Agriculture to develop a similar approach.
• The Guidance document allows for the addition of emerging pathogen claim language to the master label during the new product registration process if the product is eligible.  Additional language has been added to multiple locations in the Guidance document to clarify that the process is appropriate for new product registrations.
• EPA “may consider allowing use of additional modes of claim communication under future versions of this Guidance document, however, hangtags and other promotional materials are not authorized at this time.  Because the statements authorized under this Guidance are pesticidal claims that do not meet the FIFRA registration criteria, it is essential that these off-label claims are not made outside of an emerging pathogen outbreak as described in the Guidance. Accordingly, the Guidance limits these off-label claims primarily to communications outlets that are wholly within the registrant’s control (800 numbers, social media and websites) from which the off-label claims can be immediately removed. Hangtags and other promotional materials directed towards general consumers are largely out of the registrant’s control once the products enter the chain of commerce, and may persist long after the period during which the off-label claims are authorized.”

EPA also notes that this Guidance document “provides general guidance to EPA, pesticide registrants, applicants for pesticide registrations, and the public.  This guidance is not binding on EPA or any outside parties, and EPA may depart from the guidance where circumstances warrant and without prior notice.”

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by James V. Aidala

The threat of the Zika Virus grows every day, and the need for clear information is especially pressing if you are pregnant.  How do you prevent getting infected with the Zika Virus, and what insect repellents are best?  The first question is easy to answer:  public health experts agree that women who are pregnant or who might be pregnant should use insect repellents.  The answer to the second question is not so simple.

I am a former senior official at the U.S. Environmental Protection Agency (EPA), and familiar with how the U.S. evaluates and approves pesticides, which include insect repellents.  It is not easy for the average consumer to know what works and what does not work.  Unfortunately, EPA policies have made this question much more complicated, having made important distinctions between some “natural”-type repellents and other products available in the marketplace.

Years ago, EPA de-regulated a number of natural, non-toxic materials from being subject to the registration requirements of the federal pesticide law (the Federal Insecticide, Fungicide, and Rodenticide Act).  This made sense at the time since garlic, pepper, rotten eggs, vinegar, and other common chemicals are sometimes used as pesticides.  Before de-regulation, these products were also subject to the same requirements as synthetic chemical pesticides with long unpronounceable names (e.g., diethyltoluamide, better known as DEET) which EPA requires to have volumes of efficacy and safety test data.  Being natural does not mean a substance is non-toxic; some natural ingredients are fully evaluated and widely used.  But in the interest of efficient use of resources EPA issued a list of products that could be sold as pesticides, but would not be subject to EPA data requirements and review (EPA calls them “minimum risk pesticides”).

This list of pesticides which are not subject to EPA evaluation, and which are not required to have data which proves they are effective, includes a number of botanical ingredients, such as oil of citronella, geranium, rosemary, peppermint, and many others.  Many of these products can be used as pesticides -- some may work better than others -- and many work for the intended use (example:  rotten eggs, or as EPA refers to them -- “putrescent whole egg solids” -- are used as a deer repellent).

Many of these ingredients have been marketed as “natural” insect repellents, and labeled as “safe” or “non-toxic” using words that will not appear on products where EPA reviews and approves the instructions on the product label.

Here is the bureaucratic distinction which matters greatly to EPA, but will not be understood by consumers:

• If the repellant label includes “public health claims” -- that it repels mosquitoes that may cause a disease (like Zika Virus or West Nile Virus) -- then the product has to have data showing that it works;
• If the product just says “repels mosquitoes,” it is not required to have data that shows it is effective, and may very well be ineffective.

Few, if any, humans outside of EPA label experts realize this important distinction:  if there is no health claim on the label, then it is, in effect, a situation of “buyer beware.” 

What remains:  EPA’s deregulation of these products means it is legal to sell products which do not work, as long as the ingredients appear on the EPA minimum risk pesticides list.

Consumer Reports (CR) recently reported in May of this year on studies conducted on repellents.  Their results:

• Using a “natural” mosquito repellent, with active ingredients such as citronella or clove, lemongrass, or rosemary oils, might seem like a good idea, especially if you’re pregnant or planning to be.
• But five of the six plant-based repellents we tested…lasted one hour or less against Aedes mosquitoes, the kind that can spread Zika.

Not all repellents with the same ingredient are equally effective, and they found that some formulations of the chemical repellents also do not work for very long in their tests.  Some botanical pesticides are effective and have the public health claims on the label (example:  lemon eucalyptus, a botanical ingredient not on the exempt product list, and CR testing did find it to be effective).

To reduce confusion about what works, EPA for years has struggled to correct the situation by trying to impose changes to the requirements for insect repellents.

Unfortunately, to end the confusion about the difference between “repels mosquitoes” and “repels mosquitoes that can cause the Zika Virus,” EPA has to conduct a rulemaking which requires a long and bureaucratic process to complete.  The good news is that EPA is working on such a solution.  The bad news is that they have been working on it for almost ten years and they still have more work to do.  There are details and petitions and proposals and reasons why it has taken so long, but it is the kind of story that gives bureaucracy a bad name.

With the onset and fears about the Zika Virus, however, EPA should make the needed changes immediately to ensure that consumers are not misled into using products which are not proven effective in repelling mosquitoes. 

From a consumer’s point of view, it really is that simple.  Legally, it is more complicated.  In the meantime, EPA should be loud and clear in its communication about the distinction, even if they cannot take immediate action to reduce the confusion.

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By Lisa M. Campbell, Timothy D. Backstrom, and Lisa R. Burchi

On August 12, 2016, a three-judge panel of the Ninth Circuit Court of Appeals issued an order denying the U.S. Environmental Protection Agency’s (EPA) request for an additional six months to decide whether to ban agricultural uses of chlorpyrifos.  The court opted instead to afford EPA a three month extension, stating that “this is the final extension, and the court will not grant any further extensions." 

EPA sought the six month extension on June 29, 2016, to allow time for EPA to complete two scientific analyses that may bear on EPA’s conclusions in the final rule, and to request further public comment before taking final action on a prior proposal to revoke all chlorpyrifos tolerances.  The two analyses that EPA wanted to complete are:  (1) a refined drinking water assessment that may allow EPA “to develop more tailored risk mitigation for some regions of the country,” and (2) an evaluation of the epidemiological data for chlorpyrifos to determine whether EPA should retain the point of departure based on acetylcholinesterase (AChE) inhibition in the proposed rule.

The court concluded that EPA’s request for a six month extension “is not justified in light of EPA’s history in this matter as well as the court’s previous extensions.”  The court stated that EPA’s request was "another variation on a theme 'of partial reports, missed deadlines, and vague promises of future action' that has been repeated for the past nine years,” and that “nothing has changed that would justify EPA’s continued failure to respond to the pressing health concerns presented by chlorpyrifos."

The court ordered EPA to take final action on its proposal to revoke tolerances for chlorpyrifos by March 31, 2017.  A further status report by EPA will be due in November 2016.

EPA’s updated analysis of the epidemiological data for chlorpyrifos will be a matter of considerable interest.  After EPA issued a proposed rule utilizing a point of departure for chlorpyrifos based on AChE inhibition, EPA issued a blanket determination based on the epidemiological data for chlorpyrifos in which EPA decided to retain the Food Quality Protection Act (FQPA) safety factor for all organophosphate (OP) pesticides.  This FQPA determination could cause EPA to conclude that the tolerances for chlorpyrifos must be revoked regardless of the outcome of the refined drinking water assessment. 

EPA later proposed to use an alternative point of departure for chlorpyrifos based on biomonitoring data from one of the chlorpyrifos epidemiology studies, but the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Scientific Advisory Panel (SAP) met on April 19-21, 2016, and recommended against this new approach.  In its request for an extension, EPA stated that the FIFRA SAP might recommend a “hybrid approach” to adjusting the point of departure for AChE inhibition.  The FIFRA SAP meeting minutes do not appear to include such a hybrid recommendation.

In a related development, EPA has reached an agreement with the Columbia Center for Children’s Environmental Health (CCCEH) regarding the release of raw data from one of the chlorpyrifos epidemiology studies.  During the FIFRA SAP meeting, concerns were raised regarding use of the CCCEH study without access to the underlying raw data.  In an April 19, 2016, letter to Dr. Linda P. Fried, Dean of the Mailman School of Public Health at Columbia University, EPA requested that CCCEH provide access to the underlying data.  In her response dated May 18, 2016, Dr. Fried offered to work with EPA “to determine if we can develop one or more data sets that can be properly de-identified, consistent with our obligation to protect the privacy of our research subjects, and that will also enable EPA to conduct its own analyses in order to address its transparency goals” or, in the alternative, offered to allow EPA staff to review the original data “in a secure data enclave onsite at Columbia.”  In its June 27, 2016, response, EPA stated that the offer to allow EPA staff to review the underlying data at a secure site did not resolve issues concerning the transparency of EPA’s analysis.  This correspondence is available in EPA Docket ID EPA-HQ-OPP-2008-0850. While EPA maintained it is “unnecessary” for CCCEH and EPA to develop redacted data sets, EPA accepted CCCEH’s offer to develop such data sets.

Commentary

EPA’s request for a six month extension was filed on June 29, 2016, two days after it accepted the offer by CCCEH to develop redacted data sets for the CCCEH epidemiology study.  Moreover, the FIFRA SAP meeting minutes issued on July 20, 2016, do not appear to provide the guidance that EPA had expected concerning a potential “hybrid” approach to adjusting EPA’s proposed point of departure for AChE inhibition.

Given the lesser extension granted by the court, it is questionable whether EPA will have sufficient time to review adequately the redacted underlying data sets offered by CCCEH, or even to determine whether those redacted data sets are adequate for this review, and to make any determination based on such data before EPA issues a supplementary proposal based on the refined drinking water assessment and the updated epidemiology assessment.  The court has stated that it will entertain no further extension requests, so EPA must complete its work expeditiously to allow time for comment before final action is due on March 31, 2017.

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By Lisa M. Campbell and Lisa R. Burchi

The U.S. Environmental Protection Agency (EPA) today released a pre-publication version of a Federal Register notice to be issued on August 16, 2016, extending the deadline to submit comments on draft Pesticide Registration Notice (PRN) 2016-X from August 15, 2016, to September 14, 2016.  A discussion of draft PRN 2016-X, which proposes to update Section 5 of PRN 97-2, and to clarify and update criteria by which EPA classifies crops as “minor use,” is discussed in our blog item EPA Solicits Comments on Updated Method for Establishing Economic Minor Use. 

In the notice extending the comment period, EPA noted that the current comment period is “one of the busiest times of year for pest control experts” and provides an extension that “will allow them extra time to complete their review and comment on the PR Notice.” 

There is one comment that already has been submitted by the U.S. Department of Agriculture (USDA), which EPA stated it consulted prior to releasing the draft PRN 2016-X.  In its comments, USDA states:

• Regarding acreage cutoffs, USDA supports EPA’s use of acreage estimates from the USDA Agricultural Census, as it is the “most reliable and comprehensive public source for such information in the country.”
• Regarding EPA’s proposal to apply a seven percent discount rate, USDA recommends that EPA be “open to using supplemental information in determining whether or not an alternative discount rate should be considered.” 
• Regarding EPA’s proposal that all cases be evaluated using values for costs that range from 60 to 85 percent of gross revenue, USDA requests that EPA provide its rationale as to why this range was chosen.  USDA states: “Although USDA understands that EPA is attempting to reveal the ratio of gross revenue to cost associated with the minor use rather than across an entire company, one could assume that a rational company would not pursue registering a minor use if the ratio of costs to gross revenue was exceedingly higher than the average standard ratio for the company.  Qualitative information, as suggested by EPA, could then be used to further refine the estimate for this ratio.”
• Regarding EPA’s proposal to use study cost estimates provided by independent laboratories, USDA notes there are instances where data can be significantly more expensive than what would be expected generally and, thus, recommends that EPA “be open to additional, verifiable data a registrant wishes to submit that may indicate that its cost of data generation differs from EPA's standard estimates.”  USDA also suggests that EPA “consider making the cost estimates it is using for individual tests available publically to aid registrants in determining whether or not they need to submit alternative incurred costs for studies they have conducted.”

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By Lisa M. Campbell and Lisa R. Burchi

The comment deadline of August 15, 2016, is approaching on the June 14, 2016, notice of availability of the draft Pesticide Registration Notice (PRN) 2016-X issued by the U.S. Environmental Protection Agency (EPA), in consultation with the U.S. Department of Agriculture (USDA).  Draft PRN 2016-X proposes to update Section 5 of PRN 97-2, and to clarify and update criteria by which EPA classifies crops as “minor use.”

Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Section 2(ll) defines “minor use.”  One of those definitions at Section 2(ll)(2) defines a minor use, in part, as one that does not provide “sufficient economic incentive.”  Current guidance in PRN 97-2 defines a use as minor under FIFRA Section 2(ll)(2) if gross revenues at full market potential do not cover the costs of registration.  EPA’s concern with this policy is, in part, that:

• [T]he method in PRN 97-2 does not accurately measure economic incentive to register pesticides.  Gross revenue will overstate the registrant’s true return on the cost of registration while reliance on a single year of sales will understate the total stream of revenues.  The direction of bias is unknown.  Most importantly, it does not account for the difference in timing between costs of registration and future returns.

EPA states that the draft PRN is intended to clarify and update “its interpretation of how economic minor use status under FIFRA section 2(ll)(2) can be determined.”  Under the proposed PRN, EPA would interpret a minor use as one that “does not provide sufficient economic incentive to support the … registration” when “the registrant would not obtain sufficient revenues from sales of the pesticide to justify the cost of registration.”  Specifically, EPA states:

• This PRN describes the revised approach to interpreting economic minor use based on the concept of the registration of a pesticide as an investment.  The registrant incurs costs associated with applying for a registration while the registration once granted allows the pesticide product to be sold, generating a stream of revenue in the future.  This approach provides several measures by which EPA can assess whether there are sufficient incentives for the registration of a pesticide use.  These measures include the net present value of returns, the benefit-cost ratio, and the internal rate of return, each of which provides insight into the magnitude of the incentive to register or maintain the registration of a pesticide.

With regard to calculating the net present value (NPV) of the investment (in registration), EPA provides the following formula: 

In the draft PRN, EPA provides guidance on the four primary components to conduct a quantitative analysis to estimate NPV, the benefit-cost ration (B/C), and the internal rate of return (IRR).  These components are:  (1) costs of registration (e.g., cost to generate data necessary to show the product can be used safely for the proposed use, PRIA fees, cost to prepare and submit an application); (2) net revenues from sales of the pesticides; (3) the discount rate; and (4) the time of investment.  EPA states that, in general, “if a use of a pesticide has a negative NPV, a B/C ratio < 1, and IRR that is lower than average for a particular sector, it will be considered to have insufficient economic incentives to pursue registration.”  EPA is not setting a firm threshold, however, and will review minor use determinations on a case-by-case basis. 

For a use that the applicant requests a designation of economic minor use under FIFRA Section 2(ll)(2), the applicant should include the following types of information in writing with the application:

• The type of registration action for the specific site/use;
• A list of the registration data requirements for the specific site/use;
• Information to inform future sales, which might include the target pest(s), the application rate, the extent of the pest problem;
• Information to inform the sales price of the pesticide, which might include the price of relevant competitors; and
• A narrative addressing at least one of the criteria described in FIFRA section, 2(ll)(2)(A-D).  This summary should contain, at least, a brief description of how the pesticide will be used including the target pest(s) and alternatives.

Applicants may also wish to include the following to improve EPA’s understanding of the incentives they face in producing and/or registering a pesticide for the specific use:

• A narrative describing any relevant factors that influence the cost of manufacturing and, therefore, the net revenue from product sales;
• A narrative describing any relevant factors that influence the fixed costs of registering and marketing the pesticide;
• A narrative describing any aspects of the market that might limit or enhance sales; and
• A narrative describing any other factors which affect the economic incentive to register this use.

Commentary

EPA states its intent in revising the method and criteria for determining when a potential minor use does not present a sufficient economic incentive is because the current “outdated approach could prevent applicants from obtaining the incentives for registration that should be available to them.”  EPA further states that it is interested in developing an approach that is “simple and transparent” because a burdensome process would be “an added deterrent to registration.”  The draft PRN would indeed seem to expand the ability of registrants to seek minor use status; since EPA will be making determinations under this revised approach on a case by case basis, how broadly EPA will apply these criteria and what minor use approvals it makes will only be seen over time, however. 

It is important to note that EPA’s proposed policy has potential implications beyond minor use determinations.  For example, EPA’s discussion of the elements of the costs of registration as well as how those costs for applying for a registration are a part of the registrant’s investment could have implications in FIFRA data compensation contexts:

• The cost of applying for registration can be viewed as an investment toward the eventual marketing of a registered product.  Applying for registration is the final step in the process of developing and marketing a pesticide.  The costs of applying for registration include the costs of generating data that EPA requires for registration, the registration fees, and the cost of paperwork burden from the registration process.  In terms of “economic incentive,” the main question to answer is whether the investment in registration of a particular use is worthwhile to the registrant, that is, whether future returns from sales are sufficiently high to justify the cost of obtaining/maintaining a registration. 

The proposal also is significant because it can be applied to conventional pesticides, biopesticides, and antimicrobial pesticides to determine whether they meet the definition of minor use.

Comments are due August 15, 2016.

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By Lisa M. Campbell and Lisa R. Burchi

On July 29, 2016, the Environmental Appeals Board (EAB or Board) issued its Final Decision and Order (Order) upholding the Administrative Law Judge (ALJ) Initial Decision and an earlier order denying Bayer CropScience LP and Nichino America, Inc.’s (BCS/NAI) Motion for Accelerated Decision that held that the U.S. Environmental Protection Agency (EPA) was authorized to cancel the conditional flubendiamide registrations under Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Section 6(e) and did not need to provide BCS/NAI the full Section 6(b) cancellation process.  The Board also upheld EPA’s determination prohibiting BCS/NAI from the continued sale, distribution, and use of existing stocks of flubendiamide products, but found that EPA’s determination to prohibit the continued sale and distribution of existing stocks of flubendiamide end-use products by distributors and retailers other than BCS/NAI was not supported by the record.

Additional information regarding this case is available in our blog items EPA ALJ Issues Initial Decision in Bayer Flubendiamide Cancellation Proceeding, EPA ALJ Denies Bayer’s Motion for Accelerated Decision and Flubendiamide Registrants and EPA File Post-Oral Argument Briefs.

The EAB summarized BCS/NAI’s arguments concerning the overall proceeding with two questions: (1) whether EPA has properly initiated this cancellation action under Section 6(e) rather than Section 6(b); and (2) if the proceeding is properly initiated under Section 6(e), whether BCS/NAI can nonetheless challenge the lawfulness of a condition in their registrations in a Section 6(e) proceeding.

With regard to the first issue, the Board found that EPA appropriately commenced the proceeding under the expedited cancellation procedures set forth in FIFRA Section 6(e) because two criteria were satisfied:  (1) the registration must have been issued as a conditional registration under FIFRA Section 3(c)(7); and (2) EPA must have determined that BCS/NAI failed to satisfy a condition of that registration.  The Board found that “neither the plain language of the statute, its structure, nor legislative history” supported BCS/NAI’s argument that if EPA “has made an unreasonable adverse effects finding, FIFRA’s general cancellation provision in section 6(b) trumps section 6(e) and bars the Program from initiating a 6(e) cancellation proceeding, even where the elements for a section 6(e) cancellation are met.”  The Board further stated: “Bayer and Nichino’s argument that section 6(b) takes priority over section 6(e) is inconsistent with the structure and environmental protection goals of FIFRA.”  Instead, EAB states:

• Given Congress’ decision to add an expedited cancellation provision to FIFRA -- separate and independent from section 6(b) -- it is difficult to square FIFRA’s environmental protection goals with Bayer and Nichino’s argument that the Pesticide Program must use the more time-consuming and resource-intensive section 6(b) procedures to cancel a pesticide in circumstances where section 6(e)’s expedited procedures are applicable. That is particularly the case when one considers that, unless the Program issues an “emergency order,” a registrant is allowed to sell and distribute the pesticide during the course of section 6 cancellation proceedings. See FIFRA § 6(b)-(c), 7 U.S.C. § 136d(b)-(c). If the Program were required to initiate cancellation proceedings under section 6(b) instead of under section 6(e), registrants would, in effect, be rewarded with additional time to sell and distribute their pesticides. Had Congress intended such a result, it could have subordinated section 6(e) to section 6(b) when it added the new conditional registration authority (including section 6(e)) to the existing statutory structure in 1978. See S. Rep. No. 95-1188, at 11 (1978) (Conf. Rep.). But Congress did not take such a step. Rather, in creating the possibility of allowing pesticides to be introduced to the market conditionally when they could not meet all the requirements for a general registration, Congress took steps to assure that such pesticide registrations could be promptly canceled when the terms of the conditional registrations were not met.

The Board also found that BCS/NAI could not demand a Section 6(b) cancellation proceeding because they “willingly accepted the termination condition in 2008 and 2009, knowing that it required them to submit a request for voluntary cancellation if the Program were to issue a determination that flubendiamide causes unreasonable adverse effects.”  EAB stated: “Given the language of the conditional registrations, Bayer and Nichino’s affirmative concurrence on that language, and the record of negotiations, we find that Bayer and Nichino willingly agreed to the termination condition, knowing that they were agreeing to an approach that could remove the flubendiamide products from the market rapidly.  Having knowingly agreed to this procedure, they cannot contest it now.”

With regard to the second issue as to whether BCS/NAI can nonetheless challenge the lawfulness of a condition in their registrations in a Section 6(e) proceeding, EAB found that the scope of a Section 6(e) cancellation is “narrowly limited to the following issues:  (1) whether the condition was satisfied, and (2) whether the Pesticide Program’s determination on the appropriate disposition of the existing stocks of the canceled pesticide is consistent with FIFRA.”  The Board found that the facts in this particular case demonstrated that BCS/NAI “had ample opportunity to challenge the lawfulness of the termination condition in a timely and permissible way but failed to do so.”  EAB noted, for example, that BCS/NAI could have declined to accept the registration terms and challenged EPA’s refusal to grant a conditional registration with terms acceptable to BCS/NAI. The Board further found that BCS/NAI understood the consequences of agreeing to the condition at issue and thus “knew, or should have known given the clarity of section 6(e), that any objection they had to the condition giving the Pesticide Program the option to effectively require cancellation without instituting a section 6(b) proceeding could not be raised in a section 6(e) cancellation for failure to comply with the termination condition.” 

As for the specific issues that the Board stated were properly before it in this appeal, it found BCS/NAI did not comply with their obligation to submit voluntary cancellation requests.  The Board rejected arguments that BCS/NAI’s failure to request cancellation is excused because EPA did not meet an important pre-condition to the termination condition by “engaging in dialogue” with BCS/NAI regarding the data and EPA’s conclusions related to that data.  Specifically, the Board found that this objection was not timely raised and thus was precluded, but that even if it had not been precluded, BCS/NAI had failed to establish by a preponderance of the evidence that EPA did not engage in such dialogue.

One aspect of the EPA’s determination that was overturned relates to whether existing stocks can continue to be sold or distributed.  Although the Board upheld as reasonable EPA’s denial of the sale and distribution of existing stocks by BCS/NAI because they violated the termination condition, EAB amended EPA’s existing stocks determination described in the Notice of Intent to Cancel “to allow distributors and retailers other than Bayer and Nichino to sell and distribute end-use flubendiamide products that have been formulated, packaged, and labeled for use and [that] have been shipped or released into commerce to distributors on or before the date of this Final Decision and Order, until those stocks are exhausted.”  EAB instead stated that EPA’s “rationale for denying the sale and distribution of existing stocks by Bayer and Nichino -- because they violated the terms of their conditional registrations -- has limited, if any, applicability to non-registrants.”  Distributors and retailers other than BCS/NAI can continue to sell and distribute end-use flubendiamide products that were formulated, packaged, and labeled for use and shipped or released into commerce to distributors on or before the date of this Final Decision and Order, until those stocks are exhausted.

Commentary

Although the resolution of this case has potential implications for current and future registrations, EPA has acknowledged the unique circumstances of this case, and indicated that it is unlikely that a conditional registration like that issued for flubendiamide will be issued again. If a registrant ever finds itself in a similar position to BCS/NAI, or facing a situation, as EPA has indicated, that seeks a condition of registration that would allow a registration to simply expire, such companies should carefully consider how to proceed, including considering options to challenge the lawfulness of the condition proposed by EPA or to demonstrate that the applicant/registrant is entitled to a general, not conditional, registration.

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By Lisa M. Campbell and Timothy D. Backstrom

On July 20, 2016, the U.S. Environmental Protection Agency (EPA) issued a memorandum attaching minutes from the April 19-21, 2016, FIFRA Scientific Advisory Panel (SAP) meeting, Transmittal of Meeting Minutes of the April 19-21, 2016 Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Scientific Advisory Panel (SAP or Panel) Meeting Held to Consider and Review Scientific Issues Associated with “Chlorpyrifos: Analysis of Biomonitoring Data.”  This SAP was convened to advise EPA regarding the evaluation of biomonitoring chlorpyrifos data from epidemiology studies conducted by the Columbia Center for Children’s Environmental Health (CCCEH).

The minutes indicate that the SAP has significant concerns with EPA’s proposal to use the biomonitoring chlorpyrifos data from the CCCEH epidemiology studies to establish a point of departure (PoD) for chlorpyrifos risk assessment.  The minutes state:  “Because many uncertainties cannot be clarified, the majority of the Panel does not have confidence that the Columbia Center for Children’s Environmental Health (CCCEH) cord blood data on chlorpyrifos concentrations can accurately be used in quantitative risk assessment to determine a Point of Departure (PoD).”  A major source of uncertainty cited by the FIFRA SAP is “the lack of verification and replication of the analytical chemistry results that reported very low levels of chlorpyrifos (pg/g),” because EPA had to impute a finite quantitative value to “a large fraction of cord blood samples included in the analyses presented with levels below [level of detection (LOD)].”  Moreover, some SAP members “thought the quality of the CCCEH data is hard to assess when raw analytical data have not been made available, and the study has not been reproduced.”

The SAP also, however, stated that “both epidemiology and toxicology studies suggest there is evidence for adverse health outcomes associated with chlorpyrifos exposures below levels that result in 10% red blood cell (RBC) acetylcholinesterase (AChE) inhibition (i.e., toxicity at lower doses).”  Nevertheless, it agreed with EPA that “applying additional safety factors to the AChE PoDs to account for a possible noncholinergic mode of action (MOA) would be problematic because of challenges in justifying any particular value for such an adjustment.”

Of note, the SAP concluded that it would be appropriate to use a “10X intra-species extrapolation factor” in any analysis based on the cord blood data.  It also identified other sources of uncertainty that should be considered in such an analysis, including “the inability of single measures of chlorpyrifos concentration in blood to provide information regarding source, frequency, duration and magnitude of exposure, and how these exposures are linked to specific outcomes measured in the CCCEH study participants.”  Although EPA suggested in a Status Report filed in the chlorpyrifos litigation pending in the Ninth Circuit Court of Appeals on June 29, 2016, that the FIFRA SAP might recommend a “hybrid approach” that EPA could use in lieu of a PoD based on AChE inhibition, thereby altering the prior EPA analysis for chlorpyrifos, the SAP minutes do not include a recommendation for such a hybrid methodology.

Commentary

Given the concerns expressed by the SAP regarding EPA’s proposal to derive a PoD from cord blood biomonitoring data collected in the CCCEH epidemiology studies, it may be unlikely that EPA will further pursue this specific approach.  It is less clear whether EPA will be inclined to propose any further adjustments to its existing risk assessment for chlorpyrifos, which utilizes a PoD based on animal AChE data, along with intra-species and inter-species uncertainty factors and an additional Food Quality Protection Act (FQPA) 10X factor.  EPA’s decision to retain the special FQPA factor in its risk assessment for chlorpyrifos will remain controversial, because it is based on an assessment of the value and significance of several epidemiology studies for chlorpyrifos that many in the pesticide industry strongly dispute.  The discussion in the minutes of the uncertainties resulting from the refusal of the CCCEH investigators to provide underlying raw data may provide further support for arguments by industry that EPA should not predicate risk assessments on the epidemiology studies for chlorpyrifos before obtaining and reviewing these data.

More information on the FIFRA SAP and its surrounding legal issues is available in our blog item EPA Requests Six Month Extension of Deadline for Decision on Chlorpyrifos Tolerance Revocation, and more generally on our blog with keyword chlorpyrifos.

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By Lisa M. Campbell, Timothy D. Backstrom, and Lisa R. Burchi

On July 1, 2016, in an administrative appeal of the June 1, 2016, Administrative Law Judge (ALJ) Initial Decision and an earlier order denying Bayer CropScience LP and Nichino America, Inc.’s (BCS/NAI) Motion for Accelerated Decision that held that the U.S. Environmental Protection Agency (EPA) was authorized to cancel the conditional flubendiamide registrations under Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Section 6(e) and did not need to provide BCS/NAI the full Section 6(b) cancellation process, the parties in the case filed post-oral argument briefs.  The briefs were ordered by the Environmental Appeals Board (EAB or Board) following oral arguments held on June 22, 2016, by BCS/NAI and EPA.

Additional information regarding this case is available in our blog items EPA ALJ Issues Initial Decision in Bayer Flubendiamide Cancellation Proceeding and EPA ALJ Denies Bayer’s Motion for Accelerated Decision.

The EAB requested that the parties submit post-order briefs responding to questions raised by the Board during oral argument, and the responses filed by the parties demonstrate their divergent views on issues related to this conditional registration and the process by which EPA sought to cancel such registration.

The specific questions asked by the Board and BCS/NAI and EPA’s responses are as follows:

1(a).  What authority does the Board have in a FIFRA section 6(e) proceeding to consider the lawfulness of a condition of registration, given that section 6(e) proceedings are statutorily limited to two issues:  (1) whether a condition of registration has been violated; and (2) whether EPA's determination with respect to disposition of existing stocks is consistent with FIFRA?

BCS/NAI argues that the EAB must resolve questions about the lawfulness of a condition of registration in determining whether the condition has been violated and to ensure that it has jurisdiction over this proceeding.  BCS/NAI states: “For the EAB to determine ‘whether the … conditions have been satisfied within the time provided’ under FIFRA § 6(e)(2), the Board must necessarily first consider whether the conditions are valid.”  BCS/NAI further argues that its “challenge to the lawfulness of the voluntary cancellation provisions is a challenge to the ALJ’s and EAB’s subject matter jurisdiction over this proceeding, the resolution of which is part of the Board’s inherent authority.”  BCS/NAI argues that the EAB should find that it lacks subject matter jurisdiction to administer this dispute and remand to the Office of Pesticide Programs (OPP).

EPA, in contrast, stated that EAB “lacks the authority to rule on an issue clearly beyond the well-defined and narrow scope of section 6(e).”  If the EAB disagrees with EPA’s position, EPA states that for all the reasons it set forth in its previous motions, “the challenged condition was clearly lawful.”

1(b).  If the Board does possess the authority in a section 6(e) proceeding to consider the lawfulness of a condition of registration, may a third party also challenge the lawfulness of either that condition or any other aspect of the registration?

BCS/NAI argued that the Board’s authority to consider the lawfulness of a condition of registration does not give third parties broad rights to challenge the lawfulness of the condition or all aspects of the registration.  On this point EPA seemingly agrees, stating “While EPA would want to do a more thorough study of relevant case law and legislative history before answering this question definitively, EPA has significant doubts that any third party could challenge any condition of registration in a FIFRA section 6(e) proceeding.”

1(c).  Finally, if the Board were to conclude that the voluntary cancellation condition in the flubendiamide registrations is unlawful, what effect would such a holding have on the registration itself?

BCS/NAI argues that striking the voluntary cancellation provisions would not invalidate the registrations.  Instead, “If the Board concludes that the voluntary cancellation provisions are unlawful, they can be stricken from the registrations and the registrations may continue without consequence other than ensuring that EPA cannot pursue an unlawful process.”  BCS/NAI states that if EPA still wishes to proceed with cancellation, it must do so under FIFRA Sections 6(b) and (c).

EPA takes the position that if the EAB “decides it has the authority under section 6(e) to review the lawfulness of the cancellation condition, and finds it unlawful, the EAB should void the flubendiamide registrations.”  Specifically, EPA states: “If the condition is found to be unlawful, the whole registration must be voided because it has never been found to meet the standard for registration under FIFRA without the cancellation condition.  Although the EAB can rule on the legality of EPA’s actions that are within the scope of this proceeding, the authority to issue a registration on different terms is reserved to OPP.”

2.  FIFRA section 6(e) provides that any hearing on a notice of intent to cancel issued under section 6(e) shall be conducted under FIFRA section 6(d). An order issued after a section 6(d) hearing "shall be based only on substantial evidence of record of such hearing." 7 U.S.C. § 136d(d).  What standard of proof does this provision require? In answering this question, take into account that FIFRA section 16 requires that a substantial evidence standard be applied by a court in reviewing EPA decisions following a hearing, and the Supreme Court's decision in Steadman v. SEC, 450 U.S. 91 (1981).

BCS/NAI argues that the preponderance of the evidence standard of proof applies to orders issued by the EAB after a Section 6(e) hearing.  EPA’s position is that a hearing to address the scope of FIFRA Section 6(e) must be conducted in accordance with FIFRA Section 6(d), which states that an order issued after such a hearing “shall be based only on substantial evidence of record of such hearing.”  

3.  What "conclusions" are covered by the requirement in the flubendiamide conditional registration that EPA "shall engage in dialogue about the data and the Agency's conclusions?" Does EPA's determination on the toxic endpoint level constitute a "conclusion" within the meaning of the registration?

BCS/NAI argues that EPA was required “to not only engage in general dialogue about the data, but also to disclose and engage in dialogue about the Agency’s final decisions and judgments about the data and whether they support continued registration,” including EPA’s unreasonable adverse effects determination and decisions on toxicological endpoints.  Specifically, BCS/NAI states: “It makes sense that a condition requiring good-faith dialogue before demanding cancellation based on an unreasonable adverse effects determination would include dialogue about the final determination. In this case, EPA precluded any opportunity for such dialogue by issuing its determination on the same day as its cancellation demand.”

EPA argues in the first instance that, as the ALJ determined, BCS/NAI did not timely raise the sufficiency of dialogue issue.  If EAB considers this issue timely, EPA provides a summary of EPA’s risk assessment process and argues that “the endpoint selection was one of many components that support the conclusions in the risk assessment, but the endpoint selections were not themselves identified as conclusions in the flubendiamide risk assessments.”

4.  Appellants argue on appeal that EPA presented "new conclusions in the January 29, 2016 Decision and supporting documents that were not discussed with Registrants." Appeal Brief of Bayer CropScience LP and Nichino America, Inc. at 22. If there were new conclusions presented in these documents, what were they, and where in the record are these conclusions detailed?

BCS/NAI argues that EPA presented at least three new conclusions in the January 29, 2016, documents that were not discussed with registrants: (1) EPA disclosed for the first time on January 29, 2016 its determination that “continued use of flubendiamide as currently registered … will result in unreasonable adverse effects to the environment;” (2) “Second, throughout the Decision Memorandum, EPA refers to its conclusions that exposure concentrations based on EPA’s theoretical modeling exceed or will exceed ‘Agency LOCs [levels of concern]’ within certain time periods based on unspecified toxicological endpoints”; and (3) “Third, and perhaps most critically, the Decision Memorandum and supporting documents contain buried within them EPA’s decision to adopt the 0.28 ppb sediment pore water endpoint from the spiked water study, which had been superseded by an endpoint from the scientifically more relevant and sound spiked sediment study, as the sole basis for its cancellation determination.”

EPA rejects Appellants’ argument that there were any new conclusions in its January 29, 2016, decision and supporting documents.  EPA continues to contend that the toxicity endpoint is not a “conclusion” or “new,” instead arguing that risk assessment documents indicate EPA has been relying on the .28 ppb concentration since 2008.

5.  EPA relied upon a toxic endpoint level from the Des-iodo Spiked Water 28-Day Study (MRID 46817023), among other evidence, in its January 29, 2016 unreasonable adverse effects determination for flubendiamide.  What does the record show as to whether Appellants were notified of EPA's intent to use this toxic endpoint level prior to January 29, 2016?

BCS/NAI argued that EPA deliberately thwarted dialogue on the use of the 0.28 ppb endpoint and did not disclose its final decision until January 29, 2016.  While acknowledging that the 0.28 ppb sediment pore water endpoint was calculated back in 2008, BCS/NAI notes that they submitted a spiked sediment study in 2010 based on comments from EPA for its preference for such a study, and that EPA reviewed the spiked sediment study in July 2011 and concluded that it supported a TWA pore water sediment endpoint of 19.5 ppb.  After that, BCS/NAI states:

• [T]he record shows that OPP chose not to notify Registrants at a putative final meeting on December 15, 2015 that it had decided to revert to the 0.28 ppb endpoint; briefed the Assistant Administrator on the case for cancellation using analysis employing that endpoint the very next day; precluded meaningful discussion of the use of the lower endpoint by denying the Agency had made that decision at the January 6, 2016 meeting and presenting the lower endpoint as one endpoint among a “suite” of available endpoints; and deliberately obscured its reliance on the unsound endpoint in its final decision documents issued on the same day as the cancellation demand -- which do not even mention the choice, let alone provide the scientific basis for it.

EPA, in contrast, states that the record shows that EPA “openly and consistently treated the chronic toxicity endpoint from the Des-iodo Spiked Water 28-Day Study (MRID 46817023) as the appropriate regulatory endpoint, and neither withheld information regarding the endpoint, or changed its endpoint selection at any time between 2008 and the issuance of the [Notice of Intent to Cancel].”

6.  FIFRA section 6(f) mandates that voluntary cancellation requests may not be acted upon by EPA until a notice-and-comment procedure has been completed. If Appellants had requested voluntary cancellation of the flubendiamide registrations under section 6(f), could they have challenged EPA's unreasonable adverse effects determination during the notice-and-comment period?

BCS/NAI argued that if registrants had requested voluntary cancellation under Section 6(f), they could not have effectively challenged EPA’s unreasonable adverse effects determination during the notice-and-comment period.  BCS/NAI argues that “in exchange for the opportunity to submit public comments criticizing the lack of scientific support for EPA’s unreasonable adverse effects determination, Registrants would have had to cancel products that they believe should properly remain registered, forgo their statutory rights to a cancellation decision that is subject to interagency review by the Secretary of Agriculture and scientific peer review by the Scientific Advisory Panel and that can be challenged in an administrative proceeding, and, in doing so, potentially jeopardize their ability to seek and obtain judicial review of that decision.”  BCS/NAI states further: “No registrant should be forced to sacrifice its statutory and due process rights in order to raise scientific concerns that EPA is free to ignore. Nor should registrants be held to have lost their rights to challenge the conditions by failing to pursue such an unfavorable path, particularly when the conditions of registration at issue themselves point to the right to invoke and seek relief through the § 6(e) process.”

EPA’s position is that “comments submitted during the section 6(f) comment period would become part of the Agency’s records and, to the extent relevant to EPA’s cancellation decision, could be expected to be part of the administrative record if someone appealed EPA’s decision to approve or deny the voluntary cancellation request to the federal courts.”

7.  Is the doctrine of laches legally applicable to this proceeding? If so, explain how the record supports this conclusion.

A claim can be barred by laches when “the delay in filing the claim (1) is unreasonable and inexcusable and (2) materially prejudices the defendant.” BCS/NAI argued that the doctrine of laches does not apply here, as there was no unreasonable delay by registrants, and there is no prejudice to EPA.  BCS/NAI states that they were justified in not pursuing any of the purported options for an earlier challenge that EPA’s claims were available.  Instead, BCS/NAI chose “to generate the required data and satisfy the substantive conditions of registration, trusting that if the data did not show evidence of accumulation to levels of concern (which they did not), EPA would follow the science and the terms of the PAL and grant unconditional flubendiamide registrations.” 

While EPA agrees that if the proceeding is limited to the scope set forth by Section 6(e), the laches doctrine would not be applicable.  EPA also argues that “if EPA were to determine that the appropriateness of the cancellation condition is an appropriate issue for resolution,” then laches would apply.  To support its position, EPA states that there is “substantial evidence in the record” that BCS/NAI waited almost eight years to challenge the condition of their registration that is now at issue.  EPA further argues that it would be prejudiced because key negotiators of the cancellation condition and the initial registrations are no longer available and “this lack of available witness testimony could materially prejudice the Agency.”

Commentary

The questions posed by the EAB, and the respective responses by BCS/NAI and EPA, indicate fundamental differences regarding the facts and application of the law to this case.  Although the resolution of this case has potential implications for current and future registrations, EPA has acknowledged the unique circumstances of this case, and indicates that it is unlikely that a conditional registration like that issued for flubendiamide will be issued again.

EPA states: “the structure of the flubendiamide cancellation condition was unprecedented, and the flubendiamide experience shows that a condition requiring a registrant to request cancellation pursuant to section 6(f) is significantly less reliable than a condition that would allow a registration to simply expire.  EPA is unlikely to grant in the future a registration with conditions that depend on a registrant requesting cancellation pursuant to section 6(f).”  The statement by EPA that it is more likely in the future to impose a condition that would allow affected registrations “to simply expire” leaves unresolved the question of the rights a registrant would have to contest cancellation based on such an expiration date. 

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By Lisa M. Campbell and Timothy D. Backstrom

In two recent orders issued in the neonicotinoid seed treatment case Anderson v. McCarthy, the U.S. District Court for the Northern District of California declined to take immediate action in response to a motion by the U.S. Environmental Protection Agency (EPA) requesting that the Court dismiss the case for lack of subject matter jurisdiction.  This case involves allegations by a coalition of beekeepers, farmers, and non-governmental organizations (Petitioners) that EPA has incorrectly applied the treated article exemption to seeds coated with neonicotinoid pesticides.

The Court issued an order denying the EPA motion to dismiss on May 13, 2016.  In that order, the Court concluded that factual issues to be resolved in deciding whether a 2013 EPA guidance document constitutes a final reviewable action are so “intertwined” with the substantive issues in the case that it would be inappropriate to try to resolve the jurisdictional issues until after the filing of summary judgment motions.  The Court stated:

• If the 2013 Guidance did consummate a new rule, and thus a final agency action, then defendants clearly violated federal law by failing to comply with rulemaking requirements.  If the 2013 Guidance did not constitute final agency action, then subject-matter jurisdiction is lacking, and the case must be dismissed.

In the May 13, 2016, order, the Court also stated that the decision to defer action on the jurisdictional issues was a “close call,” because “defendants put forth a strong argument in support of dismissal of the lawsuit at the Rule 12 stage.”

On May 23, 2016, EPA filed another motion requesting that the Court clarify the May 13, 2016, order.  In its clarification motion, EPA pointed out that the May 13, 2016, order addressed only three of the counts in the complaint challenging the 2013 Guidance, but did not address Count II, which alleged a general “failure to act” because EPA has not regulated neonicotinoid coated seeds as pesticides under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).  According to EPA, resolution of this count involves a “pure issue of law,” because the Petitioners “failed to identify any discrete, legally-required action that EPA has failed to perform.”

The EPA motion for clarification was scheduled to be heard on July 21, 2016, but the Court issued an order on July 14, 2016, vacating that hearing.  The new order stated that “defendants raised a fair point,” because “the Court’s order on the motion to dismiss failed to expressly come to grips with that part of the motion directed at the ‘failure to act’ claim for relief.”  Nevertheless, the Court concluded that “no harm will be done in postponing resolution of that issue until summary judgment.”

Commentary

Although the Court has declined to rule on any jurisdictional question concerning the Petitioners’ complaint posed by EPA until after the parties have filed their respective motions for summary judgment, this case may still be dismissed once the Court engages in the requisite fact-finding.  When the Court stated that EPA made a “strong argument” in support of immediate dismissal, it appeared to be a clear signal that this case may yet be resolved on jurisdictional issues.  The Court may decide based on the record whether the 2013 Guidance was intended to change or to modify the existing policy on applicability of the treated article exemption to coated seeds.  The Court may also consider whether or not EPA intended the policy set forth in the 2013 Guidance to be binding in deciding whether or not to bring subsequent enforcement actions.  In addition, the Court will need to consider whether it can review a general “failure to act” in the absence of any allegation that EPA was required to take some specific action.

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By Lynn L. Bergeson and Margaret R. Graham

On July 18, 2016, the U.S. Environmental Protection Agency (EPA) announced that PuriCore Inc. (PuriCore), paid a $550,000 penalty for the unauthorized distribution of two of its pesticide products, ProduceFresh and FloraFresh, that were used in supermarkets nationwide.  Along with the penalty, EPA issued a stop-sale order to PuriCore prohibiting the sale of ProduceFresh.  PuriCore’s unauthorized distribution and sale of pesticide products violates the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).

ProduceFresh is used as part of a crisping process in the produce section of stores, and FloraFresh is used in floral departments.  EPA states that PuriCore had submitted an application to EPA to register ProduceFresh as a pesticide, however, EPA has not completed its review of the risks associated with the product.  FloraFresh was registered as a pesticide as of February 12, 2016, but PuriCore had been distributing FloraFresh to supermarkets for at a least a year prior to it being registered.

The recent enforcement action offers a use reminder to FIFRA stakeholders not to market products before they are registered by EPA relevant state agencies.  More information on FIFRA requirements and pesticide registration issues can be found on our FIFRA FAQs webpage, as well as this blog -- keywords FIFRA and registration.

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By Lisa M. Campbell, Timothy D. Backstrom, and Lisa R. Burchi

On July 1, 2016, the U.S. Environmental Protection Agency (EPA) issued in the Federal Register an interim final rule adjusting penalty amounts for Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) violations by more than three times the current level, in some cases.  The rule also adjusts the level of statutory civil monetary penalty amounts for the other statutes that EPA administers.  EPA issued this interim final rule pursuant to 2015 amendments to the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996 (DCIA) (collectively the 2015 Act).  The 2015 Act sets forth new requirements for agencies to:  (1) adjust the level of statutory civil penalties with an initial “catch-up” adjustment through an interim final rulemaking; and (2) beginning January 15, 2017, make subsequent annual adjustments for inflation.

EPA states that the purpose of the 2015 Act is to “provide a mechanism to address these issues by translating originally enacted statutory civil penalty amounts to today’s dollars and rounding statutory civil penalties to the nearest dollar,” and “[o]nce Federal agencies issue the 2016 one-time catchup rule, each statutory civil penalty amount will be adjusted every year to reflect the inflation that has thereafter accrued.” 

EPA sets forth a five step procedure to determine the cost-of-living or inflation adjustment to statutory civil penalties.  Through this interim final rule, EPA amends 40 C.F.R. Part 19 of EPA’s regulations, Adjustment of Civil Monetary Penalties for Inflation, to include:

1. The operative statutory civil penalty levels, as adjusted for inflation, for violations occurring on or before November 2, 2015, and for violations occurring after November 2, 2015, where penalties are assessed before August 1, 2016; and
2. The operative statutory civil penalty levels, as adjusted for inflation, where penalties are assessed on or after August 1, 2016, for violations that occurred after November 2, 2015.

Table 2 to 40 C.F.R. Section 19.4 sets forth the specific statutory civil penalty provisions of statutes administered by EPA, with the original statutory civil penalty levels, as enacted, with the last column of which displaying the operative statutory civil penalty levels where penalties are assessed on or after August 1, 2016, for violations that occurred after November 2, 2015.  Specific changes to FIFRA penalties in Table 2 are as follows:

• U.S. Code citation:  7 U.S.C. 136(a)(1); Environmental Statute:  FIFRA; ​Statutory civil penalties, as enacted:  $5,000; Statutory civil penalties for violations that occurred after November 2, 2015, and assessed on or after August 1, 2016:  $18,750; and
• U.S. Code citation:  7 U.S.C. 136(a)(2)*; Environmental Statute:  FIFRA; ​Statutory civil penalties, as enacted:  $1,000/500/1,000; Statutory civil penalties for violations that occurred after November 2, 2015, and assessed on or after August 1, 2016:  $2,750/$1,772/$2,750.

* Note that 7 U.S.C. 136(a)(2) contains three separate maximum civil penalty provisions.  The first mention of $1,000 and the $500 statutory maximum civil penalty amount were originally enacted in 1978 (Pub. L. No. 95-396) and the second mention of $1,000 was enacted in 1972 (Pub. L. No. 92-516).

Commentary

Despite the large increase in some of the civil penalty amounts, EPA has determined, pursuant to Administrative Procedure Act (APA) Section 553(b)(3)(B), that it “would be impracticable and unnecessary to delay publication of this rule pending opportunity for notice and comment.” According to EPA, notice and comment are not necessary “because the 2015 Act does not allow agencies to alter the rule based on public comment.”  This rationale presumes that EPA has correctly determined the size of the initial “catch-up” penalty adjustment mandated by the 2015 Act.  Despite EPA’s APA finding, EPA would likely be obligated to consider any comment arguing that EPA did not determine the size of this initial adjustment correctly.  Future annual adjustments should be much smaller and, thus, presumably not as likely to be as controversial.

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By Lisa M. Campbell and Timothy D. Backstrom
 
On July 5, 2016, a three judge panel of the U.S. Court of Appeals for the Ninth Circuit issued a brief opinion denying a petition for review of a U.S. Environmental Protection Agency (EPA) order in which EPA declined to “immediately adopt interim prohibitions on the use of toxic drift-prone pesticides … near homes, schools, parks, and daycare centers or wherever children congregate.”  Petitioners Pesticide Action Network North America (PANNA), United Farm Workers, and Pineros y Campesinos Unidos del Noroeste (PANNA, et al.) filed an administrative petition in 2009 asking EPA to conduct pesticide-specific drift assessments and to impose interim buffer zones to protect children from pesticide drift.
 
The Circuit Court agreed with EPA’s contention that the petitioners do not have jurisdiction to review the reregistration and tolerance determinations previously made by EPA pursuant to the Food Quality Protection Act (FQPA), because such challenges are now time barred.  EPA agreed with the petitioners that it should consider potential risks from spray drift as part of the registration review under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).  The petitioners argued that EPA had thereby acknowledged legal error when it previously reregistered food-use pesticides, but EPA has vigorously contested that premise.  In 2014, EPA issued a proposal describing the methodology for assessing risk from pesticide drift that EPA will use prospectively in making registration review decisions.
 
The petitioners requested that EPA adopt interim relief by imposing uniform buffer zones for all pesticides that are registered for application by ground sprayers, broadcast, or aerial application, and that may cause certain human health effects.  EPA rejected this request for across-the-board buffer zones as unscientific and inefficient and likely to result in a misallocation of EPA resources.  The Circuit Court concluded that “substantial evidence” supports EPA’s decision to deny this interim relief, stating that “[t]he record suggests that the risk of exposure to pesticide draft depends on a number of factors, including pesticide toxicity, the method of application, the size of pesticide droplets, and weather conditions,” and “adequately supports EPA’s conclusion that the imposition of uniform buffer zones is not the most ‘scientifically appropriate’ method for mitigating the risk of exposure to pesticide drift.”

Commentary

The Circuit Court has clearly recognized that uniform buffer zones like those sought by the petitioners would not be “scientifically appropriate.”  While this decision is both welcome by industry and constructive, the evaluation of potential exposure and risk from pesticide drift during the registration review process for individual pesticides will likely remain controversial.

More information on EPA’s spray drift policy is available in our memorandum Spray Drift and Volatilization: Issues to Navigate Carefully as EPA Develops Registration Review Decisions.

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By Lisa M. Campbell and Timothy D. Backstrom

On June 29, 2016, the U.S. Environmental Protection Agency (EPA) submitted a status report in the Ninth Circuit Court of Appeals case concerning a petition by Pesticide Action Network North America (PANNA) and the Natural Resources Defense Council (NRDC) to revoke the tolerances and cancel the registrations for chlorpyrifos.  The Court of Appeals issued an order on December 10, 2015, requiring EPA to take final action concerning the PANNA and NRDC petition no later than December 30, 2016.  To comply with an earlier order, EPA issued a proposed rule to revoke the tolerances for chlorpyrifos before it could complete a refined drinking water assessment or propose a new “point of departure” for chlorpyrifos based on biomonitoring data from an epidemiological study. 

EPA’s status report states that it has made “significant progress” towards meeting the December 30, 2016, deadline, but “extraordinary circumstances exist that make it impracticable for the Agency to meet the Court’s deadline.”  Based on these extraordinary circumstances, EPA has requested a six-month extension for final action on the petition. 

EPA notes that a proposed new point of departure was presented to the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Scientific Advisory Panel (SAP), but was not favorably received.  At the same time, EPA states that the SAP “raised concerns about the approach EPA adopted in the Proposed Rule, namely that the continued use of acetylcholinesterase inhibition as the point of departure may not be sufficiently health protective.”  EPA infers that the SAP may be disposed to recommend a “hybrid approach,” but the written SAP report will not be issued until the end of July, 2016.

EPA states that it had planned to seek public comment on its refined drinking water assessment and new point of departure for chlorpyrifos immediately after the SAP meeting.  EPA now believes that it would be best to obtain the final SAP report before deciding how to establish a point of departure.  Accordingly, EPA proposes to seek comment on its refined drinking water analysis and analysis of the epidemiological data by early Fall 2016, and to take final action on the PANNA and NRDC petition by June 30, 2017.

Commentary

EPA expects that the refined drinking water assessment for chlorpyrifos will allow “tailored risk mitigation” that could eliminate one basis for the proposed revocation of chlorpyrifos tolerances.  In contrast, EPA’s concerns about the potential neurodevelopmental effects of chlorpyrifos may not be as readily addressed by risk mitigation.  If EPA decides either to retain the Food Quality Protection Act (FQPA) 10X safety factor for chlorpyrifos based on purported neurodevelopmental effects observed in epidemiological studies, or to adopt some “hybrid” risk assessment methodology for neurodevelopmental effects in response to the SAP recommendations, debate on the merits of doing so will likely be strong.  The status report does not appear to suggest that EPA is currently considering revisiting its general views on the chlorpyrifos epidemiological data; if EPA is not doing so, considerable continued debate on this issue is also likely.

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