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Representative Rush's Section 6(b) Bill -- Stripping Basic Due Process Protection With Little Justification or Benefit

Section 6(b) of the Consumer Product Safety Act has for many years encouraged voluntary reporting and protected companies from disclosure of inaccurate or misleading information by requiring CPSC to take reasonable steps to assure that disclosure of information identifying a specific product, manufacturer, or private labeler is: (1) accurate; (2) fair in the circumstances; and (3) reasonably related to effectuating the purposes of the law. The aim of section 6(b) is surely an important one, but this provision has been threatened by some consumer advocate groups, members of Congress and even commissioners, as Mintz’s Chuck Samuels confronted when he was asked to testify last year before the House Energy and Commerce Committee.

While there has been great debate regarding the utility of Section 6(b), it must be noted that nothing in the law unduly prevents the Commission from releasing important safety information in a significantly reduced timeline, while still ensuring accuracy. The CPSA and CPSC regulations include provisions to allow the agency to release information to the public on an expedited basis when necessary in order to warn the public quickly because individuals may be in danger from a product hazard or even a potential hazard. Such a procedure is rarely used, however.

In the latest challenge to Section 6(b), Congressman Bobby Rush has introduced HR 5565, the Safety Hazard and Recall Efficiency Information Act, which would amend Section 6(b) by stripping it of its most basic due process, as well as increasing enormously the penalties for late reporting.  

First, the bill would eliminate the existing right of a firm to judicially challenge the Commission's decision to release information before it is released despite what may be well-founded arguments that the information is inaccurate and unfair to release, sometimes not even correctly identifying the product or company. If enacted, such a procedure will mean that a company will have no ability to seek judicial review before it is faced with reputational and financial damage that often flows from a CPSC unilateral release. This is the exact scenario that justified the enactment of Section 6(b) in the first place.

A most basic due process right with regards to citizens and their government is the ability that there be a remedy to seek independent, neutral judicial review of damaging, wrong decisions, although it has been very rarely exercised under this section. If this cannot be done before the release of this information, then the damage to companies is completely done and cannot be undone.

Second, Representative Rush proposes drastically increasing the maximum penalties available for violations of the law, which now stands at $16.025 million (adjusted for inflation from $15 million), to $50 million. Notably, a proposed increase in the maximum civil penalties appears unrelated to the alteration of Section 6(b), and unfortunately appears to be punitive in nature only. As it currently stands, the maximum penalties have rarely been meted out by either Democratic or Republican Commissions, and there is no evidence that companies are failing to report serious safety problems because of lack of concern about penalty amounts.

The legislation is a well-intentioned attempt to ensure that the public is protected. Section 6(b) is often blamed as the culprit for delaying the disclosure of information to the public. In our view, however, if it is implemented properly by the Commission, true safety risks to the public should not be held up in a web of red tape. Instead, Section 6(b) helps ensure that the information disclosed is accurate and useful versus bad and distorted information, which does not protect anyone’s safety and can harm companies and their employees.

Here you can find a more detailed discussion of the many myths that surround Section 6(b) and the real facts. Much debate lies ahead. Hopefully, the real facts will emerge before a damaging bill like this becomes law. Its passage would inevitably have a deleterious effect on the huge amount of voluntary reporting and cooperation with the Commission, which is a cornerstone of the present, largely effective product safety regulatory system.

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Authors

Charles A. Samuels

Member / Co-chair, Retail and Consumer Products

Charles A. Samuels is an antitrust and regulatory lawyer at Mintz. He assists clients with consumer product safety, product recalls and environmental regulations. and Chuck also serves as general counsel to many trade associations. Chuck represents clients before federal agencies like the Consumer Product Safety Commission.

Shawn N. Skolky

Associate

Shawn Skolky is a Mintz Associate who advises clients on antitrust and competition law, including antitrust counseling, merger review, and private antitrust litigation. Shawn's consumer product safety practice assists companies with product safety reporting, recalls, and regulatory compliance.
Evelyn A. French handles matters involving the Consumer Product Safety Act and other product safety laws. She focuses on reporting obligations, investigations, recalls, and other regulatory and enforcement matters. Evelyn also represents trade associations and has an antitrust practice.