HR 4040, the "Consumer Product Safety Improvement Act of 2008 (CPSI)," was signed into law by President Bush on August 14, 2008. The act goes into effect Feb. 10, 2009.

The bill was Congress’ response to multiple incidents of highly-publicized cases where lead and pthlalate-contaminated toys and utensils from China have harmed American children. Lawmakers passed CPSI ostensibly to prevent children under the age of 13 from being exposed to two notorious toxins. But CPSI does nothing to prevent the importation of potentially-contaminated children’s goods from China or elsewhere. Instead, CPSI effectively places the regulatory burden, costs and penalties on retailers after imported products have been purchased.

CPSI also advances the federal government’s agenda to justify attaching RFID tags to all items in commerce so they can be tracked more efficiently in case the violation of regulatory provisions triggers the recall of certain products.

Several legal analyses of CPSI claim that, after Feb. 10, 2009, it will no longer be legal to sell many items intended for children age 12 and under, even in second-hand stores. Effective immediately upon President Bush signing the act into law, it became illegal for anyone to knowingly or unknowingly resell products that have already been recalled. It is also claimed that potentially $billions worth of items currently on retail shelves will have to be destroyed before "National Bankruptcy Day" as many are beginning to call the Feb. 10 deadline.

The Senate version of the bill was 123 pages. Following are some of the most notable provisions of CPSI affecting the sales of children’s items:

• Prohibits the sale of children’s toys and child care articles with concentrations of more than 0.1 percent of di-(2-ethylhexyl) phthalate (DEHP), dibutyl phthalate (DBP), or benzyl butyl phthalate (BBP), effective February 10, 2009.

• Mandates a phased-in ban on lead in all children’s products, requiring that lead levels be reduced to 600 parts per million by February 10, 2009; electronic devices and inaccessible component parts will be subject to rules to be issued by August 14, 2009.

• Requires third party testing and certification of all children’s products for compliance with safety standards.

• Mandates permanent tracking labels on children’s products and their packaging by August 14, 2009, to provide source, production date and batch information so as to improve tracking and identification of recalled products.

• Expands warning requirements for choking hazards for children’s toys and games

• Greatly increases civil penalties for violations of the CPSI, as well as the Flammable Fabrics Act and the Federal Hazardous Substances Act, to $100,000 for each violation, permitting larger fines, up to five years’ imprisonment and forfeiture of assets and removes a requirement that directors, officers and agents be aware of violations before being criminally charged.

• Authorizes state attorneys general to enforce the CPSI.

• Establishes whistleblower protection for employees who report violations.

• Provides stronger prohibitions against stockpiling and selling banned or recalled products, or any products that violate product safety regulations.

• May require manufacturers to provide financial security (insurance) to pay for recalls and/or destruction of [potentially] recalled products.

• Imposes an immediate ban on three-wheeled all-terrain vehicles (ATVs).

• Mandates a study of risks resulting from formaldehydes in textiles and apparel.

• Imposes mandatory testing and certification for imported children’s products and other regulated products, prohibiting most exports of recalled, banned, hazardous or non-conforming products to other countries and establishes procedures to destroy products that have been refused admission into the United States.

• Provides significant budget increases to the Consumer Product Safety Commission (CPSC) to fund new hiring, safety, enforcement initiatives and travel, as it bans industry-sponsored travel by CPSC commissioners and staff.

• Mandates that the CPSC develop a searchable database, accessible to the public through the Internet, including reports on deaths and injuries reportedly caused by consumer products, and manufacturers’ names, product names and other information.

It remains to be seen how militant the federal government will be in its enforcement of CSPI and whether large corporations or smaller businesses that make and sell toys and utensils for children will receive the brunt of such enforcement. As in all government regulatory schemes, however, large corporations are much more able to legally and fiscally overcome them while small manufacturers or resellers do not have the finances or resources to comply with enhanced regulations and remain profitable.

While the new law has many restrictions on the CPSC to prevent manufacturers from "buying" favors, it also directs the CPSC to create a host of new regulations, including some based upon research that has yet to be performed. With attorneys general authorized to interpret and enforce this law, CPSI could easily be used as a tool to arrest and/or put out of business small businesses that make and sell non-RFID-tagged "flammable" and "untested" children’s items for a living.

An economic impact survey posted at www.nationalbankruptcyday.com reveals that, from data collected from manufacturers, component suppliers and retailers between Dec. 31, 2008 and Jan. 10, 2009 alone, "…over 70 million dollars worth of inventory must be destroyed on February 10, 2009 (National Bankruptcy Day) and, of those enterprises that expect to survive the fallout, over $40 million in lost product sales are anticipated."

Survey respondents claimed that 80 percent of their products are children’s goods and 61 percent expect to lose their businesses after CPSI goes into effect.

Of the retailers who responded, 71 percent said they will not be able to comply with the law’s testing requirements due to accessibility, logistics or finances.

Thirty-four percent indicated they will have to close their business and 28 percent noted that the law will require them to destroy about $7,000 worth of product each.

The average respondent had five full time and three part time employees and average annual wage/salary expenditures were $112,843 and $13,366 were spent each year on contractor services.

Quoting directly from the survey results as posted, "Most [respondents] (66%) think this is the last nail in the coffin, they won’t survive. Most retailers (66%) think that only 0-30% of their vendors know about the law. Most retailers (64%) report that 0-30% of their vendors think they are exempt. Most manufacturers (66%) think that only 0-30% of their retailers know about the law. Most respondents (56%) believe that 0-30% of their competitors are informed about the law. They also believe (45%) that 0-30% of their competitors intend to continue with business as usual and hope for change or think they won’t get caught."

Note: Understanding the way Congress works provides valuable insight into the purpose of CPSI. First of all, corporate interests are flawlessly held in much higher regard than the health and well-being of common people or their children. Secondly, the corporate media also flawlessly services corporate interests over the health and well-being of commoners and their children.

There is one more bonus to this perfect act of Congress: It creates a web of regulations so comprehensive that the businesses supplying products for children—books, clothes, shoes, toys, drinking and eating utensils, books, education tools—are a perpetually open door for zealots in government to search and seize entire inventories en route to charging, prosecuting, convicting, imprisoning and fining millions of American businesspeople. (DWH)