The CPSC put out long awaited guidance on testing and certification. The hearings on this guidance took place on November 9. I wanted to give some preliminary comments:
The Guidance is generally helpful and clearly well-intended. This is a helpful change in tone that will be welcomed by the business community. I encourage the CPSC to keep working on the tone of its communications to rebuild trust with the business community.
As a general matter, I find that this guidance speaks with two voices, one focused on reasonableness and good judgment with the goal of safety, and the other focused on rule-following and a byzantine structure for compliance judgments that is divorced from concepts of safety. For instance, the guidance stresses the importance of third party testing of lead-in-paint on children's products. The guidance includes an extensive section with very specific suggestions on how to accommodate lab testing for various paint scenarios (Sec. D), suggesting that the CPSC thinks that lab testing is absolutely required to assure compliance with this standard. Later, the guidance notes that "Painted non-children's products likely to be used in the home and around children, and wet paint in the can also must comply but can be accompanied by a general certificate of conformity." So, the CPSC apparently thinks it is essential to test SOME products for lead-in-paint that children will regularly encounter in the home, and as for the rest, they are prepared to trust the manufacturer. It also suggests a much lower sense of urgency on lead levels in those other products. From a safety perspective, one of these approaches must be right but they both cannot be right at the same time. How does the CPSC expect their rules to be respected (or understood) if they blow hot and cold on such an important subject?
There are other conundrums, such as conflicting uses of the term "reasonable certainty" and "reasonable assurance" when describing compliance. These terms have very different meanings and connotations. [The better term is "reasonable assurances" because "reasonable certainty" is an illogical term akin to "nearly precise".] In addition, at times in the guidance, the CPSC describes in great detail the factors that a reasonable manufacturer should weigh in making judgments, and then in other seemingly similar circumstances, articulates bright line compliance requirements. Bright line rules are almost certain to cause chafing, as there are so many different industries affected, and many companies have innovated in safety and supply chain processes designed to assure good quality. Specific bright line rules will offend innovators and will tend to force them to share or squander their proprietary efficiency gains. For instance, phthalate testing plans and frequency is something that should be left to the best judgment of manufacturers. Why? Because phthalates are additives not found in nature, and if the manufacturer's supply chain has been trained to eliminate it as an additive, testing and retesting won't find it. The incentive to run your business well is eliminated when you cannot capture the benefits of efficiency.
It would be my strong preference that the CPSC rethink this guidance from the perspective solely of a safe environment for children. As a starting point, the CPSC Staff must candidly decide if they think children are in danger now and describe precisely how they are in danger. The concept of "no safe levels of lead" has been debunked by CPSC Staff and even the Commission itself. To my recollection, no lead exemption request under Section 101(b) has been rejected for safety reasons, only for lack of flexibility in the statute. In addition, in last week's brass bushings hearing, Commissioner Adler repeated the consumer group's slogan "no safe level for lead" and then went on to state that the Learning Curve toy cars (subject of the exemption request) were perfectly safe to use even with a child at some hypothetical tipping point in blood lead levels. Thus, both CPSC staff and Commissioners concede that there are safe (tolerable) levels of lead. We need to move past sound bites and refocus on the real safety problems faced by children. Some of these problems probably involve lead (bio-available lead). I believe the agency can identify those risks that deserve attention, and would concede that the rest do not (at this time). This is crucial for a system of rules that will be respected by the stakeholders in the safety debate. Silly implementing rules lead to silly results, unfortunately; famously, the CPSC has "okayed" several metals for inclusion in children's products that are KNOWN to be quite dangerous - all because they are also known to be lead-free. A set of rules focused on real safety considerations will be much better received and will be far more effective, too.
It is also worth noting that the complexity of this guidance will likely defeat its purpose. When it takes 31 pages to explain how to sensibly test your products, with two dozen FAQs to clarify the ornate rules, it is clear that something's wrong. If the CPSC wants rules that will be understood by the "masses", the rules must be simpler and more focused and manageable. It is important that to note that the regulated community will not put the time into mastering the nuances of these rules like the few interested parties have done for the last year. Rules that work are shorter and simpler. My preference would be rules along the line of the factors listed in B.4 coupled with a requirement that manufacturers exercise good faith, make best efforts to comply and use reasonable or best judgment in making decisions. This both describes how a best-of-class enterprise thinks through safety issues and creates a basis for the CPSC to take action against "bad guys". The rules can sacrifice some complexity and even some coverage in favor of ease of understanding in order to assure practical effectiveness.
a. The Five Steps approach to designing a "reasonable testing program" creates a mega-bureaucracy, but to what end? Is this being created because the CPSC thinks it is necessary to solve a known safety problem or crisis, or just to accommodate a badly-written law? I think it's the latter, and thus I believe it is appropriate to consider the new mega-bureaucracy to be a misdirected tax we will pay (to testing companies and others) annually. I think that's bad government policy, as I think taxes (if necessary) should be paid to the government, not to private parties. Notably, the five steps do not include any advice on supply chain management. The issues in supply chain management (addressed in part in a different list in B.4.) are the source of most non-design legal compliance issues. A testing-focused set of guidelines is unlikely to change safety statistics, in my view.
b. I am blown away by the list of items subject now to GCCs outside children's products. This completely escaped my attention previously. I think this will shock a lot of people. Again, this is a most unwelcome creation of new bureaucracy that is unlikely to serve any safety purpose. It is not designed to solve a real problem and thus cannot be justified.
c. The guidance makes the following distinction: "regulations concerning reporting, recordkeeping, inspections,: guaranties, certification, or tracking labels are not 'similar'" but "any requirement of a rule, standard or ban under another act enforced by the Commission other than the CPSA that requires a warning or instruction, or specifies the form thereof, is similar". How are manufacturers supposed to figure this out? What's an "instruction"? Why is a "tracking label" not "similar" but a "warning" is "similar"?
d. In the section entitled "Will the Commission Require General Conformity Certification that a Product is Not Subject to a Ban?", the guidance articulates a rule that everything within a class of products subject to a ban must be tested to back up a GCC. This will significantly increase costs but may not contribute to safety. The better rule is again to leave it to the reasonable judgment of manufacturers, as this will retain a focus on compliance, rather than testing for compliance. Overtesting, for instance for phthalates, will hurt small businesses disproportionately. If a business can organize its affairs to comply, they should be rewarded, not subjected to the same costs of companies less capable of managing their compliance obligations.
Overtesting and other bureaucracy that is not focused on safety will tend to punish U.S. small businesses in the international marketplace. Many companies, like ours, make a significant market outside the U.S. where our competitors do not have to follow U.S. rules to compete in those foreign markets. Overtesting for the U.S. market, or barriers like retesting for changing suppliers, will tend to create a long term cost advantages for foreign companies in foreign markets, reducing the ability of U.S. small business to enter foreign markets or remain competitive there. [Some members of the toy industry are advocating for international harmonization around U.S., rather than attempting to get U.S. standards and practices to become more rational. This "race to the bottom" can do tremendous damage - we need to rise above and set up a system that works but costs a lot less.]
e. The guidance should differentiate treatment of ink under the L-I-P rules and should state plainly the basic rule that if the can says "ink", it's ink and is not subject to the L-I-P test requirements.
f. The rules on retesting for a change in manufacturer need to be loosened. The guidance strongly favors mass market companies for their economies of scale and creates a barrier preventing or inhibiting small volume manufacturers from lowering their manufacturing costs. It goes without saying that lowered costs cannot sacrifice legal compliance or the duty of care toward consumers. It rarely does, in fact. The requirement for retesting will significantly hurt small businesses, however. It is important to note that changes in manufacturers is the most common reason for a change in components. For companies with stable product lines, swapping of components may not be very common. In our business, it is rare to change a component and not change the factory. Thus, we will gain little advantage from the rules focused on switching out components.
g. In Section B.2, the guidance strongly encourages annual testing. This will hurt small businesses. Our company's focus is on producing safe and legally compliant products. We tend to focus on those issues that might affect safety or legal compliance. In our case, few things change in our manufacturing processes that would affect either safety or compliance over time. Thus, annual testing is a waste of money and rarely provides useful information in the administration of our business. If you test and test and test and get the same results each time, what is likely achieved by the next test? Again, the guidance should be focused on substantive safety compliance, not substantive testing compliance. The ONLY solution that will work for all companies in all circumstances is a rule dependent on good faith and best judgment. The principles outlined in B.4. form a good starting point on principles of supply chain management for this purpose.
h. The concept that someone can track the myriad different testing cycles by the components in a product, for most businesses, is a fantasy. In addition, the guidance notes that it may make sense to simply retest the whole product on a regular schedule "a means of simplifying cost, administrative burdens, or other factors." In other words, the CPSC concedes that the market will not likely accept this relief. The scheme is unworkable as a practical matter. The CPSC should not put out rules it knows won' t work.
i. Small volume is not best described as 10,000 units. Remember, there are 300 million people living in this country and more than 100,000 elementary schools. TRU won't sell a product that sells only 10,000 pieces per year in its stores - and that's just one outlet. The better definition would be 100,000 pieces or at a minimum, 50,000 pieces.
j. The guidance confuses the purpose of testing for compliance with the purpose of MAQL testing/inspections. Testing for MAQL (Minimum Acceptable Quality Levels) requires a MILSPEC sample size. This is appropriate because you are usually looking for defects in manufacturing, not legal compliance issues. In my experience, most if not all defects that have legal compliance implications are managed adequately with a single sample. Think of lead-in-paint, for instance. Multiple samples pulled from the same lot will NEVER produce different test results unless there are two or more sources of paint being used. That's so rare and unexpected that it cannot justify regular testing of multiple samples. As with most of this guidance, the variance from the standard approach should only be justified by a real need, nothing less.
k. I must admit that while I find the rules on component testing helpful, I cannot help but think that they are making the CPSIA testing regime into a sham. A thick bundle of component tests performed at different times, in different labs, for a patchwork quilt of standards, will defeat the CPSC's, Customs' and our customers' best efforts to understand them. If the purpose of the testing is not to communicate information, then what are we trying to achieve? The absurdly complex result from the component testing rules may bring relief to small businesses but at a high cost - by turning the entire testing scheme into a "check the box" exercise for manufacturers, dealers and regulators. If that's what this is all about, why is anyone contending that children are not safe and need all these tests to be "safe"? This scheme is simply a by-product of writing rules to implement a mis-focused law, resulting in misguided rules that don't make a lot of sense for their original purpose, rendering the entire system an embarrassing mess. Rather than burn in a terrible legacy of high costs, incomprehensible rules and test reports that cannot be interpreted, why not rethink the system from scratch and come up with rules responding to real, known problems, and leaving everything else to the best judgment and good faith of manufacturers? After all, without any additional regulation by the CPSC, every manufacturer is already subject to a common law duty of care. Why not simply describe minimally some basics of a duty of care and let the market sort out the rest, reserving the right to regulate in greater detail as real dangers are identified?
l. The sample size rules on lead-in-paint will not work for products purchased through trading companies. This is a somewhat complex subject that requires more details than I can provide in this space right now (it's late!). Again, there needs to be some recognition that the general purpose of the legislation is to get people to test for lead-in-paint. If so, why not leave the rules on this to the best judgment of manufacturers when facing the de minimus paint issue? These instances are not likely to be true human health issues anyhow. The CPSC should also consider a de minimus rule on lead-in-paint to avoid the massive and wasteful losses from recalls like the Sarge cars in 2007 (over 400,000 units recalled because of two bad cans of paint used for detailing the cars). If you can't obtain enough paint from one sample to perform the test, perhaps the amount of lead at issue is simply not worth worry about!
m. The guidance (logic) on one-of-a-kind products (which allows the manufacturer to exercise judgment as to whether versions are "the same product") should apply to all manufacturers and all products. That is, manufacturers should be free to exercise this judgment on all products to simplify their testing without making any compliance sacrifices. This is something they can likely do with great insight. Consider, for instance, a manufacturer of 3-D topographical maps: do they need to test each different map or can they consider each variant the same "product"? The rules should permit this reasonable judgment by ALL manufacturers.. This will save many companies a lot of money. They are waiting for the CPSC to say it's okay, and then they can start grouping test reports to save money. This will be a big win for small businesses, if accepted by the CPSC.
n. The CPSC should put out a FAQ about the formation of groups for testing purposes. In other words, they should bless companies or trade associations testing on behalf of groups of users of components or materials.
To sum up, the rules are helpful but would be much better if refocused on real safety issues, if shorter and less complex, and if they were more reliant on the good faith and best judgment of manufacturers based on common sense principles of duty of care.