Consumer Product Safety Improvement Act - Criticism

Criticism

Manufacturers, both large and small, have protested the extremely short timelines, the failure to take into account manufacturing processes, and the failure to take into account the breadth of the impact.

Congress passed this legislation in the wake of several high profile recalls in 2007 and 2008 of toys manufactured in China. Though many of these later turned out to be problems with design rather than manufacture, public pressure was increased as the result of at least one case of lead poisoning and subsequent issues with tainted pet food and other products shipped from China. The legislation, HR 4040, was passed in July 2008 and signed into law by President Bush in August 2008. The first deadline came up in September, and several major deadlines came up in February 2009.

Manufacturers point out that many of the products to be impacted are already making their way through the supply chain. As a result, much inventory that was legal prior to the signing of the law and was manufactured shortly thereafter will probably be on shelves as the deadlines approach. The Natural Resources Defense Council and Public Citizen apparently agree that these products are already in distribution, but believe that manufacturers should still be held liable. The problem is not the lead or phthalate content, as they imply, but the fact that the products must be tested to make sure they comply. There is also confusion of what products need a GCC and which do not. They have not been tested because the items generally do not contain hazardous materials; CPSC has been slow to define some of the accreditation or testing criteria; some of the low volume, low value items are not economical to test; and lot tracking methods would not allow some of the items to be tracked.

Manufacturers also point out that even if they were to attempt to comply, there are logistical problems. Companies with large varieties of products will have difficulty selecting several samples of every item. Even if they can, there are not enough testing facilities to handle the volume in time to meet the schedules.

Manufacturers also note both the difficulty and the apparently contradictory mandate to perform unit testing. An apparel manufacturer, for example, might use a single mill product such as organic cotton cloth coupled with a few organic dyes and a few pieces of hardware such as zippers or buttons. Those can be combined in limitless ways and in various sizes. Testing all of the final products generally provides no more information than would testing the individual inputs (or "components"), but is vastly more expensive.

Final product testing may actually be counterproductive if, for example, a solid lead button is tested as part of a larger product. When tested separately, the button would fail, but when mixed together with the other inputs, the final total lead content may fall below the standard. Thus, unit testing would result in certifying the safety of a product which has unsafe components that could be swallowed by a child.

Other manufacturers point out the problem of defining "children's products." Electronic products such as video games could be considered children's products, and are therefore subject to that testing. Electronics products contain lead as a component of solder; whereas the European Restriction of Hazardous Substances Directive standards have long attempted to phase out lead solder, the tin solder is known to suffer from a defect known as tin whiskers. This means that entire classes of products may become unavailable as manufacturers withdraw from the markets, banned as they are unable to pass tests, or defective as they substitute inferior components.

Additionally, products such as “regular Children’s books”, that have never been a health problem, are being included in the products that must be tested and certified.

The law requires some rulings from the CPSC on a predetermined schedule, and allows for other rulings as necessary. Manufacturers must wait until a final ruling is made before they can perform the required testing or gather the required documentation. Many times this ruling isn't available until after the item is already required. For example, the law required the issuance of a GCC for products manufactured "on and after November 12, 2008", but the GCC ruling was not published in the Federal Register until 18 November 2008.

These criticisms have been leveled by large and small manufacturers alike. According to 2002 business census data, 99% of the apparel manufacturers in the United States are small businesses, using the Small Business Administration's definition of "less than 500 employees." Many of them believe that they will not be able to manage or afford the mandated testing and will go out of business. This has resulted in an online petition campaign by small manufacturers of children's apparel.

Larger manufacturers are faced with problems stemming from their leverage, from aspects of Sarbanes-Oxley legislation, from their visibility, and from the logistics of managing the testing of large varieties of products. Large manufacturers tend to be very leveraged, and use their eligible inventory as their borrowing base. Because the inventory is going to become unsalable on 10 February 2009, there will be an abrupt change in their borrowing base. This raises the question of whether corporate officers can legitimately claim inventory in their current borrowing base. Because many of these loan agreements and all publicly traded companies require audited financial statements at the end of the year, inventories will be tested. This will result in a negative change in valuation and a sharp reduction or termination of available credit. For public companies, it raises the issue of whether those officers are making false representations, introducing the specter of criminal liability under Sarbanes-Oxley.

In early 2009, local media reported that children's clothes, books, toys, and other items were being removed from shelves at local stores - and in some of these cases even to the point of causing the entire store to close - in Wichita, Kansas, Ionia, Michigan, Conway, Arkansas, Goldsboro, North Carolina, Lincoln, Nebraska, New York City, New York (NYC), Rochester, New York, Marshall, Minnesota, Kailua, Hawaii, New Port Richey, Florida, and Tucson, Arizona.

According to Walter Olson's report 'The New Book Banning' in 'City Journal' (NYC), the CPSIA has problems because due to economics, some stores destroyed books, and some used book sellers removed many books. One small bookstore owner interviewee criticized the CPSC and referenced the book Fahrenheit 451, where the destruction of books at government behest was a plot point. Olson also claims that there has never been any known case of a child receiving lead poisoning from a book. In his closing paragraph, Olson writes "... ours will be a poorer world...".

The enactment of the CPSIA banned the sale of youth motorcycles and ATVs because of the lead content of battery terminals and tire valve stems. The law has a provision for exceptions to be made by the CPSC, but it has not done so for these products as of March 2009. The ban has left many motorsports retailers with unsalable products, and motorcycle industry leaders suggest that the ban may cost the US economy $1 billion.