During the Christmas buying season of 2007, Mattel Inc., RC2
Corp., and Marvel Toys (now defunct) were found to be selling toys with
dangerously high lead content and toys with unsafe small parts. The Consumer Product
Safety Commission (CPSC) properly identified these hazards and recalls were
issued for millions of toys. These recalls scared consumers and the ruckus prompted
congress to act, passing the Consumer Product Safety Improvement Act (CPSIA) in
August of 2008.
The CPSIA created new regulations for the manufacture and
sale of all children’s products. Among other things it includes: limits on
heavy metals and phthalates, conformance to the ASTM toy safety standard,
certification, labeling requirements, and mandates for third-party testing. These
requirements caused considerable burdens for small and low volume toy
manufacturers and importers based in the U.S. and Europe. These burdens
threatened their very existence and they became known as the “unintended consequences”
of the CPSIA.
The Handmade Toy Alliance (HTA) was formed in November of
2008 as an ad hoc group of small businesses that were adversely affected by the
CPSIA. A true grassroots effort, the HTA board of directors has always been
comprised of owners of small businesses and low volume toy and children’s
products manufacturers. The HTA has never had offices, staff, or legal
representation, but has operated on the efforts of its volunteer board of
directors and with the assistance of our vast and growing membership.
Today we are an alliance of nearly
800 small-batch toy makers, children’s product manufacturers, specialty
importers, and independent retailers from across the United States and Europe.
We specialize in high quality, inspiring, and safe goods for children. The Handmade
Toy Alliance seeks to:
- lend a voice to specialty toy stores, small
batch toy makers and children's product manufacturers;
- assist in raising awareness of the issues that
directly impact HTA members;
- preserve access to unique handmade and small
batch toys, clothes, and other children's products;
- support and promote HTA members.
We continue to be considerably affected by the CPSIA, its
amendment, and the subsequent rulings of the CPSC. Despite efforts by Congress
to alleviate unnecessary burdens, the pathway to compliance continues to be
littered with obstacles.
During 2009, 2010, and seven months of 2011, the HTA engaged
with the political process in Washington DC to find solutions and remedies for
the unintended consequences that were threatening all of us. It was a
frustrating, complicated, and time consuming process to attempt to right a
wrong that encumbered us through no fault of our own.
Four of our board members were invited to testify or provide
input on the issues that negatively affected our membership. Twice we were
represented by stay-at-home moms producing children’s products in home studios
and twice by owners of small specialty toy stores. We appeared first before the
House Commerce Committee in April of 2010, and again in February and April of
2011. Our testimony before the Senate Commerce Committee was in December of 2010.
Our plight was described and published in national newspapers and we became the
mouthpiece for small and micro businesses in the U.S. who earned their living
making, selling, or importing children’s products in low volumes.
Working bills came and went but relief always seemed to be
just out of grasp. Throughout the process, member businesses lost the fight to
survive because relief from the burdens of the CPSIA was not forthcoming.
On August 1st, 2011, the
confluence of three events caused movement of a bill to fix the CPSIA–
H.R.2715.
1.
The retroactive 100
ppm lead limit approved by the CPSC two weeks earlier,
2.
The need to
increase the U.S. debt ceiling to avoid a default a day later,
3.
and Congress’
desire to start August recess.
H.R.2715 was created, passed through the
House under suspension of rules and then through the Senate by unanimous
consent because the collision of these circumstances created a necessity to
move quickly without the usual due process. We were told that H.R.2715 is like
a speeding freight train and there’s no way to change it or stop it, just watch
it go past. The previous two and a half years of lobbying and advocating were
to be encapsulated and condensed into language we had not seen nor could
comment on.
H.R.2715 became Public Law 112-28 later in August of 2011 and
has two provisions relating to small business that are a result of our efforts.
They are, in Section 2 APPLICATION OF THIRD PARTY TESTING REQUIREMENTS, special
provisions for small batch manufacturers and also requirements for exploring
and implementing burden reduction from third party test. PL 112-28 is not the
legislative fix HTA desired, but instead placed the fate of all of our
businesses in the hands of the CPSC by allowing the Commission to rule for
relief and burden reduction.
The first relevant language appears in section 14(d)(4) of
the Consumer
Product Safety Act (CPSA) as amended by PL 112-28 under SPECIAL RULES
FOR SMALL BATCH MANUFACTURERS:
“(A) SPECIAL
CONSIDERATION; EXEMPTION.-
(i) CONSIDERATION;
ALTERNATIVE REQUIREMENTS.—Subject to subparagraph (C), in implementing third
party testing requirements under this section, the Commission shall take into
consideration any economic, administrative, or other limits on the ability of
small batch manufacturers to comply with such requirements and shall, after
notice and a hearing, provide alternative testing requirements for covered
products manufactured by small batch manufacturers in lieu of those required
under subsection (a) or (b). Any such alternative requirements shall provide
for reasonable methods to assure compliance with any applicable consumer
product safety rule, ban, standard, or regulation. The Commission may allow
such alternative testing requirements for small batch manufacturers with
respect to a specific product or product class or with respect to a specific
safety rule, ban, standard, or regulation, or portion thereof.
(ii) EXEMPTION.—If the
Commission determines that no alternative testing requirement is available or
economically practicable, it shall exempt small batch manufacturers from third
party testing requirements under subsections (a) and (b).
(iii) CERTIFICATION.—In lieu
of or as part of any alternative testing requirements provided under clause
(i), the Commission may allow certification of a product to an applicable
consumer product safety rule, ban, standard, or regulation, or portion thereof,
based on documentation that the product complies with another national or
international governmental standard or safety requirement that the Commission
determines is the same or more stringent than the consumer product safety rule,
ban, standard, or regulation, or portion thereof. Any such certification shall
only be allowed to the extent of the equivalency with a consumer product safety
rule, ban, standard, or regulation and not to any other part of the consumer
product safety rule, ban, standard, or regulation.
(B)
REGISTRATION.—Any small batch manufacturer that utilizes alternative
requirements or an exemption under this paragraph shall register with the
Commission prior to using such alternative requirements or exemptions pursuant
to any guidelines issued by the Commission to carry out this requirement.
(C)
LIMITATION.— [Excludes certain classes of products from alternative
requirements and exemptions like durable infant and toddler products.]
(D) SUBSEQUENT
MANUFACTURER.— [Excludes subsequent manufacturers further down a supply chain.]
(E)
DEFINITIONS.— For purposes of this paragraph—
(i) the term ‘covered
product’ means a consumer product manufactured by a small batch manufacturer
where no more than 7,500 units of the same product were manufactured in the
previous calendar year; and
(ii) the term ‘small batch manufacturer’ means a manufacturer that had no more
than $1,000,000 in total gross revenue from sales of all consumer products in
the previous calendar year. The dollar amount contained in this paragraph shall
be adjusted annually by the percentage increase in the Consumer Price Index for
all urban consumers published by the Department of Labor.
For purposes of
determining the total gross revenue for all sales of all consumer products of a
manufacturer under this subparagraph, such total gross revenue shall be
considered to include all gross revenue from all sales of all consumer products
of each entity that controls, is controlled by, or is under common control with
such manufacturer. The Commission shall take steps to ensure that all relevant
business affiliations are considered in determining whether or not a
manufacturer meets this definition.
Application for domestic manufacturers
The CPSC never identified any “alternative requirements” as
indicated in subsection (i) therefore allowing the exemption identified in
subsection (ii). This provides an exemption from some third party testing for
small batch manufacturers but not an exemption from compliance, labeling, or
certification. Specifically, third party test must be performed for: lead in
paint and other surface coatings, small parts when a product is age graded for
children under three, metal jewelry, and durable infant or toddler products.
It is important to note that small batch manufacturers must
still comply with all applicable safety rules and certify that their products
meet the requirements. For those third party tests that are exempted, a small
batch manufacturer must issue a general certificate of conformity based on
first party testing, a reasonable testing program or a certificate of
conformity provided by a component part supplier.
In addition, as subsection (B) indicates, a business
desiring to utilize the exemption must register with the CPSC. Parts of the
registration are publicly available including: the business name (often the
owners name for sole proprietors), city, and state.
Application for small batch importers
The CPSC treats small batch importers as the manufacturer of
record so that the same requirements that apply to domestic producers apply to
the importer. A possibility for relief appears in subsection (iii) indicating
the CPSC may accept compliance with an international standard as an alternative
test when it is determined to be “the same or more stringent” than what is
required by the CPSA. Unfortunately, international toy standard harmonization
is far from a reality so that the law describes a relief method that will
likely never exist.
In addition, the CPSC has added a requirement to the law so
that the small batch revenue and volume requirements apply to both the foreign
manufacturer and the U.S. based importer. In most cases, an HTA member small
business importer brings products from second tier manufacturers in Europe to
the U.S. for retail in specialty toy stores. The European manufacturer produces
in low volumes and can meet the volume requirement but the revenue cap excludes
them.
Thus HTA members who are importers or who operate specialty
toy stores continue to be negatively affected by the trade barrier raised by
the CPSIA between the E.U. and the U.S.
The second relevant language appears in section 14(d)(3) of
the Consumer
Product Safety Act as amended by
PL 112-28 under REDUCING THIRD PARTY TESTING BURDENS:
“(A)
ASSESSMENT.— Not later than 60 days after the date of enactment of this
paragraph, the Commission shall seek public comment on opportunities to reduce
the cost of third party testing requirements consistent with assuring
compliance with any applicable consumer product safety rule, ban, standard, or
regulation. The request for public comment shall include the following:
[…]
(v) The extent to which
evidence of conformity with other national or inter- national governmental
standards may provide assurance of conformity to consumer product safety rules,
bans, standards, or regulations applicable under this Act.
[…]
(vii) Other techniques for
lowering the cost of third party testing consistent with assuring compliance
with the applicable consumer product safety rules, bans, standards, and
regulations.
(B)
REGULATIONS.—Following the public comment period described in subparagraph (A),
but not later than 1 year after the date of enactment of this paragraph, the
Commission shall review the public comments and may prescribe new or revised
third party testing regulations if it determines that such regulations will
reduce third party testing costs consistent with assuring compliance with the
applicable consumer product safety rules, bans, standards, and regulations.
(C) REPORT.—If
the Commission determines that it lacks authority to implement an opportunity
for reducing the costs of third party testing consistent with assuring
compliance with the applicable consumer product safety rules, bans, standards,
and regulations, it shall transmit a report to Congress reviewing those
opportunities, along with any recommendations for any legislation to permit
such implementation.
The CPSC has already requested comments as required and CPSC
staff has prepared a document titled Consideration of Opportunities to Reduce
Third Party Testing Costs Consistent with Assuring the Compliance of Children’s
Products, dated August 29th, 2012. The Commission voted
October 10th 2012 after a verbal motion stating “that, subject to
resources allocated by the commission, and subsequent operating plans to carry
out the potential opportunities to reduce third party testing costs, the
commission approves the following actions by its staff: these items include
efforts related to” and then simply lists 8 of the burden reduction
recommendations. On the surface it appeared the Commission was voting to follow
the staff recommendations and move burden reduction forward quickly and nearly
within the one year timeframe mandated by PL 112-28.
However, with the release of the written motion, we
discovered it only directs staff to draft a request for information (RFI) on
each of the 8 burden reduction opportunities. Furthermore, the motion states
that the burden for demonstrating the validity of the burden reduction method
is on the submitter. Now the task of research and proof falls with the
stakeholder and not with the CPSC. The HTA member stakeholder has neither the
equipment nor the expertise to perform what is required to meet the “burden of
proof.”
Subsequently in January of 2013, the commission voted to
allocate resources in 2013 for staff to issue the RFIs for just 4 of the 8
opportunities. And then indicated a timetable with the statement “For each RFI,
the Commission intends to provide resources in the fiscal year 2014 operating
plan, to the extent the agency's safety work permits, to ensure staff reviews the responses and summarizes any recommended course of action
on each item for the Commission.” We are lost in another round of comment and
left to assume that it will be no earlier than 2015 before review and summary
turn into promulgated rules.
Subsection (C) – REPORT, allows for the CPSC to report back
to Congress when they lack authority to move forward with burden reduction. And
of course it is always possible for the Commission to inform Congress on
progress and obstacles stakeholders face. When the HTA personally suggested to
the Commission that they report to congress issues continuing to affect small
business stakeholders, they explicitly denied the request.
The progress the CPSC is making on these burden reduction
opportunities is simply not acceptable. Small business, and all stakeholders,
are being held hostage to pointless requirements like performing a solubility
test on cotton fabric for barium.
The beneficial methods for reducing testing costs from the
CPSC staff document of August 29th, 2012 are outlined below.
(1) Establish a List of Equivalent Tests to those in CPSC-Administered
Children’s Product Safety Rules
The differences in toy safety standards in the U.S. and
Europe continue to suppress the supply of small batch toys from Europe to
specialty retailers in the U.S. In many cases the differences in regulations
are small and in some cases even insignificant. But the small differences
create a large economic hurdle for low volume manufacturers that must be
cleared by completing multiple tests that are nearly redundant.
Subsequently, the CPSC Commissioners voted to move forward
on this issue, but then chose not to fund the effort during the 2013 budget
year.
(2) Research the Feasibility of Developing a List of Materials Determined
Not to Contain the Eight Heavy Elements Listed in ASTM F963-11
The lead determinations list in 16CFR1500.91 lists raw
materials that the CPSC has determined do not contain lead and therefore do not
need to be tested. The list is a primary method used by members of the HTA to
reduce the cost of compliance. The requirements of ASTM F963-11 with limits
placed on concentrations of heavy metals other than lead complicate this
pathway to compliance with additional tests that are superfluous.
Since low volume toys often use natural materials, the possible
reduction in testing cost is significant. For all manufacturers who use natural
materials that already receive a lead exemption, this additional determination
is a useful course to pursue while at the same time not compromising safety.
(3) Investigate Adding Manufactured Woods to Lead Determinations List
The determination that wood does not contain lead is often
used by low volume manufacturers to reduce the cost of compliance with the
CPSIA regulation. “Manufactured woods” or laminated woods are frequently used
in children’s products when any dimension of the product increases above 10 cm
(like a wooden puzzle) or if the product includes a cavity (such as a shape
sorting box or dollhouse.) For larger wooden components, manufactured wood is
more stable and thus safer than wide pieces of solid wood, which can crack or
splinter over time.
Adding manufactured woods to both the lead determinations
list and a new determination list for ASTM F963-11 heavy metals allows low
volume manufacturers to resume using this material without the substantial
burden of additional testing while at the same time not compromising safety.
(4) Determinations for Phthalate Concentrations
The CPSC, in August of 2012, indicated that these materials
do not inherently contain phthalates and so do not require third party testing:
untreated/unfinished wood, metal, natural fibers, natural latex, and mineral
products. Phthalates are primarily used to soften plastics and on occasion, plastic
parts are used in handmade children’s products.
Other raw materials also likely do not contain phthalates
and the HTA encourages the CPSC to investigate the potential to expand this
list to include:
- paper and paperboard;
- printing inks;
- textiles with manufactured fibers;
- screen printing inks;
- plant and animal derived materials; and
- manufactured wood products.
An expanded list of phthalate determinations reduces the
need for unnecessary tests and therefore reduces cost as well. The safety of a
product is not compromised.
(5) Investigate CPSC Acceptance of Other Accreditation Bodies to Accredit
Testing Laboratories to ISO/IEC 17025:2005
The Handmade Toy Alliance supports any effort to increase
the number of testing bodies certified to test for CPSIA compliance -
especially where this expands the reach within the E.U. or provides access in
countries with limited or no certified labs.
The Commission has not issued a request for information or
indicated a desire to move forward with this issue.
(6) Define a Periodic Testing Option Based on Volume of Products
Manufactured Rather than Solely on a Time Period
The periodic testing rule sets the testing timeframe based
solely on time. The HTA believes there needs to be a periodic test for low
volume manufacturers based on quantities rather than time. A low volume
manufacturer that performs a third party test can experience an economic
savings by performing fewer tests within a fixed period of time.
The current rule overwhelmingly favors large manufacturers
at the expense of smaller ones. The amount of risk which accumulates between
periodic testing of an unchanging product is directly related to the number of
units produced, not to the amount of time which has passed.
For various reasons, the small batch rules are not widely
utilized by small business. Survey results from July 2013 indicate
approximately one third of HTA members register with the CPSC and take
advantage of the small batch exemption. Reasons given for not using the small
batch exemption include: the complexity of the requirements, need for
compliance and certification, and public registration.
The small batch exemption only exempts manufacturers from a
subset of required tests. Our members indicate that selecting the tests
required for any specific product and the exemptions that apply is an arduous,
time consuming process. The resources for making these selections are difficult
to find, hard to read, and challenging to interpret. The technical information
is equally difficult.
The HTA has asked repeatedly for product specific guidance
to simplify the complexity of small batch rules. But after five years, we have consolidated
product specific guidance for only a single category of children’s product –
doll clothing.
Since the small batch exemption does not affect the requirements
for compliance and certification, small businesses seek ways to assure
themselves their products are safe in the absence of a test. Small batch
manufacturers are required to certify their products based on a first party
test, a reasonable testing program, or a previous third party test from a
component supplier.
In many instances, a first party test is not possible
because of the equipment required or the technical understanding needed to
perform the test and interpret the results.
A small business owner could develop what they believe is a
reasonable testing program, but it is unlikely to meet the CPSC’s strict
interpretation of “reasonable testing program.”
Because many small and micro businesses are sole
proprietorships without a fictions name, there is a reluctance to publicly
register as required to claim the small batch exemption. Registration exposes
personal information.
Just as water flowing downhill finds the path of least
resistance, small business also finds the path of least resistance to reach
compliance. So instead of the small batch exemption which is plagued with complexity
and obstacles, two thirds of our membership depends heavily on burden reduction
through the determinations lists, avoidance of problem materials, age grading,
and carefully choosing their own route.
Other handmade toy makers have simply gone out of business
or chosen to make products that are not designed for children because the CPSIA
and subsequent relief efforts preserve a hurdle too high for small business to
clear.
The determinations list in 16CFR1500.91 identifies many
materials that the CPSC has determined do not contain lead and therefore do not
need to be tested for lead content. So if a manufacturer uses only materials
from this list there is no need for a lead test. This is a simple application
of the rules, easy to understand, and an effective means to reach towards compliance
and certification.
But there are holes in this path that have opened with the
adoption of the ASTM-F963-11 standard. These must be filled by the CPSC and
include: determinations for the additional eight heavy elements required by
ASTM-F963, determinations on phthalates, and a determination on manufactured
woods.
Without the holes filled, some small businesses feel they
have little choice but to ignore the requirement to test cotton fabric for
barium, or natural solid wood for selenium.
It’s not a difficult stretch to imagine that if there is a
single component of your children’s product that forces you to perform an
expensive test, then you should look for an alternative component or simply
remove that component from your product.
For instance, if you produce a wooden toy with a surface
coating not on the determinations list that requires a test, then removing that
coating and substituting bee’s wax avoids the costly test. Similarly, removing
a zipper or button from doll clothing can also avoid expensive tests.
The testing requirements on children’s products age graded
for children under three years are more complex and burdensome. So instead of
producing toys for children under three years, HTA members neglect this segment
of the population and instead concentrate on products for older children.
Of course the negatives side effects are fewer unique
product choices for consumers and for the business owner, giving up a category
with a significant source of revenue.
There are certainly instances where small business believes
the path of least resistance is to continue doing what they have done for years
to assure they produce a safe product: use their experience and wisdom to guide
design and manufacture, and form relationships with their customers. Certain
risks accompany this approach but the business owner balances the risk and the
benefit.
A hybrid example occurs when some portions of the
requirements are adhered to and others are ignored because of costs and complexity.
The missteps of a few very large toy companies precipitated
regulations which damaged thousands of small and micro U.S. businesses and
continues to encumber those that survive. A Congressional directive to remedy
regulatory issues failed to solve the problems experienced by HTA members or
even clearly direct the CPSC on a definite path of remediation.
Faced with inadequate good options for compliance while
maintaining a viable business, the HTA business community out of necessity
devised paths of least resistance. They are not attractive, they have negative
side effects, and they may not meet the letter of the law; but they are simply
paths of least resistance that balance compliance, risk, and business
viability.
It is important to note that there continue to be many
opportunities where burdens can be reduced and even eliminated without
compromising the safety of consumers. These have been identified and discussed
within Congress and the CPSC. They include:
- Establish a list of equivalent tests, especially
those from the E.U. in EN-71
- Expand lead determinations list to include eight
heavy elements from ASTM-F963-11
- Add manufactured woods to the lead
determinations list
- Create and expand a determinations list for
phthalates
- Accept results from a wider group of testing
labs
- Define a low volume periodic testing rule
- Publish a wide variety of product specific
guidance
Congress and the CPSC must move forward with meaningful
solutions that are funded and given priority.
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