High profile helmet case against Citi bike

This is an interesting recent case against the very large and prominent Citi Bike operation in New York. There has been a lot of media attention on them.  Unfortunately it is not clear from the article what stage the case is in. Our research shows that it was filed February 27, 2014. I suspect that some discovery will need to take place before dismissal motions can be made on legal grounds. There is no discussion in the article as to what legal issues are at play. We will try to keep you posted on this case as it progresses. Additional dates we now know about are as follows: No party may make a motion for summary judgment until May 11, 2015 (this weill be a key date). Discovery is due to be completed by 2/9/2015. Expert witness discovery due by 4/9/2015.

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

Legal analysis: Confusion over electric bike regulations

Published July 29, 2013 in Bicycle Retailer and Industry News
Republished with permission

by Steven W Hansen

After reading two articles in BRAIN’s June 15, 2013 issue (“Speedy e-bikes trouble industry” and “NYC e-bike crackdown exposes legal morass”) as well as a follow up letter to the editor in the July 1, 2013 edition, I was compelled to respond to some apparent misunderstanding by some as to what the “laws and regulations” are with respect to electric bikes and how they do and don’t work together.

First of all there is quite a bit of confusion regarding terminology. I am going to use the phrase “electric bikes” to cover all “bicycles” (not stand on scooters without a seat) which have an “electric motor” to (help) propel them. The industry has evolved into “low speed” electric bikes and “high speed” electric bikes and various configurations which require no pedaling (or may not even have pedals) to the various “pedal assist” varieties, in which the motor wont help you unless you help it. But I digress.

Before 2003 there was really very little in the way of laws or regulations dealing with electric bikes. California passed a few laws in 1998 dealing with what at the time was a new phenomenon and those laws still exist today (more on that later). But the main event that started the ball rolling was when the bicycle industry was able to get Congress to pass a law amending the Consumer Product Safety Commission’s (CPSC) definition of a “bicycle” to include “low speed electric bicycles” which is defined as a “two- or three-wheeled vehicle with fully operable pedals and an electric motor of less than 750 watts (1 h.p.), 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.”

This did help clarify the CPSC’s jurisdiction. Before 2003 there was a legitimate question if CPSC had “regulatory” authority over all electric bikes (as “consumer products”, its generally mandated scope of authority) or if it overlapped the Dept. of Transportation (DOT) and its sub agency the National Highway Transportation Safety Administration (NHTSA). NHTSA defined (and regulated) “motor vehicles” (and still does today) as a “vehicle driven or drawn by mechanical power and manufactured primarily for use on the public streets, roads, and highways…”

From the 2003 change in the regulations it was clear that the CPSC only wanted to carve out a small(er) part of the “electric bike” market to similarly regulate as “bicycles” (no new regulations were adopted to deal with the manufacture of electric bikes, just the definition).

Unfortunately this still left NHTSA holding the bag sort of speak on what to do with all the “other” electric “devices” not regulated under CPSC’s new 2003 “carve out”. Before 2005 NHTSA had taken a somewhat ad hoc approach to requests for clarifications from electric or “motorized” bicycle manufacturers (and others) as to whether specific devices were “motor vehicles” or not. But after the CPSC acted in 2003 NHTSA then began a “notice of draft interpretation and request for comments” (aka “rulemaking” without intervention by Congress) in 2005 to help clarify when certain two and three wheeled motorized devices would be deemed “vehicles” and regulated by NHTSA and when they would not be. The problem of course is that one agency can only determine the scope of its own regulatory authority, not that of another agency. NHTSA placed great emphasis on the 20 mph limit that CPSC focused on. They also differentiated a ‘‘Motor-driven cycle’’ previously defined as “motorcycle” “with a motor that produces 5-brake horsepower or less.’’ NHTSA adopted the 20 mph limit as a more decisive factor as opposed to previous rulings as it concluded “that the maximum speed of a vehicle with on-road capabilities is largely determinative of whether the vehicle was manufactured to operate on a public road, in normal moving traffic, and therefore a ‘‘motor vehicle.’’

Unfortunately the method to determine that speed was much more involved than the CPSC’s method and could yield slightly different results. Also the “draft interpretation” remained vague for two and three-wheeled vehicles with a speed capability of 20 mph or greater. Those vehicles would be excluded from the definition of ‘‘motor vehicle’’ if they were manufactured primarily for off-road use. To determine that question NHTSA would again revert to the case by case approach of looking at the physical features of the vehicle to see if was intended for on or off road use. Again NHTSA does not regulate any off road vehicles like off road motorcycles for instance. Those all fall under CPSC jurisdiction (by default, if it’s a “consumer product”), yet there are no CPSC regulations specifically for such electrically powered devices (if they don’t meet the CPSC definition of a “low speed electric bicycle”). Finally, the NHTSA 2005 “draft interpretation” is still in “draft” stage and is no more binding that any opinion letter from NHTSA. It is not a regulation like CPSC’s electric bike definition and from discussing the matter with the NHTSA legal department there is nothing indicating that will change any time soon.

The electric bike manufacturers and distributors are for the most part satisfied with the way the laws are currently written (or at least interpreted) at the federal level. However some would like to see better and more clear regulation of the over 20 mph category as they apparently are trying to do in the EU with “fast or speed pedelecs.”

The trickier issue of course was raised once again in the article “NYC e-bike crackdown exposes legal morass” which brings to light what many fail to realize about the federal regulations. First none of the electric bikes that fall within the regulations (under 20 mph) have any specific regulations directed at electric bikes other than simply defining what is and to some extent what is not an electric bike (neither NHTSA or CPSC have regulations covering the motors or throttle devices, for example).

Over the years states have basically borrowed NHTSA’s definition of a motor vehicle along with all the regulations governing their manufacture and have incorporated those into their state laws. States have similarly regulated bicycles utilizing the 1973 CPSC bicycle standard as a basis. But with electric bicycles the process seemed to happen in reverse. Electric bicycles popped up and states, caught by surprise, felt they needed to deal with them on their roads and sidewalks, as CPSC and NHTSA failed to timely regulate their manufacture. Some of these laws unfortunately also had to define what the state felt an electric bike was and was not and in some cases this can conflict with federal law.

The other problem is that these federal regulations only affect the manufacture and first sale of these devices, not where, when, how, who and under what other conditions (age limits, licenses, insurance, registration etc.) they can be operated. The federal law has no “preemptive effect” over such state laws. These issues have always traditionally been regulated by state laws and in some cases even county and city laws. This is also true for cars, trucks and traditional non-powered bikes. CPSC mandates how bicycles must be tested and sold and what standards bicycle helmets must meet in their testing and construction but it does not mandate that riders must use the helmets while riding bicycles. That is left up to states or cities to regulate. The same was true for bicycle headlights and tail lights. CPSC does not require them on bikes but most state laws do if riding on road at night. This issue was hotly contested in a serious injury case some years back.

I approached the electric bike industry in 1995-2000 with a two pronged approach; Try to develop some voluntary standards for electric bikes that could be adopted by NHTSA or CPSC (much like they adopted the ASTM bicycle helmet standard) and then try to use model “use” legislation at the state level incorporating the ASTM standards and classifications. The proposal drew interest but was not acted upon by enough influential companies at the time. This legislative approach was somewhat followed by Google with it driverless car legislation passed in California and Nevada recently. Segway also tried a similar approach to pave the way for sales of its totally new type of device.

But the electric bike industry is following the traditional, difficult and time consuming approach. Let consumers buy the products and once a critical mass of the devises is in use there will be legislative “fixes” to accommodate the safe use of mainstream devices. The problem of course is that this is a car centric country, where drivers don’t like bikes of any kind on “their” roads, and many state legislators don’t really like Washington DC’s approach to anything. This was clear in the comments from states to NHTSA’s proposed regulation in 2005. Hopefully this method will work as it may be too late for the “pave the way with legislation first” method. The EU also tried to get a regulatory framework in place before the market was flooded with various devices and in some respects it worked as the EU market is much larger than the US market right now for electric bikes. There are other reasons as well.

Another issue to keep in mind are what some refer to as “fast” electric bicycles, which can travel over 20 mph solely on motor power. The fact that these “fast” electric bikes can travel over 20 mph solely on motor power takes them outside the scope of the CPSC definition of a “low speed electric bicycle”. Some sellers of these “fast” electric bikes claim that these bikes are designed for “off road” use. However, this may be a way to get around the CPSC and NHTSA regulations (and possibly some state laws), since some of these bikes appear to be designed for road use, as opposed to “off road” use (using the NHTSA interpretations). These “fast” e-bikes are causing debates in some states, notably in New York as noted in the article “NYC e-bike crackdown exposes legal morass”.

As pointed out above, the CPSC’s definition of an electric bike centers around a 20 mph limit, with the caveat that this 20 mph must not be exceeded if the electric bike is solely powered by its motor. Accordingly, this definition permits an electric bike which is powered by its rider (with the possible assistance of a motor, making the electric bike what some call a “pedelec”) to travel faster than 20 mph. The distinction is key to a correct interpretation of the CPSC’s definition.

Lastly, on a related topic altogether, some people appear to be confused about where the regulations fit in to the overall scheme of things in terms of liability. If a rider is injured by or on an electric bike, compliance with a regulation or standard (mandatory or otherwise) is not going to be of much help other than possibly being persuasive. (read more on that here). However failure to comply with a regulation (that is applicable) really can create an uphill battle in court. But again the facts of each specific case will be vastly different and drawing conclusions from specific cases will be difficult.

In the meantime it will be interesting to see what develops out of New York and if there is a state or city wide solution. As most in the industry know trying to lobby government officials to your point of view is a tricky business and fraught with pitfalls.

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 www.swhlaw.com or send an e mail to: legal.inquiry@swhlaw.com

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 | www.swhlaw.com | 562 866 6228 © Copyright 1996-2013 Conditions of Use

Legal Analysis: Trademark issues proliferate in the Internet age

Published in Bicycle Retailer and Industry News December 17, 2013
Reprinted with permission
by Steven W. Hansen

There has been quite a bit of ink used recently discussing trademarks and their enforcement and the folks at BRAIN wanted me to write about the topic generally. I want to make it clear that nothing written in this column is meant to comment upon or pass judgment upon recent issues in the news. We are not privy to all the non-public facts; this is just a general legal overview of the subject.

As most people should know there are three areas of “Intellectual Property” (“IP”) in the U.S.: Patents, Copyrights and Trademarks. Patents cover inventions of things and processes. Copyrights cover things such as written materials (like owners manuals) music, films and photos. Trademarks are most a associated with brand names, words, phrases, designs, logos, images or a combination of all the foregoing. It is possible that one thing could be covered in different ways but all three areas of IP law.

There are a few flavors of trademarks. One is a Service Mark (SM), used to designate a service. There are also “common law” trademarks (discussed below) usually designated with a TM and then Federally Registered trademarks denoted with a ®. There are also state-registered marks, which will not be discussed here.

Unlike patents or copyrights, which have limited lifetimes, trademarks can last forever as long as the “mark” is still being used in commerce.

The rationale behind trademarks is that consumers should not be confused about brands or names of products. Once a company had built up a particular brand or product name there is often a great deal of cost behind that and companies don’t want “impostor” products or brands coming out that act as “free riders” and benefit from all the marketing, branding and consumer goodwill that the trademark holder has put into that trademark. Also the trademark office does not want a consumer to think he is getting the brand name product when he is not. He is getting something that only looks like the genuine article. That causes confusion and does not assist consumers in selecting products or services.

Here is a recent example from the insurance industry. Travelers Ins. is suing Legal & General Group PLC of London over the use of a multicolored umbrella (used since 2011) that Travelers says is too similar to its own iconic red umbrella logo. Even though the umbrella is not red, Travelers feels that the use of any umbrella logo in the insurance industry would “dilute” the famous red umbrella mark. The umbrella is also used to convey “coverage” from harm or the elements (like insurance provides, so it’s a great memorable logo).



So in line with this theme rules have been developed to determine when one trademark is too “similar” to another (registered or non-registered mark) in terms of the way the word itself, the way the word is printed, or a logo, or its coloring or its descriptive characteristics or the goods and services categories that go along with each trademark. For example using the logo example above, if you have a bicycle goods trademark that uses an umbrella there is not much chance of consumers becoming confused as Travelers is not in the bike business. But if Travelers starts selling bikes using the umbrella logo and you are already using that, now there is a problem (unless they reserved the use of the trademark for bike parts as well) Problems crop up when a trademark owner starts to branch out into “goods and services” categories beyond which its trademark was originally registered for.

In addition to the issue of narrowing or expanding the scope when filing for trademark protection there is also the issue of where to file the trademark. You only get the protection the in the country you file in. There is a system in place now to make one filing cover about 100 countries that agree to follow the protocol or system referred to generally as the “Madrid System” (actually there are two international treaties). The U.S. and the EU joined the protocol in 2000. The problem of course is that as you make the trademark apply to a broader class of goods and services (obviously within the scope of your business’s products or services) and to more countries the more likely it is that the trademark will be denied due to some conflict with another. I had heard that “Nike” dropped the use of the word Nike and just went with the “swoosh” symbol as that was well recognized and due to the fact that some rogue distributor had picked up the trademark “Nike” in some non-EU country. But they failed to get the “swoosh.”

Within the U.S. there are also registration issues. In order to obtain a U.S. Federal Registration on a trademark the good or service must be sold or offered for sale in every state. If it's not, that technically is a bar to a federal registration and you have to obtain state law registrations, which is really a whole other system, not unified, like the federal system.

Another issue to think about is who or what entity is going to own the trademark. Normally trademarks and other intellectual property are owned by or “assigned to” a legal entity such as a corporation. In some cases corporations are formed just to own all the IP that a company or group of companies may have. Having individuals own IP is a very risky strategy obviously due to control issues.

The enforcement of trademarks is of course a subject for which books are written. One of the biggest issues for trademark owners is the failure to continue to use the mark in commerce. If the mark falls out of use for a period of longer than five years (in most cases) it can lapse for non-use (abandonment) or of course be challenged by another seeking to use the mark.

Trademarks can also become “generic” through common use and this can result in the loss of registration. For example Xerox does not want people referring to all photocopies generically as a “Xerox” especially if it’s not made on Xerox machine.

“Fair use” is also a very misunderstood concept in trademark. For example you can always use a trademark when saying something negative about the brand or company (that is truthful of course) or comparing it to another brand. This would be considered fair use and of course free speech under the First Amendment to the U.S. Constitution.

Internet domain names are another tricky subject. Typically once you have a registered trademark ensuring that no one else can use that trademark in a domain is relatively easy in straightforward cases but becomes much more convoluted in other trickier issues that don’t just involve a simple domain. For example all the www.yourcompanysucks.com domains have been held to have a right under the First Amendment to exist. Also, what happens with meta tags of your trademark in a competitor's website. Again the specifics facts of the cases control but infringement of the trademark is generally not found where the domain owner does not seek to capitalize on the trademark's goodwill for his own commercial enterprises. For example if the domain owner is legitimately comparing Fords to Chevys in the article, there would not be an infringement if the main purpose of the site was the comparison, not selling those brands. Most internet domain disputes are now dealt with worldwide under the Uniform Domain Name Dispute Resolution Policy with www.icann.org.

In most countries including the U.S. you can license the trademark to third parties. The downside of course is that the trademark owner must closely monitor the quality of the goods produced by the third party licensee to avoid the risk of abandonment of the trademark or worse product liability ramifications to the licensor if someone is injured with the product produced by the third party. These aspects are usually specifically dealt with in licensing agreements.

Some countries, like the U.S. do have certain protections provided to unregistered trademarks often denoted with the TM mark. These rights in the U.S. are geographical in nature, so multiple parties may use the trademark simultaneously. Unregistered marks may be protected under the Federal Lanham Act against commercial misrepresentation of the source or origin of goods.

But typically, in order to gain an advantage and to insure stability and predictability, users will opt to register a mark federally. This also brings greater damages for infringement than from a non-registered mark. Also it’s rare for an unregistered trademark to be successfully licensed to a third party. In addition  registered trademark owners can use the trademark to stop the importation of imported products that violate the trademark through U.S. Customs. Also when in court you have a higher burden of proof to prove the mark is yours and unique. A registered owner does not. There are also fewer geographical restrictions to deal with in a registered trademark. Even if your mark is unregistered you should always denote TM next to the mark so that others will know you are asserting that as your trademark and that cannot be used as a defense by the infringer. However, the burden to search the federal trademark database rests with each company that is seeking to find a trademark, as they may be liable for infringement even if they later discovered the owner did not mark its products with the ® mark.

Trademarks should not be an afterthought. They need to be well thought out far in advance of creating any brand name or model name of product. It will help insure many fewer headaches down the road and perhaps save thousands of dollars marketing a name that is owned by another company. Worse, the confusion that is caused with customers may not work to your advantage.

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 consumer products. For further questions visit www.swhlaw.com or send an e mail to legal.inquiry@swhlaw.com

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 | www.swhlaw.com | 562 866 6228 © Copyright 1996-2013 Conditions of Use

Bisphenol A (BPA) Delisted on Proposition 65 banned chemical list in California

The info below is taken from a press release from the Office of Environmental Health Hazard Assessment (OEHHA) which is the California government agency which governs the so called "Proposition 65" list of banned chemicals. Again this delisting of bisphenol A (BPA) is only based on a preliminary injunction (read the Judge's order here or download) in the case now pending below which may or may not be finally resolved in favor of the plastics or chemical industries whose trade group (American Chemistry Council) brought the lawsuit. The Natural Resources Defense Council, an environmental advocacy group in San Francisco, said the decision was a "temporary setback". The NRDC encouraged California to place restrictions on BPA originally.

press release from the Office of Environmental Health Hazard Assessment:

Proposition 65

Chemical Delisted Effective April 19, 2013 As Known To The State Of California To Cause Reproductive Toxicity: Bisphenol A (BPA)[04/19/13]

Effective April 19, 2013, the Office of Environmental Health Hazard Assessment (OEHHA) is removing bisphenol A (BPA) (CAS No. 80-05-7) from the list of chemicals known to the State to cause cancer or reproductive toxicity for purposes of Proposition 65 fn1. The chemical was added to the list on April 11, 2013 based on reproductive endpoints (developmental toxicity).

On April 19, 2013, the Honorable Raymond M. Cadei issued a preliminary injunction requiring OEHHA to delist the chemical in American Chemistry Council v Office of Environmental Health Hazard Assessment, et al., Sacramento County case number 34-2013-00140720, pending final resolution of the case. A copy of the court’s order is included with this Notice.

A complete, updated chemical list will be published in an upcoming issue of the California Regulatory Notice Register and is available on the OEHHA website at www.oehha.ca.gov.

Please contact Carol Monahan Cummings, OEHHA Chief Counsel at (916) 322-0493 or carol.monahan-cummings@oehha.ca.gov if you have questions regarding this notice.

fn1 The Safe Drinking Water and Toxic Enforcement Act of 1986, Health and Safety Code section 25249.5 et seq.

Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2008 Conditions of Use

Federal Trade Commission Issues Revised "Green Guides" to Help Companies Avoid Making Misleading Environmental Claims

The Federal Trade Commission (FTC), the same agency that brought you the regulations regarding "made in the USA" labels and advertising, has updated their "Green Guides" as of October 1, 2012. They were first issued in 1992 and revised in 1996 and 1998, and proposed these current revisions in October 2010. The Guides are important if you sell a product using claims that your product is "eco-freindly" or "environmentally friendly" among other terms. Ironically the Guides caution marketers not to use such terms because the FTC’s consumer perception study confirmed that such claims are likely to suggest that the product has specific and far-reaching environmental benefits and that "very few products, if any, have all the attributes consumers seem to perceive from such claims, making these claims nearly impossible to substantiate."

The Guides contain new sections on: 1) certifications and seals of approval; 2) carbon offsets, 3) free-of claims, 4) non-toxic claims, 5) made with renewable energy claims, and 6) made with renewable materials claims. Again the Guides are not "laws" or "regulations" but "guidance". They describe the types of environmental claims the FTC may or may not find "deceptive" under Section 5 of the FTC Act. The Guides do not address use of the terms "sustainable," "natural," and "organic," the last of which is covered by the U.S. Department of Agriculture.

The Guides caution marketers not to use environmental certifications or seals that don’t clearly convey the basis for the certification, because such seals or certifications are likely to convey general environmental benefits. According to the Ecolabel Index there are 432 ecolabels in 246 countries, and 25 industry sectors.

A four page "summary" of the Guides is viewable here (to view in PDF) or for download here and the regulations themselves (which will be much longer and more detailed) will be published in the Federal Register soon. We can send you a copy upon request.

Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2008 Conditions of Use

Don’t Just Rubber Stamp Your Insurance Renewal; It’s More Complicated Than You Think

Reprinted with permission from the June/July 2012 edition of Bicycle Dealer Magazine

Download pdf version

By Steven W. Hansen, esq.

I’m currently defending two cases, one involving a retailer and another a non-profit bike association where there was insurance in place at the time of the accident but no coverage due to exclusions or lack of “optional” coverages. Both of the situations are very costly mistakes as neither the defense costs in the suit nor the indemnity payment to the plaintiff will be covered and must be borne by the insured.

Most retailers never think much about their coverage once they secure it, other then trying to find a lower price each year. They treat insurance as a “commodity” (something they would never do with bikes) and only shop based on price, not coverages. This problem is often due to a lack of understanding about what insurance policies cover and do not cover and some brokers’ lack of understanding of the bicycle business and the coverages that are most needed by those in the business. As this magazine is read primarily by IBDs, the focus of this article will be on insurance for retailers, not manufacturers.

Many retailers are unaware that one of their biggest liability exposures is product liability. Some assume they cannot be sued for that, as the manufacturer made the product. Even if they never touched the product (just sold it), in most states, the retailer can be on the hook for the entire loss. In cases where the retailer installed the product, allegations are often made that make the retailer the target of the products liability case. Some retailers actually lack the “products completed operations” coverage on their policy, as they don’t understand the insurance terminology, which is foreign to most people.

Lots of retailers and manufacturers ask me what limits of liability coverage they should carry. This is a very hard question to answer and, in the end, comes down to the size of your business (its value), your actual exposures and your tolerance for risk. This is something that really has to be customized for each client.

There are two main types of policies offered for retailers. One is referred to as a “BOP” (or Business Owner’s Policy) and the other is CGL (Commercial General Liability). BOP is generally very price competitive and generally non-auditable, meaning that unlike CGL policies, the insurer cannot come back after the policy ends and seek more premium as your sales exceeded estimates. CGL policies are priced using different methods and are almost always more costly than the BOP’s. BOP’s are far more common for retailers. Again, which type you get depends on the type of operation you run and the coverages you want added in. BOP’s are often very limited with very few options.

For example, if your store carries a product which it helped to design there could be an argument that your store is the designer of the product and the BOP policy may not have the coverage needed to deal with that exposure.

Another area often overlooked are certificates of insurance. Most retailers know (or assume) that their upstream suppliers or manufacturers carry insurance that covers product liability claims. But some retailers wrongly assume that if they become involved in a suit, the upstream supplier’s insurer will defend and indemnify them. This often is not the case, as the retailer has not been added to the manufacturers policy via a certificate of insurance. The problem is that certificates can be worded in such a way as to not offer any coverage to the retailer. In addition, there are parts of the policy that are not provided to the retailer that discuss the scope of what the retailer can be indemnified for by the manufacturers policy. As most retailers don’t understand this area, it’s rarely discussed with brokers or suppliers in an intelligent fashion, if at all.

The certificate issue can become more complicated by indemnity contracts between upstream and downstream parties in the supply chain. These contracts are often poorly drafted, not well thought out and often fail to take into account insurance issues that may arise due to these contacts. For example, in many cases the party required to indemnify may not have any insurance coverage for any contractual obligation or just for the contract drafted in that specific instance. That can cause hardship to the indemnifying party and also make it less likely that the party that was to be indemnified under the agreement will not get what it bargained for. I often tell clients that if there is no insurance coverage for an indemnification agreement, they are likely not worth the paper they are written on.

Other areas overlooked by retailers are all the scenarios where problems or injuries are likely to occur. Examples are sponsorship of riders or events, rentals of bikes and related equipment, used bikes, repairs, thefts, contractual obligations, recalls, employee matters, data issues, loss of business or revenue, importing/exporting -- the list goes on.

For example, most retailers know that workers compensation coverage is required by law for employees, but fail to obtain any type of “employment practices” liability coverage that can cover wrongful discharge or discrimination claims, hiring claims etc. I tell people that often your own employees can become your worst nightmare if they turn against you -- much worse than a former customer. But again employment practice coverage varies widely from insurer to insurer so you have to be very careful about what you are paying for. In some instances, such coverage will only provide a defense to the claim but no indemnity if there is a settlement or a verdict against you.

Thefts are a complicated area as they can occur in many different ways and some types of theft are not covered by policies or are excluded. Thefts can be categorized as thefts by third parties or thefts by employees. Burglary-type thefts (by force) and thefts by some sort of deception (like giving a bogus credit card or promising to come back from a test ride and never doing so). They are also segregated by types of things stolen: money, data, identities, products etc. Policies can differ greatly on what is and is not covered, so you have to ask very pointed and specific questions of your broker (preferably in writing) as to what is and is not covered.

Data loss has become a huge marketing area lately in the insurance market, both in terms of data (incoming or outgoing) damaging your business or causing harm to third parties (such as in loss or leakage of personal information on the Internet or credit card information). The broadest types of coverage are almost always sold separately. Some “basic” coverages might get included in the primary policy. These coverages can get quite complicated and quite costly. Often, they cover more than smaller businesses need, especially if they are not processing lots of online orders and have good data management practices in place or outsource that function to the third party. But again, it really depends on your unique exposures.

Given the complexities involved in insurance, the jargon used by brokers that retailers clearly don’t understand and some brokers who are not at all familiar with the risk that retailers face in the recreational arena, I often am asked to do “insurance audits” or broader “liability audits” for clients. Some of this work should be done by the brokers, but often, it’s not, or it’s incomplete or its done using insurance jargon that leaves the insured not quite sure what’s covered and what’s not. Another problem is that some brokers that sell these policies are not very familiar with types of coverages or more importantly what types of “likely retailer scenarios” are covered and which ones are not under a particular policy.

To make matters worse, what’s covered or not covered can change from year to year or insurer to insurer. Typically, the changes are less from year to year than they are when you change insurers. You have to make sure that coverage has not been changed or restricted when the new policy issues. A broker may also be told that a policy will cover a certain act or loss, but then when the policy is actually issued by the insurer months later, it turns out the forms attached were changed or the form asked for was not included and you end up with a costly coverage problem.

Insurance can be daunting. It’s better to find out what you are paying for well before you need it.

Steven W. Hansen is an attorney who defends recreational product manufacturers, distributors and retailers in product liability matters and provides consultation regarding product recalls, owners manuals and warnings, insurance coverage questions, risk management and product compliance and development.

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 | www.swhlaw.com | 562 866 6228 © Copyright 1996-2008 Conditions of Use

Helmet Use Among U.S. Motorcyclists Who Died in Crashes 2008–2010

This is an interesting and quite detailed study regarding the use of motorcycle helmets. It would be interesting to see how much of this data is transmutable to bicycle helmet use or non use and related injuries. The CDC (Centers for Disease Control; cdc.gov) analysed fatal crash data from 2008 to 2010, where a total of 14,283 motorcyclists were killed in crashes, among whom 6,057 (42 percent) were not wearing a helmet. In the 20 states with a universal helmet law (like California), 739 (12 percent) fatally injured motorcyclists were not wearing a helmet, compared with 4,814 motorcyclists (64 percent) in the 27 states with partial helmet laws and 504 (79 percent) motorcyclists in the three states without a helmet law. As of April 2012, 19 states and the District of Columbia had universal helmet laws, 28 states had partial helmet laws, and three states had no helmet law. The full report is available here in pdf

Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2008 Conditions of Use

The new ANSI Z535 standards and drafting better user / owner manuals

We have been assisting clients with the drafting or users (or owners) manuals for some time. Companies have become much better about drafting these manuals in recent years, however many company's manuals are still seriously lacking in many areas. The biggest problem we see is that companies do not think out a long term strategy with respect to manuals, how they are to be effectively and ultimately delivered to consumers and developing a framework for revising them over time, to name a few areas that are lacking.

If your company does not have any manuals (or recent, well drafted manuals) this may be the time to get started or at least do a refresh on what you have and to rethink your entire strategy. The reason this may be a good time is that ANSI (American National Standards Institute) has just recently published two key standards dealing with warnings and drafting these manuals. The two standards are:

ANSI Z535.4 "Product Safety Signs and Labels" originally published in 1991. The 2007 version was revised and published in Sept 2011; (again this one only involves so called "on product" warnings)

ANSI Z535.6 "Product Safety Information in Product Manuals, Instructions, and Other Collateral Materials" originally published in 2006. The 2006 version was revised and published in Sept 2011; (this standard deals with complete manuals and is meant to be complimentary to Z535.4)

There are 4 other standards in the ANSI Z 535 series ( Z535.1, Z535.2, Z535.3, and Z535.5) that are not directly relevant for drafters of manuals for recreational products.

Now of course none of the Z535 series standards tell you what to say in your manuals or warnings or even what substantive topics to cover, (that is usually covered by more substantive standards like the EN 14781 entitled "Racing bicycles - Safety requirements and test methods", for example) but the Z535 standards do tell you the manner in which you should convey it, including organization, style, graphics etc. From our own review I will say that most manuals that we have not assisted on are poorly organized. Z535 aims to improve that problem specifically.

Another thing to keep in mind is that a manual is not all about "warnings" but also about instructing users on how to assemble, use or maintain the product. We always say that if users are properly instructed often times the need for the warning is reduced. But you need both components. Another area lacking in manuals is instructive, intelligent warnings. For example we often see the generic warning: "use of this product may result in serious injury or death...." Great info. That's true with almost any product. You need to tell the user the specific areas or details about the product where he or she is most likely to get hurt and how the injury is likely to occur (the mechanism of injury). This is the reason most people's eyes glaze over when reading warnings. You are not telling them something they don't already know. (think about cigarette warnings and recent controversy about making them have more impact)

Now many people will say that just having a "standard" does not guarantee that you will get past a "failure to warn" claim and I would agree with them (see my prior article Using Standards in Defending Product Liability Cases, for more detail on that issue). However whenever you fail to meet or at least demonstrate that your company at least considered a standard in drafting a warning or manual, you can pretty much be assured that overcoming a failure to warn claim will be an uphill battle with a judge or jury. The reason is that standards (especially those from recognized bodies like ANSI, ISO or ASTM) are seen as embodying years of diligent work by the worlds experts on the subject, application of the scientific method, and in most cases some democratic form of creation. That's hard for most companies to compete against in house.

At a minimum you need someone with legal training (in the relevant field of product liability) and some knowledge of the the substantive area being warned about, to review your manual at least every 2-3 years or more often if substantial changes to the manual or product are being made. Having someone outside the company critique the manuals is essential. This is a continual process and should be examined in a comprehensive fashion; again not just the manuals themselves but the delivery system, the design, the languages, the timeline etc. Once this is done properly inside people can be trained to carry on the work on a yearly basis.

Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2012 Conditions of Use

CPSIA "fixes" passed in the Consumer Product Safety Flexibility Act of 2011 [August 1, 2011]

Below is the final version of H.R. 2715 with the snappy title of "To provide the Consumer Product Safety Commission with greater authority and discretion in enforcing the consumer product safety laws, and for other purposes." that was sponsored by Rep Bono Mack, Mary [CA-45] and "introduced " on August 1, 2011, interestingly/amazingly with the same "effective date" (and of course this has not yet been signed by the President). On motion to suspend the rules and pass the bill, it was passed in the house of representatives as follows: 421 yes votes and 2 votes against (Roll no. 683). It was Passed/agreed to in Senate without amendment by "Unanimous Consent". We do not have the senate version of the bill at the time of posting. The Senate version is apparently titled the "Consumer Product Safety Flexibility Act of 2011" and we think is under number S. 1448. (However as of this posting the bill text under S. 1448 did not match that of the House bill below [HR 2715] and appears to be outdated info) (see the House press release after the end of the bill).

This bill primarily fixes the new CPSC/CPSIA 100 ppm lead requirement, which is/was set to take effect August 14, and would make it impossible to sell merchandise that is already on the shelves. Under the bill below (section 1), only products manufactured after August 14, 2011 will have to meet the 100 ppm lead standard, allowing older products to be sold under the higher lead limits in effect before August 14. This was the primary impetus to get the bill passed before August 14. There is quite a bit packed in this relatively short bill so have a quick read below and see if the provisions will affect your business.

This bill and the path it has taken is an example of why people are very frustrated with Congress and getting legislation passed in general. These "legislative" fixes have been getting passed around in backrooms for months and when they finally did come to a "vote" the "fix" was already in and they sailed thru in minutes or seconds on votes that were purely formalities. There was really no warning that this would be passed when it did or in this fashion. If you did not get what you wanted in here well that's too bad because you are not likely to see any further relief for some time. Apparently Congress is going to be in recess until after Labor day as they had to work so hard to pass the debt ceiling bill.

H.R.2715 -- To provide the Consumer Product Safety Commission with greater authority and discretion in enforcing the consumer product safety laws, and for other purposes. (Engrossed in House [Passed House] - EH)

SECTION 1. LIMITATION ON LEAD IN CHILDREN'S PRODUCTS.

SEC. 2. APPLICATION OF THIRD PARTY TESTING REQUIREMENTS.

SEC. 3. APPLICATION OF AND PROCESS FOR UPDATING DURABLE NURSERY PRODUCTS STANDARDS.

SEC. 4. APPLICATION OF SECTION 106 TO FDA-REGULATED PRODUCTS.

SEC. 5. APPLICATION OF PHTHALATES LIMIT.

SEC. 6. AUTHORITY TO MODIFY TRACKING LABELS REQUIREMENT.

SEC. 7. IMPROVED PRODUCT IDENTIFICATION FOR PUBLIC DATABASE.

SEC. 8. SUBPOENA AUTHORITY.

SEC. 9. DEADLINE FOR RULE BY CONSUMER PRODUCT SAFETY COMMISSION ON STANDARDS FOR ALL TERRAIN VEHICLES.

SEC. 10. TECHNICAL AMENDMENTS.

SEC. 11. EFFECTIVE DATE.


AN ACT

To provide the Consumer Product Safety Commission with greater authority and discretion in enforcing the consumer product safety laws, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. LIMITATION ON LEAD IN CHILDREN'S PRODUCTS.

(a) Prospective Application of Lead Limit for Children's Products- Section 101(a) of the Consumer Product Safety Improvement Act of 2008 (15 U.S.C. 1278a(a)) is amended by adding at the end the following:

`(3) APPLICATION- Each limit set forth in paragraph (2) (except for the limit set forth in subparagraphs (A) and (B)) shall apply only to a children's product (as defined in section 3(a) of the Consumer Product Safety Act (15 U.S.C. 2052(a))) that is manufactured after the effective date of such respective limit.'.

(b) Alternative Limits and Exceptions- Section 101(b) of such Act (15 U.S.C. 1278a(b)(1)) is amended--

(1) by striking paragraph (1) and inserting the following:

`(1) FUNCTIONAL PURPOSE EXCEPTION-

`(A) IN GENERAL- The Commission, on its own initiative or upon petition by an interested party, shall grant an exception to the limit in subsection (a) for a specific product, class of product, material, or component part if the Commission, after notice and a hearing, determines that--

`(i) the product, class of product, material, or component part requires the inclusion of lead because it is not practicable or not technologically feasible to manufacture such product, class of product, material, or component part, as the case may be, in accordance with subsection (a) by removing the excessive lead or by making the lead inaccessible;

`(ii) the product, class of product, material, or component part is not likely to be placed in the mouth or ingested, taking into account normal and reasonably foreseeable use and abuse of such product, class of product, material, or component part by a child; and

`(iii) an exception for the product, class of product, material, or component part will have no measurable adverse effect on public health or safety, taking into account normal and reasonably foreseeable use and abuse.

`(B) MEASUREMENT- For purposes of subparagraph (A)(iii), there is no measurable adverse effect on public health or safety if the exception described in subparagraph (A) will result in no measurable increase in blood lead levels of a child. The Commission may adopt an alternative method of measurement other than blood lead levels if it determines, after notice and a hearing, that such alternative method is a better scientific method for measuring adverse effect on public health and safety.

`(C) PROCEDURES FOR GRANTING EXCEPTION-

`(i) BURDEN OF PROOF- A party seeking an exception under subparagraph (A) has the burden of demonstrating that it meets the requirements of such subparagraph.

`(ii) GROUNDS FOR DECISION- In the case where a party has petitioned for an exception, in determining whether to grant the exception, the Commission may base its decision solely on the materials presented by the party seeking the exception and any materials received through notice and a hearing.

`(iii) ADMISSIBLE EVIDENCE- In demonstrating that it meets the requirements of subparagraph (A), a party seeking an exception under such subparagraph may rely on any nonproprietary information submitted by any other party seeking such an exception and such information shall be considered part of the record presented by the party that relies on that information.

`(iv) SCOPE OF EXCEPTION- If an exception is sought for an entire product, the burden is on the petitioning party to demonstrate that the criteria in subparagraph (A) are met with respect to every accessible component or accessible material of the product.

`(D) LIMITATION ON EXCEPTION- If the Commission grants an exception for a product, class of product, material, or component part under subparagraph (A), the Commission may, as necessary to protect public health or safety--

`(i) establish a lead limit that such product, class of product, material, or component part may not exceed; or

`(ii) place a manufacturing expiration date on such exception or establish a schedule after which the manufacturer of such product, class of product, material, or component part shall be in full compliance with the limit established under clause (i) or the limit set forth in subsection (a).

`(E) APPLICATION OF EXCEPTION- An exception under subparagraph (A) for a product, class of product, material, or component part shall apply regardless of the date of manufacture unless the Commission expressly provides otherwise.

`(F) PREVIOUSLY SUBMITTED PETITIONS- A party seeking an exception under this paragraph may rely on materials previously submitted in connection with a petition for exclusion under this section. In such cases, petitioners must notify the Commission of their intent to rely on materials previously submitted. Such reliance does not affect petitioners' obligation to demonstrate that they meet all requirements of this paragraph as required by subparagraph (C)(i).';

(2) in paragraph (2)(A), by striking `include to,' and inserting `include'; and

(3) by redesignating paragraph (5) as paragraph (8) and inserting after paragraph (4) the following:

`(5) EXCEPTION FOR OFF-HIGHWAY VEHICLES-

`(A) IN GENERAL- Subsection (a) shall not apply to an off-highway vehicle.

`(B) OFF-HIGHWAY VEHICLE DEFINED- For purposes of this section, the term `off-highway vehicle'--

`(i) means any motorized vehicle--

`(I) that is manufactured primarily for use off public streets, roads, and highways;

`(II) designed to travel on 2, 3, or 4 wheels; and

`(III) that has either--

`(aa) a seat designed to be straddled by the operator and handlebars for steering control; or

`(bb) a nonstraddle seat, steering wheel, seat belts, and roll-over protective structure; and

`(ii) includes a snowmobile.

`(6) BICYCLES AND RELATED PRODUCTS- In lieu of the lead limits established in subsection (a)(2), the limits set forth for each respective material in the notice of the Commission entitled `Notice of Stay of Enforcement Pertaining to Bicycles and Related Products', published June 30, 2009 (74 Fed. Reg. 31254), shall apply to any metal component part of the products to which the stay of enforcement described in such notice applies, except that after December 31, 2011, the limits set forth in such notice shall not be more than 300 parts per million total lead content by weight for any metal component part of the products to which such stay pertains.

`(7) EXCLUSION OF CERTAIN USED CHILDREN'S PRODUCTS-

`(A) GENERAL EXCLUSION- The lead limits established under subsection (a) shall not apply to a used children's product.

`(B) DEFINITION- In this paragraph, the term `used children's product' means a children's product (as defined in section 3(a) of the Consumer Product Safety Act (15 U.S.C. 2052(a)) that was obtained by the seller for use and not for the purpose of resale or was obtained by the seller, either directly or indirectly, from a person who obtained such children's product for use and not for the purpose of resale. Such term also includes a children's product that was donated to the seller for charitable distribution or resale to support charitable purposes. Such term shall not include--

`(i) children's metal jewelry;

`(ii) any children's product for which the donating party or the seller has actual knowledge that the product is in violation of the lead limits in this section; or

`(iii) any other children's product or product category that the Commission determines, after notice and a hearing.

For purposes of this definition, the term `seller' includes a person who lends or donates a used children's product.'.

SEC. 2. APPLICATION OF THIRD PARTY TESTING REQUIREMENTS.

(a) In General- Section 14(d) of the Consumer Product Safety Act (15 U.S.C. 2063(d)) is amended--

(1) in paragraph (2)(B)(ii), by striking `random' and inserting `representative'; and

(2) by adding at the end the following:

`(3) REDUCING THIRD PARTY TESTING BURDENS-

`(A) ASSESSMENT- Not later than 60 days after the date of enactment of this paragraph, the Commission shall seek public comment on opportunities to reduce the cost of third party testing requirements consistent with assuring compliance with any applicable consumer product safety rule, ban, standard, or regulation. The request for public comment shall include the following:

`(i) The extent to which the use of materials subject to regulations of another government agency that requires third party testing of those materials may provide sufficient assurance of conformity with an applicable consumer product safety rule, ban, standard, or regulation without further third party testing.

`(ii) The extent to which modification of the certification requirements may have the effect of reducing redundant third party testing by or on behalf of 2 or more importers of a product that is substantially similar or identical in all material respects.

`(iii) The extent to which products with a substantial number of different components subject to third party testing may be evaluated to show compliance with an applicable rule, ban, standard, or regulation by third party testing of a subset of such components selected by a third party conformity assessment body.

`(iv) The extent to which manufacturers with a substantial number of substantially similar products subject to third party testing may reasonably make use of sampling procedures that reduce the overall test burden without compromising the benefits of third party testing.

`(v) The extent to which evidence of conformity with other national or international governmental standards may provide assurance of conformity to consumer product safety rules, bans, standards, or regulations applicable under this Act.

`(vi) The extent to which technology, other than the technology already approved by the Commission, exists for third party conformity assessment bodies to test or to screen for testing consumer products subject to a third party testing requirement.

`(vii) Other techniques for lowering the cost of third party testing consistent with assuring compliance with the applicable consumer product safety rules, bans, standards, and regulations.

`(B) REGULATIONS- Following the public comment period described in subparagraph (A), but not later than 1 year after the date of enactment of this paragraph, the Commission shall review the public comments and may prescribe new or revised third party testing regulations if it determines that such regulations will reduce third party testing costs consistent with assuring compliance with the applicable consumer product safety rules, bans, standards, and regulations.

`(C) REPORT- If the Commission determines that it lacks authority to implement an opportunity for reducing the costs of third-party testing consistent with assuring compliance with the applicable consumer product safety rules, bans, standards, and regulations, it shall transmit a report to Congress reviewing those opportunities, along with any recommendations for any legislation to permit such implementation.

`(4) SPECIAL RULES FOR SMALL BATCH MANUFACTURERS-

`(A) SPECIAL CONSIDERATION; EXEMPTION-

`(i) CONSIDERATION; ALTERNATIVE REQUIREMENTS- Subject to subparagraph (C), in implementing third party testing requirements under this section, the Commission shall take into consideration any economic, administrative, or other limits on the ability of small batch manufacturers to comply with such requirements and shall, after notice and a hearing, provide alternative testing requirements for covered products manufactured by small batch manufacturers in lieu of those required under subsection (a) or (b). Any such alternative requirements shall provide for reasonable methods to assure compliance with any applicable consumer product safety rule, ban, standard, or regulation. The Commission may allow such alternative testing requirements for small batch manufacturers with respect to a specific product or product class or with respect to a specific safety rule, ban, standard, or regulation, or portion thereof.

`(ii) EXEMPTION- If the Commission determines that no alternative testing requirement is available or economically practicable, it shall exempt small batch manufacturers from third party testing requirements under subsections (a) and (b).

`(iii) CERTIFICATION- In lieu of or as part of any alternative testing requirements provided under clause (i), the Commission may allow certification of a product to an applicable consumer product safety rule, ban, standard, or regulation, or portion thereof, based on documentation that the product complies with another national or international governmental standard or safety requirement that the Commission determines is the same or more stringent than the consumer product safety rule, ban, standard, or regulation, or portion thereof. Any such certification shall only be allowed to the extent of the equivalency with a consumer product safety rule, ban, standard, or regulation and not to any other part of the consumer product safety rule, ban, standard, or regulation.

`(iv) RESTRICTION- Except as provided in subparagraph (C), and except where the Commission determines that the manufacturer does not meet the definition of a small batch manufacturer, for any small batch manufacturer registered pursuant to subparagraph (B), the Commission may not require third party testing of a covered product by a third party conformity assessment body until the Commission has provided either an alternative testing requirement or an exemption in accordance with clause (i) or (ii), respectively.

`(B) REGISTRATION- Any small batch manufacturer that utilizes alternative requirements or an exemption under this paragraph shall register with the Commission prior to using such alternative requirements or exemptions pursuant to any guidelines issued by the Commission to carry out this requirement.

`(C) LIMITATION- The Commission shall not provide or permit to continue in effect any alternative requirements or exemption from third party testing requirements under this paragraph where it determines, based on notice and a hearing, that full compliance with subsection (a) or (b) is reasonably necessary to protect public health or safety. The Commission shall not provide any alternative requirements or exemption for--

`(i) any of the third party testing requirements described in clauses (i) through (v) of subsection (a)(3)(B); or

`(ii) durable infant or toddler products, as defined in section 104(f) of the Consumer Product Safety Improvement Act of 2008 (15 U.S.C. 2056a(f)).

`(D) SUBSEQUENT MANUFACTURER- Nothing in this paragraph shall be construed to affect third party testing or any other requirements with respect to a subsequent manufacturer or other entity that uses components provided by one or more small batch manufacturers.

`(E) DEFINITIONS- For purposes of this paragraph--

`(i) the term `covered product' means a consumer product manufactured by a small batch manufacturer where no more than 7,500 units of the same product were manufactured in the previous calendar year; and

`(ii) the term `small batch manufacturer' means a manufacturer that had no more than $1,000,000 in total gross revenue from sales of all consumer products in the previous calendar year. The dollar amount contained in this paragraph shall be adjusted annually by the percentage increase in the Consumer Price Index for all urban consumers published by the Department of Labor.

For purposes of determining the total gross revenue for all sales of all consumer products of a manufacturer under this subparagraph, such total gross revenue shall be considered to include all gross revenue from all sales of all consumer products of each entity that controls, is controlled by, or is under common control with such manufacturer. The Commission shall take steps to ensure that all relevant business affiliations are considered in determining whether or not a manufacturer meets this definition.

`(5) EXCLUSION FROM THIRD PARTY TESTING-

`(A) CERTAIN PRINTED MATERIALS-

`(i) IN GENERAL- The third party testing requirements established under subsection (a) shall not apply to ordinary books or ordinary paper-based printed materials.

`(ii) DEFINITIONS-

`(I) ORDINARY BOOK- The term `ordinary book' means a book printed on paper or cardboard, printed with inks or toners, and bound and finished using a conventional method, and that is intended to be read or has educational value. Such term does not include books with inherent play value, books designed or intended for a child 3 years of age or younger, and does not include any toy or other article that is not a book that is sold or packaged with an ordinary book.

`(II) ORDINARY PAPER-BASED PRINTED MATERIALS- The term `ordinary paper-based printed materials' means materials printed on paper or cardboard, such as magazines, posters, greeting cards, and similar products, that are printed with inks or toners and bound and finished using a conventional method.

`(III) EXCLUSIONS- Such terms do not include books or printed materials that contain components that are printed on material other than paper or cardboard or contain nonpaper-based components such as metal or plastic parts or accessories that are not part of the binding and finishing materials used in a conventional method.

`(B) METAL COMPONENT PARTS OF BICYCLES- The third party testing requirements established under subsection (a) shall not apply to metal component parts of bicycles with respect to compliance with the lead content limits in place pursuant to section 101(b)(6) of the Consumer Product Safety Improvement Act of 2008.'.

(b) Prohibited Act- Section 19(a)(14) of the Consumer Product Safety Act (15 U.S.C. 2068(a)(14)) is amended by striking the period and inserting `, or to subdivide the production of any children's product into small quantities that have the effect of evading any third party testing requirements under section 14(a)(2);'.

SEC. 3. APPLICATION OF AND PROCESS FOR UPDATING DURABLE NURSERY PRODUCTS STANDARDS.

(a) Updating Standard- Section 104(b) of the Consumer Product Safety Improvement Act of 2008 (15 U.S.C. 2056a(b)) is amended by adding at the end the following:

`(4) PROCESS FOR CONSIDERING SUBSEQUENT REVISIONS TO VOLUNTARY STANDARD-

`(A) NOTICE OF ADOPTION OF VOLUNTARY STANDARD- When the Commission promulgates a consumer product safety standard under this subsection that is based, in whole or in part, on a voluntary standard, the Commission shall notify the organization that issued the voluntary standard of the Commission's action and shall provide a copy of the consumer product safety standard to the organization.

`(B) COMMISSION ACTION ON REVISED VOLUNTARY STANDARD- If an organization revises a standard that has been adopted, in whole or in part, as a consumer product safety standard under this subsection, it shall notify the Commission. The revised voluntary standard shall be considered to be a consumer product safety standard issued by the Commission under section 9 of the Consumer Product Safety Act (15 U.S.C. 2058), effective 180 days after the date on which the organization notifies the Commission (or such later date specified by the Commission in the Federal Register) unless, within 90 days after receiving that notice, the Commission notifies the organization that it has determined that the proposed revision does not improve the safety of the consumer product covered by the standard and that the Commission is retaining the existing consumer product safety standard.'.

(b) Application of Standard- Section 104(c) of the Consumer Product Safety Improvement Act of 2008 (15 U.S.C. 2056a(c)) is amended by redesignating paragraph (3) as paragraph (4) and inserting after paragraph (2) the following:

`(3) APPLICATION OF ANY REVISION- With respect to any revision of the standard promulgated under subsection (b)(1)(B) subsequent to the initial promulgation of a standard under such subsection, paragraph (1) shall apply only to a person that manufactures or imports cribs, unless the Commission determines that application to any other person described in paragraph (2) is necessary to protect against an unreasonable risk to health or safety. If the Commission determines that application to a person described in paragraph (2) is necessary, it shall provide not less than 12 months for such person to come into compliance.'.

SEC. 4. APPLICATION OF SECTION 106 TO FDA-REGULATED PRODUCTS.

Section 106(a) of the Consumer Product Safety Improvement Act of 2008 (15 U.S.C. 2056b(a)) is amended by inserting `or any provision that restates or incorporates a regulation promulgated by the Food and Drug Administration or any statute administered by the Food and Drug Administration' after `or by statute'.

SEC. 5. APPLICATION OF PHTHALATES LIMIT.

(a) Accessible, Plasticized Component Parts- Section 108 of the Consumer Product Safety Improvement Act of 2008 (15 U.S.C. 2057c) is amended--

(1) by redesignating subsections (c) through (e) as subsections (e) through (g), respectively; and

(2) by inserting after subsection (b) the following:

`(c) Application- Effective on the date of enactment of this Act, subsections (a) and (b)(1) and any rule promulgated under subsection (b)(3) shall apply to any plasticized component part of a children's toy or child care article or any other component part of a children's toy or child care article that is made of other materials that may contain phthalates.

`(d) Exclusion for Inaccessible Component Parts-

`(1) IN GENERAL- The prohibitions established under subsections (a) and (b) shall not apply to any component part of a children's toy or child care article that is not accessible to a child through normal and reasonably foreseeable use and abuse of such product, as determined by the Commission. A component part is not accessible under this paragraph if such component part is not physically exposed by reason of a sealed covering or casing and does not become physically exposed through reasonably foreseeable use and abuse of the product. Reasonably foreseeable use and abuse shall include swallowing, mouthing, breaking, or other children's activities, and the aging of the product.

`(2) LIMITATION- The Commission may revoke an exclusion or all exclusions granted under paragraph (1) at any time and require that any or all component parts manufactured after such exclusion is revoked comply with the prohibitions established under subsections (a) and (b) if the Commission finds, based on scientific evidence, that such compliance is necessary to protect the public health or safety.

`(3) INACCESSIBILITY PROCEEDING- Within 1 year after the date of enactment of this subsection, the Commission shall--

`(A) promulgate a rule providing guidance with respect to what product components, or classes of components, will be considered to be inaccessible for purposes of paragraph (1); or

`(B) adopt the same guidance with respect to inaccessibility that was adopted by the Commission with regards to accessibility of lead under section 101(b)(2)(B), with additional consideration, as appropriate, of whether such component can be placed in a child's mouth.

`(4) APPLICATION PENDING COMMISSION GUIDANCE- Until the Commission promulgates a rule pursuant to paragraph (3), the determination of whether a product component is inaccessible to a child shall be made in accordance with the requirements laid out in paragraph (1) for considering a component to be inaccessible to a child.'.

SEC. 6. AUTHORITY TO MODIFY TRACKING LABELS REQUIREMENT.

Section 14(a)(5) of the Consumer Product Safety Act (15 U.S.C. 2063(a)(5)) is amended--

(1) by striking `Effective 1 year' and inserting `(A) Effective 1 year';

(2) by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively; and

(3) by adding at the end the following:

`(B) The Commission may, by regulation, exclude a specific product or class of products from the requirements in subparagraph (A) if the Commission determines that it is not practicable for such product or class of products to bear the marks required by such subparagraph. The Commission may establish alternative requirements for any product or class of products excluded under the preceding sentence consistent with the purposes described in clauses (i) and (ii) of subparagraph (A).'.

SEC. 7. IMPROVED PRODUCT IDENTIFICATION FOR PUBLIC DATABASE.

Section 6A(c) of the Consumer Product Safety Act (15 U.S.C. 2055a(c)) is amended--

(1) in paragraph (3)(A), by inserting `or paragraph (5)' after `paragraph (4)(A)';

(2) in paragraph (4)(A), by striking `determines that the information in such report or comment is materially inaccurate, the Commission shall--' and inserting `receives notice that the information in such report or comment is materially inaccurate, the Commission shall stay the publication of the report on the database as required under paragraph (3) for a period of no more than 5 additional days. If the Commission determines that the information in such report or comment is materially inaccurate, the Commission shall--'; and

(3) by adding at the end the following new paragraph:

`(5) OBTAINING CERTAIN PRODUCT IDENTIFICATION INFORMATION-

`(A) IN GENERAL- If the Commission receives a report described in subsection (b)(1)(A) that does not include the model or serial number of the consumer product concerned, the Commission shall seek from the individual or entity submitting the report such model or serial number or, if such model or serial number is not available, a photograph of the product. If the Commission obtains information relating to the serial or model number of the product or a photograph of the product, it shall immediately forward such information to the manufacturer of the product. The Commission shall make the report available in the database on the 15th business day after the date on which the Commission transmits the report under paragraph (1) and shall include in the database any additional information about the product obtained under this paragraph.

`(B) RULE OF CONSTRUCTION- Nothing in this paragraph shall be construed to--

`(i) permit the Commission to delay transmission of the report under paragraph (1) until the Commission has obtained the model or serial number or a photograph of the consumer product concerned; or

`(ii) make inclusion in the database of a report described in subsection (b)(1)(A) contingent on the availability of the model or serial number or a photograph of the consumer product concerned.'.

SEC. 8. SUBPOENA AUTHORITY.

Section 27(b) of the Consumer Product Safety Act (15 U.S.C. 2076(b)) is amended--

(1) in paragraph (3), by inserting `and physical' after `documentary';

(2) in paragraph (8), by striking `and';

(3) by redesignating paragraph (9) as paragraph (10) and inserting after paragraph (8) the following:

`(9) to delegate to the general counsel of the Commission the authority to issue subpoenas solely to Federal, State, or local government agencies for evidence described in paragraph (3); and'; and

(4) in paragraph (10) (as so redesignated), by inserting `(except as provided in paragraph (9))' after `paragraph (3)'.

SEC. 9. DEADLINE FOR RULE BY CONSUMER PRODUCT SAFETY COMMISSION ON STANDARDS FOR ALL TERRAIN VEHICLES.

The Commission shall issue the final rule described in section 42(d) of the Consumer Product Safety Act (15 U.S.C. 2089(d)) not later than 1 year after the date of enactment of this Act.

SEC. 10. TECHNICAL AMENDMENTS.

(a) CPSA- Section 14 of the Consumer Product Safety Act (15 U.S.C. 2063) is further amended by redesignating the second subsection (d) as subsection (i).

(b) CPSIA- Section 101(a)(1) of the Consumer Product Safety Improvement Act of 2008 (15 U.S.C. 1278a(a)(1)) is amended by striking `(as defined in section 3(a)(16) of the Consumer Product Safety Act (15 U.S.C. 2052(a)(16)))' and inserting `(as defined in section 3(a) of the Consumer Product Safety Act (15 U.S.C. 2052(a)))'.

SEC. 11. EFFECTIVE DATE.

Except as provided otherwise, the amendments made by this Act shall take effect on the date of enactment of this Act.

Passed the House of Representatives August 1, 2011.

Press Release
House Votes to Protect Jobs and Reduce Regulatory Burdens on American Businesses


August 1, 2011

WASHINGTON, DC – The U.S. House of Representatives voted today to protect jobs and reduce onerous regulations with passage of H.R. 2715, a bill to provide the Consumer Product Safety Commission with greater authority and discretion in enforcing the consumer product safety laws. The measure passed the House with strong bipartisan support by a vote of 421 to 2.

The bill, authored by Commerce, Manufacturing, and Trade Subcommittee Chairman Mary Bono Mack (R-CA) and Ranking Member G.K. Butterfield (D-NC) makes important and necessary modifications to the troubled Consumer Product Safety Improvement Act. Congress had good intentions when it passed the CPSIA in 2008, but the law created a series of unintended consequences forcing small businesses to close their doors as a result of the law’s rigid restrictions and costly regulations.

The bill approved by the House today makes great strides toward cleaning up the regulatory mess created by the CPSIA, giving the Consumer Product Safety Commission the flexibility it needs to regulate based on risk. The bill’s changes aim to reduce the burden of the law while maintaining strong protections for children. The legislation includes provisions to ensure valuable store inventory is not wasted and to allow for the continued sale of used children’s items.

“For thousands of American businesses, which strive to be responsible, ‘let’s do what’s best for consumers,’ CPSIA has taken an inordinate amount of their time trying to understand how each new regulation and standard will affect them. Unfortunately, many have gone out of business, attributing their demise to the burdens of compliance,” said Bono Mack. “Today, we are striking a very careful balance. As a nation, we simply cannot afford to lose jobs or stifle innovation because of questionable regulations. But we also have an obligation to make certain that our children’s toys remain safe. This bill is a win-win. It’s good for American consumers and American businesses. I thank Chairman Upton, Ranking Member Waxman and my counterpart, Mr. Butterfield, for their dedication to this issue, and I urge the Senate to pass this important and time-sensitive legislation.”


 

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CPSC announces lead limit on childrens products will be reduced from 300ppm to 100ppm effective August 14, 2011

Update to this story posted August 2, 2011

Unfortunately the CPSC decided to move forward and reduce the lead content in products intended for "children" from 300ppm to 100ppm (parts per million) effective August 14, 2011. (Originally it was 600ppm when the law first took effect) This unfortunately was required by Congress, provided the CPSC in its rulemeaking function determined that it was "technologically feasible" to get the lead down to 100ppm. As the bicycle industry indicated in testimony before the CPSC this effectively eliminates the use of all recycled steel frames, most of which are used to make low cost children's bikes (low cost is helpful here as the children quickly outgrow the bikes). The bicycle industry also indicated that at this point in time lead testing results were not very reliable when you try to reach below 300ppm. Ahh..but its "technologically" feasible with NASA level equipment. Well sure, but we are not building a space shuttle and the recreational sports industry does not have NASA's "budget" (tax dollars).

The CPSC of course focused on "technologically" feasible, not "economically" or "reasonably" feasible. Thank you congressional staffer that used a poor choice of words. (see definition in bold below which was what the CPSC was using as guideance).

The bigger point here is that this law was flawed from the start. No children in the USA are dying or  getting sick from lead poisoning in toys, bicycles or motorcycles. The biggest "lead" threat to children does not come from consumer products. The law should only have applied only to specific items likely to go in a child's mouth (shown by empirical evidence). Bicycles, motorcycles and most recreational products don't. Unfortunately Congress chased lead (and a few select phthalates) as the only bogeyman (thanks to misled consumers and the media) and did not even focus on the most plentiful sources of lead to kids. We need to focus on what is really harming kids in the US. Lead is not in the top 20. The bigger problem is the whole race to go from 600ppm to 100pm is futile and will not insure any greater safety, but will incur exponentially more costs for small businesses. This is the problem with regulation. "Regulation" always looks and sounds good from 20,000 feet up until people that really have to make the widgets take a close look at it and what will really be required to implement it. Then you see the nightmare train wreck. But people with lifetime jobs in Government could care less about your small business job. And we wonder why unemployment is still so stubbornly high.

We all thought the CPSC would do the right thing in implementing the law via regulations, but the fact is that no one is willing to stick their neck out in government and declare the "emperor has no clothes" (or that this law and the 100ppm standard really does nothing at all to protect children and just harms US small businesses). The same is true in Congress. If a legislator came out and said reducing lead 600ppm to 100ppm means nothing to children's safety the "children's lobby" would accuse then of "wanting to harm children and puppy dogs". Some have come out and been bold but were outnumbered and outvoted.

There have been numerous bills to address some of the problems in the CPSIA since 2008. None really have moved thru Congress which in the last two years has been in a state of panicked deadline gridlock. Now with the debt crisis coming to a head on August 2, 2011 there are very few days to deal with this issue before the August 14, 2011 deadline. The National Association of Manufacturers is taking their best shot in an ad campaign here:

National Association of Manufacturers Ad Campaign regarding HR 1939

The only thing on the table now with any hope of passing (any time this summer) is HR 1939 which has been stalled in "mark up" since Mid May 2011.


So starting on August 14, 2011 manufacturers and distributors of children's products must comply with the new 100 ppm federal limit for total lead content. CPSC will not enforce the CPSIA's independent third party testing requirement for total lead content until December 31, 2011, due to a stay of enforcement that is already in place. There are some legitimate questions and ambiguities regarding how the new 100 ppm requirement interacts with the latest "bicycle-motorcycle stay" thru December 31, 2011.


The first is whether or not your company complied with the stay's initial requirements (which required some onerous reporting) and if you failed to do that whether or not you can take advantage of the stay thru December 31, 2011.


The second is to keep in mind that as to bicycles the stay only deals with components made with metal alloys, including steel containing up to 0.35 percent lead, aluminum with up to 0.4 percent lead, and copper with up to 4.0 percent lead. (see 74 FR at 31257 for all details)


Finally there is a question as to how the stay thru December 31, 2011 interacts with the current 100 ppm lead requirement. One could argue that you have to make sure lead is below 100 ppm in your children's product but you don't have to "test and certify". Apparently this sort of "catch 22" makes sense to people in government. The reality is that the CPSC likely will not be chasing down manufactures of bicycles and motorcycles on the 100 ppm requirement until after December 31, 2011, but I would not want to bet my company on that or anything the CPSC may or may not do. They are just too unpredictable these days.


Finally, to add to the confusion, lead content levels for children's products (the base material) are different than the so called "lead paint/coatings standard" which has been .009 percent since August 14, 2009.

FOR IMMEDIATE RELEASE

July 15, 2011

Release #11-278

CPSC Announces New, Lower Limit for Lead Content in Children’s Products

WASHINGTON, D.C. - The U.S. Consumer Product Safety Commission (CPSC) voted (3-2) that there was insufficient evidence to make a determination that manufacturers of children’s products sold in the United States could not meet a total lead content limit of 100 parts per million (ppm) for a product or product category. The new total lead content limit, which is called for in the Consumer Product Safety Improvement Act (CPSIA), goes into effect on August 14, 2011 for manufacturers, importers, retailers and distributors of children’s products.

Through the CPSIA, Congress set tough new levels for lead content in products designed or primarily intended for children 12 and younger. Lead is a heavy metal that is toxic for children, and associated with lowered levels of learning, impaired hearing, brain damage and, at high levels, can be fatal.

Congress directed CPSC to phase in the reduced levels for lead content over a three year period, starting with 600 ppm on February 10, 2009. The level dropped to 300 ppm on August 14, 2009. Finally, Congress directed the total lead content limit be set at 100 ppm, unless the Commission determined it was not technologically feasible for a product or product category.

The Commission was not able to determine that 100 ppm total lead content is not technologically feasible, as staff found that materials containing less than 100 ppm total lead content are commercially available in the marketplace for manufacturers. CPSC staff also found many products currently on the market, that have been tested by CPSC or other organizations, that are already in compliance with the new 100 ppm total lead content limit.

Starting on August 14, 2011, manufacturers, importers, retailers and distributors of children’s products must comply with the new 100 ppm federal limit for total lead content. CPSC will not enforce the CPSIA’s independent third party testing requirement for total lead content until December 31, 2011, due to a stay of enforcement that is already in place.

The stay of enforcement does not apply to children’s metal jewelry, which currently must undergo independent third party testing.

The new 100 ppm lead content limit does not apply to inaccessible (internal) parts of children’s products and certain component parts of children’s electronic devices, like electronic connectors and plugs, including headphone plugs.

Lead content levels for children’s products are different from the levels Congress set for lead in paint or surface coatings. The limit for lead in paint or surface coatings is .009 percent. The .009 percent level has been in place since August 14, 2009 and independent third party testing is required for all paints or surfaces coatings used on children’s products.

Commissioner's Statements: Chairman Inez Tenenbaum and Commissioner Nancy Nord (both PDF).

[Federal Register Volume 76, Number 46 (Wednesday, March 9, 2011)] [Notices] [Pages 12944-12945] From the Federal Register Online via the Government Printing Office [www.gpo.gov] [FR Doc No: 2011-5231]

CONSUMER PRODUCT SAFETY COMMISSION

[Docket No. CPSC-2010-0080]

Children's Products Containing Lead; Technological Feasibility of 100 ppm for Lead Content; Notice, Reopening of the Hearing Record

AGENCY: U.S. Consumer Product Safety Commission.

ACTION: Notice, reopening of the hearing record.

-----------------------------------------------------------------------

SUMMARY: Section 101(a) of the Consumer Product Safety Improvement Act (``CPSIA'') provides that, as of August 14, 2011, children's products may not contain more than 100 parts per million (``ppm'') of lead unless the U.S. Consumer Product Safety Commission (``CPSC,'' ``Commission,'' or ``we'') determines that such a limit is not technologically feasible. The Commission may make such a determination only after notice and a hearing and after analyzing the public health protections associated with substantially reducing lead in children's products. On February 16, 2011, the Commission conducted a public hearing to receive views from all interested parties about the technological feasibility of meeting the 100 ppm lead content limit for children's products and associated public health considerations. Individual Commissioners requested at the hearing that certain participants respond to additional questions in writing, as well as submit relevant studies and additional data referenced in oral presentations. Accordingly, through this notice, the Commission is reopening the hearing record until March 24, 2011.

ADDRESSES: Supplemental Materials identified by Docket No. CPSC-2010- 0080 may be submitted by any of the following methods:

Electronic Submissions

Supplemental Materials may be submitted to the Office of the Secretary by e-mail at cpsc-os@cpsc.gov.

Written Submissions

Submit written submissions in the following way: Mail/Hand delivery/Courier (for paper, disk, or CD-ROM submissions), preferably in five copies, to: Office of the Secretary, U.S. Consumer Product Safety Commission, Room 502, 4330 East West Highway, Bethesda, MD 20814; telephone (301) 504-7923.

Instructions: All submissions received must include the agency name and docket number for this notice. All materials received may be posted without change, including any personal identifiers, contact information, or other personal information provided, to http://www.regulations.gov. Do not submit confidential business information, trade secret information, or other sensitive or protected information electronically. Such information should be submitted in writing.

Docket: For access to the docket to read background documents or comments received, go to: http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Concerning submission of materials: Rockelle Hammond, U.S. Consumer Product Safety Commission, Bethesda, MD 20814; telephone: (301) 504-6833; e-mail: cpscos@cpsc.gov. For all other matters: Dominique Williams, U.S. Consumer Product Safety Commission, Bethesda, MD 20814; telephone: (301) 504-7597; e-mail: dwilliams@cpsc.gov.

SUPPLEMENTARY INFORMATION: Section 101(a)(2)(C) of the CPSIA (15 U.S.C. 1278a(a)(2)(C)) provides that, as of August 14, 2011, children's products may not contain more than 100 parts per million (ppm) of lead unless the Commission determines that such a limit is not technologically feasible. The Commission may make this determination only after notice and a hearing and after analyzing the public health protections associated with substantially reducing lead in children's products. Section 101(d) of the CPSIA (15 U.S.C. 1278a(d)) provides that a lead limit shall be deemed technologically feasible with regard to a product or product category if:

(1) A product that complies with the limit is commercially available in the product category;

(2) Technology to comply with the limit is commercially available to manufacturers or is otherwise available within the common meaning of the term;

(3) Industrial strategies or devices have been developed that are capable or will be capable of achieving such a limit by the effective date of the limit and that companies, acting in good faith, are generally capable of adopting; or

(4) Alternative practices, best practices, or other operational changes would allow the manufacturer to comply with the limit.

In the Federal Register of January 26, 2011 (76 FR 4641), we published a notice (``hearing notice'') announcing that the Commission would hold a public hearing pursuant to section 101(a) of the CPSIA. The hearing notice stated that the Commission was seeking information on specific issues, such as whether any product or product category already complies with the 100 ppm limit and what factors or considerations we should evaluate in deciding whether a technology is ``commercially available.''

We held the hearing on February 16, 2011. We heard presentations by and received comments from consumer groups, manufacturers, associations, and laboratories regarding the technological feasibility of meeting the 100 ppm lead content limit. At the hearing, individual Commissioners requested that certain participants respond to additional questions in writing and submit relevant studies and additional data. Through this notice, we are announcing that we have placed individual Commissioner's additional questions into the docket and will place any responses into the docket. The questions submitted and responses that are received will be made available on http://www.regulations.gov under Docket No. CPSC-2010-0080, Supporting and Related Material. The Commission will consider any additional material received during the reopening of the hearing record, in addition to information collected at the hearing, in the course of evaluating its response. The Commission is reopening the hearing record to add individual Commissioner's questions to the docket and allow for responses to those questions, and so the hearing record will remain open until March 24, 2011.

Dated: March 3, 2011. Todd A. Stevenson, Secretary, Consumer Product Safety Commission. [FR Doc. 2011-5231 Filed 3-8-11; 8:45 am] BILLING CODE 6355-01-P

Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2008 Conditions of Use