Wednesday, July 22, 2009

CPSIA - Thoughts on Tracking Labels (Part I)

To thoroughly and thoughtfully reply to this week's deluge of CPSC publications on tracking labels will take a little bit of time. [I also have a day job.] As the agency took more than 11 months to issue their documents, I will need a few days to digest and parse it for you.

However, I wanted to share a preliminary thought at this time:

The Time to React to Tracking Labels Guidance is absurdly Short. As noted, it took the CPSC more than 11 months to answer even ONE question on tracking labels. Notwithstanding the Commission's obvious efforts to be appear to be flexible and cooperative in the new guidance, it remains a fact that there are now only 22 days until August 14. The diversity of companies and industries affected by tracking labels is simply mindboggling. Commercial lead-times on production runs are (shall we say) OBVIOUSLY more than 22 days. How is that runaway train supposed to stop on a dime in supply chains all over the world? Notwithstanding the CPSC's flexibility pledge in their guidance, what does the Commission think companies will be able to do in the short period of time before August 14? I previously alluded to the fact that some people actually take summer breaks, so they might not even be scheduled to be at work to get this critical task started. For quite some time into the future, particularly in long lead-time industries, many companies will be stuck with whatever they decided to do many months ago. The new guidance will be ineffective to prevent breaches of law as of August 14. In that sense, the guidance is a total failure.

Even the chore of carefully checking the guidance against your current practices will take a great deal of time. We have 2,000 items in our line. They're not all the same and will require one-by-one examinations against the guidance. We have already compiled a lot of data about our products in anticipation of this ruling. Now we must repeat the exercise since we FINALLY got some answers. Oh well, just another waste of our time and money . . . . Likewise, I have mentioned in this space a company concerned about tracking labels with 60,000 items in their line. What are they supposed to do, just take a chance? Close their doors until they get this right? They certainly couldn't complete even a PLAN for these items within the next 22 days. [Consider the chore of even picking samples of 60,000 items and laying out for examination - what would you need, a football stadium?] The coercive power of the CPSIA which makes every violation subject to large penalties (or worse) is weighing heavily on everyone's mind. What are we supposed to DO?

Notably, the corporate camp affected by the CPSIA seems to be divided into a couple groups - the "guessers" and the "waiters". The guessers decided to implement tracking labels according to their best bets (months ago) on what the law meant. Many of those guesses will be wrong, and some of those guesses will hurt the guessers. An example: if a guesser decided to print the name of its source on its product (not required by the new guidance), then its competitors and customers will know their secrets. This would hardly count as a "guess" - we were told to do it in a Q&A session at ICPHSO by CPSC staff. While the CPSC promises to not penalize people for good faith attempts to comply, they likewise have no plan to compensate them for the cost and consequences of the guesses they were forced to make. Too bad for them, I guess.

On the other hand, the waiters have been waiting for answers to their reasonable questions. Many "waiters" are waiting simply because they cannot afford to do things twice, principally because of limited resources (money usually, but also time, space and labor limitations). It is not irrational, unprecedented or un-American to wait for clarification before attending to comply with a vague and imprecise law or regulation. Unfortunately, a hallmark of the CPSIA is its callous disregard of the limited capital and resources of small and medium-sized businesses - the waiters were put in a position to either guess at their own risk or be made to look like bad corporate citizens for waiting for answers that came at the 11th hour. The waiters didn't want to waste more money on "guessing" - they couldn't afford it, especially in these difficult economic times. Perhaps they felt they had a right for solid rules and solid answers before acting. Is that wrong? Or, is the CPSIA leading the way toward a new style of law where guessing is required, standard?

I would note further that nowhere can this author find reference in any of the Commissioners' statements, in the CPSC's FAQs or in the CPSC's new tracking labels guidance indicating that tracking labels are needed urgently to address some kind of emergency. It is not. Notably, the power to impose tracking labels has been in the CPSC's arsenal for more than 30 years. It's nothing new. Congress got a bee in its bonnet over this issue last summer and usurped the Commission's discretion by imposing the new requirement, that's all. The Commission has implemented tracking labels in the past in isolated situations where it deemed them necessary to address a public health issue. It has also DECLINED in the past to impose them in a sweeping, across-the-board manner without regards to facts or circumstances. Even the positioning of the provision in the CPSIA by all concerned is that it is a "nice to have" to improve recall effectiveness. I have previously pointed out that the strict new regime of law on safety will also sharply reduce the number of recalls - in other words, the urgency of this "nice to have" diminishes on a daily basis.

So . . . if the tracking labels are no emergency, why isn't the CPSC taking the high road in this new Tenenbaum era to give industry time to digest the rules, dialogue with the agency on its further open questions or reasonable objections, and implement tracking labels in a planned and orderly fashion? Good question, perhaps? Ms. Tenenbaum has the opportunity to make this a reality by voting in favor of the NAM stay petition before the August 14 deadline. Every day that goes by without the stay, the problems for the victimized industries will grow and grow.

Ms. Tenenbaum, please don't leave us hanging. Do the right thing - vote for the NAM stay petition. Thank you.


Anonymous said...

I think it is ironic that the very items that were violating rules are so small that they aren't practicable to label and therfore can't be labeled eventhough they may pose a greater risk then a shirt. But since a shirt has more space for a tracking label it is practicable. This law is so not about risk.
it is also fun to note that the vending machine type toys won't require them but is required on their packaging. We have those things in the corner liquor store...I am sure we can count on them to track their boxes. What a joke this is.

Jim Woldenberg said...

It seems reasonable to expect the CPSC to act in such a manner (i.e. to agree to the NAM stay) to give companies time to plan and implement the processes necessary to get this right. Even large business can not turn on a dime and implement a whole new set of labeling guidelines in 22 days. But this is especially problematic for small businesses who simply do not have the ability to react so quickly.

Sometimes I think there are people in Govenment who believe that people in businesses can wave a magic wand (like Harry Potter) and make things happen instantaneously.

Hopefully, there are others who can see that making unreasonable demands will only result in noncompliance, and, in the end, it will erode respect for the law.

Ted Casey said...

"CPSIA - Thoughts on Tracking Labels (Part I)":

Is the CPSC out to destroy businesses? Imagine the myriad of warning labels they would have required of Columbus or Lewis & Clark before they could set out on their explorations! Will the epitaph for small businesses be "Strangled by Bureaucracy"?