PART 1119—CIVIL PENALTY FACTORS Authority: 15 U.S.C. 2058, 2063, 2064, 2067(b), 2068, 2069, 2076(e), 2084, 1261, 1263, 1264, 1270, 1273, 1278, 1191, 1192, 1193, 1194, 1195, 1196. Source: 75 FR 15998, Mar. 31, 2010, unless otherwise noted. § 1119.1 Purpose. This part sets forth the Consumer Product Safety Commission's (Commission) interpretation of the statutory factors considered in determining the amount of civil penalties that the Commission may seek or compromise. The policies behind, and purposes of, civil penalties include the following: Deterring violations; providing just punishment; promoting respect for the law; promoting full compliance with the law; reflecting the seriousness of the violation; and protecting the public. § 1119.2 Applicability. This part applies to all civil penalty determinations the Commission may seek or compromise under the Consumer Product Safety Act (CPSA) (15 U.S.C. 2051-2089), the Federal Hazardous Substances Act (FHSA) (15 U.S.C. 1261-1278), and the Flammable Fabrics Act (FFA) (15 U.S.C. 1191-1204). Any person who knowingly violates section 19 of the CPSA, section 4 of the FHSA, or section 5(e) of the FFA, is subject to a civil penalty. § 1119.3 Definitions. For purposes of this rule, the following definitions apply: (a) Product defect (b) Violation (c) Person § 1119.4 Factors considered in determining civil penalties. (a) Statutory Factors. (i) CPSA (15 U.S.C. 2069(b)). (A) The nature of the product defect; (B) The severity of the risk of injury; (C) The occurrence or absence of injury; (D) The number of defective products distributed; (E) The appropriateness of such penalty in relation to the size of the business of the person charged, including how to mitigate undue adverse economic impacts on small businesses; and (F) Such other factors as appropriate. (ii) FHSA (15 U.S.C. 1264 (c)(3)). (A) The nature of the substance; (B) Severity of the risk of injury; (C) The occurrence or absence of injury; (D) The amount of substance distributed; (E) The appropriateness of such penalty in relation to the size of the business of the person charged, including how to mitigate undue adverse economic impacts on small businesses; and (F) Such other factors as appropriate. (iii) FFA (15 U.S.C. 1194 (e)(2)). (A) The severity of the risk of injury; (B) The occurrence or absence of injury; (C) The appropriateness of such penalty in relation to the size of the business of the person charged; and (D) Such other factors as appropriate. (2) The nature, circumstances, extent, and gravity of the violation. (3) Nature of the product defect. (4) Severity of the risk of injury. (5) The occurrence or absence of injury. (6) The number of defective products distributed. (7) The appropriateness of such penalty in relation to the size of the business of the person charged, including how to mitigate undue adverse economic impacts on small businesses. (i) The Commission is required to consider the size of the business of the person charged in relation to the amount of the penalty. This factor reflects the relationship between the size of a business and the policies behind, and purposes of, a penalty (as noted above in § 1119.1). In considering business size, the Commission may look to several factors including, but not limited to, the number of employees, net worth, and annual sales. A business's size and a business's ability to pay a penalty are separate considerations. In some cases for small businesses, however, these two considerations may relate to each other. The Commission will be guided, where appropriate, by relevant financial factors to determine a small business's ability to pay a penalty, including, but not limited to, liquidity, solvency, and profitability. The burden to present clear, reliable, relevant, and sufficient evidence relating to a business's size and ability to pay rests on the business. (ii) The statute requires the Commission to consider how to mitigate the adverse economic impacts on small businesses only if those impacts would be undue. What the Commission considers in determining what is undue may include, but is not limited to, the business's size and financial factors relating to its ability to pay. When considering how to mitigate undue adverse economic impacts, the Commission will, as appropriate, also follow its Small Business Enforcement Policy set forth at § 1020.5. (b) Other factors as appropriate. (1) Safety/compliance program and/or system relating to a violation. (2) History of noncompliance. (3) Economic gain from noncompliance. (4) Failure to respond in a timely and complete fashion to the Commission's requests for information or remedial action. § 1119.5 Enforcement notification. A person will be informed in writing if it is believed that the person has violated the law and if the Commission intends to seek a civil penalty. Any person who receives such a writing will have an opportunity to submit evidence and arguments that it should not pay a penalty or should not pay a penalty in the amount sought by the Commission.