CPSIA – "Low Volume Manufacturers" under Waxman Amendment

The proposed Waxman Amendment adds a new term to our CPSIA lexicon: “Low Volume Manufacturers” (LVMs). This term is introduced in the ironically-named Section 4: “RELIEF FOR SMALL MANUFACTURERS AND OTHER BUSINESSES”.

How small is “small”? The definition of a LVM is a manufacturer that

“(A) manufactured or imported no more than 2,000 units of all products manufactured by the manufacturer during the most recent calendar year; and (B) had gross receipts totaling not more than $200,000 during such year.”

To clarify, the definition intones:

“the products and gross receipts of a manufacturer shall be considered to include all products and gross receipts of each entity that controls, is controlled by, or is under common control with such manufacturer.“

Yep, THAT’S small alright. In other words, if you made or imported 2000+ units of anything regardless of value (all products added together) OR had gross receipts of $200,001 last year, you get nothing here. So, if you sold 3,000 Popsicle sticks for $50, you are out. If you sold 201 cabinets for $1,000 each, you are out. Only the true small fry are included here. Happy?

Hey, isn’t there some sort of federal definition of a “Small Business”? Yessir, the SBA publishes size standards to define Small Business. These federal standards are found in myriad federal legislation (shocking, right?). They are widely used – so why not include them here? That question was posed directly to the Dems – especially since earlier drafts of this amendment featured a higher dollar limit (also inadequate). Why did the Dems tighten the standard so much? Why not incorporate the SBA standards, like every other federal agency?

The best explanation I can give is that the Dems don’t really have any interest in providing relief to small businesses. They also may want to appear to give relief, principally to fool members of Congress who have expressed concern for the fate of crafters under the CPSIA.

Do you think I’m being too cynical? Let’s not forget the words of Senator Durbin’s associate a year ago: “I think you are right that the CPSIA imposes costs on businesses, and because of economies of scale it’s the smaller businesses that will feel these costs more acutely. This is part of a larger calculation that it’s worth the costs to shift from the old system of post-market correction (once a dangerous product is out in the market and leads to sick kids, recalls, lawsuits, etc.) to a new system of pre-market testing and certification (instead of just assuming products are safe and paying the price for false assumptions).“

She said it – small business problems induced by the CPSIA were part of a “larger calculation”. With this amendment, the Dems again test our gullibility.

The provisions relating to LVMs provide the following “relief”:

a. This provision is designed to provide modified requirements for LVMs under Section 14(d) of the CPSA, in other words, the long-delayed and never drafted “15 Month Rule”. For those of you scoring at home, the “15 Month Rule” is now four months late – call it the “19 Month (and counting) Rule”.

b. The “relief” that the CPSC can offer LVMs is “alternative testing requirements” that “provide for reasonable testing methodologies to assure certification based on compliance with the relevant consumer product safety standards”. The alternative methods must ASSURE COMPLIANCE. Can you picture what such “assured compliance” might look like? If these words have their normal English language meaning, the “relief” should be nil if compliance must be assured.

c. The CPSC has the right to implement such alternative testing requirements for LVMs on a product, product class or even for a specific safety standard or part of a standard.

d. NO relief is allowed for lead-in-paint, cribs, pacifiers, small parts, children’s metal jewelry, baby bouncers, walkers and jumpers and durable infant or toddler products (as defined somewhere). All of you LVMs, make a note!

Have you ever heard the expression “trap for the unwary”?

e. This provision also calls for the creation of an “Office for Business Education, Outreach, and Advocacy”. Since I called for such education resources in my first speech at the CPSC back in November 2008, I shouldn’t make fun of this. I just like the legislative goal of this organization: “assist the Commission in informing and educating manufacturers and retailers about requirements under this Act or any other Act enforced by the Commission”. This is much needed. Of course, given that you must master literally thousands of pages of gobbledygook to fully understand the CPSIA as implemented, I would DEFINITELY not want this job. If anyone calls about this opening, tell them I am at the dentist.

f. The provision adds an idyllic sounding provision (Section 4) to the CPSIA which states the pleasant intention to “cooperate” with LVMs “in enforcing the lead limits and third-party testing requirements”. Of course, all cooperation must be “consistent with [he] goals of statute”. In other words, you must be able to prove you comply. There are soothing words about assessing the practicability of tracking labels for these micro-businesses. [Remember that "practicable" incorporates concepts of economics .]

Shame that you and I won’t be eligible for tracking labels relief, too . . . .

This charade purports to provide relief to small businesses but in fact, will benefit virtually no one. Even the Handmade Toy Alliance, a CPSIA advocacy group created by crafters, has few members that would benefit. Notably, there are many more small businesses affected by this law beyond the HTA, so the failure to impact HTA members is just an indicator of how lame the proposed relief actually is.

The SBA sets a high bar in its definition of small business for several reasons (as high as 500 employees or $500 million in revenue). Among them is a fear that legal benefits for small businesses may be unfairly distributed if the definition is too narrow. Many small businesses could miss out on needed protections. Furthermore, the complexity of the U.S. economy makes it difficult to describe a small business. The high bar in the SBA definition leaves room for small businesses in every industry from airplanes to pencils to baby clothing.

The SBA certainly doesn’t want to disincentivize growth or prosperity among small businesses. They recognize that the small business community is a huge jobs creator, so maintaining its financial health is a public policy imperative. The SBA wouldn’t want small businesses to lose special legal benefits because of an immaterial event, like a small incremental sale. So a law that TAKES EVERYTHING AWAY when you sell one more unit of ANYTHING or take in one incremental revenue dollar (all at a very low level of sales that would not coincide with a fundamental change in the nature of your business) would never fly. Never fly with the SBA, that is. Mr. Waxman apparently thinks this is fine – but actually, it’s UN-AMERICAN. Our laws are supposed to encourage us to grow. At least they used to.

If there is one basic reason to be critical of this provision, it’s the very conceit of granting relief by business size. This misses the point of SAFETY entirely. Size of business only became an issue under the CPSIA because the law is too broad. Let’s not forget that the prior law had standards for products, not for companies by size. Why do we need size exceptions now?

Think about it – if your child is harmed by a product, will it matter how much revenue the manufacturer earned in the previous year? Do you think the CPSC wants to modify “safety rules” for little businesses only to find out that one of these businesses hurt your kid? Uh, no. So why take this legislative approach? It’s simple -the Dems have constrained the way we can fix the law. They have fixed, absolutely FIXED, the definition of “safety”. The original standards and the original age limits MAY NOT BE REVISITED. These rules are too broad and invite many negative consequences – but since the Dems will not agree to modify them, we must apparently devise ever more complex rules to circumvent (or apparently circumvent) the problems they cause. In this case, the Dems offer relief for tiny companies. Those of us who have enjoyed enough success to hire a few employees and stop working out of our bedrooms are ineligible for this “relief” although our problems are just as troubling.

I do not accept that there is no solution here, however any durable solution requires that the definition of safety be modified to something sensible. The Dems won’t allow it. This is their “legacy” and they are bound and determined to ensure that it survives, ridiculous or not.

That’s your small business relief. Enjoy!

I intend to publish one more post analyzing the rest of the Waxman Amendment. It will cover an exception to the phthalates ban for inaccessible components. It will also document the sneakiness of the remaining language in the amendment. You aren’t meant to understand it – but I will do my best to shed some light.

Sorry, Henry! Let the sun shine in.

Read more here:
CPSIA – "Low Volume Manufacturers" under Waxman Amendment

CPSIA – Waxman’s New Amendment Progress Report

In the last couple weeks, Rep. Henry Waxman’s staff on the House Committee on Energy and Commerce has been approaching Republicans and various stakeholders for feedback for a “bipartisan” approach to fixing the CPSIA. In these discussions, the staff has acknowledged that the law is “flawed” and requires surgery, not just tweaks. An interim (artificial) deadline of this week has been established for comments on their planned amendment. A draft of this amendment has not seen the light of day yet. No one knows what it will say.

While this may sound “good”, the Waxman staffers have also attempted to constrain the development of the amendment. For starters, they insist that the amendment be based on the failed Waxman amendment of last December. [Last year's try was covered in several posts in my blog from December 11-16.] They have also drawn quite a few lines in the sand, such as no change to age limits in Children’s Products. They favor exemptions for individual product categories or even individual products, a Swiss Cheese approach. [I hate this approach, as does just about everyone else other than the Waxmanites.]

The Waxmanites seem interested in helping out the ATV’rs. Apparently, the legislative logic is that if the amendment caters to the ATV’rs, who have been quite noisy and enjoy wide support among members of Congress, no one will be able to vote against the amendment for political reasons. Thus, the makings of a Democrat victory and the appearance of bipartisanship. I can see it now: “The two parties worked together and fixed the parts of the law that caused unintended consequences. All is well!”

Among the “have-nots” in this approach:

• “Common Sense”. This case-by-case or product-by-product approach means that the Waxmanites refuse to even consider trusting the CPSC to do its job and assess risk for itself. The only people the Waxmanites and consumer groups can trust are . . . are . . . themselves. You won’t be able to draw a line between those that are “in” and those that are “out” in any rational way.
• Rhinestones. On the subject of rhinestones, my understanding is that they are so resolute on keeping these innocent stones in the bill that they would be willing to write rhinestones in explicitly. This is the opposite of case-by-case exclusion – it’s a case-by-case INCLUSION.
• Educational Products. While the Waxmanites say they want to exclude educational products, they can’t figure out how to do it since you might use an educational product in your home. Horrors! Again, without a simple notion of what’s safe and what’s not, how do you expect a sensible rule to emerge from this primordial goo?
• Bikes. They really want to figure out how to help bikes but can’t seem to do it. For this reason, they are chatting about an indoor/outdoor exclusion. In other words, and I am not kidding, they have suggested a rule that if you keep something in your garage, it’s “out”, and if you keep it indoors, it’s “in”. So everybody – move all your toys, children’s clothing and shoes, furniture, books, pens, appliances and so on into your garage, quick, so you can qualify for this great new exemption! [Try to resist holding a garage sale, though, because that presents special risks under the law!]

Not one to look a gift horse in the mouth, I am happy they are thinking of an amendment, but I am not happy that we still find ourselves adrift without any sense of what’s safe and what’s not. It is hard to foresee an amendment that does much good with this kind of inflexibility. Bipartisanship promises to be hard to obtain or a sham staged by Democrats for their own benefit.

Remarkably, a hidden issue that may weigh on these proceedings is the growing awareness of paralysis at the CPSC. The agency saw a massive increase in its budget last year, to match its massive new responsibilities, but still finds itself mired in open projects and conflicting priorities. Simple things are taking forever. Agency paralysis cannot be prevented in this environment without a significant paring of CPSIA priorities, something that the Waxmanites have a hard time conceding. And Obama won’t give the agency more money, so they’re stuck. And we’re stuck.

That’s not where you want to be.

Something to think about as we go forward:

1. Principle One: Your silence is deemed to be your approval. Silence = approval. You must swing from the rafters to get their attention, too. No, don’t do that – too dangerous.
2. Principle Two: An unopposed view, particularly a document with footnotes, is considered definitive. After all, if it were wrong, why didn’t anyone point it out, with footnotes? This is really how the Waxmanites think.

You need to keep these principles in mind. Your loud involvement can help a lot.

To Be Continued . . . .

Read more here:
CPSIA – Waxman’s New Amendment Progress Report

CPSIA – Waxman Amendment Update

A few tidbits:

1. The Waxman amendment is expected to be attached to H.R. 3326 Department of Defense Appropriations Act, 2010. It has not been added yet, but will be done just before it goes to the floor of the House, presumably sometime tomorrow. It is expected to appear on the House Rules Committee website at that time. Speaker Pelosi is apparently going to Copenhagen on Wednesday which is also expected to be the last day that the House is in session this year. Thus, this amendment is expected to pass into law by Wednesday as part of this unstoppable appropriations bill.
2. Despite a flurry of frantic back room conversations, there appears little likelihood of change in the pending amendment language or terms. Mr. Waxman’s staff is telling one and all that the amendment is the “best we can do” and if we don’t like it, too bad for us. As noted, this amendment was written unilaterally by the Democrats with the cooperation of the Democrats on the Commission and without even showing the language to the Republicans on the House Energy and Commerce Committee or on the CPSC Commission. Hearings, naturally, are OUT OF THE QUESTION. Nancy Nord commented on the Democrats’ slight today: “While the amendment is less than clear legislative drafting, with its passage, Congress does acknowledge, for the first time, what many of us at the agency have been saying for many months–the inflexible nature of the CPSIA has limited the ability of the CPSC to minimize the unintended consequences of the law–hurting product sellers and limiting consumer choice while not advancing safety. This amendment was drafted in a closed and partisan process, without input from relevant stakeholders and its shortcomings reflect this flawed process.” [Emphasis added.]
3. The subterfuge of Mr. Waxman and his allies on the Commission has resulted in almost no media attention to this critical amendment. The press has barely picked up on it (there was a tentative mention in the Product Safety Letter tonight, but that’s it as far as I can tell). This plays right into their hands by keeping the dissatisfied members of Congress at bay, something that’s not particularly difficult when there is so much attention diverted to “fat cat bankers” and health care legislation, among other things. Still, keeping it out of the papers helps quite a bit.

One can only hope that these tactics will backfire. This much appears clear – the legitimate interests of the regulated community, the well-documented issues of businesses (large and small) under the CPSIA, have been totally ignored. Only a small group of politically-connected industries had the power to jump the queue. Nice for them, but lousy for those of us left behind.

Read more here:
CPSIA – Waxman Amendment Update

CPSIA – Still Steaming Over Mr. Waxman and His Unilateral CPSIA Amendment

I am still trying to unpack what happened late Friday when the Waxman amendment to the CPSIA leaked out. Since the news is so fresh and so few of the actors have come forward to account for themselves, let’s be conservative and analyze only the most positive possible scenario:

• Mr. Waxman now accepts that some aspects of the CPSIA need to be fixed.
• Mr. Waxman now accepts that the CPSC cannot fix the law through rulemaking alone.
• Mr. Waxman is being a “good guy” and showing his “good faith” by allowing a change to the law.
• Ms. Tenenbaum believed that something is better than nothing and made a practical judgment to support the Waxman amendment as a step in the right direction.
• Ms. Tenenbaum concluded that fighting with Ms. Waxman might worsen the situation for the agency and for the victims of the law.
• Ms. Tenenbaum thought that getting an amendment now might open the door to more amendments later.
• Ms. Tenenbaum thought the Commission could use this “loophole” to ease pressure on at least some victims of the law.
• None of this affects the good vibrations that emerged in recent weeks with the CPSC who has noticeably softened its rhetoric and reached out to the regulated community to find amicable solutions to the perplexing issues caused by the CPSIA.

I think that’s about as sympathetic a portrayal as I can paint of the Waxman amendment and the way it was generated. With that sunny scenario in mind, how would I now interpret the events?

1. Waxman is in control, and will not relent. Both minority members of Congress and minority Commissioners have been largely disenfranchised for the future of this law. His need for control made impossible redress of the many other issues documented by the likes of resale shops, education companies and apparel-makers.
2. Waxman will dictate precisely the speed and dimension of fixes to the CPSIA. The pain and disruption in the market does not influence him. As the terms of the original law indicate, he does not regard economics as a factor in setting safety policy. [An economist would characterize this outlook as irrational.] Political pressure does influence him, hence the meager effort to appease the ATV and publishing industries. This amendment is consistent with the longstanding position of his staff – so there is little to indicate further flexibility. If you believe the “one bite at the apple” crowd, this is grim news and contradicts the concept above that one amendment might lead to other amendments.
3. Waxman has no intention to publicly debate the issues under the law. Likewise, he has no intention of possibly losing control of the discussion or the message. Given his stated interest in reforming the Toxic Substances Control Act, it remains critical to portray the CPSIA as a success and as an advance in regulatory “theory”. The Waxman amendment makes clear that the legitimate concerns of the regulated community are taking a permanent back seat to a political agenda set by consumer groups and the California contingent. Again, not good for us. . . .
4. The CPSIA is now clearly the Democrats’ law. Republicans have been exiled from the safety debate. It is shocking that party lines now define the children’s product safety debate since injuring children is not a political issue. Yet, any notion of bipartisanship has been crushed.
5. Whether for political gain, sympathy with the original design of the legislation or for practical reasons, the Democrats on the Commission have fallen in line with the Waxmanites. The teamwork on this amendment makes them appear to be allies. If this means that the Waxman views on implementation will also hold sway, it forecasts grim developments ahead for regulated companies.
6. The appearance of appeasement or even complicity by Ms. Tenenbaum is inescapable. Even in the friendliest interpretation of events, Tenenbaum comes out as a weak defender of the legitimate interests and concerns of the regulated community. And “common sense” seems forgotten. What kind of partner does that make her? Do her statements on consulting with stakeholders and open dialogue seem somehow self-serving now? Right now, it is very hard to know when or whether she will toss regulated companies overboard. This makes partnership with her difficult because you must give to get . . . now that the “get” is in doubt, how can the regulated community become comfortable with the “give”? I also think it’s reasonable to ask why Ms. Tenenbaum allowed this provision to be negotiated in the dead of night. That’s not how a partner behaves.
7. There is a BIG issue of trust within the Commission here. The very public way in which the Republican Commissioners received notice of their irrelevance will cause lasting injury to relationships. It is hard to see collegiality restored quickly on the Commission after this betrayal. Of course, I can’t help but recall the mantra repeated by many pro-CPSIA advocates – that the CPSC needs a five-person Commission. Doesn’t the amendment “process” expose this as a joke? If Tenenbaum and Waxman are going to ignore the Republicans, was Congress really saying that the CPSC desperately needed three Democrats in a majority position? Gosh, I think the Republicans that voted for the law might take issue with this . . . .
8. The inclusion of lead labeling for excluded items confirms the zealotry of the Waxmanites, the impotence of the resistance movement and the persistent disregard for the needs of innocent victims of this law. Of course, difficult-to-obtain exclusions are quite anti-small business, as are the lead labels. The labeling is even more incredible if you take into account that exclusions will only be granted in circumstances where the inclusion of lead will have virtually no conceivable health impact. So if the Chairman would sell us down the river with a useless and extraordinarily-limited amendment without addressing ANY of the other pressing issues or demanding the right of the Commission to assess risk, then what else can we reasonably expect from here on out?

That’s the $64,000 question, isn’t it? Frankly, this amendment and the behind-closed-doors process which excluded all corporate stakeholders and many political stakeholders, sharply erodes trust in all directions. Doing this behind everyone’s backs – during a two-day workshop purportedly designed to solicit stakeholder feedback and get everyone on the same page – seems remarkably disingenuous. You can safely assume many recent conversations in retrospect seem less than candid or straightforward.

To work out the difficulties with this law, leadership on the Commission (Democrats) and in Congress (Democrats) need to come to grips with the fact that the law is incredibly misconceived and destructive. The dream that the Precautionary Principle actually works to anyone’s benefit has been debunked. To cram down this noxious law despite the legitimate concerns of the regulated community will NOT snuff out opposition – but instead will inflame it. The problems won’t go away, and cannot be buried. The issues will fester and rot until addressed.

If the issues marbling the law are allowed to linger long enough, the Democrats can ensure lasting damage to the agency and market catastrophe. I will repeat myself: there is a legacy issue for Tenenbaum and the Dems – and having jettisoned the Republicans, it’s all theirs now. The CPSC can be rendered ineffective and wholly bureaucratic, with all the attendant damage that entails, or it can be restored to glory. The choice is theirs and the stakes are high. Interestingly, the regulated community will support an effort to restore effectiveness at the agency, but that will necessarily involved restoration of risk assessment and political independence at the agency. Hard to see Waxman going along with that.

Do we have the leaders for this effort on the Commission? Time will tell. Like everyone else, they will be judged by their results. You and I are along for the ride, whether we like it or not.

Read more here:
CPSIA – Still Steaming Over Mr. Waxman and His Unilateral CPSIA Amendment

DeMint Amendment to the Senate Budget Resolution

SUPPORT THE DEMINT AMENDMENT TO THE SENATE BUDGET RESOLUTION

Senator DeMint will offer an amendment to the budget resolution to create a deficit-neutral reserve fund to protect small and home businesses from the burdensome and impractical requirements of the Consumer Product Safety Improvement Act (CPSIA) of 2008.

The CPSIA has caused many small and home businesses to unnecessarily increase the costs of their products without providing substantial improvement in product safety.   The legislation was drafted so broadly that it swept up small and family businesses that were never part of the problem.  The law imposes burdensome testing requirements when more common-sense approaches could guarantee the same level of safety.   Congress should have done better and it can do better.

The amendment that Senator DeMint will offer would:

• Delay the lead limits 6 months.
  • Congress and American businesses need breathing room so that we can fix this act.

• Exempt thrift stores and other second hand sellers
  • The Goodwill and the Salvation Army have never been a safety problem and in these hard economic times people need access to affordable goods now more than ever.

• Exempt the sale of books and children’s motorcycles from the CPSIA.
  
  • Books and bikes were never the problem.  These two products are the perfect example of the law of unintended consequences.

• Allows manufacturers to show that their products are within the lead limits by showing that all the components of their products are within the lead limit.
  • Lead doesn’t come out of thin-air! If it’s not in the component it won’t be in the product.   This is a common-sense approach that will save businesses thousands of dollars without compromising safety one bit.

• Prevents retroactive enforcement that would require otherwise safe products from having to be destroyed.
  • There are hundreds of millions of dollars of safe products on the shelves and in warehouses today that should be sold.  It is senseless to make businesses destroy perfectly good products.

These reforms will go a long way to fixing the CPSIA.  It’s also important to outline what this amendment won’t do.

The amendment will not change the lead limits in the Act.  The amendment would keep the same lead limits in place in the bill and require that the overwhelming majority of all children’s product sold in the U.S. – except the few exempted above – meet the stringent new standards in the CPSIA.   This is crucial.  Children will not be exposed to any higher levels of lead because of my amendment.  The only change will be a reform of the bureaucratic hoops that small and home businesses have to jump through.

If you have any questions about the amendment please do not hesitate to contact Tom Jones (tom_jones AT commerce DOT senate DOT gov) with Senator DeMint at 202-224-6121.

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