TOANO, Va. - Lumber Liquidators said in an SEC filing today that it has reached a settlement over formaldehyde gas exposure by consumers who bought its laminate flooring made in China from 2011-2015. The wood flooring distributor and manufacturer agreed to sequester this flooring inventory; proactively monitor formaldehyde gas exposure at thousands of consumers' homes; and will implement California Air Resource Board (CARB) compliance rules nationwide. 
 

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Lumber Liquidators laid down its dispute about so-called "destructive testing" of flooring by the California Air Resources Board agency. John Presley, CEO, signed a release agreement with California Air Resources Board head Rochard Corey as part of the settlement. Lumber Liquidators flooring fabricators will also be monitored for two years to make sure its wood flooring products do not contain excessive amounts of formaldehyde glue, detailed in this excerpt:

 
As set forth in the agreement between the California Air Resources Board and LL, dated March 21, 2016, LL has agreed to implement a Fabricator Laminate Evaluation and Audit Program to address compliance with the State of California Air Resources Board Airborne Toxic Control Measure to Reduce Formaldehyde Emissions from Composite Wood Products and the proposed future federal requirements. This Agreement requires, among other things, LL to audit all existing and new fabricators who supply laminate products to LL. LL agrees to share the results of these audits and testing programs as provided to CARB as required by the Agreement with the CPSC Office of Compliance, as confidential trade secret information
 
Consumers tear out Lumber Liquidators flooring
 
The CPSC says the deal is not intended to cause consumers to pull up Chinese-made laminate flooring installed in their home - which was the case after CBS 60 Minutes did its firs report on Lumber Liquidators. "That approach could expose residents to increased formaldehyde levels," says CPSC. 
 
CPSC says Lumber Liquidators has already tested the air quality in 17,000 households, with further formaldehyde emissions tests done on 1,300 of those consumers’ floors. "None of those floors has tested above the remediation guideline," says CPSC.
 
Some 614,000 consumers added the Chinese-made laminate flooring through Lumber Liquidators i the four year period. Lumber Liquidators suspended the sale of Chinese-made laminate flooring in May 2015, and had already decided not to sell about 22 million board feet of this flooring. "Any future sale, disposal or transfer of the inventory can only take place with CPSC’s approval," the agency says.
 
The settlement and release with California's Air Resources Board recounts the testing and findings of elevated formaldehyde in Lumber Liquidators flooring, from September 4, 2013, when agency obtainedsampels of the MDF flooring products from stores in California in boxes labeled “CARB Phase 2.” After conducting testing of these products for formaldehyde using the standard "destructive testing" method, the California Air Resources sent its findings to Lumber Liquidators on October 8.
 
Based on this testing, ARB notified LL that deconstructed samples of the following products had tested above the Emission Standard: Dream Home KM Glacier Peak Poplar 12 mm; St. James Vintner’s Reserve 12mm; Dream Home KM Warm Springs Chestnut 12mm; and Dream Home ISPIRI African Thuya Burlwood 12mm. By letter dated May 7, 2015, ARB notified LL that additional deconstructed samples of the following products had tested above the Emission Standard: Km Glacier Peak Poplar 12 mm; and St. James Vintners Reserve 12 mm.
 
By letter dated July 2, 2015, ARB notified LL that deconstructed samples of the following products had tested above the Emission Standard: ISPIRI Poplar Forest Oak 12 mm; St. James Nantucket Beech 12 mm; St. James Vintners Reserve 12 mm; INSPIRI African Thuya Burlwood 12 mm; KM Warm Springs Chestnut 12 mm; and St. James Golden Acacia 12mm.
 
 
The Consumer Products Safety Commission and Lumber Liquidators also issued a joint press release:
 
In cooperation with Lumber Liquidators, of Toano, Va., the U.S. Consumer Product Safety Commission (CPSC) is announcing that Lumber Liquidators has agreed to not resume sales of laminate wood flooring previously imported from China. The company also agreed to continue conducting a comprehensive testing program as part of a recall program that affects consumers who purchased Chinese-made laminate flooring from Lumber Liquidators during a three-year period. In homes where the Chinese-made laminate flooring is found to emit elevated levels of formaldehyde, the company will provide any required remediation.
 
Today’s announcement is not intended to cause consumers to pull up Chinese-made laminate flooring installed in their home. That approach could expose residents to increased formaldehyde levels. Instead, consumers should contact Lumber Liquidators to participate in this testing program.
 
Out of an abundance of caution, Lumber Liquidators has tested the air quality in more than 17,000 households and has retained third-party certified laboratories to conduct formaldehyde emissions tests for about 1,300 of those consumers’ floors. None of those floors has tested above the remediation guideline.
 
About 614,000 consumers nationwide purchased Chinese-made laminate flooring through Lumber Liquidators from 2011 through May 2015. Today’s announcement comes after Lumber Liquidators suspended the sale of Chinese-made laminate flooring in May 2015 and announced its decision not to sell about 22 million board feet of this flooring. Any future sale, disposal or transfer of the inventory can only take place with CPSC’s approval.
 
Lumber Liquidators will continue its voluntary program to test for formaldehyde emissions in consumers’ homes. Lumber Liquidators and the CPSC encourage consumers who purchased Chinese-made laminate flooring from the company from February 2012 through May 2015 to request a badge kit and screening test. There is no cost for the kits.
 
For consumers found to have elevated levels of formaldehyde in their homes, Lumber Liquidators will contact them for more extensive testing of their laminate flooring. Based on these test results, Lumber Liquidators has agreed to work with consumers to reduce the formaldehyde emissions levels and improve the indoor air quality of the home. If those efforts are unsuccessful, the company will pay for a certified industrial hygienist to examine the home and propose an additional remedy for the homeowner. The additional remedy would be free to the consumer and could involve replacement of the flooring or repairs to the home.
 
Consumers should immediately contact Lumber Liquidators to request a free testing kit by calling 800-366-4204 between 8:00 a.m. and 9:00 p.m. ET Monday through Friday, between 9:00 a.m. and 7:00 p.m. ET on Saturday, or between 11:00 a.m. through 7:00 p.m. on Sunday; or visit  www.lumberliquidators.com/ll/testkit .
 
Investigation Findings
 
The company’s actions come as CPSC has completed its evaluation of the safety of laminated flooring imported by Lumber Liquidators from China since 2011. Since the spring of 2015, the federal government has dedicated significant resources to determining if the Chinese-manufactured laminate flooring sold by Lumber Liquidators and installed in homes represents a health risk. The flooring was the focus of a  60 Minutes  segment in March 2015 alleging that certain boards did not meet current California Air Resources Board standards for formaldehyde emission .
 
On March 25, 2015, CPSC Chairman Elliot F. Kaye announced that the agency had opened an investigation into the matter. CPSC staff purchased samples of the product and contracted with certified laboratories to test for formaldehyde release from those flooring samples reported by  60 Minutes  to have the highest formaldehyde emission. CPSC also requested that the Centers for Disease Control and Prevention’s (CDC) National Center for Environmental Health/Agency for Toxic Substances and Disease Registry (NCEH/ATSDR) evaluate the testing results for possible human health effects from formaldehyde released into indoor air from this China-manufactured laminate flooring. CPSC staff reviewed the ATSDR report and substantially concurred with their findings.
 
CPSC and ATSDR determined that eye, nose, and throat irritation could occur with the higher formaldehyde emitting flooring samples in certain home environments. Irritation can happen in anyone, but is more likely among children, older adults, and people with respiratory issues, such as asthma or other breathing problems. Very high levels of formaldehyde in homes may also be associated with a small increase in cancer risk.
 
Some homes may already have high levels of formaldehyde emitted from products other than laminate flooring, such as cabinets, furniture or curtains, or from environmental tobacco smoke.
 
Lumber Liquidators agreed that its future laminate flooring products will be subject to enhanced supplier controls designed to achieve compliance with California formaldehyde requirements and any future federal requirements for laminate flooring. Currently, Lumber Liquidators’ laminate flooring only comes from North America and Europe.
 
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