Archive for the 'safety' Category

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 Rules that are outdated, overly complex, or impose requirements without regard to real and measurable safety results should be identified and either changed or repealed.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.

Welcoming New Leadership at the CPSC

Although it took a while, new leadership has come to the Consumer Product Safety Commission.  After a flurry of last minute activity—and a rejection of the Administration’s direction concerning new regulations—earlier this week, Elliot Kaye stepped down as agency chairman. He has announced that he plans to remain as a commissioner. Commissioner Ann Marie Buerkle, who was recently elected as agency vice chairman, now takes over as Acting Chairman of the agency until a permanent chairman is nominated by the President.

Trained as both a nurse and lawyer, Chairman Buerkle brings the type of experience the statute contemplated when it directed that commissioners be appointed by reason of “background and expertise in areas related to consumer products and protection of the public. . . .”  Having a former medical professional lead the agency will be an interesting and useful change of perspective.  And as a former Member of Congress from New York (where she served on the Committee on Oversight and Government Reform), she can work to mend the current strained relationship the agency has with the Hill.

Chairman Buerkle will not have a working majority as she seeks to reorient the agency.  For readers who keep score, here is the commissioner line-up:

  • Commissioner Marietta Robinson (D) – term ending October 2017
  • Acting Chair Ann Marie Buerkle (R) – term ending October 2018
  • Commissioner Joe Mohorovic (R) – term ending October 2019
  • Commissioner Elliot Kaye (D) – term ending October 2020
  • Commissioner Bob Adler (D) – term ending October 2021

Nevertheless, Chairman Buerkle can make incremental changes even without a working majority of commissioners.  Perhaps the most significant will be to let all stakeholders—consumers groups and industry alike—know that their perspectives are valued.  Changing the current philosophy with respect to product sellers from “us v. them” could go a long way to bringing the agency back to a collaborative relationship that focuses first and foremost on solving safety problems and less on punishment and distrust.

It was a real pleasure to have Chairman Buerkle as a colleague when I was a member of the commission.  She is thoughtful, listens carefully and truly wants to understand how agency actions impact folks outside the Washington beltway. As we have heard before, change is good.

Closing the Books on 2016

This is a time for reflection.  Looking back on the past year, it really was not a great
one for the CPSC. And, sadly, many of the agency’s problems closing-bookswere of its own making. While many of the initiatives that are either ongoing or started in 2016 will continue into 2017, others will be consigned to the dustbin of bad ideas.  And most importantly, 2017 will bring new leadership and with it fresh ideas and perspectives to address the important and complex issues with which the agency must struggle as it works to fulfill its mission to protect consumers from unreasonable risks.
From my perspective, as a past regulator and now as a practitioner trying to help those in the regulated community who sincerely want to stay on the right side of the compliance line but who find that line often moves or disappears altogether, here are some areas where the agency fell down and one hopes could do better next year.

  • A penalty policy that hardly qualifies as any kind of rational “policy” at all. The agency rewrote the regulation dealing with the factors to be considered when applying penalties back in 2009 to give more transparency to the process. Instead, the process has become anything but transparent. Agency enforcement staff has made clear that it has little interest in negotiations over penalty amounts, which is where the application of the penalty factors would come in.  Current agency leadership has stated that its penalty policy is “more is better.” In trying to appear as a tough cop, the agency instead comes across as a bully.  While that result may be an effective scare tactic, it serves to drive away companies who might otherwise seek out the agency when potential problems arise and does not help to advance collaborative problem solving which the agency needs to advance its mission.  Much has been written about the agency’s shortcomings in this area and let’s hope that 2017 brings about needed change here.
  • An “ends justifies means” mentality that allows for skirting regulatory fairness and due process. Or put another way, government always knows best. What better illustration of this attitude than the agency’s attempts to regulate small rare earth magnets (SREM’s). Even though the industry leaders proposed a collaborative effort to regulate warnings and packaging of the product back in 2011, the agency rejected that offer and instead, through recalls and regulation, acted to ban the product.  The last hold-out, a tiny U.S. company in Colorado—Zen Magnets–has consistently been prevailing in court against the full force of the U.S. Government.  In the meantime, Chinese imports of SREM’s are being sold without any effort by the CPSC to crack down.  I guess that the CPSC thinks that only magnets sold by U.S. companies are dangerous. Certainly magnets present a hazard if swallowed.  However, they can be used safely in many different art, science, educational and recreational applications.  Perhaps in 2017, the agency could consider how to step back from a ban to a regulation that allows the product into the market while providing the kind of warnings and child-proof packaging that alerts parents to the hazards the product presents if swallowed by small children.
  • Will the agency consider applying modern regulatory concepts to rule writing to assure they are effective? In a recent statement, Commissioner Mohorovic is critical of the agency’s purported effort review its standard dealing with mattress flammability.  This review is required by the Regulatory Flexibility Act which mandates review of significant rules every 10 years and the mattress rule falls into that definition.  Even though the staff found that the rule was not as effective in protecting the public as the agency had predicted when it was issued 10 years ago, it did not recommend changes.  This is just one example of the agency’s reluctance to go back to see if what it is doing is really working to protect consumers.  Commissioner Mohorovic’s suggestion that a retrospective review plan be built into rules as they are being developed is a good one and would help assure that the rules the agency writes actually provide the protection the agency says they will.  To date, agency leadership has only given lip-service to the suggestion but has done nothing real to effectuate such a plan.  Perhaps in 2017, this will change.
  • Will 2017 bring some closure to the never-ending dithering on upholstered furniture flammability regulation? For a while in 2016, it looked like Commissioner Buerkle had found a path forward for addressing upholstered furniture smoldering hazard, but that was not to be. Instead, a majority of the commissioners decided that virtually every flammability hazard needed to be regulated so are now looking at how to address the hazard of large open flame fires  where upholstered furniture is not necessarily the first ignition source but could possibly be the second or even the third source of ignition.  To do this, commercial grade materials, expensive barriers and flame retardants will necessarily be part of the equation. In the meantime, pending before the agency is a petition to ban flame retardants.  Boy, what a mess! A consumer rebellion may be on the way!
  • We started the year with flaming hover boards and ended it with flaming cell phones—both caused by lithium ion batteries. Rather than looking at the application first, would it not be better to start by looking at the batteries? The agency seems to be going about this from the wrong direction.
  • A continual point of concern for agency stakeholders is a communications and press office that makes policy rather than communicates it. In the meantime, complaints are common about press releases that contain inaccuracies or are held up for trivial reasons, thereby delaying recalls. This result directly impacts consumer safety, cannot be defended, and yet is occurring.  Again, room for improvement in 2017.

I could go on and on but 2017 is just around the corner.  Change will not happen immediately but is inevitable.  Working together and in a spirit of support for the agency, 2017 can be a great year for the CPSC. What a happy thought to take us all through the holidays and into next year!

 

Let’s Play Penalty Roulette

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Playing games at the CPSC

Commissioner Mohorovic has just issued a thoughtful statement discussing the black hole that the CPSC calls its civil penalty policy.  This statement follows another he filed this week discussing the $4.5 million penalty lodged against Sunbeam for a single-brew coffee maker that squirted out hot water when not used properly.

The Commissioner’s most recent statement precedes next week’s agency hearing on priorities for the upcoming year.  He outlines a number of ways to address the process for assessing penalties—a process that, at best, can be called veiled and perplexing and, at worst, seems like penalty roulette.  Those concerned about public policy and consumer protection should carefully review his suggestions for putting more discipline into an arbitrary process.

The CPSC Chairman has publicly stated his desire to see penalties increased.  While disagreeing with that view, I do believe that it could be achieved more effectively if the agency were up-front about how they calculate penalties.  It is not sufficient to say that this calculation is determined by applying the various factors set out in the regulation dealing with civil penalties.  The settlement agreements over the past several years have been decidedly uninformative about how various factors were applied.  As one who was directly involved in crafting that regulation, and as I have written before, I believe that the current practice is at odds with the underlying intent of the regulation—that is, to add more transparency to the process.

Commissioner Mohorovic is to be applauded for his persistence in highlighting the problem.  Not only has he accurately described the problem, he has come up with creative suggestions for solving it.  While Commissioner Buerkle has repeatedly expressed her dismay for the manner in which penalties are assessed, it will be interesting to see if the other commissioners pay any attention.

Last week it was $3.75 million for glass tumblers that can break. This week it is $4.5 million for coffee makers that can spill out hot water if not used according to instructions.  Can’t wait to see what next week brings—but, for sure, it will be a crap shoot.

It’s Not Just Size That Counts

Today, the CPSC announced a civil penalty settlement agreement for an eye-popping $15.45 million.  The settlement involved dehumidifiers sold by Gree Electrical Appliances Inc.  The penalty is the statutory maximum that could be imposed and is well beyond any penalty imposed by the agency at any time in its history.

CPSC alleged that Gree:

  • knowingly failed to report a defect and unreasonable risk of serious injury to CPSC  with dehumidifiers sold under 13 different brand names (the dehumidifiers were recalled in 2013);
  • knowingly made misrepresentations to CPSC staff during its investigation; and
  • sold dehumidifiers bearing the UL safety certification mark knowing that the dehumidifiers did not meet UL flammability standards.

Given the size of the penalty, one should expect that the alleged misconduct to be off-the-charts in terms of the severity of injury to consumers.    Yet, even though the earlier related recall involved well over 2 million items and significant property damage from fires caused by the defective product, there are no reports of injury.  In fact, there is little to distinguish this hazard pattern from others involving defective appliances posing serious fire hazards where penalties have been fractions of the amount imposed in this case. Certainly there was potential for serious injury but the fact remains that there were no injuries.  While there was substantial property damage, presumably this was covered by insurance and it is not the purpose of the CPSC to protect insurance companies.

There is nothing in the agency’s press release or the settlement agreement itself to tell us why this case was so more egregious than other cases involving violations of the requirement to report hazards to the agency.  One has to assume then that it was the alleged misrepresentations to the government and the unauthorized use of the UL mark that bumped the penalty up to the limit.  But other than these general statements and based on what has been made public, it is not clear what actual conduct triggered such a huge penalty.  For those trying to stay on the right side of the law, the government has an obligation to be more transparent in describing the activity that warrants this type of penalty.

Certainly the allegations in the settlement agreement are very serious and, if true, warrant a significant penalty.  But it would be helpful to know whether this penalty is unique to a particular set of circumstances or is just a very large scalp from another “failure-to-report” case. As Commissioner Mohorovic points out in his statement, if the agency wants to change behavior through its penalties, it is important to more fully describe the behavior those regulated should avoid.

While this is a significant case because of the size of the penalty, its importance diminishes because of the agency’s opaqueness in describing the bad acts that occurred.  If you are not confused and troubled by all this, then I suggest you are not paying attention.

 

Does the CPSC See You as a “Bad Guy” or a “Good Guy”?

I believe that it was Albert Einstein who said “What you see depends on where you stand.”  The stands taken by senior managers of the CPSC on a number of topics have changed and that leaves those of us who care both about the agency and consumer safety seeing some concerning developments.

A good example is the way in which the agency seeks to impose and assess penalties.  At one point (dare I say the “good old days”) civil penalties were assessed after an honest negotiation between lawyers for the agency and the company. Only with the most intransigent company did the negotiation break down so that the agency was forced to refer the case to the Department of Justice for resolution.  And in the very rare instances when this happened, it was viewed not as a positive development but as a failure of the process to work well.

Things have changed.  Based on comments made by agency lawyers at a meeting in Washington this past week, what was once viewed as a failure now is viewed, if not quite as a positive development, as at least routine SOP. This conclusion is based on several developments.  First, look at the Enforcement Guidance recently published by the CPSC Office of General Counsel.  It suggests that any penalty negotiation is not a negotiation at all but almost a take it or leave it proposition.  When they say that you should anticipate getting only one meeting to make your case and then they will lock down their decision, how can you infer anything else?  Add to this statements that the penalty initially demanded by the agency already has been vetted with the DOJ and one has to wonder if arguments supporting a differing view will be listened to and considered.

This concern is exacerbated by statements made by senior officials at the same meeting that the agency is exploring ways to publicize referrals to the DOJ, likening them to “grand jury indictments.”   And what to think when another agency official states that penalties are justified because they always are imposed on the “bad guys” and not in “instances where good guys made honest mistakes. . . “.   Add to this a call by the agency chairman for civil penalties in the eight figures during the next year, and what you see is an agency that appears to be punitive rather than collaborative.

It is unfortunate that those regulated by the agency are being lumped into “good guy” and “bad guy” categories. From my experience in the private sector, in different capacities in government and now in private law practice, the vast majority of companies do care about making sure the products they sell are safe and they want clear rules so that they can stay on the right side of the legal line.  They also want a government that will work with them to solve problems when they come up, not just question their judgment and consider them “bad guys” when they protest.  But from my recent conversations, from where many are standing, that is what they are seeing.  For those of us concerned about product safety, that is not a positive development.


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