Monsanto. has agreed to pay a $2.5 million penalty for misbranding biotech cotton seed products in what regulators called the largest civil administrative penalty settlement ever received for violating U.S. insecticide law.

The U.S. Environmental Protection Agency said St. Louis-based Monsanto, the world's largest seed company, violated the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) when it sold and distributed cotton seed products containing genetically engineered pesticides in a manner that violated restrictions Monsanto had told the EPA it would adhere to.

"This agreement shows that when a company violates the law by distributing misbranded pesticides, EPA will take action," said Cynthia Giles, assistant administrator for EPA's Office of Enforcement and Compliance Assurance in a statement.

The EPA said it found that between 2002 and 2007, Monsanto distributed or sold Bollgard and Bollgard II cotton seed products contain genetically engineered pesticides more than 1,700 times nationwide without the planting restrictions that EPA required to protect against pest resistance.

"People who manufacture and distribute pesticide products must follow the federal registration requirements," said Steve Owens, assistant administrator for EPA's Office of Chemical Safety and Pollution Prevention. "These requirements are critical to preventing the development and spread of insect resistance." EPA officials said Monsanto has since corrected the misbranding problems.

Monsanto officials were not immediately available for comment.