Regulatory Developments

Industry Must Comply with Formaldehyde Rule by June 1, 2018

Judge Jeffrey S. White of the U.S. District Court for the Northern District of California has ordered the EPA to require industry to be in compliance with the formaldehyde emissions limits for composite wood products the Agency established in its 2016 final rule (Formaldehyde Rule, December 12, 2016, Federal Register (FR)) by June 1, 2018.

The order follows a February 16, 2018, opinion in which White vacated another Agency final rule that delayed compliance with the emissions limits until December 12, 2018 (Delay Rule, September 25, 2017, FR). In that opinion, the judge stayed the effect of the vacatur until the EPA and several environmental groups that had sued the Agency over the Delay Rule could reach agreement on a compliance timeline. The parties jointly recommended the June 1, 2018, compliance date, and White approved that date in his final order.

Title VI of TSCA

EPA’s 2016 Formaldehyde Rule implemented the 2010 Formaldehyde Standards for Composite Wood Products Act (Title VI of the Toxic Substances Control Act (TSCA)), which set out formaldehyde emissions limits for domestically manufactured and imported composite wood products. Title VI directed the EPA to ensure that within 180 days after promulgation of its regulations, the new emissions standards “shall apply to hardwood plywood, medium-density fiberboard, and particleboard sold, supplied, offered for sale, or manufactured in the United States.”

Title VI also prohibited stockpiling of inventoried goods and products. “Stockpiling” is defined as the manufacture or purchase of noncompliant wood products between enactment of the Formaldehyde Act (July 7, 2010) and 180 days after promulgation of the implementing regulations.

Additional Time Needed

According to White, the requirement of an expeditious compliance date set at 180 days after promulgation of the Agency’s implementing regulations was a compromise made by Congress to balance both the severe health concerns caused by formaldehyde in wood composite products against the time it would take industry and the Agency to adapt to and structure enforcement of the new emissions standards.

But in its Delay Rule, the EPA stated that it had been notified by “multiple stakeholders, national trade associations, and other regulated entities who overwhelmingly confirm that regulated entities will require additional time to comply with the TSCA Title VI emission standards compliance date due to supply chain, global business, and factory supply logistics.”

Also, the Agency stated that it did not believe extension of the emissions compliance date would result in any significant increases in health risk, in part because the EPA allowed for voluntary early labeling of compliant composite wood products after August 25, 2017. This facilitated TSCA Title VI compliant products entering commerce, argued the Agency.

In addition, the EPA pointed to formaldehyde emissions limits for composite wood products that were issued by the California Air Resources Board (CARB) and were in effect years before the EPA issued the Formaldehyde Rule. Composite wood products subject to CARB’s regulations comprised the majority of products in the market, the Agency noted.

Clear Statutory Language

In rejecting the Agency’s arguments, the judge first pointed to the plain language of Title VI regarding EPA’s implementing regulations: “[E]ffective beginning on the date that is 180 days after the date of promulgation of those regulations, the emission standards … shallapply to hardwood plywood, medium-density fiberboard, and particleboard sold, supplied, offered for sale, or manufactured in the United States.” (The Act included a sell-through provision, which exempted from the emission standards products manufactured before the compliance deadline, also called the manufacturing date.)

White added that it was Congress’s intention to require expeditious compliance once the EPA issued its final rule.

“In the passage of the Act, Congress specifically set the tight deadline for compliance with stricter emission standards after regulations were promulgated as an effort both to address the significant adverse health effects of formaldehyde in household wood products and to eliminate the competitive advantage that foreign suppliers who had not been subject to the California standards had in the marketplace,” stated White.

Delay Inconsistent with the Act

White found that the Delay Rule ran afoul of both the letter and the spirit of Title VI. The judge concluded:

“The clear purpose of the Act and the plain meaning of its core provisions was to set expeditious emission compliance standards (not to exceed 180 days past the promulgation of implementing regulations) and to allow the sell off [sic] or use of preexisting noncompliant inventory but to prohibit stockpiling. This clear purpose and plain meaning cannot be reconciled with the EPA’s suggestion that a year-long extension of the designated date of manufacture in the sell-through provisions permissibly leads to a commensurate year-long extension of the mandatory compliance deadlines. The EPA’s interpretation creates inconsistency within the full text of the Act, renders the 180-day compliance deadline superfluous, leads to the absurd result of permitting the perpetual delay of the effectiveness of the Formaldehyde Rule, and fails to satisfy the stated purpose of the Act.”

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