The House Energy and Commerce Committee’s Subcommittee on Commerce, Manufacturing, and Trade, chaired by Rep. Mary Bono Mack (R-CA), held a hearing last week to examine the unintended consequences of the Consumer Product Safety Improvement Act of 2008 on American job creators, including small businesses. The purpose of this oversight hearing was to develop an understanding of the problems created by CPSIA, including the practical impediments to implementation; the impact of CPSIA on children’s safety; the impact on American jobs and businesses of all sizes; and practical ways to amend the law without endangering children’s health.

Two panels of witnesses testified before the Subcommittee. On the first were Honorable Inez Tenenbaum, Chairman, Consumer Product Safety Commission; and Honorable Anne Northup, Commissioner, Consumer Product Safety Commission.   The second panel included a mix of child safety advocates and representatives of small business industries.

The Chair noted that as a former small business owner, she recognized how unnecessary regulations – even well intentioned ones – can destroy lives.  Rick Woldenberg, the operator of Learning Resources, Inc., a small business making educational products and educational toys, testified on the many difficulties associated with the new, burdensome regulatory requirements. His company, Learning Resources, Inc., has recalled a grand total of 130 pieces in a single recall since its founding in June 1984, showing management of safety risks that was highly effective long before the government intervened in the safety processes.

CPSC Commissioner Northup testified on the exorbitant costs to small businesses, stating that in  March 2009, Commission staff reported that the economic costs associated with the CPSIA would be in the billions of dollars. Small businesses without the market clout to demand that suppliers provide compliant materials have been hit the hardest. Many report that the new compliance and testing costs have caused them to cut jobs, reduce product lines, leave the children’s market completely, or close.

CPSC Commissioner Anne Northup also focused on a key aspect of the new reporting database, observing that the Commission’s database rule all but guarantees that the database will be flooded with inaccurate reports of harm, and thus it will be less useful for commission staff in determining hazard patterns than are the current, internal databases. She suggested that the Congress delay the launch of the database until new CPSC regulations can ensure that reports of harm contain sufficient information to permit verification, and the agency has an effective procedure in place to resolve a claim of material inaccuracy before a report is posted on the database.

She noted that the the Majority on the CPSC has expanded the list of database submitters to such an extent that virtually anyone can submit reports of harm—thereby rendering meaningless the statutory language listing permitted submitters. A database full of inaccurate reports from individuals who have second or third-hand information is not remotely helpful to consumers to determine which consumer product they should purchase.  Soliciting information from sources seeking to promote an agenda unrelated to simply sharing first-hand information invites dishonest, agenda-driven use of the database.  Trial lawyers, unscrupulous competitors, advocacy groups and other nongovernmental organizations and trade associations serve their own agendas and lack an incentive to prioritize accuracy in their reports of harm.  In particular, she testified, plaintiff trial lawyers with self-serving motives will use the Commission’s database to look for potential trends and patterns of hazards. Under the current database rule, this same group could also submit to the database false and unverifiable reports to fuel a lawsuit.