The Monsanto Co.'s top-secret recipe for one of the most profitable agricultural weedkillers ever appears to have fallen into a rival's hands because of a bureaucrat's blunder at the Environmental Protection Agency.
The EPA inadvertently disclosed the formula of Roundup, described by industry experts as the largest selling herbicide in the world, in response to a Freedom of Information Act request by a Washington lawyer.
The mistake could undermine Monsanto's domination of the herbicide market, which last year accounted for sales of $450 million for the St. Louis-headquartered company and nearly 40 percent of its profits.
The EPA foul-up, the first ever of this magnitude, is expected to cause an uproar in the chemical industry, which has been urging Congress to tighten restrictions on the release of government documents through the Freedom of Information Act.
The law has been widely exploited by lawyers for clients who use the government data to develop strategies for fighting federal investigations, spying on the competition and discovering how strictly federal regulations are really enforced.
The Roundup trade secrets, which EPA is otherwise required by law to keep confidential, were released in May to Clausen Ely Jr., an attorney whose clients have included Monsanto rivals in major pesticide and herbicide markets.
Ely, a partner in the Washington law firm of Covington & Burling, obtained the trade secrets when they were included in several documents, apparently by accident, that Ely had requested under the Freedom of Information Act.
Ely said he turned over the documents to one of his clients, whom he has refused to identify. He said disclosure of the name would violate lawyer-client confidences. But Ely maintained that he did not look at the documents and did not know what information they contained.
Monsanto, however, said it believes its patented formula for Roundup is in enemy hands, according to Monsanto attorney W. Wayne Withers, who said, "The release has caused irreparable harm and damage to Monsanto."
When the EPA discovered its mistake, it demanded that Ely retrieve the documents from his client and return them to the agency, which he did. But the EPA has been unable to assure Monsanto that its trade secrets were not compromised. In fact, the agency is not even certain which and how many documents containing trade secrets it gave Ely.
Monsanto reacted by going to court, seeking an order holding EPA Administrator Anne M. Gorsuch in contempt for illegally releasing the secrets. Monsanto agreed to drop the matter Aug. 31 after the EPA admitted that it had erred and agreed to set up a special panel to check all future herbicide approval applications for ingredients similar to Roundup.
The EPA, however, will not be able to keep Monsanto's competitors with foreign subsidiaries from producing an imitation of Roundup to compete with the fourth largest chemical company in the world market. Monsanto sells Roundup in 115 countries.
The EPA also has launched an internal investigation to determine how the secrets passed through agency safeguards. While the probe is not complete, Byron Nelson III, a spokesman for the agency, said investigators believe the slip-up was an accident.
He refused to discuss details, but government sources said a GS9 technical specialist at EPA released Monsanto's trade secrets while processing the request filed by Ely for information about glyphosate, Roundup's active ingredient.
Investigators believe the employe either failed to delete the trade secrets before he gave the EPA documents to Ely or that a machine used at EPA malfunctioned.
Nelson said the agency routinely blocks out trade secrets with a "special magic marker" that blacks out portions of the document when it is copied without altering the original. The employe reportedly blamed the machine for not blacking out the secret information.
In a telephone interview, the employe in question refused to discuss specifics, but repeated that the trade secrets were released unintentionally. "I have never had any contact with Ely or any members of his staff," he said.
Roundup began to dominate the herbicide market shortly after it was introduced in the 1970s. It differs from other commerical herbicides because it not only can kill a wide assortment of annual weeds, but also because it kills perennial weeds while permitting farmers to plant their crops within 24 hours after spraying.
Jack Early, a spokesman for the National Agricultural Chemical Association, said the availability of confidential data held by the government worries the 110 chemical manufacturers in his association.
"We certainly don't mind sharing safety data with the proper regulatory agencies, but we do not want trade secrets, formulas and innovative techniques spread all over the world," he said.
It takes an average of eight years for a chemical company to get a pesticide registered with the EPA, Early said, and it costs an average of $30 million to $35 million in research and supplemental tests and reports required by EPA.
"What we are concerned about is that a competitor could pick up this data legally and register it in Japan or France without spending a dime except for copying costs," he said.