We have heard from a number of clients regarding concerns over the new Consumer Product Safety Improvement Act (“CPSIA”). The CPSIA, which became law on August 14, 2008, created new standards for certain products, primarily but not exclusively involving lead content in children’s products, childrens' toys containing phthalates, and certain products with lead-containing paint. The CPSIA also substantially increased the maximum civil penalties for violations from $8,000 per violation to $100,000 per violation, and the maximum aggregate penalty from $1.25 million to $15 million.

Many manufacturers and retailers may have breathed a sigh of relief last week when it was announced that the Consumer Products Safety Commission granted a one-year stay on certain aspects of the CPSIA. However, while the stay is helpful, sellers of products within CPSIA’s mandate remain exposed.

The Stay, Where Applicable, Only Applies to the Certification and Testing Requirements
Among other things, as of Feb. 10, 2009, the CPSIA prohibits selling of certain children’s products with lead content exceeding 600 PPM; on Aug. 14, 2009, this value drops to 300 PPM. It also prohibits sale of lead in paint, toys and other children’s articles that bear “lead-containing paint,” and consumer furniture articles (regardless of whether intended for children) with lead levels that exceed 0.0009 percent. Also, as of Feb. 10, 2009, children’s’ toys are not permitted to have a phthalate concentration in excess of 0.1 percent.

The stay does not impact these provisions. It only stays the requirement to certify compliance with these standards and to obtain third-party testing to confirm that certification. Certified or not, the products themselves still must meet the standards. Thus, if a retailer sells a product with more than 600 PPM lead content, for example, it still faces the risk of substantial fines as specified in the CPSIA.

Therefore, all sellers of products within the categories covered by the CPSIA should act with caution. If you have products in your inventory that may contain components which exceed the allowed limits, consider whether it is worthwhile to sell them without testing to confirm compliance, whether such testing is required or not.

There Are Exceptions to the Stay, Even As to Certification and Testing
The stay contains certain significant exceptions. As to these exceptions, the products must not only comply with the concentration standards, but must also comply with the certification and testing requirements.

The four exceptions are: (1) lead in paint and other surface coatings made after Dec. 21, 2008; (2) cribs and pacifiers made after Jan. 20, 2009; (3) small parts, such as marbles, latex balloons, and small balls, made after Feb, 15, 2009; and (4) lead content of metal components of children’s jewelry made after March 23, 2009.

As an example, suppose that a toy soldier is painted with lead-containing paint. While the lead paint itself, if made after Dec. 21, 2008, must have been certified as compliant by the paint seller, the toy soldier is within the exception. It still must have lead content and lead paint content below the standard, but, due to the stay, the toy soldier itself does not need to be certified or third-party tested for now.

Or suppose that a bag of marbles made before Feb. 15, 2009, is on the shelf. It still must comply with the composition concentration standards. If it does, it can be sold without a certification. On the other hand, if the marbles are made after Feb. 15, 2009, the seller must certify compliance with the standards.

Hinshaw & Culbertson LLP’s Team
Because of the complexity of these issues, Hinshaw has established a CPSIA Response Team to respond to client concerns. The team members are David H. Levitt, Jason Novak, Harvey M. Sheldon, and Todd M. Young. If you have an issue arising out of the CPSIA, please feel free to contact one of these people.

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.