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.