Showing posts with label opinion. Show all posts
Showing posts with label opinion. Show all posts

May 3, 2020

Opinion: Issue Of Ebikes On Federal Lands Far From Over [reprinted with permission from 4-20]

[reprinted with permission from April 2020; direct link to original article here]

Current rulemaking to raise more questions around access, attorney says.

Editor’s note: 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 ebikes and other consumer products. For further questions, visit or send an email to

As some of you may recall, back in 2003 the Consumer Product Safety Commission decided to regulate ebikes in much the same as they did “non-powered” bicycles by adding a provision to federal law defining a bicycle as “a two- or three-wheeled vehicle with fully operable pedals and an electric motor of less than 750 watts (1 horsepower), whose maximum speed on a paved level surface, when powered solely by such a motor while ridden by an operator who weighs 170 pounds, is less than 20 mph.” Now fast-forward to early 2015. At that point the then-titled Bicycle Products Suppliers Association—now merged with PeopleForBikes—decided to expand on the CPSC law and create three “classes” of ebikes, implicitly understanding that one day at least one or more classes would also be used off road.

The initial push with the three ebike classes was into large states like California, which adopted the framework in the fall of 2015. The idea was to start with a few key states and then see if all state legislatures would adopt the three-class structure. At that point the three classes could be relied upon by manufacturers nationwide.

But off-road use was a little less clear. The California state law (AB 1096), for example, specifically excluded Class 3 ebikes from being used on off-road “trails” (on state land) but did allow Class 1 and 2 to be used off road unless the “local authority or governing body of a public agency” decided to prohibit them “by ordinance.” This is still a very murky area of the state law. But even if we assume that the California state law applies to all “off-road trails” at state parks (public land) and county and city parks, it still does not apply to federal land of any type or land owned by nongovernmental entities (private property).

Now fast-forward again to August 2019. More than 20 states had adopted some form of the BPSA model legislation. The US Secretary of the Interior signed an order directing the Fish and Wildlife Service, National Park Service, Bureau of Land Management, and the Bureau of Reclamation to develop proposed rules to revise their own regulations to be consistent with the three classes of ebikes defined in the order. The “appropriate public guidance regarding the use of ebikes on public lands” was to be issued within 30 days.

In September 2019 the NPS did issue a four-page “policy memorandum” on the regulation of ebikes, outlining the three classes, prohibiting anything outside of those three classes, and also disallowing the use of ebikes where the motor was being used exclusively (like Class 2 bikes allow) or of course anything beyond the CPSC regulations. The memo encouraged park superintendents to not make park regulations more restrictive than the state’s laws where the national park was located—pointing out that many states had already adopted the three-class approach. Some 380 parks (out of a total of 419) within the national park system have already implemented their ebike policy as of today.

Now the four agencies above have posted their proposed official regulations (in the Code of Federal Regulations) to take the place of the “memorandums” put in place informally in late 2019. To read more detail on each as well as links for directly commenting on each regulation use the following links: NPS, BLM, FWS, BOR.

Much of this access being outlined is academic right now due to the COVID-19 pandemic, but the comment period for these proposed CFR rules is open now and expires in early June. What is not known is if this comment period will be extended or if, after the first comment period, the proposed rules are revised again and rereleased for comment. Also, it is not known at this time how many comments there will be, from who or what groups, and how long it will take for the government to review them and make changes, if any, to those proposed. If history is a guide, I would not expect significant changes to what has been “proposed” unless groups opposed to ebikes take control of the narrative or the 750-watt limit itself is challenged.

Much the same way we have local access issues and unanswered questions arising from the California state law, we will have local federal access issues under federal law. Park superintendents overseeing specific parks and national forest areas will have to deal with specific issues with Class 1, 2, and 3 bikes as they arise.

Focusing again just on the NPS proposal, the three classes of bikes are explicitly adopted and ebikes would be allowed on administrative roads and trails where bicycles are allowed without the need to undertake further action. But the proposed rules would also give park superintendents the authority to limit or restrict ebike use after taking into consideration public health and safety, natural and cultural resource protection, and other management activities and objectives and then manage ebikes, or particular classes of ebikes, differently than traditional bicycles in particular locations. Every restriction or closure that limits the use of ebikes would have to be supported by a written record explaining the basis for such action.

The proposed rule seeks to restrict Class 2 ebikes to park roads or places motor vehicles can travel. It seeks comment on the workability of this restriction or suggests park superintendents deal with this in a location-by-location fashion.

Again the Fish and Wildlife Service, Bureau of Land Management, and the Bureau of Reclamation—the last of which primarily oversees federal dams and reservoirs west of the Mississippi River—have proposed similar regulations with some variations.

Much the same way we have local access issues and unanswered questions arising from the California state law, we will have local federal access issues under federal law. Park superintendents overseeing specific parks and national forest areas will have to deal with specific issues with Class 1, 2, and 3 bikes as they arise. So this is long from over. We also still have a small population of ebikes and users who don’t comply with the three classes. Additionally, there is lots of non-public land and a huge gap that will need to be filled to create correct signage for all these thousands of trails and spaces and effectively policing them so that renegade users/ebikes do not ruin access for the law-abiding users.

The information in this column 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.

Law Offices of Steven W. Hansen | | 562 866 6228 © Copyright 1996-2020 Conditions of Use

January 15, 2016

The pitfalls of insurance coverage and additional insured certificates issued by Asian based non US admitted insurers

This re-titled article is reprinted with permission from Bicycle Retailer and Industry News

Editor's note: Steven W. Hansen an attorney who defends product manufacturers, distributors and retailers in product liability lawsuits and provides consultation on all matters related to the manufacture and distribution of consumer products. For further questions visit

How the problem arises
We receive lots of inquiries each year from both clients and their insurance brokers about how handle additional insured certificates issued to U.S.-based companies from their key Asian based manufacturing suppliers, who almost without exception, use policies issued by  Asian based non U.S. admitted/regulated insurers. If you are not closely monitoring and vetting all your suppliers additional insured certificates each year then you better go back to square one, read our article on audits, then read this article. This article does not address EU (European) or Japan based non-U.S. insurers. That is a separate future article.

This article is an attempt to outline some of the many issues with coverage provided by Asian based insurers ("AI's" for purposes of this article) and how to begin to spot these issues and develop strategies to overcome them. This article has been assembled from our first hand experience in claims with Asian based insurers and dealing directly with our client's coverage problems arising therefrom. Your first hand experience and opinion may vary, but we feel that these issues at least need to be identified and addressed by those companies least familiar with them.

Why the coverage exists 
You need to understand there is a reason for insurance issued by AIs. First of all there is a need as Asian based manufacturers are usually asked about this coverage by the U.S. companies they supply (or it is required to close the deal). Secondly, AI's are utilized as their coverage is usually much cheaper than U.S.-based coverage, even for the same limits of coverage. There is a good reason for this; in most cases the AI coverage is more limited in scope than most U.S. policies issued to the U.S. companies buying products from Asia and also because the AI's "loss ratio" tends to be lower. This means that the ratio of dollars paid out on claims to dollars of premiums collected is better than comparable U.S. insurers loss ratios. This may be partly due to the fact that the AI's can freely deny so many U.S. claims using their restrictive policies and their is no recourse by U.S. additional insureds in U.S. courts against the AI's directly.

Questions that have to be asked when vetting such coverage
The first question of course is the experience of your insurance broker and in house attorney in dealing with such AI's and their claims process. If you/they don't know the right questions to ask then seek outside expertise.

Unknown Ratings
One problem with AI's is they tend to not be rated by U.S. insurer rating agencies with respect to their financial strength. The reasons for this are varied but can be due to the fact that the AI's will not submit to regular audits by the U.S. rating agencies. The lack of a U.S.-based rating can seriously limit the use of AI's coverage when your company is trying to sell items to large companies like Walmart or Amazon.

Restrictive policies
AI's also tend to issue very restrictive policies when compared to U.S. policies. One way they do this is by only offering "claims made" (versus "occurrence") coverage which creates a whole host of issues as to how claims need to be timely handled. If you have never heard these phrases, again go back to square one. AI's also tend to use manuscripted or non standard policy provisions unlike those issued by most U.S. insurers. This unique policy terminology becomes a bigger problem as U.S. courts never get the opportunity to interpret it as they do U.S.- based policies. U.S. policies also tend to use very standard (copyrighted) policy language not used by their Asian counterparts. The reason this language is used by U.S. insurers of course is so that there is some degree of predictability when courts interpret the language.

Inexperienced claims staff
Not only are the policies a problem but the claims staff (internal and third party) can be inexperienced (or in some cases untrained) and are usually totally unfamiliar with the U.S. legal process and case law as it respects the claim process, coverage and liability. Or sometimes what knowledge they do have is used against the U.S. additional insureds. In our experience most AI staff routinely confuse coverage and liability. In some instances claims are never even opened as legitimate claims are "denied" (or more likely "ignored") before they ever reach the AI, or are denied for reasons that would receive much higher scrutiny in the U.S.

Limited policies
The AI policies are usually financially restrictive as well when compared to U.S.- issued policies. There are often large self insured retention amounts (SIR's) on these policies, in addition to low per claim and aggregate limits as well as limits on total defense costs that erode the available limits of the policy even further (so called "burning limits" policies). The Asian suppliers (with the blessing of the AI and the AI broker) also tend to issue too many additional insured certificates to too many U.S. companies which further erodes the viability of the policies. This creates a very murky situation should multiple claims later arise.

Limited usefulness
Due to these issues above many U.S.-based insurers will not give U.S.-based certificate holders any "credit" for these AI issued certificates. What this means is that these AI certificates are not worth the paper they are written on (at least insofar as U.S. insurers are concerned). Thus U.S. insureds won't get any rate reductions on their own U.S. coverage due to the fact that U.S. insurers are betting on the AI's not coming through for the U.S. additional insureds when needed.

Risky strategy
At the end of the day what this really means is that whether or not your U.S.-based company gets a defense and indemnification in a U.S. suit (or other country other than the AI's home country) from an AI comes down to how much pressure can be applied by your company to the Asian supplier, to its Asian based broker and ultimately the AI. That's a very risky strategy which can drastically change from one year to the next as players in the game change, let alone the viability of your long term business relationship with the Asian supplier.

Looking Forward
Again this all comes down to due diligence, experience in the AI market, timing and relative bargaining power. If your company is not getting the right advice from the insurance brokers and attorneys consulting with it, asking the right questions and offering solutions at the right time in the process, you will not get anywhere and may end up being counterproductive. Trying to retroactively work around or safeguard against these issues/pitfalls can be frustrating as you are not negotiating directly with the AI, nor are you on equal footing with them as compared to your Asian supplier. Many "contractual workarounds" attempted with the Asian insured supplier will not yield results for the simple reason that the AI is not a party to the contract and its insured has no power to bind it. The biggest problem with insurance is that you don't know you have a problem usually until years after the coverage was placed. At that point its too late to try to "fix" it.

Evolving picture
There are a lot more legal and underwriting issues and strategies involved than just the few mentioned in this article. Its never too late to start fixing these potential gaps in coverage. But they generally take a few policy renewals to iron out. And even then its an ongoing yearly battle as the players and policies in the shell game often change.

The information in this column is subject to change and may not be applicable in your state.  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.

Law Offices of Steven W. Hansen | | 562 866 6228 © Copyright 1996-2013 Conditions of Use