HWG LLP Energy Advisory (PDF)
By: Sean A. Lev, John Hodges, and Jason E. Neal
On Thursday, January 29, 2026, HWG LLP attorneys authored an advisory highlighting areas where companies need to be vigilant in their compliance with product safety and energy efficiency requirements. This includes attention to the obligations for reporting compliance issues to the Consumer Product Safety Commission (CPSC) and the Department of Energy (DOE). There are significant differences between the two agencies in this regard. CPSC requires reporting of certain safety issues even if the regulated party has not determined that there has been a violation; a party that fails to report to CPSC in a timely manner in that circumstance is subject to penalties. In contrast, DOE requires periodic certification of compliance with efficiency standards, and it takes into account self-reporting of noncompliance as a factor in settling enforcement cases.
CPSC. CPSC imposes a reporting obligation with a low threshold, even if no safety noncompliance has been established.
Under the Consumer Product Safety Act, every manufacturer (which, by statutory definition, includes every importer),[1] distributor, or retailer of a consumer product that has been distributed in commerce who obtains information that the consumer product contains a defect that “could” create a substantial risk of injury to the public is required to “immediately” notify CPSC.[2] CPSC has defined a “defect” as a “fault, flaw, or irregularity that causes weakness, failure, or inadequacy in form or function” (including instructions).[3] CPSC states that a company “should report to the Commission even if it is in doubt as to whether a substantial product hazard exists.”[4] The Act defines a “substantial product hazard” in relevant part as “a product defect which (because of the pattern of defect, the number of defective products distributed in commerce, the severity of the risk, or otherwise) creates a substantial risk of injury to the public.”[5] Taken together, the statutory requirement to report defects that “could” create a substantial risk of injury, CPSC’s definition of “defect,” and the guidance to report even where there is doubt as to the existence of a substantial product hazard result in a low reporting threshold.
Reporting to CPSC does not mean that the agency will necessarily conclude that corrective action is required. CPSC will conduct an evaluation to determine whether that is the case.[6] This evaluation usually includes requiring the reporting firm to file a highly detailed “Full Report.”[7] Those reports typically cover such matters as the nature of the defect; injuries; how and when information about the defect was obtained; numbers of units involved; an explanation of changes to correct the defect; information that has been or will be provided to consumers about the defect; and details and schedule for contemplated refund, repair, or replacement actions.[8]
There are other reporting obligations that could arise, including if a company has information that the product fails to comply with a consumer product safety rule or any other rule, regulation, standard, or ban enforced by CPSC, or creates an unreasonable risk of serious injury or death.[9] Information on unreasonable risk of serious injury or death can include “reports from experts, test reports, product liability lawsuits or claims, consumer or customer complaints, quality control data, scientific or epidemiological studies, reports of injury, information from other firms or governmental entities, and other relevant information.”[10]
If information is not clearly reportable, a firm can permissibly spend a reasonable time for investigation and evaluation regarding whether to report it. Investigation and evaluation should not exceed ten days unless the firm can demonstrate that a longer period is reasonable.[11] The firm should report “immediately” (within twenty-four hours) after obtaining information which “reasonably supports the conclusion” that the criteria for reporting have been met.[12]
Violating the duty to report may result in civil and criminal penalties.[13] Civil penalties arise for “knowingly” violating the duty to report. In this context, “knowingly” means (1) “the having of actual knowledge,” or (2) “the presumed having of knowledge deemed to be possessed by a reasonable [person] who acts in the circumstances, including knowledge obtainable upon the exercise of due care to ascertain the truth of representations.”[14] Criminal penalties are for a “knowing and willful” reporting violations.[15] Criminal penalties can be imposed on any individual “director, officer, or agent of a corporation” who “knowingly and willfully authorizes, orders, or performs” a reporting violation.[16] The terms “willful” and “willfully” are not defined in the Consumer Product Safety Act[17] or CPSC regulations,[18] but involve a higher degree of culpability than “knowingly.” For example, two executives were fined and sentenced to prison after being found guilty for failing to immediately report to CPSC where, despite having received reports that the products were defective and dangerous and knowing of their duty to report to CPSC, they failed to report to the agency for at least six months while they continued to sell the products.[19] The company pleaded guilty as well.[20]
DOE. DOE’s approach to reporting has significant differences from CPSC’s. DOE’s reporting requirements focus on compliance with applicable energy efficiency standards rather than on safety issues, and they don’t specifically require reporting to the agency about potential issues—although this can be relevant in settling cases.
DOE requires that a manufacturer (which, by statutory definition, includes an importer)[21] certify to DOE that a basic model of a covered product or equipment meets an applicable efficiency standard.[22] Manufacturers must certify this before distributing the model in commerce and every year thereafter.[23]
If DOE finds that a basic model is noncompliant with a standard, it may issue a Notice of Noncompliance Determination (NND),[24] which may be followed by a DOE Notice of Proposed Civil Penalty (NPCP) setting forth a proposed penalty.[25] Cases have generally been settled before reaching court.[26] In settling, DOE considers a number of factors, including whether the entity timely self-reported the potential violation.[27] The largest publicly reported settlement was for over $25 million.[28]
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For more information please contact Sean A. Lev, John A. Hodges, or Jason E. Neal. Sean Lev has served as Acting General Counsel and Deputy General Counsel for Environment and Nuclear Programs at DOE and as General Counsel at the Federal Communications Commission. John Hodges regularly counsels clients on energy efficiency and product safety issues. Jason Neal counsels clients on regulatory issues in DOE proceedings and represents clients in appellate challenges to adverse decisions.
Abigail T. Phillips, a Legal Analyst at HWG LLP, contributed to the preparation of this advisory under the supervision of John Hodges.
This advisory is not intended to convey legal advice. It is circulated publicly as a convenience and does not reflect or create an attorney-client relationship.
[1] 15 U.S.C. § 2052(a)(11).
[2] Id. § 2064(b); 16 C.F.R. § 1115.10(a).
[3] 16 C.F.R. § 1115.4.
[4] CPSC, Recall Handbook: A Guide for Manufacturers, Importers, Distributors and Retailers on Reporting Under Sections 15 and 37 of the Consumer Product Safety Act and Section 102 of the Child Safety Protection Act and Preparing for, Initiating, and Implementing Product Safety Recalls Including CPSC Fast Track Product Recall Program and Use of Social Media 13 (2012), https://www.cpsc.gov/s3fs-public/pdfs/blk_pdf_8002.pdf.
[5] 15 U.S.C. § 2064(a).
[6] CPSC, supra note 4, at 14.
[7] 16 C.F.R. § 1115.13(d).
[8] Id.
[9] Id. § 1115.10(b), (d).
[10] Id. § 1115.6(a).
[11] Id. § 1115.14(d).
[12] Id. § 1115.14(e).
[13] 15 U.S.C. §§ 2068(a)(4), 2069, 2070.
[14] Id. § 2069(d).
[15] Id. § 2070(a).
[16] Id. § 2070(b).
[17] Id. § 2051–2090.
[18] 16 C.F.R. Pts. 1000–1750.
[19] See United States v. Chu, No. 2:19-CR-00193 (C.D. Cal June 16, 2025); Two Corporate Executives Sentenced in First-Ever Criminal Prosecution for Failure to Report Under Consumer Product Safety Act, Office of Public Affairs, U.S. Department of Justice (June 16, 2025), https://www.justice.gov/opa/pr/two-corporate-executives-sentenced-first-ever-criminal-prosecution-failure-report-under.
[20] See United States v. Gree Electr. Appliances, Inc. of Zhuhai, No. 2:21-cr-00498 (C.D Cal. Oct. 24, 2024); Two Corporate Executives, supra note 19.
[21] 42 U.S.C. § 6291(10), (12).
[22] 10 C.F.R. §§ 429.1–429.158.
[23] Id. § 429.12.
[24] Id. § 429.114.
[25] Id. § 429.122.
[26] See Scott Blake Harris and John A. Hodges, Doubling Down: Energy Efficiency Penalties Skyrocket 2, HWG (July 15, 2016), https://hwglaw.com/2016/07/15/6999/.
[27] DOE, Civil Penalties for Energy Conservation Standards Program Violations – Policy Statement 5 (2024), https://www.energy.gov/sites/default/files/2024-12/Civil%20Penalty%20Policy%20for%20violations%20of%20energy%20conservation%20regulations.pdf.
[28] See Galanz Ams. Ltd. Co. & Zhongshan Galanz Consumer Elec. Appliances Co., Ltd., DOE Case No. 2019-SE-14008, OHA Case No. EEE-24-0018 (DOE Dec. 31, 2024).