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WELCOME TO UNDERSTANDING THE CPSIA, PART 2

WELCOME TO UNDERSTANDING THE CPSIA, PART 2. The Webinar will begin at 2:00 p.m. (MST). Consumer Product Safety Improvement Act of 2008 : What’s New! February 26, 2009. Alan R. Klestadt, Esq. Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP

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WELCOME TO UNDERSTANDING THE CPSIA, PART 2

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  1. WELCOME TO UNDERSTANDING THE CPSIA, PART 2 The Webinar will begin at2:00 p.m. (MST)

  2. Consumer Product Safety Improvement Act of 2008 :What’s New!February 26, 2009 Alan R. Klestadt, Esq. Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP 399 Park Avenue, New York, N.Y. 10022Tel.: 212-973-7722 • Fax: 212-557-4415 e-mail: aklestadt@gdlsk.com

  3. Understanding the CPSIA, Part 2 Will Cover: Latest Developments and New Regulations That May Impact Your Business Definition of “Consumer Product” The CPSC’s Delay on Testing Requirements CPSIA and Children’s Products and Toys CPSC Product Determinations Tracking Labels for Children’s Products

  4. Consumer Product Safety Improvement Act of 2008 Legislative Highlights: • Enacted on August 14, 2008 • Imposes a compliance certification requirement • Defines “children’s product” (12 years or younger) • Decreases allowable lead paint limit • New lead substrate standard • New phthalate standard • Requires accredited 3rd pty testing for children’s products • New tracking label required for children’s products

  5. Consumer Product Defined • An article or component of an article which is customarily produced or distributed for sale to or for the personal use, consumption or enjoyment of consumers in a residential, school, recreational or other environment. • Definition does NOT include a product intended for commercial or industrial use UNLESS it is sold to or used by consumers more than occasionally.

  6. CPSIA – What’s New? • CPSC has announced a limited stay of enforcement for certain provisions of the CPSIA. • It has been determined that the phthalates ban and new lead standards apply to existing inventory. • CPSC has issued guidelines for obtaining product exclusions under the CPSIA. • CPSC has issued a proposed rule on inaccessible component parts for children’s products containing lead. • CPSC has requested comments on the tracking label requirement.

  7. Stay of Enforcement CPSC has stayed the applicability of the testing and certification requirements for all products subject to a CPSC safety rule with the exception of: • The requirement to use 3rd party labs to test and certify compliance with: • The lead paint standard for products manufactured after 12/21/08. • Requirements applicable to cribs and pacifiers for products manufactured after 1/20/09. • Small parts requirements effective for products manufactured after 2/15/09. • Requirements for lead content in children’s metal jewelry for products manufactured after 3/23/09. • Any existing CPSC regulation as it existed prior to amendment by the CPSIA (e.g., bike helmets, lighters, mattresses, etc.). • The Pool & Spa Safety Act; certifications for ATVs. The stay of enforcement will remain in effect until at least 2/10/10.

  8. Stay of Enforcement Most significantly, this action stays the requirements for testing and certification applicable to manufacturers and importers with regard to the lead content standard (lead in substrate), the phthalates standard and wearing apparel flammability. Thus, it is not required to test inventory or goods in production for compliance with these product safety standards. Likewise, it is not required to issue certificates of compliance, except as previously noted.

  9. Mandatory Third Party Testing and Certification for Certain Children’s Products Remains in effect for the following items: • Lead Paint: The CPSC published notice for lead paint 3rd party testing on 9/22/08. Therefore, any children’s product containing paint or surface coatings and manufactured after 12/21/08 must be tested by an accredited third party lab and the importer must issue a certificate of compliance with the lead paint ban based on that testing. • Small Parts: Any children’s product covered by the small parts regulations and manufactured after 2/15/09 must be tested by an accredited third party lab. • Children's Metal Jewelry: The testing and certification requirement will take effect for goods manufactured after 3/23/09.

  10. Stay of Enforcement The stay does not permit or validate the sale of products that do not comply with all applicable mandatory safety standards. Failure to comply with such standards, including the new lead content and phthalate limits, is still prohibited.

  11. Lead and Phthalates in Children’s Products • Effective 2/10/09, it is illegal to sell or distribute children’s products with excessive levels of phthalates or which contain more than 600 ppm of lead in the substrate or in a surface coating. • What is the impact on existing inventory?

  12. Definition of “Children’s Product” • A consumer product designed or intended primarily for children 12 years of age or younger. • The CPSC will consider the following factors to determine whether a consumer product falls under this definition: • A statement by a manufacturer about the intended use of such product, including a label on such product if the statement is reasonable. • Whether the product is represented in its packaging, display, promotion, or advertising as appropriate for use by children 12 years of age or younger. • Whether the product is commonly recognized by consumers as being intended for use by a child 12 years of age or younger. • The Age Determination Guidelines issued by the CPSC staff in September 2002, and any successor to such guidelines.

  13. Lead in Children’s Products There are two different lead standards that must by complied with: • (1) The General Lead Ban (New Standard) limits the amount of lead in all children’s products, and • (2) The Lead Paint Ban (Current Standard) lowers the limit with regard to lead in paint as well as certain consumer products containing lead paint.

  14. Lead in Children’s Products General Lead Ban (Lead in the substrate) • Rule: Any children's product that contains more lead than the established limit is a banned hazardous substance under the Federal Hazardous Substances Act. • Lead Limits: The total lead content by weight for any part of the product cannot exceed: • 600 Parts per Million - Effective date: 2/10/09 • 300 Parts Per Million - Effective Date: 8/14/09 • 100 Parts Per Million - Effective Date: 8/14/11

  15. Lead in Children’s Products • General Lead Ban: Exceptions: • Inaccessible Component Parts – the lead limits do not apply to any component part of a children's product that is not accessible to a child through normal and reasonably foreseeable use and abuse, as determined by the CPSC. • A component part is not accessible if it is not physically exposed due to a sealed covering or casing and does not become physically exposed through reasonably foreseeable use and abuse of the product. Reasonably foreseeable use and abuse includes swallowing, mouthing, breaking, or other children's activities, and the aging of the product. Paint, coatings, or electroplating are not considered barriers that would render lead inaccessible to a child. • CPSC has issued a proposed interpretative rule with respect to what product components or classes of components will be considered to be inaccessible and the methodology for making that determination. Public comments were due by 2/17/09. • No testing or certification requirement until 2/10/10.

  16. Lead in Children’s Products Lead Paint Ban (16 CFR 1303) • Currently 600 ppm and covers the following products: • Lead Paint and Similar Surface coatings for consumer use • Toys and other articles intended for use by children that bear lead containing paint • Furniture articles for consumer use that bear lead containing paint. • Effective 8/14/09 - The allowable lead limit is lowered from 600 ppm to 90 ppm of the weight of the total nonvolatile content of the paint or the weight of the dried paint film. • Composite Testing • Cannot combine different paints; • Can combine like paint from several parts to obtain a sufficient sample size • Mandatory 3rd Party testing: any children’s product manufactured after 12/21/08 must be tested by an accredited third party lab for lead paint and is subject to a compliance certification requirement.

  17. Phthalates Effective Date: 2/10/09 Any children's toy or child care article that contains concentrations phthalates of more than 0.1 percent is banned from manufacture for sale, sale, distribution in commerce and importation into the United States. This ban applies to existing inventory, regardless of when the product was manufactured.

  18. Definition of “Children’s Toy” • Section 108 of the CPSIA defines a “children’s toy” as a “consumer product designed or intended by the manufacturer for a child 12 years of age or younger for use by the child when the child plays.” Any determination as to whether a particular product is designed or intended for use by a child 12 years of age or younger during play will be made after consideration of the following factors: • Whether the intended use of the product is for play, including a label on the product if such statement is reasonable. • Whether the product is represented in its packaging, display, promotion or advertising as appropriate for use by the ages specified. • Whether the product is commonly recognized by consumers as being intended for use by a child of the ages specified. • The Age Determination Guidelines issued by the Commission staff in September 2002, and any successor to such guidelines.

  19. Are Sporting Goods “Children’s Toys”? • The CPSIA makes ASTM F963 a mandatory CPSC standard and this toy safety standard excludes the following articles from the definition of “children’s toys:” • Bicycles • Tricycles • Sling shots and sharp-pointed darts • Playground equipment • Non-powder guns • Kites • Art materials, model kits, and hobby items in which the finished products is not primarily of play value • Sporting goods, camping goods, athletic equipment, musical instruments, and furniture, except for toy versions of these • Powered models of aircraft, rockets, boats, and land vehicles • Regulation-size baseballs, basketballs, footballs, and soccer balls are athletic equipment and, therefore, are also excluded by ASTM F963. Accordingly, even if they are designed or sized for use by children, the CPSC has proposed to exclude them from the CPSIA section 108 requirements. • In contrast, the CPSC has regarded general purpose balls as toys and therefore, subject to the requirements of the CPSIA section 108. A toy version of actual athletic equipment, such as a toy baseball glove with a foam ball would be considered to be a toy for the purpose of the CPSIA. A plastic bat and ball used by small children would also be considered to be a toy.

  20. The General Wearing Apparel Flammability Standard All wearing apparel is subject to the general wearing apparel flammability standard as set forth in 16 CFR 1610. Exemptions from the Standard: • Hats • Gloves • Footwear Certain Fabrics Exempt from Testing • Plain surface fabrics, regardless of fiber content, weighing 2.6 ounces per square yard or more; and • All fabrics (both plain surface and raised-fiber surface) regardless of weight, made entirely from any of the following fibers or entirely from a combination of these fibers: acrylic, modacrylic, nylon, olefin, polyester, and wool.

  21. CPSC Product Determinations CPSC is willing to consider scientific evidence that a commodity, class of materials, specific material or product does not exceed the lead limits, OR, if it does exceed the allowable limits, that such item will not result in the absorption of lead into the body or otherwise have an adverse impact on public health or safety.

  22. CPSC Product Determinations A request for a lead content determination or exclusion must include: • data on the lead content of the item in question; • detailed information on the manufacturing processes through which lead might be introduced into the product; • explanation of the test methods relied upon; • best available, objective, peer-reviewed scientific evidence supporting the request to demonstrate that the normal and reasonably foreseeable use and abuse activity by a child and the aging of the product will not result in the absorption of any lead into the body or otherwise have an adverse impact on health or safety. • best available, objective, peer-reviewed scientific evidence that is unfavorable to the request. The submission of any such request will not automatically stay the enforcement of any applicable CPSC statute or regulation.

  23. Tracking Labels for Children’s Products Rule: The manufacturer of a children's product must place permanent distinguishing marks on the product and its packaging, to the extent practicable, that will enable the manufacturer and ultimate purchaser to ascertain the manufacturer or private labeler,location and date of production of the product, cohort information (including the batch, run number, or other identifying characteristic). • The CPSC has advised that this rule applies to all children’s products, including, but not limited to, items such as clothing or shoes and not just toys and other regulated products. • “To the extent practicable”: it may not be practical for permanent distinguishing marks to be printed on small toys and other small products that are manufactured and shipped without individual packaging. • Requirement for Advertisements- If an advertisement, label or packaging references a CPSC rule or standard, there also must be a statement that the product conforms with the applicable safety rule or standard. Effective for all children’s products manufactured on or after 8/14/09.

  24. Tracking Labels for Children’s Products CPSC has requested industry comments by 4/27/09 with regard to the following issues to help formulate the final standard: • how to define the term ”practicable;” • how to define the term “permanent” (can the required information be placed on the package rather than the product itself?); • should the CPSC accept symbols, alpha numeric codes or bar coded information? • should the name of the manufacturer be disclosed to the consumer or made available only upon request? • should the CPSC require standardized nomenclature? If so, how much lead time is required for compliance?

  25. Questions

  26. For more information, please contact: Alan R. Klestadt, Esq. Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP 399 Park Avenue, New York, N.Y. 10022 Direct: 212-973-7722 Main: 212-557-4000 Fax: 212-557-4415 e-mail: aklestadt@gdlsk.com 404364

  27. Disclaimer. The information contained herein is provided for informational purposes only. The information is not offered as legal or any other advice on any particular matter and should not be construed as legal advice on any subject matter. The content herein contains general information and may not reflect current legal developments, verdicts or settlements. Recipients of content from this materials, clients or otherwise, should not act or refrain from acting based on any content without seeking from an attorney licensed in the recipient's state the appropriate legal or other professional advice on the facts and circumstances applicable to the specific situation. Outdoor Industry Association and Grunfeld, Desiderio et al expressly disclaims all liability in respect to actions taken or not taken based on the contents herein. This information may not be used or reproduced without the express consent of Outdoor Industry Association

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