Riello Corporation of America, a Corporation, Provisional Acceptance of a Settlement Agreement and Order

AGENCY:

Consumer Product Safety Commission.

ACTION:

Notice.

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. Published below is a provisionally-accepted Settlement Agreement with Riello Corporation of America, a corporation, containing a civil penalty of $125,000.

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 October 10, 2000.

ADDRESSES:

Persons wishing to comment on this Settlement Agreement should send written comments to the Comment 00-C0015, Office of the Secretary, Consumer Product Safety Commission, Washington, DC 20207.

FOR FURTHER INFORMATION CONTACT:

Jimmie L. Williams, Jr., Trial Attorney, Office of Compliance and Enforcement, Consumer Product Safety Commission, Washington, DC 20207; telephone (301) 504-0626, 1376.

SUPPLEMENTARY INFORMATION:

The text of the Agreement and Order appears below.

Settlement Agreement and Order

1. Riello Corporation of America (“RCA”), a corporation, enters into this Settlement Agreement and Order with the staff (“the staff”) of the U.S. Consumer Product Safety Commission (“the Commission”) in accordance with 16 CFR part 1118 Section 20 of the Commission's Procedures for Investigations, Inspections, and Inquiries under the Consumer Product Safety Act (“CPSA”).

I. The Parties

2. The Commission is an independent federal regulatory agency responsible for the enforcement of the Consumer Product Safety Act, 15 U.S.C. 2051-2084.

3. RCA is a corporation organized and existing under the laws of the State of Massachusetts. Its principal offices are located at 35 Pond Park Road, Hingham, Massachusetts.

II. Staff Allegations

4. Between February 1997 and December 1998, RCA imported, distributed and sold in the United States approximately 842 balanced flue oil burners models BF 40 F5 and BF 40 F3 (“the Burners”) equipped with a component known as the ET-25 post purge module (“ET-25”). The Burners were designed for installation on residential boilers for home heating. RCA is, therefore, a distributor and retailer of a consumer product in U.S. commerce pursuant to 15 U.S.C. 2052 (a)(1), (5) and (6).

5. The Burners were manufactured by Riello Canada, Inc., a corporation organized and existing under the laws of the Province of Ontario, Canada (“Riello Canada”). The ET-25 was manufactured by Enertel Controls, Inc., a corporation organized and existing under the laws of the federal government of Canada.

6. RCA sold the Burners to manufacturers of boilers. The Burners were installed in those boilers either by the boiler manufacturers or by installers.

7. The ET-25 is intended to blow combustion gases out of the Burner chamber after the call for heat to the Burner is exhausted. A defect in the ET-25 causes the Burner to “run on,” which can cause the boiler to overheat. Steam relieved through a pressure relief valve presents a burn hazard to anyone located near the valve. The continuous buildup of pressure within the boiler could cause a fire or explosion.

8. RCA recommended the installation of a secondary high-end limit with the Burner, which would shut down the Burner once a pre-set temperature level in the boiler was reached. In the summer or early fall of 1998, both RCA and Riello Canada obtained reports from their customers that the Burners were failing to shut down after the call for heat had been exhausted, and that some boilers in which the Burners were installed were not equipped with a high end limit. This information reasonably supported the conclusion that the product contained a defect, which could create a substantial product hazard.

9. Riello Canada initiated a corrective action plan beginning December 22, 1998. RCA initiated a similar plan beginning on January 13, 1999.

10. On March 4, 1999, RCA notified the Commission about the Burners. RCA, therefore, failed to report to the Commission in a timely manner as required by Section 15(b) of the CPSA, 15 U.S.C. 2064(b). RCA, in cooperation with the CPSC, voluntarily completed the recall of the Burners soon thereafter.

III. Response of RCA

11. RCA denies all of the allegations of staff and in particular denies that it violated the reporting requirements of section 15(b) of the CPSA, 15 U.S.C. 2064(b) or 16 CFR Part 1115. The payment made hereunder is made in settlement of the staff's allegations. Neither the payment nor the fact of entering into this Settlement Agreement constitute evidence of or an admission of, any fault, liability or statutory or regulatory violation by RCA, or of the truth of any of the allegations made by the staff.

IV. Agreement of the Parties

12. The Commission has jurisdiction over this matter under the Consumer Product Safety Act (CPSA), 15 U.S.C. 2051 et seq.

13. RCA knowingly, voluntarily and completely waives any rights it may have to:

a. the issuance of a complaint in this matter;

b. an administrative or judicial hearing with respect to the staff allegations discussed in paragraphs 4 through 10 above;

c. judicial review or other challenge or contest of the validity of the Commission's Order;

d. a determination by the Commission as to whether a violation of section 15(b) of the CPSA, 15 U.S.C. 2064(b) has occurred; and

e. a statement of findings of fact and conclusion of law with regard to the staff allegations.

14. Upon provisional acceptance of this Settlement Agreement and Order by the Commission, this Settlement Agreement and Order shall be placed on the public record and shall be published in the Federal Register in accordance with 16 CFR part 1118 section 20.

15. The Settlement Agreement and Order becomes effective upon final acceptance by the Commission and service of the Final Order upon RCA.

16. Upon final acceptance of this Settlement Agreement by the Commission, the issuance of the Order, and the full and timely payment by RCA to the United States Treasury of a civil penalty in the amount of One Hundred and Twenty Five Thousand Dollars ($125,000.00), the Commission specifically waives its right to initiate, either by referral to the Department of Justice or bringing in its own name, any action for civil penalties relating to any of the events that gave rise to the staff's allegations in paragraphs four through ten, supra, against (a) RCA and Riello Canada, and (b) any and all of RCA's and Riello Canada's successors, assigns, employees, representatives and agents.

17. RCA shall pay the Consumer Product Safety Commission a civil penalty in the amount of $125,000.00 within 30 calendar days of such service of the Final Order.

18. RCA agrees to entry of the attached Order, which is incorporated herein by reference, and to be bound by its terms.

19. This settlement Agreement and Order are entered into for settlement purposes only and shall not constitute evidence of, an admission of, or a determination of, any fault, liability or statutory or regulatory violation.

20. The Commission's Order in this matter is issued under the provisions of the CPSA, 15 U.S.C. 2051, et seq., and a violation of this Order may subject RCA to appropriate legal action.

21. This Settlement Agreement and Order is binding upon and shall inure to the benefit of RCA and Riello Canada and their assigns or successors.

22. Agreements, understandings, representations, or interpretations made outside of this Settlement Agreement and Order may not be used to vary or to contradict its terms.

Riello Corporation of America.

Dated: August 22, 2000.

Nick Gareri,

President.

U.S. Consumer Product Safety Commission.

Alan H. Schoem,

Assistant Executive Director, Office of Compliance.

Eric L. Stone,

Director, Legal Division, Office of Compliance.

Dated: August 16, 2000.

Jimmie L. Williams, Jr.,

Trial Attorney, Legal Division, Office of Compliance.

Order

Upon consideration of the Settlement Agreement entered into between Riello Corporation of America, a Massachusetts Corporation, and the staff of the U.S. Consumer Product Safety Commission; and the Commission having jurisdiction over the subject matter and Riello Corporation of America, 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 upon final acceptance of the Settlement Agreement and Final Order, Riello Corporation of America shall pay the Commission a civil penalty in the amount of One Hundred and Twenty Five Thousand Dollars ($125,000.00) within 30 calendar days after service of this Final Order upon Riello Corporation of America.

Provisionally accepted and Provisional Order issued on the 18th day of September, 2000.

By Order of the Commission.

Sadye E. Dunn,

Secretary, U.S. Consumer Product Safety Commission.