There is an opportunity to comment until February 4, 2014, on an important Consumer Product Safety Commission (CPSC) proposal to increase the agency’s powers regarding voluntary product safety recalls.  78 Fed. Reg. 69793 (Nov. 21, 2013).CPSC’s proposal, if adopted, would have a significant impact on the consumer product industry, including producers, importers, retailers, and distributors.Industry should consider weighing in on the issues.   

CPSC and firms often address alleged product hazards by hammering out voluntary recall agreements with corrective action plans (CAPs).This has provided prompt resolutions without the burdens and potentially adverse findings involved in contested proceedings.CPSC’s current regulations provide that a CAP has no legally binding effect.There would be a pivot under the CPSC proposal:CAPs would purportedly be legally binding, and the agency says that it could sue to enforce them.

In addition, obligations under CAPs could increase significantly.CPSC proposes that, if appropriate, CAPs could include compliance program requirements echoing compliance program requirements incorporated as part of recent civil penalty settlement agreements.These could include such things as maintaining and enforcing a system of internal controls and procedures for reporting to CPSC; effective programs to ensure compliance with CPSC requirements; written standards and policies and compliance training for employees; and making information, materials, and personnel available to CPSC to evaluate compliance with the CAP.Since CAPs would be legally enforceable, CPSC would be able to go to court to enforce these CAP undertakings. 

The proposed amendments would also facilitate CPSC’s ability to negotiate admissions by companies in consent order agreements.  

CPSC proposes additional changes in its regulations for voluntary recalls.Many of these codify current CPSC general practices.Nonetheless, even if nonbinding as “guidance,” codification would tend to lock in such general approaches, providing less flexibility to negotiate recalls shaped to specific circumstances.      

In summary, under CPSC’s proposal, the stakes involved in a CAP would increase significantly—potentially imposing onerous obligations on companies far beyond current practice before the agency.This could affect the willingness of companies to enter into CAPs and would warrant further vigilance in negotiations with CPSC.