A Wish for the Holidays

 

I have been reading with growing dismay articles that question the commitment of CPSC Acting Chairman Ann Marie Buerkle to protect consumer safety.  Those articles are ill-informed, mean-spirited personal attacks that push an agenda that has more to do with partisan politics than it has to do with consumer safety.

What is especially distressing is that some of this is coming from within the Commission itself.  Consumer safety has always—and it should—engender deep emotion and strong commitment. However, it is critical to the formation of good public policy that differences in points of view are listened to and respected.  Civil and respectful debate must be a part of our process for formulating public policy.  I worry that some, in their zeal to push a position, have forgotten that civil discourse and honest disagreement are the foundation of our government.

Some have accused Acting Chairman Buerkle of being an “extreme outlier” and “very extreme”.  They say that she represents a “radical departure” from the agency’s safety mission.  They also accused her of voting with industry 100% of the time. What silliness!

An analysis of her votes and the statements explaining them shows that she has taken principled positions that are fully appropriate. Most of her votes diverging from her colleagues have been on procedural and process grounds.  For example, she has opposed certain civil penalties, not because she believed the company should get a pass but because of the lack of rigor and consistency in the way the agency imposes penalties. She has been critical of the commission’s penalty policy that seems to be based only on “bigger is better” and not on helping regulated entities understand how to comply with a statue that is judgement-laden and whose interpretation it seems changes with the political winds.   In no way can her positions be equated with “dismantling consumer protection,” but that is what critics say.  She criticized the commission’s rule on phthalates not because she wants to support chemical companies (oh, come on. . .) but because she is rightly concerned by the direction and willingness of earlier political leadership to ignore current data.  The portable generator rule raises real questions of jurisdiction and resources.  If a majority of commissioners wish to ignore these issues, so be it, but why is it wrong to point out the problem? Her critics have either not read her statements or do not wish to hear facts that get in the way of predetermined political views.

Acting Chairman Buerkle is perhaps the most qualified person ever to be nominated to be chairman of the CPSC.  While she brings solid legal skills to the office, notably, she is also a trained health professional—a skill set never before on the commission—and so brings a point of view that is essential to the important issues the agency must deal with.  Finally, she is the mom of six kids.  If there was ever a real consumer—as opposed to a political partisan—it is her.

My holiday wish is that the debate over the direction of the CPSC can be conducted honestly at a policy level.  Questioning the character of a dedicated public servant in order to advance a political agenda is dispiriting.  With respect to the CPSC, many have deserved coal in their stockings for too long.  It’s time to say these tactics are not right.

 

 

 

 

 

 

 

Regulatory Tools Are Only As Good As The Craftsmen Who Use Them

There has been a great deal of discussion, and in some circles much hand-wringing, about President Trump’s regulatory reform initiatives and how they will impact independent agencies like the CPSC. The Office of Information and Regulatory Affairs (OIRA) within OMB is a key player in the debate since OIRA reviews and can influence changes in the significant regulations coming out of cabinet agencies. Whether OIRA should have that same authority over rules issued by independent agencies is the subject of “hot” debate in administrative law circles. Neomi Rao, a law professor from George Mason University, is the President’s pick to lead OIRA. Professor Rao has made known her views that OIRA should have greater control over independent agencies.

This coming week, the CPSC is about to hand those who wish to see greater control and oversight of independent agencies by OIRA at major argument to use in that debate. The CPSC is scheduled to vote on whether to issue a notice of proposed rulemaking (NPR) to require that all table saws (including bench saws, contractor saws and cabinet saws) have what is known as “active injury mitigation (AIM) systems” – that is, saws should be able to sense when a user’s finger is coming close to the blade and automatically shut itself off, preventing injury. While superficially this may sound like a good idea, and, at the end of the day, perhaps may even be one, there are a number of reasons why the agency’s actions to start the last stage of rulemaking to require this technology should draw the attention of OIRA.

First, this rule will be a major rule—the type that OIRA usually examines. The CPSC estimates table saw injuries costs the U.S. economy $4 billion annually. It estimates that costs of the rule to manufacturers will be between $170 million and $345 million annually. The CPSC issues very few major rules so both the benefits and the costs the agency proposes are eye-popping.

Second, the AIM technology is patented by an inventor who is now marketing table saws equipped with it. His network of patents is quite extensive and he recently successfully challenged the only other company that had tried to develop a version of this technology. He has stated his willingness to license the technology to the industry should the CPSC mandate it, and the agency estimates that this will result in approximately $35 million coming his way each year in annual licensing fees. The CPSC staff, by its own admission, does not know how extensive his patent network may be and, hence, does not know if it is possible to develop AIM technology without infringing on his patents.

Third, and most important, the agency has not done its homework properly and therefore, issuing an NPR is premature. In 2007 the Commission directed agency staff to study the types and severity of injury associated with types of table saws. In addition to the ’07-’08 study, in 2014, the agency staff looked at injuries reported directly to the agency. As was discussed extensively at its briefing last month, both of these studies are seriously and critically flawed and would not support the rule, if the Commission were to issue it. So the agency is now proposing a rule and asking for public comment even though it does not know such basic information as what type of saw causes injury or whether certain saws can be eliminated from the requirement of the proposed rule. The agency has no information on injury patterns from different types of saws and has little information on whether new safeguards on saws are being used or are working.

The agency proposes to close this embarrassing data gap by doing a study throughout 2017 to develop the missing information, even while it has the proposed rule out for public comment. However, if it proposes a rule and asks the public for comment without providing this vital data, it defeats the purpose of public comment. It may well need to seek further comment or risk a successful court challenge.

It is curious why a majority of the commissioners are so eager to advance a proposal that is missing critical information to make the public comment period useful and that would allow both the agency and the public to better assess the competing issues the rule presents. It suggests that the real purpose of the 2017 study is merely to augment an administrative record that is currently too weak to support the proposed rule and not to influence the direction of the proceeding. And that suggests minds may already be made up. If so, then OIRA is right to take a look at this activity since that is not how rules should be made.

Welcoming New Leadership at the CPSC

Although it took a while, new leadership has come to the Consumer Product Safety Commission.  After a flurry of last minute activity—and a rejection of the Administration’s direction concerning new regulations—earlier this week, Elliot Kaye stepped down as agency chairman. He has announced that he plans to remain as a commissioner. Commissioner Ann Marie Buerkle, who was recently elected as agency vice chairman, now takes over as Acting Chairman of the agency until a permanent chairman is nominated by the President.

Trained as both a nurse and lawyer, Chairman Buerkle brings the type of experience the statute contemplated when it directed that commissioners be appointed by reason of “background and expertise in areas related to consumer products and protection of the public. . . .”  Having a former medical professional lead the agency will be an interesting and useful change of perspective.  And as a former Member of Congress from New York (where she served on the Committee on Oversight and Government Reform), she can work to mend the current strained relationship the agency has with the Hill.

Chairman Buerkle will not have a working majority as she seeks to reorient the agency.  For readers who keep score, here is the commissioner line-up:

• Commissioner Marietta Robinson (D) – term ending October 2017
• Acting Chair Ann Marie Buerkle (R) – term ending October 2018
• Commissioner Joe Mohorovic (R) – term ending October 2019
• Commissioner Elliot Kaye (D) – term ending October 2020
• Commissioner Bob Adler (D) – term ending October 2021

Nevertheless, Chairman Buerkle can make incremental changes even without a working majority of commissioners.  Perhaps the most significant will be to let all stakeholders—consumers groups and industry alike—know that their perspectives are valued.  Changing the current philosophy with respect to product sellers from “us v. them” could go a long way to bringing the agency back to a collaborative relationship that focuses first and foremost on solving safety problems and less on punishment and distrust.

It was a real pleasure to have Chairman Buerkle as a colleague when I was a member of the commission.  She is thoughtful, listens carefully and truly wants to understand how agency actions impact folks outside the Washington beltway. As we have heard before, change is good.

Closing the Books on 2016

This is a time for reflection.  Looking back on the past year, it really was not a great
one for the CPSC. And, sadly, many of the agency’s problems were of its own making. While many of the initiatives that are either ongoing or started in 2016 will continue into 2017, others will be consigned to the dustbin of bad ideas.  And most importantly, 2017 will bring new leadership and with it fresh ideas and perspectives to address the important and complex issues with which the agency must struggle as it works to fulfill its mission to protect consumers from unreasonable risks.
From my perspective, as a past regulator and now as a practitioner trying to help those in the regulated community who sincerely want to stay on the right side of the compliance line but who find that line often moves or disappears altogether, here are some areas where the agency fell down and one hopes could do better next year.

• A penalty policy that hardly qualifies as any kind of rational “policy” at all. The agency rewrote the regulation dealing with the factors to be considered when applying penalties back in 2009 to give more transparency to the process. Instead, the process has become anything but transparent. Agency enforcement staff has made clear that it has little interest in negotiations over penalty amounts, which is where the application of the penalty factors would come in.  Current agency leadership has stated that its penalty policy is “more is better.” In trying to appear as a tough cop, the agency instead comes across as a bully.  While that result may be an effective scare tactic, it serves to drive away companies who might otherwise seek out the agency when potential problems arise and does not help to advance collaborative problem solving which the agency needs to advance its mission.  Much has been written about the agency’s shortcomings in this area and let’s hope that 2017 brings about needed change here.
• An “ends justifies means” mentality that allows for skirting regulatory fairness and due process. Or put another way, government always knows best. What better illustration of this attitude than the agency’s attempts to regulate small rare earth magnets (SREM’s). Even though the industry leaders proposed a collaborative effort to regulate warnings and packaging of the product back in 2011, the agency rejected that offer and instead, through recalls and regulation, acted to ban the product.  The last hold-out, a tiny U.S. company in Colorado—Zen Magnets–has consistently been prevailing in court against the full force of the U.S. Government.  In the meantime, Chinese imports of SREM’s are being sold without any effort by the CPSC to crack down.  I guess that the CPSC thinks that only magnets sold by U.S. companies are dangerous. Certainly magnets present a hazard if swallowed.  However, they can be used safely in many different art, science, educational and recreational applications.  Perhaps in 2017, the agency could consider how to step back from a ban to a regulation that allows the product into the market while providing the kind of warnings and child-proof packaging that alerts parents to the hazards the product presents if swallowed by small children.
• Will the agency consider applying modern regulatory concepts to rule writing to assure they are effective? In a recent statement, Commissioner Mohorovic is critical of the agency’s purported effort review its standard dealing with mattress flammability.  This review is required by the Regulatory Flexibility Act which mandates review of significant rules every 10 years and the mattress rule falls into that definition.  Even though the staff found that the rule was not as effective in protecting the public as the agency had predicted when it was issued 10 years ago, it did not recommend changes.  This is just one example of the agency’s reluctance to go back to see if what it is doing is really working to protect consumers.  Commissioner Mohorovic’s suggestion that a retrospective review plan be built into rules as they are being developed is a good one and would help assure that the rules the agency writes actually provide the protection the agency says they will.  To date, agency leadership has only given lip-service to the suggestion but has done nothing real to effectuate such a plan.  Perhaps in 2017, this will change.
• Will 2017 bring some closure to the never-ending dithering on upholstered furniture flammability regulation? For a while in 2016, it looked like Commissioner Buerkle had found a path forward for addressing upholstered furniture smoldering hazard, but that was not to be. Instead, a majority of the commissioners decided that virtually every flammability hazard needed to be regulated so are now looking at how to address the hazard of large open flame fires  where upholstered furniture is not necessarily the first ignition source but could possibly be the second or even the third source of ignition.  To do this, commercial grade materials, expensive barriers and flame retardants will necessarily be part of the equation. In the meantime, pending before the agency is a petition to ban flame retardants.  Boy, what a mess! A consumer rebellion may be on the way!
• We started the year with flaming hover boards and ended it with flaming cell phones—both caused by lithium ion batteries. Rather than looking at the application first, would it not be better to start by looking at the batteries? The agency seems to be going about this from the wrong direction.
• A continual point of concern for agency stakeholders is a communications and press office that makes policy rather than communicates it. In the meantime, complaints are common about press releases that contain inaccuracies or are held up for trivial reasons, thereby delaying recalls. This result directly impacts consumer safety, cannot be defended, and yet is occurring.  Again, room for improvement in 2017.

I could go on and on but 2017 is just around the corner.  Change will not happen immediately but is inevitable.  Working together and in a spirit of support for the agency, 2017 can be a great year for the CPSC. What a happy thought to take us all through the holidays and into next year!

 

The Real World Speaks; The Government Does Not Hear

Last week I traveled to St. Louis University to speak to students attending the school’s Product Safety Management Course.  This executive education course is presented by the Center for Supply Chain Management Studies at the Cook School of Business at the University and is unique in presenting a concentrated focus on product safety-related issues.  I was asked to discuss how the CPSC is organized and how agency policy and decisions get made and I discussed my perspectives, as a former commissioner, on the agency’s seemingly more contentious and less collaborative approach to product safety.

The class was made up of professionals from small, medium and global businesses with backgrounds that included law, engineering, business and science. The joy of opportunities like this is not only having several hours with engaged and very smart professionals in the classroom, but also having time outside of class to interact informally.  While I hope I imparted knowledge, I know that I learned a great deal.

Boiling it down to a sentence, here was my message to the class:  The CPSC is moving to more aggressive and expansive regulations and more aggressive and punitive enforcement.  For companies that want to stay out of the agency’s sights, they should consider, among other things,

• implementing strategies to update and fine-tune their compliance programs;
• making sure that they have appropriate written procedures for addressing safety complaints and can demonstrate those procedures are followed;
• having and being able to show good control over their supply chain;
• keeping good records to show a testing program, test results and compliance with applicable regulations; and
• registering for the Business Portal of the Public Database as one device to know what some consumers are saying about their products.

Of course, safety must always be a core value of the company, and at all levels, including senior management.  Unless that is true, none of these efforts will be truly effective in minimizing a company’s exposure.

I also learned a great deal from the students.  One message especially resonated since it came from several different class members from different types of companies.  These students described the importance their companies placed on regulatory compliance in the face of very constrained resources.  They described the challenges of complying with different regulatory approaches to addressing the same risks, on local, state, national and international levels.  They described different testing methods to measuring compliance—tests mandated by regulatory bodies in the U.S and abroad and by cautious retail customers who want to assure that the CPSC does not appear on their doorstep and have the market power to make those tests happen—with all these tests differing one from the other.  The complaint I heard was that there is an expectation of compliance with no realistic understanding of the level of resource needed for full compliance, given the complexity of the myriad rules that have now been issued.  Nor is there any effort, or feeling of responsibility, on the part of the government to simplify those rules to make them less burdensome so that compliance can be more realistically achieved.

Bottom line from my Midwest journey:  The real world speaks but the government does not hear.

Connecting Corporate Counsel

Readers who are in corporate law departments may be interested in a conversation I had recently with the editors of Corporate Counsel Connect, a Thomson Reuters publication focusing on corporate law departments.  The focus of the piece was the development and 30 year history of the Association of Corporate Counsel (ACC), where I served as its first executive director.  You can find the interview in the October issue of Corporate Counsel Connect, here.  In a separate article I discussed with the editors the challenges that corporate counsel face in the current regulatory environment.

Corporate counsel who are not members of ACC may want to check out the resources it offers.

 

Unfinished Business

In Washington, sometimes repeating something often enough seems to make it true. We see this phenomenon working in the press stories and speeches marking the CPSIA’s fifth anniversary last month.

Although the law has its strengths and weaknesses, the real story is the unrealistic tack that the CPSC has taken in implementing the CPSIA, changing difficult circumstances into nearly impossible ones. Operating from the assumption that if some regulation is good, then more must be better, the agency embarked on a course that seeks to cover all risks—real, speculative, or imagined—rather than crafting regulations to address known unreasonable risks of injury. That our regulations go well beyond what the new law requires is not a fact that seems to concern us. 

One problem with this approach is how divorced it is from the real world. Our regulations are overly-broad and so ultra-complex that only companies with swarms of lawyers can hope to fully understand and comply with them. Thus questions necessarily arise as to how to truly comply with our regulations. And, of course, those questions have been pouring into the agency.

This issue is brought home by a new report from the Handmade Toy Alliance documenting the experiences of small toy manufacturers and importers under the CPSIA and CPSC’s implementation of it over the past five years. HTA members are those who bring excitement, creativity, and imagination to the world of play. None of the products they make presented the safety issues that prompted the CPSIA. Yet this group has felt the brunt of the law more severely than others. Here are some of their observations about the impact of the CPSC’s implementation of the law:

• “The [testing] rule overwhelmingly favors large manufacturers at the expense of smaller ones. . . . A small business owner could develop what they believe is a reasonable testing program, but it is unlikely to meet the CPSC’s strict interpretation.” HTA points out that we have designed a rule that tilts to the benefit of the large company and which small companies cannot meet.
• Due to the onerous nature of the requirements, many small businesses will choose “the path of least resistance—to continue doing what they have done for years to assure they produce a safe product [and] use their experience and wisdom to guide design and manufacture, and [to] form relationships with their customers. . . . [S]ome portions of the requirements are adhered to and others are ignored because of costs and complexity.” In other words, small producers will focus on safety and only selectively comply with those portions of our rules they can meet or understand. Creating rules that do not improve safety but contribute to an approach of selective noncompliance is dereliction of our duty as regulators and stands rational regulatory policy on its head.
• Further, some “handmade toy makers have simply gone out of business or chosen to make products that are not designed for children because the CPSIA and subsequent relief efforts preserve a hurdle too high for small business to clear.” I wonder why those who are praising the passage of the CPSIA find this to be a good result.

Are these not serious flaws attributable to the CPSIA and the agency’s implementation of it? I believe so and they are compounded by this agency’s unwillingness—through over two years of procrastination—to address the unnecessary burdens of our rules as we were directed to do by the Congress. The public has identified ways to ease the burdens, our staff has identified ways to ease the burdens, and I have even added to the list—yet we have not taken any action to implement concrete suggestions, all the while ignoring congressional directions to take action. The HTA report contains a list of actions the agency could take that would ease the burdens of small producers while maintaining safety.

HTA concludes, “The missteps of a few very large toy companies precipitated regulations which damaged thousands of small and micro U.S. businesses and continues to encumber those that survive. . . . Congress and the CPSC must move forward with meaningful solutions that are funded and given priority.”

I have raised these issues with my colleagues repeatedly (and as recently as this month when we voted on our upcoming regulatory agenda). I have been repeatedly outvoted and told that reducing the burdens of our regulations is not a priority of the agency. Again, I ask, when will we turn our attention to correcting the problems we made?