Toy Industry Update: Key Provisions of the CPSIA Amendment

August 25, 2011

August 25, 2011Slide 2

Objective

During this one-hour webinar – part of an ongoing series of TIA-sponsored Legislative and Safety updates – toy industry stakeholders will be provided with an update on the Consumer Product Safety Improvement Act (CPSIA) following the President’s recent action to sign Amendment H.R. 2715 into law.

August 25, 2011Slide 3

During this session, TIA member and industry stakeholders will receive information on the Amendment’s key provisions relating to:

– Lead Limits

– Phthalates

– Third Party Testing

– Tracking Labels

– Public Database (SaferProducts.gov)

See additional resource … TIA webpageKey Provisions of H.R. 2715 - An Amendment to the CPSIA

Overview of Today’s Presentation

August 25, 2011Slide 4

Today’s Presenters

PRESENTER

Rick Locker

General Counsel

MODERATOR

Ed Desmond

Executive Vice President, External Affairs

PRESENTER

Al Kaufman

Senior Vice PresidentTechnical Affairs

PRESENTER

Rebecca Mond

Director, FederalGovernment Affairs

Background

August 25, 2011Slide 6

Background

CPSIA signed into law in 2008

“Unintended Consequences”– General Counsel issued letter

on retroactive application of lead standard

– Problems interpreting “any” in lead exclusion provision

– Library books banned

– Overall narrow interpretation of legislation

August 25, 2011Slide 7

Attempts at Reform Slide 1 of 4

Consumer Product Safety Commission

– Exclusions of materials from the lead standard

– Stays of Enforcement for testing and certification requirements

– Testing flexibility

– Technological feasibility of meeting 100ppm

August 25, 2011Slide 8

Attempts at Reform Slide 2 of 4

I am frustrated that the Consumer

Product Safety Commission has

taken too long to promulgate rules

required by the Consumer Product

Safety Improvement Act, including

the rules on third-party testing

obligations and the component

part testing rule.

Senator Richard (Dick) Durbin (D-IL)

August 25, 2011Slide 9

Attempts at Reform Slide 3 of 4

Congress

– “Amend the CPSIA” Rally

– Consumer Product Safety Enhancement Act (CPSEA) proposed by Representative Henry Waxman (D-CA)

– Enhancing CPSC Authority and Discretion Act (ECADA)Drafted by Republican staff of the House Energy and Commerce (E&C) Committee (Gib Mullan, Chief Counsel for House E&C Committee Republicans, formerly CPSC Director of Compliance)

– H.R. 2715

August 25, 2011Slide 10

Attempts at Reform Slide 4 of 4

Representative Waxman called ECADA the “Unsafe Toy Act” and Senate Democrats were not interested in passing

H.R. 2715 is a compromise to address the biggest problems with CPSIA– Co-sponsored by House Democrats Bono Mack, Butterfield,

Upton, Waxman, Barton, Dingell, Rehberg and Towns

H.R. 2715An Amendment to the CPSIA

August 25, 2011Slide 12

Rapid Review and Approval

Weekend of July 30-31– TIA staff engaged by legislative staff of several ranking members

of the House of Representatives

August 1– AM: Bill submitted to House for consideration

Approved by vote of 421-2

– PM: Bill submitted to Senate for considerationApproval by unanimous consent

August 12 – PM: Signed into law by President Obama

August 25, 2011Slide 13

Key Provisions of H.R. 2715

Lead Limits

Phthalate Limits

Third-Party Testing

Tracking Labels

Public Database (SaferProducts.gov)

August 25, 2011Slide 14

Lead Limits Slide 1 of 6

CPSIARetroactive application of the lead content limits

August 25, 2011Slide 15

Lead Limits Slide 2 of 6

CPSIARetroactive application of the lead content limits

AMENDMENT

Prospectively applies the 100ppm lead content standard (effective for product manufactured on/after August 14, 2011;product on the shelf that met prior limit can continue to be sold)

Prospectively applies any future lead content standard should the CPSC revise the standard downward

August 25, 2011Slide 16

Lead Limits Slide 3 of 6

Select industries had specific compliance issues H.R. 2715:

– exempts ATVs and Off Highway Vehiclesfrom the lead limits entirely

– applies current lead limits and eliminates third-party test requirement for metal components in bicycles and related products(300ppm limit has been in place since August 14, 2009; stay of enforcement expires December 31, 2011)

– Exempts used children’s products from the lead standard (except children’s metal jewelry)

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Lead Limits Slide 4 of 6

CPSIACPSC hesitant to exempt products and materials under lead content limits

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Lead Limits Slide 5 of 6

CPSIACPSC hesitant to exempt products and materials under lead content limits

AMENDMENT

Includes Functional Purpose Exemption

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Lead Limits Slide 6 of 6

Functional Purpose Exemption(three considerations)

– Not practicable or technologically feasible to manufacture without lead

– Not likely to be mouthed

– Does not have “measurable” adverse effect on health and safety (means no measurable increase in blood lead level)

Burden of proof is on the person/entity seeking the exemption

August 25, 2011Slide 20

Phthalate Limits Slide 1 of 3

CPSIARelied upon CPSC to determine and issue guidanceregarding which materials “may” or “may not” require phthalate testing

Made no exclusion for inaccessible components*

* The absence of an inaccessibility provision was particularly problematic for electronic toys

August 25, 2011Slide 21

Phthalate Limits Slide 2 of 3

CPSIARelied upon CPSC to determine and issue guidance regarding which materials “may” or “may not” require phthalate testing

Made no exclusion for inaccessible components

AMENDMENT

Contains exemption for inaccessible components

Codifies guidance and limits testing to plasticized components

Gives CPSC the authority to revoke any exclusion, if necessary

August 25, 2011Slide 22

Phthalate Limits Slide 3 of 3

Under H.R. 2715, Congress defines inaccessibility as “not physically exposed by reason of a sealed covering or casing and does not become physically exposed through reasonably foreseeable use and abuse of the product”

By August 2012, CPSC is required to either:

– adopt current guidance issued for lead; or

– issue new phthalate inaccessibility guidance

At present, CPSIA Section 108 still governs for three “interim ban” phthalates … current restrictions are based upon the likelihood of object being mouthed, sucked or chewed

Additionally . . .

– Existing (conflicting) state phthalate restrictions are likely preempted(e.g., California does not have inaccessibility criteria in AB 1108)

– The EU inaccessibility provision for phthalates differs slightly from the new U.S. requirements

August 25, 2011Slide 23

Third Party Testing Slide 1 of 2

SamplingCPSIA “Random” SamplingAMENDMENT “Representative” Sampling

New Consideration for Books– Exempt: Ordinary books and printed materials

– Not Exempt: Books for ages under three years and with play value or non-paper-based-materials not used in the binding process

August 25, 2011Slide 24

Third Party Testing Slide 2 of 2

Testing costs and requirements

– CPSC required to • seek comments on ways to

cut costs of third- party testing

• find alternative test methods for small batch manufacturers* or, if no alternatives exist, exempt small manufacturers from testing requirements (provided they are not subject to requirements for small parts, children’s metal jewelry, lead paint or certain defined durable nursery products)

*Small batch manufacturer defined as < $1 million in total gross revenue or <7,500 units of a single item; company must “register” with CPSC.

August 25, 2011Slide 25

Tracking Label Requirements Slide 1 of 3

CPSIA Tracking Label Requirement designed to aid retailers, enforcement authorities and consumers in identifying products.

August 25, 2011Slide 26

Tracking Label Requirements Slide 2 of 3

CPSIAOverly broad definition of products that required tracking labels

August 25, 2011Slide 27

Tracking Label Requirements Slide 3 of 3

CPSIAOverly broad definition of products that required tracking labels

AMENDMENT

Gives CPSC the authority to exempt certain products from the tracking label requirements

August 25, 2011Slide 28

Public Database (SaferProducts.gov) Slide 1 of 2

CPSIAStrict 10-day timeline for CPSC to post reports of harm regardless of manufacturer claims of material inaccuracy

August 25, 2011Slide 29

Public Database (SaferProducts.gov) Slide 2 of 2

CPSIAStrict 10-day timeline for CPSC to post reports of harm regardless of manufacturer claims of material inaccuracy

AMENDMENT

Requires CPSC to: – delay posting a report of harm for five (5) additional days

if the agency receives a claim of material inaccuracy

Requires Submitter to: – include product model or serial number on reports of harm.

If that information is not available, a picture of the product is required.

What’s Next?

August 25, 2011Slide 31

What’s Next? Slide 1 of 3

Consumer Product Safety Commission to …

– incorporate “representative” sampling

in lieu of “random” sampling

– initiate comment period within next three months

on reducing testing costs

– (following comment period) initiate year-long rulemaking to

reduce testing costs (likely to incorporate within “15-month” rule)

– (Autumn 2011) collect and review public comments on

phthalates and ASTM F963 testing

– launch ASTM F963 education campaign

August 25, 2011Slide 32

What’s Next? Slide 2 of 3

Stays of Enforcement expire December 31, 2011 for third-party testing and certification requirements for:

phthalates;

lead; and

ASTM F963 standard

Will the CPSC exempt products, materials, and/or components from the lead standard?

August 25, 2011Slide 33

What’s Next? Slide 3 of 3

Commissioner Moore’s term of office at the CPSC ends October 2011

– He sits alongside Chairman Tenenbaum and Commissioner Adler as one of the three Democratic appointees on the Commission

Question and Answer Session

Moderator: Ed Desmond

August 25, 2011Slide 35

Q/A Instructions … Tips … Helpful Hints

To communicate with the webinar moderator at any time during this session, please select either of the following options:

– Send a question using the “Q&A” drop down menu near the middle of the LiveMeeting navigation bar

– Start a private chat by double-clicking on the names “Ed Desmond” or “Stacy Leistner”in the list of participants under the “Attendees” drop-down menu

To submit a question for review during the open dialogue, use the “Q&A” drop down menu near the middle of the LiveMeeting navigation bar

Download a copy of the presentation slides from the “Handouts” drop down menu (the graphic looks like three sheets of stacked papers) on the right-hand side of the LiveMeeting navigation bar

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Additional Information

This webinar has been recorded for future playback

Watch for additional information in TIA member communications or on the TIA website

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TIA Resources

http://cpsia.toyassociation.org– CPSIA Resource Page

www.toyassociation.org– Press Room (news items on standards, legislation and more)

– Members Only Bulletins (Legislative, Safety, etc.)

– Education and Training Services

– The Toy Biz (research, reports and statistics)

Thank you for participating!

For more information on TIA’s education programs, please visit: http://education.toyassociation.org