SGMA’s Consumer Product Safety Improvement Act Conference Call

SGMA’s Consumer Product Safety Improvement Act Conference Call

September 11, 2008

AGENDA

Black is the original Agenda from the SGMA

Red is my notes from the conference call

Blue are hyperlinks

Introduction and Welcome

    Tom Cove, President and CEO of SGMA

    Mark Granger, Partner, Morrison Mahoney LLP

Overview of CPSC Act

    Paul Rosenlund, Partner, Duane Morris LLP

  1. Very interested in sporting goods and athletic product in general.
    1. Does surveys and statistical surveys of product related injuries and deaths and because sporting goods are at the top they are watched.
  2. Substantial powers over all manufactures, importers, retailers; everyone in the chain of distribution
  3. Products:
    1. Any product sold to the consumer at a household, school or recreation or otherwise
      1. Exception is those governed by other federal agencies
        1. Vehicles
        2. Food & drugs
        3. Airplanes
      2. Some overlap in
        1. Child seats
        2. PFD’s
  4. CPSC job is to review any death and gather of data
    1. Survey’s emergency room info
    2. Consumer reports
    3. Plaintiff’s reports
    4. Manufactures voluntary reports
      1. Voluntary under the law
  5. Enforce better reporting from manufactures
    1. More penalties for manufactures who don’t report on time
  6. How to deal with imports
    1. The proportion of recalls are now imports
  7. New act triggered due to toy recalls but went beyond that
    1. $15 mill can be levied for some penalties
    2. Lower burdens of proof for criminal prosecution
      1. Knowingly imports or manufactures a safety rule
    3. New whistleblower protection for employees to violate
      1. Can’t be fired or have pay reduced
  8. Definitions
    1. Manufacture: any person who manufactures or imports a product
    2. Distribution in commerce: prohibits distributing something commerce. Sell, deliver or even hold for sale for distribution in the future.
    3. Children’s product: children 12 years of age or under

Compliance with and Implications of Phthalate and Lead Restrictions    

Gary Wolensky, Partner, Snell & Wilmer LLP

  1. Section 108 bans all Phthalate in all children’s toys
  2. Child defined as a toy Designed for child 12 years or younger for use when a child plays
    1. Goes into effect 2/12/09
    2. Sporting goods do not fall under the definition of a toy under the act according to the CPSC
  3. Sporting goods are still subject to a lot of new and amended provisions under the act
  4. If a product is a toy under Section 108
    1. Then you must determine that your toy not have more than 1% phthalate (.1% of the total weight or total volume of the product)
  5. You must self certify for at least until 9/09 you must self certify because the rules will not be out yet
  6. Section 101, Lead
    1. Rules go into effect automatically.
      1. 8/14/08 signed so effective 9/13/08 and rules must be issued by this date
      2. 180 days after the act or 2/13/09 new 600 ppm lead limit goes into effect
      3. 365 (1 year) new 300 ppm lead goes into effect and paint goes down to 90 ppm
        1. New lead limits on inaccessible parts and components
      4. 3 years lead limits go down to 100 ppm if technological feasible
        1. Applies to parts individually
          1. Each component will be evaluated separately
    2. Once it becomes mandatory you will be required to test you products for soluble lead

Third Party Certification

    Mark Granger, Partner, Morrison Mahoney LLP

  1. Right now there are only 20 labs in the US that can comply with the requirements for self certification.
    1. There is going to be a big crunch
      1. Labs have to get their applications in now
        1. Deadline is November
      2. If request is not in before the November they will not be accredited
    2. Accreditation is a list of rules on testing
  2. Labs must be out of reach of the manufactures influence
    1. Must be totally independent
  3. Products will not be let into the US without the certifications
    1. There will be a new import surveillance group to check on these products

Label Tracking and Certificates

    Bruce Cranner, Partner, Frilot LLC

  1. Certifications
    1. The act requires that manufactures or labels create a certificate for their products
    2. Two types
      1. A general certificate created by the manufactures based on a 3rd party test or a reasonable testing program that complies with the regulations
      2. Certificate must state the rules, regulations or certifications the label is complying with
      3. Comes into play with 90 days of the act (mid November)
      4. Can be done based on a reasonable testing program
    3. Children’s products certificate
      1. Conforms with the act
      2. Tested by a third party
      3. Must be issued for each children’s product
        1. Lead
        2. Metal jewelry
      4. Must contain
        1. Date and place of manufactures
        2. Date and place of testing
          1. How it was tested
          2. Who tested
        3. Must be available to the buyer of the product
        4. Must be turned over to retailers upon request
        5. Available to turned over to the CPSC or the commissioner of customs
          1. System to file 24 hours before the arrival of the certificate product
    4. New requirement that manufactures tag and label children’s product
      1. Includes the packaging of the product
        1. Must contain distinguishing marks on the product
          1. Batch
          2. Lot
          3. Manufactures date & time
          4. Manufactures location
        2. Ultimate purchase must be able to ascertain
          1. Manufactures date & time
          2. Manufactures location
          3. Batch and lot number
        3. All on the product and the packaging
      2. By 2/14/09

Inventory Issues

    Paul Rosenlund, Partner, Duane Morris LLP

  1. Area with a lot of gray on what, when and where
    1. A lot of the deadlines will slide based on when the CPSC issues the regulations
  2. CPSC did issue preliminary deadlines on an excel spreadsheet
  3. Xmas time proposed deadline for lead
  4. Labels 1 year after deadline after the date of enactment
  5. Toy safety standard F9 63-07 apply to all products manufactures after 2/10/09
  6. Lead is effective immediately and applies to existing inventory
  7. Phthalate applies 100 days after enactment, 2/10/09 to all products distributed in commerce
    1. Effectively if too much Phthalate must be destroyed or fixed after 2/10/09
      1. The act prohibits selling, exporting or distributing
  8. 3 wheel all terrain vehicles banned now!
  9. 4 wheel all terrain vehicles new rules
  10. 90 day testing??

Question and Answer Session

    E-mail Mark Granger at MGranger@morrisonmahoney.com with any questions     you would like to have discussed at this time.

What about state rules and regulations that are more stringent than the Federal rules

    Gary Wolensky: state law will not be pre-empted by the federal act. State law will still apply, except for Phthalate.

    The act is it pre-emptive by CA Proposition 65

Any damage claims (plaintiff’s claims) is still based on state law

Sporting good designed for educational use, is that a toy?

    Gary Wolensky: Get advice, go through the product and product line and figure out whether the article is sporting good or something else.

    Personal use, consumption use or enjoyment in or around personal residence, school recreation or otherwise

What about certifications provided by foreign countries?

    Barring some sort of treaty or CPSC agreement those certifications will not work and must be certified under US rules

    Not just a function of what the product is made of

        Small parts

        Children’s products

        Everything will require 3rd party certification

    You will need to find lawyers skilled in this and independent labs skilled in this

Paul Rosenlund: there will be a separate set of rules for foreign labs

    EU standard will not exempt you from the CPSC

Is children’s footwear children’s toys?

    Arguably under the definition it is a consumer product and used to play.

    Can it end up in the kid’s mouth, then it might be a toy

Inaccessible parts made of Phthalate or lead?

    Inaccessible part the issue is the part really inaccessible? You are comparing the percentage concentration to the totality to the product whether accessible or not.

Probably specific regulations on accessible issues

How do I tell if I am a child’s product toy or just a sporting good?

    Clearly sporting goods fall within the definition of child’s products

    The critical inquiry is “is your product a toy or sporting goods”

        Look at the intended use

        Look at the advertising and marketing

        Is it used in team sports or individual sports

        Is it cute, colorful etc is a toy

        Are your instructions, warnings, etc aimed at a child above age 12?

        Do the instructions say only for use by children over age 12?

Certificates?

    A lot of information is not known yet on labels and certificates. Waiting on CPSC to provide more guidance.

    Everyone who manufactures a product must be on the certificate

        Where it came from, who manufactured it

    Tracking label must provide opportunity for the ultimate purchase to determine manufactures date time and location and batch run and time.

Paul: another provision of the act CPSC now has authority without a complaint or investigation the right to ask any importer retailer or manufactures for all supply chain information including component suppliers.

Gary W. as of this morning on the CPSC the PowerPoint’s are up from the presentations made by the CPSC last week.

Ended at 12: 30 PM MST

SGMA Conference Call Sponsored by:

KEY CONTACT INFORMATION

Bruce Cranner     Mark Granger      Tom Cove

Frilot LLC     Morrison Mahoney LLP             SGMA

504.599.8151         617.439.7518          202.349.9422


BCranner@frilot.com
MGranger@morrisonmahoney.com
TCove@sgma.com

 

Paul Rosenlund     Gary Wolensky             Bill Sells

Duane Morris LLP     Snell & Wilmer LLP             SGMA

415.957.3178     714.427.7022          202.349.9417


PSRosenlund@duanemorris.com
GWolensky@swlaw.com     BSells@sgma.com



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