Monday, April 27, 2009
Saturday, April 25, 2009
The disturbing metaphors of these novels ring in my ears. When you think about what followed Kafka's death, the novels take on a power that is beyond their words. The world he was describing incredibly, shockingly, came to pass years later.
I feel like a cockroach myself these days. Having worked for almost two decades to build our education company, and having done so responsibly, I find that we have been labeled a cockroach by our government for imagined transgressions. Actually, thousands of companies have been labeled cockroaches for the same unjustifiable reasons. Not unlike the experiences of Gregor Samsa, I find that we are being isolated, prevented from earning our living, and are shrinking from our former size. Samsa ended up bug-sized and incommunicado.
It is also true that I feel like we have been charged with unspecified crimes by an unidentified tribunal to be tried on a date unknown to me. I cannot figure out what we have done wrong or how we can repair the damage. Like Joseph K., I am looking for someone to defend us against charges that must be wrong - I have scoured my business life and cannot find the crime. Joseph K. ends up being convicted and is executed at the end of the novel. Joseph K.'s last words: "Like a dog."
The Trial in particular is a stunning metaphor for the dilemmas we face. The laws that underlie Joseph K.'s arrest and the unspecified charges are nowhere to be found. He cannot read them, he cannot rebut them. The "laws" exist only by the assertion of the mysterious people who have charged him with crimes. Using the same authority that enabled them to charge him with unspecified crimes, the unnamed court also convicts and sentences him. Unnamed people execute him. He has no recourse and dies alone.
Unwritten laws are subject to abuse. Kafka described the "legal system" of a totalitarian regime. Joseph Stalin used a similar "legal system" to his advantage in the decade following Kafka's death, engineering quick trials in the 30's to convict his enemies of vaguely described crimes, followed by execution within 24 hours. He was clever - he maintained the appearance of a legal system (there were charges, a court, a judge, lawyers, a "trial", even confessions) to preserve the illusion of individual rights. In fact, the system was designed to be manipulated to whatever ends he determined. He could assert he was motivated by justice and protection of the People.
The CPSC's ATV enforcement stay, justified by the agency's supposed "enforcement discretion", makes a mockery of the Rule of Law in children's product safety. If the "law" is not the one available on the CPSC website, then I must conclude it's a secret law present I know not where. The Commission's actions go far beyond exercise of discretion and far beyond their own precedent and statements on the operation of the law. While we certainly don't live in a totalitarian society, the activity of the CPSC in the ATV stay erodes the operation of law and is on a slippery slope. Tell me where it ends - I do not know.
This is a SERIOUS issue, and I hope both the CPSC and Congress takes it seriously. I do not wish to be subject to the risks Mr. Kafka highlighted, and further believe that the U.S. Constitution protects me from that possibility.
A quick side note: In a world with unwritten laws and secret enforcement stays known only on the whisper circuit, it will be impossible to administer your business. Let's not forget that the CPSC's stays (explicit or implicit) have NO effect without the cooperation of all 50 SAGs. Those SAGs were empowered to enforce the CPSIA as they see fit. Think of 51 secret laws now, not just one at the CPSC. In addition, thanks to the CPSIA, violations of any of a number of (unspecified) laws require 24 hour notice to the CPSC under Section 15 of the CPSA. For instance, this obligation would cover one missing warning label on your website. Yes, 24 hour notice for every violation, regardless of how trivial. AND any "knowing" (actual or imputed) violation of law may constitute the basis of a felony charge. How's that for coercive power for 51 different, independent regulators?
The final "gotcha" is the whistleblower provision. You cannot even THINK OUT LOUD about the most minor violations of the law in your office for fear of being turned in. Yes, cockroaches, the government has filled your office with spies to encourage you to toe the line. If you make a mistake or put something off until after your vacation, you are theoretically exposed to a disgruntled employee going "State's Evidence" against you and sticking around to collect a paycheck. The "relief" being offered in the guise of "enforcement discretion" will provide no relief whatsoever.
The imaginary law, the one in the heads of the CPSC as evidenced by the ATV enforcement stay, won't help us run our businesses. Rub your hands with glee, Congress, we are stuck with your awful bill EVEN IF the CPSC exercises its "enforcement discretion". I know you won't like the comparison, but I think Mr. Stalin would be impressed, guys. Like a dog. . . .
I don't care how desperate the 28 Senators are. Fix the damn law.
Friday, April 24, 2009
Apparently, the Southern District of New York doesn't know about the mysterious power of the CPSC to exercise "enforcement discretion"!
The court had other things to say on this subject: "In the CPSIA, Congress made it unlawful for any person to 'offer for sale' or 'distribute in commerce' children's products containing phthalates after the effective date. . . . The CPSC decision purports to allow exactly that. The specific phthalate ban in the law must control; otherwise, Congress' express prohibition on sale or distribution in commerce would have no meaning." Where have I heard that before???
Side note: Dearest Senators, you may be interested to know that the law of the land applies to you, too. While in your letter, you float the wishful thought that the CPSC may exercise its "discretion" to override the parts of your terrible law that you have come to regret, but, ahem, the laws that govern us all, even you, prevents the CPSC from saving you. You have to do the dirty work of changing the law yourself to avoid the terrible result you have wrought. And, in a delicious irony, your pals the consumer groups, helped make the law which compels you to act. For once, I applaud the assistance of the consumer groups!
Read in light of the ATV "enforcement discretion" decision, the phthalates court decision is downright humorous. Consider this footnote: "The Supreme Court has also noted that Congress 'does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions - it does not, one might say, hide elephants in mouseholes.' . . . 'The language of the statute may not be distorted under the guise of construction, or so limited by construction as to defeat the manifest intent of Congress.'" You have GOT to be kidding! And what if Congress changes its mind after it does something dumb? Can it send a letter and retroactively reset its intent to justify some different outcome . . . or must it tediously go through that awful legislative process with all that embarrassing visibility, debate and so on to fix it? A letter would be quicker, of course.
I find it fascinating that the CPSC used arguments in the phthalates case that the retroactivity of the lead standards was different (and unyielding): "The CPSC argues that Congress should have designed products with phthalates as 'banned hazardous substances' [under the FHSA] if it wanted the ban to operate 'retroactively'". Presumably, the CPSC arguments were crafted before the discovery of "enforcement discretion". Had only the CPSC presented arguments to the court that it was exercising "enforcement discretion" on the retroactivity of the phthalates ban, it would have . . . been laughed out of court?
One last thing: it's probably worth a quick re-read of Cheryl Falvey's famous September 12, 2008 opinion letter on the retroactive effect of the lead standards. I hope the CPSC takes care to distinguish the reasoning in this letter and the court case above to help us all understand how the rules of the game are being administered rationally and predictably. I think that would realy help us all.
Wednesday, April 22, 2009
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.
In any event, I was told that a principal reason to NOT revisit the law is that it had been "litigated" (their word for the process) so thoroughly. In other words, as a consequence of its "perfect" process (a series of public hearings, deliberations, conference negotiations, Congressional votes, Presidential signature), Congress had ergo delivered the "perfect" law. Perfect laws don't need to be revisited. Uh-huh. I had occasion for this trip down Memory Lane because I recently heard that Ms. Appleberry was trotting out this old chestnut again in recent meetings.
Please don't misunderstand me - it was a nifty process. They called the witnesses they wanted to hear from (namely those whose testimony supported the conclusion they had reached before the hearings), asked the questions whose answers were predetermined, and then conducted "due diligence" by asking a limited number of representatives of industry a limited number of questions behind closed doors. This undocumented "due diligence" was taken at face value and applied as fact to justify the "reasonableness" of the details of the new law. The data they gathered was overwhelming, completely flawed but unopposed.
I remember those days of the "perfect" process when any attempt to reach the players and to contribute to this process was rebuffed. We "evil" businessmen (in my case, a toymaker, horrors!) were not trustworthy and our opinions of the proposed legislative schemes were apparently perceived as self-interested and designed to permit "unsafe" products to be sold. We were labelled implicitly as moneygrubbers and were excluded from their "perfect" process. Naturally, this helped with message control by marginalizing anyone who might disagree with the design of the CPSIA.
The science justifying this law was never properly tested. As my recent blogpost indicates, the data provided by the American Academy of Pediatrics almost singlehandedly proves how absurd the contention is that many of the products regulated by the CPSIA present any detectible health risk to anyone. When presented with this data, I am told the CPSIA honchos are again saying that the science would not be revisited. What a "perfect" process!
In Illinois, we have learned a few things about "perfect" legal processes, notably death sentences. Death sentences are not handed out lightly in Illinois (or anywhere) - there are many legal hurdles to jump over, with detailed findings of fact and other protections of individual rights. Yet, in January 2003, Governor George Ryan made history when he commuted the sentences of all inmates sentenced to death in Illinois because of his concerns over the flaws in the conviction and sentencing process. Ryan was a "perfect" process skeptic.
George Ryan's concern over the "perfect" Illinois process used to hand out death sentences derived from the famous Rolando Cruz case. In 1985, a man named Rolando Cruz was convicted of the notorious rape and murder of 10 year old Jeanine Nicarico and sentenced to death. In a series of legal challenges over many years (ultimately opposed by then State Attorney General, now Senator, Roland Burris), Mr. Cruz's conviction was overturned after a sheriff's lieutenant admitted he had lied under oath and DNA evidence exonerated Cruz. In the wake of this terrible injustice, Governor Ryan initiated a moratorium on death sentences and ultimately issued a mass commutation of all Illinois death sentences. Mr. Ryan's doubts were well-founded.
Had the architects of the CPSIA been our Illinois Governor, the death row would still be stocked with inmates. In their world view, a "thorough" process, well "litigated", need never be revisited, like the one that almost killed Rolando Cruz for a crime he never committed or the case of Anthony Porter whose execution was stayed with two days to go - only to be found innocent later with evidence provided by Northwestern University undergraduate journalism students. George Ryan's stand on death sentences made me proud as an Illinoisan and as an American. Beware of anyone who defends a result by pointing to their process - sometimes it pays to check your work.
I love a perfect process, I really do. But this law is not perfect. The evidence is overwhelming. It's time that the politicians propping up this defective law - and encouraging the CPSC to break the new law to appease vocal constituents - admit their error and do the right thing by amending the law. It's their duty, what they were elected to do. Come on, guys - do your job.
Monday, April 20, 2009
Apparently, when it comes to the CPSIA, only small-minded people care what it says. The CPSC is no longer confined by the words of the law - if those words are inconvenient to a Congress that won't take responsibility for its actions. As reported in my last blogpost, the CPSC denied the petition of the ATV industry for an exemption from the CPSIA, but granted an enforcement stay through May 1, 2011 that overrides the retroactive effect of the law on ATV inventory PERMANENTLY. This stay is in flagrant violation of Federal law.
The CPSC had no legal right to grant the ATV stay. The CPSC was under tremendous pressure to act on the ATV petition - the Congressional Democrats behind this law needed the CPSC to save them from their angry constituents and apparently decided that there is no limit to what can be asked of the agency. Twenty-eight Senators wrote the Commission on April 9 to assert that the terms of the CPSIA grant the CPSC the authority to use "common sense" to implement the law, but did not cite the words that grant this power. In fact, no such provision exists, and by telling the Commission to use "common sense", the Senators were in fact telling them to break the law with impunity.
Regardless of what powers you think the CPSC has or doesn't have under the CPSIA, it remains true that the stay issued by the CPSC overrides a LAW, not one of the CPSC's rules. In other words, Congress passed a law which sets out a specific standard for lead that has a specific implementation date, and the Commission decided not only to delay its effectiveness (stay enforcement) for two years on certain products but ALSO to make the stay of enforcement retroactive and permanent through May 1, 2011. While this decision may make a lot of real world sense and fix one of many "unintended consequences" of the law, it is nevertheless illegal, in my view. By permanently enjoining enforcement of the law against existing inventory AND product made between now and May 1, 2011, the CPSC is making up its own law to override the CPSIA. They are even encouraging the production of NEW product in violation of the Act - amazing . . . but unlawful. There is no power granted by Congress to the CPSC under the CPSIA to ignore or explicitly override the really dumb parts of the law. If only it did . . . . The various Democratic leaders who have been waiting for a knight in shining armor to save them got their wish - but the rule of law was sacrificed in the process. I used to think that in this country the law mattered. Now I think the only thing that matters is the mood of certain members of Congress on any given day.
Notably, the Commissioners used to know how to read the law. On February 4, Thomas Moore intoned: "What the Commission cannot do, by rule or otherwise, is change the statutory effective date of a congressionally imposed ban. The Consumer Product Safety Improvement Act is quite specific as to the relief the Commission is authorized to take by way of exemptions or exceptions. The Congress has spoken on this issue and while the Commission will do everything in its power to ameliorate this decision [to reject the NAM petition], it cannot change it." Mr. Moore, what happened in the last 10 weeks?
And Nancy Nord took a similar view on February 5: "The law written by Congress does not give the CPSC the latitude to take the requested action [to grant the NAM petition] to stay the effective date. Congress spoke clearly in setting out a regulatory regime that applies to all children's products in commerce regardless of exposure or actual risk. Congress spoke clearly about the limited nature of the exclusions and exemptions available under the law. Congress spoke clearly about the limited nature of our enforcement discretion after February 10. The agency cannot alter or amend the statute." Ms. Nord, what has changed?
In granting the enforcement stay for the ATV'rs, the two Commissioners directly contradicted their very plain conclusions on the CPSIA, a law which has not been amended since early February I might note. I am at a loss to explain this, and believe this action discredits them as arbiters of the law. What do their opinions matter, if they have no precedential value or bind the authors in any way? This sets a new standard for the irrelevance of dicta, in my view. Why bother reading their statements from now on?
I think what happened here is that Congressional Democrats have taken over the CPSC and rather than own up to their terrible failure as legislators, have taken the awesome step of forcing the agency to break the law. I happen to work for a company making products regulated by this law. In the wake of the breakdown of the rule of law, I am even more confused as to the rules that actually apply to our company and our products. I do not believe I can turn to a document or even a series of documents to make this judgment now. The ATV decision demonstrates that we are in uncharted legal territory. Legislation will either mean nothing from now on (at least at the CPSC) or will be created on the fly based on the latest jibes from Congress. Either way, the path forward is clouded and unlawful.
Saturday, April 18, 2009
1. The Continuing Issuance of Stays is an Acknowledgement of the Flaws in the CPSIA. This is essentially the third stay of the CPSIA, and perhaps not the last. [Look for a stay of the tracking labels requirement as chaos is again building in the marketplace.] Having stayed the testing and certification requirements for a year, and deferred enforcement of the law against certain products and materials previously, the Commissioners have again put the law on hold. Why would "landmark" legislation need to be stayed again and again, and may need to be stayed some more? Let me suggest an obvious reason - the law makes no sense and the CPSC cannot make it make sense. Not only does the CPSC recognize that the law is toxic to commerce, which is not the desired purpose of well-crafted safety legislation, but it is also turning many safe and valued products into endangered species. As the Commissioners note, the law is so restrictive that a stay is the only means they have available to avoid the most terrible consequences of this overreaching law.
PLEASE NOTE the absence of howls of protests from Congressional "leaders" and consumer groups over the gutting of the retroactive feature of the CPSIA for the benefit of the ATV'rs. I thought these luminaries told us the standards were intended by Congress to be retroactive and that (evil) American industry had enough time to get the old product off the shelf. If so, why aren't our Mother Protectors screaming about the terrible CPSC Commission selectively letting the ATV industry off the hook??? That darned Nancy Nord again . . . oh yeah, it was Thomas Moore, too. Perhaps the screamers' principles aren't quite so rock hard, and retroactive effect of the lead and phthalate standards weren't actually essential to preserve our way of life after all. Hmmm. Senators???
What does that say about the law itself?
2. The CPSIA Puts the CPSC in Gridlock (not Nancy Nord). The Commissioners continue to struggle with the straitjacket imposed by Congress. In the case of the ATV Exemption request, the staff indicated that the law compelled them to deny the application despite absurdly low lead intake from ATVs (far below daily lead intake from food, water and breathing, ah but details like this are the hobgoblin of the small mind . . .). Likewise, BOTH Commissioners came to the same conclusion. Nancy Nord: "It is clear that the law does not give the Commission the flexibility to grant an exclusion for the petitioners' products." Thomas Moore: "Given the extremely restrictive language of the law, the only avenue I can see is for the Commission to establish an enforcement plan that follows, to the greatest extent possible, the Act's intention for future production. . . ." The Commissioners are stuck and make no bones about it.
Okay, so no exemptions are possible. [Senators, there's some "common sense" for you.] How about the future? Can manufacturers ever find a way to wriggle out of the ridiculous restrictions or will the entire Children's Products industry be slave to these inflexible restrictions going forward? Ummm, we're slaves. The enforcement stay proposed by the Commissioners after considerable delay to study their legal options states that the standard for relief in the future will be "technical feasibility". This sounds like a logical standard, something that reasonable people exercising "common sense" could administer capably, right? I don't know how to tell you this [Senators] but . . . no, not right.
The term "technological feasibility" is defined in Section 101(d) of the CPSIA specifically to tie the hands of the CPSC. Among other things, no consideration of economics is allowed. Notably, something is considered technologically feasible if "a product that complies with the limit is commercially available in the product category . . . or . . . alternative practices, best practices, or other operational changes would allow the manufacturer to comply with the limit." In other words, if Rolex can do it, Timex MUST do it. Mr. Moore, whose enthusiasm for this law seems to approach the pathological, gloats: "The evidence considered is strictly limited to technological feasibility, not on the higher cost of a viable substitute. The guiding principle of this agency's determinations has to be the safety of the children . . . ." Notwithstanding the non sequitur of Mr. Moore's second sentence, his statement is a clear admission that the CPSC has no way to exercise that famous "common sense" recommended by Senator Pryor and his flock.
3. The Notion that a New Chairman Would Impact Outcomes Has Been Exposed as Nonsense. This is the 24th consecutive CPSIA decision of the two person CPSC Commission which has been decided 2-0. There are NO examples of 1-1 votes on the CPSIA. The two Commissioners read the law EXACTLY the same. My heavens, if the Commissioners under this kind of pressure read the law as similarly as they do, is it POSSIBLE that they read the law correctly and are working in concert, exercising similar sound if constrained judgment and in fact, are doing their jobs responsibly? The new Chairman is supposed to clean this up by instituting a new policy at the CPSC to . . . what? Break the law? The demand for a new Chairman to "resolve" the issues under the CPSIA insults the public's intelligence. The Members of Congress and consumer groups that stand in line to bash Nancy Nord and blame her for these decisions and the direction of the agency shame themselves with their mischaracterization of the facts.
4. Fairness and Equity in Safety Regulation or Application of Rules across Industry Lines is Another Casualty of the CPSIA. I am happy for the ATV'rs that they got a break on the unfair retroactive application of the lead standards to their products and inventory. Our suffering need not be their suffering. It is worth noting, however, that they are not alone in their need for relief from the retroactive impact of the law or its harsh disruption of their marketplace. The rippling impact of this law on many industry groups has been well-documented. At a minimum, I simply cannot understand how the CPSC could justify giving a PERMANENT pass on retroactive effect for ATVs through May 1, 2011, but not do the same for all other industries affected by this law. This is shocking, irresponsible, oblivious, unfair and unkind. Had Congress or the CPSC actually given a two-year pass to everyone on retroactivity (preferably several months ago), the transition time alone would have cured many ills, including the need to sort out how to administer the new rules. Likewise, a big chunk of the problem for resellers of used or donated goods would be resolved or at least tabled for further study. Instead, justice will apparently be meted out slowly and unevenly, and will be governed by economics. You can safely anticipate that there will be justice for the rich only. Only rich industries or companies will be able to afford to mount the multi-million dollar effort to appeal for these exemptions. Crafters, for instance, will be sacrificed unless a Sugar Daddy saves them. Don't count on it.
5. The Future of Safety Regulation is Bureaucracy and Complexity without Benefit. The decision in the ATV case makes it clear that unless the law is changed, regulation of safety in children's products will be by exception only. Having mandated that regulating by risk assessment is no longer permitted, Congress' great new scheme is to make everything illegal unless the Commission decides it isn't illegal. It will be years, if not forever, before a coherent, settled law emerges. In the meantime, we will live in the grey zone.
As I have written in the past, there will be significant costs to a regulatory system based on exceptions. For one thing, it will be exceptionally difficult to clearly understand the rules if you must first find and understand all the exceptions. While this might sound achievable, it is not. Neither the law nor its exceptions are clear or entirely black-and-white. Case law or a body of other regulatory decisions will slowly and expensively clarify the law - provided you can find, understand and utilize those decisions. And. . . the body of decisions may not (likely will not) set out the answers applicable to you. It is typically clear as mud.
What will life under this kind of legal system look like?
- You will need to hire counsel. You will not feel comfortable making the legal analysis yourself. You will also become accustomed to weighing legal risks in the normal, everyday conduct of your business.
- Easy things will become hard. There will be a need for vast paperwork that does not contribute to the development of your business or the satisfaction of your customers.
- Your costs will rise to cover the bureaucracy. This will not make your products more valuable or raise the price you will receive for them in the market.
- Increasingly, your focus will be on paper, not building your business. Regulatory paper will become the medium of trade and owing to the blizzard of paper will lose its meaning. Your business processes will feel Dickensian. [Ah consumer groups, thank you so much for all you are doing to make America great!]
- You will learn to fear the CPSC and State regulators in your bones for the randomness and pettiness of their rule administration. Rules, NOT common sense, will dominate in a world of forbidden risk assessment, and random seizure of your profits (through fines and technically-driven recalls) will become commonplace. If this sounds apocalyptic, talk to anyone who has dealt with Customs. Get used to it.
6. Small Business is the CPSIA's Sacrificial Lamb. Who survives in a world defined by the ATV decision? This decision makes clear that a serious and expensive legal campaign is required to get permission to sell known safe products that give off about as much lead as four cups of water from your kitchen tap. [You know, the water you feed to your children and grandchildren, and drink yourself.] This is unaffordable and well-beyond the capabilities of 99% of all regulated companies and is thus a closed door (effectively) for small business. We have seen a recent letter by Senator Durbin's staff practically clucking at the nobility of sacrificing small business to the need for pre-market testing. As an Illinois resident, I find this indescribably infuriating. I understand the importance of small business to the marketplace and to local communities. I work at a small business and fear what will happen to us if this law is not gutted quickly. If we really must accommodate these rules, our business will become unrecognizable. That would be a very sad day for me, for our associates, for our marketplace and for our valued customers.
7. The CPSC Has Been Neutered as a Regulator. Ms. Nord sums it up in her April 17 letter: "I hope the state attorneys general will follow our lead in [the enforcement ban on ATVs.]" I hope so, too. That being said, in an orderly legal system, there is one policymaker, one decision-maker. The U.S. Supreme Court doesn't close all of its decisions by saying "We sure hope the Supreme Courts of California, Arizona and the other 48 States will follow our lead on this one." In our business, we say "Hope is not a strategy." Uh-oh.
The CPSC knows it has been cuckolded by the law since it is now subject to oversight by 50 SAGs. If you get yourself a nice two-year enforcement stay from the CPSC, are you going to take a chance to continue to sell your products when Lisa Madigan (SAG-IL) or Edmund Brown (SAG-CA) or others might choose to read the law differently than the CPSC? Does the Federal stay actually mean ANYTHING? According to my 15-year-old daughter, who has more common sense than at least 28 Senators I can name, the answer is NO. And, yes, these SAGs are not above telling the CPSC that they read the CPSIA wrong (see my recent blogpost on this topic). There is no longer a law of the land.
Final Thoughts. With the ATV decision in the books, we now must wait for the enforcement stay to be written up and published. Don't expect any surprises as the Commissioners have published their expectations already (again, one list from the 2-0 Commission vote). Will other industries raise their voices in protest? Questionable, in my opinion. If the past few months has not been enough to get people over their (irrational and misplaced) animal fears, I don't know how the current situation will add much motivation. There aren't enough motivated and persistent protestors out there, and frankly, it's understandable. The economy's still a wreck so everyone needs sales, not new hobbies. Advantage, lead fear mongers.
Time will tell. I hope some of you will answer the call.
Wednesday, April 15, 2009
In a wonderful comment post, WeeWilly recounted an ATV outing in Arizona with his two older children and his relief at not exposing his 11-year-old daughter to the dangers of lead intake from the ATV adventure. What a thoughtful guy! As he points out (somewhat sarcastically but certainly with a good sense of humor), lead intake from his ATV ride is both unlikely and the least of his concerns when riding ATVs. Although WeeWilly doesn't dwell on it too much, by far the greatest lead risk from his outing came from the dust he and his kids breathed. I think it's probably time for our nurturing Mothers, the Members of Congress responsible for the CPSIA, to outlaw air and dirt! Just to protect us, of course. . . .
As my last blogpost makes clear, lead intake is a common daily occurrence (HORRORS!) as lead is in everything. More on that below. The CPSIA foments a fear of everything, so no doubt you are now breathing heavily, clutching at furniture, feeling lightheaded. Calm down! You are not the only one fainting over the improbable intake of lead in your daily life. In another surreal incident, the Madison (WI) Children's Museum curtailed its annual American Girl-themed fundraiser because of CPSIA concerns. Hmmm. I am fairly certain that the same mathematics about lead intake apply to the withheld toys. Perhaps it's time to break out the calculator and give this some thought.
As a point of reference, I would direct you to the report of the American Academy of Pediatricians given in testimony to the House Energy and Commerce Subcommittee on Commerce, Trade and Consumer Protection on September 20, 2007. This report was presented as the testimony of Dana Best, M.D., but in fact was written by Cindy Pelligrini (at least, according to her). Cindy told me in a conversation on May 16, 2008 that she is a scientist . . . a political scientist, that is. In any event, this document is the touchstone for the lead fear mongers so you should probably read it. It has lots of interesting information in it.
As a starting point, here are some points of reference:
a. As noted in the CPSC Staff reply to the ATV Exemption request, expected daily lead intake from a child's use of an ATV is 0.015 - 0.05 mcg.
b. As noted in the same document (and confirmed in the AAP testimony), the lead limits imposed by the FDA on candy is 0.1 ppm (0.1 mcg).
c. According to the AAP testimony, safe water standards are set at 15 parts per billion. This limit is equivalent to 0.015 mcg/liter (approximately four cups), or 0.057 mcg/gallon (U.S.).
d. According to the AAP testimony, the lead limits in dairy product solids is 0.5 ppm (0.5 mcg per gram, five times higher than in candy).
e. According to the AAP testimony, lead limits in "clean air" is 1.5 mcg/cubic meter (better tell the kids to stop breathing!).
f. And, my absolute favorite, according to the AAP testimony, the "upper range" lead levels in "uncontaminated soil" is 40 ppm, which the AAP testimony considers to be a "trace amount". This "trace amount" means that if you consume between 0.000375 - 0.00125 grams of soil, you are likely to exceed the daily intake of lead from ATVs. One penny weighs 2.5 grams. [Please note that lead in dirt is soluble. The vast majority of lead-in-substrate is NOT soluble.]
[Ed. Note: While we're talking coins, did you know that according to the CPSC, over 21,000 kids made trips to the Emergency Room after swallowing coins in 1997? Lead is not an ingredient in American coins but I cannot find information on its levels as a trace contaminant. Does this statistic raise any questions of proportionality perhaps???]
As previously noted, one 7 gram piece of Coffee Nips candy contains 14-47 times the lead that would result from one day's interaction with an ATV. An entire box of 16 Nips would exceed the lead intake from years of riding an ATV. If you favor cheese, a similar 7 gram serving would equate to 70-235 days of ATV use, and the cheese equivalent of 16 Nips (112 grams) might have you riding ATVs for more than a decade without a bathroom break to catch up on your lead. And heaven knows what is in those crackers you would eat!
It gets better. Breathing in a cubic meter of air will equal 3-10 days' worth of ATV riding. How much time will that take? Well, one cubic meter is 1000 cubic liters. According to a 1994 study, an American child consumes about 7 liters of air per minute in a sitting position. Since we Americans are sedentary, I took this minimum level as the standard (the most conservative approach - I assume the kids never move, all day long). A typical American child, sitting down for 24 hours a day (remember the childhood obesity issue we all used to fret about . . . until we heard about lead?), will breathe 7 liters a minute, or 10.08 cubic meters of air. Ten cubic meters of air will contain 15.1 mcg of lead or 302x-1008x the lead intake from one day's use of an ATV. My guess is that this underestimates the daily air intake of a child by a factor of 2.5x. Taking these minimum assumptions as the basis for my answer, I say it would take 24*60/302 or four minutes and 46 seconds of breathing in a sitting position for a child to exceed the daily lead intake from a day's use of an ATV. If the kids get up and run around, it would take less time. It's probably best to stop breathing right now! [Or rescind the CPSIA.]
And then there's dirt. Dirt, according to the AAP, has 400x the lead content of candy and 80x the lead content of cheese. The AAP notes that young children might put their hands in their mouths up to 20 times per hour. [Ed. Note: I realize that the AAP and Cindy Pelligrini would NEVER mislead us about anything BUT one of the cited articles says that the contacts are 9.5 per hour for a study of 20 3-6 year olds and 10 2-5 year olds, NOT 20 per hour as claimed in the testimony. The other article cited by the AAP was a study of 37 children (average age 39 months) for two hours, resulting in a median touches hand-in-mouth of 7 touches per hour. In any event, neither of these studies seem to me to be sufficiently large to be a basis of national policy setting. Just one man's opinion. . . .]
The AAP goes on to intone: "If the dirt on their hands or the dust on the floor contains lead, every one of those activities delivers a dose of lead." Ouch, you got me! Licking my wounds, I wonder: how does the lead intake from dirt compare to the lead intake from now illegal ATVs (and the products made by the rest of us)?
The lead intake from daily use of an ATV is 0.015-0.05 mcg. The concentration of lead in dirt at 40 ppm is 40 mcg lead/gram of dirt. For an equivalent intake of 0.05 mcg of lead (the high end of ATV lead intake), you would need to consumer 0.00125 grams of dirt. According to this article entitled "The Hazards and Benefits of Eating Dirt", a child of under 3 typically consumes 500 milligrams of dirt every day or 0.5 grams (one-fifth of a penny). This amount of dirt happens to contain 20 mcg of lead, or 400x the daily lead intake from use of ATVs (high end). Yes, that's right - a child under three takes in more lead from his/her daily intake of DIRT than a child would take in from riding an ATV for more than a year without a break.
Does this put the lead issue in perspective for you? While the AAP warns us "There is no 'safe' level of lead exposure", they likewise make no effort to put it all in perspective. Their argument asks us to suspend common sense, because the AAP must know best, but the fact remains that environmental sources of lead are a much, MUCH greater problem for society than the products outlawed by the CPSIA. By divorcing their logical observation that lead is not good for you from an analysis of the lead dosage that we all take in from breathing, eating and interacting with our environment, the AAP and their merry band of fear mongers renders their message into scientific gibberish. Unfortunately, they give the misleading impression that lead is an out-of-control health crisis in this country. From our daily life, those of us with some common sense know that's not true, and the data confirms that it's not true.
Fundamentally, the CPSIA is fatally flawed because it eliminates all semblance of safety risk assessment from the CPSC tool kit. Were the CPSIA appropriately written in the context of risk assessment, none of the overreaching provisions of the law would have seen the light of day. The AAP testimony recounts the one recent documented lead death, the notorious incident in Minnesota where a four year old child died from ingesting a lead bangle from a bracelet. Notably, for all the Congressional hysteria over lead-in-paint, CPSC recall records indicate only ONE claimed injury since January 1, 2007. Frankly, all of this makes sense to those of us residing in the real world. Even the well-accepted risks posed by lead jewelry and lead-in-paint are very unlikely to cause injury in reality. Lead-in-substrate, as the ATV example shows, is FAR less likely to cause injury from lead. This is why the CPSC had only one recall even linked to lead-in-substrate since January 1, 2007 (a curious case, too) - lead-in-substrate does not typically cause injury. Seen in the context of unavoidable daily intake of lead from consumption of food and water and interaction with our environment, the risks posed by the products subject to the misconceived CPSIA are barely noticeable.
No one argues that lead does not have the ability to harm children. No one argues that lead should be consumed by children or that use of lead shouldn't be controlled in some fashion. However, the CPSIA goes way, way further and does incredible damage to commerce and to our quality of life in the process. The Children's Product Industry argues sensibly (recall that we are all parents, we live in communities and most importantly, we are in the "kid business") that spending billions and billions of dollars to eliminate lead from harmless products, terminate thousands of jobs, go out of business or drop tens of thousands of useful and well-loved products all to serve the master of someone's paranoid fantasy of widespread lead poisoning - is shameful, harmful and un-American. It's time to wake up and do something about this.
Are you listening, Mr. Waxman, Mr. Rush, Mr. Rockefeller, Mr. Pryor and Ms. Pelosi? And you, Mr. Obama? Will someone act responsibly and fix this incredible, embarrassing error of a law?
Sunday, April 12, 2009
As you may be aware, the ATV industry has been (justifiably) up in arms for getting swept up in the CPSIA nonsense. As they rightly point out, use of their products is incredibly unlikely to result in any lead poisoning issue. Thanks to an absurdly overreaching definition of Children’s Products, ATVs and dirt bikes were swept up in the CPSIA restrictions, and losses exceeding a billion dollars have reportedly been racked up by this innocent industry already. [The list of innocent victims goes well beyond the ATV industry, of course, but that’s a subject for another day.] Since many if not most members of Congress thought they were voting on a toy bill, the law of unintended consequences continues to dominate the CPSIA. [See below for evidence of this lasting confusion.]
The ATV industry is dominated by very large businesses who can afford to go through the exceedingly expensive and taxing process of pleading for an exemption from the law. That door is not open for us mere mortals, but they can afford to hire extremely expensive lawyers and scientific consultants to draft an exemption request. The statute requires that the decision to exempt items or materials that exceed the lead standards be based on “the best-available, objective, peer-reviewed, scientific evidence” that (essentially) no lead can be absorbed into the body as a result of interaction with the item or product (Section 101(b)(1) of the CPSIA). Despite the ATV industry providing scientific evidence that you would have to use an ATV for between 14 and 47 days to equal the lead intake of one Coffee Nip (my weakness, sorry!), the staff recommended rejection of the application (as the law requires). See the April 1 Staff reply and my blogpost on the same subject. [Ed. Note: I would note that 16 Nips come in a box, and that the sale and consumption of this candy is not restricted by law in any way. If one were to consume an entire box in a sitting, something which is probably not unprecedented and which might be a task well worth undertaking, the FDA’s lead limits for this candy would have you consume more lead than you might take in if you were to ride an ATV for almost three years non-stop. Come on, ATV Industry, what are you trying to get away with?!]
The consequence to ATV and dirt bike lovers of a rejection of their CPSIA lead ban exemption application is a total shutdown of their sport. Not only are new bikes now apparently illegal, but so are spare parts. Media coverage of this controversy reveals that dirt bike riders race on the weekends and repair during the week. No spare parts, no racing. And to compound the misery and the pathos, child-sized ATVs and dirt bikes were a creation of the CPSC under the relentless pressure of our overseers, the consumer groups. Yes, in a delicious irony, those same arbiters of safety and corporate morality are responsible for the creation of the kid-sized ATV market, having demonstrated convincingly that children riding adult-sized ATVs are at risk of serious injury. Hmmm. I sense a dilemma. . . . As the Human Factors assessment of the ATV Exemption request states, “[a] bigger safety concern than lead exposure is that the elimination of youth ATV sales will most likely increase the number of adult ATVs purchased to be used by younger children; therefore increasing their risk of injury and death.” See above.
So the ATV industry is apparently toast – or is it? Turns out that ATVs and dirt bikes are rather popular in many parts of this country. One person noted in an article I read along the way that dirt bike racing is their kid’s “baseball”. Oh well, time to find another sport? ATV and dirt bike riders have not given up so easily and have mounted an impressive political pressure campaign that is apparently causing some feet in Washington to feel the flame of negative public opinion. On April 9, in a remarkable effort to satisfy his electorate, Senator Pryor submitted a letter signed by 28 frightened Senators who apparently need to satisfy the ATV industry (or find another job?). In this incredibly ambiguous letter, Pryor et. al. begs the CPSC to let them off the hook: “It is our view that the Consumer Product Safety Commission is empowered by the CPSIA to exercise its authority and enforcement discretion in a manner that ensures enforcement of the Act in a comprehensive manner while providing appropriate and common-sense relief to businesses and institutions.” Frankly, I don’t remember that provision. . . .
The Senators go on to drop an even more tantalizing morsel: “We further believe that you should aid industry and institutions with compliance on a PROSPECTIVE BASIS, and immediately promulgate information and guidance to help with compliance with the dictates of the Act.” [Emphasis added.] No one knows what this means. Some people initially thought this was the Senators’ hint that they wanted the CPSC to blow off the retroactivity of the lead and phthalates provisions, something that is craved by the ATV’rs (and everyone else).
A closer examination makes that unlikely. Consider, for instance, the “Dear Colleague” letter circulated by Senator Pryor to his fellow Senators. [The blank letter attached to the Dear Colleague letter is identical to the final signed letter.] Senator Pryor’s solicitation letter speaks volumes: “Much of the confusion and frustration regarding the CPSIA can be resolved by the CPSC. Within the CPSIA, Congress gave the CPSC the flexibility and authority to interpret the law in a common sense way by allowing the CPSC to exempt products from the lead ban that they determine do not pose a safety risk to children. [Ed. Note – Remember this assertion.] This approach preserves Congressional intent to keep children’s toys safe while allowing the CPSC to implement the law in a practical manner.” [Emphasis added.] In other words, Mr. Pryor is still laboring under the illusion (delusion?) that he voted for a toy safety law. No wonder he is puzzled by the angst in the ATV industry. [Maybe next time he should read the law before he votes for it.]
Okay, here’s a recap: ATV industry applies for exemption for products that pose no conceivable risk from lead. Since the law was carefully written to remove any concept of risk assessment, the CPSC professional staff recommends that the application be denied. Senators, under pressure from the ATV industry, send an ambiguous pleading letter to the CPSC to save them by utilizing a mysterious, as-yet-identified CPSIA section that grants the agency the power to do as it pleases. The vote which was due by rule on April 8 HAS NOT OCCURRED YET. So what’s the hang-up?
On April 3, Nancy Nord released her vote and statement early. In this letter, she indicates she will vote against the exclusion request as dictated by the law she has apparently read (see, Senators, how useful reading the law is?!) but also states that she will unilaterally impose an enforcement stay for a year and expresses the hope that during the stay, “Congress will consider how the law needs to be fine-tuned to address this serious child safety dilemma [referring to the likely switch of child riders to adult-sized ATVs.].” She goes on: "[The] lack of flexibility [to grant exemptions under Section 101(b)] was brought to the attention of Congressional staff working on the legislation during the conference process and it was confirmed this is what was intended." What?! I thought Senator Pryor said she could do whatever she needed to under the CPSIA to interpret the law in a common sense way. Oh yeah, I forgot, Nancy Nord was appointed by a Republican so she can’t read – and Senator Pryor can!
Or can he? Apparently, Commissioner Moore, a Democrat so he’s a good reader, is even more strident on the lack of CPSC authority to override the lead restrictions. You see, apparently Congress meant it to be this way. In his letter of March 3, Commissioner Moore leaves no doubt that he is 100% behind Ms. Nord in his reading of the law: “As presently written, I find it IMPOSSIBLE not to conclude that Congress intended [Section 101(b)] to be a VERY NARROWLY CONSTRUED EXCEPTION that does not allow for ANY absorption of lead into a child’s body.” [Emphasis added, just for fun.] Uh-oh, somebody’s not reading the script, Mr. Moore! Hmmm, BOTH Commissioners claim to have read the CPSIA and BOTH conclude there is no way out but to read Section 101(b) narrowly as written. Senator Pryor and his panicked friends think (hope) otherwise (but cite no specific CPSIA provision for us to read). For those of you scoring at home, please note: as to whether any products might earn an exemption under Section 101(b), CPSC staff has opined as follows: "Indeed, the Commission staff is not yet aware of any substance as to which the required showing can be made." Ah, a gaping hole that anyone can wriggle through!
Incomprehensibly, Mr. Moore lashed out at Ms. Nord for her apparent statutorily-granted exercise of common sense in a release to media (but not made public): “It takes a vote of both Commissioners to stay enforcement of a congressionally-mandated ban. . . . It is premature for the press, or anyone else, to take the unprecedented release by one Commissioner of their vote and statement [as] final agency action.” Oooh, cat fight! Let’s see, they both agree on the reading of the law but are fighting anyhow. A common sense pause by the Republican Chairman is greeted with upbraiding by the Democrat Commissioner. We are told, monotonously, by “leaders” like the Senator Dick Durbin, Representative Henry Waxman or the Consumer Federation of America and their merry band of consumer “protectors” that the solution is a new Chairman, so . . . so . . . all this will be straightened out? But the Commissioners already agree (their last 23 decisions under the CPSIA have been 2-0) so what will change? For now, the Commission vote on the ATV exemption request has been delayed with no due date announced.
[Ed. Note: Please see my blogpost on State Attorney General enforcement of the CPSIA. The law doesn’t require SAGs to care one whit what the CPSC thinks is right in the ATV exemption case. They have the independent right to enforce the law as they deem appropriate without coordinating or even informing the CPSC. In other words, under this law there are 51 CPSCs and by rule, the decision of one of them, the one actually named Consumer Product Safety Commission, is not binding on the other 50. This is not a theoretical problem, as the blogpost explains. In many ways, the drama over the ATV’rs is a tempest in a teacup. The final court of adjudication is the SAGs. All we have to do is get complete agreement among the 50 of them, changing every time there’s an election of course. . . . No problemo.]
So now what? Stalemate as far as I can tell. Possibly checkmate (be still, my heart). If Moore and Nord have a change of heart and vote to accept the exemption request, the world explodes. Why? Well, the ATV’rs are not the only victims of this idiotic law prohibiting the use of products which give off less lead in a month’s use than a piece of unregulated candy. Industries like apparel, footwear, crafters, toys, books, pens, libraries, etc. will take to the streets, and won’t go home until they have new representatives in Washington. I will be out there with them, too. A vote to let ATV’rs off the hook will be an incredible injustice to the rest of us.
If they DON’T let the ATV’rs off the hook, as the ridiculous law requires, then the ATV’rs have ALREADY announced their intention to punish these legislators. Notably, Missouri, Oklahoma and Nevada have all passed legislation in their State Houses demanding a stay of the CPSIA. The 28 Senators that signed Mr. Pryor’s mystery letter are clearly feeling the heat. The ATV’rs will burn down Washington. There’s no way out if they are rebuffed.
Should be an interesting week in Washington, don’t you think?
Saturday, April 11, 2009
Why just the other day, I was marveling at the analysis of the re-energized and resurgent CPSC in their review of the scurrilous application for exemption by the ATV industry and motorcycle industry. Okay, if you must ask, yes, they have lost billions under the CPSIA even though no one was ever hurt by the lead in the alloys they use, but heck, we’re talking about safety here! Incredibly, those people think the CPSC will let them off the hook even though they ADMIT use of their product will result in the intake of lead (!): “[The authors’” calculations [of lead intake from casual contact with their products] resulted in an estimated lead intake of 0.015 – 0.05 micrograms of lead per day. . . .” OMG! Do you realize that’s between 1.5 and 5 one-hundred-millionths of a gram of lead EVERY SINGLE DAY!
To put this in perspective, the exemption application authors note that this “intake of lead from motorized recreational vehicles would be well below background intake from food and water (i.e., for a 6 year old, about 2.2 μg/day from food and 0.6 μg/day from water).” [Emphasis added.] Yeah, so what, ATV industry?! The CPSC reviewers note that the FDA has a recommended 0.1 ppm of lead maximum level for candy. The mathematics of this is that in a single 7 gram piece of candy, such as the Coffee Nips I tend to enjoy, have as much as 0.7 micrograms of lead in them. [This explains why I feel stupider every day . . . but, of course, I tend to spend a lot of time thinking about the CPSIA and that could be another explanation.] In other words, my nightly Coffee Nip has about 14-47x the lead that a child might expect to take in from daily contact with an ATV. No wonder the consumer groups are so darned worried about ATVs!
You can stop worrying about this horror of this spectacle. The resurgent CPSC blew off the exemption request, as instructed by the CPSIA, to save the American public from a lead DISASTER: “Because the requestors’ report indicated that the children’s use of motorized recreational vehicles could result in the intake of lead, and therefore absorption, however small the absorbed amount, the staff’s initial recommendation . . . is to not grant the request. . . .” I don’t know about you, but I feel so much safer now!
In the same spirit, I want to pass along my Kafkaesque CPSIA Moment of the Week: In this link, you will enjoy the NBC report on Family Dollar Stores destroying kids' shoes because they didn’t have a safety test report on file. Notably, Family Dollar Stores does not deny the incident – they seem proud of their destruction of the shoes for lack of paperwork, despite the fact that a gentlemen in the aisle offered to buy the shoes to give to charity. Charities be darned, this is all about safety! You know the hazard, shoes in the mouth – that’s so typical of kids. . . . With Congress and the CPSIA to guide us, no doubt this scenario will be repeated time and again – to make us so much SAFER!
Ain’t America great?! Especially after we put Nancy Pelosi and Henry Waxman in charge.
Monday, April 6, 2009
Here's a quick question for you - remember back when it was possible to make capital gains? Which did you prefer, capital gains or ordinary income? Capital gains, of course, because they carry a lower Federal tax rate. Do you think that lower tax rate was an accident? No. The Federal government established the lower rate to encourage investment, and added a time element to make sure that investments were held in place for at least a year. Capital gains tax rates are economic incentives. The new CPSIA rules will affect behavior as much as any other economic incentive, like tax rates.
[Courtesy of http://www.despair.com/, a favorite site of mine!]
The CPSIA features a number of rules that affect cost and risk ("risk" is another word for "cost"). Do you think your business will change because of sharply rising costs? What is the impact of uncontrollable costs which can arise suddenly and without warning? Rational business people will organize away from such costs because random events (costs) are usually overvalued by conservative people (most people). Business people will respond to randomness by taking chips off the table. Economic incentives at work.
I worry about what our business will look like when and if all the ridiculous rules (and risks) in the CPSIA are allowed to mature and be implemented. Frankly, it's more horrible than I can imagine or care to. The new law will almost certainly make most of our products unprofitable at current sales volumes. How will we deal with that? A restructuring of our business to survive will be necessary. This is quite unfortunate since we have a sterling record of attention to detail and safety achievement. Those items don't deserve to die. No never mind, a rule's a rule. I don't know what form the reorganization would take, but one obvious reorganization is to cut down sharply on the product offerings (and cut overhead sharply) and reorient the business around high volume products only. This would be a total betrayal of our customers and our market, and I am not sure I have it in me. I have no good Plan "B" at this point which is why I am fighting the law. This option won't be available to all small businesses. Below a certain threshold, the only option will be consolidation - or closing down. [Starting a new business won't be easy, either, for the same reasons.]
Even if this economic incentive wasn't bad enough, there is the prospect of a snarling CPSC to deal with. Since folks like Commissioner Moore openly scorn us for not "anticipating" for years that this law would be passed precisely as it was written, I have been actively working with my crystal ball and Ouije board. Rick the Seer foresees an ugly, retooled CPSC out to protect the American people to death (an ironic turn of phrase, I know). After all, if the new leaders appointed by the Democrats actually think that books, pens, sweaters and ATVs might be dangerous sources of lead, actually endangering lives (this ignorant attitude is entirely foreseeable), then the agency can be expected to be merciless in patrolling the markets. With this terrible vision in mind, how should I prepare? Fear of a lean, mean, enforcing machine CPSC is an economic incentive. Businesses will change as a result.
Many people will exit once this vision becomes reality, and some might leave in anticipation. Those that remain would have to get their act together. What might that mean? Again, all roads to lead to Rome - smaller product lines with higher volumes. Only a simple business model can be run predictably inside the lines at all times. In a fault-intolerant environment, especially one supervised by people that cannot distinguish between risky behavior and meaningless infractions, the only way to preserve wealth (and jobs) is to never make a mistake. This can only be done with a simplified business model. Again, goodbye specialty markets. Not sure I can do this. It's a maddening prospect.
Another economic incentive is joy in your work. Yes, you know what I mean. We are not put on this Earth to work, and many of us feel we have choices as to how we spend our time. We can do anything to make a living. I, for one, take great satisfaction from making the world a little better place by developing and supplying great educational materials. I want to spend my time on making our organizations great contributors to society. I do not want to live a Dickensian existence pushing mounds of paper back and forth in satisfaction of Congressional Democrats' notion of how to properly protect children. I would find that kind of business environment suffocating and unrewarding. Some economic incentives are not measurable in dollars. It's a basic principle of Micro Economics that people make economic choices to maximize happiness, and naturally only one element of happiness is your bank account. The CPSIA creates very negative incentives in the happiness column for me. If I felt differently about the safety impact of the law, I might feel differently, but I don't - the law will have no positive effect on safety and may in fact result in worse safety for children. When the law ultimately makes our business so unpleasant to operate that all the joy leaves it, we will leave it, too. We don't have to do this.
Finally, the CPSIA creates an economic incentive with its blinding complexity. The predictable inability to handle complex chores accurately leads to elevated costs from the risk of unpredictable failure. Most business people insist on predictability. Financial obligations only make sense if you are confident you will be able to meet them. The CPSIA is so complex it can't be learned and can't be taught - and the prospect of failure raises the likelihood of expensive problems under the new law. Businesses will respond to this feature of the law. It's an irresistible economic incentive - to exit.
The non-business people who know everything in Congress are busily ruining our economy with their rulemaking. As awful as the CPSIA is, we are not the only victims these days. For instance, Congress is currently engaged in destroying once and for all whatever remains of our financial services industry. Read all about Chris Dodd's "master stroke" on executive compensation: http://money.cnn.com/2009/03/06/magazines/fortune/colvin_bonus.fortune/index.htm. Here's a good one: the Federal government under TARP rules may get to decide where TARP fund recipients can eat lunch. Yes, it's in the law. The good news is that those new Burger King sliders are supposedly very tasty!
Where will this stop? Will the American people let these people ruin our country, right under our noses? We can only hope that the political backlash begins soon. Write your Congressman today and DEMAND that they support HR 1815 and Amend the CPSIA.
Sunday, April 5, 2009
As a retailer shouldn’t I now be saying to the child caring public at large that according to Congress, who of course knows everything there is to know, that all the toys, bikes, books etc. in everyone’s home are now unsafe, in fact they may kill your child, therefore:
“Throw it away” and “Don’t wait – do it now! – don’t leave your child at risk!!” So now you have an empty house and you need to buy everything all over again.
“Don’t let your child grow up to be ignorant – buy a book, after all you haven’t got many any more!”
“Is your child bored – buy him/her a toy today, after all you haven’t got any any more!”
“Is your child getting enough exercise – buy a bike, after all you haven’t got one any more”
and so on and so on…….!
In one fell swoop we have resolved the recession, helped all the big makers of these items whose taxable profits from this will help Obama give even more money to the banks and will have given our waste disposal workers and landfill operators enough work to last for years which means they will have to recruit thereby solving any unemployment problems!
“All power to the CPSIA”
Saturday, April 4, 2009
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.
Friday, April 3, 2009
Consumers Union was honorable enough to post my comment, along with 11 others similarly critical of their work. To blunt Joe Consumer's nonsense campaign, I reproduce here the actual CR Blogpost and my reply.
April 02, 2009
Businesses rally against CPSIA
We’ve reported many times on the Consumer Product Safety Improvement Act of 2008, a vital new law that helps ensure the safety of children’s products and revitalizes the beleaguered Consumer Product Safety Commission. The Act was signed into law last August by then-President George W. Bush after receiving overwhelming bipartisan support in Congress. It was created in response to the millions of toys, cribs, and other children’s products recalled for dangerous design flaws or dangerous levels of lead that injured and even killed children. But this week, more than seven months after the bill’s signing, some members of the business community staged a rally to ask that the CPSIA be amended.
Many who participated in Wednesday’s rally in Washington D.C. were industry lobbyists and representatives of large companies and of trade organizations that protested the effect of the bill on their businesses. Some who spoke at today’s rally, including Toy Industry Association President Carter Keithley, claimed that there are no health impacts from lead in toys. Others who spoke suggested that adult clothing was covered by the law, which is not the case. The lead testing restrictions apply only to children’s products. Further, some of the members of Congress who criticized the CPSIA voted in favor of the bill last summer.
The takeaway: The implementation of this law, which changes the way companies do business and makes a broad category of children’s products safer, has not been handled well. Congress expressly provided the CPSC, the agency charged with making the law work, the authority to address legitimate questions about its application. Unfortunately, the CPSC has been slow, if not downright reluctant, to provide timely exemptions or give clear guidance about the law’s actual requirements.
Folks with legitimate questions about the new law can and should certainly speak their minds, but it’s not okay when industry challenges the effects of lead on children’s health. It is absurd and flies in the face of good science. The American Academy of Pediatrics has repeatedly said there is no safe level of lead. That lead-tainted products crept their way back into the marketplace—even though lead paint was banned 30 years ago—is a clear indication that former laws and the agency that enforces them weren’t strong enough. It’s also disappointing that organizations such as TIA and the National Association of Manufacturers (NAM), which formerly embraced the new law, are now calling for widespread changes.
One point of agreement did surface today. Apparently, NAM agrees with consumer groups that the current leadership at the CPSC is responsible for the problems regarding the failure to issue timely guidelines or appropriate exemptions based on sound science. This is a major problem. Nancy Nord has held the position of Acting Chair since June 2006, after the resignation of Hal Stratton. The agency desperately needs new, more effective leadership at the helm—someone who will put consumer safety first, while also guiding the industry in its compliance efforts.
My comment on the CR Blogpost:
The Rally against the CPSIA on April 1 in Washington was no April Fool's joke. Efforts to marginalize the clear message of the Rally will not work. The CPSIA is misguided and misconceived in its precautionary "guilty until proven innocent" design. The ill-effects on industry and the children's products market cannot be jusified with vague assertions that the law solves some sort of public health emergency. The "emergency" does not exist.
Please note that you have made some serious mischaracterizations and factual errors in this "fact-checked" blog. First of all, you claim that the speakers were "industry lobbyists and representatives of large companies and of trade organizations". In fact, of the 20 Rally speakers (other than legislators), there were three speakers from trade organizations, namely the Presidents of the TIA, AAFA and NAM, and NO lobbyists. Every other speaker but one (the representative of Reckitt Benckiser) was from a small business or an individual. In other words, the Rally featured speakers from 16 small businesses or individuals, one large business, three representatives of industry organizations and no lobbyists. Your statement is misleading and untrue.
Second, you indicate that a "takeaway" of the meeting was that the problem was poor implementation of the CPSIA. In fact, that must be your opinion, but not the stated opinion of the speakers at the Rally. The message was clear and consistent among the Rally speakers that the problem is the law itself. Implementation was not the focus of these remarks. We were not pointing fingers at the CPSC either - but you are. In describing the Rally and then characterizing your opinion as the "takeaway", you suggest that we hold that view - which we do not.
Third, you mischaracterize the message of the scientists who appeared at the Rally, Dr. Barbara Beck, Dr. Rick Reiss and Dr. William Waddell. Each of these toxicologists reinforced the common wisdom quoted by Dr. Waddell: "The dose makes the poison." Dr. Beck clearly stated that we ingest more lead daily in our food than is likely ingested from use of many regulated children's products. You are welcome to review their remarks at our website www.AmendTheCPSIA.com. Again, you state your opinion as though it were a fact. This is misleading to your readers who trust your fact-checked blog for accuracy.
There are other, more minor errors or mischaracterizations, such as your assertion that some speaker claimed that the CPSIA applied to adult clothing (the President of the AAFA was the only speaker from the apparel industry and made no such claim), and your assertion that the 2007/8 recalls "injured and even killed children" (an analysis of recalls in this period from lead in children's products showed one death from swallowing a lead bangle on a bracelet, and one reported injury from lead-in-paint).
Finally, you also mischaracterize the remarks of the Rally speakers as endorsing YOUR view that Nancy Nord is at fault for the delays and failures to issue exemptions that you assert. I do not recall Ms. Nord's name or role being mentioned during any speech, and she was certainly not a focus of the day's events. Speaking for myself, I do not agree with your statement at all, and would observe that the data shows that Acting Chairman Nord and Comm. Moore have voted 2-0 in their last 23 decisions. It is hard to understand the reasons behind the finger pointing at Ms. Nord or at Republicans in general if the Commissioners are apparently acting in bipartisan unison. Is it because attacks on Ms. Nord make a nice diversion from an examination of the law itself?