Antimicrobial Treated Article Coalition

Transcription

1 Antimicrobial Treated Article Coalition Comments of the Antimicrobial Treated Article Coalition on EPA's Federal Register and Draft Pesticide Registration Notice on Treated Articles Docket Control Number OPP June 30, 1998 John B. Dubeck David G. Sarvadi Thomas C. Berger Keller and Heckman LLP 1001 G Street, N.W. Suite 500 West Washington, D.C Introduction Table of Contents Comments on the Draft PR Notice and Its Impacts EPA's Interpretation Radically Departs from Statutory Language and Prior Agency Interpretations

2 The Draft PR Notice Does Not Represent Good Public Policy EPA Must Give Appropriate Weight to the Benefits of Treated Articles EPA's FR and PR Notices Do Not Give Adequate Notice and Opportunity for Comment EPA Must Use Notice and Comment Rulemaking in This Case Potential Economic and Other Impacts Are Significant Active Ingredient Issues EPA's Proposal Is an Illegal Restraint on Commercial Speech Congressional Views Support the Need for a Formal Rulemaking Comments on the FR Notice Enforcement Policy The FR Notice Suffers from the Same Shortcomings as the PR Notice Stop Sale Orders Are an Illegal Enforcement Tool in Absence of Imminent Risk to Public Health ATAC's Recommended Approach EPA Must Open a Formal Rulemaking EPA Must Maintain the Status Quo While Changes Are Developed EPA Must Continue to Enforce the Exemption as Written for Clear Violations EPA Must Regulate Claims for Treated Articles by Explicit Registration of Permitted Article Claims on Pesticides Used to Treat Articles If Registation Is Required, EPA Must Provide Test Protocols and Registration Guidelines in Advance Compliance with Labeling Requirements Must Be Determined at Time of Manufacture Phase-In Period for Label and Product Changes Must Be Longer Than 60 Days

3 I. Introduction The Antimicrobial Treated Article Coalition (Coalition) is pleased to submit these comments on EPA's Federal Register (FR) and Pesticide Registration (PR) notices relating to the Agency's enforcement posture and interpretation of the "treated article" exemption to the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), 7 U.S.C y. (1) The Coalition is an unincorporated consortium of trade associations and companies. Member companies produce hundreds if not thousands of products in dozens of markets sold through retail and other outlets. The products include registered products, products with claims for improved aesthetic qualities, and products with no claims at all. The products find uses in hundreds of applications, including those specified by government purchasing specifications. (2) EPA is well aware that the products are safe for their intended uses and that data have been submitted to EPA showing that they work. And the Coalition believes that adequate data are available to allow the further conclusion to be drawn that, consistent with public health practice for more than 100 years, a reduced bacterial load generally contributes to improved hygiene. Coalition members believe that treated articles provide benefits to consumers and society, and that the safety and efficacy of the products are of primary importance. The companies produce (1) finished goods containing registered antimicrobial pesticides; (2) intermediates used to blend the active ingredients with other products to be used to make treated articles; and (3) the pesticides used as antimicrobial agents in such finished goods. EPA's new interpretation of the treated article exemption has created great uncertainty for the members of the Coalition and their customers in spite of the fact that the products in question are safe and effective. The member companies of the Coalition are committed to developing safe products that provide significant benefits for consumers, and are interested in and willing to participate in the development of a suitable regulatory model to assure that the products remain available while contributing to increased consumer safety. In addition, the companies are keenly interested in how EPA will resolve the current uncertainty involving the regulatory status of treated articles. Despite the best efforts of such companies over the last eight or more years to obtain specific guidance from the Agency and to conform their behavior to the requirements of the exemption and the Agency's interpretation of the exemption, the regulatory environment for articles treated with antimicrobial agents remains unstable. The changes wrought by EPA's proposed policy and the manner by which they were adopted have contributed to the instability and uncertainty, and the Coalition wants to assist EPA to create a more certain regulatory environment. II. Comments on the Draft PR Notice and Its Impacts A. EPA's Interpretation of the Exemption in the PR Notice Radically Departs from the Language of the Exemption and Prior Agency Interpretations of the Exemption As Applied to Certain Treated Articles

4 The treated article exemption was adopted in 1975 and affirmed in By its terms, the exemption allows a manufacturer to make a claim for protection of an article treated with a registered pesticide, as long as the claim does not state that the protection extends beyond the article itself. We first describe how the proposed policy in the PR Notice changes the regulation as it relates to aesthetic claims, which form the basis for the majority of claims made for treated articles over the last 25 years. The Coalition believes that it is clear EPA is proposing changes in the regulation that modify and expand the substantive obligations of the regulated community, but not in the fashion permitted under current law. If such a change is necessary, EPA must adopt it by notice and comment rulemaking, not by mere changes in policy or interpretations. 1. An Example of How the PR Notice Changes the Exemption: Prohibition of Claims for Aesthetic Properties: Paints, Coatings, Textiles, Building Products, and Adhesives The change in the policy would prohibit claims, among others, for those products which incorporate a fungicide in a coating product to provide control of mildew-producing fungi in the dried paint film. Other examples of aesthetic benefits include incorporation of antimicrobial agents (1) in pillows or mattresses to provide a cleaner environment; or (2) in articles of clothing to provide a fresher, more aesthetically pleasing surface by inhibiting growth of odor-causing bacteria. In fact, these kinds of claims were precisely the types intended to be allowed under the exemption. A detailed discussion of the exemption as it relates to paints containing mildew control agents is illustrative. Under the draft PR Notice, EPA proposes (1) to prohibit the use of aesthetic claims on paints, coatings, adhesives and related products; and (2) to limit claims solely to in-can preservation. In the preamble to the original treated article exemption, EPA provided specific language that industry has used since to describe mildew protection for paint surfaces. (3) The proposed interpretation appears to prohibit these specific aesthetic benefit claims. EPA explicitly permitted the use of the phrase "mildew resistant," in conjunction with other phrases limiting the claim to protection of the dried paint film, in its 1975 guidance; EPA's draft PR Notice uses "mildew proof" as an example of an impermissible phrase. (4) The preamble to the 1975 rule contains twelve other examples of the permissible claims that have been used for over twenty-five years and which are essentially claims for protection of the aesthetic properties of the product. (5) The effective difference between the two phrases above is not apparent, nor is it clear that it is a distinction with a difference. By the terms of the preamble, these twelve phrases are exemplary, and not exclusive, methods of describing the benefits of the pesticide used to treat a coating. Nor is it clear from the language of the exemption or the preamble that the exemption is limited to paints and treated wood. The plain language of the exemption allows any article treated with a registered pesticide to make claims for protection of the article itself. As long as the claims are properly limited and the claim is a fair and accurate representation of the relevant properties, it would appear that such claims are permissible under the exemption. (6)

5 Clearly from the above discussion, the proposed PR Notice is a change from past practice. Moreover, if claims of aesthetic benefit are permissible because they contribute to the functionality of a coating product, the fact that an aesthetic benefit is claimed should have no bearing on whether an article should qualify for the exemption. EPA's proposed limitation to in-can preservation is inconsistent with the 1975 rule and its preamble, and the language of the exemption itself. (7) Because there has been no rulemaking to make a change in this aspect of the regulation since its adoption, under current case law, EPA is bound by the published 1975 language. (8) Moreover, it is also clear that the label statements used in the 1975 preamble were intended to be examples, both of the kinds of claims that could be made for paints and coatings (and other kinds of products, such as caulking compounds, sealants, adhesives, and a myriad of other products intended for use in humid, outdoor, or moist environments) as well as the kinds of products that would be covered by the exemption. Clearly, it was anticipated that many other kinds of products would be developed as technology expanded (and greater use of water-based products was encouraged, in many cases by EPA's own rules), and that the list of products and claims were to be exemplary, not exclusive. To limit the kinds of products or claims that can be made, the regulation itself has to be changed. 2. Articles Treated for Antimicrobial Properties As codified, the exemption has only two requirements. First, a substance or article must be treated to protect the article or substance itself. Second, the treating pesticide must be "registered for such use." The exemption, however, is silent as to what types of claims can or cannot be made for treated articles that qualify for the exemption. Other than the April 17, 1998, FR notice and the draft PR Notice (and earlier circulated drafts of these notices), the only publicly available guidance regarding claims that are permissible under the exemption appears in the preamble to the 1975 rule. As shown, that guidance clearly envisaged claims regarding the benefits that flowed from having added a treatment to protect the article. Thus, specifying that no benefits may be described represents a change in EPA's substantive interpretation of the exemption. As mentioned above, there are myriad products treated with antimicrobial agents for which the aesthetic benefit is an inherent property and one that provides significant functional benefits to consumers. Paints and coatings are used to provide color, improve appearance, protect the substrate, and perform for other related functions. (9) The proposed change does not affect only paints and coatings, or even only building products. Rather, the characterization of aesthetic benefits as providing a benefit to the user, rather than protecting the article itself is completely misplaced. Everything added to a product is intended to provide a benefit to the user. Else, why would any manufacturer spend money to incorporate it? Thus, the question for EPA is whether the agents can be used safely and are effective, not whether they are necessary. The basis for the exemption in the first instance is the conclusion that the products -- both the active ingredients and the articles treated with the

6 antimicrobial agents -- are so safe and effective that they do not require regulation under FIFRA. Indeed, it is not clear that such products are pesticides (as the original formulation of the regulation concluded), while at the same time, it is equally clear that Congress recognized that some kinds of products did not need to be included in the FIFRA regulatory scheme. (10) Finally, EPA must recognize that the proposed policy change impacts many other products that use antimicrobial agents for the same reasons as paints and coatings. The Coalition recognizes that there is a continuum between products making ordinary claims and those making claims of disease prevention. The question is where and how to draw the lines delineating these products and to determine what kind of regulatory scheme should be adopted, recognizing the significant differences among the different kinds of products. 3. EPA's Proposed Regulation of Aesthetic Benefits Related to Allergen Reduction Is a Novel Application of FIFRA Authority, and Intrudes on FDA Regulatory Responsibility Nowhere under the authorizing statutes in the past has EPA proposed to regulate "allergen reduction" or "allergy relief" claims. While the Coalition acknowledges this is a novel area and one that is rapidly becoming more important to consumers, the adoption of a regulatory scheme under FIFRA -- particularly without benefit of rulemaking -- is clearly a change in the rule to add this category. There are a large number of questions and issues that would have to be addressed before the regulatory scheme could be adequately implemented, and questions like what kinds of efficacy data will be required and what kinds of claims are appropriate, need to be answered sooner, rather than later. In addition, the process of adopting these guidelines needs to be open and involve the regulated community so that EPA can more efficiently reach a conclusion that will benefit consumers as well as formulators and manufacturers. In particular, we recommend involving the Food and Drug Administration (FDA) to coordinate the establishment of (1) criteria for performance measurement; (2) efficacy protocols; and (3) clear jurisdictional lines between agencies through coordinated agency agreements. We are willing to work with both EPA and FDA to develop the necessary information and approaches. B. The Draft PR Notice Does Not Represent Good Public Policy 1. Aesthetic Benefits Extend Product Life and Reduce Consumption; They Should Not Be Discouraged. In the draft PR Notice, EPA states that "any esthetic [sic] claim... takes the article outside the scope of the exemption because esthetic... benefits are, by definition, for people and not merely for protection of the treated article or some component thereof." (11) This is a completely incorrect description of the use of antimicrobial agents for aesthetic purposes. These ingredients are added to mixtures and articles to impart useful functions,

7 many of which are critical to the physical properties, functionality, and the useful economic life of these products. These functions are described as "aesthetic" because they relate to the appearance and consumer acceptability of the articles. Indeed, these aesthetic properties are in themselves specific product performance criteria used by consumers and others to compare and evaluate competing products. For example, mildewicides are added to formulated paint products and adhesives not solely to control in-can deterioration of the product -- no water-based product could be sold without an in-can preservative -- or because mildew is aesthetically displeasing, but because one of the essential characteristics of a paint or adhesive is the appearance and color of the product. Certainly, products in which mildew can develop "in the can" will be returned by consumers because they will not "function" as intended. But the functionality of the product in use is of equal if not more importance to the customer than the in-can preservation function. Aesthetics are in many cases an observable manifestation of physical deterioration. A plastic curtain upon which mold or mildew has grown is just as unusable as cotton on which mold or mildew has grown. Moreover, different active ingredients are needed to impart the two different qualities described. Preservatives used to control growth of bacteria and fungus in sealed containers can be volatile, either liquids or gases, and will escape once the container is opened. But an agent intended to protect the finished film in service must be immobile to the extent possible. It must be incorporated into the matrix of the article -- in the case of a coating, into the dried film-- in such a way that it is not released or is released only very slowly. Similarly, with a plastic article, an active ingredient that escapes from the article will provide no significant protection in use, since it will dissipate too rapidly to provide the benefit sought. This characteristic distinguishes the active ingredients used in treated articles in a most significant manner from other pesticides and in a way that allows EPA to make the determination that such products do not need to be regulated under FIFRA. The nonexistent or very slow release rate makes the active ingredient and the finished article safer for use by consumers. There is another reason manufacturers add these ingredients to their products and why consumers demand products with them. Untreated mixtures or articles have shorter useful lives than comparable treated articles. Protection of articles is an important part of resource conservation. Even for aesthetic claims limited to reducing odor, staining or other factors, when these factors limit the useful life of an article -- even though its physical integrity may not be significantly degraded -- replacement of the article (i.e., repainting or replacement of a shower curtain) more frequently leads to increased use of resources. 2. Addressing Implied Claims of Aesthetic and Other Benefits. EPA's current position appears to be that the word "antibacterial" -- or similar terms such as "antimicrobial" -- is, in and of itself, a public health claim as defined by EPA. Even

8 accepting EPA's position for purposes of argument, to date, neither the rationale supporting this position nor the scope and definition of permissible or impermissible claims has been properly developed or published by EPA. (12) As we and others have noted, EPA has been less than prompt in giving the industry its views and specific written guidance on the issues. Accordingly, EPA is not in a position to assert that the claims being made seem to be excessive. But our concern with the present approach is two-fold. Antibacterial additives in plastics which prevent discoloration and other kinds of degradation of treated articles and other products provide a benefit unrelated to public health issues. It would appear that what EPA calls aesthetic claims for odor and stain control are permitted under the plain language of the treated article exemption and whether such claims can or should be permitted to reference the antibacterial properties of the active ingredient should at least be subject to public debate. There is no question that claims for articles treated with unregistered pesticides are beyond the plain language of the exemption, and EPA properly took enforcement action in those cases. And we agree that some products and claims require oversight by the agency. In the interim, while EPA is adopting these changes in the rules, the normal enforcement process can provide adequate protection to the general public in those cases where an imminent danger to the public health exists. (13) The larger difficulty for future actions is that EPA must provide a safe harbor for companies that have, in good faith, interpreted the exemption in such a way that now appears to be questionable. If EPA is to receive candid and open discussions from manufacturers, with specific examples and details about the industry and its scope, EPA will have to exercise some significant enforcement discretion to allow testimony without risk of liability. The FR notice purports to offer a "safe harbor" for the time it will take to meet the new criteria. The enforcement moratorium should be extended to any public statements made in the proceedings, and EPA should explicitly disavow any intent to pursue enforcement cases against parties who participate in the process. Only in this way will EPA receive the fully open and candid cooperation of all interested parties. 3. Understanding the Meaning of Words and Phrases on Labels with Antibacterial Claims. In any event, the Coalition does not believe that EPA can reasonably take the position that term "antibacterial" and similar words always imply a public health claim when they appear on a consumer article. Seldom do words in the English language connote a specific, singular meaning. For example, the word "antibacterial" is defined in Webster's Dictionary as simply "counteracting bacteria," which can apply to public health but could also relate to non-public health benefits. The meaning of "antibacterial" in any given case will depend on the context. Second, EPA needs to consider also the physical context in which the word appears. To glean the meaning of the term in any particular context requires that the meaning of additional words and pictures be considered as well. That is, the words and images must

9 be considered as a whole. As EPA has recognized, the placement and prominence and attention drawn to the word can change its meaning significantly. Third, the kind of article that the word describes impacts the consumer's perception. For example, a surgical instrument labeled "antibacterial" would clearly carry a different meaning than an "antibacterial" shower curtain. This, it is not reasonable to assume that the use of the word necessarily implies that a specific health benefit is provided. Therefore, if the term is properly limited by additional language on the label, such as attributing the property to protection of the article itself, it should be permitted on treated articles under the exemption when the use is approved as part of the registration of the active ingredient. So we believe that EPA needs to articulate a clear standard that takes into account these differences, and to allow the use of truthful, unambiguous statements describing the properties of an article treated with an "antibacterial" ingredient. We stand ready to work with EPA to develop that standard. The question becomes what kinds of claims should be permitted and in what way. The Coalition agrees that it is reasonable to require certain claims to be limited to registered products. Such claims should be supported by efficacy testing of specific products using specific protocols. The Coalition will work with EPA to develop a system to test and register such products. The Coalition also believes, however, that between the purely aesthetic claims and the clear, specific, known health and disease prevention claims exist a type of claim -- or perhaps a number of types of claims -- for the benefit of an antimicrobial agent, which contributes to general good hygiene and cleanliness, and for which a reduced or no regulatory scheme might be appropriate. It is these products which form the bulk of the products which Coalition members currently produce and would like to continue offering to meet consumer demand. Unless such a scheme is put in place, the cost of registration will deprive consumers of highly beneficial products. 4. Antimicrobial Agents Have a Positive Impact on Public Health; EPA's Priority Should Be on Developing Efficient Regulatory Mechanisms to Protect Public Health While Not Inhibiting Innovation in Products That Contribute Positively to Improved Public Health With respect to articles or mixtures that contain antimicrobial agents which protect the surface of the article from microbial contamination, the Agency's apparent fear is that, despite precautionary language to the contrary, consumers will wrongly assume that the presence of an antimicrobial agent obviates the need to use normal hygienic practices. We believe EPA's fear is misplaced. We are unaware of any data supporting this contention and believe that consumers will continue to use all reasonable and normal hygienic practices. We believe consumers generally treat the option of the treated products as added protection.

10 Indeed, in Figures 1 and 2, we show the results of two separate consumer surveys specifically asking this question. The results are overwhelming. A majority of consumers -- comprising more than 96% in the first survey and 98% in the second -- expected to wash and clean a cutting board with antibacterial protection as usual. (See Appendix I). There is no longer any reason for EPA to hold to this belief or to suggest that this is a potential problem. Before any other conclusions can be drawn, factual information about consumer perceptions for a variety of products must be developed. We can work together to gather this information. Second, the Coalition believes that the appropriate response to such concern is education through labeling (including product labels and other product literature), which EPA might require as a condition of the exemption. The Coalition believes that such products (e.g., treated cutting boards and sponges) generally pose no risk to consumers, provide an opportunity to educate consumers as to the benefits as well as the limitations of a reduced microbial surface load, and can play a role in an overall program of good, general sanitary practices. EPA's outside scientific advisors agree with this position. In response to a question regarding registration of treated articles with public health claims, particularly for food contact surfaces, EPA's Scientific Advisory Panel (SAP) has stated that '[i]n some circumstances, it is better to kill or control pathogens with an antimicrobial chemical (one that may not be as efficacious as a sanitizer but capable of killing, for example, 100-fold of the target pathogens) than to have no treatment available. The SAP continued, stating "[i]ncorporating a bacteriostatic germicide into a sponge to prevent growth and dissemination that could be used in food preparation areas is an example of a product that could possibly enhance health." (14) Dr. Fred Angula of the Centers for Disease Control, at EPA's Second National Antimicrobial Workshop noted that treated articles could have a role to play as part of a program of sanitary practices. (15) C. EPA Must Give Appropriate Weight to the Benefits of Treated Articles Two statutory provisions have a bearing on the public health issues related to treated articles. The Food Quality Protection Act, which was enacted in August 1996, amended the FIFRA section 2(bb) definition of "unreasonable adverse effects on the environment." It now instructs EPA to consider the risks and benefits of public health pesticides separate from the risks and benefits of other pesticides and specifically provides that the Administrator must weigh any risks of the pesticide against other health risks, such as the diseases transmitted by the vector to be controlled by the pesticide. Also, section 3(d)(5)(C) of FIFRA states that EPA "shall not make any lack of essentiality a criterion for denying registration of any pesticide." This provision instructs EPA not to base its decision on whether to register a particular product it its view of whether a product is necessary or desirable. It appears that, with respect to treated articles, EPA views section 2(bb) as overriding section 3(d)(5)(C) and that it interprets section 2(bb) as requiring, in the case of treated articles, a prospective registrant to establish the relative efficacy of the treated article as it

11 compares to the untreated article plus the use of conventional (and potentially effective, but unconventional) hygienic practices. We do not believe that this is the type of balance for public health pesticides intended by Congress, nor do we believe that this approach will provide Americans with the best regulatory approach or the safe products needed to advance public health. There may be some situations where it may not be appropriate to use some antimicrobial agents in specific treated article applications. These situations can be addressed either generically through a rulemaking or proceeding similar to this, or in regard to the registration of individual active ingredients. However, we do not agree that EPA should or can properly make an across-the-board determination that the benefits of these products do not outweigh their risks -- particularly since the EPA Administrator has publically stated that the articles subject to one enforcement action posed no risk, even to young children likely to have intimate contact with the article. Further, given the historic application of the treated article exemption, with these products having been first "not pesticides" and later "exempt" from regulatory review, it appears logical that EPA is not in a position to conclude that these products create an adverse risk unless EPA has data or studies to show the nature and scope of that risk. A second concern, one that the Coalition agrees is significant as well, is the question of bacterial resistance to therapeutic agents. There are sound public health reasons to be concerned about indiscriminate prophylactic use of therapeutic antibiotics. It is reasonable to be concerned that general and widespread uses of therapeutic agents could lead to greater resistance in pathogenic strains. Clearly, EPA and the regulated community need to work together to assure that the products and active ingredients used do not create new public health problems. The appropriate time to do so is when the active ingredient is registered and the uses are approved for its label. The Coalition believes that there needs to be development of information and sound science to support a sufficiently protective public health policy. Protocols can be developed to determine that resistant organisms are unlikely to be created by the use of specific antimicrobial agents in treated articles. For example, chlorine has been used to treat drinking water for many years, and remains an effective, economical treatment. Many of the antimicrobial agents used in the treatment of articles already have a history of worldwide use without giving rise to antibiotic resistance. The Coalition will work with EPA, CDC, FDA, and other interested parties to address this issue and assure that the treated articles do not create this unintended consequence. III. EPA's FR and PR Notices Are Inadequate to Meet the APA's Requirements for Adequate Notice and Opportunity for Comment on Substantive Changes in Regulatory Interpretations. A. EPA Must Use Notice and Comment Rulemaking in This Case Neither the exemption, its preamble, nor any guidance publicly distributed since the promulgation of the exemption in 1988 place any restrictions on label statements

12 describing the presence of an antibacterial or any other pesticide incorporated into a formulation or article, or on the claims related to the benefits of protecting the article itself. In the draft PR Notice, EPA proposes to substantively change the scope of the exemption by imposing new, binding, rights and obligations on the regulated community. If EPA wishes to change the scope and effect of a published legislative rule, it must use notice and comment rulemaking. It is important for EPA not to avoid its obligations in this regard. As noted by Anthony: Where an agency can nonlegislatively impose standards and obligations that as a practical matter are mandatory, it eases its work greatly [when following these practices] in several undesirable ways. It escapes the delay and the challenge of allowing public participation in the development of its rule. It probably escapes the toil and the discipline of building a strong rulemaking record. It escapes the discipline of preparing a statement of the basis and purpose justifying the rule. It may also escape APA publication requirements and Office of Management and Budget regulatory review. And if the agency can show that its informal document is not final or ripe, it will escape immediate judicial review. Indeed, for practical reasons it may escape judicial review altogether... One can readily understand how a government instrument so quick, cheap, largely unchecked and low in risk, and yet so effectual, may tempt some agencies to slight the APA's mandates. (16) But we think there are much greater advantages in pursuing a rulemaking in this instance. Indeed, given the complex issues discussed above and the challenge of devising an appropriate regulatory response, it may become more efficient to open a formal rulemaking to focus the discussion, obtain appropriate input from interested parties, and provide a mechanism for receiving proposals and information necessary to carry out EPA's statutory responsibilities. (17) The Coalition believes that a rulemaking might be significantly more efficient and faster in this case. A federal agency cannot attach additional binding obligations to a substantive regulation without adhering to the legislative process mandated by the APA. (18) The Coalition believes that EPA's proposed approach also sidesteps compliance with other statutes such as the Paperwork Reduction Act, 44 U.S.C , and the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), Pub. L. No , 111 Stat. 2592, and improperly circumvents Executive Order 12,866. (19) Although EPA's intentions may not have been to avoid its responsibilities under these and other statutes, the result of the course of action followed by EPA has been to violate these provisions. EPA's FR and PR Notices fall squarely within the APA definition of "rule" and the term "regulations or rules" as it is defined under E.O. 12,866. (20) The regulatory philosophy and principles of section 1 of E.O. 12,866 apply to all agency regulations and rules. These principles include the concept that regulations be tailored to impose the least burden on society. (21) The Order also requires agencies to conduct cost/benefit analyses

13 and "... propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs." (22) The Order requires agencies to consider several factors regarding cost-effectiveness: innovation, consistency, predictability, the cost of enforcement, and compliance flexibility, distributive impacts and equity. (23) B. The Potential Economic and Other Impacts of EPA's Approach as Announced in the FR and PR Notices Are Significant and Suggest that a Formal Rulemaking Should Be Undertaken. EPA's proposal will have a significant impact on the regulated community. Manufacturers have relied, with considerable justification, on a different interpretation than that contained in the PR Notice. EPA has incorrectly characterized its change in policy as codifying longstanding interpretations and is misguided in viewing its proposed actions as simply requiring manufacturers of certain treated articles to change product labeling and promotional materials to conform to the Agency's new (24) interpretation of the exemption. The significance of the new approach to treated articles and the impact of EPA's proposed actions are substantial. We expect the costs to conform to these new requirements will substantially exceed $100 million. Labeling and other marketing changes alone can cost hundreds of thousands of dollars for each product, and there are hundreds if not thousands of products currently marketed under the exemption. And the costs are multiplied if the process is not orderly. For example, the current approach creates three separate labeling components in the cost equation: first, a label change to match the enforcement policy announced in the FR notice policy; second, one when the PR Notice becomes final; and a third when and if the regulatory scheme is changed or companies are required to register. The short time frame proposed by EPA also increases costs. The change will be even more disordered and the inability to phase in the changes with scheduled label reprinting will require additional expense to comply. Finally, many of the products in question have an intrinsic value of less than the cost of stickering or relabeling, wasting products or using valuable limited resources to replace them. The industry consists of at least four tiers. First, the active ingredient manufacturers register their products for specific applications as antimicrobial agents. (25) Second, formulators process the active ingredients into intermediates used to make the articles, whose manufacturers make up the third tier. A fourth tier in the distribution chain is comprised of the distributors and retail sellers of the articles. This level may alone be several layers deep, and many companies in the third and fourth tier are small companies. The Coalition believes, on the basis of its knowledge of the industry and its customers, that many of these small manufacturers will not be able to make the changes EPA desires, either initially to comply with the FR notice or later to register their products if required, and may exit the business as a result of the much narrower market that would likely occur.

14 This loss of market means that the jobs will be lost entirely, and not simply moved overseas. If the type of product involved for a small company is essentially and effectively banned, no replacements will be made, and sold, and the jobs presently associated with that particular line of products will simply disappear. We are not suggesting that EPA not carry out its responsibilities to assure that pesticide products are used safely and are effective, but we do believe that the scheme proposed in the PR Notice will have the unintended result of removing many safe and effective products from the market and putting their manufacturers' business in jeopardy. The approach proposed needs to be rethought. 1. The Cost of the Proposed Action as Presently Contemplated Meets Current Statutory and Policy Criteria for a Significant Regulatory Action Even though the PR Notice will not be published in the Federal Register, it is expected to lead to a final rule or regulation as defined in E.O. 12,866, and, thus, falls within the Order's definition of "regulatory action." (26) For regulatory actions that are "significant," E.O. 12,866 requires that OMB be provided with a comprehensive cost-benefit analysis. (27) By any measure, EPA's proposed actions meet the definition of "significant regulatory action." E.O. 12,866 defines a "significant regulatory action," in relevant part, as one that is likely to result in a rule that may: (1) have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or Tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency.... The proposed action clearly meets the first test: the cost will exceed $100 million. The economic impact of EPA's proposed actions has four basic components: re-labeling costs; registration costs commercial disruption costs; costs associated with discontinuation of product lines. Relabeling costs - Under the draft PR Notice, many types of products previously viewed as falling within the exemption will need to be re-labeled to remain within the exemption. Indeed, as described briefly above, the current approach creates three separate labeling components in the cost equation: some manufacturers have already had to make label changes for antimicrobial containing treated articles -- first, as a result of an EPA enforcement action, and, second, when the FR notice was published. These same manufacturers likely will again be required to modify their labeling if and when the PR Notice is finalized. Manufacturers who choose to register products previously viewed by

15 EPA as falling within the scope of the exemption also will need to re-label their products in accordance with EPA's pesticide labeling regulations. Relabeling often has long lead times. Products are often manufactured in foreign countries and can take as long as three months to reach the U.S. Label stocks are purchased in large quantities, often amounting to a year's requirements. Thus, the cost of relabeling is magnified if the proposed phase-in period is as short as the 60 days envisioned in the FR notice. It should be at least 24 months, and preferably 36 months to allow the existing labels to clear store shelves. With no danger, proximate or remote, to the public, such a period is not excessive. Registration costs - Registration costs include both the costs of generating the required scientific data to support the registration as well as related legal and administrative costs associated with determining what data are required and preparing the registration application. With respect to treated articles, because EPA has not registered these types of products in the past and has not yet determined what data are required, these costs are substantial. We believe that the result of this lack of foresight by the Agency will be increased registration time and expense for the regulated community. Additional registration costs are imposed at the state level. Once a pesticide is registered, registrations in the states must be obtained, and fees and taxes paid as well. Many treated articles will not generate sufficient revenue to permit state registration and payment of the taxes as well. Moreover, it is not clear that whatever policy is adopted at the federal level will be followed by the states. This is another reason why a formal rulemaking should be pursued to involve the states and to obtain their acceptance of the final national policy. Commercial disruption costs - Significant commercial disruption will occur due to the need to re-label products and obtain any required registrations. Even under the most favorable circumstances, obtaining a pesticide registration requires several months; at worst, it can take several years. Re-labeling can also cause significant commercial disruptions in that a product cannot legally be sold or distributed unless and until it is labeled in conformance with established requirements. Product line discontinuation costs - Companies have already discontinued product lines due to EPA's shifting interpretation of the exemption and in anticipation of additional regulation of these products. For example, in a notice faxed to customers on June 3, 1998, Johns Manville announced that it has suspended the production of any media utilizing antimicrobial agents. Hasbro has also announced that it will no longer market toys that contain antimicrobial agents. Should the PR Notice be finalized as proposed, the Coalition fears that many other companies will also be forced to discontinue product lines. While this may have been in part the Agency's intention, it does not represent a considered, thoughtful result, in significant part because the judgment was not informed by the experience and knowledge of the regulated industry. As EPA knows, this is one of the essential functions of the APA and the rulemaking process.

16 In addition, there are indirect costs aside from those directly related to FIFRA (e.g., premature product performance failures resulting from the lack of an antimicrobial agent in a product) that could far exceed all of the above costs. 2. A Public Hearing Is Necessary to Allow Full Consideration of the Issues. Given the significance of the treated article debate and the scientific issues it raises, it is imperative that a hearing is conducted. A hearing will provide a mechanism for EPA, the Coalition, and other stakeholders to engage in a contemporaneous dialogue, and introduce evidence as well as criticize evidence introduced by others. A complete record, which the Coalition requested an extension of the comment period, cannot consist simply of raw data and assertions made by EPA. The regulated community must be afforded a meaningful opportunity to question the Agency's factual premises. As one commentator correctly points out, "[h]e who regulates ought to appear publicly if there is a challenge, and put on the table, subject to cross-examination, the facts on which he grounds his proposal." (28) Second, the companies which are members of the Coalition are law-abiding citizens who wish to know the limits of their obligations and will willingly conform to the rules once established. (29) Indeed, the companies strongly support a clear and well-documented regulatory scheme, adopted through an open and transparent process, because it will put all competitors on an equal footing. And the companies are interested in working with EPA to fashion a workable scheme that protects the public, first and foremost, while permitting a market for products which work and promote good hygiene. 3. The Agency's Approach in Announcing the New Policy Has Unintended Impacts on the Agency That Limit Its Ability to Act Correctly Due to a Lack of Needed Information When EPA makes changes like the ones in this case through enforcement of a retroactive interpretation, the Agency cuts off the free flow of information that it needs to make wise decisions. Companies which diligently comply with the law find themselves in a conflict with the retroactive new meaning. If they want to come forward, they fear enforcement. The approach taken so far -- of developing and then announcing the policy through a series of enforcement actions -- has been counterproductive, because it has chilled the industry's willingness to come forward and speak candidly with EPA. EPA lacks adequate knowledge of the size and scope of the industry that has been built up over the last 25 years. It does not understand the myriad array of products and markets in which the products have found and created niches. And EPA clearly is out of touch with consumers and their desire for, and understanding of, products like the articles made by members of the Coalition. EPA will not easily get accurate information on the diversity of affected products unless companies can feel comfortable that they will not be unfairly targeted as a result of open and candid participation in the regulatory process.

17 Accordingly, in the interim while the details of the regulatory scheme are being worked out, a stand still policy with respect to enforcement is absolutely essential. 4. The Decision Not To Use Formal Rulemaking Will Have a Negative Impact on EPA's Ability to Issue a Policy in a Timely Fashion Formal rulemaking creates a structure within which government agencies, the regulated community, and interested parties can communicate about concerns and issues. Having a structure can contribute to efficiency: parties know what is expected and when, and specific actions must be taken in sequence to complete the task. The Coalition is willing to work with EPA to assure that a timely process results. The experience of the last year suggests that EPA has been unable in an informal process to move quickly. The informal process is ad hoc, and by its nature less orderly for EPA as well as for the industry. If there is no formal structure, EPA may find it difficult to keep focused on the timely adoption of the policy and the return of stability and predictability to the treated article exemption, for both the agency and the industry. The return to a stable and predictable regulatory environment is a highly desirable outcome. C. Active Ingredient Issues 1. The Draft PR Notice Will Prohibit the Use of Many Active Ingredients Currently Used to Manufacture Treated Articles EPA proposes that, on a case-by case basis, it will require that the registration and labeling for the treating pesticide list the specific articles or substances that may be treated and that the Agency normally will not accept broad general use patterns, such as the preservation of hard surfaces, plastics, adhesives, or coatings. (30) There are several registered pesticide active ingredients that contain such detailed information, but by no means are all active ingredients used in treated articles in this position. (31) Thus, under EPA's proposed approach, it would appear that all other active ingredient manufacturers would be required to amend their product registrations to contain adequate specificity. This approach would be a de facto cancellation or suspension of existing registrations, an action that is not justified because the products are safe. It is important to note that even if a treated article manufacturer can comply with the PR Notice by making label changes rather than registering the product, it appears that all active ingredient manufacturers will be required to amend their registrations. In the meantime, no treated articles could be manufactured under the exemption. This is even more onerous in light of EPA's proposal to go beyond the mandates of the Food Quality Protection Act (FQPA) and limit antimicrobial registrations amendments to five years. (32) Even if this additional requirement is intended, EPA's proposed actions constitute rulemaking and an economic analysis must be prepared and made available for public comment. As noted above, another consequence of this proposed position is that the active ingredient market will decline because treated article manufacturers will abandon product lines rather than pursue registration or await the approval of the active ingredient.

18 Fairness requires that EPA establish a process to allow active ingredient manufacturers adequate time to meet the new requirements, and to allow the formulators and treated article manufacturers a means of obtaining approval of their applications. It would appear that an interim period of enforcement discretion as contemplated in the FR notice should be extended while these activities are accomplished. EPA can and should pursue appropriate action against manufacturers who exceed the limits of the exemption for explicit claims, and for claims of protection against specific pathogenic bacteria. But EPA should temper enforcement with a recognition that many in industry have not been able to rely on guidance received from the Agency in the past in light of the new interpretation. Common sense suggests that a SSURO or other enforcement action will not be warranted in all cases in this interim period, and a negotiation to an acceptable stand-still position for some manufacturers may be sufficient to address EPA's concerns. We agree generally with the approach that the active ingredient registration is the control point that offers the Agency the best opportunity to regulate conduct in this area. EPA should establish a policy for registration of the active ingredients and, using the rulemaking proposed above, determine what kinds of treated articles will be permitted to make claims and remain unregistered, and when such claims will bring the article within the scope of FIFRA section 3. The Coalition is eagerly awaiting the opportunity to work with EPA to develop such a process. 2. If Finalized as Proposed, The PR Notice Would Create a Non- Tariff Trade Barrier The draft PR Notice requires the use of an EPA-registered pesticide product that has been cleared for the particular use with the specific treated article. If finalized as proposed, the PR Notice would establish a non-tariff trade barrier with respect to products manufactured from pesticides outside the U.S. because it will not be possible for most foreign-made products to import the U.S. registered and labeled pesticide for use in accordance with the exemption. Most industrialized countries have registration and labeling requirements for such products, that are not necessarily consistent with those of EPA for those products. D. EPA's Proposal to Only Allow Specific Language for Antimicrobial Containing Treated Articles Is an Illegal Restraint on Commercial Speech Finally, we pause to note one significant impediment to EPA's proposed approach. As noted above, the exemption does not explicitly prohibit discussing the benefits of a properly used treatment on the label of the article. In the draft PR Notice (and, to a lesser extent, the FR notice) EPA proposes to impose severe restrictions on benefit claims that can be made under the exemption without notice or comment. EPA misses a significant point in proposing this broad restriction. Speech, including commercial speech, is protected by the First Amendment of the U.S. Constitution. (33) The U.S. Supreme Court has stressed that "[s]ociety... has a strong interest in the free flow of commercial information, both because the efficient allocation