CPSIA – CPSIA Amendment Process

I have been asked to explain how this week’s hearing relates to a “process” leading to a CPSIA amendment someday. Good question. I am certainly in no position to do anything more than give you my opinion. At the moment, the House Republicans have floated a draft (and still incomplete) amendment of the CPSIA. This is the third such major amendment try, but the first by the Republicans. The prior two amendments proposed by Henry Waxman died in the last Congress. You may recall many bills that have been proposed by various people to address various elements of the law. None of those bills have moved – they’re basically DOA but perhaps some current bill, like Ms. Klobuchar’s bill in the Senate, would eventually gain some traction. Next steps include completion of the CPSIA amendment and a vote on it in the House. The amendment must gain a majority vote in the entire House after it passes out of the Committee on Energy and Commerce. As usual, the Committee will seek a bipartisan approach if at all possible. The path forward is not clear in the House at this point. Assuming that the bill passes out of the House, then the bill proceeds to the Senate. Will they vote on it, propose their own version, or let it die? Your guess is as good as mine. There are definitely Senators left singing the old Waxman tune, we NEED this bill to PROTECT THE CHILDREN. Will they EVER relent? Will they ALL relent (that’s important in the Senate)? Stay tuned to find out. If the Senate approves its own version of the bill, a conference committee will form to negotiate a common bill for both Houses to approve. That’s probably where the action will take place, far from your intruding eyes. Presumably, Mr. Obama will be consulted and his agreement secured. Mr. Obama wrote part of the CPSIA. Ugh . . . . The last step is for Mr. Obama to sign the bill. We are not exactly dancing in the end zone yet, although we’ve made progress. There will be more action to come.

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CPSIA – CPSIA Amendment Process

CPSIA – Star-Tribune Op-Ed Blasts CPSIA for ATV Effects

[Editor's Note: I have a postscript to add to this Op-Ed. See the bottom for an additional fact to consider.]

Mike Larson: Toy lead ban puts kids on ATVs at risk

By MIKE LARSON
March 27, 2011
Commentary

In a month or so, the snow will be gone, the Twins will again be fighting for a pennant and thousands of families will be hitting the trails on ATVs looking for fun and adventure.

Unfortunately, this year more kids are likely to be riding larger, adult-sized ATVs because thousands of dealers like me can’t sell youth model ATVs or mini bikes.

Why? Because of a ridiculous political fight in Washington, D.C., that is putting our kids in danger.

ATV dealers and others in our industry are caught in the middle of a political tug-of-war because of the Consumer Product Safety Improvement Act (CPSIA), a law that included new, strict standards for lead in toys — but created such a broad definition of “children’s products” that it ended up banning the sale of youth model ATVs, mini-bikes and other off-highway vehicles because they contain small amounts of lead.

Yes, you read that correctly: ATVs and motorcycles designed to meet the size and performance needs of young riders ages 6 to 12 became “banned hazardous substances” under the new law.

Because lead must be ingested in order to be a health risk, the small amounts of lead that are embedded in metal parts, like the frame and the battery terminals to enhance the safety and functionality of these components, pose no risk to kids.

While not one case of lead poisoning can be documented from children riding youth model ATVs, the Consumer Product Safety Commission’s own data shows that more than 90 percent of youth injuries and fatalities occur on larger, adult-size vehicles.

In fact, the CPSC, the ATV industry, safety advocates and parents all agree that it’s critical to keep youth riders off adult-sized ATVs, and have cooperated for years to educate ATV riders that children should ride only ATVs that are the correct size for them.

The CPSC’s own scientists agree that the presence of lead in these products does not present a health hazard to children. CPSC staff wrote to Rep. John Dingell, D-Mich., who helped write the bill:

“The possibility that children will suffer significant lead exposures from [youth model ATVs] appears to be remote at best….A child using an adult ATV as a substitute would face a far graver and more immediate risk than that of the possible lead exposure from the youth ATVs.”

Dingell is now calling for Congress to fix the law.

The CPSC also tried to temporarily address the ban by issuing a stay of enforcement in 2009.

Unfortunately, this hasn’t helped because the many manufacturers and dealers have chosen not to sell the smallest youth model ATVs because of the risks of selling under the stay, and there’s now a limited availability of these products for consumers.

In fact, half of the major ATV manufacturers are no longer selling youth model off-highway vehicles.

The financial impact on our industry has been devastating. Many dealerships throughout the country have closed because of losing the sales of youth-sized machines on top of an already depressed market. Many dealerships have had to lay off workers to stay open. These actions add job losses to an already challenging economic environment.

ATV and motor-sports enthusiasts have sent hundreds of thousands of letters and e-mails to Congress urging an end to the ban. Sen. Amy Klobuchar has pledged her support, and we urge her and other Minnesota members of Congress to take a leadership role in resolving this ridiculous situation. We’ve heard a lot of talk from both Republicans and Democrats that this ban must end, but for two years nothing has been done as politics has prevented Congress from addressing this problem.

Kids aren’t licking or eating their ATVs, but they just might ride adult-sized ATVs thanks to this ban. Congress is putting kids in danger by refusing to address this problem.

Mike Larson is owner of Larsons Cycle in Cambridge, Minn.

Editor’s Postscript: I attended a meeting of stakeholders on January 6th in Washington hosted jointly by Republican and Democratic staff for the House Committee on Energy and Commerce to discuss possible changes to the CPSIA. [I wrote about this meeting a couple times earlier this year.] At this meeting, Cindy Pelligrini of the AAP admitted that the fact that the CPSIA tacitly banned youth model ATVs was fine with her and her employer. Why? As she noted, the AAP has long wanted youth model ATVs banned. Changing the law would only open the door to a reversal of this other policy objective of theirs. In other words, the AAP is using its standing with Democratic legislators to push an agenda with a “double benefit”. Rather than fighting to ban youth model ATVs directly, a battle it would certainly lose, the AAP used the indirect route of overselling a lead standard that they knew ATVs could not meet. ATVs weren’t banned under this law by accident. They were hardly an “unintended consequence.” The damage to Minnesota businesses has been significant under this law. Next time, Ms. Klobuchar should pick her allies more carefully.

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CPSIA – Star-Tribune Op-Ed Blasts CPSIA for ATV Effects

CPSIA – New York Times Notices the CPSIA

The New York Times this evening gave some coverage to last week’s hearings in an article entitled “Child-Product Makers Seek to Soften New Rules“. Reflecting the usual bias of the Times against business, the article intones: “Emboldened by a Republican majority in the House of Representatives, manufacturers of toys and other children’s products are making a last-ditch effort to quash new safety regulations that they say are unfair or too onerous . . . . The manufacturers are also trying to scale back new regulations, drafted by the commission, that would require third-party testing to determine the safety and lead content of children’s products. They have found a receptive audience among House Republicans.” [Emphasis added]

So let me ask you, does it appear that I am “emboldened” by the Republican majority in the House? Is that accurate? As I recall, I began working against this excessive and irresponsible legislation in September 2007 and began my “war” with intensity when I was invited to present at the CPSC Lead Panel on November 6, 2008. That was more than two years ago, long before the “emboldening” Republican majority. In fact, I worked hard in the last election to put the Republican majority into office.

Why?

Because no one on the other side of the aisle would listen. What the NYT noticed is that someone is listening . . . finally.

Am I trying to “quash” the legislation? I think that’s an unrealistic goal and have never asked for it. I have stated repeatedly that the legislation has few achievements to boast about and that it is defective as drafted (can’t be fixed). It is also killing jobs, companies, markets and products. It needs to go but, as noted, I think that’s unrealistic. I think fixing it is the best we can hope for.

And I promise that our efforts are not “last ditch”. We’re not going to be done until the CPSIA is fixed.

The article goes on to note that at least one Democrat thinks the CPSIA stinks: “Other lawmakers, including at least one Democrat, Representative John D. Dingell of Michigan, suggested that new regulations requiring third-party testing of all children’s products for safety and lead were too broad and needed to be revised.” John Dingell, who’s he? “At least one Democrat . . . .” Ummm, Mr. Dingell is not only the longest serving member of Congress in the history of the United States but he also happens to be the longstanding Chairman of the House Committee on Energy and Commerce who also sponsored the legislation to create the CPSC in 2972. I think he is something more than just another Democrat – he is a major historical figure and a person of great standing in this matter. When he came out against the CPSIA on Thursday, he broke with Waxman and stood up for the TRUTH.

The Times gives the consumer groups the last word: “Representatives of consumer groups, meanwhile, are fretting. They said they were worried that the tougher standards they fought for, and seemed to have finally won, were now in jeopardy. ‘You have folks who are seeing that there is a chance to undo consumer protections that they never liked in the first place,’ said Ami Gadhia, policy counsel for Consumers Union.”

That’s true – we never liked the law in the first place. It is a massive waste of money, is hurting markets, companies, jobs and kids, has mired the agency and industry in a three year mud fight and isn’t making anyone safer.

It’s time to end the posturing and the story telling. We need to fix this awful law before it kills more companies and more products. How many companies need to die before Congress and the New York Times gets the message?

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CPSIA – New York Times Notices the CPSIA

CPSIA – Upcoming Hearings

I will be appearing as a witness at two hearings next week. On Wednesday, I will appear as a panelist at the CPSC’s hearing on the feasibility of 100 ppm lead standard. I am appearing at the request of the CPSC. On Thursday, I will be a witness in front of the Subcommittee on Commerce, Manufacturing and Trade of the House Committee on Energy and Commerce in a hearing entitled “A Review of CPSIA and CPSC Resources”. This hearing will take place at 10 AM at 2322 Rayburn House Office Building.

More to follow.

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CPSIA – Upcoming Hearings

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!

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CPSIA – Welcome to the Team, Gib!

CPSIA – Reasons to be Optimistic

With just a couple days left in 2010, a desolate year of long frustration, the new Congress is already stirring on the CPSIA front. On Thursday, January 6th, the Republican staff of the House Committee on Energy and Commerce is hosting a bipartisan working group session on proposed fixes to the CPSIA. I will be attending, as will representatives of many interested stakeholder groups. It is my understanding that the Democrats have been invited as have some of their consumer advocate group allies.

It is worth noting that this meeting will be held in broad daylight with both sides at the same table. It appears that the Republicans are making a statement about changes in legislative process as well as changes in law. I think it’s high time that the legislative process emerge from the shadows and commend them for their approach.

It is also quite noteworthy that this meeting will take place on the FIRST day of the new Congress. The swearing-in ceremonies will take place on Jan. 5th in the afternoon. The next day the Energy and Commerce committee staff begin work on the CPSIA. You have to be impressed at the speed and seriousness that the Republicans are attempting to address this issue. Who says our government is broken?

The politics in Washington changed a lot at the midterm elections. Not only has the House changed hands, so the Waxman era ended, but elsewhere things are changing, too. In the Senate, perhaps a dozen Democratic Senators are facing reelection in this cycle and the Tea Party is still a major force. What will the likes of Mark Pryor think about their chances when their compadres (like Blanche Lincoln) have been so recently vanquished? Perhaps that will motivate a shift in approach. Will the Senate stiffen if a Republican House sends in a fair amendment of the CPSIA? The winds may finally be at our backs.

And then there’s the White House. It’s anybody’s guess what’s going on there, but there is reason to believe Mr. Obama is tacking toward the center. This is Clintonesque, a la 1994, and may be a trend that holds up. He has some tough choices to make, but the center may be a better place for him now. That suggests a greater willingness to cooperate with a bipartisan retooling of this law.

If Obama hugs the center line and if the Senate is feeling less unrelentingly liberal facing reelection in the Tea Party era, a serious amendment of this law is possible. It is even possible that these wave lengths will penetrate the CSPC Commission and all sorts of behaviors could change. O to dream . . . .

And we need the help, guys. The 15 Month Rule is a crisis waiting to happen, the testing and certification stay is due to expire on February 10 (in the middle of the Chinese New Year) and of course, there’s the 100 ppm lead standard looming in August. There’s a lot to address. Let’s hope this can move along quickly and put an end to this sorry chapter in our regulatory history.

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CPSIA – Reasons to be Optimistic

CPSIA – Election Results

Democrat Members of the House Energy and Commerce Committee Election Results:

Three members retired (Stupak, Gordon and Melancon), three were defeated (Boucher, Hill and Space) and one race is too close to call (McNerney).

The composition of the next Congress’ House Committee on Energy and Commerce will be all new.

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CPSIA – Election Results

CPSIA – It’s Election Season – What are You Doing About it?

We have suffered through two years of savage persecution by an unmoved federal government seemingly bent on our destruction. Now this Democratic Congress is coming up for reelection. What are you going to do???

In my case, I am committed to put my money where my mouth is. I am not content with mere grumbling in a blog – I am getting involved in several races and intend to raise money for candidates who will support a sharp revision of the CPSIA and rein in the expansion of our lardy and intrusive federal government. The goal is to take away the House Energy and Commerce Committee gavel from the bullying and anti-business Henry Waxman. He has proven time and again that he and his staff don’t care about our problems nor are they interested in understanding how our problems will become everyone’s problems in due course. In casting our industry overboard for a misguided legislative scheme designed by consumer groups, he picked sides. Now we get to pick sides ourselves.

Last week, we were pleased to host Joel Pollak, Republican candidate in Illinois’ 9th Congressional district (www.pollakforcongress.com) at our company. We had a spirited Q&A session that left everyone impressed with Joel’s intellect and integrity. Joel is a breath of fresh air, especially in the 9th district, lately represented by Jan Schakowsky, Vice Chair of the Subcommittee on Commerce, Trade and Consumer Protection. Ms. Schakowsky is one of the staunchest defenders of the CPSIA and through her actions, has declared herself an enemy of your companies and everything you do. We support Mr. Pollak in his effort to unseat her. More to the point, we are going to do everything in our power to help Mr. Pollak bring his issues to his constituents and put Ms. Schakowsky to the test.

You can do this, too. In your local district or statewide election, your energy and sense of purpose can be a difference-maker. Host a coffee, volunteer some time, ask the candidate to make an appearance. If you are able to raise funds for the campaign, all the better. If you are not happy with the direction of your country or your government, exercise your Constitutional rights and get involved.

We will never take the gavel away from Henry Waxman through worry, frustration or prayer. We are only going to help ourselves by working hard for candidates who understand our issues and will stand up for the free enterprise system. There is a lot at stake here – the future of your company, the jobs you provide your valued associates, the economic well-being of your customers and suppliers and their employees, not to mention the kids, the families and the schools who depend on your products and use them safely every day. All of those people are counting on you to defend them.

Don’t sit still – it’s time to act. The election is only about four months away. Election day could be a real triumph after years of dire straits and frustrations. There’s still time to fix the CPSC and this law – but we all must do our part. A new Congress is a good place to start.

I hope you will use this space with suggestions on how we can all help our chosen candidates. I will publish the best ideas in future blogposts as well as comments to individual blogs.

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CPSIA – It’s Election Season – What are You Doing About it?

CPSIA – Your Partner in Mischief, Congress

Never content to leave an economy merely in tatters, Henry Waxman and Bobby Rush jumped into action this week to create an international trade war, all in the name of “protecting” you. In fact, their troubling new legislation includes a sneak amendment of the CPSIA. It also takes an idea dropped from the CPSIA (submission to U.S. jurisdiction) and applies it across several new industries. Sounds promising, right?

Nominally introduced by Rep. Betty Sutton (D-OH), a wobbly Democrat said to need propping up in her faltering reelection campaign, the new bill (called “H.R.4678 — Foreign Manufacturers Legal Accountability Act of 2010″) is scheduled for mark-up tomorrow (in Rush’s subcommittee. This innocuous and technical sounding bill is packed with trouble for you and for our country. In Sutton’s blue collar industrial district, that kind of work is prized. Or so the Dems must think.

Here is the GovTrack version of the bill. In fact, I have obtained a more recent version of the bill, a “manager’s mark-up” , which includes many new provisions. The revised version of the bill packs quite a punch, right to the gut. I discuss the newer version of the bill below.

The purpose of this bill is to make foreign manufacturers of finished goods and parts intended to be used as components in those finished goods register for service of process in this country. In other words, foreign manufacturers must register here so our plaintiff’s bar and the government can sue them with ease. The new law prohibits trade with foreign manufacturers unless they are registered, and enlists the aid of the federal government’s snarling dog, the U.S. Customs and Border Patrol, to enforce this law.

This means that every factory we use outside the U.S. will have to register for service of process in the U.S. if we want to continue to import our products from them. The law goes even FURTHER, asking that each agency involved to study ways to force manufacturers of components to register here, too. So, for example, if you make a toy in China and your factory buys boxes from a local printer who has NO contractual relationship with you, this law asks the agencies to study the feasibility of getting such box printers to register for service of process in this country. To accomplish that lofty goal, of course, you have to know their identity. Our customers do not know our vendors’ names and we aren’t telling. It’s none of their business. Do you think it’s any different for our factories relative to us? Will they ever disclose that information to our Mother Government (to them, a foreign government)? Please – would you disclose your sources to the Chinese government? And who pays the administrative and out-of-pocket costs of this exercise? And what about the consequences of the fear factor and the costs of new litigation on markets?

What-a-stimulus program! Naturally, those groups most linked to your future business health and ability to create jobs, the plaintiff’s bar and consumer groups, think this legislation is long overdue!

The scope of this law covers the EPA, the CPSC, the FDA and NHTSA, and applies to drugs, cosmetics, medical devices, “biological products”, consumer products, chemicals and chemical mixtures under TSCA (the coming storm), pesticides, motor vehicles or “motor vehicle equipment”, plus components for the foregoing. That’s pretty much everything and everyone.

Oh, by the way, the manager’s mark-up adds a little provision that gives you five working days to inform the CPSC if you have “a safety recall or other safety campaign” in any country, whether initiated by the company or by the foreign government. Just thought they’d slip that one in, just in case you weren’t watching!

So, who cares? Doesn’t this “solve” the Chinese drywall problem? In fact, it’s going to make things a lot worse. This is Major League trade war material. It is not entirely unlike Smoot-Hawley, the bill that precipitated the Depression. None of our factories will be willing to accept exposure to our ravenous tort system and out-of-control invasive government regulators as a condition of doing business with us. To most of them, this will be too risky and too hard to understand. Our suppliers are small businesses like us – they will NEVER have the resources or skills to master the minute details of our legal system and myriad risks and rules. It will also be breathtakingly expensive for them, and they run very low margin businesses with no ability to absorb those costs.

Even if some of our factories will take this risk, many will not. As with Smoot-Hawley’s tariffs, this kind of rule will spur quick responses by foreign governments. If the U.S. wants the right to reach across borders and take the assets of foreign companies without a legal presence in this country, then foreign governments will extend the same “privilege” to U.S. companies selling products inside their borders. Won’t that be nice?! Learning Resources sells its products in dozens of countries. Will we have to register in each country to continue to do so? Will we be exposed to lawsuits all over the world as a result? Will we have to pay to settle “strike suits” in dozens of new jurisdictions? If the answer is yes, I cannot imagine staying in business across borders.

The provision about foreign “safety campaigns” is intended to make sure that we don’t miss a trick here. The Waxmanis want a worldwide recall system. Does ANYONE IN CONGRESS know what this will cost? Congress must want to terminate small businesses in our economy.

Rumor has it that Ways and Means wants to take this bill out of the hands of the Energy and Commerce Committee. Of course. Speaker Pelosi can skip that step if she wants. Ways and Means purportedly knows there are BIG problems here and I am assured the Republicans on that committee will fight to restrain this bill. Still, it is in keeping with recent House practice to pass something irresponsible and dangerous like this bill, relying on the Senate to stop it. It’s a “message” bill, unless it somehow gets passed into law . . . . Then there’s the rumor that the Dems intend to stick it into a moving bill, like a jobs bill, to make it impossible to stop. You know, because it’s for our own good.

This is an example of how I learned to HATE Congress and Democrats. These rules descend on our business in suffocating waves, adding no value but creating major distractions and feeding fear. On the other hand, perhaps I will be eating crow when Obama’s recently announced master plan to reduce the deficit by two-thirds in three years through increased spending, increased entitlements, increased taxes and increased regulation works like a charm. Maybe this law is part of the implementation of that great plan.

It must be me.

It must be me. . . right?

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CPSIA – Your Partner in Mischief, Congress

CPSIA – McDonalds Recall Urged by CPSC – WHY?

The CPSC has put in writing that the Shrek glasses recalled by McDonald’s last week are “non-toxic”. Nonetheless, the CPSC (perhaps the commission itself, as noted in certain press reports) “urged” the company to make the recall.

So now it appears that the CPSC thinks it’s okay to ask a company to recall a product for reasons that it acknowledges pose no safety issue. Why?

Let’s not forget all the expense that this move imposes on the company coerced into making the recall. The law restrict the power of the agency to take this step, in part to preserve the incentive to make “at risk” investments in new products. There’s also that small detail called “due process”. My previous post noted that the CPSC does not have the authority to make recalls of products absent a “substantial product hazard”. This suggests that the CPSC was exceeding its authority in the McDonald’s case. By almost any measure, the CPSC’s actions were inexplicable. Why demand a recall of a safe product?

I cannot answer this question for the CPSC or its Chairman, Inez Tenenbaum. However, here’s a few salient facts to chew on:

1. The Member of Congress (Jackie Speier) that “tipped off” the CPSC about this matter is a Democrat.
2. Jackie Speier represents a California Congressional district (12th) that abuts Nancy Pelosi’s district (8th).
3. Shortly after first being elected to Congress in a 2008 by-election, Speier was appointed by Pelosi to serve as a member of the House Oversight and Government Reform Committee, then chaired by none other than Henry Waxman. Waxman resigned this chairmanship to take over as Chairman of the House Committee on Energy and Commerce.
4. Ms. Speier has publicly endorsed the “black box” requirement for cars that Mr. Waxman supports. She also wants to create a federal law restricting cadmium in jewelry. Her concept of Congressional activism is very closely aligned with Mr. Waxman, another California Democrat and patron of the Democratic majority on the Commission.
5. Today, Speier is a member of three committees. Besides Oversight, the other two committees are chaired by Edward Markey and Barney Frank, two close allies of Waxman and Pelosi.
6. Jackie Speier is running for reelection in one of the most phobic of states, California. The Democrats need every seat they can get in this Mid-Term election.
7. One of the three Democrat Commissioners appointed by Obama was a member of Henry Waxman’s staff for several years (Adler).

And can anyone imagine a Democrat-controlled CPSC telling a Democratic Member of Congress from the San Francisco area that her highly-publicized call for investigation of Shrek glasses because of cadmium was, in fact, unmerited, that the product was perfectly safe and the large corporation responsible for the glasses had protected consumers very well? In an election year with Nancy Pelosi in charge of the House and Henry Waxman directly overseeing the agency?

Nope, can’t think of a single reason why the leadership of the CPSC would urge McDonald’s to recall the safe glasses.

At least the CPSC won’t have to pay the costs of the recall. That’s McDonald’s problem.

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CPSIA – McDonalds Recall Urged by CPSC – WHY?

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