[Federal Register: July 25, 2006 (Volume 71, Number 142)]
[Rules and Regulations]
[Page 42028-42031]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jy06-7]
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CONSUMER PRODUCT SAFETY COMMISSION
16 CFR Part 1115
Substantial Product Hazard Reports
AGENCY: Consumer Product Safety Commission.
ACTION: Final interpretative rule.
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SUMMARY: Section 15(b) of the Consumer Product Safety Act, 15 U.S.C.
2064(b), requires manufacturers, distributors, and retailers of
consumer products to
[[Page 42029]]
report potential product hazards to the Consumer Product Safety
Commission. On May 26, 2006, the Commission solicited comments on
proposed revisions to its interpretative rule advising manufacturers,
distributors, and retailers how to comply with the requirements of
section 15(b). The proposed revisions identified additional factors the
Commission and staff consider when assessing whether a product is
defective or not. The proposed revisions also clarified that compliance
with voluntary or mandatory product safety standards may be considered
by the Commission in making certain determinations under section 15.
After considering public comments, the Commission issues the
accompanying final rule.\1\
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\1\ The Commission voted 2-1 to issue the final interpretative
rule, Commissioner Thomas Moore dissenting. Chairman Stratton and
Commissioner Nord filed statements which are available from the
Office of the Secretary or on the Commission's Web site at http://www.cpsc.gov
.
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DATES: This final rule becomes effective on July 25, 2006.
FOR FURTHER INFORMATION CONTACT: John Gibson Mullan, Assistant
Executive Director, Compliance and Field Operations at (301) 504-7626.
SUPPLEMENTARY INFORMATION:
A. Background
To provide further guidance, clarity and transparency on reporting
obligations under section 15(b) of the Consumer Product Safety Act
(CPSA), 15 U.S.C. 2064(b), the Commission, on May 26, 2006 (71 FR
30350) proposed revisions to its interpretative rules regarding
reporting of possible substantial product hazards. Section 15(b) of the
CPSA requires that every manufacturer (including an importer),
distributor or retailer of a consumer product who obtains information
which reasonably supports the conclusion that its product fails to
comply with an applicable consumer product safety rule or with a
voluntary consumer product safety standard upon which the Commission
has relied under section 9 of the CPSA, or contains a defect which
could create a substantial product hazard as defined in section
15(a)(2) of the CPSA, or creates an unreasonable risk of serious injury
or death, shall immediately inform the Commission of such failure to
comply, of such defect, or of such risk, unless the manufacturer,
distributor or retailer has actual knowledge that the Commission has
been adequately informed. In 1978, the Commission first published an
interpretative rule, 16 CFR part 1115, which explained the section
15(b) reporting requirement and provided guidance on filing section
15(b) reports.
In this notice the Commission finalizes revisions to the
interpretative rule to clarify factors relevant to section 15(b)
reporting determinations. These revisions are not intended to reduce
the number of reports to the Office of Compliance, to reduce or change
the types of information reported, or to suggest a diminished need to
report.
The Commission received 14 comments in response to the proposed
revisions. Joint comments were submitted by four ATV companies (Kawaski
Motors Corp., USA; American Honda Motor Co., Inc.; Polaris Industries
Inc., and Yamaha Motor Corporation, U.S.A.). Joint comments were also
submitted by four consumer groups (Consumers Union, Consumer Federation
of America, Kids In Danger, and U.S. Public Interest Research Group).
Eight commenters supported the revisions; two of the eight suggested
clarifications to certain provisions. Six commenters opposed the
revisions; five of the six suggested that the Commission not adopt the
revisions and one of the six suggested that the Commission keep the
record open. The Commission received a number of comments in support of
a regulation related to the assessment of civil penalties pursuant to
section 20 of the CPSA, 15 U.S.C. 2069(b), (c). A separate Federal
Register notice is being issued for public comment on this issue.
The Commission received a number of comments that went beyond the
scope of the proposed revisions. These included a suggestion for a new
appeal process for preliminary determinations relating to substantial
product hazards, issues concerning the hazards presented by counterfeit
products, more widespread notice about the Fast Track recall process,
General Counsel review of recommendations of proposed administrative
complaints, and provisions in the adjudicative rules for joinder and
intervention. The Commission is not incorporating any of these
suggestions since they were not part of the proposed revisions.
A summary of the comments on the proposed revisions and our
responses appear below.
B. Section 1115.4 Defect
The first revision clarifies the Commission's discussion of
``defect'' by adding additional criteria Commission staff use to
evaluate whether a risk of injury is the type of risk that will render
a product defective, thus possibly triggering a reporting obligation
under section 15(b). The rule currently states that in determining
whether the risk of injury associated with a product is the type of
risk which will render a product defective, the Commission and staff
consider, as appropriate: the utility of the product involved; the
nature of the risk of injury which the product presents; the necessity
for the product; the population exposed to the product and its risk of
injury; the Commission's own experience and expertise; the case law
interpreting Federal and State public health and safety statutes; the
case law in the area of products liability; and other factors relevant
to the determination. The Commission proposed to add the following
factors as considerations: the obviousness of such risk; the adequacy
of warnings and instructions to mitigate such risk; the role of
consumer misuse of the product, and the foreseeability of such misuse.
The commenters who opposed the revisions suggested that inclusion
of these additional factors does not clarify a firm's reporting
obligations but weakens the intent of the original regulation by giving
firms additional factors upon which to argue that a particular product
is not defective and thereby avoid reporting. Several commenters also
suggested that a firm could rely on just one of the factors--like
consumer misuse--to negate a reporting obligation.
The Commission's intent in adopting this revision is to give
further guidance to firms about reporting defects in their products.
The determination of whether a product is defective is a threshold
issue in evaluating reporting obligations under section 15(b) of the
CPSA and is one of the most critical determinations a company is
required to make under the CPSA. A firm must report if it obtains
information which reasonably supports the conclusion that a product it
manufactures and/or distributes contains a defect which could create a
substantial product hazard. 15 U.S.C. 2064(b)(2). The regulatory
criteria for evaluating whether a product presents a risk of injury
that may render it defective have been in effect since 1978. In the
nearly 30 years since then, the Commission and staff have evaluated
thousands of products using many criteria, including, as appropriate,
the criteria now being adopted. The Commission has concluded, based on
experience and practice in applying the criteria, that the additional
factors--the obviousness of such risk; the adequacy of warning and
instructions to mitigate such risk; the role of consumer misuse of the
product and the foreseeability of such misuse--help clarify the
existing factors in the regulation and enable a better analysis of
whether the risk of injury associated with a product is the
[[Page 42030]]
type of risk which will render it defective. This regulation
contemplates consideration of a number of appropriate factors in making
such a determination. Reliance on one factor alone cannot negate a
reporting obligation if other factors, as applied, reasonably support
the conclusion that a defect exists.
The Commission staff already considers the proposed factors in
making decisions about potential defects. The current defect regulation
specifies that the Commission and staff will, as appropriate, consider
the case law in the area of product liability. Two commenters pointed
out that the case law in the product liability area, as reflected in
the Restatement of Torts, uses all of the additional criteria proposed.
Thus, the regulation only makes explicit what was already implicit in
the Commission's regulation.
C. Section 1115.12(g)(1)(ii) Number of Defective Products Distributed
In Commerce
The Commission proposed adding the following statement to an
evaluation of the number of defective products distributed in commerce
when making a substantial product hazard determination: ``The
Commission also recognizes that the risk of injury from a product may
decline over time as the number of products being used by consumers
decreases.''
Three commenters objected to this provision. One commenter
contended that the proposed regulatory change is untrue because the
individual risk to a user from a defective product bears no
relationship to the number of products in use. Commenters opposed to
the provision also stated that the proposal gave manufacturers an
incentive to wait to report and to hide problems until a product is
older.
The Commission has clarified the language of this provision in
response to comments. By this provision, the Commission is merely
recognizing that the number of products remaining in consumers hands at
any given time is relevant to a substantial product hazard
determination and that determination can be influenced by a decline
over time in the number of products remaining in use. The current
regulation can be misleading because it suggests that the number of
products originally distributed is the only relevant number in deciding
whether a defective product presents a substantial risk of injury. When
a potential hazard first appears long after a product was sold,
however, the more relevant number is not the number of products
originally sold but the number still with consumers. A firm may still
have a reporting obligation in such circumstances. The Commission
stresses that firms should never delay reporting in anticipation of, or
because of, a decrease in the number of products in use. Firms that
delay reporting for such reasons will be subject to civil penalties.
The final regulation is reworded to avoid use of the term ``risk''
which generated some confusion.
D. Section 1115.8 Compliance With Product Safety Standards
The proposed revisions also add a new section Sec. 1115.8,
``Compliance with Product Safety Standards.'' This section is intended
to further explain how the Commission views compliance with applicable
voluntary or mandatory standards, particularly in the context of
decisions under section 15 of the CPSA. Three of the commenters raised
the objection that this new provision creates a safe harbor for
companies by negating a reporting obligation when a product complies
with a voluntary or mandatory standard.
Voluntary Standards. The opposing commenters mistake the scope and
intent of this provision. It provides no safe harbor from a reporting
obligation. The text of the rule states that compliance with voluntary
standards ``may be relevant'' to preliminary determinations. This
language clearly does not foreclose the possibility that the staff may
make a preliminary determination that a product presents a substantial
product hazard notwithstanding compliance with all applicable voluntary
standards. Although the Commission strongly supports voluntary
standards, such standards are not always adequate. In some cases, a
defect may involve a product characteristic or aspect of performance
not addressed by a standard that is adequate in other respects, or a
product that meets voluntary standards by design may be taken out of
compliance by a manufacturing defect. In short, if a voluntary standard
exists and addresses a product hazard, and the product complies with
such a standard, then that compliance may be relevant to considering
whether a product preliminarily presents a substantial product hazard.
Compliance with a voluntary standard does not preclude a determination
that a substantial product hazard exists, nor will it relieve a firm of
the requirement to report when a substantial product hazard may exist.
Firms must not treat compliance with standards as an excuse not to
report. They should report if a substantial product hazard may exist
and allow the staff to consider the significance of the standard. In
the past, the Commission has sought recalls for products that have
complied with voluntary standards as well as products that did not
comply. Compliance with an applicable voluntary standard, as stated in
the final regulation, is merely one factor in this evaluation.
Mandatory Standards. For reasons similar to those stated above, the
Commission's provision for mandatory standards does not negate a
reporting obligation nor provide safe harbor for the failure to report.
There have been a number of occasions in the experience of the
Commission staff when a product is determined to contain a defect that
could create a substantial product hazard even though such product
complies with a mandatory standard. The statute and regulations
contemplate a report in such a circumstance. In fact, reports are
especially important in such cases because they may be the Commission's
only indication that the mandatory standards are in need of revision.
At the same time, the Commission appreciates that it is generally
inappropriate to hold firms to a higher standard for products
retroactively. As stated in the regulation, which is slightly reworded
in the final text, compliance with a mandatory standard should play a
role in the staff's determination as to whether a corrective action is
necessary.
List of Subjects in 16 CFR Part 1115
Administrative practice and procedure, Business and Industry,
Consumer protection, Reporting and recordkeeping requirements.
0
Accordingly, 16 CFR part 1115 is amended as follows:
PART 1115--SUBSTANTIAL PRODUCT HAZARD REPORTS
0
1. The authority citation for part 1115 continues to read as follows:
Authority: 15 U.S.C. 2061, 2064, 2065, 2066(a), 2068, 2070,
2071, 2073, 2076, 2079 and 2084.
0
2. In Sec. 1115.4, amend the concluding text by adding a new phrase
after the phrase, ``the population exposed to the product and its risk
of injury;'' to read as follows:
Sec. 1115.4 Defect.
* * * the obviousness of such risk; the adequacy of warnings and
instructions to mitigate such risk; the role of consumer misuse of the
product and the foreseeability of such misuse;'' * * *
0
3. Section 1115.8 is added to read as follows:
[[Page 42031]]
Sec. 1115.8 Compliance with product safety standards.
(a) Voluntary standards. The CPSA and other federal statutes
administered by the Commission generally encourage the private sector
development of, and compliance with voluntary consumer product safety
standards to help protect the public from unreasonable risks of injury
associated with consumer products. To support the development of such
consensus standards, Commission staff participates in many voluntary
standards committees and other activities. The Commission also strongly
encourages all firms to comply with voluntary consumer product safety
standards and considers, where appropriate, compliance or non-
compliance with such standards in exercising its authorities under the
CPSA and other federal statutes, including when making determinations
under section 15 of the CPSA. Thus, for example, whether a product is
in compliance with applicable voluntary safety standards may be
relevant to the Commission staff's preliminary determination of whether
that product presents a substantial product hazard under section 15 of
the CPSA.
(b) Mandatory standards. The CPSA requires that firms comply with
all applicable mandatory consumer product safety standards and to
report to the Commission any products which do not comply with either
mandatory standards or voluntary standards upon which the Commission
has relied. As is the case with voluntary consumer product safety
standards, compliance or non-compliance with applicable mandatory
safety standards may be considered by the Commission and staff in
making relevant determinations and exercising relevant authorities
under the CPSA and other federal statutes. Thus, for example, while
compliance with a relevant mandatory product safety standard does not,
of itself, relieve a firm from the need to report to the Commission a
product defect that creates a substantial product hazard under section
15 of the CPSA, it will be considered by staff in making the
determination of whether and what type of corrective action may be
required.
0
4. Section 1115.12 is amended by adding a new sentence at the end of
paragraph (g)(1)(ii) to read as follows:
Sec. 1115.12 Information which should be reported; evaluating
substantial product hazard.
* * * * *
(g) * * *
(1) * * *
(ii) * * * The Commission also recognizes that the number of
products remaining with consumers is a relevant consideration.
* * * * *
Dated: July 18, 2006.
Todd A. Stevenson,
Secretary, Consumer Product Safety Commission.
[FR Doc. E6-11758 Filed 7-24-06; 8:45 am]
BILLING CODE 6355-01-P