Recent Actions at CPSC

Consumer Product Safety Commission (CPSC) Update – August 2006

Several recent events at the Consumer Product Safety Commission may have significant implications for your firm.

1. Nancy Nord becomes Acting Chairman

Effective July 17, 2006, Nancy Nord assumed the position of Acting Chairman of the CPSC. Ms. Nord was appointed by President George W. Bush to be a Commissioner at CPSC and was sworn into office on May 5, 2005. Her term as Commissioner expires in October 2012.

Before coming to the CPSC, Ms. Nord held a number of legal positions both in the federal government and the private sector. Her federal experience includes service as General Counsel of the White House Council on Environmental Quality, counsel to the Commerce Committee of the U.S. House of Representatives and attorney at the Federal Communications Commission. In the private sector, she was the Director of Federal Affairs for the Eastman Kodak Company, practiced law with the Washington, DC law firm of Verner, Liipfert, Bernhard, McPherson and Hand, served as the executive director of the American Corporate Counsel Association and was Director of Consumer Affairs for the U.S. Chamber of Commerce.

Serving in Acting Chairman Nord’s office are Quin Dodd, Legal Counsel, who came to CPSC upon Ms. Nord’s appointment. He was previously a partner in a private legal firm. Patricia Adair serves as Special Assistant. Ms. Adair is on temporary assignment from the Directorate for Engineering Sciences, where she worked in the Fire Sciences Division. Prior to that, Ms. Adair was Assistant Vice President of the American Textile Manufacturers Institute. Deborah Searles is secretary and administrative assistant.

Ms. Nord became Acting Chairman upon the resignation of Chairman Hal Stratton, who left CPSC to enter private practice. Stratton had served as Chairman since July 2002.

2. CPSC issues revised Section 15 interpretive rule

Section 15(b) of the Consumer Product Safety Act (CPSA), 15 U.S.C. 2064(b), requires manufacturers, distributors, and retailers of consumer products to report potential product hazards to the CPSC.

On July 25, 2006, the CPSC issued revisions to its interpretative rule advising manufacturers, distributors, and retailers how to comply with the requirements of section 15(b) (See http://www.cpsc.gov/businfo/frnotices/fr06/E611758.html). The revisions identified additional factors the Commission and staff will consider when assessing whether a product is defective or not. The revisions also clarified that compliance with voluntary or mandatory product safety standards may be considered by the CPSC in making certain determinations under section 15. This revision codifies practices which the Compliance staff have followed for many years.

The listing of additional factors to be considered by the staff in evaluating potential Sec(b) cases could be interpreted as providing a safe harbor to products that meet voluntary or mandatory standards. Past staff practice has not provided such a safe harbor, and the Federal Register Notice stresses that it is not the intent of the revision to provide such a safe harbor. Our experience based on working in the Office of Compliance tells us that about half the products under corrective action met voluntary standards. In general, the defect being corrected either lay outside the scope of the standard, or the manufacturing process resulted in a defect. We expect that staff will continue to evaluate products based on existing standards and those products that don’t meet standards are likely to receive further investigation.

3. CPSC proposes Civil Penalty Factors for comment

Sections 20(b) and (c) of the Consumer Product Safety Act, 15 U.S.C. 2069(b), (c), require certain factors to be considered in assessing and compromising penalties.

On July 12, 2006, CPSC proposed a new interpretative rule that identifies and explains other factors that may be considered by the CPSC and staff in evaluating the appropriateness and amount of a civil penalty. (See http://www.cpsc.gov/businfo/frnotices/fr06/E610963.html).

CPSC and staff may also consider, as appropriate, one or more of the following factors in determining the appropriateness and amount of a civil penalty: (1) A firm's previous record of compliance with CPSA requirements; (2) timeliness of a firm's response to relevant information; (3) safety and compliance monitoring; (4) cooperation and good faith; (5) economic gain from any delay or non-compliance with CPSC safety or reporting requirements; (6) a product's failure rate; and (7) any other pertinent factors. Written comments are due to the Office of the Secretary not later than August 11, 2006.

CPSC has set a record in civil penalty assessments recently. Several major manufacturers have paid millions of dollars in civil penalties. In addition, several large retailers have also paid large penalties for failure to report defective products to CPSC, illustrating that retailers are responsible for reporting as much as manufacturers and distributors. Companies need to develop systems to identify information to determine whether or not they should report to the agency, thus avoiding civil penalty investigations by CPSC legal staff.

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If you have any questions about this note, please contact

Nick Marchica at 301-384-8088    or    Roy Deppa at 301-774-3889,
or by email at
nick@marchicadeppa.com   or   roy@marchicadeppa.com