Feel-good activism, unintended consequences

On Friday morning, Las Vegas resident Molly Orr was completing plans to shut down her children's clothing company. An untold number of proprietors around the country were going through similar motions. All thought they had been regulated out of business.

A Friday afternoon announcement from the Consumer Product Safety Commission has at least postponed their funerals. And a Friday night call from Sen. Harry Reid's office to Orr's home has her rethinking plans to go into a new line of work.

To say Friday was an eventful day for the millions of people whose livelihoods revolve around the creation, sale and use of children's products is an understatement. For thousands upon thousands of businesses -- small, medium and large -- this weekend provided the best news they've had since the economy crashed and burned last year.

I first wrote about Orr in December, back when the Consumer Product Safety Improvement Act was a story in only a handful of trade publications and business blogs. The sweeping, ill-considered 2008 law was intended to protect children from lead poisoning. Instead, the act poisoned a broad range of industries and services with ridiculous, expensive compliance burdens and a whole lot of uncertainty.

The law's most important standard, which limits the lead content in accessible product components to 600 parts per million, was scheduled to take effect Tuesday -- dubbed National Bankruptcy Day by a coalition of manufacturers, retailers and business associations.

The standard was put in place by Congress in response to a recall of more than 1 million Chinese-made toys that were tainted with lead paint. However, in their rush to pass high-minded, feel-good legislation to save children, lawmakers hurried the writing of the law and failed to limit the reach of the statute to toys and jewelry. Congress applied it to all "children's products," defined as anything intended for use by kids age 12 and younger.

Toothbrushes and books, T-shirts and baseballs, trading cards and blankets -- anything meant for a child, anything made with materials that obviously contained no lead, would have to be screened to meet the new content standard by Tuesday.

The vagueness of the act left the Consumer Product Safety Commission to establish all the rules of enforcement and testing guidelines. Over the past several months, corporation lobbyists and small business owners like Orr have been pounding at the commission to craft sensible standards that don't add to the country's economic woes by imposing unrecoverable regulatory costs onto already-hurting employers.

Initially, the commission went hog wild, ordering that all products undergo third-party testing at a certified lab, as components prior to manufacture and as a completed product. Testing a single product costs thousands of dollars -- and requires the destruction of the product.

The commission then decreed that the new lead standard would be retroactive, and that children's products that hadn't been tested by Feb. 10 -- although considered safe and legal for sale the day before -- would have to be removed from stores and disposed of as hazardous waste. Thousands of small, independent children's clothing and toy makers -- Orr among them -- faced testing costs greater than the value of their inventories.

The commission also held that the testing standards applied to secondhand and thrift stores that sell children's products. As a result, some thrifts had stopped taking donations of children's toys and accessories. The regulations even applied to books. Not only were new and used bookstores facing a mandate to clear out their children's sections Tuesday morning, public libraries faced the prospect of boxing up their children's collections or restricting their use to residents older than 12.

Then, mercifully, the Consumer Product Safety Commission acknowledged the insanity unfolding and started to bend. First, it ruled that secondhand and thrift resale stores wouldn't have to test their inventories for lead content. Then, on Jan. 30, the commission issued a one-year stay for the lead testing and certification requirements for most products, including clothing.

But the commission didn't have the authority to stay the law itself, which meant the tougher lead standard would still take effect Tuesday, and the penalties for selling a children's product with illegal amounts of lead -- including prison and fines of up to $100,000 -- would remain in force.

What was intended as regulatory relief was no relief at all -- to Orr, to secondhand and thrift stores, to anyone who makes and sells children's products. Businesses were told they wouldn't have to test their products until 2010, but they'd still be liable. Orr's business liability insurance premiums were scheduled to increase from $40 to $380 per month as a result of the law.

Finally, on Friday, with no time to spare, the commission handed down a series of common-sense measures that Congress should have put in the law in the first place. Among the commission's enforcement decisions:

-- No penalties for anyone who manufactures or sells children's products made from natural materials like wood, cotton and certain metals and alloys.

-- A broad exemption for all children's books printed after 1985.

-- Exemptions for products made from fabric and textiles and nonmetallic thread and trim.

-- Most importantly, the commission announced it would seek prosecutions only against people who knowingly violate the lead-content standard. The thrift store or mom-and-pop operation that accidentally sells a product with illegal lead levels won't have to worry about fines and prison time.

Is Friday's news an 11th-hour miracle that will magically undo all the turmoil of the past few months? No. Scores of businesses, including Orr's, have been dumping their inventories in anticipation of the regulations that were set to take effect Tuesday.

"I'm taking a loss," Orr said of her company, Molly O Designs. "I'm upside down for sure." She's not sure whether reviving her business is worth the expense at this point, in this economy.

And thousands of companies make and sell products that aren't affected by Friday's commission announcement. They still must figure out how to deal with the cost of lead testing.

The damage has been done.

But the voices of common sense finally have an advocate in Congress. Last week, Sen. Jim DeMint, R-S.C., introduced a bill to amend the law by preventing retroactive enforcement, exempting thrift stores, yard sales and resellers and eliminating costly redundancies in testing, among other logical provisions.

And Reid, the Senate majority leader from Nevada, appears to be paying attention. His staff assured Orr Friday night that some sort of broader fix is forthcoming.

This whole mess is a reminder of how the powerful politics of "the children" can run amok and ruin livelihoods. The effort to rein in this disastrous law isn't about allowing evil businesses to poison kids. It's about approaching the problem in a reasonable fashion -- and considering the unintended consequences before they lay waste to taxpaying businesses like Molly Orr's.

Glenn Cook (gcook@reviewjournal.com) is a Review-Journal editorial writer.