CPSIA – McDonald’s Shrek Glasses Weren’t an "Imminent Hazard"

Some people apparently think I contend that product recalls can only take place if the CSPC insists. I have certainly argued that the CPSC has no authority to demand or even ask for a recall unless certain specific conditions are met. Hate to be the bearer of bad news, guys, but there are limits to the agency’s legal authority. Companies themselves can recall products for any reason. There need not be a safety reason – you can recall something from the market because the color’s wrong, the material is somehow less than expected, wrong size, wrong instructions, wrong packaging, whatever. A company’s ability to recall its own products is not limited by law.

In the case of the McDonald’s Shrek glasses, yes, McDonald’s declared a voluntary recall. That’s not unusual – the vast majority of recalls are voluntary. Only a tiny handful of recalls every year are “mandatory”. In any event, the critical issue here is NOT that McDonald’s made this choice. As we have discussed, the publicity from this event forced McDonald’s hand – they had to protect their brand at all costs. The issue here is that the CPSC apparently “urged” the company to “do the right thing”. [These words come from the OnSafety blog, the official blog of the CPSC, believed to be written by Scott Wolfson, Director of Public Affairs.] It was apparently the “right thing” to do although the agency conceded that the glasses were “not toxic”, in other words SAFE.

While companies are allowed to choose to recall safe products at their pleasure, the CPSC does not have the unlimited legal authority to reach out to American companies and tell them to take this kind of voluntary action.

The power to recall emanates from certain provisions of the CPSA and FHSA. Notably, Section 12(a) of the CPSA, the agency can’t go to court unless there is an “imminent hazard”. What might that be? “As used in this section, and hereinafter in this Act, the term ‘imminently hazardous consumer product’ means a consumer product which presents imminent and unreasonable risk of death, serious illness, or severe personal injury.” Given that the glasses have been acknowledged to be “non-toxic”, this standard is impossible to meet.

The relevant term in the FHSA is “banned hazardous substance”. In Section 2(q)(1)(A), it is defined as “any toy, or other article intended for use by children, which is a hazardous substance, or which bears or contains a hazardous substance in such manner as to be susceptible of access by a child to whom such toy or other article is entrusted”. [If a ban is done pursuant to subsection (B) of this clause as a "household item" because it is chemical in nature, it must be done by rule, subject to comment and so on. There was no rulemaking process involved in this case.]

“Hazardous material” is defined in Section 2(f)(1)(D) in relevant part as “Any toy or other article intended for use by children which the Commission by regulation determines, in accordance with section 3(e) of this Act, presents an electrical, mechanical, or thermal hazard.” And Section 3(e) refers only to electrical, mechanical or thermal hazards, clearly inapplicable here.

Bottom line, the McDonald’s glasses are outside the reach of the CPSC . . . if the wording of its principal empowering laws matter anymore.

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CPSIA – McDonald’s Shrek Glasses Weren’t an "Imminent Hazard"

CPSIA – Duplicity and Sleight of Hand in the Waxman Amendment

The icing on the cake of the Waxman Amendment is their sneakiness. As if the problems already reported were not enough, the Dem authors greedily tossed in some real bombs, all using language sufficiently opaque to obscure their meaning. I presume this was some sort of “clever” gambit to escape attention.

You deserve to know more.

First, by way of background, let’s review how we got to this point. The CPSIA was signed into law in August 2008 and howls of pain and protest began immediately. For more than a year, the Dems asserted that the law was perfect and the CPSC would fix the “unintended consequences”. Over time, overwhelming evidence mounted to prove that the law needed to be changed, the CPSC could not fix everything without help and most disappointing, not all the bad consequences were ‘unintended”. After more than a year of bickering, Henry Waxman unilaterally tried to sneak a CPSIA amendment into an omnibus bill in December but failed. Finally, the CPSC Commission was ordered to submit a list of recommended CPSIA changes to the House Appropriations Committee on January 15. The Commission issued its report on time but could only come to consensus on a small handful of items.

In the wake of the Commission report, this amendment was drafted by Waxman’s staffers to “fix” the CPSIA.

But . . . a couple other things happened. First, it is my understanding that Inez Tenenbaum sent a secret list of 20 changes she wanted to the Waxmanis. [I have not seen this document; its existence is an open secret.] So apparently, the Commission report was for public consumption, but the Chairman had her own wish list for private viewing.

The second thing that happened was that the Waxmanis decided (perhaps with the encouragement of Tenenbaum) to use this amendment as a way to further amend the original CPSA (dating back to 1972) and make things WORSE for you and your businesses. These changes were cloaked in seemingly technical jargon at the end of an the amendment. [Connsumer groups had also expressed support for these changes in recent public meetings.]

Let’s look at what the Waxmanis are trying to do:

a. An Open Door to Confidential Information. Section 6(b) of the CPSA provides a notice period before disclosure of information to the public by the CPSC. Among other things, this provision requires that the Commission must give notice to the manufacturer of the disclosure to permit comment and dialogue, as well as the initiation of court actions (injunctions) to prevent the disclosure of such information (this is called “due process”). The Commission is also obligated to make sure “that such disclosure is fair in the circumstances and reasonably related to effectuating the purposes of this Act”. This provision essentially provides a check-and-balance to prevent the unfair coopting of the information disclosure process against manufacturers.

The amendment makes the following change to Section 6(b)(1): “striking ‘its public disclosure’ and inserting ‘initiating the public disclosure’”. Wow. I can tell you’re reeling from the significance of this change.

Okay, what’s the big deal? Is there ANY difference here? Yes, in fact, there is. By changing these three words, Section 6(b) now applies ONLY to disclosures initiated by the Commission. Isn’t that everything? No. What kind of information disclosures might NOT be initiated by the Commission? Freedom of Information Act requests by, say, reporters, plaintiff attorneys or consumer groups.

Uh-oh.

Let me state this a little more clearly – the changes in the Waxman Amendment take away ALL protection of businesses on FOIA requests and allows the (passive) disclosure without prior notice. You lose ALL protection under 6(b) with this tiny change of three words. This would apply to all investigative files (like any of your Section 15 reports) and other confidential correspondence between you and the CPSC. Presumably, if enacted, that confidential material could show up on the front page of the Chicago Tribune WITHOUT NOTICE. [Disclosure of trade secret information is regulated by Section 6(a) and is presumably not eroded by this amendment.]

The relationship between this provision and the Public Database is not clear. It might change (reduce) the flimsy protections already in place, or might provide a way for reporters, plainiff attorneys and consumer groups to get at information that might not appear in the database.

This provision is entitled “CLARIFICATION OF LAW” in the Waxman Amendment. That is a plain, unambiguous LIE. The authors of this amendment think you are a fool.

b. Subpoena Authority Loses Its Check-and-Balance. The amendment changes the rules on subpoenas in two important ways. First, in another “clarification of law”, Section 27(b)(3) is amended “by striking ‘documentary evidence’ and inserting ‘documentary and physical evidence’”. This change does not incorporate any reasonableness standard and thus allows the CPSC to subpoena evidence in private suits regardless of the consequences, and even more importantly, can subpoena inventory as a backdoor way to recall it. This is unfettered government power. Is that a good idea?

The second change requires a little background. The Commission has broad powers to delegate its powers to staff – except for subpoena power. So, if the CPSC wants to issue a subpoena, there is a procedural check-and-balance in place to require the additional step of seeking Commission approval. The Commission, being an entity visible to the public, presumably would be less wrapped up in the emotions of an investigation and be capable of more balanced judgments. It’s a procedural safeguard that protects the integrity of the system but is highly unlikely to slow an investigation detrimentally.

The amendment, however, gives the Commission the power to delegate its subpoena power now. This opens up the possibility of zealous staffers who could use subpoena power to harass or even punish “uncooperative” firms, all outside of public view. There would be no due process protections to rely on, either. This is yet another expansion of government power – but with little demonstrated need. [In other words, what terrible things have happened that could only be fixed with this legislative change?]

c. Information Disclosures in Voluntary Recalls Ratchets Up. The CPSC recently put out a 17 page Federal Register notice of its requirements for Mandatory Recall notices. Memorized it yet? Why not?! Of course, you may be forgiven for feeling you could ignore it, since mandatory recalls are quite rare and usually relate to severe risks to public health and safety. Most recalls are voluntary, which means mandatory provisions are rarely used. In any event, if it ever comes to this, the disclosure probably needs to be more comprehensive and significant.

For those reasons, I did not comment on these rules. They seemed irrelevant to me. G-d forbid such a thing should happen on my watch. Pew-pew, knock wood. I may not have been the only one to look at it this way.

Oops, my bad. The amendment makes these provisions apply to VOLUNTARY RECALLS. Sneak attack? Perhaps. The rules for mandatory recalls includes several obnoxious requirements, making compliance much more burdensome and expensive, not to mention potentially devastating to your business.

d. If You Liked the Baby Slings Warning, You’ll Just Love This Change. Knowing you as I do, I imagine you are thinking “I wish the CPSC could act more impetuously and strike out at entire product classes or industries without doing studies or anything too science-y.” Well, it’s really your lucky day!

The Waxmanis sent you an early Christmas gift with their proposed change to CPSA Section 5(a) requiring the Commission to “promptly inform and educate consumers regarding a class of imminently hazardous consumer products upon identifying or being made aware of such a class of products.’’

And how will this work? “[Whenever] the Commission identifies or is made aware of a class of imminently hazardous consumer products, the Commission shall take appropriate steps to inform and educate consumers through the media, State and local governments, and private organizations regarding such class of products and the nature of the hazard.’’

I believe that the CSPC must go to court to do this now.

I have just a few questions:

- What about due process?
- What are the procedural safeguards?
- What constitutes a “class of imminently hazardous consumer products”? What steps must the Commission take to reach that conclusion? Is reading an AP story enough? [I presume the answer is yes.]
- Who will protect innocent companies inadvertently slandered by your advice? [For example, the baby slings warning apparently related to very young babies or preemies, but the headlines applied to everything in the product class. Too bad for companies making safe baby slings for older babies?]
- When the CPSC jumps the gun and hurts companies or entire industries needlessly or in error, who will pay the damages? Do we get a bailout?

Call me a cynic, but I think this erosion of safeguards is just a mite troubling.

There are probably other ticking bombs in this legislation that I haven’t found or told you about. I think you get the point nonetheless.

Two more thoughts:

1. These four changes significantly erode protection of corporate interests under the CPSA. This makes doing business MUCH riskier and invites a lot of randomness into our business lives. It also makes it tough to believe you can trust the CPSC during a Section 15 investigation or other altercation. If you have a real worry about how you will be treated, do you experience a heightened incentive to cooperate or to hide? Will this raise the rate of disclosure of problems, or provide an incentive to bury the problems?

If disclosure to the CPSC now involves certain pain, why would people bring misery on themselves voluntarily? And when more people start to hide – and are found and punished – will the cries for stricter rules rise or fall? They will rise, as howling consumer advocates will assert that this is “proof” of the venality of corporations. The “only” solution will be even stricter rules and higher penalties. Perhaps we should all be sent to jail preemptively, save some time.

2. I hope you share my utter outrage at the arrogance and effrontery of the duplicity and sneakery of the Waxmanis. Such arrogance is only possible when public officials feel that they are beyond reach. This deception shows clearly how high and mighty the Waxmanis feel, how imperious their attitude. Their anticipated ultimatum to the business community to fall in line behind this amendment is more of the same. It’s rather revealing.

There is no reason to puzzle over disillusionment with our government. The Dems blew it . . . and continue to blow it. This amendment was a chance to build bridges and mend fences. Insead, the Dems go on a rampage.

I am tired of being treated like this by my own government.

Read more here:
CPSIA – Duplicity and Sleight of Hand in the Waxman Amendment

CPSIA – Treatment of Section 101(b)(2) in the New Waxman Amendment

i have attached a conformed version of Section 101(b) reflecting the new Waxman amendment’s proposed changes for your reference.

The dilemma posed by the current Section 101(b)(2) is that exclusions to the lead standard are basically impossible to obtain. There have been several rejected exemption requests and much pleading by Nancy Nord and Anne Northup for changes providing flexibility.

Last December, Mr. Waxman (supposedly with input from Chairman Tenenbaum) launched a sneak effort to implement something called the “functional purpose” exemption to “solve” these issues. The original construct of this exemption applied to situations where the manufacturer could demonstrate that the lead served a “functional” purpose and could not be removed without consequences (not including economic loss). This provision would have permitted ATV manufacturers to assert the need to put lead in certain parts to strengthen the steel, for instance. The functional purpose concept derives from a similar procedure under the EU’s ROHS-WEEE and is also present in the treatment of electronics under the CPSIA.

Waxman’s functional purpose language generated howls of protest as the “solution” solved nothing for anyone. Later, the Commission could not agree on a functional purpose recommendation for its January 15h report, and the idea “died”.

In the new Waxman Amendment which emerged last week, a new version of the functional purpose exemption was introduced to modify Section 101(b)(2). You may find the conformed version of Section 101(b)(2) helpful in understanding how the new provision works.

My thoughts on the new language:

a. The limitations of the exemption process in Section 101(b)(1) are UNCHANGED. In other words, the problematic “any” language is still effective. The new functional purpose exception will be an exception to the exception. Get it?

b. The Section 101(b) structure which limits exceptions to specific products, materials (or component part, in the case of the functional purpose section) remains in place. The language does NOT permit exceptions by product class. You must apply product by product, material by material. The rule even specifies that each component must be individually considered. How many parts are in an ATV . . . .

c. The Commission is now allowed to act “on its own initiative” to exempt “a specific product, material, or component part”. A petitioner may also seek the same relief.

It is hard to imagine how this would take place – will a Commission of five people pick lucky companies or industries for random acts of kindness? Of course, the first products likely to be accorded this “on its own initiative” treatment would be books, ATVs and bikes because of political pressure. [Let's not call that "influence peddling".] More complex product categories, like school supplies (my industry), would be stuck without an effective means to seek exemption.

d. The process, regardless of who initiates it, will be subject to a notice and comment period. This is new and presumably is designed to enable consumer groups to “participate in” (read, slow down or obstruct) the exception process. You have to hand it to the authors of this provision – they found a way to make a slow, expensive and tedious process even worse.

e. The standard for obtaining a functional purpose exception has several parts (all of which must be satisfied) -

“(i) the product, material, or component part requires the inclusion of lead because it is not practicable or not technologically feasible to manufacture such product, component part, or material in accordance with subsection (a) by removing the excessive lead or by making the lead inaccessible.”

This clause has several tricky parts in it. First, the word “practicable” was supposedly chosen because of a Supreme Court decision holding that “practicable” implies consideration of economic factors. So bickering over what “practicable” means is almost certain under this provision. The legal standard will need to be developed to make this provision workable – another nice project for Cheryl Falvey and her CPSC legal department. No guidance has been provided on how much economic pain needs to be incurred before lead removal is deemed not “practicable”. Consider for instance the use of recycled metal for bike frames. When is removal of lead from bike frames not “practicable”? Each frame is presumably different. Virgin metal is available without lead. You figure it out, I can’t.

Let’s not forget that the amendment also uses the term “technologically feasible” as defined in CPSIA Section 101(d). The CPSIA definition omits any reference to economics – intentionally. So the phrase “is not practicable or not technologically feasible” means that it is either too expensive or impossible to remove lead. This makes no sense to me, as the term “practicable” with its advertised meaning incorporates technologically feasibility and makes inclusion of the latter term duplicative. If there is a reason to use both terms, I can’t figure it out. Readers?

In addition to the problematic standard of “practicable”, the petitioners must also demonstrate that it is both too expensive to remove the lead to levels below the standard AND also too expensive to make the part inaccessible. Since the standard for “too expensive” (not “practicable”) is not specified, this language means we must invite the CPSC, the Commission and (due to the notice and comment period) the general public and our competitors into our business processes. That rag-tag lot will get to decide whether the expense of money on the removal of lead from the subject product, material or component is “practicable”. Yes, that’s what it means – you must publicly expose your judgments and economic choices to the Commission for their feedback and approval. Presumably, this would require you to publicly disclose your costs to obtain the “not practicable” decision.

That really sounds like FUN! I can’t see a deterrent to submitting a petition . . . can you?

“(ii) the product, material, or component part is not likely to be placed in the mouth or ingested, taking into account normal and foreseeable use and abuse of such product, material, or component part by a child; and”

Two years ago, I might have thought this was reasonable language. In a world where logic prevails, this language is something that most companies could fairly easily (and probably already do) consider. However, after Ms. Tenenbaum’s testimony about rhinestones on September 10, 2009 in which she speculated about the ingestion of 50 rhinestones by a child, it is hard to predict which imaginary risk the CPSC will fixate on. Recent events suggest that “foreseeable” is now in the eyes of the beholder.

“(iii) an exception for the product, component part, or material will have no measurable adverse effect on public health or safety.”

This third plank in the exception standard is supposedly meant to connote that contact with a subject product which produces less than 1 micro-gram per deciliter change in blood lead levels (the smallest increment for measuring blood lead levels today) is okay. It does not say so explicitly but wink-wink-nudge-nudge, that’s what it means.

Unfortunately, the precision of this “standard” promises more than it delivers. There are few identifiable lead threats in children’s products that could foreseeably cause this kind of change in blood lead levels other than lead-in-paint (probably above 90 ppm, too) and lead in jewelry. So if each case must be argued and decided, isn’t the standard and the process some sort of sham? I think the difficulty and expense of proving the negative in this case is a strategy by the Dems to keep their ridiculous standard in place while appearing to be magnanimous in offering an exception process. Few companies will get exceptions.

Sadly, fear does not allow for the use of science. There’s a lot of hypocrisy here, too. Apparently, the risk from lead in handlebars of a bike is far more worrisome than lead in our air, water or food supply. Likewise, it must be far more serious than, say, lead-in-paint on cars and boats (both of which are perfectly legal). And for those cases which this law obsesses over, lead-in-substrate in children’s products, the zealots cannot agree on how to measure what’s safe – mainly because they don’t know. Let’s not forget that Commissioner Bob Adler wrote a lengthy paper )with 89 footnotes) on how there is NO safe level for lead. The non-scientists who now control this issue have even drafted a MOVING target for safety – it is dependent on what we can measure. If we can measure lead blood levels more precisely in the future, the exception standard will automatically tighten. Like a noose.

f. The Commission can require a warning label for those items afforded an exception under this strict standard. What? Are they going to warn us that the product is safe? No, it’s Proposition 65 creeping into federal law – apparently, the Dems think that the Commission may decide to warn the public that they weren’t able to rid these items of lead, even though they have determined in an investigation that the products are safe. Again, since the zealots think “there is no safe level for lead”, it is very scary for them to concede that anything could be safe if it contains lead. This is a belief system, stop trying to figure it out.

Btw, have any of you ever tried selling a children’s product with such a warning label? At our company, we would drop such an item rather than try to sell it. No one will buy such a product for their child or for use in their classroom. The imposition of a Prop. 65-style lead warning on a children’s product is a tacit ban.

g. The petitioner has the burden of proof in applying for an exception under this provision. That means a small business has to make the same case as a Big Business. Why not simply say that small businesses can’t have an exception under this provision?

The petitioner may utilize data submitted by other petitioners in making its case, but there is no requirement that such data be made publicly available. In recent cases, the submission of the petitioners has not always been made public.

h. The language allows a sunset date to be imposed for the exceptions, even though the very terms of the exception requires that the CPSC conclude that public health and safety will not be imperiled by sale of the product. I am made to understand that the motivation behind this illogical provision is that exceptions should not last forever. Why not? I think it’s the belief system again, or it could be some sense of unjust enrichment. In any event, the CPSC would be empowered to force the continued gratuitous erosion of a company’s cost structure for no particular reason other to remedy the offense of an exception to the rule.

i. The exception will have retroactive effect unless otherwise specified by the Commission. This sounds good . . . other than the fact that we have been shooting our businesses in the foot since August 2008. The ability to give retroactive effect to exceptions might have been valuable two years ago. To put it in an amendment now, two years too late, is an insult to the regulated community. Alternatively, it is yet more evidence of the absolute inability of Democratic legislators to even SIMULATE understanding of business issues under this law.

Next up – discussion of the Resale Shop Exception under Section 101(b)(3).

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CPSIA – Treatment of Section 101(b)(2) in the New Waxman Amendment

CPSIA – Businesses Plan for the Final Days

With the February 10th stay on testing expiration rapidly approaching, the 15-month rules due on November 14 (expected to set deadly testing frequency requirements) and absolutely no relief on the horizon from a unfeeling, uncomprehending, resolutely unyielding Democratic Congress, businesses are left to fend for themselves. Consider the calendar: February 10th is only four months and ten days away. From that day forward, every item imported must be accompanied by a super-expensive CPSIA test report. Time is running out. This is a problem. For many products, the cost of testing ALONE renders them unprofitable. And this is on top of the high cost of tracking labels and other costs associated with the CPSIA. These new costs make obsolete many business models serving specialty markets like schools. [Btw I was told yesterday to be prepared to pay $35,000 to modify our warehouse management software system to fix ONE hole in our tracking labels accountability effort. ONE hole, not ALL the holes. Ah, it's just money, and money grows on trees, right?!] If you are a maker of products rendered unprofitable by CPSIA testing, you face ugly choices. Because many businesses run on a calendar marketing cycle, you may have to drop items mid-year after testing requirements kick in. Most dealers won’t forgive you for this. What to do? At this point, with so much uncertainty, businesses are struggling to answer this question. Planning is literally impossible. How can you address this major business planning issue set to mature in only 133 days if, for instance (as is true), no phthalates testing labs have been accredited yet and no final phthalate testing standard has been announced? Good question, darned good question. A common strategy to prepare for the Final Days is to top off inventory ahead of the testing requirement. Businesses are now scouring inventory records and ordering stock ahead of time to ride out 2010. This will be a mini-stimulus bill for China factories, giving them a boost in production if the American importers can find inventory financing from tired and scared banks. The upside to all this is that businesses planning ahead in this way will not have to torch dealer relations during 2010. This buys time as Congress continues to sit on its hands after gutting the business futures of countless small businesses. The next phase will be recovering from the shock of the Section 102(d)(2)(B) 15-month rule which is expected to require at least annual testing (or, as rumored, even more frequent testing, such as once per production run). After finalization of this rule, the jig will be up, and businesses will have to finally reconcile themselves to being put out of their markets once and for all. [Notice that this has nothing to do with safety, just gratuitous, thoughtless destruction of economic value and markets.] Specialty companies will face the prospect of either abandoning their specialty markets for mass markets (with smaller, less-specialized product lines), abandonment of children’s products altogether (this has happened widely in the Donated Goods industry and in apparel already) or sale/closure. The inventory top-offs going on now will allow businesses to wind up their current business plans in an orderly fashion. At demoralizing times like this, I like to think of the comforting words of a staffer of Illinois’ own Senator Dick Durbin (whataguy!): “I think you are right that the CPSIA imposes costs on businesses, and because of economies of scale it’s the smaller businesses that will feel these costs more acutely. This is part of a larger calculation that it’s worth the costs to shift from the old system of post-market correction (once a dangerous product is out in the market and leads to sick kids, recalls, lawsuits, etc.) to a new system of pre-market testing and certification (instead of just assuming products are safe and paying the price for false assumptions).” [Correspondence dated April 16, 2009] At least we know they meant for us to die. Comforting . . . unless you thought those guys worked for you, too. It’s nice to know we are living a purpose-driven life. We get to be sacrificial lambs to Senator Durbin’s master plan to keep everyone safe. Everyone, from the Senate to Henry Waxman’s House to the caring CPSC, should be SO proud!

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CPSIA – Businesses Plan for the Final Days

CPSIA – Letter to CPSC re Tracking Labels Guidance 9-18-09

September 18, 2009 VIA FEDERAL EXPRESS Todd Stevenson Director, Office of the Secretary U.S. Consumer Product Safety Commission 4330 East West Highway Bethesda, MD 20814 Re: Section 103 Tracking Labels Guidance Dear Mr. Stevenson: I am writing on behalf of the Alliance for Children’s Product Safety, an organization comprised of small businesses in many industries impacted by the Consumer Product Safety Improvement Act (CPSIA). I request your prompt consideration of an urgent matter regarding the impact of Section 103 tracking labels guidance issued on July 21 (the “Guidance”) on small businesses in America. By way of background, I would like to draw your attention to the fact that I have expended considerable effort to help the agency avoid mishap in the implementation of the CPSIA’s troubling tracking labels provision in recent months. I have testified before the CPSC on tracking labels (May 12 hearing, second panel), wrote a comment letter on Section 103 , sent a letter to Rep. John Dingell in part addressing tracking labels and posted no less than 38 blog entries related to tracking labels, including a comprehensive list of “unanswered questions” about the Guidance. To date, none of my “unanswered questions” have been addressed by the agency in any form as far as I know. The Guidance was originally heralded as a document sensitive to the interests of small businesses. Some terms seemed to offer relief to small lot manufacturers who did not already mark products with lot information. This regulatory approach was forecast by Commissioner Moore in his May 13 statement explaining his vote on the NAM tracking labels stay petition, when he noted that tracking labels implementation would be “a learning process for all of us and not an excuse to punish an unwitting mistake.” Unfortunately, the Guidance also specified that all of the information in Section 103 needed to be “ascertainable” by both the manufacturer and consumers. This has been interpreted to mean that manufacturers must be able to produce “detailed production information, including the means to distinguish products made from different factories, made with different components, at different times” for any product pulled from any store shelf anywhere and at any time. The Commission made it clear that this is a serious legal obligation. As Mr. Moore wrote on July 20, “those who fail to keep the information required by the tracking label provision . . . will not find a very sympathetic ear at the Commission.” The issue of what “ascertainable” means gets to the heart of the issue that Mr. Moore highlighted. It is also at the heart of the tracking labels dilemma for small businesses. In my “unanswered questions” blogpost on August 14, I posed the following question: The Guidance states: “The question of what should be ascertainable is a different question than whether that specific information can be marked on the product or packaging.” [Emphasis added.] Thus, it appears that the CPSC will not permit ANY manufacturers to sell ANY children’s product for which the specified Section 103 information is not “ascertainable”. In other words, if a consumer calls up to inquire about the Section 103 information for any unit of a children’s product made on or after August 14, regardless of whether made by a small lot manufacturer, that information must be available – or less. Correct? Elsewhere in the Guidance, the CPSC advises that small lot manufacturers need not create a lot marking system if one does not currently exist. So, essentially, the rules require that co-hort information be “ascertainable” on items without lot markings. This is, for all practical purposes, impossible. An unmarked item is fungible with all other similar unmarked items. If small businesses are not required to mark by lot, then it will be impossible to distinguish products by lot. This is a massive problem for small businesses. It is not solvable as far as I can tell. The Guidance says on one hand that we do not need to mark by lot, and on the other hand, says we will be exposed to civil and criminal penalties if we cannot “ascertain” lot information. This is faulty “guidance” at a minimum. It is tantamount to requiring universal marking of products by lot – although the Guidance states the exact opposite. Please do not overlook the fact that Section 103 applies to every children’s product sold in this country without exception. It is a common misconception in the market that tracking labels are only required for items subject to the new lead limits or the phthalates ban. Thus, the scale of affected industries and product classes is incomprehensibly large. As I have testified and written extensively on the issues relating to tracking labels for businesses catering to low volume specialty markets, I will not highlight again the many reasons why this rule is impractical in the extreme. Please consider, however, a very practical business problem. Many specialty items are low-priced and have not been designed optimally for tracking labels. The Guidance recognized the seriousness of this issue for the bulk vending industry, but overlooked it for everyone else. Frankly, the practical issues for items that sell for $0.25 are virtually identical for items that sell for $10. In any event, “ascertaining” co-hort information on any children’s product without a lot marking is basically impossible (without changing every lot in some physical way, a manufacturing “solution” likely to quickly degrade into utter chaos or commercial disaster). It is therefore likely that most products sold into specialty markets will violate the Guidance unless they incorporate permanent lot markings. Members of the Alliance for Children’s Product Safety are facing a profound disaster as a consequence of this rule. Products are already being dropped for an inability to meet the “ascertainable” rule, particularly under threat of penalties under the CPSIA. No one working for a children’s product manufacturer will risk going to jail over co-hort information; they are much more likely to drop products to avoid the issue entirely. The economic damage will be deep and wide – and will contribute nothing to consumer safety. It is ironic that declining product availability as a result of implementation of Section 103 may lead to fewer recalls, thus giving the misimpression that children are safer. In fact, children will simply go to poorly-stocked schools and enjoy a lower standard of living. I call on the Commission to review and modify the Guidance to provide real and meaningful relief from the requirement on “ascertainability” for small businesses catering to specialty markets. Your prompt attention to this urgent issue will save jobs, products and industries. Thank you for your prompt consideration of this important matter. Sincerely, Richard Woldenberg Chairman Alliance for Children’s Product Safety cc: Chairman Inez Tenenbaum Commissioner Robert Adler Commissioner Thomas Moore Commissioner Nancy Nord Commissioner Anne Northrup

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CPSIA – Letter to CPSC re Tracking Labels Guidance 9-18-09