[House Report 114-876]
[From the U.S. Government Publishing Office]


114th Congress   }                                     {        Report
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                     {       114-876

======================================================================



 
             REINFORCING AMERICAN-MADE PRODUCTS ACT OF 2016

                                _______
                                

 December 13, 2016.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 5092]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 5092) to make exclusive the authority of the 
Federal Government to regulate the labeling of products made in 
the United States and introduced in interstate or foreign 
commerce, and for other purposes, having considered the same, 
report favorably thereon without amendment and recommend that 
the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     6
Statement of General Performance Goals and Objectives............     6
New Budget Authority, Entitlement Authority, and Tax Expenditures     6
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......     6
Committee Cost Estimate..........................................     6
Congressional Budget Office Estimate.............................     6
Federal Mandates Statement.......................................     7
Duplication of Federal Programs..................................     7
Disclosure of Directed Rule Makings..............................     7
Advisory Committee Statement.....................................     7
Applicability to Legislative Branch..............................     7
Section-by-Section Analysis of the Legislation...................     7
Changes in Existing Law Made by the Bill, as Reported............     8
Dissenting Views.................................................    10

                          Purpose and Summary

    The goal of H.R. 5092 is to preempt state laws related to 
labeling products as manufactured in the United States and to 
establish the Federal Trade Commission's (FTC) authority over 
and approach to such labeling as the single, national standard. 
The legislation accomplishes this goal by establishing that the 
statutory provisions authorizing the FTC to prohibit deceptive 
``Made in USA'' labeling shall ``supersede any provisions of 
the law'' of any State relating to the ``extent to which'' a 
product is labeled as ``Made in the USA'' or its equivalent.

                  Background and Need for Legislation

    The FTC currently allows manufacturers to label products as 
``Made in the USA'' if they are ``all or virtually all'' 
manufactured in the U.S.\1\ In order to determine whether this 
threshold is met, the FTC looks at a number of factors, 
including the site of final assembly or processing; the 
proportion of U.S. manufacturing costs attributable to U.S. 
sources; and the remoteness of foreign content.\2\ In contrast, 
California maintains a separate standard, which consists of a 
statutory requirement that 95 percent of a product's wholesale 
value be attributable to U.S. sources.\3\ Under the California 
law, a manufacturer may attribute as little as 90 percent of a 
product's wholesale value to U.S. sources, but only if it can 
show that the product's foreign inputs were unavailable in the 
U.S.\4\
---------------------------------------------------------------------------
    \1\Fed. Trade Comm'n, Enforcement Policy Statement on U.S. Origin 
Claims, 62 Fed. Reg. 63756 (Dec. 2, 1997), available at https://
www.ftc.gov/public-statements/1997/12/enforcement-policy-statement-us-
origin-claims.
    \2\See id.
    \3\Cal. Bus. & Prof. Code Sec. 17533.7.
    \4\Id.
---------------------------------------------------------------------------
    As a result of the differing FTC and California standards, 
U.S. manufacturers may not be able to comply with both 
standards simultaneously.\5\ Unfortunately, testimony before 
this Committee suggests that, as a result, some companies that 
might otherwise comply with the FTC standard decline to use a 
label at all.\6\ Prior to the 95 percent requirement, which 
went into effect at the beginning of 2016, California law 
required 100 percent of a product's wholesale value to be 
attributable to U.S. sources in order to bear a ``Made in USA'' 
label. A few lawsuits alleging noncompliance with this previous 
standard are still pending in California courts.\7\
---------------------------------------------------------------------------
    \5\Legislative Hearing on 17 FTC Bills Before the Subcomm. on 
Commerce, Manufacturing, and Trade of the H. Comm. on Energy and 
Commerce, 114th Cong. 2 (2016) (statement of Richard Hendrickson, 
President and CEO of Lifetime Products).
    \6\Id.
    \7\Rachel Adams, CA ``Made in U.S.A.'' Law: Despite Amendment, 
Litigation Targets Cosmetic, Food, Beverage Industries, Natural 
Products Insider, Apr. 29, 2016, available at http://
www.naturalproductsinsider.com/blogs/insider-law/2016/04/ca-made-in-u-
s-a-law-despite-amendment-litigation.aspx.
---------------------------------------------------------------------------
    The Committee's view is that this legislation should 
establish a single, national standard that should be enforced 
uniformly. This standard should be a strong benchmark, and 
should engender trust that the label truthfully conveys that a 
product was manufactured domestically, regardless of where an 
item is purchased or marketed within the U.S. The current FTC 
standard meets these objectives and should be the standard 
observed in any state in the U.S.

                                Hearings

    The Subcommittee on Commerce, Manufacturing, and Trade held 
a hearing on H.R. 5092, along with several other bills, on May 
24, 2016. The Subcommittee received testimony from:
           Edith Ramirez, Chairwoman, Federal Trade 
        Commission;
           Joshua D. Wright, University Professor, 
        Antonin Scalia Law School, George Mason University;
           Geoffrey Manne, Founder and Executive 
        Director, International Center for Law and Economics;
           Daniel Castro, Vice President, Information 
        Technology and Innovation Foundation;
           Abigail Slater, General Counsel, Internet 
        Association;
           Michael Best, Senior Policy Advocate, 
        Consumer Federation of America;
           David Vladeck, Professor of Law, Georgetown 
        Law;
           Richard Hendrickson, President and CEO of 
        Lifetime Products;
           Greg O'Shanick, President and Medical 
        Director, Center for Neurorehabilitation Services;
           Stephen Shur, President, Travel Technology 
        Association;
           Robert Arrington, President, National 
        Funeral Directors Association;
           John Breyault, Vice President of Public 
        Policy, Telecommunications and Fraud, National 
        Consumers League;
           Gil Genn, Maryland Sports and Entertainment 
        Industry Coalition; and
           Jamie Pena, Vice President, Revenue Strategy 
        and Global Distribution, Omni Hotels and Resorts.

                        Committee Consideration

    On June 8 and 9, 2016, the Subcommittee on Commerce, 
Manufacturing, and Trade met in open markup session and 
forwarded H.R. 5092 to the full Committee by a voice vote. On 
July 12, 13, and 14, 2016, the full Committee on Energy and 
Commerce met in open markup session and ordered H.R. 5092, 
without amendment, favorably reported to the House by a vote of 
29 to 21.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
following reflects the record votes taken during the Committee 
consideration:


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a hearing and made 
findings that are reflected in this report.

         Statement of General Performance Goals and Objectives

    The goal of H.R. 5092 is to preempt state laws related to 
labeling products as manufactured in the United States and to 
establish the FTC's authority over and approach to such 
labeling as the single, national standard.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
5092 would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

       Earmark, Limited Tax Benefits, and Limited Tariff Benefits

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI 
of the Rules of the House of Representatives, the Committee 
finds that H.R. 5092 contains no earmarks, limited tax 
benefits, or limited tariff benefits.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

H.R. 5092--Reinforcing American-Made Products Act of 2016

    H.R. 5092 would preempt state laws that establish standards 
under which a ``Made in America'' or ``Made in the U.S.A.'' 
label may be affixed to a product. The bill would reiterate 
that the Federal Trade Commission (FTC) is solely responsible 
for developing and enforcing those standards.
    Based on information from the FTC, CBO estimates that there 
would be no significant cost to implement H.R. 5092 as it would 
not affect the workload or enforcement activities of the 
agency.
    Enacting H.R. 5092 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply. CBO 
estimates that enacting the bill would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2027.
    H.R. 5092 would impose an intergovernmental mandate as 
defined in the Unfunded Mandates Reform Act (UMRA) by 
preempting state laws related to certain product labelling. At 
least one state, California, currently has a state law setting 
its own standard for such labels. The costs, if any, to the 
state of complying with the mandate would not exceed the annual 
threshold established in UMRA ($77 million in 2016, as adjusted 
annually for inflation.)
    H.R. 5092 contains no private-sector mandates as defined in 
UMRA.
    On January 15, 2016, CBO transmitted a cost estimate for S. 
1518, the Reinforcing American-Made Products Act of 2015, as 
ordered reported by the Senate Committee on Commerce, Science, 
and Transportation on November 18, 2015. The two pieces of 
legislation are similar and CBO's estimate of their budgetary 
effects are the same.
    The CBO staff contacts for this estimate are Stephen Rabent 
(for federal costs) and Rachel Austin (for intergovernmental 
mandates). The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                    Duplication of Federal Programs

    No provision of H.R. 5092 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting H.R. 5092 
specifically directs to be completed no rulemakings within the 
meaning of 5 U.S.C. 551.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 provides that the Act may be cited as the 
``Reinforcing American-Made Products Act.''

Section 2. Exclusivity of federal authority to regulate labeling of 
        products made in the United States and introduced in interstate 
        or foreign commerce

    This section establishes that the provisions of the Federal 
Trade Commission Act that authorize the Commission to regulate 
the extent to which a product may be labeled ``Made in the 
U.S.A.'' or ``Made in America,'' or the equivalent thereof, in 
order to represent that such product was in whole or 
substantial part of domestic origin, supersede any provision of 
state law that regulates the extent to which a product may be 
labeled ``Made in the U.S.A.'' or ``Made in America,'' or the 
equivalent thereof.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

VIOLENT CRIME CONTROL AND LAW ENFORCEMENT ACT OF 1994

           *       *       *       *       *       *       *



TITLE XXXII--MISCELLANEOUS

           *       *       *       *       *       *       *


Subtitle I--Other Provisions

           *       *       *       *       *       *       *


SEC. 320933. LABELS ON PRODUCTS.

   [To the extent] (a)  In General._To the extent any person 
introduces, delivers for introduction, sells, advertises, or 
offers for sale in commerce a product with a ``Made in the 
U.S.A.'' or ``Made in America'' label, or the equivalent 
thereof, in order to represent that such product was in whole 
or substantial part of domestic origin, such label shall be 
consistent with decisions and orders of the Federal Trade 
Commission issued pursuant to section 5 of the Federal Trade 
Commission Act. This section only applies to such labels. 
[Nothing in this section] Except as provided in subsection (b), 
nothing in this section shall preclude the application of other 
provisions of law relating to labeling. The Commission may 
periodically consider an appropriate percentage of imported 
components which may be included in the product and still be 
reasonably consistent with such decisions and orders. Nothing 
in this section shall preclude use of such labels for products 
that contain imported components under the label when the label 
also discloses such information in a clear and conspicuous 
manner. The Commission shall administer this section pursuant 
to section 5 of the Federal Trade Commission Act and may from 
time to time issue rules pursuant to section 553 of title 5, 
United States Code, for such purpose. If a rule is issued, such 
violation shall be treated by the Commission as a violation of 
a rule under section 18 of the Federal Trade Commission Act (15 
U.S.C. 57a) regarding unfair or deceptive acts or practices. 
This section shall be effective upon publication in the Federal 
Register of a Notice of the provisions of this section. The 
Commission shall publish such notice within six months after 
the enactment of this section.
  (b) Effect on State Law.--The provisions of this section 
shall supersede any provisions of the law of any State relating 
to the extent to which a product is introduced, delivered for 
introduction, sold, advertised, or offered for sale in 
interstate or foreign commerce with a ``Made in the U.S.A.'' or 
``Made in America'' label, or the equivalent thereof, in order 
to represent that such product was in whole or substantial part 
of domestic origin.

           *       *       *       *       *       *       *


                            DISSENTING VIEWS

    We cannot support H.R. 5092, Reinforcing American-Made 
Products Act, as reported by the Committee on Energy and 
Commerce on July 14, 2016. While we are sympathetic to the 
problem for manufacturers that is caused by multiple standards 
for using the Made in America label as part of marketing 
practices, this bill should have included provisions that would 
have preserved state enforcement tools.

                       I. H.R. 5092, as Reported

    This bill would preempt state laws affecting how products 
having ``Made in the U.S.A.,'' ``Made in America,'' or some 
equivalent labeling are introduced, sold, advertised, or 
offered for sale in interstate or foreign commerce. This bill 
would ease burdens on manufacturers by ensuring a single 
national standard for ``Made in America'' advertising.
    Currently, California is the only state that has such law. 
The California law may be interpreted in some cases to conflict 
with the federal standard enforced by the Federal Trade 
Commission. California's law allows enforcement by the 
California Attorney General and allows citizens who have been 
misled by noncompliant advertising to bring cases against the 
manufacturers. The broad preemption of the underlying bill 
would stop these avenues of recourse.

                      II. Committee Consideration

                 A. AMENDMENTS OFFERED IN SUBCOMMITTEE

    The Subcommittee on Commerce, Manufacturing, and Trade held 
a markup of H.R. 5092 on June 8-9, 2016, at which the bill was 
favorably forwarded by voice vote. At the markup, Rep. Kennedy 
(D-MA) offered and withdrew an amendment that would have 
created a single federal standard, but allowed states to pass 
state laws with standards identical to the federal standard. It 
would have also allowed for enforcement of the federal standard 
by state attorneys general. In addition, the amendment would 
have preserved the right of California, currently the only 
state with its own law on Made in America labeling, to use its 
current enforcement tools to enforce the standard established 
by FTC.

                B. AMENDMENTS OFFERED IN FULL COMMITTEE

    On July 12-14, 2016, the full Committee on Energy and 
Commerce considered H.R. 5092. Representative Kennedy again 
offered the same amendment he offered at Subcommittee to allow 
states to pass state laws. Under the amendment, consumers who 
were deceived by noncompliant advertising would still have 
recourse, but companies acting in good faith would not be 
subjected to undue burdens. The amendment was rejected along 
party lines by a vote of 29-22.
    Ultimately, the bill was favorably reported out of the 
committee by a vote of 29-21, with no Democratic members 
supporting final passage.
    For the reasons stated above, we dissent from the views 
contained in the Committee's report.

                                   Frank Pallone, Jr.,
                                           Ranking Member.
                                   Jan Schakowsky,
                                           Ranking Member, Subcommittee 
                                               on Commerce, 
                                               Manufacturing, and 
                                               Trade.

                                  [all]