CPSIA – The CPSIA Testing "Dilemma"

As the House considers how to move a CPSIA Amendment forward, the issue of third party testing looms large.

CPSIA – The Hill Publishes My Op-Ed on CPSIA Hearings

Enough already! It’s time to amend the lead law By Richard Woldenberg 04/06/11 02:51 PM ET After almost three years of bickering over the law regulating lead in children’s products, a comprehensive amendment is finally up for discussion in the House of Representatives. It’s about time. In August 2008, the 110th Congress passed the Consumer Product Safety Improvement Act (CPSIA) in an overreaction to notorious lead-in-paint toy recalls. Claiming that weak regulation “caused” these violations of law (lead-in-paint has been illegal for decades), consumer groups coined a slogan to sum it up: “There is NO safe level of lead”. Stooping low to sow fear, they have even warned the CPSC about the perils of bicycle licking and playing brass instruments in the school band. Their lead slogan has been repeated endlessly to justify a stifling, over-reaching law which has accomplished little but damaged many fine companies, killed jobs and depressed markets. The CPSIA deems companies “guilty until proven innocent” by forcing them to test products over and over again at huge expense to prove compliance with the new lead standard. The screams of law-abiding companies have been consistently ignored by CPSC as it has implemented ever-harsher regulations under the new law. The safety agency is even considering ratcheting down permissible lead from 300 ppm to the unimaginably low 100 ppm level. Economics be damned!   In contrast to the claims of CPSIA backers warning that the sky is falling, CPSC recall records list only four alleged lead injuries from 1999 to 2010 among the nation’s 50+ million young children. Advocates have never produced victim case histories to justify the draconian rules and simply wag their fingers at anyone daring to question their cherished law.  As directed by Congress, the CPSC has dutifully banned the sale of rhinestones to children, ended the era of youth model ATVs and forbidden the use of brass bushings in toy car wheel assemblies. Why? They might emit a single atom of lead! The supporters of the law justify these extreme actions on the grounds that lead is a poison but somehow overlook that kids are exposed to more lead every day from eating a snack, drinking water or playing outside in the fresh air. The descent into regulation purgatory is down a slippery slope. Being governed by this law can give you fits. For example, to be able to continue to legally sell our geology kits to schools (featuring real rocks!), we must give this warning: “Caution: Federal law requires us to advise that the rocks in this educational product may contain lead and might be harmful if swallowed.” We don’t relish looking like idiots at the hand of the U.S. government. We’re certainly not alone in feeling the pain. The law affects many safe products spanning the U.S. economy, like books, t-shirts and shoes, ATVs and dirt bikes, bicycles, donated or resale goods, musical instruments, pens and educational products. The number of companies touched by the CPSIA is in the many thousands. The CPSIA was written in response to failings of big companies, but hammers small and medium-sized companies with particular vengeance. Our small business has already lost customers who now feel that selling toys is too confusing or too much of a “hassle”. Market shrinkage courtesy of the federal government is our new reality. The technical rules and ever-changing legal requirements are beyond the capability of all but the most highly-trained quality managers or lawyers to comprehend. For this reason, small businesses bear the greatest risk of liability under the law, despite being responsible for almost no injuries from lead in the last decade. The double whammy of massive new regulatory obligations and the prospect of devastating liability are driving small businesses out of the children’s market. Our family business makes educational products, and we work tirelessly to ensure that our products are safe. We have tested our products for decades now.  None of us could ever tolerate lead poisoning. Nevertheless, I believe that our company should not be crushed by our government over some consumer groups’ phobias and junk science.  The 112th Congress should know better after years of hearings, comment letters, op-eds, pleading and even direct appeals from the five CPSC Commissioners. To quote The Who, “We won’t get fooled again.” If Congress is serious about fixing our economy and creating jobs, it’s time to lift the yoke of the CPSIA and set the children’s product market free once again. Richard Woldenberg is Chairman of Learning Resources, Inc.

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CPSIA – The Hill Publishes My Op-Ed on CPSIA Hearings

CPSIA – Listening but Disagreeing – or Not Listening At All?

We know that the CPSC plunged ahead with the database on Friday despite the outcry of many industry stakeholders. Among the protesters was the National Association of Manufacturers, not exactly a lightweight organization. Industry protests fell on deaf ears. It goes without saying that the resistance of the two Republican Commissioners (who drafted their own database rule) aligned with industry objections. None of this apparently mattered.

As if to make the point that the CPSIA database will be misunderstood, misused and dangerous, the New York Times announced the arrival of the database in an article entitled “Consumer Agency to Post a Database of Unsafe Products“. Nice work, New York Times! The information in the database is unverified and in many cases will NOT be true. There is simply no way to conclude that the products referenced in the database are “unsafe”. Good luck convincing anyone of that now.

It is embittering and frustrating to be so flagrantly disregarded. There seems to be so much at stake, and the fix was seemingly so simple. No one asked to kill the database, just protect innocent businesses from damaging inaccurate postings on a website enjoying the prestige of a federal safety agency. Even the Pompeo Amendment was promoted as “hitting the pause button”. It is hard to fathom why dialogue was so impossible to start. Actually, after a few years of this war, it is not hard to fathom at all.

I know we were rejected – it is hard not to conclude we were ignored completely from the beginning.

My involvement in this issue began when I was asked to testify before the Commission on the issues relating to a searchable database of product incidents. Actually, I had been on record of objecting to the database even before the CPSIA became law (you can see excerpts of letters I sent in my response to Slate). I was called by Matt Howsare, then counsel to Inez Tenenbaum (now her Chief of Staff) who asked me to fly to Washington to testify. He told me that they “needed” me. Wanting to be helpful and to pitch in when asked by the agency (I was charmingly naive at that time), I agreed. I posted video of my testimony in this space, and as you will see, I was cut off by Ms. Tenenbaum. Get it? I was asked by her staff to present because they needed industry testimony, and when I gave my remarks, they cut me off – one suspects they had heard enough . . . .

This experience left me disgusted in a way that, frankly, hasn’t worn off.

Later, the agency called for a two-day workshop on the database. Owing to the discourtesy of my treatment at the hearing and because of their apparent utter disinterest in my views, I declined the opportunity to continue banging my head against the wall by attending their database confab. Later, as we know, the Democrats released a 248-page rule that greatly expanded the database rule from Congressional intent. Written as though edited by Consumer Federation of America, the rule produced howls of protest, but as has been the case thusfar in this CPSIA saga, it mattered not. The three Dems voted as they would have in the absence of any protests and the defective rule was adopted.

I continue to believe that the criticisms of the rule were (and remain) legitimate. That is, they were rational and reasonable, and lent themselves to reasonable and understandable resolution. The Dems did not make any effort to address these reasonable concerns, rejecting them out of hand.

This pattern of ignoring stakeholders while calling for comments and participation has been a hallmark of the Tenenbaum era. I am trying not to take it personally but wonder how we can be so consistently “wrong”. The Dems barely pause to discuss industry objections other than to simply reiterate that their policy objectives are more pressing. Are we so obviously wrong that our objections don’t merit an answer?

I have trouble reaching that conclusion. I have made the same points consistently over and over, yet I cannot put my finger on a single response to my objections other than outright rejection. There is a question of good faith here. The rejection of my company’s PROOF of a material error in the one filing made against one of our products in the soft launch of the database seems to call into question whether the agency can ever be trusted under this group of administrators. The response by SENIOR STAFF at the agency that the consumer in question had stated a “risk of harm” when his/her accusation was PLAINLY WRONG means that even the English language is being corrupted in service of the database. How can trust exist in an environment like this?

Ask around among industry stakeholders. Trust is GONE. No one trusts the CPSC these days.

Looking back on the database saga, it makes me all the more certain that I am doing the right thing pushing back against these people. They are not operating in good faith and have no apparent concern for the well-being of our company, our employees or the countless companies, schools, families and children who depend on us. This cancer on our markets must be stopped. We have another election coming up and I will be working hard to put more Democrats OUT OF WORK. They have no one to blame but themselves. They won’t listen . . . .

So we need to get rid of them.

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CPSIA – Listening but Disagreeing – or Not Listening At All?

CPSIA – Deaf Congress Makes Up Its Own Justifications for New Law

The recently approved H.R. 4678 Foreign Manufacturers Legal Accountability Act of 2010 is based on testimony given by several of the usual suspects. Consumer groups filed testimony portraying the need for this law as rather “obvious”:

Consumers Union (June 16, 2010): “While [the CPSIA] has made great strides in improving product safety, and will continue to do so as its implementation continues, the CPSIA focuses on improving safety by requiring that children’s products subject to mandatory standards be tested to ensure compliance with the standard. The law does not address bringing foreign manufacturers into our civil justice system. However, to fully protect consumers from unsafe products, wherever they are made, American consumers must be able to hold manufacturers accountable when they are harmed – no matter where the products are made.”

Consumers Union goes on to assert: “If a foreign manufacturer knows that they cannot be held responsible in U.S. courts for the products they sell, this knowledge has a likely significant impact upon their manufacturing decisions. Do they use the stronger, more expensive component? Do they ensure that the product meets the safety standards? Do they prioritize safety if they know they are not accountable to U.S. consumers in U.S. courts? Holding manufacturing entities accountable in our civil justice system acts as an important deterrent to unethical and potentially harmful business conduct.”

The Briefing Memo for the mark-up (prepared by the Dems) takes up the anti-business, leftist consumer group cause, namely that we need to change the rules to allow consumers to sue foreign manufacturers to protect our way of life. The new law is intended to overcome a little legal wrinkle preventing true consumer justice – the U.S. Constitution:

“In addition, even if a victim successfully serves process on a foreign manufacturer, the manufacturer will likely challenge the exercise of personal jurisdiction over it by a U.S. court. Under well-established constitutional due process principles, before a U.S. court can exercise personal jurisdiction over a defendant it must consider: (1) the defendant’s purposeful minimum contacts with the state in which the court sits, and (2) fairness to the defendant of being subjected to jurisdiction in that state’s courts. . . . H.R. 4678 requires foreign manufacturers and producers that import products into the United States to designate a registered agent who is authorized to accept service of process here in the United States. . . . Registering an agent consistent with the Act constitutes acceptance by the manufacturer of personal jurisdiction of the state and federal courts of the state in which the agent is located.”

Problem solved! Congress found a way to circumvent the framers’ intent. That darned Constitution gets in the way of good government, you know.

Notably, the “urgent” need to go around the Constitution was not echoed in the CPSC’s own testimony:

“Additional authority allowing the CPSC to require foreign manufacturers designate a U.S. registered agent for service of process could be helpful in some cases – particularly those involving administrative requests for documents or information.”

“In a few cases, however, the lack of a registered agent for service of process has hindered the Commission’s ability to develop information that would help us to provide relief to consumers.”

“The lack of a registered agent for service of process has also been recognized by Chinese industry groups, and some local lawyers in China have provided legal advice seeking to exploit this situation . . . . This type of sentiment appears rare.” [Emphasis added]

Opponents to the bill made arguments similar to those previously highlighted in this space (see above and here): American Association of Importers and Exporters and National Customs Brokers & Forwarders Association of America.

I estimate that our business will lose 25-50% of our foreign suppliers and untold numbers of component factories if they are required to have a registered agent under this new law. Most of these sources are irreplaceable in our business (for a variety of reasons). That means that the products we make at these factories will have to be discontinued. Too bad for us, I guess. This could happen quickly, too.

I wish that were the only problem. The lame-brained notion that foreign countries will allow U.S. citizens to cross borders to take domestic assets to settle foreign disputes will prove to be delustional. U.S. companies will soon be greeted by reciprocal registration requirements or even harsher laws exposing them to onerous trade barriers and significant new legal risks. Again, our business is squarely in the bullseye of this maelstrom. We have worked tirelessly for more than 20 years to build an international network of dealers for our products. That creates JOBS here. Anyhow, it is inevitable that a law like this will spawn a need to register our company in dozens of countries abroad, meaning we would need to hire a law firm for each country, translate all the laws, decide if we want to bear the expense and risk of registration. Our foreign business would evaporate quickly and efficiently.

The basic idea that our country actually needs this law is hard to comprehend. Where are all the hungry plaintiffs’ attorneys who can’t put food on the table? Which rights aren’t being satisfied? For each product imported into this country, there must a U.S. importer. Why isn’t that pool of assets enough to satisfy this need, as it has been for years and years? Why doesn’t importers’ exposure under the U.S. tort system provide enough incentive to address Consumers Union’s parade of horribles above? I thought that’s why we have our crazy tort system in the first place. No answer has been provided by Congress to these questions. They just gave us a wonderful new law to worry about.

Thanks so much, Democrats in Congress. We love ya! And we can’t wait to vote AGAINST you! See you at the polls.

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CPSIA – Deaf Congress Makes Up Its Own Justifications for New Law

CPSIA – The Eyes Glaze Over . . . .

Sometimes I wonder if they have completely lost it at the CPSC. This evening we received the CPSC Federal Register notice on the Stay decision (actually entitled “Consumer Product Safety Act: Notice of Commission Action on the Stay of Enforcement of Testing and Certification Requirements”). I seriously wonder if anyone read it over in Bethesda. I have NEVER seen anything this dense and unintelligible come out of that office.

As the Commission tucks itself into bed before an exciting day tomorrow in which it can either decently provide enough time for an orderly implementation of this mess of a law or send small businesses down the river, I hope somebody is thinking about the complexity of what they have wrought. Of course, rules always seem more complex when they apply to you than when they apply to someone else. Still, perhaps a quick scan of this document might enlighten the Democrat Commissioners who seem particularly dense on the subject of why businesses want more clarity before the rules go “hard”.

I uncovered this while on a mission from a reader of this space. I had been alerted to the possibility that this document said that the lead content stay was LIFTED. This could not be true, since a ballot vote is definitely docketed for tomorrow on this subject. Even at a Waxman-dominated CPSC, it would be rather ballsy to issue a notice announcing a decision before the vote was tallied. With three Democrats “highly sympathetic” and “seriously considering” the opposing views but by all appearances having irretrievably made up their minds, it is not hard to imagine that skipping a step might have a certain appeal. Why bother waiting for the Republicans to lose (again)???

Well, incredibly, my reader was RIGHT – the document states that the date for the lead content rules to become effective is August 10, 2010, a “date certain”:

“With regard to lead content, the Commission has determined that testing of children’s products for lead content by a third party conformity assessment body and certification based upon that testing should begin on products manufactured after August 10, 2010 to allow component testing to form the basis for certifications for lead content and permit the staff to complete an interpretative rule on the meaning of the term ‘children’s product.’ An interpretative rule on the meaning of the term ‘children’s product’ would provide firms with additional guidance on when testing for lead content will be required by the Commission.”

Apparently, no one updated this FR notice for this morning’s motion to docket this decision for ballot vote tomorrow. Oops!

Remember the part in the hearing today where they discussed market disruptions and the need for businesses to have time to absorb and adjust to the new rules? Does anyone wonder why we have confusion in the market after you read this document? Please be honest. Myself, I experience shortness of breath when I read dense prose like this. I think the works of David Hume seem more accessible than this kind of thing – so why does the Commission delude itself that anyone undersands the mountains of rules and rulings it spews out? Market confusion is all but certain when implementation is handled this insensitively.

One reason is that some Commissioners hear what they want to hear, and ignore the rest. This is called “selective hearing”; I know all about this topic, as there is at least one person who lives in my house who has been regularly accused of this malady. [No names, please.] For instance, yours truly pointed out serious errors in the presentations by CPSC professional staff during last week’s workshop as well as in the preceding December 2 hearing to a Commission staffer. I don’t blame the CPSC staff nor do I consider these errors to mean much . . . other than the fact that the CPSC staff is supposed to know these rules better than anyone else, and if they make errors (understandable), what do they honestly expect of the regulated community??? If we make these errors, we get whacked with high fines or possibly, if the CPSC is riled up enough, go to the pokey. Isn’t the occurrence of serious errors by CPSC staff an indication of over-complexity? This was all known to the Commission before today’s hearing. Get this – the Emperor has no clothes.

Still not convinced? Try this passage on for size, and then TRY to imagine running a normal business catering to children and in your spare time attempting to comply with this law. Imagine trying to master this law as implemented by the CPSC, given that you are not a lawyer, can’t afford a lawyer or a legal department, and don’t have a few unoccupied months to study the mountains of paper the CPSC emits. It’s something you have to do in between everything else you do in your job. And the CPSC says:

“In the months after the Commission issued the stay of enforcement, the regulatory environment has changed significantly [No problemo!], and both the CPSC and interested parties have increased their understanding of the CPSIA and its requirements. [Yes, bring it, baby!] For example, between February 9, 2009 and the date of publication of this notice, the Commission issued more than 20 FEDERAL REGISTER notices, statements of policy, guidance documents, proposed rules, interim final rules, and final rules pertaining to the CPSIA, and most of these documents pertained to testing and certification issues. [This is not a joke. I didn't write this part, either.] These FEDERAL REGISTER documents include:

• “Third Party Testing for Certain Children’s Products; Notice of Requirements for the Accreditation of Third Party Conformity Assessment Bodies to Assess Conformity with the Limits on Total Lead in Children’s Products,” 74 FR 55820 (October 29, 2009);
• “Notice of Availability of a Statement of Policy: Testing and Certification of Lead Content in Children’s Products,” 74 FR 55820 (October 29, 2009);
• Proposed Rule on “Safety Standard for Infant Walkers,” 74 FR 45704 (September 3, 2009);
• Proposed Rule on “Safety Standard for Bath Seats,” 74 FR 45719 (September 3, 2009);
• “Third Party Testing for Certain Children’s Products; Notice of Requirements for Accreditation of Third Party Conformity Assessment Bodies to Assess Conformity with Parts 1203,1510,1512, and/or 1513 and Section 1500.86(a)(7) and/or (a)(8) of Title 16, Code of Federal Regulations,” 74 FR 45428 (September 2,2009);
• Final Rule on “Children’s Products Containing Lead; Determinations Regarding Lead Content Limits on Certain Materials or Products,” 74 FR 43031 (Aug. 26, 2009);
• “Notice of Availability of a Statement of Policy: Testing of Component Parts With Respect to Section 108 of the Consumer Product Safety Improvement Act,” 74 FR 41400 (August 17,2009);
• Final Rule on “Children’s Products Containing Lead; Interpretative Rule on Inaccessible Component Parts,” 74 FR 39535 (August 7, 2009);
• Proposed Rule on Requirements for Consumer Registration of Durable Infant or Toddler Products, 74 FR 30983 (June 29, 2009);
• Final Rule on “Children’s Products Containing Lead; Final Rule; Procedures and Requirements for a Commission Determination of Exclusion,” 74 FR 10475 (Mar. 11,2009);
• Notice of Availability of Draft Guidance Regarding Which Children’s Products are Subject to the Requirements of CPSIA Section 108; Request for Comments and Information, 74 FR 8058 (Feb. 23, 2009); and
• Interim Final Rule on “Children’s Products Containing Lead; Exemptions for Certain Electronic Devices; Interim Final Rule,” 74 FR 6990 (Feb. 12, 2009).

Additionally, the Commission has met with numerous parties to discuss various aspects of the CPSIA or educate interested parties about the CPSIA’s requirements, and, on December 10, and 11, 2009, it held a two-day workshop to discuss issues relating to the testing, certification, and labeling of certain consumer products pursuant to section 14 of the CPSA (see 74 FR 58611 (November 13, 2009). [You know, the one last Thursday and Friday with simultaneous panels going on all day on both days. There has been no time to review or consider the data gathered at the workshop, or the written comments which will continue to come in for the next 25 days.] Given the issuance of many rules and other FEDERAL REGISTER documents, statements of policy, and guidance documents [OMG, there were other documents besides these?!], as well as increased understanding of the CPSIA’s requirements, the Commission believes it is appropriate to phase in the testing and certification requirements as described in more detail below.” [This passage is followed by pages of details of stays lifted, extended, partially extended, whathaveyou. It also includes the errant language on the lead content stay.]

I find myself scratching my head in wonder. What is going on here? Is this being staged for effect, or are they SERIOUSLY trying to regulate this way? Is ANYONE accountable over at the CPSC? Can they get away with anything and everything?

It is sickening that a discussion is even necessary for the extension of the stay on lead content. The Commission should hang its head in shame for foisting this mess off on an innocent manufacturing community. What on earth did we do to deserve this treatment? I am tired of this Commission bowing down to Henry Waxman and a howling pack of fear mongering consumer groups. Those people have never worked for actual operating companies and know nothing about the realities of the marketplace or manufacturing itself. It’s time to stop sticking it to the manufacturing community.

The WSJ noted tonight that Congress and Mr. Obama have hit new lows in popularity. I particularly found interesting that 81% of the participants in the new poll considered this “a period of division where the parties held fast to their positions and showed little willingness to compromise” in Congress. Do we really want this export at the CPSC? As a member of the regulated community, I vote no!

Tomorrow’s vote is going to tell us all a lot about this Commission and its leadership. Watch this space for news.

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CPSIA – The Eyes Glaze Over . . . .

CPSIA – Brace for It, Things Are About to Get WORSE

CPSIA Testing Costs . . . Tracking Labels . . . Retroactivity . . . Civil Penalties . . . Criminal Penalties . . . Phthalates ban . . . State AG enforcement . . . Market Chaos . . . It’s bad, bad, bad right now. Could it REALLY get worse? Consider Section 102(d)(2)(B) of the CPSIA, the latest horror story to smack you in the kisser: “(d) ADDITIONAL REGULATIONS FOR THIRD PARTY TESTING . . . (2) COMPLIANCE; CONTINUING TESTING.—Not later than 15 months after the date of enactment of the Consumer Product Safety Improvement Act of 2008, the Commission shall by regulation . . . (B) establish protocols and standards— (i) for ensuring that a children’s product tested for compliance with an applicable children’s product safety rule is subject to testing periodically and when there has been a material change in the product’s design or manufacturing process, including the sourcing of component parts; (ii) for the testing of random samples to ensure continued compliance . . . .” Nice and obscure, buried deep in the CPSIA. Never heard of it? Ayyy! Haven’t I told you that you must ALWAYS read the fine print??? This rulemaking, which has been giving CPSC Bar attorneys sleepless nights but has otherwise escaped the attention of the business community, is due in about seven weeks (November 14 deadline). It has the potential to be the final nail in our coffin, guys. Right now, there are no rules on frequency of safety testing. We are free to negotiate with our customers or establish our own testing plan. This has worked rather well for many, many years – after all, less than 0.01% of all children’s products are EVER recalled. But no longer. The CPSC is going to tell us how to assure safety and quality now. The premise is that we are incompetent to do so without government involvement. In our company’s case, the 130 pieces we recalled in 25 years (one incident) out of perhaps a billion pieces sold is no proof that we know what we are doing, apparently. Thank heavens we will finally have someone qualified to oversee our processes! The speculation is that the CPSC is going to specify testing every X pieces or Y lots, or at least annually. In addition, the requirement to have random testing suggests that we cannot be allowed to supply testing samples directly. The “idea”, as simple-minded and insulting as it may be, is that manufacturers might somehow pull the SWITCHEROO after a test report is issued. After all, we are SO EVIL ! The CPSC does, actually, worry about the “switcheroo”. They have mentioned it repeatedly as one of the impediments to the long-promised component testing rule that is aging like fine wine somewhere. NEVER has anyone pointed to a SINGLE recall that involved a “switcheroo” to my knowledge, but whatever – laws don’t need any basis in reality anymore. Hence the CPSIA. Math Interlude Begins Here . . . . I have submitted information to Congress on testing for one of our telescopes. We recently obtained a new quote on testing – it now costs about $11,500 all-in (including the 23-24 samples). Our annual revenue for this item before the econony crashed was about $30,000 per annum. Assuming gross margins of 33%, typical for the toy industry (and easy for illustration purposes), our annual gross profit (not NET profit) would be $10,000. The cost to test this item is MORE than our annual GROSS PROFIT. This means that the telescope dies – even IF we can set our own reasonable testing program. If testing on this item is conducted annually, our COMPANY dies, too. Let’s look at it another way. Say your testing cost (including samples and so on) is $3,000 for a particular product. How much profit do you require to make it worthwhile to sell that item? If you need a gross profit 33% to make 5% on the bottom line, presumably you cannot afford an annual testing cost of even 5% of the total revenue of the item. If you accept breakeven as the tipping point for this illustration, then the math is also simple: $3,000/5%, or $60,000 in annual revenue. Ideally, you would want more than that so you aren’t just “trading dollars”. You would be marginally profitable at $80,000 in annual revenue for this ONE item. In the specialty market, a product producing $80,000 per annum is pretty darned good. The profit you would earn on this $80,000 item would be 5% net profit or $4,000 less the testing cost of $3,000, or a grand total of $1,000. Sell $80,000 in telescopes, make a thousand bucks. Nifty, that must be how Bill Gates got so rich. Remember, this also means that the prospective revenue hurdle for any NEW item is ALSO $80,000 per annum revenue. AND you would have to front $11,500 before you sell dollar one of the new item. Hmmm, that might cut your product development pipeline down a LOT. In fact, this annual testing requirement will send many companies scurrying into other markets, such as the mass market or into other businesses, in any event far, far away from the CPSC and this law. I do not see how the education market would survive. Honestly, virtually every manufacturer serving the NSSEA market (educational dealers) is a small company. Even the bigger small companies still do insufficient revenue on the vast majority of products to justify this expense. I know that this rule ALONE could many companies to shed at least two-thirds of their product line. That’s too horrible to contemplate. Math Interlude Ends Here . . . . It is another irony of this rule that by formalizing the requirement to retest when you change components, you actually provide a negative incentive to become more efficient or more safe. There is no incentive to change factories if you save less than the new testing costs. It will take our factories about two seconds to realize that this gives them dominion over their customers. American businesses will be tied to their sources irretrievably even as costs rise, and will thus be at a cost disadvantage outside the U.S. to more efficient European and other competitors. In addition, the law punishes companies for improving their products by imposing a testing penalty on any change. Thus, your incentive to change a product to, for example, make it better or safer is greatly reduced – you will pay (literally) for your good deed. As these innovations are often voluntary, it will be impossible for the government to know how you might have improved your products had they not meddled in your business. You save money, and your products are more expensive, uncompetitive and less safe. What a great way to run an economy! Given everything that has happened to date, we shouldn’t expect a Knight in Shining Armor to emerge from the CPSC to save us. After the double-speaking phthalates standard and tracking labels guidance , plus the truly stupefying rules on exempt materials , I find it hard to believe they will do the right thing here. The lip service by Commissioners about recognizing the needs and legitimate concerns of the business community has been just that – lip service. How could disaster be averted? It would take unprecedented bravery and character by Inez Tenenbaum. Democratic leadership in Congress has thumbed its nose at the children’s product industry. It would be overly kind to call their attitude a calculated indifference to our fate. That leaves us in the hands of Chairman Tenenbaum. Thusfar, Ms. Tenenbaum has chosen to kiss the pinkie rings of Mr. Waxman and Mr. Rush and with Southern charm, coo about the “good statute”. She has done nothing to stand up for the moral, law-abiding, crucial businesses serving the children’s market despite overwhelming documentation of the senseless damage being done by the terrible CPSIA. Ms. Tenenbaum needs to have a change of heart. If she takes the route of least resistance and issues guidance requiring frequent testing and other unnecessary but expensive similar requirements, it is probably game over for everybody . On the other hand, she could rise to the call of history and tell Mr. Waxman to drop his pretense that this law is somehow workable. Frankly, there is no data available to justify Section 102(d)(2)(B). The assertion that the government must, for the first time in history, tell us how often to test to assure quality has no basis in fact. It’s just a Congressional staffer’s (or consumer group’s) lunkheaded idea. Ms. Tenenbaum, it’s your call. You can save us and be a hero, or you can send us down the river and be remembered as the one who committed this mortal sin. You won’t be afforded the opportunity to blame this one on Congress – you can act, and you know it.

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CPSIA – Brace for It, Things Are About to Get WORSE

CPSIA – Consider the Source (Part II)

From an article in today’s BNA entitled “Need for CPSIA Changes Debated”, “In an interview with BNA, Nancy Cowles, executive director of Kids in Danger, praised the commission’s July decision on fashion jewelry accessories. Cowles told BNA that lead is a severe toxin with no safe level. She added that while more common sense could be applied to determining which products are hazardous, consumers overall do not want products containing lead. “People will come up with other ways to put [jewelry] on children’s clothing that isn’t toxic. Whether the lead [in rhinestones] leaches out fully, it’s hard to know, but we don’t want lead in our children’s products. We will come up with other ways to decorate our clothes,” Cowles said.” There are other quotes from consumer groups in this article that set my blood ablaze, but I thought this one deserves special “heralding”. I should note that I have written about rhinestones extensively, and debunked the opinion expressed by the estimable Ms. Cowles thoroughly. [See my "Jewelry" tags.] You may wonder, why do I care so much about rhinestones. Our business does not use rhinestones, so what’s the big deal for me? Rhinestones is a poster child for the stupidity of the law. The impact of the CPSIA on rhinestones is the impact that is bedeviling the entire children’s product industry, from toys to books to shoes to bedding to what-have-you. If rhinestones go down, safe as they are, we all go down. If we can save rhinestones on a rational and fair basis, perhaps the rest of us will get fairer treatment. That said, I have a couple comments on Ms. Cowles’ remarks. First of all, she is fear mongering, not advocating for you and your children. She says rhinestones are “toxic” – I say “prove it”. The people behind the CPSIA are left with few options to save their precious law but to deceive the general public about health risks. The case on rhinestones is out there to be examined by Ms. Cowles. Why not attack rhinestones with data and analysis? Because no data or analysis exists to weaken the case FOR rhinestones. The “there’s no safe level of lead” mantra is faulty. We already consume plenty of lead in our air, our food and our water daily. The rationale that trace presence of lead in children’s products is somehow the health “tipping point” has never been proven and frankly cannot be asserted on a reasoned, scientific basis. The lead we consume in our normal daily activities dwarfs the lead you might ingest from casual contact with children’s products. If there really is “no safe level for lead”, then our wise Congress should attack the big sources of lead first, and leave the rest of us for later. Second, Ms. Cowles is sending a lot of people down the river with her casual condemnation of rhinestones. I would note that many industries use rhinestones in their products. The people who run those companies, are employed by those companies, are supported by income from those companies, trade with those companies or value those products in their lives, will ALL lose if the likes of Ms. Cowles get to run our society. Does that make ANY sense to ANYONE (besides Ms. Cowles)? I keep thinking of the prescription she offers for living a safe and wondrous life. She says we will (and should) find something else to decorate our products with. Perhaps Ms. Cowles decorates herself with the jewels from Pretty, Pretty Princess . That’s what she is suggesting, that we get used to plastic jewelry. Perhaps Ms. Cowles can live with getting gifts for her kids from a vending machine, but that’s not how I want to live. As I have noted before, inexpensive stones are a way for people to bedeck kids with jewelry inexpensively. Rhinestones are important to a lot of people, some of whom may not have the economic wherewithal to switch to diamonds and rubies. In addition, it’s an inexpensive way to let little kids have a bit of bling. If you are trying to make your little kids look special for social, cultural or religious reasons, I think Palladium earrings may be somewhat impractical for most people. Little kids to tend to outgrow their clothing and shoes quickly. Parents can’t really afford to buy and rebuy clothing and jewelry using precious stones as their kids grow, and may never warm up to Pretty, Pretty Princess jewelry. If this is the way it has to be, I think we should think more insightfully about who is writing the rules for our society. Increasingly, the recommendations of consumer advocates are ringing more and more hollow. How crazy has the world become? Consider this quote from the November 2008 “Trouble in Toyland” report issued by the Vermont PIRG: “Some children’s toys, jewelry and cosmetics may contain toxic chemicals, especially lead and toxic phthalates. . . . PHTHALATES AND OTHER CHEMICALS Avoid toys made of PVC plastic; which often contains phthalate softeners. Choose unpainted wooden or cloth toys instead.” Yes, PIRG wants us to use cloth toys and plain unpainted wooden toys to be “safe”. But how “safe” are these toys? The CPSC, after due consideration, has informed us in their new phthalates testing standard : “Examples of materials that do not normally contain phthalates and, therefore, might not require testing or certification are . . . Natural wood [and] Textiles made from natural fibers, such as cotton or wool . . . .” Uh-oh! PIRG is telling you to buy products that MIGHT contain phthalates! Ouch. [To be fair, I have no idea how phthalates would get in there, but heck, the CPSC says they MIGHT. They must know something I don't.] So PIRG has it wrong – we can’t even play with cloth toys or wood. What’s left? Rocks. Oh, no – rocks need to be tested for lead, phthalates and sharp points! Well, perhaps after the Residential Rock Roundup is wrapped up, we will all be safe to move into caves to play with our rocks. Ms. Cowles, get your own cave – you can’t play with my rocks.

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CPSIA – Consider the Source (Part II)

CPSIA – A Rich Irony, Courtesy of the CPSC

As you probably know by now, Mattel won approval from the CPSC for its seven proprietary overseas labs to conduct official and certified safety tests under the CPSIA.

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CPSIA – A Rich Irony, Courtesy of the CPSC