Nalco Company, a world-wide provider of water treatment services, worked with the U.S. EPA for three years to ensure that its OxiPRO™ system was FIFRA compliant.  But EPA’s unprecedented move to control the market among Nalco and its competitors surely exceeded anyone’s expectations, especially Judge Rosemary Collyer’s. 

U.S. EPA permitted Nalco in December, 2010, to sell its product only to existing customers while the Company pursued the newly-required FIFRA registration.  After Nalco’s competitors sued EPA to stop all sales of Nalco’s product, EPA reversed course in April 2011, leaving Nalco with no choice but to sue the Agency (Nalco Company v. U.S. EPA, No. 11-760 (D.D. C. May 18, 2011)).

The fatal flaw in EPA’s defense of its enforcement flip-flop was its argument that the Agency had intentionally tried to “level the commercial market between Nalco and its competitors.”  The Court made short work of this “troubling” position, holding that “There is no basis in FIFRA for EPA to exercise its enforcement authority to balance markets…”  EPA simply does not have the authority “to control or modify the marketplace.”

The Court was also persuaded by Nalco’s equitable argument that EPA’s unlawful enforcement position threatened the loss of sales and goodwill “for which Nalco will have no right of recourse against the federal government.”  Concluding that the public interest is served by federal enforcement that is rooted in the statutory text, notably absent in this case, the Court enjoined enforcement of EPA’s April 2011 Order and remanded the case to the Agency.
 
For more information on FIFRA, please contact Laura Ringenbach or any member of Taft’s Environmental Practice Group.