EPA Announces Enforcement Settlement for Sale of Unregistered Biocides; Imposes Penalty of $1.498 Million.

             The U.S. Environmental Protection Agency (“EPA”) has released a Consent Agreement and Final Order (“Order”) against AFCO C & S LLC of Chambersburg, PA which was signed on September 26, 2019. The Order alleges AFCO engaged in the sale of unregistered biocides, sales of registered biocides in conjunction with unregistered brand names and sales of registered pesticides with claims exceeding those registered. The Order imposes a penalty of $1,489,000, one of higher penalties ever imposed under the Federal Insecticide, Fungicide and Rodenticide Act (“FIFRA”).=

The sale of unregistered pesticides occurred 1,031 times from January 1, 2015 through August 9, 2018. During the same period, sales of a registered product misbranded with an unapproved brand name happened forty-one times while sales of registered products for which unregistered claims were made happened five times. To flesh out the scope of claims being made, EPA examined websites, Safety Data Sheets, sales promotional materials and sales contracts and technical data sheets.

EPA commenced this matter by conducting an inspection of AFCO on June 20, 2016.  However, while the sales of the unregistered products must have been obvious early in the investigation, a Stop Sale Order was not issued until July 13, 2018, over two years after the initial inspection. Since the Order states that unlawful sales continued until August 9, 2018, it would appear that unlawful sales in violation of the Stop Sale Order occurred, although no such violation is identified in the Order.

Given the size of the penalty and an assertion by AFCO that due to the size of the penalty it would be unable to pay the full amount in the standard thirty days without financial hardship, the Order allows payment over twelve monthly payments plus 1% interest. An interesting background note is that on July 25, 2017, midway in the investigation, major pesticide registrant ZEP announced its intent to acquire AFCO. If adequate due diligence was not conducted, ZEP may have received a big surprise as a result of this acquisition.

One important lesson for registrants from this action is the scope of materials that EPA may examine in determining whether pesticidal claims are being made for unregistered products or whether claims beyond the scope of the registered claims are being made for registered products. Particular care needs to be taken that website statements regarding registered products conform to a product’s label.