Archive Page 4

Changes

Tomorrow, after 8½ years, my term as a member of the Consumer Product Safety Commission ends. It has been quite a ride—smooth at times, bumpy at others, but always interesting.Change I will let others judge my successes and failures, but I have always striven to help the American consumer by ensuring that their products are safe and their options plentiful. It is my deep conviction that this agency does its job best when it works alongside stakeholders, not against them. All sides have valid concerns. All deserve to be heard. As a commissioner and then as acting chairman and then again as a commissioner, I have always tried to work collaboratively with my colleagues and with stakeholders. I am proud of the work that we do here at the CPSC, and I will be more than a little interested to see where the agency goes in the future.

As a matter of fact, more than just staying interested, I plan to stay engaged. (After having been involved with the agency in some way or another for nigh on 30 years, you wouldn’t expect me to just disappear, would you?) I have very much enjoyed writing this blog since I started it in 2009, and I’ll be keeping it up. There will be posts about the CPSC, and perhaps about other subjects like administrative law and regulatory policy. I won’t just be posting because I’m interested—I’ll be posting because all of us who know and work with the CPSC have a responsibility to stay engaged with the agency. Regulators and the regulated (and other interested parties like yours truly) have to keep talking with each other, not going back into our shells, in order to avoid the kind of groupthink that leads to bad decisions or an us-versus-them mentality. So let’s keep the conversation going.

Listening to Constructive Criticism

Yesterday, I met with representatives of the National Association of Manufacturers Product Safety Coalition. Participants at the meeting represented a broad spectrum of businesses that make and sell consumer products, and so are under the jurisdiction of the CPSC, and they shared their concerns over the direction the agency is headed. Here is a summary of some concerns expressed at the meeting:

  • A perceived breakdown in communications between the agency and business stakeholders is causing great frustration among those trying to comply with CPSC requirements.
  • The proposed rule setting out voluntary recall procedures was labeled as “a solution in search of a problem.” Great concern was expressed that this rule could make the process more time-consuming and resource intensive, both for the companies and the agency.
  • The move to mandate corporate compliance programs as a part of a penalty settlement or as part of a voluntary recall is viewed as excessively intrusive. If the agency insists on these programs as part of recall corrective action plans (as allowed by the proposed voluntary recall rule), this insistence will slow down the recall process greatly.
  • There seems to be no logic or systematic rationale about how penalties are being assessed so that past penalties are not predictive of future penalty demands. The process for referring cases to the Department of Justice is opaque.
  • While agency participation in the voluntary standards process is welcome and helpful, there is concern that technical discussions need to be held in an environment that fosters and encourages full participation from corporate technical experts. There is also concern that voluntary standards are becoming de facto mandatory standards.
  • Questions were raised about why the agency is moving forward with a wholesale change to the certification requirements (as proposed in the rule changes to 16 CFR 1110).  Companies have already set up systems to implement existing certification requirements and changing those systems will be resource intensive and is not justified.
  • There is ongoing concern that the agency is not moving forward with addressing the burdens that are associated with its testing and certification regime. There is a great deal of unnecessary testing being done, especially with respect to phthalates. A plea was made for aligning our standards with other international standards.

While a number of other issues were raised, the participants also reaffirmed their underlying support for the agency and its important safety mission. The message I took away is that we need to interact with our business stakeholders in a more collaborative and cooperative manner. Obviously, the range of issues we deal with is so broad that without this collaboration, we will not succeed in carrying out our mission to protect consumers.

Firing Blanks

While some of us may be old enough to remember playing with toy cap guns, this relic of another time has pretty much faded into the memories of kids, now long grown up, who counted the Lone Ranger, Matt Dillon or Dale Evans as a hero—except at the CPSC.  Today the Commissioners received a proposal to repeal longstanding regulations dealing with toy caps.

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This proposal is part (actually, the biggest part) of the agency’s “commitment” to undertake regulatory review.

I have written before of the agency’s disregard of the President’s direction to agencies to undertake rule review. He said that “if there are rules on the books that are needlessly stifling job creation and economic growth, we will fix them.” Apparently we have combed our rules and the repeal of the toy cap rule is all we could come up with. Never mind that this rule was already subsumed by another regulation and that other than cleaning up the Code of Federal Regulations, our actions have no effect—no one claims that the toy cap rule is stifling economic growth. Never mind that it took well over a year to go through the process of repealing a rule that impacted no one.

Yet there are many rules on the books here at the CPSC that do needlessly stifle economic growth. The testing rule is a good example of where we went overboard in our enthusiasm to regulate. In 2011, Congress asked us to take another look at testing costs and to take action to reduce the costs and burdens of testing consistent with consumer safety. We have repeatedly asked for comment on the same issues and then slow-walked any effort to take action in response to those comments.

Rather than taking honest action to address real pressing problems presented by overly-broad rules, we have hidden behind a rule review fig leaf—toy caps. It would be funny if it were not so serious.

Marshall Dillon, where are you when we need you?  Load up your toy cap gun and come to the rescue.

CPSC to Congress: Still Kicking the Can

Kick_The_Can

The government shutdown eclipsed an important letter that the agency received on October 1 from our congressional overseers asking us explain our failure to move forward on addressing the costs of CPSIA-mandated third-party testing. You will recall that Public Law 112-28 required us to address those costs and let the Congress know if we needed new authorities to do so. Congress asked for a response by October 21—today. No answer has yet gone back to the Hill, although the shutdown explains some brief delay.

But every day that we delay in reducing the costs of often-unnecessary testing we fail to perform our job to regulate rationally, opening the agency up to deserved criticism. And it is no wonder that Congress asks why we haven’t addressed this issue. To review: In November 2011, we asked the public for ideas on reducing testing costs and, based on some of those comments, our staff came up with a list of 16 recommendations. A year later, the Commissioners pared the list down to nine items, and then further shrunk it down to four ideas, none of which have been acted upon.

It has been said that there is a six-word formula for success: think things through, then follow through. Our regulations on third-party testing were not thought through, so Congress stepped in, asking  us to try again and this time follow through by either addressing the problem or asking for authorities to do so. Our response? We kicked the can down the road.  Maybe it’s wishful thinking, but I do hope this letter draws enough attention here to trigger real follow-through.

Like others, I will be most interested to read our response to the Congress, whenever it comes. One suspects we will point to the fact that we have gathered public comments on at three separate occasions. One further  suspects we will plead poverty, saying we have no resources for doing this important work. But asking stakeholders to comment over and over again on the same issues does not advance the ball. And claiming lack of resources as preventing solutions to problems of our own making rings pretty hollow.

Ben Franklin said, “Never confuse motion with action.”  We have had lots of motion.  We need some action before those who would benefit just give up.

The Fast Track to Unintended Consequences

Before the government shutdown threw so many plans up in the air, the Commissioners were scheduled to meet on October 23rd to deliberate and vote on whether to issue for comment an interpretive rule setting out guidelines for voluntary recalls.  While I have discussed my concerns about the overall approach outlined in the draft rule (see my post here), I am especially concerned about the impact it will have on our fast track recall program.

My concern flows from the provision in the proposed rule that gives the staff the authority to insist on implementation of a corporate compliance program as a part of the corrective action plan (CAP) being negotiated. Normally, a CAP is limited to a refund, a repair, and/or a return. The direction to the staff here is somewhat vague but the proposed rule states that a company’s history of recalls could trigger such a demand.

The fast track recall program is an innovative procedure put in place a number of years ago to get recalls conducted as efficiently and quickly as possible.  Under the fast track approach, a company can bring a potential recall to our attention, the staff will agree with the recall without making any finding that the product violates a rule or has a defect and the whole matter will be resolved within 20 days of the first notice to the agency (in the majority of cases).  This approach benefits the agency in that it resolves safety problems with minimum resources, it benefits the company in that it gets the recall out efficiently, and most importantly, it benefits consumers by getting product issues quickly resolved.  Consequently, the fast track option is used frequently, especially for those recalls where hazards are speculative or inconclusive.  (I am reminded of the recalls of beaded curtains that took place several years ago, when one company, seeing that another had recalled these left-overs of an earlier hippie era, also recalled its beaded curtains without any incidents or other data to justify such a recall.)

All of us hear anecdotal comments on a regular basis of companies that use the fast track program when quality control (as opposed to safety) issues have been discovered and we readily agree with such recalls.  We also hear that the fast track program is used when there is concern that there may be a potential safety issue but that has not been determined and the company, out of an abundance of caution, decides that it will do a recall early rather than wait for more evidence of the existence (or not) of a safety issue.  We have even heard of companies who have integrated the fast track concept into their compliance programs, making the default a fast track report to the agency.

These are generally positive developments.  But the incentives to use the fast track may be curtailed if using fast track could be the basis for a demand that a company supply information about its compliance program. The incentives would be further undermined if the agency treats the mere fact of past  recalls as proof that a compliance program needs to be scrapped or reworked under the watchful eye of the CPSC.  I am not suggesting that products with real safety problems are not recalled under the fast track program.  Of course they are.  But the staff has not made any finding of the existence of the hazard.  It would be a very bad result if this provision in the proposed rule made companies either reconsider or forego taking advantage of the benefits of the fast track option in marginal cases because that decision could come back to haunt them later.

And the time of our hard-working (and often over-worked) compliance officers is best spent getting unsafe products out of the hands of consumers. Their expertise is in negotiating recalls, not designing corporate compliance programs.

The “Compromise” Conundrum

With my term drawing to a close at the end of October—amidst forced agency inactivity brought on by the government shutdown with both sides refusing to budge—I have been thinking about the concept of compromise. When do people of good will stand their ground and hold tightly to principle, and when do they budge a bit to reach a beneficial conclusion to a controversy? Is one’s thinking on this issue influenced by whether you hold a majority or minority viewpoint?

In a compromise, each side gives up something. Framed positively, a compromise is the mutual acceptance of an agreement’s terms; framed negatively, a compromise involves each side surrendering to the other on some goal or principle.

The shutdown negotiations (which, like most of you, I can only observe) trigger memories of the CPSC’s experience with compromise over the past several years. On many issues, large and small, the Commissioners have not compromised and instead have voted along party lines with the minority on the losing side of the vote. This produced flawed actions, many of which lacked support from all agency stakeholders. This made the actions more time-consuming and expensive to implement, and has made enforcement of new rules more spotty. Had there been some real compromise, the result would have been regulations, policies, or actions that were equally protective of safety and also more legally, substantively, and politically robust. In short, at the CPSC, too often compromise has been viewed as capitulation, with the parties unwilling to move at all off basic principles to find middle ground, rather than as a tool for finding mutual agreement.

Some examples, you say?

First, consider the database mandated by the CPSIA and which went operational in 2011. This came to the Commissioners for a vote with no effort to find middle ground. The majority rejected every amendment offered by the minority with little or no consideration of the amendment’s merits. Each vote was divided on party lines. Accepting only a few of the offered amendments could have resulted in a database supported by a unanimous vote. Instead we have a database that continues to be controversial and that many, including members of Congress, believe may be salted with complaints generated by plaintiffs’ attorneys anticipating litigation. And we now have a federal district court judge who condemned our process for posting complaints on the database saying that the agency’s process “convert[ed] the CPSIA’s remedial scheme into a ‘sport of chance.’” See Company Doe v. Tenenbaum, Civil Action No. 8:11-cv-02958-AW at *43 (D. Md. Oct. 22, 2012), quoting Judulang v. Holder, 132 S. Ct. 476, 487 (2011).

Our decision to lower lead limits to 100 parts per million (ppm) offers another example. This decision expanded our enforcement challenge dramatically without a corresponding increase in safety. (Remember that our staff found that the health benefits have already been realized without moving to a lower limit. In other words, there was no real health benefit to pushing from 99.97% to 99.99% lead-free children’s products.) Yet it was impossible to find agreement even on so common-sense a thing as a public enforcement policy stating that our compliance resources would be directed to those products that presented the biggest threat to safety. It would be interesting to know how many agency resources are directed at finding violations of items that, although above the statutory lead limit, do not pose any real risk to children.

The testing rule and the component parts rule offer further examples of parties digging in on positions so that the resulting rules are excruciatingly complex—in the case of the testing rule—or so laden with requirements as to render them virtually useless—in the case of the component parts rule (that was touted as offering testing relief).

If I were to continue the list, it would be a long one indeed. But the point is that too often here at the agency, there has been neither incentive nor effort to find positions that accommodate differing points of view. Our organic statute, setting up the agency as a Commission, contemplated that differing points of view would be brought to the table.

If Commissioners who hold a minority viewpoint are being asked to agree to a regulation that requires them to move on points of principle (perhaps by either getting too little or giving up too much) then the majority should acknowledge and respect that, and make accommodation by also moving to the middle. That does not happen much at the CPSC. But it is there that compromise lies, assuming one wants to look for it.

More Data + More Analysis = Better Rules

Readers of this blog know that I am a big supporter of rigorous cost-benefit analysis as a way to make regulations better.  Therefore I was pleased to have the opportunity during a panel last week to discuss why this is true and how the public can participate in shaping such analysis.

Cheryl Falvey, formerly the General Counsel at the CPSC, led the discussion, which also included Michael Fitzpatrick, a former senior official in the current White Houses’ Office of Information and Regulatory Affairs (OIRA), and Reeve Bull, an attorney with the Administrative Conference of the United States (ACUS). We discussed the arguments surrounding cost-benefit analysis, the use of OIRA review in the rulemaking process, and legislation that would affect independent agencies’ use of cost-benefit analysis. Here are a few key takeaways from the panel.

First, the CPSC is hardly the only independent agency grappling with cost-benefit analysis. However, unlike the CPSC which has rejected its use when not required by statute, other independent agencies like the Nuclear Regulatory Commission and the Commodity Futures Regulatory Commission have used such analysis despite their not being required to. This is important, because there is a fallacy out there that cost-benefit analysis kills rules. Cost-benefit analysis makes them better. And vetting rules through an OIRA review process also makes them stronger and more likely to survive judicial scrutiny. Doing this analysis publicly makes an agency have, as Fitzpatrick described it, a “disciplining conversation in public.” Going through that conversation makes rules more legally and politically defensible. That is why, more and more, agencies (with the exception of the CPSC) are using this analysis even when not specifically obligated to.

Second, when it comes to cost-benefit analysis, it is not only agencies that need to step up. It is the public generally and the regulated community more specifically. When a proposed rule is released to the public for comment, affected industries usually provide comments. Many of those comments are heavy on policy arguments and weak on numbers. But policy arguments are easily responded to with other equally powerful policy arguments. What agencies need is fact-and-figure driven comments. That is the kind of information that can actually change a debate. And because agencies have limited ability to get information from the public—thanks, in part, to the strictures of the Paperwork Reduction Act which limits our ability to ask for information from the public—we have to rely on general, publicly available data. If comments come in that have hard data, especially non-anecdotal data, an agency’s staff will have to grapple with it or risk the rule’s survival in a court challenge. And good data is precisely what agencies need to truly refine rules.

Cost-benefit analysis by itself is not sufficient to assure good rules.  But it is a tool that more and more agencies use to improve the rules that affect the American economy. And it is a tool that needs the participation of the regulated community to be as effective as possible.


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