Archive for October, 2013



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.

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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.

The Use and Abuse of Voluntary Consensus Standards

The CPSC has issued several recent rules about nursery products, each of which was based on a voluntary consensus standard. Congress directed us to do so in § 104 of the Consumer Product Safety Improvement Act, and also wrote special procedures for the voluntary consensus standards under that section. Unlike most voluntary standards—which the agency relies on frequently, without enacting mandatory federal rules—Congress gave the agency the power to modify those voluntary consensus standards as necessary to reduce a risk of injury. The Commission just last week approved a new rule on bassinets and cradles under the § 104 rubric. Although I agreed with my colleagues about most of the rule, one key change made by the staff to the voluntary standard did not appear necessary—in light of all the real-world evidence presented to the Commission. Therefore, I proposed an amendment that would have adopted the standard without that change.

The agency’s staff proposed to adopt a test criterion that differed only slightly from the version in the voluntary consensus standard. (You can read more about the change in my official statement here.) If the change were necessary to advance safety, I could have supported it. If the change made a real and substantial improvement to safety, I could have supported it. But in the end, I didn’t see evidence that supported the change. And as I read § 104, that means that the agency cannot and should not adopt a rule that changes the voluntary consensus standard.

Why not? All federal agencies are supposed to use voluntary consensus standards where possible, because they are likely to increase standardization, encourage long-term economic grown, and save taxpayer funds.  So a general policy in favor of using voluntary consensus standards makes sense. And the CPSC has special reason to hew close to voluntary consensus standards.

In § 104, Congress was not legislating in a vacuum. CPSC is already required to use voluntary consensus standards instead of making up its own rules, so long as the voluntary consensus standard does the job. Section 104 is only meant to change the process so that durable nursery products are covered by enforceable federal standards, because of the special population that uses nursery products—infants. Unfortunately, the way that the CPSC has implemented § 104 has tangled up the voluntary standards process, cutting short debate and perhaps reducing the quality of the draft rules that the Commission gets for its consideration. My amendment would have been a step in the right direction, signaling to standards development organizations that their work product will not be rushed along, nor their debate stymied or stilted, by the CPSC. We should be moving down that path.


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