The Consumer Product Safety Commission is considering expanding its powers by making corrective action plans tied to voluntary product recalls legally binding, a change that if enacted could potentially increase regulatory burdens on manufacturers, suppliers and distributors. Under existing regulations, CPSC and companies address product hazard issues by developing a recall agreement with a corrective action plan – “CAPs.” Currently, CAPs are not legally binding, but a new CPSC proposal would change that, allowing the agency to sue to enforce them.
In addition, CAP obligations could increase to include compliance requirements incorporated from a civil penalty settlement. Washington, D.C.-based law firm Wiley Rein says these obligations could include such things as maintaining and enforcing a system of internal controls and procedures for reporting to CPSC, as well as effective programs to ensure compliance with CPSC requirements. What’s more, companies could be compelled to enact written standards and policies and compliance training for employees, and to make information, materials and personnel available to CPSC to ensure CAPs compliance. If CAPs are made legally binding, CPSC would be able to go to court to enforce these compliance measures.
“The stakes involved in a CAP would increase significantly – potentially imposing onerous obligations on companies far beyond current practice before the agency,” said John A. Hodges, a partner at Wiley Rein. “This could affect the willingness of companies to enter into CAPs and would warrant further vigilance in negotiations with CPSC.”
In November, CPSC Vice-Chairman Robert Adler said that making CAPs legally-binding would empower the agency to enforce all agreements and prevent companies from “slow-walking implementation.” He said he could think of one recent example in which a company did not fulfil its CAPs obligation. The public has until February 4 to send comments to CPSC regarding the proposed CAPs enforcement changes.