Rockville, Md.—After educating themselves about conflict diamonds last holiday season, jewelry retailers may now have another gemstone to bone up on this fourth-quarter: blue topaz.

In July, several major jewelry companies, including Stuller and Sterling Jewelers, reported that they had suspended blue topaz sales amid concerns about whether or not the irradiated stones had been tested for safe radiation levels before entering the United States.

The stones, a consumer favorite, generate some $1 billion in annual sales, according to the American Gem Trade Association (AGTA), with blue topaz jewelry plentiful in jewelry showcases nationwide. But the trade group issued a warning in late July, urging members to do their own radiation checks on treated deep blue topaz. Under current U.S. Nuclear Regulatory Commission (NRC) regulations, only licensed companies can import and sell blue topaz in the U.S. market, and there are currently no licensees.

In early August, representatives from three unnamed blue topaz vendors, the Jewelers Vigilance Committee (JVC) and the NRC met in New York to measure a sampling of nine batches of irradiated blue topaz to try and determine how to handle current inventories of the stones.

"The reason we did those surveys is to establish some assurance that current inventories are safe, and we could then allow their continued sale through some regulatory mechanism that would avoid further disruption for the industry," says David McIntyre, public affairs officer for the NRC.

The results were good, as he says none of the batches posed a health threat. The NRC has not asked retailers to stop selling blue topaz, though some companies have done so voluntarily.

But the testing was only step one. As the NRC reviews industry documentation further, it is also expanding the list of gemstones it oversees to include accelerator-produced radioactive material, a measure that will take effect later this year.

More gemstones impacted For blue topaz, the road to industry-wide compliance began at a July 26 public meeting at NRC headquarters in Rockville, Md., where NRC officials met with the JVC, AGTA and Jewelers of America (JA) representatives.

"During the course of the meeting, we created a road map to address a series of questions in our minds," says Cecilia Gardner, JVC's president, chief executive officer and general counsel. That included questions of what to do about current inventories, the Christmas selling season and how to manage going forward. Those present also assured the NRC that the industry would act quickly to get into compliance.

"What we agreed to was that they would accept from us documentation of prior testing that the industry had done, that they themselves would come down and test some goods and we would demonstrate to them our affirmative activity in coming into compliance," Gardner says.

While those in the industry agree that public health and safety are top of mind, business is another concern.

While current regulations mostly apply to blue topaz in darker colors, the expanded regulations will mean a license will be required for the importation of all blue topaz, red tourmaline, many beryls (including treated aquamarine, yellow beryl and morganite stones, but not emerald), as well as kunzite and irradiated diamonds. Spared from the new regulations are cobalt-60 (gamma ray) irradiated gems, including various quartz colors, yellow sapphires and pearls.

Some retailers shopping the JA New York Summer Show were concerned about the possibility of losing blue topaz, a great performer on which they gain solid margins.

But at least in the short-term, some have decided that selling the stones is not worth the risk—both to public safety and reputation—even though the NRC has not told retailers to halt sales.

We are no longer selling blue topaz in our stores and we will not do so in the future until our suppliers are in compliance with all federal regulations," says David Bouffard, vice president of public relations for Sterling Jewelers.

Stuller Inc. also decided to suspend sales of Swiss-, London- and some Sky Blue-topaz loose gems and jewelry.

"The right thing to do right now if you don't want to break the rules is don't sell it," says Joe Orlando, vice president of the gemstone business unit for the Lafayette, La.-based company.

Other majors, including J.C. Penney Co., have reportedly taken similar action. Zale would not comment, citing the ongoing status of the NRC's research.

License to import As retailers hope for a green light on current inventories, McIntyre says the NRC has already received two license applications and expects more soon.

The Gemological Institute of America (GIA), a former blue topaz licensee, is considering getting reinstated, says GIA Laboratory and Research Senior Vice President Tom Moses.

"More than 15 years ago, GIA invested heavily in becoming licensed by both the NRC and the state of California to test and store artificially irradiated materials," Moses says. "After many years of virtually no activity in this area, GIA relinquished its licenses."

Moses says over the years, the GIA has written extensively about irradiated gems to inform the industry of the potential issues with the stones.

Another possible licensee: American Gemological Laboratories (AGL).

"The entire project will probably cost in excess of $500,000 for licensing, equipment, space and other considerations, which AGL, as part of a public company, can easily provide," says Michael Haynes, CEO of Collector's Universe, the parent company of AGL.

While the NRC compliance is a no-brainer, the issue is how to get there.

Cost is definitely a factor, as some are concerned that if each of the affordably priced gems had to be tested, the cost of doing so could be exorbitant relative to the cost-per-carat.

McIntyre says NRC staff expressed a preference for "one or a few" licensees to act as a clearinghouse for the industry. Individual jewelers dealing with those licensed companies would not need a license, he says.

Even as the industry does its utmost to come into compliance, many see the blue topaz issue as a wake-up call.

"I hope it informs and awakens the industry to be a little more critical about their supply chains and check a little more thoroughly," says Eric Braunwart, president of Columbia Gem House in Vancouver, Wash. "The industry needs to do this. We need to understand our products and where they come from and how they get to us and all the circumstances."

In fact, Braunwart feels it has been the shift toward overseas sourcing—in which companies operate under different rules and regulations—that has caused the NRC-regulated companies to fall off the radar.

"We have to go by our laws, not the ones [in place] in some other country," he says.