[Federal Register Volume 81, Number 61 (Wednesday, March 30, 2016)]
[Notices]
[Pages 17683-17686]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-07124]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 16-C0002]


Gree Electric Appliances, Inc. of Zhuhai, Hong Kong Gree Electric 
Appliances Sales Co., Ltd., and Gree USA Sales, Ltd., 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 
Gree Electric Appliances, Inc. of Zhuhai, Hong Kong Gree Electric 
Appliances Sales Co., Ltd., and Gree USA Sales, Ltd. containing a civil 
penalty in the amount of fifteen million four hundred fifty thousand 
dollars (US$15,450,000) within thirty (30) days of service of the 
Commission's final Order accepting the Settlement Agreement.\1\
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    \1\ The Commission voted (4-1) to provisionally accept the 
Settlement Agreement and Order regarding Gree Electric Appliances, 
Inc. of Zhuhai, Hong Kong Gree Electric Appliances Sales Co., Ltd., 
and Gree USA Sales, Ltd. Chairman Kaye, Commissioner Adler, 
Commissioner Robinson and Commissioner Mohorovic voted to 
provisionally accept the Settlement Agreement and Order. 
Commissioner Buerkle voted to reject the Settlement Agreement and 
Order. Commissioner Mohorovic and Commissioner Robinson filed 
statements regarding this matter. The statements are available at 
the Office of the Secretary or the CPSC Web site, www.cpsc.gov.

DATES: Any interested person may ask the Commission not to accept this 
agreement or otherwise comment on its contents by filing a written 
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request with the Office of the Secretary by April 14, 2016.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 16-C0002, Office of the 
Secretary, Consumer Product Safety Commission, 4330 East West Highway, 
Room 820, Bethesda, Maryland 20814-4408.

FOR FURTHER INFORMATION CONTACT: Daniel R. Vice, Trial Attorney, 
Division of Compliance, Office of the General Counsel, Consumer Product 
Safety Commission, 4330 East West Highway, Bethesda, Maryland 20814-
4408; telephone (301) 504-6996.

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

    Dated: March 25, 2016.
Todd A. Stevenson,
Secretary.

UNITED STATES OF AMERICA CONSUMER PRODUCT SAFETY COMMISSION

In the Matter of: GREE ELECTRIC APPLIANCES, INC., OF ZHUHAI, HONG KONG 
GREE ELECTRIC APPLIANCES SALES CO., LTD., AND GREE USA SALES, LTD.

CPSC Docket No.: 16-C0002

SETTLEMENT AGREEMENT

    1. In accordance with the Consumer Product Safety Act, 15 U.S.C. 
2051-2089 (``CPSA'') and 16 CFR 1118.20, Gree Electric Appliances, 
Inc., of Zhuhai, Hong Kong Gree Electric Appliances Sales Co., Ltd., 
and Gree USA Sales, Ltd. (collectively ``Gree''), 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 
that Gree is subject to civil penalties in this matter, under section 
20 of the CPSA, 15 U.S.C. 2069, as 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. Gree Electric Appliances, Inc., of Zhuhai, is incorporated in 
China, and its principal place of business is in China. Hong Kong Gree 
Electric Appliances Sales Co., Ltd., is incorporated in Hong Kong, and 
its

[[Page 17684]]

principal place of business is in Hong Kong. Gree USA Sales, Ltd., is 
incorporated in California, and its principal place of business is in 
City of Industry, CA.

STAFF CHARGES

    4. Between January 2005 and August 2013, Gree manufactured, 
imported, and sold approximately 2.5 million dehumidifiers manufactured 
before December 2012 (``Dehumidifiers'') in the United States.
    5. The Dehumidifiers are a ``consumer product'' that was 
``distributed in commerce,'' as those terms are defined or used in 
sections 3(a)(5) and (8) of the CPSA, 15 U.S.C. 2052(a)(5) and (8). 
Gree was a ``manufacturer'' and ``distributor'' of the Dehumidifiers, 
as such terms are defined in sections 3(a)(7) and (11) of the CPSA, 15 
U.S.C. 2052(a)(7) and (11).

Violation of CPSA Section 19(a)(4)

    6. The Dehumidifiers are defective and create an unreasonable risk 
of serious injury or death because they can overheat, smoke and catch 
fire, posing smoke and burn hazards to consumers.
    7. In July 2012, Gree began receiving reports of smoking, sparking 
and fires involving the Dehumidifiers. Gree received reports of 
property damage due to these fires.
    8. In response to reports of smoking, sparking and fires, Gree 
implemented design changes to remedy the defect and unreasonable risk 
of injury or death associated with the Dehumidifiers.
    9. Despite having information reasonably supporting the conclusion 
of a defect or the creation of an unreasonable risk of serious injury 
or death associated with the Dehumidifiers, Gree 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) and (4).
    10. Because the information in Gree's possession constituted actual 
and presumed knowledge, Gree 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).

Violation of CPSA Section 19(a)(12)

    11. Although Gree knew that the Dehumidifiers were not compliant 
with UL flammability standards, Gree sold, offered for sale, 
distributed in commerce, and imported the Dehumidifiers bearing the UL 
mark.
    12. The UL mark is a registered safety certification mark owned by 
UL, which is an accredited conformity assessment body.
    13. Because Gree knew, or should have known, that the sale, offer 
for sale, distribution, and importation of Dehumidifiers that were not 
compliant with UL standards was not authorized by UL, Gree knowingly 
violated section 19(a)(12) of the CPSA, 15 U.S.C. 2068(a)(12), as the 
term ``knowingly'' is defined in section 20(d) of the CPSA, 15 U.S.C. 
2069(d).

Violation of CPSA Section 19(a)(13)

    14. Gree made material misrepresentations to Commission staff that 
the Dehumidifiers met UL flammability standards, knowing such 
representations to be false.
    15. Gree also made material misrepresentations to Commission staff 
concerning the date when Gree became aware that the Dehumidifiers were 
not compliant with UL standards, knowing such representations to be 
false.
    16. By knowingly making material misrepresentations to Commission 
staff during the course of an investigation, Gree knowingly violated 
section 19(a)(13) of the CPSA, 15 U.S.C. 2068(a)(13), as the term 
``knowingly'' is defined in section 20(d) of the CPSA, 15 U.S.C. 
2069(d).

Civil Penalties Pursuant to CPSA Section 20

    17. Pursuant to section 20 of the CPSA, 15 U.S.C. 2069, Gree is 
subject to civil penalties for its knowing violations of sections 
19(a)(4), (12), and (13) of the CPSA, 15 U.S.C. 2068(a)(4), (12) and 
(13).

RESPONSE OF GREE

    18. The signing of this Agreement does not constitute an admission 
by Gree that either reportable information or a substantial product 
hazard exists.
    19. Gree enters into this Agreement to settle this matter without 
the delay and expense of litigation. Gree enters into this Agreement 
and agrees to pay the amount referenced below in compromise of the 
staff's charges.
    20. Gree voluntarily notified the Commission in connection with the 
dehumidifiers in March 2013. Gree carried out a voluntary recall in 
cooperation with the Commission and acted to reduce the potential risk 
of injury.

AGREEMENT OF THE PARTIES

    21. Gree submits to the jurisdiction of the Commission in the 
matter involving the Dehumidifiers.
    22. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Gree or a 
determination by the Commission that Gree violated the CPSA's reporting 
requirements.
    23. In settlement of staff's charges, and to avoid the cost, 
distraction, delay, uncertainty, and inconvenience of protracted 
litigation, Gree shall pay a civil penalty in the amount of fifteen 
million four hundred fifty thousand dollars (US$15,450,000) 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: http://www.pay.gov for allocation to and credit against the payment 
obligations of Gree under this Agreement. Failure to make such payment 
by the date specified in the Commission's final Order shall constitute 
Default.
    24. All unpaid amounts, if any, due and owing under the Agreement 
shall constitute a debt due and immediately owing by Gree to the United 
States, and interest shall accrue and be paid by Gree 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''). Gree 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 Gree 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. Gree shall pay the United States all reasonable 
costs of collection and enforcement under this paragraph, respectively, 
including reasonable attorney's fees and expenses.
    25. After staff receives this Agreement executed on behalf of Gree, 
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

[[Page 17685]]

day after the date the Agreement is published in the Federal Register, 
in accordance with 16 CFR 1118.20(f).
    26. 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 Gree, 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.
    27. Effective upon the later of: (i) the Commission's final 
acceptance of the Agreement and service of the accepted Agreement upon 
Gree, and (ii) and the date of issuance of the final Order, for good 
and valuable consideration, Gree 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 Gree 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.
    28. Gree shall implement and maintain a compliance program designed 
to ensure compliance with the CPSA and regulations enforced by the 
Commission with respect to any consumer product manufactured, imported, 
distributed, or sold by Gree, and which, at a minimum, shall contain 
the following elements:
    a. written standards and policies;
    b. written procedures that provide for the appropriate forwarding 
to compliance personnel of all information that may relate to, or 
impact, CPSA compliance, including all reports and complaints involving 
consumer products, whether an injury is referenced or not;
    c. 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;
    d. effective communication of company compliance-related policies 
and procedures regarding the CPSA to all applicable employees through 
training programs or otherwise;
    e. Gree senior management responsibility for CPSA compliance and 
accountability for violations of the statutes and regulations enforced 
by the Commission;
    f. Gree governing body oversight of CPSA compliance; and
    g. retention of all CPSA compliance-related records for at least 
five (5) years, and availability of such records to staff upon 
reasonable request.
    29. Gree shall implement, maintain, and enforce a system of 
internal controls and procedures designed to ensure that, with respect 
to all consumer products manufactured, imported, distributed, or sold 
by Gree:
    a. information required to be disclosed by Gree to the Commission 
is recorded, processed, and reported in accordance with applicable law;
    b. all reporting made to the Commission is timely, truthful, 
complete, accurate, and in accordance with applicable law; and
    c. prompt disclosure is made to Gree'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, Gree's ability to record, 
process, and report to the Commission in accordance with applicable 
law.
    30. Upon reasonable request of staff, Gree shall provide written 
documentation of its improvements, processes and controls, including, 
but not limited to, the effective dates of such improvements, processes 
and controls as set forth in paragraphs 28 through 29 above. Upon 
reasonable request, Gree shall cooperate fully and truthfully with 
staff and shall make available, in a manner agreed to by the parties, 
all non-privileged information and materials, and personnel deemed 
necessary by staff to evaluate Gree's compliance with the terms of the 
Agreement.
    31. The parties acknowledge and agree that the Commission may 
publicize the terms of the Agreement and the Order.
    32. Gree 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 Gree, enforceable against Gree in accordance with 
its terms. Gree will not directly or indirectly receive any 
reimbursement, indemnification, insurance-related payment, or other 
payment in connection with the civil penalty to be paid by Gree 
pursuant to the Agreement and Order. The individuals signing the 
Agreement on behalf of Gree represent and warrant that they are duly 
authorized by Gree to execute the Agreement.
    33. The signatories represent that they are authorized to execute 
this Agreement.
    34. The Agreement is governed by the laws of the United States.
    35. The Agreement and the Order shall apply to, and be binding 
upon, Gree and each of its successors, transferees, and assigns, and a 
violation of the Agreement or Order may subject Gree, and each of its 
successors, transferees, and assigns, to appropriate legal action.
    36. Nothing herein shall preclude the Commission from initiating 
any other proceedings to enforce the Order.
    37. The Agreement and the Order constitute the complete agreement 
between the parties on the subject matter contained therein.
    38. 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.
    39. 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.
    40. 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 Gree agree in writing that severing the provision materially 
affects the purpose of the Agreement and the Order.

GREE ELECTRIC APPLIANCES, INC., OF ZHUHAI, HONG KONG GREE ELECTRIC 
APPLIANCES SALES CO., LTD., AND GREE USA SALES, LTD.

Dated: March 12, 2016

By:--------------------------------------------------------------------
Li Mingjing

Counsel, Securities and Legal Affairs Department, Gree Electric 
Appliances, Inc., of Zhuhai, Hong Kong Gree Electric Appliances 
Sales Co., Ltd., and Gree USA Sales, Ltd.

Dated: March 14, 2016

By:--------------------------------------------------------------------
Ellen Nudelman Adler

Morrison and Foerster LLP
12531 High Bluff Drive
San Diego, CA 92130-2040


[[Page 17686]]


Counsel to Gree Electric Appliances, Inc., of Zhuhai, Hong Kong Gree 
Electric Appliances Sales Co., Ltd., and Gree USA Sales, Ltd.
U.S. CONSUMER PRODUCT SAFETY COMMISSION
Stephanie Tsacoumis

General Counsel

Mary T. Boyle

Deputy General Counsel

Mary B. Murphy

Assistant General Counsel

Dated: March 14, 2016

By:--------------------------------------------------------------------
Daniel R. Vice

Trial Attorney, Division of Compliance, Office of the General 
Counsel

UNITED STATES OF AMERICA CONSUMER PRODUCT SAFETY COMMISSION

In the Matter of: GREE ELECTRIC APPLIANCES, INC., OF ZHUHAI, HONG KONG 
GREE ELECTRIC APPLIANCES SALES CO., LTD., AND GREE USA SALES, LTD.

CPSC Docket No.: 16-C0002

ORDER

    Upon consideration of the Settlement Agreement entered into between 
Gree Electric Appliances, Inc. of Zhuhai, Hong Kong Gree Electric 
Appliances Sales Co., Ltd., and Gree USA Sales, Ltd. (collectively 
``Gree''), and the U.S. Consumer Product Safety Commission 
(``Commission''), and Gree having submitted to the jurisdiction of the 
Commission with respect to the subject matter, and it appearing that 
the Settlement Agreement and the Order are in the public interest, it 
is:
    ORDERED that the Settlement Agreement be, and is, hereby, accepted; 
and it is
    FURTHER ORDERED that Gree shall comply with the terms of the 
Settlement Agreement and shall pay a civil penalty in the amount of 
fifteen million four hundred fifty thousand dollars (US$15,450,000) 
within thirty (30) days after service of the Commission's final Order 
accepting the Settlement Agreement. The payment shall be made by 
electronic wire transfer to the Commission via: http://www.pay.gov. 
Upon the failure of Gree to make the foregoing payment when due, 
interest on the unpaid amount shall accrue and be paid by Gree at the 
federal legal rate of interest set forth at 28 U.S.C. 1961(a) and (b). 
If Gree fails to make such payment or to comply in full with any other 
provision of the Settlement Agreement, such conduct will be considered 
a violation of the Settlement Agreement and Order.
    Provisionally accepted and provisional Order issued on the 25th day 
of March, 2016.

    BY ORDER OF THE COMMISSION:

Todd A. Stevenson, Secretary

U.S. Consumer Product Safety Commission

[FR Doc. 2016-07124 Filed 3-29-16; 8:45 am]
BILLING CODE 6355-01-P