CPSIA - Three Dem CPSC Commissioners Accuse Industry (You) of Dosing Kids with Lead

In a revolting display of cowardly fear mongering, the three Democratic CPSC Commissioners yesterday wrote the House Committee on Energy and Commerce and its Subcommittee on Commerce, Manufacturing and Trade to protest the proposed CPSIA amendment.  In this letter, in defense of the lead-in-substrate provisions, the Dems sow fear by suggesting what you might do:

"The CPSIA set one of the most protective lead limits for children's products in the world. The public health community continues to hold its overwhelming consensus: There is no safe level of lead.  We oppose any change in the law that would lead to an increase in the DOSES OF LEAD to which our children are exposed on a daily basis, particularly when the marketplace has for the most part already adjusted to lower lead levels and is well on its way to getting the lead out of children's products." [Emphasis added]

Hmmmm.  Apparently we evil toymakers, sinister educational product makers, monstrous t-shirt and jeans producers, venal shoemakers, diabolic rhinestone merchants, demonic ATV purveyors, fiendish motocross enthusiasts, vile vending machine operators, corrupt jewelers, slimy resale shop owners, worthless book publishers, perverse pen companies, satanic carpet weavers - we all are just waiting for the CPSC to look the other way so we can "dose" children with lead.  

This kind of asinine accusation normally would be something to deride and lampoon in this space, but in this case frankly, it's not at all funny.  Here you have three CPSC Commissioners with a majority vote (including Chairman Inez Tenenbaum) going national with serious, maligning insults of our values and our integrity.  They can hardly restrain themselves - they go further to assert that we have only "for the most part adjusted" to the new rules - you know, by firing people, cutting products, withdrawing from markets.

This is your "leadership" on the Commission.  I want to vomit.

CPSC Commissioners are appointed by the President.  I wonder if a better word is "planted".

The letters make clear where children have lead exposure risk.  Lead in D.C. tap water, no, that's fine - what can anybody do about THAT?  House paint, environmental sources - nah!  No, the real problem is industry and its "dosing" through children's products.  The last line of defense is the CPSIA.  The three Dem Commissioners put it succinctly - change the law and poison children. Better to over-regulate than under-regulate because it's a zero-sum game, right? 

As usual, the Dems don't mention that THEY CAN'T PRODUCE EVEN ONE INJURY VICTIM FROM LEAD-IN-SUBSTRATE IN CHILDREN'S PRODUCTS.  There are more than 50 million children in this country in the regulated age group and no one can find a single injury victim - EVER. Nonetheless they apparently think it's perfectly fine to wag their fingers at us and accuse us of unspeakable acts.  

Who'd say anything, anyhow?  Won't get fooled again. . . .

I guess we have a hint here how these people might vote on the technological feasibility of 100 ppm.  Giving them an extra year to lower the boom won't do anything to protect my employees or my customers - they are TELLING US that the die is cast.  That's because you and I apparently want to "dose" children with lead the first chance we get!  They reinforce the hyperbolic tone by standing pat on the age limits under the CPSIA - we NEED the 12 year old limit.  Why? Because Mommy says so.  Junk science to the rescue! We can't have kids eating their ATVs, can we?

Does anyone wonder why trust in this agency is destroyed beyond repair?  Who in the business community would ever expect to get a fair shake from these consumer group front men?  Government for all us?  Hardly.

Defending themselves on a weak point, the Dems contend they are sympathetic to small business. Myself, I can't measure commitment by limp and syrupy words of consolation - I look at what they do, not what they say.  These people have done precisely ZIPPO for small business after three years of begging, pleading, screaming.  I am tired of hearing about how much they CARE about small business. [Guess who drafted the letter?] As a friend of mine used to say, it's bullpucky.

Here's a shocker:  I actually agree with one thing these people say - that parents deserve safe products regardless of who makes them. Of course that makes sense (no one cares whether a tortfeasor is a big company or a small company) which is why I want sensible standards that apply equally to everyone. In this case, the government should stop telling us how to run our businesses.  Make a reasonable set of standards based on a real and defined "substantial product hazard" standard and go from there.  This is parent-friendly and quite workable for small business.

Of course, my suggestion would make these Democrats much less important and certainly less heroic.  Their letter makes clear who "saved" America - the CPSIA, the Dems in Congress and the Dems on the Commission.  They're the ones who really CARE.  

Won't get fooled again . . . .

Fittingly, the letter wraps up with words dripping with insincerity:  "Nevertheless, while it is true that no one, including us, wishes to over-regulate, similarly we cannot support under-protecting the American consumer, particularly our nation's children."

In other words, the Democrat Commissioners are daring Congress to loosen the nose around out necks and are prepared to blame them if anything goes wrong. This also provides cover for zealot Senators who will make sure you have a great opportunity to go bankrupt or remain under the thumb of their out-of-control agency.  I don't think it's much of a stretch to say it looks like a conspiracy - Democrats against you.

It would be wrong to call this letter disillusioning.  That happened a long time ago.  It also conveys little new information. Anyone truly shocked by this letter by these authors has been asleep at the wheel for the last three years.  This merely confirms or updates what we already knew.  I don't have a solution to people like this running the show.  I can't do anything about it.  One of them, Thomas Moore, is now about six months past the end of his term.  Maybe Congress forgot about him.  

Pay attention today.  The stakes are high and getting higher.  The CPSC is working against you.  We will need keep fighting to survive.

CPSIA - My Remarks at House Working Session on CPSIA

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CPSIA - Why Does The Press Push Bad Ideas?

Last week, Justin Pritchard of the Associated Press again pressed the point that glassware with lead in the enamel should be recalled. He expressed shock at the "stunning" news that the CPSC reconsidered its view that the glasses are subject to the noxious lead regulations of the CPSIA.

Why did Mr. Pritchard find this outcome "stunning"? After all, in response to a question about the risks involved in the glasses, Pritchard had this to say in a TV interview: "The [lead and cadmium] levels are low in the sense of . . . no one is going to touch this glass, put their hand to their mouth and fall ill. This is a low level over time concern." If the glasses are a low risk, why would he expect a federal regulator to waste time or resources on them?

Even more remarkably, Pritchard knows that the McDonalds Shrek glasses were found to be non-toxic by the CPSC. He broke the McDonalds story. The Shrek glasses present precisely the same "issue". He also knows lead is only restricted in children's products and that enamel coatings containing lead are permitted explicitly in the law (16 CFR 1303.2(b)(1)). There is no evidence that the presence of lead in the enamel has ever injured anyone. Ever.

So why is Pritchard continuing to push a story that he knows is defective? This puts it kindly. Let's rule out that he is seeking a Pulitzer or has an ill-motive. Why would he do this?

Of course, we know there is a bias in reporting and in investigating that favors reporting "bad news". Good news is not really considered news at all (except on the sports page). The media's incentive is to publish terrifying stories - it sells papers and banner ads, and it's natural for Congress to push legislation to save us from poorly understood threats as an extension of this trend. But something else is at play, it turns out.

This subject is analyzed in an interesting article by Jonah Lehrer in this week's New Yorker magazine entitled "The Truth Wears Off". Lehrer tries to explain why replication of scientific studies tends to show declining results over time. This is quite unexpected given that scientific studies are subject to peer reviews and are often published by periodicals with their own high standards of review. Lehrer notes that in small studies, weird results can show up (such as a 1930's study which claimed that one Duke University student had ESP but later retesting revealed the student's rapidly diminishing extrasensory powers . . .). In larger pools of data, results revert to a mean (this is called "funneling"). However even statistical significance doesn't explain the phenomenon. Lehrer shows that we only get to see certain slices of data. Most data won't be published because it's not interesting or doesn't confirm prejudices.

Put into a CPSIA context, Lehrer implicitly argues that media won't write a story announcing that lead-in-enamel on your glassware is safe. Nor that you were always fine and your children weren't in danger. Nor that there have been few injuries from lead in any children's products. Nor that the few known injuries in the context of the large volume of products in use is actually a GOOD result. Nor that there are no identified victims of "phthalate poisoning" or that incidents of cadmium poisoning in American children are virtually unknown. The excuse - it's not "newsworthy". What's the reality?

The reality is that we are exposed to a very imbalanced set of data. Quoting Michael Jennions, a biologist at the Australian National University, Lehrer argues that "the tendency of scientists and scientific journals [is] to prefer positive data over null results, which is what happens when no effect is found." If the null set (the "everything's fine" news) doesn't get reported, what does? Says Richard Palmer, a biologist at the University of Alberta, "We cannot escape the troubling conclusion that some - perhaps many - cherished generalities are at best exaggerated in their biological significance and at worst a collective illusion nurtured by strong a-priori beliefs often repeated."

The same mantra over and over? The words "Rachel Weintraub" suddenly pop into my mind.

Lehrer continues: "[T]he problem seems to be one of subtle omissions and unconscious misperceptions, as researchers struggle to make sense of their results. Stephen Jay Gould referred to this as the 'shoehorning' process." Referring to studies in Asia that consistently confirm that acupuncture is effective, and studies in the West that show much poorer results, "Palmer notes, this wide discrepancy suggests that scientists find ways to confirm their preferred hypothesis, disregarding what they don't want to see. Our beliefs are a form of blindness."

Or to quote Robert Adler, anecdotes aren't evidence.

John Ioannidis, an epidemiologist at Stanford University who once published a study entitled "Why Most Published Research Findings are False", calls the phenomenon "significance chasing" where scientists play with numbers trying to find "anything that seems worthy". In a news context, this is the same as Pritchard fingering the Super Hero glasses on the grounds that there is lead in the enamel even though he knows the Shrek glasses were safe. Maybe these other glasses are a problem?! Jeff Plungis of Bloomberg published an article on lead in Christmas light wires on December 8th because he apparently thought it was "interesting" and not well-known. Same thing.

Ioannidis says "It feels good to validate a hypothesis. It feels even better when you've got a financial interest in the idea or your career depends on it. And that's why even after a claim has been systematically disproved . . .you still see some stubborn researchers citing the first few studies that show a strong effect. They really want to believe that it's true." [Emphasis added]

Lehrer's article is a great read, I recommend it to you.

So you can stop scratching your head. Pritchard and Plungis, Adler and Tenenbaum, Waxman and Schakowsky, Weintraub and Green, will all continue to beat the same drum. They know they're right . . . they just can't prove it. And they will continue to repeat themselves in spite of the facts of this case:

• There are (virtually) no known victims.
• The impact of the law cannot be measured.
• The nexus between lead in children's products and purported injury to children is not proven. This means that the inclusion in the law of so many formerly unregulated categories of goods is absolutely unjustified.
• The benefits of prophylactic testing has been disproved by the passage of time - the last 29 months.
• The law targets small business and lets big business off the hook. Even since passage of the CPSIA, it is clear from data that big business are responsible for headline recalls.

I guess the media keeps on publishing these stories because it's human nature. Unfortunately, many jobs and many futures have been damaged in the service of a human weakness. I like to think we can rise about such limitations. It is in the hands of the CPSC and Congress to solve this problem.

Let's hope they do their job . . . sometime really soon.

CPSIA - Governmental Biases On Display at CPSC

802 days have passed since ANY Democrat in Congress did ANYTHING to help us on the CPSIA. There are only 8 days left until Election Day.

The WSJ published a short article about the psychology of governments called Studying the Biases of Bureaucrats (subtitled "Five Ways Regulators Think Wrong"). The application of psychology to economic decisions has produced a few Nobel Prizes - the implications of psychology on decision-making is well-known and generally accepted.

See if you recognize the Democrats who run the CPSC in some of these bureaucratic decision-making foibles:

". . . [P]sychologists have shown that we systematically overestimate how much we understand about the causes and mechanisms of things we half understand. The Swedish health economist Hans Rosling once gave students a list of five pairs of countries and asked which nation in each pair had the higher infant-mortality rate. The students got 1.8 right out of 5. Mr. Rosling noted that if he gave the test to chimpanzees they would get 2.5 right. So his students' problem was not ignorance, but that they knew with confidence things that were false." [Emphasis added]

My comment: Is the author suggesting the election of chimpanzees to the CPSC Commission? Hmmm, you must admit it's a creative suggestion. . . .

"The issue of action bias is better known in England as the "dangerous dogs act," after a previous government, confronted with a couple of cases in which dogs injured or killed people, felt the need to bring in a major piece of clumsy and bureaucratic legislation that worked poorly. . . . It takes unusual courage for a regulator to stand up and say 'something must not be done,' lest 'something' makes the problem worse." [Emphasis added]

My comment: This hypothetical regulator does not work at the CPSC. The aversion of the current Democratic CPSC leadership to not regulating is continually reinforced. Consider for instance, the CPSC's willingness to make a mockery of protecting the public against harm in the definition of "Children's Products". In that recent master stroke, the Commission approved a rule that says that the musical instruments marketed to schools (even exclusively) will be unregulated (even if made entirely of "dangerous" brass) if the instruments are full-sized (a so-called general use item) BUT will fully regulate kid-sized instruments. Big instruments made of brass apparently do not deserve their regulatory attention but little ones do, even if BOTH are used exclusively by kids. Big instruments won't poison kids but little ones will, apparently.

Spineless or just plain stupid - you make the call!

"Motivated reasoning means that we tend to believe what it is convenient for us to believe. If you run an organization called, say, the Asteroid Retargeting Group for Humanity (ARGH) and you are worried about potential cuts to your budget, we should not be surprised to find you overreacting to every space rock that passes by. Regulators rarely argue for deregulation."

My comment: Ho-hum, has anyone EVER seen this at the CPSC? Since the WSJ metaphor relates to rocks, I would note that we must warn consumers that the rocks in our rock kits may contain lead which might be harmful if swallowed. We do NOT have to warn people that our rocks ALSO contain rocks - yet another reason to not to eat them. We also don't warn consumers to not eat our fossils because it destroys the fossil record - but we do warn them about lead in fossils. Nice!

It's so fun to contribute to making a mockery of safety! I find it gratifying (not).

"The focusing illusion partly stems from the fact that people tend to see the benefits of a policy but not the hidden costs. As French theorist Frédéric Bastiat argued, it's a fallacy to think that breaking a window creates work, because while the glazier's gain of work is visible, the tailor's loss of work caused by the window-owner's loss of money—and consequent decision to delay purchase of a coat—is not. Recent history is full of government interventions with this characteristic."

My comment: Invisible costs are the true cancer of the CPSIA. I recently voted NO on a market expansion of our company into a product class that I felt would attract WAY too much regulatory attention at the maniacal CPSC these days. Why take a chance? With the government almost promoting the destruction of our industry and its supply chain (see today's WSJ for yet another scare tactic by Inez Tenenbaum), there is just no reward for moving into certain markets. And how will the regulators measure this effect? There is no evidence of our choice to NOT enter a market. That must mean it never happened . . . right??? Perhaps that's what they think. They only believe bodies (that are still warm and only if they are stacked high - and even then, we know that "anecdotes are not evidence"). No bodies are evident when you opt out.

Case closed?

"'Affect heuristic' is a fancy name for a pretty obvious concept, namely that we discount the drawbacks of things we are emotionally in favor of. For example, the Deepwater Horizon oil spill certainly killed about 1,300 birds, maybe a few more. Wind turbines in America kill between 75,000 and 275,000 birds every year, generally of rarer species, such as eagles. Yet wind companies receive neither the enforcement, nor the opprobrium, that oil companies do."

My comment: Or here's an example from the CPSIA world: deaths from lead number just one, and injuries number just three (all alleged, none verified) over ll years (CPSC data) but deaths and injuries from swimming pools are greater on an average DAY. So what's our national obsession, at least of the Democrats? Lead. Makes a lot of sense. Not.

The CPSC - it's a psychologist's dream . . . but it's our nightmare.

CPSIA - What Are We Trying Achieve?

787 days have passed since ANY Democrat in Congress did ANYTHING to help us on the CPSIA. There are only 23 days left until Election Day.

Sean Oberle published a lengthy contemplation of the issue raised in my last post on the relationship between compliance and safety as objectives for regulators and for industry. Mr. Oberle's essay speaks for itself, so I will not attempt to summarize it. He concludes with the following message: "Therein lies the frustrating and frightening aspect of product safety. Those of you tasked with ensuring product safety – industry rep, consumerist, and regulator alike – are trying to quantify ambiguity amid a chaos of demands … all of them in flux … I don't envy you."

Sean, boy are you right!

I think it's worth discussing a few issues on compliance versus safety since Mr. Oberle devoted so much ink (or electrons) to the topic.

1. The law defines what the CPSC can and cannot do. It's a shame no one told them . . . .

First and foremost, the CPSC exists because of the CPSA and its activities are governed by the CPSA. Recall authority is governed by Section 15 which limits the agency's recall authority to "substantial product hazards", namely a product that ". . . creates a substantial risk of injury to the public". [Section 12 gives the agency additional powers to seek a court order for "imminent hazards".] In other words, the CPSC does not have the legislative authority to tilt at windmills - it cannot demand recalls for anything unless it presents a "substantial risk of injury to the public".

Consider recalling 12 million glasses that the CPSC acknowledges in writing are SAFE. Substantial risk of injury?

Consider recalling more than seven million trikes sold over 14 years that caused six children to cut themselves. Children who were under three years of age and should have been under the care of attentive adults. Substantial risk of injury?

Consider recalling more than 400,000 Sarge cars because the little yellow dot on the wheel hubcap violated the lead-in-paint ban, and those dots were produced from two cans of paint. Substantial risk of injury?

One must distinguish between legerdemain and reality, between policy and what the law intended. It is a little focused-upon responsibility of the agency to exercise this judgment. Is it even possible for everything that happens to be a "substantial" risk? We know of cases where a single broken toy without an injury provoked an official investigation at the agency. Fair? Is this an activity that the CPSA authorizes? It is . . . if you are running the agency and you say it is. Arguably, the recall of the 480,000 Mattel Wheelies on September 30 was just such a case. Consumers apparently reported two broken cars with wheels that fell off, and no injuries were reported or implied. Substantial risk of injury? I question that.

2. The notion that we need all this supervision flies in the face of injury statistics. But it sure makes the CPSC look irreplaceable, doesn't it?

I have already published and discussed ad nauseum the historical injury statistics from lead based on CPSC recall notices - ONE DEATH and THREE UNVERIFIED INJURIES over 11 years (1999-2010). If we were facing such a dire public health crisis, why weren't kids dropping like flies from lead poisoning over such a long time period of "lax regulation"? If the harm was so widespread and so devastating, why aren't any of these actual victims known? Names, addresses, photos, case histories?

A friend replied to me recently reasoning that there is no safe level of lead. Okay, I concede that lead can be dangerous but it is absolutely true that lead in present throughout our environment and in the air, food and water that we consume every minute of every day. So since we take in lead from several sources all the time, we know we are building up lead and this leads to several questions. If lead is so harmful at all levels, why aren't we ALL showing the effect of our cumulative build-up of lead? How can you demonstrate that children's products contribute meaningfully to the asserted "problem"? How can you prove that "fixing" children's products will meaningfully change lead blood levels? And if you could prove those things (which cannot be done), how can you measure the return on investment of our multi-billion dollar annual investment? Remember, we can only spend those dollars one time - so is flushing them down the toilet on test reports REALLY our best use of scarce and irreplaceable dollars? How would you measure that?

But the more that the CPSC enforces the law against "bad" corporations, the more they scam the public into thinking they needed the help all along. They talk about recall statistics but never put them in the context of injury statistics. The proponents never compare lead injury statistics to other injury statistics like swimming pools.

[Is a child injured by lead "worse" that a child killed in a pool? It better be - because we are spending billions to prophylactically eliminate the possibility of purported lead injuries while leaving swimming pools open to continue a continuing skein of killings of more than one child each day. That's okay according to our Democrat-run Congress. Tell that to the family of drowning victim - they can take comfort in knowing that their child didn't have lead poisoning thanks to the relentless and remorseless enforcement of the CPSIA . . . .]

So as the regulators abuse and confuse the definition of hazard, they create an atmosphere of dependence. Oh thank you Mother Government for saving me! What would I do without you?!

3. Mr. Oberle reminds us that "Lack of incidents may not mean a product is safe." And just because you're paranoid doesn't mean they AREN'T out to get you.

Mr. Oberle does not take an offensive stance on this topic, btw. He is right, you can sometimes catch something dangerous before it creates harm. Presumably a quicker recognition of the hazard in Magnetix might have prevented injuries. Responsible companies need to always keep a lookout for insights that reveal latent hazards.

On the other hand, injury statistics are a useful tool. If, as is the case for lead, the assertion is that the hazard is widespread and present over a lengthy period of time, injury statistics become QUITE relevant. So, if lead was such a terrible problem in children's products (putting lead-in-paint aside, long ago banned), injury statistics over many years would reveal a latent problem. Think of the breadth of the definition of "Children's Products" and think of the years of recall data available for study. We are looking at TRILLIONS of interactions with children every year in the United States alone. Where are all the lead victims? We cannot say that we don't know the scale of this problem. We have apparently been running an "experiment" on the U.S. public for decades in the period the zealots label as "lax regulations" or "lax enforcement". If lead-in-substrate were so dangerous, wouldn't you expect to see SOME evidence of it?

If we must imagine the scale of the danger, can we spend imaginary dollars to deal with it?

4. The compliance hawks want to frame this as a financial question - how much is your safety worth? I think that's the wrong question - I think the question is "how long do you want to have a job?"

I have already reported that our compliance group is currently up to six people from a historical one or two, and of course, our products are no safer today than in the past. They were always safe and still are, but it costs us a lot more to operate. That's not good for you or for me.

So how do we pay for all this new bureaucracy? We have not raised prices, that's impossible these days. We are lucky to have customers and cannot spit in their faces with a price increase. Think of your business - it won't fly.

We also need to hit profitability targets because we need to remain financable. We do not get money from "money fairies" - we have to deal with a bank, just like you. Our bank prefers to see that we make money. I know that doesn't seem very civic-minded but I can't fault them for their POV. In any event, I think it's elementary that a business needs to make a profit to have the model sustain itself. Therefore, we cannot commit ourselves to ever-eroding profitability. When our costs rise, we cut elsewhere . . . just like you do.

Needless to say, we have skinnied up a lot since 2007. We have a much-reduced headcount and operate far more efficiently. This is how everyone behaved during the financial crisis and the jobs have not returned, in part because the economy remains sluggish. With our rising overhead relating to pointless regulations, what can we do? We must recover the money from activities that are focused on raising revenues. In effect, we are discontinuing activities that create growth to fund activities that are pure costs.

What's the math behind this? Consider how we recover a dollar of bureaucratic cost from productive activities. If you are already operating efficiently and cannot wring out big productivity gains (as may be the case post-financial crisis cost reductions), then how do you pay for an additional dollar of overhead cost? When you eliminate a "productive" dollar of cost to pay for an unproductive dollar of cost (e.g., you trade a dollar of marketing promotion for a dollar of test costs), it's not an even trade. No, because your dollar of productive cost creates gross margin whereas your overhead produces no profit whatsoever. Your productive dollar of cost produces gross profit which defrays your operating costs and produces marginal net profit on top of that. Wiping out the dollar of productive cost also wipes out the contribution to operating costs, so effectively, only the associated marginal net profit can defray the unproductive cost. Since profit percentages are generally low for most of us, the ratio of productive cost dollars needed to be sacrificed to cover unproductive costs is probably on the order of 2:1 or 3:1. Hire another QC person and fire the equivalent of two people elsewhere. In our case, we do it by attrition. We just shrink away.

As if this weren't bad enough, it's also a recipe for disaster or business death in a worst case. The continued erosion of productive spending to finance unproductive spending has a dramatic impact on growth. Revenue flattens out or stays in a downward trend. It's no surprise - you are starving your company of investment dollars as you spend at constant levels. You have simply shifted your spending from productive uses favoring growth to unproductive uses that will not create growth. Presumably, those of you with children have discussed the merits of eating fruits and vegetables versus eating potato chips. It's no different for a business and how it consumes dollars. We will never grow up to be big and strong if Mother Government restricts our financial diet this way.

Sean's right. I don't envy you . . . or me. This makes me very pessimistic about the future.

I hope you are mad as hell and won't take it anymore. In 23 days, you will get to vote. DO IT!

CPSIA - August, The Month To Scare (Oops, Save) The Populace

Well, it's August, almost time for Congress to recess for elections which means it's also time for your Dem friends to save you again. Makes a nice story for election time. Remember how Congress saved us two years ago, by passing a little bill called the Consumer Product Safety Improvement Act on August 14, 2008? I bet you're getting ready for the bill's second birthday party! Anyhow, the Congressional cicadian rhythm drove a couple Pelosi clones, Rep. Jan Schakowsky (D-IL) and Jackie Speier (D-CA), to timely release their latest legislative salvos designed to prove up their worth to you, the voters.

Ms. Schakowsky, one of Illinois' "finest" who is rated the Number One Spender in Congress by the National Taxpayers Union (thanks, Jan!), offered up another CPSIA-like morsel, the noxious H.R. 5786 Safe Cosmetics Act of 2010. Before we go on, who's against safe cosmetics? Everyone raise their hands . . . no one? Okay, we're all for safe cosmetics. So what's the problem?

• Annual registration with the FDA for all manufacturers, including much proprietary and confidential information.
• A federally-mandated schedule of new fees for the FDA to assess on the now poorer cosmetics companies.
• New safety labels (an old Schakowsky standby to make everyone so much safer).
• FDA review of the "physical, chemical and toxicological properties" of each chemical or mixture listed on the label. And lots of testing.
• New FDA regulations on banned chemicals and so on.
• New prohibitions, meaning that penalties and perhaps criminal actions are possible.
• Mandated public reporting of "adverse health effects".

The trial bar has to be licking its chops. And Jan gets to claim to her constituents that they can't live without her. After all, who else is going to save them??? Just like the CPSIA saved our company, our employees and our customers. So, so, soooooo safe and we get an even bigger federal government as an added bonus!

Not content to be outdone, savior-in-training Jackie Speier followed up her ratting out of safe McDonalds Shrek glasses with the newly-minted H.R. 5920 Toxic Metals Protection Act of 2010. Anyone against being protected from toxic metals??? Hmmm, no one? Thank heavens we have such an alert member of Congress ready to sweep in to protect us - right before elections! One of the big effects of this law is to make lots of things illegal and to specify civil and criminal liability for infractions. We really needed this!

Ms. Speier explains her "motivation": “'Children’s developmental health in this country is threatened by exposure to products containing cadmium,' said Congresswoman Speier. 'In May, Wal-Mart removed cadmium-tainted jewelry from its shelves. Last month, McDonald’s recalled over 12 million glasses containing cadmium, and SmileMakers Inc. recalled 68,000 Children’s Happy Charm Bracelets and Football Rings for containing this toxic metal. It’s time to be smart and aggressive about the risks posed by toxic metals that can cause children harm. This legislation is aimed at protecting them from hazardous levels of metals in products they might use.'" Oops, she forgot to mention that the Shrek glasses were acknowledged to be safe by the CPSC or that none of these products is associated with a single injury. Details . . . .

Then there's the swelling pile of Op-Eds and Editorials touting the "urgent" need to tighten the noose on chemicals (LA Times: "The new regulations will be burdensome on industry — and even more so if the state approves the recommendations we've listed here — but they should also pay dividends by lowering health care bills and environmental cleanup costs, as well as spawning a new industry dedicated to developing safer chemicals."). [Ed. Note: I love the part about how the bill will lower costs! I wish newspaper editorial writers knew how to add and multiply - they could really figure stuff out with those skills.] Henry Waxman, current shield of the CPSIA and guardian of the rules and regulations that ensure the business death of the children's product industry, wants to finish the job by making us account for every chemical in every product. TSCA Reform - super! We'll all be so safe . . . in the unemployment line.

Your Congress at work - making the world safe from jobs and prosperity, an August tradition!

CPSIA - Request to Post 60 Minutes Videos

There is something you can do to help raise awareness of the ills of the CPSIA - post the 60 Minutes segment "Phthalates: Are They Safe?" in your blog or on your Facebook page or other social media pages. You can also tweet links to this content. You can lift the "embedding" links needed to place the videos from my blog. Alternatively, you can always go to the 60 Minutes website and take links from there.

We need to ring bells loudly about this segment. A nationally-prominent news outlet has finally decided to look at the issues of the CPSIA unemotionally and objectively. The more people that see this segment, the better!

Thanks.

CPSIA - 60 Minutes Transcript of "Phthalates: Are They Safe?"

The transcript of yesterday's segment on phthalates may be found at this link.

CPSIA - Additional Data on Phthalates re 60 Minutes

The 60 Minutes report notes increased incidents of hypospadias, a birth defect affecting male sexual organs. Certain studies have linked this defect to phthalates, fanning the fears responsible for the noxious CPSIA. In the segment, a Dr. Howard Snyder of the The Children's Hospital in Philadelphia cites a "three-fold increase" in hypospadias in live male births in the last "30-40 years". Dr. Snyder "suspects" that phthalates is the "something" that is interfering in the womb with the production of testosterone leading to hypospadias. He highlights studies that "seem to point to" phthalates as the cause of low sperm counts and other ills in adult males. Thus, the link to hypospadias, or so he says.

Time to panic?

Well, before you move back into the caves, please consider this May 2009 study published in the Journal of Urology on the incidents of hypospadias in New York State from 1992-2005 (previously posted in my blog one year ago). The purpose of the study was described as follows: "Recently there has been concern that [certain male sexual organ] abnormalities described in animal studies may also be present in humans. To determine if hypospadias rates are increasing, we retrospectively reviewed the total prevalence of hypospadias in New York State from 1992 to 2005, categorized by maternal age younger than 35 years and 35 years or older." [See also this George Mason University analysis.]

You will be interested to know that one of the four authors of the Journal of Urology study is Dr. Sarah Lambert - of The Children's Hospital in Philadelphia, apparently one of Dr. Snyder's co-workers.

The authors conclude:

"Hypospadias rates have NOT changed in New York State from 1992 to 2005. Additionally advanced maternal age continues to be a risk factor for hypospadias. Combined with previous studies that demonstrate sperm counts are NOT declining, these data suggest that the testicular dysgenesis syndrome described in animal models may not be evident in humans." [Emphasis added]

One of the authors noted the significance of this study: "These studies break the link between the purported cause — phthalates — and their presumed effect — impaired male reproductive health, says Dr. Harry Fisch, director of the Male Reproductive Center at NewYork-Presbyterian Hospital/Columbia University Medical Center and professor of clinical urology at Columbia University College of Physicians and Surgeons. 'It's all in the data,' says Dr. Fisch. 'For one, the entire method of collecting data on birth defects has changed. Statewide surveillance of birth defects has become the norm. This calls into question the value of the older data. Second,' he adds, 'we can't assume that these chemicals are harmful at low, environmentally allowable levels just because we've seen high rates of exposure to phthalates in utero have been linked to hypospadias in animal studies.'" [Emphasis added]

Dr. Snyder seems to have overlooked some of these points.

The author of the study goes on to point out the obvious: "'Environmental chemicals need to be regulated,' says Dr. Fisch, 'but policies should be based on science, not fear.'"

What, is he crazy? Who ever heard of regulating based on SCIENCE, NOT FEAR?! Some people . . . .

Memo to Senators Feinstein and Boxer: Given the fear that the increasing age of birth mothers today may be linked to rising birth defects, perhaps you should regulate when mothers can conceive children. This would be yet another great regulatory innovation from California. Groundbreaking!

Anyone think that's too much government intrusion? Mr. Orwell, any thoughts? Darn, we all threw out our copies of "1984" because we couldn't be sure they were produced with lead-free ink.

This makes my head hurt. Wouldn't it just be easier to drive the children's product industry into bankruptcy? That's probably a better way to deal with hypospadias.

CPSIA - Extra 60 Minutes Video Content on Phthalates

Watch CBS News Videos Online


Watch CBS News Videos Online


Watch CBS News Videos Online


Watch CBS News Videos Online

CPSIA - 60 Minutes 5-23-10 Segment Video "Phthalates: Are They Safe?"

Watch CBS News Videos Online

CPSIA - The CPSC Sweats Out A Stay

The CPSC is on the hot seat over its testing and certification stay . . . again. As you may recall, the CPSC first postponed mandatory testing just ahead of its scheduled implementation in February 2009. On January 30, 2009, the Commission acted to push out the effectiveness of the CPSIA testing and certification requirement by one year, to February 10, 2010. Then-Acting Chairman Nancy Nord noted that the stay "provides breathing space to get in place some of the rules needed for implementation".

Well, that didn't work, so on December 17, 2009, the Commission again pushed out the testing and certification effectiveness date to February 10, 2011. This early action was done in recognition of industry's need for to plan for changes in requirements. Nonetheless, Dems on the Commission bemoaned the need to extend the stay:

Robert Adler: "While I had originally hoped the Commission and the marketplace would both be prepared for the lifting of this stay of enforcement, after thorough consultation with CPSC staff and stakeholders in both industry and the public health community, I believe an extension of another six months is necessary to permit market adjustments, especially with respect to the testing and certification by the suppliers of components. I respectfully disagree, however, with my colleagues who have chosen to extend the stay beyond August 10, 2010. While there will be some disruption in the marketplace no matter which date is chosen, no hard evidence has been brought to my attention that would require an even longer extension of this stay than two years from the passage of this landmark legislation. I recognize that others feel differently."

Perhaps Mr. Adler has uncovered some "hard evidence" by now. Scroll forward six months and things aren't going the CPSC's way. While the Commission may have thought it reserved enough time for everyone to "adjust" to the testing requirements, in fact things are getting worse. Rules are piling higher and higher, and are still being issued and changed. Many people don't feel the rules are survivable. Dan Marshall of the HTA testified at the April 29th hearing that his organization sees the CPSEA (the Waxman Amendment) as their only chance to survive the lifting of the testing stay. [My opinion - the Waxman Amendment won't help the HTA at all.]

More recently, the HTA sent a letter to the House Energy and Commerce Committee stating: "Finally, we hope to settle any confusion regarding our intent in endorsing the CPSEA. We endorsed it as our only available alternative. We truly believe that many of our members will be forced out of business after February 10, 2011 without meaningful, clear reform provided by your committee. . . . You hold the livelihoods of hundreds of small businesses in your hands."

Ouch.

Not surprisingly, there is mounting background pressure on the CPSC to push out the testing stay for another year. Nevertheless, I surmise that Dems on the Commission would rather eat dirt (40 ppm lead) than take this step. They invested a lot of political capital in the last stay extension, and despite the promulgation of (literally) reams of regulations, still haven't put in place a workable regulatory scheme yet. Retailers are telling the CPSC privately that without prompt relief from the CPSC or Congress, they are going to have to start turning the screws on their suppliers as though the stay won't be lifted. Hmmm.

The pressure is building, building. It doesn't help that Waxman and his supporters won't budge an inch on their proposed CPSIA amendment. By moving in a pack led by Waxman, the Dems are collectively taking full ownership of the awful consequences of the law.

And what if the Commission capitulates and extends the stay? That's good for the industry and the HTA, certainly, but it's political suicide for the Dems. They face a real Hobson's Choice. If the stay is extended, it will be taken as an admission that the CPSIA simply cannot be implemented. That would really stick it to Mr. Waxman, patron of the Dems on the Commission. After all, if the law isn't "ready" for full implementation for FOUR YEARS, it's logical to conclude the CPSIA won't ever work, that it was fundamentally flawed from the beginning. [Where have I heard that before???] If the Commission declines to extend the stay, manufacturers and retailers will light the world afire over the pain and losses being foisted needlessly on them. HTA members and other small businesses will start to close down. Ugly. The choice is lose-lose.

The stakes are even higher for the Dems, if you take into account Mr. Waxman's REAL baby, TSCA reform. The Dems have a big target in mind, the "reform" of chemical regulation in this country. Put simply, they want to roll out CPSIA-style regulation to all things chemical, including plastics and all mixtures of chemicals. This scares a lot of people, given the permi-chaos dogging CPSIA precautionary regulation of only two substances (lead and phthalates). Arguably, the CPSIA was just a trial balloon for TSCA reform. Ramp up the CPSIA by 30,000 times and you have TSCA reform. If the Dems give an inch on the CPSIA, they fear their hopes for TSCA reform will go down the drain. The children's product industry is caught in the middle of a historic fight over how we Americans regulate ourselves.

If you are frustrated by the stalemate over the Waxman Amendment, I think you need to keep an eye on the testing stay. Every day that passes, the pressure mounts on the Waxmanis and the Commission. What's the right thing to do? They sweat and they sweat . . . while we roast.

CPSIA - What is a "Substantial Product Hazard"?

How does the CPSC decide which items to recall and which ones to permit to remain in the market?

The basis for a CPSC recall is found in Section 15(c) and 15(d) of the Consumer Product Safety Act. The CPSC is only entitled to recall items which present a "substantial product hazard", defined in section 15(a) in relevant part as: "a product defect which (because of the pattern of defect, the number of defective products distributed in commerce, the severity of the risk, or otherwise) creates a substantial risk of injury to the public."

Can the CPSC designate anything it wants as a "substantial product hazard"? Not in my opinion, if this legal standard is to have any meaning. Some things are substantial product hazards, and some things are lesser hazards. Those lesser hazards may still be of concern to the CPSC, but the agency lacks the legal authority to order their recall. Other solutions, such as public warnings or voluntary action by the industry, can appropriately address less severe risks adequately.

It gets tricky when there are injuries to children. [This legal dilemma has previously been parodied by The Onion - eerily anticipating the recall of dart guns pictured here.] If there are injuries or deaths, will the product always be considered a "substantial product hazard"? What if the accidents occur because of product abuse, recklessness or age-inappropriate behavior? If injuries under those circumstances constitute a "substantial product hazard", will ALL similar abuses of products be considered a "substantial product hazard"? I would think this line of reasoning would make many things, including guns, knives and even forks, suitable for urgent recall. What about broken glass - if a kid eats broken glass or ceramic, wouldn't he/she be terribly injured? Should the CPSC now recall everything made of glass? What about newspapers - paper can burn and cause injury. Recall the Chicago Tribune? [This is my fantasy.]

And if you can go this far, why must the abuse or inappropriate behavior even have to take place? Why not recall items just because you can imagine an injury occurring from an abuse that may have never happened? Is that a "substantial product hazard"? Is this pure fantasy or could recalls occur on this basis? Read on.

When there are injuries to kids, emotions run high, and the "substantial product hazard" standard expands. Add in newspaper headlines, and anything seems possible nowadays. Let's not forget that in the last eleven years, there has been ONE death from lead, when a four year old swallowed a lead jewelry charm - and, BINGO, we were gifted the CPSIA as a result. The law gives a lot of wiggle room to the motivated regulator. Some recent recalls call into question whether the substantial product hazard" standard is being observed at all.

Case 1: Cadmium jewelry. It is accepted that cadmium has been used in jewelry for decades, although not widely. Nevertheless, to my knowledge, there has never been a reported case of "cadmium poisoning" from jewelry. Pediatricians have virtually no awareness of cadmium poisoning as a health threat. The low probability of childhood injury from cadmium in children's products is also evidenced by the CPSC's lack of data on the health impact of ingesting cadmium in this form - it never came up until the Associated Press sounded the "alarm". The available data on cadmium relates only to workplace exposure or airborne cadmium.

It is equally well-accepted that children inappropriately mouth jewelry. It is also known that children can and do swallow jewelry, which happens thousands of times each year. No child thinks jewelry is food - but these things happen.

Cadmium is in (some) children's jewelry. Kids are known to mouth and/or swallow jewelry. Cadmium is a dangerous metal and can be harmful if swallowed. So, does this mean that cadmium in jewelry a "substantial product hazard"? Given that there has NEVER been a reported case of injury, it is hard to describe the risk of "severe" or even "substantial". It is best described as "possible". Yet, the CPSC has recalled cadmium jewelry three times now.

Unfortunately, the CPSC has chosen to respond to the stimulus of newspaper headlines and the ill-informed action of state legislatures, rather than the discipline imposed by its own statutory legal standard. By labeling this hazard "substantial", the CPSC creates many problems that could have lasting impact on the market. It imposes high costs on the industry for something that may not matter much, dilutes the impact of recalls of more dangerous products (have you noticed that the pace of recalls has really picked up at the agency - does that help or hurt the CPSC's mission?), and diverts the resources and attention of the CPSC staff away from larger and more pressing issues.

Perhaps worst of all, contrary to the assertions of Inez Tenenbaum, the confidence of the marketplace is being eroded by the deluge of recalls. Who can you trust anymore? Is the message that you can only trust Mother Government? If so, is Mother Government planning to take over the manufacturing of all children's products next? No one will have enough capital to survive this style of "regulating" for much longer so they better get ready to take over. This is no market stimulus program.

Case 2: Dart Guns. I am in the educational toy business and have children of my own. So I am prejudiced - I have no idea why anyone makes toys of this nature. Our company certainly doesn't, and we never allowed them in our home either. However, in our society, guns and dart guns have a certain appeal and they apparently sell well. Family Dollar Stores sold 1.8 million units of a small dart gun set for $1.50 in recent years (pictured above). It looks pretty generic to me, and for $1.50, it is clearly a cheap, disposable novelty toy.

Sadly, two boys (9 and 10 years old, respectively) died in separate incidents in which they were chewing on these darts and aspirated them. The dart suction cup blocked their airways, leading to tragedy. These terrible accidents are sad confirmation of the unnecessary risk posed by dart guns as toys. But do these circumstances meet the "substantial product hazard" standard? If they don't, how can the CPSC recall this item?

My argument is that while this toy is very objectionable and apparently capable of harming children, I do not know if it rises to the level of a "substantial" product hazard just because of the two accidental deaths (especially in light of 1.8 million sets sold, plus many millions more of similar items already in the market presenting the same "risk"). The statute does not provide that deaths automatically constitute substantial product hazards. Presumably, if that's what Congress meant, it might have said so. The tragic accidents occurred when two children were doing something they shouldn't. They were also at an age where they were supposed to know better. That doesn't make the loss of these boys any less painful but it does suggest that these incidents were terrible accidents rather than substantial product hazards. It may be that the families' remedies should be in the courts, not via the CPSC. In any event, if we (as a society) don't like dart guns, that's fine - we should ban them. Notably, the CPSC is not taking that position in this case.

Recalls cost a lot of money, and it is naive to believe that the market will not respond to an erosion in the legal standard for recalls. Legal standards are an important part of the "rules of the road". If the rules change, the entire game changes. In this case, if we are all exposed to the risk of a massive, multi-year recall of our legal products because of accidents and tragedies arising out of misuse, we will have to change our business models in ways very disadvantageous to consumers. No one has the profit margin to accommodate these unplanned and random expenses. We have no answer for this business problem - we are not clairvoyant.

For small, niche businesses like ours, the erosion of expected legal protections is very scary. These recalls are a gross expansion of capricious government power, no matter how scary cadmium jewelry is or how much we might be angry at dart gun makers. With an increasingly reactive CPSC demanding recalls to meet the expectations of newspaper headlines, randomness is complicating business planning and generally demoralizing the regulated community.

I may sound like a broken record, but this style of government is stoking voter anger. We have little recourse over these policies or over the intransigence of the Dems in Congress other than in the voting booth. I, for one, won't forget all this. We need a new sheriff in town.

CPSIA - Richmond Times-Dispatch Editorial "REGULATION: Protection Racket"

REGULATION: Protection Racket

By Staff Reports
Published: May 9, 2010

We live in the safest society in world history, Michael Crichton observed in State of Fear, yet Americans seem to go about their day in abject terror of minuscule threats. Perhaps nowhere is this more apparent than in Washington's approach to child safety.

At the instigation of the American Academy of Pediatrics, federal bureaucrats at the FDA, the Department of Agriculture, and the Consumer Product Safety Commission are studying whether to require the nation's hot-dog makers to redesign hot dogs to reduce the likelihood of choking. Choking is a serious hazard -- about 15,000 children receive medical attention each year because of it. But children choke on a wide range of items, from candy and gum to balloons and small change. In 2006, only 61 choking deaths were food-related, and hot dogs accounted for only 13 of those.

Any child death is tragic. Yet it's worth noting, as The Washington Times did not long ago, that children under age 10 eat almost 2 billion -- yes, 2 billion -- hot dogs a year. On a per-hot-dog basis, the odds of a child choking to death are 13 divided by 2 billion, which comes to . . . well, a microscopically small number. The odds that a person will be struck by lightning in any given year are about 4,000 times higher than the odds of a child choking to death on a hot dog. Given that context, redesigning hot dogs looks like a solution in search of a problem.

But it's not just hot dogs. The Consumer Product Safety Commission also has sounded the alarm about baby slings, which have enjoyed a recent surge in popularity because the close physical contact allows for greater parent-child bonding. In extremely rare instances, children can slip out of the slings or smother in them. The CPSC says slings are responsible for as many as 13 deaths -- in the past two decades.

The CPSC also has announced the recall of 1.2 million high chairs. No deaths have been attributed to the high chairs, but the agency says they do pose a fall hazard because screws securing the front legs of the chairs can loosen and fall out. Earlier this year the CPSC announced a recall of more than a half-million drop-side cribs because of "31 . . . incidents. In six of those incidents children were entrapped between the drop side and crib mattress. Three children suffered from bruises as a result of the entrapment."

Three children suffered bruises.

Of course it is possible to understate hazards that can endanger children, epecially young children. But if it is possible to understate the hazards, then it also is possible to overstate them. Context and perspective matter. If the regulatory state has reached a point at which it is warning about the dangers of patently safe products, then the public might reasonably wonder what, exactly, is being protected -- the health of young children, or the jobs of federal employees?

CPSIA - More Written Testimony from CPSIA Hearing

Oddly and embarrassingly, the House Committee on Energy and Commerce's webpage for last week's CPSIA hearing does not include all written testimony submitted in association with the hearing, nor does it provide a link on the hearing video. [I will get you the video soon, I promise.] The Dem Majority, which loudly touts its "commitment" to "open government", should rapidly address this poor performance.

Here are the other document submitted thus far. I have already provided you links to the written testimony of the seven witnesses and my oral testimony.

• Opening Statement of Chairman Waxman
• The Honorable Inez Tenenbaum, Chairman, Consumer Product Safety Commission,
  Statement for the Record
• The Honorable Nancy Nord, Commissioner, Consumer Product Safety Commission,
  Statement for the Record
• The Honorable Anne Northup, Commissioner, Consumer Product Safety Commission, Statement for the Record
• The Honorable Denny Rehberg, Representative, Montana At Large, Statement for the Record
• Ms. Devra Singer, Product Development Assistant, Funtastic, Houston, Texas, Statement for the Record Entitled "Call for Testimony: A Personal Account of the CPSIA’s Crippling Effects on Our Small Business"
• Mr. Sean Hilbert, President, Cobra Moto, LLC, Statement for the Record
• Mr. Ed Moreland, Vice President, Government Relations, American Motorcyclist Association, Statement for the Record
• Mr. Michael Gale, Executive Director, Fashion Jewelry Trade Association, Statement for the Record
• Economic Analysis - Handmade Toy Alliance

This is provocative reading. I hope you aren't the only ones who read it . . . .

I really like the common sense in the Nord and Northup letters. In particular, I want to draw your attention to one statement by Commissioner Northup: "Forcing a component-by-component petition for exceptions does nothing to enhance safety, and it converts the Commission from a safety oversight agency (like the FAA) into a product approval agency (like the FDA). Rather than spend most of its time and resources removing unsafe products from the market, the agency would devote its efforts to approving perfectly safe products before they go on the market. That switch would also slow the pace of consumer product innovation by increasing the cost and lead time for companies to bring new products to market—which effect itself carries negative safety ramifications." [Emphasis added]

Ms. Northup's got it totally right and you should be worried that this style of regulation makes sense to ANYONE. This is at the heart of the precautionary principle, that the government becomes your partner in making your business decisions. Frankly, I trust companies more than I trust the government, especially these days. I will take Toyota over NHTSA and David Strickland any day. The House Energy and Commerce Committee is not done with this "great" idea, either. Next up is their "reform" of the Toxic Substance Control Act. This is the new scheme of regulation of chemicals that takes all the really great and highly successful notions from our beloved CPSIA (which applies to only TWO substances, lead and phthalates) and rolls it out to more than 30,000 chemicals and all mixtures containing those chemicals. I will need to sharply increase my blood pressure medicine to even read that draft legislation. You will read more about this toxic legislation in coming weeks.

Another interesting nugget is from the HTA economic analysis:

"Total number of manufacturers potentially affected by the CPSIA in the United States 52,544***
Total number of wholesalers potentially affected by the CPSIA in the United States 125,624***
Total number of retailers potentially affected by the CPSIA in the United States 511,240***
Total number of businesses potentially affected by the CPSIA according to the NAICS 689,408***"

The analysis goes on to surmise than 5 million individual products are affected by the CPSIA. I believe that this estimate is low by a factor of ten, but that's just one man's opinion. The author then concludes that the (presumably annual) cost of traditional testing is $5.6 billion. That's a nice way to honor the memory of the child who died in Minnesota after swallowing a lead jewelry bangle, isn't it? I can't think of a better way to spend $5.6 billion annually. . . .

Can any rational person doubt the severity and breadth of the economic damage in light of these data?

Keep your eyes on this space for more testimony. More will filter in over the next couple weeks.

CPSIA - A Quick and Incomplete Analysis of New Draft Waxman Amendment 2.0

With only a few hours to look over the new draft of the Waxman Amendment 2.0 before tomorrow's meeting, I guess the idea is that we are supposed to drop what we are doing to complete an analysis fire drill. Power trip for the Waxman staffers? Possibly. Still, what choice do we have? I thought I would outline my preliminary comments to contribute to the debate.

It goes without saying that this is entirely my own work without the benefit of discussing it with others similarly situated and without the opportunity to compare notes. It is therefore likely that I have missed something important or made other mistakes. Sorry . . . . This post is also painfully long. Again, given that Mr. Waxman hardly cares about your problems or mine, I have little choice but to post this as one essay. Again, sorry . . . .

a. Modifications to Section 101(b)(2) Exemption Process:

• The idiotic post-exemption warnings provision has been deleted.
• The three-pronged exemption test remains in place, as does the ambiguous and troubling term "practicable". "Practicable" is a sneaky Waxman approach to providing an escape hatch for big industries with narrow product definitions like ATVs and books. You're not supposed to know this. Our laws aren't for the little people anymore.
• The third prong of the exemption test has been clarified from no effect on "public health or safety" to no effect on "the user’s health or safety, taking into account normal and foreseeable use and abuse by all foreseeable users." This change seems like new belts and suspenders to make it easy to deny an exemption. The Dem zealots want to be sure no one gets an exemption but ATVs and books, wink-wink-nudge-nudge.
• Poor applicants for exemptions are still obliged to wait hungrily by the door of the CPSC for the leavings of rich supplicants. Yes, small business owners who want exemptions like the big guys but can't afford to pay the big bucks can reuse the big guys' consultant's reports provided the evidence is considered non-proprietary. [Whatever that might be.] Nice . . . if someone else has already paid for it and submitted it in an exemption process, and if you have access to it (and have found it), you can use it. Noblesse oblige, I guess. Thank You, Kind Sir. I speak for all the little people . . . . Oddly, this concept reappears in a confusing provision called "Previously Denied Petitions" that only refers to previously denied petitions in its title (I don't get it).
• In another "how closely are you watching me?" change, the grounds for decision provision now permits the Commission to consider "only" evidence presented by "interested parties", rather than the evidence presented by the party seeking such exceptions. So if you ever get as far as an exemption hearing, this provision turns it into a town meeting. How would you like it if anyone could enter and participate in your litigation without your consent . . . like your competitors or your business enemies? I have a good idea - why not just write into the law that Rachel Weintraub will be considered a party in interest to every action at the CPSC?
• The Narrowest Scope provision has been modified to clarify that you must not only address each component but also each material. The paranoia you sense in this legislation is just the precautionary principle at work. The staffer-gnomes who have been crafting this legislation are not thinking about how our markets work or should work - they are simply obsessing over how we business people might find loopholes. Of course, it is in the nature of business people to try to avoid laws, we are all so evil. Oh yeah, I forgot . . . .
• The Limitation of Exception provision now is framed in terms of "all foreseeable users" which I can only assume is meant to make the burden of proof higher for supplicants. After all, if you can foresee a so-and-so using the product (I won't supply the colorful example), then the Commission must limit the exception. No possibility of risk can be tolerated by the precautionary principle folks.

As the provision for exclusions has not changed much, here is my analysis of the original language for your reference.

b. Treatment of Resale Shops by the Waxman Amendment:

• The provision defining a "used children's product" seems to now mean (a) an actual used children's product, and (b) new goods donated for a charitable purpose. This would seem to protect resale shops from liability for sale of items violating the lead provisions (but not the phthalates ban, notably) unless the seller or the person who supplied it to the seller knew it was in violation of the lead provisions. If that seems somewhat circular, it is. In this case, the law as drafted encourages resale shops to remain as ignorant as possible. This is Waxman's "Don't Ask, Don't Tell" policy. Nice.
• There has been no clarification about the application of this provision to consignment shops. Do they "obtain" goods for resale if they never take title? Something fun to speculate about!
• In a little-noticed provision, the definition of "seller" includes lenders or donators of used children's products. Thus, for lending libraries, they will be in the clear if they lend used goods, but will be on the hook if they lend new product. Does it become "used" after one loan, and if so, what does this mean? The legal department in your local children's library will figure this out. Sure. As to people who donate, the provision is circular again. As best I can figure out, you are not subject to the lead rules (only) if you are donating something used for charitable purposes, but if you give away something new, you are on the hook. At least, that's how I read it. So the bottom line is - don't give anything new to a charity, just give them junk. This is what Mr. Waxman wants. And that means this is what Congress wants.

While these changes may be an improvement, they are sadly improvements without much impact. This provision remains convoluted and hard to understand. The definition has numerous exceptions and also avoids giving the same shelter to resale shops for all the other picayune provisions of the law, like the phthalates ban. Frankly, without a clean exemption for this industry, resale stores are all going to avoid this class of goods. The complexity alone will kill this exemption except for the most sophisticated participants in an industry not known for its legal skills or resources. These stores won't hire lawyers to check their work. They can't afford it.

This is my original criticism of this provision, which is still applicable.

c. Prospective Application of 100 ppm Lead Limits - this provision was not changed in the new draft.

d. Low Volume Manufacturer "Exceptions":

• Thank heavens, they changed the term of art for these small fry to Small Batch Manufacturers. This was done at the insistence of the HTA. What a victory! Someone please explain this to me.
• The "In General" provision is basically unchanged, other than the fancy new name for the supposed beneficiaries of this largess. Notably, the last sentence was clarified to make sure no one could contend that Waxman inadvertently gave the Commission the power to grant "alternative testing methodologies" for ANYONE but the small batch guys. There's so much trust and love flowing here . . . .
• The truly non-existent "relief" of this provision remains EXACTLY the same. Here it is, bask in its wonderfulness: "The Commission . . . may, by regulation, provide alternative testing requirements for covered products manufactured by small batch manufacturers in lieu of those required under subsection (a) or (b). Any such alternative requirements shall provide for reasonable testing methodologies to assure certification based on compliance with the relevant consumer product safety standards." [Emphasis added] Standing ovation? These lucky micro-businesses must meet alternative TESTING methodologies that ASSURE compliance with the standards. In other words, they gotta test. They even added a "savings clause" to forbid any relief here (such as it is) if any foreseeable user might be foreseeably at risk. Some relief.

Notably, the reach of this section has now been limited to "covered products". This new term, which incorporates a three-prong test (this is the second three-pronger of this amendment so far, but not the last). [See below.] Please NOTE that this new term means that the ONLY relief the CPSC can grant is to these small fry products. A product that exceeds the limits of a "covered product" will NOT enjoy any theoretical testing relief, even if made by a business qualifying for relief overall. Should you care? Well, in my view, if you have to endure the burden of full compliance with one product, you have to build the full infrastructure and bear the related liabilities. Thus, these micro-businesses supposedly being saved here are actually at substantial risk of suffocation if even ONE product sells well. Too bad for them.

The absurd and utterly inappropriate definition of a "low volume manufacturer" has been completely jumbled and incorporates the new concept of "covered products", too. Let me try to sort out this for you.

- As noted above, only "covered product" enjoy any potential relief under this section. The "covered products" test is a three-prong test: (i) manufactured not more than 5,000 "units" of the product in the prior fiscal year, (ii) had not more than $30,000 in sales of the product in the prior fiscal year, AND (iii) had no more than $500,000 in total sales in the prior fiscal year. [Do you feel vines growing over your brain yet?] Dollars are indexed for inflation. Notably, the definition ONLY applies to the manufacture of these items, NOT importation. Too bad, importers. GOTCHA!

The implication of this definition is that if you grow to over $500,000 in total sales, all exemptions applicable to any of your low volume items goes up in smoke instantly. That last dollar is gonna HURT. You also cannot get relief for any individual product if your sales of THAT item are greater than 5,000 "units" per year or $30,000 in sales. Here's another compliance tip: don't grow your business! Too hard? Don't worry, the other policies of this government should help you meet this goal . . . .

- The definition of a "small batch manufacturer" defines who should be treated with special charity by the CPSC under this marvelous section of the amendment. It's not going be a long list. Who wants to see another three-prong test?! Okay, break out your calculator so you can figure out if they are referring to you: (a) AT LEAST TWO-THIRDS of "the manufacturer's products" (I love that term) meets this two-part test: (i) the manufacturer manufactured or imported not more than 5,000 units of the product in the prior CALENDAR year, AND (ii) the manufacturer had not more than $30,000 in sales of the product in the prior CALENDAR year, AND (b) the manufacturer had not more than $500,000 in sales in the prior CALENDAR year.

This is getting fun! Okay, first we need to decide - is it a two-prong test with one prong having two sub-prongs, or is it a three-prong test? This is a rather metaphysical question . . . but I say it's our third three-prong test of this short amendment. [Imagine how many three-prong tests are in the health care bill.] I welcome your insights on this question.

There are some interesting quirks in the Small Batch Manufacturer definition. First, this provision applies to imported products, but the "covered products" definition does not. Gotcha! What does this mean? Who knows. The head spins . . . . Even better, the definition of "Small Batch Manufacturer" is based on calendar year calculations and the definition of "covered products" is based on fiscal year calculations. Love it. I learn so much from Mr. Congress. Apparently, Congress wants it to work this way because there must be some sort of dangerous loophole for people who have fiscal years which are not the calendar year. Mr. Waxman is onto your game, you desperadoes! There's no escape!

At least the Waxmanis kept it simple. Good job, guys, it's artful!

Btw, they added a little provision to make sure that the Commission investigates the structure of your business' "affiliations". Clearly, the Commission needs to make SURE they correctly tote up your revenues for this ornate determination. [Little known fact: the CPSC uses clacker balls for this work.] The reach of the Obamist/Waxman government into your private affairs, in ways completely and utterly unrelated to public interest or safety, apparently knows no bounds. Get your files ready, little businesses - the CPSC wants to take a peek. Perhaps check out your tax returns and . . . oops, it appears you took a few deductions that you weren't entitled to. We can just let our sister agency know, you don't have to do ANYTHING, we're just here to help.

Small business people, you should be flipping mad over this pathetic attempt to "help" you. My original criticism of this provision is still largely applicable.

e. Phthalates Ban Exception for Internal Components: This is largely intact from the prior draft although they did add a provision modifying the Commission's right to adopt the definition of an internal component from the lead accessibility standard. The Commission must now, "as appropriate", consider whether the component can be placed in the mouth. We are talking about internal components here.

I wish I had a laugh track for my blog . . . .

f. Removal of CPSA Section 6(b) Due Process Rights of Manufacturers: has been eliminated from the draft.

g. Voluntary Recall Standards to be Matched to Mandatory Recalls: has been eliminated from this draft.

h. Imminent Hazard Panic Attacks by the Commission: has been eliminated from this draft.

i. Subpoena Power for Underlings at the CPSC: This provision was trimmed back partially to apply only to physical and documentary evidence. This modest restructuring of this new right does not in any way address the issues I have pointed out in the past (here and here). This new subpoena power is not essential to the operation of the CPSC, regardless of their assertions, and represents a significant degradation of procedural protections that encourage business people to invest. When all trust is destroyed among the regulated community and its safety regulator, who will want to invest? Hello, Congress?

CONCLUSIONS:

The Waxman Amendment has been improved mainly by deletions of several truly awful and duplicitous provisions. Many defective provisions in the original draft survived the revisions. What's left provides little substantive relief to the unwashed masses, but promises some sub rosa relief to the book industry and ATV'rs without giving the appearance of favoritism. There is little to cheer here for resale shops, small businesses (even micro-businesses, hello HTA, are you there?), education companies, apparel companies, you-name-it.

And many important issues are left completely unaddressed. I have previously provided my most discrete list of CRITICAL missing elements that must be part of any meaningful amendment of the CPSIA:

• Risk Assessment by the CPSC and/or the Commission.
• Changes in age limits for the lead standards and phthalates ban.
• Narrowing of the scope of "Children's Product" to eliminate many categories of products unthinkingly pulled into this law by its overly broad language.
• True reform to protect small businesses.
• Tracking labels relief.

My full list of needed changes is found here.

More fun to follow tomorrow, I am sure.

CPSIA - Redesign the Dog!

I hope you didn't miss the hubbub today from the American Academy of Pediatrics over dangerous hot dogs. Apparently, you can choke on hot dogs. This shocking revelation stimulated an outpouring of news articles, including this one: "Pediatricians call for hot dogs to be redesigned". I guess the bun would have be altered, too. Readers, submit your suggestions as comments! I am looking for something very "Space Age" but also exquisitely safe.

Pundits across the blogosphere couldn't let this pass, like our friends Walter Olson ("Cut grapes into pea-sized portions?") and Lenora Skenazy ("Surely You Must Be Choking!"). Many newspapers repeated the AAP's call for warning labels on items like nuts, certain hard fruits and hot dogs. "Back away from the peanut slowly, Tommy, I don't want you to choke!"

Any of this ring a bell? The AAP remains among the most ardent of the CPSIA advocates. They are in regular contact with the Waxmanis and advise on which scraps of relief we might be allowed. In fact, my spies point to the AAP as the big rabble rouser on rhinestones (sooooooo dangerous!) Having succeeded in gutting the children's products industry, the AAP have turned their attention to that symbol of America, the hot dog. Parents cannot possibly deal with hot dogs without government intervention - individual responsibility is so passe. The AAP will make us all so safe . . . .

This seems to be a theme of this space - the world seems to have lost its moorings. Redesign the dog, indeed. Spare me.

CPSIA - What Constitutes "Safe"?

One of the tragedies of the CPSIA melodrama is that the consumer groups have completely hijacked the concept of safety, turning it utterly away from concepts of risk assessment. To what, you say? Away from management of identifiable risks to avoidance/elimination of perceived risks. In other words, Congress and our regulators now ignore the data on risk and focus instead on the possibility of risk. The POSSIBILITY of injury, not the actuality of injury.

How much of a difference is this? Pretty big, to judge by the frenzy over cadmium in jewelry. Seven Senators have sponsored a bill called the Safe Kids' Jewelry Act. This law would ban the use of cadmium in kids' jewelry. Is this "good"? I am not sure how to answer that. To my knowledge, no one has identified a single injury from cadmium in children's jewelry. It is undeniable that cadmium is a bad element and has the potential to harm. Ergo, jewelry with cadmium is "bad"? I can imagine circumstances where cadmium in jewelry might hurt a child. Then again, if it were so dangerous, where are all the victims?

If this is going to be the new standard, whether a product MIGHT harm someone, I think we are cooked. Assuming that "prevention of possible injury" is to be used as the standard to evaluate products or components of products, let me ask a few questions to see if I understand the "new rules of the road":

• How certain must the prospect of injury be?
• How specific must the circumstances of the prospective injury be?
• Are we talking about probable injury (more than 50%) or possible injury (odds greater than 0%)? How are those odds to be measured - by unit sold, by contact, by owner, by year, by lifetime use? What's "reasonable"? [Does anyone care what's reasonable?]
• Are all things that could possibly injure a child now illegal on the same basis?
• If the answer is yes, when will all those other products be banned and/or recalled? Is equity in the treatment of all products "important"?
• If the answer is no, then where do we draw the line?
• How relevant is it that no injuries have been reported?
• How many incidents are required before we declare a product or substance illegal or recalled? How many newspaper articles, editorials or CEH lawsuits are required?
• What responsibility do we have to be consistent in the administration of these rules?

Consistency, that's important, don't you think? If cadmium is now tacitly illegal because it might harm a child, do we have to make everything with the possibility of injury to children illegal?

Presumably, since no injuries to children from cadmium has been reported and the Washington Post confirms that doctors do not perceive cadmium as a serious risk (perhaps because it was not prevalent in house paint or in gasoline, hmmm), then anything with the same level of prospective risk would be illegal. That's more or less everything from water to chicken bones to lead to ruthenium. [Pardon me, ruthenium, one of the world's most expensive and dangerous elements, is a-okay to include in children's products.] Why then aren't we closing swimming pools which cause more than 250 deaths each year? What about water - you can drown in two inches of water. No more showers?

Is there something special about cadmium, besides that it has appeared in an Associated Press article?

The mania over the prevention of possible injury has turned the business environment into a feeding frenzy that will drive the business community down, down, down. Is that in anyone's interest? Will we all be safer if we have nothing to buy?

Please consider that the House Energy and Commerce Committee has today weighed in on the Toyota recall. Yes, the same Henry Waxman who is torturing our industry has now turned his talons and sharp teeth on Toyota. Toyota enjoys one of the finest reputations for quality and service in the world. It is renowned as a business leader - and proactively took strong medicine in its gas pedal recall. This is not enough for the venomous Democrats who hate businesses. They need to dig deeper and perhaps damage Toyota enough to help GM and Chrysler, owned by the U.S. government and unions. Bringing the great low, that's the new American way of the Democrats. It makes me SICK.

I want to close with a note about cows - did you know that cows are killers, too? Yes, they are - the New York Times reports:

"The image of cows as placid, gentle creatures is a city slicker's fantasy, judging from an article, published on Friday by the Centers for Disease Control and Prevention, reporting that about 20 people a year are killed by cows in the United States. In some cases, the cows actually attack humans -- ramming them, knocking them down, goring them, trampling them and kicking them in the head -- resulting in fatal injuries to the head and chest."

COWS kill 20 people a year, cadmium has apparently killed ZERO. We are running pell-mell to ban cadmium from jewelry because a misguided newspaper article fueled panic. Are cows next? Should they be? If cadmium jewelry goes away and cows stay unregulated, will respect for our laws remain?

Respect for Congress, that's another thing.