1
UNITED
STATES
ENVIRONMENTAL
PROTECTION
AGENCY
WASHINGTON
DC
20460
Office
of
Prevention,
Pesticides
and
Toxic
Substances
May
25,
2001
MEMORANDUM
SUBJECT:
RFA/
SBREFA
Certification
for
Import
Tolerance
Revocation
FROM:
Denise
Keehner,
Division
Director,
Biological
and
Economic
Analysis
Division
(7503C),
Office
of
Pesticide
Programs,
OPPTS,
U.
S.
Environmental
Protection
Agency
TO:
Public
Docket
concerning
Tolerance
Revocation
Rulemaking,
Proposed
or
Final
Issue:
Because
tolerance
revocation
is
rule­
making,
the
Agency
needs
to
certify
­­
under
RFA/
SBREFA
­­
that
the
tolerance
revocation
does
not
impose
a
significant
adverse
impact
on
a
substantial
number
of
small
entities
or
conduct
an
initial
and
final
regulatory
flexibility
analysis
and
convene
a
review
panel.
Currently,
OPP
is
trying
to
update
the
FR
notice
from
1997
that
made
a
broad,
general
certification.
The
same
conditions
apply
now
as
they
did
in
1997,
but
the
supporting
documentation
is
being
updated,
so
it
is
necessary
to
reconstruct
the
basis
for
Agency
expectations
that
import
tolerance
revocations
will
not
generate
significant
impacts
on
substantial
numbers
of
small
entities.
The
primary
RFA/
SBREFA
focus
is
on
U.
S.
based
import
businesses
who
trade
in
products
that
may
contain
one
or
more
residues
being
banned
under
the
tolerance
revocation.

Preliminary
Analysis:
The
arguments
for
why
we
would
not
expect
to
see
significant
impacts
on
a
substantial
number
of
small
entities
can
be
put
into
three
different
categories:

1.
Cases
where
substantial
numbers
of
small
entities
are
not
affected
because:
a.
Import
companies
are
not
small
businesses.
b.
If
import
companies
are
small
businesses,
then
too
few
are
affected
to
be
ineligible
for
SBREFA
certification.

2.
Cases
where
impact
on
import
commodity
price
is
not
significant
(minimal
supply
effects)
because:
a.
Affected
commodity
is
widely
traded
on
international
markets/
exchanges,
and
only
a
small
proportion
of
overall
production
is
treated.
b.
A
small
proportion
of
a
crop
is
treated
within
a
country,
suggested
the
supply
within
that
country
will
be
relatively
unaffected.
c.
There
are
sufficient
alternatives
for
the
chemical
with
the
cancelled
tolerance,
and
these
alternatives
have
few,
if
any,
impacts
on
output
or
production
costs
for
the
raw
agricultural
commodity.
3.
Cases
where
there
are
limited
alternatives
for
the
pesticide
in
a
given
country,
leading
2
to
an
increase
in
the
supply
price,
but:
a.
The
supply
price
is
only
a
proportion
of
the
import
price,
where
the
majority
of
the
price
reflects
transportation
and
other
distribution
costs.
b.
The
supply
price
increases
for
a
particular
commodity
from
a
particular
country,
but
it
does
not
impose
a
significant
impact
on
importer
sales
because
the
import
company
has
diversified
sales.
c.
The
supply
price
increases
for
a
particular
commodity
from
a
particular
country,
but
there
are
other
sources
of
the
commodity,
and
the
transaction
costs
of
utilizing
other
suppliers
is
sufficiently
low
that
it
doesn't
significantly
affect
the
overall
sales
of
the
importing
company.

Therefore,
if
ANY
of
these
eight
conditions
hold,
then
we
can
certify
that
there
is
no
SBREFA
issue.
Conversely,
in
order
for
there
to
be
consideration
of
a
SBREFA
concern
that
would
require
more
detailed
analysis,
ALL
of
the
following
have
to
hold:
1.
There
are
importers
for
a
particular
commodity
affected
by
the
tolerance
revocation,
who
qualify
as
small
business
under
SBA
guidelines;
AND
2.
there
is
a
substantial
number
of
small
importers
whose
sales
are
affected
by
the
tolerance
revocation;
AND
3.
the
affected
commodity
is
NOT
widely
traded
on
international
markets;
AND
4.
a
sizable
proportion
of
the
production
in
the
limited
geographic
production
region
is
treated
with
the
particular
pesticide
(suggesting
potential
supply
effects);
AND
5.
there
a
limited
and/
or
expensive
alternatives
for
the
particular
pesticide
in
the
limited
geographic
production
region,
with
a
concomitant
potential
for
sizable
yield
loss
or
increase
in
cost
of
production;
AND
6.
the
price
of
the
raw
agricultural
commodity
is
a
large
component
of
the
sales
price
of
the
import;
AND
7.
the
importing
companies
are
not
diversified,
and
the
increase
in
raw
commodity
cost
will
lead
to
a
significant
decline
in
sales
revenue.

There
is
a
negligible
joint
probability
of
all
these
conditions
holding
simultaneously,
so
I
believe
it
appropriate
for
the
Agency
to
take
the
position
that
import
tolerance
revocations
can
be
certified
under
RFA/
SBREFA.
I
base
this
conclusion
on
several
observations:
most
commodities
subject
to
import
tolerance
revocation
are
widely
traded
on
international
markets
(according
to
USDA's
data
on
agricultural
imports
and
exports)
and
BEAD's
data
on
foreign
pesticide
use
suggest
it
is
rare
for
a
single
pesticide
to
be
extensively
used
in
each
production/
export
region,
such
that
there
is
a
minimal
chance
of
import
tolerance
revocation
leading
to
price/
cost
increases
for
importers
with
an
attendant
SBREFA
concern.
Even
in
the
very
unlikely
event
that
an
import
tolerance
revocation
leads
to
significant
price/
cost
increases
for
a
particular
commodity,
many
importers
of
agricultural
commodities
are
diversified
companies
dealing
in
many
commodities,
so
that
a
price/
cost
increase
for
one
commodity
will
not
significantly
affect
total
company
revenues.

At
the
same
time,
it
will
be
useful
to
continue
building
a
set
of
data
describing
why
one
or
more
of
these
seven
conditions
is
not
likely
to
hold.
The
plan
for
the
medium
to
long
term
is
to
collect
such
supporting
data,
sometimes
using
general
industry
profiles
and
sometimes
using
analyses
of
specific
commodity/
chemical
combinations.
