HTA Presentation to the CPSC Roundable Discussion on Small Business Outreach, October 6, 2011

The Handmade Toy Alliance, (HTA) representsa broad swath of small and micro businesses involved in production, retailing and importing of specialty toys and children’s products. These businesses are the backbone of specialty children’s products culture in America. They are mothers crafting items for sale on etsy.com, they aresmall specialty toy shops in towns across America, they are small businesses producing small batch toys in the USA, and they are all entrepreneurs providing new and unique opportunities for safe play.

This diverse membership struggles with assembling, reading, interpreting, understanding and implementingthe Consumer Product Safety Improvement Act (CPSIA.) The smallest microbusinesses have the largest hurdle to jump, but even our small business members have a sizeable learning curve. I’ll summarize these issues along with suggested outreach opportunities for threebusiness categories within the HTA.

Micro and Small Businesses Manufacturers
Micro-businesses are those crafting and retailing toys and children’s products in very small batches, each in very narrow product types. These businesses are family or single owner businesses with no employees and they represent 61% of our membership.In addition to selling their products online in a marketplace like etsy.com, they retail their products at small craft shows throughout the country. These may be church fairs, county fairs and other artisan events where they sell directly to the public.

Small businesses are those producing children’s products in small batches, often with broader product types. They represent 7% of our membership.

The following factors combine to makecomprehensionof the law problematic:

1. Insufficient time to digest the thousands of pages of law and rulings.
2. Inability to interpret the laws and rulings for their specific products and circumstances.
3. No feasible access to legal representation to provide an interpretation the law.
4. Difficult to obtain documents required by the law – ASTM F963 – because of cost and limited availability.

These businesses need the law boiled down to the minimum required for compliance in their specific business implementation. This amounts to individual legal interpretations for each business for each product they produce. This is literally hundreds of thousands of applications of the law. (There are currently over half a million children’s items for sale at etsy.com alone.)

The HTA suggests flowcharts or other easy to use methods like web-based question-answer forms for providing requirements in a logical manner. The intelligence programmed into the flowchart or form sequence leads business owners through questions ultimately arriving at requirements for their product. Either technique mustprovide the user the following information:

1. What parts of the law are applicable,

2. What tests are required and whether the test must be performed by a 3rd party;

• what is the specific component that causes the test requirement,
• a list of certified testing laboratories.
  

3. What possibility there might be for component part certification,
4. How to apply the small batch rules from H.R.2715,
5. What are the labeling requirements,
6. What are the record keeping requirements,
7. What liabilities and penalties come into play,
8. And, what form a certificate must take.

Another tool the CPSC can provide is to publish lists of components to avoid when making one of a kind and crafted children’s items. For instance; metal beads, colors that have a greater risk of containing lead, hazardous fasteners, etc. This is an easy way to keep components that are more likely to pose a risk of injury or that likely cause test failure out of children’s products from the start.

For reaching these businesses, the Internet is the primary method. Micro businesses rarely attend trade shows and most of them are NOT members of a trade organization like the HTA.The largest of the small business manufacturers may attend a trade show like ABC Kids recently held in Kentucky.

Specialty Toy Retailers
The second category is small specialty toy retailers, both brick and mortar and internet based. These businesses provide a market for small batch children’s products and an alternative for consumers not interested in products mass produced in the Far East. They differentiate themselves from mass market retailers by offering unique small batch products, usually through a single retail outlet. These businesses represent 25% of our membership.

Technically, these retailers are not required to test and certify but are subject to some requirements of the law depending on how they acquire their product for sale. Without sorting through thousands of pages of law, they need to know:

1. What parts of the law they should be aware of when working with small batch suppliers,

2. What record keeping requirements affect them,
3. What responsibilities they have when acquiring product directly from a local small batch manufacturer,
4. What responsibilities they have when acquiring product directly from a foreign manufacturer,
5. And how they can ensure their inventory is safe and compliant.

The Internet is also a primary source of information for specialty toys retailers. Many of these retailers attend at least one trade show yearly, for instance ABC Kids or the International Toy Fair in New York. These small retailers are seldom members of the Toy Industry Association (TIA) but some may be members of the American Specialty Toy Retailing Association (ASTRA.)

Specialty Toy Importers
The final category is specialty toy importers and these businesses represent 5% of our membership. It is a small percentage, but a big component in the culture of specialty toys in America as these importers provide access to mainly small batch products from Europe.

For importers the CPSIA blurs the definition of manufacturer to include the importer. The law is not always clear in how this blurring occurs. They need to know:

1. How to determine if they are considered the manufacturer of record, especially when they hold no inventory or only facilitate transport from foreign manufacturer to domestic retailer,

2. What testing requirements apply when a product is already third party tested to a European standard,
3. What record keeping requirements affect them,
4. And how to apply the small batch rules from H.R.2715.
The primary source of information for specialty toy importers is the internet and a secondary source is an industry group like the Handmade Toy Alliance.

In General

It is important to note that small batch manufacturers are constantly under production, although certainly the fourth quarter is the busiest time of the year for all of our membership. Issuing request for comments, changes and requirements during these 3 months will often go unnoticed.

The CPSC already has a wealth of information available. Unfortunately it is not always easy to find and utilize. Perhaps it would be advantageous to create a Wiki where businesses can post questions and the CPSC can post an official response. The wiki can also incorporate existing FAQs and guidance documents. Over time this becomes a valuable, searchable knowledgebase.

About the Handmade Toy Alliance

The HTA was formed in 2009 as an ad hoc group of businesses that were adversely affected by the CPSIA. During these past few years we have worked to save our member businesses from the unintended consequences of the CPSIA. We have testified before House and Senate committees and lobbied our representatives and senators. This culminated in the passing of H.R.2715 in August of 2011 which has two provisions that are an outgrowth of our work. Unfortunately, H.R.2715 is not the legislative fix our group desired, but places the fate of all of our businesses in the hands of the Consumer Product Safety Commission.

We currently have nearly 700 members but no offices, no staff, no legal representation, a volunteer board of directors who donate time and resources to the cause, and very limited financial resources. Although we work hard to help our members understand the law and to disseminate information, we are in no way prepared to be the source or conduit of comprehensive compliance information to our members. The width and breadth of the products produced by our members is enormous and the need to interpret the law for all of these single cases beyond our capability.

Today we hope to communicate to the staff of the CPSC as an advocate for our members, the magnitude of this issue and the primary problems that need to be addressed for educating our membership. We appreciate this opportunity to voice these concerns and look forward to working together to implement suitable solutions.

Image from Michelle Sorensen.

HTA Letter to CPSC on Registration of Small Batch Manufacturers in the CPSIA Reform Law

August 19, 2011

Office of the Secretary
Consumer Product Safety Commission
Room 502
4330 East-West Highway,
Bethesda, Maryland, 20814

Dear Mr. Stevenson:

On behalf of the Handmade Toy Alliance, an alliance now numbering 670 toy stores, toymakers and children's product manufacturers from across the country who want to preserve unique handmade toys, clothes, and children's goods in the USA, we respectfully request your clarification and action in regards to the registration requirements for small batch manufacturers in the newly signed CPSIA reform law, H.R. 2715.

Congress has now expressed its clear intent to provide regulatory relief to the small businesses we represent. As you know, H.R. 2715 allows small batch manufacturers to assure compliance with applicable product safety laws through less expensive alternative testing methods and exempts them from testing altogether when no affordable alternative testing methods are identified by the Commission.

The Handmade Toy Alliance would like to be fully engaged with the CPSC as it interprets H.R. 2715. Our goal, as always, is to create a regulatory environment which protects both public health and the welfare of the small businesses we represent.

It has come to our attention that members of the Commission are interpreting H.R. 2715's requirement for small batch manufacturers to register with the CPSC as a technicality which requires the completion of an official registration process by the Commission before relief willbe provided. This interpretation is contrary to our understanding of the law and contrary to congressional intent as we understand it through dozens of conversations with bothRepublicans and Democrats in the House and Senate.

The text of the law reads:

Any small batch manufacturer that utilizes alternative requirements or an exemption...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.

The word any in this sentence makes it clear that a manufacturer's ability to register with the Commission is not predicated upon whether or not the Commission has issued guidelines for registration. If the word any were not present in the sentence, the meaning would be different. However, the inclusion of the word any makes it clear that small batch manufacturers may still register with the Commission even in the absence any official guidelines. It is our interpretation that, in the absence of any guidelines from the CPSC, a small batch manufacturer may register with the CPSC in any manner which the manufacturer deems appropriate.

Our interpretation is supported by the previous section of the law, which reads:

The Commission may not require third party testing of a covered product by a third party conformity assessment body until the Commission has provided either an alternative testing requirement or an exemption...

This sentence clearly states Congress's intent that, in the absence of any action by the CPSC, third party testing will not be required for covered products made by small batch manufacturers. Relief is not contingent upon the CPSC's ability to identify alternative testing methods. Nor should relief be made contingent upon the establishment of registration guidelines.

We therefore formally request the Commission to make an immediate finding of fact that relief for small batch manufacturers under H.R. 2715 is not contingent upon the promulgation of registration guidelines by the Commission.

Notwithstanding our position on this interpretation, we would like express our interest to help create a sensible registration process as soon as possible. Registration should be simple and straightforward for both the Commission and small batch manufactures. We agree with Senator Rockefeller, who spoke on the Senate floor:

The creation of a new public [sic] registry for small batch manufacturers...can be implemented without notice and comment or even a hearing. As such, the Commission should act to effectuate the new mandates of this bill in a most expeditious manner.

Senator Pryor then seconded this view:

I also share the Senator’s view that nothing in H.R. 2715 is intended to delay the Commission’s rulemaking with respect to third party testing and believe that the Commission should conclude its testing rulemakings in the next 2 months.

We agree with Senators Rockefeller and Pryor that 2 months is an appropriate timeline to complete registration guidelines. This will allow enough time for small batch manufacturers to register prior to the expiration of the ASTM F963 and lead in substrate testing stays of enforcement on December 31. If the registration process is not completed by October 31, 2011, there will not be enough time to notify small businesses before the expiration of these stays. As we have stated previously, the last two months of the year are the busiest season for our members. So, the earlier they can begin to register, the better.

Small batch manufacturer registration can and should be as simple as filling out a registration form or sending an email to a specified address at the CPSC. The Commission may also want to allow outsourcing of this task to trade associations or businesses who could collect and compile a database for the Commission. We would like to discuss alternatives with the Commission as soon as possible, as well as ways in which our organization can help publicize the registration process to our members.

Thank you again for taking the time to read and consider our comments.

Respectfully Submitted,

The Handmade Toy Alliance

Custom Plush – CPSIA Testing & Compliance

The following is a cross-post by HTA members CurlyQ Cuties, makers of custom plush toys. It is reposted here by permission.

If you’re manufacturing plush, you must make sure the product you’re making is safe.

While this has always been the case, the government has decided — after the lead scares in imported products a few years ago — to legislate a “solution.” If you make a child’s product — as defined by the government, not by you — you must comply with the Consumer Product Safety Improvement Act of 2008. This legislation is quite broad and far ranging. Its implementation was left to the Consumer Product Safety Commission (CPSC). Although 2010 is almost over, the rules resulting from this legislation are still evolving.

If the government decrees your product a children’s product, you better have your ducks in a row. This is not as easy as it sounds. A primary requirement is to understand the legalise (or have an attorney interpret it for you) in the Act and in the CPSC rulings. You must also become familiar with the Federal Register — this is where the official rulings from the CPSC is published.

While we believe we comply in principle with the various requirements of the Act, I’m sorry to say that I don’t personally believe we will ever be in full compliance. Don’t get me wrong — our products are safe. It’s just the Act was not written with small batch toy manufacturers in mind. The particular nature of our products — you select the design — means each product is relatively unique. While the CPSC has provided for some component testing, the guidance they’ve provided in this area is somewhat lacking for our manufacturing scenario.

To further complicate matters, the laboratories “accredited” by the CPSC for CPSIA-related testing each seem to have their own interpretation of CPSIA requirements. We’ve had different labs give us different scenarios (and widely different pricing). This testing stuff isn’t free or cheap and ultimately you, our customer, pays for it.

One lab told us woven textiles must be tested for lead — when the CPSC has published that textiles are exempt from lead testing.

Another lab told us that we’d have to test all of the unique variations of our products. Our custom products are made from a finite number of components each applied in the same way. If you calculated the number of “unique” products we’re capable of making, the number currently runs in the sextillions (10 to the 21st power). If we had enough money to pay for the testing of each of these, we would be on our own tropical island enjoying the sun (and, regretfully, not busy making plush).

After much searching, we found a lab with a representative that we were able to communicate with and who provided sane advice on what testing was considered reasonable. We’ve undertaken lead testing in advance of the third-party lead testing requirements set to go into effect in early 2011 (and which have been twice-delayed by the CPSC). Our products pass third-party accredited lab lead testing (CPSIA Section 101). We comply with the CPSIA’s tracking label requirements (CPSIA Section 103). Our products don’t have plastic components — phthalate testing is not required. Our products comply with the ban on small parts.

In addition to the federal requirements imposed by the CPSIA (and other federal Acts), individual states have begun to impose their own testing requirements. We agree that all products — particularly those used by children — should be safe. The requirements to do so, however, have become quite onerous for our small business (and many others like it). In an era where manufacturing jobs have disappeared en masse overseas (and any job is hard to come by), it boggles my mind that our government is making it more difficult — not less — to manufacture products in the United States.

If you’re thinking about manufacturing plush (or any other children’s product), know in advance what you’re getting yourself into. As a small batch manufacturer, you’re not exempt from any of these regulations. There are a lot of requirements. And fulfilling those requirements costs money.