Archive for the 'Risk Analysis' Category

Court to CPSC: Your Magnet Rule’s a Turkey

Zen Magnets, the tiny Colorado company that has challenged the CPSC’s actions turkeyregulating small, powerful magnets, will be having a very good Thanksgiving this year.  That is because, once again, Zen has shown that it is possible to fight the federal government and win.  Today the United States Court of Appeals for the Tenth Circuit ruled that the CPSC’s safety standard banning the magnets sold by Zen did not withstand judicial scrutiny.  The court told the agency that if it wanted to regulate magnets it needed to follow the requirements of the Consumer Product Safety Act, and that it should go back to the drawing board and rethink its justifications for the rule.

The CPSA requires that the agency do a cost-benefit analysis and make findings that identify the nature and degree of the risk of injury weighted against the public’s need for the product and then regulate in the least burdensome manner possible.  The Court found that the agency’s analysis was deficient.  The court found that the agency overstated the number on injuries and neglected to consider the public utility of many of the uses of the product.  In other words, the statutory requirement to weight the costs and benefits of a proposed action is a critical part of regulating.  My experience in the last several years of my term as a CPSC Commissioner was that this statutory requirement was seen as an annoyance rather than as a tool for informed decision-making.  Perhaps the Tenth Circuit’s decision will change the agency’s approach to using this statutory tool.

The agency’s approach to regulating magnets has been characterized by an “ends justifies means” mind-set.  The agency worked to cut off the ability to sell the magnets through retail channels by “asking” retailers to stop selling the product.  The agency sought to recall the product, knowing that consumers would not respond to the recall but also knowing that this device could stop further sales.  The agency sued those few distributors who had the fortitude to challenge the agency’s action.  The one company that has stayed the course is Zen, and its success rate has been quite remarkable.  The administrative law judge that heard the recall action ruled in Zen’s favor.  Now an appellate court has found that the rule the agency issued to ban future sales of the product is defective because it blew by statutory requirements that provide for balanced decision-making.

Zen is like a little Yorkie terrier that has grabbed ahold of the ankle of the CPSC and will not let go.  Yet, through its determination to challenge what it believes is over-reach by the federal government, it has forced the agency to reexamine its approach to a serious issue.  It may be that, through Zen’s actions, the CPSC will come to understand that it can protect consumer safety without disregarding basic notions of due process.  What a good Thanksgiving that would be.

Play at Your Own Risk

NO

Recently I was up in New York and met with two insightful and smart people I want to introduce if you do not already know them.

Phillip Howard is a lawyer, civic activist and the founder of an interesting organization, Common Good.  Part of the mission of the organization is to get back to a place where citizens can take responsibility for making sensible choices:  “Making choices for the common good is impossible if everyone is tied up in red tape. Reclaiming responsibility requires a basic shift—where law sets boundaries for free choice instead of dictating choices for the lowest common denominator. . .Common Good has developed practical solutions to bring reliability and balance to law in healthcare, education, and civil justice, as well as in areas such as children’s play. . .”.  With respect to this last item, the concern is that if all risk is taken out of play, our children will not be prepared for the risks that life inevitably throws at them as they mature.

This brings me to the second person I want to introduce—Lenore Skenazy.  Lenore is a journalist, mother, and the creator of Free Range Kids.  The (tongue-in-cheek) purpose of Free Range Kids is to fight “the belief that our children are in constant danger from creeps, kidnapping, germs, grades, flashers, frustration, failure, baby snatchers, bugs, bullies, men, sleepovers and/or the perils of a non-organic grape.” While Lenore’s writings are amusing, she does make the serious point that when the line between real and speculative risk becomes so blurred—which she contends is happening more and more—our children suffer as a result.

From my perspective as a former CPSC Commissioner, I do fear that the agency, when it is regulating, too often discounts the importance of personal responsibility on the part of consumers.  The result are regulations that try to address every possible risk, real or imagined, rather than actual risks that real-world data and science have demonstrated need addressing.   Imaging the worst-case scenario all the time cabins in our kids but gives government regulators a very wide swath indeed.

Why Cost Benefit Analysis Makes Sense

I’m not the only person talking about making federal regulations smarter. As I noted in my Politico piece last week, the Regulatory Accountability Act would make agencies take the costs and benefits of their regulations more seriously before they finalize them. This is something that the CPSC has not done with rules issued under the Consumer Product Safety Improvements Act, because the Act specifically gave the agency the opportunity to opt out of doing cost-benefit analysis.  Happily, one of the chief architects of the CPSIA, Sen. Mark Pryor (D-Ark) has joined with Sen. Rob Portman (R-Ohio) and others to make sure that the CPSC and other agencies do a better job of considering the impact of rules before they issue them. These two senators take to the pages of Politico to discuss the need for a better regulatory process. As they explain:

Employers…say they would like to expand and add jobs, but the regulatory environment has become too uncertain and costly.  Over-regulation now tops the list of ‘most important problems’ faced by small businesses…now is the time to build a more job-friendly regulatory system. This bipartisan blueprint would do just that.

It is unfortunate that the CPSC did not think about minimizing regulatory cost as we busily churned out regulations over the past several years.  Maybe that will now change. 

Read their piece here.

End Government by Guesswork

Regulators need good data to make good policy. As President Obama made clear yesterday in his speech to Congress, it’s important to reform regulations that are “unnecessary[] or too costly.” He demanded that federal agencies “eliminate rules that don’t make sense.”

But over the last two and a half years, the Commission hasn’t taken the time to make sensible rules. Instead, we crystal-balled benefits and ignored costs that we refuse to measure. And since our rules came into effect, costs for consumers have gone up needlessly as companies pass their costs on or leave markets entirely. These results are unnecessary and do not benefit consumers. We could have minimized them by performing cost-benefit analyses. Today, Politico posted my op-ed explaining in more detail why cost-benefit analysis makes for smart regulation and why the CPSC needs to get back to competent, sensible regulating. You can read it here.

A Voice of Reason

If you head over to reason.com, you’ll find a column by A. Barton Hinkle that deftly clarifies what the debate is really about when CPSC (or any other agency) is thinking about regulating something. The argument isn’t about whether or not regulations should exist at all or whether our modern lives need any rules. Clearly, they do.

The debate is about where to draw the line. Hinkle writes, “if a . . . rule can prevent 1 million birth defects at a cost of only one dollar, then the regulation merits adoption—and if a regulation would prevent only one birth defect at a cost of $100 trillion, then it does not. In the real world regulations fall within narrower parameters.”

That is where our focus has to be at every Commission meeting. We need to take a regulatory Hippocratic Oath: “Do more good than harm.” Sometimes, that goal will rest on the broad question, to regulate or not to regulate. Most often, however, it will depend on how we choose to regulate and how carefully we draw the lines.

As an example, look at our debate back in July on whether to lower the lead standard for children’s products down to 100 parts-per-million—that is 99.99% lead free. Common sense and the language of the law that required that debate suggested we should look at different kinds of products differently and add a degree of practicality to our decision. Lead in a doorknob and lead in a pacifier are two very different things.

Instead of recognizing that and actually digging into the real problem, we treated the entire universe of children’s products with one heavy hand. We reached for our largest regulatory hammer instead of a scalpel, and we shifted even more costs to businesses when we glibly told them that, if they wanted an exemption, they should come beg us to do the compartmentalized analysis we should have done up front. The result will be more money—and maybe more jobs and companies, too—lost to nothing but process. We could have avoided that result by using our expertise and resources to do the legwork on our own.

I hope we’ll do the hard work in the future, rather than hiding clumsy solutions behind emotional strawmen and cute catchphrases. I hope we’ll listen to the voice of reason.

Regulatory Malpractice

In a decision that surprised few, the CPSC voted today to ignore common sense and regulatory conscience. We witnessed a majority putting its last grasp of political power ahead of doing what was right.

In 2008, Congress required that we put in place a rule telling the regulated community how to test and certify that the products they make meet the relevant standards. The deadline Congress imposed has long since passed, but we all agreed that the details of the rule proved much harder to write than its basic idea did. Staff put much time and effort into a rule with some solid pieces that I could support. Then the majority, all behind closed doors, summarily dismissed these changes and determined they knew better than our experts. I cannot support their changes, and I cannot ignore their tactics.

The way the majority has handled this rule is, in my opinion, regulatory malpractice. They ultimately didn’t listen to staff, they really didn’t listen to Congress, they didn’t sincerely listen to the regulated community, and they certainly didn’t listen to their fellow Commissioners. All parties pointed in the direction of re-proposal so that we could hear and learn from public comment on the significantly changed rule and the new law surrounding it. Instead, the majority seemingly pushed this through because they soon would not be a majority.

Their reckless disregard for the value of public input in writing regulations is stunning. Other agencies have sought extra public comment when proposals or facts changed. Here, we had a new law change the framework supporting a rule, and, still the majority said we will listen to public comment only after we vote out the thing the public will be commenting on.

The majority is quick to suggest that seeking re-proposal is seeking delay. That’s pure fiction. I offered an amendment to re-propose this rule in light of the statutory changes Congress made, to make the rule better and more likely to stand up in court. Under my proposal, the rule still would have taken effect within the same timeframe as the rule passed today. The majority had a chance to get this done better and faster. Instead, they blew it.

My heart aches for any family who has lost a child due to a faulty consumer product. The pain they feel can never be dismissed or diminished. That pain, however, cannot justify irrational decision-making or misuse of power.

There’s an old lawyer adage: When you have the law on your side, pound the law; when you have the facts on your side, pound the facts; when you have neither the law nor the facts on your side, pound the table. The table-pounding by my colleagues today speaks for itself.

This arrogant dismissal of input from both peers and the public on such an important vote betrays the public trust we bear to implement statutes fairly, openly, and responsibly.

Jumping off the High Dive, Blindfolded

Would you jump into a swimming pool without looking just because a colleague told you to do it? Wouldn’t you want a little more information?

Well, that’s exactly what the Commission is about to do as it votes again on the question of what constitutes an unblockable pool drain. This vote will really be a pre-determined decision to flip-flop CPSC policy based on nothing more than a single Commissioner’s change of mind.

The Virginia Graeme Baker Pool & Spa Safety Act requires that pools either have unblockable drains or have back-up systems that will shut down the suction in the pool when those systems sense that a drain is blocked. Approximately 18 months ago, after public input, we interpreted the law to mean that a drain with a properly installed unblockable drain cover constituted an unblockable drain, so that a back-up system was not required. This interpretation was based on advice from our lawyers and technical staff. It also had the effect of preventing drowning from happening rather than addressing the problem after a person ran into trouble. The vote was 3 to 2, with Commissioner Adler joining Commissioner Northup and me in approving the interpretive rule. Since then, he has changed his mind.

Though Commissioner Adler has the right to apply his own opinion to our statutes as he votes (even changing his mind 18 months after a vote), prudence says practical realities should always inform our policy decisions. Among other things, we should consider how many people relied on what we told them 18 months ago and the impact of that reliance. I myself am open to opting for a new course if the record and arguments before us make the case. A majority of the Commissioners apparently believe we don’t need to consider any record, arguments, or practical realities, just vote.

Commissioner Adler says he is “a big fan of information,” but we will have none. He has said he is “dead set against” including that information in the conversation. He tells us it isn’t necessary, and the Chairman agrees. Sadly, they’re right since the outcome of this vote is predetermined and now we are only going through the motions. Having actual data and information would be necessary for a genuine exchange of ideas followed by a vote that relied on that exchange.

Three Commissioners are again stonewalling, saying I will have to agree or disagree with Commissioner Adler’s change of mind in a vacuum. Would a Request for Public Comment be such a bad approach here when the agency is reversing a policy developed after public input and relied upon by the public? Our staff is instructed not to ask the public now to comment on this issue. In fact, at a recent meeting, I was told it was “out of turn” for me even to ask why we wouldn’t have any of that vital information.

We’re told that’s because we already “know what we’re going to know,” and the majority has ensured that statement is true by making sure we don’t accidentally learn anything else. All we will have is Commissioner Adler’s changed mind. Sounds like regulating in willful ignorance. Shame on the Commission.

Majority’s Plan: Ram it through while we can

The past three days in this blog I have discussed my disagreements with the three-member majority on the Commission about the pending testing and certification rule they plan to ram through in October.

  • The proposed rule applies a one-size-fits-all approach to third-party testing that is guaranteed to be a misfit rather than requiring third-party testing where it is the most necessary (i.e., where the risk is highest);
  • The proposal needlessly sets detailed definitions of a “reasonable testing program” in regulatory stone; and
  • The voluntary component part testing rule—which holds the promise of actually lowering costs and for which work was completed some time ago—has been needlessly held back while we work on the testing rule.

I also question the insistence on rushing this flawed product through. H.R. 2715, passed just weeks ago, expressly instructed us to consider the costs of our testing rules and get public feedback on how to mitigate those costs while still ensuring the safety of children’s products.  It would make sense to get that information before we issue the rule, but the three-member majority doesn’t want to do that. I have to ask: If we don’t have time to get it right the first time, when are we going to have time to fix it?

Congress addressed another problem that I had with our proposed testing rule. The CPSIA required companies to submit “random” samples of their products for testing, but didn’t define the term “random.” It would have been good for the Commission to interpret “random” to mean that manufacturers couldn’t rig the game by choosing “golden samples” they knew would comply.

Our proposal, however, did not take that plain-language approach. It read “random” in a much more technical, complicated sense that might have meant lots of money for statisticians but little or no safety benefits beyond those of a common-sense reading.

In H.R. 2715, Congress resolved this dispute. The new law makes clear that Congress intended to prevent the cherry picking of samples by striking the word “random” and replacing it with “representative.” We could have done this by interpretation, but we chose to let others clean up our mess after the fact. Sound familiar?

 So:

  • Congress has expressly informed us that the majority was mistaken on at least one key aspect of the testing rule.
  • The new law re-shapes the landscape to require us to look at ways to reduce costs. 
  • The proposed testing rule has serious flaws that will make it more burdensome than it has to be and less effective than it could be.

Given all this, prudence indicates the path forward. We should take a few moments to re-examine what we’re trying to accomplish and how we’re trying to accomplish it. If we do that openly and sincerely, we will arrive at a better product.

Instead, because three members of the Commission want to do all they can while they still have their majority, they are poised to foist a misguided, misconceived, and likely expensive regulation on an already fragile economy. All with the promise that sometime in the future it could be fixed.  Man up and fix it now.

Ready…Fire…Aim

I recently wrote  about my hope that the majority of the Commission would seek and receive public input on our pending periodic testing and certification rule and the costs it will impose before we hand that rule down. I now know that hope was in vain, and three Commissioners will insist on forcing the rule through on the promise that the Commission will fix it as needed over the next year. Perhaps I was naïve to hope that the country’s economic worries, Congress’s direction in H.R. 2715, President Obama’s urging in his Executive Order, our staff’s practical concerns, and just plain common sense might steer the majority away from a course that is both irresponsible government and inconsistent with the spirit of the new law. 

It is now apparent that the final rule will be before us shortly, and the contents of that draft final rule have been predetermined by the majority.  Without getting into the minutiae of the rule, I believe there are fundamental principles it needs to reflect to be effective in balancing consumers’ needs for reliably safe products and businesses’ needs for regulation that places only as much burden as is necessary to meet our duty to consumers.

When the proposed rule came to the Commission in April of 2010, I worried the language did not strike that balance and, actually, made very little attempt to do so.  In fact, when three Commissioners voted down my suggestion that we consider the costs of the proposed rule and regulatory alternatives to meet the objectives of the statute, they declined even to ask about the consequences of the action they are so eager to take.  In the 17 months since, we’ve had clear messages from both Congress and the President that we should consider the costs and benefits of our actions and work to minimize the former while maximizing the latter, but three Commissioners have decided to summarily ignore those calls for common sense.   

The Consumer Product Safety Improvement Act of 2008 (CPSIA) requires that, before a company first introduces a children’s product to the market, it send the product to a third-party lab for compliance testing. It also requires the same third-party testing whenever there is a material change in a product.

The CPSIA further requires periodic testing for children’s products. This means that, as long as a company makes a particular product, it has to test that product at regular intervals to ensure it still complies with all relevant laws and regulations, even if nothing about the product has changed.

The CPSIA, however, gives CPSC the flexibility to decide, based on risk, how and when companies can do their periodic testing in-house and whether they are required to use a third-party lab. Our current proposal requires periodic third-party testing for every children’s product, continuing our recent trend of clumsy, one-size-fits-all regulation that imposes heavy burdens on businesses large and small while doggedly refusing to consider costs, risks, or benefits.

For some categories of children’s products, of course, third-party periodic testing makes sense. It makes sense where the risk is highest, such as for products that very young children are in close contact with for extended periods of time.  However, when a child’s interaction with a product is more distant, intermittent, or incidental, third-party testing may not be necessary or may not need to be done with the same frequency. 

Different treatment for different risks should be intuitive. Any mother would tell you she’s more concerned about the safety of her child’s pacifier than she is about the brass knob on the drawer of a dresser that happens to be in the child’s bedroom. However, three Commissioners are eager to ignore that wisdom and treat the pacifier and the brass knob identically for third-party periodic testing. Not only does this fly in the face of common sense, it also wastes CPSC’s limited resources.

Our new law (H.R. 2715) grasps this common sense. Under it, we can give small businesses exemptions or lower-cost testing alternatives unless they make any of six specific materials or products: lead paint, cribs, pacifiers, small parts, children’s metal jewelry, walkers, and durable infant/toddler products (like high chairs, bath seats, and play yards). In this new law, Congress recognizes that the products on that list are a greater risk and should face more scrutiny. Why shouldn’t we do the same? The CPSIA allows it, common sense suggests it, Congress’s most recent law mirrors it, and resource limitations urge it, so let’s focus the most attention on the biggest risks, rather than setting a bar for the highest risk product and then mandating every other product meet the same demands. 

Regular readers of this blog will know that I am primarily concerned about two things: the safety of consumers, and the unnecessary costs of the regulations we impose.  My concern for costs is at its lowest when risk is at its highest.  If a company is making pacifiers, I want those pacifiers to go through the tests necessary to make sure they’re safe.  I don’t want the tests to be any more expensive or burdensome than they need to be, but whatever costs are necessary are necessary. Conversely, where the risk is lower (if it exists at all), in-house production testing or other QA/QC techniques may be the appropriate way to make sure the products continue to comply.  

This risk-differentiated approach is what I will be looking for in our periodic testing and certification rules.  One-size-fits-all fits no one well.  Let’s tailor the requirements to the risk and require third-party periodic testing where it will make a difference in safety, not just cost.

Bridge Over Troubled Water

In October, Thomas Moore, with whom I have had the pleasure of serving for six years, will end a 16-year tenure of stewardship as a CPSC Commissioner. Like many others, I hope the President nominates and the Senate confirms Commissioner Moore’s successor promptly.

There has been growing speculation as to how the Commission will function if our new colleague’s arrival is delayed. It’s no secret that many of our recent decisions have been contentious, with philosophical disagreements producing frequent 3-2 splits in either votes or opinions. Until another takes Commissioner Moore’s place, the three-Commissioner majority bloc will be down to two, and some worry a four-member CPSC will be immobilized by stalemates.

This dire prediction overlooks an option we’ve had all along: Cooperation. And for an example of how important that can be, we need look no further than Commissioner Moore.

From three years, I served as the acting Chairman of the CPSC. During that time, we had more seats empty than filled, as Commissioner Moore and I were the only members. With only two votes available, and since the law requires at least two votes for any official action, we had to work together if we wanted to get anything done. So we did.

During that time, with an under-funded and under-staffed CPSC, we took important strides to make, among others, portable generators, upholstered furniture, ATV’s and cribs safer, and we started climbing the mountain of work the CPSIA demanded. In the 9 months following the passage of the CPSIA, we issued more than two dozen rules and other decisions. We could not have done any of that work without a commitment to cooperation and civility.

But that collaboration wasn’t just a matter of necessity. Cooperation was—and remains—the most effective way for the CPSC to operate.  Cooperation and collaboration are hallmarks of genuine leadership. Leadership is recognizing that the best time to build a bridge is before the water is troubled. Commissioner Moore and I built such a bridge, but it seems to have been burned.

With the crutch of an absolute majority to lean on, it has not been necessary for the current Commission to collaborate or cooperate. Now, it looks like a seat will be empty and any action will require bi-partisan support.  We will again have a river to cross, but with no bridge to walk. My hope is that we still remember how to build a new one.

The talk about Commissioner Moore’s departure should be limited to how much we’ll miss him, but instead the rancor of the past two years stirs whispers of deep divides and stalemates.  This doesn’t have to be. Every Commissioner wants to protect consumers, as does every CPSC employee. We differ in our approach, in how we choose to balance the consequences of our choices, but we share that common goal.

 My vote will continue to go, as it always does, to the merits of each issue. If we can build another bridge and restore an atmosphere of collegiality and trust, I’m confident we can find enough common ground to allow the CPSC to effectively carry out its mission. The only remaining question is how many bridge builders we have left on the Commission.


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