CPSIA – The Worm Continues To Turn

The day we all feared, the day we knew would come someday . . . well, the Federal Register says it’s coming soon. According to a notice of “Final Rule Stage” published on December 20, the CPSC is moving forward on the so-called “15 Month” Rule.

You have to chuckle at the “15 Months” part. This rule was legally mandated to be enacted 15 months after the CPSIA was signed into law. The presumed date of enactment would then have been November 14, 2009, a mere 14 months ago now. They didn’t even published a first draft until May 2010. If the agency can somehow finish this project by January 14, it could be called the “15 Months Times Two” Rule. Then again, it’s basically inconceivable that they will make it. Eventually they’ll need another name for this thing.

The urgency behind finishing up this rule is that the testing and certification stay expires on February 10, 2011. Remember that Bob Adler already said he wouldn’t vote an extension of this stay because . . . he hates stays. Perhaps he prefers market chaos and economic depression instead. Anyhow, to avoid the showdown, they need to get their ducks in a row, hence the need to get this rule going.

I sent in comments on the first draft of this rule on August 3. I wasn’t a big fan . . . and I guess other people had reservations, too. According to www.regulations.gov, the CPSC received 112 comments letters (that may overstate the number, because regulations.gov seems to have some duplicates). I haven’t read them myself, but I assume I am the only one who saw any flaws in this rule. The rest of the letters are probably just “thank you” notes.

Anyhow, it’s worth noting that the Chinese New Year occurs on February 3, 2011 so take my word for it, all the Chinese factories will be closed on Feb. 3rd and probably won’t reopen until Feb. 10 at the earliest after a two-week holiday. Some workers are gone three or even four weeks for this holiday. In a “best case” scenario, the CPSC can’t take action on this rule until they officially acknowledge the public comment “thank you” notes and hold a public Commission meeting. Do the math – if they choose to take action on this rule now, we will get about ten minutes notice to begin conforming. I can’t see any risk of market chaos again . . . can you?

Here’s a fairly obvious fact for you – we have not incorporated any of the pending rules into our supply chain or manufacturing processes. Why? You tell me what I’m supposed to do. The rule that has been published is deeply flawed and, basically, stupid. It is not a final rule. 112 comment letters were filed on it. It could change . . . it BETTER change. How am I supposed to implement rules that haven’t been published or possibly even written? Telepathy? I don’t read minds and I haven’t implemented the unknowable, either.

If this does not make your blood boil enough, consider these excerpts from the notice of Final Rule Stage:

• “The U.S. Consumer Product Safety Commission is charged with protecting the public from unreasonable risks of death and injury associated with consumer products.” [Emphasis added] The CPSIA makes consideration of RISK by the CPSC illegal. Bummer, huh? Someone should have told the CPSC because they still claim to be concerned with “risk” of injury.
• “When deciding which of these approaches to take in any specific case, the Commission gathers and analyzes the best available data about the nature and extent of the risk presented by the product.” And then ignores it??? See also the final bullet below.
• “As for exemptions [from the "15 Month Rule"], the statute does not appear to give the Commission the authority to exempt firms from the testing or certification requirements, so it may not be possible to exempt firms within section 14 of the CPSA.” In other words, HTA, you can lump it. And the CPSC is telling you who to blame – Congress.
• “The congressional mandate to issue this regulation does not require the Consumer Product Safety Commission to do a cost/benefit analysis for this regulation. Therefore, a cost/benefit analysis is not available for this regulatory action.” Head-in-sand syndrome. I bet you’ll be able to do a cost/benefit analysis pretty quickly when your costs go up again by 20x.
• “[It] is not possible to provide an analysis of the magnitude of the risk this regulatory action addresses.” Ahem. And it’s okay to put forward a rule of this complexity and far-reaching impact while flying entirely blind because . . . why???

Let’s not forget that there’s a new Congress being sworn in January 5th. The incoming Republican House majority has pledged to shrink the federal government and to closely examine how regulatory agencies are governing. Hmmm. Help may be on the way . . . soon.

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CPSIA – The Worm Continues To Turn

CPSIA – More Hypocritical Small Business "Help"

760 days have passed since ANY Democrat in Congress did ANYTHING to help us on the CPSIA. There are only 51 days left until Election Day.

Today we heard more blather from our Fearless Leader lecturing Congressional Republicans on an asserted lack of commitment to small business. He’s totally on the side of small business. or so he contends. Here’s his take of the status of the so-called “embargoed” small business bill that he wants to pass to solve all our economic problems:

“And you hear some of my friends on the Republican side complaining that, well, we’d get more business investment if we had more certainty. Well, here’s an example where we could give some certainty right away. Pass this bill. I will sign it into law the day after it’s passed or the day it is passed. And then right away I think a lot of small businesses around the country will feel more comfortable about hiring and making investments.”

The problem, according to Mr. Obama, is Republicans. Aha. And what about all the other things we know? I have documented in this space for two solid years the deafness of Congressional Democrats to our pleas. We have basically grovelled for scraps and been totally stuffed. Even the micro-businesses (as represented by the well-known HTA) have been spurned cruelly by the CPSC and by Congress. We are being asphyxiated and no Dem can be bothered to notice.

Of course, I think it’s RICH to be lectured by Obama over “certainty”. He says he has a quick fix to “certainty” – just pass his bill and magically everything’s okay again. Ummm, that may be just a tad over-simplified. In the children’s product industry right now, we have a ten-ton anvil dangling over our heads with the pending testing frequency and component testing rules at the CPSC, all with the potential (likelihood?) to squish small businesses. This Dem-run agency has begun to ignore public comments, as evidenced by its ridiculous dismissal of comments on the definition of “Children’s Product”. Taking comments is a pain in the neck, especially if the draft rules make no sense. You keep having to rewrite everything . . . . Is it any wonder why people are not investing in this market? Given that we must also deal with the pending cost deluge of the health care bill and unspecified tax hikes – for many people, the fetal position is the new work posture.

And what is happening right now, simultaneously with Mr. Obama’s lectures about how to make life better for small businesses? Well, Mr. O and his Dems are cynically opposing rescission of the penal 1099 provision in the Obamacare bill. Know about this small business killer yet? You will now have to file 1099 forms with the IRS for all merchandise your business buys (over $600 per year per supplier). The paper blizzard won’t just affect your suppliers, but also your customers (to whom you are a supplier). Try to estimate the number of forms flying back and forth every year courtesy of this new rule. How will you handle this new paper pushing exercise? We estimate that these forms will cost us $50-$100 to prepare and file (more than a P.O. because of demanding record keeping requirements and possible liability for errant filings) – for our thousands of suppliers and customers. Do the math – this will slaughter small business. Death by a thousand (paper) cuts.

The Republicans want to kill it. The Dems admit it was a mistake (they say they were “blindsided” – everything bad is “unintentional”, rather than poorly-conceived or simply incompetent). Nonetheless, the Dems don’t want to delete it. Why? Well, amending this provision “opens the door” to amending other parts of Obamacare. Whoa! Can’t do that . . . even if their stupid provision will kill your business. Too bad for you (and me), I guess. See this article from today’s Wall Street Journal.

I will hand it to the Dems – they have created their own cruel kind of certainty. I am absolutely certain they don’t care what I think or what happens to the jobs our company provides. That seems quite certain nowadays.

This can’t continue . . . . PLEASE help on Election Day.

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CPSIA – More Hypocritical Small Business "Help"

CPSIA – The Great Set-Up

For those who had better things to do than wade through my comment letters last week, I want to highlight a few points.

The two CPSC rulemakings up for comment on August 3rd were on component testing and on the so-called “15 Month Rule”. Both are very important rules and both have been long discussed. The “15 Month Rule” relates to testing frequency and defines a “reasonable testing program”. The long controversy over these rules relates to their acknowledged potential to be TERMINAL to small businesses. This was the principal reason that Inez Tenenbaum delayed issuing these rules on time in November 2009 as required by law (they can vary from law when it suits their purposes, please note). She called a two-day workshop for December 2009 for the purpose of gathering the feedback of stakeholders. I was asked to appear as a panelist, as were two of my colleagues. These sessions were taped (they were able to hear all the feedback and digest it).

So here’s a few things you should know:

a. Component testing will not be useful except for the largest companies and for those rare situations when everything falls neatly into place. The rules as written are too complex, too demanding (full traceability of all components is REQUIRED, which is delusional and completely unnecessary for such simple, innocuous products) and far too risky. The liability risk associated with these very challenging rules will scare off all but the most foolhardy or ignorant companies.

b. Component testing relies on a fantastic assumption, namely that component tests (if desired) will even be available. Why don’t we assume they will be available for every paint and for every plastic pellet on the planet? Does that solve the problem? I dare say not. There are many convenient examples of likely missing test reports – think of aluminum foil in a science kit, for instance. If you are missing only a few component certificates, any benefit from the rule is lost.

c. The “15 Month Rule” was apparently NOT CHANGED from the draft discussed in December 2009. In other words, despite the agency’s “misgivings” about the rule way back then, and even after two days of comments by more than 200 stakeholders, the agency ended up in the same problematic place – and put the rule out for comment now. Of course, they filled in some holes (see below). In my opinion, this means either that the “feedback” process was a complete sham (the agency gave the appearance of “listening” but did as it pleased anyhow) or else that the agency lacks the temerity to tell Congress that the CPSIA is simply screwed up. Having ducked that punch, the CPSC instead opted to put you and me out of business.

If they were unable or unwilling to listen in the last nine months, I have absolutely no confidence they will listen this time. That bodes badly for me and for you. Consider the following . . . .

d. Using the numbers from the CPSC’s rulemaking, I derived that the agency wants me to spend $10,000 per item per year in testing costs (all-in). We have 1,500 items. Do the math – that’s $15 million per year in testing. This is for a company with ONE RECALL OF 130 PIECES TO ITS NAME IN 26 YEARS. This is also the rule regulating a “risk” that killed ONE CHILD and MAY HAVE INJURED THREE CHILDREN . . . in 11 years. [You can review the math in my comment letter. It's their numbers, not mine.] Do you think this might be a touch excessive? No matter, that’s our problem to resolve.

I can’t get this $15 million number out of my head. Do you realize that this rule could become the law shortly? Hey, HTA members, do you get it yet? All that nuzzling up to the CPSC, all their tears over your plight – this rule shuts your doors. If they push forward on this rule (as I anticipate), we will all face a very daunting choice – do we close our doors, sell our companies, go into another business or, breath deep, knowingly break the law by ignoring this rule? Is this a surprise to anyone? This has to be the world’s stupidest rule – and we are left with the ultimate Hobson’s Choice. Thanks CPSC.

Let’s not forget that Bob Adler spoke in stern tones last February when he said he would not vote to extend the stay on the testing and certification rules again. In the absence of further Commission action, the testing stay lapses on February 11, 2011. This rulemaking is intended to put the agency in position to let the stay expire. The next step would be enforcement of this new rule. Ms. Tenenbaum has publicly announced that 2011 will be all about enforcement – you have been warned, the pogroms are coming.

Do you get it . . . yet? IF the agency cannot wrap up this rulemaking in time, it will need to extend the stay. Arguably, that problem is on its doorstep right now. Even they understand that businesses need time to plan, and without final rules, no planning or preparation can take place. IF they cannot get this done in time (soon), they will have to extend the stay AGAIN. This would be incredibly damning of the agency, as it would be an apparent concession that the awful CPSIA cannot be implemented, perhaps ever. Of course, that only confirms what you and I have known for a long time – the law can’t be fixed by this agency and is fatally flawed. In the absence of dynamic Congressional action, we’re all toast (this is old news).

I urge you to take this battle to the political arena. The CPSC and the Dem-controlled Congress have shown that they just won’t listen. They don’t care about our problems. I say that if they are intent in putting us out of business, all of our productive businesses making contributions to our community and our markets every day, then it’s time to return the favor. We need to put THEM out of business first.

Time’s a-wastin’.

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CPSIA – The Great Set-Up

CPSIA – Numbers Don’t Lie (2nd Update – An Upside Down World)

I have previously reported that my study of reported lead recalls over the past 11 years shows that there has been ONE reported death, the widely-discussed Jarnell Brown who died after swallowing a lead jewelry charm in Minnesota. This single death, plus three injuries, is the entire database of injuries reported by the CPSC from lead and lead-in-paint in the past 11 years. That’s it.

The New York Times reported on Sunday that data from the EPA sets the economic “value” of a human life at $6.1 million. Whether that number is high or low, it’s a good placeholder for an economic analysis of the CPSIA. [The EPA originally set this figure for an economic analysis of one of its rules.] According to federal rules governing regulations issued by the EPA, the benefits of a regulation must outweigh its costs. Therefore, as the NYT reports, if you save one life (worth $6.1 million) with a new regulation that imposes a compliance cost of $8 million, the regulation is illegal and must be withdrawn.

I wonder if this analysis would give us any insights into the CPSIA. . . .

Another relevant data point from the NYT article is that one IQ point lost to lead poisoning is worth $8,346 over a lifetime. That’s a real figure – think of the cost and disruption imposed on the children’s product industry to avoid the POSSIBILITY of the loss of an IQ point. Consider that the CPSC has reported three injuries from lead-in-paint in 11 years – that’s 3 x $8,346 = $25,038 in “damages” in lost IQ points or a little over $2,200 per year.

Even this miniscule cost is conjectural as I am simply not aware of a single, PROVEN case of lead poisoning from a children’s product. The victims assert a link between their (often undocumented) lead poisoning and the offending children’s product – but the causal link is rarely if ever challenged or conclusively verified. Even the consequences of the (asserted) lead poisoning is itself conjectural – although I am not defending lead poisoning. It is not certain, however, that lead poisoning always leads to long term problems or diminished capacity. [This issue gives fresh perspective on the recent policy of the CPSC to recall ALL lead-in-paint violations, a strict liability standard. This almost certainly violates the "substantial product hazard" standard that governs the ability of the CPSC to issue recalls as a matter of law. CPSC leadership should be held accountable for this change in policy in violation of the "substantial product hazard" statutory standard.]

On the basis of this very doubtful data, my entire industry has been trashed.

Let’s do the math on the CPSIA: In 11 years, one death ($6.1 million) and three IQ points ($25,000) = total cost $6.1 million. On other side of the ledger, the HTA estimates that the ANNUAL cost to test products for compliance with the CPSIA is $5.63 billion. The all-in cost is probably higher by a factor of 2-3x, but the HTA number is fine for illustration purposes. At this rate, ignoring the likely impact of inflation, the 11-year projected cost to comply with the CPSIA would be not less than $61.9 BILLION.

Spend $61.9 billion, save $6.1 million. In other words, thanks to the wondrous CPSIA, Americans spend $1,000 on “safety” to save a buck in injury costs. This is the legislative scheme that your Congressional Dem leaders have been fighting tooth-and-nail to preserve intact for the last two years.

The Dems want you to spend $1,000 to save a dollar. They won’t give an inch and have stubbornly refused to listen to reason for two years. The illegality and remarkable fiscal irresponsibility of this regulatory scheme doesn’t impress them. They tell us there’s no safe level for lead . . . but the real danger appears to be that there is no safe level of Democrats in our government.

November, November. Mr. Waxman, go ahead and fiddle while Rome burns. We’ll see you and your colleagues in the voting booth.

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CPSIA – Numbers Don’t Lie (2nd Update – An Upside Down World)

CPSIA – A Challenge to Inez Tenenbaum

In today’s House hearing featuring CSPC Chairman Inez Tenenbaum, the subject of rhinestones (crystal beads) came up. At about the 1:42 point in her testimony , Rep. George Radanovich asked her about the real health risk posed by crystal beads in the context of his concern over the agency’s need for the flexibility to use risk-based analysis. Ms. Tenenbaum contended that “interpretation” of her comments on crystals have “muddied the waters”. She defended the banning of rhinestones on the basis that although crystal beads might not violate the previous “substantial injury or illness” standard of the FHSA, some beads have higher concentrations of lead that violate the new CPSIA standard. [For instance, leaded crystal, hence the name.] Rep. Radanovich questioned whether this matters as a practical safety matter since swallowing a bead is exceedingly unlikely to cause injury from lead. Ms. Tenenbaum stated that while leaching of lead from one bead poses no problem, “what if the child swallowed 50 small beads?” She goes on to note that the agency “could not determine” whether 50 beads would raise the blood levels of lead. [She apparently concedes that the only potential risk with beads (from lead) is from ingestion, not handling or airborne lead.] I was blown away by this statement from the Chairman of the CPSC. She didn’t sound concerned with safety; instead, she seemed to think that her job was to defend the law she was given to enforce. Her reasoning appears to be made solely in the context of this goofy law. Common sense is only relevant if the law says so, apparently. This leaves us high and dry. Who will stand up for rational safety policy if not her? Her analysis of the risks of swallowing stones is also mindboggling. First of all, and most importantly, in her testimony before Congress today, Ms. Tenenbaum defended setting national safety policy based on our society’s lowest common denominator, a child who would swallow FIFTY BEADS. Yes, she justifies the devastation of several industries and uncountable companies dependent on these decorative stones on the grounds that if a child swallows 50 beads, he/she might get lead poisoning. Remember, we are talking about eating ROCKS here. Who might these children be that swallow 50 beads? Completely unsupervised children at a minimum, for one thing. So Ms. Tenenbaum apparently believes that she must enforce the law in a way that protects children against the total abdication of basic care by parents, teachers and caretakers. [If that is really a sound basis for national policy, Big Brother is going to look good by comparison pretty soon.] Second, only children with real problems (unrelated to product safety) would eat 50 beads (rocks). I personally have never eaten a rock or a bead, have you? These are kids that have serious deficits. So we are trashing all these companies because children of this nature MIGHT be in danger. What percentage of society will benefit from this approach, and at the expense of how many other people? Interesting question? And let’s not forget . . . that if you swallow 50 beads (rocks), you have bigger problems ahead of you than lead poisoning. Amazingly, the Chairman of the CPSC is apparently so absorbed in enforcing this defective law that this important common sense point is seemingly lost on her. Check out her Congressional testimony. She was actually arguing with a member of Congress to defend the decision to ban these stones on this basis. If this isn’t proof of an upside down world, I don’t know what is. How is your confidence in the CPSC now? BUT what if Ms. Tenenbaum is RIGHT? Holy cow, what if you can get lead poisoning from crystal beads? She must have a basis for her assertions, right? Well, I have little kids that pass through my house all the time. As we know, rhinestones are not illegal to OWN, just illegal to sell. I happen to own some rhinestones and now I am WORRIED. So I want to know how Ms. Tenenbaum derived her conclusion that 50 rhinestones poses a health risk. Clearly, a sophisticated agency like the CPSC wouldn’t make such a direct statement in front of Congress without a firm basis for it. So, my challenge to Ms. Tenenbaum is to PROVE that 50 crystal beads are dangerous (as a source of lead poisoning). She told Rep. Radanovich they might be dangerous – now, let’s see the DATA and the MATHEMATICS. I think the U.S. public deserves to see it. But I don’t want to make things too tough on the CPSC. I will help out a bit here. The Fashion Jewelry industry submitted a lot of DATA to the CPSC back in February. I have absolutely nothing else to do with my time and gave up sleeping longggg ago, so I re-read the industry’s data with a calculator in hand. Here’s what I think is the right answer. Ms. Tenenbaum can correct my math if I am mistaken. 1. The industry says that a popular size of rhinestone is 10PP for children six years old and younger (the target market for CPSC enforcement). It takes 333 of this size stone to equal one gram (remember this number). There are typically 10-15 such stones in jewelry for this age group, so to swallow one gram of stones would require eating 20-30 bracelets. Yummy, munch munch. It takes fewer stones to equal one gram for larger stones, but then again, fewer such stones are used in each piece of jewelry, too. You can find the chart in the industry letter on page 8 and look it over yourself. Eating a gram of stones will take a lot of milk, plus access to piles of jewelry. I think it’s an ambitious project for a determined, hungry, totally unsupervised child with access to tools. 2. There’s lead in your food, your water and your air. I have previously gone over some of these numbers (actually more than once ). The industry notes that the FDA has standards for lead in the food supply and sets a provisional tolerable daily consumption limit of 6 micro-grams of lead for children seven years old and younger. This level of consumption of lead theoretically corresponds to a change of one micro-gram of lead per deciliter of blood. The corresponding tolerable consumption levels for kids older than seven is 15 micro-grams of lead per day in food and water. [The FDA doesn't set standards for the lead we breathe all day long, apparently, so let's just ignore that significant source of daily lead intake.] Studies show that daily dietary intakes of lead for children range as high as 1.17 micro-grams of lead on average, well below the standards established by the FDA. If every food was at the maximum lead content, children’s diets might contain as much as 3.5 micro-grams of lead, still okay. 3. The industry submitted studies that showed that, based on ONE GRAM of stones, saline tests leach out 0.15 micro-grams of lead. Acid-extractions tests on ONE GRAM of stones produces leaching of 0.52 micro-grams of lead. To equal the daily intake in an average diet, you would have to swallow (acid extraction test) at least two grams of stones. That’s 666 of the 10PP stones, or the equivalent of up to 70 pieces of jewelry. in an absolute worst case, most unforeseen case, a child would have to swallow 54 30PP stones (11 pieces of jewelry), 210 2-mm stones (about 20 pieces of jewelry) or 22 4-mm stones (4-6 pieces of jewelry). This is to produce ONE MICRO-GRAM of lead intake. [If you are worried about mouthing, multiple the stone count by 3.5.] To raise blood levels by one micro-gram per deciliter of blood, the basic measurable change in lead levels, a child would have to ingest SIX TIMES AS MUCH on a daily basis. For those of you who don’t have access to a calculator or can’t do mental math, this means that to raise blood levels by the minimum amount, you would need to ingest about 130 of the largest reported stones or about 4,000 of the most common ones every day. Based on mouthing only, the number rises to 450+ large stones or 14,000 of the common stones. That’s quite a mouthful. Ms. Tenenbaum, the answer please?

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CPSIA – A Challenge to Inez Tenenbaum