CPSIA - The Senate Moves In the Direction of the House Bill

Confidential discussions are underway for Senate Democrats to accept the House bill amending the CPSIA which passed today 421-2.  The pressure being applied relates to the consequences on U.S. retailers from the retroactive application of the 100 ppm lead standard. If the House bill is accepted by the Senate Dems, it will no doubt be hotlined for quick passage by voice vote, and then this ugly process will be over. With the pending exclusion under the bill of ATV's, bikes and books (the chosen winners, including the remarkable free pass on metal component testing by bicycle manufacturers), the rest of us (the chosen losers) will remain under the thumb of both the CPSIA and the Dem-controlled CPSC.  I would note that we, the chosen losers, are no doubt the people Inez Tenenbaum refers to as "certain cynical special interests".  If you disagree with her agenda, you must be a "cynical special interest", it seems to me.  Thanks to Jan Schakowsky for this nifty idea!

I was asked earlier today if I supported the House bill (which subsequently passed 421-2).  I replied that the bill is good for us, but not good enough.  It does not address the big issues imperiling companies like ours, and furthermore, incorporates ineffective provisions on several fronts which are only there to bolster Dem chances for reelection.  That said, I advised supporting the bill because frankly what choice did we have anyway?  The impact of this bill, I noted, is like being offered a better cell in jail.  You gotta take it, if only for the view.

But you're still in jail all the same.

CPSIA - The House Answers with its Own (Bipartisan) Suspension Bill

The Republicans and Democrats on the House Energy and Commerce Committee have apparently suddenly agreed on a new 29-page draft CPSIA Amendment.  This is a modification of ECADA and is probably the best that the House Republicans could extract from the Dems.  It is also part of a game of chicken between the House and Senate on how to amend the CPSIA.   The bill is sponsored by Mary Bono-Mack and G.K. Butterfield, meaning that it is a bipartisan bill.  It will proceed to the House floor for a vote tomorrow, cannot be amended and will only  pass by 2/3 majority vote.  It could be a voice "consensus" vote and will likely pass without opposition given its bipartisan character.

A quick review of this amendment:

a.  100 ppm lead standard is made prospective.

b.  Functional Purpose exception process remains part of the amendment.  [I have written extensively on how this provision is a sham.  I haven't changed my mind.]

c.  ATV exception is included.  This is death knell for any hope of later CPSIA amendments. This signals the end of the road.

d.  The terms of the bike stay are made into law.  They also get a really sweet deal - as far as I can tell, they don't have to test metal components anymore.  That provision is buried on page 19 in the book exception section.  All the better to sneak it through.  Nice for them . . . but no word as to why we must test metal components.  Too bad for us, I guess. . . .

e.  Resale goods exception is included.

f.  Testing rules are now based on "representative" samples, not "random" samples.  The rest of the provision is based on the Eshoo amendment requiring further "inquiry" on reducing costs of third party testing.  The Eshoo model still requires "assuring compliance" with the lead standards.  This is the big dollar issue, as everyone knows, and is the one issue that touches everyone, all the ordinary businesses.  This provision is a punt and offers little prospect for future relief. 

This provision is a huge time-waster and will never result in anything useful because the standard for relief is in the context of "assuring compliance".  It also calls for more business "instruction" like that found in the current draft of the "15 Month Rule".  [The status of the 15 Month Rule is not apparently addressed and may still emerge from the agency to bite us later this year.]  The authors of the 15 Month Rule draft rule know exactly zippo about the real world and if we are ever supposed to follow their sage dictates, the losses will mount . . . fast.  In any event, this Commission will never feel comfortable with anything less than prophylactic assurance, injury statistics be damned.  I hate this provision because I don't trust the CPSC Commission under current leadership.

Notably, this provision does not stay compliance with the testing rules due to go off stay at the end of the year pending resolution of the Eshoo inquiry.  Congress has not dictated that the stay be extended, and believe me, it won't be.  The reasoning behind this provision escapes me.

g.  Small batch manufacturers receive minimal relief ("reasonable methods to assure compliance").  The real sham part of this is the tantalizing prospect that the CPSC will actually deliver on this demand for testing relief.  Call me a cynic, but they have received testimony out the wazoo for three years on this topic, and have yet to find a way to "help" the remaining micro-businesses in the market.  And the reason we should believe they will make a afety testing discovery in the future?  Your guess is as good as mine.  They won't.

Small batch manufacturers have to register before benefiting from this wonderful "relief".  The registration requirement is deeply offensive to me and really shames Congress and the agency.  What did these little companies do to deserve this treatment?  What makes the House (Dems) think this is a good idea?  It smacks of 1984 and is utterly detached from any rational assessment of risk.  Do small batch manufacturers have an exceptionally bad safety track record meriting this kind of surveillance?  Of course not.  That they would accept or even support this treatment is shocking to me.  In any event, no relief is offered to any company with gross revenues in excess of $1,000,000, so it's really just for the benefit of the really micro micro-businesses.  It won't benefit me even for small unit volume items we currently sell - our top line makes us ineligible for any possible relief.  Happy registering, little guys!

h.  Ordinary books and printed materials get a pass.

i.  Durable Nursery Products standards provision (not reviewed).

j.  Phthalates standard applied only to "plasticized" components and not to inaccessible components.  Guess that means no more testing of paper, wood and metal.

k.  Authority to exclude items from tracking labels provision is given to the CPSC based on practicability.  This is promising although the Dem hanging judges on the Commission have yet to make a single decision that saved a business a dollar for any reason. Don't hold your breath.

l.   Database rules are tweaked in a meaningless way consistent with the Markey proposal on database.  NO relief offered.

THERE IS NO RELIEF GIVEN TO EDUCATIONAL MATERIALS.  Thanks, Congress.  I am glad my kids are out of elementary school by now.

That's it, more or less.  Hope you like it, that's all you're going to get.

CPSIA - Pryor Amendment (as amended) to be Hotlined in Senate Tonight

According to my information, the Pryor Amendment, as amended to address the needs of resale goods stores, will be hotlined in the Senate this evening (passed by unanimous consent).  The bill then proceeds back to the House which remains a "house-divided".  Not unlike other showdowns in this disgusting spectacle over the past three years, it will come down to a nerve-wracking poker game where you are the pot. 

Who will win the day?  If the Pryor Amendment becomes law, you can assume the chances of passage of a common sense amendment of the CPSIA just went from 0.03% to 0.01% (not my joke, unfortunately - I am not as clever as some of the other cynical observers of this mess).  If the ATV'rs, bikes and resale goods victims are cut out of this mess, the rest of us will be the chosen losers.  There are no winners.

It will be up to the House Republicans to not hand a historic, economy-wrecking victory to Henry Waxman. They know what's at stake.  We are all depending on a sensible outcome of a quick Conference Committee.  The National Debt crisis victory should increase confidence. I only wish we were the subject of such public scrutiny.

The next few days will seal our fates, once and for all.

More to say later this evening.

CPSIA - Personal Injury Lawyers Say CPSIA Database is a "Success" - Any Questions?

News Flash:  Personal Injury Law Firm Beasley Allen P.A. announced the revelation that the CPSIA Database is a success but is still under attack.  Hmmm.

For those of you unfamiliar with this authoritative news source, Beasley Allen is a Montgomery, Alabama tort law firm that boasts on its website of a "$150,000,000 verdict in a personal injury case".  No doubt they are impartial in their views on the database.  Their web address is http://www.southerninjurylawyer.com/. 

To bolster their case in favor of the database, they trot out the informative results of Henry Waxman's "analysis" of the database released on July 7th.  [Mr. Waxman did not make his data available so his analysis has gone unchallenged.  The only way to review it is to recreate it.  Take it for what it's worth.]  Beasley Allen also cites the musings of Don Mays at Consumer Reports (he is the one who cautioned against his fourth grade daughter playing a brass instrument - don't worry, she plays the violin!), completing the rogues gallery.

Among the asserted benefits of the database, aside from website visits by other personal injury lawyers trolling for tort cases to file, Beasley Allen contends that "[s]ome manufacturers had even found the database helpful to them in identifying potential hazards in their products and addressing them as needed."  Aha.

There is an evil side to this controversy, naturally:  "Still, a powerful anti-consumer lobby wants the database shut down, and it is using politics to achieve that. While the database costs the CPSC $3 million to maintain – a bargain price considering its usefulness and its power to help make consumer products safer – it is on the chopping block again in current budget and debt-ceiling negotiations." [Emphasis added]

Oh, yes, the well-known and powerful "ANTI-CONSUMER LOBBY"!  Have you ever met someone who was not a consumer?  Are the people who never consume anything or don't have relatives or family members?  Or are they people who don't want consumers to buy their products?  Oh them! 

Or perhaps they are people on who oppose personal injury lawyers.  Just a thought. . . .

The Southern Injury Lawyers conclude:  "Opponents of the new database said that the database could be easily abused and filled with false information. However, analyses have found no signs of malicious activity on the database and Consumer Reports says it has not seen any evidence that the database has been harmful to businesses."

So says the lawyers with the $150 million dollar tort lawsuit.  Seems definitive to me. What could the problem possibly be???

CPSIA - Hey Republicans, You Aren't Allowed to Think!

During the July 7th House Energy and Commerce Committee's Oversight Subcommittee hearing on regulatory reform among independent agencies (a hearing which presumably prompted Obama's Executive Order two business days later), Ranking Member Diana DeGette (D-CO) trotted out one of the most common arguments against change:

"I want to talk . . . about the recent proposals on the other side of the aisle that would undermine the Consumer Product Safety Commission and some of the other good work that they've done.  Three years ago, this Committee and this Congress worked hard in a significantly bipartisan manner to put meaningful reforms for consumers into the [CPSIA].  This has yielded unbelievable benefits. . . . So I think it's important to know this, that these reforms were worked out by this Committee in one of the last great efforts that was completely bipartisan.  We should embrace that."

This is a familiar argument by Dems.  The law passed almost unanimously, guys, so it's wrong to try to change the law now. 

What logical point is DeGette making here?  How is this argument supposed to persuade us?

At first, I thought the Dems were simply arguing the infallibility of Congress.  Congress never errs, so how can we doubt something every Congressman voted for?  Congress is all-knowing and cannot pass a bill without doing the right thing.  [And as Obamacare indicates, Congress apparently doesn't even need to read the bills to get them right.]

To argue that this law is a product of infallible judgment is quite a leap.  Even the unanimity of the law hardly explains the mental state of Congress at the time.  Congress was ANGRY.  Have you ever said or done anything in anger you later regretted?  'Nuf said.

No, an infallible Congress cannot be what Ms. DeGette is pushing.  Actually, I think it's far simpler.  She is saying that the Dems were right and are still right and have no need or interest in changing their position.  She points out that the two parties agreed on the law's text in 2008 and passed it almost unanimously.  Now the Republicans want to make serious changes.  She says the Republicans should return to their bipartisan brothers, the Dems, and support the work they did three years ago.  She essentially calls into question the motivation of the Republicans in opposing the Dems now, suggesting that this is a by-product of a broken Washington, where partisan posturing is all we can expect from these people.

At the heart of her reasoning is the fact that the Dems are holding their course behind the law, and the Republicans have moved, and now she wants the Republicans to be more "bipartisan" by returning dutifully to agreement with the unwavering Dems.  Or is it the intransigent Dems?  A matter of perspective, I suppose.  Come back to the fold with the Dems!  DeGette's argument relieves the Dems of any obligation to reconsider ANYTHING.  How convenient.  How Waxman-like.

Here's something the Dems won't tell you - the law was jammed down the throats of the Republicans in both Houses of Congress.  Congress was controlled by Nancy Pelosi at the time (she of San Francisco, of course).  The CPSIA was purpose-built for getting Democrats elected and was not negotiated with the Republicans in any sense you would recognize.  On the national stage, the Obama wave was cresting at that time, too, so what do you think the political calculation was in the Bush White House and in the Minority ranks in either House on the CPSIA?  The Republicans knew that any opposition to any aspect of this law, regardless of how awful, would mean attack TV commercials on support for children's safety at a time of great electoral vulnerability. Bush agreed to sign the bill to protect his party, not to protect kids.  At least it neutralized a possibly existential political threat.  Each Republican Congressman or Senator had to make a similar political calculation.  Only four people (Ron Paul and three Senators) were politically courageous enough to stand up against this excessive bill.  It is certain that far more than four members of Congress found fault with the CPSIA at the time. 

The 2008 "great bipartisan effort" that DeGette romanticizes is an urban legend, a fiction, a fairy tale, a story.  She wants to cow the Republicans into losing their political nerve at this critical juncture when some kind of momentum behind our position may actually be growing.  She wants them to think ballot box.

And for those of you who pepper me with defense of Dems or reminders of past Republican "sins", all I can say is this:  the Republicans have nothing to gain politically from their three-year effort to right this wrong.  They are taking electoral risks to help us, and have been unwavering in their support of our mission. I can only believe that this is because they actually are trying to do the right thing.  This has never been about policy or safety. The Republicans know that this issue has been played for political gain by the Dems with no remorse over the devastation they have wrought to your businesses, your markets or job creation.  For them, it's just too juicy an opportunity to get reelected.  And if that's so, it must be the reverse for the Republicans. The Republicans are taking this risk on your behalf, for your benefit.

I hope there's a nice occasion to say "thank you".  In the meantime, the likes of Diana DeGette must be vanquished.

CPSIA - The Axis of Misinformation

CPSC Spokesman Scott Wolfson wants you to read an article:

Scott_Wolfson: If #opengov #gov20 are important to u, pls read this LATimes column: http://t.co/MrrgGwO #SaferProducts.gov #cpsc  [From Scott Wolfson's Twitter feed]

Wolfson refers you to a hatchet job by David Lazarus of the LA Times on the CPSIA Product Database. I have taken issue with the blather emitted from Lazarus' PC in the past.  In his latest example of irresponsible journalism, endorsed by the CPSC, Lazarus displays his studied ignorance of the issues relating to the database. His lack of research certainly didn't prevent him from making declarative statements. Wolfson wanted to be sure you didn't miss it.

Lazarus ponders what the issues could possibly be with the controversial database:  "You've got to wonder why businesses are fighting so hard to keep this resource away from consumers. Is it because their fears are justified that we'll misuse this tool (all evidence to the contrary notwithstanding)? Or is it because the last thing they want is a consuming public armed with the latest and most thorough information on the safety of their goods? And if it's the latter, you might now ask, what are they trying to hide?"

I cannot think of any objections to the database other than self-interest, can you?  It's all a conspiracy, as anyone on the Left can tell you.  Businesses have so much to hide!  And did you know that evil billionaires are against the database?  Lazarus sorts it all out:  "Koch Industries — run by billionaires Charles and David Koch, who are active in conservative causes — also reported spending more than $200,000 lobbying against creation of the database."  Lazarus asserts that it is significant that Members of Congress aligned against the database also received campaign contributions from businesses.  [Can you find a single member of Congress who has NOT taken contributions from businesses or business people?  Just curious.]  Lazarus notes that both Reps. Emerson and Pompeo received contributions from business people who are ALSO against the database.  It's all making sense now . . . .

Perhaps it was an oversight, but Lazarus fails to mention that the folks on the Left who so vigorously defend the database as implemented have been richly financed by TRIAL LAWYERS.  Rep. Henry Waxman raised more than $165,000 in 2010 from lawyers (11% of his total raise).  In fact, his top PAC contributor was the American Association for Justice, a group of plaintiff's attorneys actively opposing tort reform.  He also received individual contributions from AAJ lobbyists.  Rep. Jan Schakowsky raised a mere $224,000 from lawyers in 2010 (about 15% of her raise).  Ditto for AAJ support.  Poke around on OpenSecrets.org to check out your other favorites in Congress.  It goes without saying that the support Waxman, Schakowsky and their ilk lavish on the database has NOTHING to do with campaign contributions by trial lawyers.   It all comes from the heart, cloaked in white.  Any idea who pays the bill for all the litigation initiated by the AAJ and its members?  Hint:  it's not Waxmn or Schakowsky.

No Lazarus article would be complete without the quotes of Rachel Weintraub of the Consumer Federation of America.  The strangely influential Weintraub is the Left's favorite mouthpiece on the CPSIA.  Here she tries a new angle to preserve the database, the "sunk cost" argument:  "The thing that's so insidious is that the database is already up and running,  This would basically waste all the money and resources that have gone into creating the database."  Insidious! That thrifty Rachel, she literally weeps over government waste.  Of course, the database is not controversial simply because it exists; the principal reason the issue lingers on is that Lefties like Weintraub and Bob Adler insisted on unfair administrative procedures that create unreasonable risks for manufacturers unrelated to actual product hazards, like brand slander, misidentified products, lack of accountability by complaint filers, manipulation of civil disputes and unbalanced data creating misleading commercial impressions. These problems are well-documented but have apparently escaped Lazarus' beady-eyed (in)attention.

The Axis of Misinformation is at work here.  You have the ignorant journalist (perhaps intentionally so or at a minimum, biased against manufacturers and disinterested in their POV), the shrill consumer "advocate" and the self-serving agency spokesman whose job is to manipulate how we feel about the CPSC (irrespective of reality or the "truth").  CPSC as PR agency is offensive to me.  That's not its function and besides, I think it's dangerous to me as a consumer.  As a practitioner noted this week in private correspondence:  "CPSC stacks the deck by creating alarming recall notices that do not really put hazards in perspective for readers, nor does the agency give consumers enough information to determine whether the amounts that they wind up indirectly paying for the costs of recalls are justified, especially when those costs are spread out to affect products that have not been recalled and present no risk. Hazards and risks are generally overstated, and you will never see any mention of costs to the public even though, as we all know, there is, after all, no free lunch."

It is worth noting that I hear complaints from the CPSC through various channels when they object to the portrayals in this space.  It's so unfair that we have freedom of speech in this country.  No doubt that makes the job of regulating all of us idiots so much more difficult.  Still, if I get to exercise my freedom of speech, so does Wolfson.  Go ahead and read Lazarus.  It is informative in a way.  It will take you less than 30 seconds to recognize the shoddy journalism and the slanted, biased presentation of a one-sided story.  Consider the source of this lead - Scott Wolfson and the CPSC.  As I said, it's informative.

CPSIA - American Job Creators (Remember When We Did That?)

The House Majority Leader wants to know how the CPSC and the CPSIA are affecting your business.  They have a website set up for you to download everything you know about the misconceived CPSIA and resulting three year nightmare.  The first agency listed on the web page is the CPSC.

Have some fun with this!  Feel free to post your insights here, too.

CPSIA - Functional Purpose Exception Is All About Dollars Now

The purported Functional Purpose Exception in the last draft of ECADA is unavailable to all but the largest and most well-funded of corporate supplicants.  Is it even THAT good?

Let's start with the premise that the holding by the CPSC Staff that it is "technologically feasible" to make everything without lead at 100 ppm concentrations.  In other words, in CPSIA-speak, it is "possible" to make EVERYTHING without lead.  As noted previously many times, the term "technological feasibility" does not incorporate any concept of money or economics.  It simply signifies that it is possible in the real world to do it, damn the cost.

Thus, the functional purpose exception is intended for products, components or materials that are either not possible to make without lead at compliant levels (not "technologically feasible") or if possible, are unreasonably expensive or disruptive to make ("not practicable").  In other words, the functional purpose test boils down to this:  "not possible to make" or "possible to make but too expensive".  As previously noted, this is further limited to items REQUIRING the inclusion of lead.  These items are quite limited, generally they are metals only.  You'll never see the law reflect this metals limitation honestly because the Dems want to fool you into thinking this provision is something much more than it is. They don't want you to know it's not really for you.

The retort to my argument yesterday is that this exception will be a boon for everyone because you can use evidence from prior hearings (paid for by preceding supplicants) to prove your case.  But since EVERYTHING can be made without lead according to CPSC Staff, the evidence of preceding supplicants is much less likely to be helpful or even available to you.  Why?  Because evidence dealing with technological feasibility is a settled question now.  There is no need for further evidence so all those expensive consultant reports are moot.  The only evidence of prior supplicants that would be useful must  reflect on the question of "practicability".  How likely is it that you can use other people's data on practicability?

The pending draft reads as follows:  "In demonstrating that it meets the requirements of subparagraph (A), a party seeking an exception under such subparagraph may rely on any nonproprietary information submitted by any other party seeking such an exception and such information shall be considered part of the record presented by the party that relies on that information."  [Emphasis added]  In other words, you can only rely on non-proprietary evidence of others reflecting on practicability.  Of this, there will be none.

The issue of "practicability" is essentially one of having to take steps that are unreasonably burdensome in economic terms.  Each competitor in a marketplace has a different cost structure and sets different profit margins. This is very confidential and highly proprietary information.  Sources are confidential, manufacturing processes and innovations are usually trade secrets. All these secrets provide competitive advantage and will not be disclosed publicly. Furthermore, the disclosure of such information could devastate the market for the product, once profit margins or technical manufacturing data are disclosed to customers and resellers.  No one will disclose this information except under seal.  Many people won't even take that step, distrusting the sanctity of their most precious information assets once it is out of their control. 

So there won't be any non-proprietary information to share or use.  Besides, each case will be different.  In reality, the case for Kawasaki to use lead in its ATV engine blocks will be different from the case of Arctic Cat ATVs because their manufacturing processes, cost levels, manufacturing location(s), market position and so on are different.  Deciding practicability for one manufacturer sheds no light on another manufacturer because the entire question is one of economics.  Let's not forget, practicability will be determined not by whether ANY additional costs are imposed, but instead by whether the new costs are unreasonable AND unbearable.  That will vary in case by case, market by market. No doubt extraneous subjective factors like the Dems' paranoia about lead will make for inconsistent judgments of what constitutes an unreasonable burden.  After all, there's no safe level of lead! 

Nothing will extend from one case to another.  Nothing at all.

It is not surprising that this confusion lingers.  The original concept of the functional purpose exception (a lame idea from the get-go) was focused on the question of technological feasibility.  The ability to use other people's submitted consultant reports had some value in that case.  But since that question is now resolved, so the value of sharing the reports is gone.  All that's left is the taste in everyone's mouth.

Where does this leave us?  With no exceptions to the CPSIA, none, zippo, nada, nuthin'.   You can thank the ever-intransigent Dems for this terrible situation.  The functional purpose exception should be DROPPED and replaced with something actually useful to real businesses, before we all expire.  The House Energy and Commerce Committee needs to ask: 

• Who are we trying to benefit? 
• What problem are we trying to solve?
• How will the new provision solve that problem?
• Who will be the beneficiaries of that solution?  [In the real world]
• Do we like the order in which relief is likely to be doled out?  Is it okay to design a provision such that only big companies can get relief in practical effect, or one in which big companies must be granted relief first?
• How much will the process cost?  How risky is the investment in applying for relief?  Is the application for relief essentially automatic, or will it be a case-by-case trial in front of the Commission?
• How burdensome will the application process be?  Is the exemption intended to benefit companies with small high-value product lines of 5-15 products (e.g., ATV manufacturers), or companies with broad product lines (e.g., science educational suppliers can carry many thousands of items)?

Let's get real about the relief we are purportedly offering.  Something good and useful can be crafted but not if it must followed the form of the useless functional purpose exception.  Please, Congress, don't play games - write a provision that speaks clearly and honestly about who will benefit and how.  After three years of this, we deserve at least something clear and understandable.

CPSIA - Oversight Hearing Set for July 6th

The House Energy and Commerce Committee is holding an oversight hearing on July 6th entitled "The Views of the Independent Agencies on Regulatory Reform" featuring CPSC Commissioners Bob Adler and Anne Northup.  Other agencies will also be questioned (FCC, FERC and FTC). 

Break out the popcorn!

CPSIA - Do Accidents Happen?

Accidents happen. It's an old saying.

Once upon a time acts of fate were no one’s fault and we each bore the risk individually. Today, things seem different – when bad things happen, the search begins for someone to blame. The media and politicians feed this trend in hysterical tones (they profit by doing so). Individual responsibility is passé. In the case of children’s products today, blame is often laid at the feet of the product or its manufacturer by the CPSC. In some cases, the fault is clear (the hazard is “substantial”); in other cases, it’s not nearly as clear. In this article, I am only interested in those more ambiguous cases where there is an element of fate or other factors outside the control of the manufacturer. Should we be satisfied with how the CPSC draws the line?

CPSC as Allocator

The CPSC’s assignment of responsibility for injuries (in the form of recalls) is an inherently “legal” process. Our laws allocate risk and responsibility in society in the form of rights. About 75 years ago, legal theorists developed a field of inquiry known as “law and economics” which held that legal systems incorporate economic principles which ensure efficient allocation of resources and promote economic activity. “Rights” are essentially factors of production in economic terms. Ronald Coase of the University of Chicago Law School won the Nobel Prize in Economics in 1991 for his seminal work on law and economics over the preceding 50+ years. Notably, Obama regulations “czar” Cass Sunstein is an ex-University of Chicago Law School law professor, as is President Obama himself.  Sunstein is closely associated with the study of law and economics.

The issues confronting the CPSC over injuries to children are not emotional in nature at all. They are actually purely economic issues because the CPSC is a market regulator. It is an objective fact that injuries to children or other consumers are a cost we bear in exchange for the benefits of economic activity (availability of innovative manufactured products, the provision of jobs, etc.). Naturally, as a community we want to bear as few such costs as is efficient, again to promote growth, hence a societal interest in reducing injuries. The interest in reducing injuries is economic, however; we are not indifferent to cost and judge them in light of corresponding benefits. For instance, this explains why you do not wear a crash helmet on the way to work despite your awareness that fatal auto accidents happen every day. The costs outweigh the benefits.

As a regulator, the agency brokers costs among a large group of parties. Consumer costs related to injury (including emotional loss and lost income, among other things) are weighed against manufacturer and market costs (recall costs, damage to brands, decreased growth, lost jobs, etc.). Whether the CPSC does the math properly or not, their decisions allocate resources by directing that one party incur costs to protect other parties from incurring costs. These decisions are purely economic even if stated in emotional terms. It is therefore clear that CPSC regulators have the capacity to promote economic growth or stifle it.

Is the Goal “No Injuries” Ever?

The CPSC has a legal responsibility to differentiate between a product hazard that causes accidents and accidents caused by the hand of fate. Congress limited the authority of the agency to regulate only those product hazards deemed “substantial” (a term of art under the CPSA and FHSA). As stated here many times previously, I believe the CPSC under current leadership regularly exceeds its legislative authority in this regard. The CPSC acts as though its role is to move society toward a Utopian ideal in which children are never injured or die prematurely. While I certainly don’t endorse injuries to children, the Utopian ideal of injury-free childhoods is illusory. In fact, an injury-free childhood could only be achieved at a very high cost. If the CPSC attaches an almost infinite value to preventing injuries, their allocation decisions will always constitute a transfer (a tax) and cause economic inefficiency (depress economic activity).

This over-appraisal of the cost and consequence of childhood injury is illustrated by recent remarks of Chairman Inez Tenenbaum about a recall of one million pool drain covers. Ms. Tenenbaum appears to justify the recall on the possibility of injury despite media reports confirming that no deaths had occurred since 2009:

"I want to make it clear that this recall announcement does not mean that one million drain covers will need to be replaced or repaired. The recalled covers were marked with the wrong flow rating . . . . Now for those public pools and spas that need their covers replaced or fixed, I have an obligation to advise that those facilities be closed at this time. They should reopen as soon as the work is completed that addresses the recall and brings the facility into compliance with the law. I know this is a very difficult message for many communities to hear so close to Memorial Day weekend, but we cannot risk a child becoming entrapped in a recalled drain cover." [Emphasis added]

This unstated policy attaching infinite value to childhood injury is much more than a strict liability standard because the CPSC only acts after an assessment of fault (rather than simply assigning responsibility). Isn’t the agency saying that the actions or inactions of manufacturers cause accidents?

Recent Recalls Allocate Uncontrollable Costs to Manufacturers

Consider some recent recalls for perspective:

a. Big Lots recalls bunk beds recalled after a three-year-old child died when caught under a futon.
b. Maclaren recalls one million strollers sold over 11 years because of more than a dozen fingertip amputations caused by a hinge.
c. Mattel recalls more than 7,000,000 children’s trikes sold over 14 years because of genital injuries to ten young girls jumping on the trike.

While it may be hard to look past these sometimes grisly childhood injuries, each of these cases calls into question whether the injuries were really the fault of the manufacturer. It’s not worth defending the product designs – let’s concede that in retrospect the products could have been better designed. Parental supervision appears to be an issue in each case. Manufacturers are typically unwilling to resist CPSC recalls by blaming consumers for injuries incurred using its products. That route is very risky and may in fact be more costly than going along with the CPSC’s dictates. As a result, the record in these cases is usually very one-sided – the CPSC has the first and last word on the subject, often on TV. Why would anyone stand up for these companies in public? There’s no incentive to do so; after all, the costs are paid by only one party, and that party isn’t talking.

There is a fundamental error in routinely blaming manufacturers for accidents or fate. It is widely accepted that laws operate efficiently when they allocate responsibility for risk to the party in the best position to address the risk. Manufacturers can efficiently bear many such costs – but not all. For instance, product safety is best assigned to manufacturers rather than consumers. This is fairly obvious – manufacturers know their own products better than consumers do and are best able to take steps to keep products safe at the lowest possible cost (most efficient). This is the reason why the common law tort system assigns product liability costs to manufacturers.

So who is in the best position to control costs associated with accidents or fate? Risks associated with acts of fate are difficult to control.  In fact, many foreseeable risks leading to childhood injuries are completely outside the control of manufacturers:

1. Fate
2. Failures of adult supervision
3. Product abuse or misuse
4. Mental deficiencies or mental illness (e.g., pica)
5. Risks well-known to the user (e.g., knives are sharp).

I would advance that good adult supervision is the lowest cost way to prevent accidents with children’s products. There are significant limitations to what a manufacturer can achieve on behalf of consumers who don’t adequately supervise their children. Of course, drawing the line is a big issue here. But can’t an argument be made that adult supervision of the toddlers using the Mattel trike could have prevented foreseeable injuries from jumping on the trike? That a parent must carefully supervise the location of a child’s hands before closing a stroller? This is a simple point – manufacturers cannot control these factors from their offices or warehouses. The cost for a manufacturer to do so would be excessive.

Some people might argue that assigning blame for matters of fate to manufacturers of consumer products is a neat way to efficiently spread cost among the community. Why not make the manufacturer pay the uncontrollable cost of fate relating to their products, and let them pass the costs along to consumers in the form of higher prices? Manufacturers can be converted into involuntary insurers by public policy, risk intermediaries for events of misfortune. The appeal is irresistible; after all, it doesn’t cost tax dollars to pay for these losses if we force responsibility on manufacturers. Of course, if you are a careful consumer, you might resent paying more to subsidize free-riding consumers who don't take appropriate precautions.  But money aside, doesn’t it reflect a hardening of our society if if we ignore heart tugs when kids are injured? Is this heartless . . . or sensible? Is the CPSC doing the American public a favor by increasingly pushing responsibility for uncontrollable risks to manufacturers?

The Important Role of Economic Efficiency in Laws Governing Children’s Products

I believe bad things do sometimes happen to good people. What is the economic effect of assigning these costs to manufacturers by default? Unfortunately, this invariable result is not economically efficient and will have the effect of a tax on the children’s market. In other words, the economic incentive to participate in markets will shrivel as manufacturer returns on investment decline because of legal risks (costs) they cannot control. This is basic stuff, folks – the reduced economic incentive causes market participants to withdraw, just as high taxes cause people to stop taking risks (trading).

Ronald Coase addressed this subject in two articles that led to his Nobel Prize. In a 1937 paper on the nature of the firm, Coase articulated what became known as the Coase Theorem which holds that if trade in an externality is possible (in this case, childhood injuries) and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights. Translated into English and applied to the facts here, Coase theorized that it would not matter which party was responsible to pay the costs of an injury (victim or tortfeasor) if there was no cost to bargaining between the parties. This of course is not the case in the real world. Coase returned to the subject in a 1960 article entitled “The Problem of Social Cost” and explored the role of regulations in achieving economic efficiency when economic activity creates social costs. This eminently readable article is a foundation stone of modern legal theory.

Considering the social costs of human activity (such as pollution or injuries from the use of children’s products), Coase concluded that efficient allocation of resources would be achieved regardless of allocation of rights relating to social costs (responsibility to pay those costs) provided that trading can be conducted without transaction costs. In other words, in an efficient market, economic factors (resources) will always be put to their highest and best use through allocation of resources and bargaining. Through bargaining in an efficient market, the party with the most productive use of economic factors will ultimately possess the resources, thus ensuring compensation for social costs regardless of who has been assigned legal rights.

Coase cites numerous examples (including torts) in making this point. Coase notes the symmetry of these disputes in his analysis. When cattle overrun crops causing economic losses, there would be no damage without the cattle, and likewise no damage without the crops! Causation is not black-and-white to an economist interested in efficient outcomes. As he notes, a smoothly operating pricing system ensures that “the fall in the value of production due to the harmful effects would be a cost for both parties.”

Nevertheless, Coase recognized that there ARE transaction costs in the real world (e.g., legal expenses, bargaining holdouts, etc.). These costs of altering and recombining rights allocated by the legal system can interfere with the ability to bargain and thus prevent the efficient allocation of resources in the market. He argued therefore that regulations are justified to the extent they allocate rights to the most efficient risk-bearer. Regulations can supersede market transactions by imposing the most efficient outcome. This is presumably the underpinning of President Obama’s call for more federal regulation. According to him, this will be good for us.  Coase might demur, noting that it all depends on the facts as we shall see below.

Coase was realistic in his assessment of the inherent dangers of regulation: “But the governmental machine is not itself costless. It can, in fact, on occasion be extremely costly. Furthermore, there is no reason to suppose that the restrictive and zoning regulations, made by a fallible administration subject to political pressures and operating without any competitive check, will necessarily always be those which increase the efficiency with which the economic system operates. Furthermore, such general regulations which must apply to a wide variety of cases will be enforced in some cases in which they are clearly inappropriate. . . . It is my belief that economists, and policy-makers generally, have tended to over-estimate the advantages that come from government regulation.” Coase’s solution: perform a cost-benefit analysis to make sure that regulations increase economic output (the all-in costs must be less than the all-in benefits when reduced to dollars).

We encounter situations regularly in which the party causing a legal nuisance does not bear the consequential costs. For instance, a home remodeler does not have to pay compensation to neighbors for noise and debris that may adversely affect them. He may feel a social obligation to give them freshly-baked cookies but is under no legal obligation to do so. This is one of many legalized nuisances. Why is this the legal rule? The allocation of rights takes into account that as a society, we want to encourage investment and capital improvements. The small cost of dealing with these inconveniences is considered a cost we all should bear in exchange for the benefits received from the economic activity. This rule does not apply to exceptional cases of nuisance where the costs outweigh the benefits. Not every instance of damage is remediable under our legal system for good reason.

Coase cites a fascinating real world example of this rule carried to a surprising extreme: under traditional English law, railroads are protected from liability for fires caused by sparks from their engines. Coase devotes considerable ink to prove that this legal rule creates an efficient allocation of resources (a positive effect for society) notwithstanding that there are “winners” and “losers”. This result would be very difficult to achieve through bargaining. Clearly a railroad would have a very difficult time working out a deal with every landowner along its lines as a precondition to laying down track.

Importantly, Coase points out that the opposite rule (where the railroad must pay for the fires its engines cause) does much more than just transfer liability. It also shifts incentives to everyone’s detriment. A farmer along the track now can gamble with the railroad’s money – he can get a market price from market buyers if he can harvest his crops or from the railroad if there is a fire. The farmer’s return is thus guaranteed, the incentive to take care is removed, and he will be rewarded for planting crops likely to be burned. This alternative rule’s transfer of costs to the railroad will simultaneously reduce the potential reward for constructing tracks and likely result in fewer train lines, reducing the broadly-distributed economic benefits that come with the expansion of the rail system. In other words, shifting liability in this case makes everyone along the train line poorer.

Coase notes that “nuisances” are not always against our interest: “[Pigou] is wrong when he describes these actions as ‘anti-social’. They may or may not be. It is necessary to weigh the harm against the good that will result. NOTHING COULD BE MORE ‘ANTI-SOCIAL’ THAN TO OPPOSE ANY ACTION WHICH CAUSES ANY HARM TO ANYONE.” [Emphasis added] CPSC, are you listening?

Placing the cost for nuisances on the producers’ shoulders may be well-intentioned but it is not necessarily the right result because it does not provide any incentive to consumers to take steps to prevent injury. “A tax system which was confined to a tax on the producer for damage caused would tend to lead to unduly high costs being incurred for the prevention of damage.”  The CPSC’s tendency to blame products via recalls and bans is the equivalent of a tax in this case. The “unduly high costs” leads to a reduction or suspension of economic activity. We can observe this in the children’s market over the past three years – the agency and Congress have both received considerable testimony on this topic (and seemingly ignored it). Coase won the Nobel Prize for pointing out that regulators often neglect to look at the full economic picture and thus fail to achieve optimal social results.

It goes without saying that the regulators may nevertheless achieve optimal newspaper headlines.

Conclusion

Why is it inefficient to invariably push costs to manufacturers for injuries associated with children’s products? As Prof. Coase notes, in a raucous marketplace, transaction costs can distort the allocation of resources. In this case, the prospect of liability and uncontrollable losses are a high transaction cost that affects the efficient allocation of resources by trade. Coase posits that a cost-benefit analysis must be performed to make sure that efficiency is achieved. The rule for such analyses is quite clear – the all-in cost of the regulation must be less than the all-in economic benefits achieved.

The best way to understand the formula in this case is to look at all marginal children’s recalls as a class. Let’s agree that there actually are some “substantial” product hazards out there and exclude them from our analysis.  [Manufacturers are in the best position to evaluate and prevent "substantial" hazards on behalf of consumers.]  We must also assess all the money spent as a result of CPSC action as a group. It does not matter who spends the money – we want to tote up all the costs and lay them off against all the benefits. The benefits are easy to calculate – there is an economic value to a life and also to injuries. This type of analysis is not only common, it is a requirement of federal law (as a result of Coase’s work outlined above). The government has tables of these values. Likewise, the costs are pretty easy to tote up: out of pocket costs for the recall, replacement of inventory, damage to reputation and brand, legal and regulatory costs, lost jobs, reduced investment, etc.

In the case of accidents or other uncontrollable factors leading to injury, the CPSC’s calculus is defective. It is quite telling that the regulators are not interested in my point that no victims have been identified. Lead-in-substrate victims – NONE. Phthalates victims – NONE. The ledger on the benefits side is undocumented, vague and untested, but the regulators' indifference suggests that they place an almost infinite value on injury or even the possibility of injury. On the cost side, the regulator also seems to largely ignore the impact on markets. As noted by Coase, the regulators are not subject to competitive pressures so they can easily overlook these costs. The math does not add up, and as a result, their decisions inevitably will choke the market. The CPSC acts as though not subject to the laws of economics.

The legislative fix for this misguided regulatory effort is clear – mandate economic analyses as a justification for any CPSC regulation. It is also necessary to restore (actually, to mandate the use of) risk assessment by the CPSC. Risk is all about cost allocation and cost management. By removing the ability to assess risk, Congress essentially removed the wiring necessary for the CPSC to make an intelligent assessment of the economics of their decisions. While the CPSIA was clearly written and passed into law in anger, enough time has passed to expect cooler heads to prevail. Congress, it’s time to act!

CPSIA - Shams and the People Who Perpetrate Them

As far back as December 2009, CPSIA zealots have been promoting the notion that a "functional purpose" exemption is the centerpiece of any fix to the CPSIA.  See Henry Waxman's first attempt at a middle-of-the-night amendment to the CPSIA.  Chairman Inez Tenenbaum chimed in in January 2010 to support the need for a functional purpose exemption:  "I have learned through our implementation of the law, however, that there are circumstances where the exclusion of lead in certain materials or component parts is extremely problematic. Accordingly, it would be helpful for Congress to create a new exclusion to the section 101(a) lead content limits that would allow some flexibility in cases where lead is required for a functional purpose and the elimination of the lead is impracticable or impossible."  At their insistene, this term has always been part of each draft of CPSIA amendment being discussed by the House Committee on Energy and Commerce.

This same approach lives on in ECADA today.  Does it really make sense to offer an "out" for items or materials which "[require] the inclusion of lead because it is not practicable or not technologically feasible to manufacture" without violative lead levels?  How might that judgment be made? 

No matter - the exemption sounds like a nice gesture by the powers-that-be, doesn't it?  Leaves the door cracked just a bit so that companies in the children's market can preserve hope, right?  The provision also addresses the unfortunate but predictable fact that the CPSC has been "unable" to grant even one exemption to the CPSIA in the last three years.  Zero, zip, zilch, nada, nothin'.  Advocates insist that this exemption process solves the problem of an overly-inflexible law without unnecessarily "endangering" children from dreaded lead.

I wonder if you would feel differently if you knew that there are no conceivable materials or products that meet this standard.  The CPSC Staff confirmed it in writing.  The CPSC report on 100 ppm released last week confirms once and for all that the functional purpose exemption is an outright SHAM.  This darling of Rep. Henry Waxman and his minions (including Adler and Tenenbaum) will never be used to grant even one exemption, thus perpetuating the hoax that the CPSIA has exemptions.  It doesn't, it never has and if the Dems get their way with this provision, it never will.  This is no accident.

The CPSC Staff report concludes that the 100 ppm lead level is "technologically feasible" for all products and all materials.  Thus, they recommend the implementation of the new standard on time on August 14 to apply to everything.  This is critical - they conclude that every material and every product can be produced at the 100 ppm level. 

This is actually a narrow judgment under very specific conditions set out in the CPSIA.  "Technologically feasible" is a term of art under the law - it does not have the ordinary English language meaning you might otherwise expect.  Of particular note, the definition does not refer to cost or economics in any fashion.  In other words, if it can be done (at any expense, regardless of how ridiculous), it must be done.  As the staff discovered, almost anything is "technologically feasible" under this definition in a low tech business like children's products.  Of course, you might have to spend a lot of money or take a lot of economic risk.  The law is indifferent to these pedestrian concerns. 

To reach this conclusion, staff also dispensed with the notion that anyone "used" lead at these trace levels. They note that intentional uses of lead were always at concentrations well above 300 ppm:   "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."  In other words, lead is never "included" in children's products at these levels. 

[Note to the Dem Commissioners - you can now officially apologize for your insulting remark that we manufacturers intend to "dose" children with lead if standards are even slightly loosened.]

Staff also confirmed the obvious on health issues relating to these trace levels:  The contribution of products with lead levels of between 100 ppm and 300 ppm is "minimal".

In so concluding, the staff apparently rejected the testimony of the AAP's estimable Dana Best that IQ points were being lost left and right from trace levels of lead. 

So why are the Dems still insisting on a "functional purpose" exemption process?   Well, substantively, there is no rational justification for it anymore - it cannot be granted given staff's conclusions.  That said, who is going to figure that one out?  It sounds good, makes good press for an easily-duped media, and allows Dems to adopt the stump-worthy posture of "listening" to corporate victims while still protecting children against evil companies out to poison them. 

As I said, who is going to connect the dots and figure this one out?  Expect every draft of the pending CPSIA amendment to include this obsolete notion no matter the facts.  It's good for you, remember!

This is called leadership in Washington today.

CPSIA - ECADA Mark-up Delayed . . . What Did You Expect?

Continuing Congress' recent tradition of partisan gridlock, the House Energy and Commerce Committee yesterday "postponed" the mark-up on the CPSIA Amendment (ECADA).  This is no doubt due to the politically-advantageous intransigence of the Dems on basically ANY amendment of the CPSIA.  Although they (through the mouthpiece of Henry Waxman) concede that the law must be changed, they really don't mean it.  Your concerns . . . your complaints . . . your data-driven critiques of the awful CPSIA . . . your lost revenue . . . your lost business opportunities . . . your escalating costs . . . your job cuts . . . have ALL fallen on deaf Dem ears, all for the greater good of putting more Dems in a position to say THEY hold the high moral ground and love children more than evil Republicans.  Soon they will finish the job by preventing any fixes to the CPSIA.

The next chance for a mark-up is the weeks of July 7 or 14. 

And, if you aren't aware somehow, on August 14, the lead standard drops to 100 ppm by legal action under the original CPSIA.  Among the many reasons why the Republicans have been working on this amendment since the FIRST DAY OF THE NEW CONGRESS (see my blogposts of January 7th and thereafter) is to head off that terrible change in law.  Aside from the absurdity that Congress ENDORSED the sale of merchandise with 300 ppm lead for two years only to legislate a reverse course on August 14, 2011 when the merchandise magically becomes dangerous overnight, the provision has been interpreted to be RETROACTIVE in effect.  In other words, your inventory becomes unsaleable after August 13 even if in compliance with prior law if even a single component violates the trace 100 ppm lead-in-substrate standard.  For perspective, consider that the dirt in the White House vegetable garden has been tested out at 93 ppm lead.

As previously discussed in this space, retroactive bans are extremely rare in American law and never before have they been so carelessly used or endorsed as in the awful CPSIA.  So there is a ticking time bomb in the CPSIA - and the Dems are perfectly content to let it explode in your warehouse or your store.  Expect many order cancellations soon.

Thanks Dems.  Good job governing. 

CPSIA - Battles Lines Drawn

As ECADA moves toward a mark-up, possibly next week, the action over the CPSIA is happening elsewhere on the Hill.  In yesterday's The Hill newspaper, it was announced that the pending Appropriations Bill knocks out all funding for the noxious CPSIA database. 

It is symptomatic of the partisan gridlock in Washington that a policy debate has to be dealt with by withholding funds.  The parties are simply unable to agree on anything.  To agree is to give up political advantage.  In gridlock, it is always possible to blame the other party and to paint them with whatever black brush is handy.  This is particularly attractive to a minority party like the Dems in the House - they want their majority back.  Thus, while the "defenses" for the absurdly over-reaching rules governing the database are almost laughable, the Dems posture as though any change threatens the American way of life.

That said, it's a good thing that the Appropriations Bill is doing the work that the House Energy and Commerce Committee hasn't done or perhaps cannot do.  Brokering agreement with someone as unyielding and unreasonable as Henry Waxman is no small feat.  Rationality and reason, not to mention good policy, have no apparent effect on this ideologue.  He won't concede that Rep. Mike Pompeo, and the other database haters, have legitimate concerns.  NO ONE is asking that the database die, just that it be a fair game for everyone.  It's only because the Dems won't give a millimeter that you get the Appropriations Bill.  If Energy and Commerce can't change the database, or the CPSIA, I commend the Appropriations Committee for taking action to protect American businesses from government-sanctioned slander.  Somebody had to do it.

There's no telling where all this goes.  The Republican majority in the House may be able to shine a light on the issues of the CPSIA, but since the Dems control the Senate and White House, it seems as though the Dems are capable of blocking progress.  Three years of work have no persuaded one Dem of anything, by all appearances.  [Hence my disillusionment, frustration and outrage.] 

There is little sign that the Dems will give an inch - and you know what that likely means.  You and I are (remain) screwed.  Stasis means the 100 ppm standard gets implemented in two months, possibly retroactively.  It means that you must continue to test internal components for phthalates and test and retest everything else endlessly without relief of any kind.  It means that the 12-year-old age limit for everything stays in place, rhinestones and brass remain illegal (but osmium, iridium and ruthenium are still a-okay!), books and bikes and ATVs remain under the thumb of the CPSC, and many, many businesses will further weaken. 

NO child will be safer, and NO injury will be avoided.  The advocates can't provide evidence that ANYONE was EVER injured so there is no rational reason to believe this massive disruption will save a life or even a paper cut.

The battle lines are drawn.   Perhaps now you know why I was so disappointed when only one wiener resigned from Energy and Commerce today. I can think of a few more that ought to go . . . .

VOTE FOR ECADA AND END THE CPSIA CHARADE!

CPSIA - NSSEA Calls for Letters on ECADA

The NSSEA (National School Supply & Equipment Association) is calling for letters in support of the pending CPSIA Amendment legislation (ECADA).  Please send the below letters BY FAX to your House Representative and to members of the House Committee on Energy and Commerce.  You can get the fax numbers off each Representative's website.  The mark-up may happen as soon as Monday June 20th (but is not scheduled yet to my knowledge).

Now's the time to stand up and be counted!!!  There are two forms of letter below (Manufacturer and Dealer/Retailer).  Please modify as appropriate.


Letter from Manufacturers:

Dear XXXXXX:

I am writing as a constituent and concerned member of the National School Supply & Equipment Association (NSSEA) to express my support for HR 1939, the Enhancing CPSC Authority and Discretion Act of 2011 (ECADA). We urge you to support this important bill that fixes problems created by the Consumer Product Safety Improvement Act (CPSIA) while maintaining the core provisions of this law that ensures the safety of consumers.

[INSERT INFORMATION ABOUT YOUR BUSINESS, INCLUDING NUMBER OF EMPLOYEES]

The safety of our products and the safety of our customers are our top priorities. Unfortunately, we have encountered many problems in trying to comply with the well intentioned but overly burdensome CPSIA. We have been forced to spend thousands of dollars for unnecessary lead and phthalate testing and continue to deal with compliance programs that change multiple times to meet constantly changing rules. ECADA provides common sense reform to sections of CPSIA which have burdened our industry during these challenging economic times. Given your strong record as a friend of small business and manufacturers, I hope that I can count on your support for this bill.

A costly new rule mandating a burdensome, unreasonable testing regime, the lifting of the stay on third party testing for lead substrates, and the retroactive application of a tighter lead standard despite overwhelming evidence showing that this new limit is not technologically feasible are just several challenges that my company will face this year if the reforms in ECADA are not approved by Congress soon. ECADA reduces the most excessive regulatory burdens created by CPSIA while maintaining protection for consumers. The bill enhances the Consumer Production Safety Commission’s (CPSC) ability to investigate complaints and prioritize testing based on cost-benefit analysis, and improves the CPSC’s public database by ensuring more accurate information.

As manufacturers and small business struggle to recover from the worst recession in decades, it is vital that government does not impose costly and unnecessary regulations that have no positive impact and hinder the fragile recovery. I urge you to vote for ECADA to ensure that companies like mine can continue to provide quality products and services that are so important to our children's education.

Sincerely,

XXXXXXXX

 
Letter from Dealers/Retailers:
 
Dear XXXXXX:
 
I am writing as a constituent and concerned member of the National School Supply & Equipment Association (NSSEA) to express my support for HR 1939, the Enhancing CPSC Authority and Discretion Act of 2011 (ECADA). We urge you to support this important bill that fixes problems created by the Consumer Product Safety Improvement Act (CPSIA) while maintaining the core provisions of this law that ensures the safety of consumers.

[INSERT INFORMATION ABOUT YOUR BUSINESS, INCLUDING NUMBER OF EMPLOYEES]

The safety of our products and the safety of our customers are our top priorities. Unfortunately, we have encountered many problems in trying to comply with the well intentioned but overly burdensome CPSIA. As a distributor, we fear that the range of products offered by our suppliers will continue to narrow due to the costs manufacturers incur for unnecessary lead and phthalate testing. In turn, the needs of American students will be unmet, including those children with disabilities and special learning needs, because fewer specialized products will be available to our customers.

CPSIA has caused considerable confusion in the marketplace due to the constantly changing rules and regulations associated with the law. ECADA reduces the most excessive regulatory burdens created by CPSIA while maintaining protection for consumers. The bill provides common sense reform to sections of CPSIA which have burdened our industry during these challenging economic times. The bill enhances the Consumer Production Safety Commission’s (CPSC) ability to investigate complaints and prioritize testing based on cost-benefit analysis, and improves the CPSC’s public database by ensuring more accurate information.

Given your strong record as a friend of small business and manufacturing, I hope that I can count on your support for this bill. As small business struggles to recover from the worst recession in decades, it is vital that government does not impose costly and unnecessary regulations that have no positive impact and hinder the fragile recovery. I urge you to vote for ECADA to ensure that companies like mine can continue to provide quality products and services that are so important to our children's education.

Sincerely,

XXXXXXXX

CPSIA - Lies and the Lying Liars Who Tell Them

We live in interesting times.  There has been no action by Congress to deal with the CPSIA since its controversial passage in August 2008 despite consistent and loud hue and cry.  Right now, Dems are blocking progress.  Apparently, they think the biggest threat to America is ANY change to the CPSIA. Our markets, our jobs, our livelihoods will be a necessary sacrifice to . . . what? 

Reelection.

During this crisis of thousands of businesses catering to children, a Democrat on the House Committee on Energy and Commerce, the committee charged with managing the CPSIA mess, has been emailing photos of his you-know-what to women and girls all over America.  One of Anthony Weiner's email correspondents was reportedly voted "Most likely to be involved in a tabloid scandal" by her high school class (she's only 21, it wasn't long ago).  I think you get the (sordid) picture.  Mr. Weiner has been of no use on the CPSIA, riding the high horse "protecting children" with his Dem brethren, at the VERY SAME TIME he was using the Internet for interactions that are, at a minimum, pretty creepy. 

So Weiner is against letting even a notch out on the CPSIA belt around our necks, too unsafe . . . but he thinks it's okay to creep around on the Internet, shooting pics of himself in the Congressional locker room and sending them out to his female Internet pals (one of whom was a porn star).  Hypocrisy?  How can that be, the Dems are cloaked in white, right???

Mr. Weiner remains perplexingly in office.  As Chairman of the Republican National Committee Reince Priebus noted on Meet the Press:

"What we called for is for Nancy Pelosi and the Democratic leaders in this country to do what every American knew had to be done immediately and call for his resignation. Now, it seemed to me that for the first 10 days in this circus that the only job [in America] that Nancy Pelosi was interested in saving was Anthony Weiner's. We've got crushing unemployment in this country, we've got a president that's, that's whistling past the graveyard, we've got families that are struggling, and instead we've got leadership in a Democratic Party that are defending a guy that deserves no defense."  [Emphasis added]

And back at the ranch, the CPSIA Amendment (ECADA) is stalled.  Why?  Consider the May 25th words of Rep. Henry Waxman, Ranking Member on the Energy and Commerce Committee and principal roadblock to relief:

"But instead of refining a good law, the Republican bill goes after the law with a wrecking ball. The result is an assault on children’s safety.  The Republicans call their bill the 'Enhancing CPSC Authority and Discretion Act.' A better name is the 'Unsafe Toy Act.'"  [Emphasis added]

That's right - the Dem leader is calling the work of the Republican majority the "Unsafe Toy Act".  Hmmm.  Please NOTE that the General Counsel of this committee (Gib Mullen) is the former General Counsel of the CPSC and its former Director of Compliance.  Is the implication that this former Kirkland & Ellis partner is a "hack", lacking principle and integrity and is simply doing as he is told by Republican overlords who don't care about children's safety?  Please, if you believe that, I have a bridge to sell you.

The label "Unsafe Toy Act" is an insult and a lie in so many ways.  First of all, it isn't true.  As I have discussed extensively in this space, ECADA is a surgical revision to the CPSIA, designed to fine tune the law without restructuring it.  Reporters have called me to ask what the big deal is.  Good question but the answer is obvious.  No rational person subject to the laws of the United States or residing here would want to make toys, or any children's product, "unsafe".  If you insist that they would, Mr. Waxman, PROVE IT.  Oh yeah, you don't do that, do you?

Second, Mr. Waxman impugns the dignity and integrity of anyone who would dare support ECADA.  That includes me since for more than 20 years my career has been devoted to making educational products (with perhaps the best safety record in the entire children's product industry).  Mr. Waxman's label plainly announces to the general public that I favor poisoning kids to make more money.  That is rather offensive, to say the least.  Members of the House of Representatives are permitted to speak their minds, through and including libelous remarks, while on the House floor.  They literally can say ANYTHING with impunity - I can't sue them for this slander.  As such, there is no recourse for this slander.

This unfortunate label is at the heart of what the Dems are after - political advantage.  Those of you who periodically pepper me with defenses of good Democrats fail to recognize the consistent pattern of obstruction and failure to act reasonably among the small group (cabal) of Dems and associated consumer groups behind this roadblock.  The pattern of lies is all for political effect.  Can you imagine the reelection commercials?  Good for the Dems, bad for anyone who disagrees with them.   The threat even applies to Dems who might have a conscience and be willing to stand up to the demagogues - the consumer groups are ready to attack them, too.  Everyone knows it, no one wants to say it.

Mr. Waxman trots out the usual lies and misstatements, relying on the trick of portraying this law as a "toy law":

"The Unsafe Toy Act triples the amount of lead allowed in most children’s toys. For some children’s products, the bill would allow lead levels to increase 100 times or more.  The bill eviscerates the requirement that toys imported from China be independently tested for safety. . . . Just listen to what the experts are saying about this bill. The Consumer Federation of America says that the bill creates 'huge loopholes.' Consumers Union says it will 'lower standards and roll back safeguards for children and infants.'  The American Academy of Pediatrics and 100 other experts in children’s health wrote to express their 'deep concern' over the bill because it 'would have the effect of permitting more lead in toys.'  Chairman Inez Tenenbaum of the Consumer Product Safety Commission and a majority of the Commission wrote that the bill 'would effectively revoke key protections … and fails to adequately protect the health and safety of American children.'"

I have rebutted the consumer group "arguments" numerous times in this space already. I am not going to repeat myself here.  Mr. Waxman's reference to "triple" lead levels refers to a new limitation on the excessive and useless 100 ppm lead standard that, btw, has never been deemed technologically feasible by the CPSC.  The "change" to lead levels of 100 times or more than existing standards refers to the rule exempting metal alloys (like brass) complying with the stay authorized by the CPSC Commission.  OMG, you mean we can still use brass in children's products like pens and trumpets?  The HORROR!

Neither the consumer groups nor Mr. Waxman and his Dem brethren have answered my question - Where are the victims?  This question was asked several times in the April 7th hearing by members of the committee.  To date, no one has supplied even one case history.

No one calls Mr. Waxman to account for his lies and innuendos, so he persists in trashing those who can't defend themselves.  This is not unlike his unjustified attacks on Toyota that were later proven FALSE.  Mr. Waxman did something similar at the April 7th hearing first discussing the CPSIA Amendment.  In his opening statement, Mr. Waxman laid it on thick: 

"But your discussion draft, which is the subject of today’s hearing, takes a wrecking ball to the law and would endanger young children. . . . Your discussion draft is a very different document. Democrats, consumer groups, and health experts were not consulted. The result is a one-sided proposal that provides relief to industry, but sacrifices children’s health and safety. . . . I have learned over the last few months that there seems to be no limit to the ability of the new Republican majority to pass bad legislation in this Committee and on the House floor. I have no doubt that if you want to do so, you could do so again with your draft bill.  But there is no chance that a bill this extreme could ever become law. It would not survive in the Senate and if it did, it would be vetoed by the President." [Emphasis added]

It's always nice to end with a threat.

The title of this post refers to a lampoon written by now Senator Al Franken (D-MN).  In this book, he contends that Republicans are liars.  Well, well, well, how times change, huh?  Mr. Franken???  Any comment?

I didn't think so.

CPSIA - Fools in Charge

So happy to be so safe . . . and so unemployed!

Today's initial jobless claims report is yet ANOTHER report card on the dense and unthinking approach to economics implemented by Mr. Obama, Mr. Waxman and their Dem minions since the 2008 election.  A full three years after the economic cataclysm, and with a diminishing ability to blame this misfortune on someone else, the Dems stubbornly stick to their over-regulation agenda dooming Americans to safe, safe unemployment.  Can't be too careful, you know.

The CPSIA is the poster child for the Nanny State.  Mr. Obama told David Letterman on September 21, 2009 that the national problem he had to fix was that we had "too little government, too little regulation". Our industry has become a classic example of the cure being worse than the disease.  The story has been told again and again.  For instance, the CPSC heard (and promptly ignored) at its February 16th hearing from a representative of the bicycle industry, all the small bicycle manufacturers have left the children's market and the big makes of bikes have sharply cut their product lines.  They also informed the CPSC that if the 100 ppm lead standard comes into force, the rest of the bikes will disappear from the market.  Quite a stimulus plan - you can imagine all the jobs this useful plan has created.  Other consequences is a general reduction in choice and availability in child-size bikes, which not only punishes families but also retailers.

Do any of the numskulls running our safety apparatus have evidence that any child has EVER been poisoned by lead-in-substrate from a bike?  No, they don't - because there is no evidence that any child was ever injured by lead-in-substrate anywhere using any product at any time.  Did you realize that one of the big problems in making a bike comply with this moronic law is that bikes use recycled steel for the frames - and the law provides that paint does not constitute a "barrier" over the steel.  The lead content of recycled steel is hard or impossible to consistently control at the levels dictated by the law.  The industry representative submitted testimony and evidence to the CPSC (consistent with evidence I have also supplied) showing that tests on the SAME PART in ten places yields ten different lead contents. 

This law is killing jobs, products, companies and markets.  The evidence and data is right there for any thinking individual to read and consider.  The true believers stand in the way of rationality.

Please send Mr. Waxman and Mr. Obama a thank you note for the weak, sinking economy.  They have CHOSEN this path of Nanny Statism to keep you "safe" although they really can't demonstrate you were ever unsafe or that you needed this further protection.  If you are one of the unlucky 9.1% who can't find a job, perhaps you will take some comfort in knowing that your Dem-led government made this choice for you.  Safe but unemployed - that's what you need, what you want, what you got.  The best government money can buy . . . .

The solution to fools in charge is to amend the CPSIA and restore sanity in safety administration.  PASS ECADA AND END THE CPSIA CHARADE!

CPSIA - Consumers Union is Hazardous to Your Health

Lies, innuendos, misstatements, twists - which is it this time?

Today Ami Gadhia, one of the Consumers Union CPSIA hacks (a.k.a. "Policy Counsel") weighed in with her usual bunk about the lurking "dangers" in children's products.  In particular, today's tripe is a protest against modifying the CPSIA.  Her writings and utterances are invariably infuriating for their lack of perspective, tall tales and general fear mongering.  In her article "Turning Back the Clock on Child Safety Protections", Ms. Gadhia continues her fine tradition of twisting and obfuscating the facts.  Considering her background in the subject matter and her law degree, one must assume ill-intent.  This can't be accidental.

Let me debunk her junk one-by-one:

a.  "Turning Back the Clock on Child Safety Protections":  The Op-Ed's title is absurd in light of the actual bill's wording.  The CPSIA Amendment (ECADA) is a mild and surgical bill intended to offer minimal but effective relief from over-regulation while preserving the structure of the CPSIA.  Killing the CPSIA is politically impossible, it appears, so this is the best that can be offered at this time.  Ms. Gadhia must be asserting that ANY change in the CPSIA is a setback.  This argument is always left unproven - but no one ever holds her accountable so why not tell the tall tale?  The consumer groups rely on the appeal of the "zero sum" argument which also goes unchallenged.  It goes like this:  ANY change in the CPSIA which might benefit a business is THEREFORE a setback for children's safety.  If the Cubs lose 15-5, they are somehow better off if they instead lose 13-5.  Right. . . .

b.  Ms. Gadhia, like her fellow manipulators in the consumer "advocacy" field, relies on an emotional appeal to kick off her crock - the story of a child who swallowed magnets, leading to gory injury.  A few notes on this line of reasoning:

• The CPSIA is NOT a toy law.  Despite Ms. Gadhia's relentlessly repetitive references to toy safety, the law applies equally to ALL children's products, from shoes and t-shirts to pens to rhinestones to ATVs and bikes to books to educational products to carpet to what-have-you.  By focusing on toy gore, Ms. Gadhia lulls her reader into overlooking the awesome overreach of this bill.  We don't want kids injured by magnets . . . ergo, we should ban all hazards in all things.  Huh?
• The magnet hazard she refers to had never been seen by the agency previously.  It was a classic latent hazard, unregulated specifically because it was unrecognized.  You can see Gib Mullan, the current General Counsel of the House Energy and Commerce Committee and former General Counsel and Director of Compliance at the CPSC say ON VIDEOTAPE (at the CPSC Tracking Labels hearing) that the agency first thought the problem was a small parts issue, not a strong magnets issue.  No law can effectively regulate UNKNOWN hazards.  Claiming that the CPSIA "solves" this safety issue is pure baloney.
• The magnet hazard was addressed promptly and effectively by the agency without the need for changes implemented by the CPSIA. The agency had this power under its 1972 enabling legislation and following laws.
• Sometimes bad things happen to good people.

c.  Ms. Gadhia intones ominously about banned phthalates and their links to "a variety of health risks".  As has been well-documented here, that provision was placed in the law at the last minute by Diane Feinstein, true to her San Francisco roots.  This is the same place that worked for years to ban circumcision.  Yes, they are really scientific in that community.  For a discussion of phthalates, please watch the 60 Minutes segment in which I appeared.

d.  Ms. Gadhia trots out yet another misleading but longstanding justification for not changing the CPSIA - namely that it passed by an overwhelming majority of Congress.  I fail to grasp the intellectual power of this "infallibility of Congress" argument, and further note that dozens of members of Congress have been trying to change the law ever since.  There has been more than a dozen bills floated to amend this "perfect" law since August 2008.  In addition, the timing of passage of this law (three months ahead of the 2008 Presidential poll electing Mr. Obama) made it very dangerous politically to vote against this terrible law if you wanted to keep your job in Congress.  Even Mr. Bush had to sign it for political reasons.  The political and media frenzy in 2008 made rationality impossible, and minds were made up.  Have you ever made a bad call when you were furious?  'Nuf said . . . by everyone except the dangerous Ms. Gadhia.

e.  The Consumers Union storyteller informs us that ECADA "would poke some serious holes in the product safety net".  What a dream if Ms. Gadhia were actually right that this amendment would actually dent the CPSIA that I hate.  It doesn't, regrettably.  To "prove" her points, she lists four lies:

• "The bill undermines safety testing for children's products".  The bill eliminates MANDATORY testing as required by the CPSIA.  It does not ban testing, nor does it discourage or remove the incentive to test.  Excessive testing is one of the original problems cited in the bill, and has cost our company well in excess of $1 million since the passage of the bill - all without making even one product in our product range safer, even a little bit.  This term is the brainchild of the consumer groups (Rachel Weintraub?), reasoning that if the government didn't require mandatory testing, no testing would be done.  This misconception overlooks the enforcement of the new standards.  It is IMPOSSIBLE to assess whether you comply with the standard without testing.  Enforcement of the standard, as is anticipated, means that everyone WILL test.  What is being eliminated is the role of Mother Government "helping" us by telling us how to run our businesses.  If the standard is enforced, people will HAVE TO test.  If they don't enforce the standard, they won't enforce mandatory testing either. What's the big deal here?  Just the opportunity for Ms. Gadhia to mindlessly bang her drum.
• "The bill undermines lead protections".   Ms. Gadhia informs us that consumer confidence would "erode" if the current one-size-fits-all standard is replaced with "a variety of standards that will be different depending on when the product was manufactured, the age of the child for whom the product is designed, whether it contains small parts, and other factors."  OMG - standards that are reasonably tailored to the individual hazard and individual product!  NO - please tell me we still live in a world where books, t-shirts, diamonds and rubies, ATVs, bicycles, appliances, pens, carpets, DVDs and toys are ALL subject to exactly the same rules. What is the world coming to???  I presume Ms. Gadhia thinks we are idiots, or else this is all she has, which ain't much.  Anyone surprised?
• "The bill undermines the effectiveness of the new crib safety standard".  I have previously addressed this issue - the three Dem Commissioners made this same baseless accusation a few days ago.  See my reply in this space.
• "The bill undermines the new public database for people to report and read about product safety problems".  Ms. Gadhia warns "the provisions in this legislation would place onerous burdens on the person making the complaint, thereby discouraging parties with valuable safety information from reporting."  Whoa - you mean we won't get to see stuff like this, this and this again???

Ms. Gadhia needs to get one last jab in:  "The Leisy family's experience shouldn't happen to another child."  Okay, I don't want to see any child injured ever again for any reason . . . but does Ms. Gadhia even make a coherent argument here?  Does one thing have ANYTHING to do with another?

It's time to turn back the clock on irrationality and lowest common denominator government.  Who should set the tone for us - the Anthony Weiners of the world (did you hear that his wife is pregnant?) or people that are interested in children's safety AND the viability of American businesses that provide jobs to your neighbors and valued products to your kids?  I think it's time that our representatives in Congress, especially those in Congress calling themselves Democrats, to stand up for WHAT'S RIGHT rather than what's easy or what's safe (for their job security).  We pay them to lead, not to cower.  PASS ECADA AND END THE CPSIA CHARADE!

CPSIA - He Was Always a Weiner

Rep. Anthony Weiner (D-NY) is the latest politician caught doing naughty things ("The Incredible Shrinking Weiner", "Weiner Admits He Sent Lewd Photos; Vows Not to Resign", etc.).  It is no small irony that the zesty Mr. Weiner blew hot and cold on the CPSIA. It's one of his issues - he is a long-time member of the House Energy and Commerce Committee and one of the people we are ostensibly supposed to BEG for help on the CPSIA.  On two occasions, he sent letters asking questions about this noxious law (July 7, 2010 and January 7, 2009) but never actually voted to help us.  His letters are evidence that he knew that there were serious problems affecting, among others, his constituents.

Thus, we cannot nominate the Weinerman for the Hall of Fame, notwithstanding his apparent interest in our problems.  It is regrettably true that Mr. Weiner never actually DID anything for us other than send the letters.  As per the usual for EVERY SINGLE DEM, Weinerboy fell into line with the Waxmanis and refused to break ranks to support efforts to amend a law he himself questioned.  Now that's great government! 

At least he was never so heavily committed to our cause that it took time away from his hobbies.  Work-life balance is so important!

Dare we hope to someday miss Mr. Weiner???