This morning it was announced internally at the CPSC that Commissioner Ann Marie Buerkle has become the Acting Chairman of the agency. The CPSC has not yet released a statement concerning the transition of the chairmanship from Elliot Kaye to Ann Marie Buerkle, but we have confirmed the change in leadership with multiple sources inside the agency. In a move largely seen as a precursor to this change in leadership, the Commission recently voted to install Buerkle as the Vice Chairman of the agency — ensuring that she would become the Acting Chairman of the agency once Kaye vacated the Chairman’s office.
We have had a huge election result, perhaps the most significant in our lifetime, potentially even exceeding what was called the Reagan Revolution. It is critical, particularly for anybody from Washington DC, to have a great deal of modesty and humility in prognosticating the future under the Trump administration even in the CPSC world. We assume, but really do not know, what the attitudes of the new Trump administration and the Republican-led Congress will be in our parochial, but critical, little product safety world.
We can understandably assume that within a year or less there will be a new CPSC Chairman and a new Republican majority on the Commission. We can also assume that this will change the direction and substance of many regulatory initiatives and maybe even some of the approaches to compliance and civil penalties.
Though we may be unsure about the future, I can say confidently that what we badly need from the outgoing Democratic majority and the yet to be defined incoming Republican majority is some perspective, restraint, and Aristotelian moderation. I hope that the current majority commissioners will not take advantage of their present but fleeting power to push through ill-conceived regulatory or compliance and enforcement initiatives. Such actions will be bitterly opposed and this Commission’s reign will end on a sour note and be subject to regulatory and congressional reversal.
On the other hand, all five of the current commissioners swore to uphold the Constitution and the laws of the United States. Those laws absolutely include CPSIA and other governing statutes of the CPSC. So the Commissioners need to, and I am confident that they will, continue to do their jobs.
There are some very important initiatives which will enhance safety and not be politically controversial. For example, I welcome Chairman Kaye’s interest in a comprehensive and interagency review of the lithium ion battery problem. We do not need to have any more spectacular safety problems to recognize that even without hoverboards and cell phones catching on fire, the increasing use and push-the-envelope application of products which use lithium ion batteries is causing lots of problems.
Indeed, the situation with respect to lithium ion batteries is even worse for smaller companies which don’t have vertical integration, don’t design batteries or battery packs, don’t have much control over their vendors, and basically have to take solutions off the shelf. Everybody in the product safety community will benefit from figuring out what combination of standards, practices, and designs we need to protect the public and thousands of businesses.
Nevertheless, the business community and the future leaders of the CPSC need to show some restraint as well. It would be a mistake to take advantage of the present politics to fundamentally reverse the key elements of the Consumer Product Safety Act, to strangle the agency with inadequate funding, or tie the agency up in knots so it cannot adequately function. This is a formula for exponentially increasing an already problematic patchwork of state and local government regulation of consumer products. It would also potentially allow for cheap, unsafe imports to flood our country and undermine significant product safety investments already made by U.S. companies.
This does not mean that nothing should be done or that the statute shouldn’t be revisited in some regards. There are plenty of ways the business community can achieve meaningful regulatory improvements and burden relief that would not cause larger issues.
I do not support crippling the CPSC. No members of industry that I have spoken with support such drastic action either. It will not be in the long term benefit of the business community and it leaves American consumers, our families and friends, less protected.
I’ve been involved in the product safety world for 30-plus years and have seen the political pendulum swing on multiple occasions. One constant is that most reasonable, informed people, whether business executives or consumer advocates, agree that a well-functioning CPSC is a critical part of a vibrant economy for consumer products in this country.
Products like e-cigarettes and other electronic nicotine delivery systems (ENDS) have been under intense scrutiny in recent years from public health officials, legislators at all levels of government, and many other interested parties, including dozens of plaintiffs in lawsuits stemming from battery explosions and other injuries. Newly enacted Federal requirements for ENDS and their components and parts show that such scrutiny sometimes leads to legislative or administrative actions. Indeed, Summer 2016 could down in infamy for manufacturers, distributors, and retailers of this category of consumer products due to its confluence of new regulations from two major Federal agencies – CPSC and FDA.
We previously reported on the Child Nicotine Poisoning Prevention Act of 2015, introduced last year by Senator Bill Nelson (D-Fla.) and signed into law in January. It requires liquid nicotine to be packaged in accordance with the Poison Prevention Packaging Act and CPSC’s standards child-resistant packaging and containers (children are those under age five). Continue Reading E-Cigarette Makers Contending with New CPSC and FDA Regulations
After filing a Section 15(b) report and conducting a recall with the U.S. Consumer Product Safety Commission (CPSC), companies frequently ponder whether the CPSC believes the company timely filed its report under Section 15(b) of the Consumer Product Safety Act (CPSA) and, if not, whether the CPSC will launch an investigation that could lead to a civil penalty action. Unlike the experience of negotiating a recall where there is frequent contact with the CPSC within a defined time frame, the agency is usually silent and takes more time (sometimes years) to decide whether it will investigate whether a company met the statutory time deadline for filing the underlying Section 15(b) report.
In many cases, determining that a report was filed in such a manner to where the CPSC likely would not find reason for a timeliness investigation or civil penalty is relatively straightforward. In other cases where the timeliness of a report is more uncertain, however, only the CPSC’s statute of limitations for pursuing a civil penalty can provide similar comfort.
So what is the CPSC’s statute of limitations? The answer is not as straightforward as it may appear.
This morning, the U.S. Consumer Product Safety Commission (CPSC) announced that it has obtained a record-breaking $15.45 million civil penalty in a settlement agreement with Gree Electric Appliances of China, Hong Kong Gree Electric Appliances Sales Co. of Hong Kong, and Gree USA Sales of California (Gree) over dehumidifiers sold under 13 different brand names. This civil penalty amount shatters the largest previous amount levied by the CPSC against a company, $4.3 million.
The amount of this civil penalty—the maximum permitted under the Consumer Product Safety Act (CPSA)—is consistent with a series of recent remarks made by CPSC Chairman Elliot Kaye. In 2015, Kaye remarked at the annual ICPHSO product safety conference that he was directing staff to seek significantly higher civil penalties against companies for violations of the CPSA. Earlier this month, at the 2016 ICPHSO conference in Washington, D.C., Kaye doubled down (literally) by stating that he wanted to see “double digit” civil penalties based on certain fact patterns as that is what Congress intended when it increased the civil penalty ceiling in the Consumer Product Safety Improvement Act of 2008 (CPSIA).
According to the settlement agreement, the CPSC alleged that Gree did the following: (1) knowingly failed to report a defect and unreasonable risk of serious injury to the CPSC immediately with dehumidifiers sold under thirteen brand names; (2) knowingly made misrepresentations to the CPSC; (3) sold dehumidifiers bearing the UL safety certification mark knowing that the dehumidifiers did not meet UL flammability standards. The CPSC alleged further that Gree’s subject dehumidifiers had a defect that caused them to overheat, and, on occasion, catch fire, causing a purported $4.5 million in property damage.
Gree did not admit to the CPSC’s allegations and also set forth in the settlement agreement that it voluntarily notified the Commission in connection with the dehumidifiers, carried out a voluntary recall in cooperation with the Commission and acted to reduce the potential risk of injury.
In addition to paying the $15.4 million civil penalty to settle the CPSC’s charges, Gree has agreed to implement a stringent compliance program to ensure future compliance with the CPSA. Such compliance programs have become common elements in civil penalty settlement agreements.
The vote to approve the settlement agreement was 4-1 in favor, with Commissioner Ann Marie Buerkle voting against. Although voting in favor of the agreement, Commissioner Joe Mohorovic issued a statement expressing reservation that the public facing documents do not reveal enough detail (in Mohorovic’s words the “compelling facts”) for the regulated community to draw lessons. Mohorovic has expressed these same concerns previously.
There have been many twists and turns over the past four years concerning the CPSC’s regulation of certain high powered, rare-earth magnet sets and its litigation against various entities selling these magnets. In the latest chapter of the magnets saga, a federal court in Colorado has permanently enjoined Zen Magnets (Zen) from selling magnets purchased from another distributor, Star Networks USA (Star Networks) who later recalled them to settle administrative litigation with the CPSC.
It is illegal to resell previously recalled products under the Consumer Product Safety Act (CPSA). Zen asserted the products were “fungible commodities” and it had taken them out of the scope of the prohibition by repackaging and rebranding them. In a victory for the CPSC, the court disagreed vehemently and ordered Zen to recall the magnets. The court reasoned as follows: Continue Reading Federal Court Makes No Exceptions for “Commodity Products” and Orders Zen Magnets to Stop Selling Previously Recalled Magnets
President Obama signed Public Law 112-28 (“PL 112-28”) into law on August 12, 2011. PL 112-28 amended numerous provisions of the Consumer Product Safety Improvement Act (“CPSIA”). One such amendment made a notable change to the operation of the CPSC’s Saferproducts.gov database with respect to claims that a database report contains materially inaccurate information (“MII Claims”). The new procedure mandates that database reports not be published for an extra five business days if an MII Claim is filed.
While the new process for MII Claims is now reflected in the Consumer Product Safety Act (and it appears that the CPSC is following it), the updated procedure is not well known within the regulated community. Potentially contributing to this general lack of awareness is the fact that the CPSC’s database regulation and the agency’s guidance posted on Saferproducts.gov have not been updated and reflect the law prior to the enactment of PL 112-28.
As amended, Section 6A(c)(4)(A) of the Consumer Product Safety Act (“CPSA”) now states: Continue Reading CPSC Public Database: An Important 2011 Change to the Procedure for Filing Materially Inaccurate Information Claims Can Easily be Overlooked
Last year, we wrote about a growing trend of local jurisdictions regulating children’s products, primarily toys and apparel. One such jurisdiction, Albany County, NY, enacted a far-reaching ordinance, “Local Law J of 2014,” that prohibited the sale of children’s products containing seven chemicals of “high concern” (see previous blog post here). At the time, we questioned the usefulness of this type of local legislation given the existing federal (and often state) product safety regulatory framework. Now, in the face of vocal opposition to the law from industry, which included the filing of a lawsuit in federal court, the Albany County Legislature has amended the law in an attempt to address industry concerns (see Local Law P of 2015). While the amendments are a step in the right direction, many concerns over potential adverse and unintended consequences remain.
Over the past few months, numerous national media outlets have published stories about the potential health risks of a material commonly used on playground surfaces—crumb rubber. Crumb rubber is a granule material typically made from recycled scrap tires that is used to provide a soft play surface for playgrounds (and infill for artificial turf fields). Recently, some have questioned whether crumb rubber surfaces are safe for children to play on due to the materials’ potential toxicity.
From this debate, a narrower, more legally technical question has arisen over whether playgrounds—many of which use crumb rubber as a play surface—constitute “children’s products” under the Consumer Product Safety Act (“CPSA”). A “children’s product” is defined under that law as a consumer product designed or intended primarily for children 12 years of age or younger and any children’s product must meet CPSC’s requirements for lead content, lead paint, third party testing and certification, tracking labels, and other regulations. According to Public Employees for Environmental Responsibility (PEER), the U.S. Consumer Product Safety Commission (CPSC) has decided not to enforce the strict lead limits that apply to children’s products for playgrounds with crumb rubber play surfaces.
In a recent letter sent to CPSC Chairman Elliot Kaye about the crumb rubber issue, Senators Richard Blumenthal (D-CT) and Bill Nelson (D-FL) asked: Continue Reading Must Playground Equipment & Surfaces Comply with CPSC Lead Limits for Children’s Products?
At the very beginning of this year, we wrote that we expected the CPSC to remain active in bringing enforcement actions against companies for violations of the Consumer Product Safety Act (CPSA). About one month later, CPSC Chairman Elliot Kaye remarked at a product safety conference (ICPHSO 2015) that he was directing staff to seek significantly higher civil penalties against companies for such violations as provided for in the Consumer Product Safety Improvement Act. Since the beginning of the year, the CPSC has levied close to $25 million in total civil penalties against multiple companies for alleged reporting violations of product safety hazards—significantly more than any previous year.
Last week, the CPSC announced that phil&teds USA (“phil&teds”) agreed to pay $3.5 million to settle charges that it knowingly failed to report a product defect and unreasonable risk of serious injury to the Commission stemming from its “MeToo high chair.” Notably, in a rare occurrence and as part of the settlement agreement, the Commission agreed to temporarily suspend all but $200,000 of the $3.5 million civil penalty.
In doing so, the Commission relied upon phil&teds’ representations through financial statements that it has insufficient cash or other liquid assets to satisfy a civil penalty payment in excess of $200,000 without ceasing business operations. The company will be obligated to pay the suspended portion of the civil penalty if it fails to pay the non-suspended $200,000 payment or otherwise breaches its duties to implement an internal compliance plan and accurately report information to the Commission. Continue Reading CPSC Suspends Over 90% of $3.5 Million Civil Penalty Due to Company’s Inability to Pay; phil&teds USA to Pay $200,000