Hunton Retail Law Resource

The United States Environmental Protection Agency (EPA) has imposed the first penalty for violations of its new rule limiting formaldehyde emissions from composite wood products just over one year after the rule became effective. The $544,064 penalty assessed against construction product supplier Global Sourcing Solutions, a Division of Turner Logistics, LLC (Global Sourcing Solutions), comes as part of a consent agreement between EPA and the company, which will also be required to implement a corrective action plan.

EPA’s Formaldehyde Final Rule (the Rule) implemented the Formaldehyde Standards for Composite Wood Products Act of 2010, which amended the Toxic Substances Control Act (TSCA) to add TSCA Title VI. Among other requirements, the Rule requires that composite wood products be tested and certified as compliant with TSCA Title VI emissions standards and that products be labeled as compliant at the time they enter the United States. Importers, distributors and retailers are all required to maintain documentation containing a statement that the products are TSCA Title VI-compliant. Importers must also complete a TSCA section 13 import certification for all composite wood products, certifying that they are compliant with all applicable chemical regulations.

According to the consent agreement, Global Sourcing Solutions self-disclosed potential violations of the Rule on April 5, 2019, after its import broker asked it to complete the required TSCA section 13 import certification for a shipment of finished goods containing composite wood. After Global Sourcing Solutions investigated why the import certification was required, it notified EPA of the products’ potential noncompliance with the Rule. Meanwhile, the goods were released for entry by US Customs & Border Protection and transferred to a construction site for installation. Global Sourcing Solutions instructed its broker to store two additional containers that had arrived at port and to stop shipment of goods already in transit to the United States.

EPA found that Global Sourcing Solutions violated the Rule when it imported a total of 17 noncompliant finished goods spread across eight separate customs entries between March 27, 2019, and June 14, 2019. Because each of the 17 products lacked the records required by the Rule and were not labeled as TSCA Title VI-compliant, EPA assessed 34 separate violations for the products. Eight additional violations were assessed because each of the shipments lacked the required TSCA section 13 import certification. Global Sourcing Solutions agreed to pay a $544,064 penalty as well as implement a corrective action plan, which requires the company to quarantine and replace noncompliant composite wood in the finished goods with TSCA Title VI-compliant material.

EPA’s first enforcement action follows nearly two years’ worth of controversy and uncertainty over the implementation and enforcement of the Rule. Although the Rule was originally slated to be effective in December 2017, EPA announced a year-long delay in September 2017 to allow companies additional time to prepare for compliance. After consumer advocacy groups brought suit in federal court to challenge EPA’s authority to delay enforcement of the Rule, EPA agreed in March 2018 to enforce the Rule as of June 1, 2018, leaving companies only weeks to comply with the Rule’s requirements and leaving the fate of products already in transit in question.

Despite the initial delay in its enforcement of the Rule, EPA’s $544,064 penalty for 17 noncompliant products indicates that EPA is now taking enforcement seriously. And EPA’s assessment of multiple violations for each individual product shows that companies—particularly large-volume suppliers—risk stiff penalties if their products do not comply with each and every one of the requirements imposed by the Rule.

Read the consent order here.

Read EPA’s press release here.