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Retailer Reporting: Something for Nothing?

Over ten years ago, the CPSC compliance staff negotiated an agreement with Wal-Mart that has grown over the years into what is now known as the retailer reporting policy. Under the agreement, Wal-Mart agreed to file weekly reports with the CPSC documenting safety issues reported to its stores about products it sold. This reporting gave the agency important insights into the range of safety issues the world’s largest retailer was seeing. It allowed the agency to get an early heads-up on potential safety issues before they matured into “substantial product hazards.” And Wal-Mart got some protection from allegations that it had failed to report substantial product hazards to the agency.

Because this was such a win-win for both the agency and the company, other large retailers and then several large manufacturers soon began asking to participate in the program as well. In response, the agency expanded the program over the years. However, several years ago, the retailer reporting program was put on hold.

The agency staff has now decided to revise the program. Only selected companies will be “invited” to participate. The revised program makes very clear that participation in the program does not provide a substitute for or otherwise impact any reporting requirements under Section 15(b) of the law. However “consideration” may be given to participating companies should they be faced with subsequent enforcement actions for failure to report. The confidentiality protections applying to Information submitted under Section 15(b) of the law would not apply to these reports.

The staff believes that these changes make the program more transparent and answer long-standing questions about how the program operates. That is certainly true. But the changes also raise several other questions as well. For example, the selective nature of the program and the “consideration”, if any, given to participants does raise troubling fairness issues, A company wishing to participate and frozen out of the program will have little recourse in challenging the decision of some invisible staffer. What kind of consideration will be available to some but not others?

But more basically, the changes raise the question of why any company should bother to participate. When I raised that question, when I was still a Commissioner, the answer I got was “that it is the right thing for companies to do.” Perhaps there are companies who will find the CPSC staff “invitation” irresistible. (I assume that there will be no measure of bullying associated with these invitations.) However, there may be others who believe that the effort involved and the benefits to be gained are not worth it. In this case the agency will lose out on an important source of information that could help it identify risks as they come up over the horizon.

However, the biggest concern is a process one. The program has been in place for over ten years. Although it was initiated by the staff, it has grown over the years and it has consumed considerable staff resources. Changes of this magnitude should be placed before the Commission for explanation and approval in a public meeting. The program’s role in gathering useful information should be better explained and it should be part of the agency’s annual operating plan. Regardless of what one thinks of the merits of the program and the changes being made, this is something that Commissioners should consider and approve, not delegate to staff.

I saw it on the Internet; it must be true

Published April 22, 2014 Consumer Product Safety , CPSC , Information Disclosure Leave a Comment
Tags: §6(b), CPSC, Information Sharing

Earlier this week a friend told me that unfair and misleading information had been put on his Wikipedia page without his knowledge. While I have no idea how things get posted on Wikipedia, I do know that, with greater frequency, Wikipedia posts are being cited as fact. And I could not help but think about how the process of morphing disinformation into “factual” information would be accelerated if the federal government could cite, use, and repost information found on the internet without making efforts to verify the validity of that information.

Unfortunately, that is exactly what the CPSC is suggesting it be able to do in a proposed rule that would “modernize” its regulations dealing with information disclosure. The law requires that the public disclosure of any information obtained by the agency that identifies a manufacturer or product be accurate and fair. The current regulations set out a process for checking with the product manufacturer to verify the accuracy and fairness of the information proposed to be disclosed. The agency now proposed to substantially change the rules with respect to how it carries out its responsibility to assure the accuracy of the product-specific information it publicly discloses.

Among other things, the agency wants to republish with impunity information about a product that has already been made public, including information on the internet. The agency would have no obligation to go back to the manufacturer to verify the accuracy of the information it proposes to republish. Apparently checking the validity of such information is just too much of a burden. And publishing unverified information by the federal government lends credence to that information, regardless of its accuracy.

While I leave to others to opine on whether this comports with the letter of the law, it certainly violates the law’s spirit. My friend discovered that, on the web, anyone can say anything about you. But is it right that this behavior be condoned and promoted by the federal government?

There are a number of other troublesome changes being proposed by the CPSC’s proposed rule on information disclosure. Comments on the proposal (Docket No. CPSC-2014-0005) are due on April 28. Anyone concerned about agency fairness should read the proposal, go to regulations.gov and submit comments.

Wanted: Corporate Psychic

Published February 14, 2014 Information Disclosure Leave a Comment
Tags: §6(b), Information Sharing

§This past week the CPSC voted to publish for public comment a notice of proposed rulemaking to amend long-standing regulations (16 CFR 1101) dealing with information disclosure under §6(b) of the Consumer Product Safety Act. The stated rationale for the NPR is to “modernize” regulations written in 1983, and which, by most accounts, have been working well. Given the opaque nature of the discussion around this NPR, a Ouija board may be a helpful tool as you read through this NPR.

The §6(b) proposed rule is a continuation of the apparent on-going effort of the Commission altering the collaborative partnership that, over many years, resulted in successful results for consumers—altering it to one that is both more formalistic, rigid and in my view, less protective of consumers. This effort includes mandating intrusive compliance programs in inappropriate settings, changing the voluntary recall process to add delay and rigidity among other things, and now, proposing to erode important information disclosure protections mandated by Congress and that form the basis for much of the success of the fast track recall program among other things.

Whether the agency has statutory authority to proceed as proposed is questionable but from the stand point of good public policy, there is no question that the agency seems set on a course that could change the balance that has been the hallmark of its success.

To quickly summarize, §6(b) of the statute, with accompanying regulations, states that before the agency can release information it obtains about a product that identifies a manufacturer or private labeler, it must take certain steps to assure that the disclosure is fair and accurate. The regulations, written in 1983, seem to be working well except that they do not contemplate electronic communications (something that can be easily rectified). Further, in its briefing to the Commissioners, the staff did not identify in specific terms how the changes would improve efficiencies. Instead viewers of the briefing were treated to general statements, speculative scenarios and threats to go into executive session so the public could not benefit from the agency reasoning that provided the basis for the proposed rule.

The proposed rule makes a number of changes to the 1983 regulations that go well beyond “modernizing” those rules. Taken as a whole, the proposal changes the emphasis from the agency having the proactive obligation to act in a careful and deliberate manner. Instead information–perhaps in response to that pulled from the internet or from the latest (and generally flawed) toxic product hit list or perhaps stale information where context has changed–can go out the door and, only if the company has a psychic on staff, will it know the release is coming or be able to object. But even more important, this seems like an effort to minimize work for the agency without thought to whether consumers get better information or companies must correct inaccurate innuendos.

The NPR will soon be available in the Federal Register for comment. Stakeholders who care about this latest attempt to dilute the deliberate balance Congress struck in the Consumer Product Safety Act should read this proposal carefully and give the agency your views.

The Side Effects of Tweaking

Published January 16, 2014 Comment Request , CPSC , Information Disclosure , Recalls Leave a Comment
Tags: CPSC, Information Sharing, Recalls

Much has been written here and in other publications about the substantive impacts of the CPSC’s proposed changes to the rules dealing with voluntary recalls. The substantive nature of the proposed amendments cannot be discounted even though certain commissioners persist in describing them as only “tweaks.”

As commenters analyze the impacts of the proposed changes, it is important to look at how these changes impact other rules that stakeholders and the commission operate under, specifically those dealing with submission of information under §15(b) and disclosure of information under §6(b) of the Consumer Product Safety Act. Former CPSC general counsel Cheryl Falvey has written an interesting piece that discusses that interrelationship. It is worth reading and thinking about.

Information submitted to the agency under §15(b) is exempt from disclosure except under limited circumstances as described in §6(b)(5). This protection is to provide incentive for companies to fully report information the agency needs to analyze a risk without having to worry that sensitive product information is made public unfairly or prematurely. One of the exemptions to this protection is when the Commission has accepted in writing a “remedial settlement agreement” (see §6(b)(5)(B)).

Here is the question: is the voluntary recall (or specifically the recall’s corrective action plan) a remedial settlement agreement? The regulations currently say that the recall agreement is not enforceable. The agency now proposes to make the recall agreement enforceable. Is the effect of that to make any information submitted under §15(b) subject to disclosure where it otherwise would not have been?

What is the Commission’s current position on this issue? Reading the NPR or listening to the debate does not provide any answers. But one thing is clear: with all this tweaking, some transparency is called for.

§6(b): Get Ready for More “Tweaking”

Published January 7, 2014 CPSC , Harm Reduction , Information Disclosure Leave a Comment
Tags: §6(b), CPSC, Information Sharing

Rumor has it that the CPSC staff will soon be sending up to the Commission suggestions for “modernizing” the §6(b) regulations (16 CFR 1101) dealing with disclosure of company and product-specific information. “Modernizing” is a word that covers a lot of ground and it will be instructive to see how the agency staff and commissioners define it.

The §6(b) regulations were written in 1983 and do not, for example, contemplate communication by email—hence the perceived need for modernization. But if the Commission’s recent proposal with respect to voluntary recalls—where significant substantive changes are being proposed under the rubric of “tweaking” an interpretive rule—are any indicator, then interested stakeholders should pay close attention to the proposed §6(b) rule when it comes up for Commission review.

§6(b), along with §15(b) and the voluntary recall process are three legs of the stool that supports a collaborative and cooperative relationship between the Commission and product sellers. This cooperation, in large part, is what makes the agency as effective as it is. §15(b) requires submission of information indicating a product hazard, but most companies, up to now, heed the oft-stated advice of “when in doubt, report”, reporting information before, or even absent, the statutory obligation. This happens because §6(b) protects the disclosure of information that is not fair or accurate. (Here is a link to an article that discusses the consumer protection aspects of §6(b).) Taken together, the statute provides incentives for companies to give information to the agency earlier than they otherwise would because those companies have the assurance that information about specific products will be used internally but will not be prematurely released to the public, before the agency has determined if there is a problem. The voluntary recall process compliments this statutory framework by allowing recalls to be made quickly and, in some cases, before there is a determination that a substantial hazard does, in fact, exist.

The important role that §6(b) plays in making the statute work is not appreciated by some within the agency. That is unfortunate. If the Commission decides to use this proposed §6(b) modernization rule as an opportunity to make more substantial changes (as it did with the voluntary recall proposed rule), it threatens to further erode the foundation of cooperation that is so vital to an effective CPSC.