Proposed regulation would limit ability to restrict public disclosure of product information submitted to the CPSC

Once again, the Consumer Product Safety Commission (CPSC) is considering a change to its regulations that is likely to increase the risk associated with businesses reporting potentially hazardous products and initiating product recalls in cooperation with the CPSC. This week a Notice of Proposed Rulemaking (NPR) regarding Information Disclosure under Section 6(b) of the Consumer Product Safety Act (CPSA) was released that could stifle the Commission’s underlying purpose of removing from consumers and merchant shelves potentially dangerous products quickly and easily.

Under Section 15(b) of the CPSA, manufacturers, importers, and sellers of products that may create a defect or risk of injury, or fail to comply with a CPSC standard, must file notice with the CPSC, which is often followed by a request from CPSC staff to submit substantial additional information in preparation for a product recall. Company participation in the product recall system, particularly voluntary recalls under the CPSC’s popular “Fast Track” program, is based on the belief by companies that it is better for business and their customers to volunteer information to the CPSC and initiate product recalls than go through the lengthy process of adjudicating whether a particular product is actually hazardous or non-compliant. Nonetheless, in our experience, a CPSC-coordinated product recall is almost immediately followed by a Freedom of Information Act (FOIA) request for information, usually filed by plaintiffs’ class action counsel – which also often results in class action litigation within about six months.

Under Section 6(b) of the CPSA, the CPSC must give a manufacturer or private labeler at least 15 days’ notice before publishing product information that could readily disclose their identity, with exemptions for releasing information regarding certain administrative or judicial hearings, rulemaking proceedings, or products that are reasonably believed to violate a product safety rule. Additionally, the CPSC has given companies a reasonable opportunity to object to public disclosure of consumer complaints, including on the CPSC’s consumer complaint database, SaferProducts.gov, particularly if the information is considered false or baseless.

The NPR, however, would substantially curtail protections for manufacturers, private labelers, and other businesses regarding public disclosure of consumer product-related information. Notably, it could substantially limit them from protecting the information eventually disseminated to plaintiffs’ lawyers, greatly increasing the

risk of litigation brought on by cooperating with CPSC efforts to remove potentially harmful products from store shelves and consumers’ hands.

The proposal, which the Commission refers to as an “interpretive rule,” would make a number of revisions to the current rule, 16 C.F.R. 1101. Major changes include:

• Limiting Circumstances In Which Business Information Will Be Kept Confidential
  • Under the proposal, the Commission would no longer have to provide a manufacturer or private labeler advance notice and an opportunity to comment if there is uncertainty whether its identity could be determined from disclosure. Further, under Section 6(b) of the CPSA, the Commission is required to show that disclosure of information that could identify a manufacturer or private labeler be “fair in the circumstances and reasonably related to [accomplishing] the purposes of” the CPSA. The following proposed changes alter the Agency’s position on what constitutes “fairness”:
  • Requiring Companies Provide Rationale for Requesting Certain Information Remain Confidential: The proposed regulation would shift the burden to the company seeking confidentiality to show why disclosure is not necessary for fairness. It provides, “Conclusory statements that comments must be withheld with no supporting basis are not sufficient to justify a request for nondisclosure.”
  • Removing Evaluation of Attorney-Client Privilege & Work Product From “Reasonable Steps” the Commission Should Take Before Disclosure: The proposal also no longer recognizes the need to protect privileged or work product information, claiming that, generally, privilege is waived when a company submits information to the CPSC.
• Expanding Scope of Information Exempt Under 6(b):
  • Reports of Harm, News Reports, Journals & Other Internet Sources: Under the proposal the CPSC would not have to notify companies before publishing “Information that is publicly available or that has been disseminated in a manner intended to reach the public in general,” such as reports of harm posted on the Agency’s consumer complaint database and information on the Internet, in news reports and from academic and scientific journals. However, in the proposal, the Commission acknowledges its “obligations under both existing CPSC policy and federal law to assure that information disclosed by the CPSC to the public is accurate…and presented in an accurate, clear, complete, and unbiased manner.” See 79 FR 10712 at 10714.
  • Release of Information that is “Substantially Similar” to an Earlier Release: The proposal also allows the Commission to release information that is “substantially the same as information that the Commission previously disclosed” under Section 6(b) without re-notifying a company, in contrast to the current rule, which allows disclosure of information without notifying a company if it is “identical and in the same format” as information that has already been disclosed.

The proposed rule also provides that the CPSC send Section 6(b)-related communications to companies electronically whenever possible.

The CPSC is accepting comments until Monday, April 28. Since the Commission, once again, is claiming the Proposed Rule is merely interpretive – despite its significant impact on companies’ rights to protect the release of their own information – a final rule most likely will