Review Question 6 (from the Spring 2002 exam)
(Suggested time: 90 minutes) (1/2 of total exam points)

ShooBug, Inc. is a maker of insect repellents sold under the “ShooBug” trademark. ShooBug recently introduced a new repellent called “ShooBug for Kids.” The label of ShooBug for Kids states that the product is “safe for use on children over the age of 3.”

Federal law classifies insect repellants as insecticides and regulates them under the provisions of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) which is administered by the Environmental Protection Agency (EPA). While Congress, in enacting FIFRA, understood that insect repellents designed for use on humans presented a number of safety risks, it believed that, if properly regulated, the benefits of the use of such products outweighed their safety risks. Under FIFRA, all insect repellents designed for use on humans must comply with FIFRA guidelines which outlaw entirely the use of some chemicals and limit the percentage of others that may be used in insect repellents. Those percentages vary depending on whether the product is intended for use by adults or by children.

In addition to regulating its chemical composition, FIFRA also imposes labeling requirements and labeling restrictions on insect repellents. The labeling requirements provide that the label of each insect repellent must identify the name and percentage of each active ingredient and the name of each inert ingredient. The labeling restrictions require that the product label must not include any false or misleading statements. False or misleading statements are further defined as (1) false or misleading statements concerning the composition of the product, the effectiveness of the product as an insect repellent, or the value of the product for purposes other than as an insect repellent, (2) false or misleading comparisons with other insect repellents, or (3) any statement stating or implying that the insect repellent is recommended or endorsed by any government agency.

In addition to the provisions described above, Section 136(a) of FIFRA provides that “a State may regulate the sale or use within the State of a federally approved insect repellent, but only if and to the extent the regulation does not permit any sale or use prohibited by this Act.” Moreover, Section 136(b) provides that “a State shall not require statements on product labels in addition to label statements required by this Act.”

Before introducing ShooBug for Kids, ShooBug submitted its product to the EPA as required by federal law. It easily received federal approval for its product based on the fact that Shoobug for Kids complied with all requirements of federal law both in terms of its chemical composition and its product label. After receiving federal approval, ShooBug began the process of arranging to market its new product throughout the United States. Based on the success of earlier products in the ShooBug line of insect repellents, the company was able to quickly arrange for distribution through two nationwide drugstore chains and one nationwide chain of discount department stores. It also sought and received approval to distribute ShooBug for Kids from 49 state regulatory agencies based on its compliance with FIFRA.

Problems arose, however, when it sought the approval of the Colorado Department of Agriculture (CODA) to distribute ShooBug within Colorado. Under Section 25 of the Colorado Insecticide Safety Act (CISA), it is unlawful to “make representations about safety on the product label of any insect repellent intended to be used on children.” CODA, therefore, refused to approve the statement on the Shoobug for Kids product label which stated that the product is “safe for use on children over the age of 3.” It is unlawful to distribute an insect repellent in Colorado without prior approval by CODA.

Section 25 of CISA was enacted in 1998 after an incident in which children at a summer camp in Colorado had been heavily sprayed with insect repellent before a hike in the woods. The children all developed medical problems ranging from severe rashes to chemical poisoning resulting in brain damage. Outrage at the incident caused a member of the Colorado legislature to introduce Section 25 as an amendment to CISA so that adults are not led to believe that insect repellants are completely safe for use on children and will remain cautious in using such repellents. Environmental groups were among the supporters of Section 25 because of their view that insect repellents present dangers to the environment. Section 25 was also supported by BugBeGone, Inc. BugBeGone is a Colorado corporation with both its headquarters and manufacturing facilities located in Colorado. BugBeGone is the largest U.S. manufacturer of chemical-free natural insect repellents. These repellents are exempt from regulation under FIFRA, CISA and similar laws in other states because they contain no chemical ingredients. BugBeGone paid for a major advertising campaign to gain support for Section 25 and lobbied many members of the Colorado legislature to encourage them to vote for the measure.

The safety claim that ShooBug for Kids makes on its product label is legal under FIFRA and under the laws of the other 49 states. Moreover, the safety statement is an important marketing component of ShooBug’s plans to market ShooBug for Kids throughout the United States. ShooBug has looked into the possibility of creating two versions of ShooBug for Kids, a Colorado version that would delete the “safe for use” claim from the label and a national version that would include the “safe for use” label and would be distributed everywhere except Colorado. ShooBug has learned that such an alteration would involve considerable expense and inconvenience. Moreover, it is likely that at least one, if not more, of its nationwide distributors would then refuse to distribute ShooBug for Kids because of the burdens of segregating Colorado-labeled ShooBug for Kids from non-Colorado labeled versions of the product.

Under the circumstances, ShooBug is unwilling to remove the “safe for use” claim from the label of the version of ShooBug it plans to distribute in Colorado. Instead, ShooBug has filed suit against CODA challenging the constitutionality of Section 25 of the Colorado Insecticide Safety Act making it unlawful to “make representations about safety on the product label of any insect repellent intended to be used on children.” In its suit, ShooBug argues that Section 25 is preempted by FIFRA and, in the alternative, violates the dormant Commerce Clause.

You are a law clerk to the judge assigned to the case. The judge asks you to write a memorandum of law detailing the preemption and dormant Commerce Clause arguments available to ShooBug in challenging Section 25 as well as the arguments available to CODA in defending Section 25 against those constitutional challenges.