EPA Fixes Its Own Error—Clarifies Pesticide Export Collateral Labeling Requirements

On February 17, 2015, the U.S. Environmental Protection Agency's (EPA) clarified pesticide export labeling regulations will take effect, ending nearly two years of confusion and regulatory uncertainty regarding the permissibility of using collateral labeling.  This uncertainty was created in 2013 when EPA made a textual error in its updated labeling requirements.  Since that time, EPA has allowed exporters to operate according to two No Action Assurance letters while the Agency has worked to correct the erroneous rule text.  These final rules end the need for the No Action letters, and adopt a more streamlined export labeling solution. See 79 Fed. Reg. 75,752 (Dec. 19, 2014).

I. The History of the Problem

Understanding the last two years' uncertainty requires a bit of history.  Prior to 2013, EPA's export labeling regulations proscriptively described labeling requirements for exported pesticides, including pesticides registered and unregistered in the U.S.  Adopted in 1993, the rules had come to be recognized by EPA and industry to be confusingly written and internally inconsistent.  In 2011, EPA proposed rules that were intended to clarify and simplify the 1993 labeling regulations, but were not intended to substantively change most of the requirements, except to clarify that the rules extended to unregistered products.  See 76 Fed. Reg. 18,995 (April 6, 2011).  Both the 1993 rules and the 2011 proposal allowed certain pesticide export labeling to be provided either affixed to the immediate container or attached as collateral labeling.

However, when the updated rule was promulgated in final form in 2013, a drafting error meant that the provisions allowing the use of collateral labeling had been replaced with a statement that the labeling had to comply with 40 C.F.R. § 156.10(a)(4), the standard labeling requirements for domestic registered products.  See 78 Fed. Reg. 4073 (Jan. 18, 2013).  Section 156.10 requires that the label be “securely attached to the immediate container.”  This error completely eliminated the ability to rely on collateral labeling, standing prior industry practice and EPA's intention on its head.

After industry pointed out the error, EPA rapidly—for a government agency—acknowledged the problem it had created and began working to correct the error.  However, because the Agency could not amend its rules prior to the implementation date, EPA first issued a “No Action Assurance” letter to industry acknowledging the problem and stating that “EPA will not pursue enforcement for violations of the pesticide export labeling requirements found in 40 C.F.R. Part 168, Subpart D” so long as exporters followed the labeling requirements originally proposed in the 2011 proposed rule.  (Letter to American Chemistry Council, Jan. 22, 2014).

EPA next tried to correct the drafting error by promulgating a “direct final rule” at the end of April 2014, and it took the opportunity to further streamline the language in the section.  See 79 Fed. Reg. 24,347, 24,350 (April 30, 2014).  However, under federal administrative procedures, such direct final rules can only become effective if no “adverse” or negative comments are received by the agency.  Several such comments were received—some of which were less than one sentence long—and before the direct final rule could take effect, it was converted into a proposed rule subject to standard notice and comment procedures. See 79 Fed. Reg. 40,040 (July 11, 2014).

Due to the extended delays, EPA's 2014 No Action Assurance letter expired while the 2014 proposed rule was still pending.  EPA issued another letter which extended the expiration date of the first letter.  Again, the No Action Letter continued to instruct exporters to abide by the 2011 proposed rules. 

Thus, by the end of 2014, there were two published final rules (2013 and 2014), which the Agency now instructed industry to ignore, and two Agency letters providing that instruction and referring industry back to a 2011 proposed rule, whose text was different from both the 2013 and 2014 final rules.  That exporters were confused is an understatement, and EPA created a website dedicated to attempting to explain the situation.

With the December 19 th promulgation of the—we hope—final rule, this confusion should now be put to rest, and industry can get on with exporting their products.  With the final clarification in place, exporters will be allowed to meet export labeling requirements by using “collateral labeling that is either (a) Attached to the immediate product (container label); or (b) Attached to or accompanies the shipping container of the export pesticide or export device at all times when it is shipped or held for shipment in the United States.” 79 Fed. Reg. at 75,754 (to be codified at 40 C.F.R. § 168.66).

II. The Clarified Requirements as of February 17, 2014

As corrected by the December 19 th final rule, the export labeling requirements envision a number of scenarios.  The two most common scenarios are described below, but many other scenarios exist depending on factors such as the destination country, the language spoken in that country, the product's formulation, and the intended uses.

First, the situation where a product is registered in the U.S. and a foreign jurisdiction with an identical formulation and with identical approved uses presents the simplest labeling scenario under 40 C.F.R. § 168.69.  To take advantage of this provision, the foreign labeling may not add new uses or claims, or contradict in any way the U.S. approved label.  In this instance, the foreign labeling would be applied to the product's immediate container, and, under the 2014 final rule, the U.S. labeling would be attached to the shipping container as collateral labeling.

Further, for purposes of this rule, EPA allows the U.S. approved products to be modified in certain ways allowed by the notification or non-notification provisions of § 152.46 and P.R. Notice 1998-10.  See 40 C.F.R. § 168.69(b)(2).  Allowed changes include:  changing the brand name; deleting pests or uses; and limited composition changes such as a change in color.

Second, where the changes to the foreign registered and labelled product do not meet one of the allowed minor changes described above, the product would be considered an “unregistered” product for purposes of the export rule.  Commonly, such changes might include:  the addition of pests or uses that are not registered in the U.S.; adding application methods that are not approved in the U.S.; and foreign registered products whose composition does not match the U.S. registered product.

In these instances, the product would be required to follow the labeling instructions in § 168.70.  A company would include the labeling statements required by § 168.70(c)(3) using collateral labeling.  The statements that must appear on either the foreign or collateral labeling include the following:

(i) Name, address, and EPA establishment number of the producer.

(ii) English and foreign language net weight or measure of contents.

(iii) An English and foreign language ingredient statement (English only may be acceptable if English is “likely to be understood by the ordinary individual in the importing country”).

(iv) English and foreign language human hazard and precautionary statements.

(v) The statement “Not Registered for Use in the United States of America.”  This statement may be further clarified by noting the factual reason the product is not registered.  For example, “Not Registered for Use in the United States of America for Use on Ants.”

Furthermore, exporters are required to obtain a foreign purchaser acknowledgement statement (FPAS) prior to exporting unregistered pesticides.  40 C.F.R. § 168.75.  This requirement has not changed since the 2013 revisions.  The exporting company must submit the FPAS to EPA either on a per shipment basis prior to each shipment, or using annual reporting procedures.  The FPAS must contain the following information:

(i) Name, address, and EPA identification number, if applicable, of the exporter.

(ii) Name and address of the foreign purchaser.

(iii) Identity of the product and the active ingredient(s), including:

• (A) The Chemical Abstract Services (CAS) Registry number for each active ingredient.
  

• (B) The chemical nomenclature for each active ingredient as used by the International Union of Pure and Applied Chemists (IUPAC).
  

• (C) Other known chemical or common names.

(iv) The country or countries of final destination of the export shipment, i.e., where the exported pesticide is intended to be used, if different from the country of the foreign purchaser's address.

(v) A statement that indicates that the foreign purchaser understands that the product is not registered for use in the United States and cannot be sold in the United States.

(vi) The signature of the foreign purchaser.

(vii) The date of the foreign purchaser's signature.

See 40 C.F.R. § 168.75(c).  Now that EPA has finalized the clarified regulations, exporters of pesticides will have more confidence that, at a minimum, they know which rules are in effect going forward.  However, exporters must still carefully determine which labeling requirements apply to each product, and ensure that any labeling used for exports complies with the rules.