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March 2017

House Adopts “PRIA 4” By Voice Vote

On Monday, March 20, 2017, the U.S. House of Representatives adopted by voice vote H.R. 1029, the “Pesticide Registration Enhancement Act” under a suspension of the rules.  Introduced in the 115th Congress by Representative Rodney Davis (R-IL), the measure was reported favorably out of the House Committee on Agriculture on February 16, 2017.  Among its provisions, the bill would authorize the collection of $31 million in maintenance fees for each of fiscal years 2017 through 2023 (current maintenance fees are set at $27.8 million/year).  In addition, the measure provides for an increase in the maintenance fee cap for large and small businesses and it continues the current prohibition on the imposition of tolerance fees as well as any other registration fee not specifically authorized by PRIA through fiscal year 2023.

 

In its other provisions, the measure provides for a set-aside of between 1/9 and 1/8 of maintenance fees collected for the review of inert ingredient submissions and me-too pesticide applications.  The bill also adjusts registration service fees and decision review times for product submissions subject to PRIA and provides for two 5% increases in registration service fees during the effective period of the statute.  Finally, H.R. 1029 reauthorizes existing provisions of PRIA for seven years, as opposed to the five-year extensions in previous iterations of the statute.

 

 

CPDA Conducts Legislative Policy Conference in Washington, D.C.

CPDA held its 2017 Legislative Policy Conference at the Club Quarters Hotel in Washington, D.C. on March 8th.  The conference featured a presentation and Q&A with Cameron Bishop, Legislative Director in the office of Representative Austin Scott (R-GA), Chairman of the House Agriculture Committee’s Subcommittee on Commodity Exchanges, Energy, and Credit.  Bishop provided attendees an overview of current activities in the House including an update on prospects for reauthorization of the Farm Bill this year.

 

Rep. Rodney Davis

The 2017 Legislative Policy Conference marked several important changes in format from previous years.  First, following the morning session and Legislative Committee meeting, attendees traveled to Capitol Hill for a small Congressional roundtable luncheon held in the House Agriculture Committee hearing room where several Hill staffers came by for informal conversation over a quick bite to eat.  In another important change, in lieu of the traditional Congressional reception held in years past, the 2017 Legislative Policy Conference concluded with a small dinner hosted by the CPDA-PAC at the Capitol Hill Club.  The honored guest was Representative Rodney Davis (R-IL) who chairs the Subcommittee on Biotechnology, Horticulture, and Research of the House Agriculture Committee.  As reported previously, Representative Davis is the lead sponsor of H.R. 1029, legislation to reauthorize PRIA, which was recently reported out favorably by the House Committee on Agriculture.  This small, intimate dinner provided those in attendance the chance to discuss in much greater detail a range of matters critical to the success of their business operations.  CPDA believes that the new format of this year’s Legislative Policy Conference facilitated greater interaction between Council members and their elected Representatives and provided Members of Congress and their Congressional staff a better understanding of the unique challenges agrotechnology companies face in the day-to-day management of their businesses.

Council members had the opportunity to meet Representative Rodney Davis (center) during a small dinner hosted by the CPDA-PAC at the Capitol Hill Club.

 

Cameron Bishop Addresses CPDA Members

Of course, the primary focus of the Legislative Policy Conference that brought CPDA representatives to Washington was the “Rally on the Hill” during which Council members fanned out for a series of Congressional office visits to discuss several priority initiatives and issues of importance to the agrotechnology industry.  Among these was industry’s support for the reauthorization of PRIA, the call for enactment of legislation to eliminate duplicative NPDES permitting requirements for EPA approved pesticides, the need for meaningful regulatory reform that does not subject companies to unnecessary burden and costs, and raising awareness regarding the problematic relabeling requirements of OSHA’s 2012 revisions to the Hazard Communication Standard.

CPDA Legislative Policy Conference Includes an Overview of the Political and Regulatory Climate Under the Trump Administration

CPDA’s Don Davis Briefs Conference Attendees

CPDA Director of Legislative Affairs Don Davis presided over the Legislative Policy Conference held in Washington, D.C. on March 8th and provided attendees a snapshot of the post-election political landscape and regulatory climate under the Trump Administration.  The following is a summary of the key highlights of Don’s presentation.

 

CPDA Members Review Key Issues in Preparation for Congressional Visits

Across the nation, some 44 state assemblies now fall under Republican control and in 25 states, the GOP controls both the Assembly and Senate in the state legislature. The electoral map of the U.S. also shows that 33 Republicans and 16 Democrats hold the governorship.  The party breakdown at the state level is important in that it plays an important role in what happens at the federal level – especially when it comes time for Congressional redistricting.  Meanwhile in the 115th Congress, 237 Republicans and 193 Democrats make up the House (with 5 seats currently vacant) while 52 Republicans and 48 Democrats make up the Senate.  However, the GOP’s control of 52 seats in the Senate falls short of the 60 votes needed to break a filibuster under current Senate rules.

 

With regard to the current regulatory climate in Washington, the Trump Administration has wasted no time in pushing forward its agenda of regulatory reform and has already signed several Executive Orders of importance to CPDA.  Every President since George Washington has used the power of the presidency to issue Executive Orders as a means of instructing federal agencies on how to implement a law but sometimes as a way of circumventing existing law.  Yet, an Executive Order can be overturned by the Judiciary if it is determined that the EO is unconstitutional or not supported by the underlying statute.  In addition, Congress can pass a new law to override an Executive Order, subject to a Presidential veto.

 

Among the Executive Orders that the President has signed is the directive set forth in a January 20, 2017 White House memorandum that establishes a temporary regulatory “freeze” prohibiting all federal agencies from sending any regulation to the Office of the Federal Register (OFR) for publication until a department or agency head appointed by the President reviews and approves the rule.  Rules that have been sent to the OFR but have not yet been published in the Federal Register must be immediately withdrawn pending review by the Administration.  Another EO, signed by the President on January 30th, requires any executive department or agency that proposes a new regulation to identify two regulations to be repealed.  For fiscal year 2017, the total incremental cost of all new and repealed regulations must be no greater than zero.  Finally, the President signed an EO on February 24 which instructs each federal agency to designate an official as its Regulatory Reform Officer within sixty days of the order.  These officers would oversee the administration’s regulatory reform policy laid out in previous executive orders within their respective agencies.

 

In addition to these White House actions, the Republican controlled House is advancing its own agenda of regulatory reform with the introduction of several legislative initiatives supported by CPDA.  Among these are the Regulatory Accountability Act of 2017, the Congressional Review Act of 2017, and several other measures intended to instill transparency into the federal rulemaking process without imposing unnecessary cost or undue burden on the regulated community.

 

Before dispersing to Capitol Hill, CPDA members received the following “Lobbying 101” tips in preparation for their Congressional office visits:  1) Know the make-up of the political environment within which you are advocating your position; 2) Get to know Members of Congress who play a key role on specific bills of interest (including the majority and minority leadership who sit on the Committee of jurisdiction); 3) Acquire an understanding of the legislative process and how bills move through Congress; 4) Develop a personal relationship with the elected Representative from your Congressional district as well as his/her staff but do not contact them only when you need something; 5) Leave behind a one-page fact sheet summarizing the issue and stance along with your business card; and, 6) Follow up any Congressional office visit with a personal thank you note.

 

With these tips and pointers fresh in hand, Council member company representatives embarked on a very successful and productive “Rally on the Hill” relaying CPDA’s position on key legislation that will have a profound impact on the agrotechnology industry.

President Trump Continues to Push for Regulatory Reform with New Executive Order

On February 24, 2017, President Trump signed an Executive Order (EO) directing the heads of federal agencies to designate a Regulatory Reform Officer to oversee the implementation of regulatory reform initiatives including the directives set forth in his previous EO issued on January 30th.  As reported previously, the January 30th EO establishes a “regulatory cap” for fiscal year 2017 and requires federal agencies that propose for public notice and comment or otherwise promulgate a new regulation to identify at least two existing regulations to be repealed.  In addition, the January 30th EO stipulates that for fiscal year 2017, the total incremental cost of all new regulations, including those that have been repealed, must be no greater than zero unless otherwise required by law or consistent with written guidance from the Office of Management and Budget (OMB).

 

In addition to calling for the appointment of a Regulatory Reform Officer, the February 24th EO directs each federal agency to establish a Regulatory Reform Task Force that will have responsibility for evaluating existing regulations and making recommendations to the agency head regarding the repeal, replacement or modification of existing rules.  Federal agencies that issue few or no regulations could seek a waiver from OMB exempting them from the requirements of the EO.  A list of agencies with current waivers will be published by the OMB at least every three months.

 

In performing its duties, the Regulatory Reform Task Force is instructed to identify regulations that eliminate or inhibit job creation, are unnecessary or ineffective, and impose costs that exceed benefits.  In carrying out its charge, the Regulatory Reform Task Force is directed to solicit input from state, local, and tribal governments, small businesses, consumers, non-governmental organizations, and trade associations.  Within 90 days from issuance of the EO, the Regulatory Reform Task Force must provide a report to the agency detailing its progress in carrying out these obligations.

CPDA Seeks Exemption for Final PRIA Actions from Administration’s Regulatory Freeze

On February 14, 2017, CPDA wrote to then-EPA Acting Administrator Catherine R. McCabe requesting that pesticide registration actions under PRIA be exempt from the regulatory freeze established under a January 20, 2017 White House memorandum mandating a temporary hold on all new or pending regulations so as to allow the Administration sufficient time to review these rule for questions of “fact, law and policy.”  The memorandum, issued by Reince Priebus who serves as President Trump’s Assistant and Chief of Staff, sets forth a Presidential directive prohibiting all federal agencies from sending any regulation to the Office of the Federal Register (OFR) for publication until a department or agency head appointed by the President reviews and approves the rule.  Rules that have been sent to the OFR but have not yet been published in the Federal Register must be immediately withdrawn pending review by the Administration.  Until such time as the restrictions detailed in the so-called “Freeze Memorandum” are lifted, EPA submission of final rulemakings to the OFR for publication of products approved under PRIA are on hold.  The memorandum does include the opportunity for an affected entity to request an exemption to the prohibition on sending a rule to the OFR and/or the necessary rescinding of a submitted but unpublished rule with specific reasoning.

 

The mandate of the Priebus memorandum has resulted in a round of negotiated due dates under PRIA for those applications currently in the pipeline as well as those awaiting the last step of publication in the Federal Register.  CPDA has learned that many member and non-member companies have received requests from the Agency for renegotiated due dates of current PRIA actions.  It is unclear whether submissions made now or since January 20th will be time-stamped for submission or whether an applicant will be notified of receipt of submission. Exacerbating this situation are reports that the Trump Administration has also ordered a freeze on all new federal contracts (the bulk of PRIA application review is performed under contract).

 

In its February 14th letter to EPA, CPDA cited a provision in the Priebus memorandum which specifically excludes from its mandate those regulatory actions subject to statutory deadlines.  CPDA explained that the primary benefit of the statutorily established review timelines under PRIA is to provide certainty and regulatory predictability while allowing for independent review of applications for product registrations.  CPDA emphasized that the delay in publication of registration approval in the Federal Register nullifies this benefit and creates a critical situation for the agricultural and pesticide manufacturing and distribution sectors whose businesses depend on the date-certain approval of products so that they are made available for use by farmers during the limited window of the spring growing season.  Any delay in making these products available to users, CPDA added, could have serious financial consequences not only for the pesticide industry but for farmers who depend on ready access to these crucial products in making their spring planting decisions.  CPDA will continue to keep a close eye on this situation and report on further developments as they occur.

CPDA-Canada Addresses PMRA Draft Consultations on Data Compensation

On February 24, 2017, CPDA-Canada submitted comments to Health Canada’s Pest Management Regulatory Agency (PMRA) in response to the Agency’s December 30, 2016 consultation document containing proposed revisions to the Agreement for Data Protection under Section 66 of the Pest Control Products Act (PCPA) formerly known as the Ministerial Agreement.  In its comments, CPDA-Canada expressed its disappointment with the changes proposed by PMRA emphasizing that the Agency “still refuses to implement an equitable data compensation and regulatory mechanism that balances the interests of companies that develop new pesticides (‘innovator’ companies) fairly with companies that produce generic pesticides (‘generic companies’).”

 

CPDA-Canada focused on the inequities inherent in the “Final Offer Settlement” (FOS) approach to arbitration maintained from the Ministerial Agreement by PMRA and recommended by the Intersol Group in its report to the Agency.  The mechanism set forth under PMRA’s consultation document on the new Agreement is essentially identical to the arbitration terms of the existing Ministerial Agreement.  Namely, an Arbitral Tribunal is required to choose either the generic company’s “willing-to-pay” final offer or the innovator company’s “willing-to-accept” final offer.  CPDA-Canada emphasized that the FOS approach is inappropriate for this type of arbitration and subjects the generic registrant to inordinate financial risk.  CPDA-Canada pointed out that there is no evidence that a single registered generic pesticide product was based on an arbitral award utilizing FOS arbitration under the existing Ministerial Agreement since 2010.  “Instead of addressing the fundamental cause of this limitation (a severely biased arbitration approach that eliminates the availability of important lower-priced agricultural products to Canadian growers), the Agency seems insistent on perpetuating the problem by maintaining this inequitable and unworkable form of arbitration,” CPDA-Canada stated.

 

In its comments, CPDA-Canada addressed the lack of provisions in the proposed Agreement that would confer upon the generic company the right to discovery during negotiations and arbitration.  CPDA-Canada emphasized that without the right to discovery, the generic company is effectively denied access to the type of information that is necessary in accurately assessing the likely profitability of commercializing the product, especially if the product in question is the first or second generic chemical to enter the marketplace.  As such, the generic company is put at a decided disadvantage in making a “willing-to-pay” final offer under the FOS arbitration approach.  Moreover, CPDA-Canada pointed out that the proposed Agreement could unfairly subject the generic company to stiff financial penalties in the form of reimbursement to the innovator company for legal costs and disbursements incurred during the arbitration proceedings.  This penalty would be applicable in situations where the generic company either withdraws from the arbitration proceedings and/or decides that it would not be economically feasible to move forward with the registration after an award is made.

 

CPDA-Canada called upon PMRA to remedy these impediments to the generic registration process by replacing the FOS approach with an unbounded binding arbitration mechanism (under the Canadian Arbitration Act or CAA) that would include the right to discovery and information sharing during negotiations.  CPDA-Canada further urged PMRA to allow the generic company to withdraw from the arbitration proceedings at any time before the award is made without fear of financial penalty and to require that arbitration costs be split between the parties with each party responsible for its own expenses.  In addition, CPDA-Canada recommended that the Agreement include timelines of 30 days for negotiations and 120 days for arbitration.  CPDA-Canada explained that particularly in situations where the product in question would be the first generic product to enter the marketplace, the innovator company is likely to delay negotiations in an effort to keep competing companies out of the market for as long as possible.  CPDA-Canada stated that there is no incentive for an innovator company to negotiate in a timely manner in such situations.  However, CPDA-Canada noted that in cases where the negotiations are progressing at a reasonable pace, the parties can mutually agree to extend the time.  The result could be a negotiated agreement and a letter of access (LOA) or a request to go to binding arbitration.  Lastly, CPDA-Canada recommended that the final offers by the party be shared with the other party when submitted to the Arbitral Tribunal.  To read the full version of the comments, please click here.

 

CPDA-Canada also submitted comments to PMRA in response to the Agency’s draft consultation document on the eligibility criteria for compensable protection status for foreign test data as proposed on December 30, 2016.  CPDA-Canada expressed its support for PMRA’s clarification of the compensation status of the foreign data the Agency considers during re-evaluations, special reviews, and the registration of generic products calling it “appropriate and needed.”  However, CPDA-Canada reiterated the need for PMRA to revise the negotiation and arbitration component of the current data compensation process so as to make it equitable.  “Unless the Agency does so,” CPDA-Canada emphasized, “the helpful clarifications of this current proposed action will remain irrelevant to achieving a ‘fair’ and ‘equitable’ data compensation process for timely registration of generic products based on newer chemistries.”  To read CPDA-Canada’s comments, please click here.

 

(To learn more about the draft consultations proposed by PMRA please visit our archived news item by clicking here).