Archive for the '1110 Series' Category

CPSC Veteran Closes One Chapter, Opens Another

Last week veteran staffer Marc Schoem announced he is leaving the agency to become the Executive Director of the International Consumer Product Health and Safety Organization (ICPHSO).  Marc has been at the CPSC almost from the beginning and served in many capacities, but really made his mark in the Office of Compliance.  While we all know that no one is irreplaceable, it is hard to imagine the CPSC without Marc Schoem.

I have often disagreed with the direction the political leadership has steered the agency.  Yet I have also seen how the dedicated career staff works hard every day to keep the agency on course in spite of the changing political forces that buffet it. Marc exemplifies the best in federal service.  He served as a mentor to young compliance officers and provided important leadership to the office.  His common sense and practical approach to problem solving was very helpful to me when I served as a CPSC commissioner.  And his vision and hard work as a board member helped ICPHSO become the important organization it is today.  While Marc will be missed at CPSC, he will continue to play an important role in advancing consumer safety.

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Measure Twice; Cut Once

A couple of years ago, I did an addition to my house.  Everyone who has done this knows the steps.  I sat down with an

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architect to discuss exactly what I wanted to accomplish with the project.   A rough design was done and then refined in a set of blueprints that was put out for bid.  Since my budget was limited, the plans had to be readjusted to fit both my needs and my resources before they could be finalized.  Only then did we go to the relevant regulatory bodies to seek the required permits and approvals to do the project.

I thought of this process last week while I listened to the CPSC Chairman and Commissioners describe their desire to greatly expand the agency’s import surveillance system at an oversight hearing before the Senate Commerce Committee.   In 2011, in response to Congressional direction, the agency initiated a pilot program to identify imports that violate safety standards.  The current pilot program subjects certain products from certain countries/suppliers to surveillance prior to import under a computer rule set that predicts the possibility of violations. In other words, the computer looks at what is coming in and, using the rule set, flags those products that should be further examined by CPSC personnel.  As a pilot, it has worked well.  The agency now seeks to extend the program to all imports under its jurisdiction.  Such a program will be expensive and the agency has asked Congress for a significantly increased appropriation to build out the program and the authority to impose user fees on importers as a way to fund the program on a continuing basis.

The agency has a great deal of regulatory housekeeping to do before such a system is feasible.  The program will only work if the agency has the statutorily-required certificates of compliance from importers available in an electronic form.  These electronic certificates will provide the basic information to allow both the CPSC and its sister agency, Customs, to make initial judgments about compliance.  In 2013, the agency proposed to update its rules governing the creation and filing of e-certificates (at 16 C.F.R. §1110).  Unfortunately, the agency, in a good example of “wants” exceeding “needs”, proposed a rule that goes well beyond what is required by the statute, and, if finalized, would require importers to redesign reporting systems and impose many new and costly requirements.  I looked at the cost of the proposed system when I was a Commissioner and using agency estimates, determined that it would cost annually over $400 million – that is almost $1/2 billion—for importers to compile the paperwork to document tests and generate the certificates that reflect those tests. That is a lot of money for paper!

This rule has been one of the most controversial in the history of the agency.  Many comments have been filed and most of them have been critical of the proposed rule.  The agency now proposes to establish a pilot program to see if the rule will work.  Unfortunately, rather than establishing a pilot based on the learning found in the comments to the rule, the pilot will look much like the proposed rule.  And because it is so tied to the expanded import surveillance system, this rule remains on the agency’s near-term agenda for completion.

At the hearing last week, several commissioners discussed the agency’s import surveillance activities.  Chairman Kaye argued that seeking authority to expand its import surveillance activities is consistent both with Congressional desires expressed in the CPSIA and with the Presidential direction for closer coordination among agencies that handle imports.  However, the ever-thoughtful Commissioner Beurkle pointed out that the agency has yet to undertake a requirements analysis to identify the capabilities of an expanded system.  Both she and Commissioner Mohorovic expressed grave concerns about the status and substance of the agency’s proposed rule on electronic certificates with Commissioner Mohorovic suggesting that the agency was greatly underestimating the number of certificates that it would have to process. He also argued that the agency has yet to demonstrate how the rule would improve targeting of violators and suggested that a “trusted trader” program should be part of any final program.    Commissioner Beurkle suggested that an “incremental” approach to building out the system was a more prudent one than what the agency proposed.

While the Senate Committee did not dwell on the subject of user fees, there were differences of opinion both on the Committee and among the commissioners.  Again, Chairman Kaye voiced strong support for the notion of user fees to fund import surveillance activities while Commissioner Beurkle expressed concerns about the wisdom and the constitutionality of such a system.

It seems pretty apparent that the agency has much more planning to do before it should get the permits to build out this addition to its regulatory house.  The fact that so much of the planning and preparatory work that needs to proceed such a program is still “under construction” should give policy makers pause.  And the issue of how to fund the program does raise many policy issues.  User fees have a certain attractiveness and have been used before.  But the policy and legal implications of such an option should be more fully explored.  In this regard, last month the George Washington University Regulatory Studies Center published a study looking at the on-budget cost of regulations.  Among other things the study found that “in general, agencies that are at least partially funded by fees on the entities they regulate continue to grow at a faster rate than those that depend on appropriations from general funding” and that “agencies with independent funding authority will have significant increases in their outlays over the two-year 2015-2016 period.”  While this may or may not be a bad or a good result, it is something that should be understood before Congress, the agency and its stakeholders go down this road.

Planning is important.  It appears that the agency needs to work on its blueprint before it jumps into this new undertaking, not matter how important.

Crunch Time at the CPSC

We all know about crunch time—when it becomes apparent that projects are getting backed up and everyone is going to have to work like dogs to try to get the work done. Well, as summer fades and autumn beckons from around the corner, it’s crunch time at the CPSC. While no one can be certain (because deadlines can get pushed in any bureaucracy), based on our FY13 Operating Plan and the Mid-year Update, here are some of the issues I anticipate will soon be hitting our desks for decisions:

  • Final Rule on rare earth magnets;
  • Notice of Proposed Rulemaking on the CPSC staff’s role in voluntary standards committees;
  • Notice of Proposed Rulemaking on voluntary recalls;
  • Notice of Proposed Rulemaking for § 1101 with changes related to §6(b) of the Consumer Product Safety Act (CPSA) about public disclosure of information obtained under CPSA;
  • Final Rule for § 1110 Certificates of Conformity; and
  • Operating Plan for Fiscal Year 2014 (which begins October 1st).

We will have busy times ahead with important regulatory issues. Get ready to comment, participate, and track where appropriate.

Certificates of Compliance: Speak Up!

Remember CPSC’s certificates of compliance? In 16 C.F.R. part 1110? Of course you do! If you’re reading this blog, that is, you should, because I wrote about the draft update the Commission approved in May and described a number of shortcomings that I saw in the draft and the process leading up to its adoption (including the draft’s excess breadth, the refusal of some of my colleagues to ask pertinent questions of the public, the needless expansion of paperwork requirements, and a few other issues). But I voted for the package because I believe our 1110 rule needs updating, and we needed get the public’s views on how best to do that.

Now we’re coming up on the end of the comment period. The public’s comments are due next Monday, July 29, 2013. If you have something to share with us, now’s the time to speak up. You can file your comments here.

1110: Now It’s Your Turn

Last week, we talked about the shortcomings of the Commission’s proposed amendment to its Part 1110 rule on product certifications—hidden costs, confusion on bans and testing exemptions, recordkeeping disharmony, and questions not asked. Today, I issued my formal statement on the vote, which delves more deeply into the history of our first attempt at this rule and what we should have done this go-round.

That being said, I supported the broad outlines of this package. One key reason I voted to move ahead? I believe it’s high time we asked the public what to do about certificates. So now it’s your turn to let us know how we could improve this rule. Talk to me here, but more importantly, talk to the all of us at the Commission by submitting comments here.

1110 Series: Recordkeeping Harmony or Agony?

I’ve been talking about some of the shortcomings of the Commission’s proposed update to our rule on certificates of compliance, Part 1110. I’ve looked at our unwillingness to present all the costs, our inability to provide clarity on certifying to bans, and our refusal to engage the public on how to handle testing exemptions. Today, my concern is with my colleagues’ break with our staff on recordkeeping for the certificates.

The 1110 rule requires manufacturers and importers to include certificates with their products attesting to the products’ tested compliance with all applicable CPSC safety standards. These can be Children’s Product Certificates or General Certificates of Conformity, depending on the product. Most CPC requirements are already covered in Parts 1107 and 1109, leaving GCCs to 1110. As proposed, this revision contains a one-size-fits-all requirement to keep GCCs for five years. On its own, this might not be a problem; we have to set a mark, and five years might be as good as three or seven. But we cannot look at this rule on its own, as my colleagues are unfortunately doing, because doing so creates unnecessary confusion.

This rule rests on the testing rules, and those rest on safety standards. These other rules frequently contain their own recordkeeping provisions. Our rule on flammability standards for mattresses, for example, requires manufacturers to test prototypes and then keep the records for as long as the product is on the market, plus three years. Those test records, then, could be discarded after four years or hang around for decades. Even within one product, the requirements that already exist vary with circumstance, and that variation exists throughout our regulatory arena.

Recognizing the differences in the standards’ requirements and my colleagues’ preferences for keeping records for longer, I proposed a compromise tying the retention requirement for GCCs to their underlying standards, defaulting to five years for any certificate based on a standard with no recordkeeping mandate. My colleagues did not agree, and insisted on a universal five-year mandate. Since CPCs all have a five-year minimum, they argued, imposing the same requirement for GCCs would “harmonize” our certificate rules.

“Harmonizing” requires that the notes be in the same key. Imposing one regulatory scheme’s parameters on another simply for the virtue of nominal similarity while ignoring their underlying differences is as unsound as “harmonizing” your children’s closets by giving them all the same size pants, no matter their ages. Yes, they’re in harmony, but someone’s going to wind up with a bad fit.

In this instance, the more valuable harmonization would have been matching the certificate’s retention time to that of the rule that creates the standard and the test on which that certificate is based. I was pleased my colleagues were at least willing to include a request for the public to comment on the recordkeeping retirement, and I hope they read those comments with open minds.

1110 Series: If We Wanted Your Opinion…

Over the past couple days, I’ve talked about how the Commission hid the ball on costs and actively avoided clarity for product bans when we proposed to amend our certificates of compliance rule, the 1110 rule. Today, the issue I wanted to highlight is not our failure to make the rule as intelligible as it should be; it’s my colleagues’ refusal to seek intelligibility in our own deliberative process, specifically in how the new rule will deal with products that are exempt from testing to any applicable safety standard.

Our staff originally proposed what I thought was an acceptable approach: If your product is subject to multiple rules and exempt from testing for only some of them, then you have to certify to the ones in force and claim your testing exemption(s) for the rest. But if your product is exempt from testing under any applicable standard—whether your product has one or more testing exceptions—you don’t need a certificate just to say that. To me, this seemed not only a reasonable opportunity to minimize unnecessary burdens but also more consistent with the law, which bases certificates on testing.  Requiring a certificate with no information other than an exemption is wasteful and contrary to the purpose of the testing regime.

My colleagues were uninterested in these benefits. Arguing that having more pieces of paper to shuffle would expedite work at the ports, they amended the proposed rule to require companies to create, provide, and maintain certificates that say nothing more than, “I’m exempt from testing to the standard.” Although I do not think such a certificate is necessary, I thought public input on the question could be helpful, so I proposed returning to the staff’s original language and asking for comment on the safety, efficiency, and cost implications of my colleagues’ approach. My colleagues were not interested in asking a question, and decided to plow ahead. (My colleagues did less-than-helpfully note that the public could still comment on the approach.)

The rule they insisted on might turn out to be the efficient one. We might hear from commenters that consistency in certificates is more useful than skipping hollow ones. What baffles me is my colleagues’ refusal to even solicit public input on the point, particularly when they are claiming benefits that, if real, the regulated community would likely endorse. Dogged refusal to invite any other perspectives is not the hallmark of reasoned decision-making.

Tomorrow, we’ll continue this discussion of the areas where the 1110 rule could use improvement before it’s final.


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