Lumber Liquidators Holdings Inc Home-Testing Method Under EPA Scrutiny

The US Environmental Protection Agency (EPA) is scrutinizing the home-testing method offered by Lumber Liquidators Holdings Inc. (NYSE:LL) to reassure its customers that the flooring products are safe.

In response to the accusations that its laminate flooring products sourced from China released excessive amount of carcinogen and formaldehyde, Lumber Liquidators sent the consumers of its laminate products thousands of do-it-yourself (DIY) tests. As part of the DIY tests, consumers are required to use an instrument available in the package to measure and store the air present in their households for a span of 24 hours. Then, they would send the package back to the company, where the company would evaluate whether the air is contaminated with formaldehyde or not.

EPA did not take a stance on the particulars of the company’s testing method; rather, the agency declared on its official website that such testing of air present in homes “may not provide useful information due to the uncertainties” of such an approach. The agency argued such air tests do not identify the precise cause of a contaminant. Currently, there are no widely accepted rules or guidelines to measure formaldehyde levels indoors.

“Lumber Liquidators agrees with the EPA in that home testing cannot identify the source of formaldehyde in consumers’ homes,” the company responded in an online statement, according to Bloomberg. “We also believe, however, that indoor air testing can provide guidance on the presence or absence of elevated levels of formaldehyde in the home – which helps determine whether further testing is warranted.”

EPA also voiced its contention on certain public statements made by the company. Lumber sent a letter to its users who had purchased the product and undertaken the formaldehyde DIY home tests, where it cited a “recent study” taken by the EPA to reassure consumers of the products’ safety. The agency said the cited research study was an outside work, merely referenced in a document, and does not represent its verification and conclusion. The agency clarified it does not have any standards on formaldehyde in place, but regulations proposed so far should be finalized this year.

The embattled hard-flooring company has been bearing the brunt of the “60 Minutes” report since March, pushing its stock to 52-week lows as investors rapidly sold the stock short. Coupled with dozens of class action lawsuits filed against the company, Lumber Liquidators has been reeling on sales decline and an official federal investigation into the allegations. Its chief executive officer, Robert Lynch, also resigned last month amid this regulatory turmoil. Shares of the company have plunged over 50% since CBS aired “60 Minutes” on television.

Initially, the company vehemently denied the allegations and defended its laminate flooring products sourced from China, saying they were 100% safe. It also questioned the legitimacy and authenticity of the reporting undertaken by “60 Minutes.” However, the retailer halted the sale of the China-made laminate flooring only last month.

As of May 1, the company said as many as 3,400 test packages have been evaluated to check for safety, and affirmed almost 97% of its tests found carcinogen level within the range set by the World Health Organization, in its safety guidelines for any adverse long-term health impact and sensory irritation.

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