[Federal Register Volume 76, Number 216 (Tuesday, November 8, 2011)]
[Rules and Regulations]
[Pages 69482-69544]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-27678]



[[Page 69481]]

Vol. 76

Tuesday,

No. 216

November 8, 2011

Part III





Consumer Product Safety Commission





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16 CFR Part 1107





Testing and Labeling Pertaining to Product Certification; Final Rule

  Federal Register / Vol. 76 , No. 216 / Tuesday, November 8, 2011 / 
Rules and Regulations  

[[Page 69482]]


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CONSUMER PRODUCT SAFETY COMMISSION

16 CFR Part 1107

[CPSC Docket No. CPSC-2010-0038]


Testing and Labeling Pertaining to Product Certification

AGENCY: Consumer Product Safety Commission.

ACTION: Final rule.

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SUMMARY: The Consumer Product Safety Commission (``CPSC,'' 
``Commission,'' or ``we'') is issuing a final rule that establishes 
protocols and standards with respect to certification and continued 
testing for children's products. The final rule also establishes 
requirements for labeling of consumer products to show that the product 
complies with the certification requirements under section 14(a) of the 
Consumer Product Safety Act (``CPSA''). The final rule implements 
section 14(a)(2) and (i) of the CPSA, as amended by section 102(b) of 
the Consumer Product Safety Improvement Act of 2008 (``CPSIA'').

DATES: The rule will become effective on February 8, 2013 and applies 
to products manufactured after that date. The incorporation by 
reference of the publications listed in this rule is approved by the 
Director of the Federal Register as of February 8, 2013.\1\
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    \1\ The Commission voted 3-2 to publish this final rule, with 
changes, in the Federal Register. Chairman Inez M. Tenenbaum, 
Commissioners Robert S. Adler and Thomas H. Moore voted to publish 
the final rule with changes. Commissioners Nancy A. Nord and Anne M. 
Northup voted against publication of the final rule. Chairman 
Tenenbaum, Commissioner Adler, and Commissioner Moore issued a joint 
statement. Commissioner Nord and Commissioner Northrup issued 
statements. The statements can be found at http://www.cpsc.gov/pr/statements.html.

FOR FURTHER INFORMATION CONTACT: Randy Butturini, Project Manager, 
Office of Hazard Identification and Reduction, U.S. Consumer Product 
Safety Commission, 4330 East West Highway, Bethesda, Maryland 20814; 
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(301) 504-7562; email: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Purpose of the Final Rule

    The purpose of this final rule is to reduce the incidents of deaths 
and injuries associated with children's products. This will be 
accomplished by increasing the safety of children's products. The 
likelihood of a noncompliant product being detected before it is 
introduced to the public will be increased. Consequently, consumer 
confidence in children's products certified to comply with the 
applicable product safety rules may be increased. Potentially, the 
number of recalls for children's products could be reduced, and, with 
continued assessment of compliance, the scope of necessary recalls 
could be reduced. Further, third party testing during continuing 
production or importation can serve as an objective assessment of the 
effectiveness of a manufacturer's or importer's internal processes to 
ensure compliance, which would also serve to enhance the safety of 
children's products in the market.

II. Statutory Authority

A. The Consumer Product Safety Act, as Amended by the Consumer Product 
Safety Improvement Act of 2008

    Section 14(a)(1) of the CPSA, (15 U.S.C. 2063(a)(1)), as amended by 
section 102 of the CPSIA, establishes requirements for the testing and 
certification of products subject to a consumer product safety rule 
under the CPSA or similar rule, ban, standard, or regulation under any 
other act enforced by the Commission and which are imported for 
consumption or warehousing or distributed in commerce. Under section 
14(a)(1)(A) of the CPSA, manufacturers and private labelers must issue 
a certificate, which ``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 the CPSA or any other Act enforced by the Commission.'' CPSC 
regulations, at 16 CFR part 1110, limit the certificate requirement to 
importers and domestic manufacturers. Section 14(a)(1)(B) of the CPSA 
further requires that the certificate provided by the importer or 
domestic manufacturer ``specify each such rule, ban, standard, or 
regulation applicable to the product.'' The certificate described in 
section 14(a)(1) of the CPSA is known as a General Conformity 
Certification (GCC).
    Section 14(a)(2) of the CPSA (15 U.S.C. 2063(a)(2)) establishes 
testing requirements for children's products that are subject to a 
children's product safety rule. (Section 3(a)(2) of the CPSA (15 U.S.C. 
2052(a)(2)) defines a children's product, in part, as a consumer 
product designed or intended primarily for children 12 years of age or 
younger.) Section 14(a)(2)(A) of the CPSA also states that, before a 
children's product subject to a children's product safety rule is 
imported for consumption or warehousing or distributed in commerce, the 
manufacturer or private labeler of such children's product must submit 
sufficient samples of the children's product ``or samples that are 
identical in all material respects to the product'' to an accredited 
``third party conformity assessment body'' to be tested for compliance 
with the children's product safety rule. Based on such testing, the 
manufacturer or private labeler, under section 14(a)(2)(B) of the CPSA, 
must issue a certificate that certifies that such children's product 
complies with the children's product safety rule based on the 
assessment of a third party conformity assessment body accredited to 
perform such tests.
    Section 14(i)(2)(A) of the CPSA requires the Commission to initiate 
a program by which a manufacturer or private labeler may label a 
consumer product as complying with the certification requirements. This 
provision applies to all consumer products that are subject to a 
product safety rule administered by the Commission. (On August 12, 
2011, the President signed into law H.R. 2715, which amended both the 
CPSA and the CPSIA. Section 10(a) of H.R. 2715 redesignates what was 
identified as section 14(d) of the CPSA in the preamble of the proposed 
rule as section 14(i) of the CPSA; consequently, except where we are 
citing language from the proposed rule, the remainder of this document 
will refer to section 14(i) of the CPSA.)
    Section 14(i)(2)(B) of the CPSA requires the Commission to 
establish protocols and standards for:
     Ensuring that a children's product tested for compliance 
with a children's product safety rule is subject to testing 
periodically and when there has been a material change in the product's 
design or manufacturing process, including the sourcing of component 
parts;
     Testing of representative samples;
     Verifying that a children's product tested by a conformity 
assessment body complies with applicable children's product safety 
rules; and
     Safeguarding against the exercise of undue influence on a 
third party conformity assessment body by a manufacturer or private 
labeler.
    Section 14(i)(2)(B)(iii) of the CPSA provides for verification that 
a children's product tested by a conformity assessment body complies 
with applicable children's product safety rules. At this time, we are 
not imposing any verification obligations on manufacturers because we 
intend to conduct the verification ourselves under our inherent 
authorities while we gain more experience with the testing and 
certification requirements. When we find that a children's product

[[Page 69483]]

accompanied by a certificate of conformity does not pass the tests upon 
which the certification was based, we may initiate an investigation of 
the manufacturer, third party conformity assessment body, and any other 
relevant party in the supply chain, to determine the cause of the 
discrepancy.
    To implement sections 14(a) and (d) (now renumbered by H.R. 2715 as 
section 14(i)) of the CPSA, as amended by section 102 of the CPSIA, we 
published a proposed rule in the Federal Register on May 20, 2010 (75 
FR 28336). The proposed rule would:
     Define the elements of a ``reasonable testing program'' 
for purposes of section 14(a)(1)(A) of the CPSA;
     Establish the protocols and standards for continuing 
testing of children's products under section 14(d)(2)(B)(i), (ii), and 
(iv) (renumbered as sections 14(i)(2)(B)(i), (ii), and (iv)) of the 
CPSA; and
     Describe the label that manufacturers may place on a 
consumer product to show that the product complies with the 
certification requirements for purposes of what was numbered previously 
as section 14(d)(2)(A) of the CPSA (now renumbered by H.R. 2715 as 
section 14(i)(2)(A) of the CPSA).

B. H.R. 2715 and Its Impact on This Rulemaking

    On August 12, 2011, the President signed into law H.R. 2715. H.R. 
2715 amended the CPSA and the CPSIA in several ways. For example, 
section 2, ``Application of Third Party Testing Requirements,'' of H.R. 
2715, revised section 14(d) of the CPSA, in part, by:
     Renumbering the second paragraph of section 14(d) of the 
CPSA as section 14(i) of the CPSA. (When the CPSIA was enacted, it 
created, mistakenly, two paragraph (d)s in section 14 of the CPSA. The 
paragraph at issue in the proposed rule was the second of the two 
paragraphs numbered (d); H.R. 2715 contained a technical amendment to 
renumber the second paragraph (d) as a new paragraph (i) of section 14 
of the CPSA);
     Revising section 14(i)(2)(B)(ii) of the CPSA to require 
the testing of ``representative samples,'' rather than the testing of 
``random samples'';
     Creating a new section 14(i)(3)(A) of the CPSA requiring, 
no later than 60 days after the date of enactment, that we ``seek 
public comment on opportunities to reduce the cost of third party 
testing requirements consistent with assuring compliance with any 
applicable consumer product safety rule, ban, standard, or 
regulation.'' H.R. 2715 lists seven topics for public comment:
    [cir] The extent to which the use of materials subject to 
regulations of another government agency that requires third party 
testing of those materials may provide sufficient assurance of 
conformity with an applicable consumer product safety rule, ban, 
standard, or regulation without further third party testing;
    [cir] The extent to which modification of the certification 
requirements may have the effect of reducing redundant third party 
testing by or on behalf of 2 or more importers of a product that is 
substantially similar or identical in all material respects;
    [cir] The extent to which products with a substantial number of 
different components subject to third party testing may be evaluated to 
show compliance with an applicable rule, ban, standard, or regulation 
by third party testing of a subset of such components selected by a 
third party conformity assessment body;
    [cir] The extent to which manufacturers with a substantial number 
of substantially similar products subject to third party testing may 
reasonably make use of sampling procedures that reduce the overall test 
burden without compromising the benefits of third party testing;
    [cir] The extent to which evidence of conformity with other 
national or international governmental standards may provide assurance 
of conformity to consumer product safety rules, bans, standards, or 
regulations applicable under the CPSA;
    [cir] The extent to which technology, other than the technology 
already approved by the Commission, exists for third party conformity 
assessment bodies to test or to screen for testing consumer products 
subject to a third party testing requirement; and
    [cir] Other techniques for lowering the cost of third party testing 
consistent with assuring compliance with the applicable consumer 
product safety rules, bans, standards, and regulations.
     Creating a new section 14(i)(3)(B) of the CPSA, requiring 
us to review the public comments and stating that we ``may prescribe 
new or revised third party testing regulations if [we determine] that 
such regulations will reduce third party testing costs consistent with 
assuring compliance with the applicable consumer product safety rules, 
bans, standards, and regulations; and
     Creating a new section 14(i)(4) of the CPSA, titled, 
``Special rules for small batch manufacturers,'' to provide 
``alternative testing requirements'' for ``covered products'' 
manufactured by small batch manufacturers or to exempt small batch 
manufacturers from third party testing requirements. H.R. 2715 defines 
a ``covered product'' as ``a consumer product manufactured by a small 
batch manufacturer where no more than 7,500 units of the same product 
were manufactured in the previous calendar year.'' It defines a ``small 
batch manufacturer,'' in part, as ``a manufacturer that had no more 
than $1,000,000 in total gross revenue from sales of all consumer 
products in the previous calendar year.''
    H.R. 2715 also contains (among other things) provisions on 
registration of small batch manufacturers and exclusions of certain 
materials from third party testing. For example, H.R. 2715 created a 
new section 14(i)(5)(A)(i) of the CPSA, which states that the third 
party testing requirements do not apply to ``ordinary books or ordinary 
paper-based printed materials.''
    The Commission has chosen to finalize those parts of the proposed 
rule that were not affected directly or significantly by H.R. 2715, and 
we will reserve other subparts or provisions in the final rule, pending 
our consideration and implementation of H.R. 2715. For example, because 
section 14(i)(2)(B)(ii) of the CPSA, as amended by H.R. 2715, now 
refers to the testing of ``representative samples,'' we have decided to 
remove Sec.  1107.22 from subpart C of the final rule, which would have 
pertained to ``Random Samples.''

III. Comments on the Proposed Rule and Our Responses

    Below, we describe and explain each subpart and section of the 
final rule, as well as describe and respond to the comments on the 
proposed rule. A summary of each of the commenters' topics is 
presented, and each topic is followed by our response. For ease of 
reading, each comment will be prefaced by a numbered ``Comment''; and 
each response will be prefaced by a corresponding numbered 
``Response.'' Each ``Comment'' is numbered to help distinguish between 
different topics. The number assigned to each comment is for 
organizational purposes only and does not signify the comment's value 
or importance or the order in which it was received. Comments on 
similar topics are grouped together.

A. General Comments

    Several commenters addressed issues regarding testing and costs, 
generally.
    (Comment 1)--One commenter warned that because the overwhelming 
majority of consumer products sold in the United States are produced 
overseas,

[[Page 69484]]

nearly all of the work necessary to ensure compliance with the 
regulations will be performed overseas. The commenter stated that 
because the cost of compliance for foreign manufacturers can be 
relatively high--while the risks associated with noncompliance can be 
relatively low--it is important that our regulation balance the need 
for a high degree of assurance of compliance against the need to 
develop a practical regulatory structure that foreign manufacturers can 
and will implement.
    (Response 1)--The final rule is designed not to be overly 
prescriptive, thereby giving manufacturers some flexibility in 
designing their testing and certification programs to be consistent 
with the statutory requirements. For example, the final rule allows the 
manufacturer to determine the number of samples that are tested, as 
long as the manufacturer has a high degree of assurance that the 
products represented by the samples are in compliance with all 
applicable children's product safety rules. Further, while the final 
rule requires that manufacturers document their compliance, it gives 
manufacturers the flexibility to determine how to maintain this 
information. In addition, the final rule does not require any 
documentation to be maintained in English or kept in the United States, 
except the certificate.
    We also note that, on August 12, 2011, the President signed into 
law H.R. 2715, which amended the CPSIA in several respects. One 
provision in H.R. 2715 requires us to seek public comment on 
opportunities to reduce the cost of third party testing requirements 
consistent with assuring compliance with any applicable consumer 
product safety rule, ban, standard, or regulation. H.R. 2715 directs us 
to seek public comment on seven specific issues, including the extent 
to which modification of the certification requirements may have the 
effect of reducing redundant third party testing by or on behalf of two 
or more importers of a product that is substantially similar or 
identical in all material respects, and other techniques for lowering 
the cost of third party testing consistent with assuring compliance 
with the applicable consumer product safety rules, bans, standards, and 
regulations. Elsewhere in this issue of the Federal Register, we have 
published a notice seeking public comment on the issues in H.R. 2715. 
H.R. 2715 further requires us to review the public comments and states 
that we may prescribe new or revised third party testing regulations if 
we determine that such regulations will reduce third party testing 
costs consistent with assuring compliance with the applicable consumer 
product safety rules, bans, standards, and regulations.
    (Comment 2)--Two commenters stated that we should conduct a full 
cost-benefit analysis of the rule. One commenter added that costs of 
complying with the testing and certification rule, in combination with 
other requirements under the CPSIA and other rules administered by the 
CPSC, will result in a major rule with major implications to consumer 
product manufacturers, particularly children's product manufacturers, 
as well as to the entire supply chain. The commenter urged us to 
examine in greater detail, and to quantify, the full cost and burden of 
these rules. A third commenter implored us to consider the reduction in 
risk, if any, associated with each regulatory requirement and impose 
only those requirements that meaningfully enhance consumer safety in a 
way that makes increased costs and use of resources worthwhile.
    (Response 2)--This rule is being promulgated under the 
Administrative Procedure Act and also section 3 of the CPSIA; neither 
authority requires us to conduct a cost-benefit analysis. Moreover, by 
allowing in CPSIA expedited rulemaking, Congress made it clear that it 
did not want the Commission engaging in any unnecessary delay in 
promulgating this rule. However, we agree that the final rule 
constitutes a major rule, as defined by the Congressional Review Act of 
1996. While, in recognition of Congress's view as reflected in CPSIA, 
we decline to conduct a cost-benefit analysis for the final rule, we 
have changed the final rule to address some of the economic burden on 
manufacturers. Among the changes made to the final rule to reduce the 
burden are: (1) Reserving the subpart B requirements regarding a 
reasonable testing program; \2\ (2) eliminating certain requirements of 
the proposed rule for children's products such as the remedial action 
plan; (3) reducing the recordkeeping requirements in several respects; 
and (4) allowing the use of in-house ISO/IEC 17025:2005 laboratories to 
reduce the frequency of third party periodic testing. By way of further 
example, with regard to the reduction in the recordkeeping 
requirements, the final rule does not require records to be kept in the 
United States, nor does it require records to be translated into 
English, unless requested.
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    \2\ It should be noted, however, that although we are not 
finalizing subpart B at this time, manufacturers of non-children's 
products that are subject to a product safety rule, ban, standard, 
or regulation are still obligated by the CPSA, as amended by the 
CPSIA, to certify that their products comply with all applicable 
safety rule[s] based on a test of each product or a reasonable 
testing program.
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    Additionally, we note that a cost-benefit analysis would not 
necessarily be confined to manufacturers or those in a supply chain (as 
implied by one commenter). We expect, for instance, that consumers will 
benefit from the testing and certification of consumer products, 
particularly if such testing revealed potential problems associated 
with a product or its components, or if such testing prompted a 
manufacturer to redesign or remanufacture the product to make it safer.
    (Comment 3)--One commenter stated that some retailers are requiring 
many manufacturers to submit their products to as many as four 
different laboratories because the retailers want to see test results 
from specific laboratories. The commenter stated that we should clarify 
to retailers that this redundant testing is not necessary.
    (Response 3)--The preamble to the proposed rule stated that 
retailers and sellers of children's products can rely on certificates 
provided by finished product certifiers--without conducting additional 
testing themselves--if those certificates are based on testing 
conducted by a CPSC-accepted third party conformity assessment body (75 
FR at 28337).

B. Proposed Subpart A--General Provisions

1. Proposed Sec.  1107.1--Purpose
    Proposed Sec.  1107.1 would state that part 1107 establishes the 
requirements for a reasonable testing program for non-children's 
products; third party conformity assessment body testing to support 
certification and continuing testing of children's products; and 
labeling of consumer products to indicate that the certification 
requirements have been met pursuant to sections 14(a)(1), and (a)(2), 
(d)(2)(B) of the CPSA (15 U.S.C. 2063(a)(1), (a)(2), (d)(2)(B)).
    We did not receive any comments on this section. However, because 
we have decided to reserve subpart B, which would pertain to the 
reasonable testing program for non-children's products, we have removed 
the reference to the ``reasonable testing program for non-children's 
products.'' (We explain our decision to reserve subpart B of the 
proposed rule in part B.2 of this preamble below.)
    Additionally, because H.R. 2715 revised section 14(i)(2)(B)(ii) of 
the CPSA to refer to testing of ``representative'' rather than 
``random'' samples, we have, on our own initiative,

[[Page 69485]]

elected to simplify Sec.  1107.1 to reflect the final rule's narrower 
purpose and have made minor, non-substantive changes to follow the 
language of the statute. This helps clarify which requirements in the 
statute this final rule is intended to address and which have been 
reserved for a later date. Additionally, proposed Sec.  1107.1 was 
silent regarding procedures to safeguard against the exercise of undue 
influence by a manufacturer on a third party conformity assessment 
body, even though proposed Sec.  1107.24, ``Undue influence,'' would 
contain such safeguards. Consequently, the final rule now mentions the 
establishment of procedures to safeguard against the exercise of undue 
influence by a manufacturer on a third party conformity assessment 
body. Thus, Sec.  1107.1 now states that the part establishes the 
protocols and standards for ensuring continued testing of children's 
products periodically and when there has been a material change in the 
product's design or manufacturing process and safeguarding against the 
exercise of undue influence by a manufacturer on a third party 
conformity assessment body. It also establishes a program for labeling 
of consumer products to indicate that the certification requirements 
have been met pursuant to sections 14(a)(2) and (i)(2)(B) of the 
Consumer Product Safety Act (CPSA) (15 U.S.C. 2063(a)(2) and 
(i)(2)(B)).
2. Proposed Sec.  1107.2--Definitions
    Proposed Sec.  1107.2 would define various terms used in the rule.
a. CPSA
    Proposed Sec.  1107.2 would define ``CPSA'' to mean the Consumer 
Product Safety Act.
    We received no comments on this definition and have finalized it 
without change.
b. CPSC
    Proposed Sec.  1107.2 would define ``CPSC'' to mean the Consumer 
Product Safety Commission.
    We received no comments on this definition and have finalized it 
without change.
c. CPSIA
    Proposed Sec.  1107.2 would define ``CPSIA'' to mean the Consumer 
Product Safety Improvement Act of 2008.
    We received no comments on this definition and have finalized it 
without change.
d. Detailed Bill of Materials
    Proposed Sec.  1107.2 would define ``detailed bill of materials'' 
to mean a list of the raw materials, subassemblies, intermediate 
assemblies, subcomponent parts, component parts, and the quantities of 
each needed to manufacture a finished product.
    We received no comments on this definition. However, because the 
term ``detailed bill of materials'' appeared only in proposed Sec.  
1107.10(b)(1) (which would require a product specification as part of 
the reasonable testing program), and because the final rule now 
reserves subpart B, we have removed the definition of ``detailed bill 
of materials'' from the final rule.
e. Due Care
    Proposed Sec.  1107.2 would define ``due care'' to mean the degree 
of care that a prudent and competent person engaged in the same line of 
business or endeavor would exercise under similar circumstances.
    (Comment 4)--One commenter noted that the due care requirement only 
applies to a few specific provisions of the proposed rule, such as 
proposed Sec.  1107.23(a) regarding ``material change'' in the 
product's design, manufacturing process, or sourcing of component 
parts. In some instances, this defined duty of ``due care'' would be 
coupled with a CPSC-created standard of ``high degree of assurance.'' 
The commenter appreciated our recognition that both the ``due care'' 
standard of conduct and the ``high degree of assurance'' standard for 
compliance are anchored in the judgment and knowledge of the 
manufacturer. For that reason, the commenter felt that the due care 
requirement should have general applicability to all elements of 
compliance for implementation of the CPSIA's testing and certification 
requirements. The commenter stated that manufacturers should not have 
to wonder whether more than their exercise of reasonable judgment and 
practice, based on their manufacturing experience and sound knowledge 
of the product, is required for aspects of the rules that do not 
explicitly reference these standards.
    (Response 4)--The definition of ``due care'' in Sec.  1107.2 refers 
to the actions of a prudent and competent person. We expect that all 
parties will exercise prudence and competence in the testing and 
certification of products. The final rule emphasizes due care in 
particular sections, as noted by the commenter, because these are areas 
that require additional care in order to prevent noncompliant products 
from being produced and certified.
    We recognize that manufacturers' knowledge of their products and 
their manufacture can serve as a basis for determining what steps are 
necessary to achieve a high degree of assurance that their products 
comply with the applicable product safety rules. Based on that 
knowledge, manufacturers are uniquely situated to know what actions are 
necessary to exercise due care and demonstrate a high degree of 
assurance regarding their specific circumstances.
    On our own initiative, we have revised the definition of ``due 
care'' in the final rule. The final rule's definition of ``due care'' 
includes a sentence stating that ``Due care does not permit willful 
ignorance.'' This is not intended to be a substantive change because 
any party who is willfully ignorant of material facts, by definition, 
would not be exercising due care. However, the Commission wants to 
emphasize in the final rule that a party cannot purposely avoid knowing 
their business partner's testing and certification practices to avoid 
violating section 19 of the CPSA. A party will not be shielded from 
violating section 19 of the CPSA when that party knows or should know 
about testing and/or certification problems which may affect the 
ability of a consumer product to be compliant with all rules, bans, 
standards, or regulations. Certifiers and testing parties have an 
obligation to resolve known or knowable problems with testing and/or 
certification before relying upon or passing on test reports or 
certifications.
f. High Degree of Assurance
    Proposed Sec.  1107.2 would define ``high degree of assurance'' as 
``an evidence-based demonstration of consistent performance of a 
product regarding compliance based on knowledge of a product and its 
manufacture.''
    (Comment 5)--Multiple commenters questioned the definition of a 
``high degree of assurance.'' One commenter would like the rule to 
define the term ``high degree of assurance'' in a more understandable 
or quantitative way. The commenter considered the term to be confusing 
and misleading and believed this could lead to unnecessary conflicts 
between manufacturers and conformity assessment bodies when a judgment 
has to be made in certain cases. The commenter wondered if this 
requirement is targeting the design area, manufacturing process 
control, quality control, or testing procedures.
    Another commenter said that manufacturers would benefit from 
additional guidance on how to achieve a ``high degree of assurance'' 
through their testing programs. The preamble to the proposed rule 
referred to a 95 percent statistical significance level as constituting 
a ``high degree'' of

[[Page 69486]]

assurance, but the proposed rule would not mandate a 95 percent 
confidence threshold. The commenter asked what factors would permit a 
manufacturer to satisfy the ``high degree of assurance'' requirement 
with a statistical significance level below 95 percent and asked us to 
provide an example of a situation where a manufacturer could still 
achieve a high degree of assurance with less than 95 percent assurance.
    Another commenter argued that the term ``high degree of assurance'' 
is subjective and subject to varied interpretations. The commenter 
suggested that a statistical confidence limit would help remove the 
subjectivity and set a specific threshold by which we can enforce our 
rules better. The commenter also was concerned that the wording may 
lead some manufacturers to believe that they do not have to test to the 
standard in all cases, as long as they foresee little risk of 
noncompliance, or assume that the risk is low of being discovered 
having noncompliant products in the marketplace. The commenter said the 
final rule should clarify that testing to applicable standards is 
required.
    (Response 5)--The determination of a ``high degree of assurance'' 
for a given product will vary by industry, product, component part, and 
by manufacturer. Therefore, selecting an example using a hypothetical 
certifier would be of little value to manufacturers. We have 
intentionally defined the term in a manner that allows the manufacturer 
the flexibility to develop a testing program to ensure their product 
complies with all applicable children's product safety rules. This rule 
provides broad protocols and standards for regulated firms to follow 
and adapt to their particularized needs given their products and 
processes. The use of quantitative values for the definition of ``high 
degree of assurance'' could lead to difficulties for some 
manufacturers. The preamble to the proposed rule stated: ``We decided 
against defining `high degree of assurance' with respect to a 95 
percent probability or confidence level because there may be difficulty 
in applying the statistical methods to all manufacturing processes'' 
(75 FR 28344). The intent of the definition is to enable a manufacturer 
to have a degree of confidence, based on evidence (rather than only on 
a belief) that all of the products manufactured are compliant with the 
applicable product safety rules. Knowledge of a product's design and 
how it is manufactured, control over component parts, and measurements 
showing consistent performance, are some elements that can be used to 
demonstrate a ``high degree of assurance.''
    As for the commenter asking us to clarify that testing to 
applicable standards is required, Sec.  1107.20 (a) of the final rule 
states that manufacturers must submit samples of a children's product 
to a third party conformity assessment body for testing. We believe 
these statements are clear enough to convey that certification testing 
involves tests.
    (Comment 6)--Two commenters agreed that a numerical target for 
defining what constitutes a high degree of assurance--in the context of 
programs based on good manufacturing practices (GMP)--is misplaced. One 
commenter noted that the explanation of the definition of ``high degree 
of assurance'' provided in the preamble to the proposed rule (75 FR at 
28344) implies that we prefer the 95 percent statistical level of 
confidence for a high-degree-of-assurance approach and consider it the 
default. The commenter is concerned that the 95-percent-confidence-
level language may prompt third party conformity assessment bodies and 
retailers to adopt standardized testing protocols that demand large 
sample sizes, which will be a particular burden for the initial 
certification and may not be warranted in many cases. The commenter 
expressed the belief that the goal, across a broad range of different 
products that are subject to different manufacturing requirements and 
material sourcing, must be a standard that correlates ``a high degree 
of assurance'' with an ``evidence-based demonstration of consistent 
performance'' that relies more appropriately upon process controls to 
assure conformance. The commenter indicated that, while generally 
accepted process controls may include statistical sampling as part of 
process control programs, in and of themselves, they are not preferable 
to good manufacturing practices. The commenter said that the final rule 
must be clear in this regard.
    (Response 6)--Standards for GMPs are generally industry-specific in 
areas such as: Cosmetics, pharmaceutical operations, food handling, and 
medical devices. It is unlikely that any GMP-based program would be 
deemed workable or acceptable for all children's product manufacturing 
methods.
    A certifier's determination that a product complies--with a high 
degree of assurance--with the applicable children's product safety 
rules, may derive from statistically based testing, the application of 
good manufacturing practices, or other knowledge of the product and its 
manufacture. Because GMP-based programs are industry-specific, we 
disagree with the commenter's assertion that the programs are 
preferable to other accepted process controls in all manufacturing 
situations.
    The final rule defines a ``high degree of assurance'' in general 
terms because the definition is intended to be applied to a wide 
variety of products that use many different manufacturing processes. 
Customizing the definition of ``high degree of assurance'' to fit one 
type of product or GMP-based program will necessarily increase the 
difficulty of manufacturers applying the definition to dissimilar 
products or manufacturing processes. Further, because GMP-based 
programs vary across industries--and the comments were not specific 
about which aspect(s) of a GMP program we should adopt, or which GMPs 
we should adopt--we cannot revise the definition, as requested by the 
commenter.
    As for the commenter who interpreted the preamble to the proposed 
rule as expressing a preference for a 95 percent confidence level, we 
do not consider a numerically based definition of a ``high degree of 
assurance'' to be the default position. Defining a ``high degree of 
assurance'' with respect to a 95 percent probability or confidence 
level would be difficult to apply to all manufacturing processes for 
children's products. Defining a ``high degree of assurance'' as a 95 
percent, or higher, probability or confidence level could result in 
greater testing demands on small manufacturers. As discussed in the 
preamble of the proposed rule (75 FR at 28344), a statistical 
definition is not needed in order to provide an evidence-based high 
degree of assurance.
    Regarding the concern that conformity assessment bodies and 
retailers may require large numbers of samples for certification 
testing, the children's product certifier (not the conformity 
assessment body or retailer) specifies the number of samples to be 
tested. The final rule requires the number of samples to be sufficient 
to give the certifier a high degree of assurance that the tests 
conducted demonstrate accurately the ability of the product to comply 
with the applicable children's product safety rules. As we previously 
stated in the preamble to the proposed rule:

    The Commission wants to emphasize to retailers and sellers of 
children's products that they can rely on certificates provided by 
product suppliers if those certificates are based on testing 
conducted by a third party conformity assessment body.

75 FR at 28337.


[[Page 69487]]


    (Comment 7)--Two commenters contended that the proposed definition 
of a ``high degree of assurance'' lacks clarity. Both commenters said 
that the rule should have additional examples of what constitutes ``a 
high degree of assurance.'' One commenter acknowledged that the 
discussion in the preamble to the proposed rule makes clear that the 
definition mandates no specific formula (75 FR at 28344). However, the 
commenter noted that the preamble to the proposed rule gave no specific 
examples, other than the use of statistical methods. The commenter 
argued that the final rule should recognize other means of achieving 
this confidence level, including ways that do not rely solely on 
product testing or statistical methods. These methods include 
appropriate quality assurance processes and risk management. Quality 
assurance processes can include: Factory/supplier evaluations, design 
reviews, manufacturing process controls, process auditing, or similar 
controls or reviews. Risk management includes: Analysis of a given 
possible failure, the likelihood of the failure, and the potential 
consequences associated with the failure. The commenter argued that 
importers can use these activities to boost desired outcomes and reduce 
unexpected outcomes; and the commenter further maintained that the 
activities can be performed in a feedback loop that facilitates true 
root-cause analysis and correction, if there is a failure.
    The commenters suggested substitute definitions for ``a high degree 
of assurance'' that are practically identical. One suggested definition 
reads: ``A high degree of assurance means an evidence-based 
determination of consistent performance of a product regarding 
compliance based on knowledge of a product and its manufacture.'' 
Acceptable evidence-based determinations may be based on evidence 
derived through any appropriate process or control or combination of 
processes and/or controls, such as (but not limited to):
     Design validation;
     Manufacturing process control audits;
     In-process manufacturing controls, measurements, and 
tests;
     Component and material testing, as defined in 16 CFR part 
1109;
     Finished product testing;
     Raw materials certification; and
     Other controls or processes that provide information about 
the safety or compliance of a product.
    The other commenter's suggested definition reads: ``High degree of 
assurance means an evidence-based determination of consistent 
performance of a product regarding compliance based on knowledge of a 
product and its manufacture. Acceptable determinations may be based on 
evidence derived through any appropriate tool or control methodology 
(or combination of tools and/or control methodologies), such as but not 
limited to:
     Design Validation
     Process Validation
     Manufacturing Process Control Audits
     Raw material validation and controls
     In-process manufacturing controls, measurements, and tests
     Component and material testing as defined at 16 CFR part 
1109
     Finished Product Testing''
    (Response 7)--The commenters are correct that certifiers can use 
process controls, mathematical techniques, simulations, and other 
aspects of a product and its manufacture, as part of the basis for 
determining whether a particular product complies with the applicable 
product safety rules with a high degree of assurance. The commenters 
also are correct that the preamble to the proposed rule (75 FR at 
28344) provided statistically based examples in the definition of a 
``high degree of assurance.'' However, a method on the commenters' list 
may be adequate for one rule, but inadequate for another. As an 
example, Design Validation may be a good technique to ensure that a toy 
does not have a hole large enough to allow access to a sharp edge or 
point. However, Design Validation may be inadequate for controlling 
lead content because its techniques are ill-suited for controlling 
continuing production of component parts. As another example, component 
part testing is a useful technique for determining the chemical content 
of lead and the prohibited phthalates, but it is inadequate for 
determining compliance to the pacifier pull tests because the entire 
product is required to conduct the test. ``A high degree of assurance'' 
is defined in general terms because it is intended to be applied to a 
wide variety of products that use many different manufacturing 
processes. Providing a list of the intended applications as part of the 
definition would introduce the risk of a manufacturer applying 
techniques that are inappropriate for evaluating the applicable 
children's product safety rule.
    Therefore, we decline to amend the definition of ``a high degree of 
assurance,'' as suggested by the commenters. Specific examples are not 
universally applicable; and therefore, they should not be included in 
the definition of ``a high degree of assurance.'' Any such list 
necessarily would be underinclusive or possibly confusing or 
misleading. Additionally, certification and periodic testing of 
children's products must be based on tests of the finished product, or 
its component parts, sufficient to show compliance (or continuing 
compliance, in the case of periodic testing) with all applicable 
children's product safety rules. A definition of a ``high degree of 
assurance,'' that includes methods other than testing, might lead some 
certifiers to conclude mistakenly that certification or periodic test 
requirements might be met by means other than testing.
    (Comment 8)--One commenter suggested that the final rule allow a 
company's prior safety record to replace product safety testing as 
evidence that a company has met the requirement for a high degree of 
assurance (``HDA''). The commenter wrote:

    The ``high degree of assurance'' should be based on an overall 
assessment of the safety record of the company. It should NOT be 
based on the results of an individual product, even if recalled or 
deemed dangerous.

    The commenter pointed out that its company had a very good safety 
record. The commenter added:

    With this record over so many years, our company should be 
deemed to have satisfied this HDA requirement and be endorsed as 
having a reasonable testing program without further inquiry.

    (Response 8)--Section 14(a)(2) of the CPSA makes clear that 
children's product certification is based upon third party testing of 
the product and not a company's safety record. For this reason, the 
final rule does not provide relief from the testing requirements in the 
statute. In addition, the commenter's suggestion that a manufacturer 
should be allowed to rely upon its prior safety record to demonstrate a 
high degree of assurance would be a difficult concept to apply in 
practice because of the likely changes in any given manufacturer's 
safety record over time and potential disagreements as to whether a 
product caused a safety problem, whether the safety problem resulted 
from product misuse, and whether safety issues had to occur at a 
particular rate of frequency before testing was warranted.
    (Comment 9)--One commenter stated that a ``high degree of 
assurance'' could be provided best by using an accredited product 
certification program that meets the requirements of the International 
Standards Organization/International Electrotechnical Commission (ISO/
IEC) Guide 65, General requirements for bodies operating product 
certification

[[Page 69488]]

systems, and the fundamentals of System 5 product certification 
requirements of ISO/IEC Guide 67, Conformity assessment--Fundamentals 
of product certification.
    (Response 9)--The various activities a certification body 
undertakes, such as testing, conformity assessment, and surveillance 
can be used to demonstrate a high degree of assurance that a product 
complies with the applicable product safety rules. However, the 
techniques used by certification bodies are not the only means a 
manufacturer could use. Process control techniques, failure modes and 
effects analyses, and other quality assurance methods, depending upon 
the product under consideration, could be as effective as certification 
body methods. Because we want to give certifiers the flexibility to 
decide which methods apply best to their particular products, we 
decline to define a ``high degree of assurance'' using ISO/IEC Guide 65 
and Guide 67 requirements. A manufacturer who wishes to use those 
requirements to ensure a high degree of assurance of compliance may do 
so. However, we reiterate that testing in support of certification of a 
children's product must be performed by a CPSC-accepted third party 
conformity assessment body whose scope of accreditation includes the 
tests required for certification, and certification of a product cannot 
be delegated to another party, such as a certification body.
    (Comment 10)--A commenter suggested that the language related to 
periodic testing intervals and sample sizes is inconsistent in the 
preamble to the proposed rule. The commenter conceded that it is 
difficult to specify the exact number of products that must be tested 
in order to reach a high degree of assurance that a product is 
compliant. The commenter noted that the response to comments section of 
the preamble to the proposed rule titled, Additional Third Party 
Testing Requirements for Children's Products, stated that ``the sample 
size for periodic testing will depend upon the number of samples that 
need to be tested to provide that statistical assurance'' (75 FR at 
28342). The commenter agreed with this statement but noted the 
inconsistency between the language used in that section and the 
language found in the response to comments section titled, The 
Reasonable Testing Program, which specifies that the testing intervals 
must provide ``reasonable assurance'' that the product meets the 
requirements of the applicable product safety rules (75 FR at 28338). 
The commenter noted that there is a difference between a ``high degree 
of assurance'' and ``reasonable assurance.'' The commenter expressed 
the belief that the testing program should be statistically based, such 
that a confidence level of 95 percent must be achieved to indicate 
compliance. This requirement would eliminate the possibility of testing 
only a single sample to indicate compliance, the commenter asserted.
    (Response 10)--In the preamble to the proposed rule, under the 
response to comments section, Additional Third Party Testing 
Requirements for Children's Products (75 FR at 28342), we stated the 
following:

    If a high degree of assurance is interpreted to be a statistical 
likelihood of not producing noncompliant products, the sample size 
for periodic testing will depend upon the number of samples that 
need to be tested to provide that statistical assurance (italics 
added) * * *

    The word ``that'' refers to ``a high degree of assurance,'' which 
appears at the beginning of the sentence. With respect to the other 
alleged inconsistencies mentioned in the comment, it is worth noting 
that the preamble to the proposed rule uses the phrase ``high degree of 
assurance'' 20 times; whereas, the codified text of the proposed rule 
does not use the term ``reasonable assurance'' at all. The term 
``reasonable assurance'' appears only once in the preamble to the 
proposed rule, in the introduction to the response to comments section 
titled, The Reasonable Testing Program, where it is listed as one of 
the previous questions that we asked in the Federal Register notice 
announcing the December 2009 public workshop.
    We also do not agree with the commenter that there should be a 
specific probability level (i.e., 95 percent) in the definition of ``a 
high degree of assurance.'' As previously noted in the preamble to the 
proposed rule (75 FR at 28344), ``we decided against defining `high 
degree of assurance' with respect to a 95 percent probability or 
confidence level because there may be difficulty in applying the 
statistical methods to all manufacturing processes.'' Many 
manufacturing processes, such as low-volume and continuous 
manufacturing, are ill-suited to use a sampling technique for quality 
control purposes. In addition, for small-volume manufacturers, the 
number of samples required to achieve 95 percent confidence could be 
excessive, even to the point of requiring all of the products 
manufactured to be tested. Because the final rule's testing 
requirements apply to a wide variety of products, manufacturers, and 
manufacturing processes, the rule must give manufacturers the 
flexibility to determine the best way to comply with the testing 
requirements.
    The intent of the definition is for a manufacturer to have a high 
degree of assurance based upon evidence (rather than only a belief) 
that all of the products manufactured are compliant with the applicable 
safety rules. Knowledge of the product's design and how the product is 
manufactured, control over component parts, measurements showing 
consistent or inconsistent performance, the associated hazard, and many 
other elements such as these, can be used to determine the number of 
samples required for certification and for the periodic testing 
intervals, as noted in the final rule.
g. Identical in All Material Respects
    Proposed Sec.  1107.2 would define ``identical in all material 
respects'' to mean that there is no difference with respect to 
compliance to the applicable rules between the samples and the finished 
product.
    (Comment 11)--Several commenters asked us to clarify the definition 
of ``identical in all material respects.'' One commenter said that the 
definition appears absolute in that it does not allow any ``difference 
with respect to compliance.'' The commenter indicated that such a 
definition would make testing requirements unnecessarily rigid and 
costly.
    Another commenter contended that the definition of ``identical in 
all material respects'' cannot be absolute. One commenter would revise 
the definition to read: `` `Identical in all material respects' means 
there is no difference between the sample and the finished product that 
could affect compliance to the applicable rules.'' Another commenter 
suggested revising the definition of ``identical in all material 
respects'' to mean ``to a high degree of assurance, there is no 
difference between the samples and the finished product that is 
material to compliance of the applicable rule.'' One commenter 
suggested that the definition of ``identical in all material respects'' 
should mean ``a manufacturer possess [sic] a reasonable belief that, 
there is no difference between the samples and the finished product is 
not materially compliant.''
    (Response 11)--We do not regard the definitions suggested by the 
commenters to be improvements of the existing definition of ``identical 
in all material respects.'' For example, defining ``identical in all 
material respects'' to mean ``there is no difference between the sample 
and the finished product that could affect compliance to the applicable 
rules''

[[Page 69489]]

appears to be so similar to the proposed definition that adopting the 
commenter's suggested definition would not alter the rule. Samples used 
for certification testing and the finished product may be different--
just not different in any way that would affect the sample's ability to 
demonstrate compliance of the finished product. The definition of 
``identical in all material respects'' is intended to emphasize that if 
anything other than the finished product is subjected to testing, then 
the characteristics of that sample must be identical to the testing of 
the finished product, insofar as complying with the applicable product 
safety rule. Otherwise, the test may not indicate that the finished 
product, in fact, complies with the applicable product safety rule.
    The second definition suggested for ``identical in all material 
respects'' (``To a high degree of assurance, there is no difference 
between the samples and the finished product that is material to 
compliance of the applicable rule'') also does not emphasize adequately 
that the finished product is what must comply with the applicable 
rules. In addition, using the phrase ``to a high degree of assurance'' 
in describing the similarity (with respect to conformance to the 
applicable rules), results in some doubt that the samples, in fact, are 
``identical in all material respects.'' Further, Sec.  1107.20(a) of 
the final rule states that manufacturers must submit a sufficient 
number of samples of a children's product, or samples that are 
identical in all material respects to the children's product, to a 
third party conformity assessment body for testing to support 
certification. The number of samples selected must provide a high 
degree of assurance that the tests conducted for certification purposes 
accurately demonstrate the ability of the children's product to meet 
all applicable children's product safety rules. Using a ``high degree 
of assurance'' in the definition of ``samples'' would involve a double 
use of the term with no corresponding increase in clarity.
    In a similar manner, the third definition suggested for ``identical 
in all material respects,'' which uses the phrase ``a reasonable 
belief,'' introduces doubt that the samples are identical to the 
finished product with respect to compliance. Additionally, ``a 
reasonable belief'' standard in the definition would result in an 
inquiry into the state of mind of a particular manufacturer and could 
lead to disagreements between the CPSC and manufacturers over whether a 
manufacturer's belief was ``reasonable'' in a specific instance. 
Further, the commenter did not explain or clarify their interpretation 
of the phrase ``materially compliant''; the absence of such an 
explanation or interpretation would result in additional uncertainty in 
the definition.
    Nevertheless, on our own initiative, we have revised the definition 
of ``identical in all material respects'' to make minor clarifications 
to improve the definition's accuracy and consistency with the statute. 
For example, the proposed definition would refer to ``compliance to the 
applicable rules;'' the final definition now adds: ``bans, standards, 
or regulations'' after ``rules,'' to be more consistent with section 
14(f)(1) of the CPSA. We also have revised the phrase ``between the 
samples and the finished product'' to read: ``between the samples to be 
tested for compliance and the finished product distributed in 
commerce,'' to reflect that, under the final rule, the items that must 
be ``identical in all material respects'' are the samples that are to 
be tested for compliance (as opposed to samples that are tested for any 
other purpose) and the product that is actually distributed in 
commerce.
    (Comment 12)--One commenter urged us to state that the phrase 
``identical in all material respects'' is intended to be consistent 
with the ``objectively reasonable basis'' standard from 16 CFR part 
1633, and that we would consider individual subordinate mattresses that 
meet the requirements of 16 CFR 1633 to be ``identical in all material 
respects'' to the qualified prototype to which a specific mattress is 
subordinate.
    (Response 12)--We agree with the commenter that ``identical in all 
material respects'' is consistent with a demonstration on an 
``objectively reasonable basis,'' as stated in 16 CFR 
Sec. thnsp;1633.4(b)(3). We consider individual subordinate mattresses 
that meet the requirements of 16 CFR part 1633 to be ``identical in all 
material respects'' to the qualified prototype to which a specific 
mattress is subordinate.
h. Manufacturer
    Proposed Sec.  1107.2 would define ``manufacturer'' as ``the 
parties responsible for certification of a consumer product pursuant to 
16 CFR part 1110.''
    We received no comments on this definition and have finalized it 
without change.
i. Manufacturing Process
    Proposed Sec.  1107.2 would define ``manufacturing process'' as 
``the techniques, fixtures, tools, materials, and personnel used to 
create the component parts and assemble a finished product.''
    (Comment 13)--Two commenters noted that the proposed definition 
includes ``personnel used to create the component parts and assemble a 
finished product.'' The commenters argued that this should not be 
construed to mean that any change in the employees who are involved in 
the production of a part or product is equivalent to a change in the 
manufacturing process.
    (Response 13)--Regarding the commenters' suggestion on the 
definition of ``manufacturing process,'' the commenters may be 
confusing a change in the manufacturing process with a material change 
that could affect compliance to an applicable product safety rule. The 
commenters are partly correct that any change in personnel involved 
with a manufacturing process does not necessarily constitute a material 
change with respect to the product's compliance. However, for 
manufacturing processes that rely on high levels of craftsmanship or 
technical expertise, such a personnel change could affect compliance 
and, therefore, might be considered a material change to the 
manufacturing process.
    Therefore, we have finalized the definition of ``manufacturing 
process'' without change.
j. Production Testing Plan
    Proposed Sec.  1107.2 would define ``production testing plan'' as 
``a document that shows what tests must be performed and the frequency 
at which those tests must be performed to provide a high degree of 
assurance that the products manufactured after certification continue 
to meet all the applicable safety rules.''
    We received no comments on this definition, but, on our own 
initiative, we have chosen to remove it from the final rule. We have 
removed the definition because it is duplicative of the description and 
requirements of ``a production testing plan'' in Sec.  1107.21(c)(2) of 
the final rule.
k. Third Party Conformity Assessment Body
    Proposed Sec.  1107.2 would define ``third party conformity 
assessment body'' to mean a third party conformity assessment body 
recognized by the CPSC to conduct certification testing on children's 
products.
    We received no comments on this definition. However, on our own 
initiative, we have revised the definition by making editorial changes 
to describe more accurately our accreditation process and to indicate 
that the third party conformity assessment body's scope of 
accreditation must include the

[[Page 69490]]

applicable CPSC-required tests. Thus, the final rule now defines 
``third party conformity assessment body'' as ``a testing laboratory 
whose accreditation has been accepted by the CPSC to conduct 
certification testing on children's products. Only third party 
conformity assessment bodies whose scope of accreditation includes the 
applicable required tests can be used for children's product 
certification or periodic testing purposes.''

C. Proposed Subpart B--Reasonable Testing Program for Non-Children's 
Products

    Proposed subpart B would consist of one provision and would 
describe the ``reasonable testing program'' for non-children's 
products. For example, proposed Sec.  1107.10(a) would explain that, 
except as otherwise provided by a specific CPSC regulation or a 
specific standard prescribed by law, a manufacturer certifying a 
product pursuant to a reasonable testing program must ensure that the 
program ``provides a high degree of assurance that the consumer 
products covered by the program will comply with all applicable rules, 
bans, standards, or regulations.'' Proposed Sec.  1107.10(b) would 
state that a reasonable testing program must consist of five elements: 
(1) Product specification; (2) certification tests; (3) a production 
testing plan; (4) a remedial action plan; and (5) recordkeeping. The 
proposal would describe, in greater detail, the requirements for each 
element of the reasonable testing program.
    We received many comments on proposed subpart B. The comments 
addressed issues regarding the proposed provisions of a reasonable 
testing program on topics such as: product specifications, 
certification tests, samples for certification testing, production 
testing, remedial action, and recordkeeping. The commenters raised many 
concerns about the cost and burden of the proposal as well as practical 
issues, which illustrates the difficulty of drafting a regulation that 
can apply to many different types of products and manufacturing 
processes, yet still provide sufficient guidance to enable 
manufacturers to implement the requirements of a reasonable testing 
program effectively. Consequently, we are deferring action with respect 
to finalizing subpart B. We will reserve subpart B in the final rule 
and, except as stated otherwise in this preamble, continue evaluating 
the issues raised in the comments regarding a reasonable testing 
program. We note, however, that our deferral of action does not remove 
the responsibility of manufacturers, under section 14(a)(1) of the CPSA 
to certify based on tests of their products or based on reasonable 
testing programs that their products comply with all rules, bans, 
standards, or regulations applicable to such products.

D. Proposed Subpart C--Certification of Children's Products

    Proposed subpart C would contain the requirements for the 
certification of children's products. The proposed subpart C would 
consist of seven sections and would implement most requirements in 
section 14(i)(2)(B) of the CPSA.
1. General Comments
    Several commenters raised issues with respect to proposed subpart C 
generally, or on general concepts, such as testing.
    (Comment 14)--One commenter argued that the terms ``reasonable 
assurance'' and ``sufficient number of samples'' are likely to result 
in widely disparate interpretations. The commenter urged that 
``reasonable assurance'' should be defined as a statistically 
significant number with a confidence level of 95 percent, based on 
testing enough samples to provide statistical validity. The commenter 
said that setting a specific confidence limit would enable us to 
enforce this section by avoiding subjectivity and by creating 
uniformity and consistency among manufacturers and conformity 
assessment bodies.
    The commenter noted that ``upstream'' controls (i.e., processes, 
inspections, and tests conducted prior to or during product assembly 
intended to assure product quality), product risk assessments, and 
design analyses are reasonable tools for manufacturers to use but 
currently are not rigorous or specific enough to ensure ``downstream'' 
compliance. Until they are, compliance must be determined by final 
product testing, the commenter asserted.
    (Response 14)--We decline to adopt the suggestion to set a 95 
percent confidence level based on testing enough samples to provide 
statistical validity. Many manufacturing processes, such as those using 
continuous flow processes, are ill-suited to use a sampling technique 
for quality control purposes. In addition, for small-volume 
manufacturers, the number of samples required to achieve 95 percent 
confidence could be excessive, even to the point of requiring all of 
the products manufactured to be tested.
    Because the final rule's testing requirements apply to a wide 
variety of children's products, as well as to manufacturers of various 
sizes and different manufacturing processes, the rule must be flexible 
enough to allow the manufacturer to determine the best way to comply 
with the rule's requirements. We are aware of numerous ``upstream'' 
quality assurance tools and processes that are widely used to ensure 
high levels of product performance. For example, techniques such as 
component part testing are particularly well-suited for determining 
compliance with the lead content limits for accessible parts on 
children's products. Numerous international standards address quality 
control and assurance processes applied ``upstream'' in the product 
production process and can be used to extend the maximum periodic 
testing interval. Thus, we disagree with the commenter that none of 
these quality assurance tools and processes is rigorous or specific 
enough to ensure compliance.
    (Comment 15)--One commenter recommended a system of product risk 
assessment that would tailor the third party certification schedule for 
low-volume firms, as follows:

    Children's products: High-risk children's products would require 
third party certification annually. Low-risk children's products 
would require third party certification every three years.

    The commenter said that any test failure automatically would move 
the product into the next most stringent category. This system would 
focus the inspection of products on products that are the most 
dangerous to public safety. The commenter stated that an unintended 
consequence of this strategy would be to reward firms that make the 
safest products.
    (Response 15)--The commenter appears to be applying the proposed 
low-volume exception to periodic testing (stated in proposed Sec.  
1107.21(d)) to certification testing. The low-volume exception did not 
apply to certification testing. There is no schedule for any 
manufacturer for when a product is subject to certification testing, 
regardless of production volume. Instead, periodic testing is required 
for children's products to ensure continued compliance with a high 
degree of assurance.
    Section 14(a)(2) of the CPSA requires certification testing for 
children's products before they may be imported for consumption or 
warehousing or distributed in commerce. This initial testing of 
children's products does not depend on product risk. Continuing 
compliance is demonstrated through periodic testing for children's 
products, which specifies a maximum testing

[[Page 69491]]

interval, based on the implementation of a periodic testing plan by the 
manufacturer. The final rule allows a manufacturer to consider risk to 
the extent it permits consideration of ``the potential for serious 
injury or death resulting from a noncompliant product'' as a factor in 
determining the appropriate periodic testing interval under a periodic 
testing plan.
    Regarding the commenter's suggestion of devising a system of 
categorizing all children's and non-children's products subject to an 
applicable rule into risk categories, such a system would require a 
separate rulemaking effort and is beyond the scope of this rule.
    (Comment 16)--One commenter noted that the proposed rule did not 
use recognized industry terminology consistently. The commenter noted 
that the proposed rule relies on the terms ``test'' or ``testing,'' as 
if all consumer product safety requirements could be evaluated by 
performing tests to ensure ongoing compliance. The commenter noted 
that, while full product testing is appropriate in some cases, current 
consumer product safety regulations imply or specify evaluation 
activities, not considered to be actual testing (e.g., inspections, 
reviews, audits), may be appropriate.
    The commenter noted that it recommended previously that we refer to 
Annex A of ISO/IEC 17000, Conformity assessment--Vocabulary and general 
principles, which provides a general description of the functional 
approach to activities that constitute conformity assessment, to 
address the question of the interpretation of the use of the terms 
``test'' or ``testing.''
    (Response 16)--The word ``test'' was chosen because of its use in 
section 14(a) of the CPSA. ``Certification tests'' are tests on samples 
of the product that are identical in all material respects to the 
finished product. Section 14(i) (2)(B)(i) of the CPSA states that 
children's products are subject to testing periodically and after a 
material change.
    The words ``test'' and ``testing'' are used throughout the final 
rule to mean a process used to determine whether a product is compliant 
with the applicable product safety rules. The process is geared to the 
particular product and specific safety rule. As such, testing may 
include inspection of labels and manuals, audits, and measurements to 
determine compliance with the applicable product safety rules. We 
believe that the definition of ``test'' and ``testing'' are clear.
    (Comment 17)--One commenter noted that we are not allowing the use 
of existing federally registered certification marks of third party 
conformity assessment bodies as an acceptable substitute for a 
certificate of conformity. The commenter added that introducing the new 
certificate of conformity will cause immediate confusion in the 
marketplace. The commenter suggested that we should have to justify, 
through a comprehensive and independent study, why we are departing 
from the existing system and why our proposed system would be better 
and more reliable.
    Another commenter stated that we should recognize certification 
marks issued by established third party certification programs as a 
substitute for the certificates of conformity described in the proposed 
rule when the product has been certified as compliant with associated 
product standards through a program that reflects CPSA requirements by 
an ISO/IEC Guide 65-accredited certification body.
    (Response 17)--Certification marks are symbols that a manufacturer 
is authorized to affix to their product to indicate that the product 
has been certified by a certification body. Third party certification 
involves testing, declarations of conformance, factory inspections, and 
continuing surveillance activities. The certification body attests that 
the product complies with the specified product safety rules that were 
evaluated.
    A certification mark does not contain the information required on a 
certificate by section 14(g) of the CPSA and cannot be used as a 
substitute for a Children's Product Certificate. Section 14(a)(2) of 
the CPSA requires manufacturers of a consumer product that is subject 
to an applicable children's product safety rule to issue a certificate 
certifying conformance of the children's product to the applicable 
children's product safety rules. Section 14(a)(2) of the CPSA does not 
allow a party other than the manufacturer, importer, or private labeler 
to issue a Children's Product Certificate.
    Since the CPSIA was enacted in 2008, we have not observed immediate 
confusion in the marketplace regarding certificates. As noted above, 
certification marks cannot be used as a substitute for certificates if 
there is confusion in the marketplace. Thus, because section 14(a) of 
the CPSA requires the manufacturer to issue a certificate of 
conformity, an independent study is not warranted.
    Furthermore, on August 12, 2011, the President signed into law H.R. 
2715, which amended the CPSIA in several respects. One provision in 
H.R. 2715 requires us to seek public comment on opportunities to reduce 
the cost of third party testing requirements consistent with assuring 
compliance with any applicable consumer product safety rule, ban, 
standard, or regulation. Elsewhere in this issue of the Federal 
Register, we have published a notice seeking public comment on the 
issues in H.R. 2715. H.R. 2715 further requires us to review the public 
comments and states that we may prescribe new or revised third party 
testing regulations if we determine that such regulations will reduce 
third party testing costs consistent with assuring compliance with the 
applicable consumer product safety rules, bans, standards, and 
regulations.
    (Comment 18)--One commenter noted that a publisher of ordinary 
books may have varying titles and content, but all of the books are 
made of the same materials in the same manner. The commenter asserted 
that the differences between ordinary books are not material to 
compliance with the applicable rules. Accordingly, the commenter said 
that having accredited third party conformity assessment body testing 
for a finished book would constitute finished product testing for all 
other books (International Standard Book Numbers, or ISBNs) that do not 
materially differ from the tested book with respect to compliance with 
CPSC safety standards. The commenter said a publisher with a reasonable 
testing program and a product without material changes could rely on 
the component part certifications for all materials published within a 
2-year period.
    (Response 18)--Section 14(i)(5)(A)(i) of the CPSA, as amended by 
H.R. 2715, excludes ordinary books and ordinary paper-based printed 
materials from the third party testing requirements in 14(a)(2) of the 
CPSA. Additionally, the final rule reserves subpart B, which would 
pertain to a reasonable testing program for non-children's products. 
Therefore, it is unnecessary for us to consider how third party testing 
results for a book might be extended to all other books.
    (Comment 19)--One commenter asserted that only good design and 
comprehensive design review by qualified individuals will improve the 
safety of products. Therefore, the commenter suggested that we require 
``design hazard analysis'' in the certification of children's products 
section of the final rule. ``Design hazard analysis,'' according to the 
commenter, identifies potential safety hazards in a consumer product 
that result from the design of the product. It involves determinations 
made by skilled professionals including engineers, chemists, and 
biologists about the features of a product that might result in

[[Page 69492]]

safety hazards. The commenter asserted that the CPSC has the legal 
authority to require design hazard analysis of consumer products.
    The commenter suggested the following changes:
     In Subpart C, Certification of Children's Products, insert 
a new subsection 1107.20(a), Children's Product Certification. (Note: 
The commenter may have meant to create a new subsection (a) and 
renumber the remaining subsections accordingly.) The new subsection 
would state:

    Prior to submitting samples of a children's product for testing 
by a third party conformity assessment body, manufacturers must 
conduct a design hazard analysis and produce a design appraisal of 
the product that identifies and characterizes the potential hazards 
associated with that consumer product that are related to the design 
of a product. The design appraisal should include, at a minimum, an 
engineering, chemical, and biological analysis of the product, as 
appropriate to the type of product and the materials contained in 
the product.

     Insert in Sec.  1107.26(c), Remedial Action, after ``* * * 
children's product safety rules'':

    If the manufacturer knows or reasonably should know that the 
failure of the product is related to the product's design, the 
manufacturer shall conduct a revised design hazard review and 
produce a new design appraisal.

    (Response 19)--We agree that designing safety into a children's 
product is an important part of a comprehensive quality control 
program. We decline, however, the commenter's suggestion to include in 
the final rule requirements mandating design hazard analyses for 
children's products. The current rulemaking is intended to implement 
the testing and certification requirements of section 14(a) and section 
14(i)(2)(B) of the CPSA. Requiring a design hazard analysis goes beyond 
the statutory requirements because such an analysis would consider 
factors other than the factors required to demonstrate compliance with 
the applicable product safety rules. This action would extend the final 
rule to address activities that would occur before a product is 
manufactured.
    Currently, given the range of products that are subject to section 
14 of the CPSA, we have no practical means of identifying or evaluating 
individuals whose credentials and experience, under the commenter's 
suggested changes, would render them qualified to conduct design hazard 
analyses on products. Although the final rule does not require 
manufacturers to conduct a design hazard analysis on their products, 
manufacturers are free to engage in such analyses when developing or 
manufacturing a product.
    Further, as explained the section on remedial action in part 
III.D.7. below, we have removed from the final rule, the requirement 
for a remedial action plan for children's products.
    (Comment 20)--One commenter suggested that final testing and 
certification should defer to the Occupational Safety and Health 
Administration (OSHA)-designated Nationally Recognized Testing 
Laboratory (NRTL) certification program by determining that such 
products, as they are manufactured and distributed for consumer use, 
are per se compliant with the proposed testing and certification rules. 
The commenter said we would still maintain our authority to recall 
products, seek civil penalties, and other remedies available to the 
Commission, if violations are found.
    (Response 20)--Pursuant to section 14(a)(3)(C) of the CPSA, we have 
chosen to designate accrediting bodies that are full-member signatories 
to the International Laboratory Accreditation Cooperation--Mutual 
Recognition Arrangement (ILAC-MRA) to conduct third party testing. 
Given that children's products intended for the U.S. market are 
manufactured in nations throughout the world, we decided to avoid 
designating accreditation programs or entities that are recognized only 
in a specific region, nation, or locality. The reasons for this are: 
(1) To keep the program as simple as possible for use by manufacturers, 
private labelers, importers, testing laboratories, and other interested 
parties; (2) to establish uniform requirements regardless of location; 
(3) to establish a program that is manageable within agency resources; 
and (4) to maintain a degree of consistency in the procedures used by 
the designated accrediting bodies.
    Moreover, the commenter appears to misstate testing requirements. 
Consumer products are not tested for whether they are compliant with 
the testing and certification rules (i.e., parts 1107 and 1109), 
rather, consumer products are tested for compliance with the applicable 
rules, bans, standards, and regulations which the CPSC enforces. 
Moreover, section 14(i)(2)(B)(i) of the CPSA requires such testing 
periodically and when there has been a material change. Therefore, 
continued testing is required by the statute and ``per se conformance'' 
with the applicable product safety rules is not allowed. Additionally, 
section 14(a) of the CPSA requires manufacturers (including importers) 
to certify that their products comply with the applicable product 
safety rules. This responsibility cannot be delegated to another party, 
such as a certification body.
    The qualifications of testing laboratories performing certification 
tests are outside the scope of this final rule. Such qualifications are 
addressed in the various notices of requirements that we have published 
pursuant to section 14(a)(3) of the CPSA.
    Finally, we acknowledge that the recently-enacted H.R. 2715 
requires us to seek public comment on ``opportunities to reduce the 
cost of third part testing requirements consistent with assuring 
compliance with any applicable consumer product safety rule, ban, 
standard, or regulation.'' One topic which H.R. 2715 requires us to 
address pertains to ``the extent to which evidence of conformity with 
other national or international governmental standards may provide 
assurance of conformity to consumer product safety rules, bans, 
standards, or regulations applicable under [the Consumer Product Safety 
Act].'' Elsewhere in this issue of the Federal Register, we have 
published a notice inviting public comment on the issues identified in 
H.R. 2715, so the commenter's argument would be more appropriately 
raised and addressed in that proceeding. We note, however, that very 
few products covered under the OSHA-designated Nationally Recognized 
Testing Laboratory certification program would be children's products 
for which third party testing would be required. Moreover, those 
products that are subject to the OSHA certification program would 
likely be covered by CPSC regulations, if at all, for which the only 
requirement is a General Conformity Certificate based on a reasonable 
testing program. OSHA certification testing may be a sufficient basis 
for such certifications depending on the product and the type of 
testing involved. Given that CPSC does not have jurisdiction over 
products when the risks of injury associated with the consumer product 
could be eliminated or reduced to a sufficient extent by the actions of 
OSHA, there may be very little overlap between a particular product's 
results under OSHA's testing program and any CPSC required testing.
    (Comment 21)--One commenter suggested an evidenced-based approach 
to certification, based on historical performance and risk for the 
product type and manufacturing process. The commenter suggested that an 
importer/retailer may implement a program requiring:
     Sample testing using materially identical components to be 
completed before production begins;

[[Page 69493]]

     Certification from samples selected during the start of 
production; and
     Periodic testing as the item remains in production.
    At each of these stages, a representative set of samples would be 
pulled to cover all tests related to the applicable rules, bans, 
standards, and regulations.
    The commenter suggested the following example:

    For a child's solid rubber ball, more than 10,000 finished 
products that are materially identical could be made in less than 
one manufacturing shift. In this scenario, it would be appropriate 
to select samples when material changes occur and or meet 
historically defined frequency intervals in order to maintain and 
validate that products meet all rules, bans, standards, and 
regulations.

    The commenter would like the CPSC to acknowledge that for 
children's products, samples selected from a lot of finished product 
over 10,000 pieces, but produced in a short time period, may be used to 
satisfy certification testing and periodic testing requirements.
    (Response 21)--Section 14(a)(2) of the CPSA requires a manufacturer 
or importer of a children's product subject to a children's product 
safety rule to submit sufficient samples of the children's product, or 
samples that are identical in all material respects to the product, to 
a third party conformity assessment body whose accreditation has been 
accepted by us to be tested for compliance with the applicable 
children's product safety rules. This requirement is also set forth in 
Sec.  1107.20(a) of the final rule. Thus, the commenter's first two 
suggestions--to choose samples for testing using materially identical 
components, and to select samples during the start of production, would 
likely fulfill the statutory requirement to submit samples that are 
identical in all material respects to the product, for purposes of 
certification testing.
    Section 14(i)(2)(B)(i) of the CPSA requires, in part, that we 
establish protocols and standards to ensure that a certified children's 
product is tested for compliance periodically. Section 1107.21 of the 
final rule details periodic testing requirements for children's 
products. Accordingly, the commenter's suggestion regarding periodic 
testing is required by the statute, and our expectation with regard to 
periodic testing is articulated in the final rule.
    Regarding the commenter's suggestion regarding short-period 
production runs of children's products, the same samples may be used 
for certification and periodic tests. If a testing plan is designed and 
implemented to meet the requirements of Sec. Sec.  1107.20 and 1107.21, 
then the requirements to demonstrate the product's ability to meet all 
applicable children's product safety rules and ensure that continuing 
production is compliant may be met in this manner. If the manufacturer 
has a high degree of assurance of the children's product compliance, 
and the production run does not extend beyond the maximum periodic 
testing interval, then no third party periodic tests may be required. 
However, no children's product may enter into commerce without a 
Children's Product Certificate based on passing test results from a 
CPSC-accepted third party conformity assessment body certification.
    (Comment 22)--Some commenters stated that the safety performance of 
a finished product may not be able to be based solely on the compliance 
of its component parts. The commenters asserted that some requirements 
can be evaluated only with finished product samples. The commenters 
asked us to clarify which products and which regulations would be 
amenable to component part testing. One commenter suggested that 
electrical safety standards and regulations (i.e., fire and shock 
hazard testing) should not be allowed to rely solely on component part 
testing.
    (Response 22)--The commenters are correct that some requirements 
can be evaluated only with finished product samples, and not with tests 
on component parts. However, both this final rule and the final rule on 
Conditions and Requirements for Relying on Component Part Testing or 
Certification, or Another Party's Finished Product Testing or 
Certification, to Meet Requirements in Sections 14(a) and 14(i) of the 
Consumer Product Safety Act (16 CFR part 1109) contain restrictions on 
the use of component part testing. For example, Sec.  1107.20(c) of the 
final rule states that except where otherwise specified by a children's 
product safety rule, component part testing pursuant to 16 CFR part 
1109 may be used to support the certification testing requirements of 
this section. The final rule for 16 CFR part 1109 states that if a 
certifier has doubts about whether component part testing is sufficient 
to demonstrate compliance with all the applicable rules, bans, 
standards, or regulations, those doubts should be resolved in favor of 
testing the finished product.
    Therefore, the commenters' concerns are addressed by the 
requirements of the two rules.
    (Comment 23)--One commenter expressed concern about the final 
rule's effect on laboratory testing capacity and suggested removing 
references to statistical sampling and the use of ANSI/ASQ Z1.4, 
Sampling Procedures and Tables for Inspection by Attributes and Z1.9, 
Sampling Procedures and Tables for Inspection by Variables for Percent 
Nonconforming, for determining the number of samples required for 
certification testing, production testing, and periodic testing. The 
commenter said the frequency of testing and the number of samples 
tested should be set or determined by retailers and manufacturers to 
assure compliance with all applicable rules, bans, standards and 
regulations. The commenter stated that referencing the use of 
statistical sampling, confidence levels, and ANSI/ASQ Z1.4 & Z1.9 
implies a very significant increase in the number of samples required 
for product testing.
    (Response 23)--For manufacturers or importers using tests on 
samples of a product to ensure continued compliance to the applicable 
product safety rules, the rule permits manufacturers or importers to 
determine the frequency of testing and the number of samples tested to 
ensure compliance. Retailers only have testing or certification 
obligations if they are importers. The commenter did not explain how 
removing references to quality management and control standards and 
sampling procedures, which are not required, but may be used 
voluntarily by certifiers, would address the issue of third party 
conformity assessment body testing capacity. However, the proposed 
rule's reference to ASNI/ASQ Z1.4 and Z1.9 had the potential to mislead 
manufacturers because it would use the term ``Acceptable Quality Level 
(AQL).'' An AQL can be interpreted as an acceptable percentage of 
nonconforming products, which is not appropriate when applied to the 
case of compliance of products to health and safety standards. 
Therefore, we have deleted references to these standards in the final 
rule.
    (Comment 24)--One commenter noted that the Labeling of Hazardous 
Art Materials Act (LHAMA) established the requirements for the labeling 
of art materials in ASTM D-4236, which is referenced in 16 CFR 
1500.14(b)(8). The commenter asked that we: (1) Clarify the meaning of 
this provision with respect to the certification of art materials under 
section 14 of the CPSA; and (2) state whether LHAMA is a labeling rule 
under the Federal Hazardous Substances Act (FHSA) that would not 
require testing and certification to LHAMA under the CPSA. The 
commenter further proposed the use of existing facilities and 
procedures

[[Page 69494]]

allowed for LHAMA to certify compliance with the CPSIA.
    (Response 24)--LHAMA requires that the manufacturer, importer, or 
repackager of art materials have a product's formulation reviewed by a 
toxicologist for its potential to cause chronic adverse health effects. 
A conformance statement on the product is used to certify that the 
product has been so reviewed. However, section 101 of the CPSIA 
introduces additional testing requirements for lead in children's 
products beyond what is required under LHAMA, so certification of art 
materials under LHAMA is not necessarily equivalent to testing for lead 
pursuant to section 101 of the CPSIA and section 14 of the CPSA.
    Regarding whether LHAMA is a labeling requirement under the FHSA 
that would not require testing and certification, we note that LHAMA 
does not contain a performance standard similar to those in consumer 
product safety rules but rather, requires labeling in the form of a 
conformance statement that the product formulation has been reviewed by 
a toxicologist. The requirements of LHAMA are similar to the labeling 
requirements of the FHSA, of which LHAMA is a part. Therefore, third 
party testing for conformance to LHAMA is not required. Art materials 
designed or intended primarily for children 12 years of age or younger 
would have to be tested by a CPSC-accepted third party conformity 
assessment body to demonstrate compliance with the lead content limits, 
but they would not require third party testing and certification to the 
LHAMA requirements.
    Regarding using facilities for LHAMA to certify to CPSIA 
requirements, section 14(f)(2)(C) of the CPSA states that a certifying 
organization, as defined in appendix A to 16 CFR 1500.14(b)(8), ``meets 
the requirements'' for consideration as a third party conformity 
assessment body ``with respect to the certification of art materials 
and art products required under this section or by regulations 
prescribed under the Federal Hazardous Substances Act.'' Thus, an 
organization that is a certifying organization with respect to LHAMA is 
a third party conformity assessment body and may test children's art 
materials and art products for compliance with LHAMA. Thus, insofar as 
certifying organizations and LHAMA are concerned, no changes to the 
proposed rule are necessary. Accreditation requirements for testing for 
compliance with the CPSIA, other than LHAMA, are beyond the scope of 
this rulemaking and may be addressed in a separate rulemaking.
    (Comment 25)--Multiple commenters noted that manufacturers have 
established first party testing laboratories that are accredited to 
ISO/IEC 17025:2005(E) (more commonly known as ISO/IEC 17025:2005 and 
how it will be referred to in the preamble), General requirements for 
the competence of testing and calibration laboratories. The commenters 
suggested that for manufacturers with such laboratories, we should 
allow test results from those facilities to be used for children's 
product certification purposes. Many commenters suggested that one half 
of the testing for certification should be allowed at in-house testing 
facilities; others recommended that the number of samples sent to third 
party conformity assessment bodies for certification purposes be 
reduced ``to a minimum.'' Some commenters stated that we should 
recognize internal laboratories as a way to reduce dependence on third 
party conformity assessment bodies. The reasons for the suggestions 
include: A desire to reduce testing costs, to encourage other 
manufacturers to develop their own internal testing facilities, and to 
promote continuous product improvements.
    (Response 25)--Section 14(a)(2) of the CPSA explicitly requires 
that testing of children's products be conducted by a third party 
conformity assessment body as a condition of certification. Further, 
third party conformity assessment bodies must have a CPSC-accepted 
accreditation for the scope of the testing undertaken in support of 
product certification. Unless the manufacturer's laboratory is a CPSC-
accepted firewalled conformity assessment body, first party testing 
facilities, regardless of ISO/IEC 17025:2005 accreditation status, 
cannot be used for children's product certification purposes.
    We note that, in response to these comments and concerns raised 
about cost, Sec.  1107.21(d) of the final rule allows manufacturers 
using in-house testing laboratories accredited to ISO/IEC 17025:2005 to 
ensure continued compliance, to conduct periodic testing at a maximum 
testing interval of three years.
    We further note that on August 12, 2011, the President signed into 
law H.R. 2715, which amended the CPSIA in several respects. One 
provision in H.R. 2715 requires us to seek public comment on 
opportunities to reduce the cost of third party testing requirements, 
consistent with assuring compliance with any applicable consumer 
product safety rule, ban, standard, or regulation. Elsewhere in this 
issue of the Federal Register, we have published a notice seeking 
public comment on the issues in H.R. 2715. H.R. 2715 further requires 
us to review the public comments and states that we may prescribe new 
or revised third party testing regulations if we determine that such 
regulations will reduce third party testing costs, consistent with 
assuring compliance with the applicable consumer product safety rules, 
bans, standards, and regulations.
    (Comment 26)--One commenter noted that carpets and rugs currently 
require flammability testing in accordance with 16 CFR parts 1630 and 
1631 and suggested that there is no need for an additional flammability 
testing procedure for youth carpets and rugs.
    (Response 26)--Section 14(a)(2) of the CPSA requires third party 
conformity assessment body testing of children's products (or samples 
that are identical in all material respects) subject to a children's 
product safety rule for initial certification purposes. Further, 
section 14(f)(1) of the CPSA defines a ``children's product safety 
rule'' as a consumer product safety rule enforced by the Commission. 
Section 3(a)(2) of the CPSA defines a ``children's product'' as a 
consumer product designed or intended primarily for children 12 years 
of age or younger. Thus, because youth carpets and rugs are children's 
products and are subject to the consumer product safety rules 16 CFR 
parts 1630 and 1631, third party testing is required.
    For these reasons, initial certification testing for youth carpets 
and rugs must be performed by a CPSC-accepted third party conformity 
assessment body whose accreditation includes the scope of the tests. 
Second, children's products are subject to requirements for periodic 
testing, material changes, undue influence, and recordkeeping in 
subpart C of the final rule. The test methods in 16 CFR parts 1630 and 
1631 are still applicable.
    (Comment 27)--One commenter stated that the statutory requirements 
for certificates in section 14(a) of the CPSA impose strict and 
detailed requirements for the contents and availability of certificates 
of conformity that document compliance of a children's product as 
demonstrated through test results. A certificate based on accredited 
third party conformity assessment body testing must be issued by the 
manufacturer and private labeler of any children's product that is 
subject to a CPSC rule, and it must comply not only with the 
requirements of section 14(g) of CPSA, but also with the requirements 
of a finished product certifier's reliance on component materials 
testing certification. Thus, a finished product certifier could rely on

[[Page 69495]]

a test report showing passing test results for one or more component 
materials used in the product, based upon accredited third party 
conformity assessment body testing conducted by another person.
    The commenter stated that including this information in the 
certificate accompanying the finished children's product would create 
logistical nightmares for the manufacturers and private labelers of 
children's products. The commenter did not object to the 
``recordkeeping'' requirements in proposed Sec.  1107.26; however, the 
commenter urged us to note that compliance with these requirements 
should make it unnecessary for the manufacturer or private labeler of 
the finished children's product, to ensure that every certificate 
required under section 14 of the CPSA accompanies the product or 
shipment of products, is furnished to each distributor or retailer of 
the product.
    The commenter also urged us to adopt certificate requirements that 
reflect the key concept in the tracking label provisions, which require 
that the manufacturer (as well as the ``ultimate purchaser'') of the 
finished children's product be able to ``ascertain'' certain 
information similar to what is required for certificates of conformity. 
The commenter suggested that certificates, like ``tracking labels,'' 
for children's products under section 103 of CPSIA, could be mandated 
to use codes or other means to point all interested parties to a source 
where such information readily can be found. This code could be contact 
information, where the manufacturer or private labeler could include an 
Internet URL for the manufacturer's Web site, where the information 
could be accessed.
    (Response 27)--Section 14(g)(1) of the CPSA and 16 CFR 1110.11 
require specific information on each certificate. In addition, section 
14(g)(3) of the CPSA states that the required certificate 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. However, 16 CFR 1110.9 
allows a manufacturer to file certificates electronically by providing 
an Internet URL for the manufacturer's Web site, where the information 
could be accessed, as the commenter suggested. We note that the listing 
of component parts or component part test results does not have to be 
included on the finished product certificate.
    (Comment 28)--Multiple commenters mentioned the high costs 
associated with third party testing and noted that the proposed rule 
under-recognizes the in-house quality assurance and testing 
capabilities of manufacturers.
    (Response 28)--We are aware of many effective quality assurance 
techniques that are widely used to control quality in product 
manufacturing. However, section 14(a)(2) of the CPSA requires third 
party conformity assessment body testing of children's products for 
initial certification. Unless the manufacturer's in-house testing 
facility is a CPSC-accepted firewalled conformity assessment body, data 
from those facilities cannot be used for children's product 
certification purposes. No exclusion is included in the statute for 
first party certification or periodic testing of children's products 
based on the costs of testing.
    In response to these comments, and in response to concerns about 
the cost of third party testing, Sec.  1107.21(d) of the final rule 
allows manufacturers who are implementing a production testing plan to 
ensure the compliance of continuing production, to conduct third party 
periodic testing at a maximum testing interval of two years. Further, 
the final rule allows manufacturers using in-house testing laboratories 
accredited to ISO/IEC 17025:2005 to ensure continued compliance by 
conducting third party periodic testing at a maximum testing interval 
of three years. We believe this balances the desire for unbiased 
objective test results with the cost concerns expressed in the 
comments.
    Additionally, on August 12, 2011, the President signed into law 
H.R. 2715, which amended the CPSIA in several respects. One provision 
in H.R. 2715 requires the CPSC to seek public comment on opportunities 
to reduce the cost of third party testing requirements consistent with 
assuring compliance with any applicable consumer product safety rule, 
ban, standard, or regulation. Elsewhere in this issue of the Federal 
Register, we have published a notice seeking public comment on the 
issues in H.R. 2715. H.R. 2715 further requires us to review the public 
comments and states that we may prescribe new or revised third party 
testing regulations if we determine that such regulations will reduce 
third party testing costs consistent with assuring compliance with the 
applicable consumer product safety rules, bans, standards, and 
regulations.
2. Proposed Sec.  1107.20--General Requirements
a. The Number of Samples
    Proposed Sec.  1107.20(a) would require manufacturers to submit a 
sufficient number of samples of a children's product, or samples that 
are identical in all material respects to the children's product, to a 
third party conformity assessment body for testing to support 
certification. The proposal would require that the number of samples 
selected provide a high degree of assurance that the tests conducted 
for certification purposes accurately demonstrate the ability of the 
children's product to meet all applicable children's product safety 
rules.
    (Comment 29)--Two commenters wanted more detail on what is meant by 
``a sufficient number of samples.'' The commenters expressed concern 
that, if the number is left to conformity assessment bodies, there will 
be too much variability among conformity assessment bodies about what 
is a sufficient number.
    (Response 29)--A ``sufficient number of samples'' are the number of 
samples necessary to give the manufacturer or importer a high degree of 
assurance of the product's compliance with the applicable rules when 
tested. Because a high degree of assurance is based upon the 
manufacturer's or importer's knowledge of the product and its 
manufacture, a sufficient number of samples will vary based on those 
factors. For example, for products with highly consistent part-to-part 
manufacturing processes (e.g., die casting), fewer samples may be 
necessary to give the manufacturer/importer a high degree of assurance 
of compliance. For processes with more variability (such as hand 
assembly), it is likely that more samples will be necessary to achieve 
the same high degree of assurance.
    The commenters also may have misunderstood the role of conformity 
assessment bodies in the testing and certification requirements of the 
rule. The conformity assessment body does not specify the number of 
samples to be tested. The manufacturer or importer specifies to the 
conformity assessment body the number of samples to be tested.
    Finally, on our own initiative, we revised the second sentence to 
say that the number of samples selected must ``be sufficient to'' 
provide a high degree of assurance. We added this language to be 
consistent with the requirement to ``submit a sufficient number of 
samples'' language in the first sentence of the section. This change is 
also consistent with section 14(a)(2)(A) of the CPSA, which requires a 
manufacturer to ``submit sufficient samples of the children's product'' 
for testing.
    (Comment 30)--One commenter stated that the language covering

[[Page 69496]]

samples needs to be clarified. The commenter stated that the proposal 
would require testing with a ``sufficient number of samples'' to 
provide a ``high degree of assurance'' (for minimum certification 
testing), while maintaining that the sampling does not have to meet 
minimum standards of statistical confidence. However, the commenter 
noted that the comments accompanying the proposed rule recognize that 
``there may be difficulty in applying statistical methods to all 
manufacturing processes.''
    The commenter further stated that if testing a ``sufficient number 
of samples to provide a high degree of assurance'' is required when 
applying a reasonable testing program to children's products, then we 
should provide guidance on alternatives that certifiers may use to 
fulfill the duty to justify their plan, were they to choose anything 
less than a random statistical sample. The commenter noted that 
historically, we have relied on a sample of 12 or fewer units, without 
regard to the size of the production run and that certain statistical 
models used by auditors impose a maximum sample of 25 units, no matter 
the size of the cohort from which the samples are selected.
    Based on these points, the commenter recommended that we delete the 
requirement to test a ``sufficient number of samples to provide a high 
degree of assurance'' under a reasonable testing program. The commenter 
said that the premise of a ``reasonable testing program''--in order to 
differentiate it from the mandatory periodic testing required for 
children's products not relying upon a reasonable testing program--must 
be that, for some specific products, testing will not be the basis for 
certifying to the applicable rule. The commenter stated that we 
appropriately acknowledged the implications of differences between 
product categories and industries attempting to develop programs when, 
in the preamble to the proposed rule, we observed: ``A manufacturer may 
develop the scope and details of each element of a reasonable testing 
program based on knowledge and expertise regarding the product and its 
manufacturing processes'' (75 FR at 28345). The commenter stated that 
this discretion also must extend to the sample selection method of test 
programs, provided that all population elements have a chance of 
selection and due care is exercised to avoid selection bias through 
documented procedures.
    The commenter also stated that we should suggest separate 
regulations for specific products that may warrant prescribed methods, 
as has been done with bicycle helmets. The commenter expressed the 
belief that this is the kind of evidence-based decision making we 
envisioned in rejecting a single definition of ``high degree of 
assurance'' within a reasonable testing program for non-children's 
products.
    (Response 30)--Although subpart B, describing a reasonable testing 
program, has been reserved in the final rule, the concept of 
certification testing and testing a sufficient number of samples to 
provide a high degree of assurance of compliance with applicable rules, 
bans, standards, and regulations remains in the final rule with regard 
to children's products in Sec.  1107.20(a). We disagree with the 
commenter's assertion that ``testing with a sufficient number of 
samples to provide a high degree of assurance'' requires the testing 
method to meet minimum standards of statistical confidence. In the 
preamble to the proposed rule (75 FR at 28344), the discussion of a 
high degree of assurance intentionally avoided choosing a statistically 
based definition for the term. Therefore, the certifier is allowed to 
choose other means, using its knowledge of the product and how it is 
manufactured, to determine what would be a sufficient number of 
samples. A certifier may use statistical methods, but the determination 
of a sufficient number of samples to achieve a high degree of assurance 
is not required to be statistically based.
    We decline to provide guidance on alternatives that certifiers may 
use to fulfill the duty to justify their plan if they were to choose 
anything other than a random statistical sample. With the wide variety 
of children's products, manufacturers, and manufacturing processes that 
will be subject to the final rule, it would be impractical to attempt 
to provide guidance applicable to all or to attempt to provide 
individualized guidance for some or all products, as requested by the 
commenter. Because the certifier typically possesses greater knowledge 
of the product and how it is made than other parties possess, the 
certifier is in the best position to determine how to achieve a high 
degree of assurance that its products are compliant with all the 
applicable children's product safety rules.
    Regarding the commenter's observation of the CPSC's use of 12 or 
fewer samples, those samples were not used for children's product 
certification purposes. Thus, tests run by CPSC staff are not germane 
to the discussion of product certification. Depending upon the 
manufacturer's knowledge of a children's product and its manufacture, a 
sufficient number of samples to provide a high degree of assurance of 
compliance with the applicable children's product safety rules may be 
greater, or fewer, than 12.
    The commenter may be misunderstanding the rule as it relates to 
random samples. In proposed Sec.  1107.22, the testing of random 
samples was required only during periodic tests of children's products 
subject to an applicable children's product safety rule. Pursuant to 
H.R. 2715, the testing of ``random samples'' to ensure continued 
compliance has been replaced with testing of ``representative samples'' 
to ensure continued compliance. Given the change in the statute, we 
have decided to remove Sec.  1107.22 in the final rule. Regardless, 
certification testing in the proposed rule never required the selection 
of random samples for children's products.
    For children's products, section 14(a)(2)(A) of the CPSA requires 
that every manufacturer or private labeler of a children's product:

    Submit sufficient samples of the children's product, or samples 
that are identical in all material respects to the product, to a 
third party conformity assessment body accredited * * * to be tested 
for compliance with such children's product safety rule.

    Therefore, the statute requires children's products to be tested 
before they can be certified, and the statutory requirement for third 
party periodic testing applies.
    We agree that there are instances in which it may be preferable to 
specify a testing program in a particular regulation, and several of 
our existing regulations require such programs. Should a particular 
standard at some point necessitate consideration of such an approach, 
we will provide due consideration of how to specify, within the 
statutory framework that requires third party certification and third 
party periodic testing, such a particular testing program.
    (Comment 31)--One commenter expressed concern about the requirement 
to perform certification tests. The commenter said they did not believe 
that a requirement to test pre-production samples should be part of a 
reasonable testing program, adding that it may be impractical for 
seasonal items or short production runs. The commenter stated that 
preproduction samples cannot be tested because we will not accept the 
test results on samples as test results on the finished product. The 
commenter asked: if the preproduction samples fail and the retailer/
importer has the product reworked by the manufacturer to correct any 
defects, and the production units pass tests to meet all applicable

[[Page 69497]]

standards, then why should it matter if the samples failed, as long as 
the final product meets the requirements? The commenter expressed the 
belief that sample testing should be optional, not required.
    (Response 31)--Although subpart B, describing a reasonable testing 
program, has been reserved in the final rule, the concept of 
certification testing and testing a sufficient number of samples to 
provide a high degree of assurance of compliance with applicable rules, 
bans, standards, and regulations remains in the final rule with regard 
to children's products in Sec.  1107.20(a). Section 1107.20(a) states 
that certification tests must be performed on samples that are 
identical in all material respects to the children's product 
distributed in commerce. Thus, finished children's product samples or 
preproduction samples are acceptable for certification test purposes if 
their performance for the test under consideration is the same as the 
finished product.
    The commenter did not explain why they believe that certification 
tests may be impractical for seasonal or short production run items. 
Thus, we cannot respond to the commenter's concern. The final rule 
requires passing certification test results before a Children's Product 
Certificate can be issued.
    With regard to the commenter's concern regarding a test failure of 
preproduction samples, the commenter may have misunderstood the 
requirements of certification testing. The commenter described a 
circumstance in which a manufacturer tested samples for compliance to a 
regulation. Upon receiving a failing test result, the manufacturer 
addressed the causes of the failing test results and conducted new 
certification tests on samples of the ``corrected'' product and 
received passing test results. This describes an acceptable process for 
initial product certification.
    We disagree with the commenter's suggestion that certification 
tests should be optional. Section 14(a)(2) of the CPSA expressly refers 
to testing as being the basis of a certification and does not make such 
testing optional.
    (Comment 32)--A commenter suggested that the final rule not require 
finished product/component part testing and should allow samples that 
are identical in all material respects to the finished product to be 
tested. The commenter added that testing on samples since the 1950s has 
not resulted in a recall for failing to comply with the applicable 
rule. Thus, requiring finished product/component testing would be 
extremely costly and burdensome and would not increase safety. The 
commenter would revise the rule to make it clear that component parts 
that are materially similar to the finished part can be used for 
certification testing.
    (Response 32)--We agree with the commenter regarding the testing of 
samples. Section 1107.20(a) states that samples must be identical in 
all material respects to the children's product.
    We also agree with the commenter's suggestion that we clarify the 
rule; therefore, we have revised Sec.  1107.20(c) to state that 
component part testing may be used for certification of a finished 
product.
    (Comment 33)--One commenter expressed the belief that the 
manufacturer should determine the number of units to be tested, but 
added that they do not believe that statistical sampling is 
appropriate.
    (Response 33)--A manufacturer may use statistical or qualitative 
means to determine how many units of a product are needed for 
certification testing to give the manufacturer a high degree of 
assurance that the product complies with the applicable rules. The 
manufacturer is not required to use statistical methods, but they 
should be prepared to describe how their technique shows the product's 
compliance.
    (Comment 34)--One commenter noted that products using ``food 
grade'' materials have supplier certificates stating that these 
materials meet the requirements of the Federal Food, Drug, and Cosmetic 
Act (FFDCA) and/or the packaging requirements for the Coalition of 
Northeastern Governors (CONEG). The commenter suggested supplementing 
these certificates with other analyses, as part of the certification 
(e.g., gas chromatography--mass spectrometry, GC-MS) and a reasonable 
testing program. The commenter said that such assurances also can be 
used, consistent with the Commission's authority under section 3 of the 
CPSIA, to reduce the burden of testing on manufacturers of consumer 
products. Because the proposed rule would acknowledge that children's 
product manufacturers who implement a reasonable testing program have a 
reduced third party test burden from the standpoint of third party 
periodic testing, the commenter said that such compliance assurances 
can be incorporated into a program for children's products as well.
    (Response 34)--Section 14(a)(2) of the CPSA requires third party 
conformity assessment body testing of children's products as a 
condition of certification. Additionally, those third party conformity 
assessment bodies must have a CPSC-accepted accreditation for the scope 
of the testing undertaken in support of product certification. ``Food 
grade'' materials and CONEG requirements are not conducted by these 
laboratories and do not necessarily demonstrate compliance with the 
requirements of applicable children's product safety rules or 
compliance with the third party testing requirement in section 14(a)(2) 
of the CPSA. Accordingly, we cannot adopt those certifications in lieu 
of the certification required under section 14(a)(2) of the CPSA.
    While manufacturer-supplied certificates stating that these 
materials meet FFDCA or CONEG requirements may not be used as the basis 
for a third party-supported product certification, they can be used as 
part of a production testing plan implemented to extend the maximum 
periodic testing interval from one year to two years if they are 
sufficient to demonstrate compliance with a children's product safety 
rule such as the lead content limits. We note that some food additives 
are GRAS, or ``generally recognized as safe.'' However, these 
designations might not be based on scientific analyses or testing. 
Instead, the GRAS status for a material might be based on longstanding 
acceptance or belief.
    Furthermore, on August 12, 2011, the President signed into law H.R. 
2715, which amended the CPSIA in several respects. One provision in 
H.R. 2715 requires us to seek public comment on opportunities to reduce 
the cost of third party testing requirements, consistent with assuring 
compliance with any applicable consumer product safety rule, ban, 
standard, or regulation. H.R. 2715 directs us to seek public comment on 
seven specific issues, including the extent to which the use of 
materials subject to regulations of another government agency that 
requires third party testing of those materials may provide sufficient 
assurance of conformity with an applicable consumer product safety 
rule, ban, standard, or regulation without further third party testing. 
Elsewhere in this issue of the Federal Register, we have published a 
notice seeking public comment on the issues in H.R. 2715.
    H.R. 2715 further requires us to review the public comments and 
states that we may prescribe new or revised third party testing 
regulations if we determine that such regulations will reduce third 
party testing costs consistent with assuring compliance with the 
applicable consumer product safety rules, bans, standards, and 
regulations. Should new information

[[Page 69498]]

become available, the Commission may revisit this issue in the future.
b. The Interaction Between the Manufacturing Process and Samples
    Proposed Sec.  1107.20(b) would state that, if the manufacturing 
process for a children's product consistently creates parts that are 
uniform in composition and quality, a manufacturer may submit fewer 
samples to provide a high degree of assurance that the finished product 
complies with the applicable children's product safety rules. If the 
manufacturing process for a children's product results in variability 
in the composition or quality of children's products, a manufacturer 
may need to submit more samples to provide a high degree of assurance 
that the finished product complies with the applicable children's 
product safety rules.
    (Comment 35)--One commenter stated that phrases, such as 
``sufficient number of samples'' and ``variability in composition or 
quality,'' can be confusing. The commenter said that regular internal 
monitoring and periodic testing should be able to provide sufficient 
data and information to support any assessment of product quality.
    (Response 35)--The commenter is correct that internal monitoring 
and testing can provide data to support the assessment of product 
quality. Because Sec.  1107.20 applies to both tightly and loosely 
controlled manufacturing processes, we emphasize in Sec.  1107.20(b) of 
the final rule that the number of samples needed to give the certifier 
a high degree of assurance of the product's compliance is affected by 
how well the product's manufacturing process controls those variables 
associated with compliance. A sufficient number of samples would be the 
quantity of samples selected for certification testing that gives the 
certifier a high degree of assurance that the product complies with all 
the applicable children's product safety rules.
    ``Variability in the composition or quality,'' for purposes of 
Sec.  1107.20, means unit-to-unit differences of a product that can 
affect its compliance with the applicable children's product safety 
rules.
    We have finalized this paragraph without change.
    (Comment 36)--One commenter stated that regular internal monitoring 
and periodic testing should be able to provide sufficient data and 
information to support any assessment of product quality. The commenter 
noted that this procedure is commonly practiced by many manufacturers 
at present.
    (Response 36)--Section 1107.20(b) of the final rule states, in 
part, that if the manufacturing process for a children's product 
consistently creates finished products that are uniform in composition 
and quality, a manufacturer may submit fewer samples to provide a high 
degree of assurance that the finished product complies with the 
applicable children's product safety rules. We interpret the comment to 
assert that internal manufacturing controls and regular testing should 
obviate the need for numerous samples for product certification. The 
commenter is correct in that the manufacturer's internal controls and 
testing can provide information to use in determining how many 
certification test samples would be required to give the certifier a 
high degree of assurance of the product's compliance with the 
applicable rule.
c. Component Part Testing
    Proposed Sec.  1107.20(c) would state that, except where otherwise 
specified by a children's product safety rule, a manufacturer may 
substitute component part testing for finished product testing pursuant 
to 16 CFR part 1109, if the component part, without the remainder of 
the finished product, is sufficient to determine compliance for the 
finished product.
    (Comment 37)--One commenter requested that we make an explicit 
statement about component testing indicating that certain components 
are exempt from testing and certification. The commenter was concerned 
that, without specific language, the final customer will not accept 
component testing if exempt parts are not tested. The commenter 
recommended revising proposed Sec.  1107.20(c) as follows:

    (c) Except where otherwise specified by a children's product 
safety rule, a manufacturer may substitute component part testing 
for complete product testing pursuant to 16 CFR [part] 1109 if the 
component part, without the remainder of the finished product, is 
sufficient to determine compliance for the entire product. Component 
part testing can be used to substantiate compliance for those 
children's products where part of the product has been exempted from 
testing pursuant to Section 1500.91. (Italics indicate proposed 
language.)

    (Response 37)--We agree that language similar to what the commenter 
suggested would be helpful, but we believe that the commenter's change 
is more appropriate in the rulemaking pertaining to component part 
testing, specifically with component part testing for the lead content 
of children's products under proposed 16 CFR 1109.12. Therefore, we 
have considered this comment under the proposed rule for component part 
testing.
    On our own initiative, we have revised Sec.  1107.20(c) to state: 
``Except where otherwise specified by a children's product safety rule, 
component part testing pursuant to 16 CFR part 1109 may be used to 
support the certification testing requirements of this section.'' We 
made these changes to simplify the language in Sec.  1107.20(c) and to 
remove descriptions of 16 CFR part 1109 to avoid potential confusion 
over what the final rule requires and what 16 CFR part 1109 mandates.
    (Comment 38)--One commenter stated that raw (or base) material 
testing is critical to its ability to develop programs to comply with 
the law. The commenter noted that, although it is a component 
manufacturer, it has more than 384,000 stock-keeping units (SKUs). 
These hundreds of thousands of products could be seen as different 
combinations of a smaller population of subcomponents and raw 
materials. The commenter stated that it is through working with this 
smaller population of subcomponents and raw materials that they can 
effectively manage quality in areas such as lead levels.
    (Response 38)--Component part testing of raw materials is beyond 
the scope of this rule and is considered in the final rule on 
Conditions and Requirements for Relying on Component Part Testing or 
Certification, or Another Party's Finished Product Testing or 
Certification, to Meet Testing and Certification Requirements (16 CFR 
part 1109). However, in that final rule, in many cases, raw materials 
or subcomponents may be considered component parts, as long as due care 
has been taken to ensure that no action subsequent to component part 
testing has adversely affected the raw materials' or subcomponents' 
compliance with the applicable product safety rules.
d. Remedial Action
    Proposed Sec.  1107.20(d) would state that, if a product sample 
fails certification testing, even if other samples have passed the same 
certification test, the manufacturer must investigate the reasons for 
the failure and take remedial action. A manufacturer would not be 
allowed to certify the children's product until the manufacturer 
establishes with a high degree of assurance that the finished product 
complies with all applicable children's product safety rules.
    (Comment 39)--Two commenters raised questions about what action 
must be taken when a product fails a test. One commenter interpreted 
the proposed rule to mean that all similar toys are

[[Page 69499]]

also not compliant, resulting in a factory shutdown. The other 
commenter noted that different products vary in design and manufacture, 
and if one product fails, it does not mean that other products would 
have the same problem.
    (Response 39)--Section 1107.20(d) of the final rule states that if 
a product sample fails certification testing to the applicable 
children's product safety rule(s), even if other samples have passed 
the same certification test, the manufacturer must investigate the 
reasons for the failure and take the necessary steps to address the 
reasons for the failure. Generally, certification testing of a 
children's product requires all samples tested to pass the applicable 
children's product safety standard. Otherwise, the certifier cannot 
ensure with a high degree of assurance that the tests conducted for 
certification purposes accurately demonstrate the ability of the 
children's product to meet all applicable children's product safety 
rules. However, some regulations allow for some individual samples of a 
test set to exceed the limit but still comply with the regulation. For 
example, in the Standard for the Surface Flammability of Small Carpets 
and Rugs (FF 2-70) in 16 CFR part 1631, there is an allowance within 
the standard for a failure during a test and a prescribed action. 
Because the regulation specifies the procedure for dealing with a 
sample test failure, or through labeling, we would view such a properly 
labeled product as meeting the applicable product safety standard.
    A test failure for one children's product applies only to that 
product and is not necessarily representative of all products in the 
factory. An exception to this might be a test on a component part used 
in many products. In that circumstance, the nature of the test failure 
and the component part's use in the other products would affect which 
products the failing test result applies. For example, if a component 
part over the lead content limit is inaccessible, the use of that 
component part would not make the children's product noncompliant.
    Additionally, on our own initiative, we have revised Sec.  
1107.20(d) by adding the phrase: ``to the applicable children's product 
safety rule(s)'' after the phrase ``if a product sample fails 
certification testing.'' This change is for clarification purposes and 
is not intended to have a substantive effect on the final rule. We also 
replaced the phrase ``take remedial action'' with the phrase ``take the 
necessary steps to address the reasons for the failure'' because we 
have removed the remedial action plan requirement in Sec.  1107.25 from 
the final rule. We discuss the removal of the remedial action plan 
requirement in part III.D.7. of this document, below.
3. Proposed Sec.  1107.21 Periodic Testing
a. General Periodic Testing Requirements
    Proposed Sec.  1107.21(a) would implement the periodic testing 
requirement in section 14(i)(2)(B)(i) (renumbered by H.R. 2715 from 
section 14(d)(2)(B)(i)) of the CPSA by requiring each manufacturer to 
conduct third party periodic testing at least annually, except as 
otherwise provided in proposed Sec.  1107.21(b) and (d), or as provided 
in regulations under this title. The proposal also would explain that 
manufacturers may need to conduct third party periodic tests more 
frequently than on an annual basis to ensure a high degree of assurance 
that the product being tested complies with all applicable children's 
product safety rules and that more frequent third party periodic 
testing may help a manufacturer identify noncompliant products quicker 
and, as a result, may limit the scope of any potential product recall. 
In addition, more frequent third party periodic testing may reduce the 
manufacturer's liability for civil penalties resulting from a 
noncompliant product, reduce potential damage to a manufacturer's 
reputation, and increase the manufacturer's confidence in the 
effectiveness of the third party periodic testing.
    (Comment 40)--One commenter asserted that the language of proposed 
Sec.  1107.21 is not explicitly limited to children's products. The 
commenter recommended that the language in the final rule be revised so 
that the term ``manufacturer'' is changed to the phrase ``manufacturer 
of a children's product'' to clarify that Sec.  1107.21 applies only to 
children's products. The commenter also stated that the same revision 
should be made throughout subpart C, wherever the term ``manufacturer'' 
appears without the qualifier ``of a children's product.''
    (Response 40)--We believe it is clear that Subpart C applies only 
to children's products. While we believe the commenter's suggested 
change is unnecessary, we have made other revisions to the text and 
have added a reference to manufacturers of children's product in Sec.  
1107.21(a) of the final rule to reiterate that the requirement applies 
only to children's products.
    On our own initiative, we have revised Sec.  1107.21 to reflect 
changes to the periodic testing frequency in Sec.  1107.21(b), (c), and 
(d) of the final rule, to mention component part testing, and to make 
nonsubstantive clarifications. For example, Sec.  1107.21(a) of the 
final rule states: ``All periodic testing must be conducted by a third 
party conformity assessment body.'' The proposed rule had mentioned 
third party testing in proposed Sec.  1107.21(b), but not in proposed 
Sec.  1107.21(a), so adding this sentence to a revised Sec.  1107.21(a) 
of the final rule reinforces the notion that periodic testing of 
children's products must be done by a third party conformity assessment 
body. We have reorganized Sec.  1107.21 to state the general 
requirements at Sec.  1107.21(a) and then identify different options 
for third party periodic testing frequencies at Sec.  1107.21(b), (c), 
and (d). Thus, for example, we have modified and moved the annual 
periodic testing mentioned in proposed Sec.  1107.21(a) to Sec.  
1107.21(b) in the final rule, and we have combined it with the periodic 
test elements that were at proposed Sec.  1107.21(c). Consequently, 
Sec.  1107.21(b) of the final rule states that a manufacturer must 
conduct third party periodic testing to ensure compliance with the 
applicable children's product safety rules at least once a year, except 
as otherwise provided in Sec.  1107.21(c) and (d), or as provided in 
our regulations. (The final rule states that the periodic testing under 
Sec.  1107.21(b) must be done ``once a year,'' as opposed to 
``annually,'' to eliminate potential confusion in determining how to 
calculate the proper interval for periodic testing.) Under Sec.  
1107.21(b), the manufacturer must conduct periodic testing at least 
once a year when using a periodic test plan. Section 1107.21(b)(1) of 
the final rule (regarding the periodic test plan) is substantially the 
same as proposed Sec.  1107.21(c)(1), except that the final rule states 
that manufacturers must develop a periodic test plan to ``ensure with a 
high degree of assurance'' that children's products continue to comply 
with all applicable children's product safety rules. (The proposed rule 
stated that the manufacturer must develop a periodic test plan to 
``assure that children's products'' continue to comply.) Section 
1107.21(b)(2), ``Testing Interval,'' is substantially the same as 
proposed Sec.  1107.21(c)(2), except that, for consistency, the final 
rule refers simply to a ``testing interval,'' rather than a ``periodic 
testing interval.'' (The proposed rule had used different terms, such 
as ``periodic testing interval,'' ``testing interval,'' ``interval,'' 
and ``interval for periodic testing,'' for the same concept.)
    (Comment 41)--One commenter supported third party testing for the 
initial certification for any new products and said that any major 
changes in

[[Page 69500]]

design, critical component changes, or meeting changing regulations 
should require recertification by third party testing bodies. The 
commenter also supported periodic testing by third party conformity 
assessment bodies of any products, providing that a much more refined 
and more specific requirement can be presented and confirmed by a 
proper authority. The commenter noted that it would be difficult and 
extremely risky to leave such a decision and ruling to the related 
parties. However, the commenter supported the earlier proposal of 
component part testing that certifies recognized components for toy 
production because it would enhance the elimination of certain 
repetitive and redundant testing on the finished product.
    (Response 41)--The commenter was unclear what it meant by a 
``proper authority'' or which parties are the ``related parties'' 
dealing with the difficulty and risk of periodic testing. In the final 
rule, the certifier (domestic manufacturer or importer) of a children's 
product must determine the frequency of periodic testing and the number 
of samples to be tested. The frequency of testing (within specified 
maximum periodic testing intervals) and the number of samples required 
must be sufficient to give the certifier a high degree of assurance 
that continuing production or importation of the children's product 
continues to meet the requirements of all applicable children's product 
safety rules.
    The commenter did not indicate what factors should be added to the 
periodic testing requirements to make them more refined or specific. 
Thus, we have no basis to modify the rule to account for such factors. 
Further, identifying or creating a ``proper authority'' to confirm 
periodic testing programs would present practical difficulties due to 
the number of products requiring periodic testing plans and the variety 
of manufacturing techniques used in their production. Because periodic 
testing requirements apply to many different types of children's 
products and manufacturers, and because manufacturing techniques for 
those products vary widely, one set of refined or specific requirements 
for periodic testing is unlikely to be applicable to all children's 
products that require periodic testing.
    (Comment 42)--One commenter noted that some children's products are 
not produced on a regular basis, and more than one year may pass 
between production runs. Because there are no production units on which 
to perform periodic testing, the commenter suggested that an 
``Inactive'' product status be created for a children's product that 
has passed certification testing--but currently is not being produced. 
Once production resumes, periodic testing can be performed on the new 
units.
    (Response 42)--A new ``Inactive'' status is unnecessary because 
periodic testing of children's products is only required for continuing 
production after certification. If, in the commenter's example, more 
than a year passes between production runs, when production 
recommences, the final rule requires periodic tests on new production 
runs to assure continued compliance. The certifier must use due care to 
ensure that no material change has occurred in the product's design or 
manufacturing process, including the sourcing of component parts. 
Otherwise, new certification tests must be conducted on the newly 
manufactured product.
    (Comment 43)--One commenter noted that while the proposed rule 
would accept the use of component part testing for certification 
purposes, it does not address its use for periodic testing. The 
commenter would revise proposed Sec.  1107.21(c)(1) to include language 
allowing for the use of a component part testing program to meet the 
periodic testing requirements. The commenter stated that it could 
foresee customers requiring the development of a periodic testing 
program as a contractual requirement.
    Another commenter remarked that the proposed rule does not 
recognize items that are exempt from testing pursuant to 16 CFR 
1500.91, Determinations regarding lead content for certain materials or 
products under section 101 of the Consumer Product Safety Improvement 
Act.
    (Response 43)--Section 1107.21(a) of the final rule states that 
manufacturers must conduct third party periodic testing. This testing 
is to ensure that children's products manufactured after the issuance 
of a Children's Product Certificate, or since the previous periodic 
testing was conducted, continue to comply with all applicable 
children's product safety rules. Periodic testing can use component 
part testing to ensure compliance with some or all of the applicable 
children's product safety rules. We have clarified the language of 
Sec.  1107.21(a) of the final rule to state that component part testing 
may be used to meet the periodic testing requirements, subject to the 
conditions of Sec.  1107.21.
    Regarding items that are exempt from testing for lead content, 
those items are also exempt from any periodic testing requirements. In 
16 CFR 1500.91, we have determined that these materials fall under the 
lead content limit, and no testing is required.
    (Comment 44)--One commenter stated that the testing frequency 
should be left to the manufacturer and to the market; and the commenter 
further asserted that a rule requiring manufacturers to test according 
to these standards every year is an unaffordable economic burden. The 
commenter indicated that it is unrealistic to imagine that testing cost 
savings from maintaining a reasonable testing program (as described in 
the proposed rule) will be useful because that program is ``wasteful 
and gargantuan.'' The commenter asserted that a firewalled conformity 
assessment body would be unrealistic for small businesses. The 
commenter also maintained that component part and composite testing 
likewise, will provide no relief. The commenter asked: If a firm has a 
good long-term record of safety, then why are they required to test 
according to the proposed rule?
    (Response 44)--Section 14(i)(2)(B)(i) of the CPSA requires us to 
establish protocols and standards for ensuring that children's products 
are subject to testing periodically. We have revised Sec.  1107.21 to 
allow third party periodic testing: At least once per year for 
children's product with a periodic testing plan; at least once every 
two years for children's products with a production testing plan; or at 
least once every three years for a production testing plan using an 
ISO/IEC 17025:2005-accredited testing laboratory (and provided other 
requirements are met, including, but not limited to, using that lab to 
test to the children's product safety rule(s) to which the product is 
subject). Allowing firms with a good long-term record of safety to 
forego testing their children's products would not comply with the law, 
which requires periodic testing of children's products, regardless of 
past performance.
    Regarding the commenter's assertion that children's product 
manufacturers will not attempt to save on testing costs because 
implementing a reasonable testing program is ``wasteful and 
gargantuan,'' the final rule does not require manufacturers of 
children's products to have a reasonable testing program in order to 
save on third party conformity assessment body testing costs. By 
increasing the manufacturer's options to qualify for an extension of 
the maximum periodic testing interval, we hope that more manufacturers 
wishing to implement such a program will find it advantageous to do so.

[[Page 69501]]

    Additionally, pursuant to H.R. 2715, elsewhere in this issue of the 
Federal Register, we have published a notice seeking comment on other 
techniques for lowering the cost of third party testing, consistent 
with assuring compliance with the applicable consumer product safety 
rules, bans, standards, and regulations.
    As for the commenter's remark about firewalled conformity 
assessment bodies, the final rule does not require that small 
businesses have a firewalled conformity assessment body.
    Finally, regarding the commenter's statements on component part and 
composite part testing, we address those comments in the preamble to 
the final rule, Conditions and Requirements for Relying on Component 
Part Testing or Certification, or Another Party's Finished Product 
Testing or Certification, to Meet Testing and Certification 
Requirements (16 CFR part 1109).
    (Comment 45)--One commenter stated that periodic testing is 
unnecessary because when a product is manufactured in China, the 
initial product sample is inspected by the China Entry-Exit Inspection 
and Quarantine Bureau to ensure that it complies with all European 
Union, United States, and China product safety standards. Additionally, 
the commenter observed, the China Entry-Exit Inspection and Quarantine 
Bureau will conduct the random sample in-line inspection to inspect a 
number of samples in the production twice a year. The commenter said 
that products that fail the inspection will not be allowed to be 
exported. The commenter said that the strict product safety inspections 
by China Entry-Exit Inspection and Quarantine Bureau are enough to have 
the high degree of product safety assurance and that a periodic testing 
requirement would be duplicative.
    The commenter also said that periodic testing was unnecessary 
because, as the manufacturer, they have a high degree of self-
discipline and strictly supervise their products' safety. Furthermore, 
the commenter stated that 90 percent of manufacturers have their own 
testing laboratories that conform to international laboratory standards 
and already have a series of internal product safety testing in place 
to maintain a high degree of product safety and quality assurance. In 
addition, the commenter stated that most customers require testing by 
the third party conformity assessment body per order before the 
manufacturer exports the goods to ensure a high degree of product 
safety.
    (Response 45)--The final rule requires periodic testing to be 
conducted by a CPSC-accepted third party conformity assessment body. 
China Entry-Exit Inspection and Quarantine Bureaus do not currently 
meet the conditions specified in the Consumer Product Safety 
Improvement Act for governmental conformity assessment bodies to 
participate in the CPSC's program. Further, the third party testing 
requirements apply irrespective of the level of a manufacturer's self-
supervision of product safety.
    With regard to internal testing facilities, these are considered 
first party laboratories, and their tests are not allowed for periodic 
test purposes, unless the laboratory is a CPSC-accepted firewalled 
conformity assessment body. However, if the third party laboratories 
testing the manufacturer's products for the customer are CPSC-accepted 
for the scope of the testing, test results from those laboratories may 
be used for fulfilling the periodic testing requirements. We note that 
internal testing facilities can be used to extend the maximum testing 
interval for periodic testing from one year to two years. Further, if 
the internal testing facility is ISO/IEC 17025:2005-accredited and 
other conditions are met, the maximum testing interval for periodic 
testing is extended to three years.
    (Comment 46)--One commenter stated that the importer who purchases 
a product from a manufacturer and takes possession of the product prior 
to importation does not have full visibility and knowledge of the 
manufacturing process and must treat each shipment produced by the 
manufacturer as a discrete lot.
    (Response 46)--An importer is responsible for issuing a Children's 
Product Certificate for the children's products they import. If a 
foreign manufacturer tests or certifies a children's product and 
provides the importer with the test results or certificate and other 
required documentation, then the importer, exercising due care, using 
the manufacturer's test data or certificate as a basis, may issue its 
own Children's Product Certificate.
    In this circumstance, due care by the importer involves ensuring 
that the foreign manufacturer conducts periodic tests. If the foreign 
manufacturer does not certify the children's product, but the importer 
has documentation of the manufacture and testing of the children's 
product, then the importer is responsible for certifying the children's 
product and is subject to the requirement for periodic testing. 
However, if the importer has no knowledge of the manufacture of the 
product, then it should treat each shipment as a discrete lot and 
subject it to certification testing because the importer does not know 
whether material changes have been made to the product since its last 
shipment. In this circumstance, the shipment that has undergone 
certification testing is not considered continuing production of the 
product, and is not subject to the periodic testing requirements.
b. Periodic Testing and Reasonable Testing Programs
    Proposed Sec.  1107.21(b) would state that if a manufacturer has 
implemented a reasonable testing program, as described in subpart B of 
this part (with the exception of the certification element which, for 
children's products, would have to comply with the requirements in 
proposed Sec.  1107.20), it would have to submit samples of its product 
to a third party conformity assessment body for periodic testing to all 
applicable children's product safety rules at least once every two 
years. If a manufacturer's reasonable testing program fails to provide 
a high degree of assurance of compliance with all applicable children's 
product safety rules, proposed Sec.  1107.21(b) would state that we may 
require the manufacturer to meet the periodic testing requirements in 
proposed Sec.  1107.21(c) or modify their reasonable testing program to 
ensure a high degree of assurance. One element of the reasonable 
testing program in proposed subpart B would be the ``production testing 
plan'' in proposed Sec.  1107.10(b)(3); a production testing plan would 
describe what tests must be performed and the frequency with which 
those tests must be performed to provide a high degree of assurance 
that the products manufactured after certification continue to meet all 
applicable safety rules, bans, standards, or regulations.
    (Comment 47)--One commenter recommended that we require children's 
products to be tested by a third party conformity assessment body at 
least every year, not every two years, as proposed. The commenter felt 
that many changes can occur over time in the manufacturing process, 
materials, test standards, and test protocols that could cause products 
tested infrequently to drift away from compliance with applicable 
children's product safety rules. The commenter felt that more frequent 
independent testing would be able to keep this in check better.
    (Response 47)--We disagree with the commenter's inference that a 
production testing plan will not be capable of detecting ``drift'' in a 
product's

[[Page 69502]]

compliance with the applicable safety rules. We are aware of numerous 
forms of production testing techniques that have been implemented 
successfully to control product quality and ensure continuing 
compliance.
    Manufacturers are free, however, to test their products more 
frequently than the rule would require.
    Additionally, on our own initiative, we have reorganized Sec.  
1107.21 to move the requirements that were at proposed Sec.  1107.21(b) 
to Sec.  1107.21(c) of the final rule. Furthermore, because we have 
reserved subpart B (which would pertain to a reasonable testing 
program), we have removed references to a ``reasonable testing 
program'' in subpart C and replaced them with the key element of the 
``reasonable testing program,'' which is the ``production testing 
plan.'' We decided to maintain the requirement for a production testing 
plan because children are a vulnerable population, and traditionally, 
we have had a greater interest in ensuring the safety of children's 
products. Additionally, with the passage of the CPSIA, Congress 
indicated that it intended for children's products to be subject to 
more stringent requirements than non-children's products, as 
demonstrated by the requirements for third party testing and the 
protocols and standards for continuing third party testing for 
children's products promulgated in this rulemaking.
    Section 1107.21(c)(1) of the final rule states that if a 
manufacturer implements a production testing plan, as described in 
Sec.  1107.21(c)(2), to ensure continued compliance of the children's 
product with a high degree of assurance to the applicable children's 
product safety rules, the manufacturer must submit samples of its 
children's product to a third party conformity assessment body for 
periodic testing to the applicable children's product safety rules at 
least once every two years. The 2-year period is derived from proposed 
Sec.  1107.21(b) for manufacturers who have a reasonable testing 
program. Section 1107.21(c)(1) further states that a manufacturer may 
consider the information obtained from production testing when 
determining the appropriate testing interval (up to two years) and the 
number of samples needed for periodic testing to ensure that there is a 
high degree of assurance that the other untested children's products 
manufactured during the testing interval comply with the applicable 
children's product safety rules. The preamble to the proposed rule 
noted: ``[t]he appropriate periodic testing interval may vary for a 
manufacturer depending on the manufacturer's knowledge of the product 
and its manufacturing processes'' for the factors to consider when 
determining the periodic testing interval under proposed Sec.  
1107.21(c)(2) (renumbered to Sec.  1107.21(b)(2) in the final rule) (75 
FR at 28349). This concept applies equally to the information obtained 
from production testing. Information gained from production testing can 
be used to determine the appropriate testing interval (up to two 
years), and so we added this concept to Sec.  1107.21(c)(1).
    Section Sec.  1107.21(c)(2) of the final rule describes the 
production testing plan, and it is substantially the same as the 
production testing plan in proposed Sec.  1107.10(b)(3) (which is 
reserved in the final rule, along with the rest of subpart B). Section 
1107.21(c)(2) explains that the production testing plan describes ``the 
production management techniques and tests that must be performed to 
provide a high degree of assurance that the products manufactured after 
certification continue to meet all the applicable children's product 
safety rules.'' It further explains that a production testing plan may 
include: recurring testing or the use of process management techniques, 
such as control charts, statistical process control programs, or 
failure modes and effects analyses (FMEAs), designed to control 
potential variations in product manufacturing that could affect the 
product's ability to comply with the applicable children's product 
safety rules.
    Section 1107.21(c)(2) also states that a manufacturer may use 
measurement techniques that are nondestructive and that are tailored to 
the needs of an individual product to ensure that a product complies 
with all applicable children's product safety rules. Thus, the tests in 
a production testing plan under Sec.  1107.21(c)(2) do not have to be 
the tests described in the applicable children's product safety rule, 
and they do not have to be conducted by a CPSC-accepted third party 
conformity assessment body. However, the implementation of the 
production testing plan still requires some testing. Purely 
mathematical techniques, such as a Failure Modes and Effects Analysis 
only, or a computer simulation of the product alone, are not allowed. 
Purely mathematical techniques, without verifying measurements, may not 
characterize the product with sufficient fidelity to predict accurately 
its compliance to the applicable rules.
    Section 1107.21(c)(2) of the final rule has revised the requirement 
in proposed Sec.  1107.10(b)(3)(iii)(B), which stated: ``Any production 
test method used to conduct production testing must be as effective in 
detecting noncompliant products as the test used for certification'' to 
``Any production test method used to conduct production testing must be 
effective in determining compliance'' in the final rule. The language 
of the proposed rule could practically be interpreted to require the 
use of the test method mandated for certification because a 
manufacturer would be unclear about what ``as effective'' means and 
therefore, use the test method for certification. We changed the 
language in the final rule to clarify the point that production testing 
does not require the use of the test method for certification. 
Additionally, Sec.  1107.10(b)(3)(iii)(C) of the proposed rule would 
state: ``If a manufacturer is uncertain whether a production test is as 
effective as the certification test, the manufacturer must use the 
certification test.'' This provision has been eliminated from the final 
rule because it is no longer necessary after the above clarification 
that production testing does not require use of the test method for 
certification.
    Finally, Sec.  1107.21(c)(3) of the final rule states that if a 
production testing plan fails to provide a high degree of assurance of 
compliance with the applicable children's product safety rules, we may 
require the manufacturer to meet the requirements of Sec.  1107.21(b) 
for a periodic testing plan to ensure a high degree of assurance of 
compliance. This is not a new requirement. Proposed Sec.  1107.21(b) 
had the same requirement for manufacturers with a reasonable testing 
program. Because we have removed the reasonable testing program and 
reserved subpart B in the final rule, the periodic testing requirement 
is no longer linked to the reasonable testing program. However, we have 
moved this requirement to the production testing plan option in Sec.  
1107.21(c)(3) and the ISO/IEC 17025:2005-accredited laboratories option 
in Sec.  1107.21(d) of the final rule.
    (Comment 48)--A commenter strongly recommended that we recognize or 
endorse certain internal in-house testing facilities that conform to 
ISO 17025:2000 standard. The commenter felt that this recognition would 
greatly expedite testing procedures and the time for certain required 
testing and reduce costs and lessen dependence on the third party 
conformity assessment bodies. Another commenter stated that we should 
recognize internal laboratories as a way to reduce dependence on third 
party conformity assessment bodies. The reasons for the suggestions 
include:

[[Page 69503]]

Better monitoring of product safety, a desire to reduce testing costs, 
encourage other manufacturers to develop their own internal testing 
facilities, and promote continuous product improvements.
    (Response 48)--We recognize that using ISO/IEC 17025:2005-
accredited laboratories for testing purposes provides an added measure 
of assurance to production testing. The laboratories are accredited by 
an independent body as competent to perform specified tests. They are 
also recognized as having instituted a management system that 
establishes procedures and properly maintains records. Laboratory 
accreditation also establishes controls concerning data integrity, 
equipment calibration, and procedures to resist undue influence over 
testing results.
    For these reasons, we have amended the final rule to include a new 
Sec.  1107.21(d), which provides a maximum periodic testing interval of 
three years for a manufacturer using an ISO/IEC 17025:2005-accredited 
laboratory for production testing purposes. The laboratory must be 
accredited by an ISO/IEC 17011:2004(E) (more commonly known as ISO/IEC 
17011:2004 and how it will be referred to in the preamble) (Conformity 
assessment--General requirements for accreditation bodies accrediting 
conformity assessment bodies) accreditation body, and must use the same 
test method(s) used for certification testing when conducting testing 
to ensure continued compliance. We chose the 3-year time period 
because: (1) Having a laboratory accredited by an independent body as 
competent to perform specified tests provides an additional measure of 
assurance in the accuracy and the integrity of the testing results; (2) 
a laboratory accredited to ISO/IEC 17025:2005 must have implemented a 
management system that establishes and follows procedures, properly 
maintains records, and establishes controls concerning data integrity 
equipment calibration, and procedures to resist undue influence; and 
(3) using the same tests as the tests used for product certification 
provides a more direct assessment of compliance to the applicable 
children's product safety rules than process control techniques. 
Section 1107.21(d)(1) of the final rule also states that manufacturers 
must conduct testing using the ISO/IEC 17025:2005-accredited testing 
laboratory frequently enough to provide a high degree of assurance that 
the children's product continues to comply with the applicable 
children's product safety rules. In addition, section 1107.21(d)(1) of 
the final rule states that a manufacturer may consider the information 
obtained from testing conducted by an ISO/IEC 17025:2005-accredited 
testing laboratory when determining the appropriate testing interval 
and the number of samples for periodic testing that are needed to 
ensure that there is a high degree of assurance that the other untested 
children's products manufactured during the testing interval comply 
with the applicable children's product safety rules.
    Section 1107.21(d)(2) of the final rule states that if the 
continued testing described in Sec.  1107.21(d)(1) fails to provide a 
high degree of assurance of compliance with all applicable children's 
product safety rules, then we may require the manufacturer to comply 
with Sec.  1107.21(b) or modify the testing frequency or number of 
samples required to ensure a high degree of assurance of continued 
compliance. Section 1107.21(d)(2) is substantially the same, in this 
respect, as proposed Sec.  1107.21(b), in requiring the use of other 
third party periodic testing options if a manufacturer's testing 
program fails to provide a high degree of assurance of compliance, 
except that Sec.  1107.21(d)(2) refers to ``continuing testing,'' 
rather than a ``reasonable testing program.''
    Section 1107.21(g) of the final rule describes the incorporation by 
reference of ISO/IEC 17025:2005 and ISO/IEC 17011:2004, as required by 
the Director of the Federal Register. This incorporation by reference 
is necessary because Sec.  1107.21(d)(1) references ISO/IEC 17025:2005 
and ISO/IEC 17011:2004.
    (Comment 49)--Two commenters stated that periodic testing or 
auditing should be considered a regular internal function. One 
commenter stated that any manufacturer with qualified internal testing 
facilities should perform such duties easily and regularly to ensure 
product quality. Having a third party conformity assessment body 
conduct periodic testing would result in a significant cost impact and 
would create production delays and difficulties. The commenter 
suggested that we not specify the frequencies of testing under 
different manufacturing conditions. The commenter stated that product 
safety rules should apply to finished products.
    Another commenter noted that a consistently good product testing 
record should reflect the competency of qualified internal testing 
facilities and expertise. Accredited and qualified in-house testing 
facilities should be able to handle this effectively and economically. 
The commenter noted that smaller manufacturers may have to use the 
services of third party conformity assessment bodies per the agreed 
schedule, which needs to be defined and specified.
    (Response 49)--The final rule requires periodic testing to be 
conducted by a CPSC-accepted third party conformity assessment body. If 
the ``qualified internal testing facility'' is a CPSC-accepted 
firewalled conformity assessment body, then tests from that conformity 
assessment body can be used for periodic testing purposes. Otherwise, 
an internal testing facility is considered a first party laboratory, 
and its test results would not be allowed for third party periodic 
testing purposes.
    Regarding the commenter's assertion of significant costs, the 
commenter did not describe how third party testing would result in 
significant costs and production difficulties relative to internal 
testing. However, a manufacturer with internal testing facilities may 
use product test data from those facilities to increase its knowledge 
of the product and its manufacture, and thus, may reduce the number of 
samples required for periodic testing purposes as a means of 
controlling costs. Section 1107.21(c)(1) of the final rule states that 
if a manufacturer has implemented a production testing plan, the 
maximum testing interval for periodic testing is extended to two years. 
Additionally, under Sec.  1107.21(d)(1) of the final rule, if the 
manufacturer uses an ISO/IEC 17025:2005-accredited testing laboratory 
for the production testing (and other requirements are met), the 
maximum testing interval is extended to three years. These methods may 
be used by a manufacturer to reduce the costs of third party conformity 
assessment body testing. (We explain the reasons for adding Sec.  
1107.21(d) to the final rule at part III.D.3.b. of the preamble.)
    We agree with the commenter on the undesirability of specifying 
testing frequencies for different manufacturing conditions. Thus, the 
final rule specifies only the maximum testing interval for periodic 
testing and lists some factors to be considered by manufacturers in 
developing their periodic test plans. We also agree with the commenter 
that product safety rules should apply to finished products.
    As noted above, pursuant to H.R. 2715, elsewhere in this issue of 
the Federal Register, we have published a notice seeking public comment 
on other techniques for lowering the cost of third party testing 
consistent with assuring compliance with the applicable consumer 
product safety rules, bans, standards, and regulations.

[[Page 69504]]

    (Comment 50)--One commenter said we should clarify what level of 
detail or generality we would allow in mandating that a production test 
plan describe the tests to be conducted or the measurements to be 
tested. The commenter assumed that a manufacturer would have the 
flexibility to create a test plan that could be applied to multiple 
products. For example, the commenter suggested that a production 
testing plan could address testing by generic specifications of 
products, such as die-cast cars or fashion dolls. However, the 
commenter said that if we expect a production testing plan to specify 
the testing details for each product, then it would be so burdensome as 
to be economically not feasible.
    (Response 50)--The use of production testing as a means to increase 
the maximum periodic test interval to two years is intended to be 
general in nature and flexible enough to be adaptable to many different 
products and manufacturing processes. It is the manufacturer's 
responsibility to tailor its production testing to its specific 
products. As stated in Sec.  1107.21(c)(2) of the final rule, 
production testing is intended to ensure continued compliance of the 
product to the applicable children's product safety rules with a high 
degree of assurance. It is not required that a manufacturer's 
production testing plan specify all testing details for each product. 
However, Sec.  1107.21(c)(2)(i) of the final rule specifies that a 
production testing plan must include a description of the process 
management techniques used, the tests to be conducted, or the 
measurements to be taken; the intervals at which the tests or 
measurements will be made; the number of samples tested; and the basis 
for determining that the combination of process management techniques 
and tests provide a high degree of assurance of compliance if they are 
not the tests prescribed for the applicable children's product safety 
rule. This is necessary because techniques and test methods other than 
those prescribed in the applicable children's product safety rules may 
be used in production testing and are needed to show the effectiveness 
of the production testing plan.
    (Comment 51)--Two commenters stated that, although we acknowledged 
that a production testing plan could include procedures such as process 
management techniques, statistical process control programs, or failure 
mode analysis, the proposed rule would describe a rather rigid product 
testing plan. One commenter characterized the following two 
requirements as ``a rigid product testing plan'': (1) The requirement 
for each site to have a separate production testing plan, and (2) the 
production testing interval should be short enough to ensure that, if 
the samples selected for production testing comply with an applicable 
rule, ban, standard, or regulation, there is a high degree of assurance 
that the untested product will comply with the applicable rule, ban, 
standard, or regulation. The commenter urged us to acknowledge more 
clearly that the elements of a production test plan enumerated in the 
rule are not the only elements that we will recognize and that other 
processes, such as statistical process control mechanisms, also may be 
used to show compliance.
    One commenter suggested that the terms ``production testing plan'' 
and ``remedial action plan'' be replaced with ``production testing plan 
or procedures'' and ``remedial action plan or procedures'' because the 
use of the word ``plan'' may be interpreted too narrowly to allow for 
the range of methods that manufacturers may use to meet the 
requirements.
    (Response 51)--Manufacturers may use production testing plans with 
any procedure that is effective in detecting noncompliant products 
(with the requirement that purely mathematical methods with no testing 
are not allowed). Statistical process control mechanisms, properly 
applied, are acceptable methods for production testing. The production 
testing plan implemented at each manufacturing site may be identical, 
if appropriate; but each site must have identifiable production testing 
specific to the products produced at that site. On our own initiative, 
we have added language to Sec.  1107.21(c)(2)(ii) that clarifies this 
point. This is a matter of documentation, and the commenter has not 
provided a reason why this creates a problem. The final rule does not 
mandate a specific testing interval for all products. Rather, the 
requirement in the final rule is for production testing to be effective 
in detecting noncompliant products with whatever fixed or variable 
testing interval achieves a high degree of assurance of compliance to 
the applicable product safety rules.
    We decline to adopt the suggestion to change ``production testing 
plan'' to ``production testing plan or procedures.'' Dictionary 
definitions of ``plan'' and ``procedure'' are so similar that, to use 
both terms would be redundant. We believe that the description of a 
production testing plan in Sec.  1107.21(c) of the final rule provides 
a sufficient description of its scope.
    Additionally, because the final rule does not require a remedial 
action plan for children's products, the suggestion to replace the term 
``remedial action plan'' with ``remedial action plan or procedures'' is 
no longer applicable.
    (Comment 52)--One commenter supported the acknowledgement that the 
same production testing plan that is available to the manufacturing 
site and the importer of record (retailers) is sufficient. The 
commenter gave the example of a manufacturer who developed a production 
testing plan and demonstrated to their customers (the importers of 
record or retailers) that their production testing plan provides a high 
degree of assurance of compliance. The commenter said that importers 
could validate critical aspects of the plan through factory audits and 
evaluations, production inspections that ensure that the testing plan 
records are present and match the specifications, and periodic testing 
using a CPSC-accepted third party conformity assessment body.
    (Response 52)--An importer can arrange for another party (e.g., a 
foreign manufacturer) to develop and conduct production testing for a 
product. The same production testing plan from another party may be 
used by multiple importers as a means of increasing the importers' 
maximum periodic test interval to two years. The importer, as the 
product certifier, must use due care to ensure that the implementation 
of a production testing plan ensures with a high degree of assurance 
that continuing production complies with the applicable product safety 
rules.
    (Comment 53)--One commenter noted that proposed Sec.  1107.21(b) 
would specify that if a manufacturer's reasonable testing program fails 
to provide a high degree of assurance of compliance with all applicable 
children's product safety rules, we may require the manufacturer to 
meet the requirements of proposed Sec.  1107.21(c) or modify its 
reasonable testing program to ensure a high degree of assurance of 
compliance. The commenter asked who would determine whether a 
reasonable testing program provides a high degree of assurance of 
compliance, and how.
    (Response 53)--With regard to the language in proposed Sec.  
1107.21(b) referenced by the commenter, because we have reserved the 
reasonable testing program option for periodic testing in the final 
rule, we have moved that language to Sec. Sec.  1107.21(c)(3) and 
(d)(2) (renumbered in the final rule) and modified it to refer to the 
production testing plan option with a maximum periodic testing interval 
of two years and/or the testing by an ISO/IEC

[[Page 69505]]

17025:2005-accredited testing laboratory option with a maximum periodic 
test interval of three years. With these changes in mind, we will 
decide, based on the available evidence, whether a children's product's 
production testing plan provides a high degree of assurance of 
continuing compliance to the applicable children's product safety 
rules.
    (Comment 54)--One commenter noted that the voluntary establishment 
of a reasonable testing program for a children's product increases the 
period between periodic tests to--at least once every two years--from 
the requirement of annual periodic testing for children's products 
without a reasonable testing program. The commenter suggested that we 
consider the costs involved in establishing and maintaining a 
reasonable testing program, and noted that a reasonable testing program 
reasonably warrants a more relaxed periodic testing frequency standard, 
particularly when the manufacturing process inherently results in 
uniform production, with very little variability in the composition or 
quality.
    The commenter also noted that the preamble to the proposed rule 
stated that not all periodic testing was required to be conducted by a 
third party conformity assessment body (75 FR at 28348). In addition, 
the commenter pointed out that the preamble to the proposed rule also 
stated that the appropriate periodic testing interval ``may vary for a 
manufacturer depending on the manufacturer's knowledge of the product 
and its manufacturing processes'' (75 FR at 28349).
    The commenter urged us to permit a manufacturer of a children's 
product with a reasonable testing program in place to determine when to 
obtain third party conformity assessment body testing of ordinary 
children's books or other children's paper-based printed products under 
a testing frequency standard of at least once every four years. The 
commenter noted that third party conformity assessment body testing 
still would occur in response to a material change to the children's 
product.
    (Response 54)--The final rule extends the maximum testing interval 
for periodic testing from one to two years for manufacturers who have 
implemented a production testing plan as a means of ensuring continued 
compliance of the product to the applicable children's product safety 
rules. The production testing plan in Sec.  1107.21(c) of the final 
rule is the same production testing plan in the reasonable testing 
program described in proposed Sec.  1107.10(b)(3). This increase in the 
maximum testing interval was not based on the costs of third party 
testing or on the costs of implementing a production testing plan. When 
a manufacturer implements a production testing plan and conducts 
production testing, such testing provides more information about a 
product's manufacture and compliance with the applicable children's 
product safety rules, which justifies allowing a longer period of time 
between third party periodic tests. If a manufacturer uses an ISO/IEC 
17025:2005-accredited testing laboratory for testing to assure 
continued compliance, the maximum third party periodic testing interval 
is extended to three years.
    The commenter is correct that the preamble to the proposed rule 
stated that not every periodic test has to be done by a third party 
conformity assessment body if the manufacturer has implemented four 
elements of a reasonable testing program. However, Sec.  1107.21(c) of 
the final rule states that a manufacturer who has implemented a 
production testing plan for a children's product must submit samples of 
the product to a third party conformity assessment body for periodic 
testing at least once every two years. We recognize that these two 
statements may be confusing, and we have clarified the text in Sec.  
1107.21(a) of the final rule to state that all third party periodic 
testing must be conducted by a CPSC-accepted third party conformity 
assessment body accredited to the scope of the tests required.
    Additionally, on August 12, 2011, the President signed into law 
H.R. 2715 which amended the CPSIA in several respects. One provision in 
H.R. 2715 requires us to seek public comment on opportunities to reduce 
the cost of third party testing requirements consistent with assuring 
compliance with any applicable consumer product safety rule, ban, 
standard, or regulation. Elsewhere in this issue of the Federal 
Register, we have published a notice seeking public comment on the 
issues in H.R. 2715. H.R. 2715 further requires us to review the public 
comments and states that we may prescribe new or revised third party 
testing regulations if we determine that such regulations will reduce 
third party testing costs consistent with assuring compliance with the 
applicable consumer product safety rules, bans, standards, and 
regulations.
    Regarding the commenter's suggestion on testing ordinary children's 
books or other children's ordinary paper-based printed materials, 
section 14(i)(4) of the CPSA, as amended by H.R. 2715, excludes 
ordinary books from the third party testing requirements in section 
14(a) of the CPSA. Additionally, we have decided to reserve, rather 
than finalize, subpart B, which would have pertained to a reasonable 
testing program for nonchildren's products. Therefore, it is 
unnecessary for us to address the commenter's suggestion.
c. Periodic Testing in the Absence of a Reasonable Testing Program
    Proposed Sec.  1107.21(c) would state that if a manufacturer has 
not implemented a reasonable testing program, as described in subpart B 
of this part, then all periodic testing would be required to be 
conducted by a third party conformity assessment body, and the 
manufacturer would be required to conduct periodic testing, described 
in proposed Sec.  1107.21(c)(1) and (c)(2).
    Proposed Sec.  1107.21(c)(1) would require the manufacturer to 
develop a periodic testing plan to ensure that children's products 
manufactured after issuance of a children's product certification, or 
when the previous periodic testing was conducted, continue to comply 
with all applicable children's product safety rules.
    Proposed Sec.  1107.21(c)(2) would require the periodic testing 
interval selected to be short enough to ensure that, if the samples 
selected for periodic testing pass the test, then there is a high 
degree of assurance that the other untested children's products 
manufactured during the interval comply with the applicable children's 
product safety rules. The interval for periodic testing may vary, 
depending upon the specific children's product safety rules that apply 
to the children's product. Proposed Sec.  1107.21(c)(2)(i) through 
(c)(2)(ix) listed factors to be considered when determining the 
periodic testing interval.
    On our own initiative, we made several editorial and complementary 
changes to proposed Sec.  1107.21(c). In brief:
     We have renumbered proposed Sec.  1107.21(c) as Sec.  
1107.21(b) in the final rule.
     In Sec.  1107.21(b), we have revised the text to state the 
periodic testing options more clearly. Section 1107.21(b) now states 
that a manufacturer ``must conduct periodic testing to ensure 
compliance with the applicable children's product safety rules at least 
once a year,'' except as otherwise provided in Sec.  1107.21(c) and (d) 
(the other periodic testing options in the final rule), or as provided 
in regulations under this title. Section 1107.21(b) of the final rule 
further states that if a manufacturer does not conduct

[[Page 69506]]

production testing under Sec.  1107.21(c), or testing by a testing 
laboratory under Sec.  1107.21(d), the manufacturer must conduct 
periodic testing pursuant to the periodic test plan requirements at 
Sec.  1107.21(b)(1) and the testing interval requirements in Sec.  
1107.21(b)(2).
     In Sec.  1107.21(b)(1) (formerly proposed Sec.  
1107.21(c)(1)), we have replaced ``assure'' with ``ensure with a high 
degree of assurance.'' We made this change to be consistent with other 
language used throughout the final rule. We also replaced ``children's 
product certification'' with ``Children's Product Certificate,'' for 
consistency throughout the final rule, and we eliminated the 
requirement of providing a basis for determining that the periodic 
testing plan provides a high degree of assurance that the product being 
tested continues to comply with all applicable children's product 
safety rules. We eliminated the requirement that a manufacturer provide 
the basis for determining that a periodic test plan provides a high 
degree of assurance because manufacturers would need to demonstrate how 
their production testing plan provides a high degree of assurance if we 
requested that information. However, it is unnecessarily burdensome to 
require a manufacturer to provide the basis for this in every instance, 
when we may never inquire about the basis for a particular periodic 
test plan. Therefore, we have eliminated this requirement from the 
final rule. In addition, we have added language to Sec.  1107.21(b)(1) 
to clarify that a manufacturer must have a periodic testing plan 
specific to each children's product manufactured at a manufacturing 
site.
     In Sec.  1107.21(b)(2) (pertaining to testing intervals), 
we have revised the text to refer to ``testing interval'' or 
``testing,'' instead of ``periodic testing interval'' or ``periodic 
testing.'' ``Testing Interval,'' is substantially the same as proposed 
Sec.  1107.21(c)(2), except that, for consistency, the final rule 
refers simply to a ``testing interval,'' rather than a ``periodic 
testing interval.'' (The proposed rule had used different terms, such 
as ``periodic testing interval,'' ``testing interval,'' ``interval,'' 
and ``interval for periodic testing,'' for the same concept.) We 
removed the word ``periodic'' because it is redundant in the context of 
the section, which addresses ``periodic testing.'' Additionally, Sec.  
1107.21(b)(2) states that the testing interval may vary, depending upon 
the specific children's product safety rules that apply to the 
children's product, ``but may not exceed one year.'' We added ``but may 
not exceed one year'' to clarify that, consistent with Sec.  
1107.21(b), the periodic testing must occur at least once a year.
     Section 1107.21(b)(2)(i) through (x) lists the factors to 
be considered in determining the testing interval. This list is almost 
identical to proposed Sec.  1107.21(b)(2)(i) through (ix), except that 
the final rule separates the examples of nonmaterial changes that were 
at proposed Sec.  1107.21(b)(2)(v). Proposed Sec.  1107.21(b)(2)(v) 
would mention ``Nonmaterial changes, such as introduction of a new set 
of component parts into the assembly process, or the manufacture of a 
fixed number of products.'' Upon further consideration, we felt that 
the two examples were dissimilar, so Sec.  1107.21(c)(2)(v) of the 
final rule now states: ``Introduction of a new set of component parts 
into the assembly process''; and Sec.  1107.21(c)(2)(vi) of the final 
rule states: ``The manufacture of a fixed number of the products.'' We 
have renumbered the remaining subparagraphs in Sec.  1107.21(c)(2), 
accordingly.
d. Periodic Testing Frequency for Low-Volume Manufacturers
    Proposed Sec.  1107.21(d) would pertain to the periodic testing 
frequency for low-volume manufacturers. In brief, the proposal would 
not require a manufacturer to conduct periodic testing unless it has 
produced or imported more than 10,000 units of a particular product; 
instead, once that threshold has been reached, the manufacturer would 
be subject to the periodic testing requirements of proposed Sec.  
1107.21(a), and (b), or (c).
    Several commenters addressed proposed Sec.  1107.21(d). The 
comments spanned a range of issues. For example, one commenter said 
that the production or importation volumes for different children's 
products may vary substantially, such as large electrical motorcycles 
and small stuffed toys, so the commenter said it is not reasonable to 
apply the same volume of 10,000 to all children's products. The 
commenter asked whether periodic testing is necessary when a large 
number of products are produced in a short timeframe, for example, 
100,000 toys produced in three months. Other commenters also focused on 
the 10,000 figure, asking whether the figure applies only to the number 
of children's products produced, whether the number applies to each 
distinct product or to all children's products made at a facility, or 
whether the figure of 10,000 units is too high or too low. (One 
commenter stated that its analysis of CPSC-announced recalls in 2009, 
showed that 47 percent of the recalls involved products of 10,000 units 
or less.) Yet another commenter interpreted the provision as an 
acknowledgement by the CPSC that the periodic testing frequency 
standard is not essential to safety because it dispenses with periodic 
testing altogether in the case of manufacturers who produce or import 
no more than 10,000 units of a product.
    On August 12, 2011, the President signed H.R. 2715 into law. H.R. 
2715 requires, among other things, that we seek public comment on 
opportunities to reduce the cost of third party testing requirements 
consistent with assuring compliance with any applicable consumer 
product safety rule, ban, standard, or regulation. It also contains 
special rules for small batch manufacturers and directs us to consider 
alternative testing requirements or exempt small batch manufacturers 
from certain third party testing requirements. Given these new 
statutory obligations resulting from H.R. 2715, and, as part of the 
overall reorganization of Sec.  1107.21, proposed Sec.  1107.21(d) is 
being renumbered and reserved as Sec.  1107.21(e), so that we may 
consider issues relating to cost, low-volume products, and small batch 
manufacturers more fully.
    We are also reserving Sec.  1107.21(f) for an amendment to this 
rule where, elsewhere in this issue of the Federal Register, we have 
published a proposed rule that would implement the ``representative 
samples'' provision in section 14(i)(2)(B)(ii) of the CPSA.
4. Proposed Sec.  1107.22--Random Samples
    Proposed Sec.  1107.22 would implement the testing of random 
samples requirement in former section 14(d)(2)(B)(ii) of the CPSA 
(renumbered by H.R. 2715 as section 14(i)(2)(B)(ii) of the CPSA), by 
requiring each manufacturer of a children's product to select samples 
for periodic testing by using a process that assigns each sample in the 
production population an equal probability of being selected.
    We received many comments on proposed Sec.  1107.22. The commenters 
made numerous assertions, such as: Product samples should be reasonably 
representative of the product population; samples should not be golden 
samples; samples should be selected blindly; samples should not be 
selected with overt bias; and the rule should not use a statistical 
definition for random sample. Commenters also expressed concern over 
practical problems with the proposed section for random sampling. 
However, on August 12, 2011, the President signed H.R. 2715 into law. 
H.R. 2715 revised section

[[Page 69507]]

14(i)(2)(B)(ii) of the CPSA, by replacing testing of ``random samples'' 
to ensure continued compliance with testing of ``representative 
samples'' to ensure continued compliance. Given this change in the 
statute, we have removed Sec.  1107.22 from the final rule. Elsewhere 
in this issue of the Federal Register, we have published a proposed 
rule that would implement the ``representative samples'' provision in 
H.R. 2715.
5. Proposed Sec.  1107.23--Material Change
a. General Requirements
    Proposed Sec.  1107.23(a) would state that if a children's product 
undergoes a material change in product design or manufacturing process, 
including the sourcing of component parts, that a manufacturer 
exercising due care knows or should know that such material change 
could affect the product's ability to comply with the applicable 
children's product safety rules, the manufacturer must submit a 
sufficient number of samples of the materially changed product for 
testing by a third party conformity assessment body. Such testing would 
be required before a manufacturer could certify the children's product. 
The extent of such testing would depend on the nature of the material 
change. Proposed Sec.  1107.23(a) also would state that, when a 
material change is limited to a component part of the finished 
children's product and does not affect the ability of the children's 
product to meet other applicable children's product safety rules, a 
manufacturer may issue a Children's Product Certificate based on the 
earlier third party certification tests and on test results of the 
changed component part conducted by a third party conformity assessment 
body. For example, if the paint is changed on a children's product, 
issuance of a Children's Product Certificate may be based on previous 
product testing and on tests of the new paint for compliance to lead, 
heavy metal, and phthalate concentrations. Proposed Sec.  1107.23(a) 
also would state that changes that cause a children's product safety 
rule to no longer apply to a children's product are not considered to 
be material changes. For example, assume that a children's product 
consists of a cotton sweater with metal buttons and that the children's 
product would be subject to the lead limits in section 101 of the 
CPSIA. If the manufacturer decided to use wooden buttons instead of 
metal buttons, the use of wooden buttons would eliminate the need to 
test the product for lead, and the change to wooden buttons, while 
arguably a change in the product's component parts, would not be a 
``material change'' under proposed Sec.  1107.23(a) for the purposes of 
complying with the lead content limits. However, for other children's 
product safety rules, such as small parts, the change may be a material 
change.
    Additionally, proposed Sec.  1107.23(a) would require a 
manufacturer to exercise due care to ensure that reliance on anything 
other than retesting of the finished product after a material change 
would not allow a noncompliant children's product to be distributed in 
commerce. A manufacturer should resolve any doubts in favor of 
retesting the finished product for certification. A manufacturer also 
would be required to exercise due care to ensure that any component 
part undergoing component-part-level testing is the same as the 
component part on the finished children's product in all material 
respects.
    We received several comments regarding ``material change'' and 
proposed Sec.  1107.23, as well as the corresponding provision at 
proposed Sec.  1107.10(b)(2)(ii). Although we have decided to reserve 
subpart B in the final rule, to the extent that comments on proposed 
Sec.  1107.10(b)(2)(ii) were equally applicable to proposed Sec.  
1107.23, we have considered those comments here.
    (Comment 55)--A commenter suggested that the definition of 
``material change'' should be moved from proposed Sec.  
1107.10(b)(2)(ii) to the definitions in Sec.  1107.2.
    (Response 55)--Section 1107.10 has been reserved in the final rule. 
We agree with the commenter, and we have moved the definition of 
``material change'' to Sec.  1107.2 in the final rule, as this 
definition still applies to Sec.  1107.23 regarding material changes in 
children's products. Thus, Sec.  1107.2 defines ``material change'' as 
``any change in the product's design, manufacturing process, or 
sourcing of component parts that a manufacturer exercising due care 
knows, or should know, could affect the product's ability to comply 
with the applicable rules, bans, standards, or regulations.''
    (Comment 56)--Some commenters suggested revising the proposed 
definition of ``material change'' to refer only to changes that 
``reasonably could affect'' compliance.
    (Response 56)--The commenters are concerned about a remote 
possibility that some set of circumstances could combine, such that a 
seemingly innocuous change could affect the product's compliance to an 
applicable product safety rule. We realize that it would be difficult 
for a manufacturer to identify every conceivable theoretical effect a 
change could have on a children's product's compliance. Therefore, 
manufacturers should exercise prudence and competence in determining 
the effects of a change to the product and in considering whether that 
change is material. This prudence and competence is encompassed in the 
manufacturer's use of due care in evaluating the change.
    We decline the commenters' suggestion to modify the definition of 
``material change'' because the definition now in Sec.  1107.2 of the 
final rule includes the phrase ``a manufacturer exercising due care.'' 
Because the definition of ``due care'' includes the exercise of 
prudence and competence by the manufacturer, the addition of 
``reasonably could'' is duplicative.
    (Comment 57)--One commenter stated that different versions of the 
same product (e.g., color, packaging) should not require different 
tests.
    (Response 57)--The commenter is correct that different versions of 
the same product that are not materially different do not require 
separate certification tests. The final rule defines a ``material 
change'' as any change in the product's design, manufacturing process, 
or sourcing of component parts that a manufacturer exercising due care 
knows, or should know, could affect the product's ability to comply 
with the applicable rules, bans, standards, or regulations. Therefore, 
if the differences between various versions of the same product are not 
material changes, no additional testing is required. It is the 
manufacturer's responsibility to determine if a difference between 
versions of a product constitutes a ``material change.''
    (Comment 58)--One commenter suggested that after certification 
testing of a product, if another product differs by a few minor 
components from the certified product, and proper proof of equivalent 
specifications are documented, a reduced sample size for certification 
should be allowed.
    (Response 58)--In the circumstance described by the commenter, if a 
new product differs from an existing certified product by a few 
component parts, the manufacturer's knowledge of the new product and 
its manufacture might be extensive enough to result in requiring fewer 
samples for certification testing than the number required for the 
existing certified product. We reiterate that if a new product is based 
on changes to an existing certified product, only the applicable 
product safety rules affected by the changes require

[[Page 69508]]

certification testing. The number of samples still must be sufficient 
to give the manufacturer a high degree of assurance of the new 
product's compliance with the applicable children's product safety 
rules. The certifier also may use component part testing as a means of 
reducing the number of finished samples needed for certification. If 
the changes from the existing certified product to the newer product 
are not material, then the certification tests on the existing 
certified product can be used for certification purposes on the newer 
product.
    Thus, on our own initiative, we have revised Sec.  1107.23(a) to 
make several clarifying changes to the paragraph. First, we have added 
language to the final rule to require the number of samples submitted 
to be sufficient to provide a high degree of assurance that the 
materially changed component part or finished product complies with the 
applicable children's product safety rules. This language was added 
because third party testing that occurs after a material change serves 
as recertification of the product for the applicable children's product 
safety rules affected by the material change. This language is 
essentially the same requirement contained in Sec.  1107.20(a) of the 
final rule for initial certification of children's products. 
Additionally, Sec.  1107.23(a) was revised to add the following: ``A 
manufacturer of a children's product that undergoes a material change 
cannot issue a new Children's Product Certificate for the product until 
the product meets the requirements of the applicable children's product 
safety rules.'' Also, we added the following words to the first 
sentence: ``and issue a new Children's Product Certificate.'' These are 
not intended to be substantive changes, but rather, meant to make clear 
what is already the case--that material changes require recertification 
based on passing test results. Finally, we have removed the language in 
proposed Sec.  1107.23(a) that would require a manufacturer to exercise 
due care to ensure that reliance on anything other retesting of the 
finished product after a material change would not allow a noncompliant 
children's product to be distributed in commerce. This provision was 
removed because this issue is addressed in Sec.  1109.5(a)(1) of the 
accompanying component part testing rule. We also removed the 
requirement that a manufacturer should resolve any doubts in favor of 
retesting the finished product for certification. This provision was 
removed because the issue is addressed in Sec.  1109.5(c) of the 
accompanying component part testing rule.
    (Comment 59)--Two commenters raised issues related to products 
subject to 16 CFR part 1201, Safety Standard for Architectural Glazing 
Materials, although the issues they raised have wider implications that 
involve other products, including children's products. The products 
subject to that safety standard are glazing materials (glass) used or 
intended for use in doors and enclosures. The commenters noted that 
these types of glass normally are manufactured in a continuous process 
that is subject to numerous minor and ongoing adjustments to respond to 
atmospheric and other factors and to make sure that the tempering 
process continues properly. In addition, there can be numerous minor 
variations in format, size, and thickness of the glass, as well as 
other product characteristics that are a normal part of shifting from 
one product to another to meet customers' orders. This industry's 
current process of certification and quality control involves periodic 
third party ``certification'' testing to the requirements of 16 CFR 
part 1201 and uses alternate means for checking breakage performance of 
samples from subsequent production, such as a center punch test for 
tempered glass and the drop-ball and/or pummel test for laminated 
glass, in order to monitor ongoing compliance with the standard. If a 
potential failure of the standard is detected by these alternate tests, 
corrective action is taken, and product distribution is not resumed 
until a subsequent production test shows that the breakage performance 
has been restored.
    The commenters requested clarification that the ongoing adjustments 
described above would not be ``material changes'' that would require 
recertification of the product. The proposed rule defines ``material 
change'' as one that ``could affect the product's ability to comply 
with the applicable rules * * *'' One commenter requested that we 
state:

    An adjustment to equipment or machinery made in order to 
maintain, achieve, or assure compliance with the applicable rules * 
* * is not a material change within the meaning of section 1107.10.

    The other commenter suggested the following addition to the rule:

    Adjustments in the equipment or machinery to affect the 
product's ability to comply with any applicable rules or standards 
should not be considered a ``material change'' in the manufacturing 
process * * * but will require the manufacturer, following those 
adjustments to subject the product to its production testing plan 
and to achieve passing production test results before the 
manufacturer may resume production of that product.

    (Response 59)--Although regulated non-children's products still 
must meet the certification requirements in section 14(a)(1) of the 
CPSA, we have reserved subpart B, including the reasonable testing 
program described in proposed Sec.  1107.10. However, the broader issue 
presented by this commenter, which relates to adjustments in equipment 
or machinery, is applicable to children's products as well, so we will 
address this issue with regard to children's products.
    In order for a change to be a ``material change,'' it should be one 
that could adversely affect the product's ability to comply with the 
rule, ban, standard, or regulation. Minor and ongoing adjustments 
during manufacturing, especially in continuous flow processes, to 
maintain compliance with the applicable product safety rules are not 
considered material changes. However, we do not agree entirely with the 
commenters' suggested language because that language would include 
adjustments made to ``achieve'' compliance (i.e., to change a product 
from noncompliance to compliance). Such a change would constitute a 
``material change''; thus, additional certification testing would be 
required.
    (Comment 60)--One commenter suggested that, in proposed Sec.  
1107.10(b)(2), it also should be noted that testing of units within a 
common family of products should allow a test of one unit to represent 
all others within the family of products if the other models are 
materially the same. The commenter added that, regarding proposed Sec.  
1107.10(b)(2)(ii)(B), a manufacturer should not be required to conduct 
additional ``certification'' testing upon a change to the parts or 
materials, if the change does not affect the overall safety of the 
system. The commenter suggested that we revise the section to give 
manufacturers the ability to make changes to parts and materials 
without having to undergo costly and time-consuming certification 
testing. The commenter would allow manufacturers to conduct in-house 
testing that would show that the results of any change do not 
materially alter the performance of that part or system with regard to 
the safety elements in the applicable rule.
    (Response 60)--Although regulated non-children's product must still 
meet the certification requirements in section 14(a)(1) of the CPSA, we 
have reserved subpart B, including the reasonable testing program 
described in proposed Sec.  1107.10. However, the broader issue 
presented by this commenter related to

[[Page 69509]]

certification testing of units within a common family and when there 
has been a material change to a product is applicable to children's 
products as well, so we will address this issue with regard to 
children's products.
    The final rule does allow what the commenter is suggesting--that 
testing of units within a common family of products be allowed to 
represent all of the other units within the family. Section 1107.20(a) 
of the final rule states that samples used for certification must be 
identical in all material respects to the finished children's product. 
If, as the commenter has stated, the tested units are identical in all 
material respects as others within the product family, then the test 
results can be applied to the other units within the product family.
    Section 1107.23(a) describes testing requirements when there has 
been a material change in a children's product. If a change could 
adversely affect compliance with the applicable children's product 
safety rules, then it is considered a ``material change,'' and 
retesting is required. If the commenter's phrase ``does not affect the 
overall safety of the system'' means that the change does not affect 
compliance with the applicable rules, then the change is not considered 
a ``material change,'' and no recertification testing is required.
    (Comment 61)--Some commenters stated that the requirement to submit 
a sufficient number of samples of a materially changed product for 
third party testing before certifying the changes would be costly and 
would inhibit manufacturers from making continuous product 
improvements. Ultimately, according to the commenters, this will reduce 
the safety of children's products.
    (Response 61)--Section 14(i)(2)(B)(i) of the CPSA requires 
children's products to be subject to third party conformity assessment 
body testing when there has been a material change in the product's 
design or manufacturing process. These types of changes may introduce 
new hazards or may result in the product no longer being in compliance 
with the applicable children's product safety rules. After a material 
change to the product, only those applicable product safety rules that 
could adversely be affected require recertification. The samples 
selected must be of a sufficient number to provide a high degree of 
assurance that the test, conducted accurately, demonstrates the ability 
of the children's product to meet all applicable children's product 
safety rules.
    Regarding continuous product improvements, changes that do not 
adversely affect compliance to the applicable children's product safety 
rules are not ``material changes'' under the final rule and do not 
require recertification testing. However, manufacturers may wish to 
consider possible material change testing as part of their product 
improvement processes.
    (Comment 62)--Three commenters characterized the testing 
requirements resulting from the proposed definition of ``material 
change'' as ``overly burdensome'' and ``very unreasonable.'' The 
commenters differed in their reasons for arriving at this conclusion. 
One commenter characterized the proposed rule's material change testing 
requirements as too ``open ended'' because of imprecise language. The 
consequence of this lack of specificity, according to the commenter, is 
that ``either you will always test or you take a big risk. This is 
completely unfair and unreasonable.''
    Another commenter expressed concern with the examples in proposed 
Sec.  1107.23(c). Specifically, the commenter stated that manufacturing 
process changes, ``such as new solvents to clean equipment or a new 
mold for an accessible metal component part of a children's product 
pose undue burdens on manufacturers without advancing safety goals.'' 
The commenter contended that ``to require companies to develop new 
product specifications for every new solvent used in a facility or 
installation of a new mold made to the exact specifications as a prior 
mold'' would require new third party testing, and this could not have 
been Congress' intent. The commenter suggested: ``it should be left to 
the consumer product manufacturer to assess whether changes are likely 
to affect the ability of the particular product to meet a specific 
standard, ban, rule, or regulation.''
    The third commenter stated that the proposed definition is not 
clear and asked whether ``using the same quality level of component 
part but just the different brand is a material change.'' The commenter 
stated that if third party testing of each such change is necessary, 
then ``it is very unreasonable.''
    (Response 62)--The intent of Sec.  1107.23 for children's products 
is not to be overly burdensome, but rather, to demonstrate the 
product's continued compliance with applicable children's product 
safety rules when a change in the product's design, manufacturing 
process, or component part sourcing has been made that could adversely 
affect a previously certified product's compliance. Because the final 
rule applies to a variety of products and manufacturing methods, it is 
impractical to anticipate every type of product change that could occur 
to all affected products that might adversely affect compliance to an 
applicable product safety rule and provide specific language. 
Therefore, the final rule is written using general language to allow 
manufacturers the flexibility to determine, in each particular 
circumstance, whether a product change could adversely affect the 
product's compliance with an applicable children's product safety rule. 
Manufacturers should use their special knowledge of a product's design, 
components, and manufacturing processes to differentiate what changes 
may constitute a ``material change,'' and require certification 
testing, as opposed to nonmaterial changes.
    After initial certification of a product, a ``material change'' is 
a change that ``could affect the product's ability to comply with 
applicable rules, standards or regulations.'' The ability to adversely 
affect compliance is what distinguishes a ``material change'' from 
nonmaterial changes. The final rule acknowledges that a manufacturer 
has special knowledge of its product design, components and, production 
processes, and the rule states that a ``manufacturer exercising due 
care knows or should know'' when a change is material. For example, a 
new solvent that does not contain any of the prohibited chemicals (lead 
and the prohibited phthalates), or a replacement mold shown to be made 
to the same specifications as a compliant mold, would not be examples 
of ``material changes.''
    (Comment 63)--One commenter noted that proposed Sec.  
1107.10(b)(2)(ii)(A) would state that, for material changes that only 
affect product compliance to certain rules, certification may be based 
on the materially changed component, unless the change affects the 
finished product. If the change affects the finished product, then the 
certification must be based on the finished product. (The commenter is 
referring to proposed Sec.  1107.10(b)(2)(ii)(A) and (C).) The 
commenter asked, when a disagreement arises, who makes the final 
determination of whether the material change affects the finished 
product's compliance?
    (Response 63)--We have reserved subpart B, including the reasonable 
testing program described in proposed Sec.  1107.10. However, the 
broader issue presented by this commenter relates to certification 
testing of units when there has been a material change is applicable to 
children's products as well, so we will address this issue with regard 
to children's products.

[[Page 69510]]

    The commenter is correct that when a material change to a product 
occurs, only product safety rules affected by the material change would 
require recertification. If the material change solely affects a 
component part of a children's product and does not affect the ability 
of other component parts or the finished product to comply with 
applicable children's product safety rules, then Sec.  1107.23(a) 
allows a manufacturer to base certification on earlier third party 
certification tests and on third party testing of the changed component 
part.
    With regard to disagreements regarding whether the finished 
children's product is needed for certification after a material change, 
a manufacturer must use due care in determining whether testing the 
finished product or a component part is required. This due care is 
applied on a per-rule basis. Some rules, such as prohibited phthalate 
content, can be evaluated on component parts. Other rules, such as the 
safety standard for cribs, always require the use of the finished 
product for certification testing. Assuming the disagreement is between 
the manufacturer and the CPSC regarding whether a finished product is 
required for certification after a product change, we will decide, 
based on the available evidence, whether a material change requires 
samples of the finished product for certification.
b. Product Design
    Proposed Sec.  1107.23(b) would state that, for purposes of subpart 
C, the term ``product design'' includes all component parts, their 
composition, and their interaction and functionality when assembled. To 
determine which children's product safety rules apply to a children's 
product, a manufacturer should examine the product design for the 
children's product as received by the consumer. For example, if a 
children's product has a component part that contains lead or has a 
sharp edge, but is inaccessible when the product is assembled, then the 
lead and sharp edge requirements would not be applicable to the 
finished product. Changes to a product's design may result in a product 
being subject to additional children's product safety rules. For 
example, if a wooden button on a children's product is replaced with a 
plastic button, the wooden button previously excluded from testing for 
lead content has been replaced with a component part (the plastic 
button) that would be subject to testing for compliance with the lead 
content requirements.
    We received no comments on this paragraph. However, on our own 
initiative, we have revised the second sentence in Sec.  1107.23(b) to 
state that a manufacturer should examine the product design for the 
children's product ``as received or assembled by the consumer.'' We 
inserted the words ``or assembled'' because some children's product 
safety rules require the product to be tested in the finished product 
state in order to assess compliance with the applicable children's 
product safety rule. For example, assessing compliance with the 
inaccessibility requirements for the lead requirements mandates testing 
of the finished product in order to determine whether a component part 
of the product is accessible. The new language, ``or assembled,'' was 
added to make it clear to the manufacturer that products must be tested 
as received or assembled by the consumer in those instances where the 
product is not received in assembled form.
c. Manufacturing Process
    Proposed Sec.  1107.23(c) would state that a material change in the 
manufacturing process is a change in how the children's product is made 
that could affect the finished children's product's ability to comply 
with the applicable children's product safety rules. For each change in 
the manufacturing process, a manufacturer should exercise due care to 
determine if compliance to an existing applicable children's product 
safety rule could be affected or if the change results in a newly 
applicable children's product safety rule. The following are some 
examples of a material change to the manufacturing process of a 
children's product:
     A new technique is used to fasten buttons to a doll's 
dress that could affect the children's product's ability to comply with 
the small parts rule;
     New solvents are used to clean equipment employed in the 
manufacture of children's products; the new solvents could affect the 
children's product's ability to comply with the lead content and 
phthalates requirements; and
     A new mold for an accessible metal component part of a 
children's product is introduced into the assembly line that could 
affect the children's product's ability to comply with requirements for 
sharp edges.
    We received no comments on this paragraph and have finalized it 
without change.
d. Sourcing of Component Parts
    Proposed Sec.  1107.23(d) would state that a material change in the 
sourcing of component parts results when the replacement of one 
component part of a children's product with another component part 
could affect compliance with the applicable children's product safety 
rules. This would include, but would not be limited to, changes in 
component part composition, component part supplier, or use of a 
different component part from the same supplier who provided the 
initial component part.
    We received no comments on this paragraph. However, on our own 
initiative, we have revised the first sentence to replace the phrase 
``applicable children's product safety rules'' with ``applicable 
children's product safety rule.'' We made this change to avoid creating 
any misunderstanding of whether a material change results only if 
multiple children's product safety rules are affected; in other words, 
a material change can result, even if compliance with only one 
children's product safety rule is affected.
6. Proposed Sec.  1107.24--Undue Influence
    Proposed Sec.  1107.24(a) would implement the requirement to 
safeguard against undue influence, pursuant to section 14(i)(2)(B)(iv) 
of the CPSA, by requiring each manufacturer to establish procedures to 
safeguard against the exercise of undue influence by a manufacturer on 
a third party conformity assessment body.
a. Procedures To Safeguard Against the Exercise of Undue Influence
    Proposed Sec.  1107.24(a) would require the manufacturer to 
establish procedures to safeguard against the exercise of undue 
influence by a manufacturer on a third party conformity body.
    (Comment 64)--Several commenters disagreed with the requirement in 
proposed Sec.  1107.24(a) that manufacturers must establish procedures 
to safeguard against the exercise of undue influence on a third party 
conformity assessment body. One commenter noted that we already require 
third party conformity assessment bodies to train their staff to 
detect, avoid, and report undue influence. Another commenter stated 
that third party testing facilities already have these training 
programs in place. Two commenters asserted that third party conformity 
assessment bodies are not likely to be influenced unduly because their 
accreditation would be withdrawn.
    (Response 64)--Section 14(i)(2)(B)(iv) of the CPSA requires us to 
establish, by rule, protocols and standards for safeguarding against 
the exercise of

[[Page 69511]]

undue influence by a manufacturer or private labeler on a third party 
conformity assessment body. This provision applies to manufacturers and 
private labelers as opposed to third party conformity assessment 
bodies. Consequently Sec.  1107.24 of the final rule requires 
manufacturers of children's products to establish procedures to avoid 
actions that could undermine the integrity of laboratory test data. We 
have an interest in ensuring the integrity of laboratory test results 
used in the certification of children's products.
    In a separate rulemaking, we will address the issue of requiring 
third party conformity assessment bodies to report undue influence.
    (Comment 65)--Some commenters expressed concern regarding foreign 
manufacturers and the undue influence requirement. One commenter 
suggested that we will be unable to enforce the undue influence 
requirement on foreign manufacturers and importers. Another commenter 
said that the importer of record should not be responsible for undue 
influence initiated by people not directly employed by the importer of 
record. The commenter requested confirmation that importers will be 
responsible for training their employees only, and will not have the 
responsibility of training the employees of other companies, such as 
manufacturers, vendors, freight handlers, or laboratories.
    (Response 65)--Section 1107.24 of the final rule requires ``each 
manufacturer'' to establish procedures to safeguard against the 
exercise of undue influence by a manufacturer on a third party 
conformity assessment body. Section 1107.2 of the final rule defines a 
``manufacturer'' as ``the parties responsible for certification of a 
consumer product pursuant to 16 CFR part 1110.'' Under 16 CFR part 
1110, a foreign manufacturer is not required to certify a finished 
product; only a domestic manufacturer or the importer of a product made 
outside the United States is required to issue a finished product 
certificate. Thus, under Sec.  1107.24, it is a domestic manufacturer 
or the importer who must establish procedures to safeguard against 
undue influence.
    We agree that an importer is not directly responsible for training 
employees of other companies. This fact, however, does not absolve the 
importer issuing a finished product certificate of its duty to exercise 
due care when relying on test results provided by another company or 
third party conformity assessment body. A manufacturer or importer who 
issues a finished product certificate that is based on test reports 
from a third party conformity assessment body over whom undue influence 
has been exercised provides a basis for the CPSC to deem the 
certificate invalid. We will hold the finished product certifier 
responsible for exercising due care that component part or finished 
product manufacturers or suppliers have not exercised undue influence 
over third party conformity assessment bodies.
    (Comment 66)--Two commenters stated that because the term ``undue'' 
is undefined, nothing should be construed to prohibit a manufacturer 
from exercising its rights to challenge third party conformity 
assessment body test results based upon the manufacturer's belief that 
they are inaccurate.
    (Response 66)--Section 1107.24 is not intended to preclude a 
manufacturer from challenging failing test results in appropriate 
circumstances. If a manufacturer has reason to think a test result 
received from a third party conformity assessment body is in error, it 
is appropriate to ask the third party conformity assessment body about 
the test result. Such inquiry does not constitute undue influence. 
Additionally, Sec.  1107.20(d) requires a manufacturer to investigate 
the reasons for a negative certification test result and to take action 
to address failing test results before a Children's Product Certificate 
can be issued. This investigation may involve discussions about the 
test results with the third party conformity assessment body.
b. Minimum Requirements
    Proposed Sec.  1107.24(b) would require the procedures described in 
Sec.  1107.24(a) to include minimal requirements. Proposed Sec.  
1107.24(b)(1) would require safeguards to prevent attempts by the 
manufacturer to exercise undue influence on a third party conformity 
assessment body, including a written policy statement from company 
officials that the exercise of undue influence is not acceptable, and 
directing that appropriate staff receive annual training on avoiding 
undue influence and sign a statement attesting to participation in such 
training. Proposed Sec.  1107.24(b)(2) would impose a requirement to 
notify the Commission immediately of any attempt by the manufacturer to 
hide or exert undue influence over test results. Proposed Sec.  
1107.24(b)(3) would impose a requirement to inform employees that 
allegations of undue influence may be reported confidentially to the 
Commission and describe to employees the manner in which such a report 
can be made.
    (Comment 67)--Several commenters made remarks about training 
programs. Two commenters stated that the training program and 
recordkeeping requirements (proposed Sec.  1107.26(a)(5)) are 
burdensome and redundant because companies already have requirements to 
prohibit unethical behavior, such as exerting undue influence over 
third party conformity assessment body staff. Other commenters 
described this requirement as excessive and unreasonable. One commenter 
stated that the requirements for training are vague and urged us to 
describe what needs to be included. Another commenter raised questions 
about the content and form of the training, especially whether a 
written manual would be enough. Another commenter recommended deleting 
these requirements.
    One commenter urged us to delete the requirement for appropriate 
staff to receive ``annual training'' on how to avoid undue influence. 
The commenter felt that an annual training mandate would be unnecessary 
and impose excessive costs and burdens on manufacturers of children's 
products.
    (Response 67)--Section 14(i)(2)(B)(iv) of the CPSA requires us to 
establish protocols and standards, by rule, for safeguarding against 
the exercise of undue influence on third party conformity assessment 
bodies by a manufacturer or private labeler. Therefore, we decline the 
suggestion to delete these requirements from the final rule.
    Section 1107.24 of the final rule implements the statutory mandate 
by requiring manufacturers to establish procedures to safeguard against 
the exercise of undue influence by a manufacturer on a third party 
conformity assessment body. The rule does not prescribe the form or 
content of these programs in order to provide manufacturers flexibility 
in implementing the requirements. For example, manufacturers may wish 
to create written manuals and may include this training along with 
other forms of employee training. Manufacturers must keep records of 
employee participation in the training to be able to ensure that all 
relevant staff members receive this training pursuant to Sec.  
1107.26(a)(6).
    We do agree, however, with the commenter who suggested that an 
annual training requirement reiterating previously presented procedures 
can impose costs and burdens the benefits of which are unclear. Thus, 
we have replaced the proposed requirement for annual training with a 
requirement for retraining when a substantive change to the rule is 
made regarding undue influence; this requirement appears as a new Sec.  
1107.24(b)(2), and we have

[[Page 69512]]

renumbered proposed Sec. Sec.  1107.24(b)(2) and 1107.24(b)(3) as 
Sec. Sec.  1107.24(b)(3) and 1107.24(b)(4), respectively, in the final 
rule. Manufacturers of children's products are free to modify their 
procedures and conduct retraining as often as they feel it is necessary 
to institute effectively their policies for safeguarding against the 
exercise of undue influence.
    Additionally, on our own initiative, we have revised Sec.  
1107.24(b) of the final rule to make minor editorial or grammatical 
changes. We have revised Sec.  1107.24(b)(1) to direct that ``every 
appropriate staff member'' receive training on how to avoid undue 
influence. The proposal would state that ``appropriate staff receive 
annual training.'' By referring to ``every appropriate staff member,'' 
the final rule clarifies that the emphasis is on training individuals 
rather than collections of individuals. Additionally, in Sec.  
1107.24(b(4), we have replaced ``Commission'' with ``CPSC'' and 
replaced ``to describe the manner'' with ``a description of the 
manner.''
7. Proposed Sec.  1107.25 Remedial Action
    Proposed Sec.  1107.25 would require each manufacturer of a 
children's product to have a remedial action plan that contains 
procedures that the manufacturer must follow to investigate and address 
failing test results.
    (Comment 68)--One commenter stated that requiring each manufacturer 
to have an actual remedial action plan to address failing test results 
is unnecessary because the remedial action will likely be different, 
depending upon the situation. Another commenter stated that because 
they are familiar with how to resolve compliance and quality issues, 
the preparation of a detailed written remedial action plan is a waste 
of time, money, resources, and intellect.
    (Response 68)--The commenter is correct that, depending on the 
product and the nature of the test failure, remedial actions may take 
many different forms. The development of a remedial action plan before 
production commences could help in the determination of factors, such 
as lot size or what tracking information to maintain. These factors 
could help limit the number of production units subject to recall in 
the event that noncompliant products are introduced into commerce.
    However, although it may be efficient and useful to have a formal 
process (such as the remedial action plan in proposed Sec.  1107.25) to 
follow after receiving failing test reports, such preformulated plans 
are not essential, either for certification or for ensuring continued 
compliance of consumer products. Ultimately, the manufacturer is 
responsible for ensuring that the product that they make complies with 
the applicable product safety rules. For some products and types of 
failing test reports, ad hoc methods may be as effective as 
preestablished plans in addressing the test failures and ensuring that 
products are compliant. For these reasons, we have removed the 
requirements for remedial action plans for children's products from the 
final rule. We encourage manufacturers who believe that remedial action 
plans would be advantageous for their product to develop such plans as 
part of their overall quality assurance system.
    (Comment 69)--One commenter appreciated the acknowledgement that a 
remedial action plan could be a formal standard operating procedure 
(SOP), along with recordkeeping of each event. The commenter asked 
whether, when a particular component causes a product to become 
noncompliant with a rule, and the remedial action eliminates this 
specific component from the product, would certification have to be 
repeated. The commenter noted that documentation would be provided that 
the noncompliant component had been removed and that the product 
specification was revised. The commenter stated that there would be an 
SOP that requires a corrective action, along with documentation of the 
instance of noncompliance, to provide evidence that the product has 
been corrected and is compliant.
    (Response 69)--As noted in our response to Comment 68, we have 
removed the requirement for a remedial action plan for children's 
products from the final rule. If a finished product has a noncompliant 
component part (such as an accessory item), and that item is removed 
from the finished product, the finished product certifier does not have 
to repeat certification testing on the newly constituted finished 
product because the certifier has certification test data demonstrating 
compliance with all applicable product safety rules for that product. 
The certifier should make sure that eliminating the noncompliant 
component part does not affect compliance with another applicable 
children's product safety rule for the finished product.
    (Comment 70)--Several comments addressed the issue of retesting 
samples. Some commenters noted that often, a testing failure might 
result from a faulty laboratory test and not from a noncompliant 
product. The commenters said that the rule should allow retesting in 
appropriate situations when there is suspicion about the manner in 
which a sample was handled or processed, or the certifier is 
challenging the results of a third party test.
    One commenter asserted that if the manufacturer documents and 
supports any assertions related to the faulty test and the product's 
compliance, there should be no need for remedial action. Another 
commenter suggested that the implication in the rule is that any test 
failure, no matter how trivial, would trigger the need for remedial 
action, which would be costly. The commenter suggested that 
establishing tolerances for test results is necessary to reduce testing 
costs, as well as the burden of remedial actions, and at the same time 
ensure product safety. The commenter added that children's products are 
not so consistent that every test produces the same test result. The 
commenter asserted that retesting is a valid means of responding to a 
failing test result. Banning retesting out of fear that some 
unscrupulous parties will attempt to test the product into compliance 
will create severe problems.
    (Response 70)--We have removed the requirement for a remedial 
action plan for children's products from the final rule. However, we 
recognize that an error or failure in the testing of a sample may lead 
to a failing test result, and therefore, investigating the test method 
and test execution is a legitimate avenue of investigation in those 
instances. Such an investigation can include examining the test 
procedures, sample preparation steps, equipment calibration, and other 
factors, in addition to tests on samples of the product as part of the 
investigation, which may affect test results, but are not indicative of 
a noncompliant product. Additionally, Sec.  1107.20(d) of the final 
rule states that if a product sample fails certification testing to the 
applicable children's product safety rule(s), even if other samples 
have passed the same certification test, the manufacturer must 
investigate the reasons for the failure and take the necessary steps to 
address the reasons for the failure. A manufacturer cannot certify the 
children's product until the manufacturer establishes, with a high 
degree of assurance that the finished product does comply with all 
applicable children's product safety rules. While the final rule no 
longer refers to remedial action plans, a manufacture still ``must 
investigate the reasons for the failure and take the necessary steps to 
address the reasons for the failure.'' Retesting a product without 
investigating why the test yielded failing results, and taking whatever 
action addresses the situation (for

[[Page 69513]]

example, calibrating the testing machine before retesting, or 
correcting a manufacturing problem) to achieve passing results, is not 
acceptable for certification purposes because the certifier would not 
have a high degree of assurance that the products produced will be 
compliant with the applicable product safety rules.
    Retesting should not be conducted to ``shop'' for passing test 
results or to keep testing the product until a sample finally passes 
(and disregarding all other tests that suggest the product is not in 
compliance).
    With regard to establishing tolerances for test results, the 
acceptable values for test results are established in each rule, ban, 
regulation, or standard and are beyond the scope of this rule.
    (Comment 71)--One commenter stated that some standards, such as the 
standard for the surface flammability of carpets and rugs (16 CFR part 
1630), have alternative requirements for products that fail tests. The 
commenter suggested modifying the language to refer to a product that 
does not pass the applicable product safety standard, rather than a 
product that ``fails'' a test.
    (Response 71)--In 16 CFR part 1630, the standard allows for a 
single failure in eight tests. Because there is an allowance in the 
standard for a failing test result, we would view such a product as 
compliant with the standard.
8. Proposed Sec.  1107.26 Recordkeeping
a. The Records To Be Kept
    Proposed Sec.  1107.26(a) would require a children's product 
manufacturer to maintain records pertaining to:
     The Children's Product Certificate for each product 
(proposed Sec.  1107.26(a)(1));
     Each third party certification test (proposed Sec.  
1107.26(a)(2));
     The periodic test plan and periodic test results (proposed 
Sec.  1107.26(a)(3));
     Descriptions of all material changes in product design, 
manufacturing process, and sourcing of component parts, and the 
certification tests run and the test values (proposed Sec.  
1107.26(a)(4));
     Undue influence procedures (proposed Sec.  1107.26(a)(5)); 
and
     All remedial actions taken following a failing test result 
(proposed Sec.  1107.26(a)(6)).
    We did not receive any comments directly addressing proposed Sec.  
1107.26(a). However, on our own initiative, or to complement other 
changes in the final rule, we have revised Sec.  1107.26(a) as follows:
     In Sec.  1107.26(a)(1), we have changed ``Records of the 
children's product certificate'' to ``A copy of the Children's Product 
Certificate.'' This change is intended to simplify the language in the 
codified text and use a consistent style throughout part 1107 when 
referring to the Children's Product Certificate.
     We have finalized Sec.  1107.26(a)(2) without change.
     In Sec.  1107.26(a)(3), we have revised the recordkeeping 
elements to reflect changes to the periodic testing provision at Sec.  
1107.21. Thus, the final rule requires records of: (1) The periodic 
test plan and periodic test results; (2) a production testing plan, 
production test results, and periodic test results; or (3) testing 
results of tests conducted by a testing laboratory accredited to ISO/
IEC 17025:2005 and periodic test results.
     We have reserved Sec.  1107.26(a)(4). We intend to place 
any recordkeeping requirement associated with the testing of 
``representative samples'' at Sec.  1107.26(a)(4). As we stated earlier 
in part III.D.4 of this document, the final rule removes Sec.  1107.22 
because H.R. 2715 amended the CPSA to change ``random samples'' to 
``representative samples.''
     We have renumbered proposed Sec.  1107.26(a)(4) as Sec.  
1107.26(a)(5), and we have finalized it without change.
     We have renumbered proposed Sec.  1107.26(a)(5) as Sec.  
1107.26(a)(6), and we have finalized it with one change to clarify that 
manufacturers must retain copies of the attestations required under 
Sec.  1107.24(b)(1).
     We have deleted proposed Sec.  1107.26(a)(6), which would 
pertain to records of all remedial actions. We have deleted this 
provision from the recordkeeping requirements because the final rule 
does not establish remedial action requirements for children's 
products.
b. The Location Where Records Are To Be Kept, the Recordkeeping Period, 
and the Records' Availability in the English Language
    Proposed Sec.  1107.26(b) would require a manufacturer to maintain 
the records specified in subpart C at the location within the United 
States set forth in 16 CFR 1110.11(d) or, if the records are not 
maintained at the custodian's address, at a location within the United 
States specified by the custodian. The manufacturer would be required 
to make these records available, either in hard copy or electronically, 
for inspection by the CPSC, upon request.
    Proposed Sec.  1107.26(c) also would require a manufacturer to 
maintain records (except for test records) for as long as the product 
is in production or imported by the manufacturer, plus five years. Test 
records would be required to be maintained for five years. All records 
would be required to be available in the English language.
    (Comment 72)--One commenter expressed concern about the 
recordkeeping requirements in proposed Sec.  1107.10(b)(5) and asked 
for clarification of the phrase ``for as long as the product is in 
production or imported.'' The commenter noted that the requirements 
would lead to a massive undertaking for any manufacturer or importer, 
especially if all of the records must be maintained within the United 
States.
    Another commenter stated that we should clarify the relationship 
between the requirement to maintain records and the proposed rule's 
treatment of material changes requiring recertification, and thus, 
effectively creating a new product. To simplify the recordkeeping 
requirements, the commenter asked that the recordkeeping requirements 
apply ``for as long as the product, without a material change, is in 
production or imported by the manufacturer plus five years'' (emphasis 
in original). Otherwise, the commenter stated, manufacturers of long-
running products would have to maintain records in perpetuity, which 
would increase costs without assisting safety or compliance.
    (Response 72)--Although the final rule reserves subpart B (which 
includes proposed Sec.  1107.10(b)(5)), the issues raised by the 
commenters are applicable to the recordkeeping requirement for 
children's products, so we address this issue here for children's 
products.
    We agree that the burden of maintaining records for the life of a 
product, plus five years, could be unduly burdensome and difficult to 
implement, in cases where products undergo changes over time. Moreover, 
having a different time period for the retention of test reports versus 
other records may be confusing. Accordingly, we have revised the 
recordkeeping provision, such that all records must be maintained for 
at least five years from the date of their creation. If a product does 
not comply with an applicable children's product safety rule in a 
significant way, it is likely that the noncompliant aspect of the 
product would become apparent within the 5-year period. This change 
should result in less confusion for the regulated community regarding 
how long records for a particular product must be maintained.
    Additionally, on our own initiative, we have reorganized proposed 
Sec.  1107.26(b) and (c), by combining them into Sec.  1107.26(b) of 
the final rule. We

[[Page 69514]]

describe other changes in Sec.  1107.26 immediately below.
    (Comment 73)--Several commenters expressed concern about the 
requirement that records be maintained in English. Some commenters 
stated that we should allow records to be kept in the local language 
and only require translation into English by the manufacturer or 
importer when we request documentation. One commenter noted that the 
proposed rule will require millions of test reports and records to be 
created and maintained in English, even though only a small fraction of 
a percent of these test reports will ever be reviewed by the CPSC or 
other third parties. The commenter maintained that this would be very 
expensive for the manufacturer because they must find and hire English-
speaking technicians to perform the testing.
    The commenter also contended that this requirement could be 
potentially hazardous. The commenter posed this example:

    For example, a quality assurance technician in Vietnam may be 
excellent at maintaining the quality of a product, and she may even 
have a passable grasp of English, but her English skills may not be 
sufficient to communicate precise technical findings in English. If 
she is nonetheless required to record her findings in English, then 
there is a risk the test results will be transcribed, described and 
maintained inaccurately. Thus, we ask that the Commission reconsider 
this English-only requirement in the proposed rule.

    Another commenter asserted that a method for making documents 
available in English in the United States would need to be created to 
comply with the rule. The commenter contended that the requirement to 
have English language documents available within the United States does 
not offer additional confidence in product safety for U.S. consumers. 
Alternatively, the commenter suggested that a 3-year stay of the 
requirement that documents be maintained in English would allow a 
transition period to establish and implement appropriate infrastructure 
and processes for expanded recordkeeping.
    (Response 73)--We agree that it would be burdensome in many cases 
for all records to be maintained in English. Therefore, Sec.  
1107.26(b) in the final rule allows records to be maintained in 
languages other than English, if the records in the original language 
can be provided immediately by the manufacturer to the CPSC, and if an 
accurate English translation can be provided within 48 hours, or within 
such longer period of time, as may be negotiated with CPSC staff. Given 
this change to the final rule, we decline to adopt the suggestion that 
a 3-year stay of enforcement be implemented for this part of the rule.
    (Comment 74)--Many commenters expressed concern about the 
requirement in proposed Sec.  1107.26(b) that all records be maintained 
in the United States. Several commenters suggested that instead of 
requiring manufacturers to maintain records at a location within the 
United States, we should allow the records to be maintained outside the 
United States, so long as the records can be accessed from a location 
within the United States that is specified on the certificate. Some 
commenters noted that this requirement would be a burdensome and 
massive undertaking. One commenter did not believe that storing foreign 
manufacturing documents in the United States for every regulated 
product increases product safety. The commenter noted that these 
documents could be stored in their existing location and be submitted 
to the CPSC, upon request. Alternatively, the commenter suggested that 
a 3-year stay of the requirement that documents be maintained in the 
United States would allow a transition period to establish and 
implement appropriate infrastructure and processes for expanded 
recordkeeping.
    Another commenter noted that ISO 9001, Quality management systems--
Requirements, requires manufacturers to maintain these types of records 
at the factory where a product subject to certification is 
manufactured. Rather than requiring foreign manufacturers to maintain 
duplicate records in the United States, the commenter suggested that 
the final rule should harmonize CPSC requirements with ISO's, and 
require records to be made available to us for inspection, either in 
hard copy or electronically, through the U.S. subsidiary or other U.S. 
corporate entity, within a reasonable time after the CPSC requests 
them, pursuant to section 16(b) of the Consumer Product Safety Act.
    (Response 74)--We agree that it may be burdensome and duplicative 
in many cases to maintain all records in the United States. To reduce 
this burden and still maintain prompt access to records when needed, 
Sec.  1107.26(b) of the final rule no longer requires records to be 
maintained in the United States. However, all records must be made 
available, either in hard copy or electronically, such as through an 
Internet Web site, for inspection by the CPSC, upon request. Because 
the change eliminates the requirement that records be kept in the 
United States, we decline to adopt the suggestion of a 3-year stay of 
enforcement of this part of the rule.
    Regarding harmonization with the requirements of ISO 9001, the 
commenter did not specify which requirements in ISO 9001 should be 
harmonized. However, eliminating the requirement that records be 
maintained at a location within the United States would be consistent 
with sections 4.2.3.d of ISO 9001 (to ensure that relevant versions of 
applicable documents are available at points of use), and section 
4.2.3.g of ISO 9001 (to prevent the unintended use of obsolete 
documents, and to apply suitable identification to them if they are 
retained for any purpose).
    (Comment 75)--One commenter stated that some of the required 
recordkeeping is ``redundant and unnecessarily duplicative,'' such as 
production testing plans for multiple factories. Fees for outsourcing 
these services could be significant and burdensome to many small 
businesses, the commenter asserted.
    (Response 75)--Section 1107.21(c)(2) of the final rule sets forth 
the option to implement a production testing plan to increase the 
maximum periodic test interval, and Sec.  1107.21(c)(2)(ii) of the 
final rule requires that each manufacturing site conduct separate 
production testing because the location at which a product is 
manufactured could have a material effect on the product's ability to 
comply with the applicable rules. Factors such as power quality, 
climate, personnel, and factory equipment could materially affect the 
manufacture of a product. Because it cannot be assumed that units of 
the same product manufactured in more than one location are identical 
in all material respects, the finished product certifier must conduct 
separate production testing for the product for each manufacturing 
site. We have taken other steps to reduce the recordkeeping burden, 
such as not requiring that records be kept in the United States, and we 
are eliminating the requirement that all records must be maintained in 
English.
    (Comment 76)--One commenter noted that companies have established 
processes and formats and, in many cases, invested in information 
technology solutions to prepare and transmit these certificates in 
accordance with the law. The commenter added: ``Retailers are relying 
upon such certificates as they can with the benefit of reduced 
liability under section 19 of the CPSA'' as evidence that the products 
comply with all the applicable product safety rules. The commenter 
stated that

[[Page 69515]]

we need to clarify that the form of delivery of title, in and of 
itself, should not require additional testing, documentation, and 
certification. The commenter also asked us to clarify that retailers 
can rely upon domestically located supplier certifications without 
duplication of testing and certification requirements.
    (Response 76)--A certificate must accompany the product, as 
specified in 16 CFR part 1110. Certificates can be in paper or 
electronic form, as described by the commenter. The commenter is 
correct that the issuance of a Children's Product Certificate means 
that the children's product has passed its certification tests. If the 
commenter is referring to additional third party tests requested by 
retailers after the issuance of a certificate, we emphasize, as we did 
in the preamble to the proposed rule, that retailers and sellers of 
children's products can rely on certificates provided by product 
certifiers without having to conduct additional testing, if those 
certificates are based on testing conducted by a CPSC-accepted third 
party conformity assessment body.
    (Comment 77)--One commenter stated that the proposed recordkeeping 
requirements will have the largest immediate impact to the retail 
industry. The commenter stated that to meet these provisions, a process 
to centrally maintain records for an estimated 300,000 items per year 
would need to be created. The number of pages of documentation covering 
a portion of products for one large general merchandise retailer acting 
as importer of record, would range from a low of 375,000,000 pages to 
more than 1,000,000,000 pages per year. The commenter's estimate was 
based upon the following:
     Full product specification (150-200 pages);
     Certification testing (30-100 pages);
     Production testing plan (inspection records, testing 
documents, and production plans quality control documents) (1,000-3,000 
pages); and
     Periodic testing (50-200 pages).
    This estimate did not include records of remedial action, if 
necessary.
    Another commenter stated that the standards of recordkeeping 
outlined in the proposed rule are clear and should not present an 
unreasonable burden on manufacturers or importers. The commenter 
asserted that any responsible firm would maintain these records even 
without the rule, and they further asserted that establishing a 
reasonable baseline for product safety recordkeeping is crucial to 
enforcement.
    (Response 77)--We have revised the final rule to reduce costs 
associated with recordkeeping requirements, such as reducing and 
simplifying the record retention period to five years from the date of 
creation for all records, eliminating the requirement that records must 
be maintained in English, and eliminating the requirement that records 
must be maintained in the United States. Moreover, removal of the 
remedial action plan requirement for children's products should further 
reduce the recordkeeping burden for manufacturers.
    Even with these changes, the burden associated with the rule's 
recordkeeping requirements will vary among manufacturers or importers. 
As the commenters indicate, some manufacturers will consider the burden 
to be significant, whereas others will feel that the recordkeeping 
requirements are comparable to those at ``any responsible firm.'' The 
recordkeeping burden could be fairly heavy for some products and 
relatively light for others, depending upon the complexity of the 
product, the number of product safety rules that are applicable to the 
product, and the amount of testing required. However, as stated in the 
preamble to the proposed rule (75 FR at 28360), documentation and 
recordkeeping are required to establish the identity of the product and 
to demonstrate that the product complies with the applicable safety 
rules, not only when it is certified, but also on a continuing basis 
after certification.
    The final rule gives manufacturers and importers the flexibility to 
maintain records. The final rule does not require that the records be 
maintained in a specific CPSC format. While the final rule specifies 
what records or information must be maintained, a manufacturer may 
maintain the records--as the commenter suggested--within their own 
recordkeeping systems, if those systems meet the traceability 
requirements and ensure that products are certified properly before 
they enter into commerce.
    (Comment 78)--One commenter stated that manufacturers of children's 
furniture cannot provide any data on the cost of the recordkeeping 
requirements because they do not know yet the storage capacity that 
will be required to comply with the rule. Furniture manufacturers of 
non-children's products have reported that the cost of creating the 
system to collect their data on 16 CFR part 1303 compliance was 
approximately $100,000, and the cost of records maintenance was in the 
range of $30,000 to $50,000 per year. Based on this, furniture 
manufacturers of children's products are certain that it will cost them 
in excess of $100,000 to build and program such a system. These 
furniture companies will require additional staff to maintain and 
update the system, and that will require the expenditure of at least 
$30,000 to $50,000 a year, per person.
    (Response 78)--We acknowledge that there will be costs for tracking 
the data and maintaining the records, which could involve the 
development of software for tracking and managing the data and hiring 
additional staff. However, the final rule's recordkeeping requirements 
give manufacturers flexibility in determining how to meet them. 
Further, we have revised the final rule to reduce costs associated with 
recordkeeping requirements, such as reducing and simplifying the record 
retention period to five years from the date of creation for all 
records, eliminating the requirement that records must be maintained in 
English, and eliminating the requirement that records must be 
maintained in the United States.
    (Comment 79)--One commenter stated that as long as the manufacturer 
can use existing documentation, then there should not be an undue 
burden on the regulated community to comply with third party testing 
requirements for children's products. However, the commenter noted that 
if we intend to require that the manufacturer maintain documentation in 
a different format, then there will be a cost associated with 
maintaining this information.
    (Response 79)--The final rule does not require manufacturers to 
develop codes, numbering systems, or special data formats. A 
manufacturer is free to use any format, provided that the required 
information is available to the CPSC, when requested.
    (Comment 80)--One commenter objected to the requirement that 
records must be maintained for five years. The commenter pointed out 
that the larger suppliers to the U.S. market, including chain stores, 
divide an order and ship separately to different states. Without giving 
details, the commenter implied that this would make the requirement to 
keep all required records for five years a heavy burden on 
manufacturers.
    (Response 80)--This comment is from a trade association for a 
foreign manufacturer of children's products that may have 
misinterpreted the proposed rule. The proposed rule would require test 
records to be maintained for five years; other records would be 
maintained for as long as the product was in production or imported 
(without a material change), plus five years. In any event, a foreign 
manufacturer has no obligation to keep the records specified under 
Sec.  1107.26, unless it

[[Page 69516]]

agrees contractually to maintain the records on behalf of the importer. 
Even under these circumstances, only the importer has the obligation to 
keep the records. The importer, as the certifier, is responsible for 
maintaining the records or having another party maintain the records on 
its behalf. As for the retailer in the distribution chain, they are not 
required to keep the records unless they are also the importer. An 
importer's obligation to maintain the records for the product is 
independent of how many different retailers distribute the product. 
Regarding the burden of keeping records for five years, the 5-year 
record retention requirement was selected to be consistent with the 5-
year statute of limitations in 28 U.S.C. 2462. However, this 
requirement is not intended to supersede record retention times that 
are specified in existing regulations.

E. Proposed Subpart D--Consumer Product Labeling Program

1. Introduction
    Proposed subpart D, consisting of one section, would implement the 
label provision at section 14(i)(2)(A) of the CPSA. Section 14(i)(2)(A) 
of the CPSA requires the Commission to initiate a program by which a 
manufacturer or private labeler may label a consumer product as 
complying with the certification requirements in section 14(a) of the 
CPSA.
2. General Requirements
    Proposed Sec.  1107.40(a) would allow manufacturers and private 
labelers of a consumer product to indicate, by a uniform label on or 
provided with the product, that the product complies with any consumer 
product safety rule under the CPSA, or with any similar rule, ban, 
standard or regulation under any other act enforced by the CPSC.
    (Comment 81)--One commenter contended that allowing manufacturers 
to place an optional label on their products that states: ``Meets CPSC 
Safety Requirements,'' could give manufacturers who use such a label an 
unfair market advantage over manufacturers who choose not to include 
the label. The commenter stated that some manufacturers will not use 
the label because it will increase their product's cost. The commenter 
suggested that some consumers may choose the labeled product based upon 
a false assumption that a product without the label is somehow less 
safe. The commenter stated that some manufacturers will use the label 
as a misleading marketing tool or even alter the font type or size of 
the label for marketing purposes.
    (Response 81)--Section 14(i)(2)(A) of the CPSA requires us to 
initiate a program by which a manufacturer or private labeler may label 
a consumer product as complying with the certification requirements of 
section 14(a) of the CPSA. Section 1107.30 of the final rule (formerly 
proposed Sec.  1107.40) implements this requirement. Use of the 
labeling program is at the discretion of the manufacturer or private 
labeler, and the manufacturer or private labeler must determine costs 
versus benefits for their particular products. The label specifications 
are designed to avoid giving consumers the false impression that the 
product is CPSC-tested, -approved, or -endorsed. Section 1107.30(d) of 
the final rule prohibits manufacturers or private labelers from 
implying, through manipulation of the font type, font size, or other 
means that the CPSC has tested, approved, or endorsed the product.
    Other than renumbering this section, we have finalized paragraph 
(a) without change.
3. Label Specifications
    Proposed Sec.  1107.40(b) would require the label to be printed in 
bold typeface, using an Arial font of not less than 12 points, be 
visible and legible, and state: ``Meets CPSC Safety Requirements.''
    (Comment 82)--One commenter stated that the final rule should not 
specify the features that must be used for the optional label 
indicating that a product meets the CPSC's safety requirements. The 
commenter did not think we should specify features such as size, color, 
font, or location because these will depend on the product. The 
commenter noted that there is the possibility that the specified text 
type and size will not be compatible with the different internal 
systems developed by retailers and manufacturers to meet the needs of 
the affected product. The commenter said that to specify any 
requirements other than what works with a firm's internal systems would 
have absolutely no benefit at all.
    Another commenter expressed concern with the font size being ``no 
less than 12 points'' because that could be a problem on some small 
containers. The commenter said that we should use instead, the font 
size requirements in the Federal Hazardous Substances Act.
    One commenter agreed with our approach of labeling products to 
indicate compliance with the rules. The commenter recommended that the 
CPSC's labeling program include guidelines for the type, style, color, 
and font of such labels and should consider use of symbols or a mark, 
rather than words or initials, as proposed. Symbols also would help 
overcome language barriers for communicating compliance. The commenter 
said that the guidelines should allow variations in the label's size to 
accommodate products of different physical dimensions, but the general 
appearance of the label must remain consistent. They recommended that 
the labels appear as a permanent mark on the product packaging, as well 
as on the product itself.
    (Response 82)--We agree with the commenters that specifying 
particular fonts and minimum sizes for the label could make adding a 
label difficult for some products. Depending on the product's 
characteristics, such as size, surface finish, and the presence of a 
smooth, flat area for the label, a label with a minimum font size may 
be difficult to apply. Therefore, Sec.  1107.30(b) of the final rule 
(renumbered from proposed Sec.  1107.40(b)) specifies that the label 
must be visible and legible and does not specify a font and a minimum 
size. This change will give manufacturers the flexibility to implement 
a labeling system tailored to their product.
    The text of the message on the label remains: ``Meets CPSC Safety 
Requirements.'' The label may be affixed to the product or provided 
with the product to provide flexibility for the manufacturer or private 
labeler in their implementation of the labeling requirements. Because 
the labeling requirements will apply to all consumer products covered 
by an applicable product safety rule, it would be impossible to design 
a label that would work with every firm's internal system.
    Regarding the labeling requirements in the Federal Hazardous 
Substances Act (FHSA), the commenter did not specify which labeling 
requirements should be used. The general labeling requirements for 
labeling certain toys and games in section 24(d) of the FHSA states 
that the label shall be displayed in the English language in 
conspicuous and legible type in contrast by typography, layout, or 
color with other printed matter. The changes to the final rule are 
consistent with the FHSA in this regard.
    The final rule does not allow for the use of a symbol or mark 
because a symbol or mark might be misinterpreted as a CPSC 
certification mark or CPSC endorsement of the product. Additionally, 
the recommendation that a label be affixed to the product and its 
packaging may reduce the flexibility of manufacturers who choose to use 
the labeling program.

[[Page 69517]]

    In reviewing the comments submitted regarding labels and the 
provisions of subpart D of the proposed rule, we noticed that proposed 
Sec.  1107.40(d) (renumbered as Sec.  1107.30(d) in the final rule) 
could be misunderstood to imply that an alternative label may be used 
in place of the label specified in proposed Sec.  1107.40(b). We have 
revised Sec.  1107.30(d) in the final rule to state that other labels, 
in addition to the label specified in Sec.  1107.30(b), may be placed 
on the product, as long as the additional labels do not change the 
meaning of the label specified in Sec.  1107.30(b).
    (Comment 83)--One commenter argued that the requirement to provide 
only the statement: ``Meets CPSC Safety Requirements,'' is not adequate 
for indicating compliance. The commenter asserted that a registered 
certification mark is the only way to indicate adequately full 
compliance, and they noted further that the use of a registered 
certification mark is also used as a tool to address counterfeiting 
activities.
    (Response 83)--The consumer product labeling program described in 
proposed Sec.  1107.40 (renumbered as Sec.  1107.30 in the final rule) 
is voluntary on the part of a manufacturer, importer, or private 
labeler. Section 14(a) of the CPSA requires the manufacturer, importer, 
and private labeler to issue a General Conformity Certificate or a 
Children's Product Certificate for any product covered by an applicable 
product safety rule, regardless of whether a manufacturer elects to 
label their product under Sec.  1107.30. A registered certification 
mark authorized by a certification body for a manufacturer to include 
with the product does not contain the information required by a 
certificate, as specified in 16 CFR part 1110, and it cannot be used in 
place of the certificate. Thus, we disagree with the commenter that 
certification marks are the only way to indicate full compliance. Other 
products, such as mattress sets, indicate compliance (in this case to 
16 CFR part 1633) without the use of certification marks. Furthermore, 
we are aware of multiple instances of counterfeit certification marks 
on consumer products. As a result, we decline to revise the rule as 
suggested by the commenter.
4. Conditions Under Which a Consumer Product May Bear the Label
    Proposed Sec.  1107.40(c) would allow a consumer product to bear 
the label if the manufacturer or private labeler has certified, 
pursuant to section 14 of the CPSA, that the consumer product complies 
with all applicable consumer product safety rules under the CPSA and 
with all rules, bans, standards, or regulations applicable to the 
product under any other act enforced by the Consumer Product Safety 
Commission.
    We received no comments on this paragraph and, other than 
renumbering Sec.  1107.40 as Sec.  1107.30, we have finalized it 
without change.
5. Use of Other Labels
    Proposed Sec.  1107.40(d) would allow a manufacturer or private 
labeler to use another label on the consumer product, as long as such 
label does not alter or mislead consumers as to the meaning of the 
label described in proposed Sec.  1107.40(b). A manufacturer or private 
labeler would not be allowed to imply that the CPSC has tested, 
approved, or endorsed the product.
    In reviewing the comments submitted regarding labels and proposed 
subpart D, we noticed that proposed Sec.  1107.40(d) (renumbered as 
Sec.  1107.30(d) in the final rule) could be misunderstood to imply 
that an alternative label may be used in place of the label specified 
in Sec.  1107.40(b). Therefore, on our own initiative, we have revised 
Sec.  1107.30(d) to state that other labels, in addition to the label 
specified in Sec.  1107.30(b), may be placed on the product, as long as 
the additional labels do not change the meaning of the label specified 
in Sec.  1107.30(b).

F. Other Comments Received

    Several commenters raised questions on whether the final rule 
should contain ``safe harbors'' (where certain actions are considered 
to be complying with a particular requirement), and questioned the 
rule's effective date. Other commenters raised issues that were outside 
the scope of the rulemaking, such as whether a particular product was a 
``children's product'' or raised concerns on matters pertaining to the 
accreditation of third party conformity assessment bodies.
    (Comment 84)--Two commenters suggested that the rule clearly should 
allow for recognition of ``safe harbors'' based upon adherence to 
national standards for good manufacturing practices, international ISO 
standards governing GMP, and industry-based GMP category-specific 
guidelines that manufacturers may use as evidence of their good faith 
commitment to attaining a high degree of assurance that their products 
meet or exceed applicable federal safety standards. The commenters 
noted that we have recognized that such programs may be considered 
evidence of meeting the requirements under the proposed rule but noted 
as well that we have not yet recognized our authority to provide for 
such safe harbors, claiming the CPSIA did not make such specific 
provision (75 FR at 28339). According to the commenters, specific 
statutory authority is not a precondition to an agency acting under its 
rulemaking and enforcement authority to recognize such safe harbors. 
The commenters contended that we should provide such recognition.
    (Response 84)--As we noted previously in the preamble to the 
proposed rule (75 FR at 28339), section 14 of the CPSA does not contain 
a safe harbor exception, nor does it establish any criteria by which 
the Commission could recognize testing programs for purposes of a safe 
harbor.
    The final rule does not contain a safe harbor provision based upon 
a manufacturer's participation in a voluntary or industry-sponsored 
program; nor have we recognized any such program to indicate compliance 
with the final rule. We note that ISO standards for good manufacturing 
practices are generally industry-specific in areas such as cosmetics, 
pharmaceutical operations, food handling, and medical devices, products 
largely beyond the CPSC's jurisdiction. It is unlikely that any one GMP 
standard would be deemed workable or acceptable for all manufacturing 
methods for children's products.
    (Comment 85)--One commenter noted that the preamble to the proposed 
rule refers to a 95 percent statistical significance level as 
constituting a ``high degree'' of assurance. The commenter asked 
whether the CPSC would consider 95 percent probability or confidence 
level to be a safe harbor level.
    (Response 85)--In the preamble to the proposed rule, the 95 percent 
probability level was discussed as an alternative definition of a 
``high degree of assurance'' that we considered and subsequently 
rejected. We ``decided against defining `high degree of assurance' with 
respect to a 95 percent probability or confidence level (or any other 
level of statistical confidence) because there may be difficulty in 
applying the statistical methods to all manufacturing processes'' (75 
FR at 28344). Therefore, we do not consider a 95 percent confidence 
level to constitute automatically a ``high degree of assurance''; nor 
do we consider it to constitute a safe harbor level for purposes of 
compliance with the final rule. Determining what constitutes a ``high 
degree of assurance'' varies, depending upon the product manufactured 
and the manufacturing processes used. The determination must be made by 
individual manufacturers, based upon their knowledge of their products 
and manufacturing processes.

[[Page 69518]]

    (Comment 86)--One commenter noted that, for most major retailers, 
the creation of a product begins with a design specification that 
originates 12 months or more prior to manufacture or import into the 
United States. The commenter said that retroactively applying all the 
requirements of the final rule would be unduly burdensome. The 
commenter added that manufacturers of compliant products that are 
currently on retailers' shelves may not have any or all of the 
components of a reasonable testing program. Generating this 
documentation ``after the fact'' is simply not possible. The commenter 
asked that the rule apply only to products whose development begins 180 
days on or after adoption. Accordingly, products would begin to be 
certified based upon a reasonable testing program with all accompanying 
documentation approximately 18 months after adoption of the final rule.
    One commenter suggested that we set the effective date at one year 
from the publication of the final rule because that is how long it 
would take their industry to change its manufacturing processes to be 
able to comply with the requirements of a reasonable testing program.
    Another commenter said that they simply do not have the staff or 
the resources to get the third party testing done on all of the 
products that could fall within the definition of ``children's 
product'' and record it in a data collection and storage system (yet to 
be designed and implemented) within the 180-day timeframe mentioned in 
the preamble to the proposed rule. That commenter suggested that they 
needed at least 365 days, and therefore, they requested that we extend 
the stay of enforcement until February 2012.
    (Response 86)--The preamble to the proposed rule indicated that a 
final rule would become effective 180 days after its date of 
publication in the Federal Register (75 FR at 28361). However, on 
August 12, 2011, the President signed H.R. 2715 into law. H.R. 2715 
revised the CPSIA in several different ways, and it also affected 
section 14(i)(2)(B)(ii) of the CPSA. H.R. 2715 also created a new 
section 14(i)(3)(B) of the CPSA, which requires us, no later than one 
year after H.R. 2715's date of enactment, to review the public comments 
(on opportunities to reduce the costs of third party testing 
requirements), and it permits us to ``prescribe new or revised third 
party testing regulations,'' if we determine that ``such regulations 
will reduce third party testing costs consistent with assuring 
compliance with the applicable consumer product safety rules, bans, 
standards, and regulations.'' Consequently, we have finalized those 
provisions that H.R. 2715 did not affect directly. We also have decided 
to make the final rule effective 15 months after date of publication in 
the Federal Register so that parties can begin taking steps to develop 
internal processes, such as recordkeeping, and so that we, and 
interested parties, can consider how H.R. 2715 interacts with the final 
rule.
    We note that the effective date for the final rule is not 
calculated based on when development of a product begins, but rather, 
is calculated based on the date the product is manufactured. The 
requirements of the final rule apply only to products manufactured on 
or after the effective date of the final rule, and they do not apply 
retroactively to products already manufactured and certified.
    (Comment 87)--One commenter expressed concern that the rule has the 
potential to multiply the current volume of product testing by several 
fold and that third party conformity assessment bodies will be unable 
to provide accurately and efficiently the increased testing capacity 
needed by retailers/importers to comply with this rule. The commenter 
asserted that currently, without the rule being in effect, retailers 
already are experiencing delayed turnarounds in product testing, and it 
is not uncommon to have special requests denied due to the current 
backlog in testing.
    The commenter also expressed concern that the increased testing 
demand may affect laboratory execution, potentially resulting in 
incorrect laboratory results, which may cause compliant product to be 
lost, or may allow noncompliant product to enter commerce. The 
commenter said that if the capacity of the third party test conformity 
assessment bodies is exceeded, retailers' and manufacturers' ability to 
meet the rule's effective date could be jeopardized. The commenter 
asked that the third party conformity assessment body capacity issue be 
taken into consideration when establishing the effective date of the 
final rule.
    (Response 87)--We are aware that implementation of section 14(a)(2) 
of the CPSA potentially could result in insufficient testing capacity 
at CPSC-accepted third party conformity assessment bodies. We note that 
in the majority of the notices of requirements that have issued since 
2008, there have been very few claims of insufficient capacity, and 
when such issues have arisen, we have taken steps to address the matter 
(see 75 FR 34360, June 17, 2010). We intend to monitor and address, if 
possible, any capacity issues that arise after the final rule becomes 
effective.
    (Comment 88)--One commenter objected to the application of the 
regulation to some juvenile furniture. The commenter stated that it is 
difficult to estimate the cost of testing for children's products when 
we have not yet decided on the definition of a children's product. 
Another commenter generally supported the idea of third party testing 
of children's products but was unclear about what products are included 
in the category of children's products.
    (Response 88)--The final rule does not address what products fall 
within the definition of ``children's products''; and therefore, the 
comment is outside the scope of the rule. However, after the comment 
was submitted, we issued an interpretative rule (now codified at 16 CFR 
part 1200) regarding the definition of children's product, providing 
the guidance the commenter is seeking.
    (Comment 89)--One commenter wondered whether a manufacturer or 
importer of a children's product subject to a children's product safety 
rule for which no third party testing conformity assessment bodies have 
been accredited by CPSC, is required to certify the product based on 
such testing. The commenter also wondered whether an importer is 
prohibited from importing the children's product until we accredit 
third party testing conformity assessment bodies for the children's 
product safety rule.
    (Response 89)--The final rule does not address the issuance of 
notices of requirements for accreditation of third party conformity 
assessment bodies; and therefore, the comment is outside the scope of 
the rule. However, if there are no CPSC-accepted third party conformity 
assessment bodies whose scope includes a rule applicable to a 
children's product, those products are not prohibited from being 
imported. The children's products must still comply with the 
requirements of the applicable children's product safety rules. For 
example, if a rule established a limit of X for a particular chemical 
in children's products, but there were no CPSC-accepted third party 
conformity assessment bodies to test for X, the children's product 
would still be subject to the limit of X for that particular chemical; 
the absence of a CPSC-accepted third party conformity assessment body 
would not mean that the limit no longer applies.
    (Comment 90)--One commenter recommended that conformity assessment 
bodies should: (a) Comply with the standards in ISO/IEC Guide 65, or 
(b) in fulfillment of the requirements in ISO/IEC 17025:2005, during 
each audit review and resubmission of CPSC

[[Page 69519]]

Form 223, demonstrate independence from ``* * * financial and other 
pressures and influences that may adversely affect the quality of their 
work * * *''; the commenter also suggested requirements for audits of 
conformity assessment bodies.
    Another commenter expressed ongoing concern over the distinct 
possibility that accredited testing organizations, especially 
``firewalled'' and ``government laboratories,'' could be subject to 
influence and threats to impartiality by outside or related interests. 
The commenter expressed concern that the new audit procedures stated 
that all types of third party conformity assessment bodies: 
Independent, firewalled suppliers, and government-owned or -controlled 
would be treated the same and were all called third party conformity 
assessment bodies. The commenter stated that these different types of 
conformity assessment bodies have different modes of operation, and 
they need to be treated differently by us in both the auditing and 
accreditation requirements. The commenter suggested that we require 
applicants to submit the evidence used to validate the fulfillment of 
ISO/IEC 17025:2005 requirements for the laboratory to ``have 
arrangements to ensure that its management and personnel are free from 
any undue internal and external commercial, financial and other 
pressures and influences that may adversely affect the quality of their 
work,'' not only as part of their application to the CPSC, but also on 
an ongoing basis, as part of each audit review and resubmission of CPSC 
Form 223.
    Two commenters stated that the proposed rule fails to differentiate 
between firewalled and independent conformity assessment bodies. 
According to one commenter, a manufacturer can submit samples to its 
firewalled conformity assessment body even if its reasonable testing 
program fails to provide a high degree of assurance of compliance with 
the applicable children's product safety rules. The commenter sought 
clarification of the provision that a manufacturer of children's 
products with a reasonable testing program may submit samples to its 
firewalled conformity assessment body every two years.
    (Response 90)--The final rule does not address the requirements for 
conformity assessment bodies; and therefore, the comments are outside 
the scope of the rule. Conformity assessment body requirements will be 
addressed in a separate rulemaking. Further, section 14(f) of the CPSA 
defines third party, firewalled, and governmental conformity assessment 
bodies.
    (Comment 91)--Two commenters recommended that we consider a number 
of steps to ensure that third party conformity assessment bodies are 
protected against undue influence. These included the following: (1) 
Adopting the requirements in Clause 4.2 of the ISO/IEC Guide 65; (2) 
using the OSHA NRTL program as a model for laboratory accreditation; 
and (3) requiring all laboratories applying to the Commission to submit 
evidence that they fulfilled ISO/IEC 17025:2005 section 4.1.5 b. One 
commenter made the recommendation for ``firewalled'' conformity 
assessment bodies. Another commenter would require annual reassessments 
of third party conformity assessment bodies.
    (Response 91)--The final rule does not address undue influence 
requirements for third party conformity assessment bodies; and 
therefore, the comments are outside the scope of this rule. This rule 
establishes the requirements for manufacturers to safeguard against the 
exercise of undue influence on third party conformity assessment 
bodies.
    (Comment 92)--Several commenters submitted comments on the 
concurrent rulemaking for component part testing in proposed 16 CFR 
part 1109.
    (Response 92)--The final rule does not establish the requirements 
for component part testing; and therefore, these comments are outside 
the scope of this rule. We have, instead, considered those comments in 
that rulemaking. (See Conditions and Requirements for Relying on 
Component Part Testing or Certification, or Another Party's Finished 
Product Testing or Certification, to Meet Testing and Certification 
Requirements (16 CFR part 1109)).
    (Comment 93)--One commenter opined that an existing third party 
certification system under the OSHA NRTL program, in conjunction with 
testing being carried out in testing facilities accredited to ISO/IEC 
17025, is the preferred method for product certification for the CPSC. 
The commenter recommended that we consider a similar program or an 
accredited certification program that meets the requirements of ISO/IEC 
Guide 65 and ISO/IEC Guide 67.
    (Response 93)--The final rule does not address certification 
systems or accreditation, such as ISO/IEC Guides 65 and 67; and 
therefore, the comment is outside the scope of this rule.
    (Comment 94)--Several commenters asked us to exempt silk from 16 
CFR part 1610. They argued that the regulation exempts plain surface 
fabrics weighing at least 2.6 ounces per square yard and fabrics made 
from acrylic, modacrylic, nylon, olefin, polyester, and wool, but not 
silk. The commenters stated that silk's reaction to fire is comparable 
to wool and better than the synthetics that are exempted.
    (Response 94)--The final rule does not address 16 CFR part 1610; 
and therefore, the comments are outside the scope of this rule.
    (Comment 95)--One commenter noted that heavy element and phthalates 
testing use some chemicals. The commenter stated that, with increased 
testing, there will be more chemical waste, which may not be desirable.
    (Response 95)--The final rule does not address testing methods for 
specific substances; and therefore, the comment is outside the scope of 
the rule.
    (Comment 96)--One commenter suggested developing an exemption list 
for vinyl fabrics produced in accordance with 16 CFR part 1611, 
Standard for the Flammability of Vinyl Plastic Film, using a process 
similar to that used to develop the exemption list in 16 CFR part 1610, 
Standard for the Flammability of Clothing Textiles. In the latter case, 
testing over a number of years showed that certain types of fabrics 
always produce passing results when tested according to 16 CFR part 
1610, and those types of fabrics eventually were exempted from the 
standard.
    (Response 96)--The final rule does not address 16 CFR part 1611; 
and therefore, the comment is outside the scope of the rule.
    (Comment 97)--One commenter disagreed that a standard of general 
application to all consumer products in a category should be considered 
a ``children's product safety rule'' for purposes of the CPSIA.
    (Response 97)--The final rule establishes the requirements for the 
testing and certification of children's products and for the labeling 
of compliant consumer products. Determinations of whether a particular 
safety standard is a children's product safety rule are outside the 
scope of this rule.
    (Comment 98)--One commenter suggested that we consider developing 
training guidelines for the regulated community and testing 
laboratories that explain key elements of a reasonable testing program 
for non-children's and children's products. The guidelines could 
include helpful training aids and presentations to increase knowledge 
and understanding. The guidelines could include helpful examples and 
scenarios

[[Page 69520]]

for most common issues (e.g., developing a random sampling program) and 
even infrequent but complex issues (e.g., traceability for raw 
materials and product components).
    (Response 98)--The final rule is limited to establishing the 
requirements for testing and certification for children's products and 
for labeling of consumer products as compliant; therefore, the comment 
is outside the scope of the rule. Further, we have reserved proposed 
subpart B (the reasonable testing program for non-children's products) 
for future consideration. We may consider establishing training 
programs in the implementation of the final rule.
    (Comment 99)--One commenter noted that the proposed rule had to be 
worded very generally to be applicable to a wide range of products. 
This has had the effect of making it more difficult to understand how 
the rules will be applied in any specific industry. The commenter 
suggested that we conduct regional, industry-specific workshops to 
explain to the regulated manufacturers how these general rules will 
apply to their existing procedures and where new regulatory obligations 
exist.
    (Response 99)--The final rule is limited to establishing the 
requirements for testing and certification for children's products and 
for labeling of consumer products as compliant; therefore, the comment 
is outside the scope of the rule. We may consider establishing regional 
industry-specific workshops in the implementation of the final rule.
    (Comment 100)--One commenter recommended that the labels for toys 
be used to communicate not only compliance with the standards, but also 
the appropriate age range for the toy. The commenter said that the 
European Union uses a universal mark that indicates the inappropriate 
age ranges of a toy if it presents a choking hazard. The commenter said 
that the CPSC's program could expand on that concept, by recommending 
labeling that caregivers can use to separate toys intended for siblings 
of differing ages, while also preventing parents and other caregivers 
from buying toys that may be inappropriate for the age of the child. 
The commenter believes that this could help enhance toy safety by 
reducing children's exposure to inappropriate toys.
    (Response 100)--The final rule does not address labeling for the 
appropriate ages ranges for a toy; therefore, the comment is outside 
the scope of the rulemaking. Section 14(i)(2)(A) of the CPSA requires 
us to implement a program by which a manufacturer may label a product 
to comply with the certification requirements of section 14(a) of the 
CPSA. However, the CPSC staff has issued Age Determination Guidelines: 
Relating Children's Ages to Toy Characteristics and Play Behavior, T. 
P. Smith (Ed.) (2002) (which can be found on the CPSC Web site at 
http://www.cpsc.gov/BUSINFO/adg.pdf) which addresses the issue raised 
by the commenter.
    (Comment 101)--One commenter asserted that the best approach would 
be to allow businesses to manage their compliance risks as best they 
can because ``* * * the prophylactic approach to testing adopted by the 
CPSC will inevitably put many small or micro businesses into bankruptcy 
* * *. If the law does not permit the agency to adopt sensible rules 
that allow businesses to manage their compliance risk as best they can 
(where the standards remain in place, but the government stops trying 
to tell businesses HOW to comply), then the Commission must finally 
tell Mr. Waxman what he doesn't want to hear--that his law is broken 
and can't be fixed * * *.'' The commenter then wrote: ``* * * I don't 
believe the agency can devise sensible regulations to fix this problem 
short of a legislative change.''
    (Response 101)--Comments about the merits of section 14 of the CPSA 
or the CPSIA are beyond the scope of this rulemaking. However, on 
August 12, 2011, the President signed into law H.R. 2715, which amended 
the CPSIA in several respects. One provision provides relief for small 
batch manufacturers. Another provision in H.R. 2715 requires the CPSC 
to seek public comment on opportunities to reduce the cost of third 
party testing requirements consistent with assuring compliance with any 
applicable consumer product safety rule, ban, standard, or regulation. 
H.R. 2715 directs the CPSC to seek public comment on seven specific 
issues, including other techniques for lowering the cost of third party 
testing consistent with assuring compliance with the applicable 
consumer product safety rules, bans, standards, and regulations. 
Elsewhere in this issue of the Federal Register, we have published a 
notice seeking public comment on the issues in H.R. 2715. H.R. 2715 
further requires the CPSC to review the public comments and states that 
the CPSC may prescribe new or revised third party testing regulations 
if we determine that such regulations will reduce third party testing 
costs consistent with assuring compliance with the applicable consumer 
product safety rules, bans, standards, and regulations.
    (Comment 102)--One commenter, who manufactures die-cast metal toys, 
commented that the 90 ppm lead content limit is too low to allow use of 
the usual aluminum for casting their products, even though the same 
metal is used to make cooking utensils.
    Furthermore, the commenter stated that it costs $3,700 to test one 
unit and that the market will not absorb the costs of testing multiple 
units per batch. The commenter implied that these costs would cause it 
to go out of business or make its products in China. The commenter 
expressed the belief that it should not have to test using third party 
conformity assessment bodies because:
    1. They are ISO 9001:2008 compliant.
    2. They document all of their supplier receipts of metal, plastic, 
and powder paint materials.
    3. They conduct a metal analysis for each production run with their 
spectrometer.
    (Response 102)--The final rule does not address lead content and 
surface coating limits and; therefore, comments on the allowable 
concentration levels are outside the scope of this rule.
    However, H.R. 2715 directs the CPSC to seek public comment on seven 
specific issues, including the extent to which evidence of conformity 
with other national or international governmental standards may provide 
assurance of conformity to consumer product safety rules, bans, 
standards, or regulations, and the extent to which technology, other 
than the technology already approved by the Commission, exists for 
third party conformity assessment bodies to test or to screen for 
testing consumer products subject to a third party testing requirement. 
Elsewhere in this issue of the Federal Register, we have published a 
notice seeking public comment on the issues in H.R. 2715.

IV. Regulatory Flexibility Act

A. Introduction

    We have examined the impacts of the final rule under the Regulatory 
Flexibility Act (5 U.S.C. 601-612). The Regulatory Flexibility Act 
requires agencies to analyze regulatory options that would reduce any 
significant impact of a rule on small entities.
    Several sections that were included in the proposed rule are not 
included in the final rule, but they are being reserved for future 
rulemaking. Proposed subpart B, pertaining to a reasonable testing 
program for non-children's products, is not included in the final rule, 
but we may address the issue in a future rulemaking. The proposed 
section pertaining to the

[[Page 69521]]

selection of random samples for children's products (Sec.  1107.22) is 
not included in the final rule, and it is addressed in a separate 
rulemaking published elsewhere in this issue of the Federal Register. 
Proposed Sec.  1107.21(d), which would provide a partial exemption from 
periodic testing for low-volume products is not included in the final 
rule. The reason for omitting proposed Sec.  1107.21(d) from the final 
rule is that H.R. 2715 asked us to examine means to reduce the cost of 
third party testing requirements consistent with assuring compliance 
with any applicable consumer product safety rule, ban, standard, or 
regulation. It also contained special rules for small batch 
manufacturers and directed us to consider alternative testing 
requirements or to exempt small batch manufacturers from certain third 
party testing requirements. Given these new statutory obligations 
resulting from H.R. 2715, we are reserving Sec.  1107.21(e) (formerly 
proposed Sec.  1107.21(d)) so that we may consider issues related to 
cost, low-volume products, and small batch manufacturers more fully. 
Finally, proposed Sec.  1107.25, which would establish requirements for 
remedial action for children's products, has not been included in the 
final rule.
    Before promulgating a final rule, the Regulatory Flexibility Act 
requires agencies to prepare a final regulatory flexibility analysis of 
the rule that analyzes the impact that the rule will have on small 
entities. The final regulatory flexibility analysis must contain:
    (1) A succinct statement of the need for, and objectives of, the 
rule;
    (2) a summary of the significant issues raised by the public 
comments in response to the initial regulatory flexibility analysis, a 
summary of the assessment of the agency of such issues, and a statement 
of any changes made in the proposed rule as a result of such comments;
    (3) a description of and an estimate of the number of small 
entities to which the rule will apply, or an explanation of why no such 
estimate is available;
    (4) a description of the projected reporting, recordkeeping, and 
other compliance requirements of the rule, including an estimate of the 
classes of small entities which will be subject to the requirement and 
the type of professional skills necessary for preparation of the report 
or record; and
    (5) a description of the steps the agency has taken to minimize the 
significant economic impact on small entities consistent with the 
stated objectives of applicable statutes, including a statement of the 
factual, policy, and legal reasons for selecting the alternative 
adopted in the final rule and why each one of the other significant 
alternatives to the rule considered by the agency which affect the 
impact on small entities was rejected.

B. Need for, and Objectives of, the Rule

    Section 14(a)(2) of the CPSA requires that every manufacturer of a 
children's product that is subject to a children's product safety rule 
certify that the product complies with the applicable children's 
product safety rule based on testing conducted by a third party 
conformity assessment body accredited to conduct such tests. The final 
rule establishes requirements and procedures for manufacturers to 
certify children's products under this section of the CPSA.
    Section 14(i)(2)(A) of the CPSA requires that we initiate a program 
by which a manufacturer or private labeler may label a product as 
complying with the applicable safety rules. The statute also requires 
us to establish protocols and standards: (i) For ensuring that a 
children's product is tested periodically and when there has been a 
material change in the product, (ii) for the testing of representative 
samples to ensure continued compliance, (iii) for verifying that a 
product tested by a conformity assessment body complies with applicable 
safety rules, and (iv) for safeguarding against the exercise of undue 
influence on a conformity assessment body by a manufacturer or private 
labeler. With the exception of items (ii) (standards and protocols for 
the testing representative samples), and (iii) (establish protocols and 
standards for verifying that a product tested by a conformity 
assessment body complies with applicable safety rules), the final rule 
implements these requirements.
    The objective of the final rule is to reduce the number of 
children's products that are distributed each year that fail to comply 
with one or more children's product safety rules. The applicable 
children's product safety rules were established to reduce the 
unreasonable risk of injury or death due to foreseeable hazards 
associated with particular children's products.

C. Comments on the Initial Regulatory Flexibility Analysis, and Our 
Responses

    The preamble to the proposed rule contained our initial regulatory 
flexibility analysis (76 FR at 28352 through 28360). Several commenters 
addressed issues pertaining to that analysis.
    (Comment 103)--One commenter noted that in estimating the number of 
firms that could be impacted by the proposed rule, the book publishing 
industry (NAICS code 511130) and printing industry (NAICS code 323117) 
were not included. The commenter recommended their inclusion for the 
final regulatory flexibility analysis.
    (Response 103)--We acknowledge that the initial regulatory 
flexibility analysis inadvertently omitted these industries. However, 
the recently enacted H.R. 2715 exempts ordinary books and ordinary 
paper-based printed materials from the third party testing 
requirements, so the commenter's concern no longer applies.
    (Comment 104)--One commenter indicated that the cost of complying 
with the reasonable testing program requirements for furniture will 
vary according to: (1) Whether the furniture is children's or non-
children's furniture; (2) whether the furniture is produced 
domestically or imported; and (3) whether the manufacturer produces a 
high or low-volume of products. High-volume producers can rely on a 
component part certificate from their paint suppliers, and the cost of 
testing would be relatively low. Higher quality, lower volume producers 
would have greater difficulty because these items often are ``made to 
order'' and ``as needed.'' These producers will use small batches of 
finishes issued in a number of different finishing materials, each of 
which would need to be tested.
    (Response 104)--We agree that the costs of complying with the 
requirements will vary among products and manufacturers. Generally, the 
costs will be more significant for manufacturers of lower volume 
products. It should also be noted that proposed subpart B, which would 
contain the requirements applicable to non-children's products, is not 
being finalized at this time. Therefore, the final rule does not impose 
any requirements on non-children's furniture.
    (Comment 105)--Two commenters expressed concern about costs. One 
commenter noted that reliance on third party conformity assessment body 
testing raises costs and imposes production delays. Another commenter, 
a charitable organization that makes wooden toys for donation to needy 
children, commented that it lacks the resources to pay for 
certification testing and would need to discontinue activities unless 
granted an exemption or some other type of relief.
    (Response 105)--Section 14(a)(2) of the CPSA requires third party 
conformity assessment bodies to test children's products for compliance 
with applicable children's product safety

[[Page 69522]]

rules. We recognize that testing costs may be substantial and may have 
a significant adverse affect on some manufacturers, especially small 
businesses that may have limited financial resources. We also recognize 
that the testing will take time and could result in some delays in the 
production process.
    Recently enacted H.R. 2715 requires us to seek public comment on 
opportunities to reduce the cost of third party testing requirements 
consistent with assuring compliance with any applicable consumer 
product safety rule, ban, standard, or regulation. H.R. 2715 directs us 
to seek public comment on seven specific issues, including techniques 
for lowering the cost of third party testing consistent with assuring 
compliance with the applicable consumer product safety rules, bans, 
standards, and regulations. Elsewhere in this issue of the Federal 
Register, we have published a notice seeking public comment on the 
issues in H.R. 2715. H.R. 2715 further requires us to review the public 
comments and states that we may prescribe new or revised third party 
testing regulations if we determine that such regulations will reduce 
third party testing costs consistent with assuring compliance with the 
applicable consumer product safety rules, bans, standards, and 
regulations.
    H.R. 2715 also requires us to consider alternative requirements for 
the covered products of small batch manufacturers and, if no 
alternative requirements are available or economically practical, 
exempts small batch manufacturers from the third party testing 
requirements, with some exceptions. Covered products are those for 
which fewer than 7,500 units were produced in the previous year, and a 
small batch manufacturer is one whose gross sales revenue from all 
consumer products in the previous calendar year was less than $1 
million. In the case of toys, however, no alternative requirements or 
exemptions would be permitted for third party testing for the lead 
content of paint, small parts, and pacifiers. Where possible, we tried 
to reduce testing costs by allowing the use of component part testing.
    (Comment 106)--One commenter noted that the initial regulatory 
flexibility analysis acknowledged that the examples used only 
considered the out-of-pocket testing costs. Costs not considered in the 
examples include: Samples destroyed or damaged in testing; 
transportation of the samples; administrative costs for managing 
testing; administrative costs for managing the testing data and 
recordkeeping; an allocation of general management time; legal 
expenses, among other costs. The commenter estimated that, depending on 
the scale of the business, these costs will add 15 to 50 percent to the 
out-of-pocket testing costs.
    The commenter also noted that the initial regulatory flexibility 
analysis considered the probability that some manufacturers or private 
labelers will have to test multiple samples to obtain the high degree 
of assurance required by the proposed rule. The commenter asserted that 
over the last 20 years of product testing at his company, multiple 
safety tests of the same product have not revealed anything useful. The 
commenter asserted that the testing rule is complex; that many small 
businesses will not have the skills necessary to understand what is 
expected of them in terms of compliance; and that many small businesses 
will exit the market for children's products.
    (Response 106)--The initial regulatory flexibility analysis focused 
on the cost of third party testing because it will likely be the most 
significant cost for small manufacturers of children's products. 
Considering only the third party testing costs, the initial regulatory 
flexibility analysis found that the rule could have a significant 
impact on a substantial number of small entities. The initial 
regulatory flexibility analysis explicitly stated that the only costs 
considered in the analysis were the costs that the laboratories would 
charge to conduct the testing. The commenter is correct that the rule 
would impose other costs, including the cost of the samples destroyed 
in testing and freight, as well as the costs involved in administering 
and managing the testing and paperwork. The commenter's estimate that 
these costs would add 15 to 50 percent to the out-of-pocket testing 
costs, depending upon factors such as the product involved and the 
scale of the business, seems reasonable.
    The commenter also is correct that the initial regulatory 
flexibility analysis considered the impact on firms that had to test 
more than one sample of a product in order for the manufacturer to 
obtain a high degree of assurance that the product complies with the 
applicable product safety rules. However, the final rule does not 
specify the number of samples that must be tested. It is possible that 
if the commenter, as asserted, has never found multiple tests on its 
products to reveal anything useful, then the products manufactured 
could be of such uniform composition and quality that the number of 
samples that the commenter will be required to submit for testing will 
be small. However, because the rule requires that every children's 
product subject to a children's product safety rule be tested 
periodically by a third party conformity assessment body, the commenter 
might need to conduct more testing than the commenter believes is 
necessary.
    We acknowledge that the rule is complex, and some small businesses 
might have to hire outside consultants, such as lawyers, statisticians, 
or quality control experts to help them comply with the regulations. As 
a result, some small firms may exit the market for children's products.
    (Comment 107)--One commenter stated that the testing rule would 
accelerate the decline of domestic manufacturing firms, as more 
manufacturers go offshore to minimize the cost of testing. The 
commenter asserted that the furniture industry will have no choice but 
to close down more and more factories in the United States and take 
those jobs off shore to benefit from the lower testing costs. The 
commenter stated that some small manufacturers have abandoned plans to 
offer products intended for the youth market.
    (Response 107)--The initial regulatory flexibility analysis noted 
that the costs of some third party tests are less expensive abroad than 
they are in the United States. For example, while typical prices for 
lead content tests range from $50 to more than $100 in the United 
States, the same lead content test, in some cases, can be obtained for 
as little as $20 in China (75 FR at 28355). Higher third party testing 
costs in the United States would be an incentive for manufacturers to 
produce children's products abroad, to take advantage of the lower 
testing costs.
    Given all of the factors that go into a decision by a manufacturer 
to produce consumer products abroad rather than in the United States, 
the impact of third party testing costs on such a decision might be 
small. It seems unlikely that the independent effect of higher third 
party testing costs, by itself, would result in a large number of 
factories in the United States closing down. With regard to small 
domestic manufacturers, it is possible that the third party testing 
costs associated with the children's furniture could lead some to 
manufacturers to reduce their children's furniture product lines or 
even cease their production of children's furniture. Any small 
manufacturer of children's furniture who qualifies as a small batch 
manufacturer might be offered relief by the alternative requirements or 
exemptions that are provided by H.R. 2715; however, matters regarding 
the small batch manufacturer's exception in

[[Page 69523]]

H.R. 2715 are outside the scope of this rulemaking. Elsewhere in this 
issue of the Federal Register, we have published a notice seeking 
public comment on the issues in H.R. 2715, including other techniques 
for lowering the cost of third party testing consistent with assuring 
compliance with the applicable consumer product safety rules, bans, 
standards, and regulations, pursuant to H.R. 2715.
    (Comment 108)--One commenter stated that the cost to test a finish 
used in the furniture industry is about $50 (which is consistent with 
the discussion of testing costs in the initial regulatory flexibility 
analysis). A youth bed, which is also subject to the lead content 
requirements of section 101 of the CPSIA, might require 29 tests at a 
third party testing facility, which would bring the total cost of lead 
testing to $1,450. In addition, testing to the bunk bed standard would 
add $600 to $800 to the cost. A crib or toddler bed would cost an 
additional $750 to $765 ($450 to $520 in China) to test to the relevant 
children's product safety rules. The cost of testing other items of 
youth furniture, such as desks, entertainment centers, and bookcases, 
averages approximately $235. These costs do not include the cost of the 
samples, freight, random sampling, or the cost for employees to track 
and administer the recordkeeping requirements.
    (Response 108)--As described in the initial regulatory flexibility 
analysis (75 FR at 28352 through 28362), the testing of some children's 
products by third party conformity assessment bodies can be costly. The 
testing costs described by the commenter do not appear to be 
unreasonable estimates, based on cost estimates we obtained. In cases 
where the same component is used in more than one product, 
manufacturers may be able to reduce their testing costs by using 
component part testing. However, component part testing will not offer 
any relief from the costs of tests that must be performed on the 
finished product, such as tests for conformity to the crib and bunk bed 
standards.
    (Comment 109)--One commenter stated that furniture manufacturers 
who deal in high-quality but lower volume furniture manufacturing may 
offer products with between 30 and more than 2,000 possible 
combinations of finishes. Many of these finishes are custom or made to 
order, so that a batch can range from a 5-gallon bucket to a 55-gallon 
drum. Each custom finish consists of at least 10 different materials. 
The manufacturer must create a panel for each possible combination of 
finishing materials and then have it analyzed by a third party testing 
facility. An x-ray fluorescence (XRF) gun is then used to verify that 
the finished piece, in fact, complies with the lead-in-paint standard. 
It is estimated that 6 to 10 employees will be required to track the 
testing and compile the certificates of conformity. It is estimated 
that the cost to comply with the rule for non-children's products could 
range from $200,000 to $410,000, annually.
    (Response 109)--We received many comments on proposed subpart B, 
which was concerned with reasonable testing programs for non-children's 
products. The comments raised many practical issues, which illustrates 
the difficulty of drafting a regulation that can apply to many 
different types of products and manufacturing processes and still 
provide sufficient guidance to enable manufacturers to implement the 
requirements effectively. Consequently, we are deferring action with 
respect to finalizing subpart B. Instead, we will reserve subpart B in 
the final rule and continue evaluating the issues raised in the 
comments.
    It should be noted, however, that although we are not finalizing 
subpart B at this time, manufacturers of non-children's products that 
are subject to a product safety rule, ban, standard, or regulation are 
still obligated by the CPSA, as amended by the CPSIA, to certify that 
their products comply with all applicable safety rule, based on a test 
of each product or a reasonable testing program.
    In the case of testing the lead content of paint, which the 
commenter mentioned, the use of component part or composite testing--as 
would be allowed by the final rule on component part testing--might 
allow some manufacturers to reduce their testing costs. For example, if 
the same 10 raw materials (and only those materials) are combined in 
different portions to produce 30 different finishes, a manufacturer 
could test the lead content of each of the materials, and if each of 
the materials met the lead content requirement, then the manufacturer 
would not need to test each of the 30 finishes separately.
    (Comment 110)--One commenter stated that because the cost of 
testing and recordkeeping will be passed on to the consumer, this could 
create an ``upside down'' market in furniture, in which youth furniture 
is more expensive than adult furniture. This could lead some consumers 
to purchase ``adult'' furniture for children instead of purchasing 
youth furniture that has been third party tested.
    (Response 110)--Section 14(a)(2) of the CPSA requires third party 
testing of children's products, including children's and youth 
furniture. Depending upon the structure of the market and market 
conditions, some or all of the testing costs may be passed on to 
consumers. We cannot determine whether passing on these costs will make 
children's furniture--in any absolute sense--to be more expensive to 
purchase than adult furniture; but passing on these costs to consumers 
is likely to increase the relative price of children's furniture, and 
it could provide a price incentive for parents to substitute adult 
furniture for children's furniture.
    (Comment 111)--One commenter stated that the proposed rule will 
impose significant new costs on the mattress industry because 
mattresses are already subject to an expensive mandatory testing 
program pursuant to 16 CFR part 1633. The commenter asserted that 
because most manufacturers of mattresses are small businesses, the 
proposed rule would have a substantially greater impact on the mattress 
industry, given the nature of the products, the types of standards that 
the products must meet, the destructive nature of the testing involved, 
and the cost of the samples tested.
    The commenter also noted that mattress testing entails other costs, 
such as: the cost of the samples tested, the laboratory test fees, 
freight costs to ship samples to the laboratory, and the manufacturers' 
staff sent to witness the test. The total cost of conducting a full 
test for 16 CFR part 1633 can range from $850 to $1,650 per sample 
tested, plus added travel costs and salary expenses for company 
personnel to witness the test. The commenter urged us to take into 
account the significant new costs that the rules will impose on the 
mattress industry, which is comprised overwhelmingly of small 
businesses.
    (Response 111)--We acknowledge that the rule could impose 
additional costs on some firms. However, section 14(a)(2) if the CPSA 
requires third party testing of children's products that are subject to 
an applicable children's product safety rule.
    Additionally, on August 12, 2011, the President signed into law 
H.R. 2715, which amended the CPSIA in several respects. One provision 
in H.R. 2715 requires us to seek public comment on opportunities to 
reduce the cost of third party testing requirements consistent with 
assuring compliance with any applicable consumer product safety rule, 
ban, standard, or regulation. H.R. 2715 directs us to seek public 
comment on seven specific issues. These issues include:

[[Page 69524]]

     The extent to which manufacturers with a substantial 
number of substantially similar products subject to third party testing 
may reasonably make use of sampling procedures that reduce the overall 
test burden without compromising the benefits of third party testing; 
and
     Other techniques for lowering the cost of third party 
testing consistent with assuring compliance with the applicable 
consumer product safety rules, bans, standards, and regulations.
    Elsewhere in this issue of the Federal Register, we have published 
a notice seeking public comment on the issues in H.R. 2715. H.R. 2715 
further requires us to review the public comments and states that we 
may prescribe new or revised third party testing regulations if we 
determine that such regulations will reduce third party testing costs 
consistent with assuring compliance with the applicable consumer 
product safety rules, bans, standards, and regulations.
    Another provision of H.R. 2715 created a new section 14(i)(4) of 
the CPSA to provide for special rules for small batch manufacturers. 
The provision contemplates the possible development of alternative 
testing requirements for ``covered products'' made by ``small batch 
manufacturers.'' The provision also provides for possible exemptions of 
small batch manufacturers from the third party testing requirements and 
imposes certain limits on third party testing requirements. A covered 
product is a consumer product where no more than 7,500 units of the 
same product were manufactured by a small batch manufacturer in the 
previous calendar year, and a small batch manufacturer is a 
manufacturer that had no more than $1 million in gross revenue from 
sales of all consumer products in the previous calendar year. Any small 
mattress manufacturer who meets the definition of a ``small batch 
manufacturer'' might benefit from this provision when it is 
implemented.
    (Comment 112)--One commenter stated that the discussion of sample 
size is unrealistic. An example was used in the initial regulatory 
flexibility analysis that provided the sample sizes that would be 
required to meet a specified statistical confidence level, assuming 
that both the historical variability (standard deviation) and the 
historical mean of the variable (lead content) are known. The commenter 
stated that continuously variable data on commonly available testing 
reports is generally not provided by the laboratories, and data for 
samples with a result below the method detection limit is generally 
provided in the form ``< X ppm,'' where X is the method detection 
limit. The commenter noted that these data cannot be included for 
calculations of the mean or standard deviation. The commenter stated 
that the example used is invalid, unless the data can be captured and 
tracked in full resolution, which is not the current state.
    (Response 112)--To the extent that continuously variable data from 
testing results are unavailable, the discussion of sample size in the 
initial regulatory flexibility analysis may be unrealistic. Because the 
example is not widely applicable, and because we are not requiring that 
the periodic third party testing be used to provide a high degree of 
statistical assurance (e.g., 95 percent confidence) that no children's 
products violate consumer product safety standards, we have omitted the 
example from the final regulatory flexibility analysis.

D. Small Entities To Which the Rule Will Apply

    By regulation (16 CFR part 1110), the domestic manufacturer or 
importer is responsible for ensuring that a consumer product is tested 
properly, and, based on the testing results, must certify that the 
product conforms to all applicable consumer product safety rules. 
Manufacturers of children's products that are subject to a children's 
product safety rule must certify that the children's products comply 
with all applicable children's product safety rules, based on testing 
conducted by third party conformity assessment bodies that are 
accredited to conduct such tests. The definition of a ``children's 
product'' is broad, and it includes bicycles, books, furniture, 
apparel, jewelry, televisions, electronic games, toys, and so on, if 
designed or intended primarily for a child 12 years of age or younger. 
Virtually all children's products are subject to one or more children's 
product safety rules. For example, the lead content of paint and all 
non-excluded accessible component parts of children's products are 
subject to limits. Therefore, virtually all manufacturers of children's 
products will have to certify, based on tests by accredited third party 
conformity assessment bodies that their products comply with the lead 
content limits. We have excluded from the requirement to test for lead 
content a few materials that inherently do not contain lead. The 
excluded materials are limited to materials such as: most fabrics, 
precious metals, paper, gemstones, and a limited number of other items, 
and the list can be found at 16 CFR 1500.91. We also have issued a rule 
excluding from the lead content requirements (16 CFR 1500.87) 
inaccessible component parts in children's products. Section 1(b)(3) of 
H.R. 2715 excludes certain used children's products from testing for 
lead content. All other materials used in products intended for 
children must be tested for lead content.
    In addition to the requirements to test for lead content, 
manufacturers must test for conformity with a wide variety of other 
children's product safety rules. For example, there are product safety 
rules that establish standards for children's products, such as toys, 
cribs, bicycles, bicycle helmets, youth all-terrain vehicles, bunk 
beds, baby walkers, and flammable clothing textiles. The CPSIA also 
limits the amount of six phthalates that can be present in children's 
toys and child care articles; thus, many plastic component parts will 
need to be tested for phthalate content. A full list of the children's 
product safety rules for which third party testing and certification 
will be required is given in Table 1.

     Table 1--Product Safety Rules Applicable to Children's Products
------------------------------------------------------------------------
 16 CFR part  (or test method
              or standard)                         Description
------------------------------------------------------------------------
1420...................................  All-Terrain Vehicles.
1203...................................  Bicycle Helmets.
1512...................................  Bicycles.
1513...................................  Bunk Beds.
1500.86(a)(5)..........................  Clacker Balls.
1500.86(a)(7) and (8)..................  Dive Sticks and Other Similar
                                          Articles.
1505...................................  Electrically Operated Toys or
                                          Articles.
1615...................................  Flammability of Children's
                                          Sleepwear, Sizes 0 through 6X.
1616...................................  Flammability of Children's
                                          Sleepwear, Sizes 7 through 14.

[[Page 69525]]

 
1610...................................  Flammability of Clothing
                                          Textiles.
1632...................................  Flammability of Mattresses and
                                          Mattress Pads.
1633...................................  Flammability (Open Flame) of
                                          Mattress Sets.
1611...................................  Flammability of Vinyl Plastic
                                          Film.
1219...................................  Full-Size Cribs.
1215...................................  Infant Bath Seats.
1216...................................  Infant Walkers.
Sec. 101 of CPSIA (Test Method CPSC-CH-  Lead Content in Children's
 E1001-08, CPSC-CH-E1001-08.1 or 2005     Metal Jewelry.
 CPSC Laboratory SOP).
Sec. 101 of CPSIA (Test Method CPSC-CH-  Lead Content in Children's
 E1001-08 or CPSC-CH-E1001-08.1).         Metal Products.
Sec. 101 of CPSIA (Test Method CPSC-CH-  Lead Content in Children's Non-
 E1002-08 and/or CPSC-CH-E1002-08.1).     Metal Products.
1303...................................  Lead Paint.
1220...................................  Non-Full-Size Cribs.
1511...................................  Pacifiers.
Sec. 108 of CPSIA (Test Method CPSC-CH-  Phthalate Content of Children's
 C1001-09.3 ).                            Toys and Child Care Articles.
1510...................................  Rattles.
1501...................................  Small Parts Rule.
1630...................................  Surface Flammability of Carpets
                                          and Rugs.
1631...................................  Surface Flammability of Small
                                          Carpets and Rugs.
1217...................................  Toddler Beds.
(ASTM F963)............................  Toys.
------------------------------------------------------------------------

E. Number of Small Firms Affected

    We estimated the number of firms that could be impacted, by 
reviewing every industry in the North American Industrial 
Classification System (NAICS), and selecting industries with firms that 
could manufacture or sell any children's product potentially covered by 
a consumer product safety rule. Firms are classified in the NAICS 
category that describes their primary activity. Therefore, firms that 
might manufacture or import consumer products covered by a safety rule 
as a secondary or tertiary activity may not have been counted. There is 
no separate NAICS category for importers. Firms that import products 
might be classified as manufacturers, wholesalers, or retailers.
1. Manufacturers
    According to the criteria established by the U.S. Small Business 
Administration (SBA), manufacturers are generally considered to be 
small entities if they have fewer than 500 employees. Table 2 shows the 
number of manufacturing firms by the North American Industrial 
Classification System (NAICS) categories that cover most children's 
products that are subject to a product safety rule. Although there are 
more than 26,000 manufacturers that would be considered small in these 
categories, not all of these firms are engaged in manufacturing 
children's products that are subject to a product safety rule. It would 
be expected that most firms engaged listed in the category, Doll, Toy, 
and Game, produce some products that are intended for children age 12 
and younger. On the other hand, the Surgical Appliance and Supplies 
Manufacturing category includes crash helmets, but most other products 
in this category are not under our jurisdiction.

                         Table 2--Manufacturers
------------------------------------------------------------------------
                                                      Small      Total
         NAICS Code                Description        firms      firms
------------------------------------------------------------------------
31411.......................  Carpet and Rug Mills        244        262
315.........................  Apparel                   7,126      7,195
                               Manufacturing.
316211......................  Rubber and Plastic           43         45
                               Footwear
                               Manufacturing.
316212......................  House Slipper                 1          1
                               Manufacturing.
316219......................  Other Footwear               53         54
                               Manufacturing.
326299......................  All Other Rubber            622        666
                               Product
                               Manufacturing.
336991......................  Motorcycle, Bicycle,        447        452
                               and Parts
                               Manufacturing.
33712.......................  Household and             6,058      6,154
                               Institutional
                               Furniture
                               Manufacturing.
33791.......................  Mattress                    427        441
                               Manufacturing.
339113......................  Surgical Appliance        1,817      1,916
                               and Supplies
                               Manufacturing.
33991.......................  Jewelry and               2,470      2,484
                               Silverware
                               Manufacturing.
33992.......................  Sporting and              1,707      1,748
                               Athletic Goods
                               Manufacturing.
33993.......................  Doll, Toy and Game          694        705
                               Manufacturing.
339942......................  Lead Pencil and Art         124        129
                               Good Manufacturing.
339999......................  All Other                 4,646      4,695
                               Miscellaneous
                               Manufacturing.
                                                   ---------------------
                                 Total                 26,479     26,947
                                  Manufacturers.
------------------------------------------------------------------------
Source: U.S. Department of Commerce, Bureau of the Census, 2008 County
  Business Patterns, Number of Firms, Number of Establishments,
  Employment, and Annual Payroll by Small Enterprise Employment Sizes
  for the United States, NAICS Sectors: 2008. (Available at: http://www2.census.gov/econ/susb/data/2008/us_naicssector_small_emplsize_2008.xls, last accessed on 16 August 2011.


[[Page 69526]]

    In addition to the manufacturers in Table 3, there were 25,184 
nonemployer businesses classified in NAICS 315 (Apparel Manufacturing) 
and 61,180 classified in NAICS 3399 (Other Miscellaneous Manufacturers) 
in 2008. Nonemployer businesses are generally very small businesses 
with no employees. They are typically sole proprietorships, and they 
may or may not be the owner's principal source of income. The average 
receipts for the nonemployer businesses classified in Apparel 
Manufacturing was about $31,000, and the average receipts for the 
nonemployer businesses classified Other Miscellaneous Manufacturers was 
about $41,000.\3\
---------------------------------------------------------------------------

    \3\ U.S. Department of Commerce, Bureau of the Census, ``Revised 
2008 Nonemployer Statistics Table.'' Available at: http://www.census.gov/econ/nonemployer/Revised%202008%20Data%20With%202009%20Methodology%20Applied.xls 
(last accessed 16 August 2011).
---------------------------------------------------------------------------

2. Wholesalers
    Wholesalers would be impacted by the rule if they import any 
children's product that is subject to a product safety rule. 
Wholesalers who obtain their products strictly from domestic 
manufacturers, or from other wholesalers, would not be impacted by the 
rule because the manufacturer or importer would be responsible for 
certifying the products. Table 3 shows the number of wholesalers by 
NAICS code that would cover most children's products that are subject 
to a product safety rule. According to SBA criteria, wholesalers are 
generally considered to be small entities if they have fewer than 100 
employees. Although there are more than 78,000 wholesalers that would 
be considered small in these categories, not all of these firms are 
engaged in importing children's products that are subject to a consumer 
product safety rule. A significant proportion of the firms classified 
as Toy and Hobby Goods and Supplies Merchant Wholesalers probably 
import at least some children's products. However, the only firms 
classified as Motor Vehicle and Motor Vehicle Parts and Suppliers that 
would be impacted by the final rule are those that import all-terrain 
vehicles intended for children 12 years old or younger.

                          Table 3--Wholesalers
------------------------------------------------------------------------
                                                      Small      Total
         NAICS Code                Description        firms      firms
------------------------------------------------------------------------
4231........................  Motor Vehicle and        17,734     18,769
                               Motor Vehicle Parts
                               and Suppliers.
4232........................  Furniture and Home       11,353     11,844
                               Furnishing Merchant
                               Wholesalers.
42362.......................  Electrical and            2,444      2,591
                               Electronic
                               Appliance,
                               Television, and
                               Radio Set Merchant
                               Wholesalers.
42391.......................  Sporting and              5,019      5,196
                               Recreational Goods
                               and Supplies
                               Merchant
                               Wholesalers.
42392.......................  Toy and Hobby Goods       2,227      2,302
                               and Supplies
                               Merchant
                               Wholesalers.
42394.......................  Jewelry, Watch,           7,363      7,447
                               Precious Stone, and
                               Precious Metal
                               Merchant
                               Wholesalers.
42399.......................  Other Miscellaneous       9,040      9,302
                               Durable Goods
                               Merchant
                               Wholesalers.
42432.......................  Men's and Boy's           3,557      3,722
                               Clothing and
                               Furnishings
                               Merchant
                               Wholesalers.
42433.......................  Women's, Children's,      6,797      7,029
                               and Infant's
                               Clothing, and
                               Accessories
                               Merchant
                               Wholesalers.
42434.......................  Footwear Merchant         1,521      1,593
                               Wholesalers.
42499.......................  Other Miscellaneous      11,203     11,490
                               Nondurable Goods
                               Merchant
                               Wholesalers.
                                                   ---------------------
                                 Total............     78,258     81,285
------------------------------------------------------------------------
Source: U.S. Department of Commerce, Bureau of the Census, 2008 County
  Business Patterns, Number of Firms, Number of Establishments,
  Employment, and Annual Payroll by Small Enterprise Employment Sizes
  for the United States, NAICS Sectors: 2008. (Available at: http://www2.census.gov/econ/susb/data/2008/us_naicssector_small_emplsize_2008.xls, last accessed on 16 August 2011.

    In addition to the wholesalers tabulated in Table 3, the U.S. 
Census Bureau estimated that there were 206,072 nonemployer businesses 
classified in NAICS categories that could include wholesalers of 
children's products. Nonemployer businesses are generally very small 
sole proprietorships. The average receipts for the nonemployer business 
wholesalers were about $86,000.\4\ An unknown number of nonemployer 
wholesalers could import children's products.
---------------------------------------------------------------------------

    \4\ U.S. Department of Commerce, Bureau of the Census, ``Revised 
2008 Nonemployer Statistics Table.'' available at http://www.census.gov/econ/nonemployer/Revised%202008%20Data%20With%202009%20Methodology%20Applied.xls 
(last accessed 16 August 2011).
---------------------------------------------------------------------------

3. Retailers
    Retailers that obtain their products from domestic manufacturers or 
wholesalers will not be directly impacted by the rule because the 
manufacturers or wholesalers would be responsible for the testing and 
certification of the products. However, there are some retailers that 
manufacture or directly import some products; and therefore, they will 
be responsible for ensuring that these products are properly tested and 
certified. The number of such retailers is not known. Table 4 shows the 
number of retailers by NAICS code that would cover most children's 
products. According to SBA size standards, retailers are generally 
considered to be small entities if their annual sales are less than $7 
million to $30 million, depending on the specific NAICS category. 
Because of the way in which the data were reported by the Bureau of the 
Census, the estimates of the number of small firms in each category in 
Table 4 are based on similar, but different criteria. Although there 
are more than 100,000 firms that would be considered ``small 
businesses'' in these categories, it is not known how many of these 
firms are engaged in importing or manufacturing children's products. 
Many firms probably obtain all of their products from domestic 
wholesalers or manufacturers and would not be directly impacted by the 
rule.

[[Page 69527]]



                                               Table 4--Retailers
----------------------------------------------------------------------------------------------------------------
                                                                             Criteria used
                                                               SBA Size      for estimate
                                                               standard     of small firms    Small      Total
           NAICS Code                    Description         (millions of    (millions of     firms      firms
                                                              dollars of      dollars of
                                                             annual sales)   annual sales)
----------------------------------------------------------------------------------------------------------------
441221..........................  Motorcycle, ATV, and                < 30            < 25      4,794      4,879
                                   Personal Watercraft
                                   Dealers.
4421............................  Furniture Stores........            < 19            < 10     16,033     16,611
44813...........................  Children's and Infant's             < 30            < 25      2,057      2,074
                                   Clothing Stores.
44814...........................  Family Clothing Stores..          < 25.5            < 25      6,588      6,684
44815...........................  Clothing Accessories                < 14            < 10      2,757      2,774
                                   Stores.
44819...........................  Other Clothing Stores...            < 19            < 10      6,331      6,393
4482103.........................  Children's & Juveniles'           < 25.5            < 25        227        230
                                   Shoe Stores.
4482104.........................  Family Shoe Stores......          < 25.5            < 25      2,905      2,941
45111...........................  Sporting goods stores...            < 14            < 10     14,388     14,545
45112...........................  Hobby, toy, & game                < 25.5            < 25      4,612      4,629
                                   stores.
452.............................  General Merchandise                 < 30            < 25      6,873      6,971
                                   Stores.
45322...........................  Gift, Novelty, and                  < 30            < 25     19,297     19,339
                                   Souvenir Store.
454111..........................  Electronic Shopping.....            < 30            < 25     11,374     11,646
454113..........................  Mail Order Houses.......          < 35.5            < 25      5,281      5,645
4542............................  Vending machine                     < 10            < 10      3,796      3,887
                                   operators.
                                 -------------------------------------------------------------------------------
                                     Total................  ..............  ..............    107.313    124,700
----------------------------------------------------------------------------------------------------------------
Source: U.S. Census Bureau, 2007 Economic Census, Release date 11/02/2010.

    In addition to the retailers tabulated in Table 4, the U.S. Census 
Bureau estimated that there were 324,918 nonemployer businesses 
classified in NAICS categories that could include retailers of 
children's products. Nonemployer businesses are generally very small 
sole proprietorships. The average receipts for the nonemployer business 
retailers were about $40,000.\5\ An unknown number of nonemployer 
retailers could import children's products.
---------------------------------------------------------------------------

    \5\ U.S. Department of Commerce, Bureau of the Census, ``Revised 
2008 Nonemployer Statistics Table.'' Available at: http://www.census.gov/econ/nonemployer/Revised%202008%20Data%20With%202009%20Methodology%20Applied.xls 
(last accessed 16 August 2011).
---------------------------------------------------------------------------

F. Compliance, Reporting, and Recordkeeping Requirements of Rule

    The final rule establishes some requirements for the certification 
of children's products. It also establishes protocols and standards for 
ensuring that children's products are subject to testing periodically, 
when there has been a material change in the product's design or 
manufacturing process, including the sourcing of component parts, and 
for safeguarding against the exercise of undue influence on a third 
party conformity assessment body by a children's product manufacturer 
or private labeler. The requirements are discussed in more detail 
below, and the impact that these could have on manufacturers is 
discussed in a later section of this preamble.
    The final rule will impact virtually all manufacturers and 
importers of children's products because nearly all children's products 
are subject to some children's product safety rules. For example, the 
restrictions on lead content cover almost all children's products. Even 
products that contain some of the materials that have been excluded 
from the restrictions (see 16 CFR 1500.88) or that have been determined 
inherently not to contain lead in excess of the legal requirement (see 
16 CFR 1500.91) might have to be tested for compliance with other 
rules. For example, although the fabric in wearing apparel might be 
excluded from the requirement to test for lead content, it may have to 
be tested for compliance with flammability requirements. Any other non-
excluded objects on the apparel, such as buttons, snaps, zippers, or 
appliqu[eacute]s will also need to be tested for lead content.
    In meeting the requirements of the final rule, manufacturers and 
importers can use component part testing, as provided by 16 CFR part 
1109. This means, for example, that manufacturers could submit samples 
of paint that they are using on their products to a third party testing 
laboratory to be tested for lead and heavy metal content. This could 
reduce the amount of testing required because the results from the 
component part tests could be relied upon for demonstrating the 
compliance of all products on which that paint was used, rather than 
retesting the paint multiple times because it was used on multiple 
products. The final rule also allows manufacturers and importers to 
rely upon testing of component parts that was procured by their 
suppliers, provided that the testing meets all of the requirements in 
16 CFR part 1109. The requirements include that the testing be 
performed by a third party conformity assessment body whose 
accreditation has been accepted by the CPSC. To rely upon component 
part testing--whether conducted by the children's product manufacturer 
or by a supplier of the component part--there must be sufficient 
documentation so that the component part can be traced back to the 
party who procured the third party test results demonstrating that the 
component part complies with the applicable safety rules. Provisions in 
16 CFR part 1109 also allow an importer to rely upon testing procured 
by, or a certificate issued by, a supplier of a finished good in 
issuing their own certificate for a product. Therefore, if a foreign 
manufacturer has tested and certified a children's product in 
accordance with the requirements of 16 CFR part 1109, an importer may 
rely upon that testing or certification in issuing their own 
certificate for the product.

G. Partial Exemption for Small Batch Manufacturers

    H.R. 2715, which was enacted on August 12, 2011, provides some 
relief for small batch manufacturers from the third party testing 
requirements contained in the final rule. H.R. 2715 requires that we 
consider alternative requirements for small batch manufacturers. Until 
we determine what alternative requirements are suitable for

[[Page 69528]]

small batch manufacturers, small batch manufacturers are not required 
to obtain third party testing results to confirm that their children's 
products conform to several children's product safety rules. However, 
small batch manufacturers are still subject to the third party testing 
requirements of the final rule with respect to the lead content of 
paint; full-size and non full-size cribs; pacifiers; small parts; 
children's metal jewelry; and baby bouncers, walkers, and jumpers.
    H.R. 2715 defines a ``small batch manufacturer'' as a manufacturer 
who had no more than $1 million in total gross revenue from sales of 
all consumer products in the previous calendar year (which will be 
adjusted annually by the percentage increase in the Consumer Price 
Index for all urban consumers).
    We will implement the small batch manufacturer provision of H.R. 
2715 in a separate proceeding.

H. Certification Tests

    To certify that a children's product complies with all applicable 
children's product safety rules, the final rule requires that 
manufacturers submit samples of the product to a third party conformity 
assessment body whose accreditation has been accepted by the CPSC. The 
final rule requires that the number of samples submitted must be 
sufficient to provide a high degree of assurance that the tests 
conducted for certification purposes accurately demonstrate the ability 
of the children's product to meet all applicable children's product 
safety rules. Fewer samples are needed if the manufacturing process 
consistently results in products that are uniform in composition and 
quality. More samples will be needed if there is more variability in 
the finished products. If any product fails certification testing, the 
manufacturer must investigate and address the cause of the failure, 
even if other samples passed the certification tests.
    The cost of the third party testing is discussed in more detail 
later in part IV.N. of the preamble. Manufacturers also may incur costs 
for any consultants to provide advice for determining the number of 
samples that should be submitted for testing and to ensure that it was 
in compliance with the requirements. There also will be some 
administrative and recordkeeping costs associated with this 
requirement.

I. Periodic Third Party Testing

    The final rule requires manufacturers and importers of children's 
products to periodically submit samples of their products to third 
party conformity assessment bodies whose accreditation has been 
accepted by the CPSC for testing to ensure their products continue to 
comply with all applicable children's product safety rules. 
Manufacturers need to conduct periodic third party testing frequently 
enough to ensure, with a high degree of assurance, that the product 
continues to comply with all applicable children's product safety 
rules, but in no case can the interval between periodic tests exceed 
the maximum periodic testing interval applicable to the manufacturer.
    Depending upon other testing procedures that a manufacturer may opt 
to use, one of three possible maximum periodic testing intervals will 
apply to a children's product manufacturer. The first option applies to 
manufacturers who do not conduct other production testing of a 
children's product. Manufacturers who do not undertake other production 
testing must conduct periodic third party testing of the product at 
least once a year. The final rule requires manufacturers to develop a 
periodic test plan that will ensure that the children's products 
manufactured after the certification, or since the previous periodic 
testing was conducted, continue to comply with all applicable 
children's product safety rules. The periodic test plan must include 
the tests to be conducted, the intervals at which the tests will be 
conducted, and the number of samples to be tested. Although the 
manufacturer has some discretion in determining the interval between 
periodic tests, the interval must be short enough to ensure that if the 
samples selected for periodic third party testing pass the tests, then 
there is a high degree of assurance that the untested products 
manufactured during the interval comply with all applicable children's 
product safety rules; and the interval must be no longer than one year.
    The second option applies to manufacturers who implement a 
production testing plan (which can use first or third party testing). 
If a manufacturer has implemented a production testing plan that meets 
the requirement of Sec.  1107.21(c) of the final rule, the manufacturer 
must conduct third party periodic testing at least once every two 
years. The production testing plan must describe the production 
management techniques and tests that must be performed to provide a 
high degree of assurance that products manufactured after certification 
continue to meet all applicable children's product safety rules. The 
production testing plan must also include additional information, such 
as the intervals at which tests must be conducted or measurements will 
be made. The test methods used in the production testing plan need not 
be the same test methods used for certification, but they must be 
effective in determining compliance with the applicable children's 
product safety rules.
    Manufacturers or importers who choose this second option, will need 
to ensure that their quality assurance or testing program meets the 
requirements of the final rule for production testing and that their 
testing program provides a high degree of assurance that all products 
manufactured or imported continue to comply with all applicable 
children's product safety rules. In addition, at least once every two 
years, this option requires the manufacturer or importer to submit 
samples to a CPSC-accepted third party conformity assessment body to be 
tested for conformity with all applicable children's product safety 
rules. The final rule does not specify how many samples must be 
submitted to the third party conformity assessment body, nor does it 
set forth what constitutes an appropriate periodic testing interval 
(other than stating it must not be greater than two years). However, 
the expectation is that this option will require less testing by third 
party conformity assessment bodies because, under this option, the 
(first party or third party) production testing provides the 
manufacturer or importer with a high degree of assurance that the 
products continue to comply with the applicable children's product 
safety rules and can provide manufacturers with information that can be 
used to determine the interval and number of samples required for the 
periodic third party testing.
    The third option applies to manufacturers who conduct testing to 
ensure continuing compliance with the applicable children's product 
safety rules using a testing laboratory accredited to ISO/IEC 
17025:2005, General requirements for the competence of testing and 
calibration laboratories, but whose accreditation has not been accepted 
by the CPSC. In most cases, these will be in-house testing 
laboratories. If a manufacturer conducts testing using such a testing 
laboratory, the manufacturer must conduct periodic third party testing 
at least once every three years. Any testing laboratory used under this 
option must be accredited by an accreditation body that is accredited 
to ISO/IEC 17011:2004, Conformity assessment--General requirements for 
accrediting conformity assessment bodies. The tests used under this 
option must be the same tests used for certification to the

[[Page 69529]]

applicable children's product safety rules. The testing must be 
conducted frequently enough to provide a high degree of assurance that 
the product continues to comply with all applicable children's product 
safety rules.
    The final rule does not specify how many samples a manufacturer 
using the third option must submit to the third party conformity 
assessment body, nor does it set forth what constitutes an appropriate 
periodic testing interval (other than stating it must not be greater 
than three years). However, as with the second option, the intent 
behind including this option in the final rule is to reduce the cost 
that the rule imposes on children's product manufacturers, by reducing 
the amount of testing that they must obtain from third party conformity 
assessment bodies. The testing that the manufacturer performs in an 
ISO/IEC 17025:2005-accredited testing laboratory provides the high 
degree of assurance that the products comply with the applicable 
children's product safety rules, and it also can provide manufacturers 
with information that can be used to determine interval and number of 
samples required for the periodic third party testing.
    Like the second option, the intent of the third option is to reduce 
the final rule's cost to manufacturers, by reducing the amount of 
testing that they must conduct using third party conformity assessment 
bodies. However, the manufacturers that are most likely to benefit from 
this third option are manufacturers who have their own in-house ISO/IEC 
17025:2005-accredited testing laboratories. These are likely to be 
larger manufacturers, so this option is not expected to provide much 
relief to smaller manufacturers. To the extent that the smaller 
manufacturers compete with the larger manufacturers, this option may 
adversely affect the competitiveness of the smaller manufacturers 
relative to larger manufacturers because any cost reduction will 
disproportionately benefit larger manufacturers.
    Under all periodic testing options, a manufacturer may need 
statistical or other knowledge in order to develop their testing plans, 
including determining the appropriate testing intervals and number of 
samples required to provide the manufacturer with a high degree of 
assurance that its children's products are in compliance with all 
applicable children's product safety rules. If these services are not 
available in-house, the firm may have to hire outside consultants. 
Additionally, firms will incur administrative and recordkeeping costs 
associated with the periodic testing requirement, in addition to the 
cost of the third party testing, which is described in more detail 
later in this analysis.

J. Third Party Testing Due to Material Changes

    If a children's product undergoes a material change in product 
design or manufacturing processes, including the sourcing of component 
parts that could affect the product's ability to comply with the 
applicable children's product safety rules, the final rule requires the 
manufacturer to submit samples of the materially changed product to a 
third party conformity assessment body for testing. The number of 
samples must be sufficient to provide a high degree of assurance that 
the materially changed product complies with all applicable children's 
product safety rules. The testing can be limited to the portion or 
component part of the finished product that was changed and for 
compliance with those children's product safety rules for which 
compliance might have been affected.
    The primary cost of this requirement will be the cost of the third 
party testing. There also will be some administrative and recordkeeping 
costs associated with this requirement. The professional skills 
required by the manufacturer are the same skills required for the 
initial certification and periodic tests.

K. Protection Against Undue Influence

    The final rule requires that each manufacturer of children's 
products establish procedures to safeguard against the exercise of 
undue influence by a manufacturer on a third party conformity 
assessment body. At a minimum, these procedures must include written 
policy statements from company officials that the exercise of undue 
influence is not acceptable and directing that every appropriate staff 
member receives training on avoiding undue influence and signs a 
statement attesting to their participation in the training. The 
procedures also must include a requirement to retrain the appropriate 
staff if there are substantive changes in the requirements for 
safeguarding against the exercise of undue influence. The training 
procedures must include a requirement to notify us immediately of any 
attempt by the manufacturer to hide or exert undue influence over test 
results, and a requirement to inform employees that allegations of 
undue influence may be reported confidentially to us and to describe 
how such a report can be made.
    Firms will incur some costs in establishing the safeguards against 
undue influence. Although several commenters stated that establishing 
these safeguards would be burdensome, none provided estimates of what 
the cost would be. The final rule gives firms great flexibility in 
meeting these requirements. For example, the final rule does not 
prescribe the form of the training, and firms may include this training 
along with other types of employee training.

L. Recordkeeping

    The final rule requires manufacturers of children's products to 
keep the following records:
     A copy of the Children's Product Certificate for each 
product. The children's product covered by the certificate must be 
clearly identifiable and distinguishable from other products;
     Records of each certification test. The manufacturer must 
have separate certification test records for each manufacturing site;
     Records of one of the following for periodic tests of a 
children's product:
    [cir] Periodic test plan and periodic test results;
    [cir] Production testing plan, production test results, and 
periodic test results; or
    [cir] Testing results of tests conducted by a testing laboratory 
accredited to ISO/IEC 17025:2005 and periodic test results.
     Records of descriptions of all material changes in product 
design, manufacturing processes, and sourcing of component parts, the 
certification tests, the test results, and the actual values of the 
tests, if any; and
     Records of the undue influence procedures, including 
training materials and training records of all employees trained on 
these procedures.
    These records must be maintained for five years. The records must 
be made available for inspection by the CPSC, upon request. The records 
may be maintained in languages other than English, if the records can 
be provided immediately to us and translated accurately into English 
within 48 hours of a request by the CPSC or a longer period, as 
negotiated with CPSC staff.
    We have estimated that, on average, it will take three to five 
hours for recordkeeping per product. However, the time needed for 
recordkeeping for any particular product could be substantially higher 
or lower. For example, recordkeeping for products that are subject to 
multiple standards, or products that require a substantial amount of 
testing, could need substantially more hours. For other products, such 
as those subject to only one standard, and for which little

[[Page 69530]]

testing is required, the number of hours needed for recordkeeping might 
be less.

M. Consumer Product Labeling Program

    The final rule establishes a program by which any manufacturer or 
private labeler of a consumer product may label product as complying 
with the applicable certification requirements for the product. If the 
manufacturer has certified that a consumer product complies with all 
applicable consumer product safety rules, the manufacturer or private 
labeler may affix a label to the product which states that the product: 
``Meets CPSC Safety Requirements.'' The label must be visible and 
legible. This program is voluntary in that manufacturers and private 
labelers are not required to affix this label to their products. 
However, opting not to affix the label to the product would not relieve 
the firm of its responsibility to ensure that the products comply with 
the applicable safety rules and with all other provisions of the rule. 
This provision is not expected to have a significant impact on firms, 
however, because the program is voluntary, and the costs of adding or 
modifying a label on a product are expected to be low.

N. Cost of Third Party Testing and Potential Impact of the Rule

    The costs of the third party testing requirements are expected to 
be significant for some manufacturers and are expected to have a 
disproportionate impact on small and low-volume manufacturers. This 
section discusses the cost of third party testing and the potential 
impact of the third party testing and other requirements of the final 
rule on manufacturers.
1. Cost of Third Party Testing
    The cost of third party testing is influenced by many factors, 
including the amount and skill of the labor required to conduct the 
tests, the cost of the equipment involved, the cost of transporting the 
product samples to the test facility, and the geographic area where the 
tests are conducted. Some tests require a substantial amount of time to 
conduct the tests, including the preparation of the samples. It might 
take a couple of days, for example, to test a bicycle for compliance 
with the bicycle standard (16 CFR part 1512). Similarly, a chemist 
testing the lead content of a product might be able to test only a few 
metal component parts per day, due to the amount of time required to 
prepare the samples and clean and calibrate the equipment between 
tests.
    It should be noted that the price that a given manufacturer pays 
for testing is often the result of negotiations between the testing 
laboratory and the manufacturer. Manufacturers who do a large volume of 
business with a testing laboratory frequently can obtain discounts on 
the testing laboratory's normal charges; but manufacturers who do only 
a small volume of business may not be able to negotiate a discount on 
the testing.
    Information on the cost of third party testing to determine 
compliance with some children's product safety rules is provided below. 
The information was collected from a number of sources, including 
published price lists from some testing laboratories, conversations 
with representatives of testing laboratories, actual invoices provided 
by consumer product manufacturers, and public comments we received. The 
data are not based upon a statistically valid survey of testing 
laboratories. Additionally, the costs include only the costs that would 
be charged by the testing laboratory. Not included in the information 
are the costs of the samples consumed in destructive tests, the cost of 
shipping the samples to the testing laboratories, and any related 
administrative or recordkeeping activity. According to one commenter, 
these costs could add 15 to 50 percent to the third party testing 
costs.
2. Lead Content and Lead-in-Paint
    The cost per component part for testing lead content and lead-in-
paint using inductive coupled plasma (ICP) analysis will range from a 
low of about $20 per test, to more than $100 per test. The lowest per-
unit cost represents a substantially discounted price charged to a 
particular customer by a testing laboratory in China, and therefore, 
the price might not be typical. Within the United States, typical 
prices range from around $50, to more than $100 per test.
    The cost of testing for lead content using X-Ray fluorescence (XRF) 
technology is significantly less expensive. Some firms have offered to 
screen products for lead content for as little as $2 per test. These 
offers are generally directed to stores or businesses that want to 
check their inventory for conformity with the retroactive lead content 
requirements contained in the CPSIA. Some testing laboratories will 
charge for XRF testing at an hourly rate, which can cost around $100. 
Ten to 30 tests can be conducted in an hour.
    We have approved XRF test methods for determining the lead content 
of homogenous polymer products. Assuming that 10 to 30 tests can be 
conducted in an hour at a rate of $100 per hour, the cost of XRF 
testing for homogenous polymer products would be between $3 and $10 per 
test.
    For testing the lead content of paint, we have approved the use of 
a specific XRF test method described in ASTM F2853 that uses energy 
dispersive XRF using multiple monochromatic beams. Generally, fewer 
tests can be conducted in an hour using this test method. If 6 to 12 
tests can be conducted in an hour at a rate of $100 an hour, then the 
cost of testing a paint for lead content using the approved XRF 
technique would be about $8 to $17.
    Other than for homogenous polymer components and the lead content 
of paint, we have not approved the use of XRF techniques for testing 
any other materials. For other materials, such as metal components, 
manufacturers will need to use ICP analyses techniques to test for lead 
content.
3. Phthalates
    The cost of testing for phthalate content will range from around 
$100 (a discounted price by a testing laboratory in China) to about 
$350. These are the costs per component part, and they include testing 
for all six of the individual phthalates whose content is restricted.
4. Bicycle Standard (16 CFR part 1503)
    According to one testing laboratory, it takes one to two days to 
test a bicycle. The estimated price for testing one bicycle may range 
from around $700, if the testing is performed in China, to around 
$1,100, if the testing is performed in the United States. A 
manufacturer who needs several models of bicycles tested at the same 
time, might be able to obtain discounts on these prices. This does not 
include testing for lead or phthalates in nonmetal component parts. 
H.R. 2715, however, exempted the metal components of bicycles from the 
third party testing requirements for lead content.
5. Bicycle Helmets
    One testing laboratory quoted a price of $600 for testing one model 
of a bicycle helmet to the CPSC bicycle helmet standard. A price list 
from another testing laboratory stated that conducting the 
certification testing to the Snell Foundation's bicycle helmet 
standard, which is similar to the CPSC standard, is $830.
6. Full-Size Cribs
    As with bicycles, testing cribs requires a substantial amount of 
labor time to assemble the crib, take the appropriate measurements, and 
perform the required tests. The cost of testing a

[[Page 69531]]

full-size crib to the pre-2010 standard was about $750 to $1,200 for 
testing performed in the United States. The cost of testing a full-size 
crib to the current standard may be somewhat higher. The cost can vary, 
depending on the features of the individual cribs that require testing 
and among the various testing laboratories. Some manufacturers might 
receive discounted prices. This does not include testing the crib for 
lead and phthalates, which, to the extent necessary, would add to the 
cost of testing a crib to all applicable safety rules.
7. Toys
    The children's product safety rules applicable to toys, including 
the ASTM F963 standard made mandatory by the CPSIA, include a wide 
variety tests, including tests for soluble heavy metals in surface 
coatings and for various physical and mechanical criteria. Based on the 
itemized prices on several invoices provided to us by testing 
laboratories or otherwise made public, the cost of the physical and 
mechanical tests range from about $50 to $245. The cost of the chemical 
test for the presence of heavy metals ranges from about $60 to $190 per 
surface coating. Again, these costs do not include testing for lead and 
phthalates, which add to the total cost.
    The flammability requirements of ASTM F963 were not made mandatory 
by the CPSIA, but we were directed to examine the flammability 
requirements and consider promulgating rules addressing the issue. If 
some flammability tests are eventually required, the cost per test 
could be in the range of $20 to $50, based on some observed costs for 
the ASTM F963 flammability tests.
8. Cost of Third Party Testing by Product
    The cost to obtain the required third party testing for a product 
depends on the types and number of tests that must be performed, as 
well as the number of samples that are required to provide a high 
degree of assurance that the tests conducted for certification purposes 
accurately demonstrate the ability of the product to meet the 
applicable children's product safety rules or ensure continuing 
compliance with the applicable children's product safety rules. The 
cost of the testing also will be affected by the extent to which the 
manufacturer can use component part testing. Because of the wide 
variety of manufacturers and products that would be affected by the 
rule, we cannot provide comprehensive estimates of the impact of the 
rule on all manufacturers or products. The discussion below is intended 
to provide only some perspective on the potential impact.
9. Number of Samples Required
    The final rule does not specify the exact number of samples that 
must be submitted to third party conformity assessment bodies, nor does 
it specify the testing interval, other than to provide maximum 
intervals. Instead, the final rule requires manufacturers to determine 
the number samples and the necessary testing interval based on factors 
such as: The variability of the product, manufacturing processes, and 
information obtained from other testing. However, it is likely that 
between certification testing, testing after a material change, and 
periodic testing, many manufacturers will need to submit more than one 
sample of a given product to third party conformity assessment bodies 
during a given year. Because some children's product safety rules 
require more than one unit of the product to complete all of the 
required tests, one sample may consist of multiple units of the 
product.
    For purposes of certifying a children's product (including testing 
after a material change), the final rule requires manufacturers to 
submit enough samples to a third party conformity assessment body to 
provide a high degree of assurance that tests conducted for 
certification purposes accurately demonstrate the ability of the 
product to comply with all applicable children's product safety rules. 
In determining how many samples to submit, a manufacturer is to 
consider the variability in the product and manufacturing processes. If 
the manufacturing process for a children's product consistently creates 
finished products that are uniform in composition and quality, such as 
with die casting, a manufacturer may be able to submit a relatively 
small number of samples to the third party conformity assessment body. 
If the manufacturing process for a children's product results in 
variability in the composition or quality of children's products, such 
as what might be expected with hand assembly, a manufacturer may need 
to submit a greater number of samples.
    For periodic testing, the final rule requires that the number of 
samples selected must be sufficient to assess--with a high degree of 
assurance--the continuing compliance of the children's product with all 
applicable safety rules. Additionally, the testing interval for 
periodic testing must be short enough to ensure that, if the samples 
selected for periodic testing pass the test, there is a high degree of 
assurance that the other untested children's products manufactured 
during the interval comply with the applicable children's product 
safety rules. Manufacturers who have implemented a production testing 
plan or test in an ISO/IEC 17025:2005-accredited testing laboratory may 
consider the information obtained from the testing in determining the 
testing interval and the number of samples that are needed.
10. Hypothetical Toy Testing Example
    To provide some information on what the magnitude of the third 
party testing costs may be for some manufacturers of children's 
products, this section discusses the potential cost of obtaining third 
party testing for a hypothetical toy. This example is hypothetical and 
is intended to illustrate some potential cost implications of the rule. 
The example is not intended be representative of every product or 
manufacturer. The costs per test that are assumed in the examples are 
based on the cost of tests discussed above; but the actual costs can 
vary significantly between conformity assessment bodies. The testing 
costs for any particular manufacturer also depend upon factors such as 
the complexity of the products, the variation in the materials used, 
manufacturing processes used, opportunities to use component part 
testing, and so on. We used a similar example in the initial regulatory 
flexibility analysis. The discussion has been changed to reflect the 
fact that energy dispersive XRF analysis can be used to test for lead 
in paint in addition to XRF testing in homogenous polymer products. We 
also have modified the discussion to deemphasize references to 
statistical measurements because, although statistical measurements 
might be useful, the number of samples that must be tested need not be 
one that provides a particular confidence level, such as 95 percent 
confidence level that all products in a lot are compliant.
    Toys must meet requirements concerning lead and phthalate content, 
as well as several physical and mechanical requirements, including the 
requirements of ASTM F963, which was made a mandatory standard by the 
CPSIA. In this example, we assume that the testing costs are at the low 
to middle part of the ranges discussed above, and we also assume that 
the hypothetical toy contains one metal component part that must be 
tested for lead content using ICP analysis (at $50) and two plastic 
component parts for which XRF analysis can be used for determining the 
lead content (two tests at $6 each). The plastic component parts also 
must be tested for phthalate content (two tests at $225 each). 
Additionally, we assume

[[Page 69532]]

that the toy contains four different paints that must be tested for 
both lead content ($13/test, assuming energy dispersive XRF analysis) 
and soluble heavy metals ($125/test). Finally, we assume that the toy 
is subject to some mechanical requirements that include use and abuse 
testing ($50 per test). Thus, the cost of testing the hypothetical toy 
for compliance to each applicable rule one time would be $1,114: $1,064 
is associated with the chemical (lead, heavy metal, and phthalate) 
testing, and $50 is associated with the mechanical testing (including 
use and abuse testing).
    Having one sample tested by a third party conformity assessment 
body will probably not be sufficient to meet the requirements of the 
final rule. Therefore, the cost of the third party testing for the 
manufacturer of this hypothetical toy would be greater than $1,114. For 
example, if four samples are needed, the cost would be $4,456. The cost 
would be higher if some tests had to be conducted more than four times 
to provide the required high degree of assurance. The manufacturer 
might be able to reduce the third party testing costs if it is able to 
use component part testing for the chemical content tests. For example, 
if the plastic resins, metal component part, and paints are used on 
other products, the manufacturer could test the component parts 
independently of the individual finished products and spread the cost 
of the chemical content tests over more than one finished product. If 
the average cost of the chemical content tests could be reduced by a 
factor of four through component part testing, then the cost of testing 
the toy in this example for conformity with all applicable safety rules 
one time would be $316 (cost of chemical testing of $1,064/4 and cost 
of the mechanical and use and abuse testing of $50). However, the cost 
of third party testing for the manufacturer would likely be higher 
because testing one sample will seldom be sufficient to provide the 
required high degree of assurance. For example, if each component part 
required four tests, and the mechanical testing required must be 
repeated four times to provide the required high degree of assurance, 
then the cost of the third party testing for the hypothetical toy would 
be $1,264.
11. Impact of Final Rule on Firms
    Whether the third party testing costs would have a substantial 
adverse impact on a firm depends upon the individual circumstances of 
the firm. One factor is the magnitude of the impact in relation to the 
revenue of the firm. A typical profit rate is about five percent of 
revenue. In other words, for every one dollar of revenue, only five 
cents might remain after paying all expenses. Therefore, a new cost 
that amounted to one percent of revenue could, all other things equal, 
reduce the profit by 20 percent and would be considered to be a 
significant impact by most firms. This would be consistent with what 
some other agencies consider to be significant. The Occupational Safety 
and Health Administration (OSHA), for example, considers an impact to 
be significant if the costs exceed 1 percent of revenue or 5 percent of 
profit.\6\
---------------------------------------------------------------------------

    \6\ OSHA, Assigned Protection Factors, Final Rule, Federal 
Register (71 FR 50121-50192), 24 August 2006.
---------------------------------------------------------------------------

    Some insight on the disparate impact that the final rule could have 
on small businesses can be provided by examining how the rule might 
impact three hypothetical toy manufacturers of different sizes. The 
costs associated with third party testing that the hypothetical 
manufacturers would face will be described, and the potential impact on 
the hypothetical manufacturers will be discussed. This discussion is 
summarized in Table 5.

                               Table 5--Impact of Rule on Three Hypothetical Firms
----------------------------------------------------------------------------------------------------------------
                                                                                                   Hypothetical
                                                                   Hypothetical    Hypothetical    firm C--small
                                                                   firm A--large   firm B--small       batch
                                                                   manufacturer    manufacturer    manufacturer
----------------------------------------------------------------------------------------------------------------
1................................  Number of Different Products.           1,000             100              10
2................................  Annual Production Volume per          100,000          10,000           1,000
                                    Product.
3................................  Total Annual Production           100,000,000       1,000,000          10,000
                                    Volume (Row 1 x Row 2).
4................................  Revenue per unit sold........              $4              $4              $4
5................................  Total Annual Revenue (Row 4 x    $400,000,000      $4,000,000         $40,000
                                    Row 3).
6................................  Cost of testing each product           $1,114          $1,114            $102
                                    for compliance with all rule
                                    once.
7................................  Cost of Testing Each Product           $4,456          $4,456            $408
                                    4 Times (Row 6 x 4).
8................................  Total Third Party Testing          $4,456,000        $445,600          $4,080
                                    Cost (Row 7 x Row 1).
9................................  Cost of Samples (4 samples of         $32,000          $3,200            $320
                                    2 units of each product).
10...............................  Recordkeeping (5 hours/              $182,150         $18,215          $1,822
                                    product at $36.43/hour).
11...............................  Total Testing Cost for One         $4,670,150        $467,015          $6,222
                                    Year (Sum of Rows 8 through
                                    10).
12...............................  Testing Cost as Percent of               1.2%           11.7%           15.6%
                                    Revenue (Row 11/Row 5).
----------------------------------------------------------------------------------------------------------------

12. Three Hypothetical Manufacturers
    The first hypothetical manufacturer, Firm A, is a large toy 
manufacturer that offers 1,000 different toys with an annual production 
or sales volume of 100,000 units each. Its total annual production 
volume is then 100 million units (1,000 products x 100,000 units each), 
which is shown in Row 3 of Table 5. The second hypothetical 
manufacturer, Firm B, is a smaller toy manufacturer offers 100 
different products with an annual production or sales volume of 10,000 
units each. Finally, the third hypothetical toy manufacturer is a small 
batch manufacturer that offers only 10 products that with an annual 
production or sales volume of about 1,000 units each.
13. Revenue
    The average price of a toy is $7 to $8.\7\ However, because the 
retailer and any wholesalers or distributors would also get a share of 
the revenue, the manufacturer would be expected to get a fraction of 
the retail price. Therefore, the revenue received by a manufacturer of 
a toy that retails for $7 to $8 might be about $4 per unit. For some 
toys, the revenue per unit received by the

[[Page 69533]]

manufacturer might be lower, and for others it might be higher. To 
begin the example, we assume that the average revenue is $4 per unit. 
The Total Annual Revenue of the Firm (Row 5) is found by multiplying 
the Revenue per unit (Row 4) by the Total Annual Production Volume (Row 
3).
---------------------------------------------------------------------------

    \7\ Retail sales of toys in the United States are about $22 
billion per year (Toy Industry Association press release dated 27 
June 2011). A representative of the Toy Industry Association 
estimated that there are about 3 billion individual toys sold 
annually in the United States. This suggests an average retail price 
of $7 to $8 ($22 billion x 3 billion).
---------------------------------------------------------------------------

14. Third Party Testing Costs
    The final rule requires manufacturers to have children's products 
tested by a third party conformity assessment body before the products 
are distributed, periodically after that, and when there has been a 
material change in the product. In these hypothetical examples, we 
assume that the manufacturers must submit samples of their products to 
third party conformity assessment bodies annually, whether for initial 
certification of products, periodic testing, or recertification after a 
material change.
    The cost of the third party testing for a toy is a function of the 
characteristics of the toy, such as the number and type of component 
parts, the materials used in its construction, and the specific toy 
standards and tests that apply to it. The cost of third party tests 
would not be expected to be affected by the size of the manufacturer 
(although some conformity assessment bodies might offer discounts to 
firms for whom they conduct a lot of testing). In the hypothetical 
example, we assume that the conformity assessment bodies will charge 
the manufacturer $1,114 to test the toy for conformance with each 
applicable children's product safety rule (Row 6), which is the same 
cost used in the earlier discussion of the cost to test a hypothetical 
toy. In the case of Firm C, a small batch manufacturer, the third party 
testing costs may be lower. Unless we establish alternate requirements 
for small batch manufacturers, H.R. 2715 may effectively exempt the 
qualifying products of small batch manufacturers from many third party 
testing requirements, including the requirements for phthalates, heavy 
metal content of paints, and the lead content of substrates (but not 
from other requirements, such as lead-in-paint or children's metal 
jewelry). In the case of the toy example, Firm C will need to have the 
paints used tested for lead content and the toys themselves tested for 
small parts. Using the costs assumed in the hypothetical toy example, 
the cost to Firm C for testing each product once to the two applicable 
requirements would be $102 (4 paints at $13 each and for small parts at 
$50).
    This hypothetical example assumes that it is necessary to conduct 
each applicable test four times to provide the manufacturer with the 
necessary high degree of assurance, whether for the initial 
certification of the product, or to meet the periodic testing 
requirement. Therefore, the total cost that the manufacturer will be 
charged by a third party conformity assessment body is $4,456 per 
product for Firms A and B, and $408 per product for Firm C (Row 7). 
Because each manufacturer produces more than one product, total third 
party testing costs (Row 8) is equal to the cost per product times the 
number of products produced multiplied by the number of products 
produced (Row 7 x Row 1).
    In this hypothetical example, we further assume that, to conduct 
each test at least once, the manufacturer must submit two units of the 
toy to the conformity assessment body. In other words, a sample 
consists of two units of the product. The cost of the samples consumed 
by testing is the revenue that the manufacturer forgoes because the 
units were used for testing and not sold. Therefore, the cost of the 
samples consumed in the testing (given in Row 9) is calculated as the 
product of the 8 units required to conduct the tests, the revenue per 
product, and the number of different products (i.e., 8 x Row 4 x Row 
1).
    Although component part testing has the potential to reduce third 
party testing costs, component part testing is not considered initially 
in these examples. One reason we did not consider it is that it has not 
been determined how extensively component part testing will be used in 
practice. Component part testing generally might not be an option for 
component parts that are not used in multiple products, or for which 
only a small portion of the production is used in children's products. 
It also might not be applicable to some importers or manufacturers who 
obtain products from suppliers that do not have the capability for 
component part testing, or for which the manufacturer or importer, 
exercising due care, has not yet developed the degree of confidence in 
the supplier to rely upon test reports and records provided by the 
supplier.
15. Recordkeeping
    Firms will incur costs for preparing and maintaining the records 
and documentation required by the final rule. In this example, we 
assume that the recordkeeping will require approximately five hours per 
toy. Assuming that the total compensation, per hour, for the employees 
involved in the recordkeeping is $36.43,\8\ the recordkeeping cost 
would be about $182 per product. The total recordkeeping burden (given 
in Row 10) is the cost per product ($182), multiplied by the number of 
products (Row 1). This estimate of the recordkeeping burden assumes 
that the manufacturer will not be required to acquire any additional 
equipment or software to comply with the recordkeeping requirements of 
the final rule.
---------------------------------------------------------------------------

    \8\ This is based on the assumption that about half the labor is 
management or professional and the other half is sales or office 
labor. For all workers in private industry, the total hourly 
compensation for management, professional, and related occupations 
is $50.08 and $22.78 office and administrative occupations (Bureau 
of Labor Statistics, Employer Cost for Employee Compensations, 
March, 2011).
---------------------------------------------------------------------------

16. Total Testing Cost
    The total cost of testing for one year is the sum of the cost of 
the third party testing, the cost of the samples consumed in the 
testing, the cost of the recordkeeping, and the cost of developing the 
sampling plans. This is given in Row 11 of Table 5.
    Manufacturers may incur other costs that were not considered above. 
For example, the proposed rule contained provisions requiring 
manufacturers to select the samples for periodic testing, using 
techniques that would result in a statistical simple random sample. 
There will likely be costs associated with such requirements. These 
potential costs include: The cost of hiring consultants to design a 
sampling plan for selecting a sample that meets established 
requirements and the cost of the added time and effort that might be 
required in selecting such a sample. However, H.R. 2715 revised section 
14(i)(2)(B)(ii) of the CPSIA by replacing the phrase: ``the testing of 
random samples to ensure continued compliance'' with the phrase: ``the 
testing of representative samples to ensure continued compliance.'' 
Because of this change in the statute, we are not finalizing the 
section of the proposed rule pertaining to random samples. These costs 
will be addressed in more detail when we consider how to implement 
section 14(i)(2)(B)(ii) of the CPSA, as amended by the CPSIA and H.R. 
2715.
17. Impact on Hypothetical Firms
    The impact of the testing costs on each of the hypothetical firms 
is summarized in Row 12 of Table 5. For the large manufacturer, Firm A, 
the testing costs could amount to 1.2 percent of the firm's revenue 
(total testing cost, divided by the total revenue) if the firm received 
about $4 per product. This could be considered a

[[Page 69534]]

significant impact. (A typical profit is about 5 percent of total 
revenue. Thus, a 1.2 percent increase in costs could decrease profit 
for a typical firm by 24 percent.) If the average revenue that this 
firm received is somewhat higher, however, the impact probably would 
not be considered significant.
    For Hypothetical Firm B, a smaller manufacturer, the testing costs 
would amount to about 11.8 percent of the firm's revenue, if the firm 
received an average of $4 for each unit produced. For the small batch 
manufacturer, Firm C, the testing costs would amount to about 15.6 
percent of its revenue. In both cases (i.e., Firms B and C), costs 
amounting to 11.8 percent and 15.6 percent, respectively, of revenue 
would be considered a significant impact. These hypothetical examples 
illustrate the disproportionate impact that the final rule may have on 
small businesses. As illustrated, the final rule could also have a 
significant impact on even a large manufacturer. The significance of 
the impact increases as the production or sales volume of the 
manufacturer decreases.
    The example of Firm C can be used to demonstrate the relief that 
H.R. 2715 may be able to provide to small batch manufacturers. If Firm 
C is unable to benefit from the testing exemptions provided by H.R. 
2715, then Firm C would have faced the same per-unit testing costs as 
the other firms in this example: $1,114 instead of $102. Under that 
scenario, the total testing cost for Firm C would have been more than 
$46,000, which would have exceeded its revenue of $40,000.
    Some small manufacturers probably have average revenues per product 
that exceed $4. This might be the case especially if it is a specialty 
or niche market, in which only a few manufacturers participate, or if 
the product requires a substantial amount of skilled labor to create. 
Table 6 shows what the impact would be on Firm C, the hypothetical 
small batch manufacturer, if it received an average of $50 per unit for 
each unit it sold. Its total revenue would increase to $500,000 per 
year. The cost of the samples consumed in testing would increase to 
$4,000 (Row 9), which would increase the cost of testing to $9,902 (Row 
11). The testing costs would amount to about 1.9 percent of the firm's 
revenue, which might be considered significant, but it is much lower 
than it would have been if its revenue per unit was lower. It should be 
noted that if the manufacturer receives $50 per unit sold of a product, 
the retail price is likely substantially higher (unless the 
manufacturer sells a substantial portion of the product directly to the 
final consumer).

    Table 6--Impact on Hypothetical Firm C if Revenue per Unit Is $50
------------------------------------------------------------------------
                                                           Hypothetical
                                                           firm C--very
                                                               small
                                                           manufacturer
------------------------------------------------------------------------
1............................  Number of Different                    10
                                Products.
2............................  Annual Production Volume            1,000
                                per Product.
3............................  Total Annual Production            10,000
                                Volume (Row 1 x Row 2).
4............................  Revenue per unit sold....             $50
5............................  Total Annual Revenue (Row        $500,000
                                4 x Row 3).
6............................  Cost of testing each                 $102
                                product for compliance
                                with all rule once.
7............................  Cost of Testing Each                 $408
                                Product 4 Times (Row 6 x
                                4).
8............................  Total Third Party Testing          $4,080
                                Cost (Row 7 x Row 1).
9............................  Cost of Samples (4                 $4,000
                                samples of 2 units of
                                each product).
10...........................  Recordkeeping (5 hours/            $1,822
                                product at $36.43/hour).
11...........................  Total Testing Cost for             $9,902
                                One Year (Sum of Rows 8
                                through 11).
12...........................  Testing Cost as Percent              1.9%
                                of Revenue (Row 12/Row
                                5).
------------------------------------------------------------------------

    There also will be other costs that could be associated with the 
rule for which no quantification was attempted in the above 
hypothetical examples. One cost that was not considered is the 
additional administrative costs that are likely associated with the 
final rule's requirements; these include the cost of tracking when each 
product or component part needs to be tested. It also includes the cost 
of monitoring the suppliers and component parts that are used, the 
production techniques used, and any changes in product design to 
determine when products need to be tested due to material changes. 
There also may be administrative costs in matching up test reports to 
finished goods and giving the approval to ship products that the 
manufacturer has certified.
    Another cost that could impact manufacturers for which 
quantification was not attempted is the cost of receiving test reports 
that indicate inaccurately that the product did not comply with a 
children's product safety rule. When a manufacturer receives a test 
report that indicates inaccurately that a product does not meet a 
standard, the manufacturer could assume that the test was accurate and 
needlessly dispose of, or attempt to rework, the products covered by 
the test result; or, it might suspect that the test report was 
inaccurate and investigate the reason for the test failure. This could 
involve retesting samples of the product by other conformity assessment 
bodies and having the conformity assessment body that produced the 
inaccurate result attempt to determine if any error was made in testing 
the product. In any case, this could result in delays in shipping 
product and lost sales.
    Component part testing may offer some manufacturers relief from 
some testing costs. Component part testing may allow the cost of the 
third party testing to be spread over more units of the component part, 
which ultimately lowers the cost of third party testing per unit of the 
finished product. For example, if the hypothetical firms in the above 
examples were able to reduce the cost of third party testing by a 
factor of four using component part testing, in several (but not all) 
of the scenarios examined, the impact on those small firms could be 
reduced to the point that it would no longer be considered significant. 
However, component part testing is not likely to be an option for all 
manufacturers, for all component parts, or for all tests. Moreover, 
although it can reduce the cost of the third party testing, it may not 
reduce other costs associated with the final rule, such as the cost of 
samples, the cost of the recordkeeping, and other administrative costs.

[[Page 69535]]

    It should be noted that the examples above were for illustration 
purposes only. The number of times a product may have to be tested for 
certification purposes or for periodic testing purposes may be more or 
less than four times. The cost of testing some toys and other 
children's products could be higher or lower than the cost used in the 
above examples. The cost would be higher, for example, for products 
that had more component parts or for which the variability in the test 
results is greater, which could require more samples to be tested. The 
cost of testing could be lower for products that are subject to fewer 
safety rules or that contain fewer component parts. For some articles 
of apparel, for example, the only tests required might be for 
flammability and lead content on some component parts, for which 
component part testing might be possible. Although the examples suggest 
that some small businesses will be significantly adversely impacted by 
the final rule, some small businesses may have sufficient volume, 
sufficiently low testing costs, or sufficiently high revenue that the 
impact will not be significant.
18. Possible Market Reactions and Caveats
    Manufacturers can be expected to react to a significant increase in 
their costs due to the final rule in several ways. Some manufacturers 
might attempt to redesign their products to reduce the number of tests 
required, by reducing the features or the number of component parts 
used in the products that require testing. Manufacturers and importers 
could also be expected to reduce the number of children's products that 
they offer or, in some cases, exit the market for children's products 
entirely. Some may go out of business altogether.
    The requirements of the final rule could be a barrier that inhibits 
new firms from entering the children's product market, unless they 
expect to have relatively high-volume products. This could be an 
important factor for firms that expected to serve a niche market, such 
as firms with products intended for children with special needs. 
Although H.R. 2715 may provide significant relief to small batch 
manufacturers, the requirements could still be a barrier for some small 
batch manufacturers, home-based manufacturers, and craftspeople. The 
requirement for third party testing when there is a material change in 
a product's design or manufacturing process could cause some small or 
low-volume manufacturers to forgo or delay implementing some 
improvements to a product's design or manufacturing process in order to 
avoid the costs of third party testing.
    Although component part testing has the potential to reduce the 
costs of testing, component part testing might not be an option for all 
products or manufacturers. Component part testing most likely is an 
option for component parts that are common to multiple products (e.g., 
paints, bolts of a standard size). The potential for component part 
testing to reduce the cost of testing would be less for products that 
have component parts that are unique to the particular product. 
Component part testing is also not likely to offer significant cost 
savings for low-volume component parts or for component parts from 
which the component part manufacturer derives only a small percentage 
of revenue on regulated or children's products. Moreover, to use 
component part testing, the manufacturer must be able to trace each 
component part for which component part testing was used, to the party 
who procured the test. Maintaining this traceability will involve some 
administrative and recordkeeping costs, which will reduce the potential 
benefit of component part testing.
    Manufacturers may be able to mitigate the adverse impacts if they 
are able to raise their prices to cover these costs. However, because 
few companies have perfectly inelastic demand curves, most firms will 
likely have to absorb some of the cost increases that result from the 
final rule.

O. Conclusion

    The final rule will have a significant adverse impact on a 
substantial number of small businesses. The provisions of the rule that 
are expected to have the most significant impact are provisions related 
to requirements for the third party testing of children's products and 
the associated administrative and recordkeeping requirements. The 
impact is expected to be disproportionate on small and low-volume 
manufacturers. This is because testing costs are relatively fixed. 
Therefore, the impact of testing costs, per unit, will be greater on 
low-volume producers than on high-volume producers.
    H.R. 2715 may provide significant relief from the third party 
testing costs to certain manufacturers who meet the definition of a 
``small batch manufacturer.'' However, although the impact will be 
substantially reduced, some small batch manufacturers may still be 
significantly impacted by the requirements in the final rule.
    The other provisions of the rule related to protections against 
undue influence over a conformity assessment body and the voluntary 
consumer product labeling program are likely to have less significant 
impacts on small businesses.

P. Federal Rules Which May Duplicate, Overlap, or Conflict With the 
Final Rule

    The final rule implements certain provisions of the CPSIA 
pertaining to the certification and continued testing of children's 
products for compliance with children's product safety rules. Certain 
children's product safety rules contain some requirements for 
certification tests and reasonable test programs. However, any 
duplication, overlap, or conflict should be minimal. For example, the 
third party certification tests required by the final rule would 
satisfy the requirements for certification tests in any existing 
children's product safety rule. Any production testing required by an 
existing children's product safety rule can be used to increase the 
maximum period between periodic tests according to the provisions of 
the final rule.

Q. Alternatives for Reducing the Adverse Impact on Small Businesses

    We recognize that the final rule will have a disproportionate 
impact on small and low-volume manufacturers. To a large degree, the 
impact is not avoidable because the CPSA, as amended by the CPSIA, 
requires that the certification of children's products be based on test 
results from accredited third party conformity assessment bodies. 
However, we have incorporated into the final rule, some provisions that 
are intended to lessen the impact on small businesses. These include: 
Provisions allowing for longer maximum intervals between periodic 
testing if the manufacturer conducts certain other testing; allowing 
manufacturers to use component part testing; and permitting 
manufacturers and importers to rely upon the certifications issued by 
other parties as a basis for issuing their own finished product 
certificates, as provided by 16 CFR part 1109.
    We also identified and considered several alternatives that could 
have reduced the impact on small businesses, but which for reasons 
discussed below, were not adopted in the final rule. These include: 
Providing additional testing relief for low-volume products; reducing 
the number of samples that must be tested by third party conformity 
assessment bodies; basing the frequency of third party testing on the 
risk of injury from the product; and allowing

[[Page 69536]]

the use of XRF testing for lead content for more materials.

R. Provisions Incorporated in the Final Rule

1. Longer Maximum Periodic Testing Interval if the Manufacturer 
Conducts Other Testing
    The final rule provides for a longer maximum periodic testing 
interval if the manufacturer implements a production testing plan, as 
provided for in Sec.  1107.21(c) of the final rule. The manufacturer 
may consider the information obtained from the production testing in 
determining the appropriate interval and number of samples required for 
third party periodic testing, provided that third party periodic 
testing occurs at least once every two years. If the manufacturer 
conducts testing in an ISO/IEC 17025:2005-accredited testing laboratory 
in accordance with Sec.  1107.21(d) of the final rule, the maximum 
periodic testing interval is three years. However, this provision is 
expected to be of benefit primarily to larger manufacturers.
2. Component Part Testing
    The final rule allows firms to conduct component part testing 
pursuant to the requirements in 16 CFR part 1109. This can reduce the 
cost to manufacturers where one component part might be common to more 
than one product. Such component parts might include paints, polymers 
used in molding different parts, and fasteners. In these cases, the 
component parts might be received in larger lots than the production 
lots of the products in which they are used. Therefore, the testing 
costs for those component parts will be spread over more units than if 
they were required to be tested on the final products only.
3. Reliance on Certifications by Other Parties
    The final rule allows manufacturers and importers to rely upon 
testing obtained by or certifications made by another party as the 
basis for their own certificates, as allowed by 16 CFR part 1109. These 
certifications can be for component parts or for finished products. 
This provision would be of value to importers, who may base their own 
certificate of conformity on the certificate for a finished product 
issued by a foreign manufacturer, provided that the requirements of 16 
CFR part 1109 are met.

S. Alternatives That May Further Reduce the Impact on Small Businesses

Additional Testing Relief for Low-Volume Manufacturers of Children's 
Products
    The proposed rule would include a provision that would provide some 
relief to low-volume manufacturers of children's products, by exempting 
products from the periodic testing requirement until 10,000 units of 
the product have been manufactured or imported. Once 10,000 units have 
manufactured or imported, the periodic testing requirements would apply 
to the product. This provision did not relieve the manufacturer or 
importer from the obligation to have the product tested by a third 
party conformity assessment body for: (1) Certification purposes, and 
(2) when there had been a material change in the product's design or 
manufacturing processes or sourcing of component parts. Thus, the 
manufacturer would have still been obligated to submit samples to a 
third party conformity assessment body to demonstrate that the product 
conforms with the applicable children's product safety rules prior to 
introducing the product and when there has been a material change. The 
provision only relieved the manufacturer from the periodic testing 
requirements until 10,000 units of the children's product had been 
manufactured or imported.
    On August 12, 2011, H.R. 2715 was enacted into law. H.R. 2715 has 
the potential to provide substantial relief to ``small batch 
manufacturers,'' which H.R 2751 defines as manufacturers that had no 
more than $1 million in total gross revenue from sales of all consumer 
products in the previous calendar year. H.R. 2751 also defines 
``covered product'' as a consumer product manufactured by a small batch 
manufacturer where no more than 7,500 units of the same product were 
manufactured in the previous calendar year. Because the provisions for 
small batch manufacturers in H.R. 2715 may provide relief to many of 
the same manufacturers at which the low-volume exemption in the 
proposed rule was aimed, we decided to defer action on the low-volume 
exemption.
    For most small batch manufacturers, the relief provided by H.R. 
2715 may be greater than the relief that would have been provided by 
the low volume-exemption from the proposed rule because the H.R. 2715 
provides small batch manufacturers with relief from both certification 
and periodic testing, with some exceptions, while the low volume 
exemption in the proposed rule only provided some relief from periodic 
testing. However, the partial exemption from periodic testing that the 
proposed rule would provide for products where fewer than 10,000 units 
had been imported or manufactured could provide some relief for some 
manufacturers of low-volume products that are not categorized as small 
batch manufacturers by H.R. 2715. There are likely some manufacturers 
that have low-volume products, but that also have gross sales that 
exceed $1 million. These manufacturers will receive no relief from the 
small batch manufacturer exceptions in H.R. 2715, but would have been 
provided some relief by the low-volume exemption in the proposed rule. 
Consequently, including the partial exemption from periodic testing for 
low-volume products from the proposed rule, could provide some relief 
to manufacturers of low-volume products that do not meet the definition 
of a small batch manufacturer.
    We have decided to reserve the provision of the proposed rule that 
would provide partial relief from periodic testing for low-volume 
products. The reason is that H.R. 2715 directed us to seek public 
comment on opportunities to reduce the cost of third party testing 
requirements consistent with assuring compliance with any applicable 
consumer product safety rule, ban, standard, or regulation. It also 
contains special rules for small batch manufacturers and directs us to 
consider alternative testing requirements or to exempt small batch 
manufacturers from certain third party testing requirements. Thus, 
given these new statutory obligations resulting from H.R. 2715, we are 
reserving Sec.  1107.21(e) so that we may consider how to address cost, 
low-volume products, and small batch issues more fully.
1. Reduce the Number of Repeated Third Party Tests Required for 
Certification
    The final rule requires that manufacturers submit samples of 
children's products to third party conformity assessment bodies to: (1) 
Certify that they comply with all applicable children's product safety 
rules before they are distributed; (2) after material changes; and (3) 
periodically to ensure continued compliance with all applicable 
children's product safety rules. The number of samples required is not 
specified, but would be based upon factors, such as the degree to which 
the manufacturing processes create products that are uniform in 
composition and quality, the testing interval, and the number of 
samples required to ensure with a high degree of

[[Page 69537]]

assurance that a certified product continues to comply with all 
applicable children's product safety rules. It is likely that most 
manufacturers will need to have a product third party tested multiple 
times for both certification and periodic testing purposes.
    An alternative that could provide some relief to small businesses 
is to require, for purposes of certifying a product, manufacturers to 
submit sufficient units of the product to conformity assessment bodies 
to ensure that the product can be tested for compliance with each 
applicable children's safety rule, at least once, or as many times as 
required by the specific regulation, if different. The same requirement 
could apply to periodic testing: At least once during the periodic 
testing interval established by the rule (e.g., once a year) 
manufacturers would be required to submit sufficient units of the 
product to ensure that each applicable children's product safety rule 
is evaluated at least once. In some cases, all of the required tests 
could be performed on one unit of the product. In other cases, more 
than one unit of the product might be required to test the product to 
all applicable children's product safety rules. For example, more than 
one unit of a toy might be required to subject the toy to each use and 
abuse test that is applicable to the toy; the tests specified in the 
bicycle helmet standard require eight helmets. Nevertheless, each test 
would only need to be conducted one time. This could reduce the 
financial burden of the third party testing requirements on small 
businesses.
    Under this alternative, manufacturers could still be required to 
have a high degree of assurance that their children's products complied 
with all applicable children's product safety rules. However, the 
testing or inspections needed to provide the manufacturer with a high 
degree of assurance of compliance could be first or third party 
testing, or by other process control means, at the option of the 
manufacturer. The purpose of the required third party tests would be to 
provide objective evidence of compliance.
    We did not accept this alternative because, although it arguably 
would provide a greater level of evidence of compliance than what 
existed before the enactment of the CPSIA, it would not require enough 
third party testing to provide a high degree of assurance that 
children's products complied with all applicable children's product 
safety rules. An analysis of CPSC compliance data for children's shoes 
found several examples where test results for one sample of an article 
indicated compliance with the lead content requirements, but tests 
results for a different sample of the same article showed lead levels 
that exceeded the standard.\9\ This suggests that testing one sample 
may not always be sufficient to detect noncomplying products.
---------------------------------------------------------------------------

    \9\ CPSC Memorandum to the Commission, from John W. Boja, Howard 
N. Tarnoff, Mary F. Toro, and Marc J. Schoem, ``The Technological 
Feasibility of Reducing the Lead Content to 100 ppm: Compliance 
Data'' (29 June 2011).
---------------------------------------------------------------------------

2. Allow Increased Use of XRF Analysis
    XRF analysis is a testing technique that can be used to measure the 
heavy metal content of materials. The cost of using XRF analysis 
testing is generally less expensive than using ICP analysis. Currently, 
we have approved XRF analysis for determining the lead content of 
homogenous polymer products and one type of XRF analysis (energy 
dispersive XRF using multiple monochromatic beams using the test method 
in ASTM F2853-10) for paints. We have not approved the use of XRF 
analysis for determining the lead content of metal component parts. 
However, allowing the use of XRF analysis for determining the lead 
content of metal component parts could substantially reduce the cost of 
the third party testing. The reduction could be especially significant 
for manufacturers of children's products that have a lot of metal 
component parts.
    We decided not to allow the expanded use of XRF analysis to 
determine lead content at this time. However, we are continuing to 
evaluate the potential use of XRF analysis, and should we determine 
that XRF analysis can be sufficiently accurate in determining lead 
content, in a separate rulemaking, we could consider expanding the 
allowable use of XRF analysis for third party testing. Moreover, H.R. 
2715 directed us to seek public comment on opportunities to reduce the 
cost of third party testing requirements consistent with assuring 
compliance with any applicable children's product safety rule. Further, 
H.R. 2715 directs us to seek public comment on the extent to which 
technology, other than the technology already approved by the 
Commission, exists for third party conformity assessment bodies to test 
or to screen for testing consumer products subject to a third party 
testing requirement. Therefore, we may consider alternatives to reduce 
the cost of third party testing requirements more fully at a later 
date.
3. Basing the Frequency of Periodic Testing on Risk of Injury or 
Illness
    The final rule requires that periodic testing be performed at least 
once every one to three years, depending on the other testing that a 
manufacturer opts to perform. An alternative that would reduce the 
burden of the rule on some small businesses is to lengthen the time 
period between required periodic tests for products, component parts, 
or rules for which the risk of serious injury or illness from a 
violation of a children's product safety rule is low. This would reduce 
the burden on some manufacturers because it could reduce the amount of 
required third party testing.
    This alternative was not accepted because, given the number of 
children's product safety rules and the large number and wide variety 
of children's products to which they apply, its administration would be 
complex and would require a large investment of resources to analyze 
and rank the risk of serious injury or illness that could result from 
each product or product category failing to comply with each applicable 
children's product safety rule and then determining the appropriate 
periodic testing requirements for the product or product category.
4. Alternatives Not Considered Because They Would Conflict With the 
Statute
    We are aware of some alternatives that could reduce the burden of 
the rule but that were not considered in this rulemaking because 
adopting the alternative would conflict with the statute. For example, 
although we have been able to exempt some materials from the testing 
requirements that inherently do not contain lead in excess of the 
limits established by the CPSIA, we are not able to exempt materials 
from testing that can exceed those limits even if the health hazard 
associated with the materials or component parts is believed to be 
minimal. Likewise, we are not be able to exempt from the testing 
requirements products for which compliance with the applicable safety 
rule is thought to be very high even without a mandatory third party 
testing requirement.

V. Paperwork Reduction Act

    The final rule contains information collection requirements that 
are subject to public comment and review by the Office of Management 
and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3520). The preamble to the proposed rule contained a discussion of 
the estimated burden associated with the rule's collection of

[[Page 69538]]

information requirements (75 FR at 28360 through 28361).
    Several commenters addressed issues relating to the Paperwork 
Reduction Act discussion.
    (Comment 113)--Some commenters noted that the preamble to the 
proposed rule states that we will likely request access to records only 
when we are investigating potentially defective or noncompliant 
products. The commenters concluded that having to integrate multiple 
systems to compile data should not be needed, as long as companies can 
provide the data upon request. One commenter noted that proposed Sec.  
1107.10 (b)(5)(i)(C) would require not only records of each 
certification test, but also ``a description of how the product was 
certified as meeting the requirements, including how each applicable 
rule was evaluated, the test results and the actual values of the 
tests.''
    One commenter stated that it receives more than a thousand finished 
good test reports annually from CPSC-accepted third party labs. These 
reports often run 50 to 125 pages in length and contain hundreds of 
data points and assessments. The commenter asserted that adding 
additional descriptive text to explain ``how'' the product was 
certified, simply adds no value. The commenter concluded that if the 
test report references an ASTM standard, and the results are 
acceptable, that should be sufficient without additional explanations.
    (Response 113)--The final rule reserves subpart B, which would 
contain proposed Sec.  1107.10 and requirements for a reasonable test 
program for non-children's products, including the recordkeeping 
requirements. Therefore, the final rule does not impose any 
recordkeeping requirements related to non-children's products.
    With respect to children's products, the recordkeeping requirements 
at Sec.  1107.26 of the final rule do not require descriptive text to 
explain ``how'' the children's product was certified. The certification 
test methods are prescribed for children's products. It should only be 
necessary for the manufacturer or importer to identify and store the 
new requirements that are not already part of their current 
recordkeeping systems and to be certain that the remaining 
documentation can be produced, upon request, in a manner that 
identifies clearly the requisite parts.
    (Comment 114)--Several commenters addressed our estimated resource 
requirements to manage the general recordkeeping requirements for 
testing and certification. One commenter stated that the toy 
industries' experience in meeting the recordkeeping requirements of the 
interim enforcement policy is that the requirements are extremely 
burdensome, and the recordkeeping requirements contained in the 
proposed rule are much more extensive and will be even more costly. The 
commenter stated that our estimate of 200,000-300,000 hours to manage 
recordkeeping, equating to no more than 200 people across all 
industries impacted by the CPSIA, is much too low. Within the toy 
industry alone, the commenter estimated 10 times that many persons have 
been engaged along the global supply chain to manage the data and 
recordkeeping associated with the CPSIA's existing requirements. 
Although we referenced a calculation of 100,000 to 150,000 products to 
which the recordkeeping requirements would apply, the commenter stated 
that companies typically certify each SKU, and there is recordkeeping 
for every version, even if it is identical in all material respects.
    One commenter estimated that the true number of toys and games was 
closer to 2.5 million. The commenter's estimate was based on a listing 
of 808,465 toys and games on a popular commercial Web site (on August 
3, 2010), plus its estimate that the Web site only lists about one-
third of the toys available. Given some specialty and other submarkets, 
the commenter thought that the final number of items in the Toys, 
Games, and Educational items category could be in excess of 4 to 5 
million individual products or stock-keeping units. The commenter also 
provided an estimate of 8 million apparel items available for children. 
However, the commenter did not provide the method or data sources it 
used for the latter estimates. Another commenter noted that its company 
had about 1,700 individual products annually, requiring testing, 
certification, and recordkeeping, or more than 1 percent of the CPSC's 
entire estimated number of products across all affected industries.
    (Response 114)--We acknowledge that our original estimate of the 
number of products that would be impacted was low, and we have 
increased significantly our estimate of the recordkeeping burden 
associated with the testing and certification requirements of the final 
rule. Based on the comments, and other research, we have revised our 
estimate of the number of children's products. In the categories of 
toys, art and creative materials, furniture, and jewelry, we estimate 
that there are perhaps 241,000 different products. There are additional 
products in other categories, such as nursery or juvenile products, 
nontraditional toys (e.g., video games), CDs, bicycles, ATVs, party 
favors, and greeting cards intended for children, and some educational 
materials that could be affected by the final rule for which specific 
estimates have not been made. The estimates do not consider that some 
products might be produced at more than one location or certified by 
more than one importer. Therefore, we concluded that there could be 
300,000 non-apparel products that are covered by the rule.
    The original estimate did not account for the very large number of 
apparel products that would be covered by the final rule. The number of 
apparel products intended for children, including footwear, is 
estimated to be about 1.3 million. This would bring the total number of 
children's products to about 1.6 million.
    The final rule has been changed to address some of the burdens 
mentioned by the commenters, such as not requiring records to be kept 
in the United States or translated into English, unless requested.
    Elsewhere in this issue of the Federal Register, we have published 
a notice seeking public comment on the issues in H.R. 2715, including 
other methods of lowering the cost of third party testing consistent 
with assuring compliance with the applicable consumer product safety 
rules, bans, standards, and regulations.
    (Comment 115)--One commenter asserted that its company's testing 
program has been highly effective for more than 26 years, but it does 
not maintain the records that would be required by the proposed rules, 
and it would be very costly to do so. One commenter questioned whether 
the extensive recordkeeping on every item was necessary for the proper 
performance of the CPSC's functions.
    Another commenter echoed the concern that the cost of the 
recordkeeping requirements would be high without providing any clear 
benefit to the agency's mission or product safety. The commenter 
estimated that a major retailer would need to maintain records on 
300,000 distinct products, which would cost the retailer $22 million 
annually, using the estimated per product recordkeeping burden employed 
in the notice of proposed rulemaking. Another commenter stated that we 
should reduce the reporting burden by allowing manufacturers or 
importers to maintain their own recordkeeping systems if they meet the 
traceability requirements and ensure

[[Page 69539]]

that products are certified properly before they enter into commerce.
    (Response 115)--With respect to recordkeeping requirements for 
reasonable testing programs for non-children's products, we have 
reserved subpart B, which would contain requirements for reasonable 
testing programs for non-children's products. Therefore, the final rule 
does not impose any recordkeeping requirements on manufacturers of non-
children's products.
    With respect to children's products, we acknowledge that the 
recordkeeping requirements could require considerable resources to 
track the data and manage recordkeeping. As a result, the costs 
associated with the recordkeeping requirements could be a significant 
expense for some firms. However, as stated in the preamble to the 
proposed rule, the purpose of the documentation and recordkeeping 
requirements in the rule is to establish the identity of the product 
and to demonstrate that each product complies with the applicable rules 
when it is certified and on a continuing basis thereafter. 
Additionally, we note that retailers are not required to comply with 
the recordkeeping requirements of the rule, unless they are also the 
importer of the product.
    We also have revised the final rule to reduce the costs associated 
with the recordkeeping requirements. For example, the final rule does 
not require manufacturers to maintain the records at a location in the 
United States, as long as they can provide the records to us, after 
receiving a request to do so. Also, with the exception of the 
certificates of conformity, the records will not have to be maintained 
in the English language.
    Finally, the final rule does not require that the records be in a 
specific format. The final rule specifies the records or information 
that is required. However, manufacturers may maintain the records 
within their own recordkeeping systems if, as suggested by the 
commenter, they meet the traceability requirements and ensure that 
products are certified properly before they enter into commerce.
    (Comment 116)--Several comments provided estimates on the amount of 
time required for recordkeeping or information from which estimates 
could be derived. One commenter (a large toy manufacturer) stated that 
they had added six full-time employees to manage the data and 
recordkeeping associated with the CPSIA's existing testing and 
certification requirements, and they further indicated that they had 
1,700 products tested annually for which recordkeeping would be 
required. The test reports are from 50 to 125 pages in length and 
require maintaining for all products tested. The commenter estimated 
that their company accounted for greater than 1 percent of all the 
hours that the CPSC had estimated for all children's products. The 
commenter concluded that, based on this estimate, the actual number of 
hours required for recordkeeping by all companies would be higher than 
the CPSC's estimate.
    Another commenter estimated that the recordkeeping will require 
about 2.25 hours per test submitted; but due to varying lot sizes and 
requirements, they estimate that multiple tests per year could be 
required on a product. They estimate that the burden will be 3 hours 
for one category of products that it manufactures and 5 hours for 
another, with an average across their product line of 3.5 hours.
    One commenter said that the time required for recordkeeping would 
be higher for manufacturers that specialize in high quality, but low 
volume products. The commenter estimated that it would take 6 to 10 
employees to track the testing data and compile it into certificates of 
conformity, or about 6 to 10 times the per-product labor required by 
the high volume, mass production manufacturers. The commenter estimated 
about 3 to 7.5 hours of recordkeeping would be required for high-
quality, low-volume products.
    (Response 116)--Based on these comments, we have determined that 
for many children's products, substantially more than 2 hours will be 
required for the associated recordkeeping. For products, such as toys, 
jewelry, children's furniture and other children's products, which are 
subject to third party testing to several different standards, we have 
determined that 5 hours is a reasonable estimate.
    More hours will be required for some products to which many rules 
apply. Simpler products with few, or only one, applicable rule should 
require fewer hours for recordkeeping. For apparel and footwear 
products, we have determined that it is reasonable to use a lower 
estimate of the number of hours required for recordkeeping, such as 3 
hours. This estimate recognizes that there could be substantial 
recordkeeping required for some items, such as those that require 
testing for flammability and that contain various components (e.g., 
zippers, snaps, buttons, accessories) while other items, might require 
little testing.
    Title: Testing and Labeling Pertaining to Product Certification.
    Description: The final rule implements section 102(b) of the CPSIA, 
which requires certification of compliance for children's products 
subject to a children's product safety rule. A certification that a 
children's product complies with the applicable children's product 
safety rules must be supported by testing by an approved third party 
conformity assessment body. The final rule imposes recordkeeping 
requirements related to those testing and certification mandates. The 
recordkeeping requirements are intended to allow identification of each 
product and establish that each product is certified properly, before 
it enters commerce. In addition, the recordkeeping requirements require 
certification that a product has been retested properly for conformity 
with all applicable rules on a continuing basis, including after a 
material change in the product's design or manufacturing processes, 
including the sourcing of component parts.
    Each manufacturer or importer of a children's product subject to a 
children's product safety rule would be required to establish and 
maintain the following records:
     A copy of the Children's Product Certificate (Sec.  
1107.26(a)(1));
     Records of each certification test (Sec.  1107.26(a)(2));
     Records of the periodic tests (Sec.  1107.26(a)(3));
     Records of descriptions of all material changes in product 
design, manufacturing process, and sourcing of component parts, the 
certification tests run, and the test values (Sec.  1107.26(a)(5)); and
     Records of undue influence procedures (Sec.  
1107.26(a)(6)).
    Description of Respondents: The recordkeeping requirements apply to 
all manufacturers or importers of children's products that are covered 
by one or more children's product safety rules promulgated and/or 
enforced by the CPSC. We reviewed every industry category in the NAICS 
and selected those industry categories that included firms that could 
manufacture or sell such children's products. Using data from the U.S. 
Census Bureau, we determined that there are more than 37,000 
manufacturers, almost 80,000 wholesalers, and about 128,000 retailers 
in these categories. However, not all of the firms in these categories 
manufacture or import children's products that are covered by 
children's product safety rules. Therefore, these numbers would 
constitute a high estimate of the number of firms that are subject to 
the recordkeeping requirements.
    Estimate of the Burden: The hour burden of the recordkeeping

[[Page 69540]]

requirements will likely vary greatly from product to product, 
depending upon such factors as the complexity of the product and the 
amount of testing that must be documented. We do not have comprehensive 
data on the universe of products that will be impacted. Therefore, 
estimates of the hour burden of the recordkeeping requirements are 
somewhat speculative.
    The preamble to the proposed rule (75 FR at 28361) estimated that, 
on average, approximately 2 hours would be needed for recordkeeping per 
product; although we recognized that, for some products, particularly 
those subject to more than one standard or rule, would need a 
substantial amount of testing, and thus, the recordkeeping burden could 
be much higher than 2 hours. Conversely, products subject to one 
standard or that need little testing, could have a recordkeeping burden 
of less than 2 hours.
    Based on the comments we received on the proposed rule, however, we 
have revised the estimated number of children's products that are 
affected, as well as the hourly recordkeeping burden estimate. We now 
estimate that approximately 300,000 non-apparel children's products 
will be covered by the rule and that an average of 5 hours will be 
needed for the recordkeeping associated with these products. We also 
estimate that there are approximately 1.3 million children's apparel 
and footwear products and that will require an average of 3 hours for 
the recordkeeping. Thus, the total hour burden of the recordkeeping 
associated with the final rule is 5.4 million hours (300,000 x 5 hours 
plus 1,300,000 x 3 hours).
    Additionally, for the proposed rule, to calculate the cost of the 
recordkeeping burden, we used the total hourly compensation for private 
sector workers in management, professional, and related occupations, 
which is $48.91 per hour. This is based on the expectation that much of 
the recordkeeping will be done by chemists, engineers and quality 
control managers. Most commenters did not mention the occupational mix 
of the workers that would be involved in the recordkeeping associated 
with the rule. However, one commenter stated that the rule would result 
in an increase in his clerical and management staff. Therefore, to 
recognize that clerical, professional, and management staff will be 
involved in meeting the recordkeeping requirements of the rule, we will 
assume that personnel in ``management, professional, and related 
occupations'' will be responsible for half of the recordkeeping, while 
personnel in ``office and administrative support'' occupations will be 
responsible for the other half. As of March 2011, these categories 
would average $36.43 per hour (http://www.bls.gov/news.release/ecec.t09.htm).\10\ At $36.43 per hour (i.e., the revised hourly 
compensation rate), the total cost of the recordkeeping associated with 
the testing and certification rule is approximately $197 million (5.4 
million hours x $36.43 = $196,722,000).
---------------------------------------------------------------------------

    \10\ U.S. Department of Labor, Bureau of Labor Statistics, 
``Employer costs for Employee Compensation--March 2011, Table 9'' (8 
June 2011). Available at: http://www.bls.gov/news.release/ecec.t09.htm. Last accessed 8 July 2011.
---------------------------------------------------------------------------

    Estimate Limitations: There are some limitations to the above 
estimates that warrant mentioning.
    While the estimates of the number of products are more accurate 
than the original estimates, they are not based on a well-designed 
survey or comprehensive database. Additionally, the extent to which 
some products might be certified by multiple importers, or are 
manufactured at different sites, has not been established.
    Recordkeeping for the flammability of children's sleepwear might be 
captured in the OMB submission on another rule, but the recordkeeping 
associated with the lead content rules should be captured here. 
However, no adjustment for this has been made because we have not tried 
to separate children's sleepwear from other apparel items.
    The recordkeeping considered here is best thought of as the 
recordkeeping mandated by the testing and certification requirements of 
section 102 of the CPSIA. It would be impossible to separate the time 
associated with the initial certification, from the time related to 
periodic testing and documenting material changes, especially because 
it often involves issuing a new certificate.
    For finished goods manufacturers who also perform their own 
component testing, it is difficult to separate the recordkeeping burden 
associated with component part testing from the recordkeeping burden 
associated with the testing and labeling rule. This could lead to an 
overestimate of the costs associated with the testing and labeling rule 
and possibly result in underestimates associated with the component 
part testing rule. Better estimates may be possible if the 
recordkeeping burden is reevaluated after the rules are finalized.
    In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)), we have applied to the U.S. Office of Management and Budget 
(OMB) for a control number for this information collection, and we will 
publish a notice in the Federal Register providing the number when we 
receive approval from the OMB.

VI. Environmental Considerations

    This final rule falls within the scope of the Commission's 
environmental review regulations at 16 CFR 1021.5(c)(2), which provides 
a categorical exclusion from any requirement for the agency to prepare 
an environmental assessment or environmental impact statement for 
product certification rules.

VII. Executive Order 12988

    Executive Order 12988 (February 5, 1996), requires agencies to 
state in clear language the preemptive effect, if any, of new 
regulations. The final rule is issued under authority of the CPSA and 
the CPSIA. The CPSA provision on preemption appears at section 26 of 
the CPSA. The CPSIA provision on preemption appears at section 231 of 
the CPSIA. The preemptive effect of this rule would be determined in an 
appropriate proceeding by a court of competent jurisdiction.

VIII. Effective Date

    The preamble to the proposed rule indicated that a final rule would 
become effective 180 days after its date of publication in the Federal 
Register (75 FR at 28361). However, on August 12, 2011, the President 
signed H.R. 2715 into law. H.R. 2715 revised the CPSIA in several 
different ways and also affected section 14(i)(2)(B)(ii) of the CPSA. 
H.R. 2715 also created a new section 14(i)(3)(B) of the CPSA, which 
requires us, no later than one year after H.R. 2715's date of 
enactment, to review the public comments (on opportunities to reduce 
the costs of third party testing requirements) and directs us to 
``prescribe new or revised third party testing regulations'' if we 
determine that ``such regulations will reduce third party testing costs 
consistent with assuring compliance with the applicable consumer 
product safety rules, bans, standards, and regulations.'' Consequently, 
we have finalized those provisions that H.R. 2715 did not affect 
directly. We also have decided to make the final rule effective on 
February 8, 2013 so that parties can begin taking steps to develop 
internal processes, such as recordkeeping, and so that we and 
interested parties can consider how H.R. 2715 interacts with the final 
rule.

List of Subjects in 16 CFR Part 1107

    Business and industry, Children, Consumer protection, Imports,

[[Page 69541]]

Incorporation by reference, Product testing and certification, Records, 
Record retention, Toys.

    Accordingly, 16 CFR part 1107 is added to read as follows:

PART 1107--TESTING AND LABELING PERTAINING TO PRODUCT CERTIFICATION

Subpart A--General Provisions
Sec.
1107.1 Purpose.
1107.2 Definitions.
Subpart B--[Reserved]
Subpart C--Certification of Children's Products
1107.20 General requirements.
1107.21 Periodic testing.
1107.23 Material change.
1107.24 Undue influence.
1107.26 Recordkeeping.
Subpart D--Consumer Product Labeling Program
1107.30 Labeling consumer products to indicate that the 
certification requirements of section 14 of the CPSA have been met.

    Authority: 15 U.S.C. 2063, Sec. 3, 102 Pub. L. 110-314, 122 
Stat. 3016, 3017, 3022.

Subpart A--General Provisions


Sec.  1107.1  Purpose.

    This part establishes the protocols and standards for ensuring 
continued testing of children's products periodically and when there 
has been a material change in the product's design or manufacturing 
process and safeguarding against the exercise of undue influence by a 
manufacturer on a third party conformity assessment body. It also 
establishes a program for labeling of consumer products to indicate 
that the certification requirements have been met pursuant to sections 
14(a)(2) and (i)(2)(B) of the Consumer Product Safety Act (CPSA) (15 
U.S.C. 2063(a)(2) and (i)(2)(B)).


Sec.  1107.2  Definitions.

    Unless otherwise stated, the definitions of the Consumer Product 
Safety Act and the Consumer Product Safety Improvement Act of 2008 
apply to this part. The following definitions apply for purposes of 
this part:
    CPSA means the Consumer Product Safety Act.
    CPSC means the Consumer Product Safety Commission.
    Due care means the degree of care that a prudent and competent 
person engaged in the same line of business or endeavor would exercise 
under similar circumstances. Due care does not permit willful 
ignorance.
    High degree of assurance means an evidence-based demonstration of 
consistent performance of a product regarding compliance based on 
knowledge of a product and its manufacture.
    Identical in all material respects means there is no difference 
with respect to compliance to the applicable rules, bans, standards, or 
regulations between the samples to be tested for compliance and the 
finished product distributed in commerce.
    Manufacturer means the parties responsible for certification of a 
consumer product pursuant to 16 CFR part 1110.
    Manufacturing process means the techniques, fixtures, tools, 
materials, and personnel used to create the component parts and 
assemble a finished product.
    Material change means any change in the product's design, 
manufacturing process, or sourcing of component parts that a 
manufacturer exercising due care knows, or should know, could affect 
the product's ability to comply with the applicable rules, bans, 
standards, or regulations.
    Third party conformity assessment body means a testing laboratory 
whose accreditation has been accepted by the CPSC to conduct 
certification testing on children's products. Only third party 
conformity assessment bodies whose scope of accreditation includes the 
applicable required tests can be used for children's product 
certification or periodic testing purposes.

Subpart B--[Reserved]

Subpart C--Certification of Children's Products


Sec.  1107.20  General requirements.

    (a) Manufacturers must submit a sufficient number of samples of a 
children's product, or samples that are identical in all material 
respects to the children's product, to a third party conformity 
assessment body for testing to support certification. The number of 
samples selected must be sufficient to provide a high degree of 
assurance that the tests conducted for certification purposes 
accurately demonstrate the ability of the children's product to meet 
all applicable children's product safety rules.
    (b) If the manufacturing process for a children's product 
consistently creates finished products that are uniform in composition 
and quality, a manufacturer may submit fewer samples to provide a high 
degree of assurance that the finished product complies with the 
applicable children's product safety rules. If the manufacturing 
process for a children's product results in variability in the 
composition or quality of children's products, a manufacturer may need 
to submit more samples to provide a high degree of assurance that the 
finished product complies with the applicable children's product safety 
rules.
    (c) Except where otherwise specified by a children's product safety 
rule, component part testing pursuant to 16 CFR part 1109 may be used 
to support the certification testing requirements of this section.
    (d) If a product sample fails certification testing to the 
applicable children's product safety rule(s), even if other samples 
have passed the same certification test, the manufacturer must 
investigate the reasons for the failure and take the necessary steps to 
address the reasons for the failure. A manufacturer cannot certify the 
children's product until the manufacturer establishes, with a high 
degree of assurance that the finished product does comply with all 
applicable children's product safety rules.


Sec.  1107.21  Periodic testing.

    (a) General requirements for all manufacturers. All manufacturers 
of children's products must conduct periodic testing. All periodic 
testing must be conducted by a third party conformity assessment body. 
Periodic testing must be conducted pursuant to either paragraph (b), 
(c), or (d) of this section or as provided in regulations under this 
title. The testing interval selected for periodic testing may be based 
on a fixed production interval, a set number of units produced, or 
another method chosen by the manufacturer based on the product produced 
and its manufacturing process, so long as the applicable maximum 
testing interval specified in paragraph (b), (c), or (d) of this 
section is not exceeded. Component part testing pursuant to 16 CFR part 
1109 may be used to support the periodic testing requirements of this 
section.
    (b) A manufacturer must conduct periodic testing to ensure 
compliance with the applicable children's product safety rules at least 
once a year, except as otherwise provided in paragraphs (c), and (d) of 
this section or as provided in regulations under this title. If a 
manufacturer does not conduct production testing under paragraph (c) of 
this section, or testing by a testing laboratory under paragraph (d) of 
this section, the manufacturer must conduct periodic testing as 
follows:
    (1) Periodic Testing Plan. Manufacturers must develop a periodic

[[Page 69542]]

testing plan to ensure with a high degree of assurance that children's 
products manufactured after the issuance of a Children's Product 
Certificate, or since the previous periodic testing was conducted, 
continue to comply with all applicable children's product safety rules. 
The periodic testing plan must include the tests to be conducted, the 
intervals at which the tests will be conducted, and the number of 
samples tested. At each manufacturing site, the manufacturer must have 
a periodic testing plan specific to each children's product 
manufactured at that site.
    (2) Testing Interval. The testing interval selected must be short 
enough to ensure that, if the samples selected for testing pass the 
test, there is a high degree of assurance that the other untested 
children's products manufactured during the testing interval comply 
with the applicable children's product safety rules. The testing 
interval may vary depending upon the specific children's product safety 
rules that apply to the children's product, but may not exceed one 
year. Factors to be considered when determining the testing interval 
include, but are not limited to, the following:
    (i) High variability in test results, as indicated by a relatively 
large sample standard deviation in quantitative tests;
    (ii) Measurements that are close to the allowable numerical limit 
for quantitative tests;
    (iii) Known manufacturing process factors which could affect 
compliance with a rule. For example, if the manufacturer knows that a 
casting die wears down as the die nears the end of its useful life, the 
manufacturer may wish to test more often as the casting die wears down;
    (iv) Consumer complaints or warranty claims;
    (v) Introduction of a new set of component parts into the assembly 
process;
    (vi) The manufacture of a fixed number of products;
    (vii) Potential for serious injury or death resulting from a 
noncompliant children's product;
    (viii) The number of children's products produced annually, such 
that a manufacturer should consider testing a children's product more 
frequently if the product is produced in very large numbers or 
distributed widely throughout the United States;
    (ix) The children's product's similarity to other children's 
products with which the manufacturer is familiar and/or whether the 
children's product has many different component parts compared to other 
children's products of a similar type; or
    (x) Inability to determine the children's product's noncompliance 
easily through means such as visual inspection.
    (c)(1) If a manufacturer implements a production testing plan as 
described in paragraph (c)(2) of this section to ensure continued 
compliance of the children's product with a high degree of assurance to 
the applicable children's product safety rules, the manufacturer must 
submit samples of its children's product to a third party conformity 
assessment body for periodic testing to the applicable children's 
product safety rules at least once every two years. A manufacturer may 
consider the information obtained from production testing when 
determining the appropriate testing interval and the number of samples 
needed for periodic testing to ensure that there is a high degree of 
assurance that the other untested children's products manufactured 
during the testing interval comply with the applicable children's 
product safety rules.
    (2) Production Testing Plan. A production testing plan describes 
the production management techniques and tests that must be performed 
to provide a high degree of assurance that the products manufactured 
after certification continue to meet all the applicable children's 
product safety rules. A production testing plan may include recurring 
testing or the use of process management techniques, such as control 
charts, statistical process control programs, or failure modes and 
effects analyses (FMEAs) designed to control potential variations in 
product manufacturing that could affect the product's ability to comply 
with the applicable children's product safety rules. A manufacturer may 
use measurement techniques that are nondestructive and tailored to the 
needs of an individual product to ensure that a product complies with 
all applicable children's product safety rules. Any production test 
method used to conduct production testing must be effective in 
determining compliance. Production testing cannot consist solely of 
mathematical methods (such as an FMEA, with no additional components, 
or computer simulations). Production testing must include some testing, 
although it is not required that the test methods employed be the test 
methods used for certification. A manufacturer must document the 
production testing methods used to ensure continuing compliance and the 
basis for determining that the production testing plan provides a high 
degree of assurance that the product being manufactured continues to 
comply with all applicable children's product safety rules. A 
production testing plan must contain the following elements:
    (i) A description of the production testing plan, including, but 
not limited to, a description of the process management techniques 
used, the tests to be conducted, or the measurements to be taken; the 
intervals at which the tests or measurements will be made; the number 
of samples tested; and the basis for determining that the combination 
of process management techniques and tests provide a high degree of 
assurance of compliance if they are not the tests prescribed for the 
applicable children's product safety rule;
    (ii) At each manufacturing site, the manufacturer must have a 
production testing plan specific to each children's product 
manufactured at that site;
    (iii) The production testing interval selected for tests must 
ensure that, if the samples selected for production testing comply with 
an applicable children's product safety rule, there is a high degree of 
assurance that the untested products manufactured during that testing 
interval also will comply with the applicable children's product safety 
rule. Production testing intervals should be appropriate for the 
specific testing or alternative measurements being conducted.
    (3) If a production testing plan as described in this paragraph (c) 
fails to provide a high degree of assurance of compliance with all 
applicable children's product safety rules, the CPSC may require the 
manufacturer to meet the requirements of paragraph (b) of this section 
or modify its production testing plan to ensure a high degree of 
assurance of compliance.
    (d)(1) For manufacturers conducting testing to ensure continued 
compliance with the applicable children's product safety rules using a 
testing laboratory accredited to ISO/IEC 17025:2005(E), ``General 
requirements for the competence of testing and calibration 
laboratories,'' periodic tests by a third party conformity assessment 
body must be conducted at least once every three years. Any ISO/IEC 
17025:2005(E)-accredited testing laboratory used for ensuring continued 
compliance must be accredited by an accreditation body that is 
accredited to ISO/IEC 17011:2004(E), ``Conformity assessment--General 
requirements for accreditation bodies accrediting conformity assessment 
bodies.'' The test method(s) used by an ISO/IEC 17025:2005(E)-
accredited testing laboratory when conducting testing to ensure 
continued compliance must be the same test method(s) used for 
certification to the applicable children's product safety rules.

[[Page 69543]]

Manufacturers must conduct testing using the ISO/IEC 17025:2005(E)-
accredited testing laboratory frequently enough to provide a high 
degree of assurance that the children's product continues to comply 
with the applicable children's product safety rules. A manufacturer may 
consider the information obtained from testing conducted by an ISO/IEC 
17025:2005(E)-accredited testing laboratory when determining the 
appropriate testing interval and the number of samples for periodic 
testing that are needed to ensure that there is a high degree of 
assurance that the other untested children's products manufactured 
during the testing interval comply with the applicable children's 
product safety rules.
    (2) If the continued testing described in paragraph (d)(1) of this 
section fails to provide a high degree of assurance of compliance with 
all applicable children's product safety rules, the CPSC may require 
the manufacturer to meet the requirements of paragraph (b) of this 
section or modify the testing frequency or number of samples required 
to ensure a high degree of assurance of continued compliance.
    (e) [Reserved]
    (f) [Reserved]
    (g) The Director of the Federal Register approves the 
incorporations by reference of the standards in this section in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. You may inspect a 
copy of the standards at the Office of the Secretary, U.S. Consumer 
Product Safety Commission, Room 820, 4330 East West Highway, Bethesda, 
MD 20814, telephone (301) 504-7923, or at the National Archives and 
Records Administration (NARA). For information on the availability of 
this material at NARA, call (202) 741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
    (1) International Organization for Standardization (ISO), 1, ch. de 
la Voie-Creuse, Case postale 56, CH-1211 Geneva 20, Switzerland; 
Telephone +41 22 749 01 11, Fax +41 22 733 34 30; http://www.iso.org/iso/home.html.
    (i) ISO/IEC 17011:2004(E), ``Conformity assessment--General 
requirements for accreditation bodies accrediting conformity assessment 
bodies,'' First Edition, September 1, 2004 (Corrected version February 
15, 2005);
    (ii) ISO/IEC 17025:2005(E), ``General requirements for the 
competence of testing and calibration laboratories,'' Second Edition, 
May 15, 2005.
    (2) [Reserved]


Sec.  1107.23  Material change.

    (a) General Requirements. If a children's product undergoes a 
material change in product design or manufacturing process, including 
the sourcing of component parts, which a manufacturer exercising due 
care knows, or should know, could affect the product's ability to 
comply with the applicable children's product safety rules, the 
manufacturer must submit a sufficient number of samples of the 
materially changed children's product for testing by a third party 
conformity assessment body and issue a new Children's Product 
Certificate. The number of samples submitted must be sufficient to 
provide a high degree of assurance that the materially changed 
component part or finished product complies with the applicable 
children's product safety rules. A manufacturer of a children's product 
that undergoes a material change cannot issue a new Children's Product 
Certificate for the product until the product meets the requirements of 
the applicable children's product safety rules. The extent of such 
testing may depend on the nature of the material change. When a 
material change is limited to a component part of the finished 
children's product and does not affect the ability of other component 
parts of the children's product or the finished children's product to 
comply with other applicable children's product safety rules, a 
manufacturer may issue a new Children's Product Certificate based on 
the earlier third party certification tests and on test results of the 
changed component part conducted by a third party conformity assessment 
body. A manufacturer must exercise due care to ensure that any 
component part undergoing component part-level testing is identical in 
all material respects to the component part on the finished children's 
product. Changes that cause a children's product safety rule to no 
longer apply to a children's product are not considered to be material 
changes.
    (b) Product Design. For purposes of this subpart, the term 
``product design'' includes all component parts, their composition, and 
their interaction and functionality when assembled. To determine which 
children's product safety rules apply to a children's product, a 
manufacturer should examine the product design for the children's 
product as received or assembled by the consumer.
    (c) Manufacturing Process. A material change in the manufacturing 
process is a change in how the children's product is made that could 
affect the finished children's product's ability to comply with the 
applicable children's product safety rules. For each change in the 
manufacturing process, a manufacturer should exercise due care to 
determine if compliance to an existing applicable children's product 
safety rule could be affected, or if the change results in a newly 
applicable children's product safety rule.
    (d) Sourcing of Component Parts. A material change in the sourcing 
of component parts results when the replacement of one component part 
of a children's product with another component part could affect 
compliance with the applicable children's product safety rule. This 
includes, but is not limited to, changes in component part composition, 
component part supplier, or the use of a different component part from 
the same supplier who provided the initial component part.


Sec.  1107.24  Undue influence.

    (a) Each manufacturer must establish procedures to safeguard 
against the exercise of undue influence by a manufacturer on a third 
party conformity assessment body.
    (b) The procedures required in paragraph (a) of this section, at a 
minimum, must include:
    (1) Safeguards to prevent attempts by the manufacturer to exercise 
undue influence on a third party conformity assessment body, including 
a written policy statement from company officials that the exercise of 
undue influence is not acceptable, and directing that every appropriate 
staff member receive training on avoiding undue influence, and sign a 
statement attesting to participation in such training;
    (2) A requirement that upon substantive changes to the requirements 
in this section regarding avoiding undue influence, the appropriate 
staff must be retrained regarding those changed requirements.
    (3) A requirement to notify the CPSC immediately of any attempt by 
the manufacturer to hide or exert undue influence over test results; 
and
    (4) A requirement to inform employees that allegations of undue 
influence may be reported confidentially to the CPSC and a description 
of the manner in which such a report can be made.


Sec.  1107.26  Recordkeeping.

    (a) A manufacturer of a children's product subject to an applicable 
children's product safety rule must maintain the following records:
    (1) A copy of the Children's Product Certificate for each product. 
The children's product covered by the certificate must be clearly 
identifiable

[[Page 69544]]

and distinguishable from other products;
    (2) Records of each third party certification test. The 
manufacturer must have separate certification tests records for each 
manufacturing site;
    (3) Records of one of the following for periodic tests of a 
children's product:
    (i) A periodic test plan and periodic test results;
    (ii) A production testing plan, production test results, and 
periodic test results; or
    (iii) Testing results of tests conducted by a testing laboratory 
accredited to ISO/IEC 17025:2005(E) and periodic test results.
    (4) [Reserved];
    (5) Records of descriptions of all material changes in product 
design, manufacturing process, and sourcing of component parts, and the 
certification tests run and the test values; and
    (6) Records of the undue influence procedures, including training 
materials and training records of all employees trained on these 
procedures, including attestations described at Sec.  1107.24(b)(1).
    (b) A manufacturer must maintain the records specified in paragraph 
(a) of this section for five years. The manufacturer must make these 
records available, either in hard copy or electronically, such as 
through an Internet Web site, for inspection by the CPSC upon request. 
Records may be maintained in languages other than English if they can 
be:
    (1) Provided immediately by the manufacturer to the CPSC; and
    (2) Translated accurately into English by the manufacturer within 
48 hours of a request by the CPSC, or any longer period negotiated with 
CPSC staff.

Subpart D--Consumer Product Labeling Program


Sec.  1107.30  Labeling consumer products to indicate that the 
certification requirements of section 14 of the CPSA have been met.

    (a) Manufacturers and private labelers of a consumer product may 
indicate, by a uniform label on, or provided with the product, that the 
product complies with any consumer product safety rule under the CPSA, 
or with any similar rule, ban, standard or regulation under any other 
act enforced by the CPSC.
    (b) The label must be visible and legible, and consist of the 
following statement:

Meets CPSC Safety Requirements

    (c) A consumer product may bear the label if the manufacturer or 
private labeler has certified, pursuant to section 14 of the CPSA, that 
the consumer product complies with all applicable consumer product 
safety rules under the CPSA and with all rules, bans, standards, or 
regulations applicable to the product under any other act enforced by 
the Consumer Product Safety Commission.
    (d) A manufacturer or private labeler may use a label in addition 
to the label described in paragraph (b) on the consumer product, as 
long as such label does not alter or mislead consumers as to the 
meaning of the label described in paragraph (b) of this section. A 
manufacturer or private labeler must not imply that the CPSC has 
tested, approved, or endorsed the product.

    Dated: October 21, 2011.
Todd A. Stevenson,
Secretary, Consumer Product Safety Commission.
[FR Doc. 2011-27678 Filed 11-7-11; 8:45 am]
BILLING CODE 6355-01-P