CPSC Reauthorization Legislation Expected To Pass

Date: Jul 31, 2008

On July 30, the House overwhelmingly passed H.R. 4040, the Consumer Product Safety Modernization Act (CPSMA). The bill will likely be on the Senate floor by August 1 and is expected to be signed by the President. The bill adopts many new and important changes that affect consumer product safety manufacturers. Many of these new requirements will be imposed within very tight timeframes. It also imposes many new rules and obligations on the Consumer Product Safety Commission (CPSC). The legislation authorizes the Commission to operate with only two Commissioners for one year, and authorizes increased funding, staffing and staff training. The CPSMA, among other things:

  • addresses preemption in several different sections
  • gives state Attorneys General new authority to enforce violations
  • increases civil penalties to $100,000 per violation, subject to a $15 million cap
  • authorizes asset forfeiture as a penalty in criminal cases and eliminates the requirement that officers and directors be notified of a violation before being subject to potential criminal liability
  • reduces timeframes for responding to disclosure requests and creates a new public database of incident information
  • creates a new whistleblower right for non-government employees
  • imposes a broadened general conformity certification requirement on all products imported or distributed in commerce that takes effect in 90 days
  • bars the sale of recalled products
  • adopts new requirements applicable to imports and exports
  • expands the agency's authority and allows for expedited rulemaking

Many other provisions apply to various types of children's products. The bill:


  • imposes a 600 ppm limit on lead in all children's products in 6 months, with further reductions phased in over three years
  • lowers the lead paint standard to 90 ppm from the current 600 ppm limit in one year
  • bans the use of three phthalates in children's toys and childcare articles and imposes an interim ban on three other phthalates, pending further scientific review, in six months
  • requires testing and certification of children's products
  • makes the current voluntary toy safety standard a product safety standard
  • imposes a variety of new requirements on various types of children's products, including new mandates to include tracking labels on children's products, warning labels in advertising, and registration for durable nursery products

The law will become effective upon enactment. We highlight below some of the key elements of this complex new law.


General Provisions

Preemption: Existing provisions of the laws administered by the CPSC, including the Consumer Product Safety Act (CPSA), Federal Hazardous Substances Act (FHSA), and Flammable Fabrics Act (FFA), bar states from adopting rules or standards that are not identical to federal standards. Preemption was a key issue during discussions on the bill due to a need to avoid conflicts between various state laws that have been adopted, particularly as to lead and phthalates. The lead provision includes specific language that effectuates preemption under the Federal Hazardous Substances Act (FHSA). Similarly, phthalate limits are intended to be national, but the bill explicitly reserves to the states the ability to regulate phthalate alternatives not covered by the bill. The provision on the toy safety standard, however, allows states to file for recognition of their own provisions within 90 days, potentially establishing conflicts in specific requirements applicable to toys. Another provision limits the ability of the CPSC to issue opinions on whether its rules preempt common law tort suits; report language clarifies that the Commission remains free to explain the scope of Commission rules and standards. The bill includes language intended to preserve the California Proposition 65 warning scheme.

Attorney General Enforcement: State Attorneys General are authorized to initiate enforcement actions to obtain injunctive relief in federal court to enforce specific provisions of Section 19 of the Consumer Product Safety Act (CPSA), as amended by the CPSMA. Thirty days' advance notice must be given to the CPSC, which may intervene in the suit, except in instances involving "substantial product hazards," in which case the State may act immediately. The bill includes some important limits on the ability of private lawyers retained to assist AGs to share information obtained during litigation.

Penalties: Penalties per violation increase from the current $5,000 (higher with the inflation adjust) limit, and the cap increases more than ten-fold to $15 million. The bill changes the standard for criminal liability for officers and directors, potentially putting them at risk for individual criminal responsibility even in the absence of actual knowledge of a violation, although criminal action must be based on knowing and willful conduct. Criminal penalties include asset forfeiture.

Public Disclosures; Public Database: The bill alters the timeframes for offering comments to the Commission related to disclosure that identify a company or its products, and adopts a new public database requirement for incident information submitted by consumers or other third parties.

Whistleblower Protections: H.R. 4040 creates a new whistleblower right for non-governmental employees, allowing employees who allege they were discharged for reporting a product safety violation to file suit for compensatory, consequential and punitive damages.

Conformity Assessment: Current law requires certificates of conformity with any product safety standard. H.R. 4040 expands this requirement, mandating certificates of conformity with applicable consumer product safety rules or any "similar rule, ban, standard or regulation under any other Act enforced by the Commission." This requirement, effective in 90 days, thus applies to a broad array of products. Certifications must be based on a test of each product or a reasonable testing program that the product complies with all rules, bans, standards or regulations applicable to the product, and must identify each requirement.

Import/Export Provisions: The legislation bans exports of recalled or non-conforming products unless the destination country accepts the product or the product was made for export in accordance with applicable law. It directs the Commission to develop a plan for cooperation with Customs and Border Protection (CBP). The bill gives the CPSC authority to assign CPSC personnel to the National Targeting Center at CBP to facilitate information exchange to stop import of products that pose a high risk to consumer safety. It directs the CPSC to develop a comprehensive risk assessment methodology


for screening noncompliant imported consumer products, to establish a substantial product hazard list and require destruction of noncompliant imports.

CPSC Authority and Resources: Importantly, H.R. 4040 allows the Commission to operate with two Commissioners from different political parties as a quorum for 1 year, essential if the Commission is to make progress on the many rules it is required to issue under the bill. The bill authorizes increased funding and staffing, and authorizes funding of travel in light of the ban on industry-sponsored travel adopted elsewhere in the legislation.

CHILDREN'S PRODUCTS

Central to the bill are new regulations on children's products, including new limits on total lead in all children's products, a new lower lead paint standard, and a ban as well as "interim" restrictions on certain phthalates in children's toys and childcare articles. Children's products are generally defined as products primarily intended for children 12 and under.

Lead Limits: Within six months, total lead in all children's products (products for children 12 and under) may not exceed 600 ppm, with a further drop to 300 ppm in one year, and 100 ppm, if feasible, within three years. All children's products – toys, games, apparel, footwear, jewelry, sports equipment, etc. – will be subject to these lead limits, with a limited notice and hearing process for exceptions, intended to apply on a product-by-product basis and based on peer-reviewed scientific evidence that lead will neither be absorbed into the body nor have any impact on health and safety. The bill requires the CPSC to adopt a rule within one year applicable to inaccessible component parts, and provides that if the Commission determines that it is not feasible for certain electronic devices, including batteries, to comply with the prohibition, it can issue standards to reduce the exposure and accessibility of lead and establish a schedule by which electronic devices will fully comply. However, the legislation establishes that a pending rulemaking will not stay any of the effective dates, creating a situation where it may be impossible to obtain exemptions in a timely fashion because of the six month implementation date. While there may be little likelihood that the CPSC would seek to enforce lead limits on inaccessible components, electronic products, crystal and other items that will not pose a real risk of lead exposure, the ability of State Attorneys General to enforce bans or standards creates a potential liability risk.

Phthalates: H.R. 4040 includes new limits on six different phthalates in children's toys (toys for children 12 and under, specifically a toy or part of a toy smaller than five centimeters) and child care articles (items for children three and under to facilitate sleep, feeding, or help with sucking and teething). The phthalates ban applies to a narrower range of children's products than the lead prohibitions, which apply to all "children's products." Three phthalates, di (2-ethylhexyl) phthalate (DEHP), dibutyl phthalate (DBP) and benzyl butyl phthalate (BBP), may not be present in excess of .1% within six months in any children's toys or child care articles. The limits on diisononyl phthalate (DINP), diisodecyl phthalate (DIDP) and di-n-octyl phthalate (DnOP) are identical - .1% in six months - but are couched as "interim" limits pending review by a new Chronic Hazard Advisory Panel (CHAP). The legislation requires a new CHAP to review all phthalates and phthalate alternatives used in children's toys and child care articles, specifying that the findings and conclusions of the previous CHAP shall not be considered determinative, and directing the CHAP to, among other things, examine all potential health effects, including, specifically, endocrine disrupting effects, of all phthalates; consider effects of exposure to phthalates in combination; consider cumulative effects from total exposure to phthalates, including from other sources such as personal care product; consider all routes of exposure (ingestion, dermal, hand-to-mouth); and consider the level at which there is a reasonable certainty of no harm to children, pregnant women or other susceptible individuals using sufficient safety factors. Restrictions on phthalates in the final bill reflect a new focus on chemicals in consumer products; changes to the current U.S. chemical regulatory scheme to a precautionary approach similar to the EU REACH system will almost certainly be a high priority for some legislators next year.


Third-Party Certification of Children's Products: Every manufacturer of a children's product subject to a children's product safety standard must have the product tested by a qualified non‑governmental independent third party, certify that the product conforms and specify the applicable children's product safety standard.

Toy Safety Standard: The voluntary standard applicable to toys, ASTM F963-07, becomes a mandatory consumer product safety standard within 180 days.

Tracking Labels for Children's Products: Tracking labels on children's products to identify them in the event of a recall are required where feasible.

Advertising: Mandatory warning information (such as the choking hazard warning) must be included in any advertising for toys and games that provides a direct means of sale.

Consumer Product Registration Forms: Both bills require the Commission to require manufacturers of durable infant or toddler's products to provide consumers with postage-paid registration forms which can be used only to notify consumers of recalls and safety notices.

The legislation also includes provisions on ATVs, a requirement to study formaldehyde in textiles, apparel, and other provisions.

New requirements and obligations go into effect quickly, so consumer product companies must closely review the legislation and develop a compliance plan based on their product lines and operations.

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