O’KEEFFE’S, INC., Petitioner, v. U.S. CONSUMER PRODUCT SAFETY COMMISSION, Respondent

92 F.3d 940, 96 Daily Journal DAR 9873, 96 Cal. Daily Op. Serv. 6034, 1996 U.S. App. LEXIS 20230, 1996 WL 452991

• Court: Court of Appeals for the Ninth Circuit
• Decided: August 13, 1996
• Docket: 94-70580
• Status: Published

Opinions

Opinion by Judge SCHROEDER; Dissent by Judge REED.

SCHROEDER, Circuit Judge:

I. INTRODUCTION

This is a petition for review of a decision of the United States Consumer Product Safety Commission (“the Commission”), considering a request by the petitioner, O’Keeffe’s, Inc. (“O’Keeffe’s”). The Commission denied O’Keeffe’s petition to amend the Commission’s regulations setting impact standards for glass and other glazing materials used in doors, including storm doors, sliding glass doors, and shower and bathtub enclosures. O’Keeffe’s is engaged in the business of manufacturing glazing material that is subject to the impact standards. It petitioned the Commission: 1) to expand the regulations to cover new transparent ceramic materials, made by a competitor, not presently covered by the regulations; and 2) to eliminate the exemption for wired glass in fire doors.

II. BACKGROUND

The Safety Standard for Architectural Glazing Materials was adopted in 1977 “to reduce or eliminate unreasonable risks of death or serious injury to consumers when glazing material is broken by human contact.” 16 C.F.R. § 1201.1(a). The impact standards in the regulations apply to all “glass, including annealed glass, organic coated glass, tempered glass, laminated glass, wired glass; or combinations thereof’ used for certain architectural purposes. 16 C.F.R. § 1201.2(a)(ll). Since 1977, transparent ceramic materials, which have a crystalline structure and which do not meet the definition of glass, have been developed and manufactured. These new transparent ceramic materials are being used for similar architectural purposes but are not subject to the same safety standards as glass-based glazing materials.

In 1977, fire codes required the use of wired glass in fire doors, yet no wired glass existing then could meet the impact standards. Therefore, the regulations exempt “[wjired glass used in doors or other assemblies to retard the passage of fire” from the impact standards imposed on other glazing materials. 16 C.F.R. § 1201.1(c)(1). Since 1977, technological advances have allowed for the production of glazing materials suitable for fire doors which would survive the impact standards, although wired glass continues to be exempt from the impact standards.

On March 6, 1992, O’Keeffe’s submitted a petition to the Commission to amend the Safety Standard for Architectural Glazing Materials, 16 C.F.R. § 1201. O’Keeffe’s requested that the Commission (1) amend 16 C.F.R. § 1201.2(a)(10) & (11) in order to subject glass substitutes such as transparent ceramic materials to the safety standards; and (2) revoke 16 CF.R. § 1201.1(c)(1), which exempts wired glass used in fire doors from the safety standards. The voluminous record before us contains documentation of meetings, staff research, and evidence submitted by O’Keeffe’s and others that was considered by the Commission.

On July 22, 1994, the Commission denied O’Keeffe’s petition, concluding that: (1) there was no information available to suggest that either the exclusion of transparent ceramic materials or the wired glass exemption presents an unreasonable risk of injury; (2) such information is unlikely to be developed; and (3) the anticipated benefits of the proposed amendments would not bear a reasonable relationship to their cost. On September 20, 1994, O’Keeffe’s timely filed a petition for review with this court.

The Administrative Procedure Act requires that the agency give interested persons the right to petition for issuance, amendment, or repeal of a rule, 5 U.S.C. § 553(e); and the Commission is required to act on any such petition, 15 U.S.C. § 2058(i). This court has jurisdiction to review final actions of the agency under 15 U.S.C. § 2060.

III. STANDARD OF REVIEW

The Administrative Procedure Act states that a final agency action shall be set aside if it is arbitrary, capricious, or an abuse of discretion. 5 U.S.C. § 706(2)(A). A decision is arbitrary and capricious if the agency “has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 2867, 77 L.Ed.2d 443 (1983); accord Hawaii Helicopter Operators Ass’n v. Federal Aviation Admin., 51 F.3d 212, 214-15 (9th Cir.1995). Review under the arbitrary and capricious standard is narrow, and the reviewing court may not substitute its judgment for that of the agency. Marsh v. Oregon Natural Resources Council, 490 U.S. 360, 376, 109 S.Ct. 1851, 1860-61, 104 L.Ed.2d 377 (1989).

TV. DISCUSSION

A. Transparent Ceramic Materials

O’Keeffe’s argues that the Commission failed to consider relevant factors necessary to determine whether ceramics pose an unreasonable risk of injury. O’Keeffe’s first contends that the Commission failed to deal adequately with the risk of injury associated with transparent ceramic materials. Underlying O’Keeffe’s position is the assumption that, because transparent ceramic materials and the glazing material manufactured by O’Keeffe’s are being used for similar architectural purposes, and because the glazing material O’Keeffe’s manufactures is regulated, the same level of risk of injury must be associated with transparent ceramic materials as the Commission associated with glass materials in 1977.

This assumption is not correct. To establish an unreasonable risk of injury, the Commission is statutorily required to look specifically at transparent ceramics to determine the nature and the extent of the risk of injury associated with transparent ceramics, the need for transparent ceramics, and the probable effect of the amendment on the utility, cost, and availability of transparent ceramics. See 15 U.S.C. § 2058(f)(1). Additionally, the Commission must make and support findings that the amendment is “reasonably necessary” to eliminate or reduce an unreasonable risk of injury associated with the product; that the expected benefits of the amendment bear a reasonable relationship to its costs; and that the amendment imposes the “least burdensome requirement” that prevents or adequately reduces the risk of injury under consideration. 15 U.S.C. § 2059(f)(3). Therefore, the Commission is not statutorily required to compare the breakage characteristics of regulated glazing material with the breakage characteristics of transparent ceramic materials. The Commission’s acknowledgment that, if transparent ceramics had existed in 1977, they may have been subject to the regulations is not dispositive. Although similar breakage characteristics may indicate a similar risk of injury, the Commission is required to look at the risk of injury associated with the unregulated product at the current time and in light of data developed since 1977 when the regulations were promulgated. Furthermore, the Commission pointed out that, even if transparent ceramics had existed in 1977, the standard would not necessarily have been written to encompass them. The standard allows for the use of noneomplying glass in several products. 16 C.F.R. § 1201.1(c)(2)— (4).

Upon consideration of the relevant factors, the Commission determined that the evidence does not support a conclusion that transparent ceramic materials pose an unreasonable risk of injury. The Commission considered the information submitted by O’Keeffe’s about one incident involving transparent ceramics. That incident involved an item of transparent ceramic in a school door which was broken by a student’s elbow. However, O’Keeffe’s did not specify whether an injury resulted, and if so, the severity of the injury.

The Commission also recognized that the National Electronic Injury Surveillance System (“NEISS”) data does not distinguish between injuries involving transparent ceramics and those involving glass. O’Keeffe’s argues that, consequently, the Commission cannot rely on the NEISS data to determine whether an unreasonable risk of injury exists and that the Commission must develop more specific data and modify the NEISS database to distinguish between causes of the injuries. However, O’Keeffe’s is incorrect in its assertion. The Commission is not statutorily required to conduct an exhaustive study or to revise its data-gathering systems in response to a request for rulemaking. See Consumer Fed’n of America v. Consumer Prod. Safety Comm’n, 883 F.2d 1073, 1078 (D.C.Cir.1989) (holding that in determining whether to commence rulemaking under the Federal Hazardous Substances Act, 15 U.S.C. § 1261, the Commission is not obligated to conduct special studies).

O’Keeffe’s also suggests that the risk of injury is demonstrated by the fact that local agencies and other regulatory bodies have already imposed some standards upon transparent ceramic materials because of risk of injury on impact. The Commission, however, fully took this into account and concluded that such action by other bodies made regulatory'action by the Commission less, rather than more, imperative. The Commission noted in a memorandum that, because model building code bodies and industry groups have issued opinions on the use of transparent ceramics in hazardous locations, “the consumer exposure to hazards presented by the products will be limited.” This conclusion was supported by the record and was neither arbitrary nor capricious. See Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43, 103 S.Ct. at 2866-67; Hawaii Helicopter Operators Ass’n, 51 F.3d at 214-15.

O’Keeffe’s contends that this court should apply the reasoning used in American Horse Protection Ass’n v. Lyng, 812 F.2d 1 (D.C.Cir.1987), to reverse the Commission’s decision. In that case, the Department of Agriculture banned the use of chains weighing more than ten pounds on the legs of show horses for training purposes, but allowed the use of chains of lesser weight because no evidence indicated that horses were injured when trained with the lighter devices. After the rulemaking, a new study revealed that horses were in fact injured by chains weighing less than ten pounds. When petitioners in that ease requested the Department of Agriculture to amend the rule, the Department denied the petition primarily due to opposition from the horse owners’ association. Upon review, the D.C. Circuit held that the agency had violated the Horse Protection Act and remanded for the agency to consider the validity of the new evidence. Id. at 6-7.

American Horse is distinguishable from this case, however, because in American Horse the agency failed to give any explanation of why it did not take into account a significant intervening study that had indicated that further regulation was required. Id. at 7. Here, there has been no intervening study demonstrating the inaccuracy of a factual presumption underlying the glazing standard or the necessity of regulation. Far from giving the petitioner a cursory rejection, like that in American Horse, the Commission considered a great deal of material and reached a reasoned conclusion.

In sum, O’Keeffe’s contention that the Commission looked only at the cost of amending the regulations, and excluded other relevant factors, fails. The record reveals that the Commission addressed the relevant statutory factors in determining that an amendment to the regulations was not appropriate or necessary. Specifically, the Commission considered the lack of information about injury associated with transparent ceramics; the probability that transparent ceramics would be used for architectural purposes covered by the regulations; the possible effects of an amendment on the cost, utility, and availability of transparent ceramics; and the potential benefits of the requested amendment, potential’costs, and the relation between the potential benefits and costs.

Accordingly, the Commission did not act arbitrarily or capriciously in its decision to deny O’Keeffe’s request to amend the regulations to include transparent ceramic materials. See Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43, 103 S.Ct. at 2866-67; Hawaii Helicopter Operators Ass’n, 51 F.3d at 214-15.

B. Wired Glass

The regulations specifically exempt “[wjired glass used in doors or other assemblies to retard the passage of fire” from the impact standards imposed on other glazing materials. 16 C.F.R. § 1201.1(c)(1). In 1977, the Commission received comments which stated that: (1) wired glass was the only material available that met the fire resistance requirements of state and local fire codes; (2) wired glass manufactured at the time could not meet the impact standards; and (3) fire doors lacking vision panels made of wired glass would pose a high risk of injury. 42 Fed.Reg. 1430 (1977). The Commission recognized that fire doors with wired glass are in locations which pose a high risk of injury. Id. The Commission also took into account the “serious economic disruptions” likely to occur in the wired glass industry if wired glass was not exempted from the standards. Id. at 1439. The Commission ultimately “decided for good cause and in the public interest and safety” to exempt wired glass used in fire assemblies from the impact standards for 2-1/2 years, to allow for technological advances in wired glass. Id. at 1430. In 1979, the District of Columbia Circuit found no factual basis in the record for limiting the wired glass exemption to 2-1/2 years and remanded to the Commission. See ASG Indus., Inc. v. Consumer Prod. Safety Comm’n, 593 F.2d 1323, 1334-35 (D.C.Cir.1979). The Commission declined to reopen the record and instead removed the deferred effective date from the regulations, allowing the wired glass exemption to continue indefinitely. 49 Fed.Reg. 7106 (1984).

O’Keeffe’s suggests that the history of the wired glass exemption indicates that, because the Commission considered regulating wired glass in 1977, the Commission is now acting inconsistently in light of new technological advances in the manufacture of wired glass alternatives. The Commission points out, however, that it reviewed all of the evidence available concerning whether wired glass presently creates an unreasonable risk of injury and concluded that it did not. O’Keeffe’s disputes the Commission’s conclusion that there is not an unreasonable risk of injury from wired glass, but O’Keeffe’s can point to only one injury caused by wired glass in a fire door. That incident involved a student who sustained lacerations to her hand when she pushed against wired glass in a fire door, and the glass broke. Seven other incidents involved injuries resulting from broken wired glass, but they did not involve fire doors.

Again, O’Keeffe’s argues that the NEISS data does not distinguish between various types of glazing materials associated with injuries and that the Commission lacked adequate information to reliably estimate the number of injuries associated with accidental breakage of wired glass in fire doors. However, the Commission is not required to conduct special studies or revise its data-gathering systems in deciding whether to undertake rulemaking. See Consumer Fed’n of America, 883 F.2d at 1078. Based on injury reports that were available through NEISS, the Commission estimated that approximately 35 injuries associated with wired glass occur each year. Between 1985 and 1992, NEISS received a total of seven reports of injuries from wired glass that required hospital treatment. None of those injuries were associated with wired glass in a fire door.

As to the cost-benefit analysis, the Commission determined that the average cost of treating an injury associated with wired glass reported through NEISS is $3,400. None of the reported accidents resulted in a fatality. On the other hand, the Directorate for Economic Analysis estimated that the cost of granting O’Keeffe’s request to withdraw the exemption for wired glass would be $36 million per year. That estimate was based on the substitution of one of O’Keeffe’s products for wired glass. The estimate was also based on O’Keeffe’s own cost estimates and assertion that a quantity of one million square feet of wired glass is being used in fire doors. Comments by the Glazing Industry Code Committee opposing the petition indicated that the quantity and the estimated replacement cost would actually be much higher.

O’Keeffe’s contends that the Commission’s cost analysis was inadequate because it considered only the cost of medical treatment when determining the value of injuries that would be avoided by eliminating the wired glass exemption. This is an inaccurate characterization of the record. The record reflects that the Commission applied the Injury Cost Model to estimate the potential benefits in terms of reduced injuries of implementing the requested amendment. The Injury Cost Model includes hospital costs, foregone earnings, health insurance costs, product liability insurance costs, litigation costs, transportation costs, visitor costs, pain and suffering costs, disability costs, and the valuation of loss of life.

O’Keeffe’s further contests the Commission’s finding of such high replacement costs by indicating that more cost competitive alternatives are available. However, the Commission considered evidence that the alternatives do not meet water spray tests of the fire standards. Furthermore, the Commission noted that one of the asserted alternatives does not meet the fire retardation rating time requirement, and that another alternative is limited in its application.

Finally, O’Keeffe’s contends that the Commission erred by declining to consider the possible savings in replacement costs of glazing materials as a result of eliminating the wired glass exemption. The Commission’s decision not to factor in replacement cost savings was reasonable, however, because the information in the record from one school district was not sufficient to make a national estimate of replacement cost savings.

Accordingly, the Commission did not act arbitrarily or capriciously in its decision to deny O’Keeffe’s request to eliminate the wired glass exemption. See Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43, 103 S.Ct. at 2866-67; Hawaii Helicopter Operators Ass’n, 51 F.3d at 214-15.

PETITION FOR REVIEW DENIED.