Saturday, April 4, 2009

CPSIA - A Warlord Announces Himself

Our country's Federal system of law is based on a concept of legal hierarchy. Under the Supremacy Clause in Article VI of the Constitution, Federal law reigns supreme over State and local laws. Arguably, this provision was essential to the forging of a single nation from 13 Colonies by the Founding Fathers. Supremacy of Federal Law enables our Federal government to impose rules that benefit us as a nation over the parochial interests of States that might be contrary to the common weal. We depend on this system.

Unfortunately, the CPSIA by design degrades the supremacy of Federal law by giving wide latitude to State Attorneys General (SAGs) to independently enforce the law as they see fit. States also have the right to create their own safety laws with few restrictions because of weak preemption. Congress did this by plan. Notably, to do otherwise would have caused conflict with California's cherished Proposition 65 Consumer "Right to Know" law. As business people and as consumers, should we really care about this legal "technicality"? To answer this question, let’s look at the alternative.

Not every country has the benefit of a well-organized federal system. Some balkanized countries suffer from independent and uncooperative internal territories. This was the case in Europe before the European Union, as each country had its own rules and regulations, enforcement policies and courts. Trade is often a casualty of balkanization as internal boundaries or borders become points of resistance – or taxation. These internal divisions may not even be legal in nature, but rather tribal or power-based. This is the situation in Iraq.

The Americans got a rude surprise when the reality of the Iraq invasion set in: Iraq was not like home. What they believed could become a homogeneous nation was in fact a fractured, tribal land ruled by competing warlords. To move from place to place safely, Coalition forces had to negotiate and cultivate, territory by territory, appealing to each local leader (warlord) for support and cooperation. There was no way to implement rules centrally – they had to be negotiated neighborhood by neighborhood. This was and remains an uphill battle. Interestingly, similar problems bedevil the Americans in Afghanistan.

The CPSIA empowers SAGs to become modern American Warlords. These often ambitious local elected officials have no obligation to abide by CPSC policy, legal opinions or even Commission decisions, nor do they have any obligation to even inform the CPSC of their enforcement activities (until they file suit). Thus, as created by Congress under the terms of the CPSIA, there are now essentially 51 schemes of laws and 51 safety warlords governing the children's products marketplace. This remarkable "improvement" in the law is said to be sacrosanct to our Congressional leaders (read, Democrats) and not up for discussion. This is very worrisome to me – I think I do care about this. Are the SAGs going to behave consistently with national policy, only stepping in when the CPSC is not following its own rules – or will they do as they please, damn the consequences? Might the SAGs even make up their own law? Will the States behave themselves and play for the common good?

For answers, let us look westward. On March 25, California Attorney General Edmund Brown wrote a letter to the CPSC responding to its call for comments on the new phthalates test method and the draft approach for determining which products are subject to Section 108 phthalate ban.. See http://www.learningresources.com/text/pdf/CalAGPhthalateLetter25Mar09.pdf. Never mind that the CPSC has issued its interpretation of the CPSIA on phthalate testing and the phthalate bans, Warlord Brown will be doing things differently in his tribal region, California. In this remarkable letter, Warlord Brown announces that notwithstanding whatever test procedure the CPSC might settle on, the tribal region of California intends to enforce its phthalates ban component by component. Take that, Federal system! In a friendly gesture, Warlord Brown encourages the CPSC to see things his way. He also notes strongly that phthalates concentrations of 0.1% should be considered an overall limit, not phthalate by phthalate, which implies another serious division in enforcement policy. I am sure California businesses are rejoicing over Warlord Brown’s enlightened stance.

[Interestingly, one of Warlord Brown's arguments is that the CPSIA is modeled on the California ban, and thus, the interpretation of the law must follow California’s (namely, his). As a resident of Illinois, I am somewhat less sympathetic to this view. I did not have a chance to vote for or against this elected official and used to think that Federal policy was allowed to vary from that of California.]

The implications of the Brown letter are shattering. This letter is tantamount to a declaration of the supremacy of California law over Federal law. All hail Sacramento, our new national Capitol! The failure of Congress to create a simple, clear, prophylactic preemption rule, and to drive SAGs out of the children's products safety law enforcement business, will have a severe depressing effect on commerce. Of course, the CA power broker gang of Pelosi, Waxman, Boxer and Feinstein is not likely to permit any restrictions to be placed on their home state SAG. The reality is that the vast majority of companies cannot manage different legislative schemes governing their products. Most U.S. companies do not employ lawyers on their staff and even if they did, could not afford to monitor, much less accommodate, the shifting sands of 50 States' rules and enforcement policies. Presumably then, businesses will either learn to live with trade-inhibiting local rules with all the risk that goes along with it, or just give in to the most aggressive Warlords. Of course, were the latter to occur, a competition between Warlords would result, to determine which one is the toughest hombre on the range. Many companies would leave the marketplace were that to occur. I think you can count on this Democratic- controlled Congress to sit idly by and watch the spectacle with delight.

This is but one of many terrifying aspects of the CPSIA. It is not the one on people’s minds today because it is not generating expense . . . yet. This kind of risk will hit someone, sometime. So far, California has announced a broad settlement with toy companies over violations of local lead laws (http://ag.ca.gov/newsalerts/print_release.php?id=1636), and 39 SAGs feasted on Mattel for $12 million in another action (https://mail.learningresources.com/exchweb/bin/redir.asp?URL=https://mail.learningresources.com/exchweb/bin/redir.asp?URL=http://www.azag.gov/press_releases/dec/2008/Mattel%252520CJ.pdf ). When this moves downstream, the children's markets we depend on, that you depend on, will shrivel before your eyes. You heard it here first. It’s time to Amend the CPSIA before it's too late.

3 comments:

Sebastian said...

I saw a hint of how this plays out last summer. There was a tv news item in Cincinnati Ohio about a mother who had bought a backpack at Big Lots, a chain discount store. When she got it home, she discovered a hang tag on the backpack that indicated the item violated the lead standards in California.
The mom was horrified, alerted the media and Big Lots ended up recalling the backpacks.
But in all the reporting on this incident, there was no mention of whether the backpacks met or failed to meet federal guidelines. There was also no mention of what realistic potential for harm the packs presented. They had been declared dangerous by California and that was good enough to make them unmarketable in Ohio.

Ah, regulation without representation.

Anonymous said...

I have been reading through a lot of items on the precautionary principle. Do an internet search with terms California Precautionary Principle and you will find San Francisco's white paper among other items. It is the norm for lawmaking in CA and other cities in HI and WA used SF's white paper to write their own "how to" implement the PP.

Senator Kyl had this to say to the Senate on July 31,2008 just before the Senate voted.

The CPSC was created in 1972 to establish a single set of product safety regulations for manufacturers and distributors to follow throughout the country. This conference report, however, includes a section that would expand the power of state attorneys general to bring actions on behalf of their own states against businesses they believe violate federal consumer protection statutes mandated by the CPSC. Giving 50 attorneys general discretion over consumer product safety laws would lead to 50 different interpretations of the law, and, thus, a confusing patchwork of safety standards that would make it more difficult for the CPSC to enforce uniform, national policies. Moreover, in recent years, some State attorneys general have used their positions to garner national attention to advance their careers. I am worried that this conference report leaves enough discretion to the state attorneys general to enforce CPSC rules that would tempt some to file frivolous lawsuits that could ultimately undermine the effectiveness of the CPSC.

All the problems we face regarding CPSIA were brought to the lawmakers' attention before the vote but they did not listen last summer so it's no wonder they don't listen now. Ms Nord said the agency would be overwhelmed and it is, Sen Kyl said some hot-shot AG would get involved and he is, I wonder how long until a whistleblower or false database report shows up to prove Kyl correct on those points too. I also wonder how much money some of these lawmakers take from the lobby groups that were thanked for their input on this law. There is a reason we say "follow the money" in a corruption investigation.

It will be too late for a lot of businesses by the time you get the Supreme Ct to declare that section unconstitutional since the Federal government was given explicit jurisdiction over interstate commerce. One of the few items specifically mentioned as their job description.

Barb

Wacky Hermit said...

I'm wondering if I should even sell my product to California. As a former Californian who has watched my home state decline, I am saddened, but I'm convinced they really don't care what they're doing because California government leaders truly believe that the rest of the nation SHOULD by rights follow them because they're so important. They honestly do not understand that the rest of the country might want to be different from them.

Last year my booties were on the Ellen show. How could I ever do another deal like that if I can't sell in California?