When Regulation Serves Business Interests

By Michael Green

There’s a well-worn cliché that businesses oppose all government regulation. But what happens when companies look to the government for fair rules that promote safer products? As some recent cases demonstrate, too often our government lags behind these responsible companies, leaving both business and consumers at risk from market scams and unsafe products.

Take the case of the organic food sector – an industry that actually requested government regulation. For decades the organic industry was a self-regulating community made up of state and regional certifiers, farmers, and processors. You may not be surprised to learn that the country’s largest organic certifier, California Certified Organic Farmers, celebrated its 40th anniversary in 2013 – but you probably did not know that Maine launched its organic program two years before California. Organic certifiers from coast to coast had different standards for “organic” products for nearly three decades, until the industry came together and urged the government to help develop a unified national organic standard.

The organic sector recognized that a federal standard with independent, government oversight would help insure fair competition and promote markets for their products. According to the USDA, the organic standard has been wildly successful in promoting organic sales: since it was finalized in 2001, the U.S. market for organic food has outpaced supplies, with sales of organics tripling by 2008.

Unfortunately, the organic standard has not been strongly regulated in some non-food sectors. For example, today there are dozens of cosmetics and personal care products labeled “organic,” yet USDA has balked at enforcing standards for these products. This has left responsible companies who make premium-priced organic cosmetics at an unfair disadvantage, since competing purveyors can simply print phony “organic” labels for their cheaper products that actually contain few or no organic ingredients.

In California, the only state with a federally recognized organic code, recent lawsuits exposed this hoax and ended false claims by more than forty companies, including major brands like Kiss My Face and Boots (a brand now co-owned by Walgreens). Under legal settlements, some companies, like the company that makes “Organix” brand hair care products, are now required to use a different name – but only in California. Ultimately, a class-action case forced this company to make its name-change nationwide, but some other companies continue to use their phony organic labels outside of California.

There’s obviously no reason why a consumer –- or an honest organic business -- in Ohio should have less protection from organic scams than those in California. But despite urging from businesses, consumers, and organic advocates, USDA continues to allow unregulated sales of these phony “organic” cosmetics.

Another example of outdated government rules is from the furniture industry. In the 1970s, California adopted a flammability standard called TB 117, promoting the use of flame retardant chemicals –including substances linked to cancer, infertility, and other serious illnesses -- in virtually all furniture. At the time, this rule was advanced as the best way to protect families from furniture fires.

But as a 2012 exposé by the Chicago Tribune discovered, promoting the use of flame retardant chemicals in furniture was a ploy by the tobacco and chemical industries to fend off regulators who were calling on the tobacco industry to make fire-safe cigarettes. The scheme saved tobacco companies from being forced to change their products, and insured a steady market for the chemical companies’ toxic products. Given the enormous size of the California market, the flame retardant makers knew that most furniture companies would comply with the state standard by using chemical flame retardants in all products nationwide, rather than make a separate product line just for California.

For years, health advocates worked to expose the threats to children and families from flame retardants in furniture and urged California lawmakers to update this standard. Major businesses also supported change, since their customers were demanding safer products made without flame retardants.

Finally, on January 1, 2014, a new California flammability standard that provides for improved fire safety without the use of harmful chemicals went into effect. In October, with the new rules coming, the HBO documentary Toxic Hot Seat featured our organization and noted our experience in working with businesses that are interested in making safer products. The day after the movie aired, we were contacted by the founder of a national brand ergonomic furniture company who wants to work on making their products meet the new standard without harmful chemicals.

Others have also noted that many furniture makers are eager for the overdue standard: Russ Heimerich of the California Department of Consumer Affairs told the Los Angeles Times, “We anticipate seeing a huge number of pieces of furniture meeting the new standards in the first six months [of 2014]. There's consumer demand for furniture that doesn't have chemicals in it, and the manufacturers know that.”

While we welcome this happy ending, it should not take more than forty years to correct “safety” standards that both businesses and consumers know are actually making us sicker. With stronger partnerships between responsible businesses and health advocates, government can create rules that work better for all of us. Let’s undo the myth of anti-regulatory businesses, and collaborate for common-sense regulations that serve both our health and the bottom line.

Michael Green is Executive Director of the Center for Environmental Health.