[Federal Register Volume 77, Number 171 (Tuesday, September 4, 2012)]
[Proposed Rules]
[Pages 53781-53801]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-21608]


=======================================================================
-----------------------------------------------------------------------

CONSUMER PRODUCT SAFETY COMMISSION

16 CFR Part 1240


Safety Standard for Magnet Sets

AGENCY: Consumer Product Safety Commission.

ACTION: Notice of Proposed Rulemaking.

-----------------------------------------------------------------------

SUMMARY: Based on available data, the U.S. Consumer Product Safety 
Commission (the Commission, the CPSC, or we) has determined 
preliminarily that there may be an unreasonable risk of injury 
associated with children ingesting high-powered magnets that are part 
of magnet sets. These magnet sets are aggregations of separable, 
permanent, magnetic objects intended or marketed by the manufacturer 
primarily as a manipulative or construction desk toy for general 
entertainment, such as puzzle working, sculpture building, mental 
stimulation, or stress relief. In contrast to ingesting other small 
parts, when a child ingests a magnet, the magnetic properties of the 
object can cause serious, life-threatening injuries. When children 
ingest two or more of the magnets, the magnetic forces pull the magnets 
together, and the magnets pinch or trap the intestinal walls or other 
digestive tissue between them, resulting in acute and long-term health 
consequences. Although magnet sets have only been available since 2008, 
we have determined that an estimated 1,700 ingestions of magnets from 
magnet sets were treated in emergency departments between January 1, 
2009 and December 31, 2011.
    To address the unreasonable risks of serious injury associated with 
these magnet sets, the Commission is issuing this notice of proposed 
rulemaking (NPR), which would prohibit such magnet sets. Under the 
proposal, if a magnet set contains a magnet that fits within the CPSC's 
small parts cylinder, magnets from that set would be required to have a 
flux index of 50 or less, or they would be prohibited. The flux index 
would be determined by the method described in ASTM F963-11, Standard 
Consumer Safety Specification for Toy Safety.
    The Commission solicits written comments concerning the risks of 
injury associated with these magnet sets, the regulatory alternatives 
discussed in this NPR, other possible ways to address these risks, and 
the economic impacts of the various regulatory alternatives. This 
proposed rule is issued under the authority of the Consumer Product 
Safety Act (CPSA).

DATES: Written comments in response to this document must be received 
by the Commission no later than November 19, 2012.

ADDRESSES: You may submit comments, identified by Docket No. CPSC-2012-
0050, by any of the following methods:
    Submit electronic comments in the following way:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments. To ensure timely processing of 
comments, the Commission is no longer accepting comments submitted by 
electronic mail (email), except through www.regulations.gov.
    Submit written submissions in the following way:
    Mail/Hand delivery/Courier (for paper, disk, or CD-ROM 
submissions), preferably in five copies, to: Office of the Secretary, 
Consumer Product Safety Commission, Room 820, 4330 East West Highway, 
Bethesda, MD 20814; telephone (301) 504-7923.
    Instructions: All submissions received must include the agency name 
and docket number for this notice. All comments received may be posted 
without change, including any personal identifiers, contact 
information, or other personal information provided, to http://www.regulations.gov. Do not submit confidential business information, 
trade secret information, or other sensitive or protected information 
electronically. Such information should be submitted in writing.

FOR FURTHER INFORMATION CONTACT: Jonathan D. Midgett, Ph.D., Project 
Manager, Office of Hazard Identification and Reduction, Consumer 
Product Safety Commission, 4330 East West Highway, Bethesda, MD 20814-
4408; telephone: (301) 504-7692, or email: jmidgett@cpsc.gov.

SUPPLEMENTARY INFORMATION: 

A. Background

    The Commission is proposing a safety standard that would prohibit 
magnet sets that have been involved in serious injuries. The Commission 
believes that this proposed rule is necessary to address an 
unreasonable risk of injury and death associated with these magnet 
sets.

1. History With Magnetic Toys

    In the mid-2000s, construction toys for children featuring small, 
powerful magnets were introduced into the toy market. Several 
children's magnetic construction toys were recalled because the magnets 
detached from the plastic housing of the toy. (Release 07-
164). We received reports of incidents in which children and infants 
had swallowed the small magnets that had detached from such toys. In 
some incidents, children swallowed intact magnetic components that were 
small parts.\1\ These incidents revealed that if a child swallows more 
than one small, powerful magnet or one such magnet and a ferromagnetic 
object, the objects can attract each other across tissue inside the 
stomach and intestines and cause perforations and/or blockage, which, 
if not treated immediately, can be fatal. We are aware of one death and 
numerous cases requiring intestinal surgery following ingestion of 
multiple small, powerful magnets from these toys.
---------------------------------------------------------------------------

    \1\ The requirements of 16 CFR part 1501 are intended to 
minimize the hazards from choking, ingestion, or inhalation to 
children under 36 months of age created by small objects. The 
requirements state, in part, that no toy (including removable, 
liberated components, or fragments of toys) shall be small enough 
without being compressed to fit entirely within a cylinder of the 
specified dimensions.
---------------------------------------------------------------------------

    To address the hazard in toys, the CPSC worked with ASTM to develop 
voluntary standard requirements for toys containing magnets. These 
requirements became part of ASTM F963, Consumer Safety Specification 
for Toy Safety, which is now a mandatory CPSC standard. ASTM F963-11 
defines a ``hazardous magnet'' and a ``hazardous magnetic component'' 
(i.e., a toy piece that contains an embedded hazardous magnet) as one 
that has a flux index greater than 50 and that is a small object. ASTM 
F963 applies to toys intended for children under 14 years of age. The 
flux index of a magnet is an empirical value developed by ASTM as a way 
to estimate the attraction force of a magnet. The ASTM working group 
established a flux index of 50 as a cutoff for what it considered to be 
a ``safe'' magnet, based on measurements of toys on the market. Most of 
the measured magnets were cylindrical in shape, and some had been 
involved in known incidents. When the ASTM graphed their measurements, 
they showed a good correlation (fairly linear relationship) between 
calculated flux index and measured attraction force for

[[Page 53782]]

a majority of the magnets. Based on this graph, ASTM considered the 
flux index a reliable way to gauge a magnet's relative attraction 
force. Since the magnets from toys involved in incidents had flux index 
measurements greater than 70, the ASTM working group chose a flux index 
of 50 as a cutoff because it was significantly below the values for the 
incident magnets.

2. Introduction of Magnetic Sets

    In 2008, a new type of magnet product came onto the market. The 
basic product was an aggregated mass of 216 BB-size powerful magnets, 
generally marketed as adult desk toys for general amusement. These 
magnet sets were introduced in 2008, but 2009 was the first year with 
significant sales to U.S. consumers. The products are described more 
fully in section B of this preamble.
    In February 2010, CPSC staff received its first incident report 
involving this product. No injury resulted from this incident. Shortly 
after receiving this report, CPSC staff collected and evaluated samples 
of magnet sets.
    In December 2010, we received our first consumer incident report 
involving the surgical removal of magnets that were part of a magnet 
set. Information about incidents involving magnet sets is discussed in 
section C of this preamble.

3. Prior Compliance Actions Concerning Magnet Sets

    The CPSC has been warning consumers about the hazards of magnet 
ingestion since 2006, because of the injuries that have occurred to 
children from hazardous magnets that were part of construction toys 
intended for children. Several recalls have been issued for toys 
containing magnets.
    In December 2009, we received a consumer complaint that the magnet 
sets intended for adults posed hazards similar to magnets in toys. As a 
follow-up to that complaint, during that month, a sample was collected 
by staff and age graded by the Directorate for Engineering Sciences, 
Division of Human Factors to be, in developmental terms appropriate for 
children ages 9 years old and up.
    In February 2010, the CPSC received its first consumer incident 
report involving a child and a set of magnets intended for adults. A 9-
year-old boy swallowed 7 spherical magnets while mimicking body 
piercings. He was not injured because the magnets passed through his 
system as a single mass. The magnets had been purchased for a 13-year-
old.
    Samples of the product were detained and collected at the Customs 
and Border Protection site in February 2010. At the time of collection, 
the product was labeled for use by children 13+ years of age. Because 
of the age grade on the product and the manufacturer's intent, it was 
subject to the requirements of the toy standard. The Office of 
Compliance and Field Operations (Compliance) issued a Notice of 
Noncompliance to the firm in March 2010. At the time, there was very 
little incident data associated with this product. The firm agreed to a 
corrective action that included, in part, new warnings to keep the 
product away from children, a change in the appropriate age for use of 
the product, and requests to retailers to list the product as 
appropriate only for consumers over 14 years of age. The firm also 
removed inventories labeled ``13+.'' The firm also agreed to ask 
retailers who market products primarily, though not exclusively, to 
children to execute a Responsible Sellers Agreement prohibiting 
marketing and sales to children; stop the sale of these magnets to 
retailers that market products exclusively to children; and providing a 
Responsible Sellers Agreement to general use stores for their 
information.
    In December 2010, we received the first report of the surgical 
removal of magnets from a child who had ingested multiple magnets that 
came from a magnet set intended for adults. During 2011, Compliance 
activity included evaluation of the marketing and labeling of the 
product category, collecting product marketed to children under 13 and 
evaluating compliance with ASTM F963. In addition, where products did 
not have labeling or marketing information, the agency encouraged those 
firms to develop marketing and labeling to ensure that they were not 
marketed to children. More firms were issued Notices of Noncompliance 
for marketing to children younger than 14 years.
    In response to continuing injuries associated with the products and 
children of various ages, we published a public service announcement 
(PSA) in November 2011, concerning the hazard in cooperation with two 
manufacturers. Reported incidents involving children continued to 
increase unabated from 8 cases in 2010, 17 cases in 2011, and 25 cases 
in 2012 (as of July 8, 2012). Twenty two incidents were reported before 
the PSA; 28 more followed during the eight months after it. A high 
percentage of the injuries resulted in surgeries or other invasive 
procedures. Of the 50 reports known to staff, 22 required surgery, and 
10 required either invasive procedures such as endoscopies or 
colonoscopies. In 2011, and into spring 2012, staff continued to 
identify additional firms offering this product on the Internet with 
labeling and marketing violations.
    Given the continued injuries to children, Compliance began 
negotiation of corrective action plans with 11 of 13 magnet set 
importers that voluntarily agreed to cease the importation, 
distribution, and continued sale of their magnet sets. Two of the 
importers did not agree to stop sale and are the subject of 
administrative actions recently initiated by the Commission. As those 
complaints allege, among other things, CPSC staff experts do not 
believe warnings will ever be effective in protecting children from 
this hidden hazard.

B. The Product

1. Description of the Product

    The magnet sets covered by this proposed rule typically are 
comprised of numerous identical, spherical, or cube-shaped magnets, 
approximately 3 to 6 millimeters in size, with the majority made from 
NdFeB (Neodymium-Iron-Boron or NIB). These magnets exhibit strong 
attractive qualities. The magnetized neodymium-iron-boron cores are 
coated with a variety of metals and other materials to make them more 
attractive to consumers and to protect the brittle magnetic alloy 
materials from breaking, chipping, and corroding.
    Often referred to as ``magnet balls'' or ``rare earth magnets,'' 
the products currently are marketed as: adult desk toys, the ``puzzles 
of the future,'' stress relievers, science kits, and educational tools 
for ``brain development.'' As shown in product instructions and in 
videos on related Web sites, these products can be used and reused to 
make various two- and three-dimensional forms, jewelry, and toys, such 
as a spinning top.
    The products are sold in sets of varying size, from as few as 27 
magnets to more than 1,000. Most of the magnets have been sold in sets 
of either 125 balls or sets of 216 to 224 balls, although some firms 
have sold just a few balls as extras. Based on product information 
provided by marketers, the most common magnet size is approximately 5 
mm in diameter, although balls as small as about 3 mm have been sold, 
as have sets of larger magnet balls (perhaps 15 mm to 25 mm in 
diameter). In addition to magnetic ball sets, desk sets of small 
magnetic cubes have also been sold, although they have comprised a 
relatively small share of the market. The leading marketer of such 
magnet sets recently added small magnetic rods--intended to be used 
with balls to make

[[Page 53783]]

geometric shapes--to its desk toy product line.
    The most common color of these magnets is a glossy, highly 
reflective silver, with the spheres often described as similar in 
appearance to BBs or ball bearings. Some firms now include sets in a 
wide range of colors, or combinations of colors, ranging from bright 
pink, green, and blue, to darker shades, such as purple and black. 
Most, with the exception of the smaller sets, are sold with a 
container, such as a square plastic cube, a metal tin, and/or a soft 
pouch. Most brands are sold in nondescript containers, such as metal 
tins or black fabric boxes. The largest seller uses colorful, 
transparent packaging that simulates the cube floating within.
    The age labeling of hazardous magnet sets varies; currently, most 
products carry an age label and are marked ``14+.'' Some sets have no 
specific age recommendation on the package, even though retail Web 
sites may identify them as intended for ages ``13+'' or ``14+.'' The 
small parts warning \2\ is sometimes included on the packaging (i.e., 
``choking hazard, not for children under 3''), as are warnings to keep 
the product away from all children.
---------------------------------------------------------------------------

    \2\ See 16 CFR Sec.  1500.19(b)(1).
---------------------------------------------------------------------------

    The proposed rule would define magnet sets as: ``any aggregation of 
separable, permanent magnetic objects that is a consumer product 
intended or marketed by the manufacturer primarily as a manipulative or 
construction desk toy for general entertainment, such as puzzle 
working, sculpture, mental stimulation, or stress relief.''

2. Use of the Product

    Although firms that sell magnet sets state that they intend them as 
desk toys for adults, these sets are found in offices and homes and in 
locations within the home beyond desk tops, such as on refrigerators. 
Magnet sets have some appeal for virtually all age groups. They tend to 
capture attention because they are shiny and reflect light. They are 
smooth, which gives them tactile appeal, and they make soft snapping 
sounds as they are manipulated. They have the properties of a novelty, 
which arouses curiosity; incongruity, which tends to surprise and 
amuse; and complexity, which tends to challenge and maintain interest. 
Their strong magnetic properties cause them to move in unexpected ways, 
with pieces snapping together suddenly, and moving apart--occasionally 
quite quickly. These properties or characteristics of magnets are 
likely to seem magical to younger children and may evoke a degree of 
awe and amusement among older children and teens. These features are 
the foundation of the product's appeal as a challenging puzzle or as a 
manipulative or jewelry. They may also be used as a stress ball and as 
a way to hold things in place.
    Children from toddlers through teens have been exposed to these 
products in the home setting and elsewhere. Ingestion incidents have 
been reported to involve children 5 years of age and younger and follow 
similar scenarios as other ingestion incidents among this age group. 
Mouthing and ingestion of non-food items is a normal part of the 
exploratory behavior of preschool children. Caregivers, in a few cases, 
said they had intended to keep the sets away from the victims, but did 
not realize they had failed to do so, until after the child became ill 
and the magnets had already caused internal injuries. In other 
incidents, the child reportedly had never mouthed or ingested objects 
previously, and as a result, they were permitted by the caregiver to 
play with the magnets. As might be expected, in a number of cases, the 
magnets were not in their original containers, and caregivers were 
unaware that some were missing from the set and in the child's 
possession. Several importers sell sets of spares, small numbers of 
balls to replace those lost or missing from a larger set.
    These products would also be appealing to children of early-to-
middle elementary school age, who might be capable of controlling the 
magnetic forces exhibited by the pieces while constructing various 
forms depicted in the product instructions and on the related Web 
sites. Simple three-dimensional puzzles begin to interest children as 
they approach 8 and 9 years of age; and 9 through 12 year olds are 
interested in highly complex puzzles. Children in the 9 through 12 year 
age group have the reading skills to follow directions for three-
dimensional puzzles, and they have the fine motor skills required to 
handle small, abstract, or interlocking pieces. Nine-year-olds can 
complete puzzles with 100 to 500 pieces; and 10 through 12 year olds 
enjoy the challenge of puzzles with 500 to 2,000 pieces. Children in 
this age group also can engage in activities that require the type of 
meticulous work and attention that would be needed to create the 
complex patterns and structures found in the paper and video 
instructions related to the magnet sets. Additionally, magnets 
typically are included in elementary school (ages 6 through 12) science 
curricula, the age at which children are taught the basic concepts of 
magnetism.
    For all of these reasons, magnet sets are sometimes purchased for 
children under the age of 14, despite the warnings or labeling. This is 
consistent with reviews on retail Web sites, which indicate that these 
products are being purchased for children. Approximately one-third of 
53 adults reviewing one manufacturer's product on Amazon.com reported 
purchasing them for children 8 through 11 years of age.
    Thus, it is foreseeable that some portion of these products will be 
purchased for elementary school children and teens. Given the 
relatively low cost for some sets, children in these age groups also 
may purchase the magnet sets themselves. The incident reports reflect 
behaviors that are beyond the intended use of the product, but that are 
foreseeable for the groups using them. The mouthing of objects, common 
among younger children, develops into less obvious and more socially 
acceptable oral habits, which may continue through childhood and 
adolescence and into adulthood (e.g., mouthing or chewing a fingertip, 
fingernail, knuckle, pen, pencil, or other object, especially while 
concentrating or worrying). This tendency toward mouthing behavior 
involving magnets could account for some reported ingestions, where 
incident details are lacking.
    Where details are provided, the incident reports describe scenarios 
that are consistent with the behaviors of children in this age range. 
Although exploratory play is generally associated with very young 
children, people of all ages use their senses to explore unfamiliar 
phenomena. More discussion of the hazard scenarios involving these 
products is provided in section C.2 of this preamble.

3. The Market

    Based on information reviewed on product sales, including reports 
by firms to the Office of Compliance and Field Operations, the number 
of such magnet sets that have been sold to U.S. consumers since 2009, 
the first year of significant sales, may have totaled about 2.7 million 
sets, with a value of roughly $50 million. This reflects a combination 
of retail sales directly to consumers (through company Web sites and 
other Internet retail sites) and sales to retailers who market the 
products. A review of retail prices reported by importers and observed 
on Internet sites suggests prices typically ranging from about $20 to 
$45, with an average price of about $25.
    The small powerful magnets most likely to be affected by this 
proposed rule are made from alloys of

[[Page 53784]]

neodymium, iron, and boron. They are coated with a variety of metals 
and other materials to make them more attractive to consumers and to 
protect the brittle magnetic alloy materials from breaking, chipping, 
and corroding. Based on available information, all of the small magnets 
used in magnet sets, as well as most of the finished and packaged 
products that would be subject to CPSC regulation, are produced by 
manufacturers located in China.
    All of the firms that have marketed the products are believed to 
import them packaged and labeled for sale to U.S. consumers. Several 
Chinese manufacturers have the facilities and production capacity to 
meet the orders of U.S. importers, and there are no major barriers to 
market entry for firms wishing to source products from China for sale 
in the United States. Firms often have sales arrangements with Internet 
retailers who hold stock for them and process orders.
    We have identified about 25 U.S. firms and individuals who have 
recently imported magnetic sets for sale in the United States. The 
combined sales of the top seven firms have probably accounted for the 
great majority (perhaps more than 98%) of units sold. One firm is 
believed to have held a dominant position in the market for magnetic 
desk sets since it entered the market in 2009. That firm, and a few of 
the larger firms (including a firm based in Canada with a branch office 
in the United States), have marketed the products through accounts with 
retailers, in addition to selling directly to consumers on the 
Internet, using their own Web sites or other Internet shopping sites. 
In addition to products offered for sale by U.S. importers, consumers 
also have the ability to purchase magnetic sets directly from sources 
in Hong Kong or China; many that market products through ``stores'' on 
a leading Internet shopping site.

C. Risk of Injury

    The risk addressed in this proceeding concerns damage to intestinal 
tissue caused by the ingestion of more than one magnet from a magnet 
set, magnets that are attracted to each other in the digestive system, 
damaging the intestinal tissue trapped between the magnets. In rare 
cases, there can be interaction between magnets in the airways and 
digestive tract (esophagus). Serious injury and death are likely 
consequences when children ingest strong magnets.

1. Incident Data

    NEISS data. CPSC staff reviewed data from the National Electronic 
Surveillance System (NEISS) database of magnet-related ingestion cases 
treated in emergency departments from January 1, 2009 to December 31, 
2011.\3\ To derive estimates, CPSC staff considered all cases reported 
through NEISS from January 1, 2009 to December 31, 2011, which 
mentioned ``magnet'' in the narrative field of NEISS reports. This 
review produced an estimated 6,100 magnet-related ingestions for that 
period of time (note that this includes incidents involving all types 
of magnets, not just magnet sets). This excludes cases with 
descriptions such as ``kitchen magnet'' or ``plastic-covered magnet.'' 
Staff further analyzed cases that possibly involved magnets that were 
from magnet sets. This review yielded a count of 72 magnet ingestion 
cases during this time period, which staff determined (based on a 
review of narratives in the NEISS reports) to involve or possibly 
involve magnets from magnet sets. Based on the magnet ingestion cases 
treated in NEISS hospital emergency departments, staff determined that 
an estimated 1,700 ingestions of magnets from magnet sets were treated 
in U.S. emergency departments during this time period. NEISS cases are 
coded from medical records so brand name is rarely available, but 
descriptions of the products from the NEISS narrative suggests that the 
magnets involved in these cases are magnets from magnet sets. For more 
information about the process for developing the estimates of 
incidents, see the memorandum from the Directorate for Epidemiology at 
Tab A of staff's briefing package http://www.cpsc.gov/library/foia/foia12/brief/magnetstd.pdf. It is possible that some number of the 
estimated 4,400 magnet ingestion-related injuries not classified as 
high-powered magnets could be attributable to the ingestion of magnets 
from high powered magnet sets. However, the information provided in the 
NEISS reports did not provide sufficient detail to place them into that 
category.
---------------------------------------------------------------------------

    \3\ The Commission collects information on hospital emergency 
room-treated injuries through the NEISS database. This data can be 
used to provide national estimates of product-related injuries 
treated in U.S. hospital emergency departments. Incidents reported 
to the Commission represent a minimum count of injuries. To account 
for incidents that are not reported to the Commission, the staff 
calculates an estimated number of such injuries.
---------------------------------------------------------------------------

    Staff reviewed the NEISS data to obtain more information about 
incidents involving magnet sets. With regard to age, the largest 
portion of these incidents involved children 4 through 12 years of age. 
Of the estimated 1,700 ingestion incidents related to magnet sets, 
1,200 of the victims are in the 4- through 12-year-old age group (70.6 
percent). It is quite possible that some portion of the estimated 4,400 
``magnets, type unknown/other type'' category of incidents also 
involved magnet sets and children in the 4- through 12-year-old age 
group. Of the estimated 1,700 ingestions, most (approximately 1,600) 
were treated and released from the hospital.
    Databases other than NEISS. In addition to reviewing NEISS data, 
staff also reviewed incidents reported through other CPSC databases, 
such as the Injury or Potential Injury Incident database (IPII) and the 
In-depth Investigation database (INDP). These databases provided more 
detailed descriptions, and thus, included more information about the 
products involved and the incident scenarios. In reviewing the initial 
set of incidents from these databases, staff considered all reported 
incidents from January 1, 2009 through June 30, 2012, that involved a 
magnet and an ingestion or injury was reported. Excluded from this 
review were magnets in children's toys, as well as magnets that were 
determined to be a different type other than small, strong magnets from 
sets of magnets. Staff focused on one hazard pattern: ingestion of 
magnets. Other reported hazard patterns, such as allergic reactions, 
ear injuries, and a hand injury were excluded.
    From review of INDP and IPII databases, we are aware of 50 reported 
incidents occurring from January 1, 2009 through June 30, 2012 
involving the ingestion of magnets by children between the ages of 1 
and 15. Of those 50 incidents, 38 involved the ingestion of high-
powered, ball-shaped magnets contained in products that meet the 
definition above of ``magnet set''; and 5 of those 50 incidents 
possibly involved ingestion of this type of magnet. We discuss these 43 
incidents (the 38 incidents, plus the 5 possible incidents) in more 
detail below.\4\
---------------------------------------------------------------------------

    \4\ Six of the remaining seven incidents (out of the 50 
incidents) involved ingestion of magnets that were part of, or 
designed to be, part of jewelry, including beads, faux tongue rings, 
and earrings. One incident involved the ingestion of a magnetic 
rock. The rock magnet and magnets in jewelry would not meet the 
proposed definition of ``magnet set'' and would not be covered by 
this proposed rulemaking.
---------------------------------------------------------------------------

    In 35 of the 43 incidents, two or more magnets were ingested. 
Hospitalization was required in order to treat 29 of the 43 incidents, 
with surgery necessary to

[[Page 53785]]

remove the magnets in 20 of the 29 hospitalizations. In 9 of the 29 
hospitalizations, the victim underwent colonoscopic or endoscopic 
procedures to remove the magnets. In 37 of the 43 incidents that likely 
involved magnets from hazardous magnet sets, the magnets were ingested 
by children younger than 4 years old or between the ages of 4 and 12 
years.
    In 20 of the 43 incidents, the victims reportedly put the magnets 
in their mouths because they thought the magnets were edible; they 
wished to emulate jewelry piercings; or they simply mouthed the magnets 
while playing with them. In 23 of those 43 incidents, there is 
insufficient information to determine how the magnets were being used 
at the time of the ingestion.
    In 30 of the 43 incidents, the reports indicate the source of the 
magnets ingested. In 10 of the incidents, the magnets were owned by a 
relative and were obtained, presumably by the victim, without the 
relative's knowledge. In 5 incidents, the magnets were given to the 
child by an adult; and in 12 incidents, the magnets were obtained from 
a friend or classmate. In three instances, the magnets were purchased 
by the victim. The number of ingestion incidents involving magnets from 
magnet sets has increased over time, from 7 in 2010, to 16 in 2011, and 
20, as of June 30, 2012.

2. Hazard Scenarios

    The incident reports describe scenarios that are consistent with 
behaviors of children in the age range described in the incidents. In 
the incidents reported among the 8- through 12-year-old age group, one 
child described wanting to feel the force of the magnets through his 
tongue; one was trying to see if the magnets would stick to her braces; 
and another wanted to see if the magnets would stick together through 
her teeth. Another common scenario accounted for half of the reported 
ingestion incidents among 8 to 15 year olds. Children used at least two 
and as many as seven magnets to simulate piercings of their tongue, 
lips, or cheeks. On the tongue or lip, children sometimes used more 
than two magnets to form the appearance of a ring. This is a type of 
role-play behavior, particularly for the younger children in the group, 
and the magnets serve as highly realistic props.
    In this section, we summarize some of the incident reports to 
demonstrate a few of the hazard scenarios that have been reported in 
incidents involving ingestion of magnets from magnet sets.
    In one incident, a 10-year-old girl simulating a tongue piercing, 
accidentally swallowed two magnetic balls. That same day, her mother 
took her to the local emergency room, and she was admitted for 5 days; 
during that time, the movement of the magnets was monitored by 10 x-
rays, 3 CT scans, and an endoscopy. Ultimately, the magnets were 
manipulated from their eventual position in the colon into the appendix 
via laparoscopic surgery and removed by an appendectomy.
    In another incident, a 13-year-old girl accidentally swallowed five 
small, spherical, high-powered magnets when they suddenly snapped 
together while she was mimicking a lip piercing. Although her abdominal 
pains began and worsened over the next 2 days, she did not tell her 
mother of the ingestion until 3 days later. She was then taken to 
hospital, where abdominal x-rays confirmed ingestion of five magnetic 
balls. Medical staff initially tried unsuccessfully to remove the 
magnets using an oral bowel cleansing solution and then a colonoscopy 
procedure. Eventually she underwent surgery, and the magnets--located 
in three different places in her small intestine--were removed during a 
surgical procedure that involved resection of damaged bowel tissue and 
removal of her appendix. The victim's complicated recovery resulted in 
hospitalization for 14 days, and the surgery left a 4-inch abdominal 
scar.
    In another incident, an 18-month-old boy sustained life-threatening 
intestinal injuries and will have lasting adverse health effects after 
ingesting three small, spherical magnets. The boy exhibited symptoms of 
diarrhea and vomiting and was clutching at his right side. When his 
mother took him to the local hospital, he was diagnosed with an ear 
infection. When his symptoms did not resolve a few days later, she took 
him to a second hospital where, reportedly, he was diagnosed with 
bronchitis, given some medication, and released. One or 2 days later, 
his mother noticed that his stomach was distended and took him to a 
third hospital. Abdominal x-rays revealed three small balls, requiring 
immediate surgical intervention to remove the foreign objects. The 
procedure required resection of 6 inches of the child's small intestine 
and resection of 3 inches of his large intestine. The victim remained 
in intensive care for 1.5 weeks before being released. He continued to 
have diarrhea and other intestinal problems (at least 2 months post-
surgery when the IDI was completed).
    In another incident, a 3-year-old girl swallowed eight small 
spherical magnets from a magnet set, which she found on a refrigerator 
door. An x-ray revealed two joined magnets that appeared to be located 
in the victim's esophagus, plus another six magnets that appeared to be 
joined together in the victim's stomach. A second x-ray image, taken 
the next day at a different hospital, showed that the magnets had not 
moved. A third x-ray at a Children's Hospital showed no movement of the 
magnet pair (described as 3mm beads) in the esophageal area, and some 
movement of the group in the abdomen. Pre-intervention, the treating 
physicians correctly recognized that she might have aspirated a magnet 
into her airways that was interacting through tissues with a magnet 
located in the esophagus. The girl underwent three coordinated 
procedures: (1) A bronchoscopy that removed one ``magnetic bead'' from 
her right bronchus; (2) an esophagogastro-duodenoscopy (endoscopy) that 
removed one magnetic bead from the mid-esophagus, and five magnetic 
beads from the stomach; and (3) a diagnostic laparoscopy, followed by 
laparoscopic-assisted removal of the remaining magnet, plus 
laparoscopic repair of a gastric perforation and a small bowel 
perforation.
    In another incident, a 23-month-old male ingested eight small 
spherical magnets from a product described as a ``magnetic puzzle.'' He 
started vomiting overnight and worsened the next day. He was taken to 
an urgent care facility, where a bilateral ear infection initially was 
suspected. A few hours later, as the child's condition worsened and he 
lost consciousness intermittently, an abdominal x-ray indicated six 
small balls that the mother recognized immediately, and informed the 
staff, were magnets from the puzzle. He was transferred to a Children's 
Hospital where an x-ray revealed some slight movement of the magnets. 
According to the mother, the doctors thought the magnets would pass 
naturally. An x-ray taken the following day showed the magnets to be 
located between the small and large intestine; therefore, surgery was 
undertaken to remove them. During surgery, two balls were found in the 
small intestine and six balls were found outside of the bowel in the 
abdominal cavity. These were removed and a small intestine perforation 
repaired. Staff does not have access to the full medical records, but 
according to the parents, extremely serious complications ensued after 
the first surgery. The child underwent several sequential surgeries 
over the next 10 days to repair leaks (unclear if this involved missed 
perforations/failure of repairs/new

[[Page 53786]]

perforations) and treat a blood clot, ischemic necrotic bowel, and 
serious infection stemming from the initial magnet injury. Ultimately, 
after what appears to be at least five or six operations, the child was 
stabilized but was still retained in an intensive care unit for more 
than a month, having lost all but 10 to 15 centimeters of small 
intestine (HS staff notes the small intestine is about 600 to 700 
centimeters long). He is being fed intravenously and has a colostomy 
bag to remove waste products. He will require a bowel transplant and 
his long-term prognosis is poor.
    As these scenarios demonstrate (and further discussed in the next 
section), parents and caregivers may not realize that the child has 
ingested magnets. Thus, diagnosis and treatment is delayed, and the 
severity of the resulting injuries increases.

3. Details Concerning Injuries

    As indicated in the previous section describing some of the 
incident scenarios, diagnosis of injury from magnet ingestion is 
complicated by multiple factors, and the resulting injuries can be very 
serious. Medical professionals may not be aware of the dangers posed by 
ingestion of high-powered magnets and the corresponding need for 
immediate evaluation and monitoring. Standard diagnostic tools, such as 
x-rays, may not demonstrate fully that the ingested item is a magnet 
and they may not allow medical professionals to identify the number of 
magnets ingested. Moreover, magnets may appear in an x-ray to be other 
nonmagnetic items that children commonly ingest, such as beads, which 
typically are monitored without surgical intervention and are allowed 
to pass through the child's gastrointestinal tract. Furthermore, 
treatment for injuries resulting from the ingestion of these magnets 
often is delayed, much to the serious detriment of the patient because 
the symptoms associated with damage to intestinal tissue resulting from 
the ingestion of these magnets frequently resemble the symptoms 
associated with less serious conditions, such as the stomach flu.
    Accurate and timely diagnoses also are complicated by the fact that 
children and teens may not attribute their gastrointestinal symptoms to 
prior ingestion of magnets, and they may be unable or unwilling to 
communicate to their parents, caregivers, or medical personnel that 
they have ingested magnets. Accordingly, the delay of surgical 
intervention due to the patient's presentation with non-specific 
symptoms and/or medical personnel's lack of awareness of the dangers 
posed by multiple magnet ingestion can exacerbate life-threatening 
internal injuries and has resulted in the need for a bowel transplant.
    In medical terms, the magnet injuries are pressure necrosis 
injuries. The unique mechanism of injury involving harmful tissue 
compression by strong magnets has become established in recent years. 
Ingested magnets residing in relatively close proximity to one other 
are mutually attracted through intestinal walls. The magnets interact 
rapidly and forcefully. The magnetic attraction can occur over 
distances of about 10 to 20 mm for a pair of magnets, to distances much 
greater than that, as the number of magnets involved increases. The 
attraction forces operating between just one pair of magnets (or a 
magnet and another ferromagnetic object) is strong enough to withstand 
any normal muscular contractions of the gastrointestinal tissues (GI) 
(peristaltic or mixing motions), as well as the intermittent turbulent 
flow of the considerable volumes of gastrointestinal fluid in the small 
intestine, or the passage of semisolid contents in the large intestine. 
The magnets remain coupled, exerting strong bilateral compression 
forces on the trapped GI tissues, sufficient to block their blood and 
nutrient supply. The extreme pressure exerted on the trapped tissues 
ultimately is directly responsible for the progressive tissue injury, 
which starts with local inflammation and ulceration, progressing to 
tissue death, then perforation, or fistula formation.
    Fistulas (abnormal connections or passageways between two organs or 
vessels that normally do not connect) cause serious, debilitating 
symptoms, but generally are not as acutely urgent as perforations. 
Perforations present a serious risk of leakage of gut contents into the 
abdominal cavity which, within hours, can escalate quickly from an area 
of local infection, to peritonitis (an inflammation of the peritoneum, 
the thin tissue that lines the inner wall of the abdomen and covers 
most of the abdominal organs), then life-threatening systemic infection 
(sepsis).
    In some rare cases, ingested magnets have caused loops of the 
bowels to become twisted; this obstructs passage of gut contents and 
deprives the twisted gut segment of blood. It is considered an 
extremely urgent situation, requiring immediate surgical intervention 
to prevent the trapped segment from becoming necrotic, and/or from 
rupturing and causing contamination of the abdominal cavity. Magnets 
have also trapped and perforated mesenteric tissues, presenting the 
possibility that larger blood vessels in the gut mesentery could be 
damaged, which could cause an intra-abdominal hemorrhage.
    Once attracted magnetically to each other through intestinal walls, 
the magnets involved in GI injuries are unlikely to disengage 
spontaneously or to move position until they are removed by clinicians. 
A pair of magnets might be uncoupled by stronger attraction forces 
exerted by a larger number of magnets in a separate GI location (which 
then could cause further injury, perhaps unrecognized, in a different 
GI location). If magnets fall through perforations into the peritoneal 
cavity, they are expected to require surgical intervention and to have 
a relatively high associated morbidity.
    Complications after these abdominal surgeries include bleeding, 
infection, and ileus (temporary paralysis of gut motility). Adhesions 
(where bands of intra-abdominal scar tissue form that can interfere 
with gut movement and can cause obstruction) may occur as a short-term 
or long-term (years) complication, frequently resulting in bowel 
obstructions requiring additional surgeries, and thus, creating a 
cycle. In females, there also can be future fertility concerns related 
to abdominal scar tissue and adhesions. In cases where long segments of 
injured bowel have to be removed, digestive function of victims can be 
impaired permanently, resulting in malabsorption, diarrhea, cramping, 
total parental nutritional feeding (and consequent frequent bouts of 
sepsis), need for a bowel transplant, and even death.

D. Statutory Authority

    This proceeding is conducted pursuant to the Consumer Product 
Safety Act (CPSA). Magnet sets are ``consumer products'' that can be 
regulated by the Commission under the authority of the CPSA. See 15 
U.S.C. 2052(a).
    The Commission is authorized, under section 7 of the CPSA, to 
promulgate a mandatory consumer product safety standard that sets forth 
certain performance requirements for a consumer product or that sets 
forth certain requirements that a product be marked or accompanied by 
clear and adequate warnings or instructions. 15 U.S.C. 2056. A 
performance, warning, or instruction standard must be reasonably 
necessary to prevent or reduce an unreasonable risk or injury. In 
addition, if the Commission finds that no feasible consumer product 
standard under section 7 would adequately protect consumers from an 
unreasonable risk or injury associated with hazardous

[[Page 53787]]

magnet sets, the Commission may promulgate a rule under section 8 of 
the CPSA declaring hazardous magnet sets to be banned products. 15 
U.S.C. 2057.
    Section 9 of the CPSA specifies the procedure the Commission must 
follow to issue a consumer product safety standard under section 7. In 
accordance with section 9, the Commission may commence rulemaking by 
issuing an NPR including the proposed rule and a preliminary regulatory 
analysis in accordance with section 9(c) of the CPSA and requesting 
comments with respect to the risk of injury identified by the 
Commission, the regulatory alternatives being considered, and other 
possible alternatives for addressing the risk. Id. 2058(c). Next, the 
Commission will consider the comments received in response to the 
proposed rule and decide whether to issue a final rule and a final 
regulatory analysis. Id. 2058(c)-(f).
    According to section 9(f)(1) of the CPSA, before promulgating a 
consumer product safety rule, the Commission must consider, and make 
appropriate findings to be included in the rule, concerning the 
following issues: (1) The degree and nature of the risk of injury that 
the rule is designed to eliminate or reduce; (2) the approximate number 
of consumer products subject to the rule; (3) the need of the public 
for the products subject to the rule and the probable effect the rule 
will have on utility, cost, or availability of such products; and (4) 
means to achieve the objective of the rule while minimizing adverse 
effects on competition, manufacturing, and commercial practices. Id. 
2058(f)(1).
    According to section 9(f)(3) of the CPSA, to issue a final rule, 
the Commission must find that the rule is ``reasonably necessary to 
eliminate or reduce an unreasonable risk of injury associated with such 
product'' and that issuing the rule is in the public interest. Id. 
2058(f)(3)(A)&(B). In addition, if a voluntary standard addressing the 
risk of injury has been adopted and implemented, the Commission must 
find that: (1) the voluntary standard is not likely to eliminate or 
adequately reduce the risk of injury, or that (2) substantial 
compliance with the voluntary standard is unlikely. Id. 2058(f)(3(D). 
The Commission also must find that expected benefits of the rule bear a 
reasonable relationship to its costs and that the rule imposes the 
least burdensome requirements that would adequately reduce the risk of 
injury. Id. 2058(f)(3)(E)&(F).
    The Commission seeks input on whether it should be regulating under 
section 7 and 9 of the CPSA or seeking a ban under section 8 of the 
CPSA or under similar provisions of the Federal Hazardous Substances 
Act.

E. Relevant Existing Standards

    Currently, there is no voluntary standard applicable to magnet 
sets. The Consumer Product Safety Improvement Act of 2008 (CPSIA) 
mandated ASTM F963-11, Standard Consumer Safety Specification for Toy 
Safety, as a consumer product safety standard (Section 106 of the 
CPSIA). Whether the toy standard is applicable to magnet sets is not 
the subject of this rulemaking.

F. Description of the Proposed Rule

    The Commission is proposing a rule that would prohibit certain 
high-powered magnet sets. As described in previous sections of this 
preamble, we are aware of serious injuries resulting from children 
ingesting such magnets. Magnets that do not have the prohibited 
characteristics and magnets that are not parts of magnet sets would 
still be allowed.

1. Scope, Purpose, and Effective Date--Sec.  1240.1

    This section of the proposed rule would state that the proposed 
requirements in 16 CFR part 1240 are intended to reduce or eliminate an 
unreasonable risk of injury to children who ingest magnets that are 
part of hazardous magnet sets. The standard would apply to all magnet 
sets, as defined in Sec.  1240.2, that are manufactured or imported on 
or after the date 180 days after publication of a final rule.

2. Definitions--Sec.  1240.2

    This section of the proposed rule would define the term ``magnet 
set'' to mean ``any aggregation of separable, permanent magnetic 
objects that is a consumer product intended or marketed by the 
manufacturer primarily as a manipulative or construction desk toy for 
general entertainment, such as puzzle working, sculpture building, 
mental stimulation, or stress relief.'' This definition would not 
include other magnetic products that do not meet the definition, such 
as toys intended for children and jewelry. Magnets that are part of a 
toy intended for children are already covered by the requirements in 
ASTM F963-11, Standard Consumer Safety Specification for Toy Safety, 
which is a mandatory CPSC standard. The Commission seeks comment on the 
scope of the products proposed to be covered by this proposed rule and, 
in particular, whether risks are presented by magnets in science kits 
or craft and hobby kits no matter how they are age graded and labeled.
    The Commission also seeks comment on whether the definition of 
``magnet set'' should include single, i.e., individual, magnets in 
order to ensure that the regulation prohibits the sale of individual 
magnets for use as aggregated manipulative or construction desk toys. 
This is because the hazard posed by magnets attracting in the body can 
occur when magnets are purchased individually or as a set.

3. Requirements--Sec.  1240.3

    This section would set forth the requirements for magnet sets. If a 
magnet set contains a magnet that fits within the small parts cylinder 
that CPSC uses for testing toys, magnets from that set would be 
required to have a flux index of 50 or less. The Commission recognizes 
the possible hazard that could be posed by magnets that are purchased 
individually and subsequently aggregated. Therefore, the proposed 
language in Sec.  1240.3(a) applies to magnet sets that contain a 
single magnet that fits completely within the small-parts cylinder 
described in 16 CFR 1501.4.
    The Commission seeks comment regarding whether the proposed 
language in Sec.  1240.3(a) applies to magnet sets that contain one 
magnet, or more than one magnet, that fits completely within the small-
parts cylinder described in 16 CFR 1501.4.
    The small parts cylinder referenced in the proposed rule is 
specified in 16 CFR part 1501--Method for Identifying Toys and Other 
Articles Intended for Use by Children Under 3 Years of Age Which 
Present Choking, Aspiration, or Ingestion Hazards Because of Small 
Parts. If an object fits completely within the small parts cylinder, 
this indicates that the object is small enough to be ingested. If a 
magnet that is part of a magnet set is too large to fit within the 
small parts cylinder, it would not be prohibited, regardless of the 
magnet's flux index. Thus, it might be possible for manufacturers to 
make magnet sets that contain strong magnets so long as the magnets are 
sufficiently large, although the large size could reduce their utility.
    Small magnets (i.e., those that fit within the small parts 
cylinder) that are part of a magnet set must have a flux index of 50 or 
less. This limit is based on the level that is specified in ASTM F963-
11, Standard Consumer Safety Specification for Toy Safety, which is a 
mandatory CPSC standard. As discussed in section A.1 of this preamble, 
the flux index of a magnet is an empirical value

[[Page 53788]]

developed by ASTM as a way to estimate the attraction force of a 
magnet.
    The flux index limit of 50 was developed by ASTM, with CPSC staff's 
participation, to address injuries resulting from strong magnets that 
separated from toys. The limit was based on an analysis of magnets that 
were involved in incidents. The Commission seeks input on the limit 
particularly as to whether there may be health risks should a large 
number of magnets be ingested even if such magnets are at or below the 
flux limit of 50.

4. Test Procedure for Determining Flux Index--Sec.  1240.4

    This section of the proposed rule would describe how to determine 
the flux index of magnets that are part of a magnet set. If the magnet 
set contains more than one shape or size of magnet, at least one of 
each shape and size would be selected for testing. The flux index of 
the selected magnets would be measured in accordance with the procedure 
set forth in section 8.24.1 through 8.24.3 of ASTM F963-11, Standard 
Consumer Safety Specification for Toy Safety. The flux index of the 
magnet is calculated by multiplying the square of the magnet's surface 
flux density (in KGauss) by its maximum cross-sectional area (in 
mm\2\). The ASTM standard uses a gauss meter and probe that measures 
the surface flux density at 0.015 inches (0.38 mm) above the magnet's 
surface. The area is measured at the largest cross-section of the 
magnet that is perpendicular to the axis of its magnetic poles.
    We are proposing to use the methodology specified in ASTM F963-11 
to measure the flux index of magnets that are part of a magnet set. The 
test method was developed to address hazards posed by magnets that are 
part of a toy. Such magnets are likely to be individual magnets that 
separate from a toy. Magnet sets may contain hundreds of magnets. Thus, 
such magnets are more likely to be aggregated than magnets separated 
from toys. When magnets are aggregated, their magnetic strength may 
increase. Children exposed to magnets from these magnet sets may ingest 
more magnets than they would if a magnet separates from a toy. Thus, it 
may be desirable to develop a method for testing the strength of 
aggregated magnets. We are interested in receiving comments that would 
address this issue.

5. Findings--Sec.  1240.5

    In accordance with the requirements of the CPSA, we are proposing 
to make the findings stated in section 9 of the CPSA. The proposed 
findings are discussed in section N of this preamble.

G. Alternatives

    The Commission has considered alternatives to reduce the risk of 
injuries related to the ingestion of magnets contained in magnet sets. 
However, as discussed below, the Commission does not believe that any 
of these would adequately reduce the risk of injury.

1. Voluntary Recalls

    Although several of the companies that manufacture or import magnet 
sets have voluntarily agreed to recall (and in some cases, stop 
selling) these products, and several retailers have agreed to stop 
sale, the Commission has been unsuccessful in negotiating voluntary 
recalls and stop sales with several companies that control a 
significant portion of the magnet set market, including the company 
that sells more than 70 percent of the magnet sets purchased in the 
United States. It is extremely unlikely that all manufacturers/
importers will voluntarily agree to stop selling and recall their 
magnet sets. Moreover, recalls would not prevent new entrants into the 
market in the future.

2. Voluntary Standard

    Currently, there is no applicable voluntary standard in effect. A 
group of magnet set importers and distributors have requested that ASTM 
International develop a voluntary standard for the labeling and 
marketing of these products. Specifically, these companies have 
requested the formation of a voluntary standard to: (1) Provide for 
appropriate warnings and labels on packages of these magnets sets; and 
(2) establish guidelines for restricting the sale of these magnet sets 
to children, by not selling to stores that sell children's products 
exclusively and not selling the magnet sets in proximity to children's 
products. However, despite companies' marketing and labeling to attempt 
to limit children's exposure to magnets, ingestion incidents involving 
children continue to occur and the labeling does not change the 
attractiveness of the product to children or the intrinsic play value 
of the magnet sets. From the date that the firm with the largest share 
of the market undertook certain labeling enhancements and marketing 
restrictions through June of 2012, the Commission has learned of 47 
additional incidents involving ingestion of magnets from hazardous 
magnet sets, 26 involving ingestion of the company's hazardous magnets. 
As discussed more fully in the next section of this preamble, we do not 
believe that warnings would adequately reduce the injuries associated 
with this product.

3. Warnings

    It is unlikely that additional or different warnings on the 
packages of magnet sets would significantly reduce the ingestion-
related injuries caused by high-powered magnets. Safety and warnings 
literature consistently identifies warnings as a less effective hazard-
control measure than designing out the hazard or guarding the consumer 
from a hazard. Warnings do not prevent consumer exposure to the hazard, 
but rely on persuading consumers to alter their behavior in some way to 
avoid the hazard. With this product, warnings are particularly unlikely 
to adequately reduce or eliminate the ingestion of these magnets.
    Warnings are especially unlikely to be effective among children 
because children may lack the cognitive ability to appraise a hazard or 
appreciate the consequences of their own actions and may not understand 
how to avoid hazards effectively. In addition, warning design 
guidelines and literature commonly recommend that the text of warnings 
intended for the general public be written at no higher than the 6th 
grade reading level, which is equivalent to a child about 11 years old. 
A warning that met this guideline presumably would not be understood by 
many children younger than 11.
    Older children, more advanced cognitively, are able to appreciate 
better the hazards described in a warning. However, these children 
value peer acceptance more than parental guidelines, and social 
influences and peer pressure can drive adolescent behavior more 
strongly than their own independent thought processes. Furthermore, 
adolescents are at a developmental stage in which they test limits and 
bend rules. Therefore, warnings about keeping the product away from 
children could have the unintended effect of making the product more 
appealing to some children. Older children might view such warnings as 
attempts to restrict personal freedom or self-expression, which could 
result in responses that are contrary to the warning's recommendations. 
For example, warnings about not using the product in the specific ways 
that might place them at risk, such as mimicking piercings, might have 
the unintended effect of encouraging this behavior among these 
children. Repeated use of the product in this way, without ingesting 
the magnets, most likely will convince these children that the hazard 
is not especially likely or is not relevant to them.

[[Page 53789]]

    The ingestion warnings that currently accompany these products 
appear to be aimed at adults, primarily parents and other caregivers. 
Staff generally found the content of these warnings to be lacking in 
the following ways. The warnings often refer to children swallowing the 
magnets, without describing the incident scenarios that might lead to 
ingestion among older children and adolescents, whom caregivers may not 
believe are likely to put magnets into their mouths. Some warnings 
refer to the potential for swallowed magnets to stick to intestines, 
without referring to other magnets or ferromagnetic objects. Other 
warnings refer to magnets sticking together or attaching to other 
metallic objects inside the body, but they fail to explain that the 
magnets can attract through the walls of the intestines and forcefully 
compress these tissues. Without detailed information such as this, 
consumers may not understand how swallowing magnets differs from 
swallowing other small parts, or how magnets sticking together could 
pose a hazard rather than simply pass through the child's system. In 
sum, without a clear, explicit, and accurate description of the nature 
of the hazard and its consequences, consumers may have difficulty 
developing an accurate mental model of the hazard scenario and might 
find the warning implausible. In such situations, consumers are 
unlikely to comply with the action recommended in the warning.
    Even if warnings could communicate the ingestion hazard, its 
consequences, and appropriate hazard-avoidance measures in a way that 
would be understood by most parents and other caregivers, the resulting 
warnings may not be effective at substantially reducing the incidence 
of magnet ingestions if consumers do not concur with what the warning 
states. Avoiding the ingestion hazard requires consumers to keep the 
product away from all children, or at least children in the incident 
age group, which is 15 years old and younger. Caregivers who read and 
understand the warnings may attempt to keep this product out of the 
hands of young children, but are not likely to be so diligent about 
heeding the warning with older children and adolescents. Unless 
caregivers are convinced that their child is likely to mimic lip, nose, 
or similar piercings or to perform other activities that might lead 
them to place magnets into their mouth or nose, caregivers may doubt 
that the warnings are relevant to their child, despite the warnings' 
assertions to the contrary.
    Even if caregivers believe the warnings, several factors may 
prevent compliance. Some children, especially those who are older, may 
have peers who already own and use magnets from magnet sets. Some 
personally may have used the product before. Knowing this, caregivers 
might feel significant social pressure from the child, other family 
members and friends, to purchase the product for their children, or 
allow their children to use the product, especially if magnet sets are 
very popular among the child's peers. Caregivers who own the product 
and attempt to heed the warnings might find it quite difficult to 
prevent their child's access to the magnets and still keep the product 
reasonably accessible for their own use.
    Moreover, securing the product from a child after every use 
requires time and effort, and warnings research has shown that even 
small increases in time and effort can prevent compliance with 
warnings. If the caregiver cannot secure the product properly--without 
dismantling the shapes and forms created during use--and the caregiver 
has created especially challenging or interesting designs with the 
magnets, the caregiver might feel compelled to keep the forms intact 
and, as a result, fail to secure the product properly. In addition, the 
difficulty of attempting to identify an appropriate location to store 
the magnet sets may dissuade consumers from doing so, particularly for 
a product often marketed to be for ``stress relief.'' Attempts to 
secure the product also may fail because the caregiver underestimates 
the abilities of their child and places the product in locations that 
seem secure but are still accessible to the child. Teens may have 
cognitive and motor skills similar to an adult's, making it extremely 
challenging to keep the magnet sets out of their hands. Furthermore, if 
caregivers know that their children have friends who own and use magnet 
sets, caregivers are likely to conclude that securing their magnet set 
will not prevent exposure to other identical or similar products. This 
may lead caregivers to reject the warning message.
    Based on these concerns about the likely effectiveness of warnings 
for magnet sets, we do not believe that warning labels would adequately 
reduce the risk of injury presented by these products. We are 
interested in receiving comments on the warnings issues.

4. Packaging Restrictions

    Theoretically, magnet sets could be sold with special storage 
containers to reduce the likelihood that children would access the 
magnets. Possible storage might include: a container that would clearly 
indicate when a magnet is missing from the set, or a package that is 
child resistant. Aside from the evident challenges in developing such 
containers, their effectiveness at reducing ingestions is doubtful. 
Such approaches would depend on consumers securing the packaging after 
each use. As discussed above, consumers may be reluctant to place the 
product back in its packaging after they have created designs with the 
magnets.

5. Restrictions on Sales of Magnet Sets

    Another possible alternative to address the hazard of children 
ingesting magnets from magnet sets might be to limit the places where 
magnet sets are sold, keeping them away from toy stores, children's 
sections of stores, and other such locations. It is not clear that the 
Commission would have the regulatory authority to impose such sales 
restrictions by rule. In any event, such restrictions are unlikely to 
reduce ingestions significantly. As discussed in section B.2 of this 
preamble, children access these magnets from sources other than stores. 
The magnet sets may be available in the home after a caregiver has 
purchased them. Such sales restrictions are unlikely to deter teens. 
Moreover, restrictions on in-store sale of magnet sets would not affect 
Internet sales.

6. No Action

    Another option is for the Commission to take no regulatory action 
to address the risk of injury posed by magnet sets. It is possible 
that, over time, increased awareness of the hazard could result in some 
reduction in ingestions. The magnitude of any such reduction in 
incidents is uncertain, but would likely be smaller than if the 
Commission issues the proposed rule.

H. Preliminary Regulatory Analysis

    The Commission is proposing to issue a rule under sections 7 and 9 
of the CPSA. The CPSA requires that the Commission prepare a 
preliminary regulatory analysis and that it be published with the text 
of the proposed rule. 15 U.S.C. 2058(c). The following discussion is 
extracted from staff's memo, ``Preliminary Regulatory Analysis of a 
Proposed Rule that Would Prohibit Certain Small Powerful Magnet Sets.''

1. Introduction

    The Commission has preliminarily determined to issue a rule 
prohibiting magnet sets that have been involved in incidents resulting 
in serious injuries to children who have ingested magnets that are part 
of these magnet sets. Some of these incidents have required surgery to 
remove individual magnets ingested

[[Page 53790]]

by children. Reported incidents of magnet ingestion involved young 
children who put the magnets in their mouth and adolescents and teens 
who paired magnets to mimic tongue or lip piercings. This behavior has 
led to the powerful magnets being swallowed, resulting sometimes in 
severe medical consequences, including significant damage to the 
gastrointestinal tract.
    The proposed rule would prohibit magnet sets that do not meet the 
requirements of the proposed rule. Thus, for magnet sets that contain 
more than one magnet, if any of the magnets would fit within the small 
parts cylinder, the magnet set would be prohibited, unless the small 
magnets meet the specified flux index limit. This performance standard 
for magnet sets would effectively ban current designs of magnetic desk 
sets of the type that have become popular in recent years.

2. Description of the Product and Market

    Magnetic desk sets that would be affected by the scope of the 
proposed rule are comprised of small powerful magnetic balls, cubes, 
and/or cylinders that can be arranged in many different geometric 
shapes. These magnet sets were introduced in 2008, but the first year 
with significant sales to U.S. consumers was 2009.\5\ Most have been 
sold in sets of either 125 balls or sets of 216 to 224 balls, although 
some firms have sold just a few balls as extras, and others have sold 
large sets of more than 1,000 magnetic balls. Based on product 
information provided by marketers, the most common magnet size is 
approximately 5 mm in diameter; although balls as small as about 3 mm 
have been sold, as have sets of larger magnet balls (perhaps 15 mm to 
25 mm in diameter).\6\ In addition to magnetic ball sets, desk sets of 
small magnetic cubes have also been sold, although they have comprised 
a relatively small share of the market. The leading marketer of such 
magnet sets has recently added small magnetic rods--intended to be used 
with balls to make geometric shapes--to its desk toy product line.
---------------------------------------------------------------------------

    \5\ However, small neodymium-iron-boron magnets previously have 
been, and continue to be, marketed by firms, such as magnet 
suppliers and distributors of educational products.
    \6\ One firm's larger magnet balls are reportedly made with 
cores of strontium ferrite 
(SrO[middot]6Fe2O3), rather than neodymium-
iron-boron.
---------------------------------------------------------------------------

    Based on information reviewed on product sales, including reports 
by firms to the Office of Compliance and Field Operations, the number 
of such magnet sets that have been sold to U.S. consumers since 2009, 
the first year of significant sales, may have totaled about 2.7 million 
sets, with a value of roughly $50 million. This value range reflects a 
combination of retail sales directly to consumers (through company Web 
sites and other Internet retail sites) and sales to retailers who 
market the products. A review of retail prices reported by importers 
and observed on Internet sites suggest prices typically ranging from 
about $20 to $45, with an average price of about $25.
    The small powerful magnets most likely to be affected by this 
proposed rule are made from alloys of neodymium, iron, and boron. The 
magnetized neodymium-iron-boron cores are coated with a variety of 
metals and other materials to make them more attractive to consumers 
and to protect the brittle magnetic alloy materials from breaking, 
chipping, and corroding. Nearly 100 percent of neodymium and other rare 
earth metals now are mined in China, which also reportedly holds a 
nearly worldwide monopoly on the production of neodymium-iron-boron 
magnets. Based on available information, all of the small magnets used 
in magnet sets, as well as most of the finished and packaged products 
that would be subject to CPSC regulation, are produced by manufacturers 
located in China.\7\
---------------------------------------------------------------------------

    \7\ One importer reported that some of the magnet sets it sells 
and ships to U.S. consumers are made from bulk magnets received from 
its supplier in China that it repackages in its U.S. office.
---------------------------------------------------------------------------

    As noted above, none of the magnetic sets within the scope of the 
proposed rule are produced domestically. All of the firms that have 
marketed the products are believed to import them packaged and labeled 
for sale to U.S. consumers. Several Chinese manufacturers have the 
facilities and production capacity to meet the orders of U.S. 
importers; and there are no major barriers to market entry for firms 
wishing to source products from China for sale in the United States. 
For example, some of the firms with smaller sales volumes reported to 
Compliance staff that they mainly marketed products (sourced from 
manufacturers in China) through sales arrangements with a leading 
Internet retailer, which held stock for them and processed orders. A 
review of the product listings of the Internet retailer found that 
several other firms have similar business models. Other U.S. firms and 
individuals sell magnetic sets they have imported from China through 
``stores'' they maintain on another major Internet shopping site.
    To date, the Directorate for Economic Analysis has identified about 
25 U.S. firms and individuals who have recently imported magnetic desk 
sets for sale in the United States. The combined sales of the top seven 
firms have probably accounted for the great majority (perhaps over 98%) 
of units sold. Due to resource constraints, the compliance division 
targeted 13 firms for corrective action. Eleven agreed to stop sale 
pending negotiations for a corrective action plan, two are now the 
subject of administrative cases recently initiated by the Commission. 
One firm is believed to have held a dominant position in the market for 
magnetic desk sets since it entered the market in 2009. That firm, and 
a few of the larger firms (including a firm based in Canada with a 
branch office in the United States), have marketed the products through 
accounts with retailers, in addition to selling directly to consumers 
on the Internet, using their own Web sites or other Internet shopping 
sites. In addition to products offered for sale by U.S. importers, 
consumers also have the ability to purchase magnetic sets directly from 
sources in Hong Kong or China, many of which market products through 
``stores'' on a leading Internet shopping site.\8\
---------------------------------------------------------------------------

    \8\ More than 40 such stores shipping magnetic desk toys 
directly from Hong Kong or China were identified in a brief review 
of product offerings on the Internet site.
---------------------------------------------------------------------------

3. Evaluation of the Proposed Rule

Societal Costs and the Potential Benefits of a Rule Prohibiting Certain 
Magnetic Desk Sets
Estimated Societal Costs of Injuries
    The purpose of the proposed rule is to prevent serious intestinal 
injuries that can result when children ingest two or more of the 
magnets in the subject magnet sets (or one magnet and another 
ferromagnetic object) (Inkster, 2012). The draft proposed rule would 
prohibit magnet sets that do not meet specified performance 
requirements. Therefore, benefits of the proposed rule would be the 
resulting reduction in injuries. Based on a review of magnet ingestion 
incidents reported through CPSC databases that include the Injury or 
Potential Injury Incident database (IPII) and the In-depth 
Investigation database (INDP), CPSC staff is aware of 38 confirmed 
incidents involving ingestion of one or more powerful magnets from a 
subject magnetic desk set since the product was introduced in 2008 
(Garland, 2012). An additional five incidents possibly involved magnets 
from such magnet sets. No fatalities involving the products are known 
to the CPSC.
    Our analysis of the potential benefits of the proposed rule focuses 
on injuries

[[Page 53791]]

reported through the National Electronic Injury Surveillance System 
(NEISS), a probability sample of U.S. hospital emergency departments 
that can be used to provide national estimates of product-related 
injuries initially treated in U.S. hospital emergency departments. 
Based on a review of incident narratives coded from emergency 
department medical records for magnet ingestion cases obtained from 
NEISS hospitals, the Directorate for Epidemiology staff has identified 
72 magnet ingestions from 2009 through 2011, which were determined to 
involve, or possibly involve, the magnets of interest. Although 
manufacturer or brand name information is rarely available in the 
medical records extracted for NEISS, three of the 72 NEISS-reported 
cases (4.2%) did mention a brand name of magnet sets that are the 
magnets of interest; 69 cases (95.8%) were determined to have possibly 
involved the magnets of interest because the case narratives included 
terms such as ``high powered,'' ``magnetic ball,'' ``magnetic marble,'' 
``BB size magnet,'' or ``magnetic beads'' (Garland, 2012).
    Based on the 72 NEISS-reported magnet cases, there were an 
estimated 1,716 injuries treated in U.S. hospital emergency departments 
during the 2009 through 2011 study period. Roughly 6 percent were 
hospitalized injuries, as opposed to being treated and released. The 
benefits of the proposed rule can be estimated as the reduction in the 
societal costs associated with the injuries that would be prevented by 
the proposed rule. The Directorate for Economic Analysis bases 
estimates of the societal costs of emergency department-treated magnet 
injuries on the CPSC's Injury Cost Model (ICM) (Miller et al., 2000). 
The ICM is fully integrated with NEISS, and it estimates the societal 
costs of injuries reported through NEISS. Additionally, based on 
empirical relationships between the number of medically attended 
injuries treated in emergency departments and the number of injuries 
treated in other settings, the ICM also estimates the number and 
societal costs of medically attended injuries treated outside of 
emergency departments, such as in doctors' offices and clinics. The 
estimates of societal costs provided by the ICM depend upon (and vary 
by) the injury diagnosis, the body part affected, the injury 
disposition (i.e., treated in a doctor's office, treated and released 
from a hospital emergency department, or hospitalized), and the age and 
sex of the victim.
    Table 1 provides annual estimates of the injuries and the societal 
costs associated with ``high-powered and/or ball-shaped magnet 
ingestions'' that involve, or possibly involve, the magnets that are 
the subject of the proposed rule. As shown in the table, the 2009 
through 2011 NEISS estimates suggest an estimated annual average of 
about 572 emergency department-treated injuries, including 537 injuries 
that were treated and released and 35 injuries that were hospitalized. 
About 70 percent of these emergency department-treated ingestions 
involved children ages 4 through 12 years. Just over half of the magnet 
cases from the emergency departments of the hospitals that comprise the 
NEISS sample appear to have involved the ingestion of more than one 
magnet.\9\ Additionally, based on estimates from the ICM, there were 
another 870 injuries treated annually outside of hospital emergency 
departments.
---------------------------------------------------------------------------

    \9\ In contrast to the available evidence on the number of 
magnets ingested from the NEISS estimates, 37 of 40 non-NEISS 
incidents reported to the CPSC involved the ingestion of more than 
one magnet (see Garland, Table 10). The difference may be related to 
the number of cases upon which the NEISS estimate was based, which 
may have been too small to provide reliable estimates. 
Alternatively, it is possible that the non-NEISS injury reports to 
the CPSC tended to involve the more serious cases with multiple 
magnets.
---------------------------------------------------------------------------

    After including the injuries treated outside of hospital emergency 
departments, there was an annual average of about 1,442 medically 
attended injuries involving ingestions of magnets that were defined as 
at least ``possibly of interest.'' These injuries resulted in annual 
societal costs of about $24.8 million (in 2011 dollars) during the 
2009-2011 time period. The average estimated societal costs per injury 
were about $13,000 for injuries treated outside of emergency 
departments and hospitals (such as in a doctor's office or clinics), 
about $17,000 for those that were treated and released from emergency 
departments, and about $112,000 for those that were admitted to 
hospitals for treatment. Medical costs and work losses (including work 
losses of caregivers) accounted for about 25 percent of these injury 
cost estimates, and the less tangible costs of injury associated with 
pain and suffering accounted for about 75 percent of the estimated 
injury costs (Miller et al., 2000).

    Table 1--Estimated Average Annual Medically Attended Injuries and
  Associated Societal Costs for High-Powered and/or Ball-Shaped Magnet
   Ingestions That Were Determined To Involve or Possibly Involve the
                     Magnets of Interest, 2009-2011
------------------------------------------------------------------------
                                                            Estimated
         Injury disposition             Estimated No.    societal  costs
                                                        ($ millions) \*\
------------------------------------------------------------------------
Treated and Released from Hospital                 537              $9.1
 Emergency Department (NEISS).......
Admitted to Hospital Through the           [dagger] 35               3.9
 Emergency Department (NEISS).......
Medically Treated Outside of                       870              11.7
 Hospital Emergency Department (ICM)
                                     -----------------------------------
    Total Medically Attended                     1,442              24.8
     Injuries.......................
------------------------------------------------------------------------
\*\ In 2011 dollars.
[dagger] According to the Directorate for Epidemiology, the estimated
  number of hospital-admitted emergency department-treated injuries is a
  not a reliable estimate because of the small number of cases upon
  which the estimate was based.

    It should be noted that there is uncertainty concerning these 
estimates. Some of the cases described as ``possibly'' involving the 
magnet injuries that were included in Table 1 may not have involved the 
magnets that are the subject of the NPR. As noted above, about 95.8 
percent of the cases upon which the table was based were described as 
only possibly involving the magnets of interest because NEISS 
narratives are not required to list manufacturer or brand name. Hence, 
it is possible that Table 1 overstates the societal costs associated 
with the magnets that would be included in the proposed rule.

[[Page 53792]]

    On the other hand, in addition to the magnet cases upon which the 
table was based, there were also 175 NEISS cases (representing about 
1,440 emergency department-treated injuries annually) in which the 
magnet type was unknown. These cases included those in which the case 
narrative mentioned that a magnet was involved, but presented 
insufficient information to classify the magnet type. Consequently, to 
the extent that the unknown magnet types involved those that would be 
covered by the proposed rule, the Table 1 results would tend to 
understate the societal costs associated with the magnets subject to 
the proposed rule.
Estimated Benefits of the Proposed Rule
    As noted above, the benefits of a proposed magnet rule would be the 
reduction in the societal costs of the injuries that would be 
prevented. In general, because the proposed rule would effectively ban 
certain types of magnet sets, all ingestion injuries that would have 
involved magnets that, in the absence of the proposed rule, would have 
been sold after the effective date of the proposed rule, will be 
prevented. However, if children, adolescents, and teens cannot play 
with or use the prohibited magnets, they could play with or use 
substitute products that may also result in injury. Hence, the overall 
benefits of the proposed rule should be measured as the net reduction 
in injuries, and the concomitant reduction in societal costs, that 
would result.
    These issues make it difficult to estimate with much certainty the 
prospective benefits of a proposed rule. However, if we assume that the 
injuries presented in Table 1 provide a generally accurate estimate of 
the annual injuries that would be prevented by the proposed rule, and 
that the risk associated with the use of substitute products is small, 
the expected benefits might amount to roughly $25 million annually.
Potential Costs of a Rule Prohibiting Certain Magnetic Desk Sets
    The profits of firms represent a measure of the benefits to 
businesses that result from the production and sale of products. 
Similarly, the use value or ``utility'' that consumers receive from 
products represent the benefits of product use by the consuming public. 
Consequently, the costs of a proposed rule that effectively bans 
certain magnetic sets would consist of: (1) the lost profits of firms 
that would be barred from producing and selling the product in the 
future, and (2) the lost use value experienced by consumers who would 
no longer be able to purchase the prohibited magnets at any price.
Market Wide Profits
    First consider ``profits,'' which would be defined as the total 
revenue (TR) received by firms resulting from the sale of the subject 
magnets, less the total costs (TC) needed to produce, distribute, and 
market them. We do not have firsthand knowledge of the profits of firms 
marketing the magnetic desk sets, but we do have information that may 
help us provide an upper limit.
    Based on the available information described earlier, sales of the 
magnetic desk sets may have averaged roughly 1 million annually during 
the 2009-2011 study period, with an average retail price of about $25 
per set. Thus, total industry revenues may have averaged about $25 
million annually (i.e., 1 million sets x $25 per set). Additional 
information provided by firms to the Office of Compliance and Field 
Operations suggests that the average import cost of the magnets to U.S. 
importers may have amounted to about $10 per set, or an annual average 
of about $10 million (i.e., 1 million sets x $10 import cost per set). 
Thus, total revenues, less import costs, might have averaged about $15 
million annually (i.e., $25 million-$10 million). While the share of 
profits from this $15 million in net revenues is unknown, it seems 
unlikely that profits would amount to more than about half, or about 
$7.5 million annually. Thus, the costs of a proposed rule in terms of 
reduced profits might amount to as much as $7.5 million on an annual 
basis.\10\
---------------------------------------------------------------------------

    \10\ While most of these potential profits would accrue to 
importers, who also sell the magnetic desk toys directly to 
consumers, some portion would accrue to other retailers.
---------------------------------------------------------------------------

Lost Utility to Consumers
    We cannot estimate in any precise way the use value that consumers 
receive from these products, but we can describe it conceptually. In 
general, use value includes the amount of: (1) Consumer expenditures 
for the product, plus (2) what is called ``consumer surplus.'' In the 
case of the magnetic desk sets, given sales of about 1 million sets 
annually, and an average retail price of about $25 per set, consumer 
expenditures would amount to about $25 million annually. This $25 
million represents the minimum value that consumers would expect to get 
from these products. It is represented by the area of the rectangle 
CPBQ in the standard supply and demand graph below, where P equals $25, 
and Q equals 1 million units.

[[Page 53793]]

[GRAPHIC] [TIFF OMITTED] TP04SE12.001

    The consumer surplus is given by the area of the triangle PAB under 
the graph's demand function, and represents the difference between the 
market clearing price and the maximum amount consumers would have been 
willing to pay for the product. This consumer surplus will vary for 
individual consumers, but it represents a benefit to consumers over and 
above what they had to pay. For example, while tickets to a concert or 
football game might sell for $100 each, some consumers who buy them for 
$100 would have been willing to pay $150 per ticket. In other words, 
they paid $100 and received benefits that they value at $150. Hence, 
each of these consumers would receive a consumer surplus of $50.\11\
---------------------------------------------------------------------------

    \11\ If the above graph represents the market for tickets, the 
demand curve (AD) describes the quantity of tickets demanded at each 
price (i.e., the quantity of tickets consumers are willing and able 
to purchase at each price). In this example, the $150 the consumer 
would have been willing to pay for the ticket is represented on the 
demand curve at a point to the left of point B. The consumer surplus 
is given by the relevant point on the demand curve (i.e., where 
price = $150), minus the market clearing price of $100.
---------------------------------------------------------------------------

    In general, the use value for the magnetic desk sets obtained by 
consumers is represented by the area of the trapezoid CABQ. However, 
the prospective loss in use value associated with the proposed rule 
prohibiting certain magnetic desk sets would amount to, at most, the 
area of the triangle representing the consumer surplus. This is because 
consumers would no longer be able to obtain utility from the prohibited 
product, but they would, nevertheless, still have the $25 million 
(represented by the rectangle CPBQ) that they would have spent on 
magnetic sets in the absence of a ban. While they can no longer 
purchase magnetic desk sets, which would have been their first choice, 
they can use this money to buy other products providing use value.
    We have no information regarding aggregate consumer surplus, and 
hence, the amount of utility that would be lost from a ban of magnetic 
sets. While the magnetic desk sets clearly provide ``utility'' to 
purchasers, they are not necessities. Consequently, the demand for 
magnetic desk sets is probably not price inelastic, a factor that would 
tend to reduce estimates of utility losses.\12\ Additionally, if the 
magnetic sets are ``faddish,'' they may not be the type of product that 
will be used intensively by consumers over long periods of time. 
However, if, for example, consumers who purchased the magnetic sets at 
an average price of $25 would have been willing to spend, on average, 
$35 per set, the lost utility from the desk sets might amount to about 
$10 million on an annual basis (i.e., [$35-$25] x 1 million units 
annually).
---------------------------------------------------------------------------

    \12\ To say that the demand for a product is ``price inelastic'' 
means that the quantity demanded tends to be insensitive to changes 
in the price of the product. Gasoline is an example of a product 
with an inelastic demand, meaning consumers are not likely to reduce 
substantially their purchase of gasoline (at least in the short run) 
even if the price increases substantially.
---------------------------------------------------------------------------

    Finally, it should be noted that the loss in consumer surplus just 
described represents the maximum loss of consumer utility from the 
proposed rule; the actual loss is likely to be lower. This is because 
consumers are likely to gain some amount of consumer surplus from 
products that are purchased in the place of magnetic desk sets. If, for 
example, there were close substitutes for magnetic desk sets (i.e., 
desk sets that are almost as satisfying and similarly priced), the 
overall loss in consumer surplus (and hence, the costs of the proposed 
rule) would probably tend to be small. On the other hand, if there are 
no close substitutes, the costs of the proposed rule would tend to be 
higher. Nevertheless, the proposed rule will result in some level of 
lost utility. By purchasing magnetic desk sets rather than other 
products, consumers are revealing that they have a preference for the 
magnetic desk sets that are likely to provide more utility than a 
substitute purchase.
Sensitivity of Results to Product Life Assumptions
    Implicit in this analysis has been the assumption that the expected 
useful life of the magnetic desk sets is about 1 year. Because this 
product has only been in widespread consumer use since 2009, this 
assumption is made without extensive knowledge about the actual use of 
the magnetic sets by consumers. Magnetic desk sets are relatively 
durable products, purchased at an average price of about $25. However, 
many consumers may find them to be novelties that soon lose much of 
their appeal. Thus, even if some of the products remain in homes or 
offices longer than a year, the risk of ingestion by children may be 
much higher in the first month or two after they are purchased. On the 
other hand, the magnets may be put away in a place accessible by 
children at some later date. Although it is somewhat speculative, it 
seems reasonable to assume that the effective useful product life of 
magnetic desk sets is, on average, no more than about a year.

[[Page 53794]]

    However, it should also be noted that the results of our analysis 
are not particularly sensitive to this product life assumption. For 
example, had we assumed that the average product life was about 2 
years, rather than 1 year, estimates of the number of sets in use at 
any given time would approximately double, reducing the estimated 
annual risk of injury, per magnetic desk set in use (and hence, reduce 
estimated societal costs per set) by about half. However, this reduced 
estimate of annual societal costs would itself be offset by the fact 
that the sets remain in use for 2 years, rather than 1 year. Thus, 
annual benefits would be halved, but benefits would be accrued over a 
2-year period rather than 1 year. Consequently, even if we had doubled 
the assumed product life, the relationship between benefits and costs 
would have remained about the same.
Alternatives to the Proposed Rule
    There are several possible alternatives that the Commission might 
consider instead of a proposed rule prohibiting certain magnetic desk 
sets.
Alternative Performance Requirements
    As an alternative to the proposed rule, the Commission could 
consider promulgating an alternative set of requirements that could 
reduce the risk of injury from magnetic desk sets. Performance 
requirements might allow a different flux index for the magnets sold as 
manipulative desk sets; different specifications regarding shapes and 
sizes of magnets within the scope of the standard; or some other 
criteria that have not yet been developed (but not as stringent as in 
the proposed rule). The advantage of such an approach is that it could 
reduce the potentially unreasonable risk of injury associated with 
magnetic desk sets and at the same time allow adults to continue to use 
the product. One practical question, however, is whether such a 
standard would eliminate or substantially affect the physical qualities 
of the products that make them enjoyable for adults. Additionally, the 
expected injury reduction would depend upon the parameters of the 
performance requirements that are established.
Safer Packaging
    A possible alternative might be for magnetic desk sets to be sold 
with special storage containers that are fitted to the product so that 
consumers would be able to determine whether any of the magnets were 
missing from the sets. Such an approach might prevent injuries 
resulting from a small number of magnets being separated from a set 
without the owner knowing. In reality, though, many consumers may not 
use such containers because it could require time to form the magnets 
into a shape (e.g., a cube) to make them fit in the containers; or they 
might want to keep the magnets out of their container in a shape or 
structure that took time and effort to construct.
    Alternatively (or in combination), the magnets could be sold in 
child-resistant packaging. Such an approach has the potential to reduce 
ingestion injuries, but it may result in several practical problems. 
Child-resistant packaging would not prevent teens and adolescents (and 
even some younger children) from opening the packaging. Additionally, 
the child-resistant packaging would have to be secured after each use. 
According to the Division of Human Factors, it is unlikely that adults 
would accept child-resistant packaging for a product like the magnetic 
desk sets because of the level of inconvenience it would involve 
(Sedney & Smith, 2012). Also, for the reasons described above, 
consumers may leave magnets outside of their container.
Warnings
    The Commission could require strong warnings on labels and on 
product instructions designed to prevent the use of the magnetic desk 
sets by children. The Division of Human Factors, Directorate for 
Engineering Sciences (HF) memorandum contains an extensive discussion 
concerning warnings and their potential effectiveness (Sedney & Smith, 
2012). Based on HF staff's examination, the ingestion warnings that 
currently accompany magnetic desk sets are generally aimed at adults, 
but appear to be deficient in terms of their content. For example, some 
warn against children swallowing the magnets without describing the 
incident scenarios. Some warnings refer to the propensity for swallowed 
magnets to stick to intestines without referring to the presence of 
other magnets or metal objects. Others warnings did refer to magnets 
sticking together or attaching to other metallic objects inside the 
body, but without explaining that the magnets can attract through the 
walls of the intestines and forcefully compress these tissues, 
resulting in serious injuries. According to CPSC staff, without 
detailed information in the warnings, consumers may not really 
understand how swallowing magnets differs from swallowing other small 
parts or how magnets sticking together could pose a hazard.
    CPSC staff believes that it may be possible to develop warnings 
that could adequately communicate the ingestion hazard, the 
consequences of ingestion, and how to avoid the hazard. To the extent 
that the subject magnets present a ``hidden'' hazard about which 
consumers are unaware, explicit and adequate warnings could reduce 
ingestions and allow adults to continue to enjoy the use of the 
product. However, the effectiveness of such warnings is unknown, and 
CPSC staff doubts that even well-written warnings would substantially 
reduce the incidence of magnet ingestions. Some caregivers who read and 
understand the message may attempt to keep the magnets out of the hands 
of young children, but staff doubts many caregivers would attempt to 
keep the product away from older children and adolescents. 
Additionally, staff is doubtful that children old enough to understand 
the warnings would abide by them.
Restrictions on the Sale of Magnetic Desk Sets
    Another option for the Commission to consider might be to prohibit 
sales of magnetic desk sets in toy stores, children's sections of 
general purpose stores, and near cash registers of stores that sell any 
children's products. Sales limitations or requirements for strong 
warnings might also be required on Web sites advertising the sale of 
magnets on the Internet.
    The details for developing a set of sales limitations and 
requirements would need to be worked out, but the idea would be to make 
sure that magnetic desk sets, to the extent possible, are not sold at 
locations where children are likely to be present. Sales requirements 
might also be combined with strong and explicit warnings could be 
developed although the staff has expressed serious concern as to 
whether such warnings can ever overcome the attractiveness of the 
magnets and their intrinsic play value.
    Such sales limitations, in combination with adequate and explicit 
warnings, may increase consumer awareness of the hazard, and possibly 
reduce the number of ingestions. Some parents would still allow their 
children (especially older children and adolescents) to play with the 
magnetic desk sets despite the warnings. Also, some young children will 
get into the packaging, even if parents try to restrict the use of the 
desk sets. Nevertheless, combining sales limitations with explicit 
warnings might educate parents about the hidden nature of the hazard, 
while at the same time allow adults to continue to use a

[[Page 53795]]

product that they apparently enjoy. We are interested in receiving 
comments that would address this issue.
Address Through Corrective Actions Rather Than Regulatory Action
    Alternatively, the Commission could continue to address the hazard 
by means of Corrective Action Plans. While staff believes this approach 
may be deficient, such a strategy might be combined with other actions 
described above to achieve some reductions in the hazard.
Summary
    Based on reports to the CPSC, ingestions of small magnets contained 
in magnetic desk sets have caused multiple, high severity injuries that 
require surgery to remove the magnets and repair internal damage. 
However, because of the lack of definitive information on the number of 
injuries involving magnetic desk sets that would be prevented by a 
proposed rule, there is uncertainty concerning the benefits that would 
result. If we assume that the NEISS cases identified by the Directorate 
for Epidemiology staff as involving high-powered and/or ball-shaped 
magnet ingestions actually involved the magnets that would be 
prohibited, then the estimated benefits of the rule might amount to 
about $25 million annually.
    The costs of the proposed rule, in terms of reduced profits for 
firms and lost utility by consumers, are also uncertain. However, based 
on annual estimates available for the 2009-2011 study period, these 
costs could amount to about $7.5 million in lost profits and some 
unknown quantity of lost utility.
    There are alternative regulatory actions that the Commission could 
consider that might allow the magnetic desk sets to continue to be 
marketed. For example, the Commission, by regulation, could issue 
alternative performance requirements or require warnings that 
explicitly describe the hazard and how to avoid it. Other options might 
be to develop requirements for the packaging of the magnetic desk sets 
(e.g., develop requirements for child-resistant packaging); and/or 
place limitations on how and where the magnetic desk sets can be sold. 
These alternative actions--which might be considered alone, or in 
combination--would have varying levels of effectiveness.

I. Paperwork Reduction Act

    The proposed rule would not require manufacturers (including 
importers) to perform testing or require manufacturers or retailers to 
keep records. For this reason, the proposed rule does not contain 
``collection of information requirements'' as that term is used in the 
Paperwork Reduction Act, 44 U.S.C. 3501-3520. Therefore, the proposed 
rule need not be submitted to the Office of Management and Budget (OMB) 
in accordance with 44 U.S.C. 3507(d) and implementing regulations 
codified at 5 CFR 1320.11.

J. Initial Regulatory Flexibility Analysis

1. Introduction

    The Regulatory Flexibility Act (RFA) generally requires that 
agencies review proposed rules for their potential economic impact on 
small entities, including small businesses. Section 603 of the RFA 
calls for agencies to prepare and make available for public comment an 
initial regulatory flexibility analysis describing the impact of the 
proposed rule on small entities and identifying impact-reducing 
alternatives. The initial regulatory flexibility analysis is to 
contain:
    (1) A description of the reasons why the action is being 
considered;
    (2) A succinct statement of the objectives of, and legal basis for, 
the proposed rule;
    (3) A description of and, where feasible, an estimate of the number 
of small entities to which the proposed rule will apply;
    (4) A description of the projected reporting, recordkeeping, and 
other compliance requirements of the proposed rule, including an 
estimate of the classes of small entities that will be subject to the 
requirement and the types of professional skills necessary for the 
preparation of the report or record; and
    (5) An identification, to the extent possible, of all relevant 
federal rules that may duplicate, overlap, or conflict with the 
proposed rule.

Accordingly, staff prepared an initial regulatory flexibility analysis, 
which is summarized below.

2. Description of the Proposed Rule and Reasons for Considering It

    As discussed previously, the proposed rule would prohibit magnet 
sets that do not meet the specified requirements described in section F 
of this preamble. Some of the incidents that have come to the attention 
of the Commission involving ingestions of magnets from desk sets have 
resulted in severe medical consequences, including significant damage 
to the stomach or intestines. Based on a review of emergency 
department-treated magnet ingestions obtained through the NEISS, the 
Directorate for Epidemiology staff has identified 72 magnet ingestions 
from 2009 through 2011, which were determined to involve, or possibly 
involve, the magnets of interest. Based on these injuries, staff 
estimates that there has been an annual average of about 572 emergency 
department-treated injuries involving the products, including 537 
injuries that were treated and released and 35 injuries that were 
hospitalized.\13\ Additionally, based on estimates from the CPSC's 
Injury Cost Model (ICM), which is integrated with NEISS, there were 870 
other injuries treated annually outside of hospital emergency 
departments, such as in doctors' offices and clinics. The estimated 
total of 1,442 medically attended injuries involving magnet ingestions, 
which were defined as at least ``possibly of interest,'' resulted in 
average annual societal costs of nearly $25 million during 2009 through 
2011, based on estimates provided by the ICM.
---------------------------------------------------------------------------

    \13\ Average annual estimates are from the Injury Cost Model 
evaluation of 72 emergency department-treated injuries during 2009-
2011 determined to have involved, or possibly having involved, 
magnets of interest (Garland, 2012).
---------------------------------------------------------------------------

3. Products Within the Scope of the Proposed Rule

    This proposed rule would cover magnet sets that are comprised of 
sets of small powerful magnetic balls, cubes, and/or cylinders that can 
be arranged in many different geometric shapes. The products have been 
described as desk toys, games, puzzles, and stress relievers. The small 
powerful magnets most likely to be affected by the proposed rule are 
made from alloys of neodymium, iron, and boron. We are interested in 
receiving comments that would address this issue both as to the type of 
products that should be covered and the composition of the magnets. 
More information concerning the product and the market is provided in 
section B of the preamble.

4. Small Businesses Subject to the Proposed Rule and Possible Economic 
Impacts

    The proposed rule would impact U.S. importers and retailers of 
manipulative desk sets that are comprised of small powerful magnets of 
the size and magnetic force proscribed by the proposed rule. None of 
the magnetic desk sets within the scope of the proposed rule are 
produced domestically. All of the firms that have marketed the products 
are believed to import them from manufacturers in China, packaged and 
labeled for sale to U.S. consumers. The Directorate for Economic 
Analysis has indentified about 25 firms and individuals in the United 
States who have recently

[[Page 53796]]

imported the product for sale to consumers. All of the importers are 
small businesses under U.S. Small Business Administration (SBA) size 
standards (SBA, 2012).\14\
---------------------------------------------------------------------------

    \14\ The SBA size standard for ``Other Miscellaneous Nondurable 
Goods Merchant Wholesalers'' (which includes importers) is 100 
employees and the size standard for ``Non-store Retailers--
Electronic Shopping'' is $30 million in average annual receipts 
(SBA, 2012).
---------------------------------------------------------------------------

    Based on information on product sales reviewed by the Directorate 
for Economic Analysis staff, including reports by firms to the Office 
of Compliance and Field Operations (Compliance), the number of 
manipulative magnetic desk sets that have been sold by U.S. importers 
since the products were introduced in 2008 may total about 2.7 million 
sets, with a value to the firms of roughly $50 million. This value 
range reflects a combination of retail sales directly to consumers 
(through company Web sites and other Internet retail sites) and sales 
to retailers who market the products.
    Although there are about 25 U.S. importers of magnet sets that 
would fall within the scope of the rule, the economic impact of the 
rule will be most severe for the seven firms that account for the great 
majority (perhaps over 98%) of units sold. Perhaps five of these larger 
importers derive most or all of their revenues from the sale of 
magnetic desk toys falling within the scope of the rule, or related 
products, such as books and surfaces upon which magnetic designs are 
constructed. These firms would be severely affected by the proposed 
rule, which would effectively ban the magnet sets that they have been 
importing and selling. Consequently, they may go out of business. Two 
of the other leading importers of magnetic desk sets apparently have 
fairly broad product offerings, which could lessen the severity of the 
economic impact of a rule. Nevertheless, the impacts of the proposed 
rule could be considered significant for these small importers.
    Nearly all of the perhaps 18 other recent U.S. importers of 
magnetic desk sets have sold relatively few of the products. These 
importers sourced the products from manufacturers in China and have 
marketed the magnet sets through online ``stores'' maintained on 
Internet retail sites. Many of these importers are individuals who may 
also market a variety of other products through the same Internet 
outlets. For individuals and firms with these business models, the 
discontinuance of certain magnetic desk sets as a source of revenue as 
a result of the rule is less likely to cause significant economic 
hardship, unlike the firms or individuals who derive most, or all, of 
their revenue from sales of magnetic desk sets and related products.
    Although a large share of magnetic desk sets are sold directly to 
consumers by the importers using their own Internet Web sites or other 
Internet shopping sites, a rule prohibiting these products would also 
affect retailers of the products, whether selling them online or 
physically in stores. However, these retailers are not likely to derive 
significant proportions of total revenues from sales of affected desk 
sets, and the impacts on individual firms should be minimal.

5. Objectives of, and Legal Basis for, the Proposed Rule

    The purpose of the proposed rule is to reduce the risk of injury 
from ingestion of one or more small, powerful magnets that comprise the 
subject consumer products. As noted above, the estimated total of 1,442 
medically attended injuries involving magnet ingestions that were 
defined as at least ``possibly of interest'' resulted in annual 
societal costs of about $25 million during the 2009 to 2011 time 
period. These incident numbers may change over the course of the 
rulemaking because the North American Society for Pediatric 
Gastroenterology, Hepatology and Nutrition (NASPGHAN) has provided the 
Commission with some additional incident data and is currently 
surveying their members regarding any additional incident data they may 
have to share with the Commission. After receiving this data the 
Commission may conduct its own survey to collect additional data 
similar to the exposure surveys the Commission has conducted in the ATV 
rulemaking. However, it is expected that the proposed rule would 
substantially reduce the future incidence and cost to society of 
ingestions of the subject magnetic desk sets. As discussed in section D 
of this preamble, the rule is being proposed under the authority of the 
CPSA.

6. Other Federal Rules

    We are not aware of any federal rules that may duplicate, overlap, 
or conflict with the proposed rule.

7. Alternatives to the Proposed Rule

    There are possible alternatives to the proposed rule that would 
reduce the impact of a rule on small businesses. These alternatives 
would include the following:
a. Adoption of a Performance Standard With Different Provisions
    As an alternative to the proposed rule, the Commission could 
consider promulgating a different set of performance requirements to 
reduce the risk of injury from magnetic desk sets. Performance 
requirements might require a different flux index for the magnets sold 
as manipulative desk sets, different specifications regarding shapes 
and sizes of magnets within the scope of the standard, or some other 
criteria that have not been developed yet. The advantage of such an 
approach is that, theoretically, it could reduce the potentially 
unreasonable risk of injury associated with magnetic desk sets, and at 
the same time, allow adults to continue to use the product. One 
practical question, however, is whether such a standard would eliminate 
or substantially reduce the physical qualities of the products that 
make them enjoyable for adults.
b. Safer Packaging Options
    In theory, magnetic desk sets could be sold with special storage 
containers that are fitted to the product so that consumers would be 
able to determine whether any of the magnets were missing from the 
sets. Such a requirement might prevent injuries that result from a 
small number of magnets becoming separated from a set without the owner 
knowing. In reality, though, many consumers might be unlikely to use 
such containers because using a container could require consumers to 
take time to form the magnets into a shape (e.g., a cube) in order for 
the magnets to fit back into the container, or consumers might wish to 
keep the magnets in a formation that took time and effort to construct.
    Alternatively, the magnets could be sold in child-resistant 
packaging. Such an approach has the potential to reduce ingestion 
injuries, but it may suffer from several practical problems. Child-
resistant packaging would not prevent teens and adolescents (and even 
some younger children) from opening the packaging. Additionally, the 
packaging would have to be secured after each use. According to the 
Division of Human Factors, it is unlikely that adults would accept 
child-resistant packaging for a product such as the magnetic desk set 
because of the level of inconvenience it would involve.
    It is not clear that the Commission would have the authority to 
require either of these approaches through regulation.
c. Warnings/Labeling Requirements
    The Commission could require labeling on affected magnetic desk 
sets to warn consumers in lieu of a rule that prohibits the products. 
Following its evaluation of this alternative, the

[[Page 53797]]

Division of Human Factors, Directorate for Engineering Sciences, 
concluded: ``it may be possible to develop warnings that could inform 
parents and other caregivers better about the ingestion hazard, its 
consequences, and appropriate hazard-avoidance measures. Nevertheless, 
the resulting warnings may not be effective at motivating caregivers to 
comply, and therefore, they may not reduce substantially the incidence 
of magnet ingestions.''
d. Restrictions on the Sale of Magnetic Desk Sets
    Another option might be to prohibit sales of magnetic desk sets in 
toy stores, children's sections of general purpose stores, and near 
cash registers of stores that sell any children's products. Advertising 
and sales limitations or requirements for strong warnings might also be 
required at Web sites advertising the sale of magnets on the Internet.
    The details for developing a set of sales limitations and 
requirements would need to be worked out (and the legal authority to 
impose such restrictions by regulation is uncertain), but the idea 
would be to make sure that magnetic desk sets, to the extent possible, 
are not sold at locations where children are likely to be present. 
Sales requirements might also be combined with strong and explicit 
warnings of the sort that CPSC staff has suggested could be developed.
    Such sales limitations, in combination with adequate and explicit 
warnings, may increase consumer awareness of the hazard, and possibly 
reduce ingestions. Some parents would still allow their children 
(especially older children and adolescents) to play with the magnetic 
desk sets despite the warnings. Also, some young children will get into 
the packaging even if parents try to restrict the use of the products. 
Nevertheless, combining sales limitations with explicit warnings might 
educate parents about the hidden nature of the hazard, while at the 
same time allow adults to continue to use a product that apparently 
they enjoy.
e. Address Through Corrective Actions Rather Than Regulatory Action
    Alternatively, the Commission could continue to address the hazard 
by means of Corrective Action Plans. While we believe this approach may 
be deficient, such a strategy might be combined with other actions 
described above to achieve some reductions in the hazard.
 f. Taking No Action
    The Commission could take no regulatory action to reduce the risk 
of ingestion injuries associated with magnetic desk sets. Under this 
alternative, future societal losses would be determined by the numbers 
of products in use, other factors that affect the likelihood that young 
children, adolescents, and teens will ingest the magnets, and the 
awareness and response of the medical community to the hazards 
presented by ingested magnets. Theoretically, over time, increased 
awareness of the hazards by caregivers could make it more likely that 
the magnets will be kept away from young children and older children, 
and school personnel could be made more aware of the hidden dangers of 
using strong magnets to mimic tongue or lip piercings. Also, the 
medical community seems to be taking steps to become better educated 
about the risks of ingested magnets, which should lead to monitoring of 
patients' medical status more quickly, which would reduce the adverse 
medical consequences of magnet ingestions.

8. Summary

    The results of this initial regulatory flexibility analysis suggest 
that the proposed rule would likely have a significant adverse impact 
on seven of the small importers of magnetic desk sets, and perhaps five 
of these firms that derive most or all of their revenue from the sale 
of magnetic desk sets might go out of business. Some possible 
alternatives to a rule prohibiting the products have been identified. 
All of these alternatives would reduce the expected impact of the rule 
on small businesses. However, these alternatives might not achieve the 
same level of benefits as the proposed rule.

K. Environmental Considerations

    Usually, CPSC rules establishing performance requirements are 
considered to ``have little or no potential for affecting the human 
environment,'' and environmental assessments are not usually prepared 
for these rules (see 16 CFR 1021.5(c)(1)). This proposed rule falls 
within the categorical exemption.

L. Executive Order 12988 (Preemption)

    As required by Executive Order 12988 (February 5, 1996), the CPSC 
states the preemptive effect of the proposed rule as follows:
    The regulation for hazardous magnet sets is proposed under 
authority of the CPSA. 15 U.S.C. 2051-2089). Section 26 of the CPSA 
provides that ``whenever a consumer product safety standard under this 
Act is in effect and applies to a risk of injury associated with a 
consumer product, no State or political subdivision of a State shall 
have any authority either to establish or to continue in effect any 
provision of a safety standard or regulation which prescribes any 
requirements as the performance, composition, contents, design, finish, 
construction, packaging or labeling of such product which are designed 
to deal with the same risk of injury associated with such consumer 
product, unless such requirements are identical to the requirements of 
the Federal Standard''. 15 U.S.C. 2075(a). Upon application to the 
Commission, a state or local standard may be excepted from this 
preemptive effect if the state or local standard: (1) provides a higher 
degree of protection from the risk of injury or illness than the CPSA 
standard, and (2) does not unduly burden interstate commerce. In 
addition, the federal government, or a state or local government, may 
establish and continue in effect a non-identical requirement that 
provides a higher degree of protection than the CPSA requirement for 
the hazardous substance for the federal, state or local government's 
use. 15 U.S.C. 2075(b).
    Thus, with the exceptions noted above, the magnet set requirements 
proposed in today's Federal Register would preempt non-identical state 
or local requirements for magnet sets designed to protect against the 
same risk of injury.

M. Effective Date

    The Commission proposes that this rule would become effective 180 
days from publication of a final rule in the Federal Register and would 
apply to all magnet sets manufactured or imported on or after that 
date. The CPSA requires that consumer product safety rules take effect 
not later than 180 days from their promulgation unless the Commission 
finds there is good cause for a later date. 15 U.S.C. 2058(g)(1).

N. Proposed Findings

    The CPSA requires the Commission to make certain findings when 
issuing a consumer product safety standard. Specifically, the CPSA 
requires that the Commission consider and make findings about the 
degree and nature of the risk of injury; the number of consumer 
products subject to the rule; the need of the public for the rule and 
the probable effect on utility, cost, and availability of the product; 
and other means to achieve the objective of the rule, while minimizing 
the impact on competition, manufacturing, and commercial practices. The 
CPSA also requires that the rule must be reasonably necessary to 
eliminate or reduce an unreasonable risk of injury

[[Page 53798]]

associated with the product and issuing the rule must be in the public 
interest. 15 U.S.C. 2058(f)(3).
    In addition, the Commission must find that: (1) If an applicable 
voluntary standard has been adopted and implemented, that compliance 
with the voluntary standard is not likely to adequately reduce the risk 
of injury, or compliance with the voluntary standard is not likely to 
be substantial; (2) that benefits expected from the regulation bear a 
reasonable relationship to its costs; and (3) that the regulation 
imposes the least burdensome requirement that would prevent or 
adequately reduce the risk of injury. Id. These findings are discussed 
below.
    Degree and nature of the risk of injury. Based on a review of NEISS 
data, we have determined that an estimated 1,700 ingestions of magnets 
from magnet sets were treated in emergency departments during the 
period from January 1, 2009 to December 31, 2011. From review of INDP 
and IPII databases, we are aware of 50 reported incidents occurring 
from January 1, 2009 through June 30, 2012, involving the ingestion of 
magnets by children between the ages of 1 and 15. Of those 50 
incidents, 38 involved the ingestion of high-powered, ball-shaped 
magnets that were contained in products that meet the above definition 
of ``magnet set,'' and 5 of those 50 incidents possibly involved 
ingestion of this type of magnet. Hospitalization was required in order 
to treat 29 of the 43 incidents, with surgery necessary to remove the 
magnets in 20 of the 29 hospitalizations. In 10 of the 29 
hospitalizations, the victim underwent colonoscopic or endoscopic 
procedures to remove the magnets. In 37 of the 43 incidents that likely 
involved magnets from hazardous magnet sets, the magnets were ingested 
by children younger than 4 years old, or between the ages of 4 and 12.
    Once ingested, these strong magnets begin to interact in the 
gastrointestinal tract, which can lead to tissue death, perforations, 
and/or fistulas, and possibly intestinal twisting and obstruction. If 
left untreated, these injuries can lead to infection of the peritoneal 
cavity and other life-threatening conditions. The number of magnets 
swallowed increases the risk of attraction and injury, but as few as 
two magnets can cause serious internal damage in a very short period of 
time. The fact that many medical professionals do not appreciate the 
health consequences of magnet ingestion increases the severity of the 
risk because a doctor who is unfamiliar with these strong magnets may 
send a child home and expect the magnets to pass naturally. There are 
also health consequences to the treatment and surgery for removal of 
ingested magnets. There may be a risk of gastrointestinal bleeding; 
leakage of holes that were repaired; rupturing of resectioned bowels; 
temporary paralysis of the bowels; use of a colostomy bag; IV feeding 
initially, or for some longer time period; and compromise of nutrition 
and digestive function. Long-term health consequences can be severe as 
well: loss of intestinal tissue; compromised nutrition absorption; 
adhesions and scarring of intestines; need for a bowel transplant; and 
possible impediments to fertility with girls. Even those children who 
pass the magnets naturally and do not require surgery still need close 
observation by doctors and may undergo sequential x-rays, thus, 
exposing children to repeated dosages of radiation.
    Number of consumer products subject to the rule. The market has 
increased substantially since magnet sets were first introduced. We 
estimate that the number of such magnet sets that have been sold to 
U.S. consumers since 2009, the first year of significant sales, may 
have totaled about 2.7 million sets, with a value of roughly $50 
million.
    The need of the public for magnet sets and the effects of the rule 
on their utility, cost, and availability. We cannot estimate, in any 
precise way, the use value that consumers receive from these products. 
In general, this would be the amount of money that consumers expend on 
the product, plus the consumer surplus (i.e., the difference between 
the market price and the maximum amount consumers would have been 
willing to pay for the product). Although the proposed rule would 
prohibit the magnet sets currently on the market, it is conceivable 
that a similar product that meets the requirements of the proposed rule 
could be developed that would serve a similar purpose of the magnet 
sets that the proposed rule would prohibit.
    Other means to achieve the objective of the rule, while minimizing 
the impact on competition and manufacturing. Various alternatives to 
the proposed rule are discussed in previous sections of this preamble. 
We do not believe that options other than the proposed rule prohibiting 
certain magnet sets would sufficiently reduce the number and severity 
of injuries resulting from the ingestion of magnets from these magnet 
sets. As discussed above, the circumstances associated with this 
product limit the likely effectiveness of warning labels. Despite 
existing warning labels and market restrictions, ingestion incidents 
have continued to occur. Parents and caregivers may not appreciate the 
hazard associated with magnet sets, and as a result, they will continue 
to allow children access to the product. Children may not appreciate 
the hazard and will continue to mouth the items, swallow them, or, in 
the case of young adolescents and teens, mimic body piercings. Once the 
magnets are removed from their carrying case, the magnets bear no 
warnings to guard against ingestion or aspiration; the small size of 
the individual magnets precludes the addition of such a warning. 
Because individual magnets are shared easily among children, many end 
users of the product are likely to have had no exposure to any warning.
    Unreasonable risk. As noted previously, we have determined that an 
estimated 1,700 ingestions of magnets from magnet sets were treated in 
emergency departments during the period from January 1, 2009 to 
December 31, 2011. Injuries resulting from such ingestions of magnets 
can be severe and life-threatening. The risk posed by these magnets may 
not be appreciated by caregivers and children, as they may assume, 
mistakenly, that the consequences of ingesting magnets would be similar 
to ingesting any other small object. However, once ingested, these 
strong magnets are mutually attracted to each other and exert 
compression forces on the trapped gastrointestinal tissue.
    We estimate that the societal costs of resulting injuries could 
amount to $25 million annually. This would be the expected benefits 
that could result from the proposed rule. The costs of the proposed 
rule would consist of the lost profits to firms that produce and sell 
magnet sets, plus the lost use value that consumers would experience 
when the product is no longer available. We estimate these costs to be 
about $7.5 million in lost profits and some unknown quantity of lost 
utility. Considering the injuries associated with magnet sets--and the 
resulting societal costs, balanced against the likely impact that the 
proposed rule would have on firms producing and selling the product, 
and on consumers who would lose the utility of the product-- we 
preliminarily conclude that magnet sets pose an unreasonable risk of 
injury and that the proposed rule is reasonably necessary to reduce 
that risk.
    Public interest. This proposed rule is in the public interest 
because it would reduce magnet-related deaths and injuries in the 
future. A rule prohibiting certain magnet sets from the chain of 
commerce will mean that children will have less access to this product, 
thereby

[[Page 53799]]

reducing the number of incidents of children swallowing the magnets and 
the resulting cost to society of treating these injuries. The 
Commission seeks comment on this issue and also whether similar actions 
regarding lawn darts and dive sticks have had the effect of reducing 
injuries by reducing the access to the product.
    Voluntary standards. Currently, there is no voluntary standard for 
magnetic sets. A group of magnet set importers and distributors have 
requested the formation of a voluntary standard by ASTM International 
for the labeling and marketing of these products. The companies have 
requested the formation of a voluntary standard to: (1) Provide for 
appropriate warnings and labeling on packages of these magnet sets, and 
(2) establish guidelines for restricting the sale of these magnet sets 
to, or for the use of children, such as: not selling to stores that 
sell children's products exclusively, and not selling the magnets in 
proximity to children's products. Such a voluntary standard would have 
many of the same limitations as would a labeling standard.
    Relationship of benefits to costs. Based on reports to the CPSC, 
ingestions of small magnets contained in magnet sets have caused 
multiple, high severity injuries that require surgery to remove the 
magnets and repair internal damage. Although there is some uncertainty 
concerning the benefits that would result from the proposed rule, we 
estimate that benefits of the rule might amount to about $25 million 
annually.
    The costs of the proposed rule, in terms of reduced profits for 
firms and lost utility by consumers, also are uncertain. However, based 
on annual estimates available for the 2009-2011 study period, these 
costs could amount to about $7.5 million in lost profits and some 
unknown quantity of lost utility.
    Least burdensome requirement. We have considered several 
alternatives to the proposed rule prohibiting certain magnet sets. We 
conclude that none of these alternatives would adequately reduce the 
risk of injury. Alternative performance requirements might allow a 
different flux index for magnets contained in magnetic sets. 
Theoretically, this might allow some current products to continue to be 
produced. However, it is unclear that a different flux index would 
permit products that have the desired physical qualities to make them 
sufficiently enjoyable to adults while adequately reducing the 
characteristics that make these strong magnets hazardous to children. 
Some type of special storage containers or other packaging requirements 
might be possible. However, it is unlikely that consumers would use 
such containers, particularly if they wish to keep the magnets out of 
the container and maintain whatever shape they have constructed with 
the magnets. We have considered the possibility of requiring rigorous 
warnings on the products or in the instructions for the products. 
However, magnet sets currently on the market provide warnings 
concerning the potential hazard to children. It is unlikely that even 
strengthened warnings would substantially reduce the incidence of 
magnet ingestions. This is particularly true for incidents involving 
older children and adolescents. Moreover, children who are old enough 
to understand the warnings may still not abide by them. Some type of 
sales restriction, limiting the location where magnet sets could be 
sold, might be possible. However, even with restrictions on sales, 
ingestions are still likely to occur as children encounter these 
magnets in the home, at school, or other locations when adults have 
bought them and they are available to children. The Commission could 
continue to address the hazard from magnet sets through corrective 
actions, i.e., recalls of the product. However, such action would do 
nothing to prevent additional companies from continuing to enter the 
market and import magnet sets into the country. The Commission has the 
option of taking no regulatory action. Although it is possible that, 
with increased awareness of the hazard over time, some reduction in 
ingestions could occur, the magnitude of any such reduction in 
incidents is uncertain and would likely be smaller than if the 
Commission issues the proposed rule.

O. Request for Comments

    We request comments on all aspects of this proposed rule. We ask 
for comments concerning the risks of injury associated with these 
magnet sets; the regulatory alternatives discussed; other possible ways 
to address these risks; and the economic impacts of the various 
regulatory alternatives. We specifically seek comments concerning the 
following issues:
     The proposed definition of ``magnet sets'' that would be 
covered by the rulemaking and other issues related to scope of the 
proposal
     The appropriateness of the proposed flux index limit of 50 
or less
     The adequacy of the proposed test procedure for 
determining the flux index, particularly whether it would be sufficient 
to account for the strength of aggregated magnets
     Alternatives to the small parts cylinder that limits the 
size of the magnets at issue
     The likelihood that a magnet set could function as 
entertainment for adults and meet the proposed requirements
     All alternatives to the proposed regulatory action
     Issues related to warnings for these products
     The options of conducting the rulemaking under section 8 
of the CPSA or under provisions of the FHSA
     Whether the definition of magnet set should include 
magnets sold individually with the possibility that they could be 
aggregated into a set of two or more magnets by consumers, and if so, 
whether such individually sold magnets are already covered by the 
definition of magnet set contained in the proposed rule at 16 CFR 
1240.2(b), or whether the definition should be amended with additional 
language such as ``whether sold individually or as part of a set.''
     Proposed Sec.  1240.3(a) would apply to magnet sets that 
contain a magnet that fits completely within the small-parts cylinder 
described in 16 CFR 1501.4. Should it instead apply to sets with at 
least two magnets that fit completely within the small parts cylinder?

P. Conclusion

    For the reasons stated in this preamble, the Commission 
preliminarily concludes that magnet sets that do not meet the specified 
proposed requirements present an unreasonable risk of injury.

List of Subjects in 16 CFR Part 1240

    Consumer protection, Imports, Infants and children, Labeling, Law 
enforcement.

    For the reasons stated in the preamble, the Commission proposes to 
amend Title 16 of the Code of Federal Regulations as follows:
    1. Add part 1240 to read as follows:

PART 1240--SAFETY STANDARD FOR MAGNET SETS

Sec.
1240.1 Scope, purpose, and effective date.
1240.2 Definitions.
1240.3 Requirements.
1240.4 Test procedure for determining flux index.
1240.5 Findings.

    Authority: 15 U.S.C. 2056 and 2058.


Sec.  1240.1  Scope, purpose, and effective date.

    This part 1240, a consumer product safety standard, prescribes 
requirements

[[Page 53800]]

for magnet sets, as defined in Sec.  1240.2. These requirements are 
intended to reduce or eliminate an unreasonable risk of injury to 
children who ingest magnets that are part of hazardous magnet sets. 
This standard applies to all magnet sets, as defined in Sec.  1240.2, 
that are manufactured or imported on or after [180 days after 
publication of a final rule].


Sec.  1240.2  Definitions.

    (a) The definitions in section 3 of the Consumer Product Safety Act 
(15 U.S.C. 2052) apply to this part 1240.
    (b) Magnet set means any aggregation of separable, permanent, 
magnetic objects that is a consumer product intended or marketed by the 
manufacturer primarily as a manipulative or construction desk toy for 
general entertainment, such as puzzle working, sculpture building, 
mental stimulation, or stress relief.


Sec.  1240.3  Requirements.

    (a) Small parts. Magnet sets containing a magnet that fits 
completely within the cylinder described in 16 CFR 1501.4, must meet 
the requirement in paragraph (b) of this section.
    (b) Flux index. When tested in accordance with the method described 
in Sec.  1240.4, small magnets, as determined in paragraph (a) of this 
section, must have a flux index of 50 or less.


Sec.  1240.4  Test procedure for determining flux index.

    (a) Select at least one magnet of each shape and size that the 
magnet set contains.
    (b) Measure the flux index of the selected magnets in accordance 
with the procedure in sections 8.24.1 through 8.24.3 of ASTM F963-11, 
Standard Consumer Safety Specification for Toy Safety, approved 
December 1, 2011. The Director of the Federal Register approves this 
incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR 
part 51. You may obtain a copy from ASTM International, 100 Barr Harbor 
Drive, PO Box 0700, West Conshohocken, PA 19428; telephone 610-832-
9585; www.astm.org. You may inspect a copy at the Office of the 
Secretary, U.S. Consumer Product Safety Commission, Room 820, 4330 East 
West Highway, Bethesda, MD 20814, telephone 301-504-7923, or at the 
National Archives and Records Administration (NARA). For information on 
the availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.


Sec.  1240.5  Findings.

    (a) The degree and nature of the risk of injury. Based on a review 
of NEISS data, we have determined that an estimated 1,700 ingestions of 
magnets from magnet sets were treated in emergency departments during 
the period from January 1, 2009 to December 31, 2011. From review of 
INDP and IPII databases, we are aware of 50 reported incidents 
occurring from January 1, 2009 through June 30, 2012, involving the 
ingestion of magnets by children between the ages of 1 and 15 years. Of 
those 50 incidents, 38 involved the ingestion of high-powered, ball-
shaped magnets that were contained in products that meet the above 
definition of ``magnet set,'' and five of those 50 incidents possibly 
involved ingestion of this type of magnet. Hospitalization was required 
in order to treat 29 of the 43 incidents, with surgery necessary to 
remove the magnets in 20 of the 29 hospitalizations. In 9 of the 29 
hospitalizations, the victim underwent colonoscopic or endoscopic 
procedures to remove the magnets. In 37 of the 43 incidents that likely 
involved magnets from hazardous magnet sets, the magnets were ingested 
by children who were less than 4 years old or between the ages of 4 and 
12 years old.
    Once ingested, these strong magnets begin to interact in the 
gastrointestinal tract, which can lead to tissue death, perforations, 
and/or fistulas, and possibly bowel twisting and obstruction. If left 
untreated, these injuries can lead to infection of the peritoneal 
cavity and other life-threatening conditions. The number of magnets 
swallowed increases the risk of attraction and injury; however, as few 
as two magnets can cause serious internal damage in a very short period 
of time. The fact that many medical professionals do not appreciate the 
health consequences of magnet ingestion increases the severity of the 
risk because a doctor who is unfamiliar with these strong magnets may 
send a child home and expect the magnets to pass naturally. There are 
also health consequences associated with treatment and surgery for 
removal of ingested magnets. There may be a risk of gastrointestinal 
bleeding; leakage of holes that were repaired; rupturing of resectioned 
bowels; temporary paralysis of the bowels; use of a colostomy bag; IV 
feeding, initially, or for some longer time period; and compromise of 
nutrition and digestive function. Long-term health consequences can be 
severe as well: loss of intestinal tissue; compromised nutrition 
absorption; adhesions and scarring of intestines; need for a bowel 
transplant; and possible impediments to fertility with girls. Even 
those children who pass the magnets naturally and do not require 
surgery still need close observation by doctors and may undergo 
sequential x-rays, thus exposing children to repeated dosages of 
radiation.
    Number of consumer products subject to the rule. The market has 
increased substantially since magnet sets were first introduced. We 
estimate that the number of such magnet sets that have been sold to 
U.S. consumers since 2009, the first year of significant sales, may 
have totaled about 2.7 million sets, with a value of roughly $50 
million.
    The need of the public for magnet sets and the effects of the rule 
on their utility, cost and availability. We cannot estimate in any 
precise way the use value that consumers receive from these products. 
In general, this would be the amount of money that consumers expend on 
the product, plus the consumer surplus (i.e., the difference between 
the market price and the maximum amount of money that consumers would 
have been willing to pay for the product). Although the proposed rule 
would prohibit the magnet sets currently on the market, it is 
conceivable that a similar product that meets the requirements of the 
proposed rule could be developed that would serve a similar purpose as 
the magnet sets that the proposed rule would prohibit.
    Other means to achieve the objective of the rule, while minimizing 
the impact on competition and manufacturing. Various alternatives to 
the proposed rule are discussed in previous sections of this preamble. 
We do not believe that options other than the proposed rule prohibiting 
certain magnet sets would sufficiently reduce the number and severity 
of injuries resulting from the ingestion of magnets from these magnet 
sets. As discussed above, the circumstances associated with this 
product limit the likely effectiveness of warning labels. Despite 
existing warning labels and market restrictions, ingestion incidents 
have continued to occur. Parents and caregivers may not appreciate the 
hazards associated with magnet sets, and as a result, they will 
continue to allow children access to the product. Children may not 
appreciate the hazards, and they will continue to mouth the items, 
swallow them, or, in the case of young adolescents and teens, mimic 
body piercings. Once the magnets are removed from their carrying case, 
the magnets bear no warnings to guard against ingestion or aspiration; 
and the small size of the individual magnets precludes the addition of 
such

[[Page 53801]]

a warning. Because individual magnets are easily shared among children, 
many end users of the product are likely to have had no exposure to any 
warning.
    Unreasonable risk. As noted previously, we have determined that an 
estimated 1,700 ingestions of magnets from magnet sets were treated in 
emergency departments during the period from January 1, 2009 to 
December 31, 2011. Injuries resulting from such ingestions of magnets 
can be severe and life-threatening. The risk posed by these magnets may 
not be appreciated by caregivers and children, as they may assume, 
mistakenly, that the consequences of ingesting magnets would be similar 
to ingesting any other small object. However, once ingested, these 
strong magnets are mutually attracted to each other and exert 
compression forces on the trapped gastrointestinal tissue.
    We estimate that the societal costs of resulting injuries could 
amount to $25 million annually. This would be the expected benefits 
that could result from the proposed rule. The costs of the proposed 
rule would consist of the lost profits of firms that produce and sell 
magnet sets, plus the lost use value that consumers would experience 
when the product is no longer available. We estimate these costs to be 
about $7.5 million in lost profits and some unknown quantity of lost 
utility. Considering the injuries associated with magnet sets and the 
resulting societal costs, balanced against the likely impact that the 
proposed rule would have on firms producing and selling the product, 
and the impact on consumers who would lose the utility of the product, 
we conclude, preliminarily, that magnet sets pose an unreasonable risk 
of injury. Additionally, we conclude that the proposed rule is 
reasonably necessary to reduce that risk.
    Public interest. This proposed rule is in the public interest 
because it may reduce magnet-related deaths and injuries in the future. 
A rule prohibiting certain magnet sets from the chain of commerce will 
mean that children will have less access to this product, thereby 
reducing the number of incidents of children swallowing the magnets and 
the resulting cost to society of treating these injuries.
    Voluntary standards. Currently, there is no voluntary standard for 
magnetic sets. A group of magnet set importers and distributors have 
requested the formation of a voluntary standard by ASTM International 
for the labeling and marketing of these products. The companies have 
requested the formation of a voluntary standard to: (1) Provide for 
appropriate warnings and labeling on packages of these magnet sets, and 
(2) establish guidelines for restricting the sale of these magnet sets 
to, or for the use of children, such as by not selling to stores that 
sell children's products exclusively, and by not selling magnet sets in 
proximity to children's products. Such a voluntary standard would have 
many of the same limitations as a labeling standard.
    Relationship of benefits to costs. Based on reports to the CPSC, 
ingestions of small magnets contained in magnet sets have caused 
multiple, high severity injuries that require surgery to remove the 
magnets and repair internal damage. Although there is some uncertainty 
concerning the benefits that would result from the proposed rule, we 
estimate that benefits of the rule might amount to about $25 million 
annually. The costs of the proposed rule, in terms of reduced profits 
for firms and lost utility by consumers, are also uncertain. However, 
based on annual estimates available for the 2009-2011 study period, 
these costs could amount to about $7.5 million in lost profits and some 
unknown quantity of lost utility. We believe that there would be a 
reasonable relationship between the anticipated benefits and costs of 
the proposed rule.
    Least burdensome requirement. We have considered several 
alternatives to the proposed rule prohibiting certain magnet sets. We 
conclude that none of these alternatives would adequately reduce the 
risk of injury. Alternative performance requirements might allow a 
different flux index for magnets contained in magnetic sets. 
Theoretically, this might allow some current products to continue to be 
produced. However, it is unclear whether a different flux index would 
permit products that have the desired physical qualities to make them 
enjoyable to adults would reduce adequately the characteristics that 
make these strong magnets hazardous to children. Some type of special 
storage containers or other packaging requirements might be possible. 
However, it is unlikely that consumers would use such containers, 
particularly if they wish to keep the magnets out of the container and 
maintain whatever shape they have constructed with the magnets. We have 
considered the possibility of requiring rigorous warnings on the 
products or in the instructions for the products. However, magnet sets 
currently on the market provide warnings concerning the potential 
hazard to children. It is unlikely that even strengthened warnings 
would substantially reduce the incidence of magnet ingestions. This is 
particularly true for incidents involving older children and 
adolescents. Moreover, children who are old enough to understand the 
warnings still may not abide by them. Some type of sales restriction 
limiting the location where magnet sets could be sold might be 
possible. However, even with restrictions on sales, ingestions are 
still likely to occur as children encounter these magnets in the home, 
at school, or in other locations when adults have bought them and they 
are available to children. Finally, the Commission could continue to 
address the hazard from magnet sets through corrective actions, i.e., 
recalls of the product. However, such action would do nothing to 
prevent additional companies from continuing to enter the market and 
import magnet sets into the country. The Commission has the option of 
taking no regulatory action. Although it is possible that, with 
increased awareness of the hazard over time, some reduction in 
ingestions could occur, the magnitude of any such reduction in 
incidents is uncertain and would likely be smaller than if the 
Commission issues the proposed rule.

    Dated: August 28, 2012.
Todd A. Stevenson,
Secretary, U.S. Consumer Product Safety Commission.
[FR Doc. 2012-21608 Filed 8-31-12; 8:45 am]
BILLING CODE 6355-01-P