FR 2024-30826

The document in question is a finalized rule issued by the U.S. Consumer Product Safety Commission (CPSC) regarding electronic filing of certificates for imported products. The rule mandates that businesses importing consumer goods subject to safety regulations must eFile compliance certificates with the U.S. Customs and Border Protection (CBP). This measure is intended to streamline the inspections process at ports and identify potentially non-compliant products more efficiently.

Summary of the Document

The final rule is designed to harmonize CPSC’s certificate standards with other enforcement rules and introduce an electronic filing (eFiling) requirement to align with CBP processes. This eFiling requirement applies specifically to consumer goods imported into the United States and aims to use certificate data to better manage risk assessment, thereby focusing resources on probable violative shipments while minimizing delays for compliant goods.

The rule details different compliance timelines: businesses will have 18 months to comply, whereas businesses operating in Foreign Trade Zones (FTZs) have 24 months. The rule also outlines strict requirements about when and how these certificates must be filed, including provisions for using a Product Registry for certificate data.

Significant Issues and Concerns

Among the key issues identified in the document:

• Complex Language and Legal Jargon: The document employs specific legal references and technical language surrounding customs processes and electronic systems that could be difficult for non-experts to understand, potentially leading to confusion.

• Sufficient Preparation Time and Costs: Although the rule provides a structured implementation period, small companies may struggle with the financial and operational burden brought on by necessary technology upgrades and staff training.

• Impact on Small Businesses: The document mentions limited cost burden on small firms. However, it does not provide a thorough cost analysis segmented by different business sizes, leaving small enterprises, particularly those reliant on third-party certifications or frequent small shipments, potentially vulnerable.

• Ambiguity in Definitions: There might be inconsistencies or misunderstandings about the roles and responsibilities of importers and brokers under the new rule, possibly resulting in logistical challenges.

• Unclear Impact on De minimis Shipments: Details on how the new rules impact small importers using the de minimis shipping exemption are vague. The lack of sufficient data in the analysis raises concerns over the full impact for businesses relying on this import method.

Impact on the Public and Specific Stakeholders

Public Impact:

This rule is primarily aimed at ensuring the safety of consumer products by making sure they comply with existing regulations. For the general public, this could mean fewer harmful products in the market, as the CPSC will have better resources to target and hold non-compliant goods at ports.

Specific Stakeholders Impact:

• Small Businesses: Smaller firms may experience financial strain due to the need for technology investment and training, particularly those without the resources to easily adapt to new eFiling systems. The document implies potential burdens that might be disproportionately challenging for small importers.

• Importers and Brokers: These entities are directly responsible for ensuring compliance, which may require outsourcing additional expertise or upgrading internal systems. Importers dealing with FTZs might find the extended timeline beneficial for adjusting their systems to meet these new requirements.

The rule, while well-intentioned in protecting consumers, presents complexities and challenges that stakeholders, especially smaller entities, will need to navigate carefully. The CPSC has offered some guidance but a more detailed, clear, and business-segmented analysis might help reduce initial hurdles for adopting these compliance directives.

The document involves considerations and impacts related to financial aspects concerning new regulatory requirements by the Consumer Product Safety Commission (CPSC). These financial aspects are pivotal to understanding the broader implications for businesses, particularly small businesses that might face significant economic challenges as a result of the rule changes.

Startup and Compliance Costs

The document acknowledges potentially substantial costs related to technological upgrades and employee training needed to comply with the new electronic filing (eFiling) requirements. An estimated initial investment of $1,086 per firm is outlined, calculated based on an average burden of 20 hours and compensation rates for managerial and administrative roles. This figure, deemed non-significant for a typical small firm by CPSC, translates into an annualized cost of $48.48 per firm over 30 years at a 2 percent discount rate. However, this might not adequately reflect the varying sizes and financial capacities among small businesses, some of which raised concerns about the high cost of technology upgrades and training.

Filing Fees and Operational Expenses

The analysis includes a projected cost of $0.77 per certificate filing, encompassing expenses associated with broker fees for processing eFiled certificates. For small importers, this translates into a substantial cumulative financial burden, with total filing fees expected to reach approximately $37.15 million annually. Particularly for businesses that deal with high numbers of certificates, such as those in high turnover industries, these fees represent a recurring expense that could add up significantly over time.

Overall Burden on Small Importers

The final rule's financial impact on small importers is significant, with first-year costs estimated at $272.18 million for a collective group of 246,438 small importers. The average cost per firm is calculated at $1,137 for non-children's products and $1,099 for children's products, which is notably below the typical revenue threshold at which costs are considered significant.

Impact on De Minimis Shipments

There remains some ambiguity regarding the financial impact on importers dealing with de minimis shipments, which typically involve smaller financial transactions. The average de minimis shipment might have a sales value approximated at $48, potentially making the costs connected to eFiling meaningful relative to the shipment's value. Importers involved in such transactions might experience a disproportionately high burden due to the relative scale of these costs.

Financial and Governmental Allocations

The document estimates the federal government's annual cost for managing the eFiling program at about $1.2 million starting in Fiscal Year 2026, including staff costs of approximately $197,477.10. This highlights significant federal investments in infrastructure and staff support, indicating a commitment to overseeing and implementing this regulatory approach.

These financial references provide insight into the economic demands placed on various stakeholders by the new rule and highlight areas where the cost burden, particularly on small businesses and specific transactions, could present challenges. Understanding these financial aspects is crucial for anticipating the economic viability and broader compliance impact of this regulatory change.