By MATT CHANDLER
Buffalo Law Journal

Thanks to the recently enacted Consumer Product Safety Improvement Act, you may not have to worry about your children being at risk as they chew on that shiny new toy - but you may find yourself worrying about how to pay for it.

The law - crafted by the Consumer Product Safety Commission (CPSC), overwhelmingly passed by both houses of Congress and signed into law by President Bush Aug. 14 - imposes stringent regulations regarding testing and labeling of children's products.

The problem, say local toy manufacturers and retailers, is that a law created out of good intentions in the wake of much-publicized 2007 toy recalls threatens to decimate small businesses and leave the consumer holding the bag in the way of higher prices.

Guildcraft, a craft-kit manufacturer in Tonawanda, purchases parts and assembles do-it-yourself kits it sells to church groups, schools and other nonprofit organizations. Though the company doesn't manufacture anything, under the new law, it will be required to submit each product from every batch of materials it sells for lead and phthalate testing, duplicating tests already performed by manufacturers.

"I don't think anyone argues with the intent of the act," says Bob Gluck, Guildcraft president, "but the testing requirements go far beyond what is necessary to provide safety, and it will put companies like ourselves out of business."

He says being forced to test each batch of products - each required test can run between $60 and $300 - would cost more than what he sells the small batches of kits for. Following complaints from small businesses across the country, the CPSC enacted a moratorium on some parts of the Safety Improvement Act, giving manufacturers until February 2010 to comply with third-party testing rules.

"We have to plan for the worst," says Gluck. "But I think our legislators are sympathetic to what we are complaining about, and I hope they will realize there is nothing to be gained by retesting products."

Rep. Chris Lee, R-Clarence, hadn't yet arrived in Washington when Public Law 110-314 was voted on. But Lee, who ran on a platform of being a businessman and not a career politician, says this is a case of Washington politics hurting small business.

"It's a classic example of unintended consequences based on the fact that in Congress, there are so few people that come from a business background, they don't understand the repercussions of this type of legislation," he said.

Lee, along with Rep. Brian Higgins, D-Buffalo - who voted for the law - reached out to the head of the CPSC and requested an examination of the law as it would impact thrift stores, many of whom would have had to forgo selling used children's products to avoid being subject to the testing regulations.

"We were glad to get involved," Lee said. "We got thrift stores more or less taken off the list, and we got a one-year stay for libraries."


Craig Leslie is a partner at Phillips Lytle LLP who's been advising business clients on what steps to take as dates change and regulations take effect. He says that while thrift stores and libraries may be exempt from testing requirements, both would still be liable if they sold a product with lead or phthalates in excess of the new limits.

"This act has a lot of gray areas in it," he says. "But one thing you'll find, almost universally, is that any manufacturer, distributor, seller, retailer in the children's product industry, they are interested in safety, and they want their products to be safe. The problem is, how do you determine that it complies with this act?"

Most manufacturers we spoke to said the cost of the additional testing - along with expensive tracking label requirements that go into effect in August - will be passed on to the consumer at a time when many Western New Yorkers are struggling under the weight of a sagging economy.

Rep. Louise Slaughter, D-Fairport, who voted in favor of the new law, said that regardless of the cost, the priority has got to be protecting the children. She suggested that small businesses need to reach out to the CPSC with their concerns.

"This is a wonderful opportunity for them to affect the regulations directly," she said. Slaughter, who said any changes to the law will be handled through the CPSC, called the level of residential lead poisoning in some parts of Western New York "almost a criminal offense" and said toy regulation was a practical place to start addressing that.

"If there was an agency in the federal government that didn't function at all, it was Consumer Product Safety," Slaughter said. "It was a national disgrace, so we passed this bill."

The CPSC did not return calls seeking comment.

Slaughter was not alone in her support of the Safety Improvement Act, which passed the House without a single nay vote and faced little opposition in the Senate. Industry groups such as the Toy Industry Association backed the bill as well.


Ed Desmond, a vice president with TIA, said his organization surveyed its members to gauge the economic impact the law was having on them. Given that products already produced were not grandfathered in when the requirements changed, companies with inventory that didn't meet new standards were no longer allowed to sell it.

"Ninety percent of our members are small and medium-sized companies," Desmond said. "We heard back from about 300 of them, and between lost inventory and employment issues as a result of this act, they are seeing a total of almost $2 billion in losses."

Though the act's provisions were expected to affect manufacturers primarily, fallout from the law will be felt at the retail level as store owners face higher costs from manufacturers looking to offset the testing expenses.

Gaetana Schueckler has operated The Tree House toy store on Elmwood Avenue with her husband David since 1996. She says that while the business has seen a price spike in many of the items it stocks over the last year, a variety of factors led to the increase, with the Consumer Product Safety Improvement Act regulations being only one part of the equation. She credits the manufacturers and distributors she works with for being proactive and reducing the potential disruption when the law was rolled out.

"We probably spent a good six months of dialogue with our manufacturers while they were going through the same thing, figuring out what was in their warehouses," she said. "They were all so diligent, it made it much easier."

Schueckler said many manufacturers had already been adhering to the more stringent European guidelines for lead testing, so there was very little change for her store when the law was announced. She said researching the law and its implications has consumed the last year of her life, but she saw the need for an industry safety standard.

"Retailers like us wanted something to say ‘We have product of the highest standards,' and we want our customers to feel confident buying our products," she said.

With the labeling requirements set to be enforced in August and the third-party testing becoming mandatory in February, there is still more work to be done on all sides.

Lee said he plans to continue to fight to minimize the negative impact of the Safety Improvement Act.

"Initially, the intent was to protect children from lead levels coming from China," he said. "But this was a bill that wasn't properly vetted, and this is the outcome where we could potentially hurt small business at a time when they are already struggling."

What's in there

An overview of Public Law 110-314, the Consumer Product Safety Improvement Act of 2008

• Sponsor: Rep. Bobby Rush, D-III. (among 106 co-sponsors was then Rep. Kirsten Gillibrand, D-NY, now a U.S. senator)
• Introduced: Nov. 1, 2007
• Legislative history: Passed House Dec. 19, 2007, by a vote of 407-0; Passed Senate March 6, 2008, by a vote of 79-13; signed into law Aug. 14, 2008

Key points in the original legislation:

• Manufacturers of children's products will be required to submit materials for third-party testing for both lead and phthalates. Each lead test costs between $60 and $300, and a package with six different components inside would require six individual tests.
• Manufacturers that buy products already tested for lead would be required to duplicate the testing.
• Manufacturers of products that are not intended to be used by children are subject to the law if their product is sold in toy departments or includes cartoon images.
• Retailers can be held accountable for having products in their stores that are non-compliant.
• Manufacturers are required to have tracking labels on their products allowing them to be traced back in the event of a recall.
• Libraries, thrift stores, crafters and Internet sales outlets would all be subject to liability for faulty products.

Too much testing?

Bob Gluck, president of Guildcraft, a Tonawanda craft-kit manufacturer, says the Consumer Product Safety Improvement Act could put his 58-year-old company out of business. He explains how, using one of his company's products as an example.

Guildcraft Fourth of July necklace kit

• Cost: $15
• Includes: Red, white and blue beads, plus cord to create necklace
• Average batch: 25 packages
• Tests required: Separate lead analysis for each color of bead and the cord, all of which have already been tested by their manufacturers, plus phthalate testing
• Gross retail sales: $375
• Cost of compliance: Roughly $500 to $1,500, depending on test vendors

For more information, see cpsc.gov