FINAL
REGULATORY IMPACT ANALYSIS:
PROPOSED REGULATIONS EOR
PLANT-PESTICIDES UNDER
THE FEDERAL INSECTICIDE,
FUNGICIDE, AND RODENTICIDE ACT
AND THE FEDERAL FOOD, DRUG,
AND COSMETIC ACT
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FINAL
REGULATORY IMPACT ANALYSIS:
PROPOSED REGULATIONS FOR
PLANT-PESTICIDES UNDER
THE FEDERAL INSECTICIDE,
FUNGICIDE, AND RODENTICIDE ACT
AND THE FEDERAL FOOD, DRUG,
AND COSMETIC ACT
Prepared for:
Economic Analysis Branch,
Office of Pesticide Programs
U.S. Environmental Protection Agency
Prepared by:
DPRA Incorporated
200 Research Drive
Manhattan, KS 66502
March 28, 1994
P. 3780.302
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TABLE OF CONTENTS
I. INTRODUCTION 1-1
A. Purpose of Analysis 1-1
B. Requirements for Analysis 1-3
C. Scope of Analysis 1-4
O. SUMMARY OF FINDINGS D-l
ID. NEED FOR REGULATION ffl-1
A. Human Health Concerns ffl-1
B. Environmental Concerns ffl-2
C. Industry Concerns ffl-4
1. Uncertainty of regulatory environment ffl-4
2. Costs for registration under FIFRA ffl-5
3. FFDCA tolerances or exemptions from tolerances ffl-6
D. Public Concerns ffl-6
1. Inadequate consideration of public consequences ffl-7
2. Safety of the food supply ffl-7
IV. ALTERNATIVE APPROACHES IV-1
A. Nonregulatory Approaches IV-1
B. Regulatory Approaches IV-2
1. Regulatory Scope Under FIFRA IV-3
a. Regulatory Option 1 IV-4
b. Regulatory Option 2 IV-4
c. Regulatory Option 3 IV-5
d. Regulatory Option 4 IV-6
V. BASELINE REGULATORY OVERVIEW AND COMPLIANCE HISTORY V-l
A. Federal Regulations V-l
B. State Regulations V-4
VI. ECONOMIC PROFILE OF FIRMS CURRENTLY RESEARCHING
AND TESTING PLANT-PESTICIDES VI-1
A. Number and Type of Firms VI-1
B. Size and Structure of Firms VI-7
VH. COMPLIANCE COST ANALYSIS OF DATA NEEDS VH-1
A. General Methodology VII-2
1. Unit or Individual Testing Costs VII-2
2. Development of Case Studies . . VII-4
a. Case Study 1 Vfl-4
b. Case Study 2 VD-5
c. Case Study 3 VH-5
d. Case Study 4 VH-6
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VII-6
VLI-7
VH-7
Vll-8
Vll-8
Vll-9
Vll-14
VH-14
VH-l5
vu-is
Vll-16
VII-16
VI1-16
Vfl-l6
VII- 18
Vll-19
Vll-19
Vifi. ECONOMIC IMPACTS AND REGULATORY FLEXIBILITY--INDUSTRY
A. Economic Impacts
B. Regulatory Flexibility
LX. BENEFiTS OF REGULATING PLANT-PESTICIDES
A. Benefits to Society: Human Health
B. Benefits to Society: Environmental
C. Benefits to Nontarget Organisms
D. Benefits to Registrants
E. Benefits to States
BIBLIOGRAPHY
APPENDICES
Summary of Selected State Regulations for Genetically Engineered
Organisms
Alternative to the Viral Coat Protein Exemption--Costs of EPA
Regulation of Viral Coat Proteins
Plant-Pesticide Case Studies
EPA Burden Estimate Documentation
Records of Communications
TABLE OF CONTENTS (Cont’d)
e. Case Study 5
f. Case Study 6
g ‘ Case Study 7
h. Case Study 8
i. Case Studies 9 through 12
3. Methodology for Determining Aggregate Costs
B. Estimated Direct Compliance Costs to Industry
1. Option 1 Aggregate Total Compliance Costs
2. Option 2 Aggregate Total Compliance Costs
3. Option 3 Aggregate Total Compliance Costs
4. Option 4 Aggregate Total Compliance Costs
5. Annualized Aggregate Incremental Compliance Costs
a. Aggregate incremental compliance costs
b. Discounting aggregate incremental compliance costs
C. Estimated Labor Burden Costs to EPA
D. Aggregate Societal Costs of Regulating Plant-Pesticides
E. Limitations of the Cost Analysis
vffl-l
Vffl-l
Vffl-4
IX-1
LX-2
IX-2
IX-3
IX-4
tx-S
Appendix A:
Appendix B:
Appendix C:
Appendix D:
Appendix E:
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TABLE OF CONTENTS (Cont’d)
Page
LIST OF TABLES:
Table V-i: Information to be included in an application to USDAJAPHIS
for a permit for release into the environment V-3
Table VI- 1: Activities of the 116 firms involved in crop production
biotechnology Vl-2
Table VI-2: Selected financial information on firms currently researching
and testing plant-pesticides VI-5
Table VU-i: Projected plant-pesticide submissions by case study (type)
and year V11-21
Table VU-2: Projected plant-pesticide submissions under regulatory
option I V 11-22
Table VII-3: Projected plant-pesticide submissions under regulatory
option 2 V 11-23
Table V11-4: Projected plant-pesticide submissions under regulatory
option 3 VH24
Table V11-5: Projected plant-pesticide submissions under regulatory
option 4 Vjj .. .25
Table VII-6: Summary of total estimated costs of potential data
needs by case study VH-26
Table V11-7: Aggregate total compliance cost estimates under regulatory
option 1, years 1-10 V11-27
Table VLI-8: Aggregate total compliance cost estimates under regulatory
option 2, years 1-10 V11-28
Table V11-9: Aggregate total compliance cost estimates under regulatory
option 3, years 1-10 V11-29
Table Vil-lO: Aggregate total compliance cost estimates under regulatory
option 4, years 1-10 VH-30
Table VU-li: Aggregate incremental compliance cost estimates by regulatory
option, years 1-10 V11-3 1
Table VII- 12: Annualized aggregate incremental compliance costs to the
private sector by regulatory option, constant 1993 dollars,
discounted at 10% for 10 years V11-32
Table V11-l3: Total EPA hourly burden estimates under RIA options
1 to 4, years 1-10 V11-33
Table Vll-i4: EPA labor burden cost estimates under RJA options
1 to 4, years 1-10 Vfl-34
Table VU-iS: Annualized aggregate societal costs by regulatory option,
constant 1993 dollars, discounted at 10% for 10 years V11-35
LIST OF FIGURES:
Figure VI-!: Firms currently researching and testing plant-pesticides:
percentage of sales by size of firm VI-9
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REGULATORY IMPACT ANALYSIS:
PROPOSED REGULATIONS FOR PLANT-PESTICIDES UNDER
THE FEDERAL INSECI1CIDE, FUNGICIDE, AND RODENTICIDE ACT,
AND THE FEDERAL FOOD, DRUG, AND COSMETIC ACT
I. INTRODUCTION
This introductory chapter discusses the purpose of the analysis, the requirements for analysis,
and the scope of the analysis.
A. Purpose of Analysis
The Environmental Protection Agency (EPA) regulates pesticides in the United States. The
principal legal authority is established by the Federal Insecticide, Fungicide, and Rodenticide
Act (FIFRA). Under FJFRA §3, a pesticide may not be sold or distributed in the United
States unless it is registered or exempt from regulation. Before a product may be registered
as a pesticide under FIFRA, it must be shown that when used in accordance with widespread
and commonly recognized practices, it will not generally cause “unreasonable adverse effects
on the environment.” FIFRA defines the term “unreasonable adverse effects on the
environment” as any unreasonable risk to humans or the environment, taking into account the
economic, social, and environmental costs and benefits of the use of any pesticide. FIFRA
authorizes EPA to require data to be submitted to evaluate whether a registration will be
granted and under what conditions. Under FIFRA §25(b), EPA may exempt, by regulation,
any pesticide determined to be (1) adequately regulated by another Federal agency or (2) of a
character which is unnecessary to be subject to the Act in order to carry out the purposes of
the Act
Most pesticides currently regulated by EPA can be generally categorized as “chemical”
pesticides (synthetic chemicals) or as “biological” pesticides (biochemical or microbial
pesticides). Biological pesticides also include a category termed plant-pesticides. This
category is defined as pesticidal substances that are produced in plants and the genetic
material necessary for the production of the pesticidal substance. The types and amounts of
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pesticidal substances that can now be produced by plants have been expanded beyond the
technological capabilities of traditional plant breeding. Therefore, a wide range of transgenic
plant-pesticides are expected in the future, including the introduction of pesticidal
characteristics new to plants. The modification and enhancement of existing pesticidal
characteristics also will likely be seen in the future. EPA considers substances produced in
plants for the purpose of enabling plants to resist pest attack and disease to be plant-pesticides
under FIFRA §2. EPA promulgated a final regulation under §25(b) in 1982 that exempted all
macroorganisms used as biological control agents from the requirements of FJFRA (40 CFR
152.20). Although plants were implicitly exempted under 152.20, the status of pesticidal
substances produced in plants (plant-pesticides) requires clarification.
Additionally, under §408 of the Federal Food, Drug, and Cosmetic Act (FFDCA), EPA has
the authority to regulate pesticide residues in raw foods and animal feeds. Under FFDCA
§408, any poisonous or deleterious pesticide chemical added to a raw agricultural commodity
that is not “generally recognized as safe” (GRAS) is deemed to be unsafe unless a tolerance,
or an exemption from the requirement for a tolerance under FFDCA §408(c), for such
pesticide is established and the pesticide is within the tolerance limits. A tolerance is the
amount of pesticide residue allowed in the commodity as it goes to market. Section 408 of
the FFDCA applies to all “pesticide chemicals” which are defined in §201(q) of the FFDCA
as:
any substance which, alone, in chemical combination, or in formulation with
one or more other substance, is “a pesticide” within the meaning of
[ FIFRA]. ..and which is used in the production, storage, or transportation of raw
agricultural commodities.
Pesticides, therefore, subject to regulation under FFDCA are defined by reference to the
definition of a pesticide under FIFRA. A tolerance, or an exemption from a tolerance, must
be established for plant-pesticides under FFDCA.
This report presents the results of a regulatory impact analysis (RIA) evaluating the costs and
benefits of amending the Federal code to allow for the regulation or exemption of specific
types of plant-pesticides under FIFRA (40 CFR Part 152.20 and 152.27) and tolerance
exemptions or reviews under FIFRA (40 CFR Part 174).
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B. Requirements for Analysis
This report is intended to meet the requirements for a RIA as established by Executive Order
No. 12866, the Regulatory Flexibility Act, and §25 of FIFRA. This document also serves as
input in preparing any analysis required under the Paperwork Reduction Act of 1980.
Under Executive Order 12866 (58 FR 51735, October 4, 1993), the Agency must determine
whether the regulatory action is “significant” and therefore subject to review by the Office of
Management and Budget (0MB) and the requirements of the Executive Order. Under Section
3(f), the order defines a “significant regulatory action” as an action that is likely to result in a
rule (1) having an annual effect on the economy of $100 million or more, or adversely and
materially affecting a sector of the economy, productivity, competition, jobs, the environment,
public health or safety, or State, local, or tribal governments or communities (also referred to
as “economically significant”); (2) creating serious inconsistency or otherwise interfering with
an action taken or planned by another agency; (3) materially altering the budgetary impacts of
entitlement, grants, user fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the
President’s priorities, or the principles set forth in this Executive Order.
Pursuant to the terms of this Executive Order, it has been determined that this rule is a
“significant regulatory action” because it raises novel policy issues arising out of 1IFKA legal
mandates. As such, this action will be submitted to 0MB for review, and any comments or
changes made in response to 0MB suggestions or recommendations, will be documented in
the public record.
The Regulatory Flexibility Act (RFA) requires that Agencies take special note of the impact
of proposed regulations on small entities. Analysis requirements under the RFA can and
should be combined with the analysis required under Executive Order 12866.
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FIFRA, at §25(a)(2)(b), requires that the Administrator of EPA consider such factors as “...the
effect of regulation on production and prices of agricultural commodities, retail food prices,
and otherwise on the agricultural economy...” when issuing regulations under §25.
C. Scope of Analysis
Analyses of alternative approaches to achieving a regulatory objective is specified as
mandatory in both Executive Order 12866 and 0MB guidance implementing that Order. This
analysis addresses the consequences of no regulation and addresses the effects of four
regulatory alternatives: (I) an alternative option that is more narrow in regulatory scope than
the proposed scope, (2) an alternative option representing the Agency’s proposed regulatory
scope, (3) a broader alternative option than the Agency’s proposed scope, and (4) an
alternative option that encompasses nearly all plant-pesticides. The focus of this report is on
estimating the costs of compliance and the economic impacts associated with the four
regulatory alternatives, all of which have been developed within the scope of FIFRA and
FFDCA.
Primarily affected by this proposed regulation will be those companies involved with
agricultural biotechnology that have been identified as presently developing and testing plant-
pesticides. While agricultural biotechnology is currently in its infancy with 1993 sales
estimated at less than two percent of total biotechnology sales, future sales are forecasted to
grow at an average annual rate of 33 percent to the year 2003. The impacts of EPA
regulation of plant-pesticides to this growing market sector will not be all negative.
Companies involved with agricultural biotechnology have asked for plant-pesticide regulations
and they stand to benefit tremendously from these proposed regulations.
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II. SUMMARY OF FINDINGS
The Environmental Protection Agency (EPA) under the authority of the Federal Insecticide,
Fungicide, and Rodenticide Act (FIFRA) has the responsibility for regulating the sale and use
of pesticides. However, the Agency has not clearly stated its policies under FIFRA for the
regulation of pesticidal substances produced in plants (plant-pesticides). EPA is proposing to
amend Parts 152.20 and 180, and create Part 174 of CFR 40 to establish the scope of its
regulation of plant-pesticides based on benefit/risk considerations.
The proposed Rule would:
• Clarify which types of plant-pesticides would warrant regulation under FIFRA
and/or the Federal Food, Drug, and Cosmetic Act (FFDCA).
The statement of policy would:
• Describe the scientific considerations that will be used to evaluate those plant-
pesticides that the Agency has determined would be subject to EPA regulation;
and
• Outline how the Agency will assess plant-pesticides at different stages of field
testing and at sale or distribution.
Some substances produced within plants for pesticidal purposes (plant-pesticides), may pose
many of the same, or other types, of environmental and human health risks as do the
chemical, biochemical, and microbial pesticides that are currently regulated by EPA. As
such, their development and commercialization must be accompanied by appropriate
regulation.
The environmental concerns associated with plant-pesticides are similar in many respects, to
the environmental concerns identified with traditional pesticides. These concerns revolve
around the potential for exposure to the pesticide and the chemical, and the toxicological
properties of the pesticide. Another environmental risk consideration for plant-pesticides is
whether the potential exists for new or significantly different exposures of nontarget
organisms to the pesticide. Some plants may be modified to produce pesticidal substances
that may be new to the plant and thus, present new exposures to organisms that associate with
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the plant. As a whole, environmental concerns increase as plant-pesticides are planted on
increasingly larger, uncontained acreages.
Human health concerns focus on circumstances where a plant-pesticide produced in a food
crop would result in qualitative or quantitatively new dietary exposures to pesticide substances
with some toxicity. The greatest dietary risks associated with plant-pesticides are those for
which there is no record of prior significant human exposure and thus, no documentation of
an absence of adverse effects to humans.
Industry concerns are directed at the uncertainty of the regulatory environment, the costs
associated with eventual EPA regulation of plant-pesticides, the human health and
environmental risks to be addressed under FIFRA, and the dietary risks to be addressed under
FFDCA. In the face of regulatory uncertainty, companies developing plant-pesticides are
unable to devise long-term plans for their products, are concerned that regulatory delays may
give competing firms marketing advantages, and are concerned about delays in large-scale
seed production.
While the public has expressed a fairly positive attitude toward biotechnology in general, it is
particularly concerned about possible dietary and outcrossing risks. The public sector needs
assurance that the food derived from transgenic plants is safe for consumption. Another
public concern is the possible negative environmental effects of biotechnology--its impact on
ecosystems, environmental quality, and nontarget organisms. Finally, the public fears that the
potential profits associated with agricultural biotechnology may be given greater consideration
by firms than the potential effects of environmental releases of genetically engineered
organisms.
This Regulatory Impact Analysis (RIA) summarizes the costs and benefits of the proposed
Rule and policy, and presents the alternative regulatory options that were considered by the
Agency. Four approaches to the regulation of plant-pesticides under FIFRA were evaluated in
this analysis that allowed for varying degrees of regulatory coverage. Option 1 is the most
limited alternative in regulatory scope. Option 2 represents EPA’s proposed regulatory scope
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and is broader in coverage than Option I. In addition to those plant-pesticides regulated
under Option 2, Option 3’s scope would include viral coat proteins used as pesticides.
Finally, under Option 4, all plant-pesticides are subject to the requirements of I- ll-RA.
Approximately 1,300 firms are involved with some type of biotechnology application in the
U.S. Currently, about 19 firms are developing transgenic plants that express plant-pesticides.
Some of these firms will eventually develop their plant-pesticides to the commercialization
stage and will be required to fulfill some of the registration requirements specified in this
proposed Rule. Firms developing biotechnology products are quite diverse and include large,
multinational corporations, biotechnology companies (both large and very small), chemical
companies, and seed companies. While sales from the agricultural biotechnology sector ($95
million) are currently less than two percent of total biotechnology sales ($6 billion), they ari
forecasted to grow at an average annual rate of 33 percent to the year 2003.
Generally, costs will depend on whether the Agency exempts a plant-pesticide or whether it
requires a registration. The costs of regulating plant-pesticides are dependent upon the data
needed for the registration of the particular types of plant-pesticides. Data needs are
irrelevant for exempted plant-pesticides. For regulated plant-pesticides, data needs will vary
according to the gene product of the plant-pesticide and the recipient crop. Other factors
influencing data needs include: whether the crop is intended for human consumption, whether
the crop is grown in or near water, whether the crop has wild relatives in the U.S., and
whether there is information available on the characteristics and function of the gene product.
For example, the data needs and associated costs for the EPA registration of a plant-pesticide
where the pesticidal substance is derived from the monera kingdom, differ significantly
depending upon whether the recipient crop has wild relatives in the U.S. (estimated
registration cost = $732,700) or does not have wild relatives in the U.S. (estimated average
registration cost = $63,700).
After estimating the costs associated with the anticipated data needs by plant-pesticide type
and predicting the number of plant-pesticide submissions by plant-pesticide type, it was
possible to estimate the aggregate total compliance costs to industry, that are associated with
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this proposed Rule. The costs associated with existing Federal regulations were then
subtracted from the aggregate total compliance costs to yield aggregate incremental
compliance costs, or the true costs of this proposed Rule. Aggregate incremental compliance
costs under regulatory Option 1 are estimated to range from $53,700 in the first year of
implementation, to $2.6 million in the tenth year of implementation. Under EPA’s proposed
scope (Option 2), aggregate incremental compliance costs are predicted at $53,700 in year 1,
increasing to $3.1 million in year 10. Aggregate incremental compliance costs for Option 3’s
regulatory scope are estimated at nearly $741,100 in the first year of implementation and $5.1
million in the tenth year. Finally, under Option 4’s broad regulatory scope, aggregate
incremental compliance costs are projected to range from $76.6 million in year 1 to $81
million in year 10.
Aggregate incremental compliance costs to industry were discounted to allow for the time
value of money and to determine an equivalent, constant level cost per year (also known as
an annual revenue requirement (ARR)). Under Option 1, ARRs are estimated at $1.2 million
for the regulated community, or approximately $413,000 per plant-pesticide submission.
ARRs under EPA’s proposed scope, Option 2, are forecasted at about $1.6 million for the
regulated community with an ARR per submission of $311,000. Under Option 3, ARRs are
predicted at $2.9 million for those firms affected, or approximately $324,000 per submission.
Lastly, the total ARR is estimated at nearly $79 million for the regulated community with a
per submission ARR of approximately $279,000, under Option 4.
Costs were also estimated for the labor burden that would result from EPA staff preforming
various activities associated with the registration of plant-pesticides. Some of these activities
may include the establishment of the docket, internal reviews, requests for additional
information, and consultations with applicants. The cost for the Agency to preform these
activities under Option I is estimated to range from nearly $40,000 in year 1 to
approximately $259,000 in year 10. Under EPA’s preferred regulatory scope, Option 2,
annual labor burden costs range from approximately $40,000 in the first year of Rule
implementation, to $391,000 ten years after the Rule is promulgated. Labor burden costs are
estimated to range between $123,000 in year 1 to $640,000 in year 10. Under the broad
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regulatory scope of Option 4, EPA’s labor costs are predicted to range between $14.7 million
in year 1, to $15.2 million in year 10. Labor burden cost estimates vary by year, due to the
number and type of plant-pesticide submissions the Agency is predicted to receive.
The aggregate cost to society of the proposed plant-pesticide regulation is the sum of the total
costs to industry, plus the total costs to the Agency to implement the proposed Rule. After
calculating aggregate societal costs, they were discounted to allow for the time value of
money and to determine a constant level annual cost. The annual societal revenue
requirement over the 1- 10 year period of analysis was estimated at nearly $1.4 million under
Option 1, $1.8 million under Option 2, $3.3 million under Option 3, and $93.7 million under
Option 4.
The annual societal revenue requirement was also calculated on a per plant-pesticide
submission basis using the estimated annual average number of submissions by option. On a
per plant-pesticide submission basis, the proposed regulation is estimated to cost society
$456,000 annually for 10 years under Option 1, $356,000 under Option 2, $368,000 under
Option 3, and $332,000 under Option 4.
The proposed Rule will generate a wide range of benefits for the public, the firms involved
with agricultural biotechnology, the environment, nontarget organisms, and states. Benefits to
the public include a Federally implemented plant-pesticide registration process that should
help alleviate concerns regarding the consumption of transgenic plant products and it should
assure the public of a food supply free from harmful pesticide residues. Registrants of plant-
pesticides should benefit from the resolution of uncertainty regarding regulatory issues. With
the promulgation of the proposed regulations, firms developing and testing plant-pesticides
can plan ahead for timely product development and commercialization which should, in turn,
attract investors to the agricultural biotechnology sector. The environment will benefit from
safety measures that will protect against unintended environmental effects of accidental and
deliberate releases of genetically engineered organisms. Nontarget organisms, including
endangered species, will benefit from a registration process that will carefully consider the
potential effects that certain plant-pesticides may have upon them. Finally, states will benefit
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by having a set of standardized Federal regulations that will be more easily conveyed,
interpreted, and enforced. Many states may also benefit by not having to establish their own
set of agricultural biotechnology regulations.
Adverse economic impacts from the implementation of the proposed plant-pesticide
regulations are not expected under EPA’s proposed scope (regulatory Option 2). Due to the
lack of detailed financial information on those firms that are currently developing and testing
plant-pesticides, the conclusion of “no adverse economic impacts” was based on public and
proprietary information provided to EPA by industry financial advisory groups, biotechnology
associations, university biotechnology specialists, and small biotechnology firms.
The regulatory flexibility of these proposed regulations for plant-pesticides is demonstrated
within the structuring of the four regulatory options proposed. These options were considered
after extensive evaluations of the benefit/risk tradeoffs between option cost and risk reduction
provided. The Agency has structured the resulting options from a narrow regulatory scope
(Option 1) to a broad regulatory scope (Option 4) and as such, has conducted an “inherent”
sensitivity analysis for small firms likely to be affected by this regulation. The Agency has
determined that the tradeoffs between the benefits and risks of the proposed regulations are
optimized under Option 2, EPA’s proposed scope.
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III. NEED FOR REGULATION
Some pesticides produced within plants (plant-pesticides) may pose many of the same or
other types of environmental and human health risks as do the chemical, biochemical, and
microbial pesticides that are currently regulated by EPA. This chapter presents a discussion
of the risks and concerns associated with plant-pesticides. Some of these concerns are similar
to pesticides applied externally to plants, since some of the plant-pesticides expressed by
transgenic plants are the same as those applied externally. These concerns are grouped into
four areas: human health, environment, industry, and the public.
A. Human Health Concerns
Many substances having pesticidal activity occur naturally at low concentrations in edible
plants and have long been accepted as part of the human diet. The safety of these foods is
accepted based on extensive use and experience, and they usually do not warrant regulation.
For example, plant breeders depend primarily on their familiarity with food crops (e.g.,
knowledge of which crop plants have the ability to produce which toxicants) to ensure the
safety of food from the various crop plant varieties, If the plant species is known to possess
the ability to produce a toxicant, such as potato plants that express solanine, new varieties of
the plant are tested for toxicant content (e.g., potato varieties are tested for alkaloid content).
Under FWRA and FFDCA, the safety of food containing pesticides is addressed. Under the
FFDCA, EPA has the responsibility for establishing tolerances for new pesticidal residues in
food. A tolerance is the amount of pesticide that may legally remain on a crop after
harvesting. For traditional pesticides, EPA determines tolerance levels based upon both
toxicological and chemical residue data requirements codified in Part 158 of 40 CFR .
Also under FFDCA, EPA can establish an exemption from the requirement of a tolerance for
a pesticide if the Agency determines that a tolerance is not necessary to protect the public
health. On this basis, the Agency is proposing to exempt certain categories of plant-pesticides
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that the Agency believes would not result in significantly different dietary exposures and
therefore do not require an establishment of a tolerance to protect the public health.
There are, however, circumstances where a plant-pesticide produced in food would result in
qualitative or quantitatively new dietary exposures to pesticidal substances with some toxicity.
For example, a qualitatively different exposure could occur if a food plant was modified to
produce a pesticidal substance derived from a non-food source such as certain microorganisms
and animals. A qualitatively different dietary exposure could also result if an engineered
plant-pesticide has a significantly different structure, function, or composition than a
constituent known to exist in food.
The dietary risks of most concern to the Agency, are those associated with plant-pesticides for
which there is no record of prior significant human exposure. As a result, documentation is
unavailable to demonstrate that certain plant-pesticides will not have adverse or toxic effects
on humans.
B. Environmental Concerns
In many respects, the underlying risk assessment paradigm for plant-pesticides is similar to
that used for more traditional pesticides. These risk assessment considerations revolve around
the potential for exposure to the pesticide and the chemical, and the toxicological properties
of the pesticide. The properties of the plant-pesticide will determine the potential for hazards
to nontarget organisms.
An important component in the evaluation of the chemical and toxicological properties of the
pesticide with regard to the potential for adverse affects of pesticides on nontarget organisms,
is the way in which the pesticidal substance acts on the target pest. The way in which a
pesticidal substance affects the target pest could likely be the way it also affects nontarget
organisms.
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A pesticidal substance that acts directly on the target pest through a general toxic mechanism
of action may, for example, also be toxic to nontarget organisms. For example, a substance
that acts by inhibiting DNA synthesis of the pest could have the same effect on other
organisms. Toxic mechanisms of action include, but are not limited to, those that affect: (1)
membrane permeability, (2) cell division, (3) gene expression, (4) DNA replication, or (5)
other metabolic functions.
Exposure to the plant-pesticide will be determined by the type of plants that produce the
substance: whether the production of the substance is limited to particular plant parts; the
amount of plant-pesticide expressed and where it is expressed; the acreage planted; where the
plants grow; and the potential for spread of the plant’s genetic material. Because plants can
reproduce sexually and/or asexually, the plant-pesticide could potentially spread through
vegetative growth of the plant or through successful hybridization of the plant with its wild,
or other relatives, as well as through intentional human cultivation.
A risk consideration for plant-pesticides is whether the potential exists for new or
significantly different exposures of nontarget organisms to the pesticide. Some plants may be
modified to produce pesticidal substances that may be new to the plant and thus present new
exposures to organisms that associate with the plant.
If a plant-pesticide has not been a component of a plant or its sexually compatible relatives,
the organisms that associate with the plant may never have been exposed to the substance.
For instance, spider mites produce an insecticidal toxin. Plants are not known to produce this
toxin in nature nor is it likely to be produced by plants developed through traditional breeding
techniques. If this toxin were introduced into the gene pool of specific plants, organisms that
had never previously been exposed to the toxin might now be exposed.
Prior to the introduction of the toxin into these plants, only those organisms that interact with
the spider mite could potentially be exposed to the toxin in nature. If plants could now
express the toxin, a different or larger group of organisms--those that associate with the plant
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--could be exposed to it, possibly resulting in adverse effects to these organisms. For
instance, insects that feed on the plant could be exposed to the toxin, If the toxin is found ir.
pollen, pollinators could also be exposed.
Another risk consideration associated with plant-pesticides is the possible transfer through
outcrossing of a transgenic plant-pesticide gene to a cultivated or wild relative of that
transgenic plant. Outcrossing and potential gene flow between a transgenic plant and its
cultivated, wild, or weedy relatives would most likely be achieved through the movement of
pollen with resulting changes in plant behavior that may subsequently affect plant and/or
other populations. For instance, if weeds acquire increased resistance to insect or other pests
from transgenic plants through hybridization, they may become more competitive than other
plant species and because of their increased competitiveness, may alter both natural and
agricultural ecosystemsjJ.
C. Industry Concerns
This section will focus on the primary concerns of the biotechnology industry: the uncertain
regulatory environment, the costs for registering plant-pesticides under HFRA, and obtaining
a tolerance or exemption from a tolerance under FFDCA.
I. Uncertainty of regulatory environment
To this point in time, most plant-pesticide testing has been conducted in laboratories,
greenhouses, or in small field tests, with such tests being contained (i.e. the potential spread
of the plant’s genetic material is controlled) and overseen by USDA. Some companies
involved with agricultural biotechnology have plant-pesticide products that have been
developed and tested to the point where product commercialization--including marketing,
JJA natural ecosystem is an area inhabited exclusively, or nearly so, by wild, native
species including several hundred plant species, thousands of insect species, and numerous
other invertebrates, birds, and mammals. An agroecosystem is a simpler area, usually
containing one plant of interest (e.g., corn or alfalfa), a few weeds, plant pests and their
natural enemies, and a few transient species.
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sales, and distribution--is near. Due to the lack of regulations for plant-pesticides, many
companies are unsure of what they will need to do to secure EPA approval to market their
plant-pesticides commercially. Some of the consequences of this regulatory uncertainty
include the inability of companies to devise long-term plans, concern that regulatory delays
may give competing firms marketing advantages, delays in large-scale seed production, and
stifled university research (Crawford, 1990).
Recently, some companies have progressed to the point where large-scale field testing and
registration are necessary. Given the uncertainty of the final regulatory framework at the
Federal and State levels, and desiring compliance with future regulatory requirements and a
method of reassuring the public concerning their products, these companies have voluntarily
applied for experimental use permits from EPA. One company has submitted information for
a plant-pesticide registration. Having developed the technology for transgenic pesticidal
plants, industry wants to know the regulatory framework and wants it in place to allow for
timely product development (Crawford, 1990; U.S. Congress, 1992).
2. Costs for registration under FIFRA
Prior to marketing any pesticide, no person in any state may “distribute, sell, offer for sale,
hold for sale, deliver for shipment, or receive, (having so received) deliver, or offer to deliver,
to any person any pesticide which is not registered with the Administrator.” Registration
under FIFRA can be a costly, time-consuming factor in the development and marketing of
traditional pesticides, with less time and money required for biological pesticides, including
perhaps, plant-pesticides.
Potential registrants of plant-pesticides have expended considerable amounts of resources on
the research and development of products that may not even be accepted by the public.
Several of the smaller companies involved with the development of plant-pesticides have
reported negative net incomes due to heavy research and development expenses and little
sales, and don’t expect positive incomes until sufficient market sales are generated. These
companies have substantial research and development costs, and possibly lower potential
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profits than the traditional chemical pesticide manufacturers, and thus they may possibly
assume a greater market risk. Therefore, potential plant-pesticide registrants are concerned
about the costs associated with the data needs that EPA may require for the registration of
their products.
3. FFDCA tolerances or exemptions from tolerances
Under FFDCA, EPA has the authority to set tolerances for pesticide residues in or on raw
agricultural commodities and to establish food additive regulations for pesticide residues in or
on processed foods. A tolerance or an exemption from the requirement of a tolerance is
likely to be indicated for some plant-pesticides that are used in food/feed. The regulatory
decisions EPA makes under FFDCA involve a risk analysis.
D. Public Concerns
The growing use of biotechnology in many fields, including agriculture and its potential use
in others, has raised several public concerns. The results of a 1992 national survey provide
some of the most current research on consumers’ attitudes, awareness, and acceptance of
biotechnology (Hoban and Kendall, 1992). Overall, the survey found that although the
awareness level and understanding of biotechnology was low, most respondents expressed at
least “fairly” positive attitudes towards biotechnology in general. Most significantly, at least
two-thirds of the survey’s respondents indicated that (1) they could personally benefit from
applications of biotechnology, (2) biotechnology would have a positive effect on food quality
and nutrition, and (3) they supported biotechnology in agriculture and food production.
The 1992 survey found that respondents acceptance of biotechnology products was lower
when animals (versus plants) were involved and when gene transfers from different organisms
(e.g., human to farm animal) was specified. These findings support earlier research on
consumer attitudes towards biotechnology (Hoban, 1990; Hoban and Burkhart, 1991).
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One of the more relevant findings of the survey, was that the public is concerned over the
possible negative environmental effects of biotechnology. Over a third of the respondents
cited concerns about biotechnology negatively impacting environmental quality, fish, and
wildlife.
In addition to the above concerns found in the Hoban and Kendall survey, the following
concerns are addressed in this section: inadequate consideration by firms of the public
consequences of biotechnology research and development, and the safety of the food supply.
1. inadequate consideration of public consequences
One public fear is that firms may not adequately consider the public consequences of
biotechnology research and development. In the absence of regulations, the potential profits
associated with certain plant-pesticides developed by some companies and the survivability of
some firms, may be given greater consideration by those companies than the potential effects
of an environmental release. Also, without a regulatory framework there is little incentive for
companies to build potentially costly risk mitigation measures into plans for research and
development (Larson and Knudson, 1991). Thus, regulatory oversight by Federal and State
agencies is necessary to ensure that the environment will not suffer undue consequences as a
result of biotechnology products, including transgenic plants with pesticidal qualities.
2. Safety of the food supply
There is concern from the public sector that pesticide residues in food from some traditional
pesticide use may be harmful, even carcinogenic. The wide publicity given alar residues in
apples for example, deserved or not, fed such fears. Concern extends to the safety of food
from transgenic crops.
Michael Phillips, senior associate of the Congressional Office of Technology Assessment, is
quoted as saying, “Genetic tinkering can change the toxicity and nutrient value of foods,”
while Monsanto’s plant protection and improvement manager, Ganesh Kishore, is quoted as
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saying, “The probability is very low...that a toxin would be produced that we don’t know to
look for” (Nazarlo, 1991). Rebecca Goldberg, at the Environmental Defense Fund, worries
that foreign genes could interfere with a food’s natural nutritional value, or release new,
potentially dangerous toxins (Keehn, 1992). Because of differing public perceptions regarding
the safety of food produced from transgenic plants, oversight and testing of food products at
the Federal level, including tolerance reviews under FFDCA, will likely be essential for the
public’s acceptance of such food products.
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IV. ALTERNATIVE APPROACHES
This chapter begins with a discussion of the nonregulatory approaches to the control of
potential risks from plant-pesticides. Next, four options are presented in this chapter to
analyze the costs of controlling various risk potentials in the regulation of plant-pesticides.
Under FIFRA, options range from the narrowest in regulatory scope (Option 1), to EPA’s
proposed regulatory scope (Option 2), to a broader regulatory scope that includes coat
proteins from plant viruses (Option 3), to the broadest in regulatory scope that includes all
plant-pesticides (Option 4). Under FFDCA, the regulatory scope will be similar to that for
FIFRA.
A. Nonregulatory Approaches
Nonregulatory approaches might include having no regulatory oversight over plant-pesticides
or in relying upon the market system to address and resolve any issues relevant to plant-
pesticides. Even maintaining the status quo, however, would not result in “no regulatory
oversight.” Under U.S. Department of Agriculture/Animal and Plant Health Inspection
Service (USDA/APHIS), environmental release permits (ERPs) or notifications are required
for field tests of introductions of transgenic plants, including those engineered to produce
plant-pesticides. One key focus of USDA/APHIS ERPs is to prevent the release of “plant-
pests” into the environment, thus, containment of the plant pest is an important issue for
APHIS. EPA’s primary concerns are human health, non-target organism exposure, and
environmental impacts. Companies ready to conduct field tests (greater than an accumulative
total of 10 acres) of plant-pesticides have voluntarily applied for experimental use permits
(EUPs) from EPA, just as such companies are required to do for conventional pesticides.
Therefore, based on voluntary compliance with EPA regulations relevant to conventional
pesticides, having no regulatory oversight is not a likely, nor feasible option.
Another concern associated with nonregulatory approaches at the Federal level, is the possible
development of a profusion of inconsistent, individual state regulations for plant-pesticides.
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State regulations pertaining to pesticide producing transgenic plants were summarized in
Appendix A for five selected states. In Appendix A, summary tables compare several
components of each state’s regulations. From these tables it becomes obvious that state
regulations governing plant-pesticides vary, sometimes greatly, by state. In 1990, at least 22
separate states were considering various methods of regulating plant-pesticides (Crawford,
1990). Without Federal regulations, it is possible that the United States could have a
multitude of different state regulations relevant to plant-pesticides.
Relying on the market to provide regulatory oversight of plant-pesticides is also likely to be
insufficient. There are differences of opinion regarding the safety of various types of
transgenic plants, including those containing plant-pesticides, even among the scientific
community. If there should be negative consequences of environmental releases, industry
does not have the legal authority to control the use of its products once they are sold. Public
concerns regarding the safety of the food supply, potential unknown consequences of a release
to the environment, and reliance on the market system might result in the public not accepting
the products of biotechnology, involved companies not recouping their costs of research and
development, and an erosion in public trust. The market system may also not work because
once a high risk organism is released, it may reproduce and spread in the environment. Thus,
risks must be evaluated at an early stage to avoid potentially serious consequences and as
such, a reliance on the market system is not likely to be a viable option.
B. Regulatory Approaches
Having demonstrated the need for regulation, and given that EPA is the Federal agency
primarily responsible for the regulation of pesticides, environmental and human health
concerns associated with plant-pesticides can best be addressed through regulatory approaches
as developed by the EPA. USDA/APHIS currently has the authority to issue ERPs for the
testing of transgenic plants, if the genetically engineered plants or products meet the
definition of “plant pests.” The testing of plant-pesticides on small contained plots combined
with the ERP requirements assures the public of the low risk of such pesticides. However,
USDA’s focus is on plant pest risks and as such, its permitting requirements do not
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specifically address e potential human health and environmental risks associated with plant-
pesticides. Given EPA’s authority in regulating pesticides (chemical and biological
pesticides), combined with the knowledge gained from prior and continuing EPA participation
in USDA reviews for field testing, it is appropriate that EPA provide regulatory oversight for
plant-pesticides. EPA ‘s focus would be the larger environmental and dietary exposures
associated with large-scale testing and commercial uses. This is especially relevant now that
some companies have developed their biotechnology to the point where larger field testing
and commercial production is near.
The following sections present a discussion of potential alternatives to regulating plant-
pesticides under both FIFRA and FFDCA, with such alternatives analyzed within this report.
Under all regulatory options, the term “plant-pesticide” can be defined as: a pesticidal
substance that is produced in the plant and the genetic material necessary for the production
of the substance.
The alternatives differ in the scope of plant-pesticide 4 to be regulated and range from a very
limited scope that captures only a narrow universe of plant-pesticides, to a broader alternative
which captures virtually all plant-pesticides including plant varieties developed through
natural breeding procedures. EPA’s proposed regulations eliminate certain plant-pesticides
that pose little risk from registration and capture those plant-pesticides with novel exposures
that may present a risk to human health or the environment.
For this RIA, the costs of FEDCA regulation are included with the FWRA case study
estimates, since the primary FFDCA costs are those associated with data requirements. Data
be gathered on iuman Health Effects are the major FFDCA costs. of the proposed Rule.
I. Regulatory Scope Under FIFRA
The four regulatory options and their associated scopes for the regulation of plant-pesticides
will be discussed in this section under FIFRA.
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a. Regulatory Option 1
Of the four regulatory options proposed by EPA, Option I is the most limited in regulatory
scope. Under Option 1, all plant-pesticides will be regulated by the Agency unless they meet
at least one of the following criteria which makes them exempt from the requirements of
FIFRA:
(1) The genetic material leading to the expression of the pesticidal substance is
derived from the plant Kingdom and has never been derived from a source(s) outside
the plant Kingdom; or
(2) The plant-pesticide acts primarily by affecting the plant so that the pest is
inhibited from attaching to the plant, penetrating the plant or invading the plant’s
tissue in at least one of the following ways:
(i) Acts as a structural barrier to attachment of the pest to host, structural
barrier to penetration of the pest or structural barrier to spread of pest in
host, for example through the production of wax, lignin, or length of
trichomes (plant hairs); or
(ii) Acts in the host plant to inactivate or resist toxins or other disease-
causing substances produced by the target pest; or
(iii) Acts by creating a deficiency of plant nutrient(s) or chemical
component(s) essential for pest growth on/in host; or
(3) Is a coat protein from a plant virus.
b. Regulatory Option 2
Option 2 represents EPA’s proposed scope and is broader in regulatory scope than Option 1.
Plant-pesticides will be regulated by EPA under this proposed option unless they meet at least
one of the following criteria which then exempts them from the requirements of FIFRA:
(1) The genetic material leading to the expression of the pesticidal substance is
derived from plants that are sexually compatible with the recipient plant and has never
been derived from a source(s) outside sexually compatible plants; or
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(2) The plant-pesticide acts primarily by affecting the plant so that the pest is
inhibited from attaching to the plant, penetrating the plant, or invading the plant’s
tissue in at least one of the following ways:
(i) Acts as a structural barrier to attachment of the pest to host, structural
barrier to penetration of the pest or structural barrier to spread of pest in
host, for example through the production of wax, lignin, or length of
trichomes (plant hairs); or
(ii) Acts in the host plant to inactivate or resist toxins or other disease-
causing substances produced by the target pest; or
(iii) Acts by creating a deficiency of plant nutrient(s) or chemical
component(s) essential for pest growth on/in host, or
(3) Is a coat protein from a plant virus.
c. Regulatory Option 3
Option 3 is broader in regulatory scope than Option 2, but more narrow than Option 4.
Option 3 includes within its scope those plant-pesticides regulated under EPA’s proposed
scope (Option 2) and coat proteins from plant viruses. Under this Option, all plant-pesticides
will be regulated under FIFRA and FFDCA unless they meet at least one of the following
exemptions:
(1) The genetic material leading to the expression of the pesticidal substance is
derived from plants that are sexually compatible with the recipient plant and has never
been derived from a source(s) outside sexually compatible plants; or
(2) The plant-pesticide acts primarily by affecting the plant so that the pest is
inhibited from attaching to the plant, penetrating the plant, or invading the plant’s
tissue in at least one of the following ways:
(i) Acts as a structural barner to attachment of the pest to host, structural
barrier to penetration of the pest or structural barrier to spread of pest in
host, for example through the production of wax, lignin, or length of
trichomes (plant hairs); or
(ii) Acts in the host plant to inactivate or resist toxins or other disease-
causing substances produced by the target pest; or
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(iii) Acts by creating a deficiency of plant nutrient(s) or chemical
component(s) essential for pest growth on/in host.
d. Regulatory Option 4
Option 4 is the broadest option in regulatory scope. Under Option 4, all plant-pesticides,
including those that result from traditional plant breeding, are subject to the requirements of
FIFRA and FFDCA.
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V. BASELINE REGULATORY OVERVIEW AND COMPLIANCE HiSTORY
At the Federal level, the U.S. Department of Agriculture’s (USDA), Animal and Plant Health
Inspection Service (APHIS) has regulated the field testing of genetically engineered plants
since 1987. Some of the plants under APHIS regulation produce plant-pesticides that would
be subject to EPA regulation under FIFRA and FFDCA. Much of the information that
APHIS will need to evaluate early field testing is similar to the information that the Agency
may need to evaluate later stages of development. APHIS regulations will serve as the
baseline of requirements for companies producing plant-pesticides. In addition to APHIS
regulations, several states have biotechnology regulations that cover certain aspects of the
research and development of plant-pesticides. This chapter will examine these existing
regulations.
A. Federal Regulations
On June 16, 1987, USDA/APHIS published regulations which established a permit
requirement for the introduction of genetically engineered organisms which are plant pests or
for which there is reason to believe are plant pests ( Plant Pests; Introduction of Genetically
Engineered Organisms or Products; Final Rule ; 52 E! 22891). Such regulations were issued
under the authority of the Federal Plant Pest Act (FPPA) (7 U.S.C. l5Oaa et seq.) and the
Plant Quarantine Act (PQA) (7 U.S.C. 151 et seq.) and are found at 7 CFR 330 and 340.
The above referenced regulations provide that a permit is necessary to import, move
interstate, or release into the environment a genetically engineered organism or product if the
organism has been altered or produced through genetic engineering from an organism (donor,
vector, or recipient) that is included in the list at 7 CFR 340 and meets the definition of a
plant pest (or is an unclassified organism or any other product produced by genetic
engineering which APHIS determined to be a plant pest). APHIS regulations cover a broader
scope of genetically engineered organisms than the regulations proposed by EPA for plant-
pesticides under FIFRA and FFDCA. Since 1988, APHIS regulations have resulted in
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numerous individuals or firms submittmg applications for environmental release permits
(ERPs) and receiving such permits before conducting field tests of transgenic plants. The
application for an ERP addresses 14 points, as outlined at 7 CFR 340 and shown in Table
v-i.
Requirements include detailed descriptions of how the organisms will be prevented from
dissemination into the environment, both during transport and during the field test, and
monitoring procedures. Under a letter of agreement with USDA, EPA has cooperatively
reviewed field tests of plant-pesticides that are under the permitting jurisdiction of the Plant
Pest Act.
On March 31, 1993 USDA/APHIS amended their regulations to provide for a notification
process for the introduction of certain plants with which APHIS has had experience
regulating. The introduction of certain regulated articles under notification may be allowed
provided that the introduction is in accordance with the provisions of the amendments. The
amendment also provides for a petition process which grants a determination that certain
plants are no longer regulated articles. This petition process provides a waiver from
regulation for plants which do not present a plant pest risk ( Genetically Engineered
Organisms and Products; Notification Procedures for the Introduction of Certain Regulated
Articles; and Petition for Nonregulated Status; Final Rule ; 58 FR 17044).
As of February 1994, three APHIS-permitted plant-pesticide products (Bt in cotton, Bt in
potato, and Bt in corn) had reached the stage in development where large-scale field testing
was necessary. The companies developing these products voluntarily applied to EPA for
experimental use permits (EUPs) to conduct large-scale field testing. Since the issuance of
the three EUPs, another company has voluntarily applied to EPA for a registration and several
more have contacted the Agency about EUPs and registrations.
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Table V-i. Information to be included in an application to USDAJAPHIS
for a permit for release into the environment
Information requirement
I. Name, title, address, telephone number, signature of the responsible person and type of permit requested
(for importation, interstate movement, or release into the environment).
2. All scientific, common, and trade names, and all designations necessary to identify the: Donor organism(s),
recipient organism(s); vector or vector agent(s); constituent of each regulated article which is a product;
and regulated article;
3. Names, addresses, and telephone numbers of the persons who developed and/or supplied the regulated
article;
4. A description of the means of movement (e.g., mail, common carrier, baggage, or handcarned (and by
whom));
5. A description of the anticipated or actual expression of the altered genetic material in the regulated article
and how that expression differs from the expression in the non-modified parental organism (e.g.,
morphological or structural characteristics, physiological activities and processes, number of copies of
inserted genetic material and the physical state of this material inside the recipient organism (integrated or
extrachromosomal), products and secretions, growth characteristics);
6. A detailed description of the molecular biology of the system (e.g., donor-recipient-vector) which is or will
be used to produce the regulated article;
7. Country and locality where the donor organism, recipient organism, vector or vector agent, and regulated
article were collected, developed, and produced;
8. A detailed description of the purpose for the introduction of the regulated article including a detailed
description of the proposed experimental and/or production design;
9. The quantity of the regulated article to be introduced and proposed schedule and number of introductions;
10. A detailed description of the processes, procedures, and safeguards which have been used or will be used
in the country of origin and in the United States to prevent contamination, release, and dissemination in the
production of the: Donor organism; recipient organism; vector or vector agent; constituent of each regulated
article which is a product; and regulated article;
11. A detailed description of the intended destination (including final and all intermediate destinations), uses,
and/or distribution of the regulated article (e.g., greenhouses, laboratory, or growth chamber location; field
trial location; pilot project location; production, propagation, and manufacture location; proposed sale and
distribution location);
12. A detailed description of the proposed procedures, processes, and safeguards which will be used to prevent
escape and dissemination of the regulated article at each of the intended destinations;
13. A detailed description of any biological material (e.g., culture medium or host material) accompanying the
regulated article during movement; and
14. A detailed description of the proposed method of final disposition of the regulated article.
Source: Plant Pests; Introduction of Genetically Engineered Organisms or Products; Final Rule ; 52 FR 22891; June 16,
1987.
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B. State Regulations
A number of states have regulations pertaining to genetically engineered organisms, including
transgenic plants which express pesticidal substances (plant-pesticides). An article published
in Science reports that in 1990, about 22 states were considering various methods of
regulating plant-pesticides (Crawford, 1990). For this analysis, the regulations of five States--
Illinois, Minnesota, North Carolina, Oklahoma, and Wisconsin--were reviewed, as follows:
• Illinois Public Act 86-306, An Act in relation to notification and review of
the release of genetically engineered organisms into the
environment (effective July 1, 1990);
• Minnesota Chapter 18B: Pesticide Control
Chapter 18C: Fertilizers, Soil Amendments, Agricultural Liming
Materials, and Plant Amendments
Chapter 18D: Chemical Liability
Chapter 1 8F: Genetically Engineered Plants
Rules for the Release of Genetically Engineered Organisms Into
the Environment (Adopted May 21, 1992; Effective August 3,
1992), including Amendments to Chapter 4410 and New Chapter
4420;
• North Carolina Regulations for Genetically Engineered Organisms (Title 2,
Chapter 48, Subchapter 48E of the North Carolina Administrative
Code), 199 1/92;
Genetically Engineered Organisms Act (Chapter 106, Article 64 of
the General Statutes of North Carolina), 199 1/92;
• Oklahoma Oklahoma Agriculture Biotechnology Act (2 O.S. 1990
Supplement Sections 2100 Thru 2019; Effective May 17, 1990);
and
• Wisconsin 1989 Wisconsin Act 15 (Effective June 13, 1989).
Illinois and Wisconsin are “notification and review” states in that applicants for a
USDA/APHIS environmental release permit must notify the Department of Agriculture in
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each state at approximately the same time that an application is sent to the Federal agency.
Notification includes a copy of all information being submitted to USDA/APHIS, including a
summary of confidential business information (CBI) in lieu of CBI material. Following
review, the states may submit comments to the Federal agency.
North Carolina requires a permit to be obtained through the state’s Genetic Engineering
Review Board before a genetically engineered organism may be released into the
environment, sold, offered for sale, or distributed for release into the environment. This
Review Board may grant, deny, suspend, modify, or revoke such permits. They also may
submit written comments to any Federal agency reviewing a proposed or completed release.
Oklahoma, through its Department of Agriculture, requires a permit for the release into the
environment of any regulated articles. Exempt, however, are persons who have applied for
regulatory approval from the appropriate Federal agency.
In Minnesota, permit applications are requirements of the Department of Agriculture (MDA)
and the Environmental Quality Board (EQB). If the release being requested is associated with
an experimental use, a permit from the EQB must be obtained, whereas if its a commercial
use, then a permit from the MDA is required (Mason, 1993). While a State permit is
required, the application made to USDA/APHIS usually contains sufficient information for the
MDA (Mason, 1993). An Environmental Assessment Worksheet (EAW) has to be prepared
by the MDA for all permits, with help from industry; if findings from the EAW warrant, an
Environmental Impact Statement (EIS) must also be prepared (Mason, 1993). To date,
however, no EIS has been required.
Appendix A, Tables A-I and A-2 present summaries of state regulations pertaining to
genetically engineered organisms in illinois, Minnesota, North Carolina, Oklahoma, and
Wisconsin.
In some states, existing laws and procedures are considered adequate for biotechnology.
Therefore, no specific regulations pertaining to genetically engineered organisms have been
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developed. Written into USDA’s regulations are provisions for notification by APHIS of state
officials. States are kept informed about pending biotechnology permit applications which
may involve the field testing and/or introduction of genetically engineered plants within state
boundaries (McCammon and Medley, 1990(a)).
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VI. ECONOMIC PROFILE OF FIRMS CURRENTLY RESEARCHING
AND TESTING PLANT-PESTICIDES
To the extent that available data allow, this chapter identifies and profiles the financial
conditions of those entities that are currently involved with the research and testing of plants
that express pesticides. It begins with a discussion of the approximate number and type of
firms presently testing and researching plant-pesticides, and concludes with an examination of
the size and organizational structure of these firms.
A. Number and Type of Firms
According to the U.S. Department of Commerce, there are approximately 1,300 firms
involved with the application of biotechnology in the U.S. These 1,300 firms include 675
new, small companies that have been formed to market the technology developed in
universities, 440 supply companies, and 200 established companies that are predominantly
involved in pharmaceutical, medical supply, and chemical biotechnology (U.S. Department of
Commerce, 1993).
Of those 1,300 firms involved with biotechnology, only those companies that develop plants
that produce pesticidal substances would be required to fulfill EPA’s proposed requirements
under its approach to registering plant-pesticides. Reilly (1989) estimates that 116 firms are
involved in biotechnology activities in crop production. Because crop production
biotechnology is a subset of biotechnology, it is possible that many of these 116
biotechnology-crop production firms reported by Reilly are a subset of the 200 established
biotechnology firms reported by the Department of Commerce. These 116 companies are
likely to comprise the universe of fums potentially affected by the proposed registration
requirements and Table VI-! shows the activities that occur in these firms. Of all the types
of activities that occur in crop production biotechnology firms, only some of the activities
associated with biopesticides (12.5 percent), pesticidefdisease resistance (11.7 percent), and
other (1.2 percent) would potentially require EPA registration.
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Table VI-1. Activities of the 116 firms involved.
in crop production biotechnology
Percent of
Activity total activities
(%)
Improved crops 19.2
Propagation techniques 17.1
Genetic engineering 13.3
Biopesticides 12.5
Pesticide/disease resistance j/ 11.7
Miscellaneous crops 8.3
Nitrogen fixation 7.1
Stress resistance 4.6
Diagnostics 2.9
Growth promoters 2.1
Other j 12
100.0
Source: Reilly, John M. 1989(Dec). Consumer Effects of Biotechnology . U.S.
Department of Agricultural, Economic Research Service.
II Activities that may be affected by registration requirements for plant pesticides.
Medicinal plants and ornamental plants.
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Within Reilly’s universe of 116 potentially affected firms lies a subset of companies that are
currently, actively involved with the research and testing of plants with pesticidal properties.
For purposes of developing economic profile information, this analysis will focus on those
companies that have received Environment Release Permits (ERPs) from the U.S. Department
of Agriculture’s Animal and Plant Health inspection Service (USDA/APHIS) to field test
plots of plants that produce pesticidal substances. These companies are diverse and include
chemical, seed, biotechnology, and agricultural firms, as well as universities, and one
governmental agency.
Once the companies that had received USDA/APHIS permits for the field testing of plants
that produce pesticidal substances were identified, economic profile information was sought
from the limited number of private organizations and industry associations that record
relatively detailed financial information on private companies. Unfortunately, the financial
information that is needed and available, is based on the aggregated performance of the entire
company and not on specific sectors, such as biotechnology. The lack of specific data is due
to the integration of biotechnology processes with research and production in most companies.
Thus, specific standardized information on production, employment, trade, and research and
development are not available for the companies involved. Therefore, any data used to
profile the economic status of these companies is based on the companies aggregated profits,
sales, number of employees, etc.
Since 1987, approximately 56 various public and private companies, universities, and one
governmental agency have received ERPs from USDA/APHIS for the field testing of
transgenic plants. The gene types of transgenic plants that have received ERPs from APHIS
are broader than EPA’s proposed scope of plant-pesticides to be regulated under FIFRA and
FFDCA.
Thus, all companies that have received APHIS permits for the field testing of plants that have
been modified to express pesticidal substances, would not be regulated by EPA and are
not considered further. A portion of the remaining companies, universities, and governmental
VI-3
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agencies will eventually commercialize some of their plant-pesticides and may be affected by
the plant-pesticide registration requirements.
Presently, approximately 19 diverse companies are known to be developing and testing plant-
pesticides that may need to fulfill the registration requirements proposed under this proposed
Rule (See Table V1-2). Some examples of this diversity include large, multinational
companies such as Pepsico, Inc. and Dow Chemical, biotechnology companies such as
Biosource Genetics Corporation and Calgene, Inc., chemical companies like Monsanto and
Sandoz, and seed companies such as Hams Moran Seed, Rogers NK Seed, and Rohm & Haas
Seeds, Inc. In addition to the firms found in Table V1-2, 11 universities have developed
transgenic plants with pesticidal properties and have received APHIS permits. These
universities along with the crop(s) and plant-pesticide(s) developed are listed in the following
table. The USDA’s Agricultural Research Service (ARS) is another type of APHIS permit
recipient that has developed plant-pesticides.
Universities that have developed potentially EPA regulated plant-pesticides
University Crop(s) Gene Type(s)
Iowa State Tobacco Insect resistant
Louisiana State Rice Insect resistant
Michigan State Melon Virus resistant
Montana State Potato Insect/djsease res slant
North Carolina State Tobacco Insect resistant
University of Arizona Tobacco VIrus resistant
University of California Apple, Walnut Insect resistant
University olPlorlda Tobacco Virus resistant
University of Hawaii Papaya Virus resistant
University of kbho Potato Virus resistant, insect resistant
University of Kentucky Tobacco Virus resistant
Source: U.S. Department of Agriculture, Animal, Plant, and Health Inspection Service. 1992.
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Table VI-2. S elected financial information on firms currently researching and testing plant-pesticides
Profit
before Sales
Parent Parent Sales tax (PBT) Number of per employee
Subtidiary involved with biotechnology FIscal year sales rank (million $) (miflion $) employees ($)
LARGE FIRMS Average Sales = $19 billion; Average PHI = $1.8 billion
Amoco Corp. 91 1 25,325.0 2,035.0 54,190 467.300
Amoco Technology Co. NA 111.5 NA 1.350
Pepsico, Inc. 91 2 19,292.2 1,659.7 338,000 60,000
Frito-Lay, Inc. NA 3,000.0 NA 26.000
Dow Chemical Co. 91 3 18,807.0 1,688.0 62,200 302,400
DQW Gardens WA NA NA NA
Sandoz Agricultural NA 4 12,400.0 NA 50,000 248,000
Northrup King Co. 90 2000 NA 1,000
Rogers NK Seed Co. 90 104.0 NA 375
Sandoz Crop Protection NA 2500 NA 1.100
MEDIUM FIRMS Average Sales = $4 billion; Average PBT = $389 million
Monsanto Co. 91 5 1,936 354.0 39,300 225.500
Moniaisfo Agricultural Co. 90 1,717.0 NA 4,000
Campbell Soup Co. 91 6 6,204.1 667.4 43,256 144,800
W.L Grace & Co. 91 7 5,569.9 395.7 49,000 123,400
Agraceus NA 1.2 NA 75
CIBA-Geigy Corp. NA 8 3,800.0 NA 16,000 237,500
Agricultural Biotechnology Research Unit NA 0 NA 125
Upjohn Co. 91 9 3,426.3 720.2 19,193 178,500
Asgrow Seed Ca. NA NA NA NA
Rohm & Haas Co. 91 10 2,763.0 240.0 12,872 214,700
Rohm & Haas Seeds. Inc. NA 1 2 NA 19
Lubrizal Corp. 91 11 1,467.9 178.1 5,299 278,600
Agrigesesics Advanced Sc;ence Co. NA 117.0 NA 700
Pioneer Hi-Bred International, Inc 91 12 1,124.9 169.6 4.768 235,900
SMALL FIRMS Average Sales = $53 million; Average PBT = 5(1.2) million
DeKaib Qenctics Corp. 91 13 275,8 24.0 2,350 127,700
Harris Moran Seed Co. NA 14 40.0 NA 200 200,000
...Continued
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Table VI-2. Selected financial information on the regulated community (Cont’d)
Profit
before Sales
Parent Parent Sales tax (PBT) Number of per employee
at y ••S81 S ! ‘ ( m $ empJoyees $ )
Calgene, Inc. 91 15 26.1 (14.3) 282 77.700
My ogen Carp. 91 16 18.3 (3.3) 279 M,600
DNA Plant Technology 91 17 8.9 (4.2) 144 75,700
Biosource Genetics Corp. 90 18 2.3 NA 25 92,000
Crop Genetics International Corp. 91 19 1.5 (8.4) 100 14,000
Source: 1992 Million Dollar Directory
1992 Directory of Corporate Affiliations
1991 Dun and Bradstreet files
Disclosure database (10K)
NA = Not Available
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B. Size and Structure of Firms
Total sales from the biotechnology industry are predicted to reach nearly $6 billion by the end
of 1993, a 35 percent increase from 1992 sales (Burnil and Lee, 1993). Sales from the
agricultural biotechnology sector are estimated at $95 million in 1993, or less than two
percent of total biotechnology sales. While agricultural biotechnology sales currently are a
small percentage of total biotechnology sales, tremendous growth is predicted. To the year
2003, agricultural biotechnology sales are forecasted to grow at an average annual rate of 33
percent (Indiana Agrinews, 1993).
As discussed previously, the aggregation of financial statistics from publicly available sources
prevents the categorization of the individual companies that are currently involved with plant-
pesticide development and testing into size classifications based solely on biotechnology
sales, income, or employment figures. Companies involved with plant-pesticide development
include the larger, highly diversified public corporations such as Pepsico and Amoco, that are
developing and marketing their agricultural biotechnology products through subsidiaries such
as Frito-Lay and Amoco Technology, respectively. The larger firms may also market their
agricultural biotechnology products through subsidiaries (i.e., Monsanto Agricultural Company
of Monsanto Company), or those that do not have subsidiaries may market their agricultural
biotechnology through the parent company (i.e., Pioneer Hi-Bred International). There are
also several small companies currently researching and testing plant-pesticides. Some of
these small firms specialize in agricultural biotechnology products, with two examples being
Biosource Genetics and DNA Plant Technology. However, with the exception of these few
specialized small firms, most parent companies as well as their subsidiaries are developing
and marketing a wide spectrum of commodities--not just biotechnology products.
Thus, in this chapter, discussions of the size of individual firms will be based on the sales of
the parent company. Within Table Vl-2, natural breaks in the magnitudes of sales of the
parent companies become apparent. To facilitate discussions of the financial status of
companies potentially affected by these proposed regulations, these natural breaks are used to
divide the companies involved with plant-pesticide research and testing, into three sizes of
Vl-7
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firms: small--firms that have sales of less than $300 million, medium--firms that have sales of
greater than $300 million but less than $8 billion, and large--firms with sales of greater than
$8 billion.
Although only 21 percent of the firms currently involved with plant-pesticide research and
testing are considered “large”, they account for nearly 70 percent of the total sales of the 19
firms presently involved with plant-pesticide research and testing as shown in Figure VI- 1.
The top ranking parent company is Amoco Corporation with $25.3 billion in sales and over
54,000 employees (Table VI-2). At $467,300, Amoco also has the highest average sales per
employee. Along with Amoco Corporation, Pepsico, Inc. with $19.3 billion in sales, Dow
Chemical with $18.8 billion, and Sandoz Agricultural with $12.4 billion account for the
“large” firms presently testing and researching plant-pesticides.
Forty percent of the firms currently identified as involved with plant-pesticide research and
testing are considered “medium” sized and together, account for approximately 30 percent of
the total sales of all the firms presently testing and researching plant-pesticides (Figure VI-!).
Sales in this size category range from $1.1 billion for Pioneer Hi-Bred International to nearly
$8.0 billion for Monsanto. It is interesting to note that Upjohn Company, with a midpoint
sales figure of $3.4 billion, has over twice the profits before tax of Monsanto (Table Vl-2).
Many of the plant-pesticide products that are nearest to commercialization, have been
developed by firms in the “medium” sized category. Monsanto with its Bacillus thuringiensis
(Bt) in cotton and potato, CIBA-Geigy with its Bt in corn, and Upjohn Company with its
virus resistant squash and cantaloupe have or will soon reach the product development stage
where large-scale field testing is necessary.
Many of the firms currently involved with the research and testing of plant-pesticides that are
denoted as “small”, are specialized agricultural biotechnology companies with sales ranging
from $1.5 million to $276 million. Calgene, Mycogen, DNA Plant Technology, and Crop
Genetics International all have negative profits before taxes reflecting heavy research and
development expenses, and few sales. However, industry sources believe that “meaningful”
sales should start at any time and this segment of the industry should grow rapidly as
VI-8
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Figure Vl-1.
Firms currently researching & testing plant-pesticides:
percentage of sales by size of firm
Medium Firms
30%
Small Firms
O.3%
Source: Table Vl-2.
Total sales = $109 billion
V1-9
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investors are attracted (Burn]] and Lee, 1993). Probably the most famous agricultural
biotechnology product so far, the Flavr Savr tomato, was developed by one of these hsmallu
specialized biotechnology firms (Calgene).
VI-lo
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VII. COMPLIANCE COST ANALYSIS OF DATA NEEDS
This chapter presents a compliance cost analysis of the data needed for the registration of
plant-pesticides by examining four regulatory options which vary in the scope of plant-
pesticides to be regulated. Option I is the most limited in regulatory scope and is therefore
the least costly regulatory option proposed. Option 2 represents EPA’s proposed regulatory
scope and is broader in regulatory scope than Option 1. Option 3 includes within its scope,
those plant-pesticides regulated under Option 2 in addition to coat proteins from plant viruses
(VCPs). Option 4 is the broadest option in regulatory scope and would regulate all plant-
pesticides. Option 4 is likely to be very costly to industry and EPA to implement. In
addition to the four regulatory options, Appendix B independently estimates the costs of EPA
regulating (I) VCPs in plants with wild relatives in the U.S., and (2) all VCPs (with and
without wild relatives in the U.S.).
To estimate compliance costs, it is necessary to 1) determine the types of tests needed for the
different plant-pesticides, 2) obtain the costs for the data generation and submittal of testing
information, and 3) project the number of potential plant-pesticide submissions by type of
plant-pesticide the Agency may receive for registration.
USDA/APHIS requirements for environmental release permits (ERPs) ye as the existing
baseline of Federal requirements for companies that are testing genetically engineered plant-
pesticides in field trials. Once the costs for certain data currently required by USDA/APHIS
are accounted for as the baseline costs, the additional costs associated with the data needs
directly attributable to EPA registration needs for plant-pesticides, are calculated as the costs
of this proposed Rule.
This chapter is organized as follows: first, the general methodology used to estimate
compliance costs is outlined; second, direct industry compliance costs are estimated; third,
the labor burden costs to EPA are estimated; fourth, the aggregate costs of regulating plant-
pesticides to society are discussed and: fifth, the limits of the cost analysis are summarized.
VIl-l
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For ease of reading, all tables in this chapter can be found at the end of the chapter, rather
than being dispersed throughout.
A. General Methodology
The costs of regulating plants that express certain plant-pesticides are dependent upon the data
needed for the registration of a particular type of plant-pesticide, and the unit costs of
performing the tests to acquire the data. Obtaining accurate information about these two
factors is difficult due to a number of variables affecting them, especially uncertainty. Since
the technology for plant-pesticides is a new and evolving process, it is difficult to predict the
specific data needs of these pesticides before they are developed. For example, data needs for
a particular type of plant-pesticide will vary depending upon the recipient crop--whether it is
intended for human consumption, whether it is grown in or near water, whether it has wild
relatives in the U.S., etc. The general approach for developing and compiling such
information is described below.
1. Unit or Individual Testing Costs
Cost estimates for performing individual tests were either obtained from secondary sources,
EPA experts, or industry specialists. Time and resource constraints prevented a rigorous,
systematic, statistically designed data collection process.
Many of the anticipated data needs for plant-pesticides have been required for the registration
of conventional chemical, biochemical, and microbial pesticides and have established
protocols with detailed guidelines approved by EPA. Tests such as the acute oral toxicity
(CFR guideline number 152-10) and the avian oral LD5O (CFR guideline number 71-1) are
two examples of tests required for the registration of chemical pesticides as well as certain
plant-pesticides. Costs for the conventional chemical, biochemical, and microbial tests were
obtained from a 1990 EPA Regulatory Impact Analysis (RIA) of the reregistration
requirements for traditional and microbial pesticides (U.S. EPA, 1990).
Vfl-2
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However, some of the anticipated data needs for the registration of plant-pesticides are new
and have not had protocols established by EPA. Tests such as in vitro digestibility assay,
hybrid viability, pollen viability, selective advantage, and dispersion are some examples. For
these new data needs, costs were estimated after examining (I) existing traditional chemical,
biochemical, and microbial test requirements for similarities and then using their estimated
costs or portions of their estimated costs, (2) estimates provided by firms that have plant-
pesticides close to commercialization, and (3) expert opinion within the Agency.
Both lower and upper bound ere created for each unit test co.s j . The lower bound test costs
were either estimated in today’s cost by the Agency or industry specialists, or were obtained
from secondary (1989) sources and adjusted for the inflation that has occurred in test costs
since 1989 jJ by a factor of I Q. percen .for each year up to 1993 . These 1993 inflation-
adjusted direct cost estimates provided the basis for the lower bound test costs. Upper bound
test costs were estimated as the lower bound test costs plus 25 percent to account for some of
the additional effort needed to revise protocols and endpoints , and to account for the
administrative burc associated with consultations with EPA personnel regarding specific
data needs. Midpoint test costs or the mean values / were used in aggregating total
compliance costs.
Finally, the costs associated with the production of the pesticidal substancçji its
p fication for testing purposes were estimated . The Agency believes that most registrants
will use a method other than extracting the active ingredient from the plant for the test
material, because of the expense. It is likely that registrants will extract only a small amount
of the pesticidal substance from the transgenic plant or will independently produce a similar
jj According to some industry representatives, recent EPA reregistration requirements for
existing chemicals has put an increased demand on private laboratory testing services
to complete the new testing requirements. This increased demand for testing services
has caused increased costs for these services. The annual increase in test cç .Js
believed to have increased faster an the overall rate awtthps, the use of an
llO nflati at
2/ Midpoint test costs were calculated by summing the lower and upper bound estimates,
and then dividing by two.
VI1-3
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pesticidal substance. This small amount of pesticidal substance will be needed only to verify
the equivalence of the alternative source and the plant-produced test material.
2. Development of Case Studies
Case studies are used to estimate the potential costs of registering different types of plant-
pesticides. Twelve case studies were developed to represent the variety of plant-pesticides
that the Agency has had some experience with, or has reason to believe may be developed in
the near future.
Some of the data needs for certain types of plant-pesticides will require minimal additional
effort by the time the registrant seeks EPA registration. These data consist of basic
information that is created as part of the research and development of these pesticides.
Therefore, the costs associated with the product analysis data needs for Case Studies 1-5 and
7-8 are similar to USDA/APHIS permitting requirements and as such, are not a cost of this
proposed Rule (these costs are later subtracted from total costs to obtain incremental costs).
The costs attributable to pesticide exposure data are one example. Total costs are estimated
as a range to account for the varying degrees of test protocol development needed and for the
amount of administrative burden that may be incurred by individual registrants.
a. Case Study 1
Case Study I reflects the anticipated data needs for plant-pesticides in plants without wild
relatives in the U.S., that have information available on the gene product. In this case study,
the source of the pesticidal substance is the monera kingdom. The data needs and associated
costs of registering a plant-pesticide in plants without wild relatives in the U.S., for which
information on characteristics and function of the gene product is available, will cost a
registrant between $54,900 and $72,500 depending upon the amount of protocol development
needed and administrative burden incurred (see Appendix Table C-I).
Vl1-4
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b. Case Study 2
Case Study 2 depicts the anticipated data needs and associated costs for the registrant of a
plant-pesticide in a plant with no wild relatives in the U.S., and with information available on
the characteristics and function of the gene product. En this case study, the source of the
pesticidal substance is derived from within the plant kingdom or same plant family. It is
estimated to cost the registrant an average of nearly $102,400, with a potential range of
$89,300 to $115,500, to fulfill the anticipated data needs for the registration of Case Study 2
type plant-pesticides (Appendix Table C-2). The estimated costs of registration are likely to
be somewhat overstated as the Tier II terrestrial and aquatic nontarget organisms effects test
for pollinators is only predicted to be needed 25 percent of the time.
c. Case Study 3
Case Study 3 reflects the potential data needs and associated costs for plant-pesticides in
plants with wild relatives in the U.S., and for which information on the characteristics and
function of the gene product is available. As with Case Study I, the source of the pesticidal
substance is from the monera kingdom (e.g., Bt) and this type of plant-pesticide would be
regulated under all regulatory options. it is estimated to cost registrant’s between $649,500
and $815,800 with a midpoint cost of $732,700 to register an individual plant-pesticide with
Case 3’s characteristics (Appendix Table C-3).
The majority of the tests needed for the registration of this type of plant-pesticide fail under
the environmental fate heading (see Appendix Table C-3). Tier Ill biological fate tests may
not be needed always, i.e., not all plant-pesticides of this type will need these three costly
tests (marked “sometimes needed” in the “when required” column). In fact, the Agency
predicts that most likely only 10 percent of all Case Study 3 type plant-pesticides submitted
for EPA registration will need Tier 111 biological fate data. However, at this time, it is not
possible for the Agency to predict exactly which submissions will need Tier III biological fate
tests, and which will not. Thus, rather than to make an unsubstantiated assumption, EPA
chose to err on the high side and assumed that all Case Study 3 type plant-pesticide
VIl-5
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submissions would need Tier Ill biological fate testing. Therefore, for the average plant-
pesticide submission of a Case Study 3 type plant-pesticide, the total costs for fulfilling the
data needs are likely to be overestimated.
d. Case Study 4
Case Study 4 reflects the data needs and associated costs for a plant-pesticide in plants with
no wild relatives in the U.S., and no information available on the characteristics and function
of the gene product. In this case study, the source of the pesticidal substance is from within
the plant kingdom or same plant family. The data needed for EPA to register this type of
plant-pesticide are estimated to cost registrants approximately $386,800 per submission
(Appendix Table C-4).
While most of the data needs associated with a Case Study 4 type plant-pesticide are from the
terrestrial and aquatic nontarget organisms effects section, the need for Tier II and HI tests
will be determined on a case-by-case basis, depending upon the recipient crop and the
geographic location of the planting. This is reflected in the table as “sometimes needed” and
is labeled “SN”. The Agency estimates that only one out of four (25 percent) submissions of
Case Study 4 type plant-pesticides will require Tier II and HI testing. Thus, it should be
noted that for the average plant-pesticide submitted with Case Study 4’s characteristics, total
costs for EPA registration are likely to be overestimated.
e. Case Study 5
Case Study 5 depicts a plant-pesticide in plants with wild relatives in the U.S., and no.
information available on the characteristics and function of the gene product. The pesticidal
substance is derived from the animal kingdom in a Case Study 5 type plant-pesticide.
As shown in Appendix Table C-5, the cost to register a Case Study 5 type plant-pesticide is
about three times as much as a Case Study 4 type: $945,100 to $1.2 million depending upon
the administrative burden and protocol development necessary to complete the data needs.
VII-6
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This increased cost is attributable to the additional Tier II and 111 environmental fate data
needs to determine whether a particular plant expressing a plant-pesticide has the ability to
breed with its wild relatives and to determine if the resulting progeny have inherited the
ability to express the plant-pesticide.
f. Case Study 6
Case Study 6 depicts the anticipated data needs for plant-pesticides from sexually compatable
plants that have been developed through traditional breeding methods emphasizing the
development of new plant varieties which are insect-, virus-, or disease-resistant.
Appendix Table C-6 displays the data needs associated with the registration of Case Study 6
type plant varieties. Unlike Case Studies 1 through 5, the costs for product analysis data
needs are not attributable to USDA/APHIS permitting requirements for Case Study 6. While
USDA/APHIS issues permits for plant-pesticides of the type depicted in Case Studies 1-5,
new plant varieties are not required to obtain permits. Therefore, the product analysis data
needs will be included in the compliance cost analysis for Case Study 6 in this proposed
Rule.
The only other data needs associated with the EPA regulation of plants in this category,
would be the acute oral toxicity and in vitro digestibility assay under human health effects
and mammalian toxicology (see Appendix Table C-6). The total cost estimate to register a
Case Study 6 type plant variety is estimated to range between $14,700 and $18,400, with an
average cost of $16,600 per submission.
g. Case Study 7
In Case Study 7, the anticipated data needs and their associated costs for the EPA regulation
of viral coat proteins (VCPs) in plants are described (Appendix Table C-7). The example
used in this case study is a recipient crop with no wild relatives in the U.S. (e.g., tomato)
VII-7
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with virus resistance from a VCP. Registration costs are estimated to be relatively modest at
$15,400 to $23,100 with a midpoint cost of $19,200.
As with Case Studies 1-5, the product analysis data needs are attributable to USDA/API-uS
permitting requirements. The only data needs costs are for Tier I biological fate analysis tests
which may range from a literature search (approximately $1,500) to minimal testing
conducted in a greenhouse (about $2,000).
h. Case Study 8
VCPs in plants with wild relatives in the U.S. are depicted in Case Study 8. Potential
recipient crops with wild relatives in the U.S. are squash and melon. It is estimated to cost
between $610,000 and $766,400 to fulfill the data needed for the EPA registration of VCPs in
crops with wild relatives in the U.S. (Appendix Table C-8).
As compared to VCPs in plants without wild relatives in the U.S., VCPs in plants with wild
relatives in the U.S. are relatively costly to register. The sources of the added costs are the
Tier 11 and Tier III biological fate data needs which are necessary for all EPA-registered
transgenic plants with wild relatives in the U.S. Although Tier 111 biological fate data needs
were estimated to be required on only one out of 10 submissions for Case Studies 3 and 5,
they are predicted to be needed more often (one out of five submissions) for Case Study 8
type plant-pesticides. In any case, the total costs shown in Appendix Table C-8 and used
throughout this analysis, are the full costs of Tier II and Tier Ill tests with no adjustments to
account for only one out of five submissions predicted to actually need these tests. Thus, as
previously discussed under Case Studies 3 and 5, the total costs to register a plant-pesticide of
Case Study type 8 are likely to be overestimated.
i. Case Studies 9 through 12
It is possible that new plant varieties developed through traditional breeding methods may
express pesticidal substances. Case Studies 9 through 12 would further illuminate Case Study
Vll-8
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6 since some traditional breeding plant varieties may have more data needs than those
projected for Case Study 6. Thus, Case Studies 9 through 12 represent four possible plant
varieties developed through traditional plant breeding that express pesticidal substances. The
characteristics of plant-pesticides described under Case Studies 2 through 5 were used to
model Case Studies 9 to 12. For example, Case Study 9 was modeled after Case Study 2
where information is available on the characteristics and function of the gene product and the
recipient crop has no wild relatives in the U.S. (Appendix Table C-9). The data needs and
their associated costs remain the same in the two case studies ($102,400).
Appendix Tables C-9 through C- 12 present the data needs and costs of the EPA registration
of new plant varieties expressing pesticidal substances.
3. Methodology for Determining Aggregate Costs
To estimate the aggregate costs associated with the regulation of plant-pesticides, the
midpoint total cost of the anticipated data needs by case study were multiplied by the
projected number of annual plant-pesticide submissions by case study. Since the Agency
considered four regulatory options under FIFRA that varied in the scope of plant-pesticides to
be regulated, aggregate costs needed to be estimated for all four regulatory options. This was
accomplished by allocating the costs of registering the various plant-pesticides (as represented
by case studies) into the four regulatory options as follows:
• Option I - - Case Studies 1, 3, and 5
• Option 2 - - Case Studies 1-5
• Option 3 - - Case Studies 1-5, 7, and 8
• Option 4 - - Case Studies 1-12
Not only were annual projections of plant-pesticide submissions by case study needed, they
were needed for a 10-year period into the future (due to the great deal of uncertainty involved
in projecting potential plant-pesticide registrations into the future, aggregate costs were
Vll-9
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estimated for a 10-year period). Furthermore, plant-pesticide submissions were likely to vary
by year and by case study.
Data limitations prevented the use of a statistical model to predict potential plant-pesticide
submissions. The only data available on the types and numbers of plant-pesticides that could
possibly seek EPA registration, are from USDA/APHIS’s list of ERPs issued for field tests of
introductions of transgenic plants. The Agency explored several methodologies that used the
information available from the USDA/APHIS list to predict future plant-pesticide
submissions. However, the various complexities involved with the development and testing
of plant-pesticides, combined with limitations of the APHIS list ultimately prevented the
Agency from predicting future plant-pesticide submissions based on the USDA/APHIS list.
Several of the aforementioned problems are detailed in the following paragraphs.
Plant-pesticide product developmental “lags”: Based on the very limited number of
Environmental Use Permit (EUP) applications received by the Agency, it has historically
taken a minimum of four years from the time a company first receives a USDA/APHIS ERP
to field test a particular plant-pesticide, to the time the company applies to EPA for an EUP.
Companies likely spend this four year period refining the plant-pesticide, testing its efficacy,
determining average crop yields, etc. However, not all plant-pesticides that receive USDA’s
ERP will reach the next stage in product development--large-scale field testing and EPA’s
EUP in four years; some plant-pesticides could take much longer to develop. Thus, if
projecting plant-pesticide submissions based on USDA ERPs, one would have to account for
those plant-pesticide products that take longer than four years to develop, by “carrying them
over” or accounting for them in the following year(s). Because a majority of the USDA
ERPs have been issued since 1990, and the four year average product development period
would only begin to be realized in 1993, most plant-pesticides that have been permitted by
USDA are still in the development stage and are not yet ready for an EPA EUP.
Plant-pesticide product “drop-outs”: Another problem with projecting plant-pesticide
submissions based upon USDA ERPs, is that even though a particular plant-pesticide receives
an ERP in any one year, it may not be supported by its manufacturer through the entire
vu-b
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development period for a variety of reasons. Plant-pesticides that are not efficacious, are
associated with reduced yields and/or quality m the host plant, or are being developed by
several companies so that competition is intense, could be removed from the development
process. After reviewing USDA’s list of transgenic plants that have received ERPs, it is
evident that many products drop out” of the development process before the company applies
for an EPA-issued EUP. However, while it may appear easy to identify those products that
have dropped out’ by the lack of permit renewals, it has been suggested to the Agency that
something else may be occurring. Based on conversations with industry specialists, some
companies have completed contained field tests of certain plant-pesticides and have purposely
not renewed their ERPs. Even though some of their products may be ready for large-scale
field testing under EPA’s EUP, the companies are waiting for EPA to issue regulations on
plant-pesticide registration requirements before applying for an EUP. Therefore, within
USDA’s list of ERPs, it is very difficult to distinguish between products that have dropped
out of the development process, and those products that are ready for large-scale testing but
are purposely being held back by the developing company.
Unknown gene types: USDA/APHIS ERPs are issued for field tests of introductions of
transgenic plants which not only include transgenic plants with gene products that will likely
be regulated by EPA, but those with gene products that will not be regulated by EPA.
Glyphosate (herbicide) tolerant tomatoes, 2,4-D (herbicide) tolerant potatoes, oil modification
genes in canola, storage protein genes in corn, and maker genes in tobacco are examples of
transgenic plants that will not require EPA registration. By reviewing the descriptions of the
gene products in USDA’s list of ERPs, it is not inherently obvious whether some transgenic
plants will be regulated by the Agency. This is because EPA proposes to regulate plant-
pesticides based on the mode of action of the gene product and not on the gene product itself.
Thus, without extensive review of the products, the Agency is unable to categorize many of
the gene products permitted by USDA and as such, is unsure whether some of these products
might be regulated under the proposed Rule.
Multiple ERP permits for identical plant-pesticides: Companies that wish to continue
conducting field tests of transgenic plants past the ERP expiration date (one year from date of
VII-”
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issuance), must renew their permits annually with USDA/APHIS. Separate ERPs have
sometimes been issued to companies for each state (or groups of states) in which the identical
recipient crop/gene type combination was tested. For example, a recent USDA/APHIS ERP
list shows that in 1991, Monsanto was issued four separate permits for insect resistant (Bt)
cotton in: Alabama (pennit #91-007-01); Hawaii (#91-144-01); Alabama, Arizona, Louisiana,
Mississippi, and Texas (#90-347-01); and California and Mississippi (#91-018-04). Multiple
ERPs are also issued to the same company, in the same year, for the same recipient crop, but
with only slightly different gene types. For instance, in 1992, CIBA-Geigy received three
separate ERPs for herbicide tolerant/insect resistant corn, with only slight differences in gene
products. These annually renewed, multiple permits that are often issued for identical or only
slightly different products /, make it difficult for the Agency to determine the number of
unique plant-pesticide products that have been permitted by USDA.
The methodology employed in this analysis is based upon the historical registration numbers
of new chemical insecticides. This data is recorded by EPA and reported in its annual
publication Pesticides Industry Sales and Usage . Basically, the number of new chemical
insecticides registered during the first 10 years of EPA registration (1967-76) were used to
forecast the number of plant-pesticide submissions in their first 10 years of EPA registration
(referred to as “years 1-10”). Between 1967-76, EPA registered an average of 4.3 new
chemical insecticides per year. Thus, over this 10-year period, a total of 43 new chemical
insecticides were registered with the Agency.
Using chemical insecticide registrations as a proxy to predict plant-pesticide submissions, it
was assumed that registrant’s submitted between 40-50, or an average of 45, new plant-
pesticides for registration between years 1-10. In Table Vu-I, the row labeled “Total
Submissions” shows the annual and total predicted number of plant-pesticide submissions the
Agency will receive between years 1-10; these predictions are based upon the annual and total
J The three similar ERP’s for CIBA-Geigy’s corn are:
• HT/IR - PAT & Bacillus thuringiensis sub. kurstaki (HD1 strain)
• HTIIR - PAT, GUS, Bacillus thuringiensis sub. kurstaki (Btk)
• HTIIR - PAT, GUS, Bacillus thuringiensis sub. kurstaki (HD1)
VII- 12
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number of chemical insecticides registered between 1967-76. Total VCP submissions (23 +
22 = 45) are assumed to equal the total number of other plant-pesticide submissions (45)
during the 10-year period. This assumption is based on the observation that the number of
VCPs being developed and field tested has been about equal to the number of plant-pesticides
being developed and field tested.
In order to estimate the aggregate costs of this proposed Rule, the total annual number of
plant-pesticide submissions were needed by case study (plant-pesticide type). Thus, Table
Vu-I also presents the estimated number of plant-pesticide submissions between years 1-10
for Case Studies 1 through 12. The estimated submissions for Case Studies I through 5 were
derived after considering: the types and numbers of plant-pesticides that have received EPA-
issued EUPs to date, the predicted number of EUPs to be issued in 1993, consultations with
potential registrant’s, and expert opinion within the Agency. The annual number of
submissions predicted for Case Studies 6, and 9 through 12--new plant vaneties developed by
traditional breeding--were based on the average number of certificates of protection for new
plant varieties issued by the Plant Variety Protection Office between 1990-92 (273 certificates
issued). These 273 new plant varieties were allocated among Case Studies 6, and 9 through
12 based on assumptions made by the Agency (see footnote 2/in Table VII- 1 for further
explanation). Annual VCP submissions were estimated based on the assumption that nearly
equal numbers of VCPs without wild relatives in the U.S. (Case Study 7) and with wild
relatives in the U.S. (Case Study 8) are being developed and thus, the nearly equal split in
estimated submissions between the two in Table VII- 1.
Due to the time commitment involved with research, development, and field testing necessary
to bring plant-pesticides (including VCPs) to the registration stage, it was assumed that the
annual number of plant-pesticide submissions would start out relatively small and would grow
slowly during the following 10 years (Table VII-!). Submissions of plant-pesticides in new
plant varieties were assumed to remain constant in the next 10 years--a reflection of the
relatively stable number of certificates of protection issued by the Plant Variety Protection
Office between 1990-92.
VII- 13
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Once total plant-pesticide submissions were projected for the 12 case studies by year, it was
necessary to determine which plant-pesticide submissions would be regulated under each
regulatory option, as presented in Tables VI1-2 to VH-5. For example, Option 1 exempts
several types of plant-pesticides and thus, its regulatory scope is narrow in relation to Options
2, 3, and 4. Included in the scope of Option I are the types of plant-pesticides depicted in
Case Studies 1, 3, and 5. Under Option 1, one plant-pesticide would need to fulfill data
needs in support of EPA registration in year 1 (Table V1I-2). In contrast, Option 4 is the
broadest in scope, subjecting all plant-pesticides to the requirements of FIFRA. Under Option
4, 276 plant-pesticides (Table VIl-5) would be regulated by EPA in year 1 and all would need
to fulfill some data requirements. Table Vfl-3 presents the projected plant-pesticide
submissions under regulatory Option 2, EPA’s proposed scope, and Table VII-4 gives the
estimated submissions under Option 3.
B. Estimated Direct Compliance Costs to Industry
This section presents the results of the cost analysis for the data needs associated with the
registration of plant-pesticides. Table Vll-6 summarizes the total estimated costs of the
anticipated data needs for Case Studies 1 through 12. Tables VII-7 through Vil-lO present
the aggregate total compliance cost estimates for regulatory Options I through 4, respectively.
1. Option 1 Aggregate Total Compliance Costs
As previously noted, Option 1 is the most limited in regulatory scope. Please refer to Chapter
IV, page IV-3 for a summary of those plant-pesticides that will be regulated under this option.
Table Vu-i shows that under Option 1, midpoint aggregate total costs range from $63,700 in
year 1, to approximately $2.7 million in year 10. Included.in these aggregate total costs are
the baseline costs (about $10,000) associated with USDA/APHIS permitting requirements.
In year 1, it was predicted that the Agency would receive one plant-pesticide submission of
Case Study 1 type (Table Vll-2) to be regulated under Option 1. From Table Vll-6 it was
estimated that the midpoint cost of the data needs for a Case Study 1 type plant-pesticide
would be $63,700. Thus, the aggregate total cost to regulate plant-pesticides under Option 1
VII-14
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in year I is $63,700 (I X $63,700). In year 10, it was predicted that two plant-pesticide
submissions of Case Study I type, two plant-pesticide submissions of Case Study 3 type, and
one submission of Case Study 5 type would be received by the Agency (all regulated under
Option 1). Again, the midpoint cost to register these types of plant-pesticides is shown in
Table VH-6. Thus, the aggregate total cost to regulate plant-pesticides under Option I in year
10 is estimated at about $2.7 million [ (2 X $63,700) + (2 X $732,700) + (1 X $1.1 million)].
This methodology can be used to determine all aggregate total costs by year and by
regulatory option as calculated in Tables V1i1-7 through Vil-lO.
2. Option 2 Aggregate Total Compliance Costs
Option 2 represents EPA’s proposed option and is somewhat broader in regulatory scope than
Option 1. This option would regulate certain plant-pesticides that do not meet at least one of
the criteria listed in Chapter IV, page IV-4 to IV-5. As presented in Table VII-8, aggregate
total costs of regulating plant-pesticides under Option 2 are estimated to range from
approximately $63,700 in year I when one plant-pesticide submission would be regulated, to
nearly $3.2 million by year 10 when it is predicted that the Agency will receive seven new
plant-pesticide submissions (see Table Vll-3).
3. Option 3 Aggregate Total Compliance Costs
Option 3 is broader in regulatory scope than Option 2, but more narrow than Option 4. In
addition to those plant-pesticides regulated under Option 2, Option 3 would regulate all coat
proteins from plant viruses used as pesticides (See Chapter LV, page IV-5 for specific
exemptions). The aggregate total compliance cost under Option 3 is estimated to range
between nearly $771,100 in year 1 to $5.3 million in year 10 (Table Vll-9). The difference
between Option 3’s aggregate costs and Option 2’s aggregate costs are due to the cost of the
data needs for coat proteins from plant viruses included in the scope of regulatory Option 3.
VII- 15
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4. Option 4 Aggregate Total Compliance Costs
Option 4 is the broadest option in regulatory scope analyzed in this RIA. Under Option 4, all
plant-pesticides are subject to the requirements of FIFRA. Aggregate total compliance costs
under Option 4 are presented in Table vu-I 0 and are estimated to range between $76.6
million in year 1, to $81.1 million in year 10. The tremendous difference in cost between
Option 4 and the other options, is due primarily to the large number of predicted annual
submissions of plant varieties developed through traditional plant breeding methods (273
estimated submissions annually), which would be regulated only under Option 4.
5. Annualized Aggregate Incremental Compliance Costs
In order to estimate annualized aggregate incremental compliance costs of this proposed Rule,
it was necessary to I) subtract baseline costs from aggregate total costs, and 2) discount and
annualize the resulting aggregate incremental costs.
a. Aggregate incremental compliance costs
As was previously noted, the costs associated with product analysis data needs are attributable
to USDA/APHIS permitting requirements for Case Studies 1-5 and 7-8, and as such, are
considered the baseline costs of regulating plant-pesticides. From the individual case studies
(Appendix Tables C-i through C-I 2), it can be seen that baseline costs (product analysis data
needs) range from $8,858 to $11,072, with a midpoint value of nearly $10,000. Calculating
the difference between the projected aggregate total compliance costs and the current baseline
costs, yields the aggregate incremental compliance costs associated with the implementation
of this proposed Rule (Table VII- 11).
b. Discounting aggregate incremental compliance costs
The 10-year aggregate incremental compliance cost estimates by option as presented in Table
Vu-I 1 are nondiscounted costs stated in 1993 dollars. For plant-pesticides, these costs will
VII- 16
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not be evenly allocated by the affected firms over the 10-year period. Instead, cash flows
will be uneven, with relatively larger expenditures occurring in the last few years of the
period when it is predicted that submissions may hit their peak, and plant-pesticides with
more costly data needs may be developed. To appropriately account for these uneven cash
flows, to allow for the time value of money, and to determine an equivalent, constant-level
cost per year (also called an equivalent annual cash flow or annual revenue requirement),
discounted cash flow procedures were used in this cost analysis.
Through discounting, cost streams were converted to their present values. The present value
of a future cost stream shows what the value of that cost stream is today. Money has time
value because of the opportunity to invest it at some rate of return. And to validly compare
sums of money expended in different time periods, one must make adjustments for time.
Present values are less than their future values because the present value could be invested at
some rate of return and compounded to the larger future value.
Table VII- 12 displays the annualized aggregate incremental compliance costs to the private
sector by regulatory option. Under Option 1, annual revenue requirements for those firms
currently involved with plant-pesticide research and testing are estimated at $1.2 million.
Dividing the annual industry revenue requirement of $1.2 million by the average annual
number of plant-pesticide submissions under Option 1 (3) yields an estimate of the annual
revenue needed to register one plant-pesticide with EPA--$413,000. Annual industry revenue
requirements under regulatory Option 2 are predicted at about $1.6 million for companies
involved with plant-pesticide research and testing, with an annual revenue requirement of
approximately $311,000 per plant-pesticide submission (based on an average of 5 submissions
per year). Under Option 3 it is estimated that industry compliance would cost those firms
identified as presently involved with plant-pesticide research and testing, approximately $2.9
million or almost $324,000 per plant-pesticide submission under the assumption that 9 new
plant-pesticide submissions are received annually. Finally, under Option 4, annual industry
revenue requirements for the affected firms are anticipated at $78.8 million, or approximately
$279,000 annually, per plant-pesticide submission (annual average submissions = 282).
VII- 17
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C. Estimated Labor Burden Costs to EPA
This section summarizes the estimated costs that EPA may incur while preforming the various
activities necessary to register plant-pesticides. Some of these activities may include the
establishment of the docket, internal reviews, requests for additional information,
consultations with applicants, etc.
Table VII- 13 summarizes the EPA hourly burden estimates by regulatory option, from years
1-10 after the implementation of the proposed plant-pesticide regulations. Three labor burden
estimates have been provided under each option: a lower bound estimate representing the
minimum amount of time that is likely to be needed to process plant-pesticide applications; an
upper bound estimate representing the likely maximum time necessary; and an expected
average estimate representing a point estimate of the amount of time needed to process
“average” applications. See Appendix D for further documentation of EPA’s labor burden
estimates by option.
Under the Agency’s preferred regulatory scope, Option 2, total expected average labor burden
ranges from approximately 700 hours in the year the proposed Rule becomes effective, to
nearly 6,900 hours 10 years after the proposed Rule becomes effective (Table VII-13). This
variation in labor burden is due to the different types and varying numbers of plant-pesticide
submissions predicted in years 1-10. For example, under Option 2 in the first year that the
proposed Rule in enacted, it is projected that the Agency will receive one application for a
plant-pesticide registration where the pesticidal substance will likely be derived from the
monera kingdom. In year 5, the Agency predicts that it may receive up to six plant-pesticide
applications, with the pesticidal substances derived from at least three sources (the monera
kingdom, the plant family, and the animal kingdom).
Table VI1-14 provides EPA’s labor burden cost estimates by regulatory option, in years 1-10.
The cost estimates in this table were calculated by multiplying the hourly estimates by year
and labor classification, times the government wage rate by labor classification as documented
in Appendix tables D-5 to D-8. Under Option 1, labor burden cost estimates vary from
VI1-18
-------
$40,000 in year I to $259,000 in year 10. Option 2’s (EPA’s proposed scope) annual costs
range from approximately $40,000 in year 1 to $391,000 in year 10. Labor burden estimates
under Option 3 are predicted to range from $123,000 in year 1 to nearly $640,000 in year 10.
Finally, under Option 4’s broad regulatory scope, the Agency’s labor costs to review plant-
pesticide submissions are estimated to range from $14.7 million in year 1 to $15.2 million in
year 10. As discussed in the previous paragraph, hourly labor burden, and thus costs, vary by
year due to the number and type of plant-pesticide submissions the Agency is predicted to
receive.
D. Aggregate Societal Costs of Regulating Plant-Pesticides
The aggregate cost to society of the promulgation of the proposed plant-pesticide regulations
is the sum of the aggregate costs to industry plus the aggregate costs to the Agency for
implementing the proposed Rule. Table V I I- 15 presents, by regulatory option: (I) estimated
aggregate societal costs by year, (2) net present values of the aggregate societal costs by year,
(3) annual societal revenue requirement, and (4) annual revenue requirement per plant-
pesticide submission. Please refer to section B.5.b. of this chapter for a detailed discussion of
net present values and annualized revenue requirements.
As shown in Table VII- 15, the annual societal revenue requirements for this proposed Rule
are estimated at approximately $1.4 million under Option 1, $1.8 million under Option 2, $3.3
million under Option 3, and $93.7 million under Option 4. Annual revenue requirements per
plant-pesticide submission have been calculated at $455,800 under regulatory Option 1,
$355,800 under EPA’s proposed scope of Option 2, $367,600 under Option 3, and $332,400
under Option 4.
E. Limitations of the Cost Analysis
There is a great deal of uncertainty surrounding the projection of plant-pesticide registrations
into the future. To date, no plant-pesticide products have reached the commercialization
stage. However, at least two have sought registration from the Agency and several companies
VII-19
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have indicated to EPA their intentions of submitting plant-pesticides for registration in the
near future. This analysis assumes that the first 10-years of plant-pesticide submissions can
be modeled after the number of registrations of new chemical insecticides between 1967-76.
In reality, we may find that the number of new plant-pesticides registered with the Agency to
be only somewhat comparable with new chemical insecticide registrations. However, until
registrants are ready to commercialize their plant-pesticides and until EPA begins registering
these products, the methodology used to project plant-pesticide registrations in this analysis is
intuitive, practical, and forthright.
It is possible that certain data needs will change as the Agency becomes more experienced
with the registration needs for plant-pesticides. Currently, much is still unknown about the
effects that the various plant-pesticide/recipient crop combinations will have on the
environment, nontarget species, and humans. The Agency has made every effort to include
those tests that are most likely to produce the information and data needed to make a
determination that a particular plant-pesticide will not cause “unreasonable adverse effects on
the environment”. It is conceivable that some of the data needs listed in Case Studies 1
through 12 will not be required for certain plant-pesticide/crop combinations and/or that
additional or entirely new data needs will be necessary. Thus, the aggregate compliance cost
estimates for this proposed Rule will vary proportionately with the varying needs for
information and data for particular plant-pesticides.
Vll-20
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Table VU-i. Projected Ptant-Pesticide Submissions by Case Study (type) and Year
2 p _ Ljttniè} P ’ 5abatancs Yearl Yeer2 Year Year4 Year 5 ‘Year8 Year? Year 8 V.ati Year 10 Tatat
Case Study I Pestiodal substance 1 1 1 1 2 1 1 1 1 2 12
(no wild relatives in the derived from
U S & infcxmaton avala e) monera kin tom
Case Study 2 Pesliodal substance 1 1 1 1 2 1 i i 9
(no wild relatives in the derived from
US & information avalaofe) the plant family
Case Study 3 Pesucidai substance 1 1 1 1 1 1 2 2 10
(with wild relatives in the derived from
US & information avalable) monera kingdom
Case Study 4 Pesticxlai substance 1 1 1 1 1 2 1 8
(no wild relatives in the derived from
US & rio info available) the plant family
Case Study 5 Pesticidal substance 1 1 1 1 1 1 6
(with wild relatives in the derived from
US & no into available) animal kingdom _______________________________________________________________________
Total Submissions 1) 1 2 3 4 6 5 5 5 7 7 45
Case Study 6 Pesttixial substance
(plantvaneties denvedfrom 137 137 137 137 137 137 137 137 137 137 1,370
devekiped by plant kingdom
tradflional breeding) 2/
Case Study 7 Pestiedal substance 1 1 2 2 2 3 3 3 3 3 23
(VCP5 without wild denved from the
relatives in the U S) 31 plant virus
Case Study 8 Pesnodal substance 1 1 1 2 2 3 3 3 3 3 22
(VCP5 with wild derived from the
relativesmtheUS) 3/ plantwus
Case Study 9 Pesticidal substacice 41 41 41 41 41 41 41 41 41 41 410
(no wild relatives in the derived from the same
US & info available) 2’ plant family cr genus
Case Study 10 Pestiodal substance 41 41 41 41 41 41 41 41 41 41 410
(with wild relatives in the derived from the same
U S & info available) 2/ plant family or genus
Case Study 11 Pesticidal substance 27 27 27 27 V 27 27 27 27 27 270
(no wild relatives in the derived from the same
US &noinfo available)2/ planttamilyorgenus
CaseStixJyi2 Pesncidaisubs lar i oe 27 27 27 V 27 27 27 27 27 27 270
(with wild relatives in the derived from the same
US &noinfo available) 2/ plant familyorgenus
1/Estimated based cm the following
- Total plant-pesticide submissions over the next 10 years we based upon total new them i caj insedtade sutxriissicms ct.mng the first 10 years of EPA registration (1967-76)
- Between 1967-76, EPA registered an averege of 43 new thernical insecticides per year
— Thus, over the 10 y period, a total of 43 new therncaf insecticides were registered
- Based on the 43 new themical insecticides, this analysis assumes that between 40-50, with an averege 0145. new plarit-pestlcxtes will be registered between years 1-10
- Total planl-pesti e submissions will sari out relatively small and will grow slowly, during the next 10 years
21 The averege number of appiristions reowved by the Rant Variety Plolectcn Office between 1990 92 was 273. thin thcee 273 new varieties, plant breeders aüd potentially
develop plants that exlvtst pestioclal diaracteristics sinvlar to piani-pestiode types that are depicted in Case Stuctes 1-5. as well as Case Study 6 Thus, the 273
new plant varieties have beeii allocated into Case Sttdes 6 aid 9-12 in the following runner It was assumed that the following aflocaaicms reman censtant during years 1-10
Percent Number
Case Study 6 50% 137
CaseStudyg 15% 41
CaseSt i.dy lO 15% 41
CaseStudyll 10% 27
CaseStudy l2 10% 27
Total submissions ‘ 273
I The total number of VCP subrrussions between years 1-10 is estimated to be equal to the total number of plant-pestcde subilussions (45) during this time period This is based
on the observation thai the number of VCPs being developed arid field tested is about equal to the number of other types of plant-pesti fes being developed arid field tested It is
assumedtha lneedyequalnumbersofVCPswnhwiklrelativesintheus andwnwildrebevesmtheUS.arebetngdevelopedandthus,theneartyequal flhinesmtaied
submissions between the two
Vll-2 1
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Table Vil-2. Projected Plant-Pesticide Submissions Under Regulatory Option 1
Case Study• Source of
Case Study 1 Pesticidal substance 1 1 1 1 2 1 1 1 1 2
(no wild relatives in the derived from
U.S. & information available) monera kingdom
Case Study 2 Pesticidal substance Case Study 2 not in scope of regulatory Option 1
(no wild relatives in the derived from
U.S. & information available) the plant family
Case Study 3 Pesticldal substance 1 1 1 1 1 1 2 2
(with wild relatives in the derived from
U.S. & information available) monera kingdom
Case Study 4 Pesticidal substance Case Study 4 not in scope of regulatory Option 1
(no wild relatives in the derived from
U.S. & no info, available) the plant family
Case Study 5 Pesticldal substance 1 1
(with wild relatives in the derived from
U.S. & flO Into, available) animal kingdom
TotalSubmlsslons 1 2 2 2 4 3 2 3 4 5
Source: Table Vll-1.
Note: The scope of regulatory Option 1 includes submissions of Case Studies 1,3, and 5.
-------
Table Vli-3. Projected Plant-Pesticide Submissions Under Regulatory Option 2
SkJdy Sau e at
Year U Y 9 Year
Case Study 1 Pesticidal substance 1 1 1 1 2 1 1 1 1 2
(no wild relatives in the derived from
U.S. & information available) monera kingdom
Case Study 2 Pesticidal substance 1 1 1 1 2 1 1 1
(no wild relatives in the derived from
U.S. & information available) the plant family
Case Study 3 Pesticidal substance 1 1 1 1 1 1 2 2
(with wild relatives in the derived from
U.S. & information available) monera kingdom
Case Study 4 Pesticidal substance 1 1 1 1 1 2 1
(no wild relatives in the derived from
U.S. & no info, available) the plant family
Case Study 5 Pesticidal substance 1 1 1 1 1 1
(with wild relatives in the derived from
U.S. & no info, available) anmal kingdom
Total SubmIssions 1 2 3 4 6 5 5 5 7 7
Source: Table Vu-i.
Note: The scope of regulatory Option 2 includes subrrussions of Case Studies 1, 2, 3,4, and 5
-------
Table VH-4. Projected Plant-Pesticide Submissions Under Regulatory Option 3
Case Study
D!t1 Gt 0),
.
r tl0
SOulte of
I Subetancj .
.
eat1.
.
Ye r.2 V
.
ear3
,
j a,r4. Year6
.
r r8 Y r,9
Veir’tO
Case Study 1 Pesticidal substance 1 1 1 - 1 2 1 1 1 1 2
(no wild relatives in the derived from
U.S. & information available) monera kingdom
Case Study 2 Pesticidal substance 1 1 1 1 2 1 1 1
(no wild relatives in the derived from
U.S. & information available) the plant family
Case Study 3 Pesticidal substance 1 1 1 1 1 1 2 2
(with wild relatives in the derived from
U.S. & information available) monera kingdom
Case Study 4 Pesticidal substance 1 1 1 1 1 2 1
(no wild relatives in the derived from
U.S. & no info, available) the plant family
Case Study 5 Pesticidal substance 1 1 1 1 1 1
(with wild relatives in the derived from
U.S. & no info, available) arimal kingdom
Case Study 7 Pesticidal substance 1 1 2 2 2 3 3 3 3 3
(VCPs without wild derived from
relatives in the U.S.) the plant virus
Case Study 8 Pesticidal substance 1 1 1 2 2 3 3 3 3 3
(VCPs with wild derived from
relatives in the U.S.) the plant virus _________________________________________________________________________________
Total SubmissIons 3 4 6 8 10 11 11 11 13 13
NA = Not applicable
Source: Table Vu-I.
Note’ The scope of regulatory Option 3 includes submissions of Case Studies 1, 2, 3,4, 5,7, and 8.
-------
Table Vll-5. Projected Plant-Pesticide Submissions Under Regulatory Option 4
casestey Sou .of - - - -.
CaseStudyl Pesticith l substance 1 1 1 1 2 1 1 1 1 2
(nowddmlati veslflthe denvedfiom
U S & information available) macera kingck,m
Case Study 2 Pesticufal substance 1 1 1 1 2 1 1 1
(no wild relatives in the denved from
U S & information available) the plant family
Case Study 3 Pestiathl substance 1 1 1 1 1 1 2 2
(withw lldrelativesinthe denvedfrom
U S. & information available) monera kingckm
Case Study 4 Pestiaclol substance 1 1 1 1 1 2 1
(no wild relatives in the derived from
U S & no info ava able) the plant family
Case Study 5 Pestiathl substance 1 1 1 1 1 1
(with wild relatives in the derived from
US&noinfo available) plantkingdom
Case Study 6 Pestiathl substance 137 137 137 137 137 137 137 137 137 137
(plant varieties derived from
developed by plant kiigdom
traditional breeding)
Case Study 7 Peslradel substance 1 1 2 2 2 3 3 3 3 3
(VCPs without wild derived from
relatives in the U S) plant virus
Case Study 8 PesliathI substance 1 1 1 2 2 3 3 3 3 3
(VCPs with wild derived from the
relatives in the U S) plant virus
CaseStudy9 Pestiathlsubstance 41 41 41 41 41 41 41 41 41 41
(nowuidrelativesinthe denvedfromthe
U S & information available) plant virus
Case Study 10 Pestiath l substance 41 41 41 41 41 41 41 41 41 41
(no wild relatives in the derived from the same
U S & information available) plant family or genus
Case Study 11 Pestiadel substance 27 27 27 27 27 27 27 27 27 27
(no wild relatives in the deilvod from the same
U S & no mb. available) plant family or genus
Case Study 12 Pesticxfal substance 27 27 27 27 27 27 27 27 27 27
(wdh wild relatives in the derived from the same
U S & no info, available) plant family or genus
Total Subm sions 276 277 279 281 283 284 284 284 286 286
NA = Not appticalle
Note The scope of regulatory Option 4 includes submissions of Case Strides I through 12.
Source Table Vll-1
VI1-25
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Table Vll-6. Summary of Total Estimated Costs of Potential Data Needs by Case Study
Total Estimated Data Need Cost
.
Lower . Upper Md
Case Study Bound.11 . Bound Point 21
($)
Case Study 1 54,900 72,500 63,700
Case Study 2 89,300 115,500 102,400
Case Study 3 649,500 815,800 732,700
Case Study 4 340,400 433,100 386,800
Case Study 5 945,100 1,196,400 1,070,700
Case Study 6 14,700 18,400 16,600
Case Study 7 15,400 23,100 19,200
Case Study 8 610,000 766,400 688,200
Case Study 9 89,300 115,500 102,400
Case Study 10 649,500 815,800 732,700
Case Study 11 340,400 433,100 386,800
Case Study 12 945,100 1,196,400 1,070,700
1/ From indMdual case studies: Appendix tables C-i to C-12. Estimates have been rounded to the
nearest hundred.
2] Calculated: (Lower bound + Upper bound)/2.
VI1-26
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Table Vll-7. Aggregate Total Compliance Cost EstImates Under Regulatory Option 1, Years 1-10
Case Study 1
(no wild relatives in the
U.S. & information available)
Case Study 2
(no wild relatives in the
U.S. & information available)
Case Study 3
(with wild relatives in the
U.S. & information available)
Case Study 4
(no wild relatives in the
U.S. & no info, available)
Case Study 5
- (with wild relatives in the
U.S. & no info, available)
Pesticidal substance
derived from
monera kingdom
Pesticidai substance
derived from
the plant family
Pesticidal substance
derived from
monera kingdom
Pesticidai substance
derived from
the plant family
Pesticidal substance
derived from
animal kingdom
AGGREGATE TOTAL COST — OPTION 1 $63,700 $796,400 $796,400 $1,134,400 $1,930,800 $1,867,100 $796,400 $1,867,100 $2,599,800 $2,663,500
Source: Estimates calculated by multiplying the midpoint compliance cost estimate by case study (Table Vll-6) by the number of projected
plant-pesticide submissions under Option 1 (Table VIl-2).
ca9.sluy I Sourc of
t Jwt o.it1ddG tv e $&th ance.
Y.a1 Y gar. 2.Year3. Yea,4 . far5 Year6 Yearl . Ya 9 Yow’lO
($)
63,700 63,700 63,700 63,700 127,400 63,700 63,700 63,700 63,700 127,400
Case Study 2 not In scope of regulatory Option 1
732,700 732,700 732,700 732,700 732,700 732,700 1,465,400 1,465,400
Case Study 4 not in scope of regulatory Option 1
1,070,700 1,070,700 1,070,700 1,070,700 1,070,700 1,070,700
-------
Table Vll-8. Aggregate Total Compliance Cost Estimates Under Regulatory OptIon 2, Years 1-10
Case Study 1
(no wild relatives in the
U.S. & Information available)
Case Study 2
(no wild relatives in the
U.S. & information available)
Case Study 3
(with wild relatives in the
U.S. & information available)
Case Study 4
(no wild relatives in the
U.S. & no info, available)
Case Study 5
(with wild relatives in the
00 U.S. & no info, available)
Pesticidal substance
derived from
monera kingdom
Pesticidal substance
denved from
the plant family
Pesticidal substance
derived from
monera kingdom
Pesticidal substance
derived from
the plaht family
Pesticidal substance
derived from
animal kingdom
AGGREGATE TOTAL COST — OPTION 2 $63,700 $796,400 $898,800 $1,623,600 $2,356,300 $2,356,300 $1,388,000 $2,356,300 $3,475,800 $3,152,700
Source: Estimates calculated by multiplying the midpoint compliance cost estimate by case study (Table Vll-6) by the number of projected
plant-pesticide submissions under Option 2 (Table Vll-3).
732,700 732,700
Ysarl
y r
Y av$
Year5
Yoai6
Yoarl
Ye r8
‘Y ario
($)
63,700
63,700
63,700
63,700
63,700
63,700
63,700
63,700
63,700
127,400
102,400
102,400
102,400
102,400
204,800
102,400
102,400
102,400
732,700
732,700
732,700
732,700
1,465,400
1,465,400
386,800
386,800
386,800
386,800
386,800
773,600
386,800
1,070,700
1,070,700
1,070,700
1,070,700
1,070,700
1,070,700
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Table Vli-9. Aggregate Total Compliance Cost Estimates Under Regulatory Option 3, Years 1-10
CaaeS*ud .‘ .u .oI
! ___ -.i-.-.q.- __ ------- .---; . “ -i — : _r - -. - - -fl’ - - - - - - - -- - - - - -4 ,
($)
Case Study 1 Pesticidal substance 63,700 63,700 63.700 63.700 63.700 63.700 63,700 63,700 63.700 127,400
(no wild relatives in the denved from
U.S. & information available) monera kingdom
Case Study 2 Pesticidal substance 102.400 102,400 102,400 102,400 204,800 102,400 102,400 102.400
(no wild relatives in the derived from
US. & information available) the plant family
Case Study 3 Pesticidal substance 732,700 732,700 732,700 732,700 732,700 732,700 1,465,400 1,465,400
(with wild relatives in the derived from
U.S. & information available) monera kingdom
Case Study 4 Pesticidal substance 386,800 386,800 386,800 386.800 386,800 773,600 386,800
(no wild relatives in the derived from
U.S & no info available) the plant family
Case Study 5 Pesticidal substance 1.070,700 1.070,700 1,070,700 1,070,700 1,070,700 1,070,700
(withwildrelativesinthe denved tmm
U.S & no info available) animal kingdom
Case Study 7 Pesticidal substance 19,200 19,200 38.400 38,400 38.400 57,600 57.600 57,600 57,600 57,600
(VCPs without wild derived from
relatives in the U S.) the plant virus
CaseStudy8 Pesticidalsubstance 688,200 688.200 688,200 1.376,400 1,376,400 2,064,600 2.064.600 2,064,600 2,064,600 2,064,600
(VCP5 with wild derived from
relativesintheU.S) theplantvirus
AGGREGATE TOTAL COST — OPtiON 3 $771,100 $1,503,800 $1,625,400 $3,038,400 $3,771,100 $4,478,500 $3,510,200 $4,478,500 $5,598,000 $5,274,900
NA Not applicable
Source Estimates calculated by multiplying the m4,oint compliance cost estimate by case study (Table Vll-6) by the number of projected
plant-pesticide submissuore under Option 3 (Table Vll-4)
-------
Table Vu-b. Aggregate Total Compliance Cost EstimatesUnder Regulatory OptIon 4, Years 1-10
SOU 1C O i l ,
p .g iijaI i ln&dutypej we h el $ub *i’ u ‘Year 1 Year 3 Year 3 Yesr 4 Yatar Yasr YwI Vast’S Yeer9 Year 10’
($)
Case Study 1 Pestiadal substance 63,700 63.700 63.700 63.700 127,400 63,700 63,700 63,700 63,700 127.400
(no wild relatives in the denved from
US & information available) moneta lengdom
CaseStudy2 Pestiadal substance 102,400 102,400 102.400 102,400 204,800 102,400 102,400 102,400
(no wild relatives in the deflved from
US. & information available) the plant family
Case Study 3 Pestiadal substance 732,700 732.700 732,700 732,700 732,700 732,700 1,465,400 1,465,400
(with wild relatives in the denved from
US & information available) moneta kingdom
Case Study 4 Pestiddal substance 386,800 386,800 386,800 386,800 386,800 773.600 386,800
(no wild relatives in the denved from
U.S & no info available) the plant family
Case Study 5 Pesticidal substance 1.070.700 1.070.700 1.070.700 1,070,700 1,070,700 1.070,700
(with wild relatives in the denved from
U S. & no info available) plant kingdom
Case Study 6 Pesticidal substance 2,274.200 2,274.200 2.274,200 2.274,200 2,274,200 2.274.200 2,274,200 2,274.200 2,274,200 2,274,200
< (plant varieties denved from
developed by plant kingdom
tretiittcnal treeding)
C
Case Study 7 Pesticidal substance 19,200 19,200 38.400 38,400 38.400 57,600 57,600 57.600 57,600 57,600
(VCPs without wild denved from
re lativeslntheUS) plantvirus
Case Study8 Pesticidal substance 688.200 688.200 688.200 1.376,400 1,376.400 2.064.600 2.064,600 2,064,600 2,064,600 2,064,600
(VCPS with wild derived from the
relatives in the U.S) plant virus
CaseStudy9 Pestiadal substance 4,198,400 4,198.400 4,198,400 4.198,400 4,198,400 4,198.400 4,198,400 4,198,400 4,198,400 4,198,400
(no wild relatives in the derived from the
U.S. & information available plant wus
Case Study 10 Pesticidal substance 30,040,700 30,040.700 30,040,700 30,040.700 30,040,700 30,040,700 30.040,7 00 30.040,700 30,040,700 30,040,700
(no wild relatives in the derived from the same
U S & information available) plant family or genus
Case Study 11 Pesticidal substance 10.443.600 10.443.600 10,443.600 10.443,600 10,443,600 10.443,600 10,443,600 10,443,600 10 443,600 10,443,600
(no wild relatives in the derived from the same
U S & no info available) plant family or genus
Case Study 12 Pestiadal substance 28,906.900 28,908,900 28,908,900 28,908,900 28,908,900 28,908,900 28,908,900 28,908,900 28,908,900 28,908,900
(with wild relatives in the derived from the same
U.S. & no info available) plant family or genus
AGGREGATE TOTAL COST — OPTION 4 $76,636,900 $77,369,600 $77,491,200 $78,904,200 $79,700,600 $80,344,300 $79,376,000 $80,344,300 $81,463,800 $81,140,700
source ‘ auiated by multi ying sue midpoint cemptance 00s1 estimate by case study ( i e Vu-b; by the number ot projeaed plant-pesticide submissions under Option 4( i at e Vu-b )
-------
Table Vll-1 1. Aggregate incremental Compliance Cost Estimates by Regulatory Option, Years 1-10
- c t IOnI O tlofl2 O tIofl3 OntIOn4
Aggreg e •Aggi pate . Agg egate . Aggregate Aggregate Aggregate Aggregate
T taI . BaselinO b1cremat taI’ TOt l, Baseline ,, rementel lotal Basefine Incremental TOt I Baseune incrementat
Year CDs ;i/ Coets .iJ steW Costs3l COst 1
($)
Year 1 63,700 10,000 53,700 63,700 10,000 53,700 771,100 30,000 741,100 76,636,900 30,000 76,606,900
Year2 796,400 20,000 776,400 796,400 20,000 776,400 1,503,800 40,000 1,463,800 77,369,600 40,000 77,329,600
Year 3 796,400 20,000 776,400 898,800 30,000 868,800 1,625,400 60,000 1,565,400 77,491,200 60,000 77,431200
Year4 1,134,400 20,000 1,114,400 1,623,600 40,000 1,583,600 3,038,400 80,000 2,958,400 78,904,200 80,000 78,824,200
Year5 1,930,800 40,000 1,890,800 2,356,300 60,000 2,296,300 3,771,100 100,000 3,671,100 79,700,600 100,000 79,600,600
Year 6 1,867,100 30,000 1,837,100 2,356,300 50,000 2,306,300 4,478,500 110,000 4,368,500 80,344,300 110,000 80,234,300
Year7 796,400 20,000 776,400 1,388,000 50,000 1,338,000 3,510.200 110,000 3,400,200 79,346,000 110,000 79,236,000
Year8 1,867,100 30,000 1,837,100 2,356,300 50,000 2,306,300 4,478,500 110,000 4,368,500 80,344,300 110,000 80,234,300
Year9 2,599,800 40,000 2,559,800 3,475,800 70,000 3,405,800 5,598,000 130,000 5,468,000 81,463,800 130,000 81,333,800
Year 10 2,663,500 50,000 2,613,500 3,152,700 70,000 3,082,700 5,274,900 130,000 5,144,900 81,140,700 130,000 81,010,700
1/From Tables Vli-7 to Vu-b.
2/The midpoint cost of product analysis data needs ($10,000) X the projected plant-pesticide submissions under Option 1 (Table V 11-2)
3/Aggregate total costs minus baseline costs.
4/The midpoint cost of product analysis data needs ($10,000) X the projected plant-pesticide submissions under Option 2 (Table VlI-3)
5/The midpoint cost of product analysis data needs ($10,000) X the projected plant-pesticide subrTlssions under Option 3 (Table Vll-4).
6/The midpoint cost of product analysis data needs ($10,000) X [ the projected plant-pesticide submissions under Option 4 (Table ViI-5) minus the number
of submissions of Case Study 6,9, 10, 11, and 12 type plant-pesticides (273)]. Option 4 includes Case Studies 6,9, 10, 11, and 12 (plant varieties
developed by traditional breeding). Because plant varieties developed by traditional breeding are not regulated by USDA’APHIS, the product
analysis data needs have not already been accounted for and as such ARE attributable to this Rule. Accordingly, the $10,000 product analysis
costs remain for the 273 submissions of plant vaneties developed by traditional breeding.
-------
Table Vll-12. Annualized aggregate Incremental compliance costs to the private sector by regulatory Option, constant 1993 dollars,
discounted at 10% for 10 years
• •• • .. 2 .. . ... . . .. $ LI .. . 4..
.1 Net Net, Net Net
Cash Pie nL cash prauant cash P$asent CaSh Present
Fhw.1l Vak
($)
Year 1 53,700 48,813 53,700 48,813 741,100 673,660 76,606,900 69,635,672
Year 2 776,400 641,306 776,400 641,306 1,463,800 1,209,099 77,329,600 63,874,250
Year 3 776,400 583,076 868,800 652,469 1,565,400 1,175,615 77,431,200 58,150,831
Year4 1,114,400 761,135 1,583,600 1,081,599 2,958,400 2,020,587 78,824,200 53,836,929
Year 5 1,890,800 1,174,187 2,296,300 1,426,002 3,671,100 2,279,753 79,600,600 49,431,973
Year 6 1,837,100 1,036,124 2,306,300 1,300,753 4,368,500 2,463,834 80,234,300 45,252,145
Year 7 776,400 398,293 1,338,000 686,394 3,400,200 1,744,303 79,236,000 40,648,068
Year 8 1,867,100 871936 2,306,300 1,077,042 4,368,500 2,040,090 80,234,300 37,469,418
Year 9 2,559,800 1,085,355 3,405,800 1.444,059 5,468,000 2,318.432 81.333,800 34,485,531
Year 10 2,613,500 1.008.811 3,082,700 1.189.922 5,144,900 1.985.931 81,010,700 31.270.130
Total NPV $7,609,038 $9,548,360 $17,911,304 $484,054,947
Annual lndustiy
Revenue Requirement 31 $1,238,336 $1,553,952 $2.91 4,982 $78,777.71 3
Annual Revenue
Requirement per
Submission 4/ $412,779 $310,790 $323,887 $279,354
1/From Table Vu-i 1, “Aggregate Incremental Costs” columns.
2/Amount in “Cash Flow” column X the discount factor.
3/Annual Revenue Requirement — Capital Recoveiy F tor (CRF) X Total Net Present Value (NPV).
CRF = (1 + j)A (I) / (1 + i)An - 1
Where: i the real rate of return on invested capital, excluding inflation (10%)
n = the effective operating life of the asset (10 years)
4/Calculated: Annual Industry Revenue Requirement/Average annual number of plant-pesticide submissions by Option It is predicted that there will be
3, 5, 9, and 282 submissions of plant-pesticides under Options 1, 2, 3, and 4, respectively
-------
Table Vll-13. Total EPA Hourly Burden Estimates Under RIA Options 1 to 4, Years 1-10
OttlOn .2.LaborButd.n O11 .3 .t ot .I3tildBfl t lOfl.4.Lmbor.Burdefl
Lower Upper, ExPected tOwer. Upper Expected t.owei Upper Expected Lower Upper Expected
BOund BOIfltd Avaraoe Bound Bound AveffiOG Boufld Bound Avel ae BC(H B md AvO Oe.
•:
..
(Hours)
Year 1 461 952 706 461 952 706 1,425 2,911 2,168 169.894 347.094 258,494
Year 2 964 1,959 1,462 964 1,959 1,462 1,929 3,918 2,923 170,398 348,102 259,250
Year3 964 1,959 1,462 1,425 2,911 2,168 2,850 5.821 4,335 171,319 350,005 260,662
Year4 1,533 3,122 2,327 3,065 6,245 4,655 4,994 10,163 7,578 173,463 354,347 263,905
Year5 2,497 5,081 3,789 4,029 8,204 6.116 5,958 12,122 9,040 174,428 356,306 265,367
Year 6 2,036 4,130 3,083 3,569 7,252 5,410 6,462 13.129 9,795 174,931 357,313 266,122
Year 7 964 1,959 1.462 2,957 6,033 4,495 5,850 11,910 8,880 174,320 356,094 265,207
Year8 2,036 4,130 3,083 3,569 7,252 5,410 6,462 13,129 9,795 174,931 357.313 266,122
Year9 2,540 5,137 3,839 5,145 10,430 7,788 8,037 16,307 12,172 176,507 360.491 268,499
YearlO 3,001 6,089 4,545 4,533 9,211 6,872 7,426 15,088 11,257 175,896 359,272 267,584
Source: Appendx tables D-1 to D-4.
-------
Table Vil-14. EPA Labor Burden Cost Estimates Under RIA Options 1 to 4, Years 1-10
ODtlOfl.2.cOSt 0 10 1 4 1 P0S
LOI I Upper Law r Uppw LOW F IJPP Expected
Year Bcufld BO md Ave *a Bound Bound ... Avafacle ... BOund Bound Avaraaa . Bound .BOund . .Ave1 Oe
($)
Year 1 25,207 54,256 39,731 25,207 54,256 39,731 78,601 166,513 122,557 9,353,325 20,009,872 14,681,599
Year2 53,394 112,258 82,826 53,394 112,258 82,826 106,787 224,515 165,651 9,381.511 20,067,874 14.724,693
Year3 53,394 112,258 82,826 78,601 166,513 122,557 157,202 333,026 245,114 9,431,926 20,176,385 14,804,156
Year4 84,425 181,017 132,721 168,850 362,035 265,442 275,637 586,550 431,093 9,550,361 20,429,909 14.990,135
Year5 137,818 293,275 215,547 222,243 474,293 348,268 329,030 698,808 513,919 9,603,755 20,542,166 15.072,961
Year6 112,611 239,019 175,815 197,036 420,037 308,536 357,217 756,810 557,013 9,631,941 20,600,168 15,116,055
‘
Year7 53,394 112,258 82,826 163,026 347,531 255,278 323,206 684.303 503,755 9,597,931 20,527,662 15,062,796
Year8 112,611 239,019 175,815 197,036 420,037 308,536 357,217 756,810 557,013 9,631,941 20,600,168 15,116,055
Year9 140,797 297,021 218,909 284,440 604,801 444,620 444,620 941,574 693,097 9,719,345 20,784,932 15,252,138
YearlO 166,005 351,277 258,641 250,429 532,295 391,362 410,610 869,067 639,839 9,685,334 20,712,426 15,198,880
Source: Appendix Tables D-5 to D-8.
-------
Table Vil-15. Annualized Aggregate Societal Costs by Regulatory Option, Constant 1993 Dollars, Discounted at 10% for 10 Years
ODttDfl 2 Cotton $
A regat. Nat A gregst. Net A gs tgats Nat A igrn jate Net
CoStBto Pr nt Costa,to Present C09t9 to PrOeaflt Costs to Present
Year 1 93,431 84,929 93.431 84.929 863,657 785,064 91,288,499 82,981.246
Year 2 859,226 709,721 859,226 709,721 1,629,451 1,345,927 92.054,293 76,036,846
Year 3 859,226 645,279 991,357 744,509 1,810,514 1,359,696 92.235,356 69,268,752
Year 4 1,247,121 851,784 1,849,042 1,262,896 3,389,493 2,315,024 93,814,335 64,075,191
Year 5 2,106,347 1,308,041 2,644,568 1,642,277 4,185,019 2,598,897 94,673,561 58,792.281
Year 6 2,012,915 1,135,284 2,614,836 1,474,768 4,925,513 2,777,989 95,350,355 53,777,600
Year 7 859,226 440,783 1,593,278 817,352 3,903,955 2,002,729 94,298,796 48,375,282
Year 8 2,012,915 940,031 2,614,836 1,221,128 4,925,513 2.300,215 95.350,355 44,528,616
Year 9 2,778,709 1,178,173 3,850,420 1,632,578 6,161,097 2,612,305 96,585,938 40,952,438
Year 10 2,872,141 1.108.646 3,474,062 1.340.988 5,784,739 2.232.909 96,209,580 37.136.898
Totai NPV $8,402,671 $10,931,145 $20,330,754 $575,925,150
Annuai Socuetai
Revenue Requirement 3/ $1,367,496 $1,778,993 $3,308,737 $93,729,166
Annual Revenue
Requirement per
Submission 4/ $455,832 $355,799
1 / Calculated: Cost to Industry (Tabie Vu-i 1, “Aggregate incremental Costs” columns) + Cost to EPA (Table Viii 4, “Expected Average” columns).
2/ Calculated: Amount in “Aggregate Costs to Society” column X the discount factor
3/Annual Societal Revenue Requirement = Cap aJ Recovery Factor (CRF) X Total Net Present Value (NPV).
CRF — (1 + i)An (1)1(1 + j)A . 1
Where: i the real rate of return on invested capital, excluding inflation (10%)
n the effective operating life of the asset (10 years)
4/ Calculated: Annual Societal Revenue Requirement/Average annual number of plant-pesticide submissions by Option It is predicted that there will be
3, 5, 9. and 282 submissions of plant-pesticides under Options 1, 2, 3, and 4, respectively.
$367,637 $332,373
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VIII. ECONOMIC IMPACTS AND REGULATORY FLEXIBILITY--ENDUSTRY
This chapter discusses the potential economic impacts to the regulated community of the
proposed plant-pesticide regulations under FIFRA and FFDCA. The varying compliance costs
of the four regulatory options considered are then discussed to demonstrate that the Agency’s
proposed regulatory scope is not likely to cause “a significant adverse economic impact on a
substantial number of small entities.”
A. Economic Impacts
The compliance costs of EPA’s proposal (Option 2) have been estimated at approximately
$3 11,000 per submission of a plant-pesticide, on an annualized basis. While it is unknown
how many plant-pesticide products will be submitted to EPA for registration by a typical firm
in an average year, for purposes of discussion it is assumed that small firms submit one and
“other”jJ firms submit 2-3 plant-pesticide products. Thus, the associated compliance costs
could be approximated at $311,000 per year for small firms (1 product X $311,000), and
$622,000 to $933,000 per year for “other” firms (2-3 products X $311,000).
The approximated annual compliance cost ($311,000) for a plant-pesticide is much less than
for a traditional chemical pesticide ($5.3 million2/). It is unlikely that there would be
adverse impacts on the “other” sized firms that are developing and testing plant-pesticides as
jJ in this chapter, “other” is equivalent to the medium large sized firms that were
defined in Chapter VI. “Other” firms have sales greater than $300 million and small
firms have sales of less than $300 million.
Source: U.S. EPA, DPRA Inc., and W.R. Landis Associates, Inc. 1990 (August 8).
Regulatory impact Analysis: Proposed Testing and Data Reciuirements for Registering
Pesticides Under the Federal Insecticide, Fungicide, and Rodenticide Act as Amended,
1988 . DPRA Incorporated, Manhattan, Kansas. Page VI-1 1: Case study 2
(insecticide) under the moderate-cost scenario, revised estimate.
VIII- 1
-------
the annual compliance cost ($622,000 to $933,000) represents less than one percent of annual
sales (>$300 million). An industry representative predicted that if compliance costs are
similar to the costs of registering microbial or biochemical pesticides, that even the smallest
firms would be unlikely to experience adverse impacts (Goidhammer, 1993). Management
personnel in many firms developing biotechnology products are aware that any pesticide-
expressing product developed will require at least some type of Federal regulation and testing
requirements before the product can be commercialized. Some of these firms have planned
for registration costs from the initial product planning stages and have adjusted their product
research and development budgets accordingly. Considering the historical costs of registering
traditional chemical pesticides, it is possible that some biotechnology firms have
overestimated the potential costs of plant-pesticide registration, rather than underestimated the
costs. However, it is also possible that some small firms--especially those started by
individuals new to the industry and to Federal pesticide registration requirements--have not
accounted for product registration costs. Management within these companies may need to
creatively finance registration costs if their products eventually reach the stage where EPA
registration is necessary. (Woodword, 1993)
Any adverse economic impacts that these compliance costs could have on those companies
involved with testing and developing plant-pesticides would be very difficult to estimate.
Two of the greatest limitations in estimating compliance cost impacts are, (1) the lack of
disaggregated financial data for individual biotechnology products within large corporations
and, (2) the multitude of business organizations and investment strategies that are the result of
large capital needs of companies researching and developing plant-pesticides.
Examples of some business organizations and investment strategies include second mortgages,
investment capital from family, joint ventures with national and international firms, corporate
alliances, sponsors, equity offerings, and contract agreements. The lack of disaggregated
financial data for individual products prevents the analysis of compliance costs as they impact
company biotechnology sales or net profits--instead the financial data available are for the
entire company, including subsidiaries and divisions that are not related to biotechnology.
VII1-2
-------
Additionally, the structure and internal organization of businesses, and the diverse sources of
financing allow small companies to incur negative profits, sometimes for three to fours years
in a row, and remain in business. For example, small biotechnology companies that are
heavy into research and development of promising biotechnology products, commonly receive
venture capital from risk-taking investors who believe in the companies employees and/or
product(s) despite the companies negative profits. Thus, although small companies are an
important component of the regulated community, their frequently reported negative net
profits cloud the financial picture and limit quantitative economic impact analyses.
Therefore, due to: (1) uncertainties associated with the unique regulated product of this
proposed Rule--plant-pesticides; (2) the fact that agricultural biotechnology is still in its
infancy and product commercialization has yet to begun; and (3) the negative profits reported
by many small firms involved with agbiotech, a traditional economic impact analysis using
quantitative measures to determine this proposed Rule’s impact on the regulated industry was
not possible.
The remainder of this chapter will identify some of the sources of financing that are
commonly used by small firms in the regulated community. These sources of creative
financing often allow small firms to operate a business with marginal returns or even losses,
while researching, developing, and preparing for market their plant-pesticide products.
Companies involved with biotechnology, as with most other companies, finance their product
research, development, and commercialization through investments. Investments can come
from the individual(s) starting the firm or from outside sources (public or private). Investing
in biotechnology companies is an inherently risky venture--many products are novel and their
chance for success in the public marketplace can only be approximated as consumers have
mixed feelings towards some biotechnology products. This product novelty and associated
public skepticism is especially true with plant-pesticides; consumers have been polled as
feeling “cautiously optimistic” regarding food products from transgenic plants including plant-
pesticides (Hoban and Kendall, 1992). Consumer skepticism aside, the potential for financial
VIll-3
-------
reward from biotechnology products often justifies the investment risk for certain “risk
taking” investors.
Investors can be public entities, such as the U.S. Department of Agriculture or the U.S.
Environmental Protection Agency, or they can be private entities, such as individuals or other
companies. “Investment” from public entities can take the form of special research grants,
low interest loans, or even public ventures. The Small Business Administration is an example
of a public entity that offers financial assistance (among other things) to small businesses.
The U.S. Department of Agriculture has “invested” in at least one small biotechnology firm
with Small Business Innovative Research (SBIR) grants and through the use of joint contracts.
Investment from private sources can assume many names or forms: venture capital, stock
offerings, equity offerings, debt financing, joint ventures, and corporate alliances are all
means by which small biotechnology companies raise or obtain financing (Kelsey, 1993;
Radin, 1993; Woodword, 1993; Yonehiro, 1992). All of these public and private sources of
investment (and many others) are used throughout the product research, development,
registration, and commercialization stages.
B. Regulatory Flexibility
The Regulatory Flexibility Act (RFA) (P.L. 96-354) requires governmental regulators to make
a conscious effort to lighten the regulatory burden of their actions on “small entities” within
the regulated communities. Regulatory options must be considered in an attempt to avoid “a
significant adverse economic impact on a substantial number of small entities.”
The regulatory options considered under this proposed Rule were determined after extensive
evaluations of the benefit/risk tradeoff between option cost and risk reduction provided. The
Agency has structured the resulting options from a narrow regulatory scope (Option 1), to a
broad regulatory scope (Option 4) and as such, has provided the basis for a “built in”
sensitivity analysis for small firms likely to be affected by this regulation. The tradeoffs
VII1-4
-------
between the benefits and risks of the proposed regulations for plant-pesticides are optimized
under regulatory Option 2, EPA’s proposed scope.
VII1-5
-------
IX. BENEFITS OF REGULATING PLANT-PESTICIDES
The proposed regulations will generate a wide range of benefits for: the public, the firms that
develop and market plants that produce plant-pesticides, the environment, nontarget
organisms, and states, tribes, and territories JJ. Benefits to the public include a Federally
implemented plant-pesticide registration process that should help alleviate concerns regarding
the consumption of transgenic plants that express pesticides and assure the public of a food
supply with minimal risks from harmful pesticide residues. The resolution of uncertainty
regarding regulatory issues should benefit registrants tremendously. With the promulgation of
the proposed regulations, affected firms will no longer need to “hold back” on product
research and development; they will be able to plan ahead to allow for timely product
development and commercialization. With commercialization, the industry should become
attractive to investors who are skeptical to invest in companies without meaningful sales. The
environment will benefit by having safety measures in place to protect against unintended
environmental effects of accidental and deliberate releases of transgenic plants. Nontarget
organisms, including endangered species, will benefit from a registration process that will
carefully consider the potential effects that certain plant-pesticides may have upon them. And
finally, states will benefit by having a set of standardized Federal regulations that will be
more easily conveyed, interpreted, and enforced. Many states may also benefit by not having
to establish their own set of regulations pertaining to genetically engineered organisms.
This chapter will discuss the potential benefits of the proposed plant-pesticide regulations to:
• Society: Human Health,
• Society: Environmental,
• Nontarget Organisms,
• Registrants, and
• States
jj States, tribes, and territories are hereafter referred to as states only.
Ix- ’
-------
The potential benefits attributable to this Rule are expressed in qualitative terms due to the
lack of data and/or difficulty in assigning quantifiable values to such benefits as improved
public perception of biotechnology products, reduced regulatory uncertainty, consistency in
regulations, and environmental risk reduction.
A. Benefits to Society: Human Health
The public’s apprehension regarding transgenic crops includes concerns about changes in the
toxicity and nutrient value of genetically altered food crops (Nazario, 1991; Keehn, 1992).
With the implementation of this proposed Rule, registrant’s will need to submit data showing
that there are no adverse human health effects associated with the consumption of food from
the genetically engineered crop. These data will then be used to set tolerance levels, or
exemptions from the need for tolerance levels for the transgenic crop that expresses the plant-
pesticide. This procedure of testing for health effects and setting tolerance levels has been in
practice for traditional chemical pesticides since 1967 and assures the public that any
pesticide residues found in the nation’s food supply will not exceed tolerance levels. With
the implementation of this proposed Rule, this same assurance should also be extended to
genetically engineered food crops with pesticidal properties.
B. Benefits to Society: Environmental
The environmental concerns associated with agricultural biotechnology center around the
possibility that genetically engineered organisms that are accidentally or deliberately released
into the environment, may multiply and become difficult or impossible to control, or may
transfer genetic material encoded for superior survival capabilities to plants already in the
environment which may thus acquire the ability to outcompete with other organisms in the
natural environment. Such an outcome could disturb ecological stability. The result,
according to one USDA economist, may be,
“...a changed environment with fewer wild species, or it could
include specific economic control costs. Existing crops could
IX-2
-------
become weeds, or the improved crops’ characteristics could
transfer to weeds, thus increasing their vigor (Reilly, 1989)”.
To date, most of the field testing associated with plant-pesticides has been conducted in
contained greenhouses and small field plots under USDA/APHIS regulations. Required
containment, monitoring, and other protective measures resulting from APHIS requirements
have controlled the potential for outcrossing or hybridization between transgenic plants and
any cultivated or wild relatives. However, as field testing moves from small plots to larger
acreages, the possible sexual transfer, through outcrossing of a plant-pesticide gene to a
related plant, is of increasing concern in terms of the potential environmental impacts.
The proposed Rule includes guidance for data needs for registration that would allow EPA to
determine, on a case-by-case basis, if the potential exists for outcrossing and/or gene transfer
from a transgenic plant expressing a plant-pesticide to a cultivated or wild relative. These
informational requirements will greatly reduce the chances of adverse environmental changes
due to releases of genetically engineered organisms as speculated by Reilly.
C. Benefits to Nontarget Organisms
Another primary environmental public concern is the toxicity of plant-pesticides to nontarget
organisms. One risk consideration for plant-pesticides with toxic modes of action is whether
the potential exists for new or significantly different exposures of nontarget organisms to the
pesticides. Some plants may be modified to produce pesticidal substances that may be new to
the plant and thus present new exposures to organisms that associate with the plant. An
important component of the Agency’s evaluation of the toxicological properties of the
pesticide is the way in which the pesticidal substance acts on the target pest. Because this
could also be the way in which the pesticidal substance affects nontarget organisms. Thus,
the Agency’s review will consider the potential effects that plant-pesticides with toxic modes
of action may have on nontarget organisms, particularly endangered species.
IX-3
-------
D. Benefits to Registrants
The lack of Federally implemented biotechnology regulations has been a significant
contributing factor in the sluggish commercialization of agricultural biotechnology products
relative to health care (Burrill and Lee, 1992). Many companies in agricultural biotechnology
are unsure of what will be needed to secure Federal approval to market their plant-pesticides
commercially. This uncertain regulatory environment has prevented companies from devising
long-term business plans, has contributed to delays to large-scale transgenic seed production,
has stifled university research, and has raised concerns that regulatory holdups may give
competing firms marketing advantages (Crawford, 1990). Some policy analysts refer to the
risk incurred by biotechnology firms under this regulatory uncertainty as a tax, because it
hinders biotechnology product development. Establishing a clear regulatory policy is “. .. one
of the least expensive subsidies that government can provide to biotechnology development...”
(Hueth and Just, 1987).
To compound matters, some states have already established regulations pertaining to
genetically engineered organisms and industry leaders are concerned that these regulations
will not always be consistent among states (Larson and Knudson, 1991).
The industry wants and needs regulatory certainty, and stands to benefit tremendously from
these proposed regulations. With the promulgation of this proposed Rule, those companies
that have been developing plant-pesticides can move forward to the commercialization stage.
With commercialization, the industry should become attractive to investors who have
traditionally been skeptical to invest in companies without meaningful sales (Burrill and Lee,
1992). The agricultural biotechnology industry has a promising future with recent valuations
declining to levels where the industry is beginning to look appealing from a historical
perspective (Yonehiro, 1992).
LX-4
-------
E. Benefits to States
The promulgation of Federal registration requirements for plant-pesticides should benefit
states by diminishing the need for state-specific plant-pesticide regulations. Approximately 22
states are considering developing legislation or regulations regarding plant-pesticides
(Crawford, 1990). This proposed Rule would establish Federal registration requirements that
would allow states to expend their scarce human and economic resources elsewhere.
States will also benefit by having standardized Federal regulations that will be easy to
convey, interpret, and enforce. This proposed Rule is designed to clarify and make more
enforceable, registration requirements for transgenic plants that express plant-pesticides, thus
simplifying the efforts of compliance monitoring officials, and in some respects, easing their
regulatory burden.
IX-5
-------
BIBLIOGRAPHY
-------
BIBLIOGRAPHY
Crawford, Mark. 1990. “Biotech Companies Lobby for Federal Regulation”. Science .
248:546-47.
Burnil, Steven G. and Kenneth B. Lee, Jr. 1992. Biotech 93 Accelerating
Commercialization . Ernst and Young, San Francisco, California.
DPRA Incorporated. 1992 (December 15). Regulatory Impact Analysis: Proposed Standards
for Pesticide Containment Structures Under FIFRA as Amended, 1988 . Prepared for
the U.S. Environmental Protection Agency.
DPRA Incorporated. 1992 (November 20). Regulatory Impact Analysis: Proposed Container
Design and Residue Removal Regulations Under FIFRA as Amended, 1988 . Prepared
for the U.S. Environmental Protection Agency.
Federal Register . 1986 (June 26). “Coordinated Framework for Regulation of
Biotechnology.” Vol. 51, No. 123, pp. 23302-23393.
Federal Register . 1987 (June 16). “Plant Pests; Introduction of Genetically Engineered
Organisms or Products; Final Rule. Vol. 52, No. 115, pp. 22891-22915.
ICF Incorporated. 1986 (January). Principles of Regulatory Cost Incidence . Prepared for the
U.S. Environmental Protection Agency.
ICF Incorporated, Development Planning and Research Associates, Inc., and Pope-Reid
Associates, Inc. 1985 (June). Economic Analysis of Resource Conservation and
Recovery Act Regulations for Small Quantity Generators . Prepared for the U.S.
Environmental Agency.
illinois, State of. 1989. Public Act 86-306 . An Act in Relation to Notification and Review
of the Release of Genetically Engineered Organisms into the Environment.
Indiana Agrinews . 1993 (April 9). “Biotech Sales to Reach $20 Billion in 10 Years”. Volume
13, Number 30.
Hueth, Darrell L. and Richard E. Just. 1987 (May) . “Policy Implications of Agricultural
Biotechnology”. American Journal of Agricultural Economics . Vol. 69, No. 2.
Hoban, Thomas J. and Patricia A. Kendall. 1992 (July). “Consumer Attitudes About the Use
of Biotechnology in Agriculture and Food Production”. North Carolina State
University, Raleigh, North Carolina.
Kalter, Robert J. and Loren W. Tauer. 1987 (May). “Potential Economic Impacts of
Agricultural Biotechnology”. American Journal of Agricultural Economics . Vol. 69,
No.2.
-------
BIBLIOGRAPHY (Cont’d)
Keehn, Joel. 1992 (Jan/Feb). “Mean Green.” Buzzworm: The Environmental Journal .
Volume IV, Number 1.
Kelsey, Jerel. 1993 (November 22). Personal communication. President, Lim Laboratories,
Richmond, Virginia. (804) 780-3855
Larson, Bruce A. and Mary K. Knudson. 1991 (August). Public Regulation of Agricultural
Biotechnology Field Tests: Economic implications of Alternative Approaches .
Economic Research Service, United States Department of Agriculture. Technical
Bulletin Number 1793.
Mason, Art. 1993 (January 28). Personal communication. Director of Plant Protection
Division, Minnesota Department of Agriculture. (612) 296-8448.
McCammon, Sally L. and Terry L. Medley. 1990(a). “Certification for the Planned
Introduction of Transgenic Plants into the Environment.” The Molecular and Cellular
Biology of the Potato . United Kingdom: Redwood Press Ltd. Melksham.
Minnesota Environmental Quality Board. 1992 (August). Rules for the Release of
Genetically Engineered Organisms into the Environment . St. Paul, MN.
Nazario, Sonia L. 1991 (August). “Hardy Crops Yield Herbicide Controversy.” The Wall
Street Journal . p. B 1.
North Carolina Department of Agriculture. 1992 (June). Genetically Engineered Organisms
Chapter 106, Article 64 of the General Statutes of North Carolina.
North Carolina Department of Agriculture. 1991 (November). Regulations for Genetically
Engineered Organisms . Title 2, Chapter 48, Subchapter 48E of the North Carolina
Administrative Code.
Radin, David. 1993 (December 2). Personal communication. Owner and founder, CropTech,
Blacksburg, Virginia. (703) 231-4325.
Reilly, John M. 1989 (December). Consumer Effects of Biotechnology . United States
Department of Agriculture, Econqmic Research Service. Agriculture information
Bulletin Number 581.
U.S. Congress, Office of Technology Assessment. 1992 (August). A New Technological Era
for American Agriculture . OTA-F-474. U.S. Government Printing Office,
Washington D.C.
U.S. Department of Commerce, International Trade Administration. 1993 (January). U.S.
Industrial Outlook 1993 . U.S. Government Printing Office, Washington, D.C.
-------
BIBLIOGRAPHY (Cont’d)
U.S. Environmental Protection Agency. 1992 (Fall). Pesticides Industry Sales and Usage,
1990 and 1992 Market Estimates . U.S. EPA, Office of Pesticide Programs, Biological
and Economic Analysis Division, Economic Analysis Branch, Washington, D.C.
U.S. Environmental Protection Agency. 1990 (August 8). Regulatory Impact Analysis:
Proposed Testing and Data Requirements for Registering Pesticides Under FIFRA as
Amended, 1988 . U.S. EPA, Office of Pesticide Programs, Biological and Economic
Analysis Division, Economic Analysis Branch, Washington, D.C.
Wisconsin, State of. 1989 (June 12). 1989 Wisconsin Act 15 . 1989 Assembly Bill 14.
Woodword, Terry. 1993 (November 19). Personal communication. Director, Institute of
Biotechnology, Virginia Commonwealth University, Richmond, Virginia. (804) 786-
8 565.
Yonehiro, Grant. 1992 (October 6). Ag-Biotech Industry Overview . Focus Advisors, Inc.
-------
APPENDIX A
SUMMARY OF
SELECTED STATE REGULATIONS
FOR GENETICALLY ENGINEERED ORGANISMS
-------
Appendix Table A-I. Summary 01 slate regulations In North Carolina, Wlacongln., and Mlnnanota relevant to petk4de-produclng transgenk planla
,
0aS twUoard
Wk qppg n
.
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OaSvflo*SflEOb
WHO REGU L4TES, WHAT IS REGULATED, AND WHAT IS NOT REGULATED
‘ass a. , as , •s ,a ’ e a , .
Genetic Engineering Review Board oenqa’ised of
irate agency, university. rndnstsy, farmer, and
other specifically designated members. is responsible
for issuing peimita.
Depsionene of Agricu lnne. Trade, and Ccnsunier
Protection (DATCP) is lead Mate agency for all environ-
mental releases regulated under EPA/FIF 1tA and USDA
A person may not coraluct e release of a genetically
engineered plant. pesticide, fertilizer, soil
amendment, or plain amendment until a permit for
the release has been obtained from the conunisenoner
of agriculture
Environmental Quality Board (EQB) is designated itt
state onordeistiog organization for srste and Federal
regulatcey activities relating to genetically engineered
organisms A permit fran the EQB is required for
release of any genetically engineered organism, unless
some other stare agency reqarrea s stgnnftcant
environmental permit’ for that release
Regulates itt release and commercial use of genetically
engineered organmame no erder to protect agriculture,
public health, and the environment.
In 1989. state legislature passed an act conartung
notifications. The legislaeteo gives the stale so
tegidatosy autboetty and baa resulted in the state
being characterized ass mate with a NOTIFiCATION
patundere
Regulates the release of certain geneucslly engineered
organisms en protect btunae and tha environsent fran
itt potential for’ significant adverse effects of those
releases
Regulates releases of genetically engineered organisms
to protect Inimnan health and the environment, allow for
the ordcmty and sell development and use of auth
organisms, provide information to the EQB and the
public, and provide orderly and timely process for
making decnsnotn on release permits
Dora not regulate the breeding of plants. asuinals, and
other organieme by tradstncnsl tetltods, uuch as arti-
ficial meeminatson or band pollination.
Eaempss tugs, carneisca. medical devices, and
biological proehicis intended for human use, DATCP
may also waite pare or all of the notification require-
ments for a specified regulated release if DATCP
detenninea such information is not needed to protect
i t t public health or enviruuanens, may also eaempt
a clan of regulated releases from pare or all of the
notification reipiaensenia
Dora not include selective breeding, bybridization, or
nondireceed matagenean
Dora not apply to the direct medical application of
genetically engineered nrgaiusme to humans or anunala,
does not include selective breeding. bybridizarion, or
nondirccted mutagensis
GENERAL INFORMATION ON PERMITS
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Review Board may grant, dew. suspend, modify, or
revoke peimsts.
Two classes of permits.
(I) General permits, for which no permit application
is iequired, includes releasea of gmeticslly engi-
neered organisms between 7/1/90 and 12/31/90. which
are otherwise in eoniplianae with state and Federal
law; releases malt ccntained facilities; releases
fran hntnentstiese processes regulated under FDCA,
and releases or oanmereaal uses of druga or devices
miended for prephylacisc, therapeutic, or diagnostic
use in barnum if regulated under FDCA.
(2) Limited permits. requued for the release or
conurrercial use of geortically engineered organiens
not covered by a general permit
State uses is traditional permitting authority
lntrotcsion into the enviroinrs of a genetically
engineered organism may require a State pennil, not
specifically because the organism was genetically
manipulated, but because the organism falla into a
traditionally regulated category This includes binlng
ical control agents, broadly defined to include
insecticidal plants and disease-reantani plants
Each permit requires an environmental assessment
TIm coninssanoner of the MDA may iasee, revoke, or
change a penmt at any time
Conunissioniat may prescribe terms and conditicns
including, but not limited to, the period for the
genetically engineered plants to be used, monitoring
activttsea, department inspection acbedelea, reporting
of enpenment results, and enpenment termination
procedures.
For any eaperinierual use, a permit from EQB is
required, unless another state agency requires a
‘significant envireeimentsl prmnit for the release.
For any commercial sic, a prmnil from the apprspnsre
desrgiisted agency n mificient.
A release permit from EQB Moot required if a
iigiufncaru environmental prrtns’ is required by
anniher agency A angiuficanr environmental penriiC
means a pernul uaued by another irate agency with the
authority to deny modify, revoke, or place conditions
on the permit (e g, a prmnil tasted by tIre MDA) This
evidently applier only to permits for cornnrrcisl use,
not permits for raprninenrsl use
-------
Appendix Table A.1. Summary of state regulations In North Carolina, WLcconsln,
plants (Continued)
•..
.
.
Norm ca r o li na
,:
,
W l9cuM
Pepl.afAe$cultur e,Irade,assd
Consun er Protiect oe
‘.: .
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1 b taneSota
.
.
,
Env roumo t l QuafltyI ow d Q );
,
,
G ERe *wJoar4
‘I
WHAT PERMIT APPLICATiON (OR NOTIFICATiON) MUST INCLUDE
I
Limited permit mast include copy of die Federal nib’
nuuion appended to, Submital Susiy for the
Release of. Geintically Engineered Organism, OR
if no Federal submission. application en tame or in
forestal presortbedby Review Board. along wetha
Submittal Su sey.
No at)on require. a copy of all the information
submitted to Ike Federal regulatory agency which ia not
coofidential business mfoematsau (CDI). sulninasy of any
CDI n required.
Pound application mast include (I) name and addresu
of applicant. (2) any EPA. USDA, or other Federal
agency ingulatcey application or approval documems.
(3) the piupose or ob 1 eciives of t k e plant. (4) name.
address. and phone member of cooperators or participants
in the state. (5) amount of plants. plant material. or
teeth to be shipped or used in slate. .04(6) other
utfonuatien tequested by cotumiastoner.
Permit application nisi include (I) signed cover letter.
(2) title page end table of contenu. (3) upplicant’a
name, eddies., end telephom member, (4) description
of propceed release including location. use, and pwpora.
reletee date and duration of release, and infoiu,atscn
ouceuaiy to evaluate the proposed release, and any
other requested infooziation, (5) list of .11 known
Federal. State, and local agencies that requite a permit
for the proposed telcase, and (6) Federal application and
Federal CBI-deletedappltcauoui if they have been
prepared. Applicant may make reference to Federal
application in completing application
State toast issue a pennit before a genetically cOg.-
neered organism may be released into the enveonment.
acid, offered for ulc. or distnbuted for release into
the envuo
To the emant possible. the Review Board .hall authorize
lie ma of Federal loestu or fomists, to the count
possible. the Board shall accept for review and base its
thcisaou on the data siihinitted with the Federal appli-
cation, Board bay require such additional data as it
deeim necessaiy to detemtine potential adverse effects
of the release of ike organism en ageanilturu. public
health, and lie
DATCP may reipicit infonnaticn on lbs proposed
regulated release in addition to that subeutied
to. Federal agency, bet Ike effected party does not have
to mihinit that infesmatson to DATCP.
lbs application documents prepared for USDA/APHIS
arc acceptable docunienls aixi smelly contain
sufficient infosmati
Review Dosed may ( I) place ucstetctiona on the number
and location of ocgsmsnm released, method of release.
naming of persona involved wib tie release. disposal
of orgenisina. and other conditions of ma. (2) require
measures to h.snit diaperaal of released organisms or
spread of uweuted genes or gene produces. (3) requite
uwnitoeluig of ike abundance and dispersal of lie
released organism or miertad genes or gene prodiicta.
and (4) deny, suspend, modify, or revoke permit.
The Review Board may subtoit wntten corunenla to any
Feth,ul sgency reviewing a proposed or cmipleted
release. and otherwise participate in any such review.
DATCP may prepares formal comowot on the
regulated release for submission to Federal agency
No provision for peepaul000 of comments to Federal
No provision for preparation of eetnnwnis to Federal
agency
Decision shall be made one permit application within
90 days from ike date 11w cranpleted application is
iecetvsd by the Bca,d. unless a public bearing. Board
may eatend the tuna for making a decotost by no mote
30 day.. for good cause
COMMENTS/PUBUC NOTICE/PUBLIC HEARING
1
-------
Appendix Table A.1. Summary of state regulations In North Carolina, Wisconsin, and Mlnn ota relevant to putlcIde.produclng transgenlc plants (Continued)
Within 15 days of receipt of application. Board shall
poblub notice and a beieldesaiplseno(ulm proposed
release. unleis Board intends to deny application
Any person may suqntsi & pUblic hoaxing, if public
bearing is held decision on permit application must
be mide within 120 days after cossipleted application
is rueeswd, with 30-d&y.ssensionpouible; Board
may. with w ritten conoent of applscani, mend the
period to review the application
Within days of receiving notification matenals,
written notice of receipt mast be motto ielcvant
county and municipal authorities, publication of a
legal notice also requited in county for which
release is liropoled.
When preparing formal comunot for Federal regulator.
State may bold sntormatiou oneung and provide so
opportunity for the public to cerumunt.
An Enviromirnial Assesseneot Woiktheet (BA W) is
required for each release.
Within 15 days of application acceptance, applicant
muse publish notice along with Boveonnienial Assess-
nent Wutslmet (RAW) in release area mwspapcr, to
certain persons, and to certain gorcinoental units.
EQB mast publish notice in the BQB Monitor RQB mast
also publish notice of draft release permit docunents
in Monitor arid provide copies of drift dootasenu to
specific pauses
30-day period allowed for review and comment on draft
release permit docunsents anti RAW, one or mote public
bearings may be bold if BQB determines it arceusry
or useful, contested case hearing may be held.
No county or municipality shill enact any regulation
or ordinance regulating the release of genetically
e rigineeivdorpnssne
,
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P re 1rade and ”
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•
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.
D4 Thn0to(Mr ci4Ii re MD#s)
,
,
,‘
. ,
Env roqnsuW
,
Quality
.
Bn ’d
(EO1)’
A 30.day public co es& period is required for each RAW
-------
Notification must include (1) copy of all infomiation
being submiued to Federal regulatosy, except CBI and
(2) summaiy of CBI sufficient to enable reviewer to
prepare comments and to provide information to public.
Pennit application shall include (I) information on
responsible person and type of pennit requested (for
impoitation, interstate movement, or release Into the
environment), (2) infonnation on donor organism(s),
recipient organisms(s), vector or vector agent(s),
constituent of each regulated article which is a product.
and regulated article, (3) uilonnation on persons who
developed and/or supplied the regulated amcle. (4)
descnption of the means of movement, (5) descnption
of anticipated or actual expression of altered genetic
material in the regulated article and how it differs from
nonmodified parental organism. (6) descnption of
molecular biology of system which is or will be used to
produce regulated aiticle, (‘7) country and locality where
Appendix Table A-2, Summary of state regulations in Illinois and Oklahoma relevant to
pesticide-producing transgenic plants
: :
Do!Al lne!J lh lre DepLment&A& kulture
WHO REGULATES, WHAT IS REGULATED. AND WHAT IS NOT REGULATED
IL requires notification and review; does not pemut. The State Board of Agnaulture shall have the authonty
The IL Dept of Agriculture is the reviewing department to issue, renew, deny, suspend, and revoke any pemiit
for any regulated release subject to any federal require- issued according to the provisions of the Oklahoma
ment in the coordinated framework, except a 1’SCA Agnculture Biotechnology Act.
requirement; the IL EPA is the reviewing dept for any
regulated release subject to TSCA; if regulated release
subject to both TSCA and any other Fed requirement
in coordinated framework, both depts review, enter into
memorandum of understanding, and designate one dept
as the lead reviewing dept.
Regulates the release of genetically engineered orga- Regulates the “release into the environment” of any
msms into the environment if the person proposing to “regulated arncles.” Release into the environment means
commence the release has to (I) notify a Federal regula- the use of a regulated amcle outside the constraints of
br, or (2) has to secure the approval of or a permit or physical confinement that are found in a labosatosy.
license from a Federal regulator before commencing greenhouse, fermenter, or other contained structure.
the release, or (3) secure a determination by a Federal Regulated amcles are any organisms altered or produced
regulator of the need for notification, approval, through genetic engineering.
licensing or issuance of a permit under coordinated
framework: other releases not captured in IL.
Ad does not apply to any drug, cosmetic, medical device All persons who have filed Assurances of Compliance
or biological product intended for human use and regu- with federally established guidelines with their
heed under FFDCA; past or all of notification require- Institutional Biosafety Committee and/or applied for
ments maybe waived; a class of regulated releases may regulatory approval(s) from the appmpnale federal
be exempted from part or all of notification require- agency, as exempt from the provisions of the Act.
meats.
GENERAL INFORMATION ON PERMITS
Permits not required: rather, a notification and review No person shall maintain a regulated article without a
process is required. permit issued by the Board of Ag (unless us compliance
with a federal agency).
WHAT PERMIT APPLICATION (OR NOTIFICATION) MUST INCLUDE
-------
Appendix Table A-2. Summary of state regulations in Illinois and Oklahoma relevant to
pesticide-producing transgenic plants (Continued)
imnois
-
Oklahoma
Department of A icu1ture
- Department of Agriculture
donor organism, recipient organism, vector or vector
agent, and regulated article were collected, developed,
and produced, (8) description of the purpose for the
introduction of the regulated article, (9) quantity of
the regulated article to be introduced and proposed
schedule and number of introductions, (10) descnption
of the processes, procedures. and safeguards which have
been used or will be used in the country of origin and
in U.S. to prevent contamination, release, and dissemi-
nation in the production of the donor organism, recipient
organism, vector or vector agent, constituent of each
regulated article which is a product, and regulated
article, (11) description of the intended destination, uses,
and/or distribution of the regulated article, (12) descrip-
tion of the proposed procedures, processes, and safe-
guards which will be used to prevent escape and
dissemination of the regulated article at each of the
intended destinations, (13) description of any biological
material and (14) description of the proposed method
of final disposition of the regulated article.
COMMENTS/PU
BLIC NOTICE/PUBLIC HEARING
Reviewing department may prepare a formal comment
No provisions for comments, public notice, or public
for submission to the Federal regulator within time-
hearings.
frame established by Federal regulator
To assist in preparation of comment, dept. may (1) hold
an information meeting, (2) provide opportunity for
public comment, (3) conduct a technical review, and (4)
seek assistance of an IL university faculty and staff or
the Dept of Public Health
No less than 10 days prior to any regulated release,
person proposing to commence such release shall send
written notice giving summary details to the CEO of the
county in which release is proposed and to mayor or
president of any municipality in such county if release
is within its corporate limits; notice sent to reviewing
dept at same time as to local officials
-------
APPENDIX B
ALTERNATIVE TO THE
VIRAL COAT PROTEIN EXEMPTION--
COSTS OF EPA REGULATION OF
VIRAL COAT PROTEINS
-------
APPENDIX B
ALTERNATIVE TO ThE
VIRAL COAT PROTEIN EXEMPTION--
COSTS OF EPA REGULATION OF
VIRAL COAT PROTEINS
Some plant varieties are being engineered to express as part of their genome, the coat proteins
of viruses that infect them. These engineered proteins (VCPs) assist the plant to resist viral
attack and disease. EPA is considering three potential approaches to the regulation of VCPs.
The Agency’s preferred approach (alternative 1) is to exempt VCPs from regulation under
FIFRA and FFDCA. Under one of the alternative approaches (alternative 2), the Agency
would establish a series of criteria that, if met, would exempt certain VCPs from FIFRA
review. VCPs that would be captured for review under alternative 2, would be those in
situations in which the VCPs could spread to wild relatives of the VCP-engineered plant.
Under alternative 2, VCPs would be exempted from FFDCA regulation. Under the third
approach (alternative 3), all VCPs would be reviewed under RFRA and exempted under
FFDCA.
Although EPA would exempt VCPs under the preferred regulatory scope of Option 2 as
described in Chapter IV (alternative I discussed above), it is still desirable to estimate the
costs of their regulation as the proposed Rule will discuss other options (alternatives 2 and 3
described above). This appendix presents the anticipated data needs under the scenario that
VCPs would be regulated by EPA, and the associated compliance costs of these data needs.
Two cost analyses are estimated: (1) only VCPs in plants with wild relatives in the United
States are regulated (alternative 2), and (2) all VCPs are regulated, i.e., those with and
without wild relatives in the U.S. (alternative 3).
To estimate compliance costs, it is necessary to I) determine what kinds or types of tests will
be needed for VCPs in plants with wild relatives in the U.S. and for those VCPs in plants
without wild relatives in the U.S., 2) obtain the costs for the generation and submittal of
testing information, and 3) project the number of potential VCP submissions the Agency may
receive for registration.
-------
USDA/APHIS requirements for environmental release permits (ERPs) serve as the existing
baseline of Federal requirements for companies that are testing genetically engineered plants
(including VCPs) in field tests. Once the costs for certain data currently required by
USDA/APHIS are accounted for as the baseline costs, the additional costs associated with the
data needs directly attributable to EPA registration needs for VCPs, are the costs of regulating
VCPs.
A. General Methodology
The costs of regulating VCPs are developed and compiled in the same manner as were the
costs of regulating other plant-pesticides. For a full explanation of the steps involved in
estimating compliance costs, please see Chapter VII.
1. Unit or Individual Testing Costs
Cost estimates for performing individual tests were either obtained from secondary sources,
EPA experts, or industry specialists. All of the anticipated data needs for VCPs are new to
the Agency and as such, none have currently established protocols.
A lower and upper bound for the unit test costs were created. The lower bound test costs
were either estimated in today’s costs by the Agency or industry contacts, or were obtained
from secondary (1989) sources and adjusted for the inflation in test costs since 1989j/ by a
factor of 10 percent for each year up to 1993 to represent the current unit test costs. These
1993 inflation-adjusted direct cost estimates provided the basis for the lower bound test costs.
Upper bound test costs were estimated as the lower bound test costs plus 25 percent to
account for some of the additional effort needed to revise protocols and endpoints, and to
account for the administrative burden associated with consultations with EPA personnel
jf According to some industry representatives, recent EPA reregistration requirements for
existing chemicals has put an increased demand on private laboratory testing services
to complete the new testing requirements. This increased demand for testing services
has caused increased costs for these services. The annual increase in test costs is
believed to have increased faster than the overall inflation rate and thus, the use of an
annual 10% inflation rate.
-------
regarding specific data needs. Midpoint test costs were calculated by summing the lower and
upper bound estimates and then dividing by two.
The costs associated with the production of the pesticidal substance and its purification for
testing purposes were estimated and included in the case studies. A full discussion of this
cost component can be found in Chapter VII.
2. Development of Case Studies
Case studies are used to estimate the potential costs of registering VCPs in plants without
wild relatives in the U.S. and VCPs in plants with wild relatives in the U.S.
a. Case Study 1A: Viral coat proteins in plants with no wild relatives in the U.S .
Case Study IA presents the anticipated data needs and associated costs for the registration of
a VCP in plants without wild relatives in the U.S. A tomato plant would be an example of a
recipient crop without wild relatives in the U.S. Other examples of transgenic crops with
VCPs and no wild relatives in the U.S. that may be developed in the future include alfalfa,
corn, potato, and soybean. As shown in Appendix Table B- 1, it is estimated to cost a
registrant between $15,400 and $23,100 with a midpoint cost of $19,200, to fulfill the
anticipated data needs for the registration of Case Study 1 A type VCP. Total costs are
estimated as a range to account for the varying degrees of test protocol development needed
and for the amount of administrative burden that may be incurred by individual registrants.
Many of the data needs for Case Study 1A type VCPs will already have been fulfilled by the
time the registrant seeks EPA registration. The costs associated with product analysis and
residue analysis data needs are attributable to USDA/APHIS permitting requirements and as
such, are not a cost of regulating VCPs (these costs are later subtracted from total costs to
obtain incremental costs). Tier I biological fate data needs under the environmental fate
subheading, may range from a literature search which would cost approximately $1,500, to
minimal testing in a greenhouse that may cost up to $2,000. Terrestrial and aquatic nontarget
organisms effects data are also not needed for VCPs.
-------
Appendix Table B-i. Case 1A: Potential data needs for viral coat proteins in plants with no witd relatives
In the U.S.
- - - -
- Dala - -
- - -
- - -
- - :
:
- -
-
.Ra iimdt/ -
-
-
Botutd
£ I2/
u er
Boimd
I t t
- M d
Paul
I 4t
-
-
- -
..
-.
I. ProductAnalvsis 5 / N 8858 11072 9,965
1 Product identity
2 Descnption of manufactured matenals
a Source of genetic material
b Vector system
c Recipient
P. Residue Analysis 6 ’
1 DescrIbe inserted genes expression and N
estimation of number of gene copies,
If appropnate
2 Gene expression ckinng plants bfe cycle N
3 Concenlration (or range estimate) of PP ui N
plant plant parts, and analytical methods used
Envfrenmenlal Fate
11ERI:
BIOLOGICAL FATE ANALYSIS 7/ 1,500 2,000 1,750
1 Taxonomy N
2. Geo9raphy N
3 Ontogeny/Cultivation N
4Polluiat iontype - N
-I n -‘ ‘lf-tf’ IZj —
None needed
V. TerresfrfalandAqz * Nontsip. t Or thsns Effsi
None needed
Cost to Produce Pesticide! SUbstance 8/
TOTAL COST FOR CASE STUDY 1A
5.000 10.000 7.500
$15,358 $23,072 $19,215
Footnotes.
1/N = Always needed, SN = Sometimes needed
2/Alt estimates have been usted annually to 1993 doflars by an average inflation rate of 10%
at Upper bound cost was estimated as die lower bound cost plus 25% to account for a 10% administrative burden and a 15% protocol development burden
Calwlated (Lower bound + Upper botmdy2.
5/Source for Product Analysis: Federal Register. Vol. 52, No 115
6/These costs am included tithe cost of Product Analysis.
7/ her I blelogical fate analysis data needs may range from a literature search (approximately $1500) to minimal testhg conducted in a
greenhouse (approximately $2,000). The $1,500 lit seath cost is based on about 20 hours of work for a hterature review & write up at a
fully loaded hourly wage of approximately $77 for a “technician” (Source EPA, 1990, U.S. Dept of Commerce, venous issues, EPA, 1993)
The $2,000 greenhouse testh ’ig estimate was pro’nded by rnclusby specialists
81 EPA cost estimate for the rogisirant to produce the peslicirfal substance and purify it for testing purposes.
-------
b. Case Study 2A: Viral coat proteins in plants with wild relatives in the U.S .
Case Study 2A presents the anticipated data needs for VCPs in plants that have wild relatives
in the U.S. Appendix Table B-2 demonstrates that the data needs and associated costs of
registering a VCP in a plant with wild relatives in the U.S. will cost a registrant between
$61 0.000 and $766,400 depending upon the amount of protocol development needed and
administrative burden incurred. As with Case Study IA, several of the data needs in Case
Study 2A will have already been incurred by the time the registrant seeks EPA registration.
Not all VCPs in plants with wild relatives in the U.S. will need Tier III biological fate
analysis data. It is estimated that only one out of five (20%) submissions of VCPs in plants
with wild relatives in the U.S. will need Tier HI testing. However, no adjustment in costs
have been made to account for only 20 percent of the submissions of Case Study 2A type
VCPs needing Tier ifi biological fate data. This is because at this point, the Agency has no
way of knowing which submissions will require Tier 111 data and which will not, and rather
than err on the conservative side of costs, has erred on the high side of costs. Thus, the total
cost to register a Case Study 2A type VCP is likely to be overstated for the average
submission.
2. Methodology for Determining Total Costs
To estimate the total costs associated with the regulation of VCPs, the total cost of the
anticipated data needs by case study were multiplied by the projected number of annual VCP
submissions by case study. As with other plant-pesticides, compliance costs for VCPs were
estimated for a 10-year period.
Based on the observation that the number o f VCPs in development and field testing is about
equal to the number of other types of plant-pesticides in development and field testing, it is
estimated that the total number of VCP submissions between years 1-10 (45 total
submissions) will be equivalent to the number of other types of plant-pesticide submissions
between years 1-10 as shown in Appendix Table B-3.
-------
Appendix Table B-2. Case 2A: Potential data needs for viral coat proteins in plants with wild relatives
in the U.S.
-
.
-
- -
•
-
.
- -
.Ee mated
1a Need Cost
Lo
Mid
- - D a
-
Mwe
Re àed11 -
- floitnd
-
Buwid
£1 5 938I
Polat
114 3tt41
L PmductAnatvsis 5 / N 8,858 11.072 9.965
1 Product identity
2 Descnption of manufactured matenals
a Source of genetic matenal
b Vector system
c Recipient
IL ReeJdueAn s 6 ’
1 Descnbe inserted genes expression and N
estimation of number of gene copies.
if apprepnate
2 Gene expression clunng plants life cycle N
3 Concentration (or range estimate) of PP in N
plant, plant parts, and analytical methods used
ifi. EnvlmnmegdRl Fate
TIER I
BIOLOGiCAL FATE ANALYSIS 7/ 1,500 2.000 1.750
1 Taxonomy N
2 Geography N
3. Ontogeny/Cultivaticn N
4 Pollination type N
TIER II
BIOLOGICAL FATE ANALYSIS 8/
1 Hybnd viability N 29.440 36.800 33,120
2 Pollen viability N 7,400 9,250 8,325
TIER III
BIOLOGICAL FATE ANALYSiS 8/ 557,800 697,250 627,525
I Selective advantage
a. Host range SN
b Growth and development SN
2 Dispersion
a Field testing SN
“ ‘ 4 ’r’i’ 4 ” -1 r ILI-I li
None needed
V. TerresfrI andAeiwfr Nont se( Ora .niama Elf ac
None needed _____________________________
Cost to Produce Pesticide! Substance 9/
TOTAL COST FOR CASE STUDY 2A
5000 10000 7500
$609,998 $766,372 $688,185
roomoies
1/N = Always needed, SN = Sometimes needed
2/All estimates have been adjusted annually to 1993 cbllars by an average inflation rate of 10%
3/Upper bound cost was estimated as the bver bound cost plus 25% to account bra 10% administrative burden and a 15% protocol development burden.
4/Calculated: (Lower bound cost + Upper bound cost)12
5/Source for product analysis cost Federal Register Vol 52. No 115.
6/ These costa are included in the cost of Product Ma$ysis.
7! Tier I biological fate analysis data needs may range from a literature search (approximately $1,500) to minimal testing conducted in a
greenhouse (approximately $2,000). The $1,500 lit search cost is based on about 20 hours of work for a literature re iow & wnte up at a
fully loaded hourly wage of approximately $77 for a techniciair (Source: EPA, 1990, U S. Dept of Commerce. venous issues, EPA. 1993).
The $2,000 greenhouse testhig estimate was provided by industry specialists
8/ Source. 1993 industry estimate.
9/EPA cost estimate for the registrant to produce the pesticidel substance and puffy it for testing purposes
-------
Appendix Table B-3. Projected Viral Coat Protein Submissions by Case Study and Year
:.
y 1
Year 2
Year 3
Year 4
Yew 8
Year 6
Year 7
Year 8
Year 9
Year 10
Total
Case Study 1 A
1
1
2
2
2
3
3
3
3
3
23
(VCPs in plants without
wild relatives in the U.S.)
Case Study 2A
1
1
1
2
2
3
3
3
3
3
22
(VCPs in plants with
wild relatives in the U.S.)
Total
Submissions 1/
2
2
3
4
4
6
6
6
6
6
45
1/ The total number of VCP submissions between years 1-10 is estimated to be equal to the total number of plant-pesticide submissions (45)
during this time period. This is based on the observation that the number of VCPs being developed and field tested is about equal
to the number of other types of plant-pesticides being developed and field tested. It is assumed that nearly equal numbers of VCPs
in plants with wild relatives in the U.S. and in plants without wild relatives in the U.S. are being developed, thus, the nearly
equal split in estimated submissions.
-------
Furthermore, nearly equal numbers of VCPs in plants with wild relatives in the U.S. and in
plants without wild relatives in the U.S. are being developed. This observation was used to
allocate the total number of VCP submissions between VCPs in plants with wild relatives in
the U.S. and those in plants without wild relatives in the U.S. As shown in Appendix Table
B-3, approximately 50 percent of the total VCP submissions are estimated to be of the Case
Study 1 A type (in plants without wild relatives in the U.S.) and 50 percent of Case Study 2A
type (in plants with wild relatives in the U.S.).
B. Estimated Direct Compliance Costs
Appendix Table B-4 presents the total compliance cost estimates from years 1-10 for the
regulation of (1) VCPs in plants with wild relatives in the U.S., and (2) all VCPs. If EPA
regulated only VCPs in plants with wild relatives in the U.S., midpoint total costs would
range from $688,200 in year 1 to $2.1 million in year 10. If the Agency decided to regulate
all VCPs (those in plants with as well as without wild relatives in the U.S.), compliance costs
would range from $707,400 in year 1 to $2.1 million in year 10. Included in these total costs
are the midpoint baseline costs (about $10,000) associated with USDA/APHIS permitting
requirements.
In year I, it was predicted that the Agency would receive a total of two VCP submissions;
one submission of a VCP in a plant with wild relatives in the U.S. and one submission in a
plant without wild relatives in the U.S. (Appendix Table B-3). From Appendix Tables B-i
and B-2 it was estimated that the midpoint cost of the data needs would be approximately
$19,200 for VCPs in plants without wild relatives in the U.S. and $688,200 for VCPs in
plants with wild relatives in the U.S. Thus, the total cost to regulate VCPs in plants with
wild relatives in the U.S. in year I is $688,200 (1 X $688,200) and the total cost to regulate
all VCPs is $707,400 ( [ 1 X $688,200] + [ 1 X $19,200]). In year 6, it was predicted that a
total of six VCP submissions would be received by the Agency. Again, the midpoint cost to
register these types of VCPs are shown in Appendix Tables B-i and B-2. The total cost to
regulate VCPs in plants with wild relatives in the U.S. in year 6 is estimated at $2,064,600
million (3 X $688,200), and for all VCPs the total cost is predicted at $2,122,200 ( [ 3 X
-------
Appendix Table B-4. Total Compliance Cost Estimates for Viral Coat Proteins, Years 1-10
Case Study 1A
(VCPs in plants without
wild relatives in the U.S.)
ui Tr1It • aLLctnc:L ilt JI1
Case Study 2A
(VCP5 In plants with
wild relatives in the U.S.)
688,200 688,200 688,200 1,376,400 1,376,400 2,064,600 2,064,600 2,064,600 2,064,600
2,064,600
Case Study 1A + 2A
(Total cost to
regulate all VCP5)
707,400 707,400 726,600 1,414,800 1,414,800 2,122,200 2,122,200 2,122,200 2,122,200
2,122,200
qj;
‘C iL .
X r2 X,ar3
Year4
Ye r5
•
Ye ar S . tcar1
Year f t
1eatL .
1 YoariQ
($)
19,200 19,200 38,400 38,400 38,400 57,600 57,600 57,600 57,600 57,600
1/ Calculated by multiplying the nidpoint compiance cost estimate by case study (Appendix Tables B-i & 8-2) by the number of projected viral coat protein submissions
by case study (Appendix Table B-3).
-------
$688,200] + [ 3 X $19,200] ). This methodology can be used to determine all total costs by
year as shown in Appendix Table B-4.
4. Annualized Incremental Compliance Costs
In order to estimate annualized incremental compliance costs for the regulation of VCPs in
plants with wild relatives in the U.S. and the cost for the regulation of all VCPs, it was
necessary to 1) subtract baseline costs from total costs, and 2) discount and annualize the
resulting incremental costs.
a. Incremental compliance costs
As was previously noted, the costs associated with product analysis and residue analysis data
needs are attributable to USDA/APHIS permitting requirements and as such, are considered
the baseline costs of regulating VCPs. Looking back at Case Studies 1 A and 2A, it can be
seen that baseline costs (product analysis data needs) range from $8,858 to $11,072, with a
midpoint value of $9,965. Calculating the difference between the projected total compliance
costs and the current baseline costs, yields the incremental compliance costs associated with
the regulation of VCPs in plants with wild relatives in the U.S. as shown in column one of
Appendix Table B-5 and those incremental compliance costs associated with the regulation of
all VCPs as shown in column one of Appendix Table B-6.
b. Discounting incremental compliance costs
The 10-year incremental compliance cost estimates as presented in column one of Appendix
Tables B-S and B-6 are nondiscounted costs stated in 1993 dollars. For VCPs, these costs
will not be evenly allocated by industry over the 10-year period. Instead, cash flows will be
uneven. To account for these uneven cash flows, to allow for the time value of money, and
to determine an equivalent, constant-level cost per year (also called an equivalent annual cash
flow or annual revenue requirement), discounted cash flow procedures were used. For a full
discussion of the procedures used to discount cash flows, please see Chapter VII.
-------
Appendix Table B-5. Incremental and Annualized Compliance Costs to the Private
Sector for VCPs in Plants with Wild Relatives in the U.S.,
Constant 1993 Dollars. Discounted at 10% for 10 Years
Compliance Costs for VCPs In Plants with Wild Relatives In the U S .
- Net
Cash Present
Year Incremental 11 Flow 21 Value 31
($)
1 678,200 678,200 616,484
2 688,200 688,200 568,453
3 688,200 688,200 516,838
4 1,356,400 1,356,400 926,421
5 1,376,400 1,376,400 854,744
6 2,034,600 2,034,600 1,147,514
7 2,034,600 2,034,600 1,043,750
8 2,034,600 2,034,600 950,158
9 2,034,600 2,034,600 862,670
10 2,034,600 2,034,600 785,356
Total NPV $8,272,389
Annual Revenue
Requirement 4/ $1,346,293
Annual Revenue
Requirement
per Submission 5/ $61 1,951
1/ Calculated: [ Total cost to regulate VCPs in plants with wild relatives in the U.S. (Appendix Table B-4)]
- [ Baseline costs (Appendix Tables B-i and B-2) X number of VCP submissions (Appendix Table B-3)].
2/ Cash flow is equivalent to the incremental costs to regulate viral coat proteins.
3/Amount in “Cash Flow” column X the discount factor.
4/ ARR = Capital Recovery Factor (CRF) X Total Net Present Value (NPV).
CAF = (1 + )Afl (I) / (1 + i)An - I
Where: i = the real rate of return on invested capital, exduding inflation (10%)
n = the effective operating life of the asset (10 years)
5/ Calculated: Annual revenue requirement/average annual number of VCP submissions (2.2).
-------
Ap
pendlx
Ta
ble B-6. Incremental and Annualized Compliance Costs to the P
Sector for All Viral Coat Proteins, Constant 1993 Dollars,
Discounted at 10% for 10 Years,
rlvate
.•
:
COlT Hence Costs for All Viral Coat lotelns
.Net
cash Present
Year
Incremental 1/ flow V Value 3!
($)
1 687,400 687,400 624,847
2 707,400 707,400 584,312
3 696,600 696,600 523,147
4 1,374,800 1,374,800 938,988
5 1,414,800 1,414,800 878,591
6 2,062,200 2,062,200 1,163,081
7 2,122,200 2,122,200 1,088,689
8 2,122,200 2,122,200 991,067
9 2,122,200 2,122,200 899,813
10 2,122,200 2,122,200 819.169
Total NPV $8.51 1,704
Annual Revenue
Requirement 4/ $1,385,241
Annual Revenue
Requirement
per Submission 5/ $307,831
1/ Calculated: [ lotal cost to regulate all VCPs (Appendix Table B-4)] - [ (Baseline costs
(Appendix Tables B-I and B-2) X number of VCP submissions (Appendix Table B-3)1.
2/ Cash flow is equivalent to the incremental costs to regulate viral coat proteins.
3/ Amount in “Cash Flow” column X the discount factor.
4/ ARR = Capital Recovery Factor (CRF) X Total Net Present Value (NPV).
CRF = (1 + j)A (i) / (1 + j)Afl - 1
Where: i = the real rate of return on invested capital, exduding inflation (10%)
n = the effective operating life of the asset (10 years)
5/ Calculated: Annual revenue requirement/average annual number of VCP submissions (4.5).
-------
Appendix Tables B-5 and B-6 present the annualized incremental compliance costs (net
present value) to the private sector for VCPs. Annual revenue requirements for those firms
currently developing and testing plant-pesticides (including VCPs) are estimated at slightly
over $1.3 million, or approximately $612,000 per VCP submission per year (based on an
annual average of 2.2 VCP submissions per year), if the Agency found it necessary to
regulate VCPs in plants with wild relatives in the U.S. if the Agency were to regulate all
VCPs, including those in plants without wild relatives in the U.S., the total annual revenue
requirement is predicted at approximately $1.4 million for those firms currently developing
and testing plant-pesticides, or $307,800 per VCP submission per year (based on an annual
average of 4.5 VCP submissions per year).
-------
APPENDIX C
PLANT-PESTICIDE CASE STUDIES
-------
Appendix Table C-i. Case 1: Potential data needs for plant-pesticides in plants with the pesticidal substance derived
from the monera kingdom, with no wild relatives in the U.S., and with information
—— __ _L____. !_ .!_ _.. .J S... ..L..... .‘f a
aval
on .ne
a,a, t
anu n,
luricInvi —-
U u
C
•
Data
Need
-
:
-
-
- When
Reer ifredil
f ower Upp r
Sound Bound Point
ft993S 2I 1i99aS1.V (i9 3 t41
I. ProductAnalvs,s 5 ’ N 8.858 11.072 9.965
1 Product identity
2 Descnption of manufactured matenals
a Source of genetic matenal
b Vector system
c Recipient
IL Residue Analysis 6 ’
1 Describe inserted genes expression and N
estimation of number of gene copies,
if appropriate
2 Gene expression dunng planrs lute cycle SN
3 Concentration (or range estimate) of PP in N
plant, plant parts, and analytical methods used
ilL En vwonmanta’ Fate
hER I
BIOLOGICAL FATE ANALYSIS 7/ 1,500 2,000 1.750
I Taxonomy N
2Geography N
3 Ontogeny/Cultivation N
4 Pollination type N
CHEMICAL EXPOSURE 8/
ifloute SN
2Level SN
W. Hrnr,ai Health Effects dMarnmaIian Toxicoioav
I Acute oral toxicity for rodent N 5.856 7.321 6.588
and/or in vitro digestibility assay
— --— =I --.i-_...---_.- ni-- i. - J 1 1 r I-
TIER I
1 Honey bee larval test N 4.392 5.490 4.941
2 Honey bee toxicity in pollen N 5,856 7.321 6,588
3 Nontarget insect N A O
Cost to Produce Pest,adal Substance 9 /
TOTAL COST FOR CASE STUDY 1
5.000 100 00 750 0
$54,889 $12,486 $63,687
Footnotes.
1/N = Nways needed. SN = Sometimes needed
2/Unless otherwise noted, costs are from a 1990 EPA RIA. All estimates were ar sted annually to 1993 dollars by an average inflation rate of 10%
3/Upper bound cost was estimated as the l er bound cost plus 25% to account for a 10% athanistrative burden and a 15% protocal development burden
4/ Cakulated (Lower bound cost + Upper bound cost)/2.
5/Source for product analysis cost Federal Register. Vol. 52. No 115
6/ These costs are included in the cost of Product Analysis
7/Tier I buokigucal fate analysis data needs may range from a literature search (approximately $1,500) to minimal testing conducted in a greenhouse
(approxenataly $2,000) The $1500 It. search cost is based on about 20 hours of wodc for a literature reviow & write up at a fully loaded hourly
wage of approximately $77 for a Iechnuaasr (Source. EPA, 1990. US Dept. of Commerce, venous issues, EPA. 1993)
The $2,000 greenhouse testing estimate was provided by industry specialists
8/ Will be required when there is a toxicological concern for the gene product. lbs information is part of registranfs R&D expenses
9 EPA cost estimate for the registrant to produce the pestiactel substance and punfy utter’ tasting purposes.
-------
Appendix
Table C-2. Case 2: Potential data needs for plant-pesticides in plants with the pesticidal substance derived from
the plant kingdom or same plant family, Ø1 no ld relatives in the U.S., and with information
available on the characteristics and funóU on 1I.e aene srOdiiCt
within
:
:
- - - - - - Upper -
D$a - - - When Bcrmd actm Point
N e ed -- - Reet ifted1 l f1Q O t2f - (1 a O 21
L P DdLidAflal is . , N 8.858 11,072 9,965
1 Product identity
2 Description of manufactured matenals
a Source of genetic material
b Vector system
c Recipient
IL Residue AnaWsis 6, ’
1 Describe inserted genes exprsssion and N
estimation of number of gene copies.
if appropriate
2. Gene expression dunng plants life cycle SN
3 Concentration (or range estimate) of PP in N
plant, plant parts, and analytical methods used
DL Enwcnmen Fat .
11ERI
BIOLOGICAL FATE ANALYSIS 7/ 1,500 2,000 1,750
I Tamnomy N
2.Geograpby N
3 Ontogeey/Cuftivation N
4 Pollination type N
CHEMICAL EXPOSURE 8/
lRoute SN
2LeveI SN
IV. Human H h Effects and Mammalian Toxiccloav
1 Acute oral toxicity for rodent N 5,856 7,321 6,588
and/or in vitro digestibility assay
T.- - - I 11=
TIER 1
1 Honey bee larval test N 4.392 5.490 4,941
2 Honey bee toxicity in pollen N 5,856 7.321 6,588
3 Nontai et insect N 23,426 29282 26,354
4 Avian oral LD5O (mallard ci ’ bobwhite) N 6,588 8,236 7.412
5 Avian cletary LC5O (mallard and bobwhite) N 14,641 18,301 16,471
SN
TIER II.
1 Field test for pollinators
Cost to Produce Pest,cida! Substance 9/
TOTAL COST FOR CASE STUDY 2
13.177
16.471
14.824
5.000
10.000
7.500
$89,295 $115,494 $102,394
I-ootnotes
1/N = Always needed; SN = Sometimes needed
V Unless otherwise noted, costs am from a 1990 EPA RIA All estimates were ac usted annually to ‘93 dollars by an avarage inflation rate of 10%
3/Upper bound cost was estimated as the lower bound cost plus 25% to account for a 10% amn*ustiative burden and a 15% protocal
devalopment burden
4/Calculated (Lower bound cost + Upper bound costy2
5/Source for product analysis cost Federal Register, Vol. 52, No 115
6/These costs ate included in the cost of Product Analysis
7/Tier I biological fate analysis data needs may range from a literature search (appm dmately $1,500) to minimal testing conducted in a greenhouse
(approximately $2,000) The $1,500 lit search cost is based on about 20 hours of work for a literature review & wnte up at a fully loaned hourly
wage of approximately $77 for a technician (Source. EPA, 1990, US Dept of Commerce, various issues; EPA. 1993)
The $Z000 greenhouse testing estimate was providsd by industry specialists
81 Will be required when there is a toxicological concern for Ihe gene product. The information is pal of registrants R&D expenses.
9/ EPA cost estimate for the registrant to produce the pesticsdal substance and purify itfor testing purposes.
-------
Appendix Table C-3. Case 3: PotentIal data needs for plant-pesticides In plants with the pesticidal substance derived
from the monera kingdom, with Id latives In the U.S., 4 inlormat n available an the
n.1 func’Jan m
-
-
-
- -
-
-
- -
EalbnatedOa?aNea4 *
Laser U MI
OM*
- -
Wb
- -- - Bcu i td
P 0 8*
4esd
-. -
- lheehedtl
{1993$l -2T
if1993-* laJ
14963$ ) 4T
1 Product identity
2 Desaiption of manulam,red materials
a. Source of genetic material
b Vector system
c Reapent
IL R thieAnaivs 6 ’
I Desaibe inserted genes expression and
estimation of number of gene cepies.
if appropriate
2 Gene expression dunng plant’s life cyde
3 Cortentration ( cx range estimate) of PP in
plant, plant parts, arid anaf cal methods used
m En*crw’nenfai Fate
TIER I ’
BIOLOGICAL FATE ANALYSIS 7/
1 Taxonomy
2 Geography
3 Or itcgenyfCultivalion
4 Polbnation type
CHEMCAL EXPOSURE 8/
1. Route
2. Level
TIER II
BIOLOGICAL FATE ANALYSIS 9/
1 Hyba:f viability
2. Pollen viabthty
TIER Ill
BIOLOGICAL FATE ANALYSIS 9 1
I Selective aivantage
a. Host range
b Growth arid developlient
2. Dispersion
a Field testing
11ERI
I Honey bee larval test
2 Honey bee toxiaty in pollen
3 Nontorget insect
Cost to Prrx’uce PestiadslSubsaxnce 1W
N
8,858 11,072 9.965
N
1 500 2,
(100 1750
SN
N
N
N
N
N
SN
SN
N
N
SN
SN
SN
29,440 36,800
7,400 9250
33,120
8,325
1/N Always needed, SN Sometmes needed
2/Unless otherwise noted, onsts are frail, a 1990 EPA RIA. At estimates were ac usted amually to 1993 dollars by an average inflation rate 0110%
3/ Upper bound aiSI was estimated as the tower bound wet phis 25% to .int for a 10% atministralive linden arid a 15% protocol devebpment binden
4/ Calaibted’ (Lower bourd wst + Upper bound wst) /2
S/ Source for product anelysis wst. Federal Register, Vol 52. No 115.
6/These wsts are indcnfed in the cest of Product Analysis
7/Tier I biological tale analysis data needs may range from a literature search (approximately $1,500) to rrvrumal testing a,rxlucted in a greenhouse
(approximately $2,000). The $1,500 bI search cast is based on about 20 hours of k tars literature review & ante at a fully loafed hourly
wage of approximately $77 for a” du. .s ,n ” (Source EPA, 1990; US Dept. of Commerce, various issues. EPA. 1993)
The $2,000 greenhouse testing estimate was provided by industry speaalists
8/WIll be reqinred when there is a toxWogical ioern for the gene pro This information is part of registrarirs R&D expenses
9/Source: 1996 industry estimate
19’ EPA cast estimate for the registrant to produce the pestictctal substance ad pretty it tar testing purposes
L PmdiatAnalvels S I
557,800 697250 627.525
1 An ne oral toxiaty for rodent
andflx ii vitro c gestitxlity assay
V. Ta,y ‘andAererjtlc ?kotaraet Ei cte
5.856 7.321 6.588
N
N
4.392
5,490
4,941
N
N
5,856
23.429
7,321
29282
6,588
29.354
TOTAL COST FOR CASE STUDY 3
5,000 10,000 7,500
$649,529 $815,786 $732,667
-------
Appendix Table C-4. Case 4: Potential data needs for plant-pesticides in plants with the pesticidal substance derived
in the US., and no information
!yUlJlfl iW tr , M 0’
I Product identity
2 Description of manulacWred matenals
a Source of genetic material
b Vector system
c Recipient
£ RasJth,.An vsIa 6 ’
I Describe inserted genes expression and
estimation of number of gene a)pIes,
if appropnate
2 Gene expression during plant’s life cyde
3 Concentration (or range estimate) of PP in
plant, plant parts, and ana ytrcnl methods used
rn &wrcnmeolal Fats
hER I
BIOLOGICAL FATE ANALYSIS 7/
1 Taxonomy
2 Geography
3 Ontogeny/Cultivation
4 Pollination type
CHEMICAL EXPOSURE 81
1 Route
2 Level
‘ ‘ ‘• . ‘ ‘f 1 ’ )1-4--, ”1--iin VJ -1
1 Acute oral toxicity for rodent
and/or in vitro dlgestib ity assay
2 Reporting of hypersensitivity incidence and/or
specific allergeniaty testing
I, — if- ‘ J- -J --.I-’ _ _ I - -
I. ProductAnalvsis 5 ’
—— — — : — —
—
—
—— — —
— —
: —
—
-
Iti.iii..,iiili.i, i lIi —
Low IJao Mid
-
:
: -
Whá
Rénuiredi!
Bound
- f1993$ 31
-
..
Bound
Point -
(1993$ 4/
N 8,858
N
SN
N
1,500
N
N
N
N
SN
SN
N 5,856
SN 8,200
N 4,392
N 5,856
N 6,588
N 14,641
N 23,426
SN 13.177
SN 24,890
SN 12,445
SN 13,177
SN
11,072 9,965
2,000 1,750
7,321 6.588
10,250 9,225
5,490 4.941
7.321 6.588
8,236 7.412
18,301 16,471
29,282 26.354
16,471 14,824
31,112 28,001
15,556 14,000
16.471 14,824
TIER I.
1 Honey bee larva] test
2. Honey bee toxicity in pollen
3. Awan oral LD5O (mallard or bobwhite)
4. Avian detety LC5O (mallard and bobwhite)
5. Nontarget insect
TIER II 9/
1. Field test tar polirietors
2 Freshwater fish LC5O (rainbow trout
and bluegill)
3 Acute EC5O freshwater (daphne)
4 Acute LC5O estuanne and marine organism
TIER III:
1. Avian reprocluclion (mallard and bobwhite)
Cost to Produce Pest/ada! Substance 10/
TOTAL COST FOR CASE STUDY 4
187.405 234256 210830
10.000 20.000 15.000
$340,411 $433,139 $386,775
i-ooe-iotes on tceowing pege
-------
Appendix Table C-4 footnotes:
1/N = Always needed; SN = Sometimes needed
2/ Unless otherwise noted, costs are from a 1990 EPA RIA. All estimates were adjusted annually to 1993 dollars by an average
inflation rate of 10%.
3/Upper bound cost was estimated as the lower bound cost plus 25% to aa oun1 for a 10% administrative burden and a 15%
protocal development burden.
4/Calculated: (Lower bound cost + Upper bound cost)/2.
5/Source for product analysis cost: Federal Register, Vol. 52, No. 115
6/These costs are included in the cost of Product Analysis
7/Tier I biological fate analysis data needs may range from a literature search (approximately $1 .500) to minimal testing conducted
in a greenhouse (approximately $2,000). The $1,500 lit search cost is based on about 20 hours of work for a literature
review & write up at a fully loaded hourly wage of approximately $77 for a “technician” (Source: EPA, 1990, U.S. Dept of
Commerce, various issues; EPA, 1993). The $2,000 greenhouse testing estimate was piovded by industry specialists.
8/Will be required when there is a toxicological concern for the gene product. This information is part of registrant’s R&D expenses
9/Tier II data needs will depend on the recipient crop and the geographic location of the planting.
10/EPA cost estimate for the registrant to produce the pesticidal substance and purify it for testing purposes.
-------
Appendix Table C-5. Case 5: Potential data needs for plant-pesticides in plants with the pesticidal substance derived
from the animal kingdom, with wild relatives in the U.S., and no intormation available on the
4S7FP C = _ fl•? .-..
‘ “ “ of the aene rtr,wf,i,l
criara
crerisiics . .. . .
,1 — -
-- - -
.
-
-
•
- -
-
Data -
Plied
-:
- -
-
.
-
When
Renufrsdlt
Estimated Data CoSt
-
tower Upper
Bound Bound
t1øe3$ 2l f1993 3t
Mid
Point
(1993$141
I. ProdixtAnaWsis 5 ’ N 8,858 11,072 9,965
1. Product identity
2. Description of manuf tured matenals
a Source of genetic material
b. Vector system
c. Recipient
II. Residue Analysis 5 ’
1. Describe inserted genes expression and N
estimation of number of gene apies,
if appropriate.
a Gene expression dunng plant’s life cycle. SN
3. Concentration (or range estimate) of PP in N
plant, plant pasts, and analytical methods used.
Ill. Fnvironment lFate
TIER I:
BIOLOGICAL FATE ANALYSIS 7/ 1,500 2,000 1,750
1.Taxonomy N
2. Geography N
3. Ontogeny/Cultivation N
4. Pollination type N
CHEMICAL EXPOSURE 8(
1. Route SN
2. Level SN
TiER II:
BIOLOGICAL FATE ANALYSIS 9/
1 Hybnd viability N 29,440 36,800 33,120
2. Pollen viability N 7,400 9,250 8.325
TIER III:
BIOLOGICAL FATE ANALYSIS 9/ 557,800 697,250 627,525
1. Selective advantage
a. Host range SN
b. Growth and development SN
2. Dispersion
a Field testing SN
I V. Human Health Ffl s and Mamjnn Toxlcoloçv
1. Acute oral toxicity for rodent N 5,856 7,321 6,588
and/or in vitm digestibility assay
2. Reporting of hypersensitivity incidence and/or SN 8,200 10,250 9,225
specific allergenicity testing
Continue?
-------
Appendix Table C-5. Case 5; Potential data needs for plant-pesticides in plants with the pesticidal substance derived
from the animal kingdom, with wild relatives in the U.S., and no information available on the
k r Q. tiao of the aene nrrirliic4
-wt—-.
- — -
-
- -
-
lint, lit
Lower
tJcoer
M Id
Data
When
Bound
Bound
Point
Need -
Reat*edlI
(19 3$) 2I
(i 3S 3i
(1993$ 4f
V. Tea’rosfr,aI andAauatic Nontaraef CPaanisms Effects
TIER I:
1. Honey bee larval test
N
4,392
5,490
4,941
2. Honey bee toxicity in pollen
N
5,856
7,321
6,588
3. Avian oral LD5O (mallard or bobwhite)
N
6,588
8,236
7,412
4 Avian dietary LC5O (mallard and bobwhite)
N
14,641
18,301
16,471
5. Nontarget insect
N
23,426
29,282
26.354
TIER II 10/
1 Field test for pollinators
SN
13,177
16,471
14,824
2. Freshwater fish LC5O (rainbow trout
SN
24,890
31,112
28,001
and bluegill)
3. Acute EC5O freshwater (daphnia)
SN
12,445
15,556
14,000
4. Acute LC5O estuanne and marine organism
SN
13,177
16,471
14,824
TIER Ill:
1 Avian reproduction (mallard and bobwhite)
Cost to Produce Pesticidal Substance 11/
TOTAL COST FOR CASE STUDY 5
SN
187.405
234.256
210.830
20.000
40.000
30.000
$945,051
$1,196,439
$1,070,745
Footnotes:
1/N = Always needed; SN = Sometimes needed
2/ Unless otherwise noted, costs are from a 1990 EPA AlA. All estimates were adjusted annually to 1993 dollars by an average inflation
rate of 10%.
3/Upper bound cost was estimated as the lower bound cost pIus 25% to acaunt for a 10% administrative burden and a 15% protocal
development burden.
4/Calculated (Lower bound cost + Upper bound oost)/2.
5/Source for product analysis cost: Federal Register, Vol. 52, No. 115.
6/ These costs are included in the cost of Product Analysis.
7/Tier I biological fate analysis data needs may range from a literature search (approximately $1,500) to minimal testing conducted in a
greenhouse (approximately $2,000). The $1,500 hi search cost is based on about 20 hours of work for a literature review & write up at a
fully lOaded hourly wege of approximately $77 for a “technician” (Source: EPA, 1990; U.S. Dept of Commerce, vanous issues; EPA, 1993)
The $2,000 greenhouse testing estimate was provided by industry specialists.
8/Will be required’when there is a toxicological concem for the gene product. This information is part of registrant’s R&D expenses.
9/Source: 1993 industry estimate.
10/Tier II data needs will depend on the recipient a-op and the geographic location of the planting.
11/ EPA cost estimate for the registrant to produce the pestiadal substance and purify it for testing purposes.
-------
Appendix Table C-6. Case 6: PotentIal data needs for plant-pesticides from sexually compatible plants
in new plant varieties
- - - -
- -:
- Kind
-
.
Reau imd /
- sd Nesd Co
Lower
Round Scend -Point
fl 8 2! (1 * 3l ti9 41
L PmductAn ’vsis 5/
1 Product idenlity
2 Descnplionof manufactured materials
N
8,858
11.072
9,965
ll Residue Analysis 6’
1 Concentration (er range estimate) of PP ui
plant, plant palts, and analytical methode used
N
DL En wonmenta’ Fate
None needed unless there are toxicological concerns
IV M’m ‘ II cp --‘-‘r:’4mm-’ii- . Tn ;t if 7 /
N
5,856
7,321
6,588
I Acute oral toxicity for rodent
and/or in vitro cigestibility assay
V. TesieefHala,dAauafic a fonte,out Oruathms Effects
TOTAL COST FOR CASE STUDY 6
$14,714
$18,393
$16,553
Foo tnotes:
1/N = Always needed; SN = Sometimes needed
2/ PJI estimatess ha n been a4ustad annually to 1993 cbllars by an average inflation rate of 10%.
3/Upper bound cost was estimated as the louer bound cost phis 25% to acooLmt for a 10% acknrust,abve burden and a 15%
pn,tocal devebpment bnsden
4/Calculated (L er bound cost + Upper bound cost)/2
5/Cost source Federal Register, Vol 52, No 115
6/This cost is induded in the cost of product analysis
7/Cost souree 1990 EPA RIA.
-------
Appendix Table C-i. Case 7: Potential data needs for viral coat proteins in plants with no wild relatives in the U.S.
Example VCP in tomato
-
- -
-
FM Date CQM
Lsw
Dale
-
- When
Bound
Bound
3l e nd -
Rie iedV
(1O 3 I2J
(19ti a
L Product AnaWsis 5 / N 8,858 11.072 9.965
1 Product identity
2 Description of manufactured matenais
a Source of genetic matenai
b Vector system
c Recipient
IL Residue Analysis 5 ’
1 Descnbe inserted genes expression and N
estimation of number of gene copies.
if appropriate
2 Gene expression donng plants life cycle SN
3 Concentiation (or range estimate) of PP in N
plant, plant parts, and analytical methods used
IlL Environmental Fate
TIER I
BIOLOGICALFATEANALYSIS 7/ 1,500 2,000 1,750
1 Taxonomy N
2 Geography N
3 Ontogeny/Cultivation N
4 Pollination type N
I” ‘em- q u rc - -,n , T--’.m ifl - I
None needed
V. Terresfri andAaiw ? kintaroef iiLsms Effects
None needed
Cost to Produce Pesticide! Substance 8/
TOTAL COST FOR CASE STUDY 7
Footnotes
5000 10.000 7.500
$15,358 $23,072 $19,215
1/N = Always needed, SN = Sometimes needed
2/MI estimates have been adjusted annually to 1993 dollars by an average inflation rate of 10%
3/ Upper bound cost was estimated as the lower bound cost pbs 25% to account for a 10% arimiruslrative burden and a 15% protocal development burden
4/ Calculated: (Lower bound + Upper boundy2.
5/Source for Product Analysis Federal Register, Vol 52, No 115
6/ These costs are included in the cost of Product Analysis
7/ her I biological tate analysis dots needs may range from a hterature search (approximately $1,500) to minimal testing conducted in a
greenhouse (approximately $2,000) The $1500 lit seaid’ cost is based on about 20 hours of work for a literature review & write up at a
fully loaded hourly wage of approximately $77 for a “technicsasr (Source EPA. 1990; U S Dept. of Commerce, vanous issues, EPA, 1993)
The $2,000 greenhouse testing estimate was provided by u’ickistry specialists
8/EPA cost estimate for the registrant to produce the pestiactal substance aid purify it for testing purposes
-------
Appendix TthIe C-8. Case 8: Potential data needs for viral coat proteins in plants with wild relalives in the U.S.
Example VCP in squash or melon
:
:
Dale
Need - ...
- -
Wh8A
Rea i dred lf
-
Lower
BOtMd
993$ 2f
Upper
Bound
(I993-$ t1
Mid
Pofstt
fl9933 41
-
LI
L ProductAno ’vs,s 5 ’ N 8,858 11.072 9,965
1 Product ientity
2 Description of manuf Iured matenals
a Source of genetic material
b Vector system
c Recipient
il. Residue Analysis 5 ’
t Describe inserted genes expression and N
estimation of number of gene copies,
if appropriate
2 Gene expression during plants life cycle SN
3 Concenwation (or range estimate) of PP in N
plant plant parts, and analytical methods used
IlL En vironmental Fate
hER I
BIOLOGICAL FATE ANALYSIS 7/ 1,500 2,000 1,750
I Taxonomy N
2Geography N
3 Ontogeny/Cultivation N
4 Potiination type N
TIER II
BIOLOGICAL FATE ANALYSIS 8/
1 Hybrid viabihty N 29.440 36.800 33,120
2 Pollen viability N 7.400 9,250 8,325
hER III
BIOLOGICAL FATE ANALYSIS 8/ 557,800 697,250 627,525
1 Selective advan e
a. Host range SN
b Growth and development SN
2 Dispersion
a Field testing SN
IVL I*,n’ , Health Effects a,dMan,ntha,, Tozicolom ’
None needed
V. Ta’iasfrial aid Aouatic Nonta ,wt Oroanisms Effects
None needed
Cost to Produce Pestiadel Substance 91
TOTAL COST FOR CASE STUDY 8
5000 1 0000 7500
$609,998 $766,372 $688,185
I-ooteotes
1/N = Always needed; SN = Sometimes needed
2/ All estimates have been adjusted annually to 1993 dollars by an average inflation rate of 10%.
3/Upper bound cost was estimated as the lower bound cost pIus 25% to eccount for a 10% athunistrabve burden and a 15% protocal development burden
4/ Calculated (Lower bound cost + Upper bound costy2.
5/Source for product analysis cost. Federal Register. Vol 52, No 115
6/These costs ass included in the cost of Product Analysis
7/Tier I biological fate analysis deta needs may range from a literature search (approximately $1500) to minimal testing conducted in a
greenhouse (approximately $2,000) The $1,500 lit search cost is based on about 20 hours of work for a literature review & wnte up at a
fully loaded hourly wage of approximately $77 for a techniaan” (Source. EP 1990, US. Dept of Commerce, venous issues: EPA, 1993)
The $2000 greenhouse testing estimate was provided by incâistry specialists
8/ Source: 1993 mdsstiy estimate
9/EPA cost estirnale for the regisvant to produce the pestlaclel substance and purify it for testing purposes.
-------
Appendix Table C-9. Case 9: Potential data needs for plant-pesticides in new plant varieties with the pesticidal substance
derived from within the plant genus, with no wild relatives in the U.S., and with information available
—— . _ l iI.
t.ii tJai
.maia fl
u . aim
.
.
Date
Need
When
.Rewiired 11
- -
- D ed Ca
Lower
Sound
tI9O3 2!
Upper
Sound -
(1993$13
PMd
Point
U 93 41
L Product Analva ,s 5 / N 8,858 11.072 9,965
1 Product identity
2 Descnptionof manulactured materials
II. Residue Anth’sar 6 ’
1 Plant-pesticide (PP) expression ckinng SN
plant’s life cycle
2 Concentration (or range estimate) of PP in N
plant. plant parts, and analytical methods used
IlL Environmentsi Fate
hER I
BIOLOGICAL FATE ANALYSIS 7/ 1,500 2,000 1.750
1 Taxonomy N
2Geography N
3 Ontogeny/Cultivation N
4 PoNutation type N
CHEMCAL EXPOSURE 8/
1 Route SN
2Leval SN
I”g’pm- i’ ’ -i-il c’i j 1 7 :. -
I Acute oral toxicity for rodent N 5.856 7,321 6.588
and/or in vitro digestibility assay
V. Tci’rastri end Aauatic Non uet Onwn isms Effects
TIER I
1 Honey bee larval test N 4,392 5,490 4.941
2 Honey bee toxicity in pollen N 5,856 7,321 6.588
3 Nontarget insect N 23,426 29,282 26,354
4 Avian oral LD5O (mallard or bobwhite) N 6,588 8.236 7,412
5 Avian ctetary LC5O (mallard and bobwhite) N 14,641 18,301 16.471
SN
TIER II
1 Field test for pollinators
Cost ro Produce Pesitadal Substance 9/
TOTAL COST FOR CASE STUDY 9
13.177
16.471
14.824
5000
10.000
7.500
$89,295 $115,494 $102,394
Footnotes
1/N = Nways needed, SN = Sometimes needed
2/ Unless otherwise noted, costs are from a 1990 EPA RL& MI estimates were adjusted annually to 1993 dollars by an average inflation rate of 10%
3/Upper bound cost was estimated as the lower bound cost pIus 25% to account for a 10% a&anistrativa burden and a 15% protocal development burden
4/ Calculated (L.ower bound cost + Upper bound cost)/2
5/Source for product analysis cost Federal Register, Vol. 52, No 115
6/ These costs are included in the cost of Product Analysis
7/Tier I biological fate analysis data needs may range from a literature search (approximately $1,500) to minimal tasting conducted in a
greenhouse (approximately $2,000). The $1,500 lit search cost is based on about 20 hours of work for a literature review & write up at a
fully loaded hourly wage of approximately $77 for a technicrarf (Scuma’ EPA. 1990; US Dept of Corrunerce, various issues; EPA, 1993)
The $2,000 greenhouse testing estimate was provided by industry specialists
8/Will be required when there isa to acobgical concern for the gene proc*Ja This infoiTnalion is part of registrants R&D expenses
9/EPA cost estimate for the registrant to produce the pesliadal substance and purify it for testing pwposes
-------
L ProduclAnalvs 5 ’ N 8,858 11.072 9,965
1 Product identity
2 Descnption of manufactured matenals
ResidueAn vsis 5 ’
1 Plant-pesticide (PP) expression ctinng
plant ’s life cycle
2 Concentration (or range estimate) of PP in
plant, plant pails, and analytical methods used
IlL EnvhonmenW Fate
11ERL
BIOLOGICAL FATE ANALYSIS 7/
I Taxonomy N
2. Geography N
3 Ontogeny/Cultivation N
4 Pollination type N
CHEMICAL EXPOSURE 81
1.Route SN
2Level SN
TIER II
BIOLOGICAL FATE ANALYSIS 9/
1 Hybndviabillty
2 Pollen viability
TIER Ill
BIOLOGICAL FATE ANALYSIS 9/
I Selective advantage
a Host range SN
b Growth and development SN
2 Dispersion
a Field testing SN
I V Mnr,a Hea’th Efleuds a,dMaimn , Toxiccloav
1 Acute oral toxiaty for rodent
and/or in vitro digestbllity assay
I T----- 1 11 1 1----J” ‘-.i- T —I--
11ERI
I Honey bee larval test
2. Honey bee toxicity in pollen
3 Nontaiget insect ________________________
Cost to Produce Pesticth! Substance 10/ ______________________
Footiiotes
1/N = Always needed; SN = Someth’ies needed
2/Unless otherwise noted, costs are from a 90 EPA RIA. All estimates were a4usted annually to 3 dollars by an average inflation rate of 10%
3/Upper bound cost was estimated as the lower bound cost + 25% to acocunt for a 10% a&nin burden and a 15% protocol development burden
4/ Calculated (Lower bound cost + Upper bound costy2.
5/Source for product analysis cost Federal Register. Vol 52, No.115.
6/ These costs ate included in the cost of Product Analysis.
7/ Tia I biological fate analysis dote needs may range from a llterature search (approximately $1,500) to minimal testeig conducted in a
greenhouse (approximately $2,000). The $1,500 ft search cost is based on about 20 hours of work for a literature review & wnte up at a
fully loaded hourly wage of approximately $77 far a technician (Source EPA. 1990; U.S. Dept of Commerce. venous issues; EPA, 1993)
The S 000 greenhouse testing estimate was provided by industry speciafists
8/ Wll be requbod when there is a toxicological concern for the gene product. INs mfonnation is pail of registrants R&D expenses.
9/ Source 1993 uxbsvy estimate
1(Y EPA cost estimate for the registrant to produce the pesticidal substance and punfy ft for lasting purposes.
Appendix
Table C-1O. Case 10: Potential data needs for plant-pesticides meow plait vanetles with the pesticidal substance
derived from within the plant genus 1 p esin the U.S., and nformation availab on the
characteristics and function of the aene p
p e r
- Data - Wben Bormd Bound
-
- R ds d11 (tfleari2f f199 14
SN
N
1,500 2.000 1.750
29,440 36,800 33,120
7,400 9.250 8,325
557.800 697.250 627.525
N
N
N
5,856
7,321
6.588
N
4,392
5,490
4,941
N
5,856
7,321
6,588
N
23.426
Q
26.354
TOTAL COST FOR CASE STUDY 10
5000 i0 0 0 0 7500
$649,529 $815,786 $732,657
-------
Appendix Table C-il. Case ii: Potential data needs for plant-pesticides in new plant Varieties with the pesticidal substance
derived from within the plant genus, with no wild relatives in the U.S., and no information available on the
end ‘ ‘ of the aene
characteristics —-
-— --
--
- -
-
Esthnatèd Data Need Ccst
-
When
Reaufredti
Lower Ugteer Mid
Bound Bound Point
£1993$)2 / (1993S 31 (1993 $) 4/
Oats-
Heed -
L Prodia tAnaIvsis 5 / N 8,858 11.072 9,965
1. Product identrty
2. Descnption of manufactured matenals
II. Residue Analysis 6 /
1. Plant-pesticide (PP) expression during SN
plant’s Ida cycle
2. Concentration (or range estimate) of PP in N
plant, plant parts, and analytical methods used
IlL Environmental Fate
TIER I:
BIOLOGICAL FATE ANALYSIS 7/ 1,500 2,000 1,750
1. Taxonomy N
2. Geography N
3. Ontogeny/Cultivation N
4. Pollination type N
CHEMICAL EXPOSURE 8/
1. Route SN
2 Level SN
IV. Human Health Effects and Mammalian Toxicoloav
1. Acute oral toxicity for rodent N 5,856 7,321 6,588
and/or in vitro digestibility assay
2. Reporting of hypersensitivity incidence and/or SN 8,200 10,250 9,225
specific alleigenicity testing
V. Terresfrial and Acuatic Nonlaroet O anisms Effects
TIER I:
1. Honey bee larval test N 4,392 5,490 4,941
2. Honey bee toxicity in pollen N 5,856 7,321 6,588
3. Avian oral LD5O (mallard or bobwhite) N 6,588 8,236 7,412
4. Avian dietary LC5O (mallard and bobwhite) N 14,641 18,301 16,471
5. Nontarget insect N 23,426 29,282 26,354
TIER II: 9/
1. Field test for pollinators SN 13,177 16,471 14,824
2. Freshwater fish LC5O (rainbow trout SN 24,890 31,112 28,001
arid bluegill)
3. Acute EC5O freshwater (daphnia) SN 12,445 15,556 14,000
4. Acute LC5O estuanne and manne organism SN 13,177 16,471 14,824
TIER Ill:
1. Avian reproduction (mallard and bobwhite) SN
Cost to Produce Pesticidal Substance 10/
TOTAL COST FOR CASE STUDY 11
187.405
234.256
210.830
10.000
20.000
15.000
$340,411 $433,139 $386,775
Footnotes on fol ing page..
-------
Appendix Table C-il footnotes:
1/N = Always needed; SN = Sometimes needed
2/ Unless otherwise noted, costs are from a 1990 EPA RIA. All estimates were adjusted annually to 1993 dollars by an average
inflation rate of 10%.
3/Upper bound cost was estimated as the lower bound cost plus 25% to acoount for a 1 0% administrative burden and a 15%
protocal development burden.
4/Calculated: (L er bound cost + Upper bound cost)/2.
5/Source for product analysis cost: Federal Register, Vol. 52, No. 115.
6/These costs are included in the cost of Product Analysis.
7/Tier I biological fate analysis data needs may range from a literature search (approximately $1,500) to minimal testing conducted
in a greenhouse (approximately $2,000). The $1,500 lit, search cost is based on about 20 hours of work for a literature
review & write up at a fully loaded hourly wage of approximately $77 for a ‘techncian” (Source: EPA, 1990; U S. Dept of
Commerce, various issues; EPA, 1993). The $2,000 greenhouse testing estimate was provided by industiy specialists.
8/Will be required when there is a toxicological concern for the gene product. This information is part of registrant’s R&D expenses
9/Tier II data needs will depend on the recipient crop and the geographic location of the planting.
10/EPA cost estimate for the registrant to produce the pesticidal substance and punfy it for testing purposes.
-------
Appendix Table C-i 2. Case 12: Potential data needs for plant-pesticides in new plant varieties with the pesticidal substance
substance derived from within the plant genus, with wild relatives in the U.S., and no infnrm tinn u iI hl
on the h r. fi r lfuct of the aene oroduct
:
- -
Estimat
ad Data Plead Cost
Lo en
Upper
Wd
Data
- When
-‘Bound
Bound
Point
- P lead
Reot*adlI
(1993$) 2!
41993$) 31
11993$)4!
I. ProductAnalvsis 5 ’ N 8,858 11,072 9,965
1 Product dentity
2 Description of manufactured matenals
IL Residue Analysis 6 /
1. Plant-pesticide (PP) expression during SN
plant’s life cycle
2. Concentration (or range estimate) of PP in N
plant, plant parts, and analytical methods used.
IlL Envimnmental Fate
TIER I:
BIOLOGICAL FATE ANALYSIS 7/ 1,500 2,000 1,750
1. Taxonomy N
2. Geography N
3. OntogenylCultivation N
4. Pollination type N
CHEMICAL EXPOSURE 8 1
1. Route SN
2. Level SN
TIER II:
BIOLOGICAL FATE ANALYSIS 9/
1. Hybrd viability N 29.440 36,800 33,120
2. Pollen viability N 7,400 9,250 8,325
TIER Ill:
BIOLOGICAL FATE ANALYSIS 9/ 557.800 697,250 627,525
1. Selective advantage
a. Host range SN
b. Growth and development SN
2. Dispersion
a. Field testing SN
M Human Health Effects and Mainmal n Toxkoloav
1. Acute oral toxicity for rodent N 5,856 7,321 6,588
and/or in vitro digesthility assay
2. Reporting of hypersensitivity incidence and/or SN 8,200 10,250 9,225
specific allergenicity testing
Continued
-------
Appendix Table C-12. Case 12: Potential data needs for plant-pesticides in new plit varieties with the pesticidal substance
substance derived from within the plant genus, with wild relatives in the U.S., and no information available
. _ ‘.f II
uIc l.a . tn... —.
- : - - - - - - -
- -
- -
Wher
dDd
Lvwà UDPSF
Bousd Bcwid Pofnt
- ti eJ - - - - -
Renufradi!
ui9il3& 2/
t193 V
f$ 3 W -
V. TerrestiialandAauatic Pdsn met Cr vsms Effects
11ERI-
1 Honeybeelarvaltest
N
4,392
5,490
4,941
2 Honey bee toxiaty in pollen
N
5.856
7.321
6,588
3 Avian oral W50 (mallard or bobwhite)
N
6.588
8,236
7.412
4 Avian cietary LC5O (mallard and bobwhite)
N
14.641
18,301
16,471
5 Nontairget insect
N
23.426
29 282
26.354
TIER ll 10/
iFieldtestforpo l linators
SN
13.177
16.471
14.824
2 Freshwater fish LC5O (rainbow trout
SN
24.890
31,112
28.001
and bluegill)
3 Acute EC5O freshwater (daphnia)
SN
12.445
15.556
14.000
4 Acute LC5oestuarvieand marine organism
SN
13.177
16,471
14.824
TIER Ill
1. Avian reproduction (mallard and bobwhite)
Cost to Produce Pestrcidal Substance 11/
TOTAL COST FOR CASE STUDY 12
SN
187A05
234 256
210830
20.000
40.000
30.000
$945,051
$1,196,439
$1,070,745
Footiiotes.
1/N = Always needed; SN = Sometimes needed
2/ Unless otherwise noted, costs are from a 1990 EPA RIk All estimates were adjusted annually to 1993 dollars by an average inflation rate of 10%
3/Upper bound cost was estimated as the lower bound cost plus 25% to account for a 10% administrative burden and a 15% protocol devek,pment burden
4/ Calailated (Lower bound cost + Upper bound costy2
5/Source for product analysis cost Federal Register, Vol 52. No 115
6/These costs are included in the cost of Product Analysis.
7/her I buok gical tate analysis data needs may range from a literature search (approximately $1,500) to minimal testing conducted in a
greenhouse (approximately $2,000) The $1,500 lit search cost is based on about 20 hours of work for a literature review & write up at a
fully loaded hourly wage of approximately $77 bra technicsan (Source EPA. 1990. US Dept. of Commerce, various issues, EPA. 1993)
The $2,000 greenhouse testing estimate was provided by industry specialists.
8/ WiN be req.iured when there us a toxicological concern for the gene product. This infomiation is part of registrant’s R&D expenses
9/Source 1993 industry estimate.
10/ Tier II data needs will depend on the recipient crop and the geographic location of the planting
11/EPA cost estimate for the registrant to produce the pesticidal substance and purify it for testing purposes
-------
APPENDIX D
EPA BURDEN ESTIMATE DOCUMENTATION
-------
Appendix Table D-1. Total EPA Hourly Burden Estimates Under AlA Option 1, Years 1-10
• MANAGEMENT.(GSi5
1 CHN1CAL (GS13
CLERICAL
Total SLaftHOurn..Need d.
Lower Upper Expected
. Lower Upper Expected Lower Upper Expected
Lower Upper Expected
Year
BOund Bound Avera oe
Bound Bound Avencle Bound Bound Ava aae
(Hours)
Bound Bound Avetaus
Year 1 88 288 188 312 537 425 61 127 94 461 952 706
Year 2 197 591 394 653 1126 889 115 242 179 964 1959 1462
Year3 197 591 394 653 1126 889 115 242 179 964 1959 1462
Year 4 274 996 635 1088 1773 1430 171 353 262 1533 3122 2327
Year5 471 1587 1029 1741 2899 2320 286 595 440 2497 5081 3789
Year 6 383 1300 841 1428 2362 1895 225 468 347 2036 4130 3083
Year 7 197 591 394 653 1126 889 115 242 179 964 1959 1462
Year8 383 1300 841 1428 2362 1895 225 468 347 2036 4130 3083
Year9 492 1603 1047 1769 2951 2360 280 583 431 2540 5137 3839
Year 10 580 1891 1235 2081 3488 2785 340 710 525 3001 6089 4545
Source: EPA estimates.
-------
Appendix Table D-2. Total EPA Hourly Burden Estimates Under RIA Option 2, Years 1-10
MANAGE ENT.(GS45 TECHNICAL(GS i3 c1CAL.(GS 7 Jt ! a! Ha rn.Nee e
• .. Lower:. Upper Expected . Lower Upper . Expected . Lower ‘Upper Expected . Lower Upper Expected
.Yar Ekxmd BOtad Bound Bound AveffiOB Bound Ek*md AvO iae Bothid Bound Avet e
(Hours)
Year 1 88 288 188 312 537 425 61 127 94 461 952 706
Year 2 197 591 394 653 1,126 889 115 242 179 964 1,959 1,462
Year 3 284 879 581 965 1663 1,314 176 369 272 1,425 2,911 2,168
Year4 549 1,992 1,270 2,176 3,546 2,861 341 706 524 3,065 6,245 4,655
Year5 745 2,583 1,664 2,828 4,672 3,750 456 948 702 4,029 8,204 6,116
Year 6 657 2,296 1,477 2,516 4,135 3,326 396 821 608 3,569 7,252 5,410
Year 7 559 1,875 1,217 2,053 3,436 2,744 346 722 534 .2,957 6,033 4,495
Year8 657 2,296 1,477 2,516 4,135 3,326 396 821 608 3.569 7,252 5,410
Year 9 953 3,308 2,130 3,632 5,961 4,796 560 1,162 861 5,145 10,430 7,788
Year 10 854 2,887 1,870 3,169 5,261 4,215 511 1,063 787 4,533 9,211 6,872
Source: EPA estimates
-------
Appendix Table D-3. Total EPA Hourly Burden Estimates Under RIA Option 3, Years 1-10
Year
TECHNICAL (GS .i3
.
CLERICAL (GS.
Ti
.TotaI.Sta1t.Hour .Need d
Lower upper Expected Lower Upper Expected
Bound BCth Aviraae BoUnd: Bound Averaoe
Lower Upper
Bound Bound
(Hours)
Expected
Avetaae
..
Lower Upper Expected
Bound BOund Avemae...
Yearl 284 879 581 965 1,663 1,314 176 369 272 1,425 2,911 2,168
Year2 393 1,182 788 1,306 2,252 1,779 230 484 357 1,929 3,918 2,923
Year3 569 1,757 1,163 1,930 3,326 2,628 351 738 545 2,850 5.821 4,335
Year4 942 3,174 2,058 3,481 5,798 4,640 571 1,190 881 4,994 10,163 7,578
Year5 1,138 3,765 2,452 4,134 6.924 5,529 686 1,432 1,059 5,958 12,122 9,040
Year6 1,247 4,069 2,658 4,474 7,513 5,994 741 1,547 1,144 6,462 13,129 9,795
Year7 1,148 3,648 2,398 4,011 6,814 5,413 691 1,448 1,070 5,850 11,910 8880
Year8 1,247 4,069 2,658 4,474 7,513 5,994 741 1,547 1,144 6,462 13,129 9,795
Year9 1,542 5,081 3,311 5,590 9,339 7,464 905 1,888 1,396 8,037 16,307 12,172
Year 10 1,443 4,660 3,052 5,127 8,639 6,883 856 1,789 1,322 7,426 15,088 11,257
Source: EPA estimates.
-------
Appendix Table D-4. Total EPA Hourly Burden Estimates Under RIA Option 4, Years 1-10
) LT.kT St L [ t. k ifr} 5fl
— ‘.TEC I*4 ICAL 13 CurUcAL(GS fl
• Low Upper ’ Expected tower Upper Expected Lower. Upper Expected Lower Upper’ Expected
Ye ar Aver.. Bo’!nd 4yer ”,. Bound Bpqfld. Me t r e Bet i s BØufld Av cprM’e
(Hours)
Year 1
31,525
108,433
69,979
118,473
197,214
157,843
19,896
41,448
30,672
169,894
347,094
258,494
Year2
31,634
108,736
70,185
118,814
197,803
158,308
19,951
41,563
30,757
170,398
348,102
259,250
Year3
31,810
109,311
70,560
119,438
198,877
159,157
20,072
41,817
30,944
171,319
350,005
260,662
Year 4
32,183
110,729
71456
120,989
201,349
161,169
20,292
42,269
31280
173,463
354,347
263,905
Year S
32,379
111,320
71,849
121,642
202,475
162,058
20,407
42,511
31,459
174,428
356,306
265,367
Year 6
32,488
111,623
72,056
121,982
203,064
162,523
20,461
42,626
31544
174,931
357,313
266,122
Year7
32,389
111,202
71,796
121,519
202,365
161,942
20,411
42,527
31,469
174,320
356,094
265,207
Year 8
32,488
111,623
72,056
121,982
203,064
162,523
20,461
42,626
31,544
174,931
357,313
266,122
Year 9
32,783
112,635
72,709
123,098
204,889
163,994
20,626
42,967
31,796
176,507
360,491
268,499
Year 10
32,685
112,214
72,449
122,635
204,190
163,413
20,576
42,868
31,722
175,896
359,272
267,584
Source: EPA
estimates.
-------
Appendix Table 0-5. EPA Labor Burden Cost Estimates Under RIA Option 1, Years 1-10
MAGEME$T. (G& 15 :. CHN )CAUGS43 I CLERICAL (GS ,7 ) TotS .L ot.BuMen .CostS
Lower Upper . Expected Lower Upper Expected Lower Upper Expected Lower U er EXPeCtS
Year Bound Botmd Avet&18 Bound Bound Averade Bound Bound.. Avefficie .. Bound Bound Averut le
($)
Year 1 6,634 21,735 14,184 17,049 29,320 23,185 1,525 3,200 2,363 25,207 54,256 39,731
Year 2 14,855 44,680 29,768 35,640 61,480 48,560 2,898 6,098 4,498 53,394 112,258 82,826
Year 3 14,855 44,680 29,768 35,640 61,480 48,560 2,898 6,098 4,498 53,394 112,258 82,826
Year4 20,737 75,305 48,021 59,391 96,817 78,104 4,297 8,896 6,596 84,425 181,017 132,721
Year S 35,592 119,985 77,789 95,031 158,296 126,664 7,195 14,994 11,094 137,818 293,275 215,547
Year 6 28,959 98,250 63,604 77,982 128,976 103,479 5,670 11,794 8,732 112,611 239,019 175,815
Year 7 14,855 44,680 29,768 35,640 61,480 48,560 2,898 6.098 4,498 53,394 112,258 82,826
Year8 28,959 98,250 63,604 77,982 128,976 103,479 5.670 11,794 8,732 112,611 239,019 175,815
Year9 37,180 121,194 79,187 96,574 161,136 128,855 7,043 14,692 10,868 140,797 297,021 218,909
Year lO 43,814 142,929 93,372 113,623 190,456 152,039 8,568 17,892 13,230 166,005 351,277 256,641
Appendix Table D-1 by the following adjusted government wage rates (1993 $)
Adjustments Government
for all benefits wage rate
& overhead 2/ (1 993$/hour)
Calculated by multiplying the hourly estimates in
Hourly 1993
Position wage rate 1/
type (1993$/hr)
Management
Technical
GS Level
GS-15
GS-13
36
21
76
26
2.1
55
GS-7 Clerical 12
2 1
25
1/ Source: “Salary Table 93, Executive Branch of the Government”. 1993 All salaries based on Step 5
2/ Source: “RIA of Proposed Revisions to Regulabons Pertaining to Microbial Pestiddes Under FIFRA” 1993 (1/20) EPA/OPP/BEAD
-------
Appendix Table D-6. EPA Labor Burden Cost Estimates Under RIA Option 2, Years 1-10 in 1993 $
Calculated by multiplying the hourly estimates in Appendix Table D-2 by the following adjusted government wage rates (1993 $):
Hourly 1993 Adjustments Government
Position wage rate 1/ for all benefits wage rate
type (1993$/hr & overhead 2/ (1993 /hour
Management 36
Technical
GS Level
GS-15
GS-13
26
2.1
21
76
55
GS-7 Clerical 12
2.1
25
1/Source: “Salary Table 93, Executive Branch of the Government”. 1993. All salaries based on Step 5.
2/Source: “RIA of Proposed Revisions to Regulations Pertaining to Microbial Pesticides Under FIFRA”. 1993 (1/20) EPA/OPP/BEAD.
• ....... .... C CAL.(G 7
• Lower Upper Expected Lower Upper Expected Lower Upper Expected Lower,. UppOr Expected
Year BOI ind BOtft d Averade Bound BOwid Avaraae eo m Bound Ave aae BOund Bcufld
($)
Year 1 6,634 21.735 14,184 17,049 29,320 23,185 1,525 3,200 2,363 25,207 54,256 39,731
Year 2 14,855 44,680 29,768 35,640 61.480 48,560 2,898 6,098 4,498 53,394 112,258 82,826
Year3 21,489 66,415 43,952 52,689 90,800 71,744 4,423 9,299 6,861 78,601 166,513 122,557
Year4 41,474 150,610 96,042 118,782 193,633 156,208 8,593 17,791 13,192 168,850 362,035 265,442
Year 5 56,330 195,290 125,810 154,422 255.113 204,768 11,491 23,890 17,690 222,243 474,293 348,268
Year6 49,696 173,555 111.625 137,374 225,793 181,583 9,967 20,689 15,328 197,036 420,037 308,536
Year7 42,226 141,720 91,973 112,080 187,617 149,848 8,719 18,194 13,457 163,026 347,531 255,278
Year8 49,696 173,555 111,625 137,374 225,793 181.583 9,967 20.689 15,328 197.036 420,037 308,536
Year 9 72,020 250,070 161,045 198,307 325,449 261,878 14,112 29,282 21,697 284,440 604,801 444,620
Year 10 64,551 218,235 141.393 173,014 287,272 230,143 12,865 26,788 19,826 250,429 532,295 391,362
-------
Appendix Table D-7. Total EPA Hourly Burden Estimates Under RIA Option 3, Years 1-10
,
MANAGEMENT.(GBi5 itCHNICA1 (GS.13 CLERICAL .(GS .7) Total .Labot Buidan CostS
.Y ar
Lower Upper, Expected Lower Upper Expected Lower Upper Expected Lower U øer Expected
Bound Bound Averb S Bound Bound AveffiOB Bound Bound . Avet ae Bound Bound Avafaae
($)
Yearl
21,489 66,415 43,952 52,689 90,800 71,744 4,423 9,299 6,861 78,601 166,513 122,557
Year2
29,711 89,359 59,535 71,280 122,959 97,120 5,796 12,197 8,996 106,787 224,515 165,651
Year 3
42,979 132,829 87,904 105,378 181,600 143,489 8,845 18,598 13,721 157,202 333,026 245,114
Year4
71,185 239,970 155,577 190,063 316,593 253,328 14,389 29,988 22.189 275,637 586,550 431,093
Year5
86,040 284,649 185,345 225,703 378,072 301,887 17,287 36,086 26,687 329,030 698,808 513,919
Year6
94.262 307,594 200,928 244,294 410,232 327,263 18,661 38,984 28,823 357,217 756,810 557,013
Year 7
86,793 275,759 181,276 219,001 372,055 295,528 17,413 36,490 26,951 323,206 684,303 503,755
Year8
94,262 307,594 200,928 244,294 410,232 327,263 18,661 38,984 28,823 357,217 756,810 557,013
Year9
116,587 384,108 250,348 305,228 509,888 407,558 22,806 47,578 35,192 444,620 941,574 693,097
Year 10
109,117 352,273 230,695 279,934 471,711 375,823 21,559 45,083 33,321 410,610 869,067 639,839
Calculated by multiplying the hourly es mates in Appendix Table D-3 by the following adjusted government wage rat
es (1993 $)
Hourly 1993 Adjustments Government
Position wage rate 1/ for all benefits wage rate
GS Level t ype (1993$lhr) & overhead 2/ (1993$/hour)
GS-15 Management 36 2.1 76
GS-13 Technical 26 2.1 55
GS-7 Clerical 12 2.1 25
1/Source: “Salary Table 93, Execu ve Branch of the Government”. 1993. All salaries based on Step 5.
2/ Source: “RIA of Proposed Revisions to Regulations Pertaining to Microbial Pesticides Under FIFRA”. 1993(1/20)
EPA/OPP/BEAD
-------
Appendix Table D-8. EPA Labor Burden Cost Estimates Under RIA Option 4, Years 1-10
• MAN&GE A N GS ’18 .. TEC}il1tCAL GS-1S1. I CLERICAL (QSb7 .., Totl Labor BwdOn CoSta
• I,ower Upper Expected Lower Upper Expected Lower Upper Expected Lower Upper Expected
Yea, Bound Bound A irns ae Bound Bound Averaoe Bound Bound Avafane Bound Bound Averaaa
Cs)
Year 1 2,383,320 8,197,520 5,290,420 6,468,626 10,767,863 8,618,244 501,379 1,044,490 772,934 9,353,325 20,009,872 14,681,599
Year 2 2.391,542 8,220,464 5,306,003 6,487,217 10,800,022 8,643,620 502,753 1,047,388 775,070 9,381,511 20,067,874 14,724,693
Year3 2,404,810 8,263,934 5,334,372 6,521,315 10,858,662 8,689,989 505,802 1,053,788 779,795 9,431,926 20,176,385 14,804,156
Year 4 2,433,016 8,371,075 5,402,045 6,605,999 10,993,655 8,799,827 511,348 1,065,179 788,262 9,550,361 20,429,909 14,990,135
Year5 2,447,871 8,415,754 5,431,813 6,641,640 11,055,135 8,848,387 514,244 1.071:277 792,761 9,603,755 20,542,166 15,072,961
Year 6 2,456,093 8,438,699 5,447,396 6,660,231 11,087,294 8,873,763 515,617 1,074,175 794,896 9,631,941 20,600,168 15,116,055
Year 7 2,448,624 8,406,864 5,427,744 6,634,937 11,049,118 8,842,028 514,370 1,071,680 793,025 9,597,931 20,527,662 15,062,796
Year 8 2,456,093 8,438,699 5,447,396 6,660,231 11,087,294 8,873,763 515,617 1,074,175 794,896 9,631,941 20,600,168 15,116,055
Year 9 2,478,417 8,515,214 5,496,816 6,721,164 11,186,950 8,954,057 519,763 1,082.768 801,266 9,719,345 20,784,932 15,252,138
Year 10 2,470,948 8,483,378 5,477,163 6,695,871 11,148,774 8,922,323 518,515 1,080,274 799,394 9,685,334 20,712,426 15,198,880
Calculated
by multiplying
the hourly estimates i
n Appendix Table 0-4 by the following
adjusted government wage rates (1993 $).
Hourly 1993
Adjustments
Government
Position
wage rate 1 /
for all benefits
wage rate
GS Level
tvoe
(1 993$/t,r
& overhead 2/
(1 993$ihour)
GS-15
Management
36
2.1
76
GS-13
Technical
26
2.1
55
GS-7
Clencal
12
2 1
25
1/ Source: Salary Table 93, Executve Branch of the Government”. 1993. All salaries based on Step 5.
2/ Source: “RIA of Proposed Revisions to Regulations Pertaining to Microbial Pesticides Under FIFRA”. 1993 (1,20). EPA/OPPIBEAD
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APPENDiX E
RECORDS OF COMMUNICATION
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- --.: - - :— - -
‘ DPRá 1NCORPORA [ ED’
,
- RECORD OP COMM C flO1 t
(X l TELEPHONE CONVERSATION DATE: January 21. 1993
( I INCOMING TIME: 1:30 p.m .
(X I OUTGOING
MEETING RECORDED BY: Nancy J. Ekart
SUBJECT: Plant Pesucid PROJECT NO.: 3780203
PARTICIPANT(S), ORGANIZATION/DEPARTMENT, ADDRESS. TELEPHONE/EXT.
Elizabeth (Beth) Weimar, Biotech Group. U.S. Patent and Trademark Office (703) 308.0254
SUMMARY: Beth Weimar was very helpful in answering my questions about patents. The information she provided is as
follows:
• Difference in a plant patent” and a “utility patent”
A plant patent is also known as a 161 patent and is based on a 1930 stature. This type of parent is very limited in
scope and applies to a single variety. Beth stressed it is one claim to a single described and depicted plant variety.
A full botanical description is required, including pictures. etc.
A utility patent is a “normal patent It applies to just about everything such as a chair, shoes, etc. It is the basic
patent statute based on the 35-year Usc 101. This type of patent is very broad in scope. It is not subject-matter
specific. Under a utility parent, claims relevant to tisnsgenic plants may be to the DNA. to the plant cell
containing DNA. or to a plant containing hererogenous material (material from a source outside the plant). There
is no limit on the variety of a claim.
• Beth says most patents that have been issued relevant to transgenic plants have been utility patents. Plants
developed using natural plant breeding via outcmssing are more apt to be patented under a plant patent. But with
transgenic plants. there’s no attempt usually to try to be variety specific.
• I asked Beth for clarification regarding whether it is the genetic material that is more Likely to be patented rather
than the entire plant She said it can be both. Sometimes only one is patentable because the other is “known.”
She indicated that with Bt, there would be no parent on the protein, because the protein would be “known.” The
patent is likely to be only on the DNA or on the plant. if the plant was not known.
• A patent gives one the right to exdude others; not to do anything. The party receiving the patent decides to wha
extenttheywanttocxc1udeOthCi3.afldit’SUPtOthemtOeflf( CCit . ThcpatentofflcehasnothiiigtOdow th
licenses given out by a patentee, once the parent has been issued by the Patent Office.
• I asked Beth if there were any bulletins, pamphlets or the like available that would help me better understand the
patenting procedure for uansgenic plants. She didn’t know of any personally, but suggested I call the Public
Affairs Office (703-305-8341) and ask them if they have any type of biotech-type overview and for any info they
have on plant patents. Beth said I was welcome to call again with any specific questions I might have regarding
patents associated with transgenic plants.
Signatures
Author: ‘-1 2 ’ t Date: / - -
Participant: Date:
Distribution: 9(1 Author [ ] Participant ] File 1 Others Sandra M. Zavolta, U.S. EPA
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X I INCOMING
OUTGOING
DATE: January 28, 1993
TIME: 10:30 a.m .
MEETING RECORDED BY: Nancy J. Ekart
SUBJECT Plant Pesticides
PROJECT NO.. 3780 203
PARTICiPANT(S). ORGANIZA11ONIDEPARTMENT. ADDRESS. TELEPHONE/EXT.
Dr. An Mason. Minnesota Dept. of Ag. Director of Plant Protection Division (612) 296-8448
SUMMARY: Dr. Mason returned my call of earlier today and provided the following answers to my questions:
• if a person applies for a release permit from MDA (Minnesota Dept. of Ag), do they need to apply for a permit
from EQB (the Environmental Quality Board)?
Dr. Mason indicates that if it’s an experimental use, a permit from EQB must be obtained. If it’s a commercLal
use, then a permit from the MDA is enough. He says companies aren’t too happy with the situation, and that
they’re in a “state of flux” right now. The legislature may take action to clarify the situation.
• If a person applies for and receives a permit from USDA/APHIS. do they usually apply for and receive an
exemption from a State permit?
No. A State permit is required. However, the application made to AP}IIS usually contains sufficient information
for MDA.
• Does an Environmental Assessment Worksheet (EAW) have to be prepared for a permit applied for from either the
MDA or the EQB? Who prepares the EAW?
Yes. The EAW is prepared by the MDA. with help from industry. If the findings from the EAW warrant. an
Environmental Impact Statement (EIS) must also be prepared. However, no EIS has been required up to this point
in time.
Signatures:
-
Author:
Date:
Date:
I Others Sandra M. Zavolta, U.S. EPA
Participant:
Distribution: [ I Author [ ] Participant [ ] File [
DPRA INCORPORATED
[ X I TELEPHONE CONVERSATION
RECORD OF COMMUNICATION
F I
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DPRA INCORPORATED
RECORD OF COMMUNICATION
(X I TELEPHONIE CONVERSATION DATE. February 1. 1993
INCOMING TIME. 1045 a.m .
F X I OUTGOING
4EET1NG RECORDED BY Nancy J Ekart
SUBJECT- Plant Pesticides PROJECT NO 37 21)3 £—
PARTICIPANT(S). ORGANIZATION/DEPARTMENT. ADDRESS. TELEPHONEIEXT
Tohv Jones. Pesticide Registration Division. CA Dept of Agnculture (9I6) 657-4491 )
SUMMARY: I contacted Toby to see if California had any biotech regulations relevant to transgenic planis (pesticid.d pI.tnt..) It
seems that there are no biotech regs as such. However. “plant permits” are a factor and transgenic plants that are pii lenti .tl pl.wt
pests are reqwred to obtain a California permit. Other types of transgenic plants would not require a plant permit. Tohv i.. oine
to send me an annotated copy of relevant laws and regulations. Evidently. ther&s some parallelism hetween vanous reg . tnd
Toby thought it would be complicated and time-consuming for me to sort through the regs. find the relevant portions. . nd lind the
parallelism that occurs. I told her Fd be very grateful for her notes. that it would certainly reduce the time spent in reviewini the
regs.
I asked her if there were States in addition to Nonh Carolina. Wisconsin. Minnesota. Illinois and California that might have
relevant regulations. She suggested calling both Washington and Oklahoma. and indicated she was going to contact a L dv ‘ iih
the last name of Jacobs here in Kansas.
Tohy expressed great interest in biotechnology, said she’s been following the issue closely, and thinks labeling will he EPA
greatest ditticulty in regulating pesucidal plants. Toby was very cooperative, took my phone number. said she was sure e d he
talking again (indicating I’d have questions about the State’s regs once I receive the material from her).
Au t h 0 Date: 2 / P -
Pamcipant: Date: ___________
Distribution: X j Author I I Participant File () Others Sandra M. Zavolta. U.S. EPA
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DPRA INCORPORATED
RECORD OP COMMUNICATION
[ X I TELEPHONE CONVERSATION DATE: February 4. 1993
F I INCOMING TIME: 3() a.m .
IX I OUTGOING
I MEETING . RECORDED BY. Nancy J. Ekart
SUBJECT: Plant Pesticides PROJECT NO.. 37SO.2O
PARTICIPANT(S). ORGANIZATION/DEPARTMENT. ADDRESS. TELE PHONE/EXT
Dr. Sieve Kendall. Plant Division. Oklahoma Dept. of Ag (41)5) 521-3864
SUMMARY: Dr. Kendall told me that Oklahoma has a biotech law. fashioned after that in North Carolina. He .ud the hiv h.L
provisions for field testing. but they haven c been used yet because there has not yet been any held testing in the I.ite oh
transgenic plants. There are 4-5 people in the State with APHIS permits. he says. but their work is still confined to the I ihor.itor
This include 2 to 3 people at Oklahoma State University and 1 to 2 persons at the NobLe Foundation. The efforts ol ihe c
researchers are still under APHIS control. Dr. Kendall says. with Oklahoma Dept. of Ag staff accompanying APHIS ‘ talt on ill
inspections of these labs that have been made.
Dr. Kendall will ask Kevin Holley. the primary person working in the hiotech area nght now, to send me a copy oh Oklaihoin.i .
biotech law. I should address any future questions to Mr. Holley. His phone number is the same as Dr. Kendall’s.
Signatures:
Author:
Date:
— Date:
Others Sandra M. Zavolta. U.S. EPA
4+”
Participant:
Distribution: I)(I Author ( Participant E 1 File I
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[ X I TELEPHONE CONVERSATION DATE: March 15, 1993
I INCOMING TIME: 9:00 a.m .
[ X ] OUTGOING
MEETING RECORDED BY: Nancy J. Ekart
SUBJECT: Plant Pesticides PROJECT NO.: 3780.203 L—
PARTICIPANT(S), ORGANIZATIONIDEPARTMENT, ADDRESS, TELEPHONE/EXT.
Bill Small. Association of Biotechnology Companies, 1666 Connecticut Ave NW, Suite 330. Washington. D.C. 20009-1039. 202 .
234-3330; FAX = (202) 234-3565
SUMMARY: I finally was able to talk to Bill; he hadn’t returned two previous calls. He was very cooperative, said Joanne was
welcome to call him in the future with any additional questions or concerns regarding the impact of registering plant pesticides on
biotech firms.
I reminded Bill that I had met him at the Canadian Embassy when I accompanied Sandy Zavolta of EPA to the biotech meeting.
He remembered meeting us. I told him that, based on my research, it seemed likely that the biotech firms would develop the
technology for plant pesticides patent the technology, license that technology to seed companies, and NOT come into EPA for
registration. I further said it would appear unlikely that biotech firms would be involved in the actual production and marketing of
the seed. Bill’s response was as follows:
That scenario will likely hold true for certain biotech firms, but not all. Some biotech firms may come in for
registration. The scenario as I described it is more likely to be true of biotech firms today than of biotech firms in
the future (with future undefined in terms of how many years).
• Calgene was a small biotech finit just a few years ago. Now it’s a large biotech firm that has developed the Flavr
Savr tomato nearly ready for marketing. Calgene does not have its own seed company. BUT has subcontracted out
to a grower to commercially produce the tomatoes, save some seed. Calgene will get both the toamtoes and the
seed back, and Calgene will both market the seed and sell the tomatoes. Some seed companies, however, are
challenging Calgene through the Courts.
• So while it may be true today that most biotech firms will license out the technology. it may not be true tomorrow.
• Bill mentioned a small” biotech firm in South Carolina, Seeds for the Future. It’s composed of just one woman
with a Ph.D. who has a research assistant working for her. She’s doing seed research using genetic modilication.
and is getting patents. I mentioned it would seem difficult for such a small company to go into large-scale
production, given the likely lack of capital. Bill says that may be right, but who knows how she might grow in the
future.
In conclusion and based on this one call. I think we may have to consider biotech firms in ow economic profile chapter and in ttu
economic impacts analysis. It clearly points out the need for additional research.
Signatures:,
Author.
Participant:
Distribution:
— )
.
.
.
Date /,/1 J9 3
(I ,
Date:
Sandra M. Zavolta, U.S. EPA; . .ar neI Ia r —
j)(l
Author [ ) Participant X I File ‘A
Others
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[ X] TELEPHONE CONVERSATION DATE: March 17. 1993
[ 1 INCOMING TIME: A.M .
[ XI OUTGOING
I MEETING RECORDED BY: Joanne Blair
SUBJECT: Plant Pestici PROJECT NO.: 3780.203
PARTICIPANT(S). ORGANIZATION/DEPARTMENT. ADDRESS. TELEPHONE/EXT.
Dr. Alan R. Goidhanimer, Director of Technical Affairs. Industrial Biotechnology Association, 1625 K Street N.W.. Suite 1101) .
Washington. D.C. 20006 (202) 857-0244
SUMMARY: I spoke with Dr. Goidhammer about which types of firms will mcur the registration costs associated with
transgenic plants that express plant pesticides. He reports that whether chemical. biotech. or seed companies incur the costs
associated with registration is dependent upon the (1) the type of crop expressing plant pesticides. and (2) the structure of the
company that developed the technology.
Companies that have developed specialty vegetable crops (tomatoes, squash. cucumbers, etc.) that express plant pesticides, be they
chemical, seed, or biotech. will likely go the route that Bill Small described for Calgene’s Flaw Saw tomato. That is. the
company will develop the technology, patent it, register the plant pesticide with EPA (paying for all costs of registration), provide
the transgenic seed to contractors to grow the vegetables, and receive the market- or processing-ready vegetable back from the
contractor, along with any seed harvested. Dr. Goldhammer reports that this is the most likely scenario for vegetables, it is simply
an extension of what is occurring today for many of the specialty vegetables grown. i.e.. vertical integration from the development
of the seed all the way to the market.
With companies that have developed transgenic field and grain crops that express plant pesticides such as cotton and corn. Dr.
Goldhammer believes that the patenting of the technology and the responsibility of registration will depend upon the structure ot
the company. not on the type of company (biotech. chemical, or seed). Major agribusiness finns such as Cargil. Monsanto. and
Ceiba-Geigy will likely go the route of companies with transgenic vegetables. i.e.. develop the technology to produce PPs. develop
the transgenic seed, register with EPA. and sell the seed through subsidiary seed distributors. He estimates that up to 50 percent
of the biotech firms that are members of’ IBA, will go this route--that these biotech firms either already have seed companies to
distribute the transgenic seed, or they will acquire the seed companies soon.
Companies that have developed the technology, but do not own seed companies to distribute the PPs may do one or more of
several things such as license Out the technology, sell the patent, acquire a seed company. etc. Dr. Goldharnmer believes that if
the cost of registering PPs are in the ballpark of the costs of registering microbial and biochemical pesticides. that even the
smallest of seed or biotech companies will have the capital to pay for the costs of registration without adverse impacts.
I asked Dr. Goldhammer if he had anything on the subject of defining “small TM biotech companies. or on the structure of the
biotech industry (many small firms, many large firms. etc.). He said the only thing he could think of is an accounting (1) report
from Earnston-Young. While this report is geared primarily toward privately held medical biotech firms, he did say that there is
some info on agricultural biotech companies and he will send me a copy.
Signatures:, -
Author: - Date:
Participant: Date: __________
Distribution: [ v i Author [ ] Participant File [ /] Others Sandra M. Zavolta. U.S. EPA
DPRA INCORPORATED
RECORD OF COMMUNICATION
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DPRA CORPORATED
RECORD OF COMMUNEATtON (CONT’D}
SUMMARY: (Cont’d)
DPRA INCORPORATED
RECORD OF COMMUNICATION
X I TELEPHONE CONVERSATION DATE: March 29. 1993
I] INCOMING lIME: A.M .
[ X I OUTGOING
MEETING RECORDED BY: Joanne Blair
SUBJECT: Plant Pesticides, Test Costs PROJECT NO.: 3780.203
PARTICIPANT(S), ORGANIZATION/DEPARTh ENT, ADDRESS, TELEPHONE/EXT.
Tim S urgin, ABC Laboratories. Columbia, Missouri. (314) 474-8579
SUMMARY: Tim Spurgin said that the company was currently very busy with budgeting and would not be able to give me any
detailed infonnation on test costs for three weeks. He did say that if I was surveying several laboratories that I would get widely
varying test cost estimates due to the diversity of analytical methods used in labs
I asked him if he could give me any information on the relative changes in costs of laboratory rests since 1989 (when we did the
Part 158 RIA test cost estimates). He said that while demand for tests has increased since 1989 due to reregistration requirements.
that increased competition an the lab testing industry has kept costs from “skyrocketin( as we have heard from others. He
guessed that 1993 costs would be 5% - 10% higher than 1989 costs.
He also went on to explain how regulatory burden and paperwork has greatly increased (and gave me several examples) which
they have had to account for in their test costs.
If we would like to call back in three weeks we should speak with the company’s VP of finance. Greg May at the above number.
Signatures:
Author
Panrcipant
Distribution:
Q E ::)
.
Date:
Date:
olti. U.S. EPA
4 Author
(a I
Paslicipant
[ ‘j ’Fde
[ wj’Others Sandra M. Zav
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DPRA INCORPORATED
RECORD OF COMMUNICATION
[ X l TELEPHONE CONVERSATION DATE: June 15, 1993
[ 1 INCOMING TIME: A.M .
[ X] OUTGOING
I MEETING RECORDED BY: Joanne Blair
SUBJECT: Immunotoxicity Test Cost PROJECT NO.: 3780.203
PARTICIPANT(S), ORGANIZATION/DEPARTMENT, ADDRESS. TELEPHONE/EXT.
Bob Sherwood, I1TRJ, 312 567-4845
SUMMARY: Sandy gave me Bob’s name and number as a possible contact for an estimate of the cost to do an
‘Immunoloxicity” test (Tier I, Human Health Effects).
Bob told me that this is a newly required test. that it had only been required for about one year and his company had only done
two of them to date. The Immunotoxicity test is a 30-day feeding study with a cost that varies depending upon study design and
whether rats or mice are fed. He said the average test runs about 580,000.
He did not know of another testing company that was doing this type of testing. Hazelton Labs and Pharmacon have been
advertising that they preform the Immunotoxicity test, but to his knowledge. to date, neither company had actually had a chance to
do the test (i.e., no customers).
Signatures: J.
Author: Date: ______
U
Participant: Date: _________
Distribution: [ j Author [ ] Participant [ 4 File [ ‘1’ hers Sandra M. Zavolta, U.S. EPA
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DPRA INCORPORATED
RECORD OF COMMUNICATION
[ X] TELEPHONE CONVERSATION DATE 1 I/19j93
X I INCOMING TIME: p.m .
OUTGOING
MEETING RECORDED BY: Joanne S. Blair
SUBJECT: Plant-pesticides EIA PROJECT NO: 3780 302
PARTICIPANT(S). ORGANIZATIONIDEPARTMENT. ADDRESS. TELEPHOISEE/E XT.
Terry Woodword, Virginia Commonwealth University. Institute of Biotechnology (804) 786-8565
SUMMARY:
Terry used a local biotech firm as an example to explain how small firms are able to remain m business while reporting negative
profits. sometimes for up to five years in a row. “Lim Biotech Labs” is a small biotech firm in Richmond, Virginia. Although
Lim Labs is not currently researching and developing transgenic plants. it has just registered a microencapsulated Bt product with
EPA
When Lim Labs started out, they received financing from USDA through the SBIR program and from joint contracts with USDA.
They also received funds from many private, local investors that recognized the potential of the compames products. When the
company made good progress with a particular product they were developing, investors would usually increase their monetary
investment in the company.
Another local firm called “Croptech” was established by a husband and wife team from Virginia Polytechnic Institute. Terry
referred to Croptech as a “paper” company. Much of this companies financing has come from family sources and from a second
mortgage taken out by the couple.
Apparently, small biotech firms can become quite creative when seeking financial support. I asked Terry if to his knowledge.
small biotech firms have budgeted for the costs of EPA registration, which is certain to occur If the small company is the result
of an individual starting up a firm, or from someone that’s from academia, then no. they usually have no idea of what the
registration costs might be. and don’t budget them in. However, if the small firm is a “breakoff” from another, large firm, then
yes, they probably have a handle on a registration cost estimate and have accounted for this cost in their R & D budgets.
He suggested that I call Lim Labs. Richmond VA at (804) 780-3855 and speak with the president, Jarel Kelsey. Also, try
CropTech, Blacksberg, VA at (703) 231-4325 and speak with either Dr. Carol Cramer or Dr. David Radin.
Signatures:
Author: Date: __________
Participant: Date: ___________
Distribution: [ I Author [ ] Participant [ ] File [ ] Others Sandy Zavolta, BEAD
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DPRA INCORPORATED
RECORD OF COMMUNICATION
[ X] TELEPHONE CONVERSATION DATE: 11122193
I ] INCOMING TIME, am .
X ] OUTGOING
MEETING RECORDED BY: Joanne S. Blair
SUBJECT Plant-pesticides EJA PROJECT NO.: 3780.302
PARTICIPANT(S), ORGANIZATION/DEPARTMENT, ADDRESS, TELEPHONE/EXT.
Jerel Kelsey, President, Urn Laboratories, Richmond. VA (804) 780-3855
SUMMARY: Although Lim Labs is not researching transgenic plants. they have researched microencapsulated Bt and just
recently received EPA registration. They are also considered a small biotech finn.
I asked Mr. Kelsey how small biotech companies finance themselves while waiting for their product to reach commercialization.
He reports that Lim Labs “has used it all”:
• Private and equity offenngs
• Debt financing
• Venture capital (from the risk taking investor)
• Public ventures with Canadian boards
• Sponsoring by Canadian investment bankers
For interim financing, they turn to shareholders and board members. Basically, they try to receive financing where ever its
available. He related that the toughest part of starting up a biotech firm or keeping a small biotech firm going, is trying to pay the
employees their salaries when the company doesn’t have a product.
He believes that the greatest hurdle to staying in business for small firms is in dealing with environmental regulations and EPA.
The delays in regulations, delays in getting a product registered, and the bureaucracy associated with EPA is incredible. He is
“really surpnsed that the internal delays within EPA due to the administration change” have been so extensive. These delays have
trickled down to his company, causing incredible delays in product registration and commercialization.
He believes that it will be even worse for companies developing and attempting to register transgenic plants because EPA has no
experience in this area, likely leading to uncertain registration requirements. He told of a biological product that Lim Labs
attempted to register with EPA, that even with EPA’s experience with biologicals. it took forever and was very “painful” for his
company. He believes the internal confusion at EPA is tremendous. He can’t even imagine the problems that will come with
transgenic plant registration.
It’s Mr. Kelsey’s opinion that only companies with ‘deep pockets” will be able to afford the registration requirements for
transgenic plants, not because the tests will be necessarily expensive, but because of the internal delays that are an everyday
occurrence with the Agency. Ideally, someday, biotech firms will be able “to make it through the regulatory maze in a cost
effective manner so they can make payroll”.
Mr. Kelsey welcomes any calls from Agency staff to discuss improving the regulatory process.
Signatures:
Author: Date: ___________
Participant: Date: ___________
Distribution: I I Author I I Participant [ I File I I Others Sandy Zavolta, BEAD
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DPRA INCORPORATED
RECORD OF COMMUNICATION
[ X J TELEPHONE CONVERSATION DATE 1212/93
[ X] INCOMING TIME. am
I OUTGOING
MEETING RECORDED BY: Joanne S Blair
SUBJECT: Plant-pesticides E IA PROJECT NO: 3780.302
PARTICIPANT(S), ORGANIZATION/DEPARTMENT. ADDRESS. TELEPHONE/EXT
David Radin Ph D., CropTech. BIacksbur , VA (703) 231-4325
SUMMARY: Dr. Radin, along with his wife, Carol Cramer. Ph.D. have founded a small biotechnology firm in Blacksburg.
Virginia called “Croplech’ Although they both work in the Department of Biotechnology at VPI, CropTech is a “spinoff” from
the university and was created to market a biotechnology product that they have developed. While he didn’t think he should tell
me what his product was. I believe he said that they were working on plants that produced beneficial products. Their company
will be one year old tomorrow
Dr Radin told me that “hightech’ biotech firms commonly go through 3 stages of financing as their products are researched and
developed. The first stage is a government program grant. called Small Business Innovative Research grants (SBIRs). These
grants are available from any federal department/agency to small businesses which are formally defined as <500 employees. In
reality, due to the relative small size of the grants and the elaborate procedure necessary to procure a grant, only businesses with <
50 employees ever apply for them. Despite the size of the grants (an average figure was quoted as 575K), this program is very
important for two reasons: (1) ii gets the business started. and (2) ii establishes credibility in the business, which is important
when the business seeks funding elsewhere.
The second stage involves private financing sources. These can be self-financed, family financed, bank loans, etc.
The third stage is where lums seek venture capital. This usually occurs in the 2nd to 3rd year in a products development and
can continue to be a source of funding through the 4th year when up to SI million can be raised. Foundations are another source
during this time penod. By the 5th to 7th year in product development, a business usually considers an initial public offering.
IPOs can bring upwards of 520-30 million into a promising business.
I asked Dr. Radin if he had thought about budgeting for the costs of EPA registration, once his product reaches the
commercialization stage. The EPA hasn’t even entered his mind, he told me. He has been working solely with USDA. He said
that once EPA published their registration requirements for Lransgenic plants and he had a chance to see them, he really didn’t
currently have the funds to begin budgeting for compliance costs. His budgeting ‘horizon’ is only about 2 years into the future.
Signatures:
Author: Date: ___________
Participant: Date: ___________
Distribution: [ I Author [ I Participant [ ] File [ ] Others Sandy Zavolta, BEAD
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