- Agency says new information shows risk to non-target plants
- Company says it expects to resolve all issues promptly
Dow Chemical Co. fell the most in almost two months after the U.S. Environmental Protection Agency withdrew approval of the company’s Enlist Duo herbicide, citing new evidence that the chemical damages plants other than the weeds it’s meant to kill.
The shares dropped as much as 4.6 percent and closed down 2.7 percent at $51.92 in New York. The EPA said in a motion filed in a federal appeals court it has new information regarding “potential synergistic effects between the two ingredients” in the herbicide. The agency said it has learned that a 30-foot (9-meter) buffer surrounding areas where the weedkiller is applied may not be adequate to protect non-target species and it needs more time to assess the new information.
Dow had counted on the weedkiller and related products to boost earnings at its Dow AgroSciences arm. Enlist Duo combines two widely used herbicides, glyphosate and 2,4-D, and is applied to corn and soybeans that are genetically engineered to tolerate the chemical. The weedkiller was created to compete with Monsanto Co.’s popular Roundup Ready system and won EPA approval in October 2014. Midland, Michigan-based Dow said Wednesday it’s working with the EPA to provide assurances on the safe use of the product and expects the herbicide to be available for use for the 2016 crop season.
“We believe the questions that have been raised about any potential synergy between 2,4-D choline and glyphosate can be promptly resolved in the next few months, in time for the 2016 crop use season,” Dow AgroSciences President and Chief Executive Officer Tim Hassinger said in an e-mailed statement.
While it’s possible there could be changes to use conditions on the existing Enlist Duo label, the company said in the statement it doesn’t expect these issues to result in the long-term cancellation of the product.
The EPA’s move is a victory for the critics of the pesticide industry, which has been blamed for the decline of bees and butterfly species as well damage to human health. In March, the World Health Organization’s International Agency for Research on Cancer classified glyphosate as a probable human carcinogen. Monsanto, which sells glyphosate under the Roundup brand, rejected the finding and criticized the IARC’s process for a lack of transparency.
In the case of Dow’s Enlist Duo, several environmental groups sued the EPA in the Ninth Circuit Court of Appeals in October 2014 after the agency’s decision to register the weedkiller for use on modified corn and soybeans.
Removing Enlist Duo from the market is a key step in protecting sensitive native plants and monarch butterflies, Sylvia Fallon, a scientist at New York-based environmental group Natural Resources Defense Council, said in an e-mailed statement. Glyphosate, the most widely used weedkiller in the U.S., is the chief cause of the decline of the monarch butterflies and scientists have questioned 2,4-D’s impact on human health, according to the statement.
“We are delighted by this news, but also troubled that EPA overlooked this information initially,” Fallon said in the statement.
The EPA received the new information on Enlist Duo from Dow AgroSciences after the weedkiller’s approval, the agency said Wednesday in an e-mailed statement. The EPA could now alter the restrictions for using Enlist Duo.
“This could result in changes to the width around application areas of no-use buffer zones that EPA imposed to protect unintended plants, including those listed as endangered," the agency said.
There is very little substance to the complaint as both chemicals in the herbicide are widely approved, according to a report from AllianceBernstein on Wednesday. Enlist Duo contributes “virtually zero margin” and it’s in the interests of the EPA and Dow to resolve the matter as soon as possible, according to the report.
“The revocation could marginally affect Dow’s sale of the Ag business, but we do not expect it to have a material influence,” according to the report.