CPSIA - What Can We Learn From the Toyota Debacle?

It was about one year ago when the Federal government went into overdrive in trashing Toyota, a widely admired and reputable company, for its apparently defective automotive accelerator mechanism. I say "apparently" because our fearless leaders in government reached the conclusion that Toyotas were defective based on hasty conclusions and a document review . . . but no scientific research. This is hardly a shock. I have previously observed that manufacturing a dangerous public enemy in an election year is quite helpful to members of Congress - after all, we need to be reminded who's working so hard to save us.

A quick reminder: the CPSIA was passed in August 2008. Oh my gosh, that's right before a national election!

The drive to jump on board and bash Toyota was overwhelming. Recalling Joe Biden's helpful 2009 advice to not fly or take the subway because of a swine flu outbreak, Secretary of Transportation Ray LaHood warned Americans to stop driving Toyotas in a Congressional hearing last year. You can't be TOO safe! Think of the impact on the company and its brand. Yesterday he announced Toyotas "are safe to drive". Oops. . . .

Not to be outdone, Rep. Henry Waxman, the man principally responsible for our being subject to the CPSIA without amendment now almost three years later, torched the company for its supposed misdeeds in his opening statement at his committee's hearing on February 23, 2010. What did Toyota do wrong? Well, he says the "defect" in their cars had to be in the newfangled electronics in the accelerator mechanism. Callous Toyota didn't look at the electronics, Mr. Waxman contended. Instead, he said "There is no evidence that Toyota . . . took a serious look at the possibility that electronics defects could be causing the problem . . . . Toyota had three responses: first, blame the driver; second, blame the floor mat; third, blame a sticky gas pedal. And NHTSA, without doing any meaningful independent review, accepted Toyota's recommendations."

Clearly NHTSA needed David Strickland to fix everything and make us all so safe - he did such a great job on the CPSIA.

Ironically, Mr. Waxman was pretty clairvoyant that day. NHTSA (under David Strickland's guidance) concluded yesterday that Toyota's purported three "responses" were the right explanations for the sudden acceleration problem. See the WSJ article linked above. Hmmm. Mr. Waxman carried on to warn Toyota that "safety must start coming first" (implying that Mr. Waxman's judgment on auto safety is superior to Toyota's) and concluded that "ultimately . . . addressing this problem will require legislation."

I feel another CPSIA flashback coming on . . . .

The Toyota feeding frenzy even swept up our own Chairman Tenenbaum who couldn't resist pointing the finger, too: "A new Commission that has new powers - and we are not afraid to use them. If you resist our efforts to recall children's products, be forewarned, this Commission stands ready to be creative in the use of our enforcement authorities. As the Toyota experience has shown in recent weeks, this government will not allow for delay in recalling dangerous products." No delay whatsoever - even to figure out if they are actually dangerous! Didn't McDonald's recall safe Shrek glasses "out of an abundance of caution" at the request of the CPSC? Toyota was quite inspiring, I guess.

To put a bow on the conclusion of this comedy of errors, Public Citizen (a consumer group purporting to "protect" you in the CPSIA saga, too) asserts that the government's Toyota study is not "convincing". I have previously explained why folks like Public Citizen will NEVER give up the ghost here. There is probably nothing that could convince them that they were wrong in the first place. After all, that's pretty de-legitimizing. We certainly can't have that! Think AAP on lead.

Blamestorming in Congress, jumping to conclusions based on a media frenzy, little hard information and a lot of political drum banging? Brandishing the blunt force of excessive government power to beat a company senseless? Toyota is one of the largest companies in the world. Imagine if this excessive power were taken against a small business? Imagine . . . .

As I said last year, the Toyota feeding frenzy is what we have been subject to, now for three years, in the sad CPSIA debacle. At a Congressional hearing next week when I may face the same legislators who took Toyota down - for no good reason - I must again defend our right to conduct business responsibly without the intrusion of government into everything we do. Having written a law to keep children "safe", Congress is quite reluctant to admit their error and admit that we can keep kids safe without being told how to do it. The basic reason is that they can't acknowledge that kids weren't at risk from lead BEFORE the law. It's easier for them to ruin our businesses than to do the right thing.

Just to be clear, it is absolutely irrefutably clear that the agents for change here are the Republicans and the opponents to remaking the CPSIA into something workable and sensible are the Democrats. As I have stated before, Democrats in the Senate are still working to block change. They are like Public Citizen - NO possible data can convince them.

Will Congress ever admit that the definition of Children's Product is too broad, that the scope of ages covered by the CPSIA is damaging to our markets, that we are over-regulating extremely minor or unreal risks while ignoring big risks (thereby actually making children LESS safe), that the rising (risen?) specter of liability is having a very negative effect on the conduct of business, that the encouragement of rabid enforcement at the CPSC has created an environment of mindless and uncompromising rule following (creating many starkly unfair results and ruining the reputation of a proud agency accustomed to doing good), and so on? That's a good question.

Tune in next week and see for yourself!

CPSIA - ICPHSO Update -Remarks of Chairman Inez Tenenbaum

Inez Tenenbaum gave a keynote address at lunch at ICPHSO today. I would have preferred to rely on the actual text of the speech before writing about it (not yet available online at the CPSC website), but wanted to give you my impressions quickly. If I took erroneous notes, I apologize and will correct errors, if any, later.

Critical points from the speech:

• The speech was tough and hostile to "uncooperative" businesses.
• She gave plugs to Consumers Union, PIRG and CEH. Draw your own conclusions. She balanced those plugs with a hearty pat on the back for RILA which she said has proposed its own uniform testing "problem". Oops, Freudian slip . . . she corrected herself to clarify that it is actually a uniform testing program. Program, problem - these are synonyms at the new CPSC.
• She wants to dispel the "rumor" that the agency is overwhelmed by mandates and is distracted from its mission. Further to this point, with regard to Internet "rumors" like the foregoing, she recommends that you only believe websites that end in "dot gov".

Let me repeat that last one: Tenenbaum says you should ONLY believe websites that end in "dot gov". That means you shouldn't believe me, just her. Don't be cynical, guys. Speaking for myself, when a high public official tells me not to believe the media chatter, just to believe them, I always take the heartfelt advice. After all, they only mean to protect me from scurrilous gossip that I am too dumb to figure out for myself. For instance, I still believe everything John Edwards says . . . .

• Regarding recalls involving a death, Tenenbaum warned companies NOT to blame parents in the press even if they are involved in litigation with the family. If they do, Tenenbaum promised (in strong terms) to "call [them] out". I was floored by this. Is she our mother now? Our mother government, perhaps.
• She urged us to "stop fighting old battles" and get prepared. She was referring to the new era of the Public Database. Hmmm. We are to stop fighting old battles. Okay, everyone, put down your arms!
• She reiterated that the CPSIA was the "most substantial and positive" development in the CPSC's (recent) history. She noted her love of the tracking labels provision and the removal of lead from zippers. Apparently my many comments and objections to tracking labels were ALL wrong. Darn! I must learn to love tracking labels. Repeat five hundred times, I must learn to love . . . .
• On the subject of voluntary standards, she emphasized that if industry doesn't move fast to do it the CPSC's way, the agency will just put out mandatory standards more to its liking. She specifically cited the JPMA and ASTM on the crib standards. She sounds really open-minded on that one. Tenenbaum also recommends that industries proactively make their standards more stringent so the agency can make them MANDATORY. Or . . . the agency will just do it itself. Nice! I feel trust building, building, building.
• She noted that the law applies to big and small companies ALIKE "for good reason". Hey, crafters, get the message - there will no free pass for you. Of course, this actually makes sense because product injuries should not be okay simply because the manufacturer is small. The way to fix things for small companies is to rework the definition of hazard to be limited to ACTUAL hazards only, which will focus safety efforts in a logical fashion, thereby helping out the small guys. The crafters are a victim not of fair rules that are blind to small business interests - but instead of a terrible law that is so fatally flawed that no business can deal with it.

Here's the best part:

1. Chairman Tenenbaum said that she won't tolerate resistance to recalls that the agency wants to make. If you do dare resist, the agency will use its many tools to force the "right" outcome. Chairman of the CPSC or Chairman of the Politburo? Individual rights and due process are apparently a secondary consideration now, to judge from Tenenbaum's fiery speech. There's a big incentive to invest, right?
2. Tenenbaum cited Toyota as an example of how "this government" will NOT tolerate slow recalls. Oh boy. Think of the Toyota food fight when you imagine the future of CPSIA enforcement. Recall first, ask questions later and let the media sort out the details. And be sure to bring the mighty down low. That sounds so fair!

There are many industries that are going to be victimized by this new enforcement regime. The list will be LONG.

Lots of tough talk, saber rattling and scare tactics. Of particular concern is the implicit erosion in corporate legal rights and the continuing demonization of businesses and business people. The Obamist populist rhetoric was quite recognizable, and one must wonder who Tenenbaum really intended to reach with the speech. Whoever they are, I hope they were happy. As for me, I got the willies and thought that whatever progress I sensed earlier today was an illusion.

Will the Dems ever learn?

CPSIA - Misery Loves Company

Well, well, look who's haunting Toyota these days - if it isn't David Strickland, Administrator of the U.S. National Highway Traffic Safety Administration. Strickland is well-known to the cognoscenti of the CPSIA as the lead staffer in the Senate for our favorite law and as one of its principal authors/shepherds. Having wreaked sufficient havoc with the CPSIA sufficiently to impress the big boss, he was rewarded by Obama with the top job at NHTSA where he can now work his magic to reduce Toyota and the auto industry to a steaming hulk of debris in short order. And that's not all - Mr. Waxman bared his claws on Toyota, too, asking who knew what when, holding hearings, providing more and more fodder for the media.

How did Toyota get in this mess? Well, they had a big recall, and the newspapers, TV commentators and panicked members of Congress worked in concert to create a frenzy. Wow, that sounds somehow . . . familiar. Isn't this an election year, too, just like 2008? In other words, a really good time to identify a bad guy, whip up a crisis and then solve it? You know, to protect the populace just before polls open, having worked the people up into a lather. The time-honored, sure-fire formula for reelection. . . . . The CPSIA formula being rolled out again also includes calls for massive corporate penalties, spiraling litigation, increased regulation and more government involvement in oversight of the industry (because everything is better with more government). Sounds GREAT!

And who better to operate this paranoia machinery than Mr. David Strickland in partnership with Henry Waxman? With Strickland's credentials, it's only a matter of time before Toyota is so pilloried and shamed that it will become a shadow of its former self.

I have been warned to stay away from the Toyota story. I have been told, "everybody hates Toyota in Washington", no sympathy is possible. Nonetheless, I resent the effort to destroy a great company because the opportunity to create a crisis presented itself for some Democrats in need of headlines. The parallel to the CPSIA saga is just too compelling. Let me ask you Toyota owners - is this feeding frenzy what you want? Have you grown tired of the good service at the Lexus dealership, the strong record of reliability of your Camry, the innovation of your prized Prius? Wasn't it just months ago that you drove your Prius as some sort of Green badge of honor? Have you lost confidence in Toyota based on your personal experience . . . or because of the relentless barrage of bad publicity on TV and in the papers?

It's a great tradition in Congress these days - bring the mighty down low, and be sure to erode all confidence in business enterprises. It's a hallmark of leading Democrat today. With Strickland in charge at NHTSA, you can be sure that the damage to Toyota will be severe.