Source: The New York Times, November 10, 2015
Posted on: http://www.advisen.com
As Lumber Liquidators continues to struggle after a safety crisis over its Chinese-made laminate flooring, a much smaller flooring company has been drawn into the spotlight.
The hedge fund manager who publicly accused Lumber Liquidators of selling wood with dangerous levels of formaldehyde is leveling the same claims against Ark Floors, a California importer of Chinese wood products that are sold all over the United States.
The continued presence of potentially contaminated flooring underscores the federal government’s stalled efforts to regulate formaldehyde, a carcinogen, health and environmental advocates say. They say the absence of a national rule from the Environmental Protection Agency, which wants to adopt California’s rules for wood products, makes it too easy for dangerous items to enter and remain in the American market.
”It’s really disturbing to me that the E.P.A. hasn’t gotten the rule out by now,” said Tom Neltner, the chemicals policy director for the Environmental Defense Fund. ”Consumers shouldn’t have to worry about, ‘Is this good wood or bad wood?’ ”
Formaldehyde, which can cause respiratory ailments like asthma, can be found in many common items, like clothing, cleaning supplies and furniture. It is often used in the glue that binds scraps of wood in cheaper products like laminate.
Gradually, the formaldehyde seeps into the air.
Test results from five types of Ark laminate show levels of formaldehyde ”well above” the emission standards set by the California Air Resources Board, according to Josh Hosen, senior manager of certification programs at HPVA Laboratories, a testing company in Reston, Va. Whitney Tilson, the hedge fund manager who runs Kase Capital Management, hired HPVA to run the same tests on Ark’s products that the lab had done on Lumber Liquidators’ products.
Representatives from Ark did not respond to requests for comment. A spokeswoman for A&W Woods, Ark’s Chinese supplier, told a reporter to call back in a week. When pressed, she said: ”I don’t care. Go ask the operator to find you someone else then. Do you understand me?” Then she hung up.
In 2012, some of A&W’s products were pulled from Chinese store shelves because of concern over formaldehyde, according to an article from Xinhua, China’s official news agency.
It is difficult to know exactly where Ark’s laminate was sold and whether the products are still on store shelves in the United States. Mr. Tilson has bet against the stock of the online retailer, Wayfair, which sold the products on its website and through Walmart.com.
While Wayfair listed some Ark products among its best-selling laminate, Jane Carpenter, a spokeswoman for the website, said it had sold just 10 orders since December 2014, including one order through Walmart.com. Jaeme Laczkowski, a spokeswoman for Walmart.com, confirmed that the site had sold one order of laminate through Wayfair before the product was removed.
For years, health advocates like Mr. Neltner have been pushing for a national standard for formaldehyde in wood products, which would affect a variety of items, including floorboard and furniture. They succeeded in 2010, when Congress ordered the E.P.A. to adopt standards based on those in California, the only state with such regulations.
But opposition from industry groups, Democratic and Republican lawmakers and even the Chinese government has delayed those efforts. That coalition also wants the E.P.A. to ease major testing requirements in the landmark health standard.
A spokesman for the agency, Nick Conger, said it was taking longer to adopt standards because all of the issues had to be considered carefully. The agency said it expected to issue a final rule in the spring.
In the meantime, the lack of oversight has health advocates like Mr. Neltner worried about what consumers can still buy for their homes. Wayfair, for example, sold Ark’s laminate products as recently as Oct. 1.
In response to an inquiry from a reporter that day, Ms. Carpenter, the Wayfair spokeswoman, said the company had since removed all of Ark’s laminate from its website because Ark notified Wayfair that it had discontinued its laminate as of Oct. 1.
”In any situation where we are aware of possible safety concerns with a product that we sell, we take immediate steps to remove the product from site while we investigate the situation,” Ms. Carpenter said. ”The safety of our customers always comes first.”
In a follow-up phone call, Ms. Carpenter said that representatives from Ark had told Wayfair that all of the products sold on the site were certified under California’s standards, which are commonly referred to as CARB, for California Air Resources Board.
Lumber Liquidators’ stock has dropped more than 70 percent since Mr. Tilson appeared in a March 1 episode of the CBS program ”60 Minutes,” which accused the company of selling Chinese-made laminate flooring that contained unsafe amounts of formaldehyde.
The Consumer Product Safety Commission opened an investigation in March, and in May, Lumber Liquidators announced that it would suspend sales of laminate products from China.
But other companies, including Home Depot and Ark, appear to have sold laminate from some of the same Chinese mills that supplied Lumber Liquidators, raising questions about other products for sale in the United States.
”We all believe it’s a pervasive problem,” said Denny Larson, an environmental consultant who works with plaintiffs’ lawyers. ”It’s not just a Lumber Liquidators problem.”
Ark Floors, the North American subsidiary of the Chinese wood company A&W, which also goes by Anxin, bought its laminate from at least two of the same Chinese mills that supplied Lumber Liquidators, according to shipping data and interviews with former Ark employees. Ark sells its products to distributors, which then sell them to retailers throughout the country.
Another Lumber Liquidators mill supplied laminate to Home Depot in the United States and Canada last year, according to the shipping data, which was collected by Panjiva, an online search engine that provides information on global trade.
Stephen Holmes, a spokesman for Home Depot, confirmed that one of the company’s vendors sold it a ”limited amount” of flooring that used parts from that mill, but that ”even in that scenario, we require that all of our suppliers comply with applicable laws and regulations.”
A list of Lumber Liquidators’ mills was provided by Richard Drury, a lawyer who filed a class-action lawsuit against the company on behalf of consumers.
Mr. Drury said that, while he would be suspicious of any products coming from those mills, testing would be necessary to determine whether they complied with California’s rules. His office tested flooring samples from Lowe’s and Home Depot and found no violations, although it is unclear which mills made those samples.
Shortly after ”60 Minutes” broadcast its report on Lumber Liquidators, employees at Ark were told that the company no longer sold laminate to California customers unless it had a CARB-compliant label, three former employees said. Another former employee, Tim Wang, who said he had worked in the sample department of Ark’s California warehouse until July, confirmed that the company sold noncompliant flooring outside of the state.
On its website, Ark says that all of its ”engineered products” adhere to California’s emission standards, and the site links to one formaldehyde test report for its ”natural plywood.”