“There’s a massive problem with their logic,” Shihan Qu told an audience, two years ago, about the federal Consumer Product Safety Commission’s attempt to ban his product, Zen Magnets. Two days before Thanksgiving, the Tenth Circuit Court of Appeals agreed with Qu and smacked the regulatory agency for improperly assessing the risk of a once-popular, now nearly unavailable, novelty for adults. The court decision vacating the agency’s proposed ban highlights how far the CPSC has exceeded its mandate, bullying small business with shoddy regulation.
Zen Magnets is the last of what was once more than a dozen companies selling powerful, ball-bearing-sized magnets. The magnet sets are used like a sort of high-tech modeling clay—with the little balls sticking together magnetically, users can position and arrange them in an infinite variety of shapes.
The CPSC has been out to eliminate these products since 2009, successfully pressuring most businesses making the magnets to “voluntarily” recall their products. Indeed, the commission had nearly cleared the field after running Craig Zucker’s highly successful company Maxfield & Oberton—the maker of Buckyballs and Buckycube—into bankruptcy. The agency had filed a complaint against the company and sued Zucker personally (ending in a settlement with the CPSC for hundreds of thousands of dollars). But Qu refused to bow when the agency, instead of claiming his product was defective or that his company had failed to provide adequate warning of risk, opted for an outright ban.
The threat to children’s health was what got CPSC onto this crusade in the first place: Some children have suffered intestinal injuries when they’ve eaten two or more magnets, which can result, as the court noted, in “perforations, infections, [and] gastrointestinal bleeding.” The CPSC first ordered the manufacturers to attach multiple warning labels prohibiting use of the magnets by anyone under 14 years old; when those labels failed to prevent any and all injuries, the agency sought the removal of the product from the market.
To the extent there is danger posed by these magnets, it is caused by misuse. Or, as Qu described it, the magnets are safe “for anyone who knows not to eat nonfoods.” There have been no accidents reported involving Zen Magnets. But in their zeal for the unattainable goal of perfect safety, the CPSC tried to ban the product anyway.
The court’s decision to vacate the magnet ban dealt with this overreach directly, explaining that the CPSC attempted a ban through rulemaking by ignoring the required cost and benefit standard. The commission failed to balance “the degree of the risk of injury caused by magnet sets” against “the public’s need for the sets and the rule’s effect on their utility and availability.” The judges found that the agency hadn’t proved that the risk of injury to children posed by the magnets was anything near to that requiring a ban. The agency also failed to account for the cost imposed on consumers who, but for the ban, would have wanted to purchase the product.
The second major failing of CPSC’s proposed ban was incomplete and false injury data. By the summer of 2012, the court explains, “ten of the thirteen largest distributors had agreed . . . to stop selling and start recalling magnet sets; by December 2012, the dominant firm in the market had ceased operating.” In effect, the regulating agency had met with great success without a ban: Magnet set sales, which totaled 2.7 million from 2009 to 2012, dropped to fewer than 25,000 per year after 2012.
The CPSC insisted that a magnet set ban was necessary even as injury incidents plummeted along with sales. To justify the ban, the agency inflated injury statistics. The court was not impressed: “According to the Commission, ninety percent of the injury reports on which it ultimately relied only ‘possibly’ involved the subject magnets sets.” The judges didn’t like the bureaucrats’ poor Internet research skills, blasting them for using keyword terms that would have included results having nothing to do with the actual products the agency wanted banned. “Underlying findings that peg the risk of injury as a mere ‘possibility’ provide the Court no assistance in assessing” whether the risk was greater than the benefit of having the product in the market. “Even though the task may be difficult, the Commission is required to advance some explanation that allows a reviewing court to evaluate whether the cost of the lost utility is in fact outweighed by the benefits of the rule.” Ouch.
The court found that the CPSC had not acted with the overall benefit of consumers in mind: “Although the Commission’s evaluation of the costs of the rule to magnet distributors was adequate, its evaluation of the costs to consumers was incomplete.” The commission had given no consideration to the “utility” of the magnet sets, removing from the market products that could be used as “scientific and mathematics education and research tools.”
The product may have value, whether for education or even just amusement. But the magnets aren’t essential to a wide range of modern products, which made them an easy target for overambitious regulators. Former CPSC commissioner Nancy Nord once told me that the problem with the magnet set ban was that it was too attainable. “Contrast the agency’s approach to button batteries, which present the same risk of injuries, i.e., small children swallowing them,” she explained.
Small magnets may be responsible for dozens of injuries; by contrast, button-sized batteries—used in everything from watches and calculators to hearing aids—have injured thousands of children, some of whom have even died. And yet, as Nord pointed out, with batteries, “the agency has agreed to a voluntary program with industry to increase warnings, make the packaging stronger, and educate the public. Obviously the agency understands it cannot ban button batteries, but it also realized that it could do so with respect to magnets.”
The Tenth Circuit court has ruled, effectively, that the CPSC has to use a better standard for its decision-making than just who has the ability to fight back.
But that doesn’t take anything away from the importance of fighting back when the federal government oversteps its authority—which means that, with its tenacity, Zen has done a service beyond just the convenience of consumers who would like to buy magnets. “Zen is like a little Yorkie terrier that has grabbed ahold of the ankle of the CPSC and will not let go,” Nord writes on her blog. “It may be that, through Zen’s actions, the CPSC will come to understand that it can protect consumer safety without disregarding basic notions of due process.”
Or maybe not, because the bureaucracy often has more than one way to litigate: A week after the Tenth Circuit ruling, a lower court judge in Denver levied a $5.5 million fine (generously reduced to $10,000) against Zen Magnets for having sold products recalled by the commission.
Abby W. Schachter is the author of No Child Left Alone: Getting the Government Out of Parenting (Encounter Books, 2016). She blogs at captainmommy.com.
