CPSIA – Comment Letter on the "15 Month Rule"

August 3, 2010

Todd A. Stevenson
Director, Office of the Secretary
Room 820
U.S. Consumer Product Safety Commission
4330 East West Highway
Bethesda, Maryland 20814

Agency: Consumer Product Safety Commission (CPSC)

Re: Docket No. CPSC–2010-0038 Testing and Labeling Pertaining to Product Certification.

Dear Mr. Stevenson:

I am hereby submitting comments in response to the Solicitation of Comments on Testing and Labeling Pertaining to Product Certification (Docket No. CPSC–2010–0038) published in the Federal Register on May 20, 2010 (the “Proposed Rule”).

The End of (Business) Life As We Know It:

As I sit down to record my comments on this rule, I take comfort in knowing that the CPSC admits what it is doing here. In a section entitled “Caveats and Possible Market Reactions to Third Party Testing Requirements”, the agency acknowledges the severe impact of its new rule on manufacturers:

a. Significantly increased costs,
b. Incentive to redesign (presumably successful) products,
c. Incentive to reduce features on products,
d. Incentive to eliminate (presumably useful) components in finished goods,
e. Incentive to reduce product lines,
f. Exit the market altogether,
g. Go out of business,
h. Create barriers to entry for future business expansion, especially in specialty markets (non-mass market),
i. Devastate niche markets (noting particularly the “special needs” educational market – sorry, blind kids!), and
j. Incentive to delay or forgo product or manufacturing process improvements (to avoid testing costs).

Quite a stimulus program! Of course, the CPSC knows we can’t meet this challenge alone. In “The Potential Effects of the Proposed Rule”, the agency advises us to hire a few helpers:

a. Lawyers to review CPSC regulations,
b. Engineers and chemists to develop product specifications, conduct tests and design a program for production testing,
c. Statisticians or consultants to determine the frequency, sample size and collection method for production testing, and
d. Technicians, “perhaps working under the supervision of an engineer, chemist or similar professional”, to perform production tests.

This certainly is a Brave New World for us. Luckily we have the CPSC to tell us what to do. Unfortunately, we can’t afford an in-house legal department or teams of engineers, chemists or statisticians. We don’t even have technicians. Incredibly, somehow we bumble on in our blissful, almost charming ignorance, having had only one recall of 130 pieces (we recovered every unit) out of perhaps 1,000,000,000 units sold in the last 26 years. No doubt all the pain the CPSC is promising us will be worth it . . . gotta keep everyone so safe.

Seriously, Is Anyone Listening?

On page 28338 of the Federal Register, the Proposed Rule reproduces the “reasonable testing program” as it stood before the December 10-11, 2009 workshop at the CPSC. The workshop (which we attended with three people who were each asked to appear as a panelist) was ostensibly for the purpose of giving “stakeholder feedback” on the so-called “15 Month Rule” (the Proposed Rule) and the component testing rule (also up for comment today, posted under separate cover). We gave detailed feedback on these rules – none positive – yet the Proposed Rule seems to have preserved the original, deeply-flawed concepts intact.

It is difficult not to conclude that the process of providing feedback to this CPSC is a sham. While Chairman Tenenbaum has long touted her “policy” of seeking feedback from all stakeholders including industry, judging from this rule, the commitment to seeking feedback does not involve maintaining an open mind. It appears that the most likely feedback to be well-received is feedback that ratifies what the agency already plans to do. Other feedback is “wrong”, I guess. I doubt you will find this letter useful.

As time ebbs on and as the drumbeat of a CPSC bent on our destruction becomes more and more clear, the incentive to waste a few days preparing detailed comments also ebbs. Nevertheless, owing to the importance of this Proposed Rule, I am hereby submitting comments. I have no reason to be optimistic that you will consider my point of view with an open mind. This rule has all the earmarks of a fait accompli.

Deeply Flawed Economic Analysis.

The Proposed Rule devotes pages and pages to a tortured analysis of its purported compliance with the Regulatory Flexibility Act (“RFA”). This section of the Proposed Rule is a virtual admission of how unworkable the rule is (and the CPSIA testing scheme in general). As a starting point, the rule states: “The objective of the rule is to reduce the risk of injury from consumer products, especially from products intended for children aged 12 years and younger.” In my recent study of CPSC recall data posted on its website, I have found exactly ONE DEATH and THREE ASSERTED INJURIES from lead or lead-in-paint from 1999-2010. Please keep this statistic in mind as I review the economics of your “injury reduction” effort.

The flaws in the RFA analysis are clear in its discussion of testing costs for toys. The analysis acknowledges that it only accounts for out-of-pocket testing costs, nothing else. Significant additional (and ignored) costs include samples destroyed or damaged in testing, transportation of samples, administrative costs for managing testing, administration costs for managing the testing data, administrative costs for managing recordkeeping, an allocation of general management time, legal expenses relating to testing and so on. Depending on the scale of the business, I estimate that these costs (and distractions) will add 15%-50% to the out-of-pocket testing costs.

The RFA analysis concludes that testing a typical toy will cost $1,262 per product. As an average, this might be a good number for our business. I would note, however, that the Proposed Rule posits that we will test multiple samples, sending in perhaps four separate samples per item to satisfy the bizarre “required high degree of assurance” standard. [The rule states clearly that testing one sample is never enough. Interestingly, we have never had the experience in the last 20 years that multiple safety tests of the same product reveals anything useful other than rapidly approaching poverty.] The rule’s four-sample regime takes the testing cost per toy up to $4,848 (by the calculation in the document) plus another $2,500 for mechanical tests (because the rule posits that we will submit FIFTY samples for mechanical tests). That brings us up to $7,348 per item, plus 54 destroyed samples. This implies a rough “all-in” cost of $10,000 per item. We have 1,500 catalog items in our product line. Without a “reasonable testing program” in place (see below), we will have to test each item annually. This is a cost of $15 million for our company EVERY YEAR. [We also sell custom items, a business that would presumably be terminated by this testing rule. That’s several jobs down the drain.]

Does it surprise you to know that $15 million in testing costs exceeds our annual profit? By far?

The RFA analysis is deeply flawed in other ways, too. The rule duly reports that “[a]ccording to a representative of a trade association, there are an estimated 50,000 to 60,000 individual toys on the market.” Oh, really? Perhaps the CPSC shouldn’t have consulted the International Hubcap Manufacturers Association for this information. A quick visit to the Amazon.com website reveals listings of 808,465 toys and games on August 3rd (http://amzn.to/djtTVX). Amazon is a customer of ours – I estimate that they list about one-third of all toys and games sold in the consumer market. Call it 2.5 million toys and games available to consumers in the U.S. But that’s not all – the category also includes specialty items not present on consumer sites. For instance, our industry, the education industry, is largely invisible on consumer sites. I estimate that about one million SKUs are available to purchase at the annual convention of the International Reading Association. Millions of other SKUs are displayed at the national math show, the national science show and the national early childhood show. Add in special needs and other sub-markets – and you get well in excess of 4-5 million toys and games. So the RFA analysis might be off by 100x in its assessment of the toy market ALONE. That’s not close. . . .

The RFA analysis goes on to conclude that the ENTIRE MARKET of products affected by the rule is 100,000–150,000 products. This includes “wearing apparel, accessories, jewelry, juvenile products, children’s furniture, etc.”, plus non-children’s products and other children’s products like ATVs, bikes, bunk beds and so on. It is hard to dignify this ridiculous data with a retort, except to note that it is absurd on its face. The apparel industry ALONE offers as many as 8,000,000 different children’s SKUs for sale. The RFA analysis is fatally flawed.

At $10,000 per SKU, the projected children’s product testing costs will easily exceed $50 billion per year. Remember the 11-year CPSC statistic on lead deaths and injuries – one death and three ASSERTED injuries? [There are no recorded injuries from phthalates or cadmium, by the way.] The 11-year compliance cost will exceed $550 billion (in 2010 dollars), expended by U.S. companies to “reduce” this risk of injury. It would cost a lot less to wrap every American child in bubble wrap.

Small Businesses CANNOT SURVIVE THIS RULE.

Assuming we are supposed to take this rule seriously, the Proposed Rule is perhaps the best friend of the mass market yet invented by an agency seemingly bent on the destruction of the small business community. This letter documents again and again the unrealistic expectations and assumptions made by the authors of this rule with respect to businesses in general and small businesses in particular. Thousands of small businesses of every stripe and color will be affected by this rule. Are you seriously thinking that they will all hire statisticians, chemists and engineers to prepare the reams of data, plans and reports the CPSC expects? Once this massive, herculean effort is completed, who will be safer anyhow? I can think of someone – mass market companies who have been handed a game-ending cost advantage on a silver platter by the CPSC. This, combined with mass market companies’ ability to create certified firewalled in-house labs, favors the big guy dramatically. No wonder the rule states again and again how prejudicial this rule is to small business. The CPSC knows what it’s doing.

Small businesses will strain to even understand what is expected of them. The rule is obtuse, long-winded and full of arcania. Small business people may not have the time or skills to master this complex rule. When the CPSC turns to its attention to enforcement (as promised for 2011) and selects a few small businesses to whip into shape, the market will take note of the pain and a mass exit will result. I realize, however, that Cassandra-like predictions haven’t influenced the CPSC in recent times. One of the Commissioners has even been quoted as saying that “anecdotes aren’t evidence”. It feels like we have to die to prove we were right. A few small businesses might just do that, if the agency waits long enough.

The Commission has asked for feedback on how to address these issues. The complexity of the CPSIA safety rules proves that they are unworkable. To repair this damage, the Commission must ask Congress to restore its ability to assess risk. I am assuming that the Commission would exercise this discretion with more common sense than is embodied in this rule. CPSC rules should be trimmed back to things that MATTER, only. Second, the agency should build its rules and its enforcement activity around DATA. Injury statistics tell the agency what is important. If a particular hazard generates ONE DEATH AND THREE ASSERTED INJURIES OVER 11 YEARS, you can safely relax your rules quite a bit (there are worse problems out there). Education might make a difference, however.

Finally, the Commission should NOT take ANY step if there is EVEN A SHRED OF DOUBT about the impact on small business. Small business is the major jobs creator in America. When you promulgate rules that choke the life out of small business or sharply reduce their incentive to invest, you are killing our economy. You have a heavy responsibility to keep this place running, even if it’s an imperfect world. While it’s sad that a child ever dies, the pain and suffering imposed on countless families from lost jobs, lost capital, lost access to needed products, and so on likely far exceeds it.

Reasonable Testing Program – Busy Work to Keep Us From Running Our Businesses.

The “Reasonable Testing Program” (“RTP”) represents a choice presented to manufacturers of children’s products under this rule. If we endure the expense and disruption of a RTP, we can cut our testing frequency (read, testing costs) in half. A very tempting prospect but the cost of a RTP seems too high, leaving us with a Hobson’s Choice. We can’t afford annual testing and we cannot afford a RTP. What should we do? What will anyone do?

Owing to the burden and complexity of RTPs, I predict EVERY REGULATED COMPANY will violate these rules. Since Ms. Tenenbaum has promised to turn to enforcement in 2011, the CPSC regulators should have a pretty easy time finding juicy targets. Every company will provide wonderful enforcement opportunities.

Although our testing program has been highly-effective over the last 26 years, our program would never meet these standards. We do not maintain the volume of paperwork that the new CPSC rule now requires. We know what we’re doing, but we have not organized our files into a how-to manual. Perhaps the agency thinks every company in the country is an ISO 9001 company. They’re not, and this kind of documentation is rare and breathtakingly expensive to prepare.

Having endured the CPSIA spectacle for two years now, I do not trust the seemingly flexible definition of necessary documentation. The pattern is that these seemingly open-ended terms (which may or may not describe our current recordkeeping) will mature into something rigid down the line. Even if they don’t, we still face the risk that we will not measure up to the expectations of the CPSC enforcement officer at the time of reckoning. The feeling that we are being set up is inescapable. As noted above, given our record of performance, the agency should have NO concerns about how we go about our business. Nonetheless, I feel certain that these rules will bite me in the future.

Sample selection under the rule should not be based on any statistical formula (per the baffling presentation of Dr. Michael Greene at the December 2009 workshop). If the overall safety results of the company are strong, the choice of samples by the company or factories should be presumed compliant without further inquiry. Random selection (taking one off the shelf . . . without the assistance of a statistician) works just fine in our experience, and there is no evidence that testing multiple samples will accomplish anything but will certainly raise costs. Better sampling won’t lower injury rates that already approach zero.

We currently do not use production testing and have zero production testing plans in place. With one recall in 26 years, I would assert this kind of testing is superfluous in our business and basically useless from a safety standpoint. It will significantly raise costs, however. The tedious exercise of preparing a pallet load of production testing plans to meet the new requirements is just plain busy work. One must ask what the CPSC was thinking when it penned this description of a production testing plan: “A production testing plan may include recurring testing or the use of process management techniques such as control charts, statistical process control programs, or failure modes and effects analysis (FMEAs) designed to control potential variations in product manufacturing that could affect the product’s ability to comply with the applicable rules, bans, standards or regulations.” Fancy words but . . . what planet are they from?

The requirement to list all the tests applicable to our items, again and again, to satisfy the RTP requirements is typical of mindless busy work asked of us. Does the CPSC think this will make ANY difference? Most businesses confirm safety tests with their testing lab partners anyhow. More bureaucracy, taken to new heights.

We don’t have any remedial plans in place either. We are quite familiar with how to appropriately resolve compliance and quality issues, and have never had a problem with regulators in the exercise of our business judgment. The requirement to prepare a detailed written plan, just in case we have another recall in the next 26 years, is pure officiousness. This is yet another waste of our time, our money, our resources and our intellect.

The recordkeeping requirements of a RTP is well beyond our ability or interest to preserve for 1500 products produced in thousands of lots over the course of a year. Taking a “Dear Diary” approach to how we source, test, move, remediate, repair, investigate and otherwise manage children’s products is completely unreasonable. This is especially ridiculous given our track record.

The Commission has asked what a RTP might cost us. I have a hard time estimating it because all the fun in our business would be gone. If we had to endure the bureaucratic nightmare this rule envisions, if anyone actually expects us to do all this to make simple plastic toys for schools, I would have to seriously consider our alternatives. So it might cost us our entire company. That’s the whole enchilada, guys.

Remember, we don’t have to make children’s products, nor do we have to stick around for the next act of this tragedy. If the CPSC persists in ruining what was once a rather safe industry with a strong track record, the cost will be the entire market for children’s products.

Is that a high enough price to give you pause? I know, I know, more anecdotes . . . .

The Requirement to Document Procedures against Undue Influence is Unreasonable.

The “Undue Influence Procedures” requirement (“UIP”) is essentially a requirement to document efforts to avoid fraud. If you’re not inclined to commit fraud, there’s little reason to set out your plan to not commit fraud. Here’s our current policy – “Don’t break the law or commit fraud”. This has worked well for us, as we have never exerted undue influence in the last 26 years and have no plans to start now.

I am really sorry that there are bad people in the world, some small number of which may have at one time attempted to exert undue influence over one or more test labs. Perhaps the CPSC should concern themselves with the bad guys and leave the rest of us alone.

Material Change Rules Place Too Much Risk on Manufacturers.

The CPSC’s rule on when to test after a “material change” is sufficiently open-ended to render the judgment on when to test fairly obvious – ALWAYS TEST. Deep within the Proposed Rule, Section 1107.10(b)(2)(ii) instructs “A material change is any change in the product’s design, manufacturing process, or sourcing of component parts that a manufacturer exercising due care knows, or should know, could affect the product’s ability to comply with the rules . . . .” “Due care” is defined as “the degree of care that a prudent and competent person engaged in the same line of business or endeavor would exercise under similar circumstances.”

In other words, the agency’s 20-20 hindsight can construct a case for testing for a material change for just about anything that “might” or “could” affect results or that a hypothetical “prudent person” might think of investigating. Of course, this issue only comes up in the context of an injury or a recall, so what are the odds that any judgment to NOT test would withstand inquiry by an angry CPSC? Zilch. So either you always test or you take a big risk. This is completely unfair and unreasonable.

Testing Frequency Must Be Left to the Manufacturer and to the Market.

A rule requiring manufacturers to test according to these standards every year is going to kill us and many other businesses. No one can afford the testing scheme outlined above, we least of all. If we must test according to these standards, we will be out of business quickly. It is equally unrealistic to imagine that testing cost savings from maintaining a RTP will hold much appeal since that project is so wasteful and gargantuan. Of course, a firewalled in-house lab would be nice for all of us small businesses, but that’s unrealistic, too (not to mention undesirable). We have no realistic way to moderate these costs. Please see my other August 3 comment letter for an explanation of why I believe component and composite testing will likewise provide no relief.

Testing is supposed to assure product quality and compliance. If we have a good, long term record of safety, why can’t we just carry on as we have, and deal with issues as they arise? That worked for 26 years. The new way is just unaffordable.

The “High Degree of Assurance” Standard is Unreasonable and Not Derived from the CPSIA.

The rule seems to conclude that a “high degree of assurance” is a necessary element of any “reasonable testing program”. The importance of the “reasonable testing program” which was incorporated into the CPSIA as an alternative to third party testing for non-children’s products, has been imputed to the children’s product area as a way to reduce testing frequency, and with it, the “high degree of assurance” standard (“HDA”) was likewise imputed. Thus, sliding down this slippery slope, the HDA standard has become part and parcel of the “15 Month Rule”. Abracadabra.

The Commission has requested feedback on the meaning of the definition of HDA in Section 1107.2. Happily, the agency has rejected a strict statistical interpretation requiring “95% probability” of compliance. What should the definition be interpreted to mean? The “high degree of assurance” should be based on an overall assessment of the safety record of the company. It should NOT be based on the results of an individual product, even if recalled or deemed dangerous. In our case, we have done business for 26 years, had one recall of 130 pieces of out of about 1,000,000,000 pieces sold. All of these units were recovered. Thus, we believe there is zero probability that a recalled product is in the market. Our historical recall rate is approximately 130/1,000,000,000 or 0.00001% over a 26-year period.

With this record over so many years, our company should be deemed to have satisfied this HDA requirement and be endorsed as having a reasonable testing program without further inquiry. And if we DON’T deserve the HDA designation, then the CPSC should articulate what level of safety achievement would earn the designation.

Notably, the entire children’s product industry also meets this requirement. Of the 899 recalls of children’s products from 1999-2010, only one death and three asserted injuries from lead were recorded by the CPSC. Thus, the probability of being injured from lead by a children’s product is nearly zero, given that literally billions of children’s products are sold every year. [The apparel and footwear industry claims annual sales of about 4 billion units ALONE.] Industry recall rates are likewise well under 1% per annum. With injury statistics and recall rates in hand, the CPSC should GREATLY loosen the strictures of the “high degree of assurance” standard to focus its resources on activities that might actually injure someone.

One-to-One Product Testing Will Punish the Smallest Companies.

The prophylactic approach to testing adopted by the CPSC will inevitably put many small or micro businesses into bankruptcy, or drive them into unregulated markets to avoid the CPSIA’s wasteful bureaucratic costs. If the law does not permit the agency to adopt sensible rules that allow businesses to manage their compliance risk as best they can (where the standards remain in place, but the government stops trying to tell businesses HOW to comply), then the Commission must finally tell Mr. Waxman what he doesn’t want to hear – that his law is broken and can’t be fixed. [Notably, these mini businesses most at risk have an exemplary record of safety and very low recall rates. NOTHING is gained by rules that crush the little guy.]

We in the small business community have suffered for two solid years while regulators have sought any possible way to avoid delivering this “unpleasant” message. I get the impression that the demise of our businesses would not be too great a cost for the agency to incur to avoid telling Congress what it doesn’t want to hear. If the Commission is genuinely interested in a fix, it must take action with Congress. I do not believe the agency can devise sensible regulations to fix this problem short of a legislative change.

Ban on Retesting Will Unnecessarily Create Crises at Small Businesses.

In our experience, test labs are neither infallible nor definitive in their understanding of U.S. safety laws and regulations. It is not unusual to experience failed test reports for reasons besides safety problems. In addition, children’s products are not so pure and perfect in their composition that every test produces the same result. The CPSC itself instructed manufacturers to audit their test labs in the ironically-dated April 1, 2010 version of the Proposed Rule in response to industry complaints that test results varied from test lab to test lab. By forbidding retesting, the Proposed Rule removes discretion and appropriate problem resolution techniques from a commonplace quality event. You don’t need to manage a very large portfolio of products before the probability of an ordinary course testing problem rises exponentially. This is a matter of mathematics. If retesting is banned, the CPSC is legislating a crisis of the week.

Again, CPSC injury data informs us that the nature of the problem is extremely modest. Historical injury rates are VERY low. This retesting rule is completely unnecessary and penal to all companies except perhaps mass market companies with greater resources. Small businesses won’t have teams of engineers or statisticians around to save the day. Many small businesses will naively call the CPSC for “help”, only to find out that they have created a worse crisis. Some small businesses may miss this point in the Proposed Rule and continue to retest, only to be punished later when the CPSC finds evidence of retesting at the time of a recall. Is this really how you want to regulate?

I would note that the justification for all this is bad acts: “[Retesting] may tempt unscrupulous parties to attempt to ‘test the product into compliance’. . . .” To my knowledge, this behavior has little precedence and even so, it is an abuse that can be dealt with other ways. If honorable and law-abiding companies use retesting to resolve honest problems, no harm is being done. Punishing good guys because you are afraid that otherwise bad guys might benefit is excessive and inappropriately harsh.

The 10,000 Piece Limit for One-Time Testing is Arbitrary and Unfair.

The CPSC has failed to persuade that the 10,000 limit is an appropriate break point for testing. First of all, the limit is cumulative, not related to sales in a period or per annum. Second, the threshold bears no relationship to risk of injury. In other words, it’s completely arbitrary. Why 10,000? Why not? In my view, that’s not enough to justify this rule. Many of the micro businesses that might benefit from this rule have NEVER had a recall. These are the people this rule will restrict. And the logic of this is . . . what, exactly?

Even more remarkable is the rule’s insistence that these low volume items be tested annually after passing the 10,000 piece threshold. Small companies will never have a RTP so annual testing (or more frequently, if for instance the item is hand-assembled) will be mandated. Consider a product selling 2,000 piece per year. Under these rules, the incentive to drop it once it crosses the 10,000 threshold will be powerful. This reminds me of the incentive on small businesses to not hire a 26th employee to avoid an onslaught of Obamacare obligations. A tacit cap on sales will be imposed by this rule. Nice!

The solution to this problem is to require one-time testing before sale, and thereafter according to the business judgment of the manufacturer. Remember, the retailers that buy from the manufacturer will also have something to say about testing frequency, too. Not all solutions are better if imposed by the government.

Alternative Testing Technologies.

The ability to test at low cost with XRF is attractive. For our business, it is tempting to use an XRF gun but for two reasons: (a) cost, and (b) health risk. XRF guns cost $30,000 each and have high annual maintenance costs (several thousand dollars a year). We might need several guns to manage our inventory volumes, a very costly prospect. XRF guns are portable x-ray machines. Notwithstanding the assurance of XRF gun manufacturers, I am quite reluctant to place an x-ray machine in the hands of a warehouse worker in our facility. This is an invitation to disaster. We likewise have no interest in hiring a highly-paid technician to wield the gun, or technicians to wield the guns. In any event, we cannot expose our employees to a possible risk of x-ray genetic damage. I am surprised that the CPSC doesn’t take this risk more seriously. Is lead a worse problem than x-rays?

In any event, I fail to understand what would be accomplished by a XRF solution for small businesses. The process of XRF testing may be inexpensive, but would be disruptive. In any event, I don’t see a connection to safety so I prefer a solution that restores sanity to our safety practices. Burning in a wasteful and disruptive process will only bog down our economy and our competitiveness. Until the CPSC can point to a risk factor relating to the little guys, one cannot rationally conclude that XRF makes this regulation better, just somewhat less worse.

In sum, the Proposed Rule is a dangerous rule with the acknowledged prospect of doing severe market damage. The CPSC knows this, having admitted it in writing in the text of the rule. There is no excuse to push forward with a defective rule on this scale. The Commission must talk honestly with Congress . . . before it’s too late.

Thank you for considering my views on this important subject.

Sincerely,

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

Read more here:
CPSIA – Comment Letter on the "15 Month Rule"

CPSIA – Comment Letter on "Children’s Product" Definition

I apologize, the letter’s long. . . .

June 20, 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–2010-0029 Interpretation of “Children’s Product”

Dear Mr. Stevenson:

I am hereby submitting comments in response to the Solicitation of Comments on the Interpretation of “Children’s Product” (Docket No. CPSC–2010–0029) published in the Federal Register on April 20, 2010 (the “Rule”).

In her statement supporting the proposed interpretive rule defining a “Children’s Product” dated March 31, 2010, CPSC Chairman Inez Tenenbaum noted that the issuance of the Rule is not required by the Consumer Product Safety Improvement Act (CPSIA) but was being issued by the CPSC in response to the demonstrated need of stakeholders. I am such a stakeholder. Our company is in the educational materials and educational toy business and is regulated by the CPSIA. Ms. Tenenbaum notes that the regulated community wants predictability and certainty in the rules that govern the marketplace. She notes that the Commission “listens to, hears, and greatly values the input of the regulated community and all stakeholders”.

Ms. Tenenbaum’s statement informs my comments on the Rule. I believe the Rule does not achieve the objectives set out in her statement and must therefore be amended significantly.

Having read other comment letters on the definition of “Children’s Product”, I feel that the legal and technical details of the proposed interpretative rule will be adequately addressed by other stakeholders without my further input. I believe that this interpretative rule extends the reach of the CPSIA to many new products not covered or intended to be covered by the law, and furthermore, changes the “Children’s Product” test from one defined by “primarily” to something more mathematical (as in a 51/49 test). However, I will rely on the other letters to make the case on these points.

In this letter, I will focus on the impact of the Rule on the marketplace. In particular, I will focus on whether the Rule is consistent with the mission of the agency, is fundamentally sound as policy, meets Ms. Tenenbaum’s objective of clarity, certainty and predictability. I conclude that the Rule needs sharp revision.

The Definition of “Children’s Product” is Inconsistent with the Mission of the Agency: I think it is important to think about the Rule in the context of the goals of the agency as set forth in its enabling legislation, the Consumer Product Safety Act (CPSA). Notably, Section 2(b) of the CPSA states:

“(b) The purposes of this Act are – (1) to protect the public against unreasonable risks of injury associated with consumer products; (2) to assist consumers in evaluating the comparative safety of consumer products; (3) to develop uniform safety standards for consumer products and to minimize conflicting State and local regulations; and (4) to promote research and investigation into the causes and prevention of product-related deaths, illnesses, and injuries.”

The definition of “Children’s Product” has been incorporated into this legislative scheme designed to “protect the public against unreasonable risks of injury associated with consumer products”. Of course, “Children’s Products” is now a defined term in the CPSA and interpretation of that term, broadly or narrowly, will affect the scope of the law. Under the terms of the CPSIA, the definition of “Children’s Product” draws products into the coverage of the CPSIA, most notably in the regulation of lead-in-substrate and triggers the imposition of many other significant obligations (such as tracking labels). Nothing in the CPSIA overrides the purposes of the CPSC as set forth in the CPSA. Thus, the definition of “Children’s Product” must be evaluated in light of the agency’s mission to protect against unreasonable risk of injury.

How risky are children’s products for their lead content? The data in the CPSC’s historical recall database best describes the risk, in my opinion. These recalls reflect the evolving view of the agency on the threat posed by lead in its various manifestations in children’s products, and reflects the dangers posed by lead via the reported injuries. I analyzed the recalls posted on the CPSC website over the past 11 years and this data indicates that, over a period of approximately 11 years (from March 5, 1999 to April 15, 2010), the CPSC issued a total of 899 recalls of children’s products for all hazards (including lead and lead-in-paint). In this period, 247 recalls were associated with lead and resulted in one death, the well-known death of a four-year-old in Minnesota who swallowed a jewelry charm. [The data can be found at http://bit.ly/aOK4iS] These 247 recalls were also associated with three reported but unverified injuries from lead. Thus – over 11 years – the reported injuries from lead are four – one death and three unverified injuries.

Contrast this with the injuries associated with swimming pools and spas, a well-known source of childhood injuries. According to the CPSC’s press release dated May 24, pool and spa-related drowning deaths have averaged 385 per year for children under 15 (including 299 per year for children under five years of age) and serious injuries requiring emergency room treatments have averaged 4,200 per year. Consider this data in light of lead: lead produced one death and three unverified injuries in 11 years while pools and spas produced more than one death and 11.5 serious injuries PER DAY in recent years. Pools and spas produce more deaths and far more injuries on the average day than lead produced in the last 11 years IN TOTAL according to the CPSC’s own statistics.

The CPSC’s 2010 response to the daily deaths and maimings of children in pools and spas was a short public relations blitz. The CPSIA has imposed annual expenses in the billions of dollars on the children’s product industry to reduce deaths and injuries from lead.

If massive numbers of pool deaths and injuries merit only a public awareness campaign by the CPSC, the definition of “Children’s Products” should be downsized appropriately to reflect the relative nature of the “threat” posed by lead. The agency’s recall data on lead injuries has never been challenged by any advocate. Evidence that lead-in-substrate meets the “unreasonable risk of injury” standard set forth in Section 2(b) of the CPSA has never been disclosed. It is well-known that the CDC and the EPA link evidence of lead poisoning to only two environmental causes – leaded house paint (the primary cause) and the residual effects of pollution from leaded gasoline (generally found in dirt near inner city housing) and from industrial pollution.

The health impact of lead-in-substrate in ATVs, bikes, pens, clothing, apparel, even toys, is entirely absent from the literature as is any empirical evidence that these items could even theoretically cause lead poisoning. The advocates against lead cite studies that lead can be dangerous in small amounts and highlight the assertion that lead harms “silently”. In other words, advocates claim that because harm can befall children from lead undetected, it follows, ergo, that this kind of harm might also caused by children’s products containing trace amounts of lead. This notion is best summed up by the slogan “there is no safe level for lead”. Yet lead poisoning has never been positively identified from ANY children’s product beyond the one death and three unverified lead-in-paint injuries reported in the CPSC’s recall data over the past 11 years.

This absence of data of detectable lead-in-substrate poisoning means that the definition of “Children’s Product” in the Rule must be narrow. The mission of the agency under the CPSA does not permit it to divert resources for anything less than an “unreasonable risk of injury”. The Rule specifies a definition that is too broad for the documented minimal risk of injury from lead-in-substrate.

The Definition of “Children’s Product” Knowingly Permits Children to Remain in Danger: The Rule permits children to remain in “danger” of lead poisoning through its technical interpretation of the CPSIA. If lead-in-substrate is a public health issue suitable for the agency’s attention, this is unacceptable. The CPSC must adopt a clear rule that logically draws the line between regulated and unregulated commerce.

Let me explain:

The Rule attempts to distinguish items of “general use” and items that are primarily intended for children. The Rule notes that items of general use are not included in the definition of “Children’s Product”. An item of general use may in fact be used by children but because it is intended for a general audience, it is outside regulation by the CPSIA. This is an interpretation of the CPSIA under the Rule. The contrast in the treatment of items of general use and Children’s Products under the Rule is quite dramatic: obligations for safety testing, tracking labels, reporting, whistleblower risk, liability risk are all lifted for general use items. Children’s Products suffer the full brunt of the extensive new safety rules, presumably because of an asserted higher “risk” of injury to children.

An irony of the Rule is its acceptance of not regulating “items of general use” even if they are known to be widely or even universally used by children. The illogical and worrisome disparity in treatment of these items is best illustrated by pens. According to the Rule, pens are typically items of general use and are therefore (as a general rule) NOT regulated by the CPSIA. This result is quite helpful to the agency, as the pen industry has purportedly informed the CPSC that ball points must be made with brass, and brass has minimal lead content as a basic ingredient. No one argues that brass ball points have ever exposed anyone to injury from lead poisoning, not do “human factor” experts contend that contact with ball points are likely to present a risk of lead poisoning. Thus, the inclusion of pens in the broad reach of the CPSIA has been called an “unintended consequence”. So the “right” answer for all concerned is that pens shouldn’t be included in the CPSIA. The CPSC has consistently held that pens are outside the definition of “Children’s Products”.

Notably, it is well-known that close to 100% of school-age children routinely use ball point pens. Children carry pens in their backpacks and use them every day in school. Pens are a particularly ironic choice for this rulemaking example because pens are known to be routinely mouthed (chewed) by all ages of consumers including adults. However, use of pens by kids is deemed “unregulated” under the CPSIA and the Rule because pens have been held to be items of general use. Strangely, pens are in fact subject to regulation under the CPSIA if “decorated or embellished by adding certain features that may appeal to children, such as childish themes or play value”. The Rule holds that if the embellishments are “likely” to attract a child’s interaction with a pen, then it would be considered a “Children’s Product”. So the operation of the Rule is that a pen is subject to regulation if it has an embellishment but not subject o regulation if it omits the embellishment. The CPSC does not indicate that the embellishment itself is a public health or safety concern nor argues that the presence of the embellishment will raise the likelihood of use of a pen by children. The CPSC concedes that children are widely using pens now.

This flaw in the Rule will subject the CPSC and its rules to ridicule. There is no justification for the agency’s safety regulations applying only to some pens, not based on evidence of risk but because of a hyper-technical interpretation of the definition of “Children’s Product” under the CPSIA. The Rule simply makes no sense as public health policy. If the presence of lead in ball points is an actual health risk (which it is not), then there is no excuse to omit any pens from supervisory regulation. If the presence of lead in ball points is NOT an actual risk to health, then there is no excuse to regulate ANY pens under this law. Writing an interpretative rule that can’t seem to make up its mind is, frankly, worse than no rule at all.

The Definition of “Children’s Product” Does Little to Add Clarity for Regulated Companies: The convoluted definition of “Children’s Product” set forth in the Rule fails to bring clarity to the broad reach and operation of the CPSIA. Regulated companies will never be able to consistently apply the Rule in the real world, and worse still, will never be able to find peace (agreement) with their retailers (dealers) on the application of the Rule. Chaos is certain to ensue. This problem is again best illustrated by pens. Pens are items of general use and thus deemed to be unregulated under the CPSIA. The Rule notes an important exception, however: “when a general use, such as a pen, is decorated or embellished by adding certain features that may appeal to children, such as childish themes or play value, the general ruse product may be converted or transformed into a children’s product due to these additional features of characteristics.” [Emphasis added]

The Rule goes on to note that there is an exception to the exception: “However, there also are ‘novelty’ pens that could appeal to children 12 years of age or younger as well as older children and adults; such novelty pens would not be considered to be primarily intended for children. For example, a simple ball point stick pen bearing an elementary school’s name, without any other decorations, would likely appeal to anyone (i.e., students, teachers, parents) connected with the school. A pen with a silly head on the top, not associated with any particular mass media (and not sold in toy stores) may have just as much appeal to adults as it would to children. Pens with puzzle features that allow the user to take them apart and reconfigure the design also are likely to appeal to children and adults alike, and thus, are not likely to be considered children’s products because they are not primarily intended for children.” [Emphasis added]

The fact that children were already “interacting” with pens in the absence of the “childish” embellishments seems to be irrelevant under the Rule, raising the issue of how to tell when a product’s use by children is deserving of safety testing or the application of tracking labels. These are “big dollar” questions for the regulated community. If an embellishment is “appealing” to children, then if children “interact” with the pen based on foreseeable use and misuse of the product, it is apparently considered a children’s product . . . unless the embellishment has “just as much appeal” to adults or children, in which case it is a product of general use. And if the pen is unadorned but used by every child due to a marketing scheme directly aimed at the kids market, no testing or labeling is required (see discussion of musical instruments below).

It seems so obvious . . . .

The clear holding of this “policy” is that stick pens used by every child every day in every classroom do NOT require testing. Were you to remove those ordinary pens from the classroom and apply a “childish” embellishment with inks or paint supplied by the CPSC (stipulated to be entirely lead-free) and then return them to the children, the pens would now need to be tested and labeled. This, of course, makes absolutely no sense, and gives the necessary impression that the CPSC is more concerned with technical compliance issues (test reports without meaning or significance) than with notions of safety. How are regulated companies supposed to follow such incomprehensible or nonsensical rules? There is no answer to this question. Retailers (dealers) take a different tack when confronted by nonsensical rules – they crawl into a shell and invent their own “safety rules” designed to create a cushion between their practices and whatever 20-20 hindsight analyses could be used by regulators. This creates a Wild West of safety rules and practices for manufacturers: chaotic, unpredictable, penal and extremely expensive.

The Rule seems to delight in this convoluted reasoning. Consider the Rule’s stance on the marketing of musical instruments to schools: “Products with a marketing strategy that targets schools, such as instrument rentals, would not convert such products into children’s products if such products are intended for general use, regardless of how the instruments are leased, rented or sold. These instruments are intended by the manufacturer for use primarily by adults, although there also may be incidental use by children through such programs.” Incidental use? In many schools, the “incidental use” induced by these targeted programs is nearly 100% of the kids. It is difficult to take the CPSC seriously about its “passion” for eliminating lead in all manifestations when it enacts a rule that openly permits unregulated use of brass musical instruments by school kids while banning brass in toy wheel assemblies or requiring testing for certain pens because of the brass content in their ball points. This policy is best described as “two-faced”.

Let’s not forget that this Rule is hardly restricted to pens. Paper clips are known to be in wide use throughout society and also by children in the regulated age ranges. As products of “general use”, paper clips are specifically cited in the Rule as exempt from testing and the other requirements of the CPSIA. That makes sense – despite the uncontested fact that paper clips are routinely chewed on by adults AND children. I assume that the lead content in paper clips would have an equal (or greater) ability to erase IQ points as lead in children’s products that also might be mouthed – but let’s not worry about that now. The Rule sensibly draws the line at paper clips for the foregoing reasons, and whatever “hazard” chewing or sucking on paper clips may present has been overlooked as a public health risk. Unfortunately for our education business, it’s not that simple: “Manufacturers may also include a general use item as one of several items packaged together, such as a paper clip included in a magnet set primarily intended for children ages 7 through 10 years old. The paper clip may be a general use item but when included as part of the magnet set, it would need to be tested to the applicable children’s product safety rules since the product is targeted primarily to children 12 years of age or younger.”

What is achieved by this rule? High expense, much confusion, many arguments with retailers and sharply-reduced respect for the CPSC’s rules.

Please note that the Rule leaves all elements of these subjective judgments open to doubt. Consider pens again – because the Rule encourages us to reason from the pen example. The CPSC took no definite position on anything applying to pens other than that an undecorated stick pen is outside the CPSIA. Anything with an “embellishment” presumably will be the subject of endless debate in the regulated community under the Rule. If you guess wrong on the application of the Rule, the law provides (and CPSC practice now reinforces) tremendous liability risk. Let’s not forget that we in regulated community know about the $2.05 million penalty assessed against Daiso for five recalls of less than 700 units in total. Liability risk under the CPSIA seems virtually unlimited nowadays. Subjective interpretative rules applied with 20-20 hindsight by regulators would likely expose manufacturer to the highest risk at the worst possible time, namely when there’s a real problem. How can manufacturers defend themselves? The wishy-washy design of the Rule provides nothing for a manufacturer to rely upon.

The Rule makes same similar confusing distinction on DVDs and CDs and seems to imply that many promotional products will be subject to doubt under this Rule. Almost anything useful that has a so-called “childish” embellishment might be regulated now, possibly without the manufacturer even knowing! The Rule states that manufacturers “should expect” that adults will give their embellished or “childish” products to children even if made specifically for adults (the example cited is a stuffed animal sold with a candle). The fact that some businesses target adults with such items (intent!), or the fact that the Rule contemplates that adults are often drawn to the same items as children, seems to be forgotten here. At a minimum, the Rule seems entirely subjective. This not being confusing enough, the Rule notes that if the items that children are drawn to happen to be considered “collectibles”, then perhaps they won’t be considered children’s products. Or maybe they will.

To put a bow on the confusion, the Rule concludes that classic games like checkers or Chinese checkers (among other common games) are NOT children’s products. I simply cannot imagine a toy company DARING to leave these classic games untested yet the CPSC has now officially ruled that certain classic games are exempt from the CPSIA. However, if the manufacturer is foolish enough to promote these games with images “or other features . . . that make [the games] more attractive to or suitable for children than a general use product would normally be”, well then they are magically transformed into children’s products.

I literally do not know how to apply a rule so full of convoluted logic and word games. Likewise, I cannot envision smoothly functioning markets governed by a rule like this.

Notably, the weight placed on advertising portrayals with children will only intensify arguments between manufacturers and their customers about what is and what is not a children’s product. For instance, we sell magnifiers and tape measures that are identical to those sold at Home Depot. By any definition (and as acknowledged in the Rule), these items are items of general use. We happen to photograph them with children for our catalog and website to illustrate the products’ utility in educational settings. How are we supposed to determine definitively that these items are not children’s products under the law, much less get our customers to agree with us? To date, no customer has agreed with this conclusion. NOT ONE.

The Rule posits a bizarrely unrealistic deliberative process in which each photograph is “weighed” against each other to determine its “true nature”, as though that were possible: “The prominence, conspicuousness, and/or other emphasis given to each portrayal of a product’s use or intended users on packaging or in advertising media can be weighted differently according to which images or messages are the strongest and most obvious to the consumer at the point of purchase.” This language makes me want to scream. To avoid business risks under this rule, businesses may have to produce catalogs and websites that look like this: http://bit.ly/d4vtZo.

The Rule confounds by assigning responsibility to the manufacturer for its retailers’ independent choices on where they place items in their stores or in their various catalogs, web pages and ads. Of course, each retailer will make this choice differently, possibly store-by-store, catalog-by-catalog, ad-by-ad, web page-by-web page, region-by-region, country-by-country and so on. In reality, this standard is even vaguer than that, as the judgment is whether the images “could imply [the product’s] suitability for a certain age group”. [Emphasis added] In any event, we manufacturers have neither control over, nor knowledge of, these choices by third parties.

All this makes me wonder why the Rule doesn’t simply state that the CPSC will decide after the fact what is and is not a “Children’s Product” based on its subjective personal opinion at the time? That rule formulation would at least be honest and clear.

I believe the agency has given scant thought to the reality of living with this rule. How does the CPSC envision that a manufacturer and a retailer would resolve a dispute over whether a product is subject to regulation? Think about people who sell pens. What is the likelihood that there ever be agreement that a particular embellished pen is outside this law? I fear the effect of this vague, quirky and completely indeterminate rule will be that everyone associated with children’s products will throw up their hands and assume that everything is subject to the full brunt of the CPSIA. If that’s the intent, I wish the CPSC would just come out and say it.

What Should the CPSC Do? The answer to this question is clear in light of two factors: (a) in the Chairman’s statement, she indicated a strong interest in bringing certainty to this rule and further notes the importance of certainty to the marketplace, and (b) the extremely low incidence of injury and death reported from lead in the last 11 years. As noted in great detail above, there is nothing “certain” about the Rule as presently written. It includes far too many phrases like “may”, “could”, “in general”, “weighting”, “factors” and so on. The Rule as written is the antithesis of clarity and certainty.

The CPSC has as its mission “to protect the public against unreasonable risks of injury associated with consumer products”. With so few injuries and one death from lead over the course of 11 years, the perils of lead have not been demonstrated to rise to the level of an “unreasonable risk of injury”, particularly when viewed in light of the known impact of so many other dangers regulated by the CPSC (such as small parts or pool injuries).

For a rule to bring “certainty” to the market, there must be a way to make a definitive judgment, one that can be relied upon. Subjective judgments and weighing of factors may make sense for a court but has little value to regulated companies in an active marketplace. Who gets to decide which judgment is “right”? Under the present Rule, no one does.

The way to resolve this dilemma is to learn from the statistically significant history of low injuries from lead, and make a concession in favor of certainty. The right rule for the definition of “Children’s Product” is to state that the “reasonable judgment” of the manufacturer on what is and what is not a “Children’s Product” under the CPSIA will be RESPECTED by the CPSC. I believe the term “reasonable judgment” is understood in the marketplace, and is also a well-defined term in the common law. It has been clarified in countless cases, providing clear guidance to all concerned (regulators, regulated companies and consumers). The CPSC should further indicate that it will NOT review the judgments made by manufacturers in the absence of fraud, a recall situation or other serious violations of law or CSPC regulations. Retailers should be entitled to rely on the reasonable determinations of manufacturers by RULE.

My concept is that the reasonable business judgment of manufacturers will appropriately shape the range of products regulated under the CPSIA. In actual fact, the reasonable judgment of manufacturers on determinations of “Children’s Products” is tightly confined by the CPSIA, so little risk to the “will of Congress” can be anticipated. In addition, given the long track record of so few documented injuries from lead (going back for many years before the CPSIA’s enactment), there is little reason to believe this practical rule will expose children to more injuries. In any event, this will allow the agency to focus its energies on greater threats. The agency also has plenty of legislative authority to draft other rules to address lead concerns if the need arises.

A rule drafted in the vague, quirky, subjective, indefinite and convoluted manner of the Rule achieves little other than amplifying the frustration and confusion of the regulated community. Having filed numerous comments letters over the last two years, testified before Congress and the CPSC on several occasions, had personal meetings with CPSC staff, written blog posts, attended rallies, and so on, I can attest to the deep frustrations associated with implementation of the CPSIA. After all this time and effort, we manufacturers are still “in the soup”. With this Rule, the CPSC begins the final stage of the implementation of the law, and potentially, places the capstone on our ruin. This Rule, plus the so-called “15 Month Rule”, taken as a whole, has the potential to put many companies out of business. I do not know how we survive both of these rules in their present form. It’s time for the CPSC to take a reality check. If the Chairman is serious about bringing certainty to the market and to regulate without putting companies out of business, it’s time to make some concessions and let the good companies who produce children’s products run their businesses and accountably produce safe products using reasonable judgment. This strategy will work. Policies like the Rule will not.

Thank you for considering my views on this important topic.

Sincerely,

Richard Woldenberg

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

Read more here:
CPSIA – Comment Letter on "Children’s Product" Definition

CPSIA – Casualty of the Week for June 1

The Alliance for Children’s Product Safety’s “CPSIA Casualty of the Week” highlights how the Consumer Product Safety Improvement Act (CPSIA) is disrupting the U.S. marketplace in order to draw attention to the problems faced by small businesses, public institutions, consumers and others trying to comply with senseless and often contradictory provisions of the law. These provisions do nothing to improve product safety, but are driving small businesses out of the market.

Congress and the CPSC need to address the problems with CPSIA implementation to help small businesses by restoring “common sense” to our nation’s product safety laws.

CPSIA Casualty of the Week for June 1, 2010:

CPSIA RULES! (THOUSANDS OF PAGES OF THEM)

Educational Products Market Overwhelmed by CPSIA-Mandated Testing and Paperwork

American Educational Products LLC (AMEP) is a Fort Collins, Colorado-based company selling classroom teaching aids like flash cards, animal models, globes and relief maps that educators rely on to teach their students. Despite a sterling safety record, AMEP President Michael Warring is worried that the ever-increasing amount of time that his company is spending on compliance with the CPSIA threatens the future of his company.

Warring explained, “We sold 5,600 different SKU’s in 2009 to 2,600 different customers. Approximately 2,000 of these SKUs might be considered ‘children’s products’, meaning that they must be tested by a third party for lead. My 64 employees and I are finding it virtually impossible to manage the scale of this CPSIA-mandated testing. Each SKU takes approximately eight hours a year in compliance and testing administration. This means that 24 of my 64 employees would need to work full-time, year-round just to ensure compliance with CPSIA – even though our supply chain controls effectively manage the risk of lead violations. I cannot afford a 37% increase in employees nor can I force 40 employees to do the work of 64. Neither alternative can be achieved.”

Warring also said his company has lost business due to CPSIA.

“One customer cancelled a $5,000 custom rock order after deciding that rocks were too ‘dangerous’ for a geology lesson because of the CPSIA lead rules and elected to use posters instead,” said Warring. “What caliber of young scientists are we nurturing in our country when we won’t let students touch and feel the textures, densities and hues of naturally-occurring rocks in a classroom? After all, kids pick up rocks outside the classroom every day. Our laws are scaring schools away from common sense choices about how our kids are educated.”

He continued, “Another customer insisted that we use XRF scanning for lead-in-paint, a procedure not approved by the CPSC for compliance testing because XRF tests may produce erroneous results. We showed him independent test results that confirmed that our products were well within the CPSIA lead limits, but our inability to provide XRF testing resulted in the customer canceling orders worth about $35,000 to our company. Confusion reigns supreme – two years after passage of the CPSIA”

Warring fears that the CPSIA’s senseless testing requirements and voluminous paperwork will mean that many of the 5,600 educational products that AMEP produces will disappear from the marketplace.

“As we offer fewer choices to the distributors we serve, our position as a vendor will deteriorate and our very viability in the marketplace could be at risk,” said Warring.

Warring concluded, “I’m not sure how children’s safety and well being is being addressed when their parents’ livelihoods disappear and when their education is being limited to material in printed form. These are two of the many real consequences, intended or otherwise, that CPSIA has imposed on my company, my employees, the vendors we support, our customers, and the children we help to educate.”

For additional information on the Alliance for Children’s Product Safety and CPSIA, and to view previous “Casualties of the Week, visit http://www.AmendTheCPSIA.com.

Read more here:
CPSIA – Casualty of the Week for June 1

CPSIA – Hearing on Testing Stay and Interim Enforcement Policy

There was an important hearing yesterday at the CPSC on the testing stay as well as on the announcement of another interim enforcement policy on component and lead-in-paint testing (their third). I was able to watch about 1:40:00 of the hearing before I lost the signal. I think I got the gist of it, and wanted to give some highlights here.

First and foremost, the tone was relaxed, friendly and open. I want to compliment the Commission and CPSC Staff for making an effort to change the “feel” of their communications. I have not lost sight of the fact that substance matters . . . but so does choice of words, actions and tone. In this space, I have criticized Gib Mullan for this in the past. I would now like to publicly acknowledge Gib for taking pains to communicate his new enforcement policy in a reasonable and business-like tone. There were no threats; quite to the contrary, Gib portrayed the interim policy as flexible, reasonable and measured. I appreciate that.

The Commission and the CPSC Staff are also asking better and more sensitive questions, like whether there is enough lab capacity to do all the tests when required (for instance, there is apparently ONE lab approved to test bikes), how much lead time industry needs to adjust to the component testing rules, whether people are testing components now, and so on. Jay Howell even advised the Commission to weigh the impact on regulated industries when considering how or to what extent to lift the stay. This line of reasoning is another sign that we are being heard, and the issues confronting regulated businesses are on the radar . . . finally.

The content of the hearing was essentially technical. This lengthy discussion was all about compliance with the new requirements. The rules implementing the blessed CPSIA are ornately complex. Mullan in fact informed the Commission that his new interim enforcement policy is replete with footnotes – in other words, the micro-print is now getting smaller. NONE of the discussion involved SAFETY or any discussion of risk.

Let’s consider what that might mean. The CPSC seems obsessed with paperwork now. The two hours I watched were all about how companies might comply, whether they could comply, what forms they had to fill out, who had to perform tests and when, and so on. Of course, that is a critical subject to discuss . . . but it struck me as odd when these details droned on and on without a single mention of the purpose of the discussion – making kids safer.

It is hard to see how this byzantine structure will achieve better safety. To me, the new scheme is all about bureaucracy divorced entirely from purpose. This is the CPSC that the Commission apparently thinks Congress legislated – a bureaucratic agency, one no longer empowered to allocate its resources to prioritized safety threats, instead relegated to paper pushing. Congress has redesigned the agency to be administrative in nature as it relates to children’s products. By defining “safety” precisely in the CPSIA for the CPSC to administer, it forbade the agency from exercising judgment. Likewise, we in the business community are no longer trusted to exercise judgment or operate without governmental supervision. The Nanny State knows best, better than the business community or even the CPSC, and insists now that the CPSC stop thinking and just administrate.

With this new focus, the conversation about safety has taken a bizarre turn, in my opinion. The discussion is principally about how companies can comply. That is the standard against which the new CPSC policies seem to be evaluated. Is there enough testing capacity? Can companies afford it? Can a “home crafter” find paint that was tested by the manufacturer? [By the way, this is a so-called voluntary test - Congress in its INFINITE wisdom decided that makers of children's toys must test paint, not people who actually produce the paint, thus the CPSC has to hope and pray that paint companies will test their paint. Nice!] Which components need to be tested on a little dress? Only the buttons, yippee! No mention of safety or the purpose of this exercise. The high point occurred when both Chairman Tenenbaum and Gib Mullan volunteered that most paint is already certified to be lead-free. This was stated without irony, despite the 20 minutes tortured lecture on how to test paints to ensure compliance. Safety, what’s safety?

So are things now as simple and easy as portrayed? Robert Adler asked if any groups besides the Handmade Toy Alliance had contacted the CPSC with concerns about the lifting of the stay. Jay Howell said no. [My ego survived this minor bruising!] Putting aside the massive failure of business people and trade associations to effectively lobby on this issue, this seems to portray business people as accepting of the lifting of the stay, or at least highly unmotivated on the subject. Ergo, it’s fine to let it go.

What might a lifting of the stay mean? We’ll all have to test. Test what? Ah, that’s the rub. It’s so complicated that I can’t begin to attempt to explain it here. It took them Powerpoint slides upon slides to lay it out, and it is full of asterisks and exceptions. A taste: there still is no phthalates standard or any approved phthalate testing labs or any approved ASTM F963 testing labs. [Makes me wonder what I have been paying for all these years in our tests against F963. . . .] So testing will only be required against some rules, not all, and as new rules come into effect, you will have to figure out what additional tests are required over time. Good luck getting it right.

Sadly, the agency avoids the issue of complexity by focusing on whether it’s POSSIBLE to comply. They put up a photo of a little dress, announce with satisfaction that only the buttons need to be tested, and then assert that button companies will test those buttons to preserve their market. Okay, let’s concede that point – it’s probably true. Does that solve the problem? Not if the rules are so complicated that no one understands them. Even if you understand them, will the people you deal with understand them the same way (your customers, your consumers, consumer groups, the CPSC, Customs, 50 State AGs, the Chicago Tribune, and so on)? THIS ISSUE I have raised again and again (so when the Commission asks about complexity, I want a plug!] Very few people understand these rules so is it realistic to assume they will follow them (even if they are able to comply)?

A typical problem for people who are immersed in something complex and highly-specialized si forgetting that everyone else is not as immersed in the details as they are. It’s a big wide world out there, but the CPSC may only be dealing with people who have invested the time and energy in understanding the complex rules as they have. This may make it look like EVERYONE gets it but in fact, they don’t. The 800 lb. gorilla here is the silence of the majority. What do they know and understand? Not much. This is where the expression Keep It Simple, Stupid (The K.I.S.S. Principle) comes from. The new rules are anything but understandable AND the CPSC tries to solve each identified problem by adding more and more complexity (more rules and exceptions).

So what have we here now? We have a much more congenial and seemingly well-intentioned CPSC that finally grasps the nature of the mess with the regulated community and is trying hard to change course and create a workable solution . . . but all within the context of a law that makes no sense. So to do that, they are building an entirely unworkable sets of rules, unworkable because no one could possibly understand them. Each rule violation is the possible subject of a lawsuit by an eager plaintiff’s attorney, a newspaper investigation spurred on by a consumer group or the subject of a fine or possible jail time, or all of the above. Fear of these externalities will scare people out of the market, simply because they know they can’t control their business environment. This is real. I personally fight these fears every day – and I am someone obsessed with these rules and know them well. But not perfectly. Of course, we could do something else with our time, our resources and our people – but we don’t want to. We are very devoted to the education business and are trying to defend our right to engage in that endeavor without undue risk.

The sad fact is that the CPSC cannot create a workable solution, even with a smile on their faces and good intentions in their hearts, without addressing the deficiencies of the law. A nonsensical law cannot be fixed with implementing rules. At some point, the CPSC is going to figure this out when they see that compliance is very low, and they are overflowing with violations. The rabid and compromised consumer groups have demonstrated their utter lack of character in hunting down technical violations, like sandal insoles, and then mobilizing self-interested local politicians to enforce without even talking to the CPSC. We can certainly expect them to continue to hound innocent makers out of this market.

The details of this hearing are also interesting. The CPSC will be releasing a definition of a “children’s product”, “toy” and “childcare item”. This is a possible hint that some items or product categories may be excised from the law, perhaps including certain educational items used in schools, some kinds of apparel, ATVs and so on. The CPSC Staff has crafted some interesting solutions to testing of lead-in-paint and components, that will help lower costs significantly. They also are aware of the heavy load carried by small volume manufacturers with fixed testing costs and are trying to find an economic solution. They even acknowledge that larger companies also make low volume products, meaning that solutions need to take EVERYONE’S situation into account. All of this is good, it’s progress . . . but it’s not enough. The Commission needs to attack this law and push Congress to get it fixed. If this Commission does not want to leave behind a neutered and impotent CPSC, crippled by a hornet’s nest of ineffective rules, it needs to take on this ultimate battle.

I certainly hope they won’t duck this very important pitch.

Read more here:
CPSIA – Hearing on Testing Stay and Interim Enforcement Policy