Wednesday, April 22, 2009

CPSIA - CPSC Plays Word Games with the Constitution

As noted in my recent blogpost, it is my view that the CPSC acted illegally when it manhandled the law by granting an enforcement stay for ATVs that have components with lead in excess of the new standards. I feel the need to affirm here, unambiguously, that I do not favor the lead standards as applied to ATVs or many other aspects of the CPSIA, and furthermore, that the decision on ATVs appeals to my common sense - but it is nonetheless illegal and improper.

Through the grapevine, I am told that the CPSC believes that it properly exercised its enforcement discretion by issuing a "stay". I have not received a reply from the agency to my query on this point, so I cannot provide their legal reasoning behind this assertion. It's important to figure out if this action was legal as it suggests that the law can no longer be interpreted as written. Let's consider the facts to evaluate the CPSC's explanation.

First, what is "enforcement discretion" and how does it differ from an "enforcement stay"? Enforcement discretion is the power of a regulator like the CPSC to choose to enforce or not enforce a law on a case-by-case basis. Enforcement discretion is the reason you do not receive a speeding ticket every time you zoom past the police on your way to work. It is typically implemented as an explicit or implicit policy, rather than by written rule. There is nothing wrong with enforcement discretion as a general matter and arguably, it is essential to the functioning of a regulatory agency in order to ensure fairness and equity. An "enforcement stay" is a rule, as opposed to a policy, and is defined as to duration. An enforcement stay is an exercise of enforcement discretion.

The CPSC derives its authority to exercise enforcement discretion from its status as an independent agency of the U.S. government, part of the so-called "fourth branch" of government. As an independent agency, the CPSC used delegated authority from Congress to patrol safety of consumer products. See CPSA Section 2. However, under the Constitution, which institutes a separation of powers, the authority to legislate cannot be delegated. This is known as the "nondelegation doctrine" and has been heavily litigated over the years. Under Article 1, Section 1 of the Constitution, the Congress may not delegate its vested "legislative powers". Within certain bounds, Congress can delegate limited authority. This is the basis for the creation of the CPSC as an agency of the U.S. government.

What are the limits of this delegation of authority? This is a critical question because the CPSC claims that Congress delegated authority to give it the right to implement the permanent ATV enforcement stay. The summary in the above cited Wikipedia article on the nondelegation doctrine is worth reading carefully. [Okay, it's a late night shortcut, but it's good!] Notably, the article cites John Locke for the following principle from 1690: ". . . no Body else can say other Men shall make Laws for them; nor can the people be bound by any Laws but such as are Enacted by those, whom they have Chosen, and Authorised to make Laws for them. . . ." I guess we need to choose our representatives carefully since we are stuck with them as our lawmakers.

Wikipedia further explains: "One of the earliest cases involving the exact limits of nondelegation was Wayman v. Southard (1825). Congress had delegated to the courts the power to prescribe judicial procedure; it was contended that Congress had thereby unconstitutionally clothed the judiciary with legislative powers. While Chief Justice John Marshall conceded that the determination of rules of procedure was a legislative function, he distinguished between 'important' subjects and mere details. Marshall wrote that 'a general provision may be made, and power given to those who are to act under such general provisions, to fill up the details.' In 1892, the Court in Field v. Clark, 143 U.S. 649, noted 'That congress cannot delegate legislative power to the president is a principle universally recognized as vital to the integrity and maintenance of the system of government ordained by the constitution.'"

Back to ATVs. . . . In their April 17 decision, the CPSC Commission rejected the ATV request for exclusion but instead rewarded them with a remarkable enforcement stay: "The stay shall apply to vehicles manufactured both before February 10, 2009 and to vehicles made on or after that date through May 1, 2011. The stay with regard to vehicles made during this time period shall remain in effect for the life of those vehicles." The decision goes on to grant a similar stay for parts that even seems to allow the indefinite manufacturing of replacement ATV parts provided they are no worse (lead-wise) than currently available. Would this meet Justice Marshall's definition of "fill up the details" or is the CPSC Commission making up new law to replace the law written by our capable representatives in Congress? Let's look at the vaunted CPSIA and see what it says.

In Section 101(a)(1), the CPSIA deems any Children's Product violating the new lead standards to be a banned hazardous substance under the Federal Hazardous Substances Act. In Section 101(a)(2), the CPSIA sets the new arbitrary lead standards of 600 ppm, falling to 300 ppm on August 14, 2009. As you know, this standard has been interpreted by Cheryl Falvey, General Counsel of the CPSC, as retroactive in character, thus applying to existing inventory on and after the effective date of the new standard. This interpretation has been hotly defended both by members of Congress and by consumer groups. It is taken as a (sad) fact by the business community. Finally and notably, Section 3 of the CPSIA grants the CPSC the power to promulgate regulations to implement the new law. I did not find a provision granting power to the CPSC to rewrite the CPSIA - which would presumably violate the holdings of Wayman v Southard in any event.

Before the ATV decision, each of Cheryl Falvey, Nancy Nord and Thomas Moore opined in writing that these standards cannot be modified or delayed by the agency because of the limited authority given to the CPSC under the CPSIA. With that reasoning as a justification, several stay requests have been rejected that largely resembled the ATV request. Notably, the CPSC has issued a stay of the testing and certification requirement that did not modify the underlying standards, and later issued a proposed determination that certain materials did not violate the standards and announced an intention to not enforce against those materials, again not modifying the underlying standard in any way.

In both previous stays, the CPSC was careful to not disturb the law itself by delaying or otherwise modifying the application of the standards. In the ATV decision, however, the CPSC goes much, much further. Their rule re-writes the underlying standard entirely by liberating the ATV industry from its grasp despite the fact that the ATVs contain violative lead levels. I fail to see how this "fills in details" or otherwise "implements" the CPSIA lead standard. The lead standard is acknowledged to apply to ATVs - that is the basis of the denial of the ATV request. The new rule not only changes the application of the standard by excising ATVs but it also gives permission for the new manufacture of goods in violation of this standard and announces that this stay of enforcement will be PERMANENT.

There is a difference between the substance of a law and its implementation. When the CPSC stayed testing for a year, it explicitly did not stay the standards. While this was greeted with hoots by industry, it was still the right decision under law, as the CPSC only has the right to write rules on IMPLEMENTATION, and cannot write new law. See if you read Section 3 of the CPSIA any differently. As noted above, the power to legislate has not and cannot be delegated to the CPSC by Congress. Thus, the critical question is whether the ATV stay is an "implementation" regulation or a new law. In my view, it cannot be an implementation of the CPSIA because it directly contradicts a basic tenet of the CPSIA, the new standards. The decision to stay enforcement on ATVs changes the law's application, its effective date, its scope and its duration. Unlike the previous stays which did not affect the underlying rule, it does not focus on administrative details like testing (which is paperwork evidencing compliance, as opposed to compliance with the standards itself) or on devoting enforcement resources against items known to be compliant.

If the CPSC's apparent view of its powers under the law is correct, then which provision of the CPSIA will survive? Do we even need to read the CPSIA anymore? The answer is that only those provisions that the Commission arbitrarily determines it wants to enforce will survive, and they will be enforced only on terms that satisfy the Commission notwithstanding the law's explicit terms. In a good faith environment where the CPSC behaves with discretion and honor (not a farfetched concept, btw), this amounts to a reversion to the old system of risk assessment, and the new law is therefore rendered moot. If I believed that were the case, I would be jumping for joy, but unfortunately it is entirely clear that this was NOT the intention of Congress. There is simply no way to interpret the last 24 months of Congressional feeding frenzy as Congress' effort to maintain the old system.

I think the CPSC needs to reconsider its actions. The ATV decision cannot be cleansed by calling it "enforcement discretion". That is plainly wrong and illogical, not to mention a cover-up of an illegality. While it is fair to criticize the decision for its effect in increasing "confusion" (another Congressional hot button but not when they specifically ask for more confusion), the real problem is the breakdown of the Rule of Law and the rendering of our system of safety laws into a meaningless mess. We cannot tolerate this. I call on the Commission to revoke its stay on ATVs - and call on Congress to restore risk assessment to U.S. safety laws immediately. This is the only possible cure to the endless problems in the CPSIA and would be the beginning of the resolution of this sad episode in American legal history.

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