**ECONOMIC ANALYSIS FOR PROPOSED Exemption Under the Federal
Insecticide, Fungicide, and Rodenticide Act for Certain
Plant-incorporated Protectants Derived from Plant Viral Coat Protein
Gene(S) (PVCP-PIPs)**

Number range CHAPTERTable of Contents

[Executive Summary 1](#executive-summary)

[1. Introduction 4](#introduction)

[1.1. Overview of PVCP-PIPs and their Environmental Effects
5](#overview-of-pvcp-pips-and-their-environmental-effects)

[1.2. Need for Regulation 5](#need-for-regulation)

[1.2.1. Human health concerns 6](#human-health-concerns)

[1.2.2. Environmental concerns 6](#environmental-concerns)

[1.2.3. Industry concerns 7](#industry-concerns)

[1.2.4. Public concerns 9](#public-concerns)

[1.3. Statutory Authority for the Proposed Rule
10](#statutory-authority-for-the-proposed-rule)

[1.4. Regulatory Assessment Requirements
12](#regulatory-assessment-requirements)

[1.5. Scope of Analysis 12](#scope-of-analysis)

[2. Alternative Options for the Proposed Rule
13](#alternative-options-for-the-proposed-rule)

[2.1. Option 1 13](#option-1)

[2.2. Option 2 14](#option-2)

[2.3. Option 3 15](#option-3)

[2.4. Option 4 15](#option-4)

[3. Economic Profile of Regulated Industry
15](#economic-profile-of-regulated-industry)

[3.1. Background on the U.S. Seed Industry
17](#background-on-the-u.s.-seed-industry)

[3.2. Identifying Potentially Impacted Entities in the U.S. Seed
Industry
17](#identifying-potentially-impacted-entities-in-the-u.s.-seed-industry)

[3.2.1. Pesticide manufacturers 19](#pesticide-manufacturers)

[3.2.2. Crop production (including seed production)
23](#crop-production-including-seed-production)

[3.2.3. Universities, colleges, and other entities
25](#universities-colleges-and-other-entities)

[3.2.4. Research and development in the physical, engineering, and life
sciences
26](#research-and-development-in-the-physical-engineering-and-life-sciences)

[4. Cost Impacts on Developers Due to Proposed Exemption for Certain
PVCP-PIPs
26](#cost-impacts-on-developers-due-to-proposed-exemption-for-certain-pvcp-pips)

[4.1. General Methodology 27](#general-methodology)

[4.1.1. Case studies 28](#case-studies)

[4.1.2. Relationship of options to case studies
32](#relationship-of-options-to-case-studies)

[4.1.3. Projections for the number of PVCP-PIP submissions
32](#projections-for-the-number-of-pvcp-pip-submissions)

[4.1.4. Potential data needs for each case study
34](#potential-data-needs-for-each-case-study)

[4.2. Unit Test Costs and Burden Estimates
38](#unit-test-costs-and-burden-estimates)

[4.3. Data Requirements per Registration or Exemption
39](#data-requirements-per-registration-or-exemption)

[4.4. Total Cost Savings per Option 41](#total-cost-savings-per-option)

[4.4.1. Cost estimates for data submissions to the agency
41](#cost-estimates-for-data-submissions-to-the-agency)

[4.4.2. Total compliance costs 42](#total-compliance-costs)

[4.5. Limitations of the Costs Analysis
45](#limitations-of-the-costs-analysis)

[4.5.1. Unit costs 45](#unit-costs)

[4.5.2. Frequency of PVCP-PIP registration
46](#frequency-of-pvcp-pip-registration)

[4.5.3. Case study prevalences 46](#case-study-prevalences)

[4.6. Existing Products 46](#existing-products)

[5. Benefit Analysis 47](#benefit-analysis)

[5.1. Benefits to the Public 47](#benefits-to-the-public)

[5.2. Benefits to Industry 48](#benefits-to-industry)

[5.3. Benefits to Farmers 48](#benefits-to-farmers)

[5.4. Benefits to the Environment 48](#benefits-to-the-environment)

[6. Economic Impacts 49](#economic-impacts)

[7. Rationale for Proposing Option 1
50](#rationale-for-proposing-option-1)

[7.1. Protection of Human Health 51](#protection-of-human-health)

[7.2. Protection of the Environment 51](#protection-of-the-environment)

[8. Other Economic Impacts Assessments
51](#other-economic-impacts-assessments)

[8.1. Regulatory Flexibility Act (RFA) as Amended by the 1996 Small
Business Regulatory Enforcement Fairness Act (SBREFA)
51](#regulatory-flexibility-act-rfa-as-amended-by-the-1996-small-business-regulatory-enforcement-fairness-act-sbrefa)

[8.1.1. Affected small entities 52](#affected-small-entities)

[8.1.2. Impacts on small businesses 53](#impacts-on-small-businesses)

[8.2. Paperwork Reduction Act 55](#paperwork-reduction-act)

[8.3. Unfunded Mandates Reform Act of 1995
55](#unfunded-mandates-reform-act-of-1995)

[8.4. Executive Order 12898 56](#executive-order-12898)

[8.5. FIFRA § 25(a)(2)(b) 56](#fifra-25a2b)

[8.6. Remaining Regulatory Assessment Requirements
57](#remaining-regulatory-assessment-requirements)

[References 58](#references)

[Appendix A: Entities Conducting Field Tests of Virus-Resistant Plants
that May Contain a PVCP-PIP
60](#appendix-a-entities-conducting-field-tests-of-virus-resistant-plants-that-may-contain-a-pvcp-pip)

[Appendix B: List of Many of the World's Largest Seed Companies and
Their Acquisitions and/or Subsidiaries
65](#appendix-b-list-of-many-of-the-worlds-largest-seed-companies-and-their-acquisitions-andor-subsidiaries)

[Appendix C: Test Cost Data Used to Calculate Costs for 40 CFR Part
174.27
74](#appendix-c-test-cost-data-used-to-calculate-costs-for-40-cfr-part-174.27)

[Appendix D: USDA's Biotechnology Deregulation Process
77](#appendix-d-usdas-biotechnology-deregulation-process)

[Appendix E: Burden Hours and Estimates Used to Calculate Compliance
Costs for 40 CFR Part 174.27
79](#appendix-e-burden-hours-and-estimates-used-to-calculate-compliance-costs-for-40-cfr-part-174.27)

[Appendix F: High and Low Compliance Cost Estimates for Four Alternative
Options per Registration and/or Exemption
84](#appendix-f-high-and-low-compliance-cost-estimates-for-four-alternative-options-per-registration-andor-exemption)

LIST OF TABLES

[Table 1: Estimated Number of Pesticide Registrants that May Be Affected
by the Proposed Rule 20](#__RefHeading___Toc139179521)

[Table 2: Most Common NAICS Codes Associated with Sample of 804
Pesticide Registrants 21](#__RefHeading___Toc139179522)

[Table 3: Economic Profile of Pesticide Registrants by Entity Size
22](#__RefHeading___Toc139179523)

[Table 4: Leading Seed Company 2004 Seed Revenues
24](#__RefHeading___Toc139179524)

[Table 5: Estimated Seed Sales and Shares of U.S. Market for Major Field
Crops, 1997 25](#__RefHeading___Toc139179525)

[Table 6: Summary of Case Studies and Their Prevalence
31](#__RefHeading___Toc139179526)

[Table 7: Analysis of Case Studies Exempted from Registration under
Various Options 32](#__RefHeading___Toc139179527)

[Table 8: Existing Crops Containing a PVCP-PIP
32](#__RefHeading___Toc139179528)

[Table 9: Number of PVCP-PIPs Expected Over 10 Years Like Each Case
Study 34](#__RefHeading___Toc139179529)

[Table 10: Information for Conducting a Risk Assessment for Each Case
Study for FIFRA Registration Baseline 35](#__RefHeading___Toc139179530)

[Table 11: Compliance Costs for Four Alternative Options per
Registration and/or Exemption. 42](#__RefHeading___Toc139179531)

[Table 12: Probability of Registration Associated with Each Case Study
43](#__RefHeading___Toc139179532)

[Table 13: Average Total Compliance Cost
44](#__RefHeading___Toc139179533)

[Table 14: Total Compliance Cost Savings for a 10-Year Period with
Discounting 45](#__RefHeading___Toc139179534)

List of Charts

[Chart 1: Primary Production Stages and Entities in the U.S. Seed
Industry 16](#__RefHeading___Toc139179619)

[Chart 2: Methodological Flowchart for Analyzing the Cost Impacts
Associated with Proposed Changes to 40 CFR Part 174.27
38](#__RefHeading___Toc139179620)

# Executive Summary  {#executive-summary .unnumbered}

A plant-incorporated protectant (PIP) is defined as a pesticidal
substance that is intended to be produced and used in a living plant, or
in the produce thereof, and the genetic material necessary for
production of such a pesticidal substance. The definition includes both
active and inert ingredients. The U.S. Environmental Protection Agency
(EPA, or the Agency) considers plant virus coat protein PIPs (PVCP-PIPs)
to be those PIPs based on one or more genes that encode a coat protein
of a virus that naturally infects plants. PVCP-PIPs are considered
pesticides under the Federal Insecticide, Fungicide, and Rodenticide Act
(FIFRA) because they meet the FIFRA definition of a pesticide, being
intended for preventing, destroying, repelling, or mitigating a pest.
EPA under the Federal Food, Drug, and Cosmetic Act (FFDCA) regulates
residues of PVCP-PIPs in food.

EPA is proposing to exempt certain PVCP-PIPs from most FIFRA
requirements. A PIP can be exempt from the requirements of FIFRA, other
than the adverse effects reporting requirements of 40 CFR 174.71, if it
meets all three of the requirements listed in 40 CFR 174.21. Section
174.21(a) requires that the PIP meet the criteria listed in at least one
of the sections in §§ 174.25 through 174.50. Section 174.21(b) requires
that when the PIP is intended to be produced and used in a crop used as
food, the residues of the PIP are either exempted from the requirement
of a tolerance under FFDCA or no tolerance would otherwise be required
for the PIP. Section 174.21(c) requires that an exempt PIP must contain
only those inert ingredient(s) included on the list codified at §§
174.485 through 174.490.

The proposed rule would establish 40 CFR 174.27, which would contain
three criteria that, when met, would allow PVCP-PIPs to meet the general
requirement for exemption for all PIPs listed at 40 CFR 174.21(a). This
economic analysis evaluates the effect of proposed § 174.27 by assuming
that all PVCP-PIPs meet the existing requirements under § 174.21(b) and
(c).

In developing this proposal, EPA evaluated PVCP-PIPs for risk based on
an analysis of human experiences with the breeding and cultivation of
agricultural plants as well as food preparation and consumption. EPA
combined this long history of human experience with knowledge of plant
genetics, plant physiology, phytopathology, microbial ecology, ecology,
biochemistry, and plant breeding. Based on its evaluation, EPA currently
believes that some PVCP-PIPs warrant exemption, i.e., those covered
under Option 1 of this economic analysis (EA). This rule would benefit
the industry by reducing the cost of regulation for some PVCP-PIPs and
by removing regulatory uncertainty for this class of products. This rule
would also benefit the public by appropriately allocating federal
resources for risk evaluation and by ensuring that other, non-exempt
PVCP-PIPs remain subject to FIFRA requirements in order to protect
public health and the environment.

Under the proposed rule analyzed in this EA (Option 1), PVCP-PIPs
meeting all of the following three criteria (a, b, and c) will meet the
requirements of 40 CFR 174.21(a):

(a) Criterion a is satisfied if either paragraph 1 or paragraph 2
    applies:

    1.  The plant containing the PIP is one of the following: anthurium
        (*Anthurium* spp.), asparagus (*Asparagus officinale*), avocado
        (*Persea americana*), banana (*Musa acuminata*), barley
        (*Hordeum vulgare*), bean (*Phaseolus vulgaris*), cacao
        (*Theobroma cacao*), carnation (*Dianthus caryophyllus*),
        chickpea (*Cicer arietinum*), citrus (*Citrus* spp., e.g.,
        *Citrus aurantifolia, Citrus limon, Citrus paradisii, Citrus
        sinensis*), coffee (*Coffea arabica* and *Coffea canephora*),
        corn (*Zea maize*), cowpea (*Vigna unguiculata*), cucumber
        (*Cucumis sativus*), gerbera (*Gerbera* spp.), gladiolus
        (*Gladiolus* spp.), lentil (*Lens culinaris*), mango (*Mangifera
        indica*), orchids (Orchidaceae), papaya (*Carica papaya*), pea
        (*Pisum sativum*), peanut (*Arachis hypogaea*), pineapple
        (*Ananas comosus*), potato (*Solanum tuberosum*), soybean
        (*Glycine max*), starfruit (*Averrhoa carambola*), sugarcane
        (*Saccharum officinarum*), or tulips (*Tulipa* spp.).

    2.  The Agency determines after review that the plant containing the
        PIP:

```{=html}
<!-- -->
```
(i) has no wild or weedy relatives in the United States with which it
    can form viable hybrids in nature, and

(ii) is not a weedy or invasive species outside of agricultural fields
     in the United States, and

(iii) is unlikely to establish weedy or invasive populations outside of
      agricultural fields in the United States even if the plant
      contains a PVCP-PIP.

```{=html}
<!-- -->
```
(b) Criterion b is satisfied if either paragraph 1(i), paragraph 1(ii),
    or paragraph 2 applies:

    1.  \(i\) The viral pathotype used to create the PVCP-PIP has
        naturally infected plants in the United States and naturally
        infects plants of the same species as those containing the
        PVCP-PIP, or (ii) the genetic material that encodes the
        pesticidal substance or leads to the production of the
        pesticidal substance is inserted only in an inverted repeat
        orientation or lacking an initiation codon for protein synthesis
        such that no PVC-protein is produced in the plant.

    2.  The Agency determines after review that viruses that naturally
        infect the plant containing the PVCP-PIP are unlikely to acquire
        the coat protein sequence through recombination and produce a
        viable virus with significantly different properties than either
        parent virus.

(c) Criterion c is satisfied if either paragraph 1 or paragraph 2
    applies:

    1.  The genetic material that encodes the pesticidal substance or
        leads to the production of the pesticidal substance

    ```{=html}
    <!-- -->
    ```
    i.  is inserted only in an inverted repeat orientation or lacking an
        initiation codon for protein synthesis such that no PVC-protein
        is produced in the plant, or

    ii. encodes only a single virtually unmodified viral coat protein.
        Multiple PVC-proteins could each separately meet this criterion.
        Chimeric PVC-proteins do not qualify.

    ```{=html}
    <!-- -->
    ```
    2.  The Agency determines after review that the genetic material
        that encodes the pesticidal substance or leads to the production
        of the pesticidal substance

```{=html}
<!-- -->
```
(i) encodes a protein that is minimally modified from a coat protein
    from a virus that naturally infects plants, or

(ii) produces no protein.

This EA estimates the projected compliance cost for the industry under
the baseline of full registration for all PVCP-PIPs (Option 4) and
compares that to the compliance cost for the potentially affected
industry under the proposed rule in order to estimate the expected
savings from the regulation relief. The steps used in this EA to obtain
a cost estimate for the proposed rule are summarized below.

Since the nature and timing of future development of PVCP-PIPs are
unknown, this EA begins by identifying nine case studies that represent
the broadest range of PVCP-PIPs that the Agency anticipates could be
developed in the future. After considering the characteristics of the
products that have already been marketed, characteristics of the crop
plants that have been the subject of field trials for PVCP-PIPs, and
knowledge of the field of genetically engineered virus-resistant crops,
EPA estimated the percentage of products projected to be characterized
by each case study, i.e., the "prevalence" of the case study. The stated
prevalence of each case study represents the best estimate of the
expectation of a PVCP-PIP product like the one in a specific case study
being developed in the future.

For each case study, a set of data would be required of a developer in
order to register the PVCP-PIP. The cost and burden of potential data
requirements for each case study under the baseline are compared with
the potential data requirement costs and burden under the proposed
option. Using the prevalence for each case study, we estimated the
probability of developing a PVCP-PIP product like that examined in any
of the case studies in any year, given that the Agency anticipates 1.5
-- 2.5 PVCP-PIPs being developed each year over a 10-year period. These
probabilities determine the frequency and timing of development and
registration of PVCP-PIPs in a model we designed to compute compliance
cost savings.

To estimated compliance cost savings in any year, the number of
PVCP-PIPs like the one developed in a given case study was multiplied by
the difference between cost and burden under the proposed rule and
baseline. Since the model made use of probabilities, we computed the
average of 5,000 simulations for each year to represent the annual
compliance cost savings for the proposed rule. Using this procedure to
estimate the annual impact, based on an average of high and low cost
estimates (called hereafter the \"average cost\") per data requirement,
the proposed rule is expected to result in a regulatory compliance cost
reduction approximately within the range of \$330,000 and \$340,000 a
year. Over a 10-year period, the annual average regulatory compliance
cost reduction is expected to be approximately \$330,000.

# Introduction

EPA is proposing to exempt certain PVCP-PIPs from most FIFRA
requirements. A PIP can be exempt from the requirements of FIFRA, other
than the adverse effects reporting requirements of 40 CFR 174.71, if it
meets all three of the requirements listed in 40 CFR 174.21. Section
174.21(a) requires that the PIP meet the criteria listed in at least one
of the sections in §§ 174.25 through 174.50. Section 174.21(b) requires
that when the PIP is intended to be produced and used in a crop used as
food, the residues of the PIP are either exempted from the requirement
of a tolerance under FFDCA or no tolerance would otherwise be required
for the PIP. Section 174.21(c) requires that an exempt PIP must contain
only those inert ingredient(s) included on the list codified at §§
174.485 through 174.490.

The proposed rule would establish 40 CFR 174.27, which would contain
three criteria that, when met, would allow PVCP-PIPs to meet the general
requirement for exemption for all PIPs listed at 40 CFR 174.21(a). This
economic analysis evaluates the effect of proposed § 174.27 by assuming
that all PVCP-PIPs meet the existing requirements under § 174.21(b) and
(c).

This rule would benefit the industry by reducing the cost of regulation
for some PVCP-PIPs and by removing regulatory uncertainty for this class
of products. This rule would also benefit the public by appropriately
allocating federal resources for risk evaluation and by ensuring that
other, non-exempt PVCP-PIPs remain subject to FIFRA requirements in
order to protect public health and the environment. Although the rule
proposes to relax registration requirements for some types of PVCP-PIPs
that EPA determined from experience to be safe for the public health and
the environment, it will protect the public by ensuring regulatory
control over PVCP-PIPs that EPA cannot *a priori* determine to be safe.

This report presents the results of an economic analysis (EA) evaluating
the potential change in compliance costs of exempting (1) certain
PVCP-PIPs from regulation under FIFRA and (2) the protein portion of
certain PVCP-PIPs (termed the "PVC-protein") from the need for a
tolerance under the Federal Food, Drug, and Cosmetic Act. The
introductory chapter of this EA presents an overview and discussion of
PCVP-PIPs in relation to human health, the environment, industry, and
the public as a whole. The introduction also summarizes the statutory
requirements that must be met for regulating pesticides and for
exempting pesticides, the various statutes and executive orders
requiring the analysis, and the scope of the analysis.

## Overview of PVCP-PIPs and their Environmental Effects

A plant-incorporated protectant is defined as a pesticidal substance
that is intended to be produced and used in a living plant, or in the
produce thereof, and the genetic material necessary for production of
such a pesticidal substance. The definition includes both active and
inert ingredients.

EPA considers plant virus coat protein PIPs (PVCP-PIPs) to be those PIPs
based on one or more genes that encode a coat protein of a virus that
naturally infects plants. This includes plant-incorporated protectants
derived from one or more plant viral coat protein genes that produce
only RNA and no virus-related protein. PVCP-PIPs that produce no protein
are PIPs because they consist of a pesticidal substance intended to be
produced and used in a living plant (even though that substance may be
non-proteinaceous) and the genetic material necessary for production of
such a substance. Incorporation of plant viral coat protein gene
sequences into plant genomes has been found to confer resistance to the
virus from which the protein was derived, and often to related viruses
(Gonsalves & Slightom 1993; OECD Environment Directorate 1996; Kaniewski
& Lawson 1998).

PVCP-PIPs are pesticides under FIFRA because they meet the FIFRA
definition of a pesticide, being intended for preventing, destroying,
repelling, or mitigating a pest. EPA under the Federal Food, Drug, and
Cosmetic Act (FFDCA) regulates residues of PVCP-PIPs in food.

## Need for Regulation

In the mid-1980s, the Federal government examined existing laws and
concluded that, for the most part, existing laws would adequately ensure
the safety of products produced from the application of biotechnology.
In 1986, the Federal government announced in the "Coordinated Framework
for Regulation of Biotechnology" (51 FR 23302 June 26, 1986) that
biotechnology products will be regulated in the United States as are
products of other technologies; that is, by the various regulatory
agencies on the basis of use. Thus, EPA, which is responsible for
regulating the use of pesticides, would be responsible for products of
biotechnology that are to be used as pesticides. The proposed rule is
part of a program to implement fully the Coordinated Framework.

This section presents a discussion of the risks and concerns associated
with PVCP-PIPs that would not be exempted by this proposed rule.
Specifically discussed are concerns associated with human health and the
environment and the concerns of industry and the public.

### Human health concerns

Virus-infected plants have always been a part of the human and domestic
animal food supply. Most crops are frequently infected with plant
viruses, and food from these crops has been and is being consumed
without adverse human or animal health effects. In addition, plant
viruses are not infectious to humans, including children and infants, or
to other mammals. Finally, plant virus coat proteins, while widespread
in food, have not been associated with toxic effects to animals or
humans. These conclusions are derived from a sufficient experience and
information base to support this proposed exemption from the requirement
of a tolerance for PVC-proteins that (1) are virtually unmodified when
compared to natural plant viral coat proteins or (2) the Agency has
determined are minimally modified from natural plant viral coat
proteins, i.e., are substantially similar to and are as safe as natural
plant viral coat proteins.

With the PVCP-PIPs not exempted by the proposed rule, there is a
possibility of qualitatively different (i.e., new) dietary exposure. For
example, a qualitatively different exposure could occur if the
PVC-protein were significantly modified by the addition of amino acids
that changed the overall protein structure from its natural state and
modified the protein's allergenicity potential. Modern biological and
genetic techniques enable developers to introduce substances
significantly different from those historically consumed safely into
foods. PVCP-PIPs for which there is no history of natural exposure and
consumption would not fall within the record supporting exemption.

In addition, EPA evaluates under FIFRA not only potential human dietary
risks, but also non-dietary risks such as may occur through occupational
exposure. PVCP-PIPs not exempted by the rule are those that EPA cannot
determine have a history of natural human exposure, and therefore EPA
cannot conclude that there is no unreasonable occupational risk without
the type of review provided by the registration process.

### Environmental concerns

The underlying risk assessment paradigm for PVCP-PIPs is similar to that
used for other types of PIPs, considering the potential for exposure to
the pesticidal substance and its chemical and toxicological properties.
For PVCP-PIPs, EPA has addressed the three relevant potential risks:

First, EPA considered whether the transfer of virus resistance through
gene flow from a crop plant to a wild or weedy relative might affect the
recipient's growth, survivorship, and/or reproduction. A related
question is whether acquisition of virus resistance by individual plants
may subsequently affect population dynamics and change the natural plant
community on which other organisms depend.

Second, EPA considered the potential for recombination between virus
coat protein sequences of the PVCP-PIP and other viruses infecting the
plant, a process that produces viruses that contain genetic material
from both sources. Most such events are anticipated to be like those
that occur naturally in mixed virus infections that are quite common in
nature. However, for certain PVCP-PIPs, the recombinant produced may be
unlike those that would be expected to result from a natural
recombination event. For example, a PVCP-PIP could be introduced into a
plant that is not naturally infected by the virus from which the
PVCP-PIP was derived. Viruses that infect that plant may have had no
previous opportunity to recombine with such viral sequences in nature.
Potentially novel recombinants resulting from such interactions could
have altered epidemiology and/or pathogenicity. Given the potential
impact of virus infection, such changes might affect competitiveness of
plant populations, thereby altering ecosystem dynamics, e.g., through
changes in species composition of populations, resource utilization, or
herbivory.

Third, EPA considered the potential for exposure of non-target organisms
to a PVC-protein that is significantly different from any naturally
occurring plant virus coat protein. Some PVC-proteins may be identical
to those already naturally produced in virus-infected plants and to
which organisms that interact with the plant are already exposed, e.g.,
herbivorous insects and animals. However, some modifications to the coat
protein sequence in the PVCP-PIP could lead to PVC-proteins being
produced that may be entirely new to the plant and thus present new
exposures to organisms that associate with the plant. For instance,
amino acids may be added to PVC-proteins that change the allergenicity
or toxicity potential of the PVC-protein.

PVCP-PIPs not exempted by the proposed rule are those that EPA cannot
determine pose low risk with respect to one or more of the concerns
outlined above. The Agency would evaluate non-exempt PVCP-PIPs for these
considerations during the registration process.

### Industry concerns

EPA identified three primary concerns of the agricultural biotechnology
industry:

First, although EPA proposed two options to exempt PVCP-PIPs from FIFRA
registration in 1994, EPA has yet to finalize either exemption. Since
1994, several companies have developed and commercialized PVCP-PIP
products. In addition, since 2000, at least 80 field trials have been
conducted for at least 15 types of plants containing PVCP-PIPs. Until
the Agency finalizes an exemption for PVCP-PIPs that clearly articulates
which are exempt and which are not, companies will be uncertain whether
their product would be exempt upon implementation of a final rule or
whether the company would need to register the product.

Second, although the number of PVCP-PIPs subject to FIFRA requirements
would be much reduced through issuance of the proposed rule, some
companies are still likely to face costs for those products not exempted
from registration. New plant varieties have historically had lower
profit potentials than traditional chemical pesticides, and companies in
the area of agricultural biotechnology often assume a greater market
risk. Therefore, potential registrants of PVCP-PIPs are concerned about
the costs associated with the data that EPA may require for the
registration of these products.

Third, companies are also very concerned about expending considerable
resources for product development that they may not be able to recoup
because the public does not accept the products. Farmers may hesitate to
purchase seed containing a PVCP-PIP if they were unsure of their ability
to sell their harvest in international markets or for use as ingredients
in processed food that may be exported. Importing countries want
assurances that biotechnology products have undergone a thorough human
health and environmental risk assessment. For example, the Cartagena
Protocol on Biosafety requires that parties to the Protocol make
available summaries of risk assessments or environmental reviews of
living modified organisms generated by their regulatory processes.
Although the United States is not a party to the Protocol, many of its
trading partners are Parties and expect Non-Parties to follow the
procedures called for therein.

### Public concerns

EPA identified three public concerns associated with PVCP-PIPs.

One public concern is that firms may not adequately consider the
consequences to the public at large of biotechnology products (The Pew
Initiative on Food and Biotechnology 2004, 2005) or that without a
regulatory framework, companies have little incentive to use potentially
costly risk mitigation measures (Larson & Knudson 1991).

Two, many consumers are concerned about the safety of the food supply.
Surveys of American consumers show that a majority are unaware of the
existence of genetically engineered foods, but a sizeable minority of
the population have expressed concern about their safety. Respondents
also indicated that they know very little about the regulatory structure
for genetically modified foods, although they support a strong
regulatory system (The Pew Initiative on Food and Biotechnology 2004).
Consumer opinion in international markets is also highly important
because overall exports account for 28% of agricultural sales. However,
consumers in many other countries remain skeptical of genetically
modified foods (Gaskell 2000, Hogan 2004, and Asian Food Information
Centre 2003).

Three, a major source of environmental concern is the possibility that
transgenes could be transferred to wild or weedy relatives of the crop
plant engineered to contain them (Daniell 1999). For example, concerns
have been raised that if fitness-enhancing transgenes become established
in natural populations, the population might become larger, more
widespread, or more difficult to manage, depending on ecological factors
that limit population growth (Snow et al. 2005). The potential for a
plant or parts of a plant containing a PIP to adversely affect
non-target organisms has also been the subject of public concern (GM
Science Review Panel 2003).

## Statutory Authority for the Proposed Rule

EPA regulates pesticides in the United States. The principal legal
authority is established by FIFRA. This proposed rule is promulgated
under the authority of FIFRA sections 3(a), 25(a), and 25(b) (7 U.S.C.
§§ 136a(a), 136w(a), and 136w(b)).

FIFRA section 3(a) states that, except as provided by the Act, no person
may distribute or sell in the United States any pesticide that is not
registered under the Act (7 U.S.C. 136(a)). FIFRA section 2(u) defines
\"pesticide\" as: \"(1) any substance or mixture of substances intended
for preventing, destroying, repelling, or mitigating any pest, (2) any
substance or mixture of substances intended for use as a plant
regulator, defoliant, or desiccant, and (3) any nitrogen stabilizer..."
(7 U.S.C. 136(u)). Under FIFRA section 2(t), the term "pest" includes
"(1) any insect, rodent, nematode, fungus, weed, or (2) any other form
of terrestrial or aquatic plant or animal life or virus, bacteria, or
other microorganism... which the Administrator declares to be a pest..."
subject to certain exceptions (7 U.S.C. 136(t)).

Before EPA may register a pesticide under FIFRA, the applicant must show
that the pesticide "when used in accordance with widespread and commonly
recognized practice... will not generally cause unreasonable adverse
effects on the environment\" (7 U.S.C. 136a(c)(5)(D)). The term
"environment" includes "water, air, land, and all plants and man and
other animals living therein, and the interrelationships which exist
among these" (7 U.S.C. 136(j)). FIFRA section 2(bb) defines the term
\"unreasonable adverse effects on the environment\" to mean: "(1) any
unreasonable risk to man or the environment, taking into account the
economic, social, and environmental costs and benefits of the use of any
pesticide, or (2) a human dietary risk from residues that result from a
use of a pesticide in or on any food inconsistent with the standard
under section 408 of the Federal Food, Drug, and Cosmetic Act" (7 U.S.C.
136(bb)).

Although FIFRA requires the registration of most pesticides, it also
authorizes the regulation of unregistered pesticides. FIFRA section 3(a)
provides that, to the extent necessary to prevent unreasonable adverse
effects on the environment, the Administrator may limit the
distribution, sale, or use of any pesticide that is not registered under
section 3 of FIFRA, subject to an experimental use permit under section
5 of FIFRA, or subject to an emergency exemption under section 18 of
FIFRA. Pesticides that are "not registered" include pesticides that are
exempt from FIFRA requirements under section 25(b).

An unregistered pesticide may be distributed or sold if it is exempted
by regulation under FIFRA section 25(b). Under FIFRA section 25(b)(2),
the Agency can exempt pesticides from some or all of the requirements of
FIFRA when the Agency determines that the pesticide is "of a character
which is unnecessary to be subject to \[FIFRA\] in order to carry out
the purposes of this Act" (7 U.S.C. 136w(b)(2)). EPA interprets section
25(b)(2) to authorize the Agency to exempt a pesticide or category of
pesticides that EPA determines (1) poses a low probability of risk to
the environment and (2) is not likely to cause unreasonable adverse
effects to the environment even in the absence of regulatory oversight
under FIFRA. This standard differs from the standard for registration
which considers only whether the pesticide "when used in accordance with
widespread and commonly recognized practice... will not generally cause
unreasonable adverse effects on the environment\" (7 U.S.C.
136a(c)(5)(D)).

In evaluating the first condition that must be met for the Agency to
exempt a pesticide, i.e., whether use of the pesticide poses a low
probability of risk to the environment, EPA considers the extent of the
potential risks caused by use of the pesticide to the environment,
including humans and other animals, plants, water, air and land.
Potential risks to humans include dietary risks as well as non-dietary
risks such as those resulting from occupational or residential exposure
to the pesticide. EPA uses the FFDCA section 408 standard in evaluating
dietary risks. Under FFDCA §408, any pesticide chemical residue in or on
food shall be deemed unsafe unless a tolerance for such pesticide
chemical residue in or on such food is in effect under this section, and
the quantity of the residue is within the limits of the tolerance, or an
exemption from the requirement of a tolerance is in effect for the
pesticide chemical residue. The Agency may exempt a product from the
requirement of a tolerance if the Agency determines that the exemption
is "safe," i.e., if the Agency determines that "there is a reasonable
certainty that no harm will result from aggregate exposure to the
pesticide chemical residue, including all anticipated dietary exposures
and all other exposures for which there is reliable information." EPA
will not exempt pesticides unless they pose a low probability of risk to
the environment.

In evaluating the second condition that must be met for the Agency to
exempt a pesticide, i.e., whether the use of the pesticide is unlikely
to cause unreasonable adverse effects on the environment even in the
absence of regulatory oversight under FIFRA, EPA balances all the
potential risks to human health, including dietary risks, and risks to
the remainder of the environment from use of the pesticide against the
potential benefits associated with its use. In balancing risks and
benefits, EPA considers the economic, social, and environmental costs
and benefits of the use of the pesticide. If the pesticide poses a low
probability of risk to the environment and is not likely to cause
unreasonable adverse effects to the environment even in the absence of
regulatory oversight under FIFRA, EPA may exempt the pesticide from
regulation under FIFRA.

See Unit VI. of the preamble to the proposed rule for a summary of EPA's
statutory finding explaining how the proposed rules satisfies the above
two conditions that must be met for the Agency to exempt a pesticide.

## Regulatory Assessment Requirements

This report is intended to meet the requirements of Executive Order
12866 on Regulatory Planning and Review, the Regulatory Flexibility Act
as amended by the Small Businesses Regulatory Enforcement Fairness Act,
the Unfunded Mandates Reform Act, Executive Order 12898 on Federal
Actions to Address Environmental Justice in Minority Populations and
Low-Income Populations, and FIFRA §25. The remaining regulatory
requirements (the Congressional Review Act, Executive Order 13045 on
Protection of Children from Environmental Health Risks and Safety Risks,
Executive Order 13175 on Consultation and Coordination with Indian
Tribal Governments, and Executive Order 13132 on Federalism) are briefly
addressed, but do not apply to the proposed rule because of the nature
and low cost estimates of the proposed rule. This document also serves
as input in preparing any analysis required under the Paperwork
Reduction Act (44 U.S.C. § 3501-21).

Under Executive Order 12866, the Agency must determine whether a
regulatory action is "significant" and therefore subject to review by
the Office of Management and Budget (OMB). Pursuant to the terms of
Executive Order 12866, it has been determined that the proposed rule is
a "significant regulatory action" because it raises novel policy issues
arising out of FIFRA legal mandates. As such, this proposed rule will be
submitted to OMB for review, and any comments or changes made in
response to OMB suggestions or recommendations will be documented in the
public record.

The Regulatory Flexibility Act (RFA) as amended by the Small Business
Regulatory Enforcement Fairness Act (5 U.S.C. 601 et seq.) requires that
agencies take special note of the impact of regulations on small
entities. Analysis requirements under the RFA are combined with the
analysis required under Executive Order 12866.

FIFRA §25(a)(2)(b), requires that the Administrator of EPA consider such
factors as "\...the effect of the regulation on production and prices of
agricultural commodities, retail food prices, and otherwise on the
agricultural economy\..." when issuing regulations under §25 (7 U.S.C.
136w(a)(2)(B)).

## Scope of Analysis

This analysis examines the costs and benefits of exempting certain
PVCP-PIPs from regulation under FIFRA. The potential direct compliance
cost savings of exempting certain PVCP-PIPs from registration was
estimated for three exemption options. The analysis estimates the
potential direct compliance costs and benefits of the proposed rule
relative to a baseline of registering all PVCP-PIPs.

Although this economic analysis focuses solely on the direct,
quantifiable compliance costs and benefits of the rule, EPA recognizes
that there are other, non-quantifiable benefits and costs to the rule.
These include the benefits of ensuring protection of the environment, a
more certain regulatory climate for industry, and reassurance to the
public of the safety of these products. Indirect costs and benefits were
not addressed in this analysis because of the absence of data. Indirect
costs of the proposed rule include the one-time cost of time lost to
companies that must familiarize themselves with a different regulatory
scheme than is associated with other PIPs; and the time necessary for
explaining a more complex regulatory structure to the U.S. trading
partners that have developed laws specifically for genetically
engineered products, unlike the United States, which relies on existing
statutes. Indirect benefits considered include increased public
confidence in a review process that regulates commensurate with risk,
the channeling of research towards the developing and marketing of safer
products, and a reduction in time to market a product due to fewer
regulatory requirements for exempted products.

Primarily affected by this regulation will be those companies involved
with agricultural biotechnology that may develop and market PVCP-PIPs. A
majority of these include pesticide manufacturers and seed companies.
Other potentially affected entities include land grant universities or
colleges, the U.S. Department of Agriculture (USDA) Agricultural
Research Service, non-government organizations that may manufacture and
market PVCP-PIPs, and firms that perform research and development in the
agricultural sciences.

# Alternative Options for the Proposed Rule

Four options are examined in this EA: (1) an option representing the
Agency's proposed regulatory scope based on the proposed exemption, (2)
an option that exempts the same number of PVCP-PIPs as the proposed
exemption but does so solely by Agency determination rather than partly
by developer determination, (3) an option that exempts fewer PVCP-PIPs
than either Option 1 or 2, and (4) an option that exempts no PVCP-PIPs
and thus would require EPA to register all PVCP-PIPs.

## Option 1

Option 1 represents EPA's proposed rule. Under Option 1, all PVCP-PIPs
meeting all of the following criteria would be exempt from regulation:

(a) Criterion a is satisfied if either paragraph 1 or paragraph 2
    applies:

    1.  The plant containing the PIP is one of the following: anthurium
        (*Anthurium* spp.), asparagus (*Asparagus officinale*), avocado
        (*Persea americana*), banana (*Musa acuminata*), barley
        (*Hordeum vulgare*), bean (*Phaseolus vulgaris*), cacao
        (*Theobroma cacao*), carnation (*Dianthus caryophyllus*),
        chickpea (*Cicer arietinum*), citrus (*Citrus* spp., e.g.,
        *Citrus aurantifolia, Citrus limon, Citrus paradisii, Citrus
        sinensis*), coffee (*Coffea arabica* and *Coffea canephora*),
        corn (*Zea maize*), cowpea (*Vigna unguiculata*), cucumber
        (*Cucumis sativus*), gerbera (*Gerbera* spp.), gladiolus
        (*Gladiolus* spp.), lentil (*Lens culinaris*), mango (*Mangifera
        indica*), orchids (Orchidaceae), papaya (*Carica papaya*), pea
        (*Pisum sativum*), peanut (*Arachis hypogaea*), pineapple
        (*Ananas comosus*), potato (*Solanum tuberosum*), soybean
        (*Glycine max*), starfruit (*Averrhoa carambola*), sugarcane
        (*Saccharum officinarum*), or tulips (*Tulipa* spp.).

    2.  The Agency determines after review that the plant containing the
        PIP:

        i.  has no wild or weedy relatives in the United States with
            which it can form viable hybrids in nature, and

        ii. is not a weedy or invasive species outside of agricultural
            fields in the United States, and

        iii. is unlikely to establish weedy or invasive populations
             outside of agricultural fields in the United States even if
             the plant contains a PVCP-PIP.

(b) Criterion b is satisfied if either paragraph 1(i), paragraph 1(ii),
    or paragraph 2 applies:

    1.  The viral pathotype used to create the PVCP-PIP has naturally
        infected plants in the United States and naturally infects
        plants of the same species as those containing the PVCP-PIP,
        or (ii) the genetic material that encodes the pesticidal
        substance or leads to the production of the pesticidal substance
        is inserted only in an inverted repeat orientation or lacking an
        initiation codon for protein synthesis such that no PVC-protein
        is produced in the plant.

    2.  The Agency determines after review that viruses that naturally
        infect the plant containing the PVCP-PIP are unlikely to acquire
        the coat protein sequence through recombination and produce a
        viable virus with significantly different properties than either
        parent virus.

(c) Criterion c is satisfied if either paragraph 1 or paragraph 2
    applies:

    1.  The genetic material that encodes the pesticidal substance or
        leads to the production of the pesticidal substance

        i.  is inserted only in an inverted repeat orientation or
            lacking an initiation codon for protein synthesis such that
            no PVC-protein is produced in the plant, or

        ii. encodes only a single virtually unmodified viral coat
            protein. Multiple PVC-proteins could each separately meet
            this criterion. Chimeric PVC-proteins do not qualify.

    2.  The Agency determines after review that the genetic material
        that encodes the pesticidal substance or leads to the production
        of the pesticidal substance

        i.  encodes a protein that is minimally modified from a coat
            protein from a virus that naturally infects plants, or

        ii. produces no protein.

## Option 2

Option 2 exempts the same number of PVCP-PIPs as Option 1, but it
eliminates the provision for a developer-determined exemption. The
criteria for evaluation would be identical to those in Option 1; the
difference is that products could meet the criteria only upon
satisfactory evaluation by the Agency.

## Option 3

Option 3 exempts fewer PVCP-PIPs than options 1 or 2. Under Option 3,
the Agency-determined part of the exemption has been eliminated, and
only PVCP-PIPs meeting all of the following criteria (a, b, and c) would
be exempt from regulation:

(a) Criterion a is satisfied if the plant containing the PIP is one of
    the following: anthurium (*Anthurium* spp.), asparagus (*Asparagus
    officinale*), avocado (*Persea americana*), banana (*Musa
    acuminata*), barley (*Hordeum vulgare*), bean (*Phaseolus
    vulgaris*), cacao (*Theobroma cacao*), carnation (*Dianthus
    caryophyllus*), chickpea (*Cicer arietinum*), citrus (*Citrus* spp.,
    e.g., *Citrus aurantifolia, Citrus limon, Citrus paradisii, Citrus
    sinensis*), coffee (*Coffea arabica* and *Coffea canephora*), corn
    (*Zea maize*), cowpea (*Vigna unguiculata*), cucumber (*Cucumis
    sativus*), gerbera (*Gerbera* spp.), gladiolus (*Gladiolus* spp.),
    lentil (*Lens culinaris*), mango (*Mangifera indica*), orchids
    (Orchidaceae), papaya (*Carica papaya*), pea (*Pisum sativum*),
    peanut (*Arachis hypogaea*), pineapple (*Ananas comosus*), potato
    (*Solanum tuberosum*), soybean (*Glycine max*), starfruit (*Averrhoa
    carambola*), sugarcane (*Saccharum officinarum*), or tulips
    (*Tulipa* spp.).

(b) Criterion b is satisfied if the viral pathotype used to create the
    PVCP-PIP has naturally infected plants in the United States and
    naturally infects plants of the same species as those containing the
    PVCP-PIP, or (ii) the genetic material that encodes the pesticidal
    substance or leads to the production of the pesticidal substance is
    inserted only in an inverted repeat orientation or lacking an
    initiation codon for protein synthesis such that no PVC-protein is
    produced in the plant.

(c) Criterion c is satisfied if the genetic material that encodes the
    pesticidal substance or leads to the production of the pesticidal
    substance (i) is inserted only in an inverted repeat orientation or
    lacking an initiation codon for protein synthesis such that no
    PVC-protein is produced in the plant, or (ii) encodes only a single
    virtually unmodified viral coat protein. Multiple PVC-proteins could
    each separately meet this criterion. Chimeric PVC-proteins do not
    qualify.

## Option 4

Option 4, also referred to as baseline or full registration, exempts no
PVCP-PIPs from regulation. All would continue to be regulated under
FIFRA, and registration would be required for all PVCP-PIPs.

The alternatives analyzed in the EA differ in the particular PVCP-PIPs
that would be exempted from FIFRA regulation. They range from a broad
scope that exempts the largest number of products meeting the definition
of a PVCP-PIP and that meet the low-risk exemption criterion, to an
alternative that exempts no PVCP-PIPs. EPA's proposed rule would exempt
certain low-risk PVCP-PIPs from FIFRA; those PVCP-PIPs that may present
a higher probability of risk to human health or the environment would
remain subject to the statutory requirement to be registered before sale
or distribution.

# Economic Profile of Regulated Industry

According to the USDA, "\[s\]eeds embody the scientific knowledge needed
to produce a new plant variety with desirable attributes, such as higher
yield, greater disease resistance, or improved quality."[^1] The U.S.
seed industry is composed of three primary elements -- plant breeding
research and development (R&D), seed production, and seed marketing and
distribution -- historically undertaken by seed companies, pesticide
manufacturers, land grand universities or colleges, the USDA, and
non-governmental organizations, all of which may be potentially affected
by the proposed rule.[^2] Chart 1 provides a diagram depicting the U.S.
seed industry in terms of the elements generally carried out by each
potentially affected entity and the relative number of firms involved in
each stage of the seed production process.

1.  []{#__RefHeading___Toc139179619 .anchor}Primary Production Stages
    and Entities in the U.S. Seed Industry

As shown in Chart 1, the seed production process consists of three
primary stages (plant breeding R&D, seed production, and seed marketing
and distribution) conducted by a variety of entities. In general, the
seed production process begins with plant breeding R&D. This stage
involves basic research, applied research, and field trials, and it can
be relatively lengthy. The primary entities involved in plant breeding
R&D are small and large companies from the private sector, Federal
government agencies, and academic institutions. Upon successful
development of the desired characteristics for a seed product, primarily
large, private companies produce the seed for sale and distribution.
Finally, many companies of various sizes usually undertake marketing and
distribution of seeds, the last stage in the process. Overall, as the
diagram shows, the number of entities involved in each stage increases
as the process moves from R&D for a particular variety through marketing
and distribution. Section 4.1 below provides additional information on
the history and current characteristics of the seed production process
in the United States.

## Background on the U.S. Seed Industry[^3]

During the late 20^th^ century, the seed industry in the United States
underwent significant and rapid growth and consolidation -- from small,
family-owned enterprises engaged primarily in distribution of publicly
developed seed materials to vertically integrated corporations engaged
in all aspects of plant breeding and seed production, conditioning,
marketing, and distribution. The change was due to a variety of
regulatory incentives that stimulated private participation in the seed
industry, such as the 1970 Plant Variety Protection Act (PVPA), and
change was most concentrated after 1970. Large companies specializing in
different but related industries, including chemical and pharmaceutical
companies looking for profitable areas in which they could also create
economies of scale, acquired previously independent seed companies.

The growth of biotechnology in the 1980s provided further impetus for
private firms to invest in seeds by increasing their R&D efforts and
seed production capabilities. Whereas the public sector in the United
States comprised the majority of plant breeding efforts in the first
half of the 20^th^ century, private R&D expenditures on plant breeding
increased 1,300 percent from 1960 to 1996, while real public R&D
expenditures did not change significantly. The growth of private sector
involvement in plant breeding R&D is no doubt also linked to the
strengthening of intellectual property rights in the second half of the
20^th^ century through the PVPA and other regulatory mechanisms.

Along with the entry of the private sector into the seed industry, the
quantity and value of seed purchases and trade increased significantly
in the last century, due in part to the availability of commercial seed
sources. Up until the late 19^th^ century, farmers relied on their
previous year's crop for seeds, but with seed certification programs in
the early 20^th^ century, farmers began to purchase seeds from
commercial sources, many of which were improved varieties demonstrating
desirable properties such as increased yield potential. In fact, seed
improvements effected by plant breeding innovations have been a major
element in crop yield gains.

## Identifying Potentially Impacted Entities in the U.S. Seed Industry

This section details the methodology employed to identify potentially
impacted entities within the U.S. seed industry and provides results for
each industry sub-sector. A small number of firms have submitted
PVCP-PIPs to USDA since 1994 for determination of non-regulated status
(five firms), making extrapolation of historical industry impacts to all
sub-sectors of the wider seed industry inappropriate. For this reason,
and given data limitations discussed in the following paragraphs, the
analysis profiles relevant industry sub-sectors broadly rather than
profiling individual entities. In order to identify potentially impacted
industry sub-sectors in the U.S. seed industry, the analysis relies on
North American Industrial Classification System (NAICS) codes.
Accordingly, the NAICS codes and corresponding industry sub-sectors that
may be impacted by the proposed rule are:

-   **325320 Pesticide and Other Agricultural Chemical Manufacturing:**
    This industry comprises establishments primarily engaged in the
    formulation and preparation of agricultural and household pest
    control chemicals (except fertilizers).

-   **111 Crop Production:** Industries in this sub-sector grow crops
    mainly for food and fiber. The sub-sector comprises establishments
    such as farms, orchards, groves, greenhouses, and nurseries,
    primarily engaged in growing crops, plants, vines, or trees and
    their seeds.

-   **611310 Colleges, Universities, and Professional Schools:** This
    industry comprises establishments primarily engaged in furnishing
    academic courses and granting degrees at baccalaureate or graduate
    levels. The requirement for admission is at least a high school
    diploma or equivalent general academic training. Instruction may be
    provided in diverse settings, such as the establishment or client\'s
    training facilities, educational institutions, the workplace, or the
    home, and through correspondence, television, Internet, or other
    means.

-   **54171: Research and Development in the Physical, Engineering, and
    Life Sciences:** This industry comprises establishments primarily
    engaged in conducting research and experimental development in the
    physical, engineering, or life sciences, such as agriculture,
    electronics, environmental, biology, botany, biotechnology,
    computers, chemistry, food, fisheries, forests, geology, health,
    mathematics, medicine, oceanography, pharmacy, physics, veterinary,
    and other allied subjects.

Because the data derived from the U.S. Census Bureau encompass a broad
group of firms, most of which are not related to research, production,
sale, and/or distribution of PVCP-PIPs, economic profile information was
also sought from private organizations and industry associations that
record relatively detailed financial information on private companies.
Such sources are few and limited. The financial information available is
based on the aggregate performance of the entire company and not on
specific sectors that produce these products. Thus, specific
standardized information on production, employment, trade, and research
and development in the areas potentially affected by the proposed rule
are not available for many of the companies. In addition, some large,
highly diversified public corporations potentially affected by EPA's
proposed rule may market their agricultural products through
subsidiaries, and some large firms have pursued joint ventures. Most
companies, as well as their subsidiaries, are developing and marketing a
wide spectrum of commodities that are generally not of a nature to be
subject to EPA authorities and thus are not affected by EPA's proposed
rule. In addition, most information sources describe the global
pesticide and seed markets rather than the U.S. markets. Therefore, any
data used to profile these companies are based on the companies'
aggregated profits, sales, number of employees, etc., in a global market
setting.

Another factor limiting access to data is the nascence and development
of a number of small privately held firms. The locations of many of the
new firms indicate they may have been formed by or with the cooperation
of university researchers or possibly for-profit subsidiaries of
universities. Little, if any, financial information is available on
these firms.

The APHIS database offers some perspective on products in the early
stages of research and development that USDA/APHIS has reviewed and the
names of the entities pursuing testing and commercialization of products
subject to USDA authorities under the Plant Protection Act. This broad
range of entities includes pesticide-manufacturing companies, research
firms, universities, and the USDA Agricultural Research Service. Since
1988, APHIS regulations have resulted in numerous submissions of
applications for environmental release permits (ERPs) for field tests of
genetically engineered plants. A recent review of the database listed 52
entities conducting field trials for virus resistant crops that may
contain a PVCP-PIP. Detailed information about the product being field
tested is not always disclosed because in some cases it is confidential
business information. Thus, it is not always possible to determine from
the database whether virus resistance is conferred through a PVCP-PIP.
See Appendix A for a listing from the USDA database of entities
conducting research and products under development.

### Pesticide manufacturers

The pesticide and other agricultural chemical manufacturing industry
includes establishments primarily engaged in the formulation and
preparation of agricultural and household pest control chemicals (except
fertilizers). These companies frequently register products with EPA as
required by FIFRA because PVCP-PIPs are considered pesticides. According
to a 2005 analysis (U.S. EPA 2005), approximately 1,804 companies
comprise the pesticide manufacturing universe that may be impacted by
the proposed rule. This section describes the methodology and results of
the 2005 analysis to identify the universe of potentially impacted
companies within this industry sub-sector based on July 2002 pesticide
registration information.

Under the assumption that all potentially impacted pesticide
manufacturers have one or more registered pesticides, the total universe
of affected pesticide manufacturers was derived based on the number of
unique companies holding active Section 3 and/or Section 24(c) pesticide
registrations. EPA queried the Pesticide Product Information System
(PPIS) database in July 2002 and determined that 1,956 companies with
unique EPA company numbers held more than 16,000 Section 3 and 24(c)
pesticide registrations. The PPIS database, now a component of the
Office of Pesticide Programs Information Network (OPPIN), contains
information for all pesticide products registered in the United States,
including registrant name and address, chemical ingredients, toxicity
category, product names, distributor brand names, site/pest uses,
pesticidal type, formulation code, and registration status.

If only parent companies and merged companies are counted, EPA's query
results are reduced further. Specifically, parent and merged companies
were identified following three steps:

1.  Unique companies with EPA company numbers were matched to company
    information and financial data from the Dun & Bradstreet (D&B)
    database. The D&B data include information on number of employees,
    most recent sales and revenue, and primary business classifications
    (NAICS code and Standard Industrial Classification \[SIC\] code
    where possible). In order to link registrants in the PPIS sample
    data set with the D&B database, each company's Data Universal
    Numbering System (DUNS) number is identified. The D&B DUNS number is
    a unique identifier for a single business entity, which also links
    together the corporate family structure. Using the corresponding
    DUNS numbers, companies were combined to the Global Ultimate DUNS
    number or "parent" level.

2.  In some cases company information in D&B did not reflect recent
    mergers; therefore, the analysis consolidated the registrant
    universe manually by adjusting for known company mergers. For
    example, Bayer CropScience acquired Aventis CropScience in June
    2002.

3.  Finally, the analysis matched and consolidated company names for all
    EPA company numbers, based on the likelihood that the company
    numbers actually reflect one company and/or based on EPA
    recommendations.

Using the steps above, the set of 1,956 unique company numbers in EPA's
2002 PPIS database was reduced to 1,804 unique companies that represent
the pesticide registrant universe that may be impacted by the proposed
rule. Since 2002, some companies may have been formed and these
companies would not be captured in the 1,804 unique companies identified
here. However, we do not expect the new companies to be many, and the
Agency assumes the current industry profile of the universe of pesticide
manufacturers is relatively unchanged since 2002. Table 1 illustrates
this process numerically.

1.  []{#__RefHeading___Toc139179521 .anchor}Estimated Number of
    Pesticide Registrants that May Be Affected by the Proposed Rule

  ---------------------------------------------- ------------------------
  Pesticide Registrants                          Estimated Number of
                                                 Entities

  Number of unique companies in EPA's PPIS       1,956 ^a^
  database holding Section 3 and/or Section      
  24(c) registration(s)                          

  Total number of duplicate companies            243 ^b^

  Consolidated number of duplicate companies     91

  **Total**                                      **1,804**
  ---------------------------------------------- ------------------------

> ^a^ As of July 2002.
>
> ^b^ Number of all companies with unique EPA company numbers that were
> consolidated based on the following criteria: (1) matching of EPA
> company numbers with Dun & Bradstreet DUNS and Global Ultimate DUNS
> numbers; (2) consolidation as a result of recent mergers and
> acquisitions; or (3) matching of company names associated with unique
> EPA company numbers.

The eight most common six-digit NAICS codes designated in D&B for the
set of registrants with sufficient data available are presented in Table
2. A total of 184 six-digit NAICS codes are associated with at least one
of the 804 registrants. Also in Table 2 are the SBA thresholds that
determine whether a firm with that NAICS code is considered "small."

2.  []{#__RefHeading___Toc139179522 .anchor}Most Common NAICS Codes
    Associated with Sample of 804 Pesticide Registrants

  -------- -------- ---------------------------------- ------------------
  NAICS    Count of U.S. Industry Title                SBA Threshold
  CODE     NAICS                                       
           Code                                        

  325320   88       Pesticide and Other Agricultural   500 employees
                    Chemical Manufacturing             

  422690   84       1997 NAICS - Otr Chem & Allyd      100 employees
                    Prdct Whlslrs                      

  422910   65       1997 NAICS - Farm Supplies         100 employees
                    Wholesalers                        

  325612   62       Polish and Other Sanitation Good   500 employees
                    Manufacturing                      

  325998   30       All Other Miscellaneous Chemical   500 employees
                    Product and Preparation            
                    Manufacturing                      

  325188   27       All Other Basic Inorganic Chemical 1,000 employees
                    Manufacturing                      

  453998   22       All Other Miscellaneous Store      \$6 million in
                    Retailers (except Tobacco Stores)  revenue

  325412   21       Pharmaceutical Preparation         750 employees
                    Manufacturing                      
  -------- -------- ---------------------------------- ------------------

In order to disaggregate the number of potentially impacted pesticide
registrants into entity size categories as defined by Small Business
Administration (SBA) (according to NAICS code), the analysis used
information on the total number of employees and revenue information for
each company. The entity size and average sales revenue of pesticide
manufacturers used recently by the Agency (EPA 2005) are illustrated in
Table 3.

3.  []{#__RefHeading___Toc139179523 .anchor}Economic Profile of
    Pesticide Registrants by Entity Size

+-------+------+------+-------+------+-------+------+------+------+
| E     | De   | PPIS |       |      |       | P    |      |      |
| ntity | fini | Re   |       |      |       | esti |      |      |
| Size  | tion | gist |       |      |       | cide |      |      |
| Cat   |      | rant |       |      |       | Reg  |      |      |
| egory |      | Data |       |      |       | istr |      |      |
|       |      | ^a^  |       |      |       | ants |      |      |
+-------+------+------+-------+------+-------+------+------+------+
|       |      | T    | Total | Ave  | Av    | T    | T    | Pe   |
|       |      | otal | Re    | rage | erage | otal | otal | rcen |
|       |      | C    | venue | Rev  | N     | Enti | Rev  | tage |
|       |      | ompa | for   | enue | umber | ties | enue | of   |
|       |      | nies | All   | per  | of    |      | for  | T    |
|       |      |      | Comp  | Com  | Empl  |      | All  | otal |
|       |      |      | anies | pany | oyees |      | Enti | Rev  |
|       |      |      |       |      | per   |      | ties | enue |
|       |      |      | (mil  | (    | Co    |      |      |      |
|       |      |      | lion) | mill | mpany |      | (    |      |
|       |      |      |       | ion) |       |      | mill |      |
|       |      |      |       |      |       |      | ion) |      |
|       |      |      |       |      |       |      | ^b^  |      |
+-------+------+------+-------+------+-------+------+------+------+
| **S   |      |      |       |      |       |      |      |      |
| BA-De |      |      |       |      |       |      |      |      |
| fined |      |      |       |      |       |      |      |      |
| Si    |      |      |       |      |       |      |      |      |
| zes** |      |      |       |      |       |      |      |      |
+-------+------+------+-------+------+-------+------+------+------+
| Large | 501  | 146  | \     | \$7  | 1     | 146  | \$1  | 9    |
|       | or   |      | $1,07 | ,364 | 9,266 |      | ,075 | 8.6% |
|       | more |      | 5,106 |      |       |      | ,106 |      |
|       | e    |      |       |      |       |      |      |      |
|       | mplo |      |       |      |       |      |      |      |
|       | yees |      |       |      |       |      |      |      |
+-------+------+------+-------+------+-------+------+------+------+
| Small | 500  | 449  | \$    | \$   | 39    | 1    | \$15 | 1.4% |
|       | or   | ^c^  | 4,239 | 9.44 |       | ,658 | ,651 |      |
|       | f    |      |       |      |       |      |      |      |
|       | ewer |      |       |      |       |      |      |      |
|       | e    |      |       |      |       |      |      |      |
|       | mplo |      |       |      |       |      |      |      |
|       | yees |      |       |      |       |      |      |      |
+-------+------+------+-------+------+-------+------+------+------+
| Total |      | NA   | NA    | NA   | NA    | 1    | \$1  | 10   |
|       |      | ^e^  | ^e^   | ^e^  | ^e^   | ,804 | ,090 | 0.0% |
|       |      |      |       |      |       | ^d^  | ,757 |      |
+-------+------+------+-------+------+-------+------+------+------+

> Source: U.S. EPA 2005.
>
> ^a^ Sufficient Dun & Bradstreet company information and financial data
> were assumed to be available for all SBA-defined large pesticide
> registrants, based on the set of 1,804 unique pesticide registrants
> identified as having one or more Section 3 or Section 24(c) pesticide
> registrations. The total number of pesticide registrants that met
> these criteria and were considered to be large companies was 146. For
> SBA-defined small businesses, a random sample of 1,000 unique
> pesticide registrants was used to develop the economic profile. A
> total of 565 unique parent companies were identified as having
> sufficient financial information at the Global Ultimate DUNS number
> level to be included in the analysis, of which 449 or 79 percent were
> considered small businesses by SBA definitions.
>
> ^b^ Calculated as the average revenue per company multiplied by the
> total number of entities for the respective size category.
>
> ^c^ SBA-defined small businesses identified from a random sample of
> 1,000 unique companies with one or more active Section 3 or Section
> 24(c) registrations.
>
> ^d^ Number of all companies with unique EPA company numbers that were
> consolidated based on the following criteria: (1) matching of EPA
> company numbers with D&B DUNS and Global Ultimate DUNS numbers; (2) as
> a result of recent mergers and acquisitions; (3) matching of company
> names associated with unique EPA company numbers; or (4) recommended
> by EPA to be consolidated based on nearly identical name matching
> and/or prior knowledge.
>
> ^e^ Since only 1,000 randomly selected unique pesticide registrants
> from the PPIS registrant database were used to develop the profile for
> small businesses, the total for this section does not reflect the
> actual total number of registrants. For that reason, these values are
> not reported.

### Crop production (including seed production) 

Establishments are classified to the crop production sub-sector in the
U.S. Census of Agriculture when crop production (i.e., value of crops
for market) accounts for one-half or more of the establishment's total
agricultural production. According to the Census, in 2002 there were
986,625 farms (NAICS 111) in the U.S. that produced crops valued at
almost \$90 billion. As noted in Section 4.1, seed purchases by U.S.
farmers have grown significantly in the 20^th^ century: in 1960, seed
expenditures by U.S. farmers totaled approximately \$500 million; by
1997, this figure had risen to \$6.7 billion. According to the USDA, the
primary factor behind this increase is an increase in commercial seed
purchases by farmers, which is in turn driven by seed productivity
increases made possible through scientific advancements in plant
breeding.[^4] Generally, however, only certain seed producers would be
expected to develop, produce, sell, or distribute PVCP-PIPs and thus be
affected by this proposed rule; most growers would not manufacture and
market PVCP-PIPs, limiting the usefulness of Census data, which is
highly aggregated. For this reason, the analysis focused on identifying
data on seed producers that may engage in development, production,
selling, or distribution of PVCP-PIPs.

A handful of life science companies and traditional pesticide
manufacturers dominate the world seed trade. In 2005, seed companies
faced further pressure towards consolidation as large multinational
corporations sought to ensure a seed market for their genetic
technologies under development (Mergermarket Limited 2005). In
consolidating, a number of firms that in the past have been producers of
conventional pesticides have entered the seed trade in a process of
vertical integration of services. These firms have been purchasing
outright or purchasing significant interests in seed companies,
including the important seed distribution networks those companies have
developed. For example, Monsanto has purchased Agracetus, Asgrow Seeds,
DeKalb Genetics, Holden's Foundation Seed, Jacob Hartz Seed Company, and
Calgene among others (Fernandez-Cornejo 2004). The trend towards
consolidation of the industry is likely to continue as the industry
restructures vertically. Due to vertical integration, half of the
approximately \$21 billion commercial seed trade is controlled by 10
companies, with genetically modified seeds accounting for one quarter of
the total value of the commercial seed market worldwide (ETC Group
Communique 2005).

Because traditional pesticide manufacturers are rapidly acquiring seed
companies, the seed industry is the most difficult to describe and
acquire data on. For example, there are 347 seed companies listed as
subsidiaries or acquisitions of the parent companies that are listed in
Table 4, which summarizes 2004 seed sales of the leading seed producing
companies.[^5] The U.S. Census Bureau classifies these new vertically
integrated firms by their primary source of business, which most likely
will not be seed production for a majority of them. Further, the dynamic
restructuring of the seed industry makes it difficult to predict
accurately either for the short- or long-term future how many small and
medium size companies currently exist.

4.  []{#__RefHeading___Toc139179524 .anchor}Leading Seed Company 2004
    Seed Revenues

+-------------------------------------------------+--------------------+
| **[Company]{.smallcaps}**                       | **[2004 Seed Sales |
|                                                 | (Millio            |
|                                                 | ns)]{.smallcaps}** |
+-------------------------------------------------+--------------------+
| Monsanto (U.S.) + Seminis                       | \$ 2,803           |
|                                                 |                    |
| (Monsanto acquisition 03/05)                    |                    |
+-------------------------------------------------+--------------------+
| Dupont/Pioneer (U.S.)                           | \$ 2,600           |
+-------------------------------------------------+--------------------+
| Syngenta (Switzerland)                          | \$ 1,239           |
+-------------------------------------------------+--------------------+
| Groupe Limagrain (France)                       | \$ 1,044           |
+-------------------------------------------------+--------------------+
| KWS AG (Germany)                                | \$ 622             |
+-------------------------------------------------+--------------------+
| Land O' Lakes (U.S.)                            | \$ 538             |
+-------------------------------------------------+--------------------+
| Sakata (Japan)                                  | \$ 416             |
+-------------------------------------------------+--------------------+
| Bayer Crop Science (Germany)                    | \$ 387             |
+-------------------------------------------------+--------------------+
| Taikii (Japan)                                  | \$ 366             |
+-------------------------------------------------+--------------------+
| DLF-Trifolium (Denmark)                         | \$ 320             |
+-------------------------------------------------+--------------------+
| Delta & Pine Land (U.S.)                        | \$ 315             |
+-------------------------------------------------+--------------------+
| Royal Barenburg Group (Netherlands)             | € 160              |
+-------------------------------------------------+--------------------+
| Saaten-Union GmbH Ltd. (Germany)                | € 155              |
+-------------------------------------------------+--------------------+
| Svalöf Weibull AB (Sweden)                      | € 116              |
+-------------------------------------------------+--------------------+
| Nidera Corporation (Netherlands)                | \$ 80              |
+-------------------------------------------------+--------------------+
| Landec Corp. (U.S.)                             | \$ 34              |
+-------------------------------------------------+--------------------+
| BASF (Germany)                                  | Unknown            |
+-------------------------------------------------+--------------------+
| Dow Chemical Co. (U.S.)                         | Unknown            |
+-------------------------------------------------+--------------------+
| Pannar Group (South Africa)                     | Unknown            |
+-------------------------------------------------+--------------------+

Source: (ETC Group Communique 2005)

Given the character of the U.S. seed market, very few published data
sources on this industry exist. Resources with published data are
discussed below. Within these sources, very limited data were found on
the size of the U.S. seed industry (i.e., the total production, size,
and number of firms), because either the data are too aggregated or they
include the international seed industry, and parsing data on the U.S.
market in particular is not possible. One useful data source is a 2004
report on the U.S. seed industry published by USDA and referenced in
Section 4.1. Table 5 reproduces information contained within this report
on the distribution in 1997 of market share across seed-producing
companies in the U.S. As shown, the industry is highly consolidated,
with the top seven firms holding 68 percent market share in terms of
U.S. seed sales.

5.  []{#__RefHeading___Toc139179525 .anchor}Estimated Seed Sales and
    Shares of U.S. Market for Major Field Crops, 1997

  ---------------- ------------- ------------- ---------- ----------- -----------
  **Company**      **Total       **Total       **Corn     **Soybean   **Cotton
                   Sales**       Market        Market     Market      Market
                                 Share**       Share**    Share**     Share**

                   **(\$         **Percent**                          
                   millions)**                                        

  Pioneer Hi-Bred  1,178         33.6          42         19          0

  Monsanto         541           15.4          14         19          11

  Novartis         262           7.5           9          5           0

  Delta & Pine     79            2.3           0          0           73
  Land                                                                

  Dow Agrosciences 136           3.9           4          4           0
  / Mycogen                                                           

  Golden Harvest   93            2.6           4          0           0

  AgrEvo/Cargill   93            2.6           4          0           0

  Others           1,121         32            23         53          16

  Total            3,503         100           100        100         100
  ---------------- ------------- ------------- ---------- ----------- -----------

Source: United States Department of Agriculture, Economic Research
Service, 2004

Another source of information on U.S. seed companies is the U.S.-based
trade association for seed companies, the American Seed Trade
Association (ASTA). ASTA's membership consists of roughly 850 companies
involved in seed production and distribution, plant breeding, and
related industries in North America. Some of these members fall into the
list of parent seed companies above or are acquisitions of the larger
companies in the first two tiers. Not all seed companies are members of
ASTA. Additional information on the size or revenues of these companies
is not publicly available; therefore, this data is unavailable for use
in the analysis.

### Universities, colleges, and other entities

The Department of Education maintains information on universities and
colleges in the United States. According to the U.S. Department of
Education National Center for Education Statistics, in 2003-04 there
were 634 public four-year institutions in the United States and 1,896
private four-year institutions (U. S. Department of Education National
Center for Education Statistics 2004). Of the public four-year
institutions, 446 award at least 20 masters' or doctoral degrees per
year. Of the private institutions, 459 award at least 20 masters' or
doctoral degrees per year. Other information available on universities
such as the number of students, number of faculty and staff, and tuition
was not useful for this analysis.

The Agency also searched the USDA/APHIS database for universities and
colleges that may currently have environmental release permits for field
research on virus-resistant plants that may contain a PVCP-PIP. Twenty
such entities were found, almost all of which are public land grant
universities (see Appendix A). Many universities that have the
technology and resources to develop PVCP-PIPs may not manufacture and
market these products. Rather, the universities may sell or license the
rights to any PVCP-PIPs to firms with the expertise to resolve
intellectual property issues and to manufacture and market the products.

### Research and development in the physical, engineering, and life sciences

A portion of the industry potentially affected by this proposed rule
includes firms solely involved in agricultural research, particularly if
these firms have the expertise and resources to manufacture and market
PVCP-PIPs. However, larger companies that have the expertise and
financial resources to manufacture and market viable products would
likely purchase most PVCP-PIPs produced by R&D firms. If a clearer
regulatory environment and reduced regulatory costs encourage the
development and/or marketing of more PVCP-PIPs, R&D firms may benefit
from the proposed rule because the products of their research could
become more valuable to other companies.

Published data on R&D firms are very limited and highly aggregated for
all R&D in the life sciences area. For example, the Bureau of Census
groups these firms in a broad industry category, establishments involved
in research and development in the life sciences (NAICS 54171), which
includes establishments primarily engaged in conducting research and
experimental development in medicine, health, biology, botany,
biotechnology, agricultural, fisheries, forests, pharmacy, and other
life sciences. In 2002 there were 2,417 establishments conducting
research and development in biotechnology and other biological sciences.
Total revenues for these companies were over \$16 billion. In 2000, R&D
firms involved solely in agricultural biotechnology generated \$2.3
billion in revenues (Ernst & Young Economics Consulting and Quantitative
Analysis 2000). However, these data are too aggregated for the Agency to
use for the analysis of R&D firms that may be involved in research on
PVCP-PIPs. Moreover, those firms involved in agricultural biotechnology
develop a broad category of products, most of which would not be
PVCP-PIPs.

# Cost Impacts on Developers Due to Proposed Exemption for Certain PVCP-PIPs

This chapter presents the potential data requirements and method used to
quantitatively assess the incremental cost of compliance of the proposed
rule for exempting certain types of PVCP-PIPs from FIFRA registration.
Options 1 and 2 are the broadest possible exemptions for PVCP-PIPs,
exempting all products that EPA can determine *a priori* meet the low
risk criterion. Option 1 contains a provision allowing PVCP-PIP
developers to determine in some cases whether a product meets the
qualifications. Although Option 2 exempts as many PVCP-PIPs as Option 1,
Option 2 specifies that only the Agency can determine whether a product
is exempt. Option 3 exempts fewer PVCP-PIPs than Options 1 or 2 because
it eliminates those criteria enabling qualification for exemption that
the Agency must review. Option 4 exempts no PVCP-PIPs and thus would
require EPA to register all PVCP-PIPs. The compliance costs of Options
1, 2, and 3 are compared to a baseline of regulating all PVCP-PIPs
(Option 4).

This chapter is organized as follows: first, the general methodology
used to estimate the compliance cost savings is outlined; second, the
cost savings estimates are presented; and third, the limitations of the
cost savings analysis are summarized.

## General Methodology

The analysis uses a partial-budgeting approach to estimate the potential
cost savings associated with exempting certain categories of PVCP-PIPs
over the next 10 years as described under the conditions of each
regulatory option. The model is static; it does not account for changes
in the economy, public acceptance, or other market factors, such as
those affecting the industry's growth and the manufacturing of PVCP-PIP
products over the next 10 years. EPA estimated the number of products
commercialized over 10 years to be 15-25 and assumed the products would
be equally distributed over that period. EPA believes a static model is
preferable to a more complex model, as it is difficult if not impossible
to predict the dynamics of PVCP-PIP development given the many variables
that could affect the industry and an insufficient history with
PVCP-PIPs on which to base more complex assumptions with any confidence.
The USDA Advisory Committee on Biotechnology and 21^st^ Century
Agriculture was recently tasked by the Secretary of Agriculture with
predicting the direction of biotechnology in the United States. This
committee reported that a broad range of variables could affect the
success or failure of biotechnology products over the next decade (USDA
Advisory Committee on Biotechnology and 21^st^ Century Agriculture 2005,
2006). The market could vary significantly for each crop, and there is
little information to judge how the large number of variables could
impact PVCP-PIPs. For example, genetically engineered, virus-resistant
papaya has been widely adopted in the Hawaiian papaya industry, but
genetically engineered, virus-resistant potatoes are no longer
commercialized in the United States due to market variables. Given that
numerous market trends could affect the number of PVCP-PIPs brought to
market in the next decade, there is no strong support for assuming
either that submissions would increase or would decrease or that some
years may see more submissions than other years.

Costs quantified include the compliance cost savings associated with
exempting various categories of PVCP-PIPs from FIFRA registration, as
described by the options. The analysis projects the total number of
PVCP-PIPs that may be exempted over the next 10 years under each option.
The potential data requirements are assessed for each type of PVCP-PIP
that would either be exempted or registered. Whenever the data
requirements for registration are mentioned, this includes the data
requirements for a FIFRA §3 license and a FIFRA §5 experimental use
permit, as well as fees for registration imposed under the Pesticide
Improvement Act of 2003 and registration maintenance fees. Then, the
cost savings are calculated for each option by multiplying the total
number of each type of PVCP-PIP that would be exempted under each option
by the cost savings associated with reduced data requirements.

The compliance cost savings depend on the type and number of PVCP-PIPs
developed, the data needed to register or exempt each particular type of
PVCP-PIP, and the unit costs of performing the tests to acquire the data
to be recorded or reported. Obtaining accurate information about these
three factors presents difficulties due to the uncertainty of the
rapidly evolving technology and the dramatically growing and vertically
integrating industry. The technology used to create certain PVCP-PIPs is
new and evolving, which makes it difficult to project the number and
type of PVCP-PIPs that will be manufactured and marketed under the four
options. This changing technology also affects EPA's ability to project
the specific data needs for registration or exemption of particular
PVCP-PIPs. Data needs will depend upon variables such as the viral
source of the transgene, how the transgene is modified, whether the
recipient crop is intended for human consumption, and whether the
recipient crop has a strong propensity for ferality and/or wild or weedy
relatives in the United States.

EPA created nine case studies of types of PVCP-PIPs to reflect these
differences and represent the broad range of possible PVCP-PIPs that may
be developed. The general approach for creating the case studies is
described next. The relationship of the options to the case studies, the
projections for the expected number of PVCP-PIP submissions in the next
10 years, and the potential data needs for each case study are also
presented.

### Case studies

Nine case studies were created to represent the different types of
PVCP-PIPs that may be marketed over the next 10 years. In developing
these case studies, three main factors directly related to the
considerations described in the criteria for Options 1 through 3 were
used: the characteristics of the modified plant, characteristics of the
virus from which the coat protein gene was derived, and characteristics
of the PVC-protein.

With respect to the characteristics of the modified plant, four main
categories were identified: (1) plants with low propensity to naturalize
and no wild relatives in the United States with which the plant can form
viable hybrids in nature; (2) plants with low propensity to naturalize
and wild relatives that are not considered weedy; (3) plants that have a
high propensity to naturalize or wild relatives that are considered
weedy; and (4) plants for which little information about wild relatives
is known.

With respect to the characteristics of the virus from which the coat
protein was derived, three main categories were identified: (1) viruses
isolated in the United States from the plant species transformed with
the PVCP-PIP, (2) viruses isolated outside the United States that
naturally infect the transformed plant species, and (3) viruses that do
not naturally infect the transformed plant species, whether isolated in
or outside of the United States.

With respect to the characteristics of the PVC-protein, five main
categories were identified: (1) no PVC-protein produced, (2) unmodified
PVC-protein produced, (3) minimally modified PVC-protein produced, (4)
substantially modified protein produced in a product for food use, and
(5) substantially modified protein produced in a product for nonfood
use.

Case studies were then developed based on the various characteristics
enumerated above for the three factors (the plant, the virus, and the
PVC-protein). One case study represents a product with characteristics
that would warrant the least data for a risk assessment (case study 2),
and thus the lowest costs. One case study represents a product with
characteristics that would warrant the most data, and thus the highest
costs (case study 9). Additional case studies were developed to
represent the middle of the cost spectrum by varying the characteristics
of two of the factors against the characteristic most commonly expected
for the third factor. These case studies represent the broadest range of
PVCP-PIPs that the Agency anticipates would most likely be manufactured
in the near future, in order to facilitate differentiating the costs of
various regulatory options. The following is a description of each case
study:

-   Case study 1: The modified crop plant has a low propensity to
    naturalize in the United States, and has no wild or weedy relatives
    in the United States with which it can form viable hybrids in
    nature. The virus used to create the PVCP-PIP was isolated in the
    United States from the same species as the crop plant modified to
    contain the coat protein gene. PVC-protein is produced, encoded by a
    single unmodified coat protein gene.

-   Case study 2: The modified crop plant has a low propensity to
    naturalize in the United States and has no wild or weedy relatives
    in the United States with which it can form viable hybrids in
    nature. The virus used to create the PVCP-PIP was isolated in the
    United States from the same species as the crop plant modified to
    contain the coat protein gene. PVC-protein is not produced in the
    plant because the coat protein gene was inserted in an inverted
    repeat orientation.

-   Case study 3: The modified crop plant has a low propensity to
    naturalize in the United States. The plant has wild relatives in the
    United States with which it can form viable hybrids in nature, but
    these hybrids have very limited fertility and the wild relatives are
    not considered weedy in the United States. The virus used to create
    the PVCP-PIP was isolated in the United States from the same species
    as the crop plant modified to contain the coat protein gene.
    PVC-protein is not produced in the plant because the coat protein
    gene was inserted in an inverted repeat orientation.

-   Case study 4: The modified crop plant is an ornamental with low
    propensity to naturalize in the United States. Little information is
    known about whether wild relatives exist in the United States with
    which the plant can form viable hybrids in nature. The virus used to
    create the PVCP-PIP was isolated in the United States from the same
    species as the crop plant modified to contain the coat protein gene.
    PVC-protein is not produced in the plant because the coat protein
    gene was inserted in an inverted repeat orientation.

-   Case study 5: The modified crop plant has a low propensity to
    naturalize in the United States, and has no wild or weedy relatives
    in the United States with which it can form viable hybrids in
    nature. The virus used to create the PVCP-PIP was isolated outside
    the United States from the same species as the crop plant modified
    to contain the coat protein gene. The coat protein gene was modified
    to reduce the frequency of recombination. PVC-protein is not
    produced in the plant because the coat protein gene was inserted in
    an inverted repeat orientation.

-   Case study 6: The modified crop plant has a low propensity to
    naturalize in the United States and has no wild or weedy relatives
    in the United States with which it can form viable hybrids in
    nature. The virus used to create the PVCP-PIP was isolated in the
    United States from the same species as the crop plant modified to
    contain the coat protein gene. PVC-protein is produced, encoded by a
    single coat protein gene that has been minimally modified by both
    N-terminal and C-terminal truncations.

-   Case study 7: The modified crop plant has a low propensity to
    naturalize in the United States, and has no wild or weedy relatives
    in the United States with which it can form viable hybrids in
    nature. The virus used to create the PVCP-PIP was isolated in the
    United States from the same species as the crop plant modified to
    contain the coat protein gene. PVC-protein is produced, encoded by a
    single coat protein gene that has been substantially modified by the
    addition of nucleic acid derived from a non-viral source, which
    results in 35 additional amino acids in the protein. The crop plant
    has only non-food uses and is not able to form viable hybrids in
    nature with any food plants.

-   Case study 8: The modified crop plant has weedy relatives in the
    United States with which it can form viable hybrids in nature. The
    virus used to create the PVCP-PIP was isolated in the United States
    from the same species as the crop plant modified to contain the coat
    protein gene. PVC-protein is produced, encoded by a single coat
    protein gene that has been minimally modified by the addition of
    nucleic acid from a different virus coat protein gene that results
    in a few additional amino acids in the protein. The crop plant is
    used for food.

-   Case study 9: The modified crop plant has weedy relatives in the
    United States with which it can form viable hybrids in nature. The
    virus used to create the PVCP-PIP was isolated in the United States,
    but does not naturally infect the crop plant modified to contain the
    coat protein gene. PVC-protein is produced, encoded by a single coat
    protein gene that has been substantially modified by the addition of
    nucleic acid derived from a non-viral source, which results in 35
    additional amino acids in the protein. The crop plant is used for
    food.

The case studies do not represent all possible PVCP-PIPs that could be
developed given the number of variables considered. However, the case
studies cover the full spectrum of possible products from one that would
require the least data (case study 2) to one that would require the most
data (case study 9). Table 6 presents a summary of the nine case
studies, with some indication of the expected prevalence of PVCP-PIPs
like these case studies. After considering the characteristics of the
products that have already been marketed, characteristics of the crop
plants that have been the subject of field trials for PVCP-PIPs, and
knowledge of the field of genetically engineered virus-resistant crops,
EPA estimated the percentage of products projected to be characterized
by each case study as the prevalence of the case study. Due to the
inexact nature of predicting the future, several EPA staff members
knowledgeable in this area and with expertise in the fields of molecular
biology, ecology, and protein biochemistry independently estimated the
percentage of products likely to be associated with each case study, by
first considering the percentage of products likely to fall into each of
the categories identified for the plant, the virus, and the protein. The
characteristics of the plant, the virus, and the protein were considered
to be independent variables such that the probability that a product
would have any combination of the three could be found by multiplying
the independent probabilities. The estimates of four EPA scientists were
averaged to arrive at the numbers appearing in Table 6. There is
necessarily a great deal of uncertainty associated with these
predictions.

6.  []{#__RefHeading___Toc139179526 .anchor}Summary of Case Studies and
    Their Prevalence

  -------------------------------------------------------------------------------
  **Case    **Plant**        **Virus**         **Protein**       **Prevalence**
  Study**                                                        
  --------- ---------------- ----------------- ----------------- ----------------
  1         No wild          Isolated from     Encoded by entire 9%
            relatives and    plants of the     coat protein gene 
            low or no        transformed       with no           
            propensity to    species in the    modifications     
            volunteer in the United States                       
            U.S.                                                 

  2         No wild          Isolated from     No protein        14%
            relatives and    plants of the     produced          
            low or no        transformed                         
            propensity to    species in the                      
            volunteer in the United States                       
            U.S.                                                 

  3         Have wild        Isolated from     No protein        13%
            relatives that   plants of the     produced          
            are not          transformed                         
            considered weedy species in the                      
                             United States                       

  4         Little           Isolated from     No protein        4%
            information      plants of the     produced          
            about wild       transformed                         
            relatives is     species in the                      
            known            United States                       

  5         No wild          Isolated outside  No protein        1%
            relatives and    the U.S. and do   produced          
            low or no        infect the                          
            propensity to    transformed plant                   
            volunteer in the species                             
            U.S.                                                 

  6         No wild          Isolated from     Minimally         11%
            relatives and    plants of the     modified protein  
            low or no        transformed                         
            propensity to    species in the                      
            volunteer in the United States                       
            U.S.                                                 

  7         No wild          Isolated from     Substantially     1%
            relatives and    plants of the     modified protein  
            low or no        transformed       for nonfood use   
            propensity to    species in the                      
            volunteer in the United States                       
            U.S.                                                 

  8         Wild relatives   Isolated from     Minimally         4%
            in the U.S. that plants of the     modified protein  
            are weedy or     transformed                         
            have high        species in the                      
            propensity to    United States                       
            volunteer                                            

  9         Wild relatives   Does not          Substantially     0.003%
            in the U.S. that naturally infect  modified protein  
            are weedy or     the transformed   for food use      
            have high        species                             
            propensity to                                        
            volunteer                                            
  -------------------------------------------------------------------------------

### Relationship of options to case studies

The Agency evaluated four regulatory options (see Chapter 3 of this EA
for options). Table 7 illustrates the relationship of the scope of
PVCP-PIPs to be exempted and regulated under each option with the
different case studies that were developed.

7.  []{#__RefHeading___Toc139179527 .anchor}Analysis of Case Studies
    Exempted from Registration under Various Options

  -----------------------------------------------------------------------------
  **Option**   **Case studies exempted from       **Case studies subject to
               registration**                     registration**
  ------------ ---------------------------------- -----------------------------
  1            1, 2, 3, 4, 5, 6                   7, 8, 9

  2            1, 2, 3, 4, 5, 6                   7, 8, 9

  3            1, 2                               3, 4, 5, 6, 7, 8, 9

  4            None                               All
  -----------------------------------------------------------------------------

PVCP-PIP products like case studies 7, 8, and 9 will be subject to
registration under all four options, while products like case studies 1
and 2 will be exempted from registration under Options 1, 2, and 3.
Products like case studies 3, 4, 5, and 6 will be subject to
registration under Options 3 and 4, but exempted from registration under
Options 1 and 2. As noted in Chapter 3, the difference between Option 1
and Option 2 is that under the latter, exemptions from registrations are
determined by EPA upon satisfactory evaluation by the Agency.

### Projections for the number of PVCP-PIP submissions

Assumptions of potential numbers of PVCP-PIPs likely to be developed in
the next 10 years are based on the U.S. database of completed regulatory
agency reviews (found at http://usbiotechreg.nbii.gov/database_pub.asp)
and the USDA/APHIS database of small-scale field tests on transgenic
plants (found at http://www.nbiap.vt.edu/cfdocs/fieldtests1.cfm).

#### EPA experience  {#epa-experience .unnumbered}

Since 1994, the Agency has seen five PVCP-PIPs that would be regulated
under Option 4 of this EA (Table 8) and that have been submitted to USDA
for a determination of non-regulated status.

8.  []{#__RefHeading___Toc139179528 .anchor}Existing Crops Containing a
    PVCP-PIP

  ---------------------------------------------------------------------------
  **Crop**   **Current Owner**               **\#         **Current Status**
                                             Products**   
  ---------- ------------------------------- ------------ -------------------
  Squash     Monsanto                        2            Currently marketed

  Papaya     Papaya Administrative Committee 1            Currently marketed

  Potato     Monsanto                        1            No longer marketed

  Plum       USDA Agricultural Research      1            Not yet marketed
             Service                                      
  ---------------------------------------------------------------------------

#### USDA/APHIS database  {#usdaaphis-database .unnumbered}

The USDA/APHIS maintains a database of Environmental Release Permits
(ERPs) and notifications of field tests for transgenic plants[^6].
Several aspects of the database introduce uncertainty into this analysis
to project the number of PVCP-PIPs likely to be commercialized in the
next decade. First, for some types of virus-resistant plants, the
database does not indicate whether the phenotype is conferred by a
PVCP-PIP, as the donor gene is confidential business information.
Second, a single product is likely subjected to multiple field tests
that will each appear as separate listings. The database does not
explicitly indicate when multiple listings actually cover the same
product. Third, companies frequently test several different versions of
a virus resistant plant with the intention of marketing only the best
performing. The number of listings is therefore considerably higher than
the number of products that are ultimately marketed.

To estimate the number of field trial applications that might result in
a PVCP-PIP that would be seen by EPA, the Agency first screened each
crop in the database to determine whether it was engineered to contain a
virus resistance trait that might be based on a coat protein gene, i.e.,
either a coat protein gene was specified or the genotype was listed as
confidential business information. Products that appeared to be similar
based on their genotype and phenotype were grouped together to try to
account for PVCP-PIPs that may have been modified through the course of
research and/or PVCP-PIPs that underwent multiple field trials but would
likely yield no more than a single commercial product. In addition, it
was assumed that multiple entities would not market an identical
product. EPA further evaluated how many of these unique PVCP-PIPs the
Agency believed would be developed into commercial products, based on a
number of factors including: a literature search to investigate the
degree of viral resistance conferred by the PVCP-PIP, the length of time
since the field trial permit was issued without subsequent activity, a
search of field trials in other countries, and discussions with
scientists knowledgeable in the field of genetic engineering.

#### Projections for This EA  {#projections-for-this-ea .unnumbered}

EPA primarily used the USDA/APHIS database as discussed above to
estimate the projected number of PVCP-PIPs that would be ready for
commercialization in the next 10 years. However, EPA also considered the
U.S. database of completed regulatory agency reviews and EPA experience
in this evaluation to account for the fact that the number of products
marketed to date suggests that there are many products in the
development pipeline that have not been brought to market, for a variety
of reasons that would not be affected by EPA's issuance of this proposed
rule. Thus, although the analysis of the USDA database suggested that as
many as 80 or more products could conceivably be brought to market in
the next 10 years, this was considered an unreasonably high estimate,
given the fact that only five products have reached the
commercialization stage in the last 10 years. The Agency assumes a
uniform distribution in the number of products per year and estimates
that 15-25 products could be ready for commercialization in this period,
or 1.5-2.5 per year on average. The number of products expected over 10
years represented by each of the case studies (Table 9) can be
determined based on their estimated prevalence found above in Table 6.

9.  []{#__RefHeading___Toc139179529 .anchor}Number of PVCP-PIPs Expected
    Over 10 Years Like Each Case Study

  -----------------------------------------------------------------------
  **Case Study**                 **Number of PVCP-PIPs Expected Over 10
                                 Years**
  ------------------------------ ----------------------------------------
  1                              1.4 -- 2.3

  2                              2.1 -- 3.5

  3                              2.0 -- 3.3

  4                              0.6 -- 1.0

  5                              0.2 -- 0.3

  6                              1.7 -- 2.8

  7                              0.2 -- 0.3

  8                              0.6 -- 1.0

  9                              0.0005 -- 0.0008
  -----------------------------------------------------------------------

### Potential data needs for each case study

The Agency has not codified the data requirements specifically for
PVCP-PIPs or for PIPs in general. However, for the purposes of this
economic assessment, the Agency compiled a list of data/information
needs that might reasonably be associated with each case study were it
to be submitted to the Agency for a registration review. EPA staff
familiar with information used to evaluate other types of PIPs and with
expertise in ecology, molecular biology, virology, and protein
biochemistry, estimated the types of data needed to evaluate each
PVCP-PIP case study. They did this based on the content of USDA
petitions for deregulation of PVCP-PIPs, current knowledge of the nature
of PVCP-PIPs, EPA's expertise working with all types of biological
pesticides, and the current data requirements at 40 CFR part 158. To
date, EPA has relied on the microbial data requirements found at 40 CFR
part 158 when evaluating PIPs because the existing PIPs have all come
from microorganisms (bacteria or viruses). The Agency has used its
authorities under FIFRA to require the generation of additional data
when appropriate. Not all PVCP-PIPs meeting the description of any given
case study would necessarily need all of the information to conduct a
risk assessment. Tests were included if the information might reasonably
be needed depending on the particular characteristics of the PVCP-PIP
and potential routes of and levels of exposure. For this analysis, the
characteristics of each case study drive the data needs. For example, if
the plant has wild relatives in the United States with which it can form
viable hybrids, it will be important to consider the effect that
acquired virus resistance could have on the wild relatives. The Agency
assumed it would use a "tiered" approach to data needs, as with other
biological pesticides. Under a "tiered" approach, testing to meet the
second or third tier data requirements is needed only if the results of
the first tier testing indicate that additional data are needed to
assess risk adequately. Some of the higher tiered tests may be needed
for some PVCP-PIPs when the results from lower tiered tests indicate
that more information is warranted to evaluate the potential risks from
the pesticide to the environment or human health.

10. []{#__RefHeading___Toc139179530 .anchor}Information for Conducting a
    Risk Assessment for Each Case Study for FIFRA Registration Baseline

<table>
<colgroup>
<col style="width: 16%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 11%" />
<col style="width: 9%" />
<col style="width: 10%" />
</colgroup>
<thead>
<tr class="header">
<th><p><strong>Case Study</strong></p>
<p>Plant relatives</p>
<p>Virus</p>
<p>Protein</p></th>
<th><p><strong>1</strong></p>
<p>None</p>
<p>Native</p>
<p>Unmod.</p></th>
<th><p><strong>2</strong></p>
<p>None</p>
<p>Native</p>
<p>None</p></th>
<th><p><strong>3</strong></p>
<p>Non-weedy</p>
<p>Native</p>
<p>None</p></th>
<th><p><strong>4</strong></p>
<p>No info.</p>
<p>Native</p>
<p>None</p></th>
<th><p><strong>5</strong></p>
<p>None</p>
<p>Exotic</p>
<p>None</p></th>
<th><p><strong>6</strong></p>
<p>None</p>
<p>Native</p>
<p>Min. mod.</p></th>
<th><p><strong>7</strong></p>
<p>None</p>
<p>Native</p>
<p>Sub. mod. (non-food)</p></th>
<th><p><strong>8</strong></p>
<p>Weedy</p>
<p>Native</p>
<p>Min. mod.</p></th>
<th><p><strong>9</strong></p>
<p>Weedy</p>
<p>Het. res.</p>
<p>Sub. mod. (food)</p></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td>Genetic construct ID &amp; characterization <sup>a</sup></td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
</tr>
<tr class="even">
<td>Protein ID &amp; characterization (plant expressed)
<sup>b</sup></td>
<td>X</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
</tr>
<tr class="odd">
<td>Surrogate protein production <sup>c</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
<td></td>
<td>X</td>
</tr>
<tr class="even">
<td>Quantified concentration of protein produced <sup>d</sup></td>
<td>X</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
</tr>
<tr class="odd">
<td>Protein analytical detection method <sup>e</sup></td>
<td>X</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
<td></td>
<td>X</td>
<td>X</td>
</tr>
<tr class="even">
<td><p>Plant</p>
<p>identification <sup>f</sup></p></td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
</tr>
<tr class="odd">
<td>Sexual compatibility testing <sup>g</sup></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Viral pathotype characterization <sup>h</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
<td></td>
<td></td>
<td></td>
<td>X</td>
</tr>
<tr class="odd">
<td>List of other viruses <sup>i</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
</tr>
<tr class="even">
<td>Outcrossing potential <sup>j</sup> &amp; hybrid characterization
<sup>k</sup></td>
<td></td>
<td></td>
<td>X</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
<td>X</td>
</tr>
<tr class="odd">
<td>Potential impact of introgression <sup>l</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
<td>X</td>
</tr>
<tr class="even">
<td>Exposure pattern changes <sup>m</sup></td>
<td>X</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
</tr>
<tr class="odd">
<td>Amino acid similarity studies <sup>n</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
</tr>
<tr class="even">
<td>In vitro digestibility <sup>o</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
</tr>
<tr class="odd">
<td>Assessment of heat stability/lability</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
</tr>
<tr class="even">
<td><p>Acute oral</p>
<p>toxicity <sup>p</sup></p></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
</tr>
<tr class="odd">
<td>Non-target effects <sup>q</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>X</td>
<td></td>
<td>X <sup>r</sup></td>
</tr>
<tr class="even">
<td>Benefit analysis <sup>s</sup></td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
<td>X</td>
</tr>
</tbody>
</table>

Notes:

> ^a^ Includes identification of the source of the genetic material,
> including identity of viral pathotype; a description of the
> development and production process (integration method and
> transformation system, including any modifications of sequence(s));
> the genetic construct map (insert), including any modifications of the
> nucleic acid sequence; and characterization of the genetic insert to
> confirm expected identity, e.g., by restriction enzyme digestion and
> Southern blot analysis of the inserted DNA in the plant and/or PCR
> sequence analysis of the insert and flanking regions of genomic DNA.
>
> ^b^ Includes the amino acid sequence of the coat protein or fragment
> thereof translated from the genetic insert; a comparison of the
> sequence with naturally occurring sequences, if modified; and
> characterization to identify/verify the expected product is produced
> (plant expressed), e.g., by determining molecular weight by SDS-PAGE
> and/or western blot analysis, glycosylation analysis, N-terminal amino
> acid sequencing, and/or MALDI-TOF mass spectrometry.
>
> ^c^ Includes (1) development of a non-plant protein expression system;
> (2) characterization of the protein to show equivalence with
> plant-expressed protein, e,g, by molecular weight by SDS-PAGE and/or
> western blot analysis, glycosylation analysis (if non-bacterial system
> utilized), N-terminal amino acid sequencing, and/or MALDI-TOF mass
> spectrometry; and (3) production of gram quantities of the protein for
> toxicity testing, e.g., medium-scale fermentation, extraction, and
> purification.
>
> ^d^ In various tissues, e.g., leaf, seed, fruit, pollen, and whole
> plant by Western blot or ELISA.
>
> ^e^ Validated analytical detection method in seed or grain, e.g.,
> ELISA or lateral flow strip test (OPPTS guideline 860.1340), and
> submission of samples (OPPTS guideline 830.1900). The company must
> submit a method protocol and an \"independent laboratory validation\"
> study. EPA's Fort Meade lab uses the protocols to \"validate\" the
> method.
>
> ^f^ Includes the common and scientific name, with variety (if known)
> of the modified crop plant; a list of known wild or weedy relatives in
> the United States with which the plant can form viable hybrids in
> nature, including information on their weedy or invasive potential and
> endangered/threatened species status; and a description of the
> propensity of the crop plant to naturalize, including the extent of
> existing feral populations. "United States" here and elsewhere in this
> table includes the Commonwealth of Puerto Rico, the Virgin Islands,
> Guam, the Trust Territory of the Pacific Islands, and American Samoa.
>
> ^g^ To determine the ability to form a viable hybrid between the
> modified crop plant and wild or weedy relatives in the United States
> (e.g., by greenhouse tests). Testing would begin with the most closely
> related species in the same family that occur in the area of
> cultivation.
>
> ^h^ Includes the geographical location where virus was isolated,
> information about the geographical distribution of the viral
> pathotype, including in particular whether it occurs in the United
> States; a list of which plant species in the United States have been
> or are naturally infected by the virus(es) used to construct the
> PVCP-PIP; and a list of plant species outside of these areas naturally
> infected by the virus(es).
>
> ^i^ List of other virus(es) that are known to naturally infect the
> plant species that are naturally infected by the virus(es) used to
> construct the PVCP-PIP.
>
> ^j^ Includes information on potential outcrossing with all wild or
> weedy relatives with which the modified plant can form viable hybrids
> in nature, e.g., degree of sexual compatibility, degree of overlap in
> the geographic distribution of relatives and crop cultivation areas,
> and/or phenology assessment.
>
> ^k^ Characterization of crop-relative hybrid fitness (comparing hybrid
> and wild or weedy parent, virus free vs. virus-infected), including
> seedling emergence (germination rate), vegetative vigor (above and
> below-ground biomass), reproductive timing and output (seed set), and
> stability of the acquired transgene in the hybrid.
>
> ^l^ For example, plant community dynamics modeling, growth chamber,
> mesocosm, and/or field studies.
>
> ^m^ Discussion of any changes from previous human/environmental
> exposure patterns to the virus coat protein.
>
> ^n^ Including bioinformatic amino acid sequence comparison of short
> contiguous amino acid segments using an allergen database to identify
> any allergens containing identical short sequences and bioinformatic
> amino acid sequence search for overall similarity with known toxins
> and allergens.
>
> ^o^ In simulated gastric fluid and simulated intestinal fluid, e.g.,
> following the procedure in Nat. Biotech. 14:1269-1973 or Reg. Tox.
> Pharm. 39:87-98.
>
> ^p^ In mice (OPPTS guideline: 870.1100 -- limit dose study).
>
> ^q^ Includes honey bee testing; non-target insect testing, tier I
> (OPPTS guideline 885.4340); avian oral, tier I (OPPTS guideline
> 885.4050); wild mammal testing, tier I (OPPTS guideline 885.4150);
> estuarine and marine animal testing, tier 1: (OPPTS guideline
> 885.4280); freshwater fish testing, tier I: (OPPTS guideline
> 885.4200); and freshwater aquatic invertebrate testing, tier 1: (OPPTS
> validated test 885.4240).
>
> ^r^ Wild mammal testing excluded.
>
> ^s^ Under FIFRA 3(c)(7)(c).

This cost impact analysis was done in the following four steps:

> Step 1. Determine the unit test costs of each data requirement and
> burden for each case study scenario.
>
> Step 2. Determine the data requirements per case study.
>
> Step 3. Determine the cost savings per case study for each option.
>
> Step 4. Determine the industry-wide impacts.

Chart 2 illustrates the methodology for estimating the change in
compliance costs. First, for Step 1, the costs for the data requirements
identified in Table 10 were estimated. Some of the data requirements
mainly involve gathering and reporting information by the PVCP-PIP
developer to EPA. For these types of tasks, the burden -- labor
multiplied by hourly rates -- for a technician to satisfy the
requirements was also estimated. We estimate managerial review of the
reporting tasks to be 20 percent of technical effort, with an additional
10 hours of clerical support required to complete the reporting tasks.
The burden is specific to the case studies and differs among options.
The unit test costs (from Step 1) are multiplied by the data
requirements (Step 2) and added to the option-specific burden for both
the baseline and proposed alternative options to estimate total cost per
case study (Step 3). For any given year, the bundle of PVCP-PIP products
that will be ready for commercialization will depend on the probability
of a PCVP-PIP product like one of the nine case studies being developed.
These probabilities may be defined by the range of number of PVCP-PIPs
expected over 10 years in Table 9. The test costs saving per case study
for Options 1, 2, and 3 is the difference in the total cost for
exemptions and registrations between the baseline of registration and
the proposed exemption options. For any year, the cost saving per case
study for a proposed option was multiplied by the expected number of
PVCP-PIPs like each case study developed that year to get the
industry-wide cost impacts for each proposed option (Step 4).

2.  []{#__RefHeading___Toc139179620 .anchor}Methodological Flowchart for
    Analyzing the Cost Impacts Associated with Proposed Changes to 40
    CFR Part 174.27

## Unit Test Costs and Burden Estimates

In order to provide the data potentially required for a PVCP-PIP
registration, registrants must submit or cite test results or other
information to satisfy the possible data requirements. The test costs
are the costs of complying with the specific data requirements, which
depend on the type of product and use pattern. Burden estimates are
generally synonymous with reporting- and recordkeeping-type
requirements.

Several laboratories provided test cost data for different PVCP-PIP data
requirements. Laboratories were asked to identify the method, range,
analytical, and fixed cost for each guideline based on a set of
predetermined protocols. If for any test the component costs were not
available, the laboratories were asked to provide a total. Understanding
that the lab costs could vary considerably based on the study protocol
chosen by the lab, high cost and low cost estimates were requested for
each study protocol in order to bracket the costs. To establish the
protocols, EPA initially identified the various study design options for
each study based on the Office of Pesticide Prevention and Toxic
Substances (OPPTS) guidelines. In cases where data requirements do not
have predetermined OPPTS guidelines, the labs were asked to provide a
range of costs based on their best professional judgments of the tasks
involved to complete the required tests. Details on test cost data
required for registering PVCP-PIPs that was used in this study are
presented in Appendix C: Test Cost Data Used to Calculate Costs for 40
CFR Part 174.27. The estimated average costs of complying with
individual OPPTS guidelines ranged from \$495 (830.1900, Submission of
samples) to \$65,000 (885.4150, Wild mammal testing, Tier I.). The
highest estimated average cost for all kinds of tests was \$1,035,000,
for studies to evaluate the potential impact of transgene introgression,
which does not have an OPPTS guideline. In addition to tests costs and
burden, for the baseline, a developer will have to pay a registration
fee (about \$249,000 in 2005) for registration of its product. Under the
proposed regulation changes, the registration fee will be paid only when
a product is registered. This results in a reduction in the compliance
cost under the three alternative proposed options proportional to the
number of products exempted from registration.

## Data Requirements per Registration or Exemption

The initial product analysis data needs for EPA registration of certain
types of PVCP-PIPs are similar to the USDA/APHIS informational
requirements for Environmental Release Permits (ERPs) or petitions for
determination of non-regulated status. These data consist of basic
information that is created as part of the research and development of
these pesticides. The product analysis data needs for PVCP-PIPs are
similar to those needed to meet USDA/APHIS requirements. Therefore, an
application specifically for registration under FIFRA would not
necessarily incur costs for such data that can be attributed to EPA.
However, it is unclear whether costs should be assigned to EPA or USDA,
particularly because USDA is currently rewriting regulations for all
genetically engineered plants, including those containing a PVCP-PIP,
and USDA data requirements could change. Given this uncertainty, EPA has
chosen to include all costs incurred to register a PVCP-PIP in this
analysis, whether or not such information may be needed for a review of
the product at USDA. For information related to USDA/APHIS requirements,
see Appendix D.

In addition to test costs, registrants are expected to report data that
are readily available through the development of the PVCP-PIP, or
through literature searches, public websites, and breeder records. These
tasks involve only burden hours to comply with the registration process.
The analysis grouped the burden activities for complying with data
requirements for registration of PVCP-PIPs under FIFRA into eight
categories, namely, read instructions, plan activities, create
information, gather information, compile and review, complete paperwork,
maintain and file, and additional activities. Technical hours for the
baseline are estimates of the time needed by a developer to complete the
required reporting tasks. The technical hours for the baseline in this
EA are "loosely" based on the technical hours in an Information
Collection Request (ICR) for PIP Confidential Business Information (CBI)
substantiation (with some minor adjustments to account for the different
case studies and the special nature of these products).[^7] (See
Appendix E: Burden Hours and Estimates Used to Calculate Compliance
Costs for 40 CFR part 174.27.) The burden hours for managerial review
are estimated to be 20 percent burden hours for technical staff, and we
project 10 hours of clerical support for each case study and for all
options.

To obtain burden and cost estimates for the various options, the
following rules were used. Since case studies 7, 8, and 9 are registered
under all options, the data requirements for PVCP-PIP products should be
the same under all options. However, under Option 3, case studies 1 and
2 would be exempt. The only information a developer would have to supply
to the Agency is (1) a statement certifying that the product meets the
conditions of the exemption, (2) the source of the genetic material, and
(3) the name of the modified plant. Under Option 3, the other case
studies would be registered and the burden would not change from Option
4 (full registration).

Under Option 1, case studies 1 and 2 would be exempt and the burden
would be the same as under Option 3. Case studies 7, 8, and 9 would be
registered and the burden would be the same as for Options 3 and 4.
However, under Option 1, case studies 3, 4, 5, and 6 are also exempt.
For case study 3, data would be needed on the genetic construct
identification and characterization, but no benefit analysis would be
required. Outcrossing potential and hybrid characterization may be
needed for case study 3 products, depending on which alternative of the
proposed rule is finalized.[^8] Case studies 4, 5, and 6 would need to
report the same data as though they were being registered, but a benefit
analysis would not be required.

Under Option 2, case studies 3, 4, 5, and 6 are exempt and the burden is
the same as for Option 1. Case studies 1 and 2 are exempt, but now the
burden is the same as for registration (Option 4), excluding benefit
analysis and the analytical detection method for case study 1. The
registration cost estimates are summarized by case study in Table 11.

As discussed earlier, differences in the costs reflect the different
data needs for different types of PVCP-PIPs. One factor affecting the
data needed is the degree to which any PVC-protein produced has been
modified from a natural plant viral coat protein. For example, case
studies for which a history of safe exposure to the PVC-protein is not
known to exist (e.g., case studies 7 and 9) would require more data on
the human health effects and non-target organism effects than for case
study 1 where there is a history of safe exposure. Another factor is the
plant containing the PVCP-PIP. Case studies with plants that have wild
relatives (e.g., case studies 8 and 9) would require additional testing
to gather information on the biological fate of the PVCP-PIP in the
environment. A range of cost estimates was calculated for each case
study. The expected values were used to calculate the aggregate cost
estimates and account for the probability that some tests may be
required for only a portion of the time.

## Total Cost Savings per Option

To estimate the compliance costs associated with each option, it is
necessary to establish the data needed for review under each case study
and estimate the cost to generate the data and submit the test results.
The compliance cost savings from regulating only a subset of PVCP-PIPs
(Options 1, 2, and 3) is then determined by comparing the compliance
costs of each of these options with the compliance cost of registering
all PVCP-PIPs (Option 4).

### Cost estimates for data submissions to the agency

As shown in Table 10, the case studies were used to formulate potential
PVCP-PIP data requirements. Low, high, and average cost estimates for
collecting information and conducting individual tests were obtained
from various sources including laboratories, EPA labor burden hour
estimates, and best professional judgment estimates.

Table 11 presents the estimated compliance costs associated with each
option. This is equivalent to the compliance cost for the four options
per registration action if one PVCP-PIP of each of the nine case studies
were ready for commercialization in any year. The test costs were
obtained from a survey of laboratories that may have the experience of
performing the tests required for registering a PVCP-PIP. Over 20
laboratories and companies were contacted, based in part on a National
Pesticide Information Retrieval System (NPIRS -- this is the
subscription-based public version of EPA's Pesticide Data Management
System (PDMS)) database search of laboratories and companies that had
previously conducted and/or submitted data to EPA to support PIP
registrations. Of the organizations contacted, only a few provided data
used in this report. This may be primarily due to the relative novelty
of the requirements and a lack of experience related to PVCP-PIPs.

The first column of numbers presents low and high estimates of the cost
of tests that would be required by EPA for PVCP-PIPs like the respective
case studies under the baseline (option 4). (The tests required for the
respective case studies are summarized in Table 10.) The next four
columns of numbers present the total compliance cost (unit test cost
plus burden) for a PVCP-PIP like any of the nine case studies under the
baseline and the three alternative options. These were the compliance
cost estimates used to estimate expected industry compliance cost and
regulatory relief from the regulatory options.

Again, as a result of the current uncertainty of the reporting
requirement for outcrossing potential and hybrid characterization for
case study 3 under Options 1 and 2, we estimated that 50 percent of
PVCP-PIPs like case study 3 would have reporting requirements for
outcrossing potential and hybrid characterization under Options 1 and 2.

In reality, EPA is not certain of how many products similar to the nine
case studies would be registered or exempted over a 10-year period.
However, as discussed in Section 5.1.3, the Agency projected these
numbers based on the U.S. database of completed regulatory agency
reviews and the USDA/APHIS database of small-scale field tests on
transgenic plants. The section below discusses how these projections
together with the information in Table 11 were used to obtain estimates
of compliance cost for the four options over a 10-year period.

11. []{#__RefHeading___Toc139179531 .anchor}Compliance Costs for Four
    Alternative Options per Registration and/or Exemption.

+-------------+-----------+----------+----------+----------+---------+
|             | **COSTS   |          |          |          |         |
|             | (tho      |          |          |          |         |
|             | usands)** |          |          |          |         |
+-------------+-----------+----------+----------+----------+---------+
|             | **Test    | *        |          |          |         |
|             | Costs     | *Average |          |          |         |
|             | (Ba       | Burden   |          |          |         |
|             | seline)** | and Test |          |          |         |
|             |           | Costs**  |          |          |         |
+-------------+-----------+----------+----------+----------+---------+
|             | **Range** | Baseline | **Option | **Option | *       |
|             |           | (Regis   | 1**      | 2**      | *Option |
|             |           | tration) |          |          | 3**     |
+-------------+-----------+----------+----------+----------+---------+
| **Case      | \$190 -   | \$350    | \$1      | \$80     | \$1     |
| Study 1**   | \$510     |          |          |          |         |
+-------------+-----------+----------+----------+----------+---------+
| **Case      | \$140 -   | \$270    | \$1      | \$20     | \$1     |
| Study 2**   | \$400     |          |          |          |         |
+-------------+-----------+----------+----------+----------+---------+
| **Case      | \$340 -   | \$570    | \$170    | \$170    | \$570   |
| Study 3**   | \$800     |          |          |          |         |
+-------------+-----------+----------+----------+----------+---------+
| **Case      | \$140 -   | \$280    | \$30     | \$30     | \$280   |
| Study 4**   | \$420     |          |          |          |         |
+-------------+-----------+----------+----------+----------+---------+
| **Case      | \$140 -   | \$270    | \$20     | \$20     | \$270   |
| Study 5**   | \$400     |          |          |          |         |
+-------------+-----------+----------+----------+----------+---------+
| **Case      | \$190 -   | \$360    | \$110    | \$110    | \$360   |
| Study 6**   | \$520     |          |          |          |         |
+-------------+-----------+----------+----------+----------+---------+
| **Case      | \$340 -   | \$540    | \$540    | \$540    | \$540   |
| Study 7**   | \$740     |          |          |          |         |
+-------------+-----------+----------+----------+----------+---------+
| **Case      | \$420 -   | \$1,700  | \$1,700  | \$1,700  | \$1,700 |
| Study 8**   | \$2,970   |          |          |          |         |
+-------------+-----------+----------+----------+----------+---------+
| **Case      | \$670 -   | \$2,020  | \$2,020  | \$2,020  | \$2,020 |
| Study 9**   | \$3,360   |          |          |          |         |
+-------------+-----------+----------+----------+----------+---------+

### Total compliance costs

The test costs and burden are incurred each time a developer requests a
particular registration or exemption action. The Agency determined the
expected number of PVCP-PIPs like the nine case studies to be developed
over a 10-year period, and this is presented in Table 9 above. The
eventual timing of the development of different types of PVCP-PIPs over
10 years is also not known at this time. In order to project the
estimate of the expected compliance cost for registering PVCP-PIPs under
the baseline and the regulatory relief under the three proposed options,
we used the expected number of PVCP-PIPs like the nine case studies to
be developed over a 10-year period in determining probability
distributions for the likelihood of the development of PVCP-PIPs over a
10-year period. If an outcome is described as whether a PVCP-PIP is
ready for commercialization or not, then a successful event is a
PVCP-PIP similar to one of the case studies being ready for
commercialization in a given year. For any case study, the assumed
probability of a PVCP-PIP being ready for commercialization in any year
within the 10-year period may be obtained from Table 9, with the
following formula:

Expected number of PVCP-PIPs over 10 years / 10 = Number of PVCP-PIPs in
a year

The results of the range of PVCP-PIPs expected over 10 years for each
case study are expressed as percentages and presented in Table 12. Note
that Table 12 is essentially a normalization of the case study
prevalences from Table 6 into probabilities, based on the number of
PVCP-PIPs expected over the next ten years. This is necessary because of
the fact that not all possible PVCP-PIPs are characterized by the nine
case studies, but compliance costs need to be estimated for all of the
new products we expect. Although not all possible PVCP-PIPs are
characterized by the nine case studies, the case studies do span the
entire range of cost estimates. We expect some of the "missing" case
studies would be registered under all four options. We also expect the
compliance costs of "missing" cases studies that would be exempted from
registration under the proposed options would fall within the range of
costs identified in this EA. As a result, even though including the
"missing" case studies would necessarily mean higher compliance costs
than reported here, the estimates of compliance cost savings from the
regulatory relief under the three proposed options would not change
significantly.

12. []{#__RefHeading___Toc139179532 .anchor}Probability of Registration
    Associated with Each Case Study

  -----------------------------------------------------------------------
  **Case Study**                 **Probability of PVCP-PIPs Developed in
                                 a Single Year Over the Next 10 Years**
  ------------------------------ ----------------------------------------
  1                              14 -- 23%

  2                              21 -- 35%

  3                              20 -- 33%

  4                              6 -- 10%

  5                              2 -- 3%

  6                              17 -- 28%

  7                              2 -- 3%

  8                              6 -- 10%

  9                              0.005 -- 0.008%
  -----------------------------------------------------------------------

The following experiment was conducted for each case study in order to
determine if a PVCP-PIP is developed in any given year. A set of 10
random numbers is drawn from the uniform probability distribution
ranging between 0 and 1. A successful outcome results (or a PVCP-PIP
like that case study is assumed to be developed in that year) if the
number drawn for any year falls within the appropriate range for that
case study. Conducting this experiment for each case study, using a
different set of 10 random numbers each time, yields a set of 10
outcomes for the nine case studies. The result of this is a set of
results for the number of PVCP-PIPs like the nine case studies available
for registration under the baseline and three alternative options over a
10-year period. The compliance cost savings for Options 1, 2, and 3 for
the 10-year period are determined by comparing the compliance cost for
this set of PVCP-PIPs to the compliance costs under the baseline (Option
4). By repeating the experiment 5,000 times, each time using different
sets randomly drawn numbers, EPA estimated the compliance cost for all
options by the average over the 5,000 sets of compliance costs.[^9] The
annual compliance costs are shown in Table 13 with an annual average
over the 10 years.

The 10-year annualized average of total compliance cost for Option 4,
the baseline of registration for all PVCP-PIPs, is about \$550,000. The
annual compliance cost for the baseline was between \$540,000 and
\$560,000 without discounting. Option 1 has the lowest average annual
compliance cost of \$220,000 over a 10-year period. Average compliance
costs are higher by about \$20,000 with Option 2. Option 3 also has
lower average compliance costs than Option 4 by about \$140,000.
Regulatory relief from the proposed options is evident by the lower
total industry compliance costs for Options 1, 2, and 3. For each year
in Table 13, the number of PVCP-PIPs considered under the baseline and
the options are the same, but developers experience lower compliance
costs, since some of the PVCP-PIPs developed would be exempted from
registration under the proposed options, with the associated lower test
cost and burden.

13. []{#__RefHeading___Toc139179533 .anchor}Average Total Compliance
    Cost^a^

  -------------- --------------- ------- ------- ------- ------- ------- ------- ------- ------- -------- -------------
  **Option**     **Total                                                                                  
                 Compliance                                                                               
                 Costs                                                                                    
                 (thousands)**                                                                            

                 **Year**                                                                                 

                 **1**           **2**   **3**   **4**   **5**   **6**   **7**   **8**   **9**   **10**   **Average**

  *Not                                                                                                    
  Discounted*                                                                                             

  Option 1       \$220           \$220   \$220   \$220   \$220   \$220   \$220   \$220   \$220   \$220    **\$220**

  Option 2       \$240           \$240   \$240   \$240   \$240   \$240   \$240   \$240   \$240   \$240    **\$240**

  Option 3       \$410           \$410   \$410   \$410   \$410   \$410   \$410   \$410   \$410   \$400    **\$410**

  Registration   \$550           \$550   \$550   \$550   \$540   \$550   \$560   \$550   \$550   \$550    **\$550**
  -------------- --------------- ------- ------- ------- ------- ------- ------- ------- ------- -------- -------------

^a^ The compliance costs in this table represent the costs for new
products with an exemption or a new registration. There are other
compliance costs that apply to registered products and that are not
included in these estimates, e.g., costs associated with certain other
requirements of registration.

In order to obtain compliance cost savings from Options 1, 2, and 3, EPA
subtracted the annualized compliance costs for these options from the
compliance costs for the baseline (Option 4). Table 14 presents the
compliance cost savings as a result of regulatory relief for Options 1,
2, and 3 over a 10-year period without discounting and with discounting
at 3 percent and 7 percent. The average annual compliance cost savings
for the preferred option was \$330,000, and the annual compliance cost
savings was between \$140,000 and \$330,000, in nominal terms. The
preferred option results in the highest amount of regulatory relief.
Option 2 results in regulatory relief of \$310,000 a year on average,
with a range of between \$310,000 and \$320,000. This is quite similar
to the regulatory relief under the preferred option, since the same
PVCP-PIPs are exempted from regulation. The main difference in
compliance costs savings between the two options stem from slightly
higher test costs and burden required under Option 2. Regulatory relief
under Option 3 is less than half as much as Option 1 or Option 2. This
is primarily a result of fewer PVCP-PIPs qualifying for registration
exemption. Also shown in Table 14 are the present values of the cost
savings for each of the options. At a 3% discount rate, the present
value of the cost savings of the regulations over the first ten years
ranges from about \$1.2 million for Option 3 to about \$2.8 million for
Option 1. At a 7% discount rate, the present value of the cost savings
over the next ten years ranges from about \$1 million to about \$2.3
million.

14. []{#__RefHeading___Toc139179534 .anchor}Total Compliance Cost
    Savings for a 10-Year Period with Discounting

  -------------- --------------- ------- ------- ------- ------- ------- ------- ------- ------- -------- -------------
  **Option**     **Total                                                                                  
                 Compliance Cost                                                                          
                 Savings                                                                                  
                 (thousands)**                                                                            

                 **Year**                                                                                 

                 **1**           **2**   **3**   **4**   **5**   **6**   **7**   **8**   **9**   **10**   **Annual
                                                                                                          Average**

  *No                                                                                                     
  Discounting*                                                                                            

  Option 1       \$330           \$330   \$330   \$330   \$330   \$340   \$330   \$330   \$330   \$330    **\$330**

  Option 2       \$310           \$310   \$310   \$310   \$310   \$320   \$310   \$310   \$310   \$310    **\$310**

  Option 3       \$140           \$140   \$140   \$140   \$140   \$140   \$140   \$140   \$140   \$140    **\$140**

                                                                                                          

  *3% Discount*                                                                                           **Present
                                                                                                          Value**

  Option 1       \$320           \$310   \$300   \$290   \$280   \$280   \$270   \$260   \$250   \$240    **\$2,800**

  Option 2       \$300           \$290   \$280   \$280   \$260   \$260   \$250   \$240   \$240   \$230    **\$2,630**

  Option 3       \$130           \$130   \$130   \$120   \$120   \$120   \$110   \$110   \$110   \$110    **\$1,190**

                                                                                                          

  *7% Discount*                                                                                           **Present
                                                                                                          Value**

  Option 1       \$310           \$290   \$270   \$250   \$230   \$220   \$210   \$190   \$180   \$170    **\$2,320**

  Option 2       \$290           \$270   \$250   \$240   \$220   \$210   \$200   \$180   \$170   \$160    **\$2,190**

  Option 3       \$130           \$120   \$110   \$110   \$100   \$90    \$90    \$80    \$80    \$70     **\$980**
  -------------- --------------- ------- ------- ------- ------- ------- ------- ------- ------- -------- -------------

## Limitations of the Costs Analysis

The greatest cost savings from this rule are associated with the
decreased cost of generating data in support of registrations of some
types of PVCP-PIPs because of the inherently lower human health and
ecological risks of these products. Estimating these cost factors is
uncertain and complicated due to a number of variables.

### Unit costs

Most required studies and tests are quite specific to PIPs, and
guidelines for these studies and tests have not been developed. As a
result, most of the unit cost estimates are based on best professional
judgment and estimates from a few laboratories. (See Appendix C: Test
Cost Data Used to Calculate Costs for 40 CFR Part 174.27.) Compared to
labs offering testing on conventional pesticides, relatively few labs
offer some of the tests required for PVCP-PIP registration. For a number
of studies there is a wide range of cost estimates. Although the Agency
is not in a position to know the particular underlying reasons for this,
presumably it is grounded in typical economic considerations, tempered
by the particular experience that labs may have had with the study
protocols.

### Frequency of PVCP-PIP registration

The analysis is limited by the uncertainty surrounding the dynamics of
the industry producing PVCP-PIPs and the products that will be available
in the future. The absence of published data on firms developing these
products and the products themselves limited EPA from employing a
dynamic model to evaluate the proposed rule. There is uncertainty in the
projections of the number and types of PVCP-PIPs that may be developed
in the future. For this EA, we have employed the use of a probability
distribution to help account for the uncertainty of the dynamics of
innovation and registration within the industry producing PVCP-PIPs.

The limited number of existing PVCP-PIPs provides limited information to
allow for good projections for the expected number and timing of future
registrations. The use of a probability distribution in the EA was
intended to lessen the effects of the lack of information.

The effects that various novel PVCP-PIPs might have on the environment
and human health will depend on a number of characteristics of the
PVCP-PIP, including for example, the extent to which the PVC-protein is
modified from a natural plant virus coat protein. The Agency has made
every effort to include in the case studies cost estimates for those
tests that are most likely to produce the information and data needed to
make a determination that a particular PVCP-PIP will not cause
"unreasonable adverse effects on the environment." It is conceivable
that some of the data needs listed in the case studies will not be
required for certain PVCP-PIP/crop combinations and/or that additional
or entirely new data will be needed. It is possible that certain data
needs will change as the Agency becomes more experienced with the data
needed to review PVCP-PIPs.

### Case study prevalences

The results are highly dependent on assumptions of the prevalences, much
like the overall number of PVCP-PIPs that are commercialized in the next
10 years. For example, the benefits of the rule decrease as the
prevalence of PVCP-PIPs like case studies 7, 8, and 9 increase because
they would not be exempt under any of the exemption options and are
therefore associated with no cost savings. These case studies were
chosen to span the possible outcomes and were included even though they
are unlikely events. Case studies representing PVCP-PIPs with the
greatest potential risks are assumed to be rare based on the nature of
existing PVCP-PIPs and the fact that most virus problems could be solved
with relatively safe applications of PVCP-PIPs. In addition, the
existence of an exemption for safer products is likely to further drive
product development in such a direction.

## Existing Products

Although it is not possible to predict the exact form of the final rule
and determine which existing products would qualify for exemption from
FIFRA registration, EPA anticipates that some of the existing products
may not qualify. Any PVCP-PIP not exempted from registration under FIFRA
must be registered in order to be sold or distributed in commerce. The
amount of data needed to register these products cannot be readily
extrapolated from the data needs articulated in this document because
most of this data has already been generated and exists in the public
domain. EPA would also be able to rely in part on a history of safe use
when evaluating these products for registration.

# Benefit Analysis

Benefits of the alternative options over Option 4 (full registration)
arise where Options 1, 2, and 3 generate different economic,
environmental, and other conditions compared to the baseline option
under which no PVCP-PIPs are exempted from regulation. Options 1 and 2
would provide exemption from regulation for similar PCVP-PIPs that meet
certain criteria discussed in Chapter 3. These options, as compared to
Option 4 under which no PVCP-PIPs are exempted, would reduce regulatory
costs for industry and EPA, remove regulatory uncertainty for industry,
provide important information regarding the safety of exempted PVCP-PIPs
to the public, and may have certain environmental benefits. Option 3
would also exempt certain PVCP-PIPs from registration; however, it would
exempt fewer PVCP-PIPs because it eliminates the Agency-determined part
of the exemption process.

Entities that may benefit from the proposed rule or alternate options
are the public, companies that develop and market PVCP-PIPs (applicants
and/or registrants), farmers, and the environment. However, potential
future benefits to these entities are difficult to quantify due to data
limitations and uncertain market conditions. In addition, considerable
difficulty exists in quantitatively evaluating non-market benefits, such
as environmental and human health risk reduction, consistency of
regulation, reduced regulatory uncertainty, and improvements in public
perception of biotechnology products. For this reason, this section
discusses potential future benefits to each entity qualitatively, noting
areas in which future benefits may be captured through changes in market
transactions. Benefits are discussed for Option 1, the proposed rule,
exclusively, because Options 2 and 3 are not expected to confer
different types of benefits to each entity.

## Benefits to the Public

EPA is responsible for protecting human health by evaluating residues of
pesticides in food and either establishing tolerances limiting the
amount of pesticide residues that may be present in or on food or feed
or establishing exemptions from the requirement of a tolerance for such
residues. Those PVCP-PIPs not exempted by the proposed rule would be
subject to health effects testing procedures and prescribed tolerance
levels established since 1967 for pesticides. Because EPA is required to
determine that it is safe to do so before exempting residues of
pesticides from the requirement of a tolerance, the public can be
assured that those residues of PVCP-PIPs that would be exempted by the
proposed rule are safe. In addition, an exemption for certain PVCP-PIPs
that are determined to be the safest is likely to drive development
towards these safer products and away from riskier PVCP-PIPs, e.g.,
those producing proteins that have no known history of safe exposure.
With increased development of safer products, the public would also
benefit by having access to safer products on the market.

Public consumers of products containing PVCP-PIPs may indirectly benefit
from the impact of PVCP-PIPs on crops. Where exempted PVCP-PIPs are used
more extensively by farmers, crop losses due to viral diseases may be
reduced, leading to cost savings to farmers. Consumers may benefit if
farmers pass these cost savings on to them in the form of lower food
prices.

## Benefits to Industry

Biotechnology firms face considerable economic risk when deciding
whether to pursue R&D on a particular product, not least because R&D is
significantly expensive. Regulatory uncertainty may create costs for
industry where it impacts corporate decisions on timing of development
and marketing. Some policy analysts refer to the risk incurred by
biotechnology firms under regulatory uncertainty as a tax because it
hinders product development. Establishing a clear regulatory policy is
"one of the least expensive subsidies that government can provide to
biotechnology development" (Hueth & Just 1987).

Because EPA proposed two alternatives in 1994, including a proposal to
exempt a broad category of PVCP-PIPs from regulation, the status under
FIFRA of certain PVCP-PIPs may be unclear to industry. Through
implementation of the proposed rule, EPA could provide the regulated
community with greater certainty regarding the regulatory status of
PVCP-PIPs, either under consideration for development or under
development. With a final rule in place, affected firms would no longer
need to handle regulatory requirements on a case-by-case basis, and
therefore should be better able to plan for timely product development
and commercialization. In addition, regulatory costs of registering
individual PVCP-PIPs would be reduced.

Industry may also benefit if the cost savings from the proposed
exemption facilitate development and deployment of PVCP-PIPs that in
some cases may be one of a very few or the only viable means of
controlling viral diseases in a particular crop, either over the entire
United States or in a particular region of the country. For example, the
Hawaiian papaya industry was nearly devastated by papaya ringspot virus
until a transgenic virus-resistant cultivar was developed (Fuchs et al.
1997). In these cases, PVCP-PIP products may be used in greater
quantities, generating increased sales to PVCP-PIP registrants.

## Benefits to Farmers

Viral infection is a serious problem for agricultural production in the
U.S. Virtually every plant species is susceptible to infection by at
least one of more than 500 known plant viruses. Plant viruses create
economic losses for a vast variety of crops by reducing yields and
negatively affecting the quality of the crop, potentially even
destroying an entire industry. In addition, farmers incur costs of
either attempting to prevent infection or addressing a virus infection
once it has started. Growers may use several control methods during a
crop season in an attempt to prevent viral infection and dissemination.
However, these methods are not always feasible or effective as a way to
control virus transmission, and they can be harmful to the environment.

Exemptions of PVCP-PIPs under the proposed rule may bring a greater
quantity of virus-resistant seeds to market for purchase by farmers.
Farmers are likely to benefit from these seeds where they maintain or
increase productivity on the farm and where they prevent viral disease
and associated costly remediation methods.

## Benefits to the Environment

Under the proposed rule, certain PVCP-PIPs are exempted because
sufficient information exists to demonstrate a low probability of risk
to the environment. This lower probability of risk includes
environmental risks posed by PVCP-PIPs as compared with other methods of
viral control in plants. As stated in Section 7.3, in order to control
economic losses presented by viral diseases (Tolin 1991), farmers may
use several control methods during a crop season to prevent viral
infection and dissemination. For vector-transmitted viruses, control
measures have often focused on chemical insecticides, fungicides, and
nematicides to reduce the population of vectors that transmit viruses
from plant to plant, all of which have harmful environmental impacts. By
reducing or removing the need for these types of control methods,
PVCP-PIPs have the potential to reduce the negative environmental
impacts of existing virus control methods in U.S. agriculture. Benefits
to the environment may include cleaner air and water and fewer pesticide
and insecticide residues in food.

# Economic Impacts

This chapter discusses the potential economic impacts to the regulated
community of the proposed rule exempting certain PVCP-PIPs from
registration under FIFRA. Included are discussion of the total costs for
each option and the potential impacts of the rule on the industry.

The proposed rule (Option 1) is expected to ease or eliminate compliance
costs to the industry by exempting certain categories of PVCP-PIPs from
FIFRA registration. The annual compliance costs savings of the proposed
rule are estimated to be about \$330,000 per year over the first ten
years without discounting (Table 14). The Agency projected about 1.5-2.5
PVCP-PIPs would be developed annually and for that projection, about
0.3-2.4 per year would be exempted from regulation under FIFRA by this
proposed rule.

Based on the Agency's current experience with companies registering PIPs
and past experience with pesticide registrants, the Agency anticipates
that many of the firms potentially affected by the proposed rule are
pesticide manufacturers. It has already been discussed that pesticide
manufactures have purchased seed companies and become vertically
integrated. These new vertically integrated companies have the potential
expertise in R&D, manufacturing, and marketing to produce PVCP-PIPs. If
a company is involved in several different industry activities, a firm
is classified under their primary source of business to avoid double
counting. Other industries potentially affected include crop production
establishments; colleges, universities, and professional schools; and
research and development entities involved in agricultural
biotechnology.

In 2002, 1,804 U.S. firms manufactured pesticides and other agricultural
chemicals (see Table 1). The number of these firms that will be impacted
by the proposed requirement changes is uncertain. The compliance cost
savings of this rule was estimated to be between \$330,000 and \$340,000
per year. Since the proposed option results in regulatory relief with
the associated compliance cost savings, we do not expect any negative
economic impacts from the proposed option for any of the firms
identified in Table 4.

The Agency assessed qualitatively the potential impacts on universities,
colleges, and professional schools involved with agricultural
biotechnology. The Agency reviewed the USDA/APHIS database for a list of
such entities that may be researching and developing potential
PVCP-PIPs. A number of universities are testing these types of
pesticides (see Appendix A), but it is unclear whether the universities
are developing potential PVCP-PIPs, testing PVCP-PIPs for potential
registrants, or just engaged in research. Much of the research performed
at universities, colleges, and professional schools is supported by
private or public grants.

One university developed a virus-resistant papaya containing a PVCP-PIP.
This university's efforts were complicated by having to negotiate six
licensing agreements with private firms (Smith, Ballenger, N.,
Day-Rubenstein, K., Heisey, P., and Klotz-Ingram, C. 1999). Because of
the 1980 Diamond v. Chakrabarty Supreme Court decision, firms can
receive utility patents for new types of plants and plant parts,
including seeds, tissue cultures, and plant genes (Smith, Ballenger, N.,
Day-Rubenstein, K., Heisey, P., and Klotz-Ingram, C. 1999). It is now
more difficult for those who perform research in the public sector to
disseminate new technologies directly to growers, as they have typically
done in the past, because private firms can financially benefit from the
new technologies. Thus, there appears to be a need for public-private
partnerships when products like PVCP-PIPs are developed using these
technologies. Although universities may be developing PVCP-PIPs, it is
unlikely that a university, college, or professional school would have
the necessary expertise in manufacturing and marketing to bring a
PVCP-PIP successfully to market, including experience with pesticide
registration. If a university, college, or professional school develops
a PIP, the school is more likely to establish an agreement with a
private firm that has the necessary expertise and experience to market
the product. As a result of the limited information available on the
changes occurring within public and private sectors and the development
of new genetically engineered crops, the Agency could not quantify the
value of impacts of the proposed rule on universities, colleges, and
professional schools.

Another industry potentially affected by this rule is R&D firms whose
primary source of revenue is from agricultural research support. The
Bureau of Census groups these firms in a broad industry category that
includes establishments conducting research and development in
biotechnology and other biological sciences. Unfortunately, this
information is too general and broad for the Agency to determine the
potential number and the revenues of R&D firms that may be performing
research on potential PVCP-PIPs.

Because there is insufficient information to quantify impacts on R&D
firms, the Agency also qualitatively assessed the potential impact of
the proposed rule on R&D firms. Based on the available data, it is
unclear how many, if any, R&D firms could potentially become PVCP-PIP
registrants. Based on recent trends in the marketplace, smaller
companies that develop marketable products are often purchased by larger
firms that have the resources and marketing channels to bring the
product to market. As a result, many smaller-sized R&D firms with
specific expertise to perform R&D may ultimately rely on alliances with
other firms with expertise in manufacturing and marketing to sell the
product. The proposed rule would most significantly affect those who may
produce, sell, and/or distribute PVCP-PIPs, although entities that
conduct field trials might also benefit from the exemption if the field
trials require an EPA experimental use permit. Overall, the Agency
believes that the proposed rule will have minimal impacts on small R&D
firms.

# Rationale for Proposing Option 1

The Agency chose to propose Option 1 rather than Option 2 or 3 because
this option provides the relatively high level of human health and
environmental protection that FIFRA requires, while at the same time
exempting safe products from FIFRA registration. It may reassure the
public that EPA is adequately regulating PVCP-PIPs, while providing
quantifiable cost savings that are greater than the cost savings
associated with Options 2 or 3.

## Protection of Human Health 

The Agency examined the PVCP-PIPs in the various case studies under each
of the proposed options in terms of potential effects on human health.
In order to exempt a pesticide whose residues may be in food or feed
from FIFRA requirements, EPA must, among other findings, conclude that
"there is a reasonable certainty that no harm will result from aggregate
exposure to the pesticide chemical residue" (FIFRA §2(bb)(2)). A large
base of information and experience exists for the PVCP-PIPs exempted
under Option 1 that supports EPA's determination that they meet the
FIFRA exemption standard. The information in EPA's possession is still
too limited to support an *a priori* determination for PVCP-PIPs not
exempted by Option 1 that "there is a reasonable certainty that no harm
will result from aggregate exposure."

## Protection of the Environment

The Agency examined the PVCP-PIPs in the various case studies under each
of the proposed options in terms of potential effects on the
environment. In order to qualify for exemption from FIFRA requirements,
a pesticide (for this EA specifically a PVCP-PIP) must pose a low
probability of risk to the environment and not be likely to cause
unreasonable adverse effects to the environment even in the absence of
regulatory oversight under FIFRA. A large base of information and
experience exists for the PVCP-PIPs exempted under Option 1 that
supports EPA's determination that they meet the FIFRA exemption
standard. The information in EPA's possession is still too limited to
support an *a priori* determination for PVCP-PIPs not exempted by Option
1 that "there is a reasonable certainty that no harm will result from
aggregate exposure."

# Other Economic Impacts Assessments

This chapter presents the analysis used to evaluate the potential
impacts of this rule on small entities in accordance with the Regulatory
Flexibility Act (RFA) as amended by the Small Business Regulatory
Enforcement Fairness Act (SBREFA). Several other regulatory assessment
requirements (i.e., statutory requirements and executive orders) are
also addressed in this chapter. These are: Executive Order 12898 (1994),
Federal Actions to Address Environmental Justice in Minority Populations
and Low-Income Populations; the 1995 National Technology Transfer and
Advancement Act; the 1995 Unfunded Mandates Reform Act; the 1966
Congressional Review Act; Executive Order 13045 (1997), Protection of
Children from Environmental Heath Risks and Safety Risks; Executive
Order 13084 (1998), Consultation and Coordination with Indian Tribal
Governments; and Executive Order 13132 (1999), Federalism.

## Regulatory Flexibility Act (RFA) as Amended by the 1996 Small Business Regulatory Enforcement Fairness Act (SBREFA)

The President signed the Small Business Regulatory Enforcement Fairness
Act (SBREFA) into law on March 29, 1996. SBREFA amended the Regulatory
Flexibility Act (RFA) (5 U.S.C. 601 et seq.) to strengthen the RFA's
analytical and procedural requirements. SBREFA also made other changes
to agency regulatory practice as it affects small entities.

Since its enactment in 1980, the RFA has required every federal agency
to prepare regulatory flexibility analyses for any notice-and-comment
rule it issues, unless the agency certifies that the rule "will not, if
promulgated, have a significant economic impact on a substantial number
of small entities." The purpose of the RFA is to ensure that in
developing rules, agencies identify and consider ways of tailoring
regulations to the size of the regulated entities to minimize any
significant economic impact a rule may impose on a substantial number of
small entities. The RFA does not require that an agency necessarily
minimize a rule's impact on small entities if there are legal, policy,
factual, or other reasons for not doing so. The RFA requires only that
agencies determine, to the extent feasible, the rule's economic impact
on small entities, explore regulatory options for reducing any
significant economic impact on a substantial number of such entities,
and explain its ultimate choice of regulatory approach.

The RFA defines small entities as including "small businesses," "small
governments" and "small organizations." The RFA references the
definition of "small business" found in the regulations issued by the
SBA at 13 CFR 121.201. In general, the SBA defines small business by
category of business using North American Industry Classification System
(NAICS) codes, and in the case of manufacturing, generally defines small
business as a business having 500 employees or less. In the case of
agriculture, the SBA size standards generally define small business with
respect to annual receipts (from \$750,000 for crops). The RFA defines
"small governmental jurisdiction" as the government of a city, county,
town, school district, or special district with a population of less
than 50,000, and defines "small organization" as any "not-for-profit
enterprise which is independently owned and operated and is not dominant
in its field."

### Affected small entities

A majority of the regulated industry potentially affected by this
proposed rule are pesticide manufacturers and seed companies. As
previously mentioned, pesticide manufacturers have recently purchased
seed companies and become vertically integrated. These new vertically
integrated companies have the expertise to develop and produce PIPs.
Others potentially affected by the proposed rule include researchers at
land grant universities, USDA, and non-government organizations that may
develop PVCP-PIPs to manufacture and sell in the future. SBA size
standards for "small" entities within the industries that are
potentially affected by this rule are:

-   Pesticides and Other Agricultural Chemical producers (NAICS 32532):
    fewer than 500 employees.

-   Crop Production (NAICS 111): less than \$750,000 in revenues.

-   Universities, which includes colleges and professional schools
    (NAICS 611310): less than \$6.5 million in revenues.

-   Research and Development in the Physical, Engineering and Life
    Sciences (NAICS 54171): fewer than 500 employees.

The later two categories may include not-for-profit enterprises. For
these entities, the SBA definition of small for "not-for-profit
enterprises" is applicable. EPA's analysis presents only the estimated
potential impacts on small businesses and small not-for-profit entities.
EPA does not believe that small governments are likely to be impacted by
the proposed rule because they would be extremely unlikely to sell,
manufacture, or market PVCP-PIPs. The Agency reviewed data on entities
that have consulted with the Agency on PVCP-PIPs. These businesses
involve six entities: Cornell University, Monsanto, Seminis Vegetable
Seeds (now part of Monsanto), and USDA. None of these entities would
qualify as a "small" business or university.

### Impacts on small businesses

#### Pesticide and other agricultural manufacturers  {#pesticide-and-other-agricultural-manufacturers .unnumbered}

As shown in Table 3, 1,804 firms manufactured pesticides and other
agricultural chemicals with the total value of shipments at \$1,090,757
million in 2002. Table 3 also presents a further breakdown of this
industry by size of firm using the value of shipments in 2002. Firms in
this industry comprise establishments primarily engaged in the
formulation and preparation of agricultural and household pest control
chemicals (except fertilizers). Of these firms, 1,658 would be
considered small, having fewer than 500 employees. Some of these 1,658
firms may produce, manufacture, and sell one or more PVCP-PIPs in the
future, but it is unclear how many based on current information. The
proposed rule should generate regulatory relief; therefore, the expected
cost savings to revenue ratio for potentially affected pesticide and
other agricultural manufacturers was not quantified.

#### Seed companies  {#seed-companies .unnumbered}

The size and number of small businesses in the seed industry are the
most difficult to quantify because of the rapid pace of acquisition by
larger firms, the dynamic restructuring of the industry, and the absence
of published data on the industry. Some of these producers fall into
large and other-sized companies (see Table 4). A number of these firms
have purchased total or partial interests in smaller firms, e.g.,
Monsanto purchased Seminis. Many of the smaller firms have developed
expertise that the larger firms find more profitable to purchase rather
than to develop themselves. Appendix B lists 347 seed companies as
subsidiaries of the 19 parent companies that are listed in Table 4 (ETC
Group Communique 2005).. None of these seed producers with revenues
reported in Table 4 would qualify as a small business according to the
SBA's standard of less than \$0.75 million in revenues annually. For
this analysis, the Agency assumed, on the basis of the published
information available on the world seed industry, that the seed
companies that may submit PVCP-PIPs for registration during the time
period of this analysis would be represented by those vertically
integrated pesticide and other large companies. For a more detailed
discussion of the seed industry and companies, refer to the economic
profile under Section 4.2 of this analysis. Again, the proposed rule
should generate regulatory relief, and therefore the expected cost
savings to revenue ratio for potentially affected seed companies was not
quantified.

#### Universities, colleges, and professional schools  {#universities-colleges-and-professional-schools .unnumbered}

The Census Bureau does not cover universities, colleges, and
professional schools. The Department of Education maintains some
information on these NAICS codes. In 2003-04, there were 634 public and
1,896 private four-year institutions in the United States (U.S.
Department of Education National Center for Education Statistics 2004).
Of the public four-year institutions, 446 award at least 20 masters' or
doctoral degrees per year. Of the private institutions, 459 award at
least 20 masters' or doctoral degrees per year. Universities receiving
federal funding such as land grant universities would not be considered
"small."

The Agency also reviewed the USDA/APHIS database of entities testing
genetically modified plants for a list of the universities, colleges, or
professional schools that may be researching and developing potential
PVCP-PIPs (Appendix A). The universities with release permits for
PVCP-PIPs may be developing products, testing products for potential
registrants, or just engaging in research. Cornell University has
developed a product and submitted data for regulatory review. Thus,
other universities may also be developing PVCP-PIPs that would fall
under EPA's purview. All of the universities and colleges listed on the
USDA/APHIS database would not qualify as "small" according to SBA's
definition of small (i.e., \$6.5 million in revenues). Research and land
grant universities generally receive federal funding and/or private
research grants in excess of \$6.5 million. None of these types of
universities would be considered "small."

#### Research and development in the physical, engineering and life sciences  {#research-and-development-in-the-physical-engineering-and-life-sciences-1 .unnumbered}

The Agency anticipates that another industry potentially affected by
this proposed rule includes those firms involved solely in agricultural
research (i.e., their primary source of revenues is from agricultural
research). The Bureau of Census groups these firms in a broad industry
category that includes firms primarily engaged in conducting R&D in
medicine, health, biology, botany, biotechnology, agricultural,
fisheries, forests, pharmacy, and other life sciences including
veterinary sciences. Therefore, it is impossible to use these data to
identify specific information about agricultural R&D firms. The Agency
has insufficient data on R&D firms that may be affected to evaluate the
potential impact of this rule on this industry.

Because the available information is insufficient to quantify the
impact, the Agency qualitatively assessed the potential impact of the
proposed rule on R&D firms. Based on the available data, it is unclear
how many, if any, R&D firms may become PVCP-PIP developers. Based on
recent trends in the marketplace, smaller companies that develop
marketable products are often bought out by larger firms that have the
resources and marketing channels to bring the product to market. As a
result, many smaller or medium-sized R&D firms with specific expertise
to perform R&D may rely on alliances with other firms with expertise in
manufacturing and marketing to sell the product. The Agency's proposed
rule affects those who may produce, sell, and/or distribute PVCP-PIPs.
For these reasons, it is unclear what impact the proposed rule will have
on small R&D firms.

The proposed rule is expected to provide regulatory relief for small
pesticide and other chemical manufacturers. Seed companies were not
evaluated separately because the data available indicate that most seed
companies have been purchased by larger, parent companies, many of which
are pesticide manufacturers. The anticipated impact on universities,
colleges, and professional schools cannot be determined. It appears that
a majority of universities and colleges that would be expected to
develop and research PVCP-PIPs would not be small. The impact this
proposed rule would have on firms that solely perform R&D in
agricultural biotechnology is not clear given the necessary expertise
and resources needed to produce, sell, and manufacture PVCP-PIPs. The
Agency anticipates that many of the R&D firms with specialized expertise
in this area either will work with or be purchased by larger firms with
the expertise and financial resources to produce, sell, and/or
distribute viable PVCP-PIPs.

## Paperwork Reduction Act

The information collection requirements contained in the proposed rule
have been submitted to OMB for review and approval under the Paperwork
Reduction Act (PRA), 44 U.S.C. 3501 et seq., and in accordance with the
procedures at 5 CFR 1320.11. The burden and costs related to the
information collection requirements contained in this rule are described
in an ICR, identified as EPA ICR No. 1693.03.

An Agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information that is subject to approval
under the PRA, unless it displays a currently valid OMB control number.
The OMB control numbers for EPA's regulations, after appearing in the
preamble of the Federal Register, are listed in 40 CFR part 9, and
included on any related collection instrument.

As defined by the PRA and 5 CFR 1320.3(b), "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 use technology and systems for the purpose 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.

This proposed rule contains some information collection activities that
must first be approved by OMB under the PRA. In particular, developers
availing themselves of the exemption will need to notify the Agency that
they have a PVCP-PIP that qualifies for the exemption. The paperwork
burden hours are provided for clerical, technical, and managerial
personnel in the Information Collection Request.

The total annual burden for the information collection related
activities associated with this action is estimated to average 24 hours
per year for all respondents, i.e., including those that submit a
PVCP-PIP for registration as well as those that submit a PVCP-PIP for
exemption (see Appendix E). The burden per respondent submitting a
PVCP-PIP for exemption is expected to average 22 hours per year. The
total annual costs for the information collection related activities
associated with this action is estimated to average \$950 per year for
all respondents.

## Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (P.L. 104-4)
requires Federal agencies to assess the effects of their regulatory
actions on State, local, and tribal governments and the private sector.
Title II became effective on the day the Act was signed, March 22, 1995,
and a limited form of judicial review became available on October 1,
1995. In general, Title II mandates especially rigorous economic
analysis for rules imposing high costs on either the public or the
private sector, and it directs energetic consultation with small
governments prior to actions that may significantly or uniquely affect
them.

Under UMRA, an agency must generally prepare a written statement,
including a benefit-cost analysis, for proposed and final rules with
"Federal mandates" that may result in expenditures by State, local, and
tribal governments, in the aggregate, or by the private sector, of \$100
million or more in any one year. When, due to the anticipated cost of a
rule, such a written statement is warranted, the statute directs that an
agency identify and consider a reasonable number of regulatory
alternatives, and adopt the least costly, most cost-effective or least
burdensome alternative that achieves the objective of the rule. If an
agency does not do so, the agency must explain why the agency did not do
so. The requirement to consider alternatives and choose an option that
meets one of the above criteria does not apply when it is inconsistent
with applicable law. For rules with significant Federal
intergovernmental mandates, the agency must have a process that permits
elected officials of State, local, and tribal governments, or their
designated, authorized employees, to provide meaningful and timely input
in the development of the regulatory proposals.

Before EPA establishes any regulatory requirements that may
"significantly or uniquely" affect small governments, including tribal
governments, the agency must develop a Small Government Agency Plan. The
plan must provide for notifying potentially affected small governments,
giving them meaningful and timely input in the development of EPA
regulatory proposals with significant Federal intergovernmental
mandates, and informing, educating, and advising them on compliance with
the regulatory requirements.

The proposed rule exempts certain PVCP-PIPs from regulation under FIFRA,
and provides annual cost savings estimated to be \$330,000 on average
over 10 years. Furthermore, the Regulatory Flexibility Analysis,
performed within the same EA did not identify any significant costs to
any of the affected parties of the proposed rulemaking. Therefore, the
analysis concludes that this regulatory action does not contain a
federal mandate that may result in expenditures of \$100 million or more
in any one year for State, local, and tribal governments in the
aggregate, or for the private sector.

## Executive Order 12898

Pursuant to 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 considered environmental
justice-related issues with regard to the potential impacts of this
action on the environmental and health conditions in low-income and
minority communities. EPA considered available information on the
sensitivities of subgroups as pertains to the exemptions. EPA concluded
that no subgroup would be differentially affected.

## FIFRA § 25(a)(2)(b)

FIFRA § 25(a)(2)(b), requires that the Administrator of EPA consider
such factors as "...the effect of the regulation on production and
prices of agricultural commodities, retail food prices, and otherwise on
the agricultural economy..." when issuing regulations under §25 (7
U.S.C. I36w(a)(2)(B)). The total direct compliance costs savings for the
proposed rule were estimated to be \$330,000 in year 1 and year 10. The
compliance costs savings of the proposed rule will affect those who plan
to register, manufacture, or sell PVCP-PIPs. This proposed rule is
expected to have a positive impact on pesticide and other chemical
manufacturers who in turn will sell the PVCP-PIPs to agricultural
producers. Factors other than this proposed rule that occur as a result
of the production of genetically engineered plants---i.e., consumer
acceptance and the international market desire to separately market
genetically engineered products in the market---may affect agricultural
producers and international markets. This proposed rule is also expected
to benefit the agricultural industry by helping to assure the public of
the safety of these products, thus positively affecting consumer
acceptance.

## Remaining Regulatory Assessment Requirements

Because this action is not economically significant as defined by § 3(f)
of Executive Order 12866, this action is not subject to Executive Order
13045, entitled Protection of Children from Environmental Health Risks
and Safety Risks (62 FR 19885, April 23, 1997). In addition, this action
does not significantly or uniquely affect the communities of tribal
governments as specified by Executive Order 13084, entitled Consultation
and Coordination with Indian Tribal Governments (63 FR'27655, May 10,
1998). This rule 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 Executive Order 13132, entitled
Federalism (64 FR 43255, August 10, 1999).

This action does not involve any technical standards that require the
Agency's consideration of voluntary consensus standards pursuant to
§12(d) of the National Technology Transfer and Advancement Act of 1995
(NTTAA), Pub. L. 104-113, §12(d) (15 U.S.C. 272 note).

In issuing this rule, EPA has taken the necessary steps to eliminate
drafting errors and ambiguity, minimize potential litigation, and
provide a clear legal standard for affected conduct, as required by §3
of Executive Order 12988, entitled Civil Justice Reform (61 FR 4729,
February 7, 1996).

EPA has complied with Executive Order 12630, entitled Governmental
Actions and Interference with Constitutionally Protected Property Rights
(53 FR 8859, March 15, 1988), by examining the takings implications of
this rule in accordance with the "Attorney General's Supplemental
Guidelines for the Evaluation of Risk and Avoidance of Unanticipated
Takings" issued under the Executive Order.

EPA will submit a report containing this proposed 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 is not a "major
rule" as defined by 5 U.S.C. 804(2).

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Daniell, H. 1999. GM crops: public perception and scientific solutions.
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Gonsalves, D. and Slightom, J.L. 1993. Coat protein-mediated protection:
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Hogan, T.J. Public attitudes towards agricultural biotechnology.
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Hueth, D.L. and Just, R.E. 1987. Policy implications of agricultural
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426-431.

Kaniewski, W.K. and Lawson, C. 1998. Coat protein and replicase-mediated
resistance to plant viruses. *In* Hadidi, A., Khetarpal, R.K., and
Koganezawa, H., eds. Plant Virus Disease Control. APS Press, St. Paul,
Minnesota, pp 65-78.

Larson, BA. and Knudson, M.K. Public regulation of agricultural
biotechnology field tests: Economic implications of alternative
approaches, Technical Bulletin No. 1793. 1991. Economic Research
Service, United States Department of Agriculture.

Mergermarket Limited. Genetic seed competition among giants to lower
prices. <http://www.seedquest.com/News/releases/2005/november/14166.htm>
. 2005. 12-20-0005.

OECD Environment Directorate. Consensus document on general information
concerning the biosafety of crop plants made virus resistant through
coat protein gene-mediated protection.
<http://www.olis.oecd.org/olis/1996doc.nsf/62f30f71be4ed8a24125669e003b5f73/ce3a104b8ada9e8ac12563e2003183bb/$FILE/11E63213.ENG>
. 1996.

The Pew Initiative on Food and Biotechnology. Public Sentiment about
Genetically Modified Food.
<http://pewagbiotech.org/research/2004update/overview.pdf> . 2004.
12-19-2005.

The Pew Initiative on Food and Biotechnology. Public Sentiment about
Genetically Modified Food.
<http://pewagbiotech.org/research/2005update/1.php> . 2005. 12-19-2005.

RAFI Communique. Seed Industry Consolidation: Who Owns Whom? Jul-Aug.
1998. Winnipeg, Manitoba, Canada, Rural Advancement Foundation
International.

Smith, K.R., Ballenger, N., Day-Rubenstein, K., Heisey, P., and
Klotz-Ingram, C. 1999. Biotechnology research: weighing the options for
a new public-private balance. Economic Research Service, USDA.

Snow, A.A., Andow, D.A., Gepts, P., Hallerman, E.M., Power, A., Tiedje,J
.M., and Wolfenbarger, L.L. 2005. Genetically engineered organisms and
the environment: current status and recommendations. Ecol. Appl. **15:**
377-404.

Tolin, S.A. 1991. Persistence, establishment, and mitigation of
phytopathogenic viruses. *In* Levin, M.A. and Strauss, H.S., eds. Risk
Assessment in Genetic Engineering. McGraw-Hill, Inc., New York, pp.
114-139.

United States Department of Agriculture, Economic Research Service. The
Seed Industry in U.S. Agriculture: An Exploration of Data and
Information on Crop Seed Markets, Regulation, Industry Structure, and
Research and Development. Agriculture Information Bulletin Number 786,
January 2004, Table 13, page 27.

U.S. Department of Education National Center for Education Statistics.
Digest of Education Statistics.
<http://nces.ed.gov/programs/digest/d04/tables/dt04_245.asp>. 2004.
12-21-0005.

U.S. Environmental Protection Agency (EPA), Office of Pesticide
Programs. 2005. *Economic Analysis of the Bulk Pesticide Container
Design and Residue Removal Standards*. Washington, DC.

USDA Advisory Committee on Biotechnology and 21^st^ Century Agriculture.
Preparing for the Future.
<http://w3.usda.gov/agencies/biotech/ac21/reports/scenarios-4-5-05final.pdf>.
2005.

USDA Advisory Committee on Biotechnology and 21^st^ Century Agriculture.
Opportunities and Challenges in Agricultural Biotechnology: The Decade
Ahead. http://www.usda.gov/documents/final_main_report-v6.pdf. 2006.

# Appendix A: Entities Conducting Field Tests of Virus-Resistant Plants that May Contain a PVCP-PIP  {#appendix-a-entities-conducting-field-tests-of-virus-resistant-plants-that-may-contain-a-pvcp-pip .unnumbered}

+--------------+------------------------------+----------+------------+
| **Entity**   | **Crop -- Viral Resistance** | **Emp    | **Industry |
|              |                              | loyees** | Classi     |
|              |                              | ^a^      | fication** |
|              |                              |          | ^a^        |
+==============+==============================+==========+============+
| Advanta      | Sugarbeet -- BNYVV           | 19,000   | Large      |
| North        |                              |          |            |
| America ^b^  |                              |          |            |
+--------------+------------------------------+----------+------------+
| Agdia        | Tobacco -- PPV               | 42       | Small      |
+--------------+------------------------------+----------+------------+
| Agracetus    | Peanut -- TSWV               | 22,000   | Large      |
| (now         |                              |          |            |
| Monsanto)    |                              |          |            |
+--------------+------------------------------+----------+------------+
| AgraTech     | Peanut -- TSWV               | 1,250    | Large      |
| Seeds ^c^    |                              |          |            |
+--------------+------------------------------+----------+------------+
| Agrigenetics | Tobacco -- AMV               | 42,413   | Large      |
| ^d^          |                              |          |            |
+--------------+------------------------------+----------+------------+
| Agritope     | Tobacco -- Geminivirus       | 517      | Large      |
| (now         |                              |          |            |
| Exelixis)    | Tomato -- Geminivirus, BCTV  |          |            |
+--------------+------------------------------+----------+------------+
| AgriVitis    | Grape -- Closterovirus,      | 5,100    | Large      |
| ^e^          | Nepovirus                    |          |            |
+--------------+------------------------------+----------+------------+
| USDA         | Barley -- BYDV               | 99       |            |
| Agricultural |                              |          |            |
| Research     | Gladiolus -- BYMV            |          |            |
| Service      |                              |          |            |
|              | Papaya -- PRSV               |          |            |
|              |                              |          |            |
|              | Plum -- PRV, PPV             |          |            |
|              |                              |          |            |
|              | Potato PLRV, PVA, PVY        |          |            |
|              |                              |          |            |
|              | Raspberry -- RBDV, ToRSV     |          |            |
|              |                              |          |            |
|              | Soybean -- SMV               |          |            |
|              |                              |          |            |
|              | Sugarcane -- SCYLV, SRMV     |          |            |
|              |                              |          |            |
|              | Tobacco -- BCRV, TEV         |          |            |
|              |                              |          |            |
|              | Tomato -- CMV                |          |            |
+--------------+------------------------------+----------+------------+
| Asgrow ^f^   | Cucumber -- CMV, PRSV, SMV,  | 22,000   | Large      |
|              | WMV2, ZYMV                   |          |            |
|              |                              |          |            |
|              | Melon -- CMV, PRV, SMV,      |          |            |
|              | WMV2, ZYMV                   |          |            |
|              |                              |          |            |
|              | Squash -- CMV, PRV, SMV,     |          |            |
|              | WMV2, ZYMV                   |          |            |
|              |                              |          |            |
|              | Tomato -- Geminivirus, CMV,  |          |            |
|              | TSWV                         |          |            |
|              |                              |          |            |
|              | Watermelon -- WMV2, ZYMV     |          |            |
+--------------+------------------------------+----------+------------+
| Betaseed ^g^ | Beet -- BNYVV                | 2,336    | Large      |
+--------------+------------------------------+----------+------------+
| BHN Research | Tomato -- CMV, PVY           | 6        | Small      |
+--------------+------------------------------+----------+------------+
| Calgene ^f^  | Potato -- PLRV               | 22,000   | Large      |
|              |                              |          |            |
|              | Tomato -- CMV, PVY           |          |            |
+--------------+------------------------------+----------+------------+
| Cornell      | Grape -- Nepovirus,          | 12,207   | Large      |
| University   | Closterovirus                |          |            |
|              |                              |          |            |
|              | Melon -- CMV, WMV2, ZYMV     |          |            |
|              |                              |          |            |
|              | Papaya -- PRSV               |          |            |
|              |                              |          |            |
|              | Potato -- PLRV               |          |            |
|              |                              |          |            |
|              | Squash -- CMV, SqMV WMV2,    |          |            |
|              | ZYMV                         |          |            |
|              |                              |          |            |
|              | Tobacco -- TSWV              |          |            |
+--------------+------------------------------+----------+------------+
| Frito Lay    | Potato -- PLRV, PVX, PVY     | 157,000  | Large      |
| ^h^          |                              |          |            |
+--------------+------------------------------+----------+------------+
| GenApps ^e^  | Grape -- Closterovirus,      | 5,100    | Large      |
|              | Nepovirus                    |          |            |
|              |                              |          |            |
|              | Tobacco -- Potyvirus         |          |            |
+--------------+------------------------------+----------+------------+
| Harris Moran | Melon -- CMV, WMV2, ZYMV     | 6,769    | Large      |
| ^i^          |                              |          |            |
|              | Tomato -- CMV                |          |            |
+--------------+------------------------------+----------+------------+
| Hawaii       | Papaya -- PRSV               | 70       | Small      |
| Agriculture  |                              |          |            |
| Research     |                              |          |            |
| Center ^j^   |                              |          |            |
+--------------+------------------------------+----------+------------+
| Iowa State   | Soybean -- SMV               | 8,533    | Large      |
| University   |                              |          |            |
+--------------+------------------------------+----------+------------+
| Michigan     | Melon -- ZYMV                | 13,503   | Large      |
| State        |                              |          |            |
| University   | Potato - PVY                 |          |            |
+--------------+------------------------------+----------+------------+
| Monsanto     | Corn -- CBI                  | 22,000   | Large      |
|              |                              |          |            |
|              | Potato -- PLRV, PVX, PVY     |          |            |
|              |                              |          |            |
|              | Sweet Potato -- SPFMV        |          |            |
|              |                              |          |            |
|              | Tobacco -- TMV               |          |            |
|              |                              |          |            |
|              | Tomato -- TYLCV, CMV, TMV,   |          |            |
|              | ToMV                         |          |            |
|              |                              |          |            |
|              | Wheat -- BYDV, WSMV          |          |            |
+--------------+------------------------------+----------+------------+
| Montana      | Wheat -- WSMV                | 2,500    | Large      |
| State        |                              |          |            |
| University   |                              |          |            |
+--------------+------------------------------+----------+------------+
| New York     | Cucumber -- CMV              | 12,207   | Large      |
| State        |                              |          |            |
| Experimental | Melon -- CMV, WMV2, ZYMV     |          |            |
| Station ^k^  |                              |          |            |
|              | Squash -- CMV, WMV2, ZYMV    |          |            |
|              |                              |          |            |
|              | Tomato -- CMV                |          |            |
+--------------+------------------------------+----------+------------+
| Noble        | Tobacco -- PSTV              | 261      | Large      |
| Foundation   |                              |          |            |
+--------------+------------------------------+----------+------------+
| North        | Tobacco -- TSWV              | 90,333   | Large      |
| Carolina     |                              |          |            |
| Department   |                              |          |            |
| of           |                              |          |            |
| Agriculture  |                              |          |            |
+--------------+------------------------------+----------+------------+
| North        | Tobacco -- PVY, TEV, TMV,    | 7,588    | Large      |
| Carolina     | TSWV                         |          |            |
| State        |                              |          |            |
| University   |                              |          |            |
+--------------+------------------------------+----------+------------+
| Northern     | Tobacco -- BMV               | 4,000    | Large      |
| Illinois     |                              |          |            |
| University   |                              |          |            |
+--------------+------------------------------+----------+------------+
| Northrup     | Corn -- MDMV                 | 19,000   | Large      |
| King ^b^     |                              |          |            |
+--------------+------------------------------+----------+------------+
| Novartis     | Melon -- PRSV, WMV2, ZYMV    | 81,392   | Large      |
| Seeds        |                              |          |            |
|              | Squash -- CMV, PRSV, WMV2,   |          |            |
|              | ZYMV                         |          |            |
|              |                              |          |            |
|              | Watermelon -- CMV, WMV2      |          |            |
+--------------+------------------------------+----------+------------+
| Oklahoma     | Tobacco -- TMV               | 8,882    | Large      |
| State        |                              |          |            |
| University   |                              |          |            |
+--------------+------------------------------+----------+------------+
| Oregon State | Potato -- PVY                | 8,188    | Large      |
| University   |                              |          |            |
+--------------+------------------------------+----------+------------+
| PetoSeed ^f^ | Melon -- CMV, WMV2           | 22,000   | Large      |
|              |                              |          |            |
|              | Squash -- CMV, PRV, WMV2,    |          |            |
|              | ZYMV                         |          |            |
|              |                              |          |            |
|              | Tomato -- CMV                |          |            |
+--------------+------------------------------+----------+------------+
| Pioneer      | Alfalfa -- AMV               | 60,000   | Large      |
|              |                              |          |            |
|              | Corn -- MCDV, MCMV, MDMV     |          |            |
|              |                              |          |            |
|              | Soybean -- SbMV              |          |            |
|              |                              |          |            |
|              | Tobacco -- AMV               |          |            |
+--------------+------------------------------+----------+------------+
| ProfiGen ^e^ | Grape -- Closterovirus,      | 5,100    | Large      |
|              | Nepovirus                    |          |            |
+--------------+------------------------------+----------+------------+
| Purdue       | Tobacco -- AMV               | 17,812   | Large      |
| University   |                              |          |            |
+--------------+------------------------------+----------+------------+
| Rogers ^b^   | Corn -- MDMV                 | 19,000   | Large      |
|              |                              |          |            |
|              | Tomato -- ToMV, TSWV         |          |            |
+--------------+------------------------------+----------+------------+
| Sandoz ^l^   | Melon -- CMV, WMV2           | 81,392   | Large      |
+--------------+------------------------------+----------+------------+
| Seminis      | Cucumber -- CMV, PRSV, WMV2, | 22,000   | Large      |
| Vegetable    | ZYMV                         |          |            |
| Seeds ^f^    |                              |          |            |
|              | Lettuce -- LMV               |          |            |
|              |                              |          |            |
|              | Melon -- CMV, SqMV, WMV2,    |          |            |
|              | ZYMV                         |          |            |
|              |                              |          |            |
|              | Pepper -- CMV, TEV           |          |            |
|              |                              |          |            |
|              | Squash -- CMV, PRSV, WMV2,   |          |            |
|              | ZYMV                         |          |            |
|              |                              |          |            |
|              | Tomato -- Geminivirus, CMV,  |          |            |
|              | TSWV                         |          |            |
|              |                              |          |            |
|              | Watermelon -- CMV, PRSV,     |          |            |
|              | WMV2, ZYMV                   |          |            |
+--------------+------------------------------+----------+------------+
| Syngenta     | Beet -- BNYVV                | 19,000   | Large      |
|              |                              |          |            |
|              | Melon -- CMV, PRSV, WMV2,    |          |            |
|              | ZYMV                         |          |            |
|              |                              |          |            |
|              | Squash -- CMV, PRSV, WMV2,   |          |            |
|              | ZYMV                         |          |            |
|              |                              |          |            |
|              | Sugarbeet -- BNYVV           |          |            |
|              |                              |          |            |
|              | Tomato -- TLYCV              |          |            |
|              |                              |          |            |
|              | Watermelon -- PRSV, ZYMV     |          |            |
+--------------+------------------------------+----------+------------+
| Texas A&M    | Grapefruit -- Closterovirus  | 22,000   | Large      |
|              |                              |          |            |
|              | Sugarcane -- SrMV            |          |            |
+--------------+------------------------------+----------+------------+
| Tuskegee     | Sweet Potato - SPFMV         | 1,047    | Large      |
| University   |                              |          |            |
+--------------+------------------------------+----------+------------+
| University   | Tobacco -- BCTV              | 7,000    | Large      |
| of Arizona   |                              |          |            |
+--------------+------------------------------+----------+------------+
| University   | Tomato -- Geminivirus, ToMV  | 121,726  | Large      |
| of           |                              |          |            |
| California   | Walnut -- CLRV               |          |            |
+--------------+------------------------------+----------+------------+
| University   | Cucumber -- CMV, PRSV, WMV2, | 24,106   | Large      |
| of Florida   | ZYMV                         |          |            |
|              |                              |          |            |
|              | Papaya -- PRSV               |          |            |
|              |                              |          |            |
|              | Peanut -- TSWV               |          |            |
|              |                              |          |            |
|              | Sugarcane -- SCMV, SCYLV     |          |            |
|              |                              |          |            |
|              | Tobacco -- PVY , TEV, ToMoV  |          |            |
|              |                              |          |            |
|              | Tomato -- ToMoV              |          |            |
+--------------+------------------------------+----------+------------+
| University   | Peanut -- GRAV, PStV, TSWV   | 17,800   | Large      |
| of Georgia   |                              |          |            |
|              | Tobacco -- TSWV              |          |            |
+--------------+------------------------------+----------+------------+
| University   | Papaya -- PRSV               | 12,000   | Large      |
| of Hawaii    |                              |          |            |
|              | Pineapple -- PMWaV           |          |            |
|              |                              |          |            |
|              | Banana -- BBTV               |          |            |
|              |                              |          |            |
|              | Dendrobium -- CyMV           |          |            |
|              |                              |          |            |
|              | Lettuce -- TSWV              |          |            |
|              |                              |          |            |
|              | Lime -- CTV                  |          |            |
+--------------+------------------------------+----------+------------+
| University   | Pea -- BYMV, PSbMV, PEMV     | 4,200    | Large      |
| of Idaho     |                              |          |            |
|              | Potato -- BYDV, PLRV, PVX,   |          |            |
|              | PVY, TRV. TVMV               |          |            |
|              |                              |          |            |
|              | Wheat -- BYDV, WSMV          |          |            |
+--------------+------------------------------+----------+------------+
| University   | Soybean -- BPMV              | 12,503   | Large      |
| of Kentucky  |                              |          |            |
|              | Tobacco -- AMV, PVY, TEV,    |          |            |
|              | TSWV, TVMV                   |          |            |
+--------------+------------------------------+----------+------------+
| University   | Papaya -- PRSV               | 625      | Large      |
| of the       |                              |          |            |
| Virgin       |                              |          |            |
| Islands      |                              |          |            |
+--------------+------------------------------+----------+------------+
| United       | Sugarcane -- SCMV            | 2,500    | Large      |
| States Sugar |                              |          |            |
+--------------+------------------------------+----------+------------+
| Upjohn ^m^   | Cucumber -- CMV, PRV, SMV,   | 115,000  | Large      |
|              | WMV2, ZYMV                   |          |            |
|              |                              |          |            |
|              | Lettuce -- TSWV              |          |            |
|              |                              |          |            |
|              | Melon -- CMV, PRV, SMV,      |          |            |
|              | WMV2, ZYMV,                  |          |            |
|              |                              |          |            |
|              | Squash -- CMV, PRV, SMV,     |          |            |
|              | WMV2, ZYMV                   |          |            |
|              |                              |          |            |
|              | Tomato -- CMV, TMV, ToMV,    |          |            |
|              | TSWV                         |          |            |
|              |                              |          |            |
|              | Watermelon -- WMV2, ZYMV     |          |            |
+--------------+------------------------------+----------+------------+
| Virginia     | Potato -- PVY                | 6,194    | Large      |
| Tech         |                              |          |            |
+--------------+------------------------------+----------+------------+
| Yoder        | Chrysanthemum -- TSWV        | 1,100    | Large      |
| Brothers     |                              |          |            |
+--------------+------------------------------+----------+------------+

Source: <http://www.isb.vt.edu/cfdocs/fieldtests1.cfm>

> Notes.
>
> ^a^ Unless otherwise stated, information for this column based on
> parent company level data available from the Duns & Bradstreet market
> spectrum database.
>
> ^b^ Parent company is Syngenta.
>
> ^c^ Parent company is Golden Peanut Company, LLC.
>
> ^d^ Parent company is Dow Chemical.
>
> ^e^ Parent company is U.S. Tobacco.
>
> ^f^ Parent company is Monsanto.
>
> ^g^ Parent company is KWS Saat AG.
>
> ^h^ Parent company is Pepsico.
>
> ^i^ Parent company is Limagrain.
>
> ^j^ Information is from 2003 IRS form 990, obtained using
> GuideStar.org.
>
> ^k^ Part of Cornell University.
>
> ^l^ Parent company is Novartis AG.
>
> ^m^ Parent company is Pfizer.
>
> Abbreviations: AMV = alfalfa mosaic virus; BCRV = black currant
> reversion virus; BCTV = beet curly top virus; BMV = brome mosaic
> virus; BNYVV = beet necrotic yellow vein virus; BPMV = bean pod mottle
> virus; BYDV = barley yellow dwarf virus; BYMV = bean yellow mosaic
> virus; CLRV = cherry leafroll virus; CMV = cucumber mosaic virus; CTV
> = citrus tristeza virus; CyMV = cymbidium mosaic virus; GRAV =
> groundnut rosette assistor virus; MCDV = maize chlorotic dwarf virus;
> MCMV = maize chlorotic mottle virus; MDMV = maize dwarf mosaic virus;
> PEMV = pea enation mosaic virus; PLRV = potato leafroll virus; PMWaV =
> pineapple mealy bug wilt virus; PPV = plum pox virus; PRSV/PRV =
> papaya ringspot virus; PSTV = potato spindle tuber viroid; PVA =
> potato virus A; PVX = potato virus X; PVY = potato virus Y; RBDV =
> raspberry bushy dwarf virus; SbMV = southern bean mosaic virus; SCMV =
> sugarcane mosaic virus; SCYLV = sugarcane yellow leaf virus; SMV =
> soybean mosaic virus; SPFMV = sweet potato feathery mottle virus; SrMV
> = sorghum mosaic virus; SqMV = squash mosaic virus; SYLV = sugarcane
> yellow leaf virus; TEV = tobacco etch virus; TLYCV = tomato yellow
> leaf curl virus; TMV = tobacco mosaic virus; ToMoV = tomato mottle
> virus; ToMV = tomato mosaic virus; ToRSV = tomato ringspot virus; TRV
> = tobacco rattle virus; TSWV = tomato spotted wilt virus; TVMV =
> tobacco vein mottling virus; TYLCV = tomato yellow leaf curl virus;
> WMV2 = watermelon mosaic virus 2; WSMV = wheat streak mosaic virus;
> ZYMV = zucchini yellow mosaic virus.

# Appendix B: List of Many of the World's Largest Seed Companies and Their Acquisitions and/or Subsidiaries {#appendix-b-list-of-many-of-the-worlds-largest-seed-companies-and-their-acquisitions-andor-subsidiaries .unnumbered}

+------------------------------+---------------------------------------+
| **Seed Company**             | > **Subsidiaries/Acquisitions**       |
+==============================+=======================================+
| Royal Barenburg Group        | -   Barenbrug Belgium                 |
|                              |                                       |
| (Netherlands)                | -   Barenbrug China                   |
|                              |                                       |
|                              | -   Barenbrug France                  |
|                              |                                       |
|                              | -   Barenbrug Holland BV              |
|                              |                                       |
|                              | -   Barenbrug Luxembourg              |
|                              |                                       |
|                              | -   Barenbrug Polska                  |
|                              |                                       |
|                              | -   Barenbrug South East              |
|                              |                                       |
|                              | -   Barenbrug UK                      |
|                              |                                       |
|                              | -   Barenbrug USA                     |
|                              |                                       |
|                              | -   Barenbrug Production              |
|                              |                                       |
|                              | -   Heritage Seeds Pty (Australia)    |
|                              |                                       |
|                              | -   Modern Forage Systems Inc         |
|                              |                                       |
|                              | -   New Zealand Agriseeds             |
|                              |                                       |
|                              | -   Palaversich y Cia (Argentina)     |
+------------------------------+---------------------------------------+
| **BASF** (Germany)           | -   SunGene (Germany)                 |
|                              |                                       |
|                              | -   Metanomics                        |
|                              |                                       |
|                              | -   ExSeed Genetics LLC               |
+------------------------------+---------------------------------------+
| **Bayer** (Germany)          | -   Aventis CropScience (6/02)        |
|                              |                                       |
| Subsidiary: Bayer            | -   AgrEvo                            |
| CropScience                  |                                       |
|                              | -   Plant Genetic Systems             |
|                              |                                       |
|                              | -   Nunhems BV                        |
|                              |                                       |
|                              | -   Nunza BV                          |
|                              |                                       |
|                              | -   Sunseeds                          |
|                              |                                       |
|                              | -   Cannon Roth                       |
|                              |                                       |
|                              | -   Pioneer Vegetable Genetics        |
|                              |                                       |
|                              | -   Dessert Seed                      |
|                              |                                       |
|                              | -   Leen de Mos (Neth. & Spain)       |
|                              |                                       |
|                              | -   Castle Seed                       |
|                              |                                       |
|                              | -   Keystone Seed                     |
|                              |                                       |
|                              | -   Genex (Australia)                 |
|                              |                                       |
|                              | -   AgrEvo Cotton Seed Intl.          |
|                              |     (Australia)                       |
|                              |                                       |
|                              | -   Biogenetic Technologies           |
|                              |                                       |
|                              | -   Sementes Ribeiral (Brazil)        |
|                              |                                       |
|                              | -   Mitla Pesquisa Agricola (Brazil)  |
|                              |                                       |
|                              | -   Sementes Fartura (Brazil)         |
|                              |                                       |
|                              | -   Granja 4 Irmaos (Brazil)          |
|                              |                                       |
|                              | -   Associated Farmers Delinting      |
|                              |                                       |
|                              | -   Gustafson (3/04)                  |
+------------------------------+---------------------------------------+
| DLF Trifolium (Denmark)      | -   DLF International Seeds (USA)     |
|                              |                                       |
| DLF Trifolium (continued)    | -   DLF-TRIFOLIUM Ltd. (UK)           |
|                              |                                       |
|                              | -   Hladké Zlvotice s.r.o (Czek Rep.) |
|                              |                                       |
|                              | -   Top Green (France)                |
|                              |                                       |
|                              | -   Prodana Seeds                     |
|                              |                                       |
|                              | -   DLF Group China                   |
|                              |                                       |
|                              | -   Danespo Holding A/S (50%)         |
|                              |                                       |
|                              | -   DLF Seeds Ltd. (NZ)               |
|                              |                                       |
|                              | -   DLF-TRIFOLIUM A/S, Moscow         |
|                              |                                       |
|                              | -   DLF-TRIFOLIUM Deutschland         |
|                              |                                       |
|                              | -   Cebeco Seeds Group (The           |
|                              |     Netherlands)                      |
|                              |                                       |
|                              | -   Cebeco Saaten GMBH                |
|                              |                                       |
|                              | -   Cebeco Seeds S.R.O.               |
|                              |                                       |
|                              | -   Cebeco-Verneuil GMBH & Co. KG     |
|                              |                                       |
|                              | -   Cebeco Zaden B.V.                 |
|                              |                                       |
|                              | -   La Maison Des Gazons S.A.         |
|                              |                                       |
|                              | -   N.V. Zaden Van Engelen S.A.       |
|                              |                                       |
|                              | -   Oliver Seeds Ltd.                 |
|                              |                                       |
|                              | -   Proco Sem S.A.                    |
|                              |                                       |
|                              | -   Seed Innovations Ltd.             |
|                              |                                       |
|                              | -   Wiboltt Fro A/S                   |
+------------------------------+---------------------------------------+
| Delta & Pine Land (USA)      | -   Ellis Brothers Seed               |
|                              |                                       |
|                              | -   Arizona Processing                |
|                              |                                       |
|                              | -   Mississippi Seed Co.              |
|                              |                                       |
|                              | -   Hartz Cotton                      |
|                              |                                       |
|                              | -   Sure Grow Seeds                   |
|                              |                                       |
|                              | -   D&PL South Africa, Inc.           |
|                              |                                       |
|                              | -   D&PL Semillas Ltda (Costa Rica)   |
|                              |                                       |
|                              | -   Deltapine Australia Pty. Ltd.     |
|                              |                                       |
|                              | -   Turk DeltaPine, Inc. (Turkey)     |
|                              |                                       |
|                              | -   Deltapine India Seed Private Ltd. |
|                              |                                       |
|                              | -   D&M International, LLC:           |
|                              |                                       |
|                              | -   D&PL China Pte Ltd.               |
|                              |                                       |
|                              | -   Hebei Ji Dai Cottonseed           |
|                              |     Technology                        |
|                              |                                       |
|                              | -   Company Ltd.                      |
|                              |                                       |
|                              | -   CDM Mandiyu S.R.L. (Argentina)    |
|                              |                                       |
|                              | -   MDM Sementes De Algodao, Ltda.    |
|                              |     (Brazil)                          |
|                              |                                       |
|                              | -   DeltaMax Cotton, LLC (50%)        |
+------------------------------+---------------------------------------+
| Dow Chemical Co. (USA)       | -   Mycogen                           |
|                              |                                       |
| Subsidiary: Dow Agrosciences | -   Agrigenetics                      |
|                              |                                       |
|                              | -   Cargill Hybrid Seeds              |
|                              |                                       |
|                              | -   United Agriseeds                  |
|                              |                                       |
|                              | -   Morgan Seeds (Argentina)          |
|                              |                                       |
|                              | -   Kelten & Lynks                    |
|                              |                                       |
|                              | -   Delta & Pine Land (corn & sorghum |
|                              |     only)                             |
|                              |                                       |
|                              | -   Dinamilho Carol Productos         |
|                              |     (Brazil)                          |
|                              |                                       |
|                              | -   Hibridos Colorado Ltda. (Brazil)  |
|                              |                                       |
|                              | -   FT Biogenetica de Milho (Brazil)  |
|                              |                                       |
|                              | -   Phytogen (w/J.G. Boswell)         |
|                              |                                       |
|                              | -   Empresa Brasileira de Sementes    |
|                              |     (Brazil)                          |
+------------------------------+---------------------------------------+
| Dupont (USA)                 | -   Pioneer Hi-Bred Intl. (USA)       |
|                              |                                       |
|                              | -   Pioneer Argentina S.A.            |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Australia Pty Ltd |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Services GmbH     |
|                              |     (Austria)                         |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Northern Europe   |
|                              |     (Belgium)                         |
|                              |                                       |
|                              | -   Pioneer Sementes Ltda. (Brazil)   |
|                              |                                       |
|                              | -   Pioneer Semena Bulgaria           |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Limited (Canada)  |
|                              |                                       |
|                              | -   Semillas Pioneer Chile Ltda.      |
|                              |                                       |
|                              | -   Shandong Denghai-PIONEER Seeds    |
|                              |     (China)                           |
|                              |                                       |
|                              | -   DuPont de Colombia S.A.           |
|                              |                                       |
|                              | -   Pioneer Sjeme d.o.o. (Croatia)    |
|                              |                                       |
|                              | -   Pineer Hi-Bred Services (Czech    |
|                              |     Rep.)                             |
|                              |                                       |
|                              | -   Misr Pioneer Seed Company (Egypt) |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Seeds (Ethiopia)  |
|                              |                                       |
|                              | -   Pioneer Semences SAS (France)     |
|                              |                                       |
|                              | -   Pioneer Hi-Bred N. Europe         |
|                              |     (Germany                          |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Hellas (Greece)   |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Magyarország Kft. |
|                              |     (Hungary)                         |
|                              |                                       |
|                              | -   PHI Seeds Ltd. (India)            |
|                              |                                       |
|                              | -   PT DuPont Indonesia               |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Italia            |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Japan             |
|                              |                                       |
|                              | -   Farmchem Seedlinks Limited        |
|                              |     (Kenya)                           |
|                              |                                       |
|                              | -   Chemicals & Marketing Co.         |
|                              |     (Malawi)                          |
|                              |                                       |
|                              | -   PHI Mexico SA de CV               |
|                              |                                       |
|                              | -   Pioneer Hi-Bred N. Europe (Neth.) |
|                              |                                       |
|                              | -   Genetic Technologies, Ltd. (New   |
|                              |     Zealand)                          |
|                              |                                       |
|                              | -   Pioneer Pakistan Seed Ltd         |
|                              |                                       |
|                              | -   Melo & Cia, C.A. (Panama)         |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Philippines       |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Services GmbH     |
|                              |     (Poland)                          |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Sementes de       |
|                              |     Portugal                          |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Puerto Rico       |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Seeds Agro        |
|                              |     (Romania)                         |
|                              |                                       |
|                              | -   Pioneer Semena Holding GmbH       |
|                              |     (Russia)                          |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Services (Serbia  |
|                              |     & Montenegro)                     |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Slovensko         |
|                              |     (Slovakia)                        |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Services          |
|                              |     (Slovenia)                        |
|                              |                                       |
|                              | -   Pioneer Hi-Bred RSA (South        |
|                              |     Africa)                           |
|                              |                                       |
|                              | -   South Korea O.M.C.                |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Spain SL          |
|                              |                                       |
|                              | -   Bytrade Tanzania Limited          |
|                              |                                       |
|                              | -   Pioneer Hi-Bred (Thailand) Co.    |
|                              |                                       |
|                              | -   Pioneer Tohumculuk (Turkey)       |
|                              |                                       |
|                              | -   Pioneer Nasinnya Ukraine, LLC     |
|                              |                                       |
|                              | -   Pioneer Hi-Bred N. Europe (UK)    |
|                              |                                       |
|                              | -   Agar Cross Uruguaya S.A           |
|                              |                                       |
|                              | -   Semillas Pioneer de Venezuela     |
|                              |                                       |
|                              | -   Farmchem Services Ltd. (Zambia)   |
|                              |                                       |
|                              | -   Pioneer Hi-Bred Zimbabwe          |
+------------------------------+---------------------------------------+
| **KWS AG** (Germany)         | -   AgReliant (joint venture with     |
|                              |     Limagrain)                        |
|                              |                                       |
|                              | -   AgroMais                          |
|                              |                                       |
|                              | -   APZ                               |
|                              |                                       |
|                              | -   Betaseed                          |
|                              |                                       |
|                              | -   CPB Twyford                       |
|                              |                                       |
|                              | -   KWS ARGENTINA                     |
|                              |                                       |
|                              | -   KWS AUSTRIA SAAT GMBH             |
|                              |                                       |
|                              | -   KWS BENELUX                       |
|                              |                                       |
|                              | -   KWS CHILE                         |
|                              |                                       |
|                              | -   KWS FRANCE                        |
|                              |                                       |
|                              | -   KWS ITALIA                        |
|                              |                                       |
|                              | -   KWS KLOSTERGUT                    |
|                              |                                       |
|                              | -   WIEBRECHTSHAUSEN                  |
|                              |                                       |
|                              | -   KWS MAIS FRANCE                   |
|                              |                                       |
|                              | -   KWS MAIS GMBH                     |
|                              |                                       |
|                              | -   KWS OSIVA s.r.o.                  |
|                              |                                       |
|                              | -   KWS POLSKA                        |
|                              |                                       |
|                              | -   KWS RAGT HYBRID KFT               |
|                              |                                       |
|                              | -   KWS RUS                           |
|                              |                                       |
|                              | -   KWS SAAT AG                       |
|                              |                                       |
|                              | -   KWS SCANDINAVIA AB                |
|                              |                                       |
|                              | -   KWS Semena Bulgaria EOOD          |
|                              |                                       |
|                              | -   KWS Semena d.o.o.                 |
|                              |                                       |
|                              | -   KWS Semena s.r.o.                 |
|                              |                                       |
|                              | -   KWS SEME YU                       |
|                              |                                       |
|                              | -   KWS SEMILLAS IBERICA              |
|                              |                                       |
|                              | -   KWS Sjeme d.o.o.                  |
|                              |                                       |
|                              | -   S.C. KWS Seminte S.R.L.           |
|                              |                                       |
|                              | -   KWS TÜRK                          |
|                              |                                       |
|                              | -   KWS Ukraine T.O.W.                |
|                              |                                       |
|                              | -   Lochow-Petkus GmbH                |
|                              |                                       |
|                              | -   Lochow-Petkus Polska              |
|                              |                                       |
|                              | -   MOMONT                            |
|                              |                                       |
|                              | -   Pan Tohum                         |
|                              |                                       |
|                              | -   PLANTA                            |
|                              |                                       |
|                              | -   Razés Hybrides                    |
|                              |                                       |
|                              | -   SAKA-RAGIS                        |
|                              |                                       |
|                              | -   Semena AG                         |
|                              |                                       |
|                              | -   ZKW                               |
|                              |                                       |
|                              | -   Producers Hybrid                  |
+------------------------------+---------------------------------------+
| Landec Corp. (USA)           | -   Landec Ag Inc. (USA)              |
|                              |                                       |
|                              | -   Heartland Seed                    |
+------------------------------+---------------------------------------+
| Land O Lakes (USA)           | -   Croplan Genetics                  |
|                              |                                       |
|                              | -   Hytest Seeds                      |
|                              |                                       |
|                              | -   Agriliance (joint venture with    |
|                              |     CHS, Inc.)                        |
|                              |                                       |
|                              | -   ABI Alfalfa                       |
|                              |                                       |
|                              | -   Seed Research of Oregon           |
|                              |                                       |
|                              | -   Pickseed Companies Group          |
|                              |                                       |
|                              | -   Seeds Ohio                        |
|                              |                                       |
|                              | -   Forage Genetics Inc.              |
+------------------------------+---------------------------------------+
| Groupe Limagrain (France)    | -   Vilmorin Clause & Cie             |
|                              |                                       |
|                              | -   Advanta BV (European field crop   |
|                              |     division)                         |
|                              |                                       |
|                              | -   Force Limagrain (France)          |
|                              |                                       |
|                              | -   Limagrain (Bulgaria)              |
|                              |                                       |
|                              | -   Limagrain Cental Europe (France)  |
|                              |                                       |
|                              | -   Limagrain Ceska Rep (Czech Rep.)  |
|                              |                                       |
|                              | -   Limagrain Genetics (France)       |
|                              |                                       |
|                              | -   Limagrain (Italia)                |
|                              |                                       |
|                              | -   Limagrain Magyaroszag (Hungary)   |
|                              |                                       |
|                              | -   Limagrain Moldova                 |
|                              |                                       |
|                              | -   Limagrain Nederland               |
|                              |                                       |
|                              | -   Limagrain Nickerson GmbH          |
|                              |     (Germany)                         |
|                              |                                       |
|                              | -   Limagrain Polska (Poland)         |
|                              |                                       |
|                              | -   Limagrain Romania                 |
|                              |                                       |
|                              | -   Limagrain Slovensko               |
|                              |                                       |
|                              | -   Limagrain Verneuil Holding        |
|                              |                                       |
|                              | -   Mais Angevin Nickerson (France)   |
|                              |                                       |
|                              | -   Nickerson UK                      |
|                              |                                       |
|                              | -   Nickerson Intl. Research (France) |
|                              |                                       |
|                              | -   Nickerson Sur (Spain)             |
|                              |                                       |
|                              | -   Soltis (France)                   |
|                              |                                       |
|                              | -   Alliance Semillas (Chile)         |
|                              |                                       |
|                              | -   CHMT (South Africa)               |
|                              |                                       |
|                              | -   Clause Tezier Italia              |
|                              |                                       |
|                              | -   Clause Tezier do Brasil           |
|                              |                                       |
|                              | -   Clause UK                         |
|                              |                                       |
|                              | -   Clause-Tezier Iberica (Spain)     |
|                              |                                       |
|                              | -   Clause Tezier (France)            |
|                              |                                       |
|                              | -   Clause                            |
|                              |                                       |
|                              | -   CNOS Vilmorin (Poland)            |
|                              |                                       |
|                              | -   Ferry-Morse (US)                  |
|                              |                                       |
|                              | -   Flora-Fey (Germany)               |
|                              |                                       |
|                              | -   Flora-Fey (Austria)               |
|                              |                                       |
|                              | -   Harris Moran                      |
|                              |                                       |
|                              | -   Henderson                         |
|                              |                                       |
|                              | -   Kyowa                             |
|                              |                                       |
|                              | -   Marco Polo                        |
|                              |                                       |
|                              | -   Niagra                            |
|                              |                                       |
|                              | -   AgReliant Genetics (joint venture |
|                              |     w/KWS)                            |
|                              |                                       |
|                              | -   AgReliant Genetics US (joint      |
|                              |     venture w/KWS)                    |
|                              |                                       |
|                              | -   Hazera Genetics                   |
|                              |                                       |
|                              | -   Producers Hybrids (acquired by    |
|                              |     AgReliant)                        |
+------------------------------+---------------------------------------+
| Monsanto (USA)               | -   Seminis                           |
|                              |                                       |
|                              | -   Emergent Genetics                 |
|                              |                                       |
|                              | -   American Seeds Inc.               |
|                              |                                       |
|                              | -   Channel Bio Corp.                 |
|                              |                                       |
|                              | -   Crow's Hybrid Corn                |
|                              |                                       |
|                              | -   Midwest Seed Genetics             |
|                              |                                       |
|                              | -   Wilson Seeds                      |
|                              |                                       |
|                              | -   NC+Hybrids                        |
|                              |                                       |
|                              | -   Advanta Canola Seeds              |
|                              |                                       |
|                              | -   Interstate Canola Seeds           |
|                              |                                       |
|                              | -   Asgrow (soybean & corn)           |
|                              |                                       |
|                              | -   Holden's Foundation               |
|                              |                                       |
|                              | -   Jacob Hartz                       |
|                              |                                       |
|                              | -   Hybritech                         |
|                              |                                       |
|                              | -   Calgene                           |
|                              |                                       |
|                              | -   Agracetus                         |
|                              |                                       |
|                              | -   Plant Genetics Inc.               |
|                              |                                       |
|                              | -   Ameri-Can Pedigreed               |
|                              |                                       |
|                              | -   Monsoy (Brazil)                   |
|                              |                                       |
|                              | -   First Line Seeds (Canada)         |
|                              |                                       |
|                              | -   Plant Breeding Intl. (UK)         |
|                              |                                       |
|                              | -   Agroceres (Brazil)                |
|                              |                                       |
|                              | -   Cargill's intl. seed division     |
|                              |                                       |
|                              | -   Dekalb Genetics (USA)             |
|                              |                                       |
|                              | -   Custom Farm Seed                  |
|                              |                                       |
|                              | -   Sensako (South Africa)            |
+------------------------------+---------------------------------------+
| Nidera Corporation (The      | -   Nidera Semillas (Argentina)       |
| Netherlands)                 |                                       |
|                              | -   Nidera Sementes (Brazil)          |
+------------------------------+---------------------------------------+
| **Pannar Group** (South      | -   Pau Seeds USA (formerly owned by  |
| Africa)                      |     Bayer)                            |
|                              |                                       |
|                              | -   Pannar Genetics, Inc.             |
|                              |                                       |
|                              | -   Kaystar Seed                      |
|                              |                                       |
|                              | -   Pannar Seeds, Inc. (US)           |
|                              |                                       |
|                              | -   Kombat (South Africa)             |
|                              |                                       |
|                              | -   Starke Ayres (South Africa)       |
|                              |                                       |
|                              | -   Mascor (South Africa)             |
|                              |                                       |
|                              | -   Pannar Seed Kenya                 |
|                              |                                       |
|                              | -   Pannar Seed Lda (Mozambique)      |
|                              |                                       |
|                              | -   Pannar Seed Z (Zambia)            |
|                              |                                       |
|                              | -   Pannar Seed BV (The Netherlands)  |
+------------------------------+---------------------------------------+
| Saaten-Union GmbH Ltd.       | -   Subsidiary companies in UK,       |
| (Germany)                    |     Poland, France, Romania.          |
|                              |                                       |
|                              | -   Hybrinova (Dupont's hybrid wheat  |
|                              |     business)                         |
|                              |                                       |
|                              | -   Monsanto's hybrid wheat business  |
+------------------------------+---------------------------------------+
| **Sakata** (Japan)           | -   Sakata UK                         |
|                              |                                       |
|                              | -   Sakata Ornamentals UK             |
|                              |                                       |
|                              | -   Sakata Holland                    |
|                              |                                       |
|                              | -   Sakata Ornamentals Europe         |
|                              |     (Denmark)                         |
|                              |                                       |
|                              | -   Frisa Planter (Denmark)           |
|                              |                                       |
|                              | -   Sakata Polska (Poland)            |
|                              |                                       |
|                              | -   Sakata Korea Co.                  |
|                              |                                       |
|                              | -   Sakata Seed (Suzhou) China        |
|                              |                                       |
|                              | -   Sakata Siam Seed (Thailand)       |
|                              |                                       |
|                              | -   Sakata Seed Oceania               |
|                              |                                       |
|                              | -   Sakata Seed Corporation (India)   |
|                              |                                       |
|                              | -   Sakata Vegetables Europe (France) |
|                              |                                       |
|                              | -   Sakata Middle East (Jordan)       |
|                              |                                       |
|                              | -   MayFord Seeds (South Africa)      |
|                              |                                       |
|                              | -   Sakata Vegenetics (South Africa)  |
|                              |                                       |
|                              | -   Sakata Seed Iberica (Spain)       |
|                              |                                       |
|                              | -   Alf Christianson Seed (USA)       |
|                              |                                       |
|                              | -   Sakata Seed America (USA)         |
|                              |                                       |
|                              | -   Sakata Seed de Mexico             |
|                              |                                       |
|                              | -   Sakata Seed de Guatemala          |
|                              |                                       |
|                              | -   Sakata Centroamerica (Costa Rica) |
|                              |                                       |
|                              | -   Sakata Seed Sudamerica (Brazil)   |
|                              |                                       |
|                              | -   Sakata Seed Chile                 |
|                              |                                       |
|                              | -   Sakata Ornamentals (Chile)        |
+------------------------------+---------------------------------------+
| Seminis                      | -   Asgrow Seed Co.                   |
|                              |                                       |
| (sold to Monsanto in 2005)   | -   Petoseed                          |
|                              |                                       |
|                              | -   Royal Sluis                       |
|                              |                                       |
|                              | -   Hungnong Seed Co. (S. Korea)      |
|                              |                                       |
|                              | -   Ang Seed Co. (S. Korea)           |
|                              |                                       |
|                              | -   Sementes Agroceres (vegetable     |
|                              |     seed division)                    |
|                              |                                       |
|                              | -   Barham Seed                       |
+------------------------------+---------------------------------------+
| Svalöf Weibull AB (Sweden)   | -   Danisko Seeds                     |
|                              |                                       |
|                              | -   SW Seed Canada                    |
|                              |                                       |
|                              | -   Newfield Seeds (Canada)           |
|                              |                                       |
|                              | -   Riding Valley Agro (Canada)       |
|                              |                                       |
|                              | -   Promark Seed (Canada)             |
|                              |                                       |
|                              | -   Priority Lab Services (Canada)    |
|                              |                                       |
|                              | -   Wheat City Seed (Canada)          |
+------------------------------+---------------------------------------+
| Syngenta                     | -   Advanta BV (North American corn   |
|                              |     and soybean business -- Garst     |
|                              |     brand)                            |
|                              |                                       |
|                              | -   Petoseed                          |
|                              |                                       |
|                              | -   Bruinsma                          |
|                              |                                       |
|                              | -   Northrup King (NK)                |
|                              |                                       |
|                              | -   Asgrow Vegetable Seeds            |
|                              |                                       |
|                              | -   Funk Seed Intl.                   |
|                              |                                       |
|                              | -   Rogers Bros.                      |
|                              |                                       |
|                              | -   Zaadunie BV (Neth.)               |
|                              |                                       |
|                              | -   McNair Seed                       |
|                              |                                       |
|                              | -   Cokers Pedigreed                  |
|                              |                                       |
|                              | -   Fredonia                          |
|                              |                                       |
|                              | -   Hilleshog                         |
|                              |                                       |
|                              | -   Agritrading                       |
|                              |                                       |
|                              | -   CC Benoist                        |
|                              |                                       |
|                              | -   Maisadour Semences                |
|                              |                                       |
|                              | -   Eridania Beghin-Soy               |
|                              |                                       |
|                              | -   Golden Harvest (6/04)             |
|                              |                                       |
|                              | -   Dia-Engei (Japan) 2/04            |
|                              |                                       |
|                              | -   CHS Research LLC (04)             |
|                              |                                       |
|                              | -   GA21 (technology) (04)            |
+------------------------------+---------------------------------------+
| Takii and Co., Ltd. (Japan)  | -   American Takii, Inc.              |
|                              |                                       |
|                              | -   CTT Seed Co. (Thailand)           |
|                              |                                       |
|                              | -   Qingdao Huang Long (China)        |
|                              |                                       |
|                              | -   T.W. Company (Hong Kong)          |
|                              |                                       |
|                              | -   Takii Chile                       |
|                              |                                       |
|                              | -   Takii Europe (Netherlands)        |
|                              |                                       |
|                              | -   Takii France                      |
|                              |                                       |
|                              | -   Takii Korea Co.                   |
|                              |                                       |
|                              | -   Pahuja Takii Seed (India)         |
|                              |                                       |
|                              | -   Takii do Brasil                   |
+------------------------------+---------------------------------------+

Source: (ETC Group Communique 2005)

# Appendix C: Test Cost Data Used to Calculate Costs for 40 CFR Part 174.27 {#appendix-c-test-cost-data-used-to-calculate-costs-for-40-cfr-part-174.27 .unnumbered}

  ------------------------------------------------------------------------------------------
  **ACTIVITY NUMBER/DESCRIPTION**                    **COSTS**                 
  -------------------------------------------------- ----------- ------------- -------------
                                                                               

                                                     **Low**     **Average**   **High**

  Characterization of genetic insert to confirm      \$1,060     \$1,893       \$2,725
  expected identity                                                            

  Comparison of sequence with naturally occurring    \$7,420     \$13,248      \$19,075
  sequences, if modified; characterization to                                  
  identify/verify expected product produced (plant                             
  expressed)                                                                   

  Surrogate protein production                       \$12,720    \$22,710      \$32,700

  Quantified concentration of protein produced in    \$26,000    \$50,875      \$75,750
  various tissues, e.g., leaf, seed, fruit, pollen,                            
  and whole plant by Western blot or ELISA                                     

  Validated analytical detection method in seed or   \$19,000    \$21,125      \$23,250
  grain, e.g., ELISA or lateral flow strip test                                

  Submission of samples                              \$330       \$495         \$660

  Laboratory and/or greenhouse testing to determine  \$5,000     \$15,000      \$25,000
  sexual compatibility/ability to form a viable                                
  hybrid between the modified crop plant and wild or                           
  weedy relatives in the United States; testing                                
  would begin with the most closely related species                            
  in the same family that occur in the area of                                 
  cultivation.                                                                 

  Description of propensity of the crop plant to     \$5,000     \$15,000      \$25,000
  naturalize, including extent of existing feral                               
  populations (In most cases, sufficient information                           
  can be obtained from literature searches and/or                              
  consultations with breeders. Field surveys may be                            
  required in some instances.)                                                 

  Outcrossing potential -- information on potential  \$50,000    \$150,000     \$250,000
  outcrossing with all wild or weedy relatives with                            
  which the transformed plant can form viable                                  
  hybrids in nature, e.g., degree of sexual                                    
  compatibility, degree of overlap in the geographic                           
  distribution of relatives and crop cultivation                               
  areas, phenology assessment. (Information can be                             
  based upon literature, field experts, breeders,                              
  etc.)                                                                        

  Characterization of hybrids \-- to determine the   \$150,000   \$152,500     \$155,000
  likelihood of introgression of the transgene \--                             
  characterization of crop-relative hybrid fitness                             
  (comparing hybrid and wild or weedy parent, virus                            
  free vrs. virus-infected), including:\                                       
  (a). Seedling emergence/germination rate\                                    
  (b). Vegetative vigor/above and below-ground                                 
  biomass\                                                                     
  (c). Reproductive timing and output, e.g., timing                            
  of flowering and seed set and amount of seed                                 
  produced; for root crops including also size,                                
  mass, and shape of tubers at harvest time\                                   
  (d). Stability of the acquired transgene in the                              
  hybrids and their progeny                                                    

  Studies to evaluate the potential impact of        \$30,000    \$1,035,000   \$2,040,000
  transgene introgression, for example:\                                       
  · plant community dynamics modeling (with hybrids                            
  and plants expected in the communities in which                              
  the hybrids exist)\                                                          
  · plant competition growth chamber studies, e.g.,                            
  series replacement under controlled conditions\                              
  · plant competition mesocosm studies (with hybrids                           
  and plants expected in the communities in which                              
  the hybrids exist)\                                                          
  · field studies, e.g., to investigate impact of                              
  virus infection on wild or weedy relatives of the                            
  modified plant                                                               

  Bioinformatic amino acid sequence comparison of    \$1,700     \$3,550       \$5,400
  short contiguous amino acid segments using an                                
  allergen database to identify any allergens                                  
  containing identical short sequences                                         

  Bioinformatic amino acid sequence search for       \$1,700     \$3,550       \$5,400
  overall similarity with known toxins and allergens                           

  In vitro digestibility in simulated gastric fluid  \$30,000    \$35,000      \$40,000
  and simulated intestinal fluid (as defined in the                            
  U.S. Pharmacopeia)                                                           

  Assessment of heat stability/lability              \$15,000    \$27,500      \$40,000

  Acute oral toxicity study in mice                  \$2,932     \$3,474       \$4,015

  Honey bee testing                                  \$20,000    \$24,250      \$28,500

  Non-target insect testing, Tier I                  \$7,000     \$10,500      \$14,000

  Avian oral, Tier I                                 \$12,000    \$15,000      \$18,000

  Wild mammal testing, Tier I                        \$50,000    \$65,000      \$80,000

  Estuarine and marine animal testing, Tier I        \$32,000    \$40,000      \$48,000

  Freshwater fish testing, Tier I                    \$30,000    \$37,500      \$45,000

  Freshwater aquatic invertebrate testing, Tier I    \$30,000    \$37,500      \$45,000

  Registration Fee                                   \$131,250   \$249,375     \$367,500
  ------------------------------------------------------------------------------------------

The following companies provided unit cost estimates included in this
table: Biomatica, Inc., CA Agricultural research, Central California
Research Laboratories, Inc. Central Science Laboratory, Central Science
Laboratory, Huntingdon Research Centre Ltd., IIT Research Insitute, PTRL
West, SafePharm Laboratories Ltd., Springborn Laboratories Inc.,
Stillmeadow Inc., WIL Research Laboratories Ind., Wildlife International
Ltd., and other firms that requested anonymity. Best professional
estimates from SciReg were used where test costs were not available from
a laboratory.

# Appendix D: USDA's Biotechnology Deregulation Process {#appendix-d-usdas-biotechnology-deregulation-process .unnumbered}

The U.S. Department of Agriculture's (USDA) Animal and Plant Health
Inspection Service (APHIS), through its Biotechnology Regulatory
Services (BRS) program, is responsible for regulating the importation,
movement, and field release of genetically engineered (GE) plants,
insects, micro-organisms, and any other organism that is known to be, or
could be, a plant pest.

APHIS's biotechnology regulations are designed to ensure that GE
organisms, such as virus-resistant papayas, are just as safe for
agriculture and the environment as traditionally bred crop varieties. In
regulating biotechnology, BRS works in concert with the Environmental
Protection Agency (EPA) and the Food and Drug Administration (FDA),
which also play important roles in protecting agriculture, food safety,
and the environment. BRS involvement begins when a person or
organization wishes to import, move interstate, or field-test a GE
plant, which is done under the program's permitting and notification
system.

After several years of field testing and data collection, a company or
researcher may choose to begin preparing for commercialization. At this
point, an applicant typically files a petition for the determination of
non-regulated status with USDA, which means the applicant has gathered
enough data to demonstrate that the new crop variety is not a plant
pest, poses no threat to agriculture or the environment, and should no
longer be regulated by USDA. Depending on the product, reviews by FDA
and EPA may also be required.

The petition for deregulation must include:

-   A description of the biology and taxonomy of the conventional plant
    variety that was used to produce the GE version.

-   A detailed description of the differences in genotype between the GE
    plant and the original plant. The description must include all
    scientific, common, or trade names, and all designations necessary
    to identify the donor organism (where the new genetic material came
    from), the nature of the transformation system (how that genetic
    material was inserted), the inserted genetic material, and the GE
    plant. Information about the locations of the origin and processing
    of the plant, the donor organism, the original plant, vector
    organisms (if used), and any other regulated articles must be
    included.

-   A detailed description of the phenotype of the GE plant. The
    description must cover known and potential differences from the
    original plant that would substantiate that the regulated article is
    unlikely to pose a greater plant pest risk than the original plant
    from which it was derived. This description may include plant pest
    risk characteristics, disease and pest susceptibilities, expression
    of the gene product, new enzymes or changes to plant metabolism,
    weediness of the GE plant, impact on the weediness of any other
    plant with which it can interbreed, agricultural or cultivation
    practices, effects of the regulated article on non-target organisms,
    indirect plant pest effects on other agricultural products, transfer
    of genetic information to organisms with which it cannot interbreed,
    and any other information that BRS requests. Any other information
    known to the petitioner that indicates that a GE plant may pose a
    greater plant pest risk than the original plant must also be
    included.

-   Relevant experimental data and publications.

-   Field-test reports for all trials conducted under permit or
    notification procedures involving the GE plant. These reports must
    include the methods of observation, resulting data, and analysis
    regarding all deleterious effects on plants, non-target organisms,
    and the environment.

# Appendix E: Burden Hours and Estimates Used to Calculate Compliance Costs for 40 CFR Part 174.27 {#appendix-e-burden-hours-and-estimates-used-to-calculate-compliance-costs-for-40-cfr-part-174.27 .unnumbered}

<table style="width:100%;">
<colgroup>
<col style="width: 1%" />
<col style="width: 17%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 10%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="2" rowspan="2"><strong>PCVP-PIPs Burden
Activities</strong></td>
<td colspan="9"><strong>Technical Burden Hours</strong></td>
</tr>
<tr class="even">
<td><strong>Case Study 1</strong></td>
<td><strong>Case Study 2</strong></td>
<td><strong>Case Study 3</strong></td>
<td><strong>Case Study 4</strong></td>
<td><strong>Case Study 5</strong></td>
<td><strong>Case Study 6</strong></td>
<td><strong>Case Study 7</strong></td>
<td><strong>Case Study 8</strong></td>
<td><strong>Case Study 9</strong></td>
</tr>
<tr class="odd">
<td colspan="2"><strong>OPTION 1</strong></td>
<td colspan="9"></td>
</tr>
<tr class="even">
<td>1.</td>
<td>Read instructions</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td>2.</td>
<td>Plan activities</td>
<td>1.0</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>1.0</td>
<td>1.0</td>
<td>1.5</td>
<td>2.0</td>
</tr>
<tr class="even">
<td>3.</td>
<td>Create information</td>
<td>4.5</td>
<td>2.3</td>
<td>2.5</td>
<td>2.5</td>
<td>2.5</td>
<td>5.5</td>
<td>6.0</td>
<td>8.0</td>
<td>12.0</td>
</tr>
<tr class="odd">
<td>4.</td>
<td>Gather information</td>
<td>2.3</td>
<td>1.5</td>
<td>1.5</td>
<td>1.5</td>
<td>1.5</td>
<td>3.5</td>
<td>4.0</td>
<td>4.0</td>
<td>4.0</td>
</tr>
<tr class="even">
<td>5.</td>
<td>Compile and review</td>
<td>0.8</td>
<td>0.8</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td>6.</td>
<td>Complete paperwork</td>
<td>1.1</td>
<td>1.1</td>
<td>1.5</td>
<td>1.5</td>
<td>1.5</td>
<td>1.5</td>
<td>1.5</td>
<td>3.0</td>
<td>3.0</td>
</tr>
<tr class="even">
<td>7.</td>
<td>Maintain and file</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>1.0</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td>8.</td>
<td>Additional activities</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
</tr>
<tr class="even">
<td></td>
<td>Total technical hours ($49.50/hr)<sup>a</sup></td>
<td>12</td>
<td>8</td>
<td>9</td>
<td>9</td>
<td>9</td>
<td>15</td>
<td>16</td>
<td>20</td>
<td>25</td>
</tr>
<tr class="odd">
<td></td>
<td>Total managerial hours<sup>b</sup> ($57.35/hr)<sup>a</sup></td>
<td>2</td>
<td>2</td>
<td>2</td>
<td>2</td>
<td>2</td>
<td>3</td>
<td>3</td>
<td>4</td>
<td>5</td>
</tr>
<tr class="even">
<td></td>
<td>Total clerical hours<sup>c</sup> ($25.21/hr)<sup>a</sup></td>
<td>10</td>
<td>10</td>
<td>10</td>
<td>10</td>
<td>10</td>
<td>10</td>
<td>10</td>
<td>10</td>
<td>10</td>
</tr>
<tr class="odd">
<td></td>
<td><strong>UNIT BURDEN</strong></td>
<td>24</td>
<td>20</td>
<td>21</td>
<td>21</td>
<td>21</td>
<td>28</td>
<td>29</td>
<td>34</td>
<td>40</td>
</tr>
<tr class="even">
<td></td>
<td><strong>COST BURDEN</strong></td>
<td>$940</td>
<td>$770</td>
<td>$810</td>
<td>$810</td>
<td>$810</td>
<td>$1,140</td>
<td>$1,190</td>
<td>$1,470</td>
<td>$1,750</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td colspan="11"><p><sup>a</sup> Wage rates are U.S. Department of
Labor’s Employment reported employer costs per hour worked for employee
compensation for private industries. The wage rates include wages and
salaries, and benefit costs — including paid leave, supplemental pay,
insurance, retirement and savings, legally required benefits, severance
pay, and supplemental unemployment benefits. <a
href="http://www.bls.gov/news.release/ecec.t11.htm"><strong>http://www.bls.gov/news.release/ecec.t11.htm</strong></a>.
These wages are for the period ending December 2005 and were last
updated in March 2006.</p>
<p><sup>b</sup> EPA estimated the managerial labor burden to equal to 20
percent of the technical labor burden.</p>
<p><sup>c</sup> EPA estimated the clerical labor burden to equal ten
hours under each case study scenario.</p></td>
</tr>
</tbody>
</table>

  -------------- ----------------- ------------- -------- -------- -------- -------- --------- --------- --------- ---------
  **PCVP-PIPs                      **Technical                                                                     
  Burden                           Burden                                                                          
  Activities**                     Hours**                                                                         

                                   **Case Study  **Case   **Case   **Case   **Case   **Case    **Case    **Case    **Case
                                   1**           Study    Study    Study    Study    Study 6** Study 7** Study 8** Study 9**
                                                 2**      3**      4**      5**                                    

  **OPTION 2**                                                                                                     

  1\.            Read instructions 1.0           1.0      1.0      1.0      1.0      1.0       1.0       1.0       1.0

  2\.            Plan activities   1.0           0.5      0.5      0.5      0.5      1.0       1.0       1.5       2.0

  3\.            Create            5.5           2.5      2.5      2.5      2.5      5.5       6.0       8.0       12.0
                 information                                                                                       

  4\.            Gather            2.5           1.5      1.5      1.5      1.5      3.5       4.0       4.0       4.0
                 information                                                                                       

  5\.            Compile and       1.0           1.0      1.0      1.0      1.0      1.0       1.0       1.0       1.0
                 review                                                                                            

  6\.            Complete          1.5           1.5      1.5      1.5      1.5      1.5       1.5       3.0       3.0
                 paperwork                                                                                         

  7\.            Maintain and file 0.5           0.5      0.5      0.5      0.5      0.5       0.5       1.0       1.0

  8\.            Additional        0.5           0.5      0.5      0.5      0.5      0.5       0.5       0.5       0.5
                 activities                                                                                        

                 Total technical   14            9        9        9        9        15        16        20        25
                 hours                                                                                             
                 (\$49.50/hr)^a^                                                                                   

                 Total managerial  3             2        2        2        2        3         3         4         5
                 hours^b^                                                                                          
                 (\$57.35/hr)^a^                                                                                   

                 Total clerical    10            10       10       10       10       10        10        10        10
                 hours^c^                                                                                          
                 (\$25.21/hr)^a^                                                                                   

                 **UNIT BURDEN**   27            21       21       21       21       28        29        34        40

                 **COST BURDEN**   \$1,090       \$810    \$810    \$810    \$810    \$1,140   \$1,190   \$1,470   \$1,750
  -------------- ----------------- ------------- -------- -------- -------- -------- --------- --------- --------- ---------

^a^ Wage rates are U.S. Department of Labor's Employment reported
employer costs per hour worked for employee compensation for private
industries. The wage rates include wages and salaries, and benefit costs
--- including paid leave, supplemental pay, insurance, retirement and
savings, legally required benefits, severance pay, and supplemental
unemployment benefits.
[**http://www.bls.gov/news.release/ecec.t11.htm**](http://www.bls.gov/news.release/ecec.t11.htm).
These wages are for the period ending December 2005 and were last
updated in March 2006.

^b^ EPA estimated the managerial labor burden to equal to 20 percent of
the technical labor burden.

^c^ EPA estimated the clerical labor burden to equal 10 hours under each
case study scenario.

<table style="width:100%;">
<colgroup>
<col style="width: 1%" />
<col style="width: 17%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 10%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="2" rowspan="2"><strong>PCVP-PIPs Burden
Activities</strong></td>
<td colspan="9"><strong>Technical Burden Hours</strong></td>
</tr>
<tr class="even">
<td><strong>Case Study 1</strong></td>
<td><strong>Case Study 2</strong></td>
<td><strong>Case Study 3</strong></td>
<td><strong>Case Study 4</strong></td>
<td><strong>Case Study 5</strong></td>
<td><strong>Case Study 6</strong></td>
<td><strong>Case Study 7</strong></td>
<td><strong>Case Study 8</strong></td>
<td><strong>Case Study 9</strong></td>
</tr>
<tr class="odd">
<td colspan="2"><strong>OPTION 3</strong></td>
<td colspan="9"></td>
</tr>
<tr class="even">
<td>1.</td>
<td>Read instructions</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td>2.</td>
<td>Plan activities</td>
<td>1.0</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>1.0</td>
<td>1.0</td>
<td>1.5</td>
<td>2.0</td>
</tr>
<tr class="even">
<td>3.</td>
<td>Create information</td>
<td>4.5</td>
<td>2.3</td>
<td>3.0</td>
<td>3.0</td>
<td>3.0</td>
<td>6.0</td>
<td>6.0</td>
<td>8.0</td>
<td>12.0</td>
</tr>
<tr class="odd">
<td>4.</td>
<td>Gather information</td>
<td>2.3</td>
<td>1.5</td>
<td>2.0</td>
<td>2.0</td>
<td>2.0</td>
<td>4.0</td>
<td>4.0</td>
<td>4.0</td>
<td>4.0</td>
</tr>
<tr class="even">
<td>5.</td>
<td>Compile and review</td>
<td>0.8</td>
<td>0.8</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td>6.</td>
<td>Complete paperwork</td>
<td>1.1</td>
<td>1.1</td>
<td>1.5</td>
<td>1.5</td>
<td>1.5</td>
<td>1.5</td>
<td>1.5</td>
<td>3.0</td>
<td>3.0</td>
</tr>
<tr class="even">
<td>7.</td>
<td>Maintain and file</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>1.0</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td>8.</td>
<td>Additional activities</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
</tr>
<tr class="even">
<td></td>
<td>Total technical hours ($49.50/hr)<sup>a</sup></td>
<td>12</td>
<td>8</td>
<td>10</td>
<td>10</td>
<td>10</td>
<td>16</td>
<td>16</td>
<td>20</td>
<td>25</td>
</tr>
<tr class="odd">
<td></td>
<td>Total managerial hours<sup>b</sup> ($57.35/hr)<sup>a</sup></td>
<td>2</td>
<td>2</td>
<td>2</td>
<td>2</td>
<td>2</td>
<td>3</td>
<td>3</td>
<td>4</td>
<td>5</td>
</tr>
<tr class="even">
<td></td>
<td>Total clerical hours<sup>c</sup> ($25.21/hr)<sup>a</sup></td>
<td>10</td>
<td>10</td>
<td>10</td>
<td>10</td>
<td>10</td>
<td>10</td>
<td>10</td>
<td>10</td>
<td>10</td>
</tr>
<tr class="odd">
<td></td>
<td><strong>UNIT BURDEN</strong></td>
<td>24</td>
<td>20</td>
<td>22</td>
<td>22</td>
<td>22</td>
<td>29</td>
<td>29</td>
<td>34</td>
<td>40</td>
</tr>
<tr class="even">
<td></td>
<td><strong>COST BURDEN</strong></td>
<td>$940</td>
<td>$770</td>
<td>$860</td>
<td>$860</td>
<td>$860</td>
<td>$1,190</td>
<td>$1,190</td>
<td>$1,470</td>
<td>$1,750</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td colspan="11"><p><sup>a</sup> Wage rates are U.S. Department of
Labor’s Employment reported employer costs per hour worked for employee
compensation for private industries. The wage rates include wages and
salaries, and benefit costs — including paid leave, supplemental pay,
insurance, retirement and savings, legally required benefits, severance
pay, and supplemental unemployment benefits. <a
href="http://www.bls.gov/news.release/ecec.t11.htm"><strong>http://www.bls.gov/news.release/ecec.t11.htm</strong></a>.
These wages are for the period ending December 2005 and were last
updated in March 2006.</p>
<p><sup>b</sup> EPA estimated the managerial labor burden to equal to 20
percent of the technical labor burden.</p>
<p><sup>c</sup> EPA estimated the clerical labor burden to equal ten
hours under each case study scenario.</p></td>
</tr>
</tbody>
</table>

  -------------- ----------------- ------------- -------- -------- -------- -------- --------- --------- --------- ---------
  **PCVP-PIPs                      **Technical                                                                     
  Burden                           Burden                                                                          
  Activities**                     Hours**                                                                         

                                   **Case Study  **Case   **Case   **Case   **Case   **Case    **Case    **Case    **Case
                                   1**           Study    Study    Study    Study    Study 6** Study 7** Study 8** Study 9**
                                                 2**      3**      4**      5**                                    

  **OPTION 4**                                                                                                     

  1\.            Read instructions 1.0           1.0      1.0      1.0      1.0      1.0       1.0       1.0       1.0

  2\.            Plan activities   1.0           0.5      0.5      0.5      0.5      1.0       1.0       1.5       2.0

  3\.            Create            6.0           3.0      3.0      3.0      3.0      6.0       6.0       8.0       12.0
                 information                                                                                       

  4\.            Gather            3.0           2.0      2.0      2.0      2.0      4.0       4.0       4.0       4.0
                 information                                                                                       

  5\.            Compile and       1.0           1.0      1.0      1.0      1.0      1.0       1.0       1.0       1.0
                 review                                                                                            

  6\.            Complete          1.5           1.5      1.5      1.5      1.5      1.5       1.5       3.0       3.0
                 paperwork                                                                                         

  7\.            Maintain and file 0.5           0.5      0.5      0.5      0.5      0.5       0.5       1.0       1.0

  8\.            Additional        0.5           0.5      0.5      0.5      0.5      0.5       0.5       0.5       0.5
                 activities                                                                                        

                 Total technical   15            10       10       10       10       16        16        20        25
                 hours                                                                                             
                 (\$49.50/hr)^a^                                                                                   

                 Total managerial  3             2        2        2        2        3         3         4         5
                 hours^b^                                                                                          
                 (\$57.35/hr)^a^                                                                                   

                 Total clerical    10            10       10       10       10       10        10        10        10
                 hours^c^                                                                                          
                 (\$25.21/hr)^a^                                                                                   

                 **UNIT BURDEN**   28            22       22       22       22       29        29        34        40

                 **COST BURDEN**   \$1,140       \$860    \$860    \$860    \$860    \$1,190   \$1,190   \$1,470   \$1,750
  -------------- ----------------- ------------- -------- -------- -------- -------- --------- --------- --------- ---------

^a^ Wage rates are U.S. Department of Labor's Employment reported
employer costs per hour worked for employee compensation for private
industries. The wage rates include wages and salaries, and benefit costs
--- including paid leave, supplemental pay, insurance, retirement and
savings, legally required benefits, severance pay, and supplemental
unemployment benefits.
[**http://www.bls.gov/news.release/ecec.t11.htm**](http://www.bls.gov/news.release/ecec.t11.htm).
These wages are for the period ending December 2005 and were last
updated in March 2006.

^b^ EPA estimated the managerial labor burden to equal to 20 percent of
the technical labor burden.

^c^ EPA estimated the clerical labor burden to equal 10 hours under each
case study scenario.

The following explains the tasks involved in the PVCP-PIP burden
activities.

1\. *Read Instructions.* This activity includes time spent:

a.  Reviewing the data needs for EPA registration for PVCP-PIPs to
    understand what data are to be submitted. EPA recognizes that time
    is required to review and understand the standard or test protocol
    under consideration, once the decision is made to submit a PVCP-PIP
    for registration. A company may need to receive clarification form
    EPA, which would also be considered part of this activity.

b.  Discussing the scope and test protocols of data requirements among
    staff within the company, and/or with EPA.

2\. *Plan Activities*. Includes time spent to develop the company plan
for data acquisition and submission.

3\. *Create Information*. This activity includes time spent on
conducting field surveys, administering tests, analyzing test data,
performing laboratory analyses, and writing documents. Time spent in
creating information during the course of PVCP-PIP product development
is not included in burden hours, since time spent on these activities is
not spent specifically to apply for registration under FIFRA.
Information created by the company is considered a separate activity
from gathering information from other sources (see next burden activity
below).

4\. *Gather Information*. Data required may be collected from various
sources. Gathering information may include compiling information from
web sites (e.g. USDA), literature searches, field surveys, and/or
breeder records, such as, source of genetic material including viral
pathotype, description of development and production process, and
characterization of genetic inserts. All effort associated with
searching for data that will satisfy PVCP-PIP data needs is considered
part of this activity.

5\. *Compile and Review*. Information that meets the requirements for
PVCP-PIP data needs must be validated for accuracy before it is
submitted to EPA. Given that the requested information may come from a
variety of sources, such as web sites, literature searches, and breeder
records and consultations, information must be assembled and evaluated
based on the study methods used, test results obtained, and
interpretation of that data.

6\. *Complete Paperwork*. Time spent by managerial, technical, and
clerical staff to complete forms, reports, and data submissions to
comply with the PVCP-PIP data needs is considered part of this activity.
Specifically, this includes recording, disclosing and/or displaying
information, and preparing necessary correspondence, documents, and
packages for submitting data to EPA.

7\. *Maintain and File*. This activity describes the burden associated
with filing and maintaining PVCP-PIP-related data requirements. Time
spent to organize the data requirements information into a file system
is also included as part of this activity.

8\. *Additional Activities*. If additional activities are performed but
are not addressed in the seven steps described above, time spent on
these additional activities is included here.

# Appendix F: High and Low Compliance Cost Estimates for Four Alternative Options per Registration and/or Exemption {#appendix-f-high-and-low-compliance-cost-estimates-for-four-alternative-options-per-registration-andor-exemption .unnumbered}

  ---------------- ----------- ------------------ ----------- ------------ ------------
                   **Range**   **COSTS                                     
                               (thousands)**                               

                               **Average Burden                            
                               and Test Costs**                            

                               **Baseline         **Option    **Option 2** **Option 3**
                               (Registration)**   1**                      

  Case Study 1     Low         \$190              \$1         \$40         \$1

                   High        \$520              \$1         \$120        \$1

  Case Study 2     Low         \$140              \$1         \$10         \$1

                   High        \$400              \$1         \$30         \$1

  Case Study 3     Low         \$340              \$110       \$110        \$340

                   High        \$800              \$230       \$230        \$800

  Case Study 4     Low         \$140              \$10        \$10         \$140

                   High        \$420              \$50        \$50         \$420

  Case Study 5     Low         \$140              \$10        \$10         \$140

                   High        \$400              \$30        \$30         \$400

  Case Study 6     Low         \$190              \$60        \$60         \$190

                   High        \$530              \$160       \$160        \$530

  Case Study 7     Low         \$340              \$340       \$340        \$340

                   High        \$740              \$740       \$740        \$740

  Case Study 8     Low         \$420              \$420       \$420        \$420

                   High        \$2,970            \$2,970     \$2,970      \$2,970

  Case Study 9     Low         \$670              \$670       \$670        \$670

                   High        \$3,370            \$3,370     \$3,370      \$3,370
  ---------------- ----------- ------------------ ----------- ------------ ------------

[^1]: United States Department of Agriculture, Economic Research
    Service, "The Seed Industry in U.S. Agriculture: An Exploration of
    Data and Information on Crop Seed Markets, Regulation, Industry
    Structure, and Research and Development." Agriculture Information
    Bulletin Number 786, January 2004, page 18.

[^2]: Seed industry elements are taken from United States Department of
    Agriculture, Economic Research Service, "The Seed Industry in U.S.
    Agriculture: An Exploration of Data and Information on Crop Seed
    Markets, Regulation, Industry Structure, and Research and
    Development." Agriculture Information Bulletin Number 786, January
    2004. Detailed information characterizing each element is provided
    on pages 28 to 29 of this report. The report also includes seed
    conditioning as an element of the U.S. seed industry; however, due
    to the general nature of this industry overview, seed conditioning
    is not included in this section.

[^3]: Unless otherwise noted, information presented in this section is
    taken from United States Department of Agriculture, Economic
    Research Service (2004).

[^4]: United States Department of Agriculture, Economic Research
    Service, "The Seed Industry in U.S. Agriculture: An Exploration of
    Data and Information on Crop Seed Markets, Regulation, Industry
    Structure, and Research and Development." Agriculture Information
    Bulletin Number 786, January 2004.

[^5]: Appendix B provides a detailed chart of the parent companies and
    associated subsidiaries for the seed industry.

[^6]: found at http://www.nbiap.vt.edu/cfdocs/fieldtests1.cfm

[^7]: The reference numbers for this ICR are EPA ICR #1693.04; OMB
    control #2070-0142 (August 2003).

[^8]: For this reason, we assume that outcrossing potential and hybrid
    characterization would be required for 50 percent of PVCP-PIPs like
    case study 3.

[^9]: Even though we average compliance cost over a sample that was
    generated from 5,000 different sets of random draws, the cost
    estimates are stable well before the end of this sample.