2009 GHTA Conference Presentation

1. Consumer Product Safety
Regulation – GHTA
The National Association of Manufacturers
1331 Pennsylvania Avenue, Suite 600
Washington, DC 20004-1790
(202) 637-3000
www.nam.org

2. The NAM Mission
The NAM‘s mission is to advocate on behalf of its members to enhance the
competitiveness of manufacturers by shaping a legislative and regulatory
environment conducive to U.S. economic growth and to increase
understanding among policymakers, the media and the general public about
the vital role of manufacturing in America‘s economic and national security for
today and in
the future.
• The NAM is the leading advocate of a pro-growth, pro-manufacturing
agenda.
• The NAM is a partner in reinforcing the legislative and regulatory activities
of its member firms.
• The NAM is a primary source for information on manufacturers‘
contributions to innovation and productivity.

3. What Is the NAM?
• The NAM is the largest multi-industrial trade association, with 11,000
companies of all sizes as members;
• The NAM represents 12 million manufacturing employees;
• The NAM includes 350 trade associations in its membership;
• Member companies of the NAM are responsible for 85 percent of
U.S. manufacturing output;
• The NAM represents every industrial sector;
• The NAM is composed of members from all 50 states; and
• The NAM hosts the CPSC Coalition – the leading coalition of
manufacturers, distributors, and retailers committed to ensuring safe
consumer products and reasonable regulation

4. Size Breakdown of NAM-Member
Companies

5. Challenges
Regulatory Compliance Costs
• Since 2000, costs related to compliance with government regulations have
increased 10.2 percent annually.
• Compliance with environmental, economic, workplace and tax rule and
regulations cost American manufacturers $162 billion annually.
• The average annual regulatory compliance cost per manufacturing
employee is currently $10,175. This is considerably higher compared to
firms in other sectors of the economy, which average $5,633 per employee.
• The cost per employee for small firms (meaning fewer than 20 employees)
was $21,919 or 118 percent higher than the cost per employee for medium-
sized firms (defined as 20–499 employees). And it was 150 percent higher
than the $8,748 cost per employee for large firms (defined as 500 or more
employees). The federal government also imposes over 9.3 billion hours of
paperwork on the public each year.

6. Product Safety

7. Product Safety

8. Why should you care about the CPSIA?
• Higher Fines and Penalties
• New testing requirements for children‘s products
• New certification requirements for all consumer
products subject to CPSC rules, bans or
standards
• Product tracking label requirements
• Product Safety Database
• State Attorneys General Enforcement
• 2/10/2010 – End of stays of enforcement

9. Tougher Penalties
• Civil penalties increased from a maximum of $5,000 per incident to $100,00
per incident
• Total civil penalty maximum increases from $1.25 million to $15 million
• Criminal penalties of up to 5 years in prison for a knowing and willful
violation
• Enhanced liability for directors, officers and agents (previously required
notice of noncompliance before liability existed)
• Penalties include forfeiture of assets associated with the violation

10. What is a children‘s product?
CHILDREN‘S PRODUCT.—The term ‗children‘s product‘ means a consumer
product designed or intended primarily for children 12 years of age or
younger.
Relevant Factors:
• A statement by a manufacturer about the intended use of such product,
including a label on such product if such statement is reasonable.
• Whether the product is represented in its packaging, display, promotion, or
advertising as appropriate for use by children 12 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

11. What is a children‘s product? (cont‘d)
• Items that are as likely to be used by adults as by children are general
purpose not children's items.
• Price point and marketing of an item can suggest that it is intended for both
adults and children, meaning it is not a child's item.
• Colors, decorations and embellishments do not necessarily make the item a
child's product.
• Application of a school's name does not necessarily make it a child's
product.
• Application of a cartoon character does not necessarily make it a child's
product.
• Occasionally marketing an item for school use does not convert a general
purpose item into a children's product.

12. Lead Ban and Third-Party Testing
 Children‘s products are treated as a banned hazardous substance if they
contain more than 300ppm lead.
 Third-party testing required for children‘s products for compliance with new
lead content limits, lead paint limits, crib standards, small parts rules,
children‘s metal jewelry rules, baby bouncers, walkers, and jumpers, and all
other children‘s product safety rules once labs are accredited to test to the
new standards.
 Exceptions for ―inaccessible parts,‖ certain electronic devices, materials
determined by the Commission not to contain lead or products or materials
determined not to result in the absorption of any lead or any other adverse
impact on public health or safety

13. Exclusion Process
Commission has reviewed several requests for exclusion and has denied
exclusions for:
• Crystal, Glass Beads, CZ and Rhinestones
• Brass
• Youth model ATV‘s
• Children‘s Bicycles
• Pens
DENIED!

14. Product Safety Certification
‗(1) GENERAL CONFORMITY CERTIFICATION- Except as provided in paragraphs (2) and (3), every
manufacturer of a product which is subject to a consumer product safety rule under this Act or similar
rule, ban, standard, or regulation under any other Act enforced by the Commission and which is
imported for consumption or warehousing or distributed in commerce (and the private labeler of such
product if such product bears a private label) shall issue a certificate which—
‗(A) shall certify, based on a test of each product or upon a reasonable testing program, that such
product complies with all rules, bans, standards, or regulations applicable to the product under this
Act or any other Act enforced by the Commission; and
‗(B) shall specify each such rule, ban, standard, or regulation applicable to the product.‘.
.

15. Product Safety Certification
3) AVAILABILITY OF CERTIFICATES- Every certificate required under this
section shall accompany the applicable product or shipment of products
covered by the same certificate and a copy of the certificate shall be
furnished to each distributor or retailer of the product. Upon request, the
manufacturer or private labeler issuing the certificate shall furnish a copy of
the certificate to the Commission.

16. Reasonable Testing Program
1. Product specs which describe the product and
rules/bans/standards that it must comply with;
2. Certification tests which prove the product can meet those
standards;
3. A production testing plan that includes reasonable intervals for
testing;
4. Remedial action plans for when a sample product fails a test, and
5. Documentation of the reasonable testing program and how it was
implemented

17. Product Tracking Labels
The manufacturer of a children‘s product shall place permanent, distinguishing
marks on the product and its packaging, to the extent practicable, that will
enable—
(A) the manufacturer to ascertain the location and date of production of the
product, cohort information (including the batch, run number, or other
identifying characteristic), and any other information determined by the
manufacturer to facilitate ascertaining the specific source of the product by
reference to those marks; and
(B) the ultimate purchaser to ascertain the manufacturer or private labeler,
location and date of production of the product, and cohort information
(including the batch, run number, or other identifying characteristic).

18. Database
In the next twelve to fifteen months the CPSC must deploy an online
searchable database of reports of harm relating to consumer products
regulated by the Commission from consumers, state and local government,
health care professionals, child service providers, and public safety entities
Manufacturers will be given an opportunity to see complaints and respond
within a 5 day window before the complaint is made publicly available
No system or verification protocol has been designed to ensure the accuracy
of information submitted to the database

19. End of Stays of Enforcement
2/10/2010 – Stay of Enforcement on testing and certification of products
subject to lead limits.
Still illegal to manufacture, sell or distribute in commerce products that do not
meet the standards.
Exceptions to the stay included painted children‘s products which must meet
the 90ppm standard and children‘s metal jewelry.
State Attorneys General not subject to CPSC enforcement discretion.

20. Component Testing
Awaiting a final rule on the ability of manufacturers or assemblers or finished
product distributors or private labelers to rely on certifications of compliant
components coupled with exempted materials to be relieved of obligations
to test under the law
Requirements do not automatically move up the supply chain.
Still unanswered questions about liability. How comfortable should you be
about supplier certifications?
Manufacturer definition is ―domestic manufacturer or importer.‖