As the 6(b) Turns

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The U.S. Consumer Product Safety Commission has voted to publish a Notice of Proposed Rulemaking removing the “unnecessary and unjustifiable,” in the words of Acting Commission Chairman Robert Adler, re-notification procedure which forces the commission to seek the manufacturer’s blessing every time it releases the same information about a product to a different source.

The rule is designed to rid the commission of situations in which, for example, two reporters working on the same story query the commission about a product a week apart. The commission staff dutifully sets off on the ten-day path, through the manufacturer, before it can deliver an answer to the first reporter. A week later, the commission is required to take all of the same steps – even though the manufacturer has already vetted it for inaccuracies – to give the second reporter the same information.

“This is not in keeping with the acting chairman’s aim for the CPSC to be more transparent while following the law,” says commission spokesman Scott Wolfson. “The onus is still on the agency to ensure fairness and accuracy, that principle does not go away. But this rule change would ensure more efficiency and we’ll be able to serve the public faster.”

In the Information Age, consumer product manufacturers have been unusually successful at keeping the public information regulations surrounding product defect positively medieval. While consumers have myriad Internet resources to find out if a particular product is any good, when it comes to finding out if it is safe, consumers are still at a disadvantage. Section 6(b) of the Consumer Product Safety Act – beloved by industry, reviled by consumer advocates — gives manufacturers a lot of control over what negative information the CPSC can disclose about them. The CPSC cannot release information that might be considered trade secrets or “misleading” and “inaccurate” information.  The CPSC can disclose the existence of an investigation, under procedures designed to ensure the accuracy of whatever information is made public. The CPSC gives manufacturers 10 days to review any statements about their products and typically the two entities release agreed-upon language.

The CPSC is unique among federal agencies in this requirement, and in its execution, the commission has bent over a bit too backwards, in Adler’s estimation. In his opening statements at last week’s hearing, he called the re-notification practice  “an absolute right to demand that the agency follow the time consuming and cumbersome procedures of 6(b) over and over again,” creating a de facto information embargo that has no safety benefit. According to Adler, the commission spends extra thousands of dollars and hours trying to satisfy its demands.

The NPRM makes four modifications to the regulatory language, among them: clarifying that Section 6(b) does not apply to information already publicly available or disseminated, and revising the current policy of granting firms an absolute right to have their comments withheld from any information the CPSC releases. 

“In fact, this policy goes well beyond the requirements of 6(b), which generally grants a firm the right to have its comment included in a release.  It does not, however, grant a firm the absolute right to have its comment withheld from release,” Adler said.  “Therefore, the staff’s proposed revision requires a firm to demonstrate why its comment should be withheld from the public when the Commission releases information the firm has commented on.”  

The decision to publish a Notice of Proposed Rulemaking passed, two-to-one, along party lines. The commission is currently down from its five-member composition, in the wake of the departure of former Commission Chairman Inez Tenenbaum, a Democrat and Republican Nancy Nord.  In addition to Adler, former U.S. Rep. Ann Marie Buerkle serves as a Republican Commissioner and Marietta Robinson is the other Democratic commissioner.

Buerkle waved the flag for industry decrying these amendments:

“These recent proposed changes signal a troubling shift in the tone and the direction of this agency. CPSC seems to be moving from being an entity with which firms and companies can and should be open and candid, to one with which businesses will have to have their guard up,” she said in her statement.” This sea change predictably will hamper our ability to keep consumers safe. Our focus should be on strengthening the channels of communication with all participants in the safety triangle – consumers, business and government – and not taking affirmative steps to favor one at the expense of unnecessarily disregarding and alienating another.”

Actually, the bricks have been tumbling off the 6(b) wall since 2008, when the Consumer Product Safety Improvement Act mandated the creation of the consumer products database of complaints, investigations and recalls. The database was the agency’s first initiative in which 6B did not apply, and manufacturers, who lobbied hard – unsuccessfully – to either make the reporting process more cumbersome for consumers or to create a counterbalance to negative reports about their products.

Even Worse than 6(b)!

In October 2012, the commission suggested changing the 6(b) policy to initiate the vetting of information earlier in the process, so that the commission could improve the timeliness of the disclosures. All hell broke loose and the commission backed down.

The CPSC did, however, propose a major overhaul to the recall and compliance regulations in November 2013 that had manufacturers clutching their pearls all over again. 

This NPRM set out guidelines for the content and form of voluntary recall notices, to make the process more efficient, and to give manufacturers greater predictability in working with the commission – and again, more timely disclosures. These changes also give the Commission some reasonable, and much needed hand in voluntary consent agreements and recalls.

One of the biggest changes would affirm that once a firm voluntarily agrees to undertake a corrective action plan, it would be legally bound to fulfill the terms of the agreement. Under the current regulations, the Commission does not have the power to enforce a corrective action plan if the company violates the terms of the agreement.  The rulemaking also proposes to change the calculus of the negotiations on the language of a voluntary consent agreement. Currently the company can make an admission that it violated the Consumer Product Safety Act if it feels like it. The proposal eliminates the phrase ‘‘if desired by the subject firm,’’ and replaces it with the phrase ‘‘if agreed to by all parties.’’

Other changes require companies to work harder at notifying consumers of recalls – including using more current internet and social media resources. Costco, for example, uses robo-calls to directly contact consumers of a product recall. The CPSC also wants to reform the compliance program schema by establishing protocols that, among other things, require a company to hire a product safety manager, and provide protections for whistleblowers who report a product safety issue to management, and to report safety problems to the CPSC in a timely manner. The proposed procedures would lay out the circumstances under which the commission would pull out its big gun – namely repeat offenders.

The proposal drew 47 comments – mostly from industry associations complaining how this upsets the balance of their universe. The winner, without peer, was submitted by Shihan Qu, Founder of Zen Magnets. Entitled “Adler is Out of His Mind,” the submission is a full-color, multi-paneled professionally produced comic book – amusing on many levels.  Major points for creativity – finding something funny in a rulemaking is a hen’s-teeth order of rarity. But what’s really funny is Shihan Qu’s portrayal of Robert Adler, as a corpulent, balding boss, sneering behind a white mustache, like some top-tier apparatchik of the Central Committee of the Communist Party of China (CPC). Shihan Qu has Adler literally and arbitrarily crushing hapless manufacturers under his giant, fat finger. In other words, Shihan Qu has confused the Chairman of the CPSC with the Secretary of the CPC. (Ah, there but for the grace of an “S” goes Bob.)

And here’s where Qu loses points. First, if you are paying someone to create this representation, shouldn’t the artist at least have Googled Adler’s image to get the caricature right? Seriously. Second, the CPSC is practically the most toothless regulatory agency in the whole federal pantheon. As a matter of personal style, Adler is consistently courteous and professional. He’s no political hack – he’s a former attorney-advisor to two CPSC commissioners over nine years. He’s also served as counsel to the Subcommittee on Health and the Environment of the Committee on Energy and Commerce in the U.S. House of Representatives, working on all sorts of product liability legislation. He knows this agency, and he knows how thoroughly it has been hamstrung by rules that favor industry’s fee-fees over safety.

Indeed, these proposals are meant to upset the balance of industry’s universe. They’ve long enjoyed privileges other regulated industries only dream about.