Insect Pest Management Techniques for Environmental Protection 10

However, it was not until 1972 with passage of the amend-ments to FIFRA and FFDC that regulation made a transition toward more aggressiveprotection of human health and safety and the env

Regulation and its Economic Consequences Michael Ollinger and Jorge Fernandez-Cornejo

CONTENTS

10.1 Pesticide Regulation and its Economic Consequences 338

10.2 Pesticide Legislation 339

10.2.1 Major Amendments to Pesticide Legislation 339

10.2.2 Other Legislation that Influences Pesticides 342

10.2.2.1 Endangered Species Act 342

10.2.2.2 Clean Air and Clean Water Acts 342

10.2.2.3 Coastal Zone Management Act 342

10.2.2.4 Safe Water Drinking Act 342

10.2.2.5 State Legislation 343

10.2.2.6 1996 Farm Bill 344

10.3 Regulation Issues and Agencies Involved 344

10.3.1 Pesticide Registration 344

10.3.2 Pesticide Tolerances 345

10.3.3 Data and Testing Requirements 346

10.3.4 Pesticide Labeling 347

10.3.5 Pesticide Exemptions and Experimental Use Permits 347

10.3.6 Pesticide Cancellation and Suspension 348

10.3.7 Applicator and Worker Protection Standard 348

10.3.8 Pesticide Applicator Certification 349

10.3.9 Regulation of Biological Pesticides 349

10.3.10 Regulation of Transgenic Crops 349

10.4 The Economic and Environmental Effects of Pesticide Regulation 350

10.4.1 The Direct Effects of Pesticide Regulation 351

10.4.1.1 Regulation and Existing Pesticides: Restrictions,

Cancellations, and Suspensions 351

10.4.1.2 Regulation and the Number of Innovations 353

10.4.1.3 Regulation and the Environment 356

10.4.1.4 Regulation and Human Health 356

10.4.2 Indirect Effects of Regulation 359

10.4.2.1 Regulation and Pesticide Registrations for Minor Crops 359

10.4.2.2 Industry Composition 361

10.4.2.3 Regulation and Biological Pesticides 362

10.4.2.4 Regulation and Genetically Modified Plants 363

10.4.2.5 Regulation and Pesticide Availability 364

10.4.3 The Effects of the FQPA 365

10.4.4 FQPA and Integrated Pest Management 367

10.4.5 Organic Farming and Pesticide Use 368

References 368

10.1 PESTICIDE REGULATION AND ITS ECONOMIC CONSEQUENCES

Together with fertilizer and improved seeds, pesticides have played a major role

in increasing farm productivity For example, corn yields rose three-fold over the past 40 years Despite this positive effect, evidenced by the willingness of U.S farmers to spend $8.3 billion on pesticides in 1996 (USDA, 1997), there is concern about contamination of ground and surface water, the effects on wildlife, and the potential health risks to farm workers and, because of residues, to consumers (Harper and Zilberman, 1989) These potential side effects have prompted the U.S Govern-ment to strictly regulate pesticides

Regulatory stringency exists along a continuum At one extreme are pesticides with use prohibitions, such as DDT, that are believed to have a high likelihood of causing harm to human health or of having a severe impact on fish and wildlife At the other extreme is naturally occurring or self contained pesticides, such as pher-omones, that have almost no use restrictions

Legislative history suggests that pesticide regulation has gradually become more

stringent The very first federal legislation, The Federal Insecticide Act of 1910, dealt

with correctly identifying container contents through a label requirement The first real attempt to control pesticide toxicity came with the Federal Food, Drug, and Cosmetic Act of 1938 (FFDC) and the Federal Insecticide, Fungicide, and Rodenticide Act of 1948 (FIFRA) This legislation established procedures for setting tolerances, prohibited a high immediate toxicity to humans, and required handling instructions However, regulators at the United States Department of Agriculture (USDA) and the Food and Drug Administration (FDA) primarily responded to the compliance requirement concerns of registrants and the verification of pesticide efficacy

Throughout the 1950s and 1960s, publications, such as Silent Spring by Rachel

Carson, caused growing consumer concern about the harmful side-effects of cides and other chemicals Congress responded by enacting legislation that increasedregulatory restrictiveness However, it was not until 1972 with passage of the amend-ments to FIFRA and FFDC that regulation made a transition toward more aggressiveprotection of human health and safety and the environment.* This legislationimposed a strict burden of proof for verifying pesticide safety, and gave the Envi-ronmental Protection Agency (EPA), which was now the primary enforcer of pesti-cide regulation, the power to cancel and suspend pesticide registrations Althoughtesting requirements for new pesticides grew substantially after 1972, existing pes-ticides that had been approved in the less demanding regulatory period before 1972remained in use, and, except for chemicals with the most serious side-effects, werenot required to meet existing regulatory standards until the 1988 FIFRA amendment.The recently enacted Food Quality Protection Act (FQPA) of 1996 promises toincrease stringency for dietary risks for both new and existing pesticides

pesti-The first section of this chapter discusses the powers that the FFDC and FIFRAamendments and other legislation, such as the Safe Drinking Water Act, conferred

on regulators The second section deals with regulatory issues, such as pesticideregistration requirements The third section contains a discussion of research on theeconomic consequences of pesticide regulation

10.2 PESTICIDE LEGISLATION

The FFDCA of 1938 and FIFRA in 1948 form the basis of modern pesticideregulation Under the FFDCA, Congress gave the FDA the authority to establishprocedures for setting tolerances With FIFRA, Congress assigned USDA the tasks

of registering all pesticides sold in interstate commerce against manufacturers claims

of effectiveness, and ensuring that the pesticide label states whether the pesticide istoxic to humans and fish and wildlife

10.2.1 Major Amendments to Pesticide Legislation

Congress amended FIFRA in 1959, 1964, and 1967 and FFDCA in 1954, 1958,and 1960 The FIFRA amendments granted the USDA the authority to regulate allpesticides, closed a loophole that enabled companies to register pesticides whenregulators felt more data were required, and made it necessary for pesticides to meettolerances to gain registration The FFDCA amendments required producers toprovide regulators with data about the acute, intermediate, subchronic (short-term),chronic (long-term), and other health effects of pesticides They also included theDelaney Clause, which defined any pesticide that concentrates in processed food as

an additive and prohibited the use of additives that “induce cancer” in experimental

* Unless otherwise noted, we will refer to amendments to FIFRA and FFDC as FIFRA amendments because FIFRA is the primary legislative vehicle through which EPA regulation is enforced.

animals or man Under this standard, FDA set pesticide tolerances in processed foods

at zero USDA, on the other hand, set tolerances for raw commodities at a levelnecessary to protect human health

Hatch (1982) asserts that growing public awareness of the carcinogenic andenvironmental effects of pesticides led to the transfer of administration of FIFRAand the setting of tolerances for FFDCA from USDA and FDA to the EnvironmentalProtection Agency (EPA) The subsequent 1972 FIFRA amendments greatlyincreased regulatory stringency by requiring the EPA to examine the effects ofpesticides on fish and wildlife safety; demanding more extensive testing of thechronic and acute toxicity effects; and, for the first time, granting the EPA theauthority to cancel or suspend pesticides that may pose unreasonably adverse health

or environmental effects FIFRA also gave states substantial latitude in regulatingthe distribution, sale, and use of pesticides, and mandated that all existing pesticides

be reregistered within four years, with pesticides that failed to meet existing dards subject to cancellation if estimated risks outweighed benefits

stan-It took several years for the EPA to establish the precise regulatory standardsand guidelines (rules) necessary to implement the 1972 FIFRA amendment The

first formal rules, published in the Federal Register in 1978 (USEPA, 1978), mainly

dealt with testing requirements for proving the safety of chemical compounds tohuman health A second set of rules in 1982 (USEPA, 1982) dealt mainly withenvironmental testing requirements A third set of more informal rules in 1994(USEPA, 1994) had only modest requirements for safety to both human health andthe environment

Several critical aspects of the 1972 amendment were ambiguous, making mentation through formal rules difficult Concern centered on the costs of registeringpesticides with low measurable environmental risks; the development of pesticidesfor low acreage crops, such as most fruits and vegetables (minor-use pesticides); andthe reregistration of existing pesticides A major debate centered on the use of existingtest data to register new pesticides This situation arose when a second manufacturerwanted to market a product similar to one already on the market Overall testing costsand the costs to the new manufacturer of product development would have been lower

imple-if the new manufacturer could have used existing data However, the original pesticidedeveloper wanted to prevent the new manufacturer from using the data because suchuse would have facilitated the market entry of a competitor Hence, a conflict ofincentives existed that could be settled only with new legislation

The 1978 amendment eased data requirements for pesticides that pose lowenvironmental risks and gave the EPA the right to reduce data requirements forminor-use pesticides This legislation also strengthened state enforcement of pesti-cide use and allowed the registration of pesticides for specific local needs Addi-tionally, the amendment permitted certain crop uses that were not inconsistent withthe label and simplified the registration process Finally, the 1978 amendment gavenew manufacturers the right to use original producer data but required the newmanufacturers to compensate the original developers The amount of compensationwas to be decided through arbitration This aspect of legislation encouraged produc-ers to begin the registration process for many minor crop pesticides that they formerlyhad withheld from the market

The 1978 amendment eliminated the pesticide registration deadline established

in the 1972 FIFRA amendment Instead, it required an expeditious process, andallowed the EPA to evaluate the 600 active ingredients used in product formulationsrather than the 35,000 registered pesticide products However, by 1986, only oneactive ingredient had completed its final reassessment and only 130 had completedtheir preliminary reassessments In response, Congress demanded completion ofreregistration by 1997 through the 1988 FIFRA amendment Reregistration prioritywas based on: (i) potential for post-harvest residues on human food or animal feed;(ii) toxicity effects; (iii) outstanding data requirements; and (iv) likelihood of workerexposure

The amendment covered all pesticides registered before 1984 and affected 1153active ingredients grouped by EPA into 611 similar chemicals Funding for thisreregistration program came from a one-time reregistration fee for each activeingredient and an annual maintenance fee for each registered product Exempt fromfees were minor use pesticides and antimicrobial pesticides with annual production

of less than million pounds and registered for nonfarm uses

The 1988 FIFRA amendment also expedited the registration process for too” pesticides and expanded EPA’s authority to regulate the storage, transportation,and disposal of pesticides, containers, rinses, and contaminated materials “Me-too”pesticides have the same active ingredient, similar use patterns, and comparable usedirections as a previously registered pesticide

“me-The Delaney Clause became controversial in 1987 when the National Academy

of Science (NAS) issued a report entitled “Regulating Pesticides in Food: theDelaney Paradox.” NAS suggested that all pesticides should be regulated based onconsistent standards; total dietary exposure to oncogenic pesticides could be reduced

if a negligible risk standard was applied consistently; and EPA should focus onpesticides in the most commonly consumed crops/foods/feeds and improve pesticide-residual testing methodologies In 1988, EPA adopted a negligible risk standard ofone cancer incident in one million people However, the Ninth Circuit Court ruled

in 1992 that this risk standard was inconsistent with the Delaney Clause, compellingEPA to threaten cancellation of over 30 pesticides

A more recent NAS (1993) study, “Pesticides in the Diets of Infants and dren,” highlighted the sensitivity of children to the health risks of pesticide residues.The controversy surrounding this publication and the 1988 NAS report encouragedCongress to enact the 1996 FQPA This legislation reduced registration stringency

Chil-by eliminating the paradox of holding raw and processed foods to different standards;prohibiting states from setting residue standards that differ from federal standards;and facilitating the registration of minor-use and reduced-risk pesticides However,FQPA greatly increased restrictiveness by mandating that all pesticides have sup-porting test data updated every 15 years; requiring an aggregate pesticide tolerance

in which exposure to air, water, and other nonfood sources (excluding occupationalexposure) and all food sources is considered when establishing a tolerance for a newpesticide use; mandating the use of up to a ten-fold safety factor in setting tolerancesfor infants and children; substantially reducing the cases where economic benefits

of pesticide use were considered relative to dietary risk for raw commodities; andordering tests for estrogenic and other endocrine effects

10.2.2 Other Legislation that Influences Pesticides

10.2.2.1 Endangered Species Act

The Endangered Species Act was passed to protect animal and plant speciesfrom extinction and to conserve the ecosystem on which endangered species depend.Its provisions restrict pesticide use thought to affect fish and wildlife by establishing

a threshold (lowest) application rate that “may affect” endangered species In 1991,

31 pesticides had “may affect” determinations, requiring EPA to consult with theFish and Wildlife Service (FWS) over a course of action The course of action ofFWS has been to define areas where a pesticide use was banned or restricted —made part of the label

10.2.2.2 Clean Air and Clean Water Acts

The Clean Air Act dictates allowable concentrations of specified pollutant sions based on state and federal limits Although this legislation primarily affectsmanufacturing, it has led to phase-out of methyl-bromide, a chemical that can depletestratospheric ozone

emis-The Clean Water Act limits discharges of toxic pesticides from manufacturingplants Several pesticides, such as aldrin/dieldrin, DDT, and endrin, have eitherhighly limited or no permissible discharge from production plants The Clean WaterAct also required states to establish management plans containing managementpractices for best controlling pesticides, fertilizers, manure, and other nonpointpollution sources (NPS) on a watershed basis

10.2.2.3 Coastal Zone Management Act

The Coastal Zone Management Act (CZMA) requires states with coastal zones

to submit a program that will control NPS pollution in coastal waters With agement plans not required until 1999 and only small penalties for failing to imple-ment them once they are in place, this legislation will likely have only a small effect

man-on pesticide use

10.2.2.4 Safe Drinking Water Act

The Safe Drinking Water Act (SDWA) is far more relevant to pesticide usethan the CZMA Established in 1986, SDWA requires states to protect publicwater wells from contamination from all sources of pollution, including pesti-cides The SDWA requires that Public Water Systems ensure that their watersupplies do not exceed the Maximum Contaminant Level for four insecticidesand nine herbicides States are the primary enforcers and have brought more than

9000 pesticide abuse cases against farmers and other pesticide users (Ribaudoand Gadsby, 1998)

As pointed out by Ribaudo and Gadsby (1998), six states — Arizona, California,Iowa, Kansas, Montana, and Wisconsin — are addressing pesticides in water with

regulations The Arizona plan establishes a list of pesticides — currently about 152chemicals — that have groundwater leaching potential If the pesticide or any toxicbreakdown is found in groundwater, or in the soil below the root zone, the pesticide

is subject to regulation If the pesticide is carcinogenic, mutagenic, teratogenic, ortoxic to humans, and the label cannot be modified such that crop or geographic uses

or application rates do not threaten groundwater, the registration is canceled Forpesticides that do not pose risks to human health, continued use is allowed undercertain restrictions

California’s law is slightly more complex, requiring the state to set numericvalues for six chemical characteristics that define a chemical’s ability to leach intogroundwater During registration, the manufacturer must submit information on thesecharacteristics If the value for one characteristic exceeds the prescribed numericvalue, the chemical is placed on the groundwater protection list If any of thechemical characteristics are either found in groundwater, eight feet below the surface,

or below the root zone or the zone of microbial activity, the pesticide can be restricted

or canceled Restrictions, as in many other states, may apply to only some pesticidemanagement zones because leachability is affected by application rates, soil type,and topographical features Cancellation can occur statewide if all pesticide man-agement zones show similar signs of leaching

Iowa and Kansas monitor groundwater for pesticides and promote the use ofvoluntary best management practices if a contamination trend is detected If volun-tary measures fail to control pesticide leaching, then the states impose mandatoryrestrictions Montana and Wisconsin have established leaching triggers that, whenreached, require the state to take remedial action This action includes state restric-tions on pesticide use according to soil type and application timing and prohibitions

on pesticide application through irrigation systems If these and further measuresfail, the chemical is prohibited in the area overlaying the aquifer

10.2.2.5 State Legislation

States have the primary responsibility for enforcing federal pesticide regulations.Under this mandate, states encourage proper pesticide use and record commonpesticide use practices, and determine whether pesticide use is in accordance withlabel directions States also have the power to regulate the sale and use of pesticides,and, until enactment of the FQPA, could establish more stringent tolerances thanthose required by EPA The power to regulate the sale and use of pesticides is exertedthrough state registration programs that, in many cases, are based on federal stan-dards States may also prohibit or restrict federally registered pesticides and demandenvironmental and safety data in addition to the data submitted to EPA, but cannotimpose labeling or packaging requirements that differ from those mandated underFIFRA States can also facilitate the registration of pesticides for special needs, and,after consultation with the EPA, register pesticides for which federal uses have beendenied, disapproved, suspended, or canceled

The diversity of state laws makes them difficult to summarize Instead, weconsider California, which has one of the most active regulatory programs Estab-lished in 1901 and made stricter in 1969, California’s regulatory program includes

registration and data requirements; licensing of pest control operators, dealers, andadvisors; assessment of pesticide taxes; worker safety restrictions; and limits onpesticide use and permit availability It also requires companies to submit all testdata developed to meet EPA standards and all data required uniquely by California

to the California Environmental Protection Agency (CEPA) The unique Californiadata includes dermal absorption tests and mixer/loader, applicator, and reentry data.Additionally, state law requires all pesticides to meet current standards If a companydoes not adhere to this requirement, CEPA generates the data itself and charges thecompany for its service For more detailed discussion of state regulatory require-

ments, see Pesticide Regulation Handbook (1991).

The FQPA could have a major impact on state regulation This legislationprohibits states from setting tolerances that differ from those imposed by EPA unlessthe state petitions the EPA for an exemption EPA would likely approve the petitiononly if a state can justify an exemption by citing local conditions, and then only if

it does not violate federal law States can also regulate pesticide use in other ways.For example, California has numerous area-based restrictions

10.2.2.6 1996 Farm Bill

The Farm Bills passed every five years also have provisions related to pesticidelegislation The 1996 Farm Bill requires all applicators, including farmers, to main-tain records on restricted use pesticides; establishes a revolving fund to help registerminor use pesticides; requires EPA to create a program to coordinate minor useactivities; and mandates that USDA provide educational, research, and technicalassistance programs for users and dealers of agrichemicals

10.3 REGULATION ISSUES AND AGENCIES INVOLVED

All pesticides must be registered with the EPA prior to use by passing through

a series of demanding field tests With registration comes the right and the ment to print labels that clearly indicate acute, chronic, and other harmful humaneffects, adverse environmental impacts, and handling and application instructions.Pesticide registrations can be canceled if future tests reveal adverse side-effects EPAalso grants permits and exemptions of pesticide restrictions for emergencies and forpesticide testing purposes Below, we consider pesticide registration, tolerances, dataand testing requirements, label requirements, emergency use permits, and cancella-tions and suspensions We also consider the Applicator and Worker ProtectionStandard, applicator certification, and the regulation of transgenic crops and biolog-

require-ical pesticides For more detailed discussions of regulation issues, see Pesticide

Regulation Handbook (1991), Farm Chemicals Handbook ‘95, and NAS (1987).

10.3.1 Pesticide Registration

A firm must register a pesticide for use by showing that the pesticide has a

“reasonable certainty” of no harm to human health, as defined under the FDCA, and

will not cause “unreasonable adverse effects” on human health or the environment,

as defined under FIFRA To make its case, the firm submits data on pesticide fieldtests and characteristics to the EPA, which either approves, asks for more data, orrejects the registration application This process is repeated for each crop use Thenumber of tests and testing costs drop dramatically for crop uses within crop classes,such as kale and spinach, but less so for more dissimilar crops, such as lettuce andgrains Additionally, the type of data and the cost of generating it varies by soilconditions, and climatic and topographical features The EPA can reject a pesticidefor all uses or for use on some crops or in some areas For example, EPA maycompletely reject a pesticide use for clover but not corn, or a use for corn in Floridabut not Iowa

10.3.2 Pesticide Tolerances

Established by EPA and enforced by USDA for meat and poultry and by FDAfor fruits, vegetables, and grains, tolerances are the legally allowed amounts ofpesticide residues permitted in foods sold in interstate commerce Since pesticidesmust have tolerances to be registered, granting a tolerance is tantamount to granting

a pesticide registration

Until 1996, one tolerance could exist for residues in a commodity as a raw fooditem and another tolerance for residues in the same commodity as a processed food,e.g., apples for direct consumption and apples used in apple juice Under Section 408

of the Federal Food, Drug, and Cosmetic Act of 1954, tolerances for residues in or

on raw commodities were set at levels necessary to protect public health, whiletaking into account the need for an adequate, wholesome, and economical foodsupply Under Section 409, which controls tolerances for pesticide residues in pro-cessed foods, residues had to be proven safe This section was interpreted to meanthat there must exist “reasonable certainty” that “no harm” to consumers wouldresult when the pesticide is put to its intended use Moreover, the Delaney Clausesprohibited the use of a food additive found to cause cancer A pesticide was consid-ered an additive if it concentrated in the processed food

Combined Sections 408 and 409 suggest that economic benefits could be sidered and carcinogenic compounds could exist at levels not believed to causecancer in the setting of tolerances for raw commodities However, economic benefitscould not be used, and carcinogenic additives that concentrate were prohibited inprocessed foods The EPA enforced this clause by denying tolerances for both rawand processed commodities if residue concentration occurred and the Delaney Clauseapplied EPA used the raw commodity tolerance for processed foods if the pesticidewas used on raw commodities and the Delaney Clause was not an issue According

con-to the EPA, pesticide concentration existed if there was a greater quantity of thepesticide in the processed food than on the raw commodity

Raw agricultural commodity tolerances are based on the results of field trialsdesigned to achieve the highest residues likely under normal agricultural practices.These agricultural practices include the highest recommended application rates andweather and climatic conditions that permit the highest residue levels on crops.Average residue levels on raw commodities can be lower than the established tolerance

because climactic conditions dissipate residues more rapidly in some areas (NAS,1987) Since average pesticide residue levels can be lower than the raw commoditytolerance, some pesticide concentration in processed foods was possible.

The EPA establishes a tolerance by first determining whether the pesticide causes

a significant increase in tumors in animals If it does, residues are not permittedbeyond those considered “safe” for human consumption If there is no significantincrease in tumors, then EPA calculates an Acceptable Daily Intake (ADI) for thesubstance in question EPA sets an ADI level equal to the threshold, i.e., the highestdose at which no adverse human health effects are observed, divided by a safetyfactor of 100 Pesticide exposure is calculated by summing residues from all foodsources If residues from all previously approved tolerances and the new tolerance

is less than the ADI level, then the pesticide use is approved EPA assumes that thepesticide residues are present at full tolerance on all harvested acres for which atolerance exists and is proposed

Under the Delaney Clause prior to FQPA, the issue of pesticide concentrationwas extremely important in tolerance setting The EPA set tolerances for pesticidesthat were found to cause tumors but that did not concentrate in processed foods bygenerating an upper-bound estimate of human cancer risks based on animal bioas-says Using an assumption of lifetime exposure, EPA then extrapolated the pesticideeffects of high pesticide doses on animals to the much lower doses ordinarilyconsumed by humans Then, EPA predicted what would likely happen to humansunder actual exposure conditions and approved tolerances if there was an upperbound risk of less than one in one million of contracting cancer from normal foodconsumption

Under FFDCA, food — either raw or processed — is adulterated unless a pesticideresidue is within the tolerance limit The tolerance level is based on the sum of risksfrom all food uses; all other exposures, such as drinking water and lawn care products;and exposure from pesticides with a common mechanism of toxicity The tolerancefor each food use must be set so that this aggregate standard is met (i.e., all food andother uses of the pesticide) Additionally, consistent with the previous practice, pes-ticides with threshold effects are to have tolerance set 100 times below the maximumlevel determined not to cause dietary risks, including cancer

The FQPA establishes a uniform tolerance standard for raw commodities andprocessed foods Pesticides with no threshold effects are to have tolerances set at alevel at which there will be no greater than a negligible increase in cancer Also, toensure with reasonable certainty that no harm would result to infants and children,the EPA will establish an additional ten-fold margin of safety and would likelyrestrict pesticide uses for some crops heavily consumed by children and infants

10.3.3 Data and Testing Requirements

The pesticide data submitted to EPA for pesticide registration includes a tion of the pesticide chemistry; identity, description, and quantity of residuesexpected to be present in food from the crop; analytical procedures used in obtainingthe residue data (procedures must permit replication); and acute, chronic, and sub-chronic toxicity tests and mutagenicity and pesticide metabolism studies from residues

descrip-on crops, in animal feed derived from crop by-products, or from forages and resultingresidues in meat, poultry, milk, fish, or eggs Data requirements also include anassessment of human toxicity from residues remaining after application; a determi-nation of human health hazards due to reentry; product efficacy; and evaluations ofspray drift and impact on nontarget organisms, such as fish and birds.

The purpose of the test data is to permit estimation and tracking of the principalfood residues that are likely to result from commercial use of a pesticide undervariable climactic and soil conditions This generally requires extrapolation fromdata on a limited number of trials done in different parts of the country EPA generallyuses the highest residue levels reported in such tests (NAS, 1987)

As of 1992, there were 70 different types of laboratory and field tests, some ofwhich cost millions of dollars and take several years to complete The tests examinethe chemistry, toxicology, environmental fate, and ecological effects of both theparent compound and its major impurities, degradation products, and metabolites;and include two-generation reproduction and teratogenicity studies, a mutagenicitystudy, delayed neuropathy, plant and animal metabolism, and toxicology studies,consisting of acute (immediate effect), subchronic (up to 90 days), and chronic (long-term) tests, as well as oncogenicity and chronic feeding studies Other tests are used

to evaluate the effects of pesticides on aquatic systems and wildlife, farmworkerhealth, and the environment Additionally, the FQPA requires a screening programfor estrogenic and other endocrine effects

10.3.4 Pesticide Labeling

The registration process concludes with the approval of a product label Labelinformation includes producer name, weight, and ingredient statements; precaution-ary and classification statements (if restricted); and legally binding instructions onhow, when, or where the pesticide may be applied or not applied, and on whichcrops the pesticide can be used Pesticide classification is based primarily on theacute toxicity of the product and the site at which it is used Examples of userestrictions can be for a high probability of pesticide leaching and pesticide migrationdue to weather conditions, such as high winds The directions for pesticide usespecify the method of application required to minimize farm worker exposure andimpact on the environment, and also concern over reentry intervals, rotational croprestrictions, and specific warnings to prevent crop injury The label also provideswarnings of pesticide toxicity and health complications arising from ingestion orexposure; identifies environmental or other farm crop effects; gives the acute toxicityrating; and states whether the pesticide is carcinogenic, has other chronic effects, or

is harmful to human health Disclosure is also required for inert ingredients becausethese compounds may contribute to acute overall product hazard

10.3.5 Pesticide Exemptions and Experimental Use Permits

EPA grants exemptions from regulation to many types of biological controlagents and other pesticides regulated by other agencies, and substances that contain

or are treated with a pesticide to protect the article or substance itself In addition,

EPA grants tolerance exemptions when it appears that no hazard to public healthwill result from pesticide residues Tolerance exemptions must be obtained for allinert ingredients in formulations applied to raw agricultural commodities.

The EPA may exempt state governments or federal agencies from FIFRA if usewill not cause unreasonable harm to the environment and a pesticide is needed tocontrol unexpected pest outbreaks, prevent the spread of disease, or reduce a sig-nificant risk to an endangered or threatened species, beneficial organisms, or theenvironment Exemptions are not permitted for pesticides that were canceled, unlessEPA modifies the terms of the cancellation or suspension Moreover, these exemp-tions apply to specific uses of a pesticide and may be for limited time periods Othertypes of exemptions include quarantine, public health, and crisis exemptions Addi-tionally, to permit pesticide testing under actual field conditions, the EPA issuesExperimental Use Permits (EUP) Products subject to EUP may be distributed onlyunder the conditions outlined in the EUP

10.3.6 Pesticide Cancellation and Suspension

Congress gave EPA authority to cancel pesticide registrations that have sonable adverse effects on man or the environment Cancellation requires a SpecialReview Process (SRP) that is initiated if the pesticide may pose a serious risk ofacute injury or chronic human effects; could be a threat to the existence of anyendangered or threatened species; or could otherwise pose a risk to humans or theenvironment Since determining unreasonable effects include consideration of bothcosts and benefits, the EPA weighs the economic benefits against the environmentalcosts

unrea-After the SRP, the EPA typically makes label changes requiring warnings, useprecautions, and other handling and use practices, but could also either cancel theregistration or take no action EPA could also initiate a reclassification for a restricteduse or call in for additional field or laboratory data After receiving public comments,the EPA must initiate a notice of intent to cancel or reclassify the pesticide forrestricted use if it wants to cancel the pesticide or change the label of the pesticide.This notice is then reviewed by the USDA and a Scientific Advisory Panel beforeaction is taken

The EPA Administrator can suspend a pesticide registration at any point duringthe SRP This action will be taken if the Administrator determines that suspension

is necessary to prevent the use of a substance that has a high likelihood of beinghazardous Beside cancellations and suspensions, registrants may voluntarily choose

to “lose” a registration, change a label, or withdraw a product rather than meetcertain requirements Registrants often “voluntarily lose” a registration after EPApresents its risk assessment and discusses label changes, including cancellation.Additionally, EPA must approve all voluntary label changes

10.3.7 Applicator and Worker Protection Standard

EPA requires adherence to the applicator standard because most pesticides arehighly toxic shortly after application This standard applies to any pesticide registered

for use on agricultural plants on farms or in forests, nurseries, or greenhouses Itsprovisions are designed to (i) eliminate or reduce exposure to pesticides for up to

72 h in all areas in which pesticide products are applied; (ii) mitigate exposures that

do occur; and, (iii) provide information to applicators and workers about properpesticide handling and the hazards of pesticides

10.3.8 Pesticide Applicator Certification

The 1972 FIFRA legislation mandated that EPA must classify all pesticides foreither general or restricted use and that only certified applicators or laborers underthe direct supervision of a certified applicator could administer restricted use pesti-cides Certified applicators, in turn, were classified as either private or commercialapplicators Private applicators could administer restricted use pesticides on eithertheir own land or that of a second party if no compensation was received Commercialapplicators, on the other hand, were compensated for being an applicator or being

an immediate supervisor of an applicator of restricted use pesticides Since statesare permitted to establish standards that exceed EPA requirements, state pesticideapplicator standards vary considerably and are not summarized

10.3.9 Regulation of Biological Pesticides

The biotechnology portion of EPA’s pesticide regulatory program controls istration of natural biochemical materials, such as pheromones, insect hormones,products of fermentation, and genetically altered microbial materials, such as bac-teria, fungi, and viruses

reg-Regulatory costs are highest for viruses because pathogenicity tests require largequantities of test substances Additionally, the presence and viability of a virus inanimal tissue cannot be measured using chemical or microbiological techniques,

making in vivo bioassays necessary Plant and fermentation extracts also can be

costly to register because they are treated much like chemicals, yet testing ments for chemicals do not necessarily apply to them Pheromones, on the otherhand, require only toxicity and few other tests, and self-contained pheromone trapsneed no registration at all

require-EPA regards each strain of a microorganism as a separate active ingredient Ituses a tier system for nontoxic and nonpathogenic microorganisms in which pesti-cides that pass a short-term test of toxicity to humans and fish and wildlife, patho-genicity, persistence, and replication in mammals gain waivers against additionalhuman health tests The EPA also gives regulatory priority to biologicals overchemicals and waives some of the 19 tests required of chemicals

10.3.10 Regulation of Transgenic Crops

Both the USDA and the EPA regulate field research in plant biotechnology, andthe FDA becomes involved if there is a well-defined difference in food safety orhealth risks between the original product and the one produced by biotechnology.The Animal Plant Health Inspection Service (APHIS) of USDA regulates plant

biotechnology field-testing and transport It requires that organizations receive anEUP with a duration of one year before conducting field-testing with regulatedarticles.* APHIS makes two site visits to ensure compliance.

EPA has regulatory authority over all genetically modified plants with pesticidalproperties, such as insect resistance, but not herbicide tolerance, which is not con-sidered a pesticidal property EPA thoroughly scrutinizes insect resistant plants, butgives less scrutiny of virus-resistant plants because EPA believes that it is highlyunlikely that there are adverse environmental or human health effects (conversationwith Bob Torla of EPA, March 20, 1998)

As of the end of 1997, all insect-resistant plants approved by the EPA carriedthe Bacillus Thuringiensis (Bt) toxin, which has been used as an insecticide forseveral years and has well-known properties In the registration process, EPA deter-mined plant’s digestibility and toxic residue absorption by the body; examined thepotential for cross-breeding with wild plants and effects on nontarget insects andeither endangered species or the habitats of endangered species; and, considered theplanting restrictions needed to prevent insects from developing immunity For otherless well-known insect resistance traits, the regulatory approval process is likely to

be more complicated and costly

Some states also regulate field-testing, and there has been public debate overwhich government level should have jurisdiction For example, North Carolina,which has state regulations, bans local ordinances prohibiting outdoor releases

10.4 THE ECONOMIC AND ENVIRONMENTAL EFFECTS

OF PESTICIDE REGULATION

Pesticide regulation has direct and indirect economic effects The direct effectsinclude the impact of pesticide regulation on pesticide cancellations and suspensions;new pesticide registrations (pesticide innovations); and the environmental and humanhealth effects of new pesticides Pesticide cancellations can be examined in thecontext of the coincidence of legislative timing and pesticide cancellations Prior toFQPA, regulators were required to consider pesticide benefits during cancellationprocedures In their analyses, regulators measured cost in terms of risks to humanhealth and the environment and benefits in terms of productivity gains realized bycontinued pesticide use

The effect of regulatory stringency on pesticide innovations and environmentaland human health effects can be statistically analyzed by using human health andenvironmental testing (regulatory) costs as a proxy for regulatory stringency Reg-ulation should negatively affect pesticide innovations because pesticides that weremarginally profitable under a former less costly regulatory regime may be too costly

to develop under a more stringent regulation

* APHIS has added a notification process to reduce the time required for the regulatory review period (7 CFR 340) Several crops may be imported, moved interstate, or field-tested without first applying for

an APHIS permit as long as certain eligibility criteria and performance standards are met These crops were chosen after significant test experience.

Two hypotheses exist for the impact of regulation on pesticide toxicity (bothenvironmental and human health effects) Greene, Hartley, and West (1977) andLichtenberg, Spear, and Zilberman (1993) suggest that greater testing costs causefirms to develop pesticides that will be used on at least one major crop and manyminor crops They also assert that these wide-spectrum pesticides may be highlytoxic to humans and fish and wildlife because they must be effective against numer-ous pests Alternatively, Ollinger and Fernandez-Cornejo (1998) propose that anincrease in the number of tests required to gain regulatory approval reduces thenumber of pesticide candidates that can pass regulatory scrutiny As a result, pesti-cides that formerly complied with regulatory standards may no longer meet newguidelines, and the ones that do meet regulatory standards are, on average, less toxicthan their predecessors.

The indirect effects of pesticide regulation include the impact of regulation onminor crop registrations, industry composition, and the development of biologicalpesticides and genetically modified plants To gain a crop use registration, a firmmust conduct toxicological and environmental tests and supply the data to the EPA.Potential revenues for each use, however, vary from less than a million dollars forsome minor crops, such as many fruits and vegetables, to over a billion dollars forcorn Since many minor crops have low or no potential profits, a rise in regulatory-related testing costs should cause a drop in the number of new minor use registrations

A rise in testing costs makes it necessary for firms to generate greater revenues

to remain profitable Firms that realize substantial sales from each new pesticide orhave more diverse sources of income are favored over marginally profitable firmswith low sales As a result, higher testing costs favor large, multinational pesticidefirms over small, domestic ones

Some chemical pesticide alternatives, such as biological pesticides and recentlyapproved genetically modified plants, have substantially lower testing requirementsthan chemical pesticides A rise in chemical pesticide regulatory costs, therefore,should encourage the development of these chemical pesticide alternatives by low-ering relative development costs

All economic research on the effects of pesticide regulation was based on pre-1992legislation Since FQPA is important, we discuss this Act, pesticide availability, pesticideregulation and Integrated Pest Management (IPM), and organic food regulation

10.4.1 The Direct Effects of Pesticide Regulation

10.4.1.1 Regulation and Existing Pesticides: Restrictions,

Cancellations, and Suspensions

The 1972 FIFRA amendments had a profound impact on pesticide developmentand use By changing pesticide policy toward the protection of human health andthe environment, this legislation put substantial limits on the uses of pesticidesthought to cause cancers With outright bans on most uses for DDT and otherorganochlorines, regulation contributed to the decline in organochlorine use from70% of total insecticides applied in 1966 to about 5% in 1982 Although replace-ments, such as organophosphate and carbamate insecticides, did emerge, overall

insecticide use declined from a peak during the mid 1960s (Osteen and Szmedra,1989) Besides outright pesticide bans, EPA has also either severely restricted orcanceled the registrations of 22 pesticides Additionally, registrants have voluntarilyrestricted pesticide uses by changing pesticide labels or withdrawing pesticides fromthe market.

As indicated earlier, before a pesticide can be restricted, it must pass through aSRP in which EPA considers both the health dangers and the pesticide benefits(Cropper, Evans, Beradi, Dulca-Soares, and Portney, 1992) Benefits are estimated

as the efficiency loss of switching to the next best alternative If alternatives are lesseffective or more expensive or both, the cost per unit of output will increase Benefitsare then defined as the change in the cost per unit times the number of units Estimates

of pesticide benefits can readily be made for the major field crops, but not for manyfruits and vegetables Generally, experts must estimate yield differences and pesticideuse, alternative controls, and the extent of alternative use

The strategy of companies with pesticides undergoing an SRP is to avoid theloss of the most profitable crop use registrations This use registration is typicallythe crop with the highest pesticide sales volume For example, if an insecticide has1% of the corn market, 50% of the kiwi fruit market, and a choice of losing one orthe other market because of possible harm to human health or the environment, thecompany would choose to lose a registration on the kiwi fruit because the size ofthe market (and potential profits) is much higher for corn

The requirement of the 1988 FIFRA amendment that all pesticides approvedprior to 1984 be brought up to current standards necessitated pesticide companies

to conduct extensive field tests for some pesticides approved during periods of lessstringent regulation Additionally, the amendment imposed yearly maintenance feesand a pesticide registration fee Combined, the additional testing costs and the newmaintenance and registration fees dramatically increased the costs of maintaining acrop use registration Revenues, on the other hand, were either very low or did notexist for most pesticide uses (those for many minor crops) As a result, reregistrationcosts exceeded potential revenues, causing firms to voluntarily cancel about 25,000

of 45,000 pesticide uses (Gianessi and Puffer, 1992) Although only 5000 of the25,000 canceled pesticides were still in use and the acreage on which they wereused was small, there were substantial effects on pesticide availability for somecrops in some states For example, Gianessi and Puffer (1992) identify six herbicidesthat lost their registrations and adversely affected the New York onion, Ohio straw-berry, Michigan pumpkin, Maryland spinach, Pennsylvania green pea, and the Geor-gia pepper crops Additionally, Ferguson (1989) reports that registration expensesforced firms to cancel pendamethalin for garlic, glyphosate for broccoli, and prom-etryn for parsley Korson (1993) indicates that the reregistration requirements caused

a 30 to 80% drop in the availability of post-harvest apple pesticides and a 22 to 77%drop in pesticides for cherries Other studies (Council for Agricultural Science andTechnology, 1992 — and Gianessi and Puffer, 1992) indicate that firms may notrenew registrations on 600 to 1000 existing pesticide crop uses because of highregulatory and liability costs

The distributional effects of pesticide cancellations (voluntary and forced) onfarmers and consumers depend on price changes in the commodity As indicated by

Osteen and Szmedra (1989), if crop price does not change, then the farmer bearsall of the costs associated with an increase in pesticide costs or crop yield losses.The distributional effects are far more complicated if prices rise A rise in priceinduces a drop in quantity demanded of the affected crop and, thus, a rise in demandfor substitute crops The net result is still an increase in prices, causing consumers,particularly the poor, to bear at least some of the cost of pesticide cancellations(Zilberman et al., 1991).

There are also distributional impacts among farmer groups (Osteen and Szmedra,1989) Some farmers in some regions may have no substitute pesticide and, thus,may suffer a much greater yield loss than a farmer in a different region that hassubstitute pesticides available For example, Lichtenberg et al (1988) found thatusers of ethyl-parathion on almonds, plums, and prunes would lose about $2 million

in producers’ surplus while nonusers would gain about $0.5 million if the pesticidebecame no longer available Additionally, farmers in areas of heavy pest infestationwill place a higher value on chemical use, and thus may suffer a greater loss if apesticide is canceled, than farmers in areas free of the pest (Fernandez-Cornejo andJans, 1998) If a chemical becomes unavailable, production may shift geographically

as growers in pest-free areas or those with lesser pest pressure may expand tion while growers in more heavily infested regions may exit the sector or shift toother crops Finally, a price increase would likely increase revenues of farmers ofsubstitute crops because demand for substitute crops would rise

produc-10.4.1.2 Regulation and the Number of Innovations

Beginning during the pesticide discovery stage and persisting throughout thedevelopment process, the effects of regulation on pesticide innovation are moresubtle than the effects of pesticides on existing pesticides Scientists discover pes-ticides by examining various compounds for their effectiveness against pests Sincecompounds related to chemicals previously banned by the EPA would not likelygain EPA registration, regulation limits the number of viable chemical compoundsand, thus, increases the number of chemical searches needed to make a pesticidediscovery NACA surveys indicate that the number of chemicals screened per newregistered pesticide rose from 8500 over 1970–73 to about 21,600 for 1986–87.After compounds with pesticidal properties are discovered, technicians synthe-size them in larger quantities, and then examine their effectiveness in laboratory andfield trials; determine whether the chemical is toxic to humans and fish and wildlife;and estimate production costs Pesticide candidates that pose a risk to either theenvironment or human health are eliminated from consideration Chemicals that may

be able to pass regulatory scrutiny and also generate sufficient revenues to sate for future development costs then pass through a series of more demandingfield tests First, technical personnel use small-scale field testing to determine theeffectiveness of the chemical compound relative to existing pesticides They alsoevaluate the impact of soil, sunlight, microbes, and climate on its effectiveness.During either step, further consideration of a pesticide may be terminated because

compen-of possible environmental or health risks However, if the pesticide candidate fareswell against existing pesticides, the firm obtains an experimental use permit (EUP)