Archive for the 'Consumer Product Safety' Category

Phthalates NPR: A No-Win for CPSC

Assuming that the Commission does not vote to again extend it, the period for filing comments on its proposal to permanently ban certain phthalates closes in a few days.  At that point the monkey will be really on the back of the agency and none of its choices are very good.

Because the way the statute was written, the Chronic Hazard Advisory Panel (CHAP) that Congress directed the agency establish to study the health effects of phthalates, without strong direction from the management of the agency, easily could move into policy issues and this is what has happened with its recommendations.  If the agency holds with the recommendations of the CHAP, it faces sure, and probably successful, litigation at the end of the process.  If it tries to walk back the CHAP recommendations, it gets accused of disregarding “scientific” recommendations protecting children. A real no-win for the agency.

I have written before in this blog about the serious regulatory policy issues that the phthalates rulemaking raises.  For those who are interested in this issue and those who are concerned about the use of cumulative risk assessments, I wanted to bring to your attention an article I authored that appeared today in The Hill Congress Blog publication.  You can find it here.

Should Congress decide to do oversight of the CPSC, there are a number of issues that need examining.  This issue should be added to the list.

Note to CPSC: You Really Dropped a Stitch Here!

I am a knitter.  Knitting teaches patience and is a great way to pass time on an airplane.  While traveling, I missed a recent CPSC recall and am thankful to my friendclip-art-knitting-981445 Lenore Skenazy, the author of the blog Free Range Kids, for bringing to my attention important information about a silent killer—yarn.  Since she said it better than I could, the following is from her blog post:

Gracious me! This brand of yarn can unravel! Have you ever heard of such a thing? It’s just too scary! How irresponsible can a yarn maker be? No wonder the Consumer Product Safety Commission just issued this dire warning:

Name of Product: Bernat Tizzy Yarn

Hazard: In finished knit or crochet items, the yarn can unravel or snag and form a loop, posing an entanglement hazard to young children.

Incidents/Injuries: Bernat has received two reports of children becoming entangled from unraveling or snagging yarn blankets. No injuries have been reported.

Remedy: Consumers should immediately stop using the yarn or finished yarn projects, keep them out of the reach of young children, and contact Bernat for a full refund.

Remember! Children are only safe near items that can never unravel or make a loop. Kindly avoid all necklaces, ponytails, jumbo rubber bands, snakes, shoelaces, licorice whips, octopi, thread, phone cords, scarves, kites, jump ropes, taffy (long form), fishing line, string cheese, and, of course, marionettes. – L.

What is the agency thinking?  While unraveling yarn may be a quality problem (for the company to address with unhappy customers), turning a quality problem into a safety issue takes the agency way outside its mandate.

In an earlier post I addressed my concern that silly recalls can serve to make consumers stop listening.  This certainly qualifies as a silly recall. Consumer safety is not advanced by such a result.  However, if the agency persists in pushing its mandate so that product quality problems are viewed as safety issues warranting a recall, what unravels is any predictable definition of a safety hazard and then safety becomes what the agency says it is at any given time. Now that is a snag folks should be worried about.

Retailer Reporting: Something for Nothing?

Over ten years ago, the CPSC compliance staff negotiated an agreement with Wal-Mart that has grown over the years into what is now known as the retailer reporting policy. Under the agreement, Wal-Mart agreed to file weekly reports with the CPSC documenting safety issues reported to its stores about products it sold. This reporting gave the agency important insights into the range of safety issues the world’s largest retailer was seeing. It allowed the agency to get an early heads-up on potential safety issues before they matured into “substantial product hazards.” And Wal-Mart got some protection from allegations that it had failed to report substantial product hazards to the agency.

Because this was such a win-win for both the agency and the company, other large retailers and then several large manufacturers soon began asking to participate in the program as well. In response, the agency expanded the program over the years. However, several years ago, the retailer reporting program was put on hold.

The agency staff has now decided to revise the program. Only selected companies will be “invited” to participate. The revised program makes very clear that participation in the program does not provide a substitute for or otherwise impact any reporting requirements under Section 15(b) of the law. However “consideration” may be given to participating companies should they be faced with subsequent enforcement actions for failure to report. The confidentiality protections applying to Information submitted under Section 15(b) of the law would not apply to these reports.

The staff believes that these changes make the program more transparent and answer long-standing questions about how the program operates. That is certainly true. But the changes also raise several other questions as well. For example, the selective nature of the program and the “consideration”, if any, given to participants does raise troubling fairness issues,  A company wishing to participate and frozen out of the program will have little recourse in challenging the decision of some invisible staffer. What kind of consideration will be available to some but not others?

But more basically, the changes raise the question of why any company should bother to participate. When I raised that question, when I was still a Commissioner, the answer I got was “that it is the right thing for companies to do.” Perhaps there are companies who will find the CPSC staff “invitation” irresistible. (I assume that there will be no measure of bullying associated with these invitations.)  However, there may be others who believe that the effort involved and the benefits to be gained are not worth it. In this case the agency will lose out on an important source of information that could help it identify risks as they come up over the horizon.

However, the biggest concern is a process one. The program has been in place for over ten years. Although it was initiated by the staff, it has grown over the years and it has consumed considerable staff resources. Changes of this magnitude should be placed before the Commission for explanation and approval in a public meeting. The program’s role in gathering useful information should be better explained and it should be part of the agency’s annual operating plan. Regardless of what one thinks of the merits of the program and the changes being made, this is something that Commissioners should consider and approve, not delegate to staff.

Shopping the Global E-Mall, Round 2

In my last post, I discussed the growing phenomenon of e-commerce sales directly to consumers from foreign (Chinese) manufacturers. My concern is that the regulatory stance of the CPSC—asserting that a foreign manufacturer is legally responsible for compliance with all U.S. safety standards when a U.S. consumer buys a product directly from that manufacturer—is both naïve and unenforceable.

Therefore, I was interested to see the announcement last week from the CPSC that it has entered into a voluntary agreement with Alibaba, the Chinese e-commerce direct sales company, to work with the agency to try to monitor its platforms for dangerous products.  Kudos to the agency for negotiating this agreement, as modest as it is.

According to press reports, Alibaba handles more e-commerce business than Amazon.com and eBay Inc. combined and, as a platform for third parties, it controls as much as 80 per cent of the Chinese e-commerce business.  Obviously, Alibaba can be a potent ally in policing the marketplace for unsafe products.

Looking at the reported details of the agreement, it is not clear whether it will prove to advance consumer safety in the global e-mall or merely serve as a fig leaf to which the parties can point to show they are doing something.  Alibaba has apparently agreed to block sales of up to 15 recalled products upon request from the CPSC.  Since a substantial number of the over-400 recalls the CPSC does each year are of products from China, there should be no problem finding candidates for this list.  All concede that this agreement is not enforceable. It remains to be seen how aggressive Alibaba will be carrying it out over time.

More interesting is the company’s agreement to make available information about safety requirements to importers into the United States.  U.S. safety requirements are not easily understood, especially those issued since 2009 in response to the CPSIA—see the labyrinthine regulations dealing with testing and certification for examples. Any way to get information to those who are honestly trying to comply can do nothing but help.

Whether this agreement is a modest, but effective first step or just another counterfeit product remains to be seen.  Stay tuned.

Illusory Process = Diminished Results

The CPSC staff is now collecting and cogitating on information about how phthalates—substances added as plasticizers to make plastics soft and pliable—are used to manufacture children’s toys and child care articles.  This activity is part of the agency’s effort (perhaps its only effort?) to minimize the burdens of third party testing, as required by Congress in P.L. 112-28.  If the agency can conclude that certain substances do not and cannot contain illegal phthalates, then it can determine that products made up of those substances do not need to be tested for phthalates.

The problem is that the way the agency is going about its inquiry is almost guaranteed to result in very little relief.  And since phthalates testing is very costly, an illusory process that is structured to minimize any relief available does not reduce the testing burden Congress was trying to achieve, much less what responsible regulators should insist on.  The problem with the phthalates inquiry is that the agency is requiring that stakeholders not only show that phthalates are not now being used in the manufacturing process, but also to show that it is impossible that they will be so used any time in the future, in any place in the world.  In other words no matter how much real world data one supplies, it cannot proof the negative as is being asked by the CPSC staff.  Although we all know the moon is not made of green cheese, who can say what will happen in the future.

The outcome of this inquiry is pretty clear.  Certain predictable substances, such as natural wood and fibers, will eventually receive exclusions from testing (after how many years of costly and unnecessary testing?).  The bulk of products that do not use phthalates but whose makers cannot now predict the future in the absolute terms required by the agency will not get relief.  The agency will claim this as an accomplishment and close up shop on any real burden reduction.

I do not understand why the agency has taken the approach it has.  A real and honest effort to understand where phthalates are used, where they are not and then address its compliance efforts at where they are used and its burden reduction efforts at where they are not would result in significant relief.  Rather than ask stakeholders to prove a negative, they should ask stakeholders to help them understand where the agency should be looking for phthalates.

The response, no doubt, is that a collaborative approach does not guarantee that phthalates will not be added by some unscrupulous manufacturer at some point in the future.  However testing relief does not relieve anyone of complying with the underlying phthalates prohibition.  And the agency has plenty of tools to address that eventually if it were to occur.  Because the phthalates prohibition must be complied with regardless of testing, the agency cannot say that its current constrained approach is required to be consistent with assuring compliance with the existing law.  Denying testing relief to the vast majority of manufacturers who do not use phthalates because of some imagined future scenario which the agency can address should it occur does not carry out the spirit of the law Congress passed.

$375,000: The Price for Peace

Yesterday the CPSC announced that it has reached a settlement with Craig Zucker, in the litigation to force a recall of Buckyballs.  The Commission alleged that 0727_buckyballs_630x420Buckyballs, although designed and marketed for adults, were defective because a number of children had sustained serious injuries after swallowing the tiny powerful magnetic balls.  The settlement calls for the CPSC staff to establish a recall trust fund to manage the recall. Mr. Zucker will fund an escrow account to dole out money to the trust fund up to $375,000.  In its press release, the CPSC trumpets that this is “a win for safety.”  Mr. Zucker, on the other hand, says that he hopes “the settlement will discourage the CPSC from wrongfully pursuing . . . entrepreneurs in the future.”

Who, then, won and who lost?  In the most simplistic terms, perhaps one could say that the agency won since it accomplished a recall that would not otherwise have occurred.  But what is that recall worth and at what price was the recall obtained?

Left on the table is the question of whether Buckyballs are defective.  The government’s theory of defect was that warnings are not sufficient to prevent injury to an unintended user group and therefore the product cannot be made and sold, even though there were no injuries to the intended user group.  In the settlement Mr. Zucker does not concede that Buckyballs are defective, and the settlement leaves unresolved the agency’s apparent philosophy that a product can be banned if warnings do not work.

Also left on the table is the question of whether the agency even had jurisdiction over Mr. Zucker in his personal capacity. The agreement makes clear that Mr. Zucker is not conceding the issue of jurisdiction and so the applicability of the Responsible Corporate Doctrine is not addressed by this agreement except to say that Mr. Zucker personally is released from all agency liability (assuming it existed in the first place).

The recall itself is very curious.  The CPSC staff will implement the corrective action plan and claims (accompanied by proof of purchase or an affidavit attesting to purchase location and price) must be presented within six months of the recall trust being established and consumers notified of the recall.  Refunds will be made in the order they are received and any consumers who either file after the six month period ends or after the funds have been depleted are out of luck.  A web site paid for out of the recall fund will be established and maintained by the Commission for five years. The escrow account funding the recall will be closed after 12 months with any remaining funds reverting back to Mr. Zucker.  But since the government does not have experience administering recalls and will, no doubt, have to hire a third party (paid for out of recall funds) to administer the fund and oversee the recall, it is pretty unlikely that there will be any monies going back to Mr. Zucker.

The settlement agreement does raise a side issue that may be interesting to lawyers or students of regulatory policy.  The Antideficiency Act prohibits a federal agency from obligating the government to pay out money before funds have been appropriated and a real question exists as to whether this agreement violates the Antideficiency Act.  Further, administering recalls is not within the specified functions of the Commission and the act is rather specific in stating that recalls will be undertaken by the product seller.  It is not clear to me that the agency has the authority to take the actions specified in the agreement but it is also not clear who (other than the agency’s inspector general) would be in a position to object.

Going back to the question of winners and losers, it seems that there are lots of losers but I don’t see any winners.  The agency lost since it has spent substantial public resources (would it not be interesting to know how much the government has spent on this?) to reach an agreement that is about half a percent of what it initially wanted.   The agency lost because the issues that were central to the litigation were left unresolved.  Mr. Zucker lost because he, no doubt, ended up spending more in legal fees than the value of the recall and basically paid the government to get them off his back.

But at the end of the day, consumers lost. Scarce public resources were spent to achieve a recall that cannot be effective both because of how it is structured and what it is trying to accomplish.   Past experience shows that very few of these products will be returned, thereby achieving little added safety even if the government’s theory of hazard is correct.  And if the past is prologue, then the government achieved very little at a very great cost with consumers footing the bill.

 

 

I saw it on the Internet; it must be true

Earlier this week a friend told me that unfair and misleading information had been put on his Wikipedia page without his knowledge. While I have no idea how things get cautionposted on Wikipedia, I do know that, with greater frequency, Wikipedia posts are being cited as fact. And I could not help but think about how the process of morphing disinformation into “factual” information would be accelerated if the federal government could cite, use, and repost information found on the internet without making efforts to verify the validity of that information.

Unfortunately, that is exactly what the CPSC is suggesting it be able to do in a proposed rule that would “modernize” its regulations dealing with information disclosure. The law requires that the public disclosure of any information obtained by the agency that identifies a manufacturer or product be accurate and fair. The current regulations set out a process for checking with the product manufacturer to verify the accuracy and fairness of the information proposed to be disclosed. The agency now proposed to substantially change the rules with respect to how it carries out its responsibility to assure the accuracy of the product-specific information it publicly discloses.

Among other things, the agency wants to republish with impunity information about a product that has already been made public, including information on the internet.  The agency would have no obligation to go back to the manufacturer to verify the accuracy of the information it proposes to republish. Apparently checking the validity of such information is just too much of a burden. And publishing unverified information by the federal government lends credence to that information, regardless of its accuracy.

While I leave to others to opine on whether this comports with the letter of the law, it certainly violates the law’s spirit. My friend discovered that, on the web, anyone can say anything about you. But is it right that this behavior be condoned and promoted by the federal government?

There are a number of other troublesome changes being proposed by the CPSC’s proposed rule on information disclosure. Comments on the proposal (Docket No. CPSC-2014-0005) are due on April 28. Anyone concerned about agency fairness should read the proposal, go to regulations.gov and submit comments.


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