CPSC Decision Highlights Some Don’ts of Agency Rulemaking

Every parent is familiar with the parade of horrors that accompany household items as mundane as window coverings.  The cords that dangle from blinds are universally recognized as a grave danger to infants and children.  It is also a hot-button issue for the U.S. Consumer Product Safety Commission (CPSC), the federal agency charged with monitoring and enforcing against dangerous consumer products. On November 28, 2022, CPSC issued a final rule on a new safety standard for operating cords on custom window coverings.  The way it did so, however, will have ramifications for agency rulemaking going forward, including that done by the FDA.

CPSC’s final rule essentially banned all corded window coverings under what the D.C. Circuit Court of Appeals described in a recent opinion as an “aggressive timeline for industry compliance.”  The nearly $7 billion window covering industry was well aware of the dangers of dangling cords and put industry standards in place in 2018 and updated them in 2022.  Those standards did not address custom-made coverings however, and CPSC targeted this safety void.  However, as the D.C. Circuit found, the CPSC Commissioners ordered their new rule move forward with some very real procedural deficiencies, over industry protest and against the advice of their own agency counsel.

Within two days of the final rule, the Window Covering Manufacturers Association filed suit at the D.C. Circuit, which has primary jurisdiction to review consumer product safety rules under the Consumer Product Safety Act. See 15 U.S.C. § 2060(c). The court heard the case on an expedited basis and, last week, vacated the final rule. The court found that the Commission acted arbitrarily by failing to publicly disclose the evidence it used to support the consumer safety risk and the need for immediate action. The Commission also failed to perform an appropriate cost-benefit analysis because it used the prices of stock window coverings, which were not relevant to the rule. Finally, the rule was set to come into effect 180 days from the publication of the rule, which was an impossible timeline for industry to meet.

This decision from three Democrat-appointed judges can be seen as a traditional pullback of a procedurally deficient agency rule.  But there may be more for us to learn from this decision. Given a looming threat to agency deference, as seen in the Supreme Court decision in West Virginia v. Environmental Protection Agency last year, courts might be looking for ways to limit agency expansion. If agencies get ahead of themselves, as they often do, courts may be only too happy to rein them in. 

In this case, the D.C. Circuit ruled for the industry and sent the case back to CPSC for further action. So, this is not a decision that strips CPSC of the power to enact new rules. But any case that sends a proposed rule back to its home agency has import. No federal agency wants to be the next to headline a Supreme Court case that jeopardizes Chevron deference. Thus, federal agencies must carefully consider changes or novel interpretations of their authorities. We hope “slow and methodical” will remain in style as agencies adopt new rules or stake out novel enforcement authorities.

Given that both CPSC and FDA are regulatory agencies charged with protecting consumer safety, you can bet that this case has some rule-making takeaways that FDA will digest.  First, FDA will process and enact rules with deliberation.  After this opinion, we bet that the agency will continue to make rules at its current systematic pace.  Second, we expect FDA to make every effort to listen to industry and consider relevant standards as it decides how and why to address issues through rulemaking.  And third, we expect transparency from FDA about its decisions.  FDA, and all agencies, now have additional notice that attempts to justify decisions without that transparency are likely to draw the ire of courts.

Window Covering Mfrs. Is another judicial note to FDA and all federal agencies that they need to remain purposeful and transparent in their rulemaking and take the necessary time to veer policy away from the appearance of capriciousness.