Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Notices 30715

COMMODITY FUTURES TRADING

COMMISSION

Agency Information Collection

Activities Under OMB Review

AGENCY: Commodity Futures Trading

Commission.

ACTION: Notice.

SUMMARY: In compliance with the

Paperwork Reduction Act (44 U.S.C.

3501 et seq.), this notice announces that

the Information Collection Request (ICR)

abstracted below has been forwarded to

the Office of Management and Budget

(OMB) for review and comment. The

ICR describes the nature of the

information collection and its expected

costs and burden; it includes the actual

data collection instruments [if any].

DATES: Comments must be submitted on

or before July 9, 2001.

FOR FURTHER INFORMATION OR A COPY

CONTACT: Linda J. Mauldin at (202) 418–

5120; FAX: (202) 418–5524; email:

mailto:lmauldin@cftc.gov

lmauldin@cftc.gov and refer to OMB

Control No. 3038–0025.

SUPPLEMENTARY INFORMATION:

Title: Practice by Former Members

and Employees of the Commission

(OMB Control No. 3038–0025). This is

a request for extension of a currently

approved information collection.

Abstract: Commission Rule 140.735–6

governs the practice before the

Commission of former members and

employees of the Commission and is

intended to ensure that the Commission

is aware of any existing conflict of

interest. The rule generally requires

former members and employees who are

employed or retained to represent any

person before the Commission within

two years of the termination of their

CFTC employment to file a brief written

statement with the Commission’s Office

of General Counsel. The proposed rule

was promulgated pursuant to the

Commission’s rulemaking authority

contained in section 8a(5) of the

Commodity Exchange Act, 7 U.S.C.

12a(5) (1994), as amended.

An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless it displays a currently valid OMB

control number. The OMB control

numbers for the CFTC’s regulations

were published on December 30, 1981.

See 46 FR 63035 (Dec. 30, 1981). The

Federal Register notice with a 60-day

comment period soliciting comments on

this collection of information was

published on May 16, 2001 (66 FR

27079).

Burden statement: The respondent

burden for this collection is estimated to

average .10 hours per response to file

the brief written statement. This

estimate includes the time needed to

review instructions; develop, acquire,

install, and utilize technology and

systems for the purposes of collecting,

validating, and verifying information,

processing and maintaining information

and disclosing and providing

information; adjust the existing ways to

comply with any previously applicable

instructions and requirements; train

personnel to be able to respond to a

collection of information; and transmit

or otherwise disclose the information.

Respondents/Affected Entities: 3.

Estimated number of responses: 1.

Estimated total annual burden on

respondents: 4.5 hours.

Frequency of collection: On occasion.

Send comments regarding the burden

estimated or any other aspect of the

information collection, including

suggestions for reducing the burden, to

the addresses listed below. Please refer

to OMB Control No. 3038–0025 in any

correspondence.

Linda J. Mauldin, Office of General

Counsel, U.S. Commodity Futures

Trading Commission, 1155 21st Street,

NW., Washington, DC 20581 and Office

of Information and Regulatory Affairs,

Office of Management and Budget,

Attention: Desk Officer for CFTC, 725

17th Street, Washington, DC 20503.

Dated: June 4, 2001.

Jean A. Webb,

Secretary of the Commission.

[FR Doc. 01–14389 Filed 6–6–01; 8:45 am]

BILLING CODE 6351–01–M

CONSUMER PRODUCT SAFETY

COMMISSION

Issuance of Policy Statement

AGENCY: Consumer Product Safety

Commission.

ACTION: Final policy statement.

SUMMARY: Section 15(b) of the Consumer

Product Safety Act, 15 U.S.C. 2064(b),

requires manufacturers, distributors,

and retailers of consumer products to

report potential product hazards to the

Commission. After receiving public

comments, the Commission issues a

final policy statement that information

concerning products manufactured or

sold outside of the United States that

may be relevant to evaluating defects

and hazards associated with products

distributed within the United States

should be evaluated and may be

reportable under section 15(b).

DATES: This policy becomes effective

June 7, 2001.

FOR FURTHER INFORMATION CONTACT:

Marc Schoem, Director, Division of

Recalls and Compliance, Consumer

Product Safety Commission,

Washington, DC 20207, telephone—

(301) 504–0608, ext. 1365, fax.—(301)

504–0359, E-mail address—

mschoem@cpsc.gov.

SUPPLEMENTARY INFORMATION:

Background

Section 15(b) of the Consumer

Product Safety Act (CPSA), 15 U.S.C.

2064(b) requires manufacturers,

distributors, and retailers of consumer

products to report potential product

hazards to the Commission. In 1978, the

Commission published an interpretative

rule, 16 CFR 1115, that clarified the

Commission’s understanding of this

requirement and that established

policies and procedures for filing such

reports and proffering remedial actions

to the Commission. That rule talks

generally about the types of information

a firm should evaluate in considering

whether to report, but does not

specifically address information about

experience with products manufactured

or sold outside of the United States.

Neither the statute, nor the rule itself,

excludes such information from being

evaluated or reported under section

15(b).

Over the past several years, the

Commission has received section 15(b)

reports that have included information

on experience with products abroad.

When appropriate, the agency has

initiated recalls based in whole or in

part on that experience. In addition, the

Bridgestone/Firestone tire recall of 2000

focused public attention on the possible

relevance of information generated

abroad to safety issues in the United

States. Accordingly, to assure that firms

who obtain information generated

abroad are aware that they should

consider such information in deciding

whether there is a need to report under

section 15(b), the staff recommended

that the Commission issue a policy

statement. On January 3, 2001 (66 FR

351), the Commission solicited

comments on a proposed policy

statement stating the Commission’s

position that information concerning

products sold outside of the United

States that may be relevant to defects

and hazards associated with products

distributed within the United States

should be evaluated and may be

reportable under section 15(b).

Discussion

The Commission received seven

comments in response to the proposed

statement. Two supported the policy

30716 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Notices

statement. One of these commentors

recommended that the Commission

codify the policy as a substantive rule

with specific provisions to prevent firms

from circumventing the reporting

obligation. A total of five commentors

opposed issuing the statement as

drafted. Two of these joined with the

CPSC Coalition of the National

Association of Manufacturers (‘‘NAM’’)

in requesting that the Commission

withdraw the policy statement. They

also requested that, concurrent with the

withdrawal, the Commission issue a

clarification that no new obligations or

modifications to existing rules are

established, or, in the alternative, that

the Commission engage in a public

dialogue to review the issues and

objectives raised by the policy

statement. One commentor supported

withdrawing the statement because it

contended that the Commission had not

demonstrated the need for it. The last

supported the underlying rationale for

the policy, but proposed limiting the

policy to requiring the reporting of

foreign product safety issues only when

reporting would be required under the

Consumer Product Safety Act. A

summary of the comments and our

responses appear below.

a. Interpretative Rule

In its 1978 Federal Register notice,

the Commission specifically addressed

whether the reporting regulations

should be substantive or interpretative.

The significance of this distinction is

that, once a substantive rule goes into

effect, it has the force and effect of law,

and its provisions cannot be challenged

in a subsequent proceeding, for

example, an action to assess civil

penalties. An interpretative rule, on the

other hand, simply offers guidance as to

what the Commission believes the law

means or requires. A firm that disagrees

with one or more of the provisions of an

interpretative rule can, in an

enforcement proceeding, challenge the

reasonableness of the Commission’s

interpretation(s), and can prevail in the

proceeding if its contention is upheld.

In 1978, after seeking public comment,

the Commission elected to publish the

reporting rule as an interpretative rule.

NAM contends that, in issuing the

proposed policy statement, the

Commission is, in effect, promulgating a

substantive rule, and has failed to

comply with the formal rulemaking

procedures of the Administrative

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

NAM claims that the policy would be

invalid, if issued.

The Commission issued the policy

statement because it considered it only

fair that firms who might be unfamiliar

with the reporting requirements be put

on notice of the agency’s view that

information concerning foreign

experience relevant to a product in the

U.S. should be evaluated and may be

reportable if it otherwise meets the

criteria of section 15(b) and 16 CFR

1115. As the policy statement expressly

acknowledges, this is a straight-forward

interpretation of the requirements of

section 15(b), and is consistent with the

interpretative reporting regulation

which, on its face, does not limit

reporting to information derived solely

from experience with products sold in

the United States. Given the history of

the interpretative regulation and the

express acknowledgment in the policy

statement that it too is interpretative,

the NAM’s attempt to characterize the

statement as a substantive rule is

misplaced.

b. Specificity of the Policy Statement

NAM posed a number of hypothetical

questions that it claims the policy

statement should, but does not address.

In doing so, it treats the reporting rule

as a substantive rule that firms must

follow, even though it acknowledges in

a footnote that the rule is interpretative.

The short response to the NAM queries

is, of course, that, as an interpretative

rule, the reporting rule imposes no

binding obligation on any firm.

Moreover, the concerns that NAM

raises—for example, whether a firm is

responsible for reporting if an employee

has knowledge of a reportable problem,

and the extent to which a firm must

investigate incidents—are not unique to

multi-national business operations.

They have equal applicability to

domestic operations. In fact, many of

those concerns are substantially the

same as those that commentors on the

proposed interpretative rule on

reporting raised in 1977, and that the

Commission addressed in the preamble

to and text of the final rule in 1978. 43

FR 34988. Thus, for example, section J

of the preamble discusses imputing

knowledge of safety-related information

to a firm only when an employee

capable of appreciating the significance

of the information receives it. Section L

points out the Commission’s views on

the need for firms to exercise reasonable

diligence in investigating possible

product defects. It further notes that the

Commission will take into account the

reasonableness of a firm’s behavior in

the circumstances when it considers the

firm’s compliance with the reporting

regulations. Section 1115.14 of the rule

and section J of the preamble

acknowledge that the time frames

recommended for investigation of

possible defects and the imputation of

knowledge have flexibility, depending

on the circumstances of a particular

case.

While there may be a difference in

degree in what it is reasonable to expect

from reporting firms with respect to the

content of and time for collecting

foreign, as opposed to domestic,

information, the Commission believes

that the basic principles and procedures

embodied in the 1978 rule and

discussed in the preamble have always

been and continue to be applicable to

both domestic and multi-national

business operations. Those principles

and procedures have withstood almost a

quarter of a century of experience—

experience that has often involved firms

obtaining and analyzing information

from foreign sources, especially in cases

involving products imported into the

U.S. Moreover, over that period, the

Commission has consistently recognized

that what information it is reasonable to

expect a firm to provide in a specific

case depends on a number of factors.

These include the size of the firm, the

nature of its business, the method in

which it conducts its operations, the age

of the product involved, and the

availability of relevant information. The

location from which such information

may be obtained and the difficulty in

obtaining that information are simply

additional factors to take into account.

The Commission notes that the

process of business globalization and

improvements in communication have

substantially reduced the impediments

to obtaining information from abroad

that might have existed twenty years

ago. Firms frequently communicate in

seconds via the computer, telephone,

and fax machine with their overseas

customers, suppliers, and corporate

relatives. Thus, the Commission sees no

sound justification for accepting NAM’s

implicit premise that obtaining foreign

information is so much more difficult

than obtaining the same types of

information generated domestically that

different policies and procedures should

apply. In fact, the Commission’s

experience demonstrates otherwise in

that firms that have reported foreign

information to the Commission, either

on their own initiative or upon request

of the staff, have been able to obtain the

necessary information in a timely

manner. Accordingly, for the reasons

discussed above, the Commission does

not believe that the concerns NAM has

expressed warrant withdrawing or

revising the policy statement.

c. Need for the Policy Statement

The Consumer Specialty Products

Association (CSPA) suggested that the

policy places an undue burden on

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Notices 30717

companies to implement monitoring

programs abroad, comparable to those in

the United States. The Association

therefore took the position that the

Commission must demonstrate the need

for such a policy before establishing it.

Section 15(b) contemplates that

manufacturers, distributors and retailers

must consider all information relevant

to the determination of whether a

specific product contains a defect which

could create a substantial product

hazard or an unreasonable risk of

serious injury or death. As the policy

statement points out, neither the law

nor the interpretative regulation

excludes information from evaluation

because of its geographic source.

Accordingly, to the extent that CSPA

implies that the statement imposes a

burden on firms that did not previously

exist, it is mistaken.

As an example of the need for the

policy, the Commission recently

accepted a substantial penalty to settle

allegations that a company failed to

report information relating to a defective

water distiller in a timely manner. That

information included analyses of

incidents of product failure in Asia

which the firm had learned about

substantially before it finally reported to

the Commission. Had the firm reported

that information to the Commission in

a timely manner, it could have

expedited the subsequent recall, thus

protecting consumers from the risk of

fire at a much earlier date. Fires that

later occurred in the U.S. could have

been prevented. Examples of other cases

in which information generated abroad

has been relevant include corrective

actions involving oil-filled radiators,

stacking toys, strollers, and swimming

vests, and civil penalty cases involving

children’s products, burners for boilers,

and pacifiers. Moreover, in terms of

need for the policy statement, with the

volume of imported products entering

the United States, information which is

only available abroad, such as that

related to product design,

manufacturing changes, and quality

assurance is essential to the evaluation

of potential defects. The statement helps

firms that may be unfamiliar with or

unaware of this aspect of reporting to

comply with their obligations under the

law.

d. Additional Comments

One commenter feared that the policy

statement would require firms to report

products that violate safety standards

issued by other countries, even if those

products were in full compliance with

U.S. requirements. The commenter

requested that the Commission adopt a

policy that would require the reporting

of foreign product safety issues only

when reporting would otherwise be

required under section 15(b). The

Commission believes that the

commentor may have misconstrued the

scope of the policy statement, since the

commentor’s suggested alternative is in

effect what the policy statement

contemplates.

Conclusion

The Commission does not believe that

any of the comments submitted warrant

withdrawing or revising the statement.

Accordingly, the Commission is issuing

the policy statement. The Commission

has, on its own initiative, made one

revision to the statement to make it clear

that the policy applies to information

concerning products manufactured

outside of the United States, as well as

to information about products

distributed abroad. The text of the

policy statement is as follows:

Guidance Document on Reporting

Information Under 15 U.S.C. 2064(b)

about Potentially Hazardous Products

Manufactured or Distributed Outside

the United States

Section 15(b) of the Consumer

Product Safety Act (CPSA), 15 U.S.C.

2064(b), imposes specific reporting

obligations on manufacturers, importers,

distributors and retailers of consumer

products distributed in commerce. A

firm that obtains information that

reasonably supports the conclusion that

such a product:

• Fails to comply with an applicable

consumer product safety rule or with

a voluntary consumer product safety

standard upon which the Commission

has relied under section 9 of the

CPSA,

• Contains a defect that could create a

substantial product hazard as defined

in section 15(a)(2) of the CPSA, 15

U.S.C. § 2064(a)(2), or

• Creates an unreasonable risk of

serious injury or death

must immediately inform the

Commission unless the firm has actual

knowledge that the Commission has

been adequately informed of the failure

to comply, defect, or risk.

The purpose of reporting is to provide

the Commission with the information it

needs to determine whether remedial

action is necessary to protect the public.

To accomplish this purpose, section

15(b) contemplates that the Commission

receive, at the earliest time possible, all

available information that can assist it

in evaluating potential product hazards.

For example, in deciding whether to

report a potential product defect, the

law does not limit the obligation to

report to those cases in which a firm has

finally determined that a product in fact

contains a defect that creates a

substantial product hazard or has

pinpointed the exact cause of such a

defect. Rather, a firm must report if it

obtains information which reasonably

supports the conclusion that a product

it manufactures and/or distributes

contains a defect which could create

such a hazard or that the product creates

an unreasonable risk of serious injury or

death. 15 U.S.C. 2064(b)(2) and (3); 16

CFR 1115.4 and 6. Nothing in the

reporting requirements of the CPSA or

the Commission’s interpretive

regulation at 16 CFR Part 1115 limits

reporting to information derived solely

from experience with products sold in

the United States. The Commission’s

interpretative rule enumerates, at 16

CFR 1115.12(f), examples of the

different types of information that a firm

should consider in determining whether

to report. The regulation does not

exclude information from evaluation

because of its geographic source. The

Commission interprets the statutory

reporting requirements to mean that, if

a firm obtains information that meets

the criteria for reporting listed above

and that is relevant to a product it sells

or distributes in the U.S., it must report

that information to the CPSC, no matter

where the information came from. Such

information could include incidents or

experience with the same or a

substantially similar product, or a

component thereof, sold in a foreign

country.

Over the past several years, the

Commission has received reports under

section 15(b) that have included

information on experience with

products abroad, and, when

appropriate, has initiated recalls based

in whole or in part on that experience.

Thus, a number of companies already

view the statutory language as the

Commission does. However, with the

expanding global market, more firms are

obtaining this type of information, but

many may be unfamiliar with this

aspect of reporting. Therefore, the

Commission issues this policy statement

to assist those firms in complying with

the requirements of section 15(b) of the

Consumer Product Safety Act.

Dated: June 1, 2001.

Sadye E. Dunn,

Secretary, Consumer Product Safety

Commission.

[FR Doc. 01–14299 Filed 6–6–01; 8:45 am]

BILLING CODE 6355–01–P