Today, an agreement on how the formaldehyde rule will be implemented was reached by EPA, the Sierra Club, and industry trade associations including NAHB. It was then approved by the U.S. District Court for the Northern District of California.
NAHB had played a key role in clarifying the rule in 2016, ensuring that remodelers were not treated as “fabricators” and forced to comply with product testing and tracking requirements.
However, a number of NAHB members, such as manufactured housing providers, are directly regulated by the rule.
Moreover, all NAHB members would have been impacted if the supply chain for cabinets, flooring and other composite wood products had been disrupted. Any disruptions to the supply chain for these products would have increased prices and reduced availability.
EPA’s formaldehyde rule originally gave the composite wood industry until December 2017 to comply with the emissions, labeling and recordkeeping requirements. But the rule was delayed for five months because of the transition between presidential administrations. That delay prevented EPA from properly implementing the rule, so it extended the deadline by one year to December 2018.
The Sierra Club filed suit against EPA, arguing that the extension was too long. NAHB joined with other trade associations to file a brief in the case, urging the court to uphold the extension and to consider the consequences the composite wood industries — along with the industries that rely on these products — would experience if EPA’s extension were removed.
NAHB Remodelers member Robert Criner prepared a statement explaining how removing the extension would make it difficult for remodelers to provide accurate production schedules for their trades or meet agreed-upon deadlines and pricing contracts with their clients.
“While I do not know the specific pathway this disruption may take, I can describe what would happen to my business if any of these disruptions occur,” Criner wrote. “I use the prices for building materials that are available to me at the time the contract is signed to calculate the fixed fee.”
Forcing producers to change their manufacturing processes on such short notice would likely increase these prices, hurt his business and hurt his employees, he said. “Without a steady stream of income from customers whose projects are in various stages of completion, I cannot pay my employees, my trade contractors or myself. Multiple people could lose their jobs until compliant inventory becomes available,” he said.
NAHB economist Paul Emrath provided an overview of the breadth of the remodeling industry and its impact on the economy, pointing out the far-reaching effects of regulatory uncertainty on businesses, their employees and the communities they support. Emrath estimated that if the extension rule were invalidated, the resulting delay in obtaining compliant cabinets and flooring would cost residential construction more than $1.4 billion.
Nonetheless, the judge ruled against EPA on Feb. 16. However, the judge provided EPA and the Sierra Club with three weeks to consult with the impacted industries and come to an agreement, which they reached today.
The agreement provides certainty to the composite wood industry, and in turn, the home building industry that relies on these products, by:
- Setting a new date of June 1, 2018, for compliance with EPA’s formaldehyde rule
- Declaring that products manufactured between December 2017 and June 2018 can be sold at market
- Allowing products that comply with California’s formaldehyde rule to be considered compliant with EPA’s rule until March 22, 2019
For additional information, please contact Amy Chai at 202-266-8232.