SCHEDULE A-2 PESTICIDE RESEARCH AND DEVELOPMENT EXPENDITURES 1-COMPOSITE ANALYSIS OF ALL 1 Pesticide R. & D. done in the United States (and that part of R. & D. done abroad that is conducted for support of U.S. marketing activities). 2 Includes process development. SCHEDULE A 6-PESTICIDE RESEARCH AND DEVELOPMENT EXPENDITURES FOR REGULATORY MAINTENANCE OF Note: Number of participants: 33 (31 companies had expenditures for regulatory maintenance). 1 Not a summation of the compounds in each product group. Note: Number of participants: 29 SCHEDULE A-9 COMPOUND DEVELOPMENT AND REGISTRATION EXPERIENCE-COMPOSITE ANALYSIS OF ALL REPORTING Note: The number of compounds will not equal the total number of submissions or applications since these actions do SCHEDULE A-11.-INDUSTRY RULE-OF-THUMB ESTIMATES OF DISCOVERY AND COMMERCIALIZATION TIME AND SCHEDULE A-12.-HISTORY OF LAST TWO NEW PESTICIDE CHEMICAL PRODUCTS CLEARED BY Mr. HERTEL. In addition, one of our member companies, Dow Senator ALLEN. Without objection, so ordered. (The letter is as follows:) COMMITTEE ON AGRICULTURE, MIDLAND, MICH., February 29, 1972. Dow Chemical U.S.A. supports the National Agricultural Chemicals Association position and "Statement relative to exclusive use of data provision of H.R. 10729." Dow committee millions of dollars annually in generating research and development data on pesticides. Some goes for prospective new pesticides, some is spent in support of existing products. Many of these pesticides in the latter category no longer have patent protection. The group of "old" products would include the herbicides 2,4-D silvex, 2,4,5-T, dinoseb, dalapon, and the soil fumigant mixture, dichloropropene-dichloropropane. The data being obtained on these items are required to maintain present registrations or support registrations for new uses. The cost of this research must be recovered in the price of the product sold by Dow. Companies who do no research on their brand of these products can piggy-back on Dow registrations and price their products without regard for the added research and development cost. This discriminatory competition can be ended by enactment of a provision like that in Section 3 (c) (1) (D) of H.R. 10729. There is nothing in this provision that inhibits or prevents any person from performing his own research and development to earn his place in the market. Thus, it is not an "extension of a patent" as has been charged by some persons. As an side, it should be noted that often patents on new pesticides are issued several years prior to premarketing registration because of the lengthy testing requirements. This shortens the period of protection originally intended by Congress. We firmly believe that unless the new law contains a provision to prevent the use of one company's data in the support of a competitor's registration, the welfare of agriculture and the public at large will suffer. Much of the incentive for industry to commit its resources to progress will disappear. R. E. NAEGELE, General Manager, Ag-Organics Department, Dow Chemical U.S.A. Mr. HERTEL. Our statement which has been submitted for the record covers each of the proposals I have mentioned in some detail. Mr. Chairman, I would be glad to answer any questions. Senator ALLEN. Thank you very much. Mr. Hertel, yesterday at least two witnesses stated that this provision providing for indemnity in case of cancellation of registration, was a joker in the bill. Would you care to comment on that statement? Mr. HERTEL. Yes, sir; I think it is a good provision from the standpoint of the farmer particularly and the small businessman that serves agriculture. I think they need to be recognized because there are dangers in the cancellation of our product. I also think that it should be recognized that, regardless of the registered use of a product and what happens to it, that in the event of imminent hazard and the loss of that product, that there can be situations that arise where substantial inventories result. Such action is not or cannot be anticipated. It may be a matter of policy; it may be a matter of need. I think it is in these areas that we need to give consideration to the indemnity provision. Senator ALLEN. Well, suggestion was made that if there was an indemnity provision, this would encourage, not the farmer, but the manufacturer to be less careful to make sure that his product was safe. Do you feel that that is a correct observation? Mr. HERTEL. No sir, I do not. Because the research, the requirements of FIFA, the requirements of H.R. 10729 are very specific in the registration areas. Further, we in industry spend, as you know, many many millions of dollars in the research and development effort. We recog nize the concern of the public and of EPA and of our people. We attempt to direct our research into areas of safe products and I can't believe that any industry, any member of our industry, would knowingly produce a product that they felt could be a real hazard to the public. Senator ALLEN. Would you have any idea as to the total value of all inventories in the hands of manufacturers of pesticides whose registration had been canceled or withdrawn in a year's time? Mr. HERTEL. No, sir; I have no access to that. It could be developed. I have information with respect to our own company. Senator ALLEN. That is not a trade secret, is it? Mr. HERTEL. No, no, I refer particularly to the action involving DDT in particular. At the time of loss of registration of DDT our inventory in the United States was under a million dollars. Senator ALLEN. Who do you think would be the chief beneficiary of the indemnity provision, the manufacturer or someone down the line from the manufacturer? Mr. HERTEL. Well, I feel the beneficiary of such a provision here is directed toward the farmer and the small businessman. Senator ALLEN. You think the farmer, if he had 100 pounds of pesticide which had been condemned, that he would refrain from using it? Do you feel that he would refrain from using it just because he heard that in far off Washington the registration had been withdrawn? Mr. HERTEL. Some would and some wouldn't, Senator. I think one of the problems here would be in what manner they were informed and what was done about withdrawing that product from his hands. I believe that all farmers are very much aware of the need for control in this area. They want to be cooperative, they should have a part in that operation. STATEMENT OF JOHN D. CONNER, COUNSEL, NATIONAL AGRICULTURAL CHEMICALS ASSOCIATION Mr. CONNER. Senator, in regard to that question, it seems to me it should be realized that under H.R. 10729, if it is enacted, your farmer would be much less likely to use the product after cancellation because he would then be in violation of a law. At the present time he would not be unless it happened to be a State law. Senator ALLEN. Don't you think you ought to withdraw that criminal provision about the farmer using a withdrawn pesticide. Do you think that you ought to subject him to a $1,000 penalty as the law provides? Mr. CONNER. The bill as it started out, would have subjected him to a $10,000 penalty. The House cut it down to $1,000. Senator ALLEN. Do you think it ought to be in any amount? Mr. CONNER. I don't know that I am in a position to express an opinion on that. I do feel, though, as far as the method of enforcing this penalty, which is referred to as a civil penalty, that it can be very harsh in its application because the civil penalty provisions, as they are in the bill, give to EPA the administrative authoirty to assess this penalty and to the Department of Justice authority to collect it in a civil trial and the action is for the purpose of collecting the penalty. And I had agreement from the Government attorneys with whom I have discussed this that there would be no right of a jury trial on the question as to whether or not there was a violation of the act or whether or not the $1,000 penalty or $750 or whatever it would be, would be a reasonable offense. It would be in the nature of an action in debt by the United States to collect $750 or $1,000. I feel that that provision is unfair, not only to the farmers, but to anyone else who is subjected to a civil penalty under the act. We raised this point in the House. We felt strongly on it. The House would not give us the relief that we requested on it. But I do feel this is the first instance that I know of where there is statutory authority of this nature to collect as a debt, a penalty that has been imposed administratively. Senator ALLEN. Well, I appreciate your pointing that out. I am sure the subcommittee would want to give careful attention to the question of too much disposition on the part of the Federal Government to withdraw the right to trial by jury. As to the million dollars in inventory of the DDT, was that million dollars divided among a number of manufacturers. Mr. HERTEL. No, this was within our own inventory structure at that time. Senator ALLEN. In other words, this indemnity could cost the Government many millions of dollars, could it not? Mr. HERTEL. It is possible. Senator ALLEN. Well, it is likely? Mr. HERTEL. Yes. STATEMENT OF PARKE C. BRINKLEY, PRESIDENT, NATIONAL AGRICULTURAL CHEMICALS ASSOCIATION Mr. BRINKLEY. Mr. Chairman, let me add a word to that if I may. I think that it is important that you get the real understanding here. The only time that the indemnity would come into play would be when there was a suspension order. Now, this results from their finding that a particular product had properties which were an imminent hazard to the public. And so in the public interest it would be taken off the market to protect the public. Now, this is the public's business. In most cases under the cancellation proceedings, it has been generally agreed that the best way to get rid of the stock that is on hand is to provide for it to be used according to directions until the stocks have been used up. In other words, to stop the manufacturing but allow them to be used until the stocks on hand throughout the channels of trade are eliminated. And this takes only a relatively short time. Usually you don't manufacture or have on hand more than a normal year's supply. In order to run into this indemnity provision it would be a case where the manufacturer in good faith was manufacturing and distributing this product, the EPA had in good faith approved it and said that they thought it was all right, the Department of Agriculture and the Department of Health, Education, and Welfare also had been using this in good faith and suggesting its use in good faith to the people. But then something completely new or some characteristic about the product that had not been brought to light before suddenly becomes apparent and it was determined that this was a real 76-194 O -72- -18 |