It's high noon in California for the panel industry.

Imagine a U.S. wood products industry without particleboard, MDF and hardwood plywood. As unlikely as that sounds, it is not beyond the realm of possibility in the worst case scenario envisioned by a coalition of panel manufacturers and their customers that is challenging the California Air Resource Board's proposed Composite Wood Air Toxic Control Measure.

CARB chose to promulgate the rule to safeguard consumers from the alleged health risks, including cancers associated with exposure to formaldehyde.

At the very least, the regulation, as currently outlined by CARB, could have a potentially huge impact on composite panel prices and availability within the next four years.

At the center of the CARB regulation debate is the establishment of separate Limits on formaldehyde emissions from particleboard, MDF and hardwood plywood. These limits, which are subject to a scheduled Sept. 28 vote, would be established in two phases, as follows:

* Particleboard would have to meet a 0.15 parts per million (ppm) limit on July 1, 2008, followed by a more stringent 0.05 ppm on July 1, 2010.

* MDF would have to meet a 0.19 ppm Limit on July 1, 2008, and a 0.05 ppm limit on July 1, 2012.

* Hardwood plywood would have to meet a 0.09 ppm limit on July 1, 2008, and a 0.03 ppm limit on July 1, 2010.

The onus of meeting these emission Limits is not only on composite panel manufacturers, but also on wood product manufacturers, importers and retailers that do business in California. For example, a cabinet manufacturer based in Texas would have to verify that its products made with composite panels meet the CARB rules to be able to sell to California customers. Evidence of compliance will require a paper trail of certification modeled after the Forest Stewardship Council's chain of custody program.

Forcing the Issue

For nearly four years, the California Wood Industry Coalition has actively worked with CARB to present its views in hopes of persuading the agency to either forgo its pursuit of a regulation or to at least create one that takes into account more current health risk assessments and the cost of compliance. The CWTC is ed by the Composite Panel Assn. and includes the Hardwood Pywood & Veneer Assn., the Kitchen Cabinet Manufacturers Assn., the American Home Furnishings Alliance and other industry stakeholders.

Tom Julia, president of the Composite Panel Assn., said the CARB proposal represents "a significant risk to our industry" and could have "a ripple effect across the U.S., if not the world."

Julia told Wood & Wood Products that the CWIC is particularly concerned about the phase two limits of the proposed rule, which sets "emission Levels that are so exceedingly low, we're not even sure that we can test them effectively."

As a result, Julia said, "We are going to push back pretty hard on the concept of a "technology forcing regulation.' That is the Language the CARB staff is using, which is basically saying, 'We know you don't have the technology to do this now, and even if you had the technology, it may be cost-prohibitive. But, you will find a way."

A second "significant thing" that Julia said the CWTC will be watching closely over the coming months concerns enforcing the regulation against offshore products. "How are they going to create the proverbial level playing field? In other words, are we simply going to make domestic manufacturers jump through all of these hoops, force them to Lower their emissions and incur higher production costs while being in no position to enforce against offshore products? [CARB] risks undermining the entire wood products industry in North America, and possibly shifting even more of it offshore by overreaching."

Costly Alternatives

Urea formaldehyde resins are used in the vast majority of the more than 8 billion square feet of particleboard and MDF manufactured each year in North America because of its performance properties and relatively low price. According to a report prepared by CARB, urea formaldehyde resins cost about half as much as phenol formaldehyde resins and about one-fourth the cost of isocyanate resins. Julia noted that less costly alternatives to urea formaldehyde, including soy-based adhesives, though beginning to be used commercially in hardwood plywood production, have not as yet been used for manufacturing particleboard and MDF.

"We are supportive of working toward Lower emission Levels," Julia said. "We are supportive of Looking for new technologies. We are open to all of that and will voluntarily, or otherwise, lower our emission levels.

"I think well have to see if this ends up being a reasonable regulation or one that overreaches. Clearly, if you Look at trends this year, this is one that the industry has been waiting for to hit the fan and it is hitting the fan this year."