Two Cheers for the Tenth Circuit’s Temporary Stay of the CPSC’s New Magnet Safety Standard

zen magnetsOn April 1—no joke—the Consumer Product Safety Commission’s troubling new standard for magnet sets was slated to go into effect.  However, thanks to the efforts of the sole remaining distributor of Small Rare Earth Magnets (SREMs) in the United States, Zen Magnets LLC, consumer freedom won a last-minute reprieve.

As companies wishing to challenge final rules of federal agencies may typically do, Zen Magnets filed a stay of enforcement directly in the U.S. Court of Appeals covering its home state, Colorado in this case.  In rapid response to Zen Magnets LLC’s motion for a stay, the Tenth Circuit issued a same-day order to temporarily “stay the enforcement and effect of the Safety Standard for Magnet Sets promulgated by respondent Consumer Product Safety Commission on October 3, 2014, which goes into effect on April 1, 2015.”  In addition, the Court ordered CPSC to file a brief in response on or before today (April 14) “to assist the court in its review of the motion.”

Under the Federal Rules of Appellate Procedure, the Court had to consider four factors in issuing the motion to stay: likelihood of success on the merits; threat of irreparable harm; absence of harm to the government; and risk of harm to the public interest.  Just because the Tenth Circuit has issued the stay does not mean that it has decided the motion to stay enforcement will succeed.  Still, if the Court were convinced that the arguments Zen Magnets has presented in opposition to the Magnet Safety Standard were frivolous or had little chance to prevail, it is unlikely the Court would have issued even a temporary stay.  Since the appeals court’s review marks the first time any entity outside the agency’s purview has had an opportunity to check CPSC’s work, it is encouraging to see the Tenth Circuit forcing the agency to explain its unprecedented actions here.

Zen Magnets raises multiple objections to the CPSC’s proposed magnet standard.  First, the company notes that CPSC’s data was fundamentally flawed.  When adopting a product safety standard, the agency has a statutory duty (and, really, a deeper obligation) to get the science right.  Like prior restraint in the free speech context, product bans (or the equivalent, as here) are a particularly oppressive form of regulation.  Hence, a federal agency proposing to remove a product from the marketplace should face a very high bar to achieve that goal.  In analyzing the risk posed by magnets, CPSC appears to have shortchanged its duty.

The agency’s scientists rely in part on data from the National Electronic Injury Surveillance System Database, which appear to show little or no difference in injuries attributable to magnet sets before and after SREMs went on the market.  The Final Rule states that an average of roughly 580 ingestion incidents per year occurred in calendar years 2009-2013.  But in the three years prior to 2009, using the same counting method, an average of 650 emergency room visits occurred annually from the ingestion of products matching the SREM description.  CPSC ignored the pre-2009 data because SREMs were not on the market yet.  But if the introduction of SREMs to the marketplace did not result in an increase in ingestion incidents, it is hard to fathom how the CPSC’s data supports its proposed safety standard.

One of the first rules of data analysis is to ask the question “compared to what?”  By deliberately avoiding that question, the CPSC presents a partial and slanted version of the truth about the risk from SREMs.  The Commission’s effort to use data selectively appears arbitrary and calculated to support a pre-determined result rather than to establish the scientific facts of the actual risk posed.

Second, Zen points out that CPSC did not accord proper weight to the required statutory factors in reaching its decision.  Those factors include: (1) the degree and nature of the risk of injury that the rule is designed to eliminate or reduce; (2) the approximate number of consumer products subject to the rule; (3) the public’s need for the products and the rule’s likely effect on utility, cost, or availability of the product; and (4) whether the agency’s means to achieve its risk reduction goal minimize adverse effects on competition, manufacturing, and commercial practices.

In particular, CPSC wrongly assumed, despite ample evidence to the contrary, that the public does not need SREMs.  Although the agency contends the Final Rule will not affect the use of magnets in education, in fact it would ban magnets from beneficial uses such as teaching physics, chemistry, biology and other subjects in high schools and colleges.  Teachers, practicing physicists, national laboratory employees and others who filed comments on the Final Rule expressed concern about losing access to this “invaluable teaching tool” that is used for “experimental and demonstrative purposes.” Regrettably, the new standard would not permit the sale of magnets that have the same utility for educational, scientific, and artistic purposes.  Magnets that are not magnetic enough to exhibit the properties that teachers and scientists need are about as useful as matches that won’t spark.

The agency’s proposed solution bans all magnets that exceed a certain flux strength level, which will utterly deprive consumers of SREMs whose physical properties made them uniquely attractive.  In addition to the special teaching and experimental uses of these magnets, they are just plain fun to play with.  The thousands of consumers who paid $25 or more apiece for magnet sets provides strong evidence that consumers *do* derive utility from SREMs.  Those who have had the personal experience of playing with a set of these magnets will attest that there is no ready substitute for the endless variety of fun this executive desk toy provides.

Yet the agency appears to attach little or no value to consumer purchases.  It’s one thing for a federal safety agency to require that a product be manufactured and sold in such a way as to minimize risk.  It is quite another thing to effectively ban a product.  It is troubling enough that a government agency purports to be able to decide whether consumer goods have utility, but to then reject the thousands of purchases by American consumers as evidence of high utility is indefensible.  Against the record of serious health consequences for children who abused the product by swallowing it, the agency should measure the actual utility derived by consumers—not just decide that the product is unnecessary.

The agency’s logic appears to be no more sophisticated than this: kids were getting harmed by this product; there is no need for this product; this product should be taken off the market. That is a dangerous logic and troubling precedent given the long list of consumer products useful to adults but dangerous (or fatal) to kids when misused.  Knives, lighters, household chemicals, and rat poison are just a few examples of useful products no parent would want a child to play.  The solution is not a product ban; it is responsible marketing by companies and responsible parenting by adults. But rather than label SREMs “Keep Out of Reach of Children,” CPSC saw fit to effectively ban their sale altogether.  This decision is particularly odd since SREMs pose zero threat when used properly, unlike some quite dangerous products that are perfectly legal—like firecrackers. In short, the fact that potential misuse of this product can cause injury does not justify removing it from the market.

Finally, it should be noted that Congress did not empower the CPSC to ban products that the agency does not like.  Rather, Congress carefully circumscribed the power to ban products under law and limited the power to situations where the CPSC can make certain showings of hazardousness that are not easy to make.  Apparently the agency did not believe it could make the necessary showing with regard to Zen Magnets, which is why the agency is trying to enforce a superstrict safety standard instead.

But by adopting a safety standard that effectively bans an entire product category, CPSC raises the serious question whether the agency is trying to do an end-run around its own governing statutes.  If the agency wants to ban a product, the Tenth Circuit should force CPSC to go through the statutory steps required to ban a product, not let it get away with passing a back-door ban via suffocating safety standard.  The agency’s entire strategy is legally suspect, and the Tenth Circuit should examine it closely and carefully on top of all the other issues Zen Magnets has raised to date.

For temporarily staying the magnet set standard while it decides how to rule, the Tenth Circuit deserves two rousing cheers, one each for Judges Paul Kelly and Harris Hartz who issued the stay.  A full complement of huzzahs will not be in order until the Tenth Circuit buries the CPSC’s misguided rule once and for all.

Also published by Forbes.com at WLF’s contributor site

2 thoughts on “Two Cheers for the Tenth Circuit’s Temporary Stay of the CPSC’s New Magnet Safety Standard

  1. Pingback: April 22 roundup | Internet Tax Lawyers

  2. Pingback: April 22 roundup - Overlawyered

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