Archive for the 'safety' Category

Completing Unfinished Business

As the year ends, we often scramble to finish those tasks that have been put off during image.pngthe year.  At the CPSC, several unfinished tasks still need some regulatory housekeeping before the new year with new priorities takes over everyone’s attention.  Finishing outstanding regulatory work that is ripe for completion is just good practice and it furthers the President’s call to make the regulatory process more user-friendly and less burdensome.

The very best example is the outstanding proposed interpretive rule to dramatically change the voluntary recall process.  This rule, which was proposed back in 2013 and has never been finally voted on, would require all voluntary corrective action plans submitted to the Commission by the private party executing the recall be legally binding agreements. It would also prohibit the recalling firm from stating that the submission of a voluntary corrective action plan does not constitute an admission that a product hazard exists without explicit approval by the CPSC staff.  It would allow the agency staff to require the firm to implement a compliance program as a part of the voluntary recall.

The bottom line is that the proposal takes the “voluntary” out of the voluntary recall process and turns existing practice on its head.  While much has been written about why this would proposal would discourage firms from conducting voluntary recalls, with a resulting harmful safety impact on consumers, the proposal remains on the agency books as an unfinished piece of business.  Stakeholders—both product sellers and consumer advocates—have objected to the proposal and Congress has several times refused funding for implementation of the proposed rule.  It is time the Commissioners scheduled a vote on this proposal and then voted it down.

The Commissioners need to take the same action on a 2014 proposal that would change the long-standing regulations assuring the fairness and accuracy of any public statements made by the agency identifying specific products.  The requirement for fairness and accuracy is a statutory requirement added to the statute to assure that the agency did not violate due process tenants by regulating by press release. This was unfortunately happening in the early days of the agency and the Congress stepped in to stop it by passing Section 6(b) of the Consumer Product Safety Act (15 U.S.C. § 2055(b)).  The proposed rule would weaken the current protections that have been in place since 1983 and is contrary to the intent of Congress.  It should be finally voted down.

Also spinning in limbo is the agency’s Retailer Reporting Program, under which major retailers report safety complaints to the agency.  Since the beginning of the program, it has been understood that these reports, which are both voluntary and confidential, would satisfy the legal reporting requirements a retailer otherwise had.  The data collected has the potential to provide insight into developing hazards and could have been a useful supplement to the other data collection activities of the agency.  However, the CPSC changed the reporting underpinnings of the program, creating confusion and making it a questionable undertaking for retailers.  The agency has been “studying” the program for several years and it is time to bring that study to closure.  The CPSC’s regulatory actions must be based on data and the agency’s data sources are recognized by many to be outdated and inadequate.  A redesigned retailer reporting program could potentially augment the agency’s hazard data and be another useful tool to identify hazards in the marketplace.

Finally, it is inexplicable why the Commissioners have not moved to complete work on a proposed rule to modernize regulations addressing the hazards associated with fireworks.  Each year, overloaded fireworks kill or maim consumers.  The test to determine if a firework is “overly energetic” is quite subjective:  that is, CPSC staff listen to how loud it is and make an assessment.  For years, the agency has been trying to come up with a test that is not subjective and that can be implemented by the industry in the field. Working closely with the impacted industry and other stakeholders, the agency staff has now developed a test that can work and has buy-in from the majority of manufacturers.  Votes on this rule modernization have been scheduled and then cancelled without good explanation.  This proposed rule is a prime example of how regulatory reform can help product sellers and consumers alike.  It is time for the agency to move ahead on this proposed rule.

So, my year-end message to the CPSC is:  while housekeeping may not be that much fun, it needs to be done so that new tasks can be tackled in the new year.

 

 

Groundhog Day at the CPSC

In the 1993 classic movie, Groundhog Day, the protagonist is caught in a time loop and forced to repeat things over and over again.  This year, on February 2, the CPSC celebrated Groundhog Day by agreeing to settle a timeliness action brought against Michaels Stores.  For the CPSC, in true Groundhog Day-style, the Michaels’ settlement represents a situation that seems to repeat over and over again.

As I have written before, the pre-2017 political management of the agency was pressuring its staff to insist on large penalties that often seemed detached from the seriousness of the underlying violation.  The underlying policy driving penalties was nothing more sophisticated than “bigger is better” with escalating penalty demands that were not linked to more egregious behavior.  However, in September 2017, a court called out this behavior, (in the Spectrum Brands case involving coffee makers) refusing the agency’s demand for maximum penalties ($15+ million) and instead imposed a penalty just shy of $2 million.  Basically, the court found that the agency did not prove its case that such penalties were warranted.

Now comes the settlement in the Michaels Stores case.  Here the agency alleged that Michaels did not report in a timely manner the fact that nine glass vases, out of almost 300,000 in inventory, over the course of a year, broke causing lacerations.[1]  The agency demanded $7.1 million as an appropriate penalty and the company countered with an offer to pay $ 1.5 million to settle the case.  When the company did not cave to the agency’s insistent demands, the Commissioners agreed to send the matter to the Department of Justice to begin litigation.  After several years of hearings, discovery and the expenditure of who-knows-how-much resource by both the government and the company, the parties have now agreed to a settlement—of $1.5 million.

Both the Michaels settlement and the court’s decision in the Spectrum case illustrate the need for the CPSC to reassess how it imposes penalties.  The arrogant posture of demanding the maximum (or close to it) and curtailing negotiations when a company objects needs to change.  Trying to peg the amount demanded to the seriousness of the conduct would be a good place to start and is what the statute and the regulations demand.

The CPSC plays a critical and central role in assuring that American consumers are not harmed by the products they use every day. The CPSC staff does important and very hard work to carry out the agency’s safety mission.  Unfortunately, the agency’s political leadership has made this job more difficult by imposing policies that are often arbitrary and seem to be motivated by headlines to be garnered or records to be broken.  The agency’s mission cannot be realized without the cooperation of all parties in the marketplace, including product manufacturers.  Marquis penalties, imposed for their own sake, in the end do not engender the collaboration needed for effective compliance and, instead, consign the agency to more Groundhog Days.

 

[1] The agency also alleged that Michaels mislead it by not acknowledging it was the importer of the vases even though the supplier of the vases publicly agreed that it was the importer, labeled the vases with its name as the importer and agreed to recall the vases.

A Wish for the Holidays

 

I have been reading with growing dismay articles that question the commitment of CPSC Acting Chairman Ann Marie Buerkle to protect consumer safety.  Those articles are ill-informed, mean-spirited personal attacks that push an agenda that has more to do with partisan politics than it has to do with consumer safety.

What is especially distressing is that some of this is coming from within the Commission itself.  Consumer safety has always—and it should—engender deep emotion and strong commitment. However, it is critical to the formation of good public policy that differences in points of view are listened to and respected.  Civil and respectful debate must be a part of our process for formulating public policy.  I worry that some, in their zeal to push a position, have forgotten that civil discourse and honest disagreement are the foundation of our government.

Some have accused Acting Chairman Buerkle of being an “extreme outlier” and “very extreme”.  They say that she represents a “radical departure” from the agency’s safety mission.  They also accused her of voting with industry 100% of the time. What silliness!

An analysis of her votes and the statements explaining them shows that she has taken principled positions that are fully appropriate. Most of her votes diverging from her colleagues have been on procedural and process grounds.  For example, she has opposed certain civil penalties, not because she believed the company should get a pass but because of the lack of rigor and consistency in the way the agency imposes penalties. She has been critical of the commission’s penalty policy that seems to be based only on “bigger is better” and not on helping regulated entities understand how to comply with a statue that is judgement-laden and whose interpretation it seems changes with the political winds.   In no way can her positions be equated with “dismantling consumer protection,” but that is what critics say.  She criticized the commission’s rule on phthalates not because she wants to support chemical companies (oh, come on. . .) but because she is rightly concerned by the direction and willingness of earlier political leadership to ignore current data.  The portable generator rule raises real questions of jurisdiction and resources.  If a majority of commissioners wish to ignore these issues, so be it, but why is it wrong to point out the problem? Her critics have either not read her statements or do not wish to hear facts that get in the way of predetermined political views.

Acting Chairman Buerkle is perhaps the most qualified person ever to be nominated to be chairman of the CPSC.  While she brings solid legal skills to the office, notably, she is also a trained health professional—a skill set never before on the commission—and so brings a point of view that is essential to the important issues the agency must deal with.  Finally, she is the mom of six kids.  If there was ever a real consumer—as opposed to a political partisan—it is her.

My holiday wish is that the debate over the direction of the CPSC can be conducted honestly at a policy level.  Questioning the character of a dedicated public servant in order to advance a political agenda is dispiriting.  With respect to the CPSC, many have deserved coal in their stockings for too long.  It’s time to say these tactics are not right.

 

 

 

 

 

 

 

The Price of Hubris

Late last week, the CPSC community received one of its rarest gifts: A judicial opinion in a litigated civil penalty case. Judge William Conley of the U.S. District Court for the Western District of Wisconsin calculated the penalty Spectrum Brands owed for failing to report handles breaking off of Black & Decker SpaceMaker coffee pots and for selling 641 units after they had been recalled. The time Judge Conley took (over seven months) was surprising; the result was stunning. While the government argued that the maximum penalty of $30.30 million could be assessed for the two separate violations, Judge Conley determined that a much smaller number was appropriate: $821,675 for the failure to report and $1.115 million for the sale of recalled goods.

Pundits of CPSC enforcement policy will devour every morsel of the Spectrum case and I’ll be eager to read their work. But what I find most compelling is the extent to which this result highlights what, for the last eight years, has been the defining characteristic of CPSC’s attitude toward the companies it regulates: Hubris.

Judge Conley wrote that CPSC “failed to establish” the severity of the alleged defect, “introduced no admissible evidence regarding any injuries that a consumer actually sustained,” and “offered no evidence with respect to either [a history of non-compliance or a failure to respond to inquiries],” two factors CPSC calls out in its penalty rules. In short, CPSC phoned in its argument. The agency was so persuaded by the merits of its own position that it assumed Judge Conley would defer to its inherent – and, presumably, inerrant – wisdom.  Instead the trier of fact put the agency through its paces and demanded proof that the other side was as guilty as CPSC asserted it to be.

The agency’s arrogance is hardly new. In 2009, the CPSIA’s ten-fold penalty cap increase kicked in. Since then, CPSC’s political leaders have urged staff to drive penalty settlement totals ever higher, with little regard for tethering any penalty to the merits of the case. Last year, at the annual symposium of the International Consumer Product Health and Safety Organization (ICPHSO), then-Chairman Elliott Kaye called for a “double-digit millions” penalty. Mere weeks later, his attorneys delivered a $15.45 million settlement with Gree Electric Appliances, Inc. It is hard to escape the narrative of the then-Chairman driving for bigger numbers for the sake of bigger numbers.

At the same conference as Kaye’s “double-digit millions,” CPSC’s Office of General Counsel asserted that, because any product sold in any quantity could technically be subject to a maximum penalty, any demand below that already represented a magnanimous compromise on the agency’s part. Of course, if that had been Congress’ intent, there would have been no need for either statutory factors or a requirement for CPSC to interpret them, but this wasn’t enough to keep CPSC from expecting companies to be grateful any time it didn’t kick them quite as hard as it could. Bottom line is that the penalty amounts demanded by the agency have been steadily going up, with no attempt to link each higher penalty to more egregious behavior.

Chairman Buerkle and Commissioner Mohorovic consistently, but so far unsuccessfully, have been arguing for a penalty policy that is something more than “bigger is better.”  Now the court in Spectrum has agreed, going through a rigorous analysis of how the statute and the regulations should be applied to come up with a penalty amount.  Of course, this analysis is what the agency should have been doing all along but was not. Instead the agency seems to be convinced that its word is gospel, any penalty number it might choose to name is justifiable, and the only ones complaining are the companies who care nothing about their safety obligations.

The CPSC expects everyone else to accept this caricature without question. And for some time, that assumption has been correct. Companies have been quick to settle and slow to criticize, calculating that the fight isn’t worth winning.  However, CPSC’s blinkered compulsion to squeeze harder is encouraging more resistance. As one example, CPSC is currently litigating another failure-to-report penalty case against Michaels Stores–for not rushing to inform the agency that glass breaks.

Spectrum and Michaels may well see themselves members of a growing club of companies who are pushing back against the CPSC’s imperiousness. They are reminding us that, sometimes, the only way to deal with a bully is to punch back. If it doesn’t sincerely examine its own flawed, self-important assumptions, CPSC can expect to take more punches from companies and from courts. And, like all victims of hubris, it will have only itself to blame.

Remembering John Byington

It was with real sorrow that I learned of the passing earlier this month of S. John Byington, the former chairman of the CPSC.  Like many others in the product safety world, I counted John as a true friend who was always ready to provide valued advice and counsel.

A pharmacist and a lawyer by training, John brought a respect for both law and science to the agency.  As chairman from 1976 through 1978, during the early years of the agency when it was easy to demagogue issues, he insisted that the agency have a strong basis in both science and the law before tackling the important issues before it.

John was a man of many interests.  After leaving the CPSC, his career included not only traditional law practice but also a number of entrepreneurial pursuits as varied as starting a microbrewery and a leading legal recruiting firm, LegalLeaders.  I had lunch with John earlier this year and, as always, marveled at his enthusiasm for life and his willingness to reach out with friendship and caring to those around him.  He made important contributions to product safety and will be missed.

Tell CPSC What You Think

One of the very positive hallmarks of the new leadership at the CPSC is a desire to hear from all interested stakeholders on how to more effectively push forward the agency’s safety mission. The agency has offered several opportunities for input and for those of us who share that goal, these opportunities should not be ignored.

First, the agency will be conducting a workshop on ways to improve the recall process, including the effectiveness of recalls.  Recall effectiveness is a perennial topic of conversation at the agency so it is gratifying that the agency is again looking at this topic, but hopefully from a new perspective.  Both as a Commissioner and now, in private law practice, I often hear complaints about the opaqueness of the process. Participation in the workshop offers an opportunity to give real suggestions on how to make the recall process work better.  The workshop will be held on July 26, 2017 at the agency headquarters in Bethesda.  Those interested in participating must sign up with the agency no later than July 3.  Here is more information about the workshop.

Second, the agency is requesting comments on ways to reduce the regulatory burden imposed by agency rules in ways that do not diminish safety.  This effort is especially welcome since many of the regulations issued by the agency over the past eight years did not consider ways to accomplish safety goals in less burdensome ways.  When Congress told the agency to try to find ways to reduce the burden of testing, the agency went through a fantasy effort to comply and, not surprisingly, came up with very little.  Indeed, about the best it could do was exempt from testing toys made entirely from untreated wood from the trunks of trees (but not the branches—who knows what could be in branches!).  (See here.)

Reducing unnecessary regulatory burden is important since this engenders respect and support for the agency. Rules that are outdated, overly complex, or impose requirements without regard to real and measurable safety results should be identified and either changed or repealed.  The agency’s effort to collect information on burdens imposed by its regulations is a welcome first step in this process.

 

Regulatory Tools Are Only As Good As The Craftsmen Who Use Them

There has been a great deal of discussion, and in some circles much hand-wringing, measure twiceabout President Trump’s regulatory reform initiatives and how they will impact independent agencies like the CPSC. The Office of Information and Regulatory Affairs (OIRA) within OMB is a key player in the debate since OIRA reviews and can influence changes in the significant regulations coming out of cabinet agencies. Whether OIRA should have that same authority over rules issued by independent agencies is the subject of “hot” debate in administrative law circles. Neomi Rao, a law professor from George Mason University, is the President’s pick to lead OIRA. Professor Rao has made known her views that OIRA should have greater control over independent agencies.

This coming week, the CPSC is about to hand those who wish to see greater control and oversight of independent agencies by OIRA at major argument to use in that debate. The CPSC is scheduled to vote on whether to issue a notice of proposed rulemaking (NPR) to require that all table saws (including bench saws, contractor saws and cabinet saws) have what is known as “active injury mitigation (AIM) systems” – that is, saws should be able to sense when a user’s finger is coming close to the blade and automatically shut itself off, preventing injury. While superficially this may sound like a good idea, and, at the end of the day, perhaps may even be one, there are a number of reasons why the agency’s actions to start the last stage of rulemaking to require this technology should draw the attention of OIRA.

First, this rule will be a major rule—the type that OIRA usually examines. The CPSC estimates table saw injuries costs the U.S. economy $4 billion annually. It estimates that costs of the rule to manufacturers will be between $170 million and $345 million annually. The CPSC issues very few major rules so both the benefits and the costs the agency proposes are eye-popping.

Second, the AIM technology is patented by an inventor who is now marketing table saws equipped with it. His network of patents is quite extensive and he recently successfully challenged the only other company that had tried to develop a version of this technology. He has stated his willingness to license the technology to the industry should the CPSC mandate it, and the agency estimates that this will result in approximately $35 million coming his way each year in annual licensing fees. The CPSC staff, by its own admission, does not know how extensive his patent network may be and, hence, does not know if it is possible to develop AIM technology without infringing on his patents.

Third, and most important, the agency has not done its homework properly and therefore, issuing an NPR is premature. In 2007 the Commission directed agency staff to study the types and severity of injury associated with types of table saws. In addition to the ’07-’08 study, in 2014, the agency staff looked at injuries reported directly to the agency. As was discussed extensively at its briefing last month, both of these studies are seriously and critically flawed and would not support the rule, if the Commission were to issue it. So the agency is now proposing a rule and asking for public comment even though it does not know such basic information as what type of saw causes injury or whether certain saws can be eliminated from the requirement of the proposed rule. The agency has no information on injury patterns from different types of saws and has little information on whether new safeguards on saws are being used or are working.

The agency proposes to close this embarrassing data gap by doing a study throughout 2017 to develop the missing information, even while it has the proposed rule out for public comment. However, if it proposes a rule and asks the public for comment without providing this vital data, it defeats the purpose of public comment. It may well need to seek further comment or risk a successful court challenge.

It is curious why a majority of the commissioners are so eager to advance a proposal that is missing critical information to make the public comment period useful and that would allow both the agency and the public to better assess the competing issues the rule presents. It suggests that the real purpose of the 2017 study is merely to augment an administrative record that is currently too weak to support the proposed rule and not to influence the direction of the proceeding. And that suggests minds may already be made up. If so, then OIRA is right to take a look at this activity since that is not how rules should be made.


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