Over ten years ago, the CPSC compliance staff negotiated an agreement with Wal-Mart that has grown over the years into what is now known as the retailer reporting policy. Under the agreement, Wal-Mart agreed to file weekly reports with the CPSC documenting safety issues reported to its stores about products it sold. This reporting gave the agency important insights into the range of safety issues the world’s largest retailer was seeing. It allowed the agency to get an early heads-up on potential safety issues before they matured into “substantial product hazards.” And Wal-Mart got some protection from allegations that it had failed to report substantial product hazards to the agency.
Because this was such a win-win for both the agency and the company, other large retailers and then several large manufacturers soon began asking to participate in the program as well. In response, the agency expanded the program over the years. However, several years ago, the retailer reporting program was put on hold.
The agency staff has now decided to revise the program. Only selected companies will be “invited” to participate. The revised program makes very clear that participation in the program does not provide a substitute for or otherwise impact any reporting requirements under Section 15(b) of the law. However “consideration” may be given to participating companies should they be faced with subsequent enforcement actions for failure to report. The confidentiality protections applying to Information submitted under Section 15(b) of the law would not apply to these reports.
The staff believes that these changes make the program more transparent and answer long-standing questions about how the program operates. That is certainly true. But the changes also raise several other questions as well. For example, the selective nature of the program and the “consideration”, if any, given to participants does raise troubling fairness issues, A company wishing to participate and frozen out of the program will have little recourse in challenging the decision of some invisible staffer. What kind of consideration will be available to some but not others?
But more basically, the changes raise the question of why any company should bother to participate. When I raised that question, when I was still a Commissioner, the answer I got was “that it is the right thing for companies to do.” Perhaps there are companies who will find the CPSC staff “invitation” irresistible. (I assume that there will be no measure of bullying associated with these invitations.) However, there may be others who believe that the effort involved and the benefits to be gained are not worth it. In this case the agency will lose out on an important source of information that could help it identify risks as they come up over the horizon.
However, the biggest concern is a process one. The program has been in place for over ten years. Although it was initiated by the staff, it has grown over the years and it has consumed considerable staff resources. Changes of this magnitude should be placed before the Commission for explanation and approval in a public meeting. The program’s role in gathering useful information should be better explained and it should be part of the agency’s annual operating plan. Regardless of what one thinks of the merits of the program and the changes being made, this is something that Commissioners should consider and approve, not delegate to staff.
The Side Effects of Tweaking
Published January 16, 2014 Comment Request , CPSC , Information Disclosure , Recalls Leave a CommentTags: CPSC, Information Sharing, Recalls
Much has been written here and in other publications about the substantive impacts of the CPSC’s proposed changes to the rules dealing with voluntary recalls. The substantive nature of the proposed amendments cannot be discounted even though certain commissioners persist in describing them as only “tweaks.”
As commenters analyze the impacts of the proposed changes, it is important to look at how these changes impact other rules that stakeholders and the commission operate under, specifically those dealing with submission of information under §15(b) and disclosure of information under §6(b) of the Consumer Product Safety Act. Former CPSC general counsel Cheryl Falvey has written an interesting piece that discusses that interrelationship. It is worth reading and thinking about.
Information submitted to the agency under §15(b) is exempt from disclosure except under limited circumstances as described in §6(b)(5). This protection is to provide incentive for companies to fully report information the agency needs to analyze a risk without having to worry that sensitive product information is made public unfairly or prematurely. One of the exemptions to this protection is when the Commission has accepted in writing a “remedial settlement agreement” (see §6(b)(5)(B)).
Here is the question: is the voluntary recall (or specifically the recall’s corrective action plan) a remedial settlement agreement? The regulations currently say that the recall agreement is not enforceable. The agency now proposes to make the recall agreement enforceable. Is the effect of that to make any information submitted under §15(b) subject to disclosure where it otherwise would not have been?
What is the Commission’s current position on this issue? Reading the NPR or listening to the debate does not provide any answers. But one thing is clear: with all this tweaking, some transparency is called for.