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CPSIA – Mania Update No. 2 – Walmart’s 100 ppm Lead Standard

Courtesy of your Congress and the mania promoted by our essential CPSC, Walmart has kindly begun to test to a 100 ppm lead standard. The testing has already begun, to keep everyone so so SOOOOO safe, and applies to anything offered for sale on or after August 14, 2011. They have settled on this standard now even though your CPSC has not determined that it is “technologically feasible”. Another big win for Waxman and his henchmen. . . .

Isn’t that nice? Walmart is plunging into the void left by a Congress that abandoned YOU and YOUR BUSINESS. By making this a requirement of theirs, Walmart joins the effort to implement Mr. Waxman’s vision of a Utopian America, lead-free whether we like it or not – damn the consequences!

Who is at fault here? First and foremost, stubborn Congressional Democrats who KNOW this is a problem but refuse to act. The fact is that the 100 ppm standard means NOTHING to safety and cannot be justified on any rational economic or public health basis. Of course, I discount raging paranoia or paralyzing anxiety as a justification for the standard. I know, I know, I am small-minded.

Unfortunately, for businesses in the REAL WORLD, the uncertainty of stupid laws that may or may not spring to life leaves us little choice but to assume they will be implemented. Hence Walmart had to implement this provision. They can’t wait for Congress to stop sucking its thumb and take action.

Of course, we can also blame the so-called “leadership” of the CPSC for this step. The Dems running that shop are also unable or unwilling to act to prevent any of this damage. There is little to indicate that the CPSC Dems WANT to prevent this economic damage which I speculate is out of loyalty to their political patrons. Whatever the reason, they have done NOTHING to help industry. Take them off your Xmas card list.

We are not the only ones suffering at the hand of the worst Congress in history. Consider the one sentence in the Obamacare bill that requires vending machines to list calorie counts on a sign. According to a FDA Federal Register release on Friday, this will require 14 million man-hours of work per annum. Time well spent. Welcome to our world, guys. . . . One sentence in Obamacare did this, out of 2,000+ pages. Happy reading – imagine what the rest of the law says!

I will be on Fox Business on Wednesday at 7 PM EST discussing the election. I am looking forward to help from a Republican-dominated Congress but must say that the firemen better come quick. This Walmart step is just one more to be immediately undone. Can Congress save us? Will the marketplace ever revert to sanity, given that the CPSC is now crazy?

It’s put up or shut time for the Republicans. They need to act FAST and EFFECTIVELY. We are dying out here.

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CPSIA – Mania Update No. 2 – Walmart’s 100 ppm Lead Standard

CPSIA – Casualty of the Week for June 1

The Alliance for Children’s Product Safety’s “CPSIA Casualty of the Week” highlights how the Consumer Product Safety Improvement Act (CPSIA) is disrupting the U.S. marketplace in order to draw attention to the problems faced by small businesses, public institutions, consumers and others trying to comply with senseless and often contradictory provisions of the law. These provisions do nothing to improve product safety, but are driving small businesses out of the market.

Congress and the CPSC need to address the problems with CPSIA implementation to help small businesses by restoring “common sense” to our nation’s product safety laws.

CPSIA Casualty of the Week for June 1, 2010:

CPSIA RULES! (THOUSANDS OF PAGES OF THEM)

Educational Products Market Overwhelmed by CPSIA-Mandated Testing and Paperwork

American Educational Products LLC (AMEP) is a Fort Collins, Colorado-based company selling classroom teaching aids like flash cards, animal models, globes and relief maps that educators rely on to teach their students. Despite a sterling safety record, AMEP President Michael Warring is worried that the ever-increasing amount of time that his company is spending on compliance with the CPSIA threatens the future of his company.

Warring explained, “We sold 5,600 different SKU’s in 2009 to 2,600 different customers. Approximately 2,000 of these SKUs might be considered ‘children’s products’, meaning that they must be tested by a third party for lead. My 64 employees and I are finding it virtually impossible to manage the scale of this CPSIA-mandated testing. Each SKU takes approximately eight hours a year in compliance and testing administration. This means that 24 of my 64 employees would need to work full-time, year-round just to ensure compliance with CPSIA – even though our supply chain controls effectively manage the risk of lead violations. I cannot afford a 37% increase in employees nor can I force 40 employees to do the work of 64. Neither alternative can be achieved.”

Warring also said his company has lost business due to CPSIA.

“One customer cancelled a $5,000 custom rock order after deciding that rocks were too ‘dangerous’ for a geology lesson because of the CPSIA lead rules and elected to use posters instead,” said Warring. “What caliber of young scientists are we nurturing in our country when we won’t let students touch and feel the textures, densities and hues of naturally-occurring rocks in a classroom? After all, kids pick up rocks outside the classroom every day. Our laws are scaring schools away from common sense choices about how our kids are educated.”

He continued, “Another customer insisted that we use XRF scanning for lead-in-paint, a procedure not approved by the CPSC for compliance testing because XRF tests may produce erroneous results. We showed him independent test results that confirmed that our products were well within the CPSIA lead limits, but our inability to provide XRF testing resulted in the customer canceling orders worth about $35,000 to our company. Confusion reigns supreme – two years after passage of the CPSIA”

Warring fears that the CPSIA’s senseless testing requirements and voluminous paperwork will mean that many of the 5,600 educational products that AMEP produces will disappear from the marketplace.

“As we offer fewer choices to the distributors we serve, our position as a vendor will deteriorate and our very viability in the marketplace could be at risk,” said Warring.

Warring concluded, “I’m not sure how children’s safety and well being is being addressed when their parents’ livelihoods disappear and when their education is being limited to material in printed form. These are two of the many real consequences, intended or otherwise, that CPSIA has imposed on my company, my employees, the vendors we support, our customers, and the children we help to educate.”

For additional information on the Alliance for Children’s Product Safety and CPSIA, and to view previous “Casualties of the Week, visit http://www.AmendTheCPSIA.com.

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CPSIA – Casualty of the Week for June 1

CPSIA – New York Times Highlights Big Government at CPSC

The New York Times today highlighted the explosion in regulations under President Obama, particularly noting the CPSC and the controversy over the CPSIA. Here’s what Inez Tenenbaum had to say about our problems:

‘I don’t want to put anyone out of business,’ said Inez Tenenbaum, chairwoman of the Consumer Product Safety Commission, who was appointed by Mr. Obama. ‘But if anything will help the marketplace, it is to make sure that people have confidence in the products that they buy.’” [Emphasis added]

Let’s be clear about something – this is pure opinion. It may sound like fact, but there’s nothing factual about that self-justifying remark. I am not aware of ANY data to support this point of view. I believe the tenor of Ms. Tenenbaum’s remark is that she knows what’s best for our markets, namely a lot more regulation. I thought her job was to make people safe . . . . She apparently contends that the market for children’s products was sinking under the weight of declining consumer confidence and the CPSIA was some sort of stimulus bill intended to save our market with lots of confidence-restoring regulations.

That is a pretty rosy reconstruction of the CPSIA, don’t you think? I love a good work of fiction!

I have a message for our overlords in Washington – thanks for all your help but frankly, I would prefer to run my business without your assistance. We know our customers, our suppliers, our products and most definitely, our markets – and you do NOT. You say our market needs a boost of consumer confidence. I say that if it does, we’ll take care of it ourselves. You have no right to enter our market and tell us how to run our businesses more successfully. That’s the ultimate in regulatory arrogance and is completely contrary to the capitalist system prevailing in this country. We are the efficient capital allocators, not YOU.

This is all Washington “spin”. The noxious regulations choking our businesses are indefensible for their safety impact so now our regulators are telling us the new rules have been designed to be GOOD for our markets. Pass me a barf bag.

I would like to close by quoting the May 12 HTA letter on the Waxman Amendment:

“Finally, we hope to settle any confusion regarding our intent in endorsing the CPSEA. We endorsed it as our only available alternative. We truly believe that many of our members will be forced out of business after February 10, 2011 without meaningful, clear reform provided by your committee.

Thanks, Congress and CPSC, for boosting our markets so well with all your new regulations. It’s a brave new world for all of us. Yippee.

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CPSIA – New York Times Highlights Big Government at CPSC

CPSIA – Washington Post Says Cadmium Issue is Overblown

Tell me it’s not true – we can’t panic about cadmium anymore?! The Washington Post thinks the CPSC may have gone a bit too far in demanding that every American throw away all their children’s jewelry based on a newspaper article they read somewhere: “Very little is known about cadmium’s potential health effects on children, [Dr. John Rosen, chief of environmental sciences at the Children's Hospital at Montefiore in the Bronx] says, because it’s never been known to be a problem, ‘Pediatricians don’t look for it, they aren’t knowledgeable about it, and there are not any particular concerns about it.’” [Emphasis added]

The Post concludes: “So, while this is certainly no matter to pooh-pooh, and it’s important for the government to take whatever steps it must to keep poisonous metals out of the marketplace, it doesn’t sound like occasion to panic, either.” [Emphasis added]

We knew that Senators are absolutely ignorant of science so their foolishness can be understood, but what about the CPSC? Aren’t they on a different level? In the olde days, the CPSC used its professionals for their highly-refined expertise. Today, the staff brainiacs are used to bureaucratically shovel paper from one end of their desk to the other, or to practice falling in line. The folks at the top, the (Democrat) politicians, seem to have the same mastery of science as their Congressional overlords and a similar disregard for the consequences of their actions.

So Inez Tenenbaum went on a media blitz, ably assisted by her associate Scott Wolfson, and SLAMMED the jewelry industry. They had seemingly done virtually no homework (if reading an AP story doesn’t count as “research”), neglecting to take advice from the many Ph.D.s that they employ, and went ahead with an astoundingly irresponsible spree of rulemaking on the fly. And the consequences to them?

There’s the rub – there won’t be any. But there should be. This kind of tort is remediable in the private sector with lawsuits and damages. Not sure how easy it would be to prosecute such high ranking public officials for their conclusion-jumping. We can certainly count on our fearless leader Obama to COMMEND them for their precautionary actions. Surely by putting the jewelry industry out of business, they must have saved lives . . . somewhere. The nice thing about these folks, if they can assert it, it’s “true”. Or true enough.

What a sorry episode, and even with the Post on record with a calming and balanced summary of cadmium’s risks, the train already left the station. Expect the next attempt at an amendment to the CPSIA to include dramatic restrictions on cadmium. Congress will save us, don’t worry.

Hey, science is overrated. Trust me.

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CPSIA – Washington Post Says Cadmium Issue is Overblown

CPSIA – My Recommended Changes to the CPSIA

As the CPSC prepares its January 15th report to Congress on recommended changes to the CPSIA, I have also prepared my list. As though for Santa, I am checking it twice. Rumor has it that the Waxman amendment is percolating again, all without hearings, either of the Commission or heaven forbid, in Congress. That’s open government for you. In any event, expect movement in the wake of this report. How much movement is the big question.

My list of changes is long. I have a separate list of non-legislative changes that I also recommend, which I will pass along in a future post. Please note that my list is not meant to imply any limitation on the agency’s ability to respond to emerging threats or changing conditions. In that sense, each recommended change is intended to incorporate a power by the CPSC to alter it (expand or contract) according to a risk assessment process in the future. It is also true that some of these recommendations can be accomplished by agency rulemaking. As we have observed, that rulemaking is taking forever or is seemingly stuck . . . so I put them all on my list.

I have a couple of other important objectives underlying my recommendations. First, it is critical that the law provide economic incentives tailored to the actual drivers of market behavior. The current law gives little credence to the way business people make decisions or how they interact. The CPSIA takes the simpleminded approach of ultra-strict standards combined with draconian penalties. This is ironic, given that the 2007/8 recalls that incited this law were EACH violations of then current law. Thus, it was NEVER a question of standards – only of compliance with those standards. Compliance issues are complex behavioral issues. Simply ratcheting up penalties to the stratosphere won’t change behavior much because the consequences of recalls were already very great. Something else is needed.

Second, we MUST assure that the agency is relieved of excessive bureaucratic burdens and distractions, and is given back the ability to focus on real threats. This means that we cannot always work within the context of the present CPSIA scheme, because it requires a great deal of wasteful investment by the CPSC. In addition, we must give discretion back to the agency. Congress needs to get out of the way and let the CPSC do its job.

My recommended changes to the CPSIA:

1. Restore the CPSC’s authority to base its safety decisions, resource allocation and rules on risk assessment.

2. Definition of “Children’s Product” should be limited to children 6 years or younger. The argument that young children play with the toys or possessions of their older siblings is not supported by statistically significant injury statistics. If children are not being harmed by this interaction, we should not have to spend billions on safety initiatives that will have little impact.

3. Definition of “Toy” (for phthalates purposes) should be limited to children 3 years old or younger. Human factors analysis by CPSC staff indicate that it is not age-appropriate for children over three to mouth their possessions. Again, there are no statistically significant injury statistics that support a contention that children over three have any material risk from mouthing toys.

4. Definition of “Toy” should explicitly refer only to products in the form used in play. This would eliminate uninflated globes from the mouthing rules. In addition, sleepwear should only be included in childcare articles to the extent the plasticized part of the sleepwear is intended or is reasonably foreseeable to be mouthed.

5. Definition of “Children’s Product” should eliminate the factor set forth in Section 3(a)(2)(c) of the CPSA. This change is intended to make determining which items are “in” and which are “out” more objective. The Commission already has in place age grading guidelines that supplant the “common recognition” factor and provide objective guidance.

6. Definition of “Children’s Product” should be limited to a narrow class of product, ideally just toys. There is no justification based on injury statistics to regulate apparel, footwear, appliqués, hair accessories, books, pens, bikes, ATVs, educational products, rhinestones and so on. Much of the morass befalling the agency over the past two years stems from this overly-broad definition.

7. Definition of “Children’s Product” should not include anything primarily sold into the schools or which is used primarily under the supervision of adults.

8. The standards/bans for lead and phthalates should be prospective from February 10, 2009, allowing the sale of merchandise manufactured in compliance with law prior to the implementation of the law. This is ABSOLUTELY necessary to protect the thrift store industry.

9. Make ANY AND ALL changes in standards after February 10, 2009 EXPLICITLY PROSPECTIVE, including those already implemented.

10. Phthalate testing should explicitly exempt inaccessible components, metals, minerals, hard plastics, natural fibers and wood. The statutory test standard should explicitly permit testing the entire product as a whole. California law, which may conflict with these definitions, should be explicitly preempted.

11. Eliminate the 100 ppm lead standard for August 2011. There is no scientific evidence that the change from 300 ppm to 100 ppm as a limit on lead-in-substrate will have any material impact on blood lead levels. However, the economic impact of this meaningless change could be severe – the equivalent of a high tax serving no known purpose.

12. Lead-in-substrate testing should be a “reasonable testing program”, not mandated outside testing. Ideally a combination of in-house testing, spot checking, XRF (allowed for this use) and supply chain management. The focus of the rules should be on safety, NOT on compliance. Third party testing can be included as a safe harbor for a “reasonable testing program”.

13. Small lot manufacturers are exempt from all testing requirements (but not the standards). ANY product which sells less than 25,000 units per annum is exempt from testing requirements.

14. Eliminate required future reductions in the lead-in-paint standard levels if technologically-feasible. There is no scientific evidence that this further reduction will have any material impact on health, but will have an economic impact on the marketplace.

15. Clarify that all inks are excluded from the lead-in-paint ban.

16. Modify definition of “technologically feasible” to take into account economics. It is demonstrably unfair to small businesses to apply a rule that works like this: “If Rolex CAN do it, Timex MUST do it.” A technological feasibility standard without reference to economics is completely unreasonable to small companies or companies relying on narrow margins.

17. Restore ASTM F963 to voluntary standard status.

18. Eliminate the “periodic review” provisions that require ratcheting up of requirements (e.g., periodic review of F963 to achieve “highest levels of safety” that are “feasible”). Would like to further gut this provision, as I do not see that the CPSC adds any value in the process but has significant procedural burdens. This is pure government waste.

19. Eliminate exceptions to preemption (such as Sec. 106(h)). Add effective preemption of State laws on lead and lead-in-paint. Interstate commerce demands that there be one authority on safety, not 51 independent regulators. The disorder in the marketplace from the Proposition 65-style “consumer right to know” laws (like Illinois’ new Lead Poisoning Prevention Act) needs to be eliminated by explicitly preempting them in the changes to the CPSIA.

20. Add penalties (up to and including felonies) for false or misleading accusations of violations of law or safety violations.

21. Make the resale of used product that violates safety standard a misdemeanor with very limited fines (like a traffic ticker). Can only escalate if done with actual knowledge.

22. Eliminate the “knowing” standard with its imputed knowledge of a reasonable man exercising due care. This standard is a 20/20 hindsight standard and is thus subject to considerable abuse. An actual knowledge standard would ease fears among regulated companies.

23. Completely reformulate penalties to restrict them to egregious conduct, reckless endangerment or conduct resulting in serious injury. The CPSC should have the authority to assess penalties when it deems it necessary, such as for repeated violations, but the practice should be that penalties are meant to provide incentives to good behavior ONLY (not for retribution or redistribution of wealth). Minor violations should either be handled administratively without penalties or should be subject to capped penalties akin to “traffic tickets”.

24. State AG enforcement should be limited to matters involving actual knowledge leading to injury or to enforce a CPSC order.

25. Restore the ability to export non-compliant product as long as the product is compliant with the destination jurisdiction’s law.

26. Mandatory tracking labels should be explicitly restricted to cribs, bassinets, play pens, all long life “heirloom” products with a known history of injuring the most vulnerable children (babies). Tracking labels would be voluntary on all other children’s products and if in use, can be used to trim scale of recalls (as with other data maintained by businesses). CPSC should retain ability to expand the application of tracking labels as warranted. The power to impose tracking labels was a part of the prior law, it should be noted.

27. Elimination of whistleblower provision entirely. There is no demonstrated need for this provision which only creates an atmosphere of distrust and abuse in the workplace. To properly ensure corporate team play, the government should refrain from paying spies to infiltrate the workplace unless there is a demonstrated need based on actual data.

28. Elimination of lab certification process ENTIRELY. The CPSC adds NO value to this process, and in fact slows the process of labs coming on board with new testing capabilities. I am not aware of any instances of fraud by labs but if there were to be fraud, we already have anti-fraud standards on the books to protect consumers. Give the CPSC the power to create or modify certification standards or requirements if warranted in the future. Place reliance on industry organizations or independent professional organizations for certifications.

a. For in-house labs, use established firewall rules as “but for” condition for companies to avoid liability. Otherwise, companies should bear full responsibility for testing done in-house.

29. Public injury/incident database restricted to recalls only

a. If allow unfiltered postings, companies need adequate time to respond BEFORE posting. There needs to be enough time to allow for inspection of product and to conduct tests.

b. Must post name and contact info to put info up on the DB. NO anonymous postings

c. Liability for fraud, including fines and possible jail time. Need to prominently note this on the DB. There needs to be a consequence for bad actors spreading bad information intentionally.

d. The terms of the DB should not permit postings of CPSC private remedies, like “do-not-sell” orders.

e. The current timetable is unreasonable, needs to be spread out to allow for more consideration of unintended consequences.

f. The current rules specify removal of inaccurate data that is TOO SLOW. Data needs to be impounded while being investigated (Zhu Zhu Pets wouldn’t have survived this scheme).

I also recommend consideration of an exception from the lead-in-paint rules for violations which have less than XXX grams per unit. These essentially technical or de minimus violations might be exempt from recalls but not from “do-not-sell” orders. I am recommending some acknowledgement that certain L-I-P violations are not worth the expense to recall. A strict liability standard for L-I-P is not necessary to protect the public.

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CPSIA – My Recommended Changes to the CPSIA

CPSIA – Thoughts Ahead of Today’s CPSC Workshop

A few tidbits ahead of today’s workshop:

1. Your letters are hitting the mark. PLEASE keep the letters on the Stay coming. The CPSC continues to believe that it can fix the law piece-by-piece with more rules and interpretations, and is ignoring the practical problems that you face. They MUST delay the lifting of the Stay until they either FINISH THE JOB or get Congress to restore sanity to safety administration. I am on record that they cannot fix this WITHOUT a change in the law. You need to make yourself heard.

2. Here’s a shocker – there will be people at the workshop who are AGAINST component testing. For one, in a recent public meeting, YKK (a well-known zipper maker) has come out strongly against component testing on the grounds that it will encourage counterfeiting. To be frank, I have not seen or heard a comprehensive statement of their position and look forward to hearing it. My gut tells me that their principal concern is competition, not counterfeiting. Component testing is extremely beneficial to small businesses. Arguably, Big Business is only minimally affected by the CPSIA, at least in comparison to the impossible burdens borne by small business. Be prepared to argue your case.

3. The CPSC doesn’t want to see their workshop derailed by a complaint session about the many problems with the law. I think that’s a fair request. In any event, find the opportunity to stress the burdens that you bear and try to get them to focus on the challenges posed by COMPLEXITY. This issue is not something that the CPSC wants to fully acknowledge and seems bent on building more and more complexity into their system to compensate for the many, many flaws in the law. They need to know that it’s a real factor that will have a serious impact on the effectiveness of this safety regime. Likewise, it is a killer in the marketplace, especially in relations with dealers and retailers.

4. Finally, don’t forget to ask yourself today about SAFETY. This workshop is about RULES divorced from reality. As we argue endlessly about how many angels can dance on the head of a pin, ask yourself and remind the CPSC how much all of this has to do with SAFETY. We are getting lost in the weeds as we try to build a set of rules to accommodate a terrible and defective law. If we allow the fantasy to go forward that the new rules are somehow about safety (e.g., is a zipper tested by components or as a completed product safer one way or the other? OR are zippers known to be safe already?!), we are going to actually help them build the structure to kill us. We don’t want to do that!

I will try to report from the workshop as time permits.

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CPSIA – Thoughts Ahead of Today’s CPSC Workshop

CPSIA – CPSC Recalls 40 Inflatable Bats for Phthalates

I know I am crazy, over the edge, worrying about a CPSC so hellbent on enforcing the awful CPSIA that it will chill the market and kill products and companies that are essential to those markets. I know I have a reputation . . . .

Well, consider this recall today: a California company agreed to a recall of 130 pieces of several toys, including an inflatable bat stenciled with “Home Run” on it. The bat was offensive because it violated the phthalates standard. A recall of 130 pieces spread over several toys, means that they must be recalling less than 130 pieces of the inflatable bat. So I called the company (Daiso Japan) and asked them exactly how many bats were involved – the answer? Forty. Feeling safer already?

This is a rather strict standard . . . and completely disproportionate to any conceivable risk. Phthalates do not “ooze” from toys – they must be mouthed and chewed. The CPSC knows this – their own CHAP examined this question and their own scientists participated in “chew tests”. So, in choosing to expend resources on a recall of 40 pieces of an inflatable bat that is clearly not intended or likely to be mouthed, the CPSC is imposing a strict liability standard with no apparent threshhold for recalls – one unit is enough to justify this public humiliation.

This is asinine, of course. How do you expect the business community to react to this development? Well, for one thing, they will overreact. I anticipate that our customers will demand that we prove that everything we make is phthalate-free, toy or not. This means expensive tests to prove that we have not used an additive not found in nature. [It's an ADDITIVE - it will only be there if added.] The application of this rule by the marketplace to every product, whether or not subject to the ban, means that more of our items will lose marketshare simply because we cannot afford to test them to prove we were compliant. The cull of items will accelerate.

This turn in the market will dramatically increase our costs. At this point, we have seen cost increases in the range of 12-40%. Perhaps those surcharges will fall over time, but right now, that’s a pretty hefty chunk of lost profits. The impact will be lower revenues as products are dropped and volumes decline in the face of forced price increases. Price increases in a weak market is not a winning strategy.

Another factor will be fear. Companies will look at this development, connect the dots with the penalty-happy posture of this new CPSC, and realize that any misstep is subject to dramatic punishment. They will pull into their shell – or leave the market. This is called a “chilling effect”.

And what will be achieved? Recalls of less than 130 pieces is pointless from a safety standpoint. The presence of phthalates in a toy is not tantamount to devastating injury, even if banned. The CPSC used to tout its “enforcement discretion” but apparently has no intention of using it here. Even so, the use of phthalates in a baseball bat is hard to link to injury under any rational standards – baseball bats are not teethers. Ergo, there are no rational standards. “Common sense” at the CPSC is a sound bite only and a pathetic figment of the marketers’ imagination.

Enjoy! You can thank the Congressional Democrats for all the good this is bringing to your life.

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CPSIA – CPSC Recalls 40 Inflatable Bats for Phthalates