In one of the most widely publicized enforcement actions ever brought under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) the Scotts Miracle-Gro Company (“Scotts”) of Marysville, Ohio pleaded guilty to crimes, entered into a civil Consent Agreement and Final Order (CAFO) with the U.S. Environmental Protection Agency (EPA), and agreed to pay the largest criminal fine and civil penalty imposed under FIFRA. The matter unfolded over more than four years, with staff from EPA Headquarters and Region 5, the U.S. Justice Department and the Ohio Attorney General's Office assisting in the prosecution of this matter. Set out below is a description of the various elements of the matter and their impacts. In addition, related civil litigation continues.
EPA was first alerted to Scotts' illegal activities in January 2008 when the New York State Department of Environmental Conservation notified EPA that it could not verify the pesticide registration numbers listed in Scotts' annual applications for state pesticide registration. EPA confirmed that Scotts submitted false registration documents for several of its products and launched a civil investigation in April 2008. In May 2008, Scotts voluntarily submitted to a compliance review conducted by a third party and voluntarily conducted a recall of certain wild bird food products. During this investigation EPA issued over 40 FIFRA Stop Sale, Use or Removal Orders for more than 100 pesticide products being sold in violation of FIFRA. In response, Scotts immediately developed and implemented new compliance assurance procedures at its facilities.
In September, 2012, the NYSE-listed Scotts pleaded guilty to 11 misdemeanors and entered into a CAFO under FIFRA. The criminal offenses included charges of selling unregistered pesticide products and illegally applying a pesticide to stored bird seed that in fact was toxic to birds. The Court imposed a fine of $4 million for the criminal offenses.
The CAFO imposes a civil penalty of $6.05 million, together with the obligation to spend $2 million on environmental benefit projects which will restore and conserve 300 acres of land in Ohio. The CAFO describes FIFRA violations associated with 15 pesticide products. The violations included selling: (1) unregistered or canceled pesticides, (2) pesticides whose compositions differed from those approved by EPA, (3) pesticides with claims that differed from those EPA approved, and (4) misbranded pesticides with false or misleading statements, inadequate warnings or cautions or inadequate placement of required information on its labeling.
On May 25, 2012, Sheila Kendrick, a former registration manager for Scotts, pleaded guilty to making false statements, a felony, and to fabricating pesticide documents, a misdemeanor under FIFRA. Kendrick was responsible for filing Scotts' federal and state pesticide registrations. Kendrick acknowledged creating false registration documents. When EPA discovered that certain pesticides being sold had not been registered with the EPA and requested documentation from Kendrick to confirm the registrations, she provided EPA with fabricated EPA registration documents and suggested that EPA had lost the originally filed documents.
In addition to the $12.55 million in criminal fines and civil penalties, Scotts has reported spending more than $80 million in registration and recall-related costs. EPA estimated that Scotts sold over $39.5 million of products that were not in compliance with FIFRA.
Scotts still faces a civil suit alleging violations of the Racketeer Influence and Corrupt Organizations Act (RICO). In March 2008, Scotts wrote a letter to "Fellow Bird Lovers" saying it was replacing the Morning Song Bird Food with a new product because the original product's formulation had "certain insect controls." The plaintiffs allege that Scotts knowingly deceived the public into buying toxic wild bird food. In June 2012, a class action under RICO and California's consumer protection laws was lodged against Scotts in the Southern District of California. Plaintiffs allege that they purchased Scotts Morning Song Bird Food from Wal-Mart and within 24 hours of feeding their one hundred birds the pesticide-tainted food, 92 birds were dead. The case remains pending.