Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Rules and Regulations 45101 

1The Commission voted 3–0–1 to publish this 

interim final rule, with changes, in the Federal 

Register. Chairman Inez M. Tenenbaum and 

Commissioners Thomas H. Moore and Robert Adler 

voted to publish the notice with changes. 

Commissioner Anne Northup abstained from the 

voting. Commissioner Nancy Nord voted not to 

approve the publication. Chairman Tenenbaum and 

Commissioners Moore, Northup, and Nord issued 

statements, and their statements can be found at 

http://www.cpsc.gov/about/cpsia/sect217.html. 

incorporates the same novel or unusual 

design feature, or should any other 

model already included on the same 

type certificate be modified to 

incorporate the same novel or unusual 

design feature, the special conditions 

would also apply to the other model 

under the provisions of § 21.101. 

Novel or Unusual Design Features 

The model 525C will incorporate the 

following novel or unusual design 

features: A single point refuel/defuel 

system. 

Discussion of Comments 

Notice of proposed special conditions 

No. 23–09–01–SC for the Cessna 

Aircraft Company, model 525C 

airplanes was published in the Federal 

Register on April 15, 2009 (74 FR 

17438). No comments were received, 

and the special conditions are adopted 

as proposed. 

Applicability 

As discussed above, these special 

conditions are applicable to the model 

525C. Should Cessna Aircraft Company 

apply at a later date for a change to the 

type certificate to include another 

model incorporating the same novel or 

unusual design feature, the special 

conditions would apply to that model as 

well. 

Under standard practice, the effective 

date of final special conditions would 

be 30 days after the date of publication 

in the Federal Register; however, as the 

certification date for the Cessna Aircraft 

Company, Model 525C is imminent, the 

FAA finds that good cause exists to 

make these special conditions effective 

upon issuance. 

Conclusion 

This action affects only certain novel 

or unusual design features on one model 

of airplane. It is not a rule of general 

applicability, and it affects only the 

applicant who applied to the FAA for 

approval of these features on the 

airplane. 

List of Subjects in 14 CFR Part 23 

Aircraft, Aviation safety, Signs and 

symbols. 

Citation 

■ The authority citation for these 

special conditions is as follows: 

Authority: 49 U.S.C. 106(g), 40113 and 

44701; 14 CFR 21.16 and 21.101; and 14 CFR 

11.38 and 11.19. 

The Special Conditions 

Accordingly, pursuant to the 

authority delegated to me by the 

Administrator, the following special 

conditions are issued as part of the type 

certification basis for Cessna Aircraft 

Company, model 525C airplanes. 

1. SC25.979(e) 

The airplane defueling system (not 

including fuel tanks and fuel tank vents) 

must withstand an ultimate load that is 

2.0 times the load arising from the 

maximum permissible defueling 

pressure (positive or negative) at the 

airplane fueling connection. 

Issued in Kansas City, Missouri, on August 

20, 2009. 

Kim Smith, 

Manager, Small Airplane Directorate, Aircraft 

Certification Service. 

[FR Doc. E9–21056 Filed 8–31–09; 8:45 am] 

BILLING CODE 4910–13–P 

CONSUMER PRODUCT SAFETY 

COMMISSION 

16 CFR Part 1119 

Civil Penalty Factors 

AGENCY: Consumer Product Safety 

Commission. 

ACTION: Interim final interpretative rule. 

SUMMARY: The Consumer Product Safety 

Improvement Act of 2008 (‘‘CPSIA’’), 

requires the Consumer Product Safety 

Commission (‘‘Commission’’) to issue a 

final rule providing its interpretation of 

the civil penalty factors found in the 

Consumer Product Safety Act (‘‘CPSA’’), 

the Federal Hazardous Substances Act 

(‘‘FHSA’’), and the Flammable Fabrics 

Act (‘‘FFA’’), as amended by section 217 

of the CPSIA. These statutory provisions 

require the Commission to consider 

certain factors in determining the 

amount of any civil penalty. The 

Commission is issuing its interpretation 

of the statutory factors. 

DATES: This rule is effective September 

1, 2009. Comments must be received 

October 1, 2009. 

ADDRESSES: You may submit comments, 

identified by Docket No. CPSC–2009– 

0068, by any of the following methods: 

Electronic Submissions 

Submit electronic comments in the 

following way: 

Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

To ensure timely processing of 

comments, the Commission is no longer 

accepting comments submitted by 

electronic mail (e-mail) except through 

http://www.regulations.gov. 

Written Submissions 

Submit written comments in the 

following way: 

Mail/Hand delivery/Courier (for 

paper, disk, or CD–ROM submissions), 

preferably in five copies, to: Office of the 

Secretary, Consumer Product Safety 

Commission, Room 502, 4330 East West 

Highway, Bethesda, MD 20814; 

telephone (301) 504–7923. 

Instructions: All submissions received 

must include the agency name and 

docket number for this rule. All 

comments received may be posted 

without change, including any personal 

identifiers, contact information, or other 

personal information provided, to 

http://www.regulations.gov. Do not 

submit confidential business 

information, trade secret information, or 

other sensitive or protected information 

electronically. Such information should 

be submitted in writing. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http:// 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Melissa V. Hampshire, Attorney, 

Division of Enforcement and 

Information, Office of the General 

Counsel at 301–504–7631, 

mhampshire@cpsc.gov. 

SUPPLEMENTARY INFORMATION: 

A. Background 

The CPSIA specifies that the 

Commission, by August 14, 2009, must 

issue a final regulation providing its 

interpretation of civil penalty factors in 

section 20(b) of the CPSA, section 

5(c)(3) of the FHSA, and section 5(e)(2) 

of the FFA.1 This rule interprets the 

factors in section 20(b) of the CPSA, 

section 5(c)(3) of the FHSA and section 

5(e)(2) of the FFA, and describes other 

factors the Commission may consider in 

evaluating the amount of a civil penalty 

to be sought for knowing violations of 

the prohibited acts found in section 19 

of the CPSA, section 4 of the FHSA, and 

section 5 of the FFA. The statutory 

factors the Commission is required to 

consider in determining the amount of 

a civil penalty to seek are: The nature, 

circumstances, extent and gravity of the 

violation, including the nature of the 

product defect, the severity of the risk 

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45102 Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Rules and Regulations 

2This factor applies only to the CPSA. The FHSA 

factor is ‘‘the nature of the substance.’’ The FFA has 

no comparable separate factor apart from the nature, 

circumstances extent and gravity of the violation. 

3The FHSA factor is the ‘‘amount of the 

substance.’’ 

of injury, the occurrence or absence of 

injury, the number of defective products 

distributed, the appropriateness of the 

penalty in relation to the size of the 

business of the person charged, 

including how to mitigate undue 

adverse economic impacts on small 

businesses, and such other factors as 

appropriate. 

The statutory factors the Commission 

is required to consider in determining 

the amount of a civil penalty to seek are 

the same factors identified in section 

20(c) of the CPSA, section 5(c)(4) of the 

FHSA, and section 5(e)(3) of the FFA for 

determining whether a civil penalty 

may be compromised by the 

Commission. These statutory provisions 

instruct the Commission to consider the 

following factors in determining the 

amount of a compromised penalty and 

whether it should be remitted or 

mitigated by the Commission: the 

nature, circumstances, extent and 

gravity of the violation, including the 

nature of the product defect,2 the 

severity of the risk of injury, the 

occurrence or absence of injury, the 

number of defective products 

distributed,3 the appropriateness of 

such penalty in relation to the size of 

the business of the person charged, 

including how to mitigate undue 

adverse economic impacts on small 

businesses and such other factors as 

appropriate. The Commission will apply 

its interpretation to these statutory 

terms in determining whether and in 

what amounts any penalties may be 

compromised. 

As set forth in section 217(a)(4) of the 

CPSIA, new penalty amounts specified 

in section 217(a) of the CPSIA take 

effect on the date that is the earlier of 

the date on which a final rule providing 

the Commission’s interpretation of 

penalty factors is issued or on August 

14, 2009 (one year after the date of 

enactment of the CPSIA). Under the 

amendments, the maximum penalty 

amounts increase from $8,000 to 

$100,000 for each knowing violation 

under the CPSA, FHSA, and FFA. 

Maximum penalty amounts for any 

related series of violations increase from 

$1,825,000 to $15,000,000. 

B. Prior Proposal on Civil Penalty 

Factors 

On July 12, 2006, the Commission 

published a proposed interpretative rule 

(71 FR 39248) that identified additional 

factors to be considered in assessing and 

compromising civil penalties under 

sections 20(b) and (c) of the CPSA. The 

factors identified in the proposed rule 

were in addition to those already 

required to be considered under section 

20(b) and (c) of the CPSA in evaluating 

the appropriateness and amount of a 

civil penalty. The Commission invited 

comment on whether the Commission 

and staff should consider, as 

appropriate, one or more of the 

following factors in determining the 

appropriateness and amount of a civil 

penalty: (1) A firm’s previous record of 

compliance with CPSA requirements; 

(2) timeliness of a firm’s response to 

relevant information; (3) safety and 

compliance monitoring; (4) cooperation 

and good faith; (5) economic gain from 

any delay or noncompliance with CPSC 

safety or reporting requirements; (6) a 

product’s failure rate; and (7) any other 

pertinent factors. The comment period 

closed August 11, 2006. The 

Commission received four comments. 

C. CPSIA Requirements 

The enactment of the CPSIA 

superseded the proposed rule by 

requiring that the Commission provide 

its interpretation of the enumerated 

statutory factors under section 20(b) of 

the CPSA, section 5(c)(3) of the FHSA, 

and section 5(e)(2) of the FFA. The 

CPSIA also indicated that under the 

CPSA, FHSA, and FFA the Commission 

should consider the nature, 

circumstances, extent, and gravity of the 

violation in determining the appropriate 

penalty amount. The statute provides 

examples of elements that should go 

into that consideration. The CPSIA 

modified the factor of appropriateness 

of the penalty in relation to the size of 

the business of the person charged by 

requiring that this factor include a 

consideration of how to mitigate undue 

adverse economic impacts on small 

businesses. This small business analysis 

element was added to the CPSA and 

FHSA but not added to the FFA factor. 

The Commission will consider the 

undue adverse economic impacts on 

small businesses as another appropriate 

factor under the FFA. The CPSIA also 

added to the CPSA, FHSA, and FFA a 

new catch-all statutory factor ‘‘other 

factors as appropriate’’ for 

consideration. The effect of the CPSIA 

amendments was noted in the Fall 2008 

Current Regulatory Plan and the Unified 

Agenda (RIN: 3041–AC40) by stating 

that the proposed rule would be 

withdrawn. In the Federal Register of 

August 26, 2009 (74 FR 43084), the 

Commission withdrew the July 12, 

2006, notice of proposed rulemaking (71 

FR 39248). 

On November 18, 2008 the 

Commission staff posted a notice on the 

Commission Web site inviting comment 

on information the Commission should 

address in considering the amended 

statutory factors under the CPSA, FHSA, 

and FFA as outlined below: 

CPSA (15 U.S.C. 2069(b)) FHSA (15 U.S.C. 1264(c)(3)) FFA (15 U.S.C. 1194(e)(2)) 

The nature, circumstances, extent, and gravity 

of the violation, including 

The nature, circumstances, extent, and gravity 

of the violation, including 

The nature, circumstances, extent, and gravity 

of the violations, 

the nature of the product defect, the nature of the substance, 

the severity of the risk of injury, the severity of the risk of injury, the severity of the risk of injury, 

the occurrence or absence of injury, the occurrence or absence of injury, the occurrence or absence of injury, 

the number of defective products distributed, the amount of substance distributed, 

the appropriateness of such penalty in relation 

to the size of the business of the person 

charged, including how to mitigate undue adverse economic impacts on small businesses, 

the appropriateness of such penalty in relation 

to the size of the business of the person 

charged, including how to mitigate undue 

adverse economic impacts on small businesses, 

the appropriateness of such penalty in relation 

to the size of the business of the person 

charged, 

and such other factors as appropriate and such other factors as appropriate and such other factors as appropriate 

The Commission staff also invited 

comment on what other factors are 

appropriate to consider in penalty 

determinations including: (1) A 

previous record of compliance; (2) 

timeliness of response; (3) safety and 

compliance monitoring; (4) cooperation 

and good faith; (5) economic gain from 

noncompliance; (6) product failure rate; 

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Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Rules and Regulations 45103 

and (7) what information the 

Commission should consider in 

determining how to mitigate the adverse 

economic impact of a particular penalty 

on a small business. The Commission 

staff also invited comment on whether 

it should develop a formula or matrix 

for weighing any or all of the various 

factors and what criteria it should use 

in any weighting formula or matrix. The 

Commission received 16 comments in 

response to the 2008 Web site notice. 

D. Discussion 

1. What Are the Requirements for 

Imposition of Civil Penalties? 

The determination of the amount of 

any civil penalty to seek and/or 

compromise should allow for maximum 

flexibility within an identified 

framework. The CPSIA requirement for 

the Commission to interpret the civil 

penalty factors gives transparency to the 

regulated community about the 

framework the Commission will use to 

guide its penalty calculations in the 

enforcement process and may provide 

incentives for greater compliance. The 

changes made by various CPSIA 

provisions to the CPSA, FHSA, and 

FFA, including those to the CPSA 

prohibited acts and the addition of new 

prohibited acts, present the regulated 

community with many new compliance 

challenges. 

Any proposed civil penalty 

determination is based first on a 

violation of a prohibited act under the 

CPSA, FHSA, or FFA. Civil penalties 

may then be sought against any person 

who ‘‘knowingly violates’’ section 19 of 

the CPSA, section 4 of the FHSA or a 

regulation or standard under section 4 

of the FFA. The term ‘‘knowingly’’ is 

defined in section 20(d) of the CPSA, 15 

U.S.C. 2069(d), section 5(c)(5) of the 

FHSA, 15 U.S.C. 1264(c)(5), and section 

5(e)(1) of the FFA, 15 U.S.C. 1194(e)(1) 

to mean the having of actual knowledge 

or the presumed having of knowledge 

deemed to be possessed by a reasonable 

man who acts in the circumstances, 

including knowledge obtainable upon 

the exercise of due care to ascertain the 

truth of representations. Since its 

enactment in 1973, the CPSA always 

contained a civil penalty provision; 

however, until 1990, the FHSA and FFA 

did not contain comparable provisions 

for civil penalties. Under the FFA, the 

Commission had to seek civil penalties 

under the Federal Trade Commission 

Act, using the authorities under that 

provision. The FHSA had no civil 

penalty provision. The Consumer 

Product Safety Improvement Act of 

1990, Public Law 101–608, 104 Stat. 

3110, November 16, 1990, amended 

section 5 of the FHSA and section 5 of 

the FFA giving the Commission 

authority to seek civil penalties for 

knowing violations of the prohibited 

acts under those Acts. If a penalty 

cannot be compromised by the 

Commission, the Commission will seek 

to commence an action in Federal Court 

to obtain a penalty. See, Advance 

Machine Co. v. Consumer Product 

Safety Commission, 666 F.2d 1166 (8th 

Cir. 1981); Athlone Industries, Inc. v. 

Consumer Product Safety Commission 

(DC Cir. 1983). 

2. How do the CPSIA Amendments to 

the CPSA’s Prohibited Acts Affect Civil 

Penalties? 

In the past, the majority of civil 

penalties for prohibited acts were 

imposed either for a knowing failure to 

furnish information required by section 

15(b) of the CPSA, or for regulatory 

violations under the CPSA, FHSA, or 

FFA. The CPSIA amended these three 

statutes to strengthen the Commission’s 

enforcement ability and allow for more 

uniform enforcement under the CPSA, 

where applicable. 

The new amendments expand the acts 

prohibited under the CPSA and give the 

Commission the ability to enforce 

violations of the FHSA and FFA as 

prohibited acts under the CPSA. Thus, 

the amended CPSA now prohibits the 

sale, offer for sale, distribution in 

commerce, or importation into the 

United States of any consumer product, 

or other product or substance that is 

regulated under the CPSA or any other 

Act enforced by the Commission, that is 

not in conformity with an applicable 

consumer product safety rule under the 

CPSA, or any similar rule, regulation, 

standard, or ban under any other Act 

enforced by the Commission. 15 U.S.C. 

2068(a)(1). 

The CPSA, as amended, adds a new 

prohibited act for the sale, manufacture, 

distribution, or importation of products 

subject to a voluntary corrective action 

taken by the manufacturer, in 

consultation with the Commission, and 

publicly announced by the Commission 

or if the seller, distributor, or 

manufacturer knew or should have 

known of such voluntary corrective 

action. 15 U.S.C. 2068(a)(2)(B). 

The CPSA, as amended, broadens the 

prohibited act for the sale, offer for sale, 

manufacture for sale, or distribution or 

importation of any consumer product or 

other product or substance subject to a 

section 15 mandatory recall order to 

include products subject to a section 12 

order. A section 15 order is imposed in 

an adjudicative proceeding to declare a 

product a ‘‘substantial product hazard’’ 

under section 15 of the CPSA, 15 U.S.C. 

2064. A section 12 order, which may 

include a mandatory order requiring 

notification to purchasers and repair, 

replacement or refund is one imposed 

by a District Court after an ‘‘imminent 

hazard’’ proceeding under section 12 of 

the CPSA, 15 U.S.C. 2061. 

The amended prohibited acts section 

of the statute is also broadened to 

include the sale, offer for sale 

manufacture for sale, distribution in 

commerce or importation into the 

United States of a banned hazardous 

substance under the FHSA as an act 

prohibited under the CPSA. 15 U.S.C. 

2068(a)(2)(D). 

The CPSA prohibited act in section 

19(a)(6) of the CPSA relating to 

certification under section 14 of the 

CPSA is newly expanded to make the 

failure to furnish a certificate required 

by any other Act enforced by the 

Commission, a prohibited act under the 

CPSA. This prohibited act now also 

references a new tracking label 

requirement of section 103 of the CPSIA 

by specifying that the failure to comply 

with any requirement of section 14 

includes the failure to comply with the 

requirement for tracking labels or any 

rule or regulation promulgated under 

section 14. 

The CPSA statutory language has also 

been expanded to include a new 

prohibited act for the sale, offer for sale, 

distribution in commerce or importation 

into the United States of any consumer 

product containing an unauthorized 

third party certification mark. 15 U.S.C. 

2068(a)(12). 

Misrepresentations to Commission 

officers or employees about the scope of 

consumer products subject to recall or 

material misrepresentations in the 

course of an investigation under any act 

enforced by the Commission also is a 

new prohibited act under the CPSA. 15 

U.S.C. 2068(a)(13). 

In addition, the CPSA adds as a new 

prohibited act, the exercise or attempt to 

exercise undue influence on a third 

party conformity assessment body that 

tests products for compliance under 

laws administered by the Commission. 

15 U.S.C. 2068(a)(14). 

The CPSIA adds to the Commission’s 

export prohibition authority section 

19(a)(15) of the CPSA that makes it 

illegal to export from the United States 

for purposes of sale any consumer 

product or other product or substance 

(other than the export of a product or 

substance permitted by the Secretary of 

the Treasury under section 17(e) of the 

CPSA) that is subject to Court- or 

Commission-ordered recall or that is 

banned under the FHSA or subject to 

voluntary recall announced by the 

Commission. 15 U.S.C. 2068(a)(15). 

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45104 Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Rules and Regulations 

The CPSIA also adds a new 

prohibited act that makes it illegal to 

violate a Commission order issued 

under new section 18(c) of the CPSA, 

which allows the Commission to 

prohibit export for sale of any consumer 

product not in conformity with an 

applicable consumer product safety 

rule. 15 U.S.C. 2068(a)(16). 

3. Should Penalties be Sought for 

Violations that do not Involve Evidence 

of ‘‘Bad Intentions’’ or ‘‘Ill Will?’’ 

Some commenters stated that the 

Commission should reserve seeking 

penalties only for the most egregious 

and dangerous situations and that most 

violations do not involve bad intentions 

or ill will. 

The CPSA defines ‘‘knowingly’’ as 

actual knowledge or presumed 

knowledge based on knowledge 

attributed to a reasonable person acting 

in the circumstances, including 

knowledge obtainable upon the exercise 

of due care to ascertain the truth of 

representation. Since the knowledge 

requirements in the CPSA, FHSA, and 

FFA include presumed knowledge, as 

well as actual knowledge, the 

Commission declines to follow the 

commenters’ suggestion to seek a 

penalty only where there is evidence of 

bad intentions or ill will. To follow the 

commenters’ position to impose 

penalties only where there is knowing 

and willful conduct would read the 

‘‘presumed knowledge’’ element out of 

the ‘‘knowing’’ definition in the statute. 

4. Should the Commission Implement a 

Matrix or Formula for Computing 

Penalty Amounts? 

All but two commenters rejected the 

concept of a penalty matrix or formula 

for use in the assessment of civil 

penalties. Commenters opposed to such 

a matrix or formula highlighted the 

difficulty of applying any formula in a 

particular circumstance as too rigid an 

approach that would not take into 

consideration information that might be 

important to consider in one instance of 

a penalty but not in another. One 

commenter suggested that if the 

Commission reduced its penalty 

formulation to a matrix it would 

encourage regulated parties to calculate 

the cost and risk of prohibited conduct 

and not to follow the statutory 

requirements. 

The Commission declines to follow a 

formulaic or matrix approach to penalty 

assessment or to otherwise state in the 

regulation any specific circumstances 

that will warrant a certain penalty 

amount but has instead provided 

guidance about what factors may 

influence the Commission’s 

determination under the various 

statutory and other enumerated factors. 

Importantly, in an individual case, the 

Commission would review the facts and 

circumstances surrounding the 

violations and the proposed assessment 

of penalties in light of the factors and 

framework described in the rule. 

Therefore, the rule does not contain a 

matrix or formula for assigning specified 

amounts to the various factors in this 

notice. Specific considerations under 

each factor are discussed below. 

5. How Does the New Rule Interpret the 

Civil Penalty Factors? 

A. Section 1119.1—Purpose 

Section 1119.1 describes the purpose 

of new Part 1119 ‘‘Civil Penalty 

Factors,’’ explaining that it is the 

Commission’s interpretation of the 

statutory civil penalty factors set forth 

in the Consumer Product Safety Act (15 

U.S.C. 2051–2089), Federal Hazardous 

Substances Act (15 U.S.C. 1261–1278), 

and the Flammable Fabrics Act (15 

U.S.C. 1191–1204). 

B. Section 1119.2—Applicability 

Section 1119.2 explains that the part 

applies to all civil penalty 

determinations that the Commission 

proposes to seek or compromise for 

knowing violations of the prohibited 

acts under the CPSA, the FHSA, or the 

FFA. 

C. Section 1119.3—Definitions 

Section 1119.3 defines certain terms 

used in the rule. For example, the term 

‘‘product defect’’ is broadly defined to 

cover a product or substance associated 

with a prohibited act under the CPSA, 

FHSA or FFA as well as to include the 

meaning of defect as referenced in the 

CPSA and the Commission definition of 

defect at 16 CFR 1115.4. The term 

‘‘violator’’ would define any legally 

responsible party who committed a 

knowing violation of a prohibited act 

under the CPSA, FHSA or FFA. The rule 

explains that the definitions apply for 

purposes of this rule. 

D. Section 1119.4(a)(2)—Nature, 

Circumstances, Extent, and Gravity of 

the Violation 

One commenter observed that 

Congress amended the CPSIA adding 

this general factor in addition to the 

enumerated statutory factors to clarify 

its intention that the Commission adopt 

a holistic assessment of all relevant 

information for penalty determinations 

rather than place undue emphasis on 

one or more specific factors. 

The Commission agrees that this 

language allows the Commission to 

consider the totality of the 

circumstances surrounding a violation 

while recognizing that depending upon 

the case, the significance and 

importance of each factor may vary. The 

Commission also believes that this 

particular factor allows for the 

consideration of the seriousness and 

extent of a particular violation that may 

not otherwise be considered with 

respect to the other enumerated 

statutory factors. Therefore, in each 

case, the Commission will continue to 

look at the enumerated statutory factors, 

as well as other factors (described in 

paragraph J below) that the Commission 

may determine are appropriate, and 

consider all of the factors in 

determining the civil penalty amount. 

E. Section 1119.4(a)(3)—Nature of the 

Product Defect 

The Commission will consider, under 

this provision, where appropriate and 

applicable in each particular case, the 

nature of the hazard presented by the 

product for which a penalty is sought. 

The Commission considers this factor 

broadly as applying to products or 

substances that may in fact contain a 

defect which could create a substantial 

product hazard (as defined and 

explained in 16 CFR 1115.4), to 

products which present a hazard 

because of a violation of a rule, 

regulation, standard or ban under the 

CPSA, FHSA, and FFA, as well as any 

other violation of a prohibited act and 

how the nature of those violations relate 

to the underlying products or 

substances. Therefore, with respect to 

this factor, a proposed penalty could 

involve a prohibited act violation, such 

as a reporting failure under section 15(b) 

of the CPSA or a failure to comply with 

any consumer product safety rule under 

the CPSA, or any similar rule, 

regulation, standard or ban under any 

other act enforced by the Commission. 

A penalty also could involve any other 

prohibited act, and the Commission may 

examine its relation to the underlying 

product or substance and the prohibited 

act. Under this factor, the Commission 

could consider, as appropriate and 

where the business has reported in a 

timely fashion under section 15, 

information about the complexity of 

identifying a particular product hazard. 

Two commenters suggested that the 

Commission should evaluate violations 

of regulatory standards by 

distinguishing those that do not involve 

actual risk of harm, but rather the 

potential risk of harm, differently than 

those that do involve real potential for 

significant injury. 

The Commission declines to accept 

the suggestion that it distinguish any 

violations of regulatory standards, rule, 

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Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Rules and Regulations 45105 

or bans in this manner. The 

promulgation of a mandatory regulation 

by the Commission, or by Congress 

when they enact statutory bans and 

standards, carries with it a 

corresponding determination that the 

standard is necessary to address an 

unreasonable risk of injury presented by 

the product included within its scope. 

Violation of such a statutory provision 

or Commission regulation presents a 

risk to consumers that has previously 

been determined to be addressed by 

compliance with the statute or 

regulation. If the commenters’ 

suggestion were followed, the 

Commission would be classifying 

certain mandatory standards as more 

important than others. In addition, the 

comment does not account for the fact 

that the Commission can seek penalties 

for other prohibited act violations (in 

addition to knowing violations of 

mandatory rules, standards or bans). 

F. Section 1119.4(a)(4)—Severity of the 

Risk of Injury 

The Commission is to be guided by its 

discussion of the severity of the risk at 

16 CFR 1115.12, as appropriate, in 

evaluating a particular penalty. 

One commenter noted that penalties 

should not be assessed for risks of minor 

or moderate injury. 

The Commission declines to follow 

this suggestion. However, the rule 

indicates that the Commission may, in 

addition to considering information 

about injury potential and the 

seriousness of the potential injuries, 

consider the likelihood of injury 

occurring. In assessing the severity of 

the risk, the Commission may also 

consider the intended or reasonably 

foreseeable use or misuse of the 

product, and the population group 

exposed to the risk (e.g. children, 

elderly, handicapped.) 

G. Section 1119.4(a)(5)—The 

Occurrence or Absence of Injury 

The Commission received several 

comments suggesting that it should not 

seek a penalty where the information 

the Commission evaluates reveals that 

the violation involved no injury or only 

minor injuries have occurred. 

The Commission declines to follow 

this suggestion because a product may 

present a serious risk to consumers due 

to a failure to comply with a mandatory 

standard or other prohibited act even 

though no actual injuries have occurred. 

Therefore, the Commission states in the 

rule that it would consider under this 

factor whether injuries have or have not 

occurred. 

H. Section 1119.4(a)(6)—The Number of 

Defective Products Distributed 

Under this provision, the Commission 

is required to consider the actual 

number of defective products or amount 

of substances distributed in commerce. 

The Commission recognizes, as some 

commenters pointed out, that the actual 

number of defective products in 

consumers’ hands may be different than 

the number of defective products 

distributed. However, the statutory 

language makes no distinction between 

those defective products that consumers 

receive and those defective products 

distributed in commerce. Therefore, the 

Commission chooses not to make any 

such distinction in any evaluation of 

information under this factor. The rule 

reflects this consideration. 

I. Section 1119.4(a)(7)—The 

Appropriateness of Such Penalty in 

Relation to the Size of the Business of 

the Person Charged, Including How To 

Mitigate Undue Adverse Economic 

Impacts on Small Businesses 

The Commission is required to 

consider the size of a business in 

relation to the amount of the proposed 

penalty. This factor reflects the 

relationship between the size of the 

business of the person charged and the 

deterrent effect of civil penalties. In 

considering business ‘‘size,’’ the 

Commission may look to several factors, 

including the firm’s number of 

employees, net worth, and annual sales. 

The Commission may be guided, where 

appropriate, by any relevant financial 

factors to help determine a violator’s 

ability to pay a proposed penalty 

including: 

• Liquidity factors—factors that help 

measure a violator’s ability to pay its 

short-term obligations; 

• Solvency factors—factors that help 

measure a violator’s ability to pay its 

long-term obligations; and 

• Profitability factors—factors that 

measure a violator’s level of return on 

investment 

The Commission is aware that 

penalties may have adverse economic 

consequences on violators, including 

small business violators. The statute 

requires the Commission to consider 

how to mitigate the adverse economic 

consequences on small business 

violators only if those consequences 

would be ‘‘undue.’’ What the 

Commission considers to be ‘‘undue’’ 

will vary based upon the violator’s 

business size and financial condition as 

well as the nature, circumstances, extent 

and gravity of the violation(s). When 

considering how to mitigate undue 

adverse economic consequences, the 

Commission may also follow its Small 

Business Enforcement Policy set forth at 

16 CFR 1020.5. In determining a small 

business violator’s ability to pay a 

proposed penalty, the Commission may 

be guided, where appropriate, by the 

financial factors set forth above. 

J. Section 1119.4(b)—Other Factors as 

Appropriate 

Congress clarified in the CPSIA that 

the Commission does have the ability to 

consider factors in addition to the ones 

enumerated in the Act in individual 

cases, as appropriate. Both the 

Commission and the violator are free to 

raise any other factors they believe are 

relevant in determining an appropriate 

civil penalty amount. Additional factors 

which may be considered in an 

individual case include, but are not 

limited to, the following: 

• Safety/Compliance Program and/or 

System: The Commission may consider, 

for example, whether a violator had at 

the time of the violation, a reasonable 

program/or system for collecting and 

analyzing information related to safety 

issues, including incident reports, 

lawsuits, warranty claims, and safetyrelated issues related to repairs or 

returns; and whether a violator 

conducted adequate and relevant 

premarket and production testing of the 

product(s) at issue. 

• History of Noncompliance: The 

Commission may consider if the violator 

has a history of noncompliance with the 

CPSC and whether a higher penalty 

should be assessed for repeated 

noncompliance. 

• Economic Gain from 

Noncompliance: The Commission may 

consider whether a firm benefitted 

economically from a delay in complying 

with statutory and regulatory 

requirements. 

• Failure of the violator to respond in 

a timely and complete fashion to the 

Commission’s requests for information 

or remedial action: The Commission 

may consider whether a violator’s 

failure to respond in a timely and 

complete fashion to requests for 

information or for remedial action 

should increase the amount of the 

penalty. 

Which, if any, additional factors the 

Commission considers in determining 

an appropriate penalty amount, 

including but not limited to those listed 

above, will be unique to each case. In all 

civil penalty matters, any additional 

factors beyond those enumerated in the 

statute that the Commission takes into 

consideration for purposes of 

determining an appropriate civil penalty 

amount will be made known to and 

discussed with the violator. 

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45106 Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Rules and Regulations 

M. Section 1119.5—Enforcement 

Notification 

Section 1119.5 of the rule sets forth a 

notification provision that has been 

informally followed by the Commission 

in determining the amount of a civil 

penalty to seek or compromise for 

knowing violations of the prohibited 

acts. 

E. Immediate Effective Date 

The Commission must issue a final 

rule, in accordance with the procedures 

set forth at 5 U.S.C. 553 of the 

Administrative Procedure Act, by 

August 14, 2009, providing its 

interpretation of the penalty factors in 

section 20(b) of the CPSA, section 

5(c)(3) of the FHSA, and section 5(e)(2) 

of the FFA. Maximum civil penalty 

amounts are increasing on August 14, 

2009. Therefore, the Commission 

proposes that any final rule resulting 

from this rulemaking become effective 

upon publication. The rule is 

interpretative and does not impose 

obligations on regulated parties beyond 

those imposed by the CPSA, FHSA, and 

FFA. Therefore, there is no need to 

provide a delayed effective date in order 

to allow for regulated parties to prepare 

for the rule. 

F. Regulatory Flexibility Certification 

The Regulatory Flexibility Act (RFA), 

5 U.S.C. 601- 612, directs agencies to 

consider the potential impact of 

regulations on small business and other 

small entities. However, the RFA does 

not apply to rulemaking that is not 

subject to the notice and comment 

requirement of the Administrative 

Procedure Act, 5 U.S.C. 553. 

Interpretative rules, such as the one 

issued by this notice, are not subject to 

the notice and comment requirement. 

Accordingly, neither an initial nor a 

final regulatory flexibility analysis is 

required for this rule. 

G. Paperwork Reduction Act 

The rule does not impose any 

information collection requirements. 

Rather it describes the statutory civil 

penalty factors and how the 

Commission interprets those factors. 

Accordingly, it is not subject to the 

Paperwork Reduction Act, 44 U.S.C. 

3501–3520. 

H. Environmental Considerations 

The Commission’s regulations at 16 

CFR 1021.5(a) provide that there are no 

CPSC actions that ordinarily produce 

significant environmental effects. The 

rule does not fall within the categories 

in 16 CFR 1021.5(b) of CPSC actions 

that have the potential for producing 

environmental effects. The rule does not 

have any potential for adversely 

affecting the quality of the human 

environment. Council of Environmental 

Quality regulations at 40 CFR 1508.18(a) 

provide that agency actions subject to 

environmental review ‘‘do not include 

bringing judicial or administrative 

enforcement actions.’’ Therefore, no 

environmental assessment or 

environmental impact state is required. 

List of Subjects in 16 CFR Part 1119 

Administrative practice and 

procedure, Business and Industry, 

Consumer protection, Reporting and 

recordkeeping requirements. 

■ Accordingly, the Commission amends 

title 16 of the Code of Federal 

Regulations by adding a new Part 1119 

to read as follows: 

PART 1119—CIVIL PENALTY 

FACTORS 

Sec. 

1119.1 Purpose. 

1119.2 Applicability. 

1119.3 Definitions. 

1119.4 Factors considered in determining 

civil penalties. 

1119.5 Enforcement notification. 

Authority: 15 U.S.C. 2058, 2063, 2064, 

2067(b), 2068, 2069, 2076(e), 2084, 1261, 

1263, 1264, 1270, 1273, 1278, 1191, 1192, 

1193, 1194, 1195, 1196. 

§ 1119.1 Purpose. 

This part sets forth the Consumer 

Product Safety Commission’s 

(Commission) interpretation of the 

statutory factors considered in 

determining the amount of civil 

penalties the Commission may seek or 

compromise. 

§ 1119.2 Applicability. 

Application. This part applies to all 

civil penalty determinations the 

Commission may seek or compromise 

under the Consumer Product Safety Act 

(CPSA) (15 U.S.C. 2051–2089), the 

Federal Hazardous Substances Act 

(FHSA) (15 U.S.C. 1261–1278), and the 

Flammable Fabrics Act (FFA) (15 U.S.C. 

1191–1204). Any person who knowingly 

violates a prohibited act set forth in 

section 19 of the CPSA, section 4 of the 

FHSA, or section 5(e) of the FFA is 

subject to a civil penalty. 

§ 1119.3 Definitions. 

For purposes of this rule the following 

definitions apply: 

(a) Product defect means a product or 

substance that is associated with a 

prohibited act under the CPSA, FHSA, 

or FFA, including the meaning of defect 

as referenced in the CPSA and defined 

in Commission regulations at 16 CFR 

1115.4. Where applicable and where the 

term ‘‘number of defective products 

distributed’’ is used it shall include 

‘‘amount of substance distributed’’ for 

purposes of violations under the FHSA. 

(b) Violation means a knowing 

violation, as defined in the CPSA, 

FHSA, or FFA of any prohibited act 

found in section 19 of the CPSA, section 

4 of the FHSA, or section 5 of the FFA. 

(c) Violator means any manufacturer, 

importer, distributor or retailer or any 

other legally responsible party who 

committed a knowing violation of a 

prohibited act under the CPSA, FHSA, 

or FFA and is thus subject to penalties. 

§ 1119.4 Factors considered in 

determining civil penalties. 

(a) Statutory Factors. (1) Section 20(b) 

of the CPSA, section 5(c)(3) of the FHSA 

and section 5(e)(2) of the FFA specify 

factors considered by the Commission 

in determining the amount of a civil 

penalty to be sought upon commencing 

an action for knowing violations of the 

prohibited acts section of each act. 

These factors are: 

(i) CPSA (15 U.S.C. 2069(b)). The 

nature, circumstances, extent, and 

gravity of the violation, including: 

(A) The nature of the product defect; 

(B) The severity of the risk of injury; 

(C) The occurrence or absence of 

injury; 

(D) The number of defective products 

distributed; 

(E) The appropriateness of such 

penalty in relation to the size of the 

business of the person charged, 

including how to mitigate undue 

adverse economic impacts on small 

businesses; and 

(F) Such other factors as appropriate. 

(ii) FHSA (15 U.S.C. 1264(c)(3)). The 

nature, circumstances, extent, and 

gravity of the violation, including: 

(A) The nature of the substance; 

(B) Severity of the risk of injury; 

(C) The occurrence or absence of 

injury; 

(D) The amount of substance 

distributed; 

(E) The appropriateness of such 

penalty in relation to the size of the 

business of the person charged, 

including how to mitigate undue 

adverse economic impacts on small 

businesses; and 

(F) Such other factors as appropriate. 

(iii) FFA (15 U.S.C. 1194(e)(2)). The 

nature, circumstances, extent, and 

gravity of the violations: 

(A) The severity of the risk of injury; 

(B) The occurrence or absence of 

injury; 

(C) The appropriateness of such 

penalty in relation to the size of the 

business of the person charged; and 

(D) Such other factors as appropriate. 

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Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Rules and Regulations 45107 

(2) The nature, circumstances, extent 

and gravity of the violation. Under this 

factor, the Commission will consider the 

totality of the circumstances 

surrounding a violation, including how 

many provisions of law were violated. 

The Commission will continue to look 

at the enumerated statutory factors, as 

well as other factors (as described in 

paragraph (b) of this section) that the 

Commission may determine are 

appropriate, and consider all of the 

factors in determining the civil penalty 

amount. 

(3) Nature of the product defect. The 

Commission will consider the nature of 

the product hazard/substance for which 

a penalty is sought. A product defect 

under this factor includes violations for 

products that contain defects which 

could create substantial product hazards 

as referenced in the CPSA and defined 

and explained in 16 CFR 1115.4; 

regulatory violations of a rule, 

regulation, standard or ban; or product 

hazards presented by any other 

violation of the prohibited acts of 

section 19 of the CPSA. 

(4) Severity of the risk of injury. 

Consistent with its discussion of 

severity of the risk at 16 CFR 1115.12, 

the Commission will consider, among 

other factors, the potential for serious 

injury or death (and whether any injury 

required actual medical treatment 

including hospitalization or surgery); 

the likelihood of injury; the intended or 

reasonably foreseeable use or misuse of 

the product; and the population at risk 

(including vulnerable populations such 

as children, the elderly, or those with 

disabilities). 

(5) The occurrence or absence of 

injury. The Commission will consider 

whether injuries have or have not 

occurred with respect to any product 

associated with the violation. 

(6) The number of defective products 

distributed. The Commission will 

consider the actual number of products 

or amount of substances imported or 

placed in the stream of commerce to 

distributors, retailers, and consumers. 

(7) The appropriateness of such 

penalty in relation to the size of the 

business of the person charged 

including how to mitigate undue 

adverse economic impacts on small 

businesses. (i) The Commission is 

required to consider the size of a 

business in relation to the amount of the 

proposed penalty. This factor reflects 

the relationship between the size of the 

business of the person charged and the 

deterrent effect of civil penalties. In 

considering business ‘‘size,’’ the 

Commission may look to several factors 

including the firm’s number of 

employees, net worth, and annual sales. 

The Commission may be guided, where 

appropriate, by any relevant financial 

factors to help determine a violator’s 

ability to pay a proposed penalty 

including: liquidity factors; solvency 

factors; and profitability factors. 

(ii) The statute requires the 

Commission to consider how to mitigate 

the adverse economic impacts on small 

business violators only if those impacts 

would be ‘‘undue.’’ What the 

Commission considers to be ‘‘undue’’ 

will vary based upon the violator’s 

business size and financial condition as 

well as the nature, circumstances, extent 

and gravity of the violation(s). When 

considering how to mitigate undue 

adverse economic consequences, the 

Commission may also follow its Small 

Business Enforcement Policy set forth at 

16 CFR 1020.5. 

(b) Other factors as appropriate. In 

determining the amount of any civil 

penalty to be pursued when a knowing 

violation of the prohibited acts section 

of the CPSA, FHSA, or FFA has 

occurred, the Commission may 

consider, where appropriate, other 

factors in addition to those listed in the 

statutes. Both the Commission and the 

violator are free to raise any other 

factors they believe are relevant in 

determining an appropriate penalty 

amount. Which, if any, additional 

factors the Commission considers in 

determining an appropriate penalty 

amount, including but not limited to 

those listed above, will be unique to 

each case. In all civil penalty matters, 

any additional factors beyond those 

enumerated in the statute that the 

Commission takes into consideration for 

purposes of determining an appropriate 

civil penalty amount will be made 

known to and discussed with the 

violator. Additional factors which may 

be considered in an individual case 

include, but are not limited to, the 

following: 

(1) Safety/Compliance Program and/ 

or System: The Commission may 

consider, for example, whether a 

violator had at the time of the violation, 

a reasonable program/or system for 

collecting and analyzing information 

related to safety issues, including 

incident reports, lawsuits, warranty 

claims, and safety-related issues related 

to repairs or returns; and whether a 

violator conducted adequate and 

relevant premarket and production 

testing of the product(s) at issue. 

(2) History of noncompliance: The 

Commission may consider if the violator 

has a history of noncompliance with the 

CPSC and whether a higher penalty 

should be assessed for repeated 

noncompliance. 

(3) Economic Gain from 

Noncompliance: The Commission may 

consider whether a firm benefitted 

economically from a delay in complying 

with statutory and regulatory 

requirements. 

(4) Failure of the violator to respond 

in a timely and complete fashion to the 

Commission’s requests for information 

or remedial action: The Commission 

may consider whether a violator’s 

failure to respond in a timely and 

complete fashion to requests from the 

Commission for information or for 

remedial action should increase the 

amount of the penalty. 

§ 1119.5 Enforcement notification. 

A potential violator will be informed 

in writing that the Commission believes 

it is subject to a possible civil penalty. 

The violator will be able to submit 

evidence and arguments that it is not 

subject to such a penalty. 

Dated: August 19, 2009. 

Alberta E. Mills, 

Acting Secretary, Consumer Product Safety 

Commission. 

[FR Doc. E9–20591 Filed 8–31–09; 8:45 am] 

BILLING CODE 6355–01–P 

DEPARTMENT OF LABOR 

Occupational Safety and Health 

Administration 

29 CFR Part 1956 

[Docket No. OSHA–2009–0010] 

RIN 1218–AC44 

Notice of Initial Approval 

Determination; Illinois Public 

Employee Only State Plan 

AGENCY: Occupational Safety and Health 

Administration, Department of Labor 

(OSHA). 

ACTION: Final rule. 

SUMMARY: The Illinois Public Employee 

Only State Plan, a State occupational 

safety and health plan applicable only 

to public sector employees (employees 

of the State and its political 

subdivisions), is approved as a 

developmental plan under the 

Occupational Safety and Health Act of 

1970 and OSHA regulations. Under the 

approved Plan, the Illinois Department 

of Labor is designated as the State 

agency responsible for the development 

and enforcement of occupational safety 

and health standards applicable to 

public employment throughout the 

State. The Occupational Safety and 

Health Administration (OSHA) retains 

full authority for coverage of private 

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