News & Publications
August 03, 2007
by Josh Johanningmeier
Manufacturers, importers, distributors and retailers in Wisconsin and around the country should pay close attention to the frenzy of activity in the Consumer Product Safety Commission (CPSC), which is moving toward more stringent regulation of imports and enhanced penalties surrounding product recalls. The regulations being discussed could impact business practices, regulatory compliance and product liability litigation.
The Call to Action
The recent increase in product recalls and growing public concern over the safety of imports, especially from China, has led to calls for the reform of government agencies, including the CPSC, which is charged with ensuring the safety of products such as toys, machinery and appliances. The fast-track product recall announced by Fisher Price this week is just the latest in a series of events drawing attention to the quality of imports. In response, President Bush issued an Executive Order on July 18, 2007, establishing the Interagency Working Group on Import Safety. The Cabinet-level group will review current federal procedures and regulations regarding the safety of imported products. The group is expected to report its findings and recommendations to the president within 60 days.
Much of the criticism regarding unsafe imports has fallen on the CPSC. In response, acting chairwoman Nancy Nord presented a working paper to Congress that proposed to modernize the agency’s governing statutes, including the Consumer Product Safety Act of 1972, 15 U.S.C. §§2051-2084. Generally, the plan proposed increasing the agency’s enforcement powers and strengthening its ability to impose fines. Some of the proposals outlined in the working paper would:
- Make it unlawful to knowingly sell recalled products after the recall is announced publicly;
- Require that the recalling firm provide notice of the recall to any retailer or distributor to whom it has distributed the recalled product at least 24 hours before public notification;
- Grant CSPC the authority to impose administrative penalties of up to $2 million;
- Increase the cap on civil penalties under the Consumer Product Safety Act, Federal Hazardous Substances Act and Flammable Fabric Act to $10 million over the next four years;
- Permit the CSPC to require the posting of a bond sufficient to pay for the destruction of a consumer products shipment found to be unsafe.
The CPSC is hopeful that an increased ability to impose significant fines will increase safety of imported products. For a full list of proposed changes see Product Recall, Information and Safety Modernization (PRISM) Act (Consumer Product Safety Commission, Working Paper, available at http://www.cpsc.gov/PR/PRISM.pdf).
The dramatic increase in penalties and potential violations in recall situations has led Wisconsin companies to fear that the increased bureaucracy will stymie the ability of safe and much sought after products to enter the United States in a timely manner. The current proposals will, at a minimum, be delayed in Congress and, even if passed, enforcement by the CPSC will be hampered by the absence of a quorum on the commission.
Nonetheless, given the groundswell of public concern, change is sure to come. We will continue to monitor these proceedings and provide updates on significant developments.
Click here for more information on Godfrey & Kahn's product liability and tort defense services. If you have any questions or would like additional information, please contact Josh Johanningmeier (608-284-2637 or firstname.lastname@example.org) of our Product Liability and Tort Practice Group or Rea Holmes (608-284-2232 or email@example.com) of our Corporate Law Practice Group.