CPSIA – Quick Observations about the New CPSIA Amendment Draft

May 10, 2011 by RallyReporter  
Filed under BLOG, Featured Articles

The revised amendment of the CPSIA (oddly titled ” Enhancing CPSC Authority and Discretion Act of 2011 “) published today is due to be “marked up” by the Subcommittee on Commerce, Manufacturing and Trade on Thursday.

CPSIA – CPSC Shows Its True Colors in the Annals of Absurdity

April 27, 2011 by Etienne  
Filed under BLOG, Featured Articles

In a move calculated to test the limits of what I can get you to believe, the CPSC last week conducted a raid in New York City to confiscate imported chocolate Easter eggs to save America from a choking hazard.

CPSIA – More Lives "Saved" by the CPSIA Database

April 27, 2011 by mbougie  
Filed under BLOG, Featured Articles

These breathtaking database entries were submitted to me by Anonymous in a comment on my previous database blogpost.

CPSIA – Another Update on How VERY Safe We Are

I want to bring you up-to-date on the nuclear situation in Japan, but first a quick reminder – none of this matters BECAUSE there is no lead in plutonium or the other radioactive elements being discharged in tremendous mass into the air, water and soil by the disabled Fukushima reactors.

CPSIA – What Does the CPSC Know that the EPA Doesn’t?

At the recent 100 ppm hearing before the CPSC Commission, Nancy Nord asked presenters to submit regulations put out by other agencies restricting lead in our environment. She presumably wanted perspective on whether a reduction to 100 ppm lead-in-substrate content in children’s products would actually improve health or instead, simply further punish the fools who stubbornly remain in the children’s products market.

I submit here EPA regulations on permissible lead levels in play yards and residential dirt. Pleae note that lead in dirt is soluble, so it actually presents a health risk to children. In 2001, the EPA implemented a revised legal/regulatory architecture to protect children from lead-in-paint and lead in the environment. The regulations (40 CFR Part 745) are entitled “Lead; Identification of Dangerous Levels of Lead; Final Rule”.

I think this is an interesting rule because we sell sand and soil as part of children’s science kits. Hmmm. The CPSIA restricts lead content in everything we sell, even fossils and rocks, hence our well-known lead labels. Does the EPA permit something that the CPSC forbids?

Guess!

Consider what the EPA said about its new regulations:

“EPA is also promulgating amendments to the regulations for leadbased paint activities under the authority of TSCA section 402 (15 U.S.C. 2682) and to the State and Tribal program authorization requirements under authority of TSCA section 404 (15 U.S.C. 2684). These changes are needed to ensure consistency among the various regulations covering lead risks under TSCA.”

Consistency seems to be a concern of the EPA. How quaintly passé.

Nonetheless, the EPA seems to understand what is at stake for American children when it comes to lead:

“Reducing exposure to lead has been an important issue for EPA for more than 2 decades. Young children are especially vulnerable to the toxic effects of lead because their nervous systems are still developing and they absorb more of the lead to which they are exposed. Many of the health effects associated with lead are thought to be irreversible. Moreover, the effects at lower levels of exposure are often asymptomatic. In light of the impacts on children and the nature of the health effects, EPA’s goal is to eliminate exposure to harmful levels of lead.” They get it, right?

Uh-oh. The EPA veers away from the current script . . . .

“First and foremost, the Agency faces the difficulty of determining the level at which to set the standards given the uncertainties in information on cause and effect–what environmental levels in which specific medium may actually cause particular blood lead levels that are associated with adverse health effects. The Agency has tools, which are only generally consistent, that show that certain increases in environmental lead levels are associated with certain increases in blood lead levels. Given the range of uncertainty shown in its analysis supporting the establishment of a hazard level under this rule, EPA has developed a technical analysis that considers hazard standards for dust and soil at the lowest levels at which the analysis shows that across-the-board abatement on a national level could be justified. EPA recognizes, however that for any levels of lead in dust or soil judgment must be exercised as to how to treat the medium, and interim controls as well as abatement could be effective.” [Emphasis added]

Sounding like administrators from another planet, the EPA continues:

“In performing its analyses for this rule, the Agency could not quantitatively compare interim control strategies with abatement strategies because there are only limited data available on the effectiveness of interim controls over extended periods of time, and those data which are available are not suitable for quantitative comparisons with abatements. In comparing interim control strategies with abatement strategies, one must make a number of assumptions
concerning the costs of administrative management, and frequency of monitoring and renewal over the planning horizon. For the 50–year planning horizon which the Agency used in its dust and soil analyses, one would have to compare the time stream of interim control expenses, for as long as such expenses are necessary, and weigh the possible differences in potential blood-lead reductions, to make a fair comparison of abatement and interim control strategies.” [Emphasis added]

Later, the EPA warns: “Also, identification of lead-based paint hazards under this regulation is sure to have impacts that could be expensive even though the range of expenses is, itself, difficult to resolve because of the uncertainty of individual behavior and the willingness of individuals to accept risks that EPA may identify. Thus, if EPA were to choose standards that are too low, the public could be unable to distinguish between trivial risks at the low levels of lead from the more serious risks at higher levels. This could result in clean up for little to no health benefit, or conversely, it could result in almost no clean up because persons would question the credibility of the ‘hazard’ determination.” [Emphasis added]

Clearly the EPA just does not get around very much. Damn the expense, man, there is NO safe level of lead!!!

Importantly, the EPA seems to grasp the difference between CORRELATION and CAUSATION. I wish Congress understood that idea a bit better. . . .

“For dust and soil, EPA had substantial raw data on environmental levels and blood lead levels, even though it faced substantial uncertainty in correlating the levels. . . . If EPA were to set unreasonable standards (e.g., standards that would recommend removal of all lead from paint, dust, and soil), States and Tribes may choose to opt out of the Title X lead program and property owners may choose to ignore EPA’s advice, believing it lacks credibility and practical value. Consequently, EPA needed to develop standards that would protect children without wasting resources by chasing risks of negligible importance and that would be accepted as reasonable by States, Tribes, local governments, and property owners.”

Hope you weren’t eating while you read that last bit. Sorry!

I could quote from this document all day. In light of the nightmare that is the CPSIA, the EPA rules read like some sort of comedy routine. Unfortunately, the joke is on us.

So what did the EPA actually do?

“As stated in Unit II.F.3., today’s rule establishes two hazard standards for bare residential soil; 400 ppm for play areas and an average of 1,200 ppm for the rest of the yard. [See 40 CFR §745.65(c)] EPA recommends that organizations and individuals consider some action in certain areas even where levels in bare soils are below the hazard standard, particularly, if there is a concern that children 6 years and under might spend substantial time in such areas, or if there is concern that the bare soil in such areas may contribute to lead levels in the dwelling, or in the play areas. However, this rule does not mandate that any action be implemented when levels are found to be below the lead hazard standard. Moreover, the kind of response that organizations and individuals might consider could include modest actions such as planting grass (or other ground cover) to more extensive actions such as covering the bare soil with several inches of clean fill.”

Yes, you read that correctly. The standard for play yards (sand) is 400 ppm lead and for bare soil is 1200 ppm lead. If we put a bag of dirt in a child’s science toy, the current CPSC limit is 300 ppm and at this very moment, the Commission is mulling a reduction of the lead limit in that soil to 100 ppm. This change will make more science products either illegal or unsalable for children under 13 years of age. We don’t believe lead labels solve the problem.

The CPSC’s rule on our products will have no effect on play yards, bare soil or anything except items defined as “Children’s Products” under the incomprehensible rule adopted by the Commission.

The longer this goes on, the more I am convinced that only a new government solves the problem. Sad . . . but true.

Read more here:
CPSIA – What Does the CPSC Know that the EPA Doesn’t?

CPSIA – Come On, Sean, Get Real!

Sean Oberle took issue with my analysis of the Summer Infant recall of baby monitors tonight in an essay in the Product Safety Letter. In my recent blogposts, I noted that sale of the Summer Infant baby monitors can’t be resold without their kit of the label, the new instructions and the clips. True fact. As a practical matter, this is essentially a ban of resale of this item because in the REAL WORLD, resale shops do not have the time to lavish on researching this kind of nonsense.

Does ANYONE think a resale shop is going to verify that a baby monitor has the right sticker on it? What planet are you from? They WILL, however, note that this item has been recalled. In the mist of time, the reason WHY it was recalled will be long forgotten. Again, who has the time to figure all this out? Maybe Sean Oberle and Scott Wolfson, but the rest of us won’t do it.

That the items can somehow be resold legally is simply a technicality. Ask any resale shop.

As for my “confusion” between the “reason” for the recall and the “remedy”, I believe I was not confused at all. For one thing, the supposed “remedy” is no remedy at all. A warning label about the cord is superfluous by any definition and absurdly ineffective to prevent further harm. The “reason” for the recall has nothing to do with a hazard related to this item. It may relate to a proactive step recommended by the company’s lawyers, given the likelihood that they have been sued over the two unfortunate accidents. I stand by my position that this hazard falls into the category of parental supervision, not a product “defect”. I may not be alone in this view, to judge by the hundreds of comments on this MSNBC article.

More fantastic is Mr. Oberle’s characterization of the recall and how “voluntary” it was. I have no person knowledge of this situation, so perhaps he is right. Then again . . . rumors of CPSC coercion on this kind of thing are rampant. Threats of penalties, preemptive press releases and possible litigation have been rumored in many cases. Ms. Tenenbaum is not above sabor rattling in speeches, either. Think of last year’s ICPHSO keynote speech, for example. We have received at least one threat from the CPSC which I have thusfar restrained myself from discussing in this space. It’s very real. “Voluntary” is in the eyes of the beholder.

I must also say that I don’t see the benefit that the CPSC brings to this party IF the recall was “voluntary”. If this was REALLY the company’s idea, why does the CPSC have to sign off on it? Why is the CPSC in a better position to figure out how to best resolve this informational issue? After all, Summer Infant had 1.7 million reasons to get this right (plus an unknown number of lawsuits). I don’t buy the idea promoted by Mr. Wolfson in the Chicago Tribune’s hyperbolic article on pool drains: “CPSC spokesman Scott Wolfson declined to comment on AquaStar’s actions. In general, though, he said: ‘A company is not allowed to take unilateral action that is intended to fix a safety problem with their product without reporting and coordinating that action with the CPSC.’” Scott, where does it say that, precisely?

Even more to the point, why is this a “recall” anyhow? The CPSC could have avoided the entire issue by labeling this event an “alert”. There would be no implications for resale shops had they chosen that path. Was it REALLY the company’s idea to RECALL these items? Were they offered an “alert” but refused? Oh, sure.

At some point, I hope the CPSC will take more responsibility for its actions, rather than justify whatever they choose to do. Mr. Wolfson may have an answer for everything but that doesn’t make the agency’s actions right, fair or appropriate. The many comments on the MSNBC article indicate that no one is being fooled. Recall upon recall upon recall is alienating the public, NOT making them feel safer.

Come on, Sean, get real. The CPSC can raise its game, and as a member of the Fourth Estate, you can push them in that direction. I am not the enemy here.

Read more here:
CPSIA – Come On, Sean, Get Real!

CPSIA – Countdown to Crisis, Nine Days To Go

I know of no indication of a CPSC decision on the testing and certification stay scheduled for January 31, yesterday. You and I and your business and my business can wait to see the puff of white smoke from the CPSC chimney when they are good and ready for you to see it.

I am tempted to speculate on how this persistent state of indecision arose. After all, some of the Democrats on the Commission were adamant in the last go-round that this stay would not be extended. As I recall, Bob Adler expressed deep dislike for stays and promised that this was “it”. One wonders if someone has blocked action on this issue. After all, the Commission is so collegial.

Inaction in the next nine days means that the stay will lift of its own accord.

I suggest that you go into crisis mode. With the law governing your business and your market possibly going to change unfairly and dramatically in the next few days despite the incomplete state of regulations governing mandatory testing, exposing you to possible jail time, you better get working. Or praying.

Hope you aren’t in Chicago, like me – we are expecting the worst snow storm in 44 years today. I guess we’ll begin our panic attack in a day or two.

When will the CPSC take action? Who knows. Take your time, guys! After all, they must really be under the gun. Who could have seen this coming? In December 2009, they gave themselves 14 months to resolve the component testing rule and the absurdly nicknamed “15 Month Rule”, and couldn’t get it done. They couldn’t even respond to the comments they solicited on those shocking and uncomprehending rules. So busy! The last time the stay was about to expire, knowing that they couldn’t or wouldn’t get their work done, they at least had the decency to give ten weeks notice of the stay extension. Not this time.

Maybe they are punishing us because we’ve been bad. Maybe this is the way the CPSC sends us to our rooms. When can we come out of our rooms, CPSC Commission? We promise to be good!

The sick game that the Dems are playing is that the law is fine, and that there is just some sort of hang-up. A snafu. Darn those hang-ups! In fact, the law was misconceived from the start, was never workable, could not be “fixed” by regulatory action – and the Democrats on the Commission were appointed to never admit it. This is Henry Waxman’s signature legislation – Dems are not allowed to criticize it. So today we continue to suffer at their hands. They don’t care about you, your market or even the kids that your business serves. This is all politics – they are just looking up the line, and protecting their political overlords who insisted on this defective law.

Enjoy! As long as the Dems are in control in Bethesda, expect more of the same.

When’s the next election, anyhow?

Read more here:
CPSIA – Countdown to Crisis, Nine Days To Go

CPSIA – CPSC’s Shameful Failure of Leadership

On Monday, the CPSC will decide whether or not to extend the testing and certification stay that has been in place for two years. The 16-page document which sets out the parameters of the decision does not mention risk anywhere. That’s because the law prohibits the CPSC from considering safety in its work under the CPSIA. [Ironically, the CPSC warns users that use of its www.SaferProducts.gov website is at their own risk (see par. no. 2 in the user's agreement) - and ironically, we're talking about a "dot gov" website, too!]

The CPSC explains that extension of the stay is only one of its options. It can do nothing, it can roll all the existing stays forward, or just some of them (to heck with the ATV’rs and the bike industry). Presumably, they will choose to roll all of it forward to September 14, 2011. We can all be screwed on the same day. I like the symmetry of that!

The CPSC has not lost sight of the issues. They know they haven’t finished their work. They note that two years ago on February 9. 2009 when the Commission first extended the testing stay. it was because delaying implementation of the testing requirement by a year “give[s] us the time needed to develop sound rules and requirements as well as implement outreach efforts to explain these [new] requirements of the CPSIA and their applicability.”

How time flies! That didn’t happen, so the Commission again extended the stay by another year on December 8, 2010. Why? Chairman Tenenbaum: “I voted to extend the stay on lead content testing and certification until February 10, 2011, in order to allow component testing adequate time to develop and to give our stakeholders adequate notice of new requirements.” Commissioner Robert Adler: “One of the primary rationales advanced for extending the stay is to await the effective date of the so-called 15-month rule.”

Where does the time go?? None of that ever happened. Hey, CPSC, take all the time you need!

So now the Commission is poised to kick the can down the road until September 14, 2011. Why that date? The CPSC Staff report notes that this gives the Commission time to sort out the new, lower lead standard due to be imposed on August 10, 2011. The CPSC is holding a hearing on February 14 on the feasibility of the 100 ppm standard. As Staff notes, if the Commission doesn’t determine that 100 ppm is feasible, then they will have to set a standard between 300 ppm and 100 ppm that is feasible. “Feasibility” was defined in the CPSIA, lest there should be any disagreement, to exclude ANY consideration of economics. In other words, if it’s possible at any price or under any condition, it is considered “feasible” and thus mandated by the law. I can save the CPSC some time – under that definition, it’s definitely feasible. Completely unreasonable and unnecessary but “feasible”.

The idea promoted in the Staff memo is that we will time to get used to all this if the stay lifts a month after the implementation of the new lead standard. [The concept of "learning disability" floats through my head. Have we heard this song before?] “Staff recommends that the Commission extend the stay to allow time for the Commission to determine whether it is technologically feasible to lower the amount of lead in children’s products to 100 ppm.” I guess once the Commission makes up its collective mind, the CPSC will wave a magic wand and make your business, your supply chain and your sales channel comply with the new rules in a matter of days. The fact that the rules are hazy after almost three years is no concern of theirs. Is it a concern of yours?

I love magical rules and magical plans! It must be a job requirement for Commissioners to be wizards, too.

All concerns over the “15 Month Rule” seem to have evaporated. This is presumably Robert Adler’s doing (see his statement above, which is a rant that the 15 Month Rule and the stay are separable issues). The Staff report intones: “While a Commission decision to extend the current stay of enforcement will give industry an opportunity to test and certify finished products and components according to the final rule and provide the Commission time to clarify any confusion regarding the new rule, it is not necessary for the testing rule to be complete to lift the stay as to the initial test for lead compliance.” Can’t see any problem there, can you???

The CPSC doesn’t want you to worry, however. They have apparently promulgated several documents that set out their policy and whatnot on lead, namely “Statement of Commission Enforcement Policy on Section 101 Lead Limits” (February 6, 2009) (6 pages); “Children’s Products Containing Lead: Interpretative Rule on Inaccessible Component Parts” (August 7, 2009)(32 pages); “Statement of Policy: Testing and Certification of Lead Content in Children’s Products” (October 2009)(5 pages); and “Interim Enforcement Policy on Component Testing and Certification of Children’s Products and Other Consumer Products to the August 14,2009 Lead Limits” (December 28, 2009) (4 pages). If these four documents totalling 47 pages don’t clear up everything, the CPSC is ready for you. “Manufacturers of children’s products can seek guidance for what the Commission considers reasonable and representative testing in these rules.”

You may have to wait a few years for a reply, but darn it, they’re going to answer your question. And that’s because they really CARE. We’re the government and we’re here to help!

A few more cock-ups aren’t deterring the agency. The phthalates standard is still undrafted, likewise the certification procedures for phthalate testing labs. Oopsie! Well, they’ve been busy . . . and the much fantasized-over component testing “market” has failed to materialize. Imagine that, businesses that inadvertently serve the children’s market with components or which derive a small percentage of sales from children’s products aren’t volunteering to test their items and expose themselves to the ravages of a crazy and out-of-control federal agency. Shocking!

Those of you who live in the past may recall my mentioning this very issue on November 6, 2008 (yes, 2008) when I addressed the CPSC Lead Panel. [It's a safe assumption no one was listening at the agency - opportunities for stakeholder feedback is not for listening, it's for venting.] I talked about the futility of expecting our suppliers of aluminum foil (widely used in schools in science kits) to test their products. After all, they are allowed to sell it for use with food without testing, so why should they test for me? If I asked them for a test for compliance with the CPSIA, they would certainly refuse and then ask in outrage why I was selling aluminum foil to kids anyway. As I said, who could see this coming? No one . . . .

For all the outrages that this sick situation brings to mind, NOTHING is as shameful as the CPSC’s refusal to admit that this is all administrative, bureaucratic nonsense (or use your own word for “nonsense”) that has nothing to do with SAFETY. Oh yeah, safety – isn’t that word in the name of this agency – the Consumer Product SAFETY Commission. What about safety, guys? Are you concerned about that anymore? This failure of leadership is the basic issue I have with the folks running the agency today. There’s a reason that bureaucrats are called “soul-less”.

The fact is that this administration at the CPSC (Democrats) will not stand up for what’s right – they are prepared to go down with the ship. It’s ironic that they remain so strident and so stubborn. Mr. Obama can smell change in the air and even he has called for reconsideration of the deluge of regulations. The Republicans in the House have declared war on over-regulations and the House Energy and Commerce Committee has made reform of the CPSIA the top priority of Mary Bono-Mack’s subcommittee.

As I have said again and again – this is YOUR government at work. Their shameful acts which are harming your markets and your business are destroying jobs, discouraging innovation and hurting children by impairing the activities of businesses devoted to children’s welfare. This intolerable situation will only be fixed when you MAKE it change. You can do it and you must. There is a new Congress in town and they need to hear from you. Don’t let the Democrats keep on wrecking your industry. This isn’t about safety and never was. This is politics, pure and simple.

Make them pay for their sins. Call your Congressman.

Read more here:
CPSIA – CPSC’s Shameful Failure of Leadership

CPSIA – Let’s Take a Break and Think About Illinois Taxes

Hey, every once in a while it’s worth taking a breather and considering other truly amazing political stories from the big city. Consider this story entitled “Billion Dollar Baby: A Cautionary Tale” published today by Andy Shaw, formerly a local Chicago ABC-TV correspondent and now President of the Better Government Association (good luck there, Andy!).

In this tale, Mr. Shaw recounts how Illinois’ 67% tax increase was passed by a single vote Tuesday evening during a short, one-week lame duck session. You see, the Dems who run this State with an iron fist were facing the loss of several seats to the Republicans when the new legislature was sworn into office on Wednesday, hence the need to pass the tax increase Tuesday in the middle of the night. How to do it, how to do it???

Mr. Shaw:

“She is somebody somebody sent.

In the best—or maybe it’s the worst—tradition of local politics. And she was pressured into voting for a multi-billion dollar hike in the state income tax in the wee hours of Wednesday morning. By her Democratic Party allies in Springfield.

Some of her friends and neighbors may be unhappy with the tax vote but she won’t be facing any political consequences or voter backlash. And here’s why: She stepped down as an Illinois State Representative at noon on Wednesday. After one week on the job. That’s right—one week. She was, in simple terms, the lamest lame duck in a feckless Springfield flock. A billion-dollar baby.

“She” is Kathy Moore, a Lincoln Park friend and former public school teacher who was put in that unenviable position by the stark reality of political hide-and-seek. Or, in this case, seek-and-hide. Her reliably Democratic 11th District, which includes Lincoln Park and Lakeview, elected a brand new state representative, Ann Williams, in November, to replace John Fritchey, a popular long-time rep who won election to a seat on the Cook County Board. Fritchey began his new job in December, so Williams could have been sworn in as a state rep a month ago to represent the district in the lame-duck session going on in Springfield this past week. That was her initial plan.

But there were questions about how she would vote if a tax plan was on the lame-duck agenda. Williams claims that local Democratic leaders, including Fritchey and Senate President John Cullerton, wanted her commitment to support the tax hike before arranging for her to be sworn in. They say she got cold feet and decided not to start early—choosing instead to wait until Wednesday, when the rest of the freshman legislative class was sworn in.

(That, parenthetically, will save the taxpayers a few bucks because Williams won’t qualify for a more generous legislative pension than the one awaiting the new class in Springfield, thanks to a modest pension reform bill that took effect on Jan. 1. But her decision will cost the 11th District politically because, instead of moving to the top of the seniority list of new legislators by starting in December, she will be near the bottom since she’s entering with all of the other newbies, and her last name begins with “W,” a letter near the end of the alphabet. Oh well.)

Meanwhile, back at the raunch—yes, I said raunch and not ranch—Williams’s decision not to be seated early meant the political bosses in the district—Fritchey, Cullerton and the other ward committeemen—had to find someone else to fill the seat for the one-week lame-duck session. So they recruited Kathy Moore, the wife of Tom Moore, a well-known Lincoln Park zoning lawyer—because Kathy had the time and the willingness to “serve.” And down I-55 she went. Admitting sheepishly at a party last week that “they tell me what (voting) button to push and I push it.” Democracy in action.

So when the tax bill passed, without a single vote to spare, our lawmaker-for-a-week was a major reason. She says she’s not happy about voting for a gargantuan tax increase but she doesn’t think that she, or the state, had any other choice. Even though, as of Sunday, she hadn’t seen a bill. Or a press release. Or a fact sheet. Or a list of cuts, accountability measures and streamlining to go along with the increase.

“I hope it works,” she said wistfully in a text message on Wednesday morning. Williams says, for the record, that she would’ve had a hard time supporting the tax bill in its present form.

In any event, Kathy Moore was back home in Chicago by Wednesday night after morphing into a regular resident following her week as a political pumpkin. Kind of like “Cinderella” in reverse. And she may not be the life of the cocktail parties in the neighborhood for awhile, at least among the well-healed wine-and-cheese folks who will have several-thousand fewer dollars in their pockets for each of the next four years.

As for Ann Williams, the newly elected House member, she assumed her duties as the new representative of the 11th district at noon on Wednesday. And my spies at her Springfield welcoming parties report there was no evidence of any dust, dirt or snow from the rock she’s been hiding under.

Don’t you just love the Illinois Way? And can’t you see why we love being civic watchdogs?”

Read more here:
CPSIA – Let’s Take a Break and Think About Illinois Taxes

CPSIA – My Written Testimony at Senate Hearing 12-2-10

As you may know, there will be a Senate CPSC oversight hearing tomorrow. The hearing will be held by the Subcommittee on Consumer Protection, Product Safety and Insurance of the Senate Committee on Commerce, Science and Transportation. You can see the witness list here. The subject of the hearing is “Oversight of the Consumer Product Safety Commission: Product Safety in the Holiday Season”

I have submitted the following written testimony. I will not be testifying at this hearing.

STATEMENT OF RICHARD M. WOLDENBERG
Chairman, Learning Resources, Inc.
Vernon Hills, Illinois

December 2, 2010

As an operator of a small business making educational products and educational toys, I have had a front row seat for the implementation of the Consumer Product Safety Improvement Act of 2008 (CPSIA) by the Consumer Product Safety Commission (CPSC). On the occasion of your CPSC oversight hearing, I want to highlight the economic damage wrought by the CPSIA without achieving any material improvement in safety statistics. I also want to bring to your attention the open hostility of the CPSC toward the corporate community in the implementation and enforcement of the CPSIA, and conclude with my recommendations for legal reforms to restore common sense to safety administration without reducing children’s safety.

Children are our business. As educators, as parents and as members of our community, we have always placed the highest priority on safety. We would not be in the business of helping children learn if we didn’t care deeply about children and their safety. The CPSIA has dramatically impacted our business model, reduced our ability to make a profit and create jobs, pared our incentive to invest in new products and new markets, and generally made it difficult to grow our business. We would gladly accept these burdens if the law made our products safer, but the fact is that it hasn’t. Our company, Learning Resources, Inc., has recalled a grand total of 130 pieces since our founding in June 1984 (all recovered from the market). Our management of safety risks was highly effective long before the government intervened in our safety processes in 2008.

The precautionary approach of the CPSIA attempted to fill perceived “gaps” in regulation by making it illegal to sell children’s products unless proven safe prior to sale. Yet the law has yielded few quantifiable safety benefits other than a reduction in recent recall rates for lead-in-paint (already illegal in children’s products for decades). Ironically, this progress in reducing recalls has taken place in a 27-month period in which, like the time before the CPSIA, testing of children’s products prior to sale was not mandatory. Consumer confidence wasn’t dented by the lack of mandatory testing. The justifications for the over-arching and excessively expensive CPSIA regulatory scheme just don’t hold water.

In any event, the reduction in recall rates is only a minor triumph and was not due to mandatory testing or harsh new lead standards, but most likely a (hyper) energized regulator and a great deal of publicity. Recall statistics can be highly misleading because the rate and number of recalls depend on many factors and do not generally correlate to injuries to children. In other words, product recalls are not tantamount to childhood injuries. The purpose of the CPSIA is to reduce injuries, not product recalls – yet CPSC recall statistics show that there have been almost no reported injuries from lead or phthalates in children’s products in the last decade (one death and three unverified injuries from 1999-2010, all from lead or lead-in-paint). The billions of dollars now being spent by the corporate community annually on testing and other compliance activities have not reduced injuries – there weren’t any to reduce. Whatever peace of mind has been generated by lower recall rates comes at a very high price.

The CPSIA significantly broadened the reach of federal safety regulation well beyond what was needed to deal with the lead-in-paint toy violations of 2007 and 2008. Under the CPSIA, the definition of a “Children’s Product” subject to regulation now encompasses ALL products designed or intended primarily for a child 12 years of age or younger (15 U.S.C. §2052(a)(2)). This definition ensures that virtually anything marketed to children will be subject to the restrictions of the Consumer Product Safety Act (CPSA), irrespective of known or quantifiable risk of injury. Put another way, this definition ensures that many product categories with a long tradition of safety are now subject to the withering requirements of this law for the first time simply because they fall within the overly broad definition of a Children’s Product. The affected safe products span the U.S. economy books, t-shirts and shoes, ATVs, bicycles, donated or resale goods, musical instruments, pens and educational products. The CPSC declined to use its discretion to narrow this definition in its recent “final rule” interpreting “Children’s Product”, thus ensuring continued market chaos and economic waste.

The consequences of the change in the consumer safety laws to a precautionary posture has had notable negative impacts and promises to create further problems, namely:

a. Increased Costs. The new law creates a heavy burden for testing costs. From 2006 to 2009, our company’s testing costs alone jumped more than eight-fold. We estimate that our testing costs will triple again after the CPSC (as anticipated) lifts its testing stay in 2011, and could multiply again if the CPSC enacts (as anticipated) its draft “15 Month Rule” on testing frequency and “reasonable testing programs”. Testing costs are often thousands of dollars per product. Having employed one person to manage safety testing and quality control for many years, we now have a department of five, including me, plus an outside lawyer on retainer. These jobs are funded by discontinuing sales, marketing and product development jobs – the CPSIA is NOT an ersatz stimulus program. Personnel, legal and other out-of-pocket safety expenses (besides testing) have more than quadrupled in the last three years – all without any change in our super-low recall rates or injury statistics.

b. Increased Administrative Expenses. The CPSIA requires that all products include tracking labels on both the packaging and the product itself. Rationalized as “analogous” to date labels on cartons of milk, tracking labels are in reality nothing but pure economic waste as applied to the vast array of “Children’s Products” under the CPSIA. As noted, our company has a virtually unblemished 26-year track record of safety so tracking labels promise to add little value in the event of recalls that are unlikely to occur. Ironically, with the strict new rules governing product safety, we believe the already low chance of a product recall has been reduced further. As noted above, the money to pay for all this administrative busy work comes from foregone business opportunities. We are being forced to shrink our company to apply tracking labels that no one will use.
An equally frustrating bureaucracy has sprung up around recordkeeping under this law. Burdensome requirements spawned by the government’s new involvement in our quality control processes forced us to make large new investments in information technology with no return on our investment. In addition, the pending CPSC draft policy on component testing promises to convert the simple task of obtaining a complete suite of safety test reports into a major recordkeeping chore. We will now be forced to manage each component separately, tracking test reports on each component one-by-one. This promises to multiply our recordkeeping responsibilities – and the related risk of liability for failing to comply – by more than an order of magnitude.

c. Reduced Incentive to Innovate. The increased cost to bring a product to market under the CPSIA will make many viable – and valuable – products uneconomic. To cover the cost of developing, testing and safety-managing new products, the prospective sales of any new item (“hurdle rate”) is now much higher than under prior law. This means that low volume “specialty market” items are less likely to come to market and many new small business entrants may find themselves priced out of the market. The CPSIA makes it much harder to start a new business serving the children’s market because the rules so heavily favor big business. Because of CPSIA transactional costs, high volume items now have a huge cost advantage over low volume items. This will hurt many small but important markets like educational products for disabled children. Our company, with its 1500 catalog items, is probably now a dinosaur under the CPSIA –the law provides a strong economic incentive to restructure our business around 50-150 items and to focus on high volume markets only. Schools would suffer from the loss of niche educational products.
d. Crippled by Regulatory Complexity. Our problems don’t end with testing costs or increased staffing. We are being crippled by regulatory complexity. Almost 28 months after passage of the CPSIA, we still don’t have a comprehensive set of regulations. Please consider how mindboggling the rules have become. There were fewer than 200 pages of safety law and CPSC rules that pertained to our business until 2008. These rules clearly defined our responsibilities and could be taught to our staff (in fact, many were rarely applicable to us). Today, the applicable laws, rules and interpretative documents exceed 3,000 pages. As a practical matter, it is simply not possible to master all of these documents – and yet it’s potentially a felony to break any of these rules. Sadly for us, the rules and CPSC staff commentary keep changing, are still being written and are rarely if ever conformed. How can we master and re-master these rules and teach them to our staff while still doing the full-time job of running our business? Ironically, the recalls of 2007 and 2008 were never a “rules” problem – those famous recalls were clearly a compliance problem. Imagine what will happen now with an unmanageable fifteen-fold increase in rules. No small business “ombudsman” can make that problem go away.
e. Small Business Will Certainly Suffer. The CPSIA was written in response to failings of big companies, but hammers small and medium-sized companies with particular vengeance. Our small business has already lost customers for our entire category on the grounds that selling toys is too confusing or too much of a “hassle”. This is our new reality. The highly-technical rules and requirements are beyond the capability of all but the most highly-trained quality managers or lawyers to comprehend. Small businesses simply don’t have the skills, resources or business scale to manage compliance with the CPSIA. For this reason, small businesses bear the greatest risk of liability under the law, despite being responsible for almost no injuries from lead in the last decade. The double whammy of massive new regulatory obligations and the prospect of devastating liability are driving small businesses out of our market.

In implementing and administering the CPSIA, the CPSC created a harsh regulatory environment for the business community over the past 28 months. Consider the following:

1. Unjustified Recalls. In June, in response to an inquiry by a Congressman and followed up by media inquiries, the CPSC pressed McDonalds to recall 12 million Shrek glasses for “high” cadmium content, despite the agency’s admission on Twitter that the glasses were not toxic. The recall effort was justified as being done “out of an abundance of caution”, a frightening regulatory standard when applied to products acknowledged to be safe by the regulator itself. McDonalds lost millions of dollars as a result, not to mention suffering from widespread and persistent bad publicity.

2. Unjustified Penalties and Coercive Tactics. The CPSC assessed a $2.05 million penalty against a hapless Japanese dollar store chain (Daiso) for five separate tiny recalls involving 698 units and 19 items. These items sold for between $1 and $4 each. There were no reported injuries from sales of the Daiso trinkets. Ms. Tenenbaum bragged about this extraordinarily excessive prosecution in a speech in March 2010 to the Consumer Federation of America: “We secured an injunction that completely stops Daiso from importing children’s products into the country. . . . Daiso has a very high hurdle to jump over to ever get back in the import business again.” Regulated companies take stunning examples like Daiso as a warning that outsized and disproportionate force may be used by this agency with little provocation.
The regulated community has also expressed alarm over the threatened use by the agency of unilateral press releases “to warn the public” about alleged dangers in specific products as a way to coerce “voluntary” recalls. Such threats have been used where facts may be in dispute to justify a recall. Under the law, the CPSC may only implement mandatory recalls subject to a court order, a slow process perhaps but also expensive and labor-intensive. “Voluntary” recalls can be much quicker and cheaper, only requiring “agreement” between the agency and the subject company. In more than one case, CPSC has threatened unilateral releases to try to “convince” a firm to undertake a “voluntary” recall but after the firm took the risk of standing up to the staff and the staff conducted further investigation, the CPSC decided that recalls were not even necessary. Not all firms can bear the expense of such a process or take the risk of calling the staff’s bluff because issuance of a release would likely damage the firm and their brand, possibly irrevocably. Many supposedly “voluntary” recalls have resulted. Abusive tactics of this nature have severely damaged trust between the CPSC and the regulated community.

3. Disregard of Public Comments. The agency has garnered considerable criticism for overlooking or disregarding comments from the corporate community solicited in its public rulemaking processes. Ignoring or disregarding inconvenient public comments contrary to the agenda of the controlling party makes a mockery of the legally-mandated public comment process. Notable instances include the recent approval of interpretative rule on “Children’s Products” and the rules implementing the public database of safety incidents. The database debate was so fouled by the majority’s refusal to entertain the legitimate concerns of industry that the two minority Commissioners proposed their own draft rule – which the CPSC at first refused to post on its website.
4. Unjustified Hostile Rulemakings. The CPSC has implemented rules governing the public database that adversely affect the Constitutionally-guaranteed due process rights of our businesses. There is no adequate public policy justification for the erosion of the remarkable civil rights that distinguish the American legal system among all international legal systems – yet the Commission voted 3-2 to allow falsehoods to be posted without recourse in a database the CPSC will maintain. In other cases, the agency has published draft rules (yet to be acted on) which could force companies like ours to spend as much as $10,000 per item per year to meet ARBITRARY rules on testing frequency or “reasonable testing programs” – notwithstanding strong evidence that these rules are wasteful, unnecessary and financially irresponsible. The pendency of rules like this creates destabilizing market uncertainty and forces business decisions that have no basis other than fear of future regulation. For instance, Wal-Mart has already instituted a 100 ppm lead standard months ahead of the POSSIBLE implementation of the standard by the CPSC – simply because the CPSC has been so slow to act.

The CPSIA went off track by taking away the CPSC’s authority to assess risk. If the CPSC were again required to regulate based on risk, safety rules could focus on those few risks with the real potential to cause harm to children. All risks were not created equal.

I recommend several steps to reduce cost, liability risk and complexity all without sacrificing children’s product safety:

A. Mandate that the CPSC base its safety decisions, resource allocation and rules on risk assessment. Restore to the Commission the discretion to set age and product definition criteria for the 300 ppm lead standard and phthalate ban. Freeze the lead standard and lead-in-paint standard at their current levels unless the CPSC determines that a change is necessary to preserve public health and safety.

B. The definition of “Children’s Product” should not include anything primarily sold into or intended for use in schools or which is used primarily under the supervision of adults. Other explicit exceptions should include apparel, shoes, pens, ATVs, bicycles, rhinestones, books and other print materials, brass and connectors. Exclusions from the definition should take these products entirely outside the coverage of the CPSIA (including mandatory tracking labels).

C. Lead-in-substrate and phthalate testing should be based on a “reasonable testing program”, not mandated outside testing. The tenets of a reasonable testing program should be set by the reasonable business judgment of the manufacturer. Resellers should be entitled by rule to rely on the representations of manufacturers. Phthalate testing requirements should explicitly exempt inaccessible components, metals, minerals, hard plastics, natural fibers and wood.

D. Definition of “Children’s Product” should be limited to children six years old or younger and should eliminate the difficult-to-apply “common recognition” factor of Section 3(a)(2)(c) of the CPSA. Definition of “Toy” (for phthalates purposes) should be limited to children three years old or younger and should explicitly refer only to products in the form used in play.

E. Eliminate CPSC certification of laboratories (rely on the market to provide good resources). Fraud has only very rarely been a problem with test labs and is already illegal.

F. Impose procedural limits to insure fairness in penalty assessment by the CPSC under the CPSIA. Completely reformulate penalties to restrict them to egregious conduct (including patterns of violations), reckless endangerment or conduct resulting in serious injury.

G. Rewrite the penalty provision applicable to resale of used product so that violations are only subject to penalty if intentional (actual knowledge or reckless endangerment) and only if the violation led to an actual injury. Eliminate the “knowing” standard with its imputed knowledge of a reasonable man exercising due care.

H. Mandatory tracking labels should be explicitly limited to cribs, bassinets, play pens, all long-life “heirloom” products with a known history of injuring the most vulnerable children (babies or toddlers).

I. Public injury/incident database should be restricted to recalls or properly investigated incidents only. Manufacturers must be given full access to all posted incident data, including contact information. The “due process” civil liberty interests of the corporate community MUST BE PROTECTED.

I urge your committee to address the fundamental flaws in the CPSIA to restore order to the children’s product market and to protect small businesses from further damage. I appreciate the opportunity to share my views on this important topic.

Read more here:
CPSIA – My Written Testimony at Senate Hearing 12-2-10

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