Expert Column: 5 Common Regulatory Traps Retailers Selling Pesticides Encounter

12/4/2014

Many grocery and convenience stores sell pesticide products, including common items like antimicrobial soaps, pet flea treatments, insect sprays, pool treatments and disinfectants. What some retailers may not understand, however, is the extent to which these products differ from other inventory. This is because the distribution and sale of pesticides is heavily regulated by the U.S. Environmental Protection Agency (EPA) under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).

Federal regulation under FIFRA extends to substances promoted or "intended for preventing, destroying, repelling, or mitigating any pest." This applies to a wide range of products, including those that may be considered "traditional" pesticides, e.g., ant or cockroach sprays, but also to a variety of other products that remove mildew, provide "germ resistance," or disinfect surfaces and other materials. These products must be registered with EPA, can only be sold if they're accompanied by the label specifically approved by EPA and may only be used consistent with instructions provided on the approved label.

Violations of FIFRA can result in substantial civil penalties and, in some cases, criminal liability. Civil liability is strict, meaning that ignorance of FIFRA's requirements isn’t a defense to penalties. EPA can seek up to $7,500 per violation (the agency interprets each unit sold in violation of FIFRA as a separate “violation”) and is authorized to issue Stop Sale, Use or Removal Orders, or seek injunctions to prevent continuing violations. Fines can be steep; recent enforcement actions by EPA against large retailers for alleged FIFRA violations have resulted in penalties of approximately $500,000.

Examples of issues relevant to retailers that raise the risk of EPA enforcement include:

  • Advertising or In-store Promotion. Retailers need to avoid statements promoting the use of unregistered products as pesticides in their advertising and in-store displays. EPA guidance lists numerous examples of language that could pose problems, including representation that an unregistered product "cleans, washes or removes" any pest, biofilm, scum, germ or bacteria. Problems commonly arise where retailers promote unregistered, natural products for pesticide purposes. An example would be the promotion of unregistered high-concentration vinegar (acetic acid) for disinfectant or herbicidal purposes. Problems can also arise where promotional materials recommend use of a registered pesticide in a manner inconsistent with its labeling.
  • Sale of Unregistered Product or Lack of Required Labeling. Some products have dual purposes, some regulated under FIFRA and others not. For example, muriatic acid sold to remove rust stains on concrete isn't subject to FIFRA, but the same product sold as a pool treatment is subject to FIFRA's requirements. Similarly, bleach sold to "whiten or clean" laundry isn't subject to regulation, but bleach advertised to "kill bacteria" is subject to FIFRA. Problems may arise for retailers when they switch suppliers or brands and receive an unregistered, unlabeled version of products like bleach or muriatic acid that continue to be promoted by the retailer for a pesticide use.
  • "Unbundling" Pesticides. In an effort to meet customer demand, some retailers have "unbundled" multiple units of a pesticide product to sell single units. For example, ant baits and pet flea control applicators often come in boxes with multiple units, but customers often request to purchase individual units. Unbundling pesticides can expose retailers to significant liability because the sale of the unbundled product is unlikely to contain the required label information. In addition, EPA takes the position that pesticides can only be repackaged under the authority of the manufacturer in an establishment registered with EPA.
  • Foreign Products. Risk awaits retailers that market foreign products without confirming that the sale of the products complies with federal law. EPA recently brought an enforcement action against a retailer for the sale of unregistered cleaning and pest-control products imported from Mexico, which included statements, in Spanish, claiming that the products disinfected and sanitized surfaces. Other, more serious enforcement actions have been brought where retailers import pesticides banned in the United States. According to EPA, examples of illegal foreign pesticide products commonly imported include certain naphthalene moth balls, insecticide "chalk," and Tres Pasitos, a rodenticide produced in Mexico.
  • Managing Product Returns. In 2013, EPA settled an enforcement action against a nationwide retailer for its alleged failure to provide adequate oversight of the disposal of damaged and returned household pesticide products. Retailers are obligated to dispose of returned pesticides in a manner consistent with applicable hazardous waste laws. Alternatively, if returned pesticides are offered for sale, it's imperative that the retailer confirm that EPA-approved label instructions remain fully intact and legible.

In addition to federal regulation, states are authorized to regulate "above and beyond" federal requirements. Several states -- including California, New York, Iowa, Idaho and Maine -- have additional requirements that can apply to the retail sale of pesticides. California has a particularly robust program that requires separate California registration of pesticides and taxes the "first sale" of all pesticides. Although the registration and taxes in California are often handled by manufacturers or distributors, compliance issues arise where multistate retailers distribute products to their California stores from an out-of-state distribution center.

Due to the expansive regulation of pesticides, these products must be treated differently from other retail inventory. To minimize the risk of inadvertent violations, retailers are encouraged to develop robust programs to track regulatory compliance for the distribution, sale and return (or disposal) of pesticide products.

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