Friday, January 8, 2010

CPSIA - My Recommended Changes to the CPSIA

As the CPSC prepares its January 15th report to Congress on recommended changes to the CPSIA, I have also prepared my list. As though for Santa, I am checking it twice. Rumor has it that the Waxman amendment is percolating again, all without hearings, either of the Commission or heaven forbid, in Congress. That's open government for you. In any event, expect movement in the wake of this report. How much movement is the big question.

My list of changes is long. I have a separate list of non-legislative changes that I also recommend, which I will pass along in a future post. Please note that my list is not meant to imply any limitation on the agency's ability to respond to emerging threats or changing conditions. In that sense, each recommended change is intended to incorporate a power by the CPSC to alter it (expand or contract) according to a risk assessment process in the future. It is also true that some of these recommendations can be accomplished by agency rulemaking. As we have observed, that rulemaking is taking forever or is seemingly stuck . . . so I put them all on my list.

I have a couple of other important objectives underlying my recommendations. First, it is critical that the law provide economic incentives tailored to the actual drivers of market behavior. The current law gives little credence to the way business people make decisions or how they interact. The CPSIA takes the simpleminded approach of ultra-strict standards combined with draconian penalties. This is ironic, given that the 2007/8 recalls that incited this law were EACH violations of then current law. Thus, it was NEVER a question of standards - only of compliance with those standards. Compliance issues are complex behavioral issues. Simply ratcheting up penalties to the stratosphere won't change behavior much because the consequences of recalls were already very great. Something else is needed.

Second, we MUST assure that the agency is relieved of excessive bureaucratic burdens and distractions, and is given back the ability to focus on real threats. This means that we cannot always work within the context of the present CPSIA scheme, because it requires a great deal of wasteful investment by the CPSC. In addition, we must give discretion back to the agency. Congress needs to get out of the way and let the CPSC do its job.

My recommended changes to the CPSIA:

1. Restore the CPSC’s authority to base its safety decisions, resource allocation and rules on risk assessment.

2. Definition of “Children’s Product” should be limited to children 6 years or younger. The argument that young children play with the toys or possessions of their older siblings is not supported by statistically significant injury statistics. If children are not being harmed by this interaction, we should not have to spend billions on safety initiatives that will have little impact.

3. Definition of “Toy” (for phthalates purposes) should be limited to children 3 years old or younger. Human factors analysis by CPSC staff indicate that it is not age-appropriate for children over three to mouth their possessions. Again, there are no statistically significant injury statistics that support a contention that children over three have any material risk from mouthing toys.

4. Definition of “Toy” should explicitly refer only to products in the form used in play. This would eliminate uninflated globes from the mouthing rules. In addition, sleepwear should only be included in childcare articles to the extent the plasticized part of the sleepwear is intended or is reasonably foreseeable to be mouthed.

5. Definition of “Children’s Product” should eliminate the factor set forth in Section 3(a)(2)(c) of the CPSA. This change is intended to make determining which items are “in” and which are “out” more objective. The Commission already has in place age grading guidelines that supplant the “common recognition” factor and provide objective guidance.

6. Definition of “Children’s Product” should be limited to a narrow class of product, ideally just toys. There is no justification based on injury statistics to regulate apparel, footwear, appliqu├ęs, hair accessories, books, pens, bikes, ATVs, educational products, rhinestones and so on. Much of the morass befalling the agency over the past two years stems from this overly-broad definition.

7. Definition of “Children’s Product” should not include anything primarily sold into the schools or which is used primarily under the supervision of adults.

8. The standards/bans for lead and phthalates should be prospective from February 10, 2009, allowing the sale of merchandise manufactured in compliance with law prior to the implementation of the law. This is ABSOLUTELY necessary to protect the thrift store industry.

9. Make ANY AND ALL changes in standards after February 10, 2009 EXPLICITLY PROSPECTIVE, including those already implemented.

10. Phthalate testing should explicitly exempt inaccessible components, metals, minerals, hard plastics, natural fibers and wood. The statutory test standard should explicitly permit testing the entire product as a whole. California law, which may conflict with these definitions, should be explicitly preempted.

11. Eliminate the 100 ppm lead standard for August 2011. There is no scientific evidence that the change from 300 ppm to 100 ppm as a limit on lead-in-substrate will have any material impact on blood lead levels. However, the economic impact of this meaningless change could be severe - the equivalent of a high tax serving no known purpose.

12. Lead-in-substrate testing should be a “reasonable testing program”, not mandated outside testing. Ideally a combination of in-house testing, spot checking, XRF (allowed for this use) and supply chain management. The focus of the rules should be on safety, NOT on compliance. Third party testing can be included as a safe harbor for a “reasonable testing program”.

13. Small lot manufacturers are exempt from all testing requirements (but not the standards). ANY product which sells less than 25,000 units per annum is exempt from testing requirements.

14. Eliminate required future reductions in the lead-in-paint standard levels if technologically-feasible. There is no scientific evidence that this further reduction will have any material impact on health, but will have an economic impact on the marketplace.

15. Clarify that all inks are excluded from the lead-in-paint ban.

16. Modify definition of “technologically feasible” to take into account economics. It is demonstrably unfair to small businesses to apply a rule that works like this: “If Rolex CAN do it, Timex MUST do it.” A technological feasibility standard without reference to economics is completely unreasonable to small companies or companies relying on narrow margins.

17. Restore ASTM F963 to voluntary standard status.

18. Eliminate the “periodic review” provisions that require ratcheting up of requirements (e.g., periodic review of F963 to achieve “highest levels of safety” that are “feasible”). Would like to further gut this provision, as I do not see that the CPSC adds any value in the process but has significant procedural burdens. This is pure government waste.

19. Eliminate exceptions to preemption (such as Sec. 106(h)). Add effective preemption of State laws on lead and lead-in-paint. Interstate commerce demands that there be one authority on safety, not 51 independent regulators. The disorder in the marketplace from the Proposition 65-style “consumer right to know” laws (like Illinois’ new Lead Poisoning Prevention Act) needs to be eliminated by explicitly preempting them in the changes to the CPSIA.

20. Add penalties (up to and including felonies) for false or misleading accusations of violations of law or safety violations.

21. Make the resale of used product that violates safety standard a misdemeanor with very limited fines (like a traffic ticket). Can only escalate if done with actual knowledge.

22. Eliminate the “knowing” standard with its imputed knowledge of a reasonable man exercising due care. This standard is a 20/20 hindsight standard and is thus subject to considerable abuse. An actual knowledge standard would ease fears among regulated companies.

23. Completely reformulate penalties to restrict them to egregious conduct, reckless endangerment or conduct resulting in serious injury. The CPSC should have the authority to assess penalties when it deems it necessary, such as for repeated violations, but the practice should be that penalties are meant to provide incentives to good behavior ONLY (not for retribution or redistribution of wealth). Minor violations should either be handled administratively without penalties or should be subject to capped penalties akin to “traffic tickets”.

24. State AG enforcement should be limited to matters involving actual knowledge leading to injury or to enforce a CPSC order.

25. Restore the ability to export non-compliant product as long as the product is compliant with the destination jurisdiction's law.

26. Mandatory tracking labels should be explicitly restricted to cribs, bassinets, play pens, all long life “heirloom” products with a known history of injuring the most vulnerable children (babies). Tracking labels would be voluntary on all other children's products and if in use, can be used to trim scale of recalls (as with other data maintained by businesses). CPSC should retain ability to expand the application of tracking labels as warranted. The power to impose tracking labels was a part of the prior law, it should be noted.

27. Elimination of whistleblower provision entirely. There is no demonstrated need for this provision which only creates an atmosphere of distrust and abuse in the workplace. To properly ensure corporate team play, the government should refrain from paying spies to infiltrate the workplace unless there is a demonstrated need based on actual data.

28. Elimination of lab certification process ENTIRELY. The CPSC adds NO value to this process, and in fact slows the process of labs coming on board with new testing capabilities. I am not aware of any instances of fraud by labs but if there were to be fraud, we already have anti-fraud standards on the books to protect consumers. Give the CPSC the power to create or modify certification standards or requirements if warranted in the future. Place reliance on industry organizations or independent professional organizations for certifications.

a. For in-house labs, use established firewall rules as “but for” condition for companies to avoid liability. Otherwise, companies should bear full responsibility for testing done in-house.

29. Public injury/incident database restricted to recalls only

a. If allow unfiltered postings, companies need adequate time to respond BEFORE posting. There needs to be enough time to allow for inspection of product and to conduct tests.

b. Must post name and contact info to put info up on the DB. NO anonymous postings

c. Liability for fraud, including fines and possible jail time. Need to prominently note this on the DB. There needs to be a consequence for bad actors spreading bad information intentionally.

d. The terms of the DB should not permit postings of CPSC private remedies, like “do-not-sell” orders.

e. The current timetable is unreasonable, needs to be spread out to allow for more consideration of unintended consequences.

f. The current rules specify removal of inaccurate data that is TOO SLOW. Data needs to be impounded while being investigated (Zhu Zhu Pets wouldn’t have survived this scheme).

I also recommend consideration of an exception from the lead-in-paint rules for violations which have less than XXX grams per unit. These essentially technical or de minimus violations might be exempt from recalls but not from "do-not-sell" orders. I am recommending some acknowledgement that certain L-I-P violations are not worth the expense to recall. A strict liability standard for L-I-P is not necessary to protect the public.


Connie said...

Rick, I am blown away by the reasonable, comprehensive, intelligent recommendations for changes to the CPSIA you make in this blog post. Your suggestions should be accepted verbatim. You are uniquely tuned to advocating for safety for children in combination with common sense ways to achieve this objective without unnecessary destruction to businesses. Businesses that produce safe products that benefit children, provide jobs for Americans, and pay taxes that provide benefits for everyone. I salute you for all the time and effort you have put forth in this effort. Your steadfast pursuit of a path through the CPSIA morass is admirable. You are a true advocate for everyone involved. Thank you.

challengeandfun said...

Rick, thank you for succinctly expressing not only the broad nature of the problems of the CPSIA, but at the same time offering reasonable, common sense solutions.

One of the biggest problems with this law is the simple question I regularly receive: "What changes are you calling for?"
Typically anyone asking such a question is looking for a 1-3 point answer. This law is so far removed from reality that such a simplistic answer is simply impossible.

While you rightly avoided the 1-3 point answer, opting to provide a comprehensive list, you were still able to distill the problems into an easily understandable list of solutions.

jennifer said...

i sure do hope adler and tenenbaum read this. amazing. thank you for taking the time.

Anonymous said...

Thanks for taking the time on this. I appreciate you adding the 2nd hand component. It seems that we don't have a lobbying group so no one cares.

euroToyShop said...

Rick, thanks for a nearly comprehensive list. I would add another very important change - some kind of harmonization with EU EN71 standards. These have been in place in Europe since 1990 and the limits are similar and in some instances stricter than those put in place by the CPSIA.

The differences require duplicate testing and certification, sometimes at two different labs. The extra cost is prohibitive and effectively places a trade barrier between the EU and the USA.

Leah said...

Amazing as always Rick! Another very important thing they need to do is exempt craft materials that are already subject to LHAMA certification from additional third party testing. I believe Nancy Nord is the only one of the commissioners to bring this up yet the costs for craft companies is exorbitant and redundant.