Zen Magnets, LLC v. Consumer Product Safety Commission

FILED
United States Court of Appeals
PUBLISH Tenth Circuit

UNITED STATES COURT OF APPEALS November 22, 2016

Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________

ZEN MAGNETS, LLC,

Petitioner,

v. No. 14-9610

CONSUMER PRODUCT SAFETY
COMMISSION,

Respondent.
_________________________________

Petition for Review of the
Consumer Products Safety Commission
(CPSC No. CPSC 2012 0050)
_________________________________

David C. Japha, Law Offices of David C. Japha, P.C., Denver, Colorado, for Petitioner.

Daniel Tenny (Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Adam
C. Jed, and Mark R. Freeman, Attorneys, on the brief) U.S. Department of Justice,
Washington, D.C., for Respondent.
_________________________________

Before GORSUCH, EBEL, and BACHARACH, Circuit Judges.
_________________________________

EBEL, Circuit Judge.
_________________________________

Petitioner Zen Magnets, LLC (“Zen”) challenges a regulation promulgated by

Respondent Consumer Product Safety Commission (“the Commission”) restricting

the size and strength of the rare earth magnets that Zen sells. See Final Rule: Safety
Standard for Magnet Sets, 79 Fed. Reg. 59,962 (Oct. 3, 2014) (codified at 16 C.F.R.

§§ 1240.1-1240.5). We conclude that the Commission’s prerequisite factual findings,

which are compulsory under the Consumer Product Safety Act, 15 U.S.C. §§ 2051-

2089, are incomplete and inadequately explained. Accordingly, we VACATE and

REMAND to the Commission.

I. BACKGROUND

This case concerns sets of small, high-powered magnets (“magnet sets”) that

users can arrange and rearrange in various geometric designs. The component

magnets are unusually small (their diameters are approximately five millimeters) and

unusually powerful (due to rare earth metal cores, their magnetic flux index1 ranges

from 400 to 500 kG2mm2). A set typically comprises on the order of 100 to 200

identical spherical magnets, coated in reflective silver or other bright colors.

Magnets of this type were introduced to the United States circa 2009. They have

since been marketed and sold to consumers—by Zen and other distributors—as

desktop trinkets, stress-relief puzzles, and toys, and apparently also for educational

and scientific purposes.

Although the strength of these magnets is part of their appeal, it can also pose

a grave danger when the magnets are misused. Specifically, if two or more magnets

are ingested—a temptation to which children are especially at risk—they can cause

serious damage to intestinal tissue that becomes tightly clamped between them.

1
Magnetic flux index is one way to estimate the attractive force of a magnet.

2
Attendant medical consequences can include hospitalization and surgery for such

injuries as perforations, infections, gastrointestinal bleeding, and tissue death. The

danger is compounded when parents and medical personnel remain unaware of the

type of magnets ingested and their heightened risks.

That danger caught the attention of the Consumer Product Safety Commission.

The Commission is an independent regulatory agency that administers and enforces

the Consumer Product Safety Act (“the Act”), 15 U.S.C. §§ 2051-2089, a primary

purpose of which is “to protect the public against unreasonable risks of injury associated

with consumer products,” id. § 2051(b)(1). In pursuit of that goal, the Commission is

authorized to “promulgate consumer product safety standards” establishing

performance or warning requirements for consumer products, id. § 2056(a), as well

as to ban hazardous products altogether, id. § 2057.

The Commission’s regulatory approach towards magnet sets progressed as

follows. In 2008, Congress adopted as mandatory safety standards certain

requirements developed by the American Society for Testing and Materials

(“ASTM”) to address hazards associated with children’s toys. See generally 15

U.S.C. § 2056b; AR 142. With respect to magnets, those requirements prohibit any

product “designed, manufactured, or marketed as a plaything for children under 14

years of age” from containing a loose magnet that (1) has a flux index greater than 50

kG2mm2 and (2) is small enough to fit within a standardized “small parts cylinder.”2

2
However, small, powerful magnets can be included in “[h]obby, craft, and
science kit-type items intended for children over 8 years of age,” so long as those
3
ASTM International Standard F963-11 Consumer Safety Specifications for Toy

Safety §§ 3.1.37 (definition of “hazardous magnet”), 3.1.81 (definition of “toy”),

4.38-4.38.1 (prohibition of hazardous magnets in toys), and Fig. 3 (defining the small

parts cylinder’s dimensions to be a diameter of 31.7 mm with a height that, due to a

sloped bottom surface, ranges from 25.4 mm on one side to 57.1 mm on the opposite

side).3 The purpose of those restrictions is to ensure that permissible magnets are

either large enough to discourage ingestion or weak enough to avoid tissue

strangulation upon ingestion. See ASTM F963-11 4.38; cf. Final Rule: Safety

Standard for Magnet Sets, 79 Fed. Reg. at 59,968.

During 2011, in response to reports of injured children, Commission staff

began evaluating whether the magnet sets currently on the market complied with

ASTM F963 (“the toy standard”). The Commission found that the individual

magnets in those sets tended to be ten times more powerful—or, alternatively, six

times smaller—than is permissible to market to children under the toy standard. See

ASTM F963-11 §§ 3.1.37, 4.38-4.3.81; Final Rule: Safety Standard for Magnet Sets,

79 Fed. Reg. at 59,976-77. Accordingly, Commission staff issued Notices of

items comply with certain safety labeling requirements. ASTM F963-11 4.38.3, 5.17.
Because neither party has cited or argued this aspect of the ASTM requirements on
appeal, we do not address it further.
3
This citation refers to the current version of the ASTM standard, which
became effective June 2012. See Acceptance of ASTM F963-11 as a Mandatory
Consumer Product Safety Standard, 77 Fed. Reg. 10,358, 10,358 (Feb. 22, 2012).
The previous version, which was effective from August 2009 to June 2012, imposed
the same requirements on children’s toy magnets. See id.; ASTM International
Standard F963-8 Consumer Safety Specifications for Toy Safety §§ 3.1.33, 3.1.72,
4.38-4.38.1, and Fig. 3. In the interests of brevity and clarity, this opinion cites only
to the current version of the ASTM standard.
4
Noncompliance to companies that labeled or marketed these powerful magnet sets to

appeal to children younger than fourteen years old, and warned other firms not to

market their sets to children below that age.4

Some distributors took steps to comply with the toy standard, including

implementing labeling enhancements and marketing restrictions. However, “into

spring 2012, staff continued to identify additional firms offering [magnet sets] on the

Internet with labeling and marketing violations.” Proposed Rule: Safety Standard for

Magnet Sets, 77 Fed. Reg. 53,781, 53,782 (proposed Sept. 4, 2012) (to be codified at 16

C.F.R. §§ 1240.1-1240.5). Moreover, reports of child injuries from magnet ingestion

continued.

So the Commission stepped up its enforcement efforts. In May 2012, the

Commission required the thirteen leading magnet set distributors to report any

information of which they were aware reasonably supporting the conclusion that their

magnets did not comply with an applicable safety standard, contained a defect, or

created an unreasonable risk of serious injury. See 15 U.S.C. § 2064(b) (requiring

distributors to report potential noncompliance with safety standards, defects, and risk

of serious injury). Based on that information, by July 2012 Commission staff had

negotiated agreements with ten of those companies to cease importation and

distribution of magnet sets. Commission staff then initiated administrative

complaints against the remaining three companies (including Zen), arguing that their

4
In cooperation with two distributors, the Commission also published a public
service announcement regarding magnet sets’ dangers.
5
magnet sets constituted “substantial product hazards” that must be prohibited and

recalled because they failed to comply with the toy standard and/or contained a

product defect.5 See 15 U.S.C. § 2064(a) (defining “substantial product hazard” to be

a product that either (1) fails to comply with an applicable safety standard or (2)

contains a product defect), (c) (authorizing the Commission to order a seller to cease

distributing and to recall products that constitute a “substantial product hazard”).

Four months after eliminating ten of the leading magnet set distributors, the

Commission proposed a new safety standard aimed at regulating the size and strength

of all magnet sets. See Proposed Rule: Safety Standard for Magnet Sets, 77 Fed.

Reg. 53,781. In effect, the proposed standard extended the size and strength

restrictions applicable to children’s toys under ASTM F963 to magnets marketed,

intended, or used for adult entertainment. After receiving comments and holding a

public hearing, the Commission promulgated the proposed rule as a final safety

standard on October 3, 2014. See Final Rule: Safety Standard for Magnet Sets, 79

Fed. Reg. at 59,962, 59,966-72.

The final rule requires that, “Each magnet in a magnet set . . . that fits

completely within the cylinder described in 16 CFR 1501.4 must have a flux index of

50 kG2 mm2 or less when tested in accordance with the method described in

§ 1240.4.” 16 C.F.R. § 1240.3. The referenced cylinder is the same small parts

cylinder as that used in the toy standard. Compare 16 C.F.R. § 1501.4 with ASTM

5
The other two companies targeted by the Commission subsequently entered
into settlement agreements to stop selling and to recall their products.
6
F963-11 § 3.1.37 and Fig. 3. And the flux index limit of 50 kG2 mm2 is the same

limit as that used in the toy standard. See 16 C.F.R. § 1240.4 (incorporating the flux

index measurement procedure of ASTM F963-11 §§ 8.24.1-8.24.3). As a result, the

primary difference between the two standards is their scope of intended consumers.

Unlike the toy standard, the final rule is not limited to magnets designed or marketed

as toys for children under fourteen years of age, but rather applies to all magnet sets

that meet the following definition: “Any aggregation of separable magnetic objects

that is a consumer product intended, marketed or commonly used as a manipulative

or construction item for entertainment.”6 16 C.F.R. § 1240.2(b).

Zen is the only remaining importer and distributor of the magnet sets targeted

by the final rule. Over the years, Zen has made efforts to comply with the toy

standard by implementing fourteen-and-under age restrictions and placing warnings

on its website and packaging, as well as by imposing sales restrictions on its retail

distributors. Its magnet sets, however, do not comply with the strength and size

restrictions of the final rule set forth at 16 C.F.R. § 1240.3. Accordingly, Zen seeks

review of that safety standard pursuant to 15 U.S.C. § 2060(a), which provides that any

person adversely affected by a rule promulgated by the Commission “may file a

petition with the United States court of appeals . . . for the circuit in which such

6
The other difference between the two standards that figures into this
litigation is the addition of the phrase “commonly used,” which enlarges the new rule
in comparison with respect to the toy standard. That difference is discussed infra in
Section II.C.
7
person . . . resides or has his principal place of business for judicial review of such

rule.”

II. DISCUSSION

Exercising jurisdiction pursuant to 15 U.S.C. § 2060(c), we review the magnet

set safety standard in accordance with the provisions for judicial review set forth in

the Administrative Procedures Act (“APA”), 5 U.S.C. ch. 7. See 15 U.S.C. § 2060(c)

(“[T]he court shall have jurisdiction to review the consumer product safety rule in

accordance with chapter 7 of title 5, and to grant appropriate relief . . . as provided in

such chapter . . . .”). Accordingly, “our review is ‘very deferential to the agency.’”

Andalex Res., Inc. v. Mine Safety & Health Admin., 792 F.3d 1252, 1257 (10th Cir.

2015) (quoting Ron Peterson Firearms, LLC v. Jones, 760 F.3d 1147, 1161 (10th Cir.

2014)). Notwithstanding that deferential standard, we conclude that the Commission

failed to meet the Consumer Product Safety Act’s requirements for issuing a safety

standard, for the reasons explained below.

I. The Consumer Product Safety Act

Broadly speaking, the Act sets forth a two-step process for promulgating a

safety standard. See D. D. Bean & Sons Co. v. Consumer Prod. Safety Comm’n, 574

F.2d 643, 649 (1st Cir. 1978). First, the Commission must “consider” and “make

appropriate findings” regarding the social and economic costs and benefits of the

rule. See 15 U.S.C. § 2058(f)(1), (2). Specifically, the Commission must make

findings identifying (1) the degree and nature of the risk of injury sought to be

prevented; (2) the approximate number and type of products subject to the rule; (3)

8
the public’s need for those products, and the probable effect of the rule on the utility,

cost, and availability of the products; and (4) any means of reducing the risk of injury

while minimizing adverse effects on competition or other commercial practices. Id.

Second, the Commission must balance the costs and benefits identified in its

findings to determine whether a safety standard is justified. See 15 U.S.C.

§ 2058(f)(3). Specifically, the Commission can only promulgate a safety standard if

it reaches and articulates four conclusions: (1) “that the rule . . . is reasonably

necessary to eliminate or reduce an unreasonable risk of injury”; (2) that the . . . rule is in

the public interest”; (3) “that the benefits expected from the rule bear a reasonable

relationship to its costs”; and (4) “that the rule imposes the least burdensome requirement

which prevents or adequately reduces the risk of injury for which the rule is being

promulgated.”7 See 15 U.S.C. § 2058(f)(3)(A), (B), (E), (F).

Overall, then, the determination “involves ‘a balancing test like that familiar in

tort law: The regulation may issue if the severity of the injury that may result from the

product, factored by the likelihood of the injury, offsets the harm the regulation imposes

upon manufacturers and consumers.’” Southland Mower Co. v. Consumer Prod. Safety

Comm’n, 619 F.2d 499, 508-09 (5th Cir. 1980) (quoting Aqua Slide ‘N’ Dive Corp. v.

Consumer Prod. Safety Comm’n, 569 F.2d 831, 839 (5th Cir. 1978)); see also 15 U.S.C.

§ 2056(a) (requiring that “[a]ny requirement of such a [safety] standard shall be

7
Additional conclusions (which we need not address, see infra Section II.C)
are required for safety bans and rules implicating existing voluntary standards. See
15 U.S.C. § 2058(f)(3)(C), (D).
9
reasonably necessary to prevent or reduce an unreasonable risk of injury associated

with such product”).

The Act provides that a court may not uphold a safety standard unless the

Commission’s statutorily required findings and conclusions are “supported by

substantial evidence on the record taken as a whole.” 15 U.S.C. § 2060(c).

Substantial evidence is “such relevant evidence as a reasonable mind might accept as

adequate to support a conclusion.”8 Fowler v. Bowen, 876 F.2d 1451, 1453 (10th Cir.

1989) (quoting Richardson v. Perales, 402 U.S. 389, 401 (1971) (“The [Supreme]

Court has adhered to that definition in varying statutory situations.”)); see also

Am. Textile Mfrs. Inst., Inc. v. Donovan, 452 U.S. 490, 522-23 (1981) (adhering to that

definition when reviewing whether safety standards issued by the Occupational Safety

and Health Administration were “reasonably necessary” under 29 U.S.C. § 652(8)). A

court may “neither reweigh the evidence nor substitute [its] judgment for that of the

agency.” Andalex Res., 792 F.3d at 1257 (quoting Branum v. Barnhart, 385 F.3d 1268,

1270 (10th Cir. 2004)). Nonetheless, “[t]he substantiality of evidence must take into

8
Contrary to Zen’s contention, although courts once assumed that the Act’s
substantial evidence standard of review was more stringent than the APA’s arbitrary
and capricious standard of review, see, e.g., Aqua Slide, 569 F.2d at 837, that view is
no longer viable. Courts now recognize that, “[w]hen the arbitrary or capricious
standard is performing th[e] function of assuring factual support, there is no substantive
difference between what it requires and what would be required by the substantial
evidence test.” Olenhouse v. Commodity Credit Corp., 42 F.3d 1560, 1575 (10th Cir.
1994) (quoting Ass’n of Data Processing Serv. Orgs., Inc. v. Bd. of Governors of Fed.
Reserve Sys., 745 F.2d 677, 683-84 (D.C. Cir. 1984) (“[I]n their application to the
requirement of factual support the substantial evidence test and the arbitrary or capricious
test are one and the same.”)).

10
account whatever in the record fairly detracts from its weight.” Norris v. NLRB, 417

F.3d 1161, 1168 (10th Cir. 2005) (internal quotation marks omitted).

II. The Commission’s findings

In this instance, the Commission’s rulemaking analysis fails at the first step of

the Act’s two-step process: the initial cost and benefit findings. Specifically, the

Commission’s analysis neglected to address critical ambiguities and complexities in

the data underpinning the Commission’s findings as to (1) the degree of the risk of

injury caused by magnet sets, and (2) the public’s need for the sets and the rule’s

effect on their utility and availability, see 15 U.S.C. § 2058(f)(1)(A), (C). As a result

of those omissions, the Court is unable to ascertain whether the Commission’s

findings meet the substantial evidence standard—let alone to proceed to the next step

of reviewing the Commission’s balancing of the safety standard’s costs and benefits.

1. Risk of injury

After analyzing a nationwide sampling of emergency room injury reports, the

Commission estimated that the final rule would prevent approximately 900 magnet set-

ingestion injuries annually, for a savings of $28.6 million. See Final Rule: Safety

Standard for Magnets, 79 Fed. Reg. at 59,978-80; 16 C.F.R. § 1240.5(e)(2), (3). The

Commission’s benefit analysis, however, gives short shrift to two aspects of the injury

data set that cast doubt on the Commission’s findings.

The first problem stems from the data set’s time frame. In performing its cost-

benefit analysis, the Commission chose to rely on data spanning January 2009 through

June 2012. See Final Rule: Safety Standard for Magnets, 79 Fed. Reg. at 59,978-80; 16

11
C.F.R. § 1240.5(e)(2), (3). But that data set does not reflect the subsequent significant

market changes triggered by the Commission’s compliance activities beginning in May

2012. As of July 2012, ten of the thirteen largest distributors had agreed, “at

[Commission] staff’s request,” to stop selling and start recalling magnet sets; by

December 2012, the dominant firm in the market had ceased operating. Id. at 59,964,

59,978. Sales of magnet sets dropped commensurately (in the Commission’s words, they

dropped “dramatically”). See id. at 59,978 (“[A]s a result of these actions and events,

sales of the subject magnet sets currently are dramatically lower than they were at the

time of the enforcement actions.”); 16 C.F.R. § 1240.5(b) (estimating that magnet set

sales, which totaled 2.7 million from 2009 to 2012, dropped to fewer than 25,000 per

year after 2012).

As might be expected, injuries associated with ingestion of magnets from magnet

sets also declined. According to the Commission’s calculations regarding the eighteen

months following June 2012, the estimated number of emergency room visits due to

magnet sets dropped by about 100 incidents a year.9 See 16 C.F.R. 1240.5(a).

Inasmuch as the Commission estimated the expected useful life of magnet sets to be

about one year, the injury rates appeared poised to continue to drop. See Final Rule:

9
That is, the Commission estimated that an average of 610 emergency room-
treated injuries per year occurred during the three and a half years from January 2009
through June 2012. 16 C.F.R. § 1240.5(e)(2). But the Commission estimated that an
average of only 580 emergency room-treated injuries per year occurred during the
five years from January 2009 through December 2013. 16 C.F.R. § 1240.5(a). In
order for the data collected during those last eighteen months to reduce the annual
average by that amount, estimated emergency room injuries must have decreased by
about 100 injuries per year.
12
Safety Standard for Magnets, 79 Fed. Reg. at 59,982. Indeed, the number of incidents

reported directly to the Commission receded from 52 in 2012, to 13 in 2013, to only

2 in 2014. See id. at 59,962.

The Commission recognized that the decrease in injuries was “[l]ikely due to

[Commission] enforcement and regulatory activity beginning in mid-2012.” Id. It

appears that the Commission’s regulatory activity was predicated at least in part on

enforcing the preexisting toy standard, see id. at 59,962, 59,978 n.14 (incorporating

administrative complaint by reference), which prohibits designing and marketing

magnet sets to children, see ASTM F963-11 §§ 3.1.37, 4.38-4.38.1. Most of the pre-

enforcement reported and estimated injuries concerned young children. See id. at

59,964 (stating that eighty-seven of the 100 incidents reported directly to the

Commission concerned children younger than twelve years old, and 65% of the

estimated injuries involved children between four and twelve years old). The

Commission’s benefits findings, however, do not adequately account for the reduced

injury rate (and therefore reduced need for a new standard) resulting from its recent

apparent enforcement of the existing safety standard addressed specifically to toys

and children.

In general, where there is a known and significant change or trend in the data

underlying an agency decision, the agency must either take that change or trend into

account, or explain why it relied solely on data pre-dating that change or trend. See,

e.g., Cty. of Los Angeles v. Shalala, 192 F.3d 1005, 1020-22 (D.C. Cir. 1999)

(remanding a Medicare rate-setting for the agency to explain why it relied on data

13
collected under its former payment regime, where more recent data collected under

its current regime showed a marked downward trend in relevant hospital discharge

times); Seattle Audubon Soc. v. Espy, 998 F.2d 699, 703-04 (9th Cir. 1993) (finding

that an agency preparing an environmental impact statement erred in failing to

address an intervening, independent report indicating that an endangered species’

“population [wa]s declining more substantially and more quickly than previously

thought”).10

Since agencies “have an obligation to deal with newly acquired
evidence in some reasonable fashion,” Catawba Cnty. v. EPA, 571 F.3d
20, 45 (D.C. Cir. 2009), or to “reexamine” their approaches “if a
significant factual predicate” changes, Bechtel v. FCC, 957 F.2d 873,
881 (D.C. Cir. 1992), an agency must have a similar obligation to
acknowledge and account for a changed regulatory posture the agency
creates—especially when the change impacts a contemporaneous and
closely related rulemaking.”

Portland Cement Ass’n v. EPA, 665 F.3d 177, 187 (D.C. Cir. 2011) (holding that,

before issuing a new rule based on the predicted emissions of certain pollutant

sources, an agency should have considered the effect that a parallel pending

rulemaking would have on those same emissions). “The refrain that [an agency]

must promulgate rules based on the information it currently possesses simply cannot

excuse its reliance on that information when its own process [may have] render[ed] it

irrelevant.” Id.

10
See generally Dist. Hosp. Partners, L.P. v. Burwell, 786 F.3d 46, 56-57
(D.C. Cir. 2015) (“[A]n agency cannot ignore new and better data.”); Sierra Club v.
U.S. EPA, 671 F.3d 955, 968 (9th Cir. 2012) (“[W]e should not silently rubber stamp
agency action that is arbitrary and capricious in its reliance on old data without
meaningful comment on the significance of more current compiled data.”).
14
 Here, the downward trend in injury rates is obvious, and appears to speak

directly to the question of whether the new rule is “reasonably necessary.” 15 U.S.C.

§ 2056(a). Yet the Commission offered no explanation or rationale for its apparent

assumption that the observed reduction in injury rates would not endure. Rather, in

addressing its decision to rely solely on pre-enforcement injury data, the Commission

stated only:

Because [Commission] compliance actions have significantly altered the
state of the market, the environment before these actions occurred
represents the best approximation of how the market would have
operated in the absence of [Commission] intervention and is the
appropriate reference baseline for evaluating the impact of the rule.

Final Rule: Safety Standard for Magnet Sets, 79 Fed. Reg. at 59,978. That

conclusory statement is insufficient to fulfill the Commission’s duty to explain why

the downward trend in post-enforcement injury rates was not relevant to its

evaluation of the benefits of the new rule. See Portland Cement, 665 F.3d at 187;

Shalala, 192 F.3d at 1020-21.

This Court stands ready and willing to defer to agency expertise and

discretion, properly exercised. See Andalex, 792 F.3d at 1257. But “[i]t is not the role

of the courts to speculate on reasons that might have supported an agency’s

decision.” Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2127 (2016); see

also Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S.

29, 43 (1983) (“We may not supply a reasoned basis for the agency’s action that the

agency itself has not given.’”) (quoting SEC v. Chenery Corp., 332 U.S. 194, 196

15
(1947)). “Whatever potential reasons the [Commission] might have given,

the agency in fact gave . . . no reasons at all.” Id.

An agency may not simply ignore without analysis important data trends

reflected in the record. See Portland Cement, 665 F.3d at 187; Shalala, 192 F.3d at

1020-21. To the extent the Commission’s findings rely solely on pre-enforcement

injury rates, the Commission must offer a credible record-supported explanation as to

why those rates accurately reflect the benefits of the new rule.11

The second problem with the Commission’s injury findings arises from the

imprecision of the injury report narratives. The Commission used a keyword search to

identify magnet set-related injuries within a representative sample of emergency room

reports. See Final Rule: Safety Standard for Magnets, 79 Fed. Reg. at 59,978. To the

resulting injury count, the Commission applied a cost model to extrapolate the overall

number of injuries nationwide. See id. at 59,979. We take issue not with the

Commission’s methodology, but rather with the degree of uncertainty the Commission

11
The Commission contends Zen forfeited the time frame argument by failing
to raise it before the Commission during the notice-and-comment period. Generally,
a party challenging an agency regulation must have initially presented its concerns to
the agency during the rulemaking process in order for a reviewing court to consider
those concerns. See Nutraceutical Corp. v. Von Eschenbach, 459 F.3d 1033, 1041
n.9 (10th Cir. 2006). There are, however, exceptions to that requirement.
Claims not raised before an agency are not waived if “the problems underlying
the claim are ‘obvious.’” Forest Guardians v. U.S. Forest Serv., 495 F.3d 1162, 1170
(10th Cir. 2007) (quoting Dep’t of Transp. v. Pub. Citizen, 541 U.S. 752, 765
(2004)); see also Sierra Club, Inc. v. Bostick, 787 F.3d 1043, 1048 (10th Cir. 2015)
(same). Because the Commission’s own calculations show a marked reduction in
post-enforcement injury rates, the potential problems with that assumption were
obvious. See Forest Guardians, 495 F.3d at 1170. Accordingly, we are not
prohibited from reaching Zen’s time frame argument.
16
condoned when implementing it: According to the Commission, ninety percent of the

injury reports on which it ultimately relied only “possibly” involved the subject magnets

sets.12 See id. at 59,978, 59,980 (“[A]bout 90 percent of the cases upon which the table

[estimating medical costs] was based were described as only possibly involving the

magnets of interest . . . .”), 59,985 (“[T]here was an annual average of about 929

medically attended magnet ingestions that were defined as at least ‘possibly of

interest’ during the period from 2009 through June 2012.”).13

The Act provides that the Commission cannot promulgate a safety standard

unless it concludes “that the rule . . . is reasonably necessary to eliminate or reduce an

unreasonable risk of injury.” 15 U.S.C. § 2058(f)(3)(A). Underlying findings that peg

the risk of injury as a mere “possibility” provide the Court no assistance in assessing

that conclusion. See Gulf S. Insulation v. Consumer Prod. Safety Comm’n, 701 F.2d

1137, 1148 (5th Cir. 1983) (finding the Commission failed to show an unreasonable

risk of injury because the equivocal predictions that the increased cancer risk could

be “up to 51 in a million,” and that “somewhat less than 20% of the population may

12
Specifically, of the eighty-six injury reports on which the Commission based
its benefits finding, only nine definitively involved the subject magnet sets (as
evidenced by brand names mentioned in the injury reports). See Final Rule: Safety
Standard for Magnets, 79 Fed. Reg. at 59,978. The remaining seventy-seven injuries
“were determined possibly to have involved the magnets of interest” based on a
keyword search. Id. (including injury reports with keywords and phrases such as
“high-powered,” “magnetic ball,” “magnetic marble,” “BB size magnet,” and
“magnet beads”).
13
Although a greater percentage of the incidents reported directly to the
Commission can be reliably traced to subject magnet sets, 16 C.F.R. § 1240.5(a), the
Commission specifically found that those anecdotal incidents could not be used to
estimate nationwide injuries, Final Rule: Safety Standard for Magnets, 79 Fed. Reg. at
59,969.
17
respond” to the given toxicity level, “provides [the court] no basis for review”);

Southland Mower, 619 F.2d at 510 (“Without reliable evidence of the likely number

of injuries that would be addressed . . . , we are unable to agree that this provision is

reasonably necessary to reduce or prevent an unreasonable risk of injury.”). Almost

anything is “possible.” Therefore, the Commission’s finding that 90% of the

predicate injuries only “possibly” involved magnet sets provides the Court with little

guidance as to where, on the spectrum from ninety to 900 annual injuries, the real

injury rate lies.

We need not decide here what would be an acceptable degree of uncertainty in

a benefits finding; it may vary depending on the inherent factual uncertainties in a

given context. However, we are confident that mere possibility falls short of the

appropriate standard. See Morall v. Drug Enf’t Admin., 412 F.3d 165, 176 (D.C. Cir.

2005) (“Substantial evidence ‘means evidence which is substantial, that is, affording a

substantial basis of fact from which the fact in issue can be reasonably inferred.

Substantial evidence is more than a scintilla, and must do more that create a

suspicion of the existence of the fact to be established.’”) (quoting NLRB v.

Columbian Enameling & Stamping Co., 306 U.S. 292, 299-300 (1939); Greater

Yellowstone Coal., Inc. v. Servheen, 665 F.3d 1015, 1028 (9th Cir. 2011) (“It is not

enough for the [agency] to simply invoke ‘scientific uncertainty’ to justify its

action.”) (citing State Farm, 463 U.S. at 52); Vera-Villegas v. I.N.S., 330 F.3d 1222,

1231 (9th Cir. 2003) (“[C]onjecture is not a substitute for substantial evidence.”)

(quotation omitted)).

18
 While the Commission is certainly free to rely on the emergency room injury

report data set, it may not do so in a way that cloaks its findings in ambiguity and

imprecision, and consequently hinders judicial review. We leave it to the

Commission to determine whether its methodology and data set can in fact support a

higher standard. We find only that the Commission’s benefits statistics must instill

in the Court a greater degree of confidence in their accuracy than is currently present

here.14 In so holding, we offer no opinion on the number of injuries that would

support issuance of a new magnet set safety standard.

2. The public’s need for magnet sets

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.

Specifically, the Commission failed to address an entire aspect of magnet sets’ utility—

namely, the public’s need for the sets as scientific and mathematics education and

research tools—and the rule’s probable effect on magnet sets’ availability and usefulness

for those purposes. See 15 U.S.C. § 2058(f)(1)(C).

14
The Commission attempted to bolster its injury count by pointing out that
(1) some injury reports that did not alert to the keyword search may have in fact
involved magnet sets and (2) some medical experts have opined that the available
medical research undercounts injuries associated with magnet sets. See Final Rule:
Safety Standard for Magnet Sets, 79 Fed. Reg. at 59,966, 59,980. Those two facts
suggest that the true injury count may be higher than the Commission’s estimate.
The Court, however, takes issue with the uncertainty of the Commission’s estimate—
not with its magnitude. Inasmuch as those two facts are subject to their own
reliability concerns (namely, imprecise report narratives cannot be traced to magnet
sets, the experts did not quantify the degree to which they believe injuries are
undercounted), they do not assuage the Court’s concerns about the accuracy of the
Commission’s estimate.
19
 Numerous comments received by the Commission indicated that teachers and

researchers use magnet sets to model and explain physics, biology, and geometry

concepts.15 The Commission’s findings, however, contain no substantive discussion

of those uses. The Commission’s analysis does not examine how widespread the

claimed uses are, or whether substitute products, such as larger magnetic spheres or

alternative construction toys, are (or could be made) available to serve those uses.

Instead, the Commission’s cost finding referred only to “some unknown quantity of

lost utility.” 16 C.F.R. § 1240.5(e)(6), (h)(2).

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. See Aqua Slide, 569 F.2d at 840

(“The Commission does not have to conduct an elaborate cost-benefit analysis. It does,

however, have to shoulder the burden of examining the relevant factors and producing

substantial evidence to support its conclusion that they weigh in favor of the standard.”)

(citation omitted). In this instance, the Commission abdicated that responsibility by

15
See, e.g., AR 911 (“As a physicist, graduate instructor, and Los Alamos
National Laboratory employee, I wish to strongly oppose the ban on magnetic toys.
These magnet sets are of tremendous educational values [sic], and I have used them
in the classroom as well as at scientific community outreach events.”); 1410 (“As a
practicing physicist, I have used these magnets for experimental and demonstrative
purposes, and they are very effective tools.”), 1601 (“I am a high school biology
teacher and I use magnets such as these as an invaluable teaching tool when
discussing proteins structure and function. . . . It would be a great hardship to me
and to the education of my students if these tools were no longer available.”), 1696
(“I do research into geometric lattice theory with these mini-magnets . . . [now] I can
no longer take advantage of a powerful tool.”), 3704 (high school math department
chair stating, “The Buckyball Science toy [(a certain brand of magnet set)] has been a
remarkable teaching and learning tool in our home and in the classroom.”).
20
failing to assess the demand for and usefulness of magnet sets as research and

teaching tools. Without that information, the Court cannot accurately gauge the full

costs of the safety standard.16 Cf. id at 839-40 (citing Forester v. Consumer Prod.

Safety Comm’n, 559 F.2d 774, 790-91 (D.C. Cir. 1977) (remanding safety requirements

for bicycles because the “Commission has evidently not considered the utility of

specific items that will be prohibited by the regulations”)).

III. Zen’s remaining arguments

We find the remainder of Zen’s challenges to the rule unpersuasive.

To begin, we do not reach Zen’s alternative argument that the safety standard is in

effect a ban. Because we find the Commission’s underlying cost and benefit findings

are inadequate, we have no cause to decide whether, in the next stage of cost-benefit

balancing, the Commission would be required to meet the arguably higher standard

applicable to bans. See 15 U.S.C. § 2058(f)(3)(C) (requiring, in the case of a ban, that

the Commission find “that no feasible consumer product safety standard under this

16
The Commission does not contend that it would not enforce the rule, which
applies to magnets “intended, marketed or commonly used . . . for entertainment,” 16
C.F.R. § 1240.2(b), against magnets also used for teaching or research. Although the
Commission’s regulatory analysis does not quantify what amount of use it considers
“common,” it does make clear that entertainment use by some consumers could
trump both a distributor’s stated intentions and alternative uses by other consumers.
See Final Rule: Safety Standard for Magnets, 79 Fed. Reg. at 59,973 (“Common uses
may be indicated by information found in consumer reports to the [Commission], firm
reports to the [Commission], injury reports, and consumer comments/reviews posted on
product Web sites stating that a product, regardless of whether it is intended or marketed
by the manufacturer as such, was, in fact, being used as a manipulative or construction
item for entertainment, such as puzzle working, sculpture building, mental stimulation or
stress relief.”) (emphasis added). Accordingly, the Commission should have
considered all substantial uses—including research and education—that could be
foreclosed by full enforcement of the rule.
21
chapter would adequately protect the public from the unreasonable risk of injury

associated with such product”).

Next, we find no merit in Zen’s contention that the Commission did not

comply with the APA’s notice-and-comment procedures. See 5 U.S.C. § 553(b), (c).

Zen complains it did not receive adequate notice of the scope of the final rule

because it was not given an opportunity to comment on the Commission’s insertion

of the phrase “or commonly used” into the final definition of subject magnet sets.

See 16 C.F.R. § 1240.2(b) (“Magnet set means: Any aggregation of separable

magnetic objects that is a consumer product intended, marketed or commonly used as

a manipulative or construction item for entertainment . . . .”) (emphasis added).

However, “[i]t is a well settled and sound rule which permits administrative agencies

to make changes in the proposed rule after the comment period without a new round

of hearings.” Beirne v. Sec’y of Dep’t of Agric., 645 F.2d 862, 865 (10th Cir. 1981).

The primary limitation on that principle is that a final rule must be a “logical

outgrowth” of the proposed rule. Am. Mining Cong. v. Thomas, 772 F.2d 617, 637

(10th Cir. 1985). “A final rule qualifies as a logical outgrowth if interested parties

should have anticipated that the change was possible, and thus reasonably should

have filed their comments on the subject during the notice-and-comment period.”

CSX Transp., Inc. v. Surface Transp. Bd., 584 F.3d 1076, 1079-80 (D.C. Cir. 2009)

(internal quotation marks omitted).

The Commission’s notice of proposed rulemaking expressly requested

comments regarding the rule’s scope. See Proposed Rule: Safety Standard for

22
Magnets, 77 Fed. Reg. at 53,788, 53,799. Moreover, the notice evinced the

Commission’s concern that the proposed definition would not address the risks of

magnets ostensibly marketed for purposes other than entertainment. See id. at

53,787. As such, it was reasonably foreseeable that the Commission would revise the

definition to address that concern.

Moreover, the resulting revision was not “surprisingly distant” from the original

definition. CSX Transp., 584 F.3d at 1080. Rather, the addition of the phrase

“commonly used” is a logical outgrowth of the Commission’s original approach of

targeting magnets according to their primary use. See Proposed Rule: Safety

Standard for Magnets, 77 Fed. Reg. at 53,800 (original definition applying to magnets

“intended or marketed . . . primarily as” manipulative or construction entertainment

items). The final rule confirms the purpose of the revision: “[It] seeks to prevent a

manufacturer or importer of magnet sets from avoiding the rule by simply stating in

marketing and other materials that the magnets are intended for uses other than those

specified.” Final Rule: Safety Standard for Magnets, 79 Fed. Reg. at 59,973.

Because the final definition of magnet sets is a logical outgrowth of the proposed

definition, the APA’s notice requirement was satisfied.

Finally, we decline to rely on either party’s letter purporting to alert the Court

to supplemental authority. Neither letter is sanctioned by Federal Rule of Appellate

Procedure 28(j), which permits a party to bring new legal authority—not new

evidence—to the attention of the court. See Utah v. U.S. Dep’t of Interior, 535 F.3d

1184, 1195 n.7 (10th Cir. 2008). Moreover, both letters improperly invite the Court to

23
review the safety standard on grounds and evidence that was not available to the

Commission in promulgating the rule. See Fed. Power Comm’n v. Transcon. Gas Pipe

Line Corp., 423 U.S. 326, 331 (1976) (“[W]e have consistently expressed the view

that ordinarily review of administrative decisions is to be confined to consideration

of the decision of the agency and of the evidence on which it was based. . . . The

focal point for judicial review should be the administrative record already in

existence, not some new record made initially in the reviewing court.”) (internal

alteration, quotation marks, and citations omitted); Custer Cnty. Action Ass’n v.

Garvey, 256 F.3d 1024, 1027 n.1 (10th Cir. 2001) (“Judicial review of an agency

decision is generally limited to review of the administrative record.”). Consistent

with those conclusions, we do not consider either letter, and we DENY Zen’s motion

to strike the Commission’s supplemental authority as moot.17

III. CONCLUSION

For the foregoing reasons, we VACATE and REMAND the Consumer Product

Safety Commission’s magnet set safety standard, 79 Fed. Reg. 59,962 (codified at 16

C.F.R. §§ 1240.1-1240.5), to the Commission for further proceedings consistent with

this opinion.

17
Of course, on remand, the Commission is free to consider that evidence if it
reopens the administrative record to conduct additional fact-finding.
24
No. 14-9610, Zen Magnets, LLC v. Consumer Product Safety Commission
BACHARACH, J., dissenting.

Zen Magnets asserts six challenges to the Consumer Product Safety

Commission’s final rule establishing safety standards for magnet sets:

1. The Commission lacked substantial evidence in finding that the
rule is reasonably necessary to avoid an unreasonable risk of
injury.

2. The Commission’s cost-benefit analysis was not supported by
substantial evidence.

3. The Commission lacked substantial evidence in finding that the
rule promotes the public interest.

4. The Commission did not adequately consider the magnets’
usefulness in education, research, and art.

5. The rule constitutes a ban, which required additional findings.

6. The final rule impermissibly expanded the definition of the
covered products.

I would reject these challenges and deny the petition for review. As a

result, I respectfully dissent.

I. Sufficiency of the Evidentiary Support for the Commission’s
Findings

Zen Magnets challenges the adequacy of the evidentiary support for

the Commission’s findings on reasonable necessity, an unreasonable risk of

injury, balancing of costs and benefits, and consideration of the public

interest. For these challenges, we consider only whether the findings were

based on substantial evidence. See 15 U.S.C. § 2060(c) (“The consumer
product safety rule shall not be affirmed unless the Commission’s findings

under sections 2058(f)(1) and 2058(f)(3) of this title are supported by

substantial evidence on the record taken as a whole.”). In my view, such

evidence existed.

A. Our Framework for Review

“[O]ur duty is to guarantee that factual determinations are supported

by reasonable, substantial and probative evidence considering the record as

a whole.” Sidabutar v. Gonzales, 503 F.3d 1116, 1122 (10th Cir. 2007)

(alteration in original) (quoting Uanreroro v. Gonzales, 443 F.3d 1197,

1204 (10th Cir. 2006)). The evidence is considered “substantial” if it is

relevant and might reasonably lead to a given finding. TransAm Trucking,

Inc. v. Admin. Review Bd., 833 F.3d 1206, 1209 (10th Cir. 2016). When

applying this test, we follow three steps:

1. “[L]ook to the statute and legislative intent to determine
the criteria necessary to establish the required findings.” 1

2 Ascertain “the relevant portions of the record . . .
primarily by reference to pages cited by the parties.” 2

3. Evaluate the evidence and reject the agency’s finding
only if “any reasonable adjudicator would be compelled
to conclude to the contrary.” 3

1
Aqua Slide ‘N’ Dive Corp. v. Consumer Prod. Safety Comm’n, 569
F.2d 831, 838 (5th Cir. 1978).
2
Id.
3
Sidabutar, 503 F.3d at 1125.

2
 B. Risk of Injury and Reasonable Necessity
The Commission could adopt the rule only by finding that

 the product creates an unreasonable risk of injury and

 the rule is reasonably necessary in light of that risk.

15 U.S.C. § 2058(f)(3)(A). In my view, the record supports the

Commission’s findings on both the unreasonable risk of injury and

reasonable necessity for the rule.

Unreasonable Risk of Injury. A risk of injury is unreasonable when it

exceeds “the harm the regulation imposes upon manufacturers and

consumers.” Southland Mower Co. v. Consumer Prod. Safety Comm’n, 619

F.2d 499, 508-09 (5th Cir. 1980) (quoting Aqua Slide, 569 F.2d at 839);

see also Mathew E. Hoffman, The Consumer Product Safety Commission:

In Search of a Regulatory Pattern, 12 Colum. J.L. & Soc. Probs. 393, 403

(1976) (“Basically, then, the cost of the Commission-imposed standards

must be weighed against the cost of their absence.”).

The Commission considered the risk posed by the magnet sets in an

unregulated market and concluded that the magnet sets pose an

unreasonable risk of injury and death. 79 Fed. Reg. at 59,962; 59,978-82.

Zen Magnets argues that this finding lacked substantial evidence because

the Commission relied on empirical data lacking enough certainty. 4 The

4
Zen Magnets also contends that the number of ingestions did not
increase when the magnets became available in 2009. But the record
3
majority agrees with Zen Magnets, reasoning that because 90% of the

injury data only “possibly” involved the covered magnets, the data was too

uncertain and imprecise to constitute substantial evidence for the

Commission’s findings on the risk of injury. But in addition to the

empirical data, the Commission relied on three other sources of

information.

contains contrary evidence. For example, Dr. Oliva-Hemker testified about
a clinical case survey conducted by the North American Society for
Pediatric Gastroenterology, Hepatology and Nutrition. Record at 7641-44.
She observed that the study had shown an increase in the ingestion of
magnets when high-powered magnet sets flooded the market in 2009:

It was shown that during [a] ten year period. . . there
were more than 16,000 emergency department visits for magnet
related ingestion’s [sic], and such visits in aggregate overall
increased more than eight-fold.

Importantly, it shows that magnet ingestion’s [sic] began
to increase in 2009. This was following a drop in cases from
2007 to 2009. We speculate that the drop in cases from 2007 to
2009 is attributed to the Commission’s recall of numerous toy
products that contained high powered magnets and adherence to
toy safety standards.

The increase in magnet ingestion’s [sic] correlates with
2009 being the first year of significant sales of high powered
magnet sets. For example, based on data available from one
company alone, 1.5 million units of Bucky Balls were sold
between 2009 and 2011, and other companies have similar high
sales during that time period.

Id. at 7647-48.
4
 The first was a survey of doctors, which showed a sharp increase in

injuries caused by ingestion of magnets from 2008 to 2012. Record at

7719-20 (Statement of Dr. Maria Oliva-Hemker).

The second consisted of testimony about the results of a study

published in the Journal of Pediatric Gastroenterology and Nutrition. Id. at

7644 (Statement of Dr. Maria Oliva-Hemker). This study concluded that

incidents had spiked in 2009, when the magnet sets became popular. Id. at

7644-48.

The third consisted of comments by medical experts who regarded

the statistical data as “a serious under estimation.” Id. at 7619.

These sources support the Commission’s findings that injuries

increased when the magnet sets entered the market and that the magnets

posed an unreasonable risk of injury.

Zen Magnets responds with two arguments: (1) the risk was

reasonable because consumers were aware of the dangers, and (2) the risks

were remote. These arguments do not vitiate the evidentiary support for the

Commission’s findings.

The Commission concluded that many children are unlikely to

appreciate the dangers from ingesting the magnet sets. 79 Fed. Reg. at

59,969-71. For this conclusion, the Commission pointed to studies showing

that caregivers are unable to constantly monitor children, older children

5
will “test limits and bend rules,” and bitterants would not deter initial

ingestions. Id.

The Commission also rejected the argument that the risk of injury

was remote, noting that “there were an estimated 2,138 injuries treated in

U.S. hospital emergency departments from 2009 through June 2012.” Id. at

59,978; see also id. at 59,962 (“We do not agree that this is a low figure

for injuries.”).

Zen Magnets downplays the risk, citing favorable comparisons to the

risk from harmless items like balloons. But these comparisons were far

from unanimous. In my view, the record sufficed for the Commission’s

finding of an unreasonable risk of injury.

Reasonable Necessity in Light of the Risk. Zen Magnets also denies

the existence of substantial evidence for Commission’s finding that the

new rule was reasonably necessary in light of the risk. I regard the

evidence as sufficient.

Zen Magnets argues that the rule effectively bans the magnet sets,

which is excessive in light of the risk of injury. But as discussed below,

the Commission reasonably classified the rule as a safety standard rather

than a ban.

Apart from characterizing the rule as a ban, Zen Magnets asserts that

the rule is unnecessary in light of its costs. This assertion is neither

developed nor persuasive. The Commission quantified the economic loss

6
from the rule, projecting $6 million in lost surplus. Id. at 59,981-82. In

addition, the Commission acknowledged that consumers would lose some

useful features of the covered magnets. Id. But the Commission concluded

that the rule was reasonably necessary to curb injuries. Id. at 59,988. That

conclusion was reasonable based on the record.

C. The Cost-Benefit Analysis

In conducting the cost-benefit analysis, the Commission relied on

injury data from 2009 through June 2012. Zen Magnets argues that this

data was outdated because the market changed dramatically in mid-2012,

when the Commission announced future efforts to regulate magnet sets.

The majority concludes that the data’s timeframe is potentially

problematic.

I would not reach the time-frame argument. During the notice-and-

comment period, no one commented on the Commission’s choice of a time-

period for the cost-benefit analysis. In my view, the absence of public

comment on this issue results in waiver of the challenge.

The Necessity of Public Comment. As the majority notes, a party

challenging an agency rule must generally present its concerns to the

agency during the rulemaking process. Maj. Op. at 16 n.11. “In a review of

the decision of an administrative agency, a party waives its right to appeal

an issue if it fails to object through comments or documents in the record.”

7
Nutraceutical Corp. v. Von Eschenbach, 459 F.3d 1033, 1041 n.9 (10th

Cir. 2006).

Because no one objected to the Commission’s choice of a time-

period, the Commission argues that this issue has been waived. Neither Zen

Magnets nor the majority suggests otherwise. In fact, Zen Magnets fails to

address waiver in either of its appeal briefs.

We ordinarily would go no further, for we generally take the parties’

issues as they are presented to us. Greenlaw v. United States, 554 U.S.

237, 243 (2008). Instead, the majority concludes that we may address Zen

Magnets’ time-frame argument because a claim involving obvious defects

is not waived even in the absence of a comment during the notice-and-

comment process. Maj. Op. at 16 n.11.

So, is the Commission’s reliance on data from 2009 through June

2012 an obvious flaw in the Commission’s cost-benefit analysis? The

majority answers “yes,” reasoning that the injury rate substantially

declined in 2012. Id.

The Commission acknowledged the decline in injuries, attributing the

decline to a 2012 announcement of future rulemaking to curtail ingestions

of high-powered magnets. Record at 8087. But in the Commission’s view,

the announcement “significantly altered the state of the market” and the

prior environment “represent[ed] the best approximation of how the market

would have operated in the absence of [the Commission’s] intervention.”

8
Final Rule: Safety Standard for Magnet Sets, 79 Fed. Reg. 59,962, 59,978

(Oct. 3, 2014) (codified at 16 C.F.R. §§ 1240.1-1240.5). Thus, the

Commission chose a time-period, 2009 through June 2012, that reflected

the injury rate when sellers had been allowed to flood the market with

high-powered magnets. Id.

I do not think that this rationale is obviously defective. In any event,

neither Zen Magnets nor the majority explains what is wrong with the

Commission’s explanation. I would hesitate to reject the Commission’s

explanation as “obviously” flawed in the absence of at least some argument

by Zen Magnets.

D. The Public Interest
The rule could be adopted only if it promoted the public interest. 15

U.S.C. § 2058(f)(3)(B). The Commission found that this requirement had

been met. 79 Fed. Reg. at 59,988 (“The regulations in this part are in the

public interest because they would reduce deaths and injuries associated

with magnet sets in the future.”). Zen Magnets disagrees, contending that

this finding was unsupported by substantial evidence and that the

Commission ignored the magnet sets’ utility as an art medium. I disagree.

Determination of the public interest involves policy-making, which

lies within the Commission’s expertise. See Teresa M. Schwartz, The

Consumer Product Safety Commission, 51 Geo. Wash. L. Rev. 32, 34 n.5

(1982) (“Such general statutory guidelines delegated to the Consumer

9
Product Safety Commission . . . wide discretion to balance broad social

goals and the competing claims of private interests in selecting products to

regulate and in defining the contents of the regulation.”). Applying this

expertise, the Commission acknowledged the utility of magnet sets but

found greater danger through injury and death. See p. 6, above. In

assessing the public interest this way, the Commission did not err.

II. The Magnets’ Usefulness

The majority concludes that the Commission inadequately considered

the magnets’ usefulness for education, research, and art. I respectfully

disagree.

The Commission noted that some commenters had expressed concern

that the new rule would eliminate the use of high-powered magnets in

education and research. Id. at 59,967. Addressing these concerns, the

Commission stated that many high-powered magnets would continue to be

used in education and research:

Magnets have long played a role in education. However,
the specific products that are covered by the rule have been on
the market only since 2008. The rule will cover only “any
aggregation of separable magnetic objects that is a consumer
product intended, marketed or commonly used as a
manipulative or construction item for entertainment, such as
puzzle working, sculpture building, mental stimulation, or
stress relief.” Magnets that are not subject to the restrictions of
the rule would continue to be available. For example, less
powerful magnets are sometimes included in science kits to
demonstrate magnetism. In addition, high-powered magnets
that serve industrial and commercial needs would not be
covered by the rule.

10
Id. This explanation was sufficient.

Zen Magnets also argues that the Commission overlooked the

magnets’ use as an art form. The Commission acknowledged this use and

explained that “[m]agnet sets that comply with the rule could serve some

purposes of magnet sets that are currently available.” Id. Zen Magnets does

not identify any shortcomings in this explanation.

The majority states that the Commission must provide an explanation

that allows meaningful review. Maj. Op. at 20. In my view, the

Commission’s explanation was sufficient for meaningful review.

III. Classification as a Safety Standard Rather than a Ban

Zen Magnets alternatively argues that the safety standard is

functionally a ban. The Consumer Product Safety Act distinguishes

between “safety standards” and “bans,” but does not define either term.

Because the statute is ambiguous and administered by the Commission, we

must defer to the Commission’s rules if they involve reasonable

interpretations of statutory ambiguities. The Commission’s classification

of its rule as a safety standard, rather than a ban, is reasonable and entitled

to deference.

A. The Commission’s Administration of the Consumer Product
Safety Act
The Commission administers the Consumer Product Safety Act, and

Congress expressly instructed the Commission to use the notice-and-

11
comment process to adopt safety rules. 15 U.S.C. § 2058(d)(2). Therefore,

Chevron deference applies to the Commission’s interpretation of the

Consumer Product Safety Act. See United States v. Mead Corp., 533 U.S.

218, 229 (2001) (“[A] very good indicator of delegation meriting Chevron

treatment [is] express congressional authorizations to engage in the process

of rulemaking or adjudication that produces the regulations or rulings for

which deference is claimed.”); Chevron, U.S.A., Inc. v. Nat. Res. Def.

Council, Inc., 467 U.S. 837, 844 (1984) (“We have long recognized that

considerable weight should be accorded to an executive department’s

construction of a statutory scheme it is entrusted to administer . . . .”).

As a consequence, we undertake the two-step Chevron-deference

analysis. “When Congress has spoken to the precise question at issue, we

must give effect to the express intent of Congress. If the statute is silent or

ambiguous, however, we defer to the agency’s interpretation, if it is a

permissible one.” S. Utah Wilderness All. v. Dabney, 222 F.3d 819, 1235-

36 (10th Cir. 2000) (citing Chevron, 467 U.S. at 842-44).

B. Ambiguity of the Statutory Provision
We first consider whether Congress has spoken to the question at

issue. Here, Congress failed to specify how to distinguish bans from safety

standards. This omission left room for the Commission to exercise its

discretion.

12
 The Act contains separate sections for safety standards and bans, but

does not give content to those terms. Section 2056(a) authorizes the

Commission to adopt consumer product safety standards, which include

“[r]equirements expressed in terms of performance requirements.” 15

U.S.C. § 2056(a)(1). In contrast, § 2057 allows the Commission to ban a

consumer product if “no feasible consumer product safety standard . . .

would adequately protect the public from the unreasonable risk of injury

associated with such product.” 15 U.S.C. § 2057. There is no further

discussion of the term “ban.”

These provisions are ambiguous because they do not distinguish bans

from safety standards. A safety standard that sets performance

requirements can always be reframed as a “ban” on nonconforming

products. But surely Congress did not mean to treat every safety standard

as a ban, for the law states that the Commission can create performance

requirements through safety standards. Thus, Congress ruled out the

possibility that every prohibition on the sale of nonconforming products

would constitute a ban. Instead, Congress allowed the Commission to draw

a different line: Some safety standards that create performance

requirements must qualify as safety standards rather than bans.

13
 C. The Commission’s Distinction Between Bans and Safety
Standards
The Commission classified its rule—which prohibits the sale of small

magnets with a flux index greater than 50 kG2 mm2 —as a safety standard.

This interpretation of the statute is reasonable and entitled to deference.

Under Chevron, we cannot “substitute [our] own construction of a

statutory provision for a reasonable interpretation made by the

administrator of an agency.” Chevron, U.S.A., Inc. v. Nat. Res. Def.

Council, Inc., 467 U.S. 837, 844 (1984). Such judicial micromanagement

would undermine an important rationale for deferring to administrative

agencies: “to ‘achieve predictable (and relatively litigation-free)

administration of the vast body of complex laws committed to the charge

of executive agencies,’ by ‘assur[ing] that reviewing courts will accept

reasonable and authoritative agency interpretation of ambiguous

provisions.’” S. Utah Wilderness Alliance v. Office of Surface Mining

Reclamation & Enf’t., 620 F.3d 1227, 1235-36 (alteration in original)

(quoting Coeur Alaska, Inc. v. Se. Alaska Conservation Council, 557 U.S.

261, 296 (2009) (Scalia, J., concurring)). Thus, we must defer to the

Commission’s classification of the rule as a “Safety Standard for Magnet

Sets.” 79 Fed. Reg. 59,962-01; 16 C.F.R. pt. 1240.

Zen Magnets points out that members of the Commission and public

have sometimes referred to the rule as a ban. E.g., Petitioner’s Reply Br. at

14
14. But the Commission definitively expressed its view that the rule is a

safety standard, rather than a ban, and we should defer to the

Commission’s characterization. 5

IV. Expansion of the Definition of Products

Zen Magnets also contends that the Commission expanded the

definition of the regulated products from what had been proposed in the

notice of proposed rulemaking. Like the majority, I would reject this

contention.

When an administrative agency uses the notice-and-comment process,

the final rule must constitute a “logical outgrowth” of the proposed rule.

Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 174 (2007). This

requirement ensures fair notice of what rule the agency might ultimately

adopt. Id. Thus, a final rule is a logical outgrowth of a proposed rule if the

final rule was “reasonably foreseeable” when the rule was proposed. Id. at

175.

Zen Magnets argues that the final rule deviated too far from the

proposed rule, violating the Administrative Procedure Act, 5 U.S.C. § 553.

I agree with the majority’s rejection of this argument because the final

5
In arguing that the safety standard was actually a ban, Zen Magnets
maintains that the Commission did not make findings to support a ban. See
15 U.S.C. §§ 2057(2), 2058(f)(3)(C). Because the rule was not a ban, I
would not address this argument.
15
definition of regulated products logically grew out of the proposed

definition.

Zen Magnets challenges the change to the proposed definition of the

magnet sets to be regulated. (The altered text is italicized.)

 Proposed Rule: “any aggregation of separable, permanent
magnetic objects that is a consumer product intended or
marketed by the manufacturer primarily as a manipulative or
construction desk toy for entertainment, such as puzzle
working, sculpture building, mental stimulation, or stress
relief.” 77 Fed. Reg. 53,783.

 Final Rule: “[a]ny aggregation of separable magnetic objects
that is a consumer product intended, marketed, or commonly
used as a manipulative or construction item for entertainment,
such as puzzle working, sculpture building, mental stimulation,
or stress relief.” 16 C.F.R. § 1240.2(b).

The final rule reaches further than the proposed rule by adding the phrase

“commonly used.”

The magnets’ common use does not necessarily reflect

manufacturers’ intentions, for individuals might use magnet sets

differently than manufacturers intend. For instance, assume that Zen

Magnets advertised only in high school science catalogs and websites,

labeled the magnet sets “educational products,” and warned that the

magnets are not safe for use as toys. With these assumptions, we could

infer that Zen Magnets intended purchasers to use the magnet sets as

educational products. But if consumers chose to use the magnets as toys,

the common use would diverge from Zen Magnets’ intended and marketed

16
uses. Thus, the final rule differs from the proposed rule and we must

consider whether the final rule is a “logical outgrowth” of the proposed

rule.

This determination generally hinges on the salience of the changed

language to a reader of the proposed rule. Salience is a product of

 the prominence of the issue in the proposed rule 6 and

 whether the issue was flagged as something that might be
changed in the eventual rule. 7

Here, both factors indicate that the final rule was a logical outgrowth

of the proposed rule, for the Commission unambiguously stated that the

definition of “magnet set” was subject to change and invited comments on

the definition. See Notice of Proposed Rulemaking: Safety Standard for

Magnet Sets, 77 Fed. Reg. 53,781, 53,787 (Sept. 4, 2012) (“The

Commission seeks comment on the scope of the products proposed to be

covered by this proposed rule and, in particular, whether risks are

presented by magnets in science kits or craft and hobby kits no matter how

they are age graded and labeled.”).

6
See, e.g., AFL-CIO v. Donovan, 757 F.2d 330, 339 (D.C. Cir. 1985)
(noting that language that was altered by the final rule “appeared [in the
proposed rule] only as part of the entire set of Service Contract Act
regulations . . . , which was reprinted in full in some forty pages of the
Federal Register”).
7
See CSX Transp., Inc. v. Surface Transp. Bd., 584 F.3d 1076, 1081
(D.C. Cir. 2009) (explaining that when the notice of proposed rulemaking
expressly asked for comments on an issue, changes to the relevant
language were a logical outgrowth).
17
 In this manner, the Commission provided notice to interested parties

that the definition of “magnet sets” might be broadened or narrowed. Such

notice was sufficient. See CSX Transp., Inc. v. Surface Transp. Bd., 584

F.3d 1076, 1081 (D.C. Cir. 2009) (“We have found that a final rule

represents a logical outgrowth where the [notice of proposed rulemaking]

expressly asked for comments on a particular issue or otherwise made clear

that the agency was contemplating a particular change.”); Alto Dairy v.

Veneman, 336 F.3d 560, 570 (7th Cir. 2003) (holding that notice was

sufficient because industry “insiders” would realize that an issue was at

stake).

V. Conclusion

Because I would not disturb the Commission’s rule, I respectfully

dissent.

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