(Adds response from Corteva.) 



  By Mauro Orru 


  An appeals court in San Francisco ruled Wednesday that the U.S. Environmental Protection Agency should revoke its registration of three dicamba-based products, including Bayer AG's XtendiMax, saying the agency failed to acknowledge associated risks. 


  The U.S. Court of Appeals for the Ninth Circuit said it would be forced to vacate the EPA's 2018 registration decision for three dicamba-based herbicides, citing a lack of substantial evidence to support the EPA's decision. 


  The EPA had issued conditional two-year amended registrations for Bayer's XtendiMax, Corteva Inc.'s FeXapan and BASF SE's Engenia. 


  "The EPA substantially understated the risks it acknowledged, and it entirely failed to acknowledge other risks," the court said, including the amount of dicamba herbicide that had been sprayed on post-emergent crops, evidence showing dicamba damage was substantially under-reported, and anti-competitive economic effects in the soybean and cotton industries. 


  The ruling comes after a group of environmental organizations filed a petition with the court. 


  "We see risks that the short-term ban of dicamba sales will lead to lost revenues and earnings until the EPA decides on the re-approval of dicamba beyond 2020," said analysts at U.S. brokerage Bernstein, amid expectations re-approval could take place in the next four to six weeks. 


  "Until then, we think it is likely that Bayer will have to give rebates for over-the-top Dicamba application." 


  A spokesman for Bayer told Dow Jones Newswires on Thursday that the company "strongly" disagrees with the ruling and that it is assessing its next steps. "We will also await direction from the EPA on actions it may take in response to the ruling," they said. 


  "Depending upon actions by the EPA and whether the ruling is successfully challenged, we will work quickly to minimize any impact on our customers this season," the spokesman added. 


  A spokeswoman for BASF told Dow Jones Newswires that the company "disagrees with the ruling and is considering its options to respond," adding that dicamba is safe when used correctly. 


  "The ruling may have a significant adverse impact on growers in the U.S. who have already purchased dicamba tolerant seeds and dicamba product for this season," they said. 


  The announcement comes nearly four months after a federal court in Missouri ruled against Bayer and BASF in a crop-damage case, awarding $265 million to a Missouri peach farmer who claimed the companies encouraged farmers to irresponsibly spray a hard-to-control weedkiller. 


  A spokesman for Corteva told Dow Jones Newswires the company is reviewing the court's decision. 


  "We believe dicamba is an effective weed management tool for farmers that can be used safely when used according to the label." 


  Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94