March 31, 2016

Recently, the Commission voted 4-1 to withdraw certain authority that was delegated to the Executive Director and Office of Compliance more than 30 years ago.  The 1981 delegation gave the staff authority to approve a Corrective Action Plan (CAP) in any voluntary recall case except one involving a “Category A” hazard. 

Category A hazards (also called Class A hazards) are the most serious.  According to our Recall Handbook (2012), a Class A hazard exists when a risk of death or grievous injury is likely or very likely, or a risk of serious injury is very likely (p. 14).  By their nature, these hazards “warrant the highest level of attention.”  Id.  For example, “they call for a company to take immediate, comprehensive, and expansive corrective action measures to notify consumers, retailers and distributors.”  Id.  For this most serious category of cases, the Commission reserved to itself the authority to approve all CAPs.

It has been a long time since the staff has classified a hazard as Class A—too long.  All of the current Commissioners agree that the system is not working as intended if the staff has not identified a Class A hazard in more than a decade.  The question is what to do about this problem.  And this is where I part company with my colleagues.

It’s likely drawing the senior staff’s attention to this issue is all we had to do.  What the Commission did, however, is far more problematic.  Instead of providing direction to the staff on what constitutes a Class A hazard, the Commission majority approved a proposal from Commissioner Robinson to revoke the staff’s authority to approve a CAP in all cases where a death has occurred

The italicized phrase was chosen so as to include not only cases where a death was indisputably caused by a product but also cases where a death is only coincidentally associated with the product at issue.  For example, suppose a youngster drowns after falling from a ladder into an above-ground swimming pool.  CPSC staff finds no indication that the ladder was unstable and so decides not to pursue the matter.  Two years later, the ladder manufacturer discovers that some of the ladders have a sharp edge underneath one of the steps.  The manufacturer proposes to do a Fast Track recall.  Although the toddler’s death has nothing to do with the sharp-edge defect, the manufacturer’s Corrective Action Plan will have to be approved by the Commission because “a death has occurred.” 

As this hypothetical illustrates, the revised delegation diminishes the role of risk in determining which CAPs require Commission approval—if a death has occurred, Commission approval is automatically required.  This doesn’t make sense because the hazard classification, not the occurrence of a death, is the factor that should make a difference in how the case is handled.  In other words, the revised delegation violates the principle of risk-based decisionmaking--one of the basic precepts that has guided the Commission for many years.

I am concerned that the truncated delegation may have other adverse consequences as well.  In a recent blog post, Commissioner Robinson explained why she originally proposed the revised delegation.  She said that after analyzing recall press releases for the last five years, she found that “some voluntary CAPs, many of which involved the deaths of small children, were simply inadequate.”  The Robinson Report #17.  In her view, “these CAPS would have been stronger had they been submitted to the Commission for approval.”   Id.  Thus, even though she maintains that the goal of the delegation change is “not to directly affect the preliminary determination of a hazard classification or the negotiation of the voluntary CAP,” she still believes that “th[e] revised delegation will lead to more appropriate and comprehensive voluntary CAPs and an overall safer marketplace for tomorrow’s consumer.”  Id.

If the goal isn’t to affect negotiations directly, then how will the CAPs become “more appropriate and comprehensive”?  I am particularly concerned that some Commissioners may use the approval process to demand that these CAPs include features that were proposed in the much-criticized voluntary recall rule. 

One certain impact of the revised delegation is to delay voluntary recalls in these cases.  The delay may be relatively brief in some instances, but in others, the need to obtain Commission approval may require extended renegotiation.  In some cases, to win Commission approval may require CAP ingredients that a company is not willing to accept.  In such cases, the Commission will have to resort to costly litigation—a process that may cause even longer delays and yield little or no benefit to the consumer.

The revised delegation does not apply retroactively.  Instead, it will take effect for cases opened on or after April 12, 2016.  Also, in a related action I am happy to support, the Commission voted unanimously to require a staff assessment of the amended delegation within 14 months after it becomes effective.