UFFI: a parable of regulation vs. invention

It's a large colonial house, set among lawns and centuries-old maples in an upmarket Boston suburb. For over a year the local real estate directories listed it at a six-figure selling price. But it never sold. The reason? The directories also listed something else: the word ''yes'' beside the letters ''UFFI.''

UFFI (or ''you-fee,'' as it's called in the trade) is urea-formaldehyde foam insulation - a substance so controversial that it remains banned in Canada for health reasons, yet is so effective in retrofitting older houses that it spawned a multimillion-dollar industry.

It's also at the center of one of the more bizarre regulatory cases in recent years. Why? Because UFFI touches two sensitive points: the pocketbook (since buying a house is the largest investment most people make) and the domestic environment (where, as the debates over Love Canal, lead paint, and asbestos make plain, people increasingly demand purity).

UFFI came into prominence during the heating-oil price shocks of the past decade. Between 1975 and 1980, it was installed in some 500,000 US houses - a process which employed, at its peak, four manufacturers and some 230 installation companies. Its success lay in ease of installation: A meringue-like foam, it was injected into hollow wall cavities and left to harden.Its undoing, however, lay in its ingredients. It sometimes released small amounts of formaldehyde gas inside the house, causing hundreds of health-related complaints to state and federal authorities and posing what was described as ''an unreasonable risk to consumers.''

That's how the federal Consumer Product Safety Commission (CPSC) phrased the problem when, in February of 1982, it banned UFFI. The industry, staggered by lawsuits, fought back. Then, last April, the Fifth Circuit Court of Appeals in New Orleans overturned the ban, noting that the commission had based the ruling on inadequate evidence.

So UFFI (except in five states with statewide bans) was legal again. Not satisfied, the CPSC asked the Justice Department to appeal the New Orleans decision to the Supreme Court. But the nation's regulatory pendulum, meanwhile, had swung toward the less-is-better end of the scale. In August, the department decided not to appeal. Clearly miffed by the rebuff, the CPSC voted Sept. 15 to assemble a ''Chronic Hazard Advisory Panel'' to reconsider the evidence - giving the CPSC, as its spokeswoman said, ''the option to renew the ban.''

In fact, a new ban may be redundant. Since the 1982 CPSC decision to ban the product, the industry has collapsed. The trade group that used to represent it is defunct, its companies driven out of business by adverse publicity or into bankruptcy by lawsuits. UFFI, it seems, is gone.

But the questions remain. Was UFFI a marvelous invention, capable of transforming vast, unheatable homes into affordable living spaces? Or was it a counterfeit rushed greedily onto the market without proper testing? Or was it right in conception but wrong (as a spokesman for the Formaldehyde Institute maintains) only when improperly installed?

The nation turned, for answers, to its scientific community - only to find divided opinions in the absence of further tests. Meanwhile the homeowners waited - and watched some homes drop in value by up to 40 percent. Some blame the regulators (who banned UFFI from homes and schools but not from hospitals and factories) for issuing a ban that couldn't stick. Others blame them for blowing up a scare-storm in the first place.

Who was right? No one is yet sure. But there are even larger questions here. Have we, under our multitudinous regulatory agencies, allowed a double standard of justice to arise? We pride ourselves, in this democracy, on the fact that a person is innocent until proved guilty. To defend this principle, we sometimes let soon-to-be-imprisoned criminals walk the streets on bail.

Should that principle extend to inventions as well? Should they be considered innocent until proved guilty - and not, like UFFI, be blackballed without sure proof? In our desire to protect ourselves from ourselves, are we trampling on justice - and perhaps stifling the inventiveness that lies at the heart of the nation's greatness?

No one is yet sure of that,m either.

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