DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT-INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1982

WEDNESDAY, APRIL 29, 1981

U.S. SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS,

Washington, D.C.

The subcommittee met at 9:30 a.m. in room 1318, Everett McKinleyDirksen Senate Office Building, Hon. Jake Garn (chairman) presiding.

Present: Senator Garn.

CONSUMER PRODUCT SAFETY COMMISSION STATEMENT OF STUART M. STATLER, ACTING CHAIRMAN ACCOMPANIED BY:

RICHARD GROSS, EXECUTIVE DIRECTOR

RICK TINSWORTH, ACTING DIRECTOR, BUDGET PROGRAM PLANNING AND EVALUATION

MARGARET FREESTON, ACTING GENERAL COUNSEL

DAVID PITTLE, COMMISSIONER

RICHARD STAVNEAK, SPECIAL ASSISTANT TO DIRECTOR OF BUDGET PROGRAM PLANNING AND EVALUATION

BUDGET REQUEST

Senator GARN. The subcommittee will come to order.

The Consumer Product Safety Commission is an independent regulatory agency that was established on May 14, 1973, and is responsible for protecting the public against unreasonable risks of injury from consumer products, assisting consumers to evaluate the comparative safety of consumer products, developing uniform safety standards for consumer products and minimizing State and local regulations, and promoting research and investigation into causes and prevention of productrelated deaths, illnesses, and injuries.

This year the Commission is requesting $32,983,000 which represents a reduction of $9,157,000 from fiscal year 1981.

I see that you have a 15-page prepared statement. If you would present a summary of your statement at this time, we will place the entire statement in the record.

SUMMARY OF STATEMENT

Mr. STATLER. Thank you, Mr. Chairman.

On behalf of the Consumer Product Safety Commission, I welcome

this opportunity to appear before you and to discuss the agency's budget request for fiscal 1982. Our budget request is submitted in accordance with the President's fiscal 1982 recommendation; namely, for $32,983,000 and for 697 full-time equivalent work years. This reflects a substantial cut from our January 1981 submission and our fiscal 1981 spending level.

The Commission believes it has an obligation to alert the subcommittee that we have serious concerns about our ability to carry out our statutory mandate at this $33 million level. We share a commitment with you and with the President to reduce Federal spending. In our case, however, the proposed cutback will undercut our ability to satisfactorily carry out our mandate and threatens to impair our ability to fulfill that mission to protect the American public from unreasonable risk of injury.

Today we have what we believe to be a cost-effective and responsible Commission, operating on a bare-bones, no-frills basis. Vital programs will suffer severe impacts if the sizable cutbacks that are reflected in the current request are imposed on top of the cost-efficiencies that the Commission, largely as a result of the work of this committee, has been able to put into effect over the last several years.

REGULATORY AND ADMINISTRATIVE IMPROVEMENTS

With respect to regulatory and administrative improvements of the kind I just alluded to, in recent years we have, first, set priorities to target the most significant hazards, particularly those from which consumers cannot adequately protect themselves. Second, we have become a recognized leader among Federal agencies in performing cost-benefit analysis that we do on a regular basis. Third, we have saved substantial sums by making management more efficient. I would like to discuss each of these in turn.

First, on targeting priorities, the Commission is no longer subject to the criticism that we dissipate our resources on priorities numbering in the hundreds. We now have 12 for the current fiscal year. In setting priorities, we consider the severity of the risk, the size and characteristics of the population exposed-for example, whether infants or elderly are affected-and the circumstances of exposure, whether the risk is foreseeable or avoidable. Careful priority setting insures that we concentrate our resources on the most serious hazards. This increases our cost-effectiveness.

With respect to performing cost-benefit analysis, in which the chairman of the subcommittee, Senator Garn, has taken a great interest over the years, the Commission is in the forefront among Federal agencies. Our proposed regulations under section 9(c) of the Consumer Product Safety Act establish a clear framework for assessing costs and benefits of all our actions. We have proposed that as a rule to guide us so that the public knows precisely how we operate and we expect to put even more attention and resources into this effort.

Just a few weeks ago, we conducted a public hearing on the methodology we will use in assessing costs and benefits. Representatives of the administration and other witnesses unanimously testified very favorably with respect to the Commission's activities in this area. Indeed, Murray

Dollars in Millions

Weidenbaum, the Chairman of the President's Council of Economic Advisers, has specifically praised the Commission for being in the forefront on cost-benefit analysis.

And third, with respect to administrative economies, we try to get the most for each dollar spent. The Commission has streamlined its management and expenditures, becoming more lean and more efficient than it was just a few years ago.

A few examples. We reduced expenditures by outside contractors by some 15 percent last year. We scaled down our data-gathering procedures, saving $300,000 annually. We reduced fourth-quarter contract spending down to 24 percent of the year's total, in comparison to 48 percent just a year earlier. And we reduced travel expenditures last yeat by $379,000, or almost 30 percent from the year earlier. Again, these savings came in response to this committee's suggestion that we look closely into these areas.

These and other efficiencies have made it possible for the Commission to meet cost-saving targets over the last 4 years. In this period, our budget has remained practically level, so that we have experienced what amounts to about a 26-percent decrease, as this chart will show, in terms of our actual spending power, as a result of inflation.

COMMISSION ACCOMPLISHMENTS

The Commission's reform efforts, the kind I just talked about, are producing worthy results. Since mid-1978, five major mandatory rules have gone into effect, and two others have been promulgated. Approximately 100 deaths and 90,000 injuries will be prevented each year when these rules are fully implemented. Further, corrective actions, including recalls, have avoided untold tragedies and removed literally thousands of potentially lethal products from the marketplace and from consumers' hands. And, finally, some 200 deaths and 125,000 injuries will be prevented when recent industry-adopted voluntary standards, most of which have stemmed from the cooperative activities of the CPSC, have their full impact.

The Commission is active in pursuing the voluntary route, having cooperated in the development of some 83 voluntary standards since 1972, when we were established. By contrast, I will note that we have issued 33 mandatory standards in our 8-year history. We have consistently put emphasis on working with industry to take advantage of the voluntary route and have done so even more over the last year or two.

Notwithstanding progress in reducing injuries and deaths from consumer products, the Commission's job is far from done. Serious hazards remain. Some 33 million product-related injuries occur each year, many of them preventable at reasonable costs. New products and product uses, as well as new or emerging hazards, will continue to require agency attention.

There will always be design defects and there will always be assembly defects that come to our attention and need to be dealt with by a Federal presence. We found in the past that industry, on its own, will not always take the responsible action that we would expect of them without that presence.

BUDGET REDUCTION

On the impact of the proposed budget cutback, reductions contained in our current budget request, about 30 percent fewer dollars and a personnel cut from 942 to 697 full-time equivalents, will have a serious impact on CPSC's ability to function effectively. I will ask you to take a look at the second chart which compares on a percentage basis the size of the CPSC cut of 30 percent to that of several other comparable Federal regulatory agencies. With the exception of the National Highway Traffic Safety Administration with a cut of 17 percent, the CPSC percentage cut is more than two times as great as any other comparable agency.

Senator GARN. If we could get you additional money-in taking it from the FTC-I would be happy to do it.

Mr. STATLER. Thank you, Mr. Chairman. We might have to talk about that later.

Senator GARN. I don't put your agency in the same categories as other agencies on the chart. I do, however, put FTC in the same categories as EPA and IRS. That is why I wouldn't mind taking some of FTC's money for some of your activities.

Mr. STATLER. With this kind of cut, Mr. Chairman, we will be less able to anticipate hazards and prevent tragedy before it occurs. By requiring huge field and enforcement slashes, the cuts will impair our ability to encourage voluntary industry safety efforts and to deter potential irresponsible actions.

Specifically, field staff under this budget will be cut by some 40 percent, or about 115 full-time equivalent positions. In-depth injury investigations performed in the field, essential to pinpointing the actual cause of product injuries, will be cut by some 20 percent. Further reductions will be required in funds allocated for the national electronic injury surveillance system, our primary source of nationwide injury data, which we use extensively and which industry uses in setting voluntary standards. These reductions will seriously impair our ability to detect hazards and to study injury patterns, both of which are fundamental to almost all agency work. The Commission will necessarily become reactive rather than preventive.