Reporting Requirements Under the Tread Act and the Consumer Product Safety Act

October 1, 2004

On October 14, 2004, Murchison & Cumming hosted the first annual Fall Symposium entitled “Product Liability: Strategies For Success.” The following is an excerpt from the seminar handout materials.

I. Reporting Requirements Under The TREAD Act

On November 1, 2000, Congress enacted the TREAD (Transportation Recall Enhancement, Accountability, and Documentation Act) Act, codified at 49 U.S.C. § 30101 et seq. (2003). The TREAD Act addresses several issues raised by the Ford/Firestone tire recall, such as defect reporting requirements, see 49 U.S.C. § 30166, enforcement measures, see 49 U.S.C. §§ 30165, 30170, and “significantly under inflated tires,” see TREAD Act § 13.

Regarding defect reporting requirements, the focus of this memorandum, the TREAD Act requires automakers to notify the Secretary of Transportation within five days of discovery of a defect or the need for a safety recall. See 49 C.F.R. § 573.6. This requirement applies to related recalls in foreign countries as well. See 49 U.S.C. § 30166(l)(1),(2).

The Act requires dynamic rollover tests for SUVs and trucks and tougher standards in regulation of design and construction of child safety seats, specifically to side impact and head injuries. See 49 C.F.R. § 572.1 et seq.

The Act also establishes civil and criminal penalties for failure to comply with its regulations. Civil penalties may be as high as $5,000 for each violation, with a maximum of $15 million per day for accumulated daily violations. See 49 U.S.C. § 30165(a)(2). This is a risk some manufacturers may not be willing to take.

II.Reporting Requirements Under The Consumer Product Safety Act

The Consumer Product Safety Act, 15 U.S.C. §§ 2051-2084, initially adopted in 1972, sets forth consumer product safety rules, including product safety standards and warning requirements. The Act established the Consumer Product Safety Commission (“CPSC”), an independent federal regulatory agency with a wide range of powers over consumer products, including authority to adopt and implement product safety standards, ban the sale of unsafe products, and require companies to notify consumers of product hazards
Section 15(b) of the Consumer Product Safety Act, 15 U.S.C. § 2064(b), requires manufacturers, importers, distributors, and retailers of consumer products to notify the CPSC if they obtain information that reasonably supports the conclusion that a product (1) fails to comply with a consumer product safety standard established by the CPSC or a voluntary consumer product safety standard upon which the CPSC has relied under section 9 of the Act; (2) contains a defect which could create a “substantial product hazard”; or (3) creates an unreasonable risk of serious injury or death.

The CPSC has recommended that, at a minimum, a report is required if a jury or court has determined in a product case involving serious injury or death that a product presents an unreasonable risk or is unreasonably dangerous for its intended use. In addition, the Act bans certain hazardous products for use by consumers, including Butyl Nitrite and Isopropal Nitrite and other nitrites. See 15 U.S.C. §§ 2057a, 2057b...