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“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
© 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
SPEAKERS:
Lisa BurchiB&C®
Sheryl DolanB&C®
Lisa CampbellB&C®
Jon JacobsJacobs Stotsky
© 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
Background Information and Basic RequirementsLisa R. Burchi
© 2014 Bergeson & Campbell, P.C. All Rights Reserved.
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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© 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
Supplemental Registration: The Development of an EPA Enforcement PriorityJon Jacobs
© 2014 Bergeson & Campbell, P.C. All Rights Reserved.
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.”
FY 2014 NPMG for F IFRA Supplementa l Regis t ra t ions (cont ’d )
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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
FY 2014 NPMG for F IFRA Supplementa l Regis t ra t ions (cont ’d )
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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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© 2014 Bergeson & Campbell, P.C. All Rights Reserved.
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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© 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
Steps to Stay CompliantSheryl L. Dolan
© 2014 Bergeson & Campbell, P.C. All Rights Reserved.
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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© 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
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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