New Law on Imported Drywall Falls Short

WASHINGTON — For nearly four years, victims of contaminated Chinese-made drywall have sought help from the federal government to solve a problem that has wreaked havoc in thousands of homes across the country.

On Monday, President Barack Obama signed a new law aimed at the tainted drywall. The law, passed in the waning hours of the 112^th Congress, seeks to implement standards to prevent future problems with bad drywall.

But a 100Reporters review of the legislation shows that the law is unlikely to provide relief to current and potential victims of contaminated drywall. It does little to prevent the sale of tainted homes to unsuspecting buyers. Absent from the law are meaningful standards to insure that new drywall — both imported and domestically produced — does not release potentially hazardous levels of sulfur gases.

In addition, after lobbying pressure from industry, the law hands off virtually all responsibility for writing a handful of new rules to drywall manufacturers themselves, rather than government regulators.

As a result little may actually change for those whose finances and health have been severely impacted by the tainted drywall.

Drywall, also known as wallboard, gypsum board or Sheetrock, has long been used to build the interior walls of most U.S. homes. But during the housing boom, and after the devastating 2005 hurricane season that included Katrina, drywall stockpiles in the U.S. ran short. A number of suppliers and builders turned to imported gypsum board from China.

Large quantities of the Chinese drywall arriving on U.S. shores, however, turned out to be contaminated — releasing noxious and corrosive sulfur gases such as hydrogen sulfide and carbon disulfide into the air of homes built with it.

At least 550 million pounds of drywall arrived from China between 2006 and 2008, shipping records show — enough for 60,000 average-sized houses. Since then, tainted Chinese drywall has turned up in thousands of homes, corroding wires and pipes, causing smoke detectors and electronic devices to fail, and resulting in a host of respiratory ailments, nosebleeds and sinus problems plaguing affected homeowners, their children — even their pets.

(Records compiled by the Sarasota Herald-Tribune and ProPublica in 2010 found about 7,000 affected homes involved in lawsuits or tax abatement programs; the number has continued to grow since then.)

Fixing a tainted home requires essentially gutting the house down to the studs and rebuilding — frequently at a cost upwards of six figures. But some builders and investors have engaged in dubious and incomplete fixes, selling off the still-tainted houses to unsuspecting buyers. To date, federal regulators have not stepped in to require disclosures that could help prevent those practices.

The federal government’s investigation, headed by the Consumer Product Safety Commission, never used its existing authority to crack down on the companies responsible, or to determine the cause of the sulfur emissions and how extensive the health effects could be. Meanwhile, the safety commission found itself outmatched, and lacking in strong enforcement powers to pursue companies overseas in China, or to force a drywall recall.

Surrender on Standards

Though its intentions were always limited, the newly enacted Drywall Safety Act started out with more teeth when Rep. Scott Rigell, a Republican from Virginia Beach, first introduced it last year. At its inception, the bill aimed outright to make the buying, selling and using of contaminated Chinese drywall illegal. It called for tainted drywall to be “treated as a banned hazardous substance under the Federal Hazardous Substances Act” and as “an imminent hazard under section 12 of the Consumer Product Safety Act.” (That section details enforcement mechanisms for going after products presenting an “imminent and unreasonable risk of death, serious illness, or severe personal injury.”)

However, by the time Rigell’s bill got through the House Energy and Commerce Committee — a panel known on Capitol Hill for opposing new environmental regulations — the bill was reduced to calling only for better identifying marks on drywall, and for a standard on “sulfur content.” It further allowed regulators to simply defer to an industry-developed voluntary standard.

The National Association of Homebuilders opposed even the weakened bill, citing fears it would broaden the Consumer Product Safety Commission’s authority. “Homebuilding is already a highly regulated industry,” the group wrote in September to House Speaker John Boehner. The builders wanted more assurances that industry, not the government commission, would write any new rules — however modest — for drywall.

The homebuilders’ association pressed its case in the Senate, persuading Louisiana Republican David Vitter to place a hold on the bill. As a result, the Senate redrafted the legislation to designate a specific drywall working group within ASTM International (formerly the American Society for Testing and Materials), a business association that develops voluntary standards, to write the rules.

That working group, dominated by drywall manufacturers themselves, has been mired in delay and in-fighting for years — unable to even agree on basic guidelines for repairing homes with bad drywall. This past summer, it essentially went dormant altogether.

The National Association of Homebuilders declined to answer questions. A spokesman for Vitter did not respond to requests for comment.

The Senate version calls for the Consumer Product Safety Commission to essentially defer to ASTM’s standards, even if they later change. If the industry group changes its “sulfur content” standard in future years, the commission will have only 90 days to review it.

Gases that Count

But by focusing on “sulfur content” at all, the new law ensures no meaningful standard will be developed to keep drywall safe.

That is because to date, the federal government has not determined what is actually causing the drywall to release corrosive sulfur gases.

Theories have abounded: everything from contaminated gypsum mines, to problems with synthetic gypsum made from the byproduct of coal-fired power plants. The root cause could even reside in a faulty production process, or it could be a combination of such factors.

But four years after the problem first publicly emerged, the federal investigation has never reached a conclusion.

That leaves only one definitive way to test whether a piece of drywall is contaminated: measure the levels of gases the drywall releases, and their ability to corrode metals such as copper. If the sulfur gas emissions, also known as out-gassing, can corrode copper, then the drywall is conclusively tainted.

“The out-gassing is the only thing that matters,” said Michael Foreman, head of Foreman & Associates, which has been investigating tainted drywall since the crisis first emerged. “That’s why what you need is a standard for what’s an acceptable level of sulfur gas emissions from drywall. That would keep this from happening. Looking at sulfur content is a joke.”

A standard based on limiting emissions — much like what’s been enacted for formaldehyde levels allowed from composite wood products — would get to the root of the problem, Foreman said. It would both keep builders and consumers safe from bad drywall entering the marketplace, and would compel manufacturers to figure out what materials caused the emissions in order to control them.

“If we have a standard for out-gassing, then it takes care of the problem. It’s really as simple as that,” he said.

But that’s not what the new law calls for.

Legal Relief in Limbo

Meanwhile, affected homeowners have faced an uphill legal battle. Thousands of lawsuits combined in a New Orleans federal court have been ongoing for nearly four years. But the Chinese manufacturers have shown little interest in cooperating. (The exception is a Chinese subsidiary of German conglomerate Knauf Group.)

The ability of Chinese companies to skirt the U.S. court system did not go unnoticed by lawmakers crafting the new Drywall Safety Act. The act declares it the “sense of Congress” that the Chinese government “direct the companies that manufactured and exported problematic drywall to submit to jurisdiction in United States Federal Courts and comply with any decisions issued by the Courts for homeowners with problematic drywall.”

However, the “sense of Congress” language carries no legal weight, and there is little to indicate Chinese authorities will change their stance absent strong diplomatic pressure, which thus far has never been applied.

In fact, a much stronger legislative effort was launched in the last Congress requiring all overseas manufacturers doing business in America to submit to U.S. jurisdiction. Initially it appeared to gain traction.

But the Foreign Manufacturers Legal Accountability Act lost momentum after industry groups denounced it as costly and a threat to jobs. In Dec. 2011, the National Association of Manufacturers and the Organization for International Investment released a joint letter saying the bill imposed “burdensome requirements on legitimate companies based in the United States and abroad.” The measure failed to advance.

This year, however, proponents are set to try again.

Kate deGravelles, federal relations counsel at the American Association for Justice, which represents plaintiffs’ attorneys, said a new bill will likely be reintroduced in the House this spring. She said not only do Americans harmed by defective products like Chinese drywall have little recourse, but American-based companies remain at a disadvantage over foreign manufacturers who can ignore quality control while escaping the consequences.

“U.S. businesses are playing by one set of rules, and foreign manufacturers that profit from American consumers are playing by another,” deGravelles said. “We feel that has to change.”

Silence from Lawmakers

Lawmakers who sponsored the drywall bill were largely unwilling to answer questions about it, despite issuing glowing press releases touting the measure as an important step.

A spokeswoman for Sen. Mark Warner (D-Va) declined to answer questions on the record, and instead only provided a previous news release, where Warner said the bill meant “more Virginians will not have to go through similar nightmares.”

Even Rigell himself, the Virginia Beach congressman who first introduced the legislation, was reluctant to talk. His office did not respond to requests for comment.

A spokesman for Sen. Bill Nelson (D-Fla.) said only that many lawmakers felt passing something was better than nothing at all.

“It’s not a perfect bill, but it’s the best we could do under the circumstances,” said Nelson spokesman Bryan Gulley. “We can’t let these companies off the hook, we’ve got to keep the heat up on the Chinese. So this bill is a way of keeping up that pressure.”

Meanwhile, Foreman is not optimistic the ASTM drywall committee empowered by the new law can overcome its conflicts of interest. He would know: he sits on the panel.

Foreman said early on, ASTM could have assigned the contaminated drywall issue to another working group. The industry organization has committees that deal with air quality issues, with environmental hazards, with caustic or damaging chemicals, among others.

But the organization decided to let the drywall committee — which includes numerous drywall manufacturers themselves — attempt to identify the flaws in their own product.

“That was a mistake, I feel. It became a political hot potato,” Foreman said. “But we can’t go back and rewrite history, so we are where we are.”