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U.S. Consumer Product Safety Commission

LOG OF MEETING

SUBJECT: Meeting with Express Association of America (EAA) to Discuss the Proposed Rule 

on Certificates of Compliance (16 C.F.R. part 1110)

DATE OF MEETING: June 20, 2013

LOCATION: CPSC Headquarters, Room 836, 4330 East West Hwy, Bethesda, MD 20814

CPSC ATTENDEES: 

Robert (Jay) Howell; Harriet Kerwin; Mary House; Howard Tarnoff; Carol Cave; Sabrina Keller; 

Carl Philpott, Mary Toro, Henry Tapy (Teleconference)

NON-CPSC ATTENDEES:

Michael Mullen, Express Association of America

Mark Shacklette, UPS

Don Woods, UPS

John Van Wallaghen, UPS

Andrew Shiles, FedEx

Cynthia Chandler-Snell, FedeEx

Amy Smith, DHL

Chris McCartel, UPS (Teleconference)

Brian Gill, FedEx (Teleconference)

Quinn Dodd, Attorney (Teleconference)

Ben Gross, Product Safety Letter (Teleconference)

SUMMARY OF MEETING:

Carol Cave opened the meeting and reminded participants that the rulemaking is in active 

status and that CPSC’s role during the meeting was to listen to the comments made. She added 

that CPSC would respond to all comments as part of the rulemaking. Carol Cave stated that 

CPSC encourages comments in writing, and she noted that July 29, 2013, is the deadline for 

submitting comments on the proposed rule.

Mark Shacklette stated that the proposed rule has the potential for enormous impact on 

express carriers because it makes the “importer of record” (IOR), the party responsible for 

issuing certificates. Express carriers that offer their services as a customs broker frequently 

serve as the IOR for their customers in the small package world, 75 percent of the time, to 

expedite trade, such as by paying fees and duties and filing appropriate paperwork, Shacklette 

explained. Express carriers do not have knowledge about the products being shipped; they must 

rely on customers to provide appropriate information, he said. Customers, in turn, rely on 

express carriers to post a bond with CBP and pay fees and duties up front so that goods are not 

delayed. According to Shacklette, the express carriers are concerned about great expense and 
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delay if products are delayed because of a lack of certificate and brokers are held liable. Express 

carriers do not currently know the breakdown of the impact, but it could be that as much as 50

percent of the products imported that they handle may require certificates, Shacklette estimated.

Jay Howell asked how express carriers are currently filing certificates. Mark Shacklette 

stated that they currently rely on the importer, meaning their customer, to file certificates. Jay 

Howell asked whether express carriers currently file information in CBP’s ACE computer 

system. Mark Shacklette stated that express carriers do file in the ACE system.

Andrew Shiles stated that another avenue for filing certificates would be for CPSC to 

place the obligation on the ultimate consignee. Believing that the ultimate consignee is still an 

importer, Shiles drew a distinction between the importer, by which he meant the owner or 

consignee of the goods, and the IOR, which can also include a broker. Shiles stated that the 

CPSC should place the obligation to certify on the importer (meaning the owner or consignee), 

instead of the IOR. Mr. Shiles also discussed when in the entry process a certificate would be 

required: at entry, upon release of the goods, or at entry summary, he explained.

Howard Tarnoff asked the carriers to explain the difference between an IOR and an 

importer. Tarnoff explained that the draft rule defines “importer of record” or IOR consistent 

with customs laws. Mark Shacklette stated that the IOR is responsible for monies owed at entry. 

Importers of record seek reimbursement from the ultimate consignee, which is the “sold to” 

party, he pointed out.

Andrew Shiles stated that the IOR is responsible for facilitating clearance, such as paying 

duties; but the consignee/buyer of the goods is ultimately responsible for all duties and taxes, he 

noted. The broker goes back to the consignee for reimbursement, Shiles explained. Serving as 

the IOR facilitates clearance, but brokers must rely on the information supplied by the ultimate 

consignee, he added.

Howard Tarnoff asked whether IORs can get certificates from the consignee. Mark 

Shacklette stated that express carriers do not want to have to issue certificates of compliance, 

because they do not know whether products comply with CPSC regulations. When express 

carriers serve as the IOR, they have no way to know whether products are compliant, Shacklett 

said. Importers (referring to owners and consignees) are the party who can vouch for product 

safety, Shacklett said.

Mark Shacklette stated that the way the proposed rule is currently written would impact 

their customers and drive a lot of additional work. For example, if express carriers stopped 

serving as the IOR, their customers would need to issue a power of attorney and post a bond with 

CBP, he said. Customers may also experience delays and additional costs if express carriers had 

to increase staffing to handle certificate requirements and if products were delayed at entry,

causing increased storage costs, Shacklett predicted.

Donald Woods stated that one possible solution would be to change the language in the 

rule regarding which party is responsible for issuing a certificate. The CPSC could still achieve 
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its goal of having importers issue certificates, but brokers could be excluded from the term if 

“importer” was redefined.

Andrew Shiles stated that emphasizing “importer of record” in a rule does not always 

work. He stated that the CPSC’s intent was to have the “right” party supply the “right” 

information. Leaving the rule as it is would have a huge negative effect on express carriers’

business model, Shiles said, adding that a terminology change is needed in the proposed rule.

Donald Woods stated that another option for redefining the party responsible for issuing a 

certificate would be to use the IOR or the ultimate consignee. If both parties could be the 

certifier it may be a way to solve this specific issue, he observed.

Mark Shacklette stated that the express carriers would like the agency to remove customs 

brokers from the responsibility to issue certificates or to use language allowing either the IOR or 

the ultimate consignee or beneficial owner to issue certificates. Donald Woods stated that in 

their terms of service agreement, they inform their customers that they are responsible for 

complying with all laws. Carriers place the responsibility for compliance on their customers, 

whom Woods described as the “importers.” Carriers will assume IOR financial liabilities, but 

they put the financial responsibility back on their clients, according to Woods.

Jay Howell asked the group, as experts in supply chain management, what party is in the 

best position in the supply chain to have knowledge about supplying the required certificate. 

Mark Shacklette reiterated that the ultimate consignee, the buyer of the goods, has this 

knowledge.

Jay Howell asked whether an individual consumer would have enough knowledge about 

a product to issue a certificate. Mark Shacklette and Andrew Shiles agreed that an individual 

consumer would not have the knowledge required to issue a certificate. Andrew Shiles added 

that the CPSC can see these shipments and target suppliers.

Andrew Shiles explained the concept of drop shipments. Sometimes goods are shipped 

to an end customer, but that person is not the ultimate consignee, he explained. The ultimate 

consignee is the party responsible for the shipment.

Jay Howell asked whether direct Internet sales to a consumer were considered drop 

shipments. Andrew Shiles stated that direct consumer sales can sometimes be drop shipments. 

A consumer may purchase a product from a retailer over the Internet. The retailer has the 

product shipped directly to the consumer from its factory overseas. The retailer is the importer 

or the ultimate consignee, with the customer listed as the “care of” party. If an express carrier 

served as the IOR in the transaction, and more information was required, they would seek 

information from the importer, meaning the retailer, according to Shiles.

Donald Woods added that the customs entry forms do not display the “ship to” 

information. The IOR and the ultimate consignee are displayed on the customs entry form. If 

CPSC requests a certificate at the time of entry, the IOR, or the ultimate consignee, are the two 
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parties listed on the entry form from whom a certificate could be requested. Carol Cave stated 

that the importer is required to issue certificates under the existing rule.

Mary House explained that the proposed rule would require that certificates be filed with 

CBP at entry or at entry summary, if both are filed together. House asked, practically speaking,

how this would work from the express carrier’s perspective. Andrew Shiles stated that filing at 

entry summary would be preferable.

John Van Wallaghen stated that it would be a problem for the carriers if carriers did not 

have certificates and they were required at entry. If the certificate is required at entry summary,

it would be better because carriers would be given 10 additional days to file the document and 

the goods would not be held waiting for the certificate. If the certificate is required before entry 

summary, it would “shut down trade.”

Andrew Shiles stated that certificates should be provided via computer, not paper, if they 

are required for all shipments. He stated that CPSC should develop a process so that larger 

importers can go straight to the CPSC’s website to file certificates. Mark Shacklette stated that 

CBP’s ACE system would be a better solution for certificates or, he suggested using blanket 

certificates.

Andrew Shiles stated that another challenge with express carriers providing certificates 

and knowing when they are required, involves use of the harmonized tariff schedule codes 

(HTSs). When additional information on a product is required at entry, Shiles explained, an

“edit” is put into the computer system to alert brokers that additional government information is 

necessary. If the CPSC governs some, but not all, products in an HTS, that would require a 

human decision on what requires a certificate.

Shiles asked whether CPSC has a master list of the HTS that apply to products within the 

agency’s jurisdiction. Jay Howell stated that some HTS are all-encompassing; however, he 

noted that subsets of broader codes are applicable. Not all products within the CPSC’s 

jurisdiction are regulated and would require a certificate, Howell said; so HTS would not 

necessarily provide accurate information on which products are regulated.

Michael Mullen inquired where to retrieve the relevant HTS or NAIC codes online. Jay 

Howell stated that the agency will check and see what information has been publicly distributed 

on this issue. Mr. Shiles asked whether CPSC is working with CBP on this issue in the ACE 

system. Carol Cave stated that we have explored ACE options with CBP.

Carol Cave asked the carriers to discuss what the “A1A list” is and explain how the list 

currently is used by carriers. Donald Woods stated that the A1A list contains CBP’s 

recordkeeping requirements for importers and brokers. The list states import documents required

for different agencies and has a five-year record retention period. UPS has an imaging system to 

maintain A1A documents. UPS finds this to be an effective way to manage the documents and 

has used this system for 20 years. Documents are imaged early in the import process before the 

shipment leaves. Brokerage at UPS uses the images to ensure access to all necessary documents. 
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Donald Woods stated that 90 percent of UPS’s customers provide information in the form of data 

elements or as images in UPS’s computer system, which allows goods to move more quickly. 

Andrew Shiles stated that not all documents listed on the A1A are necessarily provided 

on entry; the documents are stored as back up to the entry documents, he noted. Mark Shacklette 

added that they try to get documents up front from their customers. The real issue, Shacklette 

said is whether documents are present when they are needed for entry.

Andrew Shiles stated that better advance information regarding a shipment makes 

clearance run smoothly. Shiles also noted that ambiguous governmental requirements can 

frustrate the clearance process. Shiles stated that government requirements need to be simple, 

plain, and public.

Carol Cave asked whether the express carriers had a ball park estimate of the cost of 

delay involved with the current amount of cargo that is moved to check for certificates. Andrew 

Shiles and Mark Shacklette stated that they would look into this, explaining that customers may 

be better situated to provide this information. Jay Howell stated that the CPSC is interested in 

learning about cost increases caused by delay at the ports.

Michael Mullen stated that four of the companies at the meeting represent 75 percent of 

the shipments by air, noting that these companies are the best automated and the best at shipment 

management. Carriers can help achieve what the Commission wants to achieve in the rule 

without a negative impact on imports or on the industry, Mullen posited. Jay Howell encouraged 

those present to file comments, and Howell stated that he appreciated the carriers’ willingness to 

share their concerns. Mark Shacklette and Andrew Shiles stated that the CPSC is welcome to 

visit their operations.

The meeting closed.