[Senate Hearing 114-220]
[From the U.S. Government Publishing Office]
S. Hrg. 114-220
CONSUMER PRODUCT SAFETY
AND THE RECALL PROCESS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON CONSUMER PROTECTION,
PRODUCT SAFETY, INSURANCE,
AND DATA SECURITY
of the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 8, 2015
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri MARIA CANTWELL, Washington
MARCO RUBIO, Florida CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin TOM UDALL, New Mexico
DEAN HELLER, Nevada JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado GARY PETERS, Michigan
STEVE DAINES, Montana
David Schwietert, Staff Director
Nick Rossi, Deputy Staff Director
Rebecca Seidel, General Counsel
Jason Van Beek, Deputy General Counsel
Kim Lipsky, Democratic Staff Director
Chris Day, Democratic Deputy Staff Director
Clint Odom, Democratic General Counsel and Policy Director
------
SUBCOMMITTEE ON CONSUMER PROTECTION, PRODUCT SAFETY, INSURANCE, AND
DATA SECURITY
JERRY MORAN, Kansas, Chairman RICHARD BLUMENTHAL, Connecticut,
ROY BLUNT, Missouri Ranking
TED CRUZ, Texas CLAIRE McCASKILL, Missouri
DEB FISCHER, Nebraska AMY KLOBUCHAR, Minnesota
DEAN HELLER, Nevada EDWARD MARKEY, Massachusetts
CORY GARDNER, Colorado CORY BOOKER, New Jersey
STEVE DAINES, Montana TOM UDALL, New Mexico
C O N T E N T S
----------
Page
Hearing held on October 8, 2015.................................. 1
Statement of Senator Moran....................................... 1
Letter dated January 30, 2014 to Robert S. Adler, Acting
Chairman, U.S. Consumer Product Safety Commission from
Senators Robert P. Casey, Jr. and Patrick J. Toomey........ 3
Letter dated May 30, 2014 from Ann Brown to Hon. Fred S.
Upton, Chairman, and Hon. Henry A. Waxman, Ranking Member,
Committee on Energy and Commerce, U.S. House of
Representatives............................................ 3
Statement of Senator Blumenthal.................................. 6
Statement of Senator Klobuchar................................... 18
Statement of Senator Daines...................................... 20
Statement of Senator Nelson...................................... 25
Prepared statement........................................... 25
Witnesses
Hon. Elliot F. Kaye, Chairman, Consumer Product Safety Commission 7
Prepared statement........................................... 9
Hon. Ann Marie Buerkle, Commissioner, Consumer Product Safety
Commission..................................................... 11
Prepared statement........................................... 12
Frederick (Rick) Locker, Partner, Locker Greenberg & Brainin,
LLP, on behalf of the National Association of Manufacturers.... 31
Prepared statement........................................... 33
Jonathan Gold, Vice President, Supply Chain and Customs Policy,
National Retail Federation..................................... 41
Prepared statement........................................... 43
Cheryl A. Falvey, Partner, Crowell & Moring LLP; former General
Counsel, Consumer Product Safety Commission.................... 45
Prepared statement........................................... 47
Nancy A. Cowles, Executive Director, Kids In Danger (KID)........ 50
Prepared statement........................................... 51
Appendix
Walt A. Sanders, Washington DC Counsel, Safe Fields Alliance,
prepared statement............................................. 61
Letter dated July 20, 2015 to Hon. Elliot F. Kaye, Chairman, U.S.
Consumer Product Safety Commission from Darren Gill, Vice
President, FieldTurf; Rom Reddy, Managing Partner, Sprinturf;
and Heard Smith, President, Astroturf.......................... 62
Al Garver, President, Synthetic Turf Council, prepared statement. 63
Response to written questions submitted to Hon. Elliot F. Kaye
by:
Hon. Jerry Moran............................................. 64
Hon. Cory Gardner............................................ 69
Hon. Bill Nelson............................................. 70
Hon. Richard Blumenthal...................................... 71
Hon. Edward Markey........................................... 71
Response to written questions submitted to Hon. Ann Marie Buerkle
by:
Hon. Cory Gardner............................................ 73
Hon. Bill Nelson............................................. 73
Hon. Edward Markey........................................... 74
Response to written questions submitted by Hon. Bill Nelson to:
Cheryl A. Falvey............................................. 74
Response to written questions submitted to Nancy A. Cowles by:
Hon. Bill Nelson............................................. 75
Hon. Richard Blumenthal...................................... 75
CONSUMER PRODUCT SAFETY
AND THE RECALL PROCESS
----------
THURSDAY, OCTOBER 8, 2015
U.S. Senate,
Subcommittee on Consumer Protection, Product
Safety, Insurance, and Data Security,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:02 a.m. in
room SR-253, Russell Senate Office Building, Hon. Jerry Moran,
Chairman of the Subcommittee, presiding.
Present: Senators Moran [presiding], Blunt, Gardner,
Daines, Nelson, Klobuchar, and Blumenthal.
OPENING STATEMENT OF HON. JERRY MORAN,
U.S. SENATOR FROM KANSAS
Senator Moran. Good morning. I call the Subcommittee
hearing to order and welcome our guests.
This is our second of this Congress as efforts to provide
oversight to the Consumer Protection--excuse me. Let's do this
again.
[Laughter.]
Senator Moran. Good morning. Welcome. We are glad to have
you here. And this hearing is now called to order.
This hearing is our Subcommittee's second of this Congress
as it relates to oversight of the Consumer Product Safety
Commission. And we have the Chairman and Commissioner Buerkle
with us, and we are delighted to hear what they have to say in
just a few moments.
Then we will be joined by a second panel of experts who are
involved in the consumer product community and particularly on
the issues that are scheduled to be discussed in this
subcommittee hearing today.
Product safety is not a Republican or Democrat issue; it is
something that I can't imagine that anyone doesn't care about.
The hearing today will focus on CPSC's recalls, the
Commission's efforts to spot emerging hazards and remove
potentially dangerous products from the marketplace quickly.
Specifically, I look forward to discussing the Retailer
Reporting Program, a voluntary program through which
participating retailers submit weekly and product-specific
reports to the Commission.
We will also discuss the Commission's proposed rule on
voluntary remedial actions and guidelines for voluntary recall
notices, commonly known as the Voluntary Recall Rule. We will
also discuss how the proposed rule may impact the longstanding
Fast Track Product Recall Program.
CPSC has a long history of success in its mission to keep
Americans safe. The Commission's track record, specifically on
consumer product recalls, has been marked by innovative thought
and engagement with relevant stakeholders.
A prime example of this out-of-the box thinking was the
creation of the Commission's Fast Track Program in the 1990s,
where it instituted alternative recall procedures to work
closely with companies to expedite the recall process. The
result of this program was to allow for an open exchange of
critical information between the Commission and the recalling
company and to create flexibility to remove potentially harmful
products from shelves more quickly.
Ultimately, it was American consumers and families who
benefited. The Ford Foundation and Harvard University named
CPSC the winner of the Innovations in American Government Award
for its work on this program. And it has received high marks
from consumer groups and industry stakeholders alike.
CPSC adopted a similarly innovative approach to its market
surveillance and emerging hazards identification activities
when it instituted the Retailer Reporting Program more than a
decade ago. This program created incentives for participating
retailers to hand over detailed and product-specific incident
reports to the Commission in exchange for recognition by the
Commission that participation in the program satisfied
statutory reporting obligations.
This recognition was a true benefit to participating
companies, as it provided a measure of certainty on how to meet
the obligations. In exchange, the Commission gained access to a
trove of near-realtime data about consumer product trends in
the marketplace.
Recent Commission activity, however, indicates a potential
shift with respect to CPSC's attention on these matters. With
respect to Fast Track, recent attempts to advance the proposed
Voluntary Recall Rule have drawn overwhelmingly bipartisan
concern that the proposals would unnecessarily delay the recall
process.
Last year, Senators Casey and Toomey sent a letter to then-
Acting Chairman Adler stating that the proposed changes seemed
to jeopardize the efficiency of the existing process, which
could increase the risk of harm to consumers.
In a letter dated May 30, 1914--2014--I thought my glasses
would make a difference.
[Laughter.]
Senator Moran. In a letter dated May 30, 2014, former CPSC
Chairwoman Ann Brown voiced similar concerns. Chairwoman Brown
described the Fast Track Program as hugely successful,
resulting in recalls being announced faster and better
protecting consumers from injury. She believed the proposed
rule would undermine the Fast Track Program, removing
incentives for firms to participate in the first place.
And I ask unanimous consent that these letters be entered
into our record.
So ordered.
[The information referred to follows:]
United States Senate
Washington, DC, January 30, 2014
Robert S. Adler,
Acting Chairman,
U.S. Consumer Product Safety Commission,
Bethesda, MD.
Re: Proposed Rulemaking on Voluntary Product Recalls
Dear Chairman Adler:
We have recently become aware of a proposed rule by the Consumer
Product Safety Commission (CPSC) that could greatly increase the cost
and complexity of recalling harmful consumer products.
As you know, the agency currently operates a ``Fast Track'' program
that is well regarded and has a history of success. Since its inception
in 1997, the program has allowed companies to recall products when they
have reason to believe their products will harm consumers. The vast
majority of companies across the Nation comply with the program, and
companies in Pennsylvania often initiate product recalls as a
precautionary measure, even where there is no evidence of injury to
consumers. As the CPSC itself points out, the advantage of its award
winning program is that it permits companies to remove potentially
hazardous products from the marketplace as quickly and efficiently as
possible, without requiring CPSC staff to make a preliminary
determination that the product is hazardous. Because the program makes
recalls voluntary and utilizes standard-form documents that can be
expeditiously reviewed and executed, product recalls occur rapidly and
efficiently.
Unfortunately, the proposed changes seem to jeopardize the efficacy
of the existing process, which could increase the risk of harm to
consumers. The proposed rule makes ``voluntary'' product recall Action
Plans legally binding and requires companies to state with specificity
each instance in which a product causes harm. We worry that these
changes may discourage companies from initiating precautionary recalls
and increase compliance and administrative costs. Companies that recall
products will have to utilize lawyers to negotiate their ``legally
binding'' documents and will involve upper corporate management to
approve forward-looking obligations. Similarly, the CPSC will have to
devote more time and personnel to negotiating recall documents and may
be subject to litigation to determine whether a particular product is
hazardous. Given these issues, we are concerned that the proposed
change could ultimately keep harmful products on store shelves for
longer periods of time, and thus increase the risk of harm to
consumers.
Given the longstanding success of the Fast Track program, and the
paramount importance of maintaining effective procedures for recalling
dangerous products, we encourage the Commission to very carefully
consider any changes it seeks to make to its Fast Track recall program.
Sincerely,
Robert P. Casey, Jr.,
United States Senator.
Patrick J. Toomey,
United States Senator.
______
May 30, 2014
Hon. Fred S. Upton,
Chairman,
Committee on Energy and Commerce,
U.S. House of Representatives,
Washington, DC.
Hon. Henry A. Waxman,
Ranking Minority Member,
Committee on Energy and Commerce,
U.S. House of Representatives,
Washington, DC.
Dear Chairman Upton and Ranking Minority Member Waxman,
I had the privilege of serving as Chairman of the U.S. Consumer
Product Safety Commission from March 1994 until November 1, 2001.
During my time as Chairman, we prevented numerous deaths and injuries
through enforcement actions, product recalls and working with
consumers, consumer groups and firms regulated by the Commission.
Product safety is best accomplished when government, industry and
consumers work together.
Under the Consumer Product Safety Act (CPSA), manufacturers,
distributors, and retailers of consumer products must report certain
potential product hazards to the Commission. They must report
immediately if they obtain information which reasonably supports the
conclusion that a product (1) fails to comply with certain mandatory or
voluntary standards, (2) contains a defect which could create a
substantial product hazard, or (3) creates an unreasonable risk of
serious injury or death.
If the Commission believes that a product presents a substantial
product hazard to the public, it may pursue corrective action. Early in
my Chairmanship, I learned that some number of companies were offering
to conduct product recalls but because of entrenched procedures, those
firms were not allowed to proceed with a recall until the CPSC staff
performed a technical evaluation of the product involved, agreed that
there was a product safety problem by making a ``Preliminary
Determination'' (PD) of hazard, and then sent a letter to the firm
advising it of the preliminary determination of hazard and requesting a
product recall.
This process could and often did take many months-months without a
recall, months where consumers were at risk, even though the firm was
ready, willing and able to proceed with a recall at the time of its
report. We changed this bureaucratic process early in my tenure as
Chairman by creating the Fast Track Product Recall program in August
1995.
Originally called the ``No PD'' program, firms who reported to
CPSC, identified a product safety problem, agreed to and initiated a
recall within 20 working days of their report, no longer required a
staff technical evaluation of the problem reported. Rather than
performing a technical evaluation to confirm the product problem
reported upon, the CPSC staff evaluated the remedy proposed to assure
that it adequately addressed the problem identified and spent time
working with the firm on conducting the product recall.
The Commission made this Fast Track program permanent on March 27,
1997, and it has been hugely successful. More than one-half of all CPSC
recalls are now conducted through the Fast Track Program. Recalls
conducted through this program benefit consumers, the recalling firm
and the CPSC. Recalls are announced faster better protecting consumers
from injury. Recalling firms do not receive a letter stating that the
CPSC staff has preliminarily determined their product is a substantial
product hazard. And the government spend less resources investigating a
product that a company has already agreed should be recalled.
The CPSC staff received a ``Hammer'' Award from Vice President
Albert Gore's National Partnership for Reinventing Government for the
Fast Track Product Recall Program. This award honored Federal employees
for significant improvements to customer service and for making the
government work more efficiently. Also in 1998, the Fast Track Program
was named a winner of the prestigious Innovations in American
Government award, an awards program of the Ford Foundation and Harvard
University, administered by Harvard University's John F. Kennedy School
of Government in partnership with the Council for Excellence in
Government.
Now this award winning program appears to face the risk of being
unintentionally undermined by a rule proposed by the CPSC in November
2013 that is intended to enhance voluntary recalls by setting forth
principles and guidelines for the content and form of voluntary recall
notices that firms provide as part of corrective action plans. One of
the CPSC's proposals is to prohibit firms desiring to conduct a
voluntary recall from disclaiming that there is a hazard presented by
their product unless the Commission agrees to the disclaimer. I am
concerned that this proposal if adopted could undermine the efficacy of
the Fast Track program. Another proposal would classify a voluntary
Corrective Action Plan (CAP) as ``legally binding'' thus transforming a
CAP into a Consent Decree, potentially delaying an otherwise effective
recall weeks or even months due to haggling over legalities. A Fast
Track procedure would be rendered impossible under these circumstances.
CPSC urges firms to err on the side of caution by reporting
potential product safety problems and conducting recalls. It is my
understanding that virtually every firm that reports under the CPSC
mandatory reporting requirement and requests to participate in a Fast
Track recall,asserts that their product does not present a substantial
product hazard, but nonetheless they wish to conduct a recall. If
reporting firms are not allowed to make this disclaimer, they have no
incentive to participate in the Fast Track Program.
Not making the disclaimer may be perceived in product liability
litigation as akin to admitting that the product reported on is a
substantial product hazard. If so, reporting firms might just as well
report to CPSC, not offer to conduct a recall, and take the chance that
the CPSC staff might conclude their product is not a substantial
product hazard and that no recall is necessary.
If this occurs, recalls would be delayed, CPSC would be required to
use substantial technical resources to evaluate products so that the
staff can determine whether to make a preliminary determination of
hazard, and consumers are left unprotected potentially for many months.
I respectfully request that the Committee urge the Commission to
consider its proposed rule carefully and to assure that it does not
adversely affect CPSC's Fast Track Product Recall Program.
Sincerely,
Ann Brown.
CC:
The Honorable Lee R. Terry, Chairman
Subcommittee on Commerce, Manufacturing and Trade
The Honorable Jan Schakowsky, Ranking Member
Subcommittee on Commerce Manufacturing and Trade
The Honorable John D. Dingell
Member of Congress
The Honorable Robert A. (Bob) Adler, Chairman
U.S. Consumer Product Safety Commission
The Honorable Marietta S. Robinson, Commissioner
U.S. Consumer Product Safety Commission
The Honorable Ann Marie Buerkle, Commissioner
U.S. Consumer Product Safety Commission
Senator Moran. Despite these concerns, the Voluntary Recall
Rule is explicitly included in the Commission's Fiscal Year
2016 rulemaking agenda and operating plan, released just a few
weeks ago. This rule would require that the terms of a
corrective action plan, once entered into, be legally binding
upon manufacturers and would prohibit them from disclaiming the
presence of a product hazard.
Previously, the Chairman has indicated this rule is not a
priority for the agency, so I am anxious to hear from the
commissioners what has prompted its inclusion in the Fiscal
Year 2016 rulemaking agenda and discuss the merits of the rule
as it pertains to the fundamental objective of the Commission
and this subcommittee: ensuring consumer safety.
The Commission's current Retailer Reporting Program allows
participant firms to report, on a voluntary basis, timely,
detailed, and product-specific information. The chairman has
often said that he believes the Commission to be a data-driven
agency. At the same time, some on the Commission have expressed
concerns about CPSC's ability to handle large volumes of
product safety data and to make sophisticated safety inferences
from that reporting.
This summer, CPSC staff went so far as to inform RRP
participants that the Commission would no longer consider RRP
submissions to satisfy the Commission's voluntary reporting
requirements and that it would no longer accord confidentiality
to those reports.
The program remains a pilot program, despite having been
initiated nearly a decade ago, and there is growing
consternation among program participants who want clear
guidance from the Commission of its intentions with respect to
RRP.
It is intuitive that this data could be used to identify
trends on emerging product safety hazards, and thus the program
clearly has potential to improve consumer safety and save
lives. But if the program is not functioning properly and
generating positive results, if there is not a clear benefit to
the Commission and to program participants, then we ought to
have a serious discussion on how to improve it, because in my
view the consumer would ultimately benefit.
As the Commission weighs its decision, it would be useful
to hear directly from commissioners and other stakeholders
today about CPSC's data analytical capabilities and how it can
best leverage existing resources, including cooperative
partnerships with the private sector, to make critical safety
inferences from retailer data.
Before I turn the microphone over to the Ranking Member,
Senator Blumenthal, I want to reiterate that we all share this
common goal of protecting consumers, and, on these issues that
I have mentioned, there is a clear and reasonable oversight
role for this subcommittee to provide toward that end.
Thank you to all of our witnesses for being here today, and
I look forward to the testimony and a conversation that will be
productive as we discuss these issues.
And I welcome and thank my Ranking Member, Senator
Blumenthal, and recognize him.
STATEMENT OF HON. RICHARD BLUMENTHAL,
U.S. SENATOR FROM CONNECTICUT
Senator Blumenthal. Thank you, Senator Moran. Mr. Chairman,
thank you for having this hearing, which is enormously
important to consumer protection.
Thank you to our witnesses, Chairman Kaye and Commissioner
Buerkle, for being here today. Thank you for your very diligent
and dedicated work on a commission and a mission that is
paramount in importance to ordinary Americans, working
families, and consumers, who rely on the safety of their
products when they buy and use them. And they often are,
unfortunately, unaware of the dangers that are created by those
products, particularly defects in those products.
This committee, unfortunately, knows quite a bit about
recalls. We have seen what happens when companies fail to
disclose or report, whether by neglect or deception, dangerous
and sometimes deadly product defects to oversight agencies like
yours.
We also know all too well the dangers that are posed by
recalls that are not conducted with sufficient diligence and
haste. And this committee and its members are keenly aware of
the needless, preventable tragedies inflicted on Americans
because they are all too often kept in the dark, and are not
notified of hazards by corporations or individuals with the
responsibility to do so.
I have been fighting on the issue of automobiles for better
disclosure. And the reason is, and I think also the reason for
Americans' increased interest, is the latest instance with GM,
where 120-plus people were killed by a defective ignition
switch, known to the company for years before it was disclosed,
and then only disclosed because of public pressure and because
of investigative work by some of the government agencies with
responsibility. But it was too late, much too late, for those
120-plus people who were killed, as well as their families, and
for others who were injured as a result.
Americans deserve and need to know whether their cars,
toys, or appliances or any other products are unsafe, and they
should be notified not years down the road but right away.
The sad reality is that recalls, whether for cars or
consumer products, so often fail to inform the public
adequately and so often fail to get defective and unsafe
products off the road or out of homes. Kids in Danger, whose
executive director is testifying today, has research showing
that the recall completion rate for children's products,
whether they are fixed or destroyed, is only about 10 percent.
That is absolutely shocking.
Among the children's products that were already in
consumers' hands by the time they were recalled, the recall
completion rate is a woeful 3.96 percent. Such figures are
appalling and astonishing, to say the least, and even more so
when they concern a vulnerable population, like our children,
who couldn't tell you about the CPSC or any other government
agency that is supposed to protect them or about the nature of
the corporations that manufacture those products.
And let me stress this point--that is why the CPSC's
proposed rule for correction action plans to put in place
commonsense baseline responsibility for companies that agree to
voluntary recalls is so critically important. Too few consumers
are ever notified about product recalls. The notices, even when
they get them, are vague and ambiguous and, in fact, sometimes
downright confusing and deceptive. And they all too often also
fail to stress the urgency of taking remedial action.
When the CPSC has no mechanism to ensure that these
companies are actually keeping their word and faithfully
conducting their recalls, too much uncertainty and danger are
left for the American consuming public.
I know certain members of certain industries are up in
arms. I know that there is opposition to this proposed rule and
that making voluntary recalls legally binding is said to be
somehow too onerous, financially burdensome or cumbersome on
these companies.
But the simple fact of the matter is, all we are saying is
that companies should have to do what it has committed to do:
to warn consumers of a potentially dangerous product and then
let them clearly know the steps they can take to avoid the
danger. It is about accountability. It is just fair, and it is
also common sense.
Whether a recall occurs because the CPSC mandates it or
because the company volunteers a fix, the risk posed to
consumers is the same from an unsafe or defective product, and
it ought to be remedied.
While the mechanisms to initiate a voluntary or mandatory
recall may be different--and they are, often---- neither
process should mean that a company is absolved of
accountability and from their corporate responsibility and
trust to make things right. That is a very simple,
straightforward, commonsense principle that animates and
supports this proposed rule.
And I look forward to your testimony.
Thank you.
Senator Moran. Thank you, Senator Blumenthal.
We now recognize our first panel. And that panels consists
of Mr. Elliot Kaye, Chairman of the Consumer Product Safety
Commission, and Ms. Ann Marie Buerkle, a commissioner of the
Consumer Product Safety Commission.
Chairman Kaye, welcome. And please begin your testimony.
STATEMENT OF HON. ELLIOT F. KAYE, CHAIRMAN,
CONSUMER PRODUCT SAFETY COMMISSION
Mr. Kaye. Thank you. Good morning, Chairman Moran, Ranking
Member Blumenthal, and the members of the Subcommittee. Thank
you for the invitation to come speak about the United States
Consumer Product Safety Commission's recall process. I am
pleased to be joined today by my friend and colleague,
Commissioner Ann Marie Buerkle.
U.S. Government agencies with recall authority have
struggled for decades with effectively reaching consumers about
recalls. Our experience at the CPSC has mirrored that of our
sister agencies.
When I became Chairman last summer, I asked our staff to
take a fresh look at how we and other agencies process and
monitor recalls, with an eye on reaching more consumers and
reaching them more quickly. My primary objective is a recall
process that is even more focused on consumer protection.
Toward that end, we are taking numerous steps to enhance
the effectiveness of the recalls that we announce. These
include: one, shortening the length of time it takes to alert
the public to a product recall; two, working with individual
recalling companies to ensure the monthly progress reports that
they submit are accurate; three, identifying priority recalls
so that the agency can provide enhanced monitoring of those
critical recalls; and, four, urging recalling firms to use
social media and search engine optimization to broaden the
notice of recalls.
We also continue to consider whether enhancing or changing
our regulations could have a positive effect on this process.
And I hope, as we go through that process, that there is room
for us to exercise our independent, objective judgment and to
reach different conclusions from others, potentially, and not
feel like that process is an unfair one.
As far as notifying consumers sooner, in Fiscal Year 2015,
we announced recalls to consumers, on average, 4 to 5 days
faster than we did in the previous fiscal year.
In terms of broader dissemination, in addition to the
hundreds of recalls that we have conducted in cooperation with
Canada in the past 7 years, we have increased our coordination
with safety agencies in other countries. Since 2013, we have
conducted 7 trilateral recalls with both Canada and Mexico, 3
of which were announced simultaneously in all 3 markets,
including a recall last month of 1.3 million bicycles involving
13 recalling manufacturers and distributors. Coordinated recall
announcements increase efficiency and lead to less confusion
for consumers.
The improvements we are making to the process will still be
insufficient, though, without a significantly increased effort
by recalling companies. There is no way around that fact.
As we all have experienced as consumers, companies spend a
tremendous amount of effort and resources, including time,
money, and creativity, on marketing their products to us. But
at the CPSC, we often do not see a commensurate effort on the
recall side.
Parents of young children, of which I am one, in
particular, are extremely busy. Many companies seem to embrace
that fact when marketing their products and seem to ignore it
when recalling those same products.
I believe that companies should dedicate the same effort to
recalling dangerous products as they do marketing them. In
doing so, companies should use all of the tools at their
disposal to inform and motivate consumers to take action. We
have seen companies have successful recalls by offering
incentives, such as gift cards for small amounts or free or
discounted products, to motivate consumers to take advantage of
the recall remedy.
We have also seen some companies recall effectively using
their social media platforms. Others, unfortunately, have used
lesser-followed social media accounts to disseminate
information or they bury the recall information under a
difficult-to-find ``Recalls'' tab on a website.
While such actions might check the box for publicizing
recalls, they do not lead to effective ones, and they certainly
do not strike me as a genuine attempt to protect consumers. I
expect companies to ensure that recall information is featured
prominently on their websites and social media sites instead of
making consumers search for that information.
Beyond a more prominent website placement, the use of
social media needs to become more prevalent. For many
companies, social media is an ideal medium to reach a large
number of consumers simultaneously. Companies can use their
social media sites to collect and monitor data regarding the
reach of their recall message, and Facebook is a perfect
example of this. It is the largest social media site today.
Nearly all companies have a Facebook presence for marketing
purposes, and they should be using this for recall purposes as
well.
Unfortunately, the CPSC itself does not yet have a Facebook
presence. And I would think and hope that those who support
government transparency, informing consumers, and genuine
recall effectiveness would endorse CPSC going onto Facebook.
We certainly welcome all feedback and ideas as we continue
to enhance our recall effectiveness efforts. Thank you again
for the invitation to speak to you about the CPSC's recall
process and the lifesaving work undertaken by our staff. I look
forward to answering any questions you may have.
[The prepared statement of Mr. Kaye follows:]
Prepared Statement of Hon. Elliot F. Kaye, Chairman,
U.S. Consumer Product Safety Commission
Good morning Chairman Moran, Ranking Member Blumenthal and the
members of the Subcommittee. Thank you for the invitation to come speak
about the United States Consumer Product Safety Commission's recall
process. I am pleased to be joined today by my friend and colleague,
Commissioner Buerkle.
U.S. Government agencies with recall authority have struggled for
decades with effectively reaching consumers about recalls. Our
experience at CPSC has mirrored that of our sister agencies. Expanding
technologies simultaneously create new challenges in capturing
consumers' attention and present new opportunities to do the same.
When I became Chairman last summer, I asked our staff to take a
fresh look at how we and other agencies process and monitor recalls
with an eye on reaching more consumers and reaching them more quickly.
My primary objective is to move to a recall process that is even more
focused on consumer protection.
Toward that end, we are taking numerous steps to enhance the
effectiveness of the product safety recalls that we announce. These
steps include: (1) shortening the length of time it takes to alert the
public to a product recall; (2) working with individual recalling
companies to ensure monthly progress reports provided to the Commission
accurately reflect the steps taken by the recalling company and
ensuring the accuracy of their data; (3) identifying priority recalls
so that the agency can provide enhanced monitoring of those critical
recalls; (4) improving technology so recalling companies can provide
recall progress report information to the staff through a one-stop
business portal; (5) expanding the use of social media by the CPSC to
reach targeted audiences; and (6) urging recalling firms to use social
media and search engine optimization to broaden the notice of safety
recalls to reach as many owners of recalled products as possible.
Beyond these steps, we continue to consider whether enhancing or
changing our regulations could have a positive effect on this process.
We have placed a priority on getting recall information to the
public more quickly and more broadly, two elements critical to a more
effective recall. In Fiscal Year 2015, we announced recalls to
consumers, on average, 4-5 days faster than we did in the previous
fiscal year. In addition to the hundreds of recalls that we have
conducted in cooperation with Canada in the past seven years, we have
increased our coordination with safety agencies in other countries.
Since 2013, we have conducted seven trilateral recalls with both Canada
and Mexico, three of which were announced simultaneously in all three
markets, including a recall last month of 1.3 million bicycles
involving 13 recalling manufacturers and distributors. Coordinated
recall announcements increase efficiency and lead to less confusion for
consumers.
The improvements we are making to the process will still be
insufficient without a significantly increased effort by recalling
companies. There is no way around that fact. As we all have experienced
as consumers, companies spend a tremendous amount of effort and
resources, including time, money and creativity, on marketing their
products to us. But, at CPSC we often do not see a commensurate effort
on the recall side. Parents of young children, in particular, are
extremely busy. Many companies seem to embrace that fact when marketing
their products and seem to ignore it when recalling those same
products. I believe that companies should dedicate the same effort to
recalling dangerous products as they do marketing them.
Companies should use all of the tools at their disposal, including
customer lists, incentives and social media, to inform and motivate
consumers to take action. Recalls are more effective when customers are
directly notified and for many products, companies have the ability to
do this through their existing customer records. We have seen companies
have successful recalls by offering incentives, such as gift cards for
small amounts or free or discounted products, to motivate consumers to
take advantage of the recall remedy. These are some of the creative
solutions that we believe companies can use to improve recall
effectiveness.
We have seen some recalling companies effectively use their social
media platforms. Others, unfortunately, have used lesser-followed
social media accounts to disseminate information or bury recall
information under a difficult-to-find recalls tab on a website. While
such actions might ``check the box'' for publicizing recalls, they do
not lead to effective recalls; they certainly do not strike me as a
genuine attempt to protect consumers. I expect companies to ensure that
recall information is featured prominently on their websites and social
media sites, instead of making consumers search for the information. As
consumers, we can all easily recognize when looking at a company's
website what is a priority and what is not.
Beyond far more prominent website placement, the use of social
media needs to become more prevalent. For many recalls, social media is
the ideal medium to reach a large number of consumers simultaneously,
especially when compared with some of our historic notification methods
such as posters in retail locations. Through social media sites,
companies can collect and monitor data regarding the reach of their
recall message.
Facebook is the largest social media site today, boasting nearly
1.5 billion monthly active users as of this past summer. Nearly all
major companies have an active presence on Facebook for marketing
purposes, which should also be used to disseminate recall information
more widely to consumers. Unfortunately, the CPSC itself does not yet
have a Facebook presence. Those who support government transparency,
informing consumers and genuine recall effectiveness should endorse
CPSC going onto Facebook.
I welcome feedback aimed at increasing recall effectiveness.
Earlier this year, the non-profit advocacy group, Kids In Danger,
issued a report that examined children's product recalls during the
last ten years. I give credit to them for reporting on our
effectiveness and encouraging others to focus on this important issue.
Their work has better informed our processes and amplified our call
that companies have a far greater role to play.
Thank you, again, for the invitation to speak to you about the
CPSC's recall process and the life-saving work undertaken by our staff.
I look forward to answering any questions that you may have.
Senator Moran. Mr. Chairman, thank you very much.
Commissioner Buerkle?
STATEMENT OF HON. ANN MARIE BUERKLE, COMMISSIONER, CONSUMER
PRODUCT SAFETY COMMISSION
Ms. Buerkle. Thank you, Mr. Chair.
Chairman Moran, Ranking Member Blumenthal, and
distinguished members of this committee, thank you for holding
today's hearing on compliance activities at the Consumer
Product Safety Commission.
In my testimony before this subcommittee last June, I
mentioned some concerns, and today's hearing gives me an
opportunity to further explain them.
The first concern I have is the proposed Voluntary Recall
rule. The Consumer Product Safety Improvement Act of 2008
required CPSC to issue guidelines for notices in mandatory
recalls, which the Commission can order only after a trial-type
hearing. The vast majority of CPSC recalls are not mandatory,
but voluntary, and, of those, approximately 60 percent are
Fast-Track recalls.
The House committee said nothing about a regulation for
voluntary recall notices. It merely said that it expected
similar information would be provided in voluntary recalls.
Remarkably, the CPSC majority produced a proposal that goes far
beyond the concept of a voluntary recall. It also ignored the
serious concerns expressed by the Office of Compliance.
My concerns with the Voluntary Recall Rule, as it is
proposed, are as follows: Number one, the proposed rule would
require all corrective action plans, the voluntary plans
submitted by the private party executing the recall, to be
legally binding.
This is a startling departure from the status quo. In 1978,
the Commission intentionally decided that corrective action
plans should not be legally binding. Without the legally
binding provision, the Commission observed, and I quote, ``The
hazard is remedied faster, and the consumer is protected
earlier.''
My second concern has to do with the Voluntary Recall Rule
reversing another longstanding rule, which allows a recalling
firm to state that submission of a voluntary corrective action
plan does not constitute an admission that a substantial
product hazard exists. Uncertainty on this point would
discourage many companies from conducting voluntary recalls at
the Consumer Product Safety Commission.
Number three, the notice provisions of the proposed rule
are not consistent with congressional intent.
Number four, the proposal specifies certain cases in which
recalling firms would have to include a plan for future
compliance plans. Every company should have a plan for how they
will meet their obligations under the law, but if we try to
force that type of requirement into a voluntary recall plan, it
will significantly delay the recall announcement and leave the
consumer at risk for a longer time.
Senators from both sides of the aisle have weighed in on
this, and one of the most outspoken critics has been the former
CPSC chair Ann Brown, a Democrat and consumer advocate. She
recognized the disclaimer provision would destroy the key
incentive to participate in the highly successful Fast Track
Recall Program.
We are now at the start of a new fiscal year, and it is
time for resolution. My Democrat colleagues have had several
opportunities to withdraw this proposal, but they have refused.
And, in fact, they have moved in the wrong direction, voting to
approve the CPSC's fall reg agenda with an expectation that the
Voluntary Recall Rule will be finalized by September 2016. In
the meantime, this proposal looms large over the regulated
community.
Adding to that uncertainty, it has been over a year since
the CPSC changed the legal understandings of the successful
Retailer Reporting Program, no longer assuring the reports meet
their obligations and the information will be kept
confidential.
Adding further to the uncertainty is another 2013 proposal
that relates to section 6(b) of the Consumer Product Safety
Act, requiring our agency to take reasonable steps to ensure
that public statements about specific products are fair and
accurate.
Add to this the Chairman's public statements that he wants
the Office of General Counsel to seek higher civil penalties
and that Compliance has been without a permanent leader for 5
years, and the result is a regulated community that is
alienated, beleaguered, and uncertain.
The voluntary recall proposal must be withdrawn. CPSC can
do a much better job. And the Chairman talked about it in his
opening statement; we all believe in consumer safety. And I
firmly believe we can do a far better job of protecting the
consumer if we regain the trust of the regulated community and
find ways to collaborate with them rather than to intimidate
them.
I thank you for this time and for holding this hearing, and
I look forward to your questions.
[The prepared statement of Ms. Buerkle follows:]
Prepared Statement of Hon. Ann Marie Buerkle, Commissioner,
Consumer Product Safety Commission
Chairman Moran, Ranking Member Blumenthal, and distinguished
Members of the Committee, thank you for holding today's hearing on
compliance activities at the Consumer Product Safety Commission.
In my testimony before this subcommittee last June, I mentioned my
concern that the Commission seems to be turning its back on some of the
highly successful compliance programs that depend on close
collaboration with industry and moving instead towards a more
adversarial posture. Today's hearing gives me an opportunity to further
explain my concerns.
Perhaps the most vexing example of the problem is the proposed
``voluntary recall'' rule.\1\ The original idea behind that proposal
was to establish guidelines for the information to be included in
voluntary recall notices (mostly press releases that are negotiated
between CPSC and firms conducting a voluntary recall). The Consumer
Product Safety Improvement Act of 2008 (CPSIA) required CPSC to issue
such guidelines for notices in mandatory recalls, which the Commission
can order only after a trial-type hearing.\2\ The vast majority of CPSC
recalls are not the mandatory type, but voluntary. Recognizing this,
the report accompanying the House version of CPSIA, after discussing
the requirement for mandatory recall notices, said ``the Committee
expects that similar information will be provided, as applicable and to
the greatest extent possible, in the notices issued in voluntary
recalls.'' H.R. Rep. No. 110-501.
---------------------------------------------------------------------------
\1\ Voluntary Remedial Actions and Guidelines for Voluntary Recall
Notices, 78 Fed. Reg. 69793 (Nov. 21, 2013).
\2\ See 15 U.S.C. Sec. 2064(i). CPSC issued the required notice
regulation for mandatory recalls in 2010. Guidelines and Requirements
for Mandatory Recall Notices, 75 Fed. Reg. 3355 (Jan. 21, 2010). The
rule was codified at 16 C.F.R. part 1115, subpart C.
---------------------------------------------------------------------------
The House Committee said nothing about a regulation for voluntary
recall notices--it merely said that it expected similar information
would be provided in voluntary recalls. Remarkably, while citing that
modest expectation, the CPSC majority produced a proposal that goes far
beyond the content of press releases and would, if adopted,
fundamentally defeat the concept of a voluntary recall. It also ignored
the serious concerns expressed by the Office of Compliance.
My concerns are as follows:
1. The proposed rule would require all corrective action plans--the
voluntary plans submitted to the Commission by the private
party executing the recall--to be legally binding agreements.
For those who deal with CPSC on a regular basis, this is a
startling departure from the status quo. In the original
voluntary recall rule, which was adopted in 1978, the
Commission intentionally decided that corrective action plans
should not be legally binding.\3\ The Commission recognized
that in the vast majority of recalls, allowing voluntary
corrective action plans, subject to staff approval, would save
considerable time and effort that would otherwise have to be
spent in negotiating a legally binding consent order agreement.
Saving that time, the Commission observed, means that ``the
hazard is remedied faster, and the consumer is protected
earlier.'' \4\
---------------------------------------------------------------------------
\3\ See 16 C.F.R. Sec. 1115.20(a). The regulation expressly
reserves to the Commission ``the right to seek broader corrective
action if it becomes aware of new facts or if the corrective action
plan does not sufficiently protect the public.'' Id.
\4\ Substantial Product Hazard Reports, 43 Fed. Reg. 34988, 34996
(Aug. 7, 1978).
2. The proposed voluntary recall rule would also reverse another
longstanding rule of the Commission, which allows a recalling
firm to state explicitly that submission of a voluntary
corrective action plan does not constitute an admission that a
substantial product hazard exists.\5\ Under the proposed rule,
as amended by the Commission majority, a recalling firm could
no longer disclaim a defect unless the Commission staff agrees.
Given the enormous consequences a negative ruling could have
for product liability cases, uncertainty on this point would
discourage many companies from conducting voluntary recalls
with CPSC.
---------------------------------------------------------------------------
\5\ 16 C.F.R. Sec. 1115.20(a)(1)(xiii).
3. The notice provisions of the proposed rule are not consistent
with Congressional intent as they require participants in a
voluntary recall to do much more than is required of firms who
are ordered to do an involuntary or mandatory recall after
---------------------------------------------------------------------------
unsuccessful litigation against the Commission.
4. The proposal specifies certain cases in which recalling firms
would have to include a plan for future compliance as part of
their immediate corrective action plan. While I think every
company should have a plan for how they will meet their
obligations under the law, my objection is that if we try to
force that type of requirement into a voluntary recall plan,
particularly one that would be legally binding, it will
significantly delay the recall announcement and leave consumers
at risk for a longer time.
Opposition to the proposed voluntary recall rule did not come only
from businesses. Senators from both sides of the aisle have weighed in
against it. One of the most outspoken critics of the proposed rule has
been former CPSC Chairman Ann Brown, a Democrat and leading consumer
activist appointed to the Commission by Pres. Bill Clinton. She
recognized that the proposed disclaimer provision would destroy the key
incentive to participate in the CPSC's highly successful Fast Track
recall program, which was instituted during her tenure as Chair. She
added that a Fast Track procedure would be ``rendered impossible'' in
any case if corrective action plans were required to be legally
binding.
Last July, the House of Representatives voted to defund any CPSC
activity connected to the voluntary recall proposal. It was in the
aftermath of that action that my colleague Mr. Kaye took over as
Chairman of the agency. When asked about the controversial recall
proposal and how he planned to handle it, he indicated in a number of
public statements that he planned to focus on other activities that
would have ``clear safety justifications.''
I agreed with that position because the voluntary recall proposal,
if finalized, would seriously undermine our Fast Track and voluntary
recall programs and thus could not be justified on safety grounds. Now
we are at the start of another Fiscal Year and it is time for
resolution. My Democrat colleagues have had several opportunities to
withdraw the proposal, but they have consistently refused. Most
recently, they moved in the wrong direction, voting to approve the
CPSC's fall Regulatory Agenda with an expectation that the voluntary
recall rule would be finalized by September 2016.
In the meantime, the proposal continues to loom large over the
regulated community. There are a number of other actions or inactions
that compound the uncertainty. More than a year ago, CPSC abruptly
changed the legal understandings on which the successful Retailer
Reporting program has operated for more than ten years. After the
participants strenuously objected, the staff backtracked and undertook
a more thorough review of the program. At the staff's request, most of
the participants have continued to provide the same type of reports to
the Commission. But without the former assurances that the reports will
satisfy statutory reporting obligations and the information will be
kept confidential, the uncertainty has grown intolerable and at least
one major retailer has given up on the program.
Adding further to the uncertainty is another 2013 proposal that
relates to section 6(b) of the Consumer Product Safety Act, 15 U.S.C.
Sec. 2055(b). The statute generally requires CPSC to take reasonable
steps to ensure that public statements about specific products are fair
and accurate. The proposed rule would weaken the protections of the
current CPSC regulation and deviate from the intent of Congress.
Add to this the Chairman's frequent public statements that he wants
the Office of General Counsel to seek higher civil penalties for
reporting violations, as well as the fact that the Office of Compliance
has been without a permanent leader for five years now, and the result
is a regulated community that is feeling alienated, beleaguered and
uncertain.
The CPSC can do a better job of protecting consumers if we regain
the trust of the regulated community and find ways to collaborate with
them rather than intimidate them. To that end, the voluntary recall
proposal must be withdrawn. We have accomplished the original
objectives of the Congress. There is no need to disturb or disrupt the
current, successful recall process.
Senator Moran. Commissioner, thank you very much.
Chairman Kaye, let me start with you. It does seem that in
the past you indicated that safety issues were your greatest
priority and discounted the idea of moving forward with this
topic, this rule.
Let me ask you, is this--and yet, in the Fiscal Year 2016
regulatory agenda, this rule remains. Is it the intention of
the Commission to move forward on this rule?
Mr. Kaye. Thank you, Mr. Chairman.
Yes, it is accurate that I have said that. I have been very
clear about that. My colleague sitting to my left knows that I
have said that, and it is true.
Every day, at the end of the day, I get daily death
reports. I look through them and they are about 2-year-olds who
drown, 35-year-olds who are poisoned to death from carbon
monoxide from a portable generator, or a 50-year-old who has an
ATV crush them.
This is what I see every night before I go home. And when I
became Chairman, it is addressing those types of hazards that I
have definitely made the top priority. I have been very clear
about that, and I think the direction of the agency has
reflected that.
Before I became Chairman--and as I explain this, I am not
in any way excusing what has gone on. But the rules to which
the Commissioner has referred, the 6(b) rule and the voluntary
notice recall rule, were already on our books. We had already
put out the NPRs, the notice of proposed rulemaking, for both
of those. And so, as a matter of course, our staff puts them in
the proposed operating budgets and the proposed performance
budget requests that the Commission moves forward with every
year.
As we always do and as we just experienced at the end of
the last fiscal year a few weeks ago, work that we hoped to
have gotten done during that year's operating plan, because of
extenuating circumstances, doesn't all get done. And so those
rules get carried over that haven't been finished.
To have taken them off the books, so to speak, to have
voted affirmatively to have ended them, to me, would have been
inefficient. There already is an open rulemaking. I think that
that rulemaking, should we turn to it, gives us an opportunity,
in any direction, to explore how we can enhance our recall
effectiveness process.
Everybody seems to want us and industry to have a more
effective recall process. I think that that rulemaking can take
many different forms and should be a potential vehicle to do
that. I am not necessarily wedded to any particular provision
in there. I am more wedded to trying to find, as I mentioned in
my opening testimony, a process that is even more focused on
consumer protection.
So I will continue to devote my time to those primary
hazards that I mentioned at the beginning of this answer, but
if we can also work in time, working with our colleagues --no
surprises here--working with our colleagues to try to enhance
that process through both voluntary efforts, guidance, and
potential rulemaking, I am certainly going to continue to want
to have all those options available.
Senator Moran. So, Mr. Chairman, what would you expect to
happen next in regard to this rule?
And then I will ask Commissioner Buerkle to respond to what
you said. But what you are suggesting, to me, is that this
rule, the process began before you arrived as Chairman. It is
something that is on the agenda, in a sense, through the
process that the Commission normally follows. It is not where
the Commission is focusing its attention at the moment. But you
are uninterested in withdrawing the rule in case the attention
should be or, in the Commission's view, becomes important to be
considered at some point in time.
Is that what I heard you say?
Mr. Kaye. That was 100 percent accurate. Thank you.
Senator Moran. Thank you. Perhaps I can listen better than
I can speak.
[Laughter.]
Senator Moran. Then let me ask you, if you are not going to
withdraw the rule, for a couple of commitments from you. And
one would be that you will keep this subcommittee, the Commerce
Committee, fully informed of your intentions in advance of
any--let me say it this way. Before you change your intentions
in regard to this rule, would you agree to notify us and let us
know what those plans are?
Mr. Kaye. Absolutely, if you will take my calls.
Senator Moran. Yes, sir.
Mr. Kaye. OK.
Senator Moran. And, second, would you agree that there
would be value in engaging in what I would call the CPSC
community, consumer advocates, the business community, to have
discussions about this topic before you engage in pursuing that
rulemaking?
Mr. Kaye. Well, we are certainly not going to spring
anything on anybody, if that is what you are concerned about.
Sometimes whether we like it or not, we do have those
conversations, and those dialogues happen all the time. And it
is an ongoing topic, and that is why we are having a hearing
today.
And so I am not a believer in big surprises. We will
continue to be very transparent. I think we have, not only
because of our formal meetings policy but also informally, how
we have conducted ourselves with the current commission, I
think we have an incredible amount of openness and
transparency. And that will continue on this and other issues.
Can I just say quickly, one thing that is really important
is I am not wedded to this particular rule. I am not wedded to
a specific legal or voluntary approach. I am wedded to a goal,
the goal of improving the recall process. And if it turns out
that some form of this rule, in any direction, is a valuable
piece of that, then I am going to pursue that. And of course we
are going to be open about that.
Senator Moran. I appreciate your answer. But I would add
that, in addition to the transparency that you committed to,
part of that is, you indicated, not wanting to spring something
on someone. In addition to that, my request for a commitment is
that you will seek input in this rule from consumer advocates
and the business community that care about the outcome of that
decision.
Mr. Kaye. Yes. And, certainly, if we end up deviating
substantially from--if we end up even doing another version of
a rule and we deviate substantially from the Notice of Proposed
Rulemaking, I would expect we would have to do another Notice
of Proposed Rulemaking. And that will of course involve notice
and comment.
Senator Moran. Thank you, Mr. Chairman.
My time has expired. I will give Commissioner Buerkle a
chance to respond in my next opportunity to ask questions.
Senator Blumenthal?
Senator Blumenthal. Thanks, Mr. Chairman.
Let me ask Commissioner Buerkle, I know you said that there
is no need to disrupt the current successful recall process.
How can a 10 percent recall effectiveness rate be considered
successful?
Ms. Buerkle. Thank you, Senator Blumenthal.
I think that when we look at recall effectiveness, it is
very important--and in your opening comment, you mentioned the
car issue, the automobile issues. The recalls we do at CPSC, on
many occasions, don't compare to other government agency
recalls. A lot of the consumer products we deal with are
smaller, less expensive, and, in many cases, if someone is
aware of the recall, they just disregard and they throw the
product out.
There are a whole lot of issues that we deal with in recall
effectiveness in trying to measure it. And I would say that
looking at that percentage and using what was in the report----
Senator Blumenthal. Well, let me just say, though--and I
apologize for interrupting, but my time is limited--that the
number that I have given you, 10 percent, pertains to products
whether they are fixed or destroyed. And the rate that applies
to children's products is even lower, 3.96 percent.
So can we really say the process is working now?
Ms. Buerkle. I would say the best measurement of recall
effectiveness is looking at the injury and the death rate post-
recall-notice. That is the most accurate number that we have in
terms of whether a recall is effective. And that number, in
speaking with Compliance, because they are the ones who measure
these statistics, that number is down, and post-recall we don't
see the injuries and deaths.
And that is because there are so many other factors getting
to the 10 percent. For instance, if I had a fitness tracker and
there was a recall for rashes and I didn't get the rash, I am
not going to return my product. So it is subjective, on some
levels, recalls are. It depends on the value. It depends on the
age of the product.
Compliance tells me that right now we depend on our recall
information coming from the recalling company who is doing the
recall and that the information they give to us is paper, so
there is a data integrity issue.
So just to use that figure, I think a more relevant and
certainly more important one is that post-recall-notice injury
and death rate.
Senator Blumenthal. Well, I would like to see numbers.
Ms. Buerkle. We will be happy to provide those to you.
Senator Blumenthal. And then I would like to see a
justification for the continuing risk that those numbers may
well reflect, risks that continue even after consumers are
warned.
Let me ask you, Chairman Kaye, about the Retailer Reporting
Program that was designed through the CPSC to collect data from
incident reports on both injuries and deaths in order to better
identify these kinds of emerging hazards.
Initially, this program emphasized the use of corrective
actions over civil penalties. Under the program, as you know,
to meet reporting requirements, participating retailers have to
submit complaint and incident data to the CPSC every week,
which seems like a constant influx of information.
In order to be useful for the Commission to use it in
spotting potential hazards, the data submitted by retailers, I
think, would need to be formatted in a way that is readable and
searchable for the Commission and for the public.
Is this data provided now in a standardized format? And, in
your view, has the program really provided value to the
Commission?
Mr. Kaye. Thank you, Senator.
I am glad you raised the Retailer Reporting Program. And it
is a bit of a misnomer to even call it a program. It was an ad
hoc arrangement with seven different retailers that evolved
over time separately with those seven different retailers, or
not even only retailers but other companies. As you mentioned,
really more of a compliance effort.
I thought it was a creative approach at the time; certainly
something that I have looked at since I have become Chairman.
I would say that, from my perspective of discussing this
with our epidemiologists--and I think that is important, for us
to focus on those experts who actually understand data and data
analytics and the value of certain data and the comparative
value of it--it is viewed as a useful data source but in the
lower tier of data sources that we receive and rely upon to try
to protect the public.
Since it has some value, both to the epidemiologists and to
our compliance staff, we try to figure out how we can go
forward in a way that does exactly what you mentioned, Senator,
have the information provided to us in an accessible and usable
format, standardized format, and open that up potentially--this
is the direction I am intrigued by moving in--open that up to
the larger regulated community so that they can file all of
this information electronically and we can then feed that into
our data pools and try to use that to mine that data to better
predict where we see trends.
I think that the biggest stumbling block, if this is the
direction that we move in, the biggest stumbling block,
frankly, is resources. It is extremely expensive to both build,
operate, and maintain that type of data warehouse. And before
we come asking for money to do that or try to shift priorities
to at least get it off the ground, I want to make sure that
there is actually a return on investment that we feel like is
worth it.
Senator Blumenthal. Thank you.
My time has expired. And thank you, Mr. Chairman.
Senator Moran. Senator Klobuchar?
STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator Klobuchar. Thank you very much, Mr. Chairman.
And thank you to both of our witnesses. I have worked hard
on consumer issues for quite a while, and I appreciate the work
both of you are doing.
I know that in 2008 this committee worked on the Consumer
Product Safety Improvement Act to strengthen and empower the
CPSC. This bill had bipartisan support and made a difference in
protecting the public, and I hope we continue in that vein.
I thought I would just ask briefly some questions, just
what you have been touching on with our recalls.
Commissioner Kaye, I know that the CPSC has taken the lead
on improving some of the recall processes for the Federal
agencies, including the website recall.gov. However, the
reality is not all consumers are aware of recalls; they don't
really know where to look for them.
And what can be done to improve the way that recalls are
publicized?
Mr. Kaye. Thank you, Senator.
And if I may digress for a minute, I want to congratulate
you for your winning the National Consumers League award
earlier this week, which was a recognition, a much deserved
recognition, for all that you have done for consumers. And
since I am in my official capacity here, I don't think our
ethics lawyers can prohibit me from saying something to you
about that.
[Laughter.]
Mr. Kaye. We have worked really hard to try to figure out--
--
Senator Klobuchar. It would be sad to get an ethics
violation for talking about a consumer award----
Mr. Kaye. It would.
Senator Klobuchar.--so that is good. All right.
Mr. Kaye. During official testimony that I had so eagerly
and excitedly showed up for.
It has been really challenging to try to figure out ways to
better reach consumers. And as I mentioned in my opening
testimony, this has been a decades-long problem. And I remember
even hearing from folks at NHTSA that they, even with
automobiles, have a hard time getting close to 80 percent with
a car with a serious problem. And so, as my colleague
mentioned, it is even more difficult when you talk about
products that might be relatively disposable, have low value.
What we have found is that the more that companies can
engage consumers directly, the more that they offer incentives,
the more outreach that they do, the higher the value of the
product, the more consumers are likely to act.
And I am serious about what I mentioned in my opening
statement. It is frustrating to see companies tripping over
themselves to get the attention of parents, in particular, of
these products from a marketing perspective.
The basic assumption that they do when they are marketing
it is, we really have to work hard to compete to get these
parents to pay attention to our product, so we are going to
spend all the time and the money and come up with very creative
advertising to get them to focus on our materials.
But as soon as they make those sales, if those products are
recalled, they take the opposite assumption. They assume
putting it on some lower-tier social media account, if they
even do that, is good enough to reach those same parents that a
few months ago they believed were very distracted.
Senator Klobuchar. OK.
Mr. Kaye. And so we are really looking for a greater
commitment from industry, just match what you do on the
marketing side. And we think that would make a tremendous
difference.
Senator Klobuchar. Good point.
Commissioner Kaye and Commissioner Buerkle--you have
mentioned cars, Commissioner Kaye. The auto industry, as you
know, recalled a record 64 million vehicles in 2014. Defective
ignition switch with GM. We had the Takata airbag. We have had
hearings here. We have now the ongoing Volkswagen issue, an
unbelievable story which we won't get into right now.
But what do you think that NHTSA and the EPA can learn from
CPSC's recall process? And what do you think the best practices
are for this upcoming recall notification with Volkswagen?
Mr. Kaye. Again, reaching out to consumers directly, using
creative social media approaches. And trying to put the best
and the brightest within the companies and the PR firms and
human-factors experts to try to reach and understand how to
reach people, how to really work to capture their attention, I
think, is one of the better lessons that I have picked up along
the way.
Senator Klobuchar. All right. Thank you.
Commissioner Buerkle?
Ms. Buerkle. Well, I would say that, yes, social media.
Things have changed with the development of social media. But
the American people are bombarded daily, 24/7, with
information, and I think on some levels, at least for CPSC,
there may be a recall fatigue issue that we really need to
address. What the Chairman said about understanding human
behavior, what they listen to, what gets their attention, those
kinds of factors must be considered.
But it is not just an issue of social media; it is looking
at the product, it is looking at the consumer and understanding
where they are going to get their information most efficiently
and most effectively.
Senator Klobuchar. Very good.
And just to one issue I am not going to ask but I will
probably just do it in writing, detergent pods. Maybe in
writing you could give me a progress report on that. I know
that the industry has come together with some changes, which is
truly a good thing. And Senator Durbin and I and others have
been involved in this for a while, and that is positive.
The second issue is pool safety. It has been in the news a
little. I won't discuss how it may be in the context of the
Presidential campaign.
But the Virginia Graeme Baker Pool and Spa Safety Act, as
you know, was something that I worked really hard on. It was
named after Secretary of State Baker's granddaughter, who
tragically died in a swimming pool. And we had another girl in
Minnesota where the same thing happened.
And, Chairman Kaye, could you talk about any updates we
have on numbers? Because, from my perspective, we have seen a
major decrease with only a little bit of work in terms of some
drains, and the CPSC has done a great job of education.
And you might want to make it quick, so we can get to my
colleagues here.
Mr. Kaye. The Act has been a tremendous success. That is
the bottom line. The numbers have dropped. I believe we are
still at zero deaths since the Act was passed.
Senator Klobuchar. What an unbelievable story.
So thank you all for your work. It should make you feel
good about what you do. And, every so often, we do a few good
things here. So thank you very much.
Senator Moran. Thank you, Senator Klobuchar.
Senator Daines?
STATEMENT OF HON. STEVE DAINES,
U.S. SENATOR FROM MONTANA
Senator Daines. That is a tough question to follow, Senator
Klobuchar.
Thank you, Mr. Chairman, for holding this hearing.
Last time that you both testified, this committee had just
passed the RIDE Act, which postponed the CPSC's controversial
rulemaking for recreational off-highway vehicles.
In my home state of Montana, off-highway vehicle
recreation, including ATVs and recreational off-highway
vehicles, has an economic impact of nearly $400 million. These
vehicles are essential for Montana ranchers, for farmers, for
sportsmen to specifically travel off-highway.
ROVs are not meant to be operated on streets and highways
and should not be regulated as such. Montana continues to see
residents transition, and we are seeing it all the time, from
ATVs and 4x4s to ROVs. So I am encouraged to hear that the CPSC
and industry are working together to develop voluntary
standards so that, hopefully, legislation won't be necessary.
Chairman Kaye, I am encouraged by reports the CPSC is
working collaboratively on developing these voluntary standards
that would mitigate negative impacts to the economy while still
protecting consumers. What is the status of this ROV written
negotiations between industry and the agency? And what do you
see as the likely outcome?
And a follow-up on that would be, do you intend on
terminating the mandatory rulemaking process?
Mr. Kaye. Thank you, Senator. I am pleased to continue the
dialogue that we have had in the past on this important issue.
You are correct, the trend has been very positive. And
considering where both Commissioner Buerkle and I entered this
about a year-plus ago--for Commissioner Buerkle, 2 years for
me; in the last year in this position--the tone has changed
tremendously for the positive. The negotiations, even
including--I believe it was this past Monday there was a long
meeting, which all reports were extremely productive.
I think we are close. Or they are close, I should say,
because we stay out of it. My hope is that they will see it
through.
I think what is critical--and you mentioned the RIDE Act--
is that those technical issues that the RIDE Act would have us
study through the National Academy of Sciences have been worked
out, as far as I understand it, and they are really just down
to some final number choices to figure out where along the risk
spectrum everyone can agree which vehicles pose a reasonable
risk and which ones pose an unreasonable risk.
And the reason I mention the RIDE Act is, my hope is that
if there is an agreement reached--and this is critical--if
there is a voluntary standard agreement reached, it is very
important that that rider or any type of rider that would force
the Commission to spend money studying those technological
issues doesn't go through, because it would be a waste. The
issues will have already been resolved, and it will require the
agency to spend money unnecessarily. And it really will delay
us seeing through the final aspects of this voluntary standard.
If there is an agreement reached and our staff believes
that it adequately addresses the hazards and it will be
substantially complied with, then they would send up a package
for the Commission to vote, along the lines of what you are
talking about, to terminate the rulemaking.
Senator Daines. Right. Thank you.
Commissioner Buerkle, you have been involved in that
process too. What is your perspective?
Ms. Buerkle. Thank you, Senator.
Well, I am optimistic, as well. I attended, I have attended
all of the meetings, in particular Monday's meeting, and I am
optimistic that--really, I must commend both sides for working
as diligently as they did.
But I really do feel that the legislation should stay in
place until the mandatory standard in the rule is removed.
Because there needs to be clarity, and I think that is the
clarity. When that mandatory rule is taken off the books, then
the RIDE Act can go away.
I think the agency learned a lot from this experience. And
I really do want to encourage us; we should be engaging with
the regulated community prior to proposed rules, because a lot
of time was wasted trying to get to--as the Chairman mentioned,
we started out so far apart. And if we could have that dialogue
before a proposed rule comes out, I think we begin at a closer
place and we certainly can shorten that time for----
Senator Daines. Yes. And I applaud the collaborative effort
that has been going on.
Ms. Buerkle. And the other effort, I think, is the agency,
we learned a lot from the industry. They came up with a testing
method for vehicle stability that has profited everybody in
terms of the knowledge and the information, and our staff was
so pleased to get that information. That is collaborative
effort, that is working together, and we need to be open to
that kind of effort.
Senator Daines. And to build on that, speaking of
collaboration, I know the U.S. military has purchased a large
quantity of ROVs for military use in Afghanistan as well as
around the world.
Given the military's extensive use of these vehicles in the
most extreme conditions, has the CPSC asked the military about
its experience with the safety of the vehicle or its views on
design or performance?
Mr. Kaye. Yes, Senator, we have engaged the military. And
since any ROVs that the military would specifically purchase
for military use would not be subject either to the voluntary
standard or the mandatory standard because they are not
consumer products, I don't have a concern that we would
unintentionally create an issue for the military.
Senator Daines. All right. Thank you. I am out of time.
Senator Moran. Senator Daines, thank you.
We are now joined by the Ranking Member of the Full
Committee, Senator Nelson.
Welcome. If it fits your schedule and you are prepared, you
are welcome to question our witnesses or make a statement.
Senator Nelson. Do you have any more questions?
Senator Moran. We are going to have another round, and it
appears that you and I are--you have the first round and I have
the second round.
Senator Nelson. You go ahead.
Senator Moran. All right. Very good.
Let me then turn to Commissioner Buerkle.
You heard the Chairman indicate about the Voluntary Recall
Rule, the intentions, which as I have tried to restate and I
think the Chairman agreed with the way I restated it, which is
they are going to be included in the 2016 plan, but no
intention now or the foreseeable future to pursue that rule.
Your reaction to the Chairman's statements?
Ms. Buerkle. Thank you, Senator.
In my opening comments, I talked about uncertainty. And
this rulemaking looming, it looms large over the regulated
community. And when I hear the Chairman say ``should we turn to
it,'' that creates a lot of questions in the regulated
community's mind.
The second piece about this voluntary recall, the proposed
rule, is that it is toxic. As soon as you mention it, the
regulated community, everyone, just sort of groans because of
the concern and all of the negative comments we received about
it.
And I have talked to the Chairman, and I will continue to
do that. I think the best way to proceed is to get it off the
books, have that dialogue you have asked us to have with all of
the stakeholders, and then proceed in an orderly manner.
But if I could very honest about this, I think we have
complied with the statute. We have the mandatory rule in place.
We have guidelines in our recall handbook for voluntary recall
notices. I think we have complied. If we need to modernize this
rule because there are components of social media that may
enhance our voluntary recall notices, so be it, but I don't
think that that would necessitate any rulemaking. We could
perhaps do that in our handbook, or we could modernize the
mandatory rule. There are a lot of options here.
But in all of what we do, the best way we are going to
achieve safety for the consumer is to have good relationships.
And I think this would be a really good-faith effort on behalf
of the agency that we withdraw this rule and we start again and
we discuss what do we need to enhance, as Senator Blumenthal
mentioned, our recall effectiveness. Will social media help
that? If so, how can we do that?
But to continue on with this very--I call it toxic because,
the Chairman knows, it makes everyone cringe as soon as you
mention it. And there is a lot of pressure from within the
agency, from other commissioners; they want to proceed with
this. So it puts the Chairman in a difficult spot.
So I think for the sake of everyone and for clarity for the
regulated community, if we take it off our books, if we start
again, if we have that discussion and we determine what we
really need to perhaps enhance recall effectiveness, that would
be a more prudent way to proceed.
Senator Moran. Mr. Chairman, is there anything you can do
today to eliminate uncertainty and provide clarity?
Mr. Kaye. Thank you, Mr. Chairman. I am honored you think
that I even sit in a position that has that capability.
[Laughter.]
Mr. Kaye. I would disagree slightly with my colleague, who
I really do have a wonderful relationship with. That is not lip
service. Every week, we sit down and talk individually, and
even though we disagree on many issues that we talk about, we
do get along very well personally, and I really value her
input.
I don't have the same experience with the regulated
community, and I also don't think you can call the regulated
community one entity. For me, there are two different
conversations that I have with industry whose products that we
do or could regulate.
When I get outside of Washington, which I do often and try
to do within the means of our budget, and I sit down with
companies and I talk to them on their home turf, in their
factories, about what is concerning them, this rule never comes
up, ever. And then I raise it, and they give me a blank stare.
They don't know what I am talking about.
I believe that this rule and the toxicity, the churning
that is associated with it, is not an accurate reflection of
what is actually going on in corporate boardrooms and in
company headquarters outside of Washington. I think that it is
the product of a smaller group that pays closer attention to us
that sees value in highlighting controversial aspects of it.
And I think it is important for us to make sure that when
we talk about the regulated community and talk with the
regulated community, that we are hearing from those who are
actually affected by what we might do, not those who purport to
represent those companies.
Senator Moran. How do you consider what former Chairwoman
Brown said in her letter, particularly as it relates to the
Fast Track Product Recall Program? What is the consequence of
this rule, potential rule, to Fast Track?
Mr. Kaye. Well, this is probably not something witnesses
normally like to do, but I admit I don't understand her
concerns. She is by far the standard against which any chairman
should measure him or herself. She is a legend at the agency,
and I very much value what she has done and her opinion. But I
have had a hard time reconciling her concerns, as were
expressed in her letter, with the rule itself. I am just not
seeing it. And I have asked folks who are far smarter than I
am, and I just haven't been able to pick up on what the
concerns are.
Senator Moran. So you don't see the potential rule as a
problem related to Fast Track?
Mr. Kaye. I don't. I don't understand why it would be. If
Fast Track, as far as I understand it, is a prepackaged
agreement, and if companies, whatever the requirements are of
Fast Track, if companies still want to go down that route,
whether it is legally binding, not legally binding, whatever it
ends up being, if they agree to pursue that route and they want
to go Fast Track, then they are still going to do it.
As far as I understand it. But, again, I might be missing
something when it comes--she probably has, as the creator of
that program, a far better understanding and a more nuanced
understanding of how she sees that program.
Senator Moran. Commissioner Buerkle?
Ms. Buerkle. Mr. Chairman, the Fast Track Recall Program
allows a company to come to us and say, I think this may be a
problem, I think perhaps it should be considered being
recalled. Our staff does not make a preliminary determination
that there is a substantial product hazard. So they don't go
through that analysis, and the product is recalled. That is the
kind of behavior we want to encourage.
But if you put compliance plan, you put legally binding,
and you add all of these factors into that, that slows that
process way down. And this is someone who is coming to us
voluntarily saying: I think, I am not even sure, I think this
may, you know, create a hazard. Our staff with the Fast Track
doesn't make the preliminary determination, but we get that
product out, we err on the side of caution.
We are telling manufacturers, we are telling retailers:
when in doubt, report. We want to encourage that behavior. And
if we add all of these bells and whistles to this, we are going
to slow down and impede the Fast Track Program.
Senator Moran. Let me get to two other topics quickly.
First of all, let me explore something that, Commissioner
Buerkle, you and Senator Blumenthal, the conversation you had.
I am interested in the answer about the 10 percent, what that
includes and what it doesn't include. But I want to know if you
have access to the data that you described as being the best
criteria to determine success or failure of a recall, death or
injury post-recall.
So does the Commission have that data available? That is a
standard that could be determined?
Ms. Buerkle. Yes. The commission does receive that data.
Part of our problem, as I mentioned earlier, is so much of
the recall information we get comes through a secondary party,
through the recalling firm. That is an issue we have.
Oftentimes, it will come later on in another form.
But when a corrective action plan is put into place, and
they are part of the reports that they are requested to submit
on a regular basis, that will have any followup injury data or
death information.
But we do track those numbers the best we can given all the
limitations and the issues with data integrity. But we do track
those. And from what I understand from Compliance, those
numbers are good, post-recall, the rates of injuries and
deaths.
Senator Moran. Thank you very much.
Let me turn to the Ranking Member, Senator Nelson. And I
just have a couple more questions after Senator Nelson.
STATEMENT OF HON. BILL NELSON,
U.S. SENATOR FROM FLORIDA
Senator Nelson. Thank you, Mr. Chairman.
If I may submit for the record an opening statement?
Senator Moran. Without objection.
[The prepared statement of Senator Nelson follows:]
Prepared Statement of Hon. Bill Nelson, U.S. Senator from Florida
Thank you, Chairman Moran and Ranking Member Blumenthal, for taking
a look at an issue that should cause alarm for all American families--
and that is our terrible track record for notifying and remedying
recalled consumer products.
It's been seven years since we passed the Consumer Product Safety
Improvement Act, and that law has greatly contributed to public safety.
However, the completion rates for recalls remain stubbornly--and
alarmingly--low. Too many dangerous products remain in consumers'
homes.
Parents expect to be notified promptly and clearly if it turns out
that a toy they bought for their children could actually maim or kill
them.
And parents expect to be told how and when they can get that
defective toy fixed or replaced.
But, as we all know, that's not happening.
The recall completion rates for consumer products--including
children's products--are so low it's just sad.
According to one of the consumer groups that will appear before the
Committee today, Kids in Danger, the recall effectiveness rate in 2012
for children's products was terrible--with only about 4 percent of
those products reported as being either corrected or destroyed.
That makes the recall rates for the defective Takata airbags and
the General Motors defective ignition switches look great by
comparison.
And, let me tell you: Neither Takata nor GM has any reason to be
proud of their track records when it comes to recalls.
So, why are recalls for consumer products so ineffective?
The answer seems obvious to me: Because companies are under no
legal obligation whatsoever to notify effectively and to actually carry
out the recall.
Yes, a company may do the right thing by letting CPSC know about an
unsafe or defective product and by coming up with a voluntary recall--
known as a ``Corrective Action Plan''--to get the product out of
consumers' homes. But what good is that if the company doesn't follow
through and take the steps it promised to take?
An unsafe product doesn't magically become safer if a company's
recall is voluntary instead of mandatory, so why should a company be
able to pretend that's the case?
That's why I urge both the Commission and industry to do better.
We must figure out a more effective way to get these products out
of the hands of consumers--out of the hands of children.
We all know that the current system is not working.
We must do better.
And doing better can't simply be the status quo, which too often
seems to be a completely voluntary process that just doesn't get the
job done.
Thank you, Mr. Chairman.
Senator Nelson. Thank you for the opportunity, Mr.
Chairman.
This is a little commission that I appreciate so much,
because you are the one group that is standing between
defective products and the consuming public. And I want to give
you two examples that, unfortunately, I had been personally
involved in.
The first is, after our state was pretty well covered up by
a number of hurricanes in 2004 and 2005, there was a lot of
building that occurred to repair the damaged structures, and
there was such a demand on building materials that wallboard
started coming in from China that was not only defective but it
was so filled with sulphuric gas that it was not only hazardous
to the health of people that were living in the houses but it
would turn all of the metal objects, including the silverware,
brown in the entire house. This is how bad it was. Now, not the
least of which, you could tell it when you walked in the house
because it smelled like rotten eggs.
I had to get involved, because we had a lot of people in
Florida that were affected by this. And, lo and behold, these
people had turned to their insurance company, and the insurance
company said, ``We don't know you.'' They had turned to their
bank to try to work with them, because in many cases their
pediatricians were telling them, ``Get the children out of the
house,'' and they would have to go and rent someplace. And
often what had happened is they had turned to the builder of
the house, and the builder had gone bankrupt or they had moved
on.
And so these folks, they didn't know where to turn. And so
your handy-dandy Senator from Florida actually went to China,
and, of course, I got the actual brush-off.
That is where your agency comes in, because we got you to
start doing tests and so forth. And the long and short of it is
that the only financially responsible party was, in some case,
the insurance companies of the distributors.
I even met the Chinese president in a diplomatic reception,
and of course didn't expect that he knew anything about it, but
confronted him with the issue and outlined what is happening.
The government of China has kept hands off. The government
of China often is an investor, if not the owner, of these
companies that were mining it. They traced it to a particular
mine where this wallboard was using that material.
Now, that is one very bad example for the American
consuming public, and there were a lot of people that were
harmed. And only years later are they getting part compensation
because of the lawsuits that occurred.
I will give you another one. The origin of this one is also
China. We had a number of children that were harmed and choked
to death because of defective Chinese toys.
It is your organization that stands in the way of these
defective products and the public being harmed. What are you
doing to make sure, Mr. Chairman, that the Chinese
manufacturers and distributors stand by their products and
actually carry through with the recall of the toys and the
recall of the wallboard?
Mr. Kaye. Thank you, Senator. And, of course, thank you for
your years and years of leadership in terms of revitalizing
this commission and giving us some of the tools that we have
needed to do exactly that.
The first step in this process is to stop products at the
ports before they ever get into hands of consumers. And thanks
to Congress's direction in section 222 of the Consumer Product
Safety Improvement Act, we did create a pilot program to begin
better targeting at the ports.
We cannot get that to a national scale, though, without
more funds from Congress, both in the form of a direct
appropriation as a bridge and, ultimately, we think, consistent
with other agencies' border authorities, a user fee that is
reasonably pegged to be able to give us the resources to turn
that pilot into a national-scope, data-driven enforcement tool.
So that is critical on the front end.
On the back end, we actually have, over the past few years,
developed a far better relationship with the Chinese
government. It is a bit counterintuitive in light of what you
said, where there is at least a belief of a financial incentive
with the government in some of these companies. In many of
those areas, that has not prevented them, as far as we can
tell, from actually taking information that we share with them
post-recall and post-port-stoppage when we have actionable
information, where they can go in and do something about it.
We also have a presence on the ground in China in the form
both of CPSC staff and also a foreign national who supports
that staff at the State Department. And I think that we are
building toward a more effective agency, but in the absence of
having the resources to really push beyond our borders, it is
going to continue to be a challenge.
Senator Nelson. Do you need additional authority?
Mr. Kaye. We certainly need the user-fee authority.
Absolutely.
Senator Nelson. All right.
Now, a few years ago, we were talking about a bill called
the Foreign Manufacturers Legal Accountability Act, in which
they would have to appoint a U.S. agent, so if people were hurt
by their products, we wouldn't go through this nonsense that we
have gone through on the defective Chinese wallboard. Would
that help?
Mr. Kaye. That would help tremendously. Absolutely.
Senator Nelson. Is there any provision in the corrective
action plan negotiated by the Office of Compliance that
contemplates such a later action for a recall failure?
Mr. Kaye. In terms of having a U.S. presence when there is
a foreign manufacturer?
Senator Nelson. On any kind of recall remedy.
Mr. Kaye. It becomes far more challenging for us when it is
a foreign entity. And so, unfortunately, it is not as robust as
I would like to see it.
Senator Nelson. What about the compliance and the actual
consumers that are subject to these defective products? Their
willingness to come forward is pitifully low. It is something
like only 4 percent. So does this corrective action plan
address that?
Mr. Kaye. It attempts to address it, but, as you are
pointing out, it is often not that successful, which is why we
are taking a fresh look at trying to figure out how can we be
more creative and, ultimately, how can companies do more to try
to make those agreements more effective.
Senator Nelson. That is a problem we ought to continue to
look at. Because you get particularly a foreign product that
comes in and it is defective, and yet people don't realize it.
And so the ones that have come forward are just de minimis. And
yet the defective product is out there, choking children in the
case of the defective Chinese toys.
Senator Moran. Senator Nelson, thank you. We are happy to
use this subcommittee's jurisdiction to explore a number of
issues related to certainly consumer protection.
I also would use this opportunity to indicate that in a
couple of instances, Mr. Chairman, you indicated a need for
additional resources. That is not an unusual statement by any
witness in any setting here.
I serve on the Appropriations subcommittee that has
jurisdiction over your commission. You indicated the need for
additional resources for data, big data, and here in this
import surveillance issue. I would be happy to encourage the
Chairman of the Subcommittee to have a CPSC subcommittee
hearing related to your Commission, at which you would have the
opportunity to make the case for those resources.
I am an optimist, in the sense that I believe we are not
going to have another--at least another series of continuing
resolutions and believe that we are going to do an
appropriation bill. And I think it is a place in which we can
help prioritize spending at the Commission based upon the input
of yours and others.
Mr. Kaye. Thank you, Mr. Chairman.
If I felt--and hearing you, I think you are saying I would
have this opportunity--if I felt that there was a genuine
receptiveness, despite the budget climate, for the Congress to
hear us out and to recognize that there are two different CPSCs
you can have--you can have the CPSC that is funded, in my
perspective, at a very artificial level. Because it has always
been funded in that general area, and regardless of what
problems exist, that is just the money it is going to get.
Or you could have the CPSC that actually is able to step in
and address things that I think parents are expecting to be
addressed--crumb rubber, phthalates, flame retardants. There
are so many different areas--portable generators, drowning
prevention, ROVs, ATVs, window coverings. Every day, as I
mentioned earlier, I get these reports. These are ongoing
issues. We are not even remotely close to being funded at the
level that would allow us to really make a difference.
So if I thought that there would be an interest in having
that honest discussion, recognizing that we have limitations,
too, and we would have to own up to our mistakes over the
years, which I am willing to own up to, where we have thought
that one thing would be the answer and it turned out not to be
the answer and we may not have used our funds as efficiently as
possible, if we could have that discussion, I would absolutely
love to have that discussion, either in the form of a hearing,
or a meeting at our lab so folks can understand how we have
used the appropriations. In any context, I would absolutely
show up.
Senator Moran. I appreciate those sentiments. I would
indicate that, of the two topics that we talked about
additional resources, one of them is included in the
president's budget request, one is not. So it involves others
other than just Congress. It involves your commission and the
OMB and the administration.
Let me ask Commissioner Buerkle, any response on the
funding issues?
Again, we all face constraints. None of us get to spend the
money that we want, but there is a matter of prioritization.
But I am very anxious for the day in which not every item of
spending is considered of equal value.
And you can certainly make the case and I think many
members of Congress have believed that a priority should be the
safety of consumers. And as you describe it, who could disagree
with that? So the opportunity that we have is certainly
restricted, but what a great day it would be if we had the
opportunity to say, ``We are going to spend more money here
because it is more important.''
And at too many instances, with no budget passed by
Congress and an appropriation process stalled, we just
continue, in a sense, from 1 year to the next without
determining what matters the most based upon what you tell us,
based upon what we hear from our constituents, based upon what
we think is important in our hearts. We don't have the
opportunity often enough around here to actually utilize the
power of the purse to try to deal with the most important
problems that our country faces.
Commissioner?
Ms. Buerkle. Thank you, Mr. Chairman. I do have a couple of
things I would like to say about that.
Number one, with regards to retailer reporting, you
mentioned funds for data. We have a current program in place
right now where there are seven participants. And the Chairman
said you could hardly call it a program, but I think a lot of
retailers have depended on that program to meet their reporting
responsibilities. And we have relied on that information. It is
very valuable to us.
To Senator Nelson's point, he is talking about catching
Chinese, you know, either defects or a violative product. The
best way to do that is on the front lines with the retailers.
And so, I guess, in general, what I am encouraging our
agency to do is, we can't wait around for additional funding.
There are so many issues with that. If we think something has
value, we need to reshift and look at our priorities. Perhaps
we could move away from the civil penalty and some of those
resources and move those resources over to make sure retailer
reporting gets a fair deal.
I think there are--we talked about import surveillance. I
am opposed to the user fee. I think it is unconstitutional, and
I mentioned that the last time I was here.
But, as an agency, if it comes to crumb rubber, if we think
crumb rubber is an emerging hazard or risk, we need to address
that. We can't wait and sit back on our laurels and say,
``Well, if we get the funding.'' I think the agency has a far
more important mission, and that is to make sure we are on the
cutting edge. If we identify a hazard or a risk or we think it
is, it is a question of shifting priorities and making sure
that we attend to what is most important.
With regards to import surveillance, we do have the
capability right now to be at all of our ports. In terms of the
data, it is a question of people reviewing that data. But it is
national, so to speak, because we are getting the information
from all of the ports. But it is a question of making sure we
look at that data.
So there are ways to, I think, reshift our priorities, make
sure we are tending to what is most urgent.
I think collaborative efforts with the regulated community,
whether it is retailer reporting, in so many levels, is the key
to consumer safety. Having them work with us and we not working
against them is how we are going to best affect consumer
safety. Because they are willing to work with us, and I think
the conversations that have gone on within the agency, whether
it is higher civil penalties or something, they alienate. And I
think we need to draw the regulated community closer to us.
Senator Moran. Thank you very much.
A couple other things I just want to touch briefly, and
then we will move to our next panel.
First, I want to express my concern about the general
counsel's reinterpretation of section 15 as it relates to the
consequences, the privacy consequences, of someone reporting
under the Retailer Reporting Program. I am worried that we are
going to diminish the value of that program.
And then, second, Mr. Chairman, we had a conversation at
our hearing on June 17 in which I raised the topic of fireworks
and the audible standard. My understanding from our
conversation, your testimony that day was, by the end of the
Fiscal Year, a few days ago, that there would be some
resolution or at least development in regard to trying to get a
subjective standard. We talked about the science of this issue.
And I just would ask you again if we are there and if you
could fulfill my request for some certainty there.
Mr. Kaye. Thanks, Mr. Chairman. And you are right. Your
memory is very good. I did say that we would have by the end of
this past fiscal year a package from the staff. And as I
mentioned earlier, sometimes everything that is being worked on
just doesn't make it up by a certain deadline.
The package is close. I know that they wanted to do a
little bit more technical work. But I am hopeful, when they
send that package up--which, again, we are going to live by our
commitment to send that to your office--that we will be moving
toward a road of much more certainty.
Senator Moran. I am not quibbling about 7 days.
Mr. Kaye. OK. I appreciate that.
Senator Moran. I just wanted to raise this issue with you
again and ask for your assistance.
Mr. Kaye. Absolutely.
Senator Moran. Thank you both very much for your testimony,
and we will call the second panel to the table. Thank you.
Mr. Kaye. Thank you.
Ms. Buerkle. Thank you very much.
Senator Moran. And that panel consists of Mr. Frederick
Locker, who is a Partner with Locker Greenberg & Brainin, on
behalf of the National Association of Manufacturers; Mr.
Jonathan Gold, Vice President, National Retail Federation; Ms.
Cheryl Falvey, Partner at Crowell & Moring in Washington, D.C.;
and Ms. Nancy Cowles, Executive Director, Kids in Danger,
Chicago, Illinois.
Mr. Locker, welcome. And to all of you, welcome to the
Committee. And we look forward to--I look forward to hearing
your testimony.
STATEMENT OF FREDERICK (RICK) LOCKER, PARTNER,
LOCKER GREENBERG & BRAININ, LLP, ON BEHALF OF
THE NATIONAL ASSOCIATION OF MANUFACTURERS
Mr. Locker. Thank you, Mr. Chairman. We welcome the
opportunity to be here and talk with you today about these very
important issues.
So I have spent more than 30 years focusing on improving
safety standards for a wide array of children and other
consumer products. And maintaining an effective, expedient
recall or safety alert process, I believe, is in everyone's
interest. It is and should remain a nonpartisan issue.
I appear before you as a member of the National Association
of Manufacturers' CPSC Coalition, which provides a unified
voice for manufacturers and retailers on CPSC-related issues.
We are comprised of manufacturers, retailers, trade
associations, a wide array of stakeholders within and without a
variety of industries.
We are committed to consumer product safety and working in
cooperation with the CPSC, an agency we have supported for
many, many years. And we have a shared interest and goals in
risk reduction and hazard avoidance. We encourage improved
collaboration between all stakeholders, the Commission, and its
staff. And we have supported the mission of the agency and,
importantly, funding for it, as well, for many, many years.
Now, in November 2013, the CPSC issued a proposed rule that
you have focused on here today. And while well-intended, we
came to the conclusion that it could negatively impact the
Commission's voluntary recall remedy process.
And let's understand what we are talking about. Most
recalls, clearly, you know, 99.5 percent of them, are what we
call voluntary recalls today. They may occur because of a
violation of an act or a regulation, which is in the minority,
but most occur because of unforeseen circumstances and are
developed and implemented voluntarily by companies in
collaboration with the agency.
This year, as you have noted, it remained in the operating
plan, despite comments that such a rule is not a priority and
that it needs to be reworked.
So, for nearly 40 years, you know, manufacturers and
retailers have extensively participated in the Commission's
plans. Now, the CPSC proposed rule includes, as you have noted,
several substantive provisions that would unfavorably alter the
cooperative process--at least, that is what we believe--by
which firms work with the Commission to implement these
voluntary recalls.
These substantive provisions would require firms to execute
legally binding agreements in the doc compliance programs as
part of a voluntary corrective action plan. So, rather than
improving these recalls, they could negatively impact the
efficiency, cooperative spirit, and the speed that is evident
in the current voluntary recall process. And this could be the
detriment of consumer product safety.
And CPSC has noted that 90 percent of recalls initiated
through its, as you have cited, award-winning Fast Track
Program were commenced quickly and occurred with relative speed
and alacrity. We are concerned that there is a current
creeping, if you will, a paralysis by bureaucracy before it
gets to that point. And, actually, the Fast Track recalls,
which the former chairman of the agency, a Democratic chairman,
cited to, has actually become a much slower process than it
used to be.
I am not saying that when it rises to the Commission level
that they don't act fast. I am saying it is taking longer to
get to that level. So, in that regard, we say do not diminish
the existing reporting and recall process that is flexible and
effective.
We say do not require over-lawyering of negotiated
voluntary actions. Remember, most businesses that are in our
members, 80 percent of them, and 90 percent of American
businesses are small businesses. They are the job creators.
They tend to approach these agencies in a cooperative fashion.
They want to negotiate. Very often, they want to implement
corrective action plans or do recalls. And they want to do so
without having to engage a lawyer, which can be expensive, with
all due respect to my brethren in the legal community.
So we don't want to take that away. We don't want to create
additional liability or have factors that come into play that
would require them to over-lawyer and delay the process. We
want it to proceed in an efficient manner.
We say, as part of that, you shouldn't require automatic
admissions of disclaim liability or a defect in a plan. In the
commission's own recall handbook, in your own rules, in your
own statutes, you say that there is not a presumption of defect
or liability. But yet, in this rule, it would impose one.
So that is why we think you had a lot of comments in
opposition to it, and that is why I think both commissioners
recognize there needed to be a change.
And, finally, we believe the Commission can actually
already act should the public be at risk. So, as Senator Nelson
noted, if there is an imminent hazard, the Commission has ample
authority to act, and it can act against any distributor,
manufacturer, or retailer of that product. And they do so. And
that is what experience tells us; they have that authority.
And, finally, compliance assurances, which were built into
the rule, should not be part of a voluntary corrective action
plan, which should stand on their own so that they can be
efficiently and quickly implemented.
And, in conclusion, I would simply say, as in the medical
community, I would cite to the Hippocratic Oath, which is, ``Do
no harm,'' and the same should apply to safety regulators. We
all have an interest in promoting safety and making sure it is
effectively carried out.
In short, we believe that collaborative processes, which
many people here today have talked about, that promote
voluntary corrective actions in a timely, expedient manner
should not be undermined by imposition of additional extraneous
requirements that could hamper flexible and creative solutions
that often come into play in the voluntary-initiated recall
processes, distinct from mandatory recalls.
The commission should consider a refined communications
strategy for such action plans that clearly identify and
communicate the hazard sought to be remedied and the remedy
available. Not every action needs to be labeled a, quote/
unquote, ``recall.'' Experience indicates that alerts,
information and education efforts, and offerings of accessories
that enhance safety by product category can reduce misuse and
can be extremely beneficial to the American consumer and to
American business.
Safety is good business. Safety is an important aspect of
business. If you don't have that reputation for selling safe
products, you are not going to be in business for a very long
time.
Maintaining this flexible system that encourages and
rewards such efforts we believe is highly, highly desirable.
And we welcome the recently noted collegiality among the
commissioners, as they have talked about, and would urge all of
them to work toward non-controversial, effective solutions that
actually enhance creative, expedient, voluntary recalls.
Thank you.
[The prepared statement of Mr. Locker follows:]
Prepared Statement of Frederick (Rick) Locker, Partner, Locker
Greenberg & Brainin, LLP, on behalf of the National Association of
Manufacturers
Chairman Moran, Ranking Member Blumenthal and members of the
Subcommittee on Consumer Protection, Product Safety, Insurance and Data
Security, thank you for the opportunity to testify about the U.S.
Consumer Product Safety Commission's (CPSC) voluntary recall process.
My Bio is annexed.
I appreciate the opportunity to appear before you as a member of
the National Association of Manufacturers CPSC Coalition, which
provides a unified voice for manufacturers and retailers on CPSC-
related issues. The NAM coalition is comprised of manufacturers,
retailers, trade associations and law firms representing the array
consumer product industries. Many of the CPSC's initiatives directly
impact the collective of industries. Even industry-specific initiatives
can set a precedent that impacts all manufacturers and retailers of
consumer products. Members of the NAM CPSC Coalition are committed to
consumer product safety and working in cooperation with the CPSC in
furtherance of shared goals of risk reduction and hazard avoidance. We
encourage improved collaboration between all stakeholders and the
Commission and its staff before the Commission puts forth significant
policy proposals. Cooperation with stakeholders while the agency is
developing changes in substantive policies would lead to improved
proposals and reduces the potential for conflicts or unintended
consequences of that can arise. Too often, though, stakeholders and the
rest of the public are provided limited notice of significant proposed
changes to policies that could greatly impact the abilities of both the
Commission, related government agencies and businesses to minimize
risks posed to the public.
In November 2013, the CPSC issued a proposed rule (78 Fed. Reg.
69793) that could negatively impact the Commission's voluntary recall
process and would place significant burdens on manufacturers and
retailers. The CPSC conducted no public outreach as it developed its
proposal. Despite extensive opposition to the proposed rule, the
Commission voted in May to keep the issuance of a final rule in its FY
2015 operating plan. The Commission took this action despite repeated
comments by Chairman Elliot Kaye that the voluntary recall rule is not
a priority because it would not necessarily improve safety.
For nearly 40 years, manufacturers and retailers have watched and
participated in the Commission's voluntary corrective action process.
They have reported potential safety problems and undertaken voluntary
corrective action for various reasons; sometimes out of an abundance of
caution, protecting consumers by preventing future incidents and
standing behind their products. For that reason, the CPSC's current
system geared to encouraging expedient voluntary recalls has been and
continues to be relatively effective in ensuring appropriate
notifications to the CPSC and voluntary recalls in furtherance of
product safety or availability of improved products to customers and
consumers. Simply stated, the existing voluntary recall process has
proven an efficient and effective way of quickly addressing product
safety concerns or providing consumers with options to enhance products
in their poses session. There is no preponderance of data to support
the conclusion that the CPSC's current approach to negotiating
voluntary corrective actions is deficient or in need of radical change.
I. Executive Summary and Background
The CPSC's proposed rule includes several substantive provisions
that would unfavorably alter the cooperative process by which firms
work with the Commission to implement voluntary recalls. These
substantive provisions would require firms to execute legally binding
agreements and adopt compliance programs in voluntary corrective action
plans. Rather than improving recalls, the proposed rule in its current
form could negatively impact the efficiency, cooperative spirit and
speed of the CPSC's voluntary recall process to the detriment of
consumer product safety. Manufacturers and retailers are concerned that
these proposed changes raise policy concerns that could negatively
alter the longstanding process for implementing an expedient voluntary
recall in cooperation with the CPSC.
For a number of reasons that will be discussed, the proposed rule
is unnecessary, could substantially erode the success of the
Commission's voluntary recall process, could undermine due process
afforded under the Administrative Procedure Act (APA) and is not
required under the Consumer Product Safety Act (CPSA). In the absence
of any data that the CPSC's existing voluntary recall framework is
inadequate and because aspects of the proposed rule are not needed per
statute, I urge the Commission, consistent with comments in opposition
and recent statements made in relation to the noticed rule to withdraw
it at this time.
I also encourage the Commission to cooperatively develop with
stakeholders strategies that will improve the effectiveness of recalls
and accomplish the desired policy objectives in a flexible fashion. The
proposed rule as drafted, could significantly impede and undercut the
Commission's current relatively expedient voluntary recall practice.
Careful consideration by the Commission in consultation with
stakeholders would be preferable to precipitous action that might
require correction later. The Commission should engage all interested
parties--consumers, industry and staff--in constructive meetings to
discuss ways the current corrective action process might be enhanced,
if required based upon the evidence before it.
II. The Existing Recall Process is Effective
Throughout its history, the CPSC has relied on reporting and
voluntary corrective action plans to remove hazardous products from the
marketplace. While there have in rare instances been disputes between
parties, delays or disagreements, the staff has adequate tools to
obtain the desired corrective action or to address the risks. There are
no published data to support the conclusion that the existing voluntary
recall process is inadequate. In fact, the CPSC recently noted that 90
percent of recalls initiated through the CPSC's award-winning Fast
Track recall process were commenced within 20 working days of notifying
the Commission.\1\ In light of such recent data showing the success of
the existing voluntary recall process, the proposed rule's more
substantive changes are plainly unnecessary and the Commission should
withdraw the proposed rule. There is a compelling cliche that applies
to the context in which this rule is proposed: ``If it ain't broke,
don't fix it.'' There is often wisdom in such cliches, and that wisdom
has seemingly been ignored for certain aspects of this proposal.
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\1\ See http://www.cpsc.gov/Global/About-CPSC/Budget-and-
Performance/2014BudgettoCongr
essSupplementalAppendix.pdf
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III. The Proposed Rule Would Negatively Impact Implementation of
Voluntary Recalls
The Commission asserts as background that the ``Consumer Product
Safety Improvement Act of 2008, Public Law 110-314, 122 Stat. 3016
(2008) (CPSIA), amended the CPSA to strengthen the CPSC's authority to
recall products and to notify the public effectively about the scope of
a recall and available remedies'' (78 Fed. Reg. 69794). Unfortunately
for the reasons set forth in more detail below, the proposed rule would
create impediments to the Commission's voluntary recall process and
reduce recall effectiveness. There also has been no convincing data to
support the conclusion that the proposal is necessary or that there is
a problem that the Commission does not already have the authority and
tools to address.
Rather than enhancing recalls, these provisions will make it more
difficult for companies and compliance officers to undertake recalls.
The proposed changes will extend the period of negotiation between a
subject firm and the CPSC staff, slowing down or impeding agreement on
corrective action plans. Disputes over descriptive language and format
conventions of recall notices can delay the process without any
measurable positive impact on recall effectiveness. Any delays in
implementing a recall can result in increased risks to consumers. At
the same time, the proposed provisions will force firms to more often
seek the advice of counsel and will likely make the recall negotiation
process more complicated and adversarial than necessary. This is
contrary to the stated goal of such rule.
Perhaps most important, the CPSC's proposal will fundamentally
change the cooperative relationship between industry and the Commission
that has resulted in thousands of reports and voluntary recalls. There
is simply no evidence that any of these changes are necessary, that
they will improve recall effectiveness in any way or that they add in
any measurable way to protection of consumers. Instead of enhancing the
current recall process, this proposed rule will be counterproductive in
the Commission's efforts to improve the effectiveness of recalls. New
substantive requirements and increased enforcement jeopardy could have
a chilling effect on how firms communicate and cooperate with the
Commission--delaying the recall process.
Ultimately, consumers have to cope with an incredible amount of
product information and information overload is a real problem that
affects consumer response to recall notices. Many factors besides
seeing a notice likely affect consumer response and recall
effectiveness.\2\ The CPSC may consider addressing this concern by
working cooperatively with stakeholders, as the high number of recalls
for products posing little or no risk has arguably reduced the
effectiveness of efforts to protect the public from actual risks. This
is a significant issue that likely has far more impact on the
effectiveness of the CPSC recall program than anything in this proposed
rule. The proposed rule does not help with this problem. If anything,
it increases the amount of negotiation and workload for the staff no
matter how serious the risk of injury and does little to eliminate the
problem of consumer information overload or to help consumers decide
how to respond to CPSC recalls.
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\2\ Commission ``Recall Effectiveness'' literature study, 2003.
That study noted the need for additional research but there is no
public information that shows that such research has taken place and it
is not cited in the proposal. The Commission should focus on developing
a tiered approach to recalls that measure success on the basis or
relative risk and outreach, in lieu of metrics focused solely on
product returns, which are impacted by a myriad of external factors
beyond the control of CPSC or Industry.
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IV. The Statutory Pretext for Proposed Substantive Provisions is
Unjustified and Does Not Comply with Required Rulemaking
Procedures
The preamble to the proposed rule recognizes that section 214 of
the CPSIA directs the Commission to issue guidelines for notice in
mandatory recalls ordered after a substantial product hazard hearing.
The Commission has in fact issued that regulation.\3\ The preamble goes
on, however, to suggest that the House of Representatives' committee of
jurisdiction ``explicitly expressed an expectation that similar
information would be provided, as applicable and to the greatest extent
possible'' in voluntary recall notices. The Commission's assertion that
the House committee, through a committee report, directed the
Commission to issue regulations for the content of voluntary recall is
incorrect and misrepresents the legislative history of the CPSIA. The
actual language referenced by the Commission as providing authority to
regulate voluntary recalls is provided below:
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\3\ 16 C.F.R. Sec. Sec. 1115.23-29, 75 Fed. Reg. 3355 (Jan. 21,
2010)
Subsection (c) further amends Section 15 by adding a new
subsection (i) requiring the CPSC by rule to set guidelines on
a uniform class of information in mandatory recall notices
under subsection (c) or (d) or under section 12 of the CPSA.
The guidelines should include information helpful to consumers
in identifying the specific product, understanding the hazard,
and understanding the available remedy. The Committee expects
that similar information will be provided, as applicable and to
the greatest extent possible, in the notices issued in
voluntary recalls.\4\
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\4\ H.R. Rep. No. 110-501 at 40 (2008)
In citing this language, the Commission makes several fundamental
errors. First, it ignores the fact that the legislation and even the
Committee comment do not suggest or authorize rulemaking with respect
to voluntary corrective actions as the CPSIA explicitly did for
mandatory recalls. Second, the Commission seeks to give legislative
weight to language in the legislative history. It is a basic precept of
administrative law that one looks first to the plain language of the
statute. A committee report certainly cannot be given the weight of
legislation. Additionally, the preamble ignores obvious qualifiers in
the legislative history comment the Commission paraphrases. The
committee report recognized that in voluntary corrective actions,
``similar''--not necessarily identical--information could be provided.
The language further uses the term ``as applicable,'' recognizing that
such notice requirements might not be applicable in all voluntary
recalls. Finally, the scope and extent of many of the changes proposed
in this rule exceed or are different in scope than the legislative and
regulatory provisions for mandatory recalls.
Yet, based on that inadequate legal rationale and vague statements
about the staff's experience with recalls, the detailed mandatory
requirements contained in the proposed rule have many of the hallmarks
of a substantive rule. The Commission asserts that its proposal is an
``interpretative rule to set forth principles and guidelines for the
content and form of voluntary recall notices that firms provide as part
of corrective action plans under Section 15 of the Consumer Product
Safety Act'' (78 Fed. Reg. 69794-5). Though the APA (5 U.S.C.
Subchapter II) does not explicitly define an ``interpretative rule,''
certain characteristics of a rule that would make it an
``interpretative rule'' are universally accepted: An interpretative
rule interprets a statutory term or agency regulation and is not
legally binding on regulated entities or courts. Conversely, a
substantive rule has the force and effect of law (43 Fed. Reg. 34988,
34990, Aug. 7, 1978).
Many provisions of the proposed rule such as imposing mandatory and
enforceable corrective action plans, prohibiting a firm from
disclaiming admission of a defect or potential hazard and authorizing
the staff to demand compliance program-related requirements in
corrective action plans are in direct conflict with the
``interpretative rule'' definition. The proposed rule would place new
obligations on companies, enlarge the scope of section 1115.20(a) and
go beyond merely providing guidance about the existing voluntary recall
rule. The Commission is proposing fundamental changes of longstanding
practice that establish new rights and responsibilities and legally
bind subject firms in ways not currently provided for under section
1115.20(a). Because the proposed rule would be the basis for
enforcement decisions and would broaden existing legal requirements,
the Commission should comply with the rulemaking procedures established
by the APA for substantive rules.\5\ It is improper to classify the
proposed rule as ``interpretative.'' As such, the Commission should
have engaged in proper rulemaking procedures, including the analytical
requirements that are statutorily mandated.
---------------------------------------------------------------------------
\5\ See Appalachian Power Co. v. EPA, 208 F.3d 1015, 1028 (D.C.
Cir. 2000)
---------------------------------------------------------------------------
V. Voluntary Corrective Action Plans Are As a Practical Matter Already
Binding
The Commission seeks to redefine voluntary corrective action plans
as may be agreed to between firms and the Commission staff as re-
codified distinct legally binding separate contracts. This is
ostensibly related to a desire for greater leverage when dealing with
the rare occurrence when a firm declines to honor its obligations under
a voluntary corrective action plan. Yet this almost never occur and the
Commission itself has and retains broad authority to take action under
existing statutory authority to compel corrective action or issue
unilateral public notice to prevent imminent hazards. Under such
circumstances such provision is unnecessary, contrary to the letter and
spirit of the original voluntary recall rule and not authorized by the
CPSC's statutes (40 Fed. Reg. 30938, July 24, 1975). There is no
compelling reason to transform a firm's voluntary, proactive efforts to
address a safety concern into a legal negotiation over binding terms--
the equivalent of a settlement agreement. This change would result in
unintended consequences that would delay implementation of a voluntary
recall. In practice many small businesses, which have been the engine
for economic growth in the U.S.,\6\ voluntarily negotiate and implement
corrective action plans directly with Commission staff (both within and
without the CPSC's Fast Track recall Program) without the need for
costly legal representation and protracted negotiation. To the extent
the Commission seeks to impose additional contractual obligations
related to unrelated quality assurance processes or require companies,
as part and parcel of voluntary recalls, to admit the existence of a
product defect when they do not believe one to exist, the requirement
for legal review becomes essential instead of optional. For these
reasons, many small businesses and industries regulated by the CPSC
have opposed to this provision of the proposed rule.
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\6\ Small businesses make up: 99.7 percent of U.S. employer firms,
64 percent of net new private-sector jobs, 49.2 of private-sector
payroll, 46 percent of private-sector output, 43 percent of high-tech
employment, 98 percent of firms exporting goods, and 33 percent of
exporting value. Source: U.S. Census Bureau, SUSB, CPS; International
Trade Administration; Bureau of Labor Statistics, BED; Advocacy-funded
research, Small Business GDP: Update 2002-2010, www.sba.gov/advocacy/
7540/42371
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Making voluntary corrective action plans legally binding is also
unnecessary because the Commission has existing authority to address
the very rare situation when a firm declines to comply with its
voluntary recall plan. At the time of the CPSC's original voluntary
recall rule--and now--the Commission has had the authority to seek a
binding consent agreement if the percent of private-sector employment,
42.9 percent of private-sector payroll, 46 percent of private-sector
output, 43 percent of high-tech employment, 98 percent of firms
exporting goods, and 33 percent of exporting value. Commission has
reason to believe that an enforceable agreement is necessary (16 C.F.R.
Sec. 1115.20(b)). In the entire history of the CPSC, it has used the
consent order agreement option very sparingly, even when enforcing
rules against repeat violators, yet the fact remains that the CPSC
retains authority to act in the rare situation involving a recalcitrant
firm.
The Commission's proposal would also undermine the original intent
behind the voluntary corrective action rule--to remove impediments to
quickly execute a voluntary recall. The Commission has long
acknowledged that the ``primary purpose of a corrective action plan is
to protect the public from a substantial risk of injury presented by a
consumer product and to do so as quickly as possible'' (43 Fed. Reg.
34988, 34996, Aug. 7, 1978). In the past, reporting and corrective
actions increased when cooperative efforts such as the Fast Track
recall program made the negotiation and completion of recalls easier.
Making the process more difficult and contentious for firms that want
to conduct recalls will have the opposite effect. Among other things,
the proposed rule would create additional obstacles that would encumber
the CPSC staff and firms in trying to negotiate the terms of a
corrective action plan and subsequent modification, which may improve
the effectiveness of recall efforts. This would waste staff resources
and delay protection of the public.
VI. The Commission Should Not Change a Firm's Ability to Disclaim
Admission of a Defect or Potential Hazard
Voluntary corrective actions are often undertaken in the face of
ambiguous or incomplete hazard information. At the same time, firms
must worry that admissions about an alleged hazard can have legal
consequences in product liability, other commercial contexts or in a
civil penalty matter. For that reason and to encourage firms to quickly
address safety concerns, the Commission provided that firms could
disclaim that their voluntary actions constituted an admission either
of the need to report or that a substantial product hazard existed.
This has been an important incentive to reporting and cooperating in
voluntary corrective action. The Commission provides no evidence that
such disclaimers have in any way harmed consumer protection over the
history of the recall program.
Now, the Commission proposes to give the CPSC staff veto authority
over such disclaimers. The preamble indicates that the CPSC may
actually use this change as ``an opportunity for the Commission to
negotiate and agree to appropriate admissions in each particular
corrective action plan'' (78 Fed. Reg. 69795).There are no data that
demonstrate that this change might enhance recall effectiveness or
public safety and certainly no indication in the proposed rule of how
the current policy has hamstrung the Commission in achieving good
corrective action plans or consent agreements to safeguard the public.
This change would unreasonably restrict a firm's ability to disclaim
admission of a defect or potential hazard and conflicts with the First
Amendment rights of manufacturers and retailers to the extent that it
would preclude them from making truthful public statements expressing
their views regarding the existence of a safety defect.
In short, there is no compelling reason to change the Commission's
current disclaimer practice in connection with a voluntary recall. This
change can only delay recall implementation to the detriment of
consumers. This provision is unsupported and unsupportable based on
safety and constitutional considerations and would not withstand legal
scrutiny.
VII. Compliance Programs Do Not Automatically Belong in Corrective
Action Plans
The Commission proposes to include in corrective action plans
binding ``compliance program-related requirements.'' The preamble and
proposed Sec. 1115.20(b) suggest that such provisions would be ``in the
Commission's discretion.'' That decision might be based on multiple
previous recalls in a short period of time, evidence of insufficient
controls, evidence of a reporting violation or other factors (78 Fed.
Reg. 69795). Under the proposed rule, such programs would be compulsory
as part of a legally-binding corrective action agreement. This
provision would have unintended consequences and is not authorized by
any provision of the CPSA. Section 15 of the CPSA allows the CPSC to
order recalls and notices; it does not give the agency authority to
tell firms how to structure their businesses or internal procedures.
In practice, the compliance program requirements would dramatically
slow the voluntary recall process. The CPSC staff would be required to
conduct an appropriate investigation to determine whether the
circumstances of a particular recall might merit revising a firm's
existing compliance program. To forgo such an inquiry would deprive
firms of due process and the opportunity to present information and
arguments in defense of their existing compliance programs. Such
process is afforded firms in the civil penalty context, but would not
exist under the proposed rule (16 C.F.R. Sec. 1119.5). This would
result in delay for consumers awaiting implementation of a recall and
is contrary to the intent of the original substantial hazard rule.
Equally unacceptable would be the CPSC imposing a compliance program
requirement in haste and without a fair or objective inquiry. The
implementation of a voluntary recall is not the appropriate occasion
for the CPSC to seek changes to businesses' compliance processes.
The proposed rule's insistence that multiple prior recalls would be
a basis to demand compliance programs is also contrary to public policy
and the lessons from the Commission's history. There are no data to
support the conclusion that multiple recalls are indicative of an
inadequate compliance program. Such recalls may indicate the exact
opposite: Firms have demonstrated responsible scrutiny and action to
ensure consumer safety. There is also no evidence that the absence of
multiple recalls provides assurances that a firm has an adequate
compliance program. Given the view by many--regulated industry and
consumers alike--that product recalls are salutary actions taken by
responsible economic actors when necessary or because of a desire to
act out of an abundance of caution, the proposed rule's treatment of
multiple recalls as evidence of poor compliance processes is wrong as a
policy matter. The proposed rule would penalize those who act most
responsibly, especially for carrying out a voluntary recall when a risk
of serious injury is not likely.
The proposed rule acknowledges that compliance program requirements
would ``echo'' similar requirements sought as part of recent civil
penalty settlement agreements (78 Fed. Reg. 69795). Responsible
companies should have compliance programs. However, apart from the
Commission's desire to seek compliance programs, nowhere does the
proposed rule identify the legal basis for the Commission to demand a
compliance program in connection with a voluntary recall. For all the
foregoing reasons, the Commission should withdraw this proposal.\7\
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\7\ The proposed compliance program requirements would also be the
basis for Commission enforcement decisions including the decision to
seek civil penalties. This and other aspects of the proposed rule
create substantive obligations that compliance with the rulemaking
procedures established by the APA for substantive rules.
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VIII. Requiring Corrective Action Plans to be Compliant with CPSC Rules
is Unnecessary
The Commission provides in its proposed rule that ``remedial
actions set forth in a corrective action plan . . . [comply] . . . with
all applicable CPSC rules, regulations, standards, or bans'' (78 Fed.
Reg. 69795). This would appear to be unnecessary and redundant and adds
nothing of substance to existing safeguards. Manufacturers and
retailers are nonetheless concerned that this provision could create
additional enforcement mechanisms, particularly as the staff seeks to
exercise some enforcement discretion in determining what violations to
remedy and how to do so.
IX. Guidelines for Voluntary Recall Notices Will Not Improve the
Effectiveness of Recalls
The staff defines the purpose of the proposed rule in terms of
clearly communicating hazard and recall information to the public.
Specifically, proposed Sec. 1115.30 states that the guidelines will
``help ensure that every voluntary recall notice effectively helps
consumers and other persons to'' identify the product, understand the
actual or potential hazards, understand all available remedies and take
appropriate actions (78 Fed. Reg. 69800). Many of these provisions are
not supported by evidence that they will actually better inform or
motivate consumers to participate in recalls. By mandating a laundry
list of requirements and options for voluntary recall notices, the CPSC
would constrain flexibility and may actually prevent more effective
remedial actions that are not included on the prescribed list. The
notice requirements seem to be based not in the principles for better
notice cited but instead in existing staff practice and the rule for
mandatory recalls under subpart C of 16 C.F.R. Sec. 1115 (Guidelines
and Requirements for Mandatory Recall Notices).
As discussed, the Commission lacks the statutory authority to issue
guidelines for voluntary recall notices through regulation. Moreover,
proposed subpart D mandates the content of voluntary recall notices,
which clearly binds both the CPSC staff and firms and thus makes this
provision a substantive change to the existing process.
a. Calling All Corrective Actions a ``Recall'' Reduces Effectiveness
The proposed rule requires use of the word ``recall'' in the
heading and text of a recall notice, rather than any alternative term.
Calling a corrective action plan a ``recall'' when the action needed to
address a potential hazard is far more limited than a refund or
replacement could mislead consumers. Calling each and every corrective
action a ``recall'' also adds to growing concern that consumers are
experiencing ``recall fatigue'' as a result of the increasing number of
recalls.\8\ As a result of recall overload, getting the attention of
consumers when a notice involves a significant risk of harm contrasted
with a minor technical issue or action out of an abundance of caution
based on unverified information is becoming increasingly difficult.
Rather than address these types of legitimate concerns, the proposed
rule will contribute to this recall fatigue. A tiered approach with
more accurate nomenclature may be useful to better distinguish Alerts,
Warnings related to misuse of products and voluntary offerings of
product accessories that enhance safe use by consumers of products.
---------------------------------------------------------------------------
\8\ See, e.g., Christopher Doering, Surge in Products Being
Recalled May be Numbing Consumers, USA Today, June 10, 2012; Lyndsey
Layton, Officials Worry About Consumers Lost Among the Recalls, Wash.
Post, July 2, 2010.
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b. Recall Notices Should Include Information That is Actually Helpful
and May Not Need to Include Extraneous Information
The proposed rule requires the headline of a recall notice to
include specific information, even if the information would not improve
the effectiveness of the recall effort, and precludes information that
could be helpful to consumers. The Commission's proposal would
eliminate flexibility needed to most effectively communicate hazards to
consumers in some circumstances. For example, the proposed rule
requires the headline to include the type of product being recalled,
but does not permit the headline to identify the model of the product
at issue. As a result, the headline may draw the attention of many
consumers who do not own the product, creating needless concern, while
consumers who would recognize a popular product's name might overlook
the notice. A headline focusing on the type of product may also
needlessly tarnish a firm's entire product line when the safety concern
is limited to a single model.
The proposed rule requires the listing of the names of ``each
manufacturer'' including foreign and domestic firms, beyond those firms
named on the product or the name a consumer is likely to associate with
the product, typically the brand, listed manufacturer or private
labeler. This exceeds the provision Congress prescribed for mandatory
recalls and is not likely to assist consumers. The names of other
manufacturers, foreign and domestic, will not help the consumer
identify the product and does not serve the provision's stated purpose.
Extraneous information may confuse consumers, add to the problem of
consumer information overload and actually decrease the effectiveness
of the recall notice.
Further, many manufacturers and private labelers view the identity
of their product suppliers as confidential commercial information, and
revealing this information to competitors or the public can effectively
destroy a manufacturer's competitive advantage without a commensurate
public safety benefit. Disclosure of the identity of a manufacturer
could present significant trade secret concerns when this information
must be made available to distributors and retailers. Companies have
developed processes to protect this information, and those processes
must be respected.
The Commission's proposal would also permit the staff to include a
reference to a compliance program in the recall notice. However, the
Commission provides no criteria for when this information should be
included. Moreover, there is no evidence indicating that the inclusion
of such information serves the stated purpose of subpart D and would
improve the effectiveness of the recall. Since this information is not
necessary to inform consumers of the recall, or motivate them to take
necessary action, it does not further the objectives of a product
safety recall notice and should be dropped from the proposed rule. An
insistence by the staff that compliance program information be included
in a recall notice would hinder the implementation of a timely and
effective recall, and once again erode the cooperative nature of the
voluntary recall program. The inclusion of this information could also
mislead consumers by implying that a firm did not have an adequate
compliance program and that it caused the defect. A company could face
significant reputational harm from such a provision. There is simply no
reason to believe that voluntary recall notices would be more effective
because of inclusion of this information, which is not required by
Congress for mandatory recalls.
c. Statements in the Notice and Disclosures of Information Should be
Accurate and Truthful
The provision suggests that the recall notice should state that a
hazard ``can'' occur when there have been incidents or injuries
associated with the recalled product. Product hazards often are
``associated'' with a product but have nothing to do with a defect that
leads to a recall. In some cases, it is clear that the account of an
alleged incident is not reliable and using such incidents as a basis
for such language is plainly unfair. Issues such as use, misuse,
probability and other contributing factors may be necessary for the
consumer to fully understand the hazard and to assist them with their
decision making. Firms may also recall products due to insignificant
deviations from standards or for business reasons when even a remote
risk, not reasonably likely to occur may have occur due to a variety of
unreasonable circumstances. Requiring firms to provide information
without the necessary context and qualifiers, such as identifying
circumstances where a hazard ``may'' or ``could'' occur, would reduce
the effectiveness of a recall notice by failing to accurately inform
consumers. Such unequivocal language may not only be inappropriate when
there is a low risk of injury, but could adversely affect companies in
product liability litigation, particularly when viewed in light of the
proposed rule's limit on disclaimers in notices.
The proposed rule indicates that a recall notice should include the
names of ``significant retailers'' and establishes criteria defining
when a retailer is considered significant. The proposal does not
indicate how or whether the CPSC staff would apply the criteria. As the
stated purpose of subpart D is to help ensure that a recall notice
effectively helps the consumer identify the product, simply naming a
large retailer would not provide the consumer useful information if
that chain did not sell a significant number of products and would
needlessly result in even greater information overload for consumers.
This provision could lead to naming of firms because they have
significant market presence and might obtain attention for a Commission
press release at the cost of misleading consumers about the actual
places where they purchased a particular product and may unfairly
tarnish the reputations of retailers.
The Commission through proposed Sec. 1115.34(n) is attempting to
impose new reporting obligations on subject firms and requires the
disclosure of information that may not improve the effectiveness of a
recall notice. Mandating such information also may have unintended
consequences, and the inclusion of that information may not be
necessary. Moreover, incidents and their actual causation are sometimes
disputed and can be the subject of on-going liability disputes or other
legal processes. In these cases, corrective action may be delayed as
the CPSC staff and the firm negotiate the disclosure of information
that may not improve the effectiveness of the recall notice.
The provision also requires firms to ``immediately'' report any new
information to allow the Commission to issue new recall notices. It is
not clear whether the Commission intends the 24-hour definition of
``immediately'' in subsection 1115.15(e) to apply in this context.
Firms may not be able to adequately report new information as they work
to obtain reliable information about an alleged incident. An incident
actually may not involve an initially named product or the defect
identified in a recall. This provision may require firms to supply
misinformation, which would harm efforts to accurately inform
consumers.
Firms currently provide incident updates in monthly progress
reports. In addition, the Commission advises firms that under section
15(b) they may have to report new or additional incident data that
suggests that the scope of a defect or non-compliance is not
understood. The proposal provides no evidence that this existing system
is insufficient or does not allow the staff to make reasonable
decisions with firms about the need for further notice. The proposal
seems to place additional requirements upon firms and places them in
additional enforcement jeopardy without evidence that this mandate will
help protect consumers. This inflexible provision is more likely to
lead to additional dispute rather than cooperation.
d. Changes in an Action Plan Should Not Trigger a New Agreement and
Notice
Proposed Sec. 1115.34(o)(4) would require that any changes to a
voluntary corrective action plan must be memorialized in both a new
agreement and a new notice. This could result in further discussion and
disagreements under this proposal and may delay useful changes that
could protect consumers. In addition, some procedural changes may have
absolutely no effect on consumers, and requiring that any change be
communicated to consumers in such instances is unnecessary and may
create unnecessary confusion and consumer information overload.
X. Conclusion
As many commenters to the CPSC's proposed rule requested, the CPSC
should withdraw in its entirety this extra-statutory attempt to change
40 years of successful voluntary recall practice. The proposed rule
could dramatically alter the CPSC's existing process that enables
product safety goals to be realized in a timely and generally efficient
manner. While the Commission may believe that requiring binding
voluntary recall plans and compliance programs via a separate rule is
desirable, it has provided no data on the record to support these
changes. Furthermore the Commission's existing statutory authority
allows it to act to address any imminent public hazard when and if
merited under particular circumstances. Recognizing that approaches to
voluntarily implemented corrective action plans differ and require
creative solutions, depending upon the particular circumstances, we
would hope that due consideration based upon a preponderance of the
evidence would be required before advancement of such rule, as
currently drafted. Substantive rules (notwithstanding labeling as
``interpretative'') may have unintended and adverse consequences on
expedient voluntary corrective actions and should undergo more thorough
administrative vetting prior to any imposition.
Senator Moran. Mr. Locker, thank you very much.
Mr. Gold?
STATEMENT OF JONATHAN GOLD, VICE PRESIDENT,
SUPPLY CHAIN AND CUSTOMS POLICY,
NATIONAL RETAIL FEDERATION
Mr. Gold. Mr. Chairman, thank you very much for the
opportunity to testify this morning.
I would like to discuss three specific issues: the proposed
Voluntary Recall Rule, the Retailer Reporting Program, and the
Fast Track Recall Program.
NRF is the world's largest retail trade association,
representing all segments of the retail industry. We have had a
proud history of engaging with the CPSC, particularly since the
enactment of CPSIA. While we have had a number of issues with
that law and its implementation and interpretation by the
agency, we have always sought to positively interact with the
CPSC with the viewpoint and objective of ensuring that the
products our members sell are safe for American families.
The retail community has spearheaded many product safety
initiatives and efforts that go well beyond legal and
regulatory requirements. By continuing to work in partnership
with the CPSC, we can help focus on the issues of greatest
concern while using the agency's limited resources to go after
the truly bad actors.
With this spirit of partnership and product safety in mind,
it is with some hesitance that I testify today, questioning the
manner in which the CPSC has approached the key issues of:
Voluntary Recall Rule proposal, inaction to date on expanding
and appropriately implementing the Retailer Reporting Program,
and what has been generally observed to be a reduction in the
agency's Fast Track Recall Program.
I would observe and ask the Commission and this
subcommittee to consider the fact that we have witnessed a
somewhat concerning and increasingly prevalent trend at the
CPSC to look first and last to retailers for responsibility
under section 15 with regard to reporting and recall
obligations. I would urge that this committee ask whether the
CPSC is forgoing the tools provided under the law in favor of
convenience.
NRF and its members understand and embrace their
obligations under the law, but others in the supply chain,
especially product manufacturers, may have better and more
immediate knowledge of the products and possible safety issues.
With regard to the Voluntary Recall Rule, NRF submitted
detailed public comments on the NPRM in February 2014. In those
comments, we set forth in detail how we believe that the
proposal could negatively impact the CPSC's critical safety
mission by making it significantly more difficult for retailers
and other recalling firms to undertake voluntary recalls
jointly with the agency.
The Subcommittee should observe that the CPSC does have the
clear authority to seek to force a company to recall a product,
should that become necessary, and the agency has exercised this
power on occasion. However, the current Voluntary Recall Rule
assumes, as it should, that the vast majority of companies
fully cooperate with the CPSC in developing and undertaking
product safety recalls.
There may be some disagreement over things like the
language of the recall press release or some other minor
issues, but NRF members are strongly motivated to recall
products as quickly as possible.
Unfortunately, a number of provisions of the proposed rule,
including one that would make corrective action plans legally
binding, we believe would not only discourage companies from
approaching the CPSC about a product safety issue that they
have identified, but would make voluntary recall agreements
much more legally risky for firms to undertake.
This might lead to them being resistant to various requests
the agency might make of them in the context of a recall. This
could, therefore, not only reduce the number of necessary
recalls, but it is also highly likely to unnecessarily drag out
the recall process.
Let me now discuss the Retailer Reporting Program. NRF
fully supports this important program. It has resulted in a
significant number of necessary recalls that might not
otherwise have occurred. It also provides the agency with an
excellent early warning system to identify and respond to new
and emerging product safety hazards and patterns. It is the
very model of a public-private partnership that is a win-win
for the agency, companies, and consumers alike.
We understand that the CPSC is actively reviewing the
program and potential options for changing it, but, after
several years of review, we are still waiting to hear when
those changes might occur.
We recently communicated with the commissioners, asking not
only for that progress to move forward but, perhaps more
importantly, calling into question the recent position that
participation in the program does not and can never constitute
compliance with a company's reporting obligations under section
15(b) of the Consumer Product Safety Act.
If, in fact, this is the position of the commission, then
we not only question the factual accuracy of this but its legal
and logical soundness. This has not been an issue in the
program previously, and we wonder why it has now become an
issue. This may dissuade potential participants from ever
participating in the program.
We would like to see the program opened to new participants
and believe the agency should work with current participants on
addressing any issues of concern or ways to enhance the program
to benefit the agency, the participants, and consumers.
Another great example of a program that has resulted in
several hundred recalls, and much faster than they would have
otherwise, is the Fast Track Recall Program, which encourages
companies to undertake recalls within 20 days or less of
initiating the process. In exchange, the CPSC does not make a
preliminary determination for the product, which can have
negative legal and other repercussions for recalling companies
and is not necessary to initiate a recall of potentially
dangerous products.
Anecdotal reports continue to emerge that the agency is
now, in various ways, disfavoring the Fast Track Program. This
appears to in part be motivated by a desire to seek
incriminating information about companies' potential failure to
have met their 15(b) reporting obligations. While NRF certainly
does not question the right and duty of the CPSC to
appropriately investigate companies for this and other
violations of the law, this should not come at the cost of
fewer and slower product safety recalls.
While we wanted to highlight a few of our concerns on these
issues, NRF and its members again want to emphasize that the
retail industry is continuously seeking ways to partner with
the agency in order to improve the overall recall process. In
this regard, we continue to believe that an advisory committee
comprised of all stakeholders would benefit the agency and
better enable it to address these and future issues.
Thank you, Mr. Chairman. I look forward to your questions.
[The prepared statement of Mr. Gold follows:]
Prepared Statement of Jonathan Gold, Vice President, Supply Chain and
Customs Policy, National Retail Federation
Mr. Chairman and distinguished Senators:
Thank you for the opportunity to testify this morning on ``Consumer
Product Safety and the Recall Process.'' I would like to discuss three
specific issues now before the agency relating to this process: the
proposed Voluntary Recall Rule, the Retailer Reporting Program and the
Fast Track Recall Program.
The National Retail Federation is the world's largest retail trade
association, representing discount and department stores, home goods
and specialty stores, Main Street merchants, grocers, wholesalers,
chain restaurants and Internet retailers from the U.S. more than 45
other countries. Retail is nation's largest private sector employer,
supporting one in 4 U.S. jobs--over 42 million working Americans. NRF's
This is Retail campaign highlights the industry's opportunities for
life-long careers, how retailers strengthen communities, and the
critical role that retail plays in driving innovation.
NRF has also had a proud history of engaging with the Consumer
Product Safety Commission, particularly since the enactment of the
landmark Consumer Product Safety Improvement Act of 2008. While we have
had a number of issues with that law and its implementation and
interpretation by the agency, we have always sought to positively
interact with the CPSC via the submission of numerous public comments,
participation in working groups, roundtable discussions, and through
other avenues. And we have always done this with the viewpoint and
objective of ensuring that the products our members sell are safe for
American families. Indeed, it has been the retail community that has
spearheaded many product safety initiatives and efforts that go well
beyond legal and regulatory requirements. By continuing to work in
partnership with the CPSC we can help focus on the issues of greatest
concern, while using the agency's limited resources to go after the
truly bad actors.
With this spirit of partnership and product safety in mind, it is
with some hesitance that I testify today questioning the manner in
which the CPSC has approached the key issues of the Voluntary Recall
Rule proposal; inaction to date on expanding and appropriately
implementing the Retailer Reporting Program; and what has been
generally observed to be a reduction in the agency's Fast Track Recall
Program.
Also at the outset, Mr. Chairman, I would observe and ask the
Commission and this Subcommittee to consider the fact that we have
witnessed a somewhat concerning, and increasingly prevalent trend at
the CPSC to look first, second and last to retailers for responsibility
under Section 15 of the Consumer Product Safety Act with regard to
reporting and recall obligations. This trend has gone largely
unexamined by Congress, and I would urge that this committee ask
whether the CPSC is forgoing the tools provided under the law in favor
of convenience for the agency. NRF and its members understand and
embrace their obligations under the law, but others in the supply
chain, especially the manufacturers of the products, may have better
and more immediate knowledge of the products and possible safety
issues. Those companies should also be examined for their obligations
under the law.
Proposed Voluntary Recall Rule
With regard to the Voluntary Recall Rule, NRF submitted detailed
public comments on the Notice of Proposed Rulemaking in February 2014.
In those comments, we set forth in detail how we believe that the
proposal as currently written could negatively impact the CPSC's
critical safety mission by making it significantly more difficult for
retailers and other recalling firms to undertake voluntary recalls
jointly with the agency.
The Subcommittee should observe that the CPSC does have the clear
authority to seek to force a company to recall a product, should that
become necessary, and the agency has exercised this power on occasion.
However, the current voluntary recall rule assumes, as it should, that
that the vast majority of companies fully cooperate with the CPSC in
developing and undertaking product safety recalls. There may be some
disagreement over things like the language of the recall press release
and other, generally minor issues. But NRF members are strongly
motivated to recall products as quickly as possible. Indeed, it is
their best interest to do so.
Unfortunately, a number of provisions of the proposed rule, notably
including one that would make corrective action plans legally binding,
we believe, would not only discourage companies from approaching the
CPSC about a product safety issue that they have identified (and
hundreds do approach the agency every year), but would make voluntary
recall agreements much more legally ``risky'' for firms to undertake.
This might lead to them being resistant to various requests the agency
might make of them in the context of a recall. This could, therefore,
not only reduce the number of necessary recalls (at least those
conducted jointly with the CPSC), but it is also highly likely to
unnecessarily drag-out the recall process. I will also note that there
is no legal obligation in the first instance for a company wishing to
undertake a recall to in fact do so with the CPSC (as long as the
reporting obligation is met), so we could well see many more so-called
``unilateral'' recalls, which may not be in the public's best interest.
Retailer Reporting Program
Let me now discuss the Retailer Reporting Program. NRF fully
supports this important program. It has resulted in a significant
number of necessary recalls that might not otherwise have occurred. It
also provides the agency with an excellent early warning system to
identify and respond to new and emerging product safety hazards and
patterns. Indeed, it is the very model of a government-private
partnership program that is a win-win for the agency, companies and
consumers alike. We understand that the CPSC is actively reviewing the
program and potential options for changing it. But after several years
of review, we are still waiting to hear when those changes might occur.
We recently communicated with the Commissioners, asking not only
for that progress to move forward but perhaps, more importantly,
calling into question the position of the agency's General Counsel,
without apparent explanation, that participation in the Retailer
Reporting Program does not and can never constitute compliance with a
company's reporting obligations under Section 15(b) of the Consumer
Product Safety Act. If in fact this is the position of the General
Counsel and the Commission as a whole, then we not only question the
factual accuracy of that statement but its legal and logical soundness.
This has not been an issue in the program previously and we wonder why
it has now become one, and this may dissuade potential participants in
the program from ever considering it in the future.
We would like to see the program opened to new participants and
believe the agency should work with current participants on addressing
any issues of concern or ways to enhance the program to benefit
consumers, the agency and the retail industry.
Fast Track Program
Another great example of a program that has resulted in several
hundred recalls, and much faster than they would have otherwise, is the
Fast Track Program, which as you have heard encourages companies to
undertake recalls within 20 days or less of initiating the process. In
exchange, the CPSC does not make a ``preliminary determination'' for
the product--essentially a finding that a product is in fact defective
and that the defect poses a substantial product hazard. Such a finding
can have negative legal and other repercussions for recalling companies
and is not necessary to initiate a recall of potentially dangerous
products.
Unfortunately, anecdotal reports continue to emerge that the agency
is now, in various ways, disfavoring the Fast Track Program. This
appears in part to be motivated by a desire to seek incriminating
information about companies' potential failure to have met their 15(b)
reporting obligation. While NRF certainly does not question the right
and duty of the CPSC to appropriately investigate companies for this
and other violations of the law, in our view this should not come at
the cost of fewer and slower product safety recalls.
While we wanted to highlight a few of our concerns on these issues,
NRF and its members again want to emphasize that the retail industry is
continuously seeking ways to partner with the agency in order to
improve the overall recall process, and we look forward to continuing
to do so. And in this regard we continue to believe that an advisory
committee comprised of all stakeholders would benefit the agency and
better enable it to address these and future issues.
Thank you again Mr. Chairman and Members of the Subcommittee. I
would be happy to address any questions you have.
Senator Moran. Mr. Gold, thank you.
Ms. Falvey?
STATEMENT OF CHERYL A. FALVEY, PARTNER,
CROWELL & MORING LLP; FORMER GENERAL COUNSEL,
CONSUMER PRODUCT SAFETY COMMISSION
Ms. Falvey. Thank you, Chairman Moran, for the opportunity
to address product safety, which has been a driving force in my
career for almost 30 years.
My written testimony really focuses on the law, because I
served as a General Counsel of the Consumer Product Safety
Commission from 2008 to 2012 when the CPSIA was being
implemented. And, in particular, I was involved in supervising
the Mandatory Recall Rule that was adopted during that time
period.
While my written testimony gets very detailed into the
statute and the regulations, I thought I would take this
opportunity to step out of that and make some higher-level
points.
We are at a really exciting time when it comes to product
safety and harnessing big data, to use that to spot emerging
hazards faster. More data in a data-driven world is what I
heard the first panel talking about today. It enables the
agency to pinpoint the problem in a global supply chain at the
component or even factory level and then turn around and allow
us to contact consumers who purchase the product directly.
So technology and data can help with the whole gamut of
issues that your hearing has covered today, from the timely
identification of hazards to recall effectiveness.
And with statutes and regulations that were written years
before the technology advances that will take us into this new
era of product safety, it is important that we step back and
make sure that with each regulatory move we are positioning
ourselves to take advantage of that technology to make
consumers safer and businesses more efficient.
At the end of the day, the regulated community, the
manufacturers and retailers, are in business to serve and
retain customers. And offering safe and compliant products is
of paramount importance in the pursuit of those goals. Safety
is nonpartisan, and it is good business.
So the entire statutory scheme depends on the engagement of
the regulated community in monitoring their products to ensure
the timely and accurate self-reporting to the agency of
potential serious issues. The lessons of product safety right
now, whether it is cars, food, or consumer products, it demands
early and transparent engagement with the Commissioner and the
Commission and identification of the hazards in a fast way.
And both the Fast Track Program and the Retailer Reporting
Program that we have been talking about today enable the
regulated community to work closely with the agency to meet
those goals. CPSC thrives on remedying hazards fast and getting
consumers protected early. And that is really what the Fast
Track Program was all about.
Most of the participants comply with the regulations and
their requirements, and the Commission has options beyond the
voluntary corrective action plan if they do not. They can
impose a legally binding consent order in a voluntary
settlement by regulations. The regulations explain how to do
that and to do that when there is a lack of full confidence
that the company will comply with the corrective action plan.
And they give criteria as to when the staff should use the
voluntary process versus the consent decree process.
I will spend a minute on the issue with regard to the
Retailer Reporting Program. It is used by the participants as
part of their overall corporate compliance program. They are
investing significant resources in creating data that is
scalable, unified, and usable for the commission. They work
closely with the staff to develop the search terms and to limit
their reports to the matters that really are the heart of the
reporting obligation under section 15(b).
The collection and use of that data across retailers with
robust sharing will enable the CPSC to aggregate that data. And
as the import process becomes more regulated by technology, as
well, the potential exists to link the retail information with
the information that we are getting at the ports and use that
technology to look at the entire lifecycle of a product.
And while that may be an aspirational goal for the agency
and may require additional funds and certainly notice and
comment rulemaking, the use of that really might get at the
return on investment the agency is looking for and help
modernize how the Commission spots emerging hazards and stops
those products at the ports rather than focusing on the store
shelves, which is a theme that was coming as we went through
the Consumer Product Safety Improvement Act.
Thank you very much, and I am happy to answer questions.
[The prepared statement of Ms. Falvey follows:]
Prepared Statement of Cheryl A. Falvey, Partner, Crowell & Moring LLP;
former General Counsel, Consumer Product Safety Commission
Chairman Moran, Ranking Member Blumenthal, distinguished members of
the Subcommittee, thank you for the opportunity to appear before you
today to discuss product safety and the recall process at the U.S.
Consumer Product Safety Commission (CPSC) in connection with your
oversight hearing. I am honored to speak on product safety, an issue
that has been a passion and driving force throughout my career. I am
attorney in private practice here in the District of Columbia and
served as the general counsel of the CPSC from 2008 to 2012 during the
implementation of the Consumer Product Safety Improvement Act (CPSIA).
During my time at the CPSC, I supervised the development of the
mandatory recall rule required by Congress to be promulgated as part of
the CPSIA. I also supervised the lawyers serving the Office of
Compliance and Field Investigations in handling hundreds of recalls a
year and addressing emerging risks and recall effectiveness.
I. Voluntary Recall Statutory and Regulatory Framework
The CPSC operates under a statutory scheme that depends upon
reporting by manufacturers, distributors and retailers. CPSC is not a
preapproval agency. Its authorizing statute, the Consumer Product
Safety Act, requires that manufacturers, distributors and retailers
report both violations of the statute and regulatory requirements as
well as defects that present a substantial product hazard or
unreasonable risk of serious injury or death. The entire statutory
construct depends on an engaged regulated community that monitors
products to ensure timely and accurate self-reporting to the agency.
Determining whether a product has a defect that presents a
substantial product hazard can be a very time consuming and difficult
process. It depends on whether the product exhibits a pattern of
defect, the number of defective products distributed in commerce,
severity of the risk, likelihood of injury among other things. The
challenge of determining whether a safety risk exists can be
particularly difficult for a retailer or distributor that is not as
close to the design and development of the product as the manufacturer.
Nearly all recalls conducted with the CPSC are voluntary, with most
firms agreeing to cooperate with the Commission to recall and address
potential product hazards. Indeed, under Democrat Ann Brown's
chairmanship of the CPSC in 1995, the Commission streamlined the
process for voluntary engagement on recalls with the CPSC by announcing
the Fast Track recall process. As former Chairman Brown explained in a
letter to the United States House of Representatives in May of 2014,
the CPSC's engineering review of whether a product contained a defect
that created a substantial product hazard could take months to perform
monopolizing critical agency resources. Streamlining the program to
allow for manufacturers, distributors and retailers to conduct
voluntary recalls without a CPSC engineering determination allows for
consumers to get a remedy faster--whether a refund, repair, or enhanced
instructional information. The CPSC's Fast Track program did just that
and won an innovation in government award. The twenty (20) day process
for negotiating a recall under the Fast Track program provides
incentives to companies to cooperate with the government without fear
of an adverse determination regarding the safety of their product.
II. The Voluntary Recall Rule
As originally described on the Commission regulatory agenda, the
proposed voluntary recall rule would have taken the requirements for
mandatory recall notices, a rule promulgated as required by Congress in
the CPSIA, and expanded those requirements to voluntary recall notices.
The CPSC has individually negotiated voluntary recalls for over 30
years and, in doing so, has built trust with firms and created common
practices that have been incorporated into the mandatory recall notices
rule. Similar guidance has already been provided by the Commission in
its comprehensive Recall Handbook.
The proposed rule was amended during the Commission's deliberations
to eliminate the option to engage in a voluntary recall without
entering into a legally binding agreement. It would also allow the
Commission to impose compliance program requirements on a firm seeking
a voluntary recall as part of a now legally binding corrective action
plan governing the conduct of the recall. I will address each of those
issues.
A. Legally Binding Corrective Action Plans
Under the current regulations, voluntary corrective action plans
expressly are not legally binding. 16 CFR Sec. 1115.20(a). The
Commission has preserved the option to impose a legally binding consent
order in voluntary settlement with the CPSC. 16 CFR Sec. 1115.20(b).
The original voluntary recall rule promulgated in 1975 distinguished
between the voluntary, non-binding corrective action plan and the
binding consent agreement, explaining that the consent agreement should
only be used where there was ``a lack of full confidence that the
company would comply with a non-binding Corrective Action Plan'' based
on the staff's prior experience with the firm. 40 Fed. Reg. 30,938
(July 24, 1975). The non-binding corrective action plan was established
specifically ``as an expeditious means of protecting the public from a
substantial product hazard,'' in contrast to having to take time to go
through the process of securing a consent order. Id. at 30,937; see 16
CFR Sec. 1115.20(b). The regulations were revised in 1977 to include
criteria for the staff to use in determining whether it is appropriate
to pursue a non-binding corrective action plan or consent agreement. 42
Fed. Reg. 46,721 (Sept. 16, 1977); see 16 CFR Sec. 115.20(a)(2).
During my tenure as the general counsel, in 2010, the CPSC went
even further to exercise its power to seek a legally binding corrective
action in a court ordered consent decree where a firm repeatedly failed
to engage voluntarily to come into compliance with its statutory and
regulatory obligations. The consent decree ordered a mandatory
compliance program to be established, including independent oversight
by a ``Product Safety Coordinator'' approved by the CPSC to monitor for
product safety violations and compliance with reporting obligations.
Thus, the Commission has an array of options at its disposal to use
with firms depending on the circumstances. The Commission's proposal to
make all voluntary corrective action plans legally binding would
represent a clear and dramatic turnabout: ``once a firm voluntarily
agrees to undertake a corrective action plan, the firm is legally bound
to fulfill the terms of the agreement.'' 78 Fed. Reg. 69, 795, 69, 799.
This change addresses concerns about ``recalcitrant firm[s]'' that
``have deliberately and unnecessarily delayed the timely implementation
of the provisions of their corrective action plans.'' 78 Fed. Reg. 69,
795. The CPSC already has a consent decree option to address
recalcitrant firms making this change unnecessary.
B. Negotiating Compliance Program Terms in the Context of a Voluntary
Recall
The voluntary recall rule proposal also subjects any firm engaging
with the CPSC to the prospect of a legally mandated compliance program
being imposed upon them during the course of a voluntary recall. The
consequences of this proposal include:
Imposing potentially significant delay in the voluntary
recall process so that terms can be negotiated, vetted, and
finalized, thereby gutting the streamlining benefits of the
Fast Track program;
Shifting CPSC resources away from getting unsafe products
out of the hands of consumers toward negotiating and enforcing
corrective action plan agreements; and
Causing firms to reevaluate their cooperation with the
Commission given----
the potential for future litigation with the CPSC over
enforcement of corrective action agreements;
the need for publicly traded companies to approve the
terms of a binding agreement and ensure compliance with
such an agreement to meet duties owned to their
shareholders; and
the effect corrective action plan agreements might
have if introduced as evidence in product liability
litigation.
To encumber the voluntary recall process with the negotiation of
such compliance program terms would undermine the expedience of the
Fast Track program. As Ann Brown stated in her May 2015 letter, this
has the potential to delay ``an otherwise effective recall weeks or
even months due to haggling over legalities.'' The CPSC has
acknowledged the same from the start, stating in the preamble to its
reporting rule, ``[b]y offering and accepting a corrective action plan,
the subject firm and the Commission save considerable time and effort
that would otherwise be devoted to negotiating the more complex details
of and completing the paperwork necessary for a consent order
agreement. As a result, the hazard is remedied faster, and the consumer
is protected earlier.'' 43 Fed. Reg 34988, 34996 (August 7, 1978)
(emphasis added). The CPSC went on to note that most firms comply with
the corrective action plan and ``for those few subject firms which do
not'' the Commission has the options of pursuing a consent decree or
adjudicative action. Id. The same remains true today.
The binding corrective action plan proposed in the voluntary recall
rule may prove tantamount to extracting a consent decree without
jumping through the protections and formalities built into the consent
decree process. For example, Commission staff would no longer have to
provide the firm with a draft complaint outlining its case. See 16 CFR
Sec. 1115.20(b). There would be no requirement that the corrective
action plan be published in the Federal Register for comment or that
the Commission formally consider any objections it received. Id. at
Sec. 1115.20(b)(4), (5). The CPSC would not settle its charges against
the firm, which is mandatory for a consent order. Id. at
Sec. 1115.20(b)(1)(iii).
While there is certainly a time and place for imposing compliance
program terms, the consent decree process already allows for such
negotiation by the CPSC, and is the more appropriate place for that to
occur. Without describing the legal authority for imposing compliance
terms outside a consent decree process, the voluntary recall rule
proposal describes that imposing a compliance program may be
appropriate where there have been ``[m]ultiple previous recalls,'' a
failure to timely report under Section 15(b), or actual ``[e]vidence of
insufficient or ineffectual procedures and controls . . .,'' though is
clear that ``[t]he Commission always retains broad discretion to seek a
voluntary compliance program agreement.'' One of the issues with this
formulation is that the number of voluntary recalls is not necessarily
indicative of a need for a compliance program. There is a not-so-subtle
implication that recalls reflect a failure in the existing corporate
compliance program when in fact the recall evidences the success of a
compliance program that works exactly as it should--one designed to
catch and act upon product issues before they become a problem.
III. The Retailer Reporting Program
Through the retailer reporting program, firms have voluntarily
engaged in the very compliance activities the Commission seeks to
impose in the voluntary recall rule. The uncertainty as to the status
of the retailer reporting program and how it relates to the current
expectations of the CPSC with regard to reporting merits examination.
The retailer reporting program is used by many of the participants
as part of their overall corporate compliance program to identify
emerging risks and ensure regulatory compliance. The program
unquestionably serves the interest of the health and safety of the
consumer by promoting transparent data sharing and analysis as well as
early engagement with the CPSC. Program participants work with the CPSC
to share safety related complaint information, using established
trigger words to triage and escalate those complaints likely to raise
safety concerns. Routine reporting through the program encourages
frequent engagement with the CPSC on safety related concerns and
ensures timely notification of potential defects.
The retailer reporting program follows CPSC policy encouraging that
subject firms not delay reporting in order to determine to a certainty
the existence of a reportable noncompliance, defect or unreasonable
risk and the CPSC's statements that an ``obligation to report may arise
when a subject firm receives the first information regarding a
potential hazard, noncompliance or risk.'' 57 Fed. Reg. 34222. It also
meets the CPSC's guidance to err on the side of over-reporting and when
in doubt, to report. 49 Fed. Reg. 13820 (April 6, 1984).
Program participants have worked closely with the CPSC staff to
develop search terms and processes to limit their reports to those
complaints that may reflect potential hazards and defects. They devote
substantial resources to collecting and sharing the data with the CPSC
in a format compatible with the CPSC's data requirements. The CPSC
benefits from obtaining this data from the retailers in a scalable,
unified and usable format based upon agreed upon search terms. The
Commission has always made reporting easier for a ``retailer of a
product who is neither a manufacturer or importer of that product, and
their reporting obligation is somewhat more streamlined than the
expectation for a manufacturer or importer. 16 CFR Sec. 1115.13 (b),
see, e.g., 49 Fed. Reg. 13820. This is because retailers tend to less
knowledge of design and manufacturing issues. Yet they can have more
visibility into consumer feedback and complaints with the product after
sale.
With robust data sharing from all retailers, the CPSC would be in a
position to aggregate data across retailers to spot emerging trends.
The collection and use of this data is consistent with today's focus on
a more proactive safety system. As the import process becomes more
automated in the coming years, the potential exists for retail
complaint data about a product to be linked to import data providing
the agency the opportunity to use technology as a window into the
entire product lifecycle here in the United States. While perhaps still
an aspirational goal for the agency (and certainly requiring notice and
comment to provide for due process protections), the use of the data in
this way could help modernize how the CPSC spots emerging hazards and
stops hazardous products at the ports.
I hope these comments on product safety and the recall process have
been useful. Thank you again for the opportunity to testify today, and
I will be happy to answer any questions.
Senator Moran. Thank you. Thank you for sharing your
expertise.
Ms. Cowles?
STATEMENT OF NANCY A. COWLES, EXECUTIVE DIRECTOR, KIDS IN
DANGER (KID)
Ms. Cowles. Thank you. Thank you, Chairman Moran, for
allowing us to testify here today.
KID, as you may know, is a nonprofit organization. We were
founded in 1998 by two University of Chicago professors whose
son, Danny, was killed in a recalled portable crib at
childcare.
Today, I will review the KID research that we have already
heard a little bit about on children's product recalls and
address a voluntary recall rule proposed by CPSC, product
registrations, and steps we can all take to make recalls more
effective.
Stronger standards, port surveillance, testing
requirements, and tools like saferproducts.gov have reduced
recalls. We now need to address the gap between recalling a
product and getting it out of consumers' homes.
In February, KID released a report on children's product
recalls. The findings are promising for safety. Injuries
reported from products prior to recall was the lowest in over a
decade. Looking at the 10 years of data, we can see that when a
strong standard is adopted, such as those required by Danny's
Law, recalls of that product class decline.
Eighty-nine percent of young parents are on social media,
yet our research found that only 23 percent of the companies
who are on Facebook used Facebook for posting on their recalls.
We also looked at the monthly corrective action report
data. It shows products that were with the manufacturers,
distributors, or retailers were retrieved, but only 4 percent
of recalled products already in consumer hands were accounted
for.
This summer, because of our concern over the millions of
recalled products still out in homes and childcare, we began a
research project with the Illinois Institute of Technology's
Institute of Design. Graduate students conducted extensive
interviews with stakeholders, qualitative research with
parents, and literature review on the topic and are building a
knowledge base that will be used to create an action plan to
improve recall outcomes. We look forward to updating you on the
results of that research later this year.
KID supports the provisions of the CPSC proposed rule to
set forth principles and guidelines for corrective action plans
and believe it will improve recall effectiveness. The CPSC's
main tool to protect consumers is the corrective action plan or
recall.
As our research has shown, the majority of recalled
products remain unaccounted for, and some cause death and
injury years later, like the crib that killed Danny. So it
makes sense to establish a set of minimum requirements for
voluntary recalls, allowing CPSC to use its years of experience
in developing corrective action plans to make them more
effective. It will eliminate delays that currently occur when
details that should not be negotiable take time to negotiate
and will allow the CPSC and recalling firms to use tools such
as social media more effectively.
I found it surprising that companies routinely sign
agreements with a government agency that they are then not held
responsible for fulfilling. Companies should be subject to a
binding agreement when they agree to a compliance plan.
Too often, a lack of internal controls or systems leads to
potentially unsafe products that must be recalled. Especially
in cases of repeat offenders, we support the implementation of
an effective compliance program in the corrective action plan.
We support the voluntary recall notice principles. In fact,
we recommend that CPSC consider broadening its own use of
social media to convey recall notices. Consumers trust and
respect the Consumer Product Safety Commission, and its notice
postings on Twitter are shared widely. Similar action on
Facebook and other social media sites would increase the
likelihood a consumer will learn of a recall and take action.
The CPSIA requires that infant and toddler durable products
include a product registration card in their packaging and a
means to register online. This allows manufacturers to contact
consumers directly when there is a recall. What we need now is
some reporting on how this is working. Companies should be
encouraged to share results so CPSC and others can work to make
the system stronger.
It is not enough to do a recall if the product remains in
consumer homes. We do not stop looking for mines in a minefield
simply because no one has stepped on it yet. We keeping looking
to avoid that next mine going off. The same should be true of
recalls.
We recommend that Congress request from CPSC an annual
report of the same monthly report number that we use in our
report. We believe that the sunshine that that will shine on
this problem of recall effectiveness will, by itself, improve
recall efforts.
The best way to reach owners of recalled products is to do
direct notification, assisted by product registration, social
media, and reverse marketing. To echo Chairman Kaye, these
companies know exactly how to reach consumers when they are
selling a product. They should use those same means to get
those unsafe products out of their homes.
I did run out of time, but I had one more thing I want in
the record, and that is that the Cubs won last night.
[Laughter.]
[The prepared statement of Ms. Cowles follows:]
Prepared Statement of Nancy A. Cowles, Executive Director,
Kids In Danger (KID)
Thank you, Chairman Moran, Ranking Member Blumenthal and
Subcommittee members for this opportunity to testify before you today
regarding the Consumer Product Safety Commission and recall
effectiveness.
KID is a nonprofit organization dedicated to protecting children by
improving children's product safety. The organization was founded in
1998 by Linda Ginzel and Boaz Keysar, after the death of their son
Danny Keysar in a recalled portable crib at a licensed child care home.
A portion of the Consumer Product Safety Improvement Act (CPSIA) is
named after Danny. As Danny's mother said when she testified before a
House Subcommittee more than a decade ago, ``improved children's
product safety will be Danny's legacy.''
Today's hearing is on consumer product safety and the recall
process. I will review research conducted by KID on children's product
recalls over the last decade. This research addresses not only the
types of products recalled, but also the participation rate and the
efforts made by companies to reach consumers. I will address the
voluntary recall and corrective action rule proposed by CPSC and
product registration. I will also talk about steps we can all take to
make recalls more effective.
As I mentioned, a dangerous crib that had been recalled five years
before his death killed Danny. He was the fifth child to die in that
particular product--the PlaySkool Travel-Lite Crib--another died a few
months later. There were fewer than 12,000 of these cribs in
circulation. However, the company sold their patent for the deadly
rotating side rail to four other companies. One million five hundred
thousand portable cribs were made with that deadly design. About 1.2
million of them remain unaccounted for. There have been 19 deaths in
total, the most recent we are aware of took place in 2007. The toll of
recalled products left in homes and childcare facilities is too high
for our families to bear.
From the beginning, KID worked to reach parents with information
about recalls. No one in the licensed home where Danny spent his days
had heard of the recall--not even the state inspector who visited the
facility just days before Danny's death. Recalled products don't look
dangerous or broken. It isn't until the rail rotates unexpectedly under
the weight of a waking child standing up and collapses around his neck
that the flaw becomes apparent--at least to parents and caregivers. So
KID began by focusing on how to reach those using the products with the
recall news. But new products were recalled all the time. We realized
the danger in the crib wasn't that it was recalled, but that it was
unsafe from the day it was made. Therefore, KID spent many years
working to improve children's product safety, making recalls less
common.
Stronger standards, port surveillance and testing requirements have
reduced recalls and improved safety. We now need to keep strengthening
that safety net and address the gap between recalling a product and
getting it out of our homes.
KID's Research on Children's Product Recalls
In February, KID released A Decade of Data: An In-depth Look at
2014 and a Ten-Year Retrospective on Children's Product Recalls.\1\ The
report reviews recall data from the U.S. Consumer Product Safety
Commission (CPSC) for 2014 as well as previous years. The findings are
promising for safety. Children's product recalls were only 25 percent
of the recalls issued by CPSC--down from a high of well over half the
recalls. Injuries reported from products prior to recall was the lowest
since we started studying recall rates in 2001. Seventy-five children's
products were recalled in 2014--so about 1.5 children's product recalls
a week--down from three a week some past years. When we looked at 10
years of data, we saw that when a strong standard is adopted, such as
those required by Danny's Law, recalls of that product class decline--
keeping us all safer.
---------------------------------------------------------------------------
\1\ http://www.kidsindanger.org/docs/research/
2015_KID_Recall_Report.pdf
---------------------------------------------------------------------------
However, there were still 17 million individual children's products
recalled in 2014. In addition, our research shows most of those are
likely to remain in consumer hands without fixing the hazard or
replacing it with a safer product.
In addition to looking at the recalls, we looked at what we could
see publically about company activity to spread the word to consumers.
Because of Illinois law and CPSC urging, most companies now post
recalls on their websites. A consumer who was aware of the recall can
usually easily find the information on line and participate. However,
not many people spend their days scanning child product websites to see
if there is a new recall. After direct notification--e-mail, texts,
mail or phone calls, social media is the best way to reach directly to
consumers.
It is very likely that many followers of companies on Facebook and
Twitter have purchased a product from the company--which is why it is a
great resource for getting the news out. According to Dana Points,
editor-in-chief of Parent's Magazine, 89 percent of young mothers are
on social media. Yet, our research found that for children's products
recalled in 2014, 76 percent of companies had a Facebook account but
only 13 (23 percent of those with an account) used it for posting a
recall notice. Forty-nine percent of companies had a Twitter account
and 32 percent of those used it to post a recall notice (12). There is
a lot of room for growth here.
Then, with the perspective a year gives, we looked at the available
data on how successful recalls are. You would be surprised how hard
this information is to find. We requested, through the Freedom of
Information Act, the monthly corrective action reports required for
corrective action plans or recalls. First, let me say that we did not
get information on 40 percent of the 2013 children's product recalls.
Either manufacturers had not filed the forms, CPSC could not find the
files where they should be or companies did not follow up on the FOIA
request and KID does not have the budget to sue them to comply.
Therefore, our database is 61 Monthly Progress Reports for Corrective
Action Plans and Incident Updates.
Products that were with the manufacturer, their distributors or
retailers at the time of recall are likely to be accounted for in most
cases. But for those with consumers? Only 4 percent of them were
accounted for through this reporting. Some recalls were more successful
than others were and some of the forms were completed with
mathematically impossible numbers--fixing more products than were made
for instance. Nevertheless, even if this number is lower than the
actual, it still shows a dismal problem.
KID has done other research in this area. We did focus group
research with parents, grandparents and childcare providers. All wanted
recall information that was easy to understand and invited action. In
particular, they were looking first for a brand and product name with a
picture to answer the question--do I have this product? If yes, they
want to know specifics they can check--model number, years sold and
where it was sold to confirm they have the recalled item and then why
it is being recalled and what action is expected. They expect companies
to find them to alert them.
In addition, this summer, because of our concern over the millions
of recalled products still out in homes and childcare, we began a
research project with the Illinois Institute of Technology's Institute
of Design. Graduate students in design theory conducted extensive
interviews with stakeholders, qualitative research with parents and
literature review on the topic and are building a knowledge base that
will be used to create an action plan for all stakeholders to improve
recall outcomes. We look forward to updating you on the results of that
research later this year.
Voluntary Recall Notices and Corrective Action Plans
In late 2013, the U.S. Consumer Product Safety Commission proposed
an interpretive rule to set forth principles and guidelines for the
content and form of voluntary recall notices that firms provide as part
of corrective action plans under Section 15 of the Consumer Product
Safety Act (CPSA). It has not been adopted. The rule is similar to what
is required for mandatory recalls in CPSIA. The existing regulations
provide for notice to the public of the corrective action that a firm
agrees to undertake, but do not provide any guidance regarding the
information that should be included in a recall notice issued as part
of a corrective action plan agreement.
The proposed rule would set forth the Commission's expectations for
voluntary remedial actions and recall notices, bearing in mind that
certain elements of product recalls vary and that each notice should be
tailored appropriately. The proposed rule also provides that corrective
action plans may include compliance program-related requirements when
appropriate. In addition, the proposed rule would make the corrective
action plan agreed to by CPSC and the recalling party legally binding.
KID supports the provisions of this proposed rule and believe it will
help to get information out to consumers.
The CPSC's main tool to protect consumers is the corrective action
plan or recall. It is through these efforts that unsafe products are
identified to the public with the goal of repairing, replacing, or
removing them from use to avoid the hazard posed by the product. As our
research has shown, the majority of recalled products remain
unaccounted for with most of the products presumably still in use.
Unlike food recalls, where the product has often been consumed prior to
the recall, consumer products remain in use for years after a recall,
as deaths \2\ in a decades-old hope chest that was recalled \3\ in 1996
illustrate. Or the 2007 death of a little boy in a crib of the same
design that killed Danny Keysar in 1998 and was recalled 11 years
earlier. More information presented clearly to consumers at the time of
the recall, additional ways to deliver recall information, and a
legally binding corrective action plan would reduce the number of
dangerous products that remain in consumer hands after recall.
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\2\ http://www.nbcnews.com/health/child-deaths-are-tragic-reminder-
products-pose-risk-long-after-2D11939815.
\3\ http://www.cpsc.gov/en/Recalls/1996/CPSC-The-Lane-Furniture-
Company-Announce-Recall-for-In-Home-Replacement-of-Locks-on-Cedar-
Chests/
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It makes sense to establish a set of minimum requirements for
voluntary recalls, just as the CPSIA did for mandatory recalls. This
would allow the CPSC to use its years of experience in developing
corrective action plans to make them more effective. It will eliminate
delays that currently occur when details that should not be negotiable
take days, weeks, or months to negotiate, and will allow the CPSC and
recalling firms to more effectively use new tools such as social media
to reach consumers.
KID supports efforts to make corrective action plans legally
binding. In fact, I found it surprising to learn that companies
routinely sign agreements with a government agency that they are not
held responsible for fulfilling. These plans are negotiated and agreed
to by the recalling company, but without legally binding language,
there is no pressure on recalcitrant companies to comply fully. Just as
consumers are subject to binding contracts when they purchase products
and services such as credit cards and Internet service, companies
should be subject to a binding agreement when they agree to a
compliance plan regarding a recalled product.
Without meaningful enforcement authority, the CPSC has been limited
in the ways that it can remove dangerous products from the market and
from use by consumers. Making corrective action plans legally binding
allows the CPSC to take action, as necessary, more promptly and without
additional expense, to see that the plan is actually implemented.
CPSC's has preferred remedies--refunds, replacements or repairs.
The proposed rule would require companies that propose different
remedies to show that those other remedies will be equally successful.
We believe only refunds or replacements should be options in corrective
action plans involving products that have caused death or severe
injury. Leaving it in consumers' hands to repair a faulty, deadly
product can often lead to delayed or poor repairs and additional
injuries, as we saw with immobilization kits for drop-side cribs. In
addition, the CPSC's sanctioned repairs should not leave consumers with
products that don't comply with current safety standards. Such products
could pose risks to consumers. In those instances, replacement or
refund is a more appropriate remedy.
Too often, a lack of internal controls or systems leads to a
potentially unsafe product that must be recalled. By announcing the
recall without fixing the problem that led to it, additional problems
with other products may follow. Especially in cases of repeat
offenders, for those companies with multiple recalls, we support the
implementation of an effective compliance program in the corrective
action plan.
KID supports the Voluntary Recall Notice Principles, which echo
Section 16 CFR 1115.26 for mandatory recalls. In particular, we support
web page posting--viewable when first landing on the page and
additional means such as social media. We would also recommend that the
CPSC consider broadening its own use of social media to convey recall
notices. Consumers trust and respect the CPSC, and its notice postings
on Twitter are usually shared widely. Similar action on Facebook and
other social media sites would increase the likelihood a consumer will
learn of a recall and take action. Such social media use to improve
consumer awareness of safety recalls is not, in our view, in any way
legally limited by Section 6(b) of the CPSA, since it includes only
publically available information. CPSC can put additional controls on
its Facebook page, as many nonprofits and other entities do, to
restrict postings from others there.
The proposed changes also covered the actual recall notice. These
notices should be written and disseminated in such a way that consumers
will be motivated to take action and that other entities such as the
media, nonprofit organizations, retailers and local community officials
will be motivated to share in the dissemination of the information.
These changes will enhance the ability of consumers to quickly and
effectively gather pertinent information from recall notices to
ascertain: whether they have the product in question; what the safety
risk is; how severe the risk is; and what they should do. In 2013, KID
conducted focus group research with parents, childcare providers, and
grandparents. The research showed that being able to make these
determinations quickly is an important factor in how likely someone is
to take the information seriously and take actions to remove the
product from their home.
KID strongly supports the proposed rule and guidelines. These
actions will strengthen recall effectiveness and will enable the use of
additional resources to communicate the vital safety information in
recall notices to the consumers using the products.
Product Registration for Juvenile Products
The CPSIA also requires that infant and toddler durable products,
such as cribs, strollers and high chairs, include a product
registration card in their packaging and provide an opportunity to
register online. This gives manufacturers the information necessary to
directly contact consumers in the event of a recall or other product
safety issue. Too many consumers never hear about a recall of a product
that they have in their home and as a result continue to use recalled
products. Today, most manufacturers have both online registration sites
and include the cards. KID has evaluated 157 manufacturer websites and
found that almost all have online sites that consumers can use to
register infant durable products. What we need now is some reporting on
how this is working. What percentage of products are registered? Does
it improve recall participation? What is being done to encourage
consumers to participate? Companies should be encouraged to share
results so CPSC and others can work to make the system stronger. Again,
from her testimony in 2004, Linda Ginzel stated that she firmly
believes that her beloved son Danny would be alive today if the
Playskool Travel Lite had come with this simple registration card.
Conclusion
CPSC is a very different agency from the 1998 agency that struggled
to get the word out on recalls using limited tools and funds. CPSC
staff uses all the tools at their disposal to work with companies and
consumer groups to get dangerous products off store shelves, off online
sites and out of our homes and childcare. However, with abysmal recall
participation rates, more must be done.
It is not enough to do a recall if the product remains in homes and
in use. We do not stop looking for mines in a minefield because no one
has stepped on it yet. We keep looking to avoid that next mine going
off. The same should be true of recalls. We need to set goals for
successful recalls and require additional action if the number reached
stay below that goal.
Sometimes a little sunshine helps move progress along. What if
Congress requested an annual report from CPSC of those same monthly
report numbers KID uses in our report? We believe the light that sheds
on recalls would improve the record keeping and the recall efforts.
CPSC has the information--it is a low cost effort to help ensure once
companies have recalled a product it does not remain in use.
We believe the best way to reach owners of recalled products is to
do direct notification, assisted by product registration, social media
and reverse marketing in cases where it is warranted. These companies
know exactly how to reach consumers to sell products. They should use
those same methods to reach consumers to remove dangerous products from
their homes. A recall announcement should not be the end of the
responsibility of the company.
We can all do our part to educate parents and caregivers on recalls
and the importance to stay informed and take action. However, the CPSC
and companies must take the first steps to improve the chances a
consumer will learn of a recall on their product and will be willing to
take action.
Senator Moran. We will allow that to be stated as long as
we can at least talk about the Royals, as well.
[Laughter.]
Senator Moran. Thank you all very much for your testimony.
Ms. Cowles, let me start with you. I want to give you a
chance to tell me--because you are the one at the table, I
think, that supports the Voluntary Recall Rule, and I want to
explore that with you.
Tell me about the Fast Track Program. Do you think it is
not working? Working?
Ms. Cowles. Well, the Fast Track Program, like much at
CPSC, is secret from those of us on the outside. So I can't----
Senator Moran. You don't have--all right.
Ms. Cowles. I have no information. But I would say that, if
it is as stated here, you know, that it allows companies to
come ready to do a recall when they find a defect in their
product, I don't think there is anything in this rule that
would stop them from doing that.
Senator Moran. And do you agree with everything in the rule
or just parts of it?
Ms. Cowles. What I agree with are efforts by the Consumer
Product Safety Commission to improve the abysmal rates that we
are seeing on recall effectiveness. I think, for instance,
again, things like using social media, putting the recall on
the front of your website so that people can see it, telling
consumers there is a defect.
I mean, we heard a lot about that that is going to delay.
``If we have to say there is a problem with our product, we
don't want to do that.'' That is going to drive down recalls.
If you tell consumers, ``We are recalling this, but we don't
think anything is wrong with it,'' you are not going to get
consumers to take that out of their home.
So I agree with Chairman Kaye that we can still talk about
how the final rule looks, but to say that, for every single
time a company comes forward with a recall, CPSC has to
renegotiate are they going to put it on social media, what is
every word that is going into the recall notice--that those
things are negotiated over and over every single time.
And the thought that, you know, this would bring more
lawyers in. I am not sure how many recalls Cheryl addressed at
the Commission where there was not a lawyer on the other side.
So we hear a lot of doom and gloom when consumer
protections are being talked about. And like with
safeproducts.gov, like with parts of the CPSIA, in the long
run, when those problems are worked out, we end up not seeing
what has been predicted.
Senator Moran. Thank you.
Let me use something you said to expand the conversation to
the rest of the panel.
Tell me about your relationship, interaction, ability to
present information and receive information from the
Commission. Does that exist, and is it satisfactory if it does?
What could be done to make certain that, from the retail
manufacturing as well as the safety advocates, how do we make
certain that the Commission has the willingness and ability to
pay attention to concerns?
Mr. Locker, you were nodding your head, which----
Mr. Locker. Well, I mean, you know, first of all, I just
want to comment on some things that were made--some statements
that Ms. Cowles made.
In my experience and I think in most practitioners'
experience, we would take exception that agreements with the
Commission are routinely ignored. I mean, there is a serious
price to pay, both legally, morally, ethically, and in the
court of public opinion, if you do not follow through on your
obligation to conduct a recall that you voluntarily agreed to.
It simply doesn't happen.
Now, that doesn't mean some disagreements don't arise
occasionally as to, you know, how effective you are being in
the process. But the fact of the matter is, in my experience,
people that agree to a recall commit to it.
Now, to your question about information----
Senator Moran. Mr. Locker, I was only going to say I need
to learn from you to answer the question that I want to answer.
Mr. Locker. Right. I will definitely answer your question
in terms of information.
Right now, the Commission has broad authority to obtain
information from companies and retailers and distributor of a
product and any importer of a product. And they exercise that
authority vigorously, and they get that information.
It used to be that it was more of a two-way street, and,
currently, information tends to be embargoed, considered or
labeled by legal staff as work product at the agency. And
information about a company's product should be available to
that company. So if there is testing information, evaluative
information, issues related to the safety of that product, how
it is being used, those companies should have access to that
information rather than it being kept from them, especially if
it is going to form the basis of a discussion.
Because when you have, as my colleague Commissioner Adler--
or Professor Adler, I call him--would say when negotiating with
the government, it is good to have transparency between the
parties so you can have a meeting of the minds. I am concerned
that right now that information is not as forthcoming as it
should be.
Senator Moran. Any others want to comment on this?
Ms. Falvey, I don't know what your post employment at the
Commission has entailed, but has the Commission changed over
time in its willingness to receive input from those affected by
their decisions?
Ms. Falvey. I think this current commission is very open to
receiving information. I think we heard that, in terms of
working on rules like the ROV rule, the laundry pod work that
has been done, on a voluntary standard.
I think, though, that where the breakdown occurs is between
staff and compliance professionals out in the field working in
the companies when they are trying to talk about a particular
product, a particular recall, a particular issue. And that is
what Mr. Locker was talking about.
The concern about, ``Well, if I share this information with
you, I could not necessarily make out a case against you,''
creates more of a litigious position between the regulated
entity and the commission, when 90 percent or more of what is
going on at the Commission is done on a voluntary basis.
Senator Moran. Thank you.
Let me ask perhaps Mr. Gold or Ms. Falvey, your clients,
they are thinking about section 15 reporting obligations with
the uncertainty that exists today from the Commission on
whether or not the Retailer Reporting Program satisfies that
requirement.
Describe the thought process on the part of a retailer in
weighing their benefits to participate in the program. If there
is uncertainty, what does it do in that regard, and what are
the consequences to the effectiveness of the program?
Mr. Gold. I think that is one of the outstanding issues
that we are trying to identify with the CPSC as they are doing
their review, where are they in that whole process.
I think for retailers and others who want to participate in
the program, they see the benefit of being able to provide that
information. It is a lot of information they provide, as has
been identified. If that information is not protected and does
not meet the goal of meeting your 15(b) requirement, companies
aren't going to want to participate and provide this
information that could then be used against them for something
else.
So it is that protection and it is that willingness to
provide that information with that benefit in place, as well.
Again, we think it is a benefit to both the CPSC and for
the retailers and manufacturers who participate in that
program. Again, as was noted, it has been a 10-year pilot. It
is time we move beyond the pilot phase and really look at how
do we implement this, like other agencies have done with other
programs that are public-private partnerships that help advance
the mission of the agency.
So I think companies are really weighing that, trying to
figure out--they want to do the right thing, but if they are
not going to be guaranteed some of these benefits for some of
these protections, they might not be as willing to participate
and help this process move forward.
Senator Moran. You heard the Chairman's testimony. You
heard the Commissioner's reply or response to the same kind of
question. Would you be any more certain today where we are this
afternoon--it is almost noon. Are you any more certain late
this morning than you were early this morning about what is
happening at the Commission in regard to this issue?
Mr. Gold. No.
Senator Moran. OK.
Mr. Gold. Unfortunately.
And, you know, I think we urge them to wrap up their
decision on this, and I know companies are eagerly waiting to
see whether or not this is a program they want to participate
in. I think they would like to, depending on how this shakes
out. But, you know, we really urge the Commission to continue
with their work on their evaluation of the program.
And hopefully they take into account what the participants
of the program have said have been the benefits for both the
participants and the agency. And we appreciate Commissioner
Buerkle's response on that. You know, we align with her, with
what she said with the value of the program.
Senator Moran. I want to make sure I understand this, but
there are two aspects. One of this is privacy, and one of it is
the certainty of whether or not it satisfies the requirement.
The rule has a consequence on two issues that may cause a
company from refraining from participation. One is what happens
to the information, and, two, whether it satisfies a legal
requirement.
Is that accurate?
Mr. Gold. Yes. I believe so. In talking about the Voluntary
Recall Rule separate from the Retailer Reporting Program, yes,
I believe that is accurate.
Senator Moran. OK.
Mr. Locker?
Mr. Locker. Yes, I just want to comment on the--you know,
there is a third aspect to the Retailer Reporting Rule. These
entities agreed to do this at tremendous expense and built it
into their compliance programs under a supposition that they
were not going to face increased civil liability with the
agency. That was the tradeoff. And they have acted in good
faith on that for many years.
To change those rules now is--fundamentally, there is an
unfair due process issue. And so, you know, many courts have
ruled that sometimes just changing interpretive guidelines that
have been substantively relied upon without going through
adequate rulemaking and without adequate due process should not
occur. And I think that is a third element at play for
retailers.
Senator Moran. Thank you.
Any other comments from any of the witnesses? Anything that
you want to make certain gets into the record before we close
this hearing?
Mr. Locker. I would like to comment on one issue, and that
is--and there has been a lot of discussion both in the first
panel and this panel on what is or isn't an effective recall.
And a lot of that has to do with how you define what a recall
is.
So if you are measuring recall effectiveness by the amount
of product that gets returned, regardless of an evaluation of
the length of useful life of that product, its cost, its shelf
life, how it is used by consumers, the perception of risk on
that product--and I think Commissioner Adler wrote a Law Review
article on that before he became a commissioner--then you are
going to doom yourself, in effect, to failure. You will never
have an agency that achieves an effective recall rate because
the rate itself is inherently going to be low because of the
measurement metrics that you are using.
On the other hand, if you look at this issue, as soon other
agencies do, like the Food and Drug Administration, on
measuring the effectiveness of a recall by how that recall is
communicated, including using social media and whatever media
is available--and that, by the way, I would argue, why
companies that do voluntary recalls with the agency actually
prefer and like the Commission to issue the press release,
because they feel it can get through the marketplace and
fragmented media clutter, and the message gets out there. If
you measure it by that metric, then you would have, actually,
an agency that has, I would argue, very effective rates of
recall effectiveness.
So I think you are informed by how you look at that.
Ms. Cowles. Can I just----
Senator Moran. Yes, ma'am.
Ms. Cowles.--respond to that?
And I agree that there are many--and that is why, as I
said, KID is pulling together experts to look at this issue of
recall effectiveness.
I think, by any measure you use, 4 percent of the products
with consumers participating is an abysmal number. Even if we
doubled, tripled, quadrupled it by using your different
measures to say if people threw them out or whatever, that is
still a lot of products.
And our organization is a testament to it. I deal every day
with parents whose children are killed or injured by recalled
products. So to say that, you know, as long as my company
announces the recall and sends out a social media tweet, we
have done our job--again, you know how to reach us when you are
selling us the product. You should put the same time, effort,
and money into reaching the consumers when you are trying to
retrieve it.
And some of these products had very few injuries or death
before they are recalled, but there are catastrophic injuries.
And, obviously, the death of a child is nothing anyone wants to
face. So to say, ``As long as no other death takes place, we
are going to assume it is a successful recall,'' doesn't
understand the issue of consumer products and how they remain
in the homes.
Senator Moran. Any other comments?
Very good. I thank you for your testimony.
The hearing record will remain open for 2 weeks. During
this time, senators are asked to submit any questions for the
record. Upon receipt, the witnesses are requested to submit
their written answers to the Committee as soon as possible.
Again, thank you for your testimony.
The hearing is concluded.
[Whereupon, at 11:58 a.m., the hearing was adjourned.]
A P P E N D I X
Prepared Statement of Walt A. Sanders, Washington DC Counsel,
Safe Fields Alliance
Chairman Moran and Ranking Member Blumenthal:
My name is Walt Sanders, outside counsel for the Safe Field
Alliance.
The Safe Fields Alliance is a coalition of artificial turf
companies dedicated to educating stakeholders around the safety of
synthetic turf fields using crumb rubber.
Nothing is more important than the safety and health of children,
which is why when making decisions related to children's safety and
health, we have to look at the facts and the science--which in this
case are extremely clear. An overwhelming body of scientific evidence
shows that synthetic turf with crumb rubber infill is safe for children
to play on. We believe that rigorous science and unbiased research is
the best antidote for uncertainty, and we always welcome additional
research.
We are submitting testimony today because of the focus of this
hearing on CPSC enforcement powers and responsibility.
Last week, the NBC Nightly News ran a story that called into
question the safety of crumb rubber, the infill used to support many of
the synthetic turf fields installed throughout the Nation. The NBC
report cited a number of cancer cases brought into the public domain by
a soccer coach from Seattle. The soccer coach claims that crumb rubber
may have caused these cancers.
First and foremost, our sympathy goes out to the cancer patients
and their families featured in the NBC report. Nothing is more
important than the safety and health of children. That is why when
making decisions related to children's safety and health we have to
look at the facts and the science, which in this case are extremely
clear: synthetic turf fields using crumb rubber are safe.
Dozens of scientific studies, including peer-reviewed academic
analyses and Federal and state government reports, have all found no
connection between these fields and cancer or other health issues.
When this issue was first raised in 2008, a number of studies were
commissioned and the overwhelming majority of the scientific community
was satisfied that the results showed no reason for concern. As NBC
notes in its report, ``No research has linked crumb or shredded rubber
to cancer.''
We join the chorus of voices calling on the Environmental
Protection Agency and the Consumer Product Safety Commission to take a
stand. In our view, scientific studies analyzed by independent third-
parties that hold up under peer-review from qualified toxicologists are
the best antidote for uncertainty.
The NBC report cited several chemicals found in crumb rubber as
points of concern. However, this information is misleading without
context and without baselines, especially given that we all eat, drink,
and breathe trace levels of chemicals in our daily lives. Industry
voluntarily ensures the levels of any chemicals in synthetic turf
fields are lower than the Consumer Product Safety Commission's lead and
chemical standards for children's toys and the Environmental Protection
Agency's safe standards for urban and rural soils.
More research can always be done, and we are willing to support any
additional scientific studies in any way we can. However, it should be
pointed out that over a decade of research has not produced a single
published, peer-reviewed study that shows that crumb rubber is unsafe.
The industry voluntarily came to CPSC in 2008 after the State of
New Jersey raised safety issues when the State environmental agency
found traces of lead in turf fields in New Jersey. CPSC staff conducted
testing on samples collected as part of an official investigation which
was initiated by concerns from the State of New Jersey. CPSC staff
concluded that artificial turf was safe for kids to play on, and issued
a press release announcing that result.
CPSC has since then revised their statement to limit it to the
specific issues that they studied (lead in turf) and posted a statement
to that effect on their website as an amendment to the 2008 report.
Since then the turf industry has removed all lead from its turf
fields.
The issue is now the safety of crumb rubber.
The industry has met with the CPSC Commissioners on several
occasions and has shared all of the relevant research related to the
safety of synthetic turf. The industry's position has not changed with
respect to the safety of their products.
Scientific research from academic, Federal and state government
organizations has unequivocally failed to find any link between
synthetic turf and cancer.
We are committed as an industry to the safety of our fields and the
athletes that compete on them--which is why we have encouraged the
rigorous work from third-parties that has taken place over decades to
confirm there, are no negative health effects connected to synthetic
turf. We are always open to sharing this available wealth of research
with concerned individuals or organizations, and are fully confident in
this body of findings.
Regrettably, Chairman Kaye has made public statements saying the
CPSC can no longer stand behind the safety of synthetic turf and crumb
rubber, but has not stated a reason why. This contradictory information
has created confusion in where the CPSC stands with regard to the
safety of synthetic turf and crumb rubber, and has left parents,
coaches, and local communities confused and wanting for information
from the CPSC and other Federal agencies.
In July we met with Chairman Kaye and his staff and updated the
agency on the most recent scientific evidence that crumb rubber does
not pose a health risk. We sent a follow up letter to Chairman Kaye
shortly after the meeting requesting the Commission to work with the
industry and to update the public on the progress of CPSC's work on
this issue. As of this date, we have not received a response to the
letter, which we now submit for the record.
What the industry is asking for from CPSC is the assurance that the
agency will take the necessary steps to analyze the existing scientific
data on whether is a public statement on the progress of its work.
Synthetic turf is a consumer product and CPSC has a responsibility to
the public to act and not leave the public at a loss for direction.
Perhaps this Committee will provide the Commission with some
direction.
Thank you, Mr. Chairman for the opportunity to present this
testimony.
______
July 20, 2015
Hon. Elliot F. Kaye,
Chairman,
U.S. Consumer Product Safety Commission,
Bethesda, MD.
Dear Chairman Kaye,
Thank you very much for giving us the opportunity for our companies
to brief you on recent efforts by the industry to establish the safety
of synthetic turf and crumb rubber. We especially appreciate the
assistance of your staff, Steve McGoogan, and Jonathan Midgett in
helping to arrange the dynamics and success of the webinar/
teleconference format of the meeting. It is unfortunate that time
constraints placed our presentation into overdrive as the science and
studies involved in assessing the safety of synthetic turf and crumb
rubber are highly complex.
Because of the importance of this issue, it is worth reiterating
the salient points of our presentation:
The synthetic turf industry has worked closely with rubber
recyclers who have been voluntarily complying with crumb rubber
standards that are very strict and comply with the California
Human Health Screening Level standard for heavy metals and meet
the EPA de minimus standard for exposure to carcinogenic PAH's.
We insist that the tire recycling industry supply our industry
exclusively with car/light truck tires that are domestically
produced. We welcome feedback on these compliance standards.
Science continues to strongly support the safety of crumb
rubber. Lab testing of crumb rubber toxicity in multiple
continents by academia, toxicologists and independent schools
has shown toxins in crumb rubber to be substantially below any
reasonable base line such as standards developed for urban/
rural soils, children's toys, California Prop 65 standard and
many other similar base lines. We would not use crumb rubber as
an infill for our product if this was not the case.
The types of cancers being linked to crumb rubber by media
reports, primarily adolescent lymphoma and leukemia, have been
researched extensively in the past and there are multiple IARC
publications that show no link between these types of cancers
and overexposure to chemicals of any kind including highly
carcinogenic cigarette smoking. We expect the work being done
by the Association of State and Territorial Health Officials
(ASTHO) will confirm these findings.
What we took away from this meeting is the following:
CPSC staff expressed a willingness to open up a constructive
dialog with our companies to continue to assess existing
studies and emergent science to assess the safety of synthetic
turf and crumb rubber;
Our companies will continue to provide CPSC with new science
and emerging data that will help establish that synthetic turf
and crumb rubber do not pose a health risk to consumers;
We will continue to encourage EPA, CDC, ASTHO and other
entities involved with assessing the safety of turf and crumb
rubber, to provide the agency with findings validating the
safety of turf and crumb rubber;
CPSC expressed a willingness to explore the possibility of
working with the ASTM Subcommittee in its efforts to establish
chemical standards for crumb rubber.
We look forward to building a constructive and ongoing dialog with
the CPSC that will hopefully result in the agency's public commentary
that will dispel misunderstandings and misconceptions about the
benefits of synthetic turf to the general public.
Thank you again for listening to our presentation.
Sincerely,
Darren Gill,
Vice President, Marketing
FieldTurf.
Rom Reddy,
Managing Partner,
Sprinturf.
Heard Smith,
President,
Astroturf.
______
Prepared Statement of Al Garver, President, Synthetic Turf Council
Chairman Moran and Ranking Member Blumenthal:
Recent news reports have focused on a desire for the U.S.
Government to issue updated or additional guidance on the safety of
synthetic turf fields containing crumb rubber infill. The calls come
from parents of children who play on synthetic turf, and are echoed by
officials at the local and state level who continue to inquire about
persistent but unfounded concerns over the safety of crumb rubber
infill.
The Synthetic Turf Council (STC) remains a strong advocate of
science-based research and reporting on the safety of synthetic turf.
We serve as a clearinghouse for the more than 50 studies that have
addressed various concerns on synthetic turf, including those conducted
by local, state and Federal agencies. In each case, and as the Consumer
Product Safety Commission has previously acknowledged, study results
show no elevated health risks associated with synthetic turf or its
components.
We remain supportive of any new or expanded research that addresses
the desire for additional information. However, there have been efforts
in five state legislatures in the past year to impose moratoriums on
synthetic turf while additional research is conducted. Each legislative
committee who has examined the science has determined no such actions
are necessary.
This was the case in California earlier this year when legislation
was introduced that called for a state-sponsored study into the safety
of synthetic turf with crumb rubber infill. That bill originally called
for a moratorium that would prevent schools and municipalities from
making their own informed decisions. California legislators
appropriately took the moratorium off the table, and moved forward with
a three-year $2.85 million study to be conducted by CalRecycle under
guidance by the state's Office of Environmental Health Hazard
Assessment. It will be the most thorough and exhaustive study to date,
but will not impose an unnecessary sanction that ignores the vast
amount of existing research that has never drawn a connection between
synthetic turf and health concerns.
Beyond supporting further research, the STC and its members
routinely assist parents, schools and government agencies with
information that helps them understand how and why synthetic turf
fields are pose no elevated risk compared to regular grass fields.
These synthetic turf systems are tremendously beneficial for thousands
of schools and communities. Recognizing that questions remain, the STC
took further steps to create voluntary testing guidelines for infill
products used in synthetic turf.
In August, 2015, the STC issued testing guidelines based upon
European Standard EN 71-3, which sets exacting limits for various
elements found in children's toys. This standard allows crumb rubber to
be tested in comparison to everyday products used by children, and is a
respected and widely-recognized health and human safety protocol based
upon quantified toxicology test methods.
There are more than 12,000 synthetic turf fields in use across the
United States, including those used by professional sports leagues,
collegiate teams, public and private school systems, parks departments
and municipalities. In many cases, these organizations have assessed
the existing research on field safety and concluded there is no
elevated risk to those who play on them. Further, a number of schools
have conducted their own crumb rubber infill analysis in the past year
based on persistent concerns. In each case, those who have shared their
findings report no plausible link between crumb rubber and cancer.
We are encouraged that the health and safety of those who play on
synthetic turf is receiving attention at the Federal level. The STC
remains committed to assisting in any way to help bring closure to the
issue that has created unnecessary confusion and lingering questions.
The STC website, www.syntheticturfcouncil.org, includes the many
studies on the human health and environmental safety of synthetic turf
and crumb rubber.
______
Response to Written Questions Submitted by Hon. Jerry Moran to
Hon. Elliot F. Kaye
Recall Effectiveness
Question 1. Chairman Kaye, you testified that you are not
``wedded'' to the provisions of the proposed Voluntary Recall
Guidelines rule, but rather you are ``wedded to the goal of enhancing
recall communications and effectiveness.''
In both formal comments on the rule and in testimony before the
CPSC, stakeholders have requested that the Commission establish a
collaborative, cooperative working group comprised of the CPSC,
consumer advocates, manufacturers and retailers to address recall
effectiveness, conduct a scientific study of consumer behavior to
determine the most effective methods for communicating recalls to
consumers and to establish best practices for conducting recalls.
Does the CPSC plan to establish an informal working group to
address potential ideas for improving recall effectiveness? If so, what
is the timeline for doing so? If the CPSC does not intend to establish
a working group or engage in related stakeholder outreach on this
issue, why not?
Answer. While I am open to all avenues that would genuinely assist
recalling companies and the agency with enhancing the recall process,
we do not have plans at this time to establish a working group. As we
have a very engaged set of stakeholders, including on this issue, we
will continue to benefit from their feedback even without creating a
working group. As we consider what changes we might pursue, there will
continue to be significant dialogue with our stakeholders, especially
those who truly believe in recall effectiveness.
Question 2. Chairman Kaye, many recalled products are returned to
retailers by consumers, but as you are aware some consumers instead
choose to modify use of a product to address the risk or will simply
dispose of it altogether.
My understanding is the agency's current measurement of recall
effectiveness only includes products that are returned to the retailer
and manufacturer. What is your strategy to ensure that the measurement
of recalls accurately reflects all actions taken by consumers in
response to recalls?
Answer. Recall effectiveness is calculated using data supplied by
the recalling firm or retailer that tracks the number of consumers
requesting the remedy identified in the recall notification. To date,
CPSC staff has not been able to identify a cost-effective, timely and
efficient way to also track the actions of individual consumers who
choose to take some action other than the remedy identified in the
recall notification. The Commission is open to ideas of including in
our measurement additional actions by consumers that can be captured in
a cost-effective, timely and efficient manner.
Question 3. Recently the Juvenile Products Manufacturers
Association (JPMA) announced an educational campaign entitled ``It's
not hard! Fill out your card'' to inform parents and caregivers of the
important of filling out product registration cards, allowing them to
receive direct notification of product recalls. In addition to social
media channels and working through member companies, JPMA emphasizes
product registration cards as the easiest way to ensure that
information gets to families in the event of a product recall.
Has the CPSC partnered with the JPMA on this campaign? If not, does
the CPSC see this campaign as a good example of how to improve recall
effectiveness? What does the agency do to encourage similar education
efforts?
Answer. While CPSC did not partner with the JPMA on its
registration card campaign, the agency has been active on this front.
In addition to routinely meeting with and educating trade associations
and other groups to encourage innovative approaches to direct recall
notification, CPSC has promoted the use of registration cards through
several different avenues. In February 2015, CPSC issued a blog (http:/
/onsafety.cpsc.gov/blog/2015/02/04/product-registration-cards-think-
safety-not-marketing/) related to the product registration card
requirements in Section 104 of the Consumer Product Safety Act. Within
the blog, the agency recognized the contributions of the JPMA, the
Consumer Federation of America and Kids In Danger in assisting our
agency with outreach and education as we work to encourage consumers to
fill out these cards. During her tenure, former Chairman Inez Tenenbaum
took part in an event with the Attorney General of Illinois, Lisa
Madigan, and consumer advocates to promote the use of registration
cards. In early 2016, I plan to join with National Highway Traffic
Safety Administrator Mark Rosekind for an event that is intended to
collaborate with developers and data specialists on innovative, mobile
solutions for the registration of consumer products.
We welcome any campaign aimed at improving recall effectiveness
through direct notification. There is no doubt that direct notification
is a highly effective means of notifying consumers about recalls.
Therefore, we always encourage companies to use direct notification for
recalls when contact information is available.
Question 4. Chairman Kaye, you and your fellow Commissioners have
stressed in public statements and in testimony before the Senate and
House oversight Committees that the CPSC is a data driven agency.
Recent GAO reports have identified the CPSC's lack of data analytics
capabilities as a fundamental issue.
Given the critical role that accurate and timely data and the
ability to quickly and efficiently analyze data plays in the CPSC's
core mission of identifying emerging product safety risks and injury
trends, please describe the CPSC's current data analytic capabilities,
including current staffing levels, systems and proportion of the
agency's budget.
In recent years, how has the agency responded to the increase in
available data and the emergence of new technologies and analytic
capabilities? What are your plans for hiring, training, and deploying
additional data analytic staff going forward as it pertains to
enhancing CPSC's systems and data analytic capabilities?
Answer. An October 2014 GAO report states that GAO staff
interviewed CPSC officials, industry representatives, consumer groups
and subject-matter experts who said that additional resources such as
hiring staff with expertise in technical areas, including toxicology,
public health, epidemiology, and engineering could improve the
timeliness of CPSC's response to new or emerging product risks. In
addition to inadequate resources, the report discussed multiple factors
that affect how quickly CPSC responds to new and emerging hazards. Some
of the factors that were discussed in the report include: (1) the legal
standard for proving that a product is an imminent hazard requires
extensive data analysis; (2) CPSC's inability to establish information-
sharing agreements with foreign counterparts may hinder our ability to
respond to a potential hazard in a timely way; (3) CPSC addresses
product hazards after the product has entered the market rather than
using a preventative framework such as pre-market approval (such as the
FDA or EPA); and (4) CPSC's delay in receiving death certificates. I do
not perceive any of these very accurate factors to point to a specific
deficiency in how we analyze data. Rather, the GAO correctly pointed
out that with additional resources and authority, more could be done by
CPSC to promote public safety and done faster. I completely agree with
this assessment and continue to believe the public, especially
children, have been put at risk because of these factors.
The CPSC must determine quickly and accurately which product
hazards represent the greatest risks to consumer safety. Information on
injuries, deaths, and other consumer product safety incidents comes
from a wide range of sources, including consumers and consumer groups,
hospitals and clinics, industry and the media. Used and resale consumer
products must also be monitored to prevent previously identified
hazardous products from re-entering the marketplace. A large volume of
data must be analyzed to identify patterns and trends that reflect
potential emerging hazards. Moreover, the CPSC has to determine which
addressable hazards present the greatest risk to the consumer to focus
the agency's limited resources. The CPSC's request for FY 2016
allocates $46 million, of the total $129 million requested, to help
provide for the timely and accurate detection of consumer product
safety risks.
With regard to increases in available data and the emergence of new
technologies and analytic capabilities, in recent years the CPSC has
made significant investments in information technology to enhance and
streamline hazard detection processes and improve analytic
capabilities. This includes the development and improvement of the
Consumer Product Safety Improvement Act of 2008 (CPSIA)-mandated, open
government public database (available at: www.SaferProducts.gov), which
enables consumers and others to submit reports of harm to the CPSC and
view publicly reported incident information in a Web-based, searchable
format. SaferProducts.gov is one of the many successes of the CPSIA. In
response to Section 222 of the CPSIA, we also created a pilot Risk
Assessment Methodology (RAM) system that enables the CPSC to analyze
systematically a limited set of import line entries to identify the
highest risk shipments, facilitating our import surveillance efforts at
certain ports.
The agency also developed the Consumer Product Safety Risk
Management System (CPSRMS), to standardize how data are captured and to
enable expanded and expedited data collection and analysis. CPSRMS
currently has several analytical components: SaferProducts.gov, which
consists of a public portal, a business portal, and a searchable
incident database; an internally facing application for CPSC staff to
analyze and triage incident reports; and a case management system for
CPSC staff to respond to incidents. CPSRMS is the agency's primary tool
for managing domestic incident data and makes more information
available so that agency staff can quickly process domestic incidents.
The FY 2016 funding request of $2.7 million is to continue to support
and upgrade this domestic incident management system.
Each year, through the National Electronic Injury Surveillance
System (NEISS), the CPSC collects information about product-related
injuries treated in hospital emergency rooms. This unique system
provides statistically valid national estimates of product-related
injuries from a probability sample of hospital emergency rooms. The FY
2016 budget request of $2.2 million for NEISS activities will fund the
following work: collection and review of data from approximately 100
hospitals; technical and statistical support for data collection;
coordination of NEISS activities funded by other Federal agencies
through reimbursable agreements; and travel to hospitals for training,
quality control, and recruitment of additional hospitals into NEISS to
maintain the statistically valid sample size.
Data collected from a range of sources including consumers,
newspapers, medical examiners and coroners, health care professionals,
state death certificates and retailers, is coded, compiled, and
analyzed by a staff of 35, including some mathematical statisticians,
in CPSC's Division of Data Systems in the Directorate of Epidemiology
(EPDS). Additionally, EPDS is supported by a staff of 13 contractors.
The Division of Hazard Analysis in the Directorate of Epidemiology
(EPHA) currently has 12 mathematical statisticians who have received
formal education and training in statistics. EPHA makes use of both
probabilistic and nonprobabilistic data on injury and potential injury
incidents and fatalities. EPHA (as well as other domains within CPSC)
uses statistical software for analysis including SAS, JMP, R, and
Excel.
The Directorate of Epidemiology's staffing ceiling is currently set
at 51. Resource needs are regularly reassessed and data analytic staff
will be added as warranted and as agency priorities and funding levels
permit. We will continue to seek additional funds to enhance further
our data capabilities and analytics and hope Congress agrees with the
health and safety value these efforts provide.
Question 5. Chairman Kaye, can you expound on the results and
effectiveness of the Buckyballs recall? My understanding is this recall
was unique in that the CPSC assumed the responsibilities of the
recalling firm. Of the 2.5 million sets sold, what was the product
return rate? What this an effective recall in the agency's view?
Answer. The Buckyballs matter was settled pursuant to an agreement
between Maxfield and Oberton Holdings, LLC (``M&O'') and the CPSC (the
``Settlement Agreement''). Because M&O had commenced dissolution and
liquidation proceedings, the Settlement Agreement called for the CPSC
staff to create a ``Recall Trust'' administered by a third party
trustee (the ``Trustee'') that would implement the corrective action
plan (CAP) set forth in the Settlement Agreement. The CAP provided for
a recall of Buckyballs. To effectuate the recall, the Trustee engaged a
company that specialized in claims processing. This entity processed
claims, submitted claims to the Trustee and issued payments to approved
claimants.
The Settlement Agreement required several methods of conveying
notice of the recall: a press release; additional publicity; and a
website publicizing and implementing the recall. Among other actions,
the Recall Trust reported it sent e-mail notices of the recall to more
than 100,000 consumers and retailers and arranged for social media
advertisements that reportedly were displayed 89 million times.
In accordance with the Settlement Agreement, the Recall Trust
provided refunds to consumers who returned qualifying products within
the agreed-upon six-month recall period. Also in accordance with the
Settlement Agreement, the Recall Trust implemented fraud detection
procedures to ensure that the Recall Trust paid only valid claims.
The Recall Trust reported it received a total of 3,415 claims. The
Trustee approved 2,720 total claims and paid refunds to those
claimants. The Recall Trust identified some claims as deficient because
of missing information or as potentially fraudulent. Claimants were
given the opportunity to remedy deficient claims and to provide more
information regarding claims with indicators of fraud; 460 of the
claims originally identified as deficient were remedied and paid.
Retailer Reporting Program
Question 6. Chairman Kaye, participants in the Retailer Reporting
Program (RRP) have operated under the understanding--and been
consistently reassured--that data submitted to the CPSC under the
program meets their obligations to file an initial report under 15(b).
This RRP data has resulted in multiple product recalls and was recently
cited as one source of data in the CPSC staff recommendation for a new
standard for an infant durable product.
What kind of analysis did the CPSC conduct in deciding to no longer
allow RRP participants to meet their initial 15(b) reporting
requirements by submitting data under the RRP? Did the CPSC conduct any
engagement with RRP participants prior to this change in practice? Has
the CPSC had any engagement with RRP participants after this change in
position, and what have been the results of those discussions?
Answer. The Retailer Reporting Pilot Program (RRP) began in 2004 as
part of the resolution of a civil penalty case with a single retailer.
Over time, the concept was expanded to include additional companies
under circumstances that differed from company to company and pursuant
to different understandings. The RRP did not--and to date, does not--
have formal documentation or uniform agreed-upon terms. Rather,
participants--who were not limited to retailers--were added
individually over nearly a decade pursuant to individualized
understandings that reflected CPSC staff's assessment at that time of
the value of the data that might be provided by a specific company. The
information reported by participants and the mechanism for reporting
varied from participant to participant.
In the first year of the pilot program, CPSC received 2,623 reports
from the single participating retailer. During the next few years,
additional firms were brought into the pilot program, culminating in
seven participating firms in 2009. The number of reports submitted grew
as participants were added, with a total of 21,000 reports submitted in
2009. Between 2009 and 2015, the number of reports submitted by the
seven participating firms has increased by more than 40 percent, from
21,000 reports to just over 30,000 reports.
Since 2004, CPSC has received and processed 207,340 participant
reports. Of the 4,020 recalls issued from 2004 through 2015, 0.6
percent (23 recalls) were cases where the participant report was the
initial source of hazard information. In short, this amounts to an
average of one recall for every 9,000 reports submitted, processed and
analyzed over close to a 12-year period. It is important to remember
that the firms involved in the 23 recalls would have been required to
report the incidents behind these recalls in order to fulfill 15(b)
reporting requirements, even in the absence of a Retailer Reporting
type program.
As part of a careful review of the Retailer Reporting Pilot
Program, in July 2014 CPSC's Office of General Counsel sent a letter to
all RRP participants clarifying the legal implications of participation
in the RRP with respect to Section 15(b) reporting obligations and
potential civil penalties. In this letter, the General Counsel stated,
``Participation in the RRP does not replace, alter, limit or have any
impact whatsoever on the statutory duty of participants to report
information as required under Section 15(b) of the Consumer Product
Safety Act (CPSA), 15 U.S.C. Sec. 2064. The letter goes on to state,
``Participation in the RRP does not provide `safe harbor' protection
from Section 15(b) reporting obligations or possible related civil
penalties. Specifically, submitting data to CPSC in connection with the
RRP does not satisfy Section 15(b) reporting obligations. RRP
participants must independently assess data and other information in
their possession to determine when Section 15(b) reports should be
made.''
While I am not aware of any formal meetings between CPSC staff and
the participating firms regarding the structure of the RRP, prior to
the July 2014 letter, CPSC staff received and has considered carefully
multiple letters from participants. CPSC staff also maintains constant
informal contact with all participants. In addition, CPSC staff
conducted a formal meeting with the participants since that letter was
distributed. As was explained at that meeting, adherence of RRP
participants with Section 15(b) reporting obligations is assessed by
CPSC staff case-by-case, based on application of the legal requirements
to the specific facts and circumstances. The outcome of the meetings
was a commitment by CPSC staff to further analyze the value of the
pilot program and suggest options to me regarding the future direction
of the pilot program.
Question 7. I understand that one company has withdrawn from the
RPP because of concerns about the risk and confusion over 15(b)
reporting obligations. What actions are you taking, if any, to ensure
that current RRP participants remain in the program?
Answer. Participation in the program has always been entirely
cooperative and voluntary. CPSC staff has taken no action to ensure
current participants remain in the program; nor has CPSC staff taken
any action to encourage participants to leave the program.
Question 8. What specific improvements would you like to make to
the RRP?
Answer. If the program is to continue and expand in any form,
additional funding will be required to permit the agency to build and
maintain additional systems to handle the influx of more data. It is
extremely expensive to build, operate and maintain that type of data
warehouse.
Question 9. How many retailers and manufacturers have inquired or
applied to join the program since it began ten years ago? What, if any,
communication has been made between the CPSC and those who are
interesting in joining the program?
Answer. Since 2004, CPSC staff is aware of twelve firms that have
inquired or applied to join the pilot program. Seven firms were
accepted into the pilot. Because we did not have sufficient resources,
some firms were told that their request to participate would not be
considered until additional CPSC funds became available to expand the
pilot program.
Phthalate Alternatives Rulemaking
Chairman Kaye, as you recall the issue of phthalates was a focus of
the Subcommittee's prior CPSC oversight hearing in June, and it was
mentioned briefly again at the hearing on October 6. Having reviewed
your responses to my questions for the record, I wanted to take this
opportunity to ask a few additional questions if you would be willing
and able to answer.
Question 10. Mr. Chairman, you stated the CHAP cumulative risk
assessment (CRA) method was consistent with the recommendations of the
National Research Council's 2008 report on the CRA of phthalates. That
report was requested by the EPA. Did you consider that, despite the NRC
report, the EPA has yet to conduct a CRA for phthalates and rather has
recently requested further input on how to conduct such an assessment?
Is it your view that the NRC recommendations are sufficiently robust
for how to conduct a definitive and quantitative CRA for regulatory
purposes?
Answer. The CPSC technical staff considers the NRC \1\
recommendations to be sufficiently robust to conduct a CRA. In addition
to the 2008 report referenced, CPSC staff notes that the NRC reiterated
its recommendation for a phthalates CRA in a report published in
2009.\2\ While EPA is still planning a CRA of phthalates, Congress
through Section 108 of the CPSIA required CPSC to convene a Chronic
Hazard Advisory Panel (CHAP) to conduct a CRA for phthalates within two
years, which the agency did.
---------------------------------------------------------------------------
\1\ NRC, 2008. Phthalates and Cumulative Risk Assessment. The Task
Ahead. Committee on the Health Risks of Phthalates, National Research
Council, National Academy Press, Washington, D.C.
\2\ NRC, 2009. Science and Decisions. Advancing Risk Assessment.
Committee on Improving Risk Analysis Approaches used by the U.S. EPA,
National Research Council, National Academy Press, Washington, D.C.
Question 11. Mr. Chairman, in your responses to the Subcommittee,
you noted the Agency for Toxic Substances and Disease Registry
(ATSDR)'s work on toxicity of mixtures. ATSDR has evaluated the
potential hazard of certain chemical mixtures; however, the
Subcommittee could not find an example of where it conducted a CRA. Can
you elaborate on what ``similar methodology'' to which you were
referring?
Answer. According to CPSC staff, ATSDR evaluates the toxicity of
selected chemical mixtures that are relevant to Superfund sites; they
do not perform complete risk assessments. ATSDR's evaluations \3\ are
done to support risk assessment performed by others. ATSDR's methods
\4\ for assessing chemical mixtures are essentially similar to the
methods used by EPA \5\ and the CHAP. For example, EPA, ATSDR, and the
CHAP all consider the weight of the evidence for how the chemicals in a
mixture interact. The interactions may be independent, additive,
synergistic or antagonistic. They all consider the hazard index as an
acceptable method for estimating the risk from a mixture. One
difference, however, is that ATSDR and EPA guidelines allow the risk
assessor to assume that mixtures are additive if the components act on
the same target organ or by the same mode of action. The CHAP only
calculated cumulative risks when there was empirical evidence
demonstrating an interaction between the components of the mixture.
---------------------------------------------------------------------------
\3\ Interaction Profiles for Toxic Substances. Agency for Toxic
Substances and Disease Registry.
\4\ Guidance Manual for the Assessment of Joint Toxic Action of
Chemical Mixtures. U.S. Department of Health and Human Services, Public
Health Service, Agency for Toxic Substances and Disease Registry,
Division of Toxicology. May 2004.
\5\ Guidance on Cumulative Risk Assessment of Pesticide Chemicals
That Have a Common Mechanism of Toxicity. Office of Pesticide Programs
U.S. Environmental Protection Agency Washington, D.C. 20460 January 14,
2002.
Question 12. Mr. Chairman, you referenced the EPA's pesticide CRAs
as well. In reviewing the limited number of pesticide CRAs conducted by
EPA, it appears the EPA has a robust and thorough approach relative to
that of CHAP. Outside of pesticides, EPA's limited use of cumulative
risk assessment has been as a risk prioritization or screening tool.
Have the CPSC technical and scientific staff evaluated whether the
CHAP's CRA is more in the nature of a screening tool, and whether
subsequent analysis is required prior to taking a final regulatory
action?
Answer. The CPSC staff does not consider the CHAP's CRA to be a
screening level risk assessment.
After evaluating the CHAP's cumulative risk assessment, CPSC staff
does not believe that additional analysis with respect to cumulative
risk assessment is needed before taking regulatory action.
Question 13. Mr. Chairman, you stated the International Program on
Chemical Safety has issued CRA guidelines. The citation you provided
comes from the report of a 2007 workshop, stating ``The principal
objective of the workshop was to initiate development of a framework
for the risk assessment of combined exposures to multiple chemicals.''
The language would indicated that this appears to be a preliminary
document. Are you aware of any Federal CRA conducted under this
framework? If so, was it used as a basis for actual restrictions on any
chemicals, or simply as a prioritization tool?
Answer. EPA and ATSDR guidelines for assessing chemical mixtures
have been in place for more than a decade, and those agencies generally
follow their own guidance documents. The CHAP was guided primarily by
the recommendations of the 2008 NRC report on phthalates CRA.\6\ That
NRC report refers to the EPA and ATSDR guidelines. CPSC staff is not
aware of any Federal CRA conducted under the World Health Organization
(``WHO'') but believes that framework \7\ is generally consistent with
U.S. methods.
---------------------------------------------------------------------------
\6\ NRC, 2008. Phthalates and Cumulative Risk Assessment. The Task
Ahead. Committee on the Health Risks of Phthalates, National Research
Council, National Academy Press, Washington, D.C.
\7\ Meek, M. E., Boobis, A. R., Crofton, K. M., Heinemeyer, G., Van
Raaij, M., & Vickers, C. (2011). Risk assessment of combined exposure
to multiple chemicals: A WHO/IPCS framework. Regulatory Toxicology and
Pharmacology, 60(2 suppl 1), S1-S14.
---------------------------------------------------------------------------
______
Response to Written Question Submitted by Hon. Cory Gardner to
Hon. Elliot F. Kaye
Question. Chairman Kaye, the Commission recently launched an
education campaign for furniture and TV-tipovers in an effort to
promote safety and prevent child injuries and fatalities. Has the
Commission considered launching a similar education campaign for corded
window coverings? Do you believe such an education campaign could
improve safety surrounding corded window coverings? If not, what do you
believe accounts for the difference in effectiveness of an education
campaign for furniture and TV-tipovers compared to an education
campaign for corded window coverings?
Answer. In 1985, CPSC issued a major consumer safety alert related
to the strangulation risk posed by a variety of window coverings:
www.cpsc.gov/en/Newsroom/News-Releases/1985/CPSC-Warns-of-The-Danger-
Of-Children-Strangulation-In-Window-Blind-Or-Drapery-Cords/. Thirty
years later and window covering cords are still killing or seriously
injuring children at an alarming and unacceptable rate: nearly once a
month. This is one of the most serious hidden hazards in the home. For
the past decade, CPSC has collaborated with the Window Covering Safety
Council each October (Window Covering Safety Month) to educate parents
and caregivers. Two of the biggest recalls in CPSC's history have
involved recalls managed by the Window Covering Safety Council. Yet,
the deaths and life-altering injuries continue. Window covering
manufacturers have also allocated substantial funds to marketing and
educational efforts geared toward the window covering safety. I
appreciate the industry's efforts, but it is not remotely sufficient.
Education alone is not saving enough lives. We have decades of deaths
that make that point very clear. We are better than this, as a society,
to allow these deaths to continue, especially when safe alternatives
are economical and available.
______
Response to Written Questions Submitted by Hon. Bill Nelson to
Hon. Elliot F. Kaye
Question 1. Will the CPSC commit to providing this Committee with
semi-annual reports summarizing, by product, the recall effectiveness
information provided in Parts 1 and 2 of manufacturer Monthly Progress
Reports (MPRs) for Corrective Action Plans (CAPs)?
Answer. Section 6(b) of the Consumer Product Safety Act (CPSA), 15
U.S.C. Sec. 2055(b), generally prohibits the public disclosure of
information that is provided to the CPSC in carrying out its
responsibilities under section 15 of the CPSA, 15 U.S.C. Sec. 2064
(relating to consumer product recalls). I continue to believe strongly
that Section 6(b) is an anti-consumer safety and anti-government
transparency provision that Congress should repeal. Section 6(b) also
prohibits public disclosure of any information that could identify a
specific product manufacturer unless the Commission has taken
reasonable steps to ensure that it is fair and accurate and has given
the manufacturer of the product(s) in question 15 days advance notice
(of the information to be disclosed) and an opportunity to comment. The
information discussed in this question is submitted by many different
manufacturers or retailers. Accordingly, we could not lawfully provide
these responses to the general public without going through the onerous
section 6(b) notification process. Nevertheless, consistent with our
rules implementing section 6(b), 16 C.F.R. Sec. 1101.12(g), and with
the expectation that these materials are kept confidential, we are
permitted by law to provide that information to the Chairman or Ranking
Member of the Committee or subcommittee of jurisdiction acting pursuant
to committee business.
However, in addition to other practical concerns such as IT system
constraints, we currently lack the resources to collect, collate and
transmit this information electronically. We would be pleased to work
with the Committee to see what information the Committee would find
useful on this point that we might be able to provide in a cost-
effective and efficient manner.
Question 2. Will the CPSC commit to posting copies of received
manufacturer MPRs for CAPs (with any redactions required by the
Consumer Product Safety Act, as amended) in a timely manner on the
Freedom of Information Act (FOIA) portion of the Commission's website?
Answer. The CPSC is committed to following the President and
Attorney General's guidance for achieving active disclosures and
transparency under the FOIA. See http://www.justice.gov/sites/default/
files/oip/legacy/2014/07/23/proactive-disclosures.pdf As a result of a
thorough and helpful audit of our FOIA program by the CPSC Inspector
General, we are in the process of significantly enhancing our FOIA
processes. As part of this effort, we will look at the resource
implications of making a discretionary release of this information,
which is permissible under a number of FOIA exemptions, whenever
appropriate. Of course, in some circumstances it may be appropriate for
CPSC to withhold certain records, or portions of records, that are
otherwise designated for active disclosure if those records fall within
a FOIA exemption, just as is done in response to a FOIA request. For
example, the information may be part of an ongoing active enforcement
proceeding and release of the information could reasonably expected to
interfere with enforcement proceedings.
Question 3. Does CPSC staff conduct any audits of MPRs submitted?
If so, what is the audit rate, and how often does the audit result in
corrections to the MPR data?
Answer. As part of overall efforts aimed at protecting consumers,
CPSC Compliance and Field Operations staff prioritizes review of MPRs
associated with the highest-priority recalls. We also currently have an
employee assigned to review overall data integrity for MPRs while we
consider more permanent options within the limits of our resources. It
is not common for there to be substantial changes to the MPRs after
review, but it should be noted that the agency is largely reliant on
the recalling firms to submit accurate and complete data. The agency
does not have access to the underlying sources of information to verify
the accuracy of the submitted data.
Question 4. Has the CPSC ever given any company participating in
the Retailer Reporting Program any form of formal or informal civil
penalty ``immunity'' with respect to information provided under the
program? If the answer is yes, please identify each such company,
describe the extent of the immunity, and explain the CPSC's authority
to grant such immunity.
Answer. Staff is not aware that any participant in the ``Retailer
Reporting Program'' (RRP) has been given any form of formal or informal
civil penalty ``immunity'' with respect to information provided under
the program. CPSC staff considers potential section 15(b) violations by
non-RRP participants in the same manner that staff considers potential
section 15(b) violations by RRP participants. Thus, matters involving
RRP participants that merit investigation for potential civil penalties
arising out of section 15(b) are investigated and considered based on
the specific facts and circumstances, and in the ordinary course just
as such matters involving non-RRP participants are investigated and
considered. However, the RPP was created a number of years ago under
different leadership at the agency. I cannot speak for that leadership
and whether or not any type of immunity was intended, contemplated or
provided.
Question 5. To date, has information reported under the Retailer
Reporting Program ever led to a product recall that would not have
otherwise occurred through another channel, such as an independent CPSC
staff investigation or a Section 15 report?
Answer. Since 2004, CPSC staff is aware of approximately 23 recalls
where an incident report submitted by a retailer participating in the
program was the initiating source document. Companies do have a legal
requirement to report incidents to the CPSC, so the agency would have
ultimately become aware of those incidents, provided that the companies
reported as required.
Question 6. Has the CPSC ever taken action based on, or in response
to, a low recall remedy rate? If your answer is yes, what is the
threshold rate for such an action and is there any provision for such
actions in the standard Corrective Action Plan that the Office of
Compliance negotiates with companies?
Answer. Yes, we have sought additional corrective action for
recalls with low response rates and other reasons. Our corrective
action plan letters include language that allows for the modification
of a corrective action plan based upon the circumstances, including low
response rates or additional deaths and injuries.
Although we do not have a set threshold for seeking additional
corrective action, compliance officers monitor the response rates
particularly for the highest priority recalls they handle and determine
if additional corrective action is appropriate. Additionally, we
currently have an employee assigned to review recall response rates
associated with certain key recalls and to make recommendations for
potential further corrective action.
______
Response to Written Question Submitted by Hon. Richard Blumenthal to
Hon. Elliot F. Kaye
Question. Will CPSC commit to working with this Committee to
provide aggregate data on recall effectiveness?
Answer. Yes, subject to the legal concerns and resources discussed
in previous questions, we would be happy to work with the Committee to
provide this information.
______
Response to Written Questions Submitted by Hon. Edward Markey to
Hon. Elliot F. Kaye
Question 1. In late August, Ikea recalled a children's nightlight
because its plastic covering could come off and pose an electrical
shock hazard. Yet not a single one of Ikea's 51 Facebook posts or 179
Instagram posts in the past 90 days was about safety recalls--although
1 of its 378 tweets did note the nightlight recall. 71 percent of
adults use Facebook. Do you believe that more people would learn about
safety recalls of defective products if companies were required to post
recall notices on Facebook and other social media? Why or why not?
Answer. I absolutely do. Companies should robustly use all of their
available social media to publicize recalls, since social media in many
cases is the ideal medium to reach a large number of consumers
simultaneously. The effectiveness of social media's reach as compared
with the reach of some of our historic notification methods (such as
placing posters in retail locations) is unmatched. Through social media
sites, companies are also able to collect and monitor data regarding
the reach of their recall message.
Nearly all major companies have an active presence on Facebook for
marketing purposes, which should be used to disseminate recall
information more widely to consumers. I expect companies to ensure that
recall information is featured prominently on their websites and social
media sites, instead of making consumers search for this information.
Unfortunately, the CPSC itself does not yet have a Facebook presence.
Those who support government transparency, genuine recall effectiveness
and informing consumers about seasonal and emerging hazards in the home
should endorse CPSC's creation of a Facebook account.
Question 2. Over the years, many children died due to defective
cribs, some of which had been voluntarily recalled years before the
deaths occurred. In some of these cases, the voluntary recall notices
did not even acknowledge the risk of death or injury that the defective
cribs posed. Do you believe that more people would be likely to learn
of and pay attention to safety recalls of defective products if
companies were required to accurately describe the defect and whether
it had been linked to injuries or deaths when they issued recalls? Why
or why not?
Answer. Yes. There is no doubt that prominently noting in the
recall announcement that deaths and/or injuries have occurred is more
likely to drive media attention that can ultimately capture consumers'
attention, rather than not mentioning those facts or burying them in
the release. As you note, these notices are voluntary, meaning they are
subject to negotiation with recalling companies. It is fair to say that
our interests in notifying consumers about the nature and degree of
hazards do not always align with the interests of the recalling
companies. Our staff does an excellent job of pushing for prominent
release of the most useful information relating to the recall of a
product. We are continuing to assess how to make our recall process
more effective and this topic is one aspect of that review.
Question 3. Do you believe that more people would learn about
recalls of defective products like car-seats if the companies had to
send letters or e-mails to people who purchased them, much like auto
companies are required to do when defective cars are recalled? Why or
why not?
Answer. Again, I certainly do. There is no doubt that direct
notification is a highly effective means of notifying consumers about
recalls. Therefore, we always encourage direct notification for recalls
when contact information is available. Many of our recalls involve
direct notification via mail, e-mail or text message.
Question 4. When companies issue voluntary recalls, they're also
supposed to tell CPSC what they plan to do to remedy the problem. But
some companies want the remedy--be it repair or exchange of the
product--to also be voluntary. Do you believe that companies will be
more likely to act to protect consumers if they have to comply with
their remedy plans, or that it is better for consumers to just let
companies do what they think is best on a voluntary basis? Please
justify your response.
Answer. Recalling companies propose their preferred remedy to CPSC
staff and staff reviews the proposed remedy to determine whether it is
adequate to protect consumers. The agreed-upon remedy is then
memorialized in both the corrective action plan acceptance letter and
the press release. The company must then provide that agreed-upon
remedy to every affected consumer. I believe that it is best for
customers to be fully informed about the product being recalled and the
remedies available under that recall in order to take full advantage of
the recall. While I have certainly seen recalling companies come up
short in their efforts to publicize their recalls (and we continue to
push on this front to change this dynamic), I do not recall instances
of companies flat-out choosing not to provide the agreed-upon remedy
when contacted by a consumer. If you have information about this
concern that you can please share with me, I would certainly look into
it.
______
Response to Written Question Submitted by Hon. Cory Gardner to
Hon. Ann Marie Buerkle
Question. Commissioner Buerkle, do you believe the Commission
should pursue a nationwide recall of all corded window coverings? Are
you aware of efforts by industry to promote improved corded window
covering safety? Do you think such efforts could improve corded window
covering safety?
Answer. I do not believe the Commission should pursue a nationwide
recall of the approximately one billion corded window coverings that
are currently in the U.S. marketplace.
The Commission is currently engaged in rulemaking to consider
whether to adopt a mandatory Federal standard for window coverings. I
am keenly aware of the tragic deaths of young children that occur as a
result of corded window coverings, but according to the CPSC staff's
most recent analysis, the annual risk of a fatal strangulation from the
corded window coverings sold from 1996 to 2010 barely exceeds one in a
hundred million units. That risk is already declining as older products
are gradually being replaced with the better products that are
currently available. It will continue to decline as even better
products become available and as safer alternatives become more
affordable. For these reasons, I have significant reservations as to
whether or not it would be appropriate to adopt a mandatory standard
with prospective effect. To pursue a recall of all corded window
coverings would be tantamount to retroactive application of a standard
that has not even been justified going forward. Any such recall could
easily be construed as an end run around meeting the statutory
prerequisites for adoption of a Federal standard.
I am aware of many efforts by the industry to promote window
covering safety. A crucial point to recognize is what population is at
risk from corded window coverings. Nearly all of the deaths and
injuries that have occurred as a result of corded window coverings have
involved young children. For the large majority of households that do
not have young children on a regular basis, corded window coverings
pose no risk. The solution to this issue is to make sure that
households with young children understand the hazard of a corded window
covering so that the hazard can be avoided. To that end, the industry
recently launched a certification program called ``Best for Kids,''
which will specifically identify window coverings that are suitable for
households with children. I strongly support this program, as well as
other education efforts by the industry. In addition, the Window
Covering Safety Council, a coalition of major U.S. manufacturers,
retailers and importers of window coverings dedicated to educating
consumers about window cord safety, has recently partnered with
Scholastic Inc., to develop window covering safety materials targeting
pediatricians practicing close to military installations. Finally, the
industry continues to introduce a wide variety of cordless window
products and is developing innovative new designs that would prevent
cords from forming a hazardous loop.
Unfortunately, in comparison to other agency safety campaigns, CPSC
commits very limited resources to any window covering education
campaign. CPSC could do far more to educate parents, caregivers, and
community health providers. There are many inter-governmental
partnerships that should be considered to address this issue. The goal
should be to raise awareness regarding this hazard rather than restrict
choices for everyone.
______
Response to Written Question Submitted by Hon. Bill Nelson to
Hon. Ann Marie Buerkle
Question. Should voluntary recall notices contain the same types of
information that are included in mandatory recall notices? If the
answer is no, please explain why voluntary and mandatory notices should
contain different types of information.
Answer. Generally, I believe voluntary recall notices should
contain the same types of information as mandatory recall notices.
Since mandatory recall notices are issued only after a trial-type
hearing in which the Commission staff's position is upheld against a
company resisting a recall, the position of a firm voluntarily
conducting a recall in cooperation with CPSC is quite different, and
there may be situations in which information required in a mandatory
recall notice should not be required for a voluntary recall. The
Commission's proposed voluntary recall rule has the equities backwards,
imposing more onerous requirements on firms conducting voluntary
recalls than the Consumer Product Safety Act requires for mandatory
recall notices.
______
Response to Written Questions Submitted by Hon. Edward Markey to
Hon. Ann Marie Buerkle
Question 1. In late August, Ikea recalled a children's nightlight
because its plastic covering could come off and pose an electrical
shock hazard. Yet not a single one of Ikea's 51 Facebook posts or 179
Instagram posts in the past 90 days was about safety recalls--although
1 of its 378 tweets did note the nightlight recall. 71 percent of
adults use Facebook. Do you believe that more people would learn about
safety recalls of defective products if companies were required to post
recall notices on Facebook and other social media? Why or why not?
Answer. I believe that the use of social media could lead, in some
cases, to more people learning about safety recalls. Given the wide
variety of media, and the many different approaches taken by different
firms, I think that any requirements in this area would have to be
highly flexible rather than prescriptive.
Question 2. Over the years, many children died due to defective
cribs, some of which had been voluntarily recalled years before the
deaths occurred. In some of these cases, the voluntary recall notices
did not even acknowledge the risk of death or injury that the defective
cribs posed. Do you believe that more people would be likely to learn
of and pay attention to safety recalls of defective products if
companies were required to accurately describe the defect and whether
it had been linked to injuries or deaths when they issued recalls? Why
or why not?
Answer. I believe that recall notices should accurately describe
the safety problem with a product (it may or may not be a defect that
gives rise to a recall) and should include information about injuries
or deaths that are related to that problem. This approach has been
followed at CPSC for many years.
Question 3. Do you believe that more people would learn about
recalls of defective products like car-seats if the companies had to
send letters or e-mails to people who purchased them, much like auto
companies are required to do when defective cars are recalled? Why or
why not?
Answer. I believe that recalling firms should ordinarily provide
direct notice to any purchasers whose contact information they have.
For durable infant products (including infant carriers), manufacturers
are already required to provide postage-prepaid product registration
forms so that purchasers can be notified personally in the case of a
recall. See Public Law No. 110-314, title I, Sec. 104(d), 15 U.S.C.
Sec. 2056a(d); 16 C.F.R. part 1130.
Question 4. When companies issue voluntary recalls, they're also
supposed to tell CPSC what they plan to do to remedy the problem. But
some companies want the remedy--be it repair or exchange of the
product--to also be voluntary. Do you believe that companies will be
more likely to act to protect consumers if they have to comply with
their remedy plans, or that it is better for consumers to just let
companies do what they think is best on a voluntary basis? Please
justify your response.
Answer. Before a company conducts a voluntary recall in cooperation
with the CPSC, it must submit a Corrective Action Plan (CAP). The CAP
must be approved by the CPSC staff. The vast majority of companies (>99
percent) execute their CAP as agreed. On those rare occasions when a
company does not do what it proposed, CPSC is not without recourse. It
can take a variety of measures to address the hazard.
I do not think that CPSC should change its approach because of a
few rare problems. I believe that consumers would be worse off if we
made all CAPs legally binding.
______
Response to Written Questions Submitted by Hon. Bill Nelson to
Cheryl A. Falvey
Question 1. During the time you served as General Counsel of the
CPSC, did you issue any legal opinion addressing the issue of whether
the Office of Compliance could promise formal or informal civil penalty
``immunity'' to companies participating in the Retailer Reporting
Program? If your answer is yes, please explain the basis of such
opinion. If your answer is no, what incentives do companies have to
participate in the Retailer Reporting Program?
Answer. I do not specifically recall whether the Office of General
Counsel issued an opinion addressing the issue of whether the Office of
Compliance ``could promise formal or informal civil penalty `immunity'
to companies participating in the Retailer Reporting Program.'' The
CPSC has the authority to exercise prosecutorial discretion with regard
to civil penalty enforcement, but whether the internal delegations of
authority extend that authority to the Office of Compliance is the
legal issue for consideration. The incentives for retailers to
participate in the Retailer Reporting Program include, but are not
limited to, partnering with the CPSC on a robust compliance program to
ensure the sale of safe products and minimizing the risk of civil
penalties for failure to report information related to consumer
complaints.
Question 2. What is the legal enforceability of Corrective Action
Plans that the CPSC negotiates with companies?
Answer. A Corrective Action Plan is a ``document, signed by a
subject firm, which sets forth the remedial action which a firm will
voluntarily undertake to protect the public, but which has no legal
binding effect.'' 16 C.F.R. Sec. 1115.20(a). The Commission has the
right to seek broader corrective action if ``it becomes aware of new
facts or if the corrective action plan does not sufficiently protect
the public.'' Id. In addition to being signed by representatives of the
subject firm, it acknowledges that the CPSC may monitor the corrective
action and can publicize the terms of the corrective action plan to
inform the public of the nature and extent of the alleged substantial
product hazard and refund, repair or other actions being taken by the
firm. Id.
A Corrective Action Plan differs from a ``Consent Order Agreement''
which is also a voluntary agreement but has an ``admission of
jurisdictional facts'' and contains an ``acknowledgment that any
interested person may bring an action pursuant to section 24 of the
CPSA . . . to enforce the order and obtain appropriate injunctive
relief.'' See 16 C.F.R. Sec. 1115.20(b). The CPSC can also pursue
compulsory remedial actions when voluntary agreements in the form of a
Corrective Action Plan or Consent Order Agreement cannot be reached.
______
Response to Written Questions Submitted by Hon. Bill Nelson to
Nancy A. Cowles
Question 1. How would compliance program-related requirements in
Corrective Action Plans improve the voluntary recall process?
Answer. Many companies have compliance programs in place. It gives
them the opportunity to find and address problems in their process and
avoid recalls as well as injuries from an unsafe product. However,
absent this focus, we see recalls and injuries from products that
better internal controls could have kept off the market. Compliance
programs help companies design safer products, catch potential hazards
sooner, and respond more quickly when a recall occurs. All of this will
improve the voluntary recall process.
At KID, we would also recommend that that internal program extend
through completion of a recall--tracking compliance with already
announced recalls and putting into place measures that will result in a
more complete recall.
Question 2. What, if any, additional information about product
recall rates should companies make publicly available?
Answer. In doing our annual report on children's product recalls,
we use the Freedom of Information Act (FOIA) process to obtain
information on recalled products. The monthly Corrective Action Plan
report contains much information that would be helpful to policymakers,
consumers and industry in measuring compliance and recall
effectiveness. Companies report on recall participation, consumer
contact, both incoming and outgoing, and injury and incident reports
post recall. All of the information, if available publically would give
us a better picture of the effectiveness of individual recalls, but
also what measures (such as e-mails to consumers) seem to result in a
higher participation rate. That information is most useful in the
aggregate for research purposes, but would be helpful to see for
individual recalls as well. In the hearing, Commissioner Buerkle
mentioned the importance of the death and injury after recall included
in these reports. Sharing publically would encourage consumers to look
for recalled products in their homes and comply with the steps needed
to make the product safe or remove it from use.
______
Response to Written Question Submitted by Hon. Richard Blumenthal to
Nancy A. Cowles
Question. Do you believe that the voluntary recall process is
effective in its current form? Are consumers getting notice of recalls?
How would the proposed rule help protect consumers and get potentially
dangerous and defective products out of the hands of consumers?
Answer. As strong new safety standards, required by the Consumer
Product Safety Improvement Act of 2008, go into effect, we are seeing a
decrease in recalls. That is a very good thing. However, we are not
seeing recalls themselves increase in effectiveness. A recall is
meaningless if it does not get the product out of the hands of
consumers and alert them to the hazard.
As reported in our report (A Decade of Data: An In-depth Look at
2014 and a Ten-Year Retrospective on Children's Product Recalls--
February 2015), fewer than 5 percent of children's products in
consumers' hands that were recalled in 2013 can be accounted for
through the current system CPSC maintains of monthly corrective action
reports. That is not good and we need to work together to improve that
statistic. We also need greater access to information to see if there
have been deaths or injuries after a recall that might warrant a
stronger effort to retrieve the item. All that is kept secret from the
public. Better research is needed to see if consumers are hearing about
recalls. Response rates seem to indicate that even if they are, the
messages are not motivating them to take action. Marketing experts at
the recalling firm have the information on how many `touches' a
consumer needs with a message before they act. They need to use that
same information and same methods to retrieve unsafe products after a
recall.
The proposed rule on voluntary recalls and corrective action plans
is warranted and will provide a new measure of safety for consumers. In
particular, the rule would allow the CPSC to use its years of
experience in developing corrective action plans to make them more
effective and eliminate delays that currently occur when details that
should not be negotiable take days, weeks, or months to negotiate. It
would allow the CPSC and recalling firms to more effectively use new
tools such as social media to reach consumers. By making the agreements
legally binding, CPSC can better ensure that the plan will be carried
out in a timely manner and in the manner that was negotiated.
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