1110 Series: Hiding the Ball?

Last week, the Commission proposed an update for our rule for certificates of compliance, known as the 1110 rule (part 1110 of title 16 of the Code of Federal Regulations). As the final piece in the testing and certification puzzle created by 2008’s Consumer Product Safety Improvement Act, this rule needed changes. While my colleagues were willing to improve some  problems with the way this rule has functioned in the market—and get public participation in this revision— I was disheartened that we could not find more common ground in trying to craft a rule that would rationalize the certificate requirements.

Ball

One of my biggest frustrations was that my colleagues were unwilling not just to do more to reduce the annual costs of this rule but even to be upfront in the way we presented its costs to the public. I wanted to include a chart that would lay out what we expect this change to cost in concert with the rule it replaces and the rules it supports (parts 1107 and 1109, the testing and certification rules for children’s products and their component parts). My colleagues insisted that we only needed to talk about the costs presented in the analysis prepared for this specific set of amendments. None of our rules operates in a vacuum, and the original 1110 rule was short on economic analysis because of the tiny 90-day window we had to pass it, so I thought it more transparent to give the public a chance to see and comment on the total tab. After all, companies don’t have the choice of conforming just with the new language—they have to follow all of our rules—so it is inconsistent with reality to tell people about only the new costs.

Since my colleagues refused to include this vital information, I have posted it here. The chart below breaks down how each component of the certificate rule adds to the prices consumers pay. Remember these are annual costs—and will be incurred year after year. Note also that this does not account for the actual set-up costs already expended to create and maintain the certificates, nor does it necessarily account for the costs of changes needed to comply with this proposal. And remember that these numbers apply only to paperwork—the costs of these sister rules are surely much, much larger.

Requirements

General Certificates of Conformity

Children’s Product Certificates

Document test results

$118 million[1]

 

$216.4 million[2]

Create certificate

Disclose certificate

$ 14.9 million[3]

File certificate with CBP

$56 million[4]

$18.7 million[5]

Subtotal

$174.2 million

$250 million

Total

$424.2 million

I’ll talk about more of my concerns with the rule change we just proposed—and the stilted process that led to it—the rest of the week, but I wanted to put the bottom line up front, just as we should have done in the rule.


[1] Pt. 1110 PRA (March 2013)

[2] Pts. 1107 & 1109 PRAs (November 2011)

[3] Pt. 1110 PRA (March 2013)

[4] Pt. 1110 PRA (March 2013)

[5] Pt. 1110 PRA (March 2013)

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