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The EPA is developing a final rule under the Formaldehyde Standards for Composite Wood Products Act that was enacted in 2010 as title VI of Toxic Substances Control Act (TSCA), 15 U.S.C. 2697. In 2013, EPA issued two proposed rules. A proposed rule to establish a framework for a TSCA title VI Third-Party Certification Program whereby third-party certifiers (TPCs) are accredited by accreditation bodies (ABs) so that they may certify composite wood product panel producers under TSCA title VI. That proposed rule identified the roles and responsibilities of the groups involved in the TPC process (EPA, ABs, and TPCs), as well as the criteria for participation in the program. It also proposed general requirements for TPCs, such as conducting and verifying formaldehyde emission tests, inspecting and auditing panel producers, and ensuring that panel producers’ quality assurance and quality control procedures comply with the regulations set forth in the proposed rule. A separate proposed rule issued in 2013 under RIN 2070-AJ92 covered the implementation of the statutory formaldehyde emission standards for hardwood plywood, medium-density fiberboard, and particleboard sold, supplied, offered for sale, or manufactured (including imported) in the United States. Pursuant to TSCA section 3(7), the definition of manufacture” includes import. As required by title VI, these regulations apply to hardwood plywood, medium-density fiberboard, and particleboard. TSCA Title VI also directs EPA to promulgate supplementary provisions to ensure compliance with the emissions standards, including provisions related to labeling; chain of custody requirements; sell-through provisions; ultra-low-emitting formaldehyde resins; no-added formaldehyde-based resins; finished goods; third-party testing and certification; auditing and reporting of third-party certifiers; recordkeeping; enforcement; laminated products; and exceptions from the requirements of regulations promulgated pursuant to this subsection for products and components containing de minimis amounts of composite wood products. As noted in the previously published Regulatory Agenda entry for each rulemaking, EPA has decided to issue a single final rule that addresses both of these proposals. As such, EPA is also combining the entries for the Regulatory Agenda.

Statement of Need:

TSCA title VI directs EPA to promulgate regulations to implement the statutory formaldehyde emission standards and emissions testing requirements for composite wood products (hardwood plywood, particleboard, and medium-density fiberboard). It also directs EPA to include regulatory provisions relating to third-party testing and certification in addition to the auditing and reporting of third-party certifiers.

Summary of the Legal Basis:

EPA will issue this rule under title VI of the Toxic Substances Control Act (TSCA), 15 U.S.C. 2697, enacted in the Formaldehyde Standards for Composite Wood Products Act of 2010, which provides authority for the EPA to ‘‘promulgate regulations to implement the standards required under subsection (b)" of the Act. This provision includes authority to promulgate regulations relating to ‘‘third-party testing and certification'' and ‘‘auditing and reporting of third-party certifiers." Congress directed EPA to consider a number of elements for inclusion in the implementing regulations, many of which are aspects of the California Air Resources Board (CARB) program. These elements include: (a) labeling, (b) chain of custody requirements, (c) sell-through provisions, (d) ultra low-emitting formaldehyde resins, (e) no-added formaldehyde-based resins, (f) finished goods, (g) third-party testing and certification, (h) auditing and reporting of TPCs, (i) recordkeeping, (j) enforcement, (k) laminated products, and (l) exceptions from the requirements of regulations promulgated for products and components containing de minimis amounts of composite wood products.

Alternatives:

TSCA title VI establishes national formaldehyde emission standards for composite wood products and the EPA has not been given the authority to change those standards. EPA is evaluating allowable alternatives in this rulemaking.

Anticipated Costs and Benefits:

The Economic Analysis issued with the proposed third-party certification program rule provides the EPA analysis of the potential costs and impacts associated with the proposed third-party certification program. As proposed, the annualized costs are estimated at approximately $34,000 per year using either a 3% discount rate or a 7% discount rate. These requirements would impact an estimated nine small entities, of which eight are expected to have impacts of less than 1% of revenues or expenses, and one is expected to have impacts between 1% and 3%. State, Local, and Tribal Governments are not expected to be subject to the requirements, which apply to third-party certifiers and accreditation bodies. The proposal does not have a significant intergovernmental mandate, significant or unique effect on small governments, or have Federalism implications. The Economic Analysis issued with the proposed implementation rule provides EPA's analysis of the potential costs and benefits associated with the proposed implementation requirements. As proposed, the rulemaking will reduce exposures to formaldehyde, resulting in benefits from avoided adverse health effects. For the subset of health effects where the results were quantified, the estimated annualized benefits (due to avoided incidence of eye irritation and nasopharyngeal cancer) are $20 million to $48 million per year using a 3% discount rate, and $9 million to $23 million per year using a 7% discount rate. There are additional unquantified benefits due to other avoided health effects. The annualized costs for the proposed implementation requirements are estimated at $72 million to $81 million per year using a 3% discount rate, and $80 million to $89 million per year using a 7% discount rate. Government entities are not expected to be subject to the rule's requirements, which apply to entities that manufacture (including import), fabricate, distribute, or sell composite wood products. EPA also estimated that the rulemaking would impact nearly 879,000 small businesses: Over 851,000 have costs impacts less than 1% of revenues, over 23,000 firms have impacts between 1% and 3%, and over 4,000 firms have impacts greater than 3% of revenues. Most firms with impacts over 1% have annualized costs of less than $250 per year. The proposed implementation rule increases the level of environmental protection for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minority or low-income population or children. The estimated costs of the proposed implementation rule exceed the quantified benefits. There are additional unquantified benefits due to other avoided health effects. After assessing both the costs and the benefits of the proposal, including the unquantified benefits, EPA has made a reasoned determination that the benefits of the proposal justify its costs.

Risks:

At room temperature, formaldehyde is a colorless, flammable gas that has a distinct, pungent smell. Small amounts of formaldehyde are naturally produced by plants, animals and humans. Formaldehyde is used widely by industry to manufacture a range of building materials and numerous household products. It is in resins used to manufacture some composite wood products (e.g., hardwood plywood, particleboard and medium-density fiberboard). Everyone is exposed to small amounts of formaldehyde in the air, some foods, and products, including composite wood products. The primary way you can be exposed to formaldehyde is by breathing air containing it. Formaldehyde can cause irritation of the skin, eyes, nose, and throat. High levels of exposure may cause some types of cancers.