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Bayer's Permit to Sell Dicamba-Based Weed Killer Rejected

A U.S. federal appeals court rejects the EPA's permit to sell Bayer's dicamba-based XtendiMax.

Bayer  (BAYRY) - Get Bayer AG ADR Report suffered a legal setback after an appeals court said the U.S. Environmental Protection Agency substantially understated the risks of the German agrochemicals company's dicamba-based weed killer and rejected the EPA's permit to sell the product in the United States.

Shares were off about 2.4%. Thursday morning

Environmental groups had filed a lawsuit in 2018 and claimed Monsanto's dicamba-based XtendiMax product harmed crops and wildlife. 

The three-judge panel said in its ruling that "the EPA substantially understated the risks it acknowledged, and it entirely failed to acknowledge other risks."

Bayer inherited this action and other lawsuits two years ago following its $63 billion acquisition of Monsanto.

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"Today's decision is a massive win for farmers and the environment," George Kimbrell of the Center for Food Safety, lead counsel in the case, said in a statement. "It is good to be reminded that corporations like Monsanto and the Trump Administration cannot escape the rule of law, particularly at a time of crisis like this. Their day of reckoning has arrived."

The ruling also blocks the sale of other dicamba-based herbicides such as BASF’s Engenia and Corteva Agriscience’s CTVA FeXapan. 

Bayer and BASF both said they did not agree with Wednesday's judgment. The EPA said in a statement to Bloomberg that it is "currently reviewing the court decision and will move promptly to address the court’s directive."

Pesticides cannot be sold or distributed in the U.S. without EPA registration, so farmers who bought seeds to be used with dicamba for this year’s growing season may not be able to plant them. 

On Tuesday, a California appeals court heard arguments in the first case that went to trial over allegations that Bayer AG's glyphosate-based weed killer Roundup causes cancer, resulting in a $289 million judgment against the company.