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[Senate Report 115-203]
[From the U.S. Government Publishing Office]

                                                      Calendar No. 297
115th Congress      }                                    {      Report
                                 SENATE
 2d Session         }                                    {     115-203
_______________________________________________________________________

                                     
            REINFORCING AMERICAN-MADE PRODUCTS ACT OF 2017

                               __________

                              R E P O R T

                                 of the

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                 S. 118

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                February 5, 2018.--Ordered to be printed
                
                                   ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

79-010                         WASHINGTON : 2018                 
                
                
                
    
    
    
    
    
    
    
    
    
    
                
                
                
                
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                     one hundred fifteenth congress
                             second session

                   JOHN THUNE, South Dakota, Chairman
 ROGER F. WICKER, Mississippi         BILL NELSON, Florida
 ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
 TED CRUZ, Texas                      AMY KLOBUCHAR, Minnesota
 DEB FISCHER, Nebraska                RICHARD BLUMENTHAL, Connecticut
 JERRY MORAN, Kansas                  BRIAN SCHATZ, Hawaii
 DAN SULLIVAN, Alaska                 EDWARD J. MARKEY, Massachusetts
 DEAN HELLER, Nevada                  TOM UDALL, New Mexico
 JAMES M. INHOFE, Oklahoma            GARY C. PETERS, Michigan
 MIKE LEE, Utah                       TAMMY BALDWIN, Wisconsin
 RON JOHNSON, Wisconsin               TAMMY DUCKWORTH, Illinois
 SHELLEY MOORE CAPITO, West           MARGARETWOODHASSAN,NewHampshire
    Virginia
 CORY GARDNER, Colorado               CATHERINE CORTEZ MASTO, Nevada
 TODD C. YOUNG, Indiana               JON TESTER, Montana
                       Nick Rossi, Staff Director
                 Adrian Arnakis, Deputy Staff Director
                    Jason Van Beek, General Counsel
                 Kim Lipsky, Democratic Staff Director
           Christopher Day, Democratic Deputy Staff Directorn

                                                      Calendar No. 297
115th Congress      }                                    {      Report
                                 SENATE
 2d Session         }                                    {     115-203

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

 
             REINFORCING AMERICAN-MADE PRODUCTS ACT OF 2017

                                _______
                                

                February 5, 2018.--Ordered to be printed

                                _______
                                

Mr. Thune, from the Committee on Commerce, Science, and Transportation, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 118]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 118) 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, reports favorably thereon with an amendment (in the 
nature of a substitute) and recommends that the bill (as 
amended) do pass.

                          Purpose of the Bill

    The purpose of S. 118, the Reinforcing American-Made 
Products Act of 2017, is to ensure that there is a single 
national standard for labeling products as ``Made in the 
U.S.A.'' or ``Made in America.''

                          Background and Needs

    The Federal Trade Commission (FTC) oversees claims of U.S. 
origin under its general authority to act against deceptive 
acts and practices under section 5 of the FTC Act.\1\ As part 
of the Violent Crime Control and Law Enforcement Act of 1994, 
Congress has required that products bearing the ``Made in the 
U.S.A.'' label to do so in a manner consistent with FTC 
decisions and orders.\2\ Since 1997, the FTC has enforced a 
national labeling standard that requires a product with a 
``Made in the U.S.A.'' label to be ``all or virtually all'' 
manufactured in the United States. The standard is laid out in 
an Enforcement Policy Statement on U.S. Origin Claims that 
provides guidance to companies seeking to make ``Made in the 
U.S.A.'' claims about their products.\3\ Under this standard, 
marketers labeling or advertising a product as ``Made in the 
U.S.A.'' must have a reasonable basis to support the claim.\4\ 
The marketer must know that all significant parts and 
processing that go into the product are of U.S. origin and may 
make such claims where there is a de minimis, or negligible, 
amount of foreign content.\5\ The FTC considers the following 
three factors in evaluating whether ``all or virtually all'' of 
a product is made in the United States: whether the final 
assembly or processing of the product took place in the United 
States; the portion of the total manufacturing cost of the 
product that is attributable to U.S. parts and processing; and 
how far removed from the finished product any foreign content 
is.\6\
---------------------------------------------------------------------------
    \1\15 U.S.C. Sec. 45a.
    \2\ Public Law 103-322, 108 Stat. 2135.
    \3\``Made in USA'' and other U.S. Origin Claims, The Federal Trade 
Commission, 62 Fed. Reg. 63,756 (Dec. 2, 1997).
    \4\Id. at pp. 63,765.
    \5\Id.
    \6\Id.
---------------------------------------------------------------------------
    In 2011, the California Supreme Court addressed whether 
``Made in the U.S.A.'' labeling for a lockset that contained a 
``few'' foreign-made parts violated the State's unfair 
competition and false advertising laws.\7\ The court held the 
labeling to be a material misrepresentation, effectively 
establishing a California requirement that a product bearing 
the ``Made in the U.S.A.'' label be composed of 100 percent 
domestic content. Many domestic manufacturers alleged that this 
100 percent standard was nearly impossible for them to meet 
because some component parts were virtually impossible to 
source domestically.\8\ One company faced litigation in 
California resulting in a settlement based on an infraction of 
using an imported basketball net in a rim.\9\
---------------------------------------------------------------------------
    \7\Kwikset Corp. v. Superior Court, 51 Cal. 4th 310 (Cal. 2011).
    \8\For example, shoe eyelets are difficult to source in the United 
States. See Timothy Aeppel, ``U.S. Shoe Factory Finds Supplies Are 
`Achilles Heel,''' The Wall Street Journal, Mar. 3, 2008 at B1.
    \9\See Order Granting Preliminary Approval of Class Action 
Settlement and Approving Form and Manner of Service, Hecht-Nielsen v. 
Lifetime Prods, Inc., et al., No. 37-2011-00089380-CU-BT-CTL (Cal. 
Super. Ct., San Diego Co., Jan. 8, 2014).
---------------------------------------------------------------------------
    In 2011, and again in 2012, the State Senate Assembly voted 
68 to 0 to match the Federal standard, but the legislation 
failed to pass the State Senate. In 2015, the Assembly again 
voted to match the Federal standard. However, the State Senate 
agreed to an amendment that only loosened the State labeling 
law. Under the new standard, a product can bear the ``Made in 
the U.S.A.'' label in California if 95 percent of its contents 
are domestically sourced. If a company can certify that some 
components are unavailable in the United States, then a 90 
percent threshold applies.
    The State legislature approved the new standard, and 
Governor Jerry Brown signed it into law on September 1, 
2015.\10\ While the California standard is less restrictive, it 
nevertheless differs from the FTC standard, impacts interstate 
commerce, and leaves manufacturers vulnerable to lawsuits.
---------------------------------------------------------------------------
    \10\CAL. BUS. & PROF. CODE Sec. 17533.7.
---------------------------------------------------------------------------
    S. 118 would amend the Federal product labeling statute to 
ensure that the current authority of the FTC to enforce ``Made 
in the U.S.A.'' labeling rules preempts State requirements. 
This national standard would allow a manufacturer with ``all or 
virtually all'' parts of its product produced in the United 
States to use the label, and would help a consumer decide 
whether the purchase of a product marked as ``Made in the 
U.S.A.'' supports U.S. manufacturing and jobs.

                         Summary of Provisions

    S. 118 would amend section 320933 of the Violent Crime 
Control and Law Enforcement Act of 1994 (15 U.S.C. 45a) to 
include an ``Effect on State Law'' subsection that provides 
that the national ``Made in the U.S.A.'' standard supersedes 
any provision of any State law 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.
    While S. 118 would expressly preempt State ``Made in the 
U.S.A.'' labeling laws, such as section 17533.7 of the 
California Business and Professional Code, it would allow for 
the application of State laws to enforce against the use of 
labels that do not comply with the Federal ``Made in the 
U.S.A.'' labeling standard, for instance, through State 
statutes that prohibit unfair and deceptive acts or practices 
in commerce.

                          Legislative History

    Senator Lee introduced S. 118 on January 12, 2017, with 
Senators Fischer, King, Capito, and Collins as cosponsors. On 
May 18, 2017, in an open Executive Session, the Committee, by 
voice vote, ordered S. 118 reported favorably with an amendment 
(in the nature of a substitute).

                            Estimated Costs

    In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

S. 118--Reinforcing American-Made Products Act of 2017

    S. 118 would preempt state laws that conflict with existing 
federal 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 S. 118 as it would 
not affect the workload or enforcement activities of the 
agency.
    Enacting S. 118 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply. CBO 
estimates that enacting S. 118 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2028.
    S. 118 would impose an intergovernmental mandate as defined 
in the Unfunded Mandates Reform Act (UMRA) by preempting state 
laws related to labelling items as ``Made in the U.S.A.'' or 
``Made in America.'' 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 ($78 
million in 2017, as adjusted annually for inflation).
    S. 118 contains no private-sector mandates as defined in 
UMRA.
    The CBO staff contact for this estimate is 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.

                      Regulatory Impact Statement

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       NUMBER OF PERSONS COVERED

    S. 118, as reported, would not impose any new regulatory 
requirements on businesses.

                            ECONOMIC IMPACT

    Enactment of this legislation is not expected to have an 
adverse impact on the Nation's economy.

                                PRIVACY

    S. 118 would not have an adverse impact on the personal 
privacy of individuals.

                               PAPERWORK

    S. 118 would not measurably increase paperwork requirements 
for most businesses.

                   Congressionally Directed Spending

    In compliance with paragraph 4(b) of rule XLIV of the 
Standing Rules of the Senate, the Committee provides that no 
provisions contained in the bill, as reported, meet the 
definition of congressionally directed spending items under the 
rule.

                      Section-by-Section Analysis

Section 1. Short title.

    This section would provide that the Act may be cited as the 
``Reinforcing American-Made Products Act of 2017.''

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

    This section would amend the Violent Crime Control and Law 
Enforcement Act of 1994 (15 U.S.C. 45a) to include an ``Effect 
on State Law'' subsection that states that the ``Made in 
U.S.A.'' labeling provisions would supersede any provisions of 
the law of any State expressly 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. This section would include a provision for the 
application of State laws to enforce against the use of labels 
that do not comply with the Federal ``Made in the U.S.A.'' 
labeling standard.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, 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 
material is printed in italic, existing law in which no change 
is proposed is shown in roman):

         VIOLENT CRIME CONTROL AND LAW ENFORCEMENT ACT OF 1994

                  [Public Law 103	322; 108 Stat. 2135]

SEC. 320933. LABELS ON PRODUCTS.

                            [15 U.S.C. 45a]

  [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.--
          (1) In general.--Except as provided in paragraph (2), 
        the provisions of this section shall supersede any 
        provisions of the law of any State expressly 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.
          (2) Enforcement.--Nothing in this section shall 
        preclude the application of the law of any State to the 
        use of a label not in compliance with subsection (a).

                                  [all]
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