CPSIA – Response to Questions by Nancy Nord (100 ppm Hearing February 16th)

This is my Response for the Record to a supplemental question posed by Commissioner Nancy Nord to the CPSC’s February 16th Hearing on the pending 100 ppm Lead Standards:

Response to Commissioner Nancy Nord’s Request
for Comment in the Federal Register

1. You stated reduction from 300 ppm in substrate to 100 ppm in substrate removes the margin of error for low tech manufacturers. Would you elaborate on this with some of your own testing experience?

When we consider the impact of the lower standard, we first ask how we would manage a failure. As (presumably) rational business people, we want to allocate our capital to maximize our returns, and thus, risks to those returns must be weighed and addressed as appropriate. We have tried to understand our risks under the new lower lead standard – and the results are not encouraging. Once a failure (failed test) is discovered, it is often incurable. A failed test on a completed item including an integrated failed component (e.g., a zipper) likely means a total loss under the CPSIA. Failures of components already subject to valid passing component tests cannot be ruled out and in fact, are likely to occur. Our inability to solve this problem for even trivial violations introduces a new and significant risk of random (unpredictable and uncontrollable) losses to our business.

The agency’s stance on re-testing is not encouraging either. The draft rules on re-testing in the “15 Month Rule” are best described as unworkable. The doubt raised over the consequences of a failed test under pending rules only elevates our concern over how we might deal with a failed test. At present, there seems to be few options. For this reason alone, the proposed reduction of lead standards to 100 ppm is extremely threatening.

Given the dire consequences of a failed test, we must assess whether we can control our supply chains and raw materials/components to always comply with the new lower standard. In my testimony before the Commission, I noted that 98.3% of our passing test reports in a two-year period (2701 CPSIA test reports) were compliant with the new standard. Unfortunately the 1.7% in the range of 100-300 ppm scatters randomly across our many products and components. Thus, we don’t know how to predict which components are prone to risk of non-compliance and the consequences of finding them at the wrong time can be devastating. [It goes without saying that 2701 tests in a two-year period is a strong demonstration of both the devotion of resources and the huge expenditures required by the CPSIA to obtain passing tests reports – continual clean bills of health, over and over and over again.]

Our testing results reveal two troubling trends. First, we have found a material number of our items with one or more components that fall into the 100-300 ppm zone, sometimes just barely above 100 ppm. For a “miss” of as little as 5 ppm of lead entombed permanently in a substrate, an entire lot can be relegated to the garbage heap. Failed components might be as insignificant as a label or a lens cap. We also know from experience that retesting the same unit or units from the same lot may result in a passing test report but do not anticipate that we will be afforded this option to “comply”. In any event, retesting to obtain a clean passing test report does not change the product. If this law is truly about safety, I fail to see what is being accomplished by piling up the test reports to the profit of the test labs. The occurrence of failures under the new standard for a few ppm of lead will raise our costs significantly.

Second, we have encountered significant variability in our testing results. I have attached three test reports as examples of the variability problem. The first report (submitted with my comments on the 100 ppm standard) shows the test results on a single piece of string from a mesh bag holding dominoes. We cut the string into ten pieces and then tested each segment. The lead content results ranged from 239 – 275 ppm. A representative of the bicycle industry gave similar evidence (wide variability in multiple tests on different parts of a single component) at the 100 ppm hearing on February 16th. In the attached test report on tape measures, we found lead levels in coatings in the same tape measure lot ranging from 79-97 ppm, which is more than a 20% variability range. Finally, I have attached three test reports showing yellow plastic substrate from the same lot of educational products at 23, 88 and 139 ppm lead levels. Our success in obtaining passing test reports will apparently depend on LUCK when lead levels are near the 100 ppm concentration. We don’t have a solution to this problem. In our experience, this problem strikes randomly and often absurdly. We have found, for instance, lead levels between 100-300 ppm on zipper housings on the inside of a sewn bag. Lizard tongues might be able to reach it but fortunately, none of our customers are lizards.

None of this randomness or massive expense can be tied to safety – just to the enrichment of testing companies and lawyers. I am hopeful that the Commission will see that action is needed to stop the reduction of the lead standard to 100 ppm to help preserve the value our company brings to schools and families throughout the United States.

Read more here:
CPSIA – Response to Questions by Nancy Nord (100 ppm Hearing February 16th)

CPSIA – Can You Trust Me on the CPSIA Database?

I have received a fair bit of feedback on my recent posts relating to the CPSIA Database. You may recall that I highlighted the CPSC policy decision to knowingly post untrue and misleading complaints about consumer products on the grounds that they state the opinion of consumers of a “risk of harm”. Apparently, the ignorance of those opinions or outright, blatant error matters not to our CPSC market administrators. Our submission of a valid CPSIA test report and photographic evidence was not persuasive of our common sense position in the instant case.

[The rejection of a CPSIA test report in refutation of an invalid "product incident" complaint is fascinating, given the vigorous and oft-repeated consumer group assertion that consumers DEMAND test reports to feel "secure" that children's products are safe. Supposedly, consumers assume "somebody" is testing everything, or at least that's the poppycock the consumer groups flog. This is a bedrock "assumption" underlying the CPSIA. Isn't it interesting then that the CSPC apparently places so little stock in these critically important test reports???]

Par for the course, my comments in this space never get an official response. The substance of my complaints go unanswered – but in this case, the rumor mill is churning. That’s my answer, I guess. I am told that little birds (from the CPSC) are chirping that I am taking the CPSC’s response “out of context”.

This is a great tactic because the argument makes it unnecessary to respond to my points. It also changes the debate, from the substance of my database objections to the subject of my character. Lending credence to the vague and unproven accusations is the official stature of the CPSC and its staff. CPSC job titles convey credibility, and my lowly status as a “blogger” and a “Small Business” makes everything I write subject to doubt. Who knows more about safety and the law? Who is more trustworthy? Who speaks with greater authority? My character is an easy target, much easier to attack than my points about the database.

And how am I to defend myself? I don’t have the option to hide in the shadows and say they are twisting facts. You get to read what I say . . . .

I have long adhered to principles of truthfulness and full disclosure in this space. I defy you to find a better documented space devoted to analysis of the CPSIA and its wide-ranging impact. I use real data and link to actual source materials. In this case, I quoted from a letter from a senior CPSC official. I have not revealed who wrote it – for two reasons. First, this person speaks for the agency, and as such, it is the agency that is responsible. I think the institution should be accountable, even if individuals are its mouthpiece(s). Second, this is not personal and as a consequence, the identity of the email’s author is a secondary consideration. The law is the problem. The authorship of the email is off point.

Well, why don’t you decide for yourself? Can you trust me?

Email no. 1 (March 4, from our company):

“The LER 7273 that the initial complaint was issued for is a discontinued product and is no longer available for sale in our catalogs. I have attached a test report for this item showing its compliance to both ASTM F-963 and EN-71. I have also provided you pictures which clearly shows the hearts are much larger than the choke tube requirements.

Can you please confirm that the providing of this detail, which clearly shows that the product was tested to be in compliance and the additional photos clearly showing the product complies with the stated issue, would not appear in the database after March 11th?

This type of complaint is exactly what we find to be very troubling with the database to our industry. This is an example where someone saw a photo of a product and without even touching it or seeing it in person filed a claim that they feel it ‘might’ be a hazard. There is no indication of potential harm or actual harm caused, just a feeling that it might be dangerous. We were able to quickly provide testing documents and photographic evidence that the product is compliant to all applicable standards and product requirements with no potential choking hazard with the hearts provided with the product. The concern is that this unjustified complaint will be placed on the database with a reply from us that proves it is not an issue, but the damage has been done and the perception to the end consumer is that this product is not safe.

Thanks again for your help in understanding the application of the database and it’s intended applicability going forward.”

Email no. 2 (March 8, from our company):

“Our ten day response window is coming up fast on the complaint that we had issued against us. Have you had a chance to discuss the information I sent to you on Friday? Thanks.”

Email no. 3 (March 9, from CPSC):

“As we discussed last Friday , since we are in soft launch, the report will not be posted in the public database. When I called you last Friday, I told you the staff consensus was that but for soft launch the report of harm would be posted in the database, and you would have to decide whether to post a comment or a claim for material inaccuracy. When we discussed the issue further and I asked you to send me the information you sent last Friday, I did not understand that you were still attempting to resolve the issue in the ten day time frame.

I should make it clear from the outset that I am not the person within the agency with the delegated authority to handle material inaccuracy claims. This email reflects my opinions and not those of the Commission and has not been reviewed by the Commissioners. When you first approached me about this at ICPHSO, I told you that my gut reaction was that despite the concerns you raised, the Commission staff handling these issues would take the consumer’s report at face value as a claim raising a concern of a risk of harm. I explained then that your Firm could provide a comment with your objections to the report or object to the report as materially inaccurate. Given your concerns about the report, I raised the issue with the database team handling the issues and confirmed to you in our call last Friday that the response was the same. I also indicated that the claim of material inaccuracy would likely be denied. I explained that the personnel handling these matters were not making decisions as to whether the product was harmful but rather they would take a quick look at whether the report of harm articulates a risk of harm. I write to follow up further on this issue.

On its face, the report indicates a concern about a choking hazard which suggests that the consumer believes there is a risk of harm. On Friday, you sent photos and test results that you believe are sufficient to make out a claim of material inaccuracy, i.e., that the product cannot be said to present a risk of harm because it passed the small parts test. The sweet toy heart is larger than the small parts cylinder, and you have provided test reports indicating that the product passed the small parts test. However, in assessing whether a report of harm articulates a risk of harm, the staff is not adjudicating whether the product actually presents such a risk of harm. We have other processes for making that determination which require an assessment of the risk by Commission staff, including a subject matter expert – in this case, a physiologist on the issues relating to the likelihood of a choking hazard to children. Indeed, the Commission has recalled products as a substantial product hazard where the toy was slightly larger than the small parts cylinder but, because of the shape, when swallowed, the toy presented a choking risk to children. The ultimate adjudication of whether a product presents a hazard is covered by different regulations entirely and would require an administrative hearing before an administrative law judge. As I explained on Friday, the database process is set up to allow the manufacturer to state its reasons why the report does not present a risk of harm and have that appear next to the consumer’s report. The staff handling claims of material inaccuracy will not be determining the ultimate question of whether the product does, in fact, present a risk of harm. That would only occur after a full assessment of the risk of harm by the subject matters experts and ample opportunity for the firm to address the issues with our compliance staff. The disclaimer is intended to notify users that the information has not been evaluated and specifically states: The Commission does not guarantee the accuracy, completeness or adequacy of the contents of the Consumer Product Safety Information Database, particularly with respect to the accuracy, completeness, or adequacy of information submitted by persons outside of the CPSC.

When I raised this information with the team that has been delegated the authority for making these decisions, staff concluded that the report would be posted in the database but for soft launch, and it would be up to the Firm to decide whether it wants its test reports and photos posted as comments in response to the report. The conclusion was that this is the type of report that has been included in our databases in the past and would be included in the public database along with the manufacturer’s comments and the mandatory disclaimer as to the accuracy of the information in the public database.

For the ease of your review, I have highlighted in blue the words which I quoted in my March 9th blogpost.

Can you trust me? I have nothing to say, please judge from the facts. For those that prefer to lurk in the shadows and bash my character without being in any way accountable, please remember that the truth will out. Eventually, it may not be my character that will be the big issue of the day.

Read more here:
CPSIA – Can You Trust Me on the CPSIA Database?

CPSIA – Sean Oberle Notes the Risk in the Database

Sean Oberle of the Product Safety Letter noted in an Op-Ed entitled “Andre Maginot and the CPSIA Database” that while the database has the ability to do good, it also presents the risk of causing serious harm. He’s right, of course. He goes on to note that proponents may be held to account if disaster results. We can only hope. . . .

I think this is helpful and appreciate that Sean made this point. I want to highlight one short section in his essay:

“The metaphor also helps to belie the dismissive reassurances of a few (by no means all) proponents. The issue is not that industry is failing to acknowledge the protections Congress and CPSC put in place. Rather, industry is concerned whether the protections are proper and sufficient. The irony is not lost on me that with the CPSIA database, we’re dealing with a product that has a lot of potential to do harm. The problem is that when you produce a potentially dangerous product – be it a database or a toy – there is only so much that you can do to reassure people before putting it ‘out there.’ At some point, people simply are going to have to trust you.”

There are two important issues here. First, Sean mentions “trust” – and seems to imply that we should give the agency a chance to prove itself. Well, they have already had a chance to prove themselves, and used the opportunity to prove that they don’t deserve to be trusted. The risk that we should bear while we wait to see if the CPSC can be “trusted” could literally be fatal to our businesses. Where does it say that markets are to be administered this way? How can this be defended as “sensible” or a worthy risk to take?

The second issue which Sean brushes up against but doesn’t discuss is how the database erodes corporate due process rights so significantly. We have essentially had our rights stripped, arguably illegally and illicitly. The government is now in the business of publishing slander and we have no way to stop it. Trust is impossible when due process rights have been removed. Appeal is pointless (as our company’s recent experience illustrates), but some semblance of process creates the illusion of individual rights. It’s a joke, of course. Maybe we need to call the Small Business Ombudsman. Yeah, that’s the ticket!

At some point, the zealots will push too far. The damage they wrought won’t be fixable – the dead companies won’t rise again. The cost will be borne by our society, but the perpetrators will just move on to another government job . . . .

Read more here:
CPSIA – Sean Oberle Notes the Risk in the Database

CPSIA – Congress and CPSC in the Clouds . . . .

I have heard from an old friend today, a resale shop owner. The store owner is as frustrated as anyone by the CPSIA and has some interesting observations. The store owner’s point is that it is utterly impractical for store personnel to be up-to-date on recalls or to manage recall issues on a day-to-day basis. Think recalled baby monitors with “remedies” like a new warning label. Think also of the national chain of resale shops that told us that many of their MANAGERS are paid $8 per hour. Can you get a sense of the brilliance of Congress’ master plan yet?

The store owner sent me a picture worth a thousand words:

The store owner: “The photo I’ve attached is of my six-inch binder of printouts for every recall on children’s items since the early 90′s. The papers on the floor are the new recalls since September 2010. I printed those last week, so I need to go back and print the newer ones. I take this binder to all my events and strive to search it thoroughly to keep recalled items out of our events. I’m going shopping today to pick up a second six-inch binder as I’m obviously going to need it.” [Emphasis added]

Sounds very practical. I am sure Scott Wolfson and Sean Oberle have some useful tips for this store owner on how to manage all this data. It is worth NOTING that rifling through 20 years of CPSC recalls is not the store owner’s main business – their business is selling gently-used merchandise – but it probably seems like it nowadays.

The store owner is also a victim of unscrupulous “gaming” by a competitor who seeks to capitalize on fear and the ambitions of local politicians to put pressure on him/her. The store owner: “I’m no longer comfortable posting publicly about CPSIA since a local children’s resale full-time store owner has told several of her shoppers that she’s planning to call the [local] Attorney General to come investigate my next seasonal consignment event to be sure I’m in compliance with CPSIA. Since I don’t have XRF vision, there is no way to prove I’m in compliance with the instructions to not resell anything over the lead limits, despite the fact that I’m not required to test. I still don’t have a clue what do to about phthalates, but I’ve banned all bath books, bath toys, & teething toys from our events anyway.” [Emphasis added]

There’s a stimulus plan for you. . . .

Did you catch the store owner referring to any topic relating to safety, such as injuries or concern for the health of children? Nope. It isn’t the concern of the competing store owner or the local Attorney General, either. This is about officious bureaucracy, paperwork for paperwork’s sake, all to satisfy a neurotic anxiety without a basis in FACT.

I used to ask “Where are the victims?” The zealots in the last three years have been able to produce exactly ZERO injured children from lead or phthalates in children’s products. So I guess I have to nominate my friend the store owner – a prototypical victim of this law.

Job well done, Congress and CPSC!

Read more here:
CPSIA – Congress and CPSC in the Clouds . . . .

CPSIA – Committee Press Release About CPSIA Hearing

FOR IMMEDIATE RELEASE
February 18, 2011

CONTACT: Press Office
(202) 226-4972

Commerce, Manufacturing, and Trade Subcommittee Examines Unintended Consequences of 2008 Law on Jobs and Small Businesses

WASHINGTON, DC – The House Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade, chaired by Rep. Mary Bono Mack (R-CA), Thursday convened a hearing to examine the unintended consequences of the Consumer Product Safety Improvement Act of 2008 on American job creators including small businesses and thrift stores. It reviewed the impact of the recent legislation on Consumer Product Safety Commission (CPSC ) resources and its ability to protect consumers. In addition to several small business owners, CPSC Chairman Inez Tenenbaum and Commissioner Anne Northup were also among the witnesses.

“As a mother, I have very strong, passionate feelings about protecting all children,” said Bono Mack. “But as a former small business owner, I know all too well how unnecessary regulations – even well intentioned ones – can destroy lives, too. This is a rare opportunity to put aside the differences that often divide this great body and put our heads together to make a good law even better.”

Rick Woldenberg, the operator of Learning Resources, Inc., a small business making educational products and educational toys, testified on the many difficulties associated with the new, burdensome requirements.

“Children are our business and the safety of children is our number one priority,” said Woldenberg. “The CPSIA, unfortunately, purportedly to protect children from vaguely-defined dangers, has dramatically impacted our business model, reduced our ability to make a profit and create jobs, pared our incentive to invest in new products and new markets, and generally made it more difficult to grow our business. Given these considerable sacrifices, I wish I could say the law made our products safer, but the fact is that it hasn’t. Our company, Learning Resources, Inc., has recalled a grand total of 130 pieces in a single recall since our founding in June 1984 (these products were all recovered from the market). Our management of safety risks was highly effective long before the government intervened in our safety processes in 2008. The government’s ‘help’ has not raised our safety game but it has reduced our bottom line and cost some of our employees their jobs.”

CPSC Commissioner Northup testified on the exorbitant costs to small businesses, stating, “In March 2009, Commission staff reported that the economic costs associated with the CPSIA would be ‘in the billions of dollars range.’… Small businesses without the market clout to demand that suppliers provide compliant materials have been hit the hardest. Many report that the new compliance and testing costs have caused them to cut jobs, reduce product lines, leave the children’s market completely, or close… According to a brief small business analysis by our agency, the cost to test one toy could range from $3,712 to $7,348 – not taking into account that the toy will likely change to stay competitive for the next Christmas season, or sooner, and every material change triggers a whole new set of tests.”

Jolie Fay, owner of Skipping Hippos, which makes handmade children’s ponchos provided some emotional testimony, stating, “Our businesses were born from the desire for safe children’s products. We make them with care and attention, most often from materials purchased from our local craft stores. Our dreams were to build heritage products that will be cherished and remembered, and saved for generations… The CPSIA makes no provision for these businesses to be able to operate.”

Fay went on to elaborate on the challenges that confront many small businesses. “For example, at the Hollywood Senior Center in Portland, there is a small retail shop. The items in the shop are exclusively made by their members. Handmade trucks and planes are made by retired loggers in their 70’s and 80’s. They are on an incredibly small fixed income and would never be able to afford a single ASTM laboratory test. The workmanship that has developed over a lifetime helps contribute a small, but very substantial supplement to their monthly income. These projects keep them active and give them meaning to each day. These are artisans, but this law makes them criminals.”

Chairman Upton, who pledged to address the problem, stated, “We all care deeply about our children and their safety – nearly every one of us on this dais has a child or grandchild. No one wants to put little children at risk. But this law may be doing exactly that. By dictating so much of the Commission’s work, in too many cases we have shifted its attention to products that pose little or no risk and away from more significant issues. At the same time, we have deprived the Commission of the flexibility to develop common-sense solutions to the problems of implementation. The retroactive effect of the law has caused the Salvation Army, Goodwill Industries and thrift stores across the land to destroy used products, including even winter clothing that is sorely needed by millions of American children.”

Read more here:
CPSIA – Committee Press Release About CPSIA Hearing

CPSIA – CPSC’s Shameful Failure of Leadership

On Monday, the CPSC will decide whether or not to extend the testing and certification stay that has been in place for two years. The 16-page document which sets out the parameters of the decision does not mention risk anywhere. That’s because the law prohibits the CPSC from considering safety in its work under the CPSIA. [Ironically, the CPSC warns users that use of its www.SaferProducts.gov website is at their own risk (see par. no. 2 in the user's agreement) - and ironically, we're talking about a "dot gov" website, too!]

The CPSC explains that extension of the stay is only one of its options. It can do nothing, it can roll all the existing stays forward, or just some of them (to heck with the ATV’rs and the bike industry). Presumably, they will choose to roll all of it forward to September 14, 2011. We can all be screwed on the same day. I like the symmetry of that!

The CPSC has not lost sight of the issues. They know they haven’t finished their work. They note that two years ago on February 9. 2009 when the Commission first extended the testing stay. it was because delaying implementation of the testing requirement by a year “give[s] us the time needed to develop sound rules and requirements as well as implement outreach efforts to explain these [new] requirements of the CPSIA and their applicability.”

How time flies! That didn’t happen, so the Commission again extended the stay by another year on December 8, 2010. Why? Chairman Tenenbaum: “I voted to extend the stay on lead content testing and certification until February 10, 2011, in order to allow component testing adequate time to develop and to give our stakeholders adequate notice of new requirements.” Commissioner Robert Adler: “One of the primary rationales advanced for extending the stay is to await the effective date of the so-called 15-month rule.”

Where does the time go?? None of that ever happened. Hey, CPSC, take all the time you need!

So now the Commission is poised to kick the can down the road until September 14, 2011. Why that date? The CPSC Staff report notes that this gives the Commission time to sort out the new, lower lead standard due to be imposed on August 10, 2011. The CPSC is holding a hearing on February 14 on the feasibility of the 100 ppm standard. As Staff notes, if the Commission doesn’t determine that 100 ppm is feasible, then they will have to set a standard between 300 ppm and 100 ppm that is feasible. “Feasibility” was defined in the CPSIA, lest there should be any disagreement, to exclude ANY consideration of economics. In other words, if it’s possible at any price or under any condition, it is considered “feasible” and thus mandated by the law. I can save the CPSC some time – under that definition, it’s definitely feasible. Completely unreasonable and unnecessary but “feasible”.

The idea promoted in the Staff memo is that we will time to get used to all this if the stay lifts a month after the implementation of the new lead standard. [The concept of "learning disability" floats through my head. Have we heard this song before?] “Staff recommends that the Commission extend the stay to allow time for the Commission to determine whether it is technologically feasible to lower the amount of lead in children’s products to 100 ppm.” I guess once the Commission makes up its collective mind, the CPSC will wave a magic wand and make your business, your supply chain and your sales channel comply with the new rules in a matter of days. The fact that the rules are hazy after almost three years is no concern of theirs. Is it a concern of yours?

I love magical rules and magical plans! It must be a job requirement for Commissioners to be wizards, too.

All concerns over the “15 Month Rule” seem to have evaporated. This is presumably Robert Adler’s doing (see his statement above, which is a rant that the 15 Month Rule and the stay are separable issues). The Staff report intones: “While a Commission decision to extend the current stay of enforcement will give industry an opportunity to test and certify finished products and components according to the final rule and provide the Commission time to clarify any confusion regarding the new rule, it is not necessary for the testing rule to be complete to lift the stay as to the initial test for lead compliance.” Can’t see any problem there, can you???

The CPSC doesn’t want you to worry, however. They have apparently promulgated several documents that set out their policy and whatnot on lead, namely “Statement of Commission Enforcement Policy on Section 101 Lead Limits” (February 6, 2009) (6 pages); “Children’s Products Containing Lead: Interpretative Rule on Inaccessible Component Parts” (August 7, 2009)(32 pages); “Statement of Policy: Testing and Certification of Lead Content in Children’s Products” (October 2009)(5 pages); and “Interim Enforcement Policy on Component Testing and Certification of Children’s Products and Other Consumer Products to the August 14,2009 Lead Limits” (December 28, 2009) (4 pages). If these four documents totalling 47 pages don’t clear up everything, the CPSC is ready for you. “Manufacturers of children’s products can seek guidance for what the Commission considers reasonable and representative testing in these rules.”

You may have to wait a few years for a reply, but darn it, they’re going to answer your question. And that’s because they really CARE. We’re the government and we’re here to help!

A few more cock-ups aren’t deterring the agency. The phthalates standard is still undrafted, likewise the certification procedures for phthalate testing labs. Oopsie! Well, they’ve been busy . . . and the much fantasized-over component testing “market” has failed to materialize. Imagine that, businesses that inadvertently serve the children’s market with components or which derive a small percentage of sales from children’s products aren’t volunteering to test their items and expose themselves to the ravages of a crazy and out-of-control federal agency. Shocking!

Those of you who live in the past may recall my mentioning this very issue on November 6, 2008 (yes, 2008) when I addressed the CPSC Lead Panel. [It's a safe assumption no one was listening at the agency - opportunities for stakeholder feedback is not for listening, it's for venting.] I talked about the futility of expecting our suppliers of aluminum foil (widely used in schools in science kits) to test their products. After all, they are allowed to sell it for use with food without testing, so why should they test for me? If I asked them for a test for compliance with the CPSIA, they would certainly refuse and then ask in outrage why I was selling aluminum foil to kids anyway. As I said, who could see this coming? No one . . . .

For all the outrages that this sick situation brings to mind, NOTHING is as shameful as the CPSC’s refusal to admit that this is all administrative, bureaucratic nonsense (or use your own word for “nonsense”) that has nothing to do with SAFETY. Oh yeah, safety – isn’t that word in the name of this agency – the Consumer Product SAFETY Commission. What about safety, guys? Are you concerned about that anymore? This failure of leadership is the basic issue I have with the folks running the agency today. There’s a reason that bureaucrats are called “soul-less”.

The fact is that this administration at the CPSC (Democrats) will not stand up for what’s right – they are prepared to go down with the ship. It’s ironic that they remain so strident and so stubborn. Mr. Obama can smell change in the air and even he has called for reconsideration of the deluge of regulations. The Republicans in the House have declared war on over-regulations and the House Energy and Commerce Committee has made reform of the CPSIA the top priority of Mary Bono-Mack’s subcommittee.

As I have said again and again – this is YOUR government at work. Their shameful acts which are harming your markets and your business are destroying jobs, discouraging innovation and hurting children by impairing the activities of businesses devoted to children’s welfare. This intolerable situation will only be fixed when you MAKE it change. You can do it and you must. There is a new Congress in town and they need to hear from you. Don’t let the Democrats keep on wrecking your industry. This isn’t about safety and never was. This is politics, pure and simple.

Make them pay for their sins. Call your Congressman.

Read more here:
CPSIA – CPSC’s Shameful Failure of Leadership

CPSIA – Feb 10th Approaches and the CSPC Sucks Its Thumb

How do you feel when someone you depend on treats you inconsiderately? Think of a co-worker, a partner, a family member. Think of a situation where through their own disorganization or self-absorption, your closest associates let you sweat it out, flap in the wind. Worry mounts, pressure builds – but nothing happens.

Do you like it? Does it build confidence in that relationship?

We are experiencing this phenomenon once again with our trusted partner in safety, the CPSC. The expiration of the testing and certification stay is due to occur in about two weeks now on February 10th. The conditions precedent to lifting the stay, namely completion of the hilariously-named “15 Month Rule” (it was due to be completed on November 14, 2009) and the components testing rule, were not completed. These two rules were issued in draft form earlier in 2010 and after howls of protest . . . nothing. Did this affect the CPSC’s plans? Apparently not. No action, no comment. Silence. [The Republican Commissioners have been talking about it but don't have the votes to force movement. Safety IS a partisan issue, it turns out.]

With mere days to go, the CPSC is letting thousands of businesses plan for unknown contingencies. What rules will apply? What will the world look like if the stay is lifted and these critical rules are not settled? Even worse, would the Commission jam through clearly defective rules just to “save face”?

It seems that the shabby treatment we get from the CPSC has hit rock bottom . . . and they have started to dig. O wonderful world.

The last time the Commission faced this question, they acted on December 9, 2009 to extend the stay for a year to February 10, 2011. In other words, they did not let the children’s product market flap in the wind and gave ten weeks notice that disaster was not looming. Of course, their extension of the stay was designed to permit finalization of rules that, ummm, they never finished.

So now they prefer to jerk us around, rather than face the music and admit their own failures. This is politicians behaving badly, to save their own reputation at the expense of your business and your market. Better that you should suffer than that they should look bad. Or incompetent. Accountability is not part of the lexecon.

All is not lost, however. Rep. Darrell Issa is calling over oversight on over-regulation, and the CPSC is on that list. The House Energy and Commerce Committee has also named the CPSIA as the top priority of the Subcommittee on Commerce, Manufacturing and Trade Agenda. The government is listening. Is the CPSC?

What will happen? One thing’s for sure, you will find out soon. If the Commission extends the stay, as they should, the wolf will move away from the door. Even if that happens, however, the CPSC should be shamed. They are now in the middle of the third year of implementation of a defective law and have yet to admit that it can’t be done. That’s their real crime – the sin of denial. The solution requires political bravery – standing up to Mr. Waxman and Mr. Pryor and telling them the TRUTH. The Democratic leadership at this agency failed that test and re-fail it every day as they persist in sustaining the illusion that the law makes sense or is workable.

Stay tuned!

Read more here:
CPSIA – Feb 10th Approaches and the CSPC Sucks Its Thumb

CPSIA – Tell the CPSC to Extend Testing Stay!

The AAFA has created a link where you can easily send a message to the five CPSC Commissioners to extend the Testing and Certification Stay, due to expire on February 10th. The expiration of this stay will greatly harm the business community but will contribute NOTHING to consumer safety.

The AAFA letter draws from the NAM letter posted in this space yesterday.

PLEASE send this email and ask all your friends, associates, suppliers and customers to add their voice to this important plea.

Thank you!

Read more here:
CPSIA – Tell the CPSC to Extend Testing Stay!

CPSIA – My Written Testimony at Senate Hearing 12-2-10

As you may know, there will be a Senate CPSC oversight hearing tomorrow. The hearing will be held by the Subcommittee on Consumer Protection, Product Safety and Insurance of the Senate Committee on Commerce, Science and Transportation. You can see the witness list here. The subject of the hearing is “Oversight of the Consumer Product Safety Commission: Product Safety in the Holiday Season”

I have submitted the following written testimony. I will not be testifying at this hearing.

STATEMENT OF RICHARD M. WOLDENBERG
Chairman, Learning Resources, Inc.
Vernon Hills, Illinois

December 2, 2010

As an operator of a small business making educational products and educational toys, I have had a front row seat for the implementation of the Consumer Product Safety Improvement Act of 2008 (CPSIA) by the Consumer Product Safety Commission (CPSC). On the occasion of your CPSC oversight hearing, I want to highlight the economic damage wrought by the CPSIA without achieving any material improvement in safety statistics. I also want to bring to your attention the open hostility of the CPSC toward the corporate community in the implementation and enforcement of the CPSIA, and conclude with my recommendations for legal reforms to restore common sense to safety administration without reducing children’s safety.

Children are our business. As educators, as parents and as members of our community, we have always placed the highest priority on safety. We would not be in the business of helping children learn if we didn’t care deeply about children and their safety. The CPSIA has dramatically impacted our business model, reduced our ability to make a profit and create jobs, pared our incentive to invest in new products and new markets, and generally made it difficult to grow our business. We would gladly accept these burdens if the law made our products safer, but the fact is that it hasn’t. Our company, Learning Resources, Inc., has recalled a grand total of 130 pieces since our founding in June 1984 (all recovered from the market). Our management of safety risks was highly effective long before the government intervened in our safety processes in 2008.

The precautionary approach of the CPSIA attempted to fill perceived “gaps” in regulation by making it illegal to sell children’s products unless proven safe prior to sale. Yet the law has yielded few quantifiable safety benefits other than a reduction in recent recall rates for lead-in-paint (already illegal in children’s products for decades). Ironically, this progress in reducing recalls has taken place in a 27-month period in which, like the time before the CPSIA, testing of children’s products prior to sale was not mandatory. Consumer confidence wasn’t dented by the lack of mandatory testing. The justifications for the over-arching and excessively expensive CPSIA regulatory scheme just don’t hold water.

In any event, the reduction in recall rates is only a minor triumph and was not due to mandatory testing or harsh new lead standards, but most likely a (hyper) energized regulator and a great deal of publicity. Recall statistics can be highly misleading because the rate and number of recalls depend on many factors and do not generally correlate to injuries to children. In other words, product recalls are not tantamount to childhood injuries. The purpose of the CPSIA is to reduce injuries, not product recalls – yet CPSC recall statistics show that there have been almost no reported injuries from lead or phthalates in children’s products in the last decade (one death and three unverified injuries from 1999-2010, all from lead or lead-in-paint). The billions of dollars now being spent by the corporate community annually on testing and other compliance activities have not reduced injuries – there weren’t any to reduce. Whatever peace of mind has been generated by lower recall rates comes at a very high price.

The CPSIA significantly broadened the reach of federal safety regulation well beyond what was needed to deal with the lead-in-paint toy violations of 2007 and 2008. Under the CPSIA, the definition of a “Children’s Product” subject to regulation now encompasses ALL products designed or intended primarily for a child 12 years of age or younger (15 U.S.C. §2052(a)(2)). This definition ensures that virtually anything marketed to children will be subject to the restrictions of the Consumer Product Safety Act (CPSA), irrespective of known or quantifiable risk of injury. Put another way, this definition ensures that many product categories with a long tradition of safety are now subject to the withering requirements of this law for the first time simply because they fall within the overly broad definition of a Children’s Product. The affected safe products span the U.S. economy books, t-shirts and shoes, ATVs, bicycles, donated or resale goods, musical instruments, pens and educational products. The CPSC declined to use its discretion to narrow this definition in its recent “final rule” interpreting “Children’s Product”, thus ensuring continued market chaos and economic waste.

The consequences of the change in the consumer safety laws to a precautionary posture has had notable negative impacts and promises to create further problems, namely:

a. Increased Costs. The new law creates a heavy burden for testing costs. From 2006 to 2009, our company’s testing costs alone jumped more than eight-fold. We estimate that our testing costs will triple again after the CPSC (as anticipated) lifts its testing stay in 2011, and could multiply again if the CPSC enacts (as anticipated) its draft “15 Month Rule” on testing frequency and “reasonable testing programs”. Testing costs are often thousands of dollars per product. Having employed one person to manage safety testing and quality control for many years, we now have a department of five, including me, plus an outside lawyer on retainer. These jobs are funded by discontinuing sales, marketing and product development jobs – the CPSIA is NOT an ersatz stimulus program. Personnel, legal and other out-of-pocket safety expenses (besides testing) have more than quadrupled in the last three years – all without any change in our super-low recall rates or injury statistics.

b. Increased Administrative Expenses. The CPSIA requires that all products include tracking labels on both the packaging and the product itself. Rationalized as “analogous” to date labels on cartons of milk, tracking labels are in reality nothing but pure economic waste as applied to the vast array of “Children’s Products” under the CPSIA. As noted, our company has a virtually unblemished 26-year track record of safety so tracking labels promise to add little value in the event of recalls that are unlikely to occur. Ironically, with the strict new rules governing product safety, we believe the already low chance of a product recall has been reduced further. As noted above, the money to pay for all this administrative busy work comes from foregone business opportunities. We are being forced to shrink our company to apply tracking labels that no one will use.
An equally frustrating bureaucracy has sprung up around recordkeeping under this law. Burdensome requirements spawned by the government’s new involvement in our quality control processes forced us to make large new investments in information technology with no return on our investment. In addition, the pending CPSC draft policy on component testing promises to convert the simple task of obtaining a complete suite of safety test reports into a major recordkeeping chore. We will now be forced to manage each component separately, tracking test reports on each component one-by-one. This promises to multiply our recordkeeping responsibilities – and the related risk of liability for failing to comply – by more than an order of magnitude.

c. Reduced Incentive to Innovate. The increased cost to bring a product to market under the CPSIA will make many viable – and valuable – products uneconomic. To cover the cost of developing, testing and safety-managing new products, the prospective sales of any new item (“hurdle rate”) is now much higher than under prior law. This means that low volume “specialty market” items are less likely to come to market and many new small business entrants may find themselves priced out of the market. The CPSIA makes it much harder to start a new business serving the children’s market because the rules so heavily favor big business. Because of CPSIA transactional costs, high volume items now have a huge cost advantage over low volume items. This will hurt many small but important markets like educational products for disabled children. Our company, with its 1500 catalog items, is probably now a dinosaur under the CPSIA –the law provides a strong economic incentive to restructure our business around 50-150 items and to focus on high volume markets only. Schools would suffer from the loss of niche educational products.
d. Crippled by Regulatory Complexity. Our problems don’t end with testing costs or increased staffing. We are being crippled by regulatory complexity. Almost 28 months after passage of the CPSIA, we still don’t have a comprehensive set of regulations. Please consider how mindboggling the rules have become. There were fewer than 200 pages of safety law and CPSC rules that pertained to our business until 2008. These rules clearly defined our responsibilities and could be taught to our staff (in fact, many were rarely applicable to us). Today, the applicable laws, rules and interpretative documents exceed 3,000 pages. As a practical matter, it is simply not possible to master all of these documents – and yet it’s potentially a felony to break any of these rules. Sadly for us, the rules and CPSC staff commentary keep changing, are still being written and are rarely if ever conformed. How can we master and re-master these rules and teach them to our staff while still doing the full-time job of running our business? Ironically, the recalls of 2007 and 2008 were never a “rules” problem – those famous recalls were clearly a compliance problem. Imagine what will happen now with an unmanageable fifteen-fold increase in rules. No small business “ombudsman” can make that problem go away.
e. Small Business Will Certainly Suffer. The CPSIA was written in response to failings of big companies, but hammers small and medium-sized companies with particular vengeance. Our small business has already lost customers for our entire category on the grounds that selling toys is too confusing or too much of a “hassle”. This is our new reality. The highly-technical rules and requirements are beyond the capability of all but the most highly-trained quality managers or lawyers to comprehend. Small businesses simply don’t have the skills, resources or business scale to manage compliance with the CPSIA. For this reason, small businesses bear the greatest risk of liability under the law, despite being responsible for almost no injuries from lead in the last decade. The double whammy of massive new regulatory obligations and the prospect of devastating liability are driving small businesses out of our market.

In implementing and administering the CPSIA, the CPSC created a harsh regulatory environment for the business community over the past 28 months. Consider the following:

1. Unjustified Recalls. In June, in response to an inquiry by a Congressman and followed up by media inquiries, the CPSC pressed McDonalds to recall 12 million Shrek glasses for “high” cadmium content, despite the agency’s admission on Twitter that the glasses were not toxic. The recall effort was justified as being done “out of an abundance of caution”, a frightening regulatory standard when applied to products acknowledged to be safe by the regulator itself. McDonalds lost millions of dollars as a result, not to mention suffering from widespread and persistent bad publicity.

2. Unjustified Penalties and Coercive Tactics. The CPSC assessed a $2.05 million penalty against a hapless Japanese dollar store chain (Daiso) for five separate tiny recalls involving 698 units and 19 items. These items sold for between $1 and $4 each. There were no reported injuries from sales of the Daiso trinkets. Ms. Tenenbaum bragged about this extraordinarily excessive prosecution in a speech in March 2010 to the Consumer Federation of America: “We secured an injunction that completely stops Daiso from importing children’s products into the country. . . . Daiso has a very high hurdle to jump over to ever get back in the import business again.” Regulated companies take stunning examples like Daiso as a warning that outsized and disproportionate force may be used by this agency with little provocation.
The regulated community has also expressed alarm over the threatened use by the agency of unilateral press releases “to warn the public” about alleged dangers in specific products as a way to coerce “voluntary” recalls. Such threats have been used where facts may be in dispute to justify a recall. Under the law, the CPSC may only implement mandatory recalls subject to a court order, a slow process perhaps but also expensive and labor-intensive. “Voluntary” recalls can be much quicker and cheaper, only requiring “agreement” between the agency and the subject company. In more than one case, CPSC has threatened unilateral releases to try to “convince” a firm to undertake a “voluntary” recall but after the firm took the risk of standing up to the staff and the staff conducted further investigation, the CPSC decided that recalls were not even necessary. Not all firms can bear the expense of such a process or take the risk of calling the staff’s bluff because issuance of a release would likely damage the firm and their brand, possibly irrevocably. Many supposedly “voluntary” recalls have resulted. Abusive tactics of this nature have severely damaged trust between the CPSC and the regulated community.

3. Disregard of Public Comments. The agency has garnered considerable criticism for overlooking or disregarding comments from the corporate community solicited in its public rulemaking processes. Ignoring or disregarding inconvenient public comments contrary to the agenda of the controlling party makes a mockery of the legally-mandated public comment process. Notable instances include the recent approval of interpretative rule on “Children’s Products” and the rules implementing the public database of safety incidents. The database debate was so fouled by the majority’s refusal to entertain the legitimate concerns of industry that the two minority Commissioners proposed their own draft rule – which the CPSC at first refused to post on its website.
4. Unjustified Hostile Rulemakings. The CPSC has implemented rules governing the public database that adversely affect the Constitutionally-guaranteed due process rights of our businesses. There is no adequate public policy justification for the erosion of the remarkable civil rights that distinguish the American legal system among all international legal systems – yet the Commission voted 3-2 to allow falsehoods to be posted without recourse in a database the CPSC will maintain. In other cases, the agency has published draft rules (yet to be acted on) which could force companies like ours to spend as much as $10,000 per item per year to meet ARBITRARY rules on testing frequency or “reasonable testing programs” – notwithstanding strong evidence that these rules are wasteful, unnecessary and financially irresponsible. The pendency of rules like this creates destabilizing market uncertainty and forces business decisions that have no basis other than fear of future regulation. For instance, Wal-Mart has already instituted a 100 ppm lead standard months ahead of the POSSIBLE implementation of the standard by the CPSC – simply because the CPSC has been so slow to act.

The CPSIA went off track by taking away the CPSC’s authority to assess risk. If the CPSC were again required to regulate based on risk, safety rules could focus on those few risks with the real potential to cause harm to children. All risks were not created equal.

I recommend several steps to reduce cost, liability risk and complexity all without sacrificing children’s product safety:

A. Mandate that the CPSC base its safety decisions, resource allocation and rules on risk assessment. Restore to the Commission the discretion to set age and product definition criteria for the 300 ppm lead standard and phthalate ban. Freeze the lead standard and lead-in-paint standard at their current levels unless the CPSC determines that a change is necessary to preserve public health and safety.

B. The definition of “Children’s Product” should not include anything primarily sold into or intended for use in schools or which is used primarily under the supervision of adults. Other explicit exceptions should include apparel, shoes, pens, ATVs, bicycles, rhinestones, books and other print materials, brass and connectors. Exclusions from the definition should take these products entirely outside the coverage of the CPSIA (including mandatory tracking labels).

C. Lead-in-substrate and phthalate testing should be based on a “reasonable testing program”, not mandated outside testing. The tenets of a reasonable testing program should be set by the reasonable business judgment of the manufacturer. Resellers should be entitled by rule to rely on the representations of manufacturers. Phthalate testing requirements should explicitly exempt inaccessible components, metals, minerals, hard plastics, natural fibers and wood.

D. Definition of “Children’s Product” should be limited to children six years old or younger and should eliminate the difficult-to-apply “common recognition” factor of Section 3(a)(2)(c) of the CPSA. Definition of “Toy” (for phthalates purposes) should be limited to children three years old or younger and should explicitly refer only to products in the form used in play.

E. Eliminate CPSC certification of laboratories (rely on the market to provide good resources). Fraud has only very rarely been a problem with test labs and is already illegal.

F. Impose procedural limits to insure fairness in penalty assessment by the CPSC under the CPSIA. Completely reformulate penalties to restrict them to egregious conduct (including patterns of violations), reckless endangerment or conduct resulting in serious injury.

G. Rewrite the penalty provision applicable to resale of used product so that violations are only subject to penalty if intentional (actual knowledge or reckless endangerment) and only if the violation led to an actual injury. Eliminate the “knowing” standard with its imputed knowledge of a reasonable man exercising due care.

H. Mandatory tracking labels should be explicitly limited to cribs, bassinets, play pens, all long-life “heirloom” products with a known history of injuring the most vulnerable children (babies or toddlers).

I. Public injury/incident database should be restricted to recalls or properly investigated incidents only. Manufacturers must be given full access to all posted incident data, including contact information. The “due process” civil liberty interests of the corporate community MUST BE PROTECTED.

I urge your committee to address the fundamental flaws in the CPSIA to restore order to the children’s product market and to protect small businesses from further damage. I appreciate the opportunity to share my views on this important topic.

Read more here:
CPSIA – My Written Testimony at Senate Hearing 12-2-10

CPSIA – The Scoop on the CPSC Database

In response to my last blogpost, a little bird contacted me with some thoughts about the public database that consumer advocates and their leftist political allies are cramming down our throats. Apparently, there’s a big gulf between what the Commissioners are saying publicly and what they are saying privately. Take it for what it’s worth.

While you might not agree with the POV purportedly adopted by the Dems below, it certainly portrays them as rational. I think that’s right – they know what they’re doing and are doing it by choice, rather than by coercion. The fact that their actions will be harmful to the regulated community is not lost on them, but we’re just not their priority. THAT’S the real problem here.

Here’s a few tweets for you:

a. While the Dems “support” the database, they are privately acknowledging that it is a colossal waste of time and staff resources. They do NOT believe the database will be full of useful information to anyone. Why should you believe this? According to a reliable little bird on my window sill, the CPSC has not hired even ONE person to process all the information that will be posted in the database. The reason – the leaders don’t care if the data is correct or not. The phrase “post it and forget it” is their agenda.

Did you catch that? POST IT AND FORGET IT.

I believe I recall Rachel Weintraub touting the credibility and accuracy of this data. Hmmm. My so-and-so detector is going off . . . .

b. The driving plan of the Dems is to spend as little as possible on the database. They consider it a diversion of their scarce staff resources. They believe the database will do nothing – or almost nothing – to improve safety so why put money into it?

But they will vote for it – that’s the price of their political patrons – and I guess the impact of this useless database on your business and your willingness to engage in business activities is none of their concern. So they’ll implement it and fill it with garbage. Who cares . . . .

c. The speeches touting the database are intended to please the consumer groups and the political patrons of the Dems running the shop.

d. There is a recognition that allowing the database to swallow up resources at the agency will interfere with the real work of the agency. The Dems actually want to keep people safe so they are going to spend the bare minimum on the database.

The agency doing the bare minimum on the database should be the most frightening thing you have ever read about the database. And it’s true.

You’re not meant to know any of this. This freedom of speech thing is a real pain in the neck for our overlords.

It’s time to get REALLY scared about the database.

Read more here:
CPSIA – The Scoop on the CPSC Database

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