FIFRA Stakeholders: How to Respond to an Enforcement Action or Inquiry
In a recent advisory memorandum, we noted that enforcement activity under the Toxic Substances Control Act (TSCA) and the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) has been increasing during the last couple of years. That memorandum provides guidance to TSCA stakeholders on how to respond to a typical U.S. Environmental Protection Agency (EPA) TSCA inspection letter, and notes that it is often unclear why a particular manufacturer or processor has received a TSCA inspection letter. In our TSCA memorandum, we observed that enforcement activity under FIFRA has also been trending upward, and we stated that we would be addressing FIFRA enforcement actions in a separate memorandum.
Although most parties subject to TSCA inspection receive a "boilerplate" letter, FIFRA enforcement actions tend to be more heterogeneous. Potential FIFRA enforcement communications include a notice or letter announcing that EPA has commenced an investigation or will conduct an inspection, a Notice of Warning (NOW), a refused Notice of Arrival (NOA) or a Notice of Detention (NOD), or a Stop Sale, Use, or Removal Order (SSURO).
The type of FIFRA enforcement action that EPA utilizes depends on the circumstances. Recent areas of special interest under FIFRA include imports of pesticide products and devices, product composition issues (e.g., a new active ingredient supplier, foreign or contract manufacturing), Internet sales and pesticidal claims, and "gray areas" such as cleaners with antimicrobial claims or fertilizers with biostimulant claims. In the discussion below, we review the various types of FIFRA enforcement actions that pesticide registrants and producers are most likely to encounter, and provide some general guidance concerning what to do in response to each type of action. Many of the documents discussed below can be publicly available, particularly enforcement actions posted by EPA in its administrative enforcement dockets. These documents generally are very fact-specific, but examples on EPA’s website provide guidance as to the level of detail and discussion found in such documents.
Inspection Notices and Letters
A pesticide registrant, manufacturer, formulator, or establishment (FIFRA stakeholder) may receive a notice or letter from the pertinent EPA regional office requesting specific information or documentation, or announcing that EPA plans to conduct an inspection. A FIFRA stakeholder that receives such a communication should promptly consult with in-house or outside counsel, so that the communication from EPA can be reviewed to identify specific areas of EPA interest and evaluate potential enforcement liability. Companies on notice of an inspection should review EPA’s rule on how it conducts on-site administrative inspections to understand the process and what to expect during an inspection (i.e., (1) Timing of Inspections and Facility Notification; (2) Inspector Qualifications; (3) Obtaining Consent to Enter; (4) Opening Conference; (5) Physical Inspection; (6) Managing Confidential Business Information (CBI); (7) Interview Facility Personnel; (8) Records Review; (9) Sampling; (10) Closing Conference; and (11) Inspection Reports).
A recipient should not be reluctant to request an extension if additional time is needed to provide a full response, which is often the case. The recipient should provide all requested information and records promptly, and should allow EPA inspectors to copy pertinent records and to collect samples of any pesticide or other product that has been released for shipment. Nonetheless, the recipient of such a communication should avoid gratuitously providing any information that EPA has not requested or answering any questions that EPA has not asked.
After receipt of an enforcement communication, it is important not to dispose of any potentially responsive records or product samples. FIFRA stakeholders should establish and then rigorously adhere to a document retention policy. Counsel should be consulted before adopting any document retention policy. FIFRA does not specify any separate statute of limitations for imposition of administrative civil penalties, so the general five-year statute of limitations in 28 U.S.C. Section 2462 applies based on the applicable judicial precedent. EPA will typically contend that this statute of limitations is constantly reset for any violations of a “continuing” nature, but it is prudent for registrants to retain records needed to document compliance with FIFRA for at least five years unless EPA has specifically required a longer retention period for the type of record at issue. In any case, once a FIFRA stakeholder receives an enforcement communication, no records should be destroyed.
FIFRA stakeholders should consider conducting periodic compliance audits to discover and correct any inadvertent non-compliance. If a company chooses to self-report, it generally is eligible for more lenient treatment. Although it is often desirable to review past compliance while preparing for an enforcement inspection or investigation, EPA’s policy is to deny more favorable treatment for any violation that is self-reported but was discovered after receipt of an enforcement communication.
FIFRA Section 9(c)(3) affords EPA discretion to send a “suitable written notice of warning” in lieu of imposing a penalty for “minor violations” when EPA “believes that the public interest will be adequately served.” In general, EPA's current FIFRA Enforcement Response Policy states that EPA will consider a violation to be “minor” for FIFRA stakeholders if the total “gravity adjustment value” determined by EPA is three or less or for “certain first-time recordkeeping violations.”
FIFRA stakeholders that receive a NOW should immediately take precautionary action to ensure that the claimed violation is not repeated. If the recipient questions the factual or legal basis for the claimed violation, the recipient can consider initiating a dialogue with regional enforcement personnel, but it is usually prudent to conform prospectively to EPA's interpretation of the applicable FIFRA requirements pending resolution of any contested issues. A recipient of an NOW may also dispute the EPA interpretation but conclude that it is commercially expedient simply to accept EPA's position.
Refused NOA and NOD
When a FIFRA stakeholder is importing any pesticide or pesticidal device into the United States, an NOA is required. EPA may deny entry for imported pesticides or devices that it deems to be in violation of FIFRA, either by refusing to accept the submitted NOA, or by issuing a separate NOD. In instances where EPA has issued an NOD, a hearing may be requested. When an import shipment to a FIFRA stakeholder that contains pesticides or pesticidal devices is denied entry, the most frequent response is that the FIFRA stakeholder will export the shipment. Obtaining a hearing concerning a refusal by EPA to allow entry can be difficult when EPA has not issued a separate NOD.
When an importer contests the validity of a refusal by EPA to permit entry, the importer can ask EPA to release the shipment pending a formal determination of the admissibility of the contested shipment. Under U.S. Customs regulations for FIFRA (see 19 C.F.R. §§ 12.110 - 12.117), such a release requires that the importer post a bond, and the products in the released shipment cannot be used or disposed of pending resolution of the admissibility of the shipment. If EPA ultimately refuses entry after a hearing, and the shipment is not subsequently exported, the posted bond will be forfeited.
In our experience, if a FIFRA stakeholder cannot promptly convince the EPA regional office that entry for a shipment has been erroneously refused, it is seldom worthwhile to demand a hearing or to ask that the shipment be released pending such a hearing. When the objective is to secure prompt receipt of the pesticides or devices contained in a refused shipment, the most expedient choice often is to export the refused shipment, and then to import it again following relabeling, repackaging, or other action intended to resolve the disputed issue.
FIFRA Section 13 authorizes EPA to issue a SSURO prohibiting sale, use, or removal of a pesticide product or pesticidal device if it violates FIFRA, or it has been or is intended to be distributed or sold in violation of FIFRA, or if the registration for a pesticide product has been finally cancelled or suspended by EPA. A SSURO can be issued by EPA without any prior hearing. Moreover, although a SSURO is subject to judicial review upon issuance, the cost of obtaining such review and the generally deferential standard for such review may limit the practical utility of this remedy.
Receiving a SSURO is a serious matter, and a FIFRA stakeholder who receives a SSURO should immediately seek the advice of in-house or outside legal counsel. Because a SSURO is a draconian remedy and can inflict severe commercial harm without affording the injured party any prior process, EPA has adopted enforcement criteria in the current FIFRA Enforcement Response Policy that generally require that EPA determine that there is a significant potential hazard to human health or the environment before a SSURO may be issued. Unfortunately, these criteria are not consistently followed by the EPA regional offices, and a FIFRA stakeholder may be subject to a SSURO based on little more than an EPA determination that FIFRA has been violated. As in the instance of a refusal by EPA to accept an NOA, the most commercially expedient approach to a SSURO may be to determine why each affected product has been deemed to violate FIFRA, and then to offer to modify the composition, labeling, or other claims made for the product to eliminate the purported FIFRA violation. Based on such an offer, the recipient of a SSURO can then request that EPA modify the SSURO to allow sale or use of the contested product to resume.
The principal problem with asking EPA to modify or lift a SSURO is that EPA may then presume that the inclusion of a product in the SSURO had a legitimate factual and legal basis. Because such a presumption may result in proposed imposition of administrative penalties, such a proposal can be contested separately in a formal enforcement adjudication.
Even though you believe that the enforcement action in question is based on incorrect factual premises or a dubious construction of the law, the most effective way to minimize commercial damage to you and to your customers may be to make or to propose changes to product composition, labeling, or packaging, or to adjust or modify claims concerning products made in advertising or on your website. Such adjustments can often be made quickly, without any admissions concerning ultimate enforcement liability.
If the enforcement action in question subsequently leads to proposed penalties, you may receive a draft Consent Agreement and Final Order (CAFO).
The most effective strategy is to do everything possible to ensure consistent compliance with FIFRA and pertinent state licensing and regulatory provisions.