The Consumer Product Safety Commission (the “CPSC”) is tasked with protecting the public from unreasonable risks of injury or death associated with the use of the thousands of types of consumer products.  Like most federal agencies, CPSC is required to abide by the rulemaking procedures of the Administrative Procedures Act (the “APA”), including providing a notice of proposed rulemaking, comment period, and ultimately, a final rule.  In addition, CPSC has its own requirements for rulemaking under the Consumer Product Safety Act, the statute that established CPSC.

On October 27, 2017, CPSC issued a final rule, by a narrow, 3-2 vote, prohibiting greater than 0.1 percent of five types of phthalates – a class of organic compounds used to soften and add flexibility to plastic – in children’s products sold or distributed in the United States.  The five phthalates at issue are diisononyl phthalate (DINP), diisobutyl phthalate (DIBP), di-npentyl phthalate (DPENP), di-n-hexyl phthalate (DHEXP), and dicyclohexyl phthalate (DCHP).  The rule was subsequently challenged in the U.S. Court of Appeals for the Fifth Circuit by five trade associations, alleging that CPSC failed to provide adequate opportunity to comment, failed to apply proper procedural standards, redefined substantive standards, and arbitrarily and capriciously applied scientific data.

On March 1, 2021, the Fifth Circuit ruled in favor of the trade associations and remanded the rule back to CPSC in a lengthy, detailed analysis of the issues and CPSC’s rule-making powers.  Texas Association of Manufacturers, et al. v. Consumer Prod. Safety Comm’n, No. 17-60836 (5th Cir. Mar. 1, 2021).  The Fifth Circuit held that the proposed and final rules used different data sets, and CPSC did not meet the substantive standard for showing the ban is reasonably necessary. In the first instance, the proposed rule used data related to pregnant women to study the risk posed by the use of the specified phthalates, while the final rule relied on data associated with women of reproductive age.  Based on the new data, CPSC promulgated a final rule that was “substantively identical” to the proposed rule, but, because of the new data, was based on a different justification.  To that end, while the Fifth Circuit deferred to CPSC on its application of statistical methods and scientific data, the Court found that CPSC violated APA procedures because CPSC “did not give adequate opportunity to comment when it changed its underlying rationale for the final rule.”

The Fifth Circuit also analyzed CPSC’s compliance with 15 U.S.C. § 2057, under which CPSC can ban a product containing an unreasonable risk of injury that cannot be rectified through a feasible safety standard, as well as 15 U.S.C. § 2058, which contains the standards for banning a hazardous product.  The Fifth Circuit ruled that CPSC must analyze whether the permanent ban of DINP, which was already subject to an interim ban, was reasonably necessary.  The court acknowledged that CPSC did consider the costs of testing and responded to commenters who expressed concerned about costs to small businesses, but ultimately ruled that this was not sufficient.

The Fifth Circuit opted to remand the rule back to CPSC instead of vacating the rule entirely based upon the “serious possibility that CPSC will be able to remedy its failures.”  Thus, while the final rule will not go into effect immediately and has been sent back to CPSC for further comment and consideration, manufacturers and retailers should assume that this rule, or a very close iteration of it, will eventually be re-issued as a final rule.

This alert does not purport to be a substitute for advice of counsel on specific matters.

Harris Beach has offices throughout New York State, including Albany, Buffalo, Ithaca, Long Island, New York City, Rochester, Saratoga Springs, Syracuse and White Plains, as well as New Haven, Connecticut and Newark, New Jersey.