Tuesday, April 5, 2011

CPSIA - What's Missing from the CPSIA Amendment?

I have summarized my comments on the pending CPSIA amendment in my two prior blogposts.  In this post, I explain what's MISSING from the amendment:

a.  Preemption:  The United States needs ONE law on safety for children's products - not 51.  The CPSIA amendment should include strong preemption language to stop rogue state laws and to streamline compliance costs for the entire industry. Industry wastes huge resources dealing with competing and inconsistent regulatory schemes across the country that add little to safety but disrupt commerce.  It goes without saying that small businesses can't keep up with it (which is especially perplexing in California).  Is it fair to burden small business with a hopeless compliance chore?  Is it good public policy?  I think Mattel has enough of an advantage already. . . .

This preemption should also apply to consumer "right to know" laws as they relate to lead and phthalates.  In other words, the Illinois lead labelling law and California's Proposition 65 should be preempted explicitly by federal statute.  These laws were developed to avoid federal preemption.  Lawyers and mercenary consumer groups don't need the handout anymore - the right-to-know "tax" should be lifted from the marketplace.

b.  Testing Frequency.  The amendment addresses part of the mess surrounding the so-called "15 Month Rule" but does not touch the subject of testing frequency.  The CPSC's budding efforts to regulate testing frequency (and sampling for testing) have the potential to wreak new havoc as the government pushes its way into decisions long made by private businesses.  What's the justification for this intrusion?  I guess Congress thinks they can run our businesses better than we can.  Unfortunately, there's no evidence to suggest that they know better than we do, and furthermore, there is no data to suggest that the decisions made by manufacturers on testing frequency have ANYTHING to do with injuries.  The pursuit of a perfect suite of paperwork is not the same as keeping kids safe. 

The amendment should steer the CPSC away from meddling in the internal affairs of manufacturers and instead refocus it on substantial product hazards.  That's why we have a CPSC, the only reason.
c.  Penalties.  When the CPSIA was originally passed, one of the provisions trumpeted by the agency was its fancy new right to impose huge penalties.  And it didn't take long for the agency to try out its new rights.  Unfortunately, as documented in this space, the penalties rarely reflected reason, just emotion.  Penalties tended to vary by the level of anger at the CPSC, not the magnitude of the "crime" or any sense of proportionality.  Chairman Inez Tenenbaum actually bragged publicly about effectively putting Japanese retailer Daiso out of business  in the U.S. in her 2010 ICPHSO keynote speech.   Daiso recalled a few thousand dollars of cheap toys (about one pallet's worth) in five recalls with no injuries reported byt eh CPSC.  Not exactly a crime against humanity, in my view.  Nevertheless, Daiso was hit with penalties in excess of $2 million.  The Daiso fiasco looks very much like vindictiveness or headline-seeking.  

The threat of such disproportionate punishment may look entirely theoretical . . . until it's your turn.

Call me a starry-eyed idealist, but I believe in due process and reasonable recourse to the courts.  If the agency is going to go hog wild with penalties, Congress should impose reasonable restraints on the process.  Unfettered government power is un-American.  Procedural limits providing basic due process rights and restraining the coercive tactics of the agency would be an appropriate addition to the amendment.  This problem is no secret - ICPHSO sponsored a presentation on this problem at the 2011 February meeting by three distinguished CPSC bar practitioners.  If the agency can't control its animal instincts, then the law should be changed to limit its powers.  I also recommend that penalties be limited to egregious conduct, reckless endangerment or conduct resulting in serious injury. 

d.  Restore Risk Assessment.  The basic problem underlying the CPSIA, as is apparent again and again in my comments, is termination of the CPSC's obligation to assess risk.  In fact, they are not allowed to assess risk anymore under the CPSIA, just follow the rules written by staffers in the 110th Congress.  Of course, this renders the standard of substantial risk hazard moot.  Even more problematic, the CPSC shows signs of losing sight of its mission.  Is the mission proper testing . . . or safety?  The recent hearings on pool drains illustrates this problem.  The hearing was all about the definition of proper pool drain testing.  The CPSC wasn't investigating actual injuries, because there weren't any, but instead questioning test results.  That's what passes for safety administration nowadays.

We need a CPSC focused on risks and injuries.  A phobic safety agency adds costs to our economy with little to show for the extra investment.  We need to get our compass working again.  Congress must mandate that the CPSC base all its decisions on the substantial product hazard standard and risk assessment.

e.  Allow resellers to rely on representations of manufacturers,  Fear of liability has caused many layers of the supply chain to repetitively test and retest the same product, all in the pursuit of the perfect suite of test reports.  These costs are harming manufacturers and raising prices to consumers.  Injury statistics do not support the thesis that anyone is safer, however.  The solution is for Congress to set a legal standard that permits retailers to rely on the representations of their suppliers (manufacturers).  This bright line rule should help end the atmosphere of distrust between retailers and their suppliers.  Don't worry, there will still be plenty of testing to make everyone happy (including the always deserving testing labs).

f.  End whistleblower provision.  The whistleblower provision was added in the same fever of vindictiveness that infused the "throw in the kitchen sink" CPSIA in 2008.  The problem is that there is no evidence that there were any "evil" companies at work in the children's market.  Incompetent organizations or failed operators, perhaps, but criminals and bad guys, no.  "Bad guys" are rare in the children's market, frankly.  The whistleblower provision has the potential to be a disruptor, a manipulator mainly useful to pad the income of tort lawyers. 

Additional attention by the CPSC to outreach and education of manufacturers is much more likely to produce results.  Without evidence that true venality is an actual risk in this market, there is no justification for retaining the whistleblower provision.

g.  Remove phthalates ban!  There are no known victims of phthalates.  The CPSC has been operating under this total ban for now almost three years - and has only ONE recall of 40 little inflatable toy baseball bats (our friend Daiso) to show for it.  That's it, my friends.  How much money, how many planeloads of dollar bills have been torched testing and retesting product for the presence of these chemicals in the meantime?  The CPSC hasn't even bothered to finish up testing standards or certify even ONE lab to perform the tests.  They don't appear to think this is a public health emergency.

Ket's end the charade.  When Diane Feinstein isn't looking, drop the phthalates ban!


Anonymous said...

While I abhor many of the positions of the Republican party, I believe that "Government by Phobic Nannies" is NOT a reasonable option.

I think we Democrats need to start a new organization called "Democrats Against Government by Phobic Nannies". Our by line would be "Enough is enough, vote Republican".

Once we have gotten rid of the Phobic Nannies, maybe, just maybe, we can vote in some rational Democrats.

As bad as the CPSIA is for business, as useless as it is for safety, even worse in my opinion is that this kind of phobia will eventually infect our children. I do not want my daughter to live in irrational fear.

Enough is enough, vote Republican!

Ben S said...

Phthalate fear is very much mainstream, removing it from the law will do nothing for a product that uses them (most have switched to something else by now anyway).

Tom Trinh said...

I am a small toy importer company in Los Angeles and most of my containers coming in from China now are being X-rayed and go through intensive inspection. Even with test reports to show show, the CPSC still want to get my products tested and detained my containers for weeks. This is killing all small business nation wide and enough is enough to stop this non-sense! Like Rick had been saying, it's cost small business lost of money doing testing over and over again.