Gulf South Insulation v. Consumer Product Safety Commission

Nos. 82-4135; -4136; -4218; -4311 (701 F.2d 1137) (5th Cir. April 7, 1983)

ELR Digest

The court rules that the Consumer Product Safety Commission's (CPSC's) ban on urea-formaldehyde foam insulation (UFFI) in homes and schools was not supported by substantial evidence on the record and is invalid. The CPSC issued the ban on April 2, 1982 on the basis of (1) in-home and laboratory tests indicating that homes insulated with UFFI contained significantly higher levels of formaldehyde than other homes, (2) investigation of complaints from residents of homes in which UFFI had been installed and a National Academy of Sciences report that these is no threshhold level of formaldehyde below which there is no risk of irritation, and (3) a toxicological study linking high exposure to formaldehyde to nasal cancer in rats which, when extrapolated to human risks through the Global 79 risk assessment model, indicated that the levels of formaldehyde found in UFFI homes presented a risk of up to 51 additional cancers per million people. Relying on these findings, the CPSC rules that UFFI insulation created an unreasonable risk of cancer and acute irritation when used in homes and schools.

Initially, the court rules that it must apply a substantial evidence test in reviewing CPSC actions and that the test requires closer scrutiny than an arbitrary and capricious standard. Next, the court rules that the CPSC lacked substantial evidence in support of its finding of an unreasonable risk of cancer. The court faults the CPSC data on in-home formaldehyde levels, finding that while they do suggest that UFFI use appreciably raises inhome concentrations, they are not sufficiently conclusive or precise for use in estimating the risk of cancer through a risk assessment model. Likewise, the court finds that the CPSC data on carcinogenicity suggest a link between formaldehyde and cancer, but they are too fragmentary and imprecise to use in risk assessment.

The court also rules that the record on acute irritant effects does not provide substantial evidence in support of the CPSC finding of unreasonable risk. The agency was required to determine that the risk of injury from acute irritant effects, taking into account the likelihood of injury, outweighed the harm imposed on manufacturers and consumers by the regulations. The court found that the CPSC failed to adequately assess the risk of injury since it did not quantify the risk at the formaldehyde levels actually associated with UFFI.

In addition, the court rules that the CPSC erred in regulating UFFI under the Consumer Product Safety Act (CPSA) instead of the Federal Hazardous Substances Act (FHSA). The agency's authority to use the less stringent procedures of the CPSA where the risk could not be addressed through the FHSA, which is limited to in-home problems, was not triggered by the decision to address in-school risks, because the record showed no evidence of high formaldehyde levels in schools. Nor was it in the public interest to use the CPSA instead of the FHSA where the only justification given in the record was the CPSC's desire to avoid the complex and costly procedures mandated by the latter statute.

The full text of this opinion is available from ELR (15 pp. $2.50, ELR Order No. C-1318).

Counsel for Petitioners
Paul E. Hurley
Hurley & Hoffman
925 Common St., New Orleans LA 70112
(504) 522-0807

Edward Canfield
Casey, Scott & Canfield
420 Washington Bldg., 1435 G St. NW, Washington DC 20005
(202) 783-6490

Counsel for Respondent
Andrea Limmer
Anti-Trust Division
Department of Justice, Washington DC 20530
(202) 633-4419

Clark, J.

[OPINION OMITTED BY PUBLISHER IN ORIGINAL SOURCE]