[Federal Register Volume 66, Number 211 (Wednesday, October 31, 2001)]
[Rules and Regulations]
[Pages 54923-54925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-27316]
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CONSUMER PRODUCT SAFETY COMMISSION
16 CFR Part 1115
Substantial Product Hazard Reports
AGENCY: Consumer Product Safety Commission.
ACTION: Final amendment to interpretative rule.
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SUMMARY: Section 15(b) of the Consumer Product Safety Act, requires
manufacturers, distributors, and retailers of consumer products to
report possible substantial product hazards to the Commission. The
Consumer Product Safety Commission publishes a final amendment to its
interpretative rule advising manufacturers, distributors, and retailers
how to comply with the requirements of section 15(b). The amendment
points out that firms that obtain information concerning products
manufactured or sold outside of the United States that may be relevant
to the existence of potential defects and hazards associated with
products distributed within the United States should evaluate that
information and, if necessary, report under section 15(b).
EFFECTIVE DATE: This revision is effective November 30, 2001.
FOR FURTHER INFORMATION CONTACT: Marc Schoem, Director, Division of
Recalls and Compliance, Consumer Product Safety Commission, Washington.
D.C. 20207, telephone--(301) 504-0608, ext. 1365, fax.--(301) 504-0359,
E-mail [email protected].
SUPPLEMENTARY INFORMATION: 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 possible ``substantial product
hazards'' to the Commission. In 1978, the Commission published in the
Federal Register ``Substantial Product Hazard Reports'', 16 CFR 1115,
an interpretative rule that set forth the Commission's understanding of
this requirement and established procedures for filing such reports and
proffering remedial action to the Commission. That rule addresses the
types of information a firm should evaluate in considering whether to
report. It does not, however, specifically address information about
experience with products manufactured or sold outside of the United
States. The Commission has always expected that firms would report when
they obtained reportable information, no matter where that information
comes from. Neither the statute, nor the rule itself, suggests
otherwise.
Over the past several years, the Commission has received reports
under section 15(b) that included information on experience with
products abroad and technical data concerning such products. When
appropriate, the Commission has initiated recalls based in whole or in
part on that experience. In addition, the Bridgestone/Firestone tire
recall of 2000 focused public attention on the possible relevance of
information generated abroad to safety issues in the United States.
Accordingly, to assure that firms who obtain information generated
abroad are aware that they should consider such information in deciding
whether to report under section 15(b), on January 3, 2001, the
Commission solicited comments in the Federal Register on a proposed
policy statement. The statement set forth the Commission's position
that firms should evaluate and, if appropriate, report to the
Commission information concerning products
[[Page 54924]]
manufactured or sold outside of the United States that may be relevant
to defects and hazards associated with products distributed within the
United States
On June 7, 2001, after considering the comments, the Commission
published in the Federal Register a final policy statement
memorializing this position. Simultaneously, the Commission proposed
for comment an amendment to codify this policy guidance as part of the
Substantial Product Hazard Reports interpretative rule, 16 CFR 1115.
The proposed amendment notes in substance that information about
product experience, performance, design or manufacture outside the
United States may be relevant to products sold or distributed in the
United States. It further notes that firms should study and evaluate
such information under section 15(b).
Discussion: The Commission received four comments in response to
the proposed amendment. One of these commentors, the CPSC Coalition of
the National Association of Manufacturers (``NAM''), resubmitted
comments that it had presented in response to the Commission's January
proposed policy statement. NAM's resubmission contended that the
Commission's response to its comments to that proposal did not take the
Coalition's concerns into account. However, NAM did not point to any
specific inadequacy in the Commission's response, nor did it otherwise
elaborate on its contention. The Commission, on the other hand,
believes that its response to the NAM comments in the June 7 Federal
Register notice was more than adequate. The NAM comments largely voiced
the same hypothetical concerns that commentors on the original 1977
proposed interpretative rule on reporting raised. As the June 7 Federal
Register notice points out, the Commission addressed the substance of
those comments in the preamble to and text of the final rule in 1978.
43 FR 34988. The Commission believes, therefore, that the NAM comments
require no further response.
a. Imputing Knowledge: The three commentors other than NAM
expressed concern that the proposed amendment treated information
generated abroad in the same manner that the Commission views
domestically obtained data. In the commentors' view, the amendment
should have, but did not, take into account differences in data-
gathering capabilities abroad from those within the United States, as
well as perceptions of the significance of data that becomes available.
The commentors requested that the final rule or its preamble recognize
these differences. These commentors also noted that U.S. subsidiaries
of foreign companies are often not in a position to require corporate
parents to collect and/or forward safety-related information to those
subsidiaries. They further indicated that U.S. subsidiaries will not
necessarily be aware of, or be able to obtain, information that other
independent subsidiaries of a common foreign parent acquire. Again, the
commentors suggested that the Commission recognize in the final rule or
its preamble these possible impediments to the acquisition of
information.
The issue of obtaining and evaluating information from abroad is
pertinent to two aspects of reporting--timely reporting and corrective
action. With respect to the first aspect--failing to report in a timely
manner or not at all, the Commission believes that the commentors may
have misconstrued the intent and scope of the proposed amendment. The
Commission recognizes that a number of factors may affect the ability
of a firm located in the United States to obtain information from
abroad, including limitations on the availability of and access to
information. The Commission also appreciates that the nature of
corporate business relationships and affiliations may impact the
ability of a firm to obtain such information. The Commission further
understands that training, experience, and corporate position, and
differences in product design, use and operating environment from
standard practices in the United States may affect the ability of
recipients abroad to appreciate the significance of information that
may relate to products to be sold in the United States.
As commentors acknowledged in their written comments and in
discussions with the Commission staff, the evaluation of compliance
with the reporting obligations requires a case-by-case assessment of
relevant facts, including those relating to the considerations
identified above. The Consumer Product Safety Act provides the standard
for this evaluation. In the context of reporting, section 20, 15 U.S.C.
2069, only permits the assessment of civil penalties against a party
who ``knowingly'' commits a prohibited act by failing to furnish
information required by section 15(b). Section 20(d) of the act defines
``knowingly'' as ``* * *'' (2) the presumed having of knowledge deemed
to be possessed by a reasonable man who acts in the circumstances,
including knowledge obtainable upon the exercise of due care to
ascertain the truth of representations.''
The existing interpretative rule also provides guidance, consistent
with section 20, on how the Commission will analyze the facts of each
case. In its discussion of the imputation of knowledge to a firm, 16
CFR 1115.11 notes that ``the Commission will deem a subject firm to
know what a reasonable person acting in the circumstances in which the
firm finds itself would know.'' The section goes on to explain that
this imputation extends to knowledge that a firm could have obtained,
had it exercised due care to ascertain the truth of complaints or other
representations or conducted a reasonably expeditious investigation to
evaluate the reportability of a death, grievous bodily injury, or other
information.
Under section 115.11, the ``reasonable person'' standard applies to
a firm's accountability for failure to obtain information that exists
abroad. Considerations, such as those described above that may have
affected the firm's ability to obtain or appreciate the significance of
such information are certainly relevant to whether a firm acted
reasonably in the circumstances. In view of the strictures in the
statute and the existing interpretative regulation, the Commission
believes that the commentors' fears that the Commission would not take
such factors into account when assessing a firm's compliance with the
reporting obligations are unfounded.
With respect to the second aspect of reporting--corrective action,
as the June 7, 2001 final policy statement points out, information from
abroad may be relevant to the core issue of whether some form of
remedial action is necessary to protect American consumers from
defective products that present a substantial risk of death or injury.
The Commission hopes that all of the commentors to the proposed
amendment accept that, in evaluating potential hazards, firms should
attempt to obtain all reasonably available information, including that
from abroad, in a timely manner to assure that they can reach reasoned
decisions. Indeed, one of the three commentors expressly stated its
agreement with this proposition. The Commission believes that this
perspective is appropriate, since the welfare of their domestic
customers should be of paramount concern to U.S. companies.
b. Two commentors believed that the proposed amendment differed
materially from the final policy statement because, unlike the policy
statement, the amendment did not
[[Page 54925]]
expressly note that firms had to have first obtained information from
abroad for the obligation to evaluate the information to arise. The
commentors feared that the omission signaled a possibility that, in
evaluating a firm's compliance with the reporting requirements, the
Commission might hold a firm responsible for not exercising due
diligence to search for and obtain information that was available
abroad, but that had not come to the firm's attention. The commentors
therefore requested that the final amendment expressly state that a
firm only needs to review information that it obtains.
The Commission believes that the amendment as proposed implicitly
recognized that, in order to have an obligation to study and evaluate
information, a firm must first obtain the information, or be reasonably
expected to have obtained it because, for example, of the firm's
relationship with or access to a firm or individual who possesses it.
To alleviate the apparent confusion, however, the Commission has
included in the final amendment an express statement that the
information that should be evaluated includes information that a firm
``has obtained, or reasonably should have obtained in accordance with
section 1115.11'' relating to product experience, etc. The Commission
has not, however, limited this revision to cover only information that
a firm has ``actually'' obtained, as one commentor requested. As is
discussed infra, both the CPSA and the interpretative rule recognize
that a firm need not have actually obtained information for obligations
under section 15(b) to arise, if a reasonable person acting in the
circumstances in which the firm finds itself would have obtained the
information. Accordingly, the Commission believes that these provisions
that address the imputation of knowledge to a firm dictate against
further limiting the revision to the amendment. Adopting the
restriction suggested by the commentor, on the other hand, could
encourage firms to avoid seeking reasonably available information that
could ultimately support the need for those firms to take corrective
action.
c. Recipients of Information: One commentor stated that the rule
should reflect that a firm ``obtains'' information only when an
employee of the firm capable of appreciating the significance of the
information actually receives it. Section 1115.11 of the interpretative
rule already states that `` the Commission will deem a firm to have
obtained reportable information when the information has been received
by an official or employee who may reasonably be expected to be capable
of appreciating the significance of the information.'' Because this
provision already addresses the commentor's request, no additional
revision to the final amendment is necessary.
d. Products Imported into the United States: Section 3(a)(4) of the
CPSA, 15 U.S.C. 2051(a)(4) classifies importers as ``manufacturers''
under the act, while section 15(b) itself imposes reporting obligations
on manufacturers, distributors, and retailers of consumer products. The
Commission notes that foreign manufacturers export many products into
the United States directly to importers, distributors, and retailers.
In these circumstances, the Commission reminds importers, distributors,
and retailers that they also have obligations under section 15 to
conduct reasonable and diligent investigations, and to evaluate and
report information about possible safety defects based on information
they obtain or should reasonably obtain, including information from
outside the United States. Retailers and distributors should refer to
section 1115.13(b) of the interpretative rule for procedures for
reporting.
Effective Date: This revision becomes effective 30 days after the
date of publication of the revised final interpretative rule in the
Federal Register.
List of Subjects in 16 CFR Part 1115
Administrative practice and procedure, Business and industry,
Consumer protection, Reporting and recordkeeping requirements.
In accordance with the procedures of 5 U.S.C. 553 and under the
authority of the Consumer Product Safety Act, 15 U.S.C. 2051 et seq.,
the Commission amends part 1115 of title 16, Chapter II, of the Code of
Federal Regulations as follows:
PART 1115--SUBSTANTIAL PRODUCT HAZARD REPORTS
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.
2. Section 1115.12(f) introductory text is revised to read as
follows:
Sec. 1115.12 Information which should be reported; evaluating
substantial product hazard.
* * * * *
* * * (f) Information which should be studied and evaluated.
Paragraphs (f)(1) through (7) of this section are examples of
information which a subject firm should study and evaluate in order to
determine whether it is obligated to report under section 15(b) of the
CPSA. Such information may include information that a firm has
obtained, or reasonably should have obtained in accordance with
Sec. 1115.11, about product use, experience, performance, design, or
manufacture outside the United States that is relevant to products sold
or distributed in the United States. All information should be
evaluated to determine whether it suggests the existence of a
noncompliance, a defect, or an unreasonable risk of serious injury or
death:
* * * * *
Dated: October 24, 2001.
Todd Stevenson,
Acting Secretary, Consumer Product Safety Commission.
[FR Doc. 01-27316 Filed 10-30-01; 8:45 am]
BILLING CODE 6355-01-P