Generac Power Systems, Inc., 29891-29894 [2023-09820]

Agencies

• Consumer Product Safety Commission

[Federal Register Volume 88, Number 89 (Tuesday, May 9, 2023)]
[Notices]
[Pages 29891-29894]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-09820]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 23-C0002]


Generac Power Systems, Inc.

AGENCY: Consumer Product Safety Commission.

ACTION: Notice.

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SUMMARY: The Commission publishes in the Federal Register any 
settlement that it provisionally accepts under the

[[Page 29892]]

Consumer Product Safety Act. Published below is a provisionally 
accepted Settlement Agreement with Generac Power Systems, Inc., 
containing a civil penalty in the amount of $15,800,00.00, subject to 
the terms and conditions of the Settlement Agreement. The Commission 
voted unanimously (4-0) to provisionally accept the proposed Settlement 
Agreement and Order pertaining to Generac Power Systems, Inc.

DATES: Any interested person may ask the Commission not to accept this 
agreement or otherwise comment on its contents by filing a written 
request with the Office of the Secretary by May 24, 2023.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to Comment 23-C0002, Office of the 
Secretary, Consumer Product Safety Commission, 4330 East-West Highway, 
Bethesda, MD 20814; telephone: (240) 863-8938 (mobile), (301) 504-7479 
(office); email: [email protected].

FOR FURTHER INFORMATION CONTACT: Asha Allam, Trial Attorney, Division 
of Enforcement and Litigation, Office of Compliance and Field 
Operations, Consumer Product Safety Commission, 4330 East-West Highway, 
Bethesda, Maryland 20814; [email protected], 301-504-7402 (office).

SUPPLEMENTARY INFORMATION: The text of the Settlement Agreement and 
Order appear below.

    Dated: May 3, 2023.
Pamela J. Stone,
Acting Secretary.

United States of America

Consumer Product Safety Commission

    In the Matter of: GENERAC POWER SYSTEMS, INC.

CPSC Docket No.: 23-C0002

Settlement Agreement

    1. In accordance with the Consumer Product Safety Act, 15 U.S.C. 
2051-2089 (``CPSA''), and 16 CFR 1118.20, Generac Power Systems, Inc. 
(``Generac''), and the United States Consumer Product Safety Commission 
(``Commission''), through its staff, hereby enter into this Settlement 
Agreement (``Agreement''). The Agreement and the incorporated attached 
Order resolve staff's charges set forth below.

The Parties

    2. The Commission is an independent federal regulatory agency, 
established pursuant to, and responsible for, the enforcement of the 
CPSA, 15 U.S.C. 2051-2089. By executing the Agreement, staff is acting 
on behalf of the Commission, pursuant to 16 CFR 1118.20(b). The 
Commission issues the Order under the provisions of the CPSA.
    3. Generac is a corporation, organized and existing under the laws 
of the state of Wisconsin, with its principal place of business in 
Waukesha, Wisconsin.

Staff Charges

    4. Between June 2013 and June 2021, Generac manufactured in or 
imported into the United States, and distributed, offered for sale, and 
sold approximately 321,000 Generac[supreg] or DR[supreg] brand 6500-
watt and 8000-watt portable generators, unit types XT8000E, XT8000EFI, 
GP6500, GP6500E, GP8000E, PRO 6500M, PRO 6500E, and HomeLink 6500E in 
32 models (``Portable Generators'' or ``Subject Products'').
    5. The Subject Products are ``consumer products'' that were 
``import[ed]'' and ``distribut[ed] in commerce,'' as those terms are 
defined or used in sections 3(a)(5), (7), and (9) of the CPSA, 15 
U.S.C. 2052(a)(5), (7), and (9). Generac is a ``distributor'' of the 
Subject Products, as such term is defined in section 3(a)(8) of the 
CPSA, 15 U.S.C. 2052(a)(8).
Violation of CPSA Section 19(a)(4)
    6. The Subject Products contain a defect which could create a 
substantial product hazard or create an unreasonable risk of serious 
injury or death because an unlocked handle can pinch consumers' fingers 
against the generator frame when the generator is moved, posing finger 
amputation and crushing hazards.
    7. Beginning in October 2018 and continuing into 2020, Generac 
received reports from consumers whose fingers were partially amputated 
or crushed by the unlocked handle of the Subject Products, which 
constituted grievous bodily injury, as defined in 16 CFR 1115.12(d).
    8. During that same time frame, in an effort to prevent the finger 
amputation and crushing hazard, the Firm began evaluating designs to 
add a handle hinge guard for existing models of Subject Products, 
redesigning the handle for new models, adding warning labels near the 
handle hinge, and revising the owner's manual to include additional 
instructions and warnings regarding the importance of engaging the 
locking pin when moving the product.
    9. Despite possessing information that reasonably supported the 
conclusion that the Subject Products contained a defect that could 
create a substantial product hazard or created an unreasonable risk of 
serious injury or death, Generac did not immediately report to the 
Commission.
    10. By the time Generac filed an initial report with the Commission 
under 15 U.S.C. 2064(b) concerning the Subject Products, the Firm had 
received five reports of consumers suffering finger amputations while 
attempting to transport the Subject Products that required 
hospitalization, surgery, and/or sutures and resulted in permanent 
disfigurement.
    11. The Commission and Generac jointly announced the recall of the 
Subject Products on July 29, 2021 with a repair remedy and instruction 
to stop using the Subject Products, unless the locking pin has been 
inserted to secure the handle in place before and after moving the 
generator.
    12. After Generac reported a post-recall incident involving a 
repaired but unlocked Subject Product, the Commission and Generac 
jointly re-announced the recall of the Subject Products on November 10, 
2022 with a revised repair remedy consisting of a set of spacers to 
move the handle away from the frame, eliminating the pinch point, and 
instruction to stop using unrepaired Subject Products, unless the 
locking pin has been inserted to secure the handle in place before and 
after moving the generator.
Failure to Timely Report
    13. Despite having information reasonably supporting the conclusion 
that the Subject Products contained a defect or created an unreasonable 
risk of serious injury or death, Generac did not notify the Commission 
immediately of such defect or risk, as required by sections 15(b)(3) 
and (4) of the CPSA, 15 U.S.C. 2064(b)(3), (4), in violation of section 
19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4).
    14. Because the information in Generac's possession about the 
Subject Products constituted actual and presumed knowledge, Generac 
knowingly violated section 19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4), 
as the term ``knowingly'' is defined in section 20(d) of the CPSA, 15 
U.S.C. 2069(d).
    15. Pursuant to section 20 of the CPSA, 15 U.S.C. 2069, Generac is 
subject to civil penalties for its knowing violation of section 
19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4).

Response of Generac

    16. This agreement does not constitute an admission by Generac to 
the staff's charges as set forth in paragraphs 4 through 15 above, 
including without limitation that the Subject Product contained a 
defect that

[[Page 29893]]

could create a substantial product hazard or created an unreasonable 
risk of serious injury or death; that Generac failed to notify the 
Commission in a timely matter in accordance with section 15(b) of the 
CPSA, 15 U.S.C. 2064(b); and that Generac knowingly violated section 
19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4), as the term ``knowingly'' 
is defined in section 20(d) of the CPSA, 15 U.S.C. 2069(d).
    17. Generac enters into this Agreement to settle this matter and to 
avoid the cost, distraction, delay, uncertainty, and inconvenience of 
protracted litigation or other proceedings. Generac does not admit that 
it violated the CPSA or any other law, and Generac's willingness to 
enter into this Agreement and Order does not constitute, nor is it 
evidence of, an admission by Generac of liability or violation of any 
law.

Agreement of the Parties

    18. Under the CPSA, the Commission has jurisdiction over the matter 
involving the Subject Products and over Generac.
    19. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Generac or a 
determination by the Commission that Generac violated the CPSA.
    20. In settlement of staff's charges, Generac shall pay a civil 
penalty in the amount of fifteen million, eight hundred thousand 
dollars ($15,800,000) (``Total Civil Penalty Amount''). The $15,800,000 
Payment shall be paid within thirty (30) calendar days after receiving 
service of the Commission's final Order accepting the Agreement. All 
payments to be made under the Agreement shall constitute debts owing to 
the United States and shall be made by electronic wire transfer to the 
United States via https://www.pay.gov, for allocation to, and credit 
against, the payment obligations of Generac under this Agreement. 
Failure to make such payment by the date specified in the Commission's 
final Order shall constitute Default.
    21. The Commission or the United States may seek enforcement for 
any breach of, or any failure to comply with, any provision of this 
Agreement and Order in United States District Court, to seek relief 
including, but not limited to, collecting amounts due.
    22. All unpaid amounts, if any, due and owing under the Agreement, 
shall constitute a debt due and immediately owing by Generac to the 
United States, and interest shall accrue and be paid by Generac at the 
federal legal rate of interest set forth at 28 U.S.C. 1961(a) and (b) 
from the date of Default, until all amounts due have been paid in full 
(hereinafter ``Default Payment Amount'' and ``Default Interest 
Balance''). Generac shall consent to a Consent Judgment in the amount 
of the Default Payment Amount and Default Interest Balance, and the 
United States, at its sole option, may collect the entire Default 
Payment Amount and Default Interest Balance, or exercise any other 
rights granted by law or in equity, including, but not limited to, 
referring such matters for private collection, and Generac agrees not 
to contest, and hereby waives and discharges any defenses to, any 
collection action undertaken by the United States, or its agents or 
contractors, pursuant to this paragraph. Generac shall pay the United 
States all reasonable costs of collection and enforcement under this 
paragraph, respectively, including reasonable attorney's fees and 
expenses.
    23. After staff receives this Agreement executed on behalf of 
Generac, staff shall promptly submit the Agreement to the Commission 
for provisional acceptance. Promptly following provisional acceptance 
of the Agreement by the Commission, the Agreement shall be placed on 
the public record and published in the Federal Register, in accordance 
with the procedures set forth in 16 CFR 1118.20(e). If the Commission 
does not receive any written request not to accept the Agreement within 
fifteen (15) calendar days, the Agreement shall be deemed finally 
accepted on the 16th calendar day after the date the Agreement is 
published in the Federal Register, in accordance with 16 CFR 
1118.20(f).
    24. This Agreement is conditioned upon, and subject to, the 
Commission's final acceptance, as set forth above, and it is subject to 
the provisions of 16 CFR 1118.20(h). Upon the later of: (i) 
Commission's final acceptance of this Agreement and service of the 
accepted Agreement upon Generac, and (ii) the date of issuance of the 
final Order, this Agreement shall be in full force and effect, and 
shall be binding upon the parties.
    25. Effective upon the later of: (1) the Commission's final 
acceptance of the Agreement and service of the accepted Agreement upon 
Generac and (2) and the date of issuance of the final Order, for good 
and valuable consideration, Generac hereby expressly and irrevocably 
waives and agrees not to assert any past, present, or future rights to 
the following, in connection with the matter described in this 
Agreement:
    (i) an administrative or judicial hearing;
    (ii) judicial review or other challenge or contest of the 
Commission's actions;
    (iii) a determination by the Commission of whether Generac failed 
to comply with the CPSA and the underlying regulations;
    (iv) a statement of findings of fact and conclusions of law; and
    (v) any claims under the Equal Access to Justice Act.
    26. Generac shall implement and maintain a compliance program 
(``Compliance Program'') designed to ensure compliance with the CPSA 
with respect to any consumer product imported, manufactured, 
distributed or sold by Generac, which shall contain the following 
elements:
    (i) written standards, policies, and procedures, including those 
designed to ensure that information that may relate to or impact CPSA 
compliance are conveyed effectively to personnel responsible for CPSA 
compliance, whether or not an injury has been reported;
    (ii) procedures and systems for tracking and reviewing claims, 
including warranty claims, and reports for safety concerns and for 
implementing corrective and preventive actions when compliance 
deficiencies or violations are identified;
    (iii) procedures requiring that information required to be 
disclosed by Generac to the Commission is recorded, processed, and 
reported in accordance with applicable law;
    (iv) procedures requiring that all reporting made to the Commission 
is timely, truthful, complete, accurate, and in accordance with 
applicable law;
    (v) procedures requiring that prompt disclosure is made to 
Generac's management of any significant deficiencies or material 
weaknesses in the design or operation of such internal controls that 
are reasonably likely to affect adversely, in any material respect, 
Generac's ability to record, process and report to the Commission in 
accordance with applicable law;
    (vi) mechanisms to effectively communicate to all applicable 
Generac employees, through training programs or other means, 
compliance-related company policies and procedures to prevent 
violations of the CPSA;
    (vii) a mechanism for confidential employee reporting of 
compliance-related questions or concerns to either a compliance officer 
or to another senior manager with authority to act as necessary;
    (viii) Generac's senior management responsibility for, and general 
board oversight of, CPSA compliance, including the implementation of 
steps to ensure that incident and injury data

[[Page 29894]]

is reviewed and analyzed for purposes of CPSA Section 15b reporting;
    (ix) an annual internal audit of the effectiveness of policies, 
procedures, systems, and training related to CPSA compliance that 
evaluates opportunities for improvement, deficiencies or weaknesses, 
and the Firm's overall culture of compliance; and
    (x) retention of all CPSA compliance-related records for at least 
five (5) years, and availability of such records to CPSC staff upon 
request.
    27. Generac shall submit a report under CPSA Section 16(b), sworn 
to under penalty of perjury:
    (i) describing in detail its compliance program and internal 
controls and the actions Generac has taken to comply with each 
subparagraph of paragraph 26;
    (ii) affirming that during the reporting period, Generac has 
reviewed its compliance program and internal controls, including the 
actions referenced in subparagraph (i) of this paragraph, for 
effectiveness, and that it complies with each subparagraph of paragraph 
26, or describing in detail any non-compliance with any such 
subparagraph; and
    (iii) identifying the results of the annual internal audit 
referenced in paragraph 26(ix) and any changes or modifications made 
during the reporting period to Generac's compliance program or internal 
controls to ensure compliance with the terms of the CPSA and, in 
particular, the requirements of CPSA Section 15 related to timely 
reporting.
    Such reports shall be submitted annually to the Director, Office of 
Compliance, Division of Enforcement and Litigation, for a period of 
three (3) years. The first report shall be submitted 30 days after the 
close of the first 12-month reporting period, which begins on the date 
of the Commission's Final Order of Acceptance of the Agreement, and 
successive reports shall be due annually on the same date thereafter. 
Without limitation, Generac acknowledges and agrees that failure to 
make such timely and accurate reports as required by this Agreement and 
Order may constitute a violation of Section 19(a)(3) of the CPSA and 
may subject the Firm to enforcement under section 22 of the CPSA.
    28. Notwithstanding and in addition to the above, Generac shall 
promptly provide written documentation of any changes or modifications 
to its compliance program or internal controls and procedures, 
including the effective dates of the changes or modifications thereto. 
Generac shall cooperate fully and truthfully with staff and shall make 
available all non-privileged information and materials and personnel 
deemed necessary by staff to evaluate Generac's compliance with the 
terms of the Agreement.
    29. The parties acknowledge and agree that the Commission may 
publicize the terms of the Agreement and the Order.
    30. Generac represents that the Agreement:
    (i) is entered into freely and voluntarily, without any degree of 
duress or compulsion whatsoever;
    (ii) has been duly authorized; and
    (iii) constitutes the valid and binding obligation of Generac, 
enforceable against Generac in accordance with its terms. The 
individuals signing the Agreement on behalf of Generac represent and 
warrant that they are duly authorized by Generac to execute the 
Agreement.
    31. The signatories represent that they are authorized to execute 
this Agreement.
    32. The Agreement is governed by the laws of the United States.
    33. The Agreement and the Order shall apply to, and be binding 
upon, Generac and each of its parents, successors, transferees, and 
assigns; and a violation of the Agreement or Order may subject Generac, 
and each of its parents, successors, transferees, and assigns, to 
appropriate legal action.
    34. The Agreement, any attachments, and the Order constitute the 
complete agreement between the parties on the subject matter contained 
therein.
    35. The Agreement may be used in interpreting the Order. 
Understandings, agreements, representations, or interpretations apart 
from those contained in the Agreement and the Order may not be used to 
vary or contradict their terms. For purposes of construction, the 
Agreement shall be deemed to have been drafted by both of the parties 
and shall not, therefore, be construed against any party, for that 
reason, in any subsequent dispute.
    36. The Agreement may not be waived, amended, modified, or 
otherwise altered, except as in accordance with the provisions of 16 
CFR 1118.20(h). The Agreement may be executed in counterparts.
    37. If any provision of the Agreement or the Order is held to be 
illegal, invalid, or unenforceable under present or future laws 
effective during the terms of the Agreement and the Order, such 
provision shall be fully severable. The balance of the Agreement and 
the Order shall remain in full force and effect, unless the Commission 
and Generac agree in writing that severing the provision materially 
affects the purpose of the Agreement and the Order.
Generac Power Systems, Inc.
    Dated: 4/20/2023

By: York Ragen,
Generac Power Systems, Inc., Chief Financial Officer.

    Dated: 4/20/2023

By: Erika Z. Jones,
Mayer Brown LLP, Counsel to Generac Power Systems, Inc.

U.S. Consumer Product Safety Commission
Mary B. Murphy, Director.
Leah Ippolito, Supervisory Attorney.
Asha Allam, Trial Attorney.

    Dated: 4/24/2023

By: Asha Allam,
Trial Attorney, Division of Enforcement and Litigation, Office of 
Compliance and Field Operations.

United States of America

Consumer Product Safety Commission

    In the Matter of: GENERAC POWER SYSTEMS, INC.

CPSC Docket No.: 23-C0002

Order

    Upon consideration of the Settlement Agreement entered into between 
Generac Power Systems, Inc. (``Generac''), and the U.S. Consumer 
Product Safety Commission (``Commission'' or ``CPSC''), and the 
Commission having jurisdiction over the subject matter and over 
Generac, and it appearing that the Settlement Agreement and the Order 
are in the public interest, the Settlement Agreement is incorporated by 
reference and it is:
    Provisionally accepted and provisional Order issued on the 3rd day 
of May 2023.

    By order of the commission,
Pamela J. Stone,
Acting Secretary, U.S. Consumer Product Safety Commission.
[FR Doc. 2023-09820 Filed 5-8-23; 8:45 am]
BILLING CODE 6355-01-P