Authors: Mark N. Duvall Principal 1350 I Street, N.W. Suite 700 Washington, DC 20005 (202) 789-6090 mduvall@bdlaw.com Paul E. Hagen Principal 1350 I Street, N.W. Suite 700 Washington, DC 20005 (202) 789-6022 phagen@bdlaw.com Alexandra M. Wyatt Associate 1350 I Street, N.W. Suite 700 Washington, DC 20005

Consumer Product Safety Improvement Act: One-Year Update

Beveridge & Diamond, P.C., September 14, 2009

On August 14, 2008, the Consumer Product Safety Improvement Act of 2008 (“CPSIA”)1 promised to revitalize a sleepy Consumer Product Safety Commission (“CPSC” or “Commission”). Just over one year later, a reawakened CPSC is charging forward to implement its authority, which includes several provisions that just recently took effect. The CPSC has a full complement of Commissioners, a full plate of rulemaking activities, and a full arsenal of enforcement powers. Its new chairman, Inez Tenenbaum, testified about these changes at a recent Congressional oversight hearing. The regulated community needs to keep up to date on these developments at the CPSC and to prepare for more changes and regulations on the horizon.

New CPSC Commissioners

Republican Anne M. Northup and Democrat Robert S. Adler were sworn in as the CPSC’s fourth and fifth Commissioners on August 18, 2009. Ms. Northup previously served as the Congresswoman for Kentucky’s third district from 1997 until 2007. Mr. Adler worked at CPSC during its first decade and was subsequently a Deputy Attorney General at the Pennsylvania Bureau of Consumer Protection, a member of the board of directors of the non-governmental organization Consumers Union, and a law professor. They join Republican (and former Acting Chairman) Nancy Nord and Democrats Thomas Hill Moore and Chairman Inez Tenenbaum.2

The addition of the two Commissioners marks the first time CPSC has operated with five commissioners since the 1980s. CPSC’s original enabling act provided for five commissioners, but appropriations riders since 1986 limited the Commission to three. Between 2006 and 2009, CPSC actually operated with only two Commissioners, leading to an absence of quorum.3 The CPSIA authorized expansion of the panel back to five members.4 The change is anticipated to enhance CPSC’s ability to make prompt decisions and issue rules and guidance.

New CPSIA Rules in Effect for Children’s Products

As reflected in the CPSC’s budget request for Fiscal Year 2010, the CPSIA is “the most substantial change in CPSC’s authorities since the inception of the Agency.”5 The CPSIA requires the CPSC to issue an onslaught of new regulations on an aggressive timetable. Several requirements became effective in August 2009.6

Lead Content and Lead in Paint

Congress passed the CPSIA largely in reaction to highly publicized recalls of lead-tainted toys made in China in 2007 and 2008. On August 14, 2009, pursuant to

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Consumer Product Safety Improvement Act: One-Year Update

Section 101 of the CPSIA, the limit for lead in any part of a children’s product (defined as a consumer product primarily intended for children aged 12 or younger that is reasonably accessible to children) dropped from 600 parts per million (ppm) to 300 ppm. (The CPSIA allows, and the CPSC has proposed an interim final rule for, alternative limits for some electronics.7) The limit for lead in paint and other surface-coating materials for consumer use dropped even more drastically, from 600 ppm to 90 ppm.

The CPSIA has an exception from the maximum lead content requirements for inaccessible component parts.8 The CPSC issued a final rule interpreting “inaccessible” component parts on August 7, 2009.9 The CPSIA also permits the CPSC to exclude lead-containing materials or products from the lead limit under narrow circumstances.10 To date, the CPSC has denied all such requests for exclusions, including for crystal and glass beads, writing instruments, youth bicycles, and youth motorized recreational vehicles.11 However, the CPSC has provided stays of enforcement for the lead content rule for certain youth motorized recreational vehicles, bicycles, and jogger strollers.12 In addition, pursuant to its general rulemaking authority in Section 3 of the CPSIA, the CPSC published on August 26, 2009 a final rule determining that certain product and material categories consistently meet the lead content limits and need not be tested, including certain gemstones, minerals, metals, and alloys; wood and paper; certain printing inks; most textiles; and plant- and animal-derived materials.13 Keeping track of the CPSC’s lead rules, exclusions and interpretations is proving burdensome, as is the required product testing, especially for smaller companies.14

Phthalates

The CPSIA also restricts phthalates, a family of compounds that are found in plastics and other materials. Effective February 2009, Section 108 of the CPSIA prohibits the sale of child care articles or children’s toys containing more than 0.1% of three specified phthalates (known as DEHP, DBP, and BBP). It also prohibits on an interim basis the sale of child care articles and a subset of children’s toys “that can be placed in a child’s mouth” containing more than 0.1% of three more phthalates (DINP, DIDP, and DnOP), pending the recommendation of a Chronic Hazard Advisory Panel yet to be appointed.15 On August 7, the CPSC released a Statement of Policy allowing testing of component parts, rather than entire products, for phthalates and also published a new test method.16

Tracking Labels

Under CPSIA Section 103, beginning August 14, 2009, manufacturers must put a tracking label (permanent distinguishing marks) on any consumer product primarily

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intended for children 12 and younger and on the product’s packaging. The tracking labels must, to the extent practicable, enable consumers to ascertain the manufacturer or private labeler, the location and date of production, and batch or run information that would assist with a recall. The CPSC has yet to issue specific guidance on the size, location and format required or on the meaning of “to the extent practicable,” leaving such parameters largely to the reasonable judgment of manufacturers, but it did release a brief Statement of Policy in July that offers some general direction.17 The regulated community faces considerable confusion over these somewhat uncertain tracking label requirements. The National Association of Manufacturers requested a year-long emergency stay of enforcement of the requirements in March 2009, but the August 14, 2009 effective date arrived without a stay after a deadlocked CPSC vote on the request in May.18

Choking Hazard Advertising Rules

All print advertising distributed after August 9, 2009 for certain toys and games intended for children three to six years old must include a warning about potential choking hazards to children younger than three.19

Updated Toy Test Methods and Specifications

Shortly after ASTM F963-07 became a mandatory consumer product safety rule in February 2009 pursuant to Section 106 of the CPSIA, the CPSC approved the revised ASTM F963-08 in May 2009, effective August 17, 2009.20 The CPSIA further requires the CPSC to assess the effectiveness of the ASTM F963-07 and -08 standards for toy safety, toy labeling, and various test methods. The test methods include requirements for toys with magnets, toxic substances, cords and straps, batteries, and various other components.21

Mandatory Third Party Testing

Under Section 102 of the CPSIA, manufacturers and importers of any children’s product subject to a safety standard must submit samples of their products to an accredited third party laboratory for testing to support certificates of compliance. The testing requirements have been and continue to be phased in on a rolling schedule, although the CPSC stayed the requirements with respect to many safety standards until February 10, 2010. (Manufacturers of consumer products not classified as “children’s products” are also subject to increased certification requirements under the CPSIA but may self-certify.) The CPSC issued requirements on September 2, 2009 for the initial accreditation of third party conformity assessment bodies, and on August 13, 2009 for their periodic audit.22

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Consumer Product Safety Improvement Act: One-Year Update

New Enforcement Powers

The CPSC’s exponentially increased civil penalty authority also became effective on August 14, 2009. Under CPSIA Section 217, the maximum penalties for violations increased from $8,000 to $100,000 for each knowing violation and from $1,825,000 to $15,000,000 for any related series of violations. The CPSIA also expanded the factors that the CPSC could consider when determining civil penalties. The Commission voted on August 19 to issue an interim final rule interpreting the civil penalty factors it will consider and giving the CPSC great flexibility and discretion.23 These expanded penalties build on other enforcement enhancements in the CPSIA, including the expansion of the long-standing Consumer Product Safety Act Section 15(b) requirements for companies to report certain potential problems with consumer products to the CPSC.24 Moreover, the appropriation bill for Fiscal Year 2010 increases the CPSC’s funding to $115 million, an increase over both the Fiscal Year 2009 budget and the Obama Administration’s requested budget (although not the full amount authorized by the CPSIA).25

The impacts of these new penalties and factors are already being felt, as the CPSC is eager to show that it is cracking down on violators. For example, announcing a provisional settlement on August 17, Chairman Tenenbaum stated that “CPSC’s new authority to seek higher civil penalties does not mean we will ignore serious violations by small businesses. . . . We will continue to take enforcement action against any business, large or small, that violates the Commission’s product safety laws and regulations.”26 The CPSC is also strictly enforcing Section 15(b) reporting requirements, including in several large penalties announced on September 8, 2009.27

New Reports and Recommendations

The CPSIA mandated several reports from the Government Accountability Office (“GAO”), known as “the investigative arm of Congress,” due on the one-year anniversary of enactment. The GAO released a report on August 14, 2009 asserting that the CPSC’s current limited resources and lack of information—especially access to manifest data from cargo ships from the U.S. Customs and Border Patrol (“CBP”)—are hindering its ability to prevent the sale of unsafe imported consumer goods.28 The GAO report recommended better coordination with CBP and more comprehensive long-term planning, and the CPSC concurred. The CPSC is developing a risk assessment methodology for identifying and prioritizing shipments of consumer products likely to contain products in violation of law and anticipates completing that task by next August. Another GAO report issued on August 5, 2009 declared that while research suggests that there are racial disparities in child death rates due to injuries related to consumer products, the CPSC lacks the data to

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routinely assess whether such disparities exist and to reduce disproportionate hazards.29 The CPSC agreed with that report’s recommendations as well.

New CPSC Agenda: The Future of CPSIA

While August 2009 was a milestone month for the CPSIA, the law has many more rules and deadlines in store for the busy CPSC and for regulated businesses. Among the many upcoming tasks for the CPSC as it continues to implement the CPSIA30 are promulgation of rules setting forth the information that must be included in mandatory recall notices;31 initiation of a program for manufacturers or private labelers to label products as complying with certification requirements;32 creation of standards for ensuring compliance when there has been a change in a product’s design;33 implementation of a public product safety database;34 and promulgation of several safety standards for durable infant and toddler products such as cribs and strollers.35

The CPSC has also not yet updated its 2003 long-term strategic plan to take into account its new responsibilities under the CPSIA,36 but it has already begun crafting its agenda, priorities, and strategic plan for fiscal year 2011, which begins October 1, 2010. The CPSC held a public meeting on August 25, 2009 to hear comments on that agenda.37 At the meeting, Consumers Union set forth a number of its priorities, including more robust import surveillance at ports of entry, easily searchable databases, additional chemical toxicity studies, and increased study of nanomaterials, particularly nanosilver. The Project on Emerging Nanotechnologies also promoted significant expansion of nanotechnology-related oversight plans. The nonprofit Kids In Danger requested, among other things, improved recall effectiveness and transparency and an official consumer group liaison. The American Apparel & Footwear Association requested better industry outreach and education. There were several comments on the use of X-ray fluorescence technology to test for lead. Finally, the National Association of State Fire Marshals urged that “the emphasis on implementing the CPSIA must not overwhelm and minimize the important work necessary to address fire and carbon monoxide hazards.” All together, the diversity of comments and priorities presented at the meeting highlight the tough road ahead for the CPSC and the regulated community alike in the near future.

Oversight Hearing

On September 10, 2009, the House Energy and Commerce Committee’s Subcommittee on Commerce, Trade and Consumer Protection held its first oversight hearing on the CPSC since the passage of the CPSIA.38 At the hearing, entitled “Consumer Product Safety Commission Oversight: Current Issues and a Vision for the Future,” CPSC Chairman Inez Tenenbaum was the sole witness.

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Ms. Tenenbaum testified to her intention to “transform” the CPSC into a world leader in consumer protection. She stated that meeting the law’s tight deadlines was the Agency’s top priority, with staff working late hours to prepare the rules and guidance documents discussed above.39 She also reported that the CPSC is upgrading its information infrastructure and improving its consumer outreach and CPB coordination, and that it has been meeting with Chinese officials on product safety and on toxic Chinese drywall (an issue consuming significant Agency resources). In response to questions, Ms. Tenenbaum stated that the Agency hopes to fill dozens of open positions and be fully staffed by the end of October.

Members of both parties pressed Ms. Tenenbaum for recommendations on amending the CPSIA to add risk-based regulatory flexibility to the law (though some Democrats, notably Energy and Commerce Committee chairman Henry Waxman (D-CA), insisted that the law has been effective despite some confusion). Ms. Tenenbaum resisted saying the law needed to be amended at this time, saying that “most” of the problems could be solved administratively, but told questioners that the CPSC would have a better sense of the needs for administrative or legislative actions after the issuance of additional rules on the testing of component parts. The Subcommittee’s Republicans introduced to the record more than 100 letters written by small businesses regarding the unintended negative consequences of the CPSIA; the Subcommittee’s Chairman countered with letters of support for the CPSIA from five consumer groups.

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For more information please contact Mark Duvall at mduvall@bdlaw.com or Paul Hagen at phagen@bdlaw.com. This alert was prepared with the assistance of Alex-andra Wyatt. 1 Pub. L. 110-314, 122 Stat. 3016 (Aug. 14, 2008).

2 News Release, CPSC, CPSC Announces the Swearing In of Two New Commissioners (Aug. 20, 2009),

http://www.cpsc.gov/cpscpub/prerel/prhtml09/09315.html.

3 See Bruce Mulock, Congressional Research Service, Consumer Product Safety Commission: Current Issues, CRS

Report for Congress RS22821 (Feb. 27, 2008), http://assets.opencrs.com/rpts/RS22821_20080227.pdf.

4 CPSIA § 202(b), amending 15 U.S.C. § 2053 note.

5 CPSC, 2010 Performance Budget Request (May 2009), http://www.cpsc.gov/cpscpub/pubs/

reports/2010plan.pdf.

6 News Release, CPSC, CPSC to Enforce New CPSIA Requirements for Children’s Products Effective

August 14 (Aug. 13, 2009), http://www.cpsc.gov/cpscpub/prerel/prhtml09/09306.html. CPSC has

issued a stay on enforcement of some testing and certification requirements until February 2010, but the

underlying product safety requirements are still enforceable.

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7 74 Fed. Reg. 6990 (Feb. 12, 2009), http://www.cpsc.gov/businfo/frnotices/fr09/electronicinterim.pdf.

8 CPSIA § 101(b)(2), 15 U.S.C. § 1278a(b)(2).

9 74 Fed. Reg. 39,535 (Aug. 7, 2009), http://www.cpsc.gov/businfo/frnotices/fr09/

leadinaccessibilityfinalrule.pdf.

10 CPSIA § 101(b)(1), 15 U.S.C. § 1278(b)(1).

11 See CPSC, CPSIA Section 101. Children’s Products Containing Lead; Lead Paint Rule, https://

www.cpsc.gov/about/cpsia/sect101.html.

12 74 Fed. Reg. 31,254 (June 30, 2009), http://www.cpsc.gov/businfo/frnotices/fr09/bicycles.pdf; 74

Fed. Reg. 22,154 (May 12, 2009), https://www.cpsc.gov/businfo/frnotices/fr09/youthatvstay.pdf.

13 Id.; 74 Fed. Reg. 43,031 (Aug. 26, 2009), http://edocket.access.gpo.gov/2009/pdf/E9-20589.pdf.

14 See Jennifer C. Kerr (AP), New Lead Limits Big Concern for Small Businesses, Wash. Post, Aug. 13, 2009,

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/13/AR2009081302499.html.

15 The full names of the phthalates regulated by the CPSIA are di-(2-ethylhexyl) phthalate (DEHP), dibu-

tyl phthalate (DBP), benzyl butyl phthalate (BBP), diisononyl phthalate (DINP), diisodecyl phthalate

(DIDP), and di-n-octyl phthalate (DnOP).

16 74 Fed. Reg. 41,400 (Aug. 17, 2009), http://www.cpsc.gov/businfo/frnotices/fr09/

comptestpolicy.html; CPSC, Statement of Policy: Testing of Component Parts With Respect To Section

108 of the Consumer Product Safety Improvement Act (Aug. 7, 2009), http://www.cpsc.gov/about/

cpsia/componenttestingpolicy.pdf; CPSC, Test Method CPSC-CH-C1001-09.2: Standard Operating

Procedure for Determination of Phthalates (July 27, 2009), http://www.cpsc.gov/about/cpsia/CPSC-

CH-C1001-09.2.pdf.

17 74 Fed. Reg. 41,868 (Aug. 19, 2009), http://www.cpsc.gov/businfo/frnotices/fr09/

sect103enforcepolicy.pdf; CPSC, Statement of Policy: Interpretation and Enforcement Of Section 103(a)

of the Consumer Product Safety Improvement Act (July 20, 2009), http://www.cpsc.gov/about/cpsia/

sect103policy.pdf.

18 Request for Stay from NAM CPSC Coalition (March 24, 2009), http://www.cpsc.gov/library/foia/

foia09/brief/emergstaytracklabels.pdf. Then-Acting Chairman Nord voted for a stay, but Commissioner

Moore voted to deny.

19 CPSIA § 105, codified at 15 U.S.C. § 1278(c).

20 74 Fed. Reg. 35,848 (July 21, 2009) http://www.cpsc.gov/businfo/frnotices/fr09/sect106consult.pdf.

21 Id.

22 74 Fed. Reg. 45,428 (Sep. 2, 2009), http://edocket.access.gpo.gov/2009/pdf/E9-21134.pdf; 74 Fed.

Reg. 40,784 (Aug. 13, 2009), http://www.cpsc.gov/businfo/frnotices/fr09/tpaudit.pdf.

23 74 Fed. Reg. 45,101 (Sep. 1, 2009), http://edocket.access.gpo.gov/2009/pdf/E9-20591.pdf; see also 74

Fed. Reg. 43,084 (Aug. 26, 2009), http://edocket.access.gpo.gov/2009/pdf/E9-20590.pdf (withdrawing

2006 proposed rule on civil penalty factors).

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24 See Beveridge & Diamond, P.C., Mandatory Self-Disclosure of Product Problems to the CPSC (May 19, 2009),

http://www.bdlaw.com/news-571.html.

25 Congress Seeks CPSC Funds Above Obama's Request But Still Below CPSIA Figure, Prod. Safety

Letter, July 15, 2009, http://www.productsafetyletter.com/news/5572-1.html; S. 1432, 111th Cong.

(2009).

26 News Release, CPSC, TGH International Trading to Pay $31,500 for Violating Federal Safety Law

(Aug. 17, 2009), http://www.cpsc.gov/cpscpub/prerel/prhtml09/09307.html.

27 News Release, CPSC, Ross Stores Agrees To Pay $500,000 Civil Penalty For Failing To Report Draw-

strings In Children’s Outerwear (Aug. 5, 2009), http://www.cpsc.gov/cpscpub/prerel/

prhtml09/09297.html; News Release, CPSC, Kohl’s Department Stores Agrees to Pay $425,000 Civil

Penalty for Failing to Report Drawstrings in Children’s Sweatshirts (Sep. 8, 2009), http://www.cpsc.gov/

cpscpub/prerel/prhtml09/09341.html (proposed consent order published at 74 Fed. Reg. 46576 (Sep. 10,

2009)); News Release, CPSC, Hill Sportswear Agrees To Pay $100,000 Civil Penalty For Failing To

Report Drawstrings In Children’s Sweatshirts (Sep. 8, 2009), http://www.cpsc.gov/cpscpub/prerel/

prhtml09/09340.html (proposed consent order published at 74 Fed. Reg. 46574 (Sep. 10, 2009)); News

Release, CPSC, Firms Agree to Pay $85,000 in Civil Penalties for Failing to Report Drawstrings in

Children’s Outerwear (Sep. 8, 2009), http://www.cpsc.gov/cpscpub/prerel/prhtml09/09339.html; see also

Beveridge & Diamond, supra note 29.

28 GAO, Better Information and Planning Would Strengthen CPSC’s Oversight of Imported Products

(Aug. 14, 2009), http://www.gao.gov/new.items/d09803.pdf.

29 GAO, Better Data Collection and Assessment of Consumer Information Efforts Could Help Protect

Minority Children (Aug. 5, 2009), http://www.gao.gov/new.items/d09731.pdf.

30 See generally CPSA, Required Actions Pursuant to the Consumer Product Safety Improvement Act of

2008 – Timeline, http://www.cpsc.gov/about/cpsia/rulemaking.pdf.

31 CPSIA § 214(c), 15 U.S.C. § 2064(i).

32 CPSIA § 102(a)(1), 15 U.S.C. § 2063(a)(1).

33 CPSIA § 102(b), 15 U.S.C. § 2063(d)(2).

34 CPSIA § 212, 15 U.S.C. § 2055a.

35 Danny Keysar Child Product Safety Notification Act, CPSIA § 204, 15 U.S.C. § 2056a.

36 See CPSC, Strategic Plan (Sept. 2003), http://www.cpsc.gov/cpscpub/pubs/reports/2003strategic.pdf.

37 74 Fed. Reg. 40,171 (Aug. 11, 2009), http://edocket.access.gpo.gov/2009/E9-19114.htm; CPSC,

Library – FOIA, Presentations – Public Hearing on Commission Agenda, Priorities and Strategic Plan for

FY 2011 (Aug. 25, 2009), http://www.cpsc.gov/library/foia/foia09/pubcom/2011priorities.pdf.

38 Committee on Energy & Commerce (Sep. 10, 2009), http://energycommerce.house.gov/index.php?

option=com_content&view=article&id=1737:consumer-product-safety-commission-oversight-current-

issues-and-a-vision-for-the-future&catid=129:subcommittee-on-commerce-trade-and-consumer-

protection&Itemid=70.

39 Testimony of Inez Tenenbaum, http://energycommerce.house.gov/Press_111/20090910/

tenenbaum_testimony.pdf.

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