Acting Chairman Moore presses for end to cap on civil penalties.

Acting CPSC Chairman Thomas Moore recently surprised some observers by calling on Congress to lift the existing legal cap on the amount of civil penalties that CPSC can impose on a product manufacturer or distributor. Moore made the comments addressing the ninth annual meeting of the International Consumer Product Health and Safety Organization (ICPHSO) in Orlando, Fla., on Feb. 28.

The current limit on civil penalties is a maximum of $1.65 million. The penalties may be imposed if a company fails to report to CPSC in a timely manner about a product hazard. [1]

ICPHSO is a forum for government, industry and consumer groups to come together to address health and safety issues. The two-day meeting in Orlando was held in conjunction with the meeting of the European Consumer Safety Association, which discussed international standards.

Elaine Tyrrell, CPSC's Director of Outreach, is the chairman of ICPHSO for the 2001-2002 term. CPSC sent a score or more of its top engineering, compliance and legal experts to participate in the meeting. Other attendees included industry representatives, attorneys, consumer groups representatives, and product safety consultants.

In 1990 Congress amended the Consumer Product Safety Act (CPSA) to allow the agency to make periodic adjustments to the maximum civil penalty amounts allowed. The civil penalties may be imposed under the provisions of the CPSA, the Federal Hazardous Substances Act (FHSA), and the Flammable Fabrics Act (FFA).

Periodic adjustments are based on cost-of-living increases every five years. The last adjustment was made in the year 2000. The current maximum penalty is $1.65 million, [2] but the Commission has seldom approached that amount in any of its civil penalty cases.

Acting Chairman Moore told the ICPHSO group that "[p]erhaps some companies would be less likely to try to stall our agency by putting off reporting hazardous products if we had penalties that were more commensurate with the harm they can cause." [3]

Moore alleged that the limit on the penalty amount impedes the ability of the government to punish a firm, "thereby limiting the deterrent effect of civil penalties." [4] Moore's support for eliminating the cap on civil penalties tracks the legislation backed by former CPSC chairman Ann Brown, former First Lady Hillary Clinton and the Clinton White House in May 2000. The legislation was never enacted. The Clinton bill included other "tougher" enforcement provisions, such as allowing the agency to override a manufacturer's selection of a consumer remedy under Section 15 of the CPSA and the FHSA. Current law permits a manufacturer, distributor or retailer the option of selecting "repair, replacement or refund" as a consumer remedy for a hazardous product. [5]

Rep. Ed Markey (D.-Mass.) introduced the "Consumer Product Risk Reporting Act of 2001" on Oct. 2 of last year, which, if adopted, would also increase the amount of civil penalties, and eliminate the cap on civil penalties. Markey's bill also includes a provision giving the agency authority to override the manufacturer's selection of a product hazard remedy and would give CPSC authority to impose criminal penalties for non-compliance with Section 15 reporting requirements. [6]

It is noteworthy that Acting Chairman Moore did not indicate his support for the other provisions of the Clinton and Markey bills.

Associated Press (AP) reporter David Ho noted that the highest civil penalty yet imposed was one for $1.3 million in April of 2001, against Cosco, a manufacturer of children's products. [7] But in the Cosco case, the civil penalties involved were imposed on the company for reporting violations on five different products, for a total $1.3 million. The products included cribs, crib mattresses, tandem strollers, car seats/carriers, and high chairs. [8] No individual product-reporting penalty was as high as $1.3 million. AP reporter Ho quoted Rick Locker, an attorney who represents toy and children's product manufacturers, as saying that the present cap on civil penalties is appropriate: "We believe that Congress has set the cap appropriately to avoid arbitrary penalties, and fines. The agency has never even saw fit (sic) to exceed the cap that exists. It begs the question of why it is even necessary." [9]

At the time the Clinton White House introduced its CPSC amendments, Commissioner Mary Gall opposed the concept, noting that during her tenure on the Commission there had been no civil penalty that "came close to the present limit of $1.65 million." "It is the certainty of a penalty, rather than its theoretical upper limits, that serves as a better deterrent to failures to report product hazards," Gall said at the time. [10]

Consumers would lose under the Moore proposal, since customers who buy the companies' products ultimately pay such government fines through higher prices. There is no word on whether the Markey bill will get a hearing in this session of Congress.

High Level CPSC Official Takes Sabbatical to Work for Company that Makes New `Segway' Human Transporter

In a development that is sure to raise some questions on Capitol Hill, a high level career employee of CPSC has taken a ten month "sabbatical" with full government pay to work with the makers of the "Segway," a new scooterlike "human transporter." The debut of the Segway was announced with much hype last December.

The CPSC official, Ron Medford, is an engineer with 23 years at the agency, who has worked as Assistant Executive Director for Hazard Identification and Reduction.

As reported in a March 1, 2002 Wall Street Journal article, [11] Medford was favorably impressed by the product in a visit last May to the manufacturer's headquarters in Manchester, N. H.--DEKA Research & Development Corporation (DEKA). The Journal story notes that after Medford returned to Washington, the agency defined the Segway as a "consumer product." Actually, Medford had little to do with the designation, The agency's Office of General Counsel, in a response to a query from DEKA's Washington attorney, Eric A. Rubel of Arnold & Porter, stated that based on the information presented, the product could be considered a consumer product. (Rubel, by the way, is a former CPSC General Counsel under former CPSC chairman Ann Brown.) Nonetheless, the letter cautions that the matter was not reviewed or approved by the Commissioners. [12]

A similar letter from NHTSA's General Counsel's office made a determination that the Segway was not a motor vehicle" for regulatory purposes, given "assumptions about licensability and actual usage." [13]

The definition of his product as a "consumer product" is exactly what inventor Dean Kamen wanted. Had the product been defined by the National Highway Traffic Safety Administration (NHTSA) as a "motor vehicle," its lobbying effort to persuade states and municipalities to allow its use on urban sidewalks would have been doomed. Neither does Kamen want his product to be called a "scooter," since many cities have already banned those devices from sidewalks as a threat to the safety of pedestrians.

Medford will devote his time at Segway headquarters until next July researching data that provides a basis to promote the product for sidewalk use. Company lobbyists are already at work wooing state legislators and city officials with those arguments.

Taxpayers are paying Medford his current top-level government salary for the ten-month period, while Segway is picking up his living expenses in Manchester. The authority for CPSC to approve the Medford sabbatical is based on a government-wide statute authorizing the Senior Executive Service (SES). Under that provision, SES employees such as Medford may opt to work outside government for up to a year to improve his or her knowledge about industry practices. Theoretically, that knowledge will augment the employee's skill when he or she returns to government service.

The Journal article quotes Medord as saying he hopes to "learn a little bit about what companies do to bring products to market." [14] The Journal article also quotes former CPSC Chairman Ann Brown as saying of the Segway that "[t]here are still some major safety considerations, but I don't think they outweigh the potential benefits of these machines." [15]

The Segway was developed at an estimated cost of $100 million and relies on gyroscopes contained in a high tech sensor package. Time magazine reports that as many as ten microprocessors are used in the product's design. [16]

Dean Kamen, the product's designer, says he hopes to sell the product to consumers for $3,000 each. The machine weighs only 65 pounds and can run up to 12.5 miles per hour. It has already been tested by commercial companies and some postal service facilities, but so far has not been sold directly to consumers.

According to John Heilemann writing on Dec. 2, 2001 for Time.com, Segway's inventor Dean Kamen entertains grand aspirations for storming the consumer market. He reportedly thinks his product "will be to the car what the car was to the horse and buggy." [17]

Kamen foresees that automobiles will be banned from cities to accommodate millions of "empowered pedestrians" using the Segway as their means of transportation. It is said he hopes to produce 40,000 Segways a month at the Manchester N.H. plant by the end of this year. [18]

CPSC has reported that 2,870 emergency room-treated injuries relating to motorized scooters were reported for the first 9 months of 2001. This compared to 2,760 such injuries reported in the same period in 2000. However, the motorized scooter injuries monitored by CPSC were non-Segway-type scooters. In Heilemann's Time.com article, Kamen says that Segways are "even safer than walking." [19]

CPSC transplant Medford seems to have made his mind up about the safety of the Segway as well. He was quoted in the Time. corn article recently:

      "... According to Ron Medford, a senior CPSC official, the Segway has
   `safety features that are far more substantial than we normally see in a
   consumer product--features closer to those associated with medical
   devices.' (Medford, it must be said, was so impressed that he is taking a
   sabbatical at DEKA, though he remains on the government's payroll.) To make
   the machine even safer, it comes equipped with three computerized keys that
   set speed and performance limits. The slowest setting, now called training
   mode, used to be jokingly referred to around DEKA as CEO mode."--Time.com,
   "Reinventing the Wheel, by John Heilemann, Dec. 2, 2001.

On this topic, the Commissioners are yet to be heard from.

Markey, Other Legislators, Call on Expert Panel to Assess Amusement Park Rides' Hazards

The alleged dangers of amusement park rides always seem to produce headlines. Thus the story published in the January issue of the Annals of Emergency Medicine warning that emergency room physicians could see a "significant increase" in head, neck and back trauma, due to newer rides with high G-forces, received extensive media attention.

Indeed, Rep. Ed Markey (D-MA.) immediately responded by asking the Brain Injury Association of America to investigate the reports. Ten other Congressmen, all Democrats, and one Senator (Robert Torricelli of New Jersey) joined Markey in signing the letter. The association will set up a blue ribbon panel to assess the risks. Markey has regularly backed legislation to give CPSC jurisdiction over fixed-site amusement park rides, and his current bill, H.R. 3032, the National Amusement Park Ride Safety Act, is backed by a number of consumer groups. [20] CPSC currently has jurisdiction over mobile amusement rides. Congress specifically exempted fixed site parks from CPSC's jurisdiction.

The authors of the Annals article, Doctors Robert J. Braksiek and David J. Roberts, said they found 16 cases of head and neck injuries associated with roller coaster rides in the medical literature since 1979. But, said the doctors, the risk of injury is one in 124,000 rides, from data from CPSC and the figure of 900 million rides park visitors take each year.

The International Association of Amusement Parks and Attractions (IAAPA) responded to the story by saying that there was no new information in the medical study. Terrie L. Ward, Vice President of Communications for IAAPA, noted that in the latest reports from CPSC, injuries on fixed-site amusement rides dropped by 14% from 1999 to 2000. [21] Ward also noted that 99.99% of amusement park visitors have a safe experience.

The physician authors of the Annals report noted that the CPSC data has its limitations.

      "... The proximity of the participating EDs (Emergency Departments), to
   either a mobile or fixed-site amusement park is an important limiting
   factor in the data collection. If the participating EDs in NEISS (the
   National Electronic Injury Surveillance System) were not found in
   geographic proximity to amusement parks, the CPSC would significantly
   underestimate reported injuries, Furthermore, the CPSC report did not
   distinguish reports of minor trauma, such as ankle sprains or simple
   lacerations, from major trauma, such as traumatic brain injury, in their
   statistics."--"Amusement Park Injuries and Deaths," Annals of Emergency
   Medicine, January, 2002.

The Annals authors further observed that CPSC itself noted in a 1998 report that only.08% of amusement park injuries required hospitalization. Using attendance figures from the amusement park industry, the authors conclude that the "risk of being injured severely enough to require medical attention on an amusement park ride in 1999 was 1 in 124,000 rides. The risk of injury requiring hospitalization was greater than 1 in 15 million rides. The risk of being fatally injured was 1 in 150 million rides." [22]

The aim of Congressman Markey's request to the Brain Injury Association is to determine a relationship between brain trauma and higher g-forces on the newer roller coasters and other amusement park rides.

Markey said "[W]e are asking this expert panel to determine what is safe before the industry's engineering excesses cause more risk for roller coaster riders." [23]

It seems as though Congressman Markey's mind is already made up about the industry's "excesses" even before the panel issues its report.

It also seems clear that Markey's ultimate aim is to use any new data to support his bill to put fixed-site amusement parks under CPSC's jurisdiction.

CPSC Monitor has questioned the reliability of CPSC's 2000 amusement park injury data before. According to an exhaustive analysis by Ed Heiden, a consultant and former CPSC chief of policy planning, the data appeared to be skewed. Heiden concluded in a report prepared for IAPPA that there are "significant doubts" about the agency's analysis, due to the fact that there was a change in the agency's NEISS sample base between 1996 and 1997. At that time, CPSC dropped more than 20 hospitals and added over 30 replacement hospitals to the NEISS [24] system [25]

Briefly Noted

* CPSC's two sitting Commissioners will appear on Capitol Hill on March 21st for a House Appropriations Hearing. The total 2003 budget requested by the Commission is 159,875,000, including $3,108,000 to cover the share of accrual costs for CSRS retirement and Federal health benefits. (This is a new accounting system adopted by the Administration.) Without the retirement and health costs, the 2003 budget request is $56,767,000, $1.6 million above the current 2002 appropriation of $55,200,000. Most of the increases are due to pay increases and increased rental costs.

* Last November, the Lighter Association, Inc., the trade association for the cigarette lighter industry, petitioned CPSC to adopt the current voluntary standard for cigarette lighters, ASTM 400-00, as a mandatory federal regulation. The Lighter Association claims that an unreasonable risk exists because of the failure to enforce the existing voluntary standard in the U.S. (The ASTM standard has legal force in Canada and in Mexico.) The Lighter Association claims non-complying lighters are being dumped on the U.S. market. At this time, there is no activity on the petition.

* The CPSC staff is recommending that Commissioners deny a petition by the New York City Department of Consumer Affairs, which seeks to regulate backyard playsets. In 1996, the Commission voted to deny four of the requests made in that petition, but to defer five additional requests until the ASTM Subcommittee for Home Playground Equipment amended its safety standard. In 1998, ASTM revised the standard, adding requirements covering ropes which could create strangulation hazards, guardrail requirements on platforms higher than 30 inches, and barriers on platforms higher than 48 inches to help prevent falls. There is also a requirement that a CPSC consumer information sheet for playground surfacing materials accompany the playset instructions. CPSC staff believes the revised standard meets the safety requirements requested by petitioners. Commissioners are expected to deny the petition.

* A Home Playground Safety Checklist is available from the Commission. Call the Federal Consumer Information Center (FCIC) toll-free at 1-888-878-3256 and ask for Item 627H. Or call CPSC at 1-800-638-2772

* The Commission is also expected to vote to deny a petition requesting a performance standard for nonwood baseball bats. The petitioner, J. W. MacKay Jr. of Mount Pleasant, Texas, believes that non-wood bats (primarily aluminum bats) increase a player's risk of being struck by a batted ball. He argued that the performance of non-wood bats allows the ball to come off the bat at such a speed that the pitcher does not have sufficient time to react and therefore it poses an unreasonable risk. CPSC staff could not substantiate the petitioner's claim and thus recommended that the Commission deny the petition. However, the staff pressed for an agreement with manufacturers to develop a test to measure performance of the bats, the purpose of which is to design non-wood bats to perform in a manner equal to traditional wooden bats. The industry has agreed to develop such a performance test.

* It looks as though the Baby Walker issue is about to be put to rest. The Commission will soon vote to terminate a rulemaking proceeding begun in June 1994. The formal rulemaking was to address the high number of injuries that occurred each year from baby walkers falling down stairs. In the interim, the alleged hazards were addressed by a voluntary standard developed by industry with the participation of CPSC.

There has been a marked decline in such injuries since the adoption of the new non-government standard. (Commissioner Mary Gall, who voted against the 1994 rulemaking proceeding, was mercilessly attacked by those opposing her nomination to be CPSC chairman, based in part on her vote on this issue.) Commissioner Gall was correct, and shortly the Commissioners will vote to terminate the rulemaking. The process has taken nearly six years!

[1] "CPSC Chairman Keynotes International Product Safety Conference--Calls for Lifting Cap on Civil Penalties Imposed on Industry," News from CPSC, Office of Information and Public Affairs, Washington, DC, Feb. 28, 2002. Release #02-111.

[2] Civil Penalties, Notice of Adjusted Maximum Amounts, Consumer Product Safety Commission, Federal Register, Vol. 54, No. 186, Sept. 27, 1999.

[3] CPSC News Release, Op Cit.

[4] Ibid.

[5] Consumer Product Safety Act.

[6] See CPSC Monitor, Vol. 6, Issue 10, October 2001, "Markey Introduces Bill to Expand CPSC Authority."

[7] "Product Safety Head Talks Penalties," by David Ho, Associated Press, Feb. 28, 2002.

[8] "CPSC Fines Cosco/Safety 1st $1.75 million for Failing to Report Product Defects; largest fine against children's product manufacturer in CPSC's history." News from CPSC, U.S. Consumer Product Safety Commission, Office of Information and Public Affairs, April 4, 2001, Release # 01-119.

[9] "Product Safety Head Talks Penalties," Op Cit.

[10] See CPSC Monitor, Vol. 5, Issue 5, May 2000, "White House Pushes Bills to Increase Penalties, Expand CPSC Authority."

[11] "Lobbying Campaign Could Determine Fate of a Hyped Scooter," by David Armstrong and Jerry Guidera, Wall Street Journal, "March 1, 2002.

[12] Letter from Lowell F. Martin, Esq., U.S. Consumer Product Safety Commission, to Eric A. Rubel, Arnold & Porter, August 14, 2001.

[13] Letter from John Womack, Acting Chief Counsel, National Highway Traffic Safety Administration, to Eric Rubel, Arnold & Porter, August 3, 2001.

[14] Ibid.

[15] Ibid.

[16] ABC News.com, "How It Works: Gyroscopes and Sensors Give Scooter Balance" by Paul Eng, Dec. 4, 2001.

[17] "Reinventing the Wheel," by John Heilemann, Time.com, Dec. 2, 2001.

[18] Ibid.

[19] Ibid.

[20] Some of the groups backing Markey's bill are: the Consumer Federation of America, Consumers Union, and the U.S. Public Interest Research Group.

[21] "Risk of Non-Occupational Fixed-Site Amusement Ride Injury by Year, Consumer Product Safety Commission. (In 1999, the risk was 24.7, and in 2000, the risk was 20.8, even though the number of attendees rose from 309 million to 317 million for the same period.) The risk is determined as injuries divided by attendance.

[22] "Amusement Park Injuries and Deaths," Robert J. Braksiek and David J. Roberts, Annals of Emergency Medicine, published by the American College of Emergency Physicians, January 2002.

[23] "Expert Panel to Assess Adverse Health Effects of Powerful Amusement Park Rides," News from Ed Markey, U.S. Congress, Massachusetts Seventh District, Washington, D.C., Feb. 28, 2002.

[24] NEISS is the National Electronic Injury Surveillance System, used by CPSC to gather data on product-related injuries seen in hospital emergency rooms.

[25] See CPSC Monitor, Volume 5, Issue 9, "Amusement Park Industry Issues Analysis Faulting CPSC Injury Report," September 2000.

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