The Consumer Product Safety Commission does not have the power to fine manufacturers for failing to report unsafe, defective products, a federal court ruled yesterday.
Instead, the agency must go to court to win civil penalties from firms accused of violating the reporting law, the U.S. Circuit Court of Appeals here said. The decision came in a case originally filed by Athlone Industries Inc., a Parsippany, N.J., company that manufactured automatic pitching machines.
A number of injuries were reported as a result of the arm of the machine springing forward unexpectedly, even when the machine had been turned off, and striking anyone within range. When the CPSC charged that Athlone didn't notify the government of complaints received about the machine and initiated proceedings to fine the company, Athlone sued on the grounds that CPSC lacked authority to impose fines on its own.
Writing for the three-judge panel, Judge Malcolm Wilkey said "the commission can decide how much of a penalty to seek . . . but it is the court that decides whether to assess the penalty and the amount to be assessed."
Commissioners, who had spent the morning celebrating the agency's 10th anniversary, spent the afternoon trying to assess the damage from this latest setback. The agency has been hit by a series of legal and political problems in recent months, including a campaign by the Reagan administration to reduce CPSC manpower and money. In addition, a number of companies have challenged the agency in court. Last month, as a result of one of those cases, the Fifth Circuit Court of Appeals overturned the CPSC ban on urea formaldehyde foam insulation.
Yesterday's Athlone decision was described as significant by commission officials who fear that it will diminish their ability to negotiate the quick recall of unsafe products from the marketplace.
"There is a bargaining process in arranging a recall," said Commissioner Stuart M. Statler. The loss of civil penalty power would weaken the agency's bargaining position, and the "end package that is worked out for consumers will be somewhat weaker and notification to consumers of defective products may be delayed," he said.
Commissioner Edith Barksdale Sloan said the court ruling is "alarming" and predicted that, "If we have to go through court every time we want to impose a penalty, it will be an uphill battle to get companies to report hazards."