No, they're saying people intentionally misinterpreted what they'd done.
As an example of this sort stuff, maybe you carefully define "Must not be used" in your legislation for banning materials and then you later actually write that a material "Should not be used". If a bunch of people die you can say "Actually we said very clearly that it shouldn't be used!" but if instead a bunch of companies are annoyed by how expensive it is to find an alternative you say "Actually we didn't ban it - we only used the word 'should'".
> The regulators say they thought they'd banned it.
That sounds like they're saying it is their fault.