November 3, 2015

Green Chemistry Locally Grown: Are You Prepared For New York County Toxic Free Toy Acts?

Arnold & Porter Advisory

Just as companies are coming to grips with the growing trend of state Green Chemistry laws, several New York counties have gotten into the action. Laws enacted over the past year by four counties across the State of New York ban the sale of children's products and apparel that contain certain substances in amounts that are otherwise entirely lawful under federal law. These laws are either now in effect, albeit with enforcement not yet underway, or set to go into effect in the coming months. As a result, this is the right time for manufacturers, distributors, and retailers to confirm that they understand these laws and are prepared with an appropriate response.

Background: Toxic Free Toy Acts

Following a recent wave of pressure by activist groups, the legislatures in four New York counties-Albany, Rockland, Suffolk, and Westchester-adopted similar laws that ban or regulate the sale of children's products and apparel that contain certain substances. These measures, commonly referred to as a "Toxic Free Toys Act" (TFTA), ban the sale or offer for sale of children's products or apparel that contain some or all of the following substances: benzene, lead, formaldehyde, mercury, antimony, arsenic, cadmium, and cobalt. The laws are quite broad in scope. They define "children" as any person aged 12 and under, and they use similar definitions of "children's products" and "apparel." "Children's products" include products, including but not limited to toys, that are "primarily intended for, made for, or marketed for use by children." "Children's apparel" is defined as "any item of clothing that consists of fabric or related material intended or promoted for use in children's clothing." In no case did the legislatures even attempt to establish that de minimis amounts of the substances pose a risk of harm to children.

There are a few significant differences among these laws. For example, the Albany, Rockland, and Westchester TFTAs completely ban children's products and apparel that contain the listed substances in any amount whatsoever. In contrast, Suffolk's law states that children's products must contain less than the following limits: antimony (40 ppm), arsenic (40 ppm), cadmium (75 ppm), cobalt (40 ppm), lead (100 ppm total in accessible parts or 90 ppm in paint), and mercury (40 ppm). In addition, only Westchester includes formaldehyde among the banned substances, and only Suffolk omits benzene from the list. Likewise, with the exception of Westchester, the TFTAs impose civil fines that range from $500 for the first violation and then up to $1000 for each subsequent violation. Westchester's law provides for $1000 fines beginning with the first violation. None of the laws specify on their face whether a "violation" is each unit or each product. Finally, as summarized in the chart below, exclusions from the TFTAs vary somewhat among the four counties.

Effective Dates

The TFTAs are scheduled to take effect over the next six months. (See chart on next page.) Albany County has agreed to stay the effective date of its TFTA pending the County's development of implementing regulations, and for a period of six months after the conclusion of a pending legal challenge to the law, discussed below. Similarly, to fend off threatened litigation, Rockland has agreed to stay enforcement of its TFTA through December 31, 2015. Westchester's TFTA takes effect on March 30, 2016. Finally, in Suffolk, the TFTA goes into effect in January 2016; the County will also begin random inspections in December 2016 of up to 10 retailers per quarter.

Federal Preemption

The TFTAs share a common vulnerability: they all should fall as preempted by federal law. The Federal Hazardous Substances Act (FHSA), in conjunction with implementing regulations promulgated by the Consumer Product Safety Commission (CPSC), already prohibits the sale in interstate commerce of any toy, or other article intended for use by children, that contains "an accessible and harmful amount of a hazardous chemical." 16 C.F.R. § 1500.231(c)(1). Moreover, the FHSA's express preemption clause prohibits State or local laws that impose requirements that are not identical to federal standards, and without question each of the four New York county TFTAs seek to do just that. 15 U.S.C. § 1261 note, § (b)(1)(B).

The FHSA, through the Consumer Product Safety Improvement Act (CPSIA), also sets a standard for children's products that contain lead. 15 U.S.C. § 1278a. Because the federal lead standard falls under the express preemption clause, the non-identical lead limits imposed by the county TFTAs should also fall on preemption grounds.

Separately, the Consumer Product Safety Act (CPSA) also preempts the TFTAs. In particular, the CPSIA adopted as federal law the safety standards for toys issued by the American Society for Testing and Materials (ASTM), known as ASTM F963. Notably, ASTM F963 sets maximum permissible levels of lead, mercury, antimony, cadmium, and arsenic in surface-coating materials and substrate in toys. Like the FHSA, the CPSA contains an express preemption clause with the effect that the non-identical standards set by the county TFTAs should fall as preempted.

On April 16, 2015, Arnold & Porter filed a lawsuit in federal court challenging the Albany TFTA on behalf of the Toy Industry Association, as part of the Safe to Play Coalition (additional members of the Coalition who joined in the lawsuit include the American Apparel and Footwear Association, the Halloween Industry Association, and the Juvenile Products Manufacturers Association). The complaint asserts that federal law preempts Albany's TFTA for the reasons explained above. In response to the lawsuit, the Albany County Attorney agreed to postpone the law's enforcement while the county develops implementing regulations. Those regulations are due to be published in early November, although a delay is possible. In the meantime, through an agreement of the parties, Albany County has stayed enforcement of the law until six months after the lawsuit's conclusion. In light of the stays of enforcement in Albany and Rockland Counties, and the upcoming effective dates in Suffolk and Westchester, it remains to be seen in which jurisdiction the preemption issue will first be litigated.

Next Steps: Enforcement and Open Questions

For retailers, distributors, and manufacturers of children's products and apparel, the TFTAs create complicated compliance questions. On the one hand, the effective dates for the laws are at hand. Yet, particularly for those TFTAs that set limits of zero, compliance with the letter of the law may well be impossible. Further, the federal preemption issue has not yet been resolved, leaving open the possibility that some or all of the laws will never actually go into effect. However, given the risk of fines and adverse publicity, retailers, distributors, and manufacturers that do business in Albany, Rockland, Suffolk, and Westchester counties should consider their options.

Please contact us if you have questions about the laws and your compliance system, as well as some of the open issues surrounding enforcement. To assist your internal decision making, the following chart provides an overview of some of the key points about the TFTAs (abbreviations are benzene (B), lead (L), mercury (M), formaldehyde (F), antimony (An), arsenic (Ar), cadmium (Ca), and cobalt (Co):

County Scope Exclusions Penalties Effective Date and Status
Albany B, L, M, An, Ar, Ca, Co Certain used children's products and protective sporting equipment $500 for 1st violation, then $1000 per violation Effective date: 1/12/2016; but County has agreed to stay enforcement until 6 months after pending lawsuit is resolved
Rockland B, L, M, An, Ar, Ca, Co Certain used children's products and protective sporting equipment $500 for 1st violation, then $1000 per violation; County must make good-faith effort to issue warning to alleged violator and educate about law Effective date: 10/12/2015; but County has agreed not to enforce until 1/1/2016
Suffolk L, M, An, Ar, Ca, Co Certain used children's products and protective sporting equipment; children's product based solely on containing an enclosed battery or electronic components $500 for 1st violation, then $1000 per violation; County authorized to order removal of all stock of illegal product that violates TFTA in addition to penalties County begins notifying retailers about law in January 2016; beginning in December 2016, random inspections of at least 10 retailers per quarters checking  no more than 10 children's products for on-site testing with an XRF analyzer
Westchester F, B, L, M, An, Ar, Ca, Co Children's products sold or distributed for free at secondhand stores, yard sales, on the Internet or donated to charities; does not apply based solely on product's containing an enclosed battery or electronic components $1000 per violation; each day that violation or failure continues may be assessed as a separate offense for which penalty may be assessed 3/30/2016
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