By JASON CLAFFEY
SOUTH BERWICK, Maine — When millions of children's toys imported from China were recalled in 2007 because they contained too much lead, Jen Houghton, owner of The Little Hat Company in South Berwick, said customers would come to her store, which features handmade goods, specifically to avoid buying contaminated toys.
The Little Hat Company carries a variety of children's items, from mittens made out of old sweaters to winter hats made by stay-at-home moms who work for the company — and people were comforted by the fact they didn't come from China, she said.
But now a federal law passed in response to the imported toys debacle could have the unintended consequence of putting small shop owners like Houghton out of business, along with independent crafters.
As of Feb. 10, any consumer product designed for children 12 and younger can't be sold if it contains more than 600 parts per million of lead. On Aug. 14, the limit will drop to 300 ppm, and the products will be required to be tested by a third party (other than the maker and seller) — which can cost $350 per item component.
The law was broadly worded to include not only imported toys, but items like children's books and clothing accessories.
While large toy makers like Mattel, which had millions of its toys imported from China recalled, can absorb those costs, small businesses like Houghton's can't.
"It's scary. We're hit already with the economy, and if we lose our children's hat market ...," Houghton said, trailing off.
She is currently selling hats for half price and turning away local crafters who want to sell their handmade goods in her store. She has been contacting lawmakers and the Consumer Product Safety Commission, pleading that changes be made to the law.
Patty Davis, a spokeswoman for the commission, the federal agency charged with enforcing the law, said store owners like Houghton "should be prepared to comply with the law."
The commission is aware of the effect the law could have on shop owners, Davis said, but may not be able make exceptions because of its strict wording. It applies to any "consumer product designed or intended primarily for children 12 years of age and younger," according to the law's text.
The law, the Consumer Product Safety Improvement Act, was revised by lawmakers in 2008 to require the testing of both imported and domestic children's items. It was overwhelmingly supported, passing by a vote of 407-0 in the House of Representatives and 79-13 in the Senate.
Christina Buteau, who runs the Cuddlebee's craft business out of her Durham home, said lawmakers had good intentions by putting safeguards in place to protect children, but overlooked the impact the law would have on small businesses.
"I don't think they intentionally meant to hurt the little people, but that's what they've done," she said.
Buteau, who sells baby blankets, bibs, and burp clothes to hundreds of customers and vendors across the country, including The Little Hat Company, is afraid she won't be able to continue her business.
"What are you going to do?" she said. "These are all handmade products made in the United States ... we're just sewing fabrics together. (The commission) is going to have to come to some middle ground."
Earlier this month, the commission issued a statement saying resellers and sellers of used children's products will not be required to test their products if they already meet safety standards, as the law states manufacturers are responsible for testing their products. But for crafters who make their own goods, even goods that are made from tested materials, would still be required to pay for testing, because they technically act as the manufacturer.
Lead is a neurotoxin that even in small doses can stunt growth in children and cause learning disabilities, hearing problems, anemia and brain-related developmental problems.
Houghton said she understands children should be protected from lead-tainted products, but finds it ironic owners like herself will be disproportionately affected when contaminated toys imported by large companies were the impetus for the law.
Adam Brown, a spokesman for Etsy.com, an online market for buying and selling handmade crafts, agreed the law unfairly affects small businesses.
"It's ironic and funny, if it wasn't tragic," he said. The law "is really intended for big companies who make thousands of toys."
Houghton said about 25 percent of her inventory is comprised of locally made craft items, which she will no longer be able to sell come August. She has been contemplating putting all children's items in storage in the hope the law will be revised, or selling them for adults and pets only.
"Whatever we have to do to stay in business," she said.
Kerry Wood, co-owner of the Noggin Factory in Dover, said she will be forced to no longer accept toys from local crafters because they can't afford the testing.
"It seems to me a bit of an overkill," Wood said of the law.
The Consumer Product Safety Commission currently has no plans to subsidize testing costs for small businesses. The penalty for violating the law is a fine of up to $100,000. Before the revisions to the Consumer Product Safety Improvement Act were ratified, the maximum fine was $5,000.
The commission has the authority to interpret how the law is enforced. Davis, the commission spokeswoman, said her organization has been receiving comments from small business owners and will issue another statement before February.
In a statement, U.S. Sen. Susan Collins, R-Maine, who voted for the law, said the commission hasn't given clear guidance to store owners.
She added that she will work with the commission to "improve the clarity of these new regulations to prevent unintended consequences from negatively impacting our nation's businesses."
Maine's 1st District U.S. Representative, Democrat Chellie Pingree, urged the commission to exempt items that contain materials that "aren't risky" like wool or unfinished wood.
"I'm deeply concerned about child safety, but also sensitive to any unreasonable regulations that might drive small companies out of business," she said in a statement.
Buteau, the owner of Cuddlebee's, said she hoped an exception could be made for owners like herself.
"These are little people. Isn't that supposed to be the American dream, to own your own business?" she said. "I'm just really hopeful something will change."
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