CPSC Issues Interim Rule on Civil Penalty Factors for CPSA, FHSA, & FFA Violations

August 21, 2009

The Consumer Product Safety Commission (CPSC) has published an interim final rule providing its interpretation of the civil penalty factors it must consider in determining civil penalties for violations of the Consumer Product Safety Act (CPSA), the Federal Hazardous Substances Act (FHSA) and the Flammable Fabrics Act (FFA) (collectively hereafter “Acts”). Under amendments made by the Consumer Product Safety Improvement Act (CPSIA), the maximum penalty amounts increased from $8,000 to $100,000 per knowing violation of these acts and from $1.825 million to $15 million for any related series of violations.

The interim rule, effective August 21, 2009, sets fourth the CPSC’s interpretation of the statutory factors considered in determining the amount of civil penalties the CPSC may seek or compromises as follows:

• Nature, Circumstances, Extent and Gravity of the Violation: Under this factor, the CPSC will consider the totality of the circumstances surrounding a violation, including how many provisions of the law were broken.
• Nature of the Product Defect: The CPSC will consider the nature of the product hazard/substance for which a penalty is sought (defects which create a substantial product hazard; regulatory violations of a rule, regulation, standard or ban).
• Severity of the Risk of Injury: The CPSC will consider, among other things, the potential for serious injury or death (and whether any injury required actual medical treatment).
• Occurrence or Absence of Injury: The CPSC will consider whether injuries have or have not occurred with respect to any product associated with a violation.
• Number of Defective Products Distributed: The CPSC will consider the actual amount of products imported or placed in the stream of commerce.
• Appropriateness of Such Penalty in Relation to the Size of the Business.
• Other Factor as Appropriate: Including: safety/compliance program, history of noncompliance, economic gain from noncompliance, and failure to respond of the violater.

In written statements regarding the interim rule, many commissioners emphasized that these factors will be solely to decide the size of a penalty to impose, and not to determine whether or not to seek a civil penalty.

Comments on the CPSC’s interpretation of these factors are due by September 21, 2009. To view the complete notice regarding the CPSC’s interpretation of factors for civil penalties, click here.