CPSC Proposal Makes Voluntary Corrective Action Plans Legally Binding

Corrective Action Plans Legally Binding; May Include Compliance Programs

Under CPSC’s proposal, once a firm voluntarily agrees to undertake a corrective action plan, the firm would be legally bound to fulfill the terms of the agreement. Currently, CPSC regulations specify that voluntary corrective action plans have no legally binding effect. But in its proposed rule, the commission said it is concerned that it is prohibited from enforcing corrective action plans if a firm is recalcitrant or deliberately delays implementation. CPSC said making voluntary corrective action plans legally binding would provide it “with the necessary tools to compel a noncompliant or dilatory firm to carry out the terms of its voluntarily agreed upon corrective action plan.”

The proposed rule would also add compliance program-related requirements as possible components of a corrective action plan. CPSC said compliance programs may be appropriate components if a firm: (i) has multiple previous recalls or violations over a short period of time; (ii) has previously failed to quickly report substantial product hazards; or (iii) has insufficient procedures or and controls for preventing the manufacturing, importation, or distribution of violative products.

Proposal Sets Principles and Requirements for Voluntary Recall Notices

CPSC’s proposal would set general principles for voluntary recall notices. Principles for voluntary recall notices would be similar to existing guidelines for mandatory recall notices, CPSC said. The voluntary notices would have to provide information that enables consumers and other affected people to identify the recalled product and take appropriate action, the proposed rule said. Firms would have to notify the public of voluntary recalls by a press release or recall alert, a prominently displayed in-store poster, and a website posting, as well as two of the following: a radio news release, video news release, b-roll package, YouTube video, Instagram video, Vine video, or social media sites.

The proposed rule would set specific content requirements for voluntary recall notices. This would include that the notice has the word “recall” in the heading and text; the date of the notice; a description of the product; the actions the firm is taking; the number of units affected; a description of the hazard; etc.

Former Commissioner Says Proposal Unnecessary and Burdensome

A joint statement by CPSC Chairwoman Inez Tenenbaum and Commissioners Robert Adler and Marietta Robinson (here) said the proposal would not only give the commission additional enforcement tools, but it would also improve the efficiency of recall notice negotiations by clearly stating CPSC requirements. “Interested parties have raised concerns regarding unnecessary delays when negotiating recall notices with the Commission,” the statement said. “It is our hope to reduce or eliminate these delays by setting forth the Commission’s expectations regarding the elements it believes are needed to issue effective recall notices.”

But a blogpost from former Commissioner Nancy Nord (here) called CPSC’s proposal to make voluntary correction action plans legally binding a “solution in search of a problem.” The current system has worked for 30 years without a problem, said the recently departed Nord. By making voluntary corrective action plans legally binding, CPSC would eliminate the flexibility the commission currently has to address issues that may be discovered as the recall is rolled out, because parties will only be legally obligated to undertake the corrective actions described in the agreement. “What is being proposed has the potential to delay and burden a process that everyone thinks has been working well -- all to address a hypothetical problem that exists, it seems, only in the minds of some commissioners,” said Nord.

(Federal Register 11/20/13)