Government Accountability Office seeks input

As you may know, federal agencies are autonomous which sometimes results in conflicting missions between agencies. One such federal agency currently at odds with the Consumer Product Safety Improvement Act (CPSIA) is the General Accountability Office (GAO). Simplistically described, the GAO is charged with oversight to ensure that regulations and laws are not so onerous that laws cannot be obeyed. Introduction thus dispensed with, the GAO is requesting answers to very specific questions. Please don’t respond with ire and outrage at the CPSIA law. Rather, answering these questions -targeted at importers, sorry- to the best of your ability is the most legitimate way to make a case against CPSIA. Your assistance is greatly appreciated.

Questions Regarding CPSC Authorities to Prevent Entry of Unsafe Consumer Products

The Consumer Product Safety Improvement Act (CPSIA) of 2008 contained a mandate for GAO to study the effectiveness of CPSC’s authorities with respect to preventing the entry of unsafe products into the customs territory of the United States. The mandate also requires us to review and provide recommendations with respect to plans to prevent the entry of unsafe products. Finally, the mandate requires us to make legislative recommendations, at a minimum, related to CPSC’s inspection of foreign manufacturing plants and a requirement for foreign manufacturers to consent to U.S. jurisdiction with respect to CPSC’s enforcement actions.

1. Prior to the CPSIA, what activities did CPSC undertake to enforce its authorities regarding imported products? In your view, what were the gaps in the consumer product safety law regarding imported products that were meant to be filled by the CPSIA?

2. In your view, what principles or criteria could be used to judge the effectiveness of CPSC’s enforcement of its authorities regarding imported products? Are you aware of an appropriate and authoritative source of data to help us understand CPSC’s past and current performance, particularly with respect to imported products?

3. To what extent are CPSC’s efforts inhibited by resource issues? What other issues limit the effectiveness of CPSC’s enforcement activities with respect to imported products?

4. Based on your knowledge, what are the differences or similarities between CPSC and other federal agencies (FDA, USDA, and NHTSA) and other countries (EU, Australia, Canada, Japan, and China) concerning their authorities to prevent the entry of unsafe consumer products?

5. An issue of general concern for consumer product safety is the “switcheroo” problem, whereby the product subject to testing and the product actually sold are quite different. How significant is this issue and, based on your knowledge, what is industry doing to resolve it? What, in your view, is the appropriate role for CPSC in addressing this issue?

6. CPSC has cooperative agreements with 15 countries. Based on your knowledge, to what extent have the agreements been effective in preventing the entry of unsafe consumer products into the U.S.?

7. What in your view are appropriate criteria to judge the effectiveness of CPSC’s training and outreach efforts with foreign government officials and manufacturers?

Please forward your responses to:
Meghana Acharya, Senior Analyst
Financial Markets and Community Investment Team
U.S. Government Accountability Office
301 Howard Street, Suite 1200
San Francisco, CA 94105-2252
(415) 904-2158
Email

CPSIA Protest Rally April 1st in Washington DC

A rally has been planned to protest Congressional stonewalling over CPSIA, taking place in Washington DC on April 1st. Your presence is requested. The is the brainchild of Rick Woldenberg who says:

I am pleased to announce that on April 1 there will finally be an opportunity to go to Capitol Hill to tell Congress directly about the terrible impact of the CPSIA on our lives and businesses. Having been repeatedly denied the opportunity to explore the issues created by the CPSIA in public hearings by both the House Committee on Energy and Commerce and the House Committee on Small Business since December, we have elected to organize our own rally and open hearings for this purpose. This unprecedented event is a true demonstration of democracy at work – the People will not be denied their say in this vitally important matter. The date – April Fool’s Day – is ironic but the open hearing and rally are quite real and will be held on time with a full slate of speakers and a wide range of participants. This event will include support from numerous trade organizations and is expected to feature remarks by Members of Congress as well as scientists and representatives of various organizations affected by the legislation such as small businesses, libraries, charities and thrift stores. This event will also be open to the media.

There are several ways you can signal your intent to join the event. You can leave a comment here, on the Facebook page, CPSIA-Ning or in this thread on the Fashion-Incubator site. A central planning site listing all activities and committees in charge of logistics (like accommodations) isn’t live yet but the URL is Amend the CPSIA (bookmark and check back later for content). However it is you sign up to come, be sure to let someone know (Jennifer is coordinating for F-I, you can also call her at 312-860-1186) so we can get a head count. Food will be provided the day of the event so our need to know is critical in many ways. Feel free to road trip and bring the kids to witness democracy in action. This event will be big, and include members of Congress!

My response to Representative Schakowsky

As I mentioned two Fridays ago, I received a letter from Jan Schakowsky, representative from Illinois. It wasn’t pleasant to say the least and is reprinted below. As many others suggested, the letter was intended to intimidate me and prevent me from exercising my right to free speech with respect to my protests against the CPSIA law. As far as can be determined, this letter is the only letter ever written by a legislator to a private individual regarding their activism in opposition to the CPSIA law. A well placed source suggests I’m being targeted as the focal point of a negative PR campaign. Whether this is true or not is yet to be determined but in any event, the correspondence merited a response if for no other purpose than to correct its inaccuracies. My response is reprinted following Schakowsky’s letter to me.

Representative Schakowsky’s writes:

February 12, 2009

Dear Ms. Fasanella:
It has come to my attention that, as author of the websites “Fashion-Incubator” and “National Bankruptcy Day,” you have used an illustration of a tombstone to mark the day on which certain provisions of the Consumer Product Safety Improvement Act went into effect.

I agree that the Consumer Product Safety Commission, under the leadership of Chair Nancy Nord, has not implemented the law in such a way that provided guidance and answers to business owners in a timely fashon. However, I am outraged and deeply offended that you have chosen to mark February 10th with such irreverence.

The Consumer Product Safety Improvement Act was passed because there are children who have been injured and killed by dangerous products. These are children who were loved by their families but who now lie under actual tombstones. Let me give you some of their names:

  • Danny – at sixteen months, he was strangled when the top rail of his poorly designed, untested portable crib collapsed around his neck. Danny is one of seventeen babies who died from this particular design.
  • Kenny – on Thanksgiving Day 2005, Kenny died in excruciating pain after swallowing tiny magnets that had fallen out of his older siblings’ toys. The toys were sold, even knowing that the magnets fall out and the extreme damage – or in Kenny’s case, death – that can result when they are swallowed.
  • Jamell – died after swallowing a charm that came free with children’s shoes and was 99% lead content.
  • Liam – who was caught and suffocated in the gap that formed between his crib rail and mattress when the hardware failed.

All of those deaths and many more could have been prevented if a law like the Consumer Product Safety Improvement Act had been in place. Out of respect for those children and their families, I hope you will remove all images of tombstones from your sites, tone down your rhetoric, and work to protect children’s lives by focusing on product safety.

Sincerely,

Jan Schakowsky
Member of Congress
Email

My response to Representative Schakowsky:

February 24, 2009
Ms Jan Schakowsky
2367 Rayburn House Office Building
Washington, DC 20515

Dear Representative Schakowsky,

I am writing in reply to your letter dated February 12, 2009 in which you criticized pages on my websites at www.nationalbankruptcyday.com [cit] and www.fashion-incubator.com[cit]. These pages on my sites relate to implementation of the Consumer Product Safety Improvement Act, and the design you objected to expressed my view that the retroactive effect of the new lead and phthalate standards under the CPSIA will kill many small businesses. My main business is consulting to small apparel manufacturers. I care deeply about my clients and their businesses. These hard working Americans have no record of harming children with their products. The ill effects of the CPSIA on small apparel manufacturers and retailers will harm our country without making any child safer. Your chastisement of this point of view has only amplified my estrangement from some of the liberal, “consumer protection” groups that I respected and supported.

The debate over the CPSIA has long featured misuse of child injuries data by consumer advocates to justify the overreaching CPSIA. The enduring sorrows of these families should not be exploited callously for political gain. By overstating and distorting the relationship between the tragedies experienced by these families and the new law, your letter exemplifies the myriad inappropriate arguments in support of the CPSIA.

In your letter, you state that “[t]he Consumer Product Safety Improvement Act was passed because there are children who have been injured and killed by dangerous products” and provide four examples of deaths involving children’s products as an illustration. Your letter continues: “All of these deaths and many more could have been prevented if a law like the Consumer Product Safety Improvement Act had been in place.” Sadly, this is untrue and a critical question in the debate over this law. You have argued that this draconian law was needed to fill a regulatory gap to save these children. However, as the CPSIA could not have been effective to change any of these sad outcomes, how can such a dramatic, over-arching and exceedingly costly law be justified? In this case, it cannot.

Your cited examples do not tell the whole story:

  • Your First Example: Danny, strangled by the top rail of his crib.
    Danny and seven other children were lost due to this product defect. The CPSC implemented a recall of Danny’s crib in 1993 and similar models were recalled over the next four years, primarily during the chairmanship of Anne Brown [cit/cit] . In cooperation with the JPMA, the CPSC developed voluntary standards for cribs that eliminated this product design flaw and today virtually all cribs sold in the United States meet these standards. None of this activity required any aspect of the CPSIA. Prior to the passage of the CPSIA, the CPSC had ample authority under the Federal Hazardous Substances Act and Consumer Product Safety Act to implement mandatory regulations but chose not to do so. In fact, both Acts empower the Commission to rely on voluntary standards if such standards would adequately prevent a risk of injury and would be substantially complied with. The new crib standards to be promulgated not later than August 2016 under the CPSIA simply makes mandatory what the CPSC had the authority to implement since 1970.
  • Your Second Example: Kenny, died after swallowing small magnets that had fallen out of toys.
    Kenny’s death was one of the first identified cases indicating a possible problem with multiple magnets. The CPSC implemented a recall of the product involved, as well as many other similar products, some of which contained hazardous magnets and some of which did not contain hazardous magnets [cit] . In light of the discovery of this new hazard, the ASTM F963-07 standard was updated to establish criteria for use of magnets in toys. As the hazard was unknown at the time of this accident, the CPSIA (had it been law at the time) would have had no impact on this child’s safety. As was fitting, the CPSC acted under prior legislative authority to remediate the problem upon discovery.
  • Your Third Example: Jarnell, died after swallowing a lead charm that came free with children’s shoes.
    Lead in children’s products that can cause injury has been banned since approximately 1970. In February 2005, after recalling a number of items of children’s jewelry that presented such a hazard, the Commission issued a policy statement that set forth the criteria for evaluating the hazards associated with such jewelry. Subsequently, in January 2007, the Commission commenced a rulemaking proceeding to formally define children’s jewelry as a banned hazardous substance. In March 2008, five months before the passage of the CPSIA, the manufacturer paid a $1,000,000 civil penalty to resolve the Commission’s allegations that it violated the law [cit]. As far as can be determined, the January 2007 rulemaking proceeding has been tabled in light of the CPSIA which mandates specific levels of lead in children’s jewelry. It is clear, however, that the CPSIA was not necessary to regulate leaden children’s jewelry and in fact the rulemaking might have been completed already had Congress not intervened. As a result, it can be argued that the CPSIA actually delayed implementation of rules on leaden jewelry.
  • Your Fourth Example: Liam, who suffocated in his crib when its hardware failed.
    Crib hardware has been an issue for 30 years at CPSC and is largely related to hardware loosening or becoming lost over time, especially with used cribs [cit/cit]. It is notable that the CPSIA does not address many of crib hardware issues other than to restrict the sale of used cribs that fail to comply with to-be-adopted mandatory standards (another retroactive standard). In fact, under the old FHSA and CPSA, the CPSC had the authority to address crib hardware issues that constituted product defects (see the first example) by recalling affected cribs and amending its existing crib rules if necessary to address hardware issues. Nothing in the CPSIA would have addressed the issues that led to Liam’s death, nor does the CPSIA confer authority on the agency to address hardware issues that did not exist prior to its passage.

Fundamentally, the issues underlying the four deaths you cite are not regulatory authority, but in fact resources (financial and personnel) and agency direction. The adequacy of prior legislation had nothing to do with these incidents and therefore the new law would not have remedied the above-referenced accidents. Blaming Acting Chairman Nancy Nord for the consequences of this absence of Congressional support is disingenuous.

On a personal note, I resent your implication that I am insensitive to children’s safety. The issue of children’s safety is not the sole possession of CPSIA supporters; there are many committed children’s advocates, mothers, teachers and counselors who adamantly oppose this law while still remaining very committed to safety. The vast majority of my manufacturers were compelled to enter the market for many of these reasons with products that exceed CPSIA standards. Unfortunately, today many of these same manufacturers are unable to locate contractors willing to take their work or even to acquire usual business insurance due to the fear of liability under the CPSIA. In an industry dominated by small firms (68% have fewer than 20 employees) the market chaos bodes poorly for consumers as well.

It is my sincere wish that the debate over the CPSIA can be conducted without twisting it into some sort of “good citizenship” test. The incontrovertible fact remains: CPSIA will not make children’s products safer but it will make them scarcer and more expensive. The law fails to incorporate concepts of risk assessment and will have the unintended consequence of devastating the business community and employment in this challenging economic environment.

We can do better than the CPSIA to protect our children. I would welcome a further constructive dialogue on how we can best achieve this goal for our nation.

Sincerely,

Kathleen Fasanella
www.fashion-incubator.com
www.nationalbankruptcyday.com

What didn’t make the final cut was this passage:

My delay in responding to your letter is due to indecision and mourning. Indecision wrought by my perceived futility of writing a response that will not be read anymore than the content of our continuing objections to CPSIA has been. As a life long liberal activist, I am grieving the loss of my faith in being forced to admit that the activist groups to which I’ve belonged, do not look beyond the rhetoric to examine root causes of our social afflictions.

I remain grieved that CPSIA has pitted activists against each other. I resent the polarization of well meaning but misinformed activists on both sides; reducing the controversy to simplistic descriptions of safety versus profits, right versus left, China versus domestic, and large enterprises versus small ones. It has simply become intolerable to me, not that I haven’t written of it many times before now.

CPSIA is sending us to China!

From the if-you-can’t-beat-them-join-them department is Jason Cheung. At least for him, CPSIA has been an unintended blessing. Did Congress intend for us all to move to China? They’ve certainly made the decision easier for Jason who writes:

With all the bad news and negativity surrounding the CPSIA. I’ve actually found a silver lining in it. Our family was recently able to purchase a new home! Unfortunately, that home is in Hong Kong China. How were we able to do that? Well, the rate we were offered is a low 3.5%. What’s even better though is that you can open a bank account and they will give you the same 3.5% interest rate for the money you put in there. Go ahead and read that again. Yes, that’s 0% financing on whatever you have in the bank. In addition to that, we’re also in the process of securing a 3% business loan that the Hong Kong government is offering as a stimulus. Where do you think Hong Kong gets the money for this? Maybe it’s coming from their 16% maximum income tax. How much money would you have left over if the government took only 16% of your wages? It’s actually less than 16%, if you’re married, own a home, etc. Now also imagine almost all the testing fees people are paying being funneled into one city … not a state, but one city. That has got to help. When the CPSIA went through, I never had to wait so long for someone to take my money.

More good news, our company taxes have gone down this year because I sent all my profits back to Hong Kong for safety testing! Hopefully the 8th largest economy in the world (California) can get through a budget crisis without my tax contribution.

Jason Cheung
General Manager
Huntar Company, Inc.

To put this in the proper perspective, here’s the first letter in this series he sent to his representatives in Congress:

My company is family owned, currently run by my brother and I.  We do toy design, wholesale and manufacturing for us as well as other companies.  While there may be good intention, the CPSIA is dangerous and ridiculous.  In today’s economy, this law has already cost my company over $50K.  This does not include any loss sales, potential opportunities, etc.  This is literally only from the cost of testing I’ve incurred as well as other costs, such as increases in insurance.  That in itself increased from $6K to $18K this year.  By the way, 20+ companies wouldn’t even give us a quote, even though we’ve never even had a claim.  Do you know where that $50K came from?   It came from my employee bonuses, money I would’ve used to purchase a new car, money I would have used on new product development with designers and engineers.  Instead, I sent the money to an overseas testing lab to tell me something I already knew.

Because of the manufacturing aspect of our business, we’re constantly exposed to new safety regulations both in the United States and Europe.  To be honest, we’ve already started cutting phthalates and opportunities for phthalates from our business two years ago as it began as an issue in Europe.  We also source paint from Germany to make sure it is consistently lead free.  In addition to these, we inspect supplier factories to ensure we receive safe product.  We also require they provide us with safety testing every 6 months for things such as paint and glue.  By the time I sent samples for CPSIA testing, I had already received tests stating materials were safe, conducted an in house test to verify the tests for lead, and had an existing test showing the completed product was safe.  Regardless, I had to test once again.  That’s correct, some of the inventory I hold has now been tested four times for the same thing.  The best part is, I’m not even finished yet.  I don’t have enough money to continue testing the rest of my line for phthalates in ABS.  FYI, phthalates is a softener used in PVC plastic.  It makes no sense to have it in ABS, but I’ll have to test it anyways.  It’s sort of like testing a rock for lead.  Wait … that’s actually not a good example, because testing labs have told me a rock would never pass.  I guess you can’t really sell rocks either.  Make sure you let playgrounds and schools know to clear their areas and classrooms of any rocks or pebbles.

While I enjoy what I do, if this continues to where it seems to be heading, I will have no choice to stop.  I am not financially able to do what is required by law.  I honestly do not care to be fined into bankruptcy or charged with felonies either.  I won’t go bankrupt, I’ll be ok.  I can still rent out our warehouse or find other means of income.  However, I’m not sure what my employees will do.  In today’s economy, I’m not sure they’ll be re-employed.  If anything, that’s why I think they were ok with paying for some of the required testing.  Then there’s also people we contract out to.  I wonder if the graphic artists we normally pay $20K+ each year will be missing our business.  I suppose the freight/shipping companies can always ship something else too.  To be honest, I don’t have the time to worry about them.  At this point, I’m just hoping I won’t get arrested.

Jason Cheung
General Manager
Huntar Company, Inc.

National Bankruptcy Day

tombstone_nbd

The heavens haven’t opened and rained fire today; the stay mitigated some effects which is in some ways, unfortunate, putting off for tomorrow that which will surely pass. The day will be all but seamless to consumers. However, over the coming months, I have little doubt consumers will increasingly complain there is little choice and selection in children’s products. They can’t buy things they took for granted such as replacement parts for bicycles. Prices will increase and product choices will decrease; even among used items. Unfortunately, consumers will look at the “evidence” on store shelves and blame manufacturers for being cheap and greedy. Consumers won’t know to blame the special interest groups behind this law, and since they certainly can’t blame all the manufacturers who went out of business, they’ll just blame what few remain standing. It all started with this law folks. If you’re a manufacturer, you can’t win. You just won’t.

No one expects this matter of the stay to rest unchallenged so we may be up and at it sooner rather than later. And that my friends, could be a very good thing.

Tomorrow’s Lead Regulation Deadline Will Ruin Small Businesses

From the Coalition for Safe and Affordable Childrenswear
FOR IMMEDIATE RELEASE Monday, February 09, 2009
CONTACT: Trey Ditto at tditto@rubenstein.com or 212-843-8063

The Childrenswear Coalition Warns Lawmakers: Tomorrow’s Lead Regulation Deadline Will Ruin Small Businesses. Without urgent action by Congress, runaway rules will force manufacturers out of business, cost thousands of jobs

NEW YORK – Tomorrow’s February 10 deadline to comply with the new federal lead regulations will lead to massive job losses in New York’s garment industry, as small manufacturers are forced to return upwards of $500 million in untested lead clothing from retailers with to 4,000 employees being laid off, according to the Coalition for Safe and Affordable Childrenswear (www.safechildrenswear.org). The only way to stop this catastrophe is by Congress intervening immediately.

“Congress has one more day to save thousands of jobs in New York and tens of thousands of jobs in America by demanding the Consumer Product Safety Commission fix these runaway regulations,” said Cory Silverstein, Executive President of Kids Headquarters and a Member of the Coalition Executive Committee. “If New York Members of Congress don’t intervene in the 11th hour and prevent these unrealistic rules from being applied retroactively to safe products already on the shelves, thousands of their constituents will be out of work and their districts will lose hundreds of millions of dollars in revenue.”

Another course of action could be inserting Sen. Jim DeMint’s (R-SC) legislation into the stimulus plan. The bill, that costs nothing, calls for a delay in the rules to give the CPSC the time it needs to develop a balanced, sensible approach to testing and certifying children’s clothing and eliminating the retroactive implementation of the regulation by making the compliance deadline for the new standards a “manufactured by” date, not a “sell-by” date. Thus far, the bill has received no support from Democrats and its leadership.

“The only thing that makes less sense than the CPSC’s regulations is Congress refusing to use the stimulus bill to save thousands of good manufacturing jobs,” Silverstein said. “If they are willing to spend almost one trillion dollars on projects and programs they think will project jobs, you would think they would be thrilled to have the opportunity to keep thousands of Americans employed without spending one dime.”

The new federal rules, which implement new lead standards set by Congress in the Consumer Product Safety Improve Act (CPSIA) that was passed last year, would retroactively apply to children’s clothing already on store shelves and in the inventory pipeline, forcing manufacturers to take back upwards of $500 million in returns of safe products. A ruling by the Consumer Product Safety Commission delayed some testing requirements for a year and said retailers should act in good faith that their products are safe. This stay – deemed unacceptable by the coalition – has created mass confusion among retailers, who are erring on the side of caution and will return untested products to manufacturers.

“If these totally unreasonable and unrealistic regulations go into effect on February 10th, they will have a devastating impact on a critical small business sector in New York at the worst possible time, when retail sales are plummeting and our economy is losing jobs across the board,” said Steve Levy, Director of Operations of Star Ride Kids and member of the coalition’s executive committee. “Once the February 10 deadline passes, we expect to receive hundreds of boxes of clothing from our retailers who are erring on the side of caution and returning untested clothing. And if the Commission or Congress doesn’t act, small businesses will go bankrupt and thousands of employees will be laid off.”

The Coalition, which represents 130 small manufacturers in New York, said it fully supports the spirit of the new lead standards, but a broad mandate is reckless and unrealistic.

“Our Coalition is committed to producing clothing that is safe and healthy for children. We are parents as well as business people, and we take our responsibilities to our consumers extremely seriously,” said Silverstein. “But you can’t just take an ax to such a broad issue. Instead, the Commission must evaluate each industry.”
###

Testing for thee but not for me*

*[Title courtesy] Whilst twittering about this morning, what did I find but an NRDC spokesperson flogging their all organic onesie? Ever in the market for a great product — even tho my baby will be 22 next May — I bought one. For a buck. Yep, their donations form will accept one US dollar so ignore those suggested donation amounts; they have money so I figure they can absorb the cost since all of us will be going out of business come February 10th. I think everyone should stock up now!

You recall the NRDC don’t you? They’re one of the parties who lobbied for this great CPSIA law. Considering they wrote and lobbied for the law, wouldn’t you think they’d be up on it? Turns out, they aren’t. Nope. Their spokesperson twittered:

The testing requirements only apply to manufacturers. We’re not a manufacturer.

and

The NRDC attorney who worjed [sic] on our suit about #CPSIA tells me the testing requirements only apply to manufacturers.

Ohmigosh! Can you believe it? The NRDC is selling non-CPSIA compliant products! Even they don’t understand that as the private labeler, they are the manufacturer! Boy, I can hardly wait till I get mine, I’ll bet those snaps won’t pass an XRF lead test. Jolly Jolly! I’ll bet people will be lining up on Tuesday to report them to the CPSC. So what say all of you? Don’t you have a hankering for a lead laden $1 onesie courtesy of our friends at the NRDC?

More here.