On August 12, 2011, President Obama signed into law H.R. 2715 ("A Bill to Provide the Consumer Product Safety Commission with Greater Authority and Discretion in Enforcing the Consumer Product Safety Laws, and for Other Purposes"), bi-partisan legislation intended to avoid some of the more dire, and costly, unintended consequences of the Consumer Product Safety Improvement Act of 2008 ("CPSIA"). The new law provides the Consumer Product Safety Commission with greater flexibility in granting exceptions to the CPSIA's requirements when it can be shown that there is no risk to human health. It also provides for immediate relief from the 100 ppm lead limit for products previously manufactured and intended for children 12 years of age and under as long as the products meet the previous 300 ppm limit, exempts off-road vehicles such as all-terrain vehicles from the lead limits, and permits up to 300 ppm lead in bicycle components. It provides for additional relief in the areas of testing, certification, labeling, and phthalate content of children's products. Additionally, it expands minimal safeguards for manufacturers concerned about having their products misidentified in the consumer product Public Database.
H.R. 2715 is intended to correct some of the more burdensome consequences of the CPSIA, which, among other things, set very tight limits for lead and phthalate content of products intended for children 12 years of age and younger. Lead limits were set at 600 ppm beginning in February of 2009, 300 ppm effective on August 14, 2009, and 100 ppm on August 14, 2011, if the Consumer Product Safety Commission (CPSC) determined that it was technologically feasible to do so. The CPSC on July 13 determined, in a 3-2 split of commissioners along party lines, that it is technologically feasible for all products to meet the 100 ppm standard. As a result, the lead limit was set at 100 ppm effective August 14, 2011. To make matters worse, the lead limit was to apply to all products "sold" on or after the effective date. Thus, products previously manufactured to the 300 ppm limit and currently on store shelves or in manufacturer/distributor warehouses would have no longer been legally saleable after the effective date. Similarly, children's products are required to meet a phthalate limit of 1000 ppm. In the case of lead, an exception was made for products that could be demonstrated to be inaccessible to the user. No similar exception was made for phthalates.
The CPSIA set other standards and established requirements that created problems for various businesses and resulted in heavy burdens with little or no benefit. The law creates burdensome third party testing, certification and labeling requirements that fall particularly hard on small businesses. Because of the broad sweep of the bill, the requirements of the CPSIA were deemed to be applicable to library books, used products, second-hand and charitable clothing store products.
After the CPSIA was enacted, it soon became apparent that the requirements were so burdensome that they threatened the very existence of a large number of small businesses while at the same time making obsolete billions of dollars of inventory of both small and large businesses alike. The CPSC attempted to address the absurdities through a series of stays of enforcement, exclusions from limits, and other measures. However, the CPSC was limited in the extent to which it could provide relief by the wording of the law, which preempted the Commission from making any exceptions based on risk assessments.
In the face of this debacle, Congress recognized that technical corrections to the CPSIA were needed and beginning in 2009, work began on a legislative "fix." A comprehensive bill was introduced by the then-majority Democrats in 2010 but failed to pass the Congress. After the Republicans assumed majority status in the House in 2011, the leadership of the House Energy and Commerce Committee introduced its own bill, and the subcommittee of jurisdiction recommended the bill to the full committee in March. A full committee mark-up, however, was postponed from an early-May schedule when the Republicans failed to gather any support for the bill from the Democratic minority. This would have doomed the bill in the Senate, even if it passed the House. Finally, continued negotiations, and the shadow of the looming 100 ppm standard on August 14 created the impetus for the parties to introduce compromise bill H.R. 2715 and pass it through both houses of Congress in one day, August 1, 2011.
Provisions of the Bill
H.R. 2715 will provide relief in the following ways:
I. Changes to the Lead Limit Application:
A. The legislation makes the 100 ppm limit prospective rather than retrospective. Thus, product on the shelves with lead content between 100 and 300 ppm will continue to be saleable and the 100 ppm limit will apply only to product "manufactured after the effective date" of the limit.
B. A "Functional Purpose Exception" is provided. In essence, the CPSC is granted much greater flexibility to grant exclusions and exemptions from the requirements of the CPSIA when they determine that there is no risk to human health. The CPSC can, on its own initiative, or through a petition by an interested party, grant an exception to the lead limit if it can be shown that it is not practicable or not technologically feasible to manufacture the product by removing the lead or making the lead inaccessible. The potential exception only applies to products that cannot be mouthed or ingested by the child and the CPSC must make a determination that an exception for the product will have no "measurable adverse effect on public health or safety," which is defined as resulting in no measurable increase in blood lead levels. The CPSC decision on an exception, either through its own initiative or a petition by an interested party, shall be made only after notice and a public hearing on the issue.
C. The lead limits will not apply to off-road vehicles, including All-Terrain Vehicles and Snowmobiles, intended for children twelve years and younger.
D. Bicycles will be permitted to have up to 300 ppm in any metal component part.
E. The lead limits will not apply to "used children's products," as defined by the act. This includes products donated to charities and old library books.
II. Changes to the Third-Party Testing Requirements:
A. The act allows manufacturers to use "representative samples" for testing rather than the currently prescribed "random samples."
B. The CPSC is required to seek, within sixty days of enactment, public comment on opportunities to reduce the cost of third party testing requirements consistent with assuring compliance with consumer product safety rules, and is required to review the public comments within one year after the date of enactment of the act. The new law permits the Commission to change the testing requirements if consistent with product safety standards. A report to Congress is required.
C. In an attempt to provide relief to the smallest businesses, the act provides for "Special Rules for Small Batch Manufacturers." The CPSC is required to develop alternative, low-cost testing requirements and if none can be developed, small batch manufacturers are to be exempt from the third party testing requirements. Small batch manufacturer is defined as one having no more than $1,000,000 in gross revenue and a covered product is one produced by a small batch manufacturer in quantities not exceeding 10,000 units the previous year. The alternative testing will not apply to infant or toddler products.
D. The act excludes from third party testing requirements metal components of bicycles and certain printed materials, such as ordinary books, magazines, posters, greeting cards, and similar products.
III. Changes to Phthalates Requirements:
A. Parts that are inaccessible are to be excluded from the phthalate limits. The CPSC is required to adopt the same guidance on accessibility as the one it set for the lead accessibility guidelines or to promulgate a rule setting different guidance.
B. Provides that the phthalate limitations shall apply to any plasticized component part of a children's toy or child care article or any other component part that is made of "other materials that may contain phthalates."
IV. Changes to the "Public Database" (The Publicly Available Consumer Product Safety Information Database):
The CPSIA mandated that the CPSC establish a Publicly Available Consumer Product Safety Information Database ("Public Database"). The Commission launched the Public Database on March 11, 2011,at SaferProducts.gov. Manufacturers of consumer products, particularly brand name products, have objected to the Public Database on the basis that they have inadequate opportunity to correct "material inaccuracies" prior to a negative report being posted on the database. Usually, this occurs when the consumer making the report misidentifies the product brand or manufacturer. H.R. 2715 provides that the CPSC stay the publication of a report in the database for five additional days if it is informed that a report is materially inaccurate. Additionally, the CPSC is required to take an additional five days before posting the report to try to determine model and serial number information for reported products.
V. Tracking Labels:
Under H.R. 2715, the CPSC is permitted to exclude specific products, or provide alternative tracking label requirements, when the specified tracking label requirements under the act are determined to be not practicable for those products.
VI. Other Provisions:
There are provisions related to the development of an ATV Safety Standard, Durable Nursery Standards, and removing FDA-enforced provisions from the mandatory toy standard.
Considerable relief from the unnecessary burdens is provided by H.R. 2715. Most importantly, it provides the CPSC with flexibility in granting exclusions and exemptions when it can be demonstrated that there is no risk of exposure of children to lead and phthalates in component parts in the products in question.
Kelley Drye & Warren LLP
Kelley Drye & Warren's Consumer Product Safety practice group is experienced in providing advice on the difficult issues of how and when potentially hazardous consumer products must be reported to the CPSC. If product recalls are necessary, we work with our clients and CPSC staff to quickly develop and implement cost-effective communications programs that satisfy product liability concerns and minimize potential penalties. When the CPSC threatens or brings enforcement actions, we advise our clients on appropriate strategies.
Kelley Drye's Government Relations and Public Policy practice includes partners and legislative advocates who have counseled companies and individuals subject to high-profile investigations. Our lawyers and government relations professionals are familiar with the unique characteristics and "unwritten rules" of congressional investigations, and we guide clients through the process which may include document production and testimony, in a way calculated to maintain our clients' reputation and minimize risk. We not only understand the intricacies of the legislative and executive branches individually, but also help clients navigate the delicate interplay between the two.
For more information about this client advisory, please contact:
Christie Grymes Thompson
John Arnett, Senior Advisor