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What the Future Holds

By Sharon Caffrey and Kerry McTigue
March 30, 2009
National Law Journal

What the Future Holds

By Sharon Caffrey and Kerry McTigue
March 30, 2009
National Law Journal

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Throughout his eight years in office, President George W. Bush's administration encountered strong opposition for not displaying sufficient regulatory activism. The federal Environmental Protection Agency (EPA), Occupational Safety and Health Administration (OSHA), Food and Drug Administration (FDA) and Consumer Product Safety Commission (CPSC), four key agencies that are charged with overseeing major areas of public safety, were the focus of much of this criticism. With Democratic majorities in both houses of the U.S. Congress for the first time since 1994, the Obama administration will likely shift from the less aggressive regulatory style of the past eight years to one of proactive federal regulation. President Barack Obama's campaign platform contained a promise to increase regulations, including regulations by the EPA, OSHA, FDA and CPSC. From his selections for agency heads to the regulatory review stay memorandum issued by White House Chief of Staff Rahm Emanuel on Jan. 20, it appears that Obama intends to fulfill this campaign promise.

EPA will likely focus on greenhouse gas reductions

Lisa Jackson, Obama's EPA administrator, was previously the chief of staff to New Jersey Governor Jon Corzine and commissioner of the state's Department of Environmental Protection. During her confirmation hearing, Jackson vowed that "science must be the backbone of what EPA does" and that "if confirmed, [she] will administer with science as [her] guide," but will consider "stewardship side by side with robust economic growth." Kent Garber, "EPA Nominee Jackson Under Pressure from Democrats to Rejuvenate Environmental Agency," U.S. News & World Report, Jan. 14, 2009. However, her detractors have pointed to the EPA's takeover of New Jersey's Superfund sites during the Bush administration due to the state's lack of cleanup enforcement.

Based upon Obama's campaign platform, among the key tasks the EPA is likely to face are greenhouse gas emissions reductions, improving the strength and enforcement of clean air and water regulations, preventing damage to drinking water caused by factories and enforcing Superfund cleanup regulations. Elise Castelli, "Jackson's Mission at EPA: Reverse Bush Course," Fed. Times, Dec. 22, 2008, at 9. Many of Obama's pre-election policy statements include promises to regulate and decrease greenhouse emissions by 80% by 2050. Obama's stated intent is to tie the clean air goals to his economic recovery plan by investing in the technology needed to meet those goals.

During the Bush administration, Senator Patty Murray, D-Wash., worked to pass legislation to ban all uses of asbestos. She introduced such legislation in 2001, and in 2007 the Senate passed S. 742, the Ban Asbestos in America Act. However, the legislation did not get through the House before the congressional session ended. Murray will likely reintroduce her asbestos ban legislation. Given the economic crisis, it is uncertain whether passage of this legislation will be a priority for a Congress faced with significant economic issues.

With regard to OSHA, it is likely that this administration will be more proactive than the last in enforcement of existing regulations and inspections of employers' facilities, and will increase the number of new regulations. Secretary of Labor Hilda Solis has said that she will enforce regulations aimed at protecting workers. Yet costly regulations may hamstring already struggling manufacturers. Further, as new regulations are enacted, industries hope that agency risk assessments will be based upon scientific rather than anecdotal evidence.

Obama announced on March 14 that he has chosen Dr. Margaret Hamburg as the new FDA commissioner, with an eye toward reforming the agency in the wake of numerous scandals. On March 2, Kansas Governor Kathleen Sebelius was selected as the secretary of Health and Human Services. She will play a major role in overhauling a health care system that has been described as "broken." Dr. Sidney Wolfe, a known critic of the pharmaceutical industry, has been appointed to a committee that advises the FDA on drug safety issues. Wolfe has claimed that the pharmaceutical industry has been in crisis during the past 20 years because drugs and medical devices have been approved over the objections of FDA scientists, and that the FDA has been a tool of the industry. Erin Marie Daly, "Drug Industry Critic Tapped for FDA Seat," Law360, http://productliability.law360.-com/print_article/82523 (Jan. 12, 2009).

The appointments of Sebelius and Wolfe, together with Obama's stated goal of improving health care for families and the poor, portend major changes at the FDA. Pharmaceutical and medical device companies can expect that their products will face greater scrutiny during clinical trials and that it may take longer for approvals.

Products are also likely to be more highly regulated. Plaintiffs who bring products liability claims often turn to regulatory breaches as evidence of product defects. Although the standard for regulations is a protective one, and the standard for proving product defects in a court of law is proof of causation to a reasonable degree of medical or scientific certainty, plaintiffs likely will try to rely on regulatory standards as a basis for proving product defect claims in U.S. courts. While the two standards are not interchangeable, new regulations may still result in a wave of litigation against manufacturers. As a result, manufacturers should ensure that their products warnings are revised as necessary to comport with any new regulations.

Over the years, the CPSC's budget and number of employees has declined, and during the Bush administration the agency was strongly criticized for being lax in policing the safety of consumer products. As a result of highly publicized recalls of toys produced in China, last summer, Bush signed into law the Consumer Product Safety Improvement Act of 2008 (CPSIA), which makes sweeping changes to consumer product safety laws and calls for dramatic increases in the CPSC's budget and staffing levels. Obama has promised to continue such advocacy as president. In a first step, he named Pamela Gilbert, the former executive director of the CPSC during the Clinton administration, to his transition team to assist in making CPSC appointments.

The CPSIA bans lead in all children's products and phthalates in children's toys and child care products. The CPSIA also calls for phased-in, third-party testing by CPSC-approved labs of all children's products for compliance with CPSC safety regulations and standards. It is expected that the CPSC under Obama will be very focused on compliance issues as to the child safety laws it enforces. Obama's Justice Department is also likely to be more aggressive in pursuing penalty actions. The CPSIA dramatically increases the maximum civil penalties associated with CPSC violations from $1.8 million to $15 million. Other penalties can include asset forfeitures and up to five years' imprisonment for company officers and directors. CPSC penalty actions that are not settled by the CPSC are handled by the Office of Consumer Litigation of the Department of Justice. Also, many anticipate that Obama will return the CPSC to a full complement of five commissioners. There are now only two, which has made it difficult for the CPSC to undertake certain actions.

Increased port surveillance of imported products

It is expected that the Obama administration will push for increased port surveillance and better use of technology to assist in that effort. The CPSC recently created a new subdivision, the Imports Surveillance Division, which works with U.S. Customs and Border Protection to identify possible problem shipments through the use of the CBP's import tracking system. The CPSIA authorizes seizure and destruction of imports that do not comply with safety regulations or lack proper paperwork.

More aggressive recall and safety measures are likely to be undertaken on a global scale. During the past several years, the CPSC has entered into agreements with consumer product safety authorities in many other countries to engage in joint product safety efforts. The CPSIA permits the CPSC to share confidential commercial information with foreign product safety regulators. The CPSC is also likely to put a greater focus on state and local actions. It permits the CPSC to share confidential commercial and enforcement data with state and local regulators, and it gives states new rights to enforce federal product safety laws. As such, there is a good possibility that certain states will initiate their own actions against companies that allegedly run afoul of CPSC laws. Attorney General Jerry Brown in California has already begun taking steps toward enforcing CPSC laws and parallel state laws.

Based on the information presented above, it may be critical for those involved with consumer products to make certain that they understand and are in compliance with the necessary laws and regulations. In the long run, taking this course of action should help companies avoid the substantial costs associated with tainted products, including recall costs; civil and criminal penalties; the legal costs of defending possible injury actions; and adverse publicity.

Sharon Caffrey is a partner in the Philadelphia office of Duane Morris and is the co-head of the products liability and toxic torts division of the firm's trial practice group. Kerry McTigue is a partner in the firm's Washington, D.C. office, concentrating on products liability and intellectual property litigation. Karen Crawford, Robert Hopkins and Paul Rosenlund, partners in the San Diego, Baltimore and San Francisco offices, respectively, contributed to the article.

Reprinted with permission from The National Law Journal, © ALM Media Properties LLC. All rights reserved.