On August 14, 2008, President Bush signed the Consumer Product Safety Improvement Act of 2008 which will overhaul the Consumer Product Safety Commission imposing restrictions regarding the use of lead, phthalates and possibly formaldehyde in children's products, including toys and jewelry. The Act amends four existing laws: (1) The Consumer Product Safety Act (CPSA); (2) The Federal Hazardous Substances Act (FHSA); (3) The Poison Prevention Packaging Act (PPPA); and (4) The Flammable Fabrics Act (FFA).

The Act itself includes restrictions on lead and phthalates in children's products and child care articles, mandatory testing by CPSC accredited laboratories, certification of testing laboratories, warnings in advertising including catalogs and websites, increased civil and criminal penalties, and adoption of ASTM toy safety standards as federal regulations. The full impact of the legislation cannot be anticipated because it requires the CPSC to adopt regulations and conduct tests for scientific and economic feasibility before some of the proposed standards and requirements become effective.

KEY DEFINITIONS

Children's Product – Consumer product designed or intended primarily for children 12 years old and under.[1]

Consumer Product – Is any article produced or distributed for sale to a consumer for household, school, recreational, or other use, consumption or enjoyment by a consumer. There are nine exemptions including (1) products not produced or distributed for sale to or to be used, consumed or enjoyed by a consumer; (2) tobacco and tobacco products; (3) motor vehicles or motor vehicle equipment; (4) pesticides; (5) firearms and ammunition; (6) aircrafts and aircraft parts; (7) boats; (8) drugs, devices or cosmetics; and (9) food.

Child care article – Consumer product facilitating sleep, feeding, sucking or teething of children three and under.

Children's Toys – Products designed or intended by the manufacturer for play with or by children 12 years of age or younger.

Manufacturer – Any person who manufactures or imports consumer products.

Distributor – A pesron to whom a consumer product is delivered or sold for purposes of distribution in commerce, other than a manufacturer or retailer.

Retailer – A person to whom a consumer product is delivered or sold for purposes of sale or distribution directly to consumers

Private Labeler – An owner of a brand or trademark that appears on a consumer product or label.

LEAD

The Act establishes the following decreasing permissible lead levels in children's products.

600 ppm lead — February 10, 2009

300 ppm lead — August 14, 2009

100 ppm lead — August 14, 2011

Enforcement of the 100 ppm standard is dependent upon the CPSC completing a technological feasibility study demonstrating the cost benefit supporting implementation of this standard.

The allowable lead level in paint or any surface material reduces from the current 600 ppm lead standard to 90 ppm lead by August 14, 2009.

PHTHALATES

The Act bans the use of six specific phthalates in toys or child care articles only, not all children's products, to not more than 1,000 ppm effective February 10, 2009. Three phthalates—DEHP, DBP and BBP—are permanently banned.

The ban is temporary for DINP, DIDP or DnOP contained in excess of 1,000 ppm in mouthable toys or child care articles from February 10, 2009, until the CPSC either withdraws the standard or determines, based on studies, that it should be made permanent. A definition of "mouthable toy" is to be published by the CPSC but does not currently exist.

TESTING AND CERTIFICATION

Manufacturers are required to certify that products imported into the United States and distributed are compliant with all bans, rules, regulations and standards for consumer product safety. Certificates of compliance must accompany products throughout distribution to the retail customer. This certification must be based on a reasonable testing program.

In addition to the certification requirement for all consumer products, children's products must be tested to demonstrate compliance with lead and phthalate bans and other cosumer product safety rules, standards and regulations. The Act requires that testing be done exclusively by laboratories (now known under the Act as Third Party Conformity Assessment Bodies) accredited by the CPSC pursuant to regulations to be adopted by the CPSC on the following schedule. Testing exclusively with accredited Third Party Conformity Assessment Bodies by manufacturers and private labelers is to begin 90 days after the regulations for each of the types of testing cited below are issued.

Lead paint testing September 13, 2008

Cribs and pacifier testing October 13, 2008

Small parts testing November 12, 2008

Children's metal jewelry testing December 12, 2008

Baby bouncers, walkers, and jumpers March 12, 2009

300 ppm lead standard May 11, 2009

All other children's products June 10, 2009

Given this ambitious schedule for issuing regulations for certification programs, it is likely that there will be some delay in implementing the accreditation of Third Party Conformity Assessment Bodies. The 90-day implementation period for accredited testing may be delayed if the CPSC determines that there are not enough accredited Third Party Conformity Assessment Bodies to enable manufacturers and private labelers to comply. Testing certificates must also accompany the product throughout distribution to the retailer.

Recognizing the possibility of a shortage of independent Third Party Conformity Assessment Bodies, the Act contains an exception permitting the CPSC to certify company-owned or related testing facilities. As a result, it will be accredited testing facilities as opposed to independent third party testing facilities that will be the recognized source for consumer product testing under the Act.

MANDATORY TOY SAFETY STANDARDS

Toy safety standards and testing procedures administered by the CPSC have been guided by the standards and testing protocols set out in ASTM F963-07. The ASTM toy safety standards include guidelines on toxic substance content, sharp edges, exposed points, quality of materials including stuffing materials, sound producing levels, choking hazards, folding or hinging mechanisms, cords and straps, magnets and durability. Cadmium and other heavy metals are included under the toxic substances provisions of the ASTM standard and the limits on those substances, as well as the other provisions of the new standard, will become federal law when the standard becomes a Safety Rule under the new law effective in February 2009. The effectiveness of these standards is to be evaluated by the CPSC within one year of the effective date.

LABELING, TRACKING AND ADVERTISING

A primary goal of the Act is to provide a legal standard for trackability or the ability of a consumer to identify the source of a children's product by manufacturer, location and date of production. In order to accomplish this goal, the Act includes requirements for labeling children's products to include the location and date of production as well as the batch run number or other identifying characteristics of the product. The trackability requirements will become effective August 14, 2009.

Warnings required under the FSHA for small parts on the labels of toys and games must be added to any advertising of a product that is subject to the Act including web sites and printed material such as catalogs intended for consumer use. The expanded advertising requirements become effective December 14, 2008, for Internet advertising and February 14, 2009, for printed materials. The CPSC is instructed to evaluate whether these expanded advertising rules should apply to advertising by entities that do not engage in direct sales to consumers, including those using business-to-business catalogs and customer-restricted web sites.

STANDARDS FOR DURABLE NURSERY PRODUCTS

The Act creates new rules for durable infant and toddler products (which include cribs of any size, toddler beds, high chairs, booster chairs, hook-on chairs, bath seats, gates and other enclosures, play yards, stationary activity centers, infant carriers, strollers, walkers, swings, bassinets and cradles). The rules include owner registration to aid in recalls requiring manufacturers to provide postage prepaid cards for consumers to return to the manufacturer for this purpose. Manufacturers must keep records regarding purchasers and are required to permanently place its name, contact information, model name and number and date of manufacture on each durable nursery product. The CPSC is expected to issue proposed regulations on this topic within a year.

IMPORT/EXPORT ISSUES

The Act prohibits the export for sale of recalled or non-conforming products unless the importing country indicates that it will accept the goods. Products may be exported for destruction with the approval of the CPSC under a corrective action plan.

This section mandates cooperation between the CPSC and U.S. Customs and Border Protection to prevent the import of nonconforming goods which includes goods shipped without required certificates of compliance and testing for children's products. Nonconforming goods entering the United States will be destroyed.

PENALTIES

Both civil and criminal penalties have been increased under the Act.

Civil – previously, the maximum fine per offense was $5,000. It is now $100,000. The maximum aggregate amount for any related series of events is increased from $1,250,000 to $15,000,000.

Criminal – former maximum sentence for knowing and willful violation was one year. It is now increased to five years with fines to be determined in accordance with 18 U.S.C. §3571.

Criminal liability for directors, officers or agents – former law required knowing and willful violation coupled with notice of noncompliance. The new law eliminates the need for notice of noncompliance and makes it possible to impose criminal liability on individuals in the event of a knowing and willful violation.

PUBLIC DATABASE OF CONSUMER COMPLAINTS [2]

The Act provides for but does not fund a CPSC database available to the public reporting consumer product complaints. Should Congress appropriate the funds, the CPSC hopes to create a consumer product database similar to the NHTSA Automobile Defect & Recalls database. Once a database is established, the CPSC will be required to post all consumer complaints received within ten business days of receipt. The CPSC is required to transmit the complaint or report to affected companies within five days of receipt. If a company chooses to, it can comment and ask that the comments be included in the report, or ask that certain confidential information be redacted. The CPSC will initially review the information in question to determine its confidentiality. An appeal process of the CPSC determination is available. If no objection is made, the complaints and the company's comments will be posted with the complaint on the web site.

In addition to the public database, the existing rules regarding the disclosure of information to the public concerning complaints and reports of consumer product defects are being altered to shorten the time frame for company response and request for certain information to be treated as confidential. A manufacturer or private labeler has to make the request for confidential treatment within 15 days of hearing from the CPSC that it has received a complaint concerning its product(s).

ENFORCEMENT

The CPSC will have more extensive powers for recalls and requirements for notices. The right of the party recalling the product to elect whether it will provide a refund, repair or replacement is removed and the CPSC will now make that determination based upon the public interest. Notices will now include the number of injuries or deaths and the ages of the individuals harmed and may be required to be in more than one language.

State Attorneys General will be able to enforce the Act. The State AG is required to notify the CPSC 30 days ahead of enforcement unless it involves a substantial product hazard. The CPSC may choose to intervene in the enforcement action.

ADMINISTRATION

There is increased staff and appropriations for the CPSC. The Act permits the Commission a two-person quorum to conduct business for the first year after enactment.

The new law streamlines the CPSC rulemaking procedure by removing 60-day advanced publication of notice of rulemaking. The standard notice and comment period will continue to exist. The CPSC recommends that the strategy of delaying the filing of comments until the last day of the period may no longer be effective in influencing outcomes under this Act due to the very tight timelines the Act imposes on the CPSC to publish final rules.[3]

WHISTLEBLOWER PROTECTION

Employees who report violations of the Act to the CPSC are protected under traditional Whistleblower status with remedies including reinstatement, back pay and/or payment of compensatory damages.

PREEMPTION

This Act, with a few specific exceptions, adopts the preemption language contained in the statutes already in place upon which this law expands (CPSA, FHSA, PPPA, and FFA). The relevant preemption language provides that a state cannot establish or continue in effect any law or regulation intended to deal with the same risk of injury associated with the product that has been addressed by the Act unless the state standard is identical to the federal standard. There is an exception for products for the state government's own use, in which case, the state can enact a stricter standard.

There is an exception to preemption under the Act that allows states to continue to regulate any phthalate alternative not addressed by the CPSC after the ban on DINP, DIDP and DnOP is reviewed by the Chronic Hazard Advisory Panel.

State toy testing statutes that pre-date the effective date of the Act may be maintained as long as the state notifies the CPSC of the standard by November 12, 2008. This is important, particularly if the standards for toxic substances are lower under a state's toy testing statute. Otherwise, with regard to toys, this federal adoption of the ASTM Toy Safety Standard preempts state statutes regulating toxic substances in addition to lead and phthalates on or in toys.

A state can apply to the CPSC for an exemption from the Act to have a more stringent standard or accelerate an implementation date.

The CPSC will NOT be able to preempt state common law damage claims and state product liability statutes. The CPSC will also NOT be able to preempt state laws addressing warnings such as California Proposition 65.

OTHER SUBSTANCES/PRODUCTS

Three-wheeled all-terrain vehicles are banned under the Act and the CPSC is charged with developing increased safety regulations for other all-terrain vehicles.

A study of risks involved in the use of formaldehydes in textiles and apparel is required by the Act.