Reprinted with permission from Bicycle Retailer and Industry News
Original article link
A
certificate of compliance requirement was in the original Consumer
Product Safety Improvement Act passed in 2008 and signed by George W.
Bush. It has taken 16 years for the Consumer Product Safety Commission
to finally implement the full intended scope of electronic certificates
of compliance as originally envisioned by Congress in 2008.
There have been multiple “beta” and “pilot” programs with
many large institutional participants (especially many large retailers,
e.g., Walmart and Target) giving feedback on the process. Only one or
two small bike brands gave feedback per the current notice of proposed
rulemaking, and it's not even clear they were in the pilot or beta
programs.
The biggest issue I see for the bike industry is that the commission
is proposing that the new rules take effect within 120 days of the new
rules being passed; the passage date is not clear at this point. Given
that the bike industry is slow to respond to large changes in the manner
of doing business like this and that there has been zero coverage of
this issue, I suspect there will be some pushback and scrambling going
on especially by smaller brands.
These rules have been in effect for many years, but now that CPSC has
teamed up with Customs and Border Protection (CBP) on this project, the
certificates will need to be filed before importation using the
elaborate electronic system called the Automated Commercial Environment
(ACE). The CBP has completed its ACE interface and the Partner
Government Agency Message Set, which now enable importers or their
brokers to submit electronic import data.
The Supplemental Notice of Proposed Rulemaking (SNPR) to amend 16 CFR Part 1110 was first published on Dec. 8, 2023. All 65 pages are here,
not including the 289-page Ballot package that the CPSC commissioners
have to vote on and that contains more details about the Part 1110 rule
change. Comments have to be received by Tuesday at 5 p.m. They can be made here.
Only finished products or substances that are subject to a CPSC rule,
ban, standard, or regulation, are required to be tested and certified,
and only such finished products that are imported into the United States
for consumption or warehousing would be required to e-file certificates
with CBP.
How the bike industry is affected
This is of course where things start getting murky, especially for
the bike industry that has many segments: human-powered bikes, e-bikes,
bikes intended for kids under 12, original equipment components,
aftermarket components, and replacement components. Many industries
don’t have to deal too much with replacement parts, such as the toy
industry.
Here is a quote from CPSC’s response to one comment made previously:
Comment 38: Several commenters expressed confusion regarding the
difference between certificates for component parts, for finished
products, and for replacement parts of consumer products.
Response 38: Proposed § 1110.3(b) defines “component part” as a
product or substance that is intended to be used in the manufacture or
assembly of a finished product, and is not intended for sale to, or use
by, consumers as a finished product. The SNPR defines a “finished
product” as a product or substance that is “regulated by the commission
that is imported for consumption or warehousing or is distributed in
commerce.” The SNPR definition explains that parts of such products or
substances, including replacement parts, that are imported for
consumption or warehousing, or are distributed in commerce, and that are
packaged, sold, or held for sale to, or use by, consumers, are
considered finished products.
Only (1) finished products (2) subject to a CPSC rule
must be tested and certified. (I added these numbers for clarification
that it’s a two part-test.) Component part certificates are voluntary
and are not required to accompany an imported component part, are not
required to be furnished to retailers and distributors (as described in
proposed § 1110.13(b)), and are not to be e-filed.
Not all replacement parts are finished products that require testing
and certification. A replacement part of a consumer product that meets
the definition of a finished product may be subject to Part 1110, if the
replacement part is subject to a rule. For example, a stem for a
bicycle that is sold to consumers as a replacement part requires a
certificate, because stems, either as a stand-alone product or as part
of a finished bicycle, must be tested for strength in accordance with 16
CFR 1512.18(g). (I tend to disagree with this part as the CPSC
historically, even in recalls, has not taken this position that 16 CFR
1512 is a separately sold “component” standard but rather a “complete
bike” standard.)
Additionally, parts of toys, such as doll accessories, that are sold
to consumers as a separate finished product, must comply with all
applicable rules, including for example lead in paint and/or lead
content (Editor’s note: if it is a product intended for children under
12). If the same doll accessories were imported for manufacturing
purposes and not for consumption or warehousing, (this is a small part
of competent imports in the bike business) and were intended to be
combined with a doll for sale, then such accessories would not be a
finished product required to be certified until they are part of a
finished product.
Majority of aftermarket products will need testing
So this means that 80% of the aftermarket products are going to need
CPSC testing provided there is some requirement in a CPSC rule that
arguably pertains to that bike product or component. If they are not
“intended for children under 12” (kids product) that testing can be done
in house apparently by the manufacturer or brand (subject to other
requirements). If it is a kids product then a CPSC certified lab has to
do the testing, which includes chemical testing (that does not meet
California Prop 65 requirements, by the way).
E-bikes don’t have their own standard except for 16 CFR 1512,
provided they meet the 20 mph requirement in the standard; if they
don't, well then there are other issues to deal with. E-bike batteries,
of course, don’t yet have a CPSC standard as they are not discussed in
16 CFR 1512, so in theory they escape the rule and these new testing and
reporting requirements. How ironic as they are the biggest threat at
this time and not really foreseen in 2008.
How this whole process is going to work as far as getting that
testing data etc. into the CPB and CPSC computers is what has been the
focus of multiple beta filing pilots. The importer of record has the
responsibility. Not the foreign manufacturer. It's also not clear how
this works with the tariff codes and what the timing is on the uploading
of this data before the product hits U.S. shores. Import brokers are
obviously a resource but won't likely be doing this for free. I do see a
process where smaller companies are going to be allowed to access the
data entry screens from the CPSC website using a special logon and
portal.
The “new” CPSC Product Registry will allow importers, or their
designees, to enter the certificate data elements via a user interface,
batch upload, and/or Application Programing Interface (API) upload. The
user interface is a step-by-step process, where the importer submits one
certificate at a time. The batch upload allows the importer to submit
multiple certificates using a Comma-Separated Value template. The API
upload allows the importer to build an API connection via the product
registry and their data systems to instantaneously enter certificates.
Clearly, this is going to involve some training on the brand side of the
equation.
So, for example, if you import 10 SKUs, or more or less all of the
same model bike widget with 10 colors, every time you get a container
shipped from Asia, you will know what the test requirement is for the
widget, and you will have it tested by the manufacturer, unless it's a
child widget, and that data will pretty much be cut and pasted each time
using a CSV data spreadsheet. But it will need to be changed if you
change suppliers or test requirements or anything else on the product
changes, usually SKU’s changes.
Import enforcement currently lacking
The whole rationale for this rule change and disruption is as
follows: Currently, CPSC's import enforcement methodology is
labor-intensive and lacks an efficient means of using product-specific
data to identify potentially non-compliant products. CPSC co-locates
staff alongside CBP staff at ports of entry to target shipments for
examination.
Once identified, staff request that CBP place a shipment on hold and
transport it to an examination station for CPSC inspection; an
examination hold creates delay that costs businesses and CPSC time and
money. Accordingly, stakeholders and CPSC have a common interest in
reducing examinations of compliant products and maximizing examinations
of products that are likely to be violative. Currently, certificates are
collected only after a shipment is stopped for examination; certificate
data are not used to target shipments for examination. Using
certificate data for more precise targeting would maximize examination
efficiency for stakeholders and staff.
Using certificate data can also improve CPSC's ability to target
low-value shipments. CPSC's current targeting capabilities were designed
for larger commercial shipments for which the commission receives CBP
data. CPSC's port staff is currently unable to pinpoint with a high
degree of certainty potentially non-compliant and hazardous products in
low-value shipments, which CBP refers to as “de minimis shipments,” and
international mail shipments.
As we all know the de minimis shipments to consumers of batteries
below an $800 value is where we are having a problem with low-quality
batteries. But this new certificates filing rule won't fix the e-bike
battery problem as there is not currently a CPSC standard specifically
regarding batteries and as such no certificate filing will be required.
The biggest issue I see right now is that the SNPR proposes a 120-day
effective date for a final rule. So that means after the comments on
this rule are received, I expect that the rule will be final in less
than six months, and once that happens, there will be another six months
to get ready for the enforcement. Hopefully, that will be enough time
for the industry to get ready.
This is going to be a four-step process for each product: First,
companies need to decide what CPSC rules pertain to their specific
products; second, they need to determine if they are products intended
for kids under 12 (a whole other analysis); third, they need to decide
on a test protocol for their products and whether it can be done in
house or requires a CPSC certified lab (see Step 2); then finally they
need to set up an account with CPSC and learn the methods by which they
have to enter all this data on an ongoing basis and how that data entry
timeline coincides with the timely shipment and receiving of the
product.
Clearly there is lots of work to be done on this by brands. Our
office is going to be assisting clients with this issue going forward as
there are a number of issues that have to be dealt with that are more
legal than scientific or logistical but the latter two issues are surely
ones that must be addressed as well.
Steven W. Hansen
is an attorney who represents product manufacturers, distributors and
retailers in product liability and other lawsuits and provides
consultation on all matters related to the manufacture and distribution
of e-bikes and other consumer products. For further questions visit www.swhlaw.com or email legal.inquiry@swhlaw.com
The information in this article is subject to change
and may not be applicable in your state or country. It is intended as a
thought-provoking discussion of general legal principles and does not
constitute legal advice. Any opinions expressed herein are solely those
of the author.
