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.”
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Cautious Optimism: Stay of enforcement

A variety of news worth mentioning:

CPSC: The CPSC released a Stay of Enforcement of Testing and Certification Requirements; (pdf) dated January 30, 2009. A cursory examination shows they get it. As debated previously regarding the question of which definitions were likely to define a “small business”, they’re using the SBA’s. In the case of children’s wear apparel producers, this encompasses 99% of businesses. Also see the CPSC press release explaining the matter. Another legal source is The Smart Mama. Further updates are forthcoming.

Legislative: Senator Jim DeMint (R-SC) has announced he’s sponsoring legislation to amend the CPSIA. The bare bones of the plan are on his site; I’ll publish or link to final version once permitted to do so. Minimally, we extend a great deal of gratitude to Mr. DeMint and his legislative aides for crafting a proposal with the input of manufacturers. It is gratifying to be heard.

Retail: Anecdotal response from retailers has been mixed. Or rather, I should say one-sided. Retailers are concerned their liability has increased. All I’ve spoken to have said they intend to enforce existing CPSIA mandates on their vendors, requiring GCCs as previously stipulated.

Unresolved: Furthermore, extensive legal questions remain unresolved. There is little doubt special interest groups who promulgated this law’s passage will let yesterday’s stay of enforcement go unchallenged. Speaking of special interest groups, The National Association of Manufacturers (NAM) filed filed an emergency stay of effective date (pdf) on January 28th with 77 signatory associations.

Note: I will be going to Washington DC Monday February 2, through Wednesday February 4th. More news upon my return.

This fight is far from over.