Consumer product manufacturers, importers, and small businesses are busy working to meet third-party testing and certification requirements that became effective Jan. 1, after testing enforcement stays for lead levels and phthalates in children’s products were lifted by the Consumer Product Safety Commission, stakeholders told Bloomberg BNA in interviews conducted in early 2012.
They are doing so for good reason. CPSC Chairman Inez Tenenbaum said in a Jan. 25 interview that a top agency priority throughout 2012 will be to continue to focus on enforcement of the new testing mandates.
Tenenbaum said stricter testing and other requirements mean more companies are making and selling safer products. Now that new testing and certification requirements are in place, she said, major retailers are requiring certificates that the products they are selling comply with the tighter standards.
“All of this is working to deter violations and produce better products,” she said.
In addition to the new testing requirements, Tenenbaum said the CPSC will be focusing on enforcing such standards as those that apply to cribs and pools and spas. The agency also this year expects to make mandatory a number of voluntary standards for childrens’ products, including those for full- and non-full-size cribs; bassinets and cradles; toddler beds; infant slings; high chairs and booster chairs; infant bathtubs; and bed rails. And the commission also aims to strengthen a number of other voluntary safety standards including those for corded window coverings, table saws, and infant swings.
Tenenbaum said activities such as these aim to maintain what she said was the commission’s standing as the world’s recognized leader in consumer product safety.
“When Congress passes laws like the CPSIA [Consumer Product Safety Improvement Act], other countries take notice,” she said.
The agency chief said she is particularly proud of the commission’s new crib standard, which she called “one of the strongest in the world.” The standard strengthened requirements that effectively ban the manufacture and sale of drop-side cribs, whether new or used, from the U.S. market.
For companies that don’t come into compliance with agency safety standards, and for those who don’t timely inform the CPSC about safety problems, Tenenbaum warned, they will see the country’s consumer product agency flexing more of its regulatory muscle through such tools as stiffer civil penalties authorized under CPSIA, continued seizure of unsafe goods at U.S. ports and, possibly, even criminal prosecution.
New Testing Tops Business Concern.
But business leaders say the commission’s global reputation as a top product safety regulator has its costs. Rosario Palmieri, vice president for infrastructure, legal, and regulatory policy at the National Association of Manufacturers, told Bloomberg BNA that the new third-party testing mandates for lead and phthalates have taxed businesses so much that some companies have had to modify their inventories to lower expenses.
Palmieri said NAM has been working to try to help relieve some of those costs. But really what NAM members hope for “is that the commission will do something” to provide additional relief, Palmieri said.
Enactment of H.R. 2715 (
H.R. 2715 also mandates that the commission review further reductions to third-party testing requirements and weigh the issue of random versus representative testing. Stakeholders have submitted suggestions on those issues in comments that are under review by the commission.
NAM, as well as representatives of small-batch product manufacturers and importers, told Bloomberg BNA that they are pleased with some of H.R. 2715’s changes. In particular, they applauded the inclusion of a “small-batch exemption,” that exempts small-volume product makers from certain testing requirements, and the provision of a “functional purpose exception” that in some instances allows manufacturers to exceed the CPSIA’s tighter lead limits.
But representatives of both large and small product makers said they still have significant concerns about the new testing requirements overall and the exemptions provided in the amended law specifically. As a result, they are continuing to offer more suggestions to the CPSC that they hope will provide further cost breaks from third-party testing mandates as well as clear up some of those mandates’ and exemptions’ complexities.
Product makers also said they are waiting to see what the CPSC accomplishes with the new tools it has been given under the CPSIA before they consider pushing for additional changes.
On other related fronts, stakeholders are also keeping close tabs on whether the Senate will approve President Obama’s recent nomination of Democrat Marietta Robinson to be the fifth CPSC commissioner, and what that will mean for commission actions. They are also keeping their eye on legislation that may make foreign makers of U.S.-bound products easier to sue domestically.
The ‘Small Batch’ Maker Break.
On the small-business front, the reprieve from the new third-party, children’s product testing standards lifted Jan. 1 affects smaller-scale product makers in a big way, some in the industry said.
CPSC launched a registry for small-batch makers in December and asked small-volume producers to register themselves promptly so they could be more swiftly approved for an exemption from the third-party testing standards that had been held in abeyance until this year (
Small-batch manufacturers are those with $1 million or less in gross revenues from sales of products and who produced or imported no more than 7,500 units of the same product over the course of the year.
Dan Marshall, president of the Handmade Toy Alliance, told Bloomberg BNA that, even though he lamented the fact that some product makers had to shut down because the reprieve from testing was not offered sooner, the “small-batch exemption” was seen as a welcome gesture by many of the low-volume makers he represents.
“We’re in a new place with the CPSIA, now that we have a small-batch exemption,” Marshall said, adding that most HTA members believe the commission is “acting in good faith to implement the rules in the way that Congress intended them.”
Nonetheless, small-volume makers are struggling to understand the new registration requirements as well as master the complexities of the CPSC testing requirements with which they still must comply, Marshall said.
“The rules these smaller businesses must adhere to are too complicated,” Marshall said.
A side effect of the small-business registry is that ultimately “it didn’t simplify things; it added a whole other layer of other rules for manufacturers,” he said.
Marshall said the registration process is not easy to follow because “it’s a multistep process” where registrants must “log in and out.” He said HTA members “have had trouble with the steps” and said registry requirements need to be simplified.
Small-volume makers of children’s products are just now having their questions answered, Marshall said, with queries being fielded by Neal Cohen, the commission’s small-business ombudsman.
Cohen manages the agency’s small-business ombudsman website, dedicated to providing compliance guidance to small-batch craft makers and other low-volume product producers.
Marshall said he is happy that the commission recognizes the need for CPSC to reach out to small businesses, “and Neal is doing a great job.”
But Marshall also said it is important to keep in mind that even though small-batch manufacturers are excused from some third-party testing requirements, “we still have to comply with the 100 ppm lead content rule and the small-parts standards.”
Many in the business of producing handmade toys for children also do not have the infrastructure or the legal counsel to advise them on the mandates, and that presents ongoing challenges, he said.
Palmieri, of NAM, raises another issue with the exemption. Palmieri said his association includes member companies of every size. He said he knows that there are some manufacturers and importers who do not meet the current CPSC criteria for “small-batch” companies but they nonetheless should receive the exemption. Larger-scale makers that produce small quantities of particular products would fit under this category, and Palmieri said some are pushing for these producers to ask for the exemption.
The ‘Functional Purpose’ Exception.
Some product producers, both big and small, are also looking for a break from the 100 parts per million lead content limit that they currently all must comply with, Palmieri said.
On that front, many are viewing a recent petition submitted to CPSC by a manufacturer of die-cast metal pedal tractors for young children as a bellwether for other requests for exemptions from the 100 ppm lead limit, Palmieri said.
The toy tractor maker filed for the exemption after claiming the lead limits “severely crippled” its farm-themed toy business.
A decision on whether to grant the petition for the maker of die-cast ride-on toys under the “functional purpose” exception to the lead limits could signal the agency’s flexibility toward other requests, Palmieri said.
The issue raises questions of how to address requirements for some product components that can meet a higher lead content limit but, because of the presence of alloys used in die-casting and other manufacturing processes, cannot consistently meet the 100 ppm lead content limit, he said.
Under the “functional purpose exception,” the commission has the authority to act on its own initiative, or by petitioner request, to exclude a specific product, material, or component part from the lead limits established for children’s products under the CPSIA.
The exclusion may be granted if: the agency determines it is not technologically feasible for the manufacturer to remove the excessive lead or make it inaccessible; the product or component is not likely to be mouthed or ingested; and an exemption would have no measurable adverse effect on public health or safety.
Complaint Database Concerns.
Another key provision of CPSIA is that it changed aspects of the CPSC’s public database complaint reporting process and gave the commission greater flexibility to evaluate and act on product-related problems.
The nearly one-year-old database, available at SaferProducts.gov, has brought with it a variety of concerns from a variety of both industry and product safety stakeholders.
While Tenenbaum and safety advocates laud the success of the publicly accessible database, some companies have reservations about the information posted for public viewing.
Tenenbaum and some safety advocates meanwhile have concerns of their own: the availability of funding to allow the database to operate effectively as it approaches its first anniversary in March.
President Obama released his fiscal year 2012 budget request Feb. 13. For the CPSC, the president requests $122.4 million—if the price of a possible headquarters move is included—a 6.9 percent hike over that for the previous year.
Rachel Weintraub, the director of product safety and senior counsel at the Consumer Federation of America, said the request, if followed by Congress, promises to allow the commission and the database to operate effectively.
Meeting the budget request would continue “to ensure that the database continues to remain a viable and effective tool for consumers,” Weintraub said.
Tenenbaum said funding for the database seems secure, at least for now.
But a proposed funding cut last year, while unsuccessful, does provide some pause for safety group advocates and Tenenbaum. In that defunding effort, the House Financial Services Subcommittee approved a bill June 16, 2011, that would have cut CPSC’s overall fiscal 2012 budget by about $3.5 million—approximately the amount contemplated for the database—from FY 2011 levels (
After House Republicans lost that funding fight, Tenenbaum said, “I am pleased that the Congress views the SaferProducts.gov database as a valuable, open-government tool and decided against defunding the system.”
“This would have had serious consequences for the larger IT modernization that we are continuing to put in place, with companies attaching comments to a report about one of their products,” Tenenbaum said, adding that manufacturers’ comments have ranged from informing the public that a product has been recalled, to defending a product’s safety.
But disclosure has surfaced as still another database-related issue. The CPSC faces a lawsuit, filed under seal, challenging the posting of at least one report of a product-related incident. The suit, filed anonymously by a company in October 2011, has raised the hackles of a coalition of safety advocates.
Public Citizen, CFA, and Consumers Union filed motions objecting to the sealing of the suit with the federal court in Maryland where the case was filed (
Public Citizen said it is still trying to get information about the underlying merits of the case and is continuing to push to get it unsealed.
“We are still waiting for the courts to make a decision on the pleadings,” Christine Hines, consumer and civil justice counsel for Public Citizen’s Congress Watch, told Bloomberg BNA.
Though CPSC spokesman Scott Wolfson said Feb. 10 that he could not confirm it, the commission also reportedly has objected to the sealing of the suit.
Charles Miller, a spokesman for the Department of Justice, which Wolfson said is taking the lead on the case, also said in a Feb. 10 e-mail that he could not comment on the still-sealed suit.
Asked if she thought the company’s legal challenge to a database report might spur other similar litigation in the future, Hines said regulations related to the database already allow for a process to contest the content of incident reports.
Consequently, “I don’t know why it would lead to further litigation,” Hines said.
She said the whole point of the database is to provide information to consumers and that the CPSC’s complaint reporting system provides even greater protections for manufacturers than a similar database maintained by the National Highway Traffic Safety Administration.
For its part, the commission said its database is working well.
“The SaferProducts.gov database continues to work as expected and continues to be a key tool to help consumers be informed and empowered,” Tenenbaum said.
She said CPSC staff has reviewed more than 5,000 incident reports, provided the information to the “named manufacturer” for review, and posted the information for public access.
She added, “Companies are exercising their rights to submit material inaccuracy claims and to post comments and we have good procedures in place to process these submissions.”
Tenenbaum also stressed the importance of stakeholders realizing that SaferProducts.gov “is more than just the consumer database.
“We built a business portal that includes Section 15 reporting, retailer reporting, brand management, and the small-batch registry,” she said.
Some manufacturers, however, are not so easily convinced of the database’s benefits.
“The database continues to be a concern for manufacturers,” Palmieri of NAM said. “There was a modest reform in H.R. 2715 on material inaccuracy,” he said, but there is still a problem with CPSC’s product incident report review process. Palmieri said the process allows reports to be posted in the database before they have been reviewed for material inaccuracies.
“That is not the way to run an effective database that provides effective information for consumers,” Palmieri said.
Palmieri said his members also disagree with the way in which CPSC staff evaluates the claims in incident reports, finding the evaluations too subjective.
Palmieri additionally said that the use of social media—like Facebook, Twitter, and YouTube, with which CPSC encourages consumers to interact—raises new questions about whether these technologies now provide a government-sanctioned place to air complaints outside the database.
The database does not provoke small-batch manufacturers the way it does the larger makers, Marshall of HTA, said. “We’ve chosen to pick our battles, and testing is our members’ number one concern,” he said.
Additional, Steeper Penalties.
As discussed in relation to the new third-party testing requirements, compliance is a significant agency focus this year and Tenenbaum said that, in particular, an emphasis is being placed on manufacturers’ timeliness in reporting product safety problems and on intercepting, and further deterring, unsafe products from entering the United States.
The CPSC has more ammunition than ever to carry out its compliance efforts, Tenenbaum said, as the CPSIA gave the commission enhanced authority to raise civil penalty amounts to deter violations and provide “just punishment.”
The time is right for the commission to “start addressing the higher penalties,” Tenenbaum said. She pointed to a recent penalty settlement that might be viewed as a shot over the bow of some noncompliant companies.
In the January settlement, Hewlett-Packard agreed to a $425,000 fine to resolve allegations the company failed to timely report the selling of lithium-ion battery packs with some of its notebook computers.
The penalty was negotiated before Congress passed the CPSIA, which contained the increased penalty authority, but even so Commissioner Robert Adler, who cast a dissenting vote against approval of the deal, criticized the penalty as too little.
Tenenbaum said Adler was “signalling that CPSC staff members must consider the size of the company, the number of violations, and the ability to pay.”
The agency’s top commissioner said she agreed with Adler’s views and, looking to the future, “We need to adjust our way of looking at these fines to ensure we are doing what Congress intended.”
Tenenbaum said she thought many companies were doing a better job of complying with product safety regulations, noting for example the third-party-testing-related certification processes that are now being carried out by retailers.
But, she added, CPSC will not hesitate, for example, to fine companies that do not come forward and inform the agency of defective products.
The commission has “a number of tools in our arsenal for enforcement that we will use,” and civil penalties have always been enforcement options, she said.
Still other weapons in the agency’s compliance stockpile are criminal prosecutions that, Tenenbaum said, could very well be coming down the pike soon against problem importers whose unsafe products also could be seized at the borders.
“In the coming months we are likely to see criminal cases [come up] against importers,” Tenenbaum said. Further, if companies do not comply with the safety standards, “we will hold the product at the port,” Tenenbaum said.
Enforcement at Ports.
Tenenbaum said tougher port enforcement has actually been a high-level priority for the agency since 2007. Then, the CPSC was conducting one recall after another to remove toys and other children’s products with excessive lead levels from store shelves.
Those recalls, in part, led to the very inception of the CPSIA which mandated a stronger inspection process at U.S. ports.
Carrying out that mandate, Tenenbaum said the agency has been “expanding [its] presence and tools at U.S. ports, maximizing our effectiveness in using CBP’s [U.S. Customs and Border Protection] CTAC [Commercial Targeting and Analysis] database, and incorporating risk assessment into our port surveillance.”
The agency is also actively involved in educating foreign makers on U.S. product safety standards and encouraging them to further incorporate safety into the design process of their U.S.-bound products and to apply best-manufacturing practices, she said.
Toward that end, Tenenbaum said the agency has been flexing its muscle: In 2010 and 2011 stronger CPSC and CBP presence at the ports resulted in the interception of more than 6.5 million individual items of about 1,700 children’s products considered unsafe or in violation of safety standards.
New Commissioner?
Still another CPSC-related priority, at least for some safety advocacy groups, is having a full stock of commissioners in place in 2012 and beyond. Sally Greenberg, executive director of the National Consumers League, and Hines, of Public Citizen, expressed concern that, if President Obama’s recent CPSC nominee is not approved this year, the absence of a fifth commissioner could affect the outcome of some regulatory actions.
They said the agency operates best at full capacity, and the absence of a fifth commissioner worries them that the agency may not be able to get past stalemates in votes pitting two Democratic commissioners against the two Republicans.
However, Tenenbaum and safety advocates said they are optimistic that even if the Senate does not confirm Marietta Robinson (
Tenenbaum said many rulemaking actions this year address child safety issues, and commissioners and staff tend to be united on tackling concerns in this area.
“It is not atypical for us to vote unanimously on rules, particularly rules having to do with the safety of children. We’re all open to the safety of children.” In matters concerning children’s product standards, “the majority of rules are unanimous,” Tenenbaum said.
Nonetheless, Tenenbaum said she hopes and believes Robinson will be confirmed and seated this year, as “CPSC always has had the cooperation of the Senate, and our appointments have not been contentious.”
Bills Holding Foreign Makers More Accountable.
While maybe not so much a CPSC regulatory priority, those that follow consumer product safety issues—safety groups, the American Association for Justice, and the regulated industry—are carefully monitoring another issue on the legislative front—bills that aim to hold foreign manufacturers more accountable for unsafe products that can injure or kill U.S. consumers.
Sens. Sheldon Whitehouse (D-R.I.) and Jeff Sessions (R-Ala.) reintroduced Dec. 6, 2011, the Foreign Manufacturers Legal Accountability Act of 2011 (S. 1946). The bill has been referred to the Senate Finance Committee, where it awaits further consideration. A related bill, H.R. 3646, was reintroduced in the House Dec. 13, 2011.
“Senator Whitehouse will look for any and every opportunity to move this bill forward,” Whitehouse legislative aide Seth Larson told Bloomberg BNA.
The legislation would address foreign products overseen by CPSC, the National Highway Traffic Safety Administration, the Environment Protection Agency, and the Food and Drug Administration.
The bills aim to address the types of concerns that developed in light of homeowner complaints that despite Chinese-made drywall emitting sulfur and other gases that caused property damage and health problems, the homeowners were unable to bring some Chinese companies to court in the United States.
The legislation, previously introduced in 2009, would require foreign manufacturers to name a registered U.S. agent who could be sued over allegedly defective imports. The AAJ said this will close a loophole that allows some foreign product makers to evade U.S. laws and safety standards.
“The agency really fell down on the job related to the Chinese drywall issue,” Jennifer Fuson, spokesperson for AAJ, told Bloomberg BNA. “Many homeowners are still without recourse because the Chinese company [one of the drywall makers] is refusing to come to court—saying they cannot be held liable in our court of law, even though they sold and profited from a product they sold here in the United States,” Fuson said.
Weintraub, of CFA, said safety groups like hers are interested in the legislation and will continue to monitor its progress because drywall is far from the only product the legislation would address.
Retailer groups, however, previously expressed opposition to such legislation. The National Retail Federation in August 2010 criticized the prior House bill as ineffective and unnecessary, and said it threatened to impose unacceptably high costs on U.S. industry and the economy.
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