Hearing of the Financial Services Subcommittee of the Senate Appropriations Committee - Toy Safety Standards

Statement

HEARING OF THE FINANCIAL SERVICES SUBCOMMITTEE OF THE SENATE APPROPRIATIONS COMMITTEE
SUBJECT: TOY SAFETY STANDARDS

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SEN. AMY KLOBUCHAR (D-MN): Well, thank very much, Senator Durbin, and thank you for your work in helping to build the CPSC and working to provide more resources. I don't think one guy in an office like that should be charged with ensuring the safety of $22 billion worth of toys. We clearly need change, and I also am proud to be on the Commerce Committee with my two colleagues who are working so hard on this issue.

This issue hit home to us in Minnesota when a little four year- old boy named Jarnell Brown (ph) died when he swallowed a little heart-shaped charm. And this charm was given to him for free with a pair of tennis shoes. He didn't buy it. His mom didn't buy it. And he didn't die from swallowing it. He didn't die from choking on it. He died when the lead creeped into his bloodstream. It fatally poisoned him. It took a number of days. And when the Minnesota Department of Health tested that charm, it was 99 percent lead. It came from China, and his blood levels contained three times the amount of lead -- what health officials consider dangerous.

This was preventable. This little boy who should never have had that charm in the first place. As a parent of a 12 year-old, like everyone else I'm alarmed by the reports that have been coming out about all toys. And you look at this Thomas the Train toy set -- recalled -- over a million (pieces ?) of this toy recalled. This has got to stop.

My daughter is 12, as I said, and I've got to tell you, she was sort of embarrassed by my interest in this issue, chairman, because she didn't care about Sponge Bob or Thomas the Train set. It was sort of embarrassing. But when she heard that the Barbies were recalled, she came into the kitchen and said, mom, this is really getting serious. And this is getting serious, and it's time for us to take action. These toys shouldn't be on our shores. They shouldn't be in our stores.

I've introduced two pieces of legislation that have been incorporated into the bill that senator Pryor referenced. The first is the ban -- effectively ban lead in children's toys. We looked at what was going on with the Consumer Product Safety Commission. Practically right now what happens is they have a voluntary guideline standard, and then after that if it doesn't meet that standard, they have to go through a number of tests. There's proposals out there for rule making. We decided, Mr. Chairman, it would be easier just to ban lead, allowing trace levels of lead at a level that's actually lower than the level that they have now and actually go lower to .02 for jewelry, which is the case, like we've seen, with the little boy in Minneapolis. For 30 years we've been aware of the dangers posed to children by lead paint. It's time to change our current system of voluntary guidelines, use the force of law, and have an actual federal standard.

The other piece of legislation that I introduced, which is also incorporated into this bill, will make it easier for parents to identify recalled toys. Now, imagine if you're a parent. You've got a toy box and you're trying to figure out when you hear the Thomas the Train set has been recalled which one -- is this the caboose? Is this the boxcar? Or you've got a Barbie and you're trying to tell the difference between Barbie? That's nearly impossible.

So our legislation requires that batch numbers or identifications be on these toys so when there is a recall it's easier for parents to tell what that recall is. It also requires that it be on the packaging because while larger retailers are able to put things into their computer systems and stop the sale right when it occurs -- and we've worked with the retailers on this -- some of the smaller operations or online services wouldn't be able to do that. So that's the other piece of the bill.

Finally, the legislation makes it illegal to sell a recalled toy, taking action against those bad actors who are out there. We've seen too many headlines. We've had too many deaths. For one little boy in Minneapolis and for the others that could be prevented, we have to stop just bemoaning the recalls and we have to act now. Thank you for your leadership.

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SEN. KLOBUCHAR: Well, thank you, Senator Durbin. Thank you -- as a freshman senator, thank you for allowing me to serve on the Appropriations Committee for two hours. And I appreciate, Chairman Nord, you being here and the work you're doing to try to fix this problem. You and I have talked about the need to remove lead from children's products and make sure we don't have these kinds of toxic toys in our country, and I think you've expressed your frustration both in committee hearings and to me about the process and the rules and how they work and how it's difficult for you, and how you prefer - I don't want to put words in your mouth, but some kind of legislative ban that's clearer than having to go through various stages that you do that delays things. And could you talk a little bit about what would help you statutorily to make it easier to make sure that we can immediately ban these products.

MS. NORD: Yes, I'd be happy too. Earlier this summer, I sent up to the Hill a legislative proposal that laid out things that I thought that the Commission should have - or tools the Commission should have in order to do our job better. Included in that was the authority to require certification to our safety standards across all of our statutes.

Right now, we enforce five different statutes. Only the Consumer Product Safety Act has a provision that allows for certification. So that means when somebody is manufacturing and selling a product that is subject to a mandatory safety standard, they have to, as a part of the law, certify that they are meeting it. And that's a very useful tool for us to have.

But that authority doesn't exist across the other statutes, and the Hazardous Substances Act is that Act where we regulate toys. So we don't have that authority now, and I would very much like to have that authority.

The other thing that is very interesting -- and this may be getting down in the weeds, so I apologize -- but our lead paint ban is under the Consumer Product Safety Act, not under the Hazardous Substances Act. I just told you there's a certification provision there --

SEN. KLOBUCHAR: Mm hmm.

MS. NORD: -- the way the statute is written. And past Commissioners have interpreted it is it only goes to standards, it doesn't go to bans. So we don't have a existing requirement right now that importers certify that there is no lead paint in their toys.

I have asked the general counsel to advise on whether under some other provisions of the statute we might be able to require that. And if so, to put together a briefing package for the Commission so that we can put in place that requirement. Why it has never been acted on prior to this time, I don't know. Commissioner Moore might have been able to expand on that but I do not know.

SEN. KLOBUCHAR: Okay, thank you. And again, I hope you look at our legislation where we've basically put that ban in place with some trace levels which are actually lower than the lead paint levels that are allowed, and then looked at a lower level for jewelry, which I know you've been working on because it's my understanding the rule making process can take somewhere over two years, and we're just trying to give you the tools to act quickly.

The recall process, could you talk about what you do now to make sure that these recalled products aren't for sale? Because there have been reports I - we've worked very well with Target, Toys R Us, some of the big retailers who've worked with us to tell us how they make sure that these products aren't sold. And we appreciate the work they're doing.

But I'm talking about when things that are in the stream of commerce, or they're up on the web, or they're on e-Bay. What can you do and what tools could help you with that?

MS. NORD: Well, again, one of the things that I asked for in my earlier legislative proposal was making it illegal to sell a recalled product. And I think that would be a very helpful tool for the Commission to have.

Right now, what we do is once a recall is initiated and announced, we undertake a number of surveillance activities, including going into the stores, going on the web, doing secret shopping kinds of things trying to purchase recalled items. We have a relationship with the major online auction houses, and have an agreement with them that they will not sell recalled products. But again, you know --

SEN. KLOBUCHAR: Would it help to have the batch numbers on the packaging or on the toy?

MS. NORD: Anything that provides traceability is very helpful.

SEN. KLOBUCHAR: Okay, thank you. And could I just ask, since I'm not on the Appropriations Committee, and it looks like you need enormous more resources, and you talked about revamping things, has the administration been coming in every year asking for more resources to fix these things?

MS. NORD: Well, every year our budget request has been a little bit higher than the last year, but it --

SEN. KLOBUCHAR: But is it at the extent that you would need to revamp a lab like this?

MS. NORD: You know, again, the lab modernization issue is something that we've been talking to the Congressmen and to the administration about for some time. I think everyone understands that the lab needs to be modernized. What the problem is, is that we've got this facility out there.

What GSA was looking at initially was either demolishing the whole thing and rebuilding, which would have been enormously expensive. What we've been doing in the past is just mandated type activities to try to keep it somewhat current. But, you know, that isn't very cost effective either. So we are now talking with GSA about some real estate solutions that I hope will get us into a facility that is modern and that does the job that we need to have done.

SEN. KLOBUCHAR: Thank you.

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SEN. KLOBUCHAR: Thank you. Chairman Nord, as I am listening to this, I'm thinking of my days as a prosecutor where we always knew the legislature would come and put in those tough laws, and unless they were enforced, they really didn't matter for the people in the neighborhood.

And so I'm trying to figure out how we got from where, you know, nice little packaging, and this was manufactured somewhere in China and it ended up in Tamara Forcia (sp) who works with me, her kid's toy box. And this is one of their recalled toys.

MS. NORD: Uh-huh.

SEN. KLOBUCHAR: So when we go back to the first instance you're talking about with the Chinese, and now you're reaching this agreement, how are you going to enforce these? How are we going to make sure that they are enforcing that these tests are done? Because from what I've learned, it's not necessarily the quality of the tests that's a problem for us, it's the frequency of the testing. So you'll have huge batches, 1.5 million of toys that come in, and somehow no one caught this. Not us, not the retailers, not the manufacturers and not the Chinese laboratories.

So starting with the - at that point of entry, where these toys were first painted, how are we going to make sure that those laws are being enforced, or that that agreement is being enforced?

MS. NORD: I think that this requires activity and action on the part of people - a number of different entities. First of all, I think we've got to make very clear that the manufacturers, the exporters, the importers have a responsibility here to make sure that they comply with the law -- that they understand what the law is, and they comply with it.

Now, I am very pleased by some of the leadership that has been shown in the toy industry to step up to this problem, and I understand you're going to have a chance to talk to them. And I would hope that you would explore a little bit more fully with them exactly what they're going to do rather than me discuss it with you.

I've talked with you about the need for certification. We are working internally to see if we can stretch our statute to promulgate a requirement to require a statement from importers that they don't have lead paint. But frankly, clear legislative language would be more helpful.

SEN. KLOBUCHAR: Well that's what I'm trying to get at. To get at giving you tools -

MS. NORD: Uh-huh.

SEN. KLOBUCHAR: -- instead of stretching your statute so you can continue so -

MS. NORD: Uh-huh -- Uh-huh.

SEN. KLOBUCHAR: -- so are you working right now with the border people for when the stuff comes in? Is there any work done between the CPSC and Customs at that point?

MS. NORD: Yeah, we have a good relationship with Customs, generally. I mean, we all understand that Customs' first responsibility is homeland security and they are pressed for resources as are all of us. And under out statute it's Customs' responsibility to stop the product at the - if it doesn't comply. But we do work with Customs.

SEN. KLOBUCHAR: But there's not any testing going on there?

MS. NORD: There is no testing being done at a port. What would happen, frankly, is that it would have to be sent back to Washington so that we would have to test it. Now, we are trying to integrate into our 2008 budget, the acquisition of some new technology that would allow CBP and CPSC people to do more spot checking. There is some new -

SEN. KLOBUCHAR: Do you know what percentage of the toys get tested now?

MS. NORD: Get tested for lead paint?

SEN. KLOBUCHAR: Yes. Or for --

MS. NORD: No, I don't - I don't.

SEN. KLOBUCHAR: Or loose parts or anything? Can you get those numbers for us? I'm just trying to figure out -- since I've learned in the last few months looking at this that the frequency of testing is important -- how you do that from the area where it's first manufactured, how you do that on the retail level, and how you, as an agency, are testing it. And I'm trying to increase the frequency of testing. And it's hard to do that when you don't know the baseline.

MS. NORD: You know, let me try to put this in context. I think in Commissioner Moore's statement, and it's been widely reported that FDA has, like, 13 (hundred), 1,400 inspectors and they inspect 1 percent of what is brought in. I know at our June hearing, Commissioner -- or I'm sorry, Senator Durbin asked what did we do? Did the CPSC have the ability to do that? And I responded to him saying that if we did that, this agency would be a very different agency and a much larger agency than it is. Of course we don't do that.

When your staff was out at our lab, that question was put to Bob, the small parts guy. And his response, I think, was really, really interesting because what he said was you really ought to go out to Long Beach and you ought to see the acres and acres of warehouses out there loaded with product, and then look beyond Long Beach and see the ships that are lined up full of containers of products waiting to be imported into the United States.

And so the notion of having, you know, one inspector in Long Beach, or three inspectors in Long Beach is really not what we should be talking about. We need to be talking about a more systemic way of dealing with this.

The CPSC is trying to do that. We have relationships with CBP. We are a part of their "A" system which is helping us immensely. We now have 14 people trained to do ACE (ph). But there are many other things that we should be doing but it requires working across agency lines to look at how we get a handle on this bigger picture.

SEN. KLOBUCHAR: Thank you. But remember, that heart got into that little boy's stomach and it killed him. So I mean, I appreciate the bureaucracies and the resource issues, but as we look at this, there's got to be a way to stop that from happening. And I think a piece of it may be the enforcement and making clear there's penalties when these things are sold, penalties in our law that just aren't there right now because people just aren't taking it seriously if they're letting products come in like this.

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SEN. AMY KLOBUCHAR (D-MN): Thank you, Mr. Chairman. Thank you to all of our witnesses. This is has been very helpful. I particularly welcome Mr. Storch who is a resident of Minnesota. And I wanted to echo what Senator Durbin had said, is I appreciate the people who are here today who work in the industry for being honest for working with us and coming forward. I think you've admitted that there were some major problems that need to be fixed.

And I guess my first question would be of you, Mr. Eckert, it's just that if this can happen to a reputable company like Mattel, it can happen to any toy manufacturer. And how can you make sure that the new systems that you have put in place are going to work and are going to serve us adequately when the past systems failed?

MR. ECKERT: I support mandatory testing by certified labs, the same kind of program we're doing today with mandatory testing of finished good before they reach store shelves, for the rest of the industry.

And I think, as Carter Keithley has announced, the TIA, the industry association of 500 members both large to very small, support this proposal. We would like to have a level playing field, and we would work with them and with the agency to develop those standards.

SEN. KLOBUCHAR: So what you're doing now, you're testing batch by batch, is that what's happening?

MR. ECKERT: Yes.

SEN. KLOBUCHAR: Okay.

MR. ECKERT: So here's what we're doing, and it's very important to me that I have an opportunity to explain this.

SEN. KLOBUCHAR: Right.

MR. ECKERT: First, it's the paint. Again, if you get the ingredients right, we don't have to worry about the end so much. Let's make sure the paint is right. The paint has to come from one of our eight certified paint vendors. That's all you can do. You have to buy their paint, and we test the paint in those paint factories.

Two, when a plant takes that paint, a manufacturing plant, whether we own the plant or whether a vendor, an outsider owns the plant, that paint has to be tested again, every batch of paint has to be tested before it's used.

Three, as the toys are being made, we have more auditors on the ground today going around to these various vendors and subcontractors to watch over their shoulder about how they're using the paint.

And four, to me, the ultimate test, before that product gets to retailers' shelves, we take a sampling from every product run of finished toys and test the paint one more time. I think that kind of system will be effective, and I think that sort of system would benefit manufacturers large and small.

SEN. KLOBUCHAR: Now, do you produce kids' jewelry?

MR. ECKERT: We don't. We have had some jewelry, licensed product jewelry. For example, I recall a situation with American Girl, which is one of our brands.

SEN. KLOBUCHAR: I've seen that jewelry in my house. (Laughter.) MR. ECKERT: Well, we've had some licensed jewelry out of American Girl that -- my recollection is this goes back to last spring, maybe it was the end of March of last spring, where routine testing, even though we don't manufacture that product; we just distribute it in our few American Girl stores, one of which is in Chicago. We found lead in that product and recalled that product and discontinued the product. We're not going to be in that business.

SEN. KLOBUCHAR: Mr. Storch, you were talking about the recall process, how we can make it better. I've appreciated your support for my legislation to put some kind of demarcation on the products and in the packaging. Could you talk about what you do when you get a recalled product and how that differs from what maybe a smaller retailer, what they may have the capacity to do and what you think would be best to guarantee that these products can be recalled immediately?

MR. STORCH: Yes. We have communicated, in no uncertain terms to our people, that executing recalls is the most important part of their job. And every day, store managers check the recall board and audit that the recall has been carried out. But more importantly and more specific to your question, our systems allow us to lock out sales of any recalled product, and I mentioned that a little bit in my prepared remarks, that both in the distribution centers and in the stores, the systems basically block further movement of those products. So they can't move from the DCs to the stores, and they can't move from a store shelf if one were on the store shelf, they can't be bought.

And so there should be no way, from a systems enforced perspective, for anyone to buy the product. And again, all the audits we've seen, all the testing, and believe me everyone from journalists to public agencies around the country to anyone with a thought about this has gone in and tried to check, is that we have near perfection on execution of these recalls. I think for a smaller retailer, that's going to be a much more difficult challenge, because they may not have the systems that enable them to proceed in that sort of guaranteed 100 percent fashion. The other thing we do is that if there's any source of confusion or concern, we just remove the whole line. And so that happened, for example, earlier this year with the Magnetix recall.

We felt it was confusing to our customers to try to tell which product was recalled and which one wasn't, because there were so many different types of Magnetix, so we took the whole line off the shelf until that was sorted through. And we had a financial ability to accomplish that, and I could see perhaps some smaller retailers not being able to do that.

SEN. KLOBUCHAR: So you understand the need, and I appreciate you talking about the voluntary work you're doing to revamp some of these regulations for the CPSC and also give them some more resources to do their work. Some of the issues that Ms. Greenberg was talking about with how they're a shadow of their former self. As a member of the industry, do you support more resources for this agency?

MR. STORCH: Absolutely, and it was interesting. We met with Ms. Greenberg yesterday, and it was fascinating. I'm a little bit of a Consumers Report junkie, as I told her, from childhood. And we found ourselves in agreement on almost every issue that we discussed. So we are absolutely in that place.

It is clear that CPSC needs more money, and you've all spoken of that and demonstrated that. And if we expect them to do more things, they're going to need more money.

It's also very important to us that some of these timeframes be shortened, between the time when a product is first discovered as having a problem and the time when the consumer finds out about it.

And for us, often we get a one-day notice, something like that. As soon as the manufacturer feels like the recall is going forward, we'll get a phone call. "We're going to recall this tomorrow." And so we immediately take it off the shelf. But sometimes, particularly earlier this year, we felt like months may have gone by while these situations were being investigated. And those products were still being sold, and we didn't like that. Now, with more resources, we feel the CPSC can move faster on that.

SEN. KLOBUCHAR: Thank you very much.

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SEN. KLOBUCHAR: Thank you. Mr. Keithley, I thought I'd ask you a few questions. You've been over there on your own. And we were talking briefly here about the lead standards, and I just wanted -- I think people are pretty surprised that there is no set federal lead ban or lead standards for children's products.

I think it was Mr. Eckert and Mr. Storch were correct to explain this; .06 is the standard that's used by the states. The feds us a -- the CPSC uses what I understand a voluntary guideline standard of .06, and then if it meets that standard, they may do some additional testing, which seems to add time to this whole process, which people have said is something they care about.

And then with jewelry, from what I understand, the California standard is to go to .02 by 2009. And that's why when we have talked to people, consumer advocates and people at the CPSC, people in the industry that came up with the ban standard of actually at .04, because that's the standard that's used for lead in dirt. I won't ask you the details of that, and then the jewelry standard of .02, which is the one that California is looking at to go to by 2009.

And then allowing, because of this understanding of vinyl and some of these other products, that we may want to go under that standard, to allow the CPSC or to require them to do a rulemaking to look at these individuals products and certainly saying that this is a ceiling and that we could go lower as the science develops, because we wanted to have a standard that was based on science.

So could you talk a little bit about that idea and where you think that this should go and if you think that a federal standard would be helpful?

MR. KEITHLEY: Well in fact Senator, the jewelry people per se, are not, strictly speaking, part of our industry. Nevertheless, they're closely enough related to our industry that it is a matter of concern to us. And in fact, in the spring of 2006, we wrote a letter to the commission encouraging the commission to move forward adopting a set of standards and rules eliminating lead from jewelry. We fully support that.

SEN. KLOBUCHAR: Okay. And are you open to looking at the federal standards then, to put a standard in place?

MR. KEITHLEY: Absolutely, absolutely.

SEN. KLOBUCHAR: Okay, thank you. Ms. Greenberg, could you comment a little bit about this, and then before our time expires here, a little more elaboration on your -- I had asked Chairman Nord before about the agency budgets and their requests and what had gone on, a little bit about your perspective on that as well.

MS. GREENBERG: Sure. The agency is, as I said in my oral statement, is at 401 employees as of the 2008 year. It has had as many as 960 some employees in the 1970s. It's clear, if you read their budget proposal for 2008, it is a very sad document, because there are so many things that they say they can't do. They're stretched to the limit.

And as the New York Times showed so well in the article about a week ago, they've got one person testing toys. Their lab looks like an old college friend's dorm room. They are suffering, and they've lost lots of -- I mean, there's been a serious brain drain there as a result of the very low level of funding.

One of our frustrations is, over the past several years, the chairs of the CPSC have not asked Congress for more money because apparently they were told that they shouldn't. But it's so obvious, when you read their internal documents or their documents that they supply, that they can't carry out their basic functions.

They actually said they weren't going to work on drowning incidents, which is a core issue and kills a lot of kids every year, because they simply don't have the resources to devote to it. So we need to put this agency on a course, and you've done that in your legislation, of steady increases so it can absorb additional employees and additional resources.

This business with the lab is really sad. They've been dancing around this. It was cut out of the budget this year. Commissioner Moore talks about that in his testimony. The lab was -- they've been trying to redesign the lab. It's been going on for six years, and they just cut the money for it.

So this is an unfortunate way to draw attention to a federal agency, but I think this is going to be a real shot in the arm. When I have a moment, I know your time is limited --

SEN. KLOBUCHAR: (Go on ?).

MS. GREENBERG: -- but I want to talk about the broader issue of children's products, because toys is one thing. But we have, as safety agencies and certainly with the Consumer Federation of America and other groups have talked about a lot of problems with design of children's cribs, baby walkers, strollers, care seats, portacribs.

Those are issues that also need to be addressed. We'd like to see some independent testing of those items, because kids have been killed or badly injured over the years. And the CPSC really hasn't been equipped or stepped up to the plate to deal with those issues.

SEN. KLOBUCHAR: Thank you.

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