Product Safety Alert: TRACKING LABELS: Industry Speaks Out On Upcoming Rule, but Stay Request Denied

Date: May 18, 2009

Section 103 of the Consumer Product Safety Improvement Act of 2008 will go into effect on August 14th, requiring new tracking labels on all children's products. Under the language of the act, these labels must include information on the manufacturer or private labeler, the location and date of production of the product, and cohort information. A panel held at the headquarters of the Consumer Product Safety Commission (CPSC) gave industry representatives a chance to comment on the forthcoming rule, and almost unanimously the panelists asked for a flexible approach that recognizes existing tracking activities, with many supporting a stay of enforcement. However, the Commission failed to approve a request for a stay of this obligation on a 1/1 vote.

CPSC Acting Chairman Nancy Nord opened the session, explaining the Commission's need for more input on the issue. Nord stated the law was "written in an interesting way" that has prevented the CPSC from publishing guidance on the rule, despite the implementation date being only three months away.

Two sets of panelists were given ten minutes each to make a statement, then responded to questions from CPSC staffers and the audience. The first group included Sheila Millar of Keller and Heckman, representing the Fashion Jewelry Trade Association, Jim Neill of the Retail Industry Leaders Association, Matt Priest of the Footwear Distributors and Retailers of America, Phillip Brilliant of the National Bulk Vendors Association, Roger Urbanski of Cognitive Solutions, and Marcia Kinter of the Specialty Graphics Imaging Association. The second panel featured Sally Kay of the Hosiery Association, Tim Holt of the National School Supply and Equipment Association, Rick Woldenberg of Learning Resources, Inc. and Steve Schultz of Nash Manufacturing, Inc.

Panelists stressed that tracking labels were mandated on products and packaging only to the extent "practicable," stressing that size, aesthetics and price were factors to consider. Several of the speakers provided examples of products that are so small that placing a tracking label directly on the product would be completely impractical. To do so would result in either labels that cannot be read due to the size constrains or labels that would mar the aesthetics of a product. Brilliant was emphatic about the additional cost of putting labels on products, stating the additional cost could destroy the bulk vending industry – which sells small trinkets in supermarket vending machines. Sheila Millar suggested that price considerations must include other cost such as costs of software upgrades, potential loss of confidential business information. She also recommended that the term "practicability" be considered in two ways: first, whether, based on size, aesthetics, price and other factors, it is possible to put any type of label on a product or package, and second, to establish that labels may include less than all the suggested information set forth in Section 103.

Other members of the panel argued that the rules are not even necessary, as there are already tracking systems in place for most items. Woldenberg had harsh words for the rule, calling it a "backwards looking provision" that was created in reaction to past recalls. He also pointed out that very few recalls occur each year, and the cost of labeling was far higher than the cost of any recall.

Most panelists agreed that a stay of enforcement is necessary, suggesting a one to two year delay. Virtually all panelists stressed that a "one size fits all" approach would be impossible to implement. There was one notable exception on the panel. Urbanski was the lone voice praising the rule, stating it should be implemented in its current form on August 14. Mr. Urbanski's company, Cognitive Solutions, is a manufacturer of labels.

The staff emphasized that the approach would likely be flexible and could evolve over the next few years. Staff is discussing global considerations with counterparts around the world as well.

CPSC has posted online the 130 comments it has already received from industry. The comments can be read by clicking on the following links:

Despite the day's testimony, the CPSC did not grant a stay, with Acting Chairman Nord voting in favor and Commissioner Thomas Moore voting against. Nord voiced doubt over the effectiveness of the labeling rule in improving recalls compared to the cost of implementation, while Moore felt the Commission would overstep its authority in granting a stay for all affected products. To read the Commissioners' statements, see: http://www.cpsc.gov/library/foia/ballot/ballot09/tracklabelstay.pdf.

Statements from staff at the meeting suggest that the Commission will allow for a flexible approach to implementation, and industry will seek additional specific guidance on aspects of tracking labels.

FOR MORE INFORMATION, please contact Sheila A. Millar (202.434.4143; millar@khlaw.com) or Jean-Cyril (JC) Walker (202.434.4181; walker@khlaw.com).

Downloadable Files:
Product Safety Alert