Nancy Nord Speaks to the Toy Fair

Posted by Valerie on February 26, 2009

The Acting Chairman of the CPSC, Nancy Nord, spoke at the Toy Industry Association Toy Fair ‘09 on February 16, 2009. The following excerpts are typed verbatim from that speech.

“…Sometimes…well-intentioned laws…end up having unintended consequences. These kinds of laws, and I’m not talking only about consumer protection laws here, can sometimes leave confusion rather than clarity in their wake, and their unintended side effects sometimes include collateral damage like shuttered factories and lost jobs.

…we in this room have been through very trying times, the implementation of a sweeping new law regulating the toy industry in the context of the most serious economic crisis since the Great Depression….

I think we all know that the genesis of the Consumer Product Safety Improvements Act lies in a series of high-profile toy recalls that occurred over the last several years. While a number of these recalls were for hyper-technical violations of, for example, our lead paint standard and others did not present any acute hazards, I’ve gotta tell you, some of them were downright scary, and I’m talking here about the magnets and the Aqua Dots recalls….

The lead paint issue did not involve problems that were not already covered under existing laws, but that did not stop it from contributing to really what amounted to almost public panic and hysteria up on the Hill….

…I do have concerns about the legislation, and my concerns center around several issues, which I think make responsible regulation a little bit more difficult. And let me just run through them very quickly.

First of all, the law was crafted in the heat of the moment in reaction to the toy recalls of 2007 and 2008, and it’s never a good idea to enact legislation when emotions are running so high.

Second, the lack of flexibility within the law in some cases ties the agency’s hands and does not allow us to deal very effectively with real-world issues as they arise in real time.

Third, with respect to the lead and phthalates bans, the concepts of risk and exposure, which really are at the core of our safety statutes, those two concepts have effectively been eliminated. Instead, the mere existence of those two substances, even without any exposure, requires that we take enforcement action.

Fourth, the bans on lead and phthalates are retroactive, making inventory on store shelves potentially illegal and threatening the economic viability of many small businesses….

…something that was perfectly legal and safe February 9th, on February 10th has a very different status, potentially, and that applies to products that are on container ships, sitting in warehouses, and sitting in store shelves, not only the shelves of the big retailers, but also on the shelves of the smallest thrift shops and charity stores.

Manufacturers and retailers alike are feeling the effects of the law’s retroactive impact. The Commission has been asked repeatedly, “How are retailers, especially small retailers, supposed to know if the products on their shelves meet the new requirements?” And that question really goes to the heart of the dilemma that we have. While retailers and resellers do not have an obligation to test their products, they do have an obligation to make sure that what they sell meets the requirements of the new law…. Small retailers are left with millions of dollars of inventory which they do not know if they can safely sell. And then thrift shops and charity stores, which given our current economic situation, have a very, very important role to play in our society, these groups are now questioning whether they can continue to sell children’s clothing and toys.

This is an untenable situation, but it is a situation that is driven by the new law. The agency has tried to calm fears by making clear that we will be reasonable in our enforcement policy, but we cannot waive the law. Only Congress can change it….

[There are] products that contain lead above the prescribed limits that at the same time do not present any known health risk to children. With respect to those products, we have proposed an exclusion process, but Congress has [restricted] our ability to grant exclusions, even in those situations where we don’t think there is a health risk….

So, unless Congress changes this provision, and I see very little indication that they are going to be doing that, industry should not count on exclusions as a practical way to avoid reengineering their products. While I realize that you are being asked to spend resources at a very difficult time, to address a problem that doesn’t really seem to have much to do with safety, you must understand that the Commission’s hands are tied at this point….

What is the role of industry going forward? Well your first obligation, of course, is to know the requirements of the law and to comply with it. As I’ve said a couple of times this morning, the Commission really does want to work with you. We really don’t have any interest in putting out of businesses companies that are honestly trying to comply with the law. But make no mistake. While we will be reasonable in our efforts to enforce the law, we will enforce it….

Merely complaining to us about the confused provisions, and the unrealistic deadlines of the law, will not change those provisions or those deadlines. Hard data, statistics can help us and the Congress better understand the effects of the law on your industry. And if you can provide that data, we will listen to you….

Like it or not, the CPSIA is now the law of the land. The industry must obey it, and the commission will enforce it, so it does not do us any good to lament the train after it has hit us upside the head. Instead, we need to start concentrating on what to do about the headache….

The first emphasis above is mine, and I will have more information on it later tonight. The second emphasis is Nord’s strong verbal emphasis in the original.

You may view the complete speech in four parts both at Youtube and at CPSIA-Central. (At this writing the parts are posted in reverse order at CPSIA-Central, in the left column a little more in than halfway down the page.)

I did make a complete transcription of this speech, all four parts. If anyone needs a transcription, please e-mail me.