.C13/2-

94-97 COMPLIANCE AND ENFORCEMENT EFFORTS OF THE

GOVERNMENT CONSUMER PRODUCT SAFETY COMMISSION

Storage KSU LIBRARIES 

;UMENTS

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KANSAS STAIL. L'NlY4i4SI"HEARING

=.

BEFORE THE

SUBCOMMITTEE FOR CONSUMERS

OF THE

COMMITTEE ON COMMERCE

UNITED STATES SENATE

ru NINETY-FOURTH CONGRESS

SECOND SESSION

a- ON

S. 3755

rq TO AID IN THE ENFORCEMENT OF ACTS IMPLEMENTED

r-1 BY THE CONSUMER PRODUCT SAFETY COMMISSION

SEPTEMBER 9, 1976

Serial No. 94-97

Printed for the use of the Committee on Commerce

U.S. GOVERNMENT PRINTING OFFICE

78-549 WASHINGTON: 1976
1.N.

"4

.;

144 4".

COMMITTEE ON COMMERCE

WARREN G. MAGNUSON, Washington, Chairman

JOHN 0. PASTORE, Rhode Island

VANCE HARTKE, Indiana

PHILIP A. HART, Michigan

HOWARD W. CANNON, Nevada

RUSSELL B. LONG, Louisiana

FRANK E. MOSS, Utah

ERNEST F. HOLLINGS, South Carolina

DANIEL K. INOUYE, Hawaii

JOHN V. TUNNEY, California

ADLAI E. STEVENSON, Illinois

WENDELL H. FORD, Kentucky

JOHN A. DURKIN, New Hampshire

MICHAEL PERTSCHUR, Chief Counsel

S. LYNN SUTCLIFFE, General Counsel

EDWARD B. COHEN, Staff Counsel

MALCOLM M. B. STERRETT, Minority Counsel

H. STEPHEN HALLOWAY, Minority Staff Counsel

JAMES B. PEARSON, Kansas

ROBERT P. GRIFFIN, Michigan

HOWARD H. BAKER, JR., Tennessee

TED STEVENS, Alaska

J. GLENN BEALL, JR., Maryland

LOWELL P. WEICKER, JR., Connecticut

JAMES L. BUCKLEY, New York

SUBCOMMITTEE FOR CONSUMERS

FRANK E. MOSS, Utah, Chairman

PHILIP A. HART, Michigan, Vice Chairman

JOHN 0. PASTORE, Rhode Island

VANCE HARTKE, Indiana

DANIEL K. INOUYE, Hawaii

HOWARD W. CANNON, Nevada

JOHN V. TUNNEY, California

ADLAI E. STEVENSON, Illinois

WENDELL H. FORD, Kentucky

JOHN A. DURKIN, New Hampshire

JAMES L. BUCKLEY, New York

J. GLENN BEALL, JR., Maryland

LOWELL P. WEICKER, JR., Connecticut

HOWARD H. BAKER, JR., Tennessee
CONTENTS

Page

Opening statement by Senator Pearson 1

Text of S. 3755 2

Agency comments, Consumer Product Safety Commission 10

LIST OF WITNESSES

Ahart, Gregory J., Director, Human Resources Division, General Accounting Office; accompanied by J. E. Totten, Assistant Director; J. J.

Elgin, audit manager; and Dayna Kinnard, attorney 11

Byington, S. John, Chairman, Consumer Product Safety Commission;

accompanied by R. David Pittle, Vice Chairman; and Michael A. Brown,

General Counsel 19

Prepared statement 29

ADDITIONAL ARTICLES, LETTERS, AND STATEMENTS

"Better Enforcement of Safety Requirements Needed by the Consumer

Product Safety Commission" by the Comptroller General of the United

States (July 26, 1976), commentary 

Moss, Hon. Frank E., U.S. Senator from Utah, statement 

(m)

32

10

COMPLIANCE AND ENFORCEMENT EFFORTS OF THE

CONSUMER PRODUCT SAFETY COMMISSION

THURSDAY, SEPTEMBER 9, 1976

U.S. SENATE,

COMMITTEE ON COMMERCE,

SUBCOMMITTEE ON CONSUMER AFFAIRS,

Washington, D.C.

The subcommittee met at 10 a.m. in room 5110, Dirksen Senate

Office Building, Hon. James B. Pearson, presiding.

OPENING STATEMENT BY SENATOR PEARSON

Senator PEARSON. We'll start a little early this morning. It is doubtful whether other members of the committee will be able to attend the

hearing because of other commitments, and the long hours in the closing days of the session. I think all those who are scheduled to testify

are here, however.

Today's oversight hearing on the Consumer Product Safety Commission (CPSC) was scheduled by the chairman in response to the

request of several Senators on the Consumer Subcommittee. The purpose of the hearing this morning is to consider the issues raised in the

recent Government Accounting Office (GAO) report which indicates

there are certain deficiencies with respect to the Commission's compliance and enforcement efforts.

The Consumer Product Safety Commission has been charged

by the Congress with the extremely important mission of protecting the public against unreasonable risks of injury that are associated with consumer products. If that mission is to be successfully

carried out, it is vital that the Commission not only promulgate rules

and regulations but see that they are successfully enforced. It does

little good to promulgate these safety regulations if the standards

are not enforced.

We shall be particularly interested during the course of the hearing

this morning to learn what steps have been taken by the Commission

in response to the shortcomings in compliance and enforcement programs that were pinpointed in the GAO report.

Further, it is our hope that we can also explore the legislative steps

which may be necessary to insure an effective enforcement and compliance program by the CPSC.

As many of you know, on August 10 of this year I introduced S.

3755 with Senators Magnuson, Moss, and Weicker. That bill was

designed to strengthen the Commission's compliance and enforcement activities and I understand that both the Commission and the

GAO are prepared to comment this morning on the bill's provisions.

[The bill and agency comments follow:]

Staff members assigned to this hearing: Edward Cohen and H. Stephen Hanoway

(1)
2

94nr CONGRESS

2D SESSION S. 3755

IN THE SENATE OF THE UNITED STATES

AITOUST 10,1976

31r. PEARSON (-for himself, Mr. MAoxt•soN, Mr. Moss, and Mr. WEICKER)

introduced the following bill; which was read twice and referred to the

Committee on Commerce -

A BILL

To aid in the enforcement of Acts implemented by the Consumer

Product Safety Commission.

Be it enacted by the Senate and House of Representa2 lives of the United States of America in Congress assembled,

3 That section 5 of the Federal Hazardous Substances Act (15

4 U.S.C. 1264) is amended by adding. the following new

5 subsections:

6 " (c) Any person who is found by the Commission,

7 after written notice and an opportunity for a hearing, to

8 have violated any of the provisions of section 4 of this Act

9 or sections 403 (n) , 502 (h), and 602 (f) of the Federal

10 Food, Drug, and Cometie.Act (21 U.S.C. 343 (ii), 352 (b),

3.1 and 362 (f) ) shall be liable to the United States for a civil
3

2

penalty not to exceed $2,000 for each such violation. Each

2 distinct unit of product in violation of such provisions con3 stitutes a separate offense for such purpose except that the

4 maximum civil penalty shall not exceed $500,000 for any

5 related series of violations. The Commission shall maintain

a transcript of such hearing conducted Onsuant to this sub7 section. The amount of such civil penalty shall be determined

S and assessed by the Commission, by written notice. Any

9 civil penalty under this subsection may be compromised by

10 the Commission, and may be deducted from any sums owing

11 to the Trnited States to the person charged.

12 "((1) Any person against whom a violation is found

13. under subsection (c) may obtain review in the court of

14 appeals of the -United States for the circuit in which such

15 person resides or has his principal place of business, or in

16 the United States Court of Appeals for the District of

17 Columbia, by filing a notice of appeal in such court within

18 thirty days from the date of such assessment and by siiiiul19 sending a copy of such notice by certified mail

20 to the Cominh,sion. The Commission shall promptly file in

21 such court a certified copy of the record upon which such

92 violation was found and such penalty assessed as provided in

23 section 2112 of title 28, United States Code. The finding

24 of the Commission shall be set aside if found to be unsup-
1 ported by substantial evidence, as provided by section 706

2 (2) (E) of title 5, United States Code.

" (e) In determining the amount of such penalty, the

4 Connnission shall take into account the nature, circumstances, extent, and gravity of the violation committed and, -

6 with respect to the person found to have committed such

7 violation, the degree of culliability, and history of prior

S offenses, ability to pay, effect on ability to continue to do,

9 business, and such other matters as justice may require.

10 " (f) If any person fails to pay an assessment of a civil

11 penalty after it has become final and unappealable, or after

12 the appropriate court of appeals has entered final judgment

13 in favor of the United States, the Commission shall recover

14 the amount assessed in any court of appeals in which review

15 may be sought under subsection (d) . In such action,- the

16 validity and appropriateness of the final order imposing the

17 civil penalty shall not be subject to review.".

18 SEC. 2. (a) Section 11 of the Federal Hazardous Sub19 stances Act (15 U.S.C. 1270) is amended by adding the

20 following new subsection:

21 "'(d) The Secretary is authorized to require, by special

22 or general orders, any person to submit in writing such re23 ports and answers to questions as the Secretary reasonably

24 may prescribe for the administration and enforcement of this
5

4

,A.et;. and such submission shall be made within such reasoa2 able period and under oath or otherwise as the Secretary

3 may determine.",

4 (b) Section 4 of the Federal llazardotts Substances

5 Act (15 U.S.C. 1203) is amended by adding the following

6 new subsection:

7 "(i) The failtue to submit in writing such reports ami

8 answers to questions within the period as prescribed by tke

9 Secretary pursuant to section 11(d) of this Act."„

10 SEC. 3. (a) Section 2 (i) of the Flammable Fabrics Act,

11 (15 U.S.C. 1191 (i) ) is amended by striking "Federal

12 Trade Commission" and by inserting in lieu thereof "Con13 sumer Product Safety Commission".

14 (b) Section 5 of the Flammable Fabrics Act (15 U.S.C.

15 1194) is amended by adding the following new subsection:

16 " (e) The Commission is authorized to require, bk

17 special or general orders, any person to submit in writing such

18 reports and answers to questions as the Commission may

19 reasonably prescribe for the administration and enforcement

20 of this Act; and such submission shall be made within such

21 reasonable period and under oath or otherwise as the Corn22 mission may determine.".

23 (c) Section 7 of the Flammable Fabrics Act (15

24 U.S.C. 1196) is amended by adding after "section 3" the

23 words ", section 5 (e) ,".

78-549-76-2
5

SEC. 4. The Act to require certain safety devices on

2 household refrigerators shipped in interstate commerce. 15

3 U.S.C. 1211) is amended by4 (1) redesignating sections "3", "4", and "5"; as

5 sections "4", "5", and "6" respectively;

6 (2) striking the words "Secretary of Commerce"

in newly redesignated section 4 thereof; and

(3) inserting the following new section 3 after

9 section 2 thereof:

10 "SEC. 3. (a) Any person who is found by the Commission, after written notice and an opportunity for a hearing,

12 to have violated any of the provisions of the first section shall

13 be liable to the United States for a civil penalty not to exceed

14: $2,000 for each such violation. Each distinct unit of product

15 in violation of the first section constitutes a separate offense

16 for such purpose except that the maximum civil penalty shall

17 not exceed $500,000 for any related series of violations. The

38 Consumer Product Safety Commission shall maintain a tran19 script of such hearing conduct pursuant to this subsection.

20 The amount of such civil penalty shall be determined and

21 assessed by such Commission, by written notice. Any civil

22 penalty under this subsection may be compromised by suck

23 Commission, and may be deducted from any sums owing by.

24 the United States to the person charged.

•
7

6

7

8

9

10

11

12

14

.15

16

17

18

19

20

21

22

23

24

25 penalty after it has become final and unappealable, or after

1 "(b) Any person against whom a violation is found

2 under subsection (a) may obtain review in the court of

3 appeals of the United States for the circuit in which such

4 person resides or has his principal place of business, or in

5 the United States Court of Appeals for the District of Columbia, by filing a notice of appeal in such court within

thirty days from the date of such assessment and by simultaneously sending a copy of such notice by certified mail to

the Consumer Product Safety Commission. Such Commission shall promptly file in such court a certified copy of the

record upon which such violation was found and such penalty

assessed as provided in section 2112 of title 28, United States

Code. The finding of such Commission shall be set aside if

found to be unsupported by substantial evidence, as provided by section 706 (2) (E) of title 5, United States Code.

" (c) In determining the amount of such penalty, the

Consumer Product Safety Commission shall take into account the nature, circumstances, extent, and gravity of the

violation committed and, with respect to the person found

to have committed such violation, the degree of culpability,

any history of prior offenses, ability to pay, effect on ability

to continue to do business, and such other matters as justice

may require.

"(d) If any person fails to pay an assessment of a civil
8

1 the appropriate court of appeals has entered final judgment

2 in favor of the United States, the Consumer Product Safety

3 Commission shall recover the amount assessed in any court

4 of appeals in which review may be sought under subsection

5 (h). In such action, the validity and appropriateness of the

6 final order imposing the civil penalty shall not be subject to

7 review.".

8 SEC. 5. Section 30 (b) of the Consumer Product Safety

9 Act (15 U.S.C. 2079 (b) ) is amended by adding the words

10 "as amended," after the words "Federal Trade Commission

11 Act,".

12 SEC. 6. Section 4(g) (I) of the Consumer Product

13 Safety Act (15 U.S.C. 2053 (g) (1) ) is amended by add14 ing after "a Director of Epidemiology", the words

15 Director of Compliance".

16 SEC. 7. Section 2(q) (1) of the Federal Hazardous

17 Substances Act (15 U.S.C. 1261 (q) (1) ) is amended by

18 striking out "or" at the end of clause (A) thereof, by strik19 ing out the period at the end thereof, and inserting in lieu

20 thereof the following: "-; (C) (i) any paint (other than

21 artists paint and related materials) or other similar surface22 coating material intended or packaged in a form suitable

23 for use in or around the household, (ii) any toy or other

24 article intended for use by children, or (iii) any article of

25 furniture intended or packaged in a form suitable for use in
9

8

1 or around the household, that is shipped in interstate coin2 merce after June 22, 1977, and which contains (in the

3 case of any product enumerated in subclause (i) ) or which

4 bears any paint or other similar surface-coating material

5 containing (in the case of any product enumerated in sub6 clause (ii) or (iii) ) lead compounds of which the lead

7 content (calculated as the metal) is in excess of the level

8 expressed as a percentage to lie determined 'safe' by the

9 Consumer Product Safety Commission under proceedings

10 conducted in accordance with the provisions of the Lead11 Based Paint Poisoning Prevention Act (42 -U.S.C. 4801

12 et seq.) as amended by the National Consumer Health

13 Information and of the total weight of the contained solids

14 or dried paint film: Provided, That the Consumer Product

15 Safety Commission, by regulation in accordance with section

16 553 of title 5, United States Code (notwithstanding the

17 provisions of subsection 2 (q) (2) ) , on its own initiative

18 or upon petition of any interested person, may exempt from

19 this clause any article declared a banned hazardous substance

20 thereby upon a finding that such exemption would be con21 with protection of the public health and safety.

22 Exemptions already proposed pursuant to clause (B) of

23 this paragraph as of the date of enactment of this amend24 merit may be made final by regulation in accordance with

25 this clause.".
10

U.S. CONSUMER PRODUCT SAFETY COMMISSION,

Washington, D.C., August 30, 1976.

Hon. JAMES B. PEARSON,

Member, U.S. Senate,

Washington, D.C.

DEAR SENATOR PEARSON: As you will note in the enclosed, I will necessarily be

unable to attend the September 9 oversight hearings of the Consumer

Subcommittee.

Did want to let you know I am in full support of S. 3755, your bill which would

amend the Consumer Product Safety Act. The legislation should go a long way

toward improving the work of this agency in terms of compliance, and I am particularly pleased to note inclusion of important provisions pertaining to leadbased paint.

S. 3755 is timely and needed, and in my judgment, it merits early consideration

and passage by the Congress.

Sincerely,

BARBARA HACKMAN FRANKLIN,

Commissioner.

Senator PEARSON. The first witness this morning is Mr. Gregory

Ahart from the GAO.

Let me also indicate that Senator Moss, one who is vitally interested in the work of the Commission, has a statement which I

would like to incorporate in the record at this time.

[The statement follows]

STATEMENT OF HON. FRANK E. Moss, U.S. SENATOR FROM UTAH

It is indeed important that the Subcommittee for the Consumer convene these

hearings this morning on the compliance and enforcement program of the Consumer Product Safety Commission. The General Accounting Office, in preparing

its report entitled "Better Enforcement of Safety Requirements Needed by the

Consumer Product Safety Commission," has pin-pointed what appear to be

serious deficiencies in the Commission's regulatory program. We have accomplished little if we create a federal agency to promulgate mandatory safety

standards and then fail to provide an effective mechanism to insure compliance

with those standards.

The GAO report concluded that the deficiencies in the Commission's compliance

and enforcement program were due to management problems and in some cases,

inadequate statutory authority. With respect to the internal management

problems, I am pleased to note that the Commission has begun to take several

important steps designed to expedite the processing of cases and to utilize Commission resources more efficiently. This hearing will help to crystalize the additional steps the Commission is taking to modify its internal procedures to

facilitate a more effective compliance and enforcement program. I would urge

the Commission to carefully review the specific GAO recommendations and to

make whatever additional modifications as may be necessary.

With respect to the inadequate statutory authority, I am pleased to co-sponsor

along with Senator Pearson, Chairman Magnuson and Senator Weicker, S. 3755,

a bill to aid in the enforcement of Acts implemented by the Consumer Product

Safety Commission. This legislation is a direct response to the GAO recommendations and would provide for civil sanction authority under the Federal Hazardous

Substances Act, the Refrigerator Safety Act, and the Flammable Fabrics Act.

Additionally, it would authorize the Commission, under the Federal Hazardous

Substances Act and the Flammable Fabrics Act, to require by special or general

orders, any person to submit in writing such reports and answers to questions as

the Commission may reasonably prescribe.

The former amendments will provide the Commission with greater flexibility

in bringing enforcement actions. The Commission's hands are tied if its only

enforcement tool is criminal sanction authority. The latter provisions will,

among other things, enable the Commission to identify manufacturers, distributors, importers or retailers who are engaged in the sale and distribution of

consumer products which may be subject to safety standards or product recalls.

It is modeled after a similar provision in the Consumer Product Safety Act.
11

I commend the ranking minority member of the Commerce Committee, Senator

Pearson, for convening these hearings this morning, and I am hopeful that the

Committee and Congress will approve S. 3755 by the end of this year.

Senator PEARSON. Mr. Ahart, would you identify for the record the

lady and the gentlemen that are with you at the table? We have your

statement, and I looked over it very quickly earlier this morning.

Please proceed with your introductions and with your statement.

STATEMENT OF GREGORY J. AHART, DIRECTOR, HUMAN RESOURCES DIVISION, GENERAL ACCOUNTING OFFICE; ACCOMPANIED BY J. E. TOTTEN, ASSISTANT DIRECTOR; J. J. EGLIN,

AUDIT MANAGER; AND DAYNA KINNARD, ATTORNEY

Mr. AHART. Thank you, Mr. Chairman.

At the table with me this morning is Mr. J. J. Eglin on my left who

is the Audit Manager; Mr. J. E. Totten, the Assistant Director of the

Human Resources Division; and Ms. Dayna Kinnard from the Office

of the General Counsel.

I will try to summarize the statement as briefly as I can, Mr.

Chairman.

Senator PEARSON. Well, you can read it if you want to, or you can

summarize it. So often people who summarize statements take longer

than they do when they actually read them. At least that's been my

custom when I testify.

Mr. AHART. We are pleased to be here today to discuss our report

on the CPSC's compliance and enforcement activities.

Our review was directed at determining whether the Commission's

efforts insured that industry complied with safety requirements,

products not complying with safety requirements were removed from

the market, and penalties were imposed against those violating safety

requirements or cases were referred to the Department of Justice for

prosecution. We made our review at Commission headquarters in

Washington, ,D.C., and Bethesda, Md., and at its field offices in

Atlanta, Cleveland, and Seattle.

The Commission was created in 1972 to protect the public against

unreasonable risks of injury associated with consumer products. The

Commission (1) issues safety requirements under the five laws it

administers to protect consumers from hazardous products and (2)

inspects manufacturers, distributors, and retailers for adherence to

those requirements. Each of the five laws provides the Commission

several tools to enforce compliance with its safety requirements, such

as seizures of products, injunctions, cease and desist orders, and civil

and criminal penalties. -

The largest Commission function (in terms of staff and financial

resources) is compliance and enforcement, which includes inspecting

manufacturers, importers, distributors, and retailers; collecting and

testing product samples; and applying the administrative and legal

remedies necessary to enforce compliance with safety requirements.

Compliance and enforcement is a headquarters' controlled function

with considerable participation by the area offices. The Bureau of

Compliance prepares compliance programs—each directing Commission compliance efforts at a specific consumer product hazard—
12

that contain the general operating instructions the area offices are

to use to insure compliance. The Bureau also provides compliance

and enforcement direction and support to the area offices; develops

compliance policy, guidelines, program and enforcement strategies;

and reviews area office recommendations for legal action against

those who violate safety requirements.

Commission policy is to achieve compliance in a swift, vigorous

manner by enforcing all safety requirements and using appropriate

administrative and legal remedies against violators. This policy is to motivate manufacturers, importers, distributors, and retailers to

comply with safety regulations.

The Commission has several tools to insure that products which

are identified through compliance inspections and sample tests as

not meeting safety requirements, are promptly removed from the

market, distribution chain, and consumers, when appropriate. The

Commission can use injunctions and cease and desist orders to prevent

the continued manufacture, distribution, and sale of products and it

can seize violative products being offered for sale. Under ' certain

laws it administers, the Commission can require the repurchase of

products violating safety requirements.

Senator PEARSON. Let me interrupt you there. If the Commission

wants a cease and desist order or injunction, do they always go through the Justice Department or do they have any powers to proceed in their own right and seek injunctions or cease and desist

orders?

Mr. AHART. I think I'll ask Ms. Kinnard to respond to that,

Mr. Chairman.

Ms. KINNARD. To the best of my knowledge, it's done entirely

through the Justice Department.

Senator PEARSON. They always have to go through the Justice

Department? Is that your understanding?

Ms. KINNARD. I believe so.

Senator PEARSON. We'll ask the Commission, too, when they come forward.

Mr. AHART. The Bureau of Compliance plans most of its compliance

efforts by product category (e.g., toys, mattresses, and baby cribs).

It issues compliance programs to aid the area offices in inspecting

manufacturers, distributors, and retailers. However, the Bureau has

no written policy or guidance for preparing compliance programs.

As of June 30, 1975, the Commission had safety requirements covering about 70 products and product categories. The Commission conducted compliance activity in 8 product categories during fiscal

years 1974 and 1975, and 8 compliance programs in fiscal year 1976.

We reviewed the Commission compliance activities for four product categories—aerosol sprays containing vinyl chloride, toys, aspirin products, and mattresses. We selected these categories because they (1) represented four significant categories from the standpoint of product hazards, and (2) were categories to which the Commission devoted considerable resources.

We found that the Commission has not been timely and systematic in assuring industry compliance with safety requirements. Some haz- ardous products remained available for consumer purchase. We found that:
13

Not all compliance activity was planned to insure manufacturers,

importers, and packagers were identified and notified of safety

requirements.

Followup inspections did not verify industry's compliance with

safety requirements after hazardous products were found.

Compliance actions for toys were limited by court orders because

safety requirements did not adequately define the hazards and the

Commission had not issued toy test procedures.

The failure to promptly prepare an environmental impact statement

required by law contributed to ineffective enforcement of the ban of

aerosol products containing vinyl chloride.

Compliance actions were not evaluated to determine their

effectiveness.

We recommended that the Commission formalize its compliance

procedures to insure that its compliance activity is adequately planned,

implemented, and evaluated. We also recommended that the Commission promptly issue toy safety requirements that adequately define

the hazards associated with toys and toy test procedures.

Senator PEARSON. Let me stop you there. You have outlined about

four or five omissions that the GAO found. Why did they occur?

Just because they don't have a formalized procedure or because, in

the case of toys, they just didn't promptly move with the safety

requirements?

Mr. AHART. As I understand the situation with respect to toys,

Mr. Chairman, it's a difficult definitional problem. There are so many

toys on the market and they can be hazards in quite a number of ways.

Senator PEARSON. You're saying the complexity of the problem

had a great deal to do with it?

Mr. AHART. The complexity of the problem had quite a bit to do

with it. In our judgment, the Commission could have done more

than it did and moved faster on the problem, and they are moving

faster now and trying to get better definitions of the hazards and the

safety requirements for the various classes of toys which are on the

market.

Senator PEARSON. Now with respect to the other items, is it just

the absence of a mechanism or a policy, a procedural concept that

was not implemented and enforced here?

Mr. AHART. I think the difficulty the Commission faces in many of

these areas—the first one, for example—is the problem of identifying the manufacturers and getting notification to them of the safety

requirements because of .the large number of products over which

they have jurisdiction. This is a very difficult one. The manufacturers

are not required to register -with the Commission so they don't have a

list that's put together in that way. They must rely on such sources as

Dorm and Bradstreet lists of manufacturers of various types, trade

association lists, other kinds of directories to put together lists to

identify manufacturers that are within the Commission's jurisdiction.

So I think it's a combination of the complexities, the practical

problems involved in each of these areas, plus, in our judgment, a

failure to move quite as aggressively in some of these areas as the

Commission should.

Senator PEARSON. Please continue.

78-549-7 6-3
14

Mr. AHART. The Consumer Product Safety Act provides for the

Commission to initiate, prosecute, defend, or appeal any court action

in the name of the Commission to enforce the laws subject to its

jurisdiction, through its own legal representatives with the concurrence

of the Attorney General or through the Attorney General.

The Commission's enforcement policy is to seek civil and criminal

penalties against violators and to use every appropriate remedy available to insure compliance.

Whereas product seizures and injunctions are legal actions the

Commission can use to remove hazardous products from the market,

civil and criminal penalties are administrative and legal remedies

directed at the people and firms violating safety requirements. Each of

the five laws the Commission administers provides criminal penalties.

These penalties vary under each law. The Commission can also impose

or seek (through Justice) civil penalties under two laws it administers—

the Consumer Product Safety Act and the Flammable Fabrics Act.

Although Commission policy is to seek prosecution of all violators,

adequate procedures to implement this policy have not been issued.

Compliance policy and procedures do not clearly define the conditions

for referring a criminal case to Justice for prosecution. As a result, area

offices and Bureau of Compliance staffs prepare many cases that are

not approved by the Commissioners for referral or are not accepted by

Justice for criminal prosecution.

During the 25-month period May 1973 through June 1975, 159

cases were forwarded to the Commissioners for referral to Justice or

for other action. Of these, 28 cases were approved for referral to

Justice, 52 were approved for other action (e.g., cease and desist order

or notice of enforcement), 71 were closed without action, and 8 were

awaiting a final Commission decision. In accordance with Commission

policy, each case forwarded to the Commissioners was processed

through the entire case-processing cycle, even when the area office,

Bureau of Compliance, and/or Office of General Counsel believed it

should have been terminated.

As of August 1976, the Commission had referred 26 of the 28 cases

to Justice for criminal prosecution, and closed the other two cases

after reconsidering them. Justice declined to prosecute 17 of these

because (1) too much time had elapsed since the violation occurred,

(2) the violations were de minimis—cases with little prosecution

potential, or (3) the violations were promptly corrected. Of the

remaining nine cases, four were pending at Justice and five had been

filed in Federal court. In each case Justice filed, the defendant pleaded

guilty.

The Commission has issued several directives to assist area officer

staffs (1) perform compliance inspection, (2) collect product samples,

and (3) make legal recommendations to the Commissioners when

violations are identified. However, these directives do not set forth

criteria for determining violations of the various laws and regulations

or the legal documentation needed to support such violations. Also,

there are no formal procedures (1) to guide the Bureau of Compliance

and the Office of General Counsel in preparing cases for the Commission's consideration and approval, or (2) that incorporate Justice's

criteria for accepting criminal cases for prosecution. The directives

state the Commissioners make all decisions to prosecute or close civil

and criminal cases.
15

Because the Commissioners have not delegated responsibility for

closing cases, certain criminal cases with little or no prosecution

potential were initiated in the area offices, routed through the Bureau

and General Counsel for review and further development, and finally

closed by the Commissioners.

Bureau officials told us that they plan to ask the Commissioners to

delegate authority to close cases for de minimis violations to reduce

the work on cases that are likely to be closed. As of August 1976, the

Bureau had not asked for this authority.

We recommended that the Commission specify the criteria the

Commissioners use to approve a case for referral to Justice and

develop procedures for implementing the criteria. We also recommended that the Commission delegate authority to the staff for

determining which cases should be developed and submitted to the

Commissioners recommending referral to Justice or other action.

Commission procedures provided for the area offices to initiate

cases and forward them to the Bureau of Compliance and Office of

General Counsel for review and further development before being

submitted to the Commissioners. These procedures did not provide

guidelines and milestones for timely case development and review.

The Commission did not know the total number of cases the area

offices forwarded to headquarters during the period May 1973 through

June 1975, because it did not maintain a case log until May 1974.

Therefore, we went to three area offices—Atlanta, Cleveland, and

Seattle—to find out. The three offices forwarded 71 cases-22 had

been sent to the Commissioners by June 30, 1975, and the remaining

49 were in process at headquarters.

The Commission has not been timely in preparing criminal cases,

forwarding them to the Commissioners, and referring them to Justice

for prosecution. The 49 cases were in process an average of 387 days

from the date the inspector identified the violation to June 30, 1975.

The processing time for the 49 cases ranged from 174 to 777 days.

The 22 cases forwarded to the Commissioners averaged 413 days

from the date of inspection to the date the Commissioners approved

the case for referral to Justice for prosecution or closed the case.

The Commission Chairman stated that the Commission's time to

process a case was excessive and that this time frame was not

acceptable for efficient enforcement of safety requirements. The

Commission has taken several actions to reduce its case processing

time. These actions have reduced the time to process cases in the

Bureau of Compliance, but the time to process a case in the area

offices has increased. -

We recommended that the Commission establish procedures for the

staff's use in processing cases for prosecution. These procedures should

contain the case characteristics, legal remedies available, case processing milestones, and case monitoring guidelines which the area

offices and headquarters can use to develop cases which meet the

criteria under which the Commissioners would consider referring the

case to Justice.

Most of the cases which the Commissioners closed without action

were the same types of cases the Department of Justice has declined

to prosecute because many of them were for de minimis violations

or for violations promptly corrected after they were brought to the

attention of the manufacturer, distributor, or retailer.
16

Because of its difficulties in getting Justice to prosecute some eases—

mostly Federal Hazardous Substances Act and Poison Prevention

Packaging Act cases—the Commission requested the Congress to

give it the authority to prosecute its own criminal cases. The Commission was not given this authority. We believe that another alternative would be the authority to assess civil money penalties for certain

violations of safety requirements under these two laws.

The Commission's General Counsel agreed that civil money

penalties could be a helpful enforcement tool and believes that

such penalties would be beneficial.

We believe that the Commission's enforcement of safety requirements issued under the Federal Hazardous Substances Act and the

Poison Prevention Packaging Act could be strengthened if it had

authority to impose civil money penalties for violations against

these two laws.

We recommend that the Congress amend the Federal Hazardous

Substances Act to provide the Commission the authority to assess

civil money penalties for violations of safety requirements under that

law and the Poison Prevention Packaging Act. Poison Prevention

Packaging Act violations are subject to penalties under the Federal

Hazardous Substances Act.

On August 10, 1976, as you mentioned, S. 3755 was introduced

in the Senate. Section 1 of this bill would amend the Federal Hazardous

Substances Act along the lines we recommended and provide the

Commission the authority to impose civil money penalties for certain

violations to that law and the Poison Prevention Packaging Act.

We believe that this authority would strengthen the Commission's

enforcement of safety requirements issued under these two laws.

Mr. Chairman, this concludes our statement. We shall be happy

answer any questions that you might have.

Senator PEARSON. Yes, we have several we'd like to go over with

you.

First of all, it is my understanding that when the GAO conducts

an agency audit the agency is given an opportunity to comment on

the report when it is in the draft stage. Did the GAO give the Commission an opportunity to comment on this report?

Mr. AHART. We have had some difficulty with the Commission in

this regard. I think we have resolved it now, or hopefully we have.

We do follow the policy, as you stated, of offering the agency the

opportunity to comment on our draft reports and did so with the

Commission. However, the Commission had a policy which contradicts

one of our policies. Under the Freedom of Information Act and their

overall philosophy, for a time they had held a very open kind of

Commission and they felt they could not accept a draft of our report

without making it public. And under our criteria we do not like to

see our reports go out publicly until we have had the report in final

form. For some period of time now we have not made them available

because the Commission could not assure us that they would remain

outside the public domain.

Senator PEARSON. How have you resolved that with the

Commission?

Mr. AHART. I understand under the leadership of the new chairman,

that at least it's his view after his discussion with the General Counsel
17

that they will be able to accept our draft reports under our conditions

in the future and with that assurance we will start again to give them

the opportunity to comment on draft reports.

Senator PEARSON. The GAO reported that the largest Commission

function in terms of staff and money committed is compliance and

enforcement. Is there any reason to believe that the Commission has

failed to dedicate sufficient resources to the compliance and enforcement effort?

Mr. AHART. Well, I think it's a question in our minds as to whether

they have been as effectively utilized, Mr. Chairman. I think it's

a matter of judgment as to how much resources should it deserve. I

think the Commission needs to be selective in its enforcement and

compliance activities and it certainly cannot cover the total universe

on a 100-percent basis. So there has to be a lot of judgment and I'm

not sure we are the people to make that judgment as to what resources,

what kind of coverage the Federal Government should give to the

vast universe.

Senator PEARSON. So when your report specified certain shortcomings or omissions, you didn't trace them back to manpower or

money, did you?

Mr. AHART. No. We were talking about the more effective utilization of resources that are already there as opposed to any increase in

resources.

Senator PEARSON. In your statement you note that the Commission's Bureau of Compliance had no written policy or guidance

for preparing compliance programs to aid the area offices in inspecting

the manufacturers, distributors, and retailers. Is a written policy

absolutely necessary? While it promotes a sense of certainty, doesn't

it take away something in the flexibility that's required?

Mr. AHART. Well, I think our comment 

Senator PEARSON. How much importance do you place on a written

policy and written guidelines?

Mr. AHART. Well, our comment there, Mr. Chairman, is related

not to the guidance they give to the field because the compliance program itself provides some guidance to the field on that. This is the

guidance on the preparation of the compliance programs in and of

themselves. It does provide guidance to the area offices with respect

to coverage and what techniques they ought to use.

Senator PEARSON. You also noted the fact that the Commission

had not been timely and systematic in assuring industry compliance

with safety requirements. Is part of that because the Commission

administers five different laws?

Mr. AHART. It might be a factor. Mr. Eglin, would you care to-comment on this as to whether this might be apart of the problem?

Mr. EGLIN. I don't believe that's the problem as much as when

they identify a product or category in which to verify compliance.

For example,

i

the problem is in attempting to identify which manufacturer s manufacturing the product, who the distributors and

retailers are, selecting firms systematically for inspection, and then

following up once they have identified a potential violation.

Senator PEARSON. Would it be your recommendation that we repeal

the Flammable Fabrics Act and the Refrigerator Safety Act and brmg

them all under the Consumer Product Act?
18

Mr. AHART. I don't think we've got any particular thoughts on

that, Mr. Chairman, The Consumer Product Safety Act itself is very

broad and does provide quite a range of enforcement tools. I certainly

haven't studied it to the extent to permit an opinion as to whether

you could do just as good a job under that act as under the specific

pieces of legislation. It's possible you could do so.

Senator PEARSON. With respect to the motivational concept, you

agree with that, do you not?

Mr. AHART. I think probably it's a very practical approach to the

problem because of the large universe which I have talked about.

Unless you can motivate manufacturers to voluntarily comply with

these, there's no way we could devote the resources to it to inspect

them all, to do a 100-percent compliance and enforcement function.

So I think the enforcement strategy and compliance strategy needs

to be one which motivates people that are subject to the law.

Senator PEARSON. That requires prompt action and I think according to your report, over a 2-year period, it took the Commission more

than a year, on an average, to process a case to the point where it

was either referred to the Justice Department or closed out. Does the

Commission disagree with that time period and how do they justify

that length of time?

Mr. AHART. I think the Commission certainly agrees that that time

period is excessive and it's inconsistent with the concept of the

voluntary motivation to comply. Certainly if it takes that long and

gets so old that Justice won't prosecute, you don't have much of a

deterrent or a motivational factor. So the Commission does agree and

I think they have done things to step up their case processing. I think

they could do more, as I have mentioned in my statement, by being

more selective at the area office level and the Bureau of Compliance

level as to which cases they make a full investigation of and a full case

development by delegating some authority to these levels of the

organization below the Commission itself to make decisions on which

ones are worthy of the investment of resources and the time it takes

to do the case development.

Senator PEARSON. Summarize, if you will, what recommendations

you have on the legislation, S. 3755, that was introduced in response

to your report.

Mr. AHART. Well, the legislation, as I indicated at the end of my

statement, is responsive to the recommendations we made to the

Congress in our report.

Senator PEARSON. How about the civil penalties?

Mr. AHART. The civil penalties provisions certainly are responsive.

We did not recommend civil penalties under all the acts that the bill

would put them in, but we think that would be a good idea and we

have no objection to it. So all in all, we favor the bill on the basis of

our experience in looking at the Commission's endeavors and its range

of enforcement authorities.

Senator PEARSON. Thank you very much for your contribution to

this hearing and for setting the groundwork for receiving the Commission's testimony.

Mr. AHART. Thank you, Mr. Chairman.

Senator PEARSON. Thank you all very much.
19

Mr. Byington, I think you're accompanied this morning by your

Vice Chairman and your General Counsel. Would you identify them

for the record and then proceed as you see fit?

STATEMENT OF S. JOHN BYINGTON, CHAIRMAN, CONSUMER PRODUCT SAFETY COMMISSION, WASHINGTON, D.C.; ACCOMPANIED BY

R. DAVID PITTLE, VICE CHAIRMAN; AND MICHAEL A. BROWN,

GENERAL COUNSEL

Mr. BYINGTON. Thank you, Mr. Chairman

On my right is Commissioner David Pittle, who is Vice Chairman

of the Commission; and on my left is Michael Brown, who is General

Counsel of the Commission.

I would be pleased to summarize my statement in the interest of

time, and we have already submitted, as indicated by GAO, our

comments that were not received by GAO prior to the publication of

the report. We have submitted for the record our comments on the

report in its entirety, and I think that staff has received this morning

a number of copies of those comments.

Senator PEARSON. It's been received and it will be made a part of

the record.'

Mr. BYINGTON. Thank you, Mr. Chairman.

In summary, our statement says that we are very pleased to receive

GAO's report in light of its coming at a very helpful time, as we are

presently reviewing and have been for the past couple months the

overall operations of the Commission.

Senator PEARSON. If there are any other audits of your agency in

the future, have you resolved with GAO whether you can comment

on their draft report without violation of your concept of open

procedures?

Mr. BYINGTON. I think it's fair to say, Mr. Chairman, that we will

be able to work out the mechanisms.

Senator PEARSON. The new mode of openess brought about by the

"Sunshine Acts" are all well and good, but within their implementation

there are legitimate exceptions. It seems to me that this is one of them,

I'm glad you resolved it, and I support you.

Mr. BYINGTON. Thank you very much. The report, we think, deals

with two basic areas. One is the statutory needs and deficiencies,

which you have addressed in S. 3755; and the second area is the management needs and deficiencies, which we have been addressing. Our

reorganization and our fiscal year 1977 operating plan are aimed

specifically at solving many of the problems that are addressed in the

GAO report. In our response to the report we have attempted to

point out and explain in greater detail what the agency is doing and

the programs we have underway.

Specifically, in terms of some of the recommendations that GAO

has made, I'd be happy to cite a couple of examples. They recommended we formalize our complaint procedures to insure that our

3ompliance activity is adequately planned, implemented, and evaluated, and that is being done right now. We already have a number of

See p. 32.
20

procedures in draft stage, and we have already implemented, through

the development of what we call a product profile, a mechanism for

involving compliance strategies in the regulatory development process. Thus, when the Commission considers its various options and the

potential remedial fixes it has available to it, it also will know what

some of the potential opportunities are for compliance and enforcement, and what that means in terms of strategy, allocation of resources, and so forth. -

GAO also raised a very significant question in terms of time in the

case processing cycle and made recommendations about delegation.

We are in the process right now of developing some delegation authority to the field for early case closings. We think that we can deal

with that problem in short order and thereby substantially reduce

the time element involved. This would eliminate one of -the problems

that was raised by GAO—that only the Commission had the authority

to make a decision to close or prosecute a civil or criminal case.

Early in the history of this Commission that approach had significant merit, as the agency- began to develop a case history. It would

therefore be reasonable for the Commission to want that kind of

control. But now that we have been operational for 3 years and some

case history and experience have been built up, we believe that this

is a legitimate time to begin to delegate down into the organization,

and such steps are currently underway.

•Senator PEARSON. Do you agree that the lack of formalized procedures is one of the reasons why there hasn't been compliance?

Mr. BYINGTON. Yes and no. I think that if you are talking in terms

of procedural policies, we have needed some better, more clearly defined policies for the headquarters and area office staffs to follow.

But if we are talking in terms of a formal, cookbook type of thing,

then no, because that would reduce all of the flexibility regarding

specific details and guidelines, which should be left to the investigators

and the compliance people who are building the cases.

Senator PEARSON. Another major complaint of the GAO was that

you have not been able to identify the firms that are subject to your

jurisdiction. Have you been able to notify them of the requirements?

Have you been able to inspect on a selective basis?

Mr. BYINGTON. Again, Mr. Chairman, that is a yes and no answer.

It depends upon the industry and the product category that we are

talking about. That is why we are very much in favor of the registration provision under S. 3755 because there are few industries consisting

of only several, easily identified firms—such as the bicycle industry,

in which there are seven domestic manufacturers.

Senator PEARSON. How do you identify them now?

Mr. BYINGTON. Through the telephone book, through trade directories, through Dunn and Bradstreet, through whatever other mechanisms we have available to us. But where you have a reasonably

concentrated industry, that doesn't become too significant a problem.

But in many industries, and particularly the type of industries we are

dealing with, that is not the case. We cover a broad spectrum of other

industries, such as the toy industry under the Hazardous Substances

Act, and the mattress industry under the Flammable Fabrics Act.

Many of these consist of extremely small, geographically diverse

firms which do not keep systematic records, and it therefore becomes

very, very difficult to do a planned program in these areas.
21

Senator PEARSON. Although I can appreciate the complexity, I'm

staggered by the idea that down there at the agency there are a lot

of people thumbing through the yellow pages. But after you have

identified them, how do you notify them as to their requirements?

Mr. BYINGTON. Right now, we have a program in which we use

direct mail, and we use seminars. Our area offices are conducting a

whole series of seminars this fall.

Senator PEARSON. What kind of attendance do you have for those

seminars?

Mr. BYINGTON. Mixed.

Senator PEARSON. It would depend upon how good your enforcement is in the area, I suspect.

Mr. BYINGTON. It would depend upon how good the enforcement

is and it also depends on whether or not you can get that particular

businessman's attention. Some of these are very small companies.

Some only do a few thousand dollars worth of business a year in a

particular product, and the question is whether or not the businessman

is willing to take a half an hour or an hour or 2 hours to find out

about our requirements.

We have another problem in the area of retailers. I personally do

not think that most retailers in the country understand that our laws

and regulations apply to them, and so we have made a major effort

in this area. I have met with the American Retail Association, and I

went to St. Louis to speak to all the State executives of all the State

retail associations. We have offered to cooperate with them in putting

some written material together for them to disseminate to their members so they can understand that the CPSC affects retailers as well

as manufacturers.

So we are dealing with a monumental number of small and medium

sized organizations—involving manufacturing, wholesaling, custom

and bulk packaging, and retailing—and CPSC is relatively new. It

does become a problem of priorities because, as you know, a businessman has more than just this Commission to be concerned about.

They have many other Federal agencies to deal with as well.

Senator PEARSON. What about inspections?

Mr. BYINGTON. We obviously do not have the type and amount of

manpower necessary to go out and inspect every facility in all the

regulated areas, but in terms of number of inspections, in fiscal year

1976 alone, we did about 5,200 inspections.

Senator PEARSON. I understand you have 126 inspectors. Is that

the correct number?

Mr. BYINGTON. That is approximately correct. It depends on how we

utilize our forces at any given time. Also, through a surveillance

program we have used volunteer citizens to canvass the marketplace

and look for problems, and our inspectors try to follow up.

Senator PEARSON. Tell me how that works.

Mr. BYINGTON. We get individual citizens through organized

groups. For example, in the bicycle area, a number of the bicycle clubs

volunteered to cooperate with us by taking a look at what was being

sold in the bicycle shops after the regulations went into effect, and

helping us identify where our problems might be.

Senator FORD. Wouldn't that be a form of harassment? You just

give people the authority to go and do it, report to you and you will

follow up on it?
22

Mr. BYINGTON. We follow up on it, but it should not involve any

type of harassment. That is why we call it a surveillance rather than

an inspection or investigation.

Senator PEARSON. What's the difference between surveillance and

harassment?

Mr. BYINGTON. I would consider harassment to involve some kind

of an imposition or impact on the people involved, whereas surveillance simply means looking at the landscape.

Senator PEARSON. Just looking at the landscape?

Mr. BYINGTON. Yes, sir.

Senator PEARSON. How many inspections have you been able to do?

Mr. BYINGTON. In 1975 we did about 6,300, and in 1976 we did 5,200.

As we regulate additional categories our inspection efforts will emphasize those products. For example, we expect to finalize our matchbook standard and our architectural glazing standard shortly, and

we are moving in other areas as well. Our operating plan and our 1978

budget are very much based on what we refer to as self-initiated

compliance. By this, we mean firms

'

on their own, initiating compliance

with the regulations we issue. As long as we continue to get a high

degree of self-initiated compliance, then we can probably continue

to operate with the forces that we presently have, or incremental

increases. But if that should not continue to be the case, then that

may become a major problem which we will have to address.

Senator PEARSON. The GAO recommended that in addition to following up on your rules and regulations you should issue appropriate

requirements and safety procedures that come out of the court cases

you have. Now has that been done? Do you have a system for that?

Mr. BYINGTON. We are doing that. They are correct that it has

not been done systematically in the past.

Senator PEARSON. You say systematically. What do you mean

by systematically?

Mr. BYINGTON. If you have a system, that means that if we win

a series of cases and a certain amount of case law is developed, there

would automatically be some people or procedure in place to issue

relevant guidelines or amended regulations. In the past that has not

existed—it has been done on an ad hoc basis.

Senator PEARSON. Let's go back to the question I originally

asked. Under the Consumer Product Safety Act you have the right

to initiate legal proceedings on your own. Is that right?

MT. BYINGTON. Yes, sir.

Senator PEARSON. Now with all the other acts under your juriskliction you go through the Justice Department?

Mr. BYINGTON. I would like to clarify that for a moment, because

that has been discussed with GAO as well. We do have the authority

to seek cease and desist orders on our own. We have to go through

Justice for injunctions, except under the new amendment passed

this year giving us authority to seek injunctions on our own under

section 15 of the CPS Act. As far as seizures are concerned, we have to

go through Justice; and for all criminal actions, we have to go through

Justice. We have civil authority on our own, but only after Justice

has had 45 days to determine whether or not they want to take the

case; since we have had that authority, the Justice Department has

been much more interested in our cases.
23

Senator PEARSON. You don't disagree with their report that

during a 2-year period it took a year for you to process a case and

decide whether it ought to be sent to Justice or dismissed or 

Mr. BYINGTON. Senator, I do not disagree with their statistics

.at all. In fact, in many cases it took longer than a year. One of the

major things we have been attempting to do in the last couple months

is to address the causes of that problem, and I think there were two

or three that were partially addressed and that we have been able to

deal with immediately. One of them is the delegation of authority, and

we have made changes in that area. In fact, under the Hazardous

:Substances Act and the Poison Prevention Packaging Act, the cases

:are now being sent directly from the area offices to the Commission.

That has eliminated a large number of the days that were previously

involved in Bureau of Compliance and Office of the General Counsel.

Senator PEARSON. So you could develop criteria on how to handel

these cases?

Mr. BYINGTON. Yes, sir. My goal, as I have stated at a number

,of senior staff meetings, has been that I would like to see our cases

.get to the Justice Department in six months.

Senator PEARSON. It takes a while in the Justice Department, too.

Mr. BYINGTON. Yes, sir. It is going to take a while to bring them to

trial. Also there are going to be cases of such magnitude that we will be

unable to get to Justice in 6 months. However, even if they are of that

size and magnitude, it might be appropriate to at least begin to

involve Justice at an early stage in the process. But there are an awful

lot of cases in which a determination could be made in significantly

less than 6 months from the date the violation was determined.

One of the areas in which we are discussing possible delegation right

now is the authority, under certain provisions of the FHSA and

PPPA, to close cases at the area office level. This has been needed for

some time.

Senator FORD. Let me ask him one question if I may. Am I correct

that of 25 cases that were sent to the Justice Department, 16 were

rejected because they were too old?

Mr. BYINGTON. That is not really true, Senator. It is true that in

prior years the Justice Department has declined to file some cases

because of ave.

Senator FORD. Or it could have been that of the 16 cases, the

violation was promptly corrected by the violator it was too old, or it

was de minims. So those 16 cases out of the 25 that were submitted

some were rejected because they were too old. What was the consumers' loss by the Commission being late with the cases?

Mr. BYINGTON. Of the 28 cases that were referred to Justice before

1976,18 of them were declined by Justice.

Senator FORD. I was close then, wasn't I?

Mr. BYINGTON. Yes, but of those 18 cases, there were a number of

reasons they were not filed. Many of them involved time limits; but I

do not think it is fair to say that any one specific reason was involved

in every case—whether it was only a small violation, or whether good

faith had been shown by the respondent and he had come into compliance, or whether there was a delay in forwarding the case to Justice.

In most instances, two or three such factors were involved in Justice

not accepting it.
24

Senator FORD. But delay was a factor.

Mr. BYINGTON. Delay was a factor, and we are trying to eliminate.

that factor now. Then we will have to deal with the other factors.

Senator FORD. How much knowledge would you have of a violatorwho promptly corrected his violation? Wouldn't that mean that you could close without ever going to Justice? It appears that one of the

reasons that these cases, 18 now you say, is that the violator promptly

corrected the mistake and showed good faith and yet you sent the

case on to Justice.

• Mr. BYINGTON. One of the serious questions that we are faced with—and it is appropriate that a collegial body is making these kinds of decisions—is that actual knowledge of a violation beforehand is not necessarily a defense.

Senator FORD. But you define the offense.

• Mr. BYINGTON. Yes, sir. That is what I am saying. If we took the position that if anybody came into compliance after they were dis- covered, we would not prosecute, then I think you would find your- self in a situation where industry would very likely not come into. compliance until after one of our people had discovered a problem. Thus, the fact that the person immediately comes into compliance is not necessarily a defense in and of itself, justifying not requesting Justice to prosecute. It is, of course, one of the factors that has to. be taken into consideration. It is also one of the reasons we are very much in favor of having civil penalties under the FFA and HSA, because Justice has been very reluctant to bring criminal action in a

small case where you have subsequent compliance.

Senator FORD. I'm not a lawyer, but I have learned a new phrase since I arrived in Washington—"Everybody is entitled to one bite of the apple." I have heard all this. But it appears to me that if you find a

violation and you get cooperation and the violator does everything that's necessary to eliminate that violation, it seems to me that it's adding insult to injury to continue to send that case to Justice. If that firm changed its operations and eliminated the violation, and

you proceed to prosecute nevertheless somehow that doesn't to me breed business-government cooperation. Somehow or other, that doesn't tell me that you're going to get cooperation out of that fellow next time. He'll say, "If we violate it it doesn't make any difference whether we correct it or not; they're going to refer the case to Justice for prosecution and we'll probably go to court."

Mr. BYINGTON. I understand what you are saying, Senator, and I think that is one of the serious problems we are faced with. But I

think there are a couple of factors we have to keep in mind, and I

think Commissioner Pittle would also like to say something in this

area.

First of all, we have to consider the nature of the violation and, second, we have to consider how long the violation has been in effect, and what kind of effort has been made to communicate with the industry involved. If you are talking about a very minor violation, prosecution may not be warranted.

Senator FORD. I'm talking about why the Justice Department rejects cases and one of the factors is prompt correction of the viola- tion by the violating firm.
25

Mr. BYINGTON. This is particularly significant when it relates to a

-criminal prosecution versus- a civil prosecution. In two of our acts we

are left with only criminal prosecution authority, which is obviously

-what you are talking about, whereas if we had civil penalty authority,

the situation would be different.

Senator FORD. What I'm trying to point out here I think reflects

• a problem with all Government regulation, and that's attitude.

Sometimes I think Government inspectors sit in the motel at night

and compare how many citations they give and how many dollars they

•get under OSHA instead of trying to bring about an attitude of co-

. operation. That's what I'm trying to talk to you about here and I'm

trying to get through to you.

Mr. BYINGTON. We really agree in terms of trying to improve the

•attitude situation. It is now a matter of policy in the Commission

that when these small violations have been discovered, a letter of

advice goes to the violator informing them of it, and then there is a

-subsequent reinspection. It is only in those situations where we find

a continued violation after the first one has been discovered, a letter

of advice has gone to the respondent, and a subsequent violation has

been discovered then our attitude changes, Senator.

Senator FORD. One quick question and then I'm going to have to

go.

You stated, I believe when I Caine in, that your operating plan for

fiscal year 1977 and the budget request for fiscal 1978 is premised

,on the assumption that there will be significant self-initiated compliance by regulated firms.

MT. BYINGTON. Yes, sir.

Senator FORD. Now we're talking about attitudes. You want

.cooperation. You want them to volunteer. That's what you're talking

• about here. Yet the Commission itself—I believe it's quoted in the

GAO report—estimated noncompliance with the mattresses flammability standard at as high as 40 percent. In the so-called "cottage"

-industries where there are so many small firms, is it realistic then to

believe that there will be widespread compliance?

MT. BYINGTON. I hope SO.

Senator FORD. That's not an answer. You hope. I hope, too. I

hope we balance the budget and everybody goes back to work.

Mr. BYINGTON. Senator, when you have as many people involved

,in the mattress industry as there are, with some of them making 20

mattresses a year and others making 20 mattresses a day, you have

a different type of situation.

Senator FORD. But the fellow making 20 mattresses a year is

probably more hazardous than the fellow out here making a lot of

mattresses and trying to sell them and he's got a going concern.

Mr. BYINGTON. He's often the one in the least compliance.

Mr. PITTLE. Senator Ford, I'd like to make a comment about

your last example because I think it would be unfair to leave anybody

with the impression that a large percentage of the mattress industry

is out of compliance or that there are a lot of dangerous mattresses

being produced that are going to be lying around in somebody's

bedfrarnes. When you talk about mattress manufacturers being out

-of compliance, a lot of that is because they are not in compliance

\with certain rigorous testing procedures and not necessarily because
26

they are making highly flammable mattresses. It is my understanding

that the vast majority of the manufacturers are using materials

that are flame retardant. They have, unfortunately, through ignorance

or design, decided not to test. But, in fact, the flammability characteristics the safety feature that we're trying to require on that mattress

is there I believe.

Senator FORD. Commissioner, I always heard ignorance oi the law

is no excuse.

Mr. PITTLE. I agree with that, and we do try to prosecute for

recordkeeping violations as well as flammability violations when we

undertake compliance activities. However, it is difficult to flatly

apply that maxim to every conceivable violation of the law. Many of

our regulations certainly in the Hazardous Substances Act and the

Poison Prevention Packaging Act—have been on the books for several

years, and yet far too often, when we go in and inspect some companies,

we find that they haven't been putting their drain cleaner or whatever

their product is into a child protection cap. In many cases, the company does claim ignorance of the law, and immediately brings itself into

compliance. I think someone would be a fool not to come into compliance after an inspector came in and said you're out of compliance.

So while I'm somewhat impressed that a company makes a fast

change to bring its products into compliance, I'm not convinced that

is enough. We've got a law that says when people violate that law,

penalties may be assessed, and we may seek penalties not only to

punish a violator but to help motivate other people to make sure they

are in compliance. I think a closer look at the assessment of the

FHSA cases that were rejected in Justice in the past would reveal

them to be cases sometimes involving minor violations that the

Commission was pursuing to set an example for the industry. I do

not know how many of these were turned down because they were

not considered dramatic enough by the Justice Department. I suspect

that a lot were simply taken over from FDA by the Commission when

it came into being. So the age of them I think may have been a major

factor in a number of rejects. In future cases I think that the factor

of whether somebody quickly came into compliance or was recalcitrant is going to bear on whether or not we can get a criminal

prosecution but not a total reject.

Mr. BYINGTON. Senator, as you leave, I would like to make one other

comment in terms of the mattress industry, as an example of our

effort to try to get cooperation and educate the industry. We contacted

every manufacturer of mattresses we could find, and we held seminars

and publicized those seminars. We also sent materials through the

trade associations, and, lastly, we went to their suppliers and gave

their suppliers information and material on the law. So we are trying

to inform about their legal obligations.

Senator PEARSON. Mr. Byington, you used the term in your prepared statement that always bounces off people who are concerned

with safety. You say in your prepared statement that you plan to.

undertake construction of a cost-benefit model. I'm sure you're

not going to say a certain number of children's eyes get put out to,

measure your cost of litigation. That's not the sort of judgment

you're going to make, but I think you ought to expound on that a little.
27

bit. We're going to get a lot of questions about that as you assess the

benefits of a proposed compliance action in this safety field. I know

what you're talking about, but it's just an unfortunate use of words,.

I think, particularly in this field.

Mr. BYINGTON. I agree that the image of cost-benefit assessment is

a problem in the health and safety field, but we particularly tried to

use it as it exclusively relates to the cost of litigation. In order to usa

it here, we attempted to construct a cost-benefit model to determine

our internal cost of litigating a case as contrasted with the potential

impact of the case. In looking at the agency during the past couple

months we found that we did not have any legitimate internal cost

data. We did not know what it was costing us in terms of people,

hours, or dollars, on a case-by-case basis, and I felt that this data

was important for us to determine what kind of changes may be

necessary, and especially when it may be necessary for us to request

additional legislation or funding from the Congress.

Senator PEARSON. I understand what you're saying. It's a factor

to be considered and it's a piece of information that you ought to

have.

Mr. BYINGTON. From a management point of view.

Senator PEARSON. For budget requirements and everything else,

but that's not a dominating factor in your whole development

function.

Mr. BYINGTON. No; it is not. It is only significant in terms of an

internal budget determination.

Senator PEARSON. Commissioner Pittle, I believe you have a

statement that you want to make in relation to the legislation that

was introduced.

Mr. PITTLE. Thank you, Senator. I brought a very large statement

of two and a half pages this morning.

Senator PEARSON. Go ahead and read your statement.

Mr. PITTLE. I don't have any prepared comments with regard tc.

criticisms of the GAO report beyond what the Commission has

jointly submitted to the committee.

I would like to comment on several of the provisions of S. 3755..

Senator PEARSON. Excuse me. Mr. Chairman, are your statement

here today and the responses you made the general consensus of

opinion among all the Commission members?

Mr. BYINGTON. Yes. The actual comments that were provided

in relation to the GAO report were approved by the entire Commission and my statement was the same.

Senator PEARSON. Good.

Mr. PITTLE. My comment here is an individual one.

Regarding S. 3755, I very strongly support the bill. I think it's

an excellent one and I particularly applaud the proposed addition of

authority to the Commission to assess civil money penalties under all

acts enforced by us. As far back as March 1975, I urged in a separat&

statement regarding S. 100—the Consumer Product Safety Commission Improvements Act—to this committee that Congress grant us

civil penalty authority under the Flammable Fabrics Act. I am

delighted to see that Congress is ahead of me in suggesting this

authority for all of our acts.
28

Second, I am delighted to see that S. 3755 would give the Commission approval over the chairman's choice for Director of the Bureau

of Compliance. The Commission at present has such authority over

the attorney who occupies the Office of General Counsel. Yet, the

Bureau of Compliance is significantly larger than the General Counsel's

office and conducts activities just as important.

Finally, I'd like to express a minor misgiving about the provision

which would amend the Federal Hazardous Substances Act to provide

whatever level of lead is determined "safe" under the Lead-Based

Paint Poisoning Prevention Act will be considered the highest permissible level of lead in paint. We would propose any hazardous

substance level of lead higher than what was deemed safe under

LBPPPA could not be determined. While I support the amendment,

there's a slight technical problem in it. In our proceeding under the

LBPPPA, it may turn out that the Commission could not determine

what a "safe" level of lead in paint should be. It's possible that we

won't be able to prove what a safe level is. Now in the event that we

can't prove that under the LBPPPA, then that level automatically

goes to 0.06 percent under that act. That's the definition of what a

lead based paint would be. In contrast, under S. 3755 that question is

left unanswered. There is no resolution to that problem.

I would suggest that Congress adopt the approach that was taken

in the LBPPPA and the solution—and the one I believe Congress

intended in drafting S. 3755—would be to state that "lead-based

paint" as determined under the LBPPPA shall automatically be a

"banned hazardous substance" under the FHSA. Provision for exemptions such as artists' paints from the regulation should also be

made. Should the committee wish, I would be delighted to submit

specific language on this point.

Senator PEARSON. Thank you. We want you to do that. To be

realistic, this piece of legislation is not going to pass in this Congress:

This is September 9 and hopefully we'll adjourn in two and a half

weeks or so. But, we are serious about the legislation and the issues

presented to us by the GAO report's recommendations as well as your

own recommendations. We'd like very much to have specific language

regarding some of the points raised today. I think we will move with a

greater sense of accomplishment when we consider this bill early next

year. I think, at that time, you ought to be prepared to come forward

with some very positive procedures and policy statements regarding

the civil penalties.

Realistically, the shadow of OSHA is over the Congress. It's one

of the first, and most of the questions concern whether or not this

is another type of OSHA vehicle to bring about the cascade of complaints upon the Congress. The bill provides for the imposition of a

• civil penalty which is final unless appealed to the circuit court of

appeals. That puts a great burden upon the Commission to be fair

and reasonable. The civil penalties, I agree, are a necessary part of

this legislation. However, I think it's going to be incumbent, if

we're to be successful in moving this legislation, on the Commission

to come in with some very positive statements as to what sort of

system of penalties we should have and how we can insure reasonableness and fairness in the assessing of civil penalties in order to give

the the necessary enforcement power.
29

Mr. BYINGTON. I think that is a very fair and incumbent responsibility upon the Commission, and we will be very happy to do that.

Senator PEARSON. I hope we will get into this early next year and

that this will be one of the first pieces of legislation we will consider in

the Consumer Subcommittee and in the Committee on Commerce.

I have nothing more unless you have something. Thank you very

much.

[The statement follows:]

STATEMENT OF S. JOHN BYINGTON, CHAIRMAN, CONSUMER PRODUCT SAFETY

COMMISSION

Good morning. It is a pleasure to appear before you today to discuss the issues

raised by the Comptroller General's report on the Consumer Product Safety

Commission's compliance and enforcement activities. This hearing also provides

an opportunity to explain the Commission's recent planning initiatives in discharging all of its statutory reponsibilities, as well as enforcement activities.

At the outset I would like, on behalf of the Commission, to thank the Comptroller General and his representatives for a very detailed, thorough and helpful

report. I am sorry that the agency did not make comments at the time the GAO

report was in its draft stages. But I have with me today the Commission's response. At this time I would like to submit this document for the record. Since

our response addresses the issues raised by the GAO report, I won't go into great

detail concerning specifics. But I will be happy to answer any questions you may

have on the specifics of the report at the end of my statement.

When you review the Commission's response you will note that we do not agree

with every finding and conclusion of the GAO investigators. However, we do regard the report as an extremely useful document. The report was published on

July 26, which was a most opportune time. Immediately after I took office as

Chairman of the Commission on June 2, I established a management task force

and initiated several studies to determine where the agency had been, where it

was now, where it should be going, and how it should be getting there. The GAO

report was an excellent adjunct to our inhouse study.

One of the problems highlighted in the GAO report which also was obvious in

our internal study was the inadequate range of sanctions provided in the Federal

Hazardous Substances (FHSA) and Poison Prevention Packaging Acts (PPPA)

and the lack of an ability to identify the segments of an industry subject to

Regulation by the CPSC under these acts and the Flammable Fabrics Act (FFA).

Even though I've been on the Commission only a relatively short time, I have

seen enough to agree with the suggestion by the GAO the CPSC needs the authority to assess civil penalities. In many instances cases under the HFSA and

PPPA are brought before us and we are faced with either recommending that a

U.S. Attorney seek criminal penalties or closing the case. This "go—no go"

situation does not allow the Commission much flexibility in tailoring a sanction

to fit an offense. For example, the failure of an employee to follow an acceptable

formula can result in a violative product being marketed. If the isntance is a one

time offense, then a criminal sanction might well appear overly harsh. However,

the danger to the public from inattention and poor quality control is as real as the

danger from intentional acts. Therefore, an in between" sanction such as civil

penalties would provide the deterrent and flexibility needed to address the many

gradations of violation with which the Commission must deal on a daily basis.

The same problem exists in the administration of the Flammable Fabrics Act.

Our practical options under that act are to seek criminal penalties if a willful

violation can be established or initiate a lengthy administrative hearing leading

to the issuance of a cease and desist order. We construe the Consumer Product

Safety Act as granting to us all the authority that the Federal Trade Commission

had in administering the FFA. Further, we believe that the amendments to the

Federal Trade Commission Act, which would have been applicable to the FFA

if it were still administered by the FTC, should be available to this Commission.

Unfortunately, in the sole court case testing this belief we were not successful.

Therefore, it is arguable that we do not have the more efficient and stringent

civil penalty authority the Congress has recently given to the Federal Trade

Commission. We feel strongly this authority is a necessary addition to the possible
30

sanctions available in dealing with violations under the FFA. A clear statement

to this effect—such as the passage of S. 3755—would, in our opinion, reflect

-what the Congress originally intended to do when the FFA was transferred to

•our Commission by the Consumer Product Safety Act.

Although the GAO did not make any legislative recommendations on this

point, the GAO report also noted the difficulties which can be encountered in

attempting to determine how many firms are subject to a regulation. In some

product categories, such as bicycles, the domestic manufacturers are few in number and they have detailed records from which their distributors and retailers

can be identified. In other product categories, such as mattresses, the manufacturers are extremely small, numerous and geographically diverse, and seldom

employ sophisticated record keeping systems. Such 'cottage" industries are the

• ones which are hardest to regulate because they are not highly structured. Rarely

do their trade associations have information concerning all of the members of the

•industry or even, in some cases, the size of the industry. Accordingly, if firms

which were subject to a specific regulation by the CPSC could be required to

• identify their manufacturing, distributing or retailing facilities it would make

it feasible for the Commission to structure a valid, statistically based inspection

program. In this manner, a sampling of the industry could be inspected and valid

conclusions drawn concerning the status of compliance within that industry.

It is obvious from the exhaustive review of the activities of this• Commission

that the problems we face are not only statutory but also involve management

.functions. I have already initiated efforts aimed at resolving the management

problems.

The Ad Hoc Management Task Force mentioned earlier examined the general

areas of planning and budgeting; personnel and management information;

agency programs and the functional organization needed to meet these programs;

and communications within and without the agency.

The analysis concentrated on how to provide increased consumer protection

and involvement while at the same time reducing regulatory delay. Improved

socio-economic and environmental analysis have been stressed, along with an

effort to stimulate voluntary action within the competitive marketplace.

From an organizational point of view the Management Task Force Report

pointed out that the inherited structure was entirely too diffuse, lacked coherence

or logic, and was characterized by duplication of effort, lack of accountability,

• and an excess of informal rules of procedure. The excessive organizational spread

has nurtured additional diffusion of responsibility and fostered an inordinate

number of unnecessary positions in certain areas to the detriment of other needs.

Shortly after my joining the Commission, the Commissioners and I completed

.formulating a policy for setting priorities. With completion of the Management

Task Force Report a number of actions have already been taken to improve agency

'management and performance:

Product profiles have been developed for more than 100 products which represent possible candidates for Commission attention;

A new approach to translating agency mission into programmatic operating

terms has been taken, and a draft FY 1977 Operating Plan and FY 1978 Budget

based on that approach have been completed;

Communication between Commissioners and senior managers, both at Headquarters and in the Field, has been increased and improved; and

An improved organizational structure has been developed which includes the

reallocation of personnel and financial resources to support these new management

initiatives.

It is anticipated that, over the course of FY 1977, these initiatives will result

in a significantly more efficient and productive agency.

As stated, part of our internal review also focused on the development of

product profiles in order to identify, out of the many products within our jurisdiction, those products which present problems the Commission should address.

VsTe have already begun to profile some 100 products in seven hazard categories.

These profiles analyze the safety related problems of these products and present

proposed remedies including the possible use of mandatory and voluntary safety

standards, information and education activities, compliance and enforcement

actions, or combinations of all of these approaches. From this coordinated body

of information the Commission is in a position to identify those product areas

which need specific attention. This intensive study and analysis has enabled the

Commission to select product specific tasks and projects that should be given

priority attention during the coming fiscal year.
31

From these planning documents a programmatic F Y 77 operating plan for the

Agency was drafted. It was an ambitious task as this is the first zero-base analysis

of this type, from the ground up so to speak, that has been undertaken in the life

of this agency. After the operating plan for the coming fiscal year was drafted,

the Commission turned to the needs of the agency for FY 1978. We found that

,our indepth approach to planning for FY 1977 enhanced our ability to plan for

FY 1978.

This week we have completed and submitted to the Congress and the Office of

Management and Budget our Budget Request for FY 1978. The Commission's

overall strategy for FY 1978 is based upon the management initiatives adopted

,during the transition quarter. Basically, our FY 1978 request for $40,152,000 and

928 positions represents a tight, hold-the-line projection of FY 1977 operating

objectives, which included extensive internal reprogramming. The FY 1978

request is based on a trade-off of contract dollars for• in-house expertise, and

incorporates only minimal program increases.

We believe that such reprogrammed and additional in-house expertise will

increase consumer representation and involvement in the agency's decision

making process, as well as improve agency responsiveness to consumer requests,

complaints, petitions, etc. Also, these resources will allow the agency to improve

-substantially its strategic planning as well as its socio-economic and environmental impact analysis capability—so essential in applying the "balancing of

interests" tests inherent in consumer product safety decision making.

We have also adjusted the compliance and enforcement operations within the

agency. The immediate steps I have taken include the requirement that compliance

And enforcement input be obtained at the beginning of all action the agency

,considers. In the product profile process, compliance and enforcement comments

identify the enforcement problems which may be present in the different courses

of action possible with respect to identified products. In this manner, the final

decision as to what approach the staff recommends and/or the Commission takes

on a problem will be made with full knowledge of the enforcement resources that

must be committed. Thus, regulatory or other action will be totally planned and

the burden on compliance and enforcement resources will be understood before

regulatory decisions are made.

Further, all regulatory efforts of the agency now include plans for educating

the regulated industry, as well as consumers. The recent efforts of the agency in

the bicycle regulation are illustrative of this. Prior to the effective date of the

regulations, several meetings, seminars and other gatherings were instituted by

-the agency to notify the affected manufacturers, distributors and retailers as

-to their obligations under the regulation. Information and education has played

a major role in our efforts to date in implementing this regulation.

It is also our current policy to develop marketplace data during the regulatory

(development process. In this way the universe of compliance responsibility will

be identified and a cost effective surveillance planned.

Moreover, studies are now underway to determine the best means of involving

state and local authorities in our compliance and enforcement efforts. In addition

to the contracting work we are now doing with states, our authority to commission

state and local personnel is being explored to see if this is a cost effective means

•-of obtaining better surveillance and enforcement in the marketplace.

There are other recent initiatives which are now beginning to yield fruit. For

example, the establishment of resident posts to expand our geographic presence

without adding costly and time consuming travel is now being implemented.

We also plan to undertake the construction of a cost/benefit model to determine

-the internal cost of the litigation of a case as contrasted with the proposed impact

of the case. Our pilot efforts have been encouraging and, if we are successful, this

will provide us with a useful tool in rnaking sound resource decisions.

For the future, in compliance and enforcement, our fiscal year 1978 budget

request includes a very modest increase in personnel and funds to aid in the more

,efficient handling of field casework activities, improving liaison and response

time with appropriate courts and U.S. Attorneys, and providing needed on-thejob training for our area office personnel.

However, I must stress that our operating plan for FY 1977 and the budget

Irequest for FY 1978 are premised on a very important assumption—that there

will be significant self initiated compliance by the regulated firms. If that is not

the case then I believe very significant increases will be necessary in our compliance

and enforcement programs.
32

In conclusion, I would like to thank you for the opportunity to discuss the GAO report and the initiatives the Commission has recently undertaken to address the management problems facing the agency. As I have indicated, the Comptroller.

General's report was of great benefit to us in our delineation of the actions we must take in properly managing our compliance and enforcement responsibilities. It

was also a significant aid in pinpointing deficiencies in the statutory remedies available to the Commission. Hopefully, these hearings will aid in the passage of legislation such as S. 3755, which would be an invaluable step toward curing the statutory problems identified in the GAO report.

You can be assured that our management problems will continue to be addressed and we will press our vigorous management initiatives to achieve a significantly

more efficient and productive agency.

Thank you again for your attention. I am ready to answer any questions you

may have on the GAO report or my statement here today.

[Whereupon, at 11:00 a.m., the hearing was adjourned.]

[The following information was referred to on p. 19:]

COMMENTARY UPON "BETTER ENFORCEMENT OF SAFETY REQUIREMENTS NEEDEDBY THE CONSUMER PRODUCT SAFETY COMMISSION" BY THE COMPTROLLER

GENERAL OF THE UNITED STATES (JULY 26, 1976)

Commentary Prepared by U.S. Consumer Product Safety Commission

PREFACE

The Consumer Product Safety Commission has reviewed the report of the. Comptroller General entitled "Better Enforcement of Safety Requirements Needed by the Consumer Product Safety Commission". The following three sections of commentary are the observations and comments of the Commission

upon the three chapters of the Comptroller General's report. The first section (pp. I-1 through 1-3) is introductory comments pertaining generally to the introductory chapter of the report. The next two sections (pp. II-1 through

II-7 and III-1 through 111-6) pertain to Chapters 2 and 3 of the report.

INTRODUCTORY COMMENTS

Before commenting upon the substance of this report some general observations

are in order. First, the Consumer Product Safety Commission appreciates the time and effort taken by the General Accounting Office (GAO) in conducting the audit which resulted in this report. Both during the conduct of the audit and in this report the GAO has aided the manaement of this agency in its continuing obligation to assess the operations of the agency.

The report identifies problems, some known before the audit and others dis- covered during the audit. This identification process has been invaluable in aiding the new Chairman and the Commissioners in evaluating the agency's past efforts and in setting the tone and course of new initiatives to obtain com- pliance with the laws and regulations the agency enforces.

It should be noted that the time frame in which GAO auditors were examining the many different aspects of enforcement activity by this agency is not consistent throughout the report. Some facets of the activities were continually examined and other aspects were examined early in the audit and not examined during thern latter part of the audit. This disparity in time and attention creates the impres- sion that some identified problems persist and that these problems haveS been ignored by the Commission and its staff. This is an inaccurate impression which

our response will hopefully correct.

The report occurred during a time of transition of compliance philosophies. Therefore, it fails to describe some initiatives which have been undertaken to,

address some of the problem areas discussed. However, the report recognized the efforts to improve the time necessary to process cases and the improvements which have taken place in 1976.

The report could not address the recent initiatives taken since June by thern Chairman, the Commission, the Ad Hoc Management Task Force and the staff to sift the myriad possibilities for action facing the Commission and to identify product and project specific tasks and to rank these tasks for Commission atten- tion. This recently completed effort has provided the Commission with its first,
33

'from the ground up" look at the problems facing it, the ordering of these problems and a determination of the resources involved. This effort goes far beyond

enforcement. It has taken the many missions of the Commission concerning the

identification of hazards, the analysis of these hazards, the choice of the proper

approach to take to eliminate or reduce these hazards (only one of which is

enforcement), and the 'Commission's responsibilities to inform the public concerning risks in consumer products and balanced these competing demands. The

resulting plan for the operation of the agency during the coming fiscal year is, in

our opinion, the best blend of our finite resources in approaching what is an

almost infinite problem.

COMMENTS ON CHAPTER 2

Chapter 2 of the report discusses the need to insure that consumers are being

protected from products that do not meet safety requirements. The conclusion

of the GAO investigators was that not all compliance activity was planned to

insure that manufacturers, importers and packagers were identified and notified

of safety requirements. Before addressing current CPSC efforts in this area, it

should be noted that the laws involved and the Commission's policy have never

depended upon actual notice of a safety requirement before taking remedial

actions. Most health and safety laws in the United States Code do not require

that individuals be given actual notice before they are obligated to comply. The

GAO report gives the impression that there is either no Obligation or no legal

sanctions possible if the individual against whom action is sought cannot be

demonstrated to have received actual notice of his or her obligations under the

law. This is niit the case with public health and safety requirements such as those

discussed in the GAO report.

However, the Commission realizes that the primary purpose of our efforts is

to insure that the consuming public s protected against unreasonable risks of

injury. One very important means of insuring this is to notify everyone in a

regulated industry about the requirements of a regulation and then to follow that

notification with actual inspections.

It is current procedure in the Commission's compliance activities to first determine the manufacturers, distributors, retailers and importers subject to a safety

requirement. Identifying these firms is sometimes difficult and the degree of accuracy may be relatively low, but this is always the first step in our current

compliance programs. One problem we initially encounter is that nowhere in this

agency, or in other agencies to whose information we have access, is there a

mechanism which requires firms subject to a particular regulation to register or

notify us that they are subject to that regulation. We do have the authority under

the Consumer Product Safety Act to require -reports from firms indicating that

they are regulated by certain safety requirements and where their manufacturing

and distributing facilities are located. This authority does not exist in the acts

discussed in the GAO report (i.e., Flammable Fabrics Act, Federal Hazardous

Substances Act and Poison Prevention Packaging Act).

Even if registration or some similar procedure is possible, this does not, in and

of itself, notify affected firms of their obligations under the law. We currently

use resources such as Dun and Bradstreet and the Thomas Register to identify

firms. We also use questionnaires and CPSC records to supplement these outside

sources. When we cannot identify firms through these national sources, we resort

to local information sources such as local business directories and telephone

directories.

The size of our agency's field force is such that there is no way in which every

manufacturer, importer, distributor and retailer can be visited to determine

compliance with every regulation we enforce. We must survey an industry to

determine its compliance with our regulations. Once an initial survey is conducted, we decide from the results of the initial survey whether further CPSC

efforts are needed. For example, the results of our initial survey of the mattress

industry revealed that non-compliance was so high that further educational

and inspectional efforts were necessary. However, despite the fact that prior

to the effective date of the regulation we held seminars throughout the nation in

conjunction with industry trade associations, widespread publication efforts in

industry journals, using suppliers of mattress materials to spread the information

and extensive mailings, we are still finding firms alleging that they are unaware
34

of our requirements. In an industry so diverse and conducting business in verysmall firms, such as the mattress industry, this informing process will probably

always be a long term endeavor.

Another point that the report made was that follow-up inspections after a

violation has been discovered should verify compliance with safety requirements.

The current procedures of this agency require our area offices to send Letters of

Advice to firms found in volation of our requirements. These letters outline the

violation and require written replies concerning the corrective actions to be taken

by the violative firm. These corrections are then monitored by sample collection,

follow-up inspections, or both.

The report emphasizes that the agnecy's efforts in the toy field have decreased

since certain court decisions. This is not the entire picture. Currently the Commission is conducting a survey of compliance with the electrical toy regulation

(16 CFR 1505 et seq.) and the bicycle regulations (16 CFR 1512 et seq.).

The toy regulations at issue are those which attempt to address hazards presented by toys generically. Toys are manufactured by many different sources,.

and it is estimated that approximately 5,000 new toys are introduced per year.

It can be seen that any attempt to regulate such toys on a toy-by-toy basis would'

be impracticable for any except the most dangerous toys. The hazards addressed

by the challenged regulations are the hazards of puncture wounds, lacerations,

and aspiration/ingestion problems in rattles, dolls and noise making toys. The

Commission is now attempting to address these problems through the use of

generic regulations which do not regulate individual toys but, instead, address

these particular risks of injury in all toys. However, working with our major

resource in this area, the National Bureau of Standards, we have been unable

to produce reliable test methods or devices for measuring or determining acceptable and unacceptable sharpness of edges and points. In recognition of the problems in this area, the Commission has made these generic toy regulations one of

its priority items for attention during the FY 1977.

The GAO report criticizes CPSC efforts in connection with the Commission's

ban of vinyl chloride. Our first observation is that the manner in which the entire

vinyl chloride enforcement program was conducted taught us many lessons.

Based on these lessons we will not, in the future, conduct surveys and recalls of.

banned hazardous substances exactly as we did in the vinyl chloride situation.

In particular, future field surveillance programs will include checks of manufacturers who have been using banned products to determine if they are using

old stocks of the banned product despite their assurances to the contrary. Of"

course, inspection of every establishment is never possible but a well constructed

surveillance program can give us a reliable idea concerning the industry's compliance with a banning action of the Commission.

Also, the confusion in determining exactly which products contained vinyl

chloride caused a holding back of surveillance efforts to locate identified products.

This was in the hope that more information would become available as to other

products which could be located at the same time. This attempt to be efficient

and fair in surveillance was incorrect and will not occur again. One way in which

we will avoid this situation in the future is the extensive survey we have conducted

recently to determine the formulas of approximately 15,000 chemical products.

This information is now in our files. In the event future research determnes that

a particular chemical or combination of chemicals should be banned, we will bein a position to know immediately which products contain these chemicals. Any

recall or information efforts will then begin immediately with hard information

rather than having to be conducted after hurried surveys with incomplete data.

The GAO report also mentions that delay in obtaining an environmental

assessment delayed action by this agency in dealing with vinyl chloride. Therewas a question whether there was a need for such an assessment. The agency initially believed that the requirement to recall hazardous products from th,-

distribution network was exempt from the requirements of the National Environmental Policy Act because removing these goods improved individual consumer's

environments. This was argued to the court and, subsequently, the court dis- agreed. The Commission was then required to assess the environmental impact of the disposal of recalled products. After determining volumes and concentration

of the products, the Commission decided that disposal of the recalled products under various guidelines set out by the Environmental Protection Agency would

not adversely affect the environment. The Commission's final assessment wassubmitted to the court which subsequently vacated its stay order.
35

This incident spurred the establishment of procedures within the agency for

environmental assessments for all our activities. The agency has given top priority

to the establishment of our formal regulations for such activities. These regulations as required by law, have been reviewed by the Council on Environmental

Quality and are in their final drafting.

Another point in the GAO report is the need to evaluate the effectiveness ofcompliance activities. It is current procedure within the agency to evaluate all

compliance programs to determine the effect they have had. It is through this

evaluation that we decide what the level of compliance is within the industry,

the effectiveness of the regulations' procedural mechanisms in addressing the risks

involved and the need for further resources to be devoted to compliance action

in the area.

COMMENTS ON CHAPTER 3

Chapter 3 of the report discusses the need for more effective action against

violators of safety requirements.

The GAO investigators conclude that the procedures reviewed by them are

inadequate for developing and processing criminal cases. As the introductory

remarks to the Commission's reply indicate, the GAO review came at a time of

transition in the compliance activities of the agency and many of the initiatives

taken by the Commission are not reflected in the report.

As background, early in the life of this agency two lengthy and intensive training sessions were conducted for all inspectors and investigators of the agency to

train them in the legal requirements of the laws and regulations administered by

the CPSC. Further follow-up training of the mid-level and upper level field managers has been conducted to refine their knowledge and answer particular questions. Additionally, weekly case review memoranda and conference telephone

calls are used to answer questions of those in the field as to what the legal requirements are that they are to enforce. Accordingly, every effort has been taken to

insure that everyone involved in the enforcement of CPSC laws and regulations

is familiar with these laws and regulations and knows how to determine if a,

violation exists.

The Commission has been reviewing its past policy of requiring all cases to

come to the Commission for a decision as to their disposition. This policy was

initiated by the Commission to insure that administration of the law would be

uniform throughout the nation. As the level of knowledge in the field force has

increased, the Commission has decided to decrease the centralization of its review.

Initially, as mentioned in the GAO report, delegation of case preparation and

recommendations in cases under the FI-ISA and PPPA was made to the field.

Now that the field has demonstrated the ability to implement this delegation, a

further delegation is being planned, to allow certain classes and types of cases to be

closed by the area offices without action by the Commission. Further, a pilot

program is underway to determine if area offices can close cases even earlier in

their initial stages without performing any but the most basic investigative actions.

Cases which, on their face, present violations of only a de minimis or inconsequential nature may, under this pilot program, be recommended for closing without preparation of lengthy investigations or paperwork. If this pilot program and.

the pending delegation prove successful, cases which meet the criteria may be

closed at the area office level without the use of further resources for investigation

or paperwork, and headquarters resources formerly used to review such cases

may be better employed elsewhere.

The GAO report further stated that the Commission should adapt its criteria

for case referral to meet those of the Department of Justice. The report overlooks

that, at the time of the audit, the Commission was well aware of some of the

criteria used by the Department of Justice (although these criteria are not consistently applied, as will be discussed later) but disagreed with these criteria.

For example, the Commission believes that the small size of our field force is

such that for every violation found there are many more violations which will

not be discovered. Accordingly, the Commission has sought to have violations

punished on the theory that the punishment of the one violation will be a warning

and deterrent to other violators. Also, the Department of Justice and certain

U.S. Attorneys have displayed reluctance to prosecute violators who, upon being

discovered, correct their activities. This reluctance has been challenged by the

Commission because this concept accepts that anyone may, with apparent

impunity, continue to violate the law until discovered. Further, the requirement
36

of knowledge of the offense (also incorrectly mentioned in the GAO summary

of the requirements of the FHSA) is used by the Department of Justice and some

U.S. Attorneys despite the clear provisions of the law which do not require

knowledge as a prerequisite to prosecution. Therefore, the initial efforts of the

Commission were not to instruct the field force to conform to Department of

Justice views but, instead, to change the views of the Department of Justice.

As to establishing criteria which meet Department of Justice standards, this

is very hard to do because there is no listing of any criteria by the Department.

Further, each individual U.S. Attorney uses his or her own scale to evaluate

potential criminal ,cases. As mentioned above, despite the fact that the laws

involved do not require the showing of knowledge, some U.S. Attorneys reject

cases in which the knowledge of the prospective defendant cannot be demonstrated. However, this is not consistent throughout the United States. Also, the

Department of Justice has not been consistent in its rejection of cases. For

example, some cases which have, in the past, been rejected as too old have been

of a lesser age than cases which have subsequently been accepted. However,

certain general standards used by the Department of Justice have been identified

and our area offices are aware of them. For example, timeless of cases is of great

concern, particularly in instances where there is only one violation which can

be established.

The Commission itself has become more aware of the reluctance of the Depart-.

rnent of Justice and U.S. Attorneys to proceed unless either multiple counts or

actual knowledge can be demonstrated. Accordingly, the Commission is more

selective in the cases it now refers. Many of the cases now closed by the Commission would have been forwarded to the Department of Justice previously.

In summary, the Commission is taking steps to delegate to the field authority

to close cases as soon as criteria are identified and the field can demonstrate consistent application of these criteria. The Commission is aware of certain general

standards used by the Department of Justice and U.S. Attorneys, and it is attempting to apply certain of these criteria in evaluating cases for forwarding.

Local area offices aid in this process by including, where appropriate, informal

estimates of case appeal to local U.S. Attorneys.

A final point in Chapter 3 of the report was the GAO recommendation that

civil money penalties be allowed under the Federal Hazardous Substances Act.

The Commission is in favor of this recommendation. As is evident in reading the

GAO report, our reply and other discussions of this problem, the Commission is

faced with a "go-no go" situation when evidence of a violation of the provisions

of either the FHSA or the PPPA is brought to its attention. If the Commission

decides there has been a violation and the violation should be punished, it must

then seek criminal penalties. If criminal penalties are deemed unrealistic or too

harsh, the Commission must content itself with a strong letter of warning and close

the case. This situation does not lend itself to enforcement tailored to the offenses

involved. The addition of civil penalty authority to the FHSA and the Food,

Drug and Cosmetic Act provisions relating to enforcement of the PPPA would

enable the Commission to address and properly deal with several types of violations which are currently either dismissed or processed as criminal actions. For

example, as stated earlier in this reply, ignorance of the law, particularly in health

and safety matters, is no excuse. However, when employees have been careless in

following a proper formula and the reluctant product is, one time, in non-compliance with the law, it seems harsh to seek criminal penalties. At the same time,

failure to take action against this sort of conduct does not protect the public

against hazards which, although not intentional, are just as dangerous. Civil

penalty authority would appear to fill this gap.