How to be FIFRA & ESA Compliant
Your Guide to Getting and Keeping Crop Protection Products on the Shelf
Crop protection companies with markets in the United States are dependent on a regulatory framework mandating compliance with two federal laws – the Federal, Insecticide, Fungicide and Rodenticide Act (FIFRA) and the Endangered Species Act (ESA) – and the subsequent cost, timing, and durability of those markets to achieve business targets through their sales pipeline. Shifting public sentiment over recent decades and subsequent pressures on regulatory agencies have resulted in legal conflict and other circumstances that challenge the decision-making process connected to crop protection product registration. The fallout is failure to achieve successful ESA compliance, including non-jeopardy biological opinions in pesticide registrations, which results in elevated business risks related to:
- Estimating return on investment in new product registrations (chemistry and seeds) and calculating the potential market reach, rate, and run for each product lifespan.
- Uncertainty about which stages of the product development and registration lifespan that ESA compliance should be evaluated and planned for.
- Achieving durable, legally defensible, and aligned registration decisions from the Environmental Protection Agency (EPA) as the action agency, and the Fish and Wildlife Service and the National Marine Fisheries Service (FWS and NMFS, hereafter the Services), as the consulting agencies.
- Lack of clarity about industry-wide equity and the structuring of the obligations and costs of compliant conservation activities tied to authorized incidental take and related commitments in Biological Opinions.
For a product to be a solid business proposition it must be commercially viable, scientifically sound, and legally defensible. Until recently, achieving two out of three of these objectives was considered a reasonable bar. As it turns out, two out of three is bad. Next generation companies are those that achieve all three objectives - delivering on the business requirements and the biology (for crops and for listed species), and therefore maintaining their social license to operate. There is a clear need for product development to be assessed across business divisions, where the cost of research, development, patent timelines, registration timelines, sales objectives, legal defensibility, competition, and both FIFRA and ESA compliance are not siloed from one another. Similarly, each company should evaluate their investments in industry advocacy activities such as member organizations, task forces, and grower associations relative to the progress being made on this issue.
Creekbank Associates understands the problem the crop protection industry and resource agencies are facing, and we have the experience and expertise to guide stakeholders to an effective, collaborative resolution. We are an agile group of independent professional advisors and technical experts — regulatory specialists, scientists, attorneys, research analysts and project developers — who believe that good business practice and profit can align with real-world environmental outcomes. We develop private sector solutions through regulatory, voluntary, and sustainability metrics, and environmental markets to deliver client performance objectives. Our work for crop protection clients includes the development of scalable tools using the ESA standard of the best available scientific information to quantify the anticipated effects when applying a pesticide product consistent with the proposed labeled directions, and the implementation of conservation offsets to meet regulatory compliance requirements.
Here we provide you with a guide on your journey to FIFRA and ESA compliance success – for your company, your customers, and the future of farming.
Risk Assessment & Effects Analysis: One of These is Not Like the Other
Due to mounting social and legal pressure, and because EPA has struggled to have a defensible crosswalk of scientific assessment rigor to translate their environmental risk assessment to endangered species effects analysis, the agency is increasingly conservative in their ESA biological evaluations. Thus far, continued attempts to translate risk assessment to effects analysis simply does not work because risk assessment is just a ‘yes’ or ‘no' answer to the “is there an impact and if so what amount” question. This dysfunction of EPA’s pesticide registration compliance with ESA section 7 consultation is due to EPA’s failure to recognize that the regulatory standard for Section 7 Biological Opinions is different from the risk assessment standard used to implement FIFRA. In a 2013 report to EPA, the National Academy of Sciences report recommended an iterative approach to developing methods for national-level biological evaluations (BE’s) based on risk assessment. The report showed a clear lack of understanding of the ESA law and implementing regulations that require an effects analysis to determine the anticipated effects to listed species and designated critical habitat associated with the application of the product proposed for registration. FIFRA’s highly conservative modeling exercises to assess risk simply do not translate into a quantifiable analysis of anticipated effects to endangered species, and thus fail to meet ESA compliance standards. As shown in Figure 1, FIFRA requires the assessment of risk relative to many factors, while ESA requires the assessment of effects to both species survival and recovery.
Figure 1. Difference Between FIFRA Risk Assessment and ESA Effects Analysis
As the ESA compliance lawsuits continue to pile up, the EPA is increasingly passing endangered species uncertainties over the fence to the Services in a long-running game of hot potato, and the crystal ball view is that the lawsuits will continue if all other circumstances remain the same. The Services are challenged to translate ‘risk’ to ‘effects’ and lack the resources to develop a scalable analysis. Until recently, industry has principally focused on coordinating with EPA as the action agency with very limited engagement as an ESA section 7 applicant. Adding to the challenge, industry has not yet fully linked their regulatory compliance actions to their corporate environmental stewardship activities to enhance their role as a good corporate citizen, known as their “social license” to operate. There is considerable brand value opportunity in this space for those companies that are positioned to act on it for near- and long-term return on investment.
Conservation That Counts: Balancing the Minuses and Pluses
The ESA section 7 consultation examines the effects of a proposed action so that the Services may issue an opinion on the ultimate outcome for the species under consideration. FIFRA registrants, as section 7 applicants, may include in their project proposals conservation measures to avoid, minimize, and offset the anticipated effects to the species. By utilizing the full suite of conservation measures in the “mitigation hierarchy,” as illustrated in Figure 2, registrants can consider the business costs and benefits of various option combinations before submitting their project proposal and formalizing commitments.
Figure 2. The number of species subject to section 7 consultation may decrease through the application of the full suite of the mitigation hierarchy (avoidance, minimization, and offsets).
Creekbank Associates is a solution provider, serving as expert liaison between the regulated and regulating communities, and implementing on the ground conservation. We provide our clients with guidance and analysis in advance of the formal consultation, enabling them to weigh product sales versus reduced markets, when applying any or each of the forms of mitigation hierarchy conservation measures. Based on the effects analysis, if conservation offsets are necessary to assure a no jeopardy biological opinion, we develop and include them as part of the project proposal. To do this, we assess, rank, and estimate the cost of habitat offset sites for their conservation value for inclusion in the proposed project action. Each of these steps are in complete coordination with the client to ensure the optimal business and biological outcomes.
The current situation is resolvable and can result in registrations that are commercially viable, scientifically sound, and legally defensible. This doesn’t mean that markets will not be constrained or that registration decisions won’t be taken to court, but rather that when under the legal microscope there are defensible ESA effects analyses and compliant conservation outcomes, thus providing for a stronger administrative record. This will keep products on the market instead of in legal and regulatory limbo, viable crop protection tools in the hands of growers, and businesses in business.
National Magnitude: Scaling Across Space, Time, & Conservation Commitments
As individual registrants seek durable decisions from the EPA and the Services, the imperative to scale the approach for effective administration, equitable financing, and regulatory compliance is necessary. If the crop protection industry wants a solution to their compliance conundrum, then industry must take a leadership role in innovating and structuring this approach, working together with their agency partners to address the scaling of 1) evaluating effects for all relevant species and critical habitats across large geographies; 2) relating all product registrations and their respective chemistries and registration terms to the section 7 consultation process; 3) addressing large-scale ESA consultations effectively and efficiently; 4) understanding how the effects of overlapping registrations relate to species and critical habitats, and 5) developing an appropriate private sector credit facility and funding structure to deliver on industry’s private sector commitments made within section 7 consultations. These elements of scaling are shown in Figure 3.
Figure 3. Scaling the Industry-Wide Implementation Approach incorporates Multiple Elements
This effort includes dedicating resources to resolution of the issue on a per-product registration basis, and ultimately across all registrations, and includes improving the level of federal support to these agencies to conduct the registrations and consultations more efficiently. Moving forward this will require:
- An ESA effects analysis that is accepted by EPA, the Services, and the registrant/s.
- An Interagency Review Team process to integrate the FIFRA registration and ESA consultation coordination across all registrations.
- An industry-organized ecological credit facility and funding structure for the delivery of registrant/s conservation offset obligations. An account will be generated for each registration funded through a portion of product sales, to cover the apportioned costs of the conservation offset commitments made in the respective Biological Opinion. The structure needs to establish how multiple registrants in a common geography with overlapping impacts to the same species share the costs of ESA compliance in an equitable manner. The structure should be established in parallel with an integrated registration and consultation process, so all registrants understand their potential future obligations when their registration process begins. For those registrants currently moving forward with pilot conservation activities, they will want to pre-consult with the Services to ensure that their conservation investments count – in terms of providing for species survival and recovery within their registration action.
- While it may initially be tempting to look to the nonprofit or public sector to deliver on conservation actions to improve a species baseline condition, there are significant risks due to policy concerns, non-performance for regulatory obligations, and a lack of linkage to the effects analysis to document the relationship between conservation measures and implementation of the mitigation hierarchy. Nonprofit “In Lieu Fee” programs are often touted as a possible approach, but their track record has proven their rate of compliance falls behind the occurring impacts due to inadequate fee collection in a timely matter and failure to deliver high quality conservation. The use of government programs to administer conservation program funding and/or implementation raises policy concerns about government resources being used to provide regulatory relief for private actions.
What to Do Now that You Know
Visionary companies are those that understand the role of both social endorsement and regulatory compliance in determining their market and position themselves to anticipate change. Given the mergers and acquisition history of the traditional crop protection industry, times are tight and getting tighter in terms of brand differentiation. Meanwhile societal concerns regarding environmental issues continues to increase, and there is growing entrepreneurial enterprise to bring new minimum risk and biological pesticide products to the marketplace. The same regulatory requirements, and the same lack of clarity on ESA compliance are relevant in each of these markets. To meet their fiduciary responsibilities corporate leaders will want to consider all costs and benefits of ESA compliance within their business strategies.
While the crop protection industry has worked diligently to research new product options, along with refining human health and environmental risk assessment methods, the marketplace is increasingly challenged by global financial, biological, and social factors. This means that a methodology that is designed to fit one regulation when compliance with two regulations is required, cannot increase registration and legal defensibility certainty. Due to the stovepipe structure of most large enterprises, decision-makers may miss out on seeing the full costs of their current business approach and the opportunities that a revised strategy may afford.
As your business and science teams consider their approach and options for current and future crop protection product development and registrations, we are here to help you develop an effective strategy and to ensure productive working relationships with your regulatory agency partners. Creekbank Associates guides clients through the FIFRA registration process to incorporate the full suite of ESA section 7 consultation components, including effects analysis, mitigation strategies, and conservation investments to ensure success. For more information see our additional content here.
Jody L. Bickel, Creekbank Associates, Chief Executive Officer, Email: email@example.com