January 1, 2009
Big fight over effective date of phthalate ban
There is a fascinating legal fight going on over the effective date of the phthalate ban as enacted by Congress in the Consumer Product Safety Improvement Act that was signed by the President on August 14, 2008. The Act says that certain products with phthalates are banned starting February 10, 2009. A normal reading of that act is that it is against the law to sell products with banned phthalates on and after February 10, 2009. In a letter from the CPSC General Counsel dated November 17, 2009, the CPSC has taken the position that this ban does not apply to products manufactured prior to February 10, 2009. Therefore products with banned phthalates can still be sold after February 10. This letter was sent in response to industry requests for more time to comply.
Senator Barbara Boxer of California, who wrote this provision, said that this was not her intent and the CPSC's interpretation was blatantly incorrect. On December 4, 2008, the Natural Resources Defense Council and Public Citizen filed a Complaint against the CPSC for declaratory and injunctive relief.
To add to the confusion, the California State Attorney General issued a letter dated December 3, 2008, referencing California's ban on certain phthalates that was passed October 2007 and is effective January 1, 2009, and saying that California's law is not preempted by the CPSIA ban or the CPSC's interpretation of its effective date. The California letter has an interesting discussion on federal preemption over inconsistent state legislation. Therefore, it is against the law to manufacture, sell, or distribute products with banned phthalates starting today.
How are manufacturer's responding to this incredible confusion? Will California or the CPSC enforce these bans? What will retailers do as far as accepting products that have banned phthalates? What will the court hearing the NRDC suit do? Time will tell.
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Despite Feinstein's and Boxer's assertions about co-authoring this law, they weren't even co-sponsors.
I don't know of anyone that has a problem with the ban on phthalates. The problems, which is not recognized by Feinstein, Boxer, or even the actual sponsors, are the width of the net cast by this law and the requirements for testing and documentation. Every little mom & pop maker of anything that can be construed as a "children's good" has become regulated by this requirement, and that means everything from astroturf to bicycles to boy scout badges to school science kits to books and toys and clothing. Nobody has built testing facilities since August, so far as I know, so the queues are getting longer (Bureau Veritas stopped quoting turnaround times last month), and the prices are rising. Moreover, if you tend to make stuff in small quantities, the prices for testing will simply knock you out of the market. Game Over.
The retroactive portion of this is somewhat more controversial, even more so than what you have covered here. Small manufacturers don't tend to have a large inventory, but large ones do. And so do distributors, wholesalers, and retailers. There are $Billions of inventory in the supply chain, items whose journey from raw materials to consumer products started before this law came into effect, and long before the 10 Feb deadline. What Boxer, et al, are saying is, too bad, what are a few more bankruptcies in this economic environment? Well, it's bigger than that because people, especially public companies, who just completed a calendar year were probably just audited. Their credit depends on those audits. Clever auditors probably figured out that they aren't going to be able to unload this stuff before 10 Feb, so their basis was slashed, and therefore their credit is going to be slashed or cancelled. If this wasn't anticipated in their recent public filings, they are going to be in trouble, Sarbanes-Oxley trouble.
In many -- no, make that "in most" -- cases, the goods in question DO NOT HAVE ANY LEAD OR PHTHALATE CONTENT. For example, if an apparel manufacturer is using GOTS- or Oeko-Tex-compliant inputs (cloth, thread, fusible, hardware, dyes), they are testing to about three orders of magnitude better than the new lead limits (1 or .2 ppm vs 600 ppm, depending on the good) and in all probability have 0 lead content (cotton testing typically yields no detectable lead). The problem is the testing and the certification documentation. If they were tested, most would be clean. But they weren't tested, will likely not be tested before 10 Feb, and many of those items will be uneconomical to test. But they made the economic calculations to make and distribute them long before this law was passed, and now a game of hot potato has begun. Big Box retailers are probably going to return it all to the distributor, and then we'll see who all gets to go under.
Incidentally, Illinois also has interesting state laws related to this subject. IIRC, their definition of "children" is anyone under 14 years. Note to parents in Illinois: buy next year's children's clothing and toys now.
Posted by: Eric H | Jan 7, 2009 10:44:50 AM