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A Looming Congressional Threat to Small Business

The opinions expressed by columnists are their own and do not necessarily represent the views of

There is a potentially dangerous piece of legislation to strengthen the Consumer Product Safety Commission (CPSC) which could see action in the Senate before the Easter recess. S. 2663, "a bill to reform the Consumer Product Safety Commission to provide greater protection for children's products, to improve the screening of noncompliant consumer products, to improve the effectiveness of consumer product recall programs, and for other purposes," has strong support among so-called public advocates because of recent scares over lead-based toys from China and a host of other problems with imported goods and food.

The bill would strengthen federal whistleblower protections. It would fine employers who take action against an employee who reported what that employee believed was a violation of CPSC laws or regulations. Of course, there can be abuses, but I long have been an advocate of whistleblower protections, as I believe most employees who report alleged violations mean well and have been helpful.

Beyond that one potentially beneficial provision, the bill is fatally flawed. The business community strongly opposes the bill for many valid reasons. The bill would create a government-sponsored website which would allow people anonymously to smear companies. This goes along with the left's view that all for-profit enterprises are evil. This places the imprimatur of the Federal Government upon frivolous complaints. Right now consumer groups must post their complaints on their own websites. Under the proposed changes they would be able to secure government help when often there would be no need for help.

The measure would create a new tool for State Attorneys General antagonistic toward business to harass companies. Currently a business only has to comply with one set of laws and regulations, that of CPSC. This law would allow each state the opportunity to set up its own consumer product regulations. Potentially a company could be forced to comply with fifty different sets of rules and regulations. It could be a bureaucratic nightmare.

The bill would undermine any co-operative relationship between a business and CPSC. Right now information given to CPSC is checked for fairness and accuracy. Under the bill all information received would have to be posted on CPSC website with-in fifteen days. This would eliminate thousands, even tens of thousands, of complaints CPSC receives every day as a means of fulfilling its responsibilities.

One of the most glaring problems is that the bill massively would increase fines, threatening small businesses for no good reason - maximum civil penalties more than ten-fold and individual violation penalties more than fifty-fold. The threat of a $250,000 fine simply would cause many small businesses to declare bankruptcy, thus ruining their credit and their livelihood. For example, if they had violations of more than fifty toys they would be fined $250,000 and retailers would declare bankruptcy.

This bill threatens to send owners of small companies to prison for unknowingly selling a dangerous product. This may make so-called consumer advocates feel good but can anyone suggest how this provision would improve product safety?

I could go on and on, as there are many additional onerous provisions of this legislation, including a 100% increase in the CPSC budget, but you get the picture. It is currently under consideration by the Senate and no doubt Senate Majority Leader Harry M. Reid (D-NV) is anxious to take it up. The longer it remains on the calendar the more people will hear about this terrible bill. If its provisions were known widely it most likely would be defeated, the toy scare notwithstanding. Only now is word reaching small businesses about the potentially devastating nature of this bill. So if Reid can hurry up and seek its passage before the next recess he may have a strong chance to get it through. The longer he waits the worse off proponents of this bill will fare.

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