“epa’s supplemental distribution enforcement …€œepa’s supplemental distribution...

“EPA’s Supplemental Distribution Enforcement Actions Are Buzzing:

How to Avoid Getting Stung”

Webinar

July 23, 20141:00 p.m. (EDT)

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© 2014 Bergeson & Campbell, P.C. All Rights Reserved.

Lisa M. Campbell, Lisa R. Burchi, Sheryl L. DolanBergeson & Campbell, P.C.Washington, D.C.www.lawbc.com

Jon JacobsJacobs Stotsky PLLCWashington, D.C.www.jacobsstotsky.com

E PA’s E n f o r c e m e n t E f f o r t s R e g a r d i n g F I F R A S u p p l e m e n t a l D i s t r i b u t i o n a n d H o w t o Av o i d N o n c o m p l i a n c e

Webinar, July 23, 2014

1:00 p.m. – 1:45 p.m. Presentation

1:45 p.m. – 2:00 p.m. Q&A




SPEAKERS:

Lisa BurchiB&C®

Sheryl DolanB&C®

Lisa CampbellB&C®

Jon JacobsJacobs Stotsky





Background Information and Basic RequirementsLisa R. Burchi


Background

Authority: Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Section 3(e) and U.S. Environmental Protection Agency (EPA) regulations at 40 C.F.R. §152.132

Allows a registrant to distribute or sell its registered product under another person’s name and address instead of (or in addition to) its own without a separate FIFRA Section 3 registration

Terms Distribution/sales arrangement is referred to as “supplemental

distribution” or “sub-registration”

Product is referred to as a “supplemental registration” or “distributor product”

Non-registrant selling a registrant’s product is a “supplemental distributor” or “sub-registrant”

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Not i fy ing EPA of a Supplementa l D is t r ibut ion Arrangement

Straightforward process -- Submit Notice of Supplemental Distribution of a Registered Pesticide Product (EPA Form 8570-5)

Distributor products and labels not reviewed or approved by EPA

Website of supplemental distributor products -- Pesticide Product Information System -- available at http://www.epa.gov/pesticides/PPISdata/

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Requirements for a D is t r ibutor Product - - Product ion Overv iew

The distributor product must meet the following criteria regarding production:

Same composition

Produced in registered establishment owned/operated by registrant or under contract with registrant

Remain in registrant’s unbroken container

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Requirements for a D is t r ibutor Product - - Label ing Overv iew

The distributor product must meet the following criteria regarding labeling:

Bear proper registration number (example: 98765-010-4321)

Include distributor name and address if properly qualified

Allowed to have different product name

Bear final establishment number (example: 4321-CA-001)

Have same claims as registrant’s label (specific claims may be deleted provided no other changes to the label are necessary)

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State Regis t ra t ion of D is t r ibutor Products

States can require registrations of supplemental distributor products

Consider every state in which the product could be distributed

Registrations can be required for different brand names

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Cancellation of a registrant’s product applies equally to distributor product

Registrant must notify EPA in writing if it terminates a supplemental distributor relationship or if a supplemental distributor product’s brand name is being removed or changed

If a registrant transfers its registered pesticide product to another company, supplemental distributor products do not transfer automatically -- new EPA Form 8570-5 needed

In these cases, burden on registrant to inform distributor of cancellation, termination, and transfers

Cancel la t ion , Terminat ion , and Transfers

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Supplemental Registration: The Development of an EPA Enforcement PriorityJon Jacobs


OECA’s organizational structure and major responsibilities of each office

EPA’s Enforcement Program

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Dist inct ions between Civ i l and Cr imina l Enforcement Administrative and civil judicial enforcement

Strict liability

Burden of proof: Preponderance of the evidence

Results: Civil penalties, injunctive relief, supplemental environmental projects

Criminal enforcement Knowing and intentional violations

Burden of proof: Beyond a reasonable doubt

Results: Incarceration, criminal fines, restitution, asset forfeiture, suspension and debarment, and conditions of probation

EPA policy encourages “Parallel Proceedings”

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EPA’s St ra teg ic P lanning Process

The FY 2014 - 2018 Strategic Plan: Five Strategic Goals Goal 4: Ensuring the safety of chemicals and preventing pollution

Goal 5: Protecting human health and the environment by enforcing laws and assuring compliance

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EPA’s Nat iona l Program Managers Guidance (NPMG) FY 2014 OECA NPMG issued in June 2013; began in

October 2012

Followed extensive negotiations with program offices, regions, states, local agencies, and tribal governments

Goals: Protect the Nation’s environmental and public health; provide a level playing field for responsible businesses

Accomplished under EPA’s Strategic Plan Goal 5

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EPA’s Nat iona l Program Managers Guidance (NPMG) (cont ’d ) Focus on where significant

environmental risk and noncompliance patterns are knownto exist or where there are important opportunities to improve performance

One “National Area of Focus” is Next Generation Compliance

Then there is “Program Specific Guidance” for specific programs not addressed as a National Area of Focus, including the FIFRA compliance and enforcement program

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NPMG states “EPA will generally prioritize its compliance monitoring activities based on risk to human health and the environment,” including:

Registration and labeling

Compositional integrity

Producing establishment registration and reporting

Imports

FY 2014 NPMG for F IFRA Supplementa l Regis t ra t ions

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Regions, working with states and tribes, should participate in “3 FIFRA Focus Areas,” including supplemental registrations

FY 2014 NPMG for F IFRA Supplementa l Regis t ra t ions (cont ’d )

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EPA states:

“Supplemental pesticide registrations are a continued source of concern for regulators across the country. States, which conduct thousands of marketplace inspections each year, have raised concerns over supplemental or distributor products labels, citing them as a major source of noncompliance.”


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EPA will scrutinize registrants with a large number of current supplemental registrations and registrants marketing high-risk Tox 1 and Restricted Use Pesticide (RUP) category distributor products, as well as unregistered, cancelled, or suspended pesticide products

Not a National Enforcement Initiative for FY 2014-2016


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EPA determines distributor product compliance by reviewing labeling, product chemistry, and contract manufacturing agreement(s) that should be in place

EPA regions will conduct inspections to monitor for label/labeling compliance, product composition, production, and packaging Rely on personal experience, referrals, and database

searches Example: Review agreements in jacket and then

compare production reported in the Section 7 database by the registrant and the supplemental distributor

States are encouraged to participate by referring cases involving noncompliant distributor products and sample labels obtained as part of the state product registration process

How EPA Targets Al leged Vio la tors

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The NPMG and 2009 Enforcement Response Policy encourage EPA taking enforcement actions, as appropriate, to ensure optimum deterrence

Office of Civil Enforcement’s Waste and Chemical Enforcement Division and regions emphasize developing corporate-wide cases

Enforcement options range from Notices of Warning to Stop Sale, Use, or Removal Orders (SSURO) to civil administrative penalties to criminal prosecutions

Most enforcement cases are civil in nature and the penalty is determined by a seven-step process considering the appropriateness of the penalty to the size of the business, proposed penalty’s impact on ability to continue in business, and gravity of the violations

EPA’s Enforcement Process Encourages Proact ive Compl iance Programs

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EPA’s Enforcement Process Encourages Proact ive Compl iance Programs (cont ’d )

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EPA will pursue enforcement actions against registrants and distributors for sale and distribution of unregistered, cancelled, and/or misbranded pesticides, composition differs, production from an unregistered establishment, and illegal importation

EPA’s 2000 Voluntary Disclosure Policy encourages self-auditing, prompt disclosure, and timely correcting violations

Benefits include reduction of the civil penalty and not to recommend criminal prosecution

EPA’s Enforcement Process Encourages Proact ive Compl iance Programs (cont ’d )

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Steps to Stay CompliantSheryl L. Dolan


Compl iance Responsib i l i t ies and L iab i l i t ies

Distributor is an agent of the registrant

Both the registrant and the distributor may be held liable for violations

Both the registrant and the distributor must take steps to ensure compliance

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Avoid ing Noncompl iance - - Issues Common to Regis t rants and Dis t r ibutors

Since registrants and supplemental distributors are equally liable, both parties must actively take steps regarding: Compliance programs

Appropriate contracts addressing compliance and liability issues

Reporting and recordkeeping

“You haven’t said anything for ten years. Is everything O.K.?”

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Avoid ing Noncompl iance - -Par t icu lar Issues for Regis t rants Registrants must:

Be aware of what supplemental distributors are doing

Routinely inform supplemental distributors of changes to product label

Ensure proper communication to supplemental distributors regarding cancellations and transfers

“What we have here is a failure to communicate.”

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Avoid ing Noncompl iance - -Par t icu lar Issues for Supplementa l D is t r ibutors Supplemental distributors must:

Understand the applicable requirements, their responsibilities, and particularly their limitations

Establish a program to ensure they are informed if the registrant amends the EPA-approved label and that corresponding changes are made to the supplemental distributor label

Implement training protocol or program to ensure compliance

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Avoid Noncompl iance - - Meet ing Requi rements Regard ing Product Name Supplemental distributor may use the same product

name as the registered product

A distributor product can have multiple or alternate brand names

Companies must inform EPA and states of all brand names (and states can require separate registrations for different brand names)

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Avoid ing Noncompl iance - -Accuracy of EPA Database and Recordkeeping Companies should review EPA database to

make sure that submissions to EPA are properly reflected

Registrants and supplemental distributors should keep copies of the following: All correspondence, including e-mail, regarding the

supplemental distributor product

The Distribution Agreement

The completed EPA Form 8570-5 and delivery receipt

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Avoid ing Noncompl iance - -Understanding Di f ference between Supplementa l D is t r ibutors and Tol l Manufacturers Potential pitfall regarding where and how distributor

product is produced

There must be contractual privity between registrant and formulator producing distributor product

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Avoid ing Noncompl iance - -Contracts Contracts are required between the registrant and the

producer for the supplemental distributor

Contracts are not required between registrants and supplemental distributors, but such contracts can cover important issues, for example:

Liability and indemnity

Review and approval of distributor product’s label

Existing stocks provisions

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Q&A -- The phone lines will now be opened for your questions

Lisa BurchiB&C®

Sheryl DolanB&C ®

Lisa CampbellB&C ®

Jon JacobsJacobs Stotsky

THANK YOU

For further information, please contactLisa Campbell

(202) [email protected]

B&C ® professionals have substantial experience in the law, regulation, and policy

of products implicated under FIFRA. We would be pleased to be of assistance.

www.lawbc.com

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