Business nervous that import safety scares will lead to stiff new penalties

Retailers and manufacturers are pressing for wholesale changes to a bill backed by Sen. Mark Pryor (D-Ark.) that would increase penalties on companies violating the Consumer Product Safety Act and require more public disclosure about allegedly defective products.

Pryor, who is the chairman of the Senate Commerce Consumer Affairs, Insurance and Automotive Safety subcommittee, said he remains open to changing his bill to accommodate some of industry’s concerns.

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But he also told The Hill that he is committed to both raising the fines on companies that violate consumer safety laws and requiring more public disclosure about safety issues.

“Some of these companies, with all due respect, and I do respect their efforts, are looking out for their own interests. But somebody needs to be looking out for the public’s interests. That’s where I see my role,” Pryor said.

Pryor’s bill would reform the Consumer Product Safety Commission (CPSC). It is to be marked up by Pryor’s Senate Commerce subcommittee on Tuesday.

While they oppose some aspects of the bill, retailers and manufacturers also say they support a CPSC reform bill in general because it would increase funding for the commission so that it can better handle rising safety concerns about imports.

“We want a bill because we think CPSC needs more money,” said Ed Krenik of Bracewell Giuliani, who is representing the Power Tool Institute on the issue.

He said manufacturers and retailers would work to make changes to the bill to ensure CPSC reform can be approved in this Congress, with the hope a final product can be satisfactory to industry.

“I think the good sign is the markup was postponed one week,” Krenik said. Initially, the CPSC Reform Act of 2007 introduced by Pryor was to be considered in committee on Oct. 25. “I think that shows they’re trying to give it the scrutiny it merits,” Krenik said.

He also noted that Pryor has told interested parties, including both consumer groups and industry, to provide their views on the bill.

Pryor said he and his staff have also discussed the issue with Sen. John Sununu (R-N.H.), the ranking subcommittee member, and Republican staff. But he has yet to secure a commitment from a GOP senator to support the bill.

“Everybody’s busy. I still am openly asking for a few Republicans to come in,” Pryor said.

Pryor’s legislation would increase the maximum criminal penalty for violations of the act to $100 million from the current $1.8 million. This goes much further than a House bill backed by Rep. Bobby Rush (D-Ill.) goes. That bill would increase the maximum penalty to $10 million.

The National Association of Manufacturers (NAM) and the National Retail Federation (NRF) both see the increased penalties as promoting litigation instead of cooperation.

CPSC acting Chairwoman Nancy Nord also criticized the penalties in testimony to the Senate Commerce Committee, saying they would induce companies to overwhelm CPSC with uninvestigated consumer complaints.

Privately, some lobbyists question whether the penalties are a sop to trial lawyers, a constituency loyal to Democrats. In the cycle ending in 2006, the American Association for Justice Political Action Committee gave $2,475,000 to Democrats, compared to $96,000 for Republicans. But Pryor disputes the notion that his measure is anti-business.

“The bottom line is that this bill is about protecting American consumers,” he said.

Pryor’s bill also would eliminate protections that prevent information provided by companies to the CPSC on a voluntary basis from being released to the public. The intention is to provide more information to consumers, but retailers and manufacturers argue this would result in a complete breakdown of voluntary communications.

“We want to protect the most internal discussions,” said Jonathan Gold of the NRF. He said retailers are working closely with NAM to change several provisions in the bill.

“The biggest problem for NAM members is changing the relationship between the CPSC and manufacturers and retailers,” said Rosario Palmieri, NAM’s vice president of infrastructure, legal and regulatory policy.

Pryor indicated the disclosure language is one area that could be altered during the markup to accommodate industry’s concerns. But he noted that safety information on automobiles gets posted on the National Highway Traffic Safety Administration site without great harm to automakers.

Pryor said there have been instances where CPSC “couldn’t or wouldn’t” release critical product safety information.

“We can structure this in a way in which we will not have a breakdown in communication,” Pryor said.

“It’s a balance. You want the public to know if there is a problem.”

Import safety is a hot issue in this year’s Congress, galvanized by the recent recalls of toys and other products manufactured in China. Besides Pryor’s bill, House Energy and Commerce Committee Chairman John Dingell (D-Mich.) is also working on legislation, and Rush’s bill has already been approved by his consumer protection subcommittee.

Business lobbyists privately admit they could be steamrolled, given the frenzy in Congress to respond to public concerns about the safety of imports.

Senate Majority Leader Harry Reid (D-Nev.) is considering moving legislation this year and has asked the Senate Commerce Committee when a bill could be ready for floor action, said one business lobbyist.

Pryor said he talked to Senate Majority Whip Dick Durbin (D-Ill.) and Senate Commerce Committee Chairman Daniel Inouye (D-Hawaii) on the floor Thursday about the bill. He said he would like a vote this year.

Even if tight schedules prevent action from taking place this year, several lobbyists said election-year politics in 2008 may add additional momentum to the bill.

Another provision in Pryor’s bill that has garnered opposition would allow state attorneys general to sue manufacturers and distributors for unlimited damages and other compensation on behalf of state residents. Pryor is a former Arkansas attorney general.

Retailers also oppose a provision that would allow whistleblowers to collect up to $25 million in civil penalties. They say it would give employees an incentive to report preliminary, erroneous or unsubstantiated information.

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