There is no controlling legal authority which oversees the distribution of off grade resins.
Misrepresentation of key properties is common practice with what is known as "the brokers". Did you know ? There are no prerequisites for being an off grade resin broker.
A "major" is short for a major petrochemical company which manufactures plastic resin. A "broker" is an entity which takes title to the resin which the major deems to be not "prime" resin. The majors sell prime through their direct sales force and prime distributors.
Want FDA approval of off grade resin ? Simple. The broker just changes a few things on a word doc and voila !
Instant food grade.
A data sheet lists certain key properties which define the characteristics of a resin. The first - melt index or melt flow - describes viscosity. This tells the processor the most about how the material will behave and how it will affect the outcome of the part or material. There are other criteria but going into depth would be too far in the weeds.
Each of these criteria has a target and acceptable range for what is considered to be "prime". These are not rigid and fixed. Rather, they are at the discretion of the product manager at the resin producer. The parameters change depending on the available supply. When resin is plentiful, the parameters tighten up. When resin is "tight", they widen. It's all a function of what the product managers believe they can get away with.
Off grade, or OG for short, is sold through "brokers ". By selling to a third party, the origin is obfuscated. Brokers are supposed to be discreet and sell off grade to customers who are not direct customers of the same majors and preferably into a different application than originally intended ( It gets interesting when brokered resin finds it's way to prime customers ). A business model which relies on somebody's mistakes at first sounds like a scary business model. When resin is "tight" or when the majors are trying to raise prices, the brokers don't have much to sell. The truth is there will always be material available which is rejected by processors. ( We reject several prime railcars annually produced by ISO 9000 certified major resin companies. )
The majors each have a designated person who offloads the off grade. As you might expect, there is high turnover in these positions because a lot of money can be made unethically in a very very short time. When the broker talks to the contact at the majors, the broker must make the seller's job easier by taking as much material per meeting as possible. This means the broker has to take the winners and losers both.
The perspective on customers and brokers is viewed topsy turvy. Suppliers are valued inversely to customers. In other words, the mentality is you can always get another customer but establishing a relationship with another major is tough. Here's an illustration from real life: back in the 1980's I worked for a resin reseller in Los Angeles. My first large order was for 4 railcars of ostensibly near miss garden variety general purpose polyethylene film grade. I sold them to 4 different processors. About 2 weeks later, my phone started ringing at 5 AM Pacific with calls from angry plant managers back east who rejected the cars. My boss shrugged and said "sell them somewhere else; a broker rejects material maybe twice in his entire career. We can always get another customer. " That was just the beginning. When it got to the point that entire days were spent trying to sell the same material, I left.
The most ethical and truthful brokers graduate to become what is known as "prime" distributors. They distribute prime to smaller processors not called on by the major's direct sales force.
It's easy to spot a newbie resin buyer. They are too smart by half. They make the rookie mistake of shoving an invoice from a distributor in the face of the direct sales rep. " I can buy the exact same thing from your off grade broker for 4 cents a pound less !! " Maybe so for one car. After that, their reputation precedes them and they get no more deals. Experienced buyers know the importance of emptying / returning a car quickly so the direct sales rep does not see the car which came from his own plant.