And you thought state regulation of children's products was a fait accompli, nothing we can do about it. The proliferation of state safety regulations is a major hindrance to interstate commerce and puts small and medium-sized businesses in a very risky position. Who can possibly master the federal system of safety laws and regulations plus 38 states' own unique versions (plus the EU, plus Canada, plus Japan, plus . . . plus . . . plus)? No one.
The CPSIA addressed this mess by ENCOURAGING IT. The law does not preempt a variety of state laws relating to the safety of children's products. Among the notable laws so exempted, California's Proposition 65 is especially troubling. That said, I cannot recall a single word of a single state children's product safety law that has been preempted by the federal government. It's the Wild West out there.
Worse yet, this subject is among the many that are "off limits". In other words, we are advised to keep our opinions on preemption to ourselves for risk of "offending" the controlling Democratic party. The non-preemption of state laws that conflict with the CPSIA, CPSA and policy and regulations of the CPSC are to be tolerated, I guess. We have no say in this. Like so many things nowadays . . . .
Aha, but when the liberals don't like the action of the states, well then preemption is apparently a viable option. So today the federal government decided to take action against the Arizona immigration law. [I am a minority and am generally fearful of government rules that encroach on protections for minorities. Of course, like most of the media and America at large, I haven't read the Arizona law. So while I am directionally in favor of knocking it out, I freely admit I don't know much about this controversy other than the things I have gleaned from other people's analysis.] So I guess preemption is a viable option . . . if the motivation is there.
The federal complaint makes many compelling assertions about the value and importance of preemption in the case of immigration law . . . and many of these assertions could just as easily be levied against state regulation of children's products. It will never happen, of course, because that might offend the "public interest groups" behind the CPSIA. Besides, who can trust companies anyhow . . . .
Some pertinent quotes (emphasis added):
"In our constitutional system, the federal government has preeminent authority to regulate immigration matters. This authority derives from the United States Constitution and numerous acts of Congress. . . . The Constitution and the federal immigration laws do not permit the development of a patchwork of state and local immigration policies throughout the country."
"The federal government, moreover, welcomes cooperative efforts by states and localities to aid in the enforcement of the nation’s immigration laws. But the United States Constitution forbids Arizona from supplanting the federal government’s immigration regime with its own state-specific immigration policy – a policy that, in purpose and effect, interferes with the numerous interests the federal government must balance when enforcing and administering the immigration laws and disrupts the balance actually established by the federal government."
"In crafting federal immigration law and policy, Congress has necessarily taken into account multiple and often competing national interests. . . . The laws also take into account other uniquely national interests, including facilitating trade and commerce . . . ."
"Because S.B. 1070, in both its singularly stated purpose and necessary operation, conflicts with the federal government’s balance of competing objectives in the enforcement of the federal immigration laws, its passage already has had foreign policy implications for U.S. diplomatic relations with other countries, including Mexico and many others. S.B. 1070 has also had foreign policy implications concerning specific national interests regarding national security, drug enforcement, tourism, trade, and a variety of other issues. . . . Numerous other states are contemplating passing legislation similar to S.B. 1070."
The Feds have noted that the patchwork of local laws would likely prove highly disruptive to efforts to coordinate a national policy on this topic. They are apparently fearful that the Arizona law will lead to many more just like it in other states. Among other reasons to fear the new immigration laws, local laws can have international implications and can hurt trade. I think I know what they are getting at . . . . Consider the market effects of the noxious Proposition 65 and the truly awful and frightening Green Chemistry initiative oozing forth from California in our direction. The case for this preemption lawsuit is eerily similar to the case for preemption of local safety laws. Unfortunately, we will never get this help unless the Feds decide that the system is so out-of-whack that a lawsuit must be filed. With Dems in charge of Congress who are the blood brothers of consumer groups, this will NEVER happen. Too bad for us.
I feel the federal government's pain on the Arizona law. Too bad they don't feel mine.
Showing posts with label Proposition 65. Show all posts
Showing posts with label Proposition 65. Show all posts
Tuesday, July 6, 2010
Sunday, November 22, 2009
CPSIA - Proposition 65 Provides Funding Mechanism for CEH Crusaders
Has the Center for Environmental Health (CEH) gone into the business of finding violations of law for profit? You gotta wonder.
This past week, CEH capped off a six-week investigation of 250 children's items at the request of or in partnership with the CA Attorney General's office, finding seven mildly offending items. As detailed in my blogpost last Wednesday, this rogue's gallery of offenders include a pair of shoes (soles), sandals (insoles), a poncho, a small patch of material on a bicycle accessory and the like. The CA AG issued cease-and-desist orders on his own, cutting the CPSC out of the picture, and a media feeding frenzy ensued. Presumably to the delight of the CEH troublemakers, Oregon followed up with its own action. [To Oregon's credit, they indicate they would inform the CPSC of their concerns, not take a direct recall action like the CA AG.] Perhaps other States plan to follow the CA lead and jump down the retailers' throats for these trivial defects.
How did this come to pass? It turns out that the starting point was a tip by CEH on another lead case, this one involving Mattel. As you know, Mattel was responsible for some major lead-in-paint recalls in 2007/8. These recalls were a result of a violation of longstanding federal law, and the authority for the recall was found in the CPSA (before its amendment by the CPSIA). [In other words, the new law was not required to force Mattel to recall these items.] It turns out that California's Proposition 65, its notorious consumer-right-to-know law, was also violated by those recalls. The insidious Prop. 65 (explicitly exempted from preemption under the CPSIA by the powerful California Congressional delegation including Senators Boxer and Feinstein and Reps. Pelosi and Waxman) requires that products exceeding (in this case) its lead standard be labeled to "inform" the consumer. Prop. 65 lead standards now match the federal standards. By violating the federal standards, Mattel also violated the Prop. 65 label requirements, thus giving California the chance to extend its palm for penalties and other concessions.
In the first of many settlements relating to its recalls, Mattel and other companies settled
a Prop. 65 lawsuit and paid a collective $1.56 million in penalties and fees. [The CA AG extracted similar penalties from Target, TRU and KMart for lead violations earlier this month.] It turns out that this $550,000 penalty case stemmed from a rat out by CEH: "This agreement settles a lawsuit filed by the State of California and the LA City Attorney in November 2007, after receiving notices of violation from the Center for Environmental Health, As you Sow, and the Environmental Law Foundation." Part of the money extracted ($550,000) was applied to a fund "to test toys for lead and improve outreach about future recalls."
So how did Mattel's misery pay off for CEH? The CA AG's press release tells all: "In 2008, Brown's office reached a settlement with several major toy companies over excessive levels of lead in their products. The settlement allocated $548,000 in funding for consumer safety groups to monitor lead levels in consumer goods and to provide outreach about product recalls. The Center for Environmental Health discovered the current violations with a grant from the Public Health Trust, which administers the settlement fund."
So, here's the game - CEH finds violations of the law, and then puts in for grants to find more violations, all funded by the violators. CEH is a not-for-profit - it is not a business, does not make or sell products or services for a profit and its officers and employees have no source of funding other than contributions . . . until now. Proposition 65 is their new funding source. Shaking down corporations under the auspices of Prop. 65 to provide funds for new hires, salaries, raises, perhaps even bonuses. Thus, the unholy alliance of plaintiff lawyers and consumer groups is made even more cozy. Consumer protection as a plaintiff lawyer's dream. Job well done, CEH!
CEH and its ilk want you to believe that they are simply out there to protect your interests, which is the reason presented to explain their "passionate" search for "scofflaws". But does that explanation hold water when the consumer group is essentially working on a commission for pay? Can you really be sure these violations are actually dangerous when it is clear that CEH must find them to pay its rent or keep its officers on the job? And what about the interests of the local politicians in this dynamic? Jerry Brown wants to be California's governor - what are his incentives in this case, being egged on by the pay-by-the-violation consumer group?
Does anyone see the possibility of conflicts of interest here? What is that odor I smell?
Aside from the OUTRAGE of CEH taking money for its escapades, the entire Proposition 65 gambit seems to be a parallel safety law allowing a local politician to upstage and trump federal regulation, all the while shaking down companies with duplicative penalties for the same offense. Mattel, no particular object of sympathy in my book, was hit with Prop. 65 penalties (collectively with others, $1.56 million), a "consumer fraud" settlement with 38 states for $12 million, a CPSC fine of $2.3 million and a class action settlement said to be worth more than $50 million. Since Proposition 65 is exempted from preemption by our wise Congress, this liability bonanza will continue to plague the toy industry for a long time to come (forever?).
What is the consequences of the long term, relentless, pointless (from a social good standpoint) assault on our industry under Proposition 65? A poisoned well. What do you think will happen to small business vendors to retailers who have been hounded and hunted under this law? The ultimate in skittishness. It is just not possible to satisfy their hunger for safety mania. As an example, a large national retailer has been demanding that our company test every product for lead-in-paint . . . regardless of whether it has any paint on it. That can only make sense in a world where the consequences of violations are too horrible to contemplate.
Is a violation of this law really worse than mass murder? I think not. This week's CEH violations are innocent and have not and will not harm anyone. They are minor manufacturing defects and can be corrected easily and inexpensively. By making each such trivial violation into a capital case, the cost of doing business skyrockets, profit incentive crashes and many players exit. We have already seen one offering memorandum for a customer of ours who can't take it anymore. Most of the exits are quieter and harder to detect. See my post about Whimsical Walney. If we allow regulators to run roughshod over our industry this way, there won't be anything left to protect. That would be terrible for all Americans. Sometimes you don't know what you have until you lose it.
This is your country. Think about the corruption of fee-driven consumer groups and marauding State AGs who don't answer to the CPSC. What are you going to do about it???
This past week, CEH capped off a six-week investigation of 250 children's items at the request of or in partnership with the CA Attorney General's office, finding seven mildly offending items. As detailed in my blogpost last Wednesday, this rogue's gallery of offenders include a pair of shoes (soles), sandals (insoles), a poncho, a small patch of material on a bicycle accessory and the like. The CA AG issued cease-and-desist orders on his own, cutting the CPSC out of the picture, and a media feeding frenzy ensued. Presumably to the delight of the CEH troublemakers, Oregon followed up with its own action. [To Oregon's credit, they indicate they would inform the CPSC of their concerns, not take a direct recall action like the CA AG.] Perhaps other States plan to follow the CA lead and jump down the retailers' throats for these trivial defects.
How did this come to pass? It turns out that the starting point was a tip by CEH on another lead case, this one involving Mattel. As you know, Mattel was responsible for some major lead-in-paint recalls in 2007/8. These recalls were a result of a violation of longstanding federal law, and the authority for the recall was found in the CPSA (before its amendment by the CPSIA). [In other words, the new law was not required to force Mattel to recall these items.] It turns out that California's Proposition 65, its notorious consumer-right-to-know law, was also violated by those recalls. The insidious Prop. 65 (explicitly exempted from preemption under the CPSIA by the powerful California Congressional delegation including Senators Boxer and Feinstein and Reps. Pelosi and Waxman) requires that products exceeding (in this case) its lead standard be labeled to "inform" the consumer. Prop. 65 lead standards now match the federal standards. By violating the federal standards, Mattel also violated the Prop. 65 label requirements, thus giving California the chance to extend its palm for penalties and other concessions.
In the first of many settlements relating to its recalls, Mattel and other companies settled
a Prop. 65 lawsuit and paid a collective $1.56 million in penalties and fees. [The CA AG extracted similar penalties from Target, TRU and KMart for lead violations earlier this month.] It turns out that this $550,000 penalty case stemmed from a rat out by CEH: "This agreement settles a lawsuit filed by the State of California and the LA City Attorney in November 2007, after receiving notices of violation from the Center for Environmental Health, As you Sow, and the Environmental Law Foundation." Part of the money extracted ($550,000) was applied to a fund "to test toys for lead and improve outreach about future recalls."
So how did Mattel's misery pay off for CEH? The CA AG's press release tells all: "In 2008, Brown's office reached a settlement with several major toy companies over excessive levels of lead in their products. The settlement allocated $548,000 in funding for consumer safety groups to monitor lead levels in consumer goods and to provide outreach about product recalls. The Center for Environmental Health discovered the current violations with a grant from the Public Health Trust, which administers the settlement fund."
So, here's the game - CEH finds violations of the law, and then puts in for grants to find more violations, all funded by the violators. CEH is a not-for-profit - it is not a business, does not make or sell products or services for a profit and its officers and employees have no source of funding other than contributions . . . until now. Proposition 65 is their new funding source. Shaking down corporations under the auspices of Prop. 65 to provide funds for new hires, salaries, raises, perhaps even bonuses. Thus, the unholy alliance of plaintiff lawyers and consumer groups is made even more cozy. Consumer protection as a plaintiff lawyer's dream. Job well done, CEH!
CEH and its ilk want you to believe that they are simply out there to protect your interests, which is the reason presented to explain their "passionate" search for "scofflaws". But does that explanation hold water when the consumer group is essentially working on a commission for pay? Can you really be sure these violations are actually dangerous when it is clear that CEH must find them to pay its rent or keep its officers on the job? And what about the interests of the local politicians in this dynamic? Jerry Brown wants to be California's governor - what are his incentives in this case, being egged on by the pay-by-the-violation consumer group?
Does anyone see the possibility of conflicts of interest here? What is that odor I smell?
Aside from the OUTRAGE of CEH taking money for its escapades, the entire Proposition 65 gambit seems to be a parallel safety law allowing a local politician to upstage and trump federal regulation, all the while shaking down companies with duplicative penalties for the same offense. Mattel, no particular object of sympathy in my book, was hit with Prop. 65 penalties (collectively with others, $1.56 million), a "consumer fraud" settlement with 38 states for $12 million, a CPSC fine of $2.3 million and a class action settlement said to be worth more than $50 million. Since Proposition 65 is exempted from preemption by our wise Congress, this liability bonanza will continue to plague the toy industry for a long time to come (forever?).
What is the consequences of the long term, relentless, pointless (from a social good standpoint) assault on our industry under Proposition 65? A poisoned well. What do you think will happen to small business vendors to retailers who have been hounded and hunted under this law? The ultimate in skittishness. It is just not possible to satisfy their hunger for safety mania. As an example, a large national retailer has been demanding that our company test every product for lead-in-paint . . . regardless of whether it has any paint on it. That can only make sense in a world where the consequences of violations are too horrible to contemplate.
Is a violation of this law really worse than mass murder? I think not. This week's CEH violations are innocent and have not and will not harm anyone. They are minor manufacturing defects and can be corrected easily and inexpensively. By making each such trivial violation into a capital case, the cost of doing business skyrockets, profit incentive crashes and many players exit. We have already seen one offering memorandum for a customer of ours who can't take it anymore. Most of the exits are quieter and harder to detect. See my post about Whimsical Walney. If we allow regulators to run roughshod over our industry this way, there won't be anything left to protect. That would be terrible for all Americans. Sometimes you don't know what you have until you lose it.
This is your country. Think about the corruption of fee-driven consumer groups and marauding State AGs who don't answer to the CPSC. What are you going to do about it???
Monday, October 12, 2009
CPSIA - Scary Brass!
In anticipation of the Learning Curve decision about "dangerous" brass bushings, I thought I would provide some information about the uses of brass in society and its current restrictions.
According to Wikipedia, brass has been widely used since prehistoric times. Of course, brass is used in many places: "Brass is a substitutional alloy. It is used for decoration for its bright gold-like appearance; for applications where low friction is required such as locks, gears, bearings, doorknobs, ammunition, and valves; for plumbing and electrical applications; and extensively in musical instruments such as horns and bells for its acoustic properties. It is also used in zippers. Because it is softer than most other metals in general use, brass is often used in situations where it is important that sparks not be struck, as in fittings and tools around explosive gases. Brass has a muted yellow color, somewhat similar to gold. It is relatively resistant to tarnishing, and is often used as decoration and for coins. In antiquity, polished brass was often used as a mirror." Other sites tout brass for its utility for plumbing, its most ubiquitous use.
It's obvious that children will encounter brass regularly in their daily lives, like when they handle doorknobs or handle keys. The even-handed CPSIA, as administered by the new "common sense" CPSC, seems nonetheless to place an unusual burden on those knuckleheads like me still left in the children's market. WE are not allowed to use brass with more than 0.03% lead content by weight (300 ppm), falling inevitably to 0.01% lead by weight (100 ppm) in two years. Here are a couple more "fun facts" about brass: brass typically has 2% lead by weight AND 90% of brass alloys (including bronze) are recycled. In other words, it is hard to control the lead content of this environmentally-friendly metal. Hmmm.
We know that brass pipes are used for plumbing everywhere, even in Mr. Waxman's house. Children will come in contact with brass when they wash their hands in warm water that travelled through brass pipes or drink from the drinking fountain at school. Oops, did I mention high levels of lead in drinking fountains? Like the 92% in LA Unified School District Schools that remain unrepaired to this day? Sad but true. The LAUSD situation is apparently not NEARLY the crisis presented by brass bushings or brass connectors in toys, clothing or shoes. The CPSIA in its infinite wisdom has determined that children's businesses should close or their owners should go to jail if they use such things - but other uses of brass in daily life are fine, just fine.
But what about brass in those other uses - are they restricted at all? According to Wikipedia, keys must now contain less than 1.5% lead by weight in California to avoid Proposition 65 labeling. To clarify, keys with greater content than 1.5% are still legal to sell in CA but would need to be labeled under Prop. 65. The approved lead content in keys is 50x the legal limit on lead content in brass in children's products. Yeah, that makes sense. And in California and in Vermont, brass plumbing fixtures and pipes used to convey water for human consumption must have not more than 0.25% lead by weight by January 1, 2010 - 9x the legal limit on lead in brass in children's products. [The CA limit is a weighted average, so individual components can exceed this limit.] I do not believe this law requires retrofitting existing California's pipes. The current limit on lead in California pipes is 8% by weight, a mere 267x the legal limit on lead content in brass used in children's products.
I cannot find any other restrictions on brass in any products in our country. I probably missed something but no restriction will exceed the zeal of the CPSIA. It is unique as a regulation, both for its sense of sanctity and its overreaching, penal ineffectiveness. Trumpets don't have legal lead limits, despite being made of brass and intended to be mouthed. Leaded fountains remain in schools across the country, and bad plumbing is everywhere. Nonetheless it is the children's product industry alone that must endure upheaval from the loss of brass as a basic material. Need I mention that brass was at the heart of the pens crisis earlier this year?
When the CPSC makes its inevitable decision to shut down Learning Curve's business over its use of brass bushings, they will intone that it's not their fault, the darned law made 'em do it. The leadership will then later issue some press releases about vigorously enforcing the law and making everyone safe. There will be no acknowledgement of their role as a tool in the wanton destruction of a valued industry. Not their fault. . . .
Wake me when the nightmare is over.
According to Wikipedia, brass has been widely used since prehistoric times. Of course, brass is used in many places: "Brass is a substitutional alloy. It is used for decoration for its bright gold-like appearance; for applications where low friction is required such as locks, gears, bearings, doorknobs, ammunition, and valves; for plumbing and electrical applications; and extensively in musical instruments such as horns and bells for its acoustic properties. It is also used in zippers. Because it is softer than most other metals in general use, brass is often used in situations where it is important that sparks not be struck, as in fittings and tools around explosive gases. Brass has a muted yellow color, somewhat similar to gold. It is relatively resistant to tarnishing, and is often used as decoration and for coins. In antiquity, polished brass was often used as a mirror." Other sites tout brass for its utility for plumbing, its most ubiquitous use.
It's obvious that children will encounter brass regularly in their daily lives, like when they handle doorknobs or handle keys. The even-handed CPSIA, as administered by the new "common sense" CPSC, seems nonetheless to place an unusual burden on those knuckleheads like me still left in the children's market. WE are not allowed to use brass with more than 0.03% lead content by weight (300 ppm), falling inevitably to 0.01% lead by weight (100 ppm) in two years. Here are a couple more "fun facts" about brass: brass typically has 2% lead by weight AND 90% of brass alloys (including bronze) are recycled. In other words, it is hard to control the lead content of this environmentally-friendly metal. Hmmm.
We know that brass pipes are used for plumbing everywhere, even in Mr. Waxman's house. Children will come in contact with brass when they wash their hands in warm water that travelled through brass pipes or drink from the drinking fountain at school. Oops, did I mention high levels of lead in drinking fountains? Like the 92% in LA Unified School District Schools that remain unrepaired to this day? Sad but true. The LAUSD situation is apparently not NEARLY the crisis presented by brass bushings or brass connectors in toys, clothing or shoes. The CPSIA in its infinite wisdom has determined that children's businesses should close or their owners should go to jail if they use such things - but other uses of brass in daily life are fine, just fine.
But what about brass in those other uses - are they restricted at all? According to Wikipedia, keys must now contain less than 1.5% lead by weight in California to avoid Proposition 65 labeling. To clarify, keys with greater content than 1.5% are still legal to sell in CA but would need to be labeled under Prop. 65. The approved lead content in keys is 50x the legal limit on lead content in brass in children's products. Yeah, that makes sense. And in California and in Vermont, brass plumbing fixtures and pipes used to convey water for human consumption must have not more than 0.25% lead by weight by January 1, 2010 - 9x the legal limit on lead in brass in children's products. [The CA limit is a weighted average, so individual components can exceed this limit.] I do not believe this law requires retrofitting existing California's pipes. The current limit on lead in California pipes is 8% by weight, a mere 267x the legal limit on lead content in brass used in children's products.
I cannot find any other restrictions on brass in any products in our country. I probably missed something but no restriction will exceed the zeal of the CPSIA. It is unique as a regulation, both for its sense of sanctity and its overreaching, penal ineffectiveness. Trumpets don't have legal lead limits, despite being made of brass and intended to be mouthed. Leaded fountains remain in schools across the country, and bad plumbing is everywhere. Nonetheless it is the children's product industry alone that must endure upheaval from the loss of brass as a basic material. Need I mention that brass was at the heart of the pens crisis earlier this year?
When the CPSC makes its inevitable decision to shut down Learning Curve's business over its use of brass bushings, they will intone that it's not their fault, the darned law made 'em do it. The leadership will then later issue some press releases about vigorously enforcing the law and making everyone safe. There will be no acknowledgement of their role as a tool in the wanton destruction of a valued industry. Not their fault. . . .
Wake me when the nightmare is over.
Tuesday, July 21, 2009
CPSIA - Clarification on the Jewelry Decision
I understand that the CPSC Commission believed it was effectively giving relief to the fashion jewelry industry by limiting its enforcement activities on crystals, glass beads and rhinestones to products for children aged six years or younger. I would like to clarify my previous comment on the effectiveness of this "relief". While the Commission's intentions were commendable, their decision provides no relief at all. Why?
First and most signficantly, the Commission has now removed all doubt - ALL subject stones (glass beads, crystals, rhinestones) are violative if they exceed the lead standards and if included in a product intended primarily for or designed for children twelve years of age or younger. In other words, these products are ILLEGAL. To sell them is to "knowingly" violate this law (CPSA Section 20(d)(2) - "the presumed having of knowledge deemed to be possessed by a reasonable man who acts in the circumstances, including knowledge obtainable upon the exercise of due care to ascertain the truth of representations"). That means penalties, even if you turn yourself in under Section 15(b). To sell such materials INTENTIONALLY (as might be induced by CPSC's highly-publicized policy to not enforce on products for children seven years of age or older) would be grounds for a felony charge. That would be perceived as a problem by most people. . . .
Most business owners and operators would take aggressive action to extinguish the possibility of any felony charge. Think of the shame that comes with this territory - felonies are serious crimes and might involve jail time and asset forfeiture (as though you were a drug kingpin). Felonies are easily avoided if you are good, law-abiding person. Have you ever committed a felony by mistake? No, I imagine not. Have you ever gotten close to the fuzzy line defining a felony? Again, probably not - most felonies are sharply defined. It's fairly easy to tell if you have murdered someone, for instance, and easy to avoid if you haven't already done the deed. How will businesses deal with this problem? They will stop selling rhinestones, etc., perhaps altogether, to avoid this risk of civil or criminal liability.
My experience with retailers, particularly publicly-held retailers (notably subject to the invasive and highly-risky Sarbanes-Oxley disclosure), is that they do not like take to take financial risks. Risk is decided against suppliers. If you have any doubt about this, consider TRU's new requirement that suppliers meet a 100 ppm lead-in-substrate standard as of January 1, 2010, almost two years ahead of any determination by the CPSC that it is required. TRU has taken the most conservative, risk-averse approach to "safety" since the lead-in-paint recalls of 2007-8. Their financial industry owners made a highly leveraged bet on TRU and don't want to blow it with uncontrollable liability risks. They would rather lose suppliers than take risk. Retailers dealing with the jewelry decision will simply insist on safety tests for all jewelry and apparel/shoes containing the stones, and the CPSC-certified labs will fail them all. It's a lock that these items will disappear from store shelves, notwithstanding the CPSC's promise to not enforce.
Another terrible implication of this decision is that possession of the now-illegal stones will mean significant and immediate inventory losses. Determining which stones are for which age child will be challenging or impossible. Products containing the stones are therefore likely considered contraband now, worthless in their present form. Who wants to be stuck with that loss? This is the classic "hot potato" problem highlighted in last November's Journal of Commerce article. Whoever has this inventory gets whacked with a total loss so a war will break out over its rightful owner. This is also the painful interaction of the Commission's decision with the Proposition 65 settlement and other correlated state laws - somebody's going to eat a lot of inventory (starting yesterday). To avoid this kind of risk, retailers will dump the goods back on makers, and the makers will have few options for the goods returned under this cloud (remember, felonies?).
Let's also not forget that products that are illegal under the CPSIA are not eligible for export to ANYWHERE. In other words, illegal here . . . illegal EVERYWHERE. The losses are total and irrevocable, courtesy of this decision. Who would want to get in the middle of that?
The fashion jewelry decision came as a shock to starry-eyed (non-cynical) optimists who held onto inventory from February without writing it off in the hope that the Commission would somehow preserve the stones' value. No such luck for them. With the Commission's decision, massive write-offs are now certain. In my original letter to Cheryl Falvey on retroactivity (here and here), I explained that inventory turning overnight into contraband would lead to widespread loan defaults, among other evils. It is not hard to imagine that among CIT's problem loans today are a few contraband jewelry and apparel/footwear cases arising from or related to this decision.
To add to the fun, the CPSC's new best friend, their partner U.S. Customs Service, is said to be impounding these goods as they are imported. I understand that numerous shipments are being delayed over these stones. What's the defense of the importer? "Hey, I know it's illegal but the CPSC says they don't care. . . well, they CARE but they won't enforce . . . right, no enforcement but still illegal, yes, can I have my inventory? . . . I can't give you a test report, the stones are over the limit but the CPSC says they won't be looking . . . but you ARE looking? . . . should I put my lawyer on the phone to explain???" Yeah, that might work . . . on Mars.
It's a royal mess but frankly, the CPSC and the Commission did as much as the words of the law allows. The law is very poorly-written and was even more poorly-vetted, and must be changed. The Commission will have more trying days ahead as it tries to make sense of a law that makes no sense. It's self-destructive legislation causing widespread harm but Congress stands passively on the sidelines, ready to point fingers. I think we as a country can achieve more. Now somebody has to prove it.
First and most signficantly, the Commission has now removed all doubt - ALL subject stones (glass beads, crystals, rhinestones) are violative if they exceed the lead standards and if included in a product intended primarily for or designed for children twelve years of age or younger. In other words, these products are ILLEGAL. To sell them is to "knowingly" violate this law (CPSA Section 20(d)(2) - "the presumed having of knowledge deemed to be possessed by a reasonable man who acts in the circumstances, including knowledge obtainable upon the exercise of due care to ascertain the truth of representations"). That means penalties, even if you turn yourself in under Section 15(b). To sell such materials INTENTIONALLY (as might be induced by CPSC's highly-publicized policy to not enforce on products for children seven years of age or older) would be grounds for a felony charge. That would be perceived as a problem by most people. . . .
Most business owners and operators would take aggressive action to extinguish the possibility of any felony charge. Think of the shame that comes with this territory - felonies are serious crimes and might involve jail time and asset forfeiture (as though you were a drug kingpin). Felonies are easily avoided if you are good, law-abiding person. Have you ever committed a felony by mistake? No, I imagine not. Have you ever gotten close to the fuzzy line defining a felony? Again, probably not - most felonies are sharply defined. It's fairly easy to tell if you have murdered someone, for instance, and easy to avoid if you haven't already done the deed. How will businesses deal with this problem? They will stop selling rhinestones, etc., perhaps altogether, to avoid this risk of civil or criminal liability.
My experience with retailers, particularly publicly-held retailers (notably subject to the invasive and highly-risky Sarbanes-Oxley disclosure), is that they do not like take to take financial risks. Risk is decided against suppliers. If you have any doubt about this, consider TRU's new requirement that suppliers meet a 100 ppm lead-in-substrate standard as of January 1, 2010, almost two years ahead of any determination by the CPSC that it is required. TRU has taken the most conservative, risk-averse approach to "safety" since the lead-in-paint recalls of 2007-8. Their financial industry owners made a highly leveraged bet on TRU and don't want to blow it with uncontrollable liability risks. They would rather lose suppliers than take risk. Retailers dealing with the jewelry decision will simply insist on safety tests for all jewelry and apparel/shoes containing the stones, and the CPSC-certified labs will fail them all. It's a lock that these items will disappear from store shelves, notwithstanding the CPSC's promise to not enforce.
Another terrible implication of this decision is that possession of the now-illegal stones will mean significant and immediate inventory losses. Determining which stones are for which age child will be challenging or impossible. Products containing the stones are therefore likely considered contraband now, worthless in their present form. Who wants to be stuck with that loss? This is the classic "hot potato" problem highlighted in last November's Journal of Commerce article. Whoever has this inventory gets whacked with a total loss so a war will break out over its rightful owner. This is also the painful interaction of the Commission's decision with the Proposition 65 settlement and other correlated state laws - somebody's going to eat a lot of inventory (starting yesterday). To avoid this kind of risk, retailers will dump the goods back on makers, and the makers will have few options for the goods returned under this cloud (remember, felonies?).
Let's also not forget that products that are illegal under the CPSIA are not eligible for export to ANYWHERE. In other words, illegal here . . . illegal EVERYWHERE. The losses are total and irrevocable, courtesy of this decision. Who would want to get in the middle of that?
The fashion jewelry decision came as a shock to starry-eyed (non-cynical) optimists who held onto inventory from February without writing it off in the hope that the Commission would somehow preserve the stones' value. No such luck for them. With the Commission's decision, massive write-offs are now certain. In my original letter to Cheryl Falvey on retroactivity (here and here), I explained that inventory turning overnight into contraband would lead to widespread loan defaults, among other evils. It is not hard to imagine that among CIT's problem loans today are a few contraband jewelry and apparel/footwear cases arising from or related to this decision.
To add to the fun, the CPSC's new best friend, their partner U.S. Customs Service, is said to be impounding these goods as they are imported. I understand that numerous shipments are being delayed over these stones. What's the defense of the importer? "Hey, I know it's illegal but the CPSC says they don't care. . . well, they CARE but they won't enforce . . . right, no enforcement but still illegal, yes, can I have my inventory? . . . I can't give you a test report, the stones are over the limit but the CPSC says they won't be looking . . . but you ARE looking? . . . should I put my lawyer on the phone to explain???" Yeah, that might work . . . on Mars.
It's a royal mess but frankly, the CPSC and the Commission did as much as the words of the law allows. The law is very poorly-written and was even more poorly-vetted, and must be changed. The Commission will have more trying days ahead as it tries to make sense of a law that makes no sense. It's self-destructive legislation causing widespread harm but Congress stands passively on the sidelines, ready to point fingers. I think we as a country can achieve more. Now somebody has to prove it.
Wednesday, July 8, 2009
CPSIA - Do-Gooders Playing a Role in Train Crashes?
Consumer Groups, media and panicky politicians led a feeding frenzy last year over toy recalls that resulted in remarkably broad legislation restricting the presence of lead in children's products, yes our old friend the CPSIA. Of course, the determined "do-gooders" in the consumer group corner have asserted that there is "no safe level" for lead and thus, it makes "sense" to eliminate it totally from children's products (and the world at large, if possible). Remember, you can't be too safe . . . . A leader of this charge was a staff person at the American Academy of Pediatrics who presented unchallenged statistics in September 2007 to a House Subcommittee. With the lilly-white AAP backing of this notion, Congress swung into action and outlawed lead effectively from all children's products. Sounds good, right? Well, as with most manias, the "unintended consequences" have been terrible. This has been well-documented in this space.
Interestingly, I found an article recently that suggested that elimination of lead from circuitry (solder), courtesy of our friends in EU bureaucracy, may have played a role in the recent terrible Washington, D.C. Metro train crash. [Lest we forget, it is worth noting that the motivation behind the EU's elimination of lead from solder was protection of the environment, not a fear over direct human poisoning, the basis of the current U.S. mania.] This article points out something that the amateur scientist fear mongers may not have known, which is that lead plays a useful role in solder, and in its absence . . . more "unintended consequences". In this case, the consequence is something called "tin whiskers", a phenomenon created by "untamed" tin in solder. Tin behaves differently in the absence of lead, and will grow "whiskers" that create electrical shorts. The article suggests that this explains the intermittent electrical failures of the crash detection system on the Washington Metro. Other deadly accidents have been linked to tin whiskers. Precautionary, indeed.
Among the many things that disgust me about the lead mania is the illusion (delusion) that controlling lead-in-substrate in children's products will have any material impact on exposure to lead. In fact, it's just a way to put blinders on. By publicly and notoriously addressing the "lead problem" - problem solved!! This is absurd, of course, but has only encouraged the maniacs. Take, for example, the recent hubbub over the Obama's "lead-contaminated" vegetable garden. Incredibly, the lead levels detected in the White House garden (presumably by people with too much time on their hands) was 93 ppm. Our dear friends at the AAP assert that background lead levels in dirt is 40 ppm. This was the rationale behind the recent Illinois lead labeling legislation profiled in this space. As the Obama article makes clear, the controversy over lead in dirt is just politics, not science, and is WAY out of proportion to both the health threat and the presence of lead all around us. Dr. Kimberly Gray, Director of the Environmental Sciences Program at Northwestern University comments: "It’s inflammatory. 93 ppm is well below background lead for an urban environment. It’s what you’d expect just from atmospheric deposition." The article continues: "Atmospheric deposition is lead particles that fall out of the sky, from things like auto emissions." You mean there's lead in the air, too - oh, no!
The do-gooders have infinite justifications for their bans of lead in children's products, their current obsession, but (other than economic devastation) what has actually been accomplished for the American public by their handiwork? Only the illusion of "better safety". The legislation markets the idea that elimination of insoluble lead from substrate makes a marginal, incremental difference to health, as though it were the only (or principal) source of lead in our bodies. This flawed logic also underlies the dangerous Proposition 65 in California. The labels required by Proposition 65 sounds sensible, intended to advise consumers of the presence of "toxins" in their products (even if legally there) so they can decide whether to expose themselves or their families to the "deadly" substances. Who could object to that? Well . . . the selective presence of these labels gives false comfort to consumers who may believe that the labels highlight the ONLY places where the noted risk occurs. The implicit reasoning goes like this . . . why would the government require lead labels on lip gloss if the government knows that this risk is miniscule compared to MANY other sources of lead in daily life? Aren't they requiring labels on EVERYTHING with lead? And, if so (the government wouldn't let us down!), isn't this buying decision critical, a highlighted choice that might make the difference between good health and some form of miserable, painful, lingering death?! That's the implication, however erroneous.
I do not accept that this is the only way to run a sensible society. Canada has attempted to truncate our fancy new safety system, by tailoring it to a narrow and specific class of products or situations. That seems like a good place to start. It's time for all concerned to acknowledge that the "perfect legislative process" had a faulty outcome. Real leaders are prepared to admit error and to do the right thing for their troops. Congress???
Interestingly, I found an article recently that suggested that elimination of lead from circuitry (solder), courtesy of our friends in EU bureaucracy, may have played a role in the recent terrible Washington, D.C. Metro train crash. [Lest we forget, it is worth noting that the motivation behind the EU's elimination of lead from solder was protection of the environment, not a fear over direct human poisoning, the basis of the current U.S. mania.] This article points out something that the amateur scientist fear mongers may not have known, which is that lead plays a useful role in solder, and in its absence . . . more "unintended consequences". In this case, the consequence is something called "tin whiskers", a phenomenon created by "untamed" tin in solder. Tin behaves differently in the absence of lead, and will grow "whiskers" that create electrical shorts. The article suggests that this explains the intermittent electrical failures of the crash detection system on the Washington Metro. Other deadly accidents have been linked to tin whiskers. Precautionary, indeed.
Among the many things that disgust me about the lead mania is the illusion (delusion) that controlling lead-in-substrate in children's products will have any material impact on exposure to lead. In fact, it's just a way to put blinders on. By publicly and notoriously addressing the "lead problem" - problem solved!! This is absurd, of course, but has only encouraged the maniacs. Take, for example, the recent hubbub over the Obama's "lead-contaminated" vegetable garden. Incredibly, the lead levels detected in the White House garden (presumably by people with too much time on their hands) was 93 ppm. Our dear friends at the AAP assert that background lead levels in dirt is 40 ppm. This was the rationale behind the recent Illinois lead labeling legislation profiled in this space. As the Obama article makes clear, the controversy over lead in dirt is just politics, not science, and is WAY out of proportion to both the health threat and the presence of lead all around us. Dr. Kimberly Gray, Director of the Environmental Sciences Program at Northwestern University comments: "It’s inflammatory. 93 ppm is well below background lead for an urban environment. It’s what you’d expect just from atmospheric deposition." The article continues: "Atmospheric deposition is lead particles that fall out of the sky, from things like auto emissions." You mean there's lead in the air, too - oh, no!
The do-gooders have infinite justifications for their bans of lead in children's products, their current obsession, but (other than economic devastation) what has actually been accomplished for the American public by their handiwork? Only the illusion of "better safety". The legislation markets the idea that elimination of insoluble lead from substrate makes a marginal, incremental difference to health, as though it were the only (or principal) source of lead in our bodies. This flawed logic also underlies the dangerous Proposition 65 in California. The labels required by Proposition 65 sounds sensible, intended to advise consumers of the presence of "toxins" in their products (even if legally there) so they can decide whether to expose themselves or their families to the "deadly" substances. Who could object to that? Well . . . the selective presence of these labels gives false comfort to consumers who may believe that the labels highlight the ONLY places where the noted risk occurs. The implicit reasoning goes like this . . . why would the government require lead labels on lip gloss if the government knows that this risk is miniscule compared to MANY other sources of lead in daily life? Aren't they requiring labels on EVERYTHING with lead? And, if so (the government wouldn't let us down!), isn't this buying decision critical, a highlighted choice that might make the difference between good health and some form of miserable, painful, lingering death?! That's the implication, however erroneous.
I do not accept that this is the only way to run a sensible society. Canada has attempted to truncate our fancy new safety system, by tailoring it to a narrow and specific class of products or situations. That seems like a good place to start. It's time for all concerned to acknowledge that the "perfect legislative process" had a faulty outcome. Real leaders are prepared to admit error and to do the right thing for their troops. Congress???
Wednesday, July 1, 2009
CPSIA - Lead Labels, Who Cares?
Some laws, like California's Proposition 65 and the infamous Illinois Lead Poisoning Protection Law (see my previous post) include labeling provisions to "inform the public" of the presence of various unwanted substances, even trace amounts. After all, it's the public's "right to know" that motivates these consumer protection laws. Sounds good, right? Well, if you are on the receiving end of this good work, it feels like business death. For instance, in the Illinois law (Section 6(b)), labeling is required if lead-in-paint on a toy exceeds 40 ppm. This is intentionally lower than the federal lead-in-paint standards of 90 ppm (as of August 14, 2009, that is) since Illinois is competing to win in the Race to the Bottom as the national leader in "being safe". The Illinois standard is also equivalent to national average of lead levels in DIRT. Yes, dirt (see the report of the American Academy of Pediatrics). Thus, the Illinois law does not make lead-in-paint levels above trace background lead levels illegal but does require that consumers be informed of these "elevated" lead levels in a helpful product label.
So, if you are the lucky manufacturer who has to label his/her products for lead levels that conform to the excessively precautionary federal standards in order to satisfy Illinois or California laws, will you survive the experience to tell the tale? I have argued in testimony to an Illinois House subcommittee that the answer is "no". Consumers will not ignore these labels and will treat your product as though it were poisonous or radioactive. This would not be good for business - to say the least. I, in fact, told the Attorney General's office in Illinois that this might prompt Illinois companies to relocate across the border into saner States like Wisconsin or Iowa.
My vivid imagination, right? Can you imagine the voices I must hear in my head?? Well, perhaps not. Read about the story of lip gloss at Target in Indiana where a recall of a legal, safe product was incited by a panicked consumer reading a Proposition 65 label in Indiana. You can't say you haven't heard it before. Feeling safer already?
Hey Congress - what if some of my other predictions come true, too? Are you ready to stand up before America and tell them that these terrible problems were your handiwork? Is that the Obama Revolution you want to foment?
So, if you are the lucky manufacturer who has to label his/her products for lead levels that conform to the excessively precautionary federal standards in order to satisfy Illinois or California laws, will you survive the experience to tell the tale? I have argued in testimony to an Illinois House subcommittee that the answer is "no". Consumers will not ignore these labels and will treat your product as though it were poisonous or radioactive. This would not be good for business - to say the least. I, in fact, told the Attorney General's office in Illinois that this might prompt Illinois companies to relocate across the border into saner States like Wisconsin or Iowa.
My vivid imagination, right? Can you imagine the voices I must hear in my head?? Well, perhaps not. Read about the story of lip gloss at Target in Indiana where a recall of a legal, safe product was incited by a panicked consumer reading a Proposition 65 label in Indiana. You can't say you haven't heard it before. Feeling safer already?
Hey Congress - what if some of my other predictions come true, too? Are you ready to stand up before America and tell them that these terrible problems were your handiwork? Is that the Obama Revolution you want to foment?
Saturday, April 4, 2009
CPSIA - A Warlord Announces Himself
Our country's Federal system of law is based on a concept of legal hierarchy. Under the Supremacy Clause in Article VI of the Constitution, Federal law reigns supreme over State and local laws. Arguably, this provision was essential to the forging of a single nation from 13 Colonies by the Founding Fathers. Supremacy of Federal Law enables our Federal government to impose rules that benefit us as a nation over the parochial interests of States that might be contrary to the common weal. We depend on this system.
Unfortunately, the CPSIA by design degrades the supremacy of Federal law by giving wide latitude to State Attorneys General (SAGs) to independently enforce the law as they see fit. States also have the right to create their own safety laws with few restrictions because of weak preemption. Congress did this by plan. Notably, to do otherwise would have caused conflict with California's cherished Proposition 65 Consumer "Right to Know" law. As business people and as consumers, should we really care about this legal "technicality"? To answer this question, let’s look at the alternative.
Not every country has the benefit of a well-organized federal system. Some balkanized countries suffer from independent and uncooperative internal territories. This was the case in Europe before the European Union, as each country had its own rules and regulations, enforcement policies and courts. Trade is often a casualty of balkanization as internal boundaries or borders become points of resistance – or taxation. These internal divisions may not even be legal in nature, but rather tribal or power-based. This is the situation in Iraq.
The Americans got a rude surprise when the reality of the Iraq invasion set in: Iraq was not like home. What they believed could become a homogeneous nation was in fact a fractured, tribal land ruled by competing warlords. To move from place to place safely, Coalition forces had to negotiate and cultivate, territory by territory, appealing to each local leader (warlord) for support and cooperation. There was no way to implement rules centrally – they had to be negotiated neighborhood by neighborhood. This was and remains an uphill battle. Interestingly, similar problems bedevil the Americans in Afghanistan.
The CPSIA empowers SAGs to become modern American Warlords. These often ambitious local elected officials have no obligation to abide by CPSC policy, legal opinions or even Commission decisions, nor do they have any obligation to even inform the CPSC of their enforcement activities (until they file suit). Thus, as created by Congress under the terms of the CPSIA, there are now essentially 51 schemes of laws and 51 safety warlords governing the children's products marketplace. This remarkable "improvement" in the law is said to be sacrosanct to our Congressional leaders (read, Democrats) and not up for discussion. This is very worrisome to me – I think I do care about this. Are the SAGs going to behave consistently with national policy, only stepping in when the CPSC is not following its own rules – or will they do as they please, damn the consequences? Might the SAGs even make up their own law? Will the States behave themselves and play for the common good?
For answers, let us look westward. On March 25, California Attorney General Edmund Brown wrote a letter to the CPSC responding to its call for comments on the new phthalates test method and the draft approach for determining which products are subject to Section 108 phthalate ban.. See http://www.learningresources.com/text/pdf/CalAGPhthalateLetter25Mar09.pdf. Never mind that the CPSC has issued its interpretation of the CPSIA on phthalate testing and the phthalate bans, Warlord Brown will be doing things differently in his tribal region, California. In this remarkable letter, Warlord Brown announces that notwithstanding whatever test procedure the CPSC might settle on, the tribal region of California intends to enforce its phthalates ban component by component. Take that, Federal system! In a friendly gesture, Warlord Brown encourages the CPSC to see things his way. He also notes strongly that phthalates concentrations of 0.1% should be considered an overall limit, not phthalate by phthalate, which implies another serious division in enforcement policy. I am sure California businesses are rejoicing over Warlord Brown’s enlightened stance.
[Interestingly, one of Warlord Brown's arguments is that the CPSIA is modeled on the California ban, and thus, the interpretation of the law must follow California’s (namely, his). As a resident of Illinois, I am somewhat less sympathetic to this view. I did not have a chance to vote for or against this elected official and used to think that Federal policy was allowed to vary from that of California.]
The implications of the Brown letter are shattering. This letter is tantamount to a declaration of the supremacy of California law over Federal law. All hail Sacramento, our new national Capitol! The failure of Congress to create a simple, clear, prophylactic preemption rule, and to drive SAGs out of the children's products safety law enforcement business, will have a severe depressing effect on commerce. Of course, the CA power broker gang of Pelosi, Waxman, Boxer and Feinstein is not likely to permit any restrictions to be placed on their home state SAG. The reality is that the vast majority of companies cannot manage different legislative schemes governing their products. Most U.S. companies do not employ lawyers on their staff and even if they did, could not afford to monitor, much less accommodate, the shifting sands of 50 States' rules and enforcement policies. Presumably then, businesses will either learn to live with trade-inhibiting local rules with all the risk that goes along with it, or just give in to the most aggressive Warlords. Of course, were the latter to occur, a competition between Warlords would result, to determine which one is the toughest hombre on the range. Many companies would leave the marketplace were that to occur. I think you can count on this Democratic- controlled Congress to sit idly by and watch the spectacle with delight.
This is but one of many terrifying aspects of the CPSIA. It is not the one on people’s minds today because it is not generating expense . . . yet. This kind of risk will hit someone, sometime. So far, California has announced a broad settlement with toy companies over violations of local lead laws (http://ag.ca.gov/newsalerts/print_release.php?id=1636), and 39 SAGs feasted on Mattel for $12 million in another action (https://mail.learningresources.com/exchweb/bin/redir.asp?URL=https://mail.learningresources.com/exchweb/bin/redir.asp?URL=http://www.azag.gov/press_releases/dec/2008/Mattel%252520CJ.pdf ). When this moves downstream, the children's markets we depend on, that you depend on, will shrivel before your eyes. You heard it here first. It’s time to Amend the CPSIA before it's too late.
Unfortunately, the CPSIA by design degrades the supremacy of Federal law by giving wide latitude to State Attorneys General (SAGs) to independently enforce the law as they see fit. States also have the right to create their own safety laws with few restrictions because of weak preemption. Congress did this by plan. Notably, to do otherwise would have caused conflict with California's cherished Proposition 65 Consumer "Right to Know" law. As business people and as consumers, should we really care about this legal "technicality"? To answer this question, let’s look at the alternative.
Not every country has the benefit of a well-organized federal system. Some balkanized countries suffer from independent and uncooperative internal territories. This was the case in Europe before the European Union, as each country had its own rules and regulations, enforcement policies and courts. Trade is often a casualty of balkanization as internal boundaries or borders become points of resistance – or taxation. These internal divisions may not even be legal in nature, but rather tribal or power-based. This is the situation in Iraq.
The Americans got a rude surprise when the reality of the Iraq invasion set in: Iraq was not like home. What they believed could become a homogeneous nation was in fact a fractured, tribal land ruled by competing warlords. To move from place to place safely, Coalition forces had to negotiate and cultivate, territory by territory, appealing to each local leader (warlord) for support and cooperation. There was no way to implement rules centrally – they had to be negotiated neighborhood by neighborhood. This was and remains an uphill battle. Interestingly, similar problems bedevil the Americans in Afghanistan.
The CPSIA empowers SAGs to become modern American Warlords. These often ambitious local elected officials have no obligation to abide by CPSC policy, legal opinions or even Commission decisions, nor do they have any obligation to even inform the CPSC of their enforcement activities (until they file suit). Thus, as created by Congress under the terms of the CPSIA, there are now essentially 51 schemes of laws and 51 safety warlords governing the children's products marketplace. This remarkable "improvement" in the law is said to be sacrosanct to our Congressional leaders (read, Democrats) and not up for discussion. This is very worrisome to me – I think I do care about this. Are the SAGs going to behave consistently with national policy, only stepping in when the CPSC is not following its own rules – or will they do as they please, damn the consequences? Might the SAGs even make up their own law? Will the States behave themselves and play for the common good?
For answers, let us look westward. On March 25, California Attorney General Edmund Brown wrote a letter to the CPSC responding to its call for comments on the new phthalates test method and the draft approach for determining which products are subject to Section 108 phthalate ban.. See http://www.learningresources.com/text/pdf/CalAGPhthalateLetter25Mar09.pdf. Never mind that the CPSC has issued its interpretation of the CPSIA on phthalate testing and the phthalate bans, Warlord Brown will be doing things differently in his tribal region, California. In this remarkable letter, Warlord Brown announces that notwithstanding whatever test procedure the CPSC might settle on, the tribal region of California intends to enforce its phthalates ban component by component. Take that, Federal system! In a friendly gesture, Warlord Brown encourages the CPSC to see things his way. He also notes strongly that phthalates concentrations of 0.1% should be considered an overall limit, not phthalate by phthalate, which implies another serious division in enforcement policy. I am sure California businesses are rejoicing over Warlord Brown’s enlightened stance.
[Interestingly, one of Warlord Brown's arguments is that the CPSIA is modeled on the California ban, and thus, the interpretation of the law must follow California’s (namely, his). As a resident of Illinois, I am somewhat less sympathetic to this view. I did not have a chance to vote for or against this elected official and used to think that Federal policy was allowed to vary from that of California.]
The implications of the Brown letter are shattering. This letter is tantamount to a declaration of the supremacy of California law over Federal law. All hail Sacramento, our new national Capitol! The failure of Congress to create a simple, clear, prophylactic preemption rule, and to drive SAGs out of the children's products safety law enforcement business, will have a severe depressing effect on commerce. Of course, the CA power broker gang of Pelosi, Waxman, Boxer and Feinstein is not likely to permit any restrictions to be placed on their home state SAG. The reality is that the vast majority of companies cannot manage different legislative schemes governing their products. Most U.S. companies do not employ lawyers on their staff and even if they did, could not afford to monitor, much less accommodate, the shifting sands of 50 States' rules and enforcement policies. Presumably then, businesses will either learn to live with trade-inhibiting local rules with all the risk that goes along with it, or just give in to the most aggressive Warlords. Of course, were the latter to occur, a competition between Warlords would result, to determine which one is the toughest hombre on the range. Many companies would leave the marketplace were that to occur. I think you can count on this Democratic- controlled Congress to sit idly by and watch the spectacle with delight.
This is but one of many terrifying aspects of the CPSIA. It is not the one on people’s minds today because it is not generating expense . . . yet. This kind of risk will hit someone, sometime. So far, California has announced a broad settlement with toy companies over violations of local lead laws (http://ag.ca.gov/newsalerts/print_release.php?id=1636), and 39 SAGs feasted on Mattel for $12 million in another action (https://mail.learningresources.com/exchweb/bin/redir.asp?URL=https://mail.learningresources.com/exchweb/bin/redir.asp?URL=http://www.azag.gov/press_releases/dec/2008/Mattel%252520CJ.pdf ). When this moves downstream, the children's markets we depend on, that you depend on, will shrivel before your eyes. You heard it here first. It’s time to Amend the CPSIA before it's too late.
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