US EPA issues cancellation order for 3 dicamba products; limited existing stocks provision included

By Tiffany Dowell

On Monday, June 8, 2020, the U.S. EPA issued its final cancellation order for three dicamba products: Xtendimax with Vaporgrip Technology, Engenia, and FeXapan. 

The EPA Order stems from the Ninth Circuit Court of Appeals decision last week vacating the federal label for these products, finding that in registering them, EPA violated the Federal Insecticide, Fungicide, and Rodenticide Act. 

Summary of the EPA Order

The EPA Order provides the following:

- “Any distribution, sale, or use of these products in a manner inconsistent with this order, including the provisions below regarding the disposition of existing stocks, will be considered a violation of [FIFRA].”

- With regard to existing stocks:

*Distribution or sale by the registrant:  Distribution or sale by the registrant is prohibited effective on June 3, 2020, except for distribution for the purposes of proper disposal.

*Distribution or sale by persons other than the registrant:  Distribution or sale of existing stocks already in the possession of persons other than the registrant are permitted only for the purpose of proper disposal or to facilitate return to the registrant or a registered establishment under contract with the registrant.

*Distribution or sale by commercial applicators:  Distribution or sale of existing stocks in the possession of commercial applicators is permitted, subject to the prohibition on use after July 31, 2020.  “Existing stocks” are those stocks currently in the United States and which were packaged, labeled, and released for shipment prior to the Court’s Order on June 3, 2020.

*Use of existing stocks:  The use of existing stocks is allowed through July 31, 2020, but must be made in accordance with the previously-approved label.  All use is prohibited after July 31, 2020.  “Existing stocks” are those stocks currently in the United States and which were packaged, labeled, and released for shipment prior to the Court’s Order on June 3, 2020.

Overview of the EPA Order

The Order went into more detail, specifically addressing certain legal questions regarding the EPA’s authority to issue this type of order when a court vacates a registration, the reason the EPA believes it needs to do so, and the reason the EPA included the existing stock provisions it chose.  Cancellation orders are issued to “establish enforceable terms and conditions for the disposition of existing stocks.”

First, the EPA explained it interprets FIFRA to allow EPA to issue a cancellation order “whenever a pesticide that has been sold with the imprimatur of a registration has that registration terminated, by any mechanism.”  This, the EPA stated, includes a court order vacating a registration.  Although Ninth Circuit Order immediately vacated the registration without an opportunity for the EPA to issue a corresponding cancellation order, the EPA views the Court Order as the equivalent to cancellation under FIFRA. Issuing this type of cancellation order allows the EPA to “appropriately regulate” distribution and use of these products after a registration is terminated under the authority of FIFRA.

Second, the EPA explained in May, it requested leave from the Court to file information on how it planned to issue a cancellation order that would address existing stocks, but the Court declined to allow that filing.  Thus, the parties in the lawsuit did not have the opportunity to fully brief the question of what should happen to existing stocks of the products already in the channels of trade.  Because FIFRA prohibits the sale or distribution of an unregistered pesticide and because “distribution” is broadly defined to include shipment, without this EPA Order, there could not only be no sale but no further movement of the products.  The EPA believes its Order was necessary to even allow the shipment of these products for the purpose of disposal or return to the registrants.

Third, FIFRA does not have language prohibiting use of an unregistered pesticide.  It does, however, provide all registered pesticides must be used in a manner consistent with the label.  The EPA noted because these products are no longer registered, without this EPA Order, there would be no legal requirement that existing stocks be used according to their former label.

Fourth, the EPA addressed the use of an “existing stocks” determination.  In 1991, the EPA issued a policy statement related to how existing stocks are generally treated pursuant to a cancellation order.  In general, if no significant risk concerns have been identified for the cancelled product, the EPA should allow unlimited use of existing stocks and unlimited sale by persons other than registrants.  Registrants are generally allowed to continue sale of existing stocks for one year after the cancellation or one year after the date the registrant ceased to comply with applicable requirements, whichever is sooner.

If there are significant risk concerns, the EPA will make a case-by-case determination regarding the continued use and sale of a product. This determination will focus on the social, economic, and environmental risks utilizing six factors: (1) the quantity of existing stocks at each level of the channels of trade; (2) the risks resulting from the use of the existing stocks; (3) the benefits resulting from the use of such stocks; (4) the financial expenditures users and others have already spent on existing stocks; (5) the risks and costs of disposal or alternative disposition of the stocks; and (6) the practicality of implementing restrictions on the distribution, sale, or use of existing stocks.

In applying these factors, the EPA also noted the content of the Court Order, finding the EPA substantially understated certain risks of the products and failed to acknowledge other risks. “In light of the Court’s reasoning for its vacatur, EPA is substantially restricting sale and distribution of existing stocks of these dicamba products.” However, in light of the six factors, the EPA determined “distribution and use in certain narrow circumstances is supported.”

The EPA addressed each factor.

- Quantities of existing stocks at each level of the channels of trade:  The EPA noted evidence the quantities in growers’ possession and throughout the channels of trade are “substantial” as it is the height of the growing season.  The EPA could not determine exact quantities of existing stocks, but based on information received so far, it estimates approximately 4 million gallons could be in the channels of trade.

- The risks resulting from the use of the existing stocks:  Although the Court found the labels for these products are difficult to follow, the EPA said there was “no dispute” that use inconsistent with the labeling formerly approved by the EPA would have greater potential to cause unreasonable adverse effects on the environment. “Therefore, it is imperative that EPA issue this order and require that any use of these dicamba products moving forward is consistent with the previously approved labeling and can be enforced as such in order to prevent unreasonable adverse effects on the environment.”

- The benefits resulting from the use of existing stocks: The EPA believes allowing non-over-the-top uses provides “substantially greater benefits to users and to society than disposal.” Evidence relied upon includes the potential “crippling financial impact” that herbicide resistant weeds such as pigweed and marestail could have on an already-suffering agricultural industry and difficulty finding or affording labor to manually manage weed control.

- The financial expenditures users and others have already spent on existing stocks:  Farmers and commercial applicators have already made substantial expenditures in reliance on the registration of these products. The American Soybean Association stated growers have “spent hundreds of millions of dollars” to legally purchase the products. The National Cotton Council estimated direct loss in value production of approximately $400 million for US cotton farmers based on an estimated 75% of cotton planted in the “Cotton Belt” being dicamba-resistant. The American Farm Bureau Federation noted the increased seed expense for farmers who elected to purchase the dicamba-resistant seeds in reliance on the existence of the then-legal herbicide products. Costs to retailers were expressed by the Agricultural Retailers Association, who noted manufacturers and retailers stocked inventory in anticipation of over-the-top application of these products.

- The risks and costs of disposal or alternative disposition of stocks:  Disposal entails substantial costs as well, and there are significant practical difficulties with transporting product for disposal, especially product in the hands of farmers.

 -The practicality of implementing restrictions on distribution, sale, or the use of existing stocks:  The EPA believes that tracking stocks held by dealers may be “feasible, although likely imperfect” but notes tracking existing stocks held by end-users would be “significantly more burdensome and far less accurate.” EPA notes farmers may be reluctant to cooperate and getting notice to all end users may be difficult. EPA also noted a cancellation order that allows the use of existing stocks, the ability to return them to the registrant, and the ability to transport them for disposal is critical.

In light of these six factors, the EPA determined it would be appropriate to allow existing stocks (those that were packaged, labeled, and released for shipment prior to the Court’s Order on June 3, 2020) in the hands of end users or commercial applicators to be used until July 31 in accordance with the former label requirements.