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CPSC Proposes to Make Voluntary Recalls and Compliance Programs Legally Binding

On November 13, 2013, the U.S. Consumer Product Safety Commission (CPSC) issued a proposed interpretive rule concerning corrective action plans for “voluntary” recalls that may impact future voluntary consumer product recalls in two significant ways.   First, CPSC proposes to make voluntary recall agreements that companies negotiate with CPSC legally binding.  Second, CPSC proposes to permit the staff to require ongoing compliance programs as a component of such agreements.

Legally Binding Voluntary Recalls: Under the current regulation (16 C.F.R. § 1115.20(a)), voluntary corrective action plans – which identify the remedial actions a company intends to take, up to and including a product recall – have no legally binding effect.  The proposed rule would make such corrective action plans binding, allowing the CPSC to go to federal court to enforce the terms of the agreement.

Compliance Programs: The proposed rule would also allow staff to insist that voluntary recall agreements require companies maintain ongoing compliance programs, defining the terms of such compliance programs such as levels and frequency of internal and third-party testing.  The proposed rule provides examples of circumstances that might warrant a compliance program, as well as examples of requirements that may be included in a compliance program. The proposed rule also sets forth enforcement measures CPSC may take to remedy violations, including seeking injunctive relief, specific performance, and sanctions.

Since the proposal was issued, there has been considerable debate in the product safety community as to (1) whether the CPSC has the authority to issue this rule as proposed, and (2)  whether the proposal, if implemented, would create a deterrence for companies to come forward and propose a voluntary recall and/or slow down the recall process.

Comments on the proposed rule may be submitted to CPSC by February 4, 2014.

For more information on how this proposal may impact your company, please contact me at 202-518-6358 or ebelilos@ofwlaw.com.

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