On April 25, 2016, the U.S. Environmental Protection Agency’s (EPA) Administrative Law Judge (ALJ) Susan L. Biro issued an order denying Petitioners Bayer CropScience LP and Nichino America, Inc.’s (BCS/NAI or Petitioners) motion for accelerated decision and deciding that the abbreviated Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Section 6(e) cancellation hearing, rather than the full Section 6(b) process, was appropriate (Order).  This decision is significant and, if it stands, could have far-reaching impact on easing EPA’s potential ability to cancel conditionally registered pesticide products. 

Background information regarding Bayer’s decision to challenge EPA’s position that a conditional registration term in the relevant registrations required BCS/NAI to cancel voluntarily their flubendiamide registrations within one week of notification by EPA that the currently registered flubendiamide products will result in unreasonable adverse effects on the environment, and EPA’s notice of intent to cancel all BCS/NAI flubendiamide products as a result of BCS/NAI’s decision declining EPA’s request to cancel voluntarily all flubendiamide registrations, is available in our blog items: EPA Issues Notice to Cancel Flubendiamide Registrations. 

BCS/NAI’s Motion for Accelerated Decision (Motion) requested that the ALJ “issue an accelerated decision finding that EPA’s forced ‘voluntary’ cancellation provision is unlawful, denying the proposed cancellation of the registrations under [FIFRA] § 6(e), and requiring EPA to follow the process required under § 6(b) if it wishes to cancel the flubendiamide registrations for failure to meet the FIFRA registration standard.”  Petitioners argued that the more abbreviated procedure under FIFRA Section 6(e) was the wrong procedure to apply for a cancellation procedure, and that it is unlawful for EPA to “bypass cancellation process and due process rights guaranteed by statute and to shield its cancellation decision from review and challenge by Bayer, Nichino, and all other affected stakeholders.”  Petitioners further argued that case law supported its position, since “[i]n the only other FIFRA cancellation proceeding to have been conducted in at least two decades, EPA drew a sharp distinction between FIFRA§§ 6(b) and 6(e) and confirmed that when EPA makes a cancellation decision based on a Registration Standard determination, the proper process is for EPA to proceed with cancellation under § 6(b).”

EPA’s opposition to the Motion argued in part that when Petitioners agreed to cancel voluntarily their flubendiamide registrations within one week of notification by EPA that the currently registered flubendiamide products will result in unreasonable adverse effects on the environment, Petitioners “waived or reduced their due process rights from a fuller FIFRA section 6(b) hearing to the more limited FIFRA sections 6(e) and 6(f) rights to get their products to market quicker.”  EPA further argued that in seeking other relief, Petitioners are “in effect, asking this Tribunal to rewrite the terms and conditions of their registrations,” which would exceed its authority.

In its Order, the ALJ concludes that FIFRA’s “text, structure, and legislative history and federal court opinions allow for this Section 6(e) proceeding.” The ALJ states that “Petitioners have cited nothing in the statute or legislative history to suggest that EPA is obliged to use the pre-existing general registration cancellation process under FIFRA Section 6(b) for cancelling general registrations, to cancel conditional registrations.”  The ALJ further notes:  “The few cases that Petitioners cite to support their claim that EPA is required to go through a Section 6(b) proceeding to cancel pesticide registrations are all clearly distinguishable from the facts of this case because they involve general registrations, not conditional registrations.”  Instead, the ALJ compared a “conditional registration” to a learner’s permit not entitled to Section 6(b) cancellation proceedings, while unconditional registrations are “entitled to an extended process because EPA previously determined their use, on an indefinite basis, would not cause unreasonable adverse effects on the environment.”

• [A] “conditional registration” is not equivalent to a full registration; it is a stop-gap status that gives the registrant time to gather data to prove it is entitled to general registration. This situation is analogous to obtaining a learner’s permit to obtain the requisite skill to demonstrate competence on the practical driving skills test in order to obtain a driver’s license. As such, conditional registrations are not entitled to the same lengthy procedures for cancellation under Section 6(b).

The ALJ further dismissed Petitioners’ argument that the “forced” voluntary cancellation condition in their conditional registrations is unlawful, finding instead that Petitioners had options and “made a business decision, likely for excellent economic reasons, and accepted the conditions and put their products on the market under conditional registrations.”  In addition, the ALJ found that “the record in this case indicates that Petitioners played an active part in drafting the conditions in the [Preliminary Acceptance Letter] PAL containing the voluntary cancellation provisions and were well aware of their significance.”  The Order states:

• As such, this Tribunal sees no reason to allow Petitioners out of the 2008 legal agreement they knowingly made for a “fast death” cancellation arrangement. This is especially true because Petitioners only sought to challenge the voluntary cancellation arrangement as “unlawful” seven yearsafter entering into it and only when EPA sought to trigger the cancellation and make Petitioners live up to their end of the bargain. In the interim, Petitioners financially benefited from the conditional registration, which allowed them to sell their products while pursuing data to remove the “uncertainty” as to their adverse effects on the environment.

Commentary

If the case proceeds under the FIFRA Section 6(e) hearing process, the only issues to be determined will be 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.  This means that BCS/NAI’s significant issues as to whether EPA’s determination that the continued registration of flubendiamide does not meet the Registration Standard cannot be reviewed since, as BCS/NAI discuss in their motion, that the ALJ under a Section 6(e) hearing process cannot conduct “an independent scientific review to gauge the strength of EPA’s scientific conclusions in support of its proposed cancellation.”

Many in industry agree with BSC/NAI’s argument in their Motion that EPA’s decision to proceed in this way has shown “an apparent unwillingness to subject its positions to peer review and public scrutiny in compliance with FIFRA.”  It is unclear how many other conditional registrations have conditional registration provisions that would require voluntary cancellation in the manner that the one at issue in this proceeding does.  Even if that provision is not a typical provision, the potential implications for abbreviated cancellation proceedings for other conditional registrations are significant and should be carefully considered by registrants with regard to both their existing and future registrations.  A condition of registration could result in a de facto waiver of rights otherwise afforded to challenge a cancellation determination that is not supported by the science and/or not consistent with the FIFRA Registration Standard.  This may be easier said than done, as many in the registrant community find there is often not much “voluntary” about accepting an EPA proposed condition of registration.