Companies in the retail industry may soon be grappling with new regulations and increased litigation risk involving formaldehyde, a common chemical found in consumer products like wood glue, foam insulation, paints, cosmetics and fragrances. In 2018, amid controversy over the chemical industry's alleged pressure on the Environmental Protection Agency (EPA) to withhold an updated human health risk assessment, which will reportedly link exposure to formaldehyde to leukemia and other cancers, consumer groups successfully compelled EPA to begin early enforcement of its new rule governing formaldehyde emissions from composite wood products. The tug-ofwar between consumer groups and industry groups on formaldehyde over the last year has potential consequences for companies impacted not only by the formaldehyde regulations, but who may also be impacted by regulations on the horizon as EPA moves forward with its new risk evaluations on 10 "high priority" and widely used chemicals.
EPA's Integrated Risk Information System Program (IRIS) first classified formaldehyde as a "probable human carcinogen" in 1991, linking exposure to the chemical as potentially causing nasal cancer. In 2010, the agency released a new draft risk assessment, proposing to revise formaldehyde's classification to "carcinogenic to humans" and linking formaldehyde exposure to leukemia for the first time. The scientific data and methodology underlying the revised risk assessment were met with sharp criticism. In response, EPA requested that the National Research Council (NRC), a committee of the National Academies of Sciences (NAS), perform a peer review of the draft risk assessment. The NRC reported in 2011 that EPA's conclusions regarding leukemia and related hematopoietic cancers suffered from serious "data gaps" and were not supported by any clear scientific framework. The NRC also issued specific recommendations for the revision of not only the draft risk assessment itself, but also the overall review process for future assessments. Congress then directed EPA to implement the NRC's recommendations, and EPA began the process of re-reviewing its risk assessment to take into account the NRC's recommendations.
IRIS completed the update to its formaldehyde risk assessment in late 2017, but to date EPA officials have declined to review the study or approve its release. The updated risk assessment reportedly still links exposure to formaldehyde and leukemia, despite the NRC's criticism of that conclusion in 2011. Industry groups have met with EPA and have publicly expressed concerns that the updated risk assessment will be merely a "restructuring" of the original draft and will still suffer from the same scientific and methodological defects previously identified by the NRC. Consumer groups and legislators have accused EPA of bowing to industry pressure to withhold the updated assessment and have continued to call for its release. Meanwhile, EPA has suggested that the agency is re-evaluating some of the science underlying the assessment and is currently facing a lawsuit filed by Public Employees for Environmental Responsibility (PEER) alleging that EPA failed to respond to the group's public records request.
As the debate over the release of the risk assessment heated up earlier this year, EPA was also forced to defend its decision to delay the effective date of a Final Rule implementing the Formaldehyde Emission Standards for Composite Wood Products Act of 2010 (Formaldehyde Final Rule), which amended the Toxic Substances Control Act (TSCA) to add TSCA Title VI. The Formaldehyde Final Rule sets forth emissions limits for formaldehyde in composite wood products (which are often used in furniture, flooring and construction) and imposes a number of testing and record-keeping requirements on companies in the supply chain. Although the Formaldehyde Final Rule was originally scheduled to take effect in December 2017, EPA announced a year-long delay in September 2017 in order to allow companies more time to prepare for compliance.
Consumer groups objected to EPA's decision, citing alleged immediate threats to public health from exposure to formaldehyde. After filing suit against EPA in California federal court, they reached an agreement with EPA that the agency would begin enforcement of the Formaldehyde Final Rule as of June 1, 2018—more than six months earlier than companies had planned. The new June 1 compliance date posed serious compliance challenges and came at great cost to furniture manufacturers, distributors and retailers, who were forced to act quickly to design and implement procedures that were not expected to be required until months later.
For companies in the retail industry, the controversy over formaldehyde has led to greater public scrutiny of the chemical and its alleged health effects, which often translates into increased litigation risk. Plaintiff's lawyers searching for the "next wave" of toxic tort and product liability litigation may look to get out ahead of EPA's formaldehyde risk assessment, filing lawsuits early and banking on the report's anticipated conclusions regarding leukemia. For their part, consumer groups may also put pressure on companies by conducting their own independent studies of popular consumer products and publicizing results that show traces of formaldehyde in those products in an effort to garner public support for new regulations.
The fallout from the formaldehyde controversy is also likely to affect EPA's review and regulation of chemicals in the future. Although TSCA was amended in 2016 by the Frank R. Lautenberg Chemical Safety for the 21st Century Act (Lautenberg Act) to give EPA new powers to review and regulate chemicals at the federal level, EPA does not always act with the expediency or methodology consumer advocacy groups may want. EPA is currently in the process of evaluating 10 "high priority" chemicals as mandated by the Lautenberg Act, and is already facing criticism from consumer groups who do not feel that EPA's framework for those analyses is comprehensive enough. And just as with the formaldehyde risk assessment, it is unlikely that industry groups will universally approve of the conclusions EPA reaches in connection with these new risk evaluations or the methodology it uses.
As EPA's new evaluations progress and are released, we expect to see challenges from both consumer groups and industry groups similar to those launched over formaldehyde. The uncertainty those challenges will create will pose compliance difficulties for even the most proactive companies while regulations are tied up in litigation with unpredictable outcomes. Likewise, the heightened public interest in chemical evaluations means that companies may find themselves facing lawsuits and defending their products in the court of public opinion—even if EPA concludes that certain chemicals pose no significant health risk to consumers.
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