Earlier this year, manufacturers (including importers of record) became subject to several new children’s product safety rules: the lead substrate, phthalate and ASTM F963 mandatory toy safety standards. These standards join the small parts and lead paint rules, which have been in effect for some time. Several recent actions by Congress and the CPSC, however, provide limited relief for certain manufacturers from these standards.

The CPSC approved a component testing rule as a response to industry concerns about the burdens of product testing and duplicative testing. The component testing rule, which went into effect in December 2011, permits manufacturers to obtain certificates from suppliers of component parts and to rely on those certificates, as long as the manufacturer uses “due care” to justify such reliance. This is critical, since the manufacturer is still responsible for its product’s compliance with the underlying safety standards. Therefore, manufacturers have to be vigilant in maintaining extensive documentation, including copies of the certificates on which they rely, along with the third party test reports.

In August 2011, Congress enacted H.R. 2715, which amends the CPSIA and the CPSA. H.R. 2715 offers a reprieve for small businesses that manufacture a limited quantity of products. As a result of H.R. 2715, the CPSC is required to develop alternative, low-cost testing requirements for small manufacturers. In response, the CPSC promulgated a rule that provides that small batch manufacturers are exempt from certain third party testing requirements for covered products. To be considered a “small batch” manufacturer, a business must have no more than $1 million in gross revenue from sales of consumer products in the previous calendar year. “Covered products” are those of which the manufacturer made no more than 7,500 units in the previous calendar year. To qualify for the exemption, a manufacturer must first register with the CPSC as a small batch manufacturer (go to www.SaferProducts.gov). Following this registration, the manufacturer will be exempt from some, but not all, third party testing requirements. The exemption applies to the lead content, phthalate, and ASTM F963 mandatory toy safety standards. It does not provide relief from the lead paint rule, children’s metal jewelry standard or rules relating to infant and toddler products. While the exemption provides relief from certain third party testing requirements, the manufacturer is still required to certify that products comply with the underlying safety standards.

Another significant change could provide a respite from the tracking label requirement for some manufacturers. The CPSC now has the authority to exclude certain products from this requirement or to provide alternative labeling requirements if the statutory tracking label requirements are determined not to be practicable for those products.

At 63 pages, the Consumer Product Safety Improvement Act of 2008 is a hefty piece of legislation with wide-reaching (and sometimes unexpected) effects on the consumer product and toy manufacturing, import and retail industry and the consumers who purchase its products.. The underlying subject matter of the Act is complex, and the Act is therefore dense and at times confounding and frustrating. The Act was amended this summer to address some of the industry’s concerns. We at AMM are launching this blog to provide a forum for sharing insights, and we hope to generate some interesting discussions that will benefit our readers.

The amendment to the CPSIA provides much-needed clarity and relief for many manufacturers, particularly small manufacturers and those in specific industries such as book publishers and bicycle and off-highway vehicle manufacturers. The determination that the 100 ppm lead content limit does not apply retroactively to products in inventory is certainly a welcome development for manufacturers. On the other hand, the new legislation does not contain some of the industry-friendly provisions contained in prior bills, such as delaying the implementation of the 100 ppm standard until 2012 and restricting the lead limits to products designed primarily for use by children age six and younger that can be placed into a child’s mouth. Nevertheless, the opportunity to provide comments and suggestions with respect to third party testing requirements offers manufacturers and other stakeholders the ability to voice their remaining concerns, and the new functional purpose exception will allow manufacturers to seek relief from the lead limits. I’m curious to see the comments of the various stakeholders…

Toy manufacturers, importers and retailers breathed a collective sigh of relief on August 1 at Congress’s clarification that the 100 ppm lead content limit, which went into effect on August 14, does not apply retroactively to children’s products in inventory. This standard only applies to products manufactured after August 14.

In addition, Congress codified the “functional purpose” exception that has been discussed in industry circles since the adoption of the CPSIA. In essence, this provision permits the CPSC to grant an exemption from the lead content rules if it determines that: (i) a product (or class of product, material, or component part) cannot be manufactured without lead either because it is not practicable or because it is not technologically feasible, (ii) the product is not likely to be placed in a child’s mouth or ingested during the normal and reasonably foreseeable use and abuse of the product; and (iii) granting an exception would have no measurable adverse effect on public health. Historically, the effect on public health was measured by reference to blood lead levels in children. The new law permits the CPSC in its discretion to adopt an alternative method. An exception can be granted by the CPSC on its own initiative or upon application of an interested party, in which case the interested party bears the burden of proof.

The legislation contains an exemption from the lead limits for off-highway vehicles (including snowmobiles). It also exempts used children’s products other than children’s metal jewelry and children’s products for which the seller or donor has actual knowledge of non-compliance.

The CPSIA limits or bans the use of certain phthalate compounds in toys and child care articles. The new legislation clarifies that these limits do not apply to component parts that are not accessible to a child through normal and reasonably foreseeable use and abuse of the product, as determined by the CPSC. More specifically, if a component part is not physically exposed to the child by reason of a sealed covering or casing and that covering or casing is not likely to be disturbed through reasonably foreseeable use and abuse of the product (including swallowing, mouthing, breaking or other children’s activities, as well as the aging of the product), then that part is not accessible to a child. The CPSC is charged with the task of developing a rule to provide guidance with respect to this provision.

The recent amendment to the CPSIA has several effects on the third party testing of children’s products. It clarifies that the CPSC must establish standards and protocols for the testing of representative samples (rather than the more stringent requirement of using random samples). It also directs the CPSC to revisit existing third party testing regulations within one year, taking into account public comments as to how testing costs might be reduced. Congress suggested that such comments might touch on topics such as redundant third party testing, sampling procedures, component testing, use of alternative testing technologies, and whether compliance with international standards should provide a reference for CPSC compliance.

The new law requires the CPSC to consider the economic, administrative and other limitations applicable to small batch manufacturers (generally defined as manufacturers with annual total gross sales of no more than $1 million) when implementing third party testing requirements. It must provide, after notice and a hearing, alternative testing requirements for covered products manufactured by small batch manufacturers. Alternatively, the CPSC may allow certification of a product produced by a small batch manufacturer based on compliance with another national or international governmental standard, as long as that standard is at least as rigorous as the consumer product standard enforced by the CPSC. The small batch manufacturer exemption, however, is not applicable to the lead paint and small parts standards nor is it available for certain classes of children’s products, such as cribs, children’s metal jewelry, and baby bouncers, walkers and jumpers.

Under the new law, ordinary books and ordinary paper-based printed materials are no longer subject to the third party testing requirements of the CPSIA. Additionally, the third party testing requirement as it pertains to lead content no longer applies to metal component parts of bicycles.

On August 1, 2011, amid the flurry of negotiations, posturing and press conferences on the debt ceiling bill, Congress quietly and without much fanfare passed an amendment to the Consumer Product Safety Improvement Act of 2008 (“CPSIA”) that will dramatically affect the consumer product industry. The legislation passed with overwhelming support in the House and Senate and was signed into law by the President on August 12.

In the nearly three years since the passage of the CPSIA, the Consumer Product Safety Commission (“CPSC”) on several occasions deflected criticism of its regulations by asserting that only Congress had the authority to grant the relief requested by various stakeholders. It is fitting, therefore, that the stated purpose of the legislation is “to provide the Consumer Product Safety Commission with greater authority and discretion in enforcing the consumer product safety laws.”

The new law addresses several key topics relating to toys and other children’s products, including third party testing requirements for children’s products and various toxicological safety standards.