Archive for September, 2013

Double Entendre

Voluntary recalls are one of the main things that this agency does. We at the CPSC work with a company to get a potentially (or actually) dangerous product out of consumers’ hands. (Or that’s what it should be—sometimes the meaning of “recall” is squishy around here. See my blog post here for more details.) So everyone who works with the agency should be paying close attention to the draft interpretive rule that the Commission is considering.

We held a briefing on the draft yesterday, and what I heard concerned me. As staff explained it, the purpose of this draft is to give firms—and agency staff—“greater predictability” in working through the content of voluntary recall notices. To me, this sounds like we are considering a rule that would impose strictures tantamount to requirements that would limit the ability of the agency and a company to work collaboratively to design the most effective recall possible. When I pressed the staff on this point, I received assurances that the rule would not impose requirements, but would simply represent guidance from the Commission.

Balderdash. Citing “more efficient negotiations” is simply a way of saying that points of negotiation that traditionally have been on the table should be taken off. And “guidance from the Commission,” even “nonbinding” guidance, will translate into take-it-or-leave-it offers to companies. At a minimum, if the current draft is adopted, companies can expect that they will have to cite extraordinary justifications to deviate from the guidance.

I am not sure that this is a good idea. Recalls occur for many reasons, and the effort required to develop a good recall ensures that each recall is tailored to the circumstances. Some recalls will require broad notice, others may require only direct notice to affected consumers. (A side note: I am happy that the staff draft acknowledges that direct notice is the most effective method to inform consumers about a recall. Such notice is increasingly feasible in an age of Internet shopping.) Some recalls may not even be recalls. The elements laid out in the draft rule are troubling, because they cover such a broad swath of territory.

The draft interpretive rule would encourage staff to require companies to implement compliance plans as part of corrective action plans. While this may sometimes be appropriate, I question whether this is necessary or appropriate at the recall stage. That subject is usually more appropriate for negotiation after the recall, because it will often require more analysis than can feasibly be done when trying to get recall out.

In sum, I have many concerns about this draft of the voluntary recall rule. We are scheduled to vote on this notice of proposed rulemaking on October 23, 2013.  In the meantime, I will be working with my colleagues to improve it, and look forward to seeing the public’s comments on it, assuming the Commission approves the draft proposal.

Magnets Hearing: Let Us Hear From You

The CPSC has scheduled a hearing on October 22, 2013, to hear from the public about the pending proposed rule to ban small, powerful magnets. The hearing will take place at the CPSC headquarters in Bethesda, MD. To present oral comments at the meeting, send your request, along with the text of your comments, to cpsc-os@cpsc.gov.  You can find more information through the draft Federal Register notice here. Folks who wish to be heard should contact the agency by October 15th.

This hearing is required by Section 9 of the Consumer Product Safety Act which sets the procedures for the agency to issue many of its safety standards and bans (many of the CPSIA-mandated rules do not require this kind of public input.)

This issue presents troubling and conflicting concerns for the agency.  Obviously, the injuries that occur when toddlers swallow these small powerful magnets are of great concern to us. We have heard from many doctors about the serious nature of these injuries. On the other hand, this product is made and sold for adults, is extremely popular, and is being safety used by those it was intended for. Banning a product because unintended users are being injured through misuse is a serious and fairly novel undertaking for this agency.

This rulemaking also presents some troublesome process issues—issues of the agency’s own making. Separately, the Commission brought an administrative action against manufacturers that refused our request to recall a product that would be covered under the proposed rule. One cannot help but wonder how the rulemaking will impact the administrative litigation—both as a matter of law and as a matter of fact.

These are all important and interesting questions for the Commission to grapple with. I am looking forward to hearing what the public thinks on Oct. 22.

When Competing Policies Collide

It is a basic premise of business that good managers do not allow short-range tactics, taken in response to immediate contingencies, to derail long-range strategies. This principle came to mind when I read a story in this week’s BNA Product Safety and Liability Reporter. The story discussed efforts by Wal-Mart Stores Inc. to put in place initiatives to reduce the environmental impact of the products it makes and sells. The story made clear that these efforts by Wal-Mart, and lauded by environmental activists, will be felt throughout the supply chain.

What especially caught my eye was the following portion of the story:

“Wal-Mart’s other environmentally friendly initiatives include:

• working with suppliers to increase the use of recycled content and to make packaging more recyclable. . .”

When I read this, I could not help but think back to the CPSC’s decision back in 2011 mandating the lead content of children’s products not be above 100 parts per million. You will recall that Congress set the limit at 300 ppm but allowed us to lower it to 100 ppm unless that level was not technologically feasible. The Commission decided to require the lower level even though this would drive many manufacturers to substitute more expensive materials in their products and even though our staff could not point to specific safety benefits (higher costs and consumer choice were certainly not factors in our thinking, of course).

However, more to the point, the staff specifically stated that, at the 100 ppm level, recycled materials would not be able to be used in children’s products and that virgin materials would need to be substituted. This is not because recycled materials do not necessarily meet the 100 ppm level, but because the testing we also require would not be predictive of what was actually in the product. In other words, because recycled materials, by their nature, are not necessarily consistent throughout, something could test at 90 ppm in one spot (passing our standard) but test at 120 ppm in another (failing our standard).

It is so unfortunate that the agency made no effort to try to reconcile the competing public policies—public health and environmental sustainability–at work here.  It would not have been hard for us to keep a lead content ceiling in place that was appropriately protective of health and still accommodate the government-wide policy to increase our use of recyclables. Exceptions for certain products that must and should be made out of virgin materials could easily have been integrated into such a policy. The commission clearly had, and has, the authority to do this, but in its regulatory exuberance, short-term reactive thinking trumped long-term creative problem solving.

So, kudos to Wal-Mart and other companies for their efforts to find environmentally friendly ways to make and sell products. It’s too bad that we have put up an unnecessary hurdle to that effort. Instead we could have come up with a solution that would have reconciled the important public policies of health and environmental stewardship. I wish we would have at least tried.

Unfinished Business

In Washington, sometimes repeating something often enough seems to make it true. We see this phenomenon working in the press stories and speeches marking the CPSIA’s fifth anniversary last month.

Although the law has its strengths and weaknesses, the real story is the unrealistic tack that the CPSC has taken in implementing the CPSIA, changing difficult circumstances into nearly impossible ones. Operating from the assumption that if some regulation is good, then more must be better, the agency embarked on a course that seeks to cover all risks—real, speculative, or imagined—rather than crafting regulations to address known unreasonable risks of injury. That our regulations go well beyond what the new law requires is not a fact that seems to concern us. 

One problem with this approach is how divorced it is from the real world. Our regulations are overly-broad and so ultra-complex that only companies with swarms of lawyers can hope to fully understand and comply with them. Thus questions necessarily arise as to how to truly comply with our regulations. And, of course, those questions have been pouring into the agency.

This issue is brought home by a new report from the Handmade Toy Alliance documenting the experiences of small toy manufacturers and importers under the CPSIA and CPSC’s implementation of it over the past five years. HTA members are those who bring excitement, creativity, and imagination to the world of play. None of the products they make presented the safety issues that prompted the CPSIA. Yet this group has felt the brunt of the law more severely than others. Here are some of their observations about the impact of the CPSC’s implementation of the law:

  • “The [testing] rule overwhelmingly favors large manufacturers at the expense of smaller ones. . . . A small business owner could develop what they believe is a reasonable testing program, but it is unlikely to meet the CPSC’s strict interpretation.” HTA points out that we have designed a rule that tilts to the benefit of the large company and which small companies cannot meet.
  • Due to the onerous nature of the requirements, many small businesses will choose “the path of least resistance—to continue doing what they have done for years to assure they produce a safe product [and] use their experience and wisdom to guide design and manufacture, and [to] form relationships with their customers. . . . [S]ome portions of the requirements are adhered to and others are ignored because of costs and complexity.” In other words, small producers will focus on safety and only selectively comply with those portions of our rules they can meet or understand. Creating rules that do not improve safety but contribute to an approach of selective noncompliance is dereliction of our duty as regulators and stands rational regulatory policy on its head.
  • Further, some “handmade toy makers have simply gone out of business or chosen to make products that are not designed for children because the CPSIA and subsequent relief efforts preserve a hurdle too high for small business to clear.” I wonder why those who are praising the passage of the CPSIA find this to be a good result.

Are these not serious flaws attributable to the CPSIA and the agency’s implementation of it? I believe so and they are compounded by this agency’s unwillingness—through over two years of procrastination—to address the unnecessary burdens of our rules as we were directed to do by the Congress. The public has identified ways to ease the burdens, our staff has identified ways to ease the burdens, and I have even added to the list—yet we have not taken any action to implement concrete suggestions, all the while ignoring congressional directions to take action. The HTA report contains a list of actions the agency could take that would ease the burdens of small producers while maintaining safety.

HTA concludes, “The missteps of a few very large toy companies precipitated regulations which damaged thousands of small and micro U.S. businesses and continues to encumber those that survive. . . . Congress and the CPSC must move forward with meaningful solutions that are funded and given priority.”

I have raised these issues with my colleagues repeatedly (and as recently as this month when we voted on our upcoming regulatory agenda). I have been repeatedly outvoted and told that reducing the burdens of our regulations is not a priority of the agency. Again, I ask, when will we turn our attention to correcting the problems we made?


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