Mind The (ebike) Gap: How To Proceed With Product Recalls When There Is A Regulatory Gap – Product Liability & Safety

The electric bicycle market is booming – the number of manufacturers, retailers and bicycle models in Canada continues to grow. But while consumer interest in electric bikes is growing, regulatory interest in electric bikes or e-bikes, also known in Canada as assist bikes or assisted bikes, has¹ decreases. After changes, most e-bikes are exempt from regulation by Transport Canada under the Motor Vehicle Safety Act (“MVSA“) and the Motor Vehicle Safety Ordinance (“MVSR‘), instead of being regulated by Health Canada under the Canada Consumer Product Safety Act, e-bikes appeared to fall into a regulatory vacuum (‘CCSPA“). Under these circumstances, e-bike manufacturers and retailers could understandably find themselves in a skid trying to figure out what to do when an e-bike needs to be recalled in Canada.

Transport Canada Gears Down

As of February 2021, the MVSR no longer includes the definition of a “power-assisted bicycle”. According to Transport Canada, the following features exclude e-bikes from regulation under MVSA/MVSR:

• conventional pedal bikes with gas or electric motor assistance; and




• do not exceed a speed of 32 km/h (or 20 mph).

There are e-bike designs and features that can accommodate vehicles of this broad class within the definition of a “mandatory vehicle” under MVSA. A thorough review of an e-bike’s characteristics should be made when considering selling a new e-bike in Canada. In general, however, this legislative change exempts e-bikes from Transport Canada regulation. When assessing whether an e-bike is regulated or not, Transport Canada considers the following:

• how much it looks like a road vehicle mandated under the MVSA; If a product is equipped with features that are similar to classes of vehicles that are required to go on the road, such as motorcycles or scooters, they will be regulated as such.




• If the product is used off-road only and the maximum speed of the e-bike is 20 mph (actually or due to a speed control mechanism that Transport Canada determines validly limits the maximum speed to no more than 20 mph), the E- Bike is exempt from MVSA/MVSR.

When the MVSA and MVSR mandate safety standards for a vehicle, importers must report any deficiencies affecting safety or non-compliance to the Department of Transportation (Transport Canada) and vehicle owners (unless in the case of a non-compliance is determined to be of no concern to safety assessed). However, there is no reporting requirement for unregulated vehicles, meaning that a seller of an “unregulated” e-bike in Canada is not required to report safety deficiencies through Transport Canada’s regulatory system.

Health Canada dodges

With Transport Canada declining jurisdiction over e-bikes, the natural heir to regulation should be Health Canada, which administers the CCPSA. Health Canada has historically taken responsibility for e-bikes. However, in recent months, our experience has been that Health Canada has refused to take jurisdiction over e-bikes, arguing that the products could potentially be used on roads. The CCPSA Directorate reasoned that the product was covered under the MVSA’s definition of “vehicle” (despite the legislative change mentioned above) and is therefore exempt from the CCPSA under Schedule 1, Section 7, which includes everything within the purview of Health Canada excludes “vehicles” under the MVSA.

As such, an e-bike can be an unregulated vehicle under the MVSA/MVSR and still be considered a “vehicle” by Health Canada and therefore not regulated under the CCPSA.

But a recall is needed: what does an importer/dealer/manufacturer of e-bikes have to do?

With Health Canada’s decision to decline jurisdiction, e-bikes fall into a gray area where neither Transport Canada nor Health Canada have control over incident reporting and recall publication/coordination.

However, best practices dictate that an organization should still exercise vigilance when responding to incidents. If there is no reporting requirement or oversight by a Canadian regulator, a company should still follow the normal process and protocol regarding recalls and corrective actions that a regulator would normally follow. The convention includes posting the recall on social media and the company’s website, tracking consumer interactions related to the recall, and tracing products affected by the recall. This type of behavior protects companies from potential product liability claims and provides a good defense in the face of a claim.

Additionally, there is nothing stopping a company from reporting an e-bike incident to Transport Canada and Health Canada for the sole purpose of obtaining written confirmation from regulators that the product falls outside their regulatory scope. As is so often the case, being a corporate good citizen pays off in the long run.

A note on additional provincial oversight

Each province regulates e-bikes under their own legislation, defining them based on criteria such as power, pedal control, wheel size and speed. and these regulations set out the requirements for both sellers and drivers (e.g. certifications, seat height, helmets, highway code, insurance, etc.). Many of these regulations were developed to align with the definition of “power-assisted bicycles” which has been removed from the MVSR and may soon be updated. Before importing and selling e-bikes in Canada, a review of current regional and state regulations for manufacturers, retailers and riders should be conducted.

footnote

1 Note that this category of bikes does not include bikes with internal combustion engines.

The foregoing is for an overview only and does not constitute legal advice. Readers are cautioned not to base any decisions solely on this material. Rather, specific legal advice should be obtained.

© McMillan LLP 2021