Saturday, October 31, 2009

CPSIA - Nancy Nord Announces a Delay in the "15 Month Rule"

As hinted at in this space on Thursday, the CPSC is apparently going to delay the issuance of the so-called "15 Month Rule". In Nancy Nord's new blog, she provides the following important information:

"Periodic Testing – On a related issue, the CPSIA requires that we issue a rule setting out further testing requirements within 15 months of enactment (November, 2009). The agency will not meet that deadline in spite of best efforts to do so. This issue is extremely complex and we need additional input from the affected public before we give answers. The staff will hold workshops on December 10th and 11th to seek public participation. A Federal Register notice will be published with details about the workshop and will also provide details for those who wish to submit written comments. In addition, a draft “Guidance Document on Testing and Certification” will be discussed with the Commission at a public meeting on November 9th. See for webcast details." [Emphasis added]

This is good news for the business community on several levels. First of all, the CPSC is now communicating informally through at least one blog. While it increases the number of places to watch for legal developments, you can't beat candor and openness. In addition, the CPSC is doing the considerate thing - giving advanced notice of a material event (the delay in this much-anticipated and much-feared rule). They are being nice, which is MUCH appreciated.

Finally, the Commission is being candid and admitting a small failure. [In fact, the admission is being done in a bi-partisan way, as Democrat Tenenbaum presumably consented to Republican Nord announcing this development in her new blog.] It is somewhat more complex than that, in fact. This is probably not best understood as a failure of the CPSC (although they are going to miss a date). They are CHOOSING to miss a date. Why? My guess is that they realize how important this rulemaking is, and are probably troubled by what the rule would look like under the (defective) CPSIA. It's a public acknowledgement, the strongest in a long while, by the agency that it is genuinely troubled by the unintended consequences compelled by the new law. Withholding the 15 Month Rule is a sign of resistance against doing more damage in the marketplace.

The CPSC has heard from many stakeholders that this rule could be the final straw. I think it's fair to assume that they do not want to do more damage. It is a bi-partisan worry, too - which is in the character of the CPSC over the years. They have not traditionally been the enemy of the business community, so it is nice to see them act with consideration again. Rumorville has it that the CPSC Staff could not find the magic words to make this rulemaking "work". Good to admit it. There's a lot implicit in that statement, most of it very good.

In my comment to the Nancy Nord blog, I ask the Commission to use the plain English meaning of the statute to make their decisions. If they cannot make a sensible decision using the plain English meaning of the words (e.g., does "any" mean "any" or not?), then the Commission should go to Congress and ask for an amendment. A statutory scheme based on twisting words into pretzels does not serve anyone's interests. To understand our obligations, we go to the statute and read it. How can we run our businesses if there is a super-secret meaning to plain English words? Are we expected to master hundreds of pages of releases spread of months or years to discover the nugget explaining that "any" doesn't mean "any"? This kind of treasure hunt inevitably fails. [If you like treasure hunts, see my recent blogpost on resale shops.]

Importantly, the CPSC has announced a two-day meeting on the 15 Month Rule on December 10/11. This is a critical meeting for all stakeholders. Please try to make it. I will be there.

Bottom line, this announcement is another gratefully-received sign of a shift in the wind. Let's see whether more good follows in coming weeks. We now have more dots to connect. It would be wonderful to be able to trust the CPSC and the law again. Guys, please keep plugging away!


Rick Woldenberg, Chairman - Learning Resources Inc. said...

My comment to Nancy Nord's blog has not posted yet (I assume it will in due course). Here it is:

First of all, thank you for starting this blog, and thank you for your candor. It is very helpful.

On the subject of component testing, please note two perplexing issues that work against the effectiveness of the new (unannounced) component testing rule. First, we are continually being asked for test reports by our customers because of their intense fear of liability under the CPSIA. Our customers want simple test reports that they can use to “check the box”. They are more interested in these test reports than in GCCs notwithstanding the clear language of the law on this topic. I fear that while the component testing rule may relieve us of a legal obligation to perform certain tests, it will not affect the other incentives in the law that drive our customers to request those tests. Their fear of liability is seemingly insatiable and their confusion over what is and is not required under the new law seems unresolvable. I do not think we will satisfy them with a heap of component tests that are difficult to reconcile to the final product. In this sense, the component testing rule promises no real relief. I encourage the Commission to take into account the real world impact (or non-impact) of its decisions and rules.

Second, the CPSIA does not create any leverage over component suppliers to provide testing if the components are not deemed “children’s products”. Thus, if we resell a package of paper clips to schools in a science kit, who will provide the component test reports? The paper clip manufacturer has no obligation to provide the test report, and probably will decline to do so. They will only provide it if they have an economic incentive to do so. In the absence of manufacturer-supplied component tests, the reseller will be stuck with the testing. For these unregulated components where the children’s market represents a small percentage of overall revenue, the component testing rule will not provide effective relief. I hope the Commission recognizes that in a complex economy like the U.S. marketplace, there are many, many such examples. Not every component will be as simple to deal with as a bolt of cloth.

[End Part I]

Rick Woldenberg, Chairman - Learning Resources Inc. said...

My comment to Nancy Nord (Part II):

Regarding the delay in the 15 Month Rule, I think the Commission is to be commended for acknowledging that a delay is necessary, and for making a concentrated effort to solicit comments before publishing such an important rule. That said, the consequences of this delay, like the ongoing delay in issuing a final phthalate testing rule, has serious consequences for operating businesses attempting to plan their 2010 activities. Like the chore of turning around the proverbial battleship, we need time to get our work done. Prompt action to extend the stay on testing and certification would be a strong signal to the business community of the CPSC’s sensitivity to their legitimate planning needs. I feel at this point it is clear that manufacturers of children’s products “got the message” about safety, so it is reasonable to assume that the business community’s commitment to broader and fuller compliance will not abate as a result of this reasonable gesture. I hope the Commission will give it prompt consideration as time is of the essence for the business community.

Regarding the brass bushings case, thank you for webcasting this important debate. We in the business community study the decisions of the Commission as precedent. The brass bushings case is expected to be a significant indicator of what we can expect in future rulings and enforcement actions. Of course, the law gives the Commission few options to exercise true “common sense” in this case. I am not personally in favor of twisting the words of the law so severely that they lose their ordinary English meaning – this just creates traps for the unwary, a bad regulatory practice that leads to unintended outcomes and random events. If the brass bushings case cannot be decided on a common sense basis by applying the ordinary English language meaning of the statute, I hope the Commission will table the decision and move to ask Congress to amend the law to permit the common sense decision you prefer to make. The law will serve everyone’s interests better if the plain English meaning of the statutory language corresponds to the Commission’s interpretation of those words.

Thanks again for making your process so transparent!

Rick Woldenberg

Learning Resources, Inc.

Alliance for Children’s Product Safety

Wacky Hermit said...

I wish I could go (finances, kids, the usual excuses) and represent the small-time crafter. I would also dearly love to use the skills I honed in my former career as a math teacher to school them in some simple facts about random sampling. Namely, that any testing regime that tests only samples, by its very nature is going to allow failures to slip by undetected. You can decrease the probability of this happening through good sampling design, but you do so at an increasing cost, which has a point of diminishing returns-- again, by its very mathematical nature. Moreover, when you penalize accidental failures (like the recent one Target got hit with) the same as failures from negligence or malice, you disincentivize reporting compliance. With a system in place where failure is mathematically guaranteed, the ONLY thing stopping companies from lying to the CPSC is their ethics, because the money's clearly in not reporting that just-too-high test result. When the penalties are so high that the future of the business is at stake, they might as well commit the crime for which they stand accused, convicted, and fined!

And THAT is why CPSIA will fail. QED.