Posts Tagged 'Nancy Nord'

Saw Hearing Shows Need to Sharpen CPSC Regulatory Tools

 

Last week the CPSC held a hearing to address its pending proposed rule to require active injury mitigation (“AIM”) technology on table saws.  In recent years, too often CPSC hearings have devolved into little more than theater, obviously intended to generate press but little understanding of the complex issues the agency is so often called upon to decide. Last week’s hearing was different.  For much of the hearing, the Commissioners were actually discussing the complex regulatory issues the NPR presents and doing it in a knowledgeable, engaged and interested manner.

To recap, the proposed rule would require that all table saws use the AIM technology to help prevent the 33,000 injuries that occur each year from use of these saws. Such technology can detect human contact with the saw blade and stop the saw before that contact occurs.  However, the only available technology that meets the standard is owned, patented and being sold by one table saw producer, a company called Saw Stop.  Because Saw Stop has so many patents, the agency recognizes that it is unlikely that other technology that would not violate those patents could be developed to meet the proposed standard. While the technology owner states that he is willing to license it to the rest of the industry, he is unwilling to enter into a legally-enforceable commitment to do so either with a voluntary standards organization or before a mandatory rule is finalized.  By mandating AIM, the agency will both create a monopoly and significantly increase the price of the saws.  The agency recognizes that both will occur.

The agency has to grapple with a number of important issues.  Obviously, the AIM technology would reduce the number of serious injuries associated with the product and addressing those injuries is a priority for the agency.  However, the technology is currently in the marketplace and available to consumers who wish to pay for it. Is it the proper government role to require people to buy technology that they have determined they do not wish to pay for?  Should the CPSC, a safety agency, be concerned about the market distortions its rules may bring about?  Everyone, including the CPSC, anticipates that the rule will result in significant price increases. Will those increases create disincentives for consumers to buy new  AIM-equipped saws, with the result that old saws will stay in use longer than expected and injuries will increase, at least in the short run? Has the agency’s analysis of the costs and benefits of the rule correctly considered these issues?

These are all serious questions and it is good that the agency is giving them serious thought.  The agency has now received comments from the George Washington University Regulatory Studies Center. These comments to the proposed rule look at the way the agency did its required cost-benefit analysis and finds that there is room for improvement.  The methodology the agency uses for such analyses has not changed in years; nor has it received much critical review.  Since both analyzing regulatory costs and benefits and regulating in the least burdensome way that effectively addresses safety concerns are mandated by the law, this analysis should be a more important regulatory tool than it has been in practice.

The GW comments show sufficient weaknesses in the analysis to raise questions about the validity of the conclusions the agency reaches.  For example, the agency may be overstating the benefits of the rule given the lack of detail in the injury incident data the agency relies on.  (The shortcoming in the data has also been recognized by the Commissioners who have directed the staff to develop more data.)  The agency’s estimates of the societal costs are also predicated on suspect data and open to challenge, as the report points out. The GW study not only finds fault with the agency’s analysis of potential benefits of the proposed rule but also its disregard for the negative impact market distortions may have on consumers.  It concludes that if the “CPSC finalizes these standards it is more likely to produce a market failure by creating a monopoly than to address an existing one.”

Given the concerns raised by the GW comments and by others, one can rightly ask whether it is good policy for the agency to create a monopoly on the basis of flawed data.  And even if the data is good, one still must ask whether creating a monopoly is appropriate government regulatory behavior. Considering the serious and important policy questions this proposed rule presents, the Commissioners are right to give it a more thorough evaluation than what has occurred to date.

 

 

 

 

 

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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.

 

Fighting the Magnet Wars

 

This morning I watched the oral arguments before the CPSC in the staff appeal of the ALJ’s decision in the Zen Magnets case.  I felt as if I was watching World War One trench warfare in modern dress.  And like trench warfare where the combatants refuse to give an inch, insisting on holding their positions, what we saw this morning was both wasteful and futile, made worse by a predetermined outcome.

To recap, this morning’s exercise was the latest in the long running battle between the CPSC and Zen Magnets which sells small rare earth magnets (“SREMs”).  The agency argues that the magnets are defective because small children can ingest them with resulting severe injuries.  In addition, the agency argues that the magnets are “toys” and violate the toy safety standard which prescribes how powerful magnets used in toys can be.  The agency brought an administrative action to recall the magnets but the administrative law judge who heard the case did not buy the CPSC’s arguments. Instead, he found that the magnets were not defective when accompanied with proper warnings and age restrictions and that the toy standard does not apply to such magnets. The agency staff does not accept this determination and instead appealed it to the Commission—the same body that voted to bring the administrative action in the first place.  I have not found even one person who believes that a majority of the Commissioners will not vote to overturn the ALJ’s decision and order a recall.  At that point, the order will be final agency action and ripe for judicial review.

The ALJ’s decision is not the only skirmish on this subject that the agency has lost.  At the end of last year, the Tenth Circuit U.S. Court of Appeals overturned a federal safety standard issued by the Commission which effectively banned the sale of SREMs by restricting the permissible strength and size of the magnets. The court found that the agency failed to properly address the degree of the risk posed by the product and also the utility of the product.  As a result of these shortcomings, the court overturned the rule. A majority of the Commissioners have now voted to re-propose the rule to correct the deficiencies identified by the court—in other words, beef up the record but still ban the product.

Today’s hearing covered a lot of ground.  For example, even though the agency put incident data into the administrative record, the staff sidestepped shortcomings found in the data (since the incidents could not be attributed to Zen), indicating that no injuries or incidents are needed to support a defect finding.  There was a great deal of discussion about the role of consumer misuse, and the adequacy of warnings and labels.  The Commission asked about the applicability of the toy standard to a general use product

While this all may be interesting to students of martial arts or administrative law, what should be of concern is that consumer safety has gotten lost in these protracted battles—and this must be laid at the doorstep of the agency.  Putting Zen Magnets out of business—which seems to be the objective of the exercise—will not stop SREMs from getting into the hands of consumers.  By shutting down the remaining U.S. company that has aggressive warnings and marketing practices that minimize children’s exposure to the product, the agency leaves the field open to the many other companies, based outside the U.S., that are now selling the product without warnings—and without any interference from the CPSC.

If the agency had spent the resources that it has devoted to this case to looking at what is now going on in the market, rather than seeking to stop the leading proponent of safe and responsible magnet use and who is seeking to bring better safety awareness to the industry, it would be fulfilling its safety mission.  If the agency had accepted the many offers that have been made to educate the public on magnet safety, it would be fulfilling its safety mission.  Instead, it just feels like the agency is fighting a grudge match—what a waste!

The futility of the agency’s position is also maddening.  The magnet recalls that have been done resulted in a dismal return rate.  In other words, the public likes the product—not just because it is very cool but also because it has high utility as an educational, creative and artistic product. While the agency discounts these uses, the public does not.  What the agency has not done and refuses to do is consider whether there are any ways to reconfigure the packaging, beef up the warnings, put in place marketing restrictions, and engage in education efforts so that the public can have access to the product with safety considerations part of the equation. It has done this with other products that present much greater risks to children—button batteries, for example. However, this would require the agency to get out of the trenches and this it refuses to do.  So the magnet wars continue into the future and real consumer safety is the main casualty.

 

 

 

 

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.

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.

Steps Forward; Steps Back

Now that August is over and Labor Day is but a memory, it is time to focus on how the twostepsforwardCPSC spent the closing days of summer.  On a positive note, the agency was able to push forward helpful initiatives that ease compliance costs without diluting safety.  Then they had to put a damper on this positive glow with threats of resurrecting the discredited and flawed proposals dealing with voluntary recalls and public information (the §6(b) rule).

Forward Steps

The recently published NPR interpreting the fireworks rule is one of those steps forward.  The fireworks regulation has been on the books for several decades and is sorely in need of updating.  Among many other things, the regulation is designed to address overloaded fireworks but does so in a less-than-straight-forward manner.  It bans fireworks “intended to produce audible effects” if those “audible effects” are produced by using more than 2 grains of pyrotechnic composition.  Rather than measure the pyrotechnic materials in the fireworks device to determine compliance, for years the staff has listened for the intensity of the sound produced by the device to determine if it was intended to produce audible effects or whether the sound produced was merely incidental to the operation of the device.  The staff’s determination as to how loud the device was, based on what a staffer heard, was hardly either objective or measurable and has resulted in compliance actions that have been criticized for lack of objectivity.

The American Pyrotechnic Association has a standard that actually measures the presence of materials that may be used to produce an audible effect.  The APA standard has been adopted by the Department of Transportation regulations that deal with the shipment of fireworks.  The proposal, which has been pushed by Commissioners Robinson and Mohorovic in particular, would adopt the APA standard as the testing measure for the CPSC as well. An objective standard would add clarity both for the staff who must make compliance decisions, and the industry which can stop worrying that compliance is dependent on a staffer’s ear.

Another example of a “step forward” is a proposal determining that four types of plastics used extensively in children’s products do not need to be tested for the presence of phthalates.  This proposal would put into action what product manufacturers have been telling the agency for some time—phthalates are not added to these substances and so testing for them both is unnecessary from the standpoint of safety and is costly and burdensome.  This proposal, which has been a long time in the making, compliments the flexibility found in the 2009 statement of policy on phthalates testing and, hopefully, should provide some relief to a number of manufacturers and importers.

Backward Steps

However, the Commissioners could not end the summer on a positive note.  Instead, on the last day of August, the Commissioners met to talk about their regulatory priorities for the upcoming fiscal year.  Observers of the agency are well aware of the controversy engendered by the agency proposal to significantly change the way voluntary recalls are negotiated and agreed to.  Similarly the proposed changes to §6(b) dealing with how information about individual products is made public would distort the statute and surely subject the agency to needless litigation. I have discussed the problems with these proposals in detail, and the Congress has told the agency to cease and desist.

Chairman Kaye has repeatedly expressed his lack of interest in moving forward with these two troublesome proposals.  However, each time he has been given the opportunity to vote to remove them from the agency’s regulatory priorities list, he has refused to do that.  At the recent priorities hearing he was given yet another chance to do that and he did not step up.  Instead, Commissioner Adler, a staunch foe of §6(b) and a supporter of the voluntary recall rule, announced that he would be trying to draft a “compromise” to offer at some unknown point in the future (and not specifying if that would be before or after the elections).  For those who thought that perhaps these two ill-conceived proposals were behind you, do not be so sure.  Commissioner Adler’s gambit may provide the excuse 3 Commissioners need to defy logic, good public policy and the Congress to promulgate these divisive and poorly thought-through rules.

Saying It’s a Recall Doesn’t Make It So

With the CPSC’s blessing, a large furniture company recently sent out wall anchors for its children’s dressers to address a tipping hazard and the accompanying CPSC press release did not refer to the activity as a recall. Subsequently a child was killed when one of the dressers fell. Chaffing under criticism from its decision to allow the company to do a “non-recall recall”, the powers-that-be at the CPSC have now apparently decided that every corrective action or other announcement about a product must be labeled a “recall.”  Commissioner Buerkle has pointed out why this rigid adherence to labels is bad policy.  And this past week we have seen why her concerns are well-founded.

The issue involves the agency’s investigation of flooring made in China and sold by Lumber Liquidators, which allegedly emitted dangerous levels of formaldehyde. After the issue was described in a 60 Minutes segment in March, 2015, the company responded by agreeing not to sell the Chinese flooring and to test the flooring of those consumers who so requested. After over a year of extensive study, testing and investigation by several different agencies, no formaldehyde emissions above government guidelines were found.

Rather than announce this good news and put consumers’ minds at ease, last week the CPSC instead chose to cast the announcement in terms of a “recall.”  The “recall” that the agency announced is a first ever “recall to test”, with the company agreeing to continue what it has been doing from the beginning–that is, test for formaldehyde emissions the flooring of consumers who request that.  No promises of a refund, a repair or return of the flooring are made (although the release does hint that a consumer maybe, possibly could get some replacement flooring under undescribed circumstances at the company’s discretion). Buried in the press release is the admonition that consumers are not to pull up flooring they may be concerned about because that action could be dangerous.

I saw many press stories reporting that the investigation did not find a problem with the company’s product.  I did not see stories that discussed the fact that the company was doing a “recall” (although perhaps I may have missed some). This is a good thing since, by trying to unnaturally shoehorn the announcement of the investigation results into the concept of a recall, the release is both confusing and misleading to consumers.   And it belies the agency’s oft-stated notion that the press will ignore releases that do not include “recall” in the headline. It is an example of what happens when, like a myrmidon, the agency insists on rigid adherence to rules without concern as to appropriateness under the circumstances.  As Commissioner Buerkle notes, the CPSC should never say never.


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