This article is taken from our IEG Policy dated 09/06/10.

EPA on Monday (June 8) issued a cancellation order for three dicamba products that will controversially allow farmers and applicators to use existing stocks of the herbicides through July 31.

The agency's order comes in response to a ruling last week by the US Court of Appeals for the Ninth Circuit to vacate the registrations of the three products -Bayer's XtendiMax, BASF's Engenia and Corteva's FeXapan. The pesticides were approved by EPA to be sprayed on cotton and soybeans genetically engineered to tolerate dicamba, but problems with drift and damage to non-target crops have sparked widespread debate about the safety of the herbicides and prompted environmentalists to challenge the registrations.

A three-judge panel of the Ninth Circuit on June 3 struck down the registrations after concluding EPA "substantially understated the risks it acknowledged and failed entirely to acknowledge other risks" when it approved use of the pesticides on GE cotton and soybeans in 34 states.

The decision has confused stakeholders unsure of whether the pesticides could still be used throughout the 2020 growing season and growing calls for EPA to respond.

The cancellation order aims to provide that desired clarity, allowing growers and commercial applicators to use existing stocks of the three products that were in their possession as of June 3. Those existing stocks must be used by July 31 and in accordance with their previously-approved labels.

"At the height of the growing season, the Court's decision has threatened the livelihood of our nation's farmers and the global food supply," EPA Administrator Andrew Wheeler said. "Today's cancellation and existing stocks order is consistent with EPA's standard practice following registration invalidation, and is designed to advance compliance, ensure regulatory certainty, and to prevent the misuse of existing stocks."

EPA's 12-page order cites worries from soybean and cotton growers that the court's ruling "could result in a crisis for the industry." An estimated 60 million acres of dicamba-tolerant soybeans and cotton have been planted this year and growers have few options to protect their crops absent the dicamba herbicides, according to the agency.

"Even though the court found that the labels were difficult to follow, there is no dispute that use inconsistent with the labeling formerly approved by EPA would have greater potential to cause unreasonable adverse effects on the environment including to endangered species," the agency said. "Therefore, it is imperative that EPA issue this order and require that any use of these dicamba products moving forward is consistent with the previously approved labeling and can be enforced as such in order to prevent unreasonable adverse effects on the environment."

The benefits from the pesticides are "considerable and well-established, particularly for this growing season," EPA said, adding that the products are critical to tackling glyphosate-resistant pigweed and marestail that are major concerns for growers.

US growers could lose investments totaling hundreds of millions of dollars if they aren't allowed to continue using the dicamba products, according to the EPA, which estimated some 4 million gallons of the pesticides are "in the channels of trade" across the country.

The Center for Food Safety (CFS) - which brought the underlying lawsuit challenging the dicamba registrations - blasted EPA for allowing farmers to use existing stocks and promised more legal action.

The cancellation order "flies in the face of the Court decision holding dicamba-based pesticides unlawful" and ignores the "well-documented and overwhelming evidence of substantial drift harm" to farmers from continued use, the group said in a statement.

"All users that continue to not seek alternatives should be on notice that they are using a harmful, defective, and unlawful product," according to CFS. "We will bring the EPA's failure to abide by the Court's order to the Court as expeditiously as possible."

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This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.