[With the implementation date of November 12 looming, on Nov. 10 the CPSC issued “clarifications”.]
The Consumer Product Safety Improvement Act (“CPSIA”) represents the greatest expansion of the Consumer Product Safety Commission’s (“CPSC”) authority since the Agency’s creation by Congress in 1972. Only days after the CPSC began to enforce the CPSIA the Agency was required to issue clarifications regarding certification requirements. First, I will discuss the CPSC clarifications and, thereafter, I will discuss some other issues of which any manufacturer and importer should be aware.
The CPSC clarified the issue regarding who is to supply the conformity certificate. Simply stated, for products manufactured outside the United States, the importer is required to issue the conformity certificate, and where the product is manufactured in the United States, the manufacture is required to issue the conformity certificate. Therefore, private labelers are not required to issue conformity certificates, and do not need to be listed as parties on them (although an importer is required to list the manufacturer, among other information).
The CPSC also clarifies what qualifies as a shipment accompanied by a certificate. Here, the CPSC has approved the use of electronic means to satisfy this aspect of the certification requirement. According to the CPSC, an electronic certificate is “accompanying” a shipment when the certificate is identified by a unique identifier (e.g., company initials and shipment code) and can be accessed through an Internet website, provided the website and the unique identifier are established in advance of the shipment. As a practical matter, the conformity certificate should be transmitted electronically to a customs broker with other entry documents (so they are readily available for inspection by the CPSC or the Customs and Border Protection staff). Also, while the importer (or domestic manufacturer) must also furnish the certificate to its distributors and retailers, this requirement can be satisfied by merely giving the distributors and retailers reasonable means to electronically access the certificate (e.g., posting the certificate on a company website).
Importantly, the CPSIA does not require any signatures; issuing the conformity certificate satisfies the new law. For the same reason, a conformity certificate does not have to be filed with the government; the new law only requires that the conformity certificate “accompany” the product shipment, and be “furnished” to distributors and retailers, and furnished to the CPSC upon request.
The third clarification is actually a pronouncement. Tellingly, the CPSC press release pronounces in its title that, in addition to clarifying various provisions of the CPSIA’s certification requirements, the Agency staff is to focus on compliance with safety rules, as opposed to the provisions regarding conformity certification of consumer products. Seemingly, the CPSC is suggesting that the CPSC enforcement staff will go lightly on violators of the CPSIA; however, I would take this declaration with a grain of salt. The CPSIA penalties are extremely harsh ($100,000 for each violation, and up to $15 million for a related series of violations, and up to 5 years incarceration), and the CPSC has the discretion to rely upon the CPSIA to put the hammer to your business.
Most troubling to this author is the fact that the CPSC no longer needs to demonstrate that an officer, director or agent was aware of the violations before being criminally charged. In my opinion, this raises the stakes, and gives the CPSC an enormous club to wield. Given this enormous power, in my opinion I expect the CPSC to act aggressively to establish the Agency’s new enforcement powers.
I am also concerned that the CPSC is recommending a study of the feasibility of requiring manufacturers, importers and retailers to set aside funds sufficient to pay for recalls and/or destruction of recalled products, either through the purchase of insurance coverage for this specific peril or through some form of escrow account.
These articles are not exhaustive, nor can they be, given the scope of the CPSIA and the fact that the CPSC is still making adjustments to it on the fly. Therefore, I highly recommend that you consult with counsel of choice regarding how the CPSIA impacts your business operations.
