42702 Federal Register / Vol. 77, No. 140 / Friday, July 20, 2012 / Notices 

NSN: 7045–00–NIB–0390—19.0′′ Widescreen 

NSN: 7045–00–NIB–0391—24.0′′ Widescreen 

NPA: Wiscraft, Inc., Milwaukee, WI 

Contracting Activity: General Services 

Administration, New York, NY 

Coverage: A-List for the Total Government 

Requirement as aggregated by the 

General Services Administration. 

Service 

Service Type/Location: Custodial/Janitorial 

Services, Vancouver US Armed Forces 

Reserve Center (AFRC)/WA070, 15005 

NE 65th Street, Vancouver, WA. 

NPA: Portland Habilitation Center, Inc., 

Portland, OR 

Contracting Activity: Dept of the Army, 

W6QM MICC–ARCC North, Fort McCoy, WI 

Barry S. Lineback, 

Director, Business Operations. 

[FR Doc. 2012–17707 Filed 7–19–12; 8:45 am] 

BILLING CODE 6353–01–P 

CONSUMER PRODUCT SAFETY 

COMMISSION 

[CPSC Docket No. 12–C0007] 

Battat Incorporated, Provisional 

Acceptance of a Settlement Agreement 

and Order 

AGENCY: Consumer Product Safety 

Commission. 

ACTION: Notice. 

SUMMARY: It is the policy of the 

Commission to publish settlements 

which it provisionally accepts under the 

Consumer Product Safety Act in the 

Federal Register in accordance with the 

terms of 16 CFR 1118.20(e). Published 

below is a provisionally-accepted 

Settlement Agreement with Battat 

Incorporated, containing a civil penalty 

of $400,000.00, within twenty (20) days 

of service of the Commission’s final 

Order accepting the Settlement 

Agreement. 

DATES: Any interested person may ask 

the Commission not to accept this 

agreement or otherwise comment on its 

contents by filing a written request with 

the Office of the Secretary by August 6, 

2012. 

ADDRESSES: Persons wishing to 

comment on this Settlement Agreement 

should send written comments to the 

Comment 12–C0007, Office of the 

Secretary, Consumer Product Safety 

Commission, 4330 East West Highway, 

Room 820, Bethesda, Maryland 20814– 

4408. 

FOR FURTHER INFORMATION CONTACT: 

Sarah C. Wang, General Attorney, 

Division of Enforcement and 

Information, Office of the General 

Counsel, Consumer Product Safety 

Commission, 4330 East West Highway, 

Bethesda, Maryland 20814–4408; 

telephone (301) 504–7807. 

SUPPLEMENTARY INFORMATION: The text of 

the Agreement and Order appears 

below. 

Dated: July 17, 2012. 

Todd A. Stevenson, 

Secretary. 

Settlement Agreement and Order 

1. In accordance with 16 CFR 1118.20, 

Battat Incorporated (‘‘Battat’’ or the 

‘‘Firm’’) and staff (‘‘Staff’’) of the United 

States Consumer Product Safety 

Commission (‘‘Commission’’ or ‘‘CPSC’’) 

hereby enter into this Settlement 

Agreement (‘‘Agreement’’) under the 

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

The Agreement and the incorporated 

attached Order resolve Staff’s 

allegations set forth below. 

The Parties 

2. Staff is the staff of the Commission, 

an independent federal regulatory 

agency established pursuant to, and 

responsible for, enforcement of the 

CPSA, 15 U.S.C. 2051–2089. 

3. Battat is a privately-held company, 

organized and existing under the laws of 

the state of Delaware, with its principal 

office located at 1560 Military Turnpike, 

Plattsburgh, New York, 12901. 

Staff Allegations 

4. Between August 2004 and February 

2008, Battat distributed approximately 

132,000 Magnabild magnetic building 

sets (‘‘Subject Products’’) in U.S. 

commerce. On January 23, 2008, Battat 

announced a recall for the Subject 

Products bearing model numbers 

BB1431H and BB1502H. On March 13, 

2008, Battat announced a recall for the 

Subject Products bearing model 

numbers BB1439H and BAT–34. The 

Subject Products sold for approximately 

$20—$40 through online and 

nationwide retailers. 

5. The Subject Products are 

‘‘consumer products’’ and, at all 

relevant times, Battat was a 

‘‘distributor’’ of these consumer 

products, which were ‘‘distribute[d] in 

commerce,’’ as those terms are defined 

or used in sections 3(a)(5), (7), and (8) 

of the CPSA, 15 U.S.C. 2052(a)(5), (7), 

and (8). 

6. The Subject Products, which are 

labeled for ages three and up, are 

defective because small, powerful 

magnets can loosen and fall out of the 

components with normal use. Magnets 

found by young children can be 

swallowed or aspirated. If more than 

one magnet is swallowed, the magnets 

can attract each other and cause 

intestinal perforations or blockages, 

which can be fatal. 

7. Battat received its first complaint of 

magnets coming loose from the Subject 

Products in October 2005. 

8. By March 31, 2006, Battat had 

received seven consumer reports of 

magnet liberation and two consumer 

reports of children ingesting nonmagnetized steel balls. Some consumers 

described multiple magnet liberations 

from the Subject Products. 

9. On March 31, 2006, the 

Commission announced the recall of 

Rose Art Magnetix Building Sets, which 

involved one death, four serious 

injuries, and 34 incidents involving 

small magnets. 

10. In April 2006, Battat received two 

additional consumer complaints of 

magnet liberation. Battat has 

represented to the Commission that, ‘‘At 

some point, likely April or May [2006], 

Battat became aware of the Magnetix 

recall and only then became aware of 

the possibility that small magnets could 

cause intestinal injury.’’ 

11. Between November 2006 and July 

2007, the Commission re-announced the 

Rose Art Magnetix Building Sets recall 

due to additional serious injuries to 

children; the Commission issued a 

‘‘Magnet Safety Alert,’’ warning parents 

of the risk of serious injury and death 

to children from magnet ingestion; and 

the Commission announced five 

separate recalls for several million toys 

containing magnets due to the potential 

for magnet liberation. 

12. Despite being aware of the danger 

posed to children by the ingestion of 

magnets such as those in the Subject 

Products, and with full awareness that 

the CPSC and industry were actively 

working to address the hazards posed to 

children by the ingestion of magnets, 

Battat failed to notify the CPSC or 

inform consumers of the Subject 

Products’ defect and resulting potential 

hazard. 

13. Staff contacted Battat on July 9, 

2007, to request a full report pursuant 

to CPSA section 15(b) (‘‘Section 15 

Report’’). With this request, Staff 

enclosed two in-depth investigation 

reports of consumer reports describing 

magnets liberating from the Subject 

Products. 

14. Battat did not immediately 

provide the requested Section 15 Report 

on the Subject Products. As a result, 

Staff reiterated its request at least two 

more times from July 2007 to October 

2007. Battat did not file the requested 

Section 15 Report on the Subject 

Products until October 12, 2007, after at 

least three requests from Staff. 

15. Battat failed to inform the 

Commission of the defect and resulting 

potential hazard present in the Subject 

Products bearing model numbers 

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Federal Register / Vol. 77, No. 140 / Friday, July 20, 2012 / Notices 42703 

BB1431H and BB1502H until October 

12, 2007. Subject Products bearing those 

model numbers were recalled on 

January 23, 2008. 

16. The January 23, 2008, recall did 

not encompass all Subject Products 

posing the magnet liberation hazard in 

U.S. commerce. Battat failed to inform 

the Commission of the defect and 

resulting potential hazard in two 

additional models of the Subject 

Products, those bearing model numbers 

BB1439H and BAT–34, until it filed an 

additional Section 15 Report on 

February 11, 2008. 

17. Although Battat had obtained 

sufficient information to reasonably 

support the conclusion that the Subject 

Products contained a defect that could 

create a substantial product hazard, or 

created an unreasonable risk of serious 

injury or death, Battat failed to inform 

the Commission immediately of such 

defect or risk, as required by sections 

15(b)(3) and (4) of the CPSA, 15 U.S.C. 

2064(b)(3) and (4). In failing to inform 

the Commission immediately of the 

defect or advising that the defect 

involved the Subject Products, Battat 

knowingly violated section 19(a)(4) of 

the CPSA, 15 U.S.C. 2068(a)(4), as the 

term ‘‘knowingly’’ is defined in section 

20(d) of the CPSA, 15 U.S.C. 2069(d). 

18. Pursuant to section 20 of the 

CPSA, 15 U.S.C. 2069, Battat is subject 

to civil penalties for its knowing failure 

to report, as required under section 

15(b) of the CPSA, 15 U.S.C. 2064(b). 

Response of Battat 

19. Battat denies Staff’s allegations 

that Battat knowingly or otherwise 

violated the reporting requirements of 

section 15(b) of the CPSA, 15 U.S.C. 

2064(b). Battat further disputes the staff 

position that Battat obtained 

information that reasonably supported 

the conclusion that the subject products 

contain a defect that could create a 

substantial product hazard or create an 

unreasonable risk of serious injury or 

death. 

20. The Magnabild toys were 

manufactured in 2004 and 2005 and 

tested to all existing CPSC safety 

standards, including the use and abuse 

testing requirements used by CPSC and 

the toy industry to determine whether 

toys would break during reasonably 

foreseeable use and abuse. Furthermore, 

the Magnabild toys were labeled 

‘‘Warning: Choking Hazard; Toy 

Contains Small Parts & Small Balls; Not 

For Children Under 3 years.’’ 

21. When Battat learned about the 

Magnetix recall, it examined its product 

to determine whether its product 

presented the same risks as the 

Magnetix toys and concluded that it did 

not because most of the Magnabild 

products did not contain the small 

magnets that were present in the 

Magnetix products and Battat believed 

its magnets were better retained in its 

toys and much less likely to come out 

even under foreseeable misuse and 

abuse. Unlike the Magnetix product that 

used only tiny magnets, Battat’s 

predominant magnetic component was a 

one inch magnet molded into a fulllength plastic sheath. 

22. Battat had received very few 

complaints of magnets coming out of its 

Magnabild toys and no reports of injury, 

unlike other manufacturers whose 

products—according to CPSC press 

releases and legal documents—had 

released well over a thousand magnets 

and allegedly caused a death and more 

than two dozen serious intestinal 

injuries. 

23. At some point before being 

contacted by CPSC in July 2007, Battat 

became aware that CPSC was working 

prospectively on a labeling rule for 

magnet toys with ASTM that allowed 

the sale of loose magnets, as long as a 

warning label was present telling 

consumers about the risk of infection 

and death from magnets sticking 

together across intestines. Battat did not 

use loose magnets in its toy and had 

received very few complaints of magnet 

release. Battat believed that its existing 

warning label about a choking hazard 

was likely to be no less effective at 

advising parents to keep the product 

away from small children. 

24. Battat did not receive any 

complaints about magnets coming out of 

its toys for a period of approximately 14 

months before it was contacted by the 

CPSC in July 2007 and had not received 

any reports about magnet ingestion or 

injury. This increased the firm’s 

confidence that it did not have a 

significant problem with magnets 

coming out of its Magnabild toys. 

25. From the time it was first 

contacted by the CPSC compliance staff, 

Battat believed that the CPSC staff was 

adequately informed of the alleged 

defect or risk in its product. Battat knew 

that CPSC had samples of the Magnabild 

product and had investigated incidents 

where magnets allegedly came out. 

Further, the staff contended the product 

presented a substantial product hazard 

and sought a recall. Battat made its ‘‘full 

report’’ in October 2007 to provide 

details of its recall proposal. Although 

Battat did not agree with the CPSC staff 

view of the alleged hazard, Battat agreed 

to recall 125,000 Magnabild toy sets, 

84,430 of which had only the one inch 

rod magnets Battat believed would not 

come out of their sheathes. 

26. In February 2008, Battat learned 

that another 7,000 Magnabild products 

in models BB1439H and BAT 34, had 

been shipped to the United States by the 

Chinese manufacturer several years 

before. Although both of these models 

only contained the fully sheathed one 

inch magnets Battat believed would not 

come out, Battat reported its discovery 

to CPSC and offered to recall these 

products as well. In total, only 31% of 

the 132,000 total units Battat ultimately 

recalled had any small magnets and 

Battat believed they were well retained 

in the Battat design. 

27. Battat believes its judgment that 

the Magnabild product did not contain 

reportable defects or unreasonable risks 

was reasonable. That judgment was 

supported by technical and design 

differences from products that 

experienced large numbers of failures 

and caused injuries. Battat’s judgment 

has been further borne out by the lack 

of any injuries associated with magnets 

coming out of Magnabild toys and by a 

lack of reports of magnet release for 

several years since its recall. Battat 

settles this matter not because it has 

violated the reporting obligation in 

section 15(b) of the CPSA, or because it 

believes the settlement amount is 

reasonably related to the statutory 

criteria for penalties set forth in the 

CPSA, but to avoid the negative 

publicity associated with CPSC pursuit 

of a penalty through litigation and the 

costs and interference with its business 

activities that would likely result from 

such litigation even if pursued to a 

successful conclusion. 

Agreement of the Parties 

28. The CPSC has jurisdiction over 

this matter under the CPSA and for the 

purposes of this settlement agreement 

only, over Battat. 

29. In settlement of Staff’s allegations, 

and while specifically and strenuously 

denying those allegations, Battat 

consents to the entry of the attached 

Order (‘‘Order’’) as set forth below and 

will pay a civil penalty in the amount 

of four hundred thousand dollars 

($400,000.00) over a period of 12 

months of the date this Order becomes 

final. The payment shall be made to the 

CPSC via www.pay.gov with equal 

installments of $100,000.00 paid 

quarterly starting within 20 days of 

service upon Battat of the final Order in 

this matter. 

30. The parties further agree that if 

Battat fails to make timely payments as 

agreed to in paragraph 29, such conduct 

will be considered a violation of this 

Agreement and Order. 

31. The parties enter into this 

Agreement for settlement purposes only. 

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42704 Federal Register / Vol. 77, No. 140 / Friday, July 20, 2012 / Notices 

The Agreement does not constitute an 

admission by Battat or a determination 

by the Commission that Battat violated 

the CPSA’s reporting requirements. This 

agreement completely and finally 

resolves the staff allegations set forth in 

paragraphs 2–18 with respect to Battat 

Incorporated, and its officers, directors, 

and related companies. 

32. Upon provisional acceptance of 

the Agreement by the Commission, the 

Agreement shall be placed on the public 

record and published in the Federal 

Register, in accordance with the 

procedures set forth in 16 CFR 

1118.20(e). If the Commission does not 

receive any written request not to accept 

the Agreement within fifteen (15) 

calendar days, the Agreement shall be 

deemed finally accepted on the 16th 

calendar day after the date it is 

published in the Federal Register, in 

accordance with 16 CFR 1118.20(f). 

33. Upon the Commission’s final 

acceptance of the Agreement and 

issuance of the Order, Battat knowingly, 

voluntarily, and completely waives any 

rights it may have in this matter to the 

following: (a) An administrative or 

judicial hearing; (b) judicial review or 

other challenge or contest of the 

Commission’s actions; (c) a 

determination by the Commission of 

whether Battat failed to comply with the 

CPSA and the underlying regulations; 

(d) a statement of findings of fact and 

conclusions of law; and (e) any claims 

under the Equal Access to Justice Act. 

34. The Commission may publicize 

the terms of the Agreement and the final 

Order. 

35. The Agreement and the final 

Order shall apply to, and be binding 

upon, Battat, and each of its successors 

and/or assigns, until the obligations 

described in paragraph 29 has been 

fulfilled to the satisfaction of the 

Commission. 

36. The Commission issues the final 

Order under the provisions of the CPSA, 

and a violation of the final Order may 

subject Battat, and each of its successors 

and/or assigns, to appropriate legal 

action. 

37. The Agreement may be used in 

interpreting the final Order. 

Understandings, agreements, 

representations, or interpretations apart 

from those contained in the Agreement 

and the Order may not be used to vary 

or contradict the terms or the Agreement 

and the final Order. The Agreement 

shall not be waived, amended, 

modified, or otherwise altered without 

written agreement thereto, executed by 

the party against whom such waiver, 

amendment, modification, or alteration 

is sought to be enforced. 

38. If any provision of the Agreement 

or the final Order is held to be illegal, 

invalid, or unenforceable under present 

or future laws effective during the terms 

of the Agreement and the final Order, 

such provision shall be fully severable. 

The balance of the Agreement and the 

final Order shall remain in full force 

and effect, unless the Commission and 

Battat agree that severing the provision 

materially affects the purpose of the 

Agreement and final Order. 

39. This Agreement may be executed 

in counterparts. 

Battat Incorporated 

Dated: June 27, 2012. 

By: 

lllllllllllllllllll

Joseph Battat. 

Dated June 27, 2012 

By: 

lllllllllllllllllll

Anthony T. Pavel, Jr., 

Counsel to Battat Incorporated, K&L 

Gates LLP, 1601 K Street NW., 

Washington, DC 20006–1600. 

U.S. CONSUMER PRODUCT SAFETY 

COMMISSION STAFF 

Cheryl A. Falvey, 

General Counsel. 

Mary B. Murphy, 

Assistant General Counsel 

Dated: July 12, 2012. 

By: 

lllllllllllllllllll

Sarah C. Wang, 

Trial Attorney, Division of Compliance, 

Office of the General Counsel. 

Order 

Upon consideration of the Settlement 

Agreement entered into between Battat, 

Incorporated (‘‘Battat’’), and U.S. 

Consumer Product Safety Commission 

(‘‘Commission’’) staff, and the 

Commission having jurisdiction over 

the subject matter and over Battat, and 

it appearing that the Settlement 

Agreement and the Order are in the 

public interest, it is ordered that the 

Settlement Agreement be, and is, 

hereby, accepted; and it is further 

ordered, that Battat shall pay a civil 

penalty in the amount of four hundred 

thousand dollars ($400,000.00) within 

12 months of service of the 

Commission’s Order upon counsel for 

Battat, identified in the Settlement 

Agreement. The payments shall be made 

electronically to the CPSC via 

www.pay.gov in equal quarterly 

installments of $100,000.00 

commencing within 20 days of service 

upon Battat of this final order. Upon the 

failure of Battat to make the foregoing 

payments when due, interest on the 

unpaid amount shall accrue and be paid 

by Battat at the federal legal rate of 

interest set forth at 28 U.S.C. § 1961(a) 

and (b). If Battat fails to make such 

payments, as set forth in the Settlement 

Agreement, such conduct will be 

considered a violation of this Agreement 

and Order. 

Provisionally accepted and 

provisional Order issued on the 13th 

day of July, 2012. 

By Order of the Commission. 

Todd A. Stevenson, 

Secretary, U.S. Consumer Product Safety 

Commission. 

[FR Doc. 2012–17704 Filed 7–19–12; 8:45 am] 

BILLING CODE 6355–01–P 

DEPARTMENT OF DEFENSE 

Office of the Secretary 

[Transmittal Nos. 12–10] 

36(b)(1) Arms Sales Notification 

AGENCY: Defense Security Cooperation 

Agency, Department of Defense. 

ACTION: Notice. 

SUMMARY: The Department of Defense is 

publishing the unclassified text of a 

section 36(b)(1) arms sales notification. 

This is published to fulfill the 

requirements of section 155 of Public 

Law 104–164 dated July 21, 1996. 

FOR FURTHER INFORMATION CONTACT: 

Ms. B. English, DSCA/DBO/CFM, (703) 

601–3740. 

The following is a copy of a letter to 

the Speaker of the House of 

Representatives, Transmittals 12–10 

with attached transmittal, policy 

justification, and Sensitivity of 

Technology. 

Dated: July 17, 2012. 

Aaron Siegel, 

Alternate OSD Federal Register Liaison 

Officer, Department of Defense. 

BILLING CODE 5001–06–P 

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