The New Consumer Product Safety Improvement Act

Although best known for its regulation of children's products, the CPSIA adopted new certification requirements for all consumer products subject to regulation by the CPSC. Previously, only consumer products subject to standards enacted by the CPSC under the Consumer Product Safety Act required certification. Now, tucked into a section entitled “Mandatory Third-Party Testing for Certain Children's Products,” the CPSIA includes a provision that requires every manufacturer of a product subject to any consumer product safety rule, rule, ban, standard or regulation enforced by the CPSC to certify that its products are in full compliance.

The scope of consumer products that must bear the certification remains unclear, as does the testing that must precede the certification. The CPSIA mandates certification based on a test of each product or a “reasonable testing program,” but the CPSC has not clarified this testing requirement. The certification requirement ultimately falls on the manufacturer and private labelers of a product that distributed in commerce.

On Jan. 30, 2009, the CPSC announced a stay of enforcement for most testing and certification requirements under the CPSIA until Feb. 10, 2010. The agency took this action because of confusion over interpretation and applicability of the CPSIA, stating that the agency wanted to complete additional rulemaking before enforcing the certification requirement.

Despite good intentions by the agency, the stay does not provide much relief to companies trying to comply with the CPSIA. First, the stay does not delay implementation of lead or phthalate content limits that went into effect on Feb. 10, 2009. Rather, the stay merely delays the requirement that manufacturers or importers of regulated products “prove” their compliance through product testing and certification. Second, the CPSC stay has no legal effect on the ability of state attorneys general (AGs) to enforce the testing and certification provisions of the law. While the CPSC recommends that the state AGs do not undertake enforcement, some state AGs may disregard the recommendation and seek to enforce the law. Moreover, we may also see third-party lawsuits challenging the stay.

Third-Party Testing Requirements for Children's Products

An additional level of testing is required for children's products. Manufacturers and importers must submit children's products for third-party testing to a CPSC-approved testing agency for compliance assessment. After testing, the manufacturer or importer must certify the results. Most new third-party testing requirements are subject to the CPSC stay of enforcement. However, the stay does not apply to third-party testing and certification requirements for: the ban on lead in paint and other surface coating for products made after Dec. 21, 2008; standards for cribs and pacifiers made after Jan. 20, 2009; the ban on small parts made after Feb. 15, 2009; and the limits on metal components for children's jewelry made after March 23, 2009.

Lead Content Limit in Children's Products

Under an aggressive plan, the CPSIA aims to phase out lead
content in children's products over the next three years. As interpreted by the CPSC General Counsel, the lead content limit applies retroactively to all children's products in inventory or on store shelves on the date the limit went into effect. Accordingly, as of Feb. 10, 2009, children's products moving through the stream of commerce may not have more than 600 parts per million (ppm) lead content by weight for any part of the product. On Aug. 14, 2009, the lead content limit will decrease to 300 ppm, and if technologically feasible, the limit will drop to 100 ppm in August 2011.

The CPSIA included three exceptions to the lead content limit, and the CPSC is scrambling to finish its rule-making to provide much needed guidance on this issue. First, the CPSC may specifically exempt a product from the lead content limit if there is no risk of lead absorption from the product. Second, lead content limits will not apply to parts of the product that are inaccessible to a child. Finally, the CPSC is empowered to establish alternative lead limits for electronic devices that cannot feasibly meet the 600 ppm lead content limit.

On Feb. 12, 2009, the CPSC published an Interim Final Rule to provide greater certainty regarding exemptions for electronic devices that are in the stream of commerce. The Rule recognizes exemptions for certain lead-containing component parts in children's electronic devices that are unable to meet the CPSIA lead limits due to technological infeasibility and in which the use of lead is necessary for the proper functioning of the component part. For example, the Rule exempts lead blended into the glass of cathode ray tubes, lead used as an alloying element in steel (if less than 0.35% lead by weight); lead used in manufacture of aluminum (if less than 0.4% lead by weight); and lead used in lead-bronze bearing shells and bushings. The Rule also provides that components of electronic devices that are removable and replaceable, like batteries or light bulbs, and that are inaccessible when the product is assembled and in functional form are exempt.

Phthalate Limit in Children's Toys

The CPSIA also includes a ban on certain phthalates (chemicals that make plastic more flexible) in children's toys and child-care articles. Like the lead content limit, the phthalate ban went into effect on Feb. 10, 2009. The CPSC General Counsel originally took the position that the phthalate ban did not apply retroactively to existing products on store shelves and in inventory, but her interpretation was challenged in court by the Natural Resources Defense Council. In a Feb. 5 decision, United States District Court Judge Paul Gardephe of the Southern District of New York ruled in favor of the Natural Resources Defense Council declaring that the phthalate prohibitions in the CPSIA unambiguously apply to existing inventory. A copy of the court decision can be found at www.ConsumerProductsLaw.com.

Under the CPSIA, the term “children's toy” means a product intended for a child 12 years of age or younger for use when playing. A “child-care article” includes products that a child age three and younger would use for sleeping, feeding, sucking or teething. Under the ban, it is unlawful for any person to manufacture for sale, offer for sale, distribute in commerce, or import into the United States any children's toy or child care article that contains certain regulated phthalates in concentrations greater that 0.1%.

The CPSC is evaluating many product categories to determine the scope of the regulation. Is a book bag, diaper bag, sports bag, fanny pack, school tote, wallet or backpack a covered product? What about a child's watch? Do school products like pens, paper and art supplies constitute toys or learning tools? How about an electronic device that happens to bear the logo of a cartoon character or pop culture icon ' is this a toy? The CPSC will be holding a series of meetings and intends to issue additional guidance to help answer these questions.

Under the preemption provisions in the Consumer Products Safety Act (which apply to the CPSIA), states may not adopt phthalate limits that are different from those contained in the CPSIA. States may enact identical limits, giving them the ability to enforce the standards separately under state law. In addition, ' 108(d) of the CPSIA expressly allows states to regulate chemicals that are used to replace phthalates as they are phased out. Some states (CA, WA and VT) have already enacted consumer product safety laws with phthalate bans. A number of other states (CT, HI, IL, MY, MN, MI NJ, NY, RI, WV) have proposed similar laws. Of special note, some state laws may extend the phthalate ban to all children's products and not just toys and child care articles.

Mandatory Toy Safety Standards

The CPSIA adopted the American Society of Testing and Materials (ASTM) Consumer Safety Specifications for Toy Safety (F963-07) as a mandatory toy safety standard. Prior to the CPSIA, the ASTM standard had been voluntary. The ASTM standard became mandatory on Feb. 10, 2009, although enforcement of testing and certification requirements related to the standard have been stayed until Feb. 10, 2010.

Compliance Challenges and Liability Risks

The CPSIA prohibits the manufacture, import, sale or distribution of any nonconforming consumer product, any banned hazardous substance, or any consumer product subject to an order or corrective action. In addition, the law bans the export of any consumer product subject to an order or corrective action, or any banned hazardous substance. It also prohibits the knowing import of any consumer product with an unauthorized safety certification mark or any attempt to influence a third-party testing service. Companies have a reporting obligation to inform the CPSC immediately if they learn of a product that does not comply with applicable product safety standards. The reporting obligations will likely result in increased product recalls.

Increased Enforcement Authority and Penalties

In addition to adopting aggressive new consumer product standards, the CPSIA redefined and enhanced the CPSC's enforcement authority. For instance, the CPSC now has greater authority to dictate corrective action. It also has new authority to order manufacturers, distributors and retailers to cease distribution, notify state and local officials, and provide public notice.

The maximum civil penalty for violations of the CPSIA or related consumer product safety laws has been increased to $100,000 (previously $5,000) for each violation, up to $15 million (previously $1,250,000) for a series of related violations. Willful and knowing violations of the CPSIA or related consumer product safety laws could result in up to five years (previously one year) of imprisonment. The criminal penalty provisions are quite significant, particularly since directors, officers and agents of the manufacturer no longer must have actual notice of a violation to be criminally liable.

State AGs are also empowered to enforce the CPSIA and may seek injunctive relief to stop the sale of products that do not meet federal requirements. This raises the specter of increased state enforcement actions. Last, the CPSIA adopts a new whistleblower provision to protect public and private sector employees in the manufacturing and retail industries who disclose information about reasonably perceived violations of safety laws.

Overlapping State Laws and Preemption

The preemptive effect of the CPSIA is complex and uncertain. The CPSIA leaves in place the preemption provisions in existing consumer protection laws which allow states to regulate consumer products if state requirements are identical to federal requirements. States may elect to take advantage of this option as a way to seek civil damages and maximize flexibility in enforcement. The AG in California has already issued a letter stating that the CPSIA does not preempt state product safety laws.

In response to prior actions taken by the CPSC, Congress clarified in the CPSIA that the Agency may not expand the preemptive effect of the statutes it enforces through rulemaking. In a nod to some provisions of California's Proposition 65, the Act also states that it does not preempt or affect state warning requirements that were in effect on Aug. 31, 2003.

The mandatory safety requirements in ASTM F-963 for toys and children's products preempt state laws; however, states may petition for an exemption if their rules provide a significantly higher degree of protection and do not unduly burden interstate commerce, or if their requirements were in effect before the CPSIA was adopted and they filed a petition with the CPSC by November 2008. California, Illinois, New York and Arizona all petitioned for exemptions.

The complex and dynamic interplay of federal and state consumer product regulations is in flux. A recent Supreme Court preemption decision underscores the point. On March 4, 2009, the Supreme Court held in Wyeth v. Levine that FDA approval of drug labels containing warnings does not protect drug companies from state consumer liability lawsuits because Congress did not intend to bar state failure-to-warn suits. Wyeth will no doubt influence future delineation of the preemptive effect of federal consumer product safety laws and regulations and it appears that important questions on preemption and state regulation will be settled in court.

To take just one example which illustrates the federal-state interplay, consider the proposed Toxic Free Kids Act working its way through the Minnesota legislature. This bill would create a standardized approach to evaluating chemicals in children's products. The bill would grant the state's environmental agency the authority to review the safety of chemicals in children's products and create a “priority chemicals list” based on children's exposure and chemical toxicity. The bill would require manufacturers to phase out priority chemicals when safer alternatives are available. There is no clarity on how laws like the MN Toxic Free Kids Act will align with CPSC initiatives and laws in other states.

The lack of a harmonized system of safety laws may have a chilling effect on the ability of manufacturers to produce products that comply with the myriad state laws and regulations. This is a trap waiting to snap shut for the unwary.

Conclusion

The CPSIA has dramatically and swiftly changed the regulatory landscape for manufacturers and importers of consumer products in the United States. While the full impact and scope of requirements under the new law have yet to be determined, portions of the law are already in effect. If you manufacture, import, market, distribute, license, sell or resell a product that is subject to CPSC oversight, you must be proactive. The CPSIA no longer allows a blind-eye approach. You must develop a program for testing and certification of products that are subject to safety standards. You must confirm that your products are safe. Failure to implement a consumer products safety program for your company may have dire consequences, including product recalls, product confiscation or disposal, increased regulatory costs, enhanced enforcement penalties, damage to reputation, liability to customers, liability to license partners and increased risk of product liability. These risks must be carefully managed now to avoid core business problems in the future.

Mark Kaster is a partner at Dorsey & Whitney, LLP. He has over 25 years of experience on health, safety and environmental matters, including consumer product safety, product recalls, CPSC enforcement actions, CA Proposition 65, toxic exposure cases, OSHA workplace safety, product take-back, ISO programs, environmental regulation, green marketing and recycling laws. Nena Street is an associate at the firm. She works on consumer product safety and related regulatory matters. Visit the authors' blog site at www.ConsumerProductsLaw.com.

The Consumer Product Safety Improvement Act (commonly referred to as the “CPSIA”) was enacted in August 2008 in the wake of a sharp increase in recalls of children's products, particularly the recall of toys during and after the 2007 holiday season. This article provides an overview of the CPSIA, including a summary of key provisions, an update on agency rulemaking to implement the law, and an assessment of the risks and challenges related to compliance with the law.

The CPSIA instituted significant new regulatory requirements applicable not only to toys and consumer products marketed to children, but to all consumer products that are regulated by the Consumer Product Safety Commission (the “CPSC”). Key components of the CPSIA include:

• Reduced lead content limit for children's products;
• Compliance certification requirements for all consumer products that are regulated in any manner under U.S. consumer product safety laws;
• Mandatory third-party testing and certification for all children's products;
• A ban on certain phthalates in children's toys and child care articles;
• Permanent tracking label requirements for all children's products;
• Warning requirements for certain children's product advertisements; and
• New whistleblower protections and enhanced enforcement.

The CPSIA applies most significantly to all manufacturers and importers of products regulated under U.S. consumer product safety laws, including products regulated under the Federal Hazardous Substances Act (“FHSA”); Flammable Fabrics Act (“FFA”); Poison Packaging Prevention Act (“PPA”); and Refrigerator Safety Act (“RFA”).

Certificates of Conformity

Although best known for its regulation of children's products, the CPSIA adopted new certification requirements for all consumer products subject to regulation by the CPSC. Previously, only consumer products subject to standards enacted by the CPSC under the Consumer Product Safety Act required certification. Now, tucked into a section entitled “Mandatory Third-Party Testing for Certain Children's Products,” the CPSIA includes a provision that requires every manufacturer of a product subject to any consumer product safety rule, rule, ban, standard or regulation enforced by the CPSC to certify that its products are in full compliance.

The scope of consumer products that must bear the certification remains unclear, as does the testing that must precede the certification. The CPSIA mandates certification based on a test of each product or a “reasonable testing program,” but the CPSC has not clarified this testing requirement. The certification requirement ultimately falls on the manufacturer and private labelers of a product that distributed in commerce.

On Jan. 30, 2009, the CPSC announced a stay of enforcement for most testing and certification requirements under the CPSIA until Feb. 10, 2010. The agency took this action because of confusion over interpretation and applicability of the CPSIA, stating that the agency wanted to complete additional rulemaking before enforcing the certification requirement.

Despite good intentions by the agency, the stay does not provide much relief to companies trying to comply with the CPSIA. First, the stay does not delay implementation of lead or phthalate content limits that went into effect on Feb. 10, 2009. Rather, the stay merely delays the requirement that manufacturers or importers of regulated products “prove” their compliance through product testing and certification. Second, the CPSC stay has no legal effect on the ability of state attorneys general (AGs) to enforce the testing and certification provisions of the law. While the CPSC recommends that the state AGs do not undertake enforcement, some state AGs may disregard the recommendation and seek to enforce the law. Moreover, we may also see third-party lawsuits challenging the stay.

Third-Party Testing Requirements for Children's Products

An additional level of testing is required for children's products. Manufacturers and importers must submit children's products for third-party testing to a CPSC-approved testing agency for compliance assessment. After testing, the manufacturer or importer must certify the results. Most new third-party testing requirements are subject to the CPSC stay of enforcement. However, the stay does not apply to third-party testing and certification requirements for: the ban on lead in paint and other surface coating for products made after Dec. 21, 2008; standards for cribs and pacifiers made after Jan. 20, 2009; the ban on small parts made after Feb. 15, 2009; and the limits on metal components for children's jewelry made after March 23, 2009.

Lead Content Limit in Children's Products

Under an aggressive plan, the CPSIA aims to phase out lead
content in children's products over the next three years. As interpreted by the CPSC General Counsel, the lead content limit applies retroactively to all children's products in inventory or on store shelves on the date the limit went into effect. Accordingly, as of Feb. 10, 2009, children's products moving through the stream of commerce may not have more than 600 parts per million (ppm) lead content by weight for any part of the product. On Aug. 14, 2009, the lead content limit will decrease to 300 ppm, and if technologically feasible, the limit will drop to 100 ppm in August 2011.

The CPSIA included three exceptions to the lead content limit, and the CPSC is scrambling to finish its rule-making to provide much needed guidance on this issue. First, the CPSC may specifically exempt a product from the lead content limit if there is no risk of lead absorption from the product. Second, lead content limits will not apply to parts of the product that are inaccessible to a child. Finally, the CPSC is empowered to establish alternative lead limits for electronic devices that cannot feasibly meet the 600 ppm lead content limit.

On Feb. 12, 2009, the CPSC published an Interim Final Rule to provide greater certainty regarding exemptions for electronic devices that are in the stream of commerce. The Rule recognizes exemptions for certain lead-containing component parts in children's electronic devices that are unable to meet the CPSIA lead limits due to technological infeasibility and in which the use of lead is necessary for the proper functioning of the component part. For example, the Rule exempts lead blended into the glass of cathode ray tubes, lead used as an alloying element in steel (if less than 0.35% lead by weight); lead used in manufacture of aluminum (if less than 0.4% lead by weight); and lead used in lead-bronze bearing shells and bushings. The Rule also provides that components of electronic devices that are removable and replaceable, like batteries or light bulbs, and that are inaccessible when the product is assembled and in functional form are exempt.

Phthalate Limit in Children's Toys

The CPSIA also includes a ban on certain phthalates (chemicals that make plastic more flexible) in children's toys and child-care articles. Like the lead content limit, the phthalate ban went into effect on Feb. 10, 2009. The CPSC General Counsel originally took the position that the phthalate ban did not apply retroactively to existing products on store shelves and in inventory, but her interpretation was challenged in court by the Natural Resources Defense Council. In a Feb. 5 decision, United States District Court Judge Paul Gardephe of the Southern District of New York ruled in favor of the Natural Resources Defense Council declaring that the phthalate prohibitions in the CPSIA unambiguously apply to existing inventory. A copy of the court decision can be found at www.ConsumerProductsLaw.com.

Under the CPSIA, the term “children's toy” means a product intended for a child 12 years of age or younger for use when playing. A “child-care article” includes products that a child age three and younger would use for sleeping, feeding, sucking or teething. Under the ban, it is unlawful for any person to manufacture for sale, offer for sale, distribute in commerce, or import into the United States any children's toy or child care article that contains certain regulated phthalates in concentrations greater that 0.1%.

The CPSC is evaluating many product categories to determine the scope of the regulation. Is a book bag, diaper bag, sports bag, fanny pack, school tote, wallet or backpack a covered product? What about a child's watch? Do school products like pens, paper and art supplies constitute toys or learning tools? How about an electronic device that happens to bear the logo of a cartoon character or pop culture icon ' is this a toy? The CPSC will be holding a series of meetings and intends to issue additional guidance to help answer these questions.

Under the preemption provisions in the Consumer Products Safety Act (which apply to the CPSIA), states may not adopt phthalate limits that are different from those contained in the CPSIA. States may enact identical limits, giving them the ability to enforce the standards separately under state law. In addition, ' 108(d) of the CPSIA expressly allows states to regulate chemicals that are used to replace phthalates as they are phased out. Some states (CA, WA and VT) have already enacted consumer product safety laws with phthalate bans. A number of other states (CT, HI, IL, MY, MN, MI NJ, NY, RI, WV) have proposed similar laws. Of special note, some state laws may extend the phthalate ban to all children's products and not just toys and child care articles.

Mandatory Toy Safety Standards

The CPSIA adopted the American Society of Testing and Materials (ASTM) Consumer Safety Specifications for Toy Safety (F963-07) as a mandatory toy safety standard. Prior to the CPSIA, the ASTM standard had been voluntary. The ASTM standard became mandatory on Feb. 10, 2009, although enforcement of testing and certification requirements related to the standard have been stayed until Feb. 10, 2010.

Compliance Challenges and Liability Risks

The CPSIA prohibits the manufacture, import, sale or distribution of any nonconforming consumer product, any banned hazardous substance, or any consumer product subject to an order or corrective action. In addition, the law bans the export of any consumer product subject to an order or corrective action, or any banned hazardous substance. It also prohibits the knowing import of any consumer product with an unauthorized safety certification mark or any attempt to influence a third-party testing service. Companies have a reporting obligation to inform the CPSC immediately if they learn of a product that does not comply with applicable product safety standards. The reporting obligations will likely result in increased product recalls.

Increased Enforcement Authority and Penalties

In addition to adopting aggressive new consumer product standards, the CPSIA redefined and enhanced the CPSC's enforcement authority. For instance, the CPSC now has greater authority to dictate corrective action. It also has new authority to order manufacturers, distributors and retailers to cease distribution, notify state and local officials, and provide public notice.

The maximum civil penalty for violations of the CPSIA or related consumer product safety laws has been increased to $100,000 (previously $5,000) for each violation, up to $15 million (previously $1,250,000) for a series of related violations. Willful and knowing violations of the CPSIA or related consumer product safety laws could result in up to five years (previously one year) of imprisonment. The criminal penalty provisions are quite significant, particularly since directors, officers and agents of the manufacturer no longer must have actual notice of a violation to be criminally liable.

State AGs are also empowered to enforce the CPSIA and may seek injunctive relief to stop the sale of products that do not meet federal requirements. This raises the specter of increased state enforcement actions. Last, the CPSIA adopts a new whistleblower provision to protect public and private sector employees in the manufacturing and retail industries who disclose information about reasonably perceived violations of safety laws.

Overlapping State Laws and Preemption

The preemptive effect of the CPSIA is complex and uncertain. The CPSIA leaves in place the preemption provisions in existing consumer protection laws which allow states to regulate consumer products if state requirements are identical to federal requirements. States may elect to take advantage of this option as a way to seek civil damages and maximize flexibility in enforcement. The AG in California has already issued a letter stating that the CPSIA does not preempt state product safety laws.

In response to prior actions taken by the CPSC, Congress clarified in the CPSIA that the Agency may not expand the preemptive effect of the statutes it enforces through rulemaking. In a nod to some provisions of California's Proposition 65, the Act also states that it does not preempt or affect state warning requirements that were in effect on Aug. 31, 2003.

The mandatory safety requirements in ASTM F-963 for toys and children's products preempt state laws; however, states may petition for an exemption if their rules provide a significantly higher degree of protection and do not unduly burden interstate commerce, or if their requirements were in effect before the CPSIA was adopted and they filed a petition with the CPSC by November 2008. California, Illinois, New York and Arizona all petitioned for exemptions.

The complex and dynamic interplay of federal and state consumer product regulations is in flux. A recent Supreme Court preemption decision underscores the point. On March 4, 2009, the Supreme Court held in Wyeth v. Levine that FDA approval of drug labels containing warnings does not protect drug companies from state consumer liability lawsuits because Congress did not intend to bar state failure-to-warn suits. Wyeth will no doubt influence future delineation of the preemptive effect of federal consumer product safety laws and regulations and it appears that important questions on preemption and state regulation will be settled in court.

To take just one example which illustrates the federal-state interplay, consider the proposed Toxic Free Kids Act working its way through the Minnesota legislature. This bill would create a standardized approach to evaluating chemicals in children's products. The bill would grant the state's environmental agency the authority to review the safety of chemicals in children's products and create a “priority chemicals list” based on children's exposure and chemical toxicity. The bill would require manufacturers to phase out priority chemicals when safer alternatives are available. There is no clarity on how laws like the MN Toxic Free Kids Act will align with CPSC initiatives and laws in other states.

The lack of a harmonized system of safety laws may have a chilling effect on the ability of manufacturers to produce products that comply with the myriad state laws and regulations. This is a trap waiting to snap shut for the unwary.

Conclusion

The CPSIA has dramatically and swiftly changed the regulatory landscape for manufacturers and importers of consumer products in the United States. While the full impact and scope of requirements under the new law have yet to be determined, portions of the law are already in effect. If you manufacture, import, market, distribute, license, sell or resell a product that is subject to CPSC oversight, you must be proactive. The CPSIA no longer allows a blind-eye approach. You must develop a program for testing and certification of products that are subject to safety standards. You must confirm that your products are safe. Failure to implement a consumer products safety program for your company may have dire consequences, including product recalls, product confiscation or disposal, increased regulatory costs, enhanced enforcement penalties, damage to reputation, liability to customers, liability to license partners and increased risk of product liability. These risks must be carefully managed now to avoid core business problems in the future.

Mark Kaster is a partner at Dorsey & Whitney, LLP. He has over 25 years of experience on health, safety and environmental matters, including consumer product safety, product recalls, CPSC enforcement actions, CA Proposition 65, toxic exposure cases, OSHA workplace safety, product take-back, ISO programs, environmental regulation, green marketing and recycling laws. Nena Street is an associate at the firm. She works on consumer product safety and related regulatory matters. Visit the authors' blog site at www.ConsumerProductsLaw.com.