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I am an attorney practicing in Hartford, Connecticut. A particular focus of mine is the legal needs of the amusement and tourism industry. My focus on the amusement industry derives from my pre-law career as an operations manager with Cedar Fair Entertainment Company and Universal Orlando. Having started my career as a ride operator at Cedar Point in 1992, I progressed through the seasonal ranks and ultimately became the Manager of Ride Operations and Park Services at Worlds of Fun in Kansas City. I also worked in Universal's operations department during the construction and development of Islands of Adventure. Today, I am an active member of the New England Association of Amusement Parks & Attractions and the International Association of Amusement Parks & Attractions. I have been invited to speak at amusement industry meetings and seminars and have worked on a variety of matters relating to this industry.

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Monday, August 22, 2016

A Safer Ride? (Pt. 2) - What Would Federal Amusement Ride Regulation Cost & Do Regulators Even Want It?

            The question of federal oversight of amusement ride safety is one that comes up every summer in the wake of an unfortunate, sometimes tragic, incident in the industry.  But while many in politics and the media are quick to speak out in favor of federal ride safety oversight, this rhetoric is typically devoid of any detail.  What would a federal ride safety program look like?  What would it cost?  And does the agency that would be charged with administering it share the view that it would be a good idea?  In my last post, I made my case for why I just do not see the federal government being any better (and perhaps it would be worse) than the states when it comes to ride safety oversight.  But even setting that aside, it is important to think about the details here and consider whether this program might be not enough bang and too much buck. 


How Much Oversight?

            Before getting into the costs and / or desire for federal ride safety oversight, we need to know what exactly it is that we are talking about when we think about a potential federal ride safety program.  For years, there has been talk of giving the Consumer Products Safety Commission (“CPSC”) jurisdiction over fixed site rides, but simply saying that is saying nothing.  To intelligently discuss the costs and benefits of a potential program, we need to know what exactly the CPSC would do.  Details on a proposed program are hard to find, but I was able to find some, from now-Senator Ed Markey of Massachusetts, the only real proponent on Capitol Hill for federal ride safety oversight in recent years.  Here’s what he had to say on the matter in 2008:


“[T]he federal government is prevented from investigating accidents at amusement parks, sharing accident information with operators of the same ride in other states so that malfunctions are fixed before more riders are hurt, requiring manufacturers to correct design flaws and make the ride safer, and enforcing a full range of safety measures on amusement park rides.”
Setting aside whether Senator Markey is correct about the current state of ride regulation, this statement appears to outline the contours of the federal program he would like to see enacted.  Such a program would be impressive in its scope, to be sure.  While this program would accomplish much of what is already encompassed in many states right now, particularly in terms of enforcement of safety regulations and accident investigation, it would also include, apparently, a system for reviewing and assessing amusement ride design – presumably before an accident occurs – and a publicly available comprehensive database of accident information.  All of this sounds good to those who argue vociferously for federal oversight.  But let’s look at what this program would likely cost American taxpayers. 
The Likely Cost

            Spoiler alert:  This program would probably be very, very expensive.  While, to the best of my knowledge, no one has undertaken a study of what it would actually cost, we can certainly draw a good faith estimate from looking to the one existing federal program that looks a lot like what Senator Markey describes:  aviation regulation.

            For those not familiar with how federal aviation regulation works in the United States, a quick primer is in order.  Broadly speaking there are two related, yet independent, agencies that regulate aviation in the U.S.:  the Federal Aviation Administration (“FAA”) and the National Transportation Safety Board (“NTSB”).  Each of these agencies plays an important role in aviation safety both from a regulatory and an investigatory standpoint.  The FAA is the agency in charge of reviewing and certifying aircraft design, promulgating safety regulations, enforcing those regulations, and working with the industry on safety improvements designed to prevent accidents before they occur.  The NTSB, on the other hand, is the agency tasked with investigating aviation accidents after they occur to determine their probable cause and make recommendations to the aviation industry and the FAA for safety improvements designed to prevent accident re-occurrence.  The NTSB also maintains a public database of accident data concerning every accident occurring in the U.S.  Putting these two agencies together, they have responsibility for “investigating accidents,” “sharing accident information with operators,” “requiring manufacturers to correct design flaws,” and “enforcing a full range of safety measures” in the aviation industry.  In short, this looks like a template for the federal amusement ride safety program Senator Markey described above.  So if the functions are similar, the costs might be similar too.

            The first “bucket” of costs that I think we should consider is what I’ll call the “regulatory” function of a federal amusement ride safety program.  This is the part of the program that would be in charge of assessing and certifying amusement ride design, promulgating regulations, working with the industry to ensure compliance and design modifications (where necessary), and enforcing safety regulations through periodic ride inspections and / or more formal enforcement actions.  In the aviation sector, this is the largely the FAA’s job.  And it is a big one.  How big?  Well, about $15.83 billion big in fiscal year 2016.  Now, to be clear, I don’t think that a federal amusement ride program would necessarily cost $15.8 billion.  But I think we can borrow from the FAA’s budget estimate to get a more realistic idea of what such a program would cost.  More specifically, the FAA’s 2016 budget request includes approximately $1.5 billion for the aviation safety office, the branch of the FAA dedicated to aviation inspection, surveillance, and certification services.  The aviation safety office essentially handles much of what would be within the regulatory function of a federal amusement ride safety program.  Even assuming that, due to differences between the two industries, a third of the FAA’s money would not be needed for amusement ride safety oversight, we are still left with a regulatory program alone that would cost a billion dollars to implement, maintain, and operate.  A billion dollars to review and certify amusement ride design (remember, there are literally thousands of individual amusement ride designs out there – some dating back decades), employ federal inspectors (who would now need to inspect in all 50 states), write regulations, enforce compliance, inspect every amusement ride in the country annually or, for mobile rides, whenever set up in a new location (and there are easily tens of thousands of rides, both fixed and mobile, operating each year in the U.S.), and take whatever actions are deemed necessary to enforce those regulations.  That’s a billion dollars.  Per year.  And we haven’t even gotten to the other component we have to think about.

            In the event that something bad happens on an amusement ride, a federal program would be needed to investigate it and determine its probable cause.  For that, something similar to the NTSB would be necessary.  So how much does the NTSB spend on its aviation-related issues?  In FY 2016, it requested $105 million in total funding, approximately a third of which, $33 million, is dedicated to aviation safety.   Assuming again that an amusement accident investigatory board (including a publicly available amusement safety database) might only need 2/3 of this money to operate, that still leaves about $22 million for post-accident investigation.  And, depending upon the severity threshold necessary to trigger a federal investigation, that number might actually be far greater.  
  
            The bottom line is that, to accomplish a federal ride safety oversight program that would include design certification, regulatory implementation and enforcement, and investigatory jurisdiction could conservatively cost U.S. taxpayers more than a billion dollars.  That is basically the same amount that President Obama recently requested for a new federal program to combat prescription opioid and heroin abusean amount that Congressional republicans have, thus far, refused to fund (although they are expected to next year).  Does anyone seriously believe that a Congress that drags its feet to combat heroin abuse will spend a billion dollars on roller coasters and water slides?  

Is There Any Desire For Federal Regulation By Federal Regulators?

            Even assuming that the price tag for such a comprehensive federal program was not so cost prohibitive, does anyone at the federal level really want it?  I’m not talking about legislators who sway with the wind of public outrage, advocating for the issue-of-the-moment, but who rarely have to deal with the actual realities created by their legislation.  I’m talking about the regulators themselves – the people that would actually have to implement such a program.  In this case, I’m talking about the CPSC.  Is there any evidence that the CPSC thinks federal ride safety oversight – whether carrying a billion dollar price tag or not – is a good idea.

            When trying to discern what the CPSC may think about amusement ride regulation, it is important to remember something that is repeatedly ignored when the media is reporting on this issue:  the CPSC already has regulatory jurisdiction over a huge swath of the amusement rides operating in this country.  In 1981, Congress passed a bill that excluded fixed site amusement rides from the definition of a “consumer product.”  Mobile amusement rides, however, were left within the definition and, thus, subject to CPSC oversight.  For these rides, the CPSC, for decades now, has had the authority to adopt safety standards, either voluntary or mandatory whenever it deems them “reasonably necessary to prevent or reduce an unreasonable risk of injury.”  See15 U.S.C. § 2056(a).  Nonetheless, it never has.  Presumably because it does not believe mobile amusement rides represent an “unreasonable risk of injury.” 

            The CPSC knows exactly how safe the industry is.  Not because the industry lobby tells it so.  But because it has been directly involved with the development of worldwide amusement industry ride safety standards for years through its participation on the ASTM F24 committee – the committee that sets the operating, design, and maintenance standards for the amusement industry – both mobile and fixed-site.  The F24 committee is a body comprised of more than 900 ASTM members from 30 countries, including manufacturers, engineers, designers, technicians, park owners and operators, regulators, inspectors, biodynamic experts, industry association representatives, consumer advocates and others.  Its leadership is a veritable “who’s who” in the field of amusement ride safety and includes representatives of some of the most sophisticated operators and manufacturers in the world.  These people know safety.  And these people include representatives from the CPSC.  According to the CPSC’s own documents, the CPSC has been actively involved on the F24 Committee, and took an active role in “monitor[ing] and provid[ing] technical support to the development of new and revised standards developed and maintained by the ASTM F24 Committee on Amusement Rides and Devices.”  The CPSC worked with ASTM on the development of “standard practices for amusement ride terminology, design, manufacture, railways, water-related rides and devices, ownership and operation, and hydraulic systems.”  Indeed, the CPSC was apparently comfortable enough with the industry’s own safety efforts that in 2015, the CPSC stepped back, reducing “its involvement [on the F23 Committee] from active participation to monitoring.”     

            The CPSC’s level of industry participation is important for two reasons.  First, it is evidence that the CPSC knows exactly how the industry is operating, what standards the industry has in place, and the regulatory framework enacted at the state level.  There is no doubt that the CPSC knows exactly how safe or unsafe the amusement industry is.  Second, knowing what it does, the fact that it has chosen never to adopt even voluntary standards at the federal level is an implicit acknowledgment that it perceives, to use the statutory language, no “unreasonable risk of injury” associated with amusement rides.  If it did, the CPSC would have been statutorily required to do something about it.  But it hasn’t.  And if it doesn't even perceive the need to act under its jurisdiction now, there is no reason to believe that its position would change with the addition of fixed-site rides.

            Political rhetoric and media scare tactics in favor of federal oversight are one thing.  They are effective in arousing compassion and anger at the status quo.  But the solution to the current system (if one is needed) is not a billion dollar federal program that the very regulators charged with administering it do not appear to want.  So why do it?  Well … the only reason we should even have this discussion, notwithstanding all the downsides, is if state regulation simply isn’t working.  But is that the reality?  See you next time.

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