Increased TSCA Uncertainty

As many know (and if you don’t, you should), there is a bit of new uncertainty in when TSCA enforcement is going to start. What happened, you ask? You’re probably thinking,

Didn’t you previously tell us it has been extended until Dec of 2018? And isn’t that an absolutely vital extension because the EPA still needs to get the correlation issue corrected and the entire industry needs time to get material into the supply chain so that people can phase out their old stock and work in new components? After all, something this big simply cannot happen overnight.”

Yes, you’re right—I said that and yes, the enforcement extension is important not because we don’t want to comply, but because most of us canNOT comply at this time.

But unfortunately that vital extension is no longer a given. In fact, it is possible that at any point from mid-January forward, with potentially no more than a few hours notice, TSCA enforcement could suddenly be mandated. Companies continuing production in the US could suddenly be producing illegally and material in containers on the water could suddenly be restricted from entering the country. This would impact everything covered by TSCA—the primary panels of plywood, MDF and particleboard, as well as all those products containing them such as furniture, cabinets, and of course, flooring.

Think I’m exaggerating? Perhaps—one does hope common sense will prevail, but the above is an actual possibility, although I really do hope it is an unlikely one.

How did this happen? Well, as you will recall from past blogs, the EPA realized first that everything in the supply chain could not convert at the same time at the stroke of midnight, so they established the early labeling provision. That meant CARB certified companies who met the EPA’s requirements and were confirmed as capable by EPA recognized TPCs could begin labeling raw material as TSCA from August 24th. That was a crucial first step.

But at the same time, the EPA realized that there was a significant discrepancy in how they approached certification procedures from what everyone was used to under CARB—what we call the Correlation Issue. They agreed that needed to be fixed and until it is done, very few companies are able to meet the EPA’s actual requirements as written. So that is in process, but it’s going to take a while before the government is able to make the chain—when you follow the procedures, nothing goes quickly. And in fact, we don’t know WHEN the Correlation Issue will be resolved—the EPA just withdrew on Friday their first proposal to amend it. Everyone acknowledges this has to be fixed, but the way rules are changed in the federal government process means that we don’t know WHEN this will be fixed. And that uncertainty is killing us all.

Which leads us to the worst uncertainty we are facing… The EPA correctly realized that the industry needs to time to get certified and get material into the supply chain. So they extended the final enforcement date to Dec of 2018. Again, an absolutely necessary action given 1) the correlation issue, 2) the inability to bring material into the supply chain early and 3) the Trump’s administration’s delay of all EPA regulations at the start of this year which significantly reduced the amount of time everyone had to begin implementing their programs. As required by the system for changes to a regulation, the EPA posted the proposed adjusted timeline, went through public commentary and moved forward with it.

Unfortunately last month the Sierra Club filed suit over the delay. Their argument is that the EPA had no right to delay the regulation and violated the law in doing so despite following the process for making changes. (Note that the Sierra Club didn’t post a comment when the delay was proposed and they waited months before filing this suit.) They don’t care about the fact that 1) the EPA’s emission levels are the same as CARB and 2) the vast majority of flooring and other products have been coming in as CARB for years and 3) the industry would LOVE to comply with the TSCA regulation but simply cannot until the correlation issue is fixed and material can move into the supply chain to feed the manufacturers’ needs.

So what happens now? Well, it’s in the hands of the Court. If the Court rules in favor of the Sierra Club, TSCA could suddenly become mandated overnight. Now my assumption (not a guarantee) would be that the Court would give us a reasonable grace period so the domestic manufacturers could finish their immediate lots and importers could clear containers on the water, but that doesn’t help us much if the correlation fix hasn’t been completed yet. We still face a huge barrier to wide-spread ability to comply and the bottom line is that the industry needs the extension to December of next year. If the Court simply orders immediate enforcement, the entire industry could grind to a halt.

When will this or could this all happen? I don’t know. Sometime mid Jan. Or early Feb. Or maybe March. I suspect we’ll know the results of the suit by early Feb, but that’s not a given and we’re still not sure when the correlation fix will be completed. So we’re back to living in uncertainty. Stay tuned.

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