The Washington Post today reported on some of the what should have been expected consequences of the Consumer Product Safety Improvement Act of 2008, that is, that the additional testing costs, legislated chemical ban (phthalates), and nearly impossible to meet lower lead standards, will drive products off the markets and manufacturers out of business. A balanced and worthwhile story, which admittedly comes out too late to do much in terms of shaping the public debate other than to reinforce the sense that “consumer activists” and their congressional allies will always overreact in the suspicion that business is a bad actor.

From “Toymakers Assail Costs of New Law“:

Selecta, a German toymaker, carves whimsical cars and characters from native woods, colors them with vegetable dyes and coats them in silky beeswax. No lead, no toxic varnishes. Not even waste — the company heats its factory with leftover woodchips. Just the kind of toymaker in demand after scares about tainted playthings from China.

But this holiday season, Selecta is preparing to pull out of the U.S. market. Its problem, executives say, is consumer legislation that is adding crushing costs to selling toys in America.

The law, which takes effect Feb. 10, was passed by Congress in response to recalls of lead-laced toys and growing health concerns about chemicals in plastics. The $22 billion toy industry says the requirements have created confusing bureaucratic layers and startling new costs that will decimate a business already struggling through a punishing recession.

The reporters also cite the example of Learning Resources, a manufacturer of educational toys, which reports that one lab wants $24,000 to test a children’s telescopes. Unfortunately, the law’s not so clear about what has to be tested, or how.

“This business is being ruined, and it has nothing to do with safety,” said Rick Woldenberg, chairman of Learning Resources. “It has to do with mania.”

The law goes into effect on February 10th, and the prospects of Congress bringing an element of common sense and regulatory reason to bear are not good. The House Energy and Commerce committee will oversee implementation of the law, and its new chairman is the anti-business Rep. Henry Waxman (D-CA). A committee hearing on the law scheduled by the previous chairman, Rep. John Dingell, has been postponed so the new chairman can wield the gavel, pick the witnesses, and run the show.

From the House Committee on Energy and Commerce:

*THE FOLLOWING HEARING HAS BEEN POSTPONED TO A DATE TO BE DETERMINED*
WEDNESDAY, DECEMBER 10, 2008
Implementation of the CPSIA: Urgent Questions about Application Dates,
Testing and Certification, and Protecting Children
This is an oversight hearing examining implementation of Public Law 110-314
(H.R. 4040, the Consumer Product Safety Improvement Act (CPSIA)).
Subcommittee on Commerce, Trade, and Consumer Protection Hearing
10:00 a.m. in room 2123 Rayburn House Office Building

Being handed out at the Metro Center station today in Washington, D.C.

Elsewhere in the world of secondary markets and unintended consequences:

• CQ Politics, “New Crib-Safety Law Presents Possible Problem for eBay, Other Sites“
• AHN News, “California Senator To Write eBay To Stop Sales Of Obama Inaugural Tickets“
• Times of London, “Barack Obama inauguration tickets touted for $40,000“

So I ordered this crib online and it cost $40,000! But on the plus side, two free inaugural event tickets were included.

Anyway, D.C. is going nuts over the inaugural, which is still more than two months away.

We’ll be interested in whether the media play up the theme that it’s too, too lavish in a time of war and economic dislocation. Remember that critique? Rep. Anthony Weiner (D-NY) wrote President a Bush a letter in January, 2005, arguing for restraint in Bush’s second inaugural:

The festivities surrounding your inauguration later this month are slated to cost $40 million – making this the most expensive inauguration in history. I urge you to re-direct those funds towards a use more fitting to these sober times – bonuses or equipment for our troops.

Our view: Inaugural spending will stimulate the economy. Go for it.

From the White House:

President Bush Signs H.R. 4040, H.R. 4137, and H.R. 6432 Into Law

H.R. 4040, the “Consumer Product Safety Improvement Act of 2008,” which reauthorizes the Consumer Product Safety Commission for FYs 2010-2014 and expands the Commission’s role in ensuring the safety of consumer products, especially those designed for children;

H.R. 4137, the “Higher Education Opportunity Act,” which reauthorizes and makes changes to higher education programs; and

H.R. 6432, the which reauthorizes through FY 2013 the Animal Drug User Fee Act and authorizes a new user fee program for animal generic drugs.

The report from ABC News is all about toy safety and children products provisions, which supporters of expanded regulation and litigation successfully used to frame the political debate. MarketWatch’s story is more descriptive and disinterested. We’re waiting for the first news release from advocates, something along the lines of “Group X Hails Progress, Demands More…”

UPDATE: Speaker Nancy Pelosi’s statement emphasizes the children.

Among the bad precedents set in the just-passed H.R. 4040, the consumer product litigation and regulation bill, was the banning of six classes of phthalates (a plastic softener), and more specifically the “temporary” banning of the three forms of the chemical pending a safety review by regulators and the National Academy of Sciences. No matter that previous safety reviews by European and American scientific panels saw no reasonable danger of using phthalates in toys and nail polish.

So we now have the policymaking branch of government venturing even deeper into regulatory matters, for which it is ill-prepared; Congress responds politically, not scientifically.

Even worse, this preemptive prohibition represents an embrace of the “precautionary principle,” a regulatory standard that demands any substance be first proved safe before it can be used.

• Sen. Dianne Feinstein (D-CA) said, “I believe this legislation is important as the first national effort to begin to exercise a precautionary principle in the use of chemicals as additives to products that affect human health. It is my belief that chemical additives should not be placed in products that can impact health adversely until they are tested and found to be benign.”
• Also, the Pew Charitable Trusts’ Environmental Health campaign issued a release upon the CPSC bill’s inclusion of a phthalates ban: “That Congress responded to this health threat in lieu of Federal agencies is yet another illustration of the broken regulatory system. A better approach is to require chemical manufacturers to prove their products are safe before exposing consumers to them. The Kid-Safe Chemical Act, introduced in May by Senator Frank Lautenberg (D-N.J.) and Representatives Hilda Solis (D-Calif.) and Henry Waxman (D-Calif.) would do just that by overhauling how the EPA handles the 80,000+ chemicals in consumer products. Phthalates in toys are just the tip of the iceberg.” 

Just the tip of the iceberg, eh? So let’s “temporarily” ban those 80,000+ chemicals, just to be safe.

Cass R. Sunstein, a prominent Harvard Law Professor, examined the precautionary principle in a recent Boston Globe column, “Throwing precaution to the wind“:

The central idea is simple: Avoid steps that will create a risk of harm. Until safety is established, be cautious; do not require unambiguous evidence. The principle, in its many variations, has come to play a powerful role in public debate, the development of government policy, and even international law. It can be, and has been, applied to countless problems, including nuclear power, cellphones, pesticides, electromagnetic fields, and even human cloning.

Yet the precautionary principle, for all its rhetorical appeal, is deeply incoherent. It is of course true that we should take precautions against some speculative dangers. But there are always risks on both sides of a decision; inaction can bring danger, but so can action. Precautions, in other words, themselves create risks - and hence the principle bans what it simultaneously requires.

Indeed. What replaces phthalates? A substance with its own, perhaps unforeseen risks? Or is there no replacement, meaning some products will no longer be available in a malleable form? “Oh, we used to have a vinyl product that would have been perfect for that use, really durable, but well, Congress banned it.”

And if you embrace the precautionary principle, then cost can never be considered. The result is the preclusion of any sort of cost-benefit analysis.

As Sunstein says, the precautionary appeal is deeply incoherent. It asks for proof of a negative, an impossible standard to meet but one that offers endless opportunity for grandstanding and political attacks.

In a vote last night, 89-3, the Senate adopted the conference report for H.R. 4040, the CPSC authority and regulation and litigation expansion bill.

So the bill goes to the President for his signature, which he will certainly provide. When, though? He heads to Kennebunkport tonight, is at Camp David Sunday, and then leaves for South Korea, Thailand and China on Monday. Doubt he’ll sign the bill as part of the Olympics’ opening ceremonies.

Here’s the Washington Post story, which focuses on the toy’s angle.

It’s a done deal, H.R. 4040. Or will be soon enough. Chairman Dingell and Ranking Member Barton are praising the bipartisan agreement. “The end product is worthy of support by everybody,” Barton said.

There’s much that concerns the business community in this legislation, obviously. We’ve written about the objections over the last several days.  That said, the members of the conference committee and their staffs listened and acknowledged those concerns.

The reality is that the heightened public anxiety about toys and children’s product safety, in particular, has helped create an environment in which some form of legislation like this was going to pass. And so it will…

The NAM sent a letter to the conferees today that affirms the association’s belief in enhanced funding and authority for the CPSC and also registers our concerns. The text is here.

UPDATE (6:05 p.m.): 424-1.

Self-appointed consumer activist groups have issued a joint release hailing the final conference report on H.R. 4040, the CPSC litigation and regulation expansion bill. The statement has been posted on the USPIRG website here: “Consumer Groups Urge Final Passage of Product Safety Bill”

The talking points are all about toy safety, protecting the children. This obvious political sales job suggests there are many actual provisions in the bill the groups would prefer not to talk about and would rather not be examined in detail. (See this PointofLaw.com post for some substantive objections.)

And in this political world, you can expect the legislation to pass the House today — it’s on the House’s suspension calendar — go the Senate for a probable vote Friday and be signed into law by the President.

So that ends the debate, right? Oh, sure.

From a what-have-you-done-for-me-lately statement by Andy Igrejas, manager of the Pew Charitable Trusts’ Environmental Health campaign:

“That Congress responded to this health threat in lieu of Federal agencies is yet another illustration of the broken regulatory system. A better approach is to require chemical manufacturers to prove their products are safe before exposing consumers to them. The Kid-Safe Chemical Act, introduced in May by Senator Frank Lautenberg (D-N.J.) and Representatives Hilda Solis (D-Calif.) and Henry Waxman (D-Calif.) would do just that by overhauling how the EPA handles the 80,000+ chemicals in consumer products. Phthalates in toys are just the tip of the iceberg.”

Thus, with all its other purposes, the CPSC bill is also a stalking horse for the precautionary principle.  Some people just think Europe is better.

The conference report for H.R. 4040, the CPSC regulation and litigation expansion bill, is now available here as a 1.8 MB .pdf download.

The bill is listed on the House’s suspension calendar for action today.

Or anything else that offends the globally attuned sensitivities of California’s attorney general. Get in Jerry Brown’s way, you will be sued!

State Attorney General Jerry Brown today warned Siskiyou County officials that they’ll face legal challenges if Nestle doesn’t address global warming in its plans to build a bottling plant in McCloud.

Citing environmental and global warming concerns in a letter to the Siskiyou County planning department, Brown said that Nestle Waters North America needs to revise its contract with the county to bottle water, even though the firm recently announced it would downsize its original plans.

“It takes massive quantities of oil to produce plastic water bottles and to ship them in diesel trucks across the United States,” Brown said in a statement. “Nestle will face swift legal challenge if it does not fully evaluate the environmental impact of diverting millions of gallons of spring water from the McCloud River into billions of plastic water bottles.”

So you can see where business might be leery of expanded authority for attorneys general in legislation, like, oh, the new CPSC bill.