Aqua Slide "N' Dive Corp. v. Consumer Product Safety Commission, 76-1713

• Citation: 569 F.2d 831
• Decision Date: 03 March 1978
• Docket Number: No. 76-1713,76-1713
• Parties: Page 831 569 F.2d 831 AQUA SLIDE 'N' DIVE CORPORATION, Petitioner, v. The CONSUMER PRODUCT SAFETY COMMISSION, Respondent. United States Court of Appeals, Fifth Circuit
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 831

569 F.2d 831

AQUA SLIDE 'N' DIVE CORPORATION, Petitioner v The CONSUMER PRODUCT SAFETY COMMISSION, Respondent.

No. 76-1713.

United States Court of Appeals Fifth Circuit.

March 3, 1978.

Jack L. Coke, Jr., Dallas, Tex., for petitioner.

Joseph E. Casson, Christopher Smith, Washington, D. C., for amicus curiae Anthony Industries, Inc.

John R. Fleder, Charles R. McConachie, Attys., Consumer Affairs Section, Antitrust Div., U. S. Dept. of Justice, Michael A. Brown, David Schmeltzer, Margaret A. Freeston, Alan H. Schoem, Phillip E. Bechtel, Attys., Consumer Product Safety Comm., Washington, D. C., for respondent.

Harold A. Jewett, Washington, D. C., for amicus curiae in behalf of public interest.

Petition for Review of a Rule Promulgated by The Consumer Product Safety Commission.

Before WISDOM, CLARK and RONEY, Circuit Judges.

RONEY, Circuit Judge:

In this proceeding for review authorized by the Consumer Product Safety Act, 15 U.S.C.A. §§ 2051 et seq., Aqua Slide 'N' Dive Corporation, an interested manufacturer, challenges the legality of a "Safety Standard for Swimming Pool Slides" adopted by the Consumer Product Safety Commission. 41 Fed.Reg. 2742 (1976) (codified in 16 C.F.R. § 1207 (1977)).

The primary issue is whether substantial evidence supports the Commission's finding required by statute, that this standard is "reasonably necessary to eliminate or reduce an unreasonable risk of injury." § 2058(c)(2)(A). The Commission demonstrated that adults who slide into the water headfirst encounter a one in 10 million risk of spinal injury and paralysis. The Commission, however, has only an untested theory to support its conclusion that the warnings required by the standard to be affixed to slides will actually reduce such injuries, and has failed to produce adequate evidence to show the chain required by the standard to be fixed to the slide ladder will avert drownings which might result from the installation of slides in deep water, and has further failed to consider adequately the effect of these standards on slide purchasers. Accordingly, we grant the petition for review and set aside challenged sections of the standard relating to warning signs, a ladder chain, and installation instructions.

I. Introduction

Congress created the Consumer Product Safety Commission, an independent regulatory agency, in 1972. Among the purposes of the Commission are protection of the public "against unreasonable risks of injury associated with consumer products" and assistance to consumers "in evaluating the comparative safety" of such products. § 2051(b)(1), (2).

This case involves the Commission's first exercise of its power under the Act to promulgate standards to ensure that manufactured products are safe for consumer use. §§ 2056, 2058. The statute provides a detailed scheme governing the adoption of such a standard. Any interested person may petition the Commission to adopt a standard and may resort to judicial remedies if the Commission denies the petition. § 2059. The Commission itself can begin a proceeding to develop such a standard by publishing in the Federal Register a notice inviting "any person" to submit an offer to do the development. § 2056(b). Within the constraints of specified time limits extendable for good cause, the Commission can then accept such an offer, evaluate the suggestions submitted, and publish a proposed rule. § 2056. The actual promulgation of the final standard is subject to notice and comment provisions of the Administrative Procedure Act, 5 U.S.C.A. § 553, with the added provision that "an opportunity for the oral presentation of data, views or arguments" is to be given interested persons. 15 U.S.C.A. § 2058(a)(2).

The statute specifies the kinds of requirements a standard may impose, and provides that they must be "reasonably necessary to prevent or reduce an unreasonable risk of injury associated with (a consumer) product." § 2056(a). The Act also specifies certain findings the Commission must make in any rule. § 2058(c). Judicial review lies in the Court of Appeals, where the required findings must be "supported by substantial evidence on the record taken as a whole." § 2060(c).

The penalty provisions of the Act make it unlawful to "manufacture for sale, offer for sale, distribute in commerce, or import into the United States" a consumer product which does not conform to an applicable standard. § 2069(a) (1). Violators are subject to civil penalties, § 2069, criminal penalties, § 2070, injunctive enforcement and seizure, § 2071, private suits for damages, § 2072, and private suits for injunctive relief, § 2073.

The Act took effect in late 1972. In mid-1973 both a trade association known as the National Swimming Pool Institute and the plaintiff in this action, Aqua Slide, petitioned the Commission under § 2059 seeking promulgation of a safety standard for swimming pool slides. Aqua Slide's admitted motive was to prevent a product ban or forced repurchase threatened by the Bureau of Product Safety, a predecessor of the Commission, acting under either the Federal Hazardous Substance Act or the Child Protection and Toy Safety Act, codified together in 15 U.S.C.A. §§ 1261 et seq. As the manufacturer of 95% Of the 350,000 swimming pool slides presently in use in the United States, Aqua Slide had a substantial interest at stake in the proposed regulatory action.

The Commission granted the petition and sought offers to develop the requested standard. When no suitable offers were forthcoming, it published a second solicitation, and, in January 1975, accepted an offer made by NSPI. The Institute appointed a committee and hired an engineering consultant, Weiner Associates, Inc., to assist it. Members of the committee included two pool builders, an orthopedic surgeon specializing in sports injuries, the president of Aqua Slide, a recreational safety specialist with the National Safety Council, a representative of the American National Red Cross, the head of the consultants division of the American Society of Safety Engineers, a consumer spokesman, an engineering professor, a behavioral science researcher for the Navy, and the sports editor of a newspaper. App. 843, 1587-1589. The Institute submitted the result of their efforts to the Commission in May 1975. The NSPI proposal sought to prevent slide injuries by specifying that slides must impart a low angle of attack into the water, by requiring manufacturers to include warning signs on new slides, and by limiting installation of large slides to water more than four feet deep. Because of a perceived danger of drowning in deep water, the Institute recommended a ladder chain device to warn children to stay off large slides.

The Commission modified the Institute's proposal in several respects. It rewrote the warning signs, and included a specific mention of the danger of paralysis. The signs, as depicted in 16 C.F.R. § 1207.7 (1977) read:

The Commission decided it did not have jurisdiction to regulate slide installation, and so it substituted required instructions which recommended appropriate installation depths. 16 C.F.R. § 1207.6. The ladder chain provision, however, remained mandatory. 16 C.F.R. § 1207.6(b)(2)(iv)(C). The Commission published its proposed rule on September 15, 1975. An oral proceeding took place in Washington, D. C., on October 10. Aqua Slide did not participate, and during the course of the comment period, which closed on October 15, submitted only a brief written criticism of the rule. Aqua Slide did, however, join in comments made by the Institute, of which it is a member. At the time it published the proposed rule, the Commission expressed dissatisfaction with the economic impact data then before it. See 40 Fed.Reg. 42562, 42572 (1975). The Commission hired Battelle Columbus Laboratories, a private consulting firm, to do the necessary research. Battelle did not submit its report until October 30, two weeks after the period for public comment on the standard had closed. The Commission did not produce its views concerning economic impact until November 12. On January 19, 1976 the Commission promulgated the final rule.

Aqua Slide brought a timely petition for review to this Court. The Court denied Aqua Slide's motion to stay enforcement and the standard became effective on July 17, 1976.

II. Standard of Review

The standard of review substantial evidence on the record taken as a whole is easily stated, but its application to the informal record allowed by this Act poses novel questions for which existing case law provides no clear answer. Scalia & Goodman, Procedural Aspects of the Consumer Product Safety Act, 20 U.C.L.A.L.Rev. 899, 933-936 (1973). Congress put the substantial evidence test in the statute because it wanted the courts to scrutinize the Commission's actions more closely than an "arbitrary and capricious" standard would allow. H.R.Rep.No.92-1153, 92d Cong., 2d Sess. 38 (1972); S.Rep.No.92-749, 92d Cong., 2d Sess. 35 (1972); 118 Cong.Rec. 31378 (1972) (remarks of Cong. Moss). The substantial evidence test is used to assess the weight of a factual finding. See Superior Oil Co. v. FERC, 563 F.2d 191 (5th Cir. 1977). As a general rule, substantial evidence review is applied in connection with a formal hearing, at which an unbiased officer presides, rules of evidence apply, and parties may both subpoena and cross-examine witnesses. Automotive Parts & Accessories Ass'n v. Boyd, 132 U.S.App.D.C. 200, 207, 407 F.2d 330, 337 (1968); Tidewater Express Lines, Inc. v. United States, 281 F.Supp. 995, 996 (D.C.1968); Verkuil, Judicial Review of Informal Rulemaking, 60 Va.L.Rev. 185, 212 (1974). See 5 U.S.C.A. §§ 556, 557. Contra, Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 414, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971) (dictum). In writing this Act, however, Congress, desiring to streamline the Commission's hearing process, rejected the formal hearing requirement, provided for informal...