I am writing in response to the letter dated January 16 to Commissioners Nord and Moore of the CPSC signed by Reps. Henry Waxman and Bobby Rush and Senators Rockefeller and Pryor (January 16 Letter). See http://energycommerce.house.gov/images/stories/Documents/PDF/Newsroom/nord%20moore%202009%201%2016.pdf. In this letter, Congressional leaders urge the CPSC to clarify "confusion and misinformation" under the CPSIA
in a "clear and understandable manner" and specifically, to address the
application of the new law to certain books and clothing items,
resellers like thrift and consignment stores and component testing and
to provide guidance to small businesses. Notably, the letter counsels
that "greater communication and expedited action by the Commission will
improve compliance with the law and lead to more effective and
efficient achievement of the law's goals." I respectfully disagree.
In large part, I believe this letter mischaracterizes the nature of the
problem with the CPSIA
by implying that with a few regulatory tweaks and a little more
guidance, everything will be "fine". This is patently untrue and
misleading in itself. Furthermore, with economic conditions as they
are today (see http://video.forbes.com/fvn/business/er_retailers011409 -
200,000 stores are expected to close in 2009), the negative economic
implications of this law have the potential to be catastrophic without
an IMMEDIATE serious reconsideration of legislative approach. See also
http://www.forbes.com/opinions/2009/01/16/cpsia-safety-toys-oped-cx_wo_0116olson.html and http://www.forbes.com/entrepreneurs/2009/01/15/toys-lead-retail-ent-law-cx_rb_0115bovarnicksafetylaw.html?partner=relatedstoriesbox. By attempting to prop up a poorly-conceived law, I believe that Congress is fiddling while Rome burns. This did not work out well for Rome or Nero, and will not work out well for the United States in this case.
Fixing the Law Exception-by-Exception Will Not Succeed. I am confounded by the notion that by drafting a list of exceptions, the CPSC will address the fundamental compliance issues under the CPSIA.
As the January 16 Letter notes, the only permitted exceptions are those
items which "do not contain lead or contain lead at levels that do not
or would not exceed the law's limits" - in other words, the only
exception criteria under this law is lead levels, NOT risk. This rule
is the source of much of the problem, as it sweeps into the law many
items and item categories that are well-known to be safe. No amount of
rule-making will reconstruct an economy based on selling safe products
that happen to have lead as a trace element. The diversity of
products, markets and channels in our economy will defy every attempt
to build a workable law that makes everything illegal without regard to
risk except as defined. The absurdity of this effort is illustrated by
the January 16 letter itself in which Congressional leaders request
special rules for children's apparel consisting "entirely of dyed or
undyed fabric", in other words hats, socks and underwear. Perhaps the
requested rule will be known as the Hats, Socks and Underwear
Exception. Frankly, this does not solve the problem for those of us
living in cold Chicago.
Likewise, the January 16 Letter's request to create exceptions for
books is limited to "ordinary" books made entirely of paper - staples,
glue, thread, laminates and other components of books (not apparently
well-known to Congress) will make most books ineligible in this
non-risk-based exception. However, all books comprised of loose sheets
of paper should fall comfortably within the recommended exception. I am
sure libraries will appreciate this helpful loophole.
A
safety law that is divorced from risk assessment cannot be fixed by
exceptions. Congress needs to recognize this serious flaw in the CPSIA and take immediate action to fix it.
The Proposed Actions in the January 16 Letter Will Increase Complexity. The CPSIA
is already one of the most complex pieces of legislation in American
history. For companies like ours which are committed to complying with
law, the CPSIA presents a unique business challenge to conquer. Now Congress is suggesting that the CPSC
add to the confusion by making the law even more complex with a series
of detailed exceptions for various industries, channels of trade,
products, features, and other unspecified circumstances. In other
words, if American businesses didn't understand how the law worked
before, the solution is to make it more complicated. This concept is
embedded in the CPSIA, which instructs the CPSC
to carve out limited exceptions for products which could not possibly
violate the new standards. The legislative construct is entirely
wrongheaded, as the approach to safety should be risk-based
and further, is incredibly divorced from reality. For instance, the
January 16 Letter does not request that resellers of used merchandise
be relieved of any responsibility under the law, just that they be
coached better. I suggest that Congress write a book called "How to
Run A Thrift Store under the CPSIA."
Perhaps then, and only then, will we understand the procedures such
stores must undertake to ensure compliance when selling old
merchandise.
Complexity
itself is the enemy of compliance with law. Even a simple rule like
the lead-in-paint ban has proven surprisingly resistant to universal
compliance despite the fact that there is no economic incentive to use
leaded paint in children's products. [Notably, as violations of
the laws prohibiting murder illustrate, compliance problems are not
unusual in American jurisprudence and are certainly not restricted to
children's products companies.] Under this new legislative regime, the
blazingly complex CPSIA and its attendant CPSC
exceptions, rules and regulations, FAQs, opinions, interpretations,
private letter advice and so on will make compliance with law a false
promise to the American people, and at the same act as a high-octane
stimulus package for the legal industry. Even if more $600-per-hour
lawyers is a good thing for our economy, I rather doubt this will be a
workable solution for any American business, including the largest,
wealthiest and most sophisticated companies. For perspective, I
suggest you contact the legal department of your nearest thrift store
for their opinion.
The Approaching February 10 Deadline is Incredibly Unrealistic. The January 16 letter posits a fantastic resolution to the CPSIA problem, namely that the CPSC
should just issue a lot of rules and regulations in the next few days
to resolve the painful concerns expressed by constituents of late. Even
if this were possible, the idea that it would resolve the issue is,
frankly, delusional. The United States has literally hundreds of thousands of businesses affected by the CPSIA. They tend to vary in size and sophistication and many depend on a small, low-cost labor force. Despite
the outpouring of concern over this law, Congress has heard from only a
miniscule percentage of the affected businesses - many of the silent
companies are very likely oblivious to the law and its implications.
Is the concept here that when the CPSC
issues a stack of rules a few days ahead of the deadline, every
affected business will instantly and perfectly absorb the news,
properly interpret the regulations and their application to its
economic activity, rejigger processes, repair damaged relations in its
supply chain overnight, and so on? I think the timeline of public
reaction to the CPSIA
since the law was written and signed into law informs us that this is a
wholly unrealistic scenario. A series of rulings by the CPSC in the next few days will not do much to stop the economic carnage. About the only remedy that the CPSC
can implement before February 10 to stop this train wreck is a
broad STAY OF ENFORCEMENT. The solution of a stay ("hitting the pause
button") would offer the advantage of both bringing overnight relief to
the affected industries, and provide time for an open public debate
over how to fix this law, whether by amendment, further regulation or
some combination thereof. A stay for one year (or more) would also
have the advantage of unifying the lead standards with more time to
plan and sell-off inventory, thus eliminating the problem of
retroactive application of the law against product with total lead
levels between 300 ppm and 600 ppm which will be legal for only six
months (February 10 - August 9).
Congress Seems to Want to Do the CPSC's Job. The CPSIA establishes new standards for safety in children's products in a number of now well-known ways. Prior to the CPSIA, it was the responsibility of the CPSC
to make a risk-based determination for safety hazards. The January 16
letter continues the new tradition of Congress in supplanting the CPSC
as the arbiter of safety risks. I do not understand what qualifies
Congress to make the judgment, first that books are illegal until
proven legal, and then that some kinds of books are in fact okay. Did
Congress hold hearings or does it have some other way to make this
assessment of risk? I believe that Congress should not be in the same
business as the CPSC,
and by micro-managing the activities of the Commission, it has
meaningfully contributed to creating the morass that it complains about
today. The CPSC
is qualified to manage the process of assessing safety risk and writing
sensible rules for the administration of those risks. If Congress
persists in looking over the shoulder of the CPSC
and critiquing its judgments down to the level of buttons, snaps and
other "metal, plastic or painted components", it should not express
dismay over the slow, tedious and tentative process that results.
Congress is teaching the CPSC that the determination of risk is a Congressional Subcommittee responsibility now.
And What about State Attorney Generals? I want to point out that in a post-CPSIA
world, having empowered the State AGs to meddle in and enforce federal
safety laws; companies like ours are now faced with 51 CPSC’s
(plus Congressional Subcommittees). Is this someone's idea of a more
efficient way to run an economy? Has Congress thought about the
practical effect of this change in our Federal system, or the risk that
it imposes on businesses? The exponential expansion in regulatory
bodies under the CPSIA
increases the complexity of compliance to mind-boggling levels that
outstrip literally everyone's ability to process - American businesses
are in effect forced to ignore State laws because they can't manage
compliance with them as a practical matter - and introduces significant
externalities (uncontrolled risks) that cannot be managed in any way.
State AGs do not answer to the CPSC and are now empowered by the CPSIA to take matters into their hands if, in their judgment, the CPSC is not enforcing the law. Great. See, e.g., http://www.azag.gov/press_releases/dec/2008/Mattel%20CJ.pdf. In
Eighth Grade, I learned about the Federal system and thought this was
how the Founding Fathers intended to organize our economy for maximum
efficiency and equitable treatment under the law. I believe the CPSIA has rendered my Eighth Grade civics education obsolete. We are nevertheless hopeful that Congress will act before the CPSIA makes our company obsolete, too.
While I appreciate the hard work and good intentions behind the CPSIA
and its passage last summer, the time has come to stop defending a
defective bill and its defective process and acknowledge the reality of
the law's weaknesses. I am personally convinced that there is more than
one way to legislate improved safety in children's products, and that
the CPSIA
can be safely amended without ripping the fabric of our society. A
revised bill can be built to strike the problematic overly-broad
provisions that contribute nothing to the safety of children's
products, and replace them with a simple, sensible, risk-based approach
that will provide reasonable assurance of the safety and
appropriateness of children's products in our economy.
We
are facing a historic economic crisis in our country. It is time for
non-partisan leadership to bring our country out of this terrible
situation. The CPSIA is part of the problem and needs to be fixed. I urge Congress to face this reality, stop blaming the CPSC for a doomed attempt to make a defective law workable and get to work on amending the CPSIA for the good of our country.
Sincerely,
Richard Woldenberg
Chairman
Learning Resources, Inc.
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