CPSIA - Anne Northup's Op-Ed in the Wall Street Journal

For those of you who may have missed it over the holidays, here is Commissioner Anne Northup's Op-Ed in Thursday's WSJ:

OPINION
DECEMBER 24, 2009
12:07 A.M. ET

There Is No Joy in Toyland
The overreach of a child-safety law is killing American jobs and businesses. It's not too late for some common-sense changes.

By ANNE M. NORTHUP

With the unemployment rate stubbornly high and President Obama focused on job creation, it's a perfect time for Congress to revisit a law that's making our economic problems worse, and spoiling Christmas for many kids to boot.

Thanks to the Consumer Product Safety Improvement Act (CPSIA), small businesses like Baby Sprout Naturals and Whimsical Walney have already closed their doors. And some 40% of companies responding to a Toy Industry Association survey planned to eliminate jobs this year because the cost and complexity of compliance with this law is too great. For manufacturers and sellers of children's products, perhaps a renewed interest in saving small businesses comes in the nick of time.

The safety legislation, which passed with overwhelming bipartisan support in 2008, is a study in the law of unintended consequences. The new law reduced the Consumer Product Safety Commission's longstanding discretion to act in response to genuine risks, substituting instead the rigid, broad-brush, and unscientific judgment of Congress.

Though written in response to dozens of recalls of Chinese-made toys with lead paint, the law goes well beyond lead paint (which poses an undeniable risk to children) to ban all children's products that contain a component with more than three one-hundredths of 1% lead. This means such ordinary items as zippers, buttons, belts, the hinge on a child's dresser—and even that bicycle from Santa Claus—are outlawed.

These products often contain lead in excess of the new legal limit, but unlike lead surface paint, this lead is contained within the metal or other substrate material. The lead can rub off these items in miniscule amounts detectable only with sensitive lab equipment, but it is not "bioavailable"—meaning it is unable to be extracted and absorbed into a child's bloodstream. By failing to distinguish between easily absorbable lead in paint and not easily absorbable lead in other materials, the legislation was a dramatic overreach.

It gets worse. In addition to banning components that do not create a lead hazard for children, the law also imposes onerous product testing by outside labs that smaller manufacturers and handicraft makers simply cannot afford. Instead of spending money to expand and create jobs, companies have diverted billions of dollars so far to destroy innocuous but noncompliant inventory, as well as to understand and meet complex new compliance obligations.

Major charities, like Goodwill Industries and the Salvation Army, have publicly estimated lost inventory and disposal costs at $100 million to $170 million in secondhand children's clothing—such as winter coats with metal snaps—that's not affordable to test for compliance, yet still needed by many families.

Bicycle manufacturers have re-engineered dozens of parts from more expensive and less environmentally friendly materials to replace handle bars, spokes, tire valve stems and other harmless metal parts that contain lead.

To cope with annual testing costs running to half a million dollars or more, domestic retailers and manufacturers like Challenge & Fun, Inc., Constructive Playthings, and ETA Cuisenaire (a maker of educational tools), have reduced payrolls or limited product lines. Many small apparel companies, including JenLynnDesigns, have either closed shop or exited the children's apparel market completely.

In just the first eight months after enactment, the Consumer Product Safety Commission estimated that the 2008 safety law cost businesses in the "billions of dollars range," including: more than $2 billion in losses to the toy industry; $200 million in potentially violative inventory for members of one apparel industry group (the California Fashion Association); and an estimated $1 billion in annual losses reported by the Motorcycle Industry Council for lost sales of youth model motorbikes and off-road vehicles. Several popular German toymakers such as Selecta Spielzeug, whose products comply with stringent EU regulations, have stopped selling their toys in this country. Consumers are facing higher prices for a smaller variety of products that are no safer than before.

Some of the commission's decisions have made matters worse. Last month my colleagues in the majority interpreted one exclusion built into the statute based on the absorbability of lead so inflexibly that not a single children's product could qualify for it. That vote denied a petition for exemption to brass axle collars on toy cars even though—as one majority commissioner admitted—the commission's staff would have no concerns about letting their own children play with them. The commission thus decided that the law prohibits the sale of toys that impart less lead than the Food and Drug Administration allows in a piece of candy.

For the past several months, American businesses have been caught in the middle of a classic standoff between the federal commissioners in the majority, who argue that the statute ties their hands, and members of Congress, who claim they wrote flexibility into the law and blame the commission for any harsh consequences. Although the commission steadfastly refused to reach out to Congress to seek clarifications to the law, Congress has now reached out to us—asking the agency last week for a list of recommendations to amend the statute.

Thankfully the commission responded, in part, by agreeing to extend the stay on testing and certification for lead content. This window gives Congress time to consider such common-sense changes as: allowing for higher lead content in products like bicycles where only a tiny amount could be absorbed; restoring the commission's longstanding discretion to focus its efforts in response to genuine risks; lowering the age range covered by the law so that products for 12-year-old children and 12-month-old babies are not treated identically; and eliminating the retroactive effect of the law—which disproportionately affects libraries and thrift stores. Hopefully, this request from Congress will result in real changes to the law, not a half-hearted effort on our part or Congress's to avoid responsibility for the problem.

President Obama could help this process along by urging Congress to pursue a bipartisan fix. We can protect children from harmful products without striking a blow against the teetering American economy—but we must act quickly. Otherwise, the CPSIA's Grinch-like rules will needlessly cost our country more jobs and reduce the opportunity for small businesses to help lead our country out of recession.

Ms. Northup is a Republican commissioner on the Consumer Product Safety Commission. She represented Louisville, Ky., in Congress from 1997-2006.