CPSIA – Witness List for April 7th CPSIA Amendment Hearing

Memo to Members of the House Subcommittee on Commerce, Manufacturing and Trade: When you listen to Dr. Dana Best fling around numbers tomorrow, please remember that “bazillions” is not a real number. When she asserts that there are possibly “millions” of injured children from lead-in-substrate, please demand real, auditable data! The Witnesses: Panel 1 Mr. Robert Jay Howell Assistant Executive Director Hazard Identification and Reduction U.S. Consumer Product Safety Commission  Dr. Barbara D. Beck, Ph.D., DABT, FATS Principal Gradient Dr. Dana Best, MD, MPH, FAAP American Academy of Pediatrics  Panel 2 Ms. Erika Z. Jones Partner Mayer Brown On Behalf of the Bicycle Product Suppliers Association   Mr. Paul C. Vitrano General Counsel Motorcycle Industry Council Principal Ms. Sheila A. Millar Partner Keller and Heckman LLP Caroline Cox Research Director Center for Environmental Health Panel 3 Mr. Frederick Locker Locker Greenberg & Brainin PC Mr. Charles A. Samuels Member Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Mr. Dan Marshall Vice President, Handmade Toy Alliance Co-Owner, Peapods Natural Toys & Baby Care   Ms. Rachel Weintraub Director of Product Safety and Senior Counsel Consumer Federation of America

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CPSIA – Witness List for April 7th CPSIA Amendment Hearing

CPSIA – "Must Read" in PSL

In the March 9th edition of the Product Safety Letter, Eric Stone published an analysis entitled “Is There a Need to “Recall to Repair” the Relationship Between the CPSC Compliance Staff and Business Community?“

My response: Amen, brother!

For those of you who don’t know Eric, he is the former Director of the Legal Division of the CPSC and also former Acting Director of the Recalls and Compliance Division of the Office of Compliance at the CPSC. He is currently a partner at K&L Gates LLP. To say the least, he is an authoritative figure in all matters CPSC.

Please read Eric’s Op-Ed.

Read more here:
CPSIA – "Must Read" in PSL

CPSIA – ICPHSO Update on Compliance and Field Operations

Marc Schoem moderated a discussion involving four other heads of department (he is an acting department head, too):

• Dean Woodard, Dir., Defect Investigation Div.
• Mary Toro, Dir., Regulatory Enforcement Div.
• Dennis Blasiua, Eastern District Div., Field Investigations Div.
• Kathleen Lisius, Compliance Investigator, Import Surveillance Div (standing in for the director today).

DW: This division has four teams. Fast Track Recall program does not let you off the hook for reporting violations. It does avoid a “Preliminary Determination”. This is a very “successful” and very “positive” program. Less bureaucracy and less “red tape”. “Saves lives” and “limits your exposure” to whatever issues there may have been.

[RW: It is ALSO one of the most remarkably coercive programs administered by the CPSC. You are very often, if not always, given a short period of time to decide whether to participate. By "short", this could mean HOURS to decide. Hope you are always at the ready!]

MT: Four teams based on hazard. Four team leaders and 16 compliance officers. Different backgrounds on the team, lots of tech know-how and skills. This team does a lot of advising and gives a lot of guidance to industry. Have more than double the previous total of regulations that they have to enforce. Field staff goes out to do inspections. Develop field investigation programs for the year. Now MUST report under Section 15 for a violation of a mandatory standard. [Them's a lot of reports!] All such items also have a certification requirement.

DB – Does hundreds of inspections annually. Surveys, too. Visits to consumer homes and “no one leaves in handcuffs”. [He said this in a joking manner.] Has roughly 100 investigations but gets tens of thousands of complaints annually. [RW: Now all that crap will go into the database. Can we see any issues here?] Emphasizes the politeness of his investigators. [RW: I appreciate this approach. I take him at his word.]

DB: Says we need to monitor the Internet for consumer complaints online. The CPSC is monitoring it so you better. Hmmm. DB says this may warrant investigation or spawn an investigation. More and more will send out investigators or ask for proof of destruction of recalled merchandise. Apparently, the re-export of recalled merchandise is up to Tim Geithner. [Fortunately, he's not too busy . . . .]

KL: Import Surveillance Div: Last year, not surprisingly, set a record of samples taken at port. 91% of the samples were violations, but only two products were recalled. Stopping at the port prevented the recalls. [This is interesting data. Are they clairvoyant or does everything coming into this country violate this godforsaken law in SOME way?] In apparel imports, the “first thing they look for” is drawstrings. Don’t go there. . . .

Q&A: What if you disagree with the conclusions of your compliance officer? What are your due process rights?

MS: You are encouraged to call “up the chain”. We are concerned to be responsive and want to know if you feel something is amiss.

60% of recalls come in under the Fast Track Recall program. In other words, this decision is made to pick up the “benefits” of the FTR program but also muddy the water about the state of the law on “substantial product hazards”.

[RW: This is a total cop-out on the part of the agency and contributes significantly to the confusion on the workings of the law. In addition, the defects in the FTR program make everything worse. Marc Schoem admitted during Q&A that you often have only a DAY to decide whether or not to participate, which is inherently coercive. For most companies, unprepared for a federal agency descending on them with an "offer that you can't refuse" with an eight hour time limit, the pressure can be overwhelming. It is not unusual to get this "fine" offer before all relevant facts are known, and even when basically NO relevant facts are known. One wonders if the Shrek glasses recall was one such event. See no evil, hear no evil, speak no evil?]

Why call everything a “recall”? MS: We like the word “recall” and think it’s most effective to “get the word out”. [See Nancy Nord's blogpost from earlier today. The word also has tremendous under the CPSIA - perhaps Mr. Schoem's favorite word needs to be revisited since things have changed. It is also a tough word when there is litigation going on.]

Read more here:
CPSIA – ICPHSO Update on Compliance and Field Operations

CPSIA – ICPHSO Update on Compliance and Field Operations

Marc Schoem moderated a discussion involving four other heads of department (he is an acting department head, too):

• Dean Woodard, Dir., Defect Investigation Div.
• Mary Toro, Dir., Regulatory Enforcement Div.
• Dennis Blasiua, Eastern District Div., Field Investigations Div.
• Kathleen Lisius, Compliance Investigator, Import Surveillance Div (standing in for the director today).

DW: This division has four teams. Fast Track Recall program does not let you off the hook for reporting violations. It does avoid a “Preliminary Determination”. This is a very “successful” and very “positive” program. Less bureaucracy and less “red tape”. “Saves lives” and “limits your exposure” to whatever issues there may have been.

[RW: It is ALSO one of the most remarkably coercive programs administered by the CPSC. You are very often, if not always, given a short period of time to decide whether to participate. By "short", this could mean HOURS to decide. Hope you are always at the ready!]

MT: Four teams based on hazard. Four team leaders and 16 compliance officers. Different backgrounds on the team, lots of tech know-how and skills. This team does a lot of advising and gives a lot of guidance to industry. Have more than double the previous total of regulations that they have to enforce. Field staff goes out to do inspections. Develop field investigation programs for the year. Now MUST report under Section 15 for a violation of a mandatory standard. [Them's a lot of reports!] All such items also have a certification requirement.

DB – Does hundreds of inspections annually. Surveys, too. Visits to consumer homes and “no one leaves in handcuffs”. [He said this in a joking manner.] Has roughly 100 investigations but gets tens of thousands of complaints annually. [RW: Now all that crap will go into the database. Can we see any issues here?] Emphasizes the politeness of his investigators. [RW: I appreciate this approach. I take him at his word.]

DB: Says we need to monitor the Internet for consumer complaints online. The CPSC is monitoring it so you better. Hmmm. DB says this may warrant investigation or spawn an investigation. More and more will send out investigators or ask for proof of destruction of recalled merchandise. Apparently, the re-export of recalled merchandise is up to Tim Geithner. [Fortunately, he's not too busy . . . .]

KL: Import Surveillance Div: Last year, not surprisingly, set a record of samples taken at port. 91% of the samples were violations, but only two products were recalled. Stopping at the port prevented the recalls. [This is interesting data. Are they clairvoyant or does everything coming into this country violate this godforsaken law in SOME way?] In apparel imports, the “first thing they look for” is drawstrings. Don’t go there. . . .

Q&A: What if you disagree with the conclusions of your compliance officer? What are your due process rights?

MS: You are encouraged to call “up the chain”. We are concerned to be responsive and want to know if you feel something is amiss.

60% of recalls come in under the Fast Track Recall program. In other words, this decision is made to pick up the “benefits” of the FTR program but also muddy the water about the state of the law on “substantial product hazards”.

[RW: This is a total cop-out on the part of the agency and contributes significantly to the confusion on the workings of the law. In addition, the defects in the FTR program make everything worse. Marc Schoem admitted during Q&A that you often have only a DAY to decide whether or not to participate, which is inherently coercive. For most companies, unprepared for a federal agency descending on them with an "offer that you can't refuse" with an eight hour time limit, the pressure can be overwhelming. It is not unusual to get this "fine" offer before all relevant facts are known, and even when basically NO relevant facts are known. One wonders if the Shrek glasses recall was one such event. See no evil, hear no evil, speak no evil?]

Why call everything a “recall”? MS: We like the word “recall” and think it’s most effective to “get the word out”. [See Nancy Nord's blogpost from earlier today. The word also has tremendous under the CPSIA - perhaps Mr. Schoem's favorite word needs to be revisited since things have changed. It is also a tough word when there is litigation going on.]

Read more here:
CPSIA – ICPHSO Update on Compliance and Field Operations

CPSIA – ICPHSO Update on Strategic Plan Panel Discussion

Next up (after audio problems are “fixed”) is the panel discussion on the Strategic Plan. The panel includes:

• Ken Hinson, Executive Director (moderator)
• Matt Howsare, Chief of Staff to Chairman Tenenbaum
• Cheryl Falvey, General Counsel, CPSC
• Jay Howell, Director, Hazard Identification and Reduction, CPSC
• Richard O’Brien, Director, International Programs and Intergovernmental Affairs, CPSC
• DeWayne Ray, Dep. Dir., Hazard Identification and Reductions, CPSC
• Marc Schoem, Dep. Dir., Office of Compliance and Field Operations, CPSC
• Neal Cohen, Small Business Ombudsman, CPSC
• Scott Wolfson, Dir., Information and Public Affairs, CPSC

Update on rulemaking (CF): Final rules issued in 2010 – crib rule, database rule (launching on March 11), “Children’s Product” rule and the civil penalty rule. Also, the mandatory recall rule, infant walkers and bath seat rules.

Draft rules: bike standard, two 15(j) rules on substantial product hazard list (drawstrings and hair dryers), component rule, 15 Month Rule and bassinets.

Rules coming up: cadmium rule (deferred for six months), toddler beds, lead paint and HD-XRF test methods, bed rails, bunk beds, swings, bicycle rules, testing and certification rules, 15(j) rules, 100 ppm lead standard, and notice of proposed rules on play yards and another “safe sleep” initiative category.

[One thinks that after they regulate bunk beds swings, bikes and so on that all the fun will be gone from childhood, bringing to mind an effective cure for cancer (killing the patient). Well, at least kids can still play with rocks . . . . OMG, rocks have lead in them!]

JH: They intend to double the number of rules in place in 1990. [Nice! More rules, more safety!] Rule-making activity is “abating” but have a growing compliance and enforcement workload. The burden is “shifting” to the compliance team. Working with all stakeholders to make sure they are compliant. [Safety is not the word used but instead "compliant". The notion is that compliance is tantamount to safety. Anyone want to discuss this topic?]

Why did the agency take such a “collaborative” approach to the Strategic Plan? MH – The “comprehensiveness” of the collaborative process was incredible. Went through all sorts of “painstaking” efforts to interview so many people in this room. [Perhaps Matt is referring to Raachel Weintraub - who else needed to be consulted, after all?] The Strategic Plan reflects the “consensus” view of the agency’s strategy. The “collaborative” process was designed to guarantee “buy-in”. The Chairman’s focus under the Strategic Plan is the preventative portion. Spoke of Neal Cohen’s area as a focal point. [There's an insight - we small business people are the problem! Thank heavens Neal Cohen can educate up.]

MH also points to “boots on the ground” in China as another feature of the CPSC’s efforts to prevent disaster. He did not say what kind of boots those might be. Jackboots?

Tell us about small business ombudsing, Neal! NC: Start by listening. There’s a lot of confusion, and there are ways to use the work done by the CPSC “to your favor”. [Hmmm, I'd like to know more about that.] NC: I’m not a policy maker at the agency. [RW - that's the rub, ain't it?] NC: I am spreading the word about the problems within the agency. NC has his own website (www.cpsc.gov/sbo). Putting out “plain English” documents to explain the law and the rules. Three tips on compliance: (a) know your product and your supply chain, (b) proactively educate your suppliers, and (c) don’t “assume”. [This is sound advice. It doesn't protect you from anything, however. Were you to follow Neal's advice, it would count for NOTHING if you get recalled. It should but it won't.]

All kidding aside, people have nice things to say about Neal. What he can achieve remains to be seen, however. I have yet to hear about him making problems go away. Most of the problems people are dealing with are nonsense, so if he could move heaven and earth, I think I would start to hear about him going to bat and getting something done for these beleaguered little companies.

International (RO’B): No sign of harmonization efforts in Mr. O’Brien’s presentation. He is leading the effort to get other world regulators to join us in our safety mania.

Scott Wolfson’s turn – “What about consumers and how do they fit into this?” SW: Pool Safely Initiative shows what we can do if we have money to get our messages out. [How have injury statistics changed, Scott? WS: Won't know for years. . . .] Concerned about “sustainability” ($$$). We’re hitting the road to get the message out. Have built a network to get info out. Working on a new logo.

Scott did not update us on Aston Kutcher. Maybe during the Q&A . . . .

RW: This all sounds good as far as it goes. Of course, he does not discuss the impact of OTHER decisions his office makes, like communication of “hazards” like cords on baby monitors or recalls of Shrek glasses. It’s all well and good that the CPSC has a couple billboards up about pool safety, but what about the mania on lead and their communication of those hazards?

Why does the CPSC need to train manufacturers? Why is it the agency’s role? JH: There are various levels of sophistication out in the marketplace. To drive the prevention effort, need to make sure manufacturers understand the rules of the road. [RW - this is one of my original suggestions for the agency in my first speech on the CPSIA. Failures in outreach is one of the main causes of the storm behind the CPSIA.]

JH: We are focusing our efforts around priorities to increase impact and to avoid dilution.

Jay Howell usually sounds pretty sensible. It would be great if the agency sounded more reasonable more of the time. Perhaps Jay can be an agent in that process.

MS: Trying to reduce the time taken to negotiate recalls. [RW: Two-edged sword here, since the concept of due process is flying out the window with the justification that they are "saving lives".] MS: If you’re right, you’re right – just convince us. Also need to get information out to consumers quicker.

RW: This is agency policy talking, probably not Marc Schoem.

SW: We are going out on all platforms, like Twitter, news media, Facebook, blogs – multiple times. MSNBC is doing a monthly “round-up” of recalls.

There was time for only two questions from the audience. Filibuster! I got to ask one of them. Here’s my question:

“I have testified five times at the CPSC, three times at your invitation. I have repeatedly told you that your policies and the CPSIA together are killing small businesses, killing products and killing markets. Last week, the bicycle industry testified that large bike manufacturers have reduced their product lines and small companies have left the market. Given this testimony, what do you think the agency’s responsibility is to small business and how does the Strategic Plan relate to protecting the right of small business to sell children’s products?”

KH: That’s why we have had such a collaborative process in the Strategic Plan. We need to identify hose issues and figure out a solution. RW: But we’re dying now. KH: We do what we do and violative products have to come off the market.

Read more here:
CPSIA – ICPHSO Update on Strategic Plan Panel Discussion

CPSIA – Congressional Hearing Testimony

The hearing held yesterday by the Subcommittee on Commerce, Manufacturing and Trade can be watched at this link. I will be posting snippets from this video soon if you want to wait to watch highlights.

Testimony of the participants:

Panel 1
The Honorable Inez Tenenbaum
Chairman, Consumer Product Safety Commission

The Honorable Anne Northup
Commissioner, Consumer Product Safety Commission

Panel 2

Ms. Jolie Fay
Founder, Skipping Hippos; Secretary, Handmade Toy Alliance

Mr. Wayne Morris
Vice President, Division Services, Association of Home Appliance Manufacturers

Mr. Rick Woldenberg (oral testimony and written testimony)
Chairman, Learning Resources, Inc.

Ms. Nancy A. Cowles
Executive Director, Kids In Danger

Read more here:
CPSIA – Congressional Hearing Testimony

CPSIA – House CPSIA Hearing Line-up

Here is the line-up for today’s hearing. Please note that the format is first, Members’ opening statements, second, Panel 1 presentations (five minutes each), third, questions by Members of the first panel (five minutes per member asking questions), fourth, second panel presentations, fifth, questions for the second panel. As the first panel today is Inez Tenenbaum and Anne Northup, we are certainly second fiddle so you can expect that portion of the hearing to take some time.

February 17, 2011

The Subcommittee on Commerce, Manufacturing, and Trade will hold a hearing on Thursday, February 17, 2011, at 10:00 a.m. in 2322 Rayburn House Office Building. The hearing is entitled “A Review of CPSIA and CPSC Resources.”

WITNESS LIST

Panel 1:

The Honorable Inez Tenenbaum
Chairman
Consumer Product Safety Commission

The Honorable Anne Northup
Commissioner
Consumer Product Safety Commission

Panel 2:

Ms. Jolie Fay
Founder, Skipping Hippos
Secretary, Handmade Toy Alliance

Mr. Wayne Morris
Vice President, Division Services
Association of Home Appliance Manufacturers

Mr. Rick Woldenberg
Chairman
Learning Resources, Inc.

Ms. Nancy A. Cowles
Executive Director
Kids In Danger

Read more here:
CPSIA – House CPSIA Hearing Line-up

CPSIA – Welcome to the Team, Gib!

In a fascinating turn of events, Gib Mullan has apparently left the employ of the CPSC and accepted the job of Chief Counsel of the House Committee on Energy and Commerce’s Commerce, Manufacturing and Trade Subcommittee. This is the subcommittee which has jurisdiction over the CPSC (and NHTSA, currently being run by David Strickland, one of the drafters of the CPSIA). We live in interesting times, don’t we?

Gib Mullan has had a long and illustrious career at the CPSC. Formerly a litigation partner at Kirkland & Ellis, Gib joined the CPSC as its General Counsel in 2004 and later became the Director of Compliance and Field Operations. In that latter role, Gib drew some fire in this space. Later, in something of a palace coup, he was “detailed” to the CPSC’s Office of Executive Director and then “assigned” to a “special project” at Customs and Border Patrol. The Product Safety Letter questioned whether this was a legal maneuver by Chairman Tenenbaum as it was not accompanied by a Commission vote. In other words, PSL implied that Mullan was the subject of an illegal firing by Tenenbaum.

Hmmm. And now ex-Kirkland partner Mullan is Chief Counsel for the House Subcommittee responsible for the CPSC? And working for the Republicans?

Can you say “oversight”?

Sounds like fun!

Read more here:
CPSIA – Welcome to the Team, Gib!

CPSIA – My Comment Letter on 100 ppmLead Standard

774 days have passed since ANY Democrat in Congress did ANYTHING to help us on the CPSIA. There are only 36 days left until Election Day.

My comment letter submitted today on the proposed 100 ppm lead standard due to be inflicted on August 14, 2011:

September 27, 2010

Todd A. Stevenson
Director, Office of the Secretary
Room 502
U.S. Consumer Product Safety Commission
4330 East West Highway
Bethesda, Maryland 20814

Agency: Consumer Product Safety Commission (CPSC)

Re: Docket No. CPSC–2010-0080 Children’s Products Containing Lead; Technological Feasibility of 100 ppm for Lead Content

Dear Mr. Stevenson:

I am hereby submitting comments in response to the Solicitation of Comments on Children’s Products Containing Lead; Technological Feasibility of 100 ppm for Lead Content (Docket No. CPSC–2010–0080) published in the Federal Register on July 27, 2010 (the “Proposed Rule”).

You have requested feedback and additional information on several topics relating to the prospect of a new lower 100 ppm lead-in-substrate standard. I will attempt to respond to your specific queries at the end of this letter. I find that the questions you have articulated are basically irrelevant to our company’s situation. Your questions seem to presume that the standard will be implemented. If you take the step of implementing the new standard, you will be inflicting needless and extension damage to our company with absolutely no corresponding benefit to consumers or the general public. This is terrible and irresponsible public policy. The new standard is not based on science but rather phobia and fear of the unknown. Our business will suffer for no purpose. The jobs lost will at your hand.

I want to comment on process. The agency appears to be in a race to complete its CPSIA rulemakings before year end, damn the consequences. According to www.regulations.gov, the CPSC received 73 comment letters on the Proposed Interpretative Rule for “Children’s Product” (CPSC-2010-0029 due June 21, 2010). Nevertheless, as has been widely reported, the agency ignored or glossed over the vast majority of those comments (including all of mine) and pronounced the draft rule to be “final” with virtually no changes. This flagrant disregard of public comments turned the CPSC’s rulemaking process into a sham if not an outright breach of law. I believe the agency intends to pass through rulemaking this year to avoid the embarrassment of further extending the CPSIA testing stay due to expire on February 10, 2011. The incentive to give short shrift to our comments grows daily.

I have lost faith in the sincerity of the agency’s interest in public comments after two years of being completely ignored. To judge by the agency’s disregard of my numerous comment letters, I must add little to your deliberations – in which case I do not understand why you ask me to waste hours on letters like this. After all, if you have no interest in my views, why not let me spend my time on other more productive activities? Unfortunately, I have also learned that any silence by stakeholders will be interpreted as “approval” by the powers-that-be. Thus, we are left with no option but to write these letters. With those thoughts in mind, I hereby submit my comments on the 100 ppm lead standard, fully anticipating that I will be ignored yet again.

I am aware that the agency contends that it is “compelled” to implement this new standard without regard to economics. The extremely rigid legislative language governing the implementation of the 100 ppm standard is thus portrayed as insurmountable. Is the agency truly powerless to resist? I might take that position more seriously if the agency was equally committed to following the law in other aspects of its daily affairs. However, the CPSC exhibits no such self-restraint. CPSC recalls initiated in flagrant disregard for the “substantial product hazard” standard in Section 15 of the CPSA demonstrates that the agency can invent legal flexibility wherever it wants. For instance, the CPSC pressed for a recall of McDonald’s Shrek glasses (signifying that the glasses were a “substantial product hazard”) despite this June 4th acknowledgement by the agency’s Director of Public Affairs in a tweet: “Scott_Wolfson: Note to reporters: the recalled McDonald’s glasses are not toxic.” Safe glasses do not constitute a “substantial product hazard” by any definition – yet the agency proceeded anyhow.

So when does the law actually matter, precisely? If safe drinking glasses may be labeled a “substantial product hazard”, then I guess anything goes. I find it worrisome to be regulated by a federal agency which does not abide by a disciplined interpretation of law but instead caters to prevailing political whims. If the law means nothing, then the agency should not presume to assert its inability to resist this provision. I think that’s just too convenient to be believable.

My comments on the proposed 100 ppm standard are informed by my view that the agency can do as it pleases. I have not restricted myself by the fiction that economics don’t matter.

The problems with the 100 ppm Lead Standard:

a. The new standard will have NO impact on human health. There is simply no evidence of injuries from lead at levels between 100 ppm and 300 ppm in substrate. It is notable that no other federal agency (NIH, CDC, EPA, FDA, etc.) has identified lead-in-substrate as a human health hazard. Without evidence of injuries at these barely measurable lead levels, the new standard cannot be justified economically or otherwise. It is worth noting that if the “cost” of lead-in-substrate levels of 100-300 ppm cannot be measured, the “benefit” of the new standard will be equally elusive. Given the known costs of this initiative, the new standard fails any conceivable cost-benefit analysis.

I published a study of CPSC recall data from 1999-2010 in my blog (www.learningresourcesinc.blogspot.com) in May 2010, revealing that only one death has been documented in association with lead in children’s products in the last 11 years, and only three (unverified) lead injuries in the same period. This is substantially fewer childhood fatalities and serious injuries than swimming pools and spas cause in an average day according to CPSC statistics. Given the trillions of daily interactions between children and Children’s Products in the course of a year, these meager 11-year lead injury totals are the statistical equivalent of no injuries. Thus, it will be impossible to prove statistically that any reduction in injuries flows from the change in standard. Troubling? Fear of lead-in-substrate is nothing more than a Congressionally-endorsed fear of cooties.

b. The new standard will substantially raise our product costs. The new standard means we will need to implement much tighter manufacturing tolerances for materials and for our processes. The many extra man-hours needed to implement and maintain these tighter tolerances will be expensive. It is difficult to estimate the cost, but we project a 10-20% increase in cost for finished goods subject to the new standard. Subcontractors who manufacture our goods will charge us for the risk of waste, plus the additional overhead required by the new standard. That is, they will charge us more if they are still willing to remain a vendor of Children’s Products subject to this standard. We are a small business, so many of our factories may feel our short runs are simply not worth the risk. That’s how I would look at it if I were them. Loss of vendors (manufacturing capacity) is yet another cost we would bear under the new standard.

It is worth noting that based on the results of our last two years of testing (thousands of testing line items), we estimate that less than 2% of our testing line items fall between 100 ppm and 300 ppm in lead as of today. The cost of trolling for those few affected components will be excessive and the waste associated with replacing “defective” materials will be a tax on our entire production and fulfillment processes. Not exactly a stimulus program. . . .

c. Our ability to control lead levels is unknown because test result variances are so wide. We have found that testing multiple samples from the same lot can show variances of up to 67% in lead content. It doesn’t take much variance to produce wild percentage swings at such trace lead levels. As an illustration, I have attached hereto a test report on a SINGLE PIECE OF PLASTIC STRING used to fasten a mesh bag. The string was tested in ten places, resulting in lead levels of 239 -275 ppm. In another case, we found three test results of the same yellow plastic substrate varied from 23 -139 ppm. None of this matters from a safety standpoint but from a regulatory standpoint, it’s a crisis in the making.

These small variances potentially endanger our business. How are we supposed to run our business selling inexpensive children’s products burdened by such an inflexible physical standard? The CPSC needs to recognize that substrates in the real world are not pure, consistent and invariable. The tight tolerances in this new standard will likely have us retesting several items a month at considerable expense and strain. [And G-d knows what standard the CPSC will inflict on us to govern retesting.] Each retest would presumably interfere with our ability to deliver on time and would stress our system and our people. Out-of-pocket costs would be high, perhaps over $100,000 per annum for our product portfolio of 1500 items; labor and other frictional costs would no doubt add to this total substantially.

d. It will be impossible to predict which components will fail. As test results tend to vary significantly for components from the same lot, it is difficult to control or predict problems. We have found violative results for many different materials used in our business – there is no pattern. Defects found in certain components might render the entire finished good worthless, potentially greatly increasing our losses. For example, an inexpensive backpack might be found to have a zipper that violates the new standard upon completion of the production run. This could happen even after extensive pre-manufacturing testing because physical goods tend to vary in composition. Perhaps only a tiny percentage of the zippers violate the new standard by a few ppm, but given the cost to repair and rehab the item and the practical inability to identify violative zippers, the entire lot of backpacks might have to be scrapped. There would be an increased incentive to substitute components across entire product lines, not because of any health or safety concern but simply to avoid regulatory compliance risk. Differences in utility would be a secondary consideration to avoidance of CPSC recalls or scrapping finished goods inventory. This situation would not be stable because consumers would not likely accept lower standards for our products just to mollify the CPSC – other seismic market changes could be anticipated.

e. The legal risks implicit in the new standard are simply intolerable. Let me ask you a question: how would you attempt to manage a major risk to your business caused by less than 2% of your activity? What if you had no idea WHICH 2% it was? What could you do? I think you might reevaluate your business model. Most people don’t roll the dice on their family wealth or their regular income. By imposing a standard for lead-in-substrate that is barely above measurable levels, the agency would be imposing EXACTLY this risk on us.

We believe we would be exposed to a daily risk of assault by consumer groups and other do-gooders bent on our destruction. This combat would be divorced from considerations of safety – it would be all about regulatory compliance. Our business purpose is not to pay fees to CPSC Bar attorneys, write up Section 15 reports or perform recalls. We do not have the profit margins to finance this kind of wasteful activity and do not have the spare capacity to deal with the regulatory “crisis of the day”. The legal risks of such conflict can quickly get out of control – and insurance is simply not a viable option economically. If we must bear these heightened risks, we will have to revisit our business model.

I hope the agency will not dare the children’s product industry to go belly up just to prove this point.

f. Companies, acting in good faith, are generally INCAPABLE of adopting the new standard as a practical matter. Everything can be made of low lead materials. Zippers can be made of platinum, alphabet blocks can be made of wood, cotton fibers or rhodium. Use of recycled materials can be discontinued (the anti-green movement). Durable and inexpensive materials used for years without incident can be discarded in favor of “purer” materials. All of these things are possible. But they are not practical and they are not economic. If we are to indulge the fantasy of the money-oblivious CPSIA, then whatever we can imagine is possible and money doesn’t matter. This is regrettably unrealistic – businesses exist in the real world and money DOES matter. Thus, companies operating in good faith can’t adopt the new standard if their business model is scrambled.

g. Dealers in our goods can be expected to adopt their own standards to create a regulatory “cushion”. Distributors and retailers have been building their own safe harbors to provide CPSIA protection over the last two years. We have many customers with unique and wildly variant compliance requirements despite the crafting of thousands of pages of rules from the CPSC under the CPSIA. Our dealers can always beat the CPSC in a game of “Can you top this?” If the agency implements a 100 ppm standard, we fully expect a new outbreak of “regulatory compliance exuberance” among retailers. What will happen to us under those circumstances? With a CPSC-fed mania, we will incur yet more costs and bear yet more risks. Our markets will shrink.

h. We believe these rules will so demoralize and de-motivate our staff that we will face high turnover rates among our employees who know all of your rules. Our regulatory compliance team is not on “work release” from jail. Their jobs are not intended as a form of societal punishment. If, however, compliance with the CPSC’s bureaucratic rules becomes too tedious or risky, or the stress of managing a string of crises and a blizzard of conflicting rules becomes overwhelming, our trusted associates will seek less stressful employment elsewhere. They don’t HAVE TO do this for a living. What is the CPSC planning to do to help small businesses who find themselves back at square one after a costly investment of thousands of dollars in specialized training? Is the new CPSC Small Business Ombudsman going to wave a magic wand to make our problems go away? I think we all know the answer – too bad for us.

Here are the answers to your questions:

1. Materials that are consistently under 100 ppm in lead content. You have previously provided a list of such materials for the 300 ppm standard. This list included some useful concessions, such as wood and cotton fibers, but also included useless and irritating examples like gold and platinum, gemstones and various byproducts of nuclear decay. In our experience, the common substrate materials used in educational products have varying (trace) levels of lead. As noted above, we have seen significant variances in lead content in a single string, and in substrates taken from the same lot. I have no confidence that any material we use can be proven to ALWAYS contain than 100 ppm lead.

2. Strategies or Devices to comply with the new 100 ppm standard. The only strategy we could employ is pre-manufacturing testing on materials with substantially increased testing frequency. As noted above, natural variances among many materials prevent us from creating any reliable safe harbor and cost increases from such testing activity (and the cost of scrapping otherwise acceptable raw materials) will greatly shrink our product line. As a consequence, we would likely have to sharply reduce our product line or go out of business – all thanks to the CPSC and our Congress!

3. Consequences of use of compliant materials meeting the needs of the product. We have not spent any resources evaluating the market demand for educational products made of platinum. We do not intend to switch over to osmium or ruthenium for their purported lead-free properties (we find toxicity to be a greater concern). We have not spent our time figuring out if gold is a suitable material for pattern blocks or our Reading Rods. There is no answer to this ridiculous question. As I mentioned above, more than 98% of our test line items complies with the new standard. The materials and components that fail do not fit a pattern. Tests are inconsistent, too.

4. For products that meet the 300 ppm standard but not the 100 ppm standard, provide data on compliance. As noted, we find that we are already 98%+ compliant with the new standard. The components that fail do so unpredictably and inconsistently. Even the same material out of the same lot produces varying test results, as do multiple tests of the same piece of string. We cannot run a business based on junk science intolerance of the world that G-d created. The crazy new 100 ppm lead standard is incompatible with variances found in the physical world.

I want to reiterate that the 100 ppm standard is entirely arbitrary and will save no lives and will preserve no IQ points.

5. Can such items be made compliant through use of other materials? Sure, of course they could. They would be unsalable because the products were rendered too expensive either by the engineering cost or the new materials cost. Is creating products that no one will buy an acceptable solution to this dilemma? Whether by economics (too costly to buy) or re-jiggering of business models (discontinued products), children will be purportedly “safer” because they will lose access to needed products. What a wonderful result! Does the CPSC advocate that American schools teach physical science with photos of magnets, paper clips and rocks? Perhaps we should revert to rote-and-repetition math education rather than modern techniques of hands-on learning. No doubt the CPSC would singlehandedly solve our national education crisis. Bring on pointless material substitutions and let the fun begin.

6. Best practices to be used to always comply with the new standard. I recommend dropping most products and only making items that are CERTAIN to be compliant. This in practical terms may be impossible, and as noted above, is completely uneconomic. Another good practice to discard everything that isn’t virgin material. I know that’s not “green” but we have to be really, really safe, right? Another super idea is to substantially increase our testing, but of course, we cannot afford the current level of testing as it is. That seems somehow unrealistic. Other strict controls on manufacturing seem equally out of reach. There are so many variables to manage to achieve the new standards – we must control the factory environment as though it were a hospital ICU. That’s just not possible at current cost levels. Our factories would have to be “restructured”. I bet the Small Business Ombudsman can coach us on this!!!

Please note: we don’t have to reorganize our factories because we don’t have to stay in the children’s product market. If the CPSC expects us to reorganize our entire way of doing business to accommodate a phobic standard not based on any observable public health problem, we may opt out. Is this really the purpose of the CPSC – to micromanage markets, to restructure the economy, to substitute for market forces? I think not. Please check the CPSA to see why your agency exists. I hope a Republican-controlled Congress will do exactly the same thing in a few weeks’ time.

7. The lowest technologically feasible lead level below 300 ppm in our products. We can achieve anything for a cost. There are no “lowest” levels. Why not specify entirely lead-free? We can make everything out of gold and osmium! Lay in a few gemstones and diamonds, and you will have a sparkling new toy that cannot poison anyone with lead. It may have other problems (choking hazards? Sharp points?) but at least no one will die from lead poisoning. Not that anyone did previously . . . .

8. The date by which our products can meet the 100 ppm standard. In my opinion, the date is NEVER, because we have no practical ability to control quality to the level you require. Even at our current 98%+ compliance with the new standard, it would be extraordinarily disruptive to attempt to be 100% compliant. After a few episodes of being shut down by the CPSC or sued by some lunatic consumer group over nothing, we would exit the market. If you intend to deprive us of the meaning and pleasure of our work to make children’s lives better, we’ll leave the well-being and education of our nation’s children to you. That would be a very sad day for us.

Thank you for considering my views on this important subject. This letter took me all day; I hope you won’t completely ignore it as you have all my other letters.

Sincerely,

Richard Woldenberg
Chairman
Learning Resources, Inc.
380 North Fairway Drive
Vernon Hills, IL 60061

Read more here:
CPSIA – My Comment Letter on 100 ppmLead Standard

CPSIA – Business Roundtable Torches Obama for Anti-Business Policies

In a scorching 54-page letter to departing OMB Chief Peter Orszag, the Business Roundtable and Business Council (via Ivan Seidenberg, CEO Verizon Communications, and James Owens, CEO Caterpillar Inc.) outlined the many problems caused by this Administration for the business community. I am pleased to say that the CPSIA made a cameo in this letter (see below), likewise TSCA reform. I am sure Mr. Waxman cares not, but it’s nice to know that our issues rank right up there.

The bubbling and surging frustration and despair I feel over the two-year CPSIA torture chamber is echoed by prominent business leaders in this letter. Business people are beyond exasperated after 18 months of Obama and his left wing allies who have never had to make a payroll. As I have said countless times now, our company has a sterling record for safety and the children’s product industry itself has an almost unassailable record for protecting children from injury from lead and from phthalates (according to the CPSC’s recall data itself).

How did we turn into public enemy number one? We are left to twist in the wind, and our regulators seemingly could give a damn. I have had enough . . . and that puts it mildly.

Here is the letter. You can read the report by clicking on the link above, it’s rather interesting. I have also reproduced the verbiage on TSCA and the CPSIA below the letter.

June 21, 2010

The Honorable Peter R. Orszag
Director
The Office of Management and Budget
725 17th Street, NW
Washington, DC 20503

Dear Director Orszag:

As a follow‐up to your request to both Business Roundtable and The Business Council for examples of pending legislation and regulations that have a dampening effect on economic growth and job creation, we surveyed our membership to get their views. Attached are an Executive Summary and detailed description of what they see as government initiatives that will cause slower rather than faster growth.

Obviously the list is long, but we believe the cumulative effect of these proposals will help defeat the objectives we all share – reducing unemployment, improving the competitiveness of
U.S. companies, and creating an environment that fosters long‐term economic growth.

As business leaders we are increasingly concerned that the political expediencies of the short‐term harm our ability to partner with government to create policies that foster growth. Now more than ever we need to work as businesses and as government to make the United States a place where we can attract the investment that is needed if we are to remain the strongest economy in the world. [Emphasis added]

We would be pleased to meet with you to discuss any and all of these issues.

Sincerely,

Ivan G. Seidenberg
Chairman & CEO
Verizon Communications
Chairman, Business Roundtable

James W. Owens
Chairman & CEO
Caterpillar Inc.
Chairman, The Business Council

Excerpts:

CPSIA: “Product Safety: The Consumer Product Safety Improvement Act (CPSIA) and the Consumer Product Safety Commission’s (CPSC) implementing regulations are more expansive than necessary to protect consumers and impose unjustifiable regulatory and economic burdens on the regulated industry.” (page 42)

TSCA: “TSCA Modernization: Compliance with the proposed safety standard appears to be nearly impossible and will result in a flood of litigation. It will gridlock American industry, ultimately stifling investment and costing valuable American jobs. Under the complex regulatory framework being proposed, EPA will be unable to meet required deadlines which will effectively bar new products from the market. Under these proposals, foreign manufacturers will have a distinct competitive advantage to produce new chemical solutions.” (page 12)

Read more here:
CPSIA – Business Roundtable Torches Obama for Anti-Business Policies

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