A Setback or Just a Cutback? CPSC’s Budget, Plans Trimmed

In an appropriations bill that includes more than $1.2 trillion in spending, an agency’s year-over-year loss of $1.525 million in funding might not have garnered much attention. However, the U.S. Consumer Product Safety Commission (CPSC or the agency) losing a full 1 percent of its budget between Fiscal Years (FY) 2023 and 2024 is worthy of stakeholders’ notice as it represents a departure from a years-long trend of budget increases for CPSC. In the wake of that reduction, CPSC has already adjusted its expectations for the remainder of FY 2024, but, if this cut is a sign of things to come, CPSC may face some difficult decisions.

Rolling Back Gains

CPSC has long pressed for additional funding. In testimony before Congress in 2019, then-Commissioner Robert S. Adler contrasted the $127 million total budget CPSC had requested for FY 2019 with the $643 million budget increase the Food and Drug Administration (FDA) had requested, noting “[i]n other words, FDA’s request for an increase is more than 5 times CPSC’s entire budget.” In March 2021, while serving (for the second time) as Acting Chair, Adler wrote (on his own behalf) to Congresswoman Rosa DeLauro, then-Chair of the House Committee on Appropriations, and sought “a budget of $281 million, plus an additional one-year allocation of $89 million, [which would have brought] the total budget for FY 2022 to $370 million.”

While CPSC’s official budget requests have not reached quite the heights Adler suggested, the agency has nonetheless asked for additional resources. In recent years, CPSC has submitted budget requests of $135 million (FY 2021) and $170 million (FY 2022). Under current Chair Alexander Hoehn-Saric, CPSC sought $195.5 million in FY 2023 and $212.6 million in FY 2024.

While Congress has not fully met those requests, CPSC has nonetheless seen its resources increased for several years, going from $127 million in FY 2019 to $132.5 million, $135 million, $139.5 million, and $152.5 million through FY 2023, apart from the non-recurring infusion of $50 million Congress provided in the American Rescue Plan Act of 2021 (ARPA) primarily to bolster CPSC’s import and online-marketplace surveillance efforts.

Once the dust settled on FY 2024 appropriations on March 23, not only did CPSC not get the $212.6 million it had requested, but the agency saw a $1.525 million cut, going from $152.5 million in FY 2023 to $150.975 million in FY 2024. This reversal of the trend toward a more robust CPSC budget seems to indicate the agency will have to carefully consider its priorities. Moreover, this real-dollar cut suggests that the priorities CPSC intends to fund with the $183.05 million it has requested for FY 2025 may need reevaluation (more on that below).

CPSC Adjusts

Roughly halfway through each Fiscal Year, CPSC staff conducts a “Midyear Review” and generally recommends adjustments to that year’s Operating Plan based on how much money CPSC has, versus how much the agency thought it would have at the midway point. In years in which CPSC has a surplus at the midway point (generally from savings from unfilled staff vacancies), agency staff’s Midyear Review recommends ways to allocate the excess funding, usually through contracts for service or facility upgrades or research projects. CPSC then assesses the staff recommendations and adds, removes, or reorders projects, ultimately voting out a final adjusted plan.

For FY 2024, CPSC staff’s Midyear Review concluded that “the combination of a lower Congressional appropriation, government-wide pay-raise, and increased costs for purchasing and contracts, does not allow continuation of all CPSC’s programs at the FY 2023 level.” Additionally, staff noted that CPSC has nearly exhausted the ARPA funding noted above. Accordingly, staff proposed “using this midyear review to ensure CPSC lives within its reduced FY 2024 appropriation, to position the agency for the upcoming exhaustion of ARPA funds, and to prepare the agency for the possibility of constrained annual appropriations in future years.”

To accomplish these objectives, CPSC staff recommended a variety of changes, including using the relatively small unallocated balance to fund “the highest-priority projects,” and adjusting CPSC’s expectations for the scope of mandatory standards the agency would advance during FY 2024, most notably slowing its work on updates to its infant carrier standard. Staff did anticipate a balance of about $2.9 million in available funds and recommended spending that money (as available) on as many as 14 projects, roughly half of which would be IT projects. The agency recently approved CPSC staff’s recommendations without amendment, though Commissioner Richard Trumka, Jr. abstained from the vote.

Conclusion: Going Forward

In March, before Congress passed the final FY 2024 appropriations, CPSC submitted a FY 2025 budget request seeking a total of $183.05 million. Given this year’s $1.525 million rollback, it is unclear whether Congress will approve a $30+ million increase for next year. Moreover, $8.5 million of the $10.2 million increase CPSC requested was intended to cover salaries and benefits, including prior government-wide pay raises that “the CPSC funded by decreasing non-pay spending below a sustainable level.”

Assuming Congress does not give CPSC some or all of the money the agency says it needs to keep operations at their current levels, CPSC could face difficult choices that may impact safety standard-setting, enforcement, and other activities in the year ahead and potentially beyond.

For questions about CPSC policy or about compliance with the Consumer Product Safety Act (CPSA), including timely reporting and recalls under Section 15(b) of the CPSA, or with other product safety matters, please reach out to the authors of this blog post or any of their colleagues on Arnold & Porter’s Consumer Product Safety team.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.