The opinion of the court was delivered by: Paul G. Gardephe, U.S.D.J.
MEMORANDUM OPINION AND ORDER
On August 14, 2008, Congress enacted the Consumer Product Safety Improvement Act of 2008 (Pub. L. No. 110-314 (HR 4040)) (the "CPSIA"), which amends the Consumer Product Safety Act of 1972, 15 U.S.C. §§ 2051 et seq. (the "CPSA"). At issue in this lawsuit are Sections 108(a) and 108(b)(1) of the CPSIA, which make it unlawful to "offer for sale . . . [or] distribute in commerce . . . any children's toy or child care article that contains concentrations of more than 0.1 percent of" certain chemicals known as phthalates "[b]eginning on" February 10, 2009. 15 U.S.C. §§ 2057c(a), (b)(1).
The General Counsel of Defendant United States Consumer Product Safety Commission (the "Commission"), the agency charged with enforcing the CPSA, has issued an advisory opinion letter stating that products violative of Sections 108(a) and 108(b)(1) may continue to be sold and distributed in commerce after February 10, 2009, as long as these products were manufactured prior to February 10, 2009. (Bernard Decl. Ex. B) In this suit, Plaintiffs seek a declaration that the opinion letter "constitutes agency action not in accordance with law in violation of the [Administrative Procedure Act], 5 U.S.C. §§ 702, 704, and 706(2)(A), and the CPSA, 15 U.S.C. § 2057c, as amended by the CPSIA." (Cmplt. ¶¶ 27-29) The parties have filed cross-motions for summary judgment on Plaintiffs' claim. (Docket Nos. 12 and 13)
A. Phthalates and Section 108 of the CPSIA
Phthalates are a class of chemicals used to soften plastics and are commonly found in children's toys and other products, including in bath toys, books, teethers, bibs, dolls, plastic figures, and other plastic toys.*fn1 (Pltf. Rule 56.1 Statement ¶ 8) Phthalates leach steadily from the materials to which they are added, and may be absorbed through the mouth or skin. (Id. ¶ 8; Janssen Decl. ¶¶ 12, 23) Phthalates have also been shown to leach from products and bind to dust particles that can be inhaled or ingested. (Id.; Janssen Decl. ¶ 23)
Scientific studies show that phthalates can have a variety of toxic effects. For example, phthalates interfere with the production of the steroid sex hormones, including testosterone. (Janssen Decl. ¶¶ 14-15) Interference with reproductive hormones has been associated in males with alterations in the onset of puberty, poor sperm quality, infertility, and testicular cancer. (Id. ¶¶ 15, 18) Animal studies indicate that exposure to phthalates in utero can cause birth defects to genitalia. (Id. ¶ 19) Animal studies also link certain phthalates to alterations in female sex hormones and pregnancy loss, earlier puberty in girls, and the growth of human breast cancer cells. (Id. ¶¶ 20-21)
There is scientific evidence that essentially all children over the age of 6 years old and all adults in the United States have measureable levels of phthalate metabolites in their bodies. (Pltf. Rule 56.1 Statement ¶ 11; Janssen Decl. ¶ 12) Children ages 6 to 11 have the highest levels of three specific phthalates. (Id.) Although there is little information concerning the exposure levels of younger children and infants, they are likely to be as highly exposed as older children because they are also in frequent contact with products containing phthalates. (Janssen Decl. ¶ 12) Exposure to phthalates during childhood is of particular concern, because infants and children are more susceptible to the toxic effects of chemicals, and children are also more likely to place objects, including toys, in their mouths. (Pltf. Rule 56.1 Statement ¶ 10; Janssen Decl. ¶ 17) Moreover, any disruption of a child's natural hormonally-driven development can cause long-term and irreversible reproductive (and other) damage. (Janssen Decl. ¶ 17)
Section 108 of the CPSIA, entitled "Prohibition on sale of certain products containing specified phthalates," establishes a framework for the federal regulation of children's toys and child care products containing phthalates. Section 108 is codified as a new section of the CPSA at 15 U.S.C. § 2057c. Because the pending motions concern the proper interpretation of Section 108, its five subsections are described in detail below.
Section 108(a) permanently prohibits the manufacture and sale of products containing three specific phthalates:
Beginning on the date that is 180 days after August 14, 2008 [i.e., February 10, 2009], it shall be unlawful for any person to manufacture for sale, offer for sale, distribute in commerce, or import into the United States any children's toy or child care article that contains concentrations of more than 0.1 percent of di-(2-ethylhexyl) phthalate (DEHP), dibutyl phthalate (DBP), or benzyl butyl phthalate (BBP). (15 U.S.C. § 2057c(a)). Section 108(b) creates an interim prohibition on the manufacture and sale of products containing three additional phthalates, and further directs the Commission to appoint a Chronic Hazard Advisory Panel to study those phthalates (and all other phthalates and phthalate alternatives*fn2 used in children's toys and child care articles) in order to determine whether they should be declared banned hazardous products under Section 2057 of the CPSA. 15 U.S.C. §§ 2057c(b)(1)-(3). Section 108(b)(3) provides that 180 days after the panel has issued its report, the Commission, pursuant to the Administrative Procedure Act, 5 U.S.C. § 553, shall promulgate a final rule determining whether the interim prohibition will continue in effect and whether "any children's product containing any phthalates [should be] a banned hazardous product." 15 U.S.C. § 2057c(b)(3)(B).
The interim prohibition is contained in Section 108(b)(1): Beginning on the date that is 180 days after August 14, 2008 [i.e., February 10, 2009], and until a final rule is promulgated under paragraph (3) [of section 108(b)], it shall be unlawful for any person to manufacture for sale, offer for sale, distribute in commerce, or import into the United States any children's toy that can be placed in a child's mouth or child care article that contains concentrations of more than 0.1 percent of diisononyl phthalate (DINP), diisodecyl phthalate (DIDP), or di-n-octyl phthalate (DnOP). (15 U.S.C. § 2057c(b)(1)).
Sections 108(a) and 108(b)(1) are the key provisions at issue in this action, and will be referred to collectively as the "phthalate prohibitions."
Sections 108(c) and 108(d) tie the phthalate prohibitions and any rules promulgated under Section 108(b)(3) to certain pre-existing provisions of the CPSA. Section 108(c) states that any violation of those prohibitions or rules "shall be treated as a violation of section 19(a)(1) of the Consumer Product Safety Act (15 U.S.C. 2068(a)(1))." 15 U.S.C. § 2057c(c). Section 108(d) -- entitled "Treatment as consumer product safety standards; effect on State laws" -- provides that those prohibitions and rules: shall be considered consumer product safety standards under the Consumer Product Safety Act. Nothing in this section or the Consumer Product Safety Act (15 U.S.C. 2051 et seq.) shall be construed to preempt or otherwise affect any State requirement with respect to any phthalate alternative not specifically regulated in a consumer product safety standard under the Consumer Product Safety Act. (15 U.S.C. § 2057c(d)). Section 108(e) defines various terms, including "children's toy" and "child care article," and provides additional guidelines for determining whether a consumer product falls within those definitions. See 15 U.S.C. § 2057c(e). The Court will refer to the children's toys and child care articles that fall within the scope of the phthalate prohibitions as the "covered products."
B. The November 17, 2008 Opinion Letter
In a letter to the Commission dated November 13, 2008, the law firm Arent Fox LLP -- on behalf of "several wholesale and retail entities" who wished to "remain anonymous" -- asked the Commission to (1) reconsider an earlier advisory opinion that the CPSIA's new lead content restrictions apply "to inventory of children's products containing lead as of February 10, 2009"; and (2) "consider not applying the phthalates restrictions set forth in Section 108 of the CPSIA retroactively to inventory as of February 10, 2009." (Bernard Decl. Ex. B at 1) In an advisory opinion dated November 17, 2008, the Commission's General Counsel declined to reconsider her earlier opinion concerning the lead restrictions, but opined that the phthalate prohibitions are different in nature from the lead restrictions, and do not apply to products manufactured prior to February 10, 2009 (referred to hereafter as "existing inventory"). (Id. at 1-2)
The General Counsel offered three reasons to support her opinion. First, she noted that Section 108(d) of the CPSIA provides that the phthalate prohibitions "shall be considered . . . consumer product safety standards" under the CPSA. The General Counsel further noted that 15 U.S.C. § 2058(g)(1) -- a separate, pre-existing provision of the CPSA -- states in part that "[a] consumer product safety standard shall be applicable only to consumer products manufactured after the effective date." (Bernard Decl. Ex. B at 1-2) Accordingly, the General Counsel concluded that Congress did not intend to prohibit the sale of children's products in existing inventory that violated the phthalate prohibitions.
Second, the General Counsel noted that Congress treated phthalates differently from lead, in that it declared "any children's product" containing certain amounts of lead to be a "banned hazardous substance" under the Federal Hazardous Substances Act ("FHSA"), 15 U.S.C. § 1278a(a)(1), but did not make a similar declaration with respect to products containing phthalates. (Id. at 2) Arguing that there is no inventory exception under the FHSA, the General Counsel stated that "Congress could have regulated phthalates in the same manner as lead and chose not to do so." (Id.)
Finally, the General Counsel found that applying the phthalate prohibitions to existing inventory would have a retroactive effect under Landgraf v. USI Film Prods., 511 U.S. 244 (1994), and that because Congress had not unambiguously stated that the prohibitions should be applied retroactively, such an interpretation should be avoided. (Bernard Decl. Ex. B at 2)
The General Counsel's position on this issue has been repeatedly confirmed by the Commission. On November 18, 2008, for example, the Commission's Acting Chairman, Nancy Nord, issued a public statement that the phthalate prohibitions would not apply to products manufactured before February 10, 2009. (See Bernard Decl. Ex. C) And on December 4, 2008, the Commission posted a statement on its website confirming its position that the phthalate prohibitions "only appl[y] to products that are manufactured on or after February 10, 2009." (Id. Ex. D)
C. Responses to the Commission's Opinion Letter
The Commission's interpretation of the phthalate prohibitions received immediate criticism. Four members of Congress who were instrumental in obtaining the passage of the phthalate prohibitions -- Senator Boxer, Senator Feinstein, Representative Waxman and Representative Schakowsky -- wrote to the Commission to express their belief that the Commission's interpretation was contrary to the clear intent of Congress, and to request that the Commission reverse its decision. (Bernard Decl. Ex. E and Ex. F) On December 2, 2008, Plaintiff National Resources Defense Council, Inc. formally petitioned the Commission to revoke the November 17 opinion letter. (Id. Ex. H)
In addition, Plaintiffs commenced this action. The Commission has not yet provided a substantive response to any of the requests to revoke its opinion letter.
II.APPLICABLE LEGAL STANDARDS
Under the Administrate Procedure Act, a district court may review "final agency action for which there is no other adequate remedy in a court." 5 U.S.C. § 704.
The Court must "hold unlawful and set aside" agency action that is ". . . not in accordance with law." 5 U.S.C. § 706(2)(A).*fn3 Plaintiffs ask this Court to declare unlawful the Commission's interpretation of the phthalate prohibitions as not applying to existing inventory. The Commission has cross-moved for summary judgment, asking the Court to hold that its interpretation is not contrary to the plain meaning of the statute, and that its opinion is reasonable and entitled to deference.
In deciding whether the Commission's decision is "not in accordance with" the CPSIA, the first question for the Court is "whether Congress has spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843-44 (1984). Moreover, an agency decision interpreting a statute must be set aside if it conflicts with the plain meaning of the statute. See Maislin Indus., U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 134-35 (1999) (an agency "does not have the power to adopt a policy that directly conflicts with its governing statute"); Chevron, 467 U.S. at 843 n.9 (courts "must reject administrative constructions which are contrary to clear congressional intent").
If Congress has not addressed the precise question at issue, or has done so in an ambiguous fashion, the Court must consider whether the Commission's interpretation of the CPSIA is entitled to deference. When the interpretation at issue is contained in a rule promulgated under the agency's rulemaking authority, under Chevron, agency action must be upheld where "the agency's construction is reasonable." Nat'l Cable & Telecom. Ass'n v. Brand X Internet Serv., 545 U.S. 967, 980 (2005). However, agency interpretations set forth "in opinion letters," such as here, "do not warrant Chevron-style deference." Christensen v. Harris County, 529 U.S. 576, 587 (2000) (contrasting interpretations in opinion letters with those "arrived at after . . . a formal adjudication or notice-and-comment rulemaking"). Instead, "interpretations contained in formats such as opinion letters are 'entitled to respect' under . . . Skidmore v. Swift & Co., 323 U.S. 134, 140 . . . (1944), but only to the extent that those interpretations have the 'power to persuade,' ibid." Christensen, 529 U.S. at 587; see also Catskill Devel., L.L.C. v. Park Place Enter. Corp., 547 F.3d 115, 127 (2d Cir. 2008) (under Skidmore, agency position set forth in an opinion letter was "entitled to deference only to the extent that it ha[d] the power to persuade" the court).
III.SECTION 108 UNAMBIGUOUSLY APPLIES TO ALL PRODUCTS OFFERED FOR SALE AFTER FEBRUARY 10, 2009, INCLUDING EXISTING INVENTORY
The Court must first consider whether Congress has directly spoken to the question addressed by the Commission's opinion letter -- namely, whether the phthalate prohibitions apply to existing inventory. In doing so, the Court "must look 'to the particular statutory language at issue, as well as the language and design of the statute as a whole, and, where appropriate, its legislative history.' . . . If these indicators demonstrate that Congress has spoken to the question at issue, 'the [C]court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.'" Natural Resources Defense Council v. Abraham, 355 F.3d 179, 198-99 (2d Cir. 2004) (internal citations omitted); see also Cohen v. JP Morgan Chase & Co., 498 F.3d 111, 120 (2d Cir. 2007) (the court may "look to 'structure, purpose, and history' to determine whether these construction devices can convincingly resolve . . . [a textual] ambiguity at Chevron step one. . . . A high level of clarity is necessary to resolve textual ambiguity in this manner.").
The Commission argues that the CPSIA is at least ambiguous with respect to the question at issue here, claiming that "section 108 is silent" as to "whether the phthalate provision is applicable to existing inventory." (Def. Br. at 16) As discussed below, however, the phthalate prohibitions -- as written -- are not "silent" on this question but instead unambiguously forbid the continued ...