[Federal Register Volume 83, Number 65 (Wednesday, April 4, 2018)]
[Notices]
[Pages 14447-14450]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06820]


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CONSUMER PRODUCT SAFETY COMMISSION

[CPSC Docket No. 18-C0001]


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 the Consumer 
Product Safety Commission's regulations. Published below is a 
provisionally-accepted Settlement Agreement with Polaris Industries 
Inc. containing a civil penalty in the amount of twenty seven million, 
two hundred and fifty thousand dollars ($27,250,000), to be paid within 
thirty (30) days of service of the Commission's final Order accepting 
the Settlement Agreement.

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 April 19, 2018.

ADDRESSES: Persons wishing to comment on this Settlement Agreement 
should send written comments to the Comment 18-C0001, 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 30, 2018.
Alberta E. Mills,
Secretary.

UNITED STATES OF AMERICA

CONSUMER PRODUCT SAFETY COMMISSION

    In the Matter of: POLARIS INDUSTRIES INC.

CPSC Docket No.: 18-C0001

SETTLEMENT AGREEMENT

    1. In accordance with the Consumer Product Safety Act, 15 U.S.C. 
Sec. Sec.  2051-2089 (``CPSA'') and 16 CFR Sec.  1118.20, Polaris 
Industries Inc. (``Polaris''), 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. Sec. Sec.  2051-2089. By executing the Agreement, 
staff is acting on behalf of the Commission, pursuant to 16 CFR 
Sec.  1118.20(b). The Commission issues the Order under the 
provisions of the CPSA.
    3. Polaris is a corporation, organized and existing under the 
laws of the state of Minnesota, with its principal place of business 
in Medina, Minnesota.

STAFF CHARGES

    4. Between February 2012 and April 2016, Polaris manufactured or 
imported, distributed and offered for sale in the United States 
approximately 133,000 Model Year 2013-2016 RZR 900 and Model Year 
2014-2016 RZR 1000 recreational off-road vehicles (``RZRs'').
    5. Between April 2013 and April 2017, Polaris manufactured or 
imported, distributed and offered for sale approximately 93,500 
Model Year 2014-2015 Ranger XP 900, XP 900 EPS and CREW 900 off-road 
vehicles (``Rangers'').
    6. The RZRs and Rangers (collectively, the ``Vehicles'') are 
``consumer products'' that were ``distribut[ed] in commerce,'' as 
those terms are defined or used in sections 3(a)(5) and (8) of the 
CPSA, 15 U.S.C. Sec.  2052(a)(5) and (8). Polaris is a 
``manufacturer'' of the Vehicles and imported the Vehicles, as such 
terms are defined in sections 3(a)(9) and (11) of the CPSA, 15 
U.S.C. Sec.  2052(a)(9) and (11).

Violation of CPSA Section 19(a)(4)

Staff Charges Regarding RZR 900s and 1000s

    7. The RZRs contained one or more defects which could create a 
substantial product hazard and create an unreasonable risk of 
serious injury or death because the RZRs could catch fire while 
consumers were driving, posing fire and burn hazards to drivers and 
passengers.

[[Page 14448]]

    8. Despite information that reasonably supported the conclusion 
that the RZRs contained one or more defects that could create a 
substantial product hazard or create an unreasonable risk of serious 
injury or death, Polaris did not immediately report to CPSC.
    9. Instead, Polaris filed a Full Report concerning the fire risk 
associated with MY 2014 to MY 2016 RZRs on February 19, 2016. By 
that time, Polaris reported that it had received reports of 150 
fires on MY 14-MY 16 RZRs that had resulted in the death of a 15-
year-old passenger from a rollover that resulted in a fire, 11 
reports of burn injuries, and a fire that burned ten acres of land.
    10. Polaris and the CPSC announced a recall of 133,000 MY 13-16 
RZRs on April 19, 2016, because the RZRs could catch fire while 
consumers were driving, posing fire and burn hazards to drivers and 
passengers. The repair remedy offered to consumers for this recall 
differed from the repair remedy offered for an earlier recall, 
jointly announced by Polaris and CPSC in October 2015 on MY 15 RZR 
900s and 1000s, involving a pinched fuel tank vent line. By the time 
Polaris announced the April 2016 recall, it had received more than 
160 reports of fires in MY 13-16 RZRs, including the fatality 
previously reported to CPSC and 19 reports of injuries, including 
first, second and third degree burns.

Staff Charges Regarding Ranger 900s

    11. The Rangers contained a defect which could create a 
substantial product hazard and create an unreasonable risk of 
serious injury or death because the heat shield could fall off the 
vehicle, posing fire and burn hazards to riders.
    12. Between December 2013 and July 2016, Polaris received 36 
reports of fires associated with the MY 14 Rangers, including two 
incidents that resulted in minor burns to consumers. Polaris also 
implemented design changes to increase the attachment screw length 
and require the attachment screws to be fastened to a steel frame 
member to prevent the heat shields from becoming loose and falling 
off. The first design change was implemented on MY 15 Rangers and 
the latter on MY 16 Rangers.
    13. Despite information that reasonably supported the conclusion 
that the MY 14 Rangers contained a defect that could create a 
substantial product hazard or created an unreasonable risk of 
serious injury or death, Polaris did not immediately report to CPSC.
    14. Instead, Polaris filed a Full Report on the MY 14 Rangers 
with the Commission, under 15 U.S.C. Sec.  2064(b), on July 12, 
2016.
    15. Polaris and the Commission jointly announced a recall of 
42,500 MY 14 Rangers on September 15, 2016 (``First Ranger Recall'') 
because the heat shields could fall off the vehicle, posing fire and 
burn hazards to riders.
    16. Subsequent to the First Ranger Recall, Polaris received 
reports of heat shields coming loose or falling off on the MY 15 
Ranger, including two reports of fire. Polaris did not immediately 
report this information to CPSC.
    17. Instead, Polaris filed a Full Report on MY 15 Ranger 900s in 
March 2017, when the number of heat shield incidents on Rangers had 
reached 10, including five reports of fires. Polaris and CPSC 
jointly announced a recall of the MY 15 Rangers on April 13, 2017.

Staff Charges of Failure to Report Immediately

    18. Despite having information reasonably supporting the 
conclusion that the Vehicles contained a defect or created an 
unreasonable risk of serious injury, Polaris 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. Sec.  2064(b)(3) 
and (4), in violation of section 19(a)(4) of the CPSA, 15 U.S.C. 
Sec.  2068(a)(4).
    19. Because the information in Polaris' possession about the 
Vehicles constituted actual and presumed knowledge, Polaris 
knowingly violated section 19(a)(4) of the CPSA, 15 U.S.C. Sec.  
2068(a)(4), as the term ``knowingly'' is defined in section 20(d) of 
the CPSA, 15 U.S.C. Sec.  2069(d).
    20. Pursuant to section 20 of the CPSA, 15 U.S.C. Sec.  2069, 
Polaris is subject to civil penalties for its knowing violation of 
section 19(a)(4) of the CPSA, 15 U.S.C. Sec.  2068(a)(4).

RESPONSE OF POLARIS

    21. Polaris conducted reasonable, expeditious, and diligent 
investigations into the reports of thermal events relating to the 
RZR and Ranger Vehicles. The RZR and Ranger Vehicles are four-wheel 
vehicles that have automotive-style controls and seating. 
Particularly in gasoline-powered vehicles, fires and other thermal 
events are notoriously difficult to evaluate and often do not allow 
for, and in fact impede, the prompt identification of root causes. 
Fires can, and do, occur in gasoline-powered vehicles for reasons 
unrelated to any potential defect in the vehicles. The causes of the 
fires varied. Polaris identified these causes over time in the 
course of its investigations. The issues involved in the RZR recall 
announced on April 19, 2016 were unrelated to an earlier recall, 
jointly announced in October 2015 on MY 2015 RZR 900s and 1000s, 
involving a pinched fuel tank vent line. Many of the RZR incidents 
received attention in the public media.
    22. The signing of this Agreement does not constitute an 
admission by Polaris of the staff's charges in paragraphs 4 through 
20, including, but not limited to, the charges that (a) the Vehicles 
contained defects that could create a substantial product hazard and 
created an unreasonable risk of serious injury; (b) Polaris failed 
to notify the Commission in a timely manner, in accordance with 
sections 15(b)(3) and (4) of the CPSA, 15 U.S.C. Sec. Sec.  
2064(b)(3) and (4); (c) Polaris failed to furnish information as 
required by sections 15(b)(3) and (4) of the CPSA, 15 U.S.C. Sec.  
2064(b)(3) and (4), in violation of section 19(a)(4) of the CPSA, 15 
U.S.C. Sec.  2068(a)(4); and (d) there was any ``knowing'' violation 
of the CPSA as that term is defined in section 20(d) of the CPSA, 15 
U.S.C. Sec.  2069(d).
    23. The voluntary recalls of the RZR and Ranger Vehicles, as 
well as the voluntary section 15(b) reporting, by Polaris were 
conducted out of an abundance of caution and without Polaris having 
determined or concluded that the RZR Vehicles or Ranger Vehicles 
contained a defect or posed an unreasonable risk of serious injury.
    24. Polaris enters this Agreement to settle this matter without 
the delay and unnecessary expense of litigation.

AGREEMENT OF THE PARTIES

    25. Under the CPSA, the Commission has jurisdiction over the 
matter involving the Vehicles and over Polaris.
    26. The parties enter into the Agreement for settlement purposes 
only. The Agreement does not constitute an admission by Polaris or a 
determination by the Commission that Polaris violated the CPSA's 
reporting requirements.
    27. In settlement of staff's charges of violations of the CPSA, 
15 U.S.C. Sec.  2068(a)(4), and to avoid the cost, distraction, 
delay, uncertainty, and inconvenience of protracted litigation or 
other proceedings, Polaris shall pay a civil penalty in the amount 
of twenty seven million, two hundred and fifty thousand dollars 
($27,250,000) 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 Polaris under this 
Agreement. Failure to make such payment by the date specified in the 
Commission's final Order shall constitute Default.
    28. All unpaid amounts, if any, due and owing under the 
Agreement, shall constitute a debt due and immediately owing by 
Polaris to the United States, and interest shall accrue and be paid 
by Polaris at the federal legal rate of interest set forth at 28 
U.S.C. Sec.  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''). Polaris 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 Polaris 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. Polaris shall pay the United States all reasonable costs 
of collection and enforcement under this paragraph, respectively, 
including reasonable attorney's fees and expenses.
    29. After staff receives this Agreement executed on behalf of 
Polaris, 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 
Sec.  1118.20(e). If the Commission does not receive any written 
request not to

[[Page 14449]]

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 Sec.  1118.20(f).
    30. 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 Sec.  1118.20(h). Upon the later of: (i) 
Commission's final acceptance of this Agreement and service of the 
accepted Agreement upon Polaris, 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.
    31. Effective upon the later of: (i) the Commission's final 
acceptance of the Agreement and service of the accepted Agreement 
upon Polaris and (ii) the date of issuance of the final Order, for 
good and valuable consideration, Polaris 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 Polaris 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.
    32. After receipt of the payment set forth in paragraph 27 
above, the Commission releases and agrees that it will not seek 
civil penalties from Polaris, including its current and former 
directors, officers, employees, successors and assigns, for any 
violation of section 19(a)(4) of the CPSA, 15 U.S.C. Sec.  
2068(a)(4), regarding a hazard or defect reported in connection with 
a model year vehicle for which Polaris, as of June 29, 2017, had 
submitted an Initial or Full Report under CPSA section 15(b), 15 
U.S.C. Sec.  2064(b), and 16 CFR Sec.  1115.13(c) and (d). This 
paragraph does not relieve Polaris from the continuing duty to 
report to the Commission any new, additional or different 
information as required by CPSA section 15(b), 15 U.S.C. Sec.  
2064(b), and the regulations at 16 CFR part 1115.
    33. Polaris represents and warrants that the information 
supplied by Polaris to the Commission in connection with the matters 
addressed in the Agreement was, at the time provided to the 
Commission, full, complete and accurate, to the best of Polaris' 
knowledge.
    34. Polaris shall maintain a compliance program designed to 
ensure compliance with the CPSA with respect to any consumer product 
imported, manufactured, distributed or sold by Polaris, and 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 is conveyed 
effectively to personnel responsible for CPSA compliance, whether or 
not an injury is referenced; (ii) 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; (iii) effective communication of 
company compliance-related policies and procedures regarding the 
CPSA to all applicable employees through training programs or 
otherwise; (iv) Polaris' senior management responsibility for, and 
general board oversight of, CPSA compliance; and (v) retention of 
all CPSA compliance-related records for at least five (5) years, and 
availability of such records to staff upon request.
    35. Polaris shall maintain and enforce a system of internal 
controls and procedures designed to ensure that, with respect to all 
consumer products imported, manufactured, distributed or sold by 
Polaris: (i) information required to be disclosed by Polaris to the 
Commission is recorded, processed and reported in accordance with 
applicable law; (ii) all reporting made to the Commission is timely, 
truthful, complete, accurate and in accordance with applicable law; 
and (iii) prompt disclosure is made to Polaris' 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, Polaris' ability to 
record, process and report to the Commission in accordance with 
applicable law.
    36. Upon reasonable request of staff, Polaris shall provide 
written documentation of its internal controls and procedures, 
including, but not limited to, the effective dates of the procedures 
and improvements thereto. Polaris 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 Polaris' compliance with the terms of the Agreement.
    37. The parties acknowledge and agree that the Commission may 
publicize the terms of the Agreement and the Order.
    38. Polaris 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 Polaris, enforceable against Polaris 
in accordance with its terms. Polaris 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 Polaris pursuant to the Agreement and Order. 
The individuals signing the Agreement on behalf of Polaris represent 
and warrant that they are duly authorized by Polaris to execute the 
Agreement.
    39. The signatories represent that they are authorized to 
execute this Agreement.
    40. The Agreement is governed by the laws of the United States.
    41. The Agreement and the Order shall apply to, and be binding 
upon, Polaris and each of its successors, transferees, and assigns; 
and a violation of the Agreement or Order may subject Polaris, and 
each of its successors, transferees, and assigns, to appropriate 
legal action.
    42. The Agreement and the Order constitute the complete 
agreement between the parties on the subject matter contained 
therein.
    43. 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.
    44. The Agreement may not be waived, amended, modified, or 
otherwise altered, except as in accordance with the provisions of 16 
CFR Sec.  1118.20(h). The Agreement may be executed in counterparts.
    45. 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 Polaris agree in writing that severing the provision 
materially affects the purpose of the Agreement and the Order.

POLARIS INDUSTRIES INC.

Dated: March 16, 2018
By:
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Lucy Clark-Dougherty
Senior Vice President, General Counsel, Compliance Officer and 
Secretary

POLARIS INDUSTRIES INC.

Dated: March 16, 2018
By:
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Erika Z. Jones
Counsel to Polaris Industries Inc.

U.S. CONSUMER PRODUCT SAFETY

COMMISSION

Patricia Hanz
General Counsel
Dated: March 16, 2018
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Mary B. Murphy
Assistant General Counsel
Dated: March 16, 2018
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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: POLARIS INDUSTRIES, INC.

CPSC Docket No.: 18-C0001

ORDER

    Upon consideration of the Settlement Agreement entered into 
between Polaris Industries Inc. (``Polaris''), and the U.S. Consumer 
Product Safety Commission (``Commission''), and the Commission 
having jurisdiction over the subject matter and over Polaris, 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

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    FURTHER ORDERED that Polaris shall comply with the terms of the 
Settlement Agreement and shall pay a civil penalty in the amount of 
twenty seven million, two hundred and fifty thousand dollars 
($27,250,000), 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 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 at 28 U.S.C. Sec.  1961(a) and (b). If Polaris 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 20th 
day of March, 2018.

BY ORDER OF THE COMMISSION:

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Alberta E. Mills, Secretary
U.S. Consumer Product Safety Commission
[FR Doc. 2018-06820 Filed 4-3-18; 8:45 am]
 BILLING CODE 6355-01-P