[Federal Register Volume 70, Number 13 (Friday, January 21, 2005)]
[Notices]
[Pages 3188-3190]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-1049]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 05-C0005]


Polaris Industries Inc., Provisional Acceptance of a Settlement 
Agreement and Order

AGENCY: Consumer Product Safety Commission.

ACTION:  Notice.

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SUMMARY: It is the policy of the Commission to publish settlements 
which it provisionally accepts under the Consumer Product Safety Act in 
the Federal Register in accordance with the terms of 16 CFR 1118.20(e). 
Published below is a provisionally-accepted Settlement Agreement with 
Polaris Industries Inc., containing a civil penalty of $950,000.00.

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 7, 2005.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 05-C005, Office of the 
Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT: Seth B. Popkin, Trial Attorney, Office 
of Compliance, Consumer Product Safety Commission, Washington, DC 
20207; telephone (301) 504-7612.

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

    Dated: January 13, 2005.
Todd A. Stevenson,
Secretary.

Settlement Agreement and Order

    1. In accordance with 16 CFR 1118.20, Polaris Industries Inc. 
(``Polaris'') and the staff (``Staff'') of the United States Consumer 
Product Safety Commission (``Commission'') enter into this Settlement 
Agreement (``Agreement''). The Agreement and the incorporated attached 
Order (``Order'') settle the Staff's allegations set forth below.

Parties

    2. The Commission is an independent federal regulatory agency 
established pursuant to, and responsible for the enforcement of, the 
Consumer Product Safety Act, 15 U.S.C. 2051-2084 (``CPSA'').
    3. Polaris is a corporation organized and existing under the laws 
of the state of Minnesota. Its principal offices are located at 2100 
Highway 55, Medina, MN 55340. Polaris designs and manufactures all 
terrain vehicles (ATVs) and other vehicles.

Staff Allegations

Throttle Control

    4. From December 1998 through July 2000, Polaris manufactured and/
or sold a total of approximately 13,600 units of certain 1999 Scrambler 
400, Sport 400, and Xplorer 400 ATVs, and of certain 2000 Scrambler 400 
and Xplorer 400 ATV's (``400cc ATVs'').
    5. Each 400cc ATV is a ``consumer product'' that Polaris 
``distributed in commerce,'' and Polaris is a ``manufacturer'' of a 
consumer product, as those terms are defined in sections 3(a)(1), (4), 
(11), and (12) of the CPSA, 15 U.S.C. 2052(a)(1), (4), (11), and (12).
    6. The throttle on the 400cc ATVs could stick as a result of the 
throttle cable becoming caught on the throttle control cover, 
preventing the ATVs from slowing down or stopping when riders released 
the throttle lever. A stuck throttle can cause an ATV rider to lose 
control and crash, possibly resulting in severe injury or death.
    7. From December 1998 to May 2000, Polaris received 88 reports of 
400cc ATV throttles that stuck as a direct or apparent result of the 
cable becoming caught on the throttle control cover. In 19 of the 88 
reports, the stuck throttle caused crashes, other accidents, or damage, 
and in 7 of the 88 reports, the stuck throttle caused injuries. The 
injuries included, among others, a dislocated hip, a broken shoulder, 
and torn back muscles.
    8. From September 1999 to May 2000, Polaris obtained knowledge 
about the 400cc ATVs' throttle defect, hazard, and risk, and Polaris 
made 3 engineering changes to address the defect. As of the end of 
September 1999, Polaris had received 47 of the 88 stuck throttle 
reports, it had received several reports from dealers who specifically 
noted the defect's characteristics, and it had begun engineering 
changes to address the defect. As of January 2000, Polaris had received 
additional reports, made 2 engineering changes, decided on a further 
engineering change, and successfully tested revised parts.
    9. By September 30, 1999, Polaris had obtained information that 
reasonably supported the conclusion that the 400cc ATVs contained a 
defect that could create a substantial product hazard or that they 
created an unreasonable risk of serious injury or death. Sections 
15(b)(2) and (3) of the CPSA, 15 U.S.C. 2064(b)(2) and (3), required 
Polaris to immediately inform the Commission of such defect or risk.
    10. Polaris did not report to the Commission regarding the 400cc 
ATVs until May 23, 2000, thereby failing to immediately inform the 
Commission as required by sections 15(b)(2) and (3) of the CPSA, 15 
U.S.C. 2064(b)(2) and (3). This failure violated section 19(a)(4) of 
the CPSA, 15 U.S.C. 2068(a)(4).
    11. Polaris knowingly failed to immediately inform the Commission 
of the 400cc ATVs' defect or risk, as the term ``knowingly'' is defined 
in section

[[Page 3189]]

20(d) of the CPSA, 15 U.S.C. 2069(d). Pursuant to section 20 of the 
CPSA, 15 U.S.C. 2069, this failure subjected Polaris to civil 
penalties.

Oil Line

    12. From January 1999 through August 2000, Polaris manufactured 
and/or sold a total of approximately 55,500 units of 2000 and 2001 
Xpedition 325, Trail Boss 325, and Magnum 325 ATVs (``325cc ATVs'').
    13. Each 325cc ATV is a ``consumer product'' that Polaris 
``distributed in commerce,'' and Polaris is a ``manufacturer'' of a 
consumer product, as those terms are defined in sections 3(a)(1), (4), 
(11), and (12) of the CPSA, 15 U.S.C. 2052(a)(1), (4), (11), and (12).
    14. The oil lines on the 325cc ATVs disconnected, blew off, 
loosened, or leaked, spraying or otherwise discharging hot pressurized 
oil. The discharging oil could cause the ATV and its surroundings to 
catch on fire, and the hot oil and fires could cause severe injury or 
death.
    15. From March 1999 to February 2001, Polaris received at least 
1,447 reports of 325cc ATV oil lines that disconnected, blew off, 
loosened, or leaked. In 61 of the 1,447 reports, the discharging hot 
oil caused smoke, fire, melting, or accidents, and in 42 of those 61 
reports the discharging hot oil caused the 325cc ATVs and/or their 
surroundings to catch on fire. In 18 of the 1,447 reports, the 
discharging hot oil caused injuries, including 2nd and 3rd degree burns 
and scarring.
    16. From February 2000 to January 2001, Polaris acquired extensive 
knowledge about the 325cc ATV's oil line defect, hazard and risk. 
Polaris monitored claim reports, conducted engineering analyses, and 
made 4 engineering changes to address the defect.
    17. From May 2000 to January 2001, Polaris sent at least 5 alerts 
to its dealers about the 325cc ATVs' oil line defect.
    18. By February 2000, Polaris had obtained information that 
reasonably supported the conclusion that the 325cc ATVs contained a 
defect that could create a substantial product hazard or that they 
created an unreasonable risk of serious injury or death. Sections 
15(b)(2) and (3) of the CPSA, 15 U.S.C. 2064(b)(2) and (3), required 
Polaris to immediately inform the Commission of such defect or risk.
    19. Polaris did not report to the Commission regarding the 325cc 
ATVs until after the Staff requested a report in December 2000. Polaris 
submitted a report in February 2001. As a result, Polaris failed to 
immediately inform the Commission as required by sections 15(b)(2) and 
(3) of the CPSA, 15 U.S.C. 2064(b)(2) and (3). This failure violated 
section 19(a)(4) of the CPSA, 15 U.S.C. 2068(a)(4).
    20. Polaris knowingly failed to immediately inform the Commission 
of the 325cc ATVs' defect or risk, as the term ``knowingly'' is defined 
in section 20(d) of the CPSA, 15 U.S.C. 2069(d). Pursuant to section 20 
of the CPSA, 15 U.S.C. 2069, this failure subjected Polaris to civil 
penalties.

Polaris Response

    21. Polaris vigorously contests and denies the Staff's allegations 
set forth above in this Agreement. Polaris enters into this Agreement 
to resolve the Staff's claims without the expense and distraction of 
litigation. By agreeing to this settlement, Polaris does not admit any 
of the allegations set forth above in this Agreement, or any fault, 
liability, or statutory or regulatory violation.

Agreement of the Parties

    22. Under the CPSA, the Commission has jurisdiction over this 
matter and over Polaris.
    23. The parties enter into this Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Polaris, or a 
determination by the Commission, that Polaris has violated the CPSA.
    24. In settlement of the Staff's allegations, Polaris shall pay a 
civil penalty in the amount of nine hundred and fifty thousand dollars 
($950,000.00) within twenty (20) calendar days of service of the 
Commission's final Order accepting this Agreement. The payment shall be 
by check payable to the order of the United States Treasury.
    25. Upon the Commission's provisional acceptance of the Agreement, 
the Agreement shall be placed on the public record and published in the 
Federal Register in accordance with the procedures set forth in the 16 
CFR 1118.20(e). If the Commission does not receive any written request 
not to accept the Agreement within fifteen (15) days, the Agreement 
shall be deemed finally accepted on the sixteenth (16th) day after the 
date it is published in the Federal Register.
    26. Upon the Commission's final acceptance of the Agreement and 
issuance of the final Order, Polaris knowingly, voluntarily, and 
completely waives any rights it may have in this matter to the 
following: (1) An administrative or judicial hearing; (2) judicial 
review or other challenge or contest of the validity of the 
Commission's Order or actions; (3) a determination by the Commission of 
whether Polaris failed to comply with the CPSA and its underlying 
regulations; (4) a statement of findings of fact and conclusions of 
law; and (5) any claims under the Equal Access to Justice Act.
    27. The Commission may publicize the terms of the Agreement and 
Order.
    28. The Agreement and Order shall apply to, and be binding upon, 
Polaris and each of the successors and assigns.
    29. The Commission issues the Order under the provisions of the 
CPSA, and violation of the Order may subject Polaris to appropriate 
legal action.
    30. The Agreement may be used in interpreting the Order. 
Understandings, agreements, representations, or interpretations apart 
from those contained in the Agreement and Order may not be used to vary 
or contradict their terms. The Agreement shall not be waived, amended, 
modified, or otherwise altered, except in a writing that is executed by 
the party against whom such waiver, amendment, modification, or 
alteration is sought to be enforced, and that is approved by the 
Commission.
    31. If after the effective date hereof, any provision of the 
Agreement and Order is held to be illegal, invalid, or unenforceable 
under present or future laws effective during the terms of the 
Agreement and Order, such provision shall be fully severable. The 
balance of the Agreement and Order shall remain in full force and 
effect, unless the Commission and Polaris determine that severing the 
provision materially affects the purpose of the Agreement and Order.
Polaris Industries Inc.

    Dated: December 13, 2004.
Mary P. McConnell,

Vice President and General Counsel, Polaris Industries Inc., 2100 
Highway 55, Medina, MN 55340.

Granta Y. Nakayama, Esq.,

Kirkland & Ellis LLP, 655 Fifteenth Street, NW., Suite 1200, 
Washington, DC 20005, Counsel for Polaris Industries Inc.

U.S. Consumer Product Safety Commission Staff.

Nicholas V. Marchica,

Acting Assistant Executive Director, Office of Compliance.

Eric L. Stone,

Director, Legal Division, Office of Compliance.

    Dated: December 14, 2004.
Seth B. Popkin,

Trial Attorney, Legal Division, Office of Compliance.

[[Page 3190]]

Order

    Upon consideration of the Settlement Agreement entered into between 
Polaris Industries Inc. (``Polaris'') and the U.S. Consumer Product 
Safety Commission (``Commission'') staff, and the Commission having 
jurisdiction over the subject matter and over Polaris, and it appearing 
that the Settlement Agreement and Order is in the public interest, it 
is
    Ordered, that the Settlement Agreement be, and hereby is, accepted; 
and it is
    Further ordered, that Polaris shall pay a civil penalty in the 
amount of nine hundred and fifty thousand dollars ($950,000.00) within 
twenty (20) calendar days of service of the final Order upon Polaris. 
The payment shall be made by check payable to the order of the United 
States Treasury. Upon the failure of Polaris to make the foregoing 
payment when due, interest on the unpaid amount shall accrue and be 
paid by Polaris at the federal legal rate of interest set forth in the 
provisions of 28 U.S.C. 1961(a) and (b).
    Provisionally accepted and Provisional Order issued on the 13th day 
of January, 2005.

    By order of the Commission.
Todd A. Stevenson,
Secretary, Consumer Product Safety Commission.
[FR Doc. 05-1049 Filed 1-19-05; 8:45 am]
BILLING CODE 6355-01-M