January 27, 2015

My experiences form the foundation of my regulatory philosophy. I am the only non-lawyer on the Commission, and the only MBA. I try to apply that perspective every day, to help us figure out as an agency how we can make it easy for well-meaning companies to comply with our rules and produce safe products—and easy for the agency to spot companies that skirt or ignore the law and put consumers at risk.


Part of that MBA perspective is the concept of Return on Investment, how much we get back for what we put in. I’ve modified it a little: In every CPSC decision I face, I think about the Safety Return on Investment, the SROI. How much safety is the consumer getting back for every dollar and every staff hour the Commission invests in an area? How does that compare with other choices we could make? I consider what the action we’re considering taking will do to help CPSC fulfill its statutory mission.


Our Mission

That mission has four components. First—the one people are most familiar with—is “to protect the public against unreasonable risks of injury associated with consumer products.”[1] We stand between products that present unreasonable risks and the consumers who might otherwise become an injury statistic.


Second is “to assist consumers in evaluating the comparative safety of consumer products.”[2] We’re supposed to be an information clearinghouse, helping consumers make buying decisions on safety just like they do on price or features.


Third, we’re “to develop uniform safety standards for consumer products and to minimize conflicting State and local regulations.”[3] While states may be the laboratories of democracy, the experiments sometimes get out of the lab, forcing companies to jump through some difficult hoops with no clear benefit to the consumer, and one of our jobs is to smooth the edges on the map. When we do that properly, we lower technical barriers to trade and facilitate interstate commerce, one of the core functions of the federal government.[4]


Fourth, we’re tasked with “promot[ing] research and investigation into the causes and prevention of product-related deaths, illnesses, and injuries.”[5] Not only can we do this directly through the tremendous talent of our technical staff, but we can also help stimulate the broader research community through our work with voluntary standards groups and through grant programs.


Today, I want to focus on two of those “whats” – our primary mission of protecting consumers against unreasonable risks and our task of harmonizing the consumer product market – but I also want to talk about the “how.” It’s not enough to want to protect consumers and facilitate commerce; we have to make sure we’re taking the right approach.


Principled CPSC Decision-Making

The right approach starts with identifying core principles, ideas that motivate us to act or to decline to act. Regulating based solely on what feels like a good idea has a very low chance of success, so it is incumbent upon us to develop and apply an analytical framework that can ensure consistency in our efforts. While the agency’s overall framework is likely to shift over time with changes in the Commission, each commissioner’s decisions should be internally consistent and should reflect that commissioner’s policy principles.


In deciding how or even if we should regulate a product, one of my core principles is the idea of latency. For me, a latent hazard – a risk whose nature or severity consumers are not likely to appreciate – is always more compelling than a patent hazard – one an ordinary, reasonable consumer should anticipate and understand.


My focus on latency comes in part from my belief in personal responsibility and my belief that government cannot and should not replace that responsibility. It also comes from the value I place on personal choice. We all make dozens or hundreds of choices every day based on any number of factors, and safety is routinely one of those. Where should I cross the street? How much should I brake to make that turn? And yes, is this product or this behavior safe?


Sometimes, consumers choose to use a product they know carries risk. Government needs to be very careful and very sure of itself when it tells those consumers that they’re wrong, that whatever benefit they derive from a product is, despite their own judgment, not worth the risk. And this idea has been embedded in the CPSC’s mandate as long as the agency has existed. One of the first courts to look at a CPSC rule reasoned that, “If consumers have accurate information, and still choose to incur the risk, then their judgment may well be reasonable.”[6] Just because consumers are taking a risk we don’t understand, that doesn’t make the risk unreasonable.


Sharing the Safety of Knowledge

Admittedly, consumers do not always have all of the accurate information. In fact, our statutes recognize this, in the second component of our mission: “to assist consumers in evaluating the comparative safety of consumer products.”[7] As such, when we develop information that suggests consumers are being harmed in a way that may result from their own decisions rather than any inherent product hazard, it may be that the proper role for us is to share the information and allow consumers – the free market – to address whether or not the harm is reasonable by either changing or continuing that behavior.


A properly informed body of consumers provides its own regulatory forces, rejecting products that present risks those consumers feel are unreasonable, and that silent regulation can adapt more quickly than centralized planning from the CPSC.[8] Each consumer-regulator also possesses at least one piece of information we don’t: Her own risk-tolerance. Wherever possible, I prefer to see us help that consumer do her own regulating by turning latent hazards into patent ones through robust warning and information efforts.


Patent Versus Latent: More than a Letter’s Difference

To give you some examples of the distinction between patent and latent hazards, we recently proposed a set of radical mandates for recreational off-highway vehicles (ROVs).[9] To me, ROV use – especially in the pure recreation setting – is an inherently risky activity, but it’s up to consumers to decide if it’s too risky for them. It’s their choice, not mine.


Further, a substantial majority of the injuries and deaths related to ROVs come from another choice: the choice not to wear a seatbelt. Given how successful public education and local law enforcement campaigns have been about the value of seatbelts in cars, I believe consumers are well aware of the risk of not using one in an ROV. It’s a patent hazard, and given that the most effective solution is consumer choice, I’m not convinced it’s a problem that needs a federally mandated solution.


There are sometimes hazards that are so far from what a reasonable consumer would anticipate that they are likely to remain latent despite our best efforts to call attention to them, particularly where children are involved. A recent example of a latent hazard is our vote to regulate small, powerful magnets. These products actually present both a patent and a latent hazard. The patent hazard is the risk of choking that any object this small presents for children. But what consumers may not realize is that, even if the magnets make it through a child’s throat with no problems, their magnetic interaction can cause serious damage in the airway or the intestines. The ordinary, reasonable consumer probably would not anticipate or appreciate that risk, so I felt it was an appropriate area for the CPSC to intervene and establish performance standards to make those tragic situations less likely.


Regulating Misuse

Consumer choice doesn’t just show up in which products people use, but also in how they use them. Sometimes, people use products in ways the manufacturer didn’t intend. When that misuse is foreseeable – when the manufacturer can reasonably anticipate how people will misuse the product – we may have a role to play in trying to guard against a resulting hazard by regulation. Addressing foreseeable misuse is implicit in our statutes, but it’s also something we can take much too far. If consumers are misusing a product in a way they know could expose them to harm, that is ultimately their choice to make, and it may be reasonable.


Ultimately, whether they’re misusing a product or not, consumers not only have a role to play in their own safety, but, when they’re properly informed, they’re in the best position to keep themselves safe. No rule we can pass is as effective as consumers choosing not to buy a product because they feel it presents too much risk.


Respecting the Consumer

Sometimes, we try to circumvent consumer choice. In our pending rulemaking on window blinds, for example, the hazard we’re trying to address is that the cords used to raise, lower, or adjust the blinds can be a tempting plaything for children, who then wind up strangled or otherwise entrapped in the cords. One solution is for consumers to use cleats sold with the blinds to secure the cords, rather than leaving them hanging. Instead of that, some people want a passive solution, something that operates without any user input.


The problem is that the passive solution would be substantially more expensive, impractical for some situations, and perhaps make blinds unusable for some consumers, especially the elderly and people with disabilities – and the “vertically challenged.” Where there is a viable, less burdensome solution to a hazard, embracing that solution is not just good government, it’s required under our statute.[10] The fact that such a solution relies on consumer choice is not going to be enough to deter me from supporting it.


Perhaps the concern is that consumers don’t always choose the safer path or perform the action that keeps a product safe. People don’t always buckle up or tie down their window blind cords. One of my principles is to seek to resolve that problem not by designing the consumer out, but by informing the consumer. People may make risky choices they don’t know are risky. It’s our job – in fact one of our statutory missions – to help consumers understand the risks they take.


A Nudge Toward Safety

We may find that information is a way of “[altering] people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives.”[11] That’s an approach to regulation recommended in a book called Nudge, by Richard Thaler and Cass Sunstein, former head of the Office of Information and Regulatory Affairs under President Obama. The concept is that, rather than trying to mandate what government considers to be sound choices, we provide consumers with concise information to nudge them into sound choices on their own.


A great example is the EnergyGuide label, which estimates how much an appliance will cost to operate. Presumably, all other things equal, consumers will choose the cheaper, more energy efficient appliance. As a result, government achieves energy use and environmental quality gains without taking consumers’ choices away. It’s what the book describes as “libertarian paternalism,”[12] in stark contrast to the nanny-state paternalism that is too often associated with health and safety agencies.


Moving Forward by Looking Back

While it’s important to talk about how I evaluate issues before us today, I also feel it’s important that we never stop evaluating the decisions we made yesterday. In 2011, under Executive Order 13563, President Obama directed executive agencies to apply a series of principles in their decision-making, including public participation, flexibility, and reliance on scientific expertise. The order also directed agencies to engage in regular retrospective review, to look at their existing rules and see if they needed improvement or if they were even still relevant. Another Executive Order, 13579, encouraged independent agencies use those principles, as well, and CPSC has pledged to operate in the spirit of those orders.


It’s our job as regulators not only to pursue our statutory mission, but to do so with as little disruption to the market as possible. It’s a difficult balance to strike, and, despite the talent and dedication of our staff, the odds of us getting it exactly right the first try are pretty low. Even if we do, circumstances can change and make a perfect rule very imperfect. We can wait for consumers, industry, Congress, or others to bring problems to our attention, or we can take the initiative President Obama’s order recommends and look for gaps or missteps ourselves.


There are certainly areas of our rules that need improvement. As this audience well knows, we have a small parts rule for children’s products that purportedly has an exemption for apparel. When we passed the rule, we recognized that the small part ban could effectively ban buttons and other useful apparel components, so we included the exemption. But we’ve rendered the exemption meaningless by treating things like detached buttons as defects and demanding the products be recalled. The only difference is the product is recalled as defective instead of violative.


I’m not saying we should or shouldn’t have the exemption. I am saying that, if we’re going to have it, it needs to mean something. When our rules and our actions aren’t aligned, the agency loses credibility and companies lose the predictability they need.


Easing the Burdens of Safety

Reviewing our rules isn’t just a good idea. Sometimes it’s the law. In 2011, Congress directed us to take a look at the rules that mandate third-party testing for children’s products to see if there were ways to make those rules less burdensome. Our staff has outlined seven areas to look at in Fiscal Year 2015, and Chairman Kaye and I have identified three targets in a joint letter to Chairman Thune, but I hope we won’t stop with those or at just researching. There are opportunities to make testing less expensive without making product safety less certain; I should and do know based on seven years in the testing industry, and it’s our duty to take advantage of those.


One of the big drivers of testing costs is and will certainly continue to be phthalates. Right now, six phthalates are subject to bans from some children’s products, three permanently and three on an interim basis. Under the rule we recently proposed, two of the interim bans would be lifted, but one interim-banned and another four phthalates would be permanently banned.[13] Those bans apply to plasticized parts of toys and child care articles, items intended “to facilitate sleep or the feeding of children age 3 and younger.”[14]


For the most part, phthalates aren’t an issue for the apparel industry. The big exception is sleepwear. Any plasticized component of children’s sleepwear is subject to the phthalates bans and testing – think of the non-slip texture on the bottom of some footie pajamas. Same with anything plasticized on bibs.


The big question right now for phthalates and apparel is whether or not the base fabric needs testing. In 2009, CPSC staff put out a testing policy that suggested natural fibers and most synthetic fibers don’t contain phthalates and might not need testing. Then, in 2011, in the Notice of Requirements to the labs who would do the testing, we repeated that position for natural fibers, but not for synthetics, a change that seems to have been at the behest of Commissioners. The third-party testing relief projects include trying to come up with a determinations list for phthalates much like our present lead rule, and I hope we can use that vehicle to provide some clarity for fabrics.


On a related note, I know AAFA has been in contact with CPSC regarding the exclusion from our lead determinations for “after-treatment applications, including screen prints, transfers, decals, or other prints.”[15] There is some concern that the phrase “other prints” could effectively nullify the baseline exemption for textiles and, at a minimum, creates confusion. Another of our third-party testing relief projects is to give some clarification on the prints issue, and I hope it will move swiftly.


A (Pre-)Cautionary Tale

The bigger news to come out of the phthalate rulemaking may not have been the proposed rule itself. It may have been the reasoning some of my colleagues used to explain their decision to propose the rule. That rationale is called the Precautionary Principle, and it’s the idea that the maker of any new product should have to prove its safety before the product can reach the market, rather than the historical American approach that a product is presumed safe until there is evidence to the contrary. The Precautionary Principle is the cornerstone of chemicals regulation in the EU, and there are some who advocate its adoption, here.


At least a few of those advocates are now on the Commission. We heard that there is “too much onus on the government to prove a product is dangerous as opposed to those who are profiting by it to demonstrate that their product is safe,” and that not applying the Principle is “totally irrational” and a “flat-out public policy failure.” We heard that, at least in the area of chemicals – and perhaps elsewhere – CPSC should have pre-market approval authority. I can’t imagine the level of market disruption that would cause.


The State of Chemicals

But it’s not just at the federal level where sweeping changes in chemicals policy are looming. State and even local governments are more active than they’ve ever been, with a patchwork of sometimes conflicting laws popping up everywhere. The most familiar, of course, are the California Green Chemistry Initiative[16] and Washington’s Children’s Safe Products Act,[17] namely its list of 66 “chemicals that are of high concern for children.”[18]Worse, there is very little CPSC can do to untangle this web. Even though part of our mandate is to develop uniform standards and minimize conflicting laws and we have preemptive authority to make that happen, our preemption only extends to safety standards. Many of these state laws are reporting requirements, and our preemptive authority is limited.


The best hope for standardizing chemical regulation may be reform to the Toxic Substances Control Act of 1976 (TSCA). An effort has been underway in Congress for years, and an overhaul bill came close to passage last year. There are some remaining issues – such as balancing preemption and how much new authority to give agencies like the EPA – but the committee leaders say they’re confident they’ll be able to pass some kind of reform this year.


Even with TSCA reform, chemicals and chronic hazards will continue to play a significant role in consumer product policy at all levels. For example, in December, New York City Consumer Affairs Commissioner Julie Menin petitioned CPSC to initiate rulemaking regarding the “Washington 66.” She wants us to review the use of – and potentially ban – all those chemicals in children’s products. By law, we’re required to take some action on the petition – so the issue is certain to be a topic of debate.


CPSC as Gatekeeper

Perhaps the most daunting challenge CPSC is facing – and will always face – is the size of the agency compared with the size of our mission. We regulate around 16,000 different consumer products, each with sometimes millions of units in the market. Even though the agency’s budget doubled with the passage of the CPSIA, we’re still dwarfed by the enormity of the task before us. Nowhere is that truer than at the nation’s ports.


In 2013, over 235,000 importers brought $723 billion worth of products under CPSC jurisdiction into the United States. CPSC has inspectors stationed at 16 of 327 U.S. ports, but they could only reach about 0.05% of the roughly 14 million shipments that arrived in 2013. And whether they’re for regulatory violations or defects, 4 out of 5 products CSPC works with manufacturers to recall are imported products.


The simple reality is that CPSC will never be able to have inspectors at every port and look at every shipment. The simple truth is we shouldn’t, even if we could. Taking that sort of sweeping, blundering approach would be an enormous waste of both public and private resources, grinding the wheels of commerce to a halt so that we can peek into containers we know don’t have violative products.


That said, we do need to expand our import enforcement reach. For me, the key to that isn’t inspecting more, it’s inspecting more intelligently. We’re already starting down that path. The CPSIA required us to create a risk assessment tool to allow our port inspectors to target specific problem areas or importers. The ongoing Risk Assessment Methodology pilot has done just that, giving us a perspective on which companies are most and least likely to bring in bad product.


We’re also working alongside 10 partner agencies in the Commercial Targeting and Analysis Center to coordinate cargo stoppages and inspections, and we’re fully engaged with the Single Window initiative, designed to give importers a one-stop shop for filing documentation for their imports and streamline the process.


But I want to see us take a more robust, formalized, and mutually beneficial approach. Rather than just checking our recent safety data to figure out which 5 in 10,000 shipments we’re going to look into, I want to see us partner with industry to take as many of those 10,000 as we can out of the risk pool.


Borrowing from the success our peer agencies have had with programs like TSA Pre-check and C-TPAT (CBP’s Customs-Trade Partnership Against Terrorism), I want us to establish a Trusted Trader program, through which companies can voluntarily subject themselves to more intense scrutiny on the front end and on an ongoing basis, in exchange for quicker and more certain passage through the ports. If we don’t get another dime to hire inspectors and can still only look at about 7000 shipments a year, I want to give us looking at the right 7000. Stopping cargo we could reasonably assure ourselves doesn’t need to be stopped is a low-SROI proposition.


We were able to expand the agency’s commitment to the Trusted Trader concept in our FY 2015 operating plan, giving it the staff resources it needs to go from the drawing board to the beginnings of a reality. And it’s my top priority to ensure that commitment remains, even as other challenges and other opportunities present themselves.



Finally, I’d be remiss if I didn’t talk about one of the biggest ongoing rulemaking efforts we have out right now, one that is certainly germane to our imports discussion. It’s our so-called “1110 Rule,” named not for what it does – require certificates of compliance for regulated products – but for the section of the Code of Federal Regulations where it’s published (creativity is not our strong suit). The rule was required by the CPSIA, and we put out the first version in 2008.


We’ve received feedback from across our stakeholders, and we know the rule needs improvement. The amended version is in the notice-and-comment process, with staff now reviewing the comments we received and working to craft a final version for the Commission to vote on. Because of the enormous scope of this rule, staff is taking a very thorough approach, including holding last summer’s workshop on the electronic filing components of the rule. As such, a final rule is probably months from emerging.


When the rule does come, as always, I’m going to be looking for the SROI, the Safety Return on Investment. The relationship is a little attenuated with something like a certificate – something that doesn’t inherently make any product safer – but there are still choices we face in that rule where we can craft requirements that reduce consumers’ overall risk or impose mandates that are sound and fury signifying nothing. I’m going to push hard for the former, for us to deploy our limited resources and those of the companies we regulate where they do the most to protect consumers from unreasonable risks of injury from consumer products.



CPSC has a daunting mission, protecting consumers from unreasonable risks lurking among the thousands of products in our jurisdiction. New products and new hazards emerge all the time and push the limits both of our technical understanding and our policy principles.


The agency’s mission is even more challenging if you believe, as I do, that government should interfere with markets as little as possible and use the lightest touch it can in issuing its mandates. But it’s a job we’re fully capable of doing, and certainly one that’s worth doing, and I start every day looking for ways I can help CPSC help consumers get the products they need and want without the injuries they don’t.


[1] 15 U.S.C. § 2051(b)(1).

[2] 15 U.S.C. § 2051(b)(2).

[3] 15 U.S.C. § 2051(b)(3).

[4] U.S. Const. Art. I § 8, cl. 3

[5] 15 U.S.C. § 2051(b)(4).

[6] Aqua Slide ‘N’ Dive Corp. v. CPSC, 569 F.2d 831, 839 (5th Cir. 1978) (emphasis added).

[7] 15 U.S.C. § 2051(b)(2).

[8] See generally Friedrich A. Hayek, The Use of Knowledge in Society, 4 Amer. Econ. Rev. 519 (1945).

[9] Safety Standard for Recreational Off-Highway Vehicles (ROVs), 79 Fed. Reg. 68963 (proposed Nov. 19, 2014) (to be codified at 16 C.F.R. pt. 1422).

[10] 15 U.S.C. § 2058(f)(3)(F).

[11] Richard H. Thaler & Cass R. Sunstein, Nudge: Improving Decisions about Health, Wealth, and Happiness, 6 (2008).

[12] Id.

[13] Prohibition of Children's Toys and Child Care Articles Containing Specified Phthalates, 79 Fed. Reg. 78324 (proposed Dec. 30, 2014) (to be codified at 16 C.F.R. pt. 1307).

[14] 15 U.S.C. § 2057c(g)(1)(C).

[15] 16 C.F.R. § 1500.91(d)(7).

[16] Assem.B. 1879, 2007-2008 Sess., ch. 559, Statutes of 2008; S.B. 509, 2007-2008 Sess., ch. 560, Statutes of 2008.

[17] Wash. Rev. Code § 70.240 et seq (2008).

[18] Wash. Rev. Code § 70.240.030 (2008). See also Wash. Admin. Code § 173-334-130 (2009).