CPSIA - Welcome to the Team, Gib!

In a fascinating turn of events, Gib Mullan has apparently left the employ of the CPSC and accepted the job of Chief Counsel of the House Committee on Energy and Commerce's Commerce, Manufacturing and Trade Subcommittee. This is the subcommittee which has jurisdiction over the CPSC (and NHTSA, currently being run by David Strickland, one of the drafters of the CPSIA). We live in interesting times, don't we?

Gib Mullan has had a long and illustrious career at the CPSC. Formerly a litigation partner at Kirkland & Ellis, Gib joined the CPSC as its General Counsel in 2004 and later became the Director of Compliance and Field Operations. In that latter role, Gib drew some fire in this space. Later, in something of a palace coup, he was "detailed" to the CPSC's Office of Executive Director and then "assigned" to a "special project" at Customs and Border Patrol. The Product Safety Letter questioned whether this was a legal maneuver by Chairman Tenenbaum as it was not accompanied by a Commission vote. In other words, PSL implied that Mullan was the subject of an illegal firing by Tenenbaum.

Hmmm. And now ex-Kirkland partner Mullan is Chief Counsel for the House Subcommittee responsible for the CPSC? And working for the Republicans?

Can you say "oversight"?

Sounds like fun!

CPSIA - Reasons to be Optimistic

With just a couple days left in 2010, a desolate year of long frustration, the new Congress is already stirring on the CPSIA front. On Thursday, January 6th, the Republican staff of the House Committee on Energy and Commerce is hosting a bipartisan working group session on proposed fixes to the CPSIA. I will be attending, as will representatives of many interested stakeholder groups. It is my understanding that the Democrats have been invited as have some of their consumer advocate group allies.

It is worth noting that this meeting will be held in broad daylight with both sides at the same table. It appears that the Republicans are making a statement about changes in legislative process as well as changes in law. I think it's high time that the legislative process emerge from the shadows and commend them for their approach.

It is also quite noteworthy that this meeting will take place on the FIRST day of the new Congress. The swearing-in ceremonies will take place on Jan. 5th in the afternoon. The next day the Energy and Commerce committee staff begin work on the CPSIA. You have to be impressed at the speed and seriousness that the Republicans are attempting to address this issue. Who says our government is broken?

The politics in Washington changed a lot at the midterm elections. Not only has the House changed hands, so the Waxman era ended, but elsewhere things are changing, too. In the Senate, perhaps a dozen Democratic Senators are facing reelection in this cycle and the Tea Party is still a major force. What will the likes of Mark Pryor think about their chances when their compadres (like Blanche Lincoln) have been so recently vanquished? Perhaps that will motivate a shift in approach. Will the Senate stiffen if a Republican House sends in a fair amendment of the CPSIA? The winds may finally be at our backs.

And then there's the White House. It's anybody's guess what's going on there, but there is reason to believe Mr. Obama is tacking toward the center. This is Clintonesque, a la 1994, and may be a trend that holds up. He has some tough choices to make, but the center may be a better place for him now. That suggests a greater willingness to cooperate with a bipartisan retooling of this law.

If Obama hugs the center line and if the Senate is feeling less unrelentingly liberal facing reelection in the Tea Party era, a serious amendment of this law is possible. It is even possible that these wave lengths will penetrate the CSPC Commission and all sorts of behaviors could change. O to dream . . . .

And we need the help, guys. The 15 Month Rule is a crisis waiting to happen, the testing and certification stay is due to expire on February 10 (in the middle of the Chinese New Year) and of course, there's the 100 ppm lead standard looming in August. There's a lot to address. Let's hope this can move along quickly and put an end to this sorry chapter in our regulatory history.

CPSIA - The Worm Continues To Turn

The day we all feared, the day we knew would come someday . . . well, the Federal Register says it's coming soon. According to a notice of "Final Rule Stage" published on December 20, the CPSC is moving forward on the so-called "15 Month" Rule.

You have to chuckle at the "15 Months" part. This rule was legally mandated to be enacted 15 months after the CPSIA was signed into law. The presumed date of enactment would then have been November 14, 2009, a mere 14 months ago now. They didn't even published a first draft until May 2010. If the agency can somehow finish this project by January 14, it could be called the "15 Months Times Two" Rule. Then again, it's basically inconceivable that they will make it. Eventually they'll need another name for this thing.

The urgency behind finishing up this rule is that the testing and certification stay expires on February 10, 2011. Remember that Bob Adler already said he wouldn't vote an extension of this stay because . . . he hates stays. Perhaps he prefers market chaos and economic depression instead. Anyhow, to avoid the showdown, they need to get their ducks in a row, hence the need to get this rule going.

I sent in comments on the first draft of this rule on August 3. I wasn't a big fan . . . and I guess other people had reservations, too. According to www.regulations.gov, the CPSC received 112 comments letters (that may overstate the number, because regulations.gov seems to have some duplicates). I haven't read them myself, but I assume I am the only one who saw any flaws in this rule. The rest of the letters are probably just "thank you" notes.

Anyhow, it's worth noting that the Chinese New Year occurs on February 3, 2011 so take my word for it, all the Chinese factories will be closed on Feb. 3rd and probably won't reopen until Feb. 10 at the earliest after a two-week holiday. Some workers are gone three or even four weeks for this holiday. In a "best case" scenario, the CPSC can't take action on this rule until they officially acknowledge the public comment "thank you" notes and hold a public Commission meeting. Do the math - if they choose to take action on this rule now, we will get about ten minutes notice to begin conforming. I can't see any risk of market chaos again . . . can you?

Here's a fairly obvious fact for you - we have not incorporated any of the pending rules into our supply chain or manufacturing processes. Why? You tell me what I'm supposed to do. The rule that has been published is deeply flawed and, basically, stupid. It is not a final rule. 112 comment letters were filed on it. It could change . . . it BETTER change. How am I supposed to implement rules that haven't been published or possibly even written? Telepathy? I don't read minds and I haven't implemented the unknowable, either.

If this does not make your blood boil enough, consider these excerpts from the notice of Final Rule Stage:

• "The U.S. Consumer Product Safety Commission is charged with protecting the public from unreasonable risks of death and injury associated with consumer products." [Emphasis added] The CPSIA makes consideration of RISK by the CPSC illegal. Bummer, huh? Someone should have told the CPSC because they still claim to be concerned with "risk" of injury.
• "When deciding which of these approaches to take in any specific case, the Commission gathers and analyzes the best available data about the nature and extent of the risk presented by the product." And then ignores it??? See also the final bullet below.
• "As for exemptions [from the "15 Month Rule"], the statute does not appear to give the Commission the authority to exempt firms from the testing or certification requirements, so it may not be possible to exempt firms within section 14 of the CPSA." In other words, HTA, you can lump it. And the CPSC is telling you who to blame - Congress.
• "The congressional mandate to issue this regulation does not require the Consumer Product Safety Commission to do a cost/benefit analysis for this regulation. Therefore, a cost/benefit analysis is not available for this regulatory action." Head-in-sand syndrome. I bet you'll be able to do a cost/benefit analysis pretty quickly when your costs go up again by 20x.
• "[It] is not possible to provide an analysis of the magnitude of the risk this regulatory action addresses." Ahem. And it's okay to put forward a rule of this complexity and far-reaching impact while flying entirely blind because . . . why???

Let's not forget that there's a new Congress being sworn in January 5th. The incoming Republican House majority has pledged to shrink the federal government and to closely examine how regulatory agencies are governing. Hmmm. Help may be on the way . . . soon.

CPSIA - Why Does The Press Push Bad Ideas?

Last week, Justin Pritchard of the Associated Press again pressed the point that glassware with lead in the enamel should be recalled. He expressed shock at the "stunning" news that the CPSC reconsidered its view that the glasses are subject to the noxious lead regulations of the CPSIA.

Why did Mr. Pritchard find this outcome "stunning"? After all, in response to a question about the risks involved in the glasses, Pritchard had this to say in a TV interview: "The [lead and cadmium] levels are low in the sense of . . . no one is going to touch this glass, put their hand to their mouth and fall ill. This is a low level over time concern." If the glasses are a low risk, why would he expect a federal regulator to waste time or resources on them?

Even more remarkably, Pritchard knows that the McDonalds Shrek glasses were found to be non-toxic by the CPSC. He broke the McDonalds story. The Shrek glasses present precisely the same "issue". He also knows lead is only restricted in children's products and that enamel coatings containing lead are permitted explicitly in the law (16 CFR 1303.2(b)(1)). There is no evidence that the presence of lead in the enamel has ever injured anyone. Ever.

So why is Pritchard continuing to push a story that he knows is defective? This puts it kindly. Let's rule out that he is seeking a Pulitzer or has an ill-motive. Why would he do this?

Of course, we know there is a bias in reporting and in investigating that favors reporting "bad news". Good news is not really considered news at all (except on the sports page). The media's incentive is to publish terrifying stories - it sells papers and banner ads, and it's natural for Congress to push legislation to save us from poorly understood threats as an extension of this trend. But something else is at play, it turns out.

This subject is analyzed in an interesting article by Jonah Lehrer in this week's New Yorker magazine entitled "The Truth Wears Off". Lehrer tries to explain why replication of scientific studies tends to show declining results over time. This is quite unexpected given that scientific studies are subject to peer reviews and are often published by periodicals with their own high standards of review. Lehrer notes that in small studies, weird results can show up (such as a 1930's study which claimed that one Duke University student had ESP but later retesting revealed the student's rapidly diminishing extrasensory powers . . .). In larger pools of data, results revert to a mean (this is called "funneling"). However even statistical significance doesn't explain the phenomenon. Lehrer shows that we only get to see certain slices of data. Most data won't be published because it's not interesting or doesn't confirm prejudices.

Put into a CPSIA context, Lehrer implicitly argues that media won't write a story announcing that lead-in-enamel on your glassware is safe. Nor that you were always fine and your children weren't in danger. Nor that there have been few injuries from lead in any children's products. Nor that the few known injuries in the context of the large volume of products in use is actually a GOOD result. Nor that there are no identified victims of "phthalate poisoning" or that incidents of cadmium poisoning in American children are virtually unknown. The excuse - it's not "newsworthy". What's the reality?

The reality is that we are exposed to a very imbalanced set of data. Quoting Michael Jennions, a biologist at the Australian National University, Lehrer argues that "the tendency of scientists and scientific journals [is] to prefer positive data over null results, which is what happens when no effect is found." If the null set (the "everything's fine" news) doesn't get reported, what does? Says Richard Palmer, a biologist at the University of Alberta, "We cannot escape the troubling conclusion that some - perhaps many - cherished generalities are at best exaggerated in their biological significance and at worst a collective illusion nurtured by strong a-priori beliefs often repeated."

The same mantra over and over? The words "Rachel Weintraub" suddenly pop into my mind.

Lehrer continues: "[T]he problem seems to be one of subtle omissions and unconscious misperceptions, as researchers struggle to make sense of their results. Stephen Jay Gould referred to this as the 'shoehorning' process." Referring to studies in Asia that consistently confirm that acupuncture is effective, and studies in the West that show much poorer results, "Palmer notes, this wide discrepancy suggests that scientists find ways to confirm their preferred hypothesis, disregarding what they don't want to see. Our beliefs are a form of blindness."

Or to quote Robert Adler, anecdotes aren't evidence.

John Ioannidis, an epidemiologist at Stanford University who once published a study entitled "Why Most Published Research Findings are False", calls the phenomenon "significance chasing" where scientists play with numbers trying to find "anything that seems worthy". In a news context, this is the same as Pritchard fingering the Super Hero glasses on the grounds that there is lead in the enamel even though he knows the Shrek glasses were safe. Maybe these other glasses are a problem?! Jeff Plungis of Bloomberg published an article on lead in Christmas light wires on December 8th because he apparently thought it was "interesting" and not well-known. Same thing.

Ioannidis says "It feels good to validate a hypothesis. It feels even better when you've got a financial interest in the idea or your career depends on it. And that's why even after a claim has been systematically disproved . . .you still see some stubborn researchers citing the first few studies that show a strong effect. They really want to believe that it's true." [Emphasis added]

Lehrer's article is a great read, I recommend it to you.

So you can stop scratching your head. Pritchard and Plungis, Adler and Tenenbaum, Waxman and Schakowsky, Weintraub and Green, will all continue to beat the same drum. They know they're right . . . they just can't prove it. And they will continue to repeat themselves in spite of the facts of this case:

• There are (virtually) no known victims.
• The impact of the law cannot be measured.
• The nexus between lead in children's products and purported injury to children is not proven. This means that the inclusion in the law of so many formerly unregulated categories of goods is absolutely unjustified.
• The benefits of prophylactic testing has been disproved by the passage of time - the last 29 months.
• The law targets small business and lets big business off the hook. Even since passage of the CPSIA, it is clear from data that big business are responsible for headline recalls.

I guess the media keeps on publishing these stories because it's human nature. Unfortunately, many jobs and many futures have been damaged in the service of a human weakness. I like to think we can rise about such limitations. It is in the hands of the CPSC and Congress to solve this problem.

Let's hope they do their job . . . sometime really soon.

CPSIA - Taking Advice from Idiots

In a recent article entitled "Advice on avoiding a toxic Christmas", USA Today attempted to take Christmas paranoia to new heights. Naturally, the premise of the article is that companies are criminally irresponsible or venal and certainly can't be trusted, and consumer advocates and any pediatrician that will talk to a reporter are better people, better informed and by definition trustworthy. In this article, USA Today's Liz Szabo consults "experts" to reach the following conclusions:

a. "No one knows how much lead people absorb from holiday decorations, says pediatrician Bruce Lanphear, of Canada's Simon Fraser University." And if he said it, it must be true. [Of course, pediatrician Philip Landrigan, of Mount Sinai School of Medicine in New York, notes "In the whole scheme of things, is it a huge risk? No."]

What's the problem with Xmas lights, you say? Lead in the PVC. According to Alicia Voorhiess, a mom with a blog, manufacturers "use it" in the PVC. Right - you got us! Don't worry, though, after much digging, she found two companies that offer Xmas lights which comply with Restriction of Hazardous Substances (RoHS), a European standard which limits the presence of lead in lights.

Ummm, Alicia, RoHS is a standard to designed to prevent leaching of heavy metals to protect the environment and only applies to electronics. This MEANS that the lead is restricted in the bulbs and fittings, not the PVC. Whatever, it sounds safer, doesn't it?

The author of the article quotes Dr. Alan Greene (my college classmate) saying that you should handle your Xmas lights with gloves. Why stop there? Moon suits, anyone?

b. Artificial Christmas trees are made of PVC, too, and we know what manufacturers are wont to do with PVC. The solution - use a real tree grown without pesticides.

I find this a most uncreative solution, myself. Here's a few more:

• Post a picture of a beautiful tree near the spot you might have placed your tree. Keep it away from the fire, however.
• Consider just displaying your Xmas lights in their packaging. No touching!
• Use an artificial tree, but place under a glass enclosure or something air tight like Saran Wrap. Stand at least five feet away at all times.

All of these remedies will protect you from lead. That said, please remember there is NO safe level for lead. And a holy, jolly Christmas to you, too!

Shame that USA Today didn't focus in on the fact that there is lead in the air, in our water and in our food. OOPSIE! In fact, lead in water is conveniently piped into Washington, D.C. homes for kids to drink in their own bathrooms and kitchens. Nice! Somehow USA Today missed this. Shocking . . . .

c. Candles with metal wicks might also have lead in them, or then again, maybe they won't. In a blow to poorly-researched newspaper articles, the CPSC apparently banned these wicks in 2003. Who knew the CPSC actually tried to its job before the CPSIA? Somebody should have told Congress.

According to this all-knowing newspaper, candles also contain paraffin, a wax made from petroleum. Not sure why I should care about that, but it sounds ominous. And some fragrances in candles have phthalates in them "which can affect the hormonal system". Isn't knowing nothing about science FUN???

The solution - The author of this article actually recommends that you use pure beeswax candles. Happy hunting! They also suggest you "poke cloves into oranges". Ah, the old clove poking trick! That sounds like fun but IS IT SAFE? This article says oranges have lead in them. NO! And, for an extra kicker, it also says they have cadmium, too: "If the soils contain toxic metals like lead, mercury and cadmium then the consumers may be poisoned as happened in the "Ouchi-ouchi" disease in Japan . . . and similar episodes." Wow, Ouchi-Ouchi! Scott Wolfson, do you hear a bell ringing? [Eating oranges didn't cause "Ouchi-Ouchi" but then again, researching these things is sooooo time-consuming.]

So there you go. Skip Christmas this year, too dangerous. I wonder if a Festivus pole is lead-free . . . .

CPSIA - Fred Upton Wins Republican Nod on Energy and Commerce Committee

Rep. Fred Upton has apparently won steering committee endorsement as Chairman of the House Committee on Energy and Commerce. This means he will in all likelihood be appointed as Chairman tomorrow, succeeding Henry Waxman in the next Congress. While Upton's ascendancy comes in a victory over Rep. Joe Barton, a longtime and ardent critic of the CPSIA, it is not thought to reflect any reduction of support among Republicans for a significant CPSIA amendment.

Hope springs eternal. Help may finally be on the way!

CPSIA - Canada Tries to "Out-Stupid" Us - Is that EVEN Possible?

When I went to Toronto one year ago to attend the international ICPHSO conference, I came away impressed with the sensibility of the Health Canada folks. They were grounded, they were calm and reflective, they seemed to understand that the CPSIA went too far and was not needed as the basis for Canadian law. I left with a sense of admiration and confidence in them.

And one year later - they are showing troubling signs of declining IQ points, a possible sign of lead poisoning! In a stunning turn of events, Canada apparently has decided to play one-upsmanship with the United States. Not satisfied at losing in the international arena of regulatory lunacy, Canada proceeded to tighten up our oh-so-loose CPSIA lead standards.

Editorial Pause Here - Someday I want to see governments everywhere refer to INJURY STATISTICS when they call for new laws to make people safer. To figure out if people are "unsafe", one must certainly know if they are being injured . . . right? You'd really want to be able to measure that, wouldn't you? Please tell me you understand this point . . . . Soooo, if one chooses to argue that we are harming children with "too much" lead in children's products, isn't incumbent on the accuser to demonstrate in some meaningful way that the harm we will spend zillions to "eliminate" actually exists, you know, at a bare minimum? Shouldn't we demand a higher standard of justification than "it stands to reason"?

Back to Canada - Canada announced on November 29th "the most stringent rules in the world" on lead. The Canadians have decided that lead limits should be 90 ppm for toys and any product other than a kitchen utensil intended to come in contact with the mouth for children three years old and under. They will also join us at 90 ppm for lead-in-paint.

Please recall that the dirt in Mr. Obama's backyard tested for lead at higher levels than 90 ppm. His DIRT. So now we know he won't be able make toys or teething rings out of his dirt and sell those products in Canada. Finally, the menace is contained!

So why did they do this? "Health Canada says the new limits are needed because while reputable companies do their best to ensure lead has not been added intentionally to their products, companies can still run into trouble with quality control when importing huge volumes of goods in complex supply chains."

Oh, I see - it's the fault of darkest China! Good Canadians wouldn't do this but those evil people in their complex supply chains - they can't be trusted.

I would toss this off as some kind of joke other than the fact that this creates a massive business problem for us. And, of course, after the cynical and ignorant politicians get past congratulating themselves on saving the populace (from what?), there will be great mystery about what happened to variety of playthings in Canada or why educational products are much harder to find. What a mystery that will be!

As an American supplier of many Canadian school supply dealers and Canadian schools (we make Canada-specific educational products), I want to note that we have never had a single accusation of injury in Canada from any of our products since we were founded in 1984. I do not relish attempting to meet this asinine standard, lower than the loathsome U.S. standard of 100 ppm due to come into being in August for no particular reason other than to kill jobs. Will anyone feel sorry for me when we get our first test report showing lead levels of 93 ppm on a single part in an assembled toy? In other words, compliant with the U.S., but 3 parts-per-million above the arbitrary trace standards of Canada? Nah, it will be ours to savor - no one will care. We have to make children safe, safe, safe and who could put a price of the safety of our children?!

I don't know how long we will sell products for kids under three in Canada if this law goes forward. Perhaps the Canadians figure the kids can start to be educated after three.

Maybe Canada really has a chance to out-stupid us if they keep this up. Bully for you, Canada! And I thought it couldn't be done . . . .

CPSIA - My Written Testimony at Senate Hearing 12-2-10

As you may know, there will be a Senate CPSC oversight hearing tomorrow. The hearing will be held by the Subcommittee on Consumer Protection, Product Safety and Insurance of the Senate Committee on Commerce, Science and Transportation. You can see the witness list here. The subject of the hearing is "Oversight of the Consumer Product Safety Commission: Product Safety in the Holiday Season"

I have submitted the following written testimony. I will not be testifying at this hearing.

STATEMENT OF RICHARD M. WOLDENBERG
Chairman, Learning Resources, Inc.
Vernon Hills, Illinois

December 2, 2010


As an operator of a small business making educational products and educational toys, I have had a front row seat for the implementation of the Consumer Product Safety Improvement Act of 2008 (CPSIA) by the Consumer Product Safety Commission (CPSC). On the occasion of your CPSC oversight hearing, I want to highlight the economic damage wrought by the CPSIA without achieving any material improvement in safety statistics. I also want to bring to your attention the open hostility of the CPSC toward the corporate community in the implementation and enforcement of the CPSIA, and conclude with my recommendations for legal reforms to restore common sense to safety administration without reducing children’s safety.

Children are our business. As educators, as parents and as members of our community, we have always placed the highest priority on safety. We would not be in the business of helping children learn if we didn’t care deeply about children and their safety. The CPSIA has dramatically impacted our business model, reduced our ability to make a profit and create jobs, pared our incentive to invest in new products and new markets, and generally made it difficult to grow our business. We would gladly accept these burdens if the law made our products safer, but the fact is that it hasn't. Our company, Learning Resources, Inc., has recalled a grand total of 130 pieces since our founding in June 1984 (all recovered from the market). Our management of safety risks was highly effective long before the government intervened in our safety processes in 2008.

The precautionary approach of the CPSIA attempted to fill perceived “gaps” in regulation by making it illegal to sell children’s products unless proven safe prior to sale. Yet the law has yielded few quantifiable safety benefits other than a reduction in recent recall rates for lead-in-paint (already illegal in children’s products for decades). Ironically, this progress in reducing recalls has taken place in a 27-month period in which, like the time before the CPSIA, testing of children’s products prior to sale was not mandatory. Consumer confidence wasn’t dented by the lack of mandatory testing. The justifications for the over-arching and excessively expensive CPSIA regulatory scheme just don’t hold water.

In any event, the reduction in recall rates is only a minor triumph and was not due to mandatory testing or harsh new lead standards, but most likely a (hyper) energized regulator and a great deal of publicity. Recall statistics can be highly misleading because the rate and number of recalls depend on many factors and do not generally correlate to injuries to children. In other words, product recalls are not tantamount to childhood injuries. The purpose of the CPSIA is to reduce injuries, not product recalls – yet CPSC recall statistics show that there have been almost no reported injuries from lead or phthalates in children’s products in the last decade (one death and three unverified injuries from 1999-2010, all from lead or lead-in-paint). The billions of dollars now being spent by the corporate community annually on testing and other compliance activities have not reduced injuries – there weren’t any to reduce. Whatever peace of mind has been generated by lower recall rates comes at a very high price.

The CPSIA significantly broadened the reach of federal safety regulation well beyond what was needed to deal with the lead-in-paint toy violations of 2007 and 2008. Under the CPSIA, the definition of a “Children’s Product” subject to regulation now encompasses ALL products designed or intended primarily for a child 12 years of age or younger (15 U.S.C. §2052(a)(2)). This definition ensures that virtually anything marketed to children will be subject to the restrictions of the Consumer Product Safety Act (CPSA), irrespective of known or quantifiable risk of injury. Put another way, this definition ensures that many product categories with a long tradition of safety are now subject to the withering requirements of this law for the first time simply because they fall within the overly broad definition of a Children’s Product. The affected safe products span the U.S. economy books, t-shirts and shoes, ATVs, bicycles, donated or resale goods, musical instruments, pens and educational products. The CPSC declined to use its discretion to narrow this definition in its recent “final rule” interpreting “Children’s Product”, thus ensuring continued market chaos and economic waste.

The consequences of the change in the consumer safety laws to a precautionary posture has had notable negative impacts and promises to create further problems, namely:

a. Increased Costs. The new law creates a heavy burden for testing costs. From 2006 to 2009, our company’s testing costs alone jumped more than eight-fold. We estimate that our testing costs will triple again after the CPSC (as anticipated) lifts its testing stay in 2011, and could multiply again if the CPSC enacts (as anticipated) its draft “15 Month Rule” on testing frequency and “reasonable testing programs”. Testing costs are often thousands of dollars per product. Having employed one person to manage safety testing and quality control for many years, we now have a department of five, including me, plus an outside lawyer on retainer. These jobs are funded by discontinuing sales, marketing and product development jobs – the CPSIA is NOT an ersatz stimulus program. Personnel, legal and other out-of-pocket safety expenses (besides testing) have more than quadrupled in the last three years – all without any change in our super-low recall rates or injury statistics.

b. Increased Administrative Expenses. The CPSIA requires that all products include tracking labels on both the packaging and the product itself. Rationalized as “analogous” to date labels on cartons of milk, tracking labels are in reality nothing but pure economic waste as applied to the vast array of “Children’s Products” under the CPSIA. As noted, our company has a virtually unblemished 26-year track record of safety so tracking labels promise to add little value in the event of recalls that are unlikely to occur. Ironically, with the strict new rules governing product safety, we believe the already low chance of a product recall has been reduced further. As noted above, the money to pay for all this administrative busy work comes from foregone business opportunities. We are being forced to shrink our company to apply tracking labels that no one will use.

An equally frustrating bureaucracy has sprung up around recordkeeping under this law. Burdensome requirements spawned by the government’s new involvement in our quality control processes forced us to make large new investments in information technology with no return on our investment. In addition, the pending CPSC draft policy on component testing promises to convert the simple task of obtaining a complete suite of safety test reports into a major recordkeeping chore. We will now be forced to manage each component separately, tracking test reports on each component one-by-one. This promises to multiply our recordkeeping responsibilities – and the related risk of liability for failing to comply – by more than an order of magnitude.

c. Reduced Incentive to Innovate. The increased cost to bring a product to market under the CPSIA will make many viable – and valuable – products uneconomic. To cover the cost of developing, testing and safety-managing new products, the prospective sales of any new item (“hurdle rate”) is now much higher than under prior law. This means that low volume “specialty market” items are less likely to come to market and many new small business entrants may find themselves priced out of the market. The CPSIA makes it much harder to start a new business serving the children’s market because the rules so heavily favor big business. Because of CPSIA transactional costs, high volume items now have a huge cost advantage over low volume items. This will hurt many small but important markets like educational products for disabled children. Our company, with its 1500 catalog items, is probably now a dinosaur under the CPSIA –the law provides a strong economic incentive to restructure our business around 50-150 items and to focus on high volume markets only. Schools would suffer from the loss of niche educational products.

d. Crippled by Regulatory Complexity. Our problems don’t end with testing costs or increased staffing. We are being crippled by regulatory complexity. Almost 28 months after passage of the CPSIA, we still don’t have a comprehensive set of regulations. Please consider how mindboggling the rules have become. There were fewer than 200 pages of safety law and CPSC rules that pertained to our business until 2008. These rules clearly defined our responsibilities and could be taught to our staff (in fact, many were rarely applicable to us). Today, the applicable laws, rules and interpretative documents exceed 3,000 pages. As a practical matter, it is simply not possible to master all of these documents – and yet it’s potentially a felony to break any of these rules. Sadly for us, the rules and CPSC staff commentary keep changing, are still being written and are rarely if ever conformed. How can we master and re-master these rules and teach them to our staff while still doing the full-time job of running our business? Ironically, the recalls of 2007 and 2008 were never a “rules” problem – those famous recalls were clearly a compliance problem. Imagine what will happen now with an unmanageable fifteen-fold increase in rules. No small business “ombudsman” can make that problem go away.

e. Small Business Will Certainly Suffer. The CPSIA was written in response to failings of big companies, but hammers small and medium-sized companies with particular vengeance. Our small business has already lost customers for our entire category on the grounds that selling toys is too confusing or too much of a “hassle”. This is our new reality. The highly-technical rules and requirements are beyond the capability of all but the most highly-trained quality managers or lawyers to comprehend. Small businesses simply don’t have the skills, resources or business scale to manage compliance with the CPSIA. For this reason, small businesses bear the greatest risk of liability under the law, despite being responsible for almost no injuries from lead in the last decade. The double whammy of massive new regulatory obligations and the prospect of devastating liability are driving small businesses out of our market.

In implementing and administering the CPSIA, the CPSC created a harsh regulatory environment for the business community over the past 28 months. Consider the following:

1. Unjustified Recalls. In June, in response to an inquiry by a Congressman and followed up by media inquiries, the CPSC pressed McDonalds to recall 12 million Shrek glasses for “high” cadmium content, despite the agency’s admission on Twitter that the glasses were not toxic. The recall effort was justified as being done “out of an abundance of caution”, a frightening regulatory standard when applied to products acknowledged to be safe by the regulator itself. McDonalds lost millions of dollars as a result, not to mention suffering from widespread and persistent bad publicity.

2. Unjustified Penalties and Coercive Tactics. The CPSC assessed a $2.05 million penalty against a hapless Japanese dollar store chain (Daiso) for five separate tiny recalls involving 698 units and 19 items. These items sold for between $1 and $4 each. There were no reported injuries from sales of the Daiso trinkets. Ms. Tenenbaum bragged about this extraordinarily excessive prosecution in a speech in March 2010 to the Consumer Federation of America: “We secured an injunction that completely stops Daiso from importing children’s products into the country. . . . Daiso has a very high hurdle to jump over to ever get back in the import business again.” Regulated companies take stunning examples like Daiso as a warning that outsized and disproportionate force may be used by this agency with little provocation.

The regulated community has also expressed alarm over the threatened use by the agency of unilateral press releases “to warn the public” about alleged dangers in specific products as a way to coerce “voluntary” recalls. Such threats have been used where facts may be in dispute to justify a recall. Under the law, the CPSC may only implement mandatory recalls subject to a court order, a slow process perhaps but also expensive and labor-intensive. “Voluntary” recalls can be much quicker and cheaper, only requiring “agreement” between the agency and the subject company. In more than one case, CPSC has threatened unilateral releases to try to "convince" a firm to undertake a "voluntary" recall but after the firm took the risk of standing up to the staff and the staff conducted further investigation, the CPSC decided that recalls were not even necessary. Not all firms can bear the expense of such a process or take the risk of calling the staff's bluff because issuance of a release would likely damage the firm and their brand, possibly irrevocably. Many supposedly "voluntary" recalls have resulted. Abusive tactics of this nature have severely damaged trust between the CPSC and the regulated community.

3. Disregard of Public Comments. The agency has garnered considerable criticism for overlooking or disregarding comments from the corporate community solicited in its public rulemaking processes. Ignoring or disregarding inconvenient public comments contrary to the agenda of the controlling party makes a mockery of the legally-mandated public comment process. Notable instances include the recent approval of interpretative rule on “Children’s Products” and the rules implementing the public database of safety incidents. The database debate was so fouled by the majority’s refusal to entertain the legitimate concerns of industry that the two minority Commissioners proposed their own draft rule – which the CPSC at first refused to post on its website.

4. Unjustified Hostile Rulemakings. The CPSC has implemented rules governing the public database that adversely affect the Constitutionally-guaranteed due process rights of our businesses. There is no adequate public policy justification for the erosion of the remarkable civil rights that distinguish the American legal system among all international legal systems – yet the Commission voted 3-2 to allow falsehoods to be posted without recourse in a database the CPSC will maintain. In other cases, the agency has published draft rules (yet to be acted on) which could force companies like ours to spend as much as $10,000 per item per year to meet ARBITRARY rules on testing frequency or “reasonable testing programs” – notwithstanding strong evidence that these rules are wasteful, unnecessary and financially irresponsible. The pendency of rules like this creates destabilizing market uncertainty and forces business decisions that have no basis other than fear of future regulation. For instance, Wal-Mart has already instituted a 100 ppm lead standard months ahead of the POSSIBLE implementation of the standard by the CPSC – simply because the CPSC has been so slow to act.

The CPSIA went off track by taking away the CPSC’s authority to assess risk. If the CPSC were again required to regulate based on risk, safety rules could focus on those few risks with the real potential to cause harm to children. All risks were not created equal.

I recommend several steps to reduce cost, liability risk and complexity all without sacrificing children’s product safety:

A. Mandate that the CPSC base its safety decisions, resource allocation and rules on risk assessment. Restore to the Commission the discretion to set age and product definition criteria for the 300 ppm lead standard and phthalate ban. Freeze the lead standard and lead-in-paint standard at their current levels unless the CPSC determines that a change is necessary to preserve public health and safety.

B. The definition of “Children’s Product” should not include anything primarily sold into or intended for use in schools or which is used primarily under the supervision of adults. Other explicit exceptions should include apparel, shoes, pens, ATVs, bicycles, rhinestones, books and other print materials, brass and connectors. Exclusions from the definition should take these products entirely outside the coverage of the CPSIA (including mandatory tracking labels).

C. Lead-in-substrate and phthalate testing should be based on a “reasonable testing program”, not mandated outside testing. The tenets of a reasonable testing program should be set by the reasonable business judgment of the manufacturer. Resellers should be entitled by rule to rely on the representations of manufacturers. Phthalate testing requirements should explicitly exempt inaccessible components, metals, minerals, hard plastics, natural fibers and wood.

D. Definition of “Children’s Product” should be limited to children six years old or younger and should eliminate the difficult-to-apply “common recognition” factor of Section 3(a)(2)(c) of the CPSA. Definition of “Toy” (for phthalates purposes) should be limited to children three years old or younger and should explicitly refer only to products in the form used in play.

E. Eliminate CPSC certification of laboratories (rely on the market to provide good resources). Fraud has only very rarely been a problem with test labs and is already illegal.

F. Impose procedural limits to insure fairness in penalty assessment by the CPSC under the CPSIA. Completely reformulate penalties to restrict them to egregious conduct (including patterns of violations), reckless endangerment or conduct resulting in serious injury.

G. Rewrite the penalty provision applicable to resale of used product so that violations are only subject to penalty if intentional (actual knowledge or reckless endangerment) and only if the violation led to an actual injury. Eliminate the “knowing” standard with its imputed knowledge of a reasonable man exercising due care.

H. Mandatory tracking labels should be explicitly limited to cribs, bassinets, play pens, all long-life “heirloom” products with a known history of injuring the most vulnerable children (babies or toddlers).

I. Public injury/incident database should be restricted to recalls or properly investigated incidents only. Manufacturers must be given full access to all posted incident data, including contact information. The “due process” civil liberty interests of the corporate community MUST BE PROTECTED.

I urge your committee to address the fundamental flaws in the CPSIA to restore order to the children’s product market and to protect small businesses from further damage. I appreciate the opportunity to share my views on this important topic.

CPSIA - Wingnut or Dingbat, You Make the Call!

Hey, it's her words - is Deborah Blum a "wingnut" or a "dingbat"? In her blogpost from earlier today, Ms. Blum takes Inez Tenenbaum to task for her sins in not clamping down HARDER on American businesses stupid enough to continue selling children's products. Ms. Blum is apparently a journalism professor at the University of Wisconsin.

As an aside, I must say I had the mildest twinge of sympathy for Ms. Tenenbaum after I read Blum's blogpost. This is not my usual emotion when thinking about the CPSC Chairman, but heck, there's no winning for her, is there? I don't want her job.

Ms. Blum's contention is so asinine that it hardly bears repeating except that apparently Twitter is alive with tweets and re-tweets of her blogpost. Her thesis is that Ms. Tenenbaum tolerates excessive amounts of lead in children's products and explains it thus:

"So I’ve come up with a nice little conspiracy theory. You and your business partners are tired of low-income consumers. They can only afford dirt-cheap crap from China, their purchases don’t add up enough to float the balance sheets. So, of course, you aren’t protecting them with tougher regulations. Of course, American corporations aren’t investing in safer products. Slowly but surely, one piece of jewelry, one pair of plastic boots at a time, you’re getting rid of everyone who doesn’t matter enough to be kept safe. Sure it sounds crazy. But is it any crazier than importing poisoned goods for almost ten years without looking for alternatives or better safety systems? I don’t think so. So who’s the wingnut now?" [Emphasis added]

Hey, Ms. Blum, I can answer that one - YOU are the wingnut.

Pot calling the kettle black, I think Ms. Blum shows why some blogs must be "discounted". She makes about every possible reactive error in assessing the lead "problem" in children's products:

• She confuses CPSC lead recalls (according to her, 289 since 2001 - "more than 30 recalls every single year") with lead injuries. Hysteria over the POSSIBILITY of injury without bothering to assess the PROBABILITY of injury is how we got into this mess in the first place. I am sorry Ms. Blum is so easily rattled but isn't the data on injuries relevant? I have documented one reported death and three unverified injuries from lead in this period of time. Should we turn our lives upside down to reduce that risk further? This only amplifies my call for a National Xanax Fund.
• She reasons from headlines but shows little mastery of the actual facts. She cites the recall of McDonald's Shrek glasses ("McDonald’s recalled more than 12 million “Shrek 3″ glasses contaminated with the toxic metal cadmium (and also a little lead)") but fails to note that the CSPC has acknowledged in WRITING that the glasses were safe. She also cites the AP's recent report of lead and cadmium in enamel baked on certain glasses, but fails to note that the AP also admitted that the health risk was low or that the presence of these heavy metals is LEGAL in enamels of this type. Congress did that, and how could we EVER doubt Congress?!
• Ms. Blum repeats the junk science notion that if lead is bad in some cases, it MUST be bad in all cases. She absurdly compares lead in enamel with lead in drinking water, and then asks why there aren't standards to protect adults from the dangers of lead in enamels. Ms. Blum, can I see your turnip truck?
• Ms. Blum plays the China card, a jingoistic line of reasoning used by blamestormers. We make many of our products in China, and I consider this kind of finger pointing a contemporary form of racism. I have a lot of experience with Chinese sources, and have good reason to trust our trading partners. Ms. Blum regrettably has no idea what she is talking about when she blames "China", as though we all buy from the government of China. We do business with other privately-owned companies, not "China". It may make the world seem less complex to equate "cheap" with "poor quality" or "dangerous". It is not accurate, however.

If the Deborah Blums of the world get the upper hand in this regulatory mess, they will solve the lead problem, I am sure. It won't be a solution you will like, nor will it be effective. Lead was here before Deborah Blum roamed the Earth and will here after she's gone - it's an ELEMENT, after all. No law can banish it, and no economy can survive if lead must be eliminated in all forms from all products, even in unharmful trace amounts.

She will succeed, however, in killing off all companies that make children's products. That will solve the "problem" she is apparently obsessed with, but will create other, more serious ones.

Let's hope we don't continue to slide down this slippery slope led by people who can't decide if they are wingnuts or dingbats. It's a tough call, I'll admit. She might be both.

CPSIA - Save "Lost Souls", Vote for the Slanderbase!

The semi-religious mission of the safety zealots was on full display in today's New York Times. In an article entitled "Deep Divisions as Vote Nears on Product Safety Database", the Times profiled the controversy of the pending public database final rule approval (due on November 24th in a rubber stamp Commission session), highlighting the idealist objectives of the database supporters. As per its typical leftist slant, the Times article gives scant credence to the legitimate concerns of manufacturers or the demonstrable consequences of the unrealistic Utopian vision underlying the CPSIA. After all, we manufacturers only care about money, right?

Every drama needs a hero, villain and victim. The public database controversy has all the right elements - manufacturers and Republicans as "villains", consumer groups and Democrats as "heroes" and consumers as "victims". Positioned this way, why would anyone ever support manufacturers? Who would want to even listen to the black hats? Hmmm. Good strategy, Naderites!

Consider the illustration used in the article - Michele Witte suffered the unspeakable horror of losing her child in a crib death. She asserts that the database might have saved her child. Perhaps that is true, perhaps it is not. Nothing can salve the wounds she has suffered . . . but that does not make the database a good idea. [I might feel differently about the database if, for instance, it was limited to deaths.]

The implication that the database is necessary to protect consumers is not a well-examined assertion. There is already a lot of data available to consumers. For instance, the CPSC maintains a massive national injury database called NEISS. A search of crib injuries on the NEISS database for 2009 (classes 1543-1545) reveals 572 reports which extrapolates into a national injury estimate (for 2009 ALONE) of 16,537 incidents.

Here are a few representative NEISS entries (the first five in the above sample):

- CHILD FELL 3 FEET OUT OF CRIB AND LANDED ON TILE FLOOR. CRIED IMMEDIATELY. D:CHI, FOREHEAD HEMATOMA.
- PT FELL WHILE TRYING TO CLIMB FROM HIS CRIB. LANDED ON L SHOULDER ON THE FLOOR. FELL 4 FT. CRIES WHEN PICKED UP UNDER ARM.
- PT FELL OUT OF HER CRIB AND STRUCK HER HEAD. NO LOC. CRIED IMMED. NOW ACTING NORMALLY.
- FELL OUT OF CRIB. DX HEAD INJURY
- PT STANDING UP IN CRIB, FELL BACKWARD AND HIT HEAD ON CRIB, NO LOC BUT MOM STATES PT HAD DAZED LOOK AND HAS BEEN LETHARGIC; HEAD INJURY

Did you learn a lot from this information? Can you verify that it's true? Can you see ANY issues with attaching (unverified) product identities to this unverified and uninvestigated data? Are you a plaintiff's attorney?

What are the zealots saying to justify their support of the database in the face of persistent and rational criticism of its design? Commissioner Bob Adler, former Henry Waxman staffer and longtime board member of Consumers Union, sums it up:

"Some folks are worried more about lost sales and not worried enough about lost souls."

So, in other words, Adler condescendingly asserts that people like me are only concerned with MONEY. Instead, he claims that what's really at stake here are "lost souls". What is Adler talking about? Here's what Wikipedia says about "souls":

"A soul, in certain spiritual, philosophical, and psychological traditions, is the incorporeal essence of a person or living thing. Many philosophical and spiritual systems teach that humans are souls; some attribute souls to all living things and even to inanimate objects (such as rivers); this belief is commonly called animism. The soul is often believed to exit the body and live on after a person’s death, and some religions posit that God creates souls." [Emphasis added]

Mr. Adler's POV makes the question of having a federal database a moral imperative. Wow, now that's a heavy decision - souls are at stake! Furthermore, Mr. Adler positions those who support the database as moral people and those who oppose it as immoral money-grubbers who prize financial well-being over the safety of consumers. Ugh. I would hate to be a Republican Commissioner voting against the final public database rule with Mr. Adler's curse hanging over my head! Ouch.

Catching on to the theme, Ami Gadhia of Consumers Union, chimes in: "It’s a slow death . . . . [The] information never gets out in the public.” [Emphasis added] Death . . . souls . . . database! Do I hear a new slogan???

CPSC Chairman Inez Tenenbaum, ever sensitive to criticism, archly defends the agency's effort to dialogue with people like me. Please recall that part of their "outreach" was to ask me to spend our company's money to fly to Washington, D.C. to give testimony on the public database. Matt Howsare, Tenenbaum's then Counsel and now Chief of Staff, told me that they needed more perspective from manufacturers and kindly asked me to prepare testimony. As previously noted, NOTHING that I said in my testimony was adopted or used in any way apparent to me. The NYT notes:

"The commission chairwoman, Inez Tenenbaum, disputed the idea that manufacturers’ concerns had not been properly considered. She said the agency offered numerous forums for comment and some of those ideas were incorporated into the final proposal. 'We have been abundantly fair,' Ms. Tenenbaum said." [Emphasis added]

Apparently, testimony at a CPSC hearing is meant as an outlet for venting, not for listening. That's "abundantly fair", we are assured. Makes you wonder what "unfair" might look like . . . .

[A Senate Commerce Committee CPSC oversight hearing is said to be in the offing for next week. One fantasizes that they may take an interest in this issue, but the Senate is still a Dem stronghold. Don't hold your breath. Expect self-congratulatory positioning by the self-serving and deaf Dems.]

Consumer groups are portraying manufacturers demands for Constitutionally-guaranteed due process and other appropriate procedural safeguards as a grab for "advantage". In other words, procedural safeguards for manufacturers are not legitimate protectible interests in light of the POSSIBILITY that consumers may glean some useful information among the garbage that will accumulate in the "post-it-and-forget-it" slanderbase being put up by the agency. Again, the NYT provides the bully pulpit for the zealots:

"Consumer advocates suggested the opponents were trying to weaken the database to protect business interests. 'They have a great deal now, and I think they are trying to maintain the status quo by levying these unfounded arguments,' said Rachel Weintraub, director of product safety for the Consumer Federation of America." [Emphasis added]

If ever-disingenuous Rachel Weintraub is saying that we Americans have a "great deal" because we enjoy the protections of the Bill of Rights and other Constitutionally-guaranteed rights protecting groups and individuals against persecution and excessive governmental power, I agree. I agree heartily - and don't want to lose those essential legal protections that form an important basis for our investments. Please REMEMBER, everyone loses something when ANYONE loses their legitimate legal protections. Btw, Bob Adler is a lawyer and a former Scholar in Ethics and Law at the business school at UNC Chapel Hill . . . .

Mr. Adler plays a little fast and loose with his database concepts. Apparently, it's okay to put garbage into the database because the government "disclaims" its accuracy:

"Mr. Adler, the Democratic commissioner, said the database was not meant to be a legal forum like a court but more like a catalog of consumer experiences. He noted that a disclaimer on the database said the commission did not guarantee its accuracy. ‘"I put my baby in a diaper and my baby developed a rash." That goes up. It’s an early warning system to alert other consumers,' Mr. Adler said."

Ahem: "But Ms. Nord said the proposal remained far too vague. She cited the recent case of Pampers Dry Max, made by Procter & Gamble, in which thousands of parents asserted that the diapers were causing their babies to get a rash. A commission investigation found no link between the diapers and the rashes. 'We would have posted all these complaints about them even though they proved to be wrong,' Ms. Nord said."

Any idea why the CPSC "must" put up such a controversial database? The zealots know that there is legal risk in hosting a database that may include erroneous information or information that might slander manufacturers or tortiously interfere with commerce. They know this might violate manufacturers' legal rights and could lead to lawsuits - and don't want the legal liability or the hassle. How to get the data and avoid the legal problems? Get the government to host the legally-dubious information! Clever - but not necessarily in the interests of consumers or American markets.

Is the CPSC supposed to provide Mr. Adler's catalog of "consumer experiences"? Is that part of its mission? [Readers of my blog know that] I realize we have a right of Freedom of Speech (check out the Bill of Rights), but is the federal government really supposed to foster that Freedom of Speech? I appreciate that Mr. Adler thinks a consumer "experiences" database is a really good idea (I disagree) but since when do our tax dollars need to be used to provide it? Is that the only option that makes sense? And that goes double for such a dangerous proposal that presents the realistic prospect of discouraging investment and other economic activity.

So many words wasted on people who won't listen. Expect a "spirited" debate on the database as foreplay followed by the 3-2 partisan screwing that masquerades as safety administration these days. The song plays on . . . .

CPSIA - Certainty, CPSIA-style

These days, you can count on the CPSC to hold against regulated companies, particularly in response to media inquiries. Facts are a secondary consideration. The WORST thing that could happen to you or your product is if a reporter calls the CPSC. You're cooked - safety administration these days is some sort of reality show, and everything's dangerous if a reporter is sniffing around.

And three years later, they'll hit you with a big penalty.

This week's crisis is the "discovery" by the Associated Press that some enamels used on glassware (the outside) have lead or cadmium bound in. The recall fo 12 million acknowledged safe Shrek glasses was the first indicator that we faced a "crisis".

Heavy metal use in glassware enamel is not exactly big news, nor a particular cause for concern (except for enterprising and paranoid reporters). Consider for example that our ever-wise Congress EXEMPTED these coatings years ago from lead regulation ("[The lead paint ban] does not include printing inks or those materials which actually become a part of the substrate, such as the pigment in a plastic article, or those materials which are actually bonded to the substrate, such as by electroplating or ceramic glazing." 16 CFR 1303.2(b)(1)). [You may also be interested to see all the other exemptions to the lead paint ban, in 16 CFR 1303.3.]

When confronted with the "shocking" news that other coated glasses besides Shrek had lead or cadmium in the enamels, the CPSC withered. They caved, and labeled these glasses (all very likely safe but featuring Super Hero images and the like) as "Children's Products". Here's a video of the reporter enjoying his 15 minutes of fame playing off the Shrek scare. He concedes that even HE thinks the risk is "low". No matter, it's good to stir up the mud. AP needs all the coverage it can get these days.

I am so happy we are being ruled by junk scientists now.

And the CPSC's determination that these products are "Children's Products" means they are subject to CPSIA regulation. This empowers the agency to recall them "out of an abundance of caution" and to impose penalties for failures to comply with the myriad rules of the CPSIA. No matter that this classification was hardly clear previously. Hmmm. Let's see how the mishmash interpretative rule on "Children's Products" makes this determination "clear".

I say "mishmash" because I defy you to figure this out for yourself by reading all the pages they threw at us. In fact, the latest "interpretation" in the so-called Final Rule does NOT seem to override the interpretive dicta in the prior version. It merely comments on the public comments that the agency by-and-large utterly ignored. The CPSC never bothers to reissue or conform past rules or interpretations. That's a job for us hobbyists.

In any event, it so happens that I addressed this very issue in my comment letter on the rule. The following section comes from the never-overwritten text accompanying the prior version of the rule. Consider this advice given to industry:

"The more of these types of characteristics that a product has, the greater the likelihood that the product is a children’s product. For example, a pen which is decorated or whose advertising and marketing features themes that correspond to obvious children’s interests, e.g., preschool characters, will greatly influence the purchase for preschool children. However, there also are ‘novelty’ pens that could appeal to children 12 years of age or younger as well as older children and adults; such novelty pens would not be considered to be primarily intended for children. For example, a simple ball point stick pen bearing an elementary school’s name, without any other decorations, would likely appeal to anyone (i.e. students, teachers, parents) connected with the school. A pen with a silly head on the top, not associated with any particular mass media (and not sold in toy stores), may have just as much appeal to adults as it would to children. Pens with puzzle features that allow the user to take them apart and reconfigure the design also are likely to appeal to children and adults alike, and thus, are not likely to be considered children’s products because they are not primarily intended for children."

Clear as mud.

Remember, we in industry must interpret this gobbledygook and run our businesses. Perhaps even more difficult is to use "rules" like this in agreement with your dealers. Basically, since the rules make no sense, it is not possible to agree with many or sometimes ANY of your customers. Welcome to my world.

It is extremely unfortunate that in the wake of conceding the safety of the Shrek glassware, and even worse, in the face of explicit exemptions of glazings in the FHSA, the CPSC would proceed to declare these items within the scope of its regulations, thus exposing yet another group of innocent companies to huge unexpected and unjustified losses. Brands will be further damaged, consumer confidence dented, and no doubt, sales of children's products will be bruised in the prime selling season. Good going, government!

This agency seems downright dense about the impact of its activities. For myself, this act proves that the CPSC cannot be trusted, has lost any sense of what constitutes safe or unsafe, and is dangerously reactive (especially in response to members of Congress and members of the press). For regulated companies, this is the worst of times - we face a looney regulator who is absolutely devoid of self-discipline or judgment. They administer a kind of "hang-'em-high" justice. If you are ever in the gray area with the CPSC, you can count on them to push you over the edge. Their rationale - you have to err on the side of safety even if you have no reasonable basis to suspect that any safety issues existed.

Okay, I get it. But when the regulator has no idea where "safety" is, erring on the side of safety means pleasing reporters who are trying to sell papers. Reporters sell fear - that's the only way to sell papers these days. Connect the dots - random losses are coming to all of us.

Selling children's products is for crazy people. I cannot believe the damage being inflicted by these people.

The database gets approved tomorrow. Enjoy the ride!

CPSIA - Database Questions Tell the Tale

We know that the Dems aren't listening to our concerns about the public database and we know they fully intend to move forward with their proposal this Wednesday. The outcome is so certain that the consumer groups can't resist clucking about it to the press BEFORE it happens. It's a set-up. Too bad for us . . . .

We also know that behind closed doors, the Dems are expressing little confidence that the database has any safety utility. Apparently, they have not acted to hire a SINGLE new employee to process or check the filings in the database project. "Post it and Forget it" is said to be their attitude. It is hard to see how this constitutes even the slightest effort to address the legitimate concerns of manufacturers in the database. Notwithstanding the assurances by consumer groups that we regulated companies have participated "fully" in the process of creating the rules of the database, this laissez-faire approach is hardly comforting.

Late last week, the agency released answers to Anne Northup's follow-up questions on the database. These answers give further perspective on what's at stake here.

A few nuggets:

a. To get some perspective on how many complaints might be posted, please consider the following annual postings:

National Electronic Injury Surveillance System (NEISS): 395,700 Injury or Potential Injury Incident Database (IPII) (misc filings to CPSC): 51,400 Death Certificates (data purchased from State governments): 3,600

Just a reminder, the CPSC hasn't hired anyone to process entries into the database. And don't forget, the CPSC plans a big marketing blitz on the database, encouraging consumer submissions. The foregoing data sources do not enjoy marketing support and still produce massive data submissions. Considering the liberal definition of who can file under the Dem proposal, the submission numbers could easily swell into the many tens of thousands per year.

The agency also concedes that the filings in the database may be much more detail-rich than the foregoing filings, only compounding the obvious issue. Garbage in, garbage out.

Too bad for us . . . .

b. The agency currently investigates less than 20% of "incidents" filed with the CPSC (2009 statistics). The pool of incidents totalled 16,000 in the most recent fiscal year, resulting in a 14% investigation rate.

NEISS is not investigated. IPII is investigated at a lower rate, with 51,541 reports in 2009 and 4,915 investigations.

The plans for the new database call for a 0% investigation rate (of accuracy). I am sure the CSPC will troll the database aggressively to investigate YOU but not to investigate the validity of the claims. Remember, manufacturers are always suspect, the submitters never are suspect.

Too bad for us . . . .

c. The CPSC has no idea how much time it will have to spend to investigate a claim of inaccuracy by a manufacturer. Of course, the odds of such an inaccuracy claim are reduced sharply by the limited data disclosure to manufacturers, making a rational claim of inaccuracy rather difficult. And as more consumers come to believe that filing with the database is a substitute for direct communication with manufacturers (or perhaps an even better form of communication, informing the manufacturer and the "cops" at the same time), the flow of information to manufacturers will degrade, making accurate and insightful assessments increasingly more difficult. No doubt trust between consumers and manufacturers will erode, too.

Too bad for us. . . .

d. Current database entry QC by the agency does not make "any judgment on the validity of concerns expressed by the submitter". Screening seems to be entirely comprised of searches for inconsistencies. They look for coding errors, among other errors. Some randomized checking against the original documentation is also conducted. Only about 4% of the data is bounced (of which, 40% are rejected as duplicates). The rest are bounced principally for being out of scope (beyond the CPSC's jurisdiction) or because no product type is identified.

In other words, the CPSC hardly ever catches any errors or fraud in database entries. Hmmm. Sounds very thorough to me.

The plans of the agency to review the data being included in the database does not include, as far as I can tell, ANY effort to verify accuracy - just to focus on the criteria for inclusion.

Too bad for us . . . .

e. NHTSA database provides contact information of the submitter to the manufacturer. The CPSIA database will NOT - because the CPSIA explicitly forbids it. That's call the "will of Congress".

It's also called stupid legislative drafting and a boneheaded idea.

Too bad for us . . . .

And the net effect of all these little problems? Will the Dems pause to consider the impact on markets? On small businesses? On safety in general? Perform a more open-minded cost/benefit analysis? Trim the database concept back until its value is better understood?

As Public Citizen tell us, we can scream from the rooftops all we want, but the Dems are marching forward. Who can complain, since we have participated "fully" in this process?!

CPSIA - The Scoop on the CPSC Database

In response to my last blogpost, a little bird contacted me with some thoughts about the public database that consumer advocates and their leftist political allies are cramming down our throats. Apparently, there's a big gulf between what the Commissioners are saying publicly and what they are saying privately. Take it for what it's worth.

While you might not agree with the POV purportedly adopted by the Dems below, it certainly portrays them as rational. I think that's right - they know what they're doing and are doing it by choice, rather than by coercion. The fact that their actions will be harmful to the regulated community is not lost on them, but we're just not their priority. THAT'S the real problem here.

Here's a few tweets for you:

a. While the Dems "support" the database, they are privately acknowledging that it is a colossal waste of time and staff resources. They do NOT believe the database will be full of useful information to anyone. Why should you believe this? According to a reliable little bird on my window sill, the CPSC has not hired even ONE person to process all the information that will be posted in the database. The reason - the leaders don't care if the data is correct or not. The phrase "post it and forget it" is their agenda.

Did you catch that? POST IT AND FORGET IT.

I believe I recall Rachel Weintraub touting the credibility and accuracy of this data. Hmmm. My so-and-so detector is going off . . . .

b. The driving plan of the Dems is to spend as little as possible on the database. They consider it a diversion of their scarce staff resources. They believe the database will do nothing - or almost nothing - to improve safety so why put money into it?

But they will vote for it - that's the price of their political patrons - and I guess the impact of this useless database on your business and your willingness to engage in business activities is none of their concern. So they'll implement it and fill it with garbage. Who cares . . . .

c. The speeches touting the database are intended to please the consumer groups and the political patrons of the Dems running the shop.

d. There is a recognition that allowing the database to swallow up resources at the agency will interfere with the real work of the agency. The Dems actually want to keep people safe so they are going to spend the bare minimum on the database.

The agency doing the bare minimum on the database should be the most frightening thing you have ever read about the database. And it's true.

You're not meant to know any of this. This freedom of speech thing is a real pain in the neck for our overlords.

It's time to get REALLY scared about the database.

CPSIA - On the Database, the Dems Side with the Liars

The vote on the noxious public database rule scheduled for the day before Thanksgiving (November 24) is a foregone conclusion. Says Rachel Weintraub of Consumer Federation of America: “There's majority support for the proposed rule, which we applaud.” [BNA, "Poised for Database Vote, CPSC Reschedules Meeting at Dissenting Commissioner's Behest "] Says Christine Hines of Public Citizen: “There is nothing they [Nord and Northup] can do about it except yell from the rooftops.” [ibid.]

Let's not forget, safety is not a partisan issue. Yeah, right.

But it's true - the Dems control this vote and are going ahead with their rule, damn the consequences. And there will be MANY terrible consequences. I testified about the database last year and laid out many problems (see my testimony here). Industry has in fact pointed out many issues with the database, such as (a) the consequences of inaccurate information, (b) the consequences of manipulative or misleading information posted by trial lawyers or competitors, (c) the irreversibility of damage from adverse publicity, (d) the database as a government-sponsored and administered feeding ground for plaintiffs lawyers, (e) the negative impact of encouraging consumers to disclose problems to a database which withholds information from manufacturers, rather than direct communication, (f) federal government intrusion to replace or supplant private market solutions, (g) the debasement of Constitutionally-guaranteed due process rights and other protections afforded to litigants and possible victims of abuse of government power, and (h) the likelihood that the database will severely punish small businesses while having only marginal impact on the intended targets, mass market companies.

This seems a bit treacherous for something is said to be so "good" for everyone. Is there a problem here with selective hearing?

How do the Dems justify their position? Well, first of all, they don't need to. Learning at the feet of Nancy Pelosi and Henry Waxman, the Dem Commissioners know that their voting power is all the justification they need. They have the votes, therefore they have a "mandate" from the voters, right? Why else would a Commissioner state publicly that anecdotes aren't evidence? Troubling details from little people don't matter anymore - not if the details might get in the way of the "agenda".

The Dems and their allies also hide behind the NHTSA vehicle defects database. I find this so interesting because the ever-attentive CPSC heard testimony that debunked this example (same hearing that I testified in a year ago). The NHTSA example can be distinguished in many significant ways: (a) auto accidents are a leading cause of death in this country (consumer products are not), (b) every use of automobiles is known to be hazardous (not true for consumer products), (c) the auto industry is one of the largest components of our entire economy - we all use cars and many of us owe our livelihoods to automobiles one way or the other (the average sale of consumer products is far less than a car), and (d) the industry is highly consolidated among a relatively small number of massive companies that are quite well-prepared for litigation and regulatory issues (consumer products is not a consolidated market). General Motors went public today, completing its recovery from bankruptcy and its $60 billion bailout. I think GM and other automakers can handle the burden and risk of a database of deaths and serious injuries from use of their products. Learning Resources, on the other hand, ain't no GM or Toyota. The NHTSA database sets an inappropriate example for consumer products for all of the foregoing reasons.

Providing further cover is the Rogue's Gallery of leftist consumer advocates who spin yarns to support the decisions of the Dem Commissioners. Many of their assertions are bald-faced lies.

Example No. 1: "'Right now, people can't easily find out about products that they may buy or that they use every day with their family,' said Rachel Weintraub, director of product safety for the Consumer Federation of America. 'This database will provide consumers with credible, accurate information.'"

This is two lies by Rachel Weintraub. First lie - consumers "can't easily find out about products". Really? I recently wrote about consumer comments on Amazon for a product that was recalled - is that so hard to find? What about ConsumerSearch.com? ePinions.com? Consumer Reports Forums? All the large volume online retailers allow consumers to post reviews. I think it's certainly true that consumer exchange of information online is both plentiful and easy to find. I also think it's also a matter of opinion whether the federal government has a role to play here in this exercise of free speech - particularly if in the process, the government tramples on Constitutionally-guaranteed rights of due process of other members of our community.

Second lie (more glaring): "This database will provide consumers with credible, accurate information." This is a doozie. From Section 1102.42 of the proposed rule: "The Commission does not guarantee the accuracy, completeness, or adequacy of the contents of the Consumer Product Safety Information Database, particularly with respect to the accuracy, completeness, or adequacy of information submitted by persons outside of the CPSC. The Consumer Product Safety Information Database will contain a notice to this effect that will be prominently and conspicuously displayed on the Database and on any documents that are printed from the Database." [Emphasis added] On the other hand, perhaps Rachel is on to something - by publishing unverified and untrustworthy data on a government-run database, it will certainly LOOK credible and accurate! Practically the same thing these days . . . .

I would observe that while this disclaimer is going to be widely posted on the database, the name of the site is SaferProducts.org. What does this name imply to you? I take away that (1) I should be scared of dangerous products, (2) this website is where I can find out the "truth", and (3) thank heavens for my government for making me safer (let's increase the CPSC budget!). Ahem - I thought the CPSC does not guarantee the accuracy, completeness or adequacy of the information in the database so why is the website called "SaferProducts"? Should I feel "safer"? Was I supposed to feel endangered before? That's the idea, kids.

But if Rachel says the postings are credible and accurate, there's nothing to worry about, right? Provides some nice cover for our leaders . . . .

Example No. 2: Says Ami Gadhia of Consumers Union: "Commission staffers have worked very hard to ensure that the database is fair to everyone."

Someone please define "worked very hard" and "ensure" for me. Please watch my testimony again and tell me what protections CPSC staffers designed for ME.

I interpret Ms. Gadhia's lie as connoting that "fair" to her views is tantamount to "fair to everyone". My interests don't matter. Besides, Rachel is sure everything will be credible and accurate. That sounds fair . . . even if it's completely untrue.

Example No. 3: Says Rachel Weintraub: "Every effort has been made to ensure that the information is accurate. . . . Otherwise, the database won't be useful to anyone."

Every effort, huh? Manufacturers don't get to talk to the person who files the report or to the victim or see photos or samples submitted. Only our government can be trusted with that information for reasons not clear to me. The carefully "vetted" reports must be sent out within five days to manufacturers. We live in a country with 300 million people. Are you telling me that the agency is going to carefully "vet" the reports we inundate them with in just five days? Perhaps they need hire a few hundred more highly-trained associates to push this paper.

You are more than welcome to read the proposed final rule to learn about the agency's proposed procedure to "ensure that the information is accurate". Read Section 1102.10 (page 227 in this 248-page document). But I think I can save you some time. The filer has to confirm that he's not lying ("A submitter of a report of harm must affirmatively verify that he or she has reviewed the report of harm, and that the information contained therein is true and accurate to the best of the submitter’s knowledge, information, and belief"). That's certainly foolproof. Among the various required redactions and other agency "oversight" of this data, you will NOT find anything like an investigation. They are simply scrubbing and re-publishing someone else's allegations. Under their procedures, they cannot possibly know if what they are publishing is true or false.

No wonder they disclaim accuracy, completeness or accuracy.

Example No. 4: Christine Hines of Public Citizen (from BNA): "She added that several hearings, workshops, and comment opportunities have provided the public and industry every opportunity to address concerns. 'Industry has participated fully in the entire process.'"

We, the regulated community, have had "every opportunity" to "address" our concerns. This apparently constitutes participating "fully in the entire process". This is much more than spin, this is another flat-out lie. You cannot assert that we have participated fully if we have been utterly ignored. The hearings were not for VENTING. As previously noted, Matt Howsare asked me to spend our company's money to fly to Washington to testify on this database - and then blew off every point I made. Small business concerns were almost explicitly disregarded. We cannot be said to have had "every opportunity" to address our concerns if the impact on small business could be sloughed off. Was Nancy Nord afforded "every opportunity" when she was gaveled silent in the hearing on the database?

This one isn't a lie: [from BNA:] "[Weintraub] said the CFA, like Public Citizen, supports the current version. 'We think [the database rule] strikes the right balance between Congress's intent and making the database usable while protecting manufacturers' interests,' Weintraub told BNA. The substitute rule would 'limit the utility of the database for other consumers and public health professionals in terms of unnecessarily limiting who can report,' as well as including other limiting provisions, she said."

Why isn't that a lie, too? Because she states that it is her opinion. She's wrong - but at least she's not lying this time.

The poison in the CPSIA is actually the handiwork of a small and energetic group of individuals, many of whom are featured here. They hide behind consumer-friendly sounding corganization names but are actually just troglodyte anti-business advocates. They are no less cartoonish than the way they portray us, but with the Dems running the CPSC, the "good intentions" of this group and the persuasive power of their phobias have the upper hand.

As all the consumer advocates say, the outcome here is hardly in doubt. But feel good about it - you have had "every opportunity" to address your concerns and have "participated fully" in the entire process.

Empty words and lies. That's what this mess has become.

CPSIA - Vote on Database DELAYED

The CPSC Commission vote on the public database scheduled for tomorrow has been delayed until the day before Thanksgiving (November 24th). Talk about Turkey Day . . . .

We have seen delays like this in the past. These pauses generally reflect infighting among the Commissioners. Don't be fooled by the squabbling - it doesn't mean that any light bulbs are going on. The Commissioners know exactly what they're doing when they install a database gift wrapped for trial lawyers. The Democratic majority and Republican minority may be on different sides but neither group is dumb - they don't buy the baloney that the leftist consumer advocates fling around - they know it isn't "extremely difficult" to keep your family safe from "dangerous products", they know that American consumers have many ways and places to share negative experiences with products online, they know that this venue will be an abasement of basic due process rights of manufacturers. They get it - they know they will be sending us down the river when they adopt this rule.

The difference is that the Republicans don't want to send us down the river. The Dems show absolutely NO SIGN of caring. The outcome of the vote is certain. So is the eventual loss of more jobs.

So what's the point of the delay? Why not just get it over with? The extra week gives them more time to bicker among themselves. Perhaps that gives the appearance of dialogue and "debate". Then they will pull the trigger.

You can guess where the bullet will go.

CPSIA - My Letter to Eric Cantor re CPSIA Over-regulation

VIA FAX (202-225-0011)

The Honorable Eric Cantor
United States House of Representatives
Office of Republican Whip
329 Cannon Building
Washington, DC 20515

Re: ”Delivering on Our Commitment” Letter

Dear Representative Cantor,

I am writing in response to your November 3rd letter entitled “Delivering on Our Commitment” in which you call for increased Congressional oversight of federal agencies legislating through regulations. My industry, the children’s product industry, is a victim of this kind of regulatory abuse. The Consumer Product Safety Commission's (CPSC) blizzard of new safety rules and regulations sharply ramps up government intrusions into markets by adopting the suffocating “precautionary principle” as its legal standard. This European-style approach to regulation, while doing nothing to improve the safety of products, is a job-killer and a business-killer plain and simple.

We really need your help!

In August 2008, Congress passed the “Consumer Product Safety Improvement Act of 2008” (CPSIA). The CPSIA had a noble purpose – to improve safety for children’s products by tightly regulating lead and phthalates (a plastic softener). It is a cliché now to observe that this flawed law was beset by “unintended consequences.” Unfortunately, Congress and the CPSC have been unmoved by the chaos that has ensued in the marketplace and the business community’s persistent pleas for relief. Small businesses are notable and well-documented victims of this law.

The children’s product industry, as defined by the CPSIA, goes far beyond toys and spans the U.S. economy. Children’s products under the definition of the CPSIA include ATVs, motorcycles, bicycles, pens, educational products, books, consumer electronics, apparel, shoes, jewelry, DVDs, furniture, musical instruments, carpeting and so on. Even the local resale shop and your own garage sale are now subject to new regulation under this law.

Our objections to this law do not reflect callousness toward safety. Quite the contrary, our industry’s lifeblood is children – and our outstanding safety track record befits an industry of caring adults. None of us want to endanger children. Likewise, we cannot tolerate being subject to laws that make operating our businesses unprofitable or exceptionally risky.

The CPSIA saga has become the poster child for “over-regulation”. While proponents of this safety law stress the possibility of injury to children (the curb appeal of the law), they fail to account for the probability of injury or prove a nexus between our products and the few known injuries. This is a critical distinction. While advocates argue that the so-called “Year of the Recall” justifies the arch new legal regime (473 products were recalled in 2007), the fact remains that children’s product recalls by the CPSC are associated with only one death (from a piece of leaded jewelry) and three unverified injuries over the 11-year period from 1999-2010 (according to published CPSC recall notices). By comparison, CPSIA compliance costs have been estimated to be more than $5.6 billion per annum.

We all agree that lead is a dangerous natural substance that can harm children – but the question is HOW. Other federal agencies, like the Environmental Protection Agency and the Center for Disease Control, point to house paint, industrial pollution and the residual effects of leaded gasoline as causes of elevated blood lead levels in children. The connection between lead in children’s products and injuries from lead remains undocumented. Daily intake of lead from children’s products is less than daily intake from food, water and the air, yet the CPSC remains undeterred.

Likewise, phthalates concerns remain highly controversial. The safety advocates have yet to produce a single known victim of phthalates – other than our businesses. Notably, since passage of the CPSIA in 2008, the agency recalled only one product for phthalates – 140 inflatable toy baseball bats. Even so, our company may have to spend hundreds of thousands of dollars on phthalates testing annually under the new law.

The agency’s response to lead and phthalates has been to impose a multi-billion dollar annual compliance cost accompanied by threats of heavy penalties, injunctions by the U.S. Attorney and possible felony charges. The agency’s obsession with lead and phthalates has led some staff members to refer to it as the “Children’s Product Safety Commission.” By comparison, the agency devotes few resources to swimming pools and spas, for instance, which account for more than one childhood death and between 11 and 12 serious injuries EVERY DAY according to the CPSC. I believe these confused priorities represent a subversion of the purpose of this agency under federal law.

Efforts to blunt the CPSIA’s impact have fallen on deaf ears. Sadly, Congress’ refusal to address the law’s shortcomings has only made the problem worse for the industry. Since passage, the CPSIA has been the subject of only one oversight hearing with a single witness, CPSC Chairman Inez Tenenbaum. There have been two other hearings, one by a subcommittee of the House Committee on Small Business and the other by a subcommittee of the House Committee on Energy and Commerce. Congress has never chosen to act on the many documented abuses of the business community under this law. The agency itself has held innumerable hearings and called for public comments again and again, but few objections of the regulated community have influenced outcomes. Votes on the Commission are now often on partisan lines – an abomination if one concedes that safety is not a partisan issue.

The regulatory nightmare of the CPSIA yawns wide in front of us. I testified before Congress in April 2010 that my company is now subject to more than 2500 pages of laws, regulations, rulings and other disorganized documents. Prior to the CPSIA, we were responsible to follow about 80 pages of rules, most of which did not apply to us on a daily basis. The total number of pages of applicable laws and rules now balloons far larger than Obamacare – and any violation of any sentence constitutes a possible felony offense under the terms of the CPSIA. We also must bear the risk that any of the 50 State Attorneys General might enforce this law if the CPSC defers. It is a regulatory nightmare of Orwellian dimensions. The CPSIA is an economic depressant by any definition.

The issues under the CPSIA fall into four categories: (a) Cost, (b) Complexity, (c) Legal risk and (d) Government intrusion. Our markets are now in total disarray because of the massive intrusion of the federal government along with scare tactics used by regulators trying to coerce compliance and, at the same time, obtain larger funding from Congress. Ironically, the more the agency uses the CPSIA to make us look bad, the more essential and irreplaceable they make themselves look. This perverse incentive is hard to combat. We need Congress to stop this madness.

The problems with the CPSIA and its implementation by the CPSC deserve much closer Congressional scrutiny. Our employees, our retailers and suppliers, and most importantly, the schools, teachers, families and children who want, need and depend on our educational products are counting on the new majority party in the House to restore sanity to federal safety administration.

Thank you for your urgent consideration of this matter. Please do not hesitate to contact me with any questions or comments.

Sincerely,


Richard Woldenberg

Chairman
Learning Resources, Inc.
380 North Fairway Drive
Vernon Hills, IL 60061

Chairman
Alliance for Children’s Product Safety