Tuesday, July 5, 2011

CPSIA - Futile Provision or Gimme for Big Biz?

In response to my blogpost on the "Functional Purpose" exception so desperately desired by the Dems (Waxman and his Waxmanis, plus the Dem CSPC Commissioners) as the "solution" to the inflexibility of the CPSIA restrictions on lead, I am informed that some people think the door is still cracked open for exclusions.

I must disagree.

Here is the language on the functional purpose exception from the last published version of ECADA

"(1) FUNCTIONAL PURPOSE EXCEPTION.—(A) IN GENERAL.—The Commission, on its own initiative or upon petition by an interested party, shall grant an exception to the prohibition in subsection (a) for a specific product, class of product, material, or component part if the Commission, after notice and comment in accordance with subparagraph (B), determines that—(i) the product, class of product, material, or component part requires the inclusion of lead because it is not practicable or not technologically feasible to manufacture such product, class of product, material, or component part, as the case may be, in accordance with subsection (a) by removing the excessive lead or by making the lead inaccessible; (ii) the product, class of product, material, or component part is not likely to be placed in the mouth or ingested, taking into account normal and reasonably foreseeable use and abuse of such product, class of product, material, or component part by a child; and (iii) an exception for the product, class of product, material, or component part will have no measurable adverse effect on public health or safety, taking into account normal and reasonably foreseeable use and abuse." 

I have added color to the key words in this section.  In blue, I have highlighted that the exemption will ONLY apply to those products or materials which "require" the inclusion of lead.  In yellow, I have highlighted the two parts of the exception, namely cases where the inclusion of lead is not practicable or not technologically feasible. 

Who will benefit from this provision, and how will they benefit?

First, to take advantage of this provision, you must demonstrate that your product "requires the inclusion of lead".  When might lead be required?  According to the CPSC Staff in their recently released report on the "technological feasibility" of 100 ppm lead, no products or components under 600 ppm concentration requires lead:  "Staff has found no intentional uses of lead in materials at concentrations at or near any of the three statutory lead limits (i.e., 100 ppm, 300 ppm, or 600 ppm). Therefore, staff does not believe that children’s product manufacturers intentionally design or make products or components with the maximum allowable lead content because lead concentration near the maximum limit would have no benefit or purpose to the product or the manufacturer." 

No benefit whatsoever of trace lead content.  Who would have guessed that?!

Thus, this provision only applies to items, components or materials well over 600 ppm lead.  For those of you on the sidelines hoping that this will save your trace levels of lead in components, like metals in bicycle components, sorry!  It's not for you.

I believe this provision is only intended for a very limited list of components - namely, brass, metal alloys or possibly rhinestones.  In reality, it's just for metal alloys which actually require lead as a component, like engine components (or brass).  There will be almost no argument possible where there is a market substitute that the CPSC thinks is adequate. They get to run your business now, don't forget.

Rhinestones are so done.

For those items, components or materials that make it through the "requires the inclusion of lead" filter, the provision then further limits coverage where avoiding the inclusion of lead is not "practicable" or technologically feasible.  The above-referenced report states the opinion of CPSC Staff that NOTHING requires the inclusion of lead as defined by the CPSIA:  "Based upon this analysis, the staff could not recommend that the Commission make a determination that it is not technologically feasible for a product or product category to meet the 100 ppm lead content limit for children’s products under section 101(d) of the CPSIA. No such determination has been made by the Commission. Therefore, all children’s products sold, offered for sale, manufactured for sale, distributed in commerce, or imported for sale in the United States must meet the 100 ppm lead content limit beginning August 14, 2011 as statutorily mandated by the CPSIA unless otherwise excluded . . . ."

Some people believe the legal definition of "practicable" in certain legal rulings (case law) takes into account economics  and is intended to be a more pragmatic standard allowing applicants to plead that the law will ruin their businesses.  This theory depends on a richer, more nuanced meaning of the term than provided in online legal dictionaries ("when something can be done or performed" or "anytime something can be done or performed").

A more detailed explanation, closer to the wishes of those pinning their hopes on this provision, comes from JustAnswer.com:  "Normally one would say, in a legal arena, that if it does not cause an undue hardship to one party or the other, then it is 'practicable'. An example would be if during a child support hearing, one party wants the other party to pay for a brand new corvette for their 16 years old child to drive, that would be considered impracticable whereas if they asked for the other parent to provide safe transportation and it is agreed to get a used Ford Escort, that would be practicable. If during a hearing on a property easement the land owner wants $200,000 for a 40 foot easement, the easement holder to pour a new driveway for them both to use, and he can only use it on Fridays, that would be impracticable. Does that make sense? It is basically saying that if there is a reasonable way to provide whatever is being asked, or rather 'whenever practicable', that should be done."

Anyone hoping to win an exception under this provision must be prepared to explain that there is no reasonable way to accomplish their goal, that it is in that sense not "practicable".  This definition does not permit exceptions simply because in their absence costs might rise.  The cost must be "unreasonable" but can be much greater than zero.  What might be deemed an "unreasonable" cost by this CPSC Commission?

Well, I think some factors are quite relevant in evaluating whether such exceptions will EVER be granted.  First, the three Dem Commission has taken the position publicly that there is no safe level of lead.  This is wrong, as we know, because since every human takes lead into his/her body every minute of the day and night through lead in air, water, food and dirt (at a minimum), we cannot conclude that life degrades in the presence of lead alone.  The source, concentration and exposure to lead determines the nature of the risk (as they say, the dose makes the poison).  Unfortunately, these Dem non-scientists are beyond convincing.  Try telling them that money is more important than their unthinking appraisal of the "risks" confronting children with lead.  I can't see it.

As if that weren't enough, the CPSC Staff has publicly stated that everything can be made lead-free based on the bizarre definition of "technological feasibility" under the CPSIA. That term of art does not have the expected meaning of its English words since economics were written out of the definition.  This Commission knows that everything can be made without lead, and given their caveman fear of lead, any applicant will have to explain why other available options are no good.  The concept of technological feasibility and not practicable are not really as divorced as they seem.

CPSC Staff shed some light on practicability in their 100 ppm report:

a.  " . . . low-lead materials that can be used in the production of children’s products generally appear to be commercially available in the market place"

b.  "In general, for cost increases affecting a broad base of industries, there will be a mixture of effects: both increases in the retail prices of children’s products and reductions in overall production levels."

c.  "Alternatively, some manufacturers may need to redesign or re-engineer their products. Valve stems for bicycles, for example, may need to be fitted with more secure caps, which will effectively render them inaccessible and potentially more difficult to use. In addition, products may be simplified to reduce the number of components for testing."

Overall, the implication of the economic analysis is that the bulk of economic damage (rising costs) has already occurred.  In addition, the CPSC seems to think there is more than one way to skin a cat - and that would be quite relevant in any proceeding under the Functional Purpose Exception provision  Which items would likely be eligible for consideration for relief?  It would likely only be items that are being sold subject to a stay (ATVs and bicycles) because everything else that's on the market is already compliant.  And how many items are being openly sold today are NOT in compliance with the current lead standards?  Damn near zero.  As Mike Larson notes in the Star-Tribune (March 27, 2011):  "Unfortunately, this hasn't helped because the many manufacturers and dealers have chosen not to sell the smallest youth model ATVs because of the risks of selling under the stay, and there's now a limited availability of these products for consumers.  In fact, half of the major ATV manufacturers are no longer selling youth model off-highway vehicles."

My conclusion:  No one can apply for this exception and if they do, they are highly likely to be turned down. Just like the last three years.  It's a big win for Waxman - he appears to be "listening" but instead is perpetrating a fraud on all the dupes in the children's product industry.  He cares not about your petty problems (that he created).  It's truly heartwarming . . . .

One last thought:  Who really gets the short end of the stick here?  It's you as usual, the little guy.  The CPSC Staff acknowledges that the 100 ppm standard is anti-small business:  "Despite the existence of complying materials and components in the marketplace, some manufacturers, especially very small ones, may not be able to readily purchase these materials and components due to the lack of available distribution channels. For example, the Handmade Toy Alliance stated that its members would be unable to consistently obtain materials complying with such a low lead limit because its members do not purchase raw materials, but instead purchase component parts from retail stores."

But, heck, who will take the time to actually read their 59-page report?  Believe me, Waxman ain't losing sleep over the possibility that you will read it, much less actual members of Congress.

And then there's the practicality of the exception process - it's like major litigation against the government. Think of the cost - you would need to hire experts, lawyers, consultants and would have to prepare dossiers on each and every material, component and product you want exempted.  You will bear the burden of proof, you will be judged ONLY on the "proof" you submit, and best of all, you will be judged by a panel controlled by Tenenbaum, Adler and Moore.  Who on Earth will waste their money and their time on this?  Perhaps Mattel, WalMart and a few Asian manufacturers of bicycles (China makes 58% of world bicycle production).  It's not for you - you can't afford it.  This is a meager gimme for big business, like "firewalled test labs", something to ease the troubles of the mega companies affected by the CPSIA.

As for the rest of us, let's not forget the wisdom of Senator Dick Durbin's office:

"I think you are right that the CPSIA imposes costs on businesses, and because of economies of scale it’s the smaller businesses that will feel these costs more acutely. This is part of a larger calculation that it’s worth the costs to shift from the old system of post-market correction (once a dangerous product is out in the market and leads to sick kids, recalls, lawsuits, etc.) to a new system of pre-market testing and certification (instead of just assuming products are safe and paying the price for false assumptions)." [Correspondence dated April 16, 2009]

I think the real false assumption is that the Democrats care about anything other than getting reelected.

1 comment:

Ben S said...

Well yeah, getting re-elected and not defaulting on our credit obligations.. Wait, which blog was this again?