The U.S. Consumer Product Safety Commission has proposed changes to the rules requiring reports to the CPSC about potential product hazards.1 The reporting requirements have long been controversial. Although the proposal appears to be intended as an easing of the reporting requirements, it is not clear what the actual effect in practice will be. The proposed changes probably will not substantially reduce the likelihood that a report will be required, and the prudent course for businesses will continue to be "when in doubt, report."

Existing Rules

The current rules under the Consumer Product Safety Act2 require manufacturers, importers, distributors and retailers of a consumer product to report to the CPSC if they obtain information which reasonably supports the conclusion that their product either (1) fails to comply with a consumer product safety rule or with a voluntary consumer product safety standard, (2) contains a defect which could create a "substantial product hazard,"3 or (3) creates an unreasonable risk of serious injury or death.4 A report may trigger a product recall,5 and failure to make timely reports may result in substantial civil penalties.6

It is important to note that existing rules require reports regarding a defect that "could create a substantial product hazard," not just a defect that in fact creates a substantial product hazard. The CPSC takes an aggressive view of the need to report possible hazards that might in fact turn out not to be actual hazards, and numerous reports have been made for products that have not caused any injuries. The CPSC takes the position that a company should report to the CPSC even if it is in doubt as to whether a defect or substantial product hazard exists. Reporting a product to the CPSC does not automatically mean that the CPSC will conclude that it poses a substantial product hazard or that corrective action is required. The CPSC works with the reporting firm to determine if corrective action is appropriate, and many of the reports received require no corrective action because the CPSC concludes that the reported product defect does not create a substantial product hazard.

The revisions to the rule would add new factors for determining when reports must be made. Specifically, the proposal would modify the CPSC's current interpretive regulations regarding product reporting to add certain factors to the definition of "defect"; to add provisions allowing the evaluation of the risk of substantial injury to take into account that the risk may decline over time as the number of products being used by consumers decreases; and to add a provision regarding consideration of whether a product complies with voluntary or mandatory consumer product safety standards in determining whether a report is required.

The revised definition of defect7 would include the obviousness of the risk, the adequacy of warnings and instructions to mitigate the risk, the role of consumer misuse of the product and the foreseeability of such misuse. The provision of the rule regarding the criteria for determining how substantial a hazard the defect creates (and whether a report to the CPSC is therefore necessary) also has been revised. The existing rule includes a discussion of how the number of defective products distributed in commerce may affect the risk. The proposed rule would add a new factor to the list of factors to be considered: that the risk of injury from a product may decline over time as the number of products being used by consumers decreases.

Finally, the proposal would add a new section to the rules intended to explain how the CPSC views compliance with voluntary or mandatory product safety standards. Essentially, the revisions encourage compliance with product safety standards and state that the CPSC may consider a product's compliance with a standard in determining whether a report is required and to what extent corrective action is necessary. As pointed out by Commissioner Thomas Moore in a statement criticizing the proposed rule, under existing law, a report must be made if a product fails to comply with a mandatory or certain voluntary product safety standards. So the new provisions presumably would apply only to products that do comply with those standards, but have some other characteristic that results in a hazard. However, in the preamble to the proposed rule, the CPSC stated that this "policy statement is not intended to reduce the volume of reporting."8 Thus, it appears that the new rule would not establish a safe harbor relieving a company from reporting and corrective action requirements for products that comply with product safety standards, and therefore it provides only limited additional guidance as to whether reports and corrective action are required.

The CPSC has not indicated when the proposed changes will be made final.

Conclusion

A company's affirmative obligation to report potential product hazards to the CPSC has been and will remain a difficult and contentious issue. The proposed rules appear to be an attempt to ease and clarify the rules' requirements by identifying additional factors to be considered in determining reporting and corrective action requirements. However, it appears unlikely that the new provisions will establish clear guidelines for the product and risk-specific judgments that must be made in determining reporting requirements, and the CPSC has not changed its position on the requirement for reports in doubtful cases. The new provisions would not directly affect private product liability suits. The CPSC's response to comments on the proposed rule, which will be provided when the final rule is issued, may provide more guidance.

Footnotes

1. 30 Fed. Reg. 30350 (May 26, 2006).

2. 15 U.S.C. §§ 2051-2084.

3. "Substantial product hazard" is defined as:

  1. a failure to comply with an applicable consumer product safety rule which creates a substantial risk of injury to the public, or

  2. a product defect which (because of the pattern of defect, the number of defective products distributed in commerce, the severity of the risk, or otherwise) creates a substantial risk of injury to the public.

15 U.S.C § 2064(a)

4. 15 U.S.C. § 2064(b); 16 C.F.R. § 1115.2(b).

5. 15 U.S.C. §§ 2064 (c)-(e).

6. 15 U.S.C. § 2069.

7. The current rule provides that in determining whether a product is defective, the CPSC considers, as appropriate: the utility of the product; the nature of the risk of injury which the product presents; the necessity for the product; the population exposed to the product and its risk of injury; the CPSC's experience and expertise; the case law interpreting federal and state public health and safety statutes; the case law in the area of products liability; and other factors. 16 C.F.R. § 1115.4.

8. 71 Fed. Reg. 30352 (May 26, 2006).

For more information about this Alert, please contact Andrew E. Mishkin, any of the other attorneys in our Product Liability Litigation Practice Group or the attorney in the firm with whom you are regularly in contact.

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