CPSC Statement of Policy Concerning Tracking Label Requirement in Section 103(a) of the CPSIA
Last August (August 14, 2008 to be exact) President Bush signed the Consumer Product Safety Improvement Act (CPSIA) into law. As with many laws passed by Congress it had a small seemingly innocuous passage regarding labeling of products which has over time been called the "tracking label" requirement. This requirement becomes effective one year after the law went into effect (August 14, 2009). Apparently there was not sufficient time to issue formal rulemaking and put all of this into a Code of Federal Regulations (CFR) section as was done in 1974 with the bicycle standards for example (in 16 CFR part 1512) or the recall regulations in 16 CFR part 1115 but rather (after taking into account public comments on section 103 on May 12, 2009) to issue "policy guidance" "to clarify its interpretation of the statutory requirements and provide guidance on how it intends to enforce Section 103 of the CPSIA", without "imposing any additional requirements beyond those in section 103".
The comments of the newly Obama appointed and Senate confirmed Chairman Inez Tenenbaum are also set forth at the end of this post along with Commissioner Moore (who apparently is staying on board during the Obama administration) along with the former acting Chair and likely soon departing Nancy Nord. As you will recall Ms. Nord took most of the heat (or flack) from Congress over the "flawed" and still "unfixed" CPSIA. Many of the "problems" with it can only be fixed by Congress as CPSC claims that most of its latitude and flexibility in implementation was eliminated by the way in which Congress wrote the law and the way in which courts have interpreted Congress' intent in the CPSIA.
Section 103 of the CPSIA is codified at 15 U.S.C. § 2063(a)(5) [Pub. Law 110-314, § 103(a)] and provides in part:
...that the marks are to “enable:
(A) the manufacturer to ascertain the location and date of production, cohort information (including the batch, run number, or other identifying characteristic), and any other information determined by the manufacturer to facilitate ascertaining the specific source of the product by reference to those marks; and
(B) the ultimate purchaser to ascertain the manufacturer or private labeler, location and date of production of the product, and cohort information (including the batch, run number, or other identifying characteristic).”
Statement of Policy: Interpretation and Enforcement Of Section 103(a) of the Consumer Product Safety Improvement Act
A. Background
On August 14, 2008, the Consumer Product Safety Improvement Act (CPSIA) was enacted. It made a number of amendments to the Consumer Product Safety Act (CPSA). Section 103 of the CPSIA, entitled “Tracking Labels for Children’s Products,” mandates, in pertinent part, “distinguishing marks” on all children’s products and their packaging to enable the manufacturer and the ultimate purchaser to “ascertain” certain source and production information.1 These markings are to enable the manufacturer, retailers and the ultimate consumer to ascertain the manufacturer or private labeler, location and date of production of the product, and cohort information (batch, run number, or other identifying characteristic).2 These new requirements become effective August 14, 2009. To gather comments and information about implementation of this program, the Commission published a Notice of Inquiry in the Federal Register on February 26, 2009, 74 Fed. Reg. 8781, and held a public forum on May 12, 2009. Comments in response to the Notice and discussions in the forum demonstrate that many questions exist about the tracking label requirement. Through this policy guidance the Commission intends to clarify its interpretation of the statutory requirements and provide guidance on how it intends to enforce Section 103 of the CPSIA. This document does not impose any additional requirements beyond those in the CPSIA, but informs the public of the Commission’s interpretation of the provision.
B. Section 103(a), Generally
1. Purpose
The purpose of Section 103(a) is to establish a means for identifying the source of children’s products in order to improve the safety of such products. Discussing Section 103, the Report from the House Energy and Commerce Committee noted that it intended the Section to “aid in determining the origin of the product and the cause of recall” to address the difficulty some manufacturers of children’s products had determining the location of products that were recalled during the summer of 2007. H.R. Rep. No. 501, 110th Cong., 1st Sess. 32 (2007). If a manufacturer can identify the location, date of production, and such individualized information as the batch or run number, it can more readily isolate products that it or others may discover present a safety concern. Similarly, if a consumer can identify the manufacturer (or private labeler), location and date the product was made, and any more specific identifying information, he can more easily determine whether a product in the home is the subject of a safety recall. The Commission believes that the purpose of Section 103(a) is not to impose significant additional burdens on manufacturers who already make available the required information for their products, but to bring those who do not up to a higher standard. In the event of a recall, the information mandated by Section 103(a) would enhance the specificity of the product identification and lead to better awareness by the consumer. Greater specificity identifying the product will help the manufacturer narrow the scope of a recall if one is ever needed and help retailers more readily identify products that need to be removed from inventory. This greater specificity helps the manufacturer as well as the consumer.
The statutory provision does not require a uniform one-size-fits-all system. Section 103 requires permanent distinguishing marks, but does not specify what those marks are to look like. At this point, the Commission is not imposing any such uniform requirements, but expects that manufacturers will use their best judgment to develop markings that best suit their business and product. These may change as technology improves. Over time, and as technology develops, the Commission may consider the need for, and appropriateness of, a more uniform system and has solicited comment on these issues from our global trading partners. If the Commission were to implement such a system in the future it would do so through notice and comment rulemaking and provide a prospective effective date.
2. Compliance and Enforcement
As with any new requirement, the Commission anticipates that there will be a period of education when Section 103(a) first takes effect. The Commission will require compliance with this provision in the context of recalls of products and will exercise its discretion with regard to penalizing manufacturers for noncompliance. In the first instance, given good faith efforts by manufacturers to educate themselves on the requirements of Section 103(a) and to consider ways to apply it to their business, the Commission will not likely seek penalties if required information was inadvertently omitted.
3. The Effective Date
Section 103(a) applies to children’s products made on or after August 14, 2009. It does not apply retroactively to such products made before that date. As such, there will be a period of time beginning on August 14, 2009, when there will be products available for sale that are in compliance with this Section because they meet the new requirements and products that are in compliance because they were manufactured before August 14, 2009.
4. Who is responsible for compliance?
The “manufacturer” of the product, as defined in the CPSA, 15 U.S.C. § 2052(a), is responsible for compliance with Section 103(a). The term manufacturer is defined in the CPSA to include both the manufacturer and importer. Importers should work with their foreign manufacturing sources to ensure compliance as both manufacturers and importers must comply with the Act.
5. Covered Products
Section 103(a) applies only to children’s products and their packaging. A children’s product is defined in Section 235(a) of the CPSIA as a “consumer product designed or intended primarily for children 12 years of age or younger.”
C. Format and Content of the “Tracking Label”
1. What is a “tracking label”?
While the title of Section 103 references “tracking labels,” the focus of the statutory text is “distinguishing marks.” As such, manufacturers should look at the totality of the information permanently marked on the product and packaging and not interpret “label” to mean a singular collection of information in one discrete location. The Commission believes that required information already permanently marked either to brand the product or otherwise to comply with other Commission or federal regulations, such as those promulgated under the Textile, Wool and Fur Acts or country of origin labeling rules, could be considered part of the “distinguishing marks” called for by Section 103(a). Any such marking would have to be permanent as required by Section 103(a).
2. What marks are required and what does it mean for information to be ascertainable?
Section 103(a) mandates distinguishing marks such that (1) the location of production (2) the date of production and (3) cohort information for that product is ascertainable. Any such marks should be visible and legible. Overall, the information should allow the manufacturer to determine the specific source of each product. The Commission expects a manufacturer to depart from these requirements only for considered and definable reasons. Each manufacturer is ultimately responsible for making a reasonable judgment about what information can be marked on their product and packaging, given the character and type of their product and packaging, and what required information can be ascertainable, given the character and type of their business. When considering the reasonableness of a manufacturer’s decision regarding what information to include in its markings, the Commission intends to look at the individual manufacturer’s situation along with the practices of peer manufacturers.
The question of what should be ascertainable is a different question than whether that specific information can be marked on the product or packaging. While there are foreseeable limitations of what a manufacturer might reasonably be able to mark on a product or packaging, the Commission expects the basic information referred to in Section 103(a) to be ultimately ascertainable by the manufacturer and the consumer. Section 103(a) does not require codes, formats or numbering systems. A manufacturer may choose to employ a code or numbering system provided the required information remains ascertainable by the consumer. The manufacturer can also rely on code systems already provided through compliance with other federal regulations, again, provided the required information underlying that code is ascertainable by consumers.
3. What is a “permanent” mark?
The Commission considers a “permanent” mark on a product to be a mark that can reasonably be expected to remain on the product during the useful life of the product. A mark on disposable packaging need only be permanent to the extent it is durable enough to reach the consumer. As such, an adhesive label on a piece of disposable packaging might be sufficient for a packaging mark. Further, if a mark is visible on the product through disposable packaging, there is no need for the mark to be on the packaging.
The Commission is aware that some voluntary standards, for example the ASTM standard for cribs, have provisions concerning the permanency of labels. Such standards may provide some guidance to manufacturers when determining whether a marking is permanent.
4. When can only the packaging be marked and not the product?
The Commission believes that Section 103(a) sets forth the expectation that, in most instances, both the packaging and the product will be marked. The statute recognizes, however, that this might not always be practicable. Some circumstances where the Commission considers that marking the product itself might not be practicable include:
(1) If a product is too small to be marked. Legislative history recognizes that a product’s size is a primary consideration in determining if marking only the packaging is feasible. See H.R. Rep. No. 501, 110th Cong., 1st Sess. 32 (2007).
(2) If a toy is meant to be stored in a box or other packaging, such as games with boards and small game pieces. There, the board and the box should be marked, but the individual game pieces do not need to be. This is another example recognized in the legislative history. See H.R. Rep. No. 501, 110th Cong., 1st Sess. 32 (2007). The Commission believes that this principle would similarly apply to arts and crafts kits for children. Again, only the storage box and one integral part of the kit needs to marked and not every item in the crafting kit. Where a number of small products such as marbles, buttons, beads, etc. are packaged together, the Commission believes that marking the package would be sufficient. For products that are meant to stay with or be contained in their original packaging, the packaging would be considered part of the “product.”
(3) If a product is sold through a bulk vending machine, the item does not need to be individually marked but the package or carton in which such products are shipped to the retailer should be marked. The Conference Report recognized that marking each individual product in such circumstances may not be practical. See H.R. Rep. No. 787, 110th Cong., 2d Sess. 67 (2008).
(4) If a physical mark would weaken or damage the product or impair its utility.
(5) If a product surface would be impossible to mark permanently such as those made of elastics, beads, small pieces of fabric (such as jewelry, hair ornaments, etc.), or craft items like pipe stems, or natural rocks.
(6) If the aesthetics of the product would be ruined by a mark and a mark cannot be placed in an accessible but inconspicuous location.
5. Where should marks be placed for items sold in sets?
The Commission believes that for items meant to be sold as sets or pairs and that function only as sets or pairs, only one item of the pair, or an integral part of the set would need to be marked. Shoes are an example. This situation is similar to the circumstance recognized in legislative history of a game with small pieces not needing marking on all the small pieces. The Commission expects that items which can be separated and sold separately would need to be separately marked.
6. What entity is to be marked or ascertainable?
Section 103(a) requires that the name of the manufacturer or the name of the private labeler be ascertainable from the marking.
7. What is the location of production to be marked or ascertainable?
The Commission believes that the name of the country and the city and state (or administrative region, as appropriate) where the product was manufactured would be sufficient to provide the location of production. However, the manufacturer would be responsible for identifying the specific source of the product in the event of a compliance inquiry or other Commission action.
8. What date of production is to be marked or ascertainable?
The Commission recognizes that products may not always be started and completed in a single day. The Commission anticipates that the date of production could be a date range if the product is made over a period of time.
When the product is a group of disparate components or items assembled together or gathered into one package, the Commission interprets the date of manufacture to mean the date of assembly or placement into one package.
9. What cohort information is to be marked or ascertainable? Do small volume manufacturers or crafters need to create a system that includes batch, run or other numbers?
Although Section 103(a) does not require manufacturers that do not use lot, batch or run numbers to create such a system, the Commission believes that compliance with this Section generally will require that manufacturers have in place a reasonable means to ascertain detailed production information, including the means to distinguish products made from different factories, made with different components, at different times or have other material differences that make the product non-identical from previous products. The business and recordkeeping practices of peer manufacturers should be considered. Small volume manufacturers and crafters may be unlikely to use lot, batch or run numbers, and, again, the Commission does not interpret Section 103(a) to require them to create such a system. Nevertheless, reasonable practices should be in place by such manufacturers to keep records of components used in their products.
Statement of Policy Concerning Tracking Label Requirement in Section 103(a) of the CPSIA (Briefing Package dated July 14, 2009, OS no. 5426)
STATEMENT OF CHAIRMAN INEZ M. TENENBAUM ON THE STATEMENT OF POLICY CONCERNING SECTION l03(a) OF THE CPSIA
Section 103(a) of the CPSIA requires manufacturers to place permanent, distinguishing marks on children's products and their packaging to the extent practicable. Importantly, and as this guidance indicates, the tracking labels provision applies only to products manufactured on or after August 14, 2009. The primary purpose of the distinguishing marks is to aid in the quick and effective facilitation of recalls involving children's products. I believe that the guidance unanimously approved by the Commission today will help to achieve the goals of improved recall effectiveness and better protection of consumers while also providing industry with assurance that the Commission does not intend to penalize manufacturers for inadvertent violations of the statute when they have made a good faith effort in attempting to comply with the tracking label requirements.
Although there are a number of issues surrounding the tracking labels requirement, I will address three of the principal concerns regarding this statute. First, many manufacturers have expressed concern that "one size does not fit all" with respect to tracking labels. In the guidance issued today the Commission acknowledges this concern and has agreed that Section 103(a) does not require a uniform "one size fits all" labeling system. Rather, the only "uniform" requirement is that the tracking information required by statute be ascertainable from the distinguishing marks made on the children's product and its packaging. How an individual manufacturer chooses to achieve this end is left to the reasonable judgment of each individual manufacturer, unless and until such time the Commission decides it necessary to implement more detailed and uniform regulations.
Second, small volume manufacturers and crafters have expressed concern that they cannot feasibly comply with the statute because their production patterns do not lend themselves to lot, batch, and run labeling systems. To this end, the Commission agrees that small volume manufacturers or crafters need not create a labeling system incorporating the use of lot, batch, or run numbers so long as such manufacturers can keep adequate records of the components used in their products. The goal of the labeling statute is to enable manufacturers and consumers alike to ascertain pertinent information about a children's product in the event of a recall, not to implement a rigid and uniform labeling standard that applies to both small and large manufacturers in the same way. In developing and implementing a tracking label system, small volume manufacturers and crafters should also consider the business and record keeping practices of their peers.
Third, many manufacturers have expressed concern over the lead time it will take to implement the new tracking label requirements due to confusion over the statutory provisions and the lack of clear guidance from the Commission. The Commission is aware of this concern and the guidance approved by the Commission today is intended to help clear up any confusion over the statutory requirements. While this guidance is incapable of answering every product specific question, I believe that the guidance provides sufficient general direction for all manufacturers to comply. To the extent that more detailed direction is necessary, the Commission may work directly with firms, issue additional guidance, or initiate rule making if such future measures are deemed necessary by the staff or the Commission. The Commission also understands that manufacturing changes cannot occur overnight, and some manufacturers may require some additional lead time to take the necessary measures to meet the statutory requirements. I believe the Commission and staff will measure the good faith efforts of a manufacturer, considering steps taken both before and after the issuance of this guidance to comply, in evaluating a firm's compliance with section 103(a).
STATEMENT OF THE HONORABLE THOMAS H. MOORE ON THE STATEMENT OF POLICY CONCERNING THE "TRACKING LABEL" REQUIREMENT IN SECTION 103(a) OF THE CONSUMER PRODUCT SAFETY IMPROVEMENT ACT OF 2008 July 20,2009
The tracking label provision in the Consumer Product Safety Improvement Act (CPSIA), as well as a related provision in the prohibited acts section, sprang from the legislative proposals I sent to Congress in July 2007. In my proposal I said:
"Identifying the exact product to be recalled can also be a problem. Manufacturers are not required, in most cases, to put date codes or other distinguishing marks on their products every time they change them. Thus they often cannot tell the Commission at what point in a product's production it presented a risk, and at what point the problem was fixed (particularly if they fixed the problem before the Commission became aware of it). Because old product can stay on store shelves for quite a while and be intermingled with newer versions of the same product, this presents problems for retailers and the Commission staff in identifying which products in stores are subject to the recall. I believe the law should put the burden squarely on the manufacturer/importer/distributor to make sure the products are marked (production date codes, for example) so that problem products can be readily distinguished by everyone (including the consumer who has the product in his home). If Commission staff is unable to clearly distinguish between products that should be covered by a recall and those that should not, then that should result in the recall of all similar products made by that manufacturer. The Commission should not have to guess (or test) every possible permutation of a particular product to determine if it has been remedied (although we certainly should test the alleged 'fix' to make sure that the hazard has indeed been eliminated). A company that misrepresents the scope of the products affected by a recall should be subject to a penalty. In fact, a company that knowingly misrepresents any material fact in a recall investigation that delays or otherwise hinders the agency's ability to promptly initiate an effective recall should be subject to penalties by the Commission." My proposal assumed that the manufacturer was identifiable. Congress took my proposal a step further by making sure that the manufacturer or private labeler of the product could be identified as well as the location of where the product was made. The Act's provision also requires not just marking the product, but marking the product's packaging as well, realizing that retailers need an easy way to identify products whose markings may be covered by their packaging.
I believe section 103(a) as written by Congress has an additional purpose beyond the recall setting. When problems begin to surface: publicly about products made in a particular part of the world, whether there has been a recall of any of the products or not, many consumers will want to know where those products are being made so they can exercise caution in their purchasing decisions. We certainly see this in the food industry and we saw it with toys during the period when many toys were being recalled due to excessive lead in paint. Consumers were not simply avoiding the products recalled or the products made by a company who had a recalled product, they were avoiding any toys made in that particular part of the world. There can be regional variations within a country as to manufacturing processes, which is why I think the statutory provision does not simply require the name of the country where the product was manufactured, but requires "the location ... of production of the product." The Commission has interpreted this to mean not only the country but also the city and the state or other administrative unit in which the city is located. The city of production may be a piece of information many manufacturers do not already mark on their products. The Commission recognizes that it may take some time for manufacturers to add this information and will not penalize companies as they work to bring their products and packaging into compliance as long as they are making good faith efforts to comply in a reasonable fashion with the provision. As the Commission's guidance indicat1es, many manufacturers already comply with most, if not all of the requirements in section l03(a).. A number of commenters took the section title too literally and assumed that the word "label'" meant that the distinguishing marks all had to be in one spot on the product and on the packaging. The Commission does not read the provision that narrowly. In an ideal world, such a requirement would be helpful in locating the information, but in the practical world of children's product manufacturing, where the size of manufacturers and the types of products and the styles of packaging available is all so varied, uniform compliance with such a provision would be extremely difficult. It could also, as some commenters pointed out, require a substantial reworking of their products and packaging. The Commission's interpretive guidance is meant to minimize disruption of manufacturing practices while still holding manufacturers responsible for a good faith compliance with the law. We recognize it may take time for smaller manufacturers to figure out how best to comply with marking requirements and the record keeping that will be the underpinning for making the information required by the marks "ascertainable." The Commission will shortly be posting answers to additional Frequently Asked Questions (FAQs) about the marking required by this section. The Commission will continue to update the FAQs and use other means to make the latest information available to manufacturers about the application of this section of the CPSIA. A related provision is section 19(a)(13) of the CPSA (as amended by the CPSIA). It is now unlawful for any person to misrepresent the scope of consumer products subject to a recall. This is not intended to snare the innocent manufacturer who misjudges the extent to which a product hazard applies to his product line and corrects that misjudgment as soon as it is discovered. However, manufacturers who knowingly seek to obscure how much of their products should be subject to a recall would be subject to a penalty. Similarly those who fail to keep the information required by the tracking label provision and then seek to limit the scope of a recall of their product without reference to good production data will not find a very sympathetic ear at the Commission. The Commission also understands that a number of manufacturers have already taken steps to be in compliance with the marking provision as they understand it. They are to be commended for their diligence and will not be penalized for having guessed wrong as to how the Commission would ultimately interpret the section.
STATEMENT OF COMMISSIONER NANCY NORD ON TRACKING LABELS GUIDANCE
Today the Commission is issuing guidance on the tracking label requirement in Section 103(a) of the Consumer Product Safety Improvements Act ("CPSIA"). The policy statement tries to address issues and concerns raised during the extensive public comment process we conducted over the past seven months to educate ourselves about the impact of this requirement on product sellers and how it will actually work to improve quality assurance and, by extension, recall effectiveness.
It is important to note that the guidance issued today probably will not be the last word on this important issue. We realize that all the issues presented by Section 103(a) cannot be addressed by this document. Recognizing the concern that this provision has caused, I emphasize that the agency initially will be looking for "good faith" compliance in the context of a recall. As companies gain experience in implementing this provision, we encourage them to bring to our attention any need for additional guidance to make this provision work better to achieve its objective.
Unfortunately, the CPSIA does not give the agency the flexibility to phase in the requirements, for example, by first addressing high value products with long useful lives and a history of recall issues. Applying lessons learned, we ideally could then have tailored the requirement to additional products. I discussed these concerns in my statement of May 13,2009. We have tried to minimize the burdens imposed on all childrens' product manufacturers through this policy statement while we stay focused on how to improve recall effectiveness.
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