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Proposed Rule

Civil Penalty Factors

Document Details

Information about this document as published in the Federal Register.

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AGENCY:

Consumer Product Safety Commission.

ACTION:

Proposed new interpretative rule.

SUMMARY:

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. A new interpretative rule is proposed that identifies and explains other factors that may be considered by the Commission and staff in evaluating the appropriateness and amount of a civil penalty.[1]

DATES:

The Office of the Secretary must receive written comments not later than August 11, 2006.

ADDRESSES:

Written comments should be captioned “Civil Penalties” and e-mailed to the Office of the Secretary at cpsc-os@cpsc.gov. Written comments may also be sent to the Office of the Secretary, Consumer Product Safety Commission, 4330 East West Highway, Bethesda, Maryland 20814 or by facsimile at (301) 504-0127.

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FOR FURTHER INFORMATION CONTACT:

John Gibson Mullan, Assistant Executive Director, Compliance and Field Operations at 301-504-7626.

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SUPPLEMENTARY INFORMATION:

Proposed new part 1119 describes factors the Commission and staff may consider in determining the appropriateness and amount of a civil penalty for violations of section 19(a), which includes the failure to furnish information required by section 15(b).

The CPSA provides that a knowing violation of the prohibited acts enumerated in section 19(a) could subject a firm to a civil penalty under section 20 of the CPSA. In determining the amount of a civil penalty by commencing an action pursuant to section 20(b) or compromising a civil penalty claim under section 20(c), the Commission and staff consider five statutory factors set forth in the CPSA: The nature of the product defect, the severity of the risk of injury, the number of defective products distributed, the occurrence or absence of injury, and the appropriateness of the penalty in relation to the size of the business of the person charged. The proposed regulation describes that the Commission 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.

The Commission is proposing this section to provide further clarity and transparency in how it determines civil penalty amounts in individual civil penalty determinations. The Commission believes that adoption of this proposed regulation will result in a better understanding by the public of the Commission's approach to determining the appropriateness and amount of a civil penalty.

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List of Subjects in 16 CFR Part 1119

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Accordingly, 16 CFR part 1119 is proposed to be added to read as follows:

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PART 1119—CIVIL PENALTY FACTORS

§ 1119.1
Factors considered in determining civil penalties.
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Authority: 15 U.S.C. 2058, 2063, 2064, 2067(b), 2068, 2069, 2076(e), 2084.

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Factors considered in determining civil penalties.

(a) Statutory Factors. Section 20 of the Consumer Product Safety Act (CPSA) specifies five factors that shall be considered by the Commission in determining the amount of a civil penalty to be sought for violations of section 19(a), which includes failure to furnish information to the Commission as required by section 15(b). Those factors are: The nature of the product defect, the severity of the risk of injury, the number of defective products distributed, the occurrence or absence of injury, and the appropriateness of [the] Start Printed Page 39249penalty in relation to the size of the business of the person charged. The Act also allows the Commission to compromise any civil penalty under section 20. In determining the amount of a penalty settlement, the Commission is instructed to consider the same five factors.

(b) Other factors. In determining the appropriateness and the amount of any civil penalty to be pursued in negotiations when a violation of the reporting requirements of section 15(b) or other requirements of section 19(a) have occurred, in addition to the statutory factors set forth in section 20 of the CPSA, the Commission and the staff may consider, as appropriate, one or more of the following:

(1) Previous record of compliance. The Commission and the staff may consider whether the firm has had previous safety, reporting or other violations, and, if so, whether the firm has taken action to address previous violations and to improve compliance with applicable CPSC safety requirements.

(2) Timeliness of response. With regard to the matter under review, the Commission and the staff may consider how quickly the firm responded to relevant information it obtained (or reasonably should have obtained), and the extent to which any injuries might reasonably have been prevented by more timely reporting or other required action.

(3) Safety and compliance monitoring. The Commission and the staff may consider the extent to which the firm has adopted a system for collecting and analyzing safety information and for evaluating reporting issues (including such system's application in the matter under review).

(4) Cooperation and good faith. The Commission and the staff may consider the degree to which the firm cooperated and acted in good faith to address reporting or other product safety violations or other issues, both generally and with regard to the specific matter under review.

(5) Economic gain from non-compliance. The Commission and the staff may consider the extent to which the firm profited or otherwise benefitted from an improper delay in reporting or complying with other applicable CPSC safety requirements.

(6) Product failure rate. With regard to the product and matter under review, the Commission and the staff may consider the reasonably expected rate of failure for that type of product over time.

(7) Any other pertinent factors. The Commission and staff may consider any other pertinent factors.

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Dated: July 7, 2006.

Todd A. Stevenson,

Secretary, Consumer Product Safety Commission.

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Footnotes

1.  Commissioner Thomas H. Moore filed a statement which is available from the Office of the Secretary or on the Commission's Web site at http://www.cpsc.gov.

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[FR Doc. E6-10963 Filed 7-11-06; 8:45 am]

BILLING CODE 6355-01-P