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A & B WIPER SUPPLY v. CONSUMER PROD. SAFETY COMMN.

May 19, 1981

A & B WIPER SUPPLY, INC., et al.
v.
CONSUMER PRODUCT SAFETY COMMISSION



The opinion of the court was delivered by: NEWCOMER

MEMORANDUM AND ORDER

Plaintiffs seek a declaratory judgment to enjoin the Consumer Product Safety Commission ("the Commission") from proceeding with an enforcement action. Plaintiffs engage in the business of selling material for use as industrial rags. This case arises out of their selling of TRIS treated material in interstate commerce. *fn1" In February of 1981 the Commission began an enforcement action against plaintiff. The complaint alleges that A&B Wiper Supply, Inc. failed to inform the Commission of the sale as required by section 15(b) of the Consumer Product Safety Act (CPSA), 15 U.S.C. § 2064(b). *fn2"

 Plaintiffs allege that the Commission is without jurisdiction to bring the enforcement action because it failed to promulgate a specific rule pursuant to section 30(d) of the CPSA, 15 U.S.C. § 2079(d). Section 30(d) provides in pertinent part as follows:

 
(d) A risk of injury which is associated with a consumer product and which could be eliminated or reduced to a sufficient extent by action under the Federal Hazardous Substances Act, ... may be regulated under this chapter only if the Commission by rule finds that it is in the public interest to regulate such risk of injury under this chapter. Such a rule shall identify the risk of injury proposed to be regulated under this chapter and shall be promulgated in accordance with section 553 of Title 5 (United States Code) ...

 Plaintiffs argue that requiring information under section 2064 amounts to regulation under section 2079, and therefore requires the Commission to promulgate a specific rule. In the absence of such rule, plaintiffs argue, the Commission is without jurisdiction to entertain the enforcement action. Plaintiffs have moved for summary judgment.

 The Commission has moved to dismiss, or in the alternative, for summary judgment on two grounds: the first is jurisdictional, and the second is substantive. The Commission argues: (1) the issues are not ripe for judicial determination and the plaintiffs have failed to exhaust administrative remedies, and, (2) the Commission has appropriately followed the provisions of the CPSA and accordingly is empowered to bring an enforcement action against plaintiffs for failure to furnish information as required by 15 U.S.C. § 2064. For reasons discussed below, the Court will grant defendant's motion to dismiss.

 The Consumer Product Safety Act and Federal Hazardous Substances Act (FHSA) are overlapping federal schemes for the regulation of dangerous substances in interstate commerce. TRIS, the allegedly hazardous substance involved in this case, has been regulated under the FHSA since mid-1977 when it was first designated a "banned hazardous substance" by the Commission. *fn3" Despite the subsequent nullification of the TRIS ban, the Commission has been permitted to proceed against TRIS manufacturers and sellers individually, with the trier of fact determining whether the substance is hazardous within the meaning of the FHSA. United States v. Articles of Hazardous Substance, 588 F.2d 39, 42 (4th Cir. 1978).

 In the instant case, the Commission chose to proceed under the authority of section 2079(d) of the CPSA. Because the Commission has failed to find it to be in the public interest to regulate TRIS under the CPSA, plaintiffs assert it must proceed, as it has in the past, under the FHSA. The Commission, however, contends that requiring plaintiffs to supply information to the Commission does not constitute "regulation," and that it can, as a matter of discretion, determine that "a risk of injury ... could (not) be eliminated or reduced to a sufficient extent by action under the FHSA" and impose reporting requirements of 15 U.S.C. § 2064.

 We are confronted at the outset with plaintiffs' apparent failure to exhaust their administrative remedies. In Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51, 58 S. Ct. 459, 463, 82 L. Ed. 638 (1938), the Supreme Court noted that there is a "long settled rule of judicial administration that no one is entitled to judicial relief ... until the prescribed administrative remedy has been exhausted." The primary purpose of the doctrine is "the avoidance of premature interruption of the administrative process." McKart v. United States, 395 U.S. 185, 193, 89 S. Ct. 1657, 1662, 23 L. Ed. 2d 194 (1969). Judicial intervention into the agency process denies the agency the opportunity to correct its own mistakes and to apply its expertise. F. T. C. v. Standard Oil Co. of California, 449 U.S. 232, 101 S. Ct. 488, 494, 66 L. Ed. 2d 416 (1980), citing, Weinberger v. Salfi, 422 U.S. 749, 765, 95 S. Ct. 2457, 2466, 45 L. Ed. 2d 522 (1975).

  Plaintiffs, however, contend that under the facts of the present case the doctrine does not apply. In First Jersey Securities, Inc. v. Bergen, 605 F.2d 690 (3d Cir. 1979), cert. denied, 444 U.S. 1074, 100 S. Ct. 1020, 62 L. Ed. 2d 756 (1980), the court "recognized two situations in which the exhaustion requirement will not be adhered to: (1) when the administrative procedure is clearly shown to be inadequate to prevent irreparable injury; or (2) when there is a clear and unambiguous statutory or constitutional violation." 605 F.2d at 696, citing, Barnes v. Chatterton, 515 F.2d 916, 920 (3d Cir. 1975); American Federation of Government Employees, Local 1904 v. Resor, 442 F.2d 993, 994-95 (3d Cir. 1971).

 1. Irreparable Injury

 Plaintiffs allege that the issuance of the administrative complaint is damaging to their business and that defense of the action will impose a substantial financial burden.

 a) Impact on Business

 Plaintiffs contend that the enforcement action already has had a direct and immediate impact on A&B Wiper Company and they have supplied the Court with an affidavit detailing "the material adverse changes in A&B's manner of doing business, the loss of credit from its principal supplier, its direct loss of a Commonwealth subsidy and the apparent loss of substantial customers..." Plaintiffs' Reply Memorandum at 12. See Exhibit A, Plaintiffs' Reply Memorandum. While the Court is not unsympathetic to plaintiffs' plight, we believe the harm alleged is insufficient to warrant interference with the Commission's proceedings at this stage. The harm alleged simply does not rise to the level of "irreparable harm" as the term has been defined in the cases. The plaintiffs in Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967), for example, were faced with serious criminal and civil ...


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