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EPA Intends Final Rule to Ensure Protection of Data Submitters' Rights




by:
Bergeson Campbell P.C. - Washington Office

 
February 27, 2014

The U.S. Environmental Protection Agency (EPA) promulgated on February 5, 2014, a final rule revising and updating the regulations governing the procedures for the satisfaction of data requirements under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). Given the importance of data compensation rights, and the fact EPA has not weighed-in on this matter for over three decades, the rule is an important must read for pesticide stakeholders.

The final rule addresses procedures for the protection of exclusive use and data compensation rights of data submitters, which EPA notes have not been revised since issuance in 1984. According to EPA, the revisions are necessary to accommodate statutory changes and related changes in practice that have occurred since then and to make minor changes to clarify the regulations. While this may be true of some of the changes, there are others that were the subject of significant comments and may be controversial in their resolution and the subject of further discussion. EPA's final rule should be reviewed carefully to ensure companies understand how EPA views the requirements and procedures related to data submissions and compensation. Likewise, EPA's Response to Comments document should be reviewed closely, as it includes guidance on several related issues not mentioned in the final rule. The final rule will be effective April 7, 2014.

Background

EPA issued a proposed rule on November 5, 2010, that would:
  • Replace the limited listing of actions to which Subpart E does not apply with a single reference to actions that may be accomplished by notification or non-notification under Section 152.46;
  • Update and restructure the existing definition of exclusive use period to incorporate the additional exclusive use criteria added by the Food Quality Protection Act of 1996 (FQPA);
  • Revise Section 152.84 to conform to the requirements of FIFRA Section (33)(f), which now requires data compensation materials to be submitted at the time of application; and
  • Update the regulations to be consistent with programmatic developments since the regulations were first promulgated in 1984, including eliminating the data gap procedures, removing the reference to Registration Standards, and adding e-mail as a means of contacting data submitters.
More information regarding the proposed rule is available in Bergeson & Campbell, P.C.'s November 8, 2010, memorandum.

Public Comments and EPA Responses

EPA states that it considered comments received on the November 5, 2010, proposed rule, and provided responses in a Response to Comments document, which is available in the online docket. EPA notes that many commenters requested additional revisions that were outside the scope of the proposed rule, and the Response to Comments document discusses only key comments within the scope of the proposed rule and EPA responses. The Federal Register notice summarizes comments and EPA's responses on the following issues:

Data Submitters' Rights under a Data Call-In (DCI)

EPA proposed to specify in the applicability section of the regulation at 40 C.F.R. Section 152.81(a)(3) that when a DCI itself establishes procedures for the protection of data rights, recipients of the DCI must follow the procedures established in the DCI. Two commenters were concerned that the proposed revisions would nullify the protections afforded by the administrative process used to develop Subpart E and could result in the establishment of arbitrary procedures.

EPA states that it did not intend to suggest that the data protections of FIFRA Section 3(c)(1)(F) do not apply to data submitted in response to a DCI. The purpose of the proposed amendment to Section 152.81(a)(3) was to clarify and codify EPA's existing practices for ensuring protection of data rights in connection with the issuance of DCIs. According to the notice, EPA believes it is generally simpler and more efficient to include provisions for the protection of data in the DCIs themselves to provide recipients with a single set of instructions for satisfying the terms of a DCI. EPA notes that, because the process and timing for complying with DCIs differs from the process for obtaining a new registration, "it generally makes sense to tailor the instructions for addressing the data protection requirements of FIFRA to fit the structure of the DCI compliance process."

List of Amendments Excluded from the Scope of Subpart E

A commenter asked EPA to provide a single source of current, appropriately updated, and readily available guidance that specifies actions that do not require compliance with Subpart E. EPA proposed revising Section 152.81(b) by removing the list of amendments in Section 152.81(b)(4) that do not require compliance with Subpart E and instead refer to the notification and non-notification provisions of Section 152.46.

EPA notes that, through proposed Section 152.81(b)(6), it would retain its ability to exclude from the provisions of Subpart E "any type of amendment if the Administrator determines, by written finding, that Agency consideration of data would not be necessary in order to approve the amendment under FIFRA section 3(c)(5)." EPA states that, because it would be difficult to create an exhaustive list of possible registration amendment actions that do not require review of data, EPA believes it is simpler and less confusing to make that principle clear in the regulations without also including what, in the existing regulations, was a non-exhaustive list of such amendments. EPA notes that Pesticide Registration (PR) Notice 98-10 was developed pursuant to Section 152.46 specifically to identify minor registration amendments that may be made by notification or non-notification without the need for EPA review of scientific data and are, therefore, not subject to the Subpart E data protection procedures. EPA "believes it is appropriate to address other circumstances where scientific review of data is not required on a case-by-case basis in connection with specific amendment requests."

Authorization for Use of Exclusive Use Studies for Tolerances or Tolerance Exemptions

A commenter proposed that EPA require applicants to submit authorizations for use of exclusive use studies prior to registration or EPA's granting of a tolerance or tolerance exemption if EPA identifies any exclusive use data submitted on the Data Submitter's List. EPA notes that the regulations at Sections 152.86(a) and 152.93(b) already require applicants to certify prior to registration that they have obtained permission for the citation of any exclusive use studies. EPA states that it believes that the certification process under these provisions has been effective in ensuring that necessary authorizations have been obtained and there is no need to require submission of the actual documentation to EPA. In addition, EPA states, the commenter's request to extend the proposal to apply to the issuance of tolerances and tolerance exemptions goes beyond the scope of EPA's proposal. EPA refers to its April 17, 2003, Federal Register notice announcing the availability of a white paper entitled "Proposal for Implementing Data Compensation Rights for Data Submitted in Support of Tolerance or Tolerance Exemption Actions," which discusses a program to enable EPA to implement appropriately Section 408(i) of the Federal Food, Drug, and Cosmetic Act (FFDCA) to address exclusive use and compensation rights for data submitted to EPA in support of tolerance and tolerance exemption actions. EPA states that, in the white paper, it made clear that FFDCA Section 408(i) "extends exclusive use and data compensation rights to data submitted to support or maintain tolerances and tolerance exemptions to the same extent provided by FIFRA section 3." EPA notes that while FFDCA Section 408(i) bestows protections to data submitted under FFDCA, EPA protects those rights through the FIFRA registration process when an application for a pesticide registration is submitted, not when a tolerance or tolerance exemption is sought. According to EPA, "[t]olerances and tolerance exemptions are rulemaking actions, not licenses issued to individuals that sell or distribute pesticides or pesticide ingredients." Unlike FIFRA, the FFDCA rulemaking process does not provide EPA with a means of ensuring compliance with exclusive use and compensation requirements by all persons who may sell or distribute a product covered by a tolerance or tolerance exemption. EPA states that for this reason, it ensures compliance with exclusive use and data compensation obligations in connection with the submission of an application for registration or amended registration under FIFRA, and not in connection with the issuance of a FFDCA tolerance or tolerance exemption.

When Materials Must Be Submitted

Several commenters addressed EPA's proposal to amend Section 152.84 to require submission of all data compensation compliance information and materials, including evidence of any necessary offers to pay compensation, at the time of application rather than "at any later time prior to EPA's approval of the application." EPA notes that the commenters were split regarding the proposed revision. EPA proposed the change to conform the implementing regulations with the requirements of FIFRA Section 33(f)(4), as amended by the Pesticide Registration Improvement Renewal Act (PRIA II). Because FIFRA Section 33(f)(4)(B) directs EPA to determine during the initial screen (within 21 days after receiving the required registration service fee) that "the application contains all the necessary forms, data, and draft labeling," EPA states that it believes that completed data citation forms must be submitted at the time of application.

Commenters objecting to the proposal argued that, contrary to EPA's position, FIFRA Section 33(f)(4) provides EPA with discretion to determine what contents of the application constitute a "complete application." According to these commenters, EPA's ability to conduct reviews of applications would not be limited in any way by allowing applicants to submit offers to pay throughout the application review process. EPA states that this group of commenters' primary concern appeared to be that the proposed change may provide a greater opportunity for data submitters to seek compensation and file data compensation petitions before uncertainties involving EPA's "substantial similarity" determinations and related data issues were resolved. These commenters asked EPA to maintain the current language or consider an alternative to the proposed amendment whereby applicants would be required to provide notice to data submitters of their intent to file applications for registration, but would not be compelled to tender any associated offers to pay compensation unless and until EPA reviewed and accepted the applicant's citations to data.

According to EPA, commenters supporting EPA's proposed amendment agreed with EPA's interpretation of PRIA II that completed data compensation materials must be submitted as part of the initial application. These commenters argued that allowing applicants to delay submitting required offers "until the eve of registration" effectively reads the right to petition to deny an application out of EPA's regulations and deprives EPA of the assistance of the original data submitter in meeting EPA's obligation to determine that the applicant has submitted or cited all necessary data.

EPA states that it "continues to believe that Congress clearly addressed this issue with the passage of PRIA II and must therefore reject those comments seeking that EPA maintain § 152.84 in its current form." According to EPA, with the recent passage of the Pesticide Registration Improvement Act of 2012 (Pub. L. 112-177), Congress has only made it more clear that a completed data certification form must be submitted at the time of application. The notice states:

Specifically, FIFRA section 33(f)(4)(B)(iv)(II) now expressly provides that an application is only considered complete for purposes of the preliminary technical screening required by FIFRA section 33 if the Administrator determines that "the application, data, or information are consistent with the proposed labeling and any proposal for a tolerance or exemption from the requirement of a tolerance . . . and are such that, subject to full review under the standards of this Act, could result in the granting of the application." (emphasis added). Since EPA cannot lawfully grant an application in the absence of ensuring that an applicant has made all necessary offers to pay or received any required letters of authorization to cite data, it is clear that EPA cannot consider as complete applications that do not include a completed data certification form. Consistent with the requirements of FIFRA section 33(f)(4)(B)(ii), EPA is required to reject applications that do not include completed data certification forms and therefore cannot permit applicants to submit certifications "at any later time prior to the approval of the application," as previously provided in § 152.84.

EPA states that it believes that providing data submitters with the required offers to pay at the beginning of the application process can serve to assist EPA in ensuring that it meets its FIFRA Section 3(c)(1)(F) obligations and "can serve to encourage early resolution of data compensation disputes." EPA notes that while it understands why some commenters would prefer to engage in those disputes after an application has been granted rather than before, "EPA does not believe this is a policy objective reflected in FIFRA, nor was it EPA's objective when it promulgated the original regulation that allowed data compensation materials to be submitted after the initial application."

The final rule, which rejects the possibility of submitting such evidence after the application is submitted but just prior to the time that EPA approves the application, does seem to clarify that EPA is not seeking the submission of actual copies of the offer to pay letters, but rather the completed Certification with Respect to Citation of Data form (Certification). For an applicant to submit a completed Certification, it must state that it has sent offers to pay, so the fact that the offer to pay letters need not be submitted to EPA does not mean that such letters must not be sent before the application is submitted.

Electronic Means of Contacting Data Submitters

Two commenters asked for clarification regarding whether the proposal to require offers to pay to include the applicant's e-mail address applied to data submitters or whether it was meant to apply only to applicants submitting offers to pay compensation. According to these commenters, it would not be appropriate or sufficient to allow electronic notification as the sole method of delivering offers to pay data submitters. EPA notes that the provision proposed in Sections 152.86 and 152.95 that creates a requirement to include an e-mail address as an additional point of contact is part of the "offer to pay" requirement that is applicable to applicants, not data submitters. EPA states that it believes the proposed provisions are clear that the obligation to provide an e-mail address is part of the offer to pay requirement. According to EPA, it inadvertently omitted this language from the offer to pay provision in proposed Section 152.93(b)(2)(v) and has included it in the final rule.

EPA states that it did not intend to prescribe or limit the means by which an applicant delivers offers to pay to data submitters, and the regulations in Subpart E have not limited the forms of delivery that may be used. According to the notice, "EPA recognizes the efficiencies afforded by email, and the Agency believes that, given advances in technology, it would be inappropriate to preclude email as a means of communication between applicants and data submitters, including submission of offers." Provided the applicant can produce evidence of delivery of the offer to the original data submitter, EPA states that it does not believe FIFRA prescribes a precise method of delivery. Consistent with this view, the final rule amends the language in Section 152.99(b)(2) requiring that data compensation petitions be sent by certified mail, to allow the use of any method that provides evidence of delivery.

Source of List of Data Requirements

Several commenters asked EPA to clarify when Reregistration Eligibility Decision (RED) documents and registration review decision documents can be relied on to determine registration data requirements and to determine what data are compensable. The November 5, 2010, proposed rule would eliminate from Section 152.90(a) the requirement that an applicant use an issued Registration Standard, which was the reregistration decision document EPA issued prior to 1988, as the source of its list of data requirements for the selective method. Section 152.90(a) indicated that if the Registration Standard does not address all required data or there is no Registration Standard, the applicant must refer to the data requirements in 40 C.F.R. Part 158 as the alternate source of its list of data requirements.

EPA states that the form of its decision documents has evolved since it promulgated the regulations in 1984. Registration Standards were superseded by REDs, and EPA states that REDs "will likely be superseded or updated by determinations made under the registration review program required by FIFRA section 3(g) and 40 CFR part 155." Given this, EPA no longer intends to identify by regulation a specific type of decision document as the source of data requirement listings. Commenters expressed concern that the proposed amendment could be interpreted to allow selective citations to exclude data requirements not explicitly included in EPA's codified data requirements but that were otherwise required in connection with registration, reregistration, or registration review actions and reflected in EPA decision documents. The commenters asked EPA to reinforce that its data regulations are flexible and that it can and often does impose additional requirements beyond those explicitly provided in the data tables. While EPA agrees with these comments, it "does not believe there is any need to alter the language of the amendment as proposed." EPA did not intend to suggest that in all cases the data tables in 40 C.F.R. Part 158 will constitute the exclusive list of required data that applicants using the selective method of citation must satisfy. According to EPA, its data regulations "make it explicitly clear that the regulations are intended to be flexible and that EPA reserves the right to require additional data, or, in some instances, to waive studies that EPA concludes are not relevant to its registration decision under FIFRA." EPA states that it intends the reference to 40 C.F.R. Part 158 in amended Section 152.90(a)(2) incorporate this principle.

Elimination of Certification and Documentation Procedures for Data Gaps

One commenter noted that, in the preamble to the November 5, 2010, proposed rule, EPA states that a data submitter would no longer routinely receive requests from applicants to confirm a data gap, but that, under Section 152.119, EPA "will make available 30 days after registration the means by which an applicant satisfied the data requirements, including whether, under the selective method, the applicant claimed a data gap." According to the commenter, this puts a burden upon data submitters to search for EPA actions that may be affected. The commenter questioned how EPA intends to make such information available and whether the information will be available for all applications for new or amended registrations that rely upon the selective method or only for certain ones.

According to EPA, "there are numerous means to ensure protection of a data submitter's interest in compensable data should an applicant incorrectly assert that a data gap exists." First, with the completion of reregistration and the development of REDs for all pesticides that list by guideline the data received and reviewed by EPA, EPA states that it "is now in a far better position to evaluate the legitimacy of data gap claims than it was when it issued the existing data compensation regulations in 1984." Second, according to EPA, data submitters will often have prior notice that an applicant is seeking registration when they receive offers to pay compensation for any data for which a data gap is not claimed. EPA states that if a data submitter believes the offer to pay should also extend to previously submitted studies not included in the offer, the data submitter can file a petition to deny the application under Section 152.99. Finally, according to EPA, once a registration is issued, the data submitter may obtain a copy of any applicant's data compliance materials through the Freedom of Information Act (FOIA), as provided in Section 152.119 and consistent with EPA's information regulations at 40 C.F.R. Part 2. With that information, the data submitter can then file a petition to cancel under Section 152.99 if the data submitter believes EPA improperly accepted the applicant's data gap claim in lieu of citing data belonging to the data submitter.

Final Rule

With the exception of the modifications discussed above, EPA states that the final rule is in essentially the same form as the proposed rule. The final rule:
  • Provides greater clarity when data compensation requirements do not apply by highlighting actions that do not require a scientific review of data and thus do not require satisfaction of data requirements;
  • Updates the definition of an "exclusive use study" to incorporate the additional exclusive use criteria added by the FQPA;
  • Conforms to the requirements of FIFRA Section 33(f)(4), as most recently amended by PRIA II, by requiring applicants to submit data compensation materials at the time of application;
  • Removes the outdated requirement that applicants use a Registration Standard for determining which data requirements need to be satisfied for a particular pesticide; instead, applicants will simply be directed to the data requirement listings in 40 C.F.R. Part 158; and
  • Updates the regulations to be consistent with EPA practices since the regulations were first promulgated in 1984.
Other Guidance

EPA's Response to Comments document provides some important guidance on data compensation issues that are not specified in the Federal Register notice. For example, although not discussed in the Federal Register notice, EPA's Response to Comments document includes EPA's views that citations to public literature that do not include sufficient information to satisfy a registration data requirement, or summaries of data that have previously been submitted, are not accepted. EPA states that to allow such citations or summaries to satisfy data requirements "would effectively permit follow-on applications to evade compensation requirements by simply referencing EPA's own summaries of registrant data or some other publicly accessible summary of study results." EPA states that this position is one from which it has never departed and thus found it "unnecessary to amend the regulations or articulate a new policy on this matter."

In addition, EPA's Response to Comments states the following regarding the compensation rights for IR-4 data:

EPA therefore believes applicant or registrant-submitted data are entitled to compensation rights even when there may have been some measure of government involvement in the generation or funding of the data. EPA believes that the data submitter and the follow-on application can, through negotiations (or arbitration, should negotiations fail), determine the portion of a data development activity that was supported by private funds and therefore subject to compensation. It should be noted, however, that when EPA receives data from IR-4 or other government agencies rather than from an applicant or registrant, it presumes these to be government-generated data under § 152.94 and therefore "public literature" within the meaning of FIFRA section 3(c)(1)(F). Thus, if applicants wish to receive compensation for data that may have been jointly developed with a government agency, the data must be submitted to EPA by the applicant or registrant.

Although EPA years ago released a draft guidance document asking applicants to provide with their offers to pay a copy of the label for which an application is submitted, EPA states in its Response to Comments document that it is not proposing any changes to the required elements of an offer to pay. EPA states it understands that "it is generally beneficial for both the applicant and the original data submitter to share as much information as possible to ensure a prompt and fair resolution of data compensation disputes," but it does not see a "need to impose additional regulatory requirements with respect to the offer to pay to ensure proper resolution of data compensation disputes." Since information regarding an application and methods of data citation are available through FOIA, EPA states that "even if the applicant does not agree to share its label or data matrix in advance of registration, these materials certainly become publicly available after registration and the original data submitter can thereafter access these materials at this point."

Commentary

Although EPA has framed the revisions as necessary to accommodate statutory changes and related changes in practice that have occurred since then and to make minor changes to clarify the regulations, several of the changes were controversial when proposed and continue to raise concerns regarding the submission of data and data compensation rights. EPA's decision to require applicants to list the applicable data requirements at 40 C.F.R. Part 158, which could raise issues about the compensability of studies that are required by EPA but do not fit squarely within Part 158, is an example of EPA policy that companies should review carefully in both the final rule and the Response to Comments.

In addition, EPA's statement that it will not require that labels be provided with offers to pay because companies can obtain such information from FOIA is particularly curious as FOIA responses typically take an extraordinary amount of time to obtain. This EPA response provides little assistance and no comfort to data submitters considering the lengthy time it takes to receive materials sought in a FOIA request and the possibility that objections of one form or another could delay a response all the more or defeat it entirely.

 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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