                                       
                                       
                                       
                                       
                                       
                          BURDEN REDUCTION FROM THE 
                      EXPANSION OF CROP GROUPING PROGRAM
                                       
                                       
                                       
                                       
                                       
                                 Prepared by:
                                       
                   BIOLOGICAL AND ECONOMIC ANALYSIS DIVISION
                         OFFICE OF PESTICIDE PROGRAMS
                                       
                                       
                                       
                                       
                                       
                                August 5, 2022
                                       
                                       
                                       
                                       
                     U.S. Environmental Protection Agency
                           1200 Pennsylvania Ave, NW
                             Washington, DC 20640











Executive Summary	3
Chapter 1	Introduction	5
1.1 Background	5
1.2 Tolerances	6
1.3 Crop Groups, Subgroups, and Representative Commodities	6
1.4 Problem Statement	6
1.5 Affected Community	7
Chapter 2	Changes in Crop Grouping for Legume Vegetables, Foliage of Legume Vegetables, Cereal Grains, and Forage, Fodder, and Straw of Cereal Grains	8
Chapter 3	Data	10
Chapter 4	Methodological Approach to the Economic Analysis	13
4.1 Benefits and Positive Impacts of the Rule	13
4.2 Negative Impacts of the Rule	17
4.3 Characterizations and Uncertainties	17
4.4 Summary of Changes from the Proposed Economic Analysis	18


 Executive Summary

The Environmental Protection Agency (EPA) is amending Crop Group 6: Legume Vegetables (Succulent or Dried); Crop Group 7: Foliage of Legume Vegetables; Crop Group 15: Cereal Grains; and Crop Group 16: Forage, Fodder and Straw of Cereal Grains. The amendments include updating the terminology in the names of Crop Groups 6, 7, and 16, the addition of commodities to Crop Groups 6, 15, and 16, revisions to the subgroups for Crop Group 6, and the addition of subgroups to Crop Group 15. EPA is also amending the associated commodity definitions. This is the sixth in a series of planned crop group updates expected to be prepared over the next several years.

Legume vegetable growers, cereal grain growers, and pesticide registrants are anticipated to be the biggest beneficiaries of this rulemaking. While not quantified, it is expected that growers will benefit from this rule via more registered pesticide products for small scale commodities, and IR-4 and pesticide registrants will benefit from reduced data generation costs.

This is a burden-reducing regulation for both registrants and EPA. Crop grouping saves money by permitting the results of pesticide residue studies for some crops, called representative crops, to be applied to other, similar crops in the group. Once final, EPA expects these revisions to promote greater use of crop groupings for tolerance-setting purposes. 

The Agency anticipates that revisions to the crop grouping program will result in no appreciable costs or negative impacts to consumers, specialty crop producers, pesticide registrants, the environment, or human health. Although this rule may make it possible to get a pesticide tolerance on a larger number of crops within a group, it will not necessarily increase the amount of pesticides released into the environment and will expand the choice of pesticides for crop producers, which may result in the use of safer pesticides. 

The analysis here is somewhat different than that provided for the proposed rule. The analysis for the proposed rule provided quantitative estimates based on avoided costs of field trials to generate residue data.  However, there is significant uncertainty as to the number of trials that would be conducted in the absence of this rule, which led to an enormous range in the estimated monetary benefits of the proposal. This attempt at quantifying the range of potential benefits did not provide additional useful information to decisionmakers, stakeholders, or the public beyond what the current qualitative description of the benefits to key stakeholders (e.g., growers and registrants) provides. 



Benefits and Costs of the Rule

                         Expected Benefits of the Rule
Cost Savings per Commodity 
                                   $101,700
          (i.e., avoided residue field trial cost per crop commodity)
Number of Legume Vegetable, Foliage of Legume Vegetable, Cereal Grain, and Forage, Fodder, and Straw of Cereal Grain Commodities 
                                  248 total 
(120 Legume Vegetable + 8 Foliage of Legume Vegetable + 60 Cereal Grain + 60 Forage, Fodder, and Straw of Cereal Grain)
Qualitative Effects
It is expected that:
  Growers of legume and cereal commodities will benefit from this rule via more registered pesticide products for their commodities 
  Registrants of pesticide products will benefit from reduced data generation costs 
                          Expected Costs of the Rule
There are no expected increases in costs from this rule.
                                 Other Impacts
Small Business Impacts
  No significant impact on a substantial number of small entities. The affected community for this rule includes several types of entities that are engaged in agricultural production, food production and pesticide manufacturing.  
  Affected NAICS codes include: 
      :: Crop production (NAICS code 111).
      :: Animal production (NAICS code 112).
      :: Food manufacturing (NAICS code 311).
      :: Pesticide manufacturing (NAICS code 32532)    
  No increased costs to small entities are expected because the rule should reduce the per commodity cost of registering pesticides on legume vegetable, foliage of legume vegetable, cereal grain, and forage, fodder, and straw of cereal grain commodities. 






 Introduction

EPA is revising its pesticide tolerance regulations for crop grouping, which allow the establishment of tolerances for multiple related crops based on data from a representative set of crops. The data in question are primarily for use in the exposure analysis of dietary risk assessments. EPA establishes tolerances for each pesticide on each crop or crop grouping after assessing the potential risks to human health posed by that pesticide. A tolerance is the maximum permissible residue level established for a pesticide in raw agricultural produce and processed foods.  

This analysis covers revisions to Crop Group 6: Legume Vegetables (Succulent or Dried); Crop Group 7: Foliage of Legume Vegetables; Crop Group 15: Cereal Grains; and Crop Group 16: Forage, Fodder and Straw of Cereal Grains. The revisions include updating the terminology in the names of Crop Groups 6, 7, and 16, the addition of commodities, revisions to the subgroups for Crop Group 6, and the addition of subgroups to Crop Group 15. EPA is also amending the associated commodity definitions. 

This is a burden-reducing regulation. Crop grouping saves registrants money by permitting the results of pesticide residue studies for one crop to be applied to other, similar crops. The regulation updates four crop groups, and expands three of them (i.e., 6, 15, and 16) to include more crops. Because of this expansion, it is expected that IR-4 and chemical registrants will benefit from reduced data generation costs, and that legume vegetable and cereal grain growers will benefit from this rule via more registered pesticide products. Having additional pesticides for use may help growers to lower costs (e.g., due to more effective pesticides helping growers to manage weeds or other pests) or increase yields (e.g., due to less competition from weeds or other pest damage reducing the quality or quantity of commodities harvested), which could lead to increases in grower incomes and/or decreases in prices for consumers if producer savings are passed on. The benefits to producers and consumers are not quantified in this assessment. It will also save EPA resources since there will be fewer studies overall for Agency scientists to review for all commodities in these newly expanded crop groups. The potential cost savings to EPA are not estimated in this economic analysis.

EPA expects these revisions to promote greater use of crop groupings for tolerance-setting purposes, both domestically and in countries that export food to the United States. This is the sixth in a series of seven planned crop group updates expected to be prepared over the next several years. 

1.1 Background

EPA establishes maximum residue limits (MRLs) or tolerances for pesticide chemical residues in or on food commodities under section 408 of the FFDCA (21 U.S.C. 346a). EPA establishes pesticide tolerances only after determining that aggregate exposure to the pesticide is safe. The U.S. Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA) enforce compliance with tolerance limits. 

1.2 Tolerances

A tolerance is the maximum permissible pesticide residue level established for pesticides in raw agricultural commodities (e.g., unprocessed fruits, vegetables, meat, etc.) and processed foods. To establish a tolerance, a petition is submitted to the Agency, requesting the tolerance and furnishing information on the chemical identity, composition, use pattern, toxicity, and nature and magnitude of the residue of the proposed use. EPA uses these data to determine the appropriate tolerance level. In order to obtain these data, it is usually necessary for the petitioner to conduct residue field trials for the pesticide on a given commodity.  

1.3 Crop Groups, Subgroups, and Representative Commodities  

Traditionally, tolerances are established for a specific pesticide and commodity combination. However, under EPA's crop grouping regulations (40 CFR § 180.41), a single tolerance may be established that applies to a group of related commodities. EPA regulations currently enable the establishment of tolerances for a group of crops based on residue data for designated crops that are representative of the group. For example, the pome fruit crop group (11-10) has apple and pear as its representative commodities. Crops are grouped based on similarities in cultural production practices, edible food portions and animal feed items, residue levels, geographical locations, and pest problems. All of the crops in a group may be granted a tolerance based on residue data from designated representative commodities within the group. Similarly, all of the crops in a subgroup may be granted a tolerance based on residue data from the designated representative commodity within the subgroup. 

Representative commodities are selected based on EPA's determination that they are likely to have the highest residues that could occur on any crop within the group. The minimum residue data required for a group tolerance consists of residues on all representative commodities for a group. Once the group tolerance is established, the tolerance level generally applies to all agricultural commodities in the group.

1.4 Problem Statement

All registered pesticides used on commercially produced food commodities must have either a tolerance or an exemption from a tolerance. EPA is authorized to establish tolerances for pesticide residues in or on food commodities under Federal Food, Drug and Cosmetic (FFDCA) section 408. EPA has defined by regulation groups of raw agricultural commodities for which group tolerances may be established (40 CFR § 180.41) and changing the crop groups requires an EPA regulatory action. 

EPA is reevaluating existing crop groupings because there are many related or small commodities that are not covered by an existing group. As risk assessments conducted for crop groups are as conservative and comprehensive as risk assessments conducted for individual crops, adding these commodities to existing crop groups is not expected to result in an appreciable increase in risk. Additionally, in some cases, there may be other reasons for revisions, like aligning language with industry standards. 

1.5 Affected Community

The affected community for this rule includes several types of entities that are engaged in agricultural production, food production, and pesticide manufacturing, along with government and quasi-government organizations. Firms in the following list of North American Industrial Classification System (NAICS) are potentially affected:
      ::  Crop production (NAICS code 111)
      ::  Animal production (NAICS code 112)
      ::  Food manufacturing (NAICS code 317)
      ::  Pesticide manufacturing (NAICS code 3250A1).

Among the beneficiaries are the producers and consumers of small-acreage crops. Major and minor crop producers should benefit because lower registration costs could encourage more products to be registered on legume vegetable and/or cereal grains, both large and small acreage crops, which would provide growers of these crops with additional tools for pest control. If these pest control options lead to cost savings or increased yields, then consumers may also benefit if lower prices result from these changes. 

Other beneficiaries are the participants in the nation-wide cooperative project the Interregional Research Project Number 4 (IR-4), who perform field trials necessary to obtain pesticide tolerances on minor crops. The IR-4 Project's mission is to provide safe and effective pest management options for specialty crop growers. Their focus has historically been to facilitate the registration of conventional crop protection chemicals on fruits, vegetables, herbs and nuts. The IR-4 Project is needed because there are insufficient financial incentives for the agrochemical industry to invest in registering their products for low use specialty crops. Additionally, during the data development phase, crop injury due to product failure can occur in low acreage, high value crops which may create larger, unfavorable risk-reward relationships for registrants. The IR-4 Project develops the data to support these registrations. All data from IR-4 sponsored studies are transferred from the field sites or analytical laboratories to the IR-4 Headquarters where the data are placed into petition format required for submission to EPA. The data are also reviewed by the registrant. Once complete, the petition is submitted to EPA. In doing so, the IR-4 Project helps to improve the international competitiveness of U.S. agriculture. The IR-4, which is publicly funded, is also expected to benefit from this rule as it will help IR-4 use its resources more efficiently in its efforts to ensure that minor/specialty crop growers have access to legal, registered uses of essential pest management tools such as pesticides.

Pesticide registrants develop, manufacture, formulate, package, distribute, and sell pesticide products. Pesticide products themselves fall into several categories: conventional pesticides, biochemical pesticides, plant incorporated pesticides, specialty and niche pesticides, and antimicrobial pesticides. Conventional pesticides are those products that are commonly available to users including herbicides (weed killers), insecticides ("bug" killers), and fungicides (fungus killers), as well as some special classifications such as fumigants used to sterilize soil to remove pathogens. Pesticide production involves combining substances into a formulation. The most important ingredient of a pesticide product is the active ingredient: the chemical that controls the targeted pest. While many economic sectors consume pesticide products, the agricultural sector is by far the largest conventional pesticide user. Pesticide products support agricultural production of crops under varied weather and pest pressure. Pesticide products are more readily available for crops grown on a large scale such as field corn and soybeans. Specialty crops (e.g., fruits, tree nuts, etc.) comprise nearly a quarter of the value of agricultural production in the U.S., yet there are often insufficient financial incentives for pesticide registrants to invest in registering their products for a specific low acreage specialty crop. In the data development phase, there may be crop injury in low-acreage, high-value crops that may create unfavorable risk-reward relationships for registrants. For this reason, pesticide registrants can be hesitant to act to establish pesticide uses on specialty crops. If despite this hesitance they decide to register a tolerance due to crop groups, then they will have benefits similar to IR-4 above. Otherwise, their primary benefit is the potential for increased sales of their products if another entity, like IR-4, pursues a registration.

The EPA will benefit from broader operational efficiency gains, which result from fewer emergency pesticide use requests from specialty crop growers, the ability to conduct risk assessments based on crop grouping, greater ease of establishing import tolerances, greater capacity to assess risks of pesticides used on crops not grown in the U.S., further harmonization of crop classification and nomenclature, harmonized commodity import and export standards, and increased potential for resource sharing between EPA and other pesticide regulatory agencies. Revisions to the crop grouping program will result in no appreciable costs or negative impacts to consumers, specialty crop producers, pesticide registrants, the environment, or human health.  

 Changes in Crop Grouping for Legume Vegetables, Foliage of Legume Vegetables, Cereal Grains, and Forage, Fodder, and Straw of Cereal Grains

The following provides a summary of the revisions for the Legume Vegetables, Foliage of Legume Vegetables, Cereal Grains, and Forage, Fodder, and Straw of Cereal Grains. A more detailed description of the changes, and a list of all new and old commodities in each crop group are provided in the text of the rule.

Crop Group 6: Legume Vegetables  
EPA is removing "Succulent or Dried" from the old group name "Legume Vegetables (Succulent or Dried)" since this qualification is not needed and is unclear; providing examples of different types of beans or peas that are included within the definition of certain commodities; and identifying explicitly edible podded representative commodities as separate from succulent shelled representative commodities. EPA is updating the subgroups and adding three new crop subgroups to crop group 6, bringing the total number of subgroups to six. The six subgroups are: Crop Subgroup 6-22A, Edible podded bean subgroup; Crop Subgroup 6-22B, Edible podded pea subgroup; Crop Subgroup 6-22C, Succulent shelled bean subgroup, Crop Subgroup 6-22D, Succulent shelled pea subgroup; Crop Subgroup 6-22E, Pulses, dried shelled bean, except soybean, subgroup; and Crop Subgroup 6-22F, Pulses, dried shelled pea subgroup. EPA is listing the following seven representative commodities for Crop Group 6-22:  Bean (Phaseolus spp. or Vigna spp.; one edible podded cultivar, one succulent shelled cultivar, and one dried seed); Pea (Pisum spp.; one edible podded cultivar, one succulent shelled cultivar, and one dried seed); and Soybean, seed. EPA is adding Vigna spp. as an alternate representative commodity to bean, Phaseolus spp. This change is not intended to increase the number of field trials needed for this crop group. EPA expands the crop group from 88 to 120 commodities. 

Crop Group 7: Forage and Hay of Legume Vegetables Group
EPA is revising the name of Crop Group 7: Foliage of Legume Vegetables Group, removing the term Foliage and inserting the terms Forage and Hay. Matching the name change of the group, EPA is revising the name of the subgroup. EPA is revising the name of subgroup 7A from "Crop Subgroup 7A. Foliage of legume vegetables (except soybeans) subgroup" to "Crop Subgroup 7-22A. Forage and hay of legume vegetables (except soybeans) subgroup." EPA is updating the representative commodities for Crop Group 7-22, currently defined as "any cultivar of bean and field pea, and soybean." EPA is changing the representative commodities to "Any cultivar of either cowpea or bean; field pea; and soybean." There is no expansion in the number of commodities, 8, in this crop group. While there are theoretically more forage and hay commodities in crop group 7-22 because of the expansion of crop group 6-22, there is no expansion in the number of commodities in this crop group because only a limited number of the bean and pea commodities are used as animal feed

Crop Group 15: Cereal Grain Group
EPA is increasing specificity in names for 21 commodities in this group to better align with the global standard. EPA is creating 6 subgroups: Crop Subgroup 15-22A, Wheat subgroup; Crop Subgroup 15-22B, Barley subgroup; Crop Subgroup 15-22C, Field corn subgroup; Crop Subgroup 15-22D, Sweet corn subgroup; Crop Subgroup 15-22E, Grain sorghum and millet subgroup; and Crop Subgroup 15-22F, Rice subgroup. The representative commodities for the group are currently listed as corn (fresh sweet corn and dried field corn), rice, sorghum, and wheat. EPA is including the current representative commodities for Crop Group 15, adding barley as a representative crop to accommodate the new Barley Subgroup (15-22B), and adding proso millet as an alternative representative commodity for the Grain Sorghum and Millet Subgroup (15-22D). Proso millet will be an alternate, representative commodity for the Grain sorghum and millet crop subgroup 15-22E and also for Crop Group 15-22. This change is not intended to increase the number of field trials needed for this crop group. EPA is expanding the crop group from 36 to 60 commodities. 

Crop Group 16: Forage, Hay, Stover, and Straw of Cereal Grain Group: 
For Crop Group 16, EPA is also changing the Crop Group name from "Crop Group 16: Forage, Fodder and Straw of Cereal Grains Group" to "Crop Group 16-22 Forage, Hay, Stover, and Straw of Cereal Grain Group." Consistent with the changes for Crop Group 15, EPA is adding the same additional commodities to Crop Group 16. EPA is including the following in Forage, Hay, Stover, and Straw of Cereal Grain Crop Group 16: the forage, hay, stover and straw of the commodities included in Cereal Grain Crop Group 15. EPA is not creating subgroups for Crop Group 16-22 and is not changing the representative commodities. The representative commodities continue to be corn, wheat, and any other cereal grain crop. EPA is expanding the crop group from 36 to 60 commodities.
 Data

Cost of the field trial

The cost of the field trial to obtain a tolerance is estimated to be $101,700 per trial, based on estimated cost of OPP data requirement 860.1500. The estimated costs of the data requirements for registration are available on the EPA pesticide registration website. The estimates were obtained by EPA from independent laboratories and are adjusted for inflation annually. These are cost estimates and the actual costs of studies may vary.

Tolerance Actions per Year

The history of registration actions for the legume vegetable crop group shows that, accounting for tolerance exemptions, legume vegetables have historically had about twelve tolerance actions per year, foliage of legume vegetables have had about nine tolerance actions per year, cereal grains have had about thirteen tolerance actions per year, and forage, fodder, and straw of cereal grains have had about eleven tolerance actions per year (Table 1).  
EPA publishes an annual report of the decisions made in each fiscal year for conventional pesticide chemicals (Report of Conventional Chemical Registration Decisions). These annual reports are publicly available at the EPA website, and document registration decisions by year from 2001 to the present. These annual reports list, by chemical, the use(s) (e.g., crops, non-agricultural/food sites, commodities, etc.), the data submitter (e.g., registrant, IR-4, or their authorized agent), the date of the decision, a link to the decision in the Federal Register, and the decision number. Most decisions are for tolerances. In addition, this report lists other decisions such as those that do not require a new tolerance, such registration actions for non-food uses (which do not require a tolerance) and withdrawals of use, as well as crop group changes, typically conversions or expansions. 
EPA extracted data on all tolerance actions for ten years (2010-2019) from an internal database of these reports for the relevant crops and crop groupings for this rule. The crops and crop groupings for which data were extracted included: legume vegetable crop group, foliage of legume vegetable crop group, cereal grains crop group, forage, fodder, and straw of cereal grains crop group, sweet corn, grains sorghum, field corn, rice, wheat, dried bean, edible podded pean, succulent shelled bean, dried shelled pea, edible podded pea, succulent shelled pea, dried soybean, forage/hay cowpea, and field pea. There is another data source available to EPA which has similar information to the EPA report on pesticides from BC Global. BC Global is a company with a database of pesticide MRLs on over 1,000 pesticides on 875 commodities in over 140 countries. This data source has an added benefit, which is useful for refining the estimate of the historical average of tolerances for these crop groups. Specifically, this dataset delineates between pesticides that have tolerances and exemptions for tolerances. Pesticides that have an exemption for a tolerance do not require residue field trials to get registered on a crop. The tolerance action averages for the past ten years from both EPA and BC Global are similar for these crop groups. This analysis only includes conventional pesticide chemicals.
Table 1. Historical Averages of Tolerances for Relevant Crop Groups (2010-2019)
                             Legume Vegetables (6)
                        Foliage of Legume Vegetable (7)
                                 Cereal Grain
                                     (15)
                Forage, Fodder, and Straw of Cereal Grain (16)
                                      12
                                       9
                                      13
                                      11
Source: EPA Estimates, BC Global

Number of Commodities in the Crop Group 
The current or baseline number of commodities is 88 in Crop Group 6, 8 for Crop Group 7, and 36 for both Crop Groups 15 and 16 as shown in Table 2 below. 
For this rule, there are additions to the number of crops in groups 6, 15, and 16. EPA is adding 32 commodities to Crop Group 6, no commodities to Crop Group 7, and 24 commodities to both Crop Groups 15 and 16. This expansion of commodities brings the total number of commodities to 248 for the four groups, with 120 commodities in Crop Group 6, 8 commodities in Crop Group 7, 60 commodities in Crop Group 15, and 60 commodities in Crop Group 16. 
Table 2. Number of Commodities in the Crop Group 
 
                                 Crop Group 6
                                 Crop Group 7
                                 Crop Group 15
                                 Crop Group 16
Original/Current number of crops
                                      88
                                       8
                                      36
                                      36
Additions to the crop group
                                      32
                                       0
                                      24
                                      24
New total number of crops
                                      120
                                       8
                                      60
                                      60


Number of Residue Field Trials Required to Obtain a Pesticide Registration Tolerance by Crop

The number of residue field trials required to obtain a tolerance will vary based on the crop. The number of residue field trials per commodity is based on EPA guidelines for crop field trials (Residue Chemistry Test Guidelines OPPTS 860.1500 Crop Field Trials). The number of residue field trials per commodity is determined in part by "economic (acreage) importance and/or dietary significance." For example, for commodities or crops with acreage greater than 10 million acres (e.g., field corn), the required number of field trials is 16, while the number of residue field trials needed for commodities with less than 200 acres (e.g., lablab bean) and low dietary significance is 1. Table 3 below re-creates a copy of acreage methodology from the Residue Chemistry Test Guidelines. 
Table 3: Methodology for Determining Number of Field Trials
                                Number of Acres
                            Number of Field Trials
                                > 10,000,000
                                      16
                       > 1,000,000 to >= 10,000,000
                                      12
                         > 300,000 to >= 1,000,000
                                       8
                          > 30,000 to >= 300,000
                                       5
                           > 2,000 to >= 30,000
                                       3
                             > 200 to >= 2,000
                                       2
                                    <= 200
                                       1
Source: OPPTS 860.1500 Crop Field Trials

Number of field trials needed for a group tolerance using Representative Commodities
The number of residue field trials required to obtain a tolerance will vary based on the crop, which was described in the previous section. Representative commodities are treated somewhat differently than non-representative commodities. For example, the minimum number of residue field trials for any representative commodity is 3, not 1. Table 5 below reports the number of residue field trials needed for all relevant representative commodities in this rulemaking. It should be noted that the number of residue field trials needed is reduced by 25% for crop groupings. For example, all of the legume representative crops residue field trials would be 64 in total if added together separately, but only 50 are needed for a legume crop group tolerance. 
Table 5. Number of Residue Field Trials Required to Establish a Tolerance for Representative Commodities
                                  Crop Group
                           Representative Commodity
                             Minimum No. of Trials
                 Total No. of Trials for Entire Crop Group[10]
                             Legume Vegetables (6)
Bean, Dried
                                      12
                                      50

Bean, Edible Podded
                                       8


Bean, Succulent Shelled
                                       8


Pea, Dried Shelled
                                       5


Pea, Edible Podded
                                       3


Pea, Succulent Shelled
                                       8


Soybean (dried)
                                      20

                       Foliage of Legume Vegetables (7)
Cowpea or bean (forage/hay)
                                       3
                                      21

Pea, Field (forage/hay)
                                       3


Soybean (dried)
                                      20

                              Cereal Grains (15)
Corn, Sweet 
                                      12
                                      60

Sorghum, Grain or 
Millet, Proso
                                      12


Corn, Field
                                      20


Rice 
                                      16


Wheat and Barley[11]
                                      20

Forage, Fodder, and Straw of Cereal Grains (16)
Corn, Field
                                      20
                                      42

Any other cereal grain crop 
                                      16


Wheat 
                                      20

Source: EPA









 Methodological Approach to the Economic Analysis  

 Benefits and Positive Impacts of the Rule
         
The expansion of the Agency's crop grouping program will reduce the burden of pesticide regulation in terms of obtaining pesticide uses for specialty crops. The components of the impact of the rule that are evaluated in this assessment are the benefits and impacts to IR-4, minor crop growers, pesticide registrants, consumers, and EPA. The impacts of the changes are considered individually for each of the affected entities. The impacts of the rule are measured primarily on a qualitative basis, though IR-4 efficiency gains are quantified in terms of the cost of registering a tolerance for a new use in the four crop groups before and after this phase of the crop grouping rule. Instead of conducting field trials for each individual crop in the group, field trials are required only for the representative crops in the crop group.

Benefits and Impacts of the Rule for IR-4 and Pesticide Registrants:

IR-4:  

This rule increases the efficiency of the IR-4 program. IR-4 can establish tolerances for more crops with the same residue trials, administrative process, and laboratory effort.

For a single chemical use on a crop, between 1 and 20 residue trials are required. The average number of residue trials required for a typical IR-4 chemical crop combination registration is 3. EPA's current estimate for the cost of a residue field trial, as noted in an earlier section, is around $107,500. If the average number of residue trials required is still 3, then the average cost of typical IR-4 registration is around $322,500. 

To establish a crop group tolerance, IR-4 conducts the specified number of field trials; the process for which was described in the previous chapter of this EA. For the crop groups covered in this phase of the rule, Table 5 above provides the details for the number of field trials required. Typically, when residue trials are conducted as part of a crop group request, there is a 25% reduction in the number of trials. For example, all of the legume representative crops residue field trials would be 64 in total if added together separately, but only 50 are needed for a legume crop group tolerance. The total residue trials needed for crop groups 6,7,15, and 16 with and without the 25% reduction are provided in Table 5. IR-4 must also expend laboratory and administrative resources in processing data collected in residue trials and administering the program. 

Changes to the crop grouping program in this rule increases the number of crops covered by crop group tolerances. Though the number of additional covered crops varies by crop group, efficiency gains from the rule are extensive. They include the benefit of tolerances that are established without the burden of the cost of residue trials, the 30-month administrative process, and use of laboratory and analytical resources. These efficiency gains are described in more detail in the sections below that consider the impacts to the crop groups. 

Other Pesticide Registrants:

Although IR-4 may be the primary pesticide tolerance petitioner that benefits from this rule, registrants, primarily chemical companies, could benefit from this rule as well. Some chemical firms may decide that the reduction in residue field trials allowed for crop groups along with the expansion of a given crop group provides sufficient economic incentive to pursue a tolerance for registration of their chemical on that crop group. The benefits enumerated above for IR-4 would be expected to apply to these firms as well since the pesticide tolerance process for both is the same; however, the level of benefits may differ along with the number of field trials needed. In addition to the potential benefits garnered if chemical firms decide to pursue a tolerance on a crop, there may be additional sales of their pesticide products. Additional sales may be anticipated because of the wider availability of registered pesticides due to expanded and new crop groups. This is their primary benefit from crop grouping.  

In addition to the administrative costs expected by IR-4 above, chemical firms also have other potential costs. Chemical pesticide registrants are required to add crop sites to the label. This is a potential burden of the rule but requires minimal effort on the part of the registrant and can be done at their choosing. Companies may require or perform efficacy tests on all the crops in a group or subgroup before they include them on pesticide labels. This may be needed if there are concerns about efficacy or phytotoxicity of the pesticide on a given use site. Efficacy trials are an additional cost and take one growing season to complete. Crop groups can be created that exclude certain crops, which may allow registrants to minimize their efficacy data needs and target specific crops.

Benefits and Impacts of the Rule for EPA:  
The EPA more efficiently uses the resources it devotes to review tolerance petitions for specialty crop registrations. This includes personnel and resources used to guide tolerance petitions through the registration process, and scientific review process. Under this new crop grouping rule, the Agency utilizes a similar level of resources to review tolerance petitions but can establish a greater number of tolerances for specialty crops.

Broader operational efficiency gains are also likely to accrue to the Agency. It is anticipated that crop grouping changes in the rule facilitate risk assessments based on crop grouping, increase the ease of establishing import tolerances, facilitate the risk assessment of pesticides used on crops not grown in the U.S., promote harmonization in crop classification and nomenclature, harmonize commodity import and export standards, increase the potential for resource sharing between EPA and other pesticide regulatory agencies, and reduce the need to process emergency pesticide use requests on specialty crops under Section 18 of FIFRA.

Impact of Changes to the Legume Vegetable, Crop Group 6:   
The rule expands Crop Group 6, legume vegetables, from 88 to 120 crops, an increase of 32 crops. Under the old and new crop grouping program, a Crop Group 6 tolerance can be established with 50 residue trials. The addition of these crops greatly increases the efficiency of IR-4 and EPA in registering pesticides on specialty crops. Assuming that the crops added to the crop group require only one field trial to be granted a standalone registration (grown on a regional basis and on few enough acres), to accomplish the same result without expanding Crop Group 6 would require 32 separate field trials, at a cost of $3.3 million ($101,700 per field trial) and the administrative costs of both the IR-4 testing process and the EPA review process. In addition, specialty crop producers of legume vegetables potentially gain access to important pest control tools on 32 additional crops, consumers benefit from the potential for a cheaper, more abundant, and varied supply of legume vegetables, and pesticide registrants potentially have increased sales. 

Impact of Changes to the Foliage of Legume Vegetable, Crop Group 7:   
This rule does not expand this crop group. The primary benefit for this crop group is additional clarity from updating its name, and the representative crops for this group.  

Impact of Changes to the Cereal Grains Vegetable, Crop Group 15:  
The rule expands Crop Group 15, cereal grains, from 36 to 60 crops, an increase of 24 crops. Under the old and new crop grouping program, a Crop Group 15 tolerance can be established with 60 residue trials. The addition of these crops greatly increases the efficiency of IR-4 and EPA in registering pesticides on specialty crops. Assuming that the crops added to the crop group require only one field trial to be granted a standalone registration (grown on a regional basis and on few enough acres), to accomplish the same result without expanding Crop Group 15 would require 24 separate field trials, at a cost of $2.4 million ($101,700 per field trial) and the administrative costs of both the IR-4 testing process and the EPA review process. In addition, specialty crop producers of cereal grains potentially gain access to important pest control tools on 24 additional crops, consumers benefit from the potential for a cheaper, more abundant, and varied supply of cereal grains, and pesticide registrants potentially have increased sales. 

Impacts of Changes to the Forage, Hay, Stover, and Straw of Cereal Grains, Crop Group 16:  
The rule expands Crop Group 16, Forage, Hay, Stover, and Straw of Cereal Grains, from 36 to 60 crops, an increase of 24 crops. Under the old and new crop grouping program, a Crop Group 
16 tolerance can be established with 42 residue trials. The addition of these crops greatly increases the efficiency of IR-4 and EPA in registering pesticides on specialty crops. Assuming that the crops added to the crop group require only one field trial to be granted a standalone registration (grown on a regional basis and on few enough acres), to accomplish the same result without expanding Crop Group 16 would require 24 separate field trials, at a cost of $2.4 million ($101,700 per field trial) and the administrative costs of both the IR-4 testing process and the EPA review process. In addition, growers of these crops potentially gain access to important pest control tools, and pesticide registrants potentially have increased sales. 

Benefits of the Rule for Specialty Crop Producers: 
Changes to the crop grouping program provides new safer pesticides to agricultural producers. The greater availability of pesticides to specialty crop producers enhances IPM programs, decreases the probability of pest resistance by providing more pest control tools, gives more pesticide choices for related crops grown in close proximity, and reduces the chance of inadvertent residues on crops grown in close proximity, e.g., mustard greens and kale.

Benefits of the Rule for Consumers: 
The changes to the crop grouping program may lead to a more reliable and abundant supply of specialty produce, including imports. The rule promotes a safe food supply through better pest control. The rule promotes diversity of produce available in the U.S.  

Summary of Economic Impacts: 
This rule helps to increase the efficiency of the IR-4 program. IR-4 will be able to establish tolerances for more crops with the same residue trials, administrative process, and laboratory effort. EPA is also expected to utilize a similar level of resources to review tolerance petitions, while establishing a greater number of tolerances for specialty crops. The primary impact of this crop grouping rule to chemical firms is expected to be additional sales of their pesticide products, directly or indirectly, to producers of legume and cereal grain specialty crops. Specialty crop producers of legumes and cereal grains will potentially gain access to important pest control tools. The greater availability of pesticides to specialty crop producers should enhance IPM programs, decrease the probability of pest resistance by providing more pest control tools, give more pesticide choices for related crops grown in close proximity, and reduce the chance of inadvertent residues on crops grown in close proximity. Consumers may benefit from a more reliable, potentially cheaper, and abundant supply of specialty produce, including imports.  
 
Overall, in terms of aggregate economic impact, the efficiency of IR-4 research efforts and EPA pesticide registration efforts could increase by 2 to 3 times. Given the increase in crop groups over the course of all phases of this rule, IR-4 is expected to have added flexibility in tailoring research efforts to meet the most pressing needs of specialty crop producers. Ultimately, this crop grouping rule is expected to lead to an annual increase in the availability of pesticides for legume and cereal grain specialty crop producers.  

4.2 Negative Impacts of the Rule 

The Agency anticipates that revisions to the crop grouping program will result in no appreciable costs or negative impacts to consumers, specialty crop producers, pesticide registrants, the environment, or human health.  

Although this rule may make it possible to get a pesticide tolerance on a larger number of crops within the group, it will not necessarily increase the amount of pesticides released into the environment and may result in the use of safer pesticides. This is because changes to the crop grouping program broaden the choice of pesticides for crop producers and make newer pesticides available. It is also likely that growers will have a greater ability to use integrated pest management systems that could reduce the potential for environmental damage resulting from the use of pesticides.

Revisions to the crop grouping program maintain EPA standards for protecting human health. Representative crops for groups and subgroups are chosen on the basis that they have the highest residues in the group. For this reason, risk assessments conducted for crop groups are as conservative and comprehensive as risk assessments conducted for individual crops within the crop group.

4.3 Characterizations and Uncertainties

The cost savings presented above do not include potential savings from the establishment of subgroups. Subgroups create smaller crop groups within the larger crop group and allow a registrant to seek a tolerance on a subset of a crop group using the designated subgroup representative commodities. The addition and revisions of subgroups to Crop Groups 6 and 15 will provide additional flexibility for registrants seeking tolerances on a subset of crops within a crop group.
The decision by EPA to establish a tolerance or place a crop into a crop group does not reflect a registrant's business decision to market a pesticide on that crop. There are other important factors, such as the size of the potential market, and other costs, such as efficacy and crop safety studies that might have been an equal or greater deterrent to registration than the field residue trial. If so, then the actual benefit to registrants of including a site in the crop grouping for that pesticide and crop combination is zero, since they would not have pursued a field residue trial for a pesticide that would not be profitable to market. 

4.4 Summary of Changes from the Proposed Economic Analysis

EPA determined that a qualitative assessment would provide the public with key information about the rulemaking, including the number of crops affected, the affected entities, potential costs avoided, and the value of crop grouping without needing to quantify potential benefits. The quantified benefits of this rule in the proposed economic analysis ranged from $0  -  $200M+. There was also significant uncertainty about how much of the potential benefits within the range would ever be realized. Therefore, this updated, final version of the economic analysis was modified to be primarily qualitative instead of quantitative. 
