Standing Committee Symposium on The Role of Private Institutions in Public Environmental Decisionmaking: Negotiated Rulemaking: C. Industry -- Environmentalist Negotiation: The FIFRA Experience

Standing Committee Symposium on The Role of Private Institutions in Public Environmental Decisionmaking: Negotiated Rulemaking: C. Industry — Environmentalist Negotiation: The FIFRA Experience

Scott Ferguson

Scott Ferguson is Vice President and General Counsel, National Agricultural Chemicals Association, Washington, DC.

I am not an expert at negotiation. I did participate, however, in a recent effort to amend the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).¹ Many people feel that this effort was a significant step toward resolving some of the major differences between our industry (the agricultural chemical pesticide industry) and the environmental community. I was asked to speak about these negotiations.

Over the last two years, our industry has negotiated with a coalition of about 40 environmental and health interest organizations, including the Natural Resources Defense Council (NRDC), Sierra Club, AFL-CIO, and Ralph Nader's Congress Watch. We were able to reach an agreement with the coalition on a number of very troublesome issues, which is now in Congress being considered for legislation.

Our negotiations were done primarily behind closed doors. It was a nonstructured, gloves off, face-to-face negotiation with the other side.

About two years ago, the National Agricultural Chemicals Association (NACA) was very interested in changing the patent laws, to restore at least a portion of the time that a patent holder loses in trying to get a pesticide product registered. Certain environmentalist groups found out about our efforts to pass this patent term restoration legislation, apparently by accident. They went to their friends in Congress, persuaded them to put a hold on that legislation, then came to us and said: "If you want to have that hold lifted, you have to negotiate on FIFRA."

After we recovered from our surprise, we were able to sit down with the environmentalists, in the fall of 1984, to explore some of the issues. Then, in the following year, with the beginning of a new session of Congress, we got down to the real business of negotiation.

I would like to describe first the mechanics of our negotiations; second, a little bit about the strategy — both our own and that of the environmentalists, as we understood it; and finally, some conclusions that we reached about these negotiations.

We had on our side three to four negotiators from some of our major member companies — DuPont, FMC, Eli Lilly, and Shell — and myself. The environmentalists had two negotiators: Al Meyerhoff from the NRDC and Nancy Drabble from Ralph Nader's Congress Watch. Over the next year and a half, we did not change the players except in a few isolated instances when we needed some special expertise.

We had no observers. Everything was confidential. This was important in the negotiations because, frankly, we did not trust each other as institutions. Over the course of time, however, we began to have increasing trust of each other as individuals.

We did have some lawyers negotiating, although perhaps the most effective members in our group were the technical people. They were able to tell us what was going on within the agency, what the problems had been historically, and, in technical terms, what could and could not be done. The lawyers who were present were not so much advocates as they were mechanics, of a sort, trying to help find the solution to a problem and then make it suitable for legislation.

We made a conscious decision early on to bring in the key management players in both sides of the negotiation. If we did reach agreement, we wanted to ensure that there would be sufficient "critical mass" to carry the legislation forward and to influence, if not dictate, the terms of the discussion as the bill went to Congress. That plan has succeeded pretty well. We have brought in some collateral issues, and both sides have given some ground, but for the most part the core agreement that we reached has hung together.

In these negotiations, we talked primarily about issues of concern to the agricultural chemical companies. That focus has led to criticism by others outside the negotiations. There is no question that the work of these companies, representing our industry, has had and continues to have the greatest influence on the issues that we resolved. Unfortunately, some interested parties had to be temporarily left out in the negotiations.

A second potential problem had to do with differences in the two sides' approach toward the negotiations. When we first sat down, the environmentalists wanted to start negotiating legislative language. I insisted that we not do so. That position turned out to be the correct decision, because we constructively spent the next two or three months negotiating the concepts, the basic outlines of the amendments, which were complex enough. These concepts were later distilled into an agreement that we took to our principals. This approach was very helpful to both sides.

First of all, our principals did not care to focus on the details of legislative drafting. They were used to dealing with the larger concepts. Secondly, it gave us considerable latitude, as negotiators, in shaping the subsequent discussions and the legislation we drafted together later. We used the ambiguity of the agreement in principle to our mutual advantage. We were able to bring two very different parties together on the basic principles, with the environmental coalition interpreting the agreement one way and we interpreting it another, but it gave forward progress to the negotiation and a basis for discussion about specific legislative language.

At our negotiations, each side came to the table with certain biases, prejudices, and assumptions that we needed to clear out of the way. We continued to shed some of these throughout the negotiations. There might be a temptation for the environmental coalition, for example, to view FIFRA as a statute that should operate like all other "environmental" statutes. To our industry, however, FIFRA is a very different kind of statute. It is not just an environmental statute, but really gives the basic structure to our industry and is viewed as an anomaly within the Environmental Protection Agency (EPA).

At our meetings we also tried to avoid terms like zero risk, nondegradation, risk-benefit, and other "hot buttons" and "sacred cows," that one side or the other felt were very important or non-negotiable. Rather than using the terms, then, we tried to talk around them, while continuing to focus substantively on whatever we were trying to accomplish. In this way we were able to reach agreement without doing serious damage to any of the slogans that both sides felt were essential [17 ELR 10250] to protect. This was particularly important in our negotiation on ground water.

These negotiations would not have succeeded if we had not maintained confidentiality. For one thing, it avoided posturing on either side. Perhaps even more importantly, it allowed both sides the flexibility to be able to explore with each other different concepts, to take different positions, try them out on the other side, back off, and try to move toward an agreement. We were not constantly eating our words in the press, or, from the industry's perspective, having our principals, members and allies back home read about a position and draw a negative conclusion before we were able to explain to them that perhaps we were right.

Intimidation did not work in our negotiations. Initially, one party, perhaps out of frustration and overestimation of the leverage that could be applied in this way, started to threaten litigation if we did not agree to certain proposals. This approach did not succeed with us. In a similar vein, in previous negotiations and in other contexts, we have often found that when we sit down with environmentalists, they will first berate us on how bad an industry they believed we were, and how we were not dealing with their problems and concerns. This approach does not encourage our cooperation in negotiations.

Perhaps because they were confidential, our negotiations were very businesslike, very cooperative, very gentlemanly.

Honesty played an important role. Although initially we did not trust each other, we realized from the beginning that we had to develop and maintain absolute credibility. We succeeded, in part because we realized that there was nothing to be gained by misleading, or arguing in a way that might be misinterpreted. We knew that ultimately others would scrutinize our work.

In some cases, disarming candor was used as a tactical measure. It is hard to argue, in the face of reports of pesticide-contaminated watermelons, milk, and ground water, that there is no problem. As the environmentalists began to document the problem in our negotiations, we said: "Fine, we agree. Now let's help solve the problem." This approach got us quickly on the right track.

We also strived to be very honest about the reasons that we took certain positions. For example: The penalty provisions of FIFRA are not particularly onerous for most pesticide producers — only $5,000 per violation. This is fairly low as environmental penalties go, and we readily agreed to increase penalties up to $25,000 per violation. The environmentalists wanted them at $50,000. We said: "No — We just do not want to pay any more." We could have argued deterrent effect, economic impact, and many other things. But that would have been window dressing for the true reason. We had offered to increase the penalty over five times, from $5,000 to $25,000, and that was enough.

We took a unique approach to drafting. The environmentalists told us early on that, after we finished negotiating the agreement in principle, they would not have the resources to devote to significant legislative drafting. This could have been a major tactical problem for them, because we, like others, like to argue off our own drafts. In order to maintain the dialogue on a cooperative basis, however, we agreed to do the drafting, to whatever extent that the environmentalists desired. Our effort would be simply a clerical function and we would not use the drafting process as a means of continuing the negotiation or getting an advantage.

We put together a draft and brought it to the table. If the environmentalists did not like it because it did not reflect the agreement, we trashed it. We came back and tried again. This approach helped to preserve the trust and rapport that were essential.

Let me turn now to the negotiation strategy. Both our group and the environmentalists were always looking toward the decision maker, namely, Capitol Hill. We were thinking about what we would have to do to justify our position if there were a stalemate. We both wanted the high ground.

For example: One of the topics for discussion was the process of re-registration, in which the agency re-examines the data supporting registration of a given pesticide, and then re-registers it. In testimony, EPA stated that this process would take twenty years. At our negotiations, both sides agreed that twenty years was too long. Seizing the high ground, we readily agreed with the environmentalists at the outset that re-registration should take no longer than seven or eight years.

In these days of Gramm-Rudman-Hollings², however, Congress is interested in hearing how a proposal like ours on re-registration will be funded. To back up our agreement to speed the re-registration process, we offered to pay $50 million in re-registration fees to supplement EPA's resources. In return, we exacted a concession from the environmentalists that the re-registration fee would be the only user fee that we would have to pay. This exchange has turned out to have been an important tactical move on our part, and has enabled us to block subsequent attempts by the EPA to impose user fees in other areas on us.

Another key factor in negotiation strategy is patience. We have been negotiating for over a year now. I must hand it to the NRDC and Congress Watch negotiators: In the beginning, we threw bones toward the environmentalists to see how much it would be to buy out of their hold on our patent term legislation.

They were very patient with us. We would say: "Okay, we will agree to an amendment to allow EPA to inspect our laboratories." They would say: "That is a terrific concession, we like that. Now, how about these pesticide registration cancellation procedures?" And we would say: "Oh, we don't want to talk about those." They could have gotten up in a huff and walked right out at that stage. It was important that they stuck with it, because the small concessions made there and their willingness to wait led to larger concessions later on.

At times it was evident that we had reached an issue on which each side felt that there was no middle ground. When this occurred, we began talking about what would happen if we did not reach agreement. Each side gave the other signals that too much was being asked. We together searched for an escape hatch: We would take the issues that we could not resolve to the Hill, or to EPA, or to consultants. Or we would sit down and start drafting, meet nonstop, or stop meeting, and we kept talking about what would happen if we hit a stone wall. This gave assurance to both sides that, whatever happened, things were going to continue. Fortunately, we never did have to use such an escape hatch.

The agreement in principle was itself an escape hatch of sorts. The general concepts were helpful. As we went along, however, we kept ratcheting the concepts down, and finally we were able to reach an agreement on concise legislative language.

At times, when a party seizes the high or middle ground, the outcome can be surprising. During our discussions, the issue of inert substances in pesticides arose. Inerts are those things in pesticides that do not act as pesticides — or at least, [17 ELR 10251] claimed not to be pesticides. The term "inert" is a misnomer. Some things really are inert, such as cookie crumbs, water, and mineral oil. Other things are chemicals as hot as the active ingredient. The question, then, is how inerts should be regulated. Initially, our position was: EPA has plenty of authority already in FIFRA to regulate inerts; therefore, there is no need to change the law.

On reflection, however, we realized that our position was not particularly defensible. So one day we announced: "Okay, we want to regulate inerts in much the same way that active ingredients are regulated."

The EPA was not prepared for that move. They have since decided that they do not want to regulate inerts in the way agreed on between industry and the environmental coalition. It has been cut out in the House bill, but we are going to ease it back in later.

I have three concluding observations. One, agreement between Industry and Environmentalists is not only possible but is actually likely on certain issues. What are these issues? From the industry's perspective: if the regulatory program proposed serves our interests, we're likely to agree to it.

For example, we readily agreed to increased penalties, training programs, and other measures, because they will help reduce product misuse and, perhaps, our liabilities. Other things we agreed to because doing so placed us in a better position strategically for subsequent negotiations. We realized that we were getting consensus with the environmentalists on major issues, and that perhaps the hardest negotiation we had to do — with the EPA — was yet to come. We struck deals with the environmentalists, knowing that we had reduced the battery of arguments that EPA would be able to raise. With some forty-odd environmental groups declaring our agreement to be environmentally sound, the best objections EPA could make would be that the agreement would not work, be too expensive, or be administratively inconvenient.

Those are practical concerns that Congress can readily understand and address. It takes a lot of the heat out of the legislative process — particularly on pesticide issues — when Congress is not agonizing over whether workers will be protected or the environment will be endangered.

My second conclusion has to do with the quid-pro-quo in negotiation. In our case, we recognized it from the outset. If we could get an agreement, we would, in turn, receive the patent term restoration legislation we had long sought. As we went along, our understandings matured. We began to realize that there was a real advantage to negotiating these troublesome issues with the environmentalists. To the credit of Al Meyerhoff and Nancy Drabble, we were able to talk with them, to agree on things, and to get some of these troublesome issues resolved in a reasonable way. Resolution of the issues itself became a very important quid-pro-quo.

Similarly, as negotiated rulemakings become more popular, we must ask ourselves: "What is the quid-pro-quo — what is the incentive to participate in negotiations for those people who want to maintain the status quo?" Even within the negotiations, there are many who will argue: "Let's not change things." In short, there has to be an incentive to get people off the dime.

Finally, a word about expectations. We began these negotiations fully expecting that we would not succeed. Even now, after we have come so far, we are still somewhat detached about them. Both the environmentalists and we have learned, however, that we can achieve a great deal more than we originally believed.

1. 7 U.S.C. §§ 135-136y, ELR STAT. 42301.

2. Pub. L. No. 99-177, 99 Stat. 1037, Dec. 12, 1985.