STATEMENT OF CARLOS KAMPMEIER, ROHM & HAAS CO., PHILADELPHIA, PA., REPRESENTING THE NATIONAL AGRICULTURAL CHEMICALS ASSOCIATION

Mr. KAMPMEIER. Yes.

Senator ALLEN. Since there would be very little in a financial way involved, there is really not too much need for this indemnity provision, is there?

Mr. KAMPMEIER. Except the primary benefit would be to the farmer that would have it on hand, while it might not be very much dollarwise to the U.S. Government, I would think there would be quite a number of instances where it would be important to him.

Senator ALLEN. How would it be to limit the indemnity to the farmer? Would this be a sound approach?

Mr. BRINKLEY. I don't believe that that is the purpose, Senator. I think that the purpose is that when you find that there is a product that is a hazard to the American public, that it is in the interests of the American public to get it out of the way, and I don't think that you are concerned in that with penalizing the farmer or penalizing a retailer out here because he happens to have it on hand. I think that in the interest of the public you want to get rid of it and certainly it seems like to me that it is only justice that whoever happens to have it, get paid for it without being penalized.

Senator ALLEN. I have a note here that the time for the statement and questions is over. I do want to encroach upon the time limit to this extent, something I asked Mr. Johnson, on the matter of the registrant disclosing his data. I assume you gentlemen feel that this is a provision which must stay in the bill, is that correct? I mean, to make it equitable?

Mr. KAMPMEIER. That is correct.

Mr. BRINKLEY. Yes, sir.

Senator ALLEN. What Mr. Johnson was talking about on the matter of the patent, that really is not important on this, is it?

Mr. KAMPMEIER. It doesn't have anything to do with it at all. Senator ALLEN. Yes, sir, this is the original registration of a new product which will not have a 17-year patent?

Mr. KAMPMEIER. And the maintenance of registration, which would become a very costly thing to do must be considered. And let's remember how this provision came into being. It came into being in response to the Administration's concern over the fact that research was not going forward here to produce more effective and safer chemicals and chemicals for unfilled needs and so on. And why was this? Well, because this greatly increased expense of obtaining registration along with this trend that we have for the disclosure or making everything public knowledge so that we do not have the protection of one's own information.

Senator ALLEN. I feel I understand your position on that.
Mr. KAMPMEIER. That is how this came into being.

Senator ALLEN. It would encourage research and development? Mr. KAMPMEIER. Rather than in any way creating or perpetuating a monopoly or extending a patent life or anything.

Senator ALLEN. Thank you very much.

(Mr. Hertel's prepared statement is as follows:)

I am testifying today as Chairman of the Board of Directors of the National Agricultural Chemicals Association. The National Agricultural Chemicals Association (NACA) membership includes 113 basic manufacturers, formulators and associated suppliers of the agricultural pesticide industry.

I am a Vice President of FMC Corporation and the Division Manager of Niagara Chemical Division of FMC Corporation, Middleport, New York, a manufacturer of basic and formulated pesticides.

I have with me Mr. Parke C. Brinkley, President of the National Agricultural Chemicals Association, Mr. Carlos Kampmeier, Rohm and Haas Company, Philadelphia, Pennsylvania, past Chairman of the Board of Directors, NACA, and Mr. John D. Conner, our Association counsel and a member of the law firm of Sellers, Conner and Cuneo of this city.

As is evident from the record of the hearings before the Committee on Agriculture of the House of Representatives, the National Agricultural Chemicals Association has supported the objectives of the proposed legislation, i. e., to protect the public health and welfare and the environment by a comprehensive regulation of pesticides. As was stated by Dr. R. H. Wellman, past Chairman of the Board of this Association, during those proceedings:

Our industry understands and supports the need of the Administrator of EPA to have the legal power and the machinery to protect man and his environment, because we are people and this is our environment too. As a result we as an industry will support adequate regulation of pesticides to meet these requirements.

The pesticide industry throughout the consideration of H.R. 10729 and its predecessor bill in the House has supported improved and workable regulation of pesticides. At the end of the consideration of H.R. 10729 by the House Committee on Agriculture and passage by the House of Representatives, the industry believed that all major issues had been brought forward and had been given fair consideration. Although the bill as enacted by the House contained much with which we disagreed and omitted numerous provisions which we believe should have been included, the industry recognized that the House had given the bill prolonged consideration and had achieved its objective of reasoned progress. Accordingly, our Association supported the enactment of the bill in the House.

We still consider the bill generally to be fair and equitable. There are, however, a number of amendments which we propose for consideration by this Subcommittee. These amendments are attached to this statement designated as Amendments 1, 2, and 3.

Both from a substantive and a procedural standpoint the related amendments designated as Amendment 1 we believe to be the most important.

After passage of H.R. 10729 by the House, the Environmental Protection Agency on January 22, 1972 published proposed "Rules of Practice" to be issued under the present Federal Insecticide, Fungicide, and Rodenticide Act. In his testimony before the Subcommittee yesterday, Mr. David D. Dominick, Assistant Administrator, Environmental Protection Agency, said with reference to these proposed rules:

One additional point of comparison: we believe that the House Bill carries forward the policy of open administration of our regulatory system provided for by FIFRA as interpreted by the courts, the Administration's bill S. 745 and our recently proposed rules of practice. We do not believe that the language in the House Bill is intended to close the door to responsible citizens, user groups or State or Federal agencies seeking to participate in and thereby assist in improving our regulatory decision. These groups have standing. We are promulgating new rules to reflect this approach which are intended to permit an interested or affected person or group to seek review of a registration upon a showing that there is new evidence bearing on the registration or that the registration is inconsistent with present agency policy and the chemical in question is a significant problem. These requirements will prevent nuisance complaints and avoid disrupting agency priorities. They will prevent the chemical industry from having its registrations irresponsibly attacked. These rules will also insure that the administration of FIFRA will be kept in the first instance in EPA subject to Court of Appeals review after a record has been created so the judiciary can see the full picture.

The publication and proposed issuance of these rules raises a matter of substantial significance in the enforcement of the Federal Insecticide, Fungicide, and Rodenticide Act. We do not quarrel with the objective of the rules as stated by Mr. Dominick to prevent nuisance complaints, having the pesticide registrations of our industry irresponsibly attacked and keeping the administration of FIFRA in the first instance in the Environmental Protection Agency. We endorse these objectives. It is the considered opinion of our Association, however, that the proposed rules, contrary to discouraging irresponsible attacks, would encourage such actions. We further are of the opinion that the proposed rules are not authorized either under the present Act or under H.R. 10729 as it was enacted by the House. The proposed rules asserted for the first time the acceptance by the agency as the law of the land the decisions of Judge Bazelon of the United States Court of Appeals for the District of Columbia Circuit in Environmental Defense Fund v. Ruckelshaus and Wellford v. Ruckelshaus.

In previous testimony before this Subcommittee Mr. Conner, our General Counsel, discussed these decisions. That discussion will not be repeated in this statement. We invite your attention, however, to the fact that in both of those cases the Court was acting through a panel of only three Judges and by a 2 to 1 decision. In both cases both the United States Department of Agriculture and the Environmental Protection Agency, acting through the Department of Justice, contended that the Court had no jurisdiction. Insofar as we are aware, that position has never been changed. Likewise, we invite your attention to the fact that these decisions have never been followed by any other United States Court of Appeals. Accordingly we consider it to be inappropriate for the Environmental Protection Agency to promulgate rules or regulations for the purpose of implementing the decisions in these two cases. The explanatory comment which accompanied the proposed rules makes it clear that the primary purpose in promulgating the rules would be to provide a procedure which the Court in those cases was unable to find in the statutes (Federal Register, Vol. 37, No. 15, page 1059).

The proposed regulations would establish the right of third parties to petition for the cancellation of existing pesticide registrations, to require the Administrator to determine not only whether a cancellation notice should be issued but also to make a nonstatutory determination of whether the continued registration presented a substantial question of safety, the right of the third party petitioner in certain instances to compel the Administrator to issue cancellation notice even though he had determined that it should not be issued and the right of the third parties to compel the Administrator to issue an order continuing in effect cancellation after a favorable report of an advisory committee.

We propose in our amendments designated as Amendment A, an alternative procedure which in our opinion is fair and equitable to third parties who may wish to petition for the cancellation of registrations, to the registrants, and which is administratively feasible. Our proposal would achieve the following objectives:

1. Validity of Registration.-Paragraph A of our Amendment No. 1 would state as a statutory principle that registration by the Administrator of a pesticide shall be prima facie evidence that the pesticide, its labeling and packaging comply with the provisions of the Act. This is an unstated premise both in the present Act and in H.R. 10729. We believe the justification for this principle to be self-evident.

Section 3 (c) directs the Administrator to review an application for registration against three criteria. The burden to sustain that his product is entitled to initial registration is on the applicant.

The extensive research data which must be developed by the applicant to sustain this burden is set forth in Appendix A. A survey of research costs of the agricultural chemicals industry in developing new products was conducted in 1970 by National Agricultural Chemicals Association, using Ernst & Ernst to collect the data from the individual companies and in analyzing the data. This survey showed that the cost of discovery and commercialization, or the cost of discovery and registering the product under Federal Insecticide, Fungicide, and Rodenticide Act ranged from a low of $1,000,000 to a high of $12,000,000 or an average per pesticide of $5,493,000. The elapsed time from discovery to marketing after registration ranged from a low of 60 months or 5 years to a high of 108 months or 9 years, with an average of 77 months, or 6 years and 5 months.

From these data it is apparent that the investment in time and resources in developing and resgistering a new pesticide is substantial. It manifestly is fair and equitable that the decision of the Administrator to register a pesticide after such a comprehensive examination raises a presumption that the pesticide complies with the requirements of the Act.

Upon obtaining a registration industry must place substantial reliance upon it. Such reliance is entirely appropriate since registration is an official act of the Federal Government and constitutes a license to sell the product. In testimony before the House Committee, Dr. R. H. Wellman indicated the extent of that reliance by industry. In response to a question on how long it took after registration to get a significant amount of a pesticide in the hands of distributors he stated:

“If it is a first registration for that product, it can take 2 or more years, because until you get that registration, you never know whether you are going to be able to sell, and, after you get it, you may have to construct a plant.”

Business and economic judgment dictate that a registration be obtained before a plant is built and before the channels of distribution are established and filled. The manufacturing plants alone involve investment in the millions of dollars, if not the tens of millions. The costs of establishing and filling the channels of distribution have been estimated for one product of one company at thirty million dollars. And in the case of the agricultural community, the user, once the product reaches him, knowingly relies on the fact that the product is registered.

After this exhaustive procedure, we believe it evident that the decision of the Administrator to register a pesticide should be entitled to a reasonable degree of full faith and credit. It should not be an act which may be set aside lightly. 2. Right of Third Parties to Petition.-The second part of our amendment number one (designated as (b)) would provide a procedure under which third parties could petition for the cancellation of a pesticide. There is no such procedure either in the present Act or in H.R. 10729. It is this right which the Environmental Protection Agency wishes to provide in its proposed rules. We do not object to providing such a right to third parties. Any such right, however, should be so qualified that it would protect registrants against frivolous petitions and should give to the Administrator's decision on such petition a reasonable degree of finality. We believe it would be reasonable to require that:

(1) The petition must be accompanied by scientific data which was not available to the Administrator when the product was registered and must not present merely data or argument which are redundant or which have been presented previously. Unless such a rule were adopted the Administrator might well be required to consider time after time petitions setting forth substantially the same data which had previously been considered.

(2) Any opinions which are expressed in the petition or accompanying data should set forth the qualifications of the author and should set forth the data on which the opinions are based.

(3) Any allegations as to the safety or lack of safety should be stated in terms of whether the safety or lack of safety exists when the pesticide is used as directed and with the cautions commensurate with label warnings.

3. Administrator's Determination.-Our amendment would require the Administrator to review the petition and accompanying data and within a period of 120 days make a determination of whether a notice of intention to cancel should be issued. If he determines that such a notice should be issued the registrant would be required either to accept the cancellation or to institute formal administrative review proceedings in accordance with the provisions of Sec. 4(d) of H.R. 10729. If, on the other hand, the Administrator should determine that the data does not warrant the issuance of a cancellation notice, he would so advice the third party petitioner.

4. Judicial Review.-The petitioner would be given the right to obtain judicial review of this decision by instituting an action in a United States District Court to determine whether the refusal of the Administrator to issue the cancellation notice constitutes action which is arbitrary, capricious or an abuse of discretion. This type of review is the same as is given to a registrant under section 6(c) to obtain judicial review of whether the action of the Administrator in suspending a particular registration is arbitrary, capricious, or an abuse of discretion. Review by a United States Court of Appeals at this point would not be appropriate because there would be no record resulting from a judicatory type hearing to constitute the basis of its review.

In summary, our Amendment No. 1 provides an orderly procedure in which third parties can petition for the cancellation of pesticide registrations with assurance that their petition and accompanying data will be reviewed and acted upon by the Administrator within a reasonable period of time. Further, it accords to them the right of judicial review if the Administrator determines that their petition and data does not warrant the issuance of an intention to cancel.

Disclosure of Trade Secrets. Our Amendment No. 2 relates to the disclosure of data submitted in support of a registration which may be classified as a trade secret. Section 10(a), page 38, provides that in submitting data required by this Act, the applicant may (1) clearly mark any portion which in his opinion are trade secrets or commercial or financial information, and (2) submit such marked material separately from other material required to be submitted under the Act. United States Code, Title 5, Sec. 552 exempts such material from disclosure under the Freedom of Information Act. Subsection (b), Section 10 of H.R. 10729 provides: "Notwithstanding any other provisions of this Act, the Administrator shall not make public information which in his judgment contains or relates to trade secrets or commercial or financial information obtained from a person and privileged or confidential . . . ." Our Amendment No. 2 requests the removal of the phrase "in his judgment" because the inclusion of this phrase appears to leave the decision of whether or not the data constitutes a trade secret or financial or commercial information to the Administrator, regardless of how the data may be marked by the applicant or registrant under paragraph (a).

The purpose of our amendment is to require that the Administrator give to the applicant or registrant notice of his intention to release data which has been marked as a trade secret or as financial or commercial information which is confidential. This would give to the registrant or the applicant the opportunity to bring an action in an appropriate court to obtain a decision by that court of whether or not the data is entitled to protection. The question of whether or not particular data constitutes a trade secret is dependent upon many factors, some of which may not be known to the Administrator. The doctrine of "trade secrets" is one of court origin and development. The Administrator is prohibited by 18 U.S.C. 1905 from divulging "trade secrets". Under these circumstances we believe it reasonable not to make the Administrator the final judge as to whether or not particular data constitute a trade secret but to provide an opportunity for review by a court of competent jurisdiction prior to the release of such data.

Labeling and Packaging of General and Restricted Use Pesticides.-The amendment proposed by the Senate Committee Staff to Section 3(d) (1) (A) would appear to require separate packaging and labeling for the same pesticide if some of its uses are restricted, and others are classified for general use. Such labeling and packaging would substantially increase the cost of storage and distribution without any apparent public benefit. The single but distinguishable labeling of a pesticide for restricted and general uses pursuant to the bill enacted by the House permits the Administrator wide latitude in determining labeling requirements for each pesticide. Under FIFRA and H.R. 10729 a labeling involves both the written, printed or graphic matter on, or attached to, the pesticide as well as all other written, printed or graphic matter accompanying the pesticide. The Administrator could require that the label contain merely the general uses with directions while the accompanying material establishes the directions for restricted use or vice versa. Indeed a wide variety of alternatives is available to the Administrator. With the variety of alternatives open to the Administrator, the requirement for separate packaging and labeling could be of no assistance to effective enforcement and would likely result only in greater confusion in the minds of the users.

Exclusive Use of Data.-In his testimony Mr. Dominick suggested the elimination from Section 3(c) (2) (D) of the portion reading "except that data submitted in support of an application shall not, without permission of the applicant, be considered by the Administrator in support of any other application for registration." We consider this to be a crucial provision of H.R. 10729, particularly in view of the provisions of Section 3 (c) (2) requiring the Administrator to make available for public inspection data submitted in support of a registration. The National Agricultural Chemicals Association has prepared a statement in support of the inclusion of this provision. We request that copies of this statement be included in the record as an explanation of why we support this provision.