Product Safety Civil Penalties Improvement Act

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2474) to provide for an increased maximum civil penalty for violations under the Consumer Product Safety Act, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days to revise and extend their remarks and to include extraneous material on the bill under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I am the author of the third consumer protection bill that we are considering on the House floor this afternoon, H.R. 2474, the Product Safety Civil Penalties Improvement Act, which raises the cap on civil penalties that the Consumer Product Safety Commission can impose from $1.83 million to $10 million. Furthermore, the new cap will be phased in through two steps. It rises to $5 million as soon as the CPSC issues its new interpretive guidelines or one year after reenactment, whichever occurs first. Mr. Speaker, the cap will subsequently rise to its full $10 million one year after this initial increase. This new cap figure and two-step process is the product of careful negotiations and compromise with the minority.

Furthermore, the bill, as amended in this subcommittee, renders the factors used in assessing the amount of penalties more expansive and flexible, and it further makes clear that the current list of factors is not exclusive. This flexibility will allow the commission to take into account factors such as whether the manufacturer is a recidivist or a first-time offender when imposing these civil penalties. In this regard CPSC is required to promulgate interpretive rules on these penalty factors within 360 days.

Mr. Speaker, passage of H.R. 2474 is badly needed. For too long the CPSC has only been able to slap violators on the wrist with a puny civil penalties cap of $1.8 million. Under current law, section 15(b) of the Consumer Product Safety Act requires every manufacturer, every distributor, or retailer of a consumer product to notify the CPSC immediately upon information that reasonably supports the conclusion that a given product, one, violates a safety standard promulgated by the CPSC; two, contains a defect that could pose a substantial hazard; or, three, otherwise creates an unreasonable risk of injury or death.

Unfortunately, for many large companies, a civil penalty of $1.83 million is a mere drop in the bucket and does not always provide substantial and sufficient incentive for companies to report problems to the commission. The cost of civil penalties may be outweighed by the cost of compliance with the prohibitions and requirements of the law. For instance, at our June 6 hearing before the Subcommittee on Commerce, Trade, and Consumer Protection, we heard testimony that the $750,000 fine assessed by the CPSC against Wal-Mart for failing to report a defect in fitness machines represented 1 minute, 33 seconds' worth of sales for the retail giant.

While most companies try to do the right thing and report injuries in a timely manner to the CPSC, H.R. 2474 gives the commission a bigger hammer to crack down on bad corporate behavior that leads to defective and dangerous products on the market.

Mr. Speaker, I urge a ``yes'' vote from my colleagues on this bipartisan piece of legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, this, again, is another example of commonsense legislation, bipartisan cooperation that is aimed at improving and enhancing the flow of commerce between consumers and manufacturing.

Mr. Speaker, this piece of legislation takes a giant, giant step toward improving the overall product safety, product recall phenomenon that exists to stream the system that exists.

I urge passage of this outstanding piece of legislation.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I yield myself such time as I may consume. This is a straightforward bill, and we support it on this side. Of the four consumer product safety bills that we have on the floor, we feel this is the one that is the most straightforward and, obviously, we support and we speak in favor of it.

My colleagues, go back to 1972. The House passed the Consumer Product Safety Act. At that time the penalty was simply $500,000. Now let's leap ahead. Adjusted for inflation, what is that equivalent in today's dollars? About $2.5 million. However, the original penalty maximum in the CPSA was not indexed to inflation; so $500,000 as years went by up to 1990 was a pretty paltry amount over this period of time. And then in 1990 it was indexed to inflation so that the current civil penalty maximum is $1.825 million.

The chairman would indicate that is a small incentive for companies out there. I submit that the penalty is not the big product for companies. It's bad PR. If you are a Wal-Mart and you have a product that is defective or you are a toy manufacturer, the penalty is going to be a deterrent, but the big deterrent is you won't be able to sell that product if those products have to be recalled and everybody knows that your

company has manufactured a defective product.

I support the ability of the Consumer Product Safety Commission to penalize those who willfully, willfully violate the act. At the same time, we are not sure whether the effect of an increase in potential penalties to as much as $10 million will have the desired effect.

I can support this measure, however, because there are three key factors when you look at this bill. First, the increase in the penalty maximum will be phased in, thanks to the chairman and his staff and our staff working together. Two, this measure amends the CPSA to include specific penalty assessment factors. And, three, the measure directs the CPSC to promulgate rules interpreting these factors and delineates how the commission will assess the fines.

My colleagues, this last factor in particular is important to our business community. Interpretive rules are necessary to provide guidance, clarity, and some predictability to regulate industries. Additionally, interpretive guidelines will provide a constant framework within which the CPSC may act. $10 million is too great an amount to not act responsibly, I agree with the chairman. That is a deterrent, and consistently imposing such fines is important.

But again, I point out that the larger deterrent for corporations is the fact that the publicity will be damaging to their sale of future products.

So, I would commend the chairman for his leadership in updating the CPSC on this matter, again, for his staff working with us to create, I think, a bipartisan work product that all of us, both Democrats and Republican, can support.

Mr. Speaker, I yield back the balance of my time.