Archive for the 'Small Business' Category

It’s He-ere . . .

Published February 8, 2013 Uncategorized , CPSC , CPSIA , Small Business , Component Testing , Children's Products , Certification , Testing , Burden Reduction , HR 2715 1 Comment
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Today, the CPSC’s children’s product periodic testing and certification rule goes into effect. Perhaps the most sweeping rule in the agency’s history, it was spurred by 2008’s Consumer Product Safety Improvement Act. Even before becoming effective, it has substantially affected the agency, the regulated community, and consumers. Starting today, those effects will grow.

After much debate about its details (more on that shortly), the rule is now the law. It sets massive new requirements for the CPSC’s regulated community. To comply with it, companies and labs should have developed systems and procedures to comply with the new requirements and these should all now largely be in place.

Even so, tweaks to those systems will, of course, be necessary. Some of those changes are things that manufacturers and labs can take care of on their own. Others, however, will probably require attention from agency staff and from the Commission. As you encounter problems with this rule, make sure that the agency and I hear about them. Your voice can make a difference. Already, based on pre-implementation concerns, both Congress and the CPSC have made changes to the rule. And as the rule now goes into effect, we can only expect more concerns to be revealed. When they arise, let us know about them.

Of course, as readers of this blog already know, this rule is not my ideal rule. During the many debates leading up to today, I have already filled enough of this space discussing my disagreements with the Commission’s decisions to belabor them here in any detail. To sum it up, I believe we overstated the necessity for third-party testing, ignored opportunities to make the rule more effective, created “gotcha” traps for companies, and paid lip-service to Congress’s demands that we look to make it less expensive. The result is an unwieldy rule that (because of its name) might make consumers feel safer, but holds only speculative hopes of actually making them safer. All the while, they now have the certainty of fewer choices at higher prices.

Yet, though I remain concerned about the unnecessary damage this rule threatens—and as I continue to work to improve it—make no mistake: It is the law. Companies must heed it even where they disagree with it, and violators should expect a visit from our compliance staff. We have lots of resources for helping businesses understand this rule and how to meet its demands, especially for small businesses. If you have not already figured out your plans for complying with the rule, hurry up and fix that. We surely will all learn a lot along the way, but there is no more time for waiting.

CPSC & Birthday Suits

Published November 1, 2012 Burden Reduction , Small Business , Testing 3 Comments

Few images in life are more innocently adorable than a toddler scampering about in the buff, enjoying life at its simplest and freest. The good news from the CPSC is that you might be seeing that image a lot more. The bad news is that parents might not have much choice in the matter. (A bit of overstatement I will admit, but the principle holds. See below.) 

As I mentioned last week, at least some apparel manufacturers are opting to exit the children’s market rather than brave our labyrinthine minefield of children’s product rules. These requirements, which are arcane to trained lawyers and incomprehensible to most other people, have also forced micro-businesses focused on children’s clothing to cut back or to shut down completely. Thanks to our staff, we knew this sort of thing was coming, and with little if any benefit, but my colleagues decided to forge ahead anyway.

No one should be surprised when business slows or even stops under a regime in which a company must send out even the safest product for round after round of testing, destroying stacks of samples in the process, to make sure each product complies with rules that may have no real bearing on safety, then fell entire electronic forests to document the process.  After all this a company must still live with the risk that our own post hoc judgment is the final arbiter of whether you tested enough.

The entrepreneurial spirit will keep some business owners searching for a solution. We’ve heard of some small businesses that are banding into buying cooperatives to spread the cost of testing. While it is encouraging that the fierce perseverance of American entrepreneurs will seek to overcome the challenges we throw at them, we should not forget that every dollar these companies spend trying to meet our demands is a dollar they can’t spend on any other part of their business, including research to improve product safety. This is a solution to a problem we caused with our testing rule that, in many respects, was its own solution in search of a problem. We required far more than was necessary to ensure compliance with our safety rules, and we left it to the businesses we regulate to figure out how to make it work.

We’ve already missed several opportunities to fix this. We paid lip service (if even that) to the President’s suggestion that we look in our universe of rules for ones we could stand to lose, and we were too modest in our congressionally-mandated examination of our testing rule, the 300-pound gorilla in our regulations. I hope we’ll heed the cries from the market before they turn to silence and kids’ clothes racks—and kids themselves—are bare.

Talking Business

Published October 25, 2012 Cost Benefit Analysis , Jobs , Small Business Leave a Comment

Yesterday, I had the pleasure of speaking at the 13th Annual Legal Reform Summit, hosted by U.S. Chamber of Commerce’s Institute for Legal Reform. I discussed regulatory review, cost-benefit analysis, and how little of each is happening at the CPSC.

Given the organization’s long and illustrious history, naturally, I wasn’t the first public official to speak to a Chamber audience about the administrative state. Here’s what one visitor had to say about 18 months ago: “[I]f there are rules on the books that are needlessly stifling job creation and economic growth, we will fix them.”

That speaker was President Obama, outlining an executive order on regulatory review. The order tells agencies like the CPSC to look at our rules and shed whatever wasn’t working or necessary. It envisions a regulatory system that “promot[es] economic growth, innovation, competitiveness, and job creation.” The order urges regulation “based on the best available science” that can “promote predictability and reduce uncertainty,” using “the best, most innovative, and least burdensome tools,” and taking “into account benefits and costs.”

The CPSC has failed every aspect of that order. Key recent rules stifle growth and discourage innovation. They also stifle competition and slant the playing field toward the biggest businesses. About the only jobs they create are for lawyers.

Here’s hoping that, regardless of what happens November 6th, we’ll see a renewed effort from the White House to bring CPSC into compliance with prudent government. Here is an article about my presentation at this meeting.

Voices from Outside the Echo Chamber

Published October 22, 2012 Burden Reduction , Jobs , Small Business , Travel 3 Comments

A regulator’s job description should include a requirement to get out of the Washington echo chamber, from time to time, to visit and talk with folks who have to live with our mandates. That is one of the best ways we have to gauge if regulations make sense out in the real world and if there are any issues surfacing as companies work to comply with the law. Last week I was on the road, having just those kinds of conversations.

The ABC Kids Expo was a wonderful opportunity to talk one-on-one with smaller companies who make a wide variety of infant and children’s furniture and other products. Without exception, these companies expressed a strong commitment to safety. This makes sense because many of the companies represented were started by entrepreneurial parents who saw either a need going unmet or a way to improve a product. While these companies were very pleased and eager to get whatever information we can offer on how to comply with our rules, I also heard concerns about both the process of writing the rules and the substance of the rules themselves. For example, the agency, working with the voluntary standards bodies, has been issuing the Congressionally-directed durable infant and toddler products regulations at a rapid pace.  Yet there is growing concern, which I heard expressed again last week, that this is resulting in a process that is less rigorous, at times more arbitrary and more error-prone than it used to be. Certainly, this is something that warrants greater attention at the CPSC.

I also spent time at the Specialty Graphic Imaging Association Expo, talking with the association’s Board of Directors, conducting a safety seminar and walking the show floor talking with individual members of this very complex and dynamic industry. Here are some of the key points I took home:

  • Overall, component testing is not working as the cost saver we hoped for this industry;
  • CPSIA-required testing is posing challenges in terms of expense and frustration as companies test for substances that are not present but do not fit into the exemptions; and
  • Testing variability among labs, in particular with respect to phthalates testing, is adding time and expense to the process, and is consuming resources in an unproductive manner.

While there are some very large players, the bulk of the industry is made up of small, domestic companies. Because of the nature of the business, the small batch testing exemption does not apply. One small business owner, with fewer than 10 employees, told me of needing to add an employee to do nothing but administer and document his testing and regulatory compliance program. Another told me that since children’s garments were not a major part of his business, he has decided just to get out of that aspect of the business altogether rather than have to hassle with all the rules.

I am concerned when I hear reports like that. Congress directed us to look at ways to cut costs. I suspect that, if and when we get serious with a commitment to action, taking that directive seriously, rather than just playing charades with that directive, we will find that there is ample opportunity to provide some real relief. In the meantime, with no boost to safety, the clock is ticking on the existence of numerous U.S. based low-volume businesses and their employees’ livelihoods.

A Million Here, A Million There…

Published July 16, 2012 Paperwork Reduction Act , Small Business Leave a Comment

In June, the White House Office of Management and Budget directed federal agencies to take action to reduce paperwork burdens.  What is the CPSC’s reaction? Well, last week we voted on a proposal that would require additional recordkeeping on top of extensive recordkeeping already required for periodic third-party testing of children’s products. By our own admission, this newest recordkeeping would probably only rarely be used. The price tag for this recordkeeping is estimated to be as high as $32.5 million at first, with an additional $13 million each year thereafter. And it must be noted that the burden would fall heavily on small businesses. This requirement was neither in the spirit of the OMB directive, nor was it good regulatory policy.

Simply put, the recent vote on “representative samples” would have added another regulatory requirement that incurred unjustifiably high costs with little benefit. As responsible regulators, it is our job to create rules that maximize safety while minimizing cost. I voted to support the definition of “representative samples” which was supported by all Commissioners, but without the additional unjustified costs. A million here, a million there, adds up to an ever-increasing burden for those trying to innovate and remain competitive, to say nothing of consumers who have to ultimately pay the cost.

Read my statement here.

Western Walkabout

Published June 19, 2012 CPSC , Jobs , Small Business Leave a Comment

I believe that one of regulators’ most important responsibilities is to assess the impact of the regulations they issue. A great way to do that is to get out of Washington and talk with the folks who have to live and work under the regulations we put out. I always welcome the opportunity to do that.

Recently I was in California and Arizona talking with various groups about how we are doing—both what we are doing right and what needs to be improved. In the “what we are doing right” column, there was appreciation that people in Washington would actually listen to concerns and talk candidly about how best to address them. In the “room for improvement” column, I heard strong concerns about the high costs of complying with regulations that are confusing or do not necessarily address real safety issues.

Here is an example. I visited an apparel manufacturer who has never had any safety violations or issues. They told me that, over the past 10 years, the average wholesale cost of a garment has decreased by about 50% and that costs increased by over 15% during the same time . The testing costs mandated by the CPSC under the CPSIA over the past three years have increased costs by an additional 3.5%. That added cost is an average: it’s much higher for small production runs. In fact, I was told that the testing costs for small runs “are killing us” and that this company has stopped doing small runs of products. In this case, the consumer loses: less choice and not necessarily any additional safety.

I also had the opportunity to visit with the Arizona Chamber of Commerce, doing more listening than speaking. The message I got was that businesses will support regulations that are based on sound science, are cost effective, and that advance a real safety goal. Unfortunately, some recent regulations do not meet these criteria so it is no wonder that we hear growing concern.

To me, this growing concern points to a system that is not operating in the public interest—that is, providing the appropriate level of safety in the most cost-effective manner. We need to fix this.

End Government by Guesswork

Published January 25, 2012 Congress , Consumer Product Safety , CPSC , CPSIA , Risk Analysis , Small Business , Testing , Uncategorized Leave a Comment

Regulators need good data to make good policy. As President Obama made clear yesterday in his speech to Congress, it’s important to reform regulations that are “unnecessary[] or too costly.” He demanded that federal agencies “eliminate rules that don’t make sense.”

But over the last two and a half years, the Commission hasn’t taken the time to make sensible rules. Instead, we crystal-balled benefits and ignored costs that we refuse to measure. And since our rules came into effect, costs for consumers have gone up needlessly as companies pass their costs on or leave markets entirely. These results are unnecessary and do not benefit consumers. We could have minimized them by performing cost-benefit analyses. Today, Politico posted my op-ed explaining in more detail why cost-benefit analysis makes for smart regulation and why the CPSC needs to get back to competent, sensible regulating. You can read it here.

Start Your New Year Off Right

Published January 6, 2012 Certification , Children's Products , Comment Request , Consumer Product Safety , CPSC , CPSIA , Small Business , Testing Leave a Comment

As you turn your calendars, there are a few things you should be keeping in mind. The Commission’s stay on the enforcement of the Third-Party Testing and Certification Rule is gone as of January 1st. So you should make doubly sure that your manufacturing program is in compliance if you make a children’s product that is subject to a testing rule.

And, if you’re a small-batch manufacturer, you should hurry up and sign up on the Commission’s Small Batch Manufacturers’ Registry here to give yourself peace of mind that you are exempt from certain testing requirements until the Commission takes further action.

Finally, and most importantly, in all of the regulations that the Commission has put out over the past two years, we have not given any serious consideration to the cost imposed on the economy. Congress, after hearing some loud complaints, decided to fix that with H.R. 2715, the law passed last summer that requires the Commission to consider ways to reduce the burden of third-party testing, among other things. The Commission published a series of questions on the issue in October, and we asked you for your ideas on the ways the Commission can reduce costs. We need your ideas by January 23rd. So submit your comments here!

I will be pushing internally to make sure that the staff and the Commission give serious, thoughtful consideration to the ways we can reduce costs, and your ideas in particular. But we can only be successful in reducing costs if we get serious—and perhaps out-of-the-box—ideas from you on how we can best achieve those reductions. So, please, help us ensure product safety in the most rational, cost-effective manner possible; send us your comments!

Tumbling into a Registry

Published December 30, 2011 Children's Products , CPSC , Small Business , Testing 2 Comments

Remember when you were a kid and you really wanted nothing more than to go out and play, but your parents said you couldn’t until you cleaned your room? Did you try to get by with just shoving everything in the closet? That worked right up until the door was opened and everything tumbled out, revealing the sloppiness of your effort. Now replace the child with a federal agency, and replace parental orders with congressional mandates. That’s what’s happening at the CPSC.

Like a child who “cleans” his room by stuffing everything into the closet, the CPSC rushed through a congressionally-mandated small-batch–manufacturers registry sloppily and at the last minute. As a result the agency may be failing to protect the very people the registry was supposed to protect. Last week, we finally issued a press release to let small batch manufacturers (SBMs) of children’s products know how they can take advantage of the testing relief Congress provided SBMs last August. Left unclear was whether an SBM had to be on the registry not to be required to perform certain tests that are mandated to begin in January 2012.

There is no new rule, and there was no Commission action. We shoved everything into a press release and called it a day. And to make matters worse, we issued our press release on December 23, during the holidays and just days before the new testing requirement kicks in. Our insincerity is obvious.

Another policy question not discussed by the Commission was this: Should the registry be public? There are reasonable arguments that it should be. However, there are also reasons why it should not be public since, by publishing the registry, we are implicitly releasing confidential information. (To register, a company has to be below certain revenue and product-quantity thresholds. Commissioner Northup has detailed the problems with publicizing this information, and I won’t belabor them here.) My key concern is there was no Commission-level discussion of this important policy issue.

Instead of working to find a compromise or a solution that would accommodate both points of view—something that could have been accomplished—the concerns of half of the Commission were ignored. The Chairman decided to call the process of establishing the SBM Registry and the attendant issues surrounding it “operational” rather than policy in order to act unilaterally through staff, instead of through a Commission vote.

They have told companies to use the complicated Freedom of Information Act (FOIA) exemption process if they want to keep the CPSC from telling their financial particulars to the whole world. That process requires time and legal expertise, and I believe our retreat to FOIA is contrary to the spirit of the law.

Congress wanted to relieve the product-testing burden for companies least able to bear it and to protect America’s vital small business job-creation engine. Do we really think Congress meant for these businesses to save money on testing just to spend it on lawyers? All these points could and should have been part of a Commission discussion, so people understand the reasoning behind these important decisions.

Will there occasionally be some substantial, fundamental disagreements about the best course of action? Of course there will be, but we owe to each other and the public to work to make those as infrequent as possible and to resolve them as best we can when they occur. I know we can do better, and I hope we will, but I’ll need some help from my Democratic colleagues to build a bridge.

The Song That Never Ends

Published November 21, 2011 Certification , Children's Products , Component Testing , Consumer Product Safety , CPSC , CPSIA , Lead , Small Business , Testing Leave a Comment

If you’re a close watcher of the CPSC Commissioner’s Statements page (and, really, who isn’t?) you may have noticed that my good friend and colleague Commissioner Adler and I have had another round on our perpetual motion statement ride. Back when we took the vote on our lead standard, we got a glimpse of this dynamic, as Commissioner Adler waited a couple weeks after the vote and my written statement explaining my vote, then issued a statement of his own, directly attempting to rebut the arguments I made in my statement.  He has done the same thing with respect to the recently-issued Testing Rule.  We are now on our third round of statements responding to each other.

As I have pointed out, I believe that the purpose of a commissioner’s written statement is to explain why a commissioner voted in a particular way.  If we use our statements as vehicles to respond to arguments made in other written statements, then the commissioner who writes last has the last word.  By using statements to explain ourselves, rather than directly to rebut others, we can guarantee that we do not find ourselves where we are now, trapped on a spinning merry-go-round.

Commissioner Adler does not share this view. In his most recent addition to the dialogue, he explained his rationale. He views these statements as an opportunity for “robust discussion and debate on the critical policy issues that come up before the Commission.” Discussion and debate are wonderful things, but, with all due respect, the time for them is before a vote. That way, the discussion actually has a chance to shape the policy issues. Statement after statement after the fact provides no such opportunity.  It risks becoming repetitive very quickly with the potential for descending into the petty.

The astute reader will no doubt be asking why I have responded to Commissioner Adler’s statements—both the Supplemental and the Further Supplemental—if I believe the entire exercise is such a misuse of the forum. The answer is simple: Unilateral disarmament may be noble, but it looks the same as surrender. If I don’t respond to Commissioner Adler’s arguments, no matter how fallacious they are, it will appear that I have conceded them. That is not so, and it would be inconsistent with my public policy role to allow such a misconception to exist.

That reality—that a Commissioner cannot let the conversation be one-sided, even if she feels it is hopelessly misplaced—is precisely why the CPSC statement format works best when it is kept to an explanation of the author’s perspective and decision. If we all stick to that approach, we give the public a clear, concise view of the arguments surrounding each CPSC action (or inaction) and an opportunity to provide informed comment on future debates on similar issues. If just one of us abandons this approach, we will all be inevitably sucked into a potentially endless exchange that leaves the reader confused, annoyed, or both.

I love Lambchop, but The Song That Never Ends is best sung on children’s television, not by the leadership of a Federal agency.

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