As the February 4th commenting deadline for CPSC’s voluntary remedial actions rulemaking approaches, many companies and trade associations are pondering not only the wisdom of CPSC’s insertion of compliance programs into voluntary recall negotiations, but also how those compliance programs might evolve and take shape moving forward. To date, the agency has listed a few circumstances where it may seek to impose a compliance program, some of the specific provisions that may be included in an agreement to establish a program, and how such an agreement would be enforced by the agency.
Given the Commission’s unambiguously stated intent to use compliance programs as an enforcement mechanism in civil penalty and recall negotiations, one common question we have heard is whether any additional guidance or information beyond what is written in the proposed voluntary remedial actions rule might also be forthcoming from the CPSC. Although the agency has not provided any formal indication on whether it will ever issue such guidance, product safety regulators in Australia have provided guidance for compliance program provisions included in enforcement actions called “enforceable undertakings” (or “Section 87B” undertakings), which are often entered into in lieu of litigation for violations of Australia’s Trade Practices Act.
Most notably, the Australian Competition & Consumer Commission (ACCC) has produced a series of templates that micro, small, medium, and large businesses can use to develop their own programs. At one point in time, the ACCC also offered more extensive guides for small and large businesses (the “retired” small business guide can be found here—it’s unclear whether either document will be reissued). The ACCC expressly states that these templates provide an example of:
What the ACCC is likely to accept by way of compliance programs included in an administrative resolution to an enforcement action and
An indication of what the ACCC considers advisable in compliance programs implemented by companies voluntarily
Although certain parts of the CPSC’s regulated products handbook, recall handbook, and the handbook for manufacturing safer consumer products could shed some additional light on the expected content of compliance programs, the agency has not yet provided targeted guidance on this subject. Given that the CPSC has already mandated compliance programs in some civil penalty settlements, has proposed to do the same for certain product recall agreements, and has issued a civil penalties rule that contemplates the existence of a compliance program as a potential mitigating factor in formulating a penalty amount, it is no surprise that many stakeholders are seeking additional guidance on what exactly the CPSC is looking for in such a program.