[Federal Register: January 27, 2006 (Volume 71, Number 18)]
[Rules and Regulations]
[Page 4495-4512]
[DOCID:fr27ja06-9]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 166

[EPA-HQ-OPP-2004-0038; FRL-7749-3]
RIN 2070-AD36

Pesticides; Emergency Exemption Process Revisions

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This action revises the regulations governing emergency
exemptions that allow unregistered uses of pesticides to address
emergency pest conditions for a limited time. One change provides
applicants for certain repeat exemptions a simple way to re-certify
that the emergency conditions that qualified for an exemption in a
previous year continue to exist. Another change revises the criteria
for determining when a potential emergency condition is expected to
cause a significant economic loss and revises the data requirements for
documenting the loss. These revisions streamline and improve the
application and review process by reducing the burden to both
applicants and the Environmental Protection Agency (EPA, or ``the
Agency''), allowing for potentially quicker decisions by the Agency,
and providing for consistent and equitable determinations of
``significant economic loss`` as the basis for an emergency. This
action also includes several minor revisions to the regulations. None
of these various improvements compromise protections for human health
and the environment.

DATES: This final rule is effective on March 28, 2006.

ADDRESSES: EPA has established a docket for this action under docket
identification (ID) number EPA-HQ-OPP-2004-0038. All documents in the
docket are listed on the http://www.regulations.gov web site. (EDOCKET, EPA's

electronic public docket and comment system was replaced on November
25, 2005, by an enhanced federal-wide electronic docket management and
comment system located at http://www.regulations.gov/). Follow the on-

line instructions. Although listed in the index, some information is
not publicly available, i.e., CBI or other information whose disclosure
is restricted by statute. Certain other material, such as copyrighted
material, is not placed on the Internet and will be publicly available
only in hard copy form. Publicly available docket materials are
available either electronically in EDOCKET or in hard copy at the
Public Information and Records Integrity Branch (PIRIB), Rm. 119,
Crystal Mall 2, 1801 S. Bell St., Arlington, VA, Monday
through Friday, excluding legal holidays. The Docket telephone number
is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Joseph Hogue, Field and External
Affairs Division (7506C), Office of Pesticide Programs, Environmental
Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-
0001; telephone number:<PHONE_NUMBER>; fax number:<PHONE_NUMBER>; e-
mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this Action Apply to Me?

    You may be potentially affected by this action if you are a
federal, State, or territorial government agency that petitions EPA for
an emergency use authorization under section 18 of the Federal
Insecticide, Fungicide, and Rodenticide Act (FIFRA). Potentially
affected entities may include, but are not limited to:
     Federal Government (NAICS Code 9241), i.e., Federal
Agencies that petition EPA for section 18 use authorization.
     State or Territorial governments (NAICS Code 9241), i.e.,
States, as defined in FIFRA section 2(aa), that petition EPA for
section 18 use authorization.
    This listing is not intended to be exhaustive, but rather provides
a guide for readers regarding entities likely to be affected by this
action. Other types of entities not listed in this unit could also be
affected. The North American Industrial Classification System (NAICS)
codes have been provided to assist you and others in determining
whether this action might apply to certain entities. To determine
whether you or your business may be affected by this action, you should
carefully examine the summary of the applicability provisions as found
in Unit III. If you have any questions regarding the applicability of
this action to a particular entity, consult the person listed under FOR
FURTHER INFORMATION CONTACT.

B. How Can I Access Electronic Copies of this Document and Other
Related Information?

    In addition to using EDOCKET (http://www.epa.gov/edocket/), you may

access this Federal Register document electronically through the EPA
Internet under the ``Federal Register'' listings at http://www.epa.gov/fedrgstr/.
 An electronic version of 40 CFR part 166 is available at E-

CFR Beta Site Two at http://www.gpoaccess.gov/ecfr/.

II. Purpose

    The primary purpose of this rulemaking is to simplify the process
of applying for emergency exemptions, and allow for potentially quicker
responses to emergency pest conditions, without affecting current
protections for human health and the environment. This action revises
the regulations at 40 CFR part 166, to make a variety of improvements
to the pesticide

emergency exemption program and process. The two most significant of
the revised requirements are streamlining provisions intended to reduce
the burden to both applicants and the Agency and to expedite decisions
on some exemption requests. The first of these revisions expressly
authorizes applicants for certain repeat exemptions to re-certify that
an emergency condition continues in subsequent years, and to
incorporate by reference all information submitted in a previous
application rather than annually re-submit complete but perhaps
redundant applications.
    The second change revises the approach to determining when a
potential emergency condition is expected to cause a ``significant
economic loss'' (SEL). In addition to reducing the application and
review burden, the new economic assessment approach will result in
consistent and equitable determinations of whether a significant
economic loss is expected. These two streamlining approaches have been
tested in limited pilot projects since 2003.
    In addition, EPA is making a number of revisions to correct or
update minor administrative aspects of the emergency exemption
regulations. The reason for each of these minor administrative
revisions falls into one of the following categories: Conformance with
statutory requirements arising from the Food Quality Protection Act of
1996 (FQPA); codification of improved practices that have been
voluntary but widely followed by applicants; and correction of
typographical or administrative errors. Also, the Agency is adding
specific language to the regulations to clarify that treatment of
``invasive species'' is a valid basis for issuing a quarantine
exemption.

III. Statutory Authority

    EPA regulates the use of pesticides under the authority of two
federal statutes: FIFRA and the Federal Food, Drug, and Cosmetic Act
(FFDCA).
    FIFRA provides the basis for regulation, sale, distribution, and
use of pesticides in the United States. FIFRA generally prohibits the
sale and distribution of any pesticide product, unless it has been
registered by EPA in accordance with section 3. (7 U.S.C. 136a).
Section 18 of FIFRA gives the Administrator of EPA broad authority to
exempt any federal or State agency from any provision of FIFRA if the
Administrator determines that emergency conditions exist that require
such an exemption. (7 U.S.C. 136p). Under section 2(aa) of FIFRA, the
term ``State'' is defined to include a ``State, the District of
Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam,
the Trust Territory of the Pacific Islands, and America Samoa.'' (7
U.S.C. 136(aa)).
    Section 408 of FFDCA authorizes EPA to set maximum residue levels,
or tolerances, for pesticides used in or on foods or animal feed, or to
exempt a pesticide from the requirement of a tolerance, if warranted.
(21 USC 346a). Section 408(l)(6) provides that where EPA grants an
emergency exemption under FIFRA section 18, the Agency must establish a
time-limited tolerance or exemption from the requirement of a tolerance
for any residues of the pesticide chemical in food or feed.

IV. Background

A. April 2003 Notice Initiating Pilot for Two Primary Revisions now
being Codified

    EPA published a Notice in the Federal Register on April 24, 2003
(68 FR 20145) (FRL-7293-6), announcing the initiation of a limited
pilot program to test two potential improvements to the emergency
exemption process. The pilot continued through the end of 2005, but has
not been extended for 2006 as it is superceded by this final rule. The
two potential improvements included in the pilot were: (1) Allowing
applicants for certain repeat exemptions to re-certify that the
emergency condition still exists in the second and third years, and to
incorporate by reference all information submitted in a previous
application rather than annually re-submit to EPA complete new
applications and, (2) a new approach to documenting an SEL that focuses
on the significance of the potential loss relative to yields and/or
revenues without the emergency rather than a comparison to historical
profit variation. The April 2003 notice also discussed whether
exemptions for the purpose of pest resistance management might be
allowed. Finally, the notice solicited public comment on all three
potential changes and announced EPA's plan to issue a proposed rule
addressing them. The two revised practices included in the pilot are
also included in this final rule, with modification. Today's final rule
expands the application to all pesticides, beyond the restriction to
reduced-risk pesticides under the limited terms of the pilot.
    Anyone interested in the background leading up to the pilot
program, or other related documents, may wish to review the
announcement of the pilot, and the related documents. EPA considers the
comments on the pilot program to be part of the administrative record
for this rulemaking. A public docket was established for that
announcement under docket ID number EPA-HQ-OPP-2002-0231. Interested
parties should follow instructions under ADDRESSES for accessing the
docket, but should use docket ID number EPA-HQ-OPP-2002-0231 to access
the docket for the April 24, 2003, announcement.

B. September 2004 Proposed Rule

    EPA published a proposed rule on September 3, 2004 (69 FR 53866)
(FRL-7371-3). The proposed rule included proposals for the two revised
practices in the pilot program, but without the limitation to reduced-
risk pesticides, as well as a number of minor administrative revisions.
Key public comments and Agency responses are briefly summarized in Unit
V. of this document and, more completely, in a separate Response to
Comments document available in the public docket.
    Those interested in seeing the proposed rule, related documents,
and public comments submitted may access them in the docket. A public
docket was established for this rulemaking under docket ID number EPA-
HQ-OPP-2004-0038. Interested parties should follow instructions under
ADDRESSES for accessing the docket.

C. Summary of Pilot Experience

    The pilot was started on April 24, 2003, and will not be extended
for the 2006 growing season as it is being superceded by today's final
rule. Applicability of the pilot was restricted to ``reduced-risk''
pesticides in order to limit the scope and effectively add an
additional margin of safety while the new procedures were tested.
Although participation in the pilot was limited, the process worked
well for both applicants and EPA.
    For the 2003 growing season, 16 exemptions were identified by EPA
as eligible for re-certification, of which 7 submitted re-certification
applications. In 2004, 12 exemptions were eligible, of which 4 applied
by re-certification, while in 2005, 10 exemptions were eligible for re-
certification and 6 used the process. EPA made expedited decisions on
re-certification requests under the pilot in an average of 9 days in
2003, 14 days in 2004, and 8 days in 2005, counted from receipt of the
request until the decision was made. Of the exemptions that were
eligible but for which no re-certification was submitted, some were for
pesticide uses that had obtained federal registration under FIFRA
section 3 since the previous year's exemption, some were not requested
at all (indicating that the

emergency ended), and the others were requested using conventional
exemption requests.
    The revised approach to determining an SEL applied to any new
exemption request, as long as the requested chemical was designated as
reduced-risk. However, for all 3 years of the pilot, EPA voluntarily
conducted economic evaluations of exemption requests using both the
current approach of historical 5-year data, as well as the proposed new
loss-based (tiered) approach. This experience indicates that the new
approach will not cause EPA to find SEL more commonly, nor expand the
definition of emergency. A retrospective analysis to develop the loss-
based approach, covering 2000 through 2003, showed that approximately
the same number of requests would result in an SEL finding using the
new, loss-based approach as actually occurred under the existing
approach. The new criteria will, in most cases, reduce applicants' data
burden and thereby streamline the exemption process.

V. Public Comments, EPA Responses, and Modifications for Final Rule

    This unit briefly discusses the major public comments received on
the proposed rule, EPA's responses to those comments, and changes made
in the final rule as a result. All comments leading to modifications to
the proposed revisions for the final rule are included here, as are
opposing comments on the same issues, and comments opposed to proposed
revisions for which modifications were not made. A more detailed,
complete summary of public comments and Agency responses is available
in a separate document in the public docket for this rule. That
document also addresses comments and responses on the April 2003
document that announced the pilot program.
    A total of 28 submissions of public comments on the proposed rule
were received. A total of 41 commenters were represented by these
comments, as some were submitted jointly by multiple parties. For ease
of discussion and a better understanding of the sources of the various
comments, commenters are grouped according to the type of organization
or interest. The number of comment submissions on the proposed rule, by
type of commenter are: Two by education/research groups; 3 by
agriculture/food industry groups; 1 by environmental/public interest
groups (joint submission by 13 groups); 12 by grower groups; 2 by
pesticide industry/registrants; 1 by a private citizen; and, 10 by
States (9 State lead pesticide regulatory agencies and 1 by the
American Association of Pesticide Control Officials, which represents
the States in pesticide regulatory matters).
    Generally, all except for the environmental/public interest groups
and the private citizen favored both of the two primary proposals,
although a few only commented on one of the two, and some suggested
modifications. The 13 environmental/public interest groups and the
private citizen were opposed to both of the primary revisions, but the
environmental/public interest groups also suggested some modifications
to the proposals.
    All changes made in the final rule relative to the proposed rule
are explained in this unit, while a summary of all provisions of the
final rule is in Unit VI. EPA decided to make these changes to the
proposed revisions after considering public comments on the proposed
rule. Each substantive comment is briefly paraphrased, followed by
EPA's response to that comment. Where multiple commenters made a
substantially similar comment, it is stated once, with an indication of
how many made the comment and the types of organizations the commenters
represent.
    This unit is organized into separate sections for the two main
provisions of the final rule, a section on all other aspects of the
rule, and a section on miscellaneous comments not covered in the first
three sections. Within each section, one or more issues raised by
commenters is addressed. For each issue, all applicable comments are
presented, followed by EPA's response, including the resulting
modification to the proposed revision, if any, and the rationale for
making the change or not.

A. Re-certification of Emergency Condition by Applicants

    EPA has significantly reorganized Sec.  166.20(b)(5) for improved
clarity, but no substantive changes relative to the proposed rule are
intended, except as discussed below.
    1. Commenter Issue: Allow re-certification beyond third year--(a)
Comments requesting modification to proposal. The proposed rule would
have allowed re-certification applications only in the second and third
years of an exemption for an applicant, assuming the exemption met the
eligibility criteria (e.g., type of emergency condition that could
reasonably be expected to continue). Many commenters stated that
eligibility to use a streamlined re-certification application for
repeat requests should not be limited to the second and third years of
an exemption, but rather be longer or indefinite, as there is no
compelling reason to limit it to 3 years. These commenters argued that
re-certification is specifically and solely for the purpose of
determining the existence of an emergency condition, and that EPA could
still decline a valid re-certification application based on new risk
information, availability of new alternative controls, or insufficient
progress toward registration of the requested use.
    In addition, full registration of a pesticide product often takes
longer than 3 years, particularly for minor uses, even when States move
expeditiously to identify the need. The commenters felt that States and
affected growers should not be penalized when registration actions take
more than 3 years. Commenters who supported allowing re-certification
beyond the third year suggested various alternative limitations,
including no limit. These general comments were made by 22 commenters
(9 grower groups, 7 State lead agencies, 2 education/research groups, 2
agriculture/food industry groups, and 2 pesticide industry/
registrants).
    (b) Opposing comments. Other commenters felt that applicants should
not be allowed to re-certify emergency conditions at all. They stated
that repeat conditions are routine, and therefore not an emergency, as
defined in the regulations. These commenters believe that repeat
requests reflect poor management by growers and that repeat exemptions
should be more difficult, not easier, to obtain. They contend that EPA
already grants too many repeat exemptions and ignores progress-toward-
registration requirements. Allowing applicants to re-certify emergency
conditions would only make matters worse. These comments were made by
13 environmental/public interest groups in a joint submission, and by
one private citizen.
    (c) EPA Response, including decision on re-certification limits.
EPA has carefully considered the comments summarized above concerning
whether, and how long, to allow re-certification applications. The
Agency is convinced not only that the re-certification process will
provide the intended benefits of reduced burden and potentially quicker
emergency response without negative consequences, but also that it
would afford the same benefits in subsequent years as it would in the
second and third years. Therefore, benefits would increase with the
greater applicability of this improved process. Any specific limit to
the number of years of eligibility for re-certification would be
arbitrary. Therefore, in the final rule EPA has chosen to remove the
applicability

restriction for re-certification that would have limited it to the
second and third years.
    However this modification to the proposed 40 CFR 166.20(b)(5)
includes the authority for EPA to declare an exemption ineligible for
re-certification at any time, on a case-by-case basis. In determining
whether to end eligibility for re-certification, the Agency will
consider the continued validity of the information, generally from the
original application, that documents the projected losses, as well as
whether any of the other information needs to be updated. If EPA
decides that updating the documentation of an SEL is likely to
significantly improve the projected loss estimates, or, if any other
information casts doubt on whether the initial conditions still exist,
then the Agency may declare the exemption ineligible for re-
certification. The applicant for any exemption that is ineligible for
re-certification may use a standard, full application format.
    In response to comments questioning whether re-certification, or
any repeat exemption requests, should be allowed at all, EPA has
recognized for many years that an emergency may continue for multiple
years when the emergency condition continues relative to the routine
situation prior to the first occurrence of the emergency. This most
commonly occurs when a pesticide, formerly relied upon by growers,
becomes unavailable for use or loses effectiveness and no other
effective means of pest control is available. Such a situation would
generally continue until an alternative control becomes available,
e.g., an effective alternative pesticide becomes registered for the use
(often the chemical requested for the exemption), or an effective
alternative non-chemical control becomes available.
    The ability to indefinitely re-certify emergency conditions is not
expected to increase the number of exemption requests submitted or the
number of exemptions granted. EPA expects that when an emergency
condition continues in a subsequent year, States would submit a repeat
application regardless of whether a streamlined or full application
were required. This rule reduces the burden in such situations. EPA
believes that the reduced burden afforded by this rule would not induce
applicants to make a repeat request.
    Re-certification that an emergency condition continues to exist,
for a previously granted exemption, would be part of a streamlined
application for an emergency exemption. If the same emergency condition
exists in a subsequent year that existed for the first year of an
exemption, then EPA would generally again find that the emergency
condition exists, regardless of whether a full application or a re-
certification application were submitted. A re-certification
application would simply reduce the burden on the applicant and help
the Agency make the emergency determination more quickly. However, a
determination by EPA that an emergency condition exists is not
sufficient basis for an exemption to be approved. A re-certification
application is no more likely to be approved than a full application
for the same repeat request. Like a full application, a re-
certification application would also be reviewed for, and could be
denied owing to any of the following: New risk information;
availability of new, effective alternative controls; or insufficient
progress toward registration of the requested pesticide use.
    Some commenters believe EPA grants too many repeat exemptions and
that some exemptions are repeated for too many years. EPA would like to
limit the number and length of long-running exemptions, and is pursuing
new opportunities for minimizing such outcomes. Each year, EPA makes
registration decisions on a large number of pesticide uses sought
separately by State applicants under the emergency exemption program.
For the fiscal years 2001 through 2004, EPA transitioned 313 uses to
federal labels that had been requested under the section 18 exemption
program, thereby precluding further repeat exemptions for those uses.
These products are registered after a comprehensive analysis of the
risks posed by these uses.
    In addition, the Pesticide Registration Improvement Act (PRIA),
enacted in early 2004, established time limits for EPA to make
decisions on registration actions under section 3 of FIFRA which should
further accelerate the pace of registration decision-making for all
actions. Because of the emphasis within PRIA on review schedules, EPA
is processing registration decisions more quickly than in the past.
Pesticide uses that are requested for repeat exemptions will either
gain registration more quickly than in the past, or their registration
application could be not granted or denied in the same timeframe. The
congressionally mandated review schedules under PRIA all become shorter
and more compressed in upcoming years. For instance, the Agency's
available review period for a new food use for a conventional pesticide
goes from 38 months in FY 2004 to 22 months in FY 2006. Similarly, the
review schedule for each type of registration action becomes shorter in
later implementation years of the law. Although PRIA shortens the
timeframe for registration decisions, the law also provides more
resources through registrant fees and does not compromise the rigorous,
comprehensive nature of the risk analysis necessary to support each
registration decision. In this manner, EPA expects that each
registration action will be evaluated within the context of PRIA. Under
the previous priority planning scheme, certain actions did not receive
priority due to resource and policy considerations. Additionally, EPA
is mandated to complete re-registration of older pesticides by the end
of 2006. Remaining decisions on eligibility to re-register pesticide
products are also expected to affect repeat exemptions, leading to the
denial of some and paving the way for the registration of others.
    The Interregional Research Project No. 4 (IR-4) program is a highly
successful cooperative effort and partnership of the State land grant
universities, industry, the U.S. Department of Agriculture (USDA), and
EPA, to address the chronic shortage of pest control options for minor
crops. In many cases, the crop protection industry lacks economic
incentive to pursue registrations on minor crops because of low acreage
and limited sales potential. IR-4 generates and supplies research data
needed by EPA in order to register compounds for use on minor crops.
The IR-4 process continues to improve, and registrations for repeat
exemptions are among the highest priorities in the IR-4 queue. In 1999,
IR-4 initiated a streamlined project schedule of 30 months for its
highest priority clearance projects. Pest management gaps associated
with section 18 applications qualify for this highest priority schedule
of 30 months. IR-4 is also increasingly performing research on
pesticides which are presumed to pose less hazard than traditional
synthetic chemicals. Over three quarters of the pesticides IR-4
evaluates and then submits for review to EPA are classified as reduced-
risk materials under the Agency's programs for supporting transition to
lower toxicity and sustainable means of pest management. Additionally,
the review schedule under PRIA also favors and places a bias in support
of submissions involving reduced-risk pesticides. For instance, the
Agency's review time period under PRIA for a new use of a conventional
pesticide in FY 2006 is 22 months whereas the review period for a
reduced-risk pesticide in FY 2006 is 20 months. These incentives could
help IR-4 and its collaborators realize a large

number of clearances. EPA anticipates that the processes discussed
above will further enhance recent successes in registering repeat uses
faster, as well as ensure that regulatory evaluations for any pending
registration actions associated with a section 18 use will take place
efficiently.
    EPA has authority under Sec.  166.32 to revoke any exemption during
its active use period, if the Agency learns that the emergency no
longer exists, the risks are unacceptable, the use is not effective, or
users are not complying with the terms and conditions of the exemption.
When necessary and appropriate, this provides another means to end
long-running exemptions quickly, without waiting for an exemption to
expire.
    2. Commenter Issue: Make voluntarily canceled pesticides ineligible
for re-certification--(a) Comments requesting modification to proposal.
Some commenters felt that voluntarily canceled pesticides should be
added to the list of pesticide categories for which, when requested for
an exemption, the applicant is not eligible to use a re-certification
application. The proposal already lists several categories of
pesticides (e.g., new active ingredient, first food use, canceled
pesticides) that warrant heightened review and public notice, and are
therefore not eligible for re-certification. These commenters contended
that EPA should not allow re-certification for voluntarily canceled
pesticides. This comment was made by 13 environmental/public interest
groups in a joint submission.
    (b) Opposing comments. No other comments were received on the issue
of pesticide categories ineligible for re-certification.
    (c) EPA Response, including decision on modification. The proposed
rule listed several categories of pesticides as ineligible for re-
certification. Specifically, the existing regulations at 40 CFR
166.24(a) identify a number of situations where, upon receipt of an
application for an emergency exemption, the regulatory status of a
pesticide product calls for public notice and comment. EPA believes
there is a legitimate need for heightened review and awareness of
exemption requests with the listed regulatory statuses. Both the
notice-and-comment requirements as well as the need for heightened
review would preclude the benefit of an expedited review that would
otherwise be expected from a re-certification application. The
categories proposed as ineligible for re-certification include new
pesticide active ingredients, first food uses, canceled or suspended
pesticides, and pesticides that have been the subject of a Special
Review. Because a pesticide that has been voluntarily canceled by its
registrant may be similar to these other categories of pesticides, the
Agency agrees with this comment and believes this category of pesticide
uses should also be ineligible for re-certification. Therefore, the
proposed 40 CFR 166.20(b)(5) is modified accordingly in the final rule.
Also, EPA is expanding the provision for 40 CFR 166.24 to add this
category of pesticide uses to those for which EPA will issue a Notice
of Receipt. Therefore, a Notice of Receipt will be published in
connection with the submission of emergency exemption uses that involve
pesticide uses which have been voluntarily canceled. Therefore, while
applicants may still request exemptions for a voluntarily canceled
pesticide, the streamlined re-certification application process will
not be allowed for such uses.
    3. Commenter Issue: Add to documentation requirements for repeat
exemptions--(a) Comments requesting modification to proposal. Some
commenters suggested that repeat applicants should be required to
document at least:
    (i) What effect the exemption had on the emergency condition during
the first year,
    (ii) Why the exemption continues to be necessary,
    (iii) That there are no feasible non-chemical alternatives, and,
    (iv) That the original predictions of economic harm are legitimate.
This comment was made by 13 environmental/public interest groups in a
joint submission.
    (b) Opposing comments. No other comments were received on the issue
of modifying the documentation requirements for repeat exemption
requests.
    (c) EPA Response, including decision on modification. EPA's
responses below correspond to the lettered list of the commenters'
suggested documentation requirements for repeat requests:
    (i) Annually, in a post-exemption report per Sec.  166.32, and with
any repeat application per Sec.  166.20(a)(11), applicants will still
be required to include a description of the effect the exemption had on
the emergency condition.
    (ii) A re-certification application must contain a certification
that the same emergency condition previously documented continues and
is the reason the exemption continues to be necessary.
    (iii) EPA believes that the applicant is in a better position than
the Agency to identify availability of a non-chemical alternative,
i.e., cultural practice, for the specific use in their State. EPA
agrees that it would be appropriate to have applicants (which are
primarily State agencies) for repeat exemptions document availability
and effectiveness of new non-chemical controls identified since the
previous year's application, or to certify that none are known.
Therefore, in the final rule EPA has added a requirement, at Sec.
166.20(b)(5)(v)(E), that applicants certify that they are not aware of
any alternative non-chemical practice that may offer a meaningful level
of pest control, or else provide documentation that each such known
practice does not provide adequate control or is not economically or
environmentally feasible. In situations where such effective and
feasible cultural practices are available, EPA would not grant the
exemption because there would not be an emergency condition, by
definition.
    (iv) One way to validate the reasonableness of the estimated losses
would be to allow them to happen, i.e., to grow the crop under the
emergency condition without use of the requested pesticide. EPA already
has the discretion to grant a repeat exemption subject to the condition
that some research areas be grown under the emergency condition without
use of the requested pesticide, although such validation has generally
not been required. Occasionally, confirmatory data, such as comparative
product performance studies, are required on repeat requests. The re-
certification program would not alter this practice. Furthermore, re-
certification requires that other economic factors that result in a
projection of an SEL (e.g. cost of alternative, crop prices) have not
changed substantially, and that there is no new information about pest
damage.

B. Determining and Documenting ``Significant Economic Loss'' (SEL)

    1. Commenter Issue: Lower quantitative thresholds for SEL, add
flexibility--(a) Comments requesting modification to proposal. Some
commenters said that the thresholds for the three tiers for determining
SEL should be lower, as the proposed thresholds require total
elimination of net income to qualify. Also, EPA should be allowed
flexibility to use judgement to make an SEL finding for situations not
meeting any of the thresholds. Commenters argued that total elimination
of annual net income is too severe a threshold, and that some lesser
loss constitutes a significant economic loss. These commenters feel the
three tiers should be screens to identify obvious emergencies, and that
flexibility, which does not clearly exist

in the proposed rule, should be added to identify the less obvious
emergencies. No commenter suggested an alternative level for any
threshold, or a basis on which to develop one. This general comment was
made by 17 commenters (9 grower groups, 4 State lead agencies, 2
agriculture/food industry groups, and 2 pesticide industry/
registrants).
    (b) Opposing comments. Other commenters felt that the proposed
quantitative thresholds for determining SEL are already too low. They
stated that the proposed tiered approach to document an SEL with the
selected thresholds would unreasonably expand the definition of
emergency and make it easier to find that an emergency exists. These
commenters felt that the proposed method allows prohibited pesticide
uses for profit. They assert that the proposed new approach together
with the quantitative thresholds for the three tiers are unlawful,
arbitrary and capricious, and contrary to congressional intent. This
comment was made by 13 environmental/public interest groups in a joint
submission.
    (c) EPA Response, including decision on modification. After
considering all comments, EPA believes that the proposed thresholds are
appropriate and should not be relaxed, but that flexibility should be
available to allow EPA to use judgement to make an SEL finding where
projected losses are particularly difficult to quantify or other
factors warrant an emergency exemption. Some commenters concluded that
the proposal provided no flexibility for EPA to use judgement to
determine an SEL for situations not meeting any threshold, regardless
of how close to a threshold quantitative loss projections may come. To
the extent that this comment reflects a concern that EPA would consider
only quantitative data in determining whether the loss thresholds are
met, EPA notes that it interprets the language of both the proposed and
final rule to allow for consideration of estimates based on qualitative
information, either alone or in addition to quantitative information,
in determining whether losses under the emergency condition would
exceed the thresholds for SEL. However, EPA intends to limit the use of
qualitative information to document projected losses, relying on such
information only in cases where credible quantitative information is
not available.
    In response to the concern that the quantitative loss thresholds of
Sec.  166.3(h)(1) may not apply to all pest activity primarily
affecting the current growing season, EPA has expanded Sec.
166.3(h)(2) so that EPA may use its broader criteria wherever they are
more appropriate. The proposed rule provided a loss-based approach with
quantitative thresholds applicable to pest activity primarily affecting
the current growing season under Sec.  166.3(h)(1), and ``for all other
pest activity'' included in a provision at Sec.  166.3(h)(2) to
determine an SEL for situations where the loss-based approach does not
adequately address the expected loss, similar to a provision in the
existing regulations. Such losses include those not confined to the
current year or those that impact capital assets rather than productive
activities. This change to Sec.  166.3(h)(2) will allow the flexibility
to apply an appropriate methodology for assessing the consequences of
an emergency, and help ensure that any of the widely variable
situations potentially causing an SEL can be adequately addressed.
    Although no commenter addressed the issue, EPA has corrected the
scope of the proposed SEL definition. The SEL criteria under the
proposed Sec.  166.3(h)(1) would have applied to ``pest activity that
primarily affects the current crop.'' For the final rule ``or other
output'' is added after ``current crop,'' so that non-crop productive
activities (e.g., dairy production) may also be assessed under the
loss-based, tiered approach. For the same reason, EPA has removed the
word ``crop'' from Sec. Sec.  166.3(h)(1)(i) and 166.20(b)(4)(i).
    As explained above, some commenters believe that the proposed
thresholds for SEL are too high, arguing that these thresholds
effectively require total elimination of net income to qualify. Other
commenters believe that the proposed thresholds make it easier to find
that an emergency exists, allowing unregistered pesticide uses for
profit. Actually, the selected thresholds neither raise nor lower the
standard for SEL. EPA's retrospective analysis of past exemption
requests, discussed in the Economic Analysis available in the public
docket for this final rule, shows that the new approach would not make
SEL findings any more common and would not otherwise expand the
definition of emergency. The analysis indicates that virtually the same
number of requests would result in an SEL finding using the new
approach as actually occurred under the current approach, although
different findings (in both directions) may occur in some individual
cases.
    Although the new tiered approach for determining SEL maintains the
same overall standard to qualify, its fixed, quantitative thresholds
intentionally make the standard consistent, in contrast to the current
variable standard. However, the fixed SEL standard allows an easy
comparison of the quantitative thresholds to farm income statistics. It
is true that, according to USDA statistics, the new thresholds for SEL
are roughly equivalent to elimination of net farm income from the
affected crop, if fixed costs are also considered. Because the new SEL
standard is comparable to the average of the current standard, for the
first time it is apparent that the current standard is approximately
equivalent to elimination of net farm income. However, when the States
recommended revising the approach to determining SEL, their stated
reason was to establish a fixed standard that is more equitable and
easier to document. EPA had extensive interaction with stakeholders
during the development of this rule, but received no input saying that
the existing standard for SEL was too high.
    EPA acknowledges that economic terms such as ``net revenue'' and
``net farm income'' may be confusing and are not always used the same
way by all parties. Although the proposed threshold for the third tier
for SEL is 50% of ``net revenues,'' as defined in the preamble to the
proposed rule, this is not equivalent to ``profits'' because it does
not include fixed costs. For the purpose of this rule, EPA defines net
revenue as gross revenue less variable operating costs. A calculation
of ``profit'' would typically subtract fixed costs from this amount. In
this case, ``profit'' is roughly equivalent to the gross pay of a
typical salaried employee and is essentially the return to the farmer's
labor and managerial skills. This is also referred to as ``net farm
income.'' If typical fixed costs were included in the consideration of
impacts on income, a loss of 50% of net revenues (Tier 3 threshold)
would, according to USDA statistics, result in approximate elimination
of net farm income. With this as the context for the SEL thresholds,
EPA believes that there is no basis for concern that farmers might
unduly profit from emergency exemptions.
    Section 18 of FIFRA provides broad discretion for EPA to define and
determine, by regulation, when an emergency exists. The Agency believes
that the new approach and thresholds are not arbitrary or capricious,
as they are essentially refinements to make the standard that has been
used for years more uniform and equitable, without raising or lowering
it. Furthermore, while this standard may seem severe to some, the
standard for SEL was always intended to identify and avert true
economic emergencies, and was not intended to maintain farm income at
or

near a certain level. EPA believes that there should be a high standard
for allowing an exemption from the requirements of registration. Even
if EPA were to consider a lower standard, the Agency is not aware of a
basis for selecting a lower standard that would not be arbitrary.

C. Other Regulatory Provisions

    1. Commenter Issue: Confirm efficacy and economics of non-chemical
alternatives--(a) Comments requesting modification to proposal.
Commenters stated that EPA should use section 18 to promote Integrated
Pest Management (IPM) by confirming the efficacy and economics of non-
chemical alternatives for pesticide uses requested for an emergency
exemption. This comment was made by 13 environmental/public interest
groups in a joint submission.
    (b) Opposing comments. No other comments were received on this
issue.
    (c) EPA Response, including decision on modification. The existing
Sec.  166.20(a)(4)(ii) already requires applicants to explain why
alternative practices would not provide adequate control or would not
be economically or environmentally feasible. Some time after this final
rule is issued, EPA plans to provide new guidance for applicants to
improve the quality and consistency of information submitted on non-
chemical alternatives. Although EPA supports and encourages IPM and use
of risk-reducing, alternative, non-chemical controls, as evidenced by
the Agency's voluntary Pesticide Environmental Stewardship Program, the
Agency does not directly regulate cultural practices. For this reason
and because applicants are typically State agricultural agencies, EPA
believes that the applicant is in a better position than the Agency to
identify availability of a non-chemical alternative practice for the
specific use in their State, and to assess its effectiveness and
feasibility. In this final rule, a new provision has been added at
Sec.  166.20(b)(5)(v)(E) to require that applicants using the re-
certification process separately certify that they are not aware of any
available chemical alternatives or reasonable non-chemical alternative
practices, or if they know of any such practice that they include with
the application documentation demonstrating that the chemical or
practice does not provide adequate control or is not economically or
environmentally feasible.
    2. Commenter Issue: Clarify or improve notification/confirmation
for crisis exemptions--(a) Comments requesting modification to
proposal. Commenters stated that for crisis exemptions, the proposal to
have applicants notify EPA and receive verbal confirmation from the
Agency of no risk-based objections before using the crisis provisions
needs clarification and possible revision. The proposal says that EPA
will attempt to provide such confirmation as quickly as possible, and
within 36 hours. Commenters stated that they may not be able to reach
the appropriate EPA contact on a Friday, a weekend, or a holiday, which
could delay confirmation and use of the crisis exemption until 36 hours
after the beginning of the next work day. They suggest that EPA make
someone available at all times, or, add a provision that notification
can be made by voicemail, and a consent by default would be assumed
after 36 hours if the applicant has not heard back from EPA by that
time. One commenter also suggested that EPA should make exceptions to
the 36-hour waiting period for EPA confirmation for some uses,
including public health crises, bioterrorism attacks, and non-food
uses. This comment was made by two State lead agencies.
    (b) Opposing comments. No other comments were received on this
issue.
    (c) EPA Response, including decision on modification. The reason
for this revision is to replace the current ambiguous language at 40
CFR 166.43(a), which allows for the possibility of a State or federal
agency notifying EPA after beginning use of the crisis provisions. The
revision will codify a process that has been widely practiced and
accepted by applicants, and that has become more necessary after
enactment of FQPA. FQPA expressly required that time-limited tolerances
be established for emergency exemption uses that may result in residues
in food. EPA maintains that it is in the best interest of all parties
(including States, EPA, users of pesticides under section 18, the food
processing and marketing industries, etc.) that there is some assurance
before the use begins that EPA will be able to establish a ``safe''
tolerance for a pesticide to be used under a crisis exemption. Without
that assurance, users run the risk of producing an adulterated crop
that results in unsafe pesticide residues and would be illegal to sell.
It is also important that EPA be given the opportunity to voice other
objections to a use being considered for a crisis exemption. The Agency
may be aware of risk issues unknown to the applicant, and has the
authority to deny crisis provisions for a particular pesticide use,
under Sec.  166.41(a).
    EPA is keenly aware of the time-sensitivity of emergency situations
for which crisis exemptions are needed. The Agency will continue to
make every effort to receive and quickly respond to notifications of
intent to declare a crisis. EPA believes that the concerns raised by
these commenters can be adequately addressed in the same manner that
EPA has managed these issues since enactment of FQPA. It is true that
EPA staff are not available at all times, such as at night or during
weekends, to receive notification of a State's intent to declare a
crisis. However, EPA believes that applicants generally first become
aware of the need for a crisis exemption at least a few days before
notifying EPA of its intent to issue a crisis exemption. If an
applicant notifies the Agency of their intent to declare a crisis as
soon as possible, even before they have gathered all of the necessary
information, EPA should be able to provide confirmation before use of
the pesticide is needed. The Agency believes that the existing
confirmation process now being codified has not caused significant
delays to use of crisis exemptions in the past. In fact, there have
been cases where EPA staff have worked with applicants during weekends
in order to provide timely confirmation, and in extraordinary
circumstances EPA will continue to do this in the future. A default
presumption of no EPA objection to a crisis exemption, in cases when
the Agency cannot be immediately reached, would provide neither the
necessary assurances for users of the pesticide, nor proper protections
for human health and the environment.
    EPA is not taking the commenter's suggestion that an exception to
the need for EPA confirmation be made in cases of non-food uses, or
public health or bioterrorism threats. For non-food uses, EPA can
generally provide confirmation more quickly than for food uses, but
must still be allowed the opportunity to identify other unacceptable
risks. In the case of major public health threats or bioterrorism, a
national emergency network and system is in place that will enable
applicants to contact EPA at any time, and EPA will quickly respond.
Through the National Infrastructure Protection Plan, as part of a
network of federal, State, and local governments, agencies can quickly
contact EPA whenever a public health threat arises, including
terrorism. In such cases, the Agency expects to be able to act very
quickly and at any time. For certain listed biological threats, there
is an expedited process in place whereby, once notified of the
emergency need for an unregistered pesticide or use, EPA would evaluate
the applicant's remedial action plan and, after considering the

safety and efficacy of such use, would decide whether to issue a crisis
decision.
    The Agency has modified the proposed language at Sec.  166.43(a)
for the final rule, to remove references to EPA's confirmation and the
36-hour time period, as it is not appropriate in this paragraph for
notification by applicants to EPA. EPA will strive to provide the
confirmation as quickly as possible and within the customary 36 hours,
and will attempt to match the urgency of decision-making with the
urgency of the situation. This final rule does not attempt to change
the timeframe in which EPA provides confirmation. The Agency's practice
will continue that the 36-hour clock does not start until EPA actually
receives and acknowledges the notice, and only applies to business
days. The lack of a response in 36 hours should not be interpreted as
approval of the crisis exemption; this final rule does not include
decision by default. The language in the proposed Sec.  166.40(c) is
modified for this final rule to allow EPA to withhold confirmation due
to any objection, not just risk-based objections.

D. Miscellaneous Comments

    Protections for endangered species under the emergency exemption
program and pest resistance management issues are discussed in Unit
VIII. These are important issues that were discussed in the preamble to
the proposed rule, but for which no regulatory revisions were proposed.
Some comments received on these issues are addressed in Unit VIII,
while other significant miscellaneous comments are included below.
    1. Commenter Issue: The section 18 pilot violates the
Administrative Procedure Act--(a) Comment summary. Commenters stated
that the section 18 pilot violates the Administrative Procedure Act
(APA) as a binding regulation without notice and comment. These
commenters went on to say that EPA solicited public comment on the
pilot provisions in the Federal Register Notice that initiated the
pilot, but failed to respond to those comments. This comment was made
by 13 environmental/public interest groups in a joint submission.
    (b) Opposing comments. No other comments were received on this
issue.
    (c) EPA Response. The comment that the pilot violated the APA is
not relevant to the proposed or final rule and to whatever extent it
might have been relevant to the pilot program, the issue is moot
because EPA has ended the pilot program. EPA disagrees with the comment
because the section 18 pilot program was not a binding regulation and
did not require notice and comment rulemaking under section 553 of the
APA. EPA believes that participants in the section 18 pilot program
conformed to the requirements of the Agency's existing regulations
pertaining to emergency exemption requests at 40 CFR part 166. The
purpose of the pilot was to gain experience and gather information for
the rulemaking on improvements to the section 18 process. The pilot was
intentionally limited in scope. During the course of the pilot, less
than 5% of all applications received were eligible for the pilot and
utilized its provisions. No applicant was required to use the pilot.
EPA is confident that the pilot's standard for an emergency finding was
no higher or lower than the current standard. The risk side of the
assessment and decision process was not changed for the pilot.
Furthermore, an additional safety margin was essentially added to the
pilot by limiting application to ``reduced-risk'' pesticides.
    During development of the proposed rule, EPA carefully considered
public comments received on the Federal Register Notice that initiated
the pilot. Those comments and EPA responses are summarized in the
separate response-to-comments document that also addressed comments on
the proposed rule and is available in the public docket.
    2. Commenter Issue: Documentation for endangered species needs
clarification--(a) Comment summary. Commenters stated that
documentation requirements for endangered species concerns in emergency
exemption requests need clarification and further guidance. They also
said that EPA, the U.S. Fish and Wildlife Service and the National
Marine Fisheries Service have data on endangered species that States do
not have, and these federal agencies should either provide such data,
or make it readily available to States. One commenter suggested that
when measures are necessary to protect endangered species, EPA should
involve the State early (before decision). This comment was made by
three State lead agencies and by AAPCO.
    (b) Opposing comments. No other comments were received on this
issue.
    (c) EPA Response: EPA believes that an important aspect of assuring
protections of endangered and threatened species in the implementation
of the emergency exemption program is to have available good
information on the potential exposure and risk of a requested use to a
listed species and its habitat. Some time after promulgation of this
final rule, EPA plans to issue improved guidance on what information
regarding threatened and endangered species should be included with an
application. EPA will continue to involve applicants in the discussion
of possible mitigation measures whenever it appears that threatened or
endangered species may be at risk.

VI. Final Rule Revisions to Emergency Exemption Process

    While Unit V. summarizes changes in the regulatory provisions of
the final rule from those in the proposed rule, Unit VI. summarizes how
this final rule revises the existing regulations at 40 CFR part 166
that govern the emergency exemption process.

A. Re-certification of Emergency Condition by Applicants

    1. How the re-certification process will work. This final rule adds
a new paragraph (b)(5) to 40 CFR 166.20 that allows applicants for
eligible repeat exemptions to submit streamlined ``re-certification''
applications. The re-certification application process applies only to
specific exemptions, and is not available to applicants for quarantine
exemptions, public health exemptions, or crisis exemptions. In
addition, re-certification can only be used if the same exemption was
approved for the same applicant the previous year, or use period, and
meets other eligibility criteria discussed below. Subject to
limitations specified in Sec.  166.20(b)(5) and discussed below, where
an emergency condition that originally qualified for an emergency
exemption continues in a subsequent year, eligible applicants may re-
certify that the same emergency condition continues and rely on the
preceding year's submission to document the economic impact of the pest
emergency. This re-certification approach allows applicants to
incorporate by reference all information submitted in a previous
application, instead of submitting a complete new application and
supporting documentation. The re-certification of the emergency
condition by the applicant combined with other information available to
EPA will serve as the basis for EPA's determination as to whether an
emergency condition continues to exist.
    While a re-certification application may allow for speedier
preparation of exemption requests and quicker determinations by EPA
that an emergency condition exists, it will not result in automatic
granting of an emergency exemption. In addition to an emergency
finding, before granting an exemption EPA must also determine that,
among other things, there are no

effective registered alternatives to the requested pesticide use, no
feasible alternative practices that provide adequate control are
available, the requested pesticide use will not cause unreasonable
adverse effects on human health or the environment, and there has been
sufficient progress towards registration of the requested use. If an
effective product has been registered for the requested use since the
previous exemption was approved, an emergency condition may no longer
exist. If the Agency has received new risk information since approving
the previous exemption, then the risk will be re-evaluated. Likewise,
if the request includes any change in the conditions of use that may
increase exposure, such as application rate, number of applications,
type of application, pre-harvest interval, re-entry interval, total
number of acres, or change in the geographic area proposed for
treatment, then the risk will also be re-evaluated. EPA may determine
that sufficient progress towards registration has not been made for a
requested pesticide use. The risk evaluation process for repeat
requests is not changed by this rule.
    Not all repeat exemption requests will be eligible for re-
certification. Upon approval of any specific exemption, EPA intends to
make an initial assessment regarding potential eligibility for a
streamlined re-certification application the following year, in the
event that the applicant reapplies the next year. EPA will consider the
following in determining potential eligibility to use a streamlined re-
certification application:
    1. Whether the emergency situation could reasonably be expected to
continue for longer than 1 year. An emergency situation could
reasonably be expected to continue where, for example, a registered
product relied upon by growers becomes permanently unavailable, a pest
expands its range, or a registered product ceases to be effective
against a pest. Situations that would not be expected to continue, and
therefore not be eligible for re-certification, would include a
temporary supply problem of a registered product, an isolated weather
event, or a sporadic pest outbreak.
    2. Whether the pesticide product, owing to its regulatory status,
warrants heightened review before any additional use is approved. EPA
will rely primarily on the same criteria used in the existing
regulations at 40 CFR 166.24(a), which identifies a number of different
situations where, upon receipt of an application for an emergency
exemption, the regulatory status of a pesticide product calls for
public notice and comment. The first five categories listed below are
from the existing 40 CFR 166.24(a), while the sixth is a similar
category, added for the final rule, as discussed in Unit V.A.2. An
applicant will be ineligible to use a re-certification application when
the following categories of pesticides are requested for an exemption:
    (a) A new chemical;
    (b) The first food use of an active ingredient;
    (c) Any use of a pesticide if the pesticide has been subject to a
suspension notice under section 6(c) of the Act;
    (d) A pesticide which:
    (i) Was the subject of a notice under section 6(b) of the Act and
was subsequently canceled, and
    (ii) Is intended for a use that poses a risk similar to the risk
posed by any use of the pesticide which was the subject of the notice
under section 6(b);
    (e) A pesticide which:
    (i) Contains an active ingredient which is or has been the subject
of a Special Review, and
    (ii) Is intended for a use that could pose a risk similar to the
risk posed by any use of the pesticide which is or has been the subject
of the Special Review;
    (f) A pesticide which:
    (i) Contains an active ingredient which was contained in a
pesticide product that was voluntarily canceled by its registrant, and
    (ii) Is intended for a use that could pose a risk similar to the
risk posed by any use of the pesticide which was voluntarily canceled
by its registrant.
    Furthermore, EPA may declare that an exemption that was previously
eligible for re-certification is no longer eligible. In determining
whether to end eligibility for re-certification, the Agency will
consider the continued validity of the information, generally from the
original application, that documents the projected losses, as well as
whether any of the other information needs to be updated. If EPA
decides that updating the documentation of an SEL is likely to
significantly improve the projected loss estimates, or, if any other
information casts doubt on whether the initial conditions still exist,
then the Agency may declare the exemption ineligible for re-
certification. The applicant for any exemption that is ineligible for
re-certification may use a standard application.
    In instances where EPA determines that an exemption is potentially
eligible for re-certification, EPA will advise the successful applicant
that, should it reapply the following year, they appear eligible to use
a re-certification application. EPA anticipates that this advice will
be included in the notice of approval of the current year's
application. However, if an exemption is not classified as a candidate
for re-certification in the approval notice, and an applicant believes
that subsequent information would make it eligible, the applicant may
contact the Agency to request an eligibility determination. In some
instances, EPA may determine that an emergency condition exists, and
that the exemption appears eligible for a re-certification application
the following year, yet conclude that additional information should be
gathered in order to support approval in future years. In such
instances, EPA may indicate in the approval notice that the exemption
appears eligible for re-certification provided the applicant submits
the specified information. Finally, EPA reserves the authority to
declare an emergency exemption ineligible for re-certification where,
in the Agency's sole discretion, it determines that a complete
application is necessary.
    An acceptable re-certification application must include not only
the applicant's re-certification that the emergency condition
continues, but also its certification to several other specific facts,
or be accompanied by additional information. An eligible re-
certification applicant will be exempted from the information
requirements of Sec.  166.20(a)(1) through (a)(10), and of the existing
Sec.  166.20(b), where the applicant certifies that:
    (i) The emergency condition described in the preceding year's
application continues to exist;
    (ii) Except as expressly identified, all information submitted in
the preceding year's application is still accurate;
    (iii) Except as expressly identified, the proposed conditions of
use are identical to the conditions of use EPA approved for the
preceding year;
    (iv) Any conditions or limitations on the eligibility for re-
certification identified in the preceding year's notice of approval of
the emergency exemption have been satisfied;
    (v) The applicant is not aware of any alternative chemical or non-
chemical practice that may offer a meaningful level of pest control,
or, if any, has provided documentation that each such known practice
does not provide adequate control or is not economically or
environmentally feasible.
    Applicants meeting the requirements of Sec.  166.20(b)(5), as
discussed above, would not need to submit new, updated documentation
that the emergency condition continues or the data elements otherwise
required under 40 CFR 166.20, except that the interim

report specified in Sec.  166.20(a)(11) would still be required where a
re-certification is filed before the final report on the previous
exemption is available.
    2. Rationale for new re-certification process. Allowing applicants
for eligible exemption requests to recertify the existence of an
ongoing emergency condition and to incorporate by reference all
information submitted in a previous application is expected to reduce
the burden to both applicants and EPA as well as allow for potentially
quicker decisions. When an applicant certifies the continuation of the
emergency condition and incorporates previously submitted materials by
reference, a complete new application sufficient to characterize the
situation in accordance with 40 CFR 166.20 will not be required. This
will save applicants time and effort in gathering data and preparing
their submissions. The Agency will save time and resources by not
having to annually repeat each administrative step of its review of the
documents supporting the exemption requests. If no pesticides that
could avert the emergency have been newly registered, no new non-
chemical controls have been developed, and nothing has changed to
affect the assessment of risk, then re-certification of an emergency
will lead to significantly shorter Agency review.
    For repeat exemption requests where the emergency situation has not
changed, EPA's experience with full, annual applications indicates that
projected yield and revenue losses are generally comparable to those
found the first year and a significant economic loss is again found.
This is reasonable since applicable losses are those resulting from the
emergency situation relative to the situation prior to the first
occurrence of the emergency. Therefore, with the applicant's
certification that the emergency condition continues and that all
information in the earlier application is still accurate, reliance on
the previously submitted data and other supporting information should
be adequate to support an emergency finding. Re-certification only
alters the process for an emergency finding, whereas determinations of
acceptable risk, availability of alternative controls, and progress
toward registration are not changed by this final rule. With a re-
certification application, the applicant and Agency must still address
these other areas necessary to approve or deny the request, just as
with a full application. Furthermore, the final rule provides that EPA
may declare an exemption ineligible for re-certification at any time,
should the Agency decide that a full application is more appropriate.
For the reasons discussed above, EPA believes that the re-certification
process will provide the benefits of reduced burden and quicker
emergency response, without compromising either the quality of
decisions or protections for human health and the environment.

B. Determining and Documenting ``Significant Economic Loss''

    1. How determination of significant economic loss (SEL) will work.
This rule re-defines ``significant economic loss'' at 40 CFR 166.3(h).
Under the new definition, the method for determining the amount of the
projected loss due to the emergency condition will not change, although
the calculation will be done in steps (tiers) and sometimes the later
steps will be unnecessary. However, the new definition of SEL changes
how EPA will determine whether the loss is considered ``significant.''
The revised approach provides standard criteria for determining the
significance of the projected loss, rather than comparing losses to
past variations in revenue or profit. The goal of the criteria is to
compare losses to farm or firm income in the absence of the emergency
in a manner that can be easily and consistently measured. Successive
screening levels (tiers) have been chosen that permit situations that
clearly qualify to be resolved quickly, with a minimum of data. Each
tier has a quantitative loss threshold that generally applies to all
eligible emergency exemption applications. If the pest situation does
not appear likely to result in a significant economic loss based on the
first tier analysis, it might qualify based on further analysis in
succeeding tiers. Each additional tier requires more data and involves
more analysis on how the emergency affects revenues.
    Tier 1: Yield Loss - Tier 1 is based on quantity loss, i.e., crop
yield or other output loss. If the projected yield loss due to the
emergency condition is sufficiently large, EPA would conclude that a
significant economic loss will occur, due to the magnitude of the
expected revenue loss. The yield loss threshold in Tier 1 is 20% for
all situations. This threshold is set at a sufficiently high level such
that a loss that exceeded the threshold would also meet the thresholds
in Tiers 2 and 3, if the additional economic data were submitted and
analyzed. Therefore, for such large yield losses it is not necessary to
separately estimate economic loss, which would require detailed
economic data.
    Tier 2: Economic Loss as a Percentage of Gross Revenues - A
quantity or yield loss that does not satisfy the threshold in Tier 1
may nonetheless cause a significant economic loss because such loss
alone may not reflect all economic losses. Quality losses may result in
reductions in prices received and/or there may be changes in production
costs, such as pest control costs and harvesting costs. For situations
with yield or output losses that do not meet the significant economic
loss criterion for Tier 1, EPA would evaluate estimates of economic
loss as a percent of gross revenue in Tier 2, to determine if the loss
meets that threshold for a significant economic loss. The economic loss
threshold in Tier 2 is 20% of gross revenue for all situations. Again,
this threshold in Tier 2 is set with the intention that losses
exceeding the threshold would also meet the threshold in Tier 3, if the
additional Tier 3 analysis were performed.
    Tier 3: Economic Loss as a Percentage of Net Revenues - If neither
quantity nor economic losses are above the thresholds in Tiers 1 and 2,
EPA will compare impacts to net revenues. Net revenues are defined for
the purposes of this rule as gross revenues minus operating costs. The
loss threshold in Tier 3 is 50% of net revenues for all situations.
Emergency conditions that fall short of the thresholds in Tiers 1 and 2
may qualify as a significant economic loss in Tier 3, particularly for
enterprises with high costs of production relative to gross revenue.
    Applicants should first determine whether their projected loss
meets the Tier 1 yield loss threshold of 40 CFR 166.3(h)(1)(i),
analytically the least burdensome criterion. The associated data
requirements appear in Sec.  166.20(b)(4)(i). If the projected loss
does not meet this threshold, applicants should determine whether their
projected loss meets the Tier 2 gross revenue threshold of Sec.
166.3(h)(1)(ii), providing additional data as noted in Sec.  166
20(b)(4)(ii). Failing to meet that threshold, applicants should submit
the data to perform the analysis necessary for the Tier 3 net revenue
threshold of Sec.  166.3(h)(1)(iii) as given in Sec.
166.20(b)(4)(iii). The three tiers established in Sec.  166.3(h)(1)(i),
(ii), and (iii) are designed such that when an emergency condition
qualifies for significant economic loss under a lower tier, data for
higher tiers are not required, and the burden and cost of preparing the
emergency exemption application are reduced. Each successive tier
builds upon the previous one. That is, the information required for
estimating a lower tier is also

necessary in estimating each higher tier. This allows an applicant to
collect data, and build a case for significant economic loss, as needed
and determined by the conditions, without requiring additional data.
Applicants will continue to submit data to demonstrate the emergency
nature of the pest outbreak including the basis for expected losses in
quantity, and sometimes quality and/or additional production costs.
However, applicants no longer need to submit historical economic data
demonstrating variations in revenues, although historical data may be
appropriate to define the baseline, routine, or ``without emergency''
scenario. The new guidance document that EPA is issuing in conjunction
with this final rule includes a description of information that EPA
expects applicants to submit in order to demonstrate an SEL.
    This loss-based approach is designed to capture the economic impact
of pest activity as it affects the current production season, which
will be sufficient for most emergency exemption applications. Although
Sec.  166.3(h)(1) applies the loss-based approach to pest activity
primarily affecting the current growing season, EPA has reserved the
authority to use a case-by-case approach in the new Sec.  166.3(h)(2).
Where EPA determines that the loss-based approach of Sec.  166.3(h)(1)
would not adequately describe the expected loss, for example long-term
losses in orchard crops, the Agency would continue to make its
significant economic loss determinations based on other criteria (i.e.,
a substantial loss or impairment of capital assets, or a loss that
would affect the long-term financial viability expected from the
productive activity) where the applicant demonstrates significant
losses that would not be recognized under Sec.  166.3(h)(1).
    2. Rationale for revised SEL approach. The revised methodology for
determining an SEL is intended to streamline the data and analytical
requirements for emergency exemption requests, and allow for
potentially quicker decisions by EPA. In addition, the methodology is
designed to reflect more accurately the significance of an anticipated
economic loss. Specifically, this approach makes a more direct
comparison between the losses anticipated owing to the emergency
situation and the yield and/or revenues without the pest emergency,
rather than a comparison to the historical range of profit variability.
Year-to-year profit variability often reflects market forces entirely
unrelated to pest pressure. Although EPA has attempted to make
allowances for crops' differing profit variability when determining the
economic significance of losses under the current approach, EPA
believes that the loss-based approach better and more directly permits
EPA to evaluate the significance of economic losses.
    An analysis of past emergency exemption requests suggests that this
revised approach will not cause a significant change in the overall
likelihood of an SEL finding, although findings may differ in
individual cases. The results of this analysis are discussed in the
Economic Analysis of the final rule, available in the public docket.
The analysis shows that in many cases an SEL can be adequately
demonstrated with less data and without loss of reliability or
flexibility through the revised methodology. The new approach is
expected to lead to savings to both applicants and EPA from reduced
data and analytical burdens. Under the new procedure, applicants may
elect to submit the minimum amount of data necessary to demonstrate a
significant economic loss in one of three increasingly refined tiers.
If the first tier is sufficient, the burden is reduced most
significantly, as it identifies the most obvious emergencies with less
data. The loss-based approach requires less data from applicants in
cases that qualify under Tier 1, where the same conclusion of a
significant economic loss would be made with the additional data and
analysis under the higher tiers. Even in the highest tier, the burden
may be reduced relative to the current approach as the analysis focuses
on the current year rather than historical data. Like re-certification
of emergencies, this approach is expected to save applicants time and
resources in gathering data and preparing submissions. The Agency's
burden should be reduced due to the simplified approach and clear,
consistent thresholds.
    Because the loss-based approach in today's final rule shifts the
focus from annual price variability to actual pest-related losses, it
is expected to lead to more consistent and transparent findings of the
significance of economic losses. Under the current approach, producers
of crops that have very wide fluctuations in net revenues, even if due
to price variability, may experience a large economic loss due to non-
routine pest-related conditions, without a significant economic loss
finding by EPA under strict adherence to the current approach. Other
crops and cases may have very little variation in historical net
revenues, which could lead to a small economic loss being found
significant under the current approach. Again, the new, loss-based
approach is designed so that it would not cause a significant change in
the overall likelihood of a significant economic loss finding, but it
may change the findings in individual cases so that determinations of
significance are more accurate, appropriate, and equitable.

C. Specifying Invasive Species as Targets under Quarantine Exemptions

    Existing regulations describe four types of emergency exemptions,
one of which is a quarantine exemption. The purpose of a quarantine
exemption is stated in 40 CFR 166.2(b) as follows:
    (b) Quarantine exemption. A quarantine exemption may be
authorized in an emergency condition to control the introduction or
spread of any pest new to or not theretofore known to be widely
prevalent or distributed within and throughout the United States and
its territories.

Quarantine exemptions are not necessarily for the purpose of, or
approved on the basis of, averting a significant economic loss,
although they may ultimately help prevent large economic losses. In
addition to being for the control of pests that are not widely
prevalent or distributed in the U.S., quarantine exemptions are
intended to control recently-introduced, non-native species. In recent
years such species have come to be commonly known as ``invasive
species.'' Because of the potentially widespread and devastating
impacts of invasive species to ecosystems, the environment, and the
economy, the challenge of preventing their introduction, and when
necessary controlling them, has garnered increasing attention in recent
years. Although invasive species implicitly fall within the scope of
quarantine exemptions, the now widely-recognized term does not appear
in the existing regulations, probably because it was not widely used at
the time 40 CFR part 166 was promulgated. This final rule adds the term
``invasive species'' to Sec.  166.2(b) and to Sec.  166.3(d)(3)(i), to
clarify that the intent of making quarantine exemptions available
includes the control of invasive species. The rule also adds, at Sec.
166.3(k), a definition of ``invasive species'' that is derived from
that used in Executive Order 13112 (64 FR 6183, February 3, 1999).

D. Updating Administrative and Communication Processes

    A number of minor revisions to 40 CFR part 166 are made with this
final rule to correct errors or update administrative aspects of the
emergency exemption regulations, particularly in light of the fact that
the Food Quality

Protection Act (FQPA), which amended FIFRA and the FFDCA, was enacted
since the regulations under part 166 were last revised. Each of these
revisions is made for one of the following reasons: (1) To correct
typographical or administrative errors or inaccuracies, (2) to bring
the regulations into agreement with current requirements put in place
by the FQPA, or (3) to reflect improvements to the process that have
been identified since 40 CFR part 166 was last revised, and that have
been voluntarily practiced by applicants. Each of these revisions are
non-substantive or reflect minor changes to the regulatory
requirements, but all correct, improve, or update the regulations. The
corrections of typographical or administrative errors or inaccuracies
are self-explanatory. The revisions for the other reasons are discussed
below.
    Under FFDCA section 408(l)(6), as amended by FQPA, EPA is required
to establish time-limited tolerances, or exemptions from the
requirement of a tolerance, for pesticide residues in food or feed
resulting from uses under emergency exemptions. The existing
regulations predate FQPA and therefore do not reflect this requirement.
Four revisions are made to bring 40 CFR part 166 into agreement with
current practices as required by the FFDCA. Inasmuch as FFDCA section
408(l)(6) applies to all food-use emergency exemptions, regardless of
whether its requirements are reflected in 40 CFR part 166, these
changes to 40 CFR part 166 do not substantively change the applicable
law. For ease of discussion, below, ``tolerance'' is used to refer to a
tolerance or exemption from the requirement of a tolerance.
    First, this rule amends Sec.  166.3(e) to revise the definition of
``first food use.'' The existing definition includes an explanation
that no permanent tolerance or food additive regulation has been
established for such a use. The word ``permanent'' is removed in the
revised definition so that any tolerance would be included, and the
reference to ``food additive regulation'' is removed because, owing to
the FQPA amendments, EPA no longer issues food additive regulations.
    Second, under Sec.  166.25--Agency Review, the regulations state
that the review enables EPA to make a determination with respect to
several items, including the level of residues in or on all food
resulting from the proposed use. The final rule revises Sec.
166.25(a)(2) to add the establishment of a time-limited tolerance for
such residues, where necessary.
    The third revision made necessary by FQPA is to add, under Sec.
166.40, an additional limitation to the authority of a State or federal
agency to issue a crisis exemption, namely, that they may issue a
crisis exemption for a food use only where a tolerance or exemption is
already in effect, or where EPA has provided verbal confirmation that a
time-limited tolerance for the proposed use can be established in a
timely manner. It is in the best interests of applicants and potential
users of the pesticide under the crisis exemption that there is some
assurance that an exemption can be established in a timely manner
before use of the pesticide begins. This revision at Sec.  166.40(c)
also stipulates that all crisis exemptions be conditioned upon EPA
confirming that it has no other objection to the use of the pesticide
under the crisis provisions.
    The fourth change is to remove from Sec.  166.30(b) and Sec.
166.47 the now-superfluous requirement that EPA directly notify the
U.S. Food and Drug Administration (FDA), USDA, and State health
officials. The original purpose of this requirement was to notify these
agencies of levels of pesticides that may occur in food and feed items
as a result of an emergency exemption use. Prior to FQPA, EPA did not
routinely establish tolerances for food use pesticides applied under an
emergency exemption program. This notification provision served to
advise other agencies of the exemption and to support field enforcement
activities. Now, however, with the FQPA requirement that time-limited
tolerances be established in accordance with FFDCA section 408(l)(6),
such levels are published in the Federal Register, along with detailed
background regarding safety of these tolerances, as well as
incorporated into 40 CFR part 180. Therefore, EPA considers providing
separate notification to the other regulatory organizations (FDA, USDA,
and State health officials) on an individual basis redundant to the
Federal Register notice and incorporation of the regulatory decision in
the appropriate section of 40 CFR part 180.
    Several revisions are made in this final rule to codify minor
improvements to the process that have been identified since the
existing regulations became effective. Applicants have been generally
following these practices, in most cases for several years, and EPA
believes that the public will generally agree that these are
improvements to the regulatory requirements. First, under Sec.  166.20,
``Application for a specific, quarantine, or public health exemption,''
paragraph (a)(2)(i)(A) is revised so that an application must include a
copy of the EPA-approved label for each specific pesticide product
requested, instead of the existing requirement to include the
registration number and name of the product. This will facilitate the
review of applications.
    Next, under Sec.  166.20(a)(3), the final rule adds a new item, and
revises several of the others, to specify that the conditions of use
requested in an application must include the maximum number of
applications, the period of time for which the use is proposed, and the
earliest possible harvest dates of the treated crop. Such information
is clearly necessary for both risk assessment and tolerance setting,
and in those rare occasions in the past where it was not apparent from
the application, EPA had to contact the applicant to obtain the
information. Expressly requiring this information in Sec.  166.20(a)(3)
will expedite review of applications and allow tolerances to be
established in an orderly fashion.
    Additionally, this rule revises Sec.  166.20(a)(9) to specify that
in addition to the registrant or manufacturer being notified of the
application submission, the application must also include a statement
of support from the registrant or manufacturer, and the expectation
that supplies of the requested material will be adequate to meet the
needs under the proposed emergency use.
    The existing regulations establish a measure of whether adequate
progress toward the registration of a repeat requested use is being
made. Existing regulations suggest that the lack of a request for
registration within 3 years of an emergency exemption first being
requested for the use suggests that adequate progress is not being
made. This final rule revises Sec.  166.24(a)(6)(i) and Sec.
166.25(b)(2)(ii) to relax this presumption for repeat emergency
exemption applications for uses being supported by IR-4. The IR-4
program is a cooperative effort of the state land grant universities,
USDA and EPA, to address the chronic shortage of pest control options
for minor crops. In many cases, the crop protection industry lacks
economic incentive to pursue registrations on minor crops because of
low acreage. IR-4 generates and supplies research data needed by EPA in
order to register compounds for use on minor crops. Owing to the
limited pest control options available for minor use crops, the
significance of the need evidenced by IR-4 action, and the limits on
IR-4 resources, a somewhat slower rate of progress towards registration
is reasonable for emergency exemptions for uses being supported by the
IR-4 program. Accordingly, this rule

revises Sec.  166.24(a)(7)(i) and Sec.  166.25(b)(2)(ii) so that the
presumption against adequate progress toward registration of repeat
emergency exemptions for uses being supported by the IR-4 program would
begin after 5 years, 2 years more than allowed for uses supported by
other, typically commercial, parties. For uses supported by parties
other than IR-4, the 3-year presumption in the existing regulations
remains in effect.
    This rule revises Sec.  166.30(a)(1) to reflect that EPA will not
process incomplete applications, and that action on such submissions
will be halted until required additional information is submitted.
    The rule clarifies Sec.  166.32(b) to ensure that applicants submit
interim use reports for exemptions when requesting a repeated emergency
exemption prior to the due date of the final report.
    This rule also clarifies the authority of an applicant to issue a
crisis exemption by specifying in Sec.  166.40(a) that crisis
exemptions are to be used only for unpredictable emergency conditions.
This change is strictly for purposes of clarification, as the term
``unpredictable'' already appears in the introductory language of Sec.
166.40, and does not represent any intention by EPA to change the
criteria for crisis exemptions. This rule also adds a paragraph (c)
under Sec.  166.40, so that the state's authority to exercise the
crisis exemption is stayed pending verbal confirmation by EPA that a
tolerance can be established in a timely manner and that the Agency has
no other objections.
    This final rule also revises Sec.  166.43(a)(1) to improve the
notification process for crisis exemptions, reflect the standard
practice of the state agencies, and provide for advance notice so that
EPA may make a determination of whether a tolerance may be supported in
accordance with FFDCA section 408 requirements. Section 166.43(a)(1) is
revised to require advance notification for crisis exemptions by
applicants. This replaces the currently ambiguous requirement that
notification must be made at least 36 hours in advance, or no later
than 24 hours after the decision of a state to avail itself of a crisis
exemption. Notification after the crisis has been declared does not
allow EPA to evaluate whether a crisis use can be supported with a
section 408 safety finding, or whether other potential risks are
unacceptable, before use of the pesticide begins. In any case, EPA will
continue to provide the necessary verbal confirmations as quickly as
possible, thereby often allowing use of the crisis exemption in less
than 36 hours. This final rule does not attempt to change the customary
36-hour timeframe for Agency response to notification. The Agency
recognizes that speed is important for all crisis exemptions, and that
certain situations may be particularly urgent, including, but not
necessarily limited to, national security threats and some requests
under USDA's Animal and Plant Health Inspection Service quarantine
program. EPA believes that these requests can be reviewed in a timely
manner through the appropriate use of OPP resources.
    To clarify necessary information for a crisis exemption, this rule
revises Sec.  166.43(b)(1) and (b)(4), to specify submission of the
registered label(s) for the pesticide product(s) proposed for crisis
use, as well as proposed use directions specific to the crisis use, and
the timeframe for the anticipated use, including end date.
    To bring the reporting requirements for crisis exemption requests
into agreement with those for specific, quarantine, and public health
exemption requests, this rule revises Sec.  166.49(a)(1) through (a)(4)
and deletes Sec.  166.49(a)(5), to clarify information requirements,
such as applicant, product used, site treated, and contact information.

VII. Implementation of Final Rule

    This final rule becomes effective March 28, 2006. Applicants
submitting exemption requests that are received by the Agency after
publication of the final rule, but before the effective date, will have
the option of using the revised approaches for re-certification or
documenting an SEL, or using the outgoing application method and
approach. Applications received by EPA after the effective date will be
processed under the approach described in today's final rule. However,
applicants for exemptions eligible to use a streamlined re-
certification request may still submit a full application, even after
the effective date. EPA recognizes that persons who have previously
obtained emergency exemptions have not yet been advised whether those
emergency exemptions are eligible for the re-certification program. The
Agency will use submissions received in fiscal year 2005 as the
baseline year for evaluating whether emergency exemptions are eligible
for the new re-certification program. As soon as possible, and before
the effective date of this final rule, EPA intends to share with
applicants and post on its web page a list of candidate exemptions that
appear to Agency reviewers to be eligible for the re-certification
program. Applicants that believe an exemption is eligible for re-
certification may submit a re-certification application prior to EPA's
release of the eligibility list. However, upon receipt, the Agency must
agree that it was eligible for re-certification in order to process the
request in that fashion.
    Applications that have already been received by EPA as of today's
publication date, January 27, 2006, will be processed and reviewed in
the context of the existing framework and authorities, unless the
applicant submits a replacement request under the provisions of the
final rule. The section 18 pilot program is terminated as a result of
the promulgation of this final rule.
    Mindful that this national program has many stakeholders, EPA plans
to provide training on how this final rule affects the application,
review, and approval process for emergency exemptions. EPA intends to
hold public meetings and develop information materials to help
applicants comply with this final rule and help others understand its
new provisions. A guidance document concerning the re-certification
process and the new, loss-based approach for determining and
documenting an SEL is being issued in conjunction with this final rule.
EPA plans to issue new guidance on other aspects of the final rule, or
revised guidance on other areas, in the future as it is needed and
available.

VIII. Related Issues and Emergency Exemption Program Context

A. Pest Resistance Management

    The April 24, 2003 Federal Register Notice, that initiated the
pilot to test the re-certification and revised SEL processes, indicated
that EPA was considering addressing pest resistance management (RM) in
this rulemaking. However, after carefully considering public comments
on that Notice and re-considering the possibility of emergency
exemptions for the purpose of resistance management, EPA decided not to
include such a change in the proposed rule. Additional comments on this
issue were received in response to the proposed rule and considered by
the Agency. EPA believes that section 18 is an inappropriate avenue for
addressing the worthy goal of managing pest resistance, for several
reasons.
    Some who commented on the proposed rule also stated that exemptions
for the purpose of RM should be allowed. Some commenters said that
although the recently enacted Pesticide Registration Improvement Act
(PRIA) may help bring more RM tools to

market sooner, it will not be sufficient to address the lack of RM
tools, particularly for minor crops. While these commenters recognize
the need to prevent abuse of RM exemptions, and the difficulty in
developing clear criteria for approval of an exemption for RM, they
believe that there is ample middle ground between liberally allowing RM
exemptions and allowing no such exemptions. This general comment was
made by 19 commenters (nine grower groups, four State lead agencies,
two education/research groups, two agriculture/food industry groups,
and two pesticide industry/ registrants).
    Virtually all commenters that addressed RM agree with EPA that any
potentially successful approach for RM exemptions would be proactive,
allowing exemptions before resistance has occurred for a particular use
in the field. Most also agree that predicting and documenting a case of
resistance would be highly variable and complex. The Agency believes
that the burden to applicants of preparing a request for an RM
exemption that included such documentation would be substantially
higher than the burden of preparing other requests. EPA believes such
costly and complex burden is contrary to the purpose of this
rulemaking. Likewise, the burden to EPA of reviewing and deciding on
such a request would be high, diverting resources from other
priorities. EPA feels that such a burden is not the best use of Agency
resources, and that other means of dealing with RM would be both more
efficient and more appropriate. Furthermore, a need for an RM tool to
address a future problem arguably does not fit within a conventional
interpretation of ``emergency.''
    EPA understands the importance of pest resistance management and
continues to explore how to best use its regulatory and non-regulatory
authorities to support and facilitate effective RM. The Agency believes
that RM capabilities will be improved through a multi-faceted approach
involving incorporating RM considerations into pesticide labeling
(i.e., Pesticide Registration Notice 2001-5), registering more
pesticides for minor crops, resistance management education programs,
crop management and stewardship programs, further crop grouping for
tolerance setting, and outreach efforts with stakeholders. Under PRIA,
EPA is making more timely decisions and accelerating the registration
of many products expected to be useful for RM. EPA's process for
classifying a pesticide product as ``reduced-risk'' considers RM as an
important factor. New products that would address significant RM needs
would reach the market sooner, thereby providing a strong incentive to
registrants to incorporate RM in their registration submissions. Also,
the IR-4 process has continued to improve in recent years, identifying
priority pesticide needs for minor crops and facilitating quicker
registrations, including many useful RM tools.

B. Endangered Species Considerations

    The existing emergency exemption regulations include information
requirements for applicants and review requirements for EPA concerning
threatened and endangered species. In the proposed rule, EPA did not
propose to revise these requirements. However, a discussion of plans
for improving the process for ensuring that pesticides used under
emergency exemptions do not affect threatened and endangered species
was included in the preamble. One comment submission on the proposed
rule claimed that EPA's section 18 activities routinely violate the
Endangered Species Act (ESA). These commenters said that the
streamlining proposals would make matters worse. The commenters said
that EPA does not list a single example of consultation with the U.S.
Fish and Wildlife Service (FWS) or the National Marine Fisheries
Service (NMFS) in the course of a section 18 review. They also cite a
recent letter from FWS to EPA Region 2 stating that the section 18
process insufficiently addresses EPA's consultation obligations under
ESA. This comment was made by 13 environmental/public interest groups
in a joint submission, and no other comments were received on this
issue.
    EPA disagrees that this final rule in any way lessens protections
for threatened and endangered species. As noted, the regulatory
provisions regarding submission and consideration of information
relating to listed species have not been altered by the rule nor have
EPA's obligations under the ESA been altered. EPA also disagrees that
its plans for improving its processes will make matters worse. Indeed,
EPA plans, as discussed in the proposal, explain that the Agency and
FWS and NMFS (the Services) have developed mechanisms to provide
increased and more expeditious scrutiny to these issues than the Agency
has in the past.
    The Services, in collaboration with EPA and USDA, have developed a
counterpart regulation (50 CFR part 402), that would make the process
of consultation about EPA actions involving pesticides - including any
necessary consultations for emergency exemptions under section 18 -
more efficient, effective, and timely, thereby strengthening the
protections for endangered and threatened species. As part of the work
supporting the counterpart rule, the Services and EPA reviewed the
Agency's approach to the assessment of potential risks to listed
species resulting from pesticide use. The Services agreed that EPA's
approach to ecological risk assessment ``will produce effects
determinations that reliably assess the effects of pesticides on listed
species and critical habitat pursuant to section 7 of the ESA and
implementing regulations.'' (69 FR at 47735).
    EPA looks closely at potential ecological risks of pesticide use in
connection with decisions on requests for emergency exemptions. As a
result of the Services' acceptance of the Agency's ecological risk
assessment process, the Agency intends to provide new guidance and to
work closely with applicants for emergency exemptions, to improve the
information submitted concerning threatened and endangered species and
possible effects on them of the requested use. EPA anticipates that
these measures will fall within existing requirements but should
increase the availability of essential information needed to make a
timely and substantive determination of the potential impact to
endangered and threatened species. As EPA develops this new guidance,
EPA will look for opportunities to enhance consideration of these
impacts in its emergency exemption decision process, including any need
to consult with FWS and NMFS.

C. Improving Transparency in Decisions

    One of the ongoing challenges for EPA in relation to the emergency
exemption program is to ensure that State agencies and interested
stakeholders have useful, accurate, and timely information on the
status of applications they are interested in as well as other key
information that could help clarify pesticide use directions and
facilitate observance of necessary safety restrictions that have been
placed on the exempted use pattern. Along these lines, EPA is striving
to upgrade the quality of the information available to States,
pesticides users, extension agents and other key stakeholders under the
section 18 program and also to enhance the transparency of this program
in general. One activity that the Agency has developed in this area is
a searchable section 18 data system that is supported on the Office of
Pesticide Programs' web page. This data system, located at http://cfpub1.epa.gov/oppref/section18/search.cfm
 permits basic queries of

submissions and overall status information for emergency exemption
applications. EPA also publishes information notices in the Federal
Register in accordance with 40 CFR 166.30. These are retrospective
summaries of the section 18 activity sorted and presented on the basis
of the requesting agency.
    EPA is also exploring other means of providing useful status and
regulatory information for emergency exemptions that involve pest
management concerns of national significance. For instance, in
connection with the response to the newly identified select agent that
causes the plant disease soybean rust, EPA has developed a special web
page (http://www.epa.gov/oppfod01/cb/csb_page/updates/soybean_rust.htm
) that provides the public with a comprehensive listing of all

of the products that have claims for control of the soybean rust
pathogen. Soybean rust is a serious disease of soybean crops and has
been identified as a select agent under the Agricultural Bioterrorism
Control Act. Due to the national scope of the soybean industry, there
has been significant interest on the part of the public in learning
which pesticides have regulatory clearances for this pest. Finally, EPA
is exploring another initiative for sharing information on the section
18 program more extensively. Specifically, EPA is investigating ways to
post more comprehensively its decision documents under this program.
Section 18 decision letters are public documents which the Agency
transmits to the requesting state agency. However, certain stakeholders
have requested copies of these materials directly. To this end, EPA has
plans for posting its decision documents under section 18 on the
Agency's web page.

IX. FIFRA Review Requirements

    In accordance with FIFRA section 25(a), this final rule was
submitted to the FIFRA Science Advisory Panel (SAP), the Secretary of
Agriculture (USDA), and appropriate congressional committees. The SAP
has waived its review of this final rule, and no comments were received
from any of the congressional committees or USDA.

X. Statutory and Executive Order Reviews

A. Executive Order 12866

    Under Executive Order 12866, entitled Regulatory Planning and
Review (58 FR 51735, October 4, 1993), the Office of Management and
Budget (OMB) has determined that this final rule is not a ``significant
regulatory action'' under section 3(f) of the Executive Order.
    In addition, EPA has prepared an economic analysis, entitled
Economic Analysis of the Pesticides Emergency Exemption Process
Revisions, of the potential regulatory impacts of this final action on
those affected. A copy of this Economic Analysis is available in the
public docket for this action and is briefly summarized here.
    This action is not expected to cause any significant adverse
economic impacts. There are no direct impacts on local governments or
small entities, because this action directly affects only Federal and
State agencies that petition EPA for section 18 use authorization,
neither of which qualify as a small entity under the Regulatory
Flexibility Act (RFA). The only substantive impacts expected are burden
reductions to applicants for emergency exemptions, and to EPA in the
review process, as well as quicker responses to emergency conditions.
As detailed in the Economic Analysis prepared for this final rule,
based on predicted future applications affected by the regulatory
revisions, EPA estimates the annual combined savings for applicants and
EPA of around $1.5 million; nearly $1.2 million from re-certification,
and over $0.3 million from changing to the loss-based method of
determining SEL.

B. Paperwork Reduction Act (PRA)

    This action does not impose any new information collection burden
that would require additional approval by OMB under the Paperwork
Reduction Act (PRA), 44 USC 3501 et seq. This rule is expected to
reduce the existing burden that is approved under OMB Control No. 2070-
0032 (EPA ICR No. 596), which covers the information collection
activities contained in the existing regulations at 40 CFR part 166,
and under the pilot program announced April 23, 2003 (68 FR 20145).
    The annual respondent burden for the collection of information
currently approved by OMB is estimated to average 99 hours per
application. A copy of the OMB approved Information Collection Request
(ICR) has been placed in the public docket for this rulemaking, and the
Agency's estimated burden reduction is presented in the Economic
Analysis that has been prepared for this rule.
    Under the PRA, ``burden'' means the total time, effort, or
financial resources expended by persons to generate, maintain, retain,
or disclose or provide information to or for a federal agency. This
includes the time needed to review instructions; develop, acquire,
install, and utilize technology and systems for the purposes of
collecting, validating, and verifying information, processing and
maintaining information, and disclosing and providing information;
adjust the existing ways to comply with any previously applicable
instructions and requirements; train personnel to be able to respond to
a collection of information; search data sources; complete and review
the collection of information; and transmit or otherwise disclose the
information.
    An agency may not conduct or sponsor, and a person is not required
to respond to an information collection request unless it displays a
currently valid OMB control number. The OMB control number assigned to
this final rule (No. 2070-0032) will be listed in 40 CFR part 9.

C. Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act (RFA),
5 U.S.C. 601 et seq., the Agency hereby certifies that this rulemaking
will not have a significant adverse economic impact on a substantial
number of small entities. This action will only directly impact State
and Federal agencies, neither of which qualify as a small entity under
the RFA. This final rule does not have any direct adverse impacts on
small businesses, small non-profit organizations, or small local
governments. Section 18 only applies to Federal and State governments.

D. Unfunded Mandates Reform Act

    Under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
(Public Law 104-4), EPA has determined that this action does not
contain a Federal mandate that may result in expenditures of $100
million or more for State, local, and tribal governments, in the
aggregate, or the private sector in any 1 year. This final rule only
applies to Federal and State government agencies, the only entities
that can petition the EPA under FIFRA section 18. As such, this action
will not impact local or tribal governments or the private sector, and
will not significantly or uniquely affect small governments. In
addition, as described in Unit X.A., this final rule is expected to
result in an overall reduction of existing costs for applicants and EPA
of around $1.5 million. Accordingly, this rule is not subject to the
requirements of sections 202 and 205 of UMRA.

E. Executive Order 13132

    Pursuant to Executive Order 13132, entitled Federalism (64 FR
43255, August 10, 1999), EPA has determined that this final rule does
not have ``federalism implications,'' because it

will not have substantial direct effects on the states, on the
relationship between the national government and the states, or on the
distribution of power and responsibilities among the various levels of
government, as specified in the Order. As indicated above, this final
rule is expected to reduce burden on Federal and State government
agencies that petition EPA under FIFRA section 18, and on EPA in
processing the applications. Thus, Executive Order 13132 does not apply
to this final rule. In the spirit of the Order, and consistent with EPA
policy to promote communications between the Agency and State
governments, EPA specifically solicited comment from State officials on
the proposed rule.

F. Executive Order 13175

    As required by Executive Order 13175, entitled Consultation and
Coordination with Indian Tribal Governments (65 FR 67249, November 6,
2000), EPA has determined that this final rule does not have tribal
implications because it will not have any effect on tribal governments,
on the relationship between the Federal government and the Indian
tribes, or on the distribution of power and responsibilities between
the Federal government and Indian tribes, as specified in the Order. As
indicated above, this rule only applies to State and Federal government
agencies. FIFRA section 18 does not apply to tribal governments. Thus,
Executive Order 13175 does not apply to this final rule.

G. Executive Order 13211

    This final rule is not subject to Executive Order 13211, Actions
Concerning Regulations that Significantly Affect Energy Supply,
Distribution, or Use (66 FR 28355, May 22, 2001) because it is not
designated as an ``economically significant'' regulatory action as
defined by Executive Order 12866 (see Unit X.A.), nor is it likely to
have any significant adverse effect on the supply, distribution, or use
of energy.

H. Executive Order 13045

    Executive Order 13045, entitled Protection of Children from
Environmental Health Risks and Safety Risks (62 FR 19885, April 23,
1997) does not apply to this final rule because this action is not
designated as an ``economically significant'' regulatory action as
defined by Executive Order 12866 (see Unit X.A.), nor does it establish
an environmental standard, or otherwise have a disproportionate effect
on children.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), (15 U.S.C. 272 note) directs EPA to use voluntary
consensus standards in its regulatory activities unless to do so would
be inconsistent with applicable law or impractical. Voluntary consensus
standards are technical standards (e.g., materials specifications, test
methods, sampling procedures) that are developed or adopted by
voluntary consensus standards bodies. This final rule does not impose
any technical standards that would require EPA to consider any
voluntary consensus standards.

J. Executive Order 12898

    This final rule does not have an adverse impact on the
environmental and health conditions in low-income and minority
communities. Therefore, under Executive Order 12898, entitled Federal
Actions to Address Environmental Justice in Minority Populations and
Low-Income Populations (59 FR 7629, February 16, 1994), the Agency has
not considered environmental justice-related issues.

XI. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., generally
provides that before a rule may take effect, the Agency promulgating
the rule must submit a rule report that includes a copy of the rule to
each House of the Congress and the Comptroller General of the United
States. EPA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. This rule is not a
``major rule'' as defined by 5 U.S.C. 804(2).

List of Subjects in 40 CFR Part 166

    Environmental protection, Administrative practice and procedure,
Agricultural commodities, Pesticides and pests, Reporting and
recordkeeping requirements.

    Dated: January 13, 2006.
Stephen L. Johnson,
Administrator.

0
Therefore, 40 CFR chapter I is amended as follows:

PART 166--[AMENDED]

0
1. The authority citation for part 166 continues to read as follows:

    Authority: 7 U.S.C. 136-136y.

0
2. Section 166.2 is amended by revising paragraph (b) to read as
follows:

Sec.  166.2   Types of exemptions.

* * * * *
    (b) Quarantine exemption. A quarantine exemption may be authorized
in an emergency condition to control the introduction or spread of any
pest that is an invasive species, or is otherwise new to or not
theretofore known to be widely prevalent or distributed within and
throughout the United States and its territories.
* * * * *
0
3. Section 166.3 is amended by revising paragraphs (a), (d)(3)(i), (e),
(h), and adding paragraphs (k) and (l) to read as follows:

Sec.  166.3   Definitions.

* * * * *
    (a) The term the Act means the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended, 7 U.S.C. 136 et seq.
* * * * *
    (d) * * *
     (3) * * *
     (i) Involves the introduction or dissemination of an invasive
species or a pest new to or not theretofore known to be widely
prevalent or distributed within or throughout the United States and its
territories; or
* * * * *
     (e) The term first food use refers to the use of a pesticide on a
food or in a manner which otherwise would be expected to result in
residues in a food, if no tolerance or exemption from the requirement
of a tolerance for residues of the pesticide on any food has been
established for the pesticide under section 408(b)(2) and (c)(2) of the
Federal Food, Drug, and Cosmetic Act.
* * * * *
    (h) The term significant economic loss means that, compared to the
situation without the pest emergency and despite the best efforts of
the affected persons, the emergency conditions at the specific use site
identified in the application are reasonably expected to cause losses
meeting any of the following criteria:
    (1) For pest activity that primarily affects the current crop or
other output, one or more of the following:
    (i) Yield loss greater than or equal to 20%;
    (ii) Economic loss, including revenue losses and cost increases,
greater than or equal to 20% of gross revenues;
    (iii) Economic loss, including revenue losses and cost increases,
greater than or equal to 50% of net revenues;
    (2) For any pest activity where EPA determines that the criteria in
paragraph

(h)(1) would not adequately describe the expected loss, substantial
loss or impairment of capital assets, or a loss that would affect the
long-term financial viability expected from the productive activity.
* * * * *
    (k) The term invasive species means, with respect to a particular
ecosystem, any species that is not native to that ecosystem, and whose
introduction does or is likely to cause economic or environmental harm
or harm to human health.
    (l) The term IR-4 program means the Interregional Research Project
No. 4, a cooperative effort of the state land grant universities, the
U.S. Department of Agriculture and EPA, to address the chronic shortage
of pest control options for minor crops, which are generally of too
small an acreage to provide economic incentive for registration by the
crop protection industry.
0
4. Section 166.20 is amended by revising paragraphs (a)(2)(i)(A),
(a)(3), (a)(9), (b)(4), and adding paragraph (b)(5) to read as follows:

Sec.  166.20  Application for a specific, quarantine, or public health
exemption.

     (a) * * *
     (2) * * *
     (i) * * *
     (A) A copy of the label(s) if a specific product(s) is/are
requested; or the formulation(s) requested if a specific product is not
requested; and
* * * * *
     (3) Description of the proposed use. The application shall
identify all of the following:
    (i) Sites to be treated, including their locations within the
State;
    (ii) The method of application;
    (iii) The rate of application in terms of active ingredient and
product;
    (iv) The maximum number of applications;
    (v) The total acreage or other appropriate unit proposed to be
treated;
     (vi) The total amount of pesticide proposed to be used in terms of
both active ingredient and product;
    (vii) All applicable restrictions and requirements concerning the
proposed use which may not appear on labeling;
    (viii) The duration of the proposed use; and
     (ix) Earliest possible harvest dates.
* * * * *
    (9) Acknowledgment by registrant. The application shall contain a
statement by the registrants of all pesticide products proposed for use
acknowledging that a request has been made to the Agency for use of the
pesticide under this section. This acknowledgment shall include a
statement of support for the requested use, including the expected
availability of adequate quantities of the requested product under the
use scenario proposed by the applicant(s); and the status of the
registration in regard to the requested use including appropriate
petition numbers, or of the registrant's intentions regarding the
registration of the use.
* * * * *
     (b) * * *
    (4) A discussion of the anticipated significant economic loss,
together with data and other information supporting the discussion,
that addresses one or more of the following, as appropriate:
     (i) Yield or utilized yield reasonably anticipated in the absence
of the emergency and expected losses in quantity due to the emergency;
    (ii) The information in paragraph (b)(4)(i) of this section plus
prices reasonably anticipated in the absence of the emergency and
changes in prices and/or production costs due to the emergency;
     (iii) The information in paragraph (b)(4)(ii) of this section plus
operating costs reasonably anticipated in the absence of the emergency;
     (iv) Any other information explaining the economic consequences of
the emergency.
    (5) Re-certification of an emergency condition. Applicants for
specific exemptions may submit re-certification applications relying on
previously submitted information to satisfy the information
requirements of paragraphs (a)(1) through (a)(10) of this section, and
of paragraphs (b)(1) through (b)(4) of this section, where all of the
following conditions are met:
    (i) An exemption was granted for the same pesticide at the same
site to the same applicant the previous year;
    (ii) The emergency condition could reasonably be expected to
continue for longer than 1 year;
    (iii) EPA has not declared the use ineligible for re-certification;
    (iv) The use is not subject to public notice pursuant to Sec.
166.24(a)(1) through (a)(6);
    (v) The applicant certifies that all of the following are true:
    (A) The emergency condition described in the preceding year's
application continues to exist;
    (B) Except as expressly identified, all information submitted in
the preceding year's application is still accurate;
    (C) Except as expressly identified, the proposed conditions of use
are identical to the conditions of use EPA approved for the preceding
year;
    (D) Any conditions or limitations on the eligibility for re-
certification identified in the preceding year's notice of approval of
the emergency exemption have been satisfied;
    (E) The applicant is not aware of any alternative chemical or non-
chemical practice that may offer a meaningful level of pest control, or
has provided documentation that each such known practice does not
provide adequate control or is not economically or environmentally
feasible.
* * * * *
0
5. Section 166.24 is amended by revising the introductory text of
paragraph (a), redesignating paragraphs (a)(6) and (a)(7) as paragraphs
(a)(7) and (a)(8) respectively, adding a new paragraph (a)(6), and
revising newly redesignated paragraph (a)(7)(i) to read as follows:

Sec.  166.24   Public notice of receipt of application and opportunity
for public comment.

    (a) Publication requirement. The Administrator shall issue a notice
of receipt in the Federal Register for a specific, quarantine, or
public health exemption and request public comment when any one of the
following criteria is met:
* * * * *
    (6) The application proposes use of a pesticide which:
    (i) Was voluntarily canceled under section 6(f) of the Act, and
    (ii) Is intended for a use that poses a risk similar to the risk
posed by any use of the pesticide which was voluntarily canceled under
section 6(f);
    (7) * * *
    (i) An emergency exemption has been requested or approved for that
use in any 3 previous years, or any 5 previous years if the use is
supported by the IR-4 program, and
* * * * *
0
6. Section 166.25 is amended by revising paragraphs (a)(2), (a)(4), and
(b)(2)(ii) to read as follows:

Sec.  166.25   Agency review.

    (a) * * *
    (2) The Agency's ability and intention to establish a time-limited
tolerance(s) or exemption(s) from the requirement of a tolerance for
any pesticide residues resulting from the authorized use, identifying
the level of permissible residues in or on food or feed resulting from
the proposed use;
* * * * *
    (4) The potential risks to human health, endangered or threatened
species, beneficial organisms, and the environment from the proposed
use.

    (b) * * *
    (2) * * *
    (ii) The progress which has been made toward registration of the
proposed use, if a repeated specific or public health exemption is
sought. It shall be presumed that if a complete application for
registration of a use, which has been under a specific or public health
exemption for any 3 previous years, or any 5 previous years if the use
is supported for registration by the IR-4 program, has not been
submitted, reasonable progress towards registration has not been made.
0
7. Section 166.30 is amended by revising paragraph (a)(1), removing
paragraph (b), and redesignating paragraph (c) as paragraph (b).

Sec.  166.30   Notice of Agency decision.

    (a) * * *
    (1) Incomplete applications. The Agency may discontinue the
processing of any application that does not address all of the
requirements of Sec.  166.20 until such time the additional information
is submitted by the applicant.
* * * * *
0
8. Section 166.32 is amended by revising the introductory text of
paragraph (b) to read as follows:

Sec.  166.32   Reporting and recordkeeping requirements for specific,
quarantine, and public health exemptions.

* * * * *
    (b) Interim and final reports. A final report summarizing the
results of pesticide use under any specific, quarantine, or public
health exemption must be submitted to the Agency within 6 months from
the expiration of the exemption unless otherwise specified by the
Agency. For quarantine exemptions granted for longer than 1 year,
interim reports must be submitted annually. When an application for
renewal of the exemption is submitted before the expiration of the
exemption or before submission of the final report, an interim report
must be submitted with the application. The information in interim and
final reports shall include all of the following:
* * * * *
0
9. Section 166.40 is amended by revising paragraph (a), removing the
period at the end of paragraph (b) and adding a semi-colon and the word
``and'' at the end of paragraph (b), and adding paragraph (c) to read
as follows:

Sec.  166.40   Authorization.

* * * * *
    (a) An unpredictable emergency condition exists;
* * * * *
    (c) EPA has provided verbal confirmation that, for food uses, a
tolerance or exemption from the requirement of a tolerance can be