Cribs: Good Intentions, Bad Rulemaking

In December 2010, the CPSC unanimously approved a new safety standard for cribs.  The standard, in large part, builds on a voluntary standard that was updated in 2009 and for which there is significant compliance.  The new CPSC standard goes into effect on June 28, 2011 and (as required by the CPSIA) is retroactive, impacting all cribs being sold in the US regardless of when manufactured 

All of the Commissioners are committed to assuring a safe sleep environment for infants and the technical aspects of the new standard demonstrate this commitment.  Having said that, I believe that the Commission also has an obligation to roll out standards in such a way as to minimize disruption in the marketplace.  In that, we have again fallen down in our responsibilities.  The roll-out of the new crib standard has been unnecessarily chaotic. 

Besides the crib standard, there has been only one other major rule issued by this agency in its entire history.  (A major rule is defined as one with an impact on the economy of over $100 million.)  In spite of the crib rule’s significance, no cost benefit analysis was done so we did not have any real information in front of us when voting on the rule, about how the safety benefits of the rule compared to the economic impact of the rule, much less how to minimize that impact. 

The day care industry did protest that the rule, as proposed, would result in approximately a $1/2 billion hit to a group that could not immediately absorb costs of such magnitude, especially on the heels of having just bought new cribs to meet the standards of 2009.  As a result, at the last minute just before finalizing the rule, the Commission agreed to amend the proposed rule to delay the effective date for this group by 18 months.  There was no analysis behind this date; basically, it was pulled out of a hat.  Now, just two weeks before the rule goes into effect, we are hearing from those in the rental industry who cannot get cribs that comply with the new standard and ask that we delay the effective date at it applies to them.  We are also hearing from small retailers who are stuck with stranded inventory that they cannot sell, also asking for a delay. 

We are hearing that a significant number of small retailers will be facing substantial losses.  This is even though the briefing documents we got last December, and on which we relied in voting on this rule, stated that there would be no significant impact on retailers.  I am told that, in reaching this conclusion, no analysis was done on the impact of the rule on this segment of the market. 

At a public briefing this morning it was pretty clear that we do not know the true state of the marketplace.  We heard that some small retailers have been able to accommodate themselves to the effective date of the standard and that a number have not.  (It appears from reading the letters from some of those who believe they are in compliance that their beliefs may be somewhat misinformed.)  The magnitude of the problem is unknown.  An internal survey of 5 retailers found that those companies had at least 100,000 non-complying cribs in inventory.  A survey done by a trade association representing one part of the small retailer community found that 35 companies had 17,500 cribs that cannot legally be sold in two weeks.  The question of whether any of those cribs can be retrofitted is also unclear.  Only 72 hours ago did we finally post some guidance on that subject but the letters we are getting into the agency also show that there continues to be much confusion out there. 

I have no sympathy for those businesses who did not take the steps needed to get ready to comply with this new standard.  However, I have heard from many companies who have tried to comply but still find themselves with inventory valued in the thousands of dollars and soon to be worthless.  Consequently I believe that some relief is warranted. 

The whole crib standard saga is a good illustration of how not to regulate.  We rushed the standard out without doing the hard work upfront to understand the impact of the regulation.  A cost benefit analysis would have shown us how to get the maximum safety impact at the lowest cost.  At the time we finalized the rule we applied a band aid to stop the bleeding of one group – day care centers.  This morning we applied another band aid for those who rent out cribs.  We declined to staunch the bleeding of small retailers.

Our actions today may have the result of driving some retailers selling perfectly safe cribs out of business.  We will never know because we will never bother to find out.  Once again, I find I am repeating myself: this is no way to regulate and the public deserves better.

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