[Federal Register: February 8, 1994] ======================================================================= ----------------------------------------------------------------------- CONSUMER PRODUCT SAFETY COMMISSION [CPSC Docket No. 94-C0008] Walgreen Co., a Corporation; Provisional Acceptance of a Settlement Agreement and Order AGENCY: Consumer Product Safety Commission. ACTION: Provisional acceptance of a Settlement Agreement under the Federal Hazardous Substances Act and the Consumer Product Safety Act. ----------------------------------------------------------------------- SUMMARY: It is the policy of the Commission to publish settlements which it provisionally accepts in the Federal Register in accordance with the terms of 16 CFR 1118.20(e)-(h). Published below is a provisionally-accepted Settlement Agreement with Walgreen Co., a corporation. 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 February 23, 1994. ADDRESSES: Persons wishing to comment on this Settlement Agreement should send written comments to Comment 94-C0008, Office of the Secretary, Consumer Product Safety Commission, Washington, DC 20207. FOR FURTHER INFORMATION CONTACT:Melvin I. Kramer, Trial Attorney, Office of Compliance and Enforcement, Consumer Product Safety Commission, Washington, DC 20207; telephone (301) 504-0626. SUPPLEMENTARY INFORMATION: (Attached). Dated: January 31, 1994. Sheldon D. Butts, Deputy Secretary. Settlement Agreement and Order 1. Walgreen Co. (hereinafter, ``Walgreen''), a corporation, enters into this Settlement Agreement (hereinafter, ``Agreement'') with the staff of the Consumer Product Safety Commission, and agrees to the entry of the Order described herein. The purpose of the Agreement and Order is to settle the staff's allegations that Walgreen knowingly caused the export of certain banned hazardous substances, namely toys, in violation of section 14(d) of the Federal Hazardous Substances Act (FHSA), 15 U.S.C. 1273(d), which is a prohibited act under section 4(i) of the FHSA, 15 U.S.C. 1263(i). I. Jurisdiction 2. The Commission has jurisdiction over Walgreen and the subject matter of this Settlement Agreement pursuant to section 30(a) of the Consumer Product Safety Act (hereinafter, ``CPSA''), 15 U.S.C. 2079(a), and sections 2 (f)(1)(D) and (s), 4 (a) and (i) and 5(c) of the Federal Hazardous Substances Act (hereinafter, ``FHSA''), 15 U.S.C. 1261(f)(1)(D) and (s), 1263 (a) and (i) and 1264(c). II. The Parties 3. The ``staff'' is the staff of the Consumer Product Safety Commission, an independent regulatory commission of the United States established pursuant to section 4 of the CPSA, 15 U.S.C. 2053. 4. Walgreen is a corporation organized and existing under the laws of the State of Illinois with its principal corporate offices located at 200 Wilmot Road, Deerfield, Illinois 60015. Walgreen is a retail drug chain and is engaged, in part, in the business of importing and selling domestically, children's toys and novelty items. III. Allegations of the Staff 5. On June 2, 1992, Commission field staff collected samples of Walgreen's ``Toy Center Musical Phone,'' item #874409, for evaluation under the FHSA. 6. In the staff's letter of July 8, 1992, Walgreen was advised that these toys are intended for children under three years of age and are subject to the Small Parts regulation at 16 CFR part 501. The toy phone had battery and antenna components that separated when tested under the use and abuse procedures outlined in 16 CFR 1500.52(c) and (f). The battery antenna components fit entirely within the small parts cylinder described at 16 CFR 1500.4. Therefore, the toys present a choking hazard to children under three years of age. As a result, the toy phones are hazardous substances as defined in section 2(f)(1)(D) and (s) of the FHSA and the regulations at 16 CFR 1500.18(a)(9), and are banned hazardous substances under section 2(q)(1)(A) of the FHSA. 7. In that same letter, Walgreen was supplied with the Regulated Products Handbook and referred to chapter 6. The letter and the handbook described, among other things, the procedures that must be followed if a firm elects to export banned products. 8. In Walgreen's response of September 1, 1992, they described their ``stop sales'' activity and informed Commission staff that the returned goods would be ``held for return to the vendor.'' 9. On September 30, 1992, the Commission's Central Regional office received a letter from a firm, Atico Limited of Miami, Florida which represented itself as Walgreen's agent for disposal of these toys. Atico claimed to have revised the product so that it would comply with the FHSA and included revised samples for evaluation. 10. The staff's letter dated November 3, 1992, informed Atico that the revised toys were still not in compliance with the FHSA, and asked again for a final disposition of Walgreen's stock of these violative products. The letter again outlined the correct procedures to follow should Walgreen elect to reexport the products. 11. In January 1993, the staff was contacted by counsel, purportedly representing Atico, asking for additional guidance on the Commission's export requirements. He specifically inquired about possible export to Paraguay. The staff told him that Walgreen was the importer and should file a notice of export with the Commission. 12. In a phone conversation held April 26, 1993, the CPSC staff again asked Walgreen about the disposition of the violative toys. Walgreen advised that Atico would be handling the export on its behalf. 13. In a phone conversation held on April 27, 1993, Walgreen acknowledged that it had not filed the Notice to Export. 14. Subsequently, the staff learned that Walgreen had shipped 1,758 cartons of these toys back to its foreign supplier on March 29, 1993. The Commission never received the required Notice of Export from Walgreen or Atico. 15. Section 14(d) of the FHSA requires, in pertinent part, that any person who elects to export a banned hazardous product shall notify the Commission of its intent to export at least 30 days prior to the date of exportation. 16. Walgreen's failure to provide the Commission with advance notice of its intent to export these toys is a violation of section 14(d) of the FHSA, 15 U.S.C. 1273(d), and is a prohibited act under section 4(i) of the FHSA, 15 U.S.C. IV. Response of Walgreen 17. Walgreen denies the allegations of the staff that it has knowingly introduced or caused the introduction into commerce of the aforesaid banned hazardous toys, that it knowingly failed to comply with export notification requirements of the FHSA, or that it violated the FHSA in any way. V. Agreement of the Parties 18. The Consumer Product Safety Commission has jurisdiction over Walgreen and the subject matter of this Settlement Agreement and Order under the following acts: Consumer Product Safety Act (15 U.S.C. 2051 et seq.), and the Federal Hazardous Substances Act, 15 U.S.C. 1261 et seq. 19. Walgreen agrees to pay to the Commission a civil penalty in the amount of fifty thousand and 00/100 dollars ($50,000) within twenty (20) days after service of the Final Order of the Commission accepting this Settlement Agreement. This payment is made in full settlement of the staff's allegations set forth in paragraphs five through sixteen above that Walgreen violated the FHSA. 20. The Commission does not make any determination that Walgreen knowingly violated the FHSA. The Commission and Walgreen agree that this Agreement is entered into for the purposes of settlement only. 21. Upon final acceptance of this Settlement Agreement by the Commission and issuance of the Final Order, Walgreen knowingly, voluntarily and completely, waives any rights it may have in this matter (1) to an administrative or judicial hearing, (2) to judicial review or other challenge or contest of the validity of the Commission's actions, (3) to a determination by the Commission as to whether Walgreen failed to comply with the FHSA as aforesaid, and (4) to a statement of findings of fact and conclusions of law. 22. For purposes of section 6(b) of the CPSA, 15 U.S.C. 2055(b), this matter shall be treated as if a complaint had been issued; and, the Commission may publicize the terms of the Settlement Agreement and Order. 23. Upon provisional acceptance of this Settlement Agreement and Order by the Commission, this Settlement Agreement and Order shall be placed on the public record and shall be published in the Federal Register in accordance with the procedures set forth in 16 CFR 1118.20(e)-(h). If the Commission does not receive any written request not to accept the Settlement Agreement and Order within 15 days, the Settlement Agreement and Order will be deemed finally accepted on the 16th day after the date it is published in the Federal Register. 24. The parties further agree that the Commission shall issue the attached Order, incorporated herein by reference; and that a violation of the Order shall subject Walgreen to appropriate legal action. 25. No agreement, understanding, representation, or interpretation not contained in this Settlement Agreement and Order may be used to vary or to contradict its terms. 26. The provisions of the Settlement Agreement and Order shall apply to Walgreen and each of its successors and assigns. Respondent Walgreen Co. Dated: October 28, 1993. Vernon A. Brunner, Exec. Vice President, Walgreen Co., 200 Wilmot Road, Deerfield, IL 60015. Commission Staff David Schmeltzer, Assistant Executive Director, Office of Compliance and Enforcement. Alan H. Schoem, Director, Division of Administrative Litigation, Office of Compliance and Enforcement. Dated: November 9, 1993. Melvin I. Kramer, Trial Attorney, Division of Administrative Litigation, Office of Compliance and Enforcement. Order Upon consideration of the Settlement Agreement entered into between respondent Walgreen Co., a corporation, and the staff of the Consumer Product Safety Commission; and the Commission having jurisdiction over the subject matter and Walgreen; and it appearing that the Settlement Agreement is in the public interest, it is Ordered, That the Settlement Agreement be and hereby is accepted, as indicated below; and it is Further ordered, That upon final acceptance of the Settlement Agreement, Walgreen Co. shall pay to the order of the Consumer Product Safety Commission a civil penalty in the amount of fifty thousand and 00/100 dollars ($50,000) within twenty (20) days after service of the Final Order and Decision in this matter. In the Matter of Walgreen Co. Provisionally accepted and Provisional Order issued on the 31st day of January, 1994. By order of the Commission. Sadye E. Dunn, Secretary, Consumer Product Safety Commission. [FR Doc. 94-2873 Filed 2-7-94; 8:45 am] BILLING CODE 6355-01-M