CPSIA - Oh No, They Didn't Go Away

As you may have heard, the federal government stuck around this week. No shutdown, which means that the CPSC is still busy, busy, busy protecting us. We should all appreciate it. At least that's what they tell us.

So why do I have such a bad attitude? How would you feel if the people running this federal agency told Congress in writing that you were intent on poisoning children. They didn't accuse me by name, or you, but instead accused us all together. Perhaps they think we are all intent on doing it. They said, clear as day, that we were ready and waiting to "dose" children with lead. The purposefully-chosen word "dose" suggests an act of volition, something intentional and sinister. The word connotes an unwitting victim. Bottom line, they are saying that we are perversely stalking innocent children unaware of their "fate". Really, really nice. Especially by a Chairman of the CPSC and her cohorts holding a majority vote controlling the agency.

Those of us in business, we tend to take our reputation seriously. It is deeply offensive to be insulted by strangers, people unable to know us or our intentions. I don't think the word "slander" is too far a stretch. How can the three Democrats (Inez Tenenbaum, Bob Adler and Thomas Moore) be so arrogant to stand before Congress and assert that they (and their law) stand between the American consumer and infamy? I simply can't say. It really is disgusting.

Not only is this is a devastating insult, but it is frankly a crushing blow to the FUTURE restoration of trust in this agency. NEVER previously has there been such a broadcasting of intentions, a profound and dirty bias against manufacturers and in favor of media pandering. Whether they are taking instructions from someone off-stage or not, their letter to Congress confirms that they cannot be trusted to be fair or open-minded. The three Democrats are certainly not a government for all of us because manufacturers and retailers are now frozen out of the community. The Dems have pushed them out. This is not an American government anyone would want.

What will Congress do? Rumorville has it that I am not the only one whose jaw hit the ground and whose blood began to boil when they read the Dems' letter. Some people around town actually care about the fairness of government. Some people believe in fairness and are sensitive to any odor of ignorant prejudice, minds made up before evidence is presented. Some people believe government must be accountable. Some people believe there is no excuse for this kind of behavior.

The Dems put themselves in the soup. G-d willing, they will be held to account. Stay tuned.

CPSIA - What Can We Learn From the Toyota Debacle?

It was about one year ago when the Federal government went into overdrive in trashing Toyota, a widely admired and reputable company, for its apparently defective automotive accelerator mechanism. I say "apparently" because our fearless leaders in government reached the conclusion that Toyotas were defective based on hasty conclusions and a document review . . . but no scientific research. This is hardly a shock. I have previously observed that manufacturing a dangerous public enemy in an election year is quite helpful to members of Congress - after all, we need to be reminded who's working so hard to save us.

A quick reminder: the CPSIA was passed in August 2008. Oh my gosh, that's right before a national election!

The drive to jump on board and bash Toyota was overwhelming. Recalling Joe Biden's helpful 2009 advice to not fly or take the subway because of a swine flu outbreak, Secretary of Transportation Ray LaHood warned Americans to stop driving Toyotas in a Congressional hearing last year. You can't be TOO safe! Think of the impact on the company and its brand. Yesterday he announced Toyotas "are safe to drive". Oops. . . .

Not to be outdone, Rep. Henry Waxman, the man principally responsible for our being subject to the CPSIA without amendment now almost three years later, torched the company for its supposed misdeeds in his opening statement at his committee's hearing on February 23, 2010. What did Toyota do wrong? Well, he says the "defect" in their cars had to be in the newfangled electronics in the accelerator mechanism. Callous Toyota didn't look at the electronics, Mr. Waxman contended. Instead, he said "There is no evidence that Toyota . . . took a serious look at the possibility that electronics defects could be causing the problem . . . . Toyota had three responses: first, blame the driver; second, blame the floor mat; third, blame a sticky gas pedal. And NHTSA, without doing any meaningful independent review, accepted Toyota's recommendations."

Clearly NHTSA needed David Strickland to fix everything and make us all so safe - he did such a great job on the CPSIA.

Ironically, Mr. Waxman was pretty clairvoyant that day. NHTSA (under David Strickland's guidance) concluded yesterday that Toyota's purported three "responses" were the right explanations for the sudden acceleration problem. See the WSJ article linked above. Hmmm. Mr. Waxman carried on to warn Toyota that "safety must start coming first" (implying that Mr. Waxman's judgment on auto safety is superior to Toyota's) and concluded that "ultimately . . . addressing this problem will require legislation."

I feel another CPSIA flashback coming on . . . .

The Toyota feeding frenzy even swept up our own Chairman Tenenbaum who couldn't resist pointing the finger, too: "A new Commission that has new powers - and we are not afraid to use them. If you resist our efforts to recall children's products, be forewarned, this Commission stands ready to be creative in the use of our enforcement authorities. As the Toyota experience has shown in recent weeks, this government will not allow for delay in recalling dangerous products." No delay whatsoever - even to figure out if they are actually dangerous! Didn't McDonald's recall safe Shrek glasses "out of an abundance of caution" at the request of the CPSC? Toyota was quite inspiring, I guess.

To put a bow on the conclusion of this comedy of errors, Public Citizen (a consumer group purporting to "protect" you in the CPSIA saga, too) asserts that the government's Toyota study is not "convincing". I have previously explained why folks like Public Citizen will NEVER give up the ghost here. There is probably nothing that could convince them that they were wrong in the first place. After all, that's pretty de-legitimizing. We certainly can't have that! Think AAP on lead.

Blamestorming in Congress, jumping to conclusions based on a media frenzy, little hard information and a lot of political drum banging? Brandishing the blunt force of excessive government power to beat a company senseless? Toyota is one of the largest companies in the world. Imagine if this excessive power were taken against a small business? Imagine . . . .

As I said last year, the Toyota feeding frenzy is what we have been subject to, now for three years, in the sad CPSIA debacle. At a Congressional hearing next week when I may face the same legislators who took Toyota down - for no good reason - I must again defend our right to conduct business responsibly without the intrusion of government into everything we do. Having written a law to keep children "safe", Congress is quite reluctant to admit their error and admit that we can keep kids safe without being told how to do it. The basic reason is that they can't acknowledge that kids weren't at risk from lead BEFORE the law. It's easier for them to ruin our businesses than to do the right thing.

Just to be clear, it is absolutely irrefutably clear that the agents for change here are the Republicans and the opponents to remaking the CPSIA into something workable and sensible are the Democrats. As I have stated before, Democrats in the Senate are still working to block change. They are like Public Citizen - NO possible data can convince them.

Will Congress ever admit that the definition of Children's Product is too broad, that the scope of ages covered by the CPSIA is damaging to our markets, that we are over-regulating extremely minor or unreal risks while ignoring big risks (thereby actually making children LESS safe), that the rising (risen?) specter of liability is having a very negative effect on the conduct of business, that the encouragement of rabid enforcement at the CPSC has created an environment of mindless and uncompromising rule following (creating many starkly unfair results and ruining the reputation of a proud agency accustomed to doing good), and so on? That's a good question.

Tune in next week and see for yourself!

CPSIA - Taking Advice from Idiots

In a recent article entitled "Advice on avoiding a toxic Christmas", USA Today attempted to take Christmas paranoia to new heights. Naturally, the premise of the article is that companies are criminally irresponsible or venal and certainly can't be trusted, and consumer advocates and any pediatrician that will talk to a reporter are better people, better informed and by definition trustworthy. In this article, USA Today's Liz Szabo consults "experts" to reach the following conclusions:

a. "No one knows how much lead people absorb from holiday decorations, says pediatrician Bruce Lanphear, of Canada's Simon Fraser University." And if he said it, it must be true. [Of course, pediatrician Philip Landrigan, of Mount Sinai School of Medicine in New York, notes "In the whole scheme of things, is it a huge risk? No."]

What's the problem with Xmas lights, you say? Lead in the PVC. According to Alicia Voorhiess, a mom with a blog, manufacturers "use it" in the PVC. Right - you got us! Don't worry, though, after much digging, she found two companies that offer Xmas lights which comply with Restriction of Hazardous Substances (RoHS), a European standard which limits the presence of lead in lights.

Ummm, Alicia, RoHS is a standard to designed to prevent leaching of heavy metals to protect the environment and only applies to electronics. This MEANS that the lead is restricted in the bulbs and fittings, not the PVC. Whatever, it sounds safer, doesn't it?

The author of the article quotes Dr. Alan Greene (my college classmate) saying that you should handle your Xmas lights with gloves. Why stop there? Moon suits, anyone?

b. Artificial Christmas trees are made of PVC, too, and we know what manufacturers are wont to do with PVC. The solution - use a real tree grown without pesticides.

I find this a most uncreative solution, myself. Here's a few more:

• Post a picture of a beautiful tree near the spot you might have placed your tree. Keep it away from the fire, however.
• Consider just displaying your Xmas lights in their packaging. No touching!
• Use an artificial tree, but place under a glass enclosure or something air tight like Saran Wrap. Stand at least five feet away at all times.

All of these remedies will protect you from lead. That said, please remember there is NO safe level for lead. And a holy, jolly Christmas to you, too!

Shame that USA Today didn't focus in on the fact that there is lead in the air, in our water and in our food. OOPSIE! In fact, lead in water is conveniently piped into Washington, D.C. homes for kids to drink in their own bathrooms and kitchens. Nice! Somehow USA Today missed this. Shocking . . . .

c. Candles with metal wicks might also have lead in them, or then again, maybe they won't. In a blow to poorly-researched newspaper articles, the CPSC apparently banned these wicks in 2003. Who knew the CPSC actually tried to its job before the CPSIA? Somebody should have told Congress.

According to this all-knowing newspaper, candles also contain paraffin, a wax made from petroleum. Not sure why I should care about that, but it sounds ominous. And some fragrances in candles have phthalates in them "which can affect the hormonal system". Isn't knowing nothing about science FUN???

The solution - The author of this article actually recommends that you use pure beeswax candles. Happy hunting! They also suggest you "poke cloves into oranges". Ah, the old clove poking trick! That sounds like fun but IS IT SAFE? This article says oranges have lead in them. NO! And, for an extra kicker, it also says they have cadmium, too: "If the soils contain toxic metals like lead, mercury and cadmium then the consumers may be poisoned as happened in the "Ouchi-ouchi" disease in Japan . . . and similar episodes." Wow, Ouchi-Ouchi! Scott Wolfson, do you hear a bell ringing? [Eating oranges didn't cause "Ouchi-Ouchi" but then again, researching these things is sooooo time-consuming.]

So there you go. Skip Christmas this year, too dangerous. I wonder if a Festivus pole is lead-free . . . .

CPSIA - Let's Keep Sucking Our Thumbs . . . .

803 days have passed since ANY Democrat in Congress did ANYTHING to help us on the CPSIA. There are only 7 days left until Election Day.

Seven days to go! Go, baby, go!

I just found this article documenting the pain of some Illinois toy craftsmen owing to the CPSIA. Imagine, these guys are being held up by the noxious CPSIA and are essentially shut down. I have been reading these articles for almost three years now. Ho-hum.

Have any of you heard of Mattel or Hasbro going out of business because of this law? Me, neither.

Articles of this type are discouraging on several levels, not least of which is the lack of comprehension of almost everyone who gives a quote. The scale of the problem for small business, even the very nature of the problem presented by the law is unclear, apparently. No one asks the right questions like - why are we doing this? What are we achieving? Is it worth the cost? Can we even measure what we have accomplished?

Of course, the answers to these questions are all negative. No one knows why we're doing this, other than a general love of children. Don't know about you but a "general love of children" is a rather flimsy justification for killing off an entire industry (other than mass market companies like Mattel). Given that we have many fine universities here and train the occasional engineer in this country (I am one of them), I would think we could be a just a little more "science-y" in our analysis. So, if we can put our "general love of children" on the shelf for just a moment, why indeed are we doing this? To improve the health of children, right? That sounds good to me.

To assess whether we have had any impact on the health of children, presumably we would need to be able to describe what is WRONG with the health of children now. The zealots assure us that there is no safe level of lead. They also assure us that lead harms children "silently", in other words, the harm cannot be measured accurately, but trust us, it's there. In other words, there is no way to differentiate between lead "poisoning" in children not presenting symptoms - and a purely imaginary condition in those same children. The "real" problem and the imaginary problem present exactly the same way - no symptoms. Contrast banning pixie dust with banning lead-in-substrate - the issues are the same.

[Ed. Note: Apparently there ARE safe levels of lead in musical instruments made of brass if they are full-sized, but not if they are under-sized. This is part of the new interpretative rule on the definition of "Children's Products". Therefore, if you had a small trumpet (dangerous, subject to regulation) and you stretched it, making it into a full-sized trumpet with thinner walls of brass, it would become safe (no regulation)! Hmmm. This is not magic, this is the CPSIA!]

And if you want to measure your impact on this dreaded problem, how would you do it? The health statistics are purely made up, because there are no symptoms. The reasoning goes - since there is "no safe level" for lead, then we must consider anything that could possibly cause a blip in blood lead levels as a causative agent, therefore, we must ban everything that COULD POSSIBLY make blood lead levels rise.

Given that blood lead levels are declining these days and are not considered a health risk by the EPA, FDA, NIH or CDC except in connection with certain specific hazards (leaded house paint, residual pollution from leaded gasoline, or other environmental factors like air pollution), we cannot measure any improvement in health. It's literally impossible (remember, the "real" problem and the purely imaginary problem present exactly the same way). Thus, it will be impossible to measure how much we have achieved for our investment. We must cling to our assertion that there is "no safe level" for lead to assure ourselves that we have accomplished something. This is a logical argument, but there's no evidence to support it.

So the entire exercise is speculative? The benefits cannot be measured. The problem can't be measured or even described accurately. There weren't any victims before, there aren't any victims now. Seems like nothing has changed. Uh-oh.

Ah, thumb suckers, THAT isn't true. Something fundamental has changed, thank you Congress. Safety hasn't improved . . . but a few things have changed substantially:

1. Our regulator is no longer capable of exercising a judgment about what is and what is not safe. Consider the musical instrument example above. The CPSC has also become quite aggressive, perhaps to justify its existence and its new jumbo budget. Not pretty.
2. The cost of compliance has already skyrocketed. Those dollars are coming out of activities that would otherwise be used to grow our businesses.
3. You ain't seen nothing yet on costs - wait for the CPSC to approve the 15 Month Rule on testing frequency and reasonable testing programs. Costs will rise by 10-100x for many companies if the rule is adopted as presently drafted. I'm not kidding.
4. Complexity and risk have skyrocketed. What do people do when they can't figure out the rules or they get scared about the consequences of failure? They exit.
   
   [Here's another pre-Xmas threat by the ever-lovable Inez Tenenbaum: "'We will continue to recall their products and it will damage the brand. There will be penalties, there will be lost customers,' she said in an interview." She's quite a charmer, isn't she? Does this sound good to you? Want to enter the Children's Product market? Want all your family's wealth dependent on the health of a business in this market, being regulated by Ms. Tenenbaum? Hmmm, the line's out the door, everyone wants in!!!]
   
   
5. Products and markets are being dropped, or aren't being entered in the first place. Profits are being lost (profit prevention) and jobs are being shredded. Lots of jobs . . . .
6. It's not fun anymore to be in this business.

As for the Illinois wood toymakers, it's a shame for them. We read about this kind of thing all the time. Maybe it will go away on its own. Maybe it's all their imagination. Small businessmen are often so unsophisticated, they probably don't know what they're talking about. The U.S. government is just too smart to get something this wrong. If they really screwed up, they'll fix it - the government's not the enemy, you know. Something this big and stupid can't be true. Somebody big and important, like a trade association, will save us. No, no, 60 Minutes or John Stossel will do an embarrassing story and that will break the logjam. [Ed. Note: been there, done that.] I'm too busy running my business to address this. You can't fight City Hall. It will get fixed, don't worry! Nothing this ridiculous lasts very long.

Boy, that thumb must be yummy! But at your age, thumb-sucking seems so inappropriate.

Don't forget to vote on November 2nd. Even if this scourge won't go away and has become entrenched, you can still strike a note for capitalism and for sanity by voting against the idiots and the venal people who want to destroy your businesses and deprive you of valuable products that you prize. You can defend yourself - and you MUST.

CPSIA - CPSC Sets Its Sights On the Real Menace to Society . . . Buttons

In yesterday's USA Today article entitled "Lead testing can be costly for mom and pop toy shops", Scott Wolfson, Director of Public Affairs at the CPSC, cited the "positive effects" of the CPSIA on the market. What were those "positive effects" that Wolfson bragged about to the national media? "[Wolfson] notes global suppliers are choosing lead-free buttons for adult and children's clothing, which is safer for everyone and helps shift the burden from small businesses to suppliers up the line. He says Tenenbaum is trying 'to find the right balance between compliance and not putting companies out of business.'"

Let's be clear here, Wolfson is talking about making everyone "safer" by eliminating lead-in-substrate in buttons. He is NOT talking about lead-in-paint. Lead-in-paint has been illegal for decades, and a small number of recalls have occurred for lead-in-paint violations relating to buttons. [No injuries were ever reported, of course, but don't get me started.] Buttons have been recalled for coming loose and violating the small parts rules. This is a REAL hazard to small children. Kids can actually choke on a button and be injured. Wolfson is NOT talking about this issue. He is focusing on other "positive effects" from the law.

Wolfson also took pains to note that the buttons were being removed from adult clothing, too. Did you realize how much danger you were in before the CPSC was able to induce these "positive effects"? I really appreciate Wolfson bringing this to my attention. Thank heavens for our federal protectors!

How many recalls have occurred in the United States for lead-in-substrate in buttons - EVER? According to the CPSC website, ZERO. According to a Google search this morning, I believe this kind of recall has NEVER occurred ANYWHERE IN THE WORLD. And the removal of lead-in-substrate is a positive effect of the law? Is Wolfson responsible to explain this puzzling remark?

So after two years of continuous arguing and the devotion of many tens of thousands of man-hours of work to implement the noxious CPSIA by the federal government and industry alike , the CPSC holds up as its great achievement - buttons. Whew, it's safe to walk the streets of America again!

Thank you CPSC for seeking the right balance between compliance and NOT putting companies out of business. Yeah, I get it.

Unfortunately, by highlighting something as asinine as buttons as a possible lead hazard, the CPSC fuels a long-simmering public hysteria over latent chemical hazards. No one was previously aware that buttons could kill you from their bound=in lead content, but apparently our federal government is quite concerned about button lead content. Isn't that what Wolfson said? After all, why would he mention it to USA Today if it wasn't a problem at all? This kind of remark helps persuade the public that dangers lurk where they can't see them. Lead must be terrible, right, if the CPSC is so hysterical about it? The conclusion is inescapable.

And let's not forget the McDonald's Shrek glasses. Cadmium must also be a terrible problem or else why would our trusted federal government urge recall of the drinking glasses out of "an abundance of caution"? Which are we to believe - the CPSC's actions in demanding the recall for undisclosed trace levels of cadmium in the enamel on the OUTSIDE of the glasses, or Wolfson's own written reassurance that the glasses aren't toxic? And of course, there is the Congressional "inquiry" by Waxman and Stupak as further evidence of the "justifiable" health concern. As the relentless stream of breathless and panicked media stories confirm, the public believes that the recall was justified and therefore that cadmium is a real concern, a silent "killer". The fact that there has never been a single reported cadmium injury from a consumer product in this country's history is never discussed.

This kind of reinforcement leads to paranoia about many safe products - and makes doing business in the children's market in this country exceptionally difficult and unpleasant now. No one trusts us anymore and the only thing we did wrong was elect the wrong people to Congress.

The message that we business people can't be trusted is clogging the airwaves almost daily. The weekly corporate bashings by Congress and the White House paints a clear picture to the American public. You need only consider the treatment of BP, Toyota, Wellpoint, Massey-Ferguson, GM, Chrysler, evil bankers . . . the list is long. We're all bad, right? That's the theme these days.

CPSC leadership also reinforces the notion that corporations must be closely supervised by the federal government. Corporations will cut corners and take chances with your children's health but for the crusading efforts of this pioneering and courageous safety agency. Remember Tenenbaum's theme: the CPSC is not a "teething tiger" anymore. With this approach at the CPSC, small wonder then that these are among the USA Today comments:

"Yeah...Tests can be costly, but on the other hand death seems to be pretty costly also. But I guess the determining factor will always be money. Save 10 cents, 10 dollars, 100 dollars at the cost of someone else."

"Well if they cannot test the products they make to insure that our children are safe. Then its time to start making other items. The simple fact is that the Chinese and our bought and paid for congressmen/congress women have allowed this to happen. My opinion ban all products from China since it is evident that they do not care for the health of our citizens."

"WE can never ever trust the Chinese. They are the worst people! Why do we do any business with them is beyond me."

"This is just more gov regulation that the GOP says get's in the way of the Free Market. Let the Free Market get the lead out on it's own. Too bad there's no profits in 'getting the lead out'. It's cheaper to use lead as a filler, and hire lobbyists to pay-off congress. We've got it all dialed-in in America!"

Thanks for all the help, CPSC. You sure are helping our market. Your efforts will only succeed in driving the good people out of this market, along with their good products, their innovations, their productivity gains and their jobs. And who will be around to help educate your kids and grandkids? Let's not think about that one. No, no, ignore me for a few more years. This can go on indefinitely. We'll just take it. We love it. Go ahead.

It's time for Nero to share the stage with the Democrats. Go on, fiddle while Rome burns.

CPSIA - Thank You Sir, Please Give Me Another . . . .

Today I was assaulted with the news that our company had just received a bill for more than $4,000 to test one of our older items as required by one of our major retail clients. This particular retailers requires that we test every shipment to them using their lab, their prescribed assortment of tests and their pricing - at our expense. There are no exceptions to this rule and no negotiations are tolerated. It's said to be "a cost of doing business", and we are supposed to take this cost into account when we price our products to them.

This item has been tested I don't know how many times. Many times in many forms. Every test was a pass. This latest $4,000 test told us NOTHING we didn't already know. Had we done the tests ourselves using our primary test lab, we would have spent a fraction of the $4,000 we were required to pay by our retailer client. The product is no safer with this latest test. Most of the money (60%) went to phthalates testing.

Although there is nothing about this test that does NOT irritate me, proving the absence of the six banned phthalates is BY FAR the most offensive. We use materials that do not contain the banned phthalates. This is something that our supply chain management is supposed to address. Even more to the point, since these chemicals have been banned for almost two years for use in toys (for better or worse), they are largely absent from the supply chain without our doing anything at all. Yet, the geniuses who wrote the CPSIA require that we test each product, over and over, to prove they're not there. Phthalates cannot spontaneously generate themselves - they are an ADDITIVE. Having jacked up penalties to the sky and hit several retailers with highly-publicized irrational and vindictive penalties, the CPSC has created a caustic environment in which testing is not negotiable with large retailers. Hence, we must prove again and again that the phthalates that weren't there, aren't there. This costs BIG MONEY. It accomplished absolutely nothing.

And the $4,000? We were theoretically supposed to charge the customer for the testing in our product pricing, but in fact, in most cases, we must absorb the cost. That's the real world. So we make $4,000 less in profit. We have $4,000 less to invest in our business, $4,000 less to pay health care costs, $4,000 less to pay for innovative product development, $4,000 less to pay bonuses. No one is safer, either. And this is good for all of us? A good way to run a country?

And where did the $4,000 go? To China. The lab which our client requires we use is a public company, and the chosen lab is located in China. Notwithstanding the lab's low operating costs, the prices we pay for this testing are full boat, un-discounted, nosebleed pricing. They simply vacuum up as much of our money as they are allowed, and your wonderful Democrat Congress shrieks with delight.

We're so safe now . . . .

I can only hope that the jobs of the Democrats who are keeping us in this CPSIA hell aren't as safe come November. That seems to be the only recourse we have left.

CPSIA - CPSIA Casualty of the Week for January 25

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 January 25, 2010

CPSIA Means No Bling for Baby

When Elementary School teacher Marcy Cohen had her first baby girl, she and her sister Lori Rockoff, a social worker, started making tiny accessories for the newest addition to the family. With only a few strands of hair to adorn, the sister team developed "no slip" clips and bows. Soon, their sparkling rhinestone creations were catching the eye of friends and strangers, prompting them to launch Pea Soup Accessories for Kids, which quickly became a leading manufacturer of hand-made children's products. Their trendy product line includes a wide variety of accessories from embellished headbands to ornate socks.

Yet, while the sisters behind Pea Soup were busy supplying hundreds of high-end boutiques, Congress was working on the Consumer Product Safety Improvement Act (CPSIA) to devise new testing standards of the metal and crystal embellishments that give Pea Soup accessories their unique flair. While none of Pea Soup's products ever had any safety or lead problems, the confusing nature of the CPSIA forced the sisters to make substantial changes to much of their line.

"We did not want to take any chances with violating the new law," says Marcy. "In order to avoid any risks, we scrapped many of the products in our line and had to manufacture new ones with different and compliant materials."

As a result of the law and the cost of the required testing, Pea Soup was forced to significantly change their product line, eliminating much of the creative embellishments that made their accessories distinctive and leaving them with thousands of dollars worth of perfectly safe (and adorable) unsalable inventory.

For more information about Pea Soup visit, http://www.peasoupaccessories.com/about_us/

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/

CPSIA - CPSIA Casualty of the Week January 7

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 January 11, 2010

NEW SAFETY LAW CLEANING OUT "THE KIDS CLOSET"

Kitty Boyce worked for 18 years to build her resale shop, The Kids Closet, located in Rochester, IL, into a well-known resale shop. With its colorful signage, brightly decorated interior and whimsical whale logo, The Kids Closet built its reputation on offering customers quality second-hand children's products at great values.

Shortly after being voted the "Number One Place to Shop Resale" by the Illinois Times, Kitty announced that because of CPSIA she was converting her store to sell predominately teen and adult clothing, home accessories and furniture, and changing its name to Remarkable Resale. The loss of revenue in her shop due to the changes in inventory forced her to lay off several employees.

"CPSIA has been devastating for us," said Kitty. "We just decided to get rid of all the toys and furniture. It's just not worth the risk."

While the Consumer Product Safety Commission has temporarily stayed requirements for testing and certifying products, all resale shops still must comply with the new lead and phthalate standards. Realistically, resale shops cannot be 100 percent certain that the used items meet the new requirements.

Due to the over-reaching law, Kitty Boyce's dedicated attempts to provide children and families with reasonably priced, gently used baby equipment, furniture and toys have been shut down. For Kitty and others, the risk of enforcement action by state attorneys general or private groups is too great. The result is that during one of the worst economies in decades, resale shops around the country are avoiding selling winter clothing for kids and other children's products.

This winter, ask Congress how denying a perfectly safe used winter coat to a child whose parents can't afford to buy a new one is protecting that child's health.

For more information about Kitty Boyce, visit http://www.thekidscloset.net/closet.htm

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/.

CPSIA - Another Big Fine for L-I-P: What Does It Mean?

The CPSC today lashed out at RC2 Corp. for significant lead-in-paint violations on its Thomas & Friends wooden toys in 2007. The fine totalled $1.25 million. The facts of the case are relatively simple - an original recall in June 2007 of 1.5 million pieces was quickly followed by an additional September 2007 recall of 200,000 units. You can read all the details in the provisional agreement between RC2 and the CPSC. The agreement, however, doesn't mention the really famous bit, namely that the second lead-in-paint recall included some of the "bonus gifts" that RC2 sent out to people who returned items in the first recall. Not a real confidence builder, apparently . . . .

We probably owe the CPSIA to RC2 and Mattel, who together so shocked and motivated Congress (and my hometown newspaper, the Chicago Tribune) that nothing could stop that runaway train. Since Thomas the Tank Engine was such a beloved traditional toy, the public's sense of betrayal was understandable. Unfortunately, it is hard to believe that RC2 didn't see this coming. The law on lead-in-paint was clear and unambiguous. The righteous outrage and the perceived need for retribution eventually led not only to the awful new law but also to this fine.

Let's try to put it in perspective.

First, RC2 Corp. is a big company and won't feel much pain from today's action. It has peak sales of over $500 million and peak earnings of over $80 million. It has generated over $100 million in annual cash flow at least twice. In other words, they have pretty deep pockets. This fine is basically "walking around money" for them. They are even projecting earnings this year in excess of $25 million and cash flow of over $40 million - and 2009 was an awful year for the toy industry. As if that weren't enough evidence of the symbolic nature of the fine, RC2 recently raised almost $60 million in a stock offering. In no sense will this fine imperil or even perturb the business over at RC2 - as an official "big business", they seem structurally exempt from the pain we ankle-biters might feel.

That said, hasn't RC2 paid quite a bit for its folly already? According to their 2008 year end financials, they incurred recall-related costs of $28.3 million in 2007, $14.3 million in 2008 and a further $13.9 million in 2009 year-to-date. Those are total costs of $56.5 million, excluding the new CPSC fine. Arguably, the CPSC recalls induced or precipitated these costs. These costs presumably also take into account the impact of RC2's $30 million settlement of a class action lawsuit and related legal expenses.

[According to the provisional settlement agreement, in the wake of the publicity of the recalls, RC2 was hit with a number of allegations of injuries and claims from lead-in-paint, leading to lawsuits. I have no way of estimating the financial impact of these claims on RC2. The validity of the claims is also unknown. Welcome to America.]

These losses exceed RC2's typical annual earnings - most people would call that a pretty high price paid, something that gets your attention.

And as the CPSC slams the barn door long after the horses got out, the company must now reiterate that it learned its lesson . . . three years ago. The press, however, will frame this case as a remedy much needed: "Toymaker's fine in lead case tops $1 million. Oak Brook-based RC2 sold Chinese-made toys that were later recalled" [Headline from print edition].

With all this as background, I think the fine looks a bit different:

a. The fine cannot be justified as punishment, as the CPSC's previous actions induced a very high stream of costs for the company. It cannot be justified as an inducement to behavioral reform, as better safety practices at RC2 began in 2007. What is the purpose of the fine then? I think the fine is intended for political purposes, to make the CPSC look "active" and "tough". It hardly matters that the fine is opportunistic and coercive. [CPSC fines under the CPSIA are also arbitrary and hard if not impossible to negotiate.] Apparently, the RC2 recalls were not enough to satisfy the personified "Congress" - it wanted pecuniary revenge. This allows the Chairman and her fellow Commissioners to look "tough" to Congress and it allows the RC2 company to look "contrite". Two needs met, neither of which should be part of our law.

b. The fine (the supposed punishment for the "crime") is so detached from the time of the infraction that it has no actual connection as a "remedy". The passage of time sacrificed any moral high ground for the regulators - its fine is only a gratuitous penalty now.

c. By waiting three years to impose a high profile penalty like this, the CPSC deals the company a cruel blow to its market. The fine makes it look like RC2 needed more correcting three years after the fact - isn't that what any rational person would think? Yet RC2 already paid for its failings to the tune of more than $50 million out-of-pocket. [This does not include the significant loss of goodwill from the recalls, a tangible loss to RC2 business managers.] They also changed their safety practices, presumably quite significantly. The defective goods are long off the market. Yet, with the imposition of this high fine now, the company looks like a creep, again - even though there is no sign that it is anything but a good citizen today. As a consequence of the CPSC's action, RC2 must again counter with more PR to attempt to preserve its good name.

Even more outrageous, to squeeze in the fine under the wording of the CPSIA, the CPSC asserts that the RC2 violation was made "knowingly". [See par. 16 of the provisional settlement agreement.] I highly doubt that it was "knowing" in the plain meaning of the word and naturally, the company denies it, too. It's a ridiculous contention. However, the law defines "knowingly" to include imputed knowledge; if the CPSC deems that RC2 should have never let this happen (duh), they can assert the imputed knowledge of a reasonable man to convert the infraction into a "knowing" violation. Prest-o, change-o! Incompetence or organizational failure can thus be given the appearance of ill intent. Since virtually any violation can be deemed "knowing" with the aid of 20/20 hindsight under this terrible law, the CPSC now has an unwritten strict liability penalty policy at its disposal. That's sweet for an agency that is part legislature, part judge, part jury. As for companies cited for "knowing" violations, denials ring hollow. Frankly, it's a set-up . . . and when this happens to you, it will feel the same way.

d. The CPSC's apparent indifference to these factors will have a chilling effect on the children's product market. There is no question that business people tend to look at these cases as "there, but for the grace of G-d, go I". If RC2 can be hammered this way, what will happen to us if we make a mistake? There is just no way to tell. But, the RC2 and Mattel fines make it clear that "over" isn't "over" with the CPSC until the statute of limitations passes. This fine came more than three years after the recalls. When are you allowed to move on from your mistakes? Seems like never. The recent fines levied against Excelligence for $25,000 are of a similar vintage, so this can happen to small companies with small infractions, too. This is randomness run amok. The fact that the agency has been unable to issue final penalty factors in more than a year does not help matters.

Finally, of course, we private business people can't just stick our palm out to Wall Street for more money whenever we need to restock the coffers. The RC2 capital raise restores 100% of their losses from the recalls. Nice for them! Small private businesses have to go to their banks or our personal bank accounts to fund remediation of these problems. And let's hope your bank sticks with you after bad publicity. . . .

Could the CSPC be so myopic that it doesn't know how these risks affect the thinking and planning of small businesses? I can only conclude that the answer is yes.

Let's hope that the RC2 fine helps the agency and its leadership build up a suitably tough image. And for their sake, one can only hope that the architects of this law and the agency's penalty strategy are long gone, onto their next glories, before the cumulative impact of the CPSIA and its implementation are felt. And for the rest of us . . . good luck!

CPSIA - Are Toys Supposed To Be Fun Anymore?

In a wonderful Op-Ed last week, Windsor Mann lampoons the ridiculous CPSIA by announcing his intent to not give any presents this year. His plan is as simple as the subtitle of his essay: "Giving children what they need most - nothing". Mr. Mann expands: "As someone who loves to be a wonderful person for a brief period of time, I enjoy this season of temporary giving. I am obsessed with helping people, especially children, and the best way to help children is by not giving them Christmas presents."

Sadly, Mr. Mann observes that "toys are not something to play around with", noting the recent recall of toy darts because an 8-year-old almost choked on a dart that he was chewing. This is a real case. [This recall is eerily similar to a life-imitates-art spoof on The Onion entitled "Fun Toy Banned Because Of Three Stupid Dead Kids".]

Mr. Mann recounts in hilarious fashion various recent recalls illustrating the fact that we seem to have lost sight of what constitutes safety. [He even mentions the unfortunate Timberland ankle-high boots recalled for the lead-in-paint logo on their insoles.] To make his point, Mr. Mann notes the useful instructions provided by the CPSC in its "The Super Sitter" manual for babysitters. Here's some tips the government felt the need to give babysitters:

• "Keep the youngsters safe by preventing accidents."
• "Running or horseplay on [stairs] can lead to falls."
• "In the event of accidental choking, apply first aid measures to clear the child's airway."

He quips: "(In the event of intentional choking, do not apply first aid measures.)"

The fear of everything, railed at in this essay, is the philosophical underpinning of the misconceived CPSIA. There is no solution to this disease short of changing the law. In a world dominated by the fear of everything, nothing is safe and everything must be feared. Mr. Mann's strategy of not giving gifts seems to be an appropriate response in this environment.

It's a funny article, but it's not a funny problem for those of us stubborn enough to remain in the children's product market. I don't know how it comes as a surprise to anyone that misuse of products or the absence of individual responsibility may result in injuries, but that plague has descended on our industries. The issues inherent in this shift away from common sense are many:

• Fear of liability creates a perception of COST that deters investment in products and markets. Random costs feed the fear.
• Unjustified fear of injury by consumers translates into lower sales or higher costs in making sales. Markets shrink. Consumer needs become difficult to meet.
• An atmosphere of fear affects regulators, who tend to recall more often and to assess more penalties (even if non-monetary) because it's politically-expedient or follows the trend. In other words, it's "safer" for regulators to err on the side of caution - but that cost is borne by somebody . . . businesspeople.
• Rules tighten illogically, diverting attention from real issues, increasing the cost of participating in the market. All parties suffer from the consequences of complexity, including regulators.
• Misallocation of resources (expending too much energy on unimportant things) leads eventually to true crisis, fueling the fire of the original proponents of the legislation. The obvious solution - even MORE government.

And the joke will be on you and on us, if we don't do something about it. Mr. Mann takes a lighthearted swipe at the silliness of your Congress, but it's really no laughing matter.

CPSIA - Consumer Groups are Grasping at Straws

Last week, in their usual pre-Xmas slanderfest, the full range of consumer groups unleashed their annual list of bad and dangerous toy lists on a pandering media. The pickin's were slim this year, but that didn't stop them.

I have heard from friends outside the toy industry who expressed horror and disbelief at these widely-publicized attacks. Toy industry insiders are used to it, frankly. Actually, speaking candidly, some of these annual efforts are useful and appreciated. I think that bad products (generally reflecting poor judgment, nothing more venal than that) have been usefully exposed by these groups in the past. However, of late the consumer groups have been obsessed by "toxics" - pushing the notion that toys are poisonous, rather than simply irresponsibly-designed. I think the reason is simple - the media and reactive politicians respond to this accusation, so why give up a "good thing"? You have to wonder if their goal is to simply make toys safer. Their attacks are remain more vicious than in the past and much more pointed.

The consumer group continue to package the idea that consumers do not realize that "no government agency tests toys before they are put on the shelves." This self-declared "fact" is an essential justification of their "precautionary principle" - that is, we need an activist government approving everything before you get your hands on it. President Obama's assertion on Late Night with David Letterman that we need a lot more government these days is right in line with the precautionary principle. Others call this movement the Nanny State.

The precautionary principle holds that no risk is too small to address - in advance. Thus, the neurosis underlying the assertion that Americans think the government must be "testing" toys before they are sold is the same as Consumer Union's David Pittle's admission in the TSCP hearing (beginning at about 90 minutes in the video) that he is "nervous" when he buys a toy (not sure what or whom to trust), and ergo, his rules for how manufacturers run their businesses must be imposed. Mr. Pittle's demands seem designed to relieve his anxieties, rather than improve safety. [He might contend that it is one and the same but I disagree.] Inciting terror through various means, the consumer groups place a real emphasis on how consumers FEEL and whether products and their manufacturers have earned consumer confidence (an emotional standard), not whether (objectively or actually), the products are actually safe.

Perhaps your mother told you once that it is hard to control how others feel - you can only control what you do and how you do it. Maybe she should be running Congress . . . .

In any event, the number of offending children's products uncovered this year by the consumer groups is rather meagre. As previously noted, Center for Environmental Health (CEH) drummed up seven items after six weeks of testing on 250 items. The CEH rogue's gallery featured NO soluble lead in toys, but did feature one pair of shoes with lead in the soles . . . a pair of sandals with lead in the insole . . . a trinket with a bad connector link . . . a poncho with lead in the vinyl material, etc. And now the PIRGs have joined in the fun. The annual Trouble in Toyland report was issued this week by national PIRG and the equally hyperbolic Illinois PIRG issued its own "Chemical Compliance: Testing for Toxics in Children’s Products" report. [I am only focusing on lead and phthalates in these reports.] The PIRG "bounty": a zipper "pull" and a yellow cow with lead-in-paint, one piece of lead jewelry, and two toys with phthalates (one an "unidentified" phthalate that might not be illegal, and the other just slightly over the limit). Illinois PIRG found only a small handful of violative products: only six of 87 products tested positive for violative lead levels using XRF guns, winnowing down to three items when tested by an independent lab.

Illinois PIRG failed to find lead or phthalates in the items featured in this TV segment. Unfortunately, that makes bad TV, so the head of Illinois PIRG lowered the standard to create something new to worry about (watch from 1:00 for 30 seconds in the video): "Most of the toys PIRG bought at target came up clean. But three of the toys had small amounts of lead -- MUCH LESS THAN the current safety standard but enough for the gun to detect. 'Really, children shouldn't be exposed to lead at all,' said [Brian] Imus." [Emphasis added]

An implication of the 2009 reports is that the onerous new CPSIA lead standards are simply not tough enough. For instance, PIRG says "Regulations should simply ban lead except at trace amounts (90-100 ppm), whether in paint, coatings or any toys, jewelry or other products for use by children under 12 years old." Where did this come from? Some ideas:

• They are laying the groundwork for the August 2011 determination by the CPSC about implementing a 100 ppm lead limit. To do so, the agency must conclude that it is "technologically feasible" as defined in the CPSIA.
• The groups are desperate to make their work seem relevant and constructive.
• They are confused or want to confuse consumers about HOW lead harms children, ignoring, covering up or blurring important distinctions between bio-available lead and inaccessible lead.

The latter point is so critical to understand. Lead can only harm a child if it gets into the bloodstream. Notably, lead is present throughout the environment (lead is found in at least 40 ppm concentrations in dirt, unless you are referring to the Obama's vegetable garden which has lead in concentrations of 93 ppm). Lead is in our food, drink and air, so kids consume it all the time. Apparently, lead in certain amounts must not be a problem, or else we would all have suffered reduced IQs (no comment in my case). The lead that should concern us is soluble lead, as in lead-in-paint and in jewelry, because it can easily get into the bloodstream. In any event, PIRG knows that toys and children's products aren't the problem. In their report, they cite a 2005 article (“Lead Exposure in Children: Prevention, Detection and Management,” Pediatrics, 1036-1048 (October 2005)) which makes clear that the problem with childhood blood lead levels is in lead-in-paint used in housing. There is NO mention anywhere that I can find where academic studies blame national blood lead levels on toys, etc., and likewise, I find all credit for lowering blood lead levels is given to efforts to rid the world of lead-in-paint in housing. Period.

So why does PIRG and its brethren continue to flog the notion that lead in all manifestations is dangerous? And why are they now saying that ANY lead, even below the draconian levels in the current law, is dangerous to children's health?

Questions worth pondering.

Finally, not content to blur the lines on lead, PIRG also recommends that the phthalates ban be extended: "CPSC should ban phthalates in toys and other products intended for children under five and work with the Federal Trade Commission to ensure that toys labeled 'phthalate-free' do not contain phthalates." So apparently PIRG wants ALL phthalates eliminated from toys, no matter the absence of science behind their new manic fear. Even more importantly, they apparently concede that the blanket ban on six phthalates for toys intended for children 6-12 is excessive and damaging. At least that's a positive contribution!

So another Xmas toy bashing seems to be behind us. The pseudo-science underlying the consumer groups' attacks on children's products was again exposed, as was the basic integrity and safety of the marketplace. Does that do us any good? That remains to be seen. Perhaps the leadership at the CPSC will tire of this relentless war (which is eroding their professional reputations) and do something to get Congress to fix a truly defective and damaging law. Let's hope so.

CPSIA - Does the CPSIA Cause Birth Defects?!

BBC News published yet another study of phthalates this week in which stress hormones were fingered as a source of birth defects. In particular, the study focused on those ailments which obsess the concerned citizens of America, the all-too-common "cryptorchidism" (the testes fail to drop) and "hypospadias" (the urinary tract is not aligned). Who among us doesn't know TEN PEOPLE with each of these problems?!

Here's a few quotes to chew on:

"Dr Mandy Drake, from Edinburgh University's centre for cardiovascular science, said: "What the study shows is that it is not simply a case of one factor in isolation contributing to abnormalities in male development but a combination of both lifestyle and environmental factors, which together have a greater impact." [Come on, guys, you don't expect us to believe that, do you?!]

"'In most studies reproductive disorders are only seen after abnormally high levels of exposure to chemicals, which most humans are not exposed to. Our study suggests that additional exposure to stress, which is a part of everyday life, may increase the risk of these disorders and could mean that lower levels of chemicals are required to cause adverse affects.' The study looked at male fetal development in rats. It found that while exposure to the chemical compound dibutyl phthalate, found in products including glues, paints and plastics, had some effects on reproductive development, this was significantly increased with simultaneous exposure to stress hormones."

In other words, phthalates may be much less of factor than stress in causing birth defects. What might induce stress while in utero? Well, how about scare tactics by politicians, media and consumer groups? How about their never-ending daily assault on the dangers of modern life? The regular appearance of articles questioning all the basics in our life, the accusations of hidden dangers lurking everywhere. In particular, for a pregnant woman (emitting the stress hormones to the in utero baby), the worrisome impression that the trusted baby products she bought from the trusted ocmpanies she has known for so long . . . can't be trusted. That's some serious stress.

And a likely source of such stress hormones today is the CPSIA. This study then lends credence to the proposition that the greatest threat to the health of our nation is Congress! The stress induced by the confidence-sapping CPSIA is apparently causing birth defects, and now we have a study to prove it.

It's time to sue Congress for this tort, and to pass legislation outlawing these stress hormone-inducing scare tactics. While we're at it, we might as well change the CPSIA, too. For good for future babies, we have to finish the job once and for all!

CPSIA - Randy Swart Takes My Spot in PSL!

Never tiring of a good thing, the Product Safety Letter today published an Op-Ed by Randy Swart entitled "CPSC's Guidance Is Not as Confusing as It May Seem". Mr. Swart is the founder of the Bicycle Helmet Safety Institute. In this article, Mr. Swart replies to Rob Wilson's Op-Ed in PSL on Resale Shops and Inez Tenenbaum in a way not exactly reminiscent of my rejected Op-Ed on the same subject. Recognizing the PSL's reputation for "neutrality" and "accuracy and clarity", I am trying to figure out why Mr. Swart got the nod over me. Could it be that Mr. Swart's views might be more pleasing to the regulators that feed the PSL its life-sustaining information? Golly, that's a head scratcher. . . .

Mr. Swart: "CPSC's Guidance Is Not as Confusing as It May Seem"

RW: "Tenenbaum Silence on CPSIA Speaks Volumes"

Mr. Swart: "As all readers of Product Safety Letter know, CPSC is struggling to maintain any level of enforcement at all, and will not be going after yard salers!"

RW: "Scott Wolfson, a spokesman for the agency, said it wouldn't be dispatching bureaucratic storm troopers into private homes to see whether people were selling recalled products from their garages, yards or churches. ‘We’re not looking to come across as being heavy-handed,' he said. 'We want to make sure that everybody knows what the rules of engagement are to help spur greater compliance, so that enforcement becomes less of an issue. But we're still going to enforce.'"

Mr. Swart: "In fact, [the CPSC] would have no more idea than the parent which old toys contained phthalates or had lead in the paint, and would have to test to establish that. Finding recalled product would be looking for needles in haystacks. It just will not happen."

RW: "After all, didn’t NY Attorney General Eliot Spitzer secretly inspect resale shops in 2003 and then release names and addresses to the media? Interestingly, Spitzer was joined by some of the same consumer advocates who are behind the CPSIA. The CPSC has the same power to embarrass."

Mr. Swart: "It is not fair to blame the Commission or Congress for not grandfathering the dangerous toys in our market. We need to get them out of circulation [Ed. Note: Who, the Commission or Congress?], and that fact is independent from the enforcement of the CPSIA legislation. It will impose a hardship on some retailers, but that pales in comparison to the alternative--to tolerate the continuation of poisoning our children for years to come until those toys are worn out."

RW: “'The [West Michigan] Salvation Army does not have thousands of dollars to spend on lead-testing equipment, so anything that looks suspicious — plastic toys, painted toys, toys with magnets or small parts, toys made in China — is pitched, said Robert Pierce, director of operations for the Salvation Army stores. Only about 20 percent of donations to the Salvation Army — compared to about one-third before the law — make it onto the store floor.' The CPSC’s tough talk on enforcement is having a chilling effect on the business community – and that cost must be weighed when regulators get 'tough'”.

Mr. Swart: "In fact, any threat of CPSC retribution is probably less real than the possibility of being sued by the buyer if someone is injured by a recalled product. That should give the yard saler pause if nothing else does. Many people trash some items that they would have sold or Freecycled because of that risk." [And this guy thinks he is helping make a case for the CPSC and the new law???]

RW: "The agency previously played a critical role in setting safety priorities, assessing risks and interpreting the law. . . . The Chairman can show she is a leader by providing an honest assessment to Congress of the problems with CPSIA and mapping out the necessary changes. Ironically, none of this is about safety – it’s about a law that just doesn’t work."

Okay, I can't figure it out! Can you?

A couple final thoughts (can't resist): Mr. Swart says "The chemical detoxification of America is just beginning, and this is one of the early skirmishes in a long war." Please remember this blather. This is the mantra of the "everything-is-bad-for-you" crowd. If you want to see this mania in action, watch this video (and if you have the time and energy, the three other segments). This outlook is extremely dangerous but with Mr. Waxman as champion, threatens to infect federal regulation of many markets besides toys. This is the so-called "Precautionary Principle" and is the basis of the proposed amendment of the Toxic Substances Control Act (TSCA).

Second, in response to Mr. Swart's comment "It will impose a hardship on some retailers, but that pales in comparison to the alternative--to tolerate the continuation of poisoning our children for years to come until those toys are worn out", I want to reprint the words of a staffer from the office of Illinois' own Senator Dick Durbin:

April 16, 2009: "I think you are right that the CPSIA imposes costs on businesses, and because of economies of scale it’s the smaller businesses that will feel these costs more acutely. This is part of a larger calculation that it’s worth the costs to shift from the old system of post-market correction (once a dangerous product is out in the market and leads to sick kids, recalls, lawsuits, etc.) to a new system of pre-market testing and certification (instead of just assuming products are safe and paying the price for false assumptions). . . ." [Emphasis added]

I can hardly express my joy at being a Congressionally-selected victim for the greater good of our country! Their "larger calculation" sounds so sophisticated. I will go out with a smile on my face.

The barf bags are over on the shelf on the left.

CPSIA - News Round-up

What a day for news on our favorite subject!

a. A sad, almost pathetic, illustration of the ill-effects of the CPSIA is found here: "Police Switch To Handing Out Books To Children" (WISC-TV, Channel3000.com). Be SURE to check out the embedded video, too. In this article, this Wisconsin television station shares the news that police cannot give out teddy bears anymore to children who witness traumatic events like a robbery or the arrest of a parent. For years, the police had been trying to soften those blows with comforting teddy bears. But no more! The CPSIA straightened them out: "The new Consumer Product Safety Improvement Act . . . has law enforcement officers rethinking handing out stuffed animals because of the chemicals they might contain. . . . Mueller said that he used to hand out Teddy bears or other stuffed toys to children. Now, Middleton police are using the books to make sure they're in compliance with new federal regulations."

The local police are scared of the consequences of breaking this law: "'One of the reasons for that is we get older toys that come in and they're perfectly fine to give out, but we don't know if they were made under the new requirements,' [Middleton police Sgt. Don Mueller ] said. . . . The new federal law is retroactive so the departments like Middleton are no longer using any stuffed animals as they can be held liable."

How charming! The CPSIA is actually taking teddy bears away from traumatized children, nice. At least we know the kids will be so, so safe now.

Btw, as you all know, our company makes educational products, including readers, so I am hardly opposed to giving books to kids. I would observe, however, that there are a couple obvious issues here. First of all, it's an odd message to a kid that just saw a parent being arrested to receive a book. Hey, kid, go read this book and try not to think about where we're taking your folks. Not much solace in that, certainly compared to a teddy bear. A second objection is, here's a shocker, not everyone speaks English. Giving a book in English to a traumatized child who does not speak English or has poor reading skills could even be seen as a kind of insult.

b. For a view from the scary people behind the law, check out: "Toxic Toy Law Criticized For 'Lack Of Enforcement" (WBZ Boston). In this alarming article full of inaccuracies, fear of the unknown is given a great deal of unquestioning credibility. "'They don't really know if lead or phthalates are in their products, so we don't know either,' said [Environmental activist Laura Spark]. Her daughters have a playroom full of toys that she can only hope are free from lead and other toxic chemicals." In other words, Ms. Sparks doubts everything about everyone, and feels free to spread this doubt among the populace. The grounds for this latest libel of the toy industry: HealthyStuff.org's recent spot check of pet products, automobiles and women's handbags.

HealthyStuff.org (formerly known as HealthyToys.org) has been the subject of criticism in the past for its shoddy field work. Among other things, the Wall Street Journal published an article entitled "Guerrilla Toy Testers Take Aim at Lead" on December 16, 2008 documenting their maligning of a toy company. Now the presence of "dangerous chemicals" in pet products is enough to convince a TV station that the entire children's products industry can't be trusted?

To compound the sense of fear, the article also completely misstates the Target fine, asserting that it was a "knowing" lead-in-paint violation, which is patently untrue. See my recent blogpost on Target.

c. For a glimpse of the future of litigation under the CPSIA, check out "Mattel Settles Suit Over Lead in China-Made Toys " (WSJ). Mattel has already paid big settlements in California and Arizona, as well as a serious CPSC fine, and paid many millions more for the expense of its mega recall. It's not enough, apparently: "Co-plaintiff lead counsel Whatley Drake & Kallas said in a statement the settlement provides 'tens of millions of dollars in monetary relief as well as significant injunctive relief.'" That'll teach ya!

While my heart does not bleed for Mattel ("The world's largest toy maker previously recorded charges to reserve for the litigation. The company, based in El Segundo, Calif., said final settlement won't be material to its operating results. . . . Mattel shares were up 2.9% to $19.41 in recent trading amid a broad market rally."), this case is at the heart of one of the worst risks embedded in the CPSIA - the possible onslaught of litigation opened up by recalls under the new law.

This problem will continue to bite the children's product industry HARD. My previous blogpost highlighted the snarling lawyers poised at the gate, eyeing us eagerly. Oh joy.

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.

CPSIA - Hugh Hewitt Interview 7-24-09

Here's a link to the Hugh Hewitt interview. The interview starts at 10:37 and goes about 20 minutes. If you can't open it, try this one. ShopFloor.org had this to say about the interview.

Let's hope we had some listeners - in Congress. . . .

CPSIA - Thoughts on Tracking Labels (Part I)

To thoroughly and thoughtfully reply to this week's deluge of CPSC publications on tracking labels will take a little bit of time. [I also have a day job.] As the agency took more than 11 months to issue their documents, I will need a few days to digest and parse it for you.

However, I wanted to share a preliminary thought at this time:

The Time to React to Tracking Labels Guidance is absurdly Short. As noted, it took the CPSC more than 11 months to answer even ONE question on tracking labels. Notwithstanding the Commission's obvious efforts to be appear to be flexible and cooperative in the new guidance, it remains a fact that there are now only 22 days until August 14. The diversity of companies and industries affected by tracking labels is simply mindboggling. Commercial lead-times on production runs are (shall we say) OBVIOUSLY more than 22 days. How is that runaway train supposed to stop on a dime in supply chains all over the world? Notwithstanding the CPSC's flexibility pledge in their guidance, what does the Commission think companies will be able to do in the short period of time before August 14? I previously alluded to the fact that some people actually take summer breaks, so they might not even be scheduled to be at work to get this critical task started. For quite some time into the future, particularly in long lead-time industries, many companies will be stuck with whatever they decided to do many months ago. The new guidance will be ineffective to prevent breaches of law as of August 14. In that sense, the guidance is a total failure.

Even the chore of carefully checking the guidance against your current practices will take a great deal of time. We have 2,000 items in our line. They're not all the same and will require one-by-one examinations against the guidance. We have already compiled a lot of data about our products in anticipation of this ruling. Now we must repeat the exercise since we FINALLY got some answers. Oh well, just another waste of our time and money . . . . Likewise, I have mentioned in this space a company concerned about tracking labels with 60,000 items in their line. What are they supposed to do, just take a chance? Close their doors until they get this right? They certainly couldn't complete even a PLAN for these items within the next 22 days. [Consider the chore of even picking samples of 60,000 items and laying out for examination - what would you need, a football stadium?] The coercive power of the CPSIA which makes every violation subject to large penalties (or worse) is weighing heavily on everyone's mind. What are we supposed to DO?

Notably, the corporate camp affected by the CPSIA seems to be divided into a couple groups - the "guessers" and the "waiters". The guessers decided to implement tracking labels according to their best bets (months ago) on what the law meant. Many of those guesses will be wrong, and some of those guesses will hurt the guessers. An example: if a guesser decided to print the name of its source on its product (not required by the new guidance), then its competitors and customers will know their secrets. This would hardly count as a "guess" - we were told to do it in a Q&A session at ICPHSO by CPSC staff. While the CPSC promises to not penalize people for good faith attempts to comply, they likewise have no plan to compensate them for the cost and consequences of the guesses they were forced to make. Too bad for them, I guess.

On the other hand, the waiters have been waiting for answers to their reasonable questions. Many "waiters" are waiting simply because they cannot afford to do things twice, principally because of limited resources (money usually, but also time, space and labor limitations). It is not irrational, unprecedented or un-American to wait for clarification before attending to comply with a vague and imprecise law or regulation. Unfortunately, a hallmark of the CPSIA is its callous disregard of the limited capital and resources of small and medium-sized businesses - the waiters were put in a position to either guess at their own risk or be made to look like bad corporate citizens for waiting for answers that came at the 11th hour. The waiters didn't want to waste more money on "guessing" - they couldn't afford it, especially in these difficult economic times. Perhaps they felt they had a right for solid rules and solid answers before acting. Is that wrong? Or, is the CPSIA leading the way toward a new style of law where guessing is required, standard?

I would note further that nowhere can this author find reference in any of the Commissioners' statements, in the CPSC's FAQs or in the CPSC's new tracking labels guidance indicating that tracking labels are needed urgently to address some kind of emergency. It is not. Notably, the power to impose tracking labels has been in the CPSC's arsenal for more than 30 years. It's nothing new. Congress got a bee in its bonnet over this issue last summer and usurped the Commission's discretion by imposing the new requirement, that's all. The Commission has implemented tracking labels in the past in isolated situations where it deemed them necessary to address a public health issue. It has also DECLINED in the past to impose them in a sweeping, across-the-board manner without regards to facts or circumstances. Even the positioning of the provision in the CPSIA by all concerned is that it is a "nice to have" to improve recall effectiveness. I have previously pointed out that the strict new regime of law on safety will also sharply reduce the number of recalls - in other words, the urgency of this "nice to have" diminishes on a daily basis.

So . . . if the tracking labels are no emergency, why isn't the CPSC taking the high road in this new Tenenbaum era to give industry time to digest the rules, dialogue with the agency on its further open questions or reasonable objections, and implement tracking labels in a planned and orderly fashion? Good question, perhaps? Ms. Tenenbaum has the opportunity to make this a reality by voting in favor of the NAM stay petition before the August 14 deadline. Every day that goes by without the stay, the problems for the victimized industries will grow and grow.

Ms. Tenenbaum, please don't leave us hanging. Do the right thing - vote for the NAM stay petition. Thank you.

CPSIA - Where is Everyone (on Jewelry)?

Perhaps it has occurred to you that it is a little odd that I am writing about jewels. I don't wear jewelry personally and we don't make or sell jewelry in our business. So where are all the people who are principally concerned with selling these now-illegal stones? Good question - they are hiding. The decision to confirm the illegality of the stones essentially shuts off debate because you essentially invite the regulators into your (business) home by expressing interest in the topic. Thus the silence . . . .

This is nothing new. I was the only businessperson to speak out on lead at the November 6 CPSC Lead Panel and likewise was the only operating company to address the CPSC at the May 12 Tracking Labels panel. In fact, three other companies scheduled to speak were "no shows". They didn't even enter the building. When we had our April 1 Rally in Washington, one of our speakers dropped out when we asked him to disclose information he wanted to keep very close to the vest, namely . . . his last name and his company's name. When he heard we needed to know this (to introduce him), he disappeared, never to be heard from again.

Why are people so afraid? Well, several companies that turned themselves in for lead-in-paint violations were recently hit with penalties. There's a strong message in that for everyone - your good faith cooperation will be punished the same as bad behavior. The regulators' apparent logic is simple - to violate the law is "bad" and must be strongly discouraged (this is what Congress "wants" . . .), thus there is little difference between turning yourself in and getting caught, each is "bad" and needs punishment. If you are sitting on product that is suddenly illegal (contraband), do you want the regulators (or worse yet, your customers) to know it? This question needs no answer.

Normally, when there is a "debate" and one side doesn't show up, it is assumed that they are disinterested, have nothing to say, are conceding the debate for some reason or some such. There's always a story to explain the silence. The story here is simple - speak up at your own risk. And no one is willing, big surprise.

The CPSC seems to think it is fostering a debate. But with a law on the books that makes everything illegal, debate is impossible. In addition, since the law is based on strict liability (the standards are absolute and have no flexibility to address minimal risks or needless economic damage), the most pertinent arguments are off the table. Ms. Tenenbaum herself correctly points out that safety considerations are not relevant in the Section 101(b) test for exemptions. What can you say to defend the decorative stones other than that the economic damage to your company and industry will be severe? Is it worth taking the risk of exposing yourself to make such a losing argument? No way.

The non-debates give the misleading impression that support for the law and its "common sense" implementation is widespread and unopposed except for a few cranks like me. I beg to differ. Our freedom of speech is wasted when our laws punish free debate by free people. Someone, somewhere, should be really upset about this degradation in the conduct of our society.

CPSIA - Penalties (You Can't Say You Weren't Warned)

Cassandra that I am, I have been warning of many problems with the CPSIA for many months. It's a long list, I won't bore you. Among my bitter complaints are the CPSIA's wild penalty provisions and open-ended liability provisions. [Others have also written about the penalty provisions.] I have gone further and noted that since the law is so complex and overarching, the CPSC will be accumulating claims against everyone and will be able to pick and choose who to penalize, when and how. This process won't necessarily be fair or even-handed. The possibilities for coercion and abuse in assessing liability are rampant and obvious. At ICPHSO, Gib Mullan warned that penalties would be expanded significantly. Yeah, yeah, blah blah blah, right? Worrywart . . . .

Well, you decide. In recent days, the CPSC began to announce its penalty assessments for past lead-in-paint recalls. First, Mattel was forced to pay $2.3 million in penalties (95 items, 2 million units, @$1.15 per piece in penalties). [Of course, Mattel also previously paid millions of dollars in penalties to California and to a consortium of 39 States for the same recalls, but who's counting . . . .] Then OKK Trading was cited and paid a penalty of $665,000 (repeated violations over several years for several reasons). Earlier this week, the CPSC resumed its activities, citing nine companies ($530,000 in penalties, 13 recalls total). I understand there are more penalties in the hopper right now.

Here are a couple facts before we dive into the merits of these cases. First, did you know the CPSC has a FIVE YEAR WINDOW to impose penalties? Yessiree, that's the statute of limitations. It doesn't MATTER that they imposed a recall on you or even that the case is CLOSED. Nope, the penalty window remains open. Second, it's the Legal Department, not the Enforcement folks, who set the penalty numbers. My understanding about these last nine cases is that the penalty numbers were NOT negotiable, and if you protested, you were told that a mega investigation would ensue with subpoenas and a risk of referral to the Department of Justice (you know that that means). Of course, any idiot would realize that legal fees ALONE would eat up the proposed penalty in mere days if you were to choose to fight, and then you would still be left with a potentially yawning legal mess. In other words, the CPSC's deal is "Pay or else". That's due process under the CPSIA nowadays.

Before we overreact, let's see what these latest penalty assessments are all about. Perhaps there is a pattern here.

Cardinal Industries: One recall of a toy jewelry sold in vending machines, 900,000 units, penalty of $100,000 ($0.11 per unit). NO INJURIES.

Cardinal was turned in by a consumer. They were cited for a "knowing" violation of the CPSIA under Section 20(d) because they "failed to take adequate action to ensure" that their products were lead-free. [Congress' confusion, or worse, over the meaning and possible use of the term "knowingly" in Section 20(d) has been highlighted in this space previously. And ignored.]

Dollar General Corp.: Three recalls (1, 2 and 3), 494,000 units, penalty of $100,000 ($0.20 per unit). NO INJURIES.

Dollar General was turned in by the University of Ashland on one recall, and turned itself in on the other two recalls - as is required by law and by good corporate citizenship. Dollar General was cited for the same "knowing" failure under Section 20(d) for the same reason - "failed to . . . ensure". [Consider this quote from the Settlement Agreement: "Thus, Dollar General neither knew, nor should have known, of any potential problems with these products. However, as a result of industry changes and in an abundance of caution, Dollar General voluntarily commenced validation re-testing of toys to confirm initial test results. Dollar General tested hundreds of samples and, of those, discovered that two, the Sunglasses and Toy Cars, did not meet applicable standards. Dollar General notified the CPSC of the results and promptly initiated a voluntary recall of the items." Obviously, an excellent candidate for the CPSC to teach a lesson!]

Family Dollar Stores, Inc.: One recall, 142,000 units, penalty of $75,000 ($0.53/unit). NO INJURIES.

It's not clear from the Settlement Agreement how FDS's problem was discovered. Same "knowing" citation on the same grounds.

Hobby Lobby Stores, Inc.: Two recalls (1 and 2), 23,000 units, penalty of $50,000 ($2.17 per unit). NO INJURIES.

It's not clear how HLS's problems were discovered. Same "knowing" citation on same grounds.

First Learning Company, Ltd.: Two recalls (1 and 2), 24,400 units, penalty of $50,000 ($2.05 per unit). NO INJURIES.

The CPSC found one of the recalled items in a retail sweep. The means of discovery of the other problem is not clear. Same "knowing" justification.

Michaels Stores, Inc.: One recall, 310,000 units, penalty of $45,000 ($0.145 per unit). NO INJURIES.

Michaels was turned in by the University of Ashland. They were cited for the same "knowing" violation, same justification.

A&A Global Industries, Inc.: One recall of bracelets sold in vending machines, 4,000,000 units, penalty of $40,000 ($0.01 per unit). NO INJURIES.

A&A was turned in by a customer. They were cited for the same "knowing" violation, same justification. [From the Settlement Agreement: "A&A specifically denies that it failed to take adequate action to ensure that the Bracelets did not bear lead-containing paint exceeding the permissible limits set forth in the Ban. A&A's compliance program, at the time of the subject recall met or exceeded industry standards for ensuring compliance with the permissible lead limits set forth in the Ban. Likewise, A&A asserts that it acted responsibly and reasonably to respond to the Commission's concern regarding the Bracelets, including its prompt and voluntary implementation of a successful product recall of the Bracelets in cooperation with the Commission."]

Raymond Geddes & Co.: One recall of a pencil pouch with lead paint on the zipper pull, 84,000 units, penalty of $40,000 ($0.48 per unit). NO INJURIES.

RG may have turned itself in (not entirely clear). Same "knowing" citation, same justification.

Downeast Concepts Inc.: One recall, 18,000 units, penalty of $30,000 ($1.67 per unit). NO INJURIES.

DCI self-reported this problem as required by law and by good corporate citizenship. Same "knowing" violation, same justification.

Every one of the companies denied the "knowing" violation, for whatever good that did them. Not ONE of these companies was hit with the minimum penalty (that is, the lowest penalty above refraining from imposing any penalty), even the ones who turned themselves in or the one with a dab of paint on a pouch's zipper pull.

To me, these cases seem like "ordinary" breaches of the L-I-P ban. There is no indication from the publicly available facts that these are "bad" companies or that any of the cases show a pattern of abuse or disregard of the law. Several of these companies clearly were actively trying to make amends for their own errors. The penalties do not seem to correlate to corporate behavior nor do they suggest a formula for determining penalties. The amounts seems random and capricious to me. As noted above, the companies were effectively denied the right to negotiate a penalty on any basis (such as presenting mitigating factors).

It appears that the philosophy of these penalties is one of absolute liability (you are liable for a penalty if you violate the L-I-P ban, regardless of reason or circumstance). This is an an entirely new way for the CPSC to administer this law (and excessive, unrealistic and unfair in my opinion). It also seems clear that mitigation for acting promptly and cooperatively or for the absence of injury is no longer relevant in the determination of these penalties. NONE of these cases involved injuries or death. As I have previously noted on several occasions, only ONE recall for L-I-P in 2007-8 resulted in an injury (one injury only) and NO deaths. The good faith cooperation of several of these companies is described in their Settlement Agreements.

Can you begin to connect the dots here?

In my comment letter on the CPSIA penalty provisions (linked above), I opened with this suggestion: "We strongly urge the CPSC to reserve the imposition of penalties for only the most egregious and dangerous situations. Penalties under the CPSIA should NOT be to punish but instead to motivate better legal compliance. This is consistent with the mission of the CPSC - to protect the public. Notably, the CPSC does not have a mission to mete out 'justice' so the use of penalties should be purposeful and not motivated by retribution. . . . We are fearful that the power to impose high penalties will be used coercively by the CPSC, ending any notions that law-abiding companies can work openly and in partnership with the CPSC. At present, the CPSC encourages a practice of 'when in doubt, file'. In a regulatory environment where minimum penalties are $100,000, how many companies will take up the CPSC's suggestion to file 'when in doubt'? " This letter was submitted to the CPSC on December 17, 2008.

Now we know where the CPSC stands on my advice.

Near the end of my comment letter, I made the following observation: "All in all, the CPSC must be very careful to not create a menu of 'gotcha' penalties. The CPSC's penalty policy or rules will be part of the 'game play' between the regulators and the regulated companies. If the rules encourage cooperation, the CPSC has a chance to partner with industry to improve safety. If industry believes that penalties are viewed as a revenue source or are being handed out in a way disproportionate to the infraction, then interplay between industry and the CPSC will change for the worse. If the penalties are too great, companies will exit the business (find something less regulated to do) or start hiding infractions as a survival technique. This outcome would not contribute to the safety of American children, and must be carefully considered in crafting the CPSC's penalty policies."

The dark clouds are gathering, guys. I am not sure how much more evidence is needed to prove that the cards are stacked against industry under the CPSIA - notions of "common sense", fairness or equity seem to have no place in a CPSIA world. If you think this is a great development for your business or your market, then rub your hands in glee - you are getting your wish. If you think the CPSC is going to too far or the rules empower the agency too broadly, I think you may want DO SOMETHING ABOUT IT. The few of us engaged in pushing back on this law CAN'T DO IT OURSELVES - we need your help. Get out there. Before you get whacked by a vengeful government . . . .