Announcement of Amnesty and Conditions Under Which the Staff Will Refrain From Making Preliminary Hazard Determinations

CONSUMER PRODUCT SAFETY COMMISSION

Announcement of Amnesty and Conditions Under Which the Staff Will

Refrain From Making Preliminary Hazard Determinations

AGENCY: Consumer Product Safety Commission (CPSC).

ACTION: Notice.

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SUMMARY: Section 15(b) of the Consumer Product Safety Act requires

manufacturers, distributors, and retailers of consumer products

distributed in commerce to notify the Commission of certain defects,

unreasonable risks or non-compliance with voluntary or mandatory

standards. Firms that fail to report are subject to civil penalties.

The Commission is announcing a one time amnesty for firms who have

failed to report in the past. The Commission is also announcing the

staff will forego making a preliminary hazard determination when firms

report and within 20 working days implement corrective action

acceptable to the staff.

DATES: This action announces that the staff of the CPSC will not seek

penalties under any of the rules or acts it administers against firms

who report under section 15(b) of the CPSA from August 17, 1995, to

February 13, 1996, potential hazards the firm failed to report prior to

the amnesty period. The staff will meet with interested members of the

public September 12, 1995 at 10 a.m. to discuss this initiative and a

second initiative announced in this notice.

FOR FURTHER INFORMATION CONTACT: Theresa Rogers, Office of Compliance,

CPSC, 4330 East West Highway, Bethesda, MD 20814 (Mailing address:

Washington, D.C. 20207), telephone (301) 504-0608, extension 1363, or

Eric L. Stone, Office of Compliance, CPSC, 4330 East West Highway,

Bethesda, MD 20814 (Mailing address: Washington, D.C. 20207), telephone

(301) 504-0626 extension 1350.

SUPPLEMENTARY INFORMATION:

A. Reporting Amnesty

Section 15(b) of the Consumer Product Safety Act (CPSA), 15 U.S.C.

2064(b), requires manufacturers, distributors and retailers of a

consumer product distributed in commerce to notify the Commission when

they obtain information which reasonably supports the conclusion that

their product (1) fails to comply with an applicable consumer product

safety rule or voluntary standard relied upon by the Commission under

section 9, (2) contains a defect which could create a substantial risk

of injury, or (3) creates an unreasonable risk of serious injury or

death. The Commission published a rule interpreting this provision at

16 CFR Part 1115. Firms that knowingly fail to report are subject to

civil penalties under sections 19(a)(4) and 20(a)(1) of the CPSA, 15

U.S.C. 2068(a)(4) and 2069(a)(1). Similar penalties exist for failures

to report under section 37 of the CPSA, 15 U.S.C. 2084, and section 102

of the Child Safety Protection Act, Public Law 103-267, 108 Stat. 722

(1994), and for violations of various safety rules in Title 16 of the

Code of Federal Regulations.

For years, the Commission has been concerned that many firms are

not complying with their reporting obligations under section 15(b) of

the CPSA. Despite the efforts of CPSC and various industry and legal

groups to publicize the requirements, some of this failure is

undoubtedly due to ignorance of the law. Many other factors also play a

role. Once a firm has failed to report it finds itself in a quandary. A

late report subjects the firm to civil penalties and the stigma

associated with failure to comply with the reporting obligation in the

first instance. Fear of such penalties could cause some firms to hide

their problems.

To address this fear, the Commission is announcing a one-time

amnesty program. The staff will not seek penalties under any of the

rules or acts it administers against firms who report under section

15(b) of the CPSA from August 17, 1995, to February 13, 1996, potential

hazards the firm failed to report prior to the amnesty period. The

amnesty will not be available for any product reported prior to the

date of this Federal Register notice, nor will it apply to firms who

are currently under investigation for a failure to report or other

violation of the Commission's laws. Firms will not receive amnesty for

failures to report based on reporting obligations that arise between

August 17, 1995, and February 13, 1996.

This amnesty is intended to encourage firms to ``clean out their

closets'' of matters that should have been reported in the past. While

firms may report such matters without fear of penalty, the staff will

still seek corrective action when such action is needed to protect the

public from a possible substantial product hazard.

B. Staff to Forego Preliminary Determinations When Firms Initiate

Timely Corrective Action

In the past, the Commission staff has made a preliminary hazard

determination as to whether a product presents a substantial product

hazard (section 15 of the Consumer Product Safety Act, 15 U.S.C. 2064),

or contains a defect which creates a substantial risk of injury to

children (section 15 of the Federal Hazardous Substances Act, 15 U.S.C.

1274), whenever it receives a report under section 15(b) of the CPSA.

See 16 CFR 1115.12(a). Some firms have expressed concern that the

preliminary determination, although not a formal hazard determination

of the agency, could have a negative impact in their product liability

cases or on their reputation. From August 17, 1995, until February 13,

1996, on a pilot basis, the staff will forego such preliminary

determinations for firms that report in a timely and complete manner

and implement within 20 working days after filing an initial report a

corrective action the staff believes will be effective. For purposes of

this pilot program, ``implement'' means issuance of a news release or

other form of public notice approved by the staff commencing the

corrective action.

This pilot project does not modify firms' reporting obligations.

Firms who have an obligation to notify the Commission under section

15(b) or section 37 of the CPSA, or section 102

[[Page 42849]]

of the Child Safety Protection Act, must continue to do so even when

they believe the risk does not warrant corrective action.

At the end of the pilot period, the Commission will evaluate the

effectiveness of this initiative and determine whether it should be

extended.

The staff will only forego preliminary determinations for a firm

that:

a. Files a Full Report (See 16 CFR 1115.13(d)). Currently, many

firms do not submit complete information. Firms sometimes omit copies

of complaints and claims. This information is crucial for the staff to

properly evaluate the problem and the firm's corrective action. The

staff will not allow firms that do not report fully to participate in

this pilot program.

b. Advises the staff it wishes to undertake an expeditious

corrective action under the pilot program.

c. Submits a proposed corrective action plan in sufficient time for

the staff to review the plan, analyze any replacement product or

repair, and work out the details of the corrective action with the firm

so that the plan can be implemented within 20 working days after the

filing of the report. The plan shall include the following:

(1) A description of the action to be taken (refund, repair, or

replacement) that will eliminate the identified risk.

(2) Sufficient product design, incident, and testing information to

allow the staff to determine whether the proposed action corrects the

identified problem and the problem is limited to the model[s] and

production dates identified by the firm. Such information should

include, but is not limited to: consumer complaints, test data,

engineering drawings, material specifications, samples of product, and/

or component parts, as needed. If the needed information and

documentation is being compiled, but is not yet available, the firm

must provide the date it expects to forward the information to CPSC.

CPSC staff must have sufficient time to review the information and meet

the 20 working day time limit.

(3) Usually, the firm's proposed plan must include notice to

distributors, retailers, and consumers of the subject product. The

notice must describe the product, the hazard, the number and type of

injuries that have been reported, the type of injury that may occur,

and the action to be taken in plain language understandable to the

people to whom the notice is directed. Generally, the plan must include

a joint news release with the Commission, letters and instructions to

retailers and distributors, point-of-purchase posters, and, depending

upon the level of risk, the population at risk, age and number of

products involved, there should be an additional notice. Supplementary

notice may include a Video News Release, print and/or radio

advertisements, incentives or bounties to encourage consumer response,

posters for specific audiences, such as for posting in pediatricians'

offices, medical clinics, national parks and campgrounds, and repair

shops (see Corrective Action Handbook, available from CPSC Division of

Corrective Actions). In those cases where all purchasers can be

contacted directly, a news release may not be necessary.

(4) An agreement that the Commission may publicize the terms of the

plan and inform the public of the nature and the extent of the alleged

hazard. The consumer notice should be targeted to reach a significant

portion of the public likely to have purchased the subject product.

(See 16 CFR 1115.20(a) and CPSC Corrective Action Handbook.)

(5) The corrective action plan and notice must be acceptable to the

staff. The staff will consider whether the corrective action plan

adequately addresses the risk of injury presented by the product and

whether the notice and corrective action plan are designed to make the

plan as effective as is reasonably possible given the nature of the

product and the risk. The Office of Compliance staff will provide

expedited review of each proposal submitted and work with the firm to

develop an acceptable corrective action plan that can be implemented

within the 20 working day period. The staff anticipates there may be

cases where a firm has submitted all the necessary information in a

timely manner but cannot implement the corrective action plan within

the 20 day period because the staff requires additional time to

evaluate a proposed corrective action plan and this delay did not

result from delay or fault on the part of the firm. It is also possible

that in some cases the staff and firm will agree that notice and

corrective action should occur at a later time (such as in the case of

a seasonal product). In both those cases where delay is neither caused

by, nor is the fault of, the firm, the staff will not make a

preliminary hazard determination.

If corrective action is implemented within the specified 20 working

days, staff will provide written acknowledgement that the firm has

submitted information under section 15(b); that, based on available

information, the proposed corrective action plan is adequate; and that

the staff will monitor the progress of the plan. The staff will advise

the firm that the firm has a continuing obligation to report new or

different information that may affect the scope, prevalence or

seriousness of the defect or hazard.

If the firm does not implement a corrective action acceptable to

the staff within the specified 20-day time limit, staff will inform the

firm that it will continue its evaluation and will preliminarily

determine whether the product contains a defect that creates a

substantial risk of injury to children under the FHSA or presents a

substantial product hazard under the CPSA.

Firms should not delay their reports under section 15(b) of the

CPSA in order to prepare a corrective action plan. The staff will not

forego preliminary determinations if the information available suggests

a firm delayed its initial report to prepare a corrective action plan.

C. Meeting

The staff will meet with interested members of the public at 10

a.m. on September 12, 1995 to discuss these initiatives. The meeting

will be held in the Commission's hearing room on the fourth floor of

4330 East-West Highway, Bethesda, Maryland.

Dated: August 7, 1995.

Sadye Dunn,

Secretary, Consumer Product Safety Commission.

[FR Doc. 95-20429 Filed 8-16-95; 8:45 am]

BILLING CODE 6355-01-P