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J&C Marketing, Inc. - Order - December 21, 1999

Order - December 21, 1999

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of

the Alleged Violations of Article 33 of the Environmental Conservation Law of
the State of New York and Parts 320 - 329 of Title 6 of
the Official Compilation of Codes, Rules and Regulations of the State of New York

- by -

J&C MARKETING, INC.,

Respondent.

ORDER

DEC No.
R1-5983-97-07

WHEREAS:

  1. Pursuant to a Notice of Hearing and Complaint written and served by the Region 1 Staff of the Department of Environmental Conservation ("Staff"), an administrative enforcement hearing for the Respondent J & C Marketing, Inc., (the "Respondent") was held before Administrative Law Judge ("ALJ") Kevin J. Casutto on October 21, 1999, at the Department's Region 1 Office, Stony Brook, New York. The Region 1 Staff was represented by Mary E. Carpentiere, Assistant Regional Attorney, NYSDEC Region 1 Headquarters, SUNY Campus, Stony Brook, New York. The Respondent was represented by Kenneth C. Theobald, President, J & C Marketing, Inc., 283 Western Avenue, Hampden, Maine 04444 (mailing address: P.O. Box 125, Hampden, Maine, 04444).
  2. Upon review of the record and the Hearing Report of ALJ Casutto (copy attached), I hereby adopt its Findings, Conclusions and Recommendations as my own.
  3. The record of this hearing establishes that on January 20, 1996, the Respondent J & C Marketing violated ECL §§ 33-1301(1)(a) and 33-0701 by offering for sale, selling and distributing 12 containers of VG-100 (eight ounces), an unregistered pesticide product, to Fox's True Value Hardware, East Setauket, New York.
  4. In determining the appropriate civil penalty, I have considered the Respondent's role as the producer and marketer of the unregistered product and that product registration is an essential element of the pesticide regulatory program. These circumstances were thoroughly discussed in the Report.

NOW, THEREFORE, have considered this matter, it is ORDERED that:

  1. The charge against Respondent alleging violation of ECL §§ 33-1301(1)(a) and 33-0701 is sustained.
  2. The Respondent's affirmative defense, preemption, is dismissed.
  3. A penalty of Two Thousand Dollars ($2,000.00) for each violation of ECL Article 33, a total penalty of Twenty-four Thousand Dollars ($24,000.00), is assessed upon the Respondent, due and payable within sixty days of service upon the Respondent of a conformed copy of this Order.
  4. The Respondent, J & C Marketing, immediately must apply for and obtain New York product registration for its VG-100 pesticide product. Otherwise, the Respondent immediately must cease the distribution, sale, offer for sale or use of VG-100 within New York.
  5. Any change in this Order shall not be made or become effective, except as specifically set forth by written order of the Commissioner, such written order being made either upon the written application of the Respondent, or upon the Commissioner's own findings.
  6. This Order resolves only those violations specifically articulated and described herein and in no way limits the Department's authority to enforce any other violations not described herein in the manner that the Department shall deem appropriate.
  7. For the purpose of insuring compliance with this Order, and with applicable provisions of the ECL and regulations promulgated thereunder, representatives of the DEC shall be permitted access to relevant records in order to determine the status of the Respondent's compliance with the terms and conditions of this Order.
  8. All communications between the Respondent and the Department concerning this Order shall be made to the Department's Region 1 Director, NYSDEC, Building 40, SUNY Campus, Stony Brook, New York 11794.
  9. The provisions, terms and conditions of this Order shall bind the Respondent, its officers, directors, agents, servants, employees, successors and assigns and all persons, firms and corporations acting for or on behalf of the Respondent.

For the New York State Department
of Environmental Conservation

_____________/s/_____________
By: JOHN P.CAHILL, COMMISSIONER

Dated: Albany, New York
December 21, 1999

To: J & C Marketing, Inc.(via Certified Mail)
P.O. Box 125
Hampden, Maine, 04444)

Kenneth C. Theobald (via Certified Mail)
President
J & C Marketing, Inc.
P.O. Box 125
Hampden, Maine, 04444)

Mary E. Carpentiere, Esq.
Assistant Regional Attorney
NYSDEC-Region 1
Building 40, SUNY Campus
Stony Brook, New York 11790-2356

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION

50 Wolf Road
Albany, New York 12233-1550

In the Matter

- of -

Alleged violation of Article 33, Pesticides, of
the Environmental Conservation Law of the State of New York by:

J & C MARKETING, INC.,
RESPONDENT

DEC NO. R1-5983-97-07

HEARING REPORT

- by -

____________/s/_____________
Kevin J. Casutto
Administrative Law Judge

Proceedings

Pursuant to Article 71, Title 29 of the Environmental Conservation Law of the State of New York ("ECL") and Part 622 of Title 6 of the Official Compilation of Code, Rules and Regulations of the State of New York ("6 NYCRR"), an administrative enforcement hearing was held before Administrative Law Judge ("ALJ") Kevin J. Casutto, New York State Department of Environmental Conservation, ("NYSDEC" or the "Department") Office of Hearings and Mediation Services on October 21, 1999, in the Department's Region 1 Office, Stony Brook, New York.

The hearing was conducted concerning a complaint issued and duly served by Staff of the Department's Region 1 Office ("Staff"). Staff alleges that, J & C Marketing, Inc., (the "Respondent") caused or allowed the distribution, sale, offer for sale or use of pesticides that were not registered with the Commissioner, in violation of Environmental Conservation Law Sections 33-1301(1)(a) and 33-0701.

Staff appeared at the hearing by Mary E. Carpentiere, Esq., Assistant Regional Attorney, Region 1, Stony Brook, New York. To support its case, Staff called as its witnesses Pesticide Control Specialist II, Anthony Lamanno and Supervising Pesticide Control Specialist Vincent Palmer.

Prior to hearing, the Respondent was represented in this action by Thatcher M. Adams, Jr., Esq., P.A., 26 Columbia Street, Bangor, Maine. During a telephone conference on September 10, 1999, Mr. Adams agreed to the October 21, 1999 hearing date and advised Assistant Regional Attorney Carpentiere and the ALJ that he would be representing the Respondent at the hearing. However, Mr. Adams failed to appear with his client for the October 21, 1999 hearing, with no prior notice to opposing counsel or the ALJ.

Instead, at the hearing on October 21, 1999 and subsequently, the Respondent J & C Marketing, Inc., appeared and was represented by Kenneth C. Theobald, President, J & C Marketing, Inc., 283 Western Avenue, Hampden, Maine, 04444 (mailing address: P.O. Box 125, Hampden, Maine, 04444). Mr. Theobald explained that Mr. Adams no longer represents the corporation in this matter. Kenneth Theobald testified on behalf of the Respondent J & C Marketing, Inc. The Respondent presented no other witnesses.

The parties' closing briefs were postmarked by October 28, 1999 and were timely received. The hearing record closed on December 1, 1999 upon receipt of the hearing transcript by the Office of Hearings and Mediation Services.

Department Staff's Charges and Relief Sought

Staff allege that on or about January 10, 1996 at Fox's Three Village Paint and Hardware, Inc., 305 Main Street, East Setauket, New York, J & C Marketing, Inc., caused or allowed the distribution, sale, offer for sale or use of twelve 8-ounce bottles of "100% Fox Urine", a pesticide not registered with the Commissioner, in violation of Environmental Conservation Law §§ 33-1301(1)(a) and 33-0701.

The Respondent is charged with twelve violations of ECL §§ 33-1301(1)(a) and 33-0701, a separate violation for each container of the product. Pursuant to ECL §71-2907(1), a penalty of $5,000.00 per violation may be assessed, a maximum monetary penalty of $60,000.00. However, Staff seek a monetary penalty in the amount of $24,000.00 for the 12 alleged violations. Staff assert that this is an appropriate monetary penalty level, based upon the gravity of the violations and the importance of the violated provisions to the regulatory scheme.

Respondent's Answer

The Respondent filed an Answer dated September 19, 1999 in which he denied the substantive allegations in the Complaint.

The Respondent asserted an Affirmative Defense of federal preemption (or estoppel). The Respondent asserts that the USEPA has reviewed the identical product and label that are the subject of Staff's Complaint in a collateral matter (FIFRA-IF-93-11) and in 1993, determined that the product is not a pesticide, that the product label makes no pesticide repellant claims and that the product is exempt from federal registration under the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"; 7 U.S.C.A. §§ 136 to 136y), and 40 Code of Federal Regulations ("CFR") §§ 150 to 189).

Staff's Motion to Amend

At the outset of the hearing, Staff sought to amend its complaint to add new charges for two additional products, "Bobcat Urine" and "Coyote Urine". Staff Counsel Carpentiere explained that on October 9, 1998, Staff served upon Mr. Adams a written request to amend Paragraph 5 of the complaint to include the two additional products, Bobcat Urine and Coyote Urine, by stipulation of the parties, rather than by motion. Ms. Carpentiere asserts that Mr. Adams verbally consented to the amendment. However, no papers were filed with the ALJ to document the amendment by consent.

At hearing, unassisted by counsel, Mr. Theobald was surprised by the proposed amendment. He stated he knew nothing about an amendment to the complaint. Mr. Theobald opposed Staff's motion to amend the complaint. Under these circumstances, Staff's motion to amend was denied. The hearing was limited to the charges set forth in Staff's initial complaint.

Official Notice

Official notice was taken of the Commissioner's Civil Penalty Policy Enforcement Directive (issued June 20, 1990) and the Commissioner's Pesticide Enforcement Guidance Memorandum Enforcement Directive (as revised through March 1993).

Findings of Fact

  1. The Respondent J & C Marketing, Inc., is a corporation organized and existing under the laws of the State of Maine, and transacts business in the State of New York by the sale or shipment or distribution of pesticides in the State of New York. At all relevant times herein, the Respondent has maintained a place of business at 283 Western Avenue, Hampden, Maine, 04444 and a mailing address at P.O. Box 125, Hampden, Maine, 04444, and an Internet website, and continues to do so.
  2. The Respondent manufactures, markets, offers for sale, distributes, and sells internationally a product identified as VG-100, 100% Fox Urine, packaged in 8-ounce bottles ("VG-100"). The Respondent has been marketing fox urine product for more than 15 years, for use to move animals from one place to another or to camouflage the human scent or to lure animals to a particular location.
  3. In 1992 and 1993, the State of Maine and the USEPA conducted a governmental regulatory review of Varmint Guard, manufactured by Johnson & Company Wilderness Supply, Inc. ("JCWS").
  4. However, neither JCWS nor the Respondent obtained any written determination from the USEPA stating that the revised Varmint Guard label made no pesticidal claim and the product is not a pesticide under FIFRA.
  5. Since prior to 1996, the Respondent has been marketing the JCWS Varmint Guard product as the Respondent's VG-100 product.
  6. The Respondent's VG-100 product is identical to the JCWS Varmint Guard product. The VG-100 product label information is identical to the Varmint Guard product label information as revised in 1993 (other than with respect to the product name).
  7. On January 20, 1996, the Respondent sold twelve 8-ounce bottles of VG-100 to Fox's True Value Hardware, 305 Main Street, East Setauket, New York.
  8. On June 3, 1997, in response to a complaint of sale of unregistered pesticides, NYSDEC Pesticide Control Specialist ("PCS") Anthony Lamanno conducted a pesticide compliance inspection at Fox's True Value Hardware, 305 Main Street, East Setauket, New York (the "hardware store").
  9. On June 3, 1997, one 8-ounce bottle of VG-100, 100% Fox Urine was displayed and offered for sale in the hardware store.
  10. The VG-100 product label contains no federal or New York State pesticide product registration numbers.
  11. The VG-100 product label contains the following information:

    "It warns rabbits, groundhogs, woodchucks, skunks, squirrels, chipmunks and other varmints away from the presence of a most dangerous predator . . . . Farmers, Ranchers, Gardeners: Create the illusion of presence of foxes in farms, gardens or yards by placing Scent Darts every 10-12 feet and saturating with urine. Re-apply every 10 days or after a rain. For longer impact, use 30 Day Dispensers."

  12. Next to the VG-100 product was display material, provided to by the Respondent, stating that "VG-100 is 100% real fox urine which makes varmints like rabbits, squirrels, and chipmunks react instinctively to their fear of this predator by creating the illusion of its presence."
  13. PCS Lamanno retained the one bottle of VG-100 product displayed in the hardware store as a sample, and issued a sample receipt to the hardware store owner.
  14. On November 18, 1997 as part of Staff's review of this matter, Staff advised the Respondent to contact the USEPA Region 1 office for information on how to apply for federal pesticide product registration.
  15. Neither JCWS nor the Respondent registered the product with the USEPA. Nor did JCWS or the Respondent obtain any determination, written or otherwise, from the USEPA stating that the Varmint Guard product (with the 1993 label revision) or the VG-100 product is not a pesticide under FIFRA.
  16. Lastly, the Respondent maintains an Internet website that advertises and offers for sale its VG-100 product. The Respondent's website information includes a statement similar to the display material statement. Testimonials displayed on the website indicate VG-100's efficacy in repelling woodchucks, rabbits and skunks from gardens and yards.

Discussion

Jurisdiction and authority to initiate this administrative action is based upon §§ 3-0301(1)(j), 3-0301(2)(h), 33-1301(1)(a), 33-0701, and 71-2907 of the Environmental Conservation Law (ECL).

ECL §33-0101(34)(2) provides that a pest is any form of terrestrial or aquatic plant or animal life that the commissioner declares to be a pest.

ECL §33-0101(35)(a) provides that a pesticide is any substance or mixture of substances intended for preventing, destroying, repelling or mitigating any pest.

ECL §33-1301(1)(a) provides, in pertinent part, that "[i]t shall be unlawful: (1) [f]or any person to distribute, sell, offer for sale, or use within this state. . . (a) [a]ny pesticide which has not been registered pursuant to the provisions of [ECL Article 33] . . ."

ECL §33-0701 provides, in pertinent part, that "[e]very pesticide which is used, distributed, sold, or offered for sale within this state . . . shall be registered every two years with the office of the commissioner. . ."

ECL §71-2907 provides for a civil penalty not to exceed $5,000.00 for a first violation of any provision of ECL Article 33, or any rule, regulation or order issued pursuant thereto and for a civil penalty not to exceed $10,000.00 for a subsequent offense.

The facts in this case were not substantially in dispute. The 24 exhibits in evidence were admitted into evidence by stipulation of the parties at the beginning of the hearing. Instead, the focus of this enforcement hearing was on two issues. First, is the Respondent's VG-100 product a pesticide product pursuant to ECL Article 33. Second, has the federal Environmental Protection Agency determined that the Respondent's VG-100, 100% Fox Urine product is not a pesticide product within the meaning of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA); and if so, has the federal government's determination preempted New York regulation of the Respondent's product.

In an attempt to support its position that the USEPA has determined the VG-100 product is not a pesticide under FIFRA, the Respondent offered the affidavit of Kenneth E. Johnson, the Respondent's General Manager and the testimony of Kenneth C. Theobald, President of the Respondent corporation, summarizing the affidavit. Mr. Theobald was present during, or familiar with, the events described in the Johnson affidavit. The Respondent is a marketing corporation. The Respondent's General Manager Kenneth E. Johnson is also the President of Johnson & Company Wilderness Supply, Inc. ("JCWS").

In his affidavit, Mr. Johnson explained that JCWS's "Varmint Guard" product and label are identical to the Respondent's VG-100 product and label. Since prior to January 1, 1996, the Respondent assumed marketing responsibilities for JCWS's VG-100 product (previously marketed by JCWS as Varmint Guard)(1). Mr. Johnson described regulatory review of JCWS's Varmint Guard product by the State of Maine and the USEPA in 1992 and 1993. The Respondent contends that in 1993, the Maine/USEPA regulatory review process resulted in label changes to JCWS's Varmint Guard, specifically the deletion of a label claim that the product "scares pesky varmints away..." Further, the Respondent contends that the USEPA representatives determined that JCWS's Varmint Guard, with the revised label, is not a pesticide under FIFRA. Therefore, the Respondent contends, its VG-100, identical to JCWS's Varmint Guard product and with a label identical to the Varmint Guard label as revised in 1993, is not a pesticide under FIFRA.

The Respondent has established that the Respondent's VG-100 product label is identical to the Varmint Guard revised label.

Exhibits attached to the affidavit include a letter dated June 11, 1993, from state of Maine regulators to USEPA, Region 1, Boston, MA. In that letter, Maine Pesticides Inspector Raymond G. Connors states that JCWS agreed to revise the "Varmint Guard" label and send a copy of the revised label to USEPA Region 1 (Boston, MA) to get confirmation that the revised label does not make any pesticidal claims. Subsequently, on November 18, 1997 as part of Department Staff's review of the present action, the Respondent was advised to contact the USEPA Region 1 office for information on how to apply for federal pesticide product registration. (Letter of November 18, 1997, Serafini to Johnson). Neither JCWS nor the Respondent ever obtained any written confirmation or determination from the USEPA stating that with the Varmint Guard label (as revised in 1993), the product (now marketed as the Respondent's VG-100) is not a pesticide under FIFRA.

I accept the Respondents evidence to establish that the State of Maine and the USEPA conducted a governmental regulatory review of the identical product, Varmint Guard, in 1992 and 1993. Nonetheless, I find that the Respondent's hearsay evidence characterizing the purported conclusion of USEPA's Region 1 representatives - i.e., that the product as labeled is not a pesticide under FIFRA - is unpersuasive in the absence of any documented USEPA determination.

I conclude that USEPA has not determined that the VG-100 product (formerly Varmint Guard) is not a pesticide under FIFRA. Therefore, the Respondent's affirmative defense of preemption is dismissed.

Penalties

ECL §71-2907 provides for a civil penalty not to exceed $5,000.00 for a first violation of any provision of ECL Article 33, or any rule, regulation or order issued pursuant thereto and for a civil penalty not to exceed $10,000.00 for a subsequent offense.

Staff argues that based upon the Pesticide Enforcement Guidance Memorandum ("EGM"), revised March 1993, and the Civil Penalty Policy, dated June 20, 1990, a penalty of $24,000 ($2,000 per bottle for each of the twelve bottles of the pesticide product) is appropriate. Staff have not alleged nor proven any environmental harm resulting from the Respondent's conduct.

The Respondent was the producer and marketer of the unregistered product. In these roles, the Respondent bears direct responsibility for the contents of the product label and compliance with state registration requirements. The Pesticide EGM indicates the minimum penalty response for the sale of twelve bottles of unregistered pesticide would be $1,000 (assuming the twelve containers are one violation). Further, Staff have not alleged or proven any environmental harm in this case. Nonetheless, product registration is an essential element of the regulatory program. The record does not address whether the Respondent has distributed or sold the product elsewhere in the State. But, the record does establish that the Respondent, through its Internet website, does offer the product for sale throughout the state. By avoiding product registration the Respondent's distribution, offer for sale and sale of VG-100 within the state of New York occurs outside the agency's regulatory purview, contrary to the legislative intent of ECL Article 33.

Regarding economic benefit, the Respondent did not derive a significant economic benefit from the sale of twelve bottles of VG-100. But the Respondent does derive economic benefit from the avoided costs of product registration with the state (and the EPA).

Under the Pesticide EGM, product registration violations for products that have never been registered in the state and have multi-Regional or statewide impact, are tier one violations, the highest priority. Pesticide EGM at page 6. Lastly, the Respondent failed to offer any reason for reducing the penalty Staff sought in its complaint.

Under these circumstances, a per-container penalty of $2,000, a total penalty of $24,000.00 is appropriate.

Conclusions of Law

  1. Predator animal scents, including VG-100, may be used to attract certain animals or to repel other animals.
  2. The Respondent's VG-100 label statements that the product "warns animals away from the presence of a most dangerous predator" and that "farmers, ranchers or gardeners can use it to create the illusion of presence of foxes in farms, gardens or yards," constitute claims that the product can be used to repel pests, i.e., animals that would damage crops or livestock. Lastly, the display material statement that "VG-100 is 100% real fox urine which makes certain animals react instinctively to their fear of this predator by creating the illusion of its presence," also constitutes a claim that the product can be used to repel pests.
  3. Since the Respondent describes and advertises VG-100 for use as a repellant of pests, the VG-100 product is a pesticide within the meaning of ECL §§ 33-1301(1)(a) and 33-0701.
  4. On January 20, 1996, the Respondent violated ECL §§ 33-1301(1)(a) and 33-0701 by offering for sale, selling and distributing 12 eight-ounce containers of VG-100, an unregistered pesticide product, to Fox's True Value Hardware, East Setauket, New York.

Recommendations

Upon consideration of the foregoing, and upon a review of the record of this hearing, including the transcript, exhibits, motions and closing statements submitted, my recommendation is that the Commissioner imposes a monetary penalty and other relief consistent with Staff's request, as follows:

  1. The charges against the Respondent alleging violation of ECL §§ 33-1301(1)(a) and 33-0701 should be sustained.
  2. A monetary penalty of twenty-four Thousand ($24,000.00) Dollars for each violation of ECL Article 33 should be assessed against the Respondent, J & C Marketing, Inc., due and payable within sixty days of service upon the Respondent of a conformed copy of the Order.
  3. The Respondent should be ordered immediately to cease the distribution, sale, offer for sale or use of its VG-100 pesticide product within the state of New York, until such time as the product is registered with the Department as a pesticide.

1 The Johnson affidavit states that the Respondent assumed marketing of the product on or about January 1, 1997. However, the hardware store receipt shows that the Respondent was marketing the product at least a year earlier.

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