New California Plywood/Particle Board Rule Impacts Retailers

Furniture Banned to Curb Formaldehyde Emissions

The Summary: Starting in 2009, retailers in California face unannounced visits by inspectors from the California Air Resources Board (CARB) looking for banned and unlabeled merchandise made from composite wood. Retailers, fabricators, and manufacturers of new furniture (and other goods) made from certain composite wood products are prohibited from selling such goods in the state, unless they comply with a new CARB rule limiting formaldehyde emissions.

Retailers must comply with recordkeeping requirements immediately. Retailers have 18 months (to June 30, 2010) to sell through existing inventories of non-CARB-compliant goods. Under the new rule, unlabeled, noncompliant goods cannot be sold in California beginning on July 1, 2010.

According to CARB’s January 2009 Advisory, “Retailers do not have any additional labeling requirements under the ATCM. Existing labels should not be removed from a composite wood product or finished good.” http://www.arb.ca.gov/toxics/compwood/outreach/labelingadv.pdf
However, the Advisory goes on to clarify that retailers may replace an original label with a label listing their own company name, provided "all of the other original required label information is retained on the new label."

Background on the Regulation

CARB approved a new Air Toxics Control Measure (ATCM) to reduce formaldehyde emissions from composite wood products in April, 2007. The rule applies to panel manufacturers, distributors, importers, fabricators and retailers of certain composite wood panels, and finished goods containing those products, that are sold or supplied in California. The products subject to the rule are hardwood plywood, particle board, and medium density fiberboard. The text of the rule is available at 17 California Code of Regulation, sections 93120 – 93120.12 or here:
http://www.arb.ca.gov/regact/2007/compwood07/fro-final.pdf

(Formaldehyde is used in the production of wood binding adhesives and resins. It has been classified as a cancer-causing agent in humans. In 1992, formaldehyde was designated a toxic air contaminant with no safe level of exposure.)

The rule establishes two phases for reducing formaldehyde emissions. Phase 1 takes effect on January 1, 2009. Phase 2, with more stringent emission levels, begins in January 2010. CARB has estimated the cost to the affected industries of implementing the rule at $19 million for Phase 1, and $127 million for Phase 2. Industry groups have countered that these estimates are too low. The rule has been estimated to increase the per-panel retail price of composite wood products by $3.00 to $6.00 over current prices.

Retailers should know that CARB inspectors policing stores for compliance with the new rule will look for labeling on finished goods, such as tables, cabinets, bookcases and shelving, countertops, flooring, and moldings. Labels must show that any components that are hardwood plywood, particle board, or medium density fiber board have been certified by qualified third parties as compliant with the emissions standards. Labels may also be affixed to boxes, packaging, or other goods containers. The labels should be supplied by the manufacturer or fabricator, unless a retailer has made alternative arrangements for having its own labels.

Recordkeeping Requirements for Retailers

Retailers can be required to show records indicating the source of their stock, indicating the name of the manufacturer and the date of manufacture. Records must be maintained for a minimum of two years, in both hard copy and electronic form. Retailers are not, however, required to conduct product testing. Manufacturers of composite wood panels, and manufacturers of furniture and other products using composite wood covered by the new rule, have the burden of obtaining third-party certification. Online and catalog sellers of wood products delivered into California are also subject to the new rule. Civil penalties may be assessed for noncompliance. The fines can range from $1,000 to $10,000 per day for violations.

In informational workshops about the new rule, CARB has recommended that retailers insist that their suppliers provide CARB-compliant goods. Retailers can demonstrate their good faith efforts to comply with the new rule by having explicit written agreements with their suppliers.

According to CARB staff, the rule does not apply to antiques and used furniture.

Variance Procedure

CARB acknowledges that it has a procedure for issuing variances. Retailers who may want to explore obtaining a variance should contact their legal advisor. Some groups affected by the rule have sought to extend the compliance deadlines, expressing concerns about a number of problems they anticipate in implementing the rule. To date, CARB has expressed the view that delaying implementation is not warranted because progress is being made in qualifying the third-party compliance certifiers and because it has conducted outreach efforts with industry groups.

Other Regulatory and Enforcement Actions for Formaldehyde

Efforts have also been made to expand to the national level the California rule limiting formaldehyde emissions in composite wood products. For example, the U.S. Environmental Protection Agency in 2008 considered a petition to adopt the California ATCM under the federal Toxic Substances Control Act (TSCA) and to extend the scope of the regulation to manufactured housing. EPA rejected adopting the ATCM, but indicated that it would further study both cancer and non-cancer health risk concerns associated with formaldehyde in composite wood products. See http://www.epa.gov/fedrgstr/EPA-TOX/2008/June/Day-27/t14618.htm

Retailers have also been targeted with Notices of Violation under California’s Proposition 65 based on allegations that certain furniture, including baby cribs, release formaldehyde from composite wood components.