Product safety circle stirs debate.

CPSC Chairman Ann Brown's initiative, The Product Safety Circle (PSC), will host its first Expo and Conference on June 26, 2001. Brown hailed the effort last October as a means to help companies build safety into products and thereby reduce exposure to recalls and penalties from CPSC. (1) But observers questioned the propriety of the PSC initiative and suggested that the project was mainly a prop to establish Brown's legacy as a safety advocate.

CPSC launched PSC by writing to companies under its jurisdiction and asking them to join. Companies that sign on must volunteer to adopt CPSC's "top ten" principles, which include the principle: "Report product safety defects promptly."

Attorneys who represent companies before CPSC say the ten principles are really just "common sense business practices," but others express concern that officially adopting the PSC principles could expose those companies to even greater legal jeopardy, should unexpected product defect problems arise.

CPSC has announced that its Product Safety Circle Expo and Conference will be held at the conference facility owned by McDonald's in Oak Brook, Illinois, near Chicago.

And the keynote speaker is ... who else? ... CPSC Chairman Ann Brown!

Others on the agenda include Michael Solender, CPSC's General Counsel, Allen Feldman, President of McDonald's Corporation, and Robert Tillman, CEO and President, Lowe's Companies, Inc.

CPSC has also invited Bruce Reed, Director of the Democratic Leadership Council, to participate in a workshop called "Product Safety Crises: A Washington Perspective." On another panel, journalists and "experts" will discuss media treatment of consumer product problems in the news.

Meanwhile, a debate about the Circle's usefulness erupted at an Orlando, Florida meeting of the International Consumer Product Health and Safety Organization (ICPHSO) on March 2. (2) The organization's annual meeting featured a panel discussion entitled: "Beyond Regulation--Do Government Initiatives Like the Product Safety Circle Work?"

Spirited discussion on the topic flared up when some attendees expressed serious opposition to the concept of PSC. Not unexpectedly, some well known attorneys who represent clients before CPSC found it objectionable since it caused companies to take on an extra burden which might expose them to lawsuits.

Surprisingly, some seasoned pro-regulation consumer organization representatives, including Mary Ellen Fise, General Counsel of the Consumer Federation of America (CFA), and Consumers' Union (CU) Technical Director and former CPSC Commissioner David Pittle also argued against the concept.

Fise reportedly disagreed with the decision to allow firms that had paid a high amount in civil penalties to sign on. (3) Her concern was that PSC gives these companies a highly visible public safety status they haven't earned and don't deserve.

One attorney with a large product safety practice cautioned that taking on the extra burden of membership on the PSC gives a company a "perceived extra level of duty," that might come back to bite them if a product defect lawsuit arises.

"It [PSC] can lead to all sorts of mischief," he said.

This attorney said he could visualize a plaintiff's lawyer at a trial questioning a PSC member company about whether it had named a senior product safety official to oversee implementation of the PSC's ten principles.

CPSC staff wrote to several hundred companies inviting them to join the project, and so far about 42 have done so.

CPSC has invented a new category of PSC membership: "Supporting Members." These members qualify if they provide a product or service to manufacturers, importers, distributors, or retailers of consumer products that directly support safety efforts. CPSC says the latest members to join are American International Group, Inc., a product liability insurance company, and Returns Online, Inc., an internet product returns/recalls service.

All PSC members pledge to share and publicize their safety innovations (somehow reserving the right to protect trade secrets).

For their effort they get no special treatment by CPSC. Agency officials make it clear that membership in the PSC does not imply an endorsement of a company or its product, and companies may not advertise their PSC membership in any manner that implies that CPSC has endorsed a product or service. (That is a good thing, because the CPSC's enabling statute specifically prohibits CPSC from endorsing products by name.)

PSC members do get nice certificates that can be framed for prominent display in company offices.

At the time the PSC initiative was announced, Commissioner Mary Gall, a frequent critic of such non-statutory activities, said that the scheme was inappropriate.

Gall said, "the public has a right to expect a more even-handed approach from a regulator to the members of the community it regulates." (4)

CPSC Monitor agrees with her assessment. Forming organizations such as the "Product Safety Circle" may send warm and fuzzy signals to the regulated companies, but this one is clearly a diversion of scarce agency resources into a thinly veiled public relations campaign. It is always inappropriate for an independent regulatory agency to offer its stamp of approval, regardless of the qualifiers, to the very community it regulates.

Bush Nominates Graham to Head OIRA 

President Bush has announced the nomination of Harvard professor John D. Graham to head the Office of Information and Regulatory Affairs, (OIRA), an important player in the effort to assure federal regulations are risk-based and cost-effective. Graham, Director of the Harvard Center for Risk Analysis, is known as an advocate of using cost-benefit analysis in regulatory policy--a practice that is supposed to be utilized in CPSC's regulatory procedures. Since it is an independent agency, CPSC's rules are not subject to review by OIRA. Nonetheless, Graham's nomination sends an encouraging signal that the new administration supports using cost-benefit and will expect its regulatory appointees to use caution and common sense in imposing new rules.

West Bend to Pay Civil Penalty

CPSC announced recently that West Bend Co. of Wisconsin will pay a civil penalty of $225,000 to settle allegations that it failed to report to the agency "in a timely manner" on a hazard posed by its water distillers.

A CPSC news release spoke in glowing terms that the West Bend fine was the third largest against an appliance manufacturer in CPSC history. (The largest was $575,000, paid by Black and Decker to settle complaints about a spacemaking toaster last year, and the second largest was $400,000, paid by General Electric when it settled allegations involving one of its coffeemakers.)

The interesting twist about the West Bend case is that the incident leading to the non-reporting fine actually occurred in a foreign country. The water distillers had a motor that allegedly caught fire and posed a hazard to consumers. West Bend redesigned the product, and recalled the water distillers sold in the foreign country, but did not report to CPSC. The company later learned of incidents in the U.S. West Bend did report the U.S. incidents to CPSC.

The West Bend penalty reflects an interest by CPSC's chief compliance officer, Alan Schoem, in sending a message to manufacturers that they have an obligation to report incidents that occur outside the U.S. CPSC issued a draft "Policy Statement on Reporting Information Under Section 15 U.S.C. 2064 (b) About Potentially Hazardous Products Distributed Outside the United States" in January, seeking public comment. (5)

Remington Hairdryers Recalled

Early in CPSC's history, incidents were frequently publicized in which hairdryers were accidentally dropped into bathtubs, causing gruesome electrocutions, often to children.

CPSC's first response was to require caution labels. Later, due to technological advances, most U.S.-made hairdryers were marketed with appliance leakage current interrupter plugs (ACLI plugs) which act to cut off electrical current when the product comes into contact with water. Although CPSC did not impose a regulation requiring the ACLI plugs, CPSC's Compliance Staff reasoned that the existence of the new technology made the earlier models of hairdryers "substantial product hazards," and began recalling them.

The latest recall involves Remington hairdryers, made in China and imported for sale nationwide at several major retailers, i.e., K-Mart, Sears, Target, Bed, Bath & Beyond, Service Merchandise, Eckerd, and Army and Air Force Exchanges. These hairdryers were sold from July 2000 through January 2001, for between $18 and $25.

Consumers can return the hairdryers for a refund or a replacement hairdryer with an ALCI plug. Consumers can call Remington at [phone] or log onto Remington's website at www.remingtonproducts.com for more information.

This ACLI technology was developed by industry and is another demonstration that, left unhampered by excess government rules, the market works to produce safer products.

Underwriters' Laboratories Gets New President

In an announcement on March 15, Underwriters' Laboratories (UL) said that Loring W. Knobloch, 59, will become its ninth President and CEO. Knobloch was also elected to the Board.

Knobloch replaces G. Thomas Castino, UL's eighth President and CEO, who was elected Vice Chairman of the Corporation, and will continue as a member of UL's Board. Castino spent 41 years at UL.

Knobloch comes from a manufacturing background, having served as President and CEO of Talon Automated Equipment Company, a manufacturer of industrial processing equipment. He also served as President of International Operations of Hubbell Inc., and spent 20 years with Honeywell International.

UL is an independent safety certification organization. Only products that have had samples tested by UL to meet its requirements and are periodically checked by UL can carry the UL Mark. The organization has been testing products for 107 years, and last year more than 17 billion UL Marks were placed on tens of thousands of products worldwide.

Footnotes:

(1) See CPSC Monitor, Vol. 5, No. 10, October 2000. "CPSC Chairman Brown Announces Yet Another Initiative."

(2) The International Consumer Product Health and Safety Organization can be reached through Ross Koeser, Executive Director, 17317 Fletchall Road, Poolesville, MD 20837. Tel. [phone]. On the web at www.icphso.org

(3) See CPSC Monitor, Vol. 5, No. 10, October 2000. (For example, McDonald's, a sponsor of the Chicago conference, paid $4 million in civil penalties to CPSC; Hasbro, a toy company, paid a $400,000 civil penalty; and Toys R Us paid a $60,000 penalty for a reporting violation. L.L. Bean paid a whopping $750,000 civil penalty in a reporting violation. All are Product Safety Circle members.)

(4) Statement of the Honorable Mary Sheila Gall, in Opposition to Product Safety Circle Initiative, September 15, 2000, U.S. Consumer Product Safety Commission.

(5) See CPSC Monitor, Vol. 6, No. 1, January 2001, "Compliance Office Seeks Comment on Policy Regarding Products Outside the U.S."