Consumer Product Safety Improvement Act
Encyclopedia
The Consumer Product Safety Improvement Act of 2008 is a United States
law signed on August 14, 2008 by President
George W. Bush
. The legislative bill
was known as HR
4040, sponsored by Congressman Bobby Rush
(D-Ill.). On December 19, 2007, the U.S. House approved the bill 407-0. On March 6, 2008, the U.S. Senate approved the bill 79-13. The law—public law 110-314—increases the budget of the Consumer Product Safety Commission
(CPSC), imposes new testing and documentation requirements, and sets new acceptable levels of several substances. It imposes new requirements on manufacturers of apparel, shoes, personal care products, accessories and jewelry, home furnishings, bedding, toys, electronics and video games, books, school supplies, educational materials and science kits. The Act also increases fines and specifies jail time for some violations.
This act is seen in part controversial because of its impact to many types of businesses that did not cause the problem. Because of the wide-sweeping nature of the law, many small resellers will be forced to discontinue the sale of children’s products and are in risk of losing (and in some cases have already lost) their business.
A previous, less sweeping bill, the Lead-Free Toys Act (H.R. 3473, sponsored by Representative Henry Waxman
), was incorporated into this act. The earlier bill was prompted by various scandals over high lead content in toys, including a December 2006 report at Waxman's behest showing high lead levels in items sold in U.S. Capitol gift shops.
There are also new rules governing All terrain vehicle (ATVs).
It also affects any product that is subject to anything the CPSC regulates by requiring certificates of conformance which state that the product was tested to conform to the regulations it is subject to.
allowed in surface coatings or paint to 90 ppm (from the current limit of 600 ppm) effective on 14 August 2009.
The legislation reduces the amount of total lead content in children's products to
The Falvey Opinion (named for Cheryl Falvey, General Counsel
for the CPSC) issued on 12 September 2008 stated that these limits would be retroactively applied to products on retailer's shelves on the dates indicated.
DEHP, DBP
, or BBP
at levels higher than 0.1 percent.
The legislation bans from any children's toy that can be put in a child's mouth or childcare articles phthalates DINP, DIDP
, and DnOP at levels higher than 0.1% on an interim basis until a report from the Chronic Hazard Advisory Panel (CHAP) is received, after which the CPSC can continue the prohibition by rule.
CPSC General Counsel Falvey provided an advisory opinion on 17 October 2008 that the phthalate ban does not apply to children's footwear. Falvey provided an additional opinion on 17 November 2008 that the ban does not apply to wearing apparel, but does apply to toy costumes, bibs, sleepwear. Notably in its distinction from the lead ruling of 12 September 2008, the phthalate ban will apply to articles manufactured on or after 10 February 2009. However, the decision was challenged by the Natural Resources Defense Council
(NRDC) and Public Citizen
in the New York Southern District Court and set aside by Judge Paul Gardephe on 5 February 2009.
These certificates must accompany the product through the distribution chain through the retailer. They must be available to the CPSC during any inspection.
Children's products are singled out for third party testing by this Act. A schedule for testing is found in Section 102(a)(3)(B) and shows:
The third party testing requirement for lead content was originally set by the CPSIA at 600 ppm, but dropped to 300 ppm in August, 2009. However, these lead content testing requirements were stayed by the CPSC in January 2009 until February 10, 2010. In December 2009, this stay of enforcement was further extended until February 10, 2011. In both cases, the CPSC cited a need to implement further rulemaking and to give manufacturers more time to comply. On October 9, 2011 CSPC passed final regulations requiring third-party safety testing for children's products. These new regulations go into effect 15 months after publication in the Federal Register
.
Beginning 14 August 2009, children's products must be marked by a permanent distinguishing mark or label that indicates the manufacturer, cohort (batch), and any other mark necessary to trace the product.
provision is to protect employees who do the right thing by speaking up when they believe their employer has violated a consumer product safety law. Specifically, if employees of a manufacturer, private labeler, distributor, or retailer of consumer products, may not have their employer retaliate against them for reporting potential violations of consumer product safety laws.
Additionally, under the Act a Publicly Available Consumer Product Safety Information Database where consumers can directly report harm or merely a risk of harm officially launched on March 11, 2011.
. The law
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 zipper
s or button
s. 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 enaction of the CPSIA banned the sale of youth motorcycle
s 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.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
law signed on August 14, 2008 by President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
. The legislative bill
Bill (proposed law)
A bill is a proposed law under consideration by a legislature. A bill does not become law until it is passed by the legislature and, in most cases, approved by the executive. Once a bill has been enacted into law, it is called an act or a statute....
was known as HR
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
4040, sponsored by Congressman Bobby Rush
Bobby Rush
Bobby Lee Rush is the U.S. Representative for , serving since 1993. He is a member of the Democratic Party.The district is located principally on the South Side of Chicago. It is a minority-majority district and has a higher percentage of African Americans than any other congressional district in...
(D-Ill.). On December 19, 2007, the U.S. House approved the bill 407-0. On March 6, 2008, the U.S. Senate approved the bill 79-13. The law—public law 110-314—increases the budget of the Consumer Product Safety Commission
Consumer Product Safety Commission
The United States Consumer Product Safety Commission is an independent agency of the United States government created in 1972 through the Consumer Product Safety Act to protect "against unreasonable risks of injuries associated with consumer products." The CPSC is an independent agency that does...
(CPSC), imposes new testing and documentation requirements, and sets new acceptable levels of several substances. It imposes new requirements on manufacturers of apparel, shoes, personal care products, accessories and jewelry, home furnishings, bedding, toys, electronics and video games, books, school supplies, educational materials and science kits. The Act also increases fines and specifies jail time for some violations.
This act is seen in part controversial because of its impact to many types of businesses that did not cause the problem. Because of the wide-sweeping nature of the law, many small resellers will be forced to discontinue the sale of children’s products and are in risk of losing (and in some cases have already lost) their business.
A previous, less sweeping bill, the Lead-Free Toys Act (H.R. 3473, sponsored by Representative Henry Waxman
Henry Waxman
Henry Arnold Waxman is the U.S. Representative for , serving in Congress since 1975. He is a member of the Democratic Party. He is considered to be one of the most influential liberal members of Congress...
), was incorporated into this act. The earlier bill was prompted by various scandals over high lead content in toys, including a December 2006 report at Waxman's behest showing high lead levels in items sold in U.S. Capitol gift shops.
Budget authorization
The law increases the CPSC budget authorization from $80 million in 2008 to $136 million in 2014. It also increases staffing to at least 500 personnel by 2013.Targeted industries
It is targeted mostly toward "children's products", which are defined as any consumer product designed or intended primarily for children 12 years of age or younger.There are also new rules governing All terrain vehicle (ATVs).
It also affects any product that is subject to anything the CPSC regulates by requiring certificates of conformance which state that the product was tested to conform to the regulations it is subject to.
Lead
The legislation reduces the limit of leadLead
Lead is a main-group element in the carbon group with the symbol Pb and atomic number 82. Lead is a soft, malleable poor metal. It is also counted as one of the heavy metals. Metallic lead has a bluish-white color after being freshly cut, but it soon tarnishes to a dull grayish color when exposed...
allowed in surface coatings or paint to 90 ppm (from the current limit of 600 ppm) effective on 14 August 2009.
The legislation reduces the amount of total lead content in children's products to
- 600 ppm by 10 February 2009
- 300 ppm by 14 August 2009
- 100 ppm by 14 August 2011, unless not technically feasible. A public hearing may take place in February 2011 on this issue.
The Falvey Opinion (named for Cheryl Falvey, General Counsel
General Counsel
A general counsel is the chief lawyer of a legal department, usually in a corporation or government department. The term is most used in the United States...
for the CPSC) issued on 12 September 2008 stated that these limits would be retroactively applied to products on retailer's shelves on the dates indicated.
Phthalates
As of 10 February 2009, it shall be unlawful for any person to manufacture for sale, distribute in commerce, or import any children's toy or childcare article that contains the phthalatesPhthalates
Phthalates , or phthalate esters, are esters of phthalic acid and are mainly used as plasticizers . They are used primarily to soften polyvinyl chloride...
DEHP, DBP
Dibutyl phthalate
Dibutyl phthalate is a commonly used plasticizer. It is also used as an additive to adhesives or printing inks. It is soluble in various organic solvents, e.g. in alcohol, ether and benzene...
, or BBP
Benzyl butyl phthalate
Benzylbutylphthalate , also called n-butyl benzyl phthalate or benzyl butyl phthalate, is a phthalate, an ester of phthalic acid, benzyl alcohol and n-butanol. It comes under trade names e.g. Palatinol BB, Unimoll BB, Sicol 160, or Santicizer 160. It is mostly used as a plasticizer for PVC...
at levels higher than 0.1 percent.
The legislation bans from any children's toy that can be put in a child's mouth or childcare articles phthalates DINP, DIDP
Diisodecyl phthalate
Diisodecyl phthalate is a commonly used plasticizer used in the production of plastic and plastic coating to increase flexibility...
, and DnOP at levels higher than 0.1% on an interim basis until a report from the Chronic Hazard Advisory Panel (CHAP) is received, after which the CPSC can continue the prohibition by rule.
CPSC General Counsel Falvey provided an advisory opinion on 17 October 2008 that the phthalate ban does not apply to children's footwear. Falvey provided an additional opinion on 17 November 2008 that the ban does not apply to wearing apparel, but does apply to toy costumes, bibs, sleepwear. Notably in its distinction from the lead ruling of 12 September 2008, the phthalate ban will apply to articles manufactured on or after 10 February 2009. However, the decision was challenged by the Natural Resources Defense Council
Natural Resources Defense Council
The Natural Resources Defense Council is a New York City-based, non-profit, non-partisan international environmental advocacy group, with offices in Washington DC, San Francisco, Los Angeles, Chicago, and Beijing...
(NRDC) and Public Citizen
Public Citizen
Public Citizen is a non-profit, consumer rights advocacy group based in Washington, D.C., United States, with a branch in Austin, Texas. Public Citizen was founded by Ralph Nader in 1971, headed for 26 years by Joan Claybrook, and is now headed by Robert Weissman.-Lobbying Efforts:Public Citizen...
in the New York Southern District Court and set aside by Judge Paul Gardephe on 5 February 2009.
Mandatory testing
The legislation requires that every manufacturer of a product subject to a consumer product safety rule will provide a "General Conformity Certificate" to certify, based on unit testing or a reasonable testing program, that the product complies with all safety rules. This requirement was imposed on every product manufactured on or after 12 November 2008. The certificate must:- be in English
- list the name, address, and phone number of the manufacturer, importer, and/or private labeler issuing the certificate and any third party testing facility
- list the date and place of manufacture and date and place of testing
- list the contact information of the records keeper
- list each applicable rule, standard, and ban
These certificates must accompany the product through the distribution chain through the retailer. They must be available to the CPSC during any inspection.
Children's products are singled out for third party testing by this Act. A schedule for testing is found in Section 102(a)(3)(B) and shows:
| Test Standard | Publication of Accreditation Procedure | Third Party Testing Required |
|---|---|---|
| Lead Paint | 22 September 2008 | 21 December 2008 |
| Cribs and Pacifiers | 22 October 2008 | 20 January 2009 |
| Small Parts | 17 November 2008 | 15 February 2009 |
| Metal Jewelry | December 2008 | March 2009 |
| Baby Bouncers, Walkers, and Jumpers | March 2009 | June 2009 |
| 300 ppm Lead Content | May 2009 | August 2009 (stayed until 2/10/11) |
| CPSC Children's Product Safety Rules | June 2009 | September 2009 |
The third party testing requirement for lead content was originally set by the CPSIA at 600 ppm, but dropped to 300 ppm in August, 2009. However, these lead content testing requirements were stayed by the CPSC in January 2009 until February 10, 2010. In December 2009, this stay of enforcement was further extended until February 10, 2011. In both cases, the CPSC cited a need to implement further rulemaking and to give manufacturers more time to comply. On October 9, 2011 CSPC passed final regulations requiring third-party safety testing for children's products. These new regulations go into effect 15 months after publication in the Federal Register
Federal Register
The Federal Register , abbreviated FR, or sometimes Fed. Reg.) is the official journal of the federal government of the United States that contains most routine publications and public notices of government agencies...
.
Beginning 14 August 2009, children's products must be marked by a permanent distinguishing mark or label that indicates the manufacturer, cohort (batch), and any other mark necessary to trace the product.
Whistleblower protections
The purpose of the Act's whistleblowerWhistleblower
A whistleblower is a person who tells the public or someone in authority about alleged dishonest or illegal activities occurring in a government department, a public or private organization, or a company...
provision is to protect employees who do the right thing by speaking up when they believe their employer has violated a consumer product safety law. Specifically, if employees of a manufacturer, private labeler, distributor, or retailer of consumer products, may not have their employer retaliate against them for reporting potential violations of consumer product safety laws.
Additionally, under the Act a Publicly Available Consumer Product Safety Information Database where consumers can directly report harm or merely a risk of harm officially launched on March 11, 2011.
Penalties
The Act imposes or increases both fines and jail time penalties, and mandates coordination with the CPSC when effecting a manufacturer's product recallProduct recall
A product recall is a request to return to the maker a batch or an entire production run of a product, usually due to the discovery of safety issues. The recall is an effort to limit liability for corporate negligence and to improve or avoid damage to publicity...
. The law
- increases civil penalties for failure to report possible product hazards to the CPSC in a timely manner from $5,000 per violation (with a cap of $1,825,000) to $100,000 per violation (with a cap of $15 million)
- increases criminal penalties for various prohibited acts to include forfeiture of assets and imprisonment for up to five years, and eliminates the requirement that the CPSC first notify a company of noncompliance before seeking criminal penalties
- requires CPSC approval of the remedy offered in a product recall, rather than giving the recalling party its choice of repair, replace, or refund
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
2007 Chinese export recalls
In 2007 a series of product recalls and import bans were imposed by the product safety institutions of the United States, Canada, the European Union, Australia and New Zealand against products manufactured in and exported from the mainland of the People's Republic of China because of numerous...
in 2007 and 2008 of toys manufactured in China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
. 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
Organic cotton
Organic cotton is generally understood as cotton and is grown in subtropical countries such as America and India, from non genetically modified plants, that is to be grown without the use of any synthetic agricultural chemicals such as fertilizers or pesticides. Its production also promotes and...
cloth coupled with a few organic dyes and a few pieces of hardware such as zipper
Zipper
A zipper is a commonly used device for temporarily joining two edges of fabric...
s or button
Button
In modern clothing and fashion design, a button is a small fastener, most commonly made of plastic, but also frequently of seashell, which secures two pieces of fabric together. In archaeology, a button can be a significant artifact. In the applied arts and in craft, a button can be an example of...
s. 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
Solder
Solder is a fusible metal alloy used to join together metal workpieces and having a melting point below that of the workpiece.Soft solder is what is most often thought of when solder or soldering are mentioned and it typically has a melting range of . It is commonly used in electronics and...
; whereas the European Restriction of Hazardous Substances Directive
Restriction of Hazardous Substances Directive
The Directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment 2002/95/EC was adopted in February 2003 by the European Union. The RoHS directive took effect on 1 July 2006, and is required to be enforced and become law in each member state...
standards have long attempted to phase out lead solder, the tin
Tin
Tin is a chemical element with the symbol Sn and atomic number 50. It is a main group metal in group 14 of the periodic table. Tin shows chemical similarity to both neighboring group 14 elements, germanium and lead and has two possible oxidation states, +2 and the slightly more stable +4...
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
Federal Register
The Federal Register , abbreviated FR, or sometimes Fed. Reg.) is the official journal of the federal government of the United States that contains most routine publications and public notices of government agencies...
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
Wichita, Kansas
Wichita is the largest city in the U.S. state of Kansas.As of the 2010 census, the city population was 382,368. Located in south-central Kansas on the Arkansas River, Wichita is the county seat of Sedgwick County and the principal city of the Wichita metropolitan area...
, Ionia, Michigan
Ionia, Michigan
Ionia is the largest city in, and the county seat of, Ionia County, Michigan, United States. The population was 11,394 at the 2010 census. Every late July it hosts what may be the world's largest free-admission fair...
, Conway, Arkansas
Conway, Arkansas
Conway is the county seat of Faulkner County, Arkansas, United States. The population was 58,908 at the 2010 census, making Conway the seventh most populous city in Arkansas. It is a principal city of the Little Rock–North Little Rock–Conway Metropolitan Statistical Area which had...
, Goldsboro, North Carolina
Goldsboro, North Carolina
Goldsboro is a city in Wayne County, North Carolina, United States. The population was 37,597 at the 2008 census estimate. It is the principal city of and is included in the Goldsboro, North Carolina Metropolitan Statistical Area. The nearby town of Waynesboro was founded in 1787 and Goldsboro was...
, Lincoln, Nebraska
Lincoln, Nebraska
The City of Lincoln is the capital and the second-most populous city of the US state of Nebraska. Lincoln is also the county seat of Lancaster County and the home of the University of Nebraska. Lincoln's 2010 Census population was 258,379....
, New York City, New York (NYC), Rochester, New York
Rochester, New York
Rochester is a city in Monroe County, New York, south of Lake Ontario in the United States. Known as The World's Image Centre, it was also once known as The Flour City, and more recently as The Flower City...
, Marshall, Minnesota
Marshall, Minnesota
As of the census of 2000, there were 12,735 people, 4,914 households, and 2,914 families residing in the city. The population density was 1,537.0 people per square mile . There were 5,182 housing units at an average density of 625.4 per square mile...
, Kailua, Hawaii, New Port Richey, Florida
New Port Richey, Florida
New Port Richey is a city in Pasco County, Florida, United States. It is a suburban city included in the Tampa-St. Petersburg-Clearwater, Florida Metropolitan Statistical Area...
, and Tucson, Arizona
Tucson, Arizona
Tucson is a city in and the county seat of Pima County, Arizona, United States. The city is located 118 miles southeast of Phoenix and 60 miles north of the U.S.-Mexico border. The 2010 United States Census puts the city's population at 520,116 with a metropolitan area population at 1,020,200...
.
According to Walter Olson
Walter Olson
Walter K. Olson is an author and blogger who writes mostly about tort reform. Olson is a senior fellow of the Cato Institute, a libertarian think tank in Washington DC. Formerly Olson was associated with the Manhattan Institute in New York City...
'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
Fahrenheit 451
Fahrenheit 451 is a 1953 dystopian novel by Ray Bradbury. The novel presents a future American society where reading is outlawed and firemen start fires to burn books...
, 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 enaction of the CPSIA banned the sale of youth motorcycle
Motorcycle
A motorcycle is a single-track, two-wheeled motor vehicle. Motorcycles vary considerably depending on the task for which they are designed, such as long distance travel, navigating congested urban traffic, cruising, sport and racing, or off-road conditions.Motorcycles are one of the most...
s 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.
See also
- Consumer Product Safety CommissionConsumer Product Safety CommissionThe United States Consumer Product Safety Commission is an independent agency of the United States government created in 1972 through the Consumer Product Safety Act to protect "against unreasonable risks of injuries associated with consumer products." The CPSC is an independent agency that does...
- 2007 pet food recalls2007 pet food recallsThe 2007 pet food recalls comprise the contamination and wide recall of many brands of cat and dog foods beginning in March 2007, and the ensuing developments involving the human food supply. The recalls in North America, Europe, and South Africa came in response to reports of renal failure in pets...
- 2007 Chinese export recalls2007 Chinese export recallsIn 2007 a series of product recalls and import bans were imposed by the product safety institutions of the United States, Canada, the European Union, Australia and New Zealand against products manufactured in and exported from the mainland of the People's Republic of China because of numerous...
External links
- National Bankruptcy Day blog
- CPSIA information page at CPSC
- Consumer Product Safety Improvement Act What You Must Know
- Apparel industry blog entry citing the questions still pending as of December 2008
- Public forum to discuss CPSIA
- Handmade Toy Alliance Information and advocacy for small batch manufacturers
- The Handmade Toy Alliance Urges the Senate to hold Hearings on the CPSIA