By Lynn L. Bergeson, James V. Aidala, and Margaret R. Graham
On February 14, 2017, in the House of Representatives, Rep. Rodney Davis (R-IL) introduced H.R. 1029, the “Pesticide Registration Enhancement Act of 2017,” which reauthorizes the Pesticide Registration Improvement Act (PRIA). H.R. 1029 was immediately referred to the Agriculture Committee and to the Energy and Commerce Committee; it was passed by the Agriculture Committee on February 16, 2017. Per Agriculture Committee Chair Michael Conaway’s opening statement at the Business Meeting markup of H.R. 1029, changes to PRIA include “reasonable increases in registration fees, funding for Good Laboratory Practices, and a seven year reauthorization as opposed to the five-year reauthorizations of the past.” H.R. 1029 would allow the U.S. Environmental Protection Agency (EPA) to collect up to 31 million in registration fees (up from 27.8 million) per year from fiscal years (FY) 2017-2023. It also includes the following registration increases for FY2017 through FY2023:
- The maximum annual fee for registrants holding 50 pesticide registrations or less would be $129,400 (up from $115,500);
- The maximum annual fee for registrants holding over 50 pesticide registrations would be $207,000 (up from $184,800);
- The maximum annual fee payable for a small business registrant holding 50 pesticide registrations or less would be $79,100 (up from $70,600); and
- The maximum annual fee payable for a small business registrant holding over 50 pesticide registrations would be $136,800 (up from $122,100).
PRIA represents a commitment by the pesticide registrants to help with the continued resource issues of the pesticide regulatory program. This has become an issue of increased concern with the arrival of the Trump Administration after campaign rhetoric about eliminating EPA and cutting budgets. Fees are seldom a popular topic, but an essential program component. Without staff and resources to approve pesticide registrations, registrants would be left with new products destined to pile in EPA in-boxes. PRIA is designed to help maintain some certainty and predictability to the review process.
Of some note is that in recent years Congress has appropriated funds at a level below the statutory minimum that originally was a line in the sand which, if breeched, would de-authorize EPA’s authority to charge application fees. The regulated community has reluctantly supported Congressional action to lower this “minimum” level of funding to hold onto the programmatic progress which has been made since the first PRIA authorization. This appears to be an uneasy acceptance of the budget realities surrounding federal spending on discretionary, non-defense expenditures.
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.”
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.
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.
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.
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.
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.”
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.
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.
By Lisa M. Campbell, James V. Aidala, and Lisa R. Burchi
On June 7, 2016, the U.S. Environmental Protection Agency (EPA) announced that it was making two draft Pesticide Registration Notices (PR Notices) available for public comment: (1) PR Notice 2016-X: Draft Guidance for Pesticide Registrants on Pesticide Resistance Management Labeling; and (2) PR Notice 2016-XX: Draft Guidance for Herbicide Resistance Management Labeling, Education, Training, and Stewardship. In its news release, EPA states that it has started a “more widespread effort aimed at combating and slowing the development of pesticide resistance,” in an effort to “address the growing issue of resistance and preserve the useful life of pesticides.”
Draft PR Notice 2016-X
Draft PR Notice 2016-X, which revises and updates PR Notice 2001-5, applies to all conventional agricultural pesticides (i.e., herbicides, fungicides, bactericides, insecticides and acaricides). The focus of the updates in PR Notice 2016-X is on pesticide labels and improving information about how pesticide users can minimize and manage pest resistance.
Specifically, EPA is proposing that specific resistance-management statements be included with the Directions for Use section under the heading “Resistance Management Recommendations.” EPA states that the proposed labeling statements “focus on the mitigation of pest resistance and should be used where applicable based on the availability of other pesticides and production practices specific to that crop.” As one example, EPA recommends the following general resistance management labeling statements for insecticide/acaricide products containing only a single active ingredient or multiple active ingredients that are from the same Mode of Action (MOA) group:
- For resistance management, (name of product) contains a Group (mode of action group number) insecticide (or acaricide). Any (insect/mite) population may contain individuals naturally resistant to (name of product) and other Group (mode of action group number) insecticides/acaricides. The resistant individuals may dominate the insect/mite population if this group of insecticides/acaricides are used repeatedly in the same fields.
Since the recommended resistance-management statements depend on an active ingredient’s MOA, PR Notice 2016-X also addresses MOA grouping and identification symbols for agricultural uses of herbicides, fungicides/bactericides, and insecticides/acaricides. The pesticide groupings are provided by the Weed Science Society of America (WSSA), the Herbicide Resistance Action Committee (HRAC), the Fungicide Resistance Action Committee (FRAC) and the Insecticide Resistance Action Committee (IRAC). The MOA groups, and the identifier numbers and/or letters (i.e., symbols or codes) for herbicides, fungicides/bactericides and insecticides/acaricides may be accessed through the websites of the different Resistance Action Committees. For example, for insecticides, IRAC uses a combination of numbers and letters to identify various MOA groups. EPA recommends that the IRAC MOA identifier codes be used for designating insecticide MOA grouping information on labels for pesticides containing insecticides. The IRAC MOA list and identifier codes can be found online.
While current PR Notice 2001-5 contains similar guidance in terms of MOA groupings and general pesticide-resistance statements, the Draft PR Notice 2016-X provides: (1) additional guidance, and recommended format, for resistance management statements or information to place on labels; (2) includes references to external technical resources for guidance on resistance management (e.g., professional scientific societies, resistance action committees for different types of pesticides); and (3) updates the instructions on how to submit changes to existing labels to enhance resistance management language. In addition, while PR Notice 2001-5 states that “implementation of this program is purely voluntary by the pesticide industry,” the language in Draft PR Notice 2016-X is arguably stronger, with EPA “encouraging” registrants to add the appropriate resistance-management statements through notification, amendment, or as part of an application for a new product.
Draft PR Notice 2016-XX
Draft PR Notice 2016-XX, which only applies to herbicides, is intended to provide guidance on labeling, education, training, and stewardship for herbicides undergoing registration review or registration (i.e., new herbicide actives, new uses proposed for use on herbicide-resistant crops, or other case-specific registration actions). EPA states it is focusing on the holistic guidance for herbicides first because:
- Herbicides are the most widely used agricultural chemicals;
- No new herbicide mechanism of action has been developed in the last 30 years; and
- Herbicide-resistant weeds are rapidly increasing. In the future, the Agency plans to evaluate other types of pesticides (e.g., fungicides, bactericides, insecticides, and acaricides) to determine whether and what guidance may be appropriate for these types of pesticides.
Under guidance described in PR Notice 2016-XX, EPA proposes to divide 28 herbicide Mechanisms of Actions into three categories of concern (low, moderate, high) based on the risk of developing herbicide-resistant weeds. Appendix I to PR Notice 2016-XX provides three tables with herbicide Mechanisms of Actions of “Low Concern,” “Moderate Concern,” and “High Concern” for herbicide resistance. EPA states its intent to make these tables available on its website, noting that the tables would need to be “checked periodically to determine if there are changes to the groupings or level of concern categories.” Appendix II to PR Notice 2016-XX sets forth the following eleven elements that are focused on labeling, education, training, and stewardship strategies:
- Element 1. List Mechanism of Action Group Number on label.
- Element 2. List seasonal and annual maximum number of applications and amounts.
- Element 3. Provide Resistance Management language from PR Notice 2016-X, and/or Best Management Practices language from WSSA and HRAC, and/or HRAC proposed guidelines for herbicide labels. Note that Best Management Practices (BMP) should be appropriate to crop and production system.
- Element 4. Instruction to user to scout before and after application.
- Element 5. Provide definition of Likely Resistance.
- Element 6. Instruction to user to report lack of performance to registrant or their representative.
- Element 7. List confirmed resistant weeds in a separate table and list recommended rates for these weeds with the table.
- Element 8. Registrant report new cases of likely and confirmed resistance to EPA and users yearly. This is in addition to any adverse effects reporting.
- Element 9. Provide growers with:
- Resistance Management Plan;
- Remedial Action Plan (to control resistant weeds this season or next season);
- Educational materials on resistance management; and
- Plans should be locally developed and easily modified. EPA recommends that registrants work with Extension, Consultants, Crop Groups, HRAC, and the U.S. Department of Agricultute (USDA).
- Element 10. For combination products with multiple Mechanisms of Action, list which herbicide is controlling which weed (a three-way mixture may only have one effective Mechanism of Action for some problem weeds). List minimum recommended rate if resistance is suspected.
- Element 11. Any additional specific requirements (e.g., mandatory crop rotation, unique agronomic aspects, additional training, time limited registration, etc.).
Elements 1 through 4 are proposed for Mechanisms of Actions of Low Concern, elements 1 through 8 are proposed for Mechanisms of Actions of Moderate Concern, and elements 1 through 11 are proposed for Mechanisms of Actions of High Concern.
The PR Notices are available on www.regulations.gov under Docket Numbers EPA-HQ-OPP-2016-0242 for PR Notice 2016-X; and EPA-HQ-OPP-2016-0226 for PR Notice 2016-XX. Comments are due by August 2, 2016.
With regard to PR Notice 2016-XX, EPA states that while comments are welcome on all aspects of this Notice, EPA is especially interested in comments on the following: (1) the approach, elements and categorization used to address herbicide resistance; (2) limiting the application of these measures during registration review to new herbicide active ingredients, new uses of herbicides proposed for use on herbicide-resistant crops, and other case-specific registration actions; (3) other effective measures to inform the stakeholder community of the occurrence of likely resistance; and (4) other useful strategies that, when implemented, would slow the development of herbicide resistance and prolong the useful life of herbicides.
More information on pesticide resistance management is available on EPA’s website.
Avoiding the onset of resistance to any pesticide product is a widely shared goal of users and registrants of the pesticide to maintain the effectiveness and profitability of the product. There is controversy, however, when EPA suggests specific instructions to the user community, since pesticide applications are site and situation specific, making general “one size fits all” approaches, even “flexible” ones, suspect among much of the user community. When the instructions involve label requirements, which are enforceable, concerns about flexibility and the need to adapt to local conditions increase.
Resistance management has been a stated goal of EPA for some time; here EPA seems to argue it is of the utmost importance to preserve useful pest control tools since it is better to have more “tools in the toolbox.” Yet, when EPA seeks to restrict a product or class of products and users and registrants cite the need for that product for resistance management, few benefits seem to be associated with resistance management in such cases. Overall, there is also suspicion that EPA’s concerns regarding herbicide resistance masks a political response to critics of the widespread adoption of herbicide-resistant genetically engineered crops -- since the high value of resistance management gains little value when EPA attempts to restrict other products. An example is EPA’s approach to organophosphate insecticides, where EPA is currently seeking to eliminate many uses that otherwise are viewed as important for insecticide resistance management.
Having EPA attempt to address resistance management via label instructions will be controversial, notwithstanding broad consensus that avoiding resistance is a shared goal. So, the likely debate will focus less on the goal, and more on the means of achieving the goal, as this issue moves forward.
By Lisa M. Campbell and Sheryl L. Dolan
On June 2, 2016, the U.S. Environmental Protection Agency’s (EPA) Office of Pesticide Programs (OPP) and Health Canada’s Pest Management Regulatory Agency (PMRA) released harmonized product chemistry templates for use by registrants when submitting pesticide registration packages.
These templates were developed by EPA and PMRA under the United States -- Canada Regulatory Cooperation Council (RCC) workplan. EPA stated that the templates are based on the Organization for Economic Cooperation and Development’s (OECD) Harmonized Templates for Reporting Chemical Test Summaries’ format, “but have been streamlined to address a single product/application and will facilitate the review of product chemistry data for global and joint registrations, as well as other actions.” EPA and PMRA are encouraging applicants to begin using these templates to organize and summarize the product chemistry data for each product and/or registration package that is submitted to EPA and PMRA.
More information on these templates is available in the RCC’s Work Planning Format document.
By Lisa M. Campbell and Timothy D. Backstrom
On February 29, 2016, the U.S. Environmental Protection Agency (EPA) released a prepublication copy of a notice of intent to cancel all Bayer CropScience, LP and Nichino America, Inc. (BCS/NAI) flubendiamide products. The affected products are:
- EPA Reg. No. 264-1025 -- BELT SC Insecticide;
- EPA Reg. No. 71711-26 -- FLUBENDIAMIDE Technical;
- EPA Reg. No. 71711-32 -- VETICA Insecticide; and
- EPA Reg. No. 71711-33 -- TOURISMO Insecticide.
The cancellation notice was issued by EPA, pursuant to Section 6(e) of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), and announces EPA’s intent to cancel the registration of these four products based on the registrants’ failure to comply with a required condition of their registrations. Under this condition, which EPA alleges was agreed to by the registrants, each flunbendiamide registrant is required to submit a voluntary cancellation request if EPA finds that the product causes unreasonable adverse effects on the environment.
EPA made such a finding of unreasonable adverse effects in a decision memorandum issued on January 29, 2016, but BCS/NAI has rejected EPA’s request to submit a voluntary cancellation. More information on BCS/NAI’s refusal to submit a request for voluntary cancellation is available in our blog item Bayer Announces That It Will Not Submit Voluntary Cancellation Requests for Flubendiamide.
EPA’s finding of unreasonable adverse effects is based on the purported risk to aquatic invertebrates associated with flubendiamide. More information on EPA’s rationale, including the decision memorandum, is available on EPA’s website. After the cancellation notice is published, each registrant will have 30 days to request a hearing concerning the notice. FIFRA Section 6(e) provides that the only matters that may be considered in the resulting hearing are whether the registrants have complied with the condition in question and whether EPA’s determination on existing stocks is consistent with FIFRA. In contrast, the registrants have stated that EPA is required to provide an adjudicatory hearing concerning the substantive basis for EPA’s determination that the products in question cause unreasonable adverse effects on the environment.
The dispute between BCS/NAI and EPA concerning cancellation of the conditional registrations for flubendiamide products will be carefully watched by the pesticide industry. The critical issue is whether EPA can effectively circumvent the adjudicatory hearing that would otherwise be available on the substance of EPA’s determination concerning risks and benefits by imposing a condition that requires affected registrants to accept EPA’s determination. EPA will argue that the registrants accepted the condition in question when the registrations for flubendiamide were first issued. The registrants will argue that EPA may not use such a condition to constrain hearing rights because this contravenes the intent of FIFRA.
By Lisa M. Campbell and Timothy D. Backstrom
Significant issues concerning the scope of the U.S. Environmental Protection Agency’s (EPA) authority to cancel conditional registrations are raised by recent events concerning flubendiamide products sold in the U.S. by BayerCrop Science LP (Bayer) under the trade name Belt. Bayer announced on February 5, 2016, that it will not comply with EPA’s request that Bayer “voluntarily” cancel its registered flubendiamide products. In a January 29, 2016, letter, EPA stated that flubendiamide and a degradate compound are “mobile, stable/persistent, accumulate in soils, water columns and sediments and are toxic to aquatic invertebrates.” Based primarily on EPA’s ecological risk assessment, EPA has determined “that the continued use of the currently registered flubendiamide products will result in unreasonable adverse effects on the environment.” Bayer disagrees strongly with the EPA risk assessment, because Bayer believes it is based on overly conservative modeling estimates that cannot be reconciled with actual monitoring and environmental fate data for this pesticide.
Conditional registrations for pesticides containing flubendiamide were first granted by EPA under Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Section 3(c)(7) in 2008. As one condition of registration, EPA required Bayer to conduct specific environmental fate studies, which have now been submitted and reviewed. EPA also adopted an initial expiration date for all registrations of flubendiamide products of July 31, 2013, which EPA later agreed to extend several times to allow time for further review and discussion of the submitted data. The current dispute with Bayer involves a specific condition that EPA included in its preliminary acceptance letter for this active ingredient, which EPA contends obligates Bayer to request voluntary cancellation of the registrations now that EPA has made a finding of unreasonable adverse effects. Bayer characterizes the condition in question as “unlawful,” and argues that EPA must afford Bayer a full adjudicatory hearing under FIFRA Section 6(b) before the registrations can be cancelled.
Because Bayer has not submitted the “voluntary” cancellation requests demanded by EPA, EPA has stated that it will initiate the cancellation process for conditional registrations established by FIFRA Section 6(e). Although this process affords Bayer an opportunity for an administrative hearing, the issues in a conditional registration hearing under FIFRA Section 6(e) are limited to “whether the registrant has initiated and pursued appropriate action to comply with the condition,” and the EPA determination concerning disposition of existing stocks. Bayer argues that the condition as it was originally imposed by EPA was improper and denies statutory due process rights, and that EPA must afford Bayer a full adjudicatory hearing under FIFRA Section 6(b) rather than the limited hearing provided under FIFRA Section 6(e).
This dispute presents a variety of important legal questions, including what authority EPA has under FIFRA to impose time limitations or expiration dates for pesticide registrations, the rights a registrant has when it applies to amend or to renew a time-limited registration, and the nature of the conditions that EPA may lawfully impose for a conditional registration under FIFRA Section 3(c)(7). The entire pesticide industry will be watching this matter with great interest.