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CPSC Gets it Right: Unanimously Regulates High-Powered Magnet Sets Through New Safety Standard

rare earth magnets consumer product safetyWe do not typically take positions on product specific issues pending before the U.S. Consumer Product Safety Commission (“CPSC”), but the CPSC’s new safety standard for magnet sets demonstrates both why the agency exists and how it can use its regulatory authority to protect consumers. In enacting the safety standard, the agency did not eradicate what are commonly referred to as “rare earth magnets” from the marketplace. Instead, the CPSC set a minimum level of safety for certain types of magnet sets based on the data necessary to take such action under the Consumer Product Safety Act (CPSA), the CPSC’s organic statute.

The practical effect of the CPSC’s action will be to prohibit the sale of magnet sets composed of small but very powerful magnets that have proven both extremely attractive and hazardous to children. Although these types of magnet sets were marketed to adults to manipulate into various shapes for entertainment or stress relief, the individual magnets found their way into the hands, and ultimately, the mouths of children. When accidentally swallowed, the magnets can bond and become trapped within the digestive system in a manner that can cause severe internal damage.

Summarizing the rationale for his vote, Commissioner Mohorovic said in his closing statement at the CPSC's decisional meeting:

“Without the requirements set forth in this rule, small and powerful magnets would continue to present what I consider the quintessential latent hazard to young children”

Unanimity of the Decision

There are varying  and strong opinions related to the CPSC’s recent litigation and enforcement methods against magnet companies to compel recalls of certain magnet sets already on the market. However, in our mind there is significantly less dispute in the professional safety community regarding the agency’s issuance of a safety standard that governs the future sale of these types of magnets.

The Commission’s original decision to issue a proposed safety standard passed in a unanimous and bipartisan 4-0 vote during a tumultuous time at the agency when other regulatory initiatives sometimes stalled because the Commission had two Democratic and two Republican members. Over two years later, and with just one of those four Commissioners remaining, a different panel of Commissioners passed the final version of the safety standard in a unanimous and bipartisan 4-0 vote (Commissioner Buerkle recused herself citing a potential conflict with the ongoing litigation, which could be appealed to the Commission).

Despite the unanimity of the vote, there is no doubt that this decision was difficult for both the CPSC staff and the Commissioners. This action effectively eliminates a product line from the marketplace and severely impacts the companies who sell these products with a CPSC-estimated cost to the industry of about $6 million annually. Prior to the rulemaking and parallel enforcement actions to compel recalls, there were several companies operating in the US and selling these products. During the hearing, Chairman Elliot Kaye said he felt the weight of this decision and understood the impact to the owners of those companies, including the owner of Zen Magnets, who had recently contacted Kaye and defended his products as a “window to a universe of curiosity and inspiration.”

The Statutory Requirements

The agency also had to weigh whether it could meet the necessary statutory criteria to implement the rule, including findings that the standard is reasonably necessary to eliminate or reduce an unreasonable risk, there exists no voluntary standard that adequately addresses the hazard, the expected benefits bear a reasonable relationship to the costs, and no less burdensome methods exist to achieve the same result (e.g., more effective warnings, safety education campaigns, or any other efforts that could meaningfully reduce the hazard).

In the end, the Commission was swayed by the tragic death of a 19 month old child; a staff-estimated 2,900 ingestions over a five-year period; a staff-estimated $28.6 million in annual societal benefits through avoided medical costs; and the lengthy testimony from the medical community emphasizing the high prevalence, difficult diagnosis, and potential for serious injury associated with these incidents. This is a relatively rare example where weighing the statutory criteria led to the required foundation for this type of regulatory judgment and is a precedent not widely applicable.

The New Safety Standard

Although many in the professional safety community can often find fault with the CPSC’s actions, the emergence of a new hazard posed to children by magnet sets and the adoption of a safety standard to address that hazard serves as a good example of why Congress created the CPSC and gave it the authority to take such actions under the CPSA.

Rare Earth Magnet Image: courtesy of Flickr (Licensed) by Andi 

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Charles A. Samuels

Member / Co-chair, Retail and Consumer Products

Charles A. Samuels is an antitrust and regulatory lawyer at Mintz. He assists clients with consumer product safety, product recalls and environmental regulations. and Chuck also serves as general counsel to many trade associations. Chuck represents clients before federal agencies like the Consumer Product Safety Commission.