Friday, January 7, 2011

CPSIA - My Remarks at House Working Session on CPSIA

Subcommittee on Commerce, Trade, and Consumer Protection
Committee on Energy and Commerce
United States House of Representatives
January 6, 2011

Thank you for the opportunity to present my views today. My name is Richard Woldenberg. I am Chairman of Learning Resources, Inc., a Vernon Hills, Illinois-based manufacturer of educational materials.

Despite its lofty goals, the CPSIA has had little impact on safety while severely disrupting markets and sharply raising operating costs. I have previously testified that our testing costs rose 8 times between 2006 and 2009 and are expected to multiply again. We have also cut back on our marketing and sales expenses to pay for the increase in our QC department from one to five.

This so-called “toy law” was designed to solve a problem that frankly didn’t exist. In 2007/8, there were some notorious toy recalls for lead-in-paint violations – yet there were almost no injuries. The CPSIA was an almost hysterical over-reaction to a simple compliance issue concerning a small number of companies.

Ironically, the CPSIA has already “cured” the compliance problem in the toy industry despite the glacial pace of implementation. Today, 30 months after passage of the law, lead-in-substrate testing is still not mandatory – yet toy recalls have fallen dramatically. How did it happen? I believe publicity, industry outreach and the commitment of new resources by industry improved compliance. Revised lead standards had NOTHING to do with it.

The CPSIA is causing a lasting trauma in our market. Small businesses left the market in droves. For instance, we decided not to enter the toddler market with new educational products. While foregone business opportunities don’t produce a pile of bodies, the economic damage is still severe. In an efficient marketplace, capital is redeployed and products and companies just move elsewhere. We need to fix this problem pronto.

The solution to the CPSIA problem lies in fixing the four horsemen of this apocalypse: (a) cost, (b) complexity, (c) risk and (d) government intrusion.

The worst CPSIA cost impact relates to needless and repetitive testing. Mandatory testing for everything but lead-in-paint should be dropped. An amended CPSIA should apply ONLY to those products specifically identified as presenting a substantial risk of injury or death from lead or lead-in-paint at the specified mandatory standards. This will sensibly knock out the vast majority of products subject to this law. The CPSC Commission should be mandated by law to rigorously apply this rule – the agency should bear the burden of proof.

The excesses of the current “precautionary principle” era cannot be allowed to continue. Lax application of the “substantial product hazard” law has created real doubt about the meaning of our safety laws. Strict adherence to this rule should be mandated by Congress to eliminate the many artificial crises spawned by the CPSIA. Discretion to set age limits, the applicability of the phthalates ban, tracking labels and the reduction of the lead standards should be subject to the same rigorous rule.

To preserve the competitiveness of American schools, special exemptions must be made for educational products (particularly science and special needs items).

The phthalates ban should be limited to products for children three and under to sharply reduce CPSIA compliance costs. This is a reasonable compromise pending resolution of any remaining doubts over the safety of these specific chemicals.

Complexity must be sharply reduced. The old rules were a manageable 100 pages or so but now top 3000 pages and growing. We need to return to a “keep it simple” set of rules with limited reporting requirements. Congress or the CPSC must choose top priorities, and promulgate limited and focused rules. I can assure you that no one understands the moving target of CPSC rules anymore. This MUST be remedied in any amendment of the CPSIA.

Needless bureaucracy should be eliminated, such as CPSC certification of labs, including in-house labs. Fraud and/or incompetence in testing have always been rare. Customs involvement in the CPSC supply chain should be shaped by a cost-benefit basis. Dealing with product safety like the prevention of terrorism is absurdly disproportionate to the risk and far too costly.

Implementation of the public database should be delayed until reasonable protections of due process rights of manufacturers are in place. Congress never intended to create an indistinguishable mixed bag of truths, half-truths and falsehoods – that’s what we have the Internet for. The adopted “anything goes” rules went way too far, and will accelerate market exits.

Government intrusion and excessive government power casts a pall over the children’s product market now. Open-ended penalty provisions allow for emotional and disproportionate punishments. The Commission has also asserted unprecedented powers to retroactively ban products and to mandate their replacement. Clearly, strict procedural controls and protections are missing. The era of “death penalties” without oversight must end.

Some CPSIA fixes are not legislative. Among other things, the CPSC needs to embrace industry as its partner in safety. As the past two years demonstrates, engaging industry is the key to long term improvements in safety.

Notwithstanding the media’s misrepresentation of our industry, we have an enviable record of safety. This is not a case of bad people, venal companies or lazy regulators. The problem is one of misapplied resources and ineffective regulatory strategy. The solution doesn’t require more money or more chest thumping. A well-designed law, combined with good education and industry outreach practices, will create the safer market that everyone wants.

Thank you for considering my views today. I would be happy to answer any questions you may have.

1 comment:

sassypackrat said...

I hope this was well received. I look forward to hearing how it all went.