New Consumer Product Safety Law Greatly Expands Regulation of Products Manufactured or Sold in the United States
 
November 10, 2008
 
Charles E. "Chuck" Joern- Chicago

In August 2008, President George Bush signed the Consumer Product Safety Improvement Act of 2008 (the “Act”) into law. It is the most sweeping revision of U.S. consumer product safety laws since 1972, when the original Consumer Product Safety Act (CPSA) was first enacted. The 2008 Act is Congress’ response to a wave of product recalls in 2007, the most highly publicized of which involved recalls of imported toys containing lead paint. The Act focuses on children’s products, but in addition, goes well beyond the regulation of children’s toys and products. Virtually all consumer products made in; imported into; or exported from the United States are affected by regulations in the Act. This article will highlight some of the Act’s most important provisions.

The Act expands both the authority and the resources of the Consumer Product Safety Commission (the “Commission”). The Commission is the independent federal agency charged with protecting the American public from unreasonable risks of harm involving over 15,000 different types of consumer products.¹ The Act expands the scope of the Commission’s jurisdiction and gives the Commission powerful new and enhanced tools to enforce the requirements of the Act. The Act significantly increases both civil and criminal penalties for violations, allows for seizure and destruction of non-compliant products, allows states to file civil actions enforcing consumer product safety laws, and in other significant ways dramatically affects manufacturers, importers, distributors and sellers of consumer products in the United States.

Some provisions of the Act were effective immediately upon its enactment on August 14, 2008. Other requirements are self-executing and become effective soon after enactment without any Commission action. Still other requirements are dependent upon Commission rulemakings or other Commission action. Congress has mandated an aggressive and expedited schedule for the Commission to meet. A great deal of Commission activity implementing the Act will take place in the 12 months following the August 14, 2008 enactment.

Both the self-executing provisions, and the Commission-initiated actions, affect everyone who conducts business with consumer products. The Act expands the range of regulated products in several important sections, to all products that are subject to not only consumer product safety rules under the CPSA, but also to products that are subject to a similar rule, ban, standard, or regulation under any other act enforced by the Commission.² Children’s products are subject to even more strenuous regulation and require independent third-party testing, permanent tracking labels and other mandatory actions. The maximum penalties for committing a “prohibited act” have increased to $100,000 per violation and to $15 million for a related series of violations. Criminal penalties now include up to five years in prison, increased fines and forfeiture of assets. Finally, Congress has authorized significantly increased funding for the Commission to use in enforcing these powerful provisions against non-compliant manufacturers, importers, and others.

Scope

The Act’s primary focuses are:

1) improving the safety of children’s products

2) enhancing the effectiveness of the Commission itself

Title I of the Act creates a variety of requirements involving children’s products. Title II significantly expands the Commission’s scope and gives the Commission both the resources and the enforcement tools to fulfill the Commission’s larger mission. The Act is an expansive piece of legislation that Nancy Nord, the acting chairman of the Commission, describes as “incredibly complex.” Manufacturers, importers, distributors and retailers of consumer products will need to understand the Act, its implementing regulations and how they apply to the universe of consumer products.

Title I: Children’s Product Safety

The initial portion of the Act is targeted at safety issues relating to children’s toys and products. The Act defines a “Children’s Product” as a consumer product designed or intended primarily for children 12 years of age or younger. Section 235(a). The Commission uses multiple factors in deciding whether a product is deemed a “Children’s Product.”³ Key features of Title I include bans on lead and phthalates⁴ in children’s toys and child care articles, mandatory third-party testing and certification for Children’s Products, permanent tracking labels on Children’s Products, expanded requirements for the advertising of certain toys and games on the Internet (and in print media), and the adoption of an ASTM voluntary toy safety standard as a mandatory consumer product safety rule.

Lead Limitations

Section 101 of the Act creates new limitations for the amount of lead that can be contained in Children’s Products as well as the amount of lead in paint applied to those products. This section specifically treats any Children’s Product containing more than 600 parts per million (ppm) of lead as a banned, hazardous substance under the FHSA. The 600 ppm limit is effective without any further Commission action on February 10, 2009. The lead limitation is automatically reduced to 300 ppm on August 14, 2009. It is finally reduced to 100 ppm on August 14, 2011, unless the Commission determines that the 100 ppm limitation is not “technologically feasible” for a product or product category.

The Act excludes from the ban component parts of Children’s Products where the lead is “inaccessible.” A component part will be considered “not accessible” if it is sealed by a covering or case that prevents physical exposure through a child’s foreseeable use and abuse of the product – the important issue is whether the lead in a product is biologically available. The Act provides that within a year after enactment the Commission will promulgate a rule giving guidance on what component parts may be considered inaccessible. The Act also directs the Commission to consider whether it is technologically feasible for certain electronic devices, including those that contain batteries, to comply with the lead limitations. The Commission is required to issue related regulations in this regard.

The allowable limits on lead in paint applied to Children’s Products are even more restrictive. Effective August 14, 2009, the permissible limits of lead in paint are reduced from 0.06 percent to 0.009 percent. Even these limits may be further reduced if the Commission determines that a lower amount of lead is “technologically feasible to achieve.” Section 101(f). Restrictions on lead and lead in paint apply retroactively to all product in inventory or on store shelves on February 10, 2009, not just product manufactured after that date.⁵

Mandatory Certification and Independent Testing

Section 102 of the Act requires certification of independent third-party testing for any Children’s Product that is subject to a Children’s Product safety rule. Manufacturers and private labelers of such Children’s Products must submit representative samples of the products to independent laboratories. Based on this testing, the manufacturer or private labeler must certify that the Children’s Product complies with all applicable Children’s Product safety rules.

The testing laboratory is required to have been previously accredited by the Commission or by an independent accreditation organization designated by the Commission. The testing laboratory (known as a “third-party conformity assessment body” in the Act) must be independent and not affiliated with, or subject to, undue influence by the manufacturer or government body. A manufacturer may use its own “in-house” testing facilities for certification, only if the Commission finds that the testing facility has established the appropriate procedures to protect against undue influence by the manufacturer, private labeler, or other interested party.

The effective dates for required certification are contingent upon the Commission first accrediting third-party laboratories to test particular classes of products. Generally speaking, the Commission will publish notice of the requirements for the accreditation of testing bodies 90 days before third-party testing is required of various products. For example, the Act required the Commission to publish accreditation procedures for the testing of lead paint by September 2008. Third-party testing of lead paint is then required 90 days later, in December 2008.⁶ The schedule for third-party testing requirements is expedited. Currently it is contemplated that certification and independent testing will be required for cribs and pacifiers in January 2009, for “small parts” (that present choking hazards) in February 2009, for children’s metal jewelry in March 2009, and for baby bouncers, walkers and jumpers in June 2009.

In addition to the third-party testing requirements for Children’s Products, Section 102 mandates a general conformity certification for manufacturers, private labelers and importers⁷ of consumer products. The general conformity certification requirement applies to all products that are subject to any consumer product safety rule under the CPSA or to any similar rule, ban, standard, or regulation under any other act enforced by the Commission and which are imported for consumption or warehousing or distributed in commerce. The general conformity certification does not have to be based on third-party testing. However, each manufacturer, private labeler, or importer of a consumer product covered by this section must certify that the product has been tested, or is subject to a reasonable testing program and complies with all applicable consumer product safety rules.⁸

This section is expansive and yet must be complied with by its effective date of November 12, 2008. The general conformity requirement requires manufacturers and others to first determine what bans, rules, standards and regulations under the expanded scope apply to their products; then implement a reasonable testing program to ensure compliance; and finally produce a certification that itself meets the demands of the Act.

The certificate must identify the manufacturer or private labeler issuing the certificate as well as the testing laboratory upon whose testing the certificate depends. The certificate, at a minimum, must also include the date and place of manufacturing and testing, as well as contact information for the individual responsible for maintaining test result records. The certificate must be in English, but may also contain the same content in another language.

The Commission views the certification requirements as potent tools for enforcement. If a product does not have a required certificate, that product may not enter into the United States or move in commerce within the United States. Both imported and domestically manufactured products may be halted if they do not have the appropriate certifications. A certificate must accompany each product or shipment of the same product. Although one certificate can be used for a container of the same product, if that container is broken up into separate shipments, it is likely that a separate certificate will have to accompany each separate shipment of the product to each distributor and retailer. The Act specifically requires that a copy of the certificate be furnished to each distributor or retailer of the product. A certificate must be available to United States Customs agents as well as Commission agents upon request.

Tracking Labels

By August 14, 2009, manufacturers of Children’s Products must permanently label their products and packaging with designated information designed to assist with the identification of products in the event of a recall. Under Section 103 manufacturers will be required to label all Children’s Products in a way that the manufacturer and the ultimate purchaser will be able to identify the location and date of the item’s production, including the batch, run number, or other identifying characteristic.

The Act does limit the labeling requirement by including the phrase “to the extent practicable.” This is a recognition by Congress that it may not be practical to record a permanent marking on small toys or other small products manufactured without individual packaging. In recent statements, the Commission staff emphasized that the Commission will likely address practical labeling issues (available size, type of permanent marking, use of codes, etc.) through rulemaking or other guidance. However, the requirement for tracking labels is “self executing.” Tracking labels must be placed on all Children’s Products by August 14, 2009, independent of whether the Commission rulemaking is completed or not.

This provision is extremely broad in its scope and powerful in its application. The requirement for tracking labels applies to all Children’s Products, such as clothing and shoes – not just to toys and other regulated products. The Commission plans to use the tracking label not only for recalls, but also for enforcement purposes. Importers beware: if a product is clearly a Children’s Product but lacks a tracking label, that in and of itself will be a basis for stopping the importation of the product.

Advertising Requirements

The Act expands the warnings about choking hazards that must be in the advertising on children’s toys and games. Section 105 mandates that choking warnings required by the Federal Hazardous Substances Act be included in all Internet advertising of these products by December 12, 2008. The warnings are also required in catalogues or other printed materials by February 10, 2009. The warnings are required for either Internet advertising or print media if the advertisement provides a “direct means for the purchase or order of the product.”

The preparation and publication of catalogues poses significant challenges for businesses regulated under this section. Catalogues are normally prepared and printed many months in advance of their distribution. The “last minute” addition of cautionary statements on choking hazards may be difficult if not impossible for some publishers. In recognition of this concern, the Act allows the Commission to grant up to a 180-day “grace period,” during which distribution of non-compliant catalogues will not be considered a violation of this section.⁹ Publishers should be aware that 180 days is the maximum grace period allowed by the Act.

Section 105 also requires two-way communication between retailers and those providing the product to retailers. Manufacturers, importers, distributors, or private labelers that provide covered products to retailers must inform the retailers if a precautionary statement is required. But retailers must also ask the manufacturer, importer, distributor, or private labeler if a precautionary statement is required for a particular product. A retailer who requests such information and receives false information, or no information, is not liable under the Act.

Toy Safety Standards

Section 106 designates ASTM International Standard F963-07, Consumer Safety Specifications for Toy Safety, as the mandatory consumer product safety standard for toy safety issued by the Commission. Manufacturers, and others regulated under the Act, should understand that whatever is required in the ASTM standard (with certain specified exemptions) will now become a mandatory consumer product safety standard. ASTM F963-07 is an extremely detailed standard that relates to a number of possible hazards which may occur with the normal use or foreseeable abuse of a toy. By incorporating ASTM F963-07 in total (with discreet exceptions), the Act will now require toy manufacturers to test their products for conformity with all the requirements in ASTM F963-07. For example, because the ASTM standard bars paint that contains compounds such as arsenic, barium, cadmium, mercury and other heavy metals, toy manufacturers will soon have to test for these materials prior to certification under the general conformity provisions of the Act. The effective date of this provision is February 10, 2009.

Ban on Phthalates

Section 108 of the Act bans the sale of children’s toys or child care articles that contain certain chemicals known as phthalates. Effective February 10, 2009, no children’s toy or “child care article” (a consumer product designed or intended to facilitate sleep or the feeding of children age three and younger, or to help such children with sucking or teething) may be manufactured for sale, offered for sale, distributed in commerce, or imported if it contains more than 0.1 percent of di-(2-ethylhexyl) phthalate (DEHP), dibutyl phthalate (DBP) or benzyl butyl phthalate (BBP). Also effective February 10, 2009, an interim ban, pending further study, is placed on child care articles or children’s toys that can be placed in a child’s mouth that contain more than 0.1 percent of diisononyl phthalate (DINP), diisodecyl phthalate (DIDP), or di-n-octyl phthalate (DnOP).

In recognition of the complexity of this issue, the entire subject of the use of phthalates in children’s toys and child care articles will be examined by a Commission-appointed “Chronic Hazard Advisory Panel.” The panel will undertake a comprehensive examination of the use and health effects of phthalates. The study is expected to take over two years to complete.

Title II: Consumer Product Safety Commission Reform

Funding

The Act authorizes significant increases in general appropriations to the Commission in order for it to more ably fulfill its mission. In the past, critics of the Commission have claimed that the agency has not effectively protected consumers due to inadequate funding. Along with the greatly increased funding, the Act requires that the Commission increase its number of full-time employees over the next five years. The Act further mandates that personnel shall be assigned to United States ports of entry and to inspect overseas manufacturing facilities. Section 202. All of this will result in much stricter enforcement by the Commission, especially at U.S. borders.

Commission Activity

From August 14, 2008, until August 14, 2009, the Act allows for only two members of the five member Commission to constitute a quorum for the transaction of business¹⁰. In the past, the failure to obtain a quorum has hobbled the Commission. This provision solves that immediate problem. As a result, the Commission can be expected to initiate and implement a number of far reaching regulations and rulemakings on an expedited basis.

The Act further allows the Commission to develop a product safety rule without first commencing an Advance Notice of Proposed Rulemaking (ANPR). The Commission may thus move directly into rulemaking without an ANPR notice. Congress has instructed the Commission to issue a number of rulemakings affecting a variety of consumer products in a compressed time frame. Considering the provisions that have “streamlined” the Commission’s regulatory process, as well as the wide range of actions the Commission must complete in a relatively short time, manufacturers, importers, distributors, and retailers need to carefully monitor the Commission’s actions during the coming year. The opportunity to comment on, and potentially influence Commission rulemakings, will require diligence, by manufacturers, importers and others affected by these numerous regulations.

Recall Provisions

Section 214 makes several significant revisions to the CPSA. The first expands the scope of the key self-reporting provisions under Section 15(b) of the CPSA. Previously, Section 15(b) required manufacturers and others to immediately inform the Commission of information that a consumer product failed to comply with a consumer product safety rule or standard; contained a defect which could create a substantial product hazard; or created an unreasonable risk of serious injury or death. As with other provisions in the Act, the scope of mandated self-reporting is now expanded to include all consumer products that fail to comply with any other rule, regulation, standard, or ban under the CPSA or any other act enforced by the commission. This provision became effective October 13, 2008.

The Commission is also empowered under this section to (following an administrative hearing) order a manufacturer, distributor, or retailer to: (1) give public notice of the product defect; (2) mail notice to each manufacturer, distributor, or retailer of the product; (3) mail notice to all persons to whom the product was known to be delivered or sold; (4) cease distribution of the product; (5) notify all persons that transport, store, distribute, or otherwise handle the product (or to which the product has been transported, etc.) to immediately cease distribution of the product; and (6) notify appropriate state and local public health officials. Section 214 allows the Commission to order these actions without a prior hearing if the Commission determines a product to be “imminently hazardous”¹¹ and if the Commission has both notified the manufacturer and filed a district court action under Section 12 of the CPSA.

Further, a manufacturer, distributor, or retailer may be required to post a “clear and conspicuous notice” on its own Web site as well as on any other Web site in which the product has been placed for sale. Beyond that, the Commission may order announcements on the radio and television in languages other than English if the Commission determines a substantial number of affected consumers may not be reached otherwise.

The Act eliminates the right of a party responsible for a defective product to choose whether they will repair the defect in the product, replace the product, or offer a refund. The Commission now has the right to order whichever corrective action the Commission determines to be in the public interest. The Act also requires that a plan for the corrective action be submitted to the Commission for approval.

Section 214 of the Act also imposes specific requirements for recall notices. Unless the Commission determines it unnecessary with respect to a particular product, a recall notice must contain detailed product information, a photograph of the product, and specific information with respect to the recall’s cause and scope. The Commission is mandated to establish specific guidelines for what information will be helpful to consumers in identifying the product being recalled, understanding the hazard involved and understanding what remedy is available to the consumer. The Commission must promulgate these guidelines by February 10, 2009.

Provisions Regarding Information

Information Sharing

Section 207 amends the previous law by allowing the Commission to share Commission-obtained information (information that is identifiable to a particular manufacturer or private labeler), with any “Federal, State, local or foreign government agency …” upon agreement that such agency will maintain the material in confidence and use it only for official purposes. However, the Commission can not disclose to manufacturers or others, information obtained from a foreign government agency or consumer complaints from a foreign source if the foreign agency or source has requested confidential treatment for the material. The Act makes exceptions for confidential information requested by Congress or ordered produced by a United States court.

Public Consumer Product Safety Database

A major change affecting consumers, manufacturers, and others is the creation of a Public Consumer Product Safety Database (“Database”). Section 212 of the Act establishes a Database that will be publicly available, searchable, and accessible through the Commission’s internet Web site. The Database will include reports of harm relating to the use of consumer products regulated under the CPSA and other products regulated by the Commission. These reports may come to the Commission from consumers; local, state, or federal government agencies; health care professionals; child service providers; or public safety entities.

The information may be submitted to the Database by electronic, telephonic, or paper- based means. Each report must include, at a minimum: (1) a description of the consumer product concerned; (2) an identification of the manufacturer or private labeler of the consumer product; (3) a description of the harm relating to the use of the product; (4) contact information for the person submitting the report; and (5) a verification by the person submitting the information that it is true and accurate to the best of the person’s knowledge.

Within five days after the Commission receives a report, it will, “to the extent practicable,” transmit the report to the manufacturer or private labeler who will have an opportunity to review the report. This allows the manufacturer or private labeler the opportunity to locate any inaccuracies, as well as identify any confidential information contained in the report. The manufacturer or private labeler may then request the Commission to include its comments in the Database or request that portions of the report be designated as confidential. If the Commission determines that the designated information is a trade secret, the Commission will redact the designated information before the report is put into the Database. If the Commission disagrees with the confidentiality request, the Commission shall notify the manufacturer or private labeler and include the information in the Database. The manufacturer or private labeler then has the option of bringing an action in federal court to seek removal of the information from the Database. Ordinarily, comments will be included in the Database at the same time as the underlying report is made available.

The timeframes contained in this section are compressed and require extreme diligence on the part of manufacturers to prevent either the inclusion of inaccurate information in the Database or the publication of confidential or trade secret information. Under the Act, the Commission is required to make the report available on the Database no later than 10 business days after the Commission transmits it to the manufacturer. Manufacturers and private labelers would be wise to put into place procedures which will allow for the timely review of reports received from the Commission, so as to prevent the Internet-wide, public distribution of inaccurate or confidential information.

The Act also has a provision requiring the Commission to correct erroneous information already on the Database. If the Commission determines that existing information (a report or comment) in the Database is “materially inaccurate or duplicative of information,” the Commission has seven business days after such determination to remove or correct the information or add information to correct the inaccurate information in the Database.

The Commission has until February 10, 2009, to transmit to Congress a detailed plan for establishing and maintaining the Database. The Commission shall include plans for the Database’s operation and cont