Feb. 10: National Bankruptcy Day

If the road to hell is paved with good intentions, then Washington is putting the finishing touches on a sparkling superhighway to the underworld — and forcing thousands of viable businesses onto the express lanes toward a fiery doom.

Last month, I introduced you to the bipartisan disaster known as the Consumer Product Safety Improvement Act. Rushed through Congress last summer in response to the recall of more than 1 million Chinese-made toys, the law sets stringent new limits on the lead content of children’s products. Lawmakers from both parties hailed their quick work to make parents think their kids will be safer.

Sparing children from potentially fatal lead poisoning was a worthy goal. But the law was so vague that it left the Consumer Product Safety Commission to fill in the blanks by establishing the lead testing standards and enforcement guidelines. Naturally, the regulators have set about providing themselves with job security.

And now Congress is too busy creating new economic calamities to bother cleaning up this one left from last year.

“This law was created with great intentions,” said Maj. William Raihl, Clark County coordinator of the Salvation Army, which sells donated, used children’s products at its valley thrift shops. “But the reality of it is not quite as promising.”

Since my December column on the topic, the Los Angeles Times, The Wall Street Journal and other media have picked up the story and documented the worry and disbelief sweeping the tens of thousands of businesses that make or sell children’s products. The new lead standard takes effect Feb. 10, which has been dubbed National Bankruptcy Day by a coalition of children’s apparel companies.

Depending on how the safety commission responds to the business world’s squeals for mercy during a just-started 30-day public comment period, the law could devastate secondhand stores, nonprofit social service providers, eBay sellers and an untold number of small businesses that produce children’s clothing, accessories and toys.

“With so much at stake for the resale industry, we do not need a pacifier to calm us down,” said Gail Siegel, director of membership services for the National Association of Resale & Thrift Shops, which has launched the Save Children’s Resale campaign in response to the law. “We need a fix for this terrible mess a well-intended law has become.”

It all began last year, when the Consumer Product Safety Commission clarified that the law applies to every product intended for children age 12 and younger, not just toys.

Every book, every sock, every bicycle tire, every soccer ball and beach bucket marketed toward kids — even those obviously lacking in metal — must be subjected to independent lead testing at a federally certified lab, which costs thousands of dollars per sample. Incredibly, the testing burden fell on secondhand and nonprofit thrift stores as well.

Then the commission issued a legal opinion that declared the new lead standard retroactive. All children’s products on racks and store shelves that haven’t been tested and deemed in compliance by Feb. 10 will be considered hazardous waste. Tens of millions of dollars worth of inventory could be discarded three weeks from now.

Finally, in the interest of regulatory redundancy, the commission decided that all materials and components used in children’s products must be tested for lead content prior to manufacture, then tested again as a finished product. These days, businesses and consumers certainly can afford that added cost.

The commission threw a bone to resellers Jan. 8 when it backtracked and decided that secondhand and nonprofit thrift stores would not be obligated to test their inventories of children’s products. But the commission held firm that resellers aren’t exempt from the standards and can be fined up to $100,000 for selling children’s products with illegal levels of lead.

“It’s going to be very challenging for us,” said Salvation Army national spokeswoman Melissa Temme. “Short of testing, it’s going to be difficult to reliably sort children’s products. … It will cost us tens of millions of dollars if we can’t sell them.”

Goodwill Industries International knows the rules, as they currently stand, are unworkable. “We’re seeking a regulatory exemption from the law for nonprofit social service providers that operate stores that sell donated goods,” spokeswoman Charlene Sarmiento said.

For-profit secondhand stores want their own exemption. Independent toy makers who use only wood and natural products want one, too. So do clothes designers and manufacturers who use limited types of fabric with no snaps and zippers. Their survival depends on it.

But the Democratic majorities in Congress are too concerned with stimulus pork and inauguration parties to notice. President-elect Barack Obama has talked of delaying only one regulatory boondoggle: the country’s Feb. 17 transition from analog to digital television.

At least Sen. John Ensign, R-Nev., who voted for the law, recognizes a steaming pile of legislation when he smells one. He wants the Consumer Product Safety Commission to “strike the appropriate balance between protecting consumers and regulating small businesses to death.”

Congress really outdid itself here. Not only does this law put the screws to retailers and manufacturers amid a devastating national sales slump, but it punishes the resellers and nonprofits that more and more consumers are frequenting to make ends meet.

Lawmakers can’t trust the Consumer Product Safety Commission to act in the best interests of the economy. With each passing day, the commission injects more uncertainty and doubt in markets already overflowing with them.

Congress needs to start from scratch on this stinker.

Glenn Cook (gcook@reviewjournal.com) is an editorial writer for the Review-Journal.

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