Civil Penalties and 15(b) Draw Attention at ICPHSO

Concern about increased penalties and need to understand their primary cause – section 15(b) reporting deficiencies – got repeated attention both inside and outside sessions during ICHPSO's Washington D.C. conference.

A March 2 lunch speech prediction by Chairman Elliot Kaye that CPSC stakeholders should "expect to see" civil penalties in the "double digits" for millions – meaning $10 million to the maximum-allowed $15 million – reignited debate about whether he sees the penalty cap as a general goal or an unused ceiling for worst cases. His similar statements at the same venue last year (PSL, 3/2/16) sparked comparable discussion during that event and afterwards.

Although he did not explicitly clarify goal versus ceiling in his new statement, he did link his desire to situations in which the underlying "conduct warranted" higher penalties.

His statement occurred in the context of earlier assertions by Office of the General Counsel leadership that there has been much work to ensure that the amounts in initial penalty communications with companies are well vetted, including with DOJ, as to their justification and possibility. Arising in that prior discussion was emphasis on a civil penalties guidance (1.usa.gov/1TbobsN) created last fall.

As for Section 15(b) allegations, CPSC representatives in numerous venues strove to divorce companies' decisions on whether to report – and their later defenses against tardiness allegations – from defect determinations. Timing is the key issue, and CPSCers suggested that the threshold in the language of the CPSA is lower that some companies seem to think. They emphasized could and reasonably supports.

It is a "What did you know and when did you know it" question explained General Counsel Stephanie Tsacoumis, who was joined by her section leaders Melissa Hampshire, Mary Murphy, and Patricia Pollitzer.

They also offered a non-exclusive list of possible reporting triggers beyond incident reports or complaints, including scientific or expert studies, quality control data, and information from other government entities. In his speech Kaye stressed that North American regulators – CPSC, Health Canada and Profeco – now all expect that if a company reports problems to one, it will report to the others.

Tsacoumis also stressed that firms should not assume that their Section 15 duties are satisfied except in two situations: when every statutory requirement for a report is fulfilled or when the agency says so. She explicitly warned against the mistake that knowledge of commission awareness – such as via saferproducts.gov – eliminates reporting duties.

Relatedly, she dismissed reporting-allegation defenses involving subsequently determining there was not a defect. Such findings are irrelevant to whether the information available at the deadline met Section 15(b) criteria. The timing matters more than the information's validity.